G.R. No.
L-61250 June 3, 1991
REINSURANCE COMPANY OF THE ORIENT,
INC., petitioner, vs.THE HONORABLE COURT OF
APPEALS, HON. FIDEL A. PURISIMA, as Judge of the
CFI of Manila, Branch XX, GAUDIOSO M. TIONGCO, and
BERNARDO C. BERNABE, DEPUTY SHERIFF, Branch
XX, CFI-Manilarespondents.
Ambrosio Padilla, Mempin & Reyes Law Offices for
petitioner.
Ravelo, Velante & Tiongco and Gil Venerando R. Racho for
Private respondent.
FELICIANO, J.:
On 24 April 1963, Joaquin V. Gozun, Jr. signed a
promissory note for P30,000.00, promising to pay
respondent Gaudioso M. Tiongco or order the sum of
P30,000.00, with interest at 10% per annum. The condition
of the note was that its payment was to be secured by a
surety bond acceptable to the payee. On 8 May 1963, the
spouses Joaquin V. Gozun, Jr. and Maria Nieves Toledo-
Gozun jointly and severally, as principals, and petitioner
Reinsurance Company of the Orient, Inc. ("Reinsurance"),
as surety, executed a surety bond in favor of respondent
Tiongco in the sum of P30,000.00 to guaranty faithful
compliance with the terms and conditions of the 24 April
1963 promissory note.
A week later, on 17 May 1963, respondent Tiongco and the
Industrial & Commercial Factors, Inc. ("Factors") entered
into a financing and servicing agreement, stipulating,
among other things, the following:
xxx xxx xxx
7. That Factors shall purchase only accounts
receivables arising from a promissory note
executed by Mr. Joaquin V. Gozun, Jr., in the
amount of P30,000.00, with interest at 10% per
annum, dated April 24, 1963.
8. That the Firm (respondent Tiongco) guarantees
to Factors the genuineness and legality of the
accounts receivables assigned to Factors,
covering the articles sold and of the obligations
evidenced thereby, as well as the solvency of the
customers, and such guarantee shall continue and
remain in force and shall bind the Firm until all the
amounts and liabilities owing under and by virtue
of the said accounts receivables shall have been
paid or remitted in full to Factors. The Firm hereby
renounces the benefits of excussion granted to
him by the provisions of Article 2058 of the New
Civil Code.
xxx xxx xxx
11. That Factors may resell or reassign to the Firm
the accounts receivables discounted by Factors
and the Firm shall repurchase the same for the
total amount due, and outstanding from the Firm's
customers at the time of the resale or re-
assignment, for any or all of the following grounds:
(a) When the customer for any reason is
unable to pay the whole amount or any
part thereof under the terms of the
accounts receivables;
(b) When the customer refuses to pay the
whole amount under the accounts
receivables discounted;
xxx xxx xxx
On the same date (17 May 1963), respondent Tiongco, in
consideration of the sum of P34,500.00, executed a deed of
assignment in favor of Factors ceding, transferring and
assigning all his rights and interests in the promissory note
executed by Joaquin V. Gozun, Jr., in the amount of
P30,000.00, dated 24 April 1963.
On 6 November 1964, Factors wrote a demand letter to
Joaquin V. Gozun, Jr. demanding payment of the sum of
P30,000.00 exclusive of interests, the promissory note
having become due on 17 October 1964 but remaining
unsettled. A similar letter of demand was sent on the same
day to petitioner Reinsurance.
On 9 November 1964, Factors wrote a demand letter to
respondent Tiongco, advising the latter to pay P35,061.18
arising from the financing and servicing agreement dated
17 May 1963.
On 23 December 1964, petitioner Reinsurance wrote a
letter to Factors informing the latter of its conformity to
extension of the time for payment of the P30,000.00 note
up to the end of January 1965.
No payment having been made even after the extended
date, Factors filed a complaint in the then Court of First
Instance of Manila, Branch 20, docketed as Civil Case No.
61254, against respondent Tiongco, the spouses Gozun,
and petitioner. The prayer of Factors' complaint read:
Wherefore, it is respectfully prayed that judgment
be rendered in favor of the plaintiff:
1. Ordering the defendant Tiongco to pay the
plaintiff [Factors] the sum of THIRTY-SIX
THOUSAND TWO HUNDRED SIXTY-NINE
PESOS & 99/100 (P36,269.99) under the terms
and conditions of the Financing and Servicing
Agreement (Annex "A"); and/or
2. Ordering the defendants spouses Gozun and
Reinsurance Company of the Orient, Inc., to pay
the plaintiff jointly and severally, with defendant
Tiongco, the sum of THIRTY-FOUR THOUSAND
EIGHT HUNDRED SIXTY SIX PESOS & 96/100
(P34,866.96) plus interest thereon at ten per cent
(10%) per annum from November 30, 1964 until
complete payment is made;
3. Ordering all defendants to pay the plaintiff jointly
and severally, a sum equivalent to twenty five per
cent (25%) of their outstanding obligation, as
litigation expenses and attorney's fees;
4. Ordering defendant Tiongco to pay the plaintiff
the collection fee of one per cent (1%) and a
penalty of three and five tenth (3.5%) per cent per
month on the accounts receivable representing the
sum of P36,269.99 as of November 30, 1964;
Plaintiff further prays for such other relief as this
Honorable Court in deem just and equitable on the
premises.
Civpro Rule 39-43 1
In his Answer with a Cross-Claim against Reinsurance and
the Gozuns, respondent Tiongco prayed that:
. . . in the event that judgment be rendered
ordering him, [Tiongco] to pay to the plaintiff
[Factors] the amount claimed in the latter's
complaint, that the cross-defendants [petitioner
and the Gozun spouses] be simultaneously
ordered to pay [him] back . . . whatever amount is
paid . . . to the plaintiff in accordance with said
judgment;
xxx xxx xxx
Upon the other hand, petitioner Reinsurance in its Answer
denied having any liability to Factors, and asserted a cross
claim against the Gozun spouses, praying that:
xxx xxx xxx
In the remote event that cross-claimant
[Reinsurance] is adjudged liable under [Factors']
Complaint, cross-claimant further prays that
judgment be rendered — . . .
Under the cross-claim —
a) sentencing cross defendant [Gozun spouses] to
pay the cross claimant whatever amount or
amounts the latter may be compelled to pay under
its Surety Bond, RICO Bond No. 105/63, to the
plaintiff [Factors] plus interest thereon at the rate of
12% per annum, computed from the date of such
payment to the date when reimbursement is fully
effected by cross-defendants;
b) sentencing cross-defendants to pay the cross-
claimant an additional sum equivalent to 25% of
whatever amount or amounts cross-claimant may
be compelled to pay to plaintiff under its Surety
Bond, RICO Bond No. 105/063, by way of
attorney's fees and expenses of litigation;
c) pending the hearing of this case, that cross-
claimant be appointed receiver without the
necessity of filing a bond as stipulated in the
Agreement of Counter-Indemnity with Mortgage
(Annex "2-RICO"), and to take charge of the
properties mortgaged;
d) that the usual decree of foreclosure issue for
the sale at public auction of the aforementioned
two (2) parcels of land, and for the disposition of
the proceeds thereon in accordance with the
Agreement of Counter-Indemnity with Mortgage
(Annex "2 RICO"), upon failure by cross-
defendants to fully reimburse to cross-claimant
whatever amount or amounts it may be required to
pay under the Surety Bond, RICO Bond No.
105/63.
The, spouses Gozun also filed their Answer, with a cross-
claim against Tiongco.
After trial, Judge L.B. Reyes of the Court of First Instance of
Manila on 6 June 1970 rendered a Decision,1 the dispositive
portion of which stated:
WHEREFORE, judgment is rendered —
(1) Ordering defendant Gaudioso M. Tiongco to
pay plaintiff [Factors] the sum of P36,269.99,
under the terms and conditions of the financing
and servicing agreement, and the collection fee of
1% and penalty of 3.5% per month on the
accounts receivable as of November 30, 1964; or,
in default of said defendant ––
(2) Ordering defendant spouses Joaquin V.
Gozun, Jr., and Maria Nieves Toledo-Gozun and
defendant Reinsurance Company of the Orient,
Inc. to pay plaintiff, jointly and severally, the sum
of P34,866.96, plus interest thereon at 10% per
annum from November 30, 1964, until complete
payment is made;
(3) Ordering all defendants to pay plaintiff, jointly
and severally, a sum equivalent to 10% of their
outstanding obligation, as litigation expenses and
attorney's fees.
On the cross-claim, ordering cross-defendants
Joaquin V. Gozun, Jr., and Reinsurance Company
of the Orient, Inc., to pay back, jointly and
severally, the cross-claimant Tiongco whatever
amount is paid by the latter to plaintiff in
accordance with the judgment in this case, and, in
case defendant Reinsurance Company of the
Orient, Inc., pay[s] the claim of plaintiff, ordering
cross-defendants Joaquin V. Gozun, Jr., and Maria
Nieves Toledo-Gozun to pay cross-claimant
Reinsurance Company of the Orient, Inc.,
whatever amount or amounts the latter would pay
under its surety bond, RICO Bond No. 105/63, to
plaintiff, plus interest thereon at the rate of 12%
per annum, computed from the date of such
payment to the date when reimbursement is fully
effected by cross-defendants; to pay cross-
claimant an additional sum equivalent to 10% of
whatever amount or amounts cross-claimant
would pay to plaintiff, by way of attorney's fees and
expenses of litigation. Upon failure of cross-
defendant[s] to fully reimburse to cross-claimant
whatever amount or amounts might have been
paid under its surety bond, the usual decree of
foreclosure shall issue for the sale at public
auction of the two parcels of land described in the
agreement of counter-indemnity with mortgage
and/or pledge (Exhibit "3 RICO"), and for the
disposition of the proceeds thereon in accordance
with the said agreement.
The cross-claim of Joaquin V. Gozun, Jr., is
dismissed for lack of merit.
The counterclaim of defendant Gaudioso M.
Tiongco is dismissed in view of the result.2
A motion for reconsideration was filed by petitioner
Reinsurance, on the grounds, among others, that: (a) its
liability, if any, is based exclusively on its surety bond; (b) it
is a stranger to the financing and servicing agreement
between Factors and respondent Tiongco; and (c) its
liability, if any, cannot be increased or extended. The trial
court resolved this motion by amending its decision:
Hence, paragraph (2) of the dispositive part of the
decision is hereby amended to read as follows:
(2) Ordering defendant spouses Joaquin
V. Gozun, Jr. and Maria Nieves Toledo-
Gozun and defendant Reinsurance
Civpro Rule 39-43 2
 Company of the Orient, Inc. to pay
plaintiff, jointly and severally, the sum
of P30,000.00,plus interest thereon at
10% per annum from November 30,
1964, until complete payment is made.
xxx xxx xxx
WHEREFORE, with the correction made, which
hereby amends the dispositive part of the decision
rendered in this case, the motion for
reconsideration and new trial of [petitioner] is
DENIED.
On appeal, the Court of Appeals, in CA-G.R. No. 47991-R,
affirmed the decision of the lower court. The decision
became final and a Writ of Execution dated 25 August 1980
was issued.
On 5 September 1980, petitioner Reinsurance paid to
Factors the sum of P84,980.00 broken down as follows:
(1) Principal of Promissory Note P30,000.00
(2) 10% interest per annum
from November 30, 1963 47,250.00
(3) Litigation expenses and
attorney's fees under par. 3 7,725.00
(4) Filing fee 5.00
TOTAL P84,980.00
Respondent Tiongco on 24 October 1980 –– which date
was well within the 60-day lifetime of the Writ of Execution
–– paid to Factors the sum of P221,329.19. On the same
date, however, the lower court issued a Notice of
Garnishment addressed to the Rizal Commercial Banking
Corporation ("RCBC") for:
the amount of THIRTY-SIX THOUSAND TWO
HUNDRED SIXTY-NINE AND NINETY-NINE
CENTAVOS (P36,269.99), plus 1 % collection fee
and 3.5% per month penalty charges from
November 30, 1964 and other charges in
accordance with the terms of the Writ of Execution
dated August 25, 1980 as attached —
to be obtained from the account of petitioner Reinsurance
with the bank, in favor of respondent Tiongco (as the latter
had already paid Factors). The trial court also issued a
notice of levy upon personal property of petitioner.
Petitioner Reinsurance moved to set aside the notice of
levy and the notice of garnishment upon the ground that its
liability under the decision was only for P30,000.00, plus
interest at 10% per annum from 30 November 1964 until
the amount was paid; and that this amount, which with
accumulated interest had reached P84,980.00 as of 8
September 1980, had already been paid to Factors on that
date.
On 26 February 1981, the trial court, this time through then
Judge Fidel Purisima, denied petitioner's motion, ruling that
the decision, to enforce which a Writ of Execution had been
issued in 21 August 1980, which decision ordered petitioner
Reinsurance and the spouses Gozun to pay back, jointly
and severally, respondent Tiongco "whatever amount is
paid by the latter to [Factors] in accordance with the
judgment of this case" –– had become final. Accordingly,
the RCBC issued a managers check in the amount of
P280,367.02 to respondent Tiongco and debited
Reinsurance's account for the same amount.
Petitioner thereafter filed with the Court of Appeals,
docketed as C.A.-G.R. No. SP-12108, a Petition
for Certiorari to annul the Writ of Execution and the
proceedings resulting in garnishment, and to compel
respondent Tiongco to return to petitioner the amount of
P280,367.02. Petitioner contended that its liability under the
amended decision of the lower court was only for
P84,980.00 –– the amount of the promissory note which it
had secured, plus interest and costs of suit; and that it
could not be made to assume the obligation of respondent
Tiongco to Factors under the financing and servicing
agreement, which with accrued interest and other charges
as of 9 March 1981 had reached the amount of
P280,367.02, since it. (Reinsurance) was not a party
thereto.
By a Decision dated 7 May 1982, the Court of Appeals,
speaking through Mendoza, V.J., denied the petition,
holding that it had, in C.A.-G.R. No. 47991-R, earlier
affirmed the modified judgment of the lower court in toto,
which judgment had already rejected petitioner's contention:
The judgment, subject of the writ of execution,
carefully distinguishes between the liability of
[petitioner] and its liability to Tiongco. As far as
Factors is concerned, [petitioner's] liability is for
P36,269.99 plus a collection fee of 1% a month
and penalty of 3.5% a month of the amount
outstanding.
Nor can [petitioner] elect to pay Factors the lesser
amount in order to avoid payment of the greater
sum to Tiongco. [Petitioner's] liability to Factors
arises only "in default of Tiongco." If Tiongco does
not default in the payment of his liability,
[petitioner's] liability to Tiongco arises, and it is for
"whatever amount is paid by the latter to Factors in
accordance with the judgment in this case."
xxx xxx xxx
However, except for the amendment of par. (2),
which refers to [petitioner's] contingent liability to
Factors, the trial court refused to reconsider the
other parts of the decision. For its part, when the
lower court's decision was appealed to it, this
Court rejected [petitioner's] contention that the
promissory note had been novated by the
execution of the financing and servicing
agreement, even as it affirmed the judgment of the
lower court in toto.
[Petitioner] did not appeal any further.
Consequently, it cannot now urge the same
arguments without violating the principle of res
judicata.
In the second place, the contention that to make
[petitioner] liable for "whatever amount is paid by
(Tiongco) to (Factors)" as the judgment directs
would be to make [petitioner] liable under the
financing and servicing agreement to which
[petitioner] is not a party is not correct. It is true
that there is a difference in the amount which
Tiongco is required to pay to Factors and that
which [petitioner] is required to pay to the same
party, that is, P36,269.99 in the case of Tiongco
P30,000.00, in the case of [petitioner]. The
difference is due to the fact that Tiongco's
Civpro Rule 39-43 3
 obligation to Factors under the financing and
servicing agreement includes not only the
discounting of the note at the rate of 29.75% per
month but also the payment of a collection fee of
1% per month and a penalty of 3.5% per month on
all outstanding amounts in the event the note is
not paid within 72 hours from the date of its
maturity on October 17, 1964.
While it is true that Gozun and [petitioner] are not
parties to the financing and servicing agreement, it
is equally true that were it not for the failure of
Gozun to pay the note upon its maturity, Tiongco
would not have been liable for the discount rate,
the collection fee, and the penalty to Factors. As
very well pointed out by Tiongco, the difference
represents damages suffered by Tiongco as a
result of Gozun's and [petitioner's] failure to pay
the amount of the note on time.3
Its motion for reconsideration having been denied,
petitioner came to this Court on the present Petition for
Review.
Petitioner Reinsurance asks us to hold that both Judge L.B.
Reyes of the trial court and the Court of Appeals in C.A.-
G.R. No. 47991-R erred in holding petitioner Reinsurance
liable beyond the terms and conditions found in the
promissory note of 24 April 1963 executed by Mr. Gozun
and on which Reinsurance became liable as surety
pursuant to the Surety Bond it had issued in favor of
respondent Tiongco.
The fundamental difficulty with Reinsurance's position is, of
course, that the decision of Judge Reyes became final and
executory upon being affirmed by the Court of Appeals in
CA-G.R. No. 47991-R. Neither Gozun nor Reinsurance filed
a Petition for Review to this Court after the Court of Appeals
affirmed the decision of Judge Reyes back in August 1980.
It is true that even a judgment which has become final and
executory may be clarified under certain
circumstances.1âwphi1The dispositive portion of the
judgment may, for instance, contain an error clearly clerical
in nature (perhaps best illustrated by an error in arithmetical
computation) or an ambiguity arising from inadvertent
omission, which error may be rectified or ambiguity clarified
and the omission supplied by reference primarily to the
body of the decision itself. Supplementary reference to the
pleadings previously filed in the case may also be resorted
to by way of corroboration of the existence of the error or of
the ambiguity in the dispositive part of the judgment.
In Locsin, et al. v. Paredes, et al.4 this Court allowed a
judgment which had become final and executory to be
clarified by supplying a word which had been inadvertently
omitted and which, when supplied, in effect changed the
literal import of the original phraseology:
. . . it clearly appears from the allegations of the
complaint, the promissory note reproduced therein
and made a part thereof, the prayer and the
conclusions of fact and law contained in the
decision of the respondent judge, that the
obligation contracted by the petitioners is joint and
several and that the parties as well as the trial
judge so understood it. Under the juridical rule that
the judgment should be in accordance with the
allegations, the evidence and the conclusions of
fact and law, the dispositive part of the judgment
under consideration should have ordered that the
debt be paid severally, and in omitting the word or
adverb "severally" inadvertently, said judgment
became ambiguous. This ambiguity may be
clarified at any time after the decision is rendered
and even after it had become final (34 Corpus
Juris, 235, 326). The respondent judge did not,
therefore, exceed his jurisdiction in clarifying the
dispositive part of the judgment by supplying the
omission.5 (Emphasis supplied)
In Filipino Legion Corporation vs. Court of appeals, et.
al.,6 the applicable principle was set out in the following
terms:
[W]here there is ambiguity caused by an omission
or mistake in the dispositive portion of a decision,
the court may clarify such ambiguity by an
amendment even after the judgment had become
final, and for this purpose it may resort to the
pleadings filed by the parties, the court's findings
of facts and conclusions of law as expressed in the
body of the decision.7 (Emphasis supplied)
In Republic Surety and Insurance Company, Inc. v.
Intermediate Appellate Court,8 the Court applying the above
doctrine said:
. . . We clarify, in other words, what we did affirm.
What is involved here is not what is ordinarily
regarded as a clerical error in the dispositive part
of the decision of the Court of First Instance, which
type of error is perhaps best typified by an error in
arithmetical computation. At the same time, what is
involved here is not a correction of an erroneous
judgment or dispositve portion of a judgment.
What we believe is involved here is in the nature of
an inadvertent omission on the Part of the Court of
First Instance (which should have been noticed by
private respondent's counsel who had prepared
the complaint), of what might be described as a
logical follow-through of something set forth both
in the body of the decision and in the dispositive
portion thereof: the inevitable follow-through, or
translation into, operational or behavioral terms, of
the annulment of the Deed of Sale with
Assumption of Mortgage, from which petitioners'
title or claim of title embodied in TCT 133153
flow.9 (Emphasis supplied)
The question which arises, therefore, is whether or not the
doctrine in Locsin, Filipino Legion and Republic Surety is
applicable in the instant case. A careful review of the Reyes'
decision and of the Court of Appeals' decision in C.A.-G.R.
No. 47991-R shows that the Reyes' decision had no
ambiguity or inadvertent omission in its dispositive portion
which may, notwithstanding the finality of that decision,
legitimately be clarified by referring to the body of the
Reyes' decision. The dispositive portion of the Reyes'
decision had two parts: Part I and Part II.
Part I dealt with the claims of Factors asserted against
respondent Tiongco and against the Gozun spouses and
petitioner Reinsurance in the following manner ––
(a) Claims of Factors against respondent Tiongco:
(1) Ordering defendant Gaudioso M. Tiongco to
pay plaintiff [Factors] the sum of P36,269.99,
under the terms and conditions of the financing
and servicing agreement, and the collection fee of
1% and penalty of 3.5% per month on the
accounts receivable as of November 30, 1964; or,
in default of said defendant —
Civpro Rule 39-43 4
(b) Claims of Factors against the Gozun spouses and
petitioner Reinsurance:
(2) Ordering defendant spouses Joaquin V.
Gozun, Jr., and Maria Nieves Toledo-Gozun and
defendant Reinsurance Company of the Orient,
Inc. to pay plaintiff, jointly and severally, the sum of
P34,866.96, plus interest thereon at 10% per
annum from November 30, 1964, until complete
payment is made; (Emphasis supplied)
Part II dealt with (a) the cross-claim asserted by respondent
Tiongco against the Gozun spouses and petitioner
Reinsurance, as well as (b) the cross-claim asserted by
Reinsurance against the Gozun spouses in the following
manner.
On the cross-claim, ordering cross-defendants
Joaquin V. Gozun, Jr., and Reinsurance Company
of the Orient, Inc., to pay back, jointly and
severally, the cross-claimant Tiongco whatever
amount is paid by the latter to plaintiff in
accordance with the judgment in this case, and, in
case defendant Reinsurance Company of the
Orient, Inc., pay[s] the claim of plaintiff, ordering
cross-defendants Joaquin V. Gozun, Jr., and Maria
Nieves Toledo-Gozun to pay cross-claimant
Reinsurance Company of the Orient, Inc.,
whatever amount or amounts the latter would pay
under its surety bond, RICO Bond No. 105/63, to
plaintiff, plus interest thereon at the rate of 12%
per annum, computed from the date of such
payment to the date when reimbursement is fully
effected by cross-defendants; to pay cross-
claimant an additional sum equivalent to 10% of
whatever amount or amounts cross-claimant
would pay to plaintiff, by way of attorney's fees and
expenses of litigation. Upon failure of cross-
defendant[s] to fully reimburse to cross-claimant
whatever amount or amounts might have been
paid under its surety bond, the usual decree of
foreclosure shall issue for the sale at public
auction of the two parcels of land described in the
agreement of counter-indemnity with mortgage
and/or pledge (Exhibit "3-RICO"), and for the
disposition of the proceeds thereon in accordance
with the said agreement.
xxx xxx xxx
(Emphasis supplied)
It will be noted that in Part II of the dispositive portion,
Judge Reyes ordered the Gozun spouses and petitioner
Reinsurance "to pay back jointly and severally, the cross-
claimant Tiongco whatever amount is paid by the latter to
plaintiff [Factors] in accordance with the judgment in this
case, . . .". Complying with Paragraph (1) of Part I of the
dispositive portion of the Reyes' decision, respondent
Tiongco paid Factors the amount of P221,329.19, and it is
this amount (with interest computed up to 26 February
1981) which Reinsurance was compelled to pay to
respondent Tiongco and which Reinsurance now seeks to
recover. There was, in other words, literal compliance with
the wording of Part II of the dispositive portion of the Reyes'
decision.
Viewed in the light most favorable to it, Reinsurance in
effect urges that there is contradiction between Part I
dealing with claims of Factors and Part II default with cross-
claims of Tiongco and Reinsurance. Unfortunately, in itself,
no contradiction is apparent in the dispositive portion of the
decision. Part II of the decision ordered the Gozun spouses
and Reinsurance to reimburse Tiongco whatever Tiongco
paid under the judgment; and Tiongco paid under Part I
Paragraph (1) as he was ordered to do by the decision.
We do not mean to suggest that there was no error in Part II
of the dispositive portion of the Reyes' decision; indeed it is
quite clear to the court that Part II was vitiated by error. But
that error became irremediable when the Reyes' decision
became final.
That error, most succinctly described, lies in the failure of
the trial court and of the Court of Appeals to take account of
the provisions of Article 2209 of the Civil Code which
provides as follows:
Art. 2209. If the obligation consists in the payment
of a sum of money, and the debtor incurs in delay,
the indemnity for damages, there being no
stipulation to the contrary, shall be the payment of
the interest agreed upon, and in the absence of
stipulation, the legal interest, which is six per
cent per annum.
Both the Gozun spouses and Reinsurance were liable
under the terms and conditions of the promissory note
which stipulated payment of the principal amount of
P30,000.00 plus interest at the rate of 10% per annum. By
operation of Article 2209, quoted above, in relation to the
promissory note, the measure of damages to which the
Gozun spouses and Reinsurance could have appropriately
been held to for mora, was not whatever respondent
Tiongco had been compelled to pay to Factors under the
financing and servicing agreement, as Judge Reyes had
decreed in his decision. The appropriate measure of
damages was, rather, simply the payment of
an additional 10% per annumof interest; that is, the Gozun's
should have been held liable only for 10% interest for the
use of the money (from date of execution to date of
payment) or "monetary interest", plus 10% interest as
damages for delay in payment (from date of demand to
date of payment) or "compensatory interest".10 There would
have been no inequity in requiring respondent Tiongco to
bear by himself alone the balance of his liability under his
financing and servicing agreement with Factors. Only
Tiongco was party to that agreement and he alone
benefitted by it: he immediately realized the present value
of the P30,000.00 stipulated in the promissory note instead
of having to wait for maturity of the note.
All the above mentioned notwithstanding, petitioner
Reinsurance is bound by the terms of the Reyes' decision
which constitutes the law of the case, having been rendered
by a court with undisputed jurisdiction, ratione materiae and
jurisdiction ratione personae, even though that decision
was, as a matter of law, incorrect.1âwphi1
To be sure, there is also some inequity implicit in the result
reached here. The Gozun spouses and Reinsurance paid
twice: once to Factors (the amount of P84,980); and again
to respondent Tiongco (the amount of P280,367.02). But as
Mendoza, V. J. in C.A.-G.R. No. SP-12108 said, they have
themselves principally to blame. They allowed the Reyes'
decision to become final; they also paid Factors directly
before respondent Tiongco was in default. They overpaid
Factors; they overpaid Tiongco too. The Gozun's and
Reinsurance had a right of recourse against both Factors
and against Tiongco, but at least as against Tiongco, that
right of recourse has been lost.
The harshness of the result here must be balanced against
the fundamental nature of the public policy involved and to
Civpro Rule 39-43 5
which we must give effect. All litigations must at last come
to an end, however unjust the result of error may appear.
Otherwise, litigation would become even more intolerable
than the wrong and injustice it is designed to correct.
Considering the litigiousness of our people and the volume
of litigation being processed in our judicial system, the
importance of that public policy cannot be over stressed.
For all the foregoing, the Petition for Review is hereby
DENIED and the result (but not necessarily the reasoning)
of the Decision of the Court of Appeals in C.A.-G.R. No. SP-
12108 dated 7 May 1982 and its Resolution dated 23 July
1982 are hereby AFFIRMED. No pronouncement as to
costs.
SO ORDERED.
G.R. No. 187021 January 25, 2012
DOUGLAS F. ANAMA, Petitioner, vs. PHILIPPINE
SAVINGS BANK, SPOUSES SATURNINA BARIA
&TOMAS CO and THE REGISTER OF DEEDS, METRO
MANILA, DISTRICT II, Respondents.
DECISION MENDOZA, J.:
This is a petition for review under Rule 45 assailing the
March 31, 2008 Decision1 of the Court of Appeals (CA) and
its February 27, 2009 Resolution,2 in CA G.R. No. SP-
94771, which affirmed the November 25, 2005 Order of the
Regional Trial Court, Branch 167, Pasig
City (RTC), granting the motion for issuance of a writ of
execution of respondents.
The Facts
The factual and procedural backgrounds of this case were
succinctly recited by the CA in its decision as follows:
Sometime in 1973, the Petitioner, Douglas F. Anama
(Anama), and the Respondent, Philippine Savings Bank
(PSB), entered into a "Contract to Buy," on installment
basis, the real property owned and covered by Transfer
Certificate of Title (TCT) No. 301276 in the latter’s name.
However, Anama defaulted in paying his obligations
thereunder, thus, PSB rescinded the said contract and title
to the property remained with the latter. Subsequently, the
property was sold by PSB to the Spouses Saturnina Baria
and Tomas Co (Co Spouses) who, after paying the
purchase price in full, caused the registration of the same in
their names and were, thus, issued TCT No. 14239.
Resultantly, Anama filed before the Respondent Court a
complaint for declaration of nullity of the deed of sale,
cancellation of transfer certificate of title, and specific
performance with damages against PSB, the Co Spouses,
and the Register of Deeds of Metro Manila, District II.
On August 21, 1991 and after trial on the merits, the
Respondent Court dismissed Anama’s complaint and
upheld the validity of the sale between PSB and the Co
Spouses. Undaunted, Anama appealed, at first, to this
Court, and after failing to obtain a favorable decision, to the
Supreme Court.
On January 29, 2004, the Supreme Court rendered
judgment denying Anama’s petition and sustaining the
validity of the sale between PSB and the Co Spouses. Its
decision became final and executory on July 12, 2004.
Pursuant thereto, the Co Spouses moved for execution,
which was granted by the Respondent Court per its Order,
dated November 25, 2005.
Aggrieved, Anama twice moved for the reconsideration of
the Respondent Court’s November 25, 2005 Order arguing
that the Co Spouses’ motion for execution is fatally
defective. He averred that the Spouses’ motion was pro
forma because it lacked the required affidavit of service and
has a defective notice of hearing, hence, a mere scrap of
paper. The Respondent Court, however, denied Anama’s
motion(s) for reconsideration.
Dissatisfied, the petitioner questioned the RTC Order before
the CA for taking judicial cognizance of the motion for
execution filed by spouses Tomas Co and Saturnina
Baria (Spouses Co) which was (1) not in accord with
Section 4 and Section 15 of the Rules of Court because it
was without a notice of hearing addressed to the parties;
and (2) not in accord with Section 6, Rule 15 in conjunction
with Section 13, Rule 13 of the Rules of Court because it
lacks the mandatory affidavit of service.
On March 31, 2008, the CA rendered a decision dismissing
the petition. It reasoned out, among others, that the issue
on the validity of the deed of sale between respondents,
Philippine Savings Bank (PSB) and the Spouses Co, had
long been laid to rest considering that the January 29, 2004
Decision of this Court became final and executory on July
12, 2004. Hence, execution was already a matter of right on
the part of the respondents and the RTC had the ministerial
duty to issue a writ of execution enforcing a final and
executory decision.
The CA also stated that although a notice of hearing and
affidavit of service in a motion are mandatory requirements,
the Spouses Co’s motion for execution of a final and
executory judgment could be acted upon by the RTC ex
parte, and therefore, excused from the mandatory
requirements of Sections 4, 5 and 6 of Rule 15 of the Rules
of Court.
The CA was of the view that petitioner was not denied due
process because he was properly notified of the motion for
execution of the Spouses Co. It stated that the act of the
Spouses Co in resorting to personal delivery in serving their
motion for execution did not render the motion pro forma. It
refused to apply a rigid application of the rules because it
would result in a manifest failure of justice considering that
petitioner’s position was nothing but an obvious dilatory
tactic designed to prevent the final disposition of Civil Case
No. 44940.
Not satisfied with the CA’s unfavorable disposition,
petitioner filed this petition praying for the reversal thereof
presenting the following
ARGUMENTS:
THE RESPONDENT APPELLATE COURT DID NOT TAKE
INTO CONSIDERATION THE CLEAR TEACHING OF THE
HONORABLE COURT WITH REGARD TO THE
REQUISITE NOTICE OF HEARING – IT SHOULD BE
ADDRESSED TO THE PARTIES NOT TO THE CLERK OF
COURT, THE LATEST (THEN) BEING GARCIA V.
SANDIGANBAYAN, G.R. NO. 167103, AUGUST 31, 2006,
500 SCRA 361; DE JESUS V. JUDGE DILAG, A.M. NO.
RTJ-05-1921, SEPTEMBER 30, 2005, 471 SCRA 176;
LAND BANK OF THE PHILIPPINES V. NATIVIDAD, G.R.
NO. 127198, MAY 16, 2005, 458 SCRA 441; ATTY. JULIUS
NERI V. JUDGE JESUS S. DE LA PEÑA, A.M NO. RTJ-05-
Civpro Rule 39-43 6
1896, APRIL 29, 2005, 457 SCRA 538; AND ALVAREZ V.
DIAZ, A.M. NO. MTJ-00-1283, MARCH 3, 2004, 424 SCRA
213;
THE RESPONDENT APPELLATE COURT DID NOT TAKE
INTO CONSIDERATION THE CLEAR TEACHING OF THE
HONORABLE COURT WITH REGARD TO THE
REQUISITE AFFIDAVIT OF SERVICE – IT SHOULD BE IN
THE PROPER FORM AS PRESCRIBED IN THE RULES
AND IT SHOULD BE ATTACHED TO THE MOTION, THE
LATEST (THEN) BEING ELLO V. COURT OF APPEALS,
G.R. NO. 141255, JUNE 21, 2005, 460 SCRA 406; LOPEZ
DELA ROSA DEVELOPMENT CORPORATION V. COURT
OF APPEALS, G.R. NO. 148470, APRIL 29, 2005, 457
SCRA 614; ALVAREZ V. DIAZ, A.M. NO. MTJ-00-1283,
MARCH 3, 2004, 424 SCRA 213; EL REYNO HOMES, INC.
V. ERNESTO ONG, 397 SCRA 563; CRUZ V. COURT OF
APPEALS, 388 SCRA 72, 80-81; AND MERIS V. OFILADA,
293 SCRA 606;
THE RESPONDENT APPELLATE COURT DID NOT TAKE
APPROPRIATE ACTION ON THE "FRAUD
PERPETRATED UPON THE COURT" BY RESPONDENT-
SPOUSES AND THEIR LEAD COUNSEL.
SINCE THE RESPONDENT APPELLATE COURT
REFUSED TO TAKE INTO CONSIDERATION THE
RESPONDENT BANK’S ACTION – THAT OF:
ENGAGING IN A DAGDAG-BAWAS (LEGALLY
"INTERCALATION") OPERATION OF A PORTION OF THE
TRANSCRIPT OF STENOGRAPHIC NOTES (TSN),
OCTOBER 12, 1984, OF THE REGIONAL TRIAL COURT,
BRANCH 167, PASIG CITY, IN CIVIL CASE NO. 44940,
PAGES 54-55, AND
PRESENTING IT IN ITS APPELLEE’S BRIEF (IN THE
OWNERSHIP CASE, CA-G.R. NO. CV-42663, LIKEWISE,
BEFORE THE RESPONDENT APPELLATE COURT) BY
CITING IT ON PAGE 14 OF SAID BRIEF, AS IMPLIEDLY
COMING FROM THE TSN OF THE TRIAL COURT.
THINKING THAT THEIR FALSIFIED APPELLEE’S BRIEF
WAS MATERIAL IN SAID CA-G.R. NO. CV-42663.
IT COULD NOT RULE THAT THE SAME HAS BROUGHT
ABOUT A CRUCIAL MATERIAL CHANGE IN THE
SITUATION OF THE PARTIES WHICH MAKES
EXECUTION INEQUITABLE (PUNCIA V. GERONA, 252
SCRA 424, 430-431), OR, IN THE WORDS OF
DEVELOPMENT BANK OF RIZAL V. CA, G.R. NO. 75964,
DECEMBER 1, 1987, 156 SCRA 84, 90, "THERE EXISTS A
COMPELLING REASON FOR STAYING THE EXECUTION
OF JUDGMENT."
Basically, petitioner argues that the respondents failed to
substantially comply with the rule on notice and hearing
when they filed their motion for the issuance of a writ of
execution with the RTC. He claims that the notice of hearing
in the motion for execution filed by the Spouses Co was a
mere scrap of paper because it was addressed to the Clerk
of Court and not to the parties. Thus, the motion for
execution did not contain the required proof of service to
the adverse party. He adds that the Spouses Co and their
counsel deliberately "misserved" the copy of their motion for
execution, thus, committing fraud upon the trial court.
Additionally, he claims that PSB falsified its appellee’s brief
by engaging in a "dagdag-bawas" ("intercalation") operation
in pages 54 to 55 of the TSN, dated October 12, 1984.
Position of the Spouses Co
The Spouses Co counter that the petition should be
dismissed outright for raising both questions of facts and
law in violation of Section 1, Rule 45 of the Rules of Court.
The Spouses Co aver that petitioner attempts to resurrect
the issue that PSB cheated him in their transaction and that
the RTC committed a "dagdag-bawas." According to the
Spouses Co, these issues had long been threshed out by
this Court.
At any rate, they assert that they have substantially
complied with the requirements of notice and hearing
provided under Sections 4 and 5 of Rule 15 and Section 13,
Rule 13 of the Rules of Court. Contrary to petitioner’s
allegations, a copy of the motion for the issuance of a writ
of execution was given to petitioner through his principal
counsel, the Quasha Law Offices. At that time, the said law
office had not formally withdrawn its appearance as counsel
for petitioner. Spouses Co argue that what they sought to
be executed was the final judgment of the RTC duly
affirmed by the CA and this Court, thus, putting the issues
on the merits to rest. The issuance of a writ of execution
then becomes a matter of right and the court’s duty to issue
the writ becomes ministerial.
