G.R. No.

L-63915 December 29, 1986

LORENZO M. TA;ADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF

ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM,
INC. (MABINI), petitioners,
vs.
HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the
President, HON. JOAQUIN VENUS, in his capacity as Deputy
Executive Assistant to the President, MELQUIADES P. DE LA CRUZ,
ETC., ET AL., respondents.

RESOLUTION

CRUZ, J.:

Due process was invoked by the petitioners in demanding the disclosure of a

number of presidential decrees which they claimed had not been published
as required by law. The government argued that while publication was
necessary as a rule, it was not so when it was "otherwise provided," as when
the decrees themselves declared that they were to become effective
immediately upon their approval. In the decision of this case on April 24,
1985, the Court affirmed the necessity for the publication of some of these
decrees, declaring in the dispositive portion as follows:

WHEREFORE, the Court hereby orders respondents to publish in the

Official Gazette all unpublished presidential issuances which are of
general application, and unless so published, they shall have no
binding force and effect.

The petitioners are now before us again, this time to move for
reconsideration/clarification of that decision. 1 Specifically, they ask the
following questions:

1. What is meant by "law of public nature" or "general applicability"?

2. Must a distinction be made between laws of general applicability and laws

which are not?

3. What is meant by "publication"?

4. Where is the publication to be made?

5. When is the publication to be made?

Resolving their own doubts, the petitioners suggest that there should be no
distinction between laws of general applicability and those which are not;
that publication means complete publication; and that the publication must
be made forthwith in the Official Gazette. 2

In the Comment 3 required of the then Solicitor General, he claimed first

that the motion was a request for an advisory opinion and should therefore
be dismissed, and, on the merits, that the clause "unless it is otherwise
provided" in Article 2 of the Civil Code meant that the publication required
therein was not always imperative; that publication, when necessary, did not
have to be made in the Official Gazette; and that in any case the subject
decision was concurred in only by three justices and consequently not
binding. This elicited a Reply 4 refuting these arguments. Came next the
February Revolution and the Court required the new Solicitor General to file
a Rejoinder in view of the supervening events, under Rule 3, Section 18, of
the Rules of Court. Responding, he submitted that issuances intended only
for the internal administration of a government agency or for particular
persons did not have to be 'Published; that publication when necessary must
be in full and in the Official Gazette; and that, however, the decision under
reconsideration was not binding because it was not supported by eight
members of this Court. 5

The subject of contention is Article 2 of the Civil Code providing as follows:

ART. 2. Laws shall take effect after fifteen days following the
completion of their publication in the Official Gazette, unless it is
otherwise provided. This Code shall take effect one year after such
publication.

After a careful study of this provision and of the arguments of the parties,
both on the original petition and on the instant motion, we have come to the
conclusion and so hold, that the clause "unless it is otherwise provided"
refers to the date of effectivity and not to the requirement of publication
itself, which cannot in any event be omitted. This clause does not mean that
the legislature may make the law effective immediately upon approval, or on
any other date, without its previous publication.

Publication is indispensable in every case, but the legislature may in its

discretion provide that the usual fifteen-day period shall be shortened or
extended. An example, as pointed out by the present Chief Justice in his
separate concurrence in the original decision, 6 is the Civil Code which did
not become effective after fifteen days from its publication in the Official
Gazette but "one year after such publication." The general rule did not apply
because it was "otherwise provided. "

It is not correct to say that under the disputed clause publication may be
dispensed with altogether. The reason. is that such omission would offend
due process insofar as it would deny the public knowledge of the laws that
are supposed to govern the legislature could validly provide that a law e
effective immediately upon its approval notwithstanding the lack of
publication (or after an unreasonably short period after publication), it is not
unlikely that persons not aware of it would be prejudiced as a result and
they would be so not because of a failure to comply with but simply because
they did not know of its existence, Significantly, this is not true only of penal
laws as is commonly supposed. One can think of many non-penal measures,
like a law on prescription, which must also be communicated to the persons
they may affect before they can begin to operate.

We note at this point the conclusive presumption that every person knows
the law, which of course presupposes that the law has been published if the
presumption is to have any legal justification at all. It is no less important to
remember that Section 6 of the Bill of Rights recognizes "the right of the
people to information on matters of public concern," and this certainly
applies to, among others, and indeed especially, the legislative enactments
of the government.

The term "laws" should refer to all laws and not only to those of general
application, for strictly speaking all laws relate to the people in general albeit
there are some that do not apply to them directly. An example is a law
granting citizenship to a particular individual, like a relative of President
Marcos who was decreed instant naturalization. It surely cannot be said that
such a law does not affect the public although it unquestionably does not
apply directly to all the people. The subject of such law is a matter of public
interest which any member of the body politic may question in the political
forums or, if he is a proper party, even in the courts of justice. In fact, a law
without any bearing on the public would be invalid as an intrusion of privacy
or as class legislation or as an ultra vires act of the legislature. To be valid,
the law must invariably affect the public interest even if it might be directly
applicable only to one individual, or some of the people only, and t to the
public as a whole.

We hold therefore that all statutes, including those of local application and
private laws, shall be published as a condition for their effectivity, which
shall begin fifteen days after publication unless a different effectivity date is
fixed by the legislature.
Covered by this rule are presidential decrees and executive orders
promulgated by the President in the exercise of legislative powers whenever
the same are validly delegated by the legislature or, at present, directly
conferred by the Constitution. administrative rules and regulations must a
also be published if their purpose is to enforce or implement existing law
pursuant also to a valid delegation.

Interpretative regulations and those merely internal in nature, that is,

regulating only the personnel of the administrative agency and not the
public, need not be published. Neither is publication required of the so-called
letters of instructions issued by administrative superiors concerning the rules
or guidelines to be followed by their subordinates in the performance of their
duties.

Accordingly, even the charter of a city must be published notwithstanding

that it applies to only a portion of the national territory and directly affects
only the inhabitants of that place. All presidential decrees must be published,
including even, say, those naming a public place after a favored individual or
exempting him from certain prohibitions or requirements. The circulars
issued by the Monetary Board must be published if they are meant not
merely to interpret but to "fill in the details" of the Central Bank Act which
that body is supposed to enforce.

However, no publication is required of the instructions issued by, say, the

Minister of Social Welfare on the case studies to be made in petitions for
adoption or the rules laid down by the head of a government agency on the
assignments or workload of his personnel or the wearing of office uniforms.
Parenthetically, municipal ordinances are not covered by this rule but by the
Local Government Code.

We agree that publication must be in full or it is no publication at all since its

purpose is to inform the public of the contents of the laws. As correctly
pointed out by the petitioners, the mere mention of the number of the
presidential decree, the title of such decree, its whereabouts (e.g., "with
Secretary Tuvera"), the supposed date of effectivity, and in a mere
supplement of the Official Gazette cannot satisfy the publication
requirement. This is not even substantial compliance. This was the manner,
incidentally, in which the General Appropriations Act for FY 1975, a
presidential decree undeniably of general applicability and interest, was
"published" by the Marcos administration. 7 The evident purpose was to
withhold rather than disclose information on this vital law.

Coming now to the original decision, it is true that only four justices were
categorically for publication in the Official Gazette 8 and that six others felt
that publication could be made elsewhere as long as the people were
sufficiently informed. 9 One reserved his vote 10 and another merely
acknowledged the need for due publication without indicating where it
should be made. 11 It is therefore necessary for the present membership of
this Court to arrive at a clear consensus on this matter and to lay down a
binding decision supported by the necessary vote.

There is much to be said of the view that the publication need not be made
in the Official Gazette, considering its erratic releases and limited readership.
Undoubtedly, newspapers of general circulation could better perform the
function of communicating, the laws to the people as such periodicals are
more easily available, have a wider readership, and come out regularly. The
trouble, though, is that this kind of publication is not the one required or
authorized by existing law. As far as we know, no amendment has been
made of Article 2 of the Civil Code. The Solicitor General has not pointed to
such a law, and we have no information that it exists. If it does, it obviously
has not yet been published.

At any rate, this Court is not called upon to rule upon the wisdom of a law or
to repeal or modify it if we find it impractical. That is not our function. That
function belongs to the legislature. Our task is merely to interpret and apply
the law as conceived and approved by the political departments of the
government in accordance with the prescribed procedure. Consequently, we
have no choice but to pronounce that under Article 2 of the Civil Code, the
publication of laws must be made in the Official Gazett and not elsewhere,
as a requirement for their effectivity after fifteen days from such publication
or after a different period provided by the legislature.

We also hold that the publication must be made forthwith or at least as soon
as possible, to give effect to the law pursuant to the said Article 2. There is
that possibility, of course, although not suggested by the parties that a law
could be rendered unenforceable by a mere refusal of the executive, for
whatever reason, to cause its publication as required. This is a matter,
however, that we do not need to examine at this time.

Finally, the claim of the former Solicitor General that the instant motion is a
request for an advisory opinion is untenable, to say the least, and deserves
no further comment.

The days of the secret laws and the unpublished decrees are over. This is
once again an open society, with all the acts of the government subject to
public scrutiny and available always to public cognizance. This has to be so if
our country is to remain democratic, with sovereignty residing in the people
and all government authority emanating from them.
Although they have delegated the power of legislation, they retain the
authority to review the work of their delegates and to ratify or reject it
according to their lights, through their freedom of expression and their right
of suffrage. This they cannot do if the acts of the legislature are concealed.

Laws must come out in the open in the clear light of the sun instead of
skulking in the shadows with their dark, deep secrets. Mysterious
pronouncements and rumored rules cannot be recognized as binding unless
their existence and contents are confirmed by a valid publication intended to
make full disclosure and give proper notice to the people. The furtive law is
like a scabbarded saber that cannot feint parry or cut unless the naked blade
is drawn.

WHEREFORE, it is hereby declared that all laws as above defined shall

immediately upon their approval, or as soon thereafter as possible, be
published in full in the Official Gazette, to become effective only after fifteen
days from their publication, or on another date specified by the legislature,
in accordance with Article 2 of the Civil Code.

SO ORDERED.

REPUBLIC OF THE G.R. No. 173918

PHILIPPINES, represented by
the DEPARTMENT OF ENERGY
(DOE), Present:
Petitioner,
AUSTRIA-MARTINEZ, J.,
Acting Chairperson,
CARPIO-MORALES,*
TINGA,*
- versus - CHICO-NAZARIO, and
REYES, JJ.

PILIPINAS SHELL PETROLEUM Promulgated:

CORPORATION,
Respondent. April 8, 2008
x-----------------------------------------------
--x
DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of

Court, assailing the Decision dated 4 August 2006 of the Court of Appeals in
C.A. G.R. SP No. 82183.[1] The appellate court reversed the
Decision[2] dated 19 August 2003 of the Office of the President in OP NO.
Case 96-H-6574 and declared that Ministry of Finance (MOF) Circular No. 1-
85 dated 15 April 1985, as amended, is ineffective for failure to comply with
Section 3 of Chapter 2, Book 7 of the Administrative Code of 1987, [3] which
requires the publication and filing in the Office of the National Administration
Register (ONAR) of administrative issuances. Thus, surcharges provided
under the aforementioned circular cannot be imposed upon
respondent Pilipinas Shell Petroleum Corporation.

Respondent is a corporation duly organized existing under the laws of

the Philippines. It is engaged in the business of refining oil, marketing
petroleum, and other related activities.[4]

The Department of Energy (DOE) is a government agency under the

direct control and supervision of the Office of the President. The Department
is mandated by Republic Act No. 7638 to prepare, integrate, coordinate,
supervise and control all plans, programs, projects and activities of the
Government relative to energy exploration, development, utilization,
distribution and conservation.

On 10 October 1984, the Oil Price Stabilization Fund (OPSF) was

created under Presidential Decree No. 1956 for the purpose of minimizing
frequent price changes brought about by exchange rate adjustments and/or
increase in world market prices of crude oil and imported petroleum
products.[5]

Letter of Instruction No. 1431 dated 15 October 1984 was issued

directing the utilization of the OPSF to reimburse oil companies the
additional costs of importation of crude oil and petroleum products due to
fluctuation in foreign exchange rates to assure adequate and continuous
supply of petroleum products at reasonable prices.[6]

Letter of Instruction No. 1441, issued on 20 November 1984,

mandated the Board of Energy (now, the Energy Regulatory Board) to
review and reset prices of domestic oil products every two months to reflect
the prevailing prices of crude oil and petroleum. The prices were regulated
by adjusting the OPSF impost, increasing or decreasing this price component
as necessary to maintain the balance between revenues and claims on the
OPSF.[7]

On 27 February 1987, Executive Order No. 137 was enacted to amend

P. D. No. 1956. It expanded the sources and utilization of the OPSF in order
to maintain stability in the domestic prices of oil products at reasonable
levels.[8]
On 4 December 1991, the Office of Energy Affairs (OEA), now the
DOE, informed the respondent that respondents contributions to the OPSF
for foreign exchange risk charge for the period December 1989 to March
1991 were insufficient. OEA Audit Task Force noted a total underpayment
of P14,414,860.75 by respondent to the OPSF. As a consequence of the
underpayment, a surcharge of P11,654,782.31 was imposed upon
respondent. The said surcharge was imposed pursuant to MOF Circular No.
1-85, as amended by Department of Finance (DOF) Circular No. 2-
94,[9] which provides that:

2. Remittance of payment to the OPSF as provided for under

Section 5 of MOF Order No. 11-85 shall be made not later than
20th of the month following the month of remittance of the foreign
exchange payment for the import or the month of payment to the
domestic producers in the case of locally produced
crude. Payment after the specified date shall be subject to a
surcharge of fifteen percent (15%) of the amount, if paid
within thirty (30) days from the due date plus two percent
(2%) per month if paid after thirty days.[10] (Emphasis
supplied.)
On 9 December 1991, the OEA wrote another letter[11] to respondent
advising the latter of its additional underpayment to the OPSF of the foreign
exchange risk fee in the amount of P10,139,526.56 for the period April 1991
to October 1991. In addition, surcharges in the amount
of P2,806,656.65 were imposed thereon.

In a letter dated 20 January 1992 addressed to the OEA, respondent

justified that its calculations for the transactions in question were based on a
valid interpretation of MOF Order NO. 11-85 dated 12 April 1985 and MOE
Circular No. 85-05-82 dated 16 May 1985.[12]

On 24 March 1992, respondent paid the OEA in full the principal

amount of its underpayment, totaling P24,554,387.31, but not the
surcharges.[13]
In a letter[14] dated 15 March 1996, OEA notified the respondent that
the latter is required to pay the OPSF a total amount of P18,535,531.40 for
surcharges on the late payment of foreign exchange risk charges for the
period December 1989 to October 1991.

In a letter[15] dated 11 July 1996, the DOE reiterated its demand for
respondent to settle the surcharges due. Otherwise, the DOE warned that it
would proceed against the respondents Irrevocable Standby Letter of Credit
to recover its unpaid surcharges.

On 19 July 1996, respondent filed a Notice of Appeal before the Office

of the President. The Office of the President affirmed the conclusion of the
DOE, contained in its letters dated 15 March 1996 and 11 July 1996. While it
admitted that the implementation of MOF Circular No. 1-85 is contingent
upon its publication and filing with the ONAR, it noted that respondent failed
to adduce evidence of lack of compliance with such requirements. The
aforementioned Decision reads:[16]

Given the foregoing, the DOEs implementation of MOF

Circular 1-85 by imposing surcharges on Pilipinas Shell is only
proper. Like this Office, the DOE is bound to presume the validity
of that administrative regulation.

WHEREFORE, premises considered, the Decision of the

Department of Energy, contained in its letters dated 15 March
1996 and 11 July 1996, is hereby AFFIRMED in toto.

Respondent filed a Motion for Reconsideration of the Decision dated 19

August 2003 of the Office of the President, which was denied on 28
November 2003.[17]

Respondent filed an appeal before the Court of Appeals wherein it

presented Certifications dated 9 February 2004[18] and 11 February
2004[19] issued by ONAR stating that DOF Circular No. 2-94 and MOF Circular
No. 1-85 respectively, have not been filed before said office.

The Court of Appeals reversed the Decision of the Office of the

President in O.P. CASE No. 96-H-6574 and ruled that MOF Circular 1-85, as
amended, was ineffective for failure to comply with the requirement to file
with ONAR. It decreed that even if the said circular was issued by then
Acting Minister of Finance Alfredo de Roda, Jr. long before the Administrative
Code of 1987, Section 3 of Chapter 2, Book 7 thereof specifies that rules
already in force on the date of the effectivity of the Administrative Code of
1987 must be filed within three months from the date of effectivity of said
Code, otherwise such rules cannot thereafter be the basis of any sanction
against any party or persons.[20]According to the dispositive of the appellate
courts Decision:[21]

WHEREFORE, the instant petition is hereby GRANTED. The

Decision dated August 19, 2003 and the Resolution
dated November 28, 2003 of the Office of the President, are
hereby REVERSED.

ACCORDINGLY, the imposition of surcharges upon

petitioner is hereby declared without legal basis.

On 25 September 2006, petitioner filed the present Petition for Review

on Certiorari, wherein the following issues were raised:[22]

I
THE SURCHARGE IMPOSED BY MINISTRY OF FINANCE (MOF)
CIRCULAR No. 1-85 HAS BEEN AFFIRMED BY E.O. NO. 137
HAVING RECEIVED VITALITY FROM A LEGISLATIVE ENACTMENT,
MOF CIRCULAR NO. 1-85 CANNOT BE RENDERED INVALID BY THE
SUBSEQUENT ENACTMENT OF A LAW REQUIRING REGISTRATION
OF THE MOF CIRCULAR WITH THE OFFICE OF THE NATIONAL
REGISTER

II
ASSUMING THAT THE REGISTRATION OF MOF NO. 1-85
IS REQUIRED, RESPONDENT WAIVED ITS OBJECTION ON THE
BASIS OF NON-REGISTRATION WHEN IT PAID THE AMOUNT
REQUIRED BY PETITIONER.

This petition is without merit.

As early as 1986, this Court in Taada v. Tuvera[23] enunciated that

publication is indispensable in order that all statutes, including
administrative rules that are intended to enforce or implement existing laws,
attain binding force and effect, to wit:

We hold therefore that all statutes, including those of local

application and private laws, shall be published as a condition for
their effectivity, which shall begin fifteen days after publication
unless a different effectivity date is fixed by the legislature.
 Covered by this rule are presidential decrees and executive
orders promulgated by the President in the exercise of legislative
powers whenever the same are validly delegated by the
legislature or, at present, directly conferred by the
Constitution. Administrative rules and regulations must also
be published if their purpose is to enforce or implement
existing law pursuant also to a valid delegation. (Emphasis
provided.)

Thereafter, the Administrative Code of 1987 was enacted, with Section

3 of Chapter 2, Book VII thereof specifically providing that:

Filing.(1) Every agency shall file with the University of

the Philippines Law Center three (3) certified copies of every rule
adopted by it. Rules in force on the date of effectivity of this
Code which are not filed within three (3) months from the
date shall not thereafter be the basis of any sanction
against any party or persons.
(2) The records officer of the agency, or his equivalent
functionary, shall carry out the requirements of this section under
pain of disciplinary action.
(3) A permanent register of all rules shall be kept by the issuing agency
and shall be open to public inspection. (Emphasis provided.)

Under the doctrine of Tanada v. Tuvera,[24] the MOF Circular No. 1-85,
as amended, is one of those issuances which should be published before it
becomes effective since it is intended to enforce Presidential Decree No.
1956. The said circular should also comply with the requirement stated
under Section 3 of Chapter 2, Book VII of the Administrative Code of 1987
filing with the ONAR in the University of the Philippines Law Center for rules
that are already in force at the time the Administrative Code of 1987
became effective. These requirements of publication and filing were put in
place as safeguards against abuses on the part of lawmakers and as
guarantees to the constitutional right to due process and to information on
matters of public concern and, therefore, require strict compliance.

In the present case, the Certifications dated 11 February

2004[25] and 9 February 2004[26] issued by ONAR prove that MOF Circular
No. 1-85 and its amendatory rule, DOF Circular No. 2-94, have not been
filed before said office. Moreover, petitioner was unable to controvert
respondents allegation that neither of the aforementioned circulars were
published in the Official Gazette or in any newspaper of general
circulation. Thus, failure to comply with the requirements of publication and
filing of administrative issuances renders MOF Circular No. 1-85, as
amended, ineffective.

In National Association of Electricity Consumers for Reforms v. Energy

Regulatory Board,[27] this Court emphasized that both the requirements of
publication and filing of administrative issuances intended to enforce existing
laws are mandatory for the effectivity of said issuances. In support of its
ruling, it specified several instances wherein this Court declared
administrative issuances, which failed to observe the proper requirements,
to have no force and effect:

Nowhere from the above narration does it show that the

GRAM Implementing Rules was published in the Official Gazette or
in a newspaper of general circulation. Significantly,
the effectivity clauses of both the GRAM and ICERA Implementing
Rules uniformly provide that they shall take effect
immediately. These clauses made no mention of their publication
in either the Official Gazette or in a newspaper of general
circulation. Moreover, per the Certification dated January 11,
2006 of the Office of the National Administrative Register (ONAR),
the said implementing rules and regulations were not likewise filed
with the said office in contravention of the Administrative Code of
1987.

Applying the doctrine enunciated in Taada v. Tuvera, the

Court has previously declared as having no force and effect the
following administrative issuances: (1) Rules and Regulations
issued by the Joint Ministry of Health-Ministry of Labor and
Employment Accreditation Committee regarding the accreditation
of hospitals, medical clinics and laboratories; (2) Letter of
Instruction No. 1416 ordering the suspension of payments due
and payable by distressed copper mining companies to the
national government; (3) Memorandum Circulars issued by the
Philippine Overseas Employment Administration regulating the
recruitment of domestic helpers to Hong Kong; (4) Administrative
Order No. SOCPEC 89-08-01 issued by the Philippine International
Trading Corporation regulating applications for importation from
the Peoples Republic of China; (5) Corporation Compensation
Circular No. 10 issued by the Department of Budget and
Management discontinuing the payment of other allowances and
fringe benefits to government officials and employees; and (6)
POEA Memorandum Circular No. 2 Series of 1983 which provided
for the schedule of placement and documentation fees for private
employment agencies or authority holders.
 In all these cited cases, the administrative issuances
questioned therein were uniformly struck down as they were not
published or filed with the National Administrative Register. On
the other hand, in Republic v. Express Telecommunications Co.,
Inc, the Court declared that the 1993 Revised Rules of the
National Telecommunications Commission had not become
effective despite the fact that it was filed with the National
Administrative Register because the same had not been published
at the time. The Court emphasized therein that publication in the
Official Gazette or a newspaper of general circulation is a
condition sine qua non before statutes, rules or regulations can
take effect.

Petitioners argument that respondent waived the requisite registration

of MOF Circular No. 1-85, as amended, when it paid in full the principal
amount of underpayment totaling P24,544,387.31, is specious. MOF Circular
No. 1-85, as amended imposes surcharges, while respondents
underpayment is based on MOF Circular No. 11-85 dated 12 April 1985.

Petitioner also insists that the registration of MOF Circular No. 1-85, as
amended, with the ONAR is no longer necessary since the respondent knew
of its existence, despite its non-registration. This argument is seriously
flawed and contrary to jurisprudence. Strict compliance with the
requirements of publication cannot be annulled by a mere allegation that
parties were notified of the existence of the implementing rules concerned.
Hence, also in National Association of Electricity Consumers for Reforms v.
Energy Regulatory Board, this Court pronounced:

In this case, the GRAM Implementing Rules must be

declared ineffective as the same was never published or filed with
the National Administrative Register. To show that there was
compliance with the publication requirement, respondents
MERALCO and the ERC dwell lengthily on the fact that parties,
particularly the distribution utilities and consumer groups, were
duly notified of the public consultation on the ERCs proposed
implementing rules. These parties participated in the said public
consultation and even submitted their comments thereon.

However, the fact that the parties participated in the

public consultation and submitted their respective
comments is not compliance with the fundamental rule that
the GRAM Implementing Rules, or any administrative rules
whose purpose is to enforce or implement existing law,
 must be published in the Official Gazette or in a newspaper
of general circulation. The requirement of publication of
implementing rules of statutes is mandatory and may not be
dispensed with altogether even if, as in this case, there was public
consultation and submission by the parties of their
[28]
comments. (Emphasis provided.)

Petitioner further avers that MOF Circular No. 1-85, as amended, gains
its vitality from the subsequent enactment of Executive Order No. 137,
which reiterates the power of then Minister of Finance to promulgate the
necessary rules and regulations to implement the executive order. Such
contention is irrelevant in the present case since the power of the Minister of
Finance to promulgate rules and regulations is not under dispute. The issue
rather in the Petition at bar is the ineffectivity of his administrative issuance
for non-compliance with the requisite publication and filing with the
ONAR. And while MOF Circular No. 1-85, as amended, may be
unimpeachable in substance, the due process requirements of publication
and filing cannot be disregarded. Moreover, none of the provisions of
Executive Order No. 137 exempts MOF Circular No. 1-85, as amended from
the aforementioned requirements.

IN VIEW OF THE FOREGOING, the instant Petition is DENIED and

the assailed Decision dated 4 August 2006 of the Court of Appeals in C.A.
G.R. SP No. 82183 is AFFIRMED. No cost.

SO ORDERED.

G.R. No. 207145 July 28, 2015

GIL G. CAWAD, MARIO BENEDICT P. GALON, DOMINGO E. LUSAYA,

JEAN V. APOLINARES, MA. LUISA S. OREZCA, JULIO R. GARCIA,
NESTOR M. INTIA, RUBEN C. CALIWATAN, ADOLFO Q. ROSALES, MA.
LUISA NAVARRO, and the PHILIPPINE PUBLIC HEALTH
ASSOCIATION, INC., Petitioners,
vs.
FLORENCIO B. ABAD, in his capacity as Secretary of the Department
of Budget and Management (DBM); ENRIQUE T. ONA, in his capacity
as Secretary of the Department of Health (DOH); and FRANCISCO T.
DUQUE III, in his capacity as Chairman of the Civil Service
Commission (CSC), Respondents.
 DECISION

PERALTA, J.:

Before the Court is a petition for certiorari and prohibition under Rule 65 of
the Rules of Court filed by the officers and members of the Philippine Public
Health Association, Inc. (PPHAI) assailing the validity of Joint Circular No.
11dated November 29, 2012 of the Department of Budget and Management
(DBM) and the Department of Health (DOH) as well as Item 6.5 of the Joint
Circular2 dated September 3, 2012 of the DBM and the Civil Service
Commission (CSC).

The antecedent facts are as follows:

On March 26, 1992, Republic Act (RA) No. 7305, otherwise known as The
Magna Carta of Public Health Workerswas signed into law in order to
promote the social and economic well-being of health workers, their living
and working conditions and terms of employment, to develop their skills and
capabilities to be better equipped to deliver health projects and programs,
and to encourage those with proper qualifications and excellent abilities to
join and remain in government service.3 Accordingly, public health workers
(PHWs) were granted the following allowances and benefits, among others:

Section 20. Additional Compensation. - Notwithstanding Section 12 of

Republic Act No. 6758, public health workers shall receive the following
allowances: hazard allowance, subsistence allowance, longevity pay, laundry
allowance and remote assignment allowance.

Section 21. Hazard Allowance. - Public health workers in hospitals,

sanitaria, rural health units, main health centers, health infirmaries,
barangay health stations, clinics and other health-related establishments
located in difficult areas, strife-torn or embattled areas, distressed or
isolated stations, prisons camps, mental hospitals, radiation exposed clinics,
laboratories or disease-infested areas or in areas declared under state of
calamity or emergency for the duration thereof which expose them to great
danger, contagion, radiation, volcanic activity/eruption, occupational risks or
perils to life as determined by the Secretary of Health or the Head of the unit
with the approval of the Secretary of Health, shall be compensated hazard
allowances equivalent to at least twenty-five percent (25%) of the
monthly basic salary of health workers receiving salary grade 19 and
below, and five percent (5%) for health workers with<="" b="">

Section 22. Subsistence Allowance. - Public health workers who are

required to render service within the premises of hospitals, sanitaria, health
infirmaries, main health centers, rural health units and barangay health
stations, or clinics, and other health-related establishments in order to make
their services available at any and all times, shall be entitled to full
subsistence allowance of three (3) meals which may be computed in
accordance with prevailing circumstances as determined by the
Secretary of Health in consultation with the Management-Health Worker's
Consultative Councils, as established under Section 33 of this Act: Provided,
That representation and travel allowance shall be given to rural health
physicians as enjoyed by municipal agriculturists, municipal planning and
development officers and budget officers.

Section 23. Longevity Pay.- A monthly longevity pay equivalent to five

percent (5%)of the monthly basic pay shall be paid to a health worker for
every five (5) years of continuous, efficient and meritorious
services rendered as certified by the chief of office concerned, commencing
with the service after the approval of this Act.4

Pursuant to Section 355 of the Magna Carta, the Secretary of Health

promulgated its Implementing Rules and Regulations (IRR) in July 1992.
Thereafter, in November 1999, the DOH, in collaboration with various
government agencies and health workers' organizations, promulgated a
Revised IRR consolidating all additional and clarificatory rules issued by the
former Secretaries of Health dating back from the effectivity of the Magna
Carta. The pertinent provisions of said Revised IRR provide:

6.3. Longevity Pay.- A monthly longevity pay equivalent to five percent

(5%)of the present monthly basic pay shall be paid to public health workers
for every five (5) years of continuous, efficient and meritorious services
rendered as certified by the Head of Agency/Local Chief Executives
commencing after the approval of the Act. (April 17, 1992)

xxxx

7.1.1. Eligibility to Receive Hazard Pay.- All public health workers covered
under RA 7305 are eligible to receive hazard pay when the nature of their
work exposes them to high risk/low risk hazards for at least fifty percent
(50%) of their working hours as determined and approved by the Secretary
of Health or his authorized representatives.

xxxx

7.2.1. Eligibility for Subsistence Allowance

 a. All public health workers covered under RA 7305 are eligible
to receive full subsistence allowance as long as they render
actual duty.

b. Public Health Workers shall be entitled to full Subsistence

Allowance of three (3) meals which may be computed in
accordance with prevailing circumstances as determined by the
Secretary of Health in consultation with the Management-Health
Workers Consultative Council, as established under Section 33 of
the Act.

c. Those public health workers who are out of station shall be

entitled to per diems in place of Subsistence Allowance.
Subsistence Allowance may also be commuted.

xxxx

7.2.3 Rates of Subsistence Allowance

a. Subsistence allowance shall be implemented at not less than

Ph50.00 per day or Ph1,500.00 per month as certified by head
of agency.

xxxx

d. Part-time public health workers/consultants are entitled to

one-half (1/2)of the prescribed rates received by full-time public
health workers.6

On July 28, 2008, the Fourteenth Congress issued Joint Resolution No. 4,
entitled Joint Resolution Authorizing the President of the Philippines to
Modify the Compensation and Position Classification System of Civilian
Personnel and the Base Pay Schedule of Military and Uniformed Personnel in
the Government, and for other Purposes, approved by then President Gloria
Macapagal-Arroyo on June 17,2009, which provided for certain amendments
in the Magna Carta and its IRR.

On September 3, 2012, respondents DBM and CSC issued one of the two
assailed issuances, DBM-CSC Joint Circular No. 1, Series of 2012, to
prescribe the rules on the grant of Step Increments due to meritorious
performance and Step Increment due to length of service.7 Specifically, it
provided that "an official or employee authorized to be granted Longevity
Pay under an existing law is not eligible for the grant of Step Increment due
to length of service."8 Shortly thereafter, on November29, 2012,
respondents DBM and DOH then circulated the other assailed issuance, DBM-
DOH Joint Circular No. 1, Series of 2012, the relevant provisions of which
state:

7.0. Hazard Pay. - Hazard pay is an additional compensation for performing

hazardous duties and for enduring physical hardships in the course of
performance of duties.

As a general compensation policy, and in line with Section 21 of R. A. No.

7305, Hazard Pay may be granted to PHWs only if the nature of the duties
and responsibilities of their positions, their actual services, and location of
work expose them to great danger, occupational risks, perils of life, and
physical hardships; and only during periods of actual exposure to hazards
and hardships.

xxxx

8.3 The Subsistence Allowance shall be 50for each day of actual full-time
service, or 25for each day of actual part-time service.

xxxx

9.0 Longevity Pay (LP)

9.1 Pursuant to Section 23 of R.A. No. 7305, a PHW may be granted LP at

5% of his/her current monthly basic salary, in recognition of every 5 years
of continuous, efficient, and meritorious services rendered as PHW. The
grant thereof is based on the following criteria:

9.1.1 The PHW holds a position in the agency plantilla of regular positions;
and

9.1.2 He/She has rendered at least satisfactory performance and has not
been found guilty of any administrative or criminal case within all rating
periods covered by the 5-year period.

In a letter9 dated January 23, 2013 addressed to respondents Secretary of

Budget and Management and Secretary of Health, petitioners expressed
their opposition to the Joint Circular cited above on the ground that the
same diminishes the benefits granted by the Magna Carta to PHWs.

Unsatisfied, petitioners, on May 30, 2013, filed the instant petition raising
the following issues:
 I.

WHETHER RESPONDENTS ENRIQUE T. ONA AND FLORENCIO B. ABAD

ACTED WITH GRAVE ABUSE OF DISCRETION AND VIOLATED SUBSTANTIVE
DUE PROCESS WHEN THEY ISSUED DBM-DOH JOINT CIRCULAR NO. 1, S.
2012 WHICH:

A) MADE THE PAYMENT OF HAZARD PAY DEPENDENT ON THE

ACTUAL DAYS OF EXPOSURE TO THE RISK INVOLVED;

B) ALLOWED PAYMENT OF SUBSISTENCE ALLOWANCE AT 50

FOR EACH DAY OF ACTUAL FULL-TIME SERVICE OR 25 FOR
EACH DAY OF ACTUAL PART-TIME SERVICE WITHOUT
CONSIDERATION OF THE PREVAILING CIRCUMSTANCES AS
DETERMINED BY THE SECRETARY OF HEALTH IN
CONSULTATION WITH THE MANAGEMENT HEALTH WORKERS'
CONSULTATIVE COUNCILS;

C) REQUIRED THAT LONGEVITY PAY BE GRANTED ONLY TO

PHWs WHO HOLD PLANTILLA AND REGULAR POSITIONS; AND

D) MADE THE JOINT CIRCULAR EFFECTIVE ON JANUARY 1,

2013, BARELY THREE (3) DAYS AFTER IT WAS PUBLISHED IN A
NEWSPAPER OF GENERAL CIRCULATION ON DECEMBER 29,
2012, IN VIOLATION OF THE RULES ON PUBLICATION.

II.

WHETHER RESPONDENTS FRANCISCO T. DUQUE AND FLORENCIO B. ABAD

ACTED WITH GRAVE ABUSE OF DISCRETION WHEN THEY ISSUED DBM-CSC
JOINT CIRCULAR NO. 1, S. 2012 DATED SEPTEMBER 2, 2012 WHICH
PROVIDED THAT AN OFFICIAL OR EMPLOYEE ENTITLED TO LONGEVITY PAY
UNDER EXISTING LAW SHALL NO LONGER BE GRANTED STEP INCREMENT
DUE TO LENGTH OF SERVICE.

III.

WHETHER RESPONDENTS' ISSUANCE OF DBM-DOH JOINT CIRCULAR NO. 1,

S. 2012 IS NULL AND VOID FOR BEING AN UNDUE EXERCISE OF
LEGISLATIVE POWER BY ADMINISTRATIVE BODIES WHEN RESPONDENT
ONA ALLOWED RESPONDENT ABAD TOSIGNIFICANTLY SHARE THE POWER
TO FORMULATE AND PREPARE THE NECESSARY RULES AND REGULATIONS
TO IMPLEMENT THE PROVISIONS OF THE MAGNA CARTA.
 IV.

WHETHER RESPONDENT ONA WAS REMISS IN IMPLEMENTING THE

MANDATE OF THE MAGNA CARTA WHEN HE DID NOT INCLUDE THE MAGNA
CARTA BENEFITS IN THE DEPARTMENT'S YEARLY BUDGET.

V.

WHETHER RESPONDENTS' ISSUANCE OF DBM-DOH JOINT CIRCULAR NO. 1,

S. 2012 IS NULL AND VOID FOR BEING AN UNDUE EXERCISE OF
LEGISLATIVE POWER BY ADMINISTRATIVE BODIES WHEN THE SAME WAS
ISSUED SANS CONSULTATION WITH PROFESSIONAL AND HEALTH
WORKERS' ORGANZATIONS AND UNIONS.

Petitioners contend that respondents acted with grave abuse of discretion

when they issued DBM-DOH Joint Circular No. 1, Series of 2012 and DBM-
CSC Joint Circular No. 1, Series of 2012 which prescribe certain
requirements on the grant of benefits that are not otherwise required by RA
No. 7305. Specifically, petitioners assert that the DBM-DOH Joint Circular
grants the payment of Hazard Pay only if the nature of the PHWs' duties
expose them to danger when RA No. 7305 does not make any qualification.
They likewise claim that said circular unduly fixes Subsistence Allowance at
50 for each day of full-time service and 25 for part-time service which are
not in accordance with prevailing circumstances determined by the Secretary
of Health as required by RA No. 7305. Moreover, petitioners fault
respondents for the premature effectivity of the DBM-DOH Joint Circular
which they believe should have been on January 29, 2012 and not on
January 1, 2012. As to the grant of Longevity Pay, petitioners posit that the
same was wrongfully granted only to PHWs holding regular plantilla
positions. Petitioners likewise criticize the DBM-CSC Joint Circular insofar as
it withheld the Step Increment due to length of service from those who are
already being granted Longevity Pay. As a result, petitioners claim that the
subject circulars are void for being an undue exercise of legislative power by
administrative bodies.

In their Comment, respondents, through the Solicitor General, refute

petitioners' allegations in stating that the assailed circulars were issued
within the scope of their authority, and are therefore valid and binding. They
also assert the authority of Joint Resolution No. 4, Series of 2009, approved
by the President, in accordance with the prescribed procedure. Moreover,
respondents question the remedies of Certiorari and Prohibition used by
petitioners for the assailed circulars were done in the exercise of their quasi-
legislative, and not of their judicial or quasi-judicial functions.
The petition is partly meritorious.

At the outset, the petition for certiorari and prohibition filed by petitioners is
not the appropriate remedy to assail the validity of respondents' circulars.
Sections 1 and 2 of Rule 65 of the Rules of Court provide:

RULE 65
CERTIORARI, PROHIBITION AND MANDAMUS

Section 1. Petition for certiorari. - When any tribunal, board or officer

exercising judicial or quasi-judicial functions has acted without or in excess
of its or his jurisdiction, or with grave abuse of discretion amounting to lack
or excess of jurisdiction, and there is no appeal, or any plain, speedy, and
adequate remedy in the ordinary course of law, a person aggrieved thereby
may file a verified petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting such incidental
reliefs as law and justice may require.

xxxx

Sec. 2. Petition for Prohibition. - When the proceedings of any tribunal,

corporation, board, officer or person, whether exercising judicial, quasi-
judicial or ministerial functions, are 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 other 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 commanding the respondent to desist from further
proceedings in the action or matter specified therein, or otherwise granting
such incidental reliefs as law and justice may require.10

Thus, on the one hand, certiorari as a special civil action is available only if:
(1) it is directed against a tribunal, board, or officer exercising judicial or
quasi-judicial functions; (2) the tribunal, board, or officer acted without or in
excess of jurisdiction or with grave abuse of discretion amounting to lack or
excess of jurisdiction; and (3) there is no appeal nor any plain, speedy, and
adequate remedy in the ordinary course of law.11

On the other hand, prohibition is available only if: (1) it is directed against a
tribunal, corporation, board, officer, or person exercising functions, judicial,
quasi-judicial, or ministerial; (2) the tribunal, corporation, board or person
acted without or in excess of its jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction; and (3) there is no
appeal or any other plain, speedy, and adequate remedy in the ordinary
course of law.12 Based on the foregoing, this Court has consistently
reiterated that petitions for certiorari and prohibition may be invoked only
against tribunals, corporations, boards, officers, or persons exercising
judicial, quasi-judicial or ministerial functions, and not against their exercise
of legislative or quasi-legislative functions.13

Judicial functions involve the power to determine what the law is and what
the legal rights of the parties are, and then undertaking to determine these
questions and adjudicate upon the rights of the parties.14 Quasi judicial
functions apply to the actions and discretion of public administrative officers
or bodies required to investigate facts, hold hearings, and draw conclusions
from them as a basis for their official action, in their exercise of discretion of
a judicial nature.15 Ministerial functions are those which an officer or tribunal
performs in the context of a given set of facts, in a prescribed manner and
without regard to the exercise of his own judgment upon the propriety or
impropriety of the act done.16

Before a tribunal, board, or officer may exercise judicial or quasi-judicial

acts, it is necessary that there be a law that gives rise to some specific
rights under which adverse claims are made, and the controversy ensuing
therefrom is brought before a tribunal, board, or officer clothed with
authority to determine the law and adjudicate the respective rights of the
contending parties.17 In this case, respondents did not act in any judicial,
quasi-judicial, or ministerial capacity in their issuance of the assailed joint
circulars. In issuing and implementing the subject circulars, respondents
were not called upon to adjudicate the rights of contending parties to
exercise, in any manner, discretion of a judicial nature. The issuance and
enforcement by the Secretaries of the DBM, CSC and DOH of the questioned
joint circulars were done in the exercise of their quasi-legislative and
administrative functions. It was in the nature of subordinate legislation,
promulgated by them in their exercise of delegated power. Quasi-legislative
power is exercised by administrative agencies through the promulgation of
rules and regulations within the confines of the granting statute and the
doctrine of non-delegation of powers from the separation of the branches of
the government.18

Based on the foregoing, certiorari and prohibition do not lie against herein
respondents' issuances. It is beyond the province of certiorari to declare the
aforesaid administrative issuances illegal because petitions for certiorari seek
solely to correct defects in jurisdiction, and not to correct just any error
committed by a court, board, or officer exercising judicial or quasi-judicial
functions unless such court, board, or officer thereby acts without or in
excess of jurisdiction or with such grave abuse of discretion amounting to
lack of jurisdiction.19

It is likewise beyond the territory of a writ of prohibition since generally, the

purpose of the same is to keep a lower court within the limits of its
jurisdiction in order to maintain the administration of justice in orderly
channels. It affords relief against usurpation of jurisdiction by an inferior
court, or when, in the exercise of jurisdiction, the inferior court transgresses
the bounds prescribed by the law, or where there is no adequate remedy
available in the ordinary course of law.20

Be that as it may, We proceed to discuss the substantive issues raised in the

petition in order to finally resolve the doubt over the Joint Circulars' validity.
For proper guidance, the pressing issue of whether or not the joint circulars
regulating the salaries and benefits relied upon by public health workers
were tainted with grave abuse of discretion rightly deserves its prompt
resolution. With respect to the infirmities of the DBM-DOH Joint Circular
raised in the petition, they cannot be said to have been issued with grave
abuse of discretion for not only are they reasonable, they were likewise
issued well within the scope of authority granted to the respondents. In fact,
as may be gathered from prior issuances on the matter, the circular did not
make any substantial deviation therefrom, but actually remained consistent
with, and germane to, the purposes of the law.

First, the qualification imposed by the DBM-DOH Joint Circular granting the
payment of Hazard Pay only if the nature of PHWs' duties expose them to
danger and depending on whether the risk involved is high or low was
merely derived from Section 7.1.1 of the Revised IRR of RA No. 7305, duly
promulgated by the DOH in collaboration with various government health
agencies and health workers' organizations in November 1999, to wit:

SECTION 7.1.1. Eligibility to Receive Hazard Pay. - All public health workers
covered under RA 7305 are eligible to receive hazard pay when the nature of
their work exposes them to high risk/low risk hazards for at least fifty
percent (50%) of their working hours as determined and approved by the
Secretary of Health or his authorized representatives.21

Second, fixing the Subsistence Allowance at 50 for each day of full-time

service and 25 for part-time service was also merely a reiteration of the
limits prescribed by the Revised IRR, validly issued by the Secretary of
Health pursuant to Section 3522 of RA No. 7305, the pertinent portions of
which states:

Section 7.2.3 Rates of Subsistence Allowance

a. Subsistence allowance shall be implemented at not less than Ph50.00
per day or Ph1,500.00 per month as certified by head of agency.

xxxx

d. Part-time public health workers/consultants are entitled to one-half

(1/2)of the prescribed rates received by full-time public health workers.

Third, the condition imposed by the DBM-DOH Joint Circular granting

longevity pay only to those PHWs holding regular plantilla positions merely
implements the qualification imposed by the Revised IRR which provides:

6.3. Longevity Pay. - A monthly longevity pay equivalent to five percent

(5%) of the present monthly basic pay shall be paid to public health workers
for every five (5) years of continuous, efficient and meritorious services
rendered as certified by the Head of Agency/Local Chief Executives
commencing after the approval of the Act. (April 17, 1992)

6.3.1. Criteria for Efficient and Meritorious Service A Public Worker shall
have:

a. At least a satisfactory performance rating within the rating period.

b. Not been found guilty of any administrative or criminal case within the
rating period.

As can be gleaned from the aforequoted provision, petitioners failed to show

any real inconsistency in granting longevity pay to PHWs holding regular
plantilla positions. Not only are they based on the same premise, but the
intent of longevity pay, which is paid to workers for every five (5) years of
continuous, efficient and meritorious services, necessarily coincides with that
of regularization. Thus, the assailed circular cannot be invalidated for its
issuance is consistent with, and germane to, the purposes of the law.

Anent petitioners' contention that the DBM-DOH Joint Circular is null and
void for its failure to comply with Section 3523 of RA No. 7305 providing that
its implementing rules shall take effect thirty (30) days after publication in a
newspaper of general circulation, as well as its failure to file a copy of the
same with the University of the Philippines Law Center-Office of the National
Administrative Register (UP Law Center-ONAR), jurisprudence as well as the
circumstances of this case dictate otherwise.

Indeed, publication, as a basic postulate of procedural due process, is

required by law in order for administrative rules and regulations to be
effective.24 There are, however, several exceptions, one of which are
interpretative regulations which "need nothing further than their bare
issuance for they give no real consequence more than what the law itself has
already prescribed."25 These regulations need not be published for they add
nothing to the law and do not affect substantial rights of any person.26

Thus, in Association of Southern Tagalog Electric Cooperatives, et. al. v.

Energy Regulatory Commission (ERC),27wherein several orders issued by the
ERC were sought to be invalidated for lack of publication and non-submission
of copies thereof to the UP Law Center - ONAR, it has been held that since
they merely interpret RA No. 7832 and its IRR, particularly on the
computation of the cost of purchased power, without modifying, amending
or supplanting the same, they cannot be rendered ineffective, to wit:

When the policy guidelines of the ERC directed the exclusion of discounts
extended by power suppliers in the computation of the cost of purchased
power, the guidelines merely affirmed the plain and unambiguous meaning
of "cost" in Section 5, Rule IX of the IRR of R.A. No. 7832."Cost" is an item
of outlay, and must therefore exclude discounts since these are "not
amounts paid or charged for the sale of electricity, but are reductions in
rates.

xxxx

Thus, the policy guidelines of the ERC on the treatment of discounts

extended by power suppliers "give no real consequence more than what the
law itself has already prescribed." Publication is not necessary for the
effectivity of the policy guidelines.

As interpretative regulations, the policy guidelines of the ERC on the

treatment of discounts extended by power suppliers are also not required to
be filed with the U.P. Law Center in order to be effective. Section 4, Chapter
2, Book VII of the Administrative Code of 1987 requires every rule adopted
by an agency to be filed with the U.P. Law Center to be effective. However,
in Board of Trustees of the Government Service Insurance System v.
Velasco, this Court pronounced that "not all rules and regulations adopted by
every government agency are to be filed with the UP Law Center."
Interpretative regulations and those merely internal in nature are not
required to be filed with the U.P. Law Center. Paragraph 9 (a) of the
Guidelines for Receiving and Publication of Rules and Regulations Filed with
the U.P. Law Center states:

9. Rules and Regulations which need not be filed with the U.P. Law Center,
shall, among others, include but not be limited to, the following:
a. Those which are interpretative regulations and those merely internal in
nature, that is, regulating only the personnel of the Administrative agency
and not the public.

xxxx

Furthermore, the policy guidelines of the ERC did not create a new
obligation and impose a new duty, nor did it attach a new disability.
As previously discussed, the policy guidelines merely interpret R.A.
No. 7832 and its IRR, particularly on the computation of the cost of
purchased power. The policy guidelines did not modify, amend or
supplant the IRR.

Similarly, in Republic v. Drugmaker's Laboratories, Inc.,28 the validity of

circulars issued by the Food and Drug Administration (FDA) was upheld in
spite of the non-compliance with the publication, prior hearing, and
consultation requirements for they merely implemented the provisions of
Administrative Order No. 67, entitled "Revised Rules and Regulations on
Registration of Pharmaceutical Products" issued by the DOH, in the following
wise:

A careful scrutiny of the foregoing issuances would reveal that AO

67, s. 1989 is actually the rule that originally introduced the BA/BE
testing requirement as a component of applications for the issuance
of CPRs covering certain pharmaceutical products. As such, it is
considered an administrative regulation - a legislative rule to be exact -
issued by the Secretary of Health in consonance with the express authority
granted to him by RA 3720 to implement the statutory mandate that all
drugs and devices should first be registered with the FDA prior to their
manufacture and sale. Considering that neither party contested the validity
of its issuance, the Court deems that AO 67, s. 1989 complied with the
requirements of prior hearing, notice, and publication pursuant to the
presumption of regularity accorded to the government in the exercise of its
official duties.42

On the other hand, Circular Nos. 1 and 8, s. 1997 cannot be

considered as administrative regulations because they do not: (a)
implement a primary legislation by providing the details thereof; (b)
interpret, clarify, or explain existing statutory regulations under
which the FDA operates; and/or (c) ascertain the existence of
certain facts or things upon which the enforcement of RA 3720
depends. In fact, the only purpose of these circulars is for the FDA to
administer and supervise the implementation of the provisions of AO
67, s. 1989, including those covering the BA/BE testing requirement,
consistent with and pursuant to RA 3720.43 Therefore, the FDA has
sufficient authority to issue the said circulars and since they would
not affect the substantive rights of the parties that they seek to
govern - as they are not, strictly speaking, administrative
regulations in the first place - no prior hearing, consultation, and
publication are needed for their validity.

In this case, the DBM-DOH Joint Circular in question gives no real

consequence more than what the law itself had already prescribed. As
previously discussed, the qualification of actual exposure to danger for the
PHW's entitlement to hazard pay, the rates of 50 and 25 subsistence
allowance, and the entitlement to longevity pay on the basis of PHW's status
in the plantilla of regular positions were already prescribed and authorized
by pre-existing law. There is really no new obligation or duty imposed by the
subject circular for it merely reiterated those embodied in RA No. 7305 and
its Revised IRR. The Joint Circular did not modify, amend nor supplant the
Revised IRR, the validity of which is undisputed. Consequently, whether it
was duly published and filed with the UP Law Center - ONAR is necessarily
immaterial to its validity because in view of the pronouncements above,
interpretative regulations, such as the DBM-DOH circular herein, need not be
published nor filed with the UP Law Center - ONAR in order to be effective.
Neither is prior hearing or consultation mandatory.

Nevertheless, it bears stressing that in spite of the immateriality of the

publication requirement in this case, and even assuming the necessity of the
same, its basic objective in informing the public of the contents of the law
was sufficiently accomplished when the DBM-DOH Joint Circular was
published in the Philippine Star, a newspaper of general circulation, on
December 29, 2012.29

As to petitioners' allegation of grave abuse of discretion on the part of

respondent DOH Secretary in failing to include the Magna Carta benefits in
his department's yearly budget, the same is belied by the fact that
petitioners themselves specifically provided in their petition an account of
the amounts allocated for the same in the years 2012 and 2013.30

Based on the foregoing, it must be recalled that administrative regulations,

such as the DBM-DOH Joint Circular herein, enacted by administrative
agencies to implement and interpret the law they are entrusted to enforce
are entitled to great respect.31 They partake of the nature of a statute and
are just as binding as if they have been written in the statute itself. As such,
administrative regulations have the force and effect of law and enjoy the
presumption of legality. Unless and until they are overcome by sufficient
evidence showing that they exceeded the bounds of the law,32 their validity
and legality must be upheld.

Thus, notwithstanding the contention that the Joint Resolution No. 4

promulgated by Congress cannot be a proper source of delegated power, the
subject Circular was nevertheless issued well within the scope of authority
granted to the respondents. The issue in this case is not whether the Joint
Resolution No. 4 can become law and, consequently, authorize the issuance
of the regulation in question, but whether the circular can be struck down as
invalid for being tainted with grave abuse of discretion. Regardless,
therefore, of the validity or invalidity of Joint Resolution No. 4, the DBMDOH
Joint Circular assailed herein cannot be said to have been arbitrarily or
capriciously issued for being consistent with prior issuances duly
promulgated pursuant to valid and binding law.

Distinction must be made, however, with respect to the DBM-CSC Joint

Circular, the contested provision of which states:

6.5 An official or employee authorized to be granted Longevity Pay under an

existing law is not eligible for the grant of Step Increment Due to Length of
Service.

A review of RA No. 7305 and its Revised IRR reveals that the law does not
similarly impose such condition on the grant of longevity pay to PHWs in the
government service. As such, the DBM-CSC Joint Circular effectively created
a new imposition which was not otherwise stipulated in the law it sought to
interpret. Consequently, the same exception granted to the DBM-DOH Joint
Circular cannot be applied to the DBM-CSC Joint Circular insofar as the
requirements on publication and submission with the UP Law Center - ONAR
are concerned. Thus, while it was well within the authority of the
respondents to issue rules regulating the grant of step increments as
provided by RA No. 6758, otherwise known as the Compensation and
Position Classification Act of 1989, which pertinently states:

Section 13. Pay Adjustments. - Paragraphs (b) and (c), Section 15 of

Presidential Decree No. 985 are hereby amended to read as follows:

xxxx

(c) Step Increments- Effective January 1, 1990 step increments shall be

granted based on merit and/or length of service in accordance with rules and
regulations that will be promulgated jointly by the DBM and the Civil Service
Commission,
and while it was duly published in the Philippine Star, a newspaper of
general circulation, on September 15, 2012,33the DBM-CSC Joint Circular
remains unenforceable for the failure of respondents to file the same with
the UP Law Center - ONAR.34 Moreover, insofar as the DBM-DOH Joint
Circular similarly withholds the Step Increment due to length of service from
those who are already being granted Longevity Pay, the same must likewise
be declared unenforceable.[35

Note also that the DBM-DOH Joint Circular must further be invalidated
insofar as it lowers the hazard pay at rates below the minimum prescribed
by Section 21 of RA No. 7305 and Section 7.1.5 (a) of its Revised IRR as
follows:

SEC. 21. Hazard Allowance. - Public health worker in hospitals, sanitaria,

rural health units, main centers, health infirmaries, barangay health stations,
clinics and other health-related establishments located in difficult areas,
strife-torn or embattled areas, distresses or isolated stations, prisons camps,
mental hospitals, radiation-exposed clinics, laboratories or disease-infested
areas or in areas declared under state of calamity or emergency for the
duration thereof which expose them to great danger, contagion, radiation,
volcanic activity/eruption occupational risks or perils to life as determined by
the Secretary of Health or the Head of the unit with the approval of the
Secretary of Health, shall be compensated hazard allowance equivalent to at
least twenty-five percent (25%)of the monthly basic salary of health workers
receiving salary grade 19 and below, and five percent (5%) for health
workers with salary grade 20 and above.

xxxx

7.1.5. Rates of Hazard Pay

a. Public health workers shall be compensated hazard allowances equivalent

to at least twenty five (25%)of the monthly basic salary of health workers,
receiving salary grade 19 and below, and five percent (5%)for health
workers with salary grade 20 and above. This may be granted on a monthly,
quarterly or annual basis.

It is evident from the foregoing provisions that the rates of hazard pay must
be at least25% of the basic monthly salary of PWHs receiving salary grade
19 and below, and 5% receiving salary grade 20 and above. As such, RA No.
7305 and its implementing rules noticeably prescribe the minimum rates of
hazard pay due all PHWs in the government, as is clear in the self-
explanatory phrase "at least" used in both the law and the rules.36 Thus, the
following rates embodied in Section 7.2 of DBM-DOH Joint Circular must be
struck down as invalid for being contrary to the mandate of RA No. 7305 and
its Revised IRR:

7.2.1 For PHWs whose positions are at SG-19 and below, Hazard Pay shall
be based on the degree of exposure to high risk or low risk hazards, as
specified in sub-items 7 .1.1 and 7 .1.2 above, and the number of workdays
of actual exposure over 22 workdays in a month, at rates not to exceed 25%
of monthly basic salary. In case of exposure to both high risk and low risk
hazards, the Hazard Pay for the month shall be based on only one risk level,
whichever is more advantageous to the PHW.

7.2.2 PHWs whose positions are at SG-20 and above may be entitled to
Hazard Pay at 5% of their monthly basic salaries for all days of exposure to
high risk and/or low risk hazards. However, those exposed to high risk
hazards for 12 or more days in a month may be entitled to a fixed amount of
4,989.75 per month.

Rates of Hazard Pay

Actual High Risk Low Risk

Exposure/
Level of Risk
12 or more days 25% of monthly basic 14% of monthly basic
salary salary
6 to 11 days 14% of monthly basic 8% of monthly basic
salary salary
Less than 6 8% monthly basic salary 5% of monthly basic
days salary

WHEREFORE, premises considered, the instant petition is PARTLY GRANTED.

The DBM-DOH Joint Circular, insofar as it lowers the hazard pay at rates
below the minimum prescribed by Section 21 of RA No. 7305 and Section
7.1.5 (a) of its Revised IRR, is declared INVALID. The DBM-CSC Joint
Circular, insofar as it provides that an official or employee authorized to be
granted Longevity Pay under an existing law is not eligible for the grant of
Step Increment Due to Length of Service, is declared UNENFORCEABLE. The
validity, however, of the DBM-DOH Joint Circular as to the qualification of
actual exposure to danger for the PHW's entitlement to hazard pay, the rates
of 50 and 25 subsistence allowance, and the entitlement to longevity pay
on the basis of the PHW' s status in the plantilla of regular positions, is
UPHELD.
SO ORDERED.

G.R. No. 180705 November 27, 2012

EDUARDO M. COJUANGCO, JR., Petitioner,

vs.
REPUBLIC OF THE PHILIPPINES, Respondent.

DECISION

VELASCO, JR., J.:

The Case

Of the several coconut levy appealed cases that stemmed from certain
issuances of the Sandiganbayan in its Civil Case No. 0033, the present
recourse proves to be one of the most difficult.

In particular, the instant petition for review under Rule 45 of the Rules of
Court assails and seeks to annul a portion of the Partial Summary Judgment
dated July 11, 2003, as affirmed in a Resolution of December 28, 2004, both
rendered by the Sandiganbayan in its Civil Case ("CC") No. 0033-A (the
judgment shall hereinafter be referred to as "PSJ-A"), entitled "Republic of
the Philippines, Plaintiff, v. Eduardo M. Cojuangco, Jr., et al., Defendants,
COCOFED, et al., BALLARES, et al., Class Action Movants." CC No. 0033-A is
the result of the splitting into eight (8) amended complaints of CC No. 0033
entitled, "Republic of the Philippines v. Eduardo Cojuangco, Jr., et al.," a suit
for recovery of ill-gotten wealth commenced by the Presidential Commission
on Good Government ("PCGG"), for the Republic of the Philippines
("Republic"), against Eduardo M. Cojuangco, Jr. ("Cojuangco") and several
individuals, among them, Ferdinand E. Marcos, Maria Clara Lobregat
("Lobregat"), and Danilo S. Ursua ("Ursua"). Each of the eight (8) subdivided
complaints, CC No. 0033-A to CC No. 0033-H, correspondingly impleaded as
defendants only the alleged participants in the transaction/s subject of the
suit, or who are averred as owner/s of the assets involved.

Apart from this recourse, We clarify right off that PSJ-A was challenged in
two other separate but consolidated petitions for review, one commenced by
COCOFED et al., docketed as G.R. Nos. 177857-58, and the other,
interposed by Danilo S. Ursua, and docketed as G.R. No. 178193.

By Decision dated January 24, 2012, in the aforesaid G.R. Nos. 177857-58
(COCOFED et al. v. Republic) and G.R. No. 178193 (Ursua v. Republic)
consolidated cases1 (hereinafter collectively referred to as "COCOFED v.
Republic"), the Court addressed and resolved all key matters elevated to it
in relation to PSJ-A, except for the issues raised in the instant petition which
have not yet been resolved therein. In the same decision, We made clear
that: (1) PSJ-A is subject of another petition for review interposed by
Eduardo Cojuangco, Jr., in G.R. No. 180705, entitled Eduardo M. Cojuangco,
Jr. v. Republic of the Philippines, which shall be decided separately by the
Court,2and (2) the issues raised in the instant petition should not be affected
by the earlier decision "save for determinatively legal issues directly
addressed therein."3

For a better perspective, the instant recourse seeks to reverse the Partial
Summary Judgment4 of the anti-graft court dated July 11, 2003, as
reiterated in a Resolution5 of December 28, 2004, denying COCOFEDs
motion for reconsideration, and the May 11, 2007 Resolution6 denying

COCOFEDs motion to set case for trial and declaring the partial summary
judgment final and appealable, all issued in PSJ-A. In our adverted January
24, 2012 Decision in COCOFED v. Republic, we affirmed with modification
PSJ-A of the Sandiganbayan, and its Partial Summary Judgment in Civil Case
No. 0033-F, dated May 7, 2004 (hereinafter referred to as "PSJ-F).7

More specifically, We upheld the Sandiganbayans ruling that the coconut

levy funds are special public funds of the Government. Consequently, We
affirmed the Sandiganbayans declaration that Sections 1 and 2 of
Presidential Decree ("P.D.") 755, Section 3, Article III of P.D. 961 and
Section 3, Article III of P.D. 1468, as well as the pertinent implementing
regulations of the Philippine Coconut Authority ("PCA"), are unconstitutional
for allowing the use and/or the distribution of properties acquired through
the coconut levy funds to private individuals for their own direct benefit and
absolute ownership. The Decision also affirmed the Governments ownership
of the six CIIF companies, the fourteen holding companies, and the CIIF
block of San Miguel Corporation shares of stock, for having likewise been
acquired using the coconut levy funds. Accordingly, the properties subject of
the January 24, 2012 Decision were declared owned by and ordered
reconveyed to the Government, to be used only for the benefit of all coconut
farmers and for the development of the coconut industry.

By Resolution of September 4, 2012,8 the Court affirmed the above-stated

Decision promulgated on January 24, 2012.

It bears to stress at this juncture that the only portion of the appealed
Partial Summary Judgment dated July 11, 2003 ("PSJ-A") which remains at
issue revolves around the following decretal holdings of that court relating to
the "compensation" paid to petitioner for exercising his personal and
exclusive option to acquire the FUB/UCPB shares.9It will be recalled that the
Sandiganbayan declared the Agreement between the PCA and Cojuangco
containing the assailed "compensation" null and void for not having the
required valuable consideration. Consequently, the UCPB shares of stocks
that are subject of the Agreement were declared conclusively owned by the
Government. It also held that the Agreement did not have the effect of law
as it was not published as part of P.D. 755, even if Section 1 thereof made
reference to the same.

Facts

We reproduce, below, portions of the statement of facts in COCOFED v.

Republic relevant to the present case:10

In 1971, Republic Act No. ("R.A.") 6260 was enacted creating the Coconut
Investment Company ("CIC") to administer the Coconut Investment Fund
("CIF"), which, under Section 8 thereof, was to be sourced from a PhP 0.55
levy on the sale of every 100 kg. of copra. Of the PhP 0.55 levy of which the
copra seller was or ought to be issued COCOFUND receipts, PhP 0.02
was placed at the disposition of COCOFED, the national association of
coconut producers declared by the

Philippine Coconut Administration ("PHILCOA" now "PCA") as having the

largest membership.

The declaration of martial law in September 1972 saw the issuance of

several presidential decrees ("P.D.") purportedly designed to improve the
coconut industry through the collection and use of the coconut levy fund.
While coming generally from impositions on the first sale of copra, the
coconut levy fund came under various names x x x. Charged with the duty of
collecting and administering the Fund was PCA. Like COCOFED with which it
had a legal linkage, the PCA, by statutory provisions scattered in different
coco levy decrees, had its share of the coco levy.

The following were some of the issuances on the coco levy, its collection and
utilization, how the proceeds of the levy will be managed and by whom and
the purpose it was supposed to serve:

1. P.D. No. 276 established the Coconut Consumers Stabilization Fund

("CCSF") and declared the proceeds of the CCSF levy as trust fund, to
be utilized to subsidize the sale of coconut-based products, thus
stabilizing the price of edible oil.
2. P.D. No. 582 created the Coconut Industry Development Fund
("CIDF") to finance the operation of a hybrid coconut seed farm.

3. Then came P.D. No. 755 providing under its Section 1 the following:

It is hereby declared that the policy of the State is to provide

readily available credit facilities to the coconut farmers at
preferential rates; that this policy can be expeditiously and
efficiently realized by the implementation of the "Agreement for
the Acquisition of a Commercial Bank for the benefit of Coconut
Farmers" executed by the PCA; and that the PCA is hereby
authorized to distribute, for free, the shares of stock of the bank
it acquired to the coconut farmers.

Towards achieving the policy thus declared, P.D. No. 755, under
its Section 2, authorized PCA to utilize the CCSF and the CIDF
collections to acquire a commercial bank and deposit the CCSF
levy collections in said bank interest free, the deposit
withdrawable only when the bank has attained a certain level of
sufficiency in its equity capital. The same section also decreed
that all levies PCA is authorized to collect shall not be considered
as special and/or fiduciary funds or form part of the general
funds of the government within the contemplation of P.D. No.
711.

4. P.D. No. 961 codified the various laws relating to the development
of coconut/palm oil industries.

5. The relevant provisions of P.D. No. 961, as later amended by P.D.

No. 1468 (Revised Coconut Industry Code), read:

ARTICLE III
Levies

Section 1. Coconut Consumers Stabilization Fund Levy. The PCA is

hereby empowered to impose and collect the Coconut Consumers
Stabilization Fund Levy, .

Section 5. Exemption. The CCSF and theCIDF as well as all

disbursements as herein authorized, shall not be construed as
special and/or fiduciary funds, or as part of the general funds of the
national government within the contemplation of PD 711; the
intention being that said Fund and the disbursements thereof as herein
authorized for the benefit of the coconut farmers shall be owned by
them in their private capacities: . (Emphasis supplied)

6. Letter of Instructions No. ("LOI") 926, s. of 1979, made reference to

the creation, out of other coco levy funds, of the Coconut Industry
Investment Fund ("CIIF") in P.D. No. 1468 and entrusted a portion of
the CIIF levy to UCPB for investment, on behalf of coconut farmers, in
oil mills and other private corporations, with the following equity
ownership structure:

Section 2. Organization of the Cooperative Endeavor. The UCPB, in

its capacity as the investment arm of the coconut farmers thru the
CIIF is hereby directed to invest, on behalf of the coconut farmers,
such portion of the CIIF in private corporations under the
following guidelines:

a) The coconut farmers shall own or control at least (50%) of the

outstanding voting capital stock of the private corporation acquired
thru the CIIF and/or corporation owned or controlled by the farmers
thru the CIIF . (Words in bracket added.)

Through the years, a part of the coconut levy funds went directly or
indirectly to finance various projects and/or was converted into various
assets or investments.11 Relevant to the present petition is the
acquisition of the First United Bank ("FUB"), which was subsequently
renamed as United Coconut Planters Bank ("UCPB").12

Apropos the intended acquisition of a commercial bank for the purpose

stated earlier, it would appear that FUB was the bank of choice which
Pedro Cojuangcos group (collectively, "Pedro Cojuangco") had control
of. The plan, then, was for PCA to buy all of Pedro Cojuangcos shares
in FUB. However, as later events unfolded, a simple direct sale from
the seller (Pedro) to PCA did not ensue as it was made to appear that
Cojuangco had the exclusive option to acquire the formers FUB
controlling interests. Emerging from this elaborate, circuitous
arrangement were two deeds. The first one was simply denominated
as Agreement, dated May 1975, entered into by and between
Cojuangco for and in his behalf and in behalf of "certain other buyers",
and Pedro Cojuangco in which the former was purportedly accorded
the option to buy 72.2% of FUBs outstanding capital stock, or 137,866
shares (the "option shares," for brevity), at PhP 200 per share. On its
face, this agreement does not mention the word "option."
 The second but related contract, dated May 25, 1975, was
denominated as Agreement for the Acquisition of a Commercial Bank
for the Benefit of the Coconut Farmers of the Philippines. It had PCA,
for itself and for the benefit of the coconut farmers, purchase from
Cojuangco the shares of stock subject of the First Agreement for
PhP200.00 per share. As additional consideration for PCAs buy-out of
what Cojuangco would later claim to be his exclusive and personal
option, it was stipulated that, from PCA, Cojuangco shall receive equity
in FUB amounting to 10%, or 7.22%, of the 72.2%, or fully paid
shares. And so as not to dilute Cojuangcos equity position in FUB,
later UCPB, the PCA agreed under paragraph 6 (b) of the second
agreement to cede over to the former a number of fully paid FUB
shares out of the shares it (PCA) undertakes to eventually subscribe. It
was further stipulated that Cojuangco would act as bank president for
an extendible period of 5 years.

Apart from the aforementioned 72.2%, PCA purchased from other FUB
shareholders 6,534 shares of which Cojuangco, as may be gathered
from the records, got 10%..

While the 64.98% portion of the option shares (72.2% 7.22% =

64.98%) ostensibly pertained to the farmers, the corresponding stock
certificates supposedly representing the farmers equity were in the
name of and delivered to PCA. There were, however, shares forming
part of the aforesaid 64.98% portion, which ended up in the hands of
non-farmers. The remaining 27.8% of the FUB capital stock were not
covered by any of the agreements.

Under paragraph # 8 of the second agreement, PCA agreed to

expeditiously distribute the FUB shares purchased to such "coconut
farmers holding registered COCOFUND receipts" on equitable basis.

As found by the Sandiganbayan, the PCA appropriated, out of its own

fund, an amount for the purchase of the said 72.2% equity, albeit it
would later reimburse itself from the coconut levy fund.

And per Cojuangcos own admission, PCA paid, out of the CCSF, the entire
acquisition price for the 72.2% option shares.13

As of June 30, 1975, the list of FUB stockholders included Cojuangco with
14,440 shares and PCA with 129,955 shares.14 It would appear later that,
pursuant to the stipulation on maintaining Cojuangcos equity position in the
bank, PCA would cede to him 10% of its subscriptions to (a) the authorized
but unissued shares of FUB and (b) the increase in FUBs capital stock (the
equivalent of 158,840 and 649,800 shares, respectively). In all, from the
"mother" PCA shares, Cojuangco would receive a total of 95,304 FUB (UCPB)
shares broken down as follows: 14,440 shares + 10% (158,840 shares) +
10% (649,800 shares) = 95,304.15

We further quote, from COCOFED v. Republic, facts relevant to the instant

case:16

Shortly after the execution of the PCA Cojuangco Agreement, President

Marcos issued, on July 29, 1975, P.D. No. 755 directing x x x as narrated,
PCA to use the CCSF and CIDF to acquire a commercial bank to provide coco
farmers with "readily available credit facilities at preferential rate" x x x.

Then came the 1986 EDSA event. One of the priorities of then President
Corazon C. Aquinos revolutionary government was the recovery of ill-gotten
wealth reportedly amassed by the Marcos family and close relatives, their
nominees and associates. Apropos thereto, she issued Executive Order Nos.
(EO) 1, 2 and 14, as amended by E.O. 14-A, all series of 1986. E.O. 1
created the PCGG and provided it with the tools and processes it may avail
of in the recovery efforts;17 E.O. No. 2 asserted that the ill-gotten assets and
properties come in the form of shares of stocks, etc., while E.O. No. 14
conferred on the Sandiganbayan exclusive and original jurisdiction over ill-
gotten wealth cases, with the proviso that "technical rules of procedure and
evidence shall not be applied strictly" to the civil cases filed under the EO.
Pursuant to these issuances, the PCGG issued numerous orders of
sequestration, among which were those handed out x x x against shares of
stock in UCPB purportedly owned by or registered in the names of (a) the
more than a million coconut farmers, (b) the CIIF companies and (c)
Cojuangco, Jr., including the SMC shares held by the CIIF companies. On
July 31, 1987, the PCGG instituted before the Sandiganbayan a recovery suit
docketed thereat as CC No. 0033.

xxxx

3. Civil Case 0033 x x x would be subdivided into eight complaints, docketed

as CC 0033-A to CC 0033-H.

xxxx

5. By Decision of December 14, 2001, in G.R. Nos. 147062-64 (Republic v.

COCOFED),18 the Court declared the coco levy funds as prima facie public
funds. And purchased as the sequestered UCPB shares were by such funds,
beneficial ownership thereon and the corollary voting rights prima facie
pertain, according to the Court, to the government.
xxxx

Correlatively, the Republic, on the strength of the December 14, 2001 ruling
in Republic v. COCOFED and on the argument, among others, that the claim
of COCOFED and Ballares et al., over the subject UCPB shares is based
solely on the supposed COCOFUND receipts issued for payment of the RA
6260 CIF levy, filed a Motion for Partial Summary Judgment RE: COCOFED,
et al. and Ballares, et al. dated April 22, 2002, praying that a summary
judgment be rendered declaring:

a. That Section 2 of [PD] 755, Section 5, Article III of P.D. 961 and
Section 5, Article III of P.D. No. 1468 are unconstitutional;

b. That x x x (CIF) payments under x x x (R.A.) No. 6260 are not valid
and legal bases for ownership claims over UCPB shares; and

c. That COCOFED, et al., and Ballares, et al. have not legally and
validly obtained title over the subject UCPB shares.

Right after it filed the Motion for Partial Summary Judgment RE: COCOFED,
et al. and Ballares, et al., the Republic interposed a Motion for Partial
Summary Judgment Re: Eduardo M. Cojuangco, Jr., praying that a summary
judgment be rendered:

a. Declaring that Section 1 of P.D. No. 755 is unconstitutional insofar

as it validates the provisions in the "PCA-Cojuangco Agreement x x x"
dated May 25, 1975 providing payment of ten percent (10%)
commission to defendant Cojuangco with respect to the FUB, now
UCPB shares subject matter thereof;

b. Declaring that x x x Cojuangco, Jr. and his fronts, nominees and

dummies, including x x x and Danilo S. Ursua, have not legally and
validly obtained title over the subject UCPB shares; and

c. Declaring that the government is the lawful and true owner of the
subject UCPB shares registered in the names of Cojuangco, Jr. and
the entities and persons above-enumerated, for the benefit of all
coconut farmers. x x x

Following an exchange of pleadings, the Republic filed its sur-rejoinder

praying that it be conclusively declared the true and absolute owner of the
coconut levy funds and the UCPB shares acquired therefrom.19

We quote from COCOFED v. Republic:20

A joint hearing on the separate motions for summary judgment to determine
what material facts exist with or without controversy then ensued. By Order
of March 11, 2003, the Sandiganbayan detailed, based on this Courts ruling
in related ill-gotten cases, the parties manifestations made in open court
and the pleadings and evidence on record, the facts it found to be without
substantial controversy, together with the admissions and/or extent of the
admission made by the parties respecting relevant facts, as follows:

As culled from the exhaustive discussions and manifestations of the parties

in open court of their respective pleadings and evidence on record, the facts
which exist without any substantial controversy are set forth hereunder,
together with the admissions and/or the extent or scope of the admissions
made by the parties relating to the relevant facts:

1. The late President Ferdinand E. Marcos was President x x x for two

terms under the 1935 Constitution and, during the second term, he
declared Martial Law through Proclamation No. 1081 dated September
21, 1972.

2. On January 17, 1973, he issued Proclamation No. 1102 announcing

the ratification of the 1973 Constitution.

3. From January 17, 1973 to April 7, 1981, he x x x exercised the

powers and prerogative of President under the 1935 Constitution and
the powers and prerogative of President x x x the 1973 Constitution.

He x x x promulgated various P.D.s, among which were P.D. No. 232,

P.D. No. 276, P.D. No. 414, P.D. No. 755, P.D. No. 961 and P.D. No.
1468.

4. On April 17, 1981, amendments to the 1973 Constitution were

effected and, on June 30, 1981, he, after being elected President,
"reassumed the title and exercised the powers of the President until 25
February 1986."

5. Defendants Maria Clara Lobregat and Jose R. Eleazar, Jr. were PCA
Directors x x x during the period 1970 to 1986 x x x.

6. Plaintiff admits the existence of the following agreements which are

attached as Annexes "A" and "B" to the Opposition dated October 10,
2002 of defendant Eduardo M. Cojuangco, Jr. to the above-cited
Motion for Partial Summary Judgment:
a) "This Agreement made and entered into this ______ day of May,
1975 at Makati, Rizal, Philippines, by and between:

PEDRO COJUANGCO, Filipino, of legal age and with residence at 1575

Princeton St., Mandaluyong, Rizal, for and in his own behalf and in
behalf of certain other stockholders of First United Bank listed in Annex
"A" attached hereto (hereinafter collectively called the SELLERS);

and

EDUARDO COJUANGCO, JR., Filipino, of legal age and with residence at

136 9th Street corner Balete Drive, Quezon City, represented in this
act by his duly authorized attorney-in-fact, EDGARDO J. ANGARA, for
and in his own behalf and in behalf of certain other buyers,
(hereinafter collectively called the BUYERS)";

WITNESSETH: That

WHEREAS, the SELLERS own of record and beneficially a total of

137,866 shares of stock, with a par value of P100.00 each, of the
common stock of the First United Bank (the "Bank"), a commercial
banking corporation existing under the laws of the Philippines;

WHEREAS, the BUYERS desire to purchase, and the SELLERS are

willing to sell, the aforementioned shares of stock totaling 137,866
shares (hereinafter called the "Contract Shares") owned by the
SELLERS due to their special relationship to EDUARDO COJUANGCO,
JR.;

NOW, THEREFORE, for and in consideration of the premises and the

mutual covenants herein contained, the parties agree as follows:

1. Sale and Purchase of Contract Shares

Subject to the terms and conditions of this Agreement, the

SELLERS hereby sell, assign, transfer and convey unto the
BUYERS, and the BUYERS hereby purchase and acquire, the
Contract Shares free and clear of all liens and encumbrances
thereon.

2. Contract Price
The purchase price per share of the Contract Shares payable by
the BUYERS is P200.00 or an aggregate price of P27,573,200.00
(the "Contract Price").

3. Delivery of, and payment for, stock certificates

Upon the execution of this Agreement, (i) the SELLERS shall

deliver to the BUYERS the stock certificates representing the
Contract Shares, free and clear of all liens, encumbrances,
obligations, liabilities and other burdens in favor of the Bank or
third parties, duly endorsed in blank or with stock powers
sufficient to transfer the shares to bearer; and (ii) BUYERS shall
deliver to the SELLERS P27,511,295.50 representing the
Contract Price less the amount of stock transfer taxes payable by
the SELLERS, which the BUYERS undertake to remit to the
appropriate authorities. (Emphasis added.)

4. Representation and Warranties of Sellers

The SELLERS respectively and independently of each other

represent and warrant that:

(a) The SELLERS are the lawful owners of, with good
marketable title to, the Contract Shares and that (i) the
certificates to be delivered pursuant thereto have been
validly issued and are fully paid and non-assessable; (ii)
the Contract Shares are free and clear of all liens,
encumbrances, obligations, liabilities and other burdens in
favor of the Bank or third parties x x x.

This representation shall survive the execution and

delivery of this Agreement and the consummation or
transfer hereby contemplated.

(b) The execution, delivery and performance of this

Agreement by the SELLERS does not conflict with or
constitute any breach of any provision in any agreement to
which they are a party or by which they may be bound.

(c) They have complied with the condition set forth in

Article X of the Amended Articles of Incorporation of the
Bank.

5. Representation of BUYERS
 xxxx

6. Implementation

The parties hereto hereby agree to execute or cause to be

executed such documents and instruments as may be required in
order to carry out the intent and purpose of this Agreement.

7. Notices

xxxx

IN WITNESS WHEREOF, the parties hereto have hereunto set their

hands at the place and on the date first above written.

PEDRO COJUANGCO EDUARDO COJUANGCO, JR.

(on his own behalf and in (on his own behalf and in
behalf of the other behalf
listed in Annex "A" hereof) Sellers of the other Buyers)
(SELLERS) (BUYERS)

By:

EDGARDO J. ANGARA
Attorney-in-Fact

xxxx

b) "Agreement for the Acquisition of a Commercial Bank for the Benefit

of the Coconut Farmers of the Philippines, made and entered into this
25th day of May 1975 at Makati, Rizal, Philippines, by and between:

EDUARDO M. COJUANGCO, JR., Filipino, of legal age, with business

address at 10th Floor, Sikatuna Building, Ayala Avenue, Makati, Rizal,
hereinafter referred to as the SELLER;

and

PHILIPPINE COCONUT AUTHORITY, a public corporation created by

Presidential Decree No. 232, as amended, for itself and for the benefit
of the coconut farmers of the Philippines, (hereinafter called the
BUYER)"

WITNESSETH: That
WHEREAS, on May 17, 1975, the Philippine Coconut Producers
Federation ("PCPF"), through its Board of Directors, expressed the
desire of the coconut farmers to own a commercial bank which will be
an effective instrument to solve the perennial credit problems and, for
that purpose, passed a resolution requesting the PCA to negotiate with
the SELLER for the transfer to the coconut farmers of the SELLERs
option to buy the First United Bank (the "Bank") under such terms and
conditions as BUYER may deem to be in the best interest of the
coconut farmers and instructed Mrs. Maria Clara Lobregat to convey
such request to the BUYER;

WHEREAS, the PCPF further instructed Mrs. Maria Clara Lobregat to

make representations with the BUYER to utilize its funds to finance the
purchase of the Bank;

WHEREAS, the SELLER has the exclusive and personal option to buy
144,400 shares (the "Option Shares") of the Bank, constituting 72.2%
of the present outstanding shares of stock of the Bank, at the price of
P200.00 per share, which option only the SELLER can validly exercise;

WHEREAS, in response to the representations made by the coconut

farmers, the BUYER has requested the SELLER to exercise his personal
option for the benefit of the coconut farmers;

WHEREAS, the SELLER is willing to transfer the Option Shares to the

BUYER at a price equal to his option price of P200 per share;

WHEREAS, recognizing that ownership by the coconut farmers of a

commercial bank is a permanent solution to their perennial credit
problems, that it will accelerate the growth and development of the
coconut industry and that the policy of the state which the BUYER is
required to implement is to achieve vertical integration thereof so that
coconut farmers will become participants in, and beneficiaries of the
development and growth of the coconut industry, the BUYER approved
the request of PCPF that it acquire a commercial bank to be owned by
the coconut farmers and, appropriated, for that purpose, the sum of
P150 Million to enable the farmers to buy the Bank and capitalize the
Bank to such an extension as to be in a position to adopt a credit
policy for the coconut farmers at preferential rates;

WHEREAS, x x x the BUYER is willing to subscribe to additional shares

("Subscribed Shares") and place the Bank in a more favorable financial
position to extend loans and credit facilities to coconut farmers at
preferential rates;
NOW, THEREFORE, for and in consideration of the foregoing premises
and the other terms and conditions hereinafter contained, the parties
hereby declare and affirm that their principal contractual intent is (1)
to ensure that the coconut farmers own at least 60% of the
outstanding capital stock of the Bank; and (2) that the SELLER shall
receive compensation for exercising his personal and exclusive option
to acquire the Option Shares, for transferring such shares to the
coconut farmers at the option price of P200 per share, and for
performing the management services required of him hereunder.

1. To ensure that the transfer to the coconut farmers of the

Option Shares is effected with the least possible delay and to
provide for the faithful performance of the obligations of the
parties hereunder, the parties hereby appoint the Philippine
National Bank as their escrow agent (the "Escrow Agent").

Upon execution of this Agreement, the BUYER shall deposit with

the Escrow Agent such amount as may be necessary to
implement the terms of this Agreement x x x.

2. As promptly as practicable after execution of this Agreement,

the SELLER shall exercise his option to acquire the Option Share
and SELLER shall immediately thereafter deliver and turn over to
the Escrow Agent such stock certificates as are herein provided
to be received from the existing stockholders of the Bank by
virtue of the exercise on the aforementioned option x x x.

3. To ensure the stability of the Bank and continuity of

management and credit policies to be adopted for the benefit of
the coconut farmers, the parties undertake to cause the
stockholders and the Board of Directors of the Bank to authorize
and approve a management contract between the Bank and the
SELLER under the following terms:

(a) The management contract shall be for a period of five

(5) years, renewable for another five (5) years by mutual
agreement of the SELLER and the Bank;

(b) The SELLER shall be elected President and shall hold

office at the pleasure of the Board of Directors. While
serving in such capacity, he shall be entitled to such
salaries and emoluments as the Board of Directors may
determine;
 (c) The SELLER shall recruit and develop a professional
management team to manage and operate the Bank under
the control and supervision of the Board of Directors of the
Bank;

(d) The BUYER undertakes to cause three (3) persons

designated by the SELLER to be elected to the Board of
Directors of the Bank;

(e) The SELLER shall receive no compensation for

managing the Bank, other than such salaries or
emoluments to which he may be entitled by virtue of the
discharge of his function and duties as President, provided
x x x and

(f) The management contract may be assigned to a

management company owned and controlled by the
SELLER.

4. As compensation for exercising his personal and exclusive

option to acquire the Option Shares and for transferring such
shares to the coconut farmers, as well as for performing the
management services required of him, SELLER shall receive
equity in the Bank amounting, in the aggregate, to 95,304 fully
paid shares in accordance with the procedure set forth in
paragraph 6 below;

5. In order to comply with the Central Bank program for

increased capitalization of banks and to ensure that the Bank will
be in a more favorable financial position to attain its objective to
extend to the coconut farmers loans and credit facilities, the
BUYER undertakes to subscribe to shares with an aggregate par
value of P80,864,000 (the "Subscribed Shares"). The obligation
of the BUYER with respect to the Subscribed Shares shall be as
follows:

(a) The BUYER undertakes to subscribe, for the benefit of

the coconut farmers, to shares with an aggregate par
value of P15,884,000 from the present authorized but
unissued shares of the Bank; and

(b) The BUYER undertakes to subscribe, for the benefit of

the coconut farmers, to shares with an aggregate par
value of P64,980,000 from the increased capital stock of
 the Bank, which subscriptions shall be deemed made upon
the approval by the stockholders of the increase of the
authorized capital stock of the Bank from P50 Million to
P140 Million.

The parties undertake to declare stock dividends of P8 Million out

of the present authorized but unissued capital stock of P30
Million.

6. To carry into effect the agreement of the parties that the

SELLER shall receive as his compensation 95,304 shares:

(a) The Escrow Agent shall, upon receipt from the SELLER
of the stock certificates representing the Option Shares,
duly endorsed in blank or with stock powers sufficient to
transfer the same to bearer, present such stock certificates
to the Transfer Agent of the Bank and shall cause such
Transfer Agent to issue stock certificates of the Bank in the
following ratio: one share in the name of the SELLER for
every nine shares in the name of the BUYER.

(b) With respect to the Subscribed Shares, the BUYER

undertakes, in order to prevent the dilution of SELLERs
equity position, that it shall cede over to the SELLER
64,980 fully-paid shares out of the Subscribed Shares.
Such undertaking shall be complied with in the following
manner: upon receipt of advice that the BUYER has
subscribed to the Subscribed Shares upon approval by the
stockholders of the increase of the authorized capital stock
of the Bank, the Escrow Agent shall thereupon issue a
check in favor of the Bank covering the total payment for
the Subscribed Shares. The Escrow Agent shall thereafter
cause the Transfer Agent to issue a stock certificates of the
Bank in the following ratio: one share in the name of the
SELLER for every nine shares in the name of the BUYER.

7. The parties further undertake that the Board of Directors and

management of the Bank shall establish and implement a loan policy
for the Bank of making available for loans at preferential rates of
interest to the coconut farmers x x x.

8. The BUYER shall expeditiously distribute from time to time the

shares of the Bank, that shall be held by it for the benefit of the
coconut farmers of the Philippines under the provisions of this
Agreement, to such, coconut farmers holding registered COCOFUND
receipts on such equitable basis as may be determine by the BUYER in
its sound discretion.

9. x x x x

10. To ensure that not only existing but future coconut farmers shall
be participants in and beneficiaries of the credit policies, and shall be
entitled to the benefit of loans and credit facilities to be extended by
the Bank to coconut farmers at preferential rates, the shares held by
the coconut farmers shall not be entitled to pre-emptive rights with
respect to the unissued portion of the authorized capital stock or any
increase thereof.

11. After the parties shall have acquired two-thirds (2/3) of the
outstanding shares of the Bank, the parties shall call a special
stockholders meeting of the Bank:

(a) To classify the present authorized capital stock of

P50,000,000 divided into 500,000 shares, with a par value of
P100.00 per share into: 361,000 Class A shares, with an
aggregate par value of P36,100,000 and 139,000 Class B shares,
with an aggregate par value of P13,900,000. All of the Option
Shares constituting 72.2% of the outstanding shares, shall be
classified as Class A shares and the balance of the outstanding
shares, constituting 27.8% of the outstanding shares, as Class B
shares;

(b) To amend the articles of incorporation of the Bank to effect

the following changes:

(i) change of corporate name to First United Coconut

Bank;

(ii) replace the present provision restricting the

transferability of the shares with a limitation on ownership
by any individual or entity to not more than 10% of the
outstanding shares of the Bank;

(iii) provide that the holders of Class A shares shall not be

entitled to pre-emptive rights with respect to the unissued
portion of the authorized capital stock or any increase
thereof; and
 (iv) provide that the holders of Class B shares shall be
absolutely entitled to pre-emptive rights, with respect to
the unissued portion of Class B shares comprising part of
the authorized capital stock or any increase thereof, to
subscribe to Class B shares in proportion t the
subscriptions of Class A shares, and to pay for their
subscriptions to Class B shares within a period of five (5)
years from the call of the Board of Directors.

(c) To increase the authorized capital stock of the Bank from P50
Million to P140 Million, divided into 1,010,800 Class A shares and
389,200 Class B shares, each with a par value of P100 per
share;

(d) To declare a stock dividend of P8 Million payable to the

SELLER, the BUYER and other stockholders of the Bank out of
the present authorized but unissued capital stock of P30 Million;

(e) To amend the by-laws of the Bank accordingly; and

(f) To authorize and approve the management contract provided

in paragraph 2 above.

The parties agree that they shall vote their shares and take all the
necessary corporate action in order to carry into effect the foregoing
provisions of this paragraph 11, including such other amendments of
the articles of incorporation and by-laws of the Bank as are necessary
in order to implement the intention of the parties with respect thereto.

12. It is the contemplation of the parties that the Bank shall achieve a
financial and equity position to be able to lend to the coconut farmers
at preferential rates.

In order to achieve such objective, the parties shall cause the Bank to
adopt a policy of reinvestment, by way of stock dividends, of such
percentage of the profits of the Bank as may be necessary.

13. The parties agree to execute or cause to be executed such

documents and instruments as may be required in order to carry out
the intent and purpose of this Agreement.

IN WITNESS WHEREOF x x x
PHILIPPINE COCONUT AUTHORITY
(BUYER)

By:

EDUARDO COJUANGCO, JR. MARIA CLARA L. LOBREGAT

(SELLER)

xxxx

7. Defendants Lobregat, et al. and COCOFED, et al. and Ballares, et al. admit
that the x x x (PCA) was the "other buyers" represented by defendant
Eduardo M. Cojuangco, Jr. in the May 1975 Agreement entered into between
Pedro Cojuangco (on his own behalf and in behalf of other sellers listed in
Annex "A"of the agreement) and defendant Eduardo M. Cojuangco, Jr. (on
his own behalf and in behalf of the other buyers). Defendant Cojuangco
insists he was the "only buyer" under the aforesaid Agreement.

8. Defendant Eduardo M. Cojuangco, Jr. did not own any share in the x x x
(FUB) prior to the execution of the two Agreements x x x.

9. Defendants Lobregat, et al., and COCOFED, et al., and Ballares, et al.

admit that in addition to the 137,866 FUB shares of Pedro Cojuangco, et al.
covered by the Agreement, other FUB stockholders sold their shares to PCA
such that the total number of FUB shares purchased by PCA increased
from 137,866 shares to 144,400 shares, the OPTION SHARES referred to in
the Agreement of May 25, 1975. Defendant Cojuangco did not make said
admission as to the said 6,534 shares in excess of the 137,866 shares
covered by the Agreement with Pedro Cojuangco.

10. Defendants Lobregat, et al. and COCOFED, et al. and Ballares, et al.
admit that the Agreement, described in Section 1 of Presidential Decree
(P.D.) No. 755 dated July 29, 1975 as the "Agreement for the Acquisition of
a Commercial Bank for the Benefit of Coconut Farmers" executed by the
Philippine Coconut Authority" and incorporated in Section 1 of P.D. No. 755
by reference, refers to the "AGREEMENT FOR THE ACQUISITION OF A
COMMERCIAL BANK FOR THE BENEFIT OF THE COCONUT FARMERS OF THE
PHILIPPINES" dated May 25, 1975 between defendant Eduardo M.
Cojuangco, Jr. and the PCA (Annex "B" for defendant Cojuangcos
OPPOSITION TO PLAINTIFFS MOTION FOR PARTIAL SUMMARY JUDGMENT
RE: EDUARDO M. COJUANGCO, JR. dated September 18, 2002).

Plaintiff refused to make the same admission.

11. As to whether P.D. No. 755 and the text of the agreement described
therein was published, the Court takes judicial notice that P.D. No. 755 was
published in x x x volume 71 of the Official Gazette but the text of the
agreement x x x was not so published with P.D. No. 755.

12. Defendants Lobregat, et al. and COCOFED, et al. and Ballares, et al.
admit that the PCA used public funds x x x in the total amount of P150
million, to purchase the FUB shares amounting to 72.2% of the authorized
capital stock of the FUB, although the PCA was later reimbursed from the
coconut levy funds and that the PCA subscription in the increased
capitalization of the FUB, which was later renamed the x x x (UCPB), came
from the said coconut levy funds x x x.

13. Pursuant to the May 25, 1975 Agreement, out of the 72.2% shares of
the authorized and the increased capital stock of the FUB (later UCPB),
entirely paid for by PCA, 64.98% of the shares were placed in the name of
the "PCA for the benefit of the coconut farmers" and 7,22% were given to
defendant Cojuangco. The remaining 27.8% shares of stock in the FUB
which later became the UCPB were not covered by the two (2) agreements
referred to in item no. 6, par. (a) and (b) above. "There were shares forming
part of the aforementioned 64.98% which were later sold or transferred to
non-coconut farmers.

14. Under the May 27, 1975 Agreement, defendant Cojuangcos equity in the
FUB (now UCPB) was ten percent (10%) of the shares of stock acquired by
the PCA for the benefit of the coconut farmers.

15. That the fully paid 95.304 shares of the FUB, later the UCPB, acquired by
defendant x x x Cojuangco, Jr. pursuant to the May 25, 1975 Agreement
were paid for by the PCA in accordance with the terms and conditions
provided in the said Agreement. 16. Defendants Lobregat, et al. and
COCOFED, et al. and Ballares, et al. admit that the affidavits of the coconut
farmers (specifically, Exhibit "1-Farmer" to "70-Farmer") uniformly state
that:

a. they are coconut farmers who sold coconut products;

b. in the sale thereof, they received COCOFUND receipts pursuant to

R.A. No. 6260;

c. they registered the said COCOFUND receipts; and

d. by virtue thereof, and under R.A. No. 6260, P.D. Nos. 755, 961 and
1468, they are allegedly entitled to the subject UCPB shares.
but subject to the following qualifications:

a. there were other coconut farmers who received UCPB shares

although they did not present said COCOFUND receipt because the
PCA distributed the unclaimed UCPB shares not only to those who
already received their UCPB shares in exchange for their COCOFUND
receipts but also to the coconut farmers determined by a national
census conducted pursuant to PCA administrative issuances;

b. there were other affidavits executed by Lobregat, Eleazar, Ballares

and Aldeguer relative to the said distribution of the unclaimed UCPB
shares; and

c. the coconut farmers claim the UCPB shares by virtue of their

compliance not only with the laws mentioned in item (d) above but
also with the relevant issuances of the PCA such as, PCA
Administrative Order No. 1, dated August 20, 1975 (Exh. "298-
Farmer"); PCA Resolution No. 033-78 dated February 16, 1978.

The plaintiff did not make any admission as to the foregoing qualifications.

17. Defendants Lobregat, et al. and COCOFED, et al. and Ballares, et al.
claim that the UCPB shares in question have legitimately become the private
properties of the 1,405,366 coconut farmers solely on the basis of their
having acquired said shares in compliance with R.A. No. 6260, P.D. Nos.
755, 961 and 1468 and the administrative issuances of the PCA cited above.

18. On the other hand, defendant Cojuangco, Jr. claims ownership of the
UCPB shares, which he holds, solely on the basis of the two Agreements.
(Emphasis and words in brackets added.)

On July 11, 2003, the Sandiganbayan issued the assailed PSJ-A, ruling in
favor of the Republic, disposing insofar as pertinent as follows:21

WHEREFORE, in view of the foregoing, we rule as follows:

xxxx

C. Re: MOTION FOR PARTIAL SUMMARY JUDGMENT (RE: EDUARDO M.

COJUANGCO, JR.) dated September 18, 2002 filed by plaintiff.

1. Sec. 1 of P.D. No. 755 did not validate the Agreement between PCA
and defendant Eduardo M. Cojuangco, Jr. dated May 25, 1975 nor did
 it give the Agreement the binding force of a law because of the non-
publication of the said Agreement.

2. Regarding the questioned transfer of the shares of stock of FUB

(later UCPB) by PCA to defendant Cojuangco or the so-called
"Cojuangco UCPB shares" which cost the PCA more than Ten Million
Pesos in CCSF in 1975, we declare, that the transfer of the following
FUB/UCPB shares to defendant Eduardo M. Cojuangco, Jr. was not
supported by valuable consideration, and therefore null and void:

a. The 14,400 shares from the "Option Shares";

b. Additional Bank Shares Subscribed and Paid by PCA,

consisting of:

1. Fifteen Thousand Eight Hundred Eighty-Four (15,884)

shares out of the authorized but unissued shares of the
bank, subscribed and paid by PCA;

2. Sixty Four Thousand Nine Hundred Eighty (64,980)

shares of the increased capital stock subscribed and paid
by PCA; and

3. Stock dividends declared pursuant to paragraph 5 and

paragraph 11 (iv) (d) of the Agreement.

3. The above-mentioned shares of stock of the FUB/UCPB transferred

to defendant Cojuangco are hereby declared conclusively owned by the
plaintiff Republic of the Philippines.

4. The UCPB shares of stock of the alleged fronts, nominees and

dummies of defendant Eduardo M. Cojuangco, Jr. which form part of
the 72.2% shares of the FUB/UCPB paid for by the

PCA with public funds later charged to the coconut levy funds, particularly
the CCSF, belong to the plaintiff Republic of the Philippines as their true and
beneficial owner.

Let trial of this Civil Case proceed with respect to the issues which have not
been disposed of in this Partial Summary Judgment. For this purpose, the
plaintiffs Motion Ad Cautelam to Present

Additional Evidence dated March 28, 2001 is hereby GRANTED.22 (Emphasis

and underlining added.)
As earlier explained, the core issue in this instant petition is Part C of the
dispositive portion in PSJ-A declaring the 7.22% FUB (now UCPB) shares
transferred to Cojuangco, plus the other shares paid by the PCA as
"conclusively" owned by the Republic. Parts A and B of the same dispositive
portion have already been finally resolved and adjudicated by this Court in
COCOFED v. Republic on January 24, 2012.23

From PSJ-A, Cojuangco moved for partial reconsideration but the

Sandiganbayan, by Resolution24 of December 28, 2004, denied the motion.

Hence, the instant petition.

The Issues

Cojuangcos petition formulates the issues in question form, as follows:25

a. Is the acquisition of the so-called Cojuangco, Jr. UCPB shares by

petitioner Cojuangco x x x "not supported by valuable consideration
and, therefore, null and void"?

b. Did the Sandiganbayan have jurisdiction, in Civil Case No. 0033-A,

an "ill-gotten wealth" case brought under EO Nos. 1 and 2, to declare
the Cojuangco UCPB shares acquired by virtue of the Pedro Cojuangco,
et al. Agreement and/or the PCA Agreement null and void because
"not supported by valuable consideration"?

c. Was the claim that the acquisition by petitioner Cojuangco of shares

representing 7.2% of the outstanding capital stock of FUB (later UCPB)
"not supported by valuable consideration", a "claim" pleaded in the
complaint and may therefore be the basis of a "summary judgment"
under Section 1, Rule 35 of the Rules of Court?

d. By declaring the Cojuangco UCPB shares as "not supported by

valuable consideration, and therefore, null and void", did the
Sandiganbayan effectively nullify the PCA Agreement? May the
Sandiganbayan nullify the PCA Agreement when the parties to the
Agreement, namely: x x x concede its validity? If the PCA Agreement
be deemed "null and void", should not the FUB (later UCPB) shares
revert to petitioner Cojuangco (under the PCA Agreement) or to Pedro
Cojuangco, et al. x x x? Would there be a basis then, even assuming
the absence of consideration x x x, to declare 7.2% UCPB shares of
petitioner Cojuangco as "conclusively owned by the plaintiff Republic of
the Philippines"?26
 The Courts Ruling

THE SANDIGANBAYAN HAS JURISDICTION OVER THE SUBJECT MATTER OF

THE SUBDIVIDED AMENDED COMPLAINTS, INCLUDING THE SHARES
ALLEGEDLY ACQUIRED BY COJUANGCO BY VIRTUE OF THE PCA
AGREEMENTS.

The issue of jurisdiction over the subject matter of the subdivided amended
complaints has peremptorily been put to rest by the Court in its January 24,
2012 Decision in COCOFED v. Republic. There, the Court, citing
Regalado27 and settled jurisprudence, stressed the following interlocking
precepts: Subject matter jurisdiction is conferred by law, not by the consent
or acquiescence of any or all of the parties. In turn, the issue on whether a
suit comes within the penumbra of a statutory conferment is determined by
the allegations in the complaint, regardless of whether or not the suitor will
be entitled to recover upon all or part of the claims asserted.

The Republics material averments in its complaint subdivided in CC No.

0033-A included the following:

CC No. 0033-A

12. Defendant Eduardo M. Cojuangco, Jr. served as a public officer during

the Marcos administration. During the period of his incumbency as a public
officer, he acquired assets, funds and other property grossly and manifestly
disproportionate to his salaries, lawful income and income from legitimately
acquired property.

13. Defendant Eduardo M. Cojuangco, Jr., taking undue advantage of his

association, influence, connection, and acting in unlawful concert with
Defendants Ferdinand E. Marcos and Imelda R. Marcos, AND THE
INDIVIDUAL DEFENDANTS, embarked upon devices, schemes and
stratagems, to unjustly enrich themselves at the expense of Plaintiff and the
Filipino people, such as when he

a) manipulated, beginning the year 1975 with the active collaboration

of Defendants x x x Maria Clara Lobregat, Danilo Ursua etc., the
purchase by . . . (PCA) of 72.2% of the outstanding capital stock of
the x x x (FUB) which was subsequently converted into a universal
bank named x x x (UCPB) through the use of the Coconut Consumers
Stabilization Fund (CCSF) being initially in the amount of
P85,773,100.00 in a manner contrary to law and to the specific
purposes for which said coconut levy funds were imposed and collected
under P.D. 276, and with sinister designs and under anomalous
circumstances, to wit:

(i) Defendant Eduardo Cojuangco, Jr. coveted the coconut levy

funds as a cheap, lucrative and risk-free source of funds with
which to exercise his private option to buy the controlling
interest in FUB; thus, claiming that the 72.2% of the outstanding
capital stock of FUB could only be purchased and transferred
through the exercise of his "personal and exclusive action option
to acquire the 144,000 shares" of the bank, Defendant Eduardo
M. Cojuangco, Jr. and PCA, x x x executed on May 26, 1975 a
purchase agreement which provides, among others, for the
payment to him in fully paid shares as compensation thereof
95,384 shares worth P1,444,000.00 with the further condition
that he shall manage and control the bank as Director and
President for a term of five (5) years renewable for another five
(5) years and to designate three (3) persons of his choice who
shall be elected as members of the Board of Directors of the
Bank;

(ii) to legitimize a posteriori his highly anomalous and irregular

use and diversion of government funds to advance his own
private and commercial interests, Defendant Eduardo Cojuangco,
Jr. caused the issuance by Defendant Ferdinand E. Marcos of PD
755 (a) declaring that the coconut levy funds shall not be
considered special and fiduciary and trust funds and do not form
part of the general funds of the National Government,
conveniently repealing for that purpose a series of previous
decrees, PDs 276 and 414, establishing the character of the
coconut levy funds as special, fiduciary, trust and governmental
funds; (b) confirming the agreement between Defendant
Eduardo Cojuangco, Jr. and PCA on the purchase of FUB by
incorporating by reference said private commercial agreement in
PD 755;

(iii)To further consolidate his hold on UCPB, Defendant Eduardo

Cojuangco, Jr. imposed as consideration and conditions for the
purchase that (a) he gets one out of every nine shares given to
PCA, and (b) he gets to manage and control UCPB as president
for a term of five (5) years renewable for another five (5) years;

(iv) To perpetuate his opportunity to deal with and make use of

the coconut levy funds x x x Cojuangco, Jr. caused the issuance
 by Defendant Ferdinand E. Marcos of an unconstitutional decree
(PD 1468) requiring the deposit of all coconut levy funds with
UCPB, interest free to the prejudice of the government.

(v) In gross violation of their fiduciary positions and in

contravention of the goal to create a bank for the coconut
farmers of the country, the capital stock of UCPB as of February
25, 1986 was actually held by the defendants, their lawyers,
factotum and business associates, thereby finally gaining control
of the UCPB by misusing the names and identities of the so-
called "more than one million coconut farmers."

14. The acts of Defendants, singly or collectively, and/or in unlawful

concert with one another, constitute gross abuse of official position
and authority, flagrant breach of public trust and fiduciary obligations,
brazen abuse of right and power, and unjust enrichment, violation of
the constitution and laws of the Republic of the Philippines, to the
grave and irreparable damage of Plaintiff and the Filipino people.28

In no uncertain terms, the Court has upheld the Sandiganbayans

assumption of jurisdiction over the subject matter of Civil Case Nos. 0033-A
and 0033-F.29 The Court wrote:

Judging from the allegations of the defendants illegal acts thereat made, it
is fairly obvious that both CC Nos. 0033-A and CC 0033-F partake, in the
context of EO Nos. 1, 2 and 14, series of 1986, the nature of ill-gotten
wealth suits. Both deal with the recovery of sequestered shares, property or
business enterprises claimed, as alleged in the corresponding basic
complaints, to be ill-gotten assets of President Marcos, his cronies and
nominees and acquired by taking undue advantage of relationships or
influence and/or through or as a result of improper use, conversion or
diversion of government funds or property. Recovery of these assets
determined as shall hereinafter be discussed as prima facie ill-gottenfalls
within the unquestionable jurisdiction of the Sandiganbayan.30

P.D. No. 1606, as amended by R.A. 7975 and E.O. No. 14, Series of 1986,
vests the Sandiganbayan with, among others, original jurisdiction over civil
and criminal cases instituted pursuant to and in connection with E.O. Nos. 1,
2, 14 and 14-A. Correlatively, the PCGG Rules and Regulations defines the
term "Ill-Gotten Wealth" as "any asset, property, business enterprise or
material possession of persons within the purview of E.O. Nos. 1 and 2,
acquired by them directly, or indirectly thru dummies, nominees, agents,
subordinates and/or business associates by any of the following means or
similar schemes":
 (1) Through misappropriation, conversion, misuse or malversation of
public funds or raids on the public treasury;

(2) x x x x

(3) By the illegal or fraudulent conveyance or disposition of assets

belonging to the government or any of its subdivisions, agencies or
instrumentalities or government-owned or controlled corporations;

(4) By obtaining, receiving or accepting directly or indirectly any

shares of stock, equity or any other form of interest or participation in
any business enterprise or undertaking;

(5) Through the establishment of agricultural, industrial or commercial

monopolies or other combination and/or by the issuance, promulgation
and/or implementation of decrees and orders intended to benefit
particular persons or special interests; and

(6) By taking undue advantage of official position, authority,

relationship or influence for personal gain or benefit. (Emphasis
supplied)

Section 2(a) of E.O. No. 1 charged the PCGG with the task of assisting the
President in "The recovery of all ill-gotten wealth accumulated by former
President Marcos, his immediate family, relatives, subordinates and close
associates including the takeover or sequestration of all business
enterprises and entities owned or controlled by them, during his
administration, directly or through nominees, by taking undue advantage of
their public office and/or using their powers, authority, influence,
connections or relationship." Complementing the aforesaid Section 2(a) is
Section 1 of E.O. No. 2 decreeing the freezing of all assets "in which the
Marcoses their close relatives, subordinates, business associates, dummies,
agents or nominees have any interest or participation."

The Republics averments in the amended complaints, particularly those

detailing the alleged wrongful acts of the defendants, sufficiently reveal that
the subject matter thereof comprises the recovery by the Government of ill-
gotten wealth acquired by then President Marcos, his cronies or their
associates and dummies through the unlawful, improper utilization or
diversion of coconut levy funds aided by P.D. No. 755 and other sister
decrees. President Marcos himself issued these decrees in a brazen bid to
legalize what amounts to private taking of the said public funds.

xxxx
There was no actual need for Republic, as plaintiff a quo, to adduce evidence
to show that the Sandiganbayan has jurisdiction over the subject matter of
the complaints as it leaned on the averments in the initiatory pleadings to
make visible the jurisdiction of the Sandiganbayan over the ill-gotten wealth
complaints. As previously discussed, a perusal of the allegations easily
reveals the sufficiency of the statement of matters disclosing the claim of the
government against the coco levy funds and the assets acquired directly or
indirectly through said funds as ill-gotten wealth. Moreover, the Court finds
no rule that directs the plaintiff to first prove the subject matter jurisdiction
of the court before which the complaint is filed. Rather, such burden falls on
the shoulders of defendant in the hearing of a motion to dismiss anchored on
said ground or a preliminary hearing thereon when such ground is alleged in
the answer.

xxxx

Lest it be overlooked, this Court has already decided that the sequestered
shares are prima facie ill-gotten wealth rendering the issue of the validity of
their sequestration and of the jurisdiction of the Sandiganbayan over the
case beyond doubt. In the case of COCOFED v. PCGG, We stated that:

It is of course not for this Court to pass upon the factual issues thus raised.
That function pertains to the Sandiganbayan in the first instance. For
purposes of this proceeding, all that the Court needs to determine is whether
or not there is prima facie justification for the sequestration ordered by the
PCGG. The Court is satisfied that there is. The cited incidents, given the
public character of the coconut levy funds, place petitioners COCOFED and
its leaders and officials, at least prima facie, squarely within the purview of
Executive Orders Nos. 1, 2 and 14, as construed and applied in BASECO, to
wit:

"1. that ill-gotten properties (were) amassed by the leaders and supporters
of the previous regime;

"a. more particularly, that (i) Ill-gotten wealth was accumulated by x x x

Marcos, his immediate family, relatives, subordinates and close associates, x
x x (and) business enterprises and entities (came to be) owned or controlled
by them, during x x x (the Marcos) administration, directly or through
nominees, by taking undue advantage of their public office and using their
powers, authority, influence, connections or relationships;

"b. otherwise stated, that there are assets and properties purportedly
pertaining to the Marcoses, their close relatives, subordinates, business
associates, dummies, agents or nominees which had been or were acquired
by them directly or indirectly, through or as a result of the improper or
illegal use of funds or properties owned by the Government x x x or any of
its branches, instrumentalities, enterprises, banks or financial institutions, or
by taking undue advantage of their office, authority, influence, connections
or relationship, resulting in their unjust enrichment x x x;

xxxx

2. The petitioners claim that the assets acquired with the coconut levy funds
are privately owned by the coconut farmers is founded on certain provisions
of law, to wit Sec. 7, RA 6260 and Sec. 5, Art. III, PD 1468 (Words in
bracket added; italics in the original).

xxxx

E.O. 1, 2, 14 and 14-A, it bears to stress, were issued precisely to effect the
recovery of ill-gotten assets amassed by the Marcoses, their associates,
subordinates and cronies, or through their nominees. Be that as it may, it
stands to reason that persons listed as associated with the Marcoses refer to
those in possession of such ill-gotten wealth but holding the same in behalf
of the actual, albeit undisclosed owner, to prevent discovery and
consequently recovery. Certainly, it is well-nigh inconceivable that ill-gotten
assets would be distributed to and left in the hands of individuals or entities
with obvious traceable connections to Mr. Marcos and his cronies. The Court
can take, as it has in fact taken, judicial notice of schemes and machinations
that have been put in place to keep ill-gotten assets under wraps. These
would include the setting up of layers after layers of shell or dummy, but
controlled, corporations31 or manipulated instruments calculated to confuse if
not altogether mislead would-be investigators from recovering wealth
deceitfully amassed at the expense of the people or simply the fruits thereof.
Transferring the illegal assets to third parties not readily perceived as Marcos
cronies would be another. So it was that in PCGG v. Pena, the Court,
describing the rule of Marcos as a "well entrenched plundering regime of
twenty years," noted the magnitude of the past regimes organized pillage
and the ingenuity of the plunderers and pillagers with the assistance of
experts and the best legal minds in the market.32

Prescinding from the foregoing premises, there can no longer be any serious
challenge as to the Sandiganbayans subject matter jurisdiction. And in
connection therewith, the Court wrote in COCOFED v. Republic, that the
instant petition shall be decided separately and should not be affected by the
January 24, 2012 Decision, "save for determinatively legal issues directly
addressed" therein.33 Thus:
We clarify that PSJ-A is subject of another petition for review interposed by
Eduardo Cojuangco, Jr., in G.R. No. 180705 entitled, Eduardo M. Cojuangco,
Jr. v. Republic of the Philippines, which shall be decided separately by this
Court. Said petition should accordingly not be affected by this Decision save
for determinatively legal issues directly addressed herein.34 (Emphasis Ours.)

We, therefore, reiterate our holding in COCOFED v. Republic respecting the

Sandiganbayans jurisdiction over the subject matter of Civil Case No. 0033-
A, including those matters whose adjudication We shall resolve in the
present case.

II

PRELIMINARILY, THE AGREEMENT BETWEEN THE PCA AND EDUARDO M.

COJUANGCO, JR. DATED MAY 25, 1975 CANNOT BE ACCORDED THE STATUS
OF A LAW FOR THE LACK OF THE REQUISITE PUBLICATION.

It will be recalled that Cojuangcos claim of ownership over the UCPB shares
is hinged on two contract documents the respective contents of which
formed part of and reproduced in their entirety in the aforecited Order35 of
the Sandiganbayan dated March 11, 2003. The first contract refers to the
agreement entered into by and between Pedro Cojuangco and his group, on
one hand, and Eduardo M. Cojuangco, Jr., on the other, bearing date "May
1975"36(hereinafter referred to as "PC-ECJ Agreement"), while the second
relates to the accord between the PCA and Eduardo M. Cojuangco, Jr. dated
May 25, 1975 (hereinafter referred to as "PCA-Cojuangco Agreement"). The
PC-ECJ Agreement allegedly contains, inter alia, Cojuangcos personal and
exclusive option to acquire the FUB ("UCPB") shares from Pedro and his
group. The PCA-Cojuangco Agreement shows PCAs acquisition of the said
option from Eduardo M. Cojuangco, Jr.

Section 1 of P.D. No. 755 incorporated, by reference, the "Agreement for the
Acquisition of a Commercial Bank for the Benefit of the Coconut Farmers"
executed by the PCA. Particularly, Section 1 states:

Section 1. Declaration of National Policy. It is hereby declared that the policy

of the State is to provide readily available credit facilities to the coconut
farmers at preferential rates; that this policy can be expeditiously and
efficiently realized by the implementation of the "Agreement for the
Acquisition of a Commercial Bank for the benefit of the Coconut Farmers"
executed by the Philippine Coconut Authority, the terms of which
"Agreement" are hereby incorporated by reference; and that the Philippine
Coconut Authority is hereby authorized to distribute, for free, the shares of
stock of the bank it acquired to the coconut farmers under such rules and
regulations it may promulgate. (Emphasis Ours.)

It bears to stress at this point that the PCA-Cojuangco Agreement referred

to above in Section 1 of P.D. 755 was not reproduced or attached as an
annex to the same law. And it is well-settled that laws must be published to
be valid. In fact, publication is an indispensable condition for the effectivity
of a law. Taada v. Tuvera37 said as much:

Publication of the law is indispensable in every case x x x.

xxxx

We note at this point the conclusive presumption that every person knows
the law, which of course presupposes that the law has been published if the
presumption is to have any legal justification at all. It is no less important to
remember that Section 6 of the Bill of Rights recognizes "the right of the
people to information on matters of public concern," and this certainly
applies to, among others, and indeed especially, the legislative enactments
of the government.

xxxx

We hold therefore that all statutes, including those of local application and
private laws, shall be published as a condition for their effectivity, which
shall begin fifteen days after publication unless a different effectivity date is
fixed by the legislature.