Position of respondent PSB
PSB argues that the decision rendered by the RTC in Civil
Case No. 44940 entitled "Douglas F. Anama v. Philippine
Savings Bank, et. al."3 had long become final and executory
as shown by the Entry of Judgment made by the Court on
July 12, 2004. The finality of the said decision entitles the
respondents, by law, to the issuance of a writ of execution.
PSB laments that petitioner relies more on technicalities to
frustrate the ends of justice and to delay the enforcement of
a final and executory decision.
As to the principal issue, PSB points out that the notice of
hearing appended to the motion for execution filed by the
Spouses Co substantially complied with the requirements of
the Rules since petitioner’s then counsel of record was duly
notified and furnished a copy of the questioned motion for
execution. Also, the motion for execution filed by the
Spouses Co was served upon and personally received by
said counsel.
The Court’s Ruling
The Court agrees with the Spouses Co that petitioner’s
allegations on the "dagdag-bawas operation of the
Transcript of Stenographic Notes," the "fraud perpetuated
upon the Court by said spouses and their lead counsel," the
"ownership," and "falsification" had long been laid to rest in
the case of "Douglas F. Anama v. Philippine Savings Bank,
et. al."4 For said reason, the Court cannot review those final
pronouncements. To do so would violate the rules as it
would open a final judgment to another reconsideration
which is a prohibited procedure.
On the subject procedural question, the Court finds no
compelling reason to stay the execution of the judgment
because the Spouses Co complied with the notice and
hearing requirements under Sections 4, 5 and 6 of Rule 15.
Said sections, as amended, provide:
SECTION 4. Hearing of motion. – Except for motions which
the court may act upon without prejudicing the rights of the
adverse party, every written motion shall be set for hearing
by the applicant.
Civpro Rule 39-43 7
Every written motion required to be heard and the notice of
the hearing thereof shall be served in such a manner as to
ensure its receipt by the other party at least three (3) days
before the date of hearing, unless the court for good cause
sets the hearing on shorter notice.
SECTION 5. Notice of hearing. – The notice of hearing shall
be addressed to all parties concerned, and shall specify the
time and date of the hearing which must not be later than
ten (10) days after the filing of the motion.
SECTION 6. Proof of service necessary. – No written
motion set for hearing shall be acted upon by the court
without proof of service thereof.
Pertinently, Section 13 of Rule 13 of the 1997 Rules of Civil
Procedure, as amended, provides:
SEC. 13. Proof of service. – Proof of personal service shall
consist of a written admission of the party served, or the
official return of the server, or the affidavit of the party
serving, containing a full statement of the date, place, and
manner of service. If the service is by ordinary mail, proof
thereof shall consist of an affidavit of the person mailing of
facts showing compliance with section 7 of this Rule. If
service is made by registered mail, proof shall be made by
such affidavit and the registry receipt issued by the mailing
office. The registry return card shall be filed immediately
upon its receipt by the sender, or in lieu thereof the
unclaimed letter together with the certified or sworn copy of
the notice given by the postmaster to the addressee.
Elementary is the rule that every motion must contain the
mandatory requirements of notice and hearing and that
there must be proof of service thereof. The Court has
consistently held that a motion that fails to comply with the
above requirements is considered a worthless piece of
paper which should not be acted upon. The rule, however,
is not absolute. There are motions that can be acted upon
by the court ex parte if these would not cause prejudice to
the other party. They are not strictly covered by the rigid
requirement of the rules on notice and hearing of motions.
The motion for execution of the Spouses Co is such kind of
motion. It cannot be denied that the judgment sought to be
executed in this case had already become final and
executory. As such, the Spouses Co have every right to the
issuance of a writ of execution and the RTC has the
ministerial duty to enforce the same. This right on the part
of the Spouses Co and duty on the part of the RTC are
based on Section 1 and Section 2 of Rule 39 of the 1997
Revised Rules of Civil Procedure provides, as follows:
Section 1. Execution upon judgments or final orders. –
Execution shall issue as a matter of right, on motion, upon a
judgment or order that disposes of the action or proceeding
upon the expiration of the period to appeal therefrom if no
appeal has been duly perfected.
If the appeal has been duly perfected and finally resolved,
the execution may forthwith be applied for in the court of
origin, on motion of the judgment obligee, submitting
therewith certified true copies of the judgment or judgments
or final order or orders sought to be enforced and of the
entry thereof, with notice to the adverse party.
The appellate court may, on motion in the same case, when
the interest of justice so requires, direct the court of origin to
issue the writ of execution.
SEC. 2. Discretionary execution.—
(a) Execution of a judgment or final order pending appeal.—
On motion of the prevailing party with notice to the
adverse party filed in the trial court while it has jurisdiction
over the case and is in possession of either the original
record or the record on appeal, as the case may be, at the
time of the filing of such motion, said court may, in its
discretion, order execution of a judgment or final order even
before the expiration of the period to appeal.
After the trial court has lost jurisdiction, the motion for
execution pending appeal may be filed in the appellate
court.
Discretionary execution may only issue upon good reasons
to be stated in a special order after due hearing.
(b) Execution of several, separate or partial judgments.—A
several, separate or partial judgment may be executed
under the same terms and conditions as execution of a
judgment or final order pending appeal. (2a) [Emphases
and underscoring supplied]
As can be gleaned therefrom, under Paragraph 1 of Section
1 of Rule 39 of the 1997 Revised Rules of Civil Procedure,
the Spouses Co can have their motion for execution
executed as a matter of right without the needed notice and
hearing requirement to petitioner. This is in contrast to the
provision of Paragraph 2 of Section 1 and Section 2 where
there must be notice to the adverse party. In the case of Far
Eastern Surety and Insurance Company, Inc. v. Virginia D.
Vda. De Hernandez,5 it was written:
It is evident that Section 1 of Rule 39 of the Revised
Rules of Court does not prescribe that a copy of the
motion for the execution of a final and executory
judgment be served on the defeated party, like litigated
motions such as a motion to dismiss (Section 3, Rule 16),
or motion for new trial (Section 2, Rule 37), or a motion for
execution of judgment pending appeal (Section 2, Rule 39),
in all of which instances a written notice thereof is required
to be served by the movant on the adverse party in order to
afford the latter an opportunity to resist the application.
It is not disputed that the judgment sought to be executed in
the case at bar had already become final and executory. It
is fundamental that the prevailing party in a litigation may, at
any time within five (5) years after the entry thereof, have a
writ of execution issued for its enforcement and the court
not only has the power and authority to order its execution
but it is its ministerial duty to do so. It has also been held
that the court cannot refuse to issue a writ of execution
upon a final and executory judgment, or quash it, or order
its stay, for, as a general rule, the parties will not be
allowed, after final judgment, to object to the execution by
raising new issues of fact or of law, except when there had
been a change in the situation of the parties which makes
such execution inequitable or when it appears that the
controversy has ever been submitted to the judgment of the
court; or when it appears that the writ of execution has been
improvidently issued, or that it is defective in substance, or
is issued against the wrong party, or that judgment debt has
been paid or otherwise satisfied; or when the writ has been
issued without authority. Defendant-appellant has not shown
that she falls in any of the situations afore-mentioned.
Ordinarily, an order of execution of a final judgment is not
appealable. Otherwise, as was said by this Court in Molina
v. de la Riva,a case could never end. Once a court renders
a final judgment, all the issues between or among the
parties before it are deemed resolved and its judicial
function as regards any matter related to the controversy
litigated comes to an end. The execution of its judgment is
purely a ministerial phase of adjudication. The nature of its
duty to see to it that the claim of the prevailing party is fully
Civpro Rule 39-43 8
satisfied from the properties of the loser is generally
ministerial.
In Pamintuan v. Muñoz, We ruled that once a judgment
becomes final and executory, the prevailing party can
have it executed as a matter of right, and the judgment
debtor need not be given advance notice of the
application for execution.
Also of the same stature is the rule that once a judgment
becomes final and executory, the prevailing party can have
it executed as a matter of right and the granting of
execution becomes a ministerial duty of the court.
Otherwise stated, once sought by the prevailing party,
execution of a final judgment will just follow as a matter of
course. Hence, the judgment debtor need not be given
advance notice of the application for execution nor he
afforded prior hearing.
Absence of such advance notice to the judgment debtor
does not constitute an infringement of the constitutional
guarantee of due process.
However, the established rules of our system of
jurisprudence do not require that a defendant who has been
granted an opportunity to be heard and has had his day in
court should, after a judgment has been rendered against
him, have a further notice and hearing before supplemental
proceedings are taken to reach his property in satisfaction
of the judgment. Thus, in the absence of a statutory
requirement, it is not essential that he be given notice
before the issuance of an execution against his tangible
property; after the rendition of the judgment he must take
"notice of what will follow," no further notice being
"necessary to advance justice." [Emphases and
underscoring supplied]
Likewise, in the case of Leonardo Lim De Mesa v. Hon.
Court of Appeals,6 it was stated:
In the present case, the decision ordering partition and the
rendition of accounting had already become final and
executory. The execution thereof thus became a matter of
right on the part of the plaintiffs, herein private respondents,
and is a mandatory and ministerial duty on the part of the
court. Once a judgment becomes final and executory,
the prevailing party can have it executed as a matter of
right, and the judgment debtor need not be given
advance notice of the application for execution nor be
afforded prior hearings thereon.
On the bases of the foregoing considerations, therefore, the
Court of Appeals acted correctly in holding that the failure to
serve a copy of the motion for execution on petitioner is not
a fatal defect. In fact, there was no necessity for such
service. [Emphases and underscoring supplied]
At any rate, it is not true that the petitioner was not notified
of the motion for execution of the Spouses Co. The records
clearly show that the motion for execution was duly served
upon, and received by, petitioner’s counsel-of-record, the
Quasha Ancheta Pena Nolasco Law Offices, as evidenced
by a "signed stamped received mark" appearing on said
pleading.7 The records are bereft of proof showing any
written denial from petitioner’s counsel of its valid receipt on
behalf of its client. Neither is there proof that the Quasha
Ancheta Pena Nolasco Law Offices has formally withdrawn
its appearance as petitioner’s counsel-of-record.
Considering that there is enough proof shown on record of
personal delivery in serving the subject motion for
execution, there was a valid compliance with the Rules,
thus, no persuasive reason to stay the execution of the
subject final and executory judgment.
Moreover, this Court takes note that petitioner was
particularly silent on the ruling of the CA that he was
notified, through his counsel, of the motion for execution of
the Spouses Co when he filed a motion for reconsideration
of the RTC’s order dated June 28, 2005, holding in
abeyance said motion pending the resolution of petitioner’s
pleading filed before this Court. He did not dispute the
ruling of the CA either that the alleged defect in the
Spouses Co’s motion was cured when his new counsel was
served a copy of said motion for reconsideration of the
RTC’s June 28, 2005 Order.8
The three-day notice rule is not absolute. A liberal
construction of the procedural rules is proper where the
lapse in the literal observance of a rule of procedure has
not prejudiced the adverse party and has not deprived the
court of its authority. Indeed, Section 6, Rule 1 of the Rules
of Court provides that the Rules should be liberally
construed in order to promote their objective of securing a
just, speedy and inexpensive disposition of every action
and proceeding. Rules of procedure are tools designed to
facilitate the attainment of justice, and courts must avoid
their strict and rigid application which would result in
technicalities that tend to frustrate rather than promote
substantial justice.
In Somera Vda. De Navarro v. Navarro, the Court held that
there was substantial compliance of the rule on notice of
motions even if the first notice was irregular because no
prejudice was caused the adverse party since the motion
was not considered and resolved until after several
postponements of which the parties were duly notified.
Likewise, in Jehan Shipping Corporation v. National Food
Authority, the Court held that despite the lack of notice of
hearing in a Motion for Reconsideration, there was
substantial compliance with the requirements of due
process where the adverse party actually had the
opportunity to be heard and had filed pleadings in
opposition to the motion. The Court held:
This Court has indeed held time and again, that under
Sections 4 and 5 of Rule 15 of the Rules of Court,
mandatory is the requirement in a motion, which is
rendered defective by failure to comply with the
requirement. As a rule, a motion without a notice of hearing
is considered pro forma and does not affect the
reglementary period for the appeal or the filing of the
requisite pleading.
As an integral component of the procedural due process,
the three-day notice required by the Rules is not intended
for the benefit of the movant. Rather, the requirement is for
the purpose of avoiding surprises that may be sprung upon
the adverse party, who must be given time to study and
meet the arguments in the motion before a resolution of the
court. Principles of natural justice demand that the right of a
party should not be affected without giving it an opportunity
to be heard.
The test is the presence of opportunity to be heard, as
well as to have time to study the motion and
meaningfully oppose or controvert the grounds upon
which it is based.9 [Emphases and underscoring supplied]
Likewise, in the case of KKK Foundation, Inc. v. Hon.
Adelina Calderon-Bargas,10 this Court stated:
Civpro Rule 39-43 9
Anent the second issue, we have consistently held that a
motion which does not meet the requirements of Sections 4
and 5 of Rule 15 of the Rules of Court is considered a
worthless piece of paper, which the Clerk of Court has no
right to receive and the trial court has no authority to act
upon. Service of a copy of a motion containing a notice of
the time and the place of hearing of that motion is a
mandatory requirement, and the failure of movants to
comply with these requirements renders their motions
fatally defective. However, there are exceptions to the
strict application of this rule. These exceptions are: (1)
where a rigid application will result in a manifest failure or
miscarriage of justice especially if a party successfully
shows that the alleged defect in the questioned final and
executory judgment is not apparent on its face or from the
recitals contained therein; (2) where the interest of
substantial justice will be served; (3) where the resolution of
the motion is addressed solely to the sound and judicious
discretion of the court; and (4) where the injustice to the
adverse party is not commensurate with the degree of his
thoughtlessness in not complying with the procedure
prescribed.
A notice of hearing is an integral component of procedural
due process to afford the adverse parties a chance to be
heard before a motion is resolved by the court. Through
such notice, the adverse party is given time to study and
answer the arguments in the motion. Records show that
while Angeles’s Motion for Issuance of Writ of Execution
contained a notice of hearing, it did not particularly state the
date and time of the hearing. However, we still find that
petitioner was not denied procedural due process. Upon
receiving the Motion for Issuance of Writ of Execution, the
trial court issued an Order dated September 9, 2002 giving
petitioner ten (10) days to file its comment. The trial court
ruled on the motion only after the reglementary period to file
comment lapsed. Clearly, petitioner was given time to study
and comment on the motion for which reason, the very
purpose of a notice of hearing had been achieved.
The notice requirement is not a ritual to be followed
blindly.1âwphi1 Procedural due process is not based solely
on a mechanical and literal application that renders any
deviation inexorably fatal. Instead, procedural rules are
liberally construed to promote their objective and to assist in
obtaining a just, speedy and inexpensive determination of
any action and proceeding. [Emphases supplied]
At any rate, it is undisputed that the August 21, 1991 RTC
Decision11 in Civil Case No. 44940 is already final and
executory. Once a judgment becomes final and executory,
all the issues between the parties are deemed resolved and
laid to rest. All that remains is the execution of the decision
which is a matter of right. The prevailing party is entitled to
a writ of execution, the issuance of which is the trial court’s
ministerial duty.12
The Court agrees with the respondents that petitioner
mainly relies on mere technicalities to frustrate the ends of
justice and further delay the execution process and
enforcement of the RTC Decision that has been affirmed by
the CA and this Court. The record shows that the case has
been dragging on for almost 30 years since petitioner filed
an action for annulment of sale in 1982. From the time the
Spouses Co bought the house from PSB in 1978, they have
yet to set foot on the subject house and lot.
To remand the case back to the lower court would further
prolong the agony of the Spouses Co. The Court should not
allow this to happen. The Spouses Co should not be
prevented from enjoying the fruits of the final judgment in
their favor. In another protracted case, the Court wrote:
As a final note, it bears to point out that this case has been
dragging for more than 15 years and the execution of this
Court’s judgment in PEA v. CA has been delayed for almost
ten years now simply because De Leon filed a frivolous
appeal against the RTC’s order of execution based on
arguments that cannot hold water. As a consequence, PEA
is prevented from enjoying the fruits of the final judgment in
its favor. The Court agrees with the Office of the Solicitor
General in its contention that every litigation must come to
an end once a judgment becomes final, executory and
unappealable. Just as a losing party has the right to file an
appeal within the prescribed period, the winning party also
has the correlative right to enjoy the finality of the resolution
of his case by the execution and satisfaction of the
judgment, which is the "life of the law." To frustrate it by
dilatory schemes on the part of the losing party is to
frustrate all the efforts, time and expenditure of the courts. It
is in the interest of justice that this Court should write finis to
this litigation.13
WHEREFORE, the petition is DENIED.
SO ORDERED.
G.R. No. L-59311 January 31, 1985
RADIO COMMUNICATIONS OF THE PHILIPPINES, INC.
(RCPI), petitioner, vs.HON. JAIME M. LANTIN, THE
SHERIFF OF THE COURT OF FIRST INSTANCE OF
QUEZON CITY and RUFUS B. RODRIGUEZ, respondents.
G.R. No. L-59320 January 31, 1985
GLOBE MACKAY CABLE AND RADIO
CORPORATION, petitioner, vs. THE HONORABLE
COURT OF APPEALS, HON. JAIME M. LANTIN, THE
SHERIFF OF THE COURT OF FIRST INSTANCE OF
QUEZON CITY, AND RUFUS B.
RODRIGUEZ, respondents. GUTIERREZ, JR., J.:
In these interrelated petitions for review on certiorari, the
Radio Communications of the Philippines, Inc. (RCPI) and
Globe Mackay Cable and Radio/Corporation (GLOBE)
question the decision of the Court of Appeals, now
Intermediate Appellate Court, which refused to set aside the
orders of the Court of First Instance of Rizal directing
execution pending appeal of an award of P213,148.00
damages in favor of private respondent Rufus B.
Rodriguez.
On September 8, 1978, Rufus B. Rodriguez, as President
of the World Association of Law Students (WALS), sent two
cablegrams overseas through RCPI, one addressed to
Mohammed Elsir Taha in Khartoum, Sudan Socialist Union,
and the other to Diane Merger in Athens, Georgia, United
States. The cablegrams were, in turn, relayed to GLOBE for
transmission to their foreign destinations. The telegram to
Taha advised him of Rodriguez's pending arrival in
Khartoum on September 18, 1978, while the telegram to
Merger advised her of the scheduled WALS conference in
Khartoum. Rodriguez left the Philippines on September 15,
1978. On September 18, 1978, he arrived in Khartoum,
Sudan at 9:30 in the evening. Nobody was at the airport to
meet him. Due to the lateness of the hour, he was forced to
sleep at the airport. He lined up five (5) chairs together and
Civpro Rule 39-43 10
lay down with his luggages near him. Because of the non-
receipt of the cablegram, Taha was not able to meet him.
Worse all preparations for the international conference had
to be cancelled. Furthermore, Fernando Barros, the Vice-
President, arrived the next day from Chile, followed by the
other officers from other countries except Diane Merger, the
organization's secretary. It turned out that the wire sent by
Rodriguez to Merger was delivered to the address on the
message but the person who delivered it was told that the
addressee was no longer staying there. This fact was not
accordingly reported to Rodriguez in Metro Manila. The
undelivered cablegram was not returned by the
correspondent abroad to Globe for disposition in the
Philippines,
On December 8, 1978, Rodriguez filed a complaint for
compensatory damages in the amount of P45,147.00,
moral damages in the amount of P250,000.00,' and
exemplary damages in the amount of P50,000.00 against
RCPI and GLOBE.
On March 17, 1980, the then Presiding Judge Lino L.
Añover of the Court of First Instance of Rizal rendered a
decision, the dispositive portion of which reads as follows:
WHEREFORE, judgment is hereby
rendered ordering the defendants jointly
and severally to pay the plaintiff the total
sum of TWO HUNDRED THIRTEEN
THOUSAND ONE HUNDRED FORTY
EIGHT PESOS (P213,148.00) by way of
damages and to pay the costs of this suit.
The above amount is broken down as follows by the trial
court:
Moral damages consequent to the
humiliation and embarrassment that the
plaintiff suffered under the two causes of
action in the amount of P100,000.00 are
adequate. Exemplary damages under
both counts are fixed reasonably at
P50,000.00. On the actual damages, the
court accepts plaintiff's expenses for the
preparation of the trip at P10,000.00;
plane fare at P20,000.00; stay in transit in
Pakistan at P5,000.00; his hotel bills in
Khartoum at P4,000.00; his meals in
Khartoum at P4,000.00 and the
telegraphic toll at P78.00. The court
refuses the sum spent for the dinner that
he allegedly tendered as not established
by sufficient proof.
With respect to the telegram sent to
Diane Merger, the court finds that the
actual damages amount to P70.00
representing the cost of the cablegram.
As for attorney's fees, the court finds that
the amount of P20,000.00 including
litigation of expenses are reasonable.
On May 26, 1980, Rodriguez filed a "Motion for Execution
Before Expiration of Time to Appeal" relying on Rule 39,
Section 2 of the Revised Rules of Court alleging that the
appeal is clearly dilatory and that the lapse of time would
make the ultimate judgment illusory and ineffective. An
opposition to the motion was filed by RCPI on June 3, 1980
and by GLOBE on November 18,1980.
On January 21, 1981, the respondent court of first instance
granted the said motion in an order which reads as follows:
Upon consideration of the Motion for
execution pending appeal, the opposition
thereto and the arguments in open court
by the parties, and finding that:
a) the appeal was for the purpose of
delay, there being breach of contract, and
defendants' evidence being weak or
feeble;
b) plaintiff is willing to put up a bond in the
amount of P213,148.00 to answer for
damages if the decision is reversed on
appeal
the Court grants the motion. Let writ of
execution pending appeal be issued upon
the filing of a bond by plaintiff in the sum
of P213,148.00. Said bond should be
filed within ten (10) days from receipt of
this order.
On February 5, 1981, the same court issued another order
which reads as follows:
The bond pursuant to the order of
January 21, 1981, is approved. Let writ of
execution of judgment pending appeal be
issued forthwith.
On February 10, 1981, GLOBE filed a
motion for reconsideration of the above
order and expressed its desire to put up a
supersedeas bond to stay immediate
execution. This motion was denied in an
order dated February 17, 1981. Even
before the issuance of this order denying
petitioner's motion for reconsideration,
the respondent Sheriff, on February 13,
1981, insisted on levying on the funds
and assets of petitioners RCPI and
GLOBE, prompting them to file an
"Urgent Motion to Recall Writ of
Execution. This urgent motion was
likewise denied.
On February 17, 1981, RCPI and GLOBE filed with the
Court of Appeals a petition for certiorari, mandamus, and
prohibition with a prayer for the issuance of a writ of
preliminary injunction. On February 20, 1981, the Court of
Appeals issued a restraining order enjoining the lower court
from further proceeding with the civil case and from
enforcing the writ of execution until further orders. On
November 10, 1981, the Court of Appeals rendered a
decision. The dispositive portion reads as follows:
WHEREFORE, the herein petition is
hereby dismissed for lack of merit and the
questioned orders of January 21, 1981,
February 5, 1981 and February 20, 1981
are hereby declared valid and legal.
Consequently, the restraining order
issued earlier on February 2, 1981 is
hereby lifted.
With costs against the petitioners.
Within fifteen (15) days from receipt of the abovequoted
decision, the petitioners filed with the respondent Court of
Appeals a motion for reconsideration. On December 28,
Civpro Rule 39-43 11
1981, petitioners received a resolution of the Court of
Appeals denying their motion for reconsideration.
On January 18, 1982, this petition entitled appeal by
certiorari was filed.
The petitioners' arguments revolve around the alleged
grave abuse of discretion committed by the Court of
Appeals when it declined to disturb the judgment of the trial
court on the issuance of the writ of execution pending
appeal.
Section 2, Rule 39 of the Revised Rules of Court provides:
On motion of the prevailing party with
notice to the adverse party the court may,
in its discretion, order execution to issue
even before the expiration of the time to
appeal, upon good reasons to be stated
in a special order. If a record on appeal is
filed thereafter, the motion and the
special order shall be included therein.
The rule specifically vests the court with the exercise of
discretionary power. The requisites for the court's valid
exercise of the discretion to order execution pending appeal
are: (1) there must be a motion by the prevailing party with
notice to the adverse party; (2) there must be good reasons
for issuing the execution, and (3) the good reasons must be
stated in a special order.
Considering the nature of the wrongful acts found by the
trial court and the amount of damages adjudicated as
recoverable, both of which are stated in detail in the
decisions and various orders of the trial court and the
appellate court, we are constrained to sustain the
respondent courts insofar as the award for actual or
compensatory damages are concerned but to postpone the
execution of the awards for moral and exemplary damages
until such time as the merits of the cases now on regular
appeal before the Court of Appeals are finally determined.
The execution of any award for moral and exemplary
damages is dependent on the outcome of the main case.
Unlike actual damages for which the petitioners may clearly
be held liable if they breach a specific contract and the
amounts of which are fixed and certain, liabilities with
respect to moral and exemplary damages as wen as the
exact amounts remain uncertain and indefinite pending
resolution by the Intermediate Appellate Court and
eventually the Supreme Court. The existence of the factual
bases of these types of damages and their causal relation
to the petitioners' act will have to be determined in the light
of the assignments of errors on appeal. It is possible that
the petitioners, after all, while liable for actual damages may
not be liable for moral and exemplary damages. Or as in
some cases elevated to the Supreme Court, the awards
may be reduced. (See Radio Communications of the
Philippines, Inc. v. Intermediate Appellate Court, et al., G.R.
No. 67034, December 3, 1984)
In its questioned decision, the Court of Appeals
acknowledged the nature of execution pending appeal as
an exceptional remedy which must be interpreted
restrictively, citing the many ruling cases on this point. At
the same time, what was before the appellate court was not
the application of a general rule but the exception thereto,
the special reasons or circumstances warranting execution
pending appeal. The Court of Appeals quoted with approval
the trial court's findings:
xxx xxx xxx
2. Execution pending appeal is
discretionary. — Execution pending
appeal is a matter of sound discretion on
the part of the trial court. (National
Marketing Corporation v. Tan, L- 17768,
March 31, 1962; Ong Sit v. Piccio, 78
Phil. 232; Go Changjo v. Roldan Sy
Changjo, 18 Phil. 405). The appellate
court will not interfere, control or inquire
into the exercise of this discretion, unless
it is shown that there has been an abuse
thereof. Asturias v. Victoriano, 98 Phil.
581; Naredo v. Yatco, 80 Phil.
220; Federal Fils Inc. v. Ocampo, 78 Phil.
479; Ong Sit v. Piccio
supra; Buenaventura v. Peña 78 Phil.
798; Presbitero v. Rodas, 73 Phil.
300; Iloilo Trading and Exchange v.
Rodas, 73 Phil. 327; Hacienda Navarro,
Inc. v. Labrador, 65 Phil. 536; Lusk v.
Stevens, 64 Phil. 154; Gamay
v. Gutierrez David, 48 Phil. 768; Gutierrez
Hermanos v. Orias Hermanos & Co., 39
Phil. 92; Case v. Metropole Hotel, 5 Phil.
49; Macke v. Camps, 5 Phil. 185; Calvo v.
De Gutierrez, 4 Phil. 203)
3. Requirement of good reasons. The
requirement that execution pending
appeal must be supported by good
reasons, to be stated in a special order,
should be complied with because the
existence of good reasons is the element
that gives validity to an order of execution
(Alcasid v. Samson, 102 Phil. 735; De la
Rosa v. City of Baguio, 90 Phil. 720)
(sic) Unless the reasons are made known
it would be difficult to determine whether
judicial discretion has been properly
exercised in the case (Asturias v.
Victoriano, supra If the discretionary
power of the court is to have any
meaning, the sufficiency of the reasons
for ordering such execution is naturally to
be determined by the court.
(Buenaventura v. Peña, supra; Lusk v.
Stevens, supra.)
Whether the reasons are so urgent and
compelling as to justify execution pending
appeal depends upon the circumstances
of the case. The filing of a bond by the
prevailing party, as required by the court
in its order of execution, constitutes good
reason for the issuance of a writ of
execution mending appeal (Rodriguez v.
Court of Appeals, L-12554, May 23, 1959;
Hacienda Navarro, Inc. v.
Labrador, supra; People's Bank & Trust
Co. v. San Jose, 96 Phil. 895).
The court likewise noted that the questioned order made
reference to the reasons averred in the motion which
appeared to it to be good and which it found to be sufficient
compliance with the law (Joven v. Boncan, 67 Phil. 252). It
noted the finding of the trial court that the appeal interposed
by the petitioners was not based on strong grounds, which
finding is again a good reason for execution pending
appeal. (Presbitero v. Rodas, 73 Phil. 300; Iloilo Trading
Center and Exchange v. Rodas, 78 Phil. 789)
The petitioners pit their arguments against the conclusions
of the Court of Appeals and the Court of First Instance on
Civpro Rule 39-43 12
the special nature of the circumstances warranting the
exercise of discretionary power, the weak defenses at trial
and weak reasons on appeal, and the nature of the
evidence upon which the decision is based. Insofar as
actual and compensatory damages are concerned, we find
insufficient cause to restrain the exercise of discretionary
power.
The petitioners question the findings of the Court of Appeals
that:
The respondent court had to look back at
the sworn complaint that, the private
respondent in the aforesaid complaint
had to sleep at the airport left alone to
himself throughout the night with nobody
to talk to because in Khartoum, Sudan,
only a few people if at all, could speak
English and because our country has no
consulate in the said place, language
barrier was a big problem in looking for a
taxicab to the hotel. To repeat, he had to
sleep on the 5 chairs put together; he is a
respectable man in the country who had
to go to Khartoum as President of the
World Association of Law Students in the
Philippines and had to make the trip to
Sudan for a conference; that he was a
third year law student of the College of
Law in the University of the Philippines
and the Cagayan de Oro Sangguniang
Panglunsod City where he is from, even
passed a Resolution congratulating him
for having been chosen or selected the
President of the World Association of Law
Students or WALS, invited by the
Sudanese government for the conference
on September 18, 1978: arriving at the
airport at 9:30 in the evening; as he could
not talk in Arabic, he was left alone to
himself to repeat until he had to wait for
the next morning to have somebody to
translate in Arabic language how to find
the place of Mohammed Elsir Taha who
invited him as per telegrams exchanged
between him and the plaintiff, now private
respondent that the latter's residence was
found to be 20 kilometers away (Office of
the Secretary of the African Youth
Committee, Sudan Socialist Union); that
because the telegram sent by him in
Manila, Philippines on September 8, 1978
was not delivered to Mohammed Taha,
the latter was not able to meet him at the
airport; on the other hand, the telegram
sent to Diane Merger as Secretary of the
conference committee having been
delivered to the address given by him but
the person who delivered was told that
the said addressee was no longer staying
there and moved out a year ago but this
fact was not informed/reported
accordingly to him in Metro Manila,
Philippines where the cablegram was
sent and which cablegram was not
returned by the receiver abroad to Globe
for disposition in the Philippines.
Evidently, there was a breach of
contractual obligation committed against
him by the defendants, now private
respondent Globe Mackay and RCPI, and
therefore, he is entitled to such damages
which he has claimed for the humiliation,
suffering, mental anguish and besmirched
reputation as a result of the non-delivery
of the cables, which damages amounted
to P213,148.00.
The merits of the main case are not to be determined in a
petition questioning execution pending appeal (City of
Manila v. Court of Appeals, 72 SCRA 98). However, the
facts and circumstances clearly brought out during trial
cannot help but influence whether or not an appeal appears
to be dilatory and whether or not there are sufficient
reasons including considerations of justice and equity to
justify a departure from the regular procedures regarding
execution.
Petitioners question the alleged presence of superior
circumstances demanding urgency of execution pending
appeal. Any delay in final adjudication on the merits will be
the fault of the courts and not theirs, according to them.
Petitioner GLOBE states:
In the light of the peculiar circumstances
obtaining in the case at bar, among which
are that:
1. The judgment creditor does not even
have a cause of action against herein
petitioner;
2. The greater portion of the amount
awarded in the judgment of the trial court
cannot be legally given; and
3. Herein petitioner's defenses are legal
and valid and the evidence submitted to
prove them, positive and convincing.
any bond which the prevailing party might
have posted cannot fully compensate for
the inconvenience and damages which
petitioner will suffer by reason of such
hasty execution for the reason that the
said execution will be morally, legally,
equitably and outrageously incorrect. ...
The respondent introduced evidence to show that he
suffered mental anguish, serious anxiety, besmirched
reputation, wounded feelings, and social humiliation. The
petitioners question the extent of these sufferings and
further aver that their acts claimed to have caused the injury
were not wrongful, deliberate, wanton, and tainted with bad
faith or fraud.
Our review of the records constrains us to allow execution
pending appeal of actual but not the moral and exemplary
damages which must await the final determination of the
main cases.
WHEREFORE, the petition is GRANTED PARTIAL DUE
COURSE. The November 10, 1981 decision and December
22, 1981 resolution of the appellate court are SET ASIDE
and a new ORDER is ENTERED authorizing execution
pending appeal of P43,148.00 actual damages upon the
private respondent's filing of a bond in the same amount.
The execution of any award for moral damages, exemplary
damages, and attorney's fees is enjoined until after final
resolution of the issues in the main case.
SO ORDERED.
Civpro Rule 39-43 13

G.R. No. 162100 January 18, 2012
PENTA CAPITAL FINANCE CORPORATION, Petitioner,
vs. The Honorable TEODORO BAY, Presiding Judge of
the Regional Trial Court, Quezon City, Branch 86;
ANGELITO ACOSTA, Deputy Sheriff of RTC QC Branch
86; BIBIANO REYNOSO IV, and Commercial Credit
Corporation of Quezon City, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 162395
BIBIANO REYNOSO IV, Petitioner,
vs. PENTA CAPITAL FINANCE
CORPORATION, Respondent.
DECISION SERENO, J.:
Before us is a consolidated Petition for Review on Certiorari
under Rule 45 impugning the Decision dated 30 July 2003
and Resolution dated 9 February 2004 of the Court of
Appeals,1 which modified the interests applied by the trial
court in computing the judgment awards; but affirmed the
Orders dated 3 and 19 April, 23 May, 2 August, and 3
October 2002 issued by the trial court in the course of
execution proceedings.
Penta Capital Finance Corporation (Penta) was originally
known as Commercial Credit Corporation (CCC), a
financing and investment firm, which established in different
parts of the country certain franchise companies, including
Commercial Credit Corporation of Quezon City (CCC-QC).
CCC designated its own employees as resident managers
of its franchise companies, with Bibiano Reynoso IV
(Reynoso) as resident manager of CCC-QC.
CCC-QC accepts funds from depositors to whom it issues
interest-bearing promissory notes. In view of the exclusive
management contract between CCC and CCC-QC, the
latter would sell/discount and/or assign its receivables to
the former, which loans them out to various borrowers as
money market placements.2
In view of the Central Bank's promulgation of the DOSRI
Rule,3 CCC subsequently created CCC Equity Corporation
(CCC Equity), a wholly owned subsidiary, to which it had
transferred its 30% equity and two seats in the franchise
corporations' board of directors. In February 1976, CCC
allegedly transferred to its stockholders all its shares in
CCC Equity as property dividends.
Under the new setup, CCC Equity substituted CCC in the
management contract with the franchise companies.
Several CCC-QC officials, like Reynoso, became
employees of CCC Equity and received salaries and
allowances from the latter. Still, all employees of CCC-QC
remained qualified members of the Commercial Credit
Corporation Employees Pension Plan, even when CCC-QC
was already partly owned by CCC Equity and technically
had nothing to do with CCC.
Reynoso deposited personal funds to CCC-QC, which in
return issued to him interest-bearing Promissory Notes.4
In a separate transaction, Reynoso mortgaged to CCC his
house and lot in Valle Verde, Pasig City.5 The latter later
foreclosed the property, and the title thereto was later
consolidated in its name when no redemption was made.
On 15 August 1980, CCC-QC instituted with the Regional
Trial Court of Quezon City, Branch 866 (RTC QC), a
Complaint7 against Reynoso for a sum of money with
preliminary attachment, on the allegation that he had
embezzled company funds amounting to ₱ 1,300,593.11.
Reynoso filed a Counterclaim8 based on his money
placements with CCC-QC, as shown by 23 checks he had
issued in its favor.
During the pendency of the case, or on 2 September 1983,
CCC changed its name to General Credit Corporation
(GCC).
On 14 January 1985, the RTC QC - then presided by Judge
Antonio Solano - rendered a Decision9 dismissing CCC-
QC's Complaint, but granting Reynoso's Counterclaim. The
dispositive portion of the Decision reads:
Premises considered, the court finds the complaint without
merit. Accordingly, said complaint is hereby DISMISSED.
By reason of said complaint, defendant Bibiano Reynoso IV
suffered degradation, humiliation and mental anguish.
On the counterclaim, which the Court finds to be
meritorious, plaintiff corporation is hereby ordered:
a) to pay defendant the sum of ₱ 185,000.00 plus
14% interest per annum from October 2, 1980 until
fully paid;
b) to pay defendant ₱ 3,639,470.82 plus interest
thereon at the rate of 14% per annum from June
24, 1981, the date of filing of Amended Answer,
until fully paid; from this amount may be deducted
the remaining obligation of defendant under the
promissory note of October 24, 1977, in the sum of
₱ 9,738.00 plus penalty at the rate of 1% per
month from December 24, 1977 until fully paid;
c) to pay defendants ₱ 200,000.00 as moral
damages;
d) to pay defendants ₱ 100,000.00 as exemplary
damages;
e) to pay defendants ₱ 25,000.00 as and for
attorney's fees; plus costs of the suit.
SO ORDERED.
This Decision became final and executory on 27 May
1989.10
On 24 July 1989, the RTC QC issued a Writ of Execution on
the "goods and chattels of plaintiff COMMERCIAL CREDIT
CORPORATION."11 When the writ was returned unsatisfied
on 11 December 1989, Reynoso filed a Motion for Issuance
of Alias Writ of Execution and, thereafter, a Motion for
examination of the financial records of CCC-QC. In the
course of opposing his Motion, CCC-QC President Dr.
Concepcion vda. de Blaylock (Blaylock) alleged that the
company had not been operating for about 10 years, and
that "the Commercial Credit Corporation of the Philippines
Civpro Rule 39-43 14
took possession of the premises of the office of CCC-QC,
together with all its records and documents. ..."12
On 16 August 1991, the RTC QC again ordered the
issuance of the alias writ against "the goods and chattels of
plaintiff COMMERCIAL CREDIT CORPORATION."
There being no leviable properties of CCC-QC, Sheriff
Edgardo Tanangco reported that on 23 August 1991, he
"levied whatever rights, interests, titles, participation said
plaintiff may have" over the Valle Verde property, which was
registered in the name of "Commercial Credit Corporation."
The said property was sold on execution on 20 September
1991 by Deputy Sheriff Edgardo Tanangco at public
auction, with Reynoso as the highest and sole bidder in the
amount of ₱ 650,151.50. This amount was credited as
partial satisfaction of the judgment obligation.13Meanwhile,
the Notice of Sheriff's Sale was sent to "General Credit
Corporation (Formerly Commercial Credit Corporation, ACE
Bldg., RADA corner dela Rosa Sts., Makati, Metro Manila"
on 2 October 1991, but this notice was returned with the
notation "RTS UNKNOWN AT GIVEN ADDRESS 10-9."
On 29 October 1991, Deputy Sheriff Tanangco issued a
Sheriff's Certification of Sale of the levied property.
On 11 November 1991, Reynoso filed a second Alias Writ of
Execution, arguing that CCC-QC and CCC were one and
the same, and praying that the sheriff be directed to levy
upon CCC's personal and real properties. Attached to the
Motion was the 23 February 1990 Decision of Hearing
Officer Antonio Esteves in Securities and Exchange
Commission (SEC) Case No. 2581, entitled "Avelina G.
Ramoso, et al. v. General Credit Corporation et al.," which
held that CCC (then known as GCC) and CCC-QC,
together with others, were one and the same corporation.14
On 22 November 1991, CCC's counsel appeared before the
RTC QC and was granted time to file a comment on the
Alias Writ of Execution.15 In its Special Appearance and
Opposition,16 CCC alleged that it was not a party to the
case, and that the cited Decision in SEC Case No. 2581
was still pending resolution of the SEC en banc. CCC also
moved that further levies on its other properties be stopped.
On 9 December 1991, the RTC QC ordered the issuance of
the second alias writ.17 On 18 December 1991, CCC filed an
Omnibus Motion 1) to reconsider the Order of 9 December
1991; 2) to quash the alias writ of 21 August 1991; and 3) to
nullify the sale of its Valle Verde property.18 Attached to this
Motion was a copy of a SEC Certification that SEC Case
No. 2581 was still pending. This Omnibus Motion was
denied by the RTC QC in its 13 February 1992 Order due to
the admission by CCC in the latter's pleading that it was an
alter ego of CCC-QC.19
To recover its Valle Verde property, CCC filed with the
Regional Trial Court of Pasig City, Branch 167 (RTC
Pasig),20on 21 February 1992, an action for terceria (third-
party claim) against Reynoso and Quezon City Deputy
Sheriff Edgardo Tanangco. CCC prayed that (1) the levy on
the Valle Verde property be declared void; (2) respondents
be enjoined from consolidating ownership over the property
pending resolution of the suit; and (3) respondents be
enjoined from making further levies on petitioner's
properties to answer for any liability under the Decision in
Civil Case No. Q-30583.
The RTC Pasig denied the prayer for injunction of CCC,
prompting the latter to file on 13 March 1992 a Petition for
Certiorari with prayer for preliminary injunction and/or
temporary restraining order. Docketed in the Court of
Appeals (CA) as CA-G.R. SP No. 27518, the Petition was
filed against Reynoso, Deputy Sheriff Tanangco, and Judge
Flores of RTC Pasig (and also, subsequently, against Judge
Solano of RTC QC).
Meanwhile, noting that the records failed to show that CCC
had taken a legal step to suspend the implementation of its
Order dated 9 December 1991, the RTC QC issued another
Alias Writ of Execution against the goods and chattels of
petitioner GCC on 6 March 1992.21
On 6 April 1992, the RTC QC's issuance of the second Alias
Writ of Execution was impugned by the CCC in the CA via a
Petition for Certiorari with prayer for preliminary injunction
and/or temporary restraining order, docketed as CA-G.R.
SP No. 27683. RTC QC Judge Solano, Reynoso and
Deputy Sheriff Tanangco were named respondents therein.
Meanwhile, CCC/GCC changed its name to Penta Capital
Finance Corporation (Penta) on 1 December 1993.
The CA consolidated CA-G.R. SP Nos. 27683 and 27518.
On 7 July 1994, it granted the Petition, nullified the Alias
Writ of Execution, and declared that the proper remedy for
the Valle Verde property was the terceria filed with the
Pasig court.22
Reynoso questioned this CA Decision via a Petition for
Review before the Supreme Court (SC), docketed as G.R.
No. 116124-25 and entitled "Reynoso v. Court of Appeals."
On 22 November 2000, this Court issued a
Decision23overturning that of the CA. CCC filed a Motion for
Reconsideration, but it was denied by this Court on 6
August 2001.
On 21 December 2001, CCC registered with the Sheriff of
Quezon City a third-party claim (with an Affidavit of Third-
Party Claim executed by petitioner's president, Jovencio
Cinco) on its Valle Verde property; two condominium units
under Condominium Certificates of Title Nos. 5462 and
5463; bank deposits; and various office equipment, all
subjects of the Notice of Garnishment and Notice of Levy
upon personal properties. CCC stated that it was exercising
its right of redemption ad cautelam over the Valle Verde
property. It remitted to the sheriff Metrobank Cashier's
Check No. 2610004069 in the amount of ₱ 703,987.36,
inclusive of interest amounting to ₱ 53,095.71.
On 12 March 2002, CCC filed with the RTC QC a Motion to
Quash the Alias Writ of Execution on its Valle Verde
property and the Alias Writ of Execution dated 6 March
1992 pertaining to its two condominium units on the 10th
floor of the ACT Tower Condominium.
Judge Teodoro Bay, who took over from Judge Solano upon
the latter's retirement as presiding judge of the RTC QC,
denied the Motion to Quash the Writ of Execution in
the Order dated 3 April 2002. Judge Bay reasoned that, as
finally decided by the SC in Reynoso v. Court of
Appeals, CCC-QC, CCC, and GCC were one and the same
corporation.
In an Order dated 19 April 2002, the RTC QC directed the
issuance of another Alias Writ of Execution to implement its
1985 Decision in response to Reynoso's Ex Parte Motion to
Issue an Alias Writ of Execution on the ground that while
the ruling in CA-G.R. SP No. 27518 had previously enjoined
the sheriff from levying on the properties of CCC and selling
them on execution, the SC had already overturned the said
CA ruling.
Civpro Rule 39-43 15
The Alias Writ of Execution was then issued, commanding
Sheriff Angelito Acosta (who had taken the place of
deceased Deputy Sheriff Edgardo Tanangco) to execute on
the "goods and chattels of Commercial Credit Corporation
of Quezon City/General Credit Corporation/Penta Capital
Finance Corporation."
On 29 April 2002, CCC filed an Urgent Consolidated Motion
praying that 1) the execution be quashed; 2) the sheriff be
required to file a monthly report in accordance with Section
14, Rule 39 of the Rules of Court; and 3) the RTC QC
declare itself without jurisdiction to resolve with finality the
issue of piercing the corporate veil, since the issue was
within the jurisdiction of the RTC Pasig City in Civil Case
No. 61777 (92).
In an Order dated 23 May 2002, the RTC QC denied
CCC's Consolidated Motion and required the parties to
submit their own computation of the amount of execution.
Reynoso filed his Compliance; CCC filed a Compliance Ad
Cautelam and, the next day, a Motion to resolve/clarify in
the interest of substantial justice. The Motion of CCC
sought to reopen discussions on the matter of piercing its
corporate veil of fiction.
In its Order dated 2 August 2002, the RTC QC denied
CCC's Motion to resolve/clarify, reiterating that the issue
had already been resolved with finality by the SC.
In its Order dated 9 August 2002, the RTC QC issued an
Order determining that the sum of ₱ 71,768,227.3524minus
the outstanding obligation of Reynoso to CCC was the
proper computation of the award in his favor. In its Order
dated 3 October 2002, the RTC QC reiterated its 9 August
2002 Order.
On 8 October 2002, CCC filed with the CA another Petition
for Certiorari and Prohibition, docketed as CA-G.R. SP No.
73207 and entitled "Penta Capital Finance Corporation v.
Judge Teodoro Bay, et al.," to nullify the RTC QC Orders
dated 3 and 19 April, 23 May, 2 and 9 August and 3 October
2002 as well as the Alias Writ of Execution dated 23 April
2002 and Notice of Sheriff's Sale dated 17 May 2002.
In its Decision dated 30 July 2003,25 the CA declared as
excessive the interests fixed by the RTC QC. It held that
Reynoso was entitled to recover from CCC only the amount
of ₱ 13,947,240.04, based on the computation26 made in the
presence of the parties by the CA's chief accountant,
Carmencita Angelo. The appellate court, however, affirmed
the RTC QC Orders dated 3 and 19 April, 23 May, 2 and
August, and 3 October 2002.
Both parties filed their respective Motions for
Reconsideration of the Decision of the CA, which
subsequently denied both motions.
CCC then filed an appeal by certiorari with this Court,
docketed as G.R. No. 162100, wherein it raises the
following issues: (1) the interest computation made by the
RTC QC was grossly excessive; (2) the execution is tainted
with irregularities; and (3) the RTC QC judge should have
suspended execution of the properties of petitioner and
allowed it to pursue its third-party claim to its logical
conclusion.
Respondent Reynoso also filed a Petition for Review
with this Court, docketed as G.R. No. 162395,
questioning the CA's reduction of the the sum due him
under the RTC QC Decision. Reynoso argues that the CA
failed to consider that the two judgment amounts were
money market placements that were "rolled over." Thus, the
principal (original placement) earns interest (in this case,
14% per annum) after the lapse of the agreed period. The
earned interest plus the principal becomes the new
principal/placement, which again earns interest when the
placement is rolled over. Under the terms of the money
market placement, the outstanding balance earns 14%
interest per annum, until both principal and interest are
paid. Aside from these interest earnings, a 12% interest per
annum on the entire judgment award is applied also, as the
awards partook of the nature of forbearance of credit when
it remained unsatisfied after the finality of the judgment.
In its Resolution dated 27 April 2004, this Court ordered the
consolidation of the two cases.
Consolidated Issues
1. Whether the CA seriously erred in not holding that
execution proceedings before the RTC QC was
tainted with irregularities
2. Whether the CA seriously erred in not finding that
the RTC QC should have suspended execution of
the properties of CCC/Penta and allowed the latter
to pursue its third party claim to its logical
conclusion
3. Whether the CA seriously erred in holding that
Penta's right of redemption had prescribed
4. Whether the CA seriously erred in its computation
of interest
Our Ruling
We affirm the CA Decision in toto.
On the first issue
In Reynoso v. Court of Appeals,27 CCC/GCC/Penta assailed
the validity of the execution proceedings in the RTC QC on
various grounds, mainly the fact that the latter had allowed
the levy and sale of the Valle Verde property. Allegedly, this
property was not owned by judgment debtor CCC-QC, but
by CCC/GCC/Penta itself - an entity separate and distinct
from the former. We held in the said case, though, that
since the circumstances warranted piercing the corporate
veil, judgment in favor of Reynoso may be executed against
GCC (now Penta), an alter ego of CCC-QC.
CCC/GCC/Penta presented the same arguments
in Reynoso, as it has done now. Even assuming that any of
its present arguments is novel, it would be unavailing if it is
based on the same factual milieu under which
the Reynoso ruling was made. The orderly administration of
justice and basic considerations of fair play abhor a
piecemeal presentation of points of law, theories, issues,
and arguments.28 At any rate, CCC/GCC/Penta fails to
identify any change in the facts upon which Reynoso was
predicated as to warrant a different conclusion in the
present case.
Thus, the Court's ruling in Reynoso may be considered "the
law of the case" in respect of the validity of the execution
proceedings against CCC/Penta. The principle of the law of
the case is embodied in Section 47(b) and (c), Rule 39 of
the Rules of Court.29 As we explained in Litton Mills, Inc. v.
Galleon Trader, Inc.,30 this principle holds that "(w)hatever
has been irrevocably established as the controlling legal
rule between the parties in a case continues to be the law
of the case, whether correct on general principles or not, so
Civpro Rule 39-43 16
long as the facts on which such decision was predicated
continue to be facts of the case before the Court. Once a
judgment has become final, the issues therein should be
laid to rest."
As Reynoso has long become final and can no longer be
modified, the continued insistence of CCC/GCC/Penta that
the execution proceedings were invalid cannot be
entertained.
On the second issue
CCC insists that the RTC QC should have suspended
execution insofar as the properties of CCC/Penta were
concerned, and that the trial court should have allowed
petitioner to pursue its third-party claim to its logical
conclusion.
We disagree. As discussed in the first section, CCC and
CCC-QC are one and the same entity in the context of the
subject execution of the judgment in favor of Reynoso.
Meanwhile, the remedy of terceria is available only to a
third person other than the judgment obligor or the latter's
agent who claims a property levied on.31 Hence, not being a
third party to the execution proceedings, the remedy
of terceria is not available to CCC/Penta.
On the third issue
Again, we find no error in the Decision of the CA, holding
that Penta's right of redemption has prescribed. We quote
with approval the pertinent portion of its assailed Decision
in this regard:
Penta's right of redemption over the Valle Verde property
was recognized by respondent Judge in the Order dated
April 3, 2002, considering that CCC-QC, CCC and GCC,
which was later renamed Penta Capital, are one and the
same corporation as ruled with finality by the Supreme
Court. Nonetheless, we agree with Reynoso that Penta
Capital can no longer exercise its right to redeem the Valle
Verde property.
Record shows that the Valle Verde property, which was
registered in the name of CCC under TCT No. 29940, was
levied upon and sold at public auction on October 29, 1991
with Reynoso as the highest bidder. The certificate of sale
in favor of Reynoso was registered on TCT No. 29940 on
November 7, 1991. Section 28, Rule 39 of the Rules of Civil
Procedure provides that the judgment obligor or
redemptioner may redeem the property from the purchaser
at any time within one (1) year from the date of the
registration of the certificate of sale. Inasmuch as one year
is composed of 365 days, CCC or its successors-in-interest
had only until November 6, 1992 within which to redeem the
Valle Verde property. However, it was only on December 21,
2002 that Penta Capital sent a notice to the Sheriff that it
was redeeming ad cautelam the Valle Verde property,
together with a cashier's check for ₱ 703,897.36, inclusive
of interest. On February 20, 1992, Penta Capital filed with
the Regional Trial Court of Pasig City a third-party claim
with respect to the Valle Verde property and other
properties that may be levied upon by Deputy Sheriff
Edgardo C. Tanangco of respondent court.
Penta Capital's argument that it could not redeem the Valle
Verde property within the one year period, which expired on
November 6, 1992, in view of the temporary restraining
order issued by this Court on March 13, 1992, the writ of
preliminary injunction issued on April 7, 1994 and the
decision dated July 7, 1994 of this Court in CA-G.R. SP No.
27518, does not persuade us.
As correctly pointed out by Reynoso, the injunction issued
by this Court in CA-G.R. SP No. 27518 did not cover the
Valle Verde property. The temporary restraining order and
injunction issued by this Court in said case merely enjoined
the respondents therein from conducting an auction sale on
execution of the properties of GCC, as well as from
initiating similar acts of levying upon and selling on
execution other properties of the latter until Civil Case No.
61777 before the Regional Trial Court of Pasig City shall
have been finally terminated. On the other hand, the levy
and sale of the Valle Verde property had already been
consummated when the temporary restraining order and
injunction were issued by this Court. Settled is the rule that
consummated acts can no longer be restrained by
injunction. Injunction would not lie where the acts sought to
have been enjoined had already become a fait accomplior
an accomplished or consummated act.
The right of redemption should be exercised within the
period prescribed by law. The right to redeem becomes
functus officio on the date of its expiry and its exercise after
the period is not really one of redemption but a
repurchase.32
On the fourth issue
The RTC QC ruled that CCC/GCC/Penta should pay
Reynoso the following amounts:
a) to pay defendant the sum of ₱ 185,000.00 plus
14% interest per annum from October 2, 1980 until
fully paid;
b) to pay defendant ₱ 3,639,470.82 plus interest
thereon at the rate of 14% per annum from June
24, 1981, the date of filing of Amended Answer,
until fully paid; from this amount may be deducted
the remaining obligation of defendant under the
promissory note of October 24, 1977, in the sum of
₱ 9,738.00 plus penalty at the rate of 1% per
month from December 24, 1977 until fully paid;
c) to pay defendants ₱ 200,000.00 as moral
damages;
d) to pay defendants ₱ 100,000.00 as exemplary
damages;
e) to pay defendants ₱ 25,000.00 as and for
attorney's fees; plus costs of the suit.
Based on the above figures, the RTC QC eventually
computed the award to Reynoso as ₱ 71,768,227.35. When
this matter reached the CA, its chief accountant computed
the judgment award at ₱ 13,947,240.04, after both parties
had agreed to deduct from the total judgment award the
sum of ₱ 650,150.50 paid by Reynoso for the Valle Verde
property. The CA's computation is as follows:
A. Principal Amount ₱ 185,000.00
Interest therein @ 14% per
annum from
October 2, 1980 up to
November 30,
2002 573,986.57
Total ₱ 758,986.57
Civpro Rule 39-43 17
 B. Principal Amount ₱ 3,639,470.82 We uphold the CA ruling on the computation of interest on
the judgment awards pertaining to the principal amounts ₱
Interest therein @ 14 per 9,912,788.77 185,000.00 and ₱ 3,639,470.82.
annum from
June 24 to November 30, 2002 Referring to Eastern Shipping Lines and Crismina
Garments, which Reynoso claimed to be supportive of his
₱ 13,552,259.59
position, the CA elucidated as follows:
Less: The sum of ₱ 9,738.00
The above-mentioned cases state that the imposition of
Penalty @ 1% per mo. from
interest at the rate of 12% per annum from finality of
December 24, 1977 up to
judgment applies only where the rate of interest decreed in
November 24, 2002 29,116.62 ₱ 38,854.62
the judgment of the court is only 6% per annum, in
Sub-total ₱ 13,513,404.97 accordance with Article 2209 of the Civil Code. Thus, the
dispositive portions of the decisions in the above-mentioned
cases provided for payment of interest at 6% per annum
Less: Bid Price of Auctioned
from the date of the filing of the complaint until the finality of
Property 650,151.50
the judgment and a 12% interest per annum, in lieu of 6%
bought by defendant
interest per annum, upon finality of the judgment until it is
fully satisfied. In the case at bench, the decision in Civil
Total ₱ 12,863,253.47 Case No. Q-30583 ordered the payment of interest at the
rate of 14% per annum from October 2, 1980, with respect
C. Moral Damages ₱ 200,000.00
to the amount of ₱ 185,000.00, and from June 24, 1981,
with respect to the amount of ₱ 3,639,470.82, until the
same shall have been fully paid. Inasmuch as the rate of
D. Exemplary Damages ₱ 100,000.00 interest imposed in Civil Case No. Q-30583 is even higher
than 12% per annum, Reynoso is no longer entitled to the
payment of 12% interest upon finality of the judgment.36
E. Attorney's Fees ₱ 25,000.00
In fine, Eastern Shipping merely provides that in the
TOTAL AMOUNT DUE as of absence of a written stipulation, the applicable interest rate
November 30, ₱ 13,947.240.04 to be imposed in judgments involving a forbearance of
2002 ============= credit shall be 12% per annum in accordance with Central
Bank (CB) Circular No. 416. On the other hand, if the
judgment refers to payment of indemnities in the concept of
* Note 1 Penalty of 1% per month on ₱ 9,738 loan is damages arising from a breach or a delay in the
computed from December 24, 1997 up to November 24, performance of obligations in general, the applicable
2002 only. interest rate shall be 6% per annum, in accordance with
Article 2206 of the Civil Code. Both interest rates apply from
** Note 2 Amount of Bid Price on Auctioned sale in the the time of judicial or extrajudicial demand until the finality
amount of ₱ 650,151.50 was already deducted from the of the judgment. However, from the time the judgment of
total amount due."33 the court awarding a sum of money becomes final until it is
satisfied, the award it granted shall be considered a
Two things must be priorly explained regarding the above forbearance of credit, whether or not the judgment award
computation of the CA. First, the principal amounts in items actually pertained to one. Accordingly, during this interim
A and B (₱ 185,000.00 and ₱ 3,639,470.82, respectively) period, the interest rate of 12% per annum for forbearance
were subjected to a 14% per annum interest only until 30 of money shall apply.37
November 2002, because the CA's chief accountant who
prepared the computation on 21 November 2002 had In the present case, the parties agreed in writing to apply an
anticipated that the parties would be settling the matter by annual interest rate of 14% to the amounts covered by the
the end of November 2002. Second, the interest on the sum Promissory Notes. The trial court ruled that after the finality
of ₱ 9,738 (which was deducted from the principal amount of judgment, as long as the subject amounts remain unpaid,
in item B) was subjected to a penalty until 24 November they shall bear 14% annual interest in lieu of the default
2002, only because the RTC QC judgment pegged the interest rate for forbearance of credit, which is 12% per
interest rate thereon at 1% per month, commencing on 24 annum. The RTC QC's application of 14% interest rate from
December 1977. Accordingly, the interest was computed on the finality of the judgment until its full satisfaction is
a month-to-month basis. permitted to remain herein, only because the judgment has
become final - as it was not impugned at all before the CA -
Both parties impugn the computation by the CA of interest and therefore, can no longer be modified. It is not meant to
on the judgment awards.lawphi1 On the one hand, overturn the Court's consistent application of the 12%
Reynoso claims that its computation was deficient, because interest rate in court judgments awarding a sum of money
two items in the judgment pertain to money market from the time it becomes final until it is satisfied.
placements. These placements were subject to "roll overs" -
in this case, pertaining to the reinvestment of the principal We further uphold the CA's rejection of Reynoso's
together with its earned interest of 14% per annum, which computation, which incorporates "roll overs" of the said two
shall earn another 14% per annum, and so forth. Reynoso items in the judgment awards.
further alleges that the resulting amount should be
subjected to the 12% per annum legal interest on the Reynoso argues that the "roll over" could be implied from
judgment awards after finality of the judgment, pursuant to the trial court Decision, considering that the two items in the
the rule laid down in Eastern Shipping Lines, Inc. v. Court of judgment (₱ 185,000.00 and ₱ 3,639,470.82) pertained to
Appeals 34 and Crismina Garments, Inc. v. Court of his money market placements, and considering further that
Appeals.35 On the other hand, CCC claims that the CA's the trial court applied such rollovers to its subsequent
computation was excessive, because the judgment award computation.
should be subject to a 12% interest rate only.
Civpro Rule 39-43 18
We are not convinced. The mere fact that RTC QC's
subsequent computation applied rollovers is an insufficient
basis to rule that these were proper. We stress that
"execution must conform to that ordained or decreed in the
dispositive part of the decision; consequently, where the
order of execution is not in harmony with and exceeds the
judgment which gives it life, the order has pro tanto no
validity."38 In the present case, we observe that nowhere in
the RTC QC judgment is there a provision calling for the
"roll over" of the ₱185,000.00 and ₱ 3,639,470.82 awards.
Also, while it is true that the said judgment awards
correspond to the amounts Reynoso invested as money
market placements, he himself points out in his Petition that
each placement is a separate and distinct transaction. He
explains that a rollover is a "new and independent
transaction where the amount of money market placement
is considered as a fresh infusion of a principal amount
regardless of the fact that part of the amount 'rolled over'
was in reality the interest earned from the original
placement or the immediately preceding 'roll-over'
transaction."39 Thus, a money market transaction does not
necessarily include a rollover, which would take place only if
the parties agree to the reinvestment of the proceeds of the
earlier money market transaction. The parties' agreement to
a rollover is a separate transaction whereby the new
placement, consisting of the original placement plus the
earned interest, becomes the new placement that shall earn
interest at the end of the agreed period. In the present
case, it does not appear that there was an agreement
between CCC-QC and Reynoso for the automatic rollover
of all of his placements.
Finally, Reynoso is entitled to interest on the moral and
exemplary damages, as well as the attorney's fees awarded
him. As stressed in our above discussion of Eastern
Shipping, an award of a sum of money shall be considered
as a forbearance of credit once it becomes final, whether or
not the award actually pertained to one. Hence, from its
finality until its satisfaction, the judgment award to Reynoso
of moral and exemplary damages, as well as attorney's
fees, shall be subject to the interest rate of 12% per annum.
WHEREFORE, premises considered, the consolidated
Petitions are hereby DENIED. The Court of Appeals
assailed Decision and Resolution are AFFIRMED with
MODIFICATION in that an interest rate of 12% per annum
is to be applied to the awards of moral and exemplary
damages and attorney's fees from the finality until the
satisfaction of the 14 January 1985 Decision of the
Regional Trial Court of Quezon City, Branch 86 in Civil
Case No. Q-30583.
SO ORDERED.
G.R. No. 190106 January 15, 2014
MAGDALENA T. VILLASI, Petitioner,
vs. FILOMENO GARCIA, substituted by his heirs,
namely, ERMELINDA H. GARCIA, LIZA GARCIA-
GONZALEZ, THERESA GARCIA-TIANGSON, MARIVIC
H. GARCIA, MARLENE GARCIA-MOMIN, GERARDO H.
GARCIA, GIDEON H. GARCIA and GENEROSO H.
GARCIA, and ERMELINDA H. GARCIA, Respondents.
DECISION PEREZ, J.:
This is a Petition for Review on Certiorari1 filed pursuant to
Rule 45 of the Revised Rules of Court, assailing the 19 May
2009 Decision2 rendered by the Sixth Division of the Court
of Appeals in CA-G.R. SP No. 92587. The appellate court
affirmed the Order3 of the Regional Trial Court R TC) of
Quezon City, Branch 77, directing the Deputy Sheriff to
suspend the conduct of the execution sale of the buildings
levied upon by him.
The Facts
Sometime in 1990, petitioner Magdalena T Villasi (Villasi)
engaged the services of respondent Fil-Garcia
Construction, Inc. (FGCI) to construct a seven-storey
condominium building located at Aurora Boulevard corner
N. Domingo Street, Cubao, Quezon City. For failure of
Villasi to fully pay the contract price despite several
demands, FGCI initiated a suit for collection of sum of
money before the RTC of Quezon City, Branch 77. In its
action docketed as Civil Case No. Q-91-8187, FGCI
prayed, among others, for the payment of the amount of
₱2,865,000.00, representing the unpaid accomplishment
billings. Served with summons, Villasi filed an answer
specifically denying the material allegations of the
complaint. Contending that FGCI has no cause of action
against her, Villasi averred that she delivered the total
amount of ₱7,490,325.10 to FGCI but the latter
accomplished only 28% of the project. After the pre-trial
conference was terminated without the parties having
reached an amicable settlement, trial on the merits ensued.
Finding that FGCI was able to preponderantly establish by
evidence its right to the unpaid accomplishment billings, the
RTC rendered a Decision4 dated 26 June 1996 in FGCI’s
favor. While the trial court brushed aside the allegation of
Villasi that an excess payment was made, it upheld the
claim of FGCI to the unpaid amount of the contract price
and, thus, disposed:
WHEREFORE, judgment is hereby rendered:
1. Ordering [Villasi] to pay [FGCI] the sum of
₱2,865,000.00 as actual damages and unpaid
accomplishment billings;
2. Ordering [Villasi] to pay [FGCI] the amount of
₱500,000.00 representing the value of unused
building materials;
3. Ordering [Villasi] to pay [FGCI] the amount of
₱100,000.00, as moral damages and ₱100,000.00
as attorney’s fees.5
Elevated on appeal and docketed as CA-GR CV No. 54750,
the Court of Appeals reversed the disquisition of the RTC in
its Decision6 dated 20 November 2000. The appellate court
ruled that an overpayment was made by Villasi and thereby
directed FGCI to return the amount that was paid in excess,
viz:
WHEREFORE, premises considered, the present appeal is
hereby GRANTED and the appealed decision in Civil Case
No. Q-91-8187 is hereby REVERSED and SET ASIDE and
judgment is hereby rendered ordering the [FGCI] to return
to [Villasi] the sum of ₱1,244,543.33 as overpayment under
their contract, and the further sum of ₱425,004.00
representing unpaid construction materials obtained by it
from [Villasi]. [FGCI] is likewise hereby declared liable for
the payment of liquidated damages in the sum equivalent to
1/10 of 1% of the contract price for each day of delay
computed from March 6, 1991.
No pronouncement as to costs.7
Unrelenting, FGCI filed a Petition for Review on Certiorari
before this Court, docketed as G.R. No. 147960,
Civpro Rule 39-43 19
asseverating that the appellate court erred in rendering the
20 November 2000 Decision. This Court, however, in a
Resolution dated 1 October 2001, denied the appeal for
being filed out of time. The said resolution became final and
executory on 27 November 2001, as evidenced by the
Entry of Judgment8 made herein.
To enforce her right as prevailing party, Villasi filed a Motion
for Execution of the 20 November 2000 Court of Appeals
Decision, which was favorably acted upon by the RTC.9 A
Writ of Execution was issued on 28 April 2004, commanding
the Sheriff to execute and make effective the 20 November
2000 Decision of the Court of Appeals.
To satisfy the judgment, the sheriff levied on a building
located at No. 140 Kalayaan Avenue, Quezon City, covered
by Tax Declaration No. D-021-01458, and built in the lots
registered under Transfer Certificates of Title (TCT) Nos.
379193 and 379194. While the building was declared for
taxation purposes in the name of FGCI, the lots in which it
was erected were registered in the names of the Spouses
Filomeno Garcia and Ermelinda Halili-Garcia (Spouses
Garcia). After the mandatory posting and publication of
notice of sale on execution of real property were complied
with, a public auction was scheduled on 25 January 2006.
To forestall the sale on execution, the Spouses Garcia filed
an Affidavit of Third Party Claim10 and a Motion to Set Aside
Notice of Sale on Execution,11 claiming that they are the
lawful owners of the property which was erroneously levied
upon by the sheriff. To persuade the court a quo to grant
their motion, the Spouses Garcia argued that the building
covered by the levy was mistakenly assessed by the City
Assessor in the name of FGCI. The motion was opposed by
Villasi who insisted that its ownership belongs to FGCI and
not to the Spouses Garcia as shown by the tax declaration.
After weighing the arguments of the opposing parties, the
RTC issued on 24 February 2005 an Order12 directing the
Sheriff to hold in abeyance the conduct of the sale on
execution, to wit:
WHEREFORE, premises considered, the Court hereby
orders Deputy Sheriff Angel Doroni to suspend or hold in
abeyance the conduct of the sale on execution of the
buildings levied upon by him, until further orders from the
Court.13
The motion for reconsideration of Villasi was denied by the
trial court in its 11 October 2005 Order.14
Arguing that the RTC gravely abused its discretion in
ordering the suspension of the sale on execution, Villasi
timely filed a Petition for Certiorari before the Court of
Appeals. In a Decision15 dated 19 May 2009, the appellate
court dismissed the petition. In a Resolution16 dated 28
October 2009, the Court of Appeals refused to reconsider
its decision.
Villasi is now before this Court via this instant Petition for
Review on Certiorariassailing the adverse Court of Appeals
Decision and Resolution and raising the following issues:
The Issues
I.
WHETHER OR NOT THE HONORABLE COURT OF
APPEALS GRIEVOUSLY ERRED IN UPHOLDING THE
DECISION OF THE TRIAL COURT TO SUSPEND AND
HOLD IN ABEYANCE THE SALE ON EXECUTION OF THE
BUILDINGS LEVIED UPON ON THE BASIS OF
RESPONDENTS’ AFFIDAVIT OF THIRD-PARTY CLAIM;
II.
WHETHER OR NOT THE HONORABLE COURT OF
APPEALS GRIEVOUSLY ERRED WHEN IT HELD THAT
THERE IS NO REASON TO PIERCE THE VEIL OF
[FGCI’S] CORPORATE FICTION IN THE CASE AT BAR;
[AND]
III.
WHETHER OR NOT THE BRANCH SHERIFF OF THE
REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH
77 SHOULD BE DIRECTED TO FILE THE APPROPRIATE
NOTICE OF LEVY WITH THE REGISTER OF DEEDS OF
QUEZON CITY.17
The Court’s Ruling
It is a basic principle of law that money judgments are
enforceable only against the property incontrovertibly
belonging to the judgment debtor, and if the property
belonging to any third person is mistakenly levied upon to
answer for another man’s indebtedness, such person has
all the right to challenge the levy through any of the
remedies provided for under the Rules of Court. Section
16,18 Rule 39 specifically provides that a third person may
avail himself of the remedies of either terceria, to determine
whether the sheriff has rightly or wrongly taken hold of the
property not belonging to the judgment debtor or obligor, or
an independent "separate action" to vindicate his claim of
ownership and/or possession over the foreclosed property.
However, the person other than the judgment debtor who
claims ownership or right over levied properties is not
precluded from taking other legal remedies to prosecute his
claim.19
Indeed, the power of the court in executing judgments
extends only to properties unquestionably belonging to the
judgment debtor alone. An execution can be issued only
against a party and not against one who did not have his
day in court. The duty of the sheriff is to levy the property of
the judgment debtor not that of a third person. For, as the
saying goes, one man's goods shall not be sold for another
man's debts.20
Claiming that the sheriff mistakenly levied the building that
lawfully belongs to them, the Spouses Garcia availed
themselves of the remedy of terceria under Section 16,
Rule 39 of the Revised Rules of Court. To fortify their
position, the Spouses Garcia asserted that as the owners of
the land, they would be deemed under the law as owners of
the building standing thereon. The Spouses Garcia also
asserted that the construction of the building was financed
thru a loan obtained from Metrobank in their personal
capacities, and they merely contracted FGCI to construct
the building. Finally, the Spouses Garcia argued that the tax
declaration, based on an erroneous assessment by the City
Assessor, cannot be made as basis of ownership.
For her part, Villasi insists that the levy effected by the
sheriff was proper since the subject property belongs to the
judgment debtor and not to third persons. To dispute the
ownership of the Spouses Garcia, Villasi pointed out that
the levied property was declared for tax purposes in the
name of FGCI. A Certification issued by the Office of the
City Engineering of Quezon City likewise showed that the
building permit of the subject property was likewise issued
in the name of FGCI. We grant the petition.
Civpro Rule 39-43 20
The right of a third-party claimant to file a terceria is
founded on his title or right of
possession.1avvphi1 Corollary thereto, before the court can
exercise its supervisory power to direct the release of the
property mistakenly levied and the restoration thereof to its
rightful owner, the claimant must first unmistakably
establish his ownership or right of possession thereon. In
Spouses Sy v. Hon. Discaya,21 we declared that for a third-
party claim or a terceria to prosper, the claimant must first
sufficiently establish his right on the property:
[A] third person whose property was seized by a sheriff to
answer for the obligation of the judgment debtor may invoke
the supervisory power of the court which authorized such
execution. Upon due application by the third person and
after summary hearing, the court may command that the
property be released from the mistaken levy and restored to
the rightful owner or possessor. What said court can do in
these instances, however, is limited to a determination of
whether the sheriff has acted rightly or wrongly in the
performance of his duties in the execution of judgment,
more specifically, if he has indeed taken hold of property not
belonging to the judgment debtor. The court does not and
cannot pass upon the question of title to the property, with
any character of finality. It can treat of the matter only
insofar as may be necessary to decide if the sheriff has
acted correctly or not. It can require the sheriff to restore the
property to the claimant's possession if warranted by the
evidence. However, if the claimant's proofs do not persuade
the court of the validity of his title or right of possession
thereto, the claim will be denied.22 (Emphasis and
underscoring supplied).
Our perusal of the record shows that, as the party asserting
their title, the Spouses Garcia failed to prove that they have
a bona fide title to the building in question. Aside from their
postulation that as title holders of the land, the law
presumes them to be owners of the improvements built
thereon, the Spouses Garcia were unable to adduce
credible evidence to prove their ownership of the property.
In contrast, Villasi was able to satisfactorily establish the
ownership of FGCI thru the pieces of evidence she
appended to her opposition. Worthy to note is the fact that
the building in litigation was declared for taxation purposes
in the name of FGCI and not in the Spouses Garcias’. While
it is true that tax receipts and tax declarations are not
incontrovertible evidence of ownership, they constitute
credible proof of claim of title over the property.23 In
Buduhan v. Pakurao,24 we underscored the significance of a
tax declaration as proof that a holder has claim of title, and,
we gave weight to the demonstrable interest of the claimant
holding a tax receipt:
Although tax declarations or realty tax payment of property
are not conclusive evidence of ownership, nevertheless,
they are good indicia of possession in the concept of owner
for no one in his right mind would be paying taxes for a
property that is not in his actual or at least constructive
possession. They constitute at least proof that the holder
has a claim of title over the property. The voluntary
declaration of a piece of property for taxation purposes
manifests not only one’s sincere and honest desire to obtain
title to the property and announces his adverse claim
against the State and all other interested parties, but also
the intention to contribute needed revenues to the
Government. Such an act strengthens one’s bona fide claim
of acquisition of ownership.25
It likewise failed to escape our attention that FGCI is in
actual possession of the building and as the payment of
taxes coupled with actual possession of the land covered
by tax declaration strongly supports a claim of
ownership.26 Quite significantly, all the court processes in an
earlier collection suit between FGCI and Villasi were
served, thru the former’s representative Filomeno Garcia, at
No. 140 Kalayaan Avenue, Quezon City, where the subject
property is located. This circumstance is consistent with the
tax declaration in the name of FGCI.
The explanation proffered by the Spouses Garcia, that the
City Assessor merely committed an error when it declared
the property for taxation purposes in the name of FGCI,
appears to be suspect in the absence of any prompt and
serious effort on their part to have it rectified before the
onset of the instant controversy. The correction of entry
belatedly sought by the Spouses Garcia is indicative of its
intention to put the property beyond the reach of the
judgment creditor. Every prevailing party to a suit enjoys the
corollary right to the fruits of the judgment and, thus, court
rules provide a procedure to ensure that every favorable
judgment is fully satisfied.27 It is almost trite to say that
execution is the fruit and end of the suit. Hailing it as the
"life of the law,"
ratio legis est anima,28 this Court has zealously guarded
against any attempt to thwart the rigid rule and deny the
prevailing litigant his right to savour the fruit of his
victory.29 A judgment, if left unexecuted, would be nothing
but an empty triumph for the prevailing party.30
While it is a hornbook doctrine that the accessory follows
the principal,31 that is, the ownership of the property gives
the right by accession to everything which is produced
thereby, or which is incorporated or attached thereto, either
naturally or artificially,32 such rule is not without exception.
In cases where there is a clear and convincing evidence to
prove that the principal and the accessory are not owned by
one and the same person or entity, the presumption shall
not be applied and the actual ownership shall be upheld. In
a number of cases, we recognized the separate ownership
of the land from the building and brushed aside the rule that
accessory follows the principal.
In Carbonilla v. Abiera,33 we denied the claim of petitioner
that, as the owner of the land, he is likewise the owner of
the building erected thereon, for his failure to present
evidence to buttress his position:
To set the record straight, while petitioner may have proven
his ownership of the land, as there can be no other piece of
evidence more worthy of credence than a Torrens certificate
of title, he failed to present any evidence to substantiate his
claim of ownership or right to the possession of the building.
Like the CA, we cannot accept the Deed of Extrajudicial
Settlement of Estate (Residential Building) with Waiver and
Quitclaim of Ownership executed by the Garcianos as proof
that petitioner acquired ownership of the building. There is
no showing that the Garcianos were the owners of the
building or that they had any proprietary right over it.
Ranged against respondents’ proof of possession of the
building since 1977, petitioner’s evidence pales in
comparison and leaves us totally unconvinced.34
In Caltex (Phil.) Inc. v. Felias,35 we ruled that while the
building is a conjugal property and therefore liable for the
debts of the conjugal partnership, the lot on which the
building was constructed is a paraphernal property and
could not be the subject of levy and sale:
x x x. In other words, when the lot was donated to Felisa by
her parents, as owners of the land on which the building
was constructed, the lot became her paraphernal property.
The donation transmitted to her the rights of a landowner
over a building constructed on it. Therefore, at the time of
the levy and sale of the sheriff, Lot No. 107 did not belong
Civpro Rule 39-43 21
to the conjugal partnership, but it was paraphernal property Malolos City, Bulacan a complaint[5] accusing petitioner of
of Felisa. As such, it was not answerable for the obligations committing bigamy.
of her husband which resulted in the judgment against him
in favor of Caltex.36 Petitioner was charged on 8 June 2006 with bigamy defined
and penalized under Article 349 of the Revised Penal Code,
The rule on accession is not an iron-clad dictum. On as amended, in an Information[6] which reads:
instances where this Court was confronted with cases
requiring judicial determination of the ownership of the That on or about the 10th day of December, 2001 up to the
building separate from the lot, it never hesitated to present, in the municipality of Meycauayan, province of
disregard such rule. The case at bar is of similar import. Bulacan, Philippines, and within the jurisdiction of this
When there are factual and evidentiary evidence to prove Honorable Court, the said Cenon R. Teves being previously
that the building and the lot on which it stands are owned by united in lawful marriage on November 26, 1992 with
different persons, they shall be treated separately. As such, Thelma B. Jaime and without the said marriage having
the building or the lot, as the case may be, can be made legally dissolved, did then and there willfully, unlawfully and
liable to answer for the obligation of its respective owner. feloniously contract a second marriage with one Edita T.
Calderon, who knowing of the criminal design of accused
Cenon R. Teves to marry her and in concurrence thereof,
Finally, the issue regarding the piercing of the veil of
did then and there willfully, unlawfully and feloniously
corporate fiction is irrelevant in this case. The Spouses
cooperate in the execution of the offense by marrying
Garcia are trying to protect FGCI from liability by asserting
Cenon R. Teves, knowing fully well of the existence of the
that they, not FGCI, own the levied property. The Spouses
marriage of the latter with Thelma B. Jaime.
Garcia are asserting their separation from FGCI. FGCI, the
judgment debtor, is the proven owner of the building.
During the pendency of the criminal case for bigamy, the
Piercing FGCI’s corporate veil will not protect FGCI from its
Regional Trial Court , Branch 130, Caloocan City, rendered
judgment debt. Piercing will result in the identification of the
a decision[7] dated 4 May 2006 declaring the marriage of
Spouses Garcia as FGCI itself and will make them liable for
petitioner and Thelma null and void on the ground that
FGCI’s judgment debt.
Thelma is physically incapacitated to comply with her
essential marital obligations pursuant to Article 36 of the
WHEREFORE, premises considered, the petition is Family Code. Said decision became final by virtue of a
GRANTED. The assailed Decision and Resolution of the Certification of Finality[8] issued on 27 June 2006.
Court of Appeals in CA-G.R. SP No. 92587 are hereby
REVERSED and SET ASIDE. The Deputy Sheriff is hereby On 15 August 2007, the trial court rendered its assailed
directed to proceed with the conduct of the sale on decision, the dispositive portion of which reads:
execution of the levied building.
WHEREFORE, premises considered, judgment is hereby
SO ORDERED. rendered finding the accused Cenon R. Teves, also known
as Cenon Avelino R. Teves, guilty beyond reasonable doubt
of the crime of Bigamy penalized under Article 349 of the
Revised Penal Code, as charged in the Information dated
[G.R. No. 188775 : August 24, 2011]
June 8, 2006. Pursuant to the provisions of the
Indeterminate Sentence Law, he is hereby sentenced to
CENON R. TEVES, PETITIONER, VS. PEOPLE OF THE
suffer the penalty of imprisonment of four (4) years, two (2)
PHILIPPINES AND DANILO R. BONGALON,
months and one (1) day of prision correccional, as
RESPONDENTS.
minimum, to six (6) years and one (1) day of prision mayor,
as maximum.[9]
D E C I S I O N PEREZ, J.:
Refusing to accept such verdict, petitioner appealed the
This Petition for Review seeks the reversal of the 21
decision before the Court of Appeals contending that the
January 2009 decision[1] of the Court of Appeals (CA) in CA-
court a quo erred in not ruling that his criminal action or
G.R. CR No. 31125 affirming in toto the decision of the
liability had already been extinguished. He also claimed
Regional Trial Court (RTC), Branch 20, Malolos City in
that the trial court erred in finding him guilty of Bigamy
Criminal Case No. 2070-M-2006. The RTC decision[2] found
despite the defective Information filed by the prosecution.[10]
petitioner Cenon R. Teves guilty beyond reasonable doubt
of the crime of Bigamy penalized under Article 349 of the
On 21 January 2009, the CA promulgated its decision, the
Revised Penal Code.
dispositive portion of which reads:
THE FACTS
WHEREFORE, the appeal is DISMISSED and the Decision
dated August 15, 2007 in Criminal Case No. 2070-M-2006
On 26 November 1992, a marriage was solemnized
is AFFIRMED in TOTO.[11]
between Cenon Teves (Cenon) and Thelma Jaime-Teves
(Thelma) at the Metropolitan Trial Court of Muntinlupa City,
On 11 February 2009, petitioner filed a motion for
Metro Manila.[3]
reconsideration of the decision.[12] This however, was
denied by the CA in a resolution issued on 2 July 2009.[13]
After the marriage, Thelma left to work abroad. She would
only come home to the Philippines for vacations. While on
Hence, this petition.
a vacation in 2002, she was informed that her husband had
contracted marriage with a certain Edita Calderon (Edita).
Petitioner claims that since his previous marriage was
To verify the information, she went to the National Statistics
declared null and void, "there is in effect no marriage at all,
Office and secured a copy of the Certificate of
and thus, there is no bigamy to speak of."[14] He
Marriage[4] indicating that her husband and Edita contracted
differentiates a previous valid or voidable marriage from a
marriage on 10 December 2001 at the Divine Trust
marriage null and void ab initio, and posits that the former
Consulting Services, Malhacan, Meycauayan, Bulacan.
requires a judicial dissolution before one can validly
contract a second marriage but a void marriage, for the
On 13 February 2006, Danilo Bongalon, uncle of Thelma,
same purpose, need not be judicially determined.
filed before the Office of the Provincial Prosecutor of
Civpro Rule 39-43 22