Covered by this rule are presidential decrees and executive orders

promulgated by the President in the exercise of legislative powers whenever
the same are validly delegated by the legislature, or, at present, directly
conferred by the Constitution. Administrative rules and regulations must also
be published if their purpose is to enforce or implement existing law
pursuant also to a valid delegation.38

We even went further in Taada to say that:

Laws must come out in the open in the clear light of the sun instead of
skulking in the shadows with their dark, deep secrets. Mysterious
pronouncements and rumored rules cannot be recognized as binding unless
their existence and contents are confirmed by a valid publication intended to
make full disclosure and give proper notice to the people. The furtive law is
like a scabbarded saber that cannot feint, parry or cut unless the naked
blade is drawn.39
The publication, as further held in Taada, must be of the full text of the law
since the purpose of publication is to inform the public of the contents of the
law. Mere referencing the number of the presidential decree, its title or
whereabouts and its supposed date of effectivity would not satisfy the
publication requirement.40

In this case, while it incorporated the PCA-Cojuangco Agreement by

reference, Section 1 of P.D. 755 did not in any way reproduce the exact
terms of the contract in the decree. Neither was acopy thereof attached to
the decree when published. We cannot, therefore, extend to the said

Agreement the status of a law. Consequently, We join the Sandiganbayan in

its holding that the PCA-Cojuangco Agreement shall be treated as an
ordinary transaction between agreeing minds to be governed by contract law
under the Civil Code.

III

THE PCA-COJUANGCO AGREEMENT IS A VALID CONTRACT FOR HAVING THE

REQUISITE CONSIDERATION.

In PSJ-A, the Sandiganbayan struck down the PCA-Cojuangco Agreement as

void for lack of consideration/cause as required under Article 1318,
paragraph 3 in relation to Article 1409, paragraph 3 of the Civil Code. The
Sandiganbayan stated:

In sum, the evidence on record relied upon by defendant Cojuangco negates

the presence of: (1) his claimed personal and exclusive option to buy the
137,866 FUB shares; and (2) any pecuniary advantage to the government of
the said option, which could compensate for generous payment to him by
PCA of valuable shares of stock, as stipulated in the May 25, 1975
Agreement between him and the PCA.41

On the other hand, the aforementioned provisions of the Civil Code state:

Art. 1318. There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;

(3) Cause of the obligation which is established. (Emphasis supplied)42

Art. 1409. The following contracts are inexistent and void from the
beginning:

xxxx

(3) Those whose cause or object did not exist at the time of the
transaction;43

The Sandiganbayan found and so tagged the alleged cause for the
agreement in question, i.e., Cojuangcos "personal and exclusive option to
acquire the Option Shares," as fictitious. A reading of the purchase
agreement between Cojuangco and PCA, so the Sandiganbayan ruled, would
show that Cojuangco was not the only seller; thus, the option was, as to
him, neither personal nor exclusive as he claimed it to be. Moreover, as the
Sandiganbayan deduced, that option was inexistent on the day of execution
of the PCA-Cojuangco Agreement as the Special Power of Attorney executed
by Cojuangco in favor of now Senator Edgardo J. Angara, for the latter to
sign the PC-ECJ Agreement, was dated May 25, 1975 while the PCA-
Cojuangco Agreement was also signed on May 25, 1975. Thus, the
Sandiganbayan believed that when the parties affixed their signatures on the
second Agreement, Cojuangcos option to purchase the FUB shares of stock
did not yet exist. The Sandiganbayan further ruled that there was no
justification in the second Agreement for the compensation of Cojuangco of
14,400 shares, which it viewed as exorbitant. Additionally, the
Sandiganbayan ruled that PCA could not validly enter, in behalf of
FUB/UCPB, into a veritable bank management contract with Cojuangco, PCA
having a personality separate and distinct from that of FUB. As such, the
Sandiganbayan concluded that the PCA-Cojuangco Agreement was null and
void. Correspondingly, the Sandiganbayan also ruled that the sequestered
FUB (UCPB) shares of stock in the name of Cojuangco are conclusively
owned by the Republic.

After a circumspect study, the Court finds as inconclusive the evidence relied
upon by Sandiganbayan to support its ruling that the PCA-Cojuangco
Agreement is devoid of sufficient consideration. We shall explain.

Rule 131, Section 3(r) of the Rules of Court states:

Sec. 3. Disputable presumptions.The following presumptions are

satisfactory if uncontradicted, but may be contradicted and overcome by
other evidence:

xxxx
(r) That there was a sufficient consideration for a contract;

The Court had the occasion to explain the reach of the above provision in
Surtida v. Rural Bank of Malinao (Albay), Inc.,44 to wit:

Under Section 3, Rule 131 of the Rules of Court, the following are disputable
presumptions: (1) private transactions have been fair and regular; (2) the
ordinary course of business has been followed; and (3) there was sufficient
consideration for a contract. A presumption may operate against an
adversary who has not introduced proof to rebut it. The effect of a legal
presumption upon a burden of proof is to create the necessity of presenting
evidence to meet the legal presumption or the prima facie case created
thereby, and which if no proof to the contrary is presented and offered, will
prevail. The burden of proof remains where it is, but by the presumption, the
one who has that burden is relieved for the time being from introducing
evidence in support of the averment, because the presumption stands in the
place of evidence unless rebutted.

The presumption that a contract has sufficient consideration cannot be

overthrown by the bare uncorroborated and self-serving assertion of
petitioners that it has no consideration. To overcome the presumption of
consideration, the alleged lack of consideration must be shown by
preponderance of evidence. Petitioners failed to discharge this burden x x x.
(Emphasis Ours.)

The assumption that ample consideration is present in a contract is further

elucidated in Pentacapital Investment Corporation v. Mahinay:45

Under Article 1354 of the Civil Code, it is presumed that consideration exists
and is lawful unless the debtor proves the contrary. Moreover, under Section
3, Rule 131 of the Rules of Court, the following are disputable presumptions:
(1) private transactions have been fair and regular; (2) the ordinary course
of business has been followed; and (3) there was sufficient consideration for
a contract. A presumption may operate against an adversary who has not
introduced proof to rebut it. The effect of a legal presumption upon a burden
of proof is to create the necessity of presenting evidence to meet the legal
presumption or the prima facie case created thereby, and which, if no proof
to the contrary is presented and offered, will prevail. The burden of proof
remains where it is, but by the presumption, the one who has that burden is
relieved for the time being from introducing evidence in support of the
averment, because the presumption stands in the place of evidence unless
rebutted.46 (Emphasis supplied.)
The rule then is that the party who stands to profit from a declaration of the
nullity of a contract on the ground of insufficiency of considerationwhich
would necessarily refer to one who asserts such nullityhas the burden of
overthrowing the presumption offered by the aforequoted Section 3(r).
Obviously then, the presumption contextually operates in favor of Cojuangco
and against the Republic, as plaintiff a quo, which then had the burden to
prove that indeed there was no sufficient consideration for the Second
Agreement. The Sandiganbayans stated observation, therefore, that based
on the wordings of the Second Agreement, Cojuangco had no personal and
exclusive option to purchase the FUB shares from Pedro Cojuangco had
really little to commend itself for acceptance. This, as opposed to the fact
that such sale and purchase agreement is memorialized in a notarized
document whereby both Eduardo Cojuangco, Jr. and Pedro Cojuangco
attested to the correctness of the provisions thereof, among which was that
Eduardo had such option to purchase. A notarized document, Lazaro v.
Agustin47 teaches, "generally carries the evidentiary weight conferred upon it
with respect to its due execution, and documents acknowledged before a
notary public have in their favor the disputable presumption of regularity."

In Samanilla v. Cajucom,48 the Court clarified that the presumption of a valid

consideration cannot be discarded on a simple claim of absence of
consideration, especially when the contract itself states that consideration
was given:

x x x This presumption appellants cannot overcome by a simple assertion of

lack of consideration. Especially may not the presumption be so lightly set
aside when the contract itself states that consideration was given, and the
same has been reduced into a public instrument will all due formalities and
solemnities as in this case. (Emphasis ours.)

A perusal of the PCA-Cojuangco Agreement disclosed an express statement

of consideration for the transaction:

NOW, THEREFORE, for and in consideration of the foregoing premises and

the other terms and conditions hereinafter contained, the parties hereby
declare and affirm that their principal contractual intent is (1) to ensure that
the coconut farmers own at least 60% of the outstanding capital stock of the
Bank, and (2) that the SELLER shall receive compensation for exercising his
personal and exclusive option to acquire the Option Shares, for transferring
such shares to the coconut farmers at the option price of P200 per share,
and for performing the management services required of him hereunder.

xxxx
4. As compensation for exercising his personal and exclusive option to
acquire the Option ShareApplying Samanilla to the case at bar, the express
and positive declaration by the parties of the presence of adequate
consideration in the contract makes conclusive the presumption of sufficient
consideration in the PCA Agreement. Moreover, the option to purchase
shares and management services for UCPB was already availed of by
petitioner Cojuangco for the benefit of the PCA. The exercise of such right
resulted in the execution of the PC-ECJ Agreement, which fact is not
disputed. The document itself is incontrovertible proof and hard evidence
that petitioner Cojuangco had the right to purchase the subject FUB (now
UCPB) shares. Res ipsa loquitur.

The Sandiganbayan, however, pointed to the perceived "lack of any

pecuniary value or advantage to the government of the said option, which
could compensate for the generous payment to him by PCA of valuable
shares of stock, as stipulated in the May 25, 1975 Agreement between him
and the PCA."49

Inadequacy of the consideration, however, does not render a contract void

under Article 1355 of the Civil Code:

Art. 1355. Except in cases specified by law, lesion or inadequacy of cause

shall not invalidate a contract, unless there has been fraud, mistake or
undue influence. (Emphasis supplied.)

Alsua-Betts v. Court of Appeals50 is instructive that lack of ample

consideration does not nullify the contract:

Inadequacy of consideration does not vitiate a contract unless it is proven

which in the case at bar was not, that there was fraud, mistake or undue
influence. (Article 1355, New Civil Code). We do not find the stipulated price
as so inadequate to shock the courts conscience, considering that the price
paid was much higher than the assessed value of the subject properties and
considering that the sales were effected by a father to her daughter in which
case filial love must be taken into account. (Emphasis supplied.)s and for
transferring such shares to the coconut farmers, as well as for performing
the management services required of him, SELLER shall receive equity in the
Bank amounting, in the aggregate, to 95,304 fully paid shares in accordance
with the procedure set forth in paragraph 6 below. (Emphasis supplied.)

Vales v. Villa51 elucidates why a bad transaction cannot serve as basis for
voiding a contract:
x x x Courts cannot follow one every step of his life and extricate him from
bad bargains, protect him from unwise investments, relieve him from one-
sided contracts, or annul the effects of foolish acts. x x x Men may do foolish
things, make ridiculous contracts, use miserable judgment, and lose money
by them indeed, all they have in the world; but not for that alone can the
law intervene and restore. There must be, in addition, a violation of law, the
commission of what the law knows as an actionable wrong, before the courts
are authorized to lay hold of the situation and remedy it. (Emphasis ours.)

While one may posit that the PCA-Cojuangco Agreement puts PCA and the
coconut farmers at a disadvantage, the facts do not make out a clear case of
violation of any law that will necessitate the recall of said contract. Indeed,
the anti-graft court has not put forward any specific stipulation therein that
is at war with any law, or the Constitution, for that matter. It is even clear
as day that none of the parties who entered into the two agreements with
petitioner Cojuangco contested nor sought the nullification of said
agreements, more particularly the PCA who is always provided legal advice
in said transactions by the Government corporate counsel, and a battery of
lawyers and presumably the COA auditor assigned to said agency. A
government agency, like the PCA, stoops down to level of an ordinary citizen
when it enters into a private transaction with private individuals. In this
setting, PCA is bound by the law on contracts and is bound to comply with
the terms of the PCA-Cojuangco Agreement which is the law between the
parties. With the silence of PCA not to challenge the validity of the PCA-
Cojuangco Agreement and the inability of government to demonstrate the
lack of ample consideration in the transaction, the Court is left with no other
choice but to uphold the validity of said agreements.

While consideration is usually in the form of money or property, it need not

be monetary. This is clear from Article 1350 which reads:

Art. 1350. In onerous contracts the cause is understood to be, for each
contracting party, the prestation or promise of a thing or service by the
other; in remuneratory ones, the service or benefit which is remunerated;
and in contracts of pure beneficence, the mere liability of the benefactor.
(Emphasis supplied.)

Gabriel v. Monte de Piedad y Caja de Ahorros52 tells us of the meaning of

consideration:

x x x A consideration, in the legal sense of the word, is some right, interest,

benefit, or advantage conferred upon the promisor, to which he is otherwise
not lawfully entitled, or any detriment, prejudice, loss, or disadvantage
suffered or undertaken by the promisee other than to such as he is at the
time of consent bound to suffer. (Emphasis Ours.)

The Court rules that the transfer of the subject UCPB shares is clearly
supported by valuable consideration.

To justify the nullification of the PCA-Cojuangco Agreement, the

Sandiganbayan centered on the alleged imaginary option claimed by
petitioner to buy the FUB shares from the Pedro Cojuangco group. It relied
on the phrase "in behalf of certain other buyers" mentioned in the PC-ECJ
Agreement as basis for the finding that petitioners option is neither personal
nor exclusive. The pertinent portion of said agreement reads:

EDUARDO COJUANGCO, JR., Filipino, of legal age and with residence at 136
9th Street corner Balete Drive, Quezon City, represented in this act by his
duly authorized attorney-in-fact, EDGARDO J. ANGARA, for and in his own
behalf and in behalf of certain other buyers, (hereinafter collectively called
the "BUYERS"); x x x.

A plain reading of the aforequoted description of petitioner as a party to the

PC-ECJ Agreement reveals that petitioner is not only the buyer. He is the
named buyer and there are other buyers who were unnamed. This is clear
from the word "BUYERS." If petitioner is the only buyer, then his description
as a party to the sale would only be "BUYER." It may be true that petitioner
intended to include other buyers. The fact remains, however, that the
identities of the unnamed buyers were not revealed up to the present day.
While one can conjure or speculate that PCA may be one of the buyers, the
fact that PCA entered into an agreement to purchase the FUB shares with
petitioner militates against such conjecture since there would be no need at
all to enter into the second agreement if PCA was already a buyer of the
shares in the first contract. It is only the parties to the PC-ECJ Agreement
that can plausibly shed light on the import of the phrase "certain other
buyers" but, unfortunately, petitioner was no longer allowed to testify on the
matter and was precluded from explaining the transactions because of the
motion for partial summary judgment and the eventual promulgation of the
July 11, 2003 Partial Summary Judgment.

Even if conceding for the sake of argument that PCA is one of the buyers of
the FUB shares in the PC-ECJ Agreement, still it does not necessarily follow
that petitioner had no option to buy said shares from the group of Pedro
Cojuangco. In fact, the very execution of the first agreement undeniably
shows that he had the rights or option to buy said shares from the Pedro
Cojuangco group. Otherwise, the PC-ECJ Agreement could not have been
consummated and enforced. The conclusion is incontestable that petitioner
indeed had the right or option to buy the FUB shares as buttressed by the
execution and enforcement of the very document itself.

We can opt to treat the PC-ECJ Agreement as a totally separate agreement

from the PCA-Cojuangco Agreement but it will not detract from the fact that
petitioner actually acquired the rights to the ownership of the FUB shares
from the Pedro Cojuangco group. The consequence is he can legally sell the
shares to PCA. In this scenario, he would resell the shares to PCA for a profit
and PCA would still end up paying a higher price for the FUB shares. The
"profit" that will accrue to petitioner may just be equal to the value of the
shares that were given to petitioner as commission. Still we can only
speculate as to the true intentions of the parties. Without any evidence
adduced on this issue, the Court will not venture on any unproven conclusion
or finding which should be avoided in judicial adjudication.

The anti-graft court also inferred from the date of execution of the special
power of attorney in favor of now Senator Edgardo J. Angara, which is May
25, 1975, that the PC-ECJ Agreement appears to have been executed on the
same day as the PCA-Cojuangco Agreement (dated May 25, 1975). The
coincidence on the dates casts "doubts as to the existence of defendant
Cojuangcos prior personal and exclusive option to the FUB shares."

The fact that the execution of the SPA and the PCA-Cojuangco Agreement
occurred sequentially on the same day cannot, without more, be the basis
for the conclusion as to the non-existence of the option of petitioner. Such
conjecture cannot prevail over the fact that without petitioner Cojuangco,
none of the two agreements in question would have been executed and
implemented and the FUB shares could not have been successfully conveyed
to PCA.

Again, only the parties can explain the reasons behind the execution of the
two agreements and the SPA on the same day. They were, however,
precluded from elucidating the reasons behind such occurrence. In the
absence of such illuminating proof, the proposition that the option does not
exist has no leg to stand on.

More importantly, the fact that the PC-ECJ Agreement was executed not
earlier than May 25, 1975 proves that petitioner Cojuangco had an option to
buy the FUB shares prior to that date. Again, it must be emphasized that
from its terms, the first Agreement did not create the option.It, however,
proved the exercise of the option by petitioner.

The execution of the PC-ECJ Agreement on the same day as the PCA-
Cojuangco Agreement more than satisfies paragraph 2 thereof which
requires petitioner to exercise his option to purchase the FUB shares as
promptly as practicable after, and not before, the execution of the second
agreement, thus:

2. As promptly as practicable after execution of this Agreement, the SELLER

shall exercise his option to acquire the Option Shares and SELLER shall
immediately thereafter deliver and turn over to the Escrow Agent such stock
certificates as are herein provided to be received from the existing
stockholders of the bank by virtue of the exercise on the aforementioned
option. The Escrow Agent shall thereupon issue its check in favor of the
SELLER covering the purchase price for the shares delivered. (Emphasis
supplied.)

The Sandiganbayan viewed the compensation of petitioner of 14,400 FUB

shares as exorbitant. In the absence of proof to the contrary and considering
the absence of any complaint of illegality or fraud from any of the
contracting parties, then the presumption that "private transactions have
been fair and regular"53 must apply.

Lastly, respondent interjects the thesis that PCA could not validly enter into
a bank management agreement with petitioner since PCA has a personality
separate and distinct from that of FUB. Evidently, it is PCA which has the
right to challenge the stipulations on the management contract as
unenforceable. However, PCA chose not to assail said stipulations and
instead even complied with and implemented its prestations contained in
said stipulations by installing petitioner as Chairman of UCPB. Thus, PCA has
waived and forfeited its right to nullify said stipulations and is now estopped
from questioning the same.

In view of the foregoing, the Court is left with no option but to uphold the
validity of the two agreements in question.

IV

COJUANGCO IS NOT ENTITLED TO THE UCPB SHARES WHICH WERE

BOUGHT WITH PUBLIC FUNDS AND HENCE, ARE PUBLIC PROPERTY.

The coconut levy funds were exacted for a

special public purpose. Consequently, any
use or transfer of the funds that directly
benefits private individuals should be
invalidated.
The issue of whether or not taxpayers money, or funds and property
acquired through the imposition of taxes may be used to benefit a private
individual is once again posed. Preliminarily, the instant case inquires
whether the coconut levy funds, and accordingly, the UCPB shares acquired
using the coconut levy funds are public funds. Indeed, the very same issue
took center stage, discussed and was directly addressed in COCOFED v.
Republic. And there is hardly any question about the subject funds public
and special character. The following excerpts from COCOFED v.
Republic,54 citing Republic v. COCOFED and related cases, settle once and for
all this core, determinative issue:

Indeed, We have hitherto discussed, the coconut levy was imposed in the
exercise of the States inherent power of taxation. As We wrote in Republic
v. COCOFED:

Indeed, coconut levy funds partake of the nature of taxes, which, in general,
are enforced proportional contributions from persons and properties, exacted
by the State by virtue of its sovereignty for the support of government and
for all public needs.

Based on its definition, a tax has three elements, namely: a) it is an

enforced proportional contribution from persons and properties; b) it is
imposed by the State by virtue of its sovereignty; and c) it is levied for the
support of the government. The coconut levy funds fall squarely into these
elements for the following reasons:

(a) They were generated by virtue of statutory enactments imposed on the

coconut farmers requiring the payment of prescribed amounts. Thus, PD No.
276, which created the (CCSF), mandated the following:

"a. A levy, initially, of P15.00 per 100 kilograms of copra resecada or its
equivalent in other coconut products, shall be imposed on every first sale, in
accordance with the mechanics established under RA 6260, effective at the
start of business hours on August 10, 1973.

"The proceeds from the levy shall be deposited with the Philippine National
Bank or any other government bank to the account of the Coconut
Consumers Stabilization Fund, as a separate trust fund which shall not form
part of the general fund of the government."

The coco levies were further clarified in amendatory laws, specifically PD No.
961 and PD No. 1468 in this wise:
"The Authority (PCA) is hereby empowered to impose and collect a levy, to
be known as the Coconut Consumers Stabilization Fund Levy, on every one
hundred kilos of copra resecada, or its equivalent delivered to, and/or
purchased by, copra exporters, oil millers, desiccators and other end-users
of copra or its equivalent in other coconut products. The levy shall be paid
by such copra exporters, oil millers, desiccators and other end-users of
copra or its equivalent in other coconut products under such rules and
regulations as the Authority may prescribe. Until otherwise prescribed by the
Authority, the current levy being collected shall be continued."

Like other tax measures, they were not voluntary payments or donations by
the people. They were enforced contributions exacted on pain of penal
sanctions, as provided under PD No. 276:

"3. Any person or firm who violates any provision of this Decree or the rules
and regulations promulgated thereunder, shall, in addition to penalties
already prescribed under existing administrative and special law, pay a fine
of not less than P2, 500 or more than P10,000, or suffer cancellation of
licenses to operate, or both, at the discretion of the Court."

Such penalties were later amended thus: .

(b) The coconut levies were imposed pursuant to the laws enacted by the
proper legislative authorities of the State. Indeed, the CCSF was collected
under PD No. 276, ."

(c) They were clearly imposed for a public purpose. There is absolutely no
question that they were collected to advance the governments avowed
policy of protecting the coconut industry.

This Court takes judicial notice of the fact that the coconut industry is one of
the great economic pillars of our nation, and coconuts and their byproducts
occupy a leading position among the countrys export products; .

Taxation is done not merely to raise revenues to support the government,

but also to provide means for the rehabilitation and the stabilization of a
threatened industry, which is so affected with public interest as to be within
the police power of the State .

Even if the money is allocated for a special purpose and raised by special
means, it is still public in character. In Cocofed v. PCGG, the Court
observed that certain agencies or enterprises "were organized and financed
with revenues derived from coconut levies imposed under a succession of
law of the late dictatorship with deposed Ferdinand Marcos and his cronies
as the suspected authors and chief beneficiaries of the resulting coconut
industry monopoly." The Court continued: ". It cannot be denied that the
coconut industry is one of the major industries supporting the national
economy. It is, therefore, the States concern to make it a strong and secure
source not only of the livelihood of a significant segment of the population,
but also of export earnings the sustained growth of which is one of the
imperatives of economic stability. (Emphasis Ours.)

The following parallel doctrinal lines from Pambansang Koalisyon ng mga

Samahang Magsasaka at Manggagawa sa Niyugan (PKSMMN) v. Executive
Secretary55 came next:

The Court was satisfied that the coco-levy funds were raised pursuant to law
to support a proper governmental purpose. They were raised with the use of
the police and taxing powers of the State for the benefit of the coconut
industry and its farmers in general. The COA reviewed the use of the funds.
The Bureau of Internal Revenue (BIR) treated them as public funds and the
very laws governing coconut levies recognize their public character.

The Court has also recently declared that the coco-levy funds are in the
nature of taxes and can only be used for public purpose. Taxes are enforced
proportional contributions from persons and property, levied by the State by
virtue of its sovereignty for the support of the government and for all its
public needs. Here, the coco-levy funds were imposed pursuant to law,
namely, R.A. 6260 and P.D. 276. The funds were collected and managed by
the PCA, an independent government corporation directly under the
President. And, as the respondent public officials pointed out, the pertinent
laws used the term levy, which means to tax, in describing the exaction.

Of course, unlike ordinary revenue laws, R.A. 6260 and P.D. 276 did not
raise money to boost the governments general funds but to provide means
for the rehabilitation and stabilization of a threatened industry, the coconut
industry, which is so affected with public interest as to be within the police
power of the State. The funds sought to support the coconut industry, one of
the main economic backbones of the country, and to secure economic
benefits for the coconut farmers and far workers. The subject laws are akin
to the sugar liens imposed by Sec. 7(b) of P.D. 388, and the oil price
stabilization funds under P.D. 1956, as amended by E.O. 137.

From the foregoing, it is at once apparent that any property acquired by

means of the coconut levy funds, such as the subject UCPB shares, should
be treated as public funds or public property, subject to the burdens and
restrictions attached by law to such property. COCOFED v. Republic, delved
into such limitations, thusly:
We have ruled time and again that taxes are imposed only for a public
purpose. "They cannot be used for purely private purposes or for the
exclusive benefit of private persons." When a law imposes taxes or levies
from the public, with the intent to give undue benefit or advantage to
private persons, or the promotion of private enterprises, that law cannot be
said to satisfy the requirement of public purpose. In Gaston v. Republic
Planters Bank, the petitioning sugar producers, sugarcane planters and
millers sought the distribution of the shares of stock of the Republic Planters
Bank (RPB), alleging that they are the true beneficial owners thereof. In that
case, the investment, i.e., the purchase of RPB, was funded by the deduction
of PhP 1.00 per picul from the sugar proceeds of the sugar producers
pursuant to P.D. No. 388. In ruling against the petitioners, the Court held
that to rule in their favor would contravene the general principle that
revenues received from the imposition of taxes or levies "cannot be used for
purely private purposes or for the exclusive benefit of private persons." The
Court amply reasoned that the sugar stabilization fund is to "be utilized for
the benefit of the entire sugar industry, and all its components, stabilization
of the domestic market including foreign market, the industry being of vital
importance to the countrys economy and to national interest."

Similarly in this case, the coconut levy funds were sourced from forced
exactions decreed under P.D. Nos. 232, 276 and 582, among others, with
the end-goal of developing the entire coconut industry. Clearly, to hold
therefore, even by law, that the revenues received from the imposition of
the coconut levies be used purely for private purposes to be owned by
private individuals in their private capacity and for their benefit, would
contravene the rationale behind the imposition of taxes or levies.

Needless to stress, courts do not, as they cannot, allow by judicial fiat the
conversion of special funds into a private fund for the benefit of private
individuals. In the same vein, We cannot subscribe to the idea of what
appears to be an indirect if not exactly direct conversion of special funds
into private funds, i.e., by using special funds to purchase shares of stocks,
which in turn would be distributed for free to private individuals. Even if
these private individuals belong to, or are a part of the coconut industry, the
free distribution of shares of stocks purchased with special public funds to
them, nevertheless cannot be justified. The ratio in Gaston, as articulated
below, applies mutatis mutandis to this case:

The stabilization fees in question are levied by the State for a special
purpose that of "financing the growth and development of the sugar
industry and all its components, stabilization of the domestic market
including the foreign market." The fact that the State has taken possession
of moneys pursuant to law is sufficient to constitute them as state funds
even though they are held for a special purpose.

That the fees were collected from sugar producers etc., and that the funds
were channeled to the purchase of shares of stock in respondent Bank do
not convert the funds into a trust fund for their benefit nor make them the
beneficial owners of the shares so purchased. It is but rational that the fees
be collected from them since it is also they who are benefited from the
expenditure of the funds derived from it. .56

In this case, the coconut levy funds were being exacted from copra
exporters, oil millers, desiccators and other end-users of copra or its
equivalent in other coconut products.57 Likewise so, the funds here were
channeled to the purchase of the shares of stock in UCPB. Drawing a clear
parallelism between Gaston and this case, the fact that the coconut levy
funds were collected from the persons or entities in the coconut industry,
among others, does not and cannot entitle them to be beneficial owners of
the subject funds or more bluntly, owners thereof in their private capacity.
Parenthetically, the said private individuals cannot own the UCPB shares of
stocks so purchased using the said special funds of the
government.58 (Emphasis Ours.)

As the coconut levy funds partake of the nature of taxes and can only be
used for public purpose, and importantly, for the purpose for which it was
exacted, i.e., the development, rehabilitation and stabilization of the coconut
industry, they cannot be used to benefitwhether directly or indirectly
private individuals, be it by way of a commission, or as the subject
Agreement interestingly words it, compensation. Consequently, Cojuangco
cannot stand to benefit by receiving, in his private capacity, 7.22% of the
FUB shares without violating the constitutional caveat that public funds can
only be used for public purpose. Accordingly, the 7.22% FUB (UCPB) shares
that were given to Cojuangco shall be returned to the Government, to be
used "only for the benefit of all coconut farmers and for the development of
the coconut industry."59

The ensuing are the underlying rationale for declaring, as unconstitutional,

provisions that convert public property into private funds to be used
ultimately for personal benefit:

not only were the laws unconstitutional for decreeing the distribution of
the shares of stock for free to the coconut farmers and therefore negating
the public purposed declared by P.D. No. 276, i.e., to stabilize the price of
edible oil and to protect the coconut industry. They likewise reclassified the
coconut levy fund as private fund, to be owned by private individuals in their
private capacities, contrary to the original purpose for the creation of such
fund. To compound the situation, the offending provisions effectively
removed the coconut levy fund away from the cavil of public funds which
normally can be paid out only pursuant to an appropriation made by law.
The conversion of public funds into private assets was illegally allowed, in
fact mandated, by these provisions. Clearly therefore, the pertinent
provisions of P.D. Nos. 755, 961 and 1468 are unconstitutional for violating
Article VI, Section 29 (3) of the Constitution. In this context, the distribution
by PCA of the UCPB shares purchased by means of the coconut levy fund a
special fund of the government to the coconut farmers is, therefore,
void.60

It is precisely for the foregoing that impels the Court to strike down as
unconstitutional the provisions of the PCA-Cojuangco Agreement that allow
petitioner Cojuangco to personally and exclusively own public funds or
property, the disbursement of which We so greatly protect if only to give
light and meaning to the mandates of the Constitution.

As heretofore amply discussed, taxes are imposed only for a public

purpose.61 They must, therefore, be used for the benefit of the public and
not for the exclusive profit or gain of private persons.62 Otherwise, grave
injustice is inflicted not only upon the Government but most especially upon
the citizenrythe taxpayersto whom We owe a great deal of
accountability.

In this case, out of the 72.2% FUB (now UCPB) shares of stocks PCA
purchased using the coconut levy funds, the May 25, 1975 Agreement
between the PCA and Cojuangco provided for the transfer to the latter, by
way of compensation, of 10% of the shares subject of the agreement, or a
total of 7.22% fully paid shares. In sum, Cojuangco received public assets
in the form of FUB (UCPB) shares with a value then of ten million eight
hundred eighty-six thousand pesos (PhP 10,886,000) in 1975, paid by
coconut levy funds. In effect, Cojuangco received the aforementioned asset
as a result of the PCA-Cojuangco Agreement, and exclusively benefited
himself by owning property acquired using solely public funds. Cojuangco,
no less, admitted that the PCA paid, out of the CCSF, the entire acquisition
price for the 72.2% option shares.63 This is in clear violation of the
prohibition, which the Court seeks to uphold.1wphi1

We, therefore, affirm, on this ground, the decision of the Sandiganbayan

nullifying the shares of stock transfer to Cojuangco. Accordingly, the UCPB
shares of stock representing the 7.22% fully paid shares subject of the
instant petition, with all dividends declared, paid or issued thereon, as well
as any increments thereto arising from, but not limited to, the exercise of
pre-emptive rights, shall be reconveyed to the Government of the Republic
of the Philippines, which as We previously clarified, shall "be used only for
the benefit of all coconut farmers and for the development of the coconut
industry."64

But apart from the stipulation in the PCA-Cojuangco Agreement, more

specifically paragraph 4 in relation to paragraph 6 thereof, providing for the
transfer to Cojuangco for the UCPB shares adverted to immediately above,
other provisions are valid and shall be enforced, or shall be respected, if the
corresponding prestation had already been performed. Invalid stipulations
that are independent of, and divisible from, the rest of the agreement and
which can easily be separated therefrom without doing violence to the
manifest intention of the contracting minds do not nullify the entire
contract.65

WHEREFORE, Part C of the appealed Partial Summary Judgment in

Sandiganbayan Civil Case No. 0033-A is AFFIRMED with modification. As
MODIFIED, the dispositive portion in Part C of the Sandiganbayans Partial
Summary Judgment in Civil Case No. 0033-A, shall read as follows:

C. Re: MOTION FOR PARTIAL SUMMARY JUDGMENT (RE: EDUARDO M.

COJUANGCO, JR.) dated September 18, 2002 filed by Plaintiff.

1. Sec. 1 of P.D. No. 755 did not validate the Agreement between PCA
and defendant Eduardo M. Cojuangco, Jr. dated May 25, 1975 nor did
it give the Agreement the binding force of a law because of the non-
publication of the said Agreement.

2. The Agreement between PCA and defendant Eduardo M. Cojuangco,

Jr. dated May 25, 1975 is a valid contract for having the requisite
consideration under Article 1318 of the Civil Code.

3. The transfer by PCA to defendant Eduardo M. Cojuangco, Jr. of

14,400 shares of stock of FUB (later UCPB) from the "Option Shares"
and the additional FUB shares subscribed and paid by PCA, consisting
of

a. Fifteen Thousand Eight Hundred Eighty-Four (15,884) shares

out of the authorized but unissued shares of the bank,
subscribed and paid by PCA;

b. Sixty Four Thousand Nine Hundred Eighty (64,980) shares of

the increased capital stock subscribed and paid by PCA; and
 c. Stock dividends declared pursuant to paragraph 5 and
paragraph 11 (iv) (d) of the PCA-Cojuangco Agreement dated
May 25, 1975. or the so-called "Cojuangco-UCPB shares" is
declared unconstitutional, hence null and void.1wphi1

4. The above-mentioned shares of stock of the FUB/UCPB transferred

to defendant Cojuangco are hereby declared conclusively owned by the
Republic of the Philippines to be used only for the benefit of all coconut
farmers and for the development of the coconut industry, and ordered
reconveyed to the Government.

5. The UCPB shares of stock of the alleged fronts, nominees and

dummies of defendant Eduardo M. Cojuangco, Jr. which form part of
the 72.2% shares of the FUB/UCPB paid for by the PCA with public
funds later charged to the coconut levy funds, particularly the CCSF,
belong to the plaintiff Republic of the Philippines as their true and
beneficial owner.

Accordingly, the instant petition is hereby DENIED.

Costs against petitioner Cojuangco.

SO ORDERED.

G.R. No. 166715 August 14, 2008

ABAKADA GURO PARTY LIST (formerly AASJS)1 OFFICERS/MEMBERS

SAMSON S. ALCANTARA, ED VINCENT S. ALBANO, ROMEO R. ROBISO,
RENE B. GOROSPE and EDWIN R. SANDOVAL, petitioners,
vs.
HON. CESAR V. PURISIMA, in his capacity as Secretary of Finance,
HON. GUILLERMO L. PARAYNO, JR., in his capacity as Commissioner
of the Bureau of Internal Revenue, and HON. ALBERTO D. LINA, in
his Capacity as Commissioner of Bureau of Customs, respondents.

DECISION

CORONA, J.:

This petition for prohibition1 seeks to prevent respondents from

implementing and enforcing Republic Act (RA) 93352 (Attrition Act of 2005).

RA 9335 was enacted to optimize the revenue-generation capability and

collection of the Bureau of Internal Revenue (BIR) and the Bureau of
Customs (BOC). The law intends to encourage BIR and BOC officials and
employees to exceed their revenue targets by providing a system of rewards
and sanctions through the creation of a Rewards and Incentives Fund (Fund)
and a Revenue Performance Evaluation Board (Board).3 It covers all officials
and employees of the BIR and the BOC with at least six months of service,
regardless of employment status.4

The Fund is sourced from the collection of the BIR and the BOC in excess of
their revenue targets for the year, as determined by the Development
Budget and Coordinating Committee (DBCC). Any incentive or reward is
taken from the fund and allocated to the BIR and the BOC in proportion to
their contribution in the excess collection of the targeted amount of tax
revenue.5

The Boards in the BIR and the BOC are composed of the Secretary of the
Department of Finance (DOF) or his/her Undersecretary, the Secretary of
the Department of Budget and Management (DBM) or his/her
Undersecretary, the Director General of the National Economic Development
Authority (NEDA) or his/her Deputy Director General, the Commissioners of
the BIR and the BOC or their Deputy Commissioners, two representatives
from the rank-and-file employees and a representative from the officials
nominated by their recognized organization.6

Each Board has the duty to (1) prescribe the rules and guidelines for the
allocation, distribution and release of the Fund; (2) set criteria and
procedures for removing from the service officials and employees whose
revenue collection falls short of the target; (3) terminate personnel in
accordance with the criteria adopted by the Board; (4) prescribe a system
for performance evaluation; (5) perform other functions, including the
issuance of rules and regulations and (6) submit an annual report to
Congress.7

The DOF, DBM, NEDA, BIR, BOC and the Civil Service Commission (CSC)
were tasked to promulgate and issue the implementing rules and regulations
of RA 9335,8 to be approved by a Joint Congressional Oversight Committee
created for such purpose.9

Petitioners, invoking their right as taxpayers filed this petition challenging

the constitutionality of RA 9335, a tax reform legislation. They contend that,
by establishing a system of rewards and incentives, the law "transform[s]
the officials and employees of the BIR and the BOC into mercenaries and
bounty hunters" as they will do their best only in consideration of such
rewards. Thus, the system of rewards and incentives invites corruption and
undermines the constitutionally mandated duty of these officials and
employees to serve the people with utmost responsibility, integrity, loyalty
and efficiency.

Petitioners also claim that limiting the scope of the system of rewards and
incentives only to officials and employees of the BIR and the BOC violates
the constitutional guarantee of equal protection. There is no valid basis for
classification or distinction as to why such a system should not apply to
officials and employees of all other government agencies.

In addition, petitioners assert that the law unduly delegates the power to fix
revenue targets to the President as it lacks a sufficient standard on that
matter. While Section 7(b) and (c) of RA 9335 provides that BIR and BOC
officials may be dismissed from the service if their revenue collections fall
short of the target by at least 7.5%, the law does not, however, fix the
revenue targets to be achieved. Instead, the fixing of revenue targets has
been delegated to the President without sufficient standards. It will therefore
be easy for the President to fix an unrealistic and unattainable target in
order to dismiss BIR or BOC personnel.

Finally, petitioners assail the creation of a congressional oversight committee

on the ground that it violates the doctrine of separation of powers. While the
legislative function is deemed accomplished and completed upon the
enactment and approval of the law, the creation of the congressional
oversight committee permits legislative participation in the implementation
and enforcement of the law.

In their comment, respondents, through the Office of the Solicitor General,

question the petition for being premature as there is no actual case or
controversy yet. Petitioners have not asserted any right or claim that will
necessitate the exercise of this Courts jurisdiction. Nevertheless,
respondents acknowledge that public policy requires the resolution of the
constitutional issues involved in this case. They assert that the allegation
that the reward system will breed mercenaries is mere speculation and does
not suffice to invalidate the law. Seen in conjunction with the declared
objective of RA 9335, the law validly classifies the BIR and the BOC because
the functions they perform are distinct from those of the other government
agencies and instrumentalities. Moreover, the law provides a sufficient
standard that will guide the executive in the implementation of its
provisions. Lastly, the creation of the congressional oversight committee
under the law enhances, rather than violates, separation of powers. It
ensures the fulfillment of the legislative policy and serves as a check to any
over-accumulation of power on the part of the executive and the
implementing agencies.
After a careful consideration of the conflicting contentions of the parties, the
Court finds that petitioners have failed to overcome the presumption of
constitutionality in favor of RA 9335, except as shall hereafter be discussed.

Actual Case And Ripeness

An actual case or controversy involves a conflict of legal rights, an assertion

of opposite legal claims susceptible of judicial adjudication.10 A closely
related requirement is ripeness, that is, the question must be ripe for
adjudication. And a constitutional question is ripe for adjudication when the
governmental act being challenged has a direct adverse effect on the
individual challenging it.11Thus, to be ripe for judicial adjudication, the
petitioner must show a personal stake in the outcome of the case or an
injury to himself that can be redressed by a favorable decision of the
Court.12

In this case, aside from the general claim that the dispute has ripened into a
judicial controversy by the mere enactment of the law even without any
further overt act,13 petitioners fail either to assert any specific and concrete
legal claim or to demonstrate any direct adverse effect of the law on them.
They are unable to show a personal stake in the outcome of this case or an
injury to themselves. On this account, their petition is procedurally infirm.

This notwithstanding, public interest requires the resolution of the

constitutional issues raised by petitioners. The grave nature of their
allegations tends to cast a cloud on the presumption of constitutionality in
favor of the law. And where an action of the legislative branch is alleged to
have infringed the Constitution, it becomes not only the right but in fact the
duty of the judiciary to settle the dispute.14

Accountability of
Public Officers

Section 1, Article 11 of the Constitution states:

Sec. 1. Public office is a public trust. Public officers and employees

must at all times be accountable to the people, serve them with
utmost responsibility, integrity, loyalty, and efficiency, act with
patriotism, and justice, and lead modest lives.

Public office is a public trust. It must be discharged by its holder not for his
own personal gain but for the benefit of the public for whom he holds it in
trust. By demanding accountability and service with responsibility, integrity,
loyalty, efficiency, patriotism and justice, all government officials and
employees have the duty to be responsive to the needs of the people they
are called upon to serve.

Public officers enjoy the presumption of regularity in the performance of

their duties. This presumption necessarily obtains in favor of BIR and BOC
officials and employees. RA 9335 operates on the basis thereof and
reinforces it by providing a system of rewards and sanctions for the purpose
of encouraging the officials and employees of the BIR and the BOC to exceed
their revenue targets and optimize their revenue-generation capability and
collection.15

The presumption is disputable but proof to the contrary is required to rebut

it. It cannot be overturned by mere conjecture or denied in advance (as
petitioners would have the Court do) specially in this case where it is an
underlying principle to advance a declared public policy.

Petitioners claim that the implementation of RA 9335 will turn BIR and BOC
officials and employees into "bounty hunters and mercenaries" is not only
without any factual and legal basis; it is also purely speculative.

A law enacted by Congress enjoys the strong presumption of

constitutionality. To justify its nullification, there must be a clear and
unequivocal breach of the Constitution, not a doubtful and equivocal
one.16 To invalidate RA 9335 based on petitioners baseless supposition is an
affront to the wisdom not only of the legislature that passed it but also of
the executive which approved it.

Public service is its own reward. Nevertheless, public officers may by law be
rewarded for exemplary and exceptional performance. A system of
incentives for exceeding the set expectations of a public office is not
anathema to the concept of public accountability. In fact, it recognizes and
reinforces dedication to duty, industry, efficiency and loyalty to public
service of deserving government personnel.

In United States v. Matthews,17 the U.S. Supreme Court validated a law

which awards to officers of the customs as well as other parties an amount
not exceeding one-half of the net proceeds of forfeitures in violation of the
laws against smuggling. Citing Dorsheimer v. United States,18 the U.S.
Supreme Court said:

The offer of a portion of such penalties to the collectors is to stimulate

and reward their zeal and industry in detecting fraudulent attempts to
evade payment of duties and taxes.
In the same vein, employees of the BIR and the BOC may by law be entitled
to a reward when, as a consequence of their zeal in the enforcement of tax
and customs laws, they exceed their revenue targets. In addition, RA 9335
establishes safeguards to ensure that the reward will not be claimed if it will
be either the fruit of "bounty hunting or mercenary activity" or the product
of the irregular performance of official duties. One of these precautionary
measures is embodied in Section 8 of the law:

SEC. 8. Liability of Officials, Examiners and Employees of the BIR and

the BOC. The officials, examiners, and employees of the [BIR] and
the [BOC] who violate this Act or who are guilty of negligence, abuses
or acts of malfeasance or misfeasance or fail to exercise extraordinary
diligence in the performance of their duties shall be held liable for any
loss or injury suffered by any business establishment or taxpayer as a
result of such violation, negligence, abuse, malfeasance, misfeasance
or failure to exercise extraordinary diligence.

Equal Protection

Equality guaranteed under the equal protection clause is equality under the
same conditions and among persons similarly situated; it is equality among
equals, not similarity of treatment of persons who are classified based on
substantial differences in relation to the object to be accomplished.19When
things or persons are different in fact or circumstance, they may be treated
in law differently. In Victoriano v. Elizalde Rope Workers Union,20 this Court
declared:

The guaranty of equal protection of the laws is not a guaranty of

equality in the application of the laws upon all citizens of the [S]tate.
It is not, therefore, a requirement, in order to avoid the constitutional
prohibition against inequality, that every man, woman and child should
be affected alike by a statute. Equality of operation of statutes does
not mean indiscriminate operation on persons merely as such, but on
persons according to the circumstances surrounding them. It
guarantees equality, not identity of rights. The Constitution does
not require that things which are different in fact be treated in
law as though they were the same. The equal protection clause
does not forbid discrimination as to things that are different. It
does not prohibit legislation which is limited either in the
object to which it is directed or by the territory within which it is to
operate.

The equal protection of the laws clause of the Constitution allows

classification. Classification in law, as in the other departments of
 knowledge or practice, is the grouping of things in speculation or
practice because they agree with one another in certain particulars. A
law is not invalid because of simple inequality. The very idea of
classification is that of inequality, so that it goes without saying that
the mere fact of inequality in no manner determines the matter of
constitutionality. All that is required of a valid classification is
that it be reasonable, which means that the classification
should be based on substantial distinctions which make for real
differences, that it must be germane to the purpose of the law;
that it must not be limited to existing conditions only; and that
it must apply equally to each member of the class. This Court has
held that the standard is satisfied if the classification or
distinction is based on a reasonable foundation or rational
basis and is not palpably arbitrary.

In the exercise of its power to make classifications for the purpose of

enacting laws over matters within its jurisdiction, the state is
recognized as enjoying a wide range of discretion. It is not necessary
that the classification be based on scientific or marked differences of
things or in their relation. Neither is it necessary that the classification
be made with mathematical nicety. Hence, legislative classification
may in many cases properly rest on narrow distinctions, for the equal
protection guaranty does not preclude the legislature from recognizing
degrees of evil or harm, and legislation is addressed to evils as they
may appear.21 (emphasis supplied)

The equal protection clause recognizes a valid classification, that is, a

classification that has a reasonable foundation or rational basis and not
arbitrary.22 With respect to RA 9335, its expressed public policy is the
optimization of the revenue-generation capability and collection of the BIR
and the BOC.23 Since the subject of the law is the revenue- generation
capability and collection of the BIR and the BOC, the incentives and/or
sanctions provided in the law should logically pertain to the said agencies.
Moreover, the law concerns only the BIR and the BOC because they have the
common distinct primary function of generating revenues for the national
government through the collection of taxes, customs duties, fees and
charges.

The BIR performs the following functions:

Sec. 18. The Bureau of Internal Revenue. The Bureau of Internal

Revenue, which shall be headed by and subject to the supervision and
control of the Commissioner of Internal Revenue, who shall be
 appointed by the President upon the recommendation of the Secretary
[of the DOF], shall have the following functions:

(1) Assess and collect all taxes, fees and charges and account
for all revenues collected;

(2) Exercise duly delegated police powers for the proper performance
of its functions and duties;

(3) Prevent and prosecute tax evasions and all other illegal economic
activities;

(4) Exercise supervision and control over its constituent and

subordinate units; and

(5) Perform such other functions as may be provided by law.24

xxx xxx xxx (emphasis supplied)

On the other hand, the BOC has the following functions:

Sec. 23. The Bureau of Customs. The Bureau of Customs which shall
be headed and subject to the management and control of the
Commissioner of Customs, who shall be appointed by the President
upon the recommendation of the Secretary[of the DOF] and
hereinafter referred to as Commissioner, shall have the following
functions:

(1) Collect custom duties, taxes and the corresponding fees,

charges and penalties;

(2) Account for all customs revenues collected;

(3) Exercise police authority for the enforcement of tariff and customs
laws;

(4) Prevent and suppress smuggling, pilferage and all other economic
frauds within all ports of entry;

(5) Supervise and control exports, imports, foreign mails and the
clearance of vessels and aircrafts in all ports of entry;

(6) Administer all legal requirements that are appropriate;

 (7) Prevent and prosecute smuggling and other illegal activities in all
ports under its jurisdiction;

(8) Exercise supervision and control over its constituent units;

(9) Perform such other functions as may be provided by law.25

xxx xxx xxx (emphasis supplied)

Both the BIR and the BOC are bureaus under the DOF. They principally
perform the special function of being the instrumentalities through which the
State exercises one of its great inherent functions taxation. Indubitably,
such substantial distinction is germane and intimately related to the purpose
of the law. Hence, the classification and treatment accorded to the BIR and
the BOC under RA 9335 fully satisfy the demands of equal protection.

Undue Delegation

Two tests determine the validity of delegation of legislative power: (1) the
completeness test and (2) the sufficient standard test. A law is complete
when it sets forth therein the policy to be executed, carried out or
implemented by the delegate.26 It lays down a sufficient standard when it
provides adequate guidelines or limitations in the law to map out the
boundaries of the delegates authority and prevent the delegation from
running riot.27 To be sufficient, the standard must specify the limits of the
delegates authority, announce the legislative policy and identify the
conditions under which it is to be implemented.28

RA 9335 adequately states the policy and standards to guide the President in
fixing revenue targets and the implementing agencies in carrying out the
provisions of the law. Section 2 spells out the policy of the law:

SEC. 2. Declaration of Policy. It is the policy of the State to optimize

the revenue-generation capability and collection of the Bureau of
Internal Revenue (BIR) and the Bureau of Customs (BOC) by providing
for a system of rewards and sanctions through the creation of a
Rewards and Incentives Fund and a Revenue Performance Evaluation
Board in the above agencies for the purpose of encouraging their
officials and employees to exceed their revenue targets.

Section 4 "canalized within banks that keep it from overflowing"29 the

delegated power to the President to fix revenue targets:
 SEC. 4. Rewards and Incentives Fund. A Rewards and Incentives
Fund, hereinafter referred to as the Fund, is hereby created, to be
sourced from the collection of the BIR and the BOC in excess of their
respective revenue targets of the year, as determined by the
Development Budget and Coordinating Committee (DBCC), in
the following percentages:

Excess of Collection of Percent (%) of the Excess

the Excess the Revenue Collection to Accrue to the Fund
Targets
30% or below 15%
More than 30% 15% of the first 30% plus 20%
of the remaining excess

The Fund shall be deemed automatically appropriated the year

immediately following the year when the revenue collection target was
exceeded and shall be released on the same fiscal year.

Revenue targets shall refer to the original estimated revenue

collection expected of the BIR and the BOC for a given fiscal
year as stated in the Budget of Expenditures and Sources of
Financing (BESF) submitted by the President to Congress. The
BIR and the BOC shall submit to the DBCC the distribution of the
agencies revenue targets as allocated among its revenue districts in
the case of the BIR, and the collection districts in the case of the BOC.

xxx xxx xxx (emphasis supplied)

Revenue targets are based on the original estimated revenue collection

expected respectively of the BIR and the BOC for a given fiscal year as
approved by the DBCC and stated in the BESF submitted by the President to
Congress.30 Thus, the determination of revenue targets does not rest solely
on the President as it also undergoes the scrutiny of the DBCC.

On the other hand, Section 7 specifies the limits of the Boards authority and
identifies the conditions under which officials and employees whose revenue
collection falls short of the target by at least 7.5% may be removed from the
service:

SEC. 7. Powers and Functions of the Board. The Board in the agency
shall have the following powers and functions:

xxx xxx xxx

 (b) To set the criteria and procedures for removing from service
officials and employees whose revenue collection falls short of
the target by at least seven and a half percent (7.5%), with
due consideration of all relevant factors affecting the level of
collection as provided in the rules and regulations promulgated under
this Act, subject to civil service laws, rules and regulations and
compliance with substantive and procedural due process:
Provided, That the following exemptions shall apply:

1. Where the district or area of responsibility is newly-created,

not exceeding two years in operation, as has no historical record
of collection performance that can be used as basis for
evaluation; and

2. Where the revenue or customs official or employee is a recent

transferee in the middle of the period under consideration unless
the transfer was due to nonperformance of revenue targets or
potential nonperformance of revenue targets: Provided,
however, That when the district or area of responsibility covered
by revenue or customs officials or employees has suffered from
economic difficulties brought about by natural calamities or force
majeure or economic causes as may be determined by the
Board, termination shall be considered only after careful and
proper review by the Board.

(c) To terminate personnel in accordance with the criteria adopted in

the preceding paragraph: Provided, That such decision shall be
immediately executory: Provided, further, That the application of
the criteria for the separation of an official or employee from
service under this Act shall be without prejudice to the
application of other relevant laws on accountability of public
officers and employees, such as the Code of Conduct and
Ethical Standards of Public Officers and Employees and the
Anti-Graft and Corrupt Practices Act;

xxx xxx xxx (emphasis supplied)

Clearly, RA 9335 in no way violates the security of tenure of officials and

employees of the BIR and the BOC. The guarantee of security of tenure only
means that an employee cannot be dismissed from the service for causes
other than those provided by law and only after due process is accorded the
employee.31 In the case of RA 9335, it lays down a reasonable yardstick for
removal (when the revenue collection falls short of the target by at least
7.5%) with due consideration of all relevant factors affecting the level of
collection. This standard is analogous to inefficiency and incompetence in the
performance of official duties, a ground for disciplinary action under civil
service laws.32 The action for removal is also subject to civil service laws,
rules and regulations and compliance with substantive and procedural due
process.

At any rate, this Court has recognized the following as sufficient standards:
"public interest," "justice and equity," "public convenience and welfare" and
"simplicity, economy and welfare."33 In this case, the declared policy of
optimization of the revenue-generation capability and collection of the BIR
and the BOC is infused with public interest.

Separation Of Powers

Section 12 of RA 9335 provides:

SEC. 12. Joint Congressional Oversight Committee. There is hereby

created a Joint Congressional Oversight Committee composed of seven
Members from the Senate and seven Members from the House of
Representatives. The Members from the Senate shall be appointed by
the Senate President, with at least two senators representing the
minority. The Members from the House of Representatives shall be
appointed by the Speaker with at least two members representing the
minority. After the Oversight Committee will have approved the
implementing rules and regulations (IRR) it shall thereafter
become functus officio and therefore cease to exist.

The Joint Congressional Oversight Committee in RA 9335 was created for the
purpose of approving the implementing rules and regulations (IRR)
formulated by the DOF, DBM, NEDA, BIR, BOC and CSC. On May 22, 2006, it
approved the said IRR. From then on, it became functus officio and ceased
to exist. Hence, the issue of its alleged encroachment on the executive
function of implementing and enforcing the law may be considered moot and
academic.

This notwithstanding, this might be as good a time as any for the Court to
confront the issue of the constitutionality of the Joint Congressional
Oversight Committee created under RA 9335 (or other similar laws for that
matter).

The scholarly discourse of Mr. Justice (now Chief Justice) Puno on the
concept of congressional oversight in Macalintal v. Commission on
Elections34 is illuminating:
Concept and bases of congressional oversight

Broadly defined, the power of oversight embraces all activities

undertaken by Congress to enhance its understanding of and
influence over the implementation of legislation it has enacted.
Clearly, oversight concerns post-enactment measures
undertaken by Congress: (a) to monitor bureaucratic
compliance with program objectives, (b) to determine whether
agencies are properly administered, (c) to eliminate executive
waste and dishonesty, (d) to prevent executive usurpation of
legislative authority, and (d) to assess executive conformity
with the congressional perception of public interest.

The power of oversight has been held to be intrinsic in the grant of

legislative power itself and integral to the checks and balances
inherent in a democratic system of government. x x x x x x x x x

Over the years, Congress has invoked its oversight power with
increased frequency to check the perceived "exponential accumulation
of power" by the executive branch. By the beginning of the
20th century, Congress has delegated an enormous amount of
legislative authority to the executive branch and the administrative
agencies. Congress, thus, uses its oversight power to make sure that
the administrative agencies perform their functions within the
authority delegated to them. x x x x x x x x x

Categories of congressional oversight functions

The acts done by Congress purportedly in the exercise of its oversight

powers may be divided into three categories,
namely: scrutiny, investigation and supervision.

a. Scrutiny

Congressional scrutiny implies a lesser intensity and continuity of

attention to administrative operations. Its primary purpose is to
determine economy and efficiency of the operation of
government activities. In the exercise of legislative scrutiny,
Congress may request information and report from the other
branches of government. It can give recommendations or pass
resolutions for consideration of the agency involved.

xxx xxx xxx

 b. Congressional investigation

While congressional scrutiny is regarded as a passive process of

looking at the facts that are readily available, congressional
investigation involves a more intense digging of facts. The power
of Congress to conduct investigation is recognized by the 1987
Constitution under section 21, Article VI, xxx xxx xxx

c. Legislative supervision

The third and most encompassing form by which Congress exercises

its oversight power is thru legislative supervision. "Supervision"
connotes a continuing and informed awareness on the part of a
congressional committee regarding executive operations in a given
administrative area. While both congressional scrutiny and
investigation involve inquiry into past executive branch actions in
order to influence future executive branch performance, congressional
supervision allows Congress to scrutinize the exercise of delegated
law-making authority, and permits Congress to retain part of that
delegated authority.

Congress exercises supervision over the executive agencies through its

veto power. It typically utilizes veto provisions when granting the
President or an executive agency the power to promulgate regulations
with the force of law. These provisions require the President or an
agency to present the proposed regulations to Congress, which retains
a "right" to approve or disapprove any regulation before it takes
effect. Such legislative veto provisions usually provide that a proposed
regulation will become a law after the expiration of a certain period of
time, only if Congress does not affirmatively disapprove of the
regulation in the meantime. Less frequently, the statute provides that
a proposed regulation will become law if Congress affirmatively
approves it.

Supporters of legislative veto stress that it is necessary to maintain

the balance of power between the legislative and the executive
branches of government as it offers lawmakers a way to delegate vast
power to the executive branch or to independent agencies while
retaining the option to cancel particular exercise of such power without
having to pass new legislation or to repeal existing law. They contend
that this arrangement promotes democratic accountability as it
provides legislative check on the activities of unelected administrative
agencies. One proponent thus explains:
 It is too late to debate the merits of this delegation policy: the
policy is too deeply embedded in our law and practice. It suffices
to say that the complexities of modern government have often
led Congress-whether by actual or perceived necessity- to
legislate by declaring broad policy goals and general statutory
standards, leaving the choice of policy options to the discretion
of an executive officer. Congress articulates legislative aims, but
leaves their implementation to the judgment of parties who may
or may not have participated in or agreed with the development
of those aims. Consequently, absent safeguards, in many
instances the reverse of our constitutional scheme could be
effected: Congress proposes, the Executive disposes. One
safeguard, of course, is the legislative power to enact new
legislation or to change existing law. But without some means of
overseeing post enactment activities of the executive branch,
Congress would be unable to determine whether its policies have
been implemented in accordance with legislative intent and thus
whether legislative intervention is appropriate.

Its opponents, however, criticize the legislative veto as undue

encroachment upon the executive prerogatives. They urge
that any post-enactment measures undertaken by the
legislative branch should be limited to scrutiny and
investigation; any measure beyond that would undermine the
separation of powers guaranteed by the Constitution. They
contend that legislative veto constitutes an impermissible evasion of
the Presidents veto authority and intrusion into the powers vested in
the executive or judicial branches of government. Proponents counter
that legislative veto enhances separation of powers as it prevents the
executive branch and independent agencies from accumulating too
much power. They submit that reporting requirements and
congressional committee investigations allow Congress to scrutinize
only the exercise of delegated law-making authority. They do not allow
Congress to review executive proposals before they take effect and
they do not afford the opportunity for ongoing and binding expressions
of congressional intent. In contrast, legislative veto permits Congress
to participate prospectively in the approval or disapproval of
"subordinate law" or those enacted by the executive branch pursuant
to a delegation of authority by Congress. They further argue that
legislative veto "is a necessary response by Congress to the accretion
of policy control by forces outside its chambers." In an era of
delegated authority, they point out that legislative veto "is the most
efficient means Congress has yet devised to retain control over the
evolution and implementation of its policy as declared by statute."
 In Immigration and Naturalization Service v. Chadha, the U.S.
Supreme Court resolved the validity of legislative veto
provisions. The case arose from the order of the immigration judge
suspending the deportation of Chadha pursuant to 244(c)(1) of the
Immigration and Nationality Act. The United States House of
Representatives passed a resolution vetoing the suspension pursuant
to 244(c)(2) authorizing either House of Congress, by resolution, to
invalidate the decision of the executive branch to allow a particular
deportable alien to remain in the United States. The immigration judge
reopened the deportation proceedings to implement the House order
and the alien was ordered deported. The Board of Immigration Appeals
dismissed the aliens appeal, holding that it had no power to declare
unconstitutional an act of Congress. The United States Court of
Appeals for Ninth Circuit held that the House was without
constitutional authority to order the aliens deportation and that
244(c)(2) violated the constitutional doctrine on separation of powers.

On appeal, the U.S. Supreme Court declared 244(c)(2)

unconstitutional. But the Court shied away from the issue of
separation of powers and instead held that the provision violates
the presentment clause and bicameralism. It held that the one-house
veto was essentially legislative in purpose and effect. As such, it is
subject to the procedures set out in Article I of the Constitution
requiring the passage by a majority of both Houses and presentment
to the President. x x x x x x x x x

Two weeks after the Chadha decision, the Court upheld, in

memorandum decision, two lower court decisions invalidating the
legislative veto provisions in the Natural Gas Policy Act of 1978 and
the Federal Trade Commission Improvement Act of 1980. Following
this precedence, lower courts invalidated statutes containing legislative
veto provisions although some of these provisions required the
approval of both Houses of Congress and thus met the bicameralism
requirement of Article I. Indeed, some of these veto provisions were
not even exercised.35(emphasis supplied)

In Macalintal, given the concept and configuration of the power of

congressional oversight and considering the nature and powers of a
constitutional body like the Commission on Elections, the Court struck down
the provision in RA 9189 (The Overseas Absentee Voting Act of 2003)
creating a Joint Congressional Committee. The committee was tasked not
only to monitor and evaluate the implementation of the said law but also to
review, revise, amend and approve the IRR promulgated by the Commission
on Elections. The Court held that these functions infringed on the
constitutional independence of the Commission on Elections.36

With this backdrop, it is clear that congressional oversight is not

unconstitutional per se, meaning, it neither necessarily constitutes an
encroachment on the executive power to implement laws nor undermines
the constitutional separation of powers. Rather, it is integral to the checks
and balances inherent in a democratic system of government. It may in fact
even enhance the separation of powers as it prevents the over-accumulation
of power in the executive branch.

However, to forestall the danger of congressional encroachment "beyond the

legislative sphere," the Constitution imposes two basic and related
constraints on Congress.37 It may not vest itself, any of its committees or its
members with either executive or judicial power.38 And, when it exercises its
legislative power, it must follow the "single, finely wrought and exhaustively
considered, procedures" specified under the Constitution,39 including the
procedure for enactment of laws and presentment.

Thus, any post-enactment congressional measure such as this should be

limited to scrutiny and investigation. In particular, congressional oversight
must be confined to the following:

(1) scrutiny based primarily on Congress power of appropriation and

the budget hearings conducted in connection with it, its power to ask
heads of departments to appear before and be heard by either of its
Houses on any matter pertaining to their departments and its power of
confirmation40 and

(2) investigation and monitoring41 of the implementation of laws

pursuant to the power of Congress to conduct inquiries in aid of
legislation.42

Any action or step beyond that will undermine the separation of powers
guaranteed by the Constitution. Legislative vetoes fall in this class.

Legislative veto is a statutory provision requiring the President or an

administrative agency to present the proposed implementing rules and
regulations of a law to Congress which, by itself or through a committee
formed by it, retains a "right" or "power" to approve or disapprove such
regulations before they take effect. As such, a legislative veto in the form of
a congressional oversight committee is in the form of an inward-turning
delegation designed to attach a congressional leash (other than through
scrutiny and investigation) to an agency to which Congress has by law
initially delegated broad powers.43 It radically changes the design or
structure of the Constitutions diagram of power as it entrusts to Congress a
direct role in enforcing, applying or implementing its own laws.44

Congress has two options when enacting legislation to define national policy
within the broad horizons of its legislative competence.45 It can itself
formulate the details or it can assign to the executive branch the
responsibility for making necessary managerial decisions in conformity with
those standards.46 In the latter case, the law must be complete in all its
essential terms and conditions when it leaves the hands of the
legislature.47 Thus, what is left for the executive branch or the concerned
administrative agency when it formulates rules and regulations
implementing the law is to fill up details (supplementary rule-making) or
ascertain facts necessary to bring the law into actual operation (contingent
rule-making).48

Administrative regulations enacted by administrative agencies to implement

and interpret the law which they are entrusted to enforce have the force of
law and are entitled to respect.49 Such rules and regulations partake of the
nature of a statute50 and are just as binding as if they have been written in
the statute itself. As such, they have the force and effect of law and enjoy
the presumption of constitutionality and legality until they are set aside with
finality in an appropriate case by a competent court.51 Congress, in the guise
of assuming the role of an overseer, may not pass upon their legality by
subjecting them to its stamp of approval without disturbing the calculated
balance of powers established by the Constitution. In exercising discretion to
approve or disapprove the IRR based on a determination of whether or not
they conformed with the provisions of RA 9335, Congress arrogated judicial
power unto itself, a power exclusively vested in this Court by the
Constitution.

Considered Opinion of
Mr. Justice Dante O. Tinga

Moreover, the requirement that the implementing rules of a law be subjected

to approval by Congress as a condition for their effectivity violates the
cardinal constitutional principles of bicameralism and the rule on
presentment.52

Section 1, Article VI of the Constitution states:

Section 1. The legislative power shall be vested in the Congress

of the Philippines which shall consist of a Senate and a House
 of Representatives, except to the extent reserved to the people by
the provision on initiative and referendum. (emphasis supplied)

Legislative power (or the power to propose, enact, amend and repeal
laws)53 is vested in Congress which consists of two chambers, the Senate
and the House of Representatives. A valid exercise of legislative power
requires the act of both chambers. Corrollarily, it can be exercised neither
solely by one of the two chambers nor by a committee of either or both
chambers. Thus, assuming the validity of a legislative veto, both a single-
chamber legislative veto and a congressional committee legislative veto are
invalid.

Additionally, Section 27(1), Article VI of the Constitution provides:

Section 27. (1) Every bill passed by the Congress shall, before it
becomes a law, be presented to the President. If he approves the
same, he shall sign it, otherwise, he shall veto it and return the same
with his objections to the House where it originated, which shall enter
the objections at large in its Journal and proceed to reconsider it. If,
after such reconsideration, two-thirds of all the Members of such
House shall agree to pass the bill, it shall be sent, together with the
objections, to the other House by which it shall likewise be
reconsidered, and if approved by two-thirds of all the Members of that
House, it shall become a law. In all such cases, the votes of each
House shall be determined by yeas or nays, and the names of the
members voting for or against shall be entered in its Journal. The
President shall communicate his veto of any bill to the House where it
originated within thirty days after the date of receipt thereof;
otherwise, it shall become a law as if he had signed it. (emphasis
supplied)

Every bill passed by Congress must be presented to the President for

approval or veto. In the absence of presentment to the President, no bill
passed by Congress can become a law. In this sense, law-making under the
Constitution is a joint act of the Legislature and of the Executive. Assuming
that legislative veto is a valid legislative act with the force of law, it cannot
take effect without such presentment even if approved by both chambers of
Congress.

In sum, two steps are required before a bill becomes a law. First, it must be
approved by both Houses of Congress.54 Second, it must be presented to
and approved by the President.55 As summarized by Justice Isagani
Cruz56 and Fr. Joaquin G. Bernas, S.J.57, the following is the procedure for
the approval of bills:
 A bill is introduced by any member of the House of Representatives or
the Senate except for some measures that must originate only in the
former chamber.

The first reading involves only a reading of the number and title of the
measure and its referral by the Senate President or the Speaker to the
proper committee for study.

The bill may be "killed" in the committee or it may be recommended

for approval, with or without amendments, sometimes after public
hearings are first held thereon. If there are other bills of the same
nature or purpose, they may all be consolidated into one bill under
common authorship or as a committee bill.

Once reported out, the bill shall be calendared for second reading. It is
at this stage that the bill is read in its entirety, scrutinized, debated
upon and amended when desired. The second reading is the most
important stage in the passage of a bill.

The bill as approved on second reading is printed in its final form and
copies thereof are distributed at least three days before the third
reading. On the third reading, the members merely register their votes
and explain them if they are allowed by the rules. No further debate is
allowed.

Once the bill passes third reading, it is sent to the other chamber,
where it will also undergo the three readings. If there are differences
between the versions approved by the two chambers, a conference
committee58 representing both Houses will draft a compromise
measure that if ratified by the Senate and the House of
Representatives will then be submitted to the President for his
consideration.

The bill is enrolled when printed as finally approved by the Congress,

thereafter authenticated with the signatures of the Senate President,
the Speaker, and the Secretaries of their respective chambers59

The Presidents role in law-making.

The final step is submission to the President for approval. Once

approved, it takes effect as law after the required publication.60

Where Congress delegates the formulation of rules to implement the law it

has enacted pursuant to sufficient standards established in the said law, the
law must be complete in all its essential terms and conditions when it leaves
the hands of the legislature. And it may be deemed to have left the hands of
the legislature when it becomes effective because it is only upon effectivity
of the statute that legal rights and obligations become available to those
entitled by the language of the statute. Subject to the indispensable
requisite of publication under the due process clause,61 the determination as
to when a law takes effect is wholly the prerogative of Congress.62 As such,
it is only upon its effectivity that a law may be executed and the executive
branch acquires the duties and powers to execute the said law. Before that
point, the role of the executive branch, particularly of the President, is
limited to approving or vetoing the law.63

From the moment the law becomes effective, any provision of law that
empowers Congress or any of its members to play any role in the
implementation or enforcement of the law violates the principle of separation
of powers and is thus unconstitutional. Under this principle, a provision that
requires Congress or its members to approve the implementing rules of a
law after it has already taken effect shall be unconstitutional, as is a
provision that allows Congress or its members to overturn any directive or
ruling made by the members of the executive branch charged with the
implementation of the law.

Following this rationale, Section 12 of RA 9335 should be struck down as

unconstitutional. While there may be similar provisions of other laws that
may be invalidated for failure to pass this standard, the Court refrains from
invalidating them wholesale but will do so at the proper time when an
appropriate case assailing those provisions is brought before us.64

The next question to be resolved is: what is the effect of the

unconstitutionality of Section 12 of RA 9335 on the other provisions of the
law? Will it render the entire law unconstitutional? No.

Section 13 of RA 9335 provides:

SEC. 13. Separability Clause. If any provision of this Act is declared

invalid by a competent court, the remainder of this Act or any
provision not affected by such declaration of invalidity shall remain in
force and effect.

In Tatad v. Secretary of the Department of Energy,65 the Court laid down the
following rules:

The general rule is that where part of a statute is void as repugnant to

the Constitution, while another part is valid, the valid portion, if
 separable from the invalid, may stand and be enforced. The presence
of a separability clause in a statute creates the presumption that the
legislature intended separability, rather than complete nullity of the
statute. To justify this result, the valid portion must be so far
independent of the invalid portion that it is fair to presume that the
legislature would have enacted it by itself if it had supposed that it
could not constitutionally enact the other. Enough must remain to
make a complete, intelligible and valid statute, which carries out the
legislative intent. x x x

The exception to the general rule is that when the parts of a statute
are so mutually dependent and connected, as conditions,
considerations, inducements, or compensations for each other, as to
warrant a belief that the legislature intended them as a whole, the
nullity of one part will vitiate the rest. In making the parts of the
statute dependent, conditional, or connected with one another, the
legislature intended the statute to be carried out as a whole and would
not have enacted it if one part is void, in which case if some parts are
unconstitutional, all the other provisions thus dependent, conditional,
or connected must fall with them.

The separability clause of RA 9335 reveals the intention of the legislature to

isolate and detach any invalid provision from the other provisions so that the
latter may continue in force and effect. The valid portions can stand
independently of the invalid section. Without Section 12, the remaining
provisions still constitute a complete, intelligible and valid law which carries
out the legislative intent to optimize the revenue-generation capability and
collection of the BIR and the BOC by providing for a system of rewards and
sanctions through the Rewards and Incentives Fund and a Revenue
Performance Evaluation Board.

To be effective, administrative rules and regulations must be published in full

if their purpose is to enforce or implement existing law pursuant to a valid
delegation. The IRR of RA 9335 were published on May 30, 2006 in two
newspapers of general circulation66 and became effective 15 days
thereafter.67 Until and unless the contrary is shown, the IRR are presumed
valid and effective even without the approval of the Joint Congressional
Oversight Committee.

WHEREFORE, the petition is hereby PARTIALLY GRANTED. Section 12 of

RA 9335 creating a Joint Congressional Oversight Committee to approve the
implementing rules and regulations of the law is
declared UNCONSTITUTIONAL and therefore NULL and VOID. The
constitutionality of the remaining provisions of RA 9335 is UPHELD.
Pursuant to Section 13 of RA 9335, the rest of the provisions remain in force
and effect.

SO ORDERED.

G.R. No. 211833, April 07, 2015

FERDINAND R. VILLANUEVA, PRESIDING JUDGE, MCTC,

COMPOSTELA-NEW BATAAN, COMPOSTELA VALLEY
PROVINCE, Petitioner, v. JUDICIAL AND BAR COUNCIL, Respondent.

DECISION

REYES, J.:

Presiding Judge Ferdinand R. Villanueva (petitioner) directly came to this

Court via a Petition for Prohibition, Mandamus, and Certiorari, and
Declaratory Relief1 under Rules 65 and 63 of the Rules of Court,
respectively, with prayer for the issuance of a temporary restraining order
and/or writ of preliminary injunction, to assail the policy of the Judicial and
Bar Council (JBC), requiring five years of service as judges of first-level
courts before they can qualify as applicant to second-level courts, on the
ground that it is unconstitutional, and was issued with grave abuse of
discretion.chanRoblesvirtualLawlibrary

The Facts

The petitioner was appointed on September 18, 2012 as the Presiding Judge
of the Municipal Circuit Trial Court, Compostela-New Bataan, Poblacion,
Compostela Valley Province, Region XI, which is a first-level court. On
September 27, 2013, he applied for the vacant position of Presiding Judge in
the following Regional Trial Courts (RTCs): Branch 31, Tagum City; Branch
13, Davao City; and Branch 6, Prosperidad, Agusan Del Sur.

In a letter2 dated December 18, 2013, JBC's Office of Recruitment, Selection

and Nomination, informed the petitioner that he was not included in the list
of candidates for the said stations. On the same date, the petitioner sent a
letter, through electronic mail, seeking reconsideration of his non-inclusion
in the list of considered applicants and protesting the inclusion of applicants
who did not pass the prejudicature examination.

The petitioner was informed by the JBC Executive Officer, through a

letter3 dated February 3, 2014, that his protest and reconsideration was duly
noted by the JBC en banc. However, its decision not to include his name in
the list of applicants was upheld due to the JBC's long-standing policy of
opening the chance for promotion to second-level courts to, among others,
incumbent judges who have served in their current position for at least five
years, and since the petitioner has been a judge only for more than a year,
he was excluded from the list. This caused the petitioner to take recourse to
this Court.

In his petition, he argued that: (1) the Constitution already prescribed the
qualifications of an RTC judge, and the JBC could add no more; (2) the JBC's
five-year requirement violates the equal protection and due process clauses
of the Constitution; and (3) the JBC's five-year requirement violates the
constitutional provision on Social Justice and Human Rights for Equal
Opportunity of Employment. The petitioner also asserted that the
requirement of the Prejudicature Program mandated by Section 104 of
Republic Act (R.A.) No. 85575 should not be merely directory and should be
fully implemented. He further alleged that he has all the qualifications for
the position prescribed by the Constitution and by Congress, since he has
already complied with the requirement of 10 years of practice of law.

In compliance with the Court's Resolution6 dated April 22, 2014, the
JBC7 and the Office of the Solicitor General (OSG)8separately submitted their
Comments. Summing up the arguments of the JBC and the OSG, they
essentially stated that the petition is procedurally infirm and that the
assailed policy does not violate the equal protection and due process
clauses. They posited that: (1) the writ of certiorari and prohibition cannot
issue to prevent the JBC from performing its principal function under the
Constitution to recommend appointees to the Judiciary because the JBC is
not a tribunal exercising judicial or quasi-judicial function; (2) the remedy of
mandamus and declaratory relief will not lie because the petitioner has no
clear legal right that needs to be protected; (3) the equal protection clause
is not violated because the classification of lower court judges who have
served at least five years and those who have served less than five years is
valid as it is performance and experience based; and (4) there is no violation
of due process as the policy is merely internal in
nature.chanRoblesvirtualLawlibrary

The Issue

The crux of this petition is whether or not the policy of JBC requiring five
years of service as judges of first-level courts before they can qualify as
applicant to second-level courts is constitutional.

Ruling of the Court

Procedural Issues:
Before resolving the substantive issues, the Court considers it necessary to
first determine whether or not the action for certiorari, prohibition and
mandamus, and declaratory relief commenced by the petitioner was proper.

One. The remedies of certiorari and prohibition are tenable. "The present
Rules of Court uses two special civil actions for determining and correcting
grave abuse of discretion amounting to lack or excess of jurisdiction. These
are the special civil actions for certiorari and prohibition, and both are
governed by Rule 65."9 As discussed in the case of Maria Carolina P. Araullo,
etc., et al. v. Benigno Simeon C. Aquino III, etc., et al.,10 this Court
explained that:chanroblesvirtuallawlibrary
With respect to the Court, however, the remedies of certiorari and
prohibition are necessarily broader in scope and reach, and the writ
of certiorari or prohibition may be issued to correct errors of jurisdiction
committed not only by a tribunal, corporation, board or officer exercising
judicial, quasi-judicial or ministerial functions but also to set right, undo and
restrain any act of grave abuse of discretion amounting to lack or excess of
jurisdiction by any branch or instrumentality of the Government, even if the
latter does not exercise judicial, quasi-judicial or ministerial functions. This
application is expressly authorized by the text of the second paragraph of
Section 1, supra.

Thus, petitions for certiorari and prohibition are appropriate remedies to

raise constitutional issues and to review and/or prohibit or nullify the acts of
legislative and executive officials.11 (Citation omitted)
In this case, it is clear that the JBC does not fall within the scope of a
tribunal, board, or officer exercising judicial or quasi-judicial functions. In
the process of selecting and screening applicants, the JBC neither acted in
any judicial or quasi-judicial capacity nor assumed unto itself any
performance of judicial or quasi-judicial prerogative. However, since the
formulation of guidelines and criteria, including the policy that the petitioner
now assails, is necessary and incidental to the exercise of the JBC's
constitutional mandate, a determination must be made on whether the JBC
has acted with grave abuse of discretion amounting to lack or excess of
jurisdiction in issuing and enforcing the said policy.

Besides, the Court can appropriately take cognizance of this case by virtue
of the Court's power of supervision over the JBC. Jurisprudence provides
that the power of supervision is the power of oversight, or the authority to
see that subordinate officers perform their duties. It ensures that the laws
and the rules governing the conduct of a government entity are observed
and complied with. Supervising officials see to it that rules are followed, but
they themselves do not lay down such rules, nor do they have the discretion
to modify or replace them. If the rules are not observed, they may order the
work done or redone, but only to conform to such rules. They may not
prescribe their own manner of execution of the act. They have no discretion
on this matter except to see to it that the rules are followed.12

Following this definition, the supervisory authority of the Court over the JBC
is to see to it that the JBC complies with its own rules and procedures. Thus,
when the policies of the JBC are being attacked, then the Court, through its
supervisory authority over the JBC, has the duty to inquire about the matter
and ensure that the JBC complies with its own rules.

Two. The remedy of mandamus cannot be availed of by the petitioner in

assailing JBC's policy. The petitioner insisted that mandamus is proper
because his right was violated when he was not included in the list of
candidates for the RTC courts he applied for. He said that his non-inclusion
in the list of candidates for these stations has caused him direct injury.

It is essential to the issuance of a writ of mandamus that the applicant

should have a clear legal right to the thing demanded and it must be the
imperative duty of the respondent to perform the act required.13The
petitioner bears the burden to show that there is such a clear legal right to
the performance of the act, and a corresponding compelling duty on the part
of the respondent to perform the act. The remedy of mandamus, as an
extraordinary writ, lies only to compel an officer to perform a ministerial
duty, not a discretionary one.14 Clearly, the use of discretion and the
performance of a ministerial act are mutually exclusive.

The writ of mandamus does not issue to control or review the exercise of
discretion or to compel a course of conduct, which, it quickly seems to us,
was what the petitioner would have the JBC do in his favor. The function of
the JBC to select and recommend nominees for vacant judicial positions is
discretionary, not ministerial. Moreso, the petitioner cannot claim any legal
right to be included in the list of nominees for judicial vacancies. Possession
of the constitutional and statutory qualifications for appointment to the
judiciary may not be used to legally demand that one's name be included in
the list of candidates for a judicial vacancy. One's inclusion in the list of the
candidates depends on the discretion of the JBC,
thus:chanroblesvirtuallawlibrary
The fact that an individual possesses the constitutional and statutory
qualifications for appointment to the Judiciary does not create an entitlement
or expectation that his or her name be included in the list of candidates for a
judicial vacancy. By submitting an application or accepting a
recommendation, one submits to the authority of the JBC to subject the
former to the search, screening, and selection process, and to use its
discretion in deciding whether or not one should be included in the list.
Indeed, assuming that if one has the legal right to be included in the list of
candidates simply because he or she possesses the constitutional and
statutory qualifications, then the application process would then be reduced
to a mere mechanical function of the JBC; and the search, screening, and
selection process would not only be unnecessary, but also improper.
However, this is clearly not the constitutional intent. One's inclusion in the
list of candidates is subject to the discretion of the JBC over the
selection of nominees for a particular judicial post. Such candidate's
inclusion is not, therefore, a legally demandable right, but simply a privilege
the conferment of which is subject to the JBC's sound discretion.

Moreover, petitioner is essentially seeking a promotional appointment, that

is, a promotion from a first-level court to a second level court. There is no
law, however, that grants him the right to a promotion to second-
level courts.15 (Emphasis in the original)
Clearly, to be included as an applicant to second-level judge is not properly
compellable by mandamus inasmuch as it involves the exercise of sound
discretion by the JBC.

Three. The petition for declaratory relief is improper. "An action for
declaratory relief should be filed by a person interested under a deed, a will,
a contract or other written instrument, and whose rights are affected by a
statute, an executive order, a regulation or an ordinance. The relief sought
under this remedy includes the interpretation and determination of the
validity of the written instrument and the judicial declaration of the parties'
rights or duties thereunder."16 "[T]he purpose of the action is to secure an
authoritative statement of the rights and obligations of the parties under a
statute, deed, contract, etc., for their guidance in its enforcement or
compliance and not to settle issues arising from its alleged breach."17

In this case, the petition for declaratory relief did not involve an unsound
policy. Rather, the petition specifically sought a judicial declaration that the
petitioner has the right to be included in the list of applicants although he
failed to meet JBC's five-year requirement policy. Again, the Court reiterates
that no person possesses a legal right under the Constitution to be included
in the list of nominees for vacant judicial positions. The opportunity of
appointment to judicial office is a mere privilege, and not a judicially
enforceable right that may be properly claimed by any person. The inclusion
in the list of candidates, which is one of the incidents of such appointment, is
not a right either. Thus, the petitioner cannot claim any right that could have
been affected by the assailed policy.

Furthermore, the instant petition must necessarily fail because this Court
does not have original jurisdiction over a petition for declaratory relief even
if only questions of law are involved.18 The special civil action of declaratory
relief falls under the exclusive jurisdiction of the appropriate RTC pursuant to
Section 1919 of Batas Pambansa Blg. 129, as amended by R.A.No. 7691.20

Therefore, by virtue of the Court's supervisory duty over the JBC and in the
exercise of its expanded judicial power, the Court assumes jurisdiction over
the present petition. But in any event, even if the Court will set aside
procedural infirmities, the instant petition should still be
dismissed.chanRoblesvirtualLawlibrary

Substantive Issues

As an offspring of the 1987 Constitution, the JBC is mandated to recommend

appointees to the judiciary and only those nominated by the JBC in a list
officially transmitted to the President may be appointed by the latter as
justice or judge in the judiciary. Thus, the JBC is burdened with a great
responsibility that is imbued with public interest as it determines the men
and women who will sit on the judicial bench. While the 1987 Constitution
has provided the qualifications of members of the judiciary, this does not
preclude the JBC from having its own set of rules and procedures and
providing policies to effectively ensure its mandate.

The functions of searching, screening, and selecting are necessary and

incidental to the JBC's principal function of choosing and recommending
nominees for vacancies in the judiciary for appointment by the President.
However, the Constitution did not lay down in precise terms the process that
the JBC shall follow in determining applicants' qualifications. In carrying out
its main function, the JBC has the authority to set the standards/criteria in
choosing its nominees for every vacancy in the judiciary, subject only to the
minimum qualifications required by the Constitution and law for every
position. The search for these long held qualities necessarily requires a
degree of flexibility in order to determine who is most fit among the
applicants. Thus, the JBC has sufficient but not unbridled license to act in
performing its duties.

JBC's ultimate goal is to recommend nominees and not simply to fill up

judicial vacancies in order to promote an effective and efficient
administration of justice. Given this pragmatic situation, the JBC had to
establish a set of uniform criteria in order to ascertain whether an applicant
meets the minimum constitutional qualifications and possesses the qualities
expected of him and his office. Thus, the adoption of the five-year
requirement policy applied by JBC to the petitioner's case is necessary and
incidental to the function conferred by the Constitution to the JBC.
Equal Protection

There is no question that JBC employs standards to have a rational basis to

screen applicants who cannot be all accommodated and appointed to a
vacancy in the judiciary, to determine who is best qualified among the
applicants, and not to discriminate against any particular individual or class.

The equal protection clause of the Constitution does not require the
universal application of the laws to all persons or things without distinction;
what it requires is simply equality among equals as determined according to
a valid classification. Hence, the Court has affirmed that if a law neither
burdens a fundamental right nor targets a suspect class, the classification
stands as long as it bears a rational relationship to some legitimate
government end.21ChanRoblesVirtualawlibrary

"The equal protection clause, therefore, does not preclude classification of

individuals who may be accorded different treatment under the law as long
as the classification is reasonable and not arbitrary."22 "The mere fact that
the legislative classification may result in actual inequality is not violative of
the right to equal protection, for every classification of persons or things for
regulation by law produces inequality in some degree, but the law is not
thereby rendered invalid."23

That is the situation here. In issuing the assailed policy, the JBC merely
exercised its discretion in accordance with the constitutional requirement
and its rules that a member of the Judiciary must be of proven competence,
integrity, probity and independence.24"To ensure the fulfillment of these
standards in every member of the Judiciary, the JBC has been tasked to
screen aspiring judges and justices, among others, making certain that the
nominees submitted to the President are all qualified and suitably best for
appointment. In this way, the appointing process itself is shielded from the
possibility of extending judicial appointment to the undeserving and
mediocre and, more importantly, to the ineligible or disqualified."25

Consideration of experience by JBC as one factor in choosing recommended

appointees does not constitute a violation of the equal protection clause. The
JBC does not discriminate when it employs number of years of service to
screen and differentiate applicants from the competition. The number of
years of service provides a relevant basis to determine proven competence
which may be measured by experience, among other factors. The difference
in treatment between lower court judges who have served at least five years
and those who have served less than five years, on the other hand, was
rationalized by JBC as follows:chanroblesvirtuallawlibrary
Formulating policies which streamline the selection process falls squarely
under the purview of the JBC. No other constitutional body is bestowed with
the mandate and competency to set criteria for applicants that refer to the
more general categories of probity, integrity and independence.

The assailed criterion or consideration for promotion to a second-level court,

which is five years experience as judge of a first-level court, is a direct
adherence to the qualities prescribed by the Constitution. Placing a premium
on many years of judicial experience, the JBC is merely applying one of the
stringent constitutional standards requiring that a member of the judiciary
be of "proven competence." In determining competence, the JBC
considers, among other qualifications, experience and performance.

Based on the JBC's collective judgment, those who have been judges of first-
level courts for five (5) years are better qualified for promotion to second-
level courts. It deems length of experience as a judge as indicative of
conversance with the law and court procedure. Five years is considered as a
sufficient span of time for one to acquire professional skills for the next level
court, declog the dockets, put in place improved procedures and an efficient
case management system, adjust to the work environment, and gain
extensive experience in the judicial process.

A five-year stint in the Judiciary can also provide evidence of the integrity,
probity, and independence of judges seeking promotion. To merit JBC's
nomination for their promotion, they must have had a "record of, and
reputation for, honesty, integrity, incorruptibility, irreproachable conduct,
and fidelity to sound moral and ethical standards." Likewise, their decisions
must be reflective of the soundness of their judgment, courage, rectitude,
cold neutrality and strength of character.

Hence, for the purpose of determining whether judges are worthy of

promotion to the next level court, it would be premature or difficult to assess
their merit if they have had less than one year of service on the
bench.26 (Citations omitted and emphasis in the original)
At any rate, five years of service as a lower court judge is not the only factor
that determines the selection of candidates for RTC judge to be appointed by
the President. Persons with this qualification are neither automatically
selected nor do they automatically become nominees. The applicants are
chosen based on an array of factors and are evaluated based on their
individual merits. Thus, it cannot be said that the questioned policy was
arbitrary, capricious, or made without any basis.

Clearly, the classification created by the challenged policy satisfies the

rational basis test. The foregoing shows that substantial distinctions do exist
between lower court judges with five year experience and those with less
than five years of experience, like the petitioner, and the classification
enshrined in the assailed policy is reasonable and relevant to its legitimate
purpose. The Court, thus, rules that the questioned policy does not infringe
on the equal protection clause as it is based on reasonable classification
intended to gauge the proven competence of the applicants. Therefore, the
said policy is valid and constitutional.

Due Process

The petitioner averred that the assailed policy violates procedural due
process for lack of publication and non-submission to the University of the
Philippines Law Center Office of the National Administrative Register (ONAR).
The petitioner said that the assailed policy will affect all applying judges,
thus, the said policy should have been published.

Contrary to the petitioner's contention, the assailed JBC policy need not be
filed in the ONAR because the publication requirement in the ONAR is
confined to issuances of administrative agencies under the Executive branch
of the government.27 Since the JBC is a body under the supervision of the
Supreme Court,28 it is not covered by the publication requirements of the
Administrative Code.

Nevertheless, the assailed JBC policy requiring five years of service as

judges of first-level courts before they can qualify as applicants to second-
level courts should have been published. As a general rule, publication is
indispensable in order that all statutes, including administrative rules that
are intended to enforce or implement existing laws, attain binding force and
effect. There are, however, several exceptions to the requirement of
publication, such as interpretative regulations and those merely internal in
nature, which regulate only the personnel of the administrative agency and
not the public. Neither is publication required of the so-called letters of
instructions issued by administrative superiors concerning the rules or
guidelines to be followed by their subordinates in the performance of their
duties.29

Here, the assailed JBC policy does not fall within the administrative rules and
regulations exempted from the publication requirement. The assailed policy
involves a qualification standard by which the JBC shall determine proven
competence of an applicant. It is not an internal regulation, because if it
were, it would regulate and affect only the members of the JBC and their
staff. Notably, the selection process involves a call to lawyers who meet the
qualifications in the Constitution and are willing to serve in the Judiciary to
apply to these vacant positions. Thus, it is but a natural consequence thereof
that potential applicants be informed of the requirements to the judicial
positions, so that they would be able to prepare for and comply with them.

The Court also noted the fact that in JBC-009, otherwise known as the Rules
of the Judicial and Bar Council, the JBC had put its criteria in writing and
listed the guidelines in determining competence, independence, integrity and
probity. Section 1, Paragraph 1 of Rule 9 expressly provides that applicants
for the Court of Appeals and the Sandiganbayan, should, as a general rule,
have at least five years of experience as an RTC judge,
thus:chanroblesvirtuallawlibrary
RULE 9 - SPECIAL GUIDELINES FOR NOMINATION TO A VACANCY IN THE
COURT OF APPEALS AND SANDIGANBAYAN

Section 1. Additional criteria for nomination to the Court of Appeals and the
Sandiganbayan. - In addition to the foregoing guidelines the Council should
consider the following in evaluating the merits of applicants for a vacancy in
the Court of Appeals and Sandiganbayan:

1. As a general rule, he must have at least five years of experience as a

judge of Regional Trial Court, except when he has in his favor
outstanding credentials, as evidenced by, inter alia, impressive scholastic or
educational record and performance in the Bar examinations, excellent
reputation for honesty, integrity, probity and independence of mind; at least
very satisfactory performance rating for three (3) years preceding the filing
of his application for nomination; and excellent potentials for appellate
judgeship.

x x x x (Emphasis ours)
The express declaration of these guidelines in JBC-009, which have been
duly published on the website of the JBC and in a newspaper of general
circulation suggests that the JBC is aware that these are not mere internal
rules, but are rules implementing the Constitution that should be published.
Thus, if the JBC were so-minded to add special guidelines for determining
competence of applicants for RTC judges, then it could and should have
amended its rules and published the same. This, the JBC did not do as JBC-
009 and its amendatory rule do not have special guidelines for applicants to
the RTC.

Moreover, jurisprudence has held that rules implementing a statute should

be published. Thus, by analogy, publication is also required for the five-year
requirement because it seeks to implement a constitutional provision
requiring proven competence from members of the judiciary.

Nonetheless, the JBC's failure to publish the assailed policy has not
prejudiced the petitioner's private interest. At the risk of being repetitive,
the petitioner has no legal right to be included in the list of nominees for
judicial vacancies since the possession of the constitutional and statutory
qualifications for appointment to the Judiciary may not be used to legally
demand that one's name be included in the list of candidates for a judicial
vacancy. One's inclusion in the shortlist is strictly within the discretion of the
JBC.30

As to the issue that the JBC failed or refused to implement the completion of
the prejudicature program as a requirement for appointment or promotion in
the judiciary under R.A. No. 8557, this ground of the petition, being
unsubstantiated, was unfounded. Clearly, it cannot be said that JBC
unlawfully neglects the performance of a duty enjoined by law.

Finally, the petitioner argued but failed to establish that the assailed policy
violates the constitutional provision under social justice and human rights for
equal opportunity of employment. The OSG
explained:chanroblesvirtuallawlibrary
[T]he questioned policy does not violate equality of employment
opportunities. The constitutional provision does not call for appointment to
the Judiciary of all who might, for any number of reasons, wish to apply. As
with all professions, it is regulated by the State. The office of a judge is no
ordinary office. It is imbued with public interest and is central in the
administration of justice x x x. Applicants who meet the constitutional and
legal qualifications must vie and withstand the competition and rigorous
screening and selection process. They must submit themselves to the
selection criteria, processes and discretion of respondent JBC, which has the
constitutional mandate of screening and selecting candidates whose names
will be in the list to be submitted to the President. So long as a fair
opportunity is available for all applicants who are evaluated on the basis of
their individual merits and abilities, the questioned policy cannot be struck
down as unconstitutional.31 (Citations omitted)
From the foregoing, it is apparent that the petitioner has not established a
clear legal right to justify the issuance of a preliminary injunction. The
petitioner has merely filed an application with the JBC for the position of RTC
judge, and he has no clear legal right to be nominated for that office nor to
be selected and included in the list to be submitted to the President which is
subject to the discretion of the JBC. The JBC has the power to determine
who shall be recommended to the judicial post. To be included in the list of
applicants is a privilege as one can only be chosen under existing criteria
imposed by the JBC itself. As such, prospective applicants, including the
petitioner, cannot claim any demandable right to take part in it if they fail to
meet these criteria. Hence, in the absence of a clear legal right, the issuance
of an injunctive writ is not justified.
As the constitutional body granted with the power of searching for,
screening, and selecting applicants relative to recommending appointees to
the Judiciary, the JBC has the authority to determine how best to perform
such constitutional mandate. Pursuant to this authority, the JBC issues
various policies setting forth the guidelines to be observed in the evaluation
of applicants, and formulates rules and guidelines in order to ensure that the
rules are updated to respond to existing circumstances. Its discretion is
freed from legislative, executive or judicial intervention to ensure that the
JBC is shielded from any outside pressure and improper influence. Limiting
qualified applicants in this case to those judges with five years of experience
was an exercise of discretion by the JBC. The potential applicants, however,
should have been informed of the requirements to the judicial positions, so
that they could properly prepare for and comply with them. Hence, unless
there are good and compelling reasons to do so, the Court will refrain from
interfering with the exercise of JBC's powers, and will respect the initiative
and independence inherent in the latter.cralawred

WHEREFORE, premises considered, the petition is DISMISSED. The Court,

however, DIRECTS that the Judicial and Bar Council comply with the
publication requirement of (1) the assailed policy requiring five years of
experience as judges of first-level courts before they can qualify as applicant
to the Regional Trial Court, and (2) other special guidelines that the Judicial
and Bar Council is or will be implementing.

SO ORDERED.

G.R. No. 170338 December 23, 2008

VIRGILIO O. GARCILLANO, petitioner,

vs.
THE HOUSE OF REPRESENTATIVES COMMITTEES ON PUBLIC
INFORMATION, PUBLIC ORDER AND SAFETY, NATIONAL DEFENSE
AND SECURITY, INFORMATION AND COMMUNICATIONS
TECHNOLOGY, and SUFFRAGE AND ELECTORAL
REFORMS, respondents.

x----------------------x

G.R. No. 179275 December 23, 2008

SANTIAGO JAVIER RANADA and OSWALDO D. AGCAOILI, petitioners,

vs.
THE SENATE OF THE REPUBLIC OF THE PHILIPPINES, REPRESENTED
BY THE SENATE PRESIDENT THE HONORABLE MANUEL
VILLAR, respondents.

x----------------------x

MAJ. LINDSAY REX SAGGE, petitioner-in-intervention

x----------------------x

AQUILINO Q. PIMENTEL, JR., BENIGNO NOYNOY C. AQUINO,

RODOLFO G. BIAZON, PANFILO M. LACSON, LOREN B. LEGARDA, M.A.
JAMBY A.S. MADRIGAL, and ANTONIO F. TRILLANES, respondents-
intervenors

DECISION

NACHURA, J.:

More than three years ago, tapes ostensibly containing a wiretapped

conversation purportedly between the President of the Philippines and a
high-ranking official of the Commission on Elections (COMELEC) surfaced.
They captured unprecedented public attention and thrust the country into a
controversy that placed the legitimacy of the present administration on the
line, and resulted in the near-collapse of the Arroyo government. The tapes,
notoriously referred to as the "Hello Garci" tapes, allegedly contained the
Presidents instructions to COMELEC Commissioner Virgilio Garcillano to
manipulate in her favor results of the 2004 presidential elections. These
recordings were to become the subject of heated legislative hearings
conducted separately by committees of both Houses of Congress.1

In the House of Representatives (House), on June 8, 2005, then Minority

Floor Leader Francis G. Escudero delivered a privilege speech, "Tale of Two
Tapes," and set in motion a congressional investigation jointly conducted by
the Committees on Public Information, Public Order and Safety, National
Defense and Security, Information and Communications Technology, and
Suffrage and Electoral Reforms (respondent House Committees). During the
inquiry, several versions of the wiretapped conversation emerged. But on
July 5, 2005, National Bureau of Investigation (NBI) Director Reynaldo
Wycoco, Atty. Alan Paguia and the lawyer of former NBI Deputy Director
Samuel Ong submitted to the respondent House Committees seven alleged
"original" tape recordings of the supposed three-hour taped conversation.
After prolonged and impassioned debate by the committee members on the
admissibility and authenticity of the recordings, the tapes were eventually
played in the chambers of the House.2
On August 3, 2005, the respondent House Committees decided to suspend
the hearings indefinitely. Nevertheless, they decided to prepare committee
reports based on the said recordings and the testimonies of the resource
persons.3

Alarmed by these developments, petitioner Virgilio O. Garcillano (Garcillano)

filed with this Court a Petition for Prohibition and Injunction, with Prayer for
Temporary Restraining Order and/or Writ of Preliminary Injunction4docketed
as G.R. No. 170338. He prayed that the respondent House Committees be
restrained from using these tape recordings of the "illegally obtained"
wiretapped conversations in their committee reports and for any other
purpose. He further implored that the said recordings and any reference
thereto be ordered stricken off the records of the inquiry, and the
respondent House Committees directed to desist from further using the
recordings in any of the House proceedings.5

Without reaching its denouement, the House discussion and debates on the
"Garci tapes" abruptly stopped.

After more than two years of quiescence, Senator Panfilo Lacson roused the
slumbering issue with a privilege speech, "The Lighthouse That Brought
Darkness." In his discourse, Senator Lacson promised to provide the public
"the whole unvarnished truth the whats, whens, wheres, whos and
whys" of the alleged wiretap, and sought an inquiry into the perceived
willingness of telecommunications providers to participate in nefarious
wiretapping activities.

On motion of Senator Francis Pangilinan, Senator Lacsons speech was

referred to the Senate Committee on National Defense and Security, chaired
by Senator Rodolfo Biazon, who had previously filed two bills6 seeking to
regulate the sale, purchase and use of wiretapping equipment and to
prohibit the Armed Forces of the Philippines (AFP) from performing electoral
duties.7

In the Senates plenary session the following day, a lengthy debate ensued
when Senator Richard Gordon aired his concern on the possible
transgression of Republic Act (R.A.) No. 42008 if the body were to conduct a
legislative inquiry on the matter. On August 28, 2007, Senator Miriam
Defensor-Santiago delivered a privilege speech, articulating her considered
view that the Constitution absolutely bans the use, possession, replay or
communication of the contents of the "Hello Garci" tapes. However, she
recommended a legislative investigation into the role of the Intelligence
Service of the AFP (ISAFP), the Philippine National Police or other
government entities in the alleged illegal wiretapping of public officials.9
On September 6, 2007, petitioners Santiago Ranada and Oswaldo Agcaoili,
retired justices of the Court of Appeals, filed before this Court a Petition for
Prohibition with Prayer for the Issuance of a Temporary Restraining Order
and/or Writ of Preliminary Injunction,10 docketed as G.R. No. 179275,
seeking to bar the Senate from conducting its scheduled legislative inquiry.
They argued in the main that the intended legislative inquiry violates R.A.
No. 4200 and Section 3, Article III of the Constitution.11

As the Court did not issue an injunctive writ, the Senate proceeded with its
public hearings on the "Hello Garci" tapes on September 7,12 1713 and
October 1,14 2007.

Intervening as respondents,15 Senators Aquilino Q. Pimentel, Jr., Benigno

Noynoy C. Aquino, Rodolfo G. Biazon, Panfilo M. Lacson, Loren B. Legarda,
M.A. Jamby A.S. Madrigal and Antonio F. Trillanes filed their Comment16 on
the petition on September 25, 2007.

The Court subsequently heard the case on oral argument.17

On October 26, 2007, Maj. Lindsay Rex Sagge, a member of the ISAFP and
one of the resource persons summoned by the Senate to appear and testify
at its hearings, moved to intervene as petitioner in G.R. No. 179275.18

On November 20, 2007, the Court resolved to consolidate G.R. Nos. 170338
and 179275.19

It may be noted that while both petitions involve the "Hello Garci"
recordings, they have different objectivesthe first is poised at preventing
the playing of the tapes in the House and their subsequent inclusion in the
committee reports, and the second seeks to prohibit and stop the conduct of
the Senate inquiry on the wiretapped conversation.

The Court dismisses the first petition, G.R. No. 170338, and grants the
second, G.R. No. 179275.

-I-

Before delving into the merits of the case, the Court shall first resolve the
issue on the parties standing, argued at length in their pleadings.

In Tolentino v. COMELEC,20 we explained that "[l]egal standing or locus

standi refers to a personal and substantial interest in a case such that the
party has sustained or will sustain direct injury because of the challenged
governmental act x x x," thus,
 generally, a party will be allowed to litigate only when (1) he can show
that he has personally suffered some actual or threatened injury
because of the allegedly illegal conduct of the government; (2) the
injury is fairly traceable to the challenged action; and (3) the injury is
likely to be redressed by a favorable action.21

The gist of the question of standing is whether a party has "alleged such a
personal stake in the outcome of the controversy as to assure that concrete
adverseness which sharpens the presentation of issues upon which the court
so largely depends for illumination of difficult constitutional questions."22

However, considering that locus standi is a mere procedural technicality, the

Court, in recent cases, has relaxed the stringent direct injury test. David v.
Macapagal-Arroyo23 articulates that a "liberal policy has been observed,
allowing ordinary citizens, members of Congress, and civic organizations to
prosecute actions involving the constitutionality or validity of laws,
regulations and rulings."24 The fairly recent Chavez v. Gonzales25 even
permitted a non-member of the broadcast media, who failed to allege a
personal stake in the outcome of the controversy, to challenge the acts of
the Secretary of Justice and the National Telecommunications Commission.
The majority, in the said case, echoed the current policy that "this Court has
repeatedly and consistently refused to wield procedural barriers as
impediments to its addressing and resolving serious legal questions that
greatly impact on public interest, in keeping with the Courts duty under the
1987 Constitution to determine whether or not other branches of
government have kept themselves within the limits of the Constitution and
the laws, and that they have not abused the discretion given to them."26

In G.R. No. 170338, petitioner Garcillano justifies his standing to initiate the
petition by alleging that he is the person alluded to in the "Hello Garci"
tapes. Further, his was publicly identified by the members of the respondent
committees as one of the voices in the recordings.27 Obviously, therefore,
petitioner Garcillano stands to be directly injured by the House committees
actions and charges of electoral fraud. The Court recognizes his standing to
institute the petition for prohibition.

In G.R. No. 179275, petitioners Ranada and Agcaoili justify their standing by
alleging that they are concerned citizens, taxpayers, and members of the
IBP. They are of the firm conviction that any attempt to use the "Hello Garci"
tapes will further divide the country. They wish to see the legal and proper
use of public funds that will necessarily be defrayed in the ensuing public
hearings. They are worried by the continuous violation of the laws and
individual rights, and the blatant attempt to abuse constitutional processes
through the conduct of legislative inquiries purportedly in aid of legislation.28
Intervenor Sagge alleges violation of his right to due process considering
that he is summoned to attend the Senate hearings without being apprised
not only of his rights therein through the publication of the Senate Rules of
Procedure Governing Inquiries in Aid of Legislation, but also of the intended
legislation which underpins the investigation. He further intervenes as a
taxpayer bewailing the useless and wasteful expenditure of public funds
involved in the conduct of the questioned hearings.29

Given that petitioners Ranada and Agcaoili allege an interest in the execution
of the laws and that intervenor Sagge asserts his constitutional right to due
process,30 they satisfy the requisite personal stake in the outcome of the
controversy by merely being citizens of the Republic.

Following the Courts ruling in Francisco, Jr. v. The House of

Representatives,31 we find sufficient petitioners Ranadas and Agcaoilis and
intervenor Sagges allegation that the continuous conduct by the Senate of
the questioned legislative inquiry will necessarily involve the expenditure of
public funds.32 It should be noted that in Francisco, rights personal to then
Chief Justice Hilario G. Davide, Jr. had been injured by the alleged
unconstitutional acts of the House of Representatives, yet the Court granted
standing to the petitioners therein for, as in this case, they invariably
invoked the vindication of their own rightsas taxpayers, members of
Congress, citizens, individually or in a class suit, and members of the bar
and of the legal professionwhich were also supposedly violated by the
therein assailed unconstitutional acts.33

Likewise, a reading of the petition in G.R. No. 179275 shows that the
petitioners and intervenor Sagge advance constitutional issues which
deserve the attention of this Court in view of their seriousness, novelty and
weight as precedents. The issues are of transcendental and paramount
importance not only to the public but also to the Bench and the Bar, and
should be resolved for the guidance of all.34

Thus, in the exercise of its sound discretion and given the liberal attitude it
has shown in prior cases climaxing in the more recent case of Chavez, the
Court recognizes the legal standing of petitioners Ranada and Agcaoili and
intervenor Sagge.

- II -

The Court, however, dismisses G.R. No. 170338 for being moot and
academic. Repeatedly stressed in our prior decisions is the principle that the
exercise by this Court of judicial power is limited to the determination and
resolution of actual cases and controversies.35 By actual cases, we mean
existing conflicts appropriate or ripe for judicial determination, not
conjectural or anticipatory, for otherwise the decision of the Court will
amount to an advisory opinion. The power of judicial inquiry does not extend
to hypothetical questions because any attempt at abstraction could only lead
to dialectics and barren legal questions and to sterile conclusions unrelated
to actualities.36 Neither will the Court determine a moot question in a case in
which no practical relief can be granted. A case becomes moot when its
purpose has become stale.37 It is unnecessary to indulge in academic
discussion of a case presenting a moot question as a judgment thereon
cannot have any practical legal effect or, in the nature of things, cannot be
enforced.38

In G.R. No. 170338, petitioner Garcillano implores from the Court, as

aforementioned, the issuance of an injunctive writ to prohibit the respondent
House Committees from playing the tape recordings and from including the
same in their committee report. He likewise prays that the said tapes be
stricken off the records of the House proceedings. But the Court notes that
the recordings were already played in the House and heard by its
members.39 There is also the widely publicized fact that the committee
reports on the "Hello Garci" inquiry were completed and submitted to the
House in plenary by the respondent committees.40 Having been overtaken by
these events, the Garcillano petition has to be dismissed for being moot and
academic. After all, prohibition is a preventive remedy to restrain the doing
of an act about to be done, and not intended to provide a remedy for an act
already accomplished.41

- III -

As to the petition in G.R. No. 179275, the Court grants the same. The
Senate cannot be allowed to continue with the conduct of the questioned
legislative inquiry without duly published rules of procedure, in clear
derogation of the constitutional requirement.

Section 21, Article VI of the 1987 Constitution explicitly provides that "[t]he
Senate or the House of Representatives, or any of its respective committees
may conduct inquiries in aid of legislation in accordance with its duly
published rules of procedure." The requisite of publication of the rules is
intended to satisfy the basic requirements of due process.42 Publication is
indeed imperative, for it will be the height of injustice to punish or otherwise
burden a citizen for the transgression of a law or rule of which he had no
notice whatsoever, not even a constructive one.43What constitutes
publication is set forth in Article 2 of the Civil Code, which provides that
"[l]aws shall take effect after 15 days following the completion of their
publication either in the Official Gazette, or in a newspaper of general
circulation in the Philippines."44

The respondents in G.R. No. 179275 admit in their pleadings and even on
oral argument that the Senate Rules of Procedure Governing Inquiries in Aid
of Legislation had been published in newspapers of general circulation only
in 1995 and in 2006.45 With respect to the present Senate of the
14th Congress, however, of which the term of half of its members
commenced on June 30, 2007, no effort was undertaken for the publication
of these rules when they first opened their session.

Recently, the Court had occasion to rule on this very same question. In Neri
v. Senate Committee on Accountability of Public Officers and
Investigations,46 we said:

Fourth, we find merit in the argument of the OSG that respondent

Committees likewise violated Section 21 of Article VI of the
Constitution, requiring that the inquiry be in accordance with the "duly
published rules of procedure." We quote the OSGs explanation:

The phrase "duly published rules of procedure" requires the

Senate of every Congress to publish its rules of procedure
governing inquiries in aid of legislation because every Senate is
distinct from the one before it or after it. Since Senatorial
elections are held every three (3) years for one-half of the
Senates membership, the composition of the Senate also
changes by the end of each term. Each Senate may thus enact a
different set of rules as it may deem fit. Not having published
its Rules of Procedure, the subject hearings in aid of
legislation conducted by the 14th Senate, are therefore,
procedurally infirm.

Justice Antonio T. Carpio, in his Dissenting and Concurring Opinion,

reinforces this ruling with the following rationalization:

The present Senate under the 1987 Constitution is no longer a

continuing legislative body. The present Senate has twenty-four
members, twelve of whom are elected every three years for a term of
six years each. Thus, the term of twelve Senators expires every three
years, leaving less than a majority of Senators to continue into
the next Congress. The 1987 Constitution, like the 1935
Constitution, requires a majority of Senators to "constitute a quorum
to do business." Applying the same reasoning in Arnault v. Nazareno,
the Senate under the 1987 Constitution is not a continuing body
 because less than majority of the Senators continue into the next
Congress. The consequence is that the Rules of Procedure must be
republished by the Senate after every expiry of the term of twelve
Senators.47

The subject was explained with greater lucidity in our Resolution48 (On the
Motion for Reconsideration) in the same case, viz.:

On the nature of the Senate as a "continuing body," this Court sees fit
to issue a clarification. Certainly, there is no debate that the Senate as
an institution is "continuing," as it is not dissolved as an entity with
each national election or change in the composition of its members.
However, in the conduct of its day-to-day business the Senate of each
Congress acts separately and independently of the Senate of the
Congress before it. The Rules of the Senate itself confirms this when it
states:

RULE XLIV
UNFINISHED BUSINESS

SEC. 123. Unfinished business at the end of the session shall be

taken up at the next session in the same status.

All pending matters and proceedings shall terminate upon

the expiration of one (1) Congress, but may be taken by the
succeeding Congress as if present for the first time.

Undeniably from the foregoing, all pending matters and proceedings,

i.e., unpassed bills and even legislative investigations, of the Senate of
a particular Congress are considered terminated upon the expiration
of that Congress and it is merely optional on the Senate of the
succeeding Congress to take up such unfinished matters, not in the
same status, but as if presented for the first time. The logic and
practicality of such a rule is readily apparent considering that the
Senate of the succeeding Congress (which will typically have a
different composition as that of the previous Congress) should not be
bound by the acts and deliberations of the Senate of which they had
no part. If the Senate is a continuing body even with respect to the
conduct of its business, then pending matters will not be deemed
terminated with the expiration of one Congress but will, as a matter of
course, continue into the next Congress with the same status.

This dichotomy of the continuity of the Senate as an institution and of

the opposite nature of the conduct of its business is reflected in its
Rules. The Rules of the Senate (i.e. the Senates main rules of
procedure) states:

RULE LI
AMENDMENTS TO, OR REVISIONS OF, THE RULES

SEC. 136. At the start of each session in which the Senators

elected in the preceding elections shall begin their term of office,
the President may endorse the Rules to the appropriate
committee for amendment or revision.

The Rules may also be amended by means of a motion which

should be presented at least one day before its consideration,
and the vote of the majority of the Senators present in the
session shall be required for its approval.

RULE LII
DATE OF TAKING EFFECT

SEC. 137. These Rules shall take effect on the date of their
adoption and shall remain in force until they are amended or
repealed.

Section 136 of the Senate Rules quoted above takes into account the
new composition of the Senate after an election and the possibility of
the amendment or revision of the Rules at the start of each session in
which the newly elected Senators shall begin their term.

However, it is evident that the Senate has determined that its main
rules are intended to be valid from the date of their adoption until they
are amended or repealed. Such language is conspicuously absent from
the Rules. The Rules simply state "(t)hese Rules shall take effect seven
(7) days after publication in two (2) newspapers of general
circulation." The latter does not explicitly provide for the continued
effectivity of such rules until they are amended or repealed. In view of
the difference in the language of the two sets of Senate rules, it
cannot be presumed that the Rules (on legislative inquiries) would
continue into the next Congress. The Senate of the next Congress may
easily adopt different rules for its legislative inquiries which come
within the rule on unfinished business.

The language of Section 21, Article VI of the Constitution requiring

that the inquiry be conducted in accordance with the duly published
rules of procedure is categorical. It is incumbent upon the Senate to
 publish the rules for its legislative inquiries in each Congress or
otherwise make the published rules clearly state that the same shall
be effective in subsequent Congresses or until they are amended or
repealed to sufficiently put public on notice.

If it was the intention of the Senate for its present rules on legislative
inquiries to be effective even in the next Congress, it could have easily
adopted the same language it had used in its main rules regarding
effectivity.

Respondents justify their non-observance of the constitutionally mandated

publication by arguing that the rules have never been amended since 1995
and, despite that, they are published in booklet form available to anyone for
free, and accessible to the public at the Senates internet web page.49

The Court does not agree. The absence of any amendment to the rules
cannot justify the Senates defiance of the clear and unambiguous language
of Section 21, Article VI of the Constitution. The organic law instructs,
without more, that the Senate or its committees may conduct inquiries in aid
of legislation only in accordance with duly published rules of procedure, and
does not make any distinction whether or not these rules have undergone
amendments or revision. The constitutional mandate to publish the said
rules prevails over any custom, practice or tradition followed by the Senate.

Justice Carpios response to the same argument raised by the respondents is

illuminating:

The publication of the Rules of Procedure in the website of the Senate,

or in pamphlet form available at the Senate, is not sufficient under
the Taada v. Tuvera ruling which requires publication either in the
Official Gazette or in a newspaper of general circulation. The Rules of
Procedure even provide that the rules "shall take effect seven (7) days
after publication in two (2) newspapers of general circulation,"
precluding any other form of publication. Publication in accordance
with Taada is mandatory to comply with the due process requirement
because the Rules of Procedure put a persons liberty at risk. A person
who violates the Rules of Procedure could be arrested and detained by
the Senate.

The invocation by the respondents of the provisions of R.A. No.

8792,50 otherwise known as the Electronic Commerce Act of 2000, to
support their claim of valid publication through the internet is all the more
incorrect. R.A. 8792 considers an electronic data message or an electronic
document as the functional equivalent of a written document only
for evidentiary purposes.51 In other words, the law merely recognizes the
admissibility in evidence (for their being the original) of electronic data
messages and/or electronic documents.52 It does not make the internet a
medium for publishing laws, rules and regulations.

Given this discussion, the respondent Senate Committees, therefore, could

not, in violation of the Constitution, use its unpublished rules in the
legislative inquiry subject of these consolidated cases. The conduct of
inquiries in aid of legislation by the Senate has to be deferred until it shall
have caused the publication of the rules, because it can do so only "in
accordance with its duly published rules of procedure."

Very recently, the Senate caused the publication of the Senate Rules of
Procedure Governing Inquiries in Aid of Legislation in the October 31, 2008
issues of Manila Bulletin and Malaya. While we take judicial notice of this
fact, the recent publication does not cure the infirmity of the inquiry sought
to be prohibited by the instant petitions. Insofar as the consolidated cases
are concerned, the legislative investigation subject thereof still could not be
undertaken by the respondent Senate Committees, because no published
rules governed it, in clear contravention of the Constitution.