Petitioner further contends that the ruling of the Court
in Mercado v. Tan[15] is inapplicable in his case because in
the Mercado case the prosecution for bigamy was initiated
before the declaration of nullity of marriage was filed. In
petitioner's case, the first marriage had already been legally
dissolved at the time the bigamy case was filed in court.
We find no reason to disturb the findings of the CA. There
is nothing in the law that would sustain petitioner's
contention.
Article 349 of the Revised Penal Code states:
The penalty of prision mayor shall be imposed upon any
person who shall contract a second or subsequent marriage
before the former marriage has been legally dissolved, or
before the absent spouse has been declared presumptively
dead by means of a judgment rendered in the proper
proceedings.
The elements of this crime are as follows:
1. That the offender has been legally married;
2. That the marriage has not been legally dissolved or, in
case his or her spouse is absent, the absent spouse could
not yet be presumed dead according to the Civil Code;
3. That he contracts a second or subsequent marriage; and
4. That the second or subsequent marriage has all the
essential requisites for validity.[16]
The instant case has all the elements of the crime of
bigamy. Thus, the CA was correct in affirming the
conviction of petitioner.
Petitioner was legally married to Thelma on 26 November
1992 at the Metropolitan Trial Court of Muntinlupa City. He
contracted a second or subsequent marriage with Edita on
10 December 2001 in Meycauayan, Bulacan. At the time of
his second marriage with Edita, his marriage with Thelma
was legally subsisting. It is noted that the finality of the
decision declaring the nullity of his first marriage with
Thelma was only on 27 June 2006 or about five (5) years
after his second marriage to Edita. Finally, the second or
subsequent marriage of petitioner with Edita has all the
essential requisites for validity. Petitioner has in fact not
disputed the validity of such subsequent marriage.[17]
It is evident therefore that petitioner has committed the
crime charged. His contention that he cannot be charged
with bigamy in view of the declaration of nullity of his first
marriage is bereft of merit. The Family Code has settled
once and for all the conflicting jurisprudence on the matter.
A declaration of the absolute nullity of a marriage is now
explicitly required either as a cause of action or a ground for
defense. Where the absolute nullity of a previous marriage
is sought to be invoked for purposes of contracting a
second marriage, the sole basis acceptable in law for said
projected marriage to be free from legal infirmity is a final
judgment declaring the previous marriage void.[18]
The Family Law Revision Committee and the Civil Code
Revision Committee which drafted what is now the Family
Code of the Philippines took the position that parties to a
marriage should not be allowed to assume that their
marriage is void even if such be the fact but must first
secure a judicial declaration of the nullity of their marriage
before they can be allowed to marry again.[19]
In fact, the requirement for a declaration of absolute nullity
of a marriage is also for the protection of the spouse who,
believing that his or her marriage is illegal and void, marries
again. With the judicial declaration of the nullity of his or
her marriage, the person who marries again cannot be
charged with bigamy.[20]
In numerous cases,[21] this Court has consistently held that
a judicial declaration of nullity is required before a valid
subsequent marriage can be contracted; or else, what
transpires is a bigamous marriage, reprehensible and
immoral.
If petitioner's contention would be allowed, a person who
commits bigamy can simply evade prosecution by
immediately filing a petition for the declaration of nullity of
his earlier marriage and hope that a favorable decision is
rendered therein before anyone institutes a complaint
against him. We note that in petitioner's case the complaint
was filed before the first marriage was declared a nullity. It
was only the filing of the Information that was overtaken by
the declaration of nullity of his first marriage. Following
petitioner's argument, even assuming that a complaint has
been instituted, such as in this case, the offender can still
escape liability provided that a decision nullifying his earlier
marriage precedes the filing of the Information in court.
Such cannot be allowed. To do so would make the crime of
bigamy dependent upon the ability or inability of the Office
of the Public Prosecutor to immediately act on complaints
and eventually file Informations in court. Plainly, petitioner's
strained reading of the law is against its simple letter.
Settled is the rule that criminal culpability attaches to the
offender upon the commission of the offense, and from that
instant, liability appends to him until extinguished as
provided by law, and that the time of filing of the criminal
complaint (or Information, in proper cases) is material only
for determining prescription.[22] The crime of bigamy was
committed by petitioner on 10 December 2001 when he
contracted a second marriage with Edita. The finality on 27
June 2006 of the judicial declaration of the nullity of his
previous marriage to Thelma cannot be made to retroact to
the date of the bigamous marriage.
WHEREFORE, the instant petition for review
is DENIED and the assailed Decision dated 21 January
2009 of the Court of Appeals is AFFIRMED in toto.
Costs against petitioner.
SO ORDERED.
G.R. No. 184666
REPUBLIC OF THE PHILIPPINES, Petitioner,
vs. MEGA PACIFIC Esolutions, INC., WILLY U. YU,
BONNIE S. YU, ENRIQUE T. TANSIPEK, ROSITA Y.
TANSIPEK, PEDRO O. TAN, JOHNSON W. FONG,
BERNARD I. FONG, and *LAURIANO A. BARRIOS,
Respondents.
DECISION SERENO, CJ.:
The instant case is an offshoot of this Court's Decision
dated 13 January 2004 (2004 Decision) in a related case
entitled Information Technology Foundation of the
Philippines v. Commission on Elections .1
In the 2004 case, We declared void the automation contract
executed by respondent Mega Pacific eSolutions, Inc.
(MPEI) and the Commission on Elections (COMELEC) for
the supply of automated counting machines (ACMs) for the
2004 national elections.
The present case involves the attempt of petitioner
Republic of the Philippines to cause the attachment of the
Civpro Rule 39-43 23
properties owned by respondent MPEI, as well as by its
incorporators and stockholders (individual respondents in
this case), in order to secure petitioner's interest and to
ensure recovery of the payments it made to respondents for
the invalidated automation contract.
At bench is a Rule 45 Petition assailing the Amended
Decision dated 22 September 2008 (Amended Decision)
issued by the Court of Appeals (CA) in CA-G.R. SP No.
95988.2 In said Amended Decision, the CA directed the
remand of the case to the Regional Trial Court of Makati
City, Branch 59 (RTC Makati) for the reception of evidence
in relation to petitioner's application for the issuance of a
writ of preliminary attachment. The CA had reconsidered
and set aside its previous Decision dated 31 January 2008
(First Decision)3 entitling petitioner to the issuance of said
writ.
Summarized below are the relevant facts of the case, some
of which have already been discussed in this Court's 2004
Decision:
THE FACTS
Republic Act No. 8436 authorized the COMELEC to use an
automated election system for the May 1998 elections.
However, the automated system failed to materialize and
votes were canvassed manually during the 1998 and the
2001 elections.
For the 2004 elections, the COMELEC again attempted to
implement the automated election system. For this purpose,
it invited bidders to apply for the procurement of supplies,
equipment, and services. Respondent MPEI, as lead
company, purportedly formed a joint venture - known as the
Mega Pacific Consortium (MPC) - together with We Solv,
SK C & C, ePLDT, Election.com and Oracle. Subsequently,
MPEI, on behalf of MPC, submitted its bid proposal to
COMELEC.
The COMELEC evaluated various bid offers and
subsequently found MPC and another company eligible to
participate in the next phase of the bidding process.4 The
two companies were referred to the Department of Science
and Technology (DOST) for technical evaluation. After due
assessment, the Bids and Awards Committee (BAC)
recommended that the project be awarded to MPC. The
COMELEC favorably acted on the recommendation and
issued Resolution No. 6074, which awarded the automation
project to MPC.
Despite the award to MPC, the COMELEC
and MPEI executed on 2 June 2003 the Automated
Counting and Canvassing Project Contract (automation
contract)5 for the aggregate amount of ₱l,248,949,088.
MPEI agreed to supply and deliver 1,991 units of ACMs and
such other equipment and materials necessary for the
computerized electoral system in the 2004 elections.
Pursuant to the automation contract, MPEI delivered 1,991
ACMs to the COMELEC. The latter, for its part, made partial
payments to MPEI in the aggregate amount of ₱l.05 billion.
The full implementation of the automation contract was
rendered impossible by the fact that, after a painstaking
legal battle, this Court in its 2004 Decision declared the
contract null and void.6 We held that the COMELEC
committed a clear violation of law and jurisprudence, as
well as a reckless disregard of its own bidding rules and
procedure. In addition, the COMELEC entered into the
contract with inexplicable haste, and without adequately
checking and observing mandatory financial, technical, and
legal requirements. In a subsequent Resolution, We
summarized the COMELEC's grave abuse of discretion as
having consisted of the following: 7
1. By a formal Resolution, it awarded the project to "Mega
Pacific Consortium," an entity that had not participated in
the bidding. Despite this grant, Comelec entered into
the actual Contract with "Mega Pacific eSolutions, Inc."
(MPEI), a company that joined the bidding process but
did not meet the eligibility requirements.
2. Comelec accepted and irregularly paid for MPEI's ACMs
that had failed the accuracy requirement of 99.9995 percent
set up by the Comelec bidding rules. Acknowledging that
this rating could have been too steep, the Court
nonetheless noted that "the essence of public bidding is
violated by the practice of requiring very high standards or
unrealistic specifications that cannot be met, x x x only to
water them down after the award is made. Such scheme,
which discourages the entry of bona fide bidders, is in
fact a sure indication of fraud in the bidding, designed
to eliminate fair competition."
3. The software program of the counting machines
likewise failed to detect previously downloaded precinct
results and to prevent them from being reentered. This
failure, which has not been corrected x x x, would have
allowed unscrupulous persons to repeatedly feed into the
computers the results favorable to a particular candidate,
an act that would have translated into massive election
fraud by just a few key strokes.
4. Neither were the ACMs able to print audit trails without
loss of data - a
mandatory requirement under Section 7 of Republic Act No.
8436. Audit trails would enable the Comelec to document
the identities of the ACM operators responsible for data
entry and downloading, as well as the times when the
various data were processed, in order to forestall fraud and
to identify the perpetrators. The absence of audit trails
would have posed a serious threat to free and credible
elections.
5. Comelec failed to explain satisfactorily why it had ignored
its own bidding rules and requirements. It admitted that the
software program used to test the ACMs was merely a
"demo" version, and that the final one to be actually used in
the elections was still being developed. By awarding the
Contract and irregularly paying for the supply of the ACMs
without having seen -- much less, evaluated -- the final
product being purchased, Comelec desecrated the law on
public bidding. It would have allowed the winner to alter its
bid substantially, without any public bidding.
All in all, Comelec subverted the essence of public bidding:
to give the public an opportunity for fair competition and a
clear basis for a precise comparison of bids.8 (Emphasis
supplied)
As a consequence of the nullification of the automation
contract, We directed the Office of the Ombudsman to
determine the possible criminal liability of persons
responsible for the contract.9 This Court likewise directed
the Office of the Solicitor General to protect the government
from the ill effects of the illegal disbursement of public funds
in relation to the automation contract. 10
After the declaration of nullity of the automation contract,
the following incidents transpired:
Civpro Rule 39-43 24
1. Private respondents in the 2004 case moved for
reconsideration of the 2004 Decision, but the motion was
denied by this Court in a Resolution dated 17 February
2004 (2004 Resolution). 11
2. The COMELEC filed a "Most Respectful Motion for Leave
to Use the Automated Counting Machines in the Custody of
the Commission on Elections for use in the 8 August 2005
Elections in the Autonomous Region for Muslim Mindanao"
dated 9 December 2004 (Motion for Leave to Use ACMs),
which was denied by this Court in its Resolution dated 15
June 2005 (2005 Resolution).
3. Atty. Romulo B. Macalintal (Macalintal) filed an "Omnibus
Motion for Leave of Court (1) to Reopen the Case; and (2)
to Intervene and Admit the Attached Petition in
Intervention," which was denied by this Court in its
Resolution dated 22 August 2006 (2006 Resolution); and
4. Respondent MPEI filed a Complaint for
Damages12 (Complaint) with the RTC Makati, from which
the instant case arose.
The above-mentioned incidents are discussed in more
detail below.
BACKGROUND PROCEEDINGS
Private respondents' Motion for Reconsideration
Private respondents in the 2004 case moved for
reconsideration of the 2004 Decision. Aside from reiterating
the procedural and substantive arguments they had raised,
they also argued that the 2004 Decision had exposed them
to possible criminal prosecution. 13
This Court denied the motion in its 2004 Resolution and
ruled that no prejudgment had been made on private
respondents' criminal liability. We further ruled that although
the 2004 Decision stated that the Ombudsman shall
"determine the criminal liability, if any, of the public officials
(and conspiring private individuals, if any) involved in the
subject Resolution and Contract," We did not make any
premature conclusion on any wrongdoing, but precisely
directed the Ombudsman to make that determination after
conducting appropriate proceedings and observing due
process.
Similarly, it appears from the record that several criminal
and administrative Complaints had indeed been filed with
the Ombudsman in relation to the declaration of nullity of
the automation contract. 14 The Complaints were filed
against several public officials and the individual
respondents in this case. 15
In a Resolution issued on 28 June 2006, 16 the Ombudsman
recommended the filing of informations before the
Sandiganbayan against some of the public officials and the
individual respondents17 for violation of Section 3(e) of
Republic Act No. 3019 (the Anti-Graft and Corrupt Practices
Act). However, on 27 September 2006, 18 upon
reconsideration, the Ombudsman reversed its earlier ruling
in a Supplemental Resolution (September Resolution),
directing the dismissal of the criminal cases against the
public officials, as well as the individual respondents, for
lack of probable cause. 19
With this development, a Petition for Certiorari was filed
with this Court on 13 October 2006 and docketed as G.R.
No. 174777.20 In the Petition, several individuals21 assailed
the September Resolution of the Ombudsman finding no
probable cause to hold respondents criminally liable. The
case remains pending with this Court as of this date.
COMELEC's Motion for Leave to
Use ACMs in the ARMM Elections
The COMELEC filed a motion with this Court requesting
permission to use the 1,991 ACMs previously delivered by
respondent MPEI, for the ARMM elections, then slated to
be held on 8 August 2005. In its motion, the COMELEC
claimed that automation of the ARMM elections was
mandated by Republic Act No. 9333, and since the
government had no available funds to finance the
automation of those elections, the ACMs could be utilized
for the 2005 elections.
This Court denied the Motion in Our 2005 Resolution. We
ruled that allowing the use of the ACMs would have the
effect of illegally reversing and subverting a final decision
We had promulgated. We further ruled that the COMELEC
was asking for permission to do what it had precisely been
prohibited from doing under the 2004 Decision. This Court
also ruled that the grant of the motion would bar or
jeopardize the recovery of government funds paid to
respondents. Considering that the COMELEC did not
present any evidence to prove that the defects had been
addressed, We held that the use of the ACMs and the
software would expose the ARMM elections to the same
electoral ills pointed out in the 2004 Decision.
Atty. Macalintal's Omnibus Motion
Atty. Romulo Macalintal sought to reopen the 2004 case in
order that he may be allowed to intervene as a taxpayer
and citizen. His purpose for intervening was to seek another
testing of the ACMs with the ultimate objective of allowing
the COMELEC to use them, this time for the 2007 national
elections.
This Court denied his motion in Our 2006 Resolution, ruling
that Atty. Macalintal failed to demonstrate that certain
supervening events and legal circumstances had transpired
to justify the reliefs sought. We in fact found that, after Our
determination that the ACMs had failed to pass legally
mandated technical requirements in 2004, they were simply
put in storage. The ACMs had remained idle and unused
since the last evaluation, at which they failed to hurdle
crucial tests. Consequently, We ruled that if the ACMs were
not good enough for the 2004 national elections or the 2005
ARMM elections, then neither would they be good enough
for the 2007 national elections, considering that nothing
was done to correct the flaws that had been previously
underscored in the 2004 Decision. We held that granting
the motion would be tantamount to rendering the 2004
Decision totally ineffective and nugatory.
Moreover, because of our categorical ruling that the whole
bidding process was void and fraudulent, the proposal to
use the illegally procured, demonstratively defective, and
fraud-prone ACMs was rendered nonsensical. Thus:
We stress once again that the Contract entered into by the
Comelec for the supply of the ACMs was declared VOID by
the Court in its Decision, because of clear violations of law
and jurisprudence, as well as the reckless disregard by the
Commission of its own bidding rules and procedure. In
addition, the poll body entered into the Contract with
inexplicable haste, without adequately checking and
observing mandatory financial, technical and legal
requirements. As explained in our Decision, Comclec's
gravely abusive acts consisted of the following:
Civpro Rule 39-43 25
 xxxx
To muddle the issue, Comelec keeps on saying that the
"winning" bidder presented a lower price than the only
other bidder. It ignored the fact that the whole bidding
process was VOID and FRAUDULENT. How then could
there have been a "winning" bid?22 (Emphasis supplied)
THE INSTANT CASE
Complaint for Damages filed by
respondents with the RTC Makati
and petitioner's Answer with
Counterclaim, with an application
for a writ of preliminary attachment,
from which the instant case arose
Upon the finality of the declaration of nullity of the
automation contract, respondent MPEI filed a Complaint for
Damages before the RTC Makati, arguing that,
notwithstanding the nullification of the automation contract,
the COMELEC was still bound to pay the amount of
₱200,165,681.89. This amount represented the difference
between the value of the ACMs and the support services
delivered on one hand, and on the other, the payment
previously made by the COMELEC.23
Petitioner filed its Answer with Counterclaim24 and argued
that respondent MPEI could no longer recover the unpaid
balance from the void automation contract, since the
payments made were illegal disbursements of public funds.
It contended that a null and void contract vests no rights
and creates no obligations, and thus produces no legal
effect at all. Petitioner further posited that respondent MPEI
could not hinge its claim upon the principles of unjust
enrichment and quasi-contract, because such presume that
the acts by which the authors thereof become obligated to
each other are lawful, which was not the case herein.25
By way of a counterclaim, petitioner demanded from
respondents the return of the payments made pursuant to
the automation contract.26 It argued that individual
respondents, being the incorporators of MPEI, likewise
ought to be impleaded and held accountable for MPEI's
liabilities. The creation of MPC was, after all, merely an
ingenious scheme to feign eligibility to bid.27
Pursuant to Section l(d) of Rule 57 of the Rules of Court,
petitioner prayed for the issuance of a writ of preliminary
attachment against the properties of MPEI and individual
respondents. The application was grounded upon the
fraudulent misrepresentation of respondents as to their
eligibility to participate in the bidding for the COMELEC
automation project and the failure of the ACMs to comply
with mandatory technical requirements.28
Subsequently, the trial court denied the prayer for the
issuance of a writ of preliminary attachment, 29 ruling that
there was an absence of factual allegations as to how the
fraud was actually committed.
The allegations of petitioner were found to be unreliable, as
the latter merely copied from the declarations of the
Supreme Court in Information Technology Foundation of
the Phils. v. COMELEC the factual allegations of MPEI's
lack of qualification and noncompliance with bidding
requirements. The trial court further ruled that the
allegations of fraud on the part of MPEI were not supported
by the COMELEC, the office in charge of conducting the
bidding for the election automation contract. It was likewise
held that there was no evidence that respondents harbored
a preconceived plan not to comply with the obligation;
neither was there any evidence that MPEI's corporate
fiction was used to perpetrate fraud. Thus, it found no
sufficient basis to pierce the veil of corporate fiction or to
cause the attachment of the properties owned by individual
respondents.
Petitioner moved to set aside the trial court's Order denying
the writ of attachment,30 but its motion was denied.31
Appeal before the CA and the First
Decision
Aggrieved, petitioner filed an appeal with the CA, arguing
that the trial court had acted with grave abuse of discretion
in denying the application for a writ of attachment.
As mentioned earlier, the CA in its First Decision32 reversed
and set aside the trial court's Orders and ruled that there
was sufficient basis for the issuance of a writ of attachment
in favor of petitioner.
The appellate court explained that the averments of
petitioner in support of the latter's application actually
reflected pertinent conclusions reached by this Court in its
2004 Decision. It held that the trial court erred in
disregarding the following findings of fact, which remained
unaltered and unreversed: (1) COMELEC bidding rules
provided that the eligibility and capacity of a bidder may be
proved through financial documents including, among
others, audited financial statements for the last three years;
(2) MPEI was incorporated only on 27 February 2003, or 11
days prior to the bidding itself; (3) in an attempt to disguise
its ineligibility, MPEI participated in the bidding as lead
company of MPC, a putative consortium, and submitted the
incorporation papers and financial statements of the
members of the consortium; and (4) no proof of the joint
venture agreement, consortium agreement, memorandum
of agreement, or business plan executed among the
members of the purported consortium was ever submitted
to the COMELEC.33
According to the CA, the foregoing were glaring indicia or
badges of fraud, which entitled petitioner to the issuance of
the writ. It further ruled that there was sufficient reason to
pierce the corporate veil of MPEI. Thus, the CA allowed the
attachment of the properties belonging to both MPEI and
individual respondents.34 The CA likewise ruled that even if
the COMELEC committed grave abuse of discretion in
capriciously disregarding the rules on public bidding, this
should not preclude or deter petitioner from pursuing its
claim against respondents. After all, the State is not
estopped by the mistake of its officers and employees.35
Respondents moved for reconsideration36 of the First
Decision of the CA.
Motion for Reconsideration before
the CA and the Amended Decision
Upon review, the CA reconsidered its First Decision37 and
directed the remand of the case to the RTC Makati for the
reception of evidence of allegations of fraud and to
determine whether attachment should necessarily issue.38
The CA explained in its Amended Decision that
respondents could not be considered to have fostered a
fraudulent intent to dishonor their obligation, since they had
delivered 1,991 units of ACMs.39 It directed petitioner to
present proof of respondents' intent to defraud COMELEC
during the execution of the automation contract.40 The CA
likewise emphasized that the Joint Affidavit submitted in
Civpro Rule 39-43 26
support of petitioner's application for the writ contained
allegations that needed to be substantiated.41 It added that
proof must likewise be adduced to verify the requisite fraud
that would justify the piercing of the corporate veil of
respondent MPEI.42
The CA further clarified that the 2004 Decision did not make
a definite finding as to the identities of the persons
responsible for the illegal disbursement or of those who
participated in the fraudulent dealings.43 It instructed the trial
court to consider, in its determination of whether the writ of
attachment should issue, the illegal, imprudent and hasty
acts in awarding the automation contract by the COMELEC.
In particular, these acts consisted of: (1) awarding the
automation contract to MPC, an entity that did not
participate in the bidding; and (2) signing the actual
automation contract with respondent MPEI, the company
that joined the bidding without meeting the eligibility
requirement.44
Rule 45 Petition before Us
Consequently, petitioner filed the instant Rule 45
Petition,45 arguing that the CA erred in ordering the remand
of the case to the trial court for the reception of evidence to
determine the presence of fraud. Petitioner contends that
this Court's 2004 Decision was sufficient proof of the fraud
committed by respondents in the execution of the voided
automation contract.46 Respondents allegedly committed
fraud by securing the automation contract, although MPEI
was not qualified to bid in the first place.47 Their claim that
the members of MPC bound themselves to the automation
contract was an indication of bad faith as the contract was
executed by MPEI alone.48 Neither could they deny that the
software submitted during the bidding process was not the
same one that would be used on election day.49 They could
not dissociate themselves from telltale signs such as
purportedly supplying software that later turned out to be
non-existent. 50
In their respective Comments, respondents Willy Yu, Bonnie
Yu, Enrique Tansipek, and Rosita Tansipek counter51that
this Court never ruled that individual respondents were
guilty of any fraud or bad faith in connection with the
automation contract, and that it was incumbent upon
petitioner to present evidence on the allegations of fraud to
justify the issuance of the writ. 52 They likewise argue that
the 2004 Decision cannot be invoked against them, since
petitioner and MPEI were co-respondents in the 2004 case
and not adverse parties therein. 53Respondents further
contend that the allegations of fraud are belied by their
actual delivery of 1,991 units of ACMs to the COMELEC,
which they claim is proof that they never had any intention
to evade performance. 54
They further allege that this Court, in its 2004 Decision,
even recognized that it had not found any wrongdoing on
their part, and that the Ombudsman had already made a
determination that no probable cause existed with respect
to charges of violation of Anti-Graft and Corrupt Practices
Act.55
Echoing the other respondents' arguments on the lack of
particularity in the allegations of fraud, 56 respondents MPEI,
Johnson Wong, Bernard Fong, Pedro Tan, and Lauriano
Barrios likewise argue that they were not parties to the
2004 case; thus, the 2004 Decision thereon is not binding
on them.57 Individual respondents likewise argue that the
findings of fact in the 2004 Decision were not
conclusive,58 considering that eight (8) of the fifteen (15)
justices allegedly refused to go along with the factual
findings as stated in the majority opinion.59 Thereafter,
petitioner filed its Reply to the Comments.60
Based on the submissions of both parties, the following
issues are presented to this Court for resolution:
1. Whether petitioner has sufficiently established
fraud on the part of respondents to justify the
issuance of a writ of preliminary attachment in its
favor; and
2. Whether a writ of preliminary attachment may
be issued against the properties of individual
respondents, considering that they were not
parties to the 2004 case.
THE COURT'S RULING
The Petition is meritorious. A writ of preliminary attachment
should issue in favor of petitioner over the properties of
respondents MPEI, Willy Yu (Willy) and the remaining
individual respondents, namely: Bonnie S. Yu (Bonnie),
Enrique T. Tansipek (Enrique), Rosita Y. Tansipek (Rosita),
Pedro O. Tan (Pedro), Johnson W. Fong (Johnson),
Bernard I. Fong (Bernard), and Lauriano Barrios (Lauriano).
The bases for the writ are the following:
1. Fraud on the part of respondent MPEI was
sufficiently established by the factual findings of
this Court in its 2004 Decision and subsequent
pronouncements.
2. A writ of preliminary attachment may issue over
the properties of the individual respondents using
the doctrine of piercing the corporate veil.
3. The factual findings of this Court that have
become final cannot be modified or altered, much
less reversed, and are controlling in the instant
case.
4. The delivery of 1,991 units of ACMs does not
negate fraud on the part of respondents MPEI and
Willy.
5. Estoppel does not lie against the state when it
acts to rectify mistakes, errors or illegal acts of its
officials and agents.
6. The findings of the Ombudsman are not
controlling in the instant case.
DISCUSSION
I.
Fraud on the part of respondent MPEI was sufficiently
established by the factual findings of this Court in the
latter's 2004 Decision and subsequent
pronouncements.
Petitioner argues that the findings of this Court in the 2004
Decision serve as sufficient basis to prove that, at the time
of the execution of the automation contract, there was fraud
on the part of respondents that justified the issuance of a
writ of attachment. Respondents, however, argue the
contrary. They claim that fraud had not been sufficiently
established by petitioner.
We rule in favor of petitioner. Fraud on the part of
respondents MPEI and Willy, as well as of the other
Civpro Rule 39-43 27
individual respondents - Bonnie, Enrique, Rosita, Pedro,
Johnson, Bernard, and Lauriano -has been established.
A writ of preliminary attachment is a provisional remedy
issued upon the order of the court where an action is
pending.1âwphi1 Through the writ, the property or
properties of the defendant may be levied upon and held
thereafter by the sheriff as security for the satisfaction of
whatever judgment might be secured by the attaching
creditor against the defendant.61 The provisional remedy of
attachment is available in order that the defendant may not
dispose of the property attached, and thus prevent the
satisfaction of any judgment that may be secured by the
plaintiff from the former. 62
The purpose and function of an attachment or garnishment
is twofold. First, it seizes upon property of an alleged debtor
in advance of final judgment and holds it subject to
appropriation, thereby preventing the loss or dissipation of
the property through fraud or other means. Second, it
subjects the property of the debtor to the payment of a
creditor's claim, in those cases in which personal service
upon the debtor cannot be obtained.63 This remedy is meant
to secure a contingent lien on the defendant's property until
the plaintiff can, by appropriate proceedings, obtain a
judgment and have the property applied to its satisfaction,
or to make some provision for unsecured debts in cases in
which the means of satisfaction thereof are liable to be
removed beyond the jurisdiction, or improperly disposed of
or concealed, or otherwise placed beyond the reach of
creditors.64
Petitioner relied upon Section l (d), Rule 57 of the Rules of
Court as basis for its application for a writ of preliminary
attachment. This provision states:
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. (Emphasis supplied)
For a writ of preliminary attachment to issue under the
above-quoted rule, the applicant must sufficiently show the
factual circumstances of the alleged fraud. 65 In Metro, Inc.
v. Lara's Gift and Decors, Inc., 66We 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. x x x.
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
debtor's mere non-payment of the debt or failure to comply
with his obligation. (Emphasis supplied)
An amendment to the Rules of Court added the phrase "in
the performance thereof' to include within the scope of the
grounds for issuance of a writ of preliminary attachment
those instances relating to fraud in the performance of the
obligation.67
Fraud is a generic term that is used in various senses and
assumes so many different degrees and forms that courts
are compelled to content themselves with comparatively
few general rules for its discovery and defeat. For the same
reason, the facts and circumstances peculiar to each case
are allowed to bear heavily on the conscience and
judgment of the court or jury in determining the presence or
absence of fraud. In fact, the fertility of man's invention in
devising new schemes of fraud is so great that courts have
always declined to define it, thus, reserving for themselves
the liberty to deal with it in whatever form it may present
itself.68
Fraud may be characterized as the voluntary execution of a
wrongful act or a wilful omission, while knowing and
intending the effects that naturally and necessarily arise
from that act or omission.69 In its general sense, fraud is
deemed to comprise anything calculated to deceive-
including all acts and omission and concealment involving a
breach of legal or equitable duty, trust, or confidence justly
reposed-resulting in damage to or in undue advantage over
another.70 Fraud is also described as embracing all
multifarious means that human ingenuity can device, and is
resorted to for the purpose of securing an advantage over
another by false suggestions or by suppression of truth; and
it includes all surprise, trick, cunning, dissembling, and any
other unfair way by which another is cheated.71
While fraud cannot be presumed, it need not be proved by
direct evidence and can well be inferred from attendant
circumstances.72 Fraud by its nature is not a thing
susceptible of ocular observation or readily demonstrable
physically; it must of necessity be proved in many cases by
inferences from circumstances shown to have been
involved in the transaction in question.73
In the case at bar, petitioner has sufficiently discharged the
burden of demonstrating the commission of fraud by
respondent MPEI in the execution of the automation
contract in the two ways that were enumerated earlier and
discussed below:
A. Respondent MPEI had perpetrated a
scheme against petitioner to secure the
automation contract by using MPC as
supposed bidder and eventually succeeding
in signing the automation contract as
MPEI alone, an entity which was ineligible
to hid in the first place.
To avoid any confusion relevant to the basis of fraud, We
quote herein the pertinent portions of this Court's 2004
Decision with regard to the identity, existence, and eligibility
of MPC as bidder:74
On the question of the identity and the existence of the real
bidder, respondents insist that, contrary to petitioners'
allegations, the bidder was not Mega Pacific eSolutions.
Inc. (MPEI), which was incorporated only on February
27, 2003, or 11 days prior to the bidding itself. Rather,
the bidder was Mega Pacific Consortium (MPC), of which
MPEI was but a part. As proof thereof, they point to the
March 7, 2003 letter of intent to bid, signed by the president
Civpro Rule 39-43 28
of MPEI allegedly for and on behalf of MPC. They also call
attention to the official receipt issued to MPC,
acknowledging payment for the bidding documents, as
proof that it was the "consortium" that participated in the
bidding process.
We do not agree. The March 7, 2003 letter, signed by only
one signatory - "Willy U. Yu, President, Mega Pacific
eSolutions, Inc., (Lead Company/Proponent) For: Mega
Pacific Consortium" - and without any further proof, does
not by itself prove the existence of the consortium. It does
not show that MPEI or its president have been duly pre-
authorized by the other members of the putative consortium
to represent them, to bid on their collective behalf and,
more important, to commit them jointly and severally to the
bid undertakings. The letter is purely self-serving and
uncorroborated.
Neither does an official receipt issued to MPC,