With the foregoing disquisition, the Court finds it unnecessary to discuss the
other issues raised in the consolidated petitions.

WHEREFORE, the petition in G.R. No. 170338 is DISMISSED, and the

petition in G.R. No. 179275 is GRANTED. Let a writ of prohibition be issued
enjoining the Senate of the Republic of the Philippines and/or any of its
committees from conducting any inquiry in aid of legislation centered on the
"Hello Garci" tapes.

SO ORDERED.

[G.R. No. 139607. October 28, 2002]

RAMON ISIDRO P. LAPID and GLADYS B. LAPID, in behalf of their

minor child CHRISTOPHER B. LAPID, petitioners, vs. HON.
EMMANUEL D. LAUREA, Presiding Judge of RTC, BR. 169,
Malabon, ST. THERESE OF THE CHILD JESUS, INC., and COURT
OF APPEALS, ET. AL., respondents.

RESOLUTION
QUISUMBING, J.:

In this petition for review, petitioners assail the resolution[1] dated June
1, 1999, of the Court of Appeals in CA-G.R. SP No. 52970 dismissing their
special civil action for certiorari, and also its resolution dated August 4,
1999, denying their motion for reconsideration.
The factual antecedents of this petition are as follows:
Spouses Ramon Isidro P. Lapid and Gladys B. Lapid are the parents of
seven-year-old Christopher B. Lapid, who was a Grade 1 pupil of the
respondent school, St. Therese of the Child Jesus, a private educational
institution providing preschool and elementary education at Malabon, Metro
Manila. Private respondents Esperanza N. Prim, Norilyn A. Cruz, Flordeliza C.
Santos and Macario B. Binondo are its directress, teacher-in-charge,
guidance counselor and principal, respectively.
On May 8, 1998, petitioners filed a complaint for damages against the
private respondents before the Regional Trial Court (RTC), Malabon, Metro
Manila, Branch 169, docketed as Civil Case No. 2839 MN.[2]
In their complaint, the Lapid spouses averred that on November 5, 1997,
Mrs. Lapid went to St. Therese and looked for Ms. Norilyn A. Cruz,
Christophers classroom teacher. The directress, Mrs. Esperanza N. Prim,
prohibited her from seeing Ms. Cruz so as not to disrupt ongoing
classes. Mrs. Prim advised Mrs. Lapid to return later that day. On her return,
Mrs. Lapid was surprised to see that a letter prepared by Mr. Binondo, the
school principal, was already waiting for her, apprising her of Christophers
suspension for five days effective the following day or on November 6, 1997.
Petitioners averred that their son was summarily dismissed from
school sans notice and hearing. Petitioners denied any knowledge of the
alleged letters of complaint filed by the parents whose children were
allegedly offended by Christopher. As a result of the strained relations
between the Lapids and the school management, Christopher was
transferred to a different school immediately thereafter.
Petitioners then filed a letter-complaint with Hon. Antonio Nachura,
Undersecretary of the Department of Education, Culture & Sports (DECS),
assailing the respondent schools refusal to admit their son in his
class. Petitioners also demanded an investigation of the circumstances
leading to their sons suspension. This letter-complaint was later indorsed to
the DECS Hearing Officer of Valenzuela, Metro Manila. At the hearing,
petitioners demanded a written retraction and a public apology from the
school officials, copy furnished the DECS. The school officials, however,
refused. This compelled petitioners to file the present case for damages.
 According to petitioners, the schools malicious imputation against their
son tarnished their good name and reputation. Petitioners said Mr. Lapid is a
Bachelor of Laws graduate, a college professor, and Branch Clerk of Court of
the Metropolitan Trial Court, Branch 41, Quezon City; while Mrs. Lapid is an
account analyst at the Philippine Airlines Administrative Office in Makati, and
both of them belonging to good and reputable families. They prayed for
moral damages in the amount of One Million Pesos (P1,000,000), exemplary
damages in the amount of P100,000, and another P100,000 for actual and
consequential damages.[3]
In their answer, respondent school officials stated that as early as June
1997, Ms. Cruz had been sending them letters regarding Christophers
mischief in school, as evidenced by the letters dated June 20, 1997 and June
25, 1997. According to said respondents, Christopher had committed serious
infractions when he hurt not only his classmates but also his classroom
teacher, Ms. Cruz, and one school employee. They added that at one time,
Christopher stabbed a classmate with a pencil, and at another time, he hit a
teacher with a backpack. These incidents were all recorded by Ms. Cruz and
reported to the Guidance Counselor, Mrs. Flordeliza C. Santos.
Private respondents added in their answer that on several occasions, the
parents of students offended by Christopher lodged complaints with the
school against Christopher, urging the administration to impose appropriate
disciplinary action on him. After most of these incidents, averred private
respondents, Ms. Cruz had called up petitioners house to acquaint them with
these complaints. Said phone calls were received, often by Mrs. Gloria
Manapat Bautista, grandmother and guardian de facto of
Christopher. Private respondents lamented, however, that all their efforts to
reach the Lapid spouses personally turned out to be futile.
On November 18, 1998,[4] petitioners filed a motion to declare
respondent school as in default, which motion was denied by the trial court
in an order dated February 9, 1999.[5]Petitioners moved for a
reconsideration, but said motion was likewise denied on March 11, 1999.[6]
With the denial of their motion for reconsideration, petitioners filed a
petition for certiorari with the Court of Appeals, docketed as CA-G.R. SP No.
52970.
In a resolution June 1, 1999, the appellate court dismissed the petition
for failure to indicate the material date, particularly the date of filing of
motion for reconsideration with the RTC, as required by Supreme Court
Circular No. 39-98, amending Section 3 of Rule 46 of the 1997 Rules of Civil
Procedure.[7]
In the appellate courts view, this formal requirement is needed to
ascertain whether the petition was filed within the reglementary period as
provided in Section 4, Rule 65 of the same rules, also as amended by SC
Circular No. 39-98.[8]
Unfazed, on June 15, 1999, the petitioners filed a motion for
reconsideration of the CA resolution, but still without indicating the date as
to when their motion for reconsideration of the RTC order was filed. Hence,
in its second assailed resolution[9] dated August 4, 1999, the appellate court
denied said motion for reconsideration.
Before us, petitioners now impute error to the Court of Appeals in issuing
the June 1, 1999 and August 4, 1999 resolutions, in this wise:

THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE PETITION

ON GROUNDS OF PURE TECHNICALITY, FAILING TO APPRECIATE THE
IMPORT OR MERIT OF THE CASE WHICH POSES THE QUESTION OF
WHETHER OR NOT A CORPORATION CAN ACT WITHOUT THE EXPRESS
CONCURRENCE OF ITS BOARD OF DIRECTORS.[10]

The basic issue posed before this Court is whether or not the Court of
Appeals erred in dismissing the petition for certiorari filed by petitioners on
the ground of formal and procedural deficiency, i.e., the petitioners failure to
state a material date in their petition for certiorari.
Petitioners contend that it was error for the appellate court to dismiss the
petition on grounds of pure technicality. This, they say, undermines the oft-
repeated doctrine by this Court that the rules of procedure are used only to
help secure, not override, substantial justice[11] considering that the
principal appellant is their seven-year-old son.[12] They boldly assert that
technicalities should be set aside in this case on meritorious grounds, which
they have raised in the petition particularly the issue as to whether or not a
corporation can act without the express concurrence of its Board of
Directors.[13]
Private respondents, for their part, staunchly maintain that petitioners
wanton disregard of the Rules of Court warrant the outright dismissal of
their petition.[14] In their memorandum, private respondents stressed that
petitioners had made false statements of material dates.[15] They add that
the present petition raises factual issues that the Court cannot pass upon at
the first instance.
After a careful consideration of the submissions of the parties,
particularly their respective memoranda, we are constrained to agree with
the ruling of the respondent appellate court which dismissed the instant
petition for certiorari. We find no reversible error in the assailed resolutions
of the Court of Appeals because in filing a special civil action for certiorari
without indicating the requisite material date thereon, petitioners violated
basic tenets of remedial law, particularly Rule 65 of the Rules of Court.
 There are three material dates that must be stated in a petition for
certiorari brought under Rule 65. First, the date when notice of the judgment
or final order or resolution was received; second, the date when a motion for
new trial or for reconsideration was filed; and third, the date when notice of
the denial thereof was received. [16] In the case before us, the petition filed
with the CA failed to indicate the second date, particularly the date of filing
of their motion for reconsideration.[17] As explicitly stated in the
aforementioned Rule, failure to comply with any of the requirements shall be
sufficient ground for the dismissal of the petition.
The rationale for this strict provision of the Rules of Court is not difficult
to appreciate. As stated in Santos vs. Court of Appeals,[18] the requirement
is for purpose of determining the timeliness of the petition, thus:

The requirement of setting forth the three (3) dates in a petition for
certiorari under Rule 65 is for the purpose of determining its
timeliness. Such a petition is required to be filed not later than sixty (60)
days from notice of the judgment, order or Resolution sought to be
assailed. Therefore, that the petition for certiorari was filed forty-one (41)
days from receipt of the denial of the motion for reconsideration is hardly
relevant. The Court of Appeals was not in any position to determine
when this period commenced to run and whether the motion for
reconsideration itself was filed on time since the material dates were
not stated. x x x (Stress supplied.)

Moreover, as reiterated in Mabuhay vs. NLRC, 288 SCRA 1, 6: As a rule,

the perfection of an appeal in the manner and within the period prescribed
by law is jurisdictional and failure to perfect an appeal as required by law
renders the judgment final and executory.
We are not unmindful of exceptional cases where this Court has set aside
procedural defects to correct a patent injustice. However, concomitant to a
liberal application of the rules of procedure should be an effort on the part of
the party invoking liberality to at least explain its failure to comply with the
rules.[19] In the instant case, the petition was bereft of any persuasive
explanation as to why petitioners Ramon and Gladys Lapid failed to observe
procedural rules properly. The record shows that through their counsel they
failed not only once but twice to indicate the material date required by
law. Counsel for petitioners had all the opportunity to comply with the rules,
but counsel remained obstinate in her non-observance thereof even when
she sought reconsideration of the ruling of the respondent court dismissing
her clients petition.[20] Such obstinacy is inconsistent with her late plea for
liberality in construing the rules on certiorari. Thus, any further delay that
would inadvertently result from the dismissal of the instant petition is one
purely of petitioners own making, considering that it is an elementary
principle in law that negligence of counsel binds the client.[21]
We find unsatisfactory the explanation of petitioners, through counsel,
that they have not come across said Circular No. 39-98 at the time of the
filing of the petition in the CA.[22] On one hand, law practitioners and all
lawyers, for that matter, should be fully conversant with the requirements
for the institution of certiorari proceedings under Rule 65 of the Revised
Rules of Court. On the other hand, ignorantia legis non
excusat.[23] Ignorance in this regard encompasses not only substantive but
also procedural laws.
A final note. Members of the bar are reminded that their first duty is to
comply with the rules of procedure, rather than seek exceptions as
loopholes. Technical rules of procedure are not designed to frustrate the
ends of justice. These are provided to effect the prompt, proper and orderly
disposition of cases and thus effectively prevent the clogging of court
dockets. Utter disregard of these rules cannot justly be rationalized by
harking on the policy of liberal construction.[24]
All told, no reversible error can be ascribed to the Court of Appeals for
dismissing the petition for certiorari and later denying the petitioners motion
for reconsideration.
WHEREFORE, the instant petition is DENIED. The assailed resolutions of
the Court of Appeals dated June 1,1999 and August 4, 1999 in CA-G.R. SP
No. 52970 are AFFIRMED. Cost against petitioners.
SO ORDERED.

[A.C. No. 6295. April 14, 2004]

JOSEFINA B. FAJARDO, complainant, vs. ATTY. DANILO DELA

TORRE, respondent.

RESOLUTION
YNARES-SANTIAGO, J.:

Complainant was the defendant in Civil Case No. 581 for Forcible Entry,
entitled, Felisa Imperial versus Josefina Fajardo, and the plaintiff in Civil
Case No. 582 for Unlawful Detainer, entitled, Josefina B. Fajardo versus
Felisa Imperial. The cases were consolidated and tried jointly by the
Municipal Trial Court of Ba-ao, Camarines Sur, which rendered judgment in
favor of Imperial.[1] Complainants counsel, respondent herein, appealed to
the Regional Trial Court of Iriga City, which affirmed the appealed decision.
Hence, complainant instructed respondent to file a petition for review
with the Court of Appeals. Respondent demanded the amount of
P4,300.00[2] for the preparation and filing of the petition which complainant
complied by remitting the amount to respondent.
It appears that the petition for review was later dismissed by the Court
of Appeals on the grounds of insufficient payment of docket fees and failure
to attach the certified true copy of the assailed decision. Complainant only
learned of the resolution dismissing her petition when her opponent,
Imperial, filed a motion for new trial attaching a copy thereof in the separate
action filed by complainant with the RTC of Iriga City for recovery of
possession.
Complainant thus filed a complaint charging respondent of Gross
Ignorance of the Law and Negligence in the Performance of Profession.[3]
The Integrated Bar of the Philippines Commission on Bar Discipline
directed respondent to answer the complaint. Despite receipt of the Order of
the IBP-CBD, respondent failed to answer the Complaint.
Subsequently, the IBP Commission on Bar Discipline issued a Notice
dated February 13, 2001[4] setting the case for hearing on March 13,
2001. Again, despite receipt by respondent of the notice, he failed to appear
at the scheduled hearing. Complainant was allowed to present her
evidence ex parte.
On September 22, 2003, the IBP-CBD submitted its Report finding
respondent liable as charged and recommending that he be fined P1,500.00
and suspended from the practice of law for a period ranging from four (4) to
six (6) months. The IBP Board of Governors adopted the findings of the
Investigating Commissioner but reduced the suspension to one (1) month.
While we agree with the finding that respondent is liable for negligence,
we find inadequate the recommended period of suspension. Hence, we
impose on respondent the penalty of suspension from the practice of law for
a period of one (1) year.
In Ingles v. Dela Serna,[5] it was held:

Complaints against lawyers for misconduct are normally addressed to the

Court. If, at the outset, the Court finds the complaint to be clearly wanting
in merit, it outrightly dismisses the case. If, however, the Court deems it
necessary that further inquiry should be made, such as when the matter
could not be resolved by merely evaluating the pleadings submitted, referral
is made to the IBP for formal investigation of the case during which the
parties are accorded an opportunity to be heard. An ex parte investigation
may only be conducted when respondent fails to appear despite
reasonable notice. Hereunder are some of the pertinent provisions of Rule
139-B of the Rules of Court on this matter, viz:

x x x x x x x x x.

SEC. 8. Investigation. Upon joinder of the issues or upon failure of

respondent to answer, the Investigator shall, with deliberate speed,
proceed with the investigation of the case. He shall have the power to
issue subpoenas and administer oaths. The respondent shall be given full
opportunity to defend himself, to present witnesses on his behalf and be
heard by himself and counsel. However, if, upon reasonable notice, the
respondent fails to appear, the investigation shall proceed ex parte.

The Investigator shall terminate the investigation within three (3) months
from the date of its commencement, unless extended for good cause by the
Board of Governors, upon prior application.

Willful failure or refusal to obey a subpoena or any other order

issued by the Investigator shall be dealt with as for indirect
contempt of Court. The corresponding charge shall be filed by the
Investigator with the before the IBP Board of Governors which shall require
the alleged contemnor to show cause within ten (10) days from notice. The
IBP Board of Governors may thereafter conduct hearings, if necessary in
accordance with the procedure set forth in this Rule for hearings set before
the Investigator. Such hearing shall, as far as practicable, be terminated
within fifteen (15) days from its commencement. Thereafter, the IBP Board
of Governors shall within a like period of fifteen (15) days issue a resolution
setting forth its findings and recommendations, which shall forthwith be
transmitted to the Supreme Court for final action and if warranted, the
imposition of the penalty.

The procedure outlined by the Rules are meant to ensure that the innocents
are spared from wrongful condemnation and that only the guilty are meted
their just due. Obviously, these requirements are not to be taken
lightly. (Emphasis and italics supplied)

The records show that from the time respondent was directed to file his
answer up to the time the IBP Board of Governors issued a Resolution
adopting the recommendation of the Investigating
Commissioner, nothing was heard from respondent despite due
notice. Hence, he is deemed to have waived the opportunity to present
witnesses on his behalf or to be heard by himself and counsel.
 The records show that respondent asked for the amount of P4,300.00 for
the preparation of the petition for review to be filed with the Court of
Appeals, which amount was itemized as follows:

Postage - P 350.00
(bulky -21 copies plus annexes)

Xerox copies - 750.00

(@ 500 pages)
(clear copy)
Miscellaneous - 200.00
Legal fees - P 3,000.00
-------------
P4,300.00[6]
However, the Resolution of the Court of Appeals which dismissed the
petition reads:

Before Us is a Petition for Review filed on January 27, 2000. From the
records, it appears that the said petition is not sufficient in form. For one,
the payment of the docketing fees remitted by the petitioner was for
only P650.00, which is short by P280.00. Likewise, the attached copy of
the questioned RTC Decision dated December 15, 1999 is merely a plain
photocopy, in violation of Sec. 2(d) of Rule 42 of the 1997 Rules of Court.

WHEREFORE, for violation of Sec. 1 and Sec. 2(d) in relation to Sec. 3 of

Rule 42 of the 1997 Rules of Court, the instant petition is
hereby DISMISSED.

SO ORDERED. (Emphasis and italics supplied)[7]

Respondent was not only remiss in the preparation of the petition, but
may have misappropriated a portion of the sum remitted to him by
complainant for the purpose of filing the petition because the docketing fees
he remitted was short of P280.00. What is worse is that respondent failed to
inform complainant of the actual status of the appeal. Such behavior cannot
and should not be countenanced because they run afoul with the following
provisions of the Code of Professional Responsibility:

CANON 15. A lawyer shall observe candor, fairness and loyalty in all his
dealings and transactions with his clients.

CANON 16. A lawyer shall hold in trust all moneys and property collected or
received for or from the client.
Rule 16.01. A lawyer shall account for all money or property collected or
received for or from the client.

Rule 16.02. A lawyer shall keep the funds of each client separate and apart
from his own and those of others kept by him.

Rule 16.03. A lawyer shall deliver the funds and the property of his client
when due or upon demand. However, he shall have a lien over the funds and
may apply so much thereof as may be necessary to satisfy his lawful fees
and disbursements, giving notice promptly thereafter to his client. He shall
also have lien to same extent on all judgments and executions he has
secured for his client as provided for in the Rules of Court.

xxxxxxxxx

CANON 17. A lawyer owes fidelity to the cause of his client and he shall be
mindful of the trust and confidence in him.

xxxxxxxxx

Rule 18.04. A lawyer shall keep the client informed of the status of his case
and shall respond within a reasonable time to the clients request for
information.

It appears that complainant learned about the dismissal of her petition

only through the copy of the appellate courts resolution appended to an
omnibus motion for new trial and reconsideration[8] in another
case, i.e., Civil Case No. 588 for Recovery of Ownership and
Possession. In Garcia v. Manuel,[9] it was held:

The relationship of lawyer-client being one of confidence, there is ever

present the need for the client to be adequately and fully informed of
the developments of the case and should not be left in the dark as to
mode and manner in which his interests are being defended. It is only
thus that the trust and faith in the counsel may remain unimpaired.
(Emphasis and italics supplied)

Furthermore, it was held in Rabanal v. Tugade[10] that an attorney is

bound to protect his clients interest to the best of his ability and with utmost
diligence. Implicit with this directive is the command that all lawyers are
duty-bound to keep abreast of the law and legal developments as well as to
participate in continuing legal education programs.[11] All law practitioners
should be fully conversant of the requirements for the filing of certiorari
proceedings under Rule 65 of the Rules of Court.[12] Ignorantia legis non
excusat.[13] Ignorance encompasses not only substantive but also procedural
laws.[14]
Moreover, Rule 18.03 of the Code of Professional Responsibility
mandates that a lawyer shall not neglect a legal matter entrusted to him and
his negligence in connection therewith shall render him liable. Verily:

Once he agrees to take up the cause of a client, a lawyer owes fidelity to

such cause and must always be mindful of the trust and confidence reposed
in him. He must serve the client with competence and diligence and
champion the latters cause with wholehearted fidelity, care and
devotion. Elsewise stated, he owes entire devotion to the interest of the
client, warm zeal in the maintenance and defense of his clients rights, and
the exertion of his utmost learning and ability to the end that nothing be
taken or withheld from his client, save by the rules of law, legally
applied. This simply means that his client is entitled to the benefit of any and
every remedy and defense that is authorized by the law of the land and he
may expect his lawyer to assert every such remedy or defense. If much is
demanded from an attorney, it is because the entrusted privilege to practice
law carries with it the correlative duties not only to the client but also to the
court, to the bar and to the public. A lawyer who performs his duty with
diligence and candor not only protects the interest of his client; he also
serves the ends of justice, does honor to the bar and helps maintain the
respect of the community to the legal profession.[15]

The records further show that a similar complaint[16] for malpractice and
unethical behavior has been filed against respondent by complainants son
with the IBP for the dismissal of Special Proceedings No. 1471 as a result of
respondents gross negligence. The foregoing only serves to aggravate and to
underscore respondents malfeasance.
The misconduct of respondent is not, however, limited to his professional
duties towards his clients.
Respondents consistent refusal to comply with lawful orders during the
proceedings before the Commission on Bar Discipline without any
explanation, despite receipt of notice, borders on the willful and is not lost
on the Court. In Grande v. De Silva,[17] the Court held:

Needless to state, respondents persistent refusal to comply with lawful

orders directed at her with not even an explanation for doing so
is contumacious conduct which merits no compassion. The duty of a lawyer
is to uphold the integrity and dignity of the legal profession at all times. She
can only do this by faithfully performing her duties to society, to the bar, to
the courts and to her clients. We can not tolerate any misconduct that tends
to besmirch the fair name of an honorable profession.
 All told, respondent has failed to do his duty to his client and has clearly
violated the Code of Professional Responsibility. His actions erode the publics
perception of the legal profession.
As consistently held by this Court, disbarment shall not be meted out
where a lesser penalty could accomplish the end desired.[18] However, the
penalty of suspension from the practice of law for one (1) month imposed by
the IBP Board of Governors is not proportionate to respondents violation of
several Canons of the Code of Professional Responsibility. Thus, he deserves
a graver penalty,
WHEREFORE, in view of all the foregoing, respondent Atty. DANILO
DELA TORRE is hereby SUSPENDED from the practice of law for a period of
one (1) year.
This resolution shall take effect immediately. Copies hereof shall be
furnished the Office of the Bar Confidant, to be appended to respondents
personal record; the Office of the President; the Department of Justice; the
Court of Appeals; the Sandiganbayan and the Integrated Bar of
the Philippines. The Court Administrator shall also furnish all lower courts
with copies of this Resolution.
SO ORDERED.

G.R. No. 189649, April 20, 2015

ADORACION CAROLINO (SPOUSE AND IN SUBSTITUTION OF THE

DECEASED JEREMIAS A. CAROLINO), Petitioner, v. GEN. GENEROSO
SENGA, AS CHIEF OF STAFF OF THE ARMED FORCES OF THE
PHILIPPINES (AFP); BRIG. GEN. FERNANDO ZABAT, AS CHIEF OF
THE AFP FINANCE CENTER; COMMO. REYNALDO BASILIO, AS CHIEF
OF THE AFP-GHQ MANAGEMENT AND FISCAL OFFICE; AND COMMO.
EMILIO MARAYAG, PENSION AND GRATUITY OFFICER, PENSION AND
GRATUITY MANAGEMENT CENTER, AFP FINANCE CENTER, Respondent.

DECISION

PERALTA, J.:

Before us is a petition for review under Rule 45 seeking to reverse and set
aside the Decision1 dated May 25, 2009 of the Court of Appeals (CA) in CA-
G.R. SP No. 103502 and the Resolution2 dated September 10, 2009 denying
reconsideration thereof.

The factual and legal antecedents are as follows:

On December 1, 1976, Jeremias A. Carolino, petitioner's husband,
retired3 from the Armed Forces of the Philippines (AFP) with the rank of
Colonel under General Order No. 1208 dated November 29, 1976, pursuant
to the provisions of Sections 1(A) and 10 of Republic Act (RA) No. 340,4 as
amended. He started receiving his monthly retirement pay in the amount of
P18,315.00 in December 1976 until the same was withheld by respondents
in March 2005. On June 3, 2005, Jeremias wrote a letter5 addressed to the
AFP Chief of Staff asking for the reasons of the withholding of his retirement
pay. In a letter reply,6 Myrna F. Villaruz, LTC (FS) PA, Pension and Gratuity
Officer of the AFP Finance Center, informed Jeremias that his loss of Filipino
citizenship caused the deletion of his name in the alpha list of the AFP
Pensioners' Payroll effective March 5, 2005; and that he could avail of re-
entitlement to his retirement benefits and the restoration of his name in the
AFP Pensioners' Masterlist Payroll by complying with the requirements
prescribed under RA No. 9225, or the Dual Citizenship Act.

It appeared that the termination of Jeremias' pension was done pursuant to

Disposition Form7 dated October 29, 2004, which was approved by the Chief
of Staff and made effective in January 2005. In the said Disposition Form,
the AFP Judge Advocate General opined that under the provisions of Sections
4, 5, and 6 of RA No. 340, retired military personnel are disqualified from
receiving pension benefits once incapable to render military service as a
result of his having sworn allegiance to a foreign country. It was also
mentioned that termination of retirement benefits of pensioner of the AFP
could be done pursuant to the provisions of Presidential Decree (PD) No.
16388 which provides that the name of a retiree who loses his Filipino
citizenship shall be removed from the retired list and his retirement benefits
terminated upon such loss. It being in consonance with the policy
consideration that all retirement laws inconsistent with the provisions of PD
No. 1638 are repealed and modified accordingly.

On August 24, 2006, Jeremias filed with the Regional Trial Court (RTC) of
Quezon City, a Petition for Mandamus9 against Gen. Generoso Senga, as
Chief of Staff of the AFP, Brig. Gen. Fernando Zabat, as Chief of the AFP
Finance Center, Comm. Reynaldo Basilio, as Chief of the AFP-GHQ
Management and Fiscal Office, and Comm. Emilio Marayag, Pension and
Gratuity Management Officer, Pension and Gratuity Management Center, AFP
Finance Center, seeking reinstatement of his name in the list of the AFP
retired officers, resumption of payment of his retirement benefits under RA
No. 340, and the reimbursement of all his retirement pay and benefits which
accrued from March 5, 2005 up to the time his name is reinstated and,
thereafter, with claim for damages and attorney's fees. The case was
docketed as Civil Case No. Q-06-58686, and raffled off to Branch 220.
On February 26, 2007, the RTC rendered its Decision10 granting the petition
for mandamus, the dispositive portion of which
reads:chanroblesvirtuallawlibrary

WHEREFORE, judgment is hereby rendered ordering General Hermogenes

Esperon, Jr., as Chief of Staff of the AFP, Brigadier General Fernando Zabat,
as the Commanding Officer of the AFP Finance Center, Commodore Reynaldo
Basilio, as Chief of the AFP-GFIQ Management and Fiscal Office, and Captain
Theresa M. Nicdao, as Pension and Gratuity Officer of the Pension and
Gratuity Management Center, or any of their respective successors and
those taking instructions from them as agents or subordinates,
to:chanroblesvirtuallawlibrary

a. immediately reinstate the name of petitioner in the list of retired AFP

Officers, and to resume payment of his retirement benefits under RA
340; and

b. release to [petitioner] all retirement benefits due him under RA 340

which accrued to him from March 2005 continuously up to the time his
name is reinstated in the list of AFP retired officers.11

The RTC found that the issue for resolution is the applicability of RA No. 340
and PD No. 1638 upon Jeremias' retirement benefits. It found that he retired
as a commissioned officer of the AFP in 1976; thus, RANo. 340 is the law
applicable in determining his entitlement to his retirement benefits and not
PD No. 1638 which was issued only in 1979. Article 4 of the Civil Code
provides that "laws shall have no retroactive effect unless the contrary is
provided." PD No. 1638 does not provide for such retroactive application.
Also, it could not have been the intendment of PD No. 1638 to deprive its
loyal soldiers of a monthly pension during their old age especially where, as
here, the right had been vested to them through time. RA No. 340 does not
provide that the loss of Filipino citizenship would terminate one's retirement
benefits; and that PD No. 1638 does not reduce whatever benefits that any
person has already been receiving under existing law.

Respondents sought reconsideration,12 but the RTC denied the same in an

Order13 dated May 25, 2007, the decretal portion of which
reads:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, the instant Motion for Reconsideration
is hereby DENIED, considering that the questioned decision has not yet
attained.its finality. The Motion for Execution in the meantime is
hereby DENIED.14cralawlawlibrary
Aggrieved, respondents elevated the case to the CA. After the submission of
the parties' respective memoranda, the case was submitted for decision.
Jeremias died on September 30, 200715 and was substituted by his wife,
herein petitioner.

On May 25, 2009, the CA granted respondents' appeal. The dispositive

portion of the CA decision reads:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, the instant appeal is GRANTED. The
appealed decision is REVOKED and SET ASIDE.16cralawlawlibrary
In so ruling, the CA found that while it is true that Jeremias retired in 1976
under the provisions of RA No. 340, as amended, which does not contain any
provision anent cessation or loss of retirement benefits upon acquiring
another citizenship, PD No. 1638, which was signed in 1979, effectively
repealed RA No. 340, as amended. Section 27 of PD No. 1638, which
provides that the name of a retiree who loses his Filipino citizenship shall be
removed from the retired list and his retirement benefits terminated upon
such loss, was correctly made applicable to Jeremias' retirement benefits.
Logic dictates that since Jeremias had already renounced his allegiance to
the Philippines, he cannot now be compelled by the State to render active
service and to render compulsory military service when the need arises. The
CA found that for the writ of mandamus to lie, it is essential that Jeremias
should have a clear legal right to the thing demanded and it must be the
imperative duty of respondents to perform the act required which petitioner
failed to show; thus, mandamus will not lie.

Petitioner's motion for reconsideration was denied in a Resolution dated

September 10, 2009.

Hence, this petition raising the following:chanroblesvirtuallawlibrary

RESPONDENT COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR
IN RENDERING THE ASSAILED DECISION AND RESOLUTION WHICH SET
ASIDE AND REVERSED THE 26 FEBRUARY 2007 DECISION OF THE QC RTC
BECAUSE:chanroblesvirtuallawlibrary
PD 1638 should not have been applied and cannot be used against petitioner
as her husband's retirement and pension were granted to him by the AFP
under RA 340 which was not superseded by PD 1638, a later statute.

Petitioner correctly availed of the remedy of mandamus to compel the

reinstatement of his pension and benefits from the AFP under RA 340 as PD
1638 was not applicable to him.
Petitioner contends that her husband's retirement from the active service in
1976 was pursuant to the provisions of RA No. No. 340 as PD No. 1638 was
not yet in existence then, and there was nothing in RA No. 340 that
disqualifies a retired military personnel from receiving retirement benefits
after acquiring foreign citizenship. The concept of retirement benefits is such
that one is entitled to them for services already rendered and not for those
to be made at a future time. Retirement benefits due petitioner's husband
under RA No. 340, is an acquired right which cannot be taken away by a
subsequent law. PD No. 1638 does not expressly provide for its retroactive
application. Respondents, being officers of the AFP tasked to implement the
provisions of RA No. 340 have neglected their function thereunder by
delisting petitioner's husband as a retiree, thus, mandamus is proper.

In his Comment, the Solicitor General argues that PD No. 1638 applies to all
military personnel in the service of the AFP whether active or retired; hence,
it applies retroactively to petitioner's husband. Even when a retiree is no
longer in the active service, his being a Filipino still makes him a part of the
Citizen Armed Forces; that whether a military personnel retires under the
provisions of RA No. 340 or under PD No. 1638, he is still in the service of
the military and/or the State only that he is retired, thus, they should not be
treated differently upon the loss of Filipino citizenship. He argues when there
is an irreconcilable conflict between the two laws of different vintages, i.e.,
RA No. 340 and PD No. 1638, the latter enactment prevails.

The Solicitor General argues that mandamus will not issue to enforce a right
to compel compliance with a duty which is questionable or over which a
substantial doubt exists. In this case, petitioner's husband does not have a
well-defined, clear and certain legal right to continuously receive retirement
benefits after becoming an American citizen. Likewise, the AFP does not
have a clear and imperative duty to grant the said benefits considering that
Section 27 of PD No. 1638 provides that the name of a retiree who loses his
Filipino citizenship shall be removed from the retired list and his retirement
benefits terminated upon such loss.

Petitioner filed her reply thereto. We find merit in the petition.

Petitioner's husband retired in 1976 under RA No. 340. He was already

receiving his monthly retirement benefit in the amount of P18,315.00 since
December 1976 until it was terminated in March 2005. Section 5, RA No.
340 provides:chanroblesvirtuallawlibrary
Sec. 5. Officers and enlisted men placed in the retired list shall be subject to
the rules and articles of war and to trial by court-martial for any breach
thereof. At any time said officers and enlisted men may be called to active
service by the President. Refusal on the part of any officer or enlisted man to
perform such services shall terminate his right to further participation in the
benefits of this Act provided he resides in the Philippines and is physically fit
for service. Such fitness for service shall be determined by applicable
regulations.
The afore-quoted provision clearly shows how a retiree's retirement benefits
may be terminated, i.e., when the retiree refuses to perform active service
when called to do so provided that (1) the retiree resides in the Philippines
and (2) is physically fit for service. There is no other requirement found in
the law which would be the reason for the termination of a retiree's
retirement benefits. Petitioner's husband was never called to perform active
service and refused to do so, however, his retirement benefit was
terminated. The reason for such termination was his loss of Filipino
citizenship based on Section 27 of PD No. 1638, to
wit:chanroblesvirtuallawlibrary
Section 27. Military personnel retired under Sections 4, 5, 10, 11 and 12
shall be carried in the retired list of the Armed Forces of the Philippines. The
name of a retiree who loses his Filipino citizenship shall be removed from the
retired list and his retirement benefits terminated upon such loss.
We find that the CA erred in applying PD No. 1638 to the retirement benefits
of petitioner's husband.

Firstly, PD No. 1638 was signed by then President Ferdinand Marcos on

September 10, 1979. Under Article 4 of the Civil Code, it is provided that
laws shall have no retroactive effect, unless the contrary is provided. It is
said that the law looks to the future only and has no retroactive effect unless
the legislator may have formally given that effect to some legal
provisions;17 that all statutes are to be construed as having only prospective
operation, unless the purpose and intention of the legislature to give them a
retrospective effect is expressly declared or is necessarily implied from the
language used; and that every case of doubt must be resolved against
retrospective effect.18 These principles also apply to amendments of
statutes.

PD No. 1638 does not contain any provision regarding its retroactive
application, nor the same may be implied from its language. In fact, Section
36 of PD No. 1638 clearly provides that the decree shall take effect upon its
approval. As held in Parreno v. COA,19 there is no question that PD No.
1638, as amended, applies prospectively. Since PD No. 1638, as amended,
is about the new system of retirement and separation from service of
military personnel, it should apply to those who were in the service at the
time of its approval.20 Conversely, PD No. 1638 is not applicable to those
who retired before its effectivity in 1979. The rule is familiar that after an act
is amended, the original act continues to be in force with regard to all rights
that had accrued prior to such amendment.21

Moreover, Section 27 of PD No. 1638 specifically provides for the retirees to

whom the law shall be applied, to wit:chanroblesvirtuallawlibrary
Section 27. Military personnel retired under Sections 4, 5, 10, 11 and
12 shall be carried in the retired list of the Armed Forces of the Philippines.
The name of a retiree who loses his Filipino citizenship shall be removed
from the retired list and his retirement benefits terminated upon such loss,
(emphasis supplied)
Notably, petitioner's husband did not retire under those above-enumerated
Sections of PD No. 1638 as he retired under RA No. 340.

Secondly, it has been held that before a right to retirement benefits or

pension vests in an employee, he must have met the stated conditions of
eligibility with respect to the nature of employment, age, and length of
service.22 Undeniably, petitioner's husband had complied with the conditions
of eligibility to retirement benefits as he was then receiving his retirement
benefits on a monthly basis until it was terminated. Where the employee
retires and meets the eligibility requirements, he acquires a vested right to
the benefits that is protected by the due process clause.23 It is only upon
retirement that military personnel acquire a vested right to retirement
benefits.24 Retirees enjoy a protected property interest whenever they
acquire a right to immediate payment under pre-existing law.25

In Ayog v. Cusi,26 we expounded the nature of a vested right,

thus:chanroblesvirtuallawlibrary
"A right is vested when the right to enjoyment has become the property of
some particular person or persons as a present interest" (16 C.J.S. 1173). It
is "the privilege to enjoy property legally vested, to enforce contracts, and
enjoy the rights of property conferred by the existing law" (12 C.J.S. 955,
Note 46, No. 6) or "some right or interest in property which has become
fixed and established and is no longer open to doubt or controversy" (Downs
vs. Blount 170 Fed. 15, 20, cited in Balboa vs. Farrales, 51 Phil. 498, 502).

The due process clause prohibits the annihilation of vested rights. "A state
may not impair vested rights by legislative enactment, by the enactment or
by the subsequent repeal of a municipal ordinance, or by a change in the
constitution of the State, except in a legitimate exercise of the police power"
(16 C.J.S. 1177-78).

It has been observed that, generally, the term "vested right" expresses the
concept of present fixed interest, which in right reason and natural justice
should be protected against arbitrary State action, or an innately just and
imperative right which an enlightened free society, sensitive to inherent and
irrefragable individual rights, cannot deny (16 C.J.S. 1174, Note 71, No. 5,
citing Pennsylvania Greyhound Lines, Inc. vs. Rosenthal, 192 Atl. 2nd
587).27cralawlawlibrary
Petitioner's husband acquired vested right to the payment of his retirement
benefits which must be respected and cannot be affected by the subsequent
enactment of PD No. 1638 which provides that loss of Filipino citizenship
terminates retirement benefits. Vested rights include not only legal or
equitable title to the enforcement of a demand, but also an exemption from
new obligations after the right has vested.28

In fact, Sections 33 and 35 of PD No. 1638 recognize such vested right, to

wit:chanroblesvirtuallawlibrary
Section 33. Nothing in this Decree shall be construed in any manner to
reduce whatever retirement and separation pay or gratuity or other
monetary benefits which any person is heretofore receiving or is entitled to
receive under the provisions of existing law.

xxxx

Section. 35. Except those necessary to give effect to the provisions of this
Decree and to preserve the rights granted to retired or separated military
personnel, all laws, rules and regulations inconsistent with the provisions of
this Decree are hereby repealed or modified accordingly.
Section 33 of PD No. 1638 is clear that the law has no intention to reduce or
to revoke whatever retirement benefits being enjoyed by a retiree at the
time of its passage. Hence, Section 35 provides for an exception to what the
decree repealed or modified, i.e., except those necessary to preserve the
rights granted to retired or separated military personnel.

We also find that the CA erred in finding that mandamus will not lie.

Section 3, Rule 65 of the Rules of Court lay down under what circumstances
petition for mandamus may be filed, to wit:chanroblesvirtuallawlibrary
SEC. 3. Petition for mandamus. - When any tribunal, corporation, board,
officer or person unlawfully neglects the performance of an act which the law
specifically enjoins as a duty resulting from an office, trust, or station, or
unlawfully excludes another from the use and enjoyment of a right or office
to which such other is entitled, and there is no other plain, speedy and
adequate remedy in the ordinary course of law, the person aggrieved
thereby may file a verified petition in the proper court, alleging the facts
with certainty and praying that judgment be rendered commanding the
respondent, immediately or at some other time to be specified by the court,
to do the act required to be done to protect the rights of the petitioner, and
to pay the damages sustained by the petitioner by reason of the wrongful
acts of the respondent.
A writ of mandamus can be issued only when petitioner's legal right to the
performance of a particular act which is sought to be compelled is clear and
complete. A clear legal right is a right which is indubitably granted by law or
is inferable as a matter of law.29 A doctrine well-embedded in our
jurisprudence is that mandamus will issue only when the petitioner has a
clear legal right to the performance of the act sought to be compelled and
the respondent has an imperative duty to perform the same.30 The remedy
of mandamus lies to compel the performance of a ministerial duty.31 A
purely ministerial act or duty is one that an officer or tribunal performs in a
given state of facts, in a prescribed manner, in obedience to the mandate of
a legal authority, without regard to or the exercise of its own judgment upon
the propriety or impropriety of the act done.32 If the law imposes a duty
upon a public officer, and gives him the right to decide how or when the duty
shall be performed, such duty is discretionary and not ministerial.33

The petition for mandamus filed by petitioner's husband with the RTC was
for the payment of his terminated retirement benefits, which has become
vested, and being a ministerial duty on the part of the respondents to pay
such claim, mandamus is the proper remedy to compel such payment.

The doctrine of exhaustion of administrative remedies calls for resort first to

the appropriate administrative authorities in the resolution of a controversy
falling under their jurisdiction before the same may be elevated to the courts
of justice for review.34 However, the principle of exhaustion of administrative
remedies need not be adhered to when the question is purely legal.35 This is
because issues of law cannot be resolved with finality by the administrative
officer.36 Appeal to the administrative officer would only be an exercise in
futility.37 Here, the question raised is purely legal, i.e., what law should be
applied in the payment of retirement benefits of petitioner's husband. Thus,
there was no need to exhaust all administrative remedies before a judicial
relief can be sought.cralawred

WHEREFORE, the petition is GRANTED. The Decision dated May 25, 2009
and the Resolution dated September 10, 2009 of the Court of Appeals are
hereby REVERSED and SET ASIDE. The Decision dated February 26, 2007
of the Regional Trial Court of Quezon City, Branch 220, is AFFIRMED.

SO ORDERED.chanroblesvirtuallawlibrary

A.M. No. 12-8-07-CA, June 16, 2015

RE: LETTER OF COURT OF APPEALS JUSTICE VICENTE S.E. VELOSO

FOR ENTITLEMENT TO LONGEVITY PAY FOR HIS SERVICES AS
COMMISSION MEMBER III OF THE NATIONAL LABOR RELATIONS
 COMMISSION

A.M. No. 12-9-5-SC

RE: COMPUTATION OF LONGEVITY PAY OF COURT OF APPEALS

JUSTICE ANGELITA A. GACUTAN

A.M. No. 13-02-07-SC

RE: REQUEST OF COURT OF APPEALS JUSTICE REMEDIOS A.

SALAZAR-FERNANDO THAT HER SERVICES AS MTC JUDGE AND AS
COMELEC COMMISSIONER BE CONSIDERED AS PART OF HER
JUDICIAL SERVICE AND INCLUDED IN THE
COMPUTATION/ADJUSTMENT OF HER LONGEVITY PAY

RESOLUTION

BRION, J.:

Prefatory Statement

The Consolidated Cases

and the Affected Parties

For the Courts consideration are the following: (1) letter-request dated
August 22, 2012, of Court of Appeals (CA) Associate Justice Remedios A.
Salazar-Fernando;1 (2) letter-request dated September 11, 2012, of
CA Associate Justice Angelita A. Gacutan;2 and (3) motion for
reconsideration3 dated November 7, 2012, of CA Associate Justice
Vicente S.E. Veloso.4redarclaw

The petitioners are all Justices of the Court of Appeals. Justices Veloso and
Fernando claim longevity pay for services rendered within and
outside the Judiciary as part of their compensation package. Justice
Gacutan, who has recently retired, claims deficiency payment of her
longevity pay for the services she had rendered before she joined the
Judiciary, as well as a re-computation of her retirement pay to include the
claimed longevity pay.

Interest in the outcome of these consolidated cases goes beyond

that of the petitioners; some incumbent justices and judges, before
joining the Judiciary, also served in the Executive Department and would like
to see these previous services credited in the computation of their longevity
pay. Others who had also previously served with the Executive Department
currently enjoy longevity pay credit for their executive service; they would
like to see their mistakenly granted longevity pay credits maintained.

Thus, the Courts decision on these consolidated cases, whether to

find for or against the petitioners, will likewise affect the interests of
other judges and justices in similar circumstance, including several
members of this honorable court participating in these matters.

Antecedents

A. Letter-Request of Justice Salazar-Fernando

In her letter dated August 22, 2012,5 Justice Salazar-Fernando requested

that her services as Judge of the Municipal Trial Court (MTC) of Sta.
Rita, Pampanga, from February 15, 1983 to July 31, 1987, and
as Commissioner of the Commission on Elections (COMELEC), from
February 14, 1992 to February 14, 1998, be considered as part of her
judicial services as in the case of Hon. Bernardo P. Pardo, Retired Associate
Justice of the Supreme Court. Accordingly, Justice Salazar-Fernando
requested that her longevity pay be adjusted from the current 10% to 20%
of [her] basic salary effective May 25, 1999.

We referred this letter-request to Atty. Eden T. Candelaria, Chief of the

Office of Administrative Services (OAS), for study and recommendation.

In her February 18, 2013 Memorandum,6 Atty. Candelaria recommended

that Justice Salazar-Fernandos services as MTC Judge be credited as judicial
service that can be added to her present longevity pay. Atty. Candelaria,
however, recommended the denial of Justice Salazar-Fernandos request
that her services at the COMELEC be also credited for her present longevity
pay. Nonetheless, she recommended that Justice Salazar-Fernandos
services in the COMELEC be included in the computation of her longevity pay
upon retirement as in the case of Justice Pardo.

B. Letter-Request of Justice Gacutan

In her letter7 dated September 11, 2012, Justice Gacutan requested that:
(a) her services as Commissioner IV of the National Labor Relations
Commission (NLRC), from March 3, 1998 to November 5, 2009, be
credited as judicial service for purposes of retirement; (b) she be given a
longevity pay equivalent to 10% of her basic salary; and (c) an adjustment
of her salary, allowances and benefits be made from the time she assumed
as CA Justice on November 6, 2009.
In the Courts Resolution8 of November 13, 2012, we required the Fiscal
Management and Budget Office (FMBO) to comment on Justice Gacutans
letter.

In her Comment of January 4, 2013, Atty. Corazon G. Ferrer-Flores, Deputy

Clerk of Court and Chief of Office of the FMBO, recommended that: (1)
Justice Gacutans request for the crediting of her services as Commissioner
IV of the NLRC as judicial service be granted, but only for purposes of her
retirement benefits, to take effect on her compulsory retirement on
December 3, 2013; and (2) Justice Gacutans request that her salary and
allowances be adjusted retroactive from her assumption of office in the CA
on November 6, 2009, be denied.9redarclaw

C. Motion for Reconsideration of Justice Veloso

In his November 7, 2012 motion for reconsideration,10 Justice Veloso

assailed the Courts October 23, 2012 Resolution11 that denied his request
for the crediting of his services as NLRC Commissioner as judicial service
for purposes of adjusting his salary and benefits, specifically his longevity
pay.

Justice Veloso claimed that Republic Act No. (RA) 9347 - which amended
Article 216 of the Labor Code - should be applied retroactively since it is a
curative statute. He maintained under this view that he already had the rank
of a CA Justice as NLRC Commissioner before he was appointed to the
appellate court on February 4, 2004.

We referred Justice Velosos motion for reconsideration to the FMBO for

report and recommendation in our Resolution of November 27, 2012.12 In
her Report and Recommendation dated February 15, 2013,13Atty. Ferrer-
Flores recommended that Justice Velosos motion for reconsideration be
denied since the points he raised were a rehash of his arguments in his July
30, 2012 letter-request.14redarclaw

Our Rulings

I. Letter of Justice Salazar-Fernando in A.M. No. 13-02-07-SC

a. Services as MTC Judge

We grant the request of Justice Salazar-Fernando to credit as

judicial service her previous services as MTC Judge of Sta. Rita,
Pampanga, as judicial service in the computation of her longevity
pay.
Section 42 of Batas Pambansa Bilang (B.P. Blg.) 129
provides:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
Section 42. Longevity pay. A monthly longevity pay equivalent to 5% of
the monthly basic pay shall be paid to the Justices and Judges of the courts
herein created for each five years of continuous, efficient, and meritorious
service rendered in the judiciary; Provided, That in no case shall the total
salary of each Justice or Judge concerned, after this longevity pay is added,
exceed the salary of the Justice or Judge next in rank. [Italics supplied;
emphasis and underscoring ours]
We find it undisputed that Justice Salazar-Fernando served as MTC Judge
from February 15, 1983 to July 31, 1987. This service constitutes
continuous, efficient, and meritorious service rendered in the Judiciaryand,
hence, should be included in the computation of her longevity pay.

b. Service as COMELEC Commissioner

We deny, however, the inclusion of Justice Salazar-Fernandos

request to credit her services as COMELEC Commissioner, from
February 14, 1992 to February 14, 1998, as judicial service for
longevity pay purposes.

The only service recognized for purposes of longevity pay under Section 42
of B.P. Blg. 129 is service in the Judiciary, not service in any other branch
of government. The COMELEC is an agency independent of the Judiciary;
hence, service in this agency cannot be considered as service rendered in
the Judiciary.

We find Justice Salazar-Fernandos invocation of the case of Justice Pardo, to

support her claim to longevity pay, misplaced.

b.1. Our Pardo Ruling

In In Re: Request of Justice Bernardo P. Pardo for Adjustment of His

Longevity Pay,15 we held that the inclusion of Justice Pardos service in the
COMELEC in the computation of his longevity pay upon his retirement was
predicated on the factual circumstances peculiar to him: he was an
incumbent CA Justice when he was appointed COMELEC Chairman,
and was appointed to the Supreme Court after his service with the
COMELEC, without any interruption in his service.

The Court - based on its reading of Section 3 of B.P. Blg. 12916 - did not
consider his intervening service in the COMELEC, an office outside the
Judiciary, as a disruption of his service in the Judiciary.

Notably, the Court in In Re: Justice Pardo liberally interpreted the phrase
the Court in Section 3 of BP 129 to mean the entire judiciary, not
just the Court of Appeals. The provision reads:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
Any member who is reappointed to the Court after rendering service in
any other position in the government shall retain precedence to which he
was entitled under his original appointment, and his service in the
Court shall, for all intents and purposes, be considered as continuous and
uninterrupted. (emphases supplied)
This provision was an amendment to Section 3 of BP 129 which, as originally
worded, referred only to the organization of the CA, the appointment
process of its justices, and the means by which seniority of rank is
determined among the CA justices. Executive Order No. 33 added this
phrase, and hence Section 3 now reads as:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
Sec. 3. Organization. There is hereby created a Court of Appeals which shall
consist of a Presiding Justice and fifty Associate Justices who shall be
appointed by the President of the Philippines. The Presiding Justice shall be
so designated in his appointment, and the Associate Justice shall have
precedence according to the dates of their respective appointments, or when
the appointments of two or more of them shall bear the same date,
according to the order in which their appointments were issued by the
President. Any member who is reappointed to the Court after rendering in
any other position in the government shall retain the precedence to which he
was entitled under his original appointment, and his service in the Court
shall, for all intents and purposes, be considered as continuous and
uninterrupted.
Thus, had the Court given a more literal interpretation of the phrase added
by EO No. 33, then it would have interpreted its application to refer to an
incumbent CA justice only. The phrase, after all, had been added to Section
3 of BP 129, which referred to the organization of the CA. Following this
interpretation, Justice Pardos service in the COMELEC would not have been
appreciated in determining his longevity pay, as he was reappointed not to
the CA, but to the Supreme Court.

Instead, the Court, taking a more liberal approach, interpreted the phrase
the Court to mean the entire judiciary. It noted that the additional phrase
in Section 3 used the generic word Court instead of Court of Appeals, and
that to apply the stricter application of interpreting Court to mean Court
of Appeals would lead to absurdity, contradiction, injustice, or would defeat
the clear purpose of the lawmakers.
Thus, following this more liberal approach, Justice Pardos one-time service
outside of the judiciary was considered part of his service in the judiciary for
purposes of determining his longevity pay. The same may be applied, for
instance, to a trial court judge who rendered service outside the judiciary
and then returned to being a member of the bench.

Thus, the Courts ruling in In Re: Justice Pardo is authority for expanding EO
No. 33s amendment to Section 3 of BP 129 to all members of the judiciary.

b.2. The liberal Pardo ruling cannot and should not be extended to
allow members of the judiciary to leave and return more than once,
without interrupting the continuity of their service.

The next question to be asked, then, refers to the frequency by which

members of the judiciary may be able to serve in other branches of
government without breaking their continuous and uninterrupted service.
Did the ruling in Justice Pardos case allow members of the judiciary to leave
for other branches of government numerous times, and still maintain
continuous and uninterrupted service in the judiciary? The answer to this
question is a resounding no.

A critical aspect of Justice Pardos case was the absence of any gap in his
service from the time he was appointed as Caloocan City Judge in 1974,
until he retired as an Associate Justice of the Supreme Court in 2002. He
occupied the positions of District Judge, Court of First Instance of Rizal,
Branch 34, Caloocan City, from May 3, 1974 to January 17, 1983; Regional
Trial Court (RTC), Branch 43, Manila, from January 18, 1983 to March 29,
1993; Associate Justice of the CA, from March 30, 1993 to February 16,
1995; Chairman, COMELEC, from February 17, 1995 to October 6, 1998;
and Associate Justice of the Supreme Court, from October 7, 1998 to
February 10, 2002.

In these lights, Justice Pardos case has nothing to offer by way of

jurisprudential precedent in terms of determining whether Section 3
of BP 129 allows judges and justices to leave the judiciary several
times without breaking their continuous service. There was no
occasion to rule on this issue, as Justice Pardo left the judiciary only once, to
serve in the COMELEC.

Proceeding from this conclusion, the next level of inquiry leads us to

examine whether Section 3 of BP 129 allows multiple breaks in judicial office
and considers these breaks as part of a continuous and uninterrupted
judicial service.
The amendment to Section 3, as worded and interpreted in In Re: Justice
Pardo, refers to the reappointment of a member of the judiciary after
serving in another branch of government. The judge shall retain the
precedence to which he was entitled under his original appointment, and his
judicial service shall be considered uninterrupted.

This service outside the judiciary, however, should only occur once, as in
Justice Pardos case. Section 3 refers to an original appointment, which is
the first appointment by which a lawyer becomes a member of the judiciary.
As he progresses in the judiciary - whether by staying in his original post or
by being appointed in other posts - he acquires seniority, which is especially
applicable in determining his retirement and longevity pay. Once he leaves
the judiciary, however, his original appointment is cut off; hence, Section 3
can only refer to the judges return to the judiciary as
a reappointment. He needs to get re-appointed back to the judiciary, as
he is no longer part of it.

Section 3 works to bridge the gap between the time the judge left
his original appointment and his reappointment to the judiciary,
provided the gap in service was rendered in another branch of
government. Once reappointed to the judiciary, however, he can no longer
avail of Section 3, as Section 3 speaks of an original appointment. A second
reappointment, after another service in a different government agency,
would be succeeding the first reappointment, and not the original
appointment. Section 3 operates to bridge an original appointment with a
reappointment, and not to connect a reappointment with a second
appointment. Had the latter interpretation been the intent behind the law,
then it should and would have made this situation clearer.

Further, the application of Section 3 appears to be limited to service in a

single position in government outside of the judiciary. Section 3 speaks of
any other position in the government, and thus uses a singular noun.
After this single service, the judge or justice invoking the application of
Section 3 must have returned to the judiciary in order for his service to be
deemed uninterrupted.

Additionally, it must not be lost on us that we have already given Section 3 a

liberal interpretation in In Re: Justice Pardo. To top this exercise of liberality
with another liberal interpretation of the same provision, when the law is
clear regarding its application, would amount to judicial legislation that
furthers the interests within our ranks.

To recapitulate, Section 3 applies to any judge or justice, who left the

judiciary, served in a single non-judicial governmental post, and returned to
the judiciary. This was what happened in the case of Justice Pardo, when
after a long and continuous service in the judiciary, he left to serve in the
COMELEC and from there was subsequently appointed to the Supreme
Court.

b.3. Justice Fernando is not entitled to her request even under the
liberal Pardo ruling.

Justice Salazar-Fernando effectively asks us in her present case to give her

the benefit of our Pardoruling although the attendant facts of her case differ
from those of Justice Pardos and do not approximate the factual situation
that Section 3 requires.

In the first place, her record shows that her services in between her judicial
services were not continuous and uninterrupted.

We find that after Justice Salazar-Fernandos stint as MTC Judge in July

1987, she was named Chairman of the Land Transportation Franchising and
Regulatory Board (LTFRB) where she served from August 1987 to February
13, 1992. During this period, she concurrently held directorship posts at the
Light Rail Transit Authority (LRTA) and at the Office of Transport
Cooperatives (OTC). In the later part of 1991, Justice Salazar-Fernando held
the position of Officer-in-Charge/Assistant Secretary of the Land
Transportation Office.

It was only after Justice Salazar-Fernandos stints at the LTFRB, LRTA, and
OTC - all non-judicial offices - that she was appointed as Commissioner of
the COMELEC on February 14, 1992, and served in this capacity until
February 15, 1998. Three (3) days later, or on February 18, 1998, she
started to serve as a consultant in the COMELEC until October 6, 1998.

Parenthetically, her service as consultant is not a position in government

that should be considered a part of her government service as she did not
occupy any specific position in government. Moreover, it was only five (5)
months after her COMELEC consultancy, or on March 25, 1999, that Justice
Salazar-Fernando was appointed as Associate Justice of the CA. Thus,
significant gaps in her judicial service intervened so that her situation did not
comply with the requirement in Section 3 that only a single non-judicial
position should intervene in her judicial service record.

Reduced to the bare essentials, the issue for us is whether we should apply
with liberality a ruling that had already been very liberally interpreted by this
Court, under facts that do not entitle Justice Fernando to recognition of
continuous service under the requirements of Section 3.
Our brief and direct answer is that we cannot and must not allow the
crediting of Justice Salazar-Fernandos COMELEC service for longevity pay
purposes. Acceding to her request will constitute an outright judicial
legislation that the Court cannot undertake under the Constitution. As earlier
noted, Justice Salazar-Fernandos details do not at all approximate the
factual circumstances Section 3 of BP 129 that speaks of, nor the factual
situation in In Re: Justice Pardo.

If we had been liberal in the past and this liberal ruling is now cited, we
should, at the very least, not go beyond the facts under which our past
liberality had been extended. If we further read liberally a Court ruling that
only came to being because of past liberality, we stand to hear a re-echo of
the charge that this Court selectively applies its liberality in favor of its
own. (In fact, a favorable ruling in these consolidated cases may
already raise eyebrows and questions as the Court will be ruling on
matters that will directly affect some of its participating Members.)

To sum up, Justice Salazar-Fernandos services as COMELEC

Commissioner cannot be included in the computation of her
longevity pay, now or upon her retirement.

II. Letter-Request of Justice Gacutan in A.M. No. 12-9-5-SC

a. Longevity Pay for Services as NLRC Commissioner

We deny Justice Gacutans request that her past services in the NLRC be
recognized for purposes of her longevity pay. She served as a
Commissioner IV of the NLRC from March 3, 1998 to November 5, 2009, or
for a period of eleven years and eight months.

Section 42 of B.P. Blg. 129 is clear and explicit: a judge or justice should
have rendered five years of continuous, efficient and meritorious service in
the Judiciary in order to qualify for a monthly longevity pay equivalent to
5% of the monthly basic pay.

We point out that the NLRC is an agency attached to the Department of

Labor and Employment an adjunct of the Executive Department
albeit for policy and program coordination only. Under the
circumstances, Justice Gacutans past service as NLRC Commissioner cannot
be credited as judicial service for longevity pay purposes since she did not
render such service while with the Judiciary.

b. NLRC Services Considered in Retirement Pay

Nonetheless, Justice Gacutans service as NLRC Commissioner
is creditable as part of overall government service for retirement
purposes under RA 910, as amended. Section 1 of this law
provides:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
Section 1. When a Justice of the Supreme Court or of the Court of Appeals
who has rendered at least twenty years' service either in the judiciary or in
any other branch of the Government, or in both, (a) retires for having
attained the age of seventy years, or (b) resigns by reason of his incapacity
to discharge the duties of his office, he shall receive during the residue of his
natural life, in the manner hereinafter provided, the salary which he was
receiving at the time of his retirement or resignation. And when a Justice of
the Supreme Court or of the Court of Appeals has attained the age of fifty-
seven years and has rendered at least twenty years' service in the
Government, ten or more of which have been continuously rendered as such
Justice or as judge of a court of record, he shall be likewise entitled to retire
and receive during the residue of his natural life, in the manner also
hereinafter prescribed, the salary which he was then receiving. It is a
condition of the pension provided for herein that no retiring Justice during
the time that he is receiving said pension shall appear as counsel before any
court in any civil case wherein the Government or any subdivision or
instrumentality thereof is the adverse party, or in any criminal case wherein
an officer or employee of the Government is accused of an offense
committed in relation to his office, or collect any fee for his appearance in
any administrative proceedings to maintain an interest adverse to the
Government, insular, provincial or municipal, or to any of its legally
constituted officers.
Considering the express wordings of RA 910, which include service in all
other branches of the Government as creditable service in the
computation of the retirement benefits of a justice or judge, Justice
Gacutans service as NLRC Commissioner should be credited as part of her
government service for retirement purposes under RA 910, as amended.

III. Motion for Reconsideration of Justice Veloso in A.M. No. 12-8-

07-CA

a. Background.

The chairman and members of the NLRC were entitled to receive an annual
salary at least equivalent to the allowances and benefits of the Presiding
Justice and Associate Justices of the CA, respectively, prior to the
amendment of Article 216 of the Labor Code by RA 9347.
Under RA 9347 (which took effect on August 26, 2006),17NLRC
commissioners were given the equivalent rank of a CA Justice. The
Labor Code, as now amended by Section 4 of RA 9347,
reads:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
Article 216. Salaries, Benefits and Emoluments. The Chairman and members
of the Commission shall have the same rank, receive an annual salary
equivalent to, and be entitled to the same allowances, retirement and
benefits as those of the Presiding and Associate Justices of the Court of
Appeals, respectively. [italics supplied, emphasis ours]
In his present motion, Justice Veloso claims that RA 9347 should be given a
retroactive application. With the equivalent rank of a CA Justice from the
time RA 9347 was amended, his service as NLRC Commissioner should be
considered as judicial service for purposes of his longevity pay.

b. Our ruling and the reasons therefor

b.1. RA 9347 does not provide for retroactivity.

We disagree with Justice Velosos position and thus deny his motion.

First, nothing in the language of RA 9347 expressly indicates the intention to

give it retroactive effect. We emphasize that statutes, as a rule, apply
prospectively, unless the legislative intention to give them retrospective
effect is expressly declared or is necessarily implied from the language
used.18 In case of doubt, the doubt must be resolved against the retroactive
effect.19redarclaw

Nor is retroactivity discernible, even by implication, from the provisions of

RA 9347. It is not implied from the laws legislative intent, nor from the
deliberations in Senate Bill No. 2035 (which became RA 9347).20redarclaw

In Re: Request of Retired Deputy Court Administrator Bernardo T.

Ponferrada for Automatic Adjustment of His Retirement Benefits to Include
Special Allowance Under R.A. 9227,21 the Court refused to extend the
benefits provided by RA 9227 to officials of the Judiciary who retired prior to
the passage of this law. RA 9227 granted a special allowance to justices,
judges, and all other positions in the Judiciary with the equivalent rank of
justices of the CA or judges of the RTC. Since the position of Deputy Court
Administrator (DCA) carries the same rank as an Associate Justice of the
CA,22 retired DCA Ponferrada asked for the inclusion of the RA 9227 special
allowance in his retirement pay.

The Court denied the request, noting that RA 9227 did not expressly provide
for retroactivity so that those who had retired at the time of its enactment,
would be covered. Although the grant was extended to retired SC and CA
justices, this was justified under Section 3-A of RA 910, as amended, which
states:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
SEC. 3-A. In case the salary of Justices of the Supreme Court or of the Court
Appeals is increased or decreased, salary shall, for the purpose of this Act,
be deemed to be the salary or the retirement pension which a Justice x x x
who retired was receiving at the time of his cessation in the office: Provided,
That any benefits that have already accrued prior to such increase or
decrease shall not be affected thereby.23 [underscore ours]
According to the Court, parity in rank and salary does not automatically
mean parity in retirement benefits under Section 3-A of RA 910. Notably, the
automatic adjustment of retirement benefits was expressly extended by RA
910, as amended, but only to Justices of the SC and the CA, not to judicial
officials with the equivalent rank. Additionally, since he retired prior to the
passage of RA 9227, DCA Ponferrada could not even invoke the automatic
adjustment of his retirement pay under Section 3-A of RA No. 910, as
amended, to support his request.24redarclaw

In the same way, RA 9347 was enacted into law only on July 27, 2006.
Justice Veloso had, by then (on February 4, 2004) left his post as NLRC
Commissioner to assume the position of Associate Justice of the Court of
Appeals. In the absence of any clear intent to give RA 9347 any retroactive
effect, Justice Veloso cannot validly claim that he held the rank of a CA
justice during his stint as NLRC Commissioner from 1989 to 2004.

b.2. RA 9347 is not a curative statute.

A curative statute is enacted to cure defects in a prior law or to validate

legal proceedings, instruments or acts of public authorities[,] which would
otherwise be void for want of conformity with certain existing legal
requirements.25 Simply put, curative laws are enacted to validate acts done
that otherwise would be invalid under existing laws.

RA 9347 is not a curative statute since it was not intended to supply

deficiencies, abridge superfluities in existing laws, or curb evils; the insertion
of the word rank in Article 216 was merely to emphasize the increase in
salaries and benefits of the NLRC Commissioners and labor arbiters.

b.3. Grant of Equivalent Rank is not Service in the Judiciary

At any rate, even if we recognize retroactivity as requested, the conferment

of the rank of a CA Justice to Justice Veloso during his tenure as NLRC
Commissioner would not entitle him to longevity pay.

Section 42 of B.P. Blg. 129 is clear: a judge or justice shall be paid a

monthly longevity pay equivalent to 5% of the monthly basic pay for each
five years of continuous, efficient, and meritorious service rendered in the
Judiciary. Service in the NLRC, even with the rank of a CA Justice, is not
service with the Judiciary for purposes of longevity pay. Justice Velosos
service in the NLRC, however, may be credited as part of his
government service for retirement purposes under RA 910, as in the
case of Justice Gacutan.

IV. General Discussions

With each of the consolidated petitions directly ruled upon, the following
discussions are submitted to expound on the conclusions reached and to
generally comment on the issues the Dissents raised.

At the core of the issues raised is the question: should the past service of
incumbent justices and judges, rendered at the Executive Department,
be recognized under Section 42 of BP 129 (the longevity pay provision)
on the ground that their previous executive positions now carry the
rank, salary, and benefits of their counterparts in the Judiciary?

The law governing this issue is of course the longevity pay provision,
heretofore quoted,26 whose salient points are summarized
below:LawlibraryofCRAlaw

1. The longevity pay is a monthly pay equivalent to 5% of monthly

basic pay;chanRoblesvirtualLawlibrary

2. Recipients are the Justices and Judges of

courts;chanRoblesvirtualLawlibrary

3. For each five years of continuous, efficient and meritorious

service;chanRoblesvirtualLawlibrary

4. The service is to be rendered in the

Judiciary;chanRoblesvirtualLawlibrary

5. In no case shall the total salary of each Justice or Judge, after his
longevity pay is added, exceed the salary of the Justice or Judge
next in rank.
What would otherwise be a simple stand-alone provision is complicated by
subsequent laws that grant the same ranks, salaries and benefits

- as those of their counterpart judge or justice (for the National

Prosecution Service), or

- as those of the Presiding Justice and Associate Justices of the

Court of Appeals (for the National Labor Relations Commission), and

- the [rank, prerogatives, salaries, allowances, benefits and

privileges] as their counterpart Justice or Judge (for the Office of the
Solicitor General).

These new levels of rank and salary are essentially what the present
petitioners and the incumbent justices and judges cite as basis for the grant
or increase of their longevity pay.

Another complicating factor involves the past rulings of this Court where
past executive service had been recognized, not only for retirement pay
purposes, but for longevity pay purposes upon retirement. Interestingly, no
in-depth look appears to have been made in these past rulings, although
their results cannot be in doubt - the Court recognized past executive
services for longevity pay purposes.

Interestingly, the Dissents, led by Justice De Castro, take a multi-pronged

critique of the ponencia, generally chastising it for being overly strict in its
reading of Section 42.

Among others, she posits that the ponencia disregards long established
rulings of the Court on longevity pay without a clear finding of the legal error
made, and disregards as well the liberal interpretation the Court has applied
in these rulings; that the ponencia disregards too the intent of the relevant
laws (referring to the subsequent laws that grants ranks, salaries and
benefits similar to those of their counterparts in the Judiciary), the legal
presumption of legislative awareness, and consideration of prior laws and
jurisprudence in enacting a statute; and claims that the contemporaneous
construction given by the Department of Justice and other Executive branch
officers, which discloses a similar treatment of the longevity pay provision of
Section 42, deserves the courts respect. Last but not the least, Justice De
Castro analyzes Section 42 and concludes that longevity pay is not a mere
benefit but is a component of the salary that should not be withheld from
executive officers with the same rank, salary and benefits as their
counterparts in the Judiciary.
For his part, Justice Velasco essentially joins the Dissent of Justice De Castro
and questions the ponencias proposal to freeze the longevity pay grants
for justices and judges who have been credited with their past service in the
Executive Department. He posits too that what matters is their receiving,
for purposes of computing longevity pay, the salary of a Justice of the CA at
the time they served as NLRC Commissioners. If this is the case, Justice
Veloso claims they should be credited with their service with the NLRC for
purposes of their longevity pay.

Faced with these complications and dissents, the Court should not forget
that our duty, first and foremost, is to correctly interpret the law as written,
not to stick to our past rulings at all costs nor to consider our personal
interests. In doing this, we must also be reminded that at the center of the
dispute is Section 42 of BP 129 the provision on longevity pay that we
must consider with a fresh eye.

The consolidated cases, too, do not embody claims by executive officers

against their own Department for the enforcement of what the law involving
their Department provides. These cases involve claims by CA justices
members of the Judiciary who look up to laws involving the Executive
Department to secure, maintain or increase the longevity pay that provides
benefit for judges and justices. Our primary focus, however, must be the
interpretation of our own law - BP 129 and its Section 42.

A. Statutory Construction & Interpretation Perspectives

a. First rule of statutory construction: the plain meaning rule.

The primary rule in addressing any problem relating to the understanding or

interpretation of a law (in this case, the provision granting longevity pay) is
to examine the law itself to see what it plainly says. This is the plain
meaning rule of statutory construction.27redarclaw

The first aspect that offers itself in the examination of the law is its title,
which gives us a direct indicator of the exact subject matter of the law. In
the present cases, the law under which the disputed longevity provision can
be found is B.P. Blg. 129, An Act Reorganizing the Judiciary,
Appropriating Funds Therefor, and For Other Purposes (simplified
as BP 129 or the Judiciary Reorganization Act of 1980).

This title alone already suggests that its provisions specifically relate to
members of the judiciary, unless an express contrary intent is made by the
legislature. No such exception clause is evident under the terms of BP 129 or
in any of the other related laws (specifically, in R.A. 9347, 9417, and 10071)
discussed in this ponencia.

As discussed more extensively below, these other general laws do not

specifically mention at all the longevity provision under BP 129, a specific
grant made only to the judges and justices in the Judiciary.

Section 42 of this law has heretofore been quoted, but for convenience is
again quoted below
ChanRoblesVirtualawlibrary
Section 42. Longevity pay. A monthly longevity pay equivalent to 5% of
the monthly basic pay shall be paid to the Justices and Judges of the courts
herein created for each five years of continuous, efficient, and meritorious
service rendered in the judiciary; Provided, That in no case shall the total
salary of each Justice or Judge concerned, after this longevity pay is added,
exceed the salary of the Justice or Judge next in rank. [italics supplied;
emphasis and underscore ours]
As written, the language and terms of this provision are very clear and
unequivocal: longevity pay is granted to a judge or justice (and to none
other) who has rendered five years of continuous, efficient and
meritorious service in the Judiciary. The granted monthly longevity pay is
equivalent to 5% of the monthly basic pay.

The plain reading of Section 42 shows that longevity pay is not available
even to a judicial officer who is not a judge or justice. It is likewise not
available, for greater reason, to an officer in the Executive simply because
he or she is not serving as a judge or justice. It cannot also be available to a
judge or justice for past services he or she did not render within the
Judiciary as services rendered outside the Judiciary for purposes of
longevity pay is not contemplated by law.

Significantly, the Court has had occasion to speak about the purpose of
longevity pay. In In Re: Request of Justice Bernardo P. Pardo for Adjustment
of His Longevity Pay,28 the Court categorically declared that the purpose of
the law in granting longevity pay to judges and justices is to recompense
them for each five years of continuous, efficient, and meritorious
service rendered in the Judiciary; it is the long service in the
Judiciary - from the lowest to the highest court of the land and not
in any other branch of government, that is rewarded,29redarclaw

In the case of the judge or justice now asking for the tacking of his/her past
executive service, the reason for the denial is simple and needs no intricate
or complicated exercise in interpretation: these past services were
undertaken outside the Judiciary and are not the services the law
contemplates. The tacking, to put it bluntly, violates the clear purpose and
wording of Section 42 of BP 129.

To look at Section 42 from another perspective, if indeed (as some would

argue) the intent is to grant executive officers longevity pay pursuant to
their respective grants of benefits similar to that provided under Section 42
of BP 129, this presumed grant should be understood to be limited to the
executive officers continued, efficient and meritorious service in the
Executive Department, to be given while the executive officer is still with
that department.

When the public officer with equivalent rank, salary and benefits
transfers to the Judiciary, the longevity pay to which he may have been
entitled under the law applicable to his previous Executive Department
position, and which he may have been receiving because of his continued
service in that department, will simply have to be disregarded and
discontinued.

At the point of transfer, Section 42 of BP 129 will now apply and operate,
and will require five (5) years of continued and efficient service in the
Judiciary before it can start to be earned. This application may sound hard
and illiberal, but this is the logical consequence of the combined effect of the
Judiciarys BP 129 longevity provision and the laws granting parity to
benefits applicable to the Judiciary.

To reiterate for emphasis, for a transferring public official, now a new justice
or judge, to be entitled to longevity pay under the terms of Section 42, he
must first render continued, efficient and meritorious service in the Judiciary
for at least five years; his prior continued service in his previous
department will not and should not be counted.

b. The general laws that the Dissents cite cannot prevail over a
specific law.

General laws (such as Republic Act Nos. [RA] 9347, 9417, and 10071) that
generally grant the same ranks, salaries and benefits to public officers in the
Executive Department as those of their specified counterparts in the
Judiciary, cannot prevail over a special law such as BP 129 that specifically
grants longevity pay solely to justices and judges who have rendered five
(5) years of continuous, efficient, and meritorious service rendered in the
Judiciary.

A basic principle of statutory construction is that a special law prevails over a

general law.30 A later enactment like RA 9347 and RA 10071 cannot override
BP 129 because the latter, as a special law, must prevail regardless of the
dates of the enactment of these other laws.31redarclaw

As we held in Hon. Bagatsing v. Judge Ramirez,32 a general provision must

give way to a particular provision. As a special provision on the grant of
longevity pay, Section 42 of BP 129 governs and is controlling; to hold
otherwise, as the dissent suggests, is to violate its clear mandate.

Following the rule on general and special laws, the general laws granting the
same salaries and benefits cannot apply to the longevity pay provision that,
by its specific and express terms, is solely for the benefit of judges and
justices who have shown loyal service to the Judiciary; it is not for those
who have been granted similar ranks, salaries and benefits as those of their
counterpart judges and justices. That they cannot be beneficiaries of
longevity pay is clinched by its purpose the reward is intended for those
with loyal service to the Judiciary.

c. Is there room for liberality in reading and interpreting Section 42?

As a general rule and contrary to the Dissents view, no room or occasion

exists for any liberal construction or interpretation; only the application of
the letter of the law is required by basic statutory construction principles.

We should not forget that liberality is not a magic wand that can ward off
the clear terms and import of express legal provisions; it has a place only
when, between two positions that the law can both accommodate, the Court
chooses the more expansive or more generous option. It has no place where
no choice is available at all because the terms of the law are clear and do
not at all leave room for discretion.

In terms of the longevity pays purpose, liberality has no place where service
is not to the Judiciary, as the element of loyalty the virtue that longevity
pay rewards is not at all present.

We cannot overemphasize too that the policy of liberal

construction cannot and should not be to the point of engaging in
judicial legislation an act that the Constitution absolutely forbids this
Court to do. We may not, in the guise of interpretation, enlarge the scope of
a statute or include, under its terms, situations that were not provided nor
intended by the lawmakers. We cannot rewrite the law to conform to what
we think should be the law.

In the present case, where the law is clear, we should likewise be clear and
decisive in its application lest we be accused of favoritism or accommodating
former colleagues, or indirectly, ourselves, who will all inevitably retire from
our judicial posts.

d. Administrative construction is merely advisory and is not binding

upon the courts.

We take exception to the Dissents invocation of the doctrine of

contemporaneous construction to support its expansive reading of RA 9347
in relation with Section 42 of BP 129.

The Dissent conveniently fails to mention that contemporaneous

constructions of administrative or executive agencies are merely at best
advisory and not binding on the courts, for by the Constitution and the law,
the courts are given the task of finally determining what the law
means.33 We do so under our authority to state what the law is34 and
deference to an agencys statutory interpretation should be withheld
whenever it conflicts with the language of the statute, as in the present
case.

In Peralta v. Civil Service Commission,35 the Court had occasion to state and
held:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
Administrative construction, if we may repeat, is not necessarily binding
upon the courts. Action of an administrative agency may be disturbed or set
aside by the judicial department if there is an error of law, or abuse of power
or lack of jurisdiction or grave abuse of discretion clearly conflicting with
either the letter or the spirit of a legislative enactment.
Thus, while the Executive possesses discretion in the implementation of
laws, we should not forget the reason for the Judiciarys existence. We are
the interpreters of the law and the Constitution, not the Executive, and when
a legal error exists, we must step in and intervene, however long and hard
the Executives previous implementation of the law had been.

e. The question of Judicial Legislation

Judicial legislation, in simplest terms, happens when the Court adds to

what the law provides and does so in the guise of interpretation, as the
present dissents now want to do by seeking to tack and to credit, for
longevity pay purposes, the past services that justices and judges rendered
in the Executive Department.

In fact, in their discussions, the Dissents take the view that the ponencia has
engaged in judicial legislation because it restricts the concept of salary
merely to the basic pay.
This Resolution does, in fact, reflect the views imputed to it and it has not
been shy or hesitant from the very start in taking this position. But rather
than being narrow and illiberal in doing this, we believe that our position
hews to the letter of the law so that our stance cannot be the basis for the
charge of judicial legislation.

Judicial legislation in fact transpires when the Court reads into the law an
interpretation that the four corners of that law cannot bear. This expansive
interpretation i.e., that the term salary under Section 42 includes
longevity pay so that equivalency of salary translates to the mandatory
recognition of longevity pay is unfortunately what the dissents espouse,
driven perhaps by thoughts of what the law ought to be.

What ought to be as a matter of policy is not within the jurisdiction of this

Court to decide upon. The Court eloquently spoke in Canet v. Mayor
Decena about this judicial limit, albeit in the context of discussing the
maxim expressio unius est exclusio alterius (literally, what is expressed
puts an end to what is implied). The Court said:36
ChanRoblesVirtualawlibrary
In other words, it is a basic precept of statutory construction that the
express mention of one person, thing, act, or consequence excludes all
others, as expressed in the oft-repeated maxim expressio unius est exlusio
alterius. Elsewise stated, expressium facit cessare tacitum what is
expressed puts an end to what is implied. The rule proceeds from the
premise that the legislative body would not have made specific
enumerations in a statute, if it had the intention not to restrict its meaning
and confine its terms to those expressly mentioned.

Even on the assumption that there is in fact a legislative gap caused by such
an omission, neither could the Court presume otherwise and supply the
details thereof, because a legislative lacuna cannot be filled by judicial fiat.
Indeed, courts may not, in the guise of interpretation, enlarge the scope of a
statute and include therein situations not provided nor intended by the
lawmakers. An omission at the time of the enactment, whether careless or
calculated, cannot be judicially supplied however after later wisdom may
recommend the inclusion. Courts are not authorized to insert into the law
what they think should be in it or to supply what they think the legislature
would have supplied if its attention has been called to the omission.

Courts should not, by construction, revise even the most arbitrary

and unfair action of the legislature, nor rewrite the law to conform
with what they think should be the law. Nor may they interpret into the
law a requirement which the law does not prescribe. Where a statute
contains no limitations in its operation or scope, courts should not engraft
any. And where a provision of law expressly limits its application to
certain transactions, it cannot be extended to other transactions by
interpretation. To do any of such things would be to do violence to
the language of the law and to invade the legislative
sphere. [emphases ours]
Applied to the present consolidated cases, we cannot go beyond the terms of
Section 42 by expanding its terms to what it does not include: when the law
speaks of service in the Judiciary, it means what it says and cannot
include service outside the Judiciary. To relate this to the statutory
construction rule discussed above given the express and clear terms of the
law, the basic rule to apply is: legislative intent is to be determined from
the language employed, and where there is no ambiguity in the words, there
is no room for construction.37redarclaw

B. The Grant of Rank, Benefits and their Implications

a. Judicial Rank and Executive Rank.

The grant of a rank equivalent to (or even the same as) those of the
grantees counterpart judge or justice is a matter that has not been the
subject of extensive jurisprudential coverage. Hence, the subject of this
Resolution proceeds on a path that so far remains untrodden. The novelty of
the issue posed need not deter us as the matters before us call for resolution
and should be written about if only to serve as guides for the future.

The Judiciary recognizes the ranks that the law accords to judges and
justices. These judicial ranks wholly pertain to the Judiciary as an
independent, separate and co-equal branch of government. Under our
current constitutional set-up, no legislative or executive grant, fiat or
recognition of rank can make the grantee, who is not a judge or justice, a
judicial officer, without violating the constitutional principles of separation of
powers and independence of the Judiciary.

As a consequence, the grant of rank at the same level as the grantees

counterpart judges or justices is not and cannot be a conferment of judicial
rank and does not thereby accord the grantees recognition as members of
the Judiciary. For incumbent judges and justices who had previous
government service outside the Judiciary, it follows that the grant of
rank to them under their old executive positions does not render their
service in these previous positions equivalent to and creditable as judicial
service, unless Congress by law says otherwise and only for purposes of
entitlement to salaries and benefits.

To be sure, Congress can create and recognize ranks outside of the Judiciary
that are equivalent to the ranks it has created for the Judiciary, but again,
this recognition does not thereby create judicial ranks outside of the
Judiciary, nor constitute the grantees of these ranks as judges and justices.
Technically, what Congress creates or grants are executive ranks that are
equivalent to judicial ranks.

Notably, even for those within the Judiciary itself, the recognition of judicial
rank in favor of those who are not justices or judges does not thereby make
the grantee a justice or a judge who is entitled to this formal title; the
grantee may be entitled to the benefits of the rank but he/she remains an
administrative official in the Judiciary, separate and distinct from the justices
and judges who directly exercise judicial power, singly or collegially.

b. Commonalities and Divergence of Terms and Conditions of

Government Service.

The principle of separation of powers between the Executive, Legislative, and

Judicial branches of government ordains that each of these three (3) great
branches of government has exclusive cognizance of, and is supreme in
matters falling within its own constitutionally allocated sphere.38 Each branch
cannot invade the domain of the others.39 This principle presupposes mutual
respect by and between the Executive, Legislative, and Judicial departments
and entitles them to be left alone to discharge their assigned duties as they
see fit.40redarclaw

We generally draw attention to this constitutional principle to emphasize that

while all officials in the three branches of government are government
officials, vast differences may exist in the terms and conditions of their
government service; these are ultimately traceable to the separation of
power principle.

Government officials perform specifically assigned functions peculiar to their

respective departments and these functions justify their differing terms and
conditions of government service. In the context of the present consolidated
cases, distinctions must necessarily exist between one who is appointed to
the position of a judge or justice, (which position carries law-defined
salaries, benefits, and conditions specific to judges and justices), and one
who is appointed to an executive position with the equivalent rank, salary or
benefits of a justice or judge in the Judiciary.

The extent to which those with equivalent executive and judicial ranks have
commonalities or diverge in their salaries and benefits is a matter that the
Constitution leaves, within limits, to the discretion of the Legislature as a
matter of policy. What is important to recognize is the legal reality
that the divergence of salaries and benefits across government, even
among those with equivalent ranks, is not at all unusual because
these positions belong to different branches of government and
undertake functions peculiar to their departments.

A convenient example to cite is the allowance benefit that members of the

Office of the Solicitor General are given as peculiarly their own honoraria
and allowances from client departments, agencies and
instrumentalities.41 Members of the Judiciary do not enjoy these same
benefits.

On the part of the Judiciary, the disputed longevity pay also serves as a
good example. By its terms, longevity pay is peculiar to the Judiciary as
discussed above. Significantly, in all the cited laws that grant similarity of
ranks, salaries, and benefits between executive officials and their
counterparts in the Judiciary, no mention at all is made of longevity pay
and its enjoyment outside the Judiciary. Longevity pay, of course, is not
unique as a feature of judicial life that is wholly the Judiciarys own; there
are other benefits that the Judiciary enjoys by law, by rule or by practice
that are not replicated in the executive agencies, in the same manner that
there are benefits in executive agencies that the Judiciary does not share.

In this sense, it approximates the absurd to claim that the grant of the
same benefits to executive officials with the same rank should
encompass all the benefits that the comparator judge or justice enjoys.

b.1. The Question of Fairness.

A tempting question to raise when comparisons are made across branches of

government and when equivalency of salaries and benefits comes into focus,
is the essential fairness, or lack of it, that results or should result.

The Judiciary, for example, may raise the point if we are the comparators
and all our benefits should be enjoyed by the Solicitors, is there no resulting
unfairness because no law grants the Judiciary the same privilege of
enjoying the benefits that the Office of the Solicitor General enjoys?

To be sure, unfairness may factually result, but this is not a matter for the
Judiciary to examine in the absence of a case where this factual issue is
raised and is relevant. Nor is there any indefensible inequality as a matter
of law viewed from the prism of the legal measuring standard - the equal
protection clause. Notably, the Judiciary and the Executive Department
belong to different branches of government whose roles and functions in
government differ as pointed out above. Thus, ground/s for distinctions may
exist that render any seeming unfairness not legally objectionable.

If the issue of unfairness will surface at all, this would transpire when the
terms of the longevity provision under BP 129 would be disregarded, i.e., if
longevity pay would be recognized in favor of the NLRC, the prosecutors and
the solicitors under the terms of their respective laws, when longevity pay
by the express terms fashioned out by Congress should be granted only to
those who have served continuous, efficient, and meritorious service in the
judiciary.

Similarly unfair would be the tacking of previous services outside of the

Judiciary rendered by judges and justices, incumbent or retired, for purposes
of longevity pay under Section 42. Of course, the main issue in this situation
would be legality, but this situation, to our mind, is one that is both illegal
and unfair. Unfairness comes in because of the grant of what is not legally
due.

D. The Salary and Longevity Pay

a. The Applicable Law on Salary

An examination of BP 129 shows that its Section 41 treats of salaries of

judges, while Section 42provides for longevity pay.

Under Section 41, the salaries or compensation (and allowances) that

judges shall receive shall be the amount that the President may authorize
following the guidelines set forth in Letter of Implementation (LOI) No. 93,
pursuant to Presidential Decree (PD) No. 985, as amended by PD 1597.

PD 985, as amended by PD 1597, implemented a position classification and

compensation standardization scheme (Scheme):LawlibraryofCRAlaw

(1) under which positions are classified by occupational groups, series and
classes according to the similarities or differences in duties, responsibilities,
and qualification requirements; and

(2) by which the rates of pay for each of the positions and employee
groups/classes are determined according to the salary and wage schedules
fixed by the Decree to be uniformly applied to all belonging to a particular
position.

Under Section 4 of PD 985, this position classification and compensation

standardization scheme shall apply to all positions in the national
government, that under PD 1597s amendment now includes the justices
and judges in the Judiciary.

Section 11 of PD 985 provides for the Salary Schedule under the

compensation system for positions paid on annual or monthly basis. The
Schedule consists of twenty-eight grades with each grade having
eight prescribed steps. Each grade represents a level of work
difficulty and responsibility that distinguishes it from the other
grades in the Schedule. Each class of position in the Position Classification
System is assigned a salary grade and determines the positions salary
rate.42redarclaw

Under the Scheme, every covered position receives a salary or

compensation corresponding to the positions salary grade under the
Salary Schedule. Otherwise stated, all covered positions or employees
belonging to a particular salary grade, regardless of the department,
bureau, office, etc., to which they belong, shall receive the same salary
rate, expressed as annual, in pesos, as fixed under the Salary
Schedule (subject to certain salary rate increments for each step within
each salary grade). In short, a particular salary grade equates to a
specific, fixed salary rate.

Prior to its amendment by PD 1597, Section 4 of PD 985 exempted from the

position classification and compensation standardization scheme the
following positions or group of government officials and employees: (1)
elected officers and those whose compensation is fixed by the Constitution;
(2) heads of executive departments and officials of equivalent rank: (3)
chiefs of diplomatic missions, ministers, and Foreign Service officers;
(4) Justices and Judges of the Judicial Department; (5) members of
the armed forces; (6) heads and assistant heads of GOCCs, including the
senior management and technical positions; (7) heads of state universities
and colleges; (8) positions in the career executive service; and (9)
provincial, city, municipal and other local government officials and
employees. The salaries or compensation and allowances of these exempted
positions are those to be authorized by the President.

Pursuant to PD 985s mandate, then President Ferdinand E. Marcos issued

Letter of Implementation (LOI 93) adopting an integrated compensation
scheme for positions in the Judiciary. In almost the same fashion as PD 985,
Paragraph 3.0 of LOI 93 enumerated the various positions in the Judicial
Component of the Judiciary, i.e., Justices and Judges of the Supreme Court,
Court of Appeals, Sandiganbayan, Court of Tax Appeals, Court of Agrarian
Relations, the First and Second Level Courts, the Clerks of Court of the
Supreme Court and Court of Appeals, and the corresponding salary
rates for each position, expressed as annual, in pesos.
With PD 1597s amendment, those previously exempted positions, i.e.,
Justices and Judges of the Judicial Department, are now included in the
coverage of Section 4 of PD 985. PD 985, as amended by PD 1597, now
limits the exemptions to elected officers; to those whose compensation is
fixed by the Constitution; and to local government officials and employees.

Note that Section 11 of PD 985, as amended by PD 1597, and even

Paragraph 3.0 of LOI 93, provided for fixed salary rates for each
salary grade expressed as annual, in pesos. As matters now
stand, the salary or compensation that an employee or a position in
the government will receive is the prevailing salary rate, fixed
under the Salary Schedule, that corresponds to the employee or
positions salary grade.

The salary rate as expressed in annual fixed rates, based on the salary
grade referred to under LOI 93 pursuant to PD 985, as amended by PD
1597 is the salary referred to in Section 41 of BP 129, i.e., an amount or
salary rate fixed as annual, in pesos, that is based on the recipients
salary grading.

b. Longevity Pay under Section 42.

Section 42 of BP 129 provides for the payment and the manner of computing
longevity pay, i.e., to be paid monthly, based on the recipients monthly
basic pay at the rate of 5% for each five years of continuous, efficient and
meritorious service rendered in the judiciary. Note that the amount of
longevity pay to which a recipient shall be entitled is not a fixed
amount, in contrast with the salary under Section 41; it is a
percentage of the recipients monthly basic pay which, at the least,
is equivalent to 5%.

Also, the payment of longevity pay is premised on a continued, efficient, and

meritorious service: (1) in the Judiciary; and (2) of at least five years.
Long and continued service in the Judiciary is the basis and reason for the
payment of longevity pay; it rewards the loyal and efficient service of the
recipient in the Judiciary.

From these perspectives, longevity pay is both a branch specific (i.e., to

the judges and justices of the Judiciary) and conditional (i.e., due only
upon the fulfillment of certain conditions) grant. In negative terms, it is not
an absolute grant that is easily transferrable to other departments of
government.
b.1. Salary and Longevity Pay compared.

In contrast with longevity pay, the salary under Section 41 entitles the
official or employee to its receipt from day one (or the first day of the
first month) of his service. Its basis or reason for payment is the actual
performance of service or assigned duties, without regard to the months
or years the recipient has been rendering the service.

Note, too, that the service contemplated under Section 42 for entitlement to
longevity pay is service in the judiciary. This intent is clear not only from
Section 42s explicit use of the word judiciary to qualify service, but also
from the title of the statute to which this specific provision belongs, i.e.,
The Judiciary Reorganization Act of 1980.

In these lights, the same salary that Article 216 of the Labor
Code speaks of and to which the NLRC Commissioners shall be entitled,
should be read and understood as the salary under Section 41 or the
salary rate, as provided under the Salary Schedule that
corresponds to the salary grade of their counterpart justice or
judge. Other laws that grant other public officers in the executive
department with the same salary as their counterpart justice or judge (i.e.,
RA Nos. 9417 and 10071) should likewise be read and understood in this
way.

b.2. Nature of Longevity Pay.

Based on these considerations, longevity pay should be treated as a

benefit or an add-on and not a part, let alone an integral
component of salary, contrary to the Dissents position.

This consequence necessarily results as salary and longevity pay: (1) are
treated under different sections of BP 129; (2) have different bases
for determination or computation; and (3) have different reasons for
the payment or grant.

In addition, Section 42 of BP 129 does not categorically state that the

monthly longevity pay shall form part of the salary or is an integral
or inseparable component of salary. Even the most liberal interpretation of
Section 42 does not reveal any intention to treat longevity pay in this
manner - as part, or as an integral component, of salary.

On the contrary, Section 42 makes it clear that the salary, which the
Dissents submit serve as basis of the salary of executive officers with the
same rank of a justice or judge, is that referred to or contemplated in
Section 41.

b.3. Section 42 Analyzed.

Note in this regard that the last clause of Section 42 which states that: in
no case shall the total salary of each Justice or Judge concerned, after this
longevity pay is added, exceed the salary of the Justice or Judge next in
rank.

The use of the term total salary under the first portion of Section 42s
last clause, presupposes an addition of components, and should be
understood to refer to the total compensation received. This total
salary is the salary (or the salary rate fixed under the Salary Schedule
as the recipients monthly compensation corresponding to his salary
grade) plus the add-on longevity pay (or that portion or percentage of
the salary as fixed under the Salary Schedule) equivalent to at least 5% of
the monthly salary.

In formula form, this should read

Section 41 Salary + Section 42 Longevity Pay = Total Salary

Where:

Salary = monthly salary rate of position per the Salary Schedule

Longevity Pay = monthly salary rate x 5%.

That the word total was added to salary under the first portion of Section
42s last clause, in no way signifies that longevity pay is an integral part of
the salary which a Justice or Judge will receive each month by virtue of his
position/rank/salary grade.

The word total was added simply to qualify salary (the recipients
salary fixed under the Salary Schedule) plus any longevity pay to which
he may be entitled. This treatment, to be sure, does not make the longevity
pay a part of the salary.

In short, total simply modified salary, and in effect denotes that amount
received or to be received as total compensation, and distinguishes this
resulting amount from the salary received each month by virtue of the
position/salary grade.

Note, too, the word salary under the last portion of Section 42s last clause
which is not qualified or modified by the word total, in contrast with the
total salary under the first portion.

The last portion states: the salary of the Justice or Judge next in rank: this
salary of the Justice or Judge next in rank should not be exceeded by the
total salary (or total compensation) of the recipient. The salary under the
last phrase, when read together with the total salary under the first
phrase, shows that salary is distinct, and to be paid separately from
longevity pay, so that the latter cannot be an integral part of salary.

To sum up, the same salary to be received by the public officials in the
Executive Department, with the same rank of justice or judge, is the salary
of the justice or judge under Section 41. The salary referred to in Section
41, in turn, and as explained above, is the salary rate fixed under the
Salary Schedule corresponding to the positions salary grade.

Notably, Justice De Castros proposition that the term salary

constitutes the basic monthly salary plus the longevity pay when the
Congress enacted RA Nos. 9417, 9347, and 10071 is not reflected in any
of the congressional deliberations. What the deliberations clearly reveal
is simply the intention to increase the salaries of the covered public officers
in the Executive Department to the level of the salaries received by or
granted to their counterpart in the Judiciary.

This salary cannot but refer to the fixed sum that the system of salary
rate, Salary Schedule, and salary grade speaks of. It cannot refer to the
variable amount of total salary that the dissent refers to, as the basis or
comparator cannot be a variable amount that reflects the seniority that a
judge or justice has attained after years in the service.

Ironically, Justice De Castros cited case Re Longevity pay of Justices of

the Sandiganbayan, appearing at page 42 of this ponencia best illustrates
how the salary and total salary concepts operate.

E. The complete parity that the dissent advocates is a policy matter

that Congress has not so far expressed.

The legislative history and record of the laws (that grant the same ranks,
salaries, and benefits to officers in the Executive department equivalent to
their specified counterparts in the Judiciary) do not support the Dissents
view that these laws grant full parity in rank, salaries, and benefits or equal
treatment between the executive officers/grantees and the comparator
judges and justices whose longevity pay arises from BP 129.
In fact, the legislative history and record of these statutes positively show
that Congress has not yet gone as far as the Dissents would want them to
go-to recognize full parity that includes the grant of longevity pay under BP
129 to executive officers in the Executive Department.

As the discussions below will show, the Dissent, without delving deep into
legislative history and record of the statutes it cited as bases, took the easy
route of resorting to hasty generalizations to support its tenuous theory that
these laws operate under the principle of equal in qualifications and
equal in rank, equal in salaries and benefits received.

This interpretative route may be easy but is a very dangerous one in its
implications, as Congress has not in any way shown that it has intended
officers with the same rank and qualifications across government to
receive equal pay and equal benefits.

For this kind of equalization to prevail, the government must be ready to

embark on a comparison, not only of rank and qualifications, but on
the quantification of job content and valuation of jobs of equal value,
involving similar or allied activities undertaken across government.

This is the requirement that the equal pay for equal work principle
established in jurisdictions with more advanced social legislation than the
Philippines.43 To be sure, this is a serious policy matterthat, under the
terms of the Constitution, is not for this Court but for Congress to
establish.

To fully support these contentions, we embark on a brief look into the laws
that the Dissent itself cited.

a. RA 934744affecting the NLRC.

RA 9347 lapsed into law on July 27, 2006. This law was passed to address
the then urgent need to improve the administrative and operational
efficiency of the National Labor Relations Commission (NLRC), particularly its
rate of disposition of pending cases and the reduction of its ballooning
backlog of labor cases.45 In dealing with these issues, Congress then focused
on measures that would encourage productivity and efficiency and boost the
morale of NLRC officials.

The congressional measures Congress passed included the increase in the

number of commissioner-members of the NLRC, the creation of positions for
commission attorneys who would assist the NLRC commissioners in deciding
the labor cases, and a provision for retirement benefits to NLRC
commissioners and labor arbiters equivalent to the retirement benefits of
justices of the CA and judges of the RTCs, respectively.

In appreciating RA 9347, note that as early as Presidential Decree No. (PD)

442, the commissioners of the NLRC were already given the same salary
and benefits as justices of the CA. As the old Article 216 of the Labor
Code provided, before the amendment:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
Article 216. Salaries, benefits and other emoluments. The Chairman and
members of the Commission shall receive an annual salary at least
equivalent to, and be entitled to the same allowances and benefits
as those of the Presiding Justice and Associate Justices of the Court
of Appeals, respectively. The Executive Labor Arbiters shall receive an
annual salary at least equivalent to that of an Assistant Regional Director of
the Department of Labor and Employment and shall be entitled to the same
allowances and benefits as that of a Regional Director of said Department.
The Labor Arbiters shall receive an annual salary at least equivalent to, and
be entitled to the same allowances and benefits as that of an Assistant
Regional Director of the Department of Labor and Employment. In no case,
however, shall the provision of this Article result in the diminution of existing
salaries, allowances and benefits of the aforementioned officials. (As
amended by Section 8, Republic Act No. 6715, March 21, 1989)46
This old provision did not include retirement benefits in its wording. Thus,
as enumerated, entitlement to equivalence was limited to salaries,
allowances and benefits. To address the perceived legislative gap, the
amendatory RA 9347 expressly included the word retirement in the
enumeration. This grant applied to both commissioners and labor arbiters of
the NLRC.

Aside from this observation, note too that the old Article 216 of the Labor
Code did not give labor arbiters the salary, allowances and benefits
equivalent to those of the Regional Trial Court (RTC) judges. Apart from
addressing the issue on retirement benefits, RA 9347 also sought to deal
with the then situation of labor arbiters in terms of their salaries and
emoluments.

Thus, the congressional intent in RA 9347 was to deal with two gaps in PD
442 with respect to the salaries, benefits, and emoluments of the members
of the NLRC.

The first was the grant of salaries and benefits to labor arbiters
equivalent to those of RTC judges, and the second was the express
inclusion of the retirement benefits of the labor arbiters and NLRC
commissioners at the levels equivalent to those of RTC judges and
CA justices, respectively.

In the discussions and exchanges among the members of Congress among

them, the explanatory note of Senator Ramon Revilla Jr. in Senate Bill No.
120447 and the sponsorship speech of Senator Jinggoy Ejercito Estrada of
Senate Bill No. 2035 (the senate bill that led to RA 9347)48 nowhere did
they deal with the issue of longevity pay as a benefit that should be
accorded to labor arbiters and commissioners of the NLRC.

In this light, we believe that to make the hasty generalization that the
word benefit as enumerated in Article 216 of the Labor Code should include
longevity pay would run counter to the intention of the law. Note that had it
been the intent of Congress to give the labor arbiters and commissioners of
the NLRC all the benefits enjoyed by the members of the Judiciary as
provided in BP 129 and in other laws specifically applicable to members of
the Judiciary, then it should not have amended Article 216 of the Labor Code
by including retirement benefits in the enumeration. Congress should have
left the provision as it is since it already provides for the general
term benefit.

Parenthetically, retirement pay is a specific form of allowance under the

general term benefits. Congress had to include this item as an express
benefit precisely because the use of the general word benefit in the old
Article 216 of the Labor Code did not include all the benefits then being
enjoyed by judges and justices of the Judiciary.

In providing for retirement benefits, Congress significantly did not simply

state that the NLRC shall enjoy the terms and benefits of judges and justices
under their retirement law, RA 910, where longevity pay is a special and
specific provision. Congress contented itself with the plain insertion of
retirement pay and stopped there.

Thus, as matters now stand, NLRC officials retire under the retirement
law applicable to executive officials, with parity of the terms of this
retirement law with those of their counterparts in the Judiciary.
Retirement benefits specific to the Judiciary, however, were not and should
not be interpreted to be wholly included.

b. RA 941749affecting the OSG.

RA 9417 passed into law on March 30, 2007. As in the case of RA 9347, this
law was passed to address the plight of the members of the Office of the
Solicitor General (OSG) by upgrading their salaries and benefits to improve
their efficiency as the Republics counsel.
In the sponsorship speech of Senator Juan Ponce Enrile regarding Senate Bill
No. 2249, the predecessor Senate Bill of RA 9417, Senator Enrile pointed out
that the Senates Committee on Justice and Human Rights, in crafting
Senate Bill 2249, aimed to address the following issues regarding the
OSG:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary

1. Increase the number of staff of the OSG and upgrade their

positions;chanRoblesvirtualLawlibrary

2. Increase the existing 15 legal divisions of the OSG to

30;chanRoblesvirtualLawlibrary

3. Provide health care services, insurance coverage and scholarship and

other benefits to all OSG employees subject to the availability of
funds;chanRoblesvirtualLawlibrary

4. Grant franking privileges to the OSG;chanRoblesvirtualLawlibrary

5. Establish a provident fund within the OSG; and

6. Grant retirement benefits to qualified employees.50

As in the case of the NLRC, it must again be noted that this enumeration is
specific with respect to the benefits granted to members of the OSG: it
particularly referred to the benefits to be granted.

Although Section 3 of RA 941751 provides that the Solicitor General shall

have the same qualifications for appointment, rank, prerogatives, salaries,
allowances, benefits and privileges as the Presiding Justice of the CA (and an
Assistant Solicitor General as that of a CA Associate Justice), RA 9417 still
allocated express provisions for the other benefits to be enjoyed by the
members of the OSG. These provisions are the following:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
Section 4- Compensation52redarclaw

Section 5- Benefits and Privileges53redarclaw

Section 6- Seminar and Other Professional Fees54redarclaw

Section 7- Transportation Benefits55redarclaw

Section 8- Other Benefits56redarclaw

Section 10- Grant of Special Allowances57

Had Congress really intended to grant the benefit of longevity pay to the
members of the OSG, then it should have also included in the list of benefits
granted under RA 9417 a provision pertaining to longevity pay. This
provision is glaringly missing and thus cannot be included via this Courts
decision without running afoul of the rule that prohibits judicial legislation.
Nor can this Court recognize the past service rendered by a current judge or
justice in the OSG for purposes of longevity pay.

A closer examination of this law shows that what Congress did was to grant
benefits that were applicable to the type of service that the OSG provides.

For example, OSG lawyers are entitled to honoraria and allowances from
client departments, agencies and instrumentalities of the Government.58 This
benefit is only proper as the main function of the OSG is to act as the
counsel of the Government and its officers acting in their official capacity. On
the other hand, this benefit is not applicable to members of the Judiciary as
they do not act as advocates but rather as impartial judges of the cases
before them, for which they are not entitled to honoraria and allowances on
a per case basis.

Another indicator that should be considered from the congressional handling

of RA 9417 is that Congress did not intend to introduce a strict one-to-one
correspondence between the grant of the same salaries and benefits to
members of the executive department and of the Judiciary. The
congressional approach apparently was for laws granting benefits to
be of specific application that pertains to the different departments
according to their personnels needs and activities. No equalization
or standardization of benefits was ever intended on a generalized or
across-the-board basis.

F. The structure of the laws providing for the salaries and benefits of
members of the Judiciary, prosecutors, and public officers in the OSG
and the NLRC further negate the Dissents view that these laws
intended equal treatment among them.

We cannot also agree with the Dissents position that the laws providing for
the salaries and benefits of members of the Judiciary, the prosecution
service, the OSG solicitors, and the members of the NLRC aim to provide
equality among these public officers in their salaries and benefits.

In terms of salaries, their rationalization has been addressed through

Position Classification and Compensation System of the government under
PD 985, PD 1597 and LOI 93, heretofore discussed. It is through the
amendments of these legislative enactments that parity and equity can both
be achieved in government.

On the other hand, a look at the structure of the laws affecting the Judiciary,
the prosecutors, the OSG, and the NLRC shows that there could be no equal
treatment among them. Notably, under Section 16, par. 6 of RA
10071,59 only the prosecutors would have an automatic increase in salaries
and benefits in case the salaries and benefits in the Judiciary increase. This
provision, by itself, shows that Congress did not intend full parity,
because increases in the salaries and benefits of prosecutors would
not lead to an automatic increase in the salaries and benefits of
members of the Judiciary.

Extending our judicial lens even further, the laws increasing the salaries and
benefits of executive officers in the OSG and the NLRC do not also provide
for an automatic increase should there be increases in the salaries and
benefits of the Judiciary; neither do these laws increase the salaries and
benefits of the members of the Judiciary should the salaries and benefits of
these public officers increase.

Had Congress really intended full parity between the Judiciary and other
public officers in the executive department, it would have provided
for reciprocity in the automatic increase of salaries, benefits and
allowances, and the upgrading of the grades or levels of the emoluments of
these public officers.

Instead, the laws, as currently worded, allow for a situation where an

increase in the salaries and benefits of prosecutors would not result in the
increase in the salaries of members of the Judiciary, the OSG and NLRC.
Thus, instead of equalization, the prosecutors (who were merely granted a
rank at par with their named counterparts in the Judiciary) would be in a
better position than the actual judges and justices themselves, in the
absence of a similar provision of law giving the same benefits to justices and
judges in the event additional emoluments would be given to these
prosecutors.

The inevitable conclusion from all these is that Congress, in increasing the
salaries and benefits of these officers, merely used the salary levels and
benefits in the Judiciary as a yardstick to make their salaries and benefits
comparable to fellow government employees engaged in the administration
of justice.
At the risk of endlessly belaboring a point, we cannot, without engaging in
the prohibited act of judicial legislation, construe that the Dissents cited
laws fully intend and recognize full parity in rank, salaries, benefits, and
other emoluments among the public officers mentioned.

G. The Dissents cited cases of Santiago, Gancayco, Dela Fuente and

Guevara-Salonga are not controlling in the present case, as they are
a strained and erroneous application of Section 42 of BP 129 that
should be abandoned.

The dissents invocation of the cases of Judge Santiago and Justices

Gancayco, Dela Fuente, and Guevara-Salonga cannot be applied to the
present case as they are erroneous applications of Section 42 of BP 129 in
relation with RA 910 or the Judiciarys retirement law.

Nor can these cases be cited to support the position that these past rulings
already established that the past services in the Executive Department of
incumbent and retired justices and judges, should be given credit for
purposes of longevity pay under Section 42 of BP 129.

a. The Guevarra-Salonga & Dela Fuente Cases

The grants of longevity pay to Justice Guevara-Salonga and Justice Dela

Fuente, in particular, were based on a misinterpretation and
misunderstanding of the Judiciarys retirement law - RA 910, read in
relation to Section 42 of BP 129 - and its interaction with RA 10071, which
granted prosecutors the same rank and benefits (including retirement
benefits) of their counterparts in the Judiciary.

Although RA 910 recognized, for purposes of retirement pay, past

services in the Judiciary or in any other branch of the Government,
the longevity pay provision under Section 42 of BP 129 recognizes only
services in the Judiciary in determining the longevity pay of 5% of the
basic salary (given for each five years of service) that is carried over into
retirement from the service.

In considering the longevity pay in the cases of Justices Guevarra-Salonga

and Dela Fuente, the Court mistakenly recognized their services as
prosecutors to be services in the Judiciary, because RA
1007160granted prosecutors the same rank and benefits (including
retirement benefits) as their counterparts in the Judiciary.

The Court failed to fully appreciate that the longevity pay provision under RA
910, in relation with Section 42 of BP 129, is unique to the Judiciary and
can be enjoyed only for services actually rendered, and by those who
retired, in this branch of government. Thus, services at the Department
of Justice, i.e., outside of the Judiciary, should not have been recognized as
additional judicial service for purposes of longevity pay on retirement.

Notably, the Court did not comprehensively discuss in these cited rulings the
nature of service required for the longevity provision to apply, nor the
purpose, reason and history of the longevity pay provision under BP 129, for
the Dissents to conclude that the Court already treated the past service in
the Executive Department to be equivalent to service in the Judiciary.

As we earlier discussed, under our system of Government, the Judiciary is

separate from, serves a purpose and functions, and has powers, duties and
prerogatives distinct from those of the Executive Department. Hence, the
Court, in these Resolutions, could not have regarded service in the Executive
as unqualifiedly equivalent to service in the Judiciary.

It should be considered, too, that an acceptance of past service in the

Executive as service in the Judiciary may have no basis. The qualification for
the grant by the Judiciary should be its determination that there had been
continuous, efficient, and meritorious service. No such determination can be
done by the Judiciary if it will simply recognize longevity pay based solely on
service in a position under the Executive Department with rank, salaries, and
benefits equivalent to specified positions in the Judiciary.

To reiterate, for clarity and emphasis, if the Judiciary would recognize past
service in the Executive simply because of the equivalency of rank, salaries
and benefits, the situation would be legally problematic as it would have no
way of knowing for itself if the grantee would qualify (based on efficient and
meritorious service) since the past service would be with the Executive, not
with the Judiciary. Of course, for this Court to simply recognize that past
executive service will be credited under Section 42 of BP 129
constitutes prohibited judicial legislation for going beyond the
requirement that service should be in the Judiciary.

b. The cited Sandiganbayan case.

Re: Longevity Pay of the Associate Justices of the

Sandiganbayan (Sandiganbayan case)61 is a very interesting case that
Justice De Castro uses as part of her argument on the liberal stance the
Court has taken on longevity pay.

Significantly, this case did not treat the longevity pay under Section 42 as an
integral component of the salary of the recipient, to be given to and applied
in equal degree and force, and under absolute circumstances to public
officials in the Executive Department granted the same salary as their
counterpart in the Judiciary.

The Sandiganbayan ruling, in fact, does not apply to the factual situation of
the present case; it solely involves Justices of the Sandiganbayan-members
of the Judiciary. Note the following pronouncement in that
case:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
x x x longevity pay once earned and enjoyed becomes a vested right and
forms part of the salary of the recipient thereof which may not be reduced
despite the subsequent appointment of a justice or judge next higher in rank
who is not entitled to longevity pay for being new and not having acquired
any longevity in the government service. Furthermore, diminution or
decrease of the salary of an incumbent justice or judge is prohibited by
Section 10 of Article X of the Constitution; hence, such recipient continue to
earn and receive additional longevity pay as may be warranted by
subsequent services in the judiciary, because the purpose of the
Longevity Pay Law is to reward justices and judges for their long and
dedicated service as such. The provision of the law that the total salary of
each justice or judge concerned, after adding his longevity pay, should not
exceed the salary plus longevity pay of the justice or judge next higher in
rank, refers only to the initial implementation of the law and does not
proscribe a justice or judge who is already entitled to longevity pay, from
continuing to earn and receive longevity pay for services rendered in the
judiciary subsequent to such implementation, by the mere accident of a
newcomer being appointed to the position next higher in rank.
These pronouncements reveal the Courts recognition of a situation where a
Justice or Judge who has rendered service in the Judiciary for a considerable
length of time and who will receive a total compensation that far exceeds the
salary that a newly appointed Justice or Judge, who has not rendered any
prior service in the Judiciary, will earn or receive based simply on his salary
grade. The former, the long-serving Justice or Judge, will earn far more
than the latter, the newly-serving Justice or Judge, because of the add-
on longevity pay that he (the long-serving Justice or Judge) will receive for
his continued long service in the Judiciary, aside from the salary to which
the latter (the newly-serving Justice or Judge) shall only be entitled.

The Court realized this scenario as problematic and the obvious inequity it
may bring if it were to construe strictly the words of Section 42. It is
iniquitous for the long-serving Justice or Judge if the add-on pay
(longevity pay) that he earned under the law for his long and dedicated
service in the Judiciary would be reduced or eliminated altogether simply
because of a new Justice or Judge who will not be entitled to any add-on
pay for lack of the required long and dedicated service in the Judiciary, and
who will thus receive lesser total compensation.

The Court met the case head on and declared that the limitation refers only
to the initial implementation of the law and does not proscribe a justice or
judge, who is already entitled to longevity pay, from continuing to earn and
receive longevity pay for services rendered in the judiciary subsequent to
such implementation, by the mere accident of a newcomer being appointed
to the position next higher in rank.

This case assumes importance in the present consolidated cases as it

stresses the purpose of longevity pay as discussed and interpreted in these
pronouncements: to reward justices and judges for their long and
dedicated service as such, i.e., as justices or judges.

It highlights, too, that salary and the longevity pay are separate
components of a judges or justices total compensation, and that
such total compensation can be variable because seniority or years in the
service is a factor taken into account.

Most importantly, this case is an example of the Courts prompt decisive

action to act with liberality when such action is called for.

c. Moving On

Construing Section 42 as we do in this Resolution does not and will

not negate the applicable laws, contrary to Justice De Castros
Dissent. Rather, the interpretation that the term salary does not
include longevity pay will rectify the error that the Courts past
rulings have created on this subject.

To recapitulate, the Courts prior rulings treated longevity pay as

part of the salary a ruling that, as explained, runs counter to the
express and implied intent of BP 129. They are erroneous because
they introduced and included in the definition and composition of
salary under Section 41 an element that the law did not intend to
include, either expressly or impliedly.

Hence, the most compelling reason now exists to abandon the

above-cited cases: they were clear and grossly erroneous application
of the law. In jurisdictional terms, they involved an interpretation
not within the contemplation of words expressed by the statute;
hence, they were gravely abusive interpretation62 that did not and
cannot confer any vested right protected by the due process clause.
The worst approach the Court can take now is to compound the
problem by perpetuating our past mistakes and simply burying our
heads in the sand of past-established rulings.

The first decisive move for the Court is to declare, as it hereby

declares, the abandonment of our rulings on longevity pay in the
cases of Santiago, Gancayco, Dela Fuente, and Guevara-Salonga and
to strike them out of our ruling case law, without, however,
withdrawing the grants to those who have benefitted from the
Courts misplaced final rulings.

Along these lines, the Court also hereby expressly declares that it
does not disavow the longevity pay previously granted to the retired
justices and judicial officials for services rendered outside the
Judiciary. They may continue enjoying their granted benefits as their
withdrawal now will be inequitable.

With the same objective, those still in the service who are now
enjoying past longevity pay grants due to past services outside the
Judiciary, shall likewise continue with the grants already made, but
their grants will have to be frozen at their current levels until their
services outside the Judiciary are compensated for by their present
and future judicial service.

WHEREFORE, premises considered, we resolve

to:LawlibraryofCRAlaw

(1)
NOTE the Memorandum dated February 18, 2013 of Atty. Eden T.
Candelaria and the Report and Recommendation dated February 15,
2013 of Atty. Corazon G. Ferrer-Flores;
(2)
GRANT the request of Associate Justice Remedios A. Salazar-
Fernando that her services as Judge of the Municipal Trial Court of
Sta. Rita, Pampanga be included in the computation of her longevity
pay;
(3)
DENY the request of Associate Justice Remedios A. Salazar-Fernando
that her services as COMELEC Commissioner be included in the
computation of her longevity pay;
(4)
DENY the request of Associate Justice Angelita Gacutan that her
services as NLRC Commissioner be included in the computation of
her longevity pay from the time she started her judicial service;
(5)
DENY with finality the motion for reconsideration of Associate
Justice Vicente S.E. Veloso for lack of merit; and
(6)
DIRECT the Clerk of this Court to proceed with the handling of
granted longevity pay benefits under Section 42 of Batas Pambansa
Blg. 129, pursuant to the guidelines and declarations outlined in the
Moving On portion of this Resolution.

SO ORDERED.
DOMINGO NEYPES, LUZ G.R. No. 141524
FAUSTINO, ROGELIO FAUSTINO,
LOLITO VICTORIANO, JACOB
OBANIA AND DOMINGO Present :
CABACUNGAN,
Petitioners, DAVIDE, JR., C.J.
PUNO,
PANGANIBAN,
QUISUMBING,
YNARES-SANTIAGO,
SANDOVAL-GUTIERREZ,
CARPIO,
- v e r s u s - AUSTRIA-MARTINEZ,
CORONA,
CARPIO MORALES,
CALLEJO, SR.,
AZCUNA,
TINGA,
CHICO-NAZARIO and
GARCIA, JJ.
HON. COURT OF APPEALS, HEIRS
OF BERNARDO DEL MUNDO,
namely: FE, CORAZON, JOSEFA,
SALVADOR and CARMEN, all
surnamed DEL MUNDO, LAND BANK
OF THE PHILIPPINES AND HON.
ANTONIO N. ROSALES, Presiding
Judge, Branch 43, Regional Trial
Court, Roxas, Oriental Mindoro,
Respondents. Promulgated :
September 14, 2005
x-----------------------------------------x

DECISION
CORONA, J.:

Petitioners Domingo Neypes, Luz Faustino, Rogelio Faustino, Lolito

Victoriano, Jacob Obania and Domingo Cabacungan filed an action for
annulment of judgment and titles of land and/or reconveyance and/or
reversion with preliminary injunction before the Regional Trial Court,
Branch 43, of Roxas, Oriental Mindoro, against the Bureau of Forest
Development, Bureau of Lands, Land Bank of the Philippines and the heirs
of Bernardo del Mundo, namely, Fe, Corazon, Josefa, Salvador and
Carmen.

In the course of the proceedings, the parties (both petitioners and

respondents) filed various motions with the trial court. Among these were:
(1) the motion filed by petitioners to declare the respondent heirs, the
Bureau of Lands and the Bureau of Forest Development in default and (2)
the motions to dismiss filed by the respondent heirs and the Land Bank of
the Philippines, respectively.

In an order dated May 16, 1997, the trial court, presided by public
respondent Judge Antonio N. Rosales, resolved the foregoing motions as
follows: (1) the petitioners motion to declare respondents Bureau of Lands
and Bureau of Forest Development in default was granted for their failure to
file an answer, but denied as against the respondent heirs of del Mundo
because the substituted service of summons on them was improper; (2) the
Land Banks motion to dismiss for lack of cause of action was denied because
there were hypothetical admissions and matters that could be determined
only after trial, and (3) the motion to dismiss filed by respondent heirs of del
Mundo, based on prescription, was also denied because there were factual
matters that could be determined only after trial.[1]

The respondent heirs filed a motion for reconsideration of the order

denying their motion to dismiss on the ground that the trial court could very
well resolve the issue of prescription from the bare allegations of the
complaint itself without waiting for the trial proper.

In an order[2] dated February 12, 1998, the trial court dismissed

petitioners complaint on the ground that the action had already prescribed.
Petitioners allegedly received a copy of the order of dismissal on March 3,
1998 and, on the 15th day thereafter or on March 18, 1998, filed a motion
for reconsideration. On July 1, 1998, the trial court issued another order
dismissing the motion for reconsideration[3] which petitioners received on
July 22, 1998. Five days later, on July 27, 1998, petitioners filed a notice of
appeal[4] and paid the appeal fees on August 3, 1998.
 On August 4, 1998, the court a quo denied the notice of appeal,
holding that it was filed eight days late.[5] This was received by petitioners
on July 31, 1998. Petitioners filed a motion for reconsideration but this too
was denied in an order dated September 3, 1998.[6]

Via a petition for certiorari and mandamus under Rule 65 of the 1997
Rules of Civil Procedure, petitioners assailed the dismissal of the notice of
appeal before the Court of Appeals.

In the appellate court, petitioners claimed that they had seasonably

filed their notice of appeal. They argued that the 15-day reglementary period
to appeal started to run only on July 22, 1998 since this was the day they
received the final order of the trial court denying their motion for
reconsideration. When they filed their notice of appeal on July 27, 1998, only
five days had elapsed and they were well within the reglementary period for
appeal.[7]

On September 16, 1999, the Court of Appeals (CA) dismissed the

petition. It ruled that the 15-day period to appeal should have been
reckoned from March 3, 1998 or the day they received the February 12,
1998 order dismissing their complaint. According to the appellate court, the
order was the final order appealable under the Rules. It held further:

Perforce the petitioners tardy appeal was correctly

dismissed for the (P)erfection of an appeal within the
reglementary period and in the manner prescribed by law is
jurisdictional and non-compliance with such legal requirement is
fatal and effectively renders the judgment final and executory.[8]

Petitioners filed a motion for reconsideration of the aforementioned decision.

This was denied by the Court of Appeals on January 6, 2000.

In this present petition for review under Rule 45 of the Rules, petitioners
ascribe the following errors allegedly committed by the appellate court:

THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING

THE PETITIONERS PETITION FOR CERTIORARI AND MANDAMUS
 AND IN AFFIRMING THE ORDER OF THE HON. JUDGE ANTONIO
N. ROSALES WHICH DISMISSED THE PETITIONERS APPEAL IN
CIVIL CASE NO. C-36 OF THE REGIONAL TRIAL COURT, BRANCH
43, ROXAS, ORIENTAL MINDORO, EVEN AFTER THE
PETITIONERS HAD PAID THE APPEAL DOCKET FEES.

II

THE HONORABLE COURT OF APPEALS LIKEWISE ERRED IN

RULING AND AFFIRMING THE DECISION OR ORDER OF THE
RESPONDENT HON. ANTONIO M. ROSALES THAT PETITIONERS
APPEAL WAS FILED OUT OF TIME WHEN PETITIONERS
RECEIVED THE LAST OR FINAL ORDER OF THE COURT ON JULY
22, 1998 AND FILED THEIR NOTICE OF APPEAL ON JULY 27,
1998 AND PAID THE APPEAL DOCKET FEE ON AUGUST 3, 1998.

III

THE HONORABLE COURT OF APPEALS FURTHER ERRED IN

RULING THAT THE WORDS FINAL ORDER IN SECTION 3, RULE
41, OF THE 1997 RULES OF CIVIL PROCEDURE WILL REFER TO
THE [FIRST] ORDER OF RESPONDENT JUDGE HON. ANTONIO M.
MORALES DATED FEBRUARY 12, 1998 INSTEAD OF THE LAST
AND FINAL ORDER DATED JULY 1, 1998 COPY OF WHICH WAS
RECEIVED BY PETITIONERS THROUGH COUNSEL ON JULY 22,
1998.

IV.

THE HONORABLE COURT OF APPEALS FINALLY ERRED IN

FINDING THAT THE DECISION IN THE CASE OF DENSO, INC. V.
IAC, 148 SCRA 280, IS APPLICABLE IN THE INSTANT CASE
THEREBY IGNORING THE PECULIAR FACTS AND
CIRCUMSTANCES OF THIS CASE AND THE FACT THAT THE SAID
DECISION WAS RENDERED PRIOR TO THE ENACTMENT OF THE
1997 RULES OF CIVIL PROCEDURE.[9]

The foregoing issues essentially revolve around the period within which
petitioners should have filed their notice of appeal.
First and foremost, the right to appeal is neither a natural right nor a part of
due process. It is merely a statutory privilege and may be exercised only in
the manner and in accordance with the provisions of law. Thus, one who
seeks to avail of the right to appeal must comply with the requirements of
the Rules. Failure to do so often leads to the loss of the right to
appeal.[10] The period to appeal is fixed by both statute and procedural rules.
BP 129,[11] as amended, provides:

Sec. 39. Appeals. The period for appeal from final orders, resolutions,
awards, judgments, or decisions of any court in all these cases
shall be fifteen (15) days counted from the notice of the final
order, resolution, award, judgment, or decision appealed from.
Provided, however, that in habeas corpus cases, the period for
appeal shall be (48) forty-eight hours from the notice of
judgment appealed from. x x x

Rule 41, Section 3 of the 1997 Rules of Civil Procedure states:

SEC. 3. Period of ordinary appeal. The appeal shall be

taken within fifteen (15) days from the notice of the
judgment or final order appealed from. Where a record on
appeal is required, the appellant shall file a notice of appeal and
a record on appeal within thirty (30) days from the notice of
judgment or final order.

The period to appeal shall be interrupted by a timely motion for

new trial or reconsideration. No motion for extension of time to
file a motion for new trial or reconsideration shall be allowed.
(emphasis supplied)

Based on the foregoing, an appeal should be taken within 15 days from the
notice of judgment or final order appealed from. A final judgment or order is
one that finally disposes of a case, leaving nothing more for the court to do
with respect to it. It is an adjudication on the merits which, considering the
evidence presented at the trial, declares categorically what the rights and
obligations of the parties are; or it may be an order or judgment that
dismisses an action.[12]

As already mentioned, petitioners argue that the order of July 1, 1998

denying their motion for reconsideration should be construed as the final
order, not the February 12, 1998 order which dismissed their complaint.
Since they received their copy of the denial of their motion for
reconsideration only on July 22, 1998, the 15-day reglementary period to
appeal had not yet lapsed when they filed their notice of appeal on July 27,
1998.
 What therefore should be deemed as the final order, receipt of which
triggers the start of the 15-day reglementary period to appeal the February
12, 1998 order dismissing the complaint or the July 1, 1998 order dismissing
the MR?
In the recent case of Quelnan v. VHF Philippines, Inc.,[13] the trial court
declared petitioner Quelnan non-suited and accordingly dismissed his
complaint. Upon receipt of the order of dismissal, he filed an omnibus
motion to set it aside. When the omnibus motion was filed, 12 days of the
15-day period to appeal the order had lapsed. He later on received another
order, this time dismissing his omnibus motion. He then filed his notice of
appeal. But this was likewise dismissed for having been filed out of time.
The court a quo ruled that petitioner should have appealed within 15
days after the dismissal of his complaint since this was the final order that
was appealable under the Rules. We reversed the trial court and declared
that it was the denial of the motion for reconsideration of an order of
dismissal of a complaint which constituted the final order as it was what
ended the issues raised there.

This pronouncement was reiterated in the more recent case of Apuyan v.

Haldeman et al.[14] where we again considered the order denying petitioner
Apuyans motion for reconsideration as the final order which finally disposed
of the issues involved in the case.

Based on the aforementioned cases, we sustain petitioners view that the

order dated July 1, 1998 denying their motion for reconsideration was
the final order contemplated in the Rules.
We now come to the next question: if July 1, 1998 was the start of the
15-day reglementary period to appeal, did petitioners in fact file their notice
of appeal on time?

Under Rule 41, Section 3, petitioners had 15 days from notice of

judgment or final order to appeal the decision of the trial court. On the
15thday of the original appeal period (March 18, 1998), petitioners did not
file a notice of appeal but instead opted to file a motion for reconsideration.
According to the trial court, the MR only interrupted the running of the 15-
day appeal period.[15] It ruled that petitioners, having filed their MR on the
last day of the 15-day reglementary period to appeal, had only one (1) day
left to file the notice of appeal upon receipt of the notice of denial of their
MR. Petitioners, however, argue that they were entitled under the Rules to
a fresh period of 15 days from receipt of the final order or the order
dismissing their motion for reconsideration.
In Quelnan and Apuyan, both petitioners filed a motion for
reconsideration of the decision of the trial court. We ruled there that they
only had the remaining time of the 15-day appeal period to file the notice of
appeal. We consistently applied this rule in similar cases,[16] premised on the
long-settled doctrine that the perfection of an appeal in the manner and
within the period permitted by law is not only mandatory but also
jurisdictional.[17] The rule is also founded on deep-seated considerations of
public policy and sound practice that, at risk of occasional error, the
judgments and awards of courts must become final at some definite time
fixed by law.[18]

Prior to the passage of BP 129, Rule 41, Section 3 of the 1964 Revised
Rules of Court read:

Sec. 3. How appeal is taken. Appeal maybe taken by

serving upon the adverse party and filing with the trial
court within thirty (30) days from notice of order or
judgment, a notice of appeal, an appeal bond, and a
record on appeal. The time during which a motion to set aside
the judgment or order or for new trial has been pending shall be
deducted, unless such motion fails to satisfy the requirements of
Rule 37.

But where such motion has been filed during office hours
of the last day of the period herein provided, the appeal must be
perfected within the day following that in which the party
appealing received notice of the denial of said
[19]
motion. (emphasis supplied)

According to the foregoing provision, the appeal period previously consisted

of 30 days. BP 129, however, reduced this appeal period to 15 days. In the
deliberations of the Committee on Judicial Reorganization[20] that drafted BP
129, the raison d etre behind the amendment was to shorten the period of
appeal[21] and enhance the efficiency and dispensation of justice. We have
since required strict observance of this reglementary period of appeal.
Seldom have we condoned late filing of notices of appeal,[22] and only in very
exceptional instances to better serve the ends of justice.

In National Waterworks and Sewerage Authority and Authority v.

Municipality of Libmanan,[23] however, we declared that appeal is an
essential part of our judicial system and the rules of procedure should not be
applied rigidly. This Court has on occasion advised the lower courts to be
cautious about not depriving a party of the right to appeal and that every
party litigant should be afforded the amplest opportunity for the proper and
just disposition of his cause, free from the constraint of technicalities.
 In de la Rosa v. Court of Appeals,[24] we stated that, as a rule, periods
which require litigants to do certain acts must be followed unless, under
exceptional circumstances, a delay in the filing of an appeal may be excused
on grounds of substantial justice. There, we condoned the delay incurred by
the appealing party due to strong considerations of fairness and justice.
In setting aside technical infirmities and thereby giving due course to
tardy appeals, we have not been oblivious to or unmindful of the
extraordinary situations that merit liberal application of the Rules. In those
situations where technicalities were dispensed with, our decisions were not
meant to undermine the force and effectivity of the periods set by law. But
we hasten to add that in those rare cases where procedural rules were not
stringently applied, there always existed a clear need to prevent the
commission of a grave injustice. Our judicial system and the courts have
always tried to maintain a healthy balance between the strict enforcement of
procedural laws and the guarantee that every litigant be given the full
opportunity for the just and proper disposition of his cause.[25]
The Supreme Court may promulgate procedural rules in all
courts.[26] It has the sole prerogative to amend, repeal or even establish new
rules for a more simplified and inexpensive process, and the speedy
disposition of cases. In the rules governing appeals to it and to the Court of
Appeals, particularly Rules 42,[27] 43[28] and 45,[29] the Court allows
extensions of time, based on justifiable and compelling reasons, for parties
to file their appeals. These extensions may consist of 15 days or more.

To standardize the appeal periods provided in the Rules and to afford

litigants fair opportunity to appeal their cases, the Court deems it practical
to allow a fresh period of 15 days within which to file the notice of appeal in
the Regional Trial Court, counted from receipt of the order dismissing a
motion for a new trial or motion for reconsideration. [30]

Henceforth, this fresh period rule shall also apply to Rule 40 governing
appeals from the Municipal Trial Courts to the Regional Trial Courts; Rule 42
on petitions for review from the Regional Trial Courts to the Court of
Appeals; Rule 43 on appeals from quasi-judicial agencies[31] to the Court of
Appeals and Rule 45 governing appeals by certiorari to the Supreme
Court.[32] The new rule aims to regiment or make the appeal period uniform,
to be counted from receipt of the order denying the motion for new trial,
motion for reconsideration (whether full or partial) or any final order or
resolution.
We thus hold that petitioners seasonably filed their notice of appeal
within the fresh period of 15 days, counted from July 22, 1998 (the date of
receipt of notice denying their motion for reconsideration). This
pronouncement is not inconsistent with Rule 41, Section 3 of the Rules which
states that the appeal shall be taken within 15 days from notice of
judgment or final order appealed from. The use of the disjunctive word or
signifies disassociation and independence of one thing from another. It
should, as a rule, be construed in the sense in which it ordinarily
implies.[33] Hence, the use of or in the above provision supposes that the
notice of appeal may be filed within 15 days from the notice of judgment or
within 15 days from notice of the final order, which we already determined
to refer to the July 1, 1998 order denying the motion for a new trial or
reconsideration.

Neither does this new rule run counter to the spirit of Section 39 of BP
129 which shortened the appeal period from 30 days to 15 days to hasten
the disposition of cases. The original period of appeal (in this case March 3-
18, 1998) remains and the requirement for strict compliance still
applies. The fresh period of 15 days becomes significant only when a
party opts to file a motion for new trial or motion for reconsideration. In this
manner, the trial court which rendered the assailed decision is given another
opportunity to review the case and, in the process, minimize and/or rectify
any error of judgment. While we aim to resolve cases with dispatch and to
have judgments of courts become final at some definite time, we likewise
aspire to deliver justice fairly.

In this case, the new period of 15 days eradicates the confusion as to

when the 15-day appeal period should be counted from receipt of notice of
judgment (March 3, 1998) or from receipt of notice of final order appealed
from (July 22, 1998).

To recapitulate, a party litigant may either file his notice of appeal

within 15 days from receipt of the Regional Trial Courts decision or file it
within 15 days from receipt of the order (the final order) denying his motion
for new trial or motion for reconsideration. Obviously, the new 15-day period
may be availed of only if either motion is filed; otherwise, the decision
becomes final and executory after the lapse of the original appeal period
provided in Rule 41, Section 3.
Petitioners here filed their notice of appeal on July 27, 1998 or five
days from receipt of the order denying their motion for reconsideration on
July 22, 1998. Hence, the notice of appeal was well within the fresh appeal
period of 15 days, as already discussed.[34]

We deem it unnecessary to discuss the applicability of Denso (Philippines),

Inc. v. IAC[35] since the Court of Appeals never even referred to it in its
assailed decision.

WHEREFORE, the petition is hereby GRANTED and the assailed

decision of the Court of Appeals REVERSED and SET ASIDE. Accordingly,
let the records of this case be remanded to the Court of Appeals for further
proceedings.

No costs.

SO ORDERED.
PUBLIC ESTATES G.R. No. 158812
AUTHORITY and MANUEL R.
BERINA, JR., in his capacity
as the Acting General
Manager of the Public Present:
Estates Authority,

Petitioners,
PANGANIBAN, Chairman,

SANDOVAL-GUTIERREZ,

-versus- CORONA,

CARPIO MORALES, and

GARCIA, JJ.

BOLINAO SECURITY AND

INVESTIGATION SERVICE,
INC.,

Respondent. Promulgated:

October 5, 2005

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - x

DECISION
CARPIO MORALES, J.:

Before this Court is a Petition for Review of the Court of Appeals Decision[1]
dated May 30, 2002 which affirmed that of the Makati Regional Trial Court,
Branch 58, dated April 22, 1992 declaring null and void the award by the
Philippine Estates Authority (PEA) of a bid in favor of Masada Security
Agency and declaring Bolinao Security and Investigation Service Inc. as the
winning bidder for the April 10, 1991 bidding for security services.

On February 1, 1990, the PEA, a government corporation, through its then

Acting General Manager Luis B. Pangilinan, Jr., entered into a Contract for
Security Services[2] with Bolinao Security and Investigation Services, Inc.
(Bolinao Security), to secure and protect PEAs properties, personnel and
premises at Villa Porta Vaga Subdivision, Cavite City. The contract was
effective February 1, 1990 until January 31, 1991, extendible at the option
of PEA.[3]

In December 1990, PEA published in several newspapers an Invitation to

Bid[4] for the services of three hundred seven (307) regular and well-trained
guards for its establishments, facilities, and other properties in Metro Manila
including those in Cavite City. The Invitation to Bid read:

INVITATION TO BID

Interested bidders are invited to participate in the public

bidding for Security Services for the following areas:

(1) 6th and 7th Floor, Legaspi Towers 200, Makati, Metro
Manila
(2) Central Business Park (CBP) I Pasay City
(3) Freedom Islands I and II Paraaque, Metro Manila
(4) Fishermans Wharf, Paraaque, Metro Manila
(5) Aguinaldo Blvd. (Coastal Road or R-I) Paraaque-Las Pias,
Metro Manila
 (6) Lopez, Bernabe, Madrigal-Relocation Sites Las Pias
(7) Financial Center Area Pasay City
(8) Villa Porta Vaga (Caacao Bay) Cavite City

Interested bidders may request for copies of the Terms of

Reference for this bidding, from the Administrative Department
of PEA, beginning on Dec. 17, 1990 up to Dec. 21, 1990 during
regular working hours from 9:00 AM-6:00 PM.

All sealed bids must be received by the PEA Prequalification Bids

and Awards Committee on or before 10:00 AM of December 27,
1990 at the 7th Floor, Legaspi Towers 200, Paseo de Roxas,
Makati, Metro Manila and will be publicly opened and read on the
said bidding date at the same address, in the presence of
attending bidders or their duly authorized representatives and
the general public. A Pre-bid conference will be conducted by the
PBAC on Dec. 24, 1990 at 10:00 AM. Attendance to this Pre-bid
conference is mandatory.

PEA reserves the right to reject any proposal or waive any

defects or formality, impose additional terms and
conditions and accept the proposal most advantageous to
the Government. (Emphasis supplied)[5]

The Terms of Reference (TOR) for Security Services[6] listed the following
documents which an interested party should submit to PEA to qualify to bid:

(a) Certified xerox copy of Current License to

Operate;

(b) Certified xerox copy of Articles of Incorporation;

(c) Description of the organization, including its objectives

and the names, nationality and experience of key officials;

(d) Certified list of firearms, communication equipment,

service vehicles and other equipment with their
corresponding licenses to operate said equipment;
 (e) List of existing clients;

(f) Detailed financial statements (balance sheets and

profits and loss statements) as of September 1990 and
Income Tax Return duly filed and received by the Bureau of
Internal Revenue (BIR);

(g) Certification of up-to-date payments of Social

Security Services (SSS) Contributions;

(h) Bank certification of standby credit in the amount of

TWO MILLION PESOS (P2,000,000.00);
(i) Certification of deposit from Philippine National Bank
(PNB) or any reputable bank equivalent to one (1) monthly
salary of three hundred seven (307) guards to be used
exclusively for their salaries.(Emphasis and underscoring
supplied)[7]

On December 19, 1990, a pre-bid conference was held attended by twenty-

one (21) interested security agencies. Following the conference, Bid Bulletin
No. 1 dated December 21, 1990 amending, clarifying and/or supplementing
the TOR was issued to all prospective bidders.

On the scheduled bidding on December 27, 1990, only six (6) out of the
twenty-one (21) interested bidders showed up, namely: Integrity Security
and Intelligence Service (Integrity Security); Bolinao Security; Odin Security
Agency, Inc.; Masada Security Agency, Inc. (Masada Security); Catalina
Security Agency, Inc. and Montillano Security Agency.

For alleged general non-compliance by bidders with bid qualification, PEAs

Prequalification Bids and Awards Committee (PBAC) rejected all the 6 bids
and thus scheduled a rebidding for security services contract.

In the meantime, after the contract with Bolinao Security expired on January
31, 1991, it was extended monthly by PEA up to July 29, 1991.[8]
The re-bidding was scheduled on April 10, 1991 and all the 21 bidders were
again invited to submit their bids. Bid Bulletin No. 2[9] was thereafter issued
modifying the TOR originally issued.

On April 3, 1991, a pre-bid conference was held and on April 10, 1991, the
bids were opened.

The PBACs technical working group thereafter issued Bid Evaluation[10]

dated June 11, 1991 tabulating the result of the bidding as follows:

BIDDERS LIQUIDATED REMARKS

DAMAGES

(p/ struct.)

1. Integrity Security 25,000 No SSS Clearance

2. Bolinao Security 20,000 No current license to operate

3. Masada 6,500 Complying

4. Odin Security 5,500 Complying

5. Catalina Security 5,000 Complying

6. Montillano Security 5,000 Only application for Permit To

Purchase radio eqpt.[11]

The evaluation noted that all the bidders offered a bid price of
P1,499,695.00 per month. PEA thus based the award on the amount of
liquidated damages representing the total penalty to be paid by the security
agency if it failed to prevent the construction of a shanty by a squatter in the
Manila Bay reclamation properties of PEA.

The report, noting that Integrated Security submitted the highest bid in
terms of liquidated damages but had no SSS clearance, and Bolinao Security
submitted the next highest bid but had no current license to operate,
recommended that Masada Security which proffered the third highest bid be
considered the winning bidder.[12]

Heeding the PBACs recommendation, PEA awarded the contract to Masada

Security effective September 1, 1991 up to April 30, 1993.[13] Bolinao
Security whose contract with PEA expired on January 31, 1991 but was, as
earlier stated, extended monthly up to July 29, 1991, refused to turn over
the PEA properties in Cavite City, however, to Masada Security, prompting
PEA to send a demand letter to Bolinao Security to turn over the property to
Masada Security.

Bolinao Security insisted to PEA, however, that it should be declared the

winning bidder. But PEA explained that the bid of Bolinao Security was
rejected because it failed to submit a current license to operate and to award
the contract to it despite that would violate Presidential Decree (P.D.) No.
1919.[14]

On September 16, 1991, Bolinao Security filed with the Regional Trial Court
of Makati a complaint[15] for annulment of bid award, damages, injunction
with special prayer for the issuance of a temporary restraining order against
PEA, its Acting General Manager Manuel Berina, Jr., and Masada Security,
averring that, among other things, the attempt of Masada Security to take
over the Cavite City premises from it based on the result of the bidding was
improper, illegal, criminal and violative of the provisions of the Anti-Graft
and Corrupt Practices Act.[16]

In its Answer,[17] PEA, denying Bolinao Securitys allegations, alleged that

the contract for security services for its properties situated in Cavite City
with Bolinao Security, as extended, had already been terminated effective
September 16, 1991; bidding laws were strictly followed and the bid of
Bolinao Security was twice rejected for non-compliance with important
requirements of the bidding; Bolinao Security failed to offer the highest
liquidated damages; and awarding the contract to Bolinao Security would
violate P.D. No. 1919 as well as the National Accounting and Auditing
Manual.

Masada Security, in its Answer with Compulsory Counterclaim,[18] proffered

that Bolinao Security had no valid cause of action, hence, not entitled to a
writ of preliminary injunction.

By Order of October 14, 1991, the trial court issued a writ of preliminary
injunction enjoining the defendants from terminating the contract with
Bolinao Security covering PEAs Cavite City property.[19]

After trial on the merits, the trial court, by Decision of April 22, 1992, found
for Bolinao Security and declared the contract awarded to Masada Security
null and void. The decretal text of the decision reads:

WHEREFORE, premises considered, judgment is rendered in

favor of the plaintiff with the following dispositions:

1) The writ of preliminary injunction issued in this case,

which enjoins defendants from terminating the existing
contract for security services with plaintiff, and from
implementing the questioned contract in favor of Masada
Security Agency effective September 17, 1991, and from
ejecting plaintiff from the Villa Porta Vaga Subdivision,
Canacao, Cavite City, is made permanent.

2) The award of the bid in favor of defendant Masada

Security Agency is declared null and void and plaintiff Bolinao
is declared as the winning bidder during the public bidding
held on April 10, 1991.
 3) Directing the defendants to jointly and severally pay to the
plaintiff the amount of P50,000.00 as nominal damages,
P50,000.00 as exemplary damages; attorneys fees; and the
costs of suit.

SO ORDERED.[20] (Underscoring supplied)

On appeal, the Court of Appeals affirmed the decision of the trial court by
Decision of May 30, 2002.

In affirming the trial courts decision, the appellate court held that
disqualifying Bolinao Security for the simple reason that on the day of the
bidding its application for renewal of its license was still being processed was
most unfair, arbitrary and has no legal basis as the period for processing
thereof is a bureaucratic requirement which sh[ould] not work against the
interest of [Bolinao Security], absen[t] any badge of fraud or
negligence.[21]

Even assuming that Bolinao Securitys pending application for renewal of

license did not serve as proof of a current license to operate, the appellate
court held that still PEA was estopped when it opened the second envelope
containing the bid.[22]

The appellate court went on to declare that the rule that the doctrine of
estoppel does not lie against the government is not without exception, it
holding that while the State could not be put in estoppel by the mistakes or
errors of its officials or agents, the government must not be allowed to deal
dishonorably or capriciously with its citizens;[23] and while the government
was not precluded from subsequently raising the issue of lack of qualification
on the part of Bolinao Security, the same must be supported by law and
equity.[24]
Hence, the present petition for review filed on July 24, 1003 by PEA and its
Acting General Manager Manuel R. Berina, Jr.,[25] raising the following
issues:

WHETHER OR NOT RESPONDENT BOLINAO SECURITY AND

INVESTIGATION SERVICE, INC. IS A QUALIFIED BIDDER,
DESPITE ITS NON-COMPLIANCE WITH THE BIDDING
REQUIREMENTS.

II

WHETHER OR NOT THE LOWER COURTS RULINGS CONSTITUTE

AN UNJUSTIFIED JUDICIAL INTERVENTION OVER PURELY
EXECUTIVE MATTERS AND FUNCTIONS.[26]

PEA argues that, inter alia, the lower courts rulings constituted an unjustified
judicial intervention over purely executive matters and functions;[27] where
the invitation to bid provides that the government may reject any or all bids
or any part thereof or waive any defects contained therein and accept an
offer most advantageous to the government, the highest or lowest bidder, as
the case may be, cannot claim the award as a matter of right;[28] it should
not be considered in estoppel by opening and reading the bids of Bolinao
Security since it (PEA) declared, aside from its published reservation, that it
reserved the right to reject any bid;[29] and at all events, Bolinao Security
failed to submit the most advantageous bid.[30]

The petition is meritorious.

The issue in the main is whether the thrashing out of Bolinao Securitys bid in
favor of Masada Security was justified by PEA in view of the formers lack of
current license to operate at the time of the opening of the bids on April 10,
1991 and PEAs right to reject any or all bids stipulation in the Invitation to
Bid.
As priorly stated, the contract for security services between Bolinao Security
and PEA took effect on February 1, 1990 until January 31, 1991.[31] As its
license to operate was to expire on March 31, 1991, Bolinao Security filed on
February 28, 1991 an application for a new license which was granted and
issued only on May 16, 1991, after the April 10, 1991 bidding. Evidently, at
the time of the bidding, Bolinao Security had no current license to operate
as required by the TOR.

Bolinao Security argues, however, that since PEA had given it several
extensions after its license to operate expired and as its new license was
eventually issued on May 16, 1991, such new license should have been
given retroactive effect.

At any rate, Bolinao Security argues that while PEA has the right to reject
any proposal, it has also the right to waive any defects.

Bolinao Securitys position fails.

PEAs granting of extensions to Bolinao Security after its license expired

cannot be interpreted as a waiver of the requirement of a current license.

Waiver is defined as the relinquishment of a known right with knowledge of

its existence and an intention to relinquish it. Voluntary choice is the essence
of waiver.[32] To be valid and effective, a waiver must in the first place be
couched in clear and unequivocal terms which leave no doubt as to the
intention of a person to give up a right or benefit which legally pertains to
him. It may not causally be attributed to a person when the terms thereof
do not explicitly and clearly evidence an intent to abandon a right vested in
such person.[33]
Extension of the effectivity of the security service contract can not be
interpreted as an extension of the effectivity of license to operate a security
agency. Neither can the new license issued to Bolinao Security be given
retroactive effect without running afoul of the rule in public biddings that
qualifications of bidders shall be determined at the time of the opening of
the bids, and not at any other time. The National Accounting and Auditing
Manual is explicit on the matter:

SEC. 391. Opening of bids. Bids shall be opened at the exact

hour announced for such opening in the notice or advertisement,
and in the presence of all bidders, if possible. Bids for public
services or for furnishing supplies, materials, and equipment to
the government shall be opened in the presence of a committee
to be designated by the head of the office and a representative
of the Auditor General who is authorized to secure and identify
such papers and samples as will insure the proper safeguard of
the interests of the Government.

Before the actual opening of the sealed bids, the committee shall
acquaint itself with the conditions imposed by the notice or
advertisement upon all prospective bidders, especially those with
reference to the personal qualifications of the contractor, if any;
the amount and character of deposits to be submitted with the
bid, etc. No bid presented after the expiration of the time set for
the opening shall be received. Bids shall be in sealed envelopes
only. Bids by telegram, telephone, radiogram, or open bids shall
not be accepted; they are not valid. A bid opened which does not
meet in full the conditions or requirements of the notice or
advertisement shall be disqualified and shall not be considered in
any award to be made, but notation thereof shall be entered in
the abstract of proposals giving the reason or reasons for the
disqualification of such bid. An imperfect bid, i.e., a bid which
does not comply with all the conditions or requirements in
the notice or advertisement, or complies with them partly
but not in full may not be perfected after the time set for
the opening of the bids has already elapsed, much less
after the bids have been opened. Bids which offer other
conditions than those specified in the advertisement such as in
the quantity, quality or manner of rendering the service, or
supplying the materials or supplies being bidded, or the time of
performance under the resulting contract, etc., will likewise be
ineligible for an award, but the proposal will be noted in the
 abstract with a memorandum why the said proposal has been
disqualified for an award. (Emphasis supplied)

Thus, in Republic v. Capulong,[34] the therein private respondent bidder

urged this Court to consider a 1952 Opinion of the Secretary of Justice which
declared that the failure of the lowest bidder to secure a license as a
transportation operator at the time of the opening of the bids did not affect
its bid. In debunking the therein private respondents appeal, this Court held
that the invitation to bid issued by the then Department of Agriculture and
Natural Resources contained no requirement that the bidder must be a duly
licensed transportation operator at the time of the opening of the bids,[35]
in stark contrast to the requirement involved in the instant case.

And in C & C Commercial v. Menor,[36] this Court upheld NAWASAs

rejection of the bid to supply asbestos cement pressure proffered by C and C
Commercial which did not submit the required tax clearance certificate.

Bolinao Securitys argument that PEA was estopped from questioning its
qualifications, it asserting that by opening the second/bid envelope, the
eligibility and qualification requirements of the bidding were deemed
complied with, does not persuade.

Bid Bulletin No. 2[37] expressly provides:

TERMS OF REFERENCE FOR

SECURITY SERVICES
BID BULLETIN NO. 2

This Bid Bulletin No. 2 is hereby issued for your information and
inclusion in the Terms of Reference already issued, as follows:

1. Section A. Bid Price

 Delete the entire section and substitute the following:

Section A. Bid/Tender

1) Bid Price

All prices quoted shall not be below the existing

minimum rate prescribed by PC-SUSSUA-PADPAO.

2) Submission
Bids shall be submitted in two (2) sealed envelopes
with the name of the project to be bid and the name of the
bidder in capital letters addressed to the PBAC. They shall
be marked Do not open before 2:00 P. M. of 10 April 1991.

The first envelope shall contain the following

information/documents:

a) Obligations of Contractor as specified in Section C.[38]

b) Bid Security in the proper form and amount.

It shall be opened first to determine the contractors

compliance with the above requirements. Non-compliance
with any of the above requirements shall automatically
disqualify the bid submitted.

The second envelope shall contain the following

information/documents:

a) Bid Price
b) Breakdown of Bid Price
c) Amount of Liquidated Damages

It shall be opened only if the contractor has complied with

the requirements needed in the first envelope. (Emphasis
and Footnote supplied)

In Information Technology Foundation of the Philippines v. Commission on

Elections,[39] the question of qualification or eligibility of a bidder in a public
bidding conducted by the Commission on Elections (COMELEC) to procure
election automation machines was in issue.
The public bidding conducted by the COMELEC observed a two-
envelope/two-stage system. The bidders first envelope or the Eligibility
Envelope was to establish the bidders eligibility to bid and its qualifications
to perform the acts if accepted. The second envelope contained the Bid
Envelope itself.

The COMELECs Request for Proposal (RFP) to procure the election

automation machines stated, however, that the eligibility envelopes of
prospective [b]idders shall be opened first to determine their eligibility. In
case any of the requirements specified in Clause 20 is missing from the first
bid envelope, the BAC shall declare said prospective [b]idder as ineligible to
bid. Bid envelopes of ineligible [b]idders shall be immediately returned
unopened.[40]

The winning bidders Bid Envelope was opened by the COMELEC despite its
lack of qualification or eligibility. This Court, however, disqualified such
winning bidder.

So must Bolinao Security be disqualified.

The basic rule in public bidding that bids should be evaluated on the basis of
the required documents submitted before and not after the opening of bids
must be strictly observed in order to safeguard a fair, honest and
competitive public bidding.[41]

At all events, as PEA argues, assuming arguendo that Bolinao Security was
deemed to have complied with the current license requirement, since the
Invitation to Bid expressly provided that PEA reserves the right to reject any
proposal or waive any defects or formality, impose additional terms and
conditions and accept the proposal most advantageous to the Government,
Bolinao Security voluntarily submitted itself to the terms and conditions
thereof and acknowledged the said right of the government.
In Bureau Veritas v. Office of the President,[42] this Court through the
erudite expatiation of Justice Melencio-Herrera discussed profoundly the
legal implications of the right to reject any or all bids in an invitation to bid,
viz:

xxx It must be stressed, as held in the case of A.C. Esguerra &

Sons v. Aytona, et al. (L-18751, 28 April 1962, 4 SCRA 1245) ,
that in an invitation to bid, there is a condition imposed upon the
bidders to the effect that the bidding shall be subject to the right
of the government to reject any and all bids subject to its
discretion. In the case at bar, the government has made its
choice and unless an unfairness or injustice is shown, the
losing bidders have no cause to complain nor right to
dispute that choice. This is a well-settled doctrine in this
jurisdiction and elsewhere.

This discretion to accept or reject a bid and award

contracts is vested in the Government agencies entrusted
with that function. The discretion given to the authorities
on this matter is of such wide latitude that the Courts will
not interfere therewith, unless it is apparent that it is
used as a shield to a fraudulent award (Jalandoni v. NARRA,
108 Phil. 486 [1960]). xxx The choice of who among the bidders
is best qualified to perform this task should be left to the sound
discretion of the proper Government authorities in the executive
branch since they are in a better position than the Courts to
make the determination owing to the experience and knowledge
that they have acquired by virtue of their functions. The exercise
of this discretion is a policy decision that necessitates prior
inquiry, investigation, comparison, evaluation, and deliberation.
This task can best be discharged by the Government agencies
concerned, not by the Courts. The role of the Courts is to
ascertain whether a branch or instrumentality of the Government
has transgressed its constitutional boundaries. But the Courts
will not interfere with executive or legislative discretion exercised
within those boundaries. Otherwise, it strays into the realm of
policy decision-making.
It is only upon a clear showing of grave abuse of
discretion that the Courts will set aside the award of a
contract made by a government entity. Grave abuse of
 discretion implies a capricious, arbitrary and whimsical exercise
of power xxx. The abuse of discretion must be so patent and
gross as to amount to an evasion of positive duty or to a virtual
refusal to perform a duty enjoined by law, as to act at all in
contemplation of law, where the power is exercised in an
arbitrary and despotic manner by reason of passion or hostility
xxx.

xxx. In the Invitation to Prequalify and Bid xxx, the CISS

Committee made an express reservation of the right of the
Government to reject any or all bids or any part thereof or waive
any defects contained thereon and accept an offer most
advantageous to the Government. It is well-settled rule that
where such reservation is made in an Invitation to Bid,
the highest or lowest bidder, as the case may be, is not
entitled to an award as a matter of right (C & C Commercial
Corp. v. Menor, L-28360, 27 January 1983, 120 SCRA 112).
Even the lowest Bid or any Bid may be rejected or, in the
exercise of sound discretion, the award may be made to
another than the lowest bidder (A. C. Esguerra & Sons v.
Aytona, supra, citing 43 Am. Jur., 788). (Emphasis and
underscoring supplied)

Similarly, in National Power Corporation v. Philipp Brothers Oceanic,

Inc.,[43] this Court declared that where the right to reject is so reserved,
the lowest bid or any bid for that matter may be rejected on a mere
technicality. And where the government as advertiser, availing itself of that
right, makes its choice in rejecting any or all bids, the losing bidder has no
cause to complain nor right to dispute that choice unless an unfairness or
injustice is shown. Citing Celeste v. Court of Appeals,[44] this Court went on
to declare:

Verily, a reservation of the government of its right to reject any

bid, generally vests in the authorities a wide discretion as to who
is the best and most advantageous bidder. The exercise of
such discretion involves inquiry, investigation,
comparison, deliberation and decision, which are quasi-
judicial functions, and when honestly exercised, may not
be reviewed by the court. xxx (Emphasis supplied)
Only recently, this Court in JG Summit Holdings, Inc. v. Court of Appeals[45]
held:

It is a settled rule that where the invitation to bid

contains a reservation for the Government to reject any or
all bids, the lowest or the highest bidder, as the case may
be, is not entitled to an award as a matter of right for it
does not become a ministerial duty of the Government to
make such an award. Thus, it has been held that where
the right to reject is so reserved, the lowest bid or any bid
for that matter may be rejected on a mere technicality,
that all bids may be rejected, even if arbitrarily and
unwisely, or under a mistake, and that in the exercise of a
sound discretion, the award may be made to another than
the lowest bidder. And so, where the Government as
advertiser, availing itself of that right, makes its choice in
rejecting any or all bids, the losing bidder has no cause to
complain nor right to dispute that choice, unless an unfairness
or injustice is shown. (Emphasis and underscoring supplied)[46]

Clearly, as spelled out in the foregoing disquisitions, the government is

granted broad discretion in choosing who among the bidders can offer the
most advantageous terms and courts will not interfere therewith or direct
the committee on bids to do a particular act or to enjoin such act within its
prerogatives, except when in the exercise of its authority, it gravely abuses
or exceeds its jurisdiction.[47]

A reading of the decisional rules on reservation of right to reject cautions,

however, against injustice, unfairness, arbitrariness, fraudulent acts or grave
abuse of discretion.[48] A contrary conclusion would be anathema to the
purposes for which public biddings are founded to give the public the best
possible advantages through open competition as it would give the
unscrupulous a plain escape to rig the bidding process.
Thus segueing to the issue of whether PEAs choice of Masada Security over
that of Bolinao Security was tainted with injustice, unfairness, arbitrariness
or fraud or whether it constituted grave abuse of discretion, this Court finds
that Bolinao Security failed to prove the same.

The presumption of regularity of the bidding must thus remain.

As reflected above, competitive public bidding aims to protect the public

interest by giving the public the best possible advantages through open
competition. It is a mechanism that enables the government agency to avoid
or preclude anomalies in the execution of public contracts.[49] Authorities
should not thus be permitted to waive any substantial variance between the
conditions under which bids are invited and the proposals submitted. If one
bidder is relieved from conforming with the conditions which impose some
duty upon it or lay the ground for holding it to a strict performance of its
contract, that bidder is not contracting in fair competition with those bidders
who propose to be bound by all the conditions.[50]

In fine, the PEA did not commit grave abuse of discretion in selecting the bid
of Masada Security as the most advantageous to the government.

WHEREFORE, the decision of the Court of Appeals dated May 30, 2002 is
REVERSED and SET ASIDE and the complaint of respondent, Bolinao
Security and Investigation Service, Inc. is DISMISSED.

SO ORDERED.

SPOUSES ROBERTO AND G.R. No. 165005

NATIVIDAD VALDERAMA,[1]
Petitioners, Present:
PUNO, J., Chairman,
- versus - AUSTRIA-MARTINEZ,

CALLEJO, SR.,
TINGA, and
SALVACION V. MACALDE, CHICO-NAZARIO, JJ.
for herself and her brothers
and sisters, substituted by Promulgated:
FLORDELIZA V. MACALDE,
Respondents. September 16, 2005
x-----------------------------------------------
---x

DECISION

CALLEJO, SR., J.:

Before us is a petition for review on certiorari of the Decision[2] of the Court

of Appeals (CA) in CA-G.R. CV No. 48899.

The case stemmed from the following facts:

Years before World War II, the parents of Salvacion V. Macalde rented a lot
located at No. 551 Pampanga Street, Tondo, Manila. Their house was
constructed on a two-thirds portion of the said property, with an area of 175
square meters. It was in that house that Salvacion was born in 1934.
Sometime in 1977, Herminia Albano, who was engaged in the buy-and-sell
of PX goods, acquired the said lot, Thereafter, Transfer Certificate of Title
(TCT) No. 129569 was issued in her name. Macalde and her siblings leased
the property from Albano and paid their monthly rentals to her. On the
remaining one-third portion of the parcel of land stood an apartment which
was being leased to the spouses Roberto and Natividad Valderama.
On June 11, 1978, then President Ferdinand E. Marcos issued Presidential
Decree (P.D.) No. 1517 proclaiming specific parcels of urban lands as Urban
Land Reform Zones (otherwise known as Urban Zones). Under Section 6 of
the law, legitimate tenants within the urban zones who had been residing on
the land for ten years or more, who have built their homes on the land, and
residents who have legally occupied the lands by contract continuously for
the last ten years, shall not be dispossessed of the land and shall be allowed
the right of first refusal to purchase the same within a reasonable time and
at reasonable prices under terms and conditions to be determined by the
Urban Zone Expropriation and Land Management Committee created under
the law. Section 7 further provides that, in case the tenants and residents
are unable to purchase the said land, the government shall acquire the same
and/or the improvements thereon by expropriation or other land acquisition
techniques provided under Section 11 of the said decree. Landowners,
tenants and residents are also required to declare any proposal to sell, lease
or encumber lands and improvements thereon, including the proposed price,
rent or value of encumbrances and secure approval of said proposed
transactions.[3]

On May 14, 1980, former President Marcos issued Proclamation (Proc.) No.
1967, declaring the Metropolitan Manila area as an Urban Zone. On April 13,
1983, Proc. No. 2284 was issued amending Proc. No. 1967. The
proclamation identified 244 sites in Metro Manila as areas for priority
development, including Albanos property.

Sometime in November 1990, Albano offered to sell the property to

Salvacion Macalde and her siblings. In a Letter[4] dated November 9, 1990,
Macalde, in her behalf and in behalf of her siblings, informed Albano of her
desire and readiness to buy the property, and suggested that they discuss
the price, as well as the other terms and conditions of the sale at the
soonest possible time. Beth Diaz, Albanos grandchild, received the letter.
Albano did not respond. Nevertheless, Macalde sent a Letter dated
November 12, 1990 to the Housing and Land Use Regulatory Board
(HLURB), inquiring whether Albanos property was included in the areas for
priority development under P.D. No. 1517. In its Reply[5] dated November
26, 1990, the HLURB informed Macalde that the property was, indeed, within
the coverage of Areas for Priority Development under Proc. No. 1967, as
amended by Proc. No. 2284.
In the meantime, Macalde and her siblings continued paying their rentals to
Albano for the property. In fact, Macalde paid the amount of P3,321.00 on
March 5, 1991, representing the rental of the property for the period of July
1990 to March 1991.[6] On March 14, 1991, Albano told Macalde, for the
first time, that she had already sold the property. However, Albano did not
divulge to Macalde the identity of the person to whom she sold the property.
In a Letter dated March 21, 1991, Macalde complained to Albano about the
sale of the property to another, despite her prior offer to buy the property
way back in November 1990. She also requested Albano to rescind the sale
of the property, insofar as the portion occupied by their house was
concerned.[7] Sometime later, Macalde learned that Natividad Valderama
was the purchaser of Albanos property. Forthwith, on March 26, 1991,
Macalde wrote the spouses Valderama, and expressed her willingness to buy
the two-thirds portion of the property where their ancestral house was
constructed.[8] Macalde enclosed therein a copy of her letter to Albano
dated March 21, 1991.

Albano and the spouses Valderama rejected Macaldes offer, and the
latter brought the matter to the Barangay Lupon for conciliation. However,
the parties failed to settle the case amicably.[9]

In the meantime, Macalde discovered that Albano had executed a Deed of

Absolute Sale over the property in favor of Natividad Valderama, and that
TCT No. 129569 was cancelled and, in lieu thereof, TCT No. 198661 was
issued to Natividad Valderama, married to Roberto Valderama.[10]

On December 5, 1991, Macalde, for herself and on behalf of her

brothers and sisters, namely, Ma. Patria, Juan, Jr., Bienvenido, Fredeswinda,
Ricardo and Flordeliza, all surnamed Macalde, filed a Complaint[11] against
Herminia Albano and the spouses Valderama for the annulment of sale,
cancellation of title, reconveyance and damages with the Regional Trial
Court (RTC) of Manila, Branch 2. The case was docketed as Civil Case No.
91-59504.

The Macaldes averred therein that they had a preferential right to buy
the property under P.D. No. 1517, and prayed:
 Wherefore, it is most respectfully prayed of the Honorable
Court that

1. Transfer Certificate of Title No. 198661, Registry

of Deeds of Manila, in the name of Natividad
Valderama married to Roberto Valderama (Annex
I), be ordered cancelled;

The deed of sale by and between Herminia

Albano and Natividad Valderama, vendor and
vendee, respectively, dated May 28, 1990, regarding
TCT No. 129569 (Annex J) be declared null and void;

The subject parcel of land be ordered partitioned

or subdivided, 2/3 to and in favor of Salvacion
Macalde, 1/3 to remain in the name of Natividad
Valderama, and proper transfer titles thereto issue.
The plaintiff shall pay defendant Natividad
Valderama P200,000.00 correspondingly.

2. Order the defendants, jointly and solidarily, to pay

the plaintiff, collectively with her brothers and
sisters, the following:

a. P70,000.00 moral damages;

b. P10,000.00 attorneys fees; to double this rate
in case of appeal;
c. P800.00 appearance fee of counsel per
hearing;
d. P8,000.00 litigation expenses for
documentation, transportation and other
necessary expenses, or in such higher sums
as may be proved.

Plaintiff prays for other available reliefs.[12]

In her answer,[13] Albano alleged, inter alia, that the property with an
area of 175 square meters was not within the coverage of the law. She
insisted that as the owner of the property, she had that right to dispose the
same, and the Macaldes had been notified of her intention to sell the
property but that they ignored the offer.

In their answer to the complaint, the spouses Valderama averred that

the Macaldes had waived their preferential right to buy the property since
they failed to exercise their right when Albano first offered the property to
them. They insisted that no right of the plaintiffs had been violated; Albano
assured them that she had already offered the subject property to the
plaintiffs, and that they did not exercise their right to purchase the same.
They claimed that while the amount of P300,000.00 was stated in the deed
of sale as the purchase price, they had actually paid P750,000.00 to Albano
in installment. They further alleged that it was the amount of P300,000.00 in
the deed of sale that motivated the Macaldes to pursue the purchase of the
property.

On March 26, 1992, the Valderama spouses filed a cross-claim[14] against

Albano for the amount of P750,000.00 which they claimed they had paid for
the subject property. They prayed that Albano reimburse them the
difference, in the event that the RTC ordered the re-selling of the disputed
portion to the Macaldes for only P300,000.00 pursuant to the deed of sale.

After the trial on the merits, the RTC rendered its Decision[15] on
August 8, 1994, in favor of the Macaldes. The decretal portion reads as
follows:

WHEREFORE, prescinding from the foregoing, judgment is

hereby rendered:

1. The questioned deed of sale dated May 28, 1990

(Exhibit J) is partially annulled insofar as it affects the two-thirds
(2/3) portion of the lot in question being occupied by the
plaintiffs who built their ancestral home;

2. Perforce, TCT No. T-198661, of the land records of the

City of Manila (Exhibit I) issued in the name of Natividad
Valderama married to Roberto Valderama dated July 9, 1991, is
likewise ordered partially cancelled insofar as it affects the 2/3
portion occupied by the plaintiffs;

3. Defendant Natividad Valderama and her husband, are

ordered to execute the corresponding Deed of Reconveyance in
favor of the plaintiffs represented by Salvacion V. Macalde,
covering the said two-thirds (2/3) portion of the lot in question
presently occupied by the plaintiffs, for a consideration of
P500,000.00 upon full payment of said amount within a
reasonable time of thirty (30) days from receipt of this decision
together with and including the interest cost on said amount of
12% per annum, starting from May 28, 1990 up to the date of
actual reconveyance, which is estimated to be P240,000.00 more
or less for a total [a]mount of P740,000.00. Failing which,
plaintiffs are deemed to have waived their right of first refusal
and the questioned sale in favor of the Valderamas shall ipso
facto be affirmed with full force and legal effect including their
title thereto;

4. The spouses Natividad Valderama and Roberto

Valderama are declared the absolute owners of the undivided
one/third (1/3) portion of the lot where their ancestral home
stands, with all the rights blossoming forth from such ownership;

5. Should the reconveyance be consummated, the parties

may hire the services of a geodetic surveyor of their choice to
effect the soonest segregation and titling of their respective lots;

6. Defendants are ordered to jointly and severally pay

plaintiffs the sum of P10,000.00 by way of reasonable attorneys
fees.

7. Defendants to pay the costs.

SO ORDERED.[16]

The Macaldes appealed the decision and averred that:

 1. The Honorable Trial Court erred in finding that the
purchase price of the disputed parcel of land is P740,000.00,
when the facts and the law show that it is only P300,000.00.

2. The Honorable Trial Court erred in imposing the burden

of interest cost of 12% per annum against the appellants, when
the same was not pleaded nor taken up on the merits.

3. The Honorable Trial Court erred in denying an award of

damages in favor of the plaintiff-appellants, who have shown in
evidence vivid moral shock, mental torture and serious
anxiety.[17]

On October 29, 2003, the CA rendered judgment partially granting the

appeal. The fallo of the decision reads:

WHEREFORE, the instant appeal is hereby PARTIALLY

GRANTED. The ITEM NO. 3 in the assailed decision dated
August 8, 1994 of the Regional Trial Court of Manila, Branch 2 in
Civil Case No. 91-59504 is hereby MODIFIED to read as follows:

Conformably with PD 1517 or the Urban

Land Reform Law, the Urban Zone and Land
Management Committee is hereby directed to
ascertain and determine the reasonable price
and the other terms and conditions of the sale,
by Valderama to plaintiffs-appellants, covering
the portion of the land under TCT No. 198661
occupied by the latters ancestral house;

The plaintiffs-appellants are granted the

period of 30 days to exercise their right of first
refusal, from receipt of, and in accordance
with, the terms and conditions set by the Urban
Zone and Land Management Committee.
 The rest of the decision is hereby affirmed in all other
respect.

SO ORDERED.[18]

The CA ruled that under P.D. No. 1517, Albano cannot, on her own, fix
the purchase price of the property, as it was yet to be determined by the
Urban Zone Expropriation and Land Management Committee under P.D. No.
1517, in relation to Republic Act No. 7279.

The CA also held that since the controversy did not involve an
obligation to pay money or interest on liquidated claims or damages, or a
court judgment awarding a sum of money, no interest on the purchase price
of the property should be imposed. It found no basis to award any moral or
exemplary damages, since the Macaldes failed to present any evidence to
warrant such award.[19] The CA, likewise, denied the spouses Valderamas
motion for reconsideration of the said decision.[20]

In the present recourse, the spouses Valderama, as petitioners, raise

the following issues:

I. IS THE FORMER OWNER OF THE PROPERTY WHO OFFERED TO

SELL IT TO THE TENANT UNDER PD No. 1517 WHO COULD
NOT AFFORD TO BUY AND THEREFORE WAIVED SAID RIGHT
NO LONGER OBLIGED TO REFER THE OFFER TO SELL TO THE
URBAN ZONE AND LAND MANAGEMENT COMMITTEE UNDER
PD 1517 TO DETERMINE THE PRICE THEREFOR?

II. IS THE PURCHASE PRICE OF P750,000.00 PAID BY THE

PETITIONERS TO THE FORMER OWNER IN A DIRECT SALE
CORRECT AND PROPER PRICE, CONSIDERING THAT THE
BUYERS-PETITIONERS DID NOT BUY UNDER PD NO. 1517?
 III. IS THE INTEREST IMPOSED BY THE TRIAL COURT
JUSTICEABLE, WHICH IS STRICKENED OUT BY THE
HONORABLE COURT OF APPEALS, CONSIDERING THAT
RESPONDENTS HAVE NOT BEEN PAYING THEIR P120.00
MONTHLY RENTALS EITHER TO THE FORMER OWNER OR TO
THE BUYERS-PETITIONERS SINCE MAY 28, 1990 (purchased
by petitioners), UP TO THE PRESENT?[21]

The petition has no merit.

At the outset, the Court stresses that the issues raised by the
petitioners are factual and, under Rule 45 of the Rules of Court, only
questions of law may be raised. The reason for the rule is that this Court is
not a trier of facts and is not to reexamine and calibrate the evidence of the
parties. Furthermore, the findings of the trial court and its conclusion on the
basis thereof, as affirmed by the CA, are conclusive on this Court, absent
any showing that the trial court ignored, misconstrued or misinterpreted
cogent facts and circumstances which, if considered, would change the
outcome of the case.[22] We have reviewed the records and find no
justification to modify, much less reverse the findings of the court a quo and
affirmed by the CA.

Central to the resolution of the first issue is Section 6 of P.D. No. 1517
which grants a right of first refusal to legitimate tenants in the purchase of
the property, to wit:

SECTION 6. Land Tenancy in Urban Land Reform Areas.

Within the Urban Zones legitimate tenants who have resided on
the land for ten years or more who have built their homes on the
land and residents who have legally occupied the lands by
contract, continuously for the last ten years shall not be
dispossessed of the land and shall be allowed the right of first
 refusal to purchase the same within a reasonable time and at
reasonable prices, under terms and conditions to be determined
by the Urban Zone Expropriation and Land Management
Committee created by Section 8 of this Decree.

The petitioners reiterate the contention that, based on the testimony

of Albano, she repeatedly offered to sell the property to the respondents,
through Salvacion Macalde, for P1,000,000.00, later reduced to
P800,000.00; because of financial constraints, the respondents rejected the
offer. Respondents became interested to purchase the property when they
discovered that Albano had sold it to the petitioners for only P300,000.00.
But then, the trial court gave no credence to the testimony of Albano, and
instead gave full probative weight to the testimony of respondent Salvacion
Macalde, that she learned only sometime in March 1991 that the petitioners
had purchased the property from Albano for P300,000.00. Moreover, Albano
never adduced any documentary evidence to prove that she had earlier
offered to sell the property to the respondents. Indeed, the trial court found
it incredible that Albano did not even require the respondents to sign any
document rejecting the offer or waiving their right to purchase the property:

It is interesting to note, however, why defendant Albano,

who is admittedly a businesswoman, did not require the plaintiffs
to sign any note, memorandum or any public or private
document to evidence the waiver or refusal of the plaintiffs to
buy the lot in question, expressly stating therein that they lack
sufficient funds to purchase the lot. The insistence of Albano to
offer the lot for purchase by the plaintiffs is an implied admission
that, indeed, the Macaldes had the right of first refusal. And the
waiver of such right requires some note or memorandum or any
private or public document for the waiver to be effective. Such
verbal offer may not be sufficient basis to support the alleged
waiver. Thus, plaintiffs may not now be faulted if they insist in
demanding for their right of first refusal involving a real property
where they have built their ancestral home and stayed thereat
for about 50 long years. Defendant Albano does not claim that
the Macaldes failed to pay the rentals of the lot where their
ancestral home was constructed so that they may be rejected
therefore as squatters or deforcients.
 On the other hand, herein plaintiffs assert that they were
not notified of the sale of the lot in favor of the Valderamas.
They only came to know during the barangay conciliation
conference, where no settlement was effected, (Exhibit A, dated
August 28, 1991) based on a written complaint, the plaintiff
Salvacion Macalde sent to Mrs. Juanita Limcolioc dated May 16,
1991, informing the latter that about a year before, Herminia
Albano offered to sell to them the lot where their ancestral home
stands. She was surprised to know, however, that the same lot
was sold to the Valderamas; hence, the need for conciliation.
(Exhibit C). On November 9, 1990, Salvacion Macalde wrote a
personal note to defendant Albano, informing her that they are
accepting the offer for them to buy the lot in question and that
they request an early meeting with her to discuss the sale and
other conditions soonest possible and said note was sent by
registered mail on November 9, 1990 (Exhibits E and E-1). Again
on 21 March 1991, plaintiff Salvacion Macalde sent a letter to
defendant Albano, requesting the latter to rescind the Sale
Contract of the lot to defendant Valderama, and same was sent
by registered mail, received by Herminia Albano thru one Beth A.
Diaz on March 23, 1991 (Exhibits F, F-1, F-2 and F-3). On March
26, 1991, same plaintiff sent a registered letter to defendant
spouses Valderamas, attaching thereto her letter to defendant
Albano and requested that they consider their complaint about
the sale made to them (Exhibits G, G-1, G-2). Finally, on April 3,
1991, counsel for the plaintiff made a final demand for
defendant Albano to cancel or rescind the sale in favor of the
Valderamas and requested them not to register the sale, so that
title to the Valderamas may not be issued (Exhibits H, H-1 to H-
5).

Notwithstanding these efforts to stop the sale, the

document of conveyance was registered and on July 9, 1991,
TCT No. 198661 was issued in the name of defendants
Valderamas, which cancelled TCT No. 129569/T-922 in the name
of defendant Albano (Exhibit I and Exhibit 1 Albano). In other
words, about five (5) months lapsed from March 26, 1991, when
defendant Valderamas were notified by plaintiffs about their
insistence to buy the lot and that the sale be
cancelled/rescinded.[23]
 Albano even failed to respond to the respondents letter of November
9, 1990, in which they informed her of their desire to purchase that portion
of the property where their house stood.[24]

Albano even failed to inform the respondents, shortly after receipt of

the said letter, that she had already sold the property to the petitioners.
Indeed, Albano even received from the respondents on March 5, 1991 the
rentals for the property for July 1990 to March 1991.[25] The respondents
had no inkling before March 5, 1991 that the property had already been sold
by Albano to the petitioners. It was only on March 14, 1991 that Albano told
the respondents, for the first time, that she had already sold the property.

Significantly, Albano even concealed from the respondents the identity

of the buyer. This prompted the respondents to write Albano on March 21,
1991, informing her that her property was a part of the Urban Land Reform
areas for priority development, and requested her to rescind the sale. The
respondents even reminded Albano that they had been ready with the down
payment for the property since the year before.[26] It was only after writing
Albano on March 21, 1991 that the respondents discovered the sale of the
property to their neighbor, Natividad Valderama.

As provided in Section 9 of P.D. No. 1517, Albano was mandated to

declare to the Land Management Committee her proposal to sell the
property:

SECTION 9. Compulsory Declaration of Sale and Pre-

emptive Rights. Upon the proclamation by the President of an
area as an Urban Land Reform Zone, all landowners, tenants and
residents thereupon are required to declare to the Ministry any
proposal to sell, lease or encumber lands and improvements
thereon, including the proposed price, rent or value of
encumbrances and secure approval of said proposed transaction.

The Ministry shall have the pre-emptive right to acquire

the above-mentioned lands and improvements thereon which
shall include, but shall not be limited to lands occupied by
tenants as provided for in Section 6 of this Decree.

However, Albano failed to comply with the law, and instead executed a
deed of absolute sale over the property in favor of the petitioners. Even the
government was deprived of its preemptive right to acquire the property.
 That the petitioners and Albano sought to conceal the sale of the
property from the respondents is evidenced by the fact that the parties
executed the same on May 28, 1990.[27] However, TCT No. 198661 was
issued only on July 9, 1991 in the name of petitioner Natividad
Valderama.[28] There was no valid reason why the said deed could not have
been registered on or shortly after May 28, 1990, when the petitioners had
paid in full the purchase price of the property to Albano.[29] Worse, it is
made to appear, in the said deed, that Santos Albano, the husband of
Herminia Albano, had affixed his signature therein. However, Albano testified
in the court a quo that her husband died in 1982. This is gleaned from the
trial courts decision:

In passing, the Court observes that, in the deed of sale

executed in favor of the Valderamas (Exhibit J and Exhibit 2
Albano) dated and acknowledged on May 28, 1990, there
appears a signature on top of the typewritten name Santos V.
Albano, below the words with my marital consent.

If this is clearly so, then it is safe to conclude that the

husband of Herminia Albano was still living or alive on May 28,
1990, which is diametrically opposed and/or inconsistent with
the testimony of Herminia Albano that her husband died in the
year 1982.

ATTY. SEMENTILLA: (cross-exam. Herminia Albano)

Q. Your husband is Mr. Santos Albano, am I correct

Mrs. Witness?
A. Yes, Sir.

Q. He signed this deed of sale for his marital

consent?

ATTY. TAMAYO:
The document is the best evidence.

ATTY. SEMENTILLA:
I will reform.

COURT:
 Proceed.

ATTY. SEMENTILLA:
Q. Am I correct Mrs. Witness that your husband died
five (5) years ago?
A. Yes, in 1982.

Q. So he died in 1982, he was not there when the

document was acknowledged?

ATTY. TAMAYO:
The document speaks for itself, Your Honor.
(TSN, December 16, 1993 session, pp. 25-27).

The Court finds the above created inconsistency very

unfortunate.[30]

In sum then, the respondents were deprived of their right of first

refusal when, without their knowledge, Albano sold the property to the
petitioners.

The contention of the petitioners that the respondents had waived

their right of first refusal is not supported by the evidence. For a waiver of
rights to exist, three elements are essential: (a) existence of a right; (b) the
knowledge of the evidence thereof; and (c) an intention to relinquish such
right. In People v. Bodoso,[31] this Court held that:

It is elementary that the existence of waiver must be positively

demonstrated since a waiver by implication cannot be presumed. The
standard of waiver requires that it not only must be voluntary, but
must be knowing, intelligent, and done with sufficient awareness of
the relevant circumstances and likely consequences. There must thus
be persuasive evidence of an actual intention to relinquish the right.
Mere silence of the holder of the right should not be easily construed
as surrender thereof; the courts must indulge every reasonable
presumption against the existence and validity of such waiver.
 Thus, the petitioners and Albano failed to adduce sufficient, competent
and credible evidence that the respondents had waived their right of first
refusal to buy the property.

Anent the issue of whether the petitioners are entitled to 12% interest
per annum of the P750,000.00 paid for the property, they assert that the
respondents had not paid rentals from May 28, 1990, either to them or to
Albano. The petitioners claim that they had been considerate to the
respondents, as they did not file any complaint for ejectment against them,
nor appealed the RTC decision. They submit that these are valid
justifications for the respondents to pay 12% per annum interest on the
amount of P500,000.00 which corresponds to the purchase price of the two-
thirds portion of the subject property where the house of the respondents
stands.

The respondents, on the other hand, aver that:

II
On the second issue, the purchase price of P750,000.00
allegedly paid by Valderama to Albano is improper, illegal and, in
fact, non-existent in evidence. Petitioner Valderamas own
exhibit, the deed of sale, shows their purchase price of only
P300,000.00 they paid to Albano. Petitioners allegation of a
bloated price is, in fact, illegal, a blatant violation of internal
revenue rules on property taxation. If true, then buyer and seller
are both guilty of tax evasion. Petitioners insistence on this point
is actually a very stubborn impropriety.
 III
Petitioners now want 12% interest on their money,
awarded by the trial court but deleted by the Court of Appeals.
But this is not a breach of contract where it may be awarded the
intermediate appellate court properly ruled. The Macaldes are
only invoking their rights of first refusal. It is strange that
petitioners are after the Macaldes on this issue, not after their
co-defendant below, Mrs. Albano, the previous owner-seller. And
yet, petitioners admit that they launched a
counterclaim/crossclaim against Albano. Besides, petitioners did
not ask for this relief in the courts below. In fact, they did not
appeal the RTC decision.

Basic is the rule that matters or issues not

raised in the court a quo cannot be raised for the
first time on appeal. (Orosa vs. CA, 329 SCRA 652;
PBA vs. CA, 337 SCRA 358; Jimenez vs. Patricia, 340
SCRA 525.)

It is an irony, too, that petitioners are asking monthly rent

from the Macaldes after nearly depriving them of their ancestral
home. They are asking premium on their secret and illegal
transaction with Mrs. Albano. Had they been openly honest with
their neighbor, the Macaldes, there is no rent to speak of. Then
and there, when Albano decided to sell, both of them, Macalde
and Valderama, would have been owners of their respective
adjacent portions of the land. Petitioners did not do this. In bad
faith, unknown to the Macaldes, they maliciously maneuvered
the sale. Those who come to court should come with clean
hands.

On ground of equity and fairness, petitioners pray. But

petitioners should re-assess what they understand by the words
equity and fairness. They admitted buying the whole lot,
knowing fully well that the Macaldes occupy more than half of it.
This is not equity. They purchased it secretly, without notifying
the Macaldes. This is not fair. Now they want the Macaldes, not
Albano, to pay interest and rent. This is not equity and
fairness.[32]

Resolving the issue, the CA ruled that:

 With respect to the award of interest on the purchase
price, We agree with the plaintiffs-appellants asseveration that
the same has no basis. The circumstance obtaining herein is not
a breach of an obligation to pay money. Neither is it an interest
on liquidated claims or damages nor on a court judgment
awarding a sum of money that has become final and executory.
Only in these cited circumstances, is an award of interest in the
concept of actual and compensatory damages allowed, as set-
forth in the early case of Eastern Shipping Lines, Inc. vs. CA and
reiterated in the case of Eastern Assurance and Surety
Corporation vs. CA, et al. Consequently, the interest at 12% per
annum adjudged by the Trial Court should not have been
imposed. This is specially so since the same was neither prayed
for by the parties nor justified in the assailed decision.[33]

The submission of petitioners has no merit.

First. Contrary to their contention, the respondents paid rentals for the
property to Albano up to March 5, 1991.[34]

Second. Even if the petitioners filed a complaint for ejectment against

the respondents, the same would not have prospered because Section 6 of
P.D. No. 1517 prohibits the latters eviction from the property.

Third. The petitioners and Albano violated P.D. No. 1517 when they
clandestinely consummated the sale of the entire property. Worse, they
undervalued the property to enable the petitioners to evade the payment of
the lawful capital gains tax, registration, and other fees/charges of the sale.
The petitioners should not be rewarded by obliging the respondents to pay
12% per annum interest on the aforesaid amount of P500,000.00. It is a
well-established principle in law that as between two parties, he who, by his
acts, caused the loss shall bear the same.[35] He who comes to court for
equity must do so with clean hands.
 IN VIEW OF ALL THE FOREGOING, the petition is DENIED for lack
of merit. The Decision of the Court of Appeals and its Resolution in CA-G.R.
CV No. 48899 are hereby AFFIRMED. Costs against the petitioners.

SO ORDERED.

G.R. No. L-36703 July 31, 1974

GOTARDO FLORDELIS and RAFAEL BOLLOZOS, the latter in his

capacity as Asst. Fiscal of Tagbilaran, Bohol, petitioners,
vs.
THE HON. HERACLEO CASTILLO, as City Judge, Branch I, Tagbilaran,
Bohol, MERLIN O. MAR, MARCELINO T. MACAPOBRE, JR., DELFIN
EPE, GRACIANO LIGAN, PHILIP COLLYER and ANTONIO CUAJAO,
respondents.

Cristeto O. Cimagala for petitioners.

Paulino Clarin for private respondents. Hon. Heracleo Castillo for and in his
own behalf.

CASTRO, J.:p

This is a petition for review of the resolution of March 30, 1973 of the City
Court of Tagbilaran, Bohol (Branch I) in its criminal case 4640, ordering "the
provisional dismissal of this case" in view of the alleged existence of an
unresolved pre-judicial question in an administrative case.

The essential facts are not controverted.

On November 29, 1972 the private respondent teachers of the Bohol School
of Arts and Trades of Tagbilaran City, namely, Merlin O. Mar, Marcelino T.
Macapobre, Jr., Delfin Epe, Graciano Ligan, Philip Collyer and Antonio Cuajao
(hereinafter referred to as the private respondents), lodged with the
Department of Education and Culture a sworn administrative complaint
against the petitioner principal teacher Gotardo Flordelis (hereinafter
referred to as the petitioner), that recites several counts, one of which
accuses the latter as "a tax evader by refusing to pay his income tax for
many years now and for misdeclaring the sales of his business under the
pretext of his son's name."
The petitioner reacted by filing a complaint for perjury against the private
respondents. After a preliminary investigation at which testimonial and
documentary evidence was adduced by the parties, the second assistant city
fiscal (Rafael Bollozos) of Tagbilaran, Bohol resolved (1) that the
administrative complaint imputes to the petitioner two distinct and separate
criminal offenses, namely, income tax evasion, and misdeclaration of the
sales of his business (sale of furniture); (2) that upon the evidence
submitted, the allegation that the petitioner misdeclared the sales of his
business "has some semblance of truth which can be the basis of good
faith;" and (3) that with respect, however, to the charge that the petitioner
had evaded his income tax obligations, the private respondents "failed to
adduce evidence to substantiate their charge." An information for perjury
was accordingly filed against the private respondents, which information
pertinently recites as follows: .

That, on or about the 29th day of November, 1972, in the City of

Tagbilaran, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, conspiring and
confederating together and moved by hate and personal
resentment, did then and there willfully, unlawfully and
feloniously, with malice aforethought and with deliberate attempt
to bismirch the good name, reputation and integrity of one
Gotardo Flordelis, Principal In-Charge of the Bohol School of Arts
and Trades, write, execute and sign a verified administrative
complaint against said Gotardo Flordelis and have it filed with
the office of the Honorable Secretary of Education and Culture,
declaring therein a false statement, particularly under Count No.
11 thereof, which charges said Gotardo Flordelis that "He
(referring to Mr. Flordelis) is a tax evader by refusing to pay his
income tax for many years now ..." which statement the accused
herein fully well know to be false and malicious and constitutive
of an untruthful narration of facts ....

On March 27, 1973 the private respondents, upon arraignment before the
City Court of Tagbilaran, pleaded not guilty. Contemporaneously they filed a
motion to quash the information on the grounds (1) that the facts recited
therein do not constitute an offense; and (2) that it contains averments
which, if true, would constitute a legal excuse or justification.

On March 30, 1973 the respondent judge, resolving the said motion,
provisionally dismissed the case and ordered the release from custody of the
private respondents, on the sole ground that the tax evasion issue pending
resolution in the administrative case before the Department of Education and
Culture constitutes a pre-judicial question which should first be resolved
before the criminal action may proceed.

On April 23, 1973 the petitioner, joined by the assistant city fiscal, filed the
present petition for review. They here contend (1) that the doctrine of pre-
judicial question was incorrectly applied below; and (2) that the criminal
case should have been merely suspended as provided in section 5, Rule 111,
infra, of the Rules of Court, instead of being provisionally dismissed, which
dismissal may later be pleaded by the private respondents as a bar in double
jeopardy.

1. We rule that the doctrine of pre-judicial question has no application to the

situation below.

Article 36 of the new Civil Code states:

Pre-judicial questions, which must be decided before any

criminal action may be instituted or may proceed, shall be
governed by rules of court which the Supreme Court shall
promulgate and which shall not be in conflict with the provisions
of this Code.

The implementing provision of the Rules of Court is section 5 of Rule 111,

which reads:

Sec. 5. Suspension by reason of pre-judicial question. A

petition for the suspension of the criminal action based upon the
pendency of a pre-judicial question in a civil case, may only be
presented by any party before or during the trial of the criminal
action. (emphasis supplied)

As clearly delineated in the aforecited provisions of the new Civil Code and
the Rules of Court, and as uniformly applied in numerous decisions of this
Court,1 the doctrine of pre-judicial question comes into play generally in a
situation where a civil action and a criminal action both pend and there
exists in the former an issue which must be preemptively resolved before
the criminal action may proceed, because howsoever the issue raised in the
civil action is resolved would be determinative juris et de jure of the guilt or
innocence of the accused in the criminal case.

In the case at bar, no civil action pends, nor has any been instituted. The
complaint is merely an administrative one. Moreover, neither success nor
failure of the private respondents to prove their tax evasion charge against
the petitioner in the administrative case can attain the character of a final
determination binding and conclusive upon the court in the criminal action so
as to foreclose the issue of guilt or innocence of the private respondents
upon the perjury indictment..

2. The petitioner's apprehension that double jeopardy may set in is

unwarranted. The record shows that the quashal of the information below
was explicitly and actively sought by the private respondents.

When a criminal case is dismissed upon the express application of the

defendant, the dismissal is not a bar to another prosecution for the same
offense, because the defendant's action in having the same dismissed
constitutes a waiver of his constitutional prerogative against double jeopardy
as he thereby prevented the court from proceeding to trial on the merits and
rendering a judgment of conviction against him.2

The doctrine of estoppel is in quintessence the same as the

doctrine of waiver : the thrust of both is that a dismissal, other
than on the merits, sought by the accused in a motion to
dismiss, is deemed to be with his express consent and bars him
from subsequently interposing the defense of double jeopardy on
appeal or in a new prosecution for the same offense.3

ACCORDINGLY, the resolution of the court a quo of March 30, 1973 is set
aside, and the said court is hereby ordered to reinstate the perjury case
against the private respondents and to proceed with the trial thereof in
accordance with law. No costs.

G.R. No. 79269 June 5, 1991

PEOPLE OF THE PHILIPPINES, petitioner,

vs.
HON. PROCORO J. DONATO, in his official capacity as Presiding
Judge, Regional Trial Court, Branch XII, Manila; RODOLFO C. SALAS,
alias Commander Bilog, respondents.

The Solicitor General for petitioner.

Jose Suarez, Romeo Capulong, Efren Mercado and Movement of Attorneys
for Brotherhood, Integrity, Nationalism, Inc. (MABINI) for Rodolfo Salas.

DAVIDE, JR., J.:

The People of the Philippines, through the Chief State Prosecutor of the
Department of Justice, the City Fiscal of Manila and the Judge Advocate
General, filed the instant petition for certiorari and prohibition, with a prayer
for restraining order/preliminary injunction, to set aside the order of
respondent Judge dated July 7, 1987 granting bail to the accused Rodolfo
Salas alias "Commander Bilog" in Criminal Case No. 86-48926 for
Rebellion,1 and the subsequent Order dated July 30, 1987 granting the
motion for reconsideration of 16 July 1987 by increasing the bail bond from
P30,000.00 to P50,000.00 but denying petitioner's supplemental motion for
reconsideration of July 17, 1987 which asked the court to allow petitioner to
present evidence in support of its prayer for a reconsideration of the order of
7 July 1987.

The pivotal issues presented before Us are whether the right to bail may,
under certain circumstances, be denied to a person who is charged with an
otherwise bailable offense, and whether such right may be waived.

The following are the antecedents of this petition:

In the original Information2 filed on 2 October 1986 in Criminal Case No. 86-
48926 of the Regional Trial Court of Manila, later amended in an Amended
Information3 which was filed on 24 October 1986, private respondent
Rodolfo Salas, alias "Commander Bilog", and his co-accused were charged
for the crime of rebellion under Article 134, in relation to Article 135, of the
Revised Penal Code allegedly committed as follows:

That in or about 1968 and for some time before said year and
continuously thereafter until the present time, in the City of Manila and
elsewhere in the Philippines, the Communist Party of the Philippines,
its military arm, the New People's Army, its mass infiltration network,
the National Democratic Front with its other subordinate organizations
and fronts, have, under the direction and control of said organizations'
leaders, among whom are the aforenamed accused, and with the aid,
participation or support of members and followers whose whereabouts
and identities are still unknown, risen publicly and taken arms
throughout the country against the Government of the Republic of the
Philippines for the purpose of overthrowing the present Government,
the seat of which is in the City of Manila, or of removing from the
allegiance to that government and its laws, the country's territory or
part of it;

That from 1970 to the present, the above-named accused in their

capacities as leaders of the aforenamed organizations, in conspiracy
with, and in support of the cause of, the organizations aforementioned,
 engaged themselves in war against the forces of the government,
destroying property or committing serious violence, and other acts in
the pursuit of their unlawful purpose, such as . . .

(then follows the enumeration of specific acts committed before and

after February 1986).

At the time the Information was filed the private respondent and his co-
accused were in military custody following their arrest on 29 September
1986 at the Philippine General Hospital, Taft Ave., Manila; he had earlier
escaped from military detention and a cash reward of P250,000.00 was
offered for his
capture.4

A day after the filing of the original information, or on 3 October 1986, a

petition for habeas corpus for private respondent and his co-accused was
filed with this Court5 which, as shall hereafter be discussed in detail, was
dismissed in Our resolution of 16 October 1986 on the basis of the
agreement of the parties under which herein private respondent "will remain
in legal custody and will face trial before the court having custody over his
person" and the warrants for the arrest of his co-accused are deemed
recalled and they shall be immediately released but shall submit themselves
to the court having jurisdiction over their person.

On November 7, 1986 , private respondent filed with the court below a

Motion to Quash the Information alleging that: (a) the facts alleged do not
constitute an offense; (b) the Court has no jurisdiction over the offense
charged; (c) the Court has no jurisdiction over the persons of the
defendants; and (d) the criminal action or liability has been extinguished,6
to which petitioner filed an Opposition7 citing, among other grounds, the fact
that in the Joint Manifestation and Motion dated October 14, 1986, in G.R.
No. 76009, private respondent categorically conceded that:

xxx xxx xxx

Par. 2 (B) Petitioner Rodolfo Salas will remain in legal custody and
face trial before the court having custody over his person.

In his Order of March 6, 1987,8 respondent Judge denied the motion to

quash.

Instead of asking for a reconsideration of said Order, private respondent

filed on 9 May 1987 a petition for bail,9 which herein petitioner opposed in
an Opposition filed on 27 May 198710 on the ground that since rebellion
became a capital offense under the provisions of P.D. Nos. 1996, 942 and
1834, which amended Article 135 of the Revised Penal Code, by imposing
the penalty of reclusion perpetua to death on those who promote, maintain,
or head a rebellion the accused is no longer entitled to bail as evidence of his
guilt is strong.

On 5 June 1987 the President issued Executive Order No. 187 repealing,
among others, P.D. Nos. 1996, 942 and 1834 and restoring to full force and
effect Article 135 of the Revised Penal Code as it existed before the
amendatory decrees. Thus, the original penalty for rebellion, prision mayor
and a fine not to exceed P20,000.00, was restored.

Executive Order No. 187 was published in the Official Gazette in its June 15,
1987 issue (Vol. 83, No. 24) which was officially released for circulation on
June 26, 1987.

In his Order of 7 July 198711 respondent Judge, taking into consideration

Executive Order No. 187, granted private respondent's petition for bail, fixed
the bail bond at P30,000.00 and imposed upon private respondent the
additional condition that he shall report to the court once every two (2)
months within the first ten (10) days of every period thereof. In granting the
petition respondent Judge stated:

. . . There is no more debate that with the effectivity of Executive

Order No. 187, the offense of rebellion, for which accused Rodolfo
Salas is herein charged, is now punishable with the penalty of prision
mayor and a fine not exceeding P20,000.00, which makes it now
bailable pursuant to Section 13, Article III, 1986 Constitution and
Section 3, Rule 114, 1985 Rules of Criminal Procedure. Unlike the old
rule, bail is now a matter of right in non-capital offenses before final
judgment. This is very evident upon a reading of Section 3, Rule 114,
aforementioned, in relation to Section 21, same rule. In view,
therefore, of the present circumstances in this case, said accused-
applicant is now entitled to bail as a matter of right inasmuch as the
crime of rebellion ceased to be a capital offense.

As to the contention of herein petitioner that it would be dangerous to grant

bail to private respondent considering his stature in the CPP-NPA hierarchy,
whose ultimate and overriding goal is to wipe out all vestiges of our
democracy and to replace it with their ideology, and that his release would
allow his return to his organization to direct its armed struggle to topple the
government before whose courts he invokes his constitutional right to bail,
respondent Judge replied:
 True, there now appears a clash between the accused's constitutional
right to bail in a non-capital offense, which right is guaranteed in the
Bill of Rights and, to quote again the prosecution, "the existence of the
government that bestows the right, the paramount interest of the
state." Suffice to state that the Bill of Rights, one of which is the right
to bail, is a "declaration of the rights of the individual, civil, political
and social and economic, guaranteed by the Constitution against
impairment or intrusion by any form of governmental action. Emphasis
is placed on the dignity of man and the worth of individual. There is
recognition of certain inherent and inalienable rights of the individual,
which the government is prohibited from violating" (Quisumbing-
Fernando, Philippine Constitutional Law, 1984 Edition, p. 77). To this
Court, in case of such conflict as now pictured by the prosecution, the
same should be resolved in favor of the individual who, in the eyes of
the law, is alone in the assertion of his rights under the Bill of Rights
as against the State. Anyway, the government is that powerful and
strong, having the resources, manpower and the wherewithals to fight
those "who oppose, threathen (sic) and destroy a just and orderly
society and its existing civil and political institutions." The
prosecution's fear may or may not be founded that the accused may
later on jump bail and rejoin his comrades in the field to sow further
disorders and anarchy against the duly constituted authorities. But,
then, such a fear can not be a reason to deny him bail. For the law is
very explicit that when it comes to bailable offenses an accused is
entitled as a matter of light to bail. Dura est lex sed lex.

In a motion to reconsider12 the above order filed on 16 July 1987, petitioner

asked the court to increase the bail from P30,000.00 to P100,000.00
alleging therein that per Department of Justice Circular No. 10 dated 3 July
1987, the bail for the, provisional release of an accused should be in an
amount computed at P10,000.00 per year of imprisonment based on the
medium penalty imposable for the offense and explaining that it is
recommending P100,000.00 because the private respondent "had in the past
escaped from the custody of the military authorities and the offense for
which he is charged is not an ordinary crime, like murder, homicide or
robbery, where after the commission, the perpetrator has achieved his end"
and that "the rebellious acts are not consummated until the well-organized
plan to overthrow the government through armed struggle and replace it
with an alien system based on a foreign ideology is attained."

On 17 July 1987, petitioner filed a supplemental motion for

reconsideration13 indirectly asking the court to deny bail to the private
respondent and to allow it to present evidence in support thereof considering
the "inevitable probability that the accused will not comply with this main
condition of his bail to appear in court for trial," a conclusion it claims to
be buttressed "by the following facts which are widely known by the People
of the Philippines and which this Honorable Court may have judicial notice
of:

1. The accused has evaded the authorities for thirteen years and was
an escapee from detention when arrested;

2. He was not arrested at his residence as he had no known address;

3. He was using the false name "Manuel Mercado Castro" at the time
of his arrest and presented a Driver's License to substantiate his false
identity;

4. The address he gave "Panamitan, Kawit, Cavite," turned out to be

also a false address;

5. He and his companions were on board a private vehicle with a

declared owner whose identity and address were also found to be
false;

6. Pursuant to Ministry Order No. 1-A dated 11 January 1982 , a

reward of P250,000.00 was offered and paid for his arrest,

which "clearly indicate that the accused does not entertain the slightest
intention to appear in court for trial, if released." Petitioner further argues
that the accused, who is the Chairman of the Communist Party of the
Philippines and head of its military arm, the NPA, together with his followers,
are now engaged in an open warfare and rebellion against this government
and threatens the existence of this very Court from which he now seeks
provisional release," and that while he is entitled to bail as a matter of right
in view of Executive Order No. 187 which restored the original penalty for
rebellion under Article 135 of the Revised Penal Code, yet, when the interest
of the State conflicts with that of an individual, that of the former prevails
for "the right of the State of self-preservation is paramount to any of the
rights of an individual enshrined in the Bill of Rights of the Constitution."
Petitioner further invokes precedents in the United States of America holding
"that there is no absolute constitutional barrier to detention of potentially
dangerous resident aliens pending deportation proceedings,14 and that an
arrestee may be incarcerated until trial as he presents a risk of flight;15 and
sustaining a detention prior to trial of arrestee charged with serious felonies
who are found after an adversary hearing to pose threat to the safety of
individuals and to the community which no condition of release can dispel.16
On 30 July 1987 respondent Judge handed down the Order17 adverted to in
the introductory portion of this decision the dispositive portion of which
reads:

WHEREFORE, in the light of the foregoing considerations, the Court

finds the "supplemental" motion for reconsideration to be without
merit and hereby denies it but finds the first motion for
reconsideration to be meritorious only insofar as the amount of bail is
concerned and hereby reconsiders its Order of July 7, 1987 only to
increase the amount of bail from P30,000.00 to P50,000.00, subject to
the approval of this Court, and with the additional condition that
accused Rodolfo Salas shall report to the court once every two (2)
months within the first ten (10) days of every period thereof
(Almendras vs. Villaluz, et al., L-31665, August 6, 1975, 66 SCRA 58).

In denying the supplemental motion for reconsideration the respondent

Judge took into account the "sudden turn-about" on the part of the
petitioner in that a day earlier it filed a motion for reconsideration wherein it
conceded the right of the private respondent to bail but merely asked to
increase the amount of bail; observed that it is only a reiteration of
arguments in its opposition to the petition for bail of 25 May 1987; asserted
that the American precedents are not applicable since the cases involved
deportation of aliens and, moreover, the U.S. Federal Constitution does not
contain a proviso on the right of an accused to bail in bailable offenses, but
only an injunction against excessive bail; and quoted the concurring opinion
of the late Justice Pedro Tuason in the cases of Nava, et al. vs. Gatmaitan,
L-4853, Hernandez vs. Montesa, L-4964 and Angeles vs. Abaya, L-5108,
October 11, 1951, 90 Phil, 172.

Unable to agree with said Order, petitioner commenced this petition

submitting therein the following issues:

THE HONORABLE RESPONDENT JUDGE PROCORO J. DONATO ACTED

WITH GRAVE ABUSE OF DISCRETION AND IN EXCESS OF HIS
JURISDICTION, AND IN TOTAL DISREGARD OF THE PREVAILING
REALITIES, WHEN HE DENIED PETITIONER'S SUPPLEMENTAL MOTION
FOR RECONSIDERATION WITH PRAYER TO BE GIVEN THE
OPPORTUNITY TO ADDUCE EVIDENCE IN SUPPORT OF ITS
OPPOSITION TO THE GRANT OF BAIL TO THE RESPONDENT RODOLFO
SALAS.

THE HONORABLE RESPONDENT JUDGE PROCORO J. DONATO ACTED

WITH GRAVE ABUSE OF DISCRETION AND IN EXCESS OF HIS
 JURISDICTION WHEN HE GRANTED BAIL TO THE RESPONDENT
RODOLFO SALAS.

in support of which petitioner argues that private respondent is estopped

from invoking his right to bail, having expressly waived it in G.R. No. 76009
when he agreed to "remain in legal custody and face trial before the court
having custody of his person" in consideration of the recall of the warrant of
arrest for his co-petitioners Josefina Cruz and Jose Concepcion; and the right
to bail, even in non-capital offenses, is not absolute when there is prima
facie evidence that the accused is a serious threat to the very existence of
the State, in which case the prosecution must be allowed to present
evidence for the denial of bail. Consequently, respondent Judge acted with
grave abuse of discretion when he did not allow petitioner to present all the
evidence it may desire to support its prayer for the denial of bail and when
he declared that the State has forfeited its right to do so since during all the
time that the petition for bail was pending, it never manifested, much less
hinted, its intention to adduce such evidence. And that even if release on
bail may be allowed, respondent judge, in fixing the amount of bail at
P50,000.00 (originally P30,000.00 only), failed to take into account the
lengthy record of private respondents' criminal background, the gravity of
the pending charge, and the likelihood of flight.18

In Our resolution of 11 August 198719 We required the respondents to

comment on the petition and issued a Temporary Restraining Order ordering
respondent Judge to cease and desist from implementing his order of 30 July
1987 granting bail to private respondent in the amount of P50,000.00.

In his Comment filed on 27 August 1987,20 private respondent asks for the
outright dismissal of the petition and immediate lifting of the temporary
restraining order on the following grounds:

RESPONDENT SALAS NEVER WAIVED HIS RIGHT TO BAIL; NEITHER IS

HE ESTOPPED FROM ASSERTING SAID RIGHT. ON THE CONTRARY IT
IS PETITIONER WHO IS ESTOPPED FROM RAISING THE SAID ISSUE
FOR THE FIRST TIME ON APPEAL.

II

RESPONDENT SALAS ENJOYS NOT ONLY THE CONSTITUTIONAL RIGHT

TO BE PRESUMED INNOCENT BUT ALSO THE RIGHT TO BAIL.

III
 RESPONDENT SALAS IS NOT CHARGED WITH A CAPITAL OFFENSE
(RECLUSION PERPETUA), HENCE HE HAS THE RIGHT TO BAIL AS
MANDATED BY THE CONSTITUTION.

IV

THE ORDER OF JULY 30, 1987 DENYING PETITIONER OPPORTUNITY

TO PRESENT EVIDENCE IS CORRECT. PETITIONER'S ALLEGED RIGHT
TO PRESENT EVIDENCE IS NON-EXISTENT AND/OR HAD BEEN
WAIVED.

THE ISSUANCE OF A TEMPORARY RESTRAINING ORDER IN THIS CASE

VIOLATES NOT ONLY RESPONDENT SALAS' RIGHT TO BAIL BUT ALSO
HIS OTHER CONSTITUTIONAL RIGHT TO DUE PROCESS.

We required the petitioner to reply to the comment of private respondent.21

The reply was filed on 18 September 1987.22

In Our resolution of 15 October 198723 We gave due course to the petition

and required the parties to file simultaneously their memoranda within
twenty days from notice.

In their respective manifestations and motions dated 5 November24 and 23

November 198725 petitioner and private respondents asked to be excused
from filing their Memoranda and that the petition and reply be considered as
the Memorandum for petitioner and the Comment as the Memorandum for
private respondent, which We granted in Our resolution of 19 November
198726 and 1 December 1987,27 respectively.

In Our resolution of 14 September 1989 We required the Solicitor General to

express his stand on the issues raised in this petitions,28 which he complied
with by filing his Manifestation on 30 May 199029 wherein he manifests that
he supports the petition and submits that the Order of respondent Judge of
July 7, July 17 and July 30, 1987 should be annulled and set aside asserting
that private respondent had waived the light to bail in view of the agreement
in G.R. No. 76009; that granting bail to him is accepting wide-eyed his
undertaking which he is sure to break; in determining bail, the primary
consideration is to insure the attendance of the accused at the trial of the
case against him which would be frustrated by the "almost certainty that
respondent Salas will lump bail of whatever amount"; and application of the
guidelines provided for in Section 10 of Rule 114, 1985 Rules on Criminal
Procedure on the amount of bail dictates denial of bail to private respondent.
The Solicitor General likewise maintains that the right of the petitioner to
hearing on the application of private respondent for bail cannot be denied by
respondent Judge.

And now on the issues presented in this case.

I.

Unquestionably, at the time the original and the amended Informations for
rebellion and the application for bail were filed before the court below the
penalty imposable for the offense for which the private respondent was
charged was reclusion perpetua to death. During the pendency of the
application for bail Executive Order No. 187 was issued by the President, by
virtue of which the penalty for rebellion as originally provided for in Article
135 of the Revised Penal Code was restored. The restored law was the
governing law at the time the respondent court resolved the petition for bail.

We agree with the respondent court that bail cannot be denied to the private
respondent for he is charged with the crime of rebellion as defined in Article
134 of the Revised Penal Code to which is attached the penalty of prision
mayor and a fine not exceeding P20,000.00.30 It is, therefore, a bailable
offense under Section 13 of Article III of the 1987 Constitution which
provides thus:

Sec. 13. All persons, except those charged with offenses punishable by
reclusion perpetua when evidence of guilt is strong, shall, before
conviction, be bailable by sufficient sureties, or be released on
recognizance as may be prescribed by law. The right to bail shall not
be impaired even when the privilege of the writ of habeas corpus is
suspended. Excessive bail shall not be required.

Section 3, Rule 114 of the Rules of Court, as amended, also provides:

Bail, a matter of right: exception. All persons in custody shall,

before final conviction, be entitled to bail as a matter of right, except
those charged with a capital offense or an offense which, under the
law at the time of its commission and at the time of the application for
bail, is punishable by reclusion perpetua, when evidence of guilt is
strong.

Therefore, before conviction bail is either a matter of right or of discretion. It

is a matter of right when the offense charged is punishable by any penalty
lower than reclusion perpetua.31 To that extent the right is absolute.32
And so, in a similar case for rebellion, People vs. Hernandez, et al., 99 Phil.
515, despite the fact that the accused was already convicted, although
erroneously, by the trial court for the complex crime of rebellion with
multiple murders, arsons and robberies, and sentenced to life imprisonment,
We granted bail in the amount of P30,000.00 during the pendency of his
appeal from such conviction. To the vigorous stand of the People that We
must deny bail to the accused because the security of the State so requires,
and because the judgment of conviction appealed from indicates that the
evidence of guilt of Hernandez is strong, We held:

. . . Furthermore, individual freedom is too basic, too transcendental

and vital in a republican state, like ours, to be derived upon mere
general principles and abstract consideration of public safety. Indeed,
the preservation of liberty is such a major preoccupation of our
political system that, not satisfied with guaranteeing its enjoyment in
the very first paragraph of section (1) of the Bill of Rights, the framers
of our Constitution devoted paragraphs (3), (4), (5), (6), (7), (8),
(11), (12), (13), (14), (15), (16), (17), (18), and (21) of said section
(1) to the protection of several aspects of freedom.

The 1987 Constitution strengthens further the right to bail by explicitly

providing that it shall not be impaired even when the privilege of the writ of
habeas corpus is suspended. This overturns the Court's ruling in Garcia-
Padilla vs. Enrile, et al., supra., to wit:

The suspension of the privilege of the writ of habeas corpus must,

indeed, carry with it the suspension of the right to bail, if the
government's campaign to suppress the rebellion is to be enhanced
and rendered effective. If the right to bail may be demanded during
the continuance of the rebellion, and those arrested, captured and
detained in the course thereof will be released, they would, without
the least doubt, rejoin their comrades in the field thereby jeopardizing
the success of government efforts to bring to an end the invasion,
rebellion or insurrection.

Upon the other hand, if the offense charged is punishable by reclusion

perpetua bail becomes a matter of discretion. It shall be denied if the
evidence of guilt is strong. The court's discretion is limited to determining
whether or not evidence of guilt is strong.33 But once it is determined that
the evidence of guilt is not strong, bail also becomes a matter of right. In
Teehankee vs. Director of Prisons, supra., We held:
The provision on bail in our Constitution is patterned after similar
provisions contained in the Constitution of the United States and that
of many states of the Union. And it is said that:

The Constitution of the United States and the constitution of the

many states provide that all persons shall be bailable by
sufficient sureties, except for capital offenses, where the proof is
evident or the presumption of guilt is great, and, under such
provisions, bail is a matter of right which no court or judge can
properly refuse, in all cases not embraced in the exceptions.
Under such provisions bail is a matter of right even in cases of
capital offenses, unless the proof of guilt is evident or the
presumption thereof is great!34

Accordingly, the prosecution does not have the right to present

evidence for the denial of bail in the instances where bail is a matter of
right. However, in the cases where the grant of bail is discretionary,
due process requires that the prosecution must be given an
opportunity to present, within a reasonable time, all the evidence that
it may desire to introduce before the court should resolve the motion
for bail.35

We agree, however, with petitioner that it was error for the respondent
court to fix the bond at P30,000.00, then later at P50,000.00 without
hearing the prosecution. The guidelines for the fixing of the amount of
bail provided for in Section 10 of Rule 114 of the Rules of Court are
not matters left entirely to the discretion of the court. As We stated in
People vs. Dacudao, et al., 170 SCRA, 489, 495:

Certain guidelines in the fixing of a bailbond call for the

presentation of evidence and reasonable opportunity for the
prosecution to refute it. Among them are the nature and
circumstances of the crime, character and reputation of the
accused, the weight of the evidence against him, the probability
of the accused appearing at the trial, whether or not the accused
is a fugitive from justice, and whether or not the accused is
under bond in other case. . . .

In the instant case petitioner has sufficiently made out allegations

which necessitate a grant of an opportunity to be heard for the
purpose of determining the amount of bail, but not for the denial
thereof because aforesaid Section 10 of Rule 114 does not authorize
any court to deny bail.
 II.

It must, however, be stressed that under the present state of the law,
rebellion is no longer punishable by prision mayor and fine not
exceeding P20,000.00. Republic Act No. 6968 approved on 24 October
1990 and which took effect after publication in at least two
newspapers of general circulation, amended, among others, Article
135 of the Revised Penal Code by increasing the penalty for rebellion
such that, as amended, it now reads:

Article 135. Penalty for rebellion, insurrection or coup d'etat.

Any person who promotes, maintains, or heads a rebellion or
insurrection shall suffer the penalty of reclusion perpetua.

Any person merely participating or executing the commands of

others in a rebellion or insurrection shall suffer the penalty of
reclusion perpetua.

xxx xxx xxx

This amendatory law cannot apply to the private respondent for acts
allegedly committed prior to its effectivity. It is not favorable to him.
"Penal laws shall have a retroactive effect insofar as they favor the
person guilty of a felony, who is not a habitual criminal, as this term is
defined in Rule 5 of Article 62 of this Code, although at the time of the
publication of such laws a final sentence has been pronounced and the
convict is serving the same.36

III.

We agree with Petitioner that private respondent has, however, waived

his right to bail in G.R. No. 76009.

On 3 October 1986, or the day following the filing of the original

information in Criminal Case No. 86-48926 with the trial court, a
petition for habeas corpus for herein private respondent, and his co-
accused Josefina Cruz and Jose Concepcion, was filed with this Court
by Lucia Cruz, Aida Concepcion Paniza and Beatriz Salas against Juan
Ponce Enrile, Gen. Fidel Ramos, Brig. Gen. Renato de Villa, Brig. Gen.
Ramon Montao, and Col. Saldajeno praying, among others, that the
petition be given due course and a writ of habeas corpus be issued
requiring respondents to produce the bodies of herein private
respondent and his co-accused before the Court and explain by what
authority they arrested and detained them. The following proceedings
took place thereafter in said case:

1. In a resolution of 7 October 1986 We issued a writ of habeas

corpus, required respondents to make a return of the writ on or before
the close of office hours on 13 October and set the petition for hearing
on 14 October 1986 at 10:00 o'clock in the morning.

2. On 13 October 1986 respondents, through the Office of the Solicitor

General, filed a Return To The Writ of Habeas Corpus alleging therein
that private respondent and Josefina Cruz alias "Mrs. Mercado", and
Jose Milo Concepcion alias "Eugene Zamora" were apprehended by the
military on September 29, 1986 in the evening at the Philippine
General Hospital Compound at Taft Ave., Mangga being leaders or
members of the Communist Party of the Philippines, New People's
Army and National Democratic Front, organizations dedicated to the
overthrow of the Government through violent means, and having
actually committed acts of rebellion under Article 134 of the Revised
Penal Code, as amended. After their arrest they were forthwith
charged with rebellion before Branch XII of the Regional Trial Court,
National Capital Region in Criminal Case No. 86-48926 and on 3
October warrants for their arrest were issued and respondents
continue to detain them because of the warrants of arrest and the
pendency of the criminal cases against them. Respondents further
allege that, contrary to the allegation in the petition, herein private
respondent was not a member of the NDF panel involved in peace
negotiations with the Government; neither is he and his companions
Cruz and Concepcion covered by any, safe conduct pass issued by
competent authorities.

3. At the hearing on 14 October 1986 the parties informed the Court of

certain agreements reached between them. We issued a resolution
reading as follows:

When this case was called for hearing this morning, Attorneys
Romeo Capulong, Arno V. Sanidad, Efren H. Mercado, Edgardo
Pamin-tuan, Casiano Sabile, Ramon Cura, and William Chua
appeared for the petitioners with Atty. Capulong arguing for the
petitioners. Solicitor General Sedfrey Ordonez, Assistant Solicitor
General Romeo C. de la Cruz and Trial Attorney Josue E.
Villanueva appeared for the respondents, with Solicitor General
Ordoez arguing for the respondents.
 Petitioners' counsel, Atty. Romeo Capulong, manifested in open
Court that in conformity with the agreement reached with the
government, the petition for habeas corpus will be withdrawn
with detainee Rodolfo Salas to remain under custody, whereas
his co-detainees Josefina Cruz and Jose Milo Concepcion will be
released immediately.

Solicitor General Sedfrey Ordoez, also in open Court, confirmed

the foregoing statement made by petitioners' counsel regarding
the withdrawal of the petition for habeas corpus, declaring that
no objection will be interposed to the immediate release of
detainees Josefina Cruz and Jose Milo Concepcion, and that no
bond will be required of them, but they will continue to face trial
with their co-accused, Rodolfo Salas; further, that they will not
be rearrested on the basis of the warrants issued by the trial
court provided that they manifest in open Court their willingness
to subject themselves to the jurisdiction of the Court and to
appear in court when their presence is required.

In addition, he stated that he is willing to confer with petitioners'

counsel today relative to the compromise agreement that they
have previously undertaken to submit.

Upon manifestation of petitioners' counsel, Atty. Romeo

Capulong, that on his oath as member of the Bar, the detainees
Josefina Cruz and Jose Milo Concepcion have agreed to subject
themselves to the jurisdiction of the trial court, the Court
ordered their immediate release.

Thereafter, the Court approved the foregoing manifestations and

statements and required both parties to SUBMIT to the Court
their compromise agreement by 4:00 o'clock this afternoon.
Teehankee, C.J., is on official leave.

4. At 3:49 o'clock in the afternoon of 14 October 1986 the parties

submitted a Joint Manifestation and Motion duly signed by Atty. Romeo
Capulong, counsel for petitioners, and Solicitor General Sedfrey
Ordoez, Assistant Solicitor General Romeo C. de la Cruz and Trial
Attorney Josue S. Villanueva, counsel for respondents, which reads as
follows:

COME NOW petitioners and the respondents, assisted by their

respective counsel, and to this Honorable Tribunal respectfully
manifest:
 1. That in the discussion between Romeo Capulong, petitioners'
counsel, and Solicitor General Sedfrey A. Ordoez on October
13, 1986 exploratory talks were conducted to find out how the
majesty of the law may be preserved and human considerations
may be called into play.

2. That in the conference both counsel agreed to the following

terms of agreement:

a. The petition for habeas corpus will be withdrawn by

petitioners and Josefina Cruz and Jose Milo Concepcion will
be immediately released but shall appear at the trial of the
criminal case for rebellion (People v. Rodolfo Salas, et al.,
Criminal Case No. 4886 [should be 86-48926], Regional
Trial Court, National Capital Judicial Region) filed against
them under their personal recognizance.

b. Petitioner Rodolfo Salas will remain in legal custody and

face trial before the court having custody over his person.

c. The warrant of arrest for the persons of Josefina Cruz

and Jose Milo Concepcion is hereby deemed recalled in
view of formal manifestation before the Supreme Court
that they will submit themselves to the court having
jurisdiction over their person.

3. That on October 14, the Solicitor General was able to obtain

the conformity of the Government to the foregoing terms which
were likewise accepted by petitioner (sic) and their counsel of
record.

4. That the two counsel submitted their oral manifestation during

the hearing on October 14 and the present manifestation in
compliance with the resolution announced in court this morning.

WHEREFORE, it is prayed that the petition for habeas corpus be

dismissed.

5. On 16 October 1986 We issued the following resolution:

G.R. No. 76009 [In the Matter of the Petition for Habeas Corpus
of Rodolfo Salas, Josefina Cruz and Jose Milo Concepcion, et al.
v. Hon. Juan Ponce Enrile, Gen. Fidel V. Ramos, Brig. Gen.
Renato de Villa, Brig. Gen. Ramon Montao and Col. Virgilio
 Saldajeno] considering the Joint Manifestation and Motion dated
October 14, 1986 filed by Attorneys Romeo Capulong, Arno V.
Sanidad, Efren H. Mercado and Ricardo Fernandez, Jr. as counsel
for petitioners and Solicitor General Sedfrey A. Ordonez and
Assistant Solicitor General Romeo C. de la Cruz and Trial
Attorney Josue S. Villanueva as counsel for respondents which
states that they have entered into an agreement whereby: [a]
the petition for habeas corpus will be withdrawn by petitioners,
and Josefina Cruz and Jose Milo Concepcion will be immediately
released but shall appear at the trial of the criminal case for
rebellion [People vs. Rodolfo Salas, et al., Criminal Case No.
4886, Regional Trial Court, National Capital Judicial Region,
Branch XII, Manila], filed against them, on their personal
recognizance; [b] petitioner Rodolfo Salas will remain in legal
custody and face trial before the court having custody over his
person; and [c] the warrant of arrest for the person of Josefina
Cruz and Jose Milo Concepcion is hereby deemed recalled in view
of the formal manifestation before this Court that they will
submit themselves to the court having jurisdiction over their
person and in view of the said agreement, the petition for
habeas corpus be dismissed, the Court Resolved to DISMISS the
petition for habeas corpus but subject to the condition that
petitioners' lead counsel, Atty. Capulong, upon his oath as
member of the Bar, shall abide by his commitment to ensure the
appearance of Josefina Cruz and Jose Milo Concepcion at the trial
of the criminal case for rebellion filed against them. Teehankee,
C.J., is on official leave.

It is the stand of the petitioner that private respondent, "in agreeing to

remain in legal custody even during the pendency of the trial of his criminal
case, [he] has expressly waived his right to bail."37 Upon the other hand,
private respondent asserts that this claim is totally devoid of factual and
legal basis, for in their petition for habeas corpus they precisely questioned
the legality of the arrest and the continued detention of Rodolfo Salas,
Josefina Cruz and Jose Milo Concepcion, which was not resolved by this
Court or by the compromise agreement of the parties but left open for
further determination in another proceeding. Moreover, the matter of the
right to bail was neither raised by either party nor resolved by this Court,
and the legal steps promptly taken by private respondent after the
agreement was reached, like the filing of the motion to quash on 7
November 1986 and the petition for bail on 14 May 1987, were clear and
positive assertions of his statutory and constitutional rights to be granted
not only provisional but final and permanent liberty. Finally, private
respondent maintains that the term "legal custody" as used in the Joint
Manifestation and Motion simply means that private respondent agreed to
continue to be in the custody of the law or in custodia legis and nothing else;
it is not to be interpreted as waiver.

Interestingly, private respondent admits that:

"Custody" has been held to mean nothing less than actual

imprisonment. It is also defined as the detainer of a person by virtue
of a lawful authority, or the "care and possession of a thing or person."
(Bouviers Law Dictionary, Third Ed, Vol. I, pp. 741-742 citing Smith v.
Com. 59 Pa. 320 and Rolland v. Com. 82 Pa. 306)

He further admits that, in the light of Section 1 of Rule 114 of the Rules of
Court and settled jurisprudence, the "constitutional right to bail is subject to
the limitation that the person applying for admission to bail should be in the
custody of the law or otherwise deprived of his liberty."38

When the parties in G.R. No. 76009 stipulated that:

b. Petitioner Rodolfo Salas will remain in legal custody and face trial
before the court having custody over his person.

they simply meant that Rodolfo Salas, herein respondent, will remain in
actual physical custody of the court, or in actual confinement or detention,
as distinguished from the stipulation concerning his co-petitioners, who were
to be released in view of the recall of the warrants of arrest against them;
they agreed, however, "to submit themselves to the court having jurisdiction
over their persons." Note should be made of the deliberate care of the
parties in making a fine distinction between legal custody and court having
custody over the person in respect to Rodolfo Salas and court having
jurisdiction over the persons of his co-accused. Such a fine distinction was
precisely intended to emphasize the agreement that Rodolfo Salas will not
be released, but should remain in custody. Had the parties intended
otherwise, or had this been unclear to private respondent and his counsel,
they should have insisted on the use of a clearer language. It must be
remembered that at the time the parties orally manifested before this Court
on 14 October 1986 the terms and conditions of their agreement and
prepared and signed the Joint Manifestation and Motion, a warrant of arrest
had already been issued by the trial court against private respondent and his
co-accused. The stipulation that only the warrants of arrest for Josefina Cruz
and Jose Milo Concepcion shall be recalled and that only they shall be
released, further confirmed the agreement that herein petitioner shall
remain in custody of the law, or detention or confinement.
In defining bail as:

. . . the security given for the release of a person in custody of the

law, . . .

Section 1 of Rule 114 of the Revised Rules of Court admits no other meaning
or interpretation for the term "in custody of the law" than that as above
indicated. The purpose of bail is to relieve an accused from imprisonment
until his conviction and yet secure his appearance at the trial.39 It
presupposes that the person applying for it should be in the custody of the
law or otherwise deprived of liberty.40

Consequently, having agreed in G.R. No. 76009 to remain in legal custody,

private respondent had unequivocably waived his right to bail.

But, is such waiver valid?

Article 6 of the Civil Code expressly provides:

Art. 6. Rights may be waived, unless the waiver is contrary to law,

public order, public policy, morals, or good customs, or prejudicial to a
third person with a right recognized by law.

Waiver is defined as "a voluntary and intentional relinquishment or

abandonment of a known existing legal right, advantage, benefit, claim or
privilege, which except for such waiver the party would have enjoyed; the
voluntary abandonment or surrender, by a capable person, of a right known
by him to exist, with the intent that such right shall be surrendered and such
person forever deprived of its benefit; or such conduct as warrants an
inference of the relinquishment of such right; or the intentional doing of an
act inconsistent with claiming it."41

As to what rights and privileges may be waived, the authority is settled:

. . . the doctrine of waiver extends to rights and privileges of any

character, and, since the word "waiver" covers every conceivable right,
it is the general rule that a person may waive any matter which affects
his property, and any alienable right or privilege of which he is the
owner or which belongs to him or to which he is legally entitled,
whether secured by contract, conferred with statute, or guaranteed by
constitution, provided such rights and privileges rest in the individual,
are intended for his sole benefit, do not infringe on the rights of
others, and further provided the waiver of the right or privilege is not
forbidden by law, and does not contravene public policy; and the
 principle is recognized that everyone has a right to waive, and agree to
waive, the advantage of a law or rule made solely for the benefit and
protection of the individual in his private capacity, if it can be
dispensed with and relinquished without infringing on any public right,
and without detriment to the community at large. . . .

Although the general rule is that any right or privilege conferred by

statute or guaranteed by constitution may be waived, a waiver in
derogation of a statutory right is not favored, and a waiver will be
inoperative and void if it infringes on the rights of others, or would be
against public policy or morals and the public interest may be waived.

While it has been stated generally that all personal rights conferred by
statute and guaranteed by constitution may be waived, it has also
been said that constitutional provisions intended to protect property
may be waived, and even some of the constitutional rights created to
secure personal liberty are subjects of waiver.42

In Commonwealth vs. Petrillo,43 it was held:

Rights guaranteed to one accused of a crime fall naturally into two

classes: (a) those in which the state, as well as the accused, is
interested; and (b) those which are personal to the accused, which are
in the nature of personal privileges. Those of the first class cannot be
waived; those of the second may be.

It is "competent for a person to waive a right guaranteed by the

Constitution, and to consent to action which would be invalid if taken against
his will."44

This Court has recognized waivers of constitutional rights such as, for
example, the right against unreasonable searches and seizures;45 the right
to counsel and to remain silent;46 and the right to be heard.47

Even the 1987 Constitution expressly recognizes a waiver of rights

guaranteed by its Bill of Rights.1wphi1 Section 12(l) of Article III thereof on
the right to remain silent and to have a competent and independent counsel,
preferably of his own choice states:

. . . These rights cannot be waived except in writing and in the

presence of counsel.

This provision merely particularizes the form and manner of the waiver; it,
nevertheless, clearly suggests that the other rights may be waived in some
other form or manner provided such waiver will not offend Article 6 of the
Civil Code.

We hereby rule that the right to bail is another of the constitutional rights
which can be waived. It is a right which is personal to the accused and
whose waiver would not be contrary to law, public order, public policy,
morals, or good customs, or prejudicial to a third person with a right
recognized by law.

The respondent Judge then clearly acted with grave abuse of discretion in
granting bail to the private respondent.

WHEREFORE, the Orders of respondent Judge of July 7, 1987 and July 30,
1987 in Criminal Case No. 86-48926 entitled People of the Philippines vs.
Rodolfo C. Salas alias Commander Bilog/Henry, Josefina Cruz alias Mrs.
Mercado, and Jose Milo Concepcion alias Eugene Zamora, for Rebellion, are
hereby NULLIFIED and SET ASIDE.

SO ORDERED.

G.R. No. 189516, June 08, 2016

EDNA MABUGAY-OTAMIAS, JEFFREN M. OTAMIAS AND MINOR

JEMWEL M. OTAMIAS, REPRESENTED BY THEIR MOTHER EDNA
MABUGAY-OTAMIAS, Petitioners, v. REPUBLIC OF THE PHILIPPINES,
REPRESENTED BY COL. VIRGILIO O. DOMINGO, IN HIS CAPACITY AS
THE COMMANDING OFFICER OF THE PENSION AND GRATUITY
MANAGEMENT CENTER (PGMC) OF THE ARMED FORCES OF THE
PHILIPPINES, Respondent.

DECISION

LEONEN, J.:

A writ of execution lies against the pension benefits of a retired officer of the
Armed Forces of the Philippines, which is the subject of a deed of
assignment drawn by him granting support to his wife and five (5) children.
The benefit of exemption from execution of pension benefits is a statutory
right that may be waived, especially in order to comply with a husband's
duty to provide support under Article XV of the 1987 Constitution and the
Family Code.

Petitioner Edna Mabugay-Otamias (Edna) and retired Colonel Francisco B.

Otamias (Colonel Otamias) were married on June 16, 1978 and had five (5)
children.1ChanRoblesVirtualawlibrary

On September 2000, Edna and Colonel Otamias separated due to his alleged
infidelity.2 Their children remained with Edna.3ChanRoblesVirtualawlibrary

On August 2002, Edna filed a Complaint-Affidavit against Colonel Otamias

before the Provost Marshall Division of the Armed Forces of the Philippines.4
Edna demanded monthly support equivalent to 75% of Colonel Otamias'
retirement benefits.5 Colonel Otamias executed an Affidavit,
stating:chanRoblesvirtualLawlibrary

That sometime in August or September 2002, I was summoned at the Office

of the Provost Marshal, Philippine Army, in connection with a complaint
affidavit submitted to said Office by my wife Mrs. Edna M. Otamias signifying
her intention 75% of my retirement benefits from the AFP;

That at this point, I can only commit 50% of my retirement benefits to be

pro-rated among my wife and five (5) children;

That in order to implement this compromise, I am willing to enter into

Agreement with my wife covering the same;

That I am executing this affidavit to attest to the truth of the foregoing facts
and whatever legal purpose it may serve.6cralawred
On February 26, 2003, Colonel Otamias executed a Deed of Assignment
where he waived 50% of his salary and pension benefits in favor of Edna and
their children.7 The Deed of Assignment was considered by the parties as a
compromise agreement.8 It stated:chanRoblesvirtualLawlibrary
This Assignment, made and executed unto this 26th day of February 2003 at
Fort Bonifacio, Makati City, by the undersigned LTC Francisco B. Otamias, 0-
0-111045 (INP) PA, of legal age, married and presently residing at Dama De
Noche St., Pembo, Makati City.