acknowledging payment for the bidding documents,
constitute proof that it was the purported consortium that
participated in the bidding. Such receipts are issued by
cashiers without any legally sufficient inquiry as to the real
identity or existence of the supposed payor.
To assure itself properly of the due existence (as well as
eligibility and qualification) of the putative consortium,
Comelec's BAC should have examined the bidding
documents submitted on behalf of MPC. They would have
easily discovered the following fatal flaws.
xxxx
The Eligibility Envelope was to contain legal
documents such as articles of incorporation, x x x to
establish the bidder's financial capacity.
In the case of a consortium or joint venture desirous of
participating in the bidding, it goes without saying that the
Eligibility Envelope would necessarily have to include a
copy of the joint venture agreement, the consortium
agreement or memorandum of agreement -- or a business
plan or some other instrument of similar import --
establishing the due existence, composition and scope of
such aggrupation. Otherwise, how would Comelec know
who it was dealing with, and whether these parties are
qualified and capable of delivering the products and
services being offered for bidding?
In the instant case, no such instrument was submitted
to Comelec during the bidding process. x x x
xxxx
However, there is no sign whatsoever of any joint
venture agreement, consortium agreement,
memorandum of agreement, or business plan executed
among the members of the purported consortium.
The only logical conclusion is that no such agreement
was ever submitted to the Comelec for its
consideration, as part of the bidding process.
It thus follows that, prior the award of the Contract,
there was no documentary or other basis for Comelec
to conclude that a consortium had actually been
formed amongst MPEI, SK C&C and WeSolv, along with
Election.com and ePLDT. Neither was there anything to
indicate the exact relationships between and among these
firms; their diverse roles, undertakings and prestations, if
any, relative to the prosecution of the project, the extent of
their respective investments (if any) in the supposed
consortium or in the project; and the precise nature and
extent of their respective liabilities with respect to the
contract being offered for bidding. And apart from the self-
serving letter of March 7, 2003, there was not even any
indication that MPEI was the lead company duly authorized
to act on behalf of the others.
xxxx
Hence, had the proponent MPEI been evaluated based
solely on its own experience, financial and operational
track record or lack thereof, it would surely not have
qualified and would have been immediately considered
ineligible to bid, as respondents readily admit.
xxxx
At this juncture, one might ask: What, then, if there are four
MOAs instead of one or none at all? Isn't it enough that
there are these corporations coming together to carry out
the automation project? Isn't it
true, as respondent aver, that nowhere in the RFP issued
by Comelec is it required that the members of the joint
venture execute a single written agreement to prove the
existence of a joint venture. x x x
xxxx
The problem is not that there are four agreements instead
of only one.1âwphi1 The problem is that Comelec never
bothered to check. It never based its decision on
documents or other proof that would concretely establish
the existence of the claimed consortium or joint venture or
agglomeration.
xxxx
True, copies of financial statements and incorporation
papers of the alleged "consortium" members were
submitted. But these papers did not establish the existence
of a consortium, as they could have been provided by the
companies concerned for purposes other than to prove that
they were part of a consortium or joint venture.
xxxx
In brief, despite the absence of competent proof as to
the existence and eligibility of the alleged consortium
(MPC), its capacity to deliver on the Contract, and the
members' joint and several liability therefor, Comelec
nevertheless assumed that such consortium existed
and was eligible. It then went ahead and considered the
bid of MPC, to which the Contract was eventually
awarded, in gross violation of the former's own bidding
rules and procedures contained in its RFP. Therein lies
Comelec's grave abuse of discretion.
Sufficiency of the Four Agreements
Instead of one multilateral agreement executed by, and
effective and binding on, all the five "consortium members"
-- as earlier claimed by Commissioner Tuason in open court
-- it turns out that what was actually executed were four
(4) separate and distinct bilateral Agreements. Obviously,
Comelec was furnished copies of these Agreements
only after the bidding process had been terminated, as
these were not included in the Eligibility Documents. x
xx
Civpro Rule 39-43 29
 xxxx
At this point, it must be stressed most vigorously that
the submission of the four bilateral Agreements to
Comelec after the end of the bidding process did
nothing to eliminate the grave abuse of discretion it
had already committed on April 15, 2003.
Deficiencies Have Not Been "Cured"
In any event, it is also claimed that the automation Contract
awarded by Comelec incorporates all documents executed
by the "consortium" members, even if these documents are
not referred to therein. x x x
xxxx
Thus, it is argued that whatever perceived deficiencies
there were in the supplementary contracts -- those entered
into by MPEI and the other members of the "consortium" as
regards their joint and several undertakings -- have been
cured. Better still, such deficiencies have supposedly been
prevented from arising as a result of the above-quoted
provisions, from which it can be immediately established
that each of the members of MPC assumes the same joint
and several liability as the other members.
The foregoing argument is unpersuasive. First, the
contract being referred to, entitled "The Automated
Counting and Canvassing Project Contract," is between
Comelec and MPEI, not the alleged consortium, MPC.
To repeat, it is MPEI -- not MPC -that is a party to the
Contract. Nowhere in that Contract is there any
mention of a consortium or joint venture, of members
thereof, much less of joint and several
liability. Supposedly executed sometime in May 2003,
the Contract bears a notarization date of June 30, 2003,
and contains the signature of Willy U. Yu signing as
president of MPEI (not for and on behalf of MPC), along
with that of the Comelec chair. It provides in Section 3.2
that MPEI (not MPC) is to supply the Equipment and
perform the Services under the Contract, in accordance
with the appendices thereof; nothing whatsoever is
said about any consortium or joint venture or
partnership.
xxxx
Eligibility of a Consortium Based on the Collective
Qualifications of Its Members
Respondents declare that, for purposes of assessing the
eligibility of the bidder, the members of MPC should be
evaluated on a collective basis. Therefore, they contend,
the failure of MPEI to submit financial statements (on
account of its recent incorporation) should not by itself
disqualify MPC, since the other members of the
"consortium" could meet the criteria set out in the RFP.
xxxx
Unfortunately, this argument seems to assume that the
"collective" nature of the undertaking of the members of
MPC, their contribution of assets and sharing of risks, and
the "community" of their interest in the performance of the
Contract entitle MPC to be treated as a joint venture or
consortium; and to be evaluated accordingly on the basis of
the members' collective qualifications when, in fact, the
evidence before the Court suggest otherwise.
xxxx
Going back to the instant case, it should be recalled
that the automation Contract with Comelec was not
executed by the "consortium" MPC -- or by MPEI for
and on behalf of MPC -- but by MPEI, period. The said
Contract contains no mention whatsoever of any
consortium or members thereof. This fact alone seems
to contradict all the suppositions about a joint
undertaking that would normally apply to a joint
venture or consortium: that it is a commercial
enterprise involving a community of interest, a sharing
of risks, profits and losses, and so on.
xxxx
To the Court, this strange and beguiling arrangement of
MPEI with the other companies does not qualify them to be
treated as a consortium or joint venture, at least of the type
that government agencies like the Comelec should be
dealing with. With more reason is it unable to agree to the
proposal to evaluate the members of MPC on a collective
basis. (Emphases supplied)
These findings found their way into petitioner's application
for a writ of preliminary attachment,75 in which it claimed the
following as bases for fraud: (1) respondents committed
fraud by securing the election automation contract and, in
order to perpetrate the fraud, by misrepresenting the actual
bidder as MPC and MPEI as merely acting on MPC's
behalf; (2) while knowing that MPEI was not qualified to bid
for the automation contract, respondents still signed and
executed the contract; and (3) respondents acted in bad
faith when they claimed that they had bound themselves to
the automation contract, because it was not executed by
MPC-or by MPEI on MPC's behalf- but by MPEI alone. 76
We agree with petitioner that respondent MPEI committed
fraud by securing the election automation contract; and, in
order to perpetrate the fraud, by misrepresenting that the
actual bidder was MPC and not MPEI, which was only
acting on behalf of MPC. We likewise rule that respondent
MPEI has defrauded petitioner, since the former still
executed the automation contract despite knowing that it
was not qualified to bid for the same.
The established facts surrounding the eligibility, qualification
and existence of MPC - and of MPEI for that matter - and
the subsequent execution of the automation contract with
the latter, when all taken together, constitute badges of
fraud that We simply cannot ignore. MPC was considered
an illegitimate entity, because its existence as a joint
venture had not been established. Notably, the essential
document/s that would have shown its eligibility as a joint
venture/consortium were not presented to the COMELEC at
the most opportune time, that is, during the qualification
stage of the bidding process. The concealment by
respondent MPEI of the essential documents showing its
eligibility to bid as part a joint venture is too obvious to be
missed. How could it not have known that the very
document showing MPC as a joint venture should have
been included in their eligibility envelope?
Likewise notable is the fact that these supposed
agreements, allegedly among the supposed consortium
members, were belatedly provided to the
COMELEC after the bidding process had been terminated;
these were not included in the Eligibility Documents earlier
submitted by MPC. Similarly, as found by this Court, these
documents did not prove any joint venture agreement
among the parties in the first place, but were actually
individual agreements executed by each member of the
supposed consortium with respondent MPEI.
Civpro Rule 39-43 30
More startling to the dispassionate mind is the
incongruence between the supposed actual bidder MPC, on
one hand, and, on the other, respondent MPEI, which
executed the automation contract. Significantly, respondent
MPEI was not even eligible and qualified to bid in the first
place; and yet, the automation contract itself was executed
and signed singly by respondent MPEI, not on behalf of the
purported bidder MPC, without any mention whatsoever of
the members of the supposed consortium.
From these established facts, We can surmise that in order
to secure the automation contract, respondent MPEI
perpetrated a scheme against petitioner by using MPC as
supposed bidder and eventually succeeding in signing the
automation contract as MPEI alone. Worse, it was
respondent MPEI alone, an entity that was ineligible to bid
in the first place, that eventually executed the automation
contract.
To a reasonable mind, the entire situation reeks of fraud,
what with the misrepresentation of identity and
misrepresentation as to creditworthiness. It is in these kinds
of fraudulent instances, when the ability to abscond is
greatest, to which a writ of attachment is precisely
responsive.
Further, the failure to attach the eligibility documents is
tantamount to failure on the part of respondent MPEI to
disclose material facts. That omission constitutes fraud.
Pursuant to Article 1339 of the Civil Code,77 silence or
concealment does not, by itself, constitute fraud, unless
there is a special duty to disclose certain facts, or unless
the communication should be made according to good faith
and the usages of commerce. 78
Fraud has been defined to include an inducement through
insidious machination. Insidious machination refers to a
deceitful scheme or plot with an evil or devious purpose.
Deceit exists where the party, with intent to
deceive, conceals or omits to state material facts and,
by reason of such omission or concealment, the other party
was induced to give consent that would not otherwise have
been given.79
One form of inducement is covered within the scope of the
crime of estafa under Article 315, paragraph 2, of the
Revised Penal Code, in which, any person who defrauds
another by using fictitious name, or falsely pretends to
possess power, influence, qualifications, property, credit,
agency, business or imaginary transactions, or by means of
similar deceits executed prior to or simultaneously with the
commission of fraud is held criminally liable. In Jason v.
People,80this Court explained the element of defraudation
by means of deceit, by giving a definition of fraud and
deceit, in this wise:
What needs to be determined therefore is whether or not
the element of defraudation by means of deceit has been
established beyond reasonable doubt.
In the case of People v. Menil, Jr., the Court has defined
fraud and deceit in this wise:
Fraud, in its general sense, is deemed to comprise anything
calculated to deceive, including all acts, 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. It is a generic term
embracing all multifarious means which human ingenuity
can devise, 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. On the other hand, deceit is the false
representation of a matter of fact, whether by words or
conduct, by false or misleading allegations, or by
concealment of that which should have been disclosed
which deceives or is intended to deceive another so
that he shall act upon it to his legal injury. (Emphases
supplied)
For example, in People v. Comila,81both accused-appellants
therein represented themselves to the complaining
witnesses to have the capacity to send them to Italy for
employment, even as they did not have the authority or
license for the purpose. It was such misrepresentation that
induced the complainants to part with their hard-earned
money for placement and medical fees. Both accused-
appellants were criminally held liable for estafa.
In American jurisprudence, fraud may be predicated on a
false introduction or identification. 82 In Union Co. v.
Cobb, 83the defendant therein procured the merchandise by
misrepresenting that she was Mrs. Taylor Ray and at
another time she was Mrs. Ben W. Chiles, and she forged
their name on charge slips as revealed by the exhibits of
the plaintiff. The sale of the merchandise was induced by
these representations, resulting in injury to the plaintiff.
In Raser v. Moomaw,84it was ruled that the essential
elements necessary to constitute actionable fraud and
deceit were present in the complaint. It was alleged that, to
induce plaintiff to procure a loan, defendant introduced him
to a woman who was falsely represented to be Annie L.
Knowles of Seattle, Washington, the owner of the property,
and that plaintiff had no means of ascertaining her true
identity. On the other hand, defendant knew, or in the
exercise of reasonable caution should have known, that she
was an impostor, and that plaintiff relied on the
representations, induced his client to make the loan, and
had since been compelled to repay it. In the same case, the
Court ruled that false representations as to the identity of a
person are actionable, if made to induce another to act
thereon, and such other does so act thereon to his
prejudice.85
In this case, analogous to the fraud and deceit exhibited in
the abovementioned circumstances, respondent MPEI had
no excuse not to be forthright with the documents showing
MPC's eligibility to bid as a joint venture. The Invitation to
Bid, as quoted in our 2004 Decision, could not have been
any clearer when it stated that only bids from qualified
entities, such as a joint venture, would be entertained:
INVITATION TO APPLY FOR ELIGIBILITY AND TO BID
The Commission on Elections (COMELEC), pursuant to the
mandate of Republic Act Nos. 8189 and 8436, invites
interested offerors, vendors, suppliers or lessors to apply for
eligibility and to bid for the procurement by purchase, lease,
lease with option to purchase, or otherwise, supplies,
equipment, materials and services needed for a
comprehensive Automated Election System, consisting of
three (3) phases: (a) registration/verification of voters, (b)
automated counting and consolidation of votes, and (c)
electronic transmission of election results, with an approved
budget of TWO BILLION FIVE HUNDRED MILLION
(Php2,500,000,000) Pesos.
Only bids from the following entities shall be
entertained:
Civpro Rule 39-43 31
 xxxx
d. Manufacturers, suppliers and/or distributors forming
themselves into a joint venture, i.e., a group of two (2)
or more manufacturers, suppliers and/or distributors
that intend to be jointly and severally responsible or
liable for a particular contract, provided that Filipino
ownership thereof shall be at least sixty percent
(60%); and
e. Cooperatives duly registered with the Cooperatives
Development Authority. 86 (Emphases supplied)
No reasonable mind would argue that documents showing
the very existence of a joint venture need not be included in
the bidding envelope showing its existence, qualification,
and eligibility to undertake the project, considering that the
purpose of prequalification in any public bidding is to
determine, at the earliest opportunity, the ability of the
bidder to undertake the project.87
As found by this Court in its 2004 Decision, it appears that
the documents that were submitted after the bidding, which
respondents claimed would prove the existence of the
relationship among the members of the consortium, were
actually separate agreements individually executed by the
supposed members with MPEI. We had ruled that these
documents were highly irregular, considering that each of
the four different and separate bilateral Agreements was
valid and binding only between MPEI and the other
contracting party, leaving the other "consortium" members
total strangers thereto. Consequently, the other consortium
members had nothing to do with one another, as each one
dealt only with MPEI.88
Considering that they merely showed MPEI's individual
agreements with the other supposed members, these
agreements confirm to our mind the fraudulent intent on the
part of respondent MPEI to deceive the relevant officials
about MPC. The intent was to cure the deficiency of the
winning bid, which intent miserably failed. Said this Court:89
We are unconvinced, PBAC was guided by the rules,
regulations or guidelines existing before the bid proposals
were opened on November 10, 1989. The basic rule in
public bidding is that bids should be evaluated based
on the required documents submitted before and not
after the opening of bids. Otherwise, the foundation of
a fair and competitive public bidding would be
defeated. Strict observance of the rules, regulations,
and guidelines of the bidding process is the only
safeguard to a fair, honest and competitive public
bidding.
In underscoring the Court's strict application of the pertinent
rules, regulations and guidelines of the public bidding
process, We have ruled in C & C Commercial vs. Menor (L-
28360, January 27, 1983, 120 SCRA 112), that Nawasa
properly rejected a bid of C & C Commercial to supply
asbestos cement pressure which bid did not include a tax
clearance certificate as required by Administrative Order
No. 66 dated June 26, 1967. In Caltex (Phil.) Inc., et. al. vs.
Delgado Brothers, Inc. et. al., (96 Phil. 368, 375), We
stressed that public biddings are held for the protection of
the public and the public should be given the best possible
advantages by means of open competition among the
bidders.
xxxx
INTER TECHNICAL's failure to comply with what is
perceived to be an elementary and customary practice
in a public bidding process, that is, to enclose the Form
of Bid in the original and eight separate copies of the
bidding documents submitted to the bidding committee
is fatal to its cause. All the four pre-qualified bidders which
include INTER TECHNICAL were subject to Rule IB 2.1 of
the
Implementing Rules and Regulations of P.D. 1594 in the
preparation of bids, bid bonds, and pre-qualification
statement and Rule IB 2.8 which states that the Form of
Bid, among others, shall form part of the contract. INTER
TECHNICAL's explanation that its bid form was
inadvertently left in the office (p. 6, Memorandum for Private
Respondent, p. 355, Rollo) will not excuse compliance with
such a simple and basic requirement in the public bidding
process involving a multi-million project of the
Government. There should be strict application of the
pertinent public bidding rules, otherwise the essential
requisites of fairness, good faith, and competitiveness
in the public bidding process would be rendered
meaningless. (Emphases supplied)
All these circumstances, taken together, reveal a scheme
on the part of respondent MPEI to perpetrate fraud against
the government. The purpose of the scheme was to ensure
that MPEI, an entity that was ineligible to bid in the first
place, would eventually be awarded the contract. While
respondent argues that it was merely a passive participant
in the bidding process, We cannot ignore its cavalier
disregard of its participation in the now voided automation
contract.
B. Fraud on the part of respondent MPEI
was further shown by the fact that despite
the failure of its ACMs to pass the tests
conducted by the DOST, respondent still
acceded to being awarded the automation
contract.
Another token of fraud is established by Our findings in
relation to the failure of the ACMs to pass the tests of the
DOST. We quote herein the pertinent portions of this
Court's 2004 Decision in relation thereto:
After respondent "consortium" and the other bidder, TIM,
had submitted their respective bids on March 10, 2003, the
Comelec's BAC - - through its Technical Working Group
(TWG) and the DOST - evaluated their technical proposals.
xxxx
According to respondents, it was only after the TWG and
the DOST had conducted their separate tests and
submitted their respective reports that the BAC, on the
basis of these reports formulated its
comments/recommendations on the bids of the consortium
and TIM.
The BAC, in its Report dated April 21, 2003, recommended
that the Phase II project involving the acquisition of
automated counting machines be awarded to MPEI. x x x
xxxx
The BAC, however, also stated on page 4 of its
Report: "Based on the 14 April 2003 report (Table 6) of
the DOST, it appears that both Mega-Pacific and TIM
(Total Information Management Corporation) failed to
meet some of the requirements. x x x
xxxx
Civpro Rule 39-43 32
Failure to Meet the Required Accuracy Rating
The first of the key requirements was that the counting
machines were to have an accuracy rating of at least
99.9995 percent. The BAC Report indicates that both
Mega Pacific and TIM failed to meet this standard.
The key requirement of accuracy rating happens to be
part and parcel of the Comelec's Request for Proposal
(RFP). x x x
xxxx
x x x Whichever accuracy rating is the right
standard - whether 99.995 or 99.9995 percent – the fact
remains that the machines of the so-called "consortium"
failed to even reach the lesser of the two. On this basis
alone, it ought to have been disqualified and its bid rejected
outright.
At this point, the Court stresses that the essence of
public bidding is violated by the practice of requiring
very high standards or unrealistic specifications that
cannot be met - like the 99.9995 percent accuracy
rating in this case - only to water them down after the
bid has been award.[sic]Such scheme, which
discourages the entry of prospective bona fide bidders,
is in fact a sure indication of fraud in the bidding,
designed to eliminate fair competition. Certainly, if no
bidder meets the mandatory requirements, standards
or specifications, then no award should be made and a
failed bidding declared.
xxxx
Failure of Software to Detect Previously Downloaded Data
Furthermore, on page 6 of the BAC Report, it appears
that the "consortium" as well as TIM failed to meet
another key requirement - for the counting machine's
software program to be able to detect previously
downloaded precinct results and to prevent these from
being entered again into the counting machine. This
same deficiency on the part of both bidders reappears on
page 7 of the BAC Report, as a result of the recurrence of
their failure to meet the said key requirement.
That the ability to detect previously downloaded data at
different canvassing or consolidation levels is deemed of
utmost importance can be seen from the fact that it is
repeated three times in the RFP. x x x.
Once again, though, Comelec chose to ignore this crucial
deficiency, which should have been a cause for the gravest
concern. x x x.
xxxx
Inability to Print the Audit Trail
But that grim prospect is not all. The BAC Report, on pages
6 and 7, indicate that the ACMs of both bidders were unable
to print the audit trail without any loss of data. In the case of
MPC, the audit trail system was "not yet incorporated" into
its ACMs.
xxxx
Thus, the RFP on page 27 states that the ballot counting
machines and ballot counting software must print an audit
trail of all machine operations for documentation and
verification purposes. Furthermore, the audit trail must be
stored on the internal storage device and be available on
demand for future printing and verifying. On pages 30-31,
the RFP also requires that the city/municipal canvassing
system software be able to print an audit trail of the
canvassing operations, including therein such data as the
date and time the canvassing program was started, the log-
in of the authorized users (the identity of the machine
operators), the date and time the canvass data were
downloaded into the canvassing system, and so on and so
forth. On page 33 of the RFP, we find the same audit trail
requirement with respect to
the provincial/district canvassing system software; and
again on pages 35-36 thereof, the same audit trail
requirement with respect to the national canvassing
system software.
xxxx
The said provision which respondents have quoted several
times, provides that ACMs are to possess certain features
divided into two classes: those that the statute itself
considers mandatory and other features or capabilities that
the law deems optional. Among those considered
mandatory are "provisions for audit trails"! x x x.
In brief, respondents cannot deny that the provision
requiring audit trails is indeed mandatory, considering
the wording of Section 7 of RA 8436. Neither can
Respondent Comelec deny that it has relied on the BAC
Report, which indicates that the machines or the software
was deficient in that respect. And yet, the Commission
simply disregarded this shortcoming and awarded the
Contract to private respondent, thereby violating the very
law it was supposed to implement.90 (Emphases supplied)
The above-mentioned findings were further echoed by this
Court in its 2006 Resolution with a categorical conclusion
that the bidding process was void and fraudulent.91 Again,
these factual findings found their way into the application of
petitioner for a writ of preliminary attachment,92 as it claimed
that respondents could not dissociate themselves from their
telltale acts of supplying defective machines and
nonexistent software.93 The latter offered no defense in
relation to these claims.
We see no reason to deviate from our finding of fraud on
the part of respondent MPEI in the 2004 Decision and 2006
Resolution. Despite its failure to meet the mandatory
requirements set forth in the bidding procedure, respondent
still acceded to being awarded the contract. These
circumstances reveal its ploy to gain undue advantage over
the other bidders in general, even to the extent of cheating
the government.
The word "bidding" in its comprehensive sense means
making an offer or an invitation to prospective contractors,
whereby the government manifests its intention to make
proposals for the purpose of securing supplies, materials,
and equipment for official business or public use, or for
public works or repair.94 Three principles involved in public
bidding are as follows: (1) the offer to the public; (2) an
opportunity for competition, and (3) a basis for an exact
comparison of bids. A regulation of the matter, which
excludes any of these factors, destroys the distinctive
character of the system and thwarts the purpose of its
adoption.95
Civpro Rule 39-43 33
In the instant case, We infer from the circumstances that
respondent MPEI welcomed and allowed the award of the
automation contract, as it executed the contract despite the
full knowledge that it had not met the mandatory
requirements set forth in the RFP. Respondent acceded to
and benefitted from the watering down of these mandatory
requirements, resulting in undue advantage in its favor. The
fact that there were numerous mandatory requirements that
were simply set aside to pave the way for the award of the
automation contract does not escape the attention of this
Court. Respondent MPEI, through respondent Willy, signed
and executed the automation contract with COMELEC. It is
therefore preposterous for respondent argue that it was a
"passive participant" in the whole bidding process.
We reject the CA's denial of petitioner's plea for the
ancillary remedy of preliminary attachment, considering that
the cumulative effect of the factual findings of this Court
establishes a sufficient basis to conclude that fraud had
attended the execution of the automation contract. Such
fraud is deducible from the 2004 Decision and further
upheld in the 2006 Resolution. It was incongruous,
therefore, for the CA to have denied the application for a
writ of preliminary attachment, when the evidence on record
was the same that was used to demonstrate the propriety of
the issuance of the writ of preliminary attachment. This was
the same evidence that We had already considered and
passed upon, and on which We based Our 2004 Decision
to nullify the automation contract. It would not be right for
this Court to ignore these illegal transactions, as to do so
would be tantamount to abandoning its constitutional duty
of safeguarding public interest.
II.
Application of the piercing doctrine justifies the
issuance of a writ of preliminary attachment over the
properties of the individual respondents.
Individual respondents argue that since they were not
parties to the 2004 case, any factual findings or conclusions
therein should not be binding upon them.96 Since they were
strangers to that case, they are not bound by the judgment
rendered by this Court.97 They claim that their fundamental
right to due process would be violated if their properties
were to be attached for a purported corporate debt on the
basis of a court ruling in a case in which they were not
given the right or opportunity to be heard.98
We cannot subscribe to this argument. In the first place, it
could not be reasonably expected that individual
respondents would be impleaded in the 2004 case. As
admitted by respondents, the issues resolved in the 2004
Decision were limited to the following: (1) whether to
declare Resolution No. 6074 of the COMELEC null and
void; (2) whether to enjoin the implementation of any further
contract that may have been entered into by COMELEC
with MPC or MPEI; and (3) whether to compel COMELEC
to conduct a rebidding of the project. To implead individual
respondents then was improper, considering that the
automation contract was entered into by respondent MPEI.
This Court even acknowledged this fact by directing that the
liabilities of persons responsible for the nullity of the
contract be determined in another appropriate proceeding
and by directing the OSG to undertake measures to protect
the interests of the government.
At any rate, individual respondents have been fully afforded
the right to due process by being impleaded and heard in
the subsequent proceedings before the courts a
quo. Finally, they cannot argue violation of due process, as
respondent MPEI, of which they are
incorporators/stockholders, remains vulnerable to the
piercing of its corporate veil.
A. There are red flags indicating that
MPEI was used to perpetrate the fraud
against petitioner, thus allowing the
piercing of its corporate veil.
Petitioner seeks the issuance of a writ of preliminary
attachment over the personal assets of the individual
respondents, notwithstanding the doctrine of separate
juridical personality.99 It invokes the use of the doctrine of
piercing the corporate veil, to which the canon of separate
juridical personality is vulnerable, as a way to reach the
personal properties of the individual respondents. Petitioner
paints a picture of a sham corporation set up by all the
individual respondents for the purpose of securing the
automation contract.
We agree with petitioner.
Veil-piercing in fraud cases requires that the legal fiction of
separate juridical personality is used for fraudulent or
wrongful ends. 100 For reasons discussed below, We see
red flags of fraudulent schemes in public procurement, all of
which were established in the 2004 Decision, the totality of
which strongly indicate that MPEI was a sham corporation
formed merely for the purpose of perpetrating a fraudulent
scheme.
The red flags are as follows: (1) overly narrow
specifications; (2) unjustified recommendations and
unjustified winning bidders; (3) failure to meet the terms of
the contract; and (4) shell or fictitious company. We shall
discuss each in detail.
Overly Narrow Specifications
The World Bank's Fraud and Corruption Awareness
Handbook: A Handbook for Civil Servants Involved in Public
Procurement, (Handbook) identifies an assortment of fraud
and corruption indicators and relevant schemes in public
procurement. 101 One of the schemes recognized by the
Handbook is rigged specifications:
Scheme: Rigged specifications. In a competitive market
for goods and services, any specifications that seem to be
drafted in a way that favors aparticular company
deserve closer scrutiny. For example, specifications that
are too narrow can be used to exclude other qualified
bidders or justify improper sole source awards. Unduly
vague or broad specifications can allow an unqualified
bidder to compete or justify fraudulent change orders after
the contract is awarded. Sometimes, project officials will go
so far as to allow the favored bidder to draft the
specifications. 102
In Our 2004 Decision, We identified a red flag of rigged
bidding in the form of overly narrow specifications. As
already discussed, the accuracy requirement of 99.9995
percent was set up by COMELEC bidding rules. This Court
recognized that this rating was "too high and was a sure
indication of fraud in the bidding, designed to eliminate
fair competition." 103 Indeed, "the essence of public
bidding is violated by the practice of requiring very high
standards or unrealistic specifications that cannot be
met. . . only to water them down after the bid has been
award(ed)." 104
Unjustified Recommendations and
Unjustified Winning Bidders
Civpro Rule 39-43 34
Questionable evaluation in a Bid Evaluation Report (BER)
is an
indicator of bid rigging. The Handbook expounds:
Questionable evaluation and unusual bid patterns may
emerge in the BER. After the completion of the
evaluation process, the Bid Evaluation Committee
should present to the implementing agency its BER,
which describes the results and the process by which
the BEC has evaluated the bids received. The BER may
include a number of indicators of bid rigging, e.g.,
questionable disqualifications, and unusual bid
patterns.105
The Handbook lists unjustified recommendations and
unjustified winning bidders as red flags of a rigged
bidding. 106
The red flags of questionable recommendation and
unjustified awards are raised in this case. As earlier
discussed, the project was awarded to MPC, which proved
to be a nonentity. It was MPEI that actually participated in
the bidding process, but it was not qualified to be a bidder
in the first place. Moreover, its ACMs failed the accuracy
requirement set by COMELEC. Yet, MPC - the nonentity -
obtained a favorable recommendation from the BAC, and
the automation contract was awarded to the former.
Failure to Meet Contract Terms
Failure to meet the terms of a contract is regarded as a
fraud by the Handbook:
Scheme: Failure to meet contract terms. Firms may
deliberately fail to comply with contract requirements. The
contractor will attempt to conceal such actions often by
falsifying or forging supporting documentation and bill for
the work as if it were done in accordance with
specifications. In many cases, the contractors must bribe
inspection or project personnel to accept the substandard
goods or works, or supervision agents are coerced to
approve substandard work. x x x 107
As mentioned earlier, this Court already found the ACMs to
be below the standards set by the COMELEC. We
reiterated their noncompliant status in Our 2005 and 2006
Resolutions. As early as 2005, when the COMELEC sought
permission from this Court to utilize the ACMs in the then
scheduled ARMM elections, We declared that the proposed
use of the machines would expose the ARMM elections to
the same dangers of massive electoral fraud that would
have been inflicted by the projected automation of the 2004
national elections. We based this pronouncement on the
fact that the COMELEC failed to show that the
deficiencies had been cured. 108 Yet again, this Court in
2006 blocked another attempt to use the ACMs, this time
for the 2007 elections. We reiterated that because the
ACMs had merely remained idle and unused since their last
evaluation, in which they failed to hurdle the crucial tests,
then their defects and deficiencies could not have been
cured by then. 109
Based on the foregoing, the ACMs delivered were plagued
with defects that made them fail the requirements set for
the automation project.
Shell or fictitious company
The Handbook regards a shell or fictitious company as a
"serious red flag," a concept that it elaborates upon:
Fictitious companies are by definition fraudulent and may
also serve as fronts for government officials. The typical
scheme involves corrupt government officials creating a
fictitious company that will serve as a "vehicle" to secure
contract awards. Often, the fictitious-or ghost-company will
subcontract work to lower cost and sometimes unqualified
firms. The fictitious company may also utilize designated
losers as subcontractors to deliver the work, thus indicating
collusion.
Shell companies have no significant assets, staff or
operational capacity. They pose a serious red flagas a
bidder on public contracts, because they often hide the
interests of project or government officials, concealing a
conflict of interest and opportunities for money
laundering. Also, by definition, they have no
experience. 110
MPEI qualifies as a shell or fictitious company. It was
nonexistent at the time of the invitation to bid; to be precise,
it was incorporated only 11 days before the bidding. It was a
newly formed corporation and, as such, had no track record
to speak of.
Further, MPEI misrepresented itself in the bidding process
as "lead company" of the supposed joint venture. The
misrepresentation appears to have been an attempt to
justify its lack of experience. As a new company, it was not
eligible to participate as a bidder. It could do so only by
pretending that it was acting as an agent of the putative
consortium.
The timing of the incorporation of MPEI is particularly
noteworthy. Its close nexus to the date of the invitation to
bid and the date of the bidding (11 days) provides a strong
indicium of the intent to use the corporate vehicle for
fraudulent purposes. This proximity unmistakably indicates
that the automation contract served as motivation for the
formation of MPEI: a corporation had to be organized so it
could participate in the bidding by claiming to be an agent
of a pretended joint venture.
The timing of the formation of MPEI did not escape the
scrutiny of Justice Angelina Sandoval-Gutierrez, who made
this observation in her Concurring Opinion in the 2004
Decision:
At this juncture, it bears stressing that MPEI was
incorporated only on February 27, 2003 as evidenced by its
Certificate of Incorporation. This goes to show that from the
time the COMELEC issued its Invitation to Bid (January 28,
2003) and Request for Proposal (February 17, 2003) up to
the time it convened the Pre-bid Conference (February 18,
2003), MPEI was literally a non-existent entity. It came into
being only on February 27, 2003 or eleven (11) days prior to
the submission of its bid, i.e. March 10, 2003. This poses a
legal obstacle to its eligibility as a bidder. The Request
for Proposal requires the bidder to submit financial
documents that will establish to the BAC's satisfaction its
financial capability which include:
(1) audited financial statements ofthe Bidder's firm for the
last three (3) calendar years, stamped "RECEIVED" by the
appropriate government agency, to show its capacity to
finance the manufacture and supply of Goods called for and
a statement or record of volumes of sales;
(2) Balance Sheet;
(3) Income Statement; and
Civpro Rule 39-43 35
(4) Statement of Cash Flow.
As correctly pointed out by petitioners, how could MPEI
comply with the above requirement of audited financial
statements for the last three (3) calendar years if it came
into existence only eleven (11) days prior to the bidding?
To do away with such complication, MPEI asserts that it
was MP CONSORTIUM who submitted the bid on March
10, 2003. It pretends compliance with the requirements by
invoking the financial capabilities and long time existence of
the alleged members of the MP CONSORTIUM, namely,
Election.Com, WeSolv, SK CeC, ePLDT and Oracle. It
wants this Court to believe that it is MP CONSORTIUM who
was actually dealing with the COMELEC and that its (MPEI)
participation is merely that of a "lead company and
proponent" of the joint venture. This is hardly convincing.
For one, the contract for the supply and delivery of ACM
was between COMELEC and MPEI, not MP
CONSORTIUM. As a matter of fact, there cannot he found
in the contract any reference to the MP CONSORTIUM or
any member thereof for that matter. For another, the
agreements among the alleged members of MP
CONSORTIUM do not show the existence of a joint-venture
agreement. Worse, MPEI cannot produce the agreement as
to the "joint and several liability" of the alleged members of
the MP CONSORTIUM as required by this Court in its
Resolution dated October 7, 2003. 111
Respondent MPEI was formed to
perpetrate the fraud against petitioner.
The totality of the red flags found in this case leads Us to
the inevitable conclusion that MPEI was nothing but a sham
corporation formed for the purpose of defrauding petitioner.
Its ultimate objective was to secure the ₱1,248,949,088
automation contract. The scheme was to put up a
corporation that would participate in the bid and enter into a
contract with the COMELEC, even if the former was not
qualified or authorized to do so.
Without the incorporation of MPEI, the defraudation of the
government would not have been possible. The formation of
MPEI paved the way for its participation in the bid, through
its claim that it was an agent of a supposed joint venture, its
misrepresentations to secure the automation contract, its
misrepresentation at the time of the execution of the
contract, its delivery of the defective ACMs, and ultimately
its acceptance of the benefits under the automation
contract.
The foregoing considered, veil-piercing is justified in this
case.
We shall next consider the question of whose assets shall
be reached by the application of the piercing doctrine.
B. Because all the individual
respondents actively participated in the
perpetration of the fraud against petitioner,
their personal assets may be subject to a
writ of preliminary attachment by piercing
the corporate veil.
A corporation's privilege of being treated as an entity
distinct and separate from the stockholders is confined to
legitimate uses, and is subject to equitable limitations to
prevent its being exercised for fraudulent, unfair, or illegal
purposes. 112 As early as the 19th century, it has been held
that:
The general proposition that a corporation is to be regarded
as a legal entity, existing separate and apart from the
natural persons composing it, is not disputed; but that the
statement is a mere fiction, existing only in idea, is well
understood, and not controverted by any one who pretends
to accurate knowledge on the subject. It has been
introduced for the convenience of the company in making
contracts, in acquiring property for corporate purposes, in
suing and being sued, and to preserve the limited liability of
the stockholder by distinguishing between the corporate
debts and property of the company and of the stockholders
in their capacity as individuals. All fictions of law have
been introduced for the purpose of convenience, and to
subserve the ends of justice. It is in this sense that the
maxim in fictione juris subsistit aequitas is used, and the
doctrine of fictions applied. But when they are urged to an
intent and purpose not within the reason and policy of
the fiction, they have always been disregarded by the
courts. Broom's, Legal Maxims 130. "It is a certain rule,"
says Lord Mansfield, C.J., "that a fiction of law never be
contradicted so as to defeat the end for which it was
invented, but for every other purpose it may be
contradicted.'' Johnson v. Smith, 2 Burr., 962.113
The main effect of disregarding the corporate fiction is that
stockholders will be held personally liable for the acts and
contracts of the corporation, whose existence, at least for
the purpose of the particular situation involved, is
ignored. 114
We have consistently held that when the notion of legal
entity is used to defeat public convenience, justify wrong,
protect fraud, or defend crime, the law will regard the
corporation as an association of persons. 115 Thus,
considering that We find it justified to pierce the corporate
veil in the case before Us, MPEI must, perforce, be treated
as a mere association of persons whose assets are
unshielded by corporate fiction. Such persons' individual
liability shall now be determined with respect to the matter
at hand.
Contrary to respondent Willy's claims, his participation in
the fraud is clearly established by his unequivocal
agreement to the execution of the automation contract with
the COMELEC, and his signature that appears on the
voided contract. As far back as in the 2004 Decision, his
participation as a signatory to the automation contract was
already established:
The foregoing argument is unpersuasive. First, the contract
being referred to, entitled "The Automated Counting and
Canvassing Project Contract,'' is between Comelec and
MPEI, not the alleged consortium, MPC. To repeat, it
is MPEI -- not MPC -- that is a party to the
Contract. Nowhere in that Contract is there any mention of
a consortium or joint venture, of members thereof,much
less of joint and several liability. Supposedly executed
sometime in May 2003, the Contract bears a notarization
date of June 30, 2003, and contains the signature of
Willy U. Yu signing as president of MPEI (not for and on
behalf of MPC), along with that of the Comclec chair. It
provides in Section 3.2 that MPEI (not MPC) is to supply
the Equipment and perform the Services under the
Contract, in accordance with the appendices thereof;
nothing whatsoever is said about any consortium or joint
venture or partnership. x x x (Emphasis supplied)
That his signature appears on the automation contract
means that he agreed and acceded to its terms. 116 His
participation in the fraud involves his signing and executing
the voided contract.
Civpro Rule 39-43 36
The execution of the automation contract with a non-eligible
entity and the subsequent award of the contract despite the
failure to meet the mandatory requirements were "badges
of fraud" in the procurement process that should have been
recognized by the CA to justify the issuance of the writ of
preliminary attachment against the properties of respondent
Willy.
With respect to the other individual respondents, petitioner,
in its Answer with Counterclaim, alleged:
30. Also, inasmuch as MPEI is in truth a mere shell
corporation with no real assets in its name, incorporated
merely to feign eligibility for the bidding of the automated
contract when it in fact had none, to the great prejudice of
the Republic, plaintiff's individual incorporators should
likewise be made liable together with MPEI for the
automated contract amount paid to and received by the
latter. The following circumstances altogether manifest that
the individual incorporators merely cloaked themselves with
the veil of corporate fiction to perpetrate a fraud and to
eschew liability therefor, thus:
xxxx
f. From the time it was incorporated until today, MPEI has
not complied with the reportorial requirements of the
Securities and Exchange Commission;
g. Individual incorporators, acting fraudulently through
MPEI, and in violation of the bidding rules,
then subcontracted the automation contract to four (4)
other corporations, namely: WeSolve Corporation, SK
C&C, ePLDT and election.com, to comply with the capital
requirements, requisite five (5)-year corporate standing and
the technical qualifications of the Request for Proposal;
x x x x117
In response to petitioner's allegations, respondents Willy
and Bonnie stated in their Reply and Answer (Re: Answer
with Counterclaim dated 28 June 2004): 118
3.3 As far as plaintiff MPEI and defendants-in-
counterclaim are concerned, they dealt with the
COMELEC with full transparency and in utmost good
faith. All documents support its eligibility to bid for the
supply of the ACMs and their peripheral services, were
submitted to the COMELEC for its evaluation in full
transparency. Pertinently, neither plaintiff MPEI nor any of
its directors, stockholders, officers or employees had any
participation in the evaluation of the bids and eventual
choice of the winning bidder. 119
Respondents Johnson's and Bernard’s denials were made
in paragraphs 2.17 and 3.3 of their Answer with
Counterclaim to the Republic’s Counterclaim, to wit:120
2.17 The erroneous conclusion of fact and law in paragraph
30 (f) and (g) of the Republic's answer is denied, having
been pleaded in violation of the requirement, that only
ultimate facts are to be stated in the pleadings and they are
falsehoods. The truth of the matter is that there could not
have been fraud, as these agreements were submitted to
the COMELEC for its evaluation and assessment, as to the
qualification of the Consortium as a bidder, a showing of
transparency in plaintiff's dealings with the Republic. 121
3.3 As far as plaintiff MPEI and defendants-in-
counterclaim are concerned, they dealt with the
COMELEC with full transparency and in utmost good
faith. All documents support its eligibility to bid for the
supply of the automated counting machines and its
peripheral services, were submitted to the COMELEC for its
evaluation in full transparency. Pertinently, the plaintiff or
any of its directors, stockholders, officers or employees had
no participation in the evaluation of the bids and eventual
choice of the winning bidder.122
As regards Enrique and Rosita, the relevant paragraphs in
the Answer with Counterclaim to the Republic's
Counterclaim 123 are quoted below:
2.17. The erroneous conclusion of fact and law in
paragraph 30 (F) and (G) of the Republic's answer is
denied, having been pleaded in violation of the requirement,
that only ultimate facts are to be stated in the pleadings and
they are falsehoods. The truth of the matter is that there
could not have been fraud, as these agreements were
submitted to the COMELEC for its evaluation and
assessment, as to the qualification of the Consortium as a
bidder, a showing of transparency in plaintiffs dealings with
the Republic. 124
3.3. As far as the plaintiff and herein answering
defendants-in-counterclaim are concerned, they dealt
with the Commission on Elections with full
transparency and in utmost good faith. All documents in
support of its eligibility to bid for the supply of the
automated counting machines and its peripheral services
were submitted to the Commission on Elections for its
evaluation in full transparency. Pertinently, the plaintiff or
any of its directors, stockholders, officers or employees had
no participation in the evaluation of the bids and eventual
choice of the winning bidder.125
Pedro and Laureano offer a similar defense in paragraph
3.3 of their Reply and Answer with Counterclaim to the
Republic's Counterclaim 126 dated 28 June 2004, which
reads:
3.3. As far as plaintiff MPEI and defendants-in-counterclaim
are concerned, they dealt with the COMELEC with full
transparency and in utmost good faith. All documents
support its eligibility to bid for the supply of the ACMs and
their peripheral services, were submitted to the COMELEC
for its evaluation in full transparency. Pertinently, neither
plaintiff MPEI nor any of its directors, stockholders, officers
or employees had any participation in the evaluation of the
bids and eventual choice of the winning bidder. 127
It can be seen from the above-quoted paragraphs that the
individual respondents never denied their participation in
the questioned transactions of MPEI, merely raising the
defense of good faith and shifting the blame to the
COMELEC. The individual respondents have, in effect,
admitted that they had knowledge of and participation in the
fraudulent subcontracting of the automation contract to the
four corporations.
It bears stressing that the remaining individual respondents,
together with respondent Willy, incorporated MPEI. As
incorporators, they are expected to be involved in the
management of the corporation and they are charged with
the duty of care. This is one of the reasons for the
requirement of ownership of at least one share of stock by
an incorporator:
The reason for this, as explained by the lawmakers, is to
avoid the confusion and/or ambiguities arising in a situation
under the old corporation law where there exists one set of
incorporators who are not even shareholders and
another set of directors/incorporators who must all be
Civpro Rule 39-43 37
shareholders of the corporation. The people who deal
with said corporation at such an early stage are confused
as to who are the persons or group really authorized to act
in behalf of the corporation. (Proceedings of the Batasan
Pambansa on the Proposed Corporation Code). Another
reason may be anchored on the presumption that when
an incorporator has pecuniary interest in the
corporation, no matter how minimal, he will be more
involved in the management of corporate affairs and to
a greater degree, be concerned with the welfare of the
corporation. 128
As incorporators and businessmen about to embark on a
new business venture involving a sizeable capital (₱300
million), the remaining individual respondents should have
known of Willy's scheme to perpetrate the fraud against
petitioner, especially because the objective was a billion
peso automation contract. Still, they proceeded with the
illicit business venture.
It is clear to this Court that inequity would result if We do not
attach personal liability to all the individual respondents.
With a definite finding that MPEI was used to perpetrate the
fraud against the government, it would be a great injustice if
the remaining individual respondents would enjoy the
benefits of incorporation despite a clear finding of abuse of
the corporate vehicle. Indeed, to allow the corporate fiction
to remain intact would not subserve, but instead subvert,
the ends of justice.
III.
The factual findings of this Court that have become
final
cannot be modified or altered, much less reversed,
and are controlling in the instant case.
Respondents argue that the 2004 Decision did not resolve
and could not have resolved the factual issue of whether
they had committed any fraud, as the Supreme Court is not
a trier of facts; and the 2004 case, being a certioraricase,
did not deal with questions of fact. 129
Further, respondents argue that the findings of this Court
ought to be confined only to those issues actually raised
and resolved in the 2004 case, in accordance with the
principle of conclusiveness of judgment. 130 They explain
that the issues resolved in the 2004 Decision were only
limited to the following: (l)whether to declare COMELEC
Resolution No. 6074 null and void; (2) whether to enjoin the
implementation of any further contract that may have been
entered into by COMELEC with MPC or MPEI; and (3)
whether to compel COMELEC to conduct a rebidding of the
project. 131
It is obvious that respondents are merely trying to escape
the implications or effects of the nullity of the automation
contract that they had executed. Section 1,Rule 65 of the
Rules of Court, clearly sets forth the instances when a
petition for certiorari can be used as a proper remedy:
Section 1. Petition for certiorari. - When any tribunal, board
or officer exercising judicial or quasi-judicial functions has
acted without or in excess of its jurisdiction, or with grave
abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, or any plain, speedy,
and adequate remedy in the ordinary course of law, a
person aggrieved thereby may file a verified petition in the
proper court, alleging the facts with certainty and praying
that judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting
such incidental reliefs as law and justice may require.
The term "grave abuse of discretion" has a specific
meaning. An act of a court or tribunal can only be
considered to have been committed with grave abuse of
discretion when the act is done in a "capricious or whimsical
exercise of judgment as is equivalent to lack of
jurisdiction." 132 The abuse of discretion must be so patent
and gross as to amount to an "evasion of a positive duty or
to a virtual refusal to perform a duty enjoined by law, or to
act at all in contemplation of law, as where the power is
exercised in an arbitrary and despotic manner by reason of
passion and hostility." 133 Furthermore, the use of a petition
for certiorari is restricted only to "truly extraordinary cases
wherein the act of the lower court or quasi-judicial body is
wholly void." 134 From the foregoing definition, it is clear that
the special civil action of certiorari under Rule 65 can only
strike down an act for having been done with grave abuse
of discretion if the petitioner could manifestly show that
such act was patent and gross. 135
We had to ascertain from the evidence whether the
COMELEC committed grave abuse of discretion, and in the
process, were justified in making some factual findings. The
conclusions derived from the factual findings are
inextricably intertwined with this Court's determination of
grave abuse of discretion. They have a direct bearing and
are in fact necessary to illustrate that the award of the
automation contract was done hastily and in direct violation
of law. This Court has indeed made factual findings based
on the evidence presented before it; in turn, these factual
findings constitute the controlling legal rule between the
parties that cannot be modified or amended by any of them.
This Court is bound to consider the factual findings made in
the 2004 Decision in order to declare that there is fraud for
the purpose of issuing the writ of preliminary attachment.
Respondents appear to have misunderstood the
implications of the principle of conclusiveness of judgment
on their cause. Contrary to their claims, the factual findings
are conclusive and have been established as the controlling
legal rule in the instant case, on the basis of the principle
of res judicata-moreparticularly, the principle of
conclusiveness of judgment.
This doctrine of res judicata which is set forth in Section 47
of Rule 39 of the Rules of Court136 lays down two main
rules, namely: (1) the judgment or decree of a court of
competent jurisdiction on the merits concludes the litigation
between the parties and their privies and constitutes a bar
to a new action or suit involving the same cause of action
either before the same or any other tribunal; and (2) any
right, fact, or matter in issue directly adjudicated or
necessarily involved in the determination of an action
before a competent court in which a judgment or decree is
rendered on the merits is conclusively settled by the
judgment therein and cannot again be litigated between the
parties and their privies whether or not the claims or
demands, purposes, or subject matters of the two suits are
the same. 137
These two main rules mark the distinction between the
principles governing the two typical cases in which a
judgment may operate as evidence. 138 The first general rule
stated above and corresponding to the
afore-quoted paragraph (b) of Section 47, Rule 39 of the
Rules of Court, is referred to as "bar by former judgment";
while the second general rule, which is embodied in
paragraph (c) of the same section and rule, is known as
"conclusiveness of judgment." 139
In Calalang v. Register of Deeds of Quezon City, 140 We
discussed the concept of conclusiveness of judgment as
pertaining even to those matters essentially connected with
Civpro Rule 39-43 38
the subject of litigation in the first action. This Court
explained therein that the bar on re-litigation extends to
those questions necessarily implied in the final judgment,
although no specific finding may have been made in
reference thereto, and although those matters were directly
referred to in the pleadings and were not actually or
formally presented. If the record of the former trial shows
that the judgment could not have been rendered without
deciding a particular matter, it will be considered as having
settled that matter as to all future actions between the
parties; and if a judgment necessarily presupposes certain
premises, they are as conclusive as the judgment itself:
The second concept - conclusiveness of judgment -
states that a fact or question which was in issue in a
former suit and was there judicially passed upon and
determined by a court of competent jurisdiction, is
conclusively settled by the judgment therein as far as
the parties to that action and persons in privity with
them are concerned and cannot be again litigated in
any future action between such parties or their privies,
in the same court or any other court of concurrent
jurisdiction on either the same or different cause of
action, while the judgment remains unreversed by
proper authority. It has been held that in order that a
judgment in one action can be conclusive as to a particular
matter in another action between the same parties or their
privies, it is essential that the issue be identical. If a
particular point or question is in issue in the second
action, and the judgment will depend on the
determination of that particular point or question, a
former judgment between the same parties or their
privies will be final and conclusive in the second if that
same point or question was in issue and adjudicated in
the first suit (Nabus v. Court of Appeals, 193 SCRA 732
[1991]). Identity of cause of action is not required but
merely identity of issue.
Justice Feliciano, in Smith Bell & Company (Phils), Inc. v.
Court of Appeals (197 SCRA 201, 210 [1991]),
reiterated Lopez v. Reyes (76 SCRA 179 [1977]) in regard
to the distinction between bar by former judgment which
bars the prosecution of a second action upon the same
claim, demand, or cause of action, and conclusiveness of
judgment which bars the relitigation of particular facts or
issues in another litigation between the same parties on a
different claim or cause of action.
The general rule precluding the re-litigation of material
facts or questions which were in issue and adjudicated
in former action are commonly applied to all matters
essentially connected with the subject matter of the
litigation. Thus, it extends to questions necessarily
implied in the final judgment, although no specific
finding may have been made in reference thereto and
although such matters were directly ref erred to in the
pleadings and were not actually or formally presented.
Under this rule, if the record of the former trial shows
that the judgment could not have been rendered
without deciding the particular matter, it will be
considered as having settled that matter as to all future
actions between the parties and if a judgment
necessarily presupposes certain premises, they are as
conclusive as the judgment itself. 141 (Emphases
supplied)
The foregoing disquisition finds application to the case at
bar. Undeniably, the present case is merely an adjunct of
the 2004 case, in which the automation contract was
declared to be a nullity. Needless to say, the 2004 Decision
has since become final. As earlier explained, this Court
arrived at several factual findings showing the illegality of
the automation contract; in turn, these findings were used
as basis to justify the declaration of nullity.
A closer scrutiny of the 2004 Decision would reveal that the
judgment could not have been rendered without deciding
particular factual matters in relation to the following: (1)
identity, existence and eligibility of MPC as a bidder; (2)
failure of the ACMs to pass DOST technical tests; and (3)
remedial measures undertaken by the COMELEC after the
award of the automation contract. Under the principle of
conclusiveness of judgment, We are precluded from re-
litigating these facts, as these were essential to the
question of nullity. Otherwise stated, the judgment could not
have been rendered without necessarily deciding on the
above-enumerated factual matters.
Thus, under the principle of conclusiveness of judgment,
those material facts became binding and conclusive on the
parties, in this case MPEI and, ultimately, the persons that
comprised it. When a right or fact has been judicially tried
and determined by a court of competent jurisdiction, or
when an opportunity for that trial has been given, the
judgment of the court-as long as it remains unreversed-
should be conclusive upon the parties and those in
privity with them. 142 Thus, the CA should not have
required petitioner to present further evidence of fraud on
the part of respondent Willy and MPEI, as it was already
necessarily adjudged in the 2004 case.
To allow respondents to argue otherwise would be violative
of the principle of immutability of judgment. When a final
judgment becomes executory, it becomes immutable and
unalterable and may no longer undergo any modification,
much less any reversal. 143 In Navarro v. Metropolitan Bank
& Trust Company144this Court explained that the underlying
reason behind this principle is to avoid delay in the
administration of justice and to avoid allowing judicial
controversies to drag on indefinitely, viz.:
No other procedural law principle is indeed more
settled than that once a judgment becomes final, it is
no longer subject to change, revision, amendment or
reversal, except only for correction of clerical errors, or
the making of nunc pro tunc entries which cause no
prejudice to any party, or where the judgment itself is
void. The underlying reason for the rule is two-fold: (1) to
avoid delay in the administration of justice and thus make
orderly the discharge of judicial business, and (2) to put
judicial controversies to an end, at the risk of occasional
errors, inasmuch as controversies cannot be allowed to
drag on indefinitely and the rights and obligations of every
litigant must not hang in suspense for an indefinite period of
time. As the Court declared in Yau v. Silverio,
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 that
result. Constituted as they are to put an end to
controversies, courts should frown upon any attempt to
prolong them.
Indeed, just as a losing party has the right to file an appeal
within the prescribed period, the winning party also has the
correlative right to enjoy the finality of the resolution of his
case by the execution and satisfaction of the judgment. Any
attempt to thwart this rigid rule and deny the prevailing
litigant his right to savor the fruit of his victory must
immediately be struck down. x x x. (Emphasis supplied) 145
Civpro Rule 39-43 39
In the instant case, adherence to respondents' position
would mean a complete disregard of the factual findings We
made in the 2004 Decision, and would certainly be
tantamount to reversing the same. This would invariably
cause further delay in the efforts to recover the amounts of
government money illegally disbursed to respondents back
in 2004.
Next, respondents argue that the findings of fact in the 2004
Decision are not conclusive146 considering that eight (8) of
the fifteen (15) justices of this Court refused to go along
with the factual findings as stated in the majority
opinion. 147 This argument fails to convince.
Fourteen (14) Justices participated in the promulgation of
the 2004 Decision.1âwphi1 Out of the fourteen (14)
Justices, three (3) Justices registered their dissent, 148 and
two (2) Justices wrote their Separate Opinions, each
recommending the dismissal of the Petition. 149 Of the nine
(9) Justices who voted to grant the Petition, four (4) joined
the ponente in his disposition of the case, 150 and two (2)
Justices wrote Separate Concurring Opinions. 151 As to the
remaining two (2) Justices, one (1) Justice 152 merely
concurred in the result, while the other joined another
Justice in her Separate Opinion. 153
Contrary to the allegations of respondents, an examination
of the voting shows that nine (9) Justices voted in favor of
the majority opinion, without any qualification regarding the
factual findings made therein. In fact, the two (2) Justices
who wrote their own Concurring Opinions echoed the lack
of eligibility of MPC and the failure of the ACMs to pass the
mandatory requirements.
Finally, respondents cannot argue that, from the line of
questioning of then Justice Leonardo A. Quisumbing during
the oral arguments in the 2004 case, he did not agree with
the factual findings of this Court. Oral arguments before this
Court are held precisely to test the soundness of each
proponent's contentions. The questions and statements
propounded by Justices during such an exercise are not to
be construed as their definitive opinions. Neither are they
indicative of how a Justice shall vote on a particular issue;
indeed, Justice Quisumbing clearly states in the 2004
Decision that he concurs in the results. At any rate,
statements made by Our Members during oral arguments
are not stare decisis; what is conclusive are the decisions
reached by the majority of the Court.
IV.
The delivery of 1,991 units of ACMs does not negate
fraud on
the part of respondents Willy and MPEI.
The CA in its Amended Decision explained that
respondents could not be considered to have fostered a
fraudulent intent to not honor their obligation, since they
delivered 1,991 units of ACMs. 154 In turn, respondents
argue that respondent MPEI had every intention of fulfilling
its obligation, because it in fact delivered the ACMs as
required by the automation contract. 155
We disagree with the CA and respondents.1âwphi1 The fact
that the ACMs were delivered cannot induce this Court to
disregard the fraud respondent MPEI had employed in
securing the award of the automation contract, as
established above. Furthermore, they cannot cite the fact of
delivery in their favor, considering that the ACMs delivered
were substandard and noncompliant with the requirements
initially set for the automation project.
In Our 2004 Decision, We already found the ACMs to be
below the standards set by the COMELEC. The
noncompliant status of these ACMs was reiterated by this
Court in its 2005 and 2006 Resolutions. The CA therefore
gravely erred in considering the delivery of 1,991 ACMs as
evidence of respondents' willingness to perform the
obligation (and thus, their lack of fraud) considering that, as
exhaustively discussed earlier, the ACMs delivered were
plagued with defects and failed to meet the requirements
set for the automation project.
Under Article 1233 of the New Civil Code, a debt shall not
be understood to have been paid, unless the thing or
service in which the obligation consists has been
completely delivered or rendered. In this case, respondents
cannot be considered to have performed their obligation,
because the ACMs were defective.
v.
Estoppel does not lie against the State when it acts to
rectify
the mistakes, errors or illegal acts of its officials and
agents.
Respondents claim that the 2004 Decision may not be
invoked against them, since the petitioner and the
respondents were co-respondents and not adverse parties
in the 2004 case. Respondents further explain that since
petitioner and respondents were on the same side at the
time, had the same interest, and took the same position on
the validity and regularity of the automation contract,
petitioner cannot now invoke the 2004 Decision against
them. 156
Contrary to respondents' contention, estoppel generally
finds no application against the State when it acts to rectify
mistakes, errors, irregularities, or illegal acts of its officials
and agents, irrespective of rank. This principle ensures the
efficient conduct of the affairs of the State without any
hindrance to the implementation of laws and regulations by
the government. This holds true even if its agents' prior
mistakes or illegal acts shackle government operations and
allow others-some by malice-to profit from official error or
misbehavior, and even if the rectification prejudices parties
who have meanwhile received benefit. 157 Indeed, in the
2004 Decision, this Court even directed the Ombudsman to
determine the possible criminal liability of public officials
and private persons responsible for the contract, and the
OSG to undertake measures to protect the government
from the ill effects of the illegal disbursement of public
funds. 158
The equitable doctrine of estoppel for the prevention of
injustice and is for the protection of those who have been
misled by that which on its face was fair and whose
character, as represented, parties to the deception will not,
in the interest of justice, be heard to deny. 159 It cannot
therefore be utilized to insulate from liability the very
perpetrators of the injustice complained of.
VI.
The findings of the Office of the Ombudsman
are not controlling in the instant case.
Respondents further claim that this Court has recognized
the fact that it did not determine or adjudge any fraud that
may have been committed by individual respondents.
Rather, it referred the matter to the Ombudsman for the
determination of criminal liability. 160 The Ombudsman in
Civpro Rule 39-43 40
fact made its own determination that there was no probable TERESITA J. LEONARDO-DE CASTRO
cause to hold individual respondents criminally liable. 161 Associate Justice