WITNESSETH

WHEREAS, the undersigned affiant is the legal husband of EDNA M.

OTAMIAS and the father of Julie Ann, Jonathan, Jennifer, Jeffren and Jemwel
all residing at Patag, Cagayan de Oro City;

WHEREAS, the undersigned will be retiring from the military service and
expects to receive retirement benefits from the Armed Forces of the
Philippines;

WHEREAS, the undersigned had expressed his willingness to give a share in

his retirement benefits to my wife and five (5) abovenamed children,

NOW, THEREFORE, for and in consideration of the foregoing premises, the

undersigned hereby stipulated the following:

1. That the undersigned will give to my legal wife and five (5) children FIFTY
PERCENT (50%) of my retirement benefits to be pro rated among them.

2. That a separate check(s) be issued and to be drawn and encash [sic] in

the name of the legal wife and five (5) children pro-rating the fifty (50%)
percent of my retirement benefits.

IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of

February 2003 at Fort Bonifacio, Makati City.9cralawred
Colonel Otamias retired on April 1, 2003.10ChanRoblesVirtualawlibrary

The agreement was honored until January 6, 2006.11 Edna alleged that "the
A[rmed] F[orces] [of the] Philippines] suddenly decided not to honor the
agreement"12 between Colonel Otamias and his legitimate family.

In a letter13 dated April 3, 2006, the Armed Forces of the Philippines Pension
and Gratuity Management Center (AFP PGMC) informed Edna that a court
order was required for the AFP PGMC to recognize the Deed of
Assignment.14ChanRoblesVirtualawlibrary

In another letter15 dated April 17, 2006, the AFP PGMC reiterated that it
could not act on Edna's request to receive a portion of Colonel Otamias'
pension "unless ordered by [the] appropriate
court."16ChanRoblesVirtualawlibrary

Heeding the advice of the AFP PGMC, Edna, on behalf of herself and Jeffren
M. Otamias and Jemwel M. Otamias (Edna, et al.), filed before the Regional
Trial Court of Cagayan de Oro, Misamis Oriental an action for support,
docketed as F.C. Civil Case No. 2006-039.17ChanRoblesVirtualawlibrary

The trial court's Sheriff tried to serve summons on Colonel Otamias several
times, to no avail.18 Substituted service was resorted to.19 Colonel Otamias
was subsequently declared in default for failure to file a responsive pleading
despite order of the trial court.20ChanRoblesVirtualawlibrary

The trial court ruled in favor of Edna, et al. and ordered the automatic
deduction of the amount of support from the monthly pension of Colonel
Otamias.21ChanRoblesVirtualawlibrary
The dispositive portion of the trial court's Decision
stated:chanRoblesvirtualLawlibrary
ALL THE FOREGOING CONSIDERED, and in consonance with the legal
obligation of the defendant to the plaintiffs, the Armed Forces of the
Philippines, through its Finance Center and/or appropriate Finance Officer
thereof, is thereby ordered to release to Edna Mabugay Otamias and minor
Jemwel M. Otamias, herein represented by his mother Edna, their fifty
(50%) per cent share of each of the monthly pension due to Colonel
Francisco B. Otamias, AFP PA (Retired).

Defendant Francisco Otamias is also ordered to pay plaintiff Edna M.

Otamias, fifty (50%) per cent of whatever retirement benefits he has already
received from the Armed Forces of the Philippines AND the arrears in
support, effective January 2006 up to the time plaintiff receives her share
direct from the Finance Center of the Armed Forces of the Philippines.

IT IS SO ORDERED.22cralawred
The Armed Forces of the Philippines, through the Office of the Judge
Advocate General, filed a Manifestation/Opposition23 to the Decision of the
trial court, but it was not given due course due to its late
filing.24ChanRoblesVirtualawlibrary

Edna, et al., through counsel, filed a Motion for Issuance of Writ of

Execution25 dated February 22, 2008. The trial court granted the Motion, and
a writ of execution was issued by the trial court on April 10,
2008.26ChanRoblesVirtualawlibrary

The Armed Forces of the Philippines Finance Center (AFP Finance Center),
tlirough the Office of the Judge Advocate General, filed a Motion to Quash27
the writ of execution and argued that the AFP Finance Center's duty to
disburse benefits is ministerial. It releases benefits only upon the AFP
PGMC's approval.28ChanRoblesVirtualawlibrary

The trial court denied the Motion to Quash and held

that:chanRoblesvirtualLawlibrary
Under the law and existing jurisprudence, the "right to support" is practically
equivalent to the "right to life." The "right to life" always takes precedence
over "property rights." The "right to support/life" is also a substantive right
which always takes precedence over technicalities/procedural rules. It being
so, technical rules must yield to substantive justice. Besides, this Court's
Decision dated February 27, 2007 has long acquired finality, and as such, is
ripe for enforcement/execution.
THE FOREGOING CONSIDERED, the instant Motion is hereby
DENIED.29cralawred
The AFP PGMC moved for reconsideration of the order denying the Motion to
Quash,30 but the Motion was also denied by the trial court in the Order31
dated August 6, 2008.

A Notice of Garnishment was issued by the trial court on July 15, 2008 and
was received by the AFP PGMC on September 9,
2008.32ChanRoblesVirtualawlibrary

The AFP PGMC filed before the Court of Appeals a Petition for Certiorari and
Prohibition.33ChanRoblesVirtualawlibrary

The Court of Appeals granted34 the Petition for Certiorari and Prohibition and
partially nullified the trial court's Decision insofar as it directed the automatic
deduction of support from the pension benefits of Colonel Otamias.

The Court of Appeals discussed that Section 3135 of Presidential Decree No.
1638, otherwise known as the AFP Military Personnel Retirement and
Separation Decree of 1979, "provides for the exemption of the monthly
pension of retired military personnel from execution and attachment[,]"36
while Rule 39, Section 13 of the Rules of Court
provides:chanRoblesvirtualLawlibrary
SEC. 13. Property exempt from execution. Except as otherwise expressly
provided by law, the following property, and no other, shall be exempt from
execution:

....

(1) The right to receive legal support, or money or property obtained as

such support, or any pension or gratuity from the Government[.]cralawred
The Court of Appeals also cited Pacific Products, Inc. vs. Ong:37
[M]oneys sought to be garnished, as long as they remain in the hands of the
disbursing officer of the Government, belong to the latter, although the
defendant in garnishment may be entitled to a specific portion thereof. And
still another reason which covers both of the foregoing is that every
consideration of public policy forbids it.38cralawred
In addition, the AFP PGMC was not impleaded as a party in the action for
support; thus, it is not bound by the Decision.39ChanRoblesVirtualawlibrary

The dispositive portion of the Court of Appeals Decision

reads:chanRoblesvirtualLawlibrary
WHEREFORE, the petition is GRANTED. The assailed Decision of the
Regional Trial Court, Branch 19, Cagayan de Oro City dated February 27,
2007 in Civil Case No. 2006-039 is PARTIALLY NULLIFIED in so far as it
directs the Armed Forces of the Philippines Finance Center to automatically
deduct the financial support in favor of private respondents, Edna Otamias
and her children Jeffren and Jemwel Otamias, from the pension benefits of
Francisco Otamias, a retired military officer. The Order dated June 10, 2008,
Order dated August 6, 2008 and Writ of Execution dated April 10, 2008, all
issued by the court a quo are likewise SET ASIDE. Perforce, let a writ of
permanent injunction issue enjoining the implementation of the assailed Writ
of Execution dated April 10, 2008 and the corresponding Notice of
Garnishment dated July 15, 2008. No pronouncement as to costs.

SO ORDERED.40 (Emphasis in the original)cralawred

Edna, et al. moved for reconsideration, but the Motion was denied by the
Court of Appeals.41ChanRoblesVirtualawlibrary

Edna, et al. filed before this Court a Petition for Review on Certiorari42 on
November 11, 2009. In the Resolution43 dated January 20, 2010, this Court
required respondent to comment.

In the Resolution44 dated August 4, 2010, this Court noted the Comment
filed by the Office of the Solicitor General and required Edna, et al. to file a
reply.45ChanRoblesVirtualawlibrary

A Reply46 was filed on September 27, 2010.

Edna, et al. argue that the Deed of Assignment Colonel Otamias executed Is
valid and legal.47ChanRoblesVirtualawlibrary

They claim that Section 31 of Presidential Decree No. 163848 "does not
include support";49 hence, the retirement benefits of Colonel Otamias can be
executed upon.

Edna, et al. also argue that the Court of Appeals erred in granting
respondent's Petition because it effectively rendered the Deed of Assignment
of no force and effect.50 On the other hand, the trial court's Decision
implements the Deed of Assignment and Edna, et al.'s right to
support.51ChanRoblesVirtualawlibrary

Further, the AFP PGMC had already recognized the validity of the agreement
and had made payments to them until it suddenly stopped payment.52 After
Edna, et al. obtained a court order, the AFP PGMC still refused to honor the
Deed of Assignment.53ChanRoblesVirtualawlibrary

The Armed Forces of the Philippines, through the Office of the Solicitor
General, argues that it was not a party to the case filed by Edna, et al.54
Thus, "it cannot be compelled to release part of the monthly pension
benefits of retired Colonel Otamias in favor of [Edna, et
al]."55ChanRoblesVirtualawlibrary

The Office of the Solicitor General avers that the AFP PGMC never submitted
itself to the jurisdiction of the trial court.56 It was not a party to the case as
the trial court never acquired jurisdiction over the AFP
PGMC.57ChanRoblesVirtualawlibrary

The Office of the Solicitor General also argues that Section 31 of Presidential
Decree No. 1638 and Rule 39, Section 13(1) of the Rules of Court support
the Court of Appeals Decision that Colonel Otamias' pension benefits are
exempt from execution.58ChanRoblesVirtualawlibrary

Section 31 of Presidential Decree No. 1638 "does not deprive the survivor/s
of a retired or separated officer or enlisted man of their right to support."59
Rather, "[w]hat is prohibited is for respondent [AFP PGMC] to segregate a
portion of the pension benefit in favor of the retiree's family while still in the
hands of the A[rmed] F[orces] [of the]
Philippines]."60ChanRoblesVirtualawlibrary

Thus, the AFP PGMC "cannot be compelled to directly give or issue a check in
favor of [Edna, et al.] out of the pension gratuity of Col.
Otamias."61ChanRoblesVirtualawlibrary

In their Reply,62 Edna, et al. argue that the Armed Forces of the Philippines
should not be allowed to question the legal recourse they took because it
was an officer of the Armed Forces of the Philippines who had advised them
to file an action for support.63ChanRoblesVirtualawlibrary

They argue that the phrase "while in the active service" in Section 31 of
Presidential Decree No. 1638 refers to the "time when the retired officer
incurred his accountabilities in favor of a private creditor[,]"64 who is a third
person. The phrase also "serves as a timeline designed to separate the debts
incurred by the retired officer after his retirement from those which he
incurred prior thereto."65ChanRoblesVirtualawlibrary

Further, the accountabilities referred to in Section 31 of Presidential Decree

No. 1638 refer to debts or loans, not to
support.66ChanRoblesVirtualawlibrary

The issues for resolution are:

First, whether the Court of Appeals erred in ruling that the AFP Finance
Center cannot be directed to automatically deduct the amount of support
needed by the legitimate family of Colonel Otamias; and

Second, whether Colonel Otamias' pension benefits can be executed upon

for the financial support of his legitimate family.

The Petition is granted.

Article 6 of the Civil Code provides:chanRoblesvirtualLawlibrary

Article 6. Rights may be waived, unless the waiver is contrary to law, public
order, public policy, morals or good customs, or prejudicial to a third person
with a right recognized by law.cralawred
The concept of waiver has been defined by this Court
as:chanRoblesvirtualLawlibrary
a voluntary and intentional relinquishment or abandonment of a known
existing legal right, advantage, benefit, claim or privilege, which except for
such waiver the party would have enjoyed; the voluntary abandonment or
surrender, by a capable person, of a right known by him to exist, with the
intent that such right shall be surrendered and such person forever deprived
of its benefit; or such conduct as warrants an inference of the
relinquishment of such right; or the intentional doing of an act inconsistent
with claiming it.67cralawred
In determining whether a statutory right can be waived, this Court is guided
by the following pronouncement:chanRoblesvirtualLawlibrary
[T]he doctrine of waiver extends to rights and privileges of any character,
and, since the word 'waiver' covers every conceivable right, it is the general
rule that a person may waive any matter which affects his property, and any
alienable right or privilege of which he is the owner or which belongs to him
or to which he is legally entitled, whether secured by contract, conferred
with statute, or guaranteed by constitution, provided such rights and
privileges rest in the individual, are intended for his sole benefit, do
not infringe on the rights of others, and further provided the waiver
of the right or privilege is not forbidden by law, and does not
contravene public policy; and the principle is recognized that everyone
has a right to waive, and agree to waive, the advantage of a law or rule
made solely for the benefit and protection of the individual in his private
capacity, if it can be dispensed with and relinquished without infringing on
any public right, and without detriment to the community at large[.]68
(Emphasis in the original)cralawred
When Colonel Otamias executed the Deed of Assignment, he effectively
waived his right to claim that his retirement benefits are exempt from
execution. The right to receive retirement benefits belongs to Colonel
Otamias. His decision to waive a portion of his retirement benefits does not
infringe on the right of third persons, but even protects the right of his
family to receive support.

In addition, the Deed of Assignment should be considered as the law

between the parties, and its provisions should be respected in the absence
of allegations that Colonel Otamias was coerced or defrauded in executing it.
The general rule is that a contract is the law between parties and parties are
free to stipulate terms and conditions that are not contrary to law, morals,
good customs, public order, or public policy.69ChanRoblesVirtualawlibrary

The Deed of Assignment executed by Colonel Otamias was not contrary to

law; it was in accordance with the provisions on support in the Family Code.
Hence, there was no reason for the AFP PGMC not to recognize its validity.

Further, this Court notes that the AFP PGMC granted the request for support
of the wives of other retired military personnel in a similar situation as that
of petitioner in this case. Attached to the Petition are the affidavits of the
wives of retired members of the military, who have received a portion of
their husbands' pensions.70ChanRoblesVirtualawlibrary

One affidavit stated:chanRoblesvirtualLawlibrary

4. That when I consulted and appeared before the Office of PGMC, I was
instructed to submit a Special Power of Authority from my husband so
they can release part of his pension to me;

5. That my husband signed the Special Power of Attorney at the PGMC

ceding 50% of his pension to me; the SPA form was given to us by the
PGMC and the same was signed by my husband at the PGMC;. . .

....

7. That the amount was deposited directly to my account by the PGMC-

Finance Center AFP out of the pension of my husband;

8. That only the Special Power of Attorney was required by the PGMC in
order for them to segregate my share of my husband's pension and
deposit the same to my account[.]71

The other affidavit stated:chanRoblesvirtualLawlibrary

 8. That my husband signed the Special Power of Attorney at the PGMC
ceding 50% of his pension to me; the SPA form was given to us by the
PGMC and the same was signed by my husband at the PGMC[.]72

In addition, the AFP PGMC's website informs the public of the following
procedure:chanRoblesvirtualLawlibrary
Tanong: My husband-retiree cut-off my allotment. How can I have it
restored?
Sagot: Pension benefits are separate properties of the retiree and can not
[sic] be subject of a Ocurt [sic] Order for execution nor can they be assigned
to any third party (Sec 31, PD 1638, as amended). However, a valid Special
Power of Attorney (SPA) by the retiree himself empowering the AFP Finance
Center to deduct certain amount from his lumpsum [sic] or pension pay as
the case maybe, as a rule, is a valid waiver of rights which can be effectively
implemented by the AFP F[inance] C[enter].73cralawred
Clearly, the AFP PGMC allows deductions from a retiree's pension for as long
as the retiree executes a Special Power of Attorney authorizing the AFP
PGMC to deduct a certain amount for the benefit of the retiree's beneficiary.

It is curious why Colonel Otamias was allowed to execute a Deed of

Assignment by the administering officer when, in the first place, the AFP
PGMC's recognized procedure was to execute a Special Power of Attorney,
which would have been the easier remedy for Colonel Otamias' family.

Instead, Colonel Otamias' family was forced to incur litigation expenses just
to be able to receive the financial support that Colonel Otamias was willing
to give to Edna, et al.

II

Section 31 of Presidential Decree No. 1638

provides:chanRoblesvirtualLawlibrary
Section 31. The benefits authorized under this Decree, except as provided
herein, shall not be subject to attachment, garnishment, levy, execution or
any tax whatsoever; neither shall they be assigned, ceded, or conveyed to
any third person: Provided, That if a retired or separated officer or enlisted
man who is entitled to any benefit under this Decree has unsettled money
and/or property accountabilities incurred while in the active service, not
more than fifty per centum of the pension gratuity or other payment due
such officer or enlisted man or his survivors under this Decree may be
withheld and be applied to settle such accountabilities.cralawred
Under Section 31, Colonel Otamias' retirement benefits are exempt from
execution. Retirement benefits are exempt from execution so as to ensure
that the retiree has enough funds to support himself and his family.
On the other hand, the right to receive support is provided under the Family
Code. Article 194 of the Family Code defines support as
follows:chanRoblesvirtualLawlibrary
Art. 194. Support comprises everything indispensable for sustenance,
dwelling, clothing, medical attendance, education and transportation, in
keeping with the financial capacity of the family.

The education of the person entitled to be supported referred to in the

preceding paragraph shall include his schooling or training for some
profession, trade or vocation, even beyond the age of majority.
Transportation shall include expenses in going to and from school, or to and
from place of work.cralawred
The provisions of the Family Code also state who are obliged to give support,
thus:chanRoblesvirtualLawlibrary
Art. 195. Subject to the provisions of the succeeding articles, the following
are obliged to support each other to the whole extent set forth in the
preceding article:

(1) The spouses;

(2) Legitimate ascendants and descendants;

(3) Parents and their legitimate children and the legitimate and illegitimate
children of the latter;

(4) Parents and their illegitimate children and the legitimate and illegitimate
children of the latter; and

(5) Legitimate brothers and sisters, whether of the full or half- blood.

Art. 196. Brothers and sisters not legitimately related, whether of the full or
half-blood, are likewise bound to support each other to the full extent set
forth in Article 194 except only when the need for support of the brother or
sister, being of age, is due to a cause imputable to the claimant's fault or
negligence.

Art. 197. For the support of legitimate ascendants; descendants, whether

legitimate or illegitimate; and brothers and sisters, whether legitimately or
illegitimately related, only the separate property of the person obliged to
give support shall be answerable provided that in case the obligor has no
separate property, the absolute community or the conjugal partnership, if
financially capable, shall advance the support, which shall be deducted from
the share of the spouses obliged upon the liquidation of the absolute
community or of the conjugal partnership[.]cralawred
The provisions of Rule 39 of the Rules of Court that are applicable to this
case are in apparent conflict with each other. Section 4 provides that
judgments in actions for support are immediately executory. On the other
hand, Section 13(1) provides that the right to receive pension from
government is exempt from execution, thus:chanRoblesvirtualLawlibrary
RULE 39

EXECUTION, SATISFACTION, AND EFFECT OF JUDGMENTS

....

SEC. 4. Judgments not stayed by appeal. Judgments in actions for

injunction, receivership, accounting and support, and such other judgments
as are now or may hereafter be declared to be immediately executory, shall
be enforceable after their rendition and shall not, be stayed by an appeal
taken therefrom, unless otherwise ordered by the trial court. On appeal
therefrom, the appellate court in its discretion may make an order
suspending, modifying, restoring or granting the injunction, receivership,
accounting, or award of support.

The stay of execution shall be upon such terms as to bond or otherwise as

may be considered proper for the security or protection of the rights of the
adverse party.

....

SEC. 13. Property exempt from execution. Except as otherwise expressly

provided by law, the following property, and no other, shall be exempt from
execution:

....

(1) The right to receive legal support, or money or property obtained as

such support, or any pension or gratuity from the Government;

....

But no article or species of property mentioned in this section shall be

exempt from execution issued upon a judgment recovered for its price or
upon a judgment of foreclosure of a mortgage thereon. (Emphasis
supplied)cralawred
Based on the Family Code, Colonel Otamias is obliged to give support to his
family, petitioners in this case. However, he retired in 2003, and his sole
source of income is his pension. Judgments in actions for support are
immediately executory, yet under Section 31 of Presidential Decree No.
1638, his pension cannot be executed upon.

However, considering that Colonel Otamias has waived a portion of his

retirement benefits through his Deed of Assignment, resolution on the
conflict between the civil code provisions on support and Section 31 of
Presidential Decree No. 1638 should be resolved in a more appropriate case.

III

Republic v. Yahon74 is an analogous case because it involved the grant of

support to the spouse of a retired member of the Armed Forces of the
Philippines.

In Republic v. Yahon, Daisy R. Yahon filed a Petition for the Issuance of

Protection Order under Republic Act No. 9262.75 She alleged that she did not
have any source of income because her husband made her resign from her
job.76 The trial court issued a temporary restraining order, a portion of which
stated:chanRoblesvirtualLawlibrary
To insure that petitioner [Daisy R. Yahon] can receive a fair share of
respondent's retirement and other benefits, the following agencies
thru their heads are directed to WITHHOLD any retirement, pension
[,] and other benefits of respondent, S/SGT. CHARLES A. YAHON, a
member of the Armed Forces of the Philippines assigned at 4ID, Camp
Evangelista, Patag, Cagayan de Oro City until further orders from the
court:chanRoblesvirtualLawlibrary
1. Commanding General/Officer of the Finance Center of the Armed Forces
of the Philippines, Camp Emilio Aguinaldo, Quezon City;

2. The Management of RSBS, Camp Emilio Aguinaldo, Quezon City;

3. The Regional Manager of PAG-IBIG, Mortola St., Cagayan de Oro City.77

(Emphasis in the original)cralawred
The trial court subsequently granted Daisy's Petition and issued a permanent
protection order78 and held:chanRoblesvirtualLawlibrary
Pursuant to the order of the court dated February 6, 2007, respondent,
S/Sgt. Charles A. Yahon is directed to give it to petitioner 50% of whatever
retirement benefits and other claims that may be due or released to him
from the government and the said share of petitioner shall be automatically
deducted from respondent's benefits and claims and be given directly to the
petitioner, Daisy R. Yahon.
Let copy of this decision be sent to the Commanding General/Officer of
Finance Center of the Armed Forces of the Philippines, Camp Emilio
Aguinaldo, Quezon City; the Management of RSBS, Camp Emilio Aguinaldo,
Quezon City and the Regional Manager of PAG-IBIG, Mortola St., Cagayan de
Oro City for their guidance and strict compliance.79cralawred
In that case, the AFP Finance Center filed before the trial court a
Manifestation and Motion stating that "it was making a limited and special
appearance"80 and argued that the trial court did not acquire jurisdiction
over the Armed Forces of the Philippines. Hence, the Armed Forces of the
Philippines is not bound by the trial court's
ruling.81ChanRoblesVirtualawlibrary

The Armed Forces of the Philippines also cited Pacific Products, where this
Court ruled that:chanRoblesvirtualLawlibrary
A rule, which has never been seriously questioned, is that money in the
hands of public officers, although it may be due government employees, is
not liable to the creditors of these employees in the process of garnishment.
One reason is, that the State, by virtue of its sovereignty may not be sued in
its own courts except by express authorization by the Legislature, and to
subject its officers to garnishment would be to permit indirectly what is
prohibited directly. Another reason is that moneys sought to be garnished,
as long as they remain in the hands of the disbursing officer of the
Government, belong to the latter, although the defendant in garnishment
may be entitled to a specific portion thereof. And still another reason which
covers both of the foregoing is that every consideration of public policy
forbids it.82 (Citations omitted)cralawred
This Court in Republic v. Yahon denied the Petition and discussed that
because Republic Act No. 9262 is the later enactment, its provisions should
prevail,83 thus:chanRoblesvirtualLawlibrary
We hold that Section 8(g) of R.A. No. 9262, being a later enactment, should
be construed as laying down an exception to the general rule above stated
that retirement benefits are exempt from execution. The law itself declares
that the court shall order the withholding of a percentage of the income or
salary of the respondent by the employer, which shall be automatically
remitted directly to the woman "[n]otwithstanding other laws to the
contrary"84 (Emphasis in the original)cralawred
IV

The 1987 Constitution gives much importance to the family as the basic unit
of society, such that Article XV85 is devoted to it.

The passage of the Family Code further implemented Article XV of the

Constitution. This Court has recognized the importance of granting support
to minor children, provided that the filiation of the child is proven. In this
case, the filiation of Jeffren M. Otamias and Jemwel M. Otamias was
admitted by Colonel Otamias in the Deed of
Assignment.86ChanRoblesVirtualawlibrary

Even before the passage of the Family Code, this Court has given primary
consideration to the right of a child to receive support. In Samson v. Yatco,87
a petition for support was dismissed with prejudice by the trial court on the
ground that the minor asking for support was not present in court during
trial. An appeal was filed, but it was dismissed for having been filed out of
time. This Court relaxed the rules of procedure and held that "[i]f the order
of dismissal with prejudice of the petition for support were to stand, the
petitioners would be deprived of their right to present and nature
support."88ChanRoblesVirtualawlibrary

In Gan v. Reyes,89 Augustus Caezar R. Gan (Gan) questioned the trial court's
decision requiring him to give support and claimed that that he was not the
father of the minor seeking support. He also argued that he was not given
his day in court. This Court held that Gan's arguments were meant to delay
the execution of the judgment, and that in any case, Gan himself filed a
Motion for Leave to Deposit in Court Support Pendente
Lite:chanRoblesvirtualLawlibrary
In all cases involving a child, his interest and welfare are always the
paramount concerns. There may be instances where, in view of the poverty
of the child, it would be a travesty of justice to refuse him support until the
decision of the trial court attains finality while time continues to slip away.
An excerpt from the early case of De Leon v. Soriano is relevant,
thus:chanRoblesvirtualLawlibrary
The money and property adjudged for support and education should and
must be given presently and without delay because if it had to wait the final
judgment, the children may in the meantime have suffered because of lack
of food or have missed and lost years in school because of lack of funds. One
cannot delay the payment of such funds for support and education for the
reason that if paid long afterwards, however much the accumulated amount,
its payment cannot cure the evil and repair the damage caused. The children
with such belated payment for support and education cannot act as gluttons
and eat voraciously and unwisely, afterwards, to make up for the years of
hunger and starvation. Neither may they enrol in several classes and schools
and take up numerous subjects all at once to make up for the years they
missed in school, due to non-payment of the funds when needed.90cralawred
V

The non-inclusion of the AFP PGMC or the AFP Finance Center in the action
for support was proper, considering that both the AFP PGMC and the AFP
Finance Center are not the persons obliged to give support to Edna, et al.
Thus, it was not a real party-in-interest.91 Nor was the AFP PGMC a
necessary party because complete relief could be obtained even without
impleading the AFP PGMC.92ChanRoblesVirtualawlibrary

WHEREFORE, the Petition is GRANTED. The Court of Appeals Decision

dated May 22, 2009 and Resolution dated August 11, 2009 in CA-G.R. SP
No. 02555-MIN are REVERSED and SET ASIDE. The Regional Trial Court
Decision dated February 27, 2007 in F.C. Civil Case No. 2006-039 is
REINSTATED.

SO ORDERED.chanroblesvirtuallawlibrary
SPOUSES REX AND G.R. No. 165803
CONCEPCION AGGABAO,

Petitioners,
Present:

CARPIO MORALES, Chairperson

BERSAMIN,
-versus-
DEL CASTILLO,*

VILLARAMA, JR., and

SERENO, JJ.

DIONISIO Z. PARULAN, JR.

Promulgated:
and MA. ELENA PARULAN,

Respondents.
September 1, 2010

x------------------------------------------------------------------------------------
-----x

DECISION
BERSAMIN, J:

On July 26, 2000, the Regional Trial Court (RTC), Branch 136, in
Makati City annulled the deed of absolute sale executed in favor of the
petitioners covering two parcels of registered land the respondents owned
for want of the written consent of respondent husband Dionisio Parulan, Jr.
On July 2, 2004, in C.A.-G.R. CV No. 69044,1[1] the Court of Appeals (CA)
affirmed the RTC decision.

Hence, the petitioners appeal by petition for review on certiorari,

seeking to reverse the decision of the CA. They present as the main issue
whether the sale of conjugal property made by respondent wife by
presenting a special power of attorney to sell (SPA) purportedly executed by
respondent husband in her favor was validly made to the vendees, who
allegedly acted in good faith and paid the full purchase price, despite the
showing by the husband that his signature on the SPA had been forged and
that the SPA had been executed during his absence from the country.

We resolve the main issue against the vendees and sustain the CAs
finding that the vendees were not buyers in good faith, because they did not
exercise the necessary prudence to inquire into the wifes authority to sell.
We hold that the sale of conjugal property without the consent of the
husband was not merely voidable but void; hence, it could not be ratified.

Antecedents

Involved in this action are two parcels of land and their improvements
(property) located at No. 49 Miguel Cuaderno Street, Executive Village, BF
Homes, Paraaque City and registered under Transfer Certificate of Title
(TCT) No. 633762[2] and TCT No. 633773[3] in the name of respondents
Spouses Maria Elena A. Parulan (Ma. Elena) and Dionisio Z. Parulan, Jr.
(Dionisio), who have been estranged from one another.

In January 1991, real estate broker Marta K. Atanacio (Atanacio)

offered the property to the petitioners, who initially did not show interest
due to the rundown condition of the improvements. But Atanacios
persistence prevailed upon them, so that on February 2, 1991, they and
Atanacio met with Ma. Elena at the site of the property. During their
meeting, Ma. Elena showed to them the following documents, namely: (a)
the owners original copy of TCT No. 63376; (b) a certified true copy of TCT
No. 63377; (c) three tax declarations; and (d) a copy of the special power of
attorney (SPA) dated January 7, 1991 executed by Dionisio authorizing Ma.
Elena to sell the property.4[4] Before the meeting ended, they paid
P20,000.00 as earnest money, for which Ma. Elena executed a handwritten
Receipt of Earnest Money, whereby the parties stipulated that: (a) they
would pay an additional payment of P130,000.00 on February 4, 1991; (b)
they would pay the balance of the bank loan of the respondents amounting
to P650,000.00 on or before February 15, 1991; and (c) they would make
the final payment of P700,000.00 once Ma. Elena turned over the property
on March 31, 1991.5[5]

On February 4, 1991, the petitioners went to the Office of the Register

of Deeds and the Assessors Office of Paraaque City to verify the TCTs shown
by Ma. Elena in the company of Atanacio and her husband (also a licensed
broker).6[6] There, they discovered that the lot under TCT No. 63376 had
been encumbered to Banco Filipino in 1983 or 1984, but that the
encumbrance had already been cancelled due to the full payment of the
obligation.7[7] They noticed that the Banco Filipino loan had been effected
through an SPA executed by Dionisio in favor of Ma. Elena.8[8] They found
on TCT No. 63377 the annotation of an existing mortgage in favor of the Los
Baos Rural Bank, also effected through an SPA executed by Dionisio in favor
of Ma. Elena, coupled with a copy of a court order authorizing Ma. Elena to
mortgage the lot to secure a loan of P500,000.00.9[9]
 The petitioners and Atanacio next inquired about the mortgage and the
court order annotated on TCT No. 63377 at the Los Baos Rural Bank. There,
they met with Atty. Noel Zarate, the banks legal counsel, who related that
the bank had asked for the court order because the lot involved was
conjugal property.10[10]

Following their verification, the petitioners delivered P130,000.00 as

additional down payment on February 4, 1991; and P650,000.00 to the Los
Baos Rural Bank on February 12, 1991, which then released the owners
duplicate copy of TCT No. 63377 to them.11[11]

On March 18, 1991, the petitioners delivered the final amount of

P700,000.00 to Ma. Elena, who executed a deed of absolute sale in their
favor. However, Ma. Elena did not turn over the owners duplicate copy of
TCT No. 63376, claiming that said copy was in the possession of a relative
who was then in Hongkong.12[12] She assured them that the owners
duplicate copy of TCT No. 63376 would be turned over after a week.

On March 19, 1991, TCT No. 63377 was cancelled and a new one was
issued in the name of the petitioners.

Ma. Elena did not turn over the duplicate owners copy of TCT No.
63376 as promised. In due time, the petitioners learned that the duplicate
owners copy of TCT No. 63376 had been all along in the custody of Atty.
Jeremy Z. Parulan, who appeared to hold an SPA executed by his brother
Dionisio authorizing him to sell both lots.13[13]
 At Atanacios instance, the petitioners met on March 25, 1991 with
Atty. Parulan at the Manila Peninsula.14[14] For that meeting, they were
accompanied by one Atty. Olandesca.15[15] They recalled that Atty. Parulan
smugly demanded P800,000.00 in exchange for the duplicate owners copy of
TCT No. 63376, because Atty. Parulan represented the current value of the
property to be P1.5 million. As a counter-offer, however, they tendered
P250,000.00, which Atty. Parulan declined,16[16] giving them only until
April 5, 1991 to decide.

Hearing nothing more from the petitioners, Atty. Parulan decided to

call them on April 5, 1991, but they informed him that they had already fully
paid to Ma. Elena.17[17]

Thus, on April 15, 1991, Dionisio, through Atty. Parulan, commenced

an action (Civil Case No. 91-1005 entitled Dionisio Z. Parulan, Jr.,
represented by Jeremy Z. Parulan, as attorney in fact, v. Ma. Elena Parulan,
Sps. Rex and Coney Aggabao), praying for the declaration of the nullity of
the deed of absolute sale executed by Ma. Elena, and the cancellation of the
title issued to the petitioners by virtue thereof.

In turn, the petitioners filed on July 12, 1991 their own action for
specific performance with damages against the respondents.

Both cases were consolidated for trial and judgment in the RTC.18[18]

Ruling of the RTC

 After trial, the RTC rendered judgment, as follows:

WHEREFORE, and in consideration of the foregoing,

judgment is hereby rendered in favor of plaintiff Dionisio A.
Parulan, Jr. and against defendants Ma. Elena Parulan and the
Sps. Rex and Concepcion Aggabao, without prejudice to any
action that may be filed by the Sps. Aggabao against co-
defendant Ma. Elena Parulan for the amounts they paid her for
the purchase of the subject lots, as follows:

1. The Deed of Absolute Sale dated March 18, 1991

covering the sale of the lot located at No. 49 M. Cuaderno St.,
Executive Village, BF Homes, Paraaque, Metro Manila, and
covered by TCT Nos. 63376 and 63377 is declared null and void.

2. Defendant Mrs. Elena Parulan is directed to pay

litigation expenses amounting to P50,000.00 and the costs of the
suit.

SO ORDERED.19[19]

The RTC declared that the SPA in the hands of Ma. Elena was a
forgery, based on its finding that Dionisio had been out of the country at the
time of the execution of the SPA;20[20] that NBI Sr. Document Examiner
Rhoda B. Flores had certified that the signature appearing on the SPA
purporting to be that of Dionisio and the set of standard sample signatures
of Dionisio had not been written by one and the same person;21[21] and
that Record Officer III Eliseo O. Terenco and Clerk of Court Jesus P.
Maningas of the Manila RTC had issued a certification to the effect that Atty.
Alfred Datingaling, the Notary Public who had notarized the SPA, had not
been included in the list of Notaries Public in Manila for the year 1990-
1991.22[22]
 The RTC rejected the petitioners defense of being buyers in good faith
because of their failure to exercise ordinary prudence, including demanding
from Ma. Elena a court order authorizing her to sell the properties similar to
the order that the Los Baos Rural Bank had required before accepting the
mortgage of the property.23[23] It observed that they had appeared to be
in a hurry to consummate the transaction despite Atanacios advice that they
first consult a lawyer before buying the property; that with ordinary
prudence, they should first have obtained the owners duplicate copies of the
TCTs before paying the full amount of the consideration; and that the sale
was void pursuant to Article 124 of the Family Code.24[24]

Ruling of the CA

As stated, the CA affirmed the RTC, opining that Article 124 of the
Family Code applied because Dionisio had not consented to the sale of the
conjugal property by Ma. Elena; and that the RTC correctly found the SPA to
be a forgery.

The CA denied the petitioners motion for reconsideration.25[25]

Issues

The petitioners now make two arguments: (1) they were buyers in
good faith; and (2) the CA erred in affirming the RTCs finding that the sale
between Mrs. Elena and the petitioners had been a nullity under Article 124
of the Family Code.

The petitioners impute error to the CA for not applying the ordinary
prudent mans standard in determining their status as buyers in good faith.
They contend that the more appropriate law to apply was Article 173 of the
Civil Code, not Article 124 of the Family Code; and that even if the SPA held
by Ma. Elena was a forgery, the ruling in Veloso v. Court of Appeals26[26]
warranted a judgment in their favor.

Restated, the issues for consideration and resolution are as follows:

1) Which between Article 173 of the Civil Code and Article 124 of
the Family Code should apply to the sale of the conjugal
property executed without the consent of Dionisio?

2) Might the petitioners be considered in good faith at the time

of their purchase of the property?

3) Might the ruling in Veloso v. Court of Appeals be applied in

favor of the petitioners despite the finding of forgery of the
SPA?

Ruling

The petition has no merit. We sustain the CA.

1.

Article 124, Family Code, applies to sale of conjugal

properties made after the effectivity of the Family Code

 The petitioners submit that Article 173 of the Civil Code, not Article
124 of the Family Code, governed the property relations of the respondents
because they had been married prior to the effectivity of the Family Code;
and that the second paragraph of Article 124 of the Family Code should not
apply because the other spouse held the administration over the conjugal
property. They argue that notwithstanding his absence from the country
Dionisio still held the administration of the conjugal property by virtue of his
execution of the SPA in favor of his brother; and that even assuming that
Article 124 of the Family Code properly applied, Dionisio ratified the sale
through Atty. Parulans counter-offer during the March 25, 1991 meeting.

We do not subscribe to the petitioners submissions.

To start with, Article 25427[27] the Family Code has expressly

repealed several titles under the Civil Code, among them the entire Title VI
in which the provisions on the property relations between husband and wife,
Article 173 included, are found.

Secondly, the sale was made on March 18, 1991, or after August 3,
1988, the effectivity of the Family Code. The proper law to apply is,
therefore, Article 124 of the Family Code, for it is settled that any alienation
or encumbrance of conjugal property made during the effectivity of the
Family Code is governed by Article 124 of the Family Code.28[28]

Article 124 of the Family Code provides:

Article 124. The administration and enjoyment of the

conjugal partnership property shall belong to both spouses
jointly. In case of disagreement, the husbands decision shall
prevail, subject to recourse to the court by the wife for proper
remedy, which must be availed of within five years from the date
of the contract implementing such decision.
 In the event that one spouse is incapacitated or
otherwise unable to participate in the administration of
the conjugal properties, the other spouse may assume
sole powers of administration. These powers do not
include disposition or encumbrance without authority of
the court or the written consent of the other spouse. In
the absence of such authority or consent, the disposition
or encumbrance shall be void. However, the transaction shall
be construed as a continuing offer on the part of the consenting
spouse and the third person, and may be perfected as a binding
contract upon the acceptance by the other spouse or
authorization by the court before the offer is withdrawn by either
or both offerors.

Thirdly, according to Article 25629[29] of the Family Code, the

provisions of the Family Code may apply retroactively provided no vested
rights are impaired. In Tumlos v. Fernandez,30[30] the Court rejected the
petitioners argument that the Family Code did not apply because the
acquisition of the contested property had occurred prior to the effectivity of
the Family Code, and pointed out that Article 256 provided that the Family
Code could apply retroactively if the application would not prejudice vested
or acquired rights existing before the effectivity of the Family Code. Herein,
however, the petitioners did not show any vested right in the property
acquired prior to August 3, 1988 that exempted their situation from the
retroactive application of the Family Code.

Fourthly, the petitioners failed to substantiate their contention that

Dionisio, while holding the administration over the property, had delegated
to his brother, Atty. Parulan, the administration of the property, considering
that they did not present in court the SPA granting to Atty. Parulan the
authority for the administration.

Nonetheless, we stress that the power of administration does not

include acts of disposition or encumbrance, which are acts of strict
ownership. As such, an authority to dispose cannot proceed from an
authority to administer, and vice versa, for the two powers may only be
exercised by an agent by following the provisions on agency of the Civil
Code (from Article 1876 to Article 1878). Specifically, the apparent authority
of Atty. Parulan, being a special agency, was limited to the sale of the
property in question, and did not include or extend to the power to
administer the property.31[31]

Lastly, the petitioners insistence that Atty. Parulans making of a

counter-offer during the March 25, 1991 meeting ratified the sale merits no
consideration. Under Article 124 of the Family Code, the transaction
executed sans the written consent of Dionisio or the proper court order was
void; hence, ratification did not occur, for a void contract could not be
ratified.32[32]

On the other hand, we agree with Dionisio that the void sale was a
continuing offer from the petitioners and Ma. Elena that Dionisio had the
option of accepting or rejecting before the offer was withdrawn by either or
both Ma. Elena and the petitioners. The last sentence of the second
paragraph of Article 124 of the Family Code makes this clear, stating that in
the absence of the other spouses consent, the transaction should be
construed as a continuing offer on the part of the consenting spouse and the
third person, and may be perfected as a binding contract upon the
acceptance by the other spouse or upon authorization by the court before
the offer is withdrawn by either or both offerors.

2.

Due diligence required in verifying not only vendors title,

but also agents authority to sell the property

A purchaser in good faith is one who buys the property of another,

without notice that some other person has a right to, or interest in, such
property, and pays the full and fair price for it at the time of such purchase
or before he has notice of the claim or interest of some other persons in the
property. He buys the property with the belief that the person from whom he
receives the thing was the owner and could convey title to the property. He
cannot close his eyes to facts that should put a reasonable man on his guard
and still claim he acted in good faith.33[33] The status of a buyer in good
faith is never presumed but must be proven by the person invoking it.34[34]

Here, the petitioners disagree with the CA for not applying the
ordinary prudent mans standard in determining their status as buyers in
good faith. They insist that they exercised due diligence by verifying the
status of the TCTs, as well as by inquiring about the details surrounding the
mortgage extended by the Los Baos Rural Bank. They lament the holding of
the CA that they should have been put on their guard when they learned
that the Los Baos Rural Bank had first required a court order before granting
the loan to the respondents secured by their mortgage of the property.

The petitioners miss the whole point.

Article 124 of the Family Code categorically requires the consent of

both spouses before the conjugal property may be disposed of by sale,
mortgage, or other modes of disposition. In Bautista v. Silva,35[35] the
Court erected a standard to determine the good faith of the buyers dealing
with

a seller who had title to and possession of the land but whose capacity to
sell was restricted, in that the consent of the other spouse was required
before the conveyance, declaring that in order to prove good faith in such a
situation, the buyers must show that they inquired not only into the title of
the seller but also into the sellers capacity to sell.36[36] Thus, the buyers of
conjugal property must observe two kinds of requisite diligence, namely: (a)
the diligence in verifying the validity of the title covering the property; and
(b) the diligence in inquiring into the authority of the transacting spouse to
sell conjugal property in behalf of the other spouse.

It is true that a buyer of registered land needs only to show that he

has relied on the face of the certificate of title to the property, for he is not
required to explore beyond what the certificate indicates on its face.37[37]
In this respect, the petitioners sufficiently proved that they had checked on
the authenticity of TCT No. 63376 and TCT No. 63377 with the Office of the
Register of Deeds in Pasay City as the custodian of the land records; and
that they had also gone to the Los Baos Rural Bank to inquire about the
mortgage annotated on TCT No. 63377. Thereby, the petitioners observed
the requisite diligence in examining the validity of the TCTs concerned.

Yet, it ought to be plain enough to the petitioners that the issue was
whether or not they had diligently inquired into the authority of Ma. Elena to
convey the property, not whether or not the TCT had been valid and
authentic, as to which there was no doubt. Thus, we cannot side with them.

Firstly, the petitioners knew fully well that the law demanded the
written consent of Dionisio to the sale, but yet they did not present evidence
to show that they had made inquiries into the circumstances behind the
execution of the SPA purportedly executed by Dionisio in favor of Ma. Elena.
Had they made the appropriate inquiries, and not simply accepted the SPA
for what it represented on its face, they would have uncovered soon enough
that the respondents had been estranged from each other and were under
de facto separation, and that they probably held conflicting interests that
would negate the existence of an agency between them. To lift this doubt,
they must, of necessity, further inquire into the SPA of Ma. Elena. The
omission to inquire indicated their not being buyers in good faith, for, as
fittingly observed in Domingo v. Reed:38[38]

What was required of them by the appellate court, which we

affirm, was merely to investigate as any prudent vendee should
 the authority of Lolita to sell the property and to bind the
partnership. They had knowledge of facts that should have led
them to inquire and to investigate, in order to acquaint
themselves with possible defects in her title. The law requires
them to act with the diligence of a prudent person; in this case,
their only prudent course of action was to investigate whether
respondent had indeed given his consent to the sale and
authorized his wife to sell the property.39[39]

Indeed, an unquestioning reliance by the petitioners on Ma. Elenas

SPA without first taking precautions to verify its authenticity was not a
prudent buyers move.40[40] They should have done everything within their
means and power to ascertain whether the SPA had been genuine and
authentic. If they did not investigate on the relations of the respondents vis-
-vis each other, they could have done other things towards the same end,
like attempting to locate the notary public who had notarized the SPA, or
checked with the RTC in Manila to confirm the authority of Notary Public
Atty. Datingaling. It turned out that Atty. Datingaling was not authorized to
act as a Notary Public for Manila during the period 1990-1991, which was a
fact that they could easily discover with a modicum of zeal.

Secondly, the final payment of P700,000.00 even without the owners

duplicate copy of the TCT No. 63376 being handed to them by Ma. Elena
indicated a revealing lack of precaution on the part of the petitioners. It is
true that she promised to produce and deliver the owners copy within a
week because her relative having custody of it had gone to Hongkong, but
their passivity in such an essential matter was puzzling light of their earlier
alacrity in immediately and diligently validating the TCTs to the extent of
inquiring at the Los Baos Rural Bank about the annotated mortgage. Yet,
they could have rightly withheld the final payment of the balance. That they
did not do so reflected their lack of due care in dealing with Ma. Elena.

Lastly, another reason rendered the petitioners good faith incredible.

They did not take immediate action against Ma. Elena upon discovering that
the owners original copy of TCT No. 63376 was in the possession of Atty.
Parulan, contrary to Elenas representation. Human experience would have
impelled them to exert every effort to proceed against Ma. Elena, including
demanding the return of the substantial amounts paid to her. But they
seemed not to mind her inability to produce the TCT, and, instead, they
contented themselves with meeting with Atty. Parulan to negotiate for the
possible turnover of the TCT to them.

3.

Veloso v. Court of Appeals cannot help petitioners

The petitioners contend that the forgery of the SPA notwithstanding,

the CA could still have decided in their favor conformably with Veloso v.
Court of Appeals,41[41] a case where the petitioner husband claimed that
his signature and that of the notary public who had notarized the SPA the
petitioner supposedly executed to authorize his wife to sell the property had
been forged. In denying relief, the Court upheld the right of the vendee as
an innocent purchaser for value.

Veloso is inapplicable, however, because the contested property

therein was exclusively owned by the petitioner and did not belong to the
conjugal regime. Veloso being upon conjugal property, Article 124 of the
Family Code did not apply.

In contrast, the property involved herein pertained to the conjugal

regime, and, consequently, the lack of the written consent of the husband
rendered the sale void pursuant to Article 124 of the Family Code. Moreover,
even assuming that the property involved in Veloso was conjugal, its sale
was made on November 2, 1987, or prior to the effectivity of the Family
Code; hence, the sale was still properly covered by Article 173 of the Civil
Code, which provides that a sale effected without the consent of one of the
spouses is only voidable, not void. However, the sale herein was made
already during the effectivity of the Family Code, rendering the application of
Article 124 of the Family Code clear and indubitable.
 The fault of the petitioner in Veloso was that he did not adduce
sufficient evidence to prove that his signature and that of the notary public
on the SPA had been forged. The Court pointed out that his mere allegation
that the signatures had been forged could not be sustained without clear and
convincing proof to substantiate the allegation. Herein, however, both the
RTC and the CA found from the testimonies and evidence presented by
Dionisio that his signature had been definitely forged, as borne out by the
entries in his passport showing that he was out of the country at the time of
the execution of the questioned SPA; and that the alleged notary public,
Atty. Datingaling, had no authority to act as a Notary Public for Manila
during the period of 1990-1991.

WHEREFORE, we deny the petition for review on certiorari, and affirm

the decision dated July 2, 2004 rendered by the Court of Appeals in C.A.-
G.R. CV No. 69044 entitled Dionisio Z. Parulan, Jr. vs. Ma. Elena Parulan and
Sps. Rex and Concepcion Aggabao and Sps. Rex and Concepcion Aggabao
vs. Dionisio Z. Parulan, Jr. and Ma. Elena Parulan.

Costs of suit to be paid by the petitioners.

SO ORDERED.

G.R. No. 116049 July 13, 1995

PEOPLE OF THE PHILIPPINES, petitioner,

vs.
HON. EUSTAQUIO Z. GACOTT, JR., Presiding Judge, RTC, Branch 47,
Puerto Princesa City, ARNE STROM and GRACE REYES, respondents.

RESOLUTION

REGALADO, J.:

Rebuffed by this Court through the annulment of his order dismissing

Criminal Case No. 11529 of the court a quo, complemented with a reprimand
and a fine of P10,000.00 for gross ignorance of the law, respondent Judge
Eustaquio Z. Gacott, Jr. has filed a motion for reconsideration dated April 1,
1995, and a supplemental motion for reconsideration dated April 26, 1995.

For reasons of his own but the purposes of which can easily be deduced,
separate copies of the basic motion were furnished the Chief Justice, Judicial
and Bar Council, Solicitor General, Bar Confidant, Integrated Bar of the
Philippines, Court Administrator and his deputies, Secretary of Justice, and
Ombudsman. Copies of the supplemental motion were also furnished by him
to the same officials or entities and, additionally, to the individual members
of this Court.

In the judgment now sought to be reconsidered, the Second Division of the

Court, speaking through Mr. Justice Abdulwahid A. Bidin, specified that the
only issue to be resolved in this case was whether or not respondent judge
gravely abused his discretion in granting the motion to quash the
aforementioned criminal case. We quote the pertinent portions of his
ponencia not only for easy reference but to serve as a basis for determining
whether the sanctions imposed were commensurate to the administrative
offense, to wit:

The error committed by respondent judge in dismissing the case

is quite obvious in the light of P.D. No. 1, LOI No. 2 and P.D. No.
1275 aforementioned. The intent to abolish the Anti-Dummy
Board could not have been expressed more clearly than in the
aforequoted LOI. Even assuming that the City Fiscal of Puerto
Princesa failed to cite P.D. No. 1 in his opposition to the Motion
to Quash, a mere perusal of the text of LOI No. 2 would have
immediately apprised the respondent judge of the fact that LOI
No. 2 was issued in implementation of P.D. No. 1. . . .

xxx xxx xxx

Obviously, respondent judge did not even bother to read the text
of the cited LOI; otherwise, he would have readily acknowledged
the validity of the argument advanced by the prosecution. As
correctly observed by the Solicitor General, Presidential Decrees,
such as P.D. No. 1, issued by the former President Marcos under
his martial law powers have the same force and effect as the
laws enacted by Congress. As held by the Supreme Court in the
case of Aquino vs. Comelec (62 SCRA 275 [1975]), all
proclamations, orders, decrees, instructions and acts
promulgated, issued or done by the former President are part of
the law of the land, and shall remain valid, legal, binding, and
effective, unless modified, revoked or superseded by subsequent
 proclamations, orders, decrees, instructions, or other acts of the
President. LOI No. 2 is one such legal order issued by former
President Marcos in the exercise of his martial law powers to
implement P.D. No. 1. Inasmuch as neither P.D. No. 1 nor LOI
No. 2 has been expressly or impliedly revoked or repealed, both
continue to have the force and effect of law (Rollo, pp. 7-8).

xxx xxx xxx

But even more glaring than respondent judge's utter inexcusable

neglect to check the citations of the prosecution is the mistaken
belief that the duty to inform the court on the applicable law to a
particular case devolves solely upon the prosecution or whoever
may be the advocate before the court. Respondent judge should
be reminded that courts are duty bound to take judicial notice of
all the laws of the land (Sec. 1, Rule 129, Rules of Court). Being
the trier of facts, judges are presumed to be well-informed of the
existing laws, recent enactments and jurisprudence, in keeping
with their sworn duty as members of the bar (and bench) to
keep abreast of legal developments. . . .

xxx xxx xxx

The court is fully aware that not every error or mistake of a

judge in the performance of his duties is subject to censure. But
where, as in the present case, the error could have been entirely
avoided were it not for the public respondent's irresponsibility in
the performance of his duties, it is but proper that respondent
judge be reprimanded and his order of dismissal set aside for
grave ignorance of the law. For, respondent judge's error is not
a simple error in judgment but one amounting to gross
ignorance of the law which could easily undermine the public's
perception of the court's competence.

We could stop here, since the rehashed arguments raised by respondent

judge in his aforesaid original and supplemental motions are completely
refuted by the foregoing discussion demonstrative not only of his
adjudicatory error but also of judicial incompetence. In fact, just to cite a
few representative cases, it may be worthwhile for respondent judge to
ponder upon the Court's observations in Aducayan vs. Flores, etc., et al.,1
Ajeno vs. Inserto,2 Libarios vs. Dabalos,3 and Estoya, et al. vs. Singson,
etc.,4 which would put his asseverations at rest.
Respondent judge, however, would want this Court to pass upon his other
supplications, arguments, and even his insinuations for that matter, which
although born more of fecundity in formulation and less of bases in law, we
have decided to anatomize even with some expense of prolixity.

Respondent judge prefaces his remedial approach with the assurance that
"(t)he only purpose of (h)is motion is to plead with bended knees and with
all humility for the kind reconsideration" of the decision in this case,
specifically the findings that he is "grossly ignorant of the law and as such,
(he) was reprimanded and fined in the amount of P10,000.00; and that the
aforesaid decision is to be spread on (his) personal records."5

He adverts to his good conduct as a person and as a judge, reiterates that

the error primarily stemmed from the shortcomings of the public prosecutor
and, on a personal note, he expresses this concern: ". . . I am again begging
with humility that the spreading of the aforesaid Decision on my personal
records be reconsidered because doing so will foreclose any chance for me
to aspire for promotion in the judiciary in the future. This is very painful. I
will agonize up to my last day and my last breath in life."6

The Court assures respondent judge that it has taken all the aforesaid
matters into consideration and is not insensitive thereto, including his
argumentum ad misericordiam. It feels, however, that there is more than
ample substantiation for the findings of the ponente in the main case, and
compelling legal warrant for the administrative penalties imposed which are
even milder than those meted by it under similar and comparable situations.

The spreading of the decision on the personal record of a respondent is an

official procedure and requirement which, incredibly, respondent judge
would want this very Court to violate and forego, in suppression of facts
which must appear in official documents. His further argument that

The spreading of such decision on my personal records will not

only open criticisms on my private qualifications as a minister in
the temple of justice but will open more comments on my official
acts, competence and credibility as a judge that might
undermine the people's faith in the judicial system in the
Province of Palawan, in Puerto Princesa City and in the entire
country because it is always difficult to disassociate my private
credential from that of my public qualifications.7

is, to put it mildly, a mite too exaggerated and a tad too melodramatic. The
Court regrets that respondent judge appears unaware that he is actually the
recipient of uncommon sympathetic consideration in this case.
Administrative penalties do not play the final strains of the valkyrian chant
to a public career, judicial or otherwise. It is for respondent judge, by
subsequently demonstrating his true worth through observance of judicial
standards, to vindicate himself from a misjudgment which is the heritage of
the heedless and to rise to higher levels which is the destiny of the
deserving. Besides, it is a curious fact that assuming as valid his meticulosity
on the confidential nature of disciplinary cases, he nevertheless sent copies
of his motions to all the persons enumerated at the start of this resolution. It
is elementary that copies of such motions are merely filed with the court and
furnished only to the adverse party. Here, he wants us to keep sub rosa
what he himself publicizes.

From his initial exhibition of humility and penitential pose, respondent judge
then goes into a critical second gear by rhetorically wondering aloud in this
fashion:

On July 27, 1994, the Third Division of the Honorable Supreme

Court required me to comment on the above-entitled petition.
On August 23, 1994 I filed my comment thereto and on October
24, 1994, in a Resolution the Third Division of the Supreme
Court resolved to note my Comment. When the Third Division of
the Honorable Court required me to comment in G.R. No.
116049, the supposition is that a valid raffle of said case to that
Division had already been made. That was my thinking and
impression for, why would the case go to that Division except
thru a valid raffle. I am now in quandary, however, as to why all
of a sudden, G.R. No. 116049 was transferred to the Second
Division of the Supreme Court without us or any party being
informed by the Honorable Supreme Court about it. In our level
at the Regional Trial Court in Palawan, we observe the raffle of
cases with solemnity and abide by the result of the raffle
faithfully. And the said Second Division meted me out excessive
penalties when it was the Third Division that required me to
comment. Why did this happen? (Emphasis supplied.)8

Since this was obviously spoken with the ascriptive courage of the
uninformed, we assure His Honor that the Supreme Court also conducts "a
valid raffle," observes such raffle of its cases "with solemnity," and abides by
the result thereof "faithfully." This case was validly and solemnly raffled to
Mr. Justice Bidin who was then with the Third Division of the Court. On
January 23, 1995, he was transferred to the Second Division where he
served as working chairman until his retirement on April 7, 1995. In
accordance with the internal rules of the Court, this case remained with him
as the original ponente and he accordingly penned the decision therein for
and as a member of the Second Division. There is no rule in the Court that
the parties be informed that a case has been transferred to another division,
as respondent judge would want or expect. To do so would easily be
revelatory of the identity of the ponente which is precisely what some
litigants used to, and still, watch for and speculate upon.

In anticipation of a similar insinuendo, respondent judge is further informed

that because of the retirement of Mr. Justice Bidin and the uncertainty of the
date when his replacement could act upon his unfinished cases and the
subsequent proceedings therein, after its summer session and working
recess the Court en banc, after due deliberation on respondent judge's
successive motions, decided to assign the preparation of this resolution to
the present writer thereof, he having been and still is with the Second
Division. Respondent judge, with his claim of extensive magisterial
experience, should have verified all the foregoing facts from the records of
this Court, instead of proceeding upon speculations.

Finally, shifting to what he obviously fancies to be high gear on a

constitutional basis, respondent judge questions the competence of the
Second Division of this Court to administratively discipline him. Exordially, a
mere allegatio nudus does not create a constitutional issue as to require the
referral of this case, or at least the disciplinary aspect thereof, to the Court
en banc. The disposition of that matter merely involves a clarification of the
misconception of respondent judge thereon, presumably because of his
unfamiliarity with circulars adopted and followed by this Court, some of them
being on internal procedure. Be that as it may, since all the members of this
Court are aware of the submissions of respondent judge on this point
through the copies of the motions which he furnished them, and he
insistently harps on constitutional grounds therein, the Court en banc
resolved to accept this aspect of the case from the Second Division.

His Honor relies on the second sentence of Section 11, Article VIII of the
present Constitution which reads: "The Supreme Court en banc shall have
the power to discipline judges of lower courts, or order their dismissal by a
vote of a majority of the Members who actually took part in the deliberations
on the issues in the case and voted thereon." This provision is an expansion
of and was taken from the second sentence of Section 7, Article X of the
1973 Constitution which provided: "The Supreme Court shall have the power
to discipline judges of inferior courts and, by a vote of at least eight
Members, order their dismissal."

Stress is apparently laid by respondent judge on the inclusion of the

adverbial phrase "en banc" in referring to this Court in the quoted provision
of the 1987 Constitution and, from this, he argues that it is only the full
Court, not a division thereof, that can administratively punish him.

Fortuitously, the writer of this resolution, as a member of the Committee on

the Judiciary of the 1986 Constitutional Commission, had the opportunity to
take up that precise matter with the committee chairman, retired Chief
Justice Roberto Concepcion, by pointing out the equivalent provision in the
1973 Constitution, hereinbefore quoted, which merely referred to the
"Court," without qualification. It was accordingly explained and agreed that
insofar as the power to discipline is concerned, the qualification was not
intended to make a difference, as a reference to the Court by itself
necessarily means the Court en banc. It was only decided to state "en banc"
there because all internal procedural and administrative matters, as well as
ceremonial functions, are always decided by or conducted in the Court en
banc. On the other hand, where the reference is to the Court acting through
its divisions, it would necessarily be so specified. For lack of transcription of
the proceedings of the committees of said Commission, the writer has
perforce to rely on his recollection and notes, but he assures this Court of
the foregoing facts as they transpired.

At any rate, the very text of the present Section 11 of Article VIII clearly
shows that there are actually two situations envisaged therein. The first
clause which states that "the Supreme Court en banc shall have the power
to discipline judges of lower courts," is a declaration of the grant of that
disciplinary power to, and the determination of the procedure in the exercise
thereof by, the Court en banc. It was not therein intended that all
administrative disciplinary cases should be heard and decided by the whole
Court since it would result in an absurdity, as will hereafter be explained.

The second clause, which refers to the second situation contemplated

therein and is intentionally separated from the first by a comma, declares on
the other hand that the Court en banc can "order their dismissal by a vote of
a majority of the Members who actually took part in the deliberations on the
issues in the case and voted therein." Evidently, in this instance, the
administrative case must be deliberated upon and decided by the full Court
itself.

Pursuant to the first clause which confers administrative disciplinary power

to the Court en banc, on February 9, 1993 a Court En Banc resolution was
adopted, entitled "Bar Matter No. 209. In the Matter of the Amendment
and/or Clarification of Various Supreme Court Rules and Resolutions," and
providing inter alia:

For said purpose, the following are considered en banc cases:

 xxx xxx xxx

6. Cases where the penalty to be imposed is the dismissal of a

judge, officer or employee of the Judiciary, disbarment of a
lawyer, or either the suspension of any of them for a period of
more than one (1) year or a fine exceeding P10,000.00, or both.

xxx xxx xxx

This resolution was amended on March 16, 1993 and November 23, 1993,
but the aforequoted provision was maintained.

Indeed, to require the entire Court to deliberate upon and participate in all
administrative matters or cases regardless of the sanctions, imposable or
imposed, would result in a congested docket and undue delay in the
adjudication of cases in the Court, especially in administrative matters, since
even cases involving the penalty of reprimand would require action by the
Court en banc. This would subvert the constitutional injunction for the Court
to adopt a systematic plan to expedite the decision or resolution of cases or
matters pending in the Supreme Court or the lower courts,9 and the very
purpose of authorizing the Court to sit en banc or in divisions of three, five,
or seven members. 10

Yet, although as thus demonstrated, only cases involving dismissal of judges

of lower courts are specifically required to be decided by the Court en banc,
in cognizance of the need for a thorough and judicious evaluation of serious
charges against members of the judiciary, it is only when the penalty
imposed does not exceed suspension of more than one year or a fine of
P10,000.00, or both, that the administrative matter may be decided in
division.

It must not also be overlooked that as early as February 7, 1989, the Court
promulgated Circular No. 2-89 which clarifies that:

xxx xxx xxx

2. A decision or resolution of a Division of the Court, when

concurred in by a majority of its members who actually took part
in the deliberations on the issues in a case and voted thereon,
and in no case without the concurrence of at least three of such
Members, is a decision or resolution of the Supreme Court
(Section 4[3], Article VIII, 1987 Constitution).
That guideline or rule in the referral to the Court en banc of cases assigned
to a division thereof rests on the same rationale and applies with equal force
to confute the antithetical theory of respondent Judge Eustaquio Z. Gacott,
Jr. Apropos thereto, it would indeed be desirable for said respondent to
hereafter deal with situations like the one subject of this resolution with
more perspicacity and circumspection.

WHEREFORE, the basic and supplemental motions for reconsideration of the

judgment in the case at bar are hereby DENIED. This resolution is
immediately final and executory.

SO ORDERED.

[G.R. No. 102330. November 25, 1998]

TERESITA C. FRANCISCO, petitioner, vs. HON. COURT OF APPEALS; and

CONCHITA EVANGELISTA and Her Husband SIMEON EVANGELISTA;
ARACELI F. MARILLA and Her Husband FREDDY MARILLA; ANTONIO V.
FRANCISCO; and EUSEBIO FRANCISCO, respondents.

DECISION

QUISUMBING, J.:

This petition for review on certiorari seeks to reverse respondent appellate

courts decisioni[1] promulgated on October 7, 1991, affirming in toto the
judgment of the Regional Trial Court which ruled,ii[2] thus:

WHEREFORE, premises considered, this Court renders judgment in

favor of the defendants and against the plaintiff, as follows:

1) Ordering the dismissal of the Complaint with costs against the plaintiff;

2) Declaring the defendant Eusebio Francisco the administrator of the

properties described in paragraph eight (8) of the Complaint; and

3) Sentencing the plaintiff to pay the defendants the sum of P10,000.00 as

and for attorneys fees.

SO ORDERED.

Petitioner is the legal wife of private respondent Eusebio Francisco (Eusebio)

by his second marriage. Private respondents Conchita Evangelista, Araceli F.
Marilla and Antonio Francisco are children of Eusebio by his first marriage.
Petitioner alleges that since their marriage on February 10, 1962, she and
Eusebio have acquired the following: (1) a sari-sari store, a residential house
and lot, and an apartment house, all situated at Col. S. Cruz St., Barangay
Balite, Rodriguez (formerly Montalban), Rizal, and; (2) a house and lot at
Barrio San Isidro, Rodriguez, Rizal. Petitioner further avers that these
properties were administered by Eusebio until he was invalidated on account
of tuberculosis, heart disease and cancer, thereby, rendering him unfit to
administer them. Petitioner also claims that private respondents succeeded
in convincing their father to sign a general power of attorney which
authorized Conchita Evangelista to administer the house and lot together
with the apartments situated in Rodriguez, Rizal.

On August 31, 1988, petitioner filed a suit for damages and for annulment of
said general power of attorney, and thereby enjoining its enforcement.
Petitioner also sought to be declared as the administratrix of the properties
in dispute. In due course, the trial court rendered judgment in favor of
private respondents. It held that the petitioner failed to adduce proof that
said properties were acquired during the existence of the second conjugal
partnership, or that they pertained exclusively to the petitioner. Hence, the
court ruled that those properties belong exclusively to Eusebio, and that he
has the capacity to administer them.

On appeal, the Court of Appeals affirmed in toto the decision of the trial
court. Hence, this petition.

Petitioner raised the following errors allegedly committed by the appellate

court:

FIRST ASSIGNMENT OF ERROR

RESPONDENT COURT ERRED IN APPLYING ARTICLES 160 AND 158,

UNDER TITLE VI OF THE (NEW) CIVIL CODE BECAUSE SAID TITLE,
TOGETHER WITH THE OTHERS, HAVE (SIC) ALREADY BEEN
REPEALED BY ARTICLE 253 OF THE FAMILY CODE.

SECOND ASSIGNMENT OF ERROR

RESPONDENT COURT FURTHER ERRED IN NOT APPLYING ARTICLE

124 OF THE FAMILY CODE.iii[3]

But in her reply, petitioner posed the sole issue whether or not Article 116 of
the Family Code applies to this case because Article 253 of the same Code
[which] expressly repeals Arts. 158 and 160 of the Civil Code.iv[4]
To our mind, the crucial issue in this petition is whether or not the appellate
court committed reversible error in affirming the trial courts ruling that the
properties, subject matter of controversy, are not conjugal but the capital
properties of Eusebio exclusively.

Indeed, Articles 158v[5] and 160vi[6] of the New Civil Code have been
repealed by the Family Code of the Philippines which took effect on August
3, 1988. The aforecited articles fall under Title VI, Book I of the New Civil
Code which was expressly repealed by Article 254vii[7] (not Article 253 as
alleged by petitioner in her petition and reply) of the Family Code.
Nonetheless, we cannot invoke the new law in this case without impairing
prior vested rights pursuant to Article 256viii[8] in relation to Article
105ix[9] (second paragraph) of the Family Code. Accordingly, the repeal of
Articles 158 and 160 of the New Civil Code does not operate to prejudice or
otherwise affect rights which have become vested or accrued while the said
provisions were in force.x[10] Hence, the rights accrued and vested while
the cited articles were in effect survive their repeal.xi[11] We shall therefore
resolve the issue of the nature of the contested properties based on the
provisions of the New Civil Code.

Petitioner contends that the subject properties are conjugal, thus, she
should administer these on account of the incapacity of her husband. On the
other hand, private respondents maintain that the assets in controversy
claimed by petitioner as conjugal are capital properties of Eusebio
exclusively as these were acquired by the latter either through inheritance or
through his industry prior to his second marriage. Moreover, they stress that
Eusebio is not incapacitated contrary to petitioners allegation.

We find petitioners contention lacks merit, as hereafter elucidated.

Article 160 of the New Civil Code provides that all property of the marriage is
presumed to belong to the conjugal partnership, unless it be proved that it
pertains exclusively to the husband or to the wife. However, the party who
invokes this presumption must first prove that the property in controversy
was acquired during the marriage.xii[12] Proof of acquisition during the
coverture is a condition sine qua non for the operation of the presumption in
favor of the conjugal partnership.xiii[13] The party who asserts this
presumption must first prove said time element. Needless to say, the
presumption refers only to the property acquired during the marriage and
does not operate when there is no showing as to when property alleged to
be conjugal was acquired.xiv[14] Moreover, this presumption in favor of
conjugality is rebuttable, but only with strong, clear and convincing
evidence; there must be a strict proof of exclusive ownership of one of the
spouses.xv[15]
In this case, petitioner failed to adduce ample evidence to show that the
properties which she claimed to be conjugal were acquired during her
marriage with Eusebio.

With respect to the land at Col. Cruz St., Balite, Rodriguez, Rizal, petitioner
failed to refute the testimony of Eusebio that he inherited the same from his
parents. Interestingly, petitioner even admitted that Eusebio brought into
their marriage the said land, albeit in the concept of a possessor only as it
was not yet registered in his name.

Whether Eusebio succeeded to the property prior or subsequent to his

second marriage is inconsequential. The property should be regarded as his
own exclusively, as a matter of law, pursuant to Article 148xvi[16] of the
New Civil Code.

Essentially, property already owned by a spouse prior to the marriage, and

brought to the marriage, is considered his or her separate property.xvii[17]
Acquisitions by lucrative title refers to properties acquired gratuitously and
include those acquired by either spouse during the marriage by inheritance,
devise, legacy, or donation.xviii[18] Hence, even if it be assumed that
Eusebios acquisition by succession of the land took place during his second
marriage, the land would still be his exclusive property because it was
acquired by him, during the marriage, by lucrative title.xix[19]

As regards the house, apartment and sari-sari store, private respondents

aver that these properties were either constructed or established by their
father during his first marriage. On the other hand, petitioner insists that the
said assets belong to conjugal partnership. In support of her claim,
petitioner relied on the building permits for the house and the apartment,
with her as the applicant although in the name of Eusebio. She also invoked
the business license for the sari-sari store issued in her name alone.

It must be emphasized that the aforementioned documents in no way prove

that the improvements were acquired during the second marriage. And the
fact that one is the applicant or licensee is not determinative of the issue as
to whether or not the property is conjugal or not. As the appellate court
aptly noted:

x x x. And the mere fact that plaintiff-appellant [petitioner herein] is

the licensee of the sari-sari store (Exhibit F-3; Exhibit G, pp. 44-47,
Record) or is the supposed applicant for a building permit does not
establish that these improvements were acquired during her marriage
with Eusebio Francisco, especially so when her exhibits (D-1, E, E-1,
T, T-1, T-2, U, U-1 and U-2; pp. 38-40; 285-290, Record; TSN,
 January 17, 1989, page 6-7) are diametrically opposed to her
pretense as they all described Eusebio Francisco as the owner of the
structures (Article 1431, New Civil Code; Section 4, Rule 129,
Revised Rules on Evidence).
Neither is it plausible to argue that the sari-sari store constructed on
the land of Eusebio Francisco has thereby become conjugal for want
of evidence to sustain the proposition that it was constructed at the
expense of their partnership (second paragraph, Article 158, New
Civil Code). Normally, this absence of evidence on the source of
funding will call for the application of the presumption under Article
160 of the New Civil Code that the store is really conjugal but it
cannot be so in this particular case again, by reason of the dearth in
proof that it was erected during the alleged second marriage (5
Sanchez Roman 840-841; 9 Manresa; cited in Civil Code of the
Philippines by Tolentino, Volume 1, 1983 Edition, page 421).xx[20]

Regarding the property at San Isidro, Rodriguez, Rizal, private respondents

assert that their father purchased it during the lifetime of their mother. In
contrast, petitioner claims ownership over said property inasmuch as the
title thereto is registered in the name of Eusebio Francisco, married to
Teresita Francisco.

It must be stressed that the certificate of title upon which petitioner anchors
her claim is inadequate. The fact that the land was registered in the name of
Eusebio Francisco, married to Teresita Francisco, is no proof that the
property was acquired during the spouses coverture. Acquisition of title and
registration thereof are two different acts.xxi[21] It is well settled that
registration does not confer title but merely confirms one already
existing.xxii[22] The phrase married to preceding Teresita Francisco is
merely descriptive of the civil status of Eusebio Francisco.xxiii[23]

In the light of the foregoing circumstances, the appellate court cannot be

said to have been without valid basis in affirming the lower courts ruling that
the properties in controversy belong exclusively to Eusebio.

Now, insofar as the administration of the subject properties is concerned, it

follows that Eusebio shall retain control thereof considering that the assets
are exclusively his capital.xxiv[24] Even assuming for the sake of argument
that the properties are conjugal, petitioner cannot administer them
inasmuch as Eusebio is not incapacitated. Contrary to the allegation of
petitioner, Eusebio, as found by the lower court, is not suffering from serious
illness so as to impair his fitness to administer his properties. That he is
handicapped due to a leg injury sustained in a bicycle accident, allegedly
aggravated when petitioner pushed him to the ground in one of their
occasional quarrels, did not render him, in the Courts view, incapacitated to
perform acts of administration over his own properties.

WHEREFORE, petition is hereby DENIED. The Decision of the Court of

Appeals is AFFIRMED.

Costs against petitioner.

SO ORDERED.

A.M. No. 203-J November 18, 1975

THE SECRETARY OF JUSTICE, complainant,

vs.
JUDGE ALFREDO CATOLICO, respondent.

A.M. No. 625-CFI November 18, 1975

FERMINA OLAES, complainant,

vs.
JUDGE ALFREDO CATOLICO, respondent.

BARREDO, J.:

Two administrative complaints with four charges, the first three of them formulated by
the Secretary of Justice, against Judge Alfredo Catolico of Branch III of the Court of
First Instance of Cavite charging him with "serious misconduct and gross disregard of
law." It may be mentioned at the outset that the action taken by the Secretary of justice
must have been caused by the following portion of the decision of the Court in the case
of People vs. Judge Alfredo Catolico, 38 SCRA 389:

11. In view of the rash and improper actuations of respondent judge,

which could have resulted in a serious miscarriage of justice, the Court
has resolved that this matter be brought to the attention of the Secretary of
Justice for the initiation of appropriate administrative action, as the facts
and circumstances warrant. This is in fact the third case involving
respondent judge that has thus been resolved to be officially brought to
the Secretary's attention the two others being the contempt proceedings in
Barrera vs. Barrera, supra, and the prohibition proceedings in Queto vs.
Catolico. (31 SCRA 52 [Jan. 23, 1970.])

The first complaint arose out of the actuations in October of 1965 of respondent, then
acting as Judge of the Court of First Instance of Misamis Occidental, relative to the
naturalization cases of over fifty naturalized citizens wherein said respondent not only
declared motu proprio, without any corresponding petition of the Republic of the
Philippines, null and void the oath taking of therein petitioners, with the aggravating
circumstance that, without priorly hearing the petitioner concerned, "the respondent
delivered in open court a lengthy dissertation reflecting on the honesty and integrity of
provincial and city fiscals appearing in naturalization cases, and venting his spleen
particularly on Chua Tuan, referred to him as a Chinese who had become a multi-
millionaire by making over shipments of copra, who was "untouchable because he could
buy his way out in Malacaang, in the Army, in the Foreign Affairs, in the Immigration, in
the Bureau of Internal Revenue and in the Courts of Justice," of which the respondent
said he would take judicial notice. The respondent further castigated Chua Tuan with
the following epithets: "balasuba;" ingrate; "hambug;" animalistic; a danger and a
disgrace to the community; a dishonor to the Filipino people." (Pars. 5 & 6, p. 2 of
complaint.)

The second and third complaints relate to the insistence of respondent to consider
himself as without jurisdiction to continue trying every case, civil and criminal, which he
found had not been tried for more than thirty days since the respective previous
hearings therein, for which reason, he ordered their dismissal, with aggravating
circumstance, that he refused to recognize not only the authority of the Court to
authorize the continuation of the corresponding proceedings but also the personality of
the Clerk of this Court to transmit to him the pertinent resolutions of the Court in the
usual form in which parties have always been notified in all cases of resolutions of the
Court.

The fourth complaint was filed by the widow of the victim, Mrs. Fermina Olaes, in a case
of homicide in which the arraignment was held on October 3, 1973 and the hearings
were set on October 15, November 23 and 27, December 6, 12, 17, 18, 20, 21 and 26,
1973 and January 2, 3 and 4, 1974 and the decision acquitting the accused was
promulgated by respondent on January 10, 1974, two days before he reached the age
of 70 years, the complainant charging that respondent hurried, in preference to other
cases in his sala which deserved earlier attention, the trial with the intention of being
able to finish and decide the same favorably to the accused before he (the judge) could
retire, with the aggravating circumstance that:

2. Respondent during the hearing of December 26, 1973 was so carried

away by his emotions that he was, for two hours, the one asking questions
to the prosecution's witness; and that in the process, respondent "bullied,
ridiculed, frightened, threatened (there was even an instance when the
judge was banging the table with his own fist) and humiliated the witness.

3. Respondent has the propensity to ridicule the witness manifested in his

questions regarding the illness of the witness when he asked the latter if
he was examined by a veterinarian.
 4. Respondent tried the case with a "wrapped-up decision-that of acquittal
"manifested in his order dated December 26, 1973:

... and in order to disabuse any fear on the part of the prosecution for
indeed the prosecution always believes that anybody accused must have
to be sentenced to die if necessary and can not admit into their mind that
there are doubt that may linger longer in the mind of the Court and can not
be explained by any amount of oral testimony because the prosecution
cannot present evidence enough for the conviction of the accused beyond
any doubt ... (Pars. 2 to 4, page 2 of Report.)

In his answers, respondent claims that all his impugned actuations were motivated by
his desire to comply with the rules and the law and, most of all, the best interests of
justice which require the speedy and expeditious disposition of cases. In regard to what
he did in the naturalization cases aforementioned, respondent avers that the rulings of
this Court sustain him in his view that the petitioners in the said cases had not validly
become Filipino citizens because they had taken their oaths of allegiance prematurely,
and since this fact was evident in the record, he could act motu proprio to require them
to validate their said oaths. He denies having improperly castigated Chua Tan. Anent
the last complaint, respondent maintains he had nothing to do with the preparation of
the calendar and denies having been actuated any bias or prejudice either in his
questioning of the witnesses or in acquitting the accused. And as a general and
fundamental defense, respondent pleads that "if at all there was any error committed it
is of the mind rather than of the heart".

For the obvious reason that all the facts involved in the first three complaints relate to
matters of record in the proceedings in this Court in which respondent had been duly
heard, no further administrative proceedings were held after respondent filed his
answer. The fourth case was referred to Justice Buenaventura de la Fuente of the Court
of Appeals for appropriate investigation. The report was submitted on August 1, 1975.

In connection with respondent's actuations involved in the first charge of the Secretary
of Justice, the Court has in a way already admonished respondent. In the decision in
Queto vs. Catolico, 31 SCRA 52, Chief Justice Makalintal spoke for the Court thus:

Judges, in their zeal to uphold the law, should not lose the proper judicial
perspective, and should see to it that in the execution of their sworn duties
they do not overstep the limitations of their power as laid down by statute
and by the rules of procedure. If they arrogate unto themselves the
authority allocated to other officials, there can be no consequence but
confusion in the administration of justice and, in many instances,
oppressive disregard of the basic requirements of due process.
With reference to the second and third charges of the Secretary, the Court has already
reprimanded respondent in its decision in Barrera vs. Barrera, 34 SCRA 98, and thru
Justice Fernando, We therein stated:

Given the opportunity to explain both in a memorandum and in oral

argument, he remained adamant and obdurate. It was apparent he was
not averse to disciplinary action being visited on his conduct. ...

What calls for disciplinary action is the recklessness with which

respondent judge did hurl the baseless allegation that the Clerk of this
Court was permitted to exercise an authority which appertained to the
Chief Justice. He did speak with all the valor of ignorance. Nor did he
retreat from such an indefensible stand in the face of his being informed
that what the Clerk did was solely in accordance with what was previously
decided by this Court, which certainly will not tolerate, anybody else, much
less a subordinate, to speak and act for itself. This gross disrespect shown
to this Court has no justification. The misdeed of respondent judge is
compounded by such an accusation apparently arising from his
adamantine conviction that a doctrine of this Court that fails to meet his
approval need not be applied ... "

In People vs. Catolico, 38 SCRA 389, Justice Teehankee added the following strictures:

9. Respondent judge's capricious dismissal of cases in his court in Cavite,

based on his own unique appreciation of the provisions of Rule 22, section
3 of the Revised Rules of Court to the effect' that upon the lapse of three
months from the first day of trial on the merits, the trial judge lost control of
the same, and may not continue trying the same [when there is no written
authority from the Chief Justice of the Supreme Court] for the only thing
possible to be done is to dismiss the case,' (Respondent judge's
comments to the contempt charge against him, notes in brackets supplied,
in Barrera vs. Barrera, 34 SCRA 98) notwithstanding his awareness of this
Court's contrary ruling in Barrueco, supra, was already noted by the Court
in Barrera vs. Barrera (Supra, fn. 17) decided on July 31, 1970. In said
case, where respondent judge was held in contempt of this court and
reprimanded, he was reminded of his duty to apply the law as interpreted
by this Court "as the final arbiter of any justiciable controversy' and of the
great mischief and prejudice to the administration of justice, and
unnecessary inconvenience, delay and expenses to litigants, that would
be needlessly caused, should judges of lower courts dispose of cases in
accordance with their personal views contrary to the final authoritative
pronouncements of this Court. The Court has noted that the inconsistency
of respondent judge's present posture that he loses control of a case upon
the lapse of three months from the first day of trial on the merits and has
only to dismiss the case was brought out at the contempt hearing in said
 case when he admitted that he did not follow such a course of action in
the other trial courts presided by him, viz, the Courts of First Instance or
Misamis Occidental and of Ilocos Norte, prior to his appointment to the
Cavite court.

10. In the same case of Barrera, this Court, per Mr. Justice Enrique M.
Fernando, already found respondent judge in contempt for recklessly
"hurling the baseless allegation that the Clerk of this Court was permitted
to exercise an authority which appertained to the Chief Justice. He did
speak with all the valor of ignorance. Nor did he retreat from such an
indefensible stand in the face of his being informed that what the Clerk did
was solely in accordance with what was previously decided by this Court,
which certainly will not tolerate, anybody else, much less a subordinate, to
speak and act for itself. This gross disrespect shown to this Court has no
justification."

In his present order of denial of the People's motion for reconsideration,

respondent judge committed the same reckless act of making it appear in
his Order that it was the Clerk of this Court who "informs the presiding
judge that he is extending authority to continue hearing and trying, until
finished all criminal cases pending ...," notwithstanding that the Clerk of
this Court signed the communication expressly "By authority of the Chief
Justice.

Such action of respondent judge, aside from being grossly disrespectful of

the Court, exposes his lack of appreciation or disregard of the time-
honored usage of the Court that minute resolutions, summons and
processes of the Court as well as official actions of the Chief Justice, upon
being duly adopted and recorded are transmitted to the interested parties
by and upon the signature of the Clerk of Court who is duly authorized to
do so. With the thousands of resolutions approved monthly by the Court, it
would unduly tax the time and attention of the Chief Justice and members
of the Court to the prejudice of the administration of justice if all such
papers, other than decisions, could be released only upon their own
signatures. The situation is analogous to administrative decisions signed
by the Executive Secretary "by authority of the President," which decisions
are given full faith and credit by our courts as decisions of the President,
"unless disapproved or reprobated by the Chief Executive." (Lacson-
Magallanes Co., Inc. vs. Pao, 21 SCRA 895 [Nov. 17, 1967].).

Anent the fourth charge, the report of the investigator is to the effect that the actuations
of respondent complained of by Mrs. Olaes were not due to any improper or personal
motive and were just the result of the innocuous eccentricities and odd ways and ideas
of respondent which could not be categorized as serious misconduct nor deserving of
any heavier sanction than admonition.
While the Court was awaiting said report, however, in a letter dated April 17, 1975,
respondent informed the Court that His Excellency, President Ferdinand E. Marcos had
accepted his resignation effective January 11, 1974, "without prejudice to his receiving
whatever rights he may be entitled to under the retirement and other existing laws."
Premises considered, and in line with the established policy regarding similar situations
wherein the President has accepted resignations without prejudice to the grant of legally
possible retirement benefits thus rendering administrative cases pending against the
official concerned, moot and academic, the Court resolved to DISMISS above-entitled
cases.

G.R. Nos. 119987-88 October 12, 1995

THE PEOPLE OF THE PHILIPPINES, petitioner,

vs.
HON. LORENZO B. VENERACION, Presiding Judge of the Regional Trial Court, National Capital Judicial Region, Branch 47, Manila,
HENRY LAGARTO y PETILLA and ERNESTO CORDERO, respondents.

KAPUNAN, J.:

The sole issue in the case at bench involves a question of law. After finding that an accused individual in a criminal case has, on the
occasion of Rape, committed Homicide, is the judge allowed any discretion in imposing either the penalty of Reclusion Perpetua or Death?

The facts antecedent to the case before this Court, as narrated by petitioner,1 involve the perpetration of acts so bizarre and devoid of
humanity as to horrify and numb the senses of all civilized men:

On August 2, 1994, the cadaver of a young girl, later identified as Angel Alquiza wrapped in a sack and yellow table
cloth tied with a nylon cord with both feet and left hand protruding from it was seen floating along Del Pan St. near the
corner of Lavesares St., Binondo, Manila.

When untied and removed from its cover, the lifeless body of the victim was seen clad only in a light colored duster
without her panties, with gaping wounds on the left side of the face, the left chin, left ear, lacerations on her genitalia,
and with her head bashed in.

On the basis of sworn statements of witnesses, booking sheets, arrest reports and the necropsy report of the victim, Abundio Lagunday,
a.k.a. Jr. Jeofrey of no fixed address, and Henry Lagarto y Petilla, of 288 Area H. Parola Compound, Tondo, Manila were later charged with
the crime of Rape with Homicide in an Information dated August 8, 1994 filed with the Regional Trial Court of Manila, National Capital
Judicial Region. Said Information, docketed as Criminal Case No. 94-138071, reads:

That on or about August 2, 1994, in the City of Manila, Philippines, the said accused, conspiring and confederating
together with one alias "LANDO" and other persons whose true names, identifies and present whereabouts are still
unknown and helping one another, with treachery, taking advantage of their superior strength and nocturnity, and
ignominy, and with the use of force and violence, that is, by taking ANGEL ALQUIZA y LAGMAN into a warehouse,
covering her mouth, slashing her vagina, hitting her head with a thick piece of wood and stabbing her neck did then and
there wilfully, unlawfully and feloniously have carnal knowledge of the person of said ANGEL ALQUIZA y LAGMAN, a
minor, seven (7) years of age, against the latter's will and consent and on said occasion the said ABUNDIO
LAGUNDAY, a.k.a. "LANDO" and others, caused her fatal injuries which were the direct cause of her death
immediately thereafter.

CONTRARY TO LAW.

Subsequently thereafter, Ernesto Cordero y Maristela, a.k.a. "Booster," of 1198 Sunflower St., Tondo, Manila, Rolando
Manlangit y Mamerta, a.k.a. "Lando," of 1274 Kagitingan St., Tondo, Manila, Richard Baltazar y Alino, a.k.a. "Curimao,"
also of 1274 Kagitingan St., Tondo, Manila, and Catalino Yaon y Aberin, a.k.a. "Joel," of 1282 Lualhati St., Tondo,
Manila were accused of the same crime of Rape with Homicide in an Information dated August 11, 1994, docketed as
Criminal Case No. 94-138138, allegedly committed as follows:
 That on or about the 2nd day of August, 1994, in the City of Manila, Philippines, the said accused
conspiring and confederating with ABUNDIO LAGUNDAY Alias "JR," JEOFREY and HENRY
LAGARTO y PETILLA who have already been charged in the Regional Trial Court of Manila of
the same offense under Criminal Case No. 94-138071, and helping one another, with treachery,
taking advantage of their superior strength and nocturnity and ignominy, and with the use of force
and violence, that is, by taking ANGEL ALQUIZA y LAGMAN into a pedicab, and once helpless,
forcibly bringing her to a nearby warehouse, covering her mouth, slashing her vagina, hitting her
head with a thick piece of wood and stabbing her neck, did then and there wilfully, unlawfully and
feloniously have carnal knowledge of the person of said ANGEL ALQUIZA y LAGMAN, a minor,
seven (7) years of age, against the latter's will and consent and on said occasion the said
accused together with their confederates ABUNDIO LAGARTO y PETILLA caused her fatal
injuries which were the direct cause of her death immediately thereafter.

CONTRARY TO LAW.

The two criminal cases were consolidated to Branch 47 of the Regional Trial Court of Manila, presided over by
respondent Judge.

Duly arraigned, all the accused, except Abundio Lagunday who was already dead, (allegedly shot by police escorts
after attempting to fire a gun he was able to grab from SPO1 D. Vidad on August 12, 1994), pleaded "Not Guilty."
Abundio Lagunday was dropped from the Information.

After trial and presentation of the evidence of the prosecution and the defense, the trial court rendered a decision2 on January 31, 1995
finding the defendants Henry Lagarto y Petilla and Ernesto Cordero y Maristela guilty beyond reasonable doubt of the crime of Rape with
Homicide and sentenced both accused with the "penalty of reclusion perpetua with all the accessories provided for by law."3 Disagreeing
with the sentence imposed, the City Prosecutor of Manila on February 8, 1995, filed a Motion for Reconsideration, praying that the Decision
be "modified in that the penalty of death be imposed" against respondents Lagarto and Cordero, in place of the original penalty (reclusion
perpetua). Refusing to act on the merits of the said Motion for Reconsideration, respondent Judge, on February 10, 1995, issued an Order
denying the same for lack of jurisdiction. The pertinent portion reads:

The Court believes that in the above-entitled cases, the accused Lagarto and Cordero have complied with the legal
requirements for the perfection of an appeal. Consequently, for lack of jurisdiction, this Court cannot take cognizance of
the Motion for Reconsideration of the Public Prosecutor of Manila.

WHEREFORE, the order earlier issued by this Court regarding the Notices of Appeal filed by both herein accused is
hereby reiterated.

The Clerk of this Court is hereby directed to transmit the complete records of these cases, together with the notices of
appeal, to the Honorable Supreme Court, in accordance with Sec. 8, Rule 122 of the Revised Rules of Criminal
Procedure.

SO ORDERED.

Hence, the instant petition.

The trial court's finding of guilt is not at issue in the case at bench. The basis of the trial court's determination of guilt and its conclusions will
only be subject to our scrutiny at an appropriate time on appeal. We have thus clinically limited our narration of events to those cold facts
antecedent to the instant case relevant to the determination of the legal question at hand, i.e., whether or not the respondent judge acted
with grave abuse of discretion and in excess of jurisdiction when he failed and/or refused to impose the mandatory penalty of death under
Republic Act No. 7659, after finding the accused guilty of the crime of Rape with Homicide.

We find for petitioner.

Obedience to the rule of law forms the bedrock of our system of justice. If judges, under the guise of religious or political beliefs were allowed
to roam unrestricted beyond boundaries within which they are required by law to exercise the duties of their office, then law becomes
meaningless. A government of laws, not of men excludes the exercise of broad discretionary powers by those acting under its authority.
Under this system, judges are guided by the Rule of Law, and ought "to protect and enforce it without fear or favor,"4 resist encroachments
by governments, political parties,5 or even the interference of their own personal beliefs.

In the case at bench, respondent judge, after weighing the evidence of the prosecution and the defendant at trial found the accused guilty
beyond reasonable doubt of the crime of Rape with Homicide. Since the law in force at the time of the commission of the crime for which
respondent judge found the accused guilty was Republic Act No. 7659, he was bound by its provisions.

Section 11 of R.A. No. 7659 provides:

 Sec. 11. Article 335 of the same Code is hereby amended to read as follows:

Art. 335. When and how rape is committed. Rape is committed by having carnal knowledge of a woman under any
of the following circumstances:

1. By using force or intimidation.

2. When the woman is deprived of reason or otherwise unconscious; and

3. When the woman is under twelve years of age or is demented.

The crime of rape shall be punished by reclusion perpetua.

Whenever the crime of rape is committed with the use of a deadly weapon or by two or more persons, the penalty shall
be reclusion perpetua to death.

When by reason or on the occasion of the rape, the victim has become insane, the penalty shall be death.

When the rape is attempted or frustrated and a homicide is committed by reason or on the occasion thereof, the
penalty shall be reclusion perpetua to death.

When by reason or on the occasion of the rape, a homicide is committed, the penalty shall be death. . . .6

Clearly, under the law, the penalty imposable for the crime of Rape with Homicide is not Reclusion Perpetua but Death. While Republic Act
7659 punishes cases of ordinary rape with the penalty of Reclusion Perpetua, it allows judges the discretion depending on the existence
of circumstances modifying the offense committed to impose the penalty of either Reclusion Perpetua only in the three instances
mentioned therein. Rape with homicide is not one of these three instances. The law plainly and unequivocably provides that "[w]hen by
reason or on the occasion of rape, a homicide is committed, the penalty shall be death." The provision leaves no room for the exercise of
discretion on the part of the trial judge to impose a penalty under the circumstances described, other than a sentence of death.

We are aware of the trial judge's misgivings in imposing the death sentence because of his religious convictions. While this Court
sympathizes with his predicament, it is its bounden duty to emphasize that a court of law is no place for a protracted debate on the morality
or propriety of the sentence, where the law itself provides for the sentence of death as a penalty in specific and well-defined instances. The
discomfort faced by those forced by law to impose the death penalty is an ancient one, but it is a matter upon which judges have no choice.
Courts are not concerned with the wisdom, efficacy or morality of laws. In People vs. Limaco 7 we held that:

[W]hen . . . private opinions not only form part of their decision but constitute a decisive factor in arriving at a conclusion
and determination of a case or the penalty imposed, resulting in an illegality and reversible error, then we are
constrained to state our opinion, not only to correct the error but for the guidance of the courts. We have no quarrel with
the trial judge or with anyone else, layman or jurist as to the wisdom or folly of the death penalty. Today there are quite
a number of people who honestly believe that the supreme penalty is either morally wrong or unwise or ineffective.
However, as long as that penalty remains in the statute books, and as long as our criminal law provides for its
imposition in certain cases, it is the duty of judicial officers to respect and apply the law regardless of their private
opinions. It is a well settled rule that the courts are not concerned with the wisdom, efficacy or morality of laws. That
question falls exclusively within the province of the Legislature which enacts them and the Chief Executive who
approves or vetoes them. The only function of the judiciary is to interpret the laws and, if not in disharmony with the
Constitution, to apply them. And for the guidance of the members of the judiciary we feel it incumbent upon us to state
that while they as citizens or as judges may regard a certain law as harsh, unwise or morally wrong, and may
recommend to the authority or department concerned, its amendment, modification, or repeal, still, as long as said law
is in force, they must apply it and give it effect as decreed by the law-making body.8

Finally, the Rules of Court mandates that after an adjudication of guilt, the judge should impose "the proper penalty and civil liability provided
for by the law on the accused."9 This is not a case of a magistrate ignorant of the law. This is a case in which a judge, fully aware of the
appropriate provisions of the law, refuses to impose a penalty to which he disagrees. In so doing, respondent judge acted without or in
excess of his jurisdiction or with grave abuse of discretion amounting to a lack of jurisdiction in imposing the penalty of Reclusion Perpetua
where the law clearly imposes the penalty of Death.

WHEREFORE, PREMISES CONSIDERED, the instant petition is GRANTED. The case is hereby REMANDED to the Regional Trial Court
for the imposition of the penalty of death upon private respondents in consonance with respondent judge's finding that the private
respondents in the instant case had committed the crime of Rape with Homicide under Article 335 of the Revised Penal Code, as amended
by Section 11 of Republic Act No. 7659, subject to automatic review by this Court of the decision imposing the death penalty.

SO ORDERED.
PEPSICO, INC., now known as the
PEPSI COLA COMPANY, G.R. No. 146007
Petitioner,

Present:

- versus - QUISUMBING, J., Chairperson,

CARPIO,

CARPIO MORALES,

JAIME LACANILAO, TINGA, and

Respondent. VELASCO, JR., JJ.

x-----------------------x

PEPSI-COLA PRODUCTS PHILS., G.R. No. 146295

INC.,

Petitioner,

- versus -

Promulgated:

COURT OF APPEALS and JAIME

LACANILAO,

Respondents. June 2006

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
 DECISION

QUISUMBING, J.:

Once again, the Court is called upon to rule on the rights and liabilities of the parties
involved in the ill-fated Number Fever fiasco that befell Pepsi-Cola Products Phils., Inc. (PCPPI)
and PEPSICO, Inc. (PI) more than a decade ago involving the number combination 349.

The instant consolidated petition for review on certiorari is an appeal from the
Decisioni[1] dated February 4, 1999 and Resolutioni[2] dated November 10, 2000 of the Court
of Appeals in CA G.R. CV No. 50438, which ordered petitioners to pay respondent the sum of
P1,050,000 as aggregate prize for two allegedly winning crowns in the promotional campaign
sponsored by petitioners.

The facts are undisputed.

Petitioner PCPPI is a domestic corporation engaged in the production, bottling, and

distribution of soft drink products namely, Pepsi, 7-Up, Mirinda, and Mountain Dew. Petitioner
PI is a foreign corporation licensed to do business in the Philippines and is the major stockholder
of PCPPI. Respondent Jaime Lacanilao is a holder of two soft drink bottle caps bearing the
number 349.

The controversy began when petitioners hired D.G. Consultores, a Mexican consulting
firm, to randomly pre-select the winning numbers and send a list of the 60 winning combination
with their corresponding security codes. The process of selecting the winning numbers was
conducted with the approval of the Department of Trade and Industry (DTI).

Accordingly, during the initial promotional period from February 17 to May 8, 1992,
petitioners seeded 1000 numbers, 60 of which were winning numbers, 510 were non-winning
numbers, and the remaining 430 were unused.i[3] To ensure that the winning numbers would
not be tampered, the DTI required petitioners to submit the list of the winning numbers including
their security codes and to deposit the said list in a safety deposit box in a bank.
 Owing to its success, petitioners extended the Number Fever promotion by five more
weeks, from May 12 to June 12, 1992. Petitioners again tapped D.G. Consultores to
predetermine the 25 additional winning numbers from the list of unused numbers.

On May 25, 1992, petitioners announced 349 as the winning number. It turned out that
the draw was marred by a security code problem. Quintin J. Gomez, Jr., then PCPPIs Marketing
Services Manager, immediately called the DTI to relay the information that a mistake had been
made in the announcement of 349 as the winning number. On May 28, 1992, petitioners,
together with the DTI, opened the safety deposit box where the list of winning numbers had been
kept and it was verified that crowns bearing the number 349 and security codes L-2560-FQ and
L-3560-FQ were not winning crowns.

Consequently, petitioners did not honor holders of crowns bearing the number 349 with
security codes L-2560-FQ and L-3560-FQ. Some of these rejected crown holders, tenaciously
believing that they were entitled to the cash prize, resorted to violence against petitioners employees
and properties.

To appease the holders of the non-winning 349 crowns, petitioners offered to pay P500
for every non-winning 349 crown that would be presented on or before June 12, 1992. About
490,116i[4] holders of non-winning 349 crowns took advantage of petitioners goodwill gesture.

Still, a great many disgruntled holders of the non-winning 349 crowns, including
respondent herein, filed against petitioners separate complaints for recovery of the cash prize and
damages. Three of such cases, Rodrigo v. PCPPI, Mendoza v. PCPPI, and De Mesa v. Pepsi
Cola Products Phils., Inc.i[5] were dismissed at the trial court level, but eventually reached this
Court.

In the Rodrigo and Mendoza cases, this Court denied the petition for review on certiorari
for failure to show that a reversible error had been committed by the Court of Appeals in
affirming the trial courts finding that the security code was an indispensable element of a
winning crown and that PCPPI and PI were not negligent in the conduct of their promotional
campaign.
 In the De Mesa case, on the other hand, the trial court dismissed the complaint outright
based on the principle of stare decisis. Upon review on certiorari, this Court affirmed the trial
courts dismissal of the complaint considering the finality of the parallel cases of Rodrigo and
Mendoza.

As for the complaint filed by respondent Jaime Lacanilao, the trial court ruled differently,
to wit:

WHEREFORE, finding preponderance of evidence in favor of the

plaintiff, judgment is hereby rendered against the defendants as follows:

1) Declaring the plaintiff as rightful winner in the Number Fever

promotional campaign conducted by the defendants from February 17, 1992 up to
June 12, 1992, and entitled to the prize agreed upon;

2) Ordering the defendants jointly and severally to pay the plaintiff the
amount of P1,050,000.00 representing his legitimate prize for two (2) winning
crowns within ten (10) days from finality of this decision with legal interest until
[fully] paid;

3) Ordering the defendants to pay the plaintiff jointly and severally the
amount of P100,000.00 as moral damages, P100,000.00 as exemplary damages,
P25,000.00 as attorneys fees and P25,000.00 as reimbursement for transportation
and meals with costs;

4) Dismissing defendants counterclaim for being frivolous and

unsubstantiated.i[6]

The Court of Appeals, in its assailed Decision, affirmed with modification the
aforequoted judgment, thus:

WHEREFORE, the foregoing considered, the Decision of the lower court

in Civil Case No. 92-13022 dated 20 July 1995, is hereby MODIFIED. The
portion of the said Decision declaring plaintiff-appellant Jaime Lacanilao as a
lawful winner of the Number Fever promotion conducted by defendants-
appellants, and ordering the latter to pay unto plaintiff-appellant (sic) the sum of
PESOS: ONE MILLION FIFTY THOUSAND (P1,050,000.00) as the aggregate
prize for two (2) winning crowns (one for P1,000,000.00 and another for
P50,000.00), together with legal interests thereon from 25 May 1992 until the
same is paid in full, and the dismissal of defendants-appellants counterclaims, are
hereby AFFIRMED. The award of moral and exemplary damages, attorneys fees
and costs of litigation in the form of reimbursement for transportation and meals,
is however REVERSED and DELETED.
 No costs.

SO ORDERED.i[7]

Hence, the instant consolidated petition separately filed by PCPPI and PI. Petitioner
PCPPI submitted the following issues:

I. WHETHER OR NOT THIS CASE SHOULD BE DISMISSED ON THE

BASIS OF THE RESOLUTIONS OF THIS HONORABLE COURT IN
THE CASE OF RODRIGO.

II. WHETHER OR NOT PEPSIS COMPROMISE WITH MR.

LACANILAO IS CONTRARY TO LAW, MORALS, GOOD
CUSTOMS, PUBLIC POLICY OR PUBLIC ORDER.

III. WHETHER OR NOT MR. LACANILAO HAS EXPRESSLY WAIVED

HIS CLAIMS AGAINST PEPSI.

IV. WHETHER OR NOT THE TERMS OF THE NUMBER FEVER

PROMOTION CLEARLY STATED THAT EACH CROWN/CAP WITH
A WINNING NUMBER AND AUTHENTICATED SECURITY CODE
WINS THE AMOUNT PRINTED ON THE CROWN/CAP.

V. WHETHER OR NOT THE MECHANICS OF THE NUMBER FEVER

PROMOTION AMOUNTS TO A CONTRACT OF ADHESION.

VI. WHETHER OR NOT PEPSI WAS AWARE OF THE HIDDEN

DEFECT IN THE MASTER LIST OF WINNING CROWNS FOR THE
EXTENSION PERIOD WHEN, IN GOOD FAITH, IT OFFERED 349
AS THE NUMBER OF A WINNING CROWN.

VII. WHETHER OR NOT THE OFFER HAD ALREADY BEEN

WITHDRAWN AT THE TIME MR. LACANILAO ACCEPTED PEPSIS
OFFER OF 349 AS THE NUMBER OF A WINNING CROWN FOR 26
MAY 1992.

VIII. WHETHER OR NOT D.G. CONSULTORES WAS AN

INDEPENDENT CONTRACTOR, NOT AN AGENT, OF PEPSI.

IX. WHETHER OR NOT THERE WAS PROOF OF A COMPARABLE

SNAFU IN CHILE.

X. WHETHER OR NOT THE COMPLAINT BELOW SHOULD HAVE

BEEN DISMISSED FOR LACK OF THE REQUIRED CERTIFICATE
OF NON-FORUM SHOPPING.
XI. WHETHER OR NOT PAYMENT OF NON-WINNING 349 CROWNS
BY PEPSI WOULD RENDER THE SERVICE SO DIFFICULT AS TO
BE MANIFESTLY BEYOND THE CONTEMPLATION OF THE
PARTIES.i[8]

Petitioner PI, on the other hand, put forth the following issues:

A. Whether or not the Court of Appeals had the authority to rule on

respondents claims, even after the latter had expressly waived his cause of action
and prayed to set aside the judgment in his favor.

B. Whether or not the fundamental principles of res judicata and stare

decisis should be applied in this case in view of previous, final and executory
judgments on the same facts and issues.

C. Whether or not the Court of Appeals, in disregarding:

i. the nature of the Number Fever Promotion, as an under-the-

crown promotion, where only specific preselected crowns seeded into
the trade were intended to win; and

ii. the rules of the promotion whereby the security codes, along
with the printed three (3)-digit numbers and prizes, identified each
specific preselected crown,

decided questions of substance in a manner not in accord with law and the law
between the parties.

D. Whether or not the Court of Appeals conclusion that D.G. Consultores

was not an independent contractor, but an agent of Pepsi, is in accordance with
applicable jurisprudence.

E. Whether or not Pepsi was negligent in the conduct of the promotion.

Assuming arguendo that Pepsi was negligent, whether or not it was proper to
award the prizes indicated on the 349 crowns to respondent, rather than the actual
damages proximately caused by the alleged negligence.

F. Whether or not mistake, under which petitioner labored, vitiated its

consent, and that unilateral mistake suffices to annul a contract.

G. Whether or not Article 1267 of the Civil Code and the doctrine of
adjustment of rights apply in this case.i[9]
 For his part, respondent Jaime Lacanilao in his Commenti[10] abandoned all claims
against petitioners. He instead confirmed the execution of a compromise agreement where he had
waived and withdrawn all claims subject of his complaint against petitioners. He reiterated the
Manifestation dated October 29, 1999, which he filed with the Court of Appeals, to the effect
that he joins petitioners motion for reconsideration of the appellate courts judgment.

As respondent has joined petitioners cause and considering the recent pronouncement of
this Court in De Mesa v. Pepsi Cola Products Phils., Inc.,i[11] the sole issue for resolution now
is whether the principle of stare decisis can likewise be applied in the instant case.

We rule in the affirmative.

When a court has laid down a principle of law as applicable to a certain set of facts, it
will adhere to that principle and apply it to all future cases in which the facts are substantially the
same. Stare decisis et non quieta movere. Stand by the decision and disturb not what is settled. It
simply means that a conclusion reached in one case should be applied to those that follow if the
facts are substantially the same, even though the parties may be different. It comes from the basic
principle of justice that like cases ought to be decided alike. Thus, where the same question
relating to the same event is brought by parties similarly situated as in a previous case already
litigated and decided by a competent court, the rule of stare decisis is a bar to any attempt to
relitigate the same issue.i[12]

The Rodrigo and Mendoza cases were both decided by this Court through a minute
resolution. It is axiomatic that when a minute resolution denies a petition for lack of merit, the
challenged decision, together with its findings of fact and legal conclusions, is deemed
sustained.i[13]

The De Mesa case, on the other hand, was decided on the strength of the stare decisis
doctrine considering that the legal rights and relations of the parties, the facts, the applicable
laws, the causes of action, the issues, and the evidence are exactly the same as those in the
decided cases of Rodrigo and Mendoza.
 The instant case falls squarely within the same set of facts as the Rodrigo, Mendoza, and De
Mesa cases, which all ruled that the security code number was an indispensable element of a winning
crown and that petitioners were not negligent in the conduct of their promotional campaign.

The issues surrounding the 349 incident have been laid to rest and must no longer be
disturbed in this decision. Otherwise, a situation could arise where decisions would conflict,
rendering inutile the Courts finding in the earlier cases, and undermining the integrity of the Court
and its capacity to dispense justice equally.

Accordingly, since respondent Jaime Lacanilao is not a holder of the winning 349
crowns, petitioners are not liable to him for the payment of the cash prize. Further, there being no
proof of negligence on the part of petitioners in the conduct of their promotional campaign,
neither should they be held liable to respondent for damages. Respondent having withdrawn all
claims against petitioners, and all parties now united in seeking reconsideration of the appellate
courts judgment, the reversal of the appellate courts judgment is in order.

WHEREFORE, the petition is GRANTED. The assailed Decision dated February 4,

1999 and the Resolution dated November 10, 2000 of the Court of Appeals in CA G.R. CV No.
50438, are REVERSED and SET ASIDE.

No pronouncement as to costs.

SO ORDERED.

G.R. No. L-19650 September 29, 1966

CALTEX (PHILIPPINES), INC., petitioner-appellee,

vs.
ENRICO PALOMAR, in his capacity as THE POSTMASTER GENERAL, respondent-
appellant.

Office of the Solicitor General for respondent and appellant.

Ross, Selph and Carrascoso for petitioner and appellee.
CASTRO, J.:

In the year 1960 the Caltex (Philippines) Inc. (hereinafter referred to as Caltex) conceived and
laid the groundwork for a promotional scheme calculated to drum up patronage for its oil
products. Denominated "Caltex Hooded Pump Contest", it calls for participants therein to
estimate the actual number of liters a hooded gas pump at each Caltex station will dispense
during a specified period. Employees of the Caltex (Philippines) Inc., its dealers and its
advertising agency, and their immediate families excepted, participation is to be open
indiscriminately to all "motor vehicle owners and/or licensed drivers". For the privilege to
participate, no fee or consideration is required to be paid, no purchase of Caltex products
required to be made. Entry forms are to be made available upon request at each Caltex station
where a sealed can will be provided for the deposit of accomplished entry stubs.

A three-staged winner selection system is envisioned. At the station level, called "Dealer
Contest", the contestant whose estimate is closest to the actual number of liters dispensed by the
hooded pump thereat is to be awarded the first prize; the next closest, the second; and the next,
the third. Prizes at this level consist of a 3-burner kerosene stove for first; a thermos bottle and a
Ray-O-Vac hunter lantern for second; and an Everready Magnet-lite flashlight with batteries and
a screwdriver set for third. The first-prize winner in each station will then be qualified to join in
the "Regional Contest" in seven different regions. The winning stubs of the qualified contestants
in each region will be deposited in a sealed can from which the first-prize, second-prize and
third-prize winners of that region will be drawn. The regional first-prize winners will be entitled
to make a three-day all-expenses-paid round trip to Manila, accompanied by their respective
Caltex dealers, in order to take part in the "National Contest". The regional second-prize and
third-prize winners will receive cash prizes of P500 and P300, respectively. At the national level,
the stubs of the seven regional first-prize winners will be placed inside a sealed can from which
the drawing for the final first-prize, second-prize and third-prize winners will be made. Cash
prizes in store for winners at this final stage are: P3,000 for first; P2,000 for second; Pl,500 for
third; and P650 as consolation prize for each of the remaining four participants.

Foreseeing the extensive use of the mails not only as amongst the media for publicizing the
contest but also for the transmission of communications relative thereto, representations were
made by Caltex with the postal authorities for the contest to be cleared in advance for mailing,
having in view sections 1954(a), 1982 and 1983 of the Revised Administrative Code, the
pertinent provisions of which read as follows:

SECTION 1954. Absolutely non-mailable matter. No matter belonging to any of the

following classes, whether sealed as first-class matter or not, shall be imported into the
Philippines through the mails, or to be deposited in or carried by the mails of the
Philippines, or be delivered to its addressee by any officer or employee of the Bureau of
Posts:
 Written or printed matter in any form advertising, describing, or in any manner pertaining
to, or conveying or purporting to convey any information concerning any lottery, gift
enterprise, or similar scheme depending in whole or in part upon lot or chance, or any
scheme, device, or enterprise for obtaining any money or property of any kind by means
of false or fraudulent pretenses, representations, or promises.

"SECTION 1982. Fraud orders.Upon satisfactory evidence that any person or

company is engaged in conducting any lottery, gift enterprise, or scheme for the
distribution of money, or of any real or personal property by lot, chance, or drawing of
any kind, or that any person or company is conducting any scheme, device, or enterprise
for obtaining money or property of any kind through the mails by means of false or
fraudulent pretenses, representations, or promises, the Director of Posts may instruct any
postmaster or other officer or employee of the Bureau to return to the person, depositing
the same in the mails, with the word "fraudulent" plainly written or stamped upon the
outside cover thereof, any mail matter of whatever class mailed by or addressed to such
person or company or the representative or agent of such person or company.

SECTION 1983. Deprivation of use of money order system and telegraphic transfer
service.The Director of Posts may, upon evidence satisfactory to him that any person
or company is engaged in conducting any lottery, gift enterprise or scheme for the
distribution of money, or of any real or personal property by lot, chance, or drawing of
any kind, or that any person or company is conducting any scheme, device, or enterprise
for obtaining money or property of any kind through the mails by means of false or
fraudulent pretenses, representations, or promise, forbid the issue or payment by any
postmaster of any postal money order or telegraphic transfer to said person or company
or to the agent of any such person or company, whether such agent is acting as an
individual or as a firm, bank, corporation, or association of any kind, and may provide by
regulation for the return to the remitters of the sums named in money orders or
telegraphic transfers drawn in favor of such person or company or its agent.

The overtures were later formalized in a letter to the Postmaster General, dated October 31,
1960, in which the Caltex, thru counsel, enclosed a copy of the contest rules and endeavored to
justify its position that the contest does not violate the anti-lottery provisions of the Postal Law.
Unimpressed, the then Acting Postmaster General opined that the scheme falls within the
purview of the provisions aforesaid and declined to grant the requested clearance. In its counsel's
letter of December 7, 1960, Caltex sought a reconsideration of the foregoing stand, stressing that
there being involved no consideration in the part of any contestant, the contest was not, under
controlling authorities, condemnable as a lottery. Relying, however, on an opinion rendered by
the Secretary of Justice on an unrelated case seven years before (Opinion 217, Series of 1953),
the Postmaster General maintained his view that the contest involves consideration, or that, if it
does not, it is nevertheless a "gift enterprise" which is equally banned by the Postal Law, and in
his letter of December 10, 1960 not only denied the use of the mails for purposes of the proposed
contest but as well threatened that if the contest was conducted, "a fraud order will have to be
issued against it (Caltex) and all its representatives".
Caltex thereupon invoked judicial intervention by filing the present petition for declaratory relief
against Postmaster General Enrico Palomar, praying "that judgment be rendered declaring its
'Caltex Hooded Pump Contest' not to be violative of the Postal Law, and ordering respondent to
allow petitioner the use of the mails to bring the contest to the attention of the public". After
issues were joined and upon the respective memoranda of the parties, the trial court rendered
judgment as follows:

In view of the foregoing considerations, the Court holds that the proposed 'Caltex
Hooded Pump Contest' announced to be conducted by the petitioner under the rules
marked as Annex B of the petitioner does not violate the Postal Law and the respondent
has no right to bar the public distribution of said rules by the mails.

The respondent appealed.

The parties are now before us, arrayed against each other upon two basic issues: first, whether
the petition states a sufficient cause of action for declaratory relief; and second, whether the
proposed "Caltex Hooded Pump Contest" violates the Postal Law. We shall take these up in
seriatim.

1. By express mandate of section 1 of Rule 66 of the old Rules of Court, which was the
applicable legal basis for the remedy at the time it was invoked, declaratory relief is available to
any person "whose rights are affected by a statute . . . to determine any question of construction
or validity arising under the . . . statute and for a declaration of his rights thereunder" (now
section 1, Rule 64, Revised Rules of Court). In amplification, this Court, conformably to
established jurisprudence on the matter, laid down certain conditions sine qua non therefor, to
wit: (1) there must be a justiciable controversy; (2) the controversy must be between persons
whose interests are adverse; (3) the party seeking declaratory relief must have a legal interest in
the controversy; and (4) the issue involved must be ripe for judicial determination (Tolentino vs.
The Board of Accountancy, et al., G.R. No. L-3062, September 28, 1951; Delumen, et al. vs.
Republic of the Philippines, 50 O.G., No. 2, pp. 576, 578-579; Edades vs. Edades, et al., G.R.
No. L-8964, July 31, 1956). The gravamen of the appellant's stand being that the petition herein
states no sufficient cause of action for declaratory relief, our duty is to assay the factual bases
thereof upon the foregoing crucible.

As we look in retrospect at the incidents that generated the present controversy, a number of
significant points stand out in bold relief. The appellee (Caltex), as a business enterprise of some
consequence, concededly has the unquestioned right to exploit every legitimate means, and to
avail of all appropriate media to advertise and stimulate increased patronage for its products. In
contrast, the appellant, as the authority charged with the enforcement of the Postal Law,
admittedly has the power and the duty to suppress transgressions thereof particularly thru the
issuance of fraud orders, under Sections 1982 and 1983 of the Revised Administrative Code,
against legally non-mailable schemes. Obviously pursuing its right aforesaid, the appellee laid
out plans for the sales promotion scheme hereinbefore detailed. To forestall possible difficulties
in the dissemination of information thereon thru the mails, amongst other media, it was found
expedient to request the appellant for an advance clearance therefor. However, likewise by virtue
of his jurisdiction in the premises and construing the pertinent provisions of the Postal Law, the
appellant saw a violation thereof in the proposed scheme and accordingly declined the request. A
point of difference as to the correct construction to be given to the applicable statute was thus
reached. Communications in which the parties expounded on their respective theories were
exchanged. The confidence with which the appellee insisted upon its position was matched only
by the obstinacy with which the appellant stood his ground. And this impasse was climaxed by
the appellant's open warning to the appellee that if the proposed contest was "conducted, a fraud
order will have to be issued against it and all its representatives."

Against this backdrop, the stage was indeed set for the remedy prayed for. The appellee's
insistent assertion of its claim to the use of the mails for its proposed contest, and the challenge
thereto and consequent denial by the appellant of the privilege demanded, undoubtedly spawned
a live controversy. The justiciability of the dispute cannot be gainsaid. There is an active
antagonistic assertion of a legal right on one side and a denial thereof on the other, concerning a
real not a mere theoretical question or issue. The contenders are as real as their interests
are substantial. To the appellee, the uncertainty occasioned by the divergence of views on the
issue of construction hampers or disturbs its freedom to enhance its business. To the appellant,
the suppression of the appellee's proposed contest believed to transgress a law he has sworn to
uphold and enforce is an unavoidable duty. With the appellee's bent to hold the contest and the
appellant's threat to issue a fraud order therefor if carried out, the contenders are confronted by
the ominous shadow of an imminent and inevitable litigation unless their differences are settled
and stabilized by a tranquilizing declaration (Pablo y Sen, et al. vs. Republic of the Philippines,
G.R. No. L-6868, April 30, 1955). And, contrary to the insinuation of the appellant, the time is
long past when it can rightly be said that merely the appellee's "desires are thwarted by its own
doubts, or by the fears of others" which admittedly does not confer a cause of action. Doubt,
if any there was, has ripened into a justiciable controversy when, as in the case at bar, it was
translated into a positive claim of right which is actually contested (III Moran, Comments on the
Rules of Court, 1963 ed., pp. 132-133, citing: Woodward vs. Fox West Coast Theaters, 36 Ariz.,
251, 284 Pac. 350).

We cannot hospitably entertain the appellant's pretense that there is here no question of
construction because the said appellant "simply applied the clear provisions of the law to a given
set of facts as embodied in the rules of the contest", hence, there is no room for declaratory relief.
The infirmity of this pose lies in the fact that it proceeds from the assumption that, if the
circumstances here presented, the construction of the legal provisions can be divorced from the
matter of their application to the appellee's contest. This is not feasible. Construction, verily, is
the art or process of discovering and expounding the meaning and intention of the authors of the
law with respect to its application to a given case, where that intention is rendered doubtful,
amongst others, by reason of the fact that the given case is not explicitly provided for in the law
(Black, Interpretation of Laws, p. 1). This is precisely the case here. Whether or not the scheme
proposed by the appellee is within the coverage of the prohibitive provisions of the Postal Law
inescapably requires an inquiry into the intended meaning of the words used therein. To our
mind, this is as much a question of construction or interpretation as any other.
Nor is it accurate to say, as the appellant intimates, that a pronouncement on the matter at hand
can amount to nothing more than an advisory opinion the handing down of which is anathema to
a declaratory relief action. Of course, no breach of the Postal Law has as yet been committed.
Yet, the disagreement over the construction thereof is no longer nebulous or contingent. It has
taken a fixed and final shape, presenting clearly defined legal issues susceptible of immediate
resolution. With the battle lines drawn, in a manner of speaking, the propriety nay, the
necessity of setting the dispute at rest before it accumulates the asperity distemper, animosity,
passion and violence of a full-blown battle which looms ahead (III Moran, Comments on the
Rules of Court, 1963 ed., p. 132 and cases cited), cannot but be conceded. Paraphrasing the
language in Zeitlin vs. Arnebergh 59 Cal., 2d., 901, 31 Cal. Rptr., 800, 383 P. 2d., 152, cited in
22 Am. Jur., 2d., p. 869, to deny declaratory relief to the appellee in the situation into which it
has been cast, would be to force it to choose between undesirable alternatives. If it cannot obtain
a final and definitive pronouncement as to whether the anti-lottery provisions of the Postal Law
apply to its proposed contest, it would be faced with these choices: If it launches the contest and
uses the mails for purposes thereof, it not only incurs the risk, but is also actually threatened with
the certain imposition, of a fraud order with its concomitant stigma which may attach even if the
appellee will eventually be vindicated; if it abandons the contest, it becomes a self-appointed
censor, or permits the appellant to put into effect a virtual fiat of previous censorship which is
constitutionally unwarranted. As we weigh these considerations in one equation and in the spirit
of liberality with which the Rules of Court are to be interpreted in order to promote their object
(section 1, Rule 1, Revised Rules of Court) which, in the instant case, is to settle, and afford
relief from uncertainty and insecurity with respect to, rights and duties under a law we can see
in the present case any imposition upon our jurisdiction or any futility or prematurity in our
intervention.

The appellant, we apprehend, underrates the force and binding effect of the ruling we hand down
in this case if he believes that it will not have the final and pacifying function that a declaratory
judgment is calculated to subserve. At the very least, the appellant will be bound. But more than
this, he obviously overlooks that in this jurisdiction, "Judicial decisions applying or interpreting
the law shall form a part of the legal system" (Article 8, Civil Code of the Philippines). In effect,
judicial decisions assume the same authority as the statute itself and, until authoritatively
abandoned, necessarily become, to the extent that they are applicable, the criteria which must
control the actuations not only of those called upon to abide thereby but also of those in duty
bound to enforce obedience thereto. Accordingly, we entertain no misgivings that our resolution
of this case will terminate the controversy at hand.

It is not amiss to point out at this juncture that the conclusion we have herein just reached is not
without precedent. In Liberty Calendar Co. vs. Cohen, 19 N.J., 399, 117 A. 2d., 487, where a
corporation engaged in promotional advertising was advised by the county prosecutor that its
proposed sales promotion plan had the characteristics of a lottery, and that if such sales
promotion were conducted, the corporation would be subject to criminal prosecution, it was held
that the corporation was entitled to maintain a declaratory relief action against the county
prosecutor to determine the legality of its sales promotion plan. In pari materia, see also: Bunis
vs. Conway, 17 App. Div. 2d., 207, 234 N.Y.S. 2d., 435; Zeitlin vs. Arnebergh, supra; Thrillo,
Inc. vs. Scott, 15 N.J. Super. 124, 82 A. 2d., 903.
In fine, we hold that the appellee has made out a case for declaratory relief.

2. The Postal Law, chapter 52 of the Revised Administrative Code, using almost identical
terminology in sections 1954(a), 1982 and 1983 thereof, supra, condemns as absolutely non-
mailable, and empowers the Postmaster General to issue fraud orders against, or otherwise deny
the use of the facilities of the postal service to, any information concerning "any lottery, gift
enterprise, or scheme for the distribution of money, or of any real or personal property by lot,
chance, or drawing of any kind". Upon these words hinges the resolution of the second issue
posed in this appeal.

Happily, this is not an altogether untrodden judicial path. As early as in 1922, in "El Debate",
Inc. vs. Topacio, 44 Phil., 278, 283-284, which significantly dwelt on the power of the postal
authorities under the abovementioned provisions of the Postal Law, this Court declared that

While countless definitions of lottery have been attempted, the authoritative one for this
jurisdiction is that of the United States Supreme Court, in analogous cases having to do
with the power of the United States Postmaster General, viz.: The term "lottery" extends
to all schemes for the distribution of prizes by chance, such as policy playing, gift
exhibitions, prize concerts, raffles at fairs, etc., and various forms of gambling. The three
essential elements of a lottery are: First, consideration; second, prize; and third, chance.
(Horner vs. States [1892], 147 U.S. 449; Public Clearing House vs. Coyne [1903], 194
U.S., 497; U.S. vs. Filart and Singson [1915], 30 Phil., 80; U.S. vs. Olsen and Marker
[1917], 36 Phil., 395; U.S. vs. Baguio [1919], 39 Phil., 962; Valhalla Hotel Construction
Company vs. Carmona, p. 233, ante.)

Unanimity there is in all quarters, and we agree, that the elements of prize and chance are too
obvious in the disputed scheme to be the subject of contention. Consequently as the appellant
himself concedes, the field of inquiry is narrowed down to the existence of the element of
consideration therein. Respecting this matter, our task is considerably lightened inasmuch as in
the same case just cited, this Court has laid down a definitive yard-stick in the following terms

In respect to the last element of consideration, the law does not condemn the gratuitous
distribution of property by chance, if no consideration is derived directly or indirectly
from the party receiving the chance, but does condemn as criminal schemes in which a
valuable consideration of some kind is paid directly or indirectly for the chance to draw a
prize.

Reverting to the rules of the proposed contest, we are struck by the clarity of the language in
which the invitation to participate therein is couched. Thus

No puzzles, no rhymes? You don't need wrappers, labels or boxtops? You don't have to
buy anything? Simply estimate the actual number of liter the Caltex gas pump with the
hood at your favorite Caltex dealer will dispense from to , and win valuable prizes .
. . ." .
Nowhere in the said rules is any requirement that any fee be paid, any merchandise be bought,
any service be rendered, or any value whatsoever be given for the privilege to participate. A
prospective contestant has but to go to a Caltex station, request for the entry form which is
available on demand, and accomplish and submit the same for the drawing of the winner.
Viewed from all angles or turned inside out, the contest fails to exhibit any discernible
consideration which would brand it as a lottery. Indeed, even as we head the stern injunction,
"look beyond the fair exterior, to the substance, in order to unmask the real element and
pernicious tendencies which the law is seeking to prevent" ("El Debate", Inc. vs. Topacio, supra,
p. 291), we find none. In our appraisal, the scheme does not only appear to be, but actually is, a
gratuitous distribution of property by chance.

There is no point to the appellant's insistence that non-Caltex customers who may buy Caltex
products simply to win a prize would actually be indirectly paying a consideration for the
privilege to join the contest. Perhaps this would be tenable if the purchase of any Caltex product
or the use of any Caltex service were a pre-requisite to participation. But it is not. A contestant, it
hardly needs reiterating, does not have to buy anything or to give anything of value.1awphl.nt

Off-tangent, too, is the suggestion that the scheme, being admittedly for sales promotion, would
naturally benefit the sponsor in the way of increased patronage by those who will be encouraged
to prefer Caltex products "if only to get the chance to draw a prize by securing entry blanks". The
required element of consideration does not consist of the benefit derived by the proponent of the
contest. The true test, as laid down in People vs. Cardas, 28 P. 2d., 99, 137 Cal. App. (Supp.)
788, is whether the participant pays a valuable consideration for the chance, and not whether
those conducting the enterprise receive something of value in return for the distribution of the
prize. Perspective properly oriented, the standpoint of the contestant is all that matters, not that of
the sponsor. The following, culled from Corpus Juris Secundum, should set the matter at rest:

The fact that the holder of the drawing expects thereby to receive, or in fact does receive,
some benefit in the way of patronage or otherwise, as a result of the drawing; does not
supply the element of consideration. Griffith Amusement Co. vs. Morgan, Tex. Civ. App.,
98 S.W., 2d., 844" (54 C.J.S., p. 849).

Thus enlightened, we join the trial court in declaring that the "Caltex Hooded Pump Contest"
proposed by the appellee is not a lottery that may be administratively and adversely dealt with
under the Postal Law.

But it may be asked: Is it not at least a "gift enterprise, or scheme for the distribution of money,
or of any real or personal property by lot, chance, or drawing of any kind", which is equally
prescribed? Incidentally, while the appellant's brief appears to have concentrated on the issue of
consideration, this aspect of the case cannot be avoided if the remedy here invoked is to achieve
its tranquilizing effect as an instrument of both curative and preventive justice. Recalling that the
appellant's action was predicated, amongst other bases, upon Opinion 217, Series 1953, of the
Secretary of Justice, which opined in effect that a scheme, though not a lottery for want of
consideration, may nevertheless be a gift enterprise in which that element is not essential, the
determination of whether or not the proposed contest wanting in consideration as we have
found it to be is a prohibited gift enterprise, cannot be passed over sub silencio.

While an all-embracing concept of the term "gift enterprise" is yet to be spelled out in explicit
words, there appears to be a consensus among lexicographers and standard authorities that the
term is commonly applied to a sporting artifice of under which goods are sold for their market
value but by way of inducement each purchaser is given a chance to win a prize (54 C.J.S., 850;
34 Am. Jur., 654; Black, Law Dictionary, 4th ed., p. 817; Ballantine, Law Dictionary with
Pronunciations, 2nd ed., p. 55; Retail Section of Chamber of Commerce of Plattsmouth vs.
Kieck, 257 N.W., 493, 128 Neb. 13; Barker vs. State, 193 S.E., 605, 56 Ga. App., 705; Bell vs.
State, 37 Tenn. 507, 509, 5 Sneed, 507, 509). As thus conceived, the term clearly cannot embrace
the scheme at bar. As already noted, there is no sale of anything to which the chance offered is
attached as an inducement to the purchaser. The contest is open to all qualified contestants
irrespective of whether or not they buy the appellee's products.

Going a step farther, however, and assuming that the appellee's contest can be encompassed
within the broadest sweep that the term "gift enterprise" is capable of being extended, we think
that the appellant's pose will gain no added comfort. As stated in the opinion relied upon, rulings
there are indeed holding that a gift enterprise involving an award by chance, even in default of
the element of consideration necessary to constitute a lottery, is prohibited (E.g.: Crimes vs.
States, 235 Ala 192, 178 So. 73; Russell vs. Equitable Loan & Sec. Co., 129 Ga. 154, 58 S.E.,
88; State ex rel. Stafford vs. Fox-Great Falls Theater Corporation, 132 P. 2d., 689, 694, 698, 114
Mont. 52). But this is only one side of the coin. Equally impressive authorities declare that, like a
lottery, a gift enterprise comes within the prohibitive statutes only if it exhibits the tripartite
elements of prize, chance and consideration (E.g.: Bills vs. People, 157 P. 2d., 139, 142, 113
Colo., 326; D'Orio vs. Jacobs, 275 P. 563, 565, 151 Wash., 297; People vs. Psallis, 12 N.Y.S.,
2d., 796; City and County of Denver vs. Frueauff, 88 P., 389, 394, 39 Colo., 20, 7 L.R.A., N.S.,
1131, 12 Ann. Cas., 521; 54 C.J.S., 851, citing: Barker vs. State, 193 S.E., 605, 607, 56 Ga.
App., 705; 18 Words and Phrases, perm. ed., pp. 590-594). The apparent conflict of opinions is
explained by the fact that the specific statutory provisions relied upon are not identical. In some
cases, as pointed out in 54 C.J.S., 851, the terms "lottery" and "gift enterprise" are used
interchangeably (Bills vs. People, supra); in others, the necessity for the element of consideration
or chance has been specifically eliminated by statute. (54 C.J.S., 351-352, citing Barker vs. State,
supra; State ex rel. Stafford vs. Fox-Great Falls Theater Corporation, supra). The lesson that we
derive from this state of the pertinent jurisprudence is, therefore, that every case must be
resolved upon the particular phraseology of the applicable statutory provision.

Taking this cue, we note that in the Postal Law, the term in question is used in association with
the word "lottery". With the meaning of lottery settled, and consonant to the well-known
principle of legal hermeneutics noscitur a sociis which Opinion 217 aforesaid also relied upon
although only insofar as the element of chance is concerned it is only logical that the term
under a construction should be accorded no other meaning than that which is consistent with the
nature of the word associated therewith. Hence, if lottery is prohibited only if it involves a
consideration, so also must the term "gift enterprise" be so construed. Significantly, there is not
in the law the slightest indicium of any intent to eliminate that element of consideration from the
"gift enterprise" therein included.

This conclusion firms up in the light of the mischief sought to be remedied by the law, resort to
the determination thereof being an accepted extrinsic aid in statutory construction. Mail fraud
orders, it is axiomatic, are designed to prevent the use of the mails as a medium for
disseminating printed matters which on grounds of public policy are declared non-mailable. As
applied to lotteries, gift enterprises and similar schemes, justification lies in the recognized
necessity to suppress their tendency to inflame the gambling spirit and to corrupt public morals
(Com. vs. Lund, 15 A. 2d., 839, 143 Pa. Super. 208). Since in gambling it is inherent that
something of value be hazarded for a chance to gain a larger amount, it follows ineluctably that
where no consideration is paid by the contestant to participate, the reason behind the law can
hardly be said to obtain. If, as it has been held

Gratuitous distribution of property by lot or chance does not constitute "lottery", if it is

not resorted to as a device to evade the law and no consideration is derived, directly or
indirectly, from the party receiving the chance, gambling spirit not being cultivated or
stimulated thereby. City of Roswell vs. Jones, 67 P. 2d., 286, 41 N.M., 258." (25 Words
and Phrases, perm. ed., p. 695, emphasis supplied).

we find no obstacle in saying the same respecting a gift enterprise. In the end, we are persuaded
to hold that, under the prohibitive provisions of the Postal Law which we have heretofore
examined, gift enterprises and similar schemes therein contemplated are condemnable only if,
like lotteries, they involve the element of consideration. Finding none in the contest here in
question, we rule that the appellee may not be denied the use of the mails for purposes thereof.

Recapitulating, we hold that the petition herein states a sufficient cause of action for declaratory
relief, and that the "Caltex Hooded Pump Contest" as described in the rules submitted by the
appellee does not transgress the provisions of the Postal Law.

ACCORDINGLY, the judgment appealed from is affirmed. No costs.

G.R. No. 190253 June 11, 2014

JUAN TRAJANO a.k.a. JOHNNY TRAJANO, Petitioner,

vs.
UNIWIDE SALES WAREHOUSE CLUB, Respondent.

DECISION

BRION, J.:

We resolve the petition for review on certiorari,1 filed by petitioner Juan Trajano, to challenge
the July 29, 2009 decision2 and the October 28, 2009 resolution3 of the Court of Appeals (CA)
in CA-G.R. SP No. 101815.
 The Factual Antecedents

This petition originated from Uniwide Sales Warehouse Club, Inc.s (Uniwides) complaint
against Golden Sea Overseas Sales Corp. (Golden Sea) and Trajano for a sum of money and
damages with prayer for the issuance of a temporary restraining order and a writ of preliminary
injunction before the Regional Trial Court (RTC) of Paraaque.4

Uniwide alleged that it entered into a sales arrangement with Golden Sea and Trajano for the
importation of goods from China in 2001. Under this arrangement, Uniwide ordered merchandise
from Golden Sea, which delivered the goods to Uniwide. Since Uniwide was under corporate
rehabilitation at that time, Trajano allegedly "guarantee[d] the payment"5 of the goods to Golden
Sea. In turn, Uniwide delivered to Trajano and a certain Vicente Kua post-dated checks payable
to "Golden Universal/Cash" or "Golden Sea/Cash" whose face value represented the goods
purchase price plus a monetary interest rate of 36% per annum.6

From January 2002 until the filing of the complaint, Golden Sea delivered 178,199,054.60
worth of unsaleable, defective and/or damaged goods as well as merchandise that Uniwide did
not agree to purchase. Thus, Golden Sea allegedly agreed to credit in Uniwides account the
price of these goods, upon which Uniwide requested for credit amounting to 163,199,054.60 in
its favor. However, Golden Sea did not heed Uniwides request; instead, Golden Sea and Trajano
encashed all the post-dated checks Uniwide issued (except those maturing from July 2005 to
September 2006), which totaled to 86,284.028.00.7 Aggrieved, Uniwide filed the complaint to
get the refund of the total value of misdelivered, unsaleable, defective and/or damaged goods,
and to enjoin Golden Sea and Trajano from encashing the remaining post-dated checks in their
possession.8

The complaint, docketed as Civil Case No. 05-0265, was raffled to RTC of Paraaque Branch
274, which was presided by Judge Fortunito Madrona.9 On August 11, 2005, the RTC issued a
writ of preliminary injunction prohibiting Golden Sea and Trajano from encashing the postdated
checks.10 Trajano moved to reconsider the issuance of the writ for lack of factual basis.11
Subsequently, Trajano filed a motion to post counterbond to lift the writ of preliminary
injunction.12 Uniwide opposed this,13 and filed a motion for ocular inspection of the goods to
support its opposition to the motion to post counterbond.14

On December 22, 2005, the RTC issued an order: (1) sustaining the issuance of the writ of
preliminary injunction; (2) granting Uniwides motion for ocular inspection; and (3) deferring
the resolution of Trajanos motion to post counterbond pending the ocular inspection of the
subject goods.15

On January 11, 2006, Trajano sought a partial reconsideration of the December 22, 2005 order
insofar as the RTC held that his motion to post counterbond would only be resolved after the
ocular inspection. Trajano claimed that Uniwide entered into a contract of sale with Golden Sea
for the importation of merchandise. On the other hand, Uniwide entered into a contract of loan
with Trajano for the payment of these imported goods. Consequently, the determination of
whether Golden Sea should credit in Uniwides account the total value of misdelivered,
unsaleable, defective and/or damaged goods was a separate matter from Uniwides contractual
obligation to pay Trajano the matured loan. The condition of the purchased goods was irrelevant
with respect to Uniwides obligation to pay him the overdue loan. Trajano thus prayed that he be
allowed to post a counter bond and to encash the post-dated checks.16 On the same date, Golden
Sea and Trajano also separately moved for the voluntary inhibition of Judge Madrona for his
alleged bias towards Uniwide.17

On January 12, 2006, Trajano filed a supplemental motion to his motion for partial
reconsideration dated January 11, 2006.In his supplemental motion, Trajano called the trial
courts attention to the statement of Uniwides counsel during the August 5, 2005 hearing that
the agreement for the credit of misdelivered, unsaleable, defective and/or damaged goods only
involved Uniwide and Golden Sea.18

On February 15, 2006, Judge Madrona recused himself from the case,19 but Uniwide moved to
reconsider his voluntary inhibition. Thereafter, the case was re-raffled to the RTC of Paraaque
Branch 195, which was presided by Judge Aida Estrella Macapagal. Uniwide contested the re-
raffling of the case due to its pending motion for reconsideration of Judge Madronas voluntary
inhibition. On June 30, 2006, Judge Madrona denied Uniwides motion for reconsideration and
the records of the case were subsequently transferred to Branch 195.20 On March 17, 2006,
Trajano filed a petition for certiorari with prayer for the issuance of a temporary restraining order
and a writ of preliminary injunction docketed as CA-G.R. SP No. 93492before the CA. In his
petition, Trajano sought to dissolve the writ enjoining him from encashing the post-dated
checks.21 On January 22, 2008, the CA dissolved the writ of preliminary injunction with respect
to Trajano for lack of factual basis.22 The CA held that Uniwide failed to prove that it had a
clear and unmistakable right to be protected that warrants the issuance of the writ.23 This
decision eventually became final and entry of judgment was made on February 27, 2008.24

Meanwhile, on March 29, 2006, Trajano filed before the RTC motions to resolve his motion to
post counterbond and for partial reconsideration dated January 11, 2006.25 Trajano reiterated his
motion to resolve on May 22, 2007.26

On August 28, 2006, Uniwide assailed Judge Madronas inhibition from the case27 in a petition
for certiorari docketed as CA-G.R. SP No. 95885 before the CA.28 Uniwide argued that Judge
Madronas perceived bias in its favor was unfounded, and that the preservation of the parties
trust and confidence was an insufficient ground for Judge Madronas inhibition.29

The RTC Ruling

Due to the pendency of CA-G.R. SP No. 95885, the RTC issued an order dated June 19, 2007
deferring the resolution of Trajanos motions to post counterbond and for partial reconsideration
dated January 11, 2006.The RTC held that the issue of whether Judge Madrona should hear Civil
Case No. 05-0265 presented a jurisdictional question that prevented Branch 195 from resolving
Trajanos pending motions.30
After the RTC denied31 Trajanos motion for reconsideration32 in an order dated October 15,
2007, he filed a petition for certiorari assailing the June 19 and October 15, 2007 orders before
the CA.33 The case was docketed as CA-G.R. SP No. 101815.

The CA Ruling in CA-G.R. SP No. 101815

In a decision dated July 29, 2009,the CA upheld the RTC rulings deferring the resolution of
Trajanos motions and suspending the proceedings in Civil Case No. 05-0265 during the
pendency of CA-G.R. SP No. 95885. Citing Eternal Gardens Memorial Park v. Court of
Appeals34 , the CA ruled that judicial courtesy prompted the RTC to await the final
determination of CA-G.R. SP No. 95885 before taking cognizance of Trajanos motions and
continuing with the proceedings in Civil Case No. 05-0265.35

Trajano filed the present petition36 after the CA denied37 its motion for reconsideration.38

The Petition

In the present petition, Trajano insists that the RTC should decide on his pending motions since
the propriety of a judges inhibition does not determine the RTCs jurisdiction over the subject
matter of the case. He points out that jurisdiction is vested in the court, not in its branch or in the
judge presiding the case. Trajano also opines that whether Judge Madrona correctly recused
himself from the case merely involves the exercise of jurisdiction, not of jurisdiction itself.
Trajano further asserts that the CA incorrectly applied the principle of judicial courtesy since the
disposition of his motions before the RTC would not render the propriety of Judge Madronas
voluntary inhibition moot.39

The Respondents Position

In its Comment,40 Uniwide claims that Trajanos petition is in fact an appeal from the June 19
and October 15, 2007 orders of the RTC since he did not raise the issue of "whether the CA
correctly found that Judge Macapagal did not commit grave abuse of discretion" in deferring the
resolution of Trajanos pending motions. Thus, Trajano incorrectly availed of a Rule 45 petition
in assailing the RTCs interlocutory orders. Uniwide also points out that Trajano failed to show
that Judge Macapagal gravely abused his discretion in issuing the June 19 and October 15, 2007
orders. Lastly, Uniwide prays for the outright denial of the petition because it lacks competent
evidence of Trajanos identity in its verification page.

Proceedings in CA-G.R. SP No. 95885 and G.R. No. 193972

In a decision dated May 5, 2010, the CAruled that the events that had transpired before Branch
274 of the Paraaque RTC provoked the parties suspicions that Judge Madrona prejudged the
case, which warranted his inhibition.41 The CA also denied Uniwides motion for
reconsideration,42 prompting Uniwide to elevate the case before the Supreme Court in Uniwide
Sales Warehouse Club, Inc. v. Golden Sea Overseas Sales Corp., docketed as G.R. No. 193972,
before the Courts First Division.43
 The Issues

This case presents to us the following issues:

(1) Whether the petition should be denied outright for procedural infirmities; in
particular:

(a) Whether the petition lacks proper verification; and

(b) Whether the petition availed of the proper remedy in appealing the CA
decision dated January 3, 2008 and resolution dated October 28, 2009;

(2) Whether the resolution of Trajanos motion to post counterbond,44 motion for partial
reconsideration,45 and supplemental motion to the motion for partial reconsideration46 is
already moot and academic; and

(3) Whether the CA erred in not finding that the RTC committed grave abuse of
discretion in suspending the proceedings in Civil Case No. 05-0265.

The Courts Ruling

We find the petition partly meritorious.

I. The petition is not procedurally infirm

A. The petition contains proper verification

Contrary to Uniwides claim, the records of the case show that the petitions verification page
containsTrajanos competent evidence of identity, specifically, Passport No. XX041470.47
Trajanos failure to furnish Uniwide a copy of the petition containing his competent evidence of
identity is a minor error that this Court may and chooses to brush aside in the interest of
substantial justice. This Court has, in proper instances, relaxed the application of the Rules of
Procedure when the party has shown substantial compliance with it.48 In these cases, we have
held that the rules of procedure should not be applied in a very technical sense when it defeats
the purpose for which it had been enacted, i.e., to ensure the orderly, just and speedy
dispensation of cases.49 We maintain this ruling in this procedural aspect of this case.

B. Trajano properly availed of a Rule 45 petition in assailing the January 3, 2008 decision and
the October 28, 2009 resolution of the Court of Appeals

We also see no merit in Uniwides claim that Trajano improperly availed of the present petition
for review on certiorari in assailing the RTC orders dated June 19 and October 15, 2007. The
body of the petition clearly and unequivocably challenges the CA decision dated January 3, 2008
and resolution dated October 28, 2009. A petition for review on certiorari under Rule 45 of the
Rules of Court invokes the Courts appellate jurisdiction over questions of law that has been
decided by the lower courts with finality. The CA decision assailed by the present petition
involves its final order regarding the alleged grave abuse of discretion involved in the RTCs
interlocutory orders.1wphi1

This CA decision should not be confused with the RTCs interlocutory orders that had been
disputed before the CA, which was correctly contested by Trajano through a petition for
certiorari. In J.L. Bernardo Construction v. Court of Appeals,50 we stated that a petition for
certiorari is an appropriate remedy to assail an interlocutory order: (1) when the tribunal issued
such order without or in excess of jurisdiction or with grave abuse of discretion and (2) when the
assailed interlocutory order is patently erroneous and the remedy of appeal would not afford
adequate and expeditious relief.

Thus, Trajano correctly filed a petition for certiorari before the CA in order to strike down the
RTCs interlocutory orders that he claims to have been issued with grave abuse of discretion. In
the same vein, Trajanos present petition for review on certiorari is also the proper remedy, as it
questions the CAs final order regarding the RTCs interlocutory orders.

II. The issue of whether the CA erred in finding no jurisdictional error in the June 19 and
October 15, 2007 orders of the RTC is already moot and academic

Amidst the myriad of procedures that the parties had taken before the lower courts and this
Court, the main focus of the controversy i.e., whether the CA erred in not finding a
jurisdictional error on the June 19 and October 15, 2007 orders of the RTC no longer presents
a justiciable controversy. The CA and the parties have overlooked the crucial fact that the CA, in
CA-G.R. SP No. 93492, had already dissolved the writ of preliminary injunction that enjoined
Trajano from encashing the subject post-dated checks. Moreover, the dissolution of the writ had
long become final and executory on February 27, 2008.

In its June 19 and October 15, 2007 orders, the RTC deferred the resolution of Trajanos motions
to post counterbond and for partial reconsideration dated January 11, 2006. These motions were
filed to lift the writ of preliminary injunction. In addition, the motion for partial reconsideration
questioned the RTCs suspension of its ruling on the motion to post counterbond pending its
ocular inspection of the subject goods. In turn, the order commanding the examination of the
goods stemmed from Uniwides motion for ocular inspection in support of its opposition to
Trajanos motion to post counterbond.

In other words, the gist of the controversy in CA-G.R. SP No. 101815 that are now the subject of
the present petition pertains to the posting of counterbond to dissolve the writ of preliminary
injunction, which had already been lifted with respect to Trajano in CA-G.R. SP No. 93492.
Thus, Trajano is no longer entitled to any substantial relief on his pending motions before the
RTC as the writ of preliminary injunction itself had already been dissolved with finality.

We also note that Trajano himself admitted that the subject post-dated checks had already
become stale.51 A stale check is one which has not been presented for payment within a
reasonable time after its issue; it is valueless and, therefore, should not be paid.52 For these
reasons, we hold that this issue has been rendered moot and academic.

III. The RTC should continue with the proceedings in Civil Case No. 05-0265 during the
pendency of G.R. No. 193972

Trajano alleges in his petition that the RTC did not set the case for Trial53 due to the pendency
of CA-G.R. SP No. 95885 and subsequently, G.R. No. 193972. The mere pendency of a special
civil action for certiorari commenced in relation to a case pending before a lower court does not
automatically interrupt the proceedings in the lower court. A petition for certiorari does not
divest the lower courts of jurisdiction validly acquired over the case pending before them. A
petition for certiorari, unlike an appeal, is an original action; it is not a continuation of the
proceedings in the lower court. It is designed to correct only errors of jurisdiction, including
grave abuse of discretion amounting to lack or excess of jurisdiction.54

Under Section 7, Rule 65 of the Rules of Court, the higher court should issue against the public
respondent a temporary restraining order or a writ of preliminary injunction in order to interrupt
the course of the principal case.55 The petitioner in a Rule 65 petition has the burden of proof to
show that there is a meritorious ground for the issuance of an injunctive writ or order to suspend
the proceedings before the public respondent. He should show the existence of an urgent
necessity for the writ or order, so that serious damage may be prevented. Nonetheless, even if an
injunctive writ or order is issued, the lower court retains jurisdiction over the principal case.56

Indeed, we introduced in Eternal Gardens Memorial Park v. Court of Appeals57 the principle of
judicial courtesy to justify the suspension of the proceedings before the lower court even without
an injunctive writ or order from the higher court. In that case, we pronounced that "[d]ue respect
for the Supreme Court and practical and ethical considerations should have prompted the
appellate court to wait for the final determination of the petition [for certiorari] before taking
cognizance of the case and trying to render moot exactly what was before this [C]ourt."58 We
subsequently reiterated the concept of judicial courtesy in Joy Mart Consolidated Corp. v. Court
of Appeals.59

We, however, have qualified and limited the application of judicial courtesy in Go v. Abrogar60
and Republic v. Sandiganbayan.61 In these cases, we expressly delimited the application of
judicial courtesy to maintain the efficacy of Section 7, Rule 65 of the Rules of Court, and held
that the principle of judicial courtesy applies only "if there is a strong probability that the issues
before the higher court would be rendered moot and moribund as a result of the continuation of
the proceedings in the lower court." Through these cases, we clarified that the principle of
judicial courtesy remains to be the exception rather than the rule.62

From these perspectives, the appellate court erroneously applied the principle of judicial courtesy
in the current case. There is no strong probability that the issue of the propriety of Judge
Madronas voluntary inhibition in CA-G.R. SP No. 95885 would be rendered moot and academic
by the continuation of the proceedings in the trial court.
Furthermore, whether Judge Madrona properly inhibited himself from the case does not pose any
jurisdictional problem in resolving the issues in Civil Case No. 05-0265. We agree with Trajano
that jurisdiction vests in the trial court, not in the judges. We also point out in this respect that the
various branches of the RTC of Paraaque are coordinate and co-equal courts whose totality
constitutes only one RTC. Each of the RTC's branches is not a court separate and distinct from
the other branches. When a complaint is filed before one branch or judge, jurisdiction does not
attach to this branch or judge alone, to the exclusion of the others. Trial may be had or
proceedings may continue by and before another branch or judge. The different branches in the
RTC of Paraaque do not possess jurisdictions independent of and incompatible with each
other.63

WHEREFORE, premises considered, we PARTLY GRANT the petition. The resolution of

petitioner Juan Trajano's motion to post counterbond dated September 9, 2005, motion for partial
reconsideration of the order allowing ocular inspection dated January 11, 2006, and supplemental
motion to the motion for partial reconsideration dated January 12, 2006 is hereby declared
MOOT AND ACADEMIC. The Regional Trial Court of Paraaque - Branch 195 is hereby
ordered to CONTINUE with the proceedings in Civil Case No. 05-0265.

SO ORDERED.

G.R. No. L-62577 September 21, 1987

ESTELITA, ROBERTO, LEONARD, REYNALDO, ELY, MYRNA, MICHAELANGELO,

ROMEO and LEONOR, all surnamed ROSALES, petitioners,
vs.
COURT OF FIRST INSTANCE OF LANAO DEL NORTE, BRANCH III, Presided by
the HONORABLE MAGADAPA I. RASUMAN, CITY COURT OF ILIGAN CITY,
Presided by the HONORABLE POMPEYO L. PALARCA AND GREGORIO
ORELLANA, respondents.

CRUZ, J.:

The basic issue in this case is whether or not the contract of lease between the
petitioners and the private respondent has already expired according to their
stipulations. However, that is not what we are called upon to decide at this time. What is
raised in this petition is a question of procedure, viz., which of two cases involving the
same parties and the same subject shall have precedence over the other. That is what
we shall determine now.

The antecedents are as follows: The petitioners and the respondent entered into a
contract of lease over the former's property for the expressed period of three years
beginning March 1, 1977. 1 On January 12, 1980, the petitioners advised the private respondent that he would have to
vacate the leased premises on March 1, 1980, not only because of the lapse of the agreed term but also because he had subleased the
property in violation of their agreement. 2 The private respondent objected, claiming that his verbal agreement with them was for a period of
ten years, which was the reason he had introduced permanent and costly improvements in the building, and moreover they had also
consented to his sublease of the property. 3 As no agreement between the parties appeared in sight, the private respondents beat his
adversaries to the draw, so to speak, by filing on February 21, 1980, with the Court of First Instance of Iligan City an action 4 for the
continued enforcement of the lease contract and for damages. 5 The said court on February 28, 1980, one day before the expiration of the
lease, issued a restraining order that maintained the status quo between the parties. 6 Ten days later, the petitioners filed their own
complaint, this time for unlawful detainer, 7 with the City Court of Iligan City. 8 This was followed two days later with a motion to dismiss the
private respondents' complaint before the Court of First Instance on the ground inter alia of the pendency of the ejectment case, and for the
lifting of the temporary restraining order. 9 For his part, the private respondent moved to dismiss the ejectment suit also on the ground of lis
pendens, his argument being that the case he had filed earlier should be decided first before the petitioners' complaint could be entertained.
10

In the Court of First Instance, the petitioners' motion was in effect denied with its Order dated May 27, 1981, that the "determination of the
said motion is hereby deferred until the trial. " 11 The motion for reconsideration was denied in an Order dated September 14, 1982. 12 In
the City Court, the petitioners fared no better when the ejectment case was on April 24, 1980, "ordered held in abeyance until the case in the
Court of First Instance is finally resolved." 13 The motion for reconsideration was denied in an Order dated October 4, 1982. 14 Thus failing
in both courts, the petitioners have come to this Court, praying for a reversal of the said orders on the ground that they were issued with
grave abuse of discretion amounting to lack of jurisdiction.

Specifically, the petitioners ask us to enjoin the trial of the enforcement suit before the Court of First Instance and to order the City Court to
proceed with the ejectment case.

The facts of this case are practically the same as those of Pardo vs. Encarnacion 15 decided in 1968, which is itself a reaffirmation of several
earlier decisions. The present case must be examined in accordance with these precedents.

In Pardo, the lessor and the lessee had stipulated on an initial period of twelve years for their lease, subject to extension by another eight
years upon subsequent agreement of the parties. Negotiations for this purpose having failed, the lessee filed in the Court of First Instance of
Cavite an action for the renewal of the lease at a reduced rental. This the lessor sought to dismiss by questioning the jurisdiction of the court
and the venue of the case. One day after the expiration of the lease, the lessor commenced an ejectment case in the City Court of Quezon
City, and this time it was the lessee who moved to dismiss, on the ground of the pendency of his own complaint in the Court of First Instance
of Cavite. The City Court ruled it had jurisdiction. However, in a petition for certiorari and prohibition, the Court of First Instance of Quezon
City issued a temporary restraining order that maintained the status quo between the parties pending action on the petition on the merits.
Eventually, the Court of First Instance of Cavite, resolving the challenge to its own jurisdiction, declared it was competent to proceed with the
specific performance case filed by the lessee. The lessor then came to us.

Speaking for a unanimous Court, Justice Angeles declared:

The lessor, Carmen Pardo de Tavera, has brought the case directly to this Court on petition: (a) for certiorari to annul
the order of the respondent judge of the Court of First Instance of Cavite, declaring itself with jurisdiction to take
cognizance of Civil Case No. N-872, and to likewise annul the orders of the respondent judge of the Court of First
Instance of Quezon City in its Civil Case No. Q-10710 restraining the Quezon City Court from trying the ejectment case
and denying the lessor's motion to dismiss; (b) for prohibition, to restrain the respondents judges of said Courts of First
Instance from further proceeding with the aforesaid cases before them; and (c) for mandamus, to order the respondent
judge of the Quezon City court to proceed with the hearing of the unlawful detainer-ejectment case pending therein
until its final termination.

We find the petition to be meritorious.

The provision of the lease contract entered into between petitioner and respondent is apparently clear that unless the
lessor and lessee agreed to a renewal thereof at least thirty days prior to the date of expiration, the lease shall not be
renewed. The facts on record show that despite the exchange of communication, proposals and counter-proposals,
between the parties regarding a renewal of the lease, they were not able to arrive at an agreement within said period
for while the lessor wanted an increased rental the lessee, on the other hand, proposed for a reduction. With this failure
of an agreement, it is to be presumed that the lessee was aware that an ejectment case against him was forthcoming.
Whether or not the case filed before the Cavite Court of First Instance, just one day before the expiration of the lease
contract, was an anticipation to block the action for ejectment which the lessor was to take against the lessee, the fact,
however, is that the lessee was not disposed to leave the premises. At any rate, while the said case before the Court of
First Instance of Cavite appears to be one for specific performance with damages, it cannot be denied that the real
issue between the parties is whether or not the lessee should be allowed to continue occupying the land as lessee.

The situation is not novel to Us.

It has been settled in a number of cases that the right of a lessee to occupy the land lease as against the demand of
the lessor should be decided under Rule 70 (formerly Rule 72) of the Rules of Court.

There is no merit to the contention that the lessee's supposed right to a renewal of the lease contract can not be
decided in the ejectment suit. In the case of Teodoro vs. Mirasol, supra, this Court held that "if the plaintiff has any right
 to the extension of the lease at all, such right is a proper and legitimate issue that could be raised in the unlawful
detainer case because it may be used as a defense to the action." In other words, the matter raised in the Court of First
Instance of Cavite may be threshed out in the ejectment suit, in consonance with the principle prohibiting multiplicity of
suits. And the mere fact that the unlawful detainer-ejectment case was filed later, would not change the situation to
depart from the application of the foregoing ruling.

It is to be noted that the Rules do not require as a ground for dismissal of a complaint that there is
a prior pending action. They provide that there is pending action, not a pending prior action. The
fact that the unlawful detainer suit was of a later date is no bar to the dismissal of the present
action (Teodoro, Jr. v. Mirasol, supra.). 16

Precedents are helpful in deciding cases when they are on all fours or at least substantially identical with previous litigations. Argumentum a
simili valet in lege. Earlier decisions are guideposts that can lead us in the right direction as we tread the highways and byways of the law in
the search for truth and justice. These pronouncements represent the wisdom of the past. They are the voice of vanished judges talking to
the future. Except where there is a need to reverse them because of an emergent viewpoint or an altered situation, they urge us strongly
that, indeed, the trodden path is best.

We have reviewed the ruling announced in the abovementioned cases and we see no reason to deviate from it. Its logic remains valid and no
change in the law or in the condition of the times calls for its revision or reversal. It is still sound doctrine and so we continue to apply it,
remembering that via trita est tutissima

WHEREFORE, the petition is granted and judgment is hereby rendered: a) SETTING ASIDE the Orders of the respondent Court of First
Instance dated February 28, 1980, May 27,1981, and September 14,1982, in Civil Case No. 1352-80 and of the respondent City Court dated
April 24, 1980 and October 4, 1982, in Civil Case No. 8174-AF; b) DIRECTING the respondent Court of First Instance to dismiss Civil Case
G.R. No. 1352-80; and c) ORDERING the respondent City Court to commence hearing Civil Case No. 8174-AF without further delay. No
costs. It is so ordered.

[G.R. No. 117029. March 19, 1997]

PELTAN DEVELOPMENT, INC., PATROCINIO E. MARGOLLES, EDGARDO C.

ESPINOSA, VIRGINIA E. VILLONGCO, LUCIA E. LAPERAL, NORMA C.i[1] ESPINOSA,
TERESITA E. CASAL and ALICE E. SOTTO, petitioners, vs. COURT OF APPEALS,
ALEJANDRO Q. REY and JUAN B. ARAUJO, respondents.

DECISION

PANGANIBAN, J.:

In resolving a motion to dismiss for failure to state a cause of action, should the Court of Appeals
invoke a Supreme Court decision promulgated after such motion was filed by defendants and
ruled upon by the trial court? Is such invocation violative of the rule that motions to dismiss
based on lack of cause of action should be ruled upon only on the basis of the allegations of the
complaint? Who are the real parties-in-interest in an action to cancel a Torrens certificate of
title?

Petitioners challenge the Decisioni[2] of public respondenti[3] in CA-G.R. CV No. 28244

promulgated on June 29, 1994, which ruled as follows:i[4]

WHEREFORE, the appealed order dated August 22, 1989 is REVERSED and SET ASIDE. The
trial court is ordered to try the case on plaintiffs (herein private respondents) complaint/amended
complaint against all defendants (herein petitioners).

Let the original record of the case be returned to the court of origin.
In a Resolutioni[5] promulgated on September 2, 1994, Respondent Court denied petitioners
motion for reconsideration.

The order reversed by public respondent had been issued by the Regional Trial Court of Pasay
City, Branch 112, in Civil Case No. LP-8852-P. The order in part ruled:i[6]

Considering the arguments and counter-arguments urged by the parties in this case, particularly
on the nature and effect of the action filed by plaintiffs, the Court is inclined to grant the Motion
to Dismiss filed by defendant Peltan Development Corporation on the basis of the Supreme
Court ruling in Gabila vs. Barriga, 41 SCRA 131. The ultimate result of the cancellation prayed
for by the plaintiffs, if granted by this Court, would be to revert the property in question to the
public domain. Therefore, the ultimate beneficiary of such cancellation would be the
Government. Since the Government can only be represented by the Office of the Solicitor
General, which has repeatedly refused to institute or join an action for cancellation of defendants
titles, then, the real party in interest cannot be said to have instituted the present action. It is the
Government, not the plaintiffs which is the real party in interest. Plaintiffs not being the real
party in interest, they have no cause of action against the defendants.

WHEREFORE, the Motion to Dismiss is hereby granted and this case is hereby dismissed,
without prejudice to plaintiffs pursuing administrative relief in the proper government agencies
concerned.

The Facts

The facts, as found by public respondent, are undisputed by the parties, to wit:i[7]

On February 20, 1981 plaintiffs (herein private respondents) filed against eleven (11) defendants
(herein petitioners) a complaint captioned for Cancellation of Titles and Damages. On December
15, 1981, the complaint was amended by including or impleading as the twelfth defendant the
City Townhouse Development Corporation. Omitting the jurisdictional facts, the allegations in
the amended complaint are quoted hereunder:

II

Plaintiffs are applicants for a free patent over a parcel of land comprising an area of 197,527
square meters, more or less, situated in Barrio Tindig na Manga, Las Pias, Metro Manila.

III

Prior to the filing of their petition for free patent, plaintiffs had for many years been occupying
and cultivating the aforestated piece of land until their crops, houses and other improvements
they introduced thereon were illegally bulldozed and destroyed by persons led by defendant
Edgardo Espinosa x x x Thereafter, the same persons forcibly and physically drove out plaintiffs
therefrom.
IV

Plaintiffs filed their petition for issuance of free patent covering the aforesaid property with the
Bureau of Lands in May 1976, as a result of which they were issued by the Lands Bureau Survey
Authority No. 54 (IV-1) on December 16, 1976.

Accordingly, and on the strength of the aforesaid authority to survey, plaintiffs had the property
surveyed by Geodetic Engineer Regino L. Sobrerinas, Jr. on December 20-21, 1976.

VI

During the years that plaintiffs were occupying, cultivating, planting and staying on the
aforestated parcel of land, neither x x x one of the defendants was in possession thereof.

VII

The processing and eventual approval of plaintiffs free patent application or petition over the
subject piece of land have, however, been obstructed and/or held in abeyance, despite the
absence of any opposition thereto, because of the alleged existence of several supposed
certificates of title thereon, x x x of the defendants, namely:

Peltan Development, Inc. Transfer Certificate of Title No. S-17992

xxx xxx xxx

VIII

The aforestated transfer certificates of title of the abovenamed defendants, plaintiffs discovered,
and therefore they hereby allege, were all derived from an alleged Original Certificate of Title
No. 4216 supposedly issued by the Register of Deeds of Rizal and registered in the name of the
Spouses Lorenzo Gana and Maria Juliana Carlos in 1929 allegedly pursuant to Decree No.
351823 issued by the Court of First Instance of Rizal in Land Registration Case (LRC) No. 672.

IX

Plaintiffs, however, subsequently discovered, after a thorough research, that the alleged Original
Certificate of Title No. 4216 of the Spouses Lorenzo Gana and Juliana Carlos whence all the
transfer certificates of title of the x x x abovenamed defendants originated and/or were derived
from was FICTITIOUS and/or SPURIOUS x x x

xxx xxx xxx

Being, thus, derived and/or having originated from a FICTITIOUS and/or SPURIOUS original
certificate of title (OCT No. 4216), as herein above shown, ALL the aforestated transfer
certificates of title of the x x x abovenamed defendants are, logically and imperatively, FAKE,
SPURIOUS and/or NULL AND VOID as well. Hence, they all must and should be
CANCELED.

xxx xxx xxx

XIV

Before they decided to institute this action, plaintiffs informed, indeed they warned, the
defendants that their so-called titles over the parcels of land or portions thereof covered by
plaintiffs free patent application and/or petition are either fake, spurious or void for reasons
aforestated. But the defendants simply ignored plaintiffs admonitions.

XV

Accordingly, plaintiffs were compelled to retain the services of the undersigned counsel to file
this complaint not only because they have been materially and substantially prejudiced by the
existence of defendants spurious titles, but also because as citizens and taxpayers of this country
they have a legitimate interest in the disposition of alienable lands of the State, as well as the
right to question any illegitimate, unlawful or spurious award, disposition or registration thereof
to protect not just their interest but also the public.

XVI

Because of the defendants illegal titling of the parcel of land or portions thereof covered by
plaintiffs free patent application, and particularly by the unlawful disturbance of plaintiffs
possession thereof and destruction of plaintiffs plants and dwellings thereon, which was caused
and/or directed by the defendants Edgardo Espinosa and Pat C. Margolles, said defendants
should be ordered to pay plaintiffs actual or compensatory damages in such amount as may be
proven during the trial of this case. (Original Records, Vol. I, pp. 202-214)

On the basis of the foregoing allegations, the prayer in the amended complaint states:

WHEREFORE, it is most respectfully prayed that after hearing, judgment (should) be rendered:

1. Canceling the transfer certificates of titles of the defendants as specified in par. VII hereof
and/or declaring them null and void for having originated or being derived from a fictitious,
spurious or void original certificates of title.

2. Ordering defendants Edgardo Espinosa and Pat C. Margolles to pay plaintiffs actual or
compensatory damages as may be proven during the trial of this case. And
3. Ordering the defendants to pay plaintiffs appropriate amount of exemplary damages and
reasonable amount of attorneys fees, as well as to pay the costs.

Plaintiffs further respectfully pray for such other reliefs just and equitable in the premises.
(Original Records, Vol. I, p. 215)

xxx xxx xxx

On April 3, 1985, defendant Peltan Development Corporation (Peltan, for brevity) filed a Motion
For Preliminary Hearing on Affirmative Defenses mainly on the ground that the complaint states
no cause of action against defendant Peltan. It is alleged in the motion that plaintiffs are not the
real parties in interest in the action as they do not assert any present and subsisting title of
ownership over the property in question. Invoking the case of Gabila vs. Barriga, L-28917,
promulgated on September 30, 1971, the defendant Peltan contends that the action being one for
cancellation of the certificates of title the Government, through the Solicitor General not a
private individual like plaintiff Gabila was the real party in interest.

On April 27, 1989 plaintiffs filed their opposition to defendant Peltans aforesaid motion in which
plaintiffs reasserted their cause of action as set forth in their complaint, and pointed to the trial
court the pertinent averments in their action showing their rights and interests or claims that had
been violated which thus placed them in the status of a real party in interest. Subsequently,
defendant Peltan filed its reply to plaintiffs opposition, with plaintiffs submitting their rejoinder
thereto. Then finally defendant Peltan filed its comment on the rejoinder.

On August 22, 1989, the trial court dismissed the complaint. Holding that the plaintiffs were not
the real parties-in-interest, the RTC ruled that they had no cause of action against the defendants.
The order was reversed by public respondent. Hence, this petition for review.

In a motion filed before this Court on March 8, 1996, petitioners prayed for the cancellation of
the notice of lis pendens annotated on their titles under Entry No. 210060/T-12473-A. The notice
was caused by Private Respondent Alejandro Rey because of the pendency of Civil Case No. LP-
8852-P, the dismissal of which is the issue at bench.i[8]

Ruling of the Court of Appeals

As observed earlier, the Court of Appeals reversed and set aside the order of the Regional Trial
Court, holding that the two elements of a cause of action were present in the complaint, to wit: 1)
the plaintiffs primary right and 2) the delict or wrongful act of the defendant violative of that
right. The CA held that private respondents had a right over the property as shown by the
allegation that they had been occupying the landholding in question and that they had applied for
a free patent thereon; and that petitioners committed a delict against private respondents by
forcibly driving them out of the property, and delaying the processing and approval of their
application for free patent because of the existence of petitioners transfer certificates of title
derived from OCT No. 4126.i[9] The CA further held that the RTC should have treated the case as
an accion publiciana to determine who as between the parties plaintiffs and defendants have a
better right of possession.i[10]

Stressing that only the facts alleged in the complaint should have been considered in resolving
the motion to dismiss, Respondent CA held that the trial court had erred in accepting the
allegations of herein petitioners that private respondents requests for the Solicitor General to file
an action to annul OCT No. 4216 had been repeatedly denied.

Public respondent also rejected the application of the Gabilai[11] ruling to the case at bar. It
reasoned:i[12]

True, plaintiffs in their complaint prayed inter alia for the cancellation of the transfer certificates
of title of the defendants for being derived from a spurious or false original certificate of title.
Relying on the case of Gabila vs. Barriga, supra, defendants argued that the ultimate result of a
favorable decision on complaints of such nature is for the lands to revert back to the ownership
of the state, and hence, such actions may only be instituted by the Government through the
Solicitor Generel (sic). This argument is misplaced. Firstly, unlike the Gabila case, the herein
plaintiffs in their complaint did not assert and pray for reversion. Secondly, the prayer for
cancellation of the defendants Torrens titles does not negate nor eliminate the presence of the
elements of plaintiffs cause of action on the basis of the allegations in the complaint, as already
discussed. Thirdly, the prayer of a complaint is not a material factor in determining the relief
grantable, which rests upon the facts proved (Lacson vs. Diaz, 47 O.G. No. 12 Supp. 377, Aug.
4, 1950, No. L-2839). Precisely, as a matter of practice, complaints filed in court usually contain
a general prayer for other relief which may be just and equitable in the premises like the
complaint in the case at bar. Fourthly, in the Gabila case, the Supreme Court did not affirm the
trial courts dismissal order. Instead, per dispositive portion of the decision, it ordered the setting
aside of the appealed dismissal order and directing the return of the records of the case to the trial
court with admonition to the party interested to formally implead the Bureau of Lands with
notice to the Solicitor General. Obviously, the posture of defendants Peltan is not entirely
supported by the Gabila case.

The Issues

Petitioners assign the following errors committed by public respondent:i[13]

a. Ordering the trial court to proceed on private respondents cause of action for the nullification
of OCT No. 4216 on the ground that it is fake/spurious when the Supreme Court had already
ruled in G.R. No. 109490 and in G.R. No. 112038 that OCT No. 4216 is genuine and valid -- and
in disregarding and refusing to pass upon the said squarely applicable decisions of this
Honorable Court;

b. Ordering the trial court to proceed on private respondents cause of action for damages for the
supposed acts of the private respondents Margolles and Espinosa despite non-payment of the
jurisdictional docket fees when this cause of action had already prescribed -- and in disregarding
and refusing to pass upon the squarely applicable Manchester ruling;
c. In not applying the Gabila ruling to dismiss the subject complaint considering that respondents
do not even pretend to have any title or right to the subject property to authorize them to ask for a
free patent thereon since it is already (a) private property covered by petitioners torrens title
derived from OCT No. 4216 issued in 1929.

The Courts Ruling

We grant the petition and reverse the public respondent.

What Determines Cause of Action?

It is a well-settled rule that the existence of a cause of action is determined by the allegations in
the complaint.i[14] In the resolution of a motion to dismiss based on failure to state a cause of
action, only the facts alleged in the complaint must be considered. The test in cases like these is
whether a court can render a valid judgment on the complaint based upon the facts alleged and
pursuant to the prayer therein.i[15] Hence, it has been held that a motion to dismiss generally
partakes of the nature of a demurrer which hypothetically admits the truth of the factual
allegations made in a complaint.i[16]

It is axiomatic nonetheless that a court has a mandate to apply relevant statutes and jurisprudence
in determining whether the allegations in a complaint establish a cause of action. While it
focuses on the complaint, a court clearly cannot disregard decisions material to the proper
appreciation of the questions before it. In resolving a motion to dismiss, every court must take
cognizance of decisions this Court has rendered because they are proper subjects of mandatory
judicial notice as provided by Section 1 of Rule 129 of the Rules of Court, to wit:

SECTION 1. Judicial notice, when mandatory. A court shall take judicial notice, without the
introduction of evidence, of the existence and territorial extent of states, their political history,
forms of government and symbols of nationality, the law of nations, the admiralty and maritime
courts of the world and their seals, the political constitution and history of the Philippines, the
official acts of the legislative, executive and judicial departments of the Philippines, laws of
nature, the measure of time, and the geographical divisions. (Emphasis supplied.)

The said decisions, more importantly, form part of the legal system,i[17] and failure of any court
to apply them shall constitute an abdication of its duty to resolve a dispute in accordance with
law, and shall be a ground for administrative action against an inferior court magistrate.

In resolving the present complaint, therefore, the Court is well aware that a decision in Margolles
vs. CA,i[18] rendered on 14 February 1994, upheld the validity of OCT No. 4216 (and the
certificates of title derived therefrom), the same OCT that the present complaint seeks to nullify
for being fictitious and spurious. Respondent CA, in its assailed Decision dated 29 June 1994,
failed to consider Margolles vs. CA. This we cannot countenance.

In finding that the complaint stated a cause of action, Public Respondent CA recognized that
private respondent had a valid right over the property in question, based on their actual
possession thereof and their pending application for a free patent thereon. The linchpin of this
right, however, is the validity of OCT No. 4216. In other words, private respondents right is
premised on the allegation that the title of herein petitioners originated merely from the fictitious
and/or spurious OCT No. 4216.

Because it had failed to take cognizance of Margolles vs. CA, the CA was unable to consider that
the legality of OCT No. 4216. As adverted to earlier, Margolles vs. CA upheld the validity of this
title and the titles derived therefrom by, among others, Petitioner Peltan Corporation. Clearly,
private respondents possession of the land, and their pending application for a free patent
thereon, did not not vest in them a right superior to the valid title of petitioner originating from
OCT No. 4216. Indeed, private respondents can invoke no right at all against the petitioners.
Accordingly, the first element of a cause of action, i.e., plaintiffs right, is not present in the
instant case.

In this light, the CAs treatment of the present suit as an accion publiciana to determine which
one among the parties had a better right over the property is but an exercise in redundancy. As
discussed above, the same issue has been foreclosed by the Supreme Court in Margolles.

The Supreme Court promulgated Margolles ahead of the assailed CA decision. It was incumbent
upon Respondent CA to take judicial notice thereof and apply it in resolving this case. That the
CA did not is clearly a reversible error.

Furthermore, allowing repeated suits seeking to nullify OCT No. 4216, like the present case, will
bring to naught the principle of indefeasibility of titles issued under the Torrens system of land
registration.i[19] Thus, in a resolutioni[20] dated 10 August 1994, the First Division of this Court,
applying the Margolles ruling, dismissed a petition for review involving herein petitioner Peltan
Corporation which had raised as issue the validity of OCT No. 4216. The Court, in the case at
bench, can do no less. Subjecting OCT No. 4216 to further scrutiny, as proposed in the amended
complaint, is no longer an available option.

Are Private Respondents the Real Parties-in-Interest?

The Court also holds that private respondents are not the proper parties to initiate the present
suit. The complaint, praying as it did for the cancellation of the transfer certificates of title of
petitioners on the ground that they were derived from a spurious OCT No. 4216, assailed in
effect the validity of said title. While private respondents did not pray for the reversion of the
land to the government, we agree with the petitioners that the prayer in the complaint will have
the same result of reverting the land to the government under the Regalian doctrine.i[21] Gabila
vs. Barriga ruled that only the government is entitled to this relief. The Court in that case held:

The present motion to dismiss is actually predicated on Section 1(g), Rule 16 of the Revised
Rules of Court, i.e., failure of the complaint to state a cause of action, for it alleges in paragraph
12 thereof that the plaintiff admits that he has no right to demand the cancellation or amendment
of the defendants title, because, even if the said title were canceled or amended, the ownership of
the land embraced therein, or of the portion thereof affected by the amendment, would revert to
the public domain. In his amended complaint the plaintiff makes no pretense at all that any part
of the land covered by the defendants title was privately owned by him or by his predecessors-in-
interest. Indeed, it is admitted therein that the said land was at all times a part of the public
domain until December 18, 1964, when the government issued a title thereon in favor of
defendant. Thus, if there is any person or entity to relief, it can only be the government.

In the case at bar, the plaintiffs own averments negate the existence of such right, for it would
appear therefrom that whatever right might have been violated by the defendant belonged to the
government, not to the plaintiff. Plaintiff-appellant argues that although his complaint is
captioned as one for cancellation of title, he has nevertheless stated therein several causes of
action based on his alleged rights of possession and ownership over the improvements, on
defendant-appellees alleged fraudulent acquisition of the land, and on the damages allegedly
incurred by him (plaintiff-appellant) in relation to the improvements. These matters are merely
ancillary to the central issue of whether or not defendant-appellees title should be canceled or
amended, and they may not be leaned upon in an effort to make out a cause of action in relation
to the said focal issue. Indeed, the principal relief prayed for in the amended complaint is the
cancellation or amendment of defendant-appellees title.i[22]

Nonpayment of Docket Fees

As we have already ruled that the private respondents are not the real parties in interest, we find
no more need to pass upon the question of nonpayment of filing fees.

WHEREFORE, the petition is GRANTED and the assailed Decision is REVERSED and SET
ASIDE. The complaint of private respondents in Civil Case No. LP-8852-P is DISMISSED. The
notice of lis pendens, annotated in the titles of petitioners because of Civil Case No. LP-8852-P,
is ordered CANCELED. No costs.

SO ORDERED.

G.R. No. L-30642 April 30, 1985

PERFECTO S. FLORESCA, in his own behalf and on behalf of the minors

ROMULO and NESTOR S. FLORESCA; and ERLINDA FLORESCA-GABUYO,
PEDRO S. FLORESCA, JR., CELSO S. FLORESCA, MELBA S. FLORESCA, JUDITH
S. FLORESCA and CARMEN S. FLORESCA;

LYDIA CARAMAT VDA. DE MARTINEZ in her own behalf and on behalf of her
minor children LINDA, ROMEO, ANTONIO JEAN and ELY, all surnamed Martinez;
and DANIEL MARTINEZ and TOMAS MARTINEZ;

SALUSTIANA ASPIRAS VDA. DE OBRA, in her own behalf and on behalf of her
minor children JOSE, ESTELA, JULITA SALUD and DANILO, all surnamed OBRA;
LYDIA CULBENGAN VDA. DE VILLAR, in her own behalf and on behalf of her
minor children EDNA, GEORGE and LARRY III, all surnamed VILLAR;

DOLORES LOLITA ADER VDA. DE LANUZA, in her own behalf and on behalf of
her minor children EDITHA, ELIZABETH, DIVINA, RAYMUNDO, NESTOR and
AURELIO, JR. all surnamed LANUZA;

EMERENCIANA JOSE VDA. DE ISLA, in her own behalf and on behalf of her minor
children JOSE, LORENZO, JR., MARIA, VENUS and FELIX, all surnamed ISLA,
petitioners,
vs.
PHILEX MINING CORPORATION and HON. JESUS P. MORFE, Presiding Judge of
Branch XIII, Court of First Instance of Manila, respondents.

Rodolfo C. Pacampara for petitioners.

Tito M. Villaluna for respondents.

MAKASIAR, J.:

This is a petition to review the order of the former Court of First Instance of Manila,
Branch XIII, dated December 16, 1968 dismissing petitioners' complaint for damages on
the ground of lack of jurisdiction.

Petitioners are the heirs of the deceased employees of Philex Mining Corporation
(hereinafter referred to as Philex), who, while working at its copper mines underground
operations at Tuba, Benguet on June 28, 1967, died as a result of the cave-in that
buried them in the tunnels of the mine. Specifically, the complaint alleges that Philex, in
violation of government rules and regulations, negligently and deliberately failed to take
the required precautions for the protection of the lives of its men working underground.
Portion of the complaint reads:

xxx xxx xxx

9. That for sometime prior and up to June 28,1967, the defendant

PHILEX, with gross and reckless negligence and imprudence and
deliberate failure to take the required precautions for the due protection of
the lives of its men working underground at the time, and in utter violation
of the laws and the rules and regulations duly promulgated by the
Government pursuant thereto, allowed great amount of water and mud to
accumulate in an open pit area at the mine above Block 43-S-1 which
seeped through and saturated the 600 ft. column of broken ore and rock
below it, thereby exerting tremendous pressure on the working spaces at
 its 4300 level, with the result that, on the said date, at about 4 o'clock in
the afternoon, with the collapse of all underground supports due to such
enormous pressure, approximately 500,000 cubic feet of broken ores
rocks, mud and water, accompanied by surface boulders, blasted through
the tunnels and flowed out and filled in, in a matter of approximately five
(5) minutes, the underground workings, ripped timber supports and carried
off materials, machines and equipment which blocked all avenues of exit,
thereby trapping within its tunnels of all its men above referred to,
including those named in the next preceding paragraph, represented by
the plaintiffs herein;

10. That out of the 48 mine workers who were then working at defendant
PHILEX's mine on the said date, five (5) were able to escape from the
terrifying holocaust; 22 were rescued within the next 7 days; and the rest,
21 in number, including those referred to in paragraph 7 hereinabove,
were left mercilessly to their fate, notwithstanding the fact that up to then,
a great many of them were still alive, entombed in the tunnels of the mine,
but were not rescued due to defendant PHILEX's decision to abandon
rescue operations, in utter disregard of its bounden legal and moral duties
in the premises;

xxx xxx xxx

13. That defendant PHILEX not only violated the law and the rules and
regulations duly promulgated by the duly constituted authorities as set out
by the Special Committee above referred to, in their Report of
investigation, pages 7-13, Annex 'B' hereof, but also failed completely to
provide its men working underground the necessary security for the
protection of their lives notwithstanding the fact that it had vast financial
resources, it having made, during the year 1966 alone, a total operating
income of P 38,220,254.00, or net earnings, after taxes of
P19,117,394.00, as per its llth Annual Report for the year ended
December 31, 1966, and with aggregate assets totalling P 45,794,103.00
as of December 31, 1966;

xxx xxx xxx

(pp. 42-44, rec.)

A motion to dismiss dated May 14, 1968 was filed by Philex alleging that the causes of
action of petitioners based on an industrial accident are covered by the provisions of the
Workmen's Compensation Act (Act 3428, as amended by RA 772) and that the former
Court of First Instance has no jurisdiction over the case. Petitioners filed an opposition
dated May 27, 1968 to the said motion to dismiss claiming that the causes of action are
not based on the provisions of the Workmen's Compensation Act but on the provisions
of the Civil Code allowing the award of actual, moral and exemplary damages,
particularly:

Art. 2176. Whoever by act or omission causes damage to another, there

being fault or negligence, is obliged to pay for the damage done. Such
fault or negligence, if there is no pre- existing contractual relation between
the parties, is called a quasi-delict and is governed by the provisions of
this Chapter.

Art. 2178. The provisions of articles 1172 to 1174 are also applicable to a
quasi-delict.

(b) Art. 1173The fault or negligence of the obligor consists in the

omission of that diligence which is required by the nature of the obligation
and corresponds with the circumstances of the persons, of the time and of
the place. When negligence shows bad faith, the provisions of Articles
1171 and 2201, paragraph 2 shall apply.

Art. 2201. x x x x x x x x x

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be
responsible for all damages which may be reasonably attributed to the
non-performance of the obligation.

Art. 2231. In quasi-delicts, exemplary damages may be granted if the

defendant acted with gross negligence.

After a reply and a rejoinder thereto were filed, respondent Judge issued an order dated
June 27, 1968 dismissing the case on the ground that it falls within the exclusive
jurisdiction of the Workmen's Compensation Commission. On petitioners' motion for
reconsideration of the said order, respondent Judge, on September 23, 1968,
reconsidered and set aside his order of June 27, 1968 and allowed Philex to file an
answer to the complaint. Philex moved to reconsider the aforesaid order which was
opposed by petitioners.

On December 16, 1968, respondent Judge dismissed the case for lack of jurisdiction
and ruled that in accordance with the established jurisprudence, the Workmen's
Compensation Commission has exclusive original jurisdiction over damage or
compensation claims for work-connected deaths or injuries of workmen or employees,
irrespective of whether or not the employer was negligent, adding that if the employer's
negligence results in work-connected deaths or injuries, the employer shall, pursuant to
Section 4-A of the Workmen's Compensation Act, pay additional compensation equal to
50% of the compensation fixed in the Act.

Petitioners thus filed the present petition.

In their brief, petitioners raised the following assignment of errors:

THE LOWER COURT ERRED IN DISMISSING THE PLAINTIFFS-

PETITIONERS' COMPLAINT FOR LACK OF JURISDICTION.

II

THE LOWER COURT ERRED IN FAILING TO CONSIDER THE CLEAR

DISTINCTION BETWEEN CLAIMS FOR DAMAGES UNDER THE CIVIL
CODE AND CLAIMS FOR COMPENSATION UNDER THE WORKMEN'S
COMPENSATION ACT.

In the first assignment of error, petitioners argue that the lower court has jurisdiction
over the cause of action since the complaint is based on the provisions of the Civil Code
on damages, particularly Articles 2176, 2178, 1173, 2201 and 2231, and not on the
provisions of the Workmen's Compensation Act. They point out that the complaint
alleges gross and brazen negligence on the part of Philex in failing to take the
necessary security for the protection of the lives of its employees working underground.
They also assert that since Philex opted to file a motion to dismiss in the court a quo,
the allegations in their complaint including those contained in the annexes are deemed
admitted.

In the second assignment of error, petitioners asseverate that respondent Judge failed
to see the distinction between the claims for compensation under the Workmen's
Compensation Act and the claims for damages based on gross negligence of Philex
under the Civil Code. They point out that workmen's compensation refers to liability for
compensation for loss resulting from injury, disability or death of the working man
through industrial accident or disease, without regard to the fault or negligence of the
employer, while the claim for damages under the Civil Code which petitioners pursued
in the regular court, refers to the employer's liability for reckless and wanton negligence
resulting in the death of the employees and for which the regular court has jurisdiction to
adjudicate the same.

On the other hand, Philex asserts that work-connected injuries are compensable
exclusively under the provisions of Sections 5 and 46 of the Workmen's Compensation
Act, which read:

SEC. 5. Exclusive right to compensation.The rights and remedies

granted by this Act to an employee by reason of a personal injury entitling
him to compensation shall exclude all other rights and remedies accruing
to the employee, his personal representatives, dependents or nearest of
 kin against the employer under the Civil Code and other laws because of
said injury ...

SEC. 46. Jurisdiction. The Workmen's Compensation Commissioner

shall have exclusive jurisdiction to hear and decide claims for
compensation under the Workmen's Compensation Act, subject to appeal
to the Supreme Court, ...

Philex cites the case of Manalo vs. Foster Wheeler (98 Phil. 855 [1956]) where it was
held that "all claims of workmen against their employer for damages due to accident
suffered in the course of employment shall be investigated and adjudicated by the
Workmen's Compensation Commission," subject to appeal to the Supreme Court.

Philex maintains that the fact that an employer was negligent, does not remove the case
from the exclusive character of recoveries under the Workmen's Compensation Act;
because Section 4-A of the Act provides an additional compensation in case the
employer fails to comply with the requirements of safety as imposed by law to prevent
accidents. In fact, it points out that Philex voluntarily paid the compensation due the
petitioners and all the payments have been accepted in behalf of the deceased miners,
except the heirs of Nazarito Floresca who insisted that they are entitled to a greater
amount of damages under the Civil Code.

In the hearing of this case, then Undersecretary of Labor Israel Bocobo, then Atty.
Edgardo Angara, now President of the University of the Philippines, Justice Manuel
Lazaro, as corporate counsel and Assistant General Manager of the GSIS Legal Affairs
Department, and Commissioner on Elections, formerly UP Law Center Director Froilan
Bacungan, appeared as amici curiae and thereafter, submitted their respective
memoranda.

The issue to be resolved as WE stated in the resolution of November 26, 1976, is:

Whether the action of an injured employee or worker or that of his heirs in

case of his death under the Workmen's Compensation Act is exclusive,
selective or cumulative, that is to say, whether his or his heirs' action is
exclusively restricted to seeking the limited compensation provided under
the Workmen's Compensation Act or whether they have a right of
selection or choice of action between availing of the worker's right under
the Workmen's Compensation Act and suing in the regular courts under
the Civil Code for higher damages (actual, moral and/or exemplary) from
the employer by virtue of negligence (or fault) of the employer or of his
other employees or whether they may avail cumulatively of both actions,
i.e., collect the limited compensation under the Workmen's Compensation
Act and sue in addition for damages in the regular courts.
There are divergent opinions in this case. Justice Lazaro is of the opinion that an injured
employee or worker, or the heirs in case of his death, may initiate a complaint to recover
damages (not compensation under the Workmen's Compensation Act) with the regular
court on the basis of negligence of an employer pursuant to the Civil Code provisions.
Atty. Angara believes otherwise. He submits that the remedy of an injured employee for
work-connected injury or accident is exclusive in accordance with Section 5 of the
Workmen's Compensation Act, while Atty. Bacungan's position is that the action is
selective. He opines that the heirs of the employee in case of his death have a right of
choice to avail themselves of the benefits provided under the Workmen's Compensation
Act or to sue in the regular court under the Civil Code for higher damages from the
employer by virtue of negligence of the latter. Atty. Bocobo's stand is the same as that
of Atty. Bacungan and adds that once the heirs elect the remedy provided for under the
Act, they are no longer entitled to avail themselves of the remedy provided for under the
Civil Code by filing an action for higher damages in the regular court, and vice versa.

On August 3, 1978, petitioners-heirs of deceased employee Nazarito Floresca filed a

motion to dismiss on the ground that they have amicably settled their claim with
respondent Philex. In the resolution of September 7, 1978, WE dismissed the petition
only insofar as the aforesaid petitioners are connected, it appearing that there are other
petitioners in this case.

WE hold that the former Court of First Instance has jurisdiction to try the case,

It should be underscored that petitioners' complaint is not for compensation based on

the Workmen's Compensation Act but a complaint for damages (actual, exemplary and
moral) in the total amount of eight hundred twenty-five thousand (P825,000.00) pesos.
Petitioners did not invoke the provisions of the Workmen's Compensation Act to entitle
them to compensation thereunder. In fact, no allegation appeared in the complaint that
the employees died from accident arising out of and in the course of their employments.
The complaint instead alleges gross and reckless negligence and deliberate failure on
the part of Philex to protect the lives of its workers as a consequence of which a cave-in
occurred resulting in the death of the employees working underground. Settled is the
rule that in ascertaining whether or not the cause of action is in the nature of workmen's
compensation claim or a claim for damages pursuant to the provisions of the Civil Code,
the test is the averments or allegations in the complaint (Belandres vs. Lopez Sugar
Mill, Co., Inc., 97 Phil. 100).

In the present case, there exists between Philex and the deceased employees a
contractual relationship. The alleged gross and reckless negligence and deliberate
failure that amount to bad faith on the part of Philex, constitute a breach of contract for
which it may be held liable for damages. The provisions of the Civil Code on cases of
breach of contract when there is fraud or bad faith, read:
 Art. 2232. In contracts and quasi-contracts, the court may award
exemplary damages if the defendant acted in a wanton, fraudulent,
reckless, oppressive or malevolent manner.

Art. 2201. In contracts and quasi-contracts, the damages for which the
obligor who acted in good faith is able shall be those that are the natural
and probable consequences of the breach of the obligation, and which the
parties have foreseen or could have reasonably foreseen at the time the
obligation was constituted.

In cases of fraud, bad faith, malice or wanton attitude, the obligor shall be
responsible for all damages which may be reasonably attributed to the
non-performance of the obligation.

Furthermore, Articles 2216 et seq., Civil Code, allow the payment of all kinds of
damages, as assessed by the court.

The rationale in awarding compensation under the Workmen's Compensation Act differs
from that in giving damages under the Civil Code. The compensation acts are based on
a theory of compensation distinct from the existing theories of damages, payments
under the acts being made as compensation and not as damages (99 C.J.S. 53).
Compensation is given to mitigate the harshness and insecurity of industrial life for the
workman and his family. Hence, an employer is liable whether negligence exists or not
since liability is created by law. Recovery under the Act is not based on any theory of
actionable wrong on the part of the employer (99 C.J.S. 36).

In other words, under the compensation acts, the employer is liable to pay
compensation benefits for loss of income, as long as the death, sickness or injury is
work-connected or work-aggravated, even if the death or injury is not due to the fault of
the employer (Murillo vs. Mendoza, 66 Phil. 689). On the other hand, damages are
awarded to one as a vindication of the wrongful invasion of his rights. It is the indemnity
recoverable by a person who has sustained injury either in his person, property or
relative rights, through the act or default of another (25 C.J.S. 452).

The claimant for damages under the Civil Code has the burden of proving the causal
relation between the defendant's negligence and the resulting injury as well as the
damages suffered. While under the Workmen's Compensation Act, there is a
presumption in favor of the deceased or injured employee that the death or injury is
work-connected or work-aggravated; and the employer has the burden to prove
otherwise (De los Angeles vs. GSIS, 94 SCRA 308; Carino vs. WCC, 93 SCRA 551;
Maria Cristina Fertilizer Corp. vs. WCC, 60 SCRA 228).

The claim of petitioners that the case is not cognizable by the Workmen's
Compensation Commission then, now Employees Compensation Commission, is
strengthened by the fact that unlike in the Civil Code, the Workmen's Compensation Act
did not contain any provision for an award of actual, moral and exemplary damages.
What the Act provided was merely the right of the heirs to claim limited compensation
for the death in the amount of six thousand (P6,000.00) pesos plus burial expenses of
two hundred (P200.00) pesos, and medical expenses when incurred (Sections 8, 12
and 13, Workmen's Compensation Act), and an additional compensation of only 50% if
the complaint alleges failure on the part of the employer to "install and maintain safety
appliances or to take other precautions for the prevention of accident or occupational
disease" (Section 4-A, Ibid.). In the case at bar, the amount sought to be recovered is
over and above that which was provided under the Workmen's Compensation Act and
which cannot be granted by the Commission.

Moreover, under the Workmen's Compensation Act, compensation benefits should be

paid to an employee who suffered an accident not due to the facilities or lack of facilities
in the industry of his employer but caused by factors outside the industrial plant of his
employer. Under the Civil Code, the liability of the employer, depends on breach of
contract or tort. The Workmen's Compensation Act was specifically enacted to afford
protection to the employees or workmen. It is a social legislation designed to give relief
to the workman who has been the victim of an accident causing his death or ailment or
injury in the pursuit of his employment (Abong vs. WCC, 54 SCRA 379).

WE now come to the query as to whether or not the injured employee or his heirs in
case of death have a right of selection or choice of action between availing themselves
of the worker's right under the Workmen's Compensation Act and suing in the regular
courts under the Civil Code for higher damages (actual, moral and exemplary) from the
employers by virtue of that negligence or fault of the employers or whether they may
avail themselves cumulatively of both actions, i.e., collect the limited compensation
under the Workmen's Compensation Act and sue in addition for damages in the regular
courts.

In disposing of a similar issue, this Court in Pacana vs. Cebu Autobus Company, 32
SCRA 442, ruled that an injured worker has a choice of either to recover from the
employer the fixed amounts set by the Workmen's Compensation Act or to prosecute an
ordinary civil action against the tortfeasor for higher damages but he cannot pursue both
courses of action simultaneously.

In Pacaa WE said:

In the analogous case of Esguerra vs. Munoz Palma, involving the

application of Section 6 of the Workmen's Compensation Act on the
injured workers' right to sue third- party tortfeasors in the regular courts,
Mr. Justice J.B.L. Reyes, again speaking for the Court, pointed out that
the injured worker has the choice of remedies but cannot pursue both
courses of action simultaneously and thus balanced the relative
advantage of recourse under the Workmen's Compensation Act as against
an ordinary action.
 As applied to this case, petitioner Esguerra cannot maintain his action for
damages against the respondents (defendants below), because he has
elected to seek compensation under the Workmen's Compensation Law,
and his claim (case No. 44549 of the Compensation Commission) was
being processed at the time he filed this action in the Court of First
Instance. It is argued for petitioner that as the damages recoverable under
the Civil Code are much more extensive than the amounts that may be
awarded under the Workmen's Compensation Act, they should not be
deemed incompatible. As already indicated, the injured laborer was
initially free to choose either to recover from the employer the fixed
amounts set by the Compensation Law or else, to prosecute an ordinary
civil action against the tortfeasor for higher damages. While perhaps not
as profitable, the smaller indemnity obtainable by the first course is
balanced by the claimant's being relieved of the burden of proving the
causal connection between the defendant's negligence and the resulting
injury, and of having to establish the extent of the damage suffered; issues
that are apt to be troublesome to establish satisfactorily. Having staked his
fortunes on a particular remedy, petitioner is precluded from pursuing the
alternate course, at least until the prior claim is rejected by the
Compensation Commission. Anyway, under the proviso of Section 6
aforequoted, if the employer Franklin Baker Company recovers, by
derivative action against the alleged tortfeasors, a sum greater than the
compensation he may have paid the herein petitioner, the excess accrues
to the latter.

Although the doctrine in the case of Esguerra vs. Munoz Palma (104 Phil. 582), applies
to third-party tortfeasor, said rule should likewise apply to the employer-tortfeasor.

Insofar as the heirs of Nazarito Floresca are concerned, as already stated, the petition
has been dismissed in the resolution of September 7, 1978 in view of the amicable
settlement reached by Philex and the said heirs.

With regard to the other petitioners, it was alleged by Philex in its motion to dismiss
dated May 14, 1968 before the court a quo, that the heirs of the deceased employees,
namely Emerito Obra, Larry Villar, Jr., Aurelio Lanuza, Lorenzo Isla and Saturnino
Martinez submitted notices and claims for compensation to the Regional Office No. 1 of
the then Department of Labor and all of them have been paid in full as of August 25,
1967, except Saturnino Martinez whose heirs decided that they be paid in installments
(pp. 106-107, rec.). Such allegation was admitted by herein petitioners in their
opposition to the motion to dismiss dated May 27, 1968 (pp. 121-122, rec.) in the lower
court, but they set up the defense that the claims were filed under the Workmen's
Compensation Act before they learned of the official report of the committee created to
investigate the accident which established the criminal negligence and violation of law
by Philex, and which report was forwarded by the Director of Mines to the then
Executive Secretary Rafael Salas in a letter dated October 19, 1967 only (p. 76, rec.).
WE hold that although the other petitioners had received the benefits under the
Workmen's Compensation Act, such may not preclude them from bringing an action
before the regular court because they became cognizant of the fact that Philex has
been remiss in its contractual obligations with the deceased miners only after receiving
compensation under the Act. Had petitioners been aware of said violation of
government rules and regulations by Philex, and of its negligence, they would not have
sought redress under the Workmen's Compensation Commission which awarded a
lesser amount for compensation. The choice of the first remedy was based on
ignorance or a mistake of fact, which nullifies the choice as it was not an intelligent
choice. The case should therefore be remanded to the lower court for further
proceedings. However, should the petitioners be successful in their bid before the lower
court, the payments made under the Workmen's Compensation Act should be deducted
from the damages that may be decreed in their favor.

Contrary to the perception of the dissenting opinion, the Court does not legislate in the
instant case. The Court merely applies and gives effect to the constitutional guarantees
of social justice then secured by Section 5 of Article 11 and Section 6 of Article XIV of
the 1935 Constitution, and now by Sections 6, 7, and 9 of Article 11 of the
DECLARATION OF PRINCIPLES AND STATE POLICIES of the 1973 Constitution, as
amended, and as implemented by Articles 2176, 2177, 2178, 1173, 2201, 2216, 2231
and 2232 of the New Civil Code of 1950.

To emphasize, the 1935 Constitution declares that:

Sec. 5. The promotion of social justice to insure the well-being and

economic security of all the people should be the concern of the State
(Art. II).

Sec. 6. The State shall afford protection to labor, especially to working

women, and minors, and shall regulate the relations between landowner
and tenant, and between labor and capital in industry and in agriculture.
The State may provide for compulsory arbitration (Art. XIV).

The 1973 Constitution likewise commands the State to "promote social justice to insure
the dignity, welfare, and security of all the people "... regulate the use ... and disposition
of private property and equitably diffuse property ownership and profits "establish,
maintain and ensure adequate social services in, the field of education, health, housing,
employment, welfare and social security to guarantee the enjoyment by the people of a
decent standard of living" (Sections 6 and 7, Art. II, 1973 Constitution); "... afford
protection to labor, ... and regulate the relations between workers and employers ..., and
assure the rights of workers to ... just and humane conditions of work" (Sec. 9, Art. II,
1973 Constitution, emphasis supplied).
The foregoing constitutional guarantees in favor of labor institutionalized in Section 9 of
Article 11 of the 1973 Constitution and re-stated as a declaration of basic policy in
Article 3 of the New Labor Code, thus:

Art. 3. Declaration of basic policy.The State shall afford protection to

labor, promote full employment, ensure equal work opportunities
regardless of sex, race or creed, and regulate the relations between
workers and employers. The State shall assure the rights of workers to
self-organization, collective bargaining, security of tenure, and just and
humane conditions of work. (emphasis supplied).

The aforestated constitutional principles as implemented by the aforementioned articles

of the New Civil Code cannot be impliedly repealed by the restrictive provisions of
Article 173 of the New Labor Code. Section 5 of the Workmen's Compensation Act
(before it was amended by R.A. No. 772 on June 20, 1952), predecessor of Article 173
of the New Labor Code, has been superseded by the aforestated provisions of the New
Civil Code, a subsequent law, which took effect on August 30, 1950, which obey the
constitutional mandates of social justice enhancing as they do the rights of the workers
as against their employers. Article 173 of the New Labor Code seems to diminish the
rights of the workers and therefore collides with the social justice guarantee of the
Constitution and the liberal provisions of the New Civil Code.

The guarantees of social justice embodied in Sections 6, 7 and 9 of Article II of the 1973
Constitution are statements of legal principles to be applied and enforced by the courts.
Mr. Justice Robert Jackson in the case of West Virginia State Board of Education vs.
Barnette, with characteristic eloquence, enunciated:

The very purpose of a Bill of Rights was to withdraw certain subjects from
the vicissitudes of political controversy, to place them beyond the reach of
majorities and officials and to establish them as legal principles to be
applied by the courts. One's right to life, liberty, and property, to free
speech, a free press, freedom of worship and assembly, and other
fundamental rights may not be submitted to vote; they depend on the
outcome of no elections (319 U.S. 625, 638, 87 L.ed. 1638, emphasis
supplied).

In case of any doubt which may be engendered by Article 173 of the New Labor Code,
both the New Labor Code and the Civil Code direct that the doubts should be resolved
in favor of the workers and employees.

Thus, Article 4 of the New Labor Code, otherwise known as Presidential Decree No.
442, as amended, promulgated on May 1, 1974, but which took effect six months
thereafter, provides that "all doubts in the implementation and interpretation of the
provisions of this Code, including its implementing rules and regulations, shall be
resolved in favor of labor" (Art. 2, Labor Code).
Article 10 of the New Civil Code states: "In case of doubt in the interpretation or
application of laws, it is presumed that the law-making body intended right and justice to
prevail. "

More specifically, Article 1702 of the New Civil Code likewise directs that. "In case of
doubt, all labor legislation and all labor contracts shall be construed in favor of the
safety and decent living of the laborer."

Before it was amended by Commonwealth Act No. 772 on June 20, 1952, Section 5 of
the Workmen's Compensation Act provided:

Sec. 5. Exclusive right to compensation.- The rights and remedies granted

by this Act to an employee by reason of a personal injury entitling him to
compensation shall exclude all other rights and remedies accruing to the
employee, his personal representatives, dependents or nearest of kin
against the employer under the Civil Code and other laws, because of said
injury (emphasis supplied).

Employers contracting laborecsrs in the Philippine Islands for work outside

the same may stipulate with such laborers that the remedies prescribed by
this Act shall apply exclusively to injuries received outside the Islands
through accidents happening in and during the performance of the duties
of the employment; and all service contracts made in the manner
prescribed in this section shall be presumed to include such agreement.

Only the second paragraph of Section 5 of the Workmen's Compensation Act No. 3428,
was amended by Commonwealth Act No. 772 on June 20, 1952, thus:

Sec. 5. Exclusive right to compensation.- The rights and remedies granted

by this Act to an employee by reason of a personal injury entitling him to
compensation shall exclude all other rights and remedies accruing to the
employee, his personal representatives, dependents or nearest of kin
against the employer under the Civil Code and other laws, because of said
injury.

Employers contracting laborers in the Philippine Islands for work outside

the same shall stipulate with such laborers that the remedies prescribed
by this Act shall apply to injuries received outside the Island through
accidents happening in and during the performance of the duties of the
employment. Such stipulation shall not prejudice the right of the laborers
to the benefits of the Workmen's Compensation Law of the place where
the accident occurs, should such law be more favorable to them (As
amended by section 5 of Republic Act No. 772).
Article 173 of the New Labor Code does not repeal expressly nor impliedly the
applicable provisions of the New Civil Code, because said Article 173 provides:

Art. 173. Exclusiveness of liability.- Unless otherwise provided, the liability

of the State Insurance Fund under this Title shall be exclusive and in place
of all other liabilities of the employer to the employee, his dependents or
anyone otherwise entitled to receive damages on behalf of the employee
or his dependents. The payment of compensation under this Title shall bar
the recovery of benefits as provided for in Section 699 of the Revised
Administrative Code, Republic Act Numbered Eleven hundred sixty-one,
as amended, Commonwealth Act Numbered One hundred eighty- six, as
amended, Commonwealth Act Numbered Six hundred ten, as amended,
Republic Act Numbered Forty-eight hundred Sixty-four, as amended, and
other laws whose benefits are administered by the System during the
period of such payment for the same disability or death, and conversely
(emphasis supplied).

As above-quoted, Article 173 of the New Labor Code expressly repealed only Section
699 of the Revised Administrative Code, R.A. No. 1161, as amended, C.A. No. 186, as
amended, R.A. No. 610, as amended, R.A. No. 4864, as amended, and all other laws
whose benefits are administered by the System (referring to the GSIS or SSS).

Unlike Section 5 of the Workmen's Compensation Act as aforequoted, Article 173 of the
New Labor Code does not even remotely, much less expressly, repeal the New Civil
Code provisions heretofore quoted.

It is patent, therefore, that recovery under the New Civil Code for damages arising from
negligence, is not barred by Article 173 of the New Labor Code. And the damages
recoverable under the New Civil Code are not administered by the System provided for
by the New Labor Code, which defines the "System" as referring to the Government
Service Insurance System or the Social Security System (Art. 167 [c], [d] and [e] of the
New Labor Code).

Furthermore, under Article 8 of the New Civil Code, decisions of the Supreme Court
form part of the law of the land.

Article 8 of the New Civil Code provides:

Art. 8. Judicial decisions applying or interpreting the laws or the

Constitution shall form a part of the legal system of the Philippines.

The Court, through the late Chief Justice Fred Ruiz Castro, in People vs. Licera ruled:

Article 8 of the Civil Code of the Philippines decrees that judicial decisions
applying or interpreting the laws or the Constitution form part of this
 jurisdiction's legal system. These decisions, although in themselves not
laws, constitute evidence of what the laws mean. The application or
interpretation placed by the Court upon a law is part of the law as of the
date of the enactment of the said law since the Court's application or
interpretation merely establishes the contemporaneous legislative intent
that the construed law purports to carry into effect" (65 SCRA 270, 272-
273 [1975]).

WE ruled that judicial decisions of the Supreme Court assume the same authority as the
statute itself (Caltex vs. Palomer, 18 SCRA 247; 124 Phil. 763).

The aforequoted provisions of Section 5 of the Workmen's Compensation Act, before

and after it was amended by Commonwealth Act No. 772 on June 20, 1952, limited the
right of recovery in favor of the deceased, ailing or injured employee to the
compensation provided for therein. Said Section 5 was not accorded controlling
application by the Supreme Court in the 1970 case of Pacana vs. Cebu Autobus
Company (32 SCRA 442) when WE ruled that an injured worker has a choice of either
to recover from the employer the fixed amount set by the Workmen's Compensation Act
or to prosecute an ordinary civil action against the tortfeasor for greater damages; but
he cannot pursue both courses of action simultaneously. Said Pacana case penned by
Mr. Justice Teehankee, applied Article 1711 of the Civil Code as against the Workmen's
Compensation Act, reiterating the 1969 ruling in the case of Valencia vs. Manila Yacht
Club (28 SCRA 724, June 30,1969) and the 1958 case of Esguerra vs. Munoz Palma
(104 Phil. 582), both penned by Justice J.B.L. Reyes. Said Pacana case was concurred
in by Justices J.B.L. Reyes, Dizon, Makalintal, Zaldivar, Castro, Fernando and Villamor.

Since the first sentence of Article 173 of the New Labor Code is merely a re-statement
of the first paragraph of Section 5 of the Workmen's Compensation Act, as amended,
and does not even refer, neither expressly nor impliedly, to the Civil Code as Section 5
of the Workmen's Compensation Act did, with greater reason said Article 173 must be
subject to the same interpretation adopted in the cases of Pacana, Valencia and
Esguerra aforementioned as the doctrine in the aforesaid three (3) cases is faithful to
and advances the social justice guarantees enshrined in both the 1935 and 1973
Constitutions.

It should be stressed likewise that there is no similar provision on social justice in the
American Federal Constitution, nor in the various state constitutions of the American
Union. Consequently, the restrictive nature of the American decisions on the Workmen's
Compensation Act cannot limit the range and compass of OUR interpretation of our own
laws, especially Article 1711 of the New Civil Code, vis-a-vis Article 173 of the New
Labor Code, in relation to Section 5 of Article II and Section 6 of Article XIV of the 1935
Constitution then, and now Sections 6, 7 and 9 of the Declaration of Principles and
State Policies of Article II of the 1973 Constitution.
The dissent seems to subordinate the life of the laborer to the property rights of the
employer. The right to life is guaranteed specifically by the due process clause of the
Constitution. To relieve the employer from liability for the death of his workers arising
from his gross or wanton fault or failure to provide safety devices for the protection of
his employees or workers against the dangers which are inherent in underground
mining, is to deprive the deceased worker and his heirs of the right to recover indemnity
for the loss of the life of the worker and the consequent loss to his family without due
process of law. The dissent in effect condones and therefore encourages such gross or
wanton neglect on the part of the employer to comply with his legal obligation to provide
safety measures for the protection of the life, limb and health of his worker. Even from
the moral viewpoint alone, such attitude is un-Christian.

It is therefore patent that giving effect to the social justice guarantees of the
Constitution, as implemented by the provisions of the New Civil Code, is not an exercise
of the power of law-making, but is rendering obedience to the mandates of the
fundamental law and the implementing legislation aforementioned.

The Court, to repeat, is not legislating in the instant case.

It is axiomatic that no ordinary statute can override a constitutional provision.

The words of Section 5 of the Workmen's Compensation Act and of Article 173 of the
New Labor Code subvert the rights of the petitioners as surviving heirs of the deceased
mining employees. Section 5 of the Workmen's Compensation Act and Article 173 of the
New Labor Code are retrogressive; because they are a throwback to the obsolete
laissez-faire doctrine of Adam Smith enunciated in 1776 in his treatise Wealth of
Nations (Collier's Encyclopedia, Vol. 21, p. 93, 1964), which has been discarded soon
after the close of the 18th century due to the Industrial Revolution that generated the
machines and other mechanical devices (beginning with Eli Whitney's cotton gin of 1793
and Robert Fulton's steamboat of 1807) for production and transportation which are
dangerous to life, limb and health. The old socio-political-economic philosophy of live-
and-let-live is now superdesed by the benign Christian shibboleth of live-and-help
others to live. Those who profess to be Christians should not adhere to Cain's selfish
affirmation that he is not his brother's keeper. In this our civilization, each one of us is
our brother's keeper. No man is an island. To assert otherwise is to be as atavistic and
ante-deluvian as the 1837 case of Prisley vs. Fowler (3 MN 1,150 reprint 1030) invoked
by the dissent, The Prisley case was decided in 1837 during the era of economic
royalists and robber barons of America. Only ruthless, unfeeling capitalistics and
egoistic reactionaries continue to pay obeisance to such un-Christian doctrine. The
Prisley rule humiliates man and debases him; because the decision derisively refers to
the lowly worker as "servant" and utilizes with aristocratic arrogance "master" for
"employer." It robs man of his inherent dignity and dehumanizes him. To stress this
affront to human dignity, WE only have to restate the quotation from Prisley, thus: "The
mere relation of the master and the servant never can imply an obligation on the part of
the master to take more care of the servant than he may reasonably be expected to do
himself." This is the very selfish doctrine that provoked the American Civil War which
generated so much hatred and drew so much precious blood on American plains and
valleys from 1861 to 1864.

"Idolatrous reverence" for the letter of the law sacrifices the human being. The spirit of
the law insures man's survival and ennobles him. In the words of Shakespeare, "the
letter of the law killeth; its spirit giveth life."

It is curious that the dissenting opinion clings to the myth that the courts cannot
legislate.

That myth had been exploded by Article 9 of the New Civil Code, which provides that
"No judge or court shall decline to render judgment by reason of the silence, obscurity
or insufficiency of the laws. "

Hence, even the legislator himself, through Article 9 of the New Civil Code, recognizes
that in certain instances, the court, in the language of Justice Holmes, "do and must
legislate" to fill in the gaps in the law; because the mind of the legislator, like all human
beings, is finite and therefore cannot envisage all possible cases to which the law may
apply Nor has the human mind the infinite capacity to anticipate all situations.

But about two centuries before Article 9 of the New Civil Code, the founding fathers of
the American Constitution foresaw and recognized the eventuality that the courts may
have to legislate to supply the omissions or to clarify the ambiguities in the American
Constitution and the statutes.

'Thus, Alexander Hamilton pragmatically admits that judicial legislation may be justified
but denies that the power of the Judiciary to nullify statutes may give rise to Judicial
tyranny (The Federalist, Modern Library, pp. 503-511, 1937 ed.). Thomas Jefferson
went farther to concede that the court is even independent of the Nation itself (A.F.L. vs.
American Sash Company, 1949 335 US 538).

Many of the great expounders of the American Constitution likewise share the same
view. Chief Justice Marshall pronounced: "It is emphatically the province and duty of the
Judicial department to say what the law is (Marbury vs. Madison I Cranch 127 1803),
which was re-stated by Chief Justice Hughes when he said that "the Constitution is what
the judge says it is (Address on May 3, 1907, quoted by President Franklin Delano
Roosevelt on March 9, 1937). This was reiterated by Justice Cardozo who pronounced
that "No doubt the limits for the judge are narrower. He legislates only between gaps.
He fills the open spaces in the law. " (The Nature of the Judicial Process, p. 113). In the
language of Chief Justice Harlan F. Stone, "The only limit to the judicial legislation is the
restraint of the judge" (U.S. vs. Butler 297 U.S. 1 Dissenting Opinion, p. 79), which view
is also entertained by Justice Frankfurter and Justice Robert Jackson. In the rhetoric of
Justice Frankfurter, "the courts breathe life, feeble or strong, into the inert pages of the
Constitution and all statute books."

It should be stressed that the liability of the employer under Section 5 of the Workmen's
Compensation Act or Article 173 of the New Labor Code is limited to death, ailment or
injury caused by the nature of the work, without any fault on the part of the employers. It
is correctly termed no fault liability. Section 5 of the Workmen's Compensation Act, as
amended, or Article 173 of the New Labor Code, does not cover the tortious liability of
the employer occasioned by his fault or culpable negligence in failing to provide the
safety devices required by the law for the protection of the life, limb and health of the
workers. Under either Section 5 or Article 173, the employer remains liable to pay
compensation benefits to the employee whose death, ailment or injury is work-
connected, even if the employer has faithfully and diligently furnished all the safety
measures and contrivances decreed by the law to protect the employee.

The written word is no longer the "sovereign talisman." In the epigrammatic language of
Mr. Justice Cardozo, "the law has outgrown its primitive stage of formalism when the
precise word was the sovereign talisman, and every slip was fatal" (Wood vs. Duff
Gordon 222 NW 88; Cardozo, The Nature of the Judicial Process 100). Justice Cardozo
warned that: "Sometimes the conservatism of judges has threatened for an interval to
rob the legislation of its efficacy. ... Precedents established in those items exert an
unhappy influence even now" (citing Pound, Common Law and Legislation 21 Harvard
Law Review 383, 387).

Finally, Justice Holmes delivered the coup de grace when he pragmatically admitted,
although with a cautionary undertone: "that judges do and must legislate, but they can
do so only interstitially they are confined from molar to molecular motions" (Southern
Pacific Company vs. Jensen, 244 US 204 1917). And in the subsequent case of
Springer vs. Government (277 US 188, 210-212, 72 L.ed. 845, 852- 853), Justice
Holmes pronounced:

The great ordinances of the Constitution do not establish and divide fields
of black and white. Even the more specific of them are found to terminate
in a penumbra shading gradually from one extreme to the other. x x x.
When we come to the fundamental distinctions it is still more obvious that
they must be received with a certain latitude or our government could not
go on.

To make a rule of conduct applicable to an individual who but for such

action would be free from it is to legislate yet it is what the judges do
whenever they determine which of two competing principles of policy shall
prevail.

xxx xxx xxx

 It does not seem to need argument to show that however we may disguise
it by veiling words we do not and cannot carry out the distinction between
legislative and executive action with mathematical precision and divide the
branches into waterlight compartments, were it ever so desirable to do so,
which I am far from believing that it is, or that the Constitution requires.

True, there are jurists and legal writers who affirm that judges should not legislate, but
grudgingly concede that in certain cases judges do legislate. They criticize the
assumption by the courts of such law-making power as dangerous for it may
degenerate into Judicial tyranny. They include Blackstone, Jeremy Bentham, Justice
Black, Justice Harlan, Justice Roberts, Justice David Brewer, Ronald Dworkin, Rolf
Sartorious, Macklin Fleming and Beryl Harold Levy. But said Justices, jurists or legal
commentators, who either deny the power of the courts to legislate in-between gaps of
the law, or decry the exercise of such power, have not pointed to examples of the
exercise by the courts of such law-making authority in the interpretation and application
of the laws in specific cases that gave rise to judicial tyranny or oppression or that such
judicial legislation has not protected public interest or individual welfare, particularly the
lowly workers or the underprivileged.

On the other hand, there are numerous decisions interpreting the Bill of Rights and
statutory enactments expanding the scope of such provisions to protect human rights.
Foremost among them is the doctrine in the cases of Miranda vs. Arizona (384 US 436
1964), Gideon vs. Wainright (372 US 335), Escubedo vs. Illinois (378 US 478), which
guaranteed the accused under custodial investigation his rights to remain silent and to
counsel and to be informed of such rights as even as it protects him against the use of
force or intimidation to extort confession from him. These rights are not found in the
American Bill of Rights. These rights are now institutionalized in Section 20, Article IV of
the 1973 Constitution. Only the peace-and-order adherents were critical of the activism
of the American Supreme Court led by Chief Justice Earl Warren.

Even the definition of Identical offenses for purposes of the double jeopardy provision
was developed by American judicial decisions, not by amendment to the Bill of Rights
on double jeopardy (see Justice Laurel in People vs. Tarok, 73 Phil. 260, 261-268). And
these judicial decisions have been re-stated in Section 7 of Rule 117 of the 1985 Rules
on Criminal Procedure, as well as in Section 9 of Rule 117 of the 1964 Revised Rules of
Court. In both provisions, the second offense is the same as the first offense if the
second offense is an attempt to commit the first or frustration thereof or necessarily
includes or is necessarily included in the first offense.

The requisites of double jeopardy are not spelled out in the Bill of Rights. They were
also developed by judicial decisions in the United States and in the Philippines even
before people vs. Ylagan (58 Phil. 851-853).

Again, the equal protection clause was interpreted in the case of Plessy vs. Ferguson
(163 US 537) as securing to the Negroes equal but separate facilities, which doctrine
was revoked in the case of Brown vs. Maryland Board of Education (349 US 294),
holding that the equal protection clause means that the Negroes are entitled to attend
the same schools attended by the whites-equal facilities in the same school-which was
extended to public parks and public buses.

De-segregation, not segregation, is now the governing principle.

Among other examples, the due process clause was interpreted in the case of People
vs. Pomar (46 Phil. 440) by a conservative, capitalistic court to invalidate a law granting
maternity leave to working women-according primacy to property rights over human
rights. The case of People vs. Pomar is no longer the rule.

As early as 1904, in the case of Lochner vs. New York (198 US 45, 76, 49 L. ed. 937,
949), Justice Holmes had been railing against the conservatism of Judges perverting
the guarantee of due process to protect property rights as against human rights or
social justice for the working man. The law fixing maximum hours of labor was
invalidated. Justice Holmes was vindicated finally in 1936 in the case of West Coast
Hotel vs. Parish (300 US 377-79; 81 L. ed. 703) where the American Supreme Court
upheld the rights of workers to social justice in the form of guaranteed minimum wage
for women and minors, working hours not exceeding eight (8) daily, and maternity leave
for women employees.

The power of judicial review and the principle of separation of powers as well as the rule
on political questions have been evolved and grafted into the American Constitution by
judicial decisions (Marbury vs. Madison, supra Coleman vs. Miller, 307 US 433, 83 L.
ed. 1385; Springer vs. Government, 277 US 210-212, 72 L. ed. 852, 853).

It is noteworthy that Justice Black, who seems to be against judicial legislation, penned
a separate concurring opinion in the case of Coleman vs. Miller, supra, affirming the
doctrine of political question as beyond the ambit of judicial review. There is nothing in
both the American and Philippine Constitutions expressly providing that the power of the
courts is limited by the principle of separation of powers and the doctrine on political
questions. There are numerous cases in Philippine jurisprudence applying the doctrines
of separation of powers and political questions and invoking American precedents.

Unlike the American Constitution, both the 1935 and 1973 Philippine Constitutions
expressly vest in the Supreme Court the power to review the validity or constitutionality
of any legislative enactment or executive act.

WHEREFORE, THE TRIAL COURT'S ORDER OF DISMISSAL IS HEREBY

REVERSED AND SET ASIDE AND THE CASE IS REMANDED TO IT FOR FURTHER
PROCEEDINGS. SHOULD A GREATER AMOUNT OF DAMAGES BE DECREED IN
FAVOR OF HEREIN PETITIONERS, THE PAYMENTS ALREADY MADE TO THEM
PURSUANT TO THE WORKMEN'S COMPENSATION ACT SHALL BE DEDUCTED.
NO COSTS.
SO ORDERED.

[G.R. Nos. 115008-09. July 24, 1996]

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. DANIEL QUIJADA Y CIRCULADO,

accused-appellant.

DECISION

DAVIDE, JR., J.:

Accused-appellant Daniel Quijada appeals from the decision of 30 September 1993 of Branch 1
of the Regional Trial Court (RTC) of Bohol convicting him of the two offenses separately
charged in two informations, viz., murder under Article 248 of the Revised Penal Code and
illegal possession of firearm in its aggravated form under P.D. No. 1866, and imposing upon him
the penalty of reclusion perpetua for the first crime and an indeterminate penalty ranging from
seventeen years, four months, and one day, as minimum, to twenty years and one day, as
maximum, for the second crime.i[1]

The appeal was originally assigned to the Third Division of the Court but was later referred to
the Court en banc in view of the problematical issue of whether to sustain the trial court's
judgment in conformity with the doctrine laid down in People vs. Tac-an,i[2] People vs.
Tiozon,i[3] People vs. Caling,i[4] People vs. Jumamoy,i[5] People vs. Deunida,i[6] People vs.
Tiongco,i[7] People vs. Fernandez,i[8] and People vs. Somooc,i[9] or to modify the judgment
and convict the appellant only of illegal possession of firearm in its aggravated form pursuant to
People vs. Barros,i[10] which this Court (Second Division) decided on 27 June 1995.

The informations read as follows:

CRIMINAL CASE NO. 8178

That on or about the 30th day of December, 1992, in the municipality of Dauis, province of
Bohol, Philippines, and within the jurisdiction of this Honorable Court, the abovenamed accused,
with intent to kill and without any justifiable motive, with treachery and abuse of superior
strength, the accused being then armed with a .38 cal. revolver, while the victim was unarmed,
suddenly attacked the victim without giving the latter the opportunity to defend himself, and with
evident premeditation, the accused having harbored a grudge against the victim a week prior to
the incident of murder, did then and there willfully, unlawfully and feloniously attack, assault
and shoot Diosdado Iroy y Nesnea with the use of the said firearm, hitting the latter on his head
and causing serious injuries which resulted to his death; to the damage and prejudice of the heirs
of the deceased.

Acts committed contrary to the provision of Art. 248 of the Revised Penal Code, with
aggravating circumstance of nighttime being purposely sought for or taken advantage of by the
accused to facilitate the commission of the crime.i[11]
 CRIMINAL CASE NO. 8179

That on or about the 30th day of December, 1992, in the municipality of Dauis, province of
Bohol, Philippines, and within the jurisdiction of this Honorable Court, the abovenamed accused,
did then and there willfully, unlawfully and feloniously keep, carry and have in his possession,
custody and control a firearm (hand gun) with ammunition, without first obtaining the necessary
permit or license to possess the said firearm from competent authorities which firearm was
carried by the said accused outside of his residence and was used by him in committing the crime
of Murder with Diosdado Iroy y Nesnea as the victim; to the damage and prejudice of the
Republic of the Philippines.

Acts committed contrary to the provisions of P.D. No. 1866.i[12]

Having arisen from the same incident, the cases were consolidated, and joint hearings were had.
The witnesses presented by the prosecution were SPO4 Felipe Nigparanon (Acting Chief of
Police of Dauis, Bohol), SPO Gondalino Inte, Dr. Greg Julius Sodusta, Rosita Iroy, and Teodula
Matalinis. The defense presented as witnesses Alfred Aranzado, Edwin Nistal, Julius Bonao,
Saturnino Maglupay, and the appellant himself.

The evidence for the prosecution is summarized by the Office of the Solicitor General in the
Brief for the Appellee as follows:

On 25 December 1992, a benefit dance was held at the Basketball Court of Barangay Tinago,
Dauis, Bohol. On this occasion, a fist fight occurred between Diosdado Iroy and appellant Daniel
Quijada as the latter was constantly annoying and pestering the former's sister. Rosita Iroy (TSN,
Crim. Cases 8178 & 8179, June 8, 1993, pp. 32-35; August 5, 1993, pp. 14-15).

In the evening of 30 December 1992, another benefit dance/disco was held in the same place.
This benefit dance was attended bv Rosita Iroy, Ariel Dano, Teodora Badayos, Ado Aranzado,
Largo Iroy and Diosdado Iroy.

While Rosita Iroy and others were enjoying themselves inside the dancing area, Diosdado Iroy,
Eugene Nesnea and Largo Iroy, who were then sitting at the plaza (the area where they
positioned themselves was duly lighted and was approximately four meters from the dancing
hall), decided to just watch the activities in the dance hall directly from the plaza.

After dancing, Rosita Iroy decided to leave and went outside the gate of the dance area.
Subsequently, or around 11:30 of the same night, while facing the direction of Diosdado Iroy,
Rosita lroy saw appellant surreptitiously approach her brother Diosdado Iroy from behind.
Suddenly, appellant fired his revolver at Diosdado Iroy, hitting the latter at the back portion of
the head. This caused Rosita Iroy to spontaneously shout that appellant shot her brother; while
appellant, after shooting Diosdado Iroy, ran towards the cornfield.

Diosdado Iroy was immediately rushed by Elmer Nigparanon and Largo Iroy to the hospital but
the injury sustained was fatal. In the meantime, Rosita Iroy went home and relayed to her parents
the unfortunate incident (TSN, Crim Case Nos. 8178 & 8179, June 8, 1993, pp. 9-22, inclusive
of the preceding paragraphs).

At around midnight, the incident was reported to then Acting Chief of Police Felipe Nigparanon
by Mrs. Alejandra Iroy and her daughter Teodula Matalinis. The police officer made entries in
the police blotter regarding the shooting and correspondingly, ordered his men to pick up the
appellant. But they were unable to locate appellant on that occasion (TSN, Crim. Case Nos. 8178
& 8179, June 9, 1993, pp. 2-6).

In the afternoon of 31 December 1992, appellant, together with his father Teogenes Quijada went
to the police station at Dauis, Bohol. There and then, appellant was pinpointed by Elenito Nistal
and Rosita Iroy as the person who shot Diosdado Iroy. These facts were entered in the police
blotter as Entry No. 1151 (TSN, Crim. Case Nos. 8178 & 8179, ibid. p. 14, June 14, 1993, pp. 4-
6).i[13]

The slug was embedded at the midbrain.i[14] Diosdado Iroy died of Cardiorespiratory arrest,
secondary to tonsillar herniation, secondary to massive intracranial hemorrhage, secondary to
gunshot wound, 1 cm. left occipital area, transacting cerebellum up to midbrain.i[15]

The firearm used by the appellant in shooting Diosdado Iroy was not licensed. Per certifications
issued on 26 April 1993, the appellant was not a duly licensed firearm holder as verified from a
consolidated list of licensed firearm holders in the provincei[16] and was not authorized to carry
a firearm outside his residence.i[17]

The appellant interposed the defense of alibi, which the trial court rejected because he was
positively identified by prosecution witness Rosita Iroy. It summarized his testimony in this
wise:

Daniel Quijada y Circulado, the accused in the instant cases, declared that in the afternoon of
December 30, 1992 he was in their house At 6:00 o'clock in the afternoon he went to Tagbilaran
City together with Julius Bonao in a tricycle No. 250 to solicit passengers. They transported
passengers until 10:30 o'clock in the evening. They then proceeded to the Tagbilaran wharf
waiting for the passenger boat Trans Asia Taiwan. Before the arrival of Trans Asia Taiwan they
had a talk with Saturnino Maglopay. They were able to pick up two passengers for Graham
Avenue near La Roca Hotel. They then returned to the Tagbilaran wharf for the arrival of MV
Cebu City that docked at 12:10 past midnight. They had a talk with Saturnino Maglopay who
was waiting for his aunties scheduled to arrive aboard MV Cebu City. They were not able to pick
up passengers which, as a consequence, they went home. They had on their way home
passengers for the Agora Public Market. They arrived at the house of Julian Bonao at Bil-isan,
Panglao, Bohol at 3:00 o'clock in the morning of December 31, 1992 where he passed the night.
He went home to Mariveles, Dauis, Bohol at 9:00 o'clock in the morning.i[18]

The trial court gave full faith and credit to the version of the prosecution and found the appellant
guilty beyond reasonable doubt of the crimes charged and sentenced him accordingly. It
appreciated the presence of the qualifying circumstance of treachery considering that the
appellant shot the victim at the back of the head while the latter was watching the dance. The
dispositive portion of the decision dated 30 September 1993 reads as follows:

PREMISES CONSIDERED, in Criminal Case No. 8178, the court finds the accused Daniel
Quijada guilty of the crime of murder punished under Article 248 of the Revised Penal Code and
hereby sentences him to suffer an imprisonment of Reclusion Perpetua, with the accessories of
the law and to pay the cost.

In Criminal Case No. 8179, the Court finds the accused Daniel Quijada guilty of the crime of
Qualified Illegal Possession of Firearm and Ammunition punished under Sec. 1 of R.A. No. 1866
as amended, and hereby sentences him to suffer an indeterminate sentence from Seventeen (17)
years Four (4) months and One (1) day, as minimum, to Twenty (20) years and One (1) day, as
maximum, with the accessories of the law and to pay the cost.

The slug or bullet which was extracted from the brain at the back portion of the head of the
victim Diosdado Iroy is hereby ordered forfeited in favor of the government.

It appearing that the accused Daniel Quijada has undergone preventive imprisonment he is
entitled to the full time he has undergone preventive imprisonment to be deducted from the term
of sentence if he has executed a waiver otherwise he will only be entitled to 4/5 of the time he
has undergone preventive imprisonment to be deducted from his term of sentence if he has not
executed a waiver.i[19]

On 29 October 1993, after discovering that it had inadvertently omitted in the decision an award
of civil indemnity and other damages in Criminal Case No. 8178, the trial court issued an order
directing the appellant to pay the parents of the victim the amount of P50,000.00 as indemnity
for the death of their son and P10,000.00 for funeral expenses.i[20] The order was to form an
integral part of the decision.

The decision was promulgated on 29 October 1993.i[21]

The appellant forthwith interposed the present appeal, and in his Brief, he contends that the trial
court erred

. . . IN CONVICTING ACCUSED-APPELLANT AND GIVING CREDENCE TO THE

TESTIMONY OF PROSECUTION WITNESSES ROSITA IROY AND FELIPE
NIGPARANON.

II

. . . IN NOT CONSIDERING THE TESTIMONIES OF DEFENSE WITNESSES EDWIN

NISTAL AND ALFRED ARANZADO, AND IN DISREGARDING THE PICTORIAL
EXHIBITS OF THE ACCUSED-APPELLANT PARTICULARLY THE RELATIVE
POSITIONS OF DIOSDADO IROY, ROSITA IROY, EDWIN NISTAL, AND ALFRED
ARANZADO.