Respondents miss the point. The main issue in the instant

case is whether respondents are guilty of fraud in obtaining LUCAS P. ESTELA M. PERLAS-
and executing the automation contract, to justify the BERSAMIN BERNABE
issuance of a writ of preliminary attachment in petitioner's Associate Justice Associate Justice
favor. Meanwhile, the issue relating to the proceedings
before the Ombudsman (and this Court in G.R. No. 174777)
pertains to the finding of lack of probable cause for the ALFREDO BENJAMIN S. CAGUIOA
possible criminal liability of respondents under the Anti- Associate Justice
Graft and Corrupt Practices Act.
CERTIFICATION
The matter before Us involves petitioner's application for a
writ of preliminary attachment in relation to its recovery of Pursuant to the Section 13, Article VIII of the Constitution, I
the expended amount under the voided contract, and not certify that the conclusions in the above Decision had been
the determination of whether there is probable cause to reached in consultation before the case was assigned to
hold respondents liable for possible criminal liability due to the writer of the opinion of the Court’s Division.
the nullification of the automation contract. Whether or not
the Ombudsman has found probable cause for possible
MARIA LOURDES P.A. SERENO
criminal liability on the part of respondents is not controlling
Chief Justice
in the instant case.

CONCLUSION

If the State is to be serious in its obligation to develop and

implement coordinated anti-corruption policies that promote
proper management of public affairs and public property,
integrity, transparency and accountability, 162 it needs to
establish and promote effective practices aimed at the
prevention of corruption, 163 as well as strengthen our efforts
at asset recovery. 164
As a signatory to the United Nations Convention Against
Corruption (UNCAC), 165 the Philippines acknowledges its
obligation to establish appropriate systems of procurement
based on transparency, competition and objective criteria in
decision-making that are effective in preventing
corruption. 166 To promote transparency, and in line with the
country's efforts to curb corruption, it is useful to identify
certain fraud indicators or "red flags" that can point to
corrupt activity. 167 This case - arguably the first to provide
palpable examples of what could be reasonably considered
as "red flags" of fraud and malfeasance in public
procurement - is the Court's contribution to the nation's
continuing battle against corruption, in accordance with its
mandate to dispense justice and safeguard the public
interest.
WHEREFORE, premises considered, the Petition
is GRANTED. The Amended Decision dated 22 September
2008 of the Court of Appeals in CA-G.R. SP. No. 95988
is ANNULLED AND SET ASIDE. A new one is
entered DIRECTING the Regional Trial Court of Makati City,
Branch 59, to ISSUE in Civil Case No. 04-346,
entitled Mega Pacific eSolutions, Inc., vs. Republic of the
Philippines, the Writ of Preliminary Attachment prayed for
by petitioner Republic of the Philippines against the
properties of respondent Mega Pacific eSolutions, Inc., and
Willy U. Yu, Bonnie S. Yu, Enrique T. Tansipek, Rosita Y.
Tansipek, Pedro O. Tan, Johnson W. Fong, Bernard I. Fong
and Lauriano Barrios.
No costs.
SO ORDERED.
MARIA LOURDES P.A. SERENO
Chief Justice, Chairperson
WE CONCUR:
Footnotes
*
Laureano A. Barrios in some part of the records.
1
G.R. No. 159139, 464 Phil. 173 (2004) [the 2004
case].
2
Rollo, pp. 31-36; In the case entitled Republic of
the Philippines v. Hon. Winlove M.
Dumayas written by Associate Justice Japar B.
Dimaampao, and concurred in by Associate
Justices Mario L. Guariña III and Sixto C. Marella,
Jr.
3
Id. at 293-302.
4
Id. at 82.
5
Id. at 84-106.
6
The dispositive portion of this Court's Decision in
the 2004 case is stated as follows:
Wherefore, the PETITION is GRANTED.
The Court hereby declares NULL and
VOID Comelec Resolution No. 6074
awarding the contract for Phase II of the
CAES to Mega Pacific Consortium
(MPC). Also declared null and void is the
subject Contract executed between
Comelec and Mega Pacific eSolutions
(MPEI). Comelec is further ORDERED to
refrain from implementing any other
contract or agreement entered into with
regard to this project.
Let a copy of this Decision be furnished
the Office of the Ombudsman which shall
determine the criminal liability, if any, of
the public officials (and conspiring private
individuals, if any) involved in the subject
Resolution and Contract. Let the Office of
the Solicitor General also take measures
to protect the government and vindicate
Civpro Rule 39-43 41
 public interest from the ill effects of the
illegal disbursements of public funds
made by reason of the void Resolution
and Contract.
7
Resolution dated 22 August 2006; Rollo (G.R.
No. 159139), Vol. V, pp. 4127-4137.
8
Id.
9
Supra note 6.
10
Id.
11
Rollo (G.R. No.159139). Vol. IV. pp. 3324-3339.
12
Rollo, pp. 153-169; Pertaining to the case
entitled Mega Pacific eSolutions, Inc. v. Republic
of the Philippines, docketed as Civil Case No. 04-
346.
13
Supra note 11.
14
Rollo, pp. 822-825; The four (4) cases are as
follows:
(1) "Kilosbayan Foundation and Bantay
Katarungan Foundation, represented by
Atty. Emilio C. Capulong, Jr. v. Benjamin
Santos Abalos, Resurreccion Zante
Borra, Florentino Aglipay Tuason, Rufino
San Buenaventura Javier, Mehol Kiram
Sadain, Luzviminda Gaba Tancangco,
Pablo Ralph Cabatian Lantion, Willy U.
Yu, Bonnie S. Yu, Enrique T. Tansipek,
Pedro 0. Tan, Johnson W. Fong and
Laureano A. Barrios," docketed as OMB-
L-C-04-0922-J, for violation of Sec. 3(e)
and (g) of R.A. 3019 and Sec. 2 of R.A.
7080;
(2) "Sen. Aquilino Q. Pimentel, Jr., Field
Investigation Office (FIO) Office of the
Ombudsman, represented by Atty. Maria
Olivia Elena A. Roxas v. Benjamin Santos
Abalos, Resurreccion Zante Borra,
Florentino Aglipay Tuason, Rufino San
Buenaventura Javier, Mehol Kiram
Sadain, Luzviminda Gaba Tancangco,
Pablo Ralph Cabatian Lantion, Eduardo
Dulay Mejos, Gideon Gillego de Guzman,
Jose Parel Balbuena, Lamberto Posadas
Llamas, Bartolome Javillonar Sinocruz,
Jr., Jose Marundan Tolentino, Jr., Jaime
Zita Paz, Zita Buena-Castillon, Rolando T.
Viloria, Willy U. Yu, Bonnie S. Yu, Enrique
T. Tansipek, Pedro O. Tan, Johnson W.
Fong and Laureano A. Barrios," docketed
as OMB-L-C-04-0983-J, for violation of
Sec. 3(e) and (g) ofR.A. 3019;
(3) "Sen. Aquilino Q. Pimentel, Jr. v.
Luzviminda Gaba Tancangco, Pablo
Ralph Cabatian Lantion," docketed as
OMB-C-C-04-0011-A for violation of Sec.
3(e) and (g) of R.A. 3019; and
(4) "Sen. Aquilino Q. Pimentel, Jr., Field
Investigation Office (FIO) Office of the
Ombudsman, represented by Atty. Maria
Olivia Elena A. Roxas v. Eduardo Dulay
Mejos, Gideon Gillego de Guzman, Jose
Parel Balbuena, Lamberto Posadas
Llamas, Bartolome Javillonar Sinocruz,
Jr., Jose Marundan Tolentino, Jr., Jaime
Zita Paz, Zita Buena-Castillon, Rolando T.
Viloria," docketed as OMB-L-A-04-0706-J
for dishonesty, grave misconduct and
conduct prejudicial to the best interest of
service.
15
Except Rosita Y. Tansipek and Bernard I. Fong,
who have not been impleaded.
16
Rollo (G.R. No. 174777), Vol. I, pp. 88-122; The
pertinent portions of the fallo are quoted below:
WHEREFORE, premises considered, it is
respectfully recommended that:
1. An Information for Violation of Section
3 (e) of Republic Act No. 3019, be filed
before the Sandiganbayan against
respondents EDUARDO MEJOS,
GIDEON G. DE GUZMAN, JOSE P.
BALBUENA, LAMBERTO P. LLAMAS
and BARTOLOME J. SINOCRUZ, JR. in
conspiracy with private respondents
WILLY U. YU, BONNIE YU, ENRIQUE
TANSIPEK, ROSITA Y. TANSIPEK,
PEDRO O. TAN, JOHNSON W. FONG,
BERNARD L. FONG and LAUREANO
BARRIOS;
xxxx
5. That further fact-finding investigation
be conducted by this Office on the
following matters:
a. Charges involving violation of
Section 3 (g) of Republic Act
3019 and other pertinent laws;
b. On the criminal liability of all
persons who may have
conspired with public officials in
the subject contract;
c. On the culpability of other
individuals who were not
originally charged in the
complaints, but may have
participated and benefited in the
awarding of the subject
Contract; and
d. the disbursement of public
funds made on account of the
void Resolution and Contract.
17
Including Rosita Y. Tansipek and Bernard I.
Fong.
18
Rollo, pp. 825-826.
19
Id. at 822-876; The dispositive portion states:
WHEREFORE, the Office recommends
the following:
Civpro Rule 39-43 42
 40
1. That the Resolution dated 28 Id. at 33.
June 2006 be REVERSED and
SET ASIDE. 41
Id.

2. That the criminal complaints 42

Id.
against public and private
respondents be DISMISSED for 43
lack of probable cause. Id.

44
3. That the administrative Id. at 34.
complaint against public
respondents be DISMISSED. 45
Id. at 10-30.

4. That the matter of the editorial 46

Id. at 19.
article appearing in the July
2006 issue of Kilosbayan by 47
Id. at 22.
Former Senator Jovito R.
Salonga be REFERRED to the 48
Internal Affairs Board for Id. at 23.
investigation.
49
Id. at 24.
20
See rollo (G.R. No. 174777), Vol. I, p. 3:
Entitled Sen. Aquilino Q. Pimentel, Jr. v. Omb. Ma. 50
Id.
Merceditas N. Gutierrez.
51
Id. at 793-821.
21
Id.; Including Sen. Aquilino Q. Pimentel, Jr.,
Sergio L. Osmena III, Pamfilo M. Lacson, Alfredo 52
Id. at 795-796.
S. Lim. Jamby A.S. Madrigal, Luisa P. Ejercito-
Estrada, Jinggoy E. Estrada, Rodolfo G. Biazon
53
and Richard F. Gordon. Id. at 801-803.

54
22
Supra note 7 at 4132-4134. Id. at 817-819.

55
23
Rollo, pp. 161-163. Id. at 807-808.

56
24
Id. at 170-195. Id. at 884-886

57
25
Id. at 185-187. Id. at 906-915.

58
26
Id. at 190-192. Id. at 897-903.

59
27
Id. at 191-192 & 196-200. Id. at 902.

60
28
ld. at 201-211. Id. at 924-934.

61
29
Order dated 28 March 2006; id at 213-214. Virata v. Aquino, 152 Phil. 405 (1973).

62
30
Id. at 215-226. Adlawan v. Tomol, 262 Phil. 893 (1990).

63
31
Id. at 227. Id.

64
32
Id. at 293-302. Id.

65
33
Id. at 299-300. Metro, Inc. v. Lara's Gift and Decors, Inc., 621
Phil. 162 (2009).
34
Id. at 300.
66
Id., citing liberty Insurance Corporation v.
35 Court o/ Appeals, G.R. No. 104405, 13 May 1993,
Id. at 301.
222 SCRA 37, 45.
36
Id. at 303-330 & 331-352. 67
Liberty Insurance Corporation v. Court of'
Appeals, supra, citing old Sec. 1(d), Rule 57 of the
37
Id. at 3 1-36. Rules of Court:

38
Id. at 36. "In an action against a party who has
been guilty of fraud in contracting the
39
Id. at 32. debt or incurring the obligation upon
which the action is brought, Section 1 (d)
Civpro Rule 39-43 43
 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 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;'"
68
37 AM. JUR. 2D Fraud and Deceit§I (1968).
69
International Corporate Bank v. Gueco, 404 Phil.
353 (2001).
70
Ortega v. People, 595 Phil. 1103 (2008).
71
Republic v. Estate of Alfonso Lim, Sr., 611 Phil.
37 (2009).
72
Sps. Godinez v. Alano, 362 Phil. 597 (1999).
73
37 AM. JUR. 2D Fraud and Deceit § 439 (1968).
74
Information Technology Foundation of the
Philippines v. COMELEC. 464 Phil. 173. 209-226
2004).
75
Rollo, pp. 201-211.
76
Id. at 203-205, 211; Petitioner's allegations in its
application for the issuance of a writ of preliminary
attachment are as follows:
4. Indeed, plaintiff and defendants-in-
counterclaim committed fraud by securing
the election automation contract even if
MPEI (plaintiff) was not qualified to bid for
the said contract. To perpetrate the said
fraud, plaintiff and defendants-in-
counterclaim misrepresented that the
actual bidder was Mega Pacific
Consortium, and that MPEI (plaintiff) was
only acting on behalf of MPC. x x x. Anent
plaintiff's claim that the MPC members
bound themselves under the election
automation contract, suffice it to say that
the Supreme Court held that "the
automation Contract with Comelec was
not executed by the 'consortium· MPC-or
by MPEI (plaintiff) for and in behalf of
MPC-but by MPEI (plaintiff), period. The
said Contract contains no mention
whatsoever of any consortium or
members thereof.'"
5. Both plaintiff and defendants-in-
counterclaim knew that plaintiff was
not qualified to bid for the election
automation contract. In fact, the
Supreme Court clearly declared that "had
the proponent MPEI (plaintiff) been
evaluated based solely on its own
experience, financial and operational
track record or lack thereof it would
surely not have qualified and would have
been immediately considered ineligible to
bid, as respondents readily admit. This
notwithstanding, plaintiff still bidded
for the election automation contract;
signed the same; and implemented,
albeit partially, the provisions thereof.
xxxx
4. Plaintiff Mega Pacific eSolutions, Inc.
and defendants-in-counterclaim Willy Yu,
et al. committed fraud in securing the
automation contract even if the bid for
the same was not awarded to them,
but to an ineligible consortium Mega
Pacific Consortium; and that said
plaintiff, while it was the one which
signed the voided automation
contract, was ineligible to bid for the
same. (Emphases supplied)
77
Art. 1339. Failure to disclose facts, when there is
a duty to reveal them, as when the parties are
bound by confidential relations, constitutes fraud.
(NEW CIVIL CODE, Art. 1339)
78
Rural Banko of Sta. Maria, Pangasinan v. Court
of Appeals, 373 Phil. 27 (1999).
79
Cathay Pacific Airways Ltd v. Spouses
Vasquez, 447 Phil. 306 (2003).
80
581 Phil. 612 (2008).
81
545 Phil. 755 (2007).
82
37 Am Jur 2d Fraud and Deceit § 50
citing Union Co. v. Cobb, 73 Ohio L. Abs. 155, 136
N.E. 2d 429 (Ct. App. 10th Dist. Franklin County
1955) and Raser v. Moomaw, 78 Wash. 653, 139
P. 622 (1914).
83
73 Ohio L. Abs. 155, 136 N.E. 2d 429 (Ct. App.
10th Dist. Franklin County 1955).
84
78 Wash. 653; 139 P. 622 (1914).
85
Id.
86
Information Technology Foundation of the
Philippines v. COMELEC, 464 Phil. 173, 193-194
(2004).
87
Agan, Jr. v. PIATCO, Inc., 450 Phil. 744 (2003).
88
Information Technology Foundation of the
Philippines v. COMELEC. supra, at 215-216.
89
Republic of the Philippines v. Judge
Capulong, 276 Phil. 136, 152-153 (1991).
90
Information Technology Foundation of the
Philippines, Inc. v. COMELEC, supra note 90 at
227, 232-238.
Civpro Rule 39-43 44
91
We stress once again that the Contract entered
into by the Comelec for the supply of the ACMs
was declared VOID by the Court in its Decision
because of clear violations of law and
jurisprudence, as well as the reckless disregard by
the Commission of its own bidding rules and
procedure:
"To muddle the issue, Comelec keeps on
saying that the 'winning' bidder presented
a lower price than the only other bidder. It
ignored the fact that the whole bidding
process was VOID and FRAUDULENT.
How then could there have been a
"winning'' bid? x x x" (Supra note 7 at
4132-4134.)
92
Rollo, pp. 201-211.
93
Id. at 208.
94
JG Summit Holdings. Inc. v. Court of
Appeals, 458 Phil. 581 (2003).
95
Malaga v. Penachos, Jr., G.R. No. 86695, 3
September 1992, 213 SCRA 516.
96
Id. at 797-801 & 906-915.
97
Id. at 798.
98
Id. at 800.
99
The general rule is that a corporation has a
separate juridical personality distinct from the
persons composing it. Remo, Jr. v. Intermediate
Appellate Court, 254 Phil. 409, 411 (1989).0ne
implication of the doctrine is that corporate
creditors may not reach the personal assets of the
shareholders, who are liable only to the extent of
their subscription under the related doctrine of
limited liability. (Philippine National Bank v. Hydro
Resources Contractors Corp., G.R. Nos. 167530,
167561, 167603, 13 March 2013, 693 SCRA 294)
100
See Black's Law Dictionary, 114 7-1148 (6th ed.
2008). See also Kukan International Corp. v.
Reyes, 646 Phil. 210 (2010) and Cesar Lapuz
Villanueva and Teresa S. Villanueva-
Tiansay, Philippine Corporate Law, p. 105 (2013).
101
International Bank for Reconstruction and
Development/ The World Bank, 2013, Fraud and
Corruption Awareness Handbook: A Handbook for
Civil Servants Involved in Public Procurement, I
(last visited 15 November 2015) <http://www-
wds.worldbank.org/external/default/WDSContentS
erver/WDSP/IB/2014/04/25/000456286
20140425150639/Rendered/PDF/877290PUB0Fra
u00Box382147B00PUBLIC0.pdf> (Fraud and
Corruption Awareness Handbook).
102
Id. at 17-18.
103
Supra note 7.
104
Supra note 1.
105
Supra note 101 at 30.
106
Id.
107
Supra note 101 at 39.
108
This Court in its 2005 Resolution in 2004 case
ruled as follows:
The Motion has not at all demonstrated
that these technical requirements have
been addressed from the time our
Decision was issued up to now. In fact,
Comelec is merely asking for leave to use
the machines, without mentioning any
specific manner in which the foregoing
requirements have been satisfactorily
met.
Equally important, we stressed in our
Decision that "[n]othing was said or done
about the software - the deficiencies as to
detection and prevention of downloading
and entering previously downloaded data,
as well as the capability to print an audit
trail. No matter how many times the
machines were tested and retested, if
nothing was done about the programming
defects and deficiencies, the same
danger of massive electoral fraud
remains."
Other than vaguely claiming that its four
so-called "experts" have "unanimously
confirmed that the software development
which the Comelec undertook, [was] in
line with the internationally accepted
standards (ISO/IEC 12207) [for] software
life cycle processes," the present Motion
has not shown that the alleged "software
development" was indeed extant and
capable of addressing the "programming
defects and deficiencies" pointed out by
this Court.
At bottom, the proposed use of the ACMs
would subject the ARMM elections to the
same dangers of massive electoral fraud
that would have been inflicted by the
projected automation of the 2004 national
elections.
109
This Court in its 2006 Resolution in 2004 case
ruled thus:
Like the earlier Comelec Motion,
however, the present one of Atty.
Macalintal utterly fails to demonstrate -
nay, even slightly indicate -- what "certain
supervening and legal circumstances
[have] transpired" to justify the reliefs it
seeks. In fact, after the Court had
ruled, among others, that the ACMs
had failed to pass legally mandated
technical requirements, they have
admittedly been simply stored.
In other words, they have merely
remained idle and unused since their
last evaluation in which they failed to
hurdle the crucial tests. Thus, again
we say, the ACMs were not good
enough for either the 2004 national
elections or for the 2005 ARMM polls;
Civpro Rule 39-43 45
 123
why should they be good enough for Id. at 885-897.
the 2007 elections, considering
that nothing has been done to correct 124
Id. at 889.
the legal, jurisprudential and technical
flaws underscored in our final and 125
executory Decision? Likewise, we Id. at 892.
repeat that no matter how many times the
machines were retested, if nothing was 126
Id. at 900-918.
done about the programming defects and
deficiencies, the same danger of massive 127
Id. at 911.
electoral fraud remains. (Emphases
supplied) 128
Lopez, Rosario N., The Corporation Code of the
110
Philippines (Annotated), Volume I (1994), p. 170.
Fraud and Corruption Awareness Handbook, p.
40. 129
Rollo, pp. 892-897.
111
Supra note 1 at 277-278. 130
Id. at 804.
112
Jose C. Campos Jr., and Maria Clara Lopez- 131
Campos. The Corporation Code, Volume I, p. 149 Id. at 803-804.
(1990).
132
Ganaden v. Court of Appeals, 665 Phil. 261
113
State ex rel. Attorney General v. Standard Oil (2011).
Co., Supreme Court of Ohio, 49 Ohio St., 137,
N.E. 279 (1892), cited in Campos, Note 112, at 133
Yu v. Reyes-Carpio. 667 Phil., 474
154. (Emphases supplied) (2011), citing 2 JOSE Y. FERIA & MARIA
CONCEPCION S. NOCHE, CIVIL PROCEDURE
114
Supra Note 111. ANNOTATED 463 (2001).

134
115
Koppel Philippines, Inc. v. Yatco, 77 Phil. 496 J. L. Bernardo Construction v. Court of
(1946); Laguna Transportation Co., Inc. v. Social Appeals, 381 Phil. 25 (2000).
Security System, 107 Phil. 833 (1960), Francisco
v. Mejia. G.R. No. 141617 (14 August 2001); Yao, 135
Yu v. Reyes-Carpio, supra.
Sr. v. People, 552 Phil. 195 (2007).
136
Sec. 47.Effect of judgments or final orders. - -
116
See Traders Royal Bank v. Cuison Lumber Co., The effect of a judgment or final order rendered by
Inc., 606 Phil. 700 citing People's Industrial and a court of the Philippines, having jurisdiction to
Commercial Corp. v. Court of Appeals, 346 Phil. pronounce the judgment or final order, may be as
189: follows:

"The clear and neat principle is that the xxxx

offer must be ce1iain and definite with
respect to the cause or consideration and
(b) In other cases, the judgment or final
object of the proposed contract, while the
order is, with respect to the matter directly
acceptance of this offer - express or
adjudged or as to any other matter that
implied - must be unmistakable,
could have been raised in relation
unqualified, and identical in all respects to
thereto, conclusive between the parties
the offer. The required concurrence,
and their successors in interest by title
however, may not always be
subsequent to the commencement of the
immediately clear and may have to be
action or special proceeding, litigating for
read from the attendant
the same thing and under the same title
circumstances; in fact, a binding
and in the same capacity; and
contract may exist between the parties
whose minds have met, although they
did not affix their signatures to any (c) In any other litigation between the
written document." (Emphasis supplied) same pai1ies or their successors in
interest, that only is deemed to have
117 been adjudged in a former judgment or
Rollo, pp. 181-182.
final order which appears upon its face to
have been so adjudged, or which actually
118
Records, Vol. 2, pp. 866-884. and necessarily included therein or
necessary thereto.
119
Id. at 877.
137
Reforzado v. Sps. Lopez, 627 Phil. 294 (2010).
120
Id. at 853-865.
138
Alamayri v. Pabale, 576 Phil. 146 (2008).
121
Id. at 889.
139
Sps. Noceda v. Arbizo-Directo, 639 Phil. 483
122
Id. at 877. (2010).

Civpro Rule 39-43 46

140 164
G. R. Nos. 76265 and 83280, 11 March 1994, Chapter 5, Article 51, United Nations
231 SCRA 88. Convention Against Corruption. 2349 U.N.T.S. 41
(in force 14 Dec. 2005) (signed by the Philippines
141
Id. at 99-100. on 09 Dec. 2003 and ratified on 8 Nov. 2006).

165
142
Malayang Samahan ng Manggagawa sa United Nations Convention Against Corruption.
Balanced Food v. Pinakamasarap 2349 U.N.T.S. 41 (in force 14 Dec. 2005) (signed
Corporation, 464 Phil. 998 (2004). by the Philippines on 09 Dec. 2003 and ratified on
8 Nov. 2006).
143
AGG Trucking v. Yuag, 675 Phil. 108 (2011). 166
Chapter 2, Article 9, United Nations Convention
144
Against Corruption. 2349 U.N.T.S. 41 (in force 14
612 Phil. 462, 471 (2009). Dec. 2005) (signed by the Philippines on 09 Dec.
2003 and ratified on 8 Nov. 2006).
145
Id. at 471.
167
Most Common Red Flags of Fraud and
146
Rollo, pp. 897-903. Corruption in Procurement (available at
<http://siteresources.worldbank.org/INTDOII/Reso
147
Id. at p. 902. urccs/Red_flags_reader_friendly.pdf> (last visited
on 8 January 2016).
148
Justices Renato C. Corona, Adolfo S. Azcuna
and Dante O. Tinga registered their dissent. EFREN SALVAN Y PRESENES, PETITIONER, VS. THE
Justice Dante O. Tinga wrote a dissenting opinion. PEOPLE OF THE PHILIPPINES, RESPONDENT., G.R.
NO. 153845, 2003 SEPTEMBER 11,
149
Justices Hilario G. Davide, Jr. and Jose C. Vitug
wrote their separate opinions voting for dismissal DECISION YNARES-SANTIAGO, J.:
of the Petition.
This is a petition for review under Rule 45 of the
150
The 2004 Decision was penned by Justice Rules of Court, which seeks to set aside the Order of the
Artemio V. Panganiban, with Justices ANTONIO T. Regional Trial Court, Branch 13 of Malolos, Bulacan, dated
CARPIO, Ma. Alicia Austria-Martinez, Conchita February 12, 2002, denying due course to petitioner Efren
Carpio-Morales and Romeo J. Callejo, Sr. Salvan’s Notice of Partial Appeal, and the Order of the
concurring therein. same court, dated June 6, 2002, denying petitioner’s Motion
for Reconsideration.[1] The petition also specifically prays
151
for the issuance of an Order directing the trial court to give
Justices Consuelo Ynares-Santiago and Justice due course to the petitioner’s Notice of Partial Appeal.[2]
Angelina Sandoval-Gutierrez.