III

. . . IN FAILING TO CONSIDER THAT PROSECUTION WITNESSES ROSITA IROY AND

SP04 FELIPE NIGPARANON HAD MOTIVES IN FALSELY TESTIFYING AGAINST
ACCUSED-APPELLANT.i[22]

The appellant then submits that the issue in this case boils down to the identity of the killer of
Diosdado Iroy. To support his stand that the killer was not identified, he attacks the credibility of
prosecution witnesses Rosita Iroy and SP04 Felipe Nigparanon. He claims that the former had a
motive "to put him in a bad light" and calls our attention to her direct testimony that her brother
Diosdado, the victim, boxed him on the night of 25 December 1992 because he allegedly
"bothered her." He further asserts that Rosita could not have seen the person who shot Diosdado
considering their respective positions, particularly Rosita who, according to defense witnesses
Nistal and Aranzado, was still inside the dancing area and ran towards the crime scene only after
Diosdado was shot. And, the appellant considers it as suppression of evidence when the
prosecution did not present as witnesses Diosdado's companions who were allegedly seated with
Diosdado when he was shot.

As to SPO4 Nigparanon, the appellant intimates improper motives in that the said witness is a
neighbor of the Iroys, and when he testified, a case for arbitrary detention had already been filed
against him by the appellant. The appellant further claims of alleged omissions and unexplained
entries in the police blotter.

Finally, the appellant wants us to favorably consider his defense of alibi which, according to him,
gained strength because of the lack of evidence on the identity of the killer. Furthermore, he
stresses that his conduct in voluntarily going to the police station after having been informed that
he, among many others, was summoned by the police is hardly the actuation of the perpetrator of
the killing of Diosdado Iroy -- specially so if Rosita Iroy's claim is to be believed that moments
after the shooting she shouted that Daniel Quijada shot Diosdado Iroy.

In its Appellee's Brief, the People refutes every argument raised by the appellant and
recommends that we affirm in toto the challenged decision.

After a careful scrutiny of the records and evaluation of the evidence adduced by the parties, we
find this appeal to be absolutely without merit.

The imputation of ill-motive on the part of Rosita Iroy and the basis therefor hardly persuade.
The appellant was the one who was boxed by and lost to Diosdado Iroy in their fight on the night
of 25 December 1992. It is then logical and consistent with human experience that it would be
the appellant who would have forthwith entertained a grudge, if not hatred, against Diosdado. No
convincing evidence was shown that Rosita had any reason to falsely implicate the appellant in
the death of her brother Diosdado.
The claim that Rosita could not have seen who shot her brother Diosdado because, as testified to
by defense witnesses Nistal and Aranzado, she was inside the dancing hall and rushed to her
brother only after the latter was shot is equally baseless. The following testimony of Rosita
shows beyond cavil that she saw the assailant:

Q You said that you were initially dancing inside the dancing place and you went out, about
what time did you get out?

A 11:00 o'clock.

Q And you were standing about two (2) meters from Diosdado Iroy until 11:30 when the
incident happened?

A Yes, I was standing.

Q And where did you face, you were facing Diosdado Iroy or the dancing area?

A I was intending to go near my brother. I was approaching and getting near going to my
brother Diosdado Iroy and while in the process I saw Daniel Quijada shot my brother Diosdado
Iroy.i[23]

xxx xxx xxx

Q And in your estimate, how far was your brother Diosdado Iroy while he was sitting at the
plaza to the dancing place?

A More or less four (4) meters distance.

COURT:

From the dancing hall?

A Yes, your honor.

Q And in your observation, was the place where Diosdado Iroy was sitting lighted or
illuminated?

A Yes, sir.

Q What kind of light illuminated the place?

A I do not know what kind of light but it was lighted.

Q Was it an electric light?

A It is electric light coming from a bulb.

Q Where is that electric bulb that illuminated the place located?

A It was placed at the gate of the dancing place and the light from the house.

Q You said gate of the dancing place, you mean the dancing place was enclosed at that time
and there was a gate, an opening?

A Yes, sir.

Q What material was used to enclose the dancing place?

A Bamboo.

Q And how far was the bulb which was placed near the entrance of the dancing place to the
place where Diosdado Iroy was sitting?

A Five (5) meters.

Q You mentioned also that there was a light coming from the house, now whose house was
that?

A The house of spouses Fe and Berto, I do not know the family name.

Q Was the light coming from the house of spouses Fe and Berto an electric light?

A Yes sir.

Q And in your estimate, how far was the source of light of the house of Fe and Berto to the
place where Diosdado Iroy was sitting?

A About six (6) meters distance.i[24]

xxx xxx xxx

Q What was the color of the electric bulb in the gate of the dancing place?

A The white bulb.i[25]

The trial court disbelieved the testimony of Nistal and Aranzado. It explicitly declared:

The factual findings of the Court in the instant case is anchored principally in ". . . observing the
attitude and deportment of witnesses while listening to them speak (People vs. Magaluna, 205,
SCRA 266).
thereby indicating that on the basis of the witnesses' deportment and manner of testifying, the
declarations of Nistal and Aranzado failed to convince the trial court that they were telling the
truth. Settled is the rule that the factual findings of the trial court, especially on the credibility of
witnesses, are accorded great weight and respect. For, the trial court has the advantage of
observing the witnesses through the different indicators of truthfulness or falsehood, such as the
angry flush of an insisted assertion or the sudden pallor of a discovered lie or the tremulous
mutter of a reluctant answer or the forthright tone of a ready reply;i[26] or the furtive glance, the
blush of conscious shame, the hesitation, the sincere or the flippant or sneering tone, the heat, the
calmness, the yawn, the sigh, the candor or lack of it, the scant or full realization of the solemnity
of an oath, the carriage and mien.i[27] The appellant has miserably failed to convince us that we
must depart from this rule.

Neither are we persuaded by the claimed suppression of evidence occasioned by the non-
presentation as prosecution witnesses any of the companions of Diosdado who were seated with
him when he was shot. In the first place, the said companions could not have seen from their
back the person who suddenly shot Diosdado. In the second place, the testimony of the
companions would, at the most, only corroborate that of Rosita Iroy. Besides, there is no
suggestion at all that the said companions were not available to the appellant. It is settled that the
presumption in Section 3 (e), Rule 131 of the Rules of Court that evidence willfully suppressed
would be adverse if produced does not apply when the testimony of the witness is merely
corroborative or where the witness is available to the accused.i[28]

The alleged improper motive on the part of SP04 Nigparanon simply because he is a neighbor of
the Iroy; remains purely speculative, as no evidence was offered to establish that such a
relationship affected SP04 Nigparanon's objectivity. As a police officer, he enjoyed in his favor
the presumption of regularity in the performance of his official duty.i[29] As to the alleged
omissions and unexplained entries in the police blotter, the same were sufficiently clarified by
SP04 Nigparanon.

The defense of alibi interposed by the appellant deserves scant consideration. He was positively
identified by a credible witness. It is a fundamental judicial dictum that the defense of alibi
cannot prevail over the positive identification of the accused.i[30] Besides, for that defense to
prosper it is not enough to prove that the accused was somewhere else when the crime was
committed; he must also demonstrate that it was physically impossible for him to have been at
the scene of the crime at the time of its commission.i[31] As testified to by defense witness
Julian Bonao, the Tagbilaran wharf, where the appellant said he was, is only about eight to nine
kilometers away from the crime scene and it would take only about thirty minutes to traverse the
distance with the use of a tricycle.i[32] It was, therefore, not physically impossible for the
appellant to have been at the scene of the crime at the time of its commission.

Finally, the appellant asserts that if he were the killer of Diosdado Iroy, he would not have
voluntarily proceeded to the police station. This argument is plain sophistry. The law does not
find unusual the voluntary surrender of offenders; it even considers such act as a mitigating
circumstance.i[33] Moreover, non-flight is not conclusive proof of innocence.i[34]
The evidence for the prosecution further established with moral certainty that the appellant had
no license to possess or carry a firearm. The firearm then that he used in shooting Diosdado Iroy
was unlicensed. He, therefore, committed the crime of aggravated illegal possession of firearm
under the second paragraph of Section 1 of P.D. No. 1866, which reads:

SEC. 1. Unlawful Manufacture, Sale, Acquisition, Disposition or Possession of Firearms,

Ammunition or Instruments Used or Intended to be Used in the Manufacture of Firearms or
Ammunition -- The penalty of reclusion temporal in its maximum period to reclusion perpetua
shall be imposed upon any person who shall unlawfully manufacture, deal in, acquire, dispose or
possess any firearm, part of firearm, ammunition or machinery, tool or instrument used or
intended to be used in the manufacture of any firearm or ammunition.

If homicide or murder is committed with the use of an unlicensed firearm, the penalty of death
shall be imposed.

In light of the doctrine enunciated in People vs. Tac-an,i[35] and reiterated in People vs.
Tiozon,i[36] People vs. Caling,i[37] People vs. Jumamoy,i[38] People vs. Deunida,i[39] People
vs. Tiongco,i[40] People vs. Fernandez,i[41] and People vs. Somooc,i[42] that one who kills
another with the use of an unlicensed firearm commits two separate offenses of (1) either
homicide or murder under the Revised Penal Code, and (2) aggravated illegal possession of
firearm under the second paragraph of Section 1 of P.D. No. 1866, we sustain the decision of the
trial court finding the appellant guilty of two separate offenses of murder in Criminal Case No.
8178 and of aggravated illegal possession of firearm in Criminal Case No. 8179.

Although Tac-an and Tiozon relate more to the issue of whether there is a violation of the
constitutional proscription against double jeopardy if an accused is prosecuted for homicide or
murder and for aggravated illegal possession of firearm, they at the same time laid down the rule
that these are separate offenses, with the first punished under the Revised Penal Code and the
second under a special law; hence, the constitutional bar against double jeopardy will not apply.
We observed in Tac-an:

It is elementary that the constitutional right against double jeopardy protects one against a second
or later prosecution for the same offense, and that when the subsequent information charges
another and different offense, although arising from the same act or set of acts, there is no
prohibited double jeopardy. In the case at bar, it appears to us quite clear that the offense charged
in Criminal Case No. 4007 is that of unlawful possession of an unlicensed firearm penalized
under a special statute, while the offense charged in Criminal Case No. 4012 was that of murder
punished under the Revised Penal Code. It would appear self-evident that these two (2) offenses
in themselves are quite different one from the other, such that in principle, the subsequent filing
of Criminal Case No. 4012 is not to be regarded as having placed appellant in a prohibited
second jeopardy.

And we stressed that the use of the unlicensed firearm cannot serve to increase the penalty for
homicide or murder; however, the killing of a person with the use of an unlicensed firearm, by
express provision of P.D. No. 1866, shall increase the penalty for illegal possession of firearm.
In Tiozon, we stated:

It may be loosely said that homicide or murder qualifies the offense penalized in said Section 1
because it is a circumstance which increases the penalty. It does not, however, follow that the
homicide or murder is absorbed in the offense; otherwise, an anomalous absurdity results
whereby a more serious crime defined and penalized in the Revised Penal Code is absorbed by a
statutory offense, which is just a malum prohibitum. The rationale for the qualification, as
implied from the exordium of the decree, is to effectively deter violations of the laws on firearms
and to stop the "upsurge of crimes vitally affecting public order and safety due to the
proliferation of illegally possessed and manufactured firearms, x x x." In fine then, the killing of
a person with the use of an unlicensed firearm may give rise to separate prosecutions for (a)
violation of Section 1 of P.D. No. 1866 and (b) violation of either Article 248 (Murder) or
Article 249 (Homicide) of the Revised Penal Code. The accused cannot plead one as a bar to the
other; or, stated otherwise, the rule against double jeopardy cannot be invoked because the first is
punished by a special law while the second, homicide or murder, is punished by the Revised
Penal Code.

In People vs. Doriguez, [24 SCRA 163, 171], We held:

It is a cardinal rule that the protection against double jeopardy may be invoked only for the same
offense or identical offenses. A simple act may offend against two (or more) entirely distinct and
unrelated provisions of law, and if one provision requires proof of an additional fact or element
which the other does not, an acquittal or conviction or a dismissal of the information under one
does not bar prosecution under the other. Phrased elsewise, where two different laws (or articles
of the same code) defines two crimes, prior jeopardy as to one of them is not obstacle to a
prosecution of the other, although both offenses arise from the same fact, if each crime involves
some important act which is not an essential element of the other.

In People vs. Bacolod [89 Phil. 621], from the act of firing a shot from a sub-machine gun which
caused public panic among the people present and physical injuries to one, informations of
physical injuries through reckless imprudence and for serious public disturbance were filed.
Accused pleaded guilty and was convicted in the first and he sought to dismiss the second on the
ground of double jeopardy. We ruled:

The protection against double jeopardy is only for the same offense. A simple act may be an
offense against two different provisions of law and if one provision requires proof of an
additional fact which the other does not, an acquittal or conviction under one does not bar
prosecution under the other.

Since the informations were for separate offense[s] -- the first against a person and the second
against public peace and order -- one cannot be pleaded as a bar to the other under the rule on
double jeopardy.

In Caling, we explicitly opined that a person charged with aggravated illegal possession of
firearm under the second paragraph of Section 1 of P.D. No. 1866 can also be separately charged
with and convicted of homicide or murder under the Revised Penal Code and punished
accordingly. Thus:

It seems that the Court a quo did indeed err in believing that there is such a thing as "the special
complex crime of Illegal Possession of Unlicensed Firearm Used in Homicide as provided for
and defined under the 2nd paragraph of Sec. 1 of P.D. 1866 as amended," and declaring Caling
guilty thereof. The legal provision invoked, "Sec. 1 of P.D. 1866, as amended," reads as follows:

"SECTION 1. Unlawful Manufacture, Sale, Acquisition, Disposition or Possession of Firearms

[or] Ammunition or Instruments Used or Intended to be Used in the Manufacture of Firearms or
Ammunition. - The penalty of reclusion temporal in its maximum period to reclusion perpetua
shall be imposed upon any person who shall unlawfully manufacture, deal in, acquire, dispose, or
possess any firearm, part of firearm, ammunition or machinery, tool or instrument used or
intended to be used in the manufacture of any firearm or ammunition.

If homicide or murder is committed with the use of an unlicensed firearm, the penalty of death
shall be imposed."

What is penalized in the first paragraph, insofar as material to the present case is the sole, simple
act of a person who shall, among others, "unlawfully possess any firearm x x x (or) ammunition
x x x." Obviously, possession of any firearm is unlawful if the necessary permit and/or license
therefor is not first obtained. To that act is attached the penalty of reclusion temporal, maximum,
to reclusion perpetua. Now, if "with the use of (such) an unlicensed firearm, a "homicide or
murder is committed," the crime is aggravated and is more heavily punished, with the capital
punishment.

The gravamen of the offense in its simplest form is, basically, the fact of possession of a firearm
without license. The crime may be denominated simple illegal possession, to distinguish it from
its aggravated form. It is Aggravated if the unlicensed firearm is used in the commission of a
homicide or murder under the Revised Penal Code. But the homicide or murder is not absorbed
in the crime of possession of an unlicensed firearm; neither is the latter absorbed in the former.
There are two distinct crimes that are here spoken of. One is unlawful possession of a firearm,
which may be either simple or aggravated, defined and punished respectively by the first and
second paragraphs of Section 1 of PD 1866. The other is homicide or murder, committed with
the use of an unlicensed firearm. The mere possession of a firearm without legal authority
consummates the crime under P.D. 1866, and the liability for illegal possession is made heavier
by the firearm's use in a killing. The killing, whether homicide or murder, is obviously distinct
from the act of possession, and is separately punished and defined under the Revised Penal Code.
(emphasis supplied)

In Jumamoy, we reiterated Caling and amplified the rationale on why an accused who kills
another with an unlicensed firearm can be prosecuted and punished for the two separate offenses
of violation of the second paragraph of Section 1 of P.D. No. 1866 and for homicide or murder
under the Revised Penal Code. Thus:
Coming to the charge of illegal possession of firearms, Section 1 of P.D. No. 1866 penalizes,
inter alia, the unlawful possession of firearms or ammunition with reclusion temporal in its
maximum period to reclusion perpetua. However, under the second paragraph thereof, the
penalty is increased to death if homicide or murder is committed with the use of an unlicensed
firearm. It may thus be loosely said that homicide or murder qualifies the offense because both
are circumstances which increase the penalty. It does not, however, follow that the homicide or
murder is absorbed in the offense. If these were to be so, an anomalous absurdity would result
whereby a more serious crime defined and penalized under the Revised Penal Code will be
absorbed by a statutory offense, one which is merely malum prohibitum. Hence, the killing of a
person with the use of an unlicensed firearm may give rise to separate prosecutions for (a) the
violation of Section 1 of P.D. No. 1866 and (b) the violation of either Article 248 (Murder) or
Article 249 (Homicide) of the Revised Penal Code. The accused cannot plead one to bar the
other; stated otherwise, the rule against double jeopardy cannot be invoked as the first is
punished by a special law while the second - Murder or Homicide - is punished by the Revised
Penal Code. [citing People vs. Tiozon, 198 SCRA 368, 379 (1991); People vs. Doriguez, 24
SCRA 163 (1968)]. Considering, however, that the imposition of the death penalty is prohibited
by the Constitution, the proper imposable penalty would be the penalty next lower in degree, or
reclusion perpetua. (emphasis supplied)

In Deunida, in discussing the propriety of the Government's action in withdrawing an

information for murder and pursuing only the information for "Qualified Illegal Possession of
Firearm," this Court categorically declared:

At the outset, it must be stressed that, contrary to the prosecution's legal position in withdrawing
the information for murder, the offense defined in the second paragraph of Section 1 of P.D. No.
1866 does not absorb the crime of homicide or murder under the Revised Penal Code and,
therefore, does not bar the simultaneous or subsequent prosecution of the latter crime. The 1982
decision in Lazaro vs. People, involving the violation of P.D. No. 9, which the investigating
prosecutor invokes to justify the withdrawal, is no longer controlling in view of our decisions in
People vs. Tac-an, People vs. Tiozon, and People vs. Caling.

In Somooc, we once more ruled:

The offense charged by the Information is clear enough from the terms of that document,
although both the Information and the decision of the trial court used the term "Illegal Possession
of Firearm with Homicide," a phrase which has sometimes been supposed to connote a "complex
crime as used in the Revised Penal Code. Such nomenclature is, however, as we have ruled in
People vs. Caling, a misnomer since there is no complex crime of illegal possession of firearm
with homicide. The gravamen of the offense penalized in P.D. No. 1866 is the fact of possession
of a firearm without a license or authority for such possession. This offense is aggravated and the
imposable penalty upgraded if the unlicensed firearm is shown to have been used in the
commission of homicide or murder, offenses penalized under the Revised Penal Code. The
killing of a human being, whether characterized as homicide or murder, is patently distinct from
the act of possession of an unlicensed firearm and is separately punished under the provisions of
the Revised Penal Code.
The foregoing doctrine suffered a setback when in our decision of 27 June 1995 in People vs.
Barros,i[43] we set aside that portion of the appealed decision convicting the appellant of the
offense of murder and affirmed that portion convicting him of illegal possession of firearm in its
aggravated form. We therein made the following statement:

[A]ppellant may not in the premises be convicted of two separate offenses [of illegal possession
of firearm in its aggravated form and of murder], but only that of illegal possession of firearm in
its aggravated form, in light of the legal principles and propositions set forth in the separate
opinion of Mr. Justice Florenz D. Regalado, to which the Members of the Division, the ponente
included, subscribe.

The pertinent portions of the separate opinion of Mr. Justice Florenz D. Regalado referred to
therein read as follows:

This premise accordingly brings up the second query as to whether or not the crime should
properly be the aggravated illegal possession of an unlicensed firearm through the use of which a
homicide or murder is committed. It is submitted that an accused so situated should be liable
only for the graver offense of aggravated illegal possession of the firearm punished by death
under the second paragraph of Section 1, Presidential Decree No. 1866, and it is on this point
that the writer dissents from the holding which would impose a separate penalty for the homicide
in addition to that for the illegal possession of the firearm used to commit the former.

If the possession of the unlicensed firearm is the only offense imputable to the accused, the Court
has correctly held that to be the simple possession punished with reclusion temporal in its
maximum period to reclusion perpetua in the first paragraph of Section 1. Where,
complementarily, the unlicensed firearm is used to commit homicide or murder, then either of
these felonies will convert the erstwhile simple illegal possession into the graver offense of
aggravated illegal possession. In other words, the homicide or murder constitutes the essential
element for integrating into existence the capital offense of the aggravated form of illegal
possession of a firearm. Legally, therefore, it would be illogical and unjustifiable to use the very
same offenses of homicide or murder as integral elements of and to create the said capital
offense, and then treat the former all over again as independent offenses to be separately
punished further, with penalties immediately following the death penalty to boot.

The situation contemplated in the second query is, from the punitive standpoint, virtually of the
nature of the so-called, special complex crimes," which should more appropriately be called
composite crimes, punished in Article 294, Article 297 and Article 335. They are neither of the
same legal basis as nor subject to the rules on complex crimes in Article 48, since they do not
consist of a single act giving rise to two or more grave or less grave felonies nor do they involve
an offense being a necessary means to commit another. However, just like the regular complex
crimes and the present case of aggravated illegal possession of firearms, only a single penalty is
imposed for each of such composite crimes although composed of two or more offenses.

On the other hand, even if two felonies would otherwise have been covered by the conceptual
definition of a complex crime under Article 48, but the Code imposes a single definite penalty
therefor, it cannot also be punished as a complex crime, much less as separate offense, but with
only the single penalty prescribed by law. Thus, even where a single act results in two less grave
felonies of serious physical injuries and serious slander by deed, the offense will not be punished
as a delito compuesto under Article 48 but as less serious physical injuries with ignominy under
the second paragraph of Article 265. The serious slander by deed is integrated into and produces
a graver offense, and the former is no longer separately punished.

What is, therefore, sought to be stressed by such alternative illustration, as well as the discussion
on complex and composite crimes, is that when an offense becomes a component of another, the
resultant crime being correspondingly punished as thus aggravated by the integration of the
other, the former is not to be further separately punished as the majority would want to do with
the homicide involved in the case at bar.

With the foregoing answers to the second question, the third inquiry is more of a question of
classification for purposes of the other provisions of the Code. The theory in Tac-an that the
principal offense is the aggravated form of illegal possession of firearm and the killing shall
merely be included in the particulars or, better still, as an element of the principal offense, may
be conceded. After all, the plurality of crimes here is actually source from the very provisions of
Presidential Decree No. 1866 which sought to "consolidate, codify and integrate" the various
laws and presidential decrees to harmonize their provision" which must be updated and revised
in order to more effectively deter violators of said laws.

This would be akin to the legislative intendment underlying the provisions of the Anti-
Carnapping Act of 1972, wherein the principal crime to be charged is still carnapping, although
the penalty therefore is increased when the owner, driver or occupant of the carnapped vehicle is
killed. The same situation, with escalating punitive provisions when attended by a killing, are
found in the Anti-Piracy and Anti-Highway Robbery Law of 1974 and the Anti-Cattle Rustling
Law of 1974, wherein the principal crimes still are piracy, highway robbery and cattle rustling.
Also, in the matter of destructive arson, the principal offense when, inter alia, death results as a
consequence of the commission of any of the acts punished under said article of the Code.

In the present case, the academic value of specifying whether it is a case of illegal possession of
firearm resulting in homicide or murder, or, conversely, homicide or murder through the illegal
possession and use of an unlicensed firearm, would lie in the possible application of the
provision on recidivism. Essentially, it would be in the theoretical realm since, taken either way,
the penalty for aggravated illegal possession of a firearm is the single indivisible penalty of
death, in which case the provision on recidivism would not apply. If, however, the illegal
possession is not established but either homicide or murder is proved, then the matter of
recidivism may have some significance in the sense that, for purposes thereof, the accused was
convicted of a crime against persons and he becomes a recidivist upon conviction of another
crime under the same title of the Code.

Lastly, on the matter of the offense or offenses to be considered and the penalty to be imposed
when the unlawful killing and the illegal possession are charged in separate informations, from
what has been said the appropriate course of action would be to consolidate the cases and render
a joint decision thereon, imposing a single penalty for aggravated illegal possession of firearm if
such possession and the unlawful taking of life shall have been proved, or for only the proven
offense which may be either simple illegal possession, homicide or murder per se. The same
procedural rule and substantive disposition should be adopted if one information for each offense
was drawn up and these informations were individually assigned to different courts or branches
of the same court.

Indeed, the practice of charging the offense of illegal possession separately from the homicide or
murder could be susceptible of abuse since it entails undue concentration of prosecutorial powers
and discretion. Prefatorily, the fact that the killing was committed with a firearm will necessarily
be known to the police or prosecutorial agencies, the only probable problem being the
determination and obtention of evidence to show that the firearm is unlicensed.

Now, if a separate information for homicide or murder is filed without alleging therein that the
same was committed by means of an unlicensed firearm, the case would not fall under
Presidential Decree No. 1866. Even if the use of a firearm is alleged therein, but without alleging
the lack of a license therefor as where that fact has not yet been verified, the mere use of a
firearm by itself, even if proved in that case, would not affect the accused either since it is not an
aggravating or qualifying circumstance.

Conversely, if the information is only for illegal possession, with the prosecution intending to
file thereafter the charge for homicide or murder but the same is inexplicably delayed or is not
consolidated with the information for illegal possession, then any conviction that may result from
the former would only be for simple illegal possession. If, on the other hand, the separate and
subsequent prosecution for homicide or murder prospers, the objective of Presidential Decree
No. 1866 cannot be achieved since the penalty imposable in that second prosecution will only be
for the unlawful killing and further subject to such modifying circumstances as may be proved.

In any event, the foregoing contingencies would run counter to the proposition that the real
offense committed by the accused, and for which sole offense he should be punished, is the
aggravated form of illegal possession of a firearm. Further, it is the writer's position that the
possible problems projected herein may be minimized or obviated if both offenses involved are
charged in only one information or that the trial thereof, if separately charged, be invariably
consolidated for joint decision. Conjointly, this is the course necessarily indicated since only a
single composite crime is actually involved and it is palpable error to deal therewith and dispose
thereof by segregated parts in piecemeal fashion.

If we follow Barros, the conviction of the appellant for murder in Criminal Case No. 8178 must
have to be set aside. He should only suffer the penalty for the aggravated illegal possession of
firearm in Criminal Case No. 8179.

The Court en banc finds in this appeal an opportunity to reexamine the existing conflicting
doctrines applicable to prosecutions for murder or homicide and for aggravated illegal possession
of firearm in instances where an unlicensed firearm is used in the killing of a person. After a
lengthy deliberation thereon, the Court en banc arrived at the conclusion that the rule laid down
in Tac-an, reiterated in Tiozon, Caling, Jumamoy, Deunida, Tiongco, Fernandez, and Somooc is
the better rule, for it applies the laws concerned according to their letter and spirit, thereby
steering this Court away from a dangerous course which could have irretrievably led it to an
inexcusable breach of the doctrine of separation of powers through Judicial legislation. That rule
upholds and enhances the lawmaker's intent or purpose in aggravating the crime of illegal
possession of firearm when an unlicensed firearm is used in the commission of murder or
homicide. Contrary to the view of our esteemed brother, Mr. Justice Florenz D. Regalado, in his
Concurring and Dissenting Opinion in the case under consideration, Tac-an did not enunciate an
unfortunate doctrine or a "speciously camouflaged theory" which "constitutes an affront on
doctrinal concepts of penal law and assails even the ordinary notions of common sense."

If Tac-an did in fact enunciate such an "unfortunate doctrine," which this Court has reiterated in
a convincing number of cases and for a convincing number of years, so must the same verdict be
made in our decision in People vs. De Gracia,i[44] which was promulgated on 6 July 1994. In
the latter case, we held that unlawful possession of an unlicensed firearm in furtherance of
rebellion may give rise to separate prosecutions for a violation of Section 1 of P.D. No. 1866 and
also for a violation of Articles 134 and 135 of the Revised Penal Code on rebellion. A distinction
between that situation and the case where an unlicensed firearm is used in homicide or murder
would have no basis at all. In De Gracia, this Court, speaking through Mr. Justice Florenz D.
Regalado, made the following authoritative pronouncements:

III. As earlier stated, it was stipulated and admitted by both parties that from November 30, 1989
up to and until December 9, 1989, there was a rebellion. Ergo, our next inquiry is whether or not
appellant's possession of the firearms, explosives and ammunition seized and recovered from
him was for the purpose and in furtherance of rebellion.

The trial court found accused guilty of illegal possession of firearms in furtherance of rebellion
pursuant to paragraph 2 of Article 135 of the Revised Penal Code which states that "any person
merely participating or executing the command of others in a rebellion shall suffer the penalty of
prision mayor in its minimum period." The court below held that appellant De Gracia, who had
been servicing the personal needs of Col. Matillano (whose active armed opposition against the
Government, particularly at the Camelot Hotel, was well known), is guilty of the act of guarding
the explosives and "molotov bombs for and in behalf of the latter. We accept this finding of the
lower court.

The above provision of the law was, however, erroneously and improperly used by the court
below as a basis in determining the degree of liability of appellant and the penalty to be imposed
on him. It must be made clear that appellant is charged with the qualified offense of illegal
possession of firearms in furtherance of rebellion under Presidential Decree No. 1866 which, in
law, is distinct from the crime of rebellion punished under Article 134 and 135 of the Revised
Penal Code. There are two separate statutes penalizing different offenses with discrete penalties.
The Revised Penal Code treats rebellion as a crime apart from murder, homicide, arson, or other
offenses, such as illegal possession of firearms, that might conceivably be committed in the
course of a rebellion. Presidential Decree No. 1866 defines and punishes, as a specific offense,
the crime of illegal possession of firearms committed in the course or as part of a rebellion.
As a matter of fact, in one case involving the constitutionality of Section 1 of Presidential Decree
No. 1866, the Court has explained that said provision of the law will not be invalidated by the
mere fact that the same act is penalized under two different statutes with different penalties, even
if considered highly advantageous to the prosecution and onerous to the accused. It follows that,
subject to the presence of requisite elements in each case, unlawful possession of an unlicensed
firearm in furtherance of rebellion may give rise to separate prosecutions for a violation of
Section 1 of Presidential Decree No. 1866, and also a violation of Articles 134 and 135 of the
Revised Penal Code on rebellion. Double jeopardy in this case cannot be invoked because the
first is an offense punished by a special law while the second is a felony punished by the Revised
Penal Code with variant elements.

We cannot justify what we did in De Gracia with a claim that the virtue of fidelity to a
controlling doctrine, i.e., of Tac-an, had compelled us to do so. Indeed, if Tac-an enunciated an
"unfortunate doctrine" which is "an affront on doctrinal concepts of penal law and assails even
the ordinary notions of common sense," then De Gracia should have blazed the trail of a new
enlightenment and forthwith set aside the "unfortunate doctrine" without any delay to
camouflage a judicial faux pas or a doctrinal quirk. De Gracia provided an excellent vehicle for
an honorable departure from Tac-an because no attack on the latter was necessary as the former
merely involved other crimes to which the doctrine in Tac-an might only be applied by analogy.
De Gracia did not even intimate the need to reexamine Tac-an; on the contrary, it adapted the
latter to another category of illegal possession of firearm qualified by rebellion precisely because
the same legal principle and legislative purpose were involved, and not because De Gracia
wanted to perpetuate an "unfortunate doctrine" or to embellish "the expanding framework of our
criminal law from barnacled ideas which have not grown apace with conceptual changes over
time," as the concurring and dissenting opinion charges.

The majority now reiterates the doctrine in Tac-an and the subsequent cases not because it has
become hostage to the "inertia of time [which] has always been the obstacle to the virtues of
change," as the concurring and dissenting opinion finds it to be, but rather because it honestly
believes that Tac-an laid down the correct doctrine. If P.D. No. 1866 as applied in Tac-an is an
"affront on doctrinal concepts of penal laws and assails even the ordinary notions of common
sense," the blame must not be laid at the doorsteps of this Court, but on the lawmaker's. All that
the Court did in Tac-an was to apply the law, for there was nothing in that case that warranted an
interpretation or the application of the niceties of legal hermeneutics. It did not forget that its
duty is merely to apply the law in such a way that shall not usurp legislative powers by judicial
legislation and that in the course of such application or construction it should not make or
supervise legislation, or under the guise of interpretation modify, revise, amend, distort, remodel,
or rewrite the law, or give the law a construction which is repugnant to its terms.i[45]

Murder and homicide are defined and penalized by the Revised Penal Codei[46] as crimes
against persons. They are mala in se because malice or dolo is a necessary ingredient
therefor.i[47] On the other hand, the offense of illegal possession of firearm is defined and
punished by a special penal law,i[48] P.D. No. 1866. It is a malum prohibitumi[49] which the
lawmaker, then President Ferdinand E. Marcos, in the exercise of his martial law powers, so
condemned not only because of its nature but also because of the larger policy consideration of
containing or reducing, if not eliminating, the upsurge of crimes vitally affecting public order
and safety due to the proliferation of illegally possessed and manufactured firearms, ammunition,
and explosives. If intent to commit the crime were required, enforcement of the decree and its
policy or purpose would be difficult to achieve. Hence, there is conceded wisdom in punishing
illegal possession of firearm without taking into account the criminal intent of the possessor. All
that is needed is intent to perpetrate the act prohibited by law, coupled, of course, by animus
possidendi. However, it must be clearly understood that this animus possidendi is without regard
to any other criminal or felonious intent which an accused may have harbored in possessing the
firearm.i[50]

A long discourse then on the concepts of malum in se and malum prohibilum and their
distinctions is an exercise in futility.

We disagree for lack of basis the following statements of Mr. Justice Regalado in his Concurring
and Dissenting Opinion, to wit:

The second paragraph of the aforestated Section 1 expressly and unequivocally provides for such
illegal possession and resultant killing as a single integrated offense which is punished as such.
The majority not only created two offenses by dividing a single offense into two but, worse, it
resorted to the unprecedented and invalid act of treating the original offense as a single
integrated crime and then creating another offense by using a component crime which is also an
element of the former.

It would already have been a clear case of judicial legislation if the illegal possession with
murder punished with a single penalty have been divided into two separate offenses of illegal
possession and murder with distinct penalties. It is consequently a compounded infringement of
legislative powers for this Court to now, as it has done, treat that single offense as specifically
described by the law and impose reclusion perpetua therefor (since the death penalty for that
offense is still proscribed), but then proceed further by plucking out therefrom the crime of
murder in order to be able to impose the death sentence. For indeed, on this score, it is beyond
cavil that in the aggravated form of illegal possession, the consequential murder (or homicide) is
an integrated element or integral component since without the accompanying death, the crime
would merely be simple illegal possession of a firearm under the first paragraph of Section 1.

The second paragraph of Section 1 of P.D. No. 1866 does not warrant and support a conclusion
that it intended to treat "illegal possession and resultant killing" (emphasis supplied) "as a single
and integrated offense" of illegal possession with homicide or murder. It does not use the clause
as a result or on the occasion of to evince an intention to create a single integrated crime. By its
unequivocal and explicit language, which we quote to be clearly understood:

If homicide or murder is committed with the use of an unlicensed firearm, the penalty of death
shall be imposed. (emphasis supplied)

the crime of either homicide or murder is committed NOT AS A RESULT OR ON THE

OCCASION of the violation of Section 1, but WITH THE USE of an unlicensed firearm, whose
possession is penalized therein. There is a world of difference, which is too obvious, between (a)
the commission of homicide or murder as a result or on the occasion of the violation of Section
1, and (b) the commission of homicide or murder with the use of an unlicensed firearm. In the
first, homicide or murder is not the original purpose or primary objective of the offender, but a
secondary event or circumstance either resulting from or perpetrated on the occasion of the
commission of that originally or primarily intended. In the second, the killing, which requires a
mens rea, is the primary purpose, and to carry that out effectively the offender uses an unlicensed
firearm.

As to the question then of Mr. Justice Regalado of whether this Court should also apply the rule
enunciated here to P.D. No. 532 (Anti-Piracy and Anti-Highway Robbery Law of 1974), P.D.
No. 533 (Anti-Cattle Rustling Law of 1974), and P.D. No. 534 (Defining Illegal Fishing and
Prescribing Stiffer Penalties Therefor), the answer is resoundingly in the negative. In those cases,
the lawmaker clearly intended a single integrated offense or a special complex offense because
the death therein occurs as a result or on the occasion of the commission of the offenses therein
penalized or was not the primary purpose of the offender, unlike in the second paragraph of
Section 1 of P.D. No. 1866. Thus, (a) Section 3 of P.D. No. 532 provides:

SEC. 3. Penalties. -- Any person who commits piracy or highway robbery/brigandage as herein
defined, shall, upon conviction by competent court be punished by:

a. Piracy. - The penalty of reclusion temporal in its medium and maximum periods shall be
imposed. If physical injuries or other crimes are committed as a result or on the occasion thereof,
the penalty of reclusion perpetua shall be imposed. If rape, murder or homicide is committed as a
result or on the occasion of piracy, or when the offenders abandoned the victims without means
of saving themselves, or when the seizure is accomplished by firing upon or boarding a vessel,
the mandatory penalty of death shall be imposed.

b. Highway Robbery/Brigandage.-- The penalty of reclusion temporal in its minimum period

shall be imposed. If physical injuries or other crimes are committed during or on the occasion of
the commission of robbery or brigandage, the penalty of reclusion temporal in its medium and
maximum periods shall be imposed. If kidnapping for ransom or extortion, or murder or
homicide, or rape is committed as a result or on the occasion thereof, the penalty of death shall
be imposed. (emphasis supplied)

(b) Section 8 of P.D. No. 533 reads in part as follows:

SEC. 8. Penal provisions. -- Any person convicted of cattle rustling as herein defined shall,
irrespective of the value of the large cattle involved, be punished by prision mayor in its
maximum period to reclusion temporal in its medium period if the offense is committed without
violence against or intimidation of persons or force upon things. If the offense is committed with
violence against or intimidation of persons or force upon things, the penalty of reclusion
temporal in its maximum period to reclusion perpetua shall be imposed. If a person is seriously
injured or killed as a result or on the occasion of the commission of cattle rustling, the penalty of
reclusion perpetua to death shall be imposed. (emphasis supplied)
and (c) Section 3 of P.D. No. 534 reads as follows:

SECTION. 3. Penalties.-- Violations of this Decree and the rules and regulations mentioned in
paragraph (f) of Section 1 hereof shall be punished as follows:

a. by imprisonment from 10 to 12 years, if explosives are used: Provided, that if the explosion
results (1) in physical injury to person, the penalty shall be imprisonment from 12 to 20 years, or
(2) in the loss of human life, then the penalty shall be imprisonment from 20 years to life, or
death;

b. by imprisonment from 8 to 10 years, if obnoxious or poisonous substances are used: Provided,

that if the use of such substances results (1) in physical injury to any person, the penalty shall be
imprisonment from 10 to 12 years, or (2) in the loss of human life, then the penalty shall be
imprisonment from 20 years to life, or death; x x x (emphasis supplied)

The unequivocal intent of the second paragraph of Section 1 of P.D. No. 1866 is to respect and
preserve homicide or murder as a distinct offense penalized under the Revised Penal Code and to
increase the penalty for illegal possession of firearm where such a firearm is used in killing a
person. Its clear language yields no intention of the lawmaker to repeal or modify, pro tanto,
Articles 248 and 249 of the Revised Penal Code, in such a way that if an unlicensed firearm is
used in the commission of homicide or murder, either of these crimes, as the case may be, would
only serve to aggravate the offense of illegal possession of firearm and would not anymore be
separately punished. Indeed, the words of the subject provision are palpably clear to exclude any
suggestion that either of the crimes of homicide and murder, as crimes mala in se under the
Revised Penal Code, is obliterated as such and reduced as a mere aggravating circumstance in
illegal possession of firearm whenever the unlicensed firearm is used in killing a person. The
only purpose of the provision is to increase the penalty prescribed in the first paragraph of
Section 1 -- reclusion temporal in its maximum period to reclusion perpetua -- to death,
seemingly because of the accused's manifest arrogant defiance and contempt of the law in using
an unlicensed weapon to kill another, but never, at the same time, to absolve the accused from
any criminal liability for the death of the victim.

Neither is the second paragraph of Section 1 meant to punish homicide or murder with death if
either crime is committed with the use of an unlicensed firearm, i.e., to consider such use merely
as a qualifying circumstance and not as an offense. That could not have been the intention of the
lawmaker because the term "penalty" in the subject provision is obviously meant to be the
penalty for illegal possession of firearm and not the penalty for homicide or murder. We
explicitly stated in Tac-an:

There is no law which renders the use of an unlicensed firearm as an aggravating circumstance in
homicide or murder. Under an information charging homicide or murder, the fact that the death
weapon was an unlicensed firearm cannot be used to increase the penalty for the second offense
of homicide or murder to death .... The essential point is that the unlicensed character or
condition of the instrument used in destroying human life or committing some other crime, is not
included in the inventory of aggravating circumstances set out in Article 14 of the Revised Penal
Code.

A law may, of course, be enacted making the use of an unlicensed firearm as a qualifying
circumstance. This would not be without precedent. By analogy, we can cite Section 17 of B.P.
Blg. 179, which amended the Dangerous Drugs Act of 1972 (R.A. No. 6425). The said section
provides that when an offender commits a crime under a state of addiction, such a state shall be
considered as a qualifying aggravating circumstance in the definition of the crime and the
application of the penalty under the Revised Penal Code.

In short, there is nothing in P.D. No. 1866 that manifests, even vaguely, a legislative intent to
decriminalize homicide or murder if either crime is committed with the use of an unlicensed
firearm, or to convert the offense of illegal possession of firearm as a qualifying circumstance if
the firearm so illegally possessed is used in the commission of homicide or murder. To charge
the lawmaker with that intent is to impute an absurdity that would defeat the clear intent to
preserve the law on homicide and murder and impose a higher penalty for illegal possession of
firearm if such firearm is used in the commission of homicide or murder.

Evidently, the majority did not, as charged in the concurring and dissenting opinion, create two
offenses by dividing a single offense into two. Neither did it resort to the "unprecedented and
invalid act of treating the original offense as a single integrated crime and then creating another
offense by using a component crime which is also an element of the former." The majority has
always maintained that the killing of a person with the use of an illegally possessed firearm gives
rise to two separate offenses of (a) homicide or murder under the Revised Penal Code, and (b)
illegal possession of firearm in its aggravated form.

What then would be a clear case of judicial legislation is an interpretation of the second
paragraph of Section 1 of P.D. No. 1866 that would make it define and punish a single integrated
offense and give to the words WITH THE USE OF a similar meaning as the words AS A
RESULT OR ON THE OCCASION OF, a meaning which is neither born out by the letter of the
law nor supported by its intent. Worth noting is the rule in statutory construction that if a statute
is clear, plain, and free from ambiguity, it must be given its literal meaning and applied without
attempted interpretation,i[51] leaving the court no room for any extended ratiocination or
rationalization of the law.i[52]

Peregrinations into the field of penology such as on the concept of a single integrated crime or
composite crimes, or into the philosophical domain of integration of the essential elements of
one crime to that of another would then be unnecessary in light of the clear language and
indubitable purpose and intent of the second paragraph of Section 1 of P.D. No. 1866. The realm
of penology, the determination of what should be criminalized, the definition of crimes, and the
prescription of penalties are the exclusive prerogatives of the legislature. As its wisdom may
dictate, the legislature may even create from a single act or transaction various offenses for
different purposes subject only to the limitations set forth by the Constitution. This Court cannot
dictate upon the legislature to respect the orthodox view concerning a single integrated crime or
composite crimes.
The only apparent obstacle to the imposition of cumulative penalties for various acts is the rule
on double jeopardy. This brings us to the proposition in the dissenting opinion of Mr. Justice
Regalado that the majority view offends the constitutional bar against double jeopardy under the
"same-evidence" test enunciated in People vs. Diaz.i[53] He then concludes:

In the cases now before us, it is difficult to assume that the evidence for the murder in the first
charge of aggravated illegal possession of firearm with murder would be different from the
evidence to be adduced in the subsequent charge for murder alone. In the second charge, the
illegal possession is not in issue, except peripherally and inconsequentially since it is not an
element or modifying circumstance in the second charge, hence the evidence therefor is
immaterial. But, in both prosecutions, the evidence on murder is essential, in the first charge
because without it the crime is only simple illegal possession, and, in the second charge, because
murder is the very subject of the prosecution. Assuming that all the other requirements under
Section 7, Rule 117 are present, can it be doubted that double jeopardy is necessarily present and
can be validly raised to bar the second prosecution for murder?

In fact, we can extrapolate the constitutional and reglementary objection to the cases of the other
composite crimes for which a single penalty is imposed, such as the complex, compound and so-
called special complex crimes. Verily, I cannot conceive of how a person convicted of estafa
through falsification under Article 48 can be validly prosecuted anew for the same offense or
either estafa or falsification; or how the accused convicted of robbery with homicide under
Article 294 can be legally charged again with either of the same component crimes of robbery or
homicide; or how the convict who was found guilty of rape with homicide under Article 335 can
be duly haled before the court again to face charges of either the same rape or homicide. Why,
then, do we now sanction a second prosecution for murder in the cases at bar since the very same
offense was an indispensable component for the other composite offense of illegal possession of
firearm with murder? Why would the objection of non bis in idim as a bar to a second jeopardy
lie in the preceding examples and not apply to the cases now before us?

We are unable to agree to the proposition. For one, the issue of double jeopardy is not raised in
this case. For another, the so-called "same-evidence" test is not a conclusive, much less
exclusive, test in double jeopardy cases of the first category under the Double Jeopardy Clause
which is covered by Section 21, Article III of the Constitution and which reads as follows:

No person shall be twice put in jeopardy of punishment for the same offense. If an act is
punished by a law and an ordinance, conviction or acquittal under either shall constitute a bar to
another prosecution for the same act.

Note that the first category speaks of the same offense. The second refers to the same act. This
was explicitly distinguished in Yap vs. Lutero,i[54] from where People vs. Relovai[55] quotes the
following:

Thirdly, our Bill of Rights deals with two (2) kinds of double jeopardy. The first sentence of
clause 20, Section 1, Article III of the Constitution, ordains that "no person shall be twice put in
jeopardy of punishment for the same offense." (italics in the original) The second sentence of
said clause provides that "if an act is punishable by a law and an ordinance, conviction or
acquittal under either shall constitute a bar to another prosecution for the same act." Thus, the
first sentence prohibits double jeopardy of punishment for the same offense whereas, the second
contemplates double jeopardy of punishment for the same act. Under the first sentence, one may
be twice put in jeopardy of punishment of the same act, provided that he is charged with different
offenses, or the offense charged in one case is not included in, or does not include, the crime
charged in the other case. The second sentence applies, even if the offenses charged are not the
same, owing to the fact that one constitutes a violation of an ordinance and the other a violation
of a statute. If the two charges are based on one and the same act, conviction or acquittal under
either the law or the ordinance shall bar a prosecution under the other. Incidentally, such
conviction or acquittal is not indispensable to sustain the plea of double jeopardy of punishment
for the same offense. So long as jeopardy has been attached under one of the informations
charging said offense, the defense may be availed of in the other case involving the same
offense, even if there has been neither conviction nor acquittal in either case.

Elsewise stated, where the offenses charged are penalized either by different sections of the same
statute or by different statutes, the important inquiry relates to the identity of offenses charged.
The constitutional protection against double jeopardy is available only where an identity is
shown to exist between the earlier and the subsequent offenses charged.i[56] The question of
identity or lack of identity of offenses is addressed by examining the essential elements of each
of the two offenses charged, as such elements are set out in the respective legislative definitions
of the offenses involved.i[57]

It may be noted that to determine the same offense under the Double Jeopardy Clause of the
Fifth Amendment of the Constitution of the United States of America which reads:

[N]or shall any person be subject for the same offense to be twice put in jeopardy of life or limb .
...

the rule applicable is the following: "where the same act or transaction constitutes a violation of
two distinct statutory provisions, the test to be applied to determine whether there are two
offenses or only one, is whether each provision requires proof of an additional fact which the
other does not."i[58]

The Double Jeopardy Clause of the Constitution of the United States of America was brought to
the Philippines through the Philippine Bill of 1 July 1902, whose Section 5 provided, inter alia:

[N]o person for the same offense shall be twice put in jeopardy of punishment . . . .

This provision was carried over in identical words in Section 3 of the Jones Law of 29 August
1916.i[59] Then under the 1935 Constitution, the Jones Law provision was recast with the
addition of a provision referring to the same act. Thus, paragraph 20, Section 1, Article III
thereof provided as follows:
No person shall be twice put in jeopardy of punishment for the same offense. If an act is
punished by a law and an ordinance, conviction or acquittal under either shall constitute a bar to
another prosecution for the same act.

This was adopted verbatim in Section 22, Article IV of the 1973 Constitution and in Section 21,
Article III of the present Constitution.

This additional-element test in Lutero and Relova and in Blockburger, Gore, and Missouri would
safely bring the second paragraph of Section 1 of P.D. No. 1866 out of the proscribed double
jeopardy principle. For, undeniably, the elements of illegal possession of firearm in its
aggravated form are different from the elements of homicide or murder, let alone the fact that
these crimes are defined and penalized under different laws and the former is malum prohibitum,
while both the latter are mala in se. Hence, the fear that the majority's construction of the subject
provision would violate the constitutional bar against double jeopardy is unfounded.

The penalty which the trial court imposed in Criminal Case No. 8179 for illegal possession of
firearm in its aggravated form must, however, be modified. The penalty prescribed by P.D. No.
1866 is death. Since Section 19(1), Article III of the Constitution prohibits the imposition of the
death penalty, the penalty next lower in degree, reclusion perpetual must be imposed.

WHEREFORE, the instant appeal is DISMISSED, and the challenged decision of 30 September
1993 of Branch 1 of the Regional Trial Court of Bohol finding accused-appellant DANIEL
QUIJADA y CIRCULADO guilty beyond reasonable doubt of the crime of murder in Criminal
Case No. 8178 and of illegal possession of firearm in its aggravated form in Criminal Case No.
8179 is AFFIRMED. The penalty imposed in the first case, as amended by the Order of 29
October 1993, is sustained; however, the penalty imposed in the second case is changed to
Reclusion Perpetua from the indeterminate penalty ranging from Seventeen (17) years, Four (4)
months, and One (1) day, as minimum, to Twenty (20) years and One (1) day, as maximum.

Costs de oficio.

SO ORDERED.

G.R. No. L-17938 April 30, 1963

ESPERIDION TOLENTINO, plaintiff-appellant,

vs.
ADELA ONGSIAKO, ET AL., defendants-appellees.

Esperidion Tolentino for and in his own behalf as plaintiff-appellant.

Edmundo M. Reyes and Senen Ceniza for defendants-appellees.

REYES, J.B.L., J.:

Appeal from the order of dismissal of the Court of First Instance of Nueva Ecija, in its Civil Case
No. 3197.

The plaintiff-appellant, Esperidion Tolentino, prays in the complaint that he filed with the lower
court on 20 May 1959, for the enforcement of the dissenting opinion rendered in the case entitled
"Severo Domingo, et al. vs. Santos Ongsiako, et al., G.R. No. 32776."

The decision in said case (in favor of appellees' predecessors, and adverse to those of appellant)
was promulgated by this Court on 4 December 1930, and, together with the dissenting opinion,
appears in Volume 55 of the Philippine Reports, starting on page 361. Unfortunately, the records
of said case were lost, or destroyed, during the war.

The plaintiff-appellant claims to be the successor-interest of the late Severo Domingo, who died
without having received a copy of the decision, and alleges that plaintiff-appellant learned of the
decision, only about a week before he filed the aforementioned complaint; that the decision of
the majority of the Court was erroneous and unjust; that the dissenting opinion is the correct
view of the case, and should be enforced. The court below, on motion of one of the several
defendants, dismissed the case, for lack of cause of action.

Not satisfied, the plaintiff-appellant interposed the present appeal, and urges that the failure of
service of a copy of the decision upon the late Severo Domingo was a denial of due process,
which invalidates the decision, and asks that, on equitable grounds, the present case be heard as a
proceeding coram nobis.

Assuming the truth of the allegation that Severo Domingo, appellant's predecessor-in-interest,
was never furnished a copy of the decision in G.R. No. L-32776, it appears in the printed report
of the case (55 Phil. 361) that he was represented by Atty. Ramon Diokno. Being represented by
counsel, service of the decision is made upon the latter by the clerk of the Supreme Court (Sec.
250, Act 190), and not upon the client (Palad vs. Cui, 28 Phil. 44); and the unrebutted
presumption is that the said official of this Court had regularly performed his duty (No. 14, Sec.
334, Act 190; Sec. 69 [m], Rule 123, Rules of Court). Appellant's alleged predecessor-in-interest
was not, therefore, denied due process of law.

Appellant's position that the decision was erroneous and unjust is entirely untenable, because the
issue sought to be reopened is res judicata, aside from its having stood unchallenged for 30
years. The ridiculous prayer to enforce a dissenting opinion requires no discussion, it being
sufficient to state that there is nothing to enforce in a dissenting opinion, since it affirms or
overrules no claim, right, or obligation, and neither disposes of, nor awards, anything; it merely
expresses the views of the dissenter.

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and
approved by this Honorable Court, without prejudice to the parties adducing other evidence to
prove their case not covered by this stipulation of facts. 1wph1.t
Lastly, the appellant's claim that "the lower court erred in not allowing plaintiff-appellant's cause
as a proceeding coram nobis", is devoid of merit. The ancient common law writ of error coram
nobis, now substantially obsolete even in common law jurisdictions (49 CJS 561), does not lie
after affirmance of a judgment on writ of error on appeal (49 CJS 562); nor can it be grounded
on facts already in issue and adjudicated on the trial (49 CJS 567). Moreover, the jurisdiction of
a writ of error coram nobis lies exclusively in the court which rendered the judgment sought to
be corrected (49 CJS 568), so that it should have been sought by appellants, if at all, in the
Supreme Court, and not in the Court of First Instance.

In the Philippines, no court appears to have ever recognized such writ, the rule in this jurisdiction
being that public policy and sound practice demand that, at the risk of occasional errors,
judgments of courts should become final and irrevocable at some definite date fixed by law.1
Interes rei publicae ut finis sit litium.

The order of dismissal appealed from is affirmed. Costs against the appellant.

G.R. No. L-24670 December 14, 1979

ORTIGAS & CO., LIMITED PARTNERSHIP, plaintiff-appellant,

vs.
FEATI BANK AND TRUST CO., defendant-appellee.

Ramirez & Ortigas for appellant.

Taada, Teehankee & Carreon for appellee.

SANTOS, J.:

An appeal interposed on June 23, 1965 by plaintiff-appellant, Ortigas & Co., Limited
Partnership, from the decision of the Court of First Instance of Rizal, Branch VI, at
Pasig, Hon. Andres Reyes presiding, which dismissed its complaint in Civil Case No.
7706, entitled, "Ortigas & Company, Limited Partnership, plaintiff, v. Feati Bank and
Trust Company, defendant," for lack of merit.

The following facts a reproduction of the lower court's findings, which, in turn, are
based on a stipulation of facts entered into by the parties are not disputed. Plaintiff
(formerly known as "Ortigas, Madrigal y Cia") is a limited partnership and defendant
Feati Bank and Trust Co., is a corporation duly organized and existing in accordance
with the laws of the Philippines. Plaintiff is engaged in real estate business, developing
and selling lots to the public, particularly the Highway Hills Subdivision along Epifanio
de los Santos Avenue, Mandaluyong, Rizal. 1
On March 4, 1952, plaintiff, as vendor, and Augusto Padilla y Angeles and Natividad
Angeles, as vendees, entered into separate agreements of sale on installments over
two parcels of land, known as Lots Nos. 5 and 6, Block 31, of the Highway Hills
Subdivision, situated at Mandaluyong, Rizal. On July 19, 1962, the said vendees
transferred their rights and interests over the aforesaid lots in favor of one Emma
Chavez. Upon completion of payment of the purchase price, the plaintiff executed the
corresponding deeds of sale in favor of Emma Chavez. Both the agreements (of sale on
installment) and the deeds of sale contained the stipulations or restrictions that:

1. The parcel of land subject of this deed of sale shall be used the Buyer
exclusively for residential purposes, and she shall not be entitled to take or
remove soil, stones or gravel from it or any other lots belonging to the
Seller.

2. All buildings and other improvements (except the fence) which may be
constructed at any time in said lot must be, (a) of strong materials and
properly painted, (b) provided with modern sanitary installations connected
either to the public sewer or to an approved septic tank, and (c) shall not
be at a distance of less than two (2) meters from its boundary lines. 2

The above restrictions were later annotated in TCT Nos. 101509 and 101511 of the
Register of Deeds of Rizal, covering the said lots and issued in the name of Emma
Chavez.3

Eventually, defendant-appellee acquired Lots Nos. 5 and 6, with TCT Nos. 101613 and
106092 issued in its name, respectively and the building restrictions were also
annotated therein. 4 Defendant-appellee bought Lot No. 5 directly from Emma Chavez,
"free from all liens and encumbrances as stated in Annex 'D', 5 while Lot No. 6 was
acquired from Republic Flour Mills through a "Deed of Exchange," Annex "E". 6 TCT
No. 101719 in the name of Republic Flour Mills likewise contained the same restrictions,
although defendant-appellee claims that Republic Flour Mills purchased the said Lot No.
6 "in good faith. free from all liens and encumbrances," as stated in the Deed of Sale,
Annex "F" 7 between it and Emma Chavez.

Plaintiff-appellant claims that the restrictions annotated on TCT Nos. 101509, 101511,
101719, 101613, and 106092 were imposed as part of its general building scheme
designed for the beautification and development of the Highway Hills Subdivision which
forms part of the big landed estate of plaintiff-appellant where commercial and industrial
sites are also designated or established. 8

Defendant-appellee, upon the other hand, maintains that the area along the western
part of Epifanio de los Santos Avenue (EDSA) from Shaw Boulevard to Pasig River, has
been declared a commercial and industrial zone, per Resolution No. 27, dated February
4, 1960 of the Municipal Council of Mandaluyong, Rizal. 9 It alleges that plaintiff-
appellant 'completely sold and transferred to third persons all lots in said subdivision
facing Epifanio de los Santos Avenue" 10 and the subject lots thereunder were acquired
by it "only on July 23, 1962 or more than two (2) years after the area ... had been
declared a commercial and industrial zone ... 11

On or about May 5, 1963, defendant-appellee began laying the foundation and

commenced the construction of a building on Lots Nos. 5 and 6, to be devoted to
banking purposes, but which defendant-appellee claims could also be devoted to, and
used exclusively for, residential purposes. The following day, plaintiff-appellant
demanded in writing that defendant-appellee stop the construction of the commerical
building on the said lots. The latter refused to comply with the demand, contending that
the building was being constructed in accordance with the zoning regulations,
defendant-appellee having filed building and planning permit applications with the
Municipality of Mandaluyong, and it had accordingly obtained building and planning
permits to proceed with the construction.12

On the basis of the foregoing facts, Civil Case No. 7706, supra, was submitted in the
lower court for decision. The complaint sought, among other things, the issuance of "a
writ of preliminary injunction ... restraining and enjoining defendant, its agents, assigns,
and those acting on its or their behalf from continuing or completing the construction of
a commercial bank building in the premises ... involved, with the view to commanding
the defendant to observe and comply with the building restrictions annotated in the
defendant's transfer certificate of title."

In deciding the said case, the trial court considered, as the fundamental issue, whether
or not the resolution of the Municipal Council of Mandaluyong declaring Lots Nos. 5 and
6, among others, as part of the commercial and industrial zone of the municipality,
prevailed over the building restrictions imposed by plaintiff-appellant on the lots in
question. 13 The records do not show that a writ of preliminary injunction was issued.

The trial court upheld the defendant-appellee and dismissed the complaint, holding that
the subject restrictions were subordinate to Municipal Resolution No. 27, supra. It
predicated its conclusion on the exercise of police power of the said municipality, and
stressed that private interest should "bow down to general interest and welfare. " In
short, it upheld the classification by the Municipal Council of the area along Epifanio de
los Santos Avenue as a commercial and industrial zone, and held that the same
rendered "ineffective and unenforceable" the restrictions in question as against
defendant-appellee.14 The trial court decision further emphasized that it "assumes said
resolution to be valid, considering that there is no issue raised by either of the parties as
to whether the same is null and void. 15

On March 2, 1965, plaintiff-appellant filed a motion for reconsideration of the above

decision, 16 which motion was opposed by defendant-appellee on March 17, 1965.17 It
averred, among others, in the motion for reconsideration that defendant- appellee "was
duty bound to comply with the conditions of the contract of sale in its favor, which
conditions were duly annotated in the Transfer Certificates of Title issued in her (Emma
Chavez) favor." It also invited the trial court's attention to its claim that the Municipal
Council had (no) power to nullify the contractual obligations assumed by the defendant
corporation." 18

The trial court denied the motion for reconsideration in its order of March 26, 1965. 19

On April 2, 1965 plaintiff-appellant filed its notice of appeal from the decision dismissing
the complaint and from the order of March 26, 1965 denying the motion for
reconsideration, its record on appeal, and a cash appeal bond." 20 On April 14, the
appeal was given due course 21 and the records of the case were elevated directly to
this Court, since only questions of law are raised. 22

Plaintiff-appellant alleges in its brief that the trial court erred

I. When it sustained the view that Resolution No. 27, series of 1960 of the
Municipal Council of Mandaluyong, Rizal declaring Lots Nos. 5 and 6,
among others, as part of the commercial and industrial zone, is valid
because it did so in the exercise of its police power; and

II. When it failed to consider whether or not the Municipal Council had the
power to nullify the contractual obligations assumed by defendant-
appellee and when it did not make a finding that the building was erected
along the property line, when it should have been erected two meters
away from said property line. 23

The defendant-appellee submitted its counter-assignment of errors. In this connection,

We already had occasion to hold in Relativo v. Castro 24 that "(I)t is not incumbent on
the appellee, who occupies a purely defensive position, and is seeking no affirmative
relief, to make assignments of error, "

The only issues to be resolved, therefore, are: (1) whether Resolution No. 27 s-1960 is
a valid exercise of police power; and (2) whether the said Resolution can nullify or
supersede the contractual obligations assumed by defendant-appellee.

1. The contention that the trial court erred in sustaining the validity of Resolution No. 27
as an exercise of police power is without merit. In the first place, the validity of the said
resolution was never questioned before it. The rule is that the question of law or of fact
which may be included in the appellant's assignment of errors must be those which
have been raised in the court below, and are within the issues framed by the parties. 25
The object of requiring the parties to present all questions and issues to the lower court
before they can be presented to the appellate court is to enable the lower court to pass
thereon, so that the appellate court upon appeal may determine whether or not such
ruling was erroneous. The requirement is in furtherance of justice in that the other party
may not be taken by surprise. 26 The rule against the practice of blowing "hot and cold"
by assuming one position in the trial court and another on appeal will, in the words of
Elliot, prevent deception. 27 For it is well-settled that issues or defenses not raised 28 or
properly litigated 29 or pleaded 30 in the Court below cannot be raised or entertained on
appeal.

In this particular case, the validity of the resolution was admitted at least impliedly, in the
stipulation of facts below. when plaintiff-appellant did not dispute the same. The only
controversy then as stated by the trial court was whether or not the resolution of the
Municipal Council of Mandaluyong ... which declared lots Nos. 4 and 5 among others,
as a part of the commercial and industrial zone of the municipality, prevails over the
restrictions constituting as encumbrances on the lots in question. 31 Having admitted
the validity of the subject resolution below, even if impliedly, plaintiff-appellant cannot
now change its position on appeal.

But, assuming arguendo that it is not yet too late in the day for plaintiff-appellant to raise
the issue of the invalidity of the municipal resolution in question, We are of the opinion
that its posture is unsustainable. Section 3 of R.A. No. 2264, otherwise known as the
Local Autonomy Act," 32 empowers a Municipal Council "to adopt zoning and
subdivision ordinances or regulations"; 33 for the municipality. Clearly, the law does not
restrict the exercise of the power through an ordinance. Therefore, granting that
Resolution No. 27 is not an ordinance, it certainly is a regulatory measure within the
intendment or ambit of the word "regulation" under the provision. As a matter of fact the
same section declares that the power exists "(A)ny provision of law to the contrary
notwithstanding ... "

An examination of Section 12 of the same law 34 which prescribes the rules for its
interpretation likewise reveals that the implied power of a municipality should be
"liberally construed in its favor" and that "(A)ny fair and reasonable doubt as to the
existence of the power should be interpreted in favor of the local government and it shall
be presumed to exist." The same section further mandates that the general welfare
clause be liberally interpreted in case of doubt, so as to give more power to local
governments in promoting the economic conditions, social welfare and material
progress of the people in the community. The only exceptions under Section 12 are
existing vested rights arising out of a contract between "a province, city or municipality
on one hand and a third party on the other," in which case the original terms and
provisions of the contract should govern. The exceptions, clearly, do not apply in the
case at bar.

2. With regard to the contention that said resolution cannot nullify the contractual
obligations assumed by the defendant-appellee referring to the restrictions
incorporated in the deeds of sale and later in the corresponding Transfer Certificates of
Title issued to defendant-appellee it should be stressed, that while non-impairment of
contracts is constitutionally guaranteed, the rule is not absolute, since it has to be
reconciled with the legitimate exercise of police power, i.e., "the power to prescribe
regulations to promote the health, morals, peace, education, good order or safety and
general welfare of the people. 35 Invariably described as "the most essential, insistent,
and illimitable of powers" 36 and "in a sense, the greatest and most powerful attribute of
government, 37 the exercise of the power may be judicially inquired into and corrected
only if it is capricious, 'whimsical, unjust or unreasonable, there having been a denial of
due process or a violation of any other applicable constitutional guarantee. 38 As this
Court held through Justice Jose P. Bengzon in Philippine Long Distance Company vs.
City of Davao, et al. 39 police power "is elastic and must be responsive to various social
conditions; it is not, confined within narrow circumscriptions of precedents resting on
past conditions; it must follow the legal progress of a democratic way of life." We were
even more emphatic in Vda. de Genuino vs. The Court of Agrarian Relations, et al., 40
when We declared: "We do not see why public welfare when clashing with the individual
right to property should not be made to prevail through the state's exercise of its police
power.

Resolution No. 27, s-1960 declaring the western part of highway 54, now E. de los
Santos Avenue (EDSA, for short) from Shaw Boulevard to the Pasig River as an
industrial and commercial zone, was obviously passed by the Municipal Council of
Mandaluyong, Rizal in the exercise of police power to safeguard or promote the health,
safety, peace, good order and general welfare of the people in the locality, Judicial
notice may be taken of the conditions prevailing in the area, especially where lots Nos.
5 and 6 are located. The lots themselves not only front the highway; industrial and
commercial complexes have flourished about the place. EDSA, a main traffic artery
which runs through several cities and municipalities in the Metro Manila area, supports
an endless stream of traffic and the resulting activity, noise and pollution are hardly
conducive to the health, safety or welfare of the residents in its route. Having been
expressly granted the power to adopt zoning and subdivision ordinances or regulations,
the municipality of Mandaluyong, through its Municipal 'council, was reasonably, if not
perfectly, justified under the circumstances, in passing the subject resolution.

The scope of police power keeps expanding as civilization advances, stressed this
Court, speaking thru Justice Laurel in the leading case of Calalang v. Williams et al., 41
Thus-

As was said in the case of Dobbins v. Los Angeles (195 US 223, 238 49 L.
ed. 169), 'the right to exercise the police power is a continuing one, and a
business lawful today may in the future, because of changed situation, the
growth of population or other causes, become a menace to the public
health and welfare, and be required to yield to the public good.' And in
People v. Pomar (46 Phil. 440), it was observed that 'advancing civilization
is bringing within the scope of police power of the state today things which
were not thought of as being with in such power yesterday. The
development of civilization), the rapidly increasing population, the growth
of public opinion, with an increasing desire on the part of the masses and
of the government to look after and care for the interests of the individuals
of the state, have brought within the police power many questions for
 regulation which formerly were not so considered. 42 (Emphasis,
supplied.)

Thus, the state, in order to promote the general welfare, may interfere with personal
liberty, with property, and with business and occupations. Persons may be subjected to
all kinds of restraints and burdens, in order to secure the general comfort health and
prosperity of the state 43 and to this fundamental aim of our Government, the rights of
the individual are subordinated. 44

The need for reconciling the non-impairment clause of the Constitution and the valid
exercise of police power may also be gleaned from Helvering v. Davis 45 wherein Mr.
Justice Cardozo, speaking for the Court, resolved the conflict "between one welfare and
another, between particular and general, thus

Nor is the concept of the general welfare static. Needs that were narrow or
parochial a century ago may be interwoven in our day with the well-being
of the nation What is critical or urgent changes with the times. 46

The motives behind the passage of the questioned resolution being reasonable, and it
being a " legitimate response to a felt public need," 47 not whimsical or oppressive, the
non-impairment of contracts clause of the Constitution will not bar the municipality's
proper exercise of the power. Now Chief Justice Fernando puts it aptly when he
declared: "Police power legislation then is not likely to succumb to the challenge that
thereby contractual rights are rendered nugatory." 48

Furthermore, We restated in Philippine American Life Ins. Co. v. Auditor General49 that
laws and reservation of essential attributes of sovereign power are read into contracts
agreed upon by the parties. Thus

Not only are existing laws read into contracts in order to fix obligations as
between the parties, but the reservation of essential attributes of
sovereign power is also read into contracts as a postulate of the legal
order. The policy of protecting contracts against impairments presupposes
the maintenance of a government by virtue of which contractual relations
are worthwhile a government which retains adequate authority to secure
the peace and good order of society.

Again, We held in Liberation Steamship Co., Inc. v. Court of Industrial Relations, 50

through Justice J.B.L. Reyes, that ... the law forms part of, and is read into, every
contract, unless clearly excluded therefrom in those cases where such exclusion is
allowed." The decision in Maritime Company of the Philippines v. Reparations
Commission, 51 written for the Court by Justice Fernando, now Chief Justice, restates
the rule.
One last observation. Appellant has placed unqualified reliance on American
jurisprudence and authorities 52 to bolster its theory that the municipal resolution in
question cannot nullify or supersede the agreement of the parties embodied in the sales
contract, as that, it claims, would impair the obligation of contracts in violation of the
Constitution. Such reliance is misplaced.

In the first place, the views set forth in American decisions and authorities are not per se
controlling in the Philippines, the laws of which must necessarily be construed in
accordance with the intention of its own lawmakers and such intent may be deduced
from the language of each law and the context of other local legislation related thereto.
53 and Burgess, et al v. Magarian, et al., 55 two Of the cases cited by plaintiff-appellant,
lend support to the conclusion reached by the trial court, i.e. that the municipal
resolution supersedes/supervenes over the contractual undertaking between the
parties. Dolan v. Brown, states that "Equity will not, as a rule, enforce a restriction upon
the use of property by injunction where the property has so changed in character and
environment as to make it unfit or unprofitable for use should the restriction be enforced,
but will, in such a case, leave the complainant to whatever remedy he may have at law.
56 (Emphasis supplied.) Hence, the remedy of injunction in Dolan vs. Brown was
denied on the specific holding that "A grantor may lawfully insert in his deed conditions
or restrictions which are not against public policy and do not materially impair the
beneficial enjoyment of the estate. 57 Applying the principle just stated to the present
controversy, We can say that since it is now unprofitable, nay a hazard to the health and
comfort, to use Lots Nos. 5 and 6 for strictly residential purposes, defendants- appellees
should be permitted, on the strength of the resolution promulgated under the police
power of the municipality, to use the same for commercial purposes. In Burgess v.
Magarian et al. it was, held that "restrictive covenants running with the land are binding
on all subsequent purchasers ... " However, Section 23 of the zoning ordinance involved
therein contained a proviso expressly declaring that the ordinance was not intended "to
interfere with or abrogate or annul any easements, covenants or other agreement
between parties." 58 In the case at bar, no such proviso is found in the subject
resolution.

It is, therefore, clear that even if the subject building restrictions were assumed by the
defendant-appellee as vendee of Lots Nos. 5 and 6, in the corresponding deeds of sale,
and later, in Transfer Certificates of Title Nos. 101613 and 106092, the contractual
obligations so assumed cannot prevail over Resolution No. 27, of the Municipality of
Mandaluyong, which has validly exercised its police power through the said resolution.
Accordingly, the building restrictions, which declare Lots Nos. 5 and 6 as residential,
cannot be enforced.

IN VIEW OF THE FOREGOING, the decision appealed from, dismissing the complaint,
is hereby AFFIRMED. "without pronouncement as to costs.

SO ORDERED.
G.R. No. L-55960 November 24, 1988

YAO KEE, SZE SOOK WAH, SZE LAI CHO, and SY CHUN YEN, petitioners,
vs.
AIDA SY-GONZALES, MANUEL SY, TERESITA SY-BERNABE, RODOLFO SY, and
HONORABLE COURT OF APPEALS, respondents.

Montesa, Albon, & Associates for petitioners.

De Lapa, Salonga, Fulgencio & De Lunas for respondents.

CORTES, J.:
Sy Kiat, a Chinese national. died on January 17, 1977 in Caloocan City where he was then residing, leaving behind real and personal
properties here in the Philippines worth P300,000.00 more or less.

Thereafter, Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy filed a petition for the grant of letters of administration
docketed as Special Proceedings Case No. C-699 of the then Court of First Instance of Rizal Branch XXXIII, Caloocan City. In said petition
they alleged among others that (a) they are the children of the deceased with Asuncion Gillego; (b) to their knowledge Sy Mat died intestate;
(c) they do not recognize Sy Kiat's marriage to Yao Kee nor the filiation of her children to him; and, (d) they nominate Aida Sy-Gonzales for
appointment as administratrix of the intestate estate of the deceased [Record on Appeal, pp. 4-9; Rollo, p. 107.]

The petition was opposed by Yao Kee, Sze Sook Wah, Sze Lai Cho and Sy Yun Chen who alleged that: (a) Yao Kee is the lawful wife of Sy
Kiat whom he married on January 19, 1931 in China; (b) the other oppositors are the legitimate children of the deceased with Yao Kee; and,
(c) Sze Sook Wah is the eldest among them and is competent, willing and desirous to become the administratrix of the estate of Sy Kiat
[Record on Appeal, pp. 12-13; Rollo, p. 107.] After hearing, the probate court, finding among others that:

(1) Sy Kiat was legally married to Yao Kee [CFI decision, pp. 12-27; Rollo, pp. 49-64;]

(2) Sze Sook Wah, Sze Lai Cho and Sze Chun Yen are the legitimate children of Yao
Kee with Sy Mat [CFI decision, pp. 28-31; Rollo. pp. 65-68;] and,

(3) Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy are the
acknowledged illegitimate offsprings of Sy Kiat with Asuncion Gillego [CFI decision, pp.
27-28; Rollo, pp. 64- 65.]

held if favor of the oppositors (petitioners herein) and appointed Sze Sook Wah as the administratrix of
the intestate estate of the deceased [CFI decision, pp. 68-69; Rollo, pp. 105-106.]

On appeal the Court of Appeals rendered a decision modifying that of the probate court, the dispositive
portion of which reads:

IN VIEW OF THE FOREGOING, the decision of the lower Court is hereby MODIFIED
and SET ASIDE and a new judgment rendered as follows:

(1) Declaring petitioners Aida Sy-Gonzales, Manuel Sy, Teresita Sy- Bernabe and
Rodolfo Sy acknowledged natural children of the deceased Sy Kiat with Asuncion
Gillego, an unmarried woman with whom he lived as husband and wife without benefit of
marriage for many years:
 (2) Declaring oppositors Sze Sook Wah, Sze Lai Chu and Sze Chun Yen, the
acknowledged natural children of the deceased Sy Kiat with his Chinese wife Yao Kee,
also known as Yui Yip, since the legality of the alleged marriage of Sy Mat to Yao Kee in
China had not been proven to be valid to the laws of the Chinese People's Republic of
China (sic);

(3) Declaring the deed of sale executed by Sy Kiat on December 7, 1976 in favor of
Tomas Sy (Exhibit "G-1", English translation of Exhibit "G") of the Avenue Tractor and
Diesel Parts Supply to be valid and accordingly, said property should be excluded from
the estate of the deceased Sy Kiat; and

(4) Affirming the appointment by the lower court of Sze Sook Wah as judicial
administratrix of the estate of the deceased. [CA decision, pp. 11-12; Rollo, pp. 36- 37.]

From said decision both parties moved for partial reconsideration, which was however denied by
respondent court. They thus interposed their respective appeals to this Court.

Private respondents filed a petition with this Court docketed as G.R. No. 56045 entitled "Aida Sy-
Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy v. Court of Appeals, Yao Kee, Sze Sook
Wah, Sze Lai Cho and Sy Chun Yen" questioning paragraphs (3) and (4) of the dispositive portion of the
Court of Appeals' decision. The Supreme Court however resolved to deny the petition and the motion for
reconsideration. Thus on March 8, 1982 entry of judgment was made in G.R. No. 56045. **

The instant petition, on the other hand, questions paragraphs (1) and (2) of the dispositive portion of the decision of the Court of Appeals.
This petition was initially denied by the Supreme Court on June 22, 1981. Upon motion of the petitioners the Court in a resolution dated
September 16, 1981 reconsidered the denial and decided to give due course to this petition. Herein petitioners assign the following as errors:

I. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THE

MARRIAGE OF SY KIAT TO YAO YEE AS NOT HAVE (sic) BEEN PROVEN VALID IN
ACCORDANCE WITH LAWS OF THE PEOPLE'S REPUBLIC OF CHINA.

II. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DECLARING AIDA SY-

GONZALES, MANUEL SY, TERESITA SY-BERNABE AND RODOLFO SY AS
NATURAL CHILDREN OF SY KIAT WITH ASUNCION GILLEGO. [Petition, p. 2; Rollo, p.
6.]

I. Petitioners argue that the marriage of Sy Kiat to Yao Kee in accordance with Chinese law and custom
was conclusively proven. To buttress this argument they rely on the following testimonial and
documentary evidence.

First, the testimony of Yao Kee summarized by the trial court as follows:

Yao Kee testified that she was married to Sy Kiat on January 19, 1931 in Fookien, China;
that she does not have a marriage certificate because the practice during that time was
for elders to agree upon the betrothal of their children, and in her case, her elder brother
was the one who contracted or entered into [an] agreement with the parents of her
husband; that the agreement was that she and Sy Mat would be married, the wedding
date was set, and invitations were sent out; that the said agreement was complied with;
that she has five children with Sy Kiat, but two of them died; that those who are alive are
Sze Sook Wah, Sze Lai Cho, and Sze Chun Yen, the eldest being Sze Sook Wah who is
already 38 years old; that Sze Sook Wah was born on November 7, 1939; that she and
her husband, Sy Mat, have been living in FooKien, China before he went to the
Philippines on several occasions; that the practice during the time of her marriage was a
 written document [is exchanged] just between the parents of the bride and the parents of
the groom, or any elder for that matter; that in China, the custom is that there is a go-
between, a sort of marriage broker who is known to both parties who would talk to the
parents of the bride-to-be; that if the parents of the bride-to-be agree to have the groom-
to-be their son in-law, then they agree on a date as an engagement day; that on
engagement day, the parents of the groom would bring some pieces of jewelry to the
parents of the bride-to-be, and then one month after that, a date would be set for the
wedding, which in her case, the wedding date to Sy Kiat was set on January 19, 1931;
that during the wedding the bridegroom brings with him a couch (sic) where the bride
would ride and on that same day, the parents of the bride would give the dowry for her
daughter and then the document would be signed by the parties but there is no
solemnizing officer as is known in the Philippines; that during the wedding day, the
document is signed only by the parents of the bridegroom as well as by the parents of the
bride; that the parties themselves do not sign the document; that the bride would then be
placed in a carriage where she would be brought to the town of the bridegroom and
before departure the bride would be covered with a sort of a veil; that upon reaching the
town of the bridegroom, the bridegroom takes away the veil; that during her wedding to
Sy Kiat (according to said Chinese custom), there were many persons present; that after
Sy Kiat opened the door of the carriage, two old ladies helped her go down the carriage
and brought her inside the house of Sy Mat; that during her wedding, Sy Chick, the eldest
brother of Sy Kiat, signed the document with her mother; that as to the whereabouts of
that document, she and Sy Mat were married for 46 years already and the document was
left in China and she doubt if that document can still be found now; that it was left in the
possession of Sy Kiat's family; that right now, she does not know the whereabouts of that
document because of the lapse of many years and because they left it in a certain place
and it was already eaten by the termites; that after her wedding with Sy Kiat, they lived
immediately together as husband and wife, and from then on, they lived together; that Sy
Kiat went to the Philippines sometime in March or April in the same year they were
married; that she went to the Philippines in 1970, and then came back to China; that
again she went back to the Philippines and lived with Sy Mat as husband and wife; that
she begot her children with Sy Kiat during the several trips by Sy Kiat made back to
China. [CFI decision, pp. 13-15; Rollo, pp. 50-52.]

Second, the testimony of Gan Ching, a younger brother of Yao Kee who stated that he was among the
many people who attended the wedding of his sister with Sy Kiat and that no marriage certificate is issued
by the Chinese government, a document signed by the parents or elders of the parties being sufficient
[CFI decision, pp. 15-16; Rollo, pp.
52-53.]

Third, the statements made by Asuncion Gillego when she testified before the trial court to the effect that
(a) Sy Mat was married to Yao Kee according to Chinese custom; and, (b) Sy Kiat's admission to her that
he has a Chinese wife whom he married according to Chinese custom [CFI decision, p. 17; Rollo, p. 54.]

Fourth, Sy Kiat's Master Card of Registered Alien issued in Caloocan City on October 3, 1972 where the
following entries are found: "Marital statusMarried"; "If married give name of spousesYao Kee";
"Address-China; "Date of marriage1931"; and "Place of marriageChina" [Exhibit "SS-1".]

Fifth, Sy Kiat's Alien Certificate of Registration issued in Manila on January 12, 1968 where the following
entries are likewise found: "Civil statusMarried"; and, 'If married, state name and address of spouse
Yao Kee Chingkang, China" [Exhibit "4".]

And lastly, the certification issued in Manila on October 28, 1977 by the Embassy of the People's
Republic of China to the effect that "according to the information available at the Embassy Mr. Sy Kiat a
Chinese national and Mrs. Yao Kee alias Yui Yip also Chinese were married on January 19, 1931 in
Fukien, the People's Republic of China" [Exhibit "5".]

These evidence may very well prove the fact of marriage between Yao Kee and Sy Kiat. However, the
same do not suffice to establish the validity of said marriage in accordance with Chinese law or custom.

Custom is defined as "a rule of conduct formed by repetition of acts, uniformly observed (practiced) as a
social rule, legally binding and obligatory" [In the Matter of the Petition for Authority to Continue Use of the
Firm Name "Ozaeta, Romulo, de Leon, Mabanta and Reyes", July 30, 1979, SCRA 3, 12 citing JBL
Reyes & RC Puno, Outline of Phil. Civil Law, Fourth Ed., Vol. 1, p. 7.] The law requires that "a custom
must be proved as a fact, according to the rules of evidence" [Article 12, Civil Code.] On this score the
Court had occasion to state that "a local custom as a source of right can not be considered by a court of
justice unless such custom is properly established by competent evidence like any other fact" [Patriarca v.
Orate, 7 Phil. 390, 395 (1907).] The same evidence, if not one of a higher degree, should be required of a
foreign custom.

The law on foreign marriages is provided by Article 71 of the Civil Code which states that:

Art. 71. All marriages performed outside the Philippines in accordance with the laws in
force in the country where they were performed and valid there as such, shall also be
valid in this country, except bigamous, Polygamous, or incestuous marriages, as
determined by Philippine law. (Emphasis supplied.) ***

Construing this provision of law the Court has held that to establish a valid foreign marriage two things must be proven, namely: (1) the
existence of the foreign law as a question of fact; and (2) the alleged foreign marriage by convincing evidence [Adong v. Cheong Seng Gee,
43 Phil. 43, 49 (1922).]

In proving a foreign law the procedure is provided in the Rules of Court. With respect to an unwritten foreign law, Rule 130 section 45 states
that:

SEC. 45. Unwritten law.The oral testimony of witnesses, skilled therein, is admissible
as evidence of the unwritten law of a foreign country, as are also printed and published
books of reports of decisions of the courts of the foreign country, if proved to be
commonly admitted in such courts.

Proof of a written foreign law, on the other hand, is provided for under Rule 132 section 25, thus:

SEC. 25. Proof of public or official record.An official record or an entry therein, when
admissible for any purpose, may be evidenced by an official publication thereof or by a
copy attested by the officer having the legal custody of the record, or by his deputy, and
accompanied, if the record is not kept in the Philippines, with a certificate that such officer
has the custody. If the office in which the record is kept is in a foreign country, the
certificate may be made by a secretary of embassy or legation, consul general, consul,
vice consul, or consular agent or by any officer in the foreign service of the Philippines
stationed in the foreign country in which the record is kept and authenticated by the seal
of his office.

The Court has interpreted section 25 to include competent evidence like the testimony of a witness to
prove the existence of a written foreign law [Collector of Internal Revenue v. Fisher 110 Phil. 686, 700-
701 (1961) citing Willamette Iron and Steel Works v. Muzzal, 61 Phil. 471 (1935).]

In the case at bar petitioners did not present any competent evidence relative to the law and custom of
China on marriage. The testimonies of Yao and Gan Ching cannot be considered as proof of China's law
or custom on marriage not only because they are
self-serving evidence, but more importantly, there is no showing that they are competent to testify on the
subject matter. For failure to prove the foreign law or custom, and consequently, the validity of the
marriage in accordance with said law or custom, the marriage between Yao Kee and Sy Kiat cannot be
recognized in this jurisdiction.

Petitioners contend that contrary to the Court of Appeals' ruling they are not duty bound to prove the
Chinese law on marriage as judicial notice thereof had been taken by this Court in the case of Sy Joc
Lieng v. Sy Quia [16 Phil. 137 (1910).]

This contention is erroneous. Well-established in this jurisdiction is the principle that Philippine courts
cannot take judicial notice of foreign laws. They must be alleged and proved as any other fact [Yam Ka
Lim v. Collector of Customs, 30 Phil. 46, 48 (1915); Fluemer v. Hix, 54 Phil. 610 (1930).]

Moreover a reading of said case would show that the party alleging the foreign marriage presented a
witness, one Li Ung Bieng, to prove that matrimonial letters mutually exchanged by the contracting parties
constitute the essential requisite for a marriage to be considered duly solemnized in China. Based on his
testimony, which as found by the Court is uniformly corroborated by authors on the subject of Chinese
marriage, what was left to be decided was the issue of whether or not the fact of marriage in accordance
with Chinese law was duly proven [Sy Joc Lieng v. Sy Quia, supra., at p. 160.]

Further, even assuming for the sake of argument that the Court has indeed taken judicial notice of the law
of China on marriage in the aforecited case, petitioners however have not shown any proof that the
Chinese law or custom obtaining at the time the Sy Joc Lieng marriage was celebrated in 1847 was still
the law when the alleged marriage of Sy Kiat to Yao Kee took place in 1931 or eighty-four (84) years
later.

Petitioners moreover cite the case of U.S. v. Memoracion [34 Phil. 633 (1916)] as being applicable to the
instant case. They aver that the judicial pronouncement in the Memoracion case, that the testimony of
one of the contracting parties is competent evidence to show the fact of marriage, holds true in this case.

The Memoracion case however is not applicable to the case at bar as said case did not concern a foreign
marriage and the issue posed was whether or not the oral testimony of a spouse is competent evidence
to prove the fact of marriage in a complaint for adultery.

Accordingly, in the absence of proof of the Chinese law on marriage, it should be presumed that it is the
same as ours *** [Wong Woo Yiu v. Vivo, G.R. No. L-21076, March 31, 1965, 13 SCRA 552, 555.] Since Yao Kee admitted in her
testimony that there was no solemnizing officer as is known here in the Philippines [See Article 56, Civil Code] when her alleged marriage to
Sy Mat was celebrated [CFI decision, p. 14; Rollo, p. 51], it therefore follows that her marriage to Sy Kiat, even if true, cannot be recognized
in this jurisdiction [Wong Woo Yiu v. Vivo, supra., pp. 555-556.]

II. The second issue raised by petitioners concerns the status of private respondents.

Respondent court found the following evidence of petitioners' filiation:

(1) Sy Kiat's Master Card of Registered Alien where the following are entered: "Children if
any: give number of childrenFour"; and, "NameAll living in China" [Exhibit "SS-1";]

(2) the testimony of their mother Yao Kee who stated that she had five children with Sy
Kiat, only three of whom are alive namely, Sze Sook Wah, Sze Lai Chu and Sze Chin
Yan [TSN, December 12, 1977, pp. 9-11;] and,
 (3) an affidavit executed on March 22,1961 by Sy Kiat for presentation to the Local Civil
Registrar of Manila to support Sze Sook Wah's application for a marriage license,
wherein Sy Kiat expressly stated that she is his daughter [Exhibit "3".]

Likewise on the record is the testimony of Asuncion Gillego that Sy Kiat told her he has three daughters
with his Chinese wife, two of whomSook Wah and Sze Kai Choshe knows, and one adopted son
[TSN, December 6,1977, pp. 87-88.]

However, as petitioners failed to establish the marriage of Yao Kee with Sy Mat according to the laws of
China, they cannot be accorded the status of legitimate children but only that of acknowledged natural
children. Petitioners are natural children, it appearing that at the time of their conception Yao Kee and Sy
Kiat were not disqualified by any impediment to marry one another [See Art. 269, Civil Code.] And they
are acknowledged children of the deceased because of Sy Kiat's recognition of Sze Sook Wah [Exhibit
"3"] and its extension to Sze Lai Cho and Sy Chun Yen who are her sisters of the full blood [See Art. 271,
Civil Code.]

Private respondents on the other hand are also the deceased's acknowledged natural children with
Asuncion Gillego, a Filipina with whom he lived for twenty-five (25) years without the benefit of marriage.
They have in their favor their father's acknowledgment, evidenced by a compromise agreement entered
into by and between their parents and approved by the Court of First Instance on February 12, 1974
wherein Sy Kiat not only acknowleged them as his children by Asuncion Gillego but likewise made
provisions for their support and future inheritance, thus:

xxx xxx xxx

2. The parties also acknowledge that they are common-law husband and wife and that
out of such relationship, which they have likewise decided to definitely and finally
terminate effective immediately, they begot five children, namely: Aida Sy, born on May
30, 1950; Manuel Sy, born on July 1, 1953; Teresita Sy, born on January 28, 1955;
Ricardo Sy now deceased, born on December 14, 1956; and Rodolfo Sy, born on May 7,
1958.

3. With respect to the AVENUE TRACTOR AND DIESEL PARTS SUPPLY ... , the
parties mutually agree and covenant that

(a) The stocks and merchandize and the furniture and equipments ...,
shall be divided into two equal shares between, and distributed to, Sy
Kiat who shall own
one-half of the total and the other half to Asuncion Gillego who shall
transfer the same to their children, namely, Aida Sy, Manuel Sy, Teresita
Sy, and Rodolfo Sy.

(b) the business name and premises ... shall be retained by Sy Kiat.
However, it shall be his obligation to give to the aforenamed children an
amount of One Thousand Pesos ( Pl,000.00 ) monthly out of the rental of
the two doors of the same building now occupied by Everett
Construction.

xxx xxx xxx

(5) With respect to the acquisition, during the existence of the

common-law husband-and-wife relationship between the parties, of the real estates and
 properties registered and/or appearing in the name of Asuncion Gillego ... , the parties
mutually agree and covenant that the said real estates and properties shall be transferred
in equal shares to their children, namely, Aida Sy, Manuel Sy, Teresita Sy, and Rodolfo
Sy, but to be administered by Asuncion Gillego during her lifetime ... [Exhibit "D".]
(Emphasis supplied.)

xxx xxx xxx

This compromise agreement constitutes a statement before a court of record by which a child may be
voluntarily acknowledged [See Art. 278, Civil Code.]

Petitioners further argue that the questions on the validity of Sy Mat's marriage to Yao Kee and the
paternity and filiation of the parties should have been ventilated in the Juvenile and Domestic Relations
Court.

Specifically, petitioners rely on the following provision of Republic Act No. 5502, entitled "An Act Revising
Rep. Act No. 3278, otherwise known as the Charter of the City of Caloocan', with regard to the Juvenile
and Domestic Relations Court:

SEC. 91-A. Creation and Jurisdiction of the Court.

xxx xxx xxx

The provisions of the Judiciary Act to the contrary notwithstanding, the court shall have
exclusive original jurisdiction to hear and decide the following cases:

xxx xxx xxx

(2) Cases involving custody, guardianship, adoption, revocation of adoption, paternity

and acknowledgment;

(3) Annulment of marriages, relief from marital obligations, legal separation of spouses,
and actions for support;

(4) Proceedings brought under the provisions of title six and title seven, chapters one to
three of the civil code;

xxx xxx xxx

and the ruling in the case of Bartolome v. Bartolome [G.R. No. L-23661, 21 SCRA 1324] reiterated in
Divinagracia v. Rovira [G.R. No. L-42615, 72 SCRA 307.]

With the enactment of Batas Pambansa Blg. 129, otherwise known as the Judiciary Reorganization Act of
1980, the Juvenile and Domestic Relations Courts were abolished. Their functions and jurisdiction are
now vested with the Regional Trial Courts [See Section 19 (7), B.P. Blg. 129 and Divinagracia v. Belosillo,
G.R. No. L-47407, August 12, 1986, 143 SCRA 356, 360] hence it is no longer necessary to pass upon
the issue of jurisdiction raised by petitioners.

Moreover, even without the exactment of Batas Pambansa Blg. 129 we find in Rep. Act No. 5502 sec. 91-
A last paragraph that:
 xxx xxx xxx

If any question involving any of the above matters should arise as an incident in any case
pending in the ordinary court, said incident shall be determined in the main case.

xxx xxx xxx

As held in the case of Divinagracia v. Rovira [G.R. No. L42615. August 10, 1976, 72 SCRA 307]:

xxx xxx xxx

It is true that under the aforequoted section 1 of Republic Act No. 4834 **** a case
involving paternity and acknowledgment may be ventilated as an incident in the intestate
or testate proceeding (See Baluyot vs. Ines Luciano, L-42215, July 13, 1976). But that
legal provision presupposes that such an administration proceeding is pending or existing
and has not been terminated. [at pp. 313-314.] (Emphasis supplied.)

xxx xxx xxx

The reason for ths rule is not only "to obviate the rendition of conflicting rulings on the same issue by the
Court of First Instance and the Juvenile and Domestic Relations Court" [Vda. de Baluyut v. Luciano, G.R.
No. L-42215, July 13, 1976, 72 SCRA 52, 63] but more importantly to prevent multiplicity of suits.
Accordingly, this Court finds no reversible error committed by respondent court.

WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED.

SO ORDERED.

July 30, 1979

PETITION FOR AUTHORITY TO CONTINUE USE OF THE FIRM NAME "SYCIP,

SALAZAR, FELICIANO, HERNANDEZ & CASTILLO." LUCIANO E. SALAZAR,
FLORENTINO P. FELICIANO, BENILDO G. HERNANDEZ. GREGORIO R.
CASTILLO. ALBERTO P. SAN JUAN, JUAN C. REYES. JR., ANDRES G.
GATMAITAN, JUSTINO H. CACANINDIN, NOEL A. LAMAN, ETHELWOLDO E.
FERNANDEZ, ANGELITO C. IMPERIO, EDUARDO R. CENIZA, TRISTAN A.
CATINDIG, ANCHETA K. TAN, and ALICE V. PESIGAN, petitioners.

IN THE MATTER OF THE PETITION FOR AUTHORITY TO CONTINUE USE OF THE

FIRM NAME "OZAETA, ROMULO, DE LEON, MABANTA & REYES." RICARDO J.
ROMULO, BENJAMIN M. DE LEON, ROMAN MABANTA, JR., JOSE MA, REYES,
JESUS S. J. SAYOC, EDUARDO DE LOS ANGELES, and JOSE F.
BUENAVENTURA, petitioners.

RESOLUTION

MELENCIO-HERRERA, J.:+.wph!1
Two separate Petitions were filed before this Court 1) by the surviving partners of Atty.
Alexander Sycip, who died on May 5, 1975, and 2) by the surviving partners of Atty.
Herminio Ozaeta, who died on February 14, 1976, praying that they be allowed to
continue using, in the names of their firms, the names of partners who had passed
away. In the Court's Resolution of September 2, 1976, both Petitions were ordered
consolidated.

Petitioners base their petitions on the following arguments:

1. Under the law, a partnership is not prohibited from continuing its business under a
firm name which includes the name of a deceased partner; in fact, Article 1840 of the
Civil Code explicitly sanctions the practice when it provides in the last paragraph that:
t.hqw

The use by the person or partnership continuing the business of the

partnership name, or the name of a deceased partner as part thereof,
shall not of itself make the individual property of the deceased partner
liable for any debts contracted by such person or partnership. 1

2. In regulating other professions, such as accountancy and engineering, the legislature

has authorized the adoption of firm names without any restriction as to the use, in such
firm name, of the name of a deceased partner; 2 the legislative authorization given to
those engaged in the practice of accountancy a profession requiring the same
degree of trust and confidence in respect of clients as that implicit in the relationship of
attorney and client to acquire and use a trade name, strongly indicates that there is
no fundamental policy that is offended by the continued use by a firm of professionals of
a firm name which includes the name of a deceased partner, at least where such firm
name has acquired the characteristics of a "trade name." 3

3. The Canons of Professional Ethics are not transgressed by the continued use of the
name of a deceased partner in the firm name of a law partnership because Canon 33 of
the Canons of Professional Ethics adopted by the American Bar Association declares
that: t.hqw

... The continued use of the name of a deceased or former partner when
permissible by local custom, is not unethical but care should be taken that
no imposition or deception is practiced through this use. ... 4

4. There is no possibility of imposition or deception because the deaths of their

respective deceased partners were well-publicized in all newspapers of general
circulation for several days; the stationeries now being used by them carry new
letterheads indicating the years when their respective deceased partners were
connected with the firm; petitioners will notify all leading national and international law
directories of the fact of their respective deceased partners' deaths. 5
5. No local custom prohibits the continued use of a deceased partner's name in a
professional firm's name; 6 there is no custom or usage in the Philippines, or at least in
the Greater Manila Area, which recognizes that the name of a law firm necessarily
Identifies the individual members of the firm. 7

6. The continued use of a deceased partner's name in the firm name of law partnerships
has been consistently allowed by U.S. Courts and is an accepted practice in the legal
profession of most countries in the world.8

The question involved in these Petitions first came under consideration by this Court in
1953 when a law firm in Cebu (the Deen case) continued its practice of including in its
firm name that of a deceased partner, C.D. Johnston. The matter was resolved with this
Court advising the firm to desist from including in their firm designation the name of C.
D. Johnston, who has long been dead."

The same issue was raised before this Court in 1958 as an incident in G. R. No. L-
11964, entitled Register of Deeds of Manila vs. China Banking Corporation. The law
firm of Perkins & Ponce Enrile moved to intervene as amicus curiae. Before acting
thereon, the Court, in a Resolution of April 15, 1957, stated that it "would like to be
informed why the name of Perkins is still being used although Atty. E. A. Perkins is
already dead." In a Manifestation dated May 21, 1957, the law firm of Perkins and
Ponce Enrile, raising substantially the same arguments as those now being raised by
petitioners, prayed that the continued use of the firm name "Perkins & Ponce Enrile" be
held proper.

On June 16, 1958, this Court resolved: t.hqw

After carefully considering the reasons given by Attorneys Alfonso Ponce

Enrile and Associates for their continued use of the name of the deceased
E. G. Perkins, the Court found no reason to depart from the policy it
adopted in June 1953 when it required Attorneys Alfred P. Deen and Eddy
A. Deen of Cebu City to desist from including in their firm designation, the
name of C. D. Johnston, deceased. The Court believes that, in view of the
personal and confidential nature of the relations between attorney and
client, and the high standards demanded in the canons of professional
ethics, no practice should be allowed which even in a remote degree could
give rise to the possibility of deception. Said attorneys are accordingly
advised to drop the name "PERKINS" from their firm name.

Petitioners herein now seek a re-examination of the policy thus far enunciated by the
Court.

The Court finds no sufficient reason to depart from the rulings thus laid down.
A. Inasmuch as "Sycip, Salazar, Feliciano, Hernandez and Castillo" and "Ozaeta,
Romulo, De Leon, Mabanta and Reyes" are partnerships, the use in their partnership
names of the names of deceased partners will run counter to Article 1815 of the Civil
Code which provides: t.hqw

Art. 1815. Every partnership shall operate under a firm name, which may
or may not include the name of one or more of the partners.

Those who, not being members of the partnership, include their names in
the firm name, shall be subject to the liability, of a partner.

It is clearly tacit in the above provision that names in a firm name of a partnership must
either be those of living partners and. in the case of non-partners, should be living
persons who can be subjected to liability. In fact, Article 1825 of the Civil Code prohibits
a third person from including his name in the firm name under pain of assuming the
liability of a partner. The heirs of a deceased partner in a law firm cannot be held liable
as the old members to the creditors of a firm particularly where they are non-lawyers.
Thus, Canon 34 of the Canons of Professional Ethics "prohibits an agreement for the
payment to the widow and heirs of a deceased lawyer of a percentage, either gross or
net, of the fees received from the future business of the deceased lawyer's clients, both
because the recipients of such division are not lawyers and because such payments will
not represent service or responsibility on the part of the recipient. " Accordingly, neither
the widow nor the heirs can be held liable for transactions entered into after the death of
their lawyer-predecessor. There being no benefits accruing, there ran be no
corresponding liability.

Prescinding the law, there could be practical objections to allowing the use by law firms
of the names of deceased partners. The public relations value of the use of an old firm
name can tend to create undue advantages and disadvantages in the practice of the
profession. An able lawyer without connections will have to make a name for himself
starting from scratch. Another able lawyer, who can join an old firm, can initially ride on
that old firm's reputation established by deceased partners.

B. In regards to the last paragraph of Article 1840 of the Civil Code cited by petitioners,
supra, the first factor to consider is that it is within Chapter 3 of Title IX of the Code
entitled "Dissolution and Winding Up." The Article primarily deals with the exemption
from liability in cases of a dissolved partnership, of the individual property of the
deceased partner for debts contracted by the person or partnership which continues the
business using the partnership name or the name of the deceased partner as part
thereof. What the law contemplates therein is a hold-over situation preparatory to formal
reorganization.

Secondly, Article 1840 treats more of a commercial partnership with a good will to
protect rather than of a professional partnership, with no saleable good will but whose
reputation depends on the personal qualifications of its individual members. Thus, it has
been held that a saleable goodwill can exist only in a commercial partnership and
cannot arise in a professional partnership consisting of lawyers. 9t.hqw

As a general rule, upon the dissolution of a commercial partnership the

succeeding partners or parties have the right to carry on the business
under the old name, in the absence of a stipulation forbidding it, (s)ince
the name of a commercial partnership is a partnership asset inseparable
from the good will of the firm. ... (60 Am Jur 2d, s 204, p. 115) (Emphasis
supplied)

On the other hand, t.hqw

... a professional partnership the reputation of which depends or; the

individual skill of the members, such as partnerships of attorneys or
physicians, has no good win to be distributed as a firm asset on its
dissolution, however intrinsically valuable such skill and reputation may
be, especially where there is no provision in the partnership agreement
relating to good will as an asset. ... (ibid, s 203, p. 115) (Emphasis
supplied)

C. A partnership for the practice of law cannot be likened to partnerships formed by

other professionals or for business. For one thing, the law on accountancy specifically
allows the use of a trade name in connection with the practice of accountancy.10
t.hqw

A partnership for the practice of law is not a legal entity. It is a mere

relationship or association for a particular purpose. ... It is not a
partnership formed for the purpose of carrying on trade or business or of
holding property." 11 Thus, it has been stated that "the use of a nom de
plume, assumed or trade name in law practice is improper. 12

The usual reason given for different standards of conduct being applicable
to the practice of law from those pertaining to business is that the law is a
profession.

Dean Pound, in his recently published contribution to the Survey of the

Legal Profession, (The Lawyer from Antiquity to Modern Times, p. 5)
defines a profession as "a group of men pursuing a learned art as a
common calling in the spirit of public service, no less a public service
because it may incidentally be a means of livelihood."

xxx xxx xxx

Primary characteristics which distinguish the legal profession from

business are:
 1. A duty of public service, of which the emolument is a byproduct, and in
which one may attain the highest eminence without making much money.

2. A relation as an "officer of court" to the administration of justice

involving thorough sincerity, integrity, and reliability.

3. A relation to clients in the highest degree fiduciary.

4. A relation to colleagues at the bar characterized by candor, fairness,

and unwillingness to resort to current business methods of advertising and
encroachment on their practice, or dealing directly with their clients. 13

"The right to practice law is not a natural or constitutional right but is in the nature of a
privilege or franchise. 14 It is limited to persons of good moral character with special
qualifications duly ascertained and certified. 15 The right does not only presuppose in
its possessor integrity, legal standing and attainment, but also the exercise of a special
privilege, highly personal and partaking of the nature of a public trust." 16

D. Petitioners cited Canon 33 of the Canons of Professional Ethics of the American Bar
Association" in support of their petitions.

It is true that Canon 33 does not consider as unethical the continued use of the name of
a deceased or former partner in the firm name of a law partnership when such a
practice is permissible by local custom but the Canon warns that care should be taken
that no imposition or deception is practiced through this use.

It must be conceded that in the Philippines, no local custom permits or allows the
continued use of a deceased or former partner's name in the firm names of law
partnerships. Firm names, under our custom, Identify the more active and/or more
senior members or partners of the law firm. A glimpse at the history of the firms of
petitioners and of other law firms in this country would show how their firm names have
evolved and changed from time to time as the composition of the partnership changed.
t.hqw

The continued use of a firm name after the death of one or more of the
partners designated by it is proper only where sustained by local custom
and not where by custom this purports to Identify the active members. ...

There would seem to be a question, under the working of the Canon, as to

the propriety of adding the name of a new partner and at the same time
retaining that of a deceased partner who was never a partner with the new
one. (H.S. Drinker, op. cit., supra, at pp. 207208) (Emphasis supplied).

The possibility of deception upon the public, real or consequential, where the name of a
deceased partner continues to be used cannot be ruled out. A person in search of legal
counsel might be guided by the familiar ring of a distinguished name appearing in a firm
title.

E. Petitioners argue that U.S. Courts have consistently allowed the continued use of a
deceased partner's name in the firm name of law partnerships. But that is so because it
is sanctioned by custom.

In the case of Mendelsohn v. Equitable Life Assurance Society (33 N.Y.S. 2d 733)
which petitioners Salazar, et al. quoted in their memorandum, the New York Supreme
Court sustained the use of the firm name Alexander & Green even if none of the present
ten partners of the firm bears either name because the practice was sanctioned by
custom and did not offend any statutory provision or legislative policy and was adopted
by agreement of the parties. The Court stated therein: t.hqw

The practice sought to be proscribed has the sanction of custom and

offends no statutory provision or legislative policy. Canon 33 of the
Canons of Professional Ethics of both the American Bar Association and
the New York State Bar Association provides in part as follows: "The
continued use of the name of a deceased or former partner, when
permissible by local custom is not unethical, but care should be taken that
no imposition or deception is practiced through this use." There is no
question as to local custom. Many firms in the city use the names of
deceased members with the approval of other attorneys, bar associations
and the courts. The Appellate Division of the First Department has
considered the matter and reached The conclusion that such practice
should not be prohibited. (Emphasis supplied)

xxx xxx xxx

Neither the Partnership Law nor the Penal Law prohibits the practice in
question. The use of the firm name herein is also sustainable by reason of
agreement between the partners. 18

Not so in this jurisdiction where there is no local custom that sanctions the practice.
Custom has been defined as a rule of conduct formed by repetition of acts, uniformly
observed (practiced) as a social rule, legally binding and obligatory. 19 Courts take no
judicial notice of custom. A custom must be proved as a fact, according to the rules of
evidence. 20 A local custom as a source of right cannot be considered by a court of
justice unless such custom is properly established by competent evidence like any other
fact. 21 We find such proof of the existence of a local custom, and of the elements
requisite to constitute the same, wanting herein. Merely because something is done as
a matter of practice does not mean that Courts can rely on the same for purposes of
adjudication as a juridical custom. Juridical custom must be differentiated from social
custom. The former can supplement statutory law or be applied in the absence of such
statute. Not so with the latter.
Moreover, judicial decisions applying or interpreting the laws form part of the legal
system. 22 When the Supreme Court in the Deen and Perkins cases issued its
Resolutions directing lawyers to desist from including the names of deceased partners
in their firm designation, it laid down a legal rule against which no custom or practice to
the contrary, even if proven, can prevail. This is not to speak of our civil law which
clearly ordains that a partnership is dissolved by the death of any partner. 23 Custom
which are contrary to law, public order or public policy shall not be countenanced. 24

The practice of law is intimately and peculiarly related to the administration of justice
and should not be considered like an ordinary "money-making trade." t.hqw

... It is of the essence of a profession that it is practiced in a spirit of public

service. A trade ... aims primarily at personal gain; a profession at the
exercise of powers beneficial to mankind. If, as in the era of wide free
opportunity, we think of free competitive self assertion as the highest
good, lawyer and grocer and farmer may seem to be freely competing with
their fellows in their calling in order each to acquire as much of the world's
good as he may within the allowed him by law. But the member of a
profession does not regard himself as in competition with his professional
brethren. He is not bartering his services as is the artisan nor exchanging
the products of his skill and learning as the farmer sells wheat or corn.
There should be no such thing as a lawyers' or physicians' strike. The best
service of the professional man is often rendered for no equivalent or for a
trifling equivalent and it is his pride to do what he does in a way worthy of
his profession even if done with no expectation of reward, This spirit of
public service in which the profession of law is and ought to be exercised
is a prerequisite of sound administration of justice according to law. The
other two elements of a profession, namely, organization and pursuit of a
learned art have their justification in that they secure and maintain that
spirit. 25

In fine, petitioners' desire to preserve the Identity of their firms in the eyes of the public
must bow to legal and ethical impediment.

ACCORDINGLY, the petitions filed herein are denied and petitioners advised to drop
the names "SYCIP" and "OZAETA" from their respective firm names. Those names
may, however, be included in the listing of individuals who have been partners in their
firms indicating the years during which they served as such.

SO ORDERED.

PAG-ASA STEEL WORKS, INC., G.R. No. 166647

Petitioner,
 Present:

- versus - PANGANIBAN, C.J.,

Chairperson,

YNARES-SANTIAGO,

AUSTRIA-MARTINEZ.

CALLEJO, SR., and

COURT OF APPEALS, FORMER CHICO-NAZARIO, JJ.

SIXTH DIVISION and PAG-ASA

STEEL WORKERS UNION (PSWU), Promulgated:

Respondent.

March 31, 2006

x-----------------------------------------------------------------------------------------x

DECISION

CALLEJO, SR., J.:

 This is a Petition for Review on Certiorari of the Decisioni[1] of the Court of Appeals (CA)
in CA-G.R. SP No. 65171 ordering Pag-Asa Steel Works, Inc. to pay the members of Pag-
Asa Steel Workers Union (Union) the wage increase prescribed under Wage Order No. NCR-
08. Also assailed in this petition is the CA Resolution denying the corporations motion for
reconsideration.

Petitioner Pag-Asa Steel Works, Inc. is a corporation duly organized and existing under
Philippine laws and is engaged in the manufacture of steel bars and wire rods. Pag-Asa Steel
Workers Union is the duly authorized bargaining agent of the rank-and-file employees of
petitioner.

On January 8, 1998, the Regional Tripartite Wages and Productivity Board

(Wage Board) of the National Capital Region (NCR) issued Wage Order No.
NCR-06.i[2] It provided for an increase of P13.00 per day in the salaries of
employees receiving the minimum wage, and a consequent increase in the
minimum wage rate to P198.00 per day. Petitioner and the Union negotiated on
how to go about the wage adjustments. Petitioner forwarded a letteri[3] dated
March 10, 1998 to the Union with the list of the salary adjustments of the rank-
and-file employees after the implementation of Wage Order No. NCR-06, and the
notation that said adjustments [were] in accordance with the formula [they] have
discussed and [were] designed so as no distortion shall result from the
implementation of Wage Order No. NCR-06.

DATE PRESENT ADJUST

NEW
REGULAR
NAME RATE EFF RATE
2/6/98
1. PEPINO EMMANUEL 08.01.97 191.00 13.00 204.00
2. SEVANDRA RODOLFO 01.17.98 192.00 13.00 205.00
3. BERNABE ALFREDO 10.24.97 200.00 13.00 213.00
4. UMBAL ADOLFO 08.18.97 215.00 12.00 227.00
5. AQUINO JONAS 08.25.97 215.00 12.00 227.00
6. AGCAOILI JAIME 01.08.98 220.00 11.00 231.00
7. BERMEJO JIMMY JR. 04.01.97 221.00 11.00 232.00
8. EDRADAN ELDEMAR P. 04.17.97 221.00 11.00 232.00
9. REBOTON RONILO 05.14.97 221.00 11.00 232.00
10. TABAOG ALBERT 04.10.97 221.00 11.00 232.00
11. SALEN EDILBERTO 02.10.97 221.00 11.00 232.00
13. PAEZ REYNALDO 02.27.97. 235.00 11.00 246.00
14. HERNANDEZ ALFREDO 03.23.96 246.00 10.00 256.00
15. BANIA LUIS JR. 12.08.95 246.00 10.00 256.00
16. MAGBOO VICTOR 05.25.96 246.00 10.00 256.00
17. NINORA BONIFACIO 03.22.96 246.00 10.00 256.00
18. ALANCADO RODERICK 11.10.95 246.00 10.00 256.00
19. PUTONG PASCUAL 06.23.96 246.00 10.00 256.00
20. PAR EULOGIO JR. 08.16.95 246.00 10.00 256.00
21. SALON FONDADOR 11.16.95 246.00 10.00 256.00
22. RODA GEORGE 10.11.95 246.00 10.00 256.00
23. RIOJA JOSEPH 12.28.95 246.00 10.00 256.00
24. RAYMUNDO ANTONIO 06.05.96 246.00 10.00 256.00
25. BUGTAI ROBERTO 04.10.96 246.00 10.00 256.00
26. RELATO RAMON 07.07.96 265.00 10.00 275.00
27. REGACHUELO DENNIS 11.30.95 265.00 10.00 275.00
28. ORNOPIA REYNALDO 08.09.94 268.00 10.00 278.00
29. PULPULAAN JAIME 01.18.96 275.00 10.00 285.00
30. PANLAAN FERDINAND 01.18.96 275.00 10.00 285.00
31.BAGASBAS EULOGIO JR. 01.18.96 275.00 10.00 285.00
32. ALEJANDRO OLIVER 12.03.95 275.00 10.00 285.00
33. PRIELA DANILO 11.30.95 280.00 10.00 290.00
34. NOBELJAS EDGAR 07.10.95 283.00 10.00 293.00
35. SAJOT RONNIE 10.02.93 288.00 10.00 298.00
36. WHITING JOEL 09.30.93 288.00 10.00 298.00
37. SURINGA FRANKLIN 12.19.93 288.00 10.00 298.00
38. SIBOL MICHAEL 12.11.93 288.00 10.00 298.00
39. SOLO JOSE 02.20.94 288.00 10.00 298.00
40. TIZON JOEL 12.23.93 288.00 10.00 298.00
41. SABATIN GILBERT 04.19.94 288.00 10.00 298.00
42. REYES RONALDO 04.14.94 288.00 10.00 298.00
43. AMANIA WILFREDO 01.06.94 288.00 10.00 298.00
44. QUIDATO ARISTON 12.12.93 288.00 10.00 298.00
45. LAROGA CLAUDIO JR. 10.13.93 288.00 10.00 298.00
46. MORALES LUIS 09.30.93 288.00 10.00 298.00
47. ANTOLO DANILO 12.26.93 288.00 10.00 298.00
48. EXMUNDO HERCULES 05.13.94 288.00 10.00 298.00
49. AMPER VALENTINO 08.02.93 288.00 10.00 298.00
50. BAYO-ANG ALDEN JR. 07.14.93 288.00 10.00 298.00
51. BASCONES NELSON 02.26.94 288.00 10.00 298.00
52. DECENA LAURO 09.18.93 288.00 10.00 298.00
53. CHUA MARLONITO 10.20.93 288.00 10.00 298.00
54. CATACUTAN JUNE 03.02.94 288.00 10.00 298.00
55.DE LOS SANTOS REYNALDO 12.23.93 288.00 10.00 298.00
56. REYES EFREN 10.23.93 288.00 10.00 298.00
57. CAGOMOC DANILO 01.13.94 288.00 10.00 298.00
58. DOROL ERWIN 09.16.93 288.00 10.00 298.00
59. CURAMBAO TIRSO 09.23.93 288.00 10.00 298.00
60. VENTURA FERDINAND 09.20.94 292.00 10.00 302.00
61. ALBANO JESUS 01.06.94 297.00 10.00 307.00
62. CALLEJA JOSEPH 05.10.93 303.00 10.00 313.00
63. PEREZ DANILO 03.01.93 303.00 10.00 313.00
64. BATOY ERNIE 06.15.93 305.00 10.00 315.00
65. SAMPAGA EDGARDO 06.07.93 307.00 10.00 317.00
66. SOLON ROBINSON 05.10.94 315.00 10.00 325.00
67. ELEDA FULGENIO 06.07.93 322.00 10.00 332.00
68. CASCARA RODRIGO 06.07.93 322.00 10.00 332.00
69. ROMANOS ARNULFO 06.07.93 322.00 10.00 332.00
70. LUMANSOC MARIANO 06.07.93 322.00 10.00 332.00
71. RAMOS GRACIANO 06.07.93 322.00 10.00 332.00
72. MAZON NESTOR 07.24.90 330.00 10.00 340.00
73. BRIN LUCENIO 07.26.90 330.00 10.00 340.00
74. SE FREDIE 03.25.90 340.00 10.00 350.00
75. RONCALES DIOSDADO 04.30.90 340.00 10.00 350.00
76. DISCAYA EDILBERTO 09.06.89 340.00 10.00 350.00
77. SUAREZ LUISTO 06.10.92 347.00 10.00 357.00
78. CASTRO PEDRO 10.30.92 348.00 10.00 358.00
79. CLAVECILLA AMBROSIO 09.09.88 351.00 10.00 361.00
80. YSON ROMEO 09.11.88 351.00 10.00 361.00
81. JUMAWAN URBANO JR. 12.20.87 354.00 10.00 364.00
82. MARASIGAN GRACIANO 05.20.88 354.00 10.00 364.00
83. MAGLENTE ROLANDO 09.03.87 354.00 10.00 364.00
84. NEBRIA CALIX 02.25.88 354.00 10.00 364.00
85. BARBIN DANIEL 09.03.87 354.00 10.00 364.00
86. CAMAING CARLITO 12.22.87 354.00 10.00 364.00
87. BUBAN JONATHAN 10.22.87 354.00 10.00 364.00
88. GUEVARRA ARNOLD 10.04.87 354.00 10.00 364.00
89. MALAPO MARCOS JR. 08.04.87 354.00 10.00 364.00
90. ZUNIEGA CARLOS 02.19.88 354.00 10.00 364.00
91. SABORNIDO JULITO 12.20.87 354.00 10.00 364.00
92. DALUYO LOTERIO 04.02.88 354.00 10.00 364.00
93. AGUILLON GRACIANO 05.27.87 359.00 10.00 369.00
94. CRISTY EMETERIO 04.06.87 359.50 10.00 369.50
95. FULGUERAS DOMINGO 01.25.87 362.00 10.00 372.00
96. ZIPAGAN NELSON 02.07.84 370.00 10.00 380.00
97. LAURIO JESUS 06.01.82 371.00 10.00 381.00
98. ACASIO PEDRO 11.21.79 372.00 10.00 382.00
99. MACALISANG EPIFANIO 02.01.88 372.00 10.00 382.00
100. OFILAN ANTONIO 03.12.79 374.50 10.00 384.50
101. SEVANDRA ALFREDO 05.02.69 374.50 10.00 384.50
102. VILLAMER JOEY 11.04.81 374.50 10.00 384.50
103. GRIPON GIL 01.17.76 374.75 10.00 384.75
104. CARLON HERMINIGILDO, 04.17.87 375.00 10.00 385.00
JR.
105. MANLABAO HEROHITO 04.14.81 375.00 10.00 385.00
106. VILLANUEVA DOMINGO 12.01.77 375.50 10.00 385.50
107. APITAN NAZARIO 09.04.79 376.00 10.00 386.00
108. SALAMEDA EDUARDO 02.13.79 377.00 10.00 387.00
109. ARNALDO LOPE 05.02.69 378.50 10.00 388.50
110. SURIGAO HERNANDO 12.29.79 379.00 10.00 389.00
111. DE LA CRUZ CHARLIE 07.14.76 379.00 10.00 389.00
112. ROSAURO JUAN 07.15.76 379.50 10.00 389.50
 113 HILOTIN ARLEN 10.10.77 383.00 10.00 393.00i[4]

On September 23, 1999, petitioner and the Union entered into a Collective Bargaining
Agreement (CBA), effective July 1, 1999 until July 1, 2004. Section 1, Article VI (Salaries
and Wage) of said CBA provides:

Section 1. WAGE ADJUSTMENT - The COMPANY agrees to grant all the workers, who are
already regular and covered by this AGREEMENT at the effectivity of this AGREEMENT, a
general wage increase as follows:

July 1, 1999 . . . . . . . . . . . P15.00 per day per employee

July 1, 2000 . . . . . . . . . . . P25.00 per day per employee
July 1, 2001 . . . . . . . . . . . P30.00 per day per employee

The aforesaid wage increase shall be implemented across the board. Any Wage Order to be
implemented by the Regional Tripartite Wage and Productivity Board shall be in addition to the
wage increase adverted to above. However, if no wage increase is given by the Wage Board
within six (6) months from the signing of this AGREEMENT, the Management is willing to give
the following increases, to wit:

July 1, 1999 . . . . . . . . . . . P20.00 per day per employee

July 1, 2000 . . . . . . . . . . . P25.00 per day per employee
July 1, 2001 . . . . . . . . . . . P30.00 per day per employee

The difference of the first year adjustment to retroact to July 1, 1999.

The across-the-board wage increase for the 4th and 5th year of this
AGREEMENT shall be subject for a re-opening or renegotiation as provided for
by Republic Act No. 6715.i[5]

For the first year of the CBAs effectivity, the salaries of Union members were increased as
follows:
 NAME WAGE NAME WAGE
1. Pedro Acasio P427.00 53. Nestor Mazon P385.0
0
2. Roderick Alancado 301.00 54. Luis Morales 343.00
3. Jesus Albano 352.00 55. Calix Nebria 409.00
4. Oliver Alejandro 330.00 56. Bonifacio 301.00
Ninora Jr.
5. Welfredo Amania 343.00 57. Edgar Noblejas 338.00
6. Valentino Amper 343.00 58. Antonio Ofilan 429.50
7. Danilo Antolo 343.00 59. Reynaldo 323.00
Ornopia
8. Nazario Apitan 431.00 60. Reynaldo Paez 291.00
9. Jonas Aquino 272.00 61. Ferdinand 330.00
Panlaan
10. Eulogio Bagasbas, 330.00 62. Eulogio Par Jr. 301.00
Jr.
11. Luis Bania, 301.00 63. Marvin Peco 223.00
Jr.
12. Daniel 409.00 64. Emmanuel 249.00
Barbin Pepino
13. Nelson Bascones 343.00 65. Danilo Perez 358.00
14. Alden Bayo-ang, Jr. 343.00 66. Jaime Pulpulaan 330.00
15. Jimmy Bermejo 277.00 67. Ariston Quidato 343.00
16. Alfredo Bernabe 258.00 68. Graciano 377.00
Ramos Jr.
17. Lucenio 385.00 69. Antonio 301.00
Brin Raymundo
18. Jonathan Buban 409.00 70. Ronilo Reboton 277.00
19. Roberto Bugtai 301.00 71. Ramon Relato 320.00
20. Danilo Cagomoc 343.00 72. Efren Reyes 343.00
21. Joseph 358.00 73. Ronaldo Reyes 343.00
Calleja
22. Carlito Camaing 409.00 74. Joseph Rioja 301.00
23. Hermenigildo 430.00 75. George Roda 301.00
Carlon, Jr.
24. June 343.00 76. Diosdado 395.00
Catacutan Roncales
25. Marlonito 343.00 77. Gilbert Sabatin 343.00
Chua
26. Ambrocio 406.00 78. Julito Sabornido 409.00
Clavecilla
27. Emeterio 414.50 79. Ronnie Sajot 343.00
Cristy
28. Tirso 343.00 80. Eduardo 432.00
Curambao Salameda
29. Loterio 409.00 81. Edilberto Salen 277.00
Daluyo
30. Lauro 343.00 82. Fundador Salon 301.00
Decena
31. Charlie dela Cruz 434.00 83. Edgar Sampaga 362.00
32. Raynaldo delos 343.00 84. Fredie 395.00
Santos Se
33. Edilberto Discaya 395.00 85. Rodolfo 250.00
Sevandra
34. Erwin 343.00 86. Jose 343.00
Dorol Solo
35. Eldemar Edradan 277.00 87. Robinson Solon 370.00
36. Fulgencio 377.00 88. Luisito Suarez 402.00
Eleda
37. Hercules Exmundo 343.00 89. Jeriel 223.00
Suico
38. Domingo Fulgueras 417.00 90. Hernando 434.00
Surigao
39. Federico 277.00 91. Franklin 343.00
Garcia Suringa
40. Gil Gripon 429.75 92. Albert Tabaog 277.00
41. Arnold Guevarra 409.00 93. Joel 343.00
Tizon
42. Arlen 438.00 94. Alfredo Umbal 272.00
Hilotin
43. Urbano Jumawan, 409.00 95. Ferdinand 347.00
Jr. Ventura
 44. Ronilo Lacandoze 265.00 96. Joey Villamer 429.50
45. Claudio Laroga, Jr. 343.00 97.Domingo 430.50
Villanueva
46. Jesus 426.00 98. Joel Whiting 343.00
Laurio
47. Mariano Lumansoc 377.00 99. Romeo Yson 406.00
48. Victor 301.00 100. Carlos Zuniega 409.00
Magboo
49. Rolando Maglente 409.00 101. Nelson 425.00
Zipagan
50. Marcos Malapo Jr. 409.00 102. Michael Sibol 343.00
51. Herohito Manlabao 430.00 103. Renante 223.00
Tangian
52. Graciano Marasigan 409.00 104. Rodrigo 377.00i[6]
Cascara

On October 14, 1999, Wage Order No. NCR-07i[7] was issued, and on October 26, 1999, its
Implementing Rules and Regulations. It provided for a P25.50 per day increase in the salary
of employees receiving the minimum wage and increased the minimum wage to P223.50 per
day. Petitioner paid the P25.50 per day increase to all of its rank-and-file employees.

On July 1, 2000, the rank-and-file employees were granted the second year increase provided
in the CBA in the amount of P25.00 per day.i[8]

On November 1, 2000, Wage Order No. NCR-08i[9] took effect. Section 1 thereof provides:

Section 1. Upon the effectivity of this Wage Order, private sector workers and
employees in the National Capital Region receiving the prescribed daily minimum
wage rate of P223.50 shall receive an increase of TWENTY SIX PESOS and
FIFTY CENTAVOS (P26.50) per day, thereby setting the new minimum wage
rate in the National Capital Region at TWO HUNDRED FIFTY PESOS
(P250.00) per day.i[10]

Then Union president Lucenio Brin requested petitioner to implement the

increase under Wage Order No. NCR-08 in favor of the companys rank-and-file
employees. Petitioner rejected the request, claiming that since none of the
employees were receiving a daily salary rate lower than P250.00 and there was no
wage distortion, it was not obliged to grant the wage increase.

The Union elevated the matter to the National Conciliation and Mediation Board. When the
parties failed to settle, they agreed to refer the case to voluntary arbitration. In the
Submission Agreement, the parties agreed that the sole issue is [w]hether or not the
management is obliged to grant wage increase under Wage Order No. NCR #8 as a matter of
practice,i[11] and that the award of the Voluntary Arbitrator (VA) shall be final and
binding.i[12]

In its Position Paper, the Union alleged that it has been the companys
practice to grant a wage increase under a government-issued wage order, aside
from the yearly wage increases in the CBA. It averred that petitioner paid the
salary increases provided under the previous wage orders in full (aside from the
yearly CBA increases), regardless of whether there was a resulting wage distortion,
or whether Union members salaries were above the minimum wage rate. Wage
Order No. NCR-06, where rank-and-file employees were given different wage
increases ranging from P10.00 to P13.00, was an exception since the adjustments
were the result of the formula agreed upon by the Union and the employer after
negotiations. The Union averred that all of their CBAs with petitioner had a
collateral agreement where petitioner was mandated to pay the equivalent of the
wage orders across-the-board, or at least to negotiate how much will be paid. It
pointed out that an established practice cannot be discontinued without running
afoul of Article 100 of the Labor Code on non-diminution of benefits.i[13]

For its part, petitioner alleged that there is no such company practice and that it complied
with the previous wage orders (Wage Order Nos. NCR-01-05) because some of its
employees were receiving wages below the minimum prescribed under said orders. As for
Wage Order No. NCR-07, petitioner alleged that its compliance was in accordance with its
verbal commitment to the Union during the CBA negotiations that it would implement any
wage order issued in 1999. Petitioner further averred that it applied the wage distortion
formula prescribed under Wage Order Nos. NCR-06 and NCR-07 because an actual
distortion occurred as a result of their implementation. It asserted that at present, all its
employees enjoy regular status and that none receives a daily wage lower than the P250.00
minimum wage rate prescribed under Wage Order No. NCR-08.i[14]
 In reply to the Unions position paper, petitioner contended that the full implementation of the
previous wage orders did not give rise to a company practice as it was not given to the
workers within the bargaining unit on a silver platter, but only per request of the Union and
after a series of negotiations. In fact, during CBA negotiations, it steadfastly rejected the
following proposal of the Unions counsel, Atty. Florente Yambot, to include an across-the-
board implementation of the wage orders:i[15]

x x x To supplement the above wage increases, the parties agree that additional
wage increases equal to the wage orders shall be paid across-the-board whenever
the Regional Tripartite Wage and Productivity Board issues wage orders. It is
understood that these additional wage increases will be paid not as wage orders
but as agreed additional salary increases using the wage orders merely as a device
to fix or determine how much the additional wage increases shall be paid.i[16]

The Union, however, insisted that there was such a company practice. It pointed out that
despite the fact that all the employees were already receiving salaries above the minimum
wage, the CBA still provided for the payment of a wage increase using wage orders as the
yardstick. It claimed that the parties intended that petitioner-employer would pay the
additional increases apart from those in the CBA.i[17] The Union further asserted that the
CBA did not include all the agreements of the parties; hence, to determine the true intention
of the parties, parol evidence should be resorted to. Thus, Atty. Yambots version of the wage
adjustment provision should be considered.i[18]

On June 6, 2001, the VA rendered judgment in favor of the company and ordered
the case dismissed.i[19] It held that there was no company practice of granting a
wage order increase to employees across-the-board, and that there is no provision
in the CBA that would oblige petitioner to grant the wage increase under Wage
Order No. NCR08 across-the-board.i[20]

The Union filed a petition for review with the CA under Rule 43 of the
Rules of Court. It defined the issue for resolution as follows:

The principal issue in the present petition is whether or not the wage increase of P26.50 under
Wage Order No. NCR-08 must be paid to the union members as a matter of practice and whether
or not parol evidence can be resorted to in proving or explaining or elucidating the existence of a
collateral agreement/company practice for the payment of the wage increase under the wage
order despite that the employees were already receiving wages way above the minimum wage of
P250.00/day as prescribed by Wage Order No. NCR-08 and irrespective of whether wage
distortion exists.i[21]

On September 23, 2004, the CA rendered judgment in favor of the Union and
reversed that of the VA. The fallo of the decision reads:

WHEREFORE, the assailed Decision dated June 6, 2001 of public respondent

Voluntary Arbitrator is REVERSED and SET ASIDE. Private respondent Pag-Asa Steel
Works, Inc. is ordered to pay the members of the petitioner union the P26.50 daily wage by
applying the wage increase prescribed under Wage Order No. NCR-08. Costs against private
respondent.

SO ORDERED.i[22]

The CA stressed that the CBA constitutes the law between the employer and the
Union. It held that the CBA is plain and clear, and leaves no doubt as to the
intention of the parties, that is, to grant a wage increase that may be ordered by the
Wage Board in addition to the CBA-mandated salary increases regardless of
whether the employees are already receiving wages way above the minimum wage.
The appellate court further held that
the employer has no valid reason not to implement the wage increase mandated by
Wage Order No. NCR-08 because prior thereto, it had been paying the wage
increase provided for in the CBA even though the employees concerned were
already receiving wages way above the applicable minimum wage.i[23] Petitioner
filed a motion for reconsideration which the CA denied for lack of merit on
January 11, 2005.i[24]

Petitioner then filed the instant petition in which it raises the following issues:

I. WHETHER THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE

REVERSIBLE ERROR IN NOT FINDING THAT THE INCREASES PROVIDED
 FOR UNDER WAGE ORDER NO. 8 CANNOT BE DEMANDED AS A MATTER
OF RIGHT BY THE RESPONDENT UNDER THE 1999 CBA, in that:

a) Issue not averred in the complaint nor raised during the trial cannot be raised for
the first time on appeal; and

b) The Rules of Statutory Construction, in relation to Article 1370 and 1374 of the
New Civil Code, as well as Section 11 of the Rules of Court, requires that
contract must be read in its entirety and the various stipulations in a contract must
be read together to give effect to all.

II. WHETHER THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE

REVERSIBLE ERROR IN NOT FINDING THAT THE INCREASES PROVIDED
FOR UNDER WAGE ORDER NO. 8 CANNOT BE DEMANDED BY THE
RESPONDENT UNION AS A MATTER OF PRACTICE.i[25]

Petitioner points out that the only issue agreed upon during the voluntary
arbitration proceedings was whether or not the company was obliged to grant the
wage increase under Wage Order No. NCR-08 as a matter of practice. It posits that
the respondent did not anchor its claim for such wage increase on the CBA but on
an alleged company practice of granting the increase pursuant to a wage order.
According to petitioner, respondent Union changed its theory on appeal when it
claimed before the CA that the CBA is ambiguous.i[26] Petitioner contends that
respondent Union was precluded from raising this issue as it was not raised during
the voluntary arbitration. It insists that an issue cannot be raised for the first time
on appeal.i[27]

Petitioner further argues that there is no ambiguity in the CBA. It avers that
Section 1, Article VI of the CBA should be read in its entirety.i[28] From the said
provision, it is clear that the CBA contemplated only the implementation of a wage
order issued within six months from the execution of the CBA, and not every wage
order issued during its effectivity. Hence, petitioner complied with Wage Order
No. NCR-07 which was issued 28 days from the execution of the CBA. Petitioner
emphasizes that this was implemented not because it was a matter of practice but
because it was agreed upon in the CBA.i[29] It alleges that respondent Union in
fact realized that it could not invoke the provisions of the CBA to enforce Wage
Order No. NCR-08, which is why it agreed to limit the issue for voluntary
arbitration to whether respondent Union is entitled to the wage increase as a matter
of practice. The fact that the Yambot proposals were left out in the final document
simply means that the parties never agreed to them.i[30]

In any case, petitioner avers that respondent Union is not entitled to the wage
increase provided under Wage Order No. NCR-08 as a matter of practice. There is
no company practice of granting a wage-order-mandated increase in addition to the
CBA-mandated wage increase. It points out that, as admitted by respondent Union,
the previous wage orders were not automatically implemented and were made
applicable only after negotiations. Petitioner argues that the previous wage orders
were implemented because at that time, some employees were receiving salaries
below the minimum wage and the resulting wage distortion had to be
remedied.i[31]

For its part, respondent Union avers that the provision [a]ny Wage Order to be
implemented by the Regional Tripartite Wage and Productivity Board shall be in
addition to the wage increase adverted to above referred to a company practice of
paying a wage increase whenever the government issues a wage order even if the
employees salaries were above the minimum wage and there is no resulting wage
distortion. According to respondent, the CBA contemplated all the salary increases
that may be mandated by wage orders to be issued in the future. Since the wage
order was only a device to determine exactly how much and when the increase
would be given, these increases are, in effect, CBA-mandated and not wage order
increases. i[32] Respondent further avers that the ambiguity in the wage
adjustment provision of the CBA can be clarified by resorting to parol evidence,
that is, Atty. Yambots version of said provision.i[33]

The petition is meritorious. We rule that petitioner is not obliged to grant the wage
increase under Wage Order No. NCR-08 either by virtue of the CBA, or as a
matter of company practice.

On the procedural issue, well-settled is the rule, also applicable in labor cases, that
issues not raised below cannot be raised for the first time on appeal.i[34] Points of
law, theories, issues and arguments not brought to the attention of the lower court
need not be, and ordinarily will not be, considered by the reviewing court, as they
cannot be raised for the first time at that late stage. Basic considerations of due
process impel this rule.i[35]

We agree with petitioners contention that the issue on the ambiguity of the CBA
and its failure to express the true intention of the parties has not been expressly
raised before the voluntary arbitration proceedings. The parties specifically
confined the issue for resolution by the VA to whether or not the petitioner is
obliged to grant an increase to its employees as a matter of practice. Respondent
did not anchor its claim for an across-the-board wage increase under Wage Order
No. NCR-08 on the CBA. However, we note that it raised before the CA two
issues, namely:

x x x whether or not the wage increase of P26.50 under Wage Order No. NCR-08 must be paid
to the union members as a matter of practice and whether or not parol evidence can be resorted to
in proving or explaining or elucidating the existence of a collateral agreement/company practice
for the payment of the wage increase under the wage order despite that the employees were
already receiving wages way above the minimum wage of P250.00/day as prescribed by Wage
Order No. NCR-08 and irrespective of whether wage distortion exists.i[36]

Petitioner, in its Comment on the petition, delved into these issues and elaborated on its
contentions. By so doing, it thereby agreed for the CA to take cognizance of such issues as
defined by respondent (petitioner therein). Moreover, a perusal of the records shows that the
issue of whether or not the CBA is ambiguous and does not reflect the true agreement of the
parties was, in fact, raised before the voluntary arbitration proceedings. Despite the
submission agreement confining the issue to whether petitioner was obliged to grant an
increase pursuant to Wage Order No. NCR-08 as a matter of practice, respondent Union
nevertheless raised the same issues in its pleadings. In its Position Paper, it asserted that the
CBA consistently contained a collateral agreement to pay the equivalent of the wage orders
across-the-board; in its Reply, it claimed that such provision clearly provided that petitioner
would pay the additional increases apart from the CBA and that the wage order serves only
as a measure of said increase. These assertions indicate that respondent Union also relied on
the CBA to support its claim for the wage increase.

Central to the substantial issue is Article VI, Section I, of the CBA of the
parties, dated September 23, 1999, viz:

SALARIES AND WAGE

 Section 1. WAGE ADJUSTMENT The COMPANY agrees to grant to all
workers who are already regular and covered by this AGREEMENT at the
effectivity of this AGREEMENT a general wage increase as follows:

July 1, 1999 . P15.00 per day per employee

July 1, 2000 . P25.00 per day per employee
July 1, 2001 . P 30.00 per day per employee

The aforesaid wage increase shall be implemented across the board. Any
Wage Order to be implemented by the Regional Tripartite Wage and Productivity
Board shall be in addition to the wage increase adverted to above. However, if no
wage increase is given by the Wage Board within six (6) months from the signing
of this AGREEMENT, the Management is willing to give the following increases,
to wit:

July 1, 1999 . P 20.00 per day per employee

July 1, 2000 . P 25.00 per day per employee
July 1, 2001 P 30.00 per day per employee

The difference of the first year adjustment to retroact to July 1, 1999.

The across-the-board wage increase for the 4th and 5th year of this
AGREEMENT shall be subject for a reopening or renegotiation as provided for
by Republic Act No. 6715.i[37]

On the other hand, Wage Order No. NCR-08 specifically provides that only those
in the private sector in the NCR receiving the prescribed daily minimum wage rate
of P223.00 per day would receive an increase of P26.50 a day, thereby setting the
new minimum wage rate in said region to P250.00 per day. There is no dispute
that, when the order was issued, the lowest paid employee of petitioner was
receiving a wage higher than P250.00 a day. As such, its employees had no right to
demand for an increase under said order. As correctly ruled by the VA:

We now come to the core of this case. Is [petitioner] under an obligation to grant wage increase
to its workers under W.O. No. NCR-08 as a matter of practice? It is submitted that employers
(unless exempt) in Metro Manila (including the [petitioner]) are mandated to implement the said
wage order but limited to those entitled thereto. There is no legal basis to implement the same
across-the-board. A perusal of the record shows that the lowest paid employee before the
implementation of Wage Order #8 is P250.00/day and none was receiving below P223.50
minimum. This could only mean that the union can no longer demand for any wage distortion
adjustment. Neither could they insist for an adjustment of P26.50 increase under Wage Order #8.
The provision of wage order #8 and its implementing rules are very clear as to who are entitled
to the P26.50/day increase, i.e., private sector workers and employees in the National Capital
Region receiving the prescribed daily minimum wage rate of P223.50 shall receive an increase
of Twenty-Six Pesos and Fifty Centavos (P26.50) per day, and since the lowest paid is
P250.00/day the company is not obliged to adjust the wages of the workers.

With the above narration of facts and with the union not having effectively controverted the
same, we find no merit to the complainants assertion of such a company practice in the grant of
wage order increase applied across-the-board. The fact that it was shown the increases granted
under the Wage Orders were obtained thru request and negotiations because of the existence of
wage distortion and not as company practice as what the union would want.

Neither do we find merit in the argument that under the CBA, such increase should be
implemented across-the-board. The provision in the CBA that Any Wage Order to be
implemented by the Regional Tripartite Wage and Productivity Board shall be in addition to the
wage increase adverted above cannot be interpreted in support of an across-the-board increase. If
such were the intentions of this provision, then the company could have simply accepted the
original demand of the union for such across-the-board implementation, as set forth in their
original proposal (Annex 2 union[]s counsel proposal). The fact that the company rejected this
proposal can only mean that it was never its intention to agree, to such across-the-board
implementation. Thus, the union will have to be contented with the increase of P30.00 under the
CBA which is due on July 31, 2001 barely a month from now.i[38]

The error of the CA lies in its considering only the CBA in interpreting the wage
adjustment provision, without taking into account Wage Order No. NCR-08, and
the fact that the members of respondent Union were already receiving salaries
higher than P250.00 a day when it was issued. The CBA cannot be considered
independently of the wage order which respondent Union relied on for its claim.
Wage Order No. NCR-08 clearly states that only those employees receiving
salaries below the prescribed minimum wage are entitled to the wage increase
provided therein, and not all employees across-the-board as respondent Union
would want petitioner to do. Considering therefore that none of the members of
respondent Union are receiving salaries below the P250.00 minimum wage,
petitioner is not obliged to grant the wage increase to them.

The ruling of the Court in Capitol Wireless, Inc. v. Batei[39] is instructive on how
to construe a CBA vis--vis a wage order. In that case,
the company and the Union signed a CBA with a similar provision: [s]hould there
be any government mandated wage increases and/or allowances, the same shall be
over and above the benefits herein granted.i[40] Thereafter, the Wage Board of the
NCR issued several wage orders providing for an across-the-board increase in the
minimum wage of all employees in the private sector. The company implemented
the wage increases only to those employees covered by the wage orders - those
receiving not more than the minimum wage. The Union protested, contending that,
pursuant to said provision, any and all government-mandated increases in salaries
and allowance should be granted to all employees across-the-board. The Court held
as follows:

x x x The wage orders did not grant across-the-board increases to all employees in the National
Capital Region but limited such increases only to those already receiving wage rates not more
than P125.00 per day under Wage Order Nos. NCR-01 and NCR-01-A and P142.00 per day
under Wage Order No. NCR-02. Since the wage orders specified who among the employees are
entitled to the statutory wage increases, then the increases applied only to those mentioned
therein. The provisions of the CBA should be read in harmony with the wage orders, whose
benefits should be given only to those employees covered thereby. (Emphasis added)i[41]

In this case, as gleaned from the pleadings of the parties, respondent Union relied
on a collateral agreement between it and petitioner, an agreement extrinsic of the
CBA based on an alleged established practice of the latter as employer. The VA
rejected this claim:

Complainant Pag-Asa Steel Workers Union additionally advances the arguments that there exist
a collateral agreement to pay the equivalent of wage orders across the board or at least to
negotiate how much will be paid and that parol evidence is now applicable to show or explain
what the unclean provisions of the CBA means regarding wage adjustment. The respondent cites
Article XXVII of the CBA in effect, as follows:
 The parties acknowledged that during the negotiation which resulted in
this AGREEMENT, each had the unlimited right & opportunity to make
demands, claims and proposals of every kind and nature with respect to
any subject or matter not removed by law from the Collective Bargaining
and the understanding and agreements arrived at by the parties after the
exercise of that right & opportunity are set forth in this AGREEMENT.
Therefore, the COMPANY and the UNION, for the life of this
AGREEMENT, agrees that neither party shall not be obligated to
bargain collectively with respect to any subject matter not specifically
referred to or covered in this AGREEMENT, and furthermore, that each
party voluntarily & unqualifiedly waives such right even though such
subject may not have been within the knowledge or contemplation of
either or both of the parties at the time they signed this AGREEMENT.

From the said CBA provision and upon an appreciation of the entire CBA, we find it to have
more than amply covered all aspects of the collective bargaining. To allow alleged collateral
agreements or parol/oral agreements would be violative of the CBA provision afore-quoted.i[42]

We agree with petitioners contention that the rule excluding parol evidence to vary
or contradict a written agreement, does not extend so far as to preclude the
admission of extrinsic evidence, to show prior or contemporaneous collateral parol
agreements between the parties. Such evidence may be received regardless of
whether or not the written agreement contains reference to such collateral
agreement.i[43] As the Court ruled in United Kimberly-Clark Employees Union, et
al. v. Kimberly-Clark Philippines, Inc.:i[44]

A CBA is more than a contract; it is a generalized code to govern a myriad of cases which the
draftsmen cannot wholly anticipate. It covers the whole employment relationship and prescribes
the rights and duties of the parties. It is a system of industrial self-government with the grievance
machinery at the very heart of the system. The parties solve their problems by molding a system
of private law for all the problems which may arise and to provide for their solution in a way
which will generally accord with the variant needs and desires of the parties.

If the terms of a CBA are clear and have no doubt upon the intention of the contracting parties,
the literal meaning of its stipulation shall prevail. However, if, in a CBA, the parties stipulate that
the hirees must be presumed of employment qualification standards but fail to state such
qualification standards in said CBA, the VA may resort to evidence extrinsic of the CBA to
determine the full agreement intended by the parties. When a CBA may be expected to speak on
a matter, but does not, its sentence imports ambiguity on that subject. The VA is not merely to
rely on the cold and cryptic words on the face of the CBA but is mandated to discover the
intention of the parties. Recognizing the inability of the parties to anticipate or address all future
problems, gaps may be left to be filled in by reference to the practices of the industry, and the
step which is equally a part of the CBA although not expressed in it. In order to ascertain the
intention of the contracting parties, their contemporaneous and subsequent acts shall be
principally considered. The VA may also consider and rely upon negotiating and contractual
history of the parties, evidence of past practices interpreting ambiguous provisions. The VA has
to examine such practices to determine the scope of their agreement, as where the provision of
the CBA has been loosely formulated. Moreover, the CBA must be construed liberally rather
than narrowly and technically and the Court must place a practical and realistic construction
upon it.i[45]

However, just like any other fact, habits, customs, usage or patterns of conduct
must be proved. Thus was the ruling of the Court in Bank of Commerce v. Manalo,
et al.:i[46]

Habit, custom, usage or pattern of conduct must be proved like any other facts. Courts must
contend with the caveat that, before they admit evidence of usage, of habit or pattern of conduct,
the offering party must establish the degree of specificity and frequency of uniform response that
ensures more than a mere tendency to act in a given manner but rather, conduct that is semi-
automatic in nature. The offering party must allege and prove specific, repetitive conduct that
might constitute evidence of habit. The examples offered in evidence to prove habit, or pattern of
evidence must be numerous enough to base on inference of systematic conduct. Mere similarity
of contracts does not present the kind of sufficiently similar circumstances to outweigh the
danger of prejudice and confusion.

In determining whether the examples are numerous enough, and sufficiently regular, the key
criteria are adequacy of sampling and uniformity of response. After all, habit means a course of
behavior of a person regularly represented in like circumstances. It is only when examples
offered to establish pattern of conduct or habit are numerous enough to lose an inference of
systematic conduct that examples are admissible. The key criteria are adequacy of sampling and
uniformity of response or ratio of reaction to situations.
We have reviewed the records meticulously and find no evidence to prove that the
grant of a wage-order-mandated increase to all the employees regardless of their
salary rates on an agreement collateral to the CBA had ripened into company
practice before the effectivity of Wage Order No. NCR-08. Respondent Union
failed to adduce proof on the salaries of the employees prior to the issuance of each
wage order to establish its allegation that, even if the employees were receiving
salaries above the minimum wage and there was no wage distortion, they were still
granted salary increase. Only the following lists of salaries of respondent Unions
members were presented in evidence: (1) before Wage Order No. NCR-06 was
issued; (2) after Wage Order No. NCR-06 was implemented; (3) after the grant of
the first year increase under the CBA; (4) after Wage Order No. NCR-07 was
implemented; and (5) after the second year increase in the CBA was implemented.

The list of the employees salaries before Wage Order No. NCR-06 was
implemented belie respondent Unions claim that the wage-order-mandated
increases were given to employees despite the fact that they were receiving salaries
above the minimum wage. This list proves that some employees were in fact
receiving salaries below the P198.00 minimum wage rate prescribed by the wage
order two rank-and-file employees in particular. As petitioner explains, a wage
distortion occurred as a result of granting the increase to those employees who
were receiving salaries below the prescribed minimum wage. The wage distortion
necessitated the upward adjustment of the salaries of the other employees and not
because it was a matter of company practice or usage. The situation of the
employees before Wage Order No. NCR-08, however, was different. Not one of
the members of respondent Union was then receiving less than P250.00 per day,
the minimum wage requirement in said wage order.

The only instance when petitioner admittedly implemented a wage order despite
the fact that the employees were not receiving salaries below the minimum wage
was under Wage Order No. NCR-07. Petitioner, however, explains that it did so
because it was agreed upon in the CBA that should a wage increase be ordered
within six months from its signing, petitioner would give the increase to the
employees in addition to the CBA-mandated increases. Respondents isolated act
could hardly be classified as a company practice or company usage that may be
considered an enforceable obligation.

Moreover, to ripen into a company practice that is demandable as a matter of right,

the giving of the increase should not be by reason of a strict legal or contractual
obligation, but by reason of an act of liberality on the part of the employer. Hence,
even if the company continuously grants a wage increase as mandated by a wage
order or pursuant to a CBA, the same would not automatically ripen into a
company practice. In this case, petitioner granted the increase under Wage Order
No. NCR-07 on its belief that it was obliged to do so under the CBA.

WHEREFORE, premises considered, the petition is GRANTED. The Decision of

the Court of Appeals in CA-G.R. SP No. 65171 and Resolution dated January 11,
2005 are REVERSED and SET ASIDE. The Decision of the Voluntary
Arbitrator is REINSTATED. No costs.

SO ORDERED.

G.R. No. L-5691 December 27, 1910

S. D. MARTINEZ and his wife, CARMEN ONG DE MARTINEZ, plaintiffs-appellees,

vs.
WILLIAM VAN BUSKIRK, defendant-appellant.

Lionel D. Hargis for appellant.

Sanz and Oppisso for appellee.

MORELAND, J.:

The facts found by the trial court are undisputed by either party in this case. They are

That on the 11th day of September, 1908, the plaintiff, Carmen Ong de Martinez, was
riding in a carromata on Calle Real, district of Ermita, city of Manila, P.I., along the left-
hand side of the street as she was going, when a delivery wagon belonging to the
defendant used for the purpose of transportation of fodder by the defendant, and to which
was attached a pair of horses, came along the street in the opposite direction to that the in
which said plaintiff was proceeding, and that thereupon the driver of the said plaintiff's
carromata, observing that the delivery wagon of the defendant was coming at great speed,
crowded close to the sidewalk on the left-hand side of the street and stopped, in order to
give defendant's delivery wagon an opportunity to pass by, but that instead of passing by
the defendant's wagon and horses ran into the carromata occupied by said plaintiff with
her child and overturned it, severely wounding said plaintiff by making a serious cut
upon her head, and also injuring the carromata itself and the harness upon the horse
which was drawing it.

xxx xxx xxx

 These facts are not dispute, but the defendant presented evidence to the effect that the
cochero, who was driving his delivery wagon at the time the accident occurred, was a
good servant and was considered a safe and reliable cochero; that the delivery wagon had
sent to deliver some forage at Paco Livery Stable on Calle Herran, and that for the
purpose of delivery thereof the cochero driving the team as defendant's employee tied the
driving lines of the horses to the front end of the delivery wagon and then went back
inside of the wagon for the purpose of unloading the forage to be delivered; that while
unloading the forage and in the act of carrying some of it out, another vehicle drove by,
the driver of which cracked a whip and made some other noises, which frightened the
horses attached to the delivery wagon and they ran away, and the driver was thrown from
the inside of the wagon out through the rear upon the ground and was unable to stop the
horses; that the horses then ran up and on which street they came into collision with the
carromata in which the plaintiff, Carmen Ong de Martinez, was riding.

The defendant himself was not with the vehicle on the day in question.

Upon these facts the court below found the defendant guilty of negligence and gave judgment
against him for P442.50, with interest thereon at the rate of 6 per cent per annum from the 17th
day of October, 1908, and for the costs of the action. The case is before us on an appeal from that
judgment.

There is no general law of negligence in the Philippine Islands except that embodied in the Civil
Code. The provisions of that code pertinent to this case are

Art. 1902. A person who by an act or omission causes damage to another when there is
fault or negligence shall be obliged to repair the damage so done.

Art. 1903. The obligation imposed by preceding article is demandable, not only for
personal acts and omissions, but also for those of the persons for whom they should be
responsible.

The father, and on his death or incapacity the mother, is liable for the damages caused by
the minors who live with them.

Guardians are liable for the damages caused by minors or incapacitated persons who are
under their authority and live with them.

Owners of directors of an establishment or enterprise are equally liable for the damages
caused by the employees in the service of the branches in which the latter may be
employed or on account of their duties.

The State is liable in this sense when it acts through a special agent, but not when the
damages should have been caused by the official to whom properly it pertained to do the
act performed, in which case the provisions of the preceding article shall be applicable.
 Finally, masters or directors of arts and trades are liable for the damages caused by their
pupils or apprentices while they are under their custody.

The liability referred to in this article shall cease when the persons mentioned therein
prove that they employed all the diligence of a good father of a family to avoid the
damage.

Passing the question whether or not an employer who has furnished a gentle and tractable team
and a trusty and capable driver is, under the last paragraph of the above provisions, liable for the
negligence of such driver in handling the team, we are of the opinion that the judgment must be
reversed upon the ground that the evidence does not disclose that the cochero was negligent.

While the law relating to negligence in this jurisdiction may possibly be some what different
from that in Anglo-Saxon countries, a question we do not now discuss, the rules under which the
fact of negligence is determined are, nevertheless, generally the same. That is to say, while the
law designating the person responsible for a negligent act may not be the same here as in many
jurisdictions, the law determining what is a negligent act is the same here, generally speaking, as
elsewhere. (Supreme court of Spain, 4 December, 1903; 16 May, 1893; 27 June, 1894; 9 April,
1896; 14 March, 1901; 2 March, 1904; 7 February, 1905; 16 June, 1905; 23 June, 1905; 13
April, 1903; 7 March, 1902; 12 June, 1900; 2 March, 1907; 18 March, 1898; 3 June, 1901.)

It appears from the undisputed evidence that the horses which caused the damage were gentle
and tractable; that the cochero was experienced and capable; that he had driven one of the horses
several years and the other five or six months; that he had been in the habit, during all that time,
of leaving them in the condition in which they were left on the day of the accident; that they had
never run away up to that time and there had been, therefore, no accident due to such practice;
that to leave the horses and assist in unloading the merchandise in the manner described on the
day of the accident was the custom of all cochero who delivered merchandise of the character of
that which was being delivered by the cochero of the defendant on the day in question, which
custom was sanctioned by their employers.

In our judgment, the cochero of the defendant was not negligent in leaving the horses in the
manner described by the evidence in this case, either under Spanish or American jurisprudence.
(Lynch vs. Nurdin, 1 Q. B., 422; Rumsey vs. Nelson, 58 Vt., 590; Drake vs. Mount, 33 N. J. L.,
442; Hoboken Land and Improvement Co. vs. Lally, 48 N. J. L., 604; Wasmer vs. D. L. & W. R.
R. Co., 80 N. Y., 212.) lawphi1.net

In the case of Hayman vs. Hewitt (Peake N. P. Cas., pt. 2, p. 170), Lord Kenyon said:

He was performing his duty while removing the goods into the house, and, if every
person who suffered a cart to remain in the street while he took goods out of it was
obliged to employ another to look after the horses, it would be impossible for the
business of the metropolis to go on.

In the case of Griggs vs. Fleckenstein (14 Minn., 81), the court said:
 The degree of care required of the plaintiff, or those in charged of his horse, at the time of
the injury, is that which would be exercised by a person of ordinary care and prudence
under like circumstances. It can not be said that the fact of leaving the horse unhitched is
in itself negligence. Whether it is negligence to leave a horse unhitched must be depend
upon the disposition of the horse; whether he was under the observation and control of
some person all the time, and many other circumstances; and is a question to be
determined by the jury from the facts of each case.

In the case of Belles vs. Kellner (67 N. J. L., 255), it was held that it was error on the part of the
trial court to refuse to charge that "it is not negligence for the driver of a quite, gentle horse to
leave him unhitched and otherwise unattended on the side of a public highways while the driver
is upon the sidewalk loading goods on the wagon." The said court closed its opinion with these
words:

There was evidence which could have fully justified the jury in finding that the horse was
quite and gentle, and that the driver was upon the sidewalk loading goods on the wagon,
at time of the alleged injury, and that the horse had been used for years in that way
without accident. The refusal of the trial court to charge as requested left the jury free to
find was verdict against the defendant, although the jury was convinced that these facts
were proven.lawphil.net

In the case of Southworth vs. Ry. Co. (105 Mass., 342), it was held:

That evidence that a servant, whom traders employed to deliver goods, upon stopping
with his horse and wagon to deliver a parcel at a house from fifty to a hundred rods from
a railroad crossing, left the horse unfastened for four or five minutes while he was in the
house, knowing that it was not afraid of cars, and having used it for three or four months
without ever hitching it or knowing it to start, is not conclusive, as a matter of law, of a
want of due care on his part.

The duty, a violation of which is claimed to be negligence in the respect in question, is to

exercise reasonable care and prudence. Where reasonable care is employed in doing an act not
itself illegal or inherently likely to produce damage to others, there will be no liability, although
damage in fact ensues. (Milwaukee Ry. Co. vs. Arms, 91 U. S., 489; Parrott vs. Wells, 15 Wall.,
524; Brown vs. Kendall, 6 Cushing, 292; Jackson Architectural Iron Works vs. Hurlbut, 158 N.
Y., 34 Westerfield vs. Levis, 43 La. An., 63; Niosi vs. Empire Steam Laundry, 117 Cal., 257.)

The act of defendant's driver in leaving the horses in the manner proved was not unreasonable or
imprudent. Acts the performance of which has not proved destructive or injurious and which
have, therefore, been acquiesced in by society for so long a time that they have ripened into
custom, can not be held to be themselves unreasonable or imprudent. Indeed the very reason why
they have been permitted by society is that they beneficial rather than prejudicial.itc-alf
Accidents sometimes happen and injuries result from the most ordinary acts of life. But such are
not their natural or customary results. To hold that, because such an act once resulted in accident
or injury, the actor is necessarily negligent, is to go far. The fact that the doctrine of res ipsa
loquitur is sometimes successfully invoked in such a case, does not in any sense militate against
the reasoning presented. That maxim at most only creates a prima facie case, and that only in the
absence of proof of the circumstances under which the act complained of was performed. It is
something invoked in favor of the plaintiff before defendant's case showing the conditions and
circumstances under which the injury occurred, the creative reason for the doctrine of res ipsa
loquitur disappears. This is demonstrated by the case of Inland and Seaboard Costing Co. vs.
Tolson (139 U.S., 551), where the court said (p. 554):

. . . The whole effect of the instruction in question, as applied to the case before the jury,
was that if the steamboat, on a calm day and in smooth water, was thrown with such force
against a wharf properly built, as to tear up some of the planks of the flooring, this would
be prima facie evidence of negligence on the part of the defendant's agent in making the
landing, unless upon the whole evidence in the case this prima facie evidence was
rebutted. As such damage to a wharf is not ordinarily done by a steamboat under control
of her officers and carefully managed by them, evidence that such damage was done in
this case was prima facie, and, if unexplained, sufficient evidence of negligence on their
part, and the jury might properly be so instructed.

There was presented in this case, and by the plaintiffs themselves, not only the fact of the runway
and the accident resulting therefrom, but also the conditions under which the runaway occurred.
Those conditions showing of themselves that the defendant's cochero was not negligent in the
management of the horse, the prima facie case in plaintiffs' favor, if any, was destroyed as soon
as made.

It is a matter of common knowledge as well as proof that it is the universal practice of merchants
to deliver merchandise of the kind of that being delivered at the time of the injury, in the manner
in which that was then being delivered; and that it is the universal practice to leave the horses in
the manner in which they were left at the time of the accident. This is the custom in all cities. It
has not been productive of accidents or injuries. The public, finding itself unprejudiced by such
practice, has acquiesced for years without objection. Ought the public now, through the courts,
without prior objection or notice, to be permitted to reverse the practice of decades and thereby
make culpable and guilty one who had every reason and assurance to believe that he was acting
under the sanction of the strongest of all civil forces, the custom of a people? We think not.

The judgement is reversed, without special finding as to costs. So ordered

[G.R. No. 124893. April 18, 1997]

LYNETTE G. GARVIDA, petitioner, vs. FLORENCIO G. SALES, JR., THE HONORABLE

COMMISSION ON ELECTIONS, ELECTION OFFICER DIONISIO F. RIOS and
PROVINCIAL SUPERVISOR NOLI PIPO, respondents.

DECISION

PUNO, J.:
Petitioner Lynette G. Garvida seeks to annul and set aside the order dated May 2, 1996 of
respondent Commission on Elections (COMELEC) en banc suspending her proclamation as the
duly elected Chairman of the Sangguniang Kabataan of Barangay San Lorenzo, Municipality of
Bangui, Ilocos Norte.

The facts are undisputed. The Sangguniang Kabataan (SK) elections nationwide was scheduled
to be held on May 6, 1996. On March 16, 1996, petitioner applied for registration as member and
voter of the Katipunan ng Kabataan of Barangay San Lorenzo, Bangui, Ilocos Norte. The Board
of Election Tellers, however, denied her application on the ground that petitioner, who was then
twenty-one years and ten (10) months old, exceeded the age limit for membership in the
Katipunan ng Kabataan as laid down in Section 3 [b] of COMELEC Resolution No. 2824.

On April 2, 1996, petitioner filed a "Petition for Inclusion as Registered Kabataang Member and
Voter" with the Municipal Circuit Trial Court, Bangui-Pagudpud-Adams-Damalneg, Ilocos
Norte. In a decision dated April 18, 1996, the said court found petitioner qualified and ordered
her registration as member and voter in the Katipunan ng Kabataan.i[1] The Board of Election
Tellers appealed to the Regional Trial Court, Bangui, Ilocos Norte.i[2] The presiding judge of the
Regional Trial Court, however, inhibited himself from acting on the appeal due to his close
association with petitioner.i[3]

On April 23, 1996, petitioner filed her certificate of candidacy for the position of Chairman,
Sangguniang Kabataan, Barangay San Lorenzo, Municipality of Bangui, Province of Ilocos
Norte. In a letter dated April 23, 1996, respondent Election Officer Dionisio F. Rios, per advice
of Provincial Election Supervisor Noli Pipo,i[4] disapproved petitioner's certificate of candidacy
again due to her age.i[5] Petitioner, however, appealed to COMELEC Regional Director Filemon
A. Asperin who set aside the order of respondents and allowed petitioner to run.i[6]

On May 2, 1996, respondent Rios issued a memorandum to petitioner informing her of her
ineligibility and giving her 24 hours to explain why her certificate of candidacy should not be
disapproved.i[7] Earlier and without the knowledge of the COMELEC officials, private
respondent Florencio G. Sales, Jr., a rival candidate for Chairman of the Sangguniang Kabataan,
filed with the COMELEC en banc a "Petition of Denial and/or Cancellation of Certificate of
Candidacy" against petitioner Garvida for falsely representing her age qualification in her
certificate of candidacy. The petition was sent by facsimilei[8] and registered mail on April 29,
1996 to the Commission on Elections National Office, Manila.

On May 2, 1996, the same day respondent Rios issued the memorandum to petitioner, the
COMELEC en banc issued an order directing the Board of Election Tellers and Board of
Canvassers of Barangay San Lorenzo to suspend the proclamation of petitioner in the event she
won in the election. The order reads as follows:

"Acting on the Fax "Petition for Denial And/Or Cancellation of Certificate of

Candidacy" by petitioner Florencio G. Sales, Jr. against Lynette G. Garvida, received on
April 29, 1996, the pertinent allegations of which reads:
 xxx

5. That the said respondent is disqualified to become a voter and a candidate for the SK for
the reason that she will be more than twenty-one (21) years of age on May 6, 1996; that she was
born on June 11, 1974 as can be gleaned from her birth certificate, a copy of which is hereto
attached and marked as Annex "A";

6. That in filing her certificate of candidacy as candidate for SK of Bgy. San Lorenzo,
Bangui, Ilocos Norte, she made material representation which is false and as such, she is
disqualified; that her certificate of candidacy should not be given due course and that said
candidacy must be cancelled;

x x x."

the Commission, it appearing that the petition is meritorious, hereby DIRECTS the
Board of Election Tellers/Board of Canvassers of Barangay San Lorenzo, Bangui,
Ilocos Norte, to suspend the proclamation of Lynette G. Garvida in the event she
garners the highest number of votes for the position of Sangguniang Kabataan [sic].
Meantime, petitioner is hereby required to submit immediately ten (10) copies of his
petition and to pay the filing and legal research fees in the amount of P510.00.
SO ORDERED."i[9]

On May 6, 1996, election day, petitioner garnered 78 votes as against private respondent's votes
of 76.i[10] In accordance with the May 2, 1996 order of the COMELEC en banc, the Board of
Election Tellers did not proclaim petitioner as the winner. Hence, the instant petition for
certiorari was filed on May 27, 1996.

On June 2, 1996, however, the Board of Election Tellers proclaimed petitioner the winner for the
position of SK chairman, Barangay San Lorenzo, Bangui, Ilocos Norte.i[11] The proclamation
was "without prejudice to any further action by the Commission on Elections or any other
interested party."i[12] On July 5, 1996, petitioner ran in the Pambayang Pederasyon ng mga
Sangguniang Kabataan for the municipality of Bangui, Ilocos Norte. She won as Auditor and
was proclaimed one of the elected officials of the Pederasyon.i[13]

Petitioner raises two (2) significant issues: the first concerns the jurisdiction of the COMELEC
en banc to act on the petition to deny or cancel her certificate of candidacy; the second, the
cancellation of her certificate of candidacy on the ground that she has exceeded the age
requirement to run as an elective official of the SK.

Section 532 (a) of the Local Government Code of 1991 provides that the conduct of the SK
elections is under the supervision of the COMELEC and shall be governed by the Omnibus
Election Code.i[14] The Omnibus Election Code, in Section 78, Article IX, governs the procedure
to deny due course to or cancel a certificate of candidacy, viz:

"Sec. 78. Petition to deny due course to or cancel a certificate of candidacy. -- A

verified petition seeking to deny due course or to cancel a certificate of candidacy may
be filed by any person exclusively on the ground that any material representation
contained therein as required under Section 74 hereof is false. The petition may be filed
at any time not later than twenty-five days from the time of filing of the certificate of
candidacy and shall be decided, after due notice and hearing, not later than fifteen days
before election."

In relation thereto, Rule 23 of the COMELEC Rules of Procedure provides that a petition to deny
due course to or cancel a certificate of candidacy for an elective office may be filed with the Law
Department of the COMELEC on the ground that the candidate has made a false material
representation in his certificate. The petition may be heard and evidence received by any official
designated by the COMELEC after which the case shall be decided by the COMELEC itself.i[15]

Under the same Rules of Procedure, jurisdiction over a petition to cancel a certificate of
candidacy lies with the COMELEC sitting in Division, not en banc. Cases before a Division may
only be entertained by the COMELEC en banc when the required number of votes to reach a
decision, resolution, order or ruling is not obtained in the Division. Moreover, only motions to
reconsider decisions, resolutions, orders or rulings of the COMELEC in Division are resolved by
the COMELEC en banc.i[16] It is therefore the COMELEC sitting in Divisions that can hear and
decide election cases. This is clear from Section 3 of the said Rules thus:

"Sec. 3. The Commission Sitting in Divisions. -- The Commission shall sit in two (2)
Divisions to hear and decide protests or petitions in ordinary actions, special actions,
special cases, provisional remedies, contempt and special proceedings except in
accreditation of citizens' arms of the Commission."i[17]

In the instant case, the COMELEC en banc did not refer the case to any of its Divisions upon
receipt of the petition. It therefore acted without jurisdiction or with grave abuse of discretion
when it entertained the petition and issued the order of May 2, 1996.i[18]

II

The COMELEC en banc also erred when it failed to note that the petition itself did not comply
with the formal requirements of pleadings under the COMELEC Rules of Procedure. These
requirements are:

"Sec. 1. Filing of Pleadings. -- Every pleading, motion and other papers must be filed in
ten (10) legible copies. However, when there is more than one respondent or protestee,
the petitioner or protestant must file additional number of copies of the petition or
protest as there are additional respondents or protestees.
 Sec. 2. How Filed. -- The documents referred to in the immediately preceding section
must be filed directly with the proper Clerk of Court of the Commission personally, or,
unless otherwise provided in these Rules, by registered mail. In the latter case, the date
of mailing is the date of filing and the requirement as to the number of copies must be
complied with.
Sec. 3. Form of Pleadings, etc. -- (a) All pleadings allowed by these Rules shall be
printed, mimeographed or typewritten on legal size bond paper and shall be in English
or Filipino.

x x x."

Every pleading before the COMELEC must be printed, mimeographed or typewritten in legal
size bond paper and filed in at least ten (10) legible copies. Pleadings must be filed directly with
the proper Clerk of Court of the COMELEC personally, or, by registered mail.

In the instant case, the subject petition was not in proper form. Only two (2) copies of the
petition were filed with the COMELEC.i[19] Also, the COMELEC en banc issued its Resolution
on the basis of the petition transmitted by facsimile, not by registered mail.

A facsimile or fax transmission is a process involving the transmission and reproduction of

printed and graphic matter by scanning an original copy, one elemental area at a time, and
representing the shade or tone of each area by a specified amount of electric current.i[20] The
current is transmitted as a signal over regular telephone lines or via microwave relay and is used
by the receiver to reproduce an image of the elemental area in the proper position and the correct
shade.i[21] The receiver is equipped with a stylus or other device that produces a printed record on
paper referred to as a facsimile.i[22]

Filing a pleading by facsimile transmission is not sanctioned by the COMELEC Rules of

Procedure, much less by the Rules of Court. A facsimile is not a genuine and authentic pleading.
It is, at best, an exact copy preserving all the marks of an original.i[23]

Without the original, there is no way of determining on its face whether the facsimile pleading is
genuine and authentic and was originally signed by the party and his counsel. It may, in fact, be a
sham pleading. The uncertainty of the authenticity of a facsimile pleading should have restrained
the COMELEC en banc from acting on the petition and issuing the questioned order. The
COMELEC en banc should have waited until it received the petition filed by registered mail.

III

To write finis to the case at bar, we shall now resolve the issue of petitioner's age.

The Katipunan ng Kabataan was originally created by Presidential Decree No. 684 in 1975 as the
Kabataang Barangay, a barangay youth organization composed of all residents of the barangay
who were at least 15 years but less than 18 years of age.i[24]
The Kabataang Barangay sought to provide its members a medium to express their views and
opinions and participate in issues of transcendental importance.i[25] Its affairs were administered
by a barangay youth chairman together with six barangay youth leaders who were actual
residents of the barangay and were at least 15 years but less than 18 years of age.i[26] In 1983,
Batas Pambansa Blg. 337, then the Local Government Code, raised the maximum age of the
Kabataang Barangay members from "less than 18 years of age" to "not more than 21 years of
age."

The Local Government Code of 1991 changed the Kabataang Barangay into the Katipunan ng
Kabataan. It, however, retained the age limit of the members laid down in B.P. 337 at 15 but not
more than 21 years old.i[27] The affairs of the Katipunan ng Kabataan are administered by the
Sangguniang Kabataan (SK) composed of a chairman and seven (7) members who are elected by
the Katipunan ng Kabataan.i[28]

The chairman automatically becomes ex-officio member of the Sangguniang Barangay.i[29] A

member of the SK holds office for a term of three (3) years, unless sooner removed for cause, or
becomes permanently incapacitated, dies or resigns from office.i[30]

Membership in the Katipunan ng Kabataan is subject to specific qualifications laid down by the
Local Government Code of 1991, viz:

"Sec. 424. Katipunan ng Kabataan. -- The katipunan ng kabataan shall be composed of

all citizens of the Philippines actually residing in the barangay for at least six (6)
months, who are fifteen (15) but not more than twenty-one (21) years of age, and who
are duly registered in the list of the sangguniang kabataan or in the official barangay list
in the custody of the barangay secretary."

A member of the Katipunan ng Kabataan may become a candidate for the Sangguniang Kabataan
if he possesses the following qualifications:

"Sec. 428. Qualifications. -- An elective official of the sangguniang kabataan must be a

citizen of the Philippines, a qualified voter of the katipunan ng kabataan, a resident of
the barangay for at least one (1) year immediately prior to election, at least fifteen (15)
years but not more than twenty-one (21) years of age on the day of his election, able to
read and write Filipino, English, or the local dialect, and must not have been convicted
of any crime involving moral turpitude."

Under Section 424 of the Local Government Code, a member of the Katipunan ng Kabataan
must be: (a) a Filipino citizen; (b) an actual resident of the barangay for at least six months; (c)
15 but not more than 21 years of age; and (d) duly registered in the list of the Sangguniang
Kabataan or in the official barangay list. Section 428 of the Code requires that an elective official
of the Sangguniang Kabataan must be: (a) a Filipino citizen; (b) a qualified voter in the
Katipunan ng Kabataan; (c) a resident of the barangay at least one (1) year immediately
preceding the election; (d) at least 15 years but not more than 21 years of age on the day of his
election; (e) able to read and write; and (f) must not have been convicted of any crime involving
moral turpitude.

For the May 6, 1996 SK elections, the COMELEC interpreted Sections 424 and 428 of the Local
Government Code of 1991 in Resolution No. 2824 and defined how a member of the Katipunan
ng Kabataan becomes a qualified voter and an elective official. Thus:

"Sec. 3. Qualifications of a voter. -- To be qualified to register as a voter in the SK

elections, a person must be:

a) a citizen of the Philippines;

b) fifteen (15) but not more than twenty-one (21) years of age on election day, that is, he must
have been born between May 6, 1975 and May 6, 1981, inclusive; and

c) a resident of the Philippines for at least one (1) year and actually residing in the barangay
wherein he proposes to vote for at least six (6) months immediately preceding the elections."

xxx

"Sec. 6. Qualifications of elective members. -- An elective official of the SK must be:

a) a qualified voter;

b) a resident in the barangay for at least one (1) year immediately prior to the elections; and

c) able to read and write Filipino or any Philippine language or dialect or English.

Cases involving the eligibility or qualification of candidates shall be decided by the

city/municipal Election Officer (EO) whose decision shall be final."

A member of the Katipunan ng Kabataan may be a qualified voter in the May 6, 1996 SK
elections if he is: (a) a Filipino citizen; (b) 15 but not more than 21 years of age on election day,
i.e., the voter must be born between May 6, 1975 and May 6, 1981, inclusive; and (c) a resident
of the Philippines for at least one (1) year and an actual resident of the barangay at least six (6)
months immediately preceding the elections. A candidate for the SK must: (a) possess the
foregoing qualifications of a voter; (b) be a resident in the barangay at least one (1) year
immediately preceding the elections; and (c) able to read and write.

Except for the question of age, petitioner has all the qualifications of a member and voter in the
Katipunan ng Kabataan and a candidate for the Sangguniang Kabataan. Petitioner's age is
admittedly beyond the limit set in Section 3 [b] of COMELEC Resolution No. 2824. Petitioner,
however, argues that Section 3 [b] of Resolution No. 2824 is unlawful, ultra vires and beyond the
scope of Sections 424 and 428 of the Local Government Code of 1991. She contends that the
Code itself does not provide that the voter must be exactly 21 years of age on election day. She
urges that so long as she did not turn twenty-two (22) years old, she was still twenty-one years of
age on election day and therefore qualified as a member and voter in the Katipunan ng Kabataan
and as candidate for the SK elections.

A closer look at the Local Government Code will reveal a distinction between the maximum age
of a member in the Katipunan ng Kabataan and the maximum age of an elective SK official.
Section 424 of the Code sets a member's maximum age at 21 years only. There is no further
provision as to when the member shall have turned 21 years of age. On the other hand, Section
428 provides that the maximum age of an elective SK official is 21 years old "on the day of his
election." The addition of the phrase "on the day of his election" is an additional qualification.
The member may be more than 21 years of age on election day or on the day he registers as
member of the Katipunan ng Kabataan. The elective official, however, must not be more than 21
years old on the day of election. The distinction is understandable considering that the Code
itself provides more qualifications for an elective SK official than for a member of the Katipunan
ng Kabataan. Dissimilum dissimilis est ratio.i[31] The courts may distinguish when there are facts
and circumstances showing that the legislature intended a distinction or qualification.i[32]

The qualification that a voter in the SK elections must not be more than 21 years of age on the
day of the election is not provided in Section 424 of the Local Government Code of 1991. In fact
the term "qualified voter" appears only in COMELEC Resolution No. 2824.i[33] Since a
"qualified voter" is not necessarily an elective official, then it may be assumed that a "qualified
voter" is a "member of the Katipunan ng Kabataan." Section 424 of the Code does not provide
that the maximum age of a member of the Katipunan ng Kabataan is determined on the day of
the election. Section 3 [b] of COMELEC Resolution No. 2824 is therefore ultra vires insofar as it
sets the age limit of a voter for the SK elections at exactly 21 years on the day of the election.

The provision that an elective official of the SK should not be more than 21 years of age on the
day of his election is very clear. The Local Government Code speaks of years, not months nor
days. When the law speaks of years, it is understood that years are of 365 days each. i[34] One
born on the first day of the year is consequently deemed to be one year old on the 365th day after
his birth -- the last day of the year.i[35] In computing years, the first year is reached after
completing the first 365 days. After the first 365th day, the first day of the second 365-day cycle
begins. On the 365th day of the second cycle, the person turns two years old. This cycle goes on
and on in a lifetime. A person turns 21 years old on the 365th day of his 21st 365-day cycle. This
means on his 21st birthday, he has completed the entire span of 21 365-day cycles. After this
birthday, the 365-day cycle for his 22nd year begins. The day after the 365th day is the first day
of the next 365-day cycle and he turns 22 years old on the 365th day.

The phrase "not more than 21 years of age" means not over 21 years, not beyond 21 years. It
means 21 365-day cycles. It does not mean 21 years and one or some days or a fraction of a year
because that would be more than 21 365-day cycles. "Not more than 21 years old" is not
equivalent to "less than 22 years old," contrary to petitioner's claims. The law does not state that
the candidate be less than 22 years on election day.
In P.D. 684, the law that created the Kabataang Barangay, the age qualification of a barangay
youth official was expressly stated as "x x x at least fifteen years of age or over but less than
eighteen x x x."i[36] This provision clearly states that the youth official must be at least 15 years
old and may be 17 years and a fraction of a year but should not reach the age of eighteen years.
When the Local Government Code increased the age limit of members of the youth organization
to 21 years, it did not reenact the provision in such a way as to make the youth "at least 15 but
less than 22 years old." If the intention of the Code's framers was to include citizens less than 22
years old, they should have stated so expressly instead of leaving the matter open to confusion
and doubt.i[37]

Former Senator Aquilino Q. Pimentel, the sponsor and principal author of the Local Government
Code of 1991 declared that one of the reasons why the Katipunan ng Kabataan was created and
the Kabataang Barangay discontinued was because most, if not all, Kabataang Barangay leaders
were already over 21 years of age by the time President Aquino assumed power.i[38] They were
not the "youth" anymore. The Local Government Code of 1991 fixed the maximum age limit at
not more than 21 yearsi[39] and the only exception is in the second paragraph of Section 423
which reads:

"Sec. 423. Creation and Election. -- a) x x x;

b) A sangguniang kabataan official who, during his term of office, shall have passed
the age of twenty-one (21) years shall be allowed to serve the remaining portion of the
term for which he was elected."

The general rule is that an elective official of the Sangguniang Kabataan must not be
more than 21 years of age on the day of his election. The only exception is when the official
reaches the age of 21 years during his incumbency. Section 423 [b] of the Code allows him to
serve the remaining portion of the term for which he was elected. According to Senator Pimentel,
the youth leader must have "been elected prior to his 21st birthday."i[40] Conversely, the SK
official must not have turned 21 years old before his election. Reading Section 423 [b] together
with Section 428 of the Code, the latest date at which an SK elective official turns 21 years old is
on the day of his election. The maximum age of a youth official must therefore be exactly 21
years on election day. Section 3 [b] in relation to Section 6 [a] of COMELEC Resolution No.
2824 is not ultra vires insofar as it fixes the maximum age of an elective SK official on the day
of his election.

In the case at bar, petitioner was born on June 11, 1974. On March 16, 1996, the day she
registered as voter for the May 6, 1996 SK elections, petitioner was twenty-one (21) years and
nine (9) months old. On the day of the elections, she was 21 years, 11 months and 5 days old.
When she assumed office on June 1, 1996, she was 21 years, 11 months and 20 days old and was
merely ten (10) days away from turning 22 years old. Petitioner may have qualified as a member
of the Katipunan ng Kabataan but definitely, petitioner was over the age limit for elective SK
officials set by Section 428 of the Local Government Code and Sections 3 [b] and 6 of Comelec
Resolution No. 2824. She was ineligible to run as candidate for the May 6, 1996 Sangguniang
Kabataan elections.
The requirement that a candidate possess the age qualification is founded on public policy and if
he lacks the age on the day of the election, he can be declared ineligible.i[41]

In the same vein, if the candidate is over the maximum age limit on the day of the election, he is
ineligible. The fact that the candidate was elected will not make the age requirement directory,
nor will it validate his election.i[42] The will of the people as expressed through the ballot cannot
cure the vice of ineligibility.i[43]

The ineligibility of petitioner does not entitle private respondent, the candidate who obtained the
highest number of votes in the May 6, 1996 elections, to be declared elected.i[44] A defeated
candidate cannot be deemed elected to the office.i[45] Moreover, despite his claims,i[46] private
respondent has failed to prove that the electorate themselves actually knew of petitioner's
ineligibility and that they maliciously voted for her with the intention of misapplying their
franchises and throwing away their votes for the benefit of her rival candidate.i[47]

Neither can this Court order that pursuant to Section 435 of the Local Government Code
petitioner should be succeeded by the Sangguniang Kabataan member who obtained the next
highest number of votes in the May 6, 1996 elections.i[48] Section 435 applies when a
Sangguniang Kabataan Chairman "refuses to assume office, fails to qualify,i[49] is convicted of a
felony, voluntarily resigns, dies, is permanently incapacitated, is removed from office, or has
been absent without leave for more than three (3) consecutive months."

The question of the age qualification is a question of eligibility.i[50]

Being "eligible" means being "legally qualified; capable of being legally chosen."i[51]

Ineligibility, on the other hand, refers to the lack of the qualifications prescribed in the
Constitution or the statutes for holding public office.i[52] Ineligibility is not one of the grounds
enumerated in Section 435 for succession of the SK Chairman.

To avoid a hiatus in the office of SK Chairman, the Court deems it necessary to order that the
vacancy be filled by the SK member chosen by the incumbent SK members of Barangay San
Lorenzo, Bangui, Ilocos Norte by simple majority from among themselves. The member chosen
shall assume the office of SK Chairman for the unexpired portion of the term, and shall
discharge the powers and duties, and enjoy the rights and privileges appurtenant to said office.

IN VIEW WHEREOF, the petition is dismissed and petitioner Lynette G. Garvida is declared
ineligible for being over the age qualification for candidacy in the May 6, 1996 elections of the
Sangguniang Kabataan, and is ordered to vacate her position as Chairman of the Sangguniang
Kabataan of Barangay San Lorenzo, Bangui, Ilocos Norte. The Sangguniang Kabataan member
voted by simple majority by and from among the incumbent Sangguniang Kabataan members of
Barangay San Lorenzo, Bangui, Ilocos Norte shall assume the office of Sangguniang Kabataan
Chairman of Barangay San Lorenzo, Bangui, Ilocos Norte for the unexpired portion of the term.

SO ORDERED.
G.R. No. L-29131 August 27, 1969

NATIONAL MARKETING CORPORATION, plaintiff-appellant,

vs.
MIGUEL D. TECSON, ET AL., defendants,
MIGUEL D. TECSON, defendant-appellee,
THE INSURANCE COMMISSIONER, petitioner.

Government Corporate Counsel Leopoldo M. Abellera and Trial Atty. Antonio M. Brillantes for
plaintiff-appellant.
Antonio T. Lacdan for defendant-appellee.
Office of the Solicitor General for petitioner.

CONCEPCION, C.J.:

This appeal has been certified to us by the Court of Appeals only one question of law being
involved therein.

On November 14, 1955, the Court of First Instance of Manila rendered judgment, in Civil Case
No. 20520 thereof, entitled "Price Stabilization Corporation vs. Miguel D. Tecson and Alto
Surety and Insurance Co., Inc.," the dispositive part of which reads as follows:

For the foregoing consideration, the Court decides this case:

(a) Ordering the defendants Miguel D. Tecson and Alto Surety Insurance Co., Inc. to pay
jointly and severally plaintiff PRATRA the sum of P7,200.00 plus 7% interest from May
25, 1960 until the amount is fully paid, plus P500.00 for attorney's fees, and plus costs;

(b) ordering defendant Miguel D. Tecson to indemnify his co-defendant Alto Surety &
Insurance Co., Inc. on the cross-claim for all the amounts it would be made to pay in this
decision, in case defendant Alto Surety & Insurance Co., Inc. pay the amount adjudged to
plaintiff in this decision. From the date of such payment defendant Miguel D. Tecson
would pay the Alto Surety & Insurance Co., Inc., interest at 12% per annum until Miguel
D. Tecson has fully reimbursed plaintiff of the said amount.

Copy of this decision was, on November 21, 1955, served upon the defendants in said case. On
December 21, 1965, the National Marketing Corporation, as successor to all the properties,
assets, rights, and choses in action of the Price Stabilization Corporation, as plaintiff in that case
and judgment creditor therein, filed, with the same court, a complaint, docketed as Civil Case
No. 63701 thereof, against the same defendants, for the revival of the judgment rendered in said
Case No. 20520. Defendant Miguel D. Tecson moved to dismiss said complaint, upon the ground
of lack of jurisdiction over the subject matter thereof and prescription of action. Acting upon the
motion and plaintiff's opposition thereto, said Court issued, on February 14, 1966, an order
reading:
 Defendant Miguel Tecson seeks the dismissal of the complaint on the ground of lack of
jurisdiction and prescription. As for lack of jurisdiction, as the amount involved is less
than P10,000 as actually these proceedings are a revival of a decision issued by this same
court, the matter of jurisdiction must be admitted. But as for prescription. Plaintiffs admit
the decision of this Court became final on December 21, 1955. This case was filed
exactly on December 21, 1965 but more than ten years have passed a year is a period
of 365 days (Art. 13, CCP). Plaintiff forgot that 1960, 1964 were both leap years so that
when this present case was filed it was filed two days too late.

The complaint insofar as Miguel Tecson is concerned is, therefore, dismissed as having
prescribed.1wph1.t

The National Marketing Corporation appealed from such order to the Court of Appeals, which,
on March 20, 1969t certified the case to this Court, upon the ground that the only question
therein raised is one of law, namely, whether or not the present action for the revival of a
judgment is barred by the statute of limitations.

Pursuant to Art. 1144(3) of our Civil Code, an action upon a judgment "must be brought within
ten years from the time the right of action accrues," which, in the language of Art. 1152 of the
same Code, "commences from the time the judgment sought to be revived has become final."
This, in turn, took place on December 21, 1955, or thirty (30) days from notice of the judgment
which was received by the defendants herein on November 21, 1955 no appeal having
been taken therefrom. 1 The issue is thus confined to the date on which ten (10) years from
December 21, 1955 expired.

Plaintiff-appellant alleges that it was December 21, 1965, but appellee Tecson maintains
otherwise, because "when the laws speak of years ... it shall be understood that years are of three
hundred sixty-five days each" according to Art. 13 of our Civil Code and, 1960 and 1964
being leap years, the month of February in both had 29 days, so that ten (10) years of 365 days
each, or an aggregate of 3,650 days, from December 21, 1955, expired on December 19, 1965.
The lower court accepted this view in its appealed order of dismissal.

Plaintiff-appellant insists that the same "is erroneous, because a year means a calendar year
(Statutory Construction, Interpretation of Laws, by Crawford, p. 383) and since what is being
computed here is the number of years, a calendar year should be used as the basis of
computation. There is no question that when it is not a leap year, December 21 to December 21
of the following year is one year. If the extra day in a leap year is not a day of the year, because
it is the 366th day, then to what year does it belong? Certainly, it must belong to the year where
it falls and, therefore, that the 366 days constitute one year." 2

The very conclusion thus reached by appellant shows that its theory contravenes the explicit
provision of Art. 13 of the Civil Code of the Philippines, limiting the connotation of each "year"
as the term is used in our laws to 365 days. Indeed, prior to the approval of the Civil Code
of Spain, the Supreme Court thereof had held, on March 30, 1887, that, when the law spoke of
months, it meant a "natural" month or "solar" month, in the absence of express provision to the
contrary. Such provision was incorporated into the Civil Code of Spain, subsequently
promulgated. Hence, the same Supreme Court declared 3 that, pursuant to Art. 7 of said Code,
"whenever months ... are referred to in the law, it shall be understood that the months are of 30
days," not the "natural," or "solar" or "calendar" months, unless they are "designated by name,"
in which case "they shall be computed by the actual number of days they have. This concept was
later, modified in the Philippines, by Section 13 of the Revised Administrative Code, Pursuant to
which, "month shall be understood to refer to a calendar month." 4 In the language of this Court,
in People vs. Del Rosario, 5 with the approval of the Civil Code of the Philippines (Republic Act
386) ... we have reverted to the provisions of the Spanish Civil Code in accordance with which a
month is to be considered as the regular 30-day month ... and not the solar or civil month," with
the particularity that, whereas the Spanish Code merely mentioned "months, days or nights," ours
has added thereto the term "years" and explicitly ordains that "it shall be understood that years
are of three hundred sixty-five days."

Although some members of the Court are inclined to think that this legislation is not realistic, for
failure to conform with ordinary experience or practice, the theory of plaintiff-appellant herein
cannot be upheld without ignoring, if not nullifying, Art. 13 of our Civil Code, and reviving
Section 13 of the Revised Administrative Code, thereby engaging in judicial legislation, and, in
effect, repealing an act of Congress. If public interest demands a reversion to the policy
embodied in the Revised Administrative Code, this may be done through legislative process, not
by judicial decree.

WHEREFORE, the order appealed from should be as it is hereby affirmed, without costs. It is so
ordered.

G.R. No. L-19671 November 29, 1965

PASTOR B. TENCHAVEZ, plaintiff-appellant,

vs.
VICENTA F. ESCAO, ET AL., defendants-appellees.

I. V. Binamira & F. B. Barria for plaintiff-appellant.

Jalandoni & Jarnir for defendants-appellees.

REYES, J.B.L., J.:

Direct appeal, on factual and legal questions, from the judgment of the Court of First Instance of
Cebu, in its Civil Case No. R-4177, denying the claim of the plaintiff-appellant, Pastor B.
Tenchavez, for legal separation and one million pesos in damages against his wife and parents-
in-law, the defendants-appellees, Vicente, Mamerto and Mena,1 all surnamed "Escao,"
respectively.2

The facts, supported by the evidence of record, are the following:

Missing her late afternoon classes on 24 February 1948 in the University of San Carlos, Cebu
City, where she was then enrolled as a second year student of commerce, Vicenta Escao, 27
years of age (scion of a well-to-do and socially prominent Filipino family of Spanish ancestry
and a "sheltered colegiala"), exchanged marriage vows with Pastor Tenchavez, 32 years of age,
an engineer, ex-army officer and of undistinguished stock, without the knowledge of her parents,
before a Catholic chaplain, Lt. Moises Lavares, in the house of one Juan Alburo in the said city.
The marriage was the culmination of a previous love affair and was duly registered with the local
civil register.

Vicenta's letters to Pastor, and his to her, before the marriage, indicate that the couple were
deeply in love. Together with a friend, Pacita Noel, their matchmaker and go-between, they had
planned out their marital future whereby Pacita would be the governess of their first-born; they
started saving money in a piggy bank. A few weeks before their secret marriage, their
engagement was broken; Vicenta returned the engagement ring and accepted another suitor,
Joseling Lao. Her love for Pastor beckoned; she pleaded for his return, and they reconciled. This
time they planned to get married and then elope. To facilitate the elopement, Vicenta had
brought some of her clothes to the room of Pacita Noel in St. Mary's Hall, which was their usual
trysting place.

Although planned for the midnight following their marriage, the elopement did not, however,
materialize because when Vicente went back to her classes after the marriage, her mother, who
got wind of the intended nuptials, was already waiting for her at the college. Vicenta was taken
home where she admitted that she had already married Pastor. Mamerto and Mena Escao were
surprised, because Pastor never asked for the hand of Vicente, and were disgusted because of the
great scandal that the clandestine marriage would provoke (t.s.n., vol. III, pp. 1105-06). The
following morning, the Escao spouses sought priestly advice. Father Reynes suggested a
recelebration to validate what he believed to be an invalid marriage, from the standpoint of the
Church, due to the lack of authority from the Archbishop or the parish priest for the officiating
chaplain to celebrate the marriage. The recelebration did not take place, because on 26 February
1948 Mamerto Escao was handed by a maid, whose name he claims he does not remember, a
letter purportedly coming from San Carlos college students and disclosing an amorous
relationship between Pastor Tenchavez and Pacita Noel; Vicenta translated the letter to her
father, and thereafter would not agree to a new marriage. Vicenta and Pastor met that day in the
house of Mrs. Pilar Mendezona. Thereafter, Vicenta continued living with her parents while
Pastor returned to his job in Manila. Her letter of 22 March 1948 (Exh. "M"), while still
solicitous of her husband's welfare, was not as endearing as her previous letters when their love
was aflame.

Vicenta was bred in Catholic ways but is of a changeable disposition, and Pastor knew it. She
fondly accepted her being called a "jellyfish." She was not prevented by her parents from
communicating with Pastor (Exh. "1-Escao"), but her letters became less frequent as the days
passed. As of June, 1948 the newlyweds were already estranged (Exh. "2-Escao"). Vicenta had
gone to Jimenez, Misamis Occidental, to escape from the scandal that her marriage stirred in
Cebu society. There, a lawyer filed for her a petition, drafted by then Senator Emmanuel Pelaez,
to annul her marriage. She did not sign the petition (Exh. "B-5"). The case was dismissed
without prejudice because of her non-appearance at the hearing (Exh. "B-4").

On 24 June 1950, without informing her husband, she applied for a passport, indicating in her
application that she was single, that her purpose was to study, and she was domiciled in Cebu
City, and that she intended to return after two years. The application was approved, and she left
for the United States. On 22 August 1950, she filed a verified complaint for divorce against the
herein plaintiff in the Second Judicial District Court of the State of Nevada in and for the County
of Washoe, on the ground of "extreme cruelty, entirely mental in character." On 21 October
1950, a decree of divorce, "final and absolute", was issued in open court by the said tribunal.

In 1951 Mamerto and Mena Escao filed a petition with the Archbishop of Cebu to annul their
daughter's marriage to Pastor (Exh. "D"). On 10 September 1954, Vicenta sought papal
dispensation of her marriage (Exh. "D"-2).

On 13 September 1954, Vicenta married an American, Russell Leo Moran, in Nevada. She now
lives with him in California, and, by him, has begotten children. She acquired American
citizenship on 8 August 1958.

But on 30 July 1955, Tenchavez had initiated the proceedings at bar by a complaint in the Court
of First Instance of Cebu, and amended on 31 May 1956, against Vicenta F. Escao, her parents,
Mamerto and Mena Escao, whom he charged with having dissuaded and discouraged Vicenta
from joining her husband, and alienating her affections, and against the Roman Catholic Church,
for having, through its Diocesan Tribunal, decreed the annulment of the marriage, and asked for
legal separation and one million pesos in damages. Vicenta claimed a valid divorce from plaintiff
and an equally valid marriage to her present husband, Russell Leo Moran; while her parents
denied that they had in any way influenced their daughter's acts, and counterclaimed for moral
damages.

The appealed judgment did not decree a legal separation, but freed the plaintiff from supporting
his wife and to acquire property to the exclusion of his wife. It allowed the counterclaim of
Mamerto Escao and Mena Escao for moral and exemplary damages and attorney's fees against
the plaintiff-appellant, to the extent of P45,000.00, and plaintiff resorted directly to this Court.

The appellant ascribes, as errors of the trial court, the following:

1. In not declaring legal separation; in not holding defendant Vicenta F. Escao liable for
damages and in dismissing the complaint;.

2. In not holding the defendant parents Mamerto Escano and the heirs of Doa Mena
Escao liable for damages;.

3 In holding the plaintiff liable for and requiring him to pay the damages to the defendant
parents on their counterclaims; and.
 4. In dismissing the complaint and in denying the relief sought by the plaintiff.

That on 24 February 1948 the plaintiff-appellant, Pastor Tenchavez, and the defendant-appellee,
Vicenta Escao, were validly married to each other, from the standpoint of our civil law, is
clearly established by the record before us. Both parties were then above the age of majority, and
otherwise qualified; and both consented to the marriage, which was performed by a Catholic
priest (army chaplain Lavares) in the presence of competent witnesses. It is nowhere shown that
said priest was not duly authorized under civil law to solemnize marriages.

The chaplain's alleged lack of ecclesiastical authorization from the parish priest and the
Ordinary, as required by Canon law, is irrelevant in our civil law, not only because of the
separation of Church and State but also because Act 3613 of the Philippine Legislature (which
was the marriage law in force at the time) expressly provided that

SEC. 1. Essential requisites. Essential requisites for marriage are the legal capacity of the
contracting parties and consent. (Emphasis supplied)

The actual authority of the solemnizing officer was thus only a formal requirement, and,
therefore, not essential to give the marriage civil effects,3 and this is emphasized by section 27 of
said marriage act, which provided the following:

SEC. 27. Failure to comply with formal requirements. No marriage shall be declared
invalid because of the absence of one or several of the formal requirements of this Act if,
when it was performed, the spouses or one of them believed in good faith that the person
who solemnized the marriage was actually empowered to do so, and that the marriage
was perfectly legal.

The good faith of all the parties to the marriage (and hence the validity of their marriage) will be
presumed until the contrary is positively proved (Lao vs. Dee Tim, 45 Phil. 739, 745; Francisco
vs. Jason, 60 Phil. 442, 448). It is well to note here that in the case at bar, doubts as to the
authority of the solemnizing priest arose only after the marriage, when Vicenta's parents
consulted Father Reynes and the archbishop of Cebu. Moreover, the very act of Vicenta in
abandoning her original action for annulment and subsequently suing for divorce implies an
admission that her marriage to plaintiff was valid and binding.

Defendant Vicenta Escao argues that when she contracted the marriage she was under the
undue influence of Pacita Noel, whom she charges to have been in conspiracy with appellant
Tenchavez. Even granting, for argument's sake, the truth of that contention, and assuming that
Vicenta's consent was vitiated by fraud and undue influence, such vices did not render her
marriage ab initio void, but merely voidable, and the marriage remained valid until annulled by a
competent civil court. This was never done, and admittedly, Vicenta's suit for annulment in the
Court of First Instance of Misamis was dismissed for non-prosecution.

It is equally clear from the record that the valid marriage between Pastor Tenchavez and Vicenta
Escao remained subsisting and undissolved under Philippine law, notwithstanding the decree of
absolute divorce that the wife sought and obtained on 21 October 1950 from the Second Judicial
District Court of Washoe County, State of Nevada, on grounds of "extreme cruelty, entirely
mental in character." At the time the divorce decree was issued, Vicenta Escao, like her
husband, was still a Filipino citizen.4 She was then subject to Philippine law, and Article 15 of
the Civil Code of the Philippines (Rep. Act No. 386), already in force at the time, expressly
provided:

Laws relating to family rights and duties or to the status, condition and legal capacity of
persons are binding upon the citizens of the Philippines, even though living abroad.

The Civil Code of the Philippines, now in force, does not admit absolute divorce, quo ad vinculo
matrimonii; and in fact does not even use that term, to further emphasize its restrictive policy on
the matter, in contrast to the preceding legislation that admitted absolute divorce on grounds of
adultery of the wife or concubinage of the husband (Act 2710). Instead of divorce, the present
Civil Code only provides for legal separation (Title IV, Book 1, Arts. 97 to 108), and, even in
that case, it expressly prescribes that "the marriage bonds shall not be severed" (Art. 106, subpar.
1).

For the Philippine courts to recognize and give recognition or effect to a foreign decree of
absolute divorce betiveen Filipino citizens could be a patent violation of the declared public
policy of the state, specially in view of the third paragraph of Article 17 of the Civil Code that
prescribes the following:

Prohibitive laws concerning persons, their acts or property, and those which have for
their object public order, policy and good customs, shall not be rendered ineffective by
laws or judgments promulgated, or by determinations or conventions agreed upon in a
foreign country.

Even more, the grant of effectivity in this jurisdiction to such foreign divorce decrees would, in
effect, give rise to an irritating and scandalous discrimination in favor of wealthy citizens, to the
detriment of those members of our polity whose means do not permit them to sojourn abroad and
obtain absolute divorces outside the Philippines.

From this point of view, it is irrelevant that appellant Pastor Tenchavez should have appeared in
the Nevada divorce court. Primarily because the policy of our law cannot be nullified by acts of
private parties (Civil Code,Art. 17, jam quot.); and additionally, because the mere appearance of
a non-resident consort cannot confer jurisdiction where the court originally had none (Area vs.
Javier, 95 Phil. 579).

From the preceding facts and considerations, there flows as a necessary consequence that in this
jurisdiction Vicenta Escao's divorce and second marriage are not entitled to recognition as
valid; for her previous union to plaintiff Tenchavez must be declared to be existent and
undissolved. It follows, likewise, that her refusal to perform her wifely duties, and her denial of
consortium and her desertion of her husband constitute in law a wrong caused through her fault,
for which the husband is entitled to the corresponding indemnity (Civil Code, Art. 2176). Neither
an unsubstantiated charge of deceit nor an anonymous letter charging immorality against the
husband constitute, contrary to her claim, adequate excuse. Wherefore, her marriage and
cohabitation with Russell Leo Moran is technically "intercourse with a person not her husband"
from the standpoint of Philippine Law, and entitles plaintiff-appellant Tenchavez to a decree of
"legal separation under our law, on the basis of adultery" (Revised Penal Code, Art. 333).

The foregoing conclusions as to the untoward effect of a marriage after an invalid divorce are in
accord with the previous doctrines and rulings of this court on the subject, particularly those that
were rendered under our laws prior to the approval of the absolute divorce act (Act 2710 of the
Philippine Legislature). As a matter of legal history, our statutes did not recognize divorces a
vinculo before 1917, when Act 2710 became effective; and the present Civil Code of the
Philippines, in disregarding absolute divorces, in effect merely reverted to the policies on the
subject prevailing before Act 2710. The rulings, therefore, under the Civil Code of 1889, prior to
the Act above-mentioned, are now, fully applicable. Of these, the decision in Ramirez vs. Gmur,
42 Phil. 855, is of particular interest. Said this Court in that case:

As the divorce granted by the French Court must be ignored, it results that the marriage
of Dr. Mory and Leona Castro, celebrated in London in 1905, could not legalize their
relations; and the circumstance that they afterwards passed for husband and wife in
Switzerland until her death is wholly without legal significance. The claims of the very
children to participate in the estate of Samuel Bishop must therefore be rejected. The
right to inherit is limited to legitimate, legitimated and acknowledged natural children.
The children of adulterous relations are wholly excluded. The word "descendants" as
used in Article 941 of the Civil Code cannot be interpreted to include illegitimates born
of adulterous relations. (Emphasis supplied)

Except for the fact that the successional rights of the children, begotten from Vicenta's marriage
to Leo Moran after the invalid divorce, are not involved in the case at bar, the Gmur case is
authority for the proposition that such union is adulterous in this jurisdiction, and, therefore,
justifies an action for legal separation on the part of the innocent consort of the first marriage,
that stands undissolved in Philippine law. In not so declaring, the trial court committed error.

True it is that our ruling gives rise to anomalous situations where the status of a person (whether
divorced or not) would depend on the territory where the question arises. Anomalies of this kind
are not new in the Philippines, and the answer to them was given in Barretto vs. Gonzales, 58
Phil. 667:

The hardship of the existing divorce laws in the Philippine Islands are well known to the
members of the Legislature. It is the duty of the Courts to enforce the laws of divorce as
written by Legislature if they are constitutional. Courts have no right to say that such
laws are too strict or too liberal. (p. 72)

The appellant's first assignment of error is, therefore, sustained.

However, the plaintiff-appellant's charge that his wife's parents, Dr. Mamerto Escao and his
wife, the late Doa Mena Escao, alienated the affections of their daughter and influenced her
conduct toward her husband are not supported by credible evidence. The testimony of Pastor
Tenchavez about the Escao's animosity toward him strikes us to be merely conjecture and
exaggeration, and are belied by Pastor's own letters written before this suit was begun (Exh. "2-
Escao" and "Vicenta," Rec. on App., pp. 270-274). In these letters he expressly apologized to
the defendants for "misjudging them" and for the "great unhappiness" caused by his "impulsive
blunders" and "sinful pride," "effrontery and audacity" [sic]. Plaintiff was admitted to the Escao
house to visit and court Vicenta, and the record shows nothing to prove that he would not have
been accepted to marry Vicente had he openly asked for her hand, as good manners and breeding
demanded. Even after learning of the clandestine marriage, and despite their shock at such
unexpected event, the parents of Vicenta proposed and arranged that the marriage be recelebrated
in strict conformity with the canons of their religion upon advice that the previous one was
canonically defective. If no recelebration of the marriage ceremony was had it was not due to
defendants Mamerto Escao and his wife, but to the refusal of Vicenta to proceed with it. That
the spouses Escao did not seek to compel or induce their daughter to assent to the recelebration
but respected her decision, or that they abided by her resolve, does not constitute in law an
alienation of affections. Neither does the fact that Vicenta's parents sent her money while she
was in the United States; for it was natural that they should not wish their daughter to live in
penury even if they did not concur in her decision to divorce Tenchavez (27 Am. Jur. 130-132).

There is no evidence that the parents of Vicenta, out of improper motives, aided and abetted her
original suit for annulment, or her subsequent divorce; she appears to have acted independently,
and being of age, she was entitled to judge what was best for her and ask that her decisions be
respected. Her parents, in so doing, certainly cannot be charged with alienation of affections in
the absence of malice or unworthy motives, which have not been shown, good faith being always
presumed until the contrary is proved.

SEC. 529. Liability of Parents, Guardians or Kin. The law distinguishes between the
right of a parent to interest himself in the marital affairs of his child and the absence of
rights in a stranger to intermeddle in such affairs. However, such distinction between the
liability of parents and that of strangers is only in regard to what will justify interference.
A parent isliable for alienation of affections resulting from his own malicious conduct, as
where he wrongfully entices his son or daughter to leave his or her spouse, but he is not
liable unless he acts maliciously, without justification and from unworthy motives. He is
not liable where he acts and advises his child in good faith with respect to his child's
marital relations in the interest of his child as he sees it, the marriage of his child not
terminating his right and liberty to interest himself in, and be extremely solicitous for, his
child's welfare and happiness, even where his conduct and advice suggest or result in the
separation of the spouses or the obtaining of a divorce or annulment, or where he acts
under mistake or misinformation, or where his advice or interference are indiscreet or
unfortunate, although it has been held that the parent is liable for consequences resulting
from recklessness. He may in good faith take his child into his home and afford him or
her protection and support, so long as he has not maliciously enticed his child away, or
does not maliciously entice or cause him or her to stay away, from his or her spouse. This
 rule has more frequently been applied in the case of advice given to a married daughter,
but it is equally applicable in the case of advice given to a son.

Plaintiff Tenchavez, in falsely charging Vicenta's aged parents with racial or social
discrimination and with having exerted efforts and pressured her to seek annulment and divorce,
unquestionably caused them unrest and anxiety, entitling them to recover damages. While this
suit may not have been impelled by actual malice, the charges were certainly reckless in the face
of the proven facts and circumstances. Court actions are not established for parties to give vent to
their prejudices or spleen.

In the assessment of the moral damages recoverable by appellant Pastor Tenchavez from
defendant Vicente Escao, it is proper to take into account, against his patently unreasonable
claim for a million pesos in damages, that (a) the marriage was celebrated in secret, and its
failure was not characterized by publicity or undue humiliation on appellant's part; (b) that the
parties never lived together; and (c) that there is evidence that appellant had originally agreed to
the annulment of the marriage, although such a promise was legally invalid, being against public
policy (cf. Art. 88, Civ. Code). While appellant is unable to remarry under our law, this fact is a
consequence of the indissoluble character of the union that appellant entered into voluntarily and
with open eyes rather than of her divorce and her second marriage. All told, we are of the
opinion that appellant should recover P25,000 only by way of moral damages and attorney's fees.

With regard to the P45,000 damages awarded to the defendants, Dr. Mamerto Escao and Mena
Escao, by the court below, we opine that the same are excessive. While the filing of this
unfounded suit must have wounded said defendants' feelings and caused them anxiety, the same
could in no way have seriously injured their reputation, or otherwise prejudiced them, lawsuits
having become a common occurrence in present society. What is important, and has been
correctly established in the decision of the court below, is that said defendants were not guilty of
any improper conduct in the whole deplorable affair. This Court, therefore, reduces the damages
awarded to P5,000 only.

Summing up, the Court rules:

(1) That a foreign divorce between Filipino citizens, sought and decreed after the effectivity of
the present Civil Code (Rep. Act 386), is not entitled to recognition as valid in this jurisdiction;
and neither is the marriage contracted with another party by the divorced consort, subsequently
to the foreign decree of divorce, entitled to validity in the country;

(2) That the remarriage of divorced wife and her co-habitation with a person other than the
lawful husband entitle the latter to a decree of legal separation conformably to Philippine law;

(3) That the desertion and securing of an invalid divorce decree by one consort entitles the other
to recover damages;

(4) That an action for alienation of affections against the parents of one consort does not lie in
the absence of proof of malice or unworthy motives on their part.
WHEREFORE, the decision under appeal is hereby modified as follows;

(1) Adjudging plaintiff-appellant Pastor Tenchavez entitled to a decree of legal separation from
defendant Vicenta F. Escao;

(2) Sentencing defendant-appellee Vicenta Escao to pay plaintiff-appellant Tenchavez the

amount of P25,000 for damages and attorneys' fees;

(3) Sentencing appellant Pastor Tenchavez to pay the appellee, Mamerto Escao and the estate of
his wife, the deceased Mena Escao, P5,000 by way of damages and attorneys' fees.

Neither party to recover costs.

G.R. No. 196049 June 26, 2013

MINORU FUJIKI, PETITIONER,

vs.
MARIA PAZ GALELA MARINAY, SHINICHI MAEKARA, LOCAL CIVIL
REGISTRAR OF QUEZON CITY, AND THE ADMINISTRATOR AND CIVIL
REGISTRAR GENERAL OF THE NATIONAL STATISTICS OFFICE, RESPONDENTS.

DECISION

CARPIO, J.:

The Case

This is a direct recourse to this Court from the Regional Trial Court (RTC), Branch 107, Quezon
City, through a petition for review on certiorari under Rule 45 of the Rules of Court on a pure
question of law. The petition assails the Order1 dated 31 January 2011 of the RTC in Civil Case
No. Q-11-68582 and its Resolution dated 2 March 2011 denying petitioners Motion for
Reconsideration. The RTC dismissed the petition for "Judicial Recognition of Foreign Judgment
(or Decree of Absolute Nullity of Marriage)" based on improper venue and the lack of
personality of petitioner, Minoru Fujiki, to file the petition.

The Facts

Petitioner Minoru Fujiki (Fujiki) is a Japanese national who married respondent Maria Paz
Galela Marinay (Marinay) in the Philippines2 on 23 January 2004. The marriage did not sit well
with petitioners parents. Thus, Fujiki could not bring his wife to Japan where he resides.
Eventually, they lost contact with each other.

In 2008, Marinay met another Japanese, Shinichi Maekara (Maekara). Without the first marriage
being dissolved, Marinay and Maekara were married on 15 May 2008 in Quezon City,
Philippines. Maekara brought Marinay to Japan. However, Marinay allegedly suffered physical
abuse from Maekara. She left Maekara and started to contact Fujiki.3

Fujiki and Marinay met in Japan and they were able to reestablish their relationship. In 2010,
Fujiki helped Marinay obtain a judgment from a family court in Japan which declared the
marriage between Marinay and Maekara void on the ground of bigamy.4 On 14 January 2011,
Fujiki filed a petition in the RTC entitled: "Judicial Recognition of Foreign Judgment (or Decree
of Absolute Nullity of Marriage)." Fujiki prayed that (1) the Japanese Family Court judgment be
recognized; (2) that the bigamous marriage between Marinay and Maekara be declared void ab
initio under Articles 35(4) and 41 of the Family Code of the Philippines;5 and (3) for the RTC to
direct the Local Civil Registrar of Quezon City to annotate the Japanese Family Court judgment
on the Certificate of Marriage between Marinay and Maekara and to endorse such annotation to
the Office of the Administrator and Civil Registrar General in the National Statistics Office
(NSO).6

The Ruling of the Regional Trial Court

A few days after the filing of the petition, the RTC immediately issued an Order dismissing the
petition and withdrawing the case from its active civil docket.7 The RTC cited the following
provisions of the Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of
Voidable Marriages (A.M. No. 02-11-10-SC):

Sec. 2. Petition for declaration of absolute nullity of void marriages.

(a) Who may file. A petition for declaration of absolute nullity of void marriage may be filed
solely by the husband or the wife.

xxxx

Sec. 4. Venue. The petition shall be filed in the Family Court of the province or city where the
petitioner or the respondent has been residing for at least six months prior to the date of filing, or
in the case of a non-resident respondent, where he may be found in the Philippines, at the
election of the petitioner. x x x

The RTC ruled, without further explanation, that the petition was in "gross violation" of the
above provisions. The trial court based its dismissal on Section 5(4) of A.M. No. 02-11-10-SC
which provides that "[f]ailure to comply with any of the preceding requirements may be a ground
for immediate dismissal of the petition."8 Apparently, the RTC took the view that only "the
husband or the wife," in this case either Maekara or Marinay, can file the petition to declare their
marriage void, and not Fujiki.

Fujiki moved that the Order be reconsidered. He argued that A.M. No. 02-11-10-SC
contemplated ordinary civil actions for declaration of nullity and annulment of marriage. Thus,
A.M. No. 02-11-10-SC does not apply. A petition for recognition of foreign judgment is a
special proceeding, which "seeks to establish a status, a right or a particular fact,"9 and not a civil
action which is "for the enforcement or protection of a right, or the prevention or redress of a
wrong."10 In other words, the petition in the RTC sought to establish (1) the status and
concomitant rights of Fujiki and Marinay as husband and wife and (2) the fact of the rendition of
the Japanese Family Court judgment declaring the marriage between Marinay and Maekara as
void on the ground of bigamy. The petitioner contended that the Japanese judgment was
consistent with Article 35(4) of the Family Code of the Philippines11 on bigamy and was
therefore entitled to recognition by Philippine courts.12

In any case, it was also Fujikis view that A.M. No. 02-11-10-SC applied only to void marriages
under Article 36 of the Family Code on the ground of psychological incapacity.13 Thus, Section
2(a) of A.M. No. 02-11-10-SC provides that "a petition for declaration of absolute nullity of void
marriages may be filed solely by the husband or the wife." To apply Section 2(a) in bigamy
would be absurd because only the guilty parties would be permitted to sue. In the words of
Fujiki, "[i]t is not, of course, difficult to realize that the party interested in having a bigamous
marriage declared a nullity would be the husband in the prior, pre-existing marriage."14 Fujiki
had material interest and therefore the personality to nullify a bigamous marriage.

Fujiki argued that Rule 108 (Cancellation or Correction of Entries in the Civil Registry) of the
Rules of Court is applicable. Rule 108 is the "procedural implementation" of the Civil Register
Law (Act No. 3753)15 in relation to Article 413 of the Civil Code.16 The Civil Register Law
imposes a duty on the "successful petitioner for divorce or annulment of marriage to send a copy
of the final decree of the court to the local registrar of the municipality where the dissolved or
annulled marriage was solemnized."17 Section 2 of Rule 108 provides that entries in the civil
registry relating to "marriages," "judgments of annulments of marriage" and "judgments
declaring marriages void from the beginning" are subject to cancellation or correction.18 The
petition in the RTC sought (among others) to annotate the judgment of the Japanese Family
Court on the certificate of marriage between Marinay and Maekara.

Fujikis motion for reconsideration in the RTC also asserted that the trial court "gravely erred"
when, on its own, it dismissed the petition based on improper venue. Fujiki stated that the RTC
may be confusing the concept of venue with the concept of jurisdiction, because it is lack of
jurisdiction which allows a court to dismiss a case on its own. Fujiki cited Dacoycoy v.
Intermediate Appellate Court19 which held that the "trial court cannot pre-empt the defendants
prerogative to object to the improper laying of the venue by motu proprio dismissing the case."20
Moreover, petitioner alleged that the trial court should not have "immediately dismissed" the
petition under Section 5 of A.M. No. 02-11-10-SC because he substantially complied with the
provision.

On 2 March 2011, the RTC resolved to deny petitioners motion for reconsideration. In its
Resolution, the RTC stated that A.M. No. 02-11-10-SC applies because the petitioner, in effect,
prays for a decree of absolute nullity of marriage.21 The trial court reiterated its two grounds for
dismissal, i.e. lack of personality to sue and improper venue under Sections 2(a) and 4 of A.M.
No. 02-11-10-SC. The RTC considered Fujiki as a "third person"22 in the proceeding because he
"is not the husband in the decree of divorce issued by the Japanese Family Court, which he now
seeks to be judicially recognized, x x x."23 On the other hand, the RTC did not explain its ground
of impropriety of venue. It only said that "[a]lthough the Court cited Sec. 4 (Venue) x x x as a
ground for dismissal of this case[,] it should be taken together with the other ground cited by the
Court x x x which is Sec. 2(a) x x x."24

The RTC further justified its motu proprio dismissal of the petition based on Braza v. The City
Civil Registrar of Himamaylan City, Negros Occidental.25 The Court in Braza ruled that "[i]n a
special proceeding for correction of entry under Rule 108 (Cancellation or Correction of Entries
in the Original Registry), the trial court has no jurisdiction to nullify marriages x x x."26 Braza
emphasized that the "validity of marriages as well as legitimacy and filiation can be questioned
only in a direct action seasonably filed by the proper party, and not through a collateral attack
such as [a] petition [for correction of entry] x x x."27

The RTC considered the petition as a collateral attack on the validity of marriage between
Marinay and Maekara. The trial court held that this is a "jurisdictional ground" to dismiss the
petition.28 Moreover, the verification and certification against forum shopping of the petition was
not authenticated as required under Section 529 of A.M. No. 02-11-10-SC. Hence, this also
warranted the "immediate dismissal" of the petition under the same provision.

The Manifestation and Motion of the Office of the Solicitor General and the Letters of
Marinay and Maekara

On 30 May 2011, the Court required respondents to file their comment on the petition for
review.30 The public respondents, the Local Civil Registrar of Quezon City and the
Administrator and Civil Registrar General of the NSO, participated through the Office of the
Solicitor General. Instead of a comment, the Solicitor General filed a Manifestation and
Motion.31

The Solicitor General agreed with the petition. He prayed that the RTCs "pronouncement that
the petitioner failed to comply with x x x A.M. No. 02-11-10-SC x x x be set aside" and that the
case be reinstated in the trial court for further proceedings.32 The Solicitor General argued that
Fujiki, as the spouse of the first marriage, is an injured party who can sue to declare the
bigamous marriage between Marinay and Maekara void. The Solicitor General cited Juliano-
Llave v. Republic33 which held that Section 2(a) of A.M. No. 02-11-10-SC does not apply in
cases of bigamy. In Juliano-Llave, this Court explained:

[t]he subsequent spouse may only be expected to take action if he or she had only discovered
during the connubial period that the marriage was bigamous, and especially if the conjugal bliss
had already vanished. Should parties in a subsequent marriage benefit from the bigamous
marriage, it would not be expected that they would file an action to declare the marriage void and
thus, in such circumstance, the "injured spouse" who should be given a legal remedy is the one in
a subsisting previous marriage. The latter is clearly the aggrieved party as the bigamous marriage
not only threatens the financial and the property ownership aspect of the prior marriage but most
of all, it causes an emotional burden to the prior spouse. The subsequent marriage will always be
a reminder of the infidelity of the spouse and the disregard of the prior marriage which sanctity is
protected by the Constitution.34
The Solicitor General contended that the petition to recognize the Japanese Family Court
judgment may be made in a Rule 108 proceeding.35 In Corpuz v. Santo Tomas,36 this Court held
that "[t]he recognition of the foreign divorce decree may be made in a Rule 108 proceeding
itself, as the object of special proceedings (such as that in Rule 108 of the Rules of Court) is
precisely to establish the status or right of a party or a particular fact."37 While Corpuz concerned
a foreign divorce decree, in the present case the Japanese Family Court judgment also affected
the civil status of the parties, especially Marinay, who is a Filipino citizen.

The Solicitor General asserted that Rule 108 of the Rules of Court is the procedure to record
"[a]cts, events and judicial decrees concerning the civil status of persons" in the civil registry as
required by Article 407 of the Civil Code. In other words, "[t]he law requires the entry in the
civil registry of judicial decrees that produce legal consequences upon a persons legal capacity
and status x x x."38 The Japanese Family Court judgment directly bears on the civil status of a
Filipino citizen and should therefore be proven as a fact in a Rule 108 proceeding.

Moreover, the Solicitor General argued that there is no jurisdictional infirmity in assailing a void
marriage under Rule 108, citing De Castro v. De Castro39 and Nial v. Bayadog40 which
declared that "[t]he validity of a void marriage may be collaterally attacked."41

Marinay and Maekara individually sent letters to the Court to comply with the directive for them
to comment on the petition.42 Maekara wrote that Marinay concealed from him the fact that she
was previously married to Fujiki.43 Maekara also denied that he inflicted any form of violence on
Marinay.44 On the other hand, Marinay wrote that she had no reason to oppose the petition.45 She
would like to maintain her silence for fear that anything she say might cause misunderstanding
between her and Fujiki.46

The Issues

Petitioner raises the following legal issues:

(1) Whether the Rule on Declaration of Absolute Nullity of Void Marriages and
Annulment of Voidable Marriages (A.M. No. 02-11-10-SC) is applicable.

(2) Whether a husband or wife of a prior marriage can file a petition to recognize a
foreign judgment nullifying the subsequent marriage between his or her spouse and a
foreign citizen on the ground of bigamy.

(3) Whether the Regional Trial Court can recognize the foreign judgment in a proceeding
for cancellation or correction of entries in the Civil Registry under Rule 108 of the Rules
of Court.

The Ruling of the Court

We grant the petition.

The Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable
Marriages (A.M. No. 02-11-10-SC) does not apply in a petition to recognize a foreign judgment
relating to the status of a marriage where one of the parties is a citizen of a foreign country.
Moreover, in Juliano-Llave v. Republic,47 this Court held that the rule in A.M. No. 02-11-10-SC
that only the husband or wife can file a declaration of nullity or annulment of marriage "does not
apply if the reason behind the petition is bigamy."48

I.

For Philippine courts to recognize a foreign judgment relating to the status of a marriage where
one of the parties is a citizen of a foreign country, the petitioner only needs to prove the foreign
judgment as a fact under the Rules of Court. To be more specific, a copy of the foreign judgment
may be admitted in evidence and proven as a fact under Rule 132, Sections 24 and 25, in relation
to Rule 39, Section 48(b) of the Rules of Court.49 Petitioner may prove the Japanese Family
Court judgment through (1) an official publication or (2) a certification or copy attested by the
officer who has custody of the judgment. If the office which has custody is in a foreign country
such as Japan, the certification may be made by the proper diplomatic or consular officer of the
Philippine foreign service in Japan and authenticated by the seal of office.50

To hold that A.M. No. 02-11-10-SC applies to a petition for recognition of foreign judgment
would mean that the trial court and the parties should follow its provisions, including the form
and contents of the petition,51 the service of summons,52 the investigation of the public
prosecutor,53 the setting of pre-trial,54 the trial55 and the judgment of the trial court.56 This is
absurd because it will litigate the case anew. It will defeat the purpose of recognizing foreign
judgments, which is "to limit repetitive litigation on claims and issues."57 The interpretation of
the RTC is tantamount to relitigating the case on the merits. In Mijares v. Raada,58 this Court
explained that "[i]f every judgment of a foreign court were reviewable on the merits, the plaintiff
would be forced back on his/her original cause of action, rendering immaterial the previously
concluded litigation."59

A foreign judgment relating to the status of a marriage affects the civil status, condition and legal
capacity of its parties. However, the effect of a foreign judgment is not automatic. To extend the
effect of a foreign judgment in the Philippines, Philippine courts must determine if the foreign
judgment is consistent with domestic public policy and other mandatory laws.60 Article 15 of the
Civil Code provides that "[l]aws relating to family rights and duties, or to the status, condition
and legal capacity of persons are binding upon citizens of the Philippines, even though living
abroad." This is the rule of lex nationalii in private international law. Thus, the Philippine State
may require, for effectivity in the Philippines, recognition by Philippine courts of a foreign
judgment affecting its citizen, over whom it exercises personal jurisdiction relating to the status,
condition and legal capacity of such citizen.

A petition to recognize a foreign judgment declaring a marriage void does not require relitigation
under a Philippine court of the case as if it were a new petition for declaration of nullity of
marriage. Philippine courts cannot presume to know the foreign laws under which the foreign
judgment was rendered. They cannot substitute their judgment on the status, condition and legal
capacity of the foreign citizen who is under the jurisdiction of another state. Thus, Philippine
courts can only recognize the foreign judgment as a fact according to the rules of evidence.

Section 48(b), Rule 39 of the Rules of Court provides that a foreign judgment or final order
against a person creates a "presumptive evidence of a right as between the parties and their
successors in interest by a subsequent title." Moreover, Section 48 of the Rules of Court states
that "the judgment or final order may be repelled by evidence of a want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of law or fact." Thus, Philippine courts
exercise limited review on foreign judgments. Courts are not allowed to delve into the merits of a
foreign judgment. Once a foreign judgment is admitted and proven in a Philippine court, it can
only be repelled on grounds external to its merits, i.e. , "want of jurisdiction, want of notice to
the party, collusion, fraud, or clear mistake of law or fact." The rule on limited review embodies
the policy of efficiency and the protection of party expectations,61 as well as respecting the
jurisdiction of other states.62

Since 1922 in Adong v. Cheong Seng Gee,63 Philippine courts have recognized foreign divorce
decrees between a Filipino and a foreign citizen if they are successfully proven under the rules of
evidence.64 Divorce involves the dissolution of a marriage, but the recognition of a foreign
divorce decree does not involve the extended procedure under A.M. No. 02-11-10-SC or the
rules of ordinary trial. While the Philippines does not have a divorce law, Philippine courts may,
however, recognize a foreign divorce decree under the second paragraph of Article 26 of the
Family Code, to capacitate a Filipino citizen to remarry when his or her foreign spouse obtained
a divorce decree abroad.65

There is therefore no reason to disallow Fujiki to simply prove as a fact the Japanese Family
Court judgment nullifying the marriage between Marinay and Maekara on the ground of bigamy.
While the Philippines has no divorce law, the Japanese Family Court judgment is fully consistent
with Philippine public policy, as bigamous marriages are declared void from the beginning under
Article 35(4) of the Family Code. Bigamy is a crime under Article 349 of the Revised Penal
Code. Thus, Fujiki can prove the existence of the Japanese Family Court judgment in accordance
with Rule 132, Sections 24 and 25, in relation to Rule 39, Section 48(b) of the Rules of Court.

II.

Since the recognition of a foreign judgment only requires proof of fact of the judgment, it may be
made in a special proceeding for cancellation or correction of entries in the civil registry under
Rule 108 of the Rules of Court. Rule 1, Section 3 of the Rules of Court provides that "[a] special
proceeding is a remedy by which a party seeks to establish a status, a right, or a particular fact."
Rule 108 creates a remedy to rectify facts of a persons life which are recorded by the State
pursuant to the Civil Register Law or Act No. 3753. These are facts of public consequence such
as birth, death or marriage,66 which the State has an interest in recording. As noted by the
Solicitor General, in Corpuz v. Sto. Tomas this Court declared that "[t]he recognition of the
foreign divorce decree may be made in a Rule 108 proceeding itself, as the object of special
proceedings (such as that in Rule 108 of the Rules of Court) is precisely to establish the status or
right of a party or a particular fact."67
Rule 108, Section 1 of the Rules of Court states:

Sec. 1. Who may file petition. Any person interested in any act, event, order or decree
concerning the civil status of persons which has been recorded in the civil register, may file a
verified petition for the cancellation or correction of any entry relating thereto, with the Regional
Trial Court of the province where the corresponding civil registry is located. (Emphasis supplied)

Fujiki has the personality to file a petition to recognize the Japanese Family Court judgment
nullifying the marriage between Marinay and Maekara on the ground of bigamy because the
judgment concerns his civil status as married to Marinay. For the same reason he has the
personality to file a petition under Rule 108 to cancel the entry of marriage between Marinay and
Maekara in the civil registry on the basis of the decree of the Japanese Family Court.

There is no doubt that the prior spouse has a personal and material interest in maintaining the
integrity of the marriage he contracted and the property relations arising from it. There is also no
doubt that he is interested in the cancellation of an entry of a bigamous marriage in the civil
registry, which compromises the public record of his marriage. The interest derives from the
substantive right of the spouse not only to preserve (or dissolve, in limited instances68) his most
intimate human relation, but also to protect his property interests that arise by operation of law
the moment he contracts marriage.69 These property interests in marriage include the right to be
supported "in keeping with the financial capacity of the family"70 and preserving the property
regime of the marriage.71

Property rights are already substantive rights protected by the Constitution,72 but a spouses right
in a marriage extends further to relational rights recognized under Title III ("Rights and
Obligations between Husband and Wife") of the Family Code.73 A.M. No. 02-11-10-SC cannot
"diminish, increase, or modify" the substantive right of the spouse to maintain the integrity of his
marriage.74 In any case, Section 2(a) of A.M. No. 02-11-10-SC preserves this substantive right
by limiting the personality to sue to the husband or the wife of the union recognized by law.

Section 2(a) of A.M. No. 02-11-10-SC does not preclude a spouse of a subsisting marriage to
question the validity of a subsequent marriage on the ground of bigamy. On the contrary, when
Section 2(a) states that "[a] petition for declaration of absolute nullity of void marriage may be
filed solely by the husband or the wife"75it refers to the husband or the wife of the subsisting
marriage. Under Article 35(4) of the Family Code, bigamous marriages are void from the
beginning. Thus, the parties in a bigamous marriage are neither the husband nor the wife under
the law. The husband or the wife of the prior subsisting marriage is the one who has the
personality to file a petition for declaration of absolute nullity of void marriage under Section
2(a) of A.M. No. 02-11-10-SC.

Article 35(4) of the Family Code, which declares bigamous marriages void from the beginning,
is the civil aspect of Article 349 of the Revised Penal Code,76 which penalizes bigamy. Bigamy
is a public crime. Thus, anyone can initiate prosecution for bigamy because any citizen has an
interest in the prosecution and prevention of crimes.77 If anyone can file a criminal action which
leads to the declaration of nullity of a bigamous marriage,78 there is more reason to confer
personality to sue on the husband or the wife of a subsisting marriage. The prior spouse does not
only share in the public interest of prosecuting and preventing crimes, he is also personally
interested in the purely civil aspect of protecting his marriage.

When the right of the spouse to protect his marriage is violated, the spouse is clearly an injured
party and is therefore interested in the judgment of the suit.79 Juliano-Llave ruled that the prior
spouse "is clearly the aggrieved party as the bigamous marriage not only threatens the financial
and the property ownership aspect of the prior marriage but most of all, it causes an emotional
burden to the prior spouse."80 Being a real party in interest, the prior spouse is entitled to sue in
order to declare a bigamous marriage void. For this purpose, he can petition a court to recognize
a foreign judgment nullifying the bigamous marriage and judicially declare as a fact that such
judgment is effective in the Philippines. Once established, there should be no more impediment
to cancel the entry of the bigamous marriage in the civil registry.

III.

In Braza v. The City Civil Registrar of Himamaylan City, Negros Occidental, this Court held that
a "trial court has no jurisdiction to nullify marriages" in a special proceeding for cancellation or
correction of entry under Rule 108 of the Rules of Court.81 Thus, the "validity of marriage[] x x x
can be questioned only in a direct action" to nullify the marriage.82 The RTC relied on Braza in
dismissing the petition for recognition of foreign judgment as a collateral attack on the marriage
between Marinay and Maekara.

Braza is not applicable because Braza does not involve a recognition of a foreign judgment
nullifying a bigamous marriage where one of the parties is a citizen of the foreign country.

To be sure, a petition for correction or cancellation of an entry in the civil registry cannot
substitute for an action to invalidate a marriage. A direct action is necessary to prevent
circumvention of the substantive and procedural safeguards of marriage under the Family Code,
A.M. No. 02-11-10-SC and other related laws. Among these safeguards are the requirement of
proving the limited grounds for the dissolution of marriage,83 support pendente lite of the
spouses and children,84 the liquidation, partition and distribution of the properties of the
spouses,85 and the investigation of the public prosecutor to determine collusion.86 A direct action
for declaration of nullity or annulment of marriage is also necessary to prevent circumvention of
the jurisdiction of the Family Courts under the Family Courts Act of 1997 (Republic Act No.
8369), as a petition for cancellation or correction of entries in the civil registry may be filed in
the Regional Trial Court "where the corresponding civil registry is located."87 In other words, a
Filipino citizen cannot dissolve his marriage by the mere expedient of changing his entry of
marriage in the civil registry.

However, this does not apply in a petition for correction or cancellation of a civil registry entry
based on the recognition of a foreign judgment annulling a marriage where one of the parties is a
citizen of the foreign country. There is neither circumvention of the substantive and procedural
safeguards of marriage under Philippine law, nor of the jurisdiction