152
Petitioner Efren Salvan, a bus driver, was charged
Justice Leonardo A. Quisumbing. with Reckless Imprudence Resulting in Homicide for the
death of John Barry Abogado, in Criminal Case No. 718-M-
153
Justice Reynato S. Puno joins in opinion of 00 before the Regional Trial Court of Malolos, Bulacan,
Justice Consuelo Ynares-Santiago. Branch 13.[3] At his arraignment, petitioner pleaded guilty to
the charge. The trial court then proceeded to receive
154 evidence to determine the civil liability of petitioner. During
Rollo, p. 32.
the course of the hearing, petitioner and private
complainant Edna Abogado, the mother of the accused,
155
Id. at 306-307. agreed to amicably settle the civil aspect of the case.[4]

156
Rollo, pp. 801-803. On October 23, 2001, the trial court promulgated
its Decision, the decretal portion of which provides:
157
Secretary of Finance v. Ora Maura Shipping
Lines. 610 Phil. 419 (2009). WHEREFORE, premises considered, this Court
finds the accused GUILTY beyond reasonable doubt of the
158
Supra note 6. crime of simple negligence resulting in homicide as per the
recitals in the information, punished under the second
159 paragraph of Article 365 of the Revised Penal Code, and
31 C.J.S. Estoppel §1 (1964).
hereby sentences him to suffer the penalty of six (6) months
of arresto mayor. Accused is directed to pay to the heirs of
160
Rollo, pp. 893-897. the deceased the net sum of P100,000.00, representing the
difference between the P100,000.00 earlier paid by way of
161
Id. at pp. 807-808. amicable settlement herein and the sum of:

162
Chapter 2, Article 5(1), United Nations a) P50,000.00 in actual damages;
Convention Against Corruption. 2349 U.N.T.S. 41
(in force 14 Dec. 2005) (signed by the Philippines b) P50,000.00 in civil indemnity; and
on 09 Dec. 2003 and ratified on 8 Nov. 2006).
c) P100,000.00 in moral damages.
163
Chapter 2, Article 5(2), United Nations
Convention Against Corruption. 2349 U.N.T.S. 41
SO ORDERED.[5]
(in force 14 Dec. 2005) (signed by the Philippines
on 09 Dec. 2003 and ratified on 8 Nov. 2006).
Civpro Rule 39-43 47

Petitioner filed a Motion for Partial Reconsideration praying
for the deletion of the additional award of damages.[6] He
also filed an Application for Probation on the same date.[7]
On January 28, 2002, the trial court denied the petitioner’s
Motion for Partial Reconsideration, but gave due course to
the petitioner’s Application for Probation.[8
Petitioner then filed a Notice of Partial Appeal on February
8, 2002. On February 12, 2002, the trial court issued the
first assailed Order, the dispositive portion of which states:
Considering that the application for probation of the
accused was given due course as per the Order of this
Court dated January 28, 2002, and the application for
probation is deemed under the law to be a waiver of the
right to appeal, the Notice of Appeal is hereby DENIED due
course.
SO ORDERED.[9]
Petitioner filed a Motion for Reconsideration, which was
denied on June 6, 2002.[10]
Petitioner is now before us, alleging that:
THE TRIAL COURT ERRED WHEN IT DENIED GIVING
DUE COURSE TO ACCUSED’S NOTICE OF PARTIAL
APPEAL EXCLUSIVELY ON THE AWARD OF DAMAGES.
[11]
In Rule 41 of the 1964 Rules of Court, the dismissal of
appeals was governed by the following provisions:
SEC. 13. Effect of failure to file notice, bond, or record on
appeal. — Where the notice of appeal, appeal bond or
record on appeal is not filed within the period of time herein
provided, the appeal shall be dismissed.
SEC. 14. Motion to dismiss appeal. — A motion to dismiss
an appeal on any of the grounds mentioned in the
preceding section, may be filed in the Court of First
Instance prior to the transmittal of the record to the
appellate court.
Rule 41, Section 13 of the 1997 Rules of Civil Procedure,
provides for the grounds to dismiss appeals, to wit:
Sec. 13. Dismissal of appeal. — Prior to the transmittal of
the original record or the record on appeal to the appellate
court, the trial court may motu proprio or on motion dismiss
the appeal for having been taken out of time or for non-
payment of the docket and other lawful fees within the
reglementary period.[12]
The above-quoted rule limits the grounds for dismissal of
appeals to very specific instances. The filing of an
application for probation is not one of them.
In the parallel case of Ortigas & Company Limited
Partnership v. Velasco,[13] we held:
His Honor was apparently incognizant of the principle that
dismissals of appeals from the judgment of a Regional Trial
Court by the latter are authorized only in the instances
specifically set forth in Section 13, Rule 41 of the Rules of
Court. The succeeding provision, Section 14 of said Rule
41, provides that “(a) motion to dismiss an appeal may be
filed in the (Regional Trial) Court . . . prior to the transmittal
of the record to the appellate court;” and the grounds are
limited to those “mentioned in the preceding section,” i.e.,
Section 13 to wit: where “the notice of appeal, appeal bond,
or record on appeal is not filed within the period of time
herein provided . . .”
These two (2) sections clearly establish “that. . . . (A) trial
court may not dismiss an appeal as frivolous, or on the
ground that the case has become moot and academic, such
step devolving upon the appellate courts. Otherwise, the
way would be opened for (regional trial) courts . . . to
forestall review or reversal of their decisions by higher
courts, no matter how erroneous or improper such
decisions should be.[14]
Although the aforementioned ruling was made in a civil
case, we see no reason why the principles enunciated
therein cannot be applied, by analogy, to a criminal case,
such as the one at bar. Thus, aside from its competence to
dismiss withdrawn appeals,[15] the Regional Trial Court’s
power to dismiss an appeal is limited to the instances
provided for in Rule 41, Section 13.
Going now to the issue of probation, we recall that the law
which governs all matters relating to probation is
Presidential Decree No. 968, commonly known as the
Probation Law, as amended by Presidential Decree No.
1990. The provision of the law that is pertinent to the
current controversy reads:
SEC. 4. Grant of Probation. – Subject to the provisions of
this Decree, the trial court may, after it shall have convicted
and sentenced a defendant, and upon application by said
defendant within the period for perfecting an appeal,
suspend the execution of the sentence and place the
defendant on probation for such period and upon such
terms and conditions as it may deem best; Provided, That
no application for probation shall be entertained or granted
if the defendant has perfected the appeal from the judgment
of conviction.
Probation may be granted whether the sentence imposes a
term of imprisonment or a fine only. An application for
probation shall be filed with the trial court. The filing of the
application shall be deemed a waiver of the right to appeal.
An order granting or denying probation shall not be
appealable.
Relying solely on the letter of the law, the filing of the
application for probation should be deemed a waiver of the
right to appeal. However, in the case of Budlong v.
Apalisok,[16] we had occasion to rule that the above
provision of the Probation Law clearly provides only for the
suspension of the sentence imposed on the accused by
virtue of his application for probation. It has absolutely no
bearing on civil liability. This ruling was clarified in Salgado
v. Court of Appeals,[17] wherein we ruled that, although the
execution of sentence is suspended by the grant of
probation, it does not follow that the civil liability of the
offender, if any, is extinguished.
This intertwining of criminal and civil liability is best
understood by analyzing the criminal act itself which, by its
very nature, causes two (2) classes of injury. The first is the
social injury produced by the criminal act which is sought to
Civpro Rule 39-43 48
be repaired thru the imposition of the corresponding penalty
and the second is the personal injury caused to the victim of
the crime which injury is sought to be compensated thru
indemnity, which is civil in nature.[18] This has been
codified in our criminal law, where every person criminally
liable for a felony is also civilly liable.[19] Thus, Article 113
of the Revised Penal Code provides that, except in case of
extinction of civil liability, the offender shall continue to be
obliged to satisfy the civil liability resulting from the crime
committed by him, notwithstanding the fact that he has
served his sentence consisting of deprivation of liberty or
other rights, or has not been required to serve the same by
reason of amnesty, pardon, commutation of sentence or
any other reason. Furthermore, this principle has found its
way into our rules of criminal procedure, where it is
provided that an action for recovery of civil liability is
deemed instituted in the criminal action unless reserved by
the offended party.[20] And yet it must be remembered that
the civil liability of the accused is not part of the penalty for
the crime committed: it is personal to the victim.[21]
The Probation Law prohibits a judge from entertaining or
granting an application for probation if the defendant has
perfected an appeal from the judgment of conviction. The
fact of conviction most certainly refers to the criminal liability
of the accused, as a result of a finding made by a judge that
he is guilty of the crime charged. However, the appeal in
this case involved only the civil aspect of the trial court’s
judgment. Hence, we see no reason why, between the
conjoined criminal and civil aspects of a felony, a line
cannot be drawn marking where the one springs from the
other. Even if by definition civil liability ex delicto arises
from the criminal act, once its existence is established, it
should be treated separately from the criminal liability.
Indeed there is even categorical statutory basis to state
that it subsists despite the extinguishment of the criminal
liability from which it arose. This was the finding in Budlong
v. Apalisok and Salgado v. Court of Appeals.
Thus, we rule that, in an appeal from a judgment of
conviction, the criminal liability and the civil liability ex
delicto should be considered independently, each with its
own corresponding effects. In the present case, the law
that bars an appeal of the judgment of conviction, as well as
its corresponding criminal liability, should not bar an appeal
of the civil aspect of the same judgment.
WHEREFORE, in view of the foregoing, the petition is
GRANTED. The Orders of the Regional Trial Court, Branch
13 of Malolos, Bulacan, dated February 12, 2002, and June
6, 2002 are REVERSED and SET ASIDE. Let this case be
REMANDED to the court of origin which is ORDERED to
give due course to the petitioner’s Notice of Partial Appeal.
SO ORDERED.
G.R. No. 198583
ARLYN ALMARIO-TEMPLONUEVO, Petitioner
vs. OFFICE OF THE OMBUDSMAN, THE HONORABLE
SECRETARY, DEPARTMENT OF INTERIOR AND LOCAL
GOVERNMENT and CHITO M. OYARDO, Respondents
DECISION MENDOZA, J.:
This petition for review on certiorari under Rule 45 of the
Rules of Court seeks the review of the February 17,
2011 1and the September 8, 2011 2 Resolutions of the Court
of Appeals (CA) in CA-G.R. SP No. 116229. The CA
issuances dismissed the petition for certiorari and
prohibition filed by petitioner Arlyn Almario-
Templonuevo (Templonuevo), thus, affirming the January 6,
2010 Decision3 of Office of the Deputy Ombudsman for
Luzon (Ombudsman) in OMB-L-A-08-0097-B, finding her
administratively liable for simple misconduct. The complaint
against her was filed by respondent Chito M.
Oyardo (Oyardo).
Factual Antecedents
Templonuevo was elected as Sangguniang Bayan Member
of the Municipality of Caramoan, Province of Catanduanes,
during the May 2007 elections. She served from July 1,
2007 to June 30, 2010. In the elections of May 2010, she
was elected as Municipal Vice Mayor of the same
municipality.
In a complaint, docketed as OMB-L-A-08-0097-B, Oyardo
administratively charged Templonuevo before the
Ombudsman for violation of Sec. 2, par. I of Republic Act
No. 9287.
In its January 6, 2010 Decision, the Deputy Ombudsman for
Luzon found petitioner guilty of simple misconduct and
imposed upon her the penalty of one month suspension
without pay. The dispositive portion of said decision reads:
WHEREFORE, premises considered, it is hereby
respectfully recommended that ARLYN ALMARIO-
TEMPLONUEVO be adjudged guilty of violation of simple
misconduct and is hereby imposed a penalty of one (1)
month suspension from office without pay pursuant to
Section 7 Rule III of the Administrative Order No. 07 as
amended by Administrative Order No. 17 in relation to
Republic Act No. 6770.
The Honorable Secretary Ronaldo V. Puno, Department of
Interior and Local Government, is hereby directed to
implement this DECISION immediately upon receipt thereof
pursuant to Section 7, Rule III of Administrative Order No.
07, as amended by Administrative Order No. 17
(Ombudsman Rules of Procedure) in relation to
Memorandum Circular No. 1, Series of 2006 dated 11 April
2006 and to promptly inform this office of the action taken
hereon.
SO DECIDED.4
At the time Templonuevo received her copy of the January
6, 2010 Decision on September 27, 2010, her term as
Sangguniang Bayan Member had expired. She, however,
was elected as Vice Mayor of the same municipality.
Without filing a motion for reconsideration, Templonuevo
directly filed before the CA an original petition
for certiorari and prohibition under Rule 65 of the Rules of
Court. She claimed that the Ombudsman acted with grave
abuse of discretion in ordering her suspension at a time
when her term of office as Sangguniang Bayan Member
had already expired and she had been elected as Vice
Mayor in the May 2010 elections.
In its February 17, 2011 Resolution,5 the CA dismissed
outright the petition on the ground of Templonuevo's failure
to file a motion for reconsideration. According to the CA, the
remedy of certiorariwill not lie if other plain and speedy
remedies in the ordinary course of law such as a motion for
reconsideration are available, which, in this case, was not
sought after by Templonuevo.
Templonuevo moved for reconsideration, but her motion
was denied by the CA in its September 8, 2011 Resolution.
Civpro Rule 39-43 49
Aggrieved, Templonuevo elevated the case to this Court via
Rule 45 of the Rules of Court.
Hence, this petition.
Templonuevo asserts that the CA decided questions of
substance contrary to law and the applicable decisions of
this Court when her petition was dismissed outright on the
ground of failure to file a motion for reconsideration. She
claims that there was no need to file for reconsideration
considering that the Ombudsman's decision has become
final, executory and unappealable. She cites, as support,
Section 7, Rule III of Administrative Order No. 07, otherwise
known as the Rules of Procedure of the Ombudsman, as
amended by A.O. No. 17, which provides:
Section 7. Finality and execution of decision. - Where the
respondent is absolved of the charge, and in case of
conviction where the penalty imposed is public censure or
reprimand, suspension of not more than one month, or a
fine equivalent to one month salary, the decision shall be
final, executory and unappealable. In all other cases, the
decision may be appealed to the Court of Appeals in a
verified petition for review under the requirements and
conditions set forth in Rule 43 of the Rules of Court, within
fifteen (15) days from the receipt of the written Notice of the
Decision or Order denying the Motion for Reconsideration.
An appeal shall not stop the decision from being executory.
In case the penalty is suspension or removal and the
respondent wins such appeal, he shall be considered as
having been under preventive suspension and shall be paid
the salary and such other emoluments that he did not
receive by reason of the suspension or removal.
A decision of the Office of the Ombudsman in administrative
cases shall be executed as a matter of course. The Office
of the Ombudsman shall ensure that the decision shall be
strictly enforced and properly implemented. The refusal or
failure by any officer without just cause to comply with an
order of the Office of the Ombudsman to remove, suspend,
demote, fine or censure shall be ground for disciplinary
action against said officer.
To Templonuevo, said AO makes a motion for
reconsideration unavailable in cases where a respondent is
absolved of the charge or in cases of conviction where the
penalty imposed is public censure or reprimand,
suspension of not more than one month, or a fine of
equivalent to one month salary. Considering that she was
given the penalty of one-month suspension only, her only
remedy then was to file a petition for certiorari under Rule
65 of the Rules of Court.
In furtherance of her position, Templonuevo cites Office of
the Ombudsman v. Alano,6 wherein the Court ruled that a
resolution or order of the Ombudsman becomes final and
unappealable in the instances mentioned by her. The effect
of such finality, in her view, is simple - that the motion for
reconsideration is not required before resorting to the
extraordinary remedy of certiorari. This was, according to
her, the same conclusion reached by the Court in Reyes,
Jr. v. Belisario.7 There, it was held that the complainant
therein was not entitled to any corrective recourse, whether
by motion for reconsideration, or by appeal to the courts, to
effect a reversal of the exoneration. The Court further held
that despite such a fact, courts are still empowered by the
Constitution to determine whether there has been grave
abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of
the Government.
Templonuevo, thus, believes that because the decision of
the Ombudsman in her case was immediately final,
executory and unappealable, the same could no longer be
reviewed by the said office and as such a motion for
reconsideration would be an exercise in futility. The CA
should have taken note of that fact and such a failure
amounts to an error, says petitioner.
Templonuevo likewise calls the Court's attention to the fact
that the misconduct for which she was penalized was
committed when she was still a Sangguniang Bayan
Member. As she was elected Vice Mayor of the same
municipality in 2010, she claims that such election resulted
in the condonation of her administrative liability on acts
committed during her previous post. She cites the case
of Pascual v. Hon. Provincial Board of Nueva Ecija, 8 where
this Court held that the re-election to office operates as a
condonation of the officer's previous misconduct to the
extent of cutting off the right to remove him therefrom.
Consequently, the decision of the Ombudsman is in her
view a patent nullity.
On November 16, 2011, the Court resolved to require the
respondents to comment on the petition and also issued a
Temporary Restraining Order enjoining the respondents
from implementing the Decision of the Office of the
Ombudsman. 9
On December 2, 2011, the Office of the Solicitor
General (OSG) filed a Manifestation and Motion (in Lieu of
Comment), 10 stating that the arguments raised by it in its
Manifestation and Motion (in Lieu of Comment), dated April
26, 2011 and filed on April 28, 2011 with the CA, was
exhaustive enough to serve as its comment on the present
petition. The OSG in the pleadings it filed with the CA took
the side of Templonuevo. It, thus, asserts that by virtue of
AO No. 7, as amended, a decision of Ombudsman
imposing a penalty of not more than one (1) month is final,
executory and unappealable and, as such, a motion for
reconsideration or appeal is not an available remedy. It also
claimed that the subsequent reelection of Templonuevo
precludes the imposition and execution of the penalty by
virtue of the long standing doctrine of condonation.
In its Comment on the Petition For Review
on Certiorari with Leave of Court (With Motion to Recall the
Temporary Restraining Order with Opposition to the
Issuance of a Writ of Preliminary Injunction), 11 the
Ombudsman submits that Section 7, Rule III, Administrative
Order No. 07, as amended, allows the filing of motions for
reconsideration on its decisions that impose one month
suspension; that a plethora of jurisprudence reveals that the
Condonation Doctrine was applied by the Supreme Court
only in cases where there was re-election to the same
position; and that, the issuance of a temporary restraining
order was erroneous and the error should not be extended
with the issuance of a writ of preliminary injunction which
the law proscribes.
In the meantime, Templonuevo filed a Manifestation in Lieu
of Compliance12 with the January 25, 2012 Resolution
which ordered her to furnish this Court with the current
address of Oyardo. She stated therein that she did not
know the present address of Oyardo, who was not a
permanent resident of Caramoan, and that no forwarding
address was left behind.
In its July 18, 2012 Resolution,13 the Court noted the
manifestation and required the Ombudsman to furnish the
address of Oyardo. This was complied with. 14
Civpro Rule 39-43 50
Oyardo still failed to file his Comment on the petition. As
such, in the Court's September 14, 2015
Resolution, 15 Oyardo's right to file his comment was
deemed waived. In the same Resolution, the Court required
Templonuevo to file her Reply to the manifestation and
motion of the OSG, dated December 1, 2011, and to the
Comment on the Petition for Review on Certiorari with
Leave of Court filed by the Ombudsman.
Until now, no reply has been filed by Templonuevo. She is
deemed to have waived her right to file it.
Issues
A reading of the pleadings filed by the parties reveals that
the issues are as follows:
1. Whether the CA committed an error in
dismissing outright the petition filed by
Templonuevo on the ground of failure to
file a motion for reconsideration from the
decision of the Ombudsman finding her
administratively liable and imposing upon
her a penalty of one month
suspension.1âwphi1
2. Whether the CA committed an error in
not treating the election of Templonuevo
as Vice Mayor of the same municipality
as an event that precludes the imposition
of the one month suspension penalty
following the doctrine of condonation.
The Ruling of the Court
The Court grants the petition.
A motion for reconsideration is not required where the
penalty imposed by the Ombudsman is one month
suspension before a petition under Rule 65 can be filed.
The settled rule is that a motion for reconsideration is a
condition sine qua non for the filing of a petition
for certiorari. 16 Its purpose is to grant an opportunity for the
court to correct any actual or perceived error attributed to it
by re-examination of the legal and factual circumstances of
the case. 17
This rule, however, admits well-defined exceptions, such as
(a) where the order is a patent nullity, as where the court a
quo has no jurisdiction; (b) where the questions raised in
the certiorari proceedings have been duly raised and
passed upon by the lower court, or are the same as those
raised and passed upon in the lower court; (c) where there
is an urgent necessity for the resolution of the question and
any further delay would prejudice the interests of the
Government or of the petitioner or the subject matter of the
action is perishable; (d) where, under the circumstances, a
motion for reconsideration would be useless; (e) where
petitioner was deprived of due process and there is extreme
urgency for relief; (t) where, in a criminal case, relief from
an order of arrest is urgent and the granting of such relief
by the trial court is improbable; (g) where the proceedings
in the lower court are a nullity for lack of due process; (h)
where the proceeding were ex parte or in which the
petitioner had no opportunity to object; and (i) where the
issue raised is one purely of law or where public interest is
involved. 18
Templonuevo contended that her non-filing of a motion for
reconsideration of the assailed Ombudsman decision was
justified because it would be useless. She claims that the
assailed decision was final, executory and unappealable,
hence, beyond the ambit of a motion for reconsideration
following Section 7, Rule III of Administrative Order No. 07.
She also argued that the Ombudsman's decision was a
patent nullity considering that her election as Vice Mayor of
the same municipality precluded the attachment to her of
any administrative liability arising from the acts done while
she was a Sangguniang Bayan Member.
The Court agrees with Templonuevo on her first position.
In Ombudsman v. Alano, 19 the Court stressed that Section
13(8), Article XI of the 1987 Constitution empowers the
Office of the Ombudsman to, among others, "promulgate its
rules of procedure and exercise such other powers or
perform such functions or duties as may be provided by
law." Pursuant to such constitutional authority,
Administrative Order No. 07 (otherwise known as the
"Rules of Procedure of the Office of the Ombudsman"),
dated April 10, 1990, was issued. Section 7, Rule III thereof
provides:
SEC. 7. Finality of decision. - Where the respondent is
absolved of the charge, and in case of conviction where the
penalty imposed is public censure or reprimand,
suspension of not more than one month, or a fine
equivalent to one month salary, the decision shall be final
and unappealable. In all other cases, the decision shall
become final after the expiration of ten (10) days from
receipt thereof by the respondent, unless a motion for
reconsideration or petition for certiorari shall have been filed
by him as prescribed in Section 27 of RA 6770.
The Court, in interpreting the above constitutional and
statutory provisions, recognizes only two instances where a
decision of the Ombudsman is considered as final and
unappealable and, thus, immediately executory. The first is
when the respondent is absolved of the charge; and second
is, in case of conviction, where the penalty imposed is
public censure or reprimand, suspension of not more than
one month, or a fine equivalent to one month salary.
In this case, Templonuevo was meted with a penalty of one
month suspension. Accordingly, the decision of the
Ombudsman is final, unappealable and immediately
executory.
Being the case, the Ombudsman's decision was beyond the
reach of an appeal or even of a motion for
reconsideration.1âwphi1 This was the same ruling in Reyes
v. Belisario,20 where the Court explained that a complainant
was not entitled to any corrective recourse by motion for
reconsideration in the Ombudsman, or by appeal to the
courts if the penalty imposed was higher than public
censure, reprimand, one-month suspension or a fine
equivalent to a one month salary. It was further written:
The clear import of Section 7, Rule III of the Ombudsman
Rules is to deny the complainant in an administrative
complaint the right to appeal where the Ombudsman has
exonerated the respondent of the administrative charge.
The complainant, therefore, is not entitled to any corrective
recourse, whether by motion for reconsideration in the
Office of the Ombudsman, or by appeal to the courts, to
effect a reversal of the exoneration. Only the respondent is
granted the right to appeal but only in case he is found
liable and the penalty imposed is higher than public
censure, reprimand, one-month suspension or fine
equivalent to one month salary.21
Civpro Rule 39-43 51
Left without any remedy in the ordinary course of law,
Templonuevo was justified in resorting directly to the CA via
a Rule 65 petition. Indeed, an independent action
for certiorari may be availed of only when there is no appeal
or any plain, speedy and adequate remedy in the ordinary
course of law and certiorari is not a substitute for the lapsed
remedy of appeal. 22 In other words, because petitioner
could not avail a motion for reconsideration or an appeal,
her choice of a Rule 65 petition was proper.
The decision of the Ombudsman was not a patent nullity;
Condonation doctrine applies.
Templonuevo claimed that the decision of the Ombudsman
was null and void as the penalty imposed could no longer
be imposed on account of her election as Vice Mayor of the
same municipality, which to her, operated as forgiveness by
her constituents for the acts done while she was still a
Sangguniang Bayan Member. This "theory of nullity," in a
sense, does not hold water. The Ombudsman decided the
case prior to the May 2010 elections. At that
time,Templonuevo remained an incumbent and no event
had transpired yet which would have had an effect on her
liability for the acts done during her previous term. As the
elections for 2010 did not happen yet, nothing could have
substantially changed the course of action of the
Ombudsman.
The election of 2010, however, became material only when
the Ombudsman's decision was on appeal. It is at this stage
that the CA, should have considered Templonuevo's
election as Vice Mayor as rendering the imposition of
administrative sanctions moot and academic on the basis of
the condonation doctrine. Said doctrine, despite its
abandonment in Conchita Carpio-Morales v. Court of
Appeals and Jejomar Erwin S. Binay, Jr., (Carpio-
Morales), 23still applies in this case as the effect of the
abandonment was made prospective in application.
In Giron v. Ochoa,24 the Court recognized that the doctrine
can be applied to a public officer who was elected to a
different position provided that it is shown that the body
politic electing the person to another office is the
same. Thus, the Court ruled:
On this issue, considering the ratio decidendi behind the
doctrine, the Court agrees with the interpretation of the
administrative tribunals below that the condonation doctrine
applies to a public official elected to another office. The
underlying theory is that each term is separate from other
terms. Thus, in Carpio-Morales, the basic considerations
are the following: first, the penalty of removal may not be
extended beyond the term in which the public officer was
elected for each term is separate and distinct; second, an
elective official's re-election serves as a condonation of
previous misconduct, thereby cutting the right to remove
him therefor; and third, courts may not deprive the
electorate, who are assumed to have known the life and
character of candidates, of their right to elect officers. In this
case, it is a given fact that the body politic, who elected him
to another office, was the same. [Emphasis supplied]
In this case, those who elected Templonuevo into office as
Sangguniang Bayan member and Vice Mayor were
essentially the same. Stated otherwise, the electorate for
the Vice Mayor of a municipality embraces wholly those
voting for a member of the Sangguniang Bayan. Logically,
the condonation doctrine is applicable in her case. The
Court is, thus, precluded from imposing the administrative
penalties of one month suspension on account of the same
people's decision to elect her again to office.
WHEREFORE, the petition is GRANTED. The February 17,
2011 and September 8, 2011 Resolutions of the Court of
Appeals in CA-G.R. SP No. 116229 are hereby REVERSED
and SET ASIDE. The act committed by petitioner Arlyn
Almario-Templonuevo is deemed CONDONED.
SO ORDERED.
G.R. No. 184464
CINDY SHIELA COBARDE-GAMALLO, Petitioner
vs. JOSE ROMEO C. ESCANDOR, Respondent
DECISION VELASCO, JR., J.:
Challenged in these consolidated Petitions for Review
on Certiorari under Rule 45 of the Rules of Court are the
Decision 1 and the Resolution 2 dated March 25, 2008 and
August 28, 2008, respectively, of the Court of Appeals (CA)
in CA-G.R. SP No. 02886.
These two cases arose from an administrative complaint for
Violation of Republic Act No. 7877 (Anti-Sexual Harassment
Act of 1995) filed by Cindy Sheila Cobarde-Gamallo
(Cobarde-Gamallo ), a contractual employee of the National
Economic Development Authority, Regional Office No. 7
(NEDA 7), for the UNICEF-assisted Fifth Country Program
for Children (CPC V), against Jose Romeo C. Escandor
(Escandor), Regional Director of NEDA 7, before the Office
of the Deputy Ombudsman for the Visayas (OMB-Visayas),
docketed as OMB-V-A-04-0492-I.
In a Decision dated March 21, 2007, there being substantial
evidence, the OMB-Visayas, through Graft Investigation
and Prosecution Officer II Cynthia C. Maturan-Sibi,
adjudged Escandor guilty of grave misconduct and meted
him with the penalty of dismissal from the service with all its
accessory penalties. 3 This OMB-Visayas Decision was
later approved by the then Ombudsman Ma. Merceditas N.
Gutierrez (Gutierrez) on June 14, 2007. Pursuant to Section
7, Rule III of the Rules of Procedure of the Office of the
Ombudsman, as amended by Administrative Order (AO)
No. 17 , 4 the Office of the Ombudsman (OMB) issued on
even date an Order directing the implementation of the
aforesaid Decision, particularly Escandor's dismissal from
the service, through the then Director General/Secretary of
NEDA Romulo L. Neri (Neri). 5
Aggrieved, Escandor went to the CA via a Petition
for Certiorari (with application for Temporary Restraining
Order and Preliminary Injunction) under Rule 65 of the
Rules of Court, seeking to set aside, reverse and declare
null and void the OMB Order dated June 14, 2007 directing
the immediate implementation and execution of the OMB-
Visayas Decision dated March 21, 2007 (approved on June
14, 2007) dismissing him from the service. 6 In support of
his petition, Escandor claimed that he timely moved for
reconsideration of the said Decision; thus, it would be
premature for the OMB and the NEDA to dismiss him from
the service. 7 Escandor also cited several rulings 8 of this
Court to sustain his position that the penalty of dismissal
cannot be immediately executed pending any appeal or
motion for reconsideration. Lastly, Escandor sought the
nullification of Section 7, Administrative Order No. 17 of the
OMB for being allegedly contrary to this Court's ruling in the
cases cited by him.
Finding merit in Escandor's petition, the CA, in its now
assailed Decision dated March 25, 2008, partly granted the
Civpro Rule 39-43 52
same, and, thus, enjoined Ombudsman Gutierrez and
Secretary Neri from executing the Decision dated March 21,
2007, as well as the Order dated June 14, 2007, in OMB-
VA- 04-0492-I until after the said Decision becomes final
and executory. The CA held that there are good grounds to
prevent Ombudsman Gutierrez and Secretary Neri from
enforcing the Decision dated March 21, 2007, as it has not
yet become final and executory considering the pendency
of Escandor's Motion for Reconsideration thereof. The CA
based its Decision from the same cases cited by Escandor
in his petition where this Court declared that penalties other
than public censure, reprimand, or suspension of not more
than one month, or a fine not equivalent to one month
salary, cannot be immediately executed pending any appeal
or motion for reconsideration. With these, the CA
considered it grave abuse of discretion to insist Escandor's
dismissal from the service despite the unequivocal
pronouncements of this Court on the matter and Escandor's
pending motion for reconsideration with the OMB. The CA,
however, declined to nullify Section 7, Administrative Order
No. 17 of the OMB. 9
Cobarde-Gamallo, Ombudsman Gutierrez and Secretary
Neri sought reconsideration of the aforesaid CA Decision
but it was denied for lack of merit in the now questioned CA
Resolution dated August 28, 2008.
Hence, these consolidated Petitions.
Both Cobarde-Gamallo and the OMB insist that the CA
committed an error of law in enjoining the immediate
implementation of the Decision dated March 21, 2007
despite the clear provision of Section 7, Article III, of the
OMB Rules of Procedure, as amended, that decisions,
resolutions and orders of the OMB are immediately
executory even pending appeal. They also argue that the
CA's reliance on this Court's rulings in Office of the
Ombudsman v. Laja, et al., Laxina v. Office of the
Ombusdman, et al., Lopez v. Court of Appeals, et
al., and Lapid v. Court of Appeals, et al., 10 is likewise an
error of law as these cases have already been superseded
by the ruling in Buencamino v. Court of Appeals, et
al., 11 where this Court declared that Section 7, Rule III of
the OMB Rules of Procedure, was already amended by AO
No. 17, where it is categorically stated that the appeal shall
not stop the decisions of the OMB from being immediately
executory.
On the contrary, Escandor maintains the correctness of the
CA's ruling enjoining the immediate execution of the
Decision dated March 21, 2007. Escandor believes that the
amendment of Section 7, Rule III of the OMB Rules of
Procedure by AO No. 17 cannot overturn the doctrinal
pronouncements in Lapid, Laxina, Lopez and Laja that
penalties other than public censure, reprimand, or
suspension of not more than one month, or a fine not
equivalent to one month salary cannot be immediately
executed pending any appeal or motion for reconsideration.
Escandor also holds that the immediate implementation and
execution of the order of dismissal pursuant to AO No. 17
deprive him of his rights without due process of law.
Given the foregoing arguments of the parties, the sole issue
that must be addressed in these consolidated petitions is
whether the OMB's Decision and Order of Dismissal against
Escandor can be immediately implemented despite the
pendency of his Motion for Reconsideration and/or Appeal.
This Court rules in the affirmative.
The issue presented in these consolidated petitions is not
novel. In fact, it has long been settled in a number of cases,
to wit: Office of the Ombudsman v.
Samaniego, 12 Villasenor, et al. v. Ombudsman, et
al., 13 and The Office of the Ombudsman v.
Valencerina, 14 stating that the OMB's decision, even if the
penalty imposed is dismissal from the service, is
immediately executory despite the pendency of a motion for
reconsideration or an appeal and cannot be stayed by mere
filing of them.
Section 7, Rule III of the OMB Rules of Procedure, as
amended by AO No. 17 dated September 15, 2003,
explicitly provides:
Section 7. Finality and execution of decision. - Where the
respondent is absolved of the charge, and in case of
conviction where the penalty imposed is public censure or
reprimand, suspension of not more than one month, or a
fine equivalent to one month salary, the decision shall be
final, executory and unappealable. In all other cases, the
decision may be appealed to the Court of Appeals on a
verified petition for review under the requirements and
conditions set forth in Rule 43 of the Rules of Court, within
fifteen (15) days from receipt of the written Notice of the
Decision or Order denying the Motion for Reconsideration.
An appeal shall not stop the decision from being executory.
In case the penalty is suspension or removal and the
respondent wins such appeal, he shall be considered as
having been under preventive suspension and shall be paid
the salary and such other emoluments that he did not
receive by reason of the suspension or removal. A decision
of the Office of the Ombudsman in administrative cases
shall be executed as a matter of course. The Office of the
Ombudsman shall ensure that the decision shall be strictly
enforced and properly implemented. The refusal or failure
by any officer without just cause to comply with an order of
the Office of the Ombudsman to remove, suspend, demote,
fine, or censure shall be a ground for disciplinary action
against said officer. (emphases supplied)
It can be gleaned from the afore-quoted provision that the
OMB's decisions in administrative cases may either be
unappealable or appealable.1âwphi1 The unappealable
decisions are final and executory, to wit: (1) respondent is
absolved of the charge; (2) the penalty imposed is public
censure or reprimand; (3) suspension of not more than one
month; and (4) a fine equivalent to one month's salary. The
appealable decisions, on the other hand, are those falling
outside the aforesaid enumeration, and may be appealed to
the CA under Rule 43 of the Rules of Court, within 15 days
from receipt of the written notice of the decision or order
denying the motion for reconsideration. Section 7 is
categorical in providing that an appeal shall not stop the
decision from being executory, and that such shall be
executed as a matter of course. 15
Also, Memorandum Circular (MC) No. 01, Series of 2006, of
the OMB states:
Section 7, Rule III of Administrative Order No. 07, otherwise
known as, the "Ombudsman Rules of Procedure" provides
that: "A decision of the Office of the Ombudsman in
administrative cases shall be executed as a matter of
course."
In order that the foregoing rule may be strictly observed, all
concerned are hereby enjoined to implement all
Ombudsman decisions, orders or resolutions in
administrative disciplinary cases, immediately upon receipt
thereof by their respective offices.
The filing of a motion for reconsideration or a petition for
review before the Office of the Ombudsman does not
Civpro Rule 39-43 53
operate to stay the immediate implementation of the
foregoing Ombudsman decisions, orders or resolutions.
(emphases supplied.)
Here, Escandor was ordered dismissed from the service.
Undoubtedly, such decision against him is appealable via
Rule 43 to the CA. Nonetheless, the same is immediately
executory even pending appeal or in his case even pending
his motion for reconsideration before the OMB as that is the
clear mandate of Section 7, Rule III of the OMB Rules of
Procedure, as amended, as well as the OMB's MC No. 01,
Series of 2006. As such, Escandor's filing of a motion for
reconsideration does not stay the immediate
implementation of the OMB 's order of dismissal since "a
decision of the [OMB] in administrative cases shall be
executed as a matter of course" under the afore-quoted
Section 7. 16
Further, in applying Section 7, there is no vested right that
is violated as the respondent in the administrative case is
considered preventively suspended while his case is on
appeal and, in the event he wins on appeal, he shall be
paid the salary and such other emoluments that he did not
receive by reason of the suspension or removal. 17 To note,
there is no such thing as a vested interest in an office, or
even an absolute right to hold office. Except for
constitutional offices that provide for special immunity as
regards salary and tenure, no one can be said to have any
vested right in an office. 18 Hence, no vested right of
Escandor would be violated as he would be considered
under preventive suspension and entitled to the salary and
emoluments that he did not receive, by reason of his
dismissal from the service, in the event that his Motion for
Reconsideration will be granted or that he wins in his
eventual appeal.
assailed CA Decision and Resolution were rendered in
2008 while the ruling in Buencamino was made in 2007 and
the amendments to the OMB Rules of Procedure stating
that the OMB's decisions, resolutions and orders are
immediately executory pending appeal were already in
effect as early as 2003. Yet, the CA still enjoined the
implementation of the OMB Decision and Order on the
ground that the same were not yet final and executory as
Escandor has pending motion for reconsideration before
the OMB. This is a clear error on the part of the CA, which
this Court now corrects.
As a final note. The OMB is authorized to promulgate its
own rules of procedure by none other than the Constitution,
which is fleshed out in Sections 18 and 27 of Republic Act
No. (RA) 6770, otherwise known as "The Ombudsman Act
of 1989" empowering the OMB to "promulgate its rules of
procedure for the effective exercise or performance of its
powers, functions, and duties" and to accordingly amend or
modify its n1les as the interest of justice may require. With
that, the CA cannot just stay the execution of decisions
rendered by the OMB when its rules categorically and
specifically warrant their enforcement, else the OMB’s rule-
making authority be unduly encroached and the
constitutional and statutory provisions providing the same
be disregarded. 20
WHEREFORE, premises considered, these consolidated
petitions are hereby GRANTED. The Decision dated March
25, 2008 and the Resolution dated August 28, 2008 of the
CA in CA-G.R. SP No. 02886 are hereby REVERSED and
SET ASIDE.
SO ORDERED.

Now, as regards the earlier pronouncements in Lapid,

Laxina, Lopez and Laja that penalties other than public
censure, reprimand, or suspension of not more than one
month, or a fine not equivalent to one month salary cannot
be immediately executed pending any appeal or motion for
reconsideration, which relied upon by both Escandor and
the CA, this Court explained in The Office of the
Ombudsman v. Valencerina,19 thus:

x x x the previous ruling in Lapid v. CA (as quoted

in Lopez v. CA and OMB v. Laja) wherein the
Court, relying on the old OMB Rules of
Procedure, i.e., Administrative Order No. 7 dated
April 10, 1990, had opined that "the fact that the
[Ombudsman Act] gives parties the right to appeal
from [the OMB' s] decisions should generally carry
with it the stay of these decisions pending appeal,''
cannot be successfully invoked by Valencerina in
this case for the reason that the said
pronouncement had already been superseded by
the more recent ruling in Buencamino v.
CA (Buencamino ). In Buencamino, the Court
applied the current OMB Rules of
Procedure, i.e., Administrative Order No. 17 dated
September 15, 2003, which were already in effect
at the time the CA assailed Resolutions dated
June 15, 2006 and April 24, 2007 were issued,
and, hence, governing x x x. (emphases supplied)

Having been superseded by this Court's recent

rulings declaring that the OMB's decisions, resolutions and
orders are immediately executory pending motion for
reconsideration or appeal, it is, therefore, an error on the
part of the CA to still rely on those old rulings and make
them its bases in granting Escandor's writ of certiorari and
enjoining the OMB from implementing its Decision and
Order dismissing Escandor from the service. Notably, the
Civpro Rule 39-43 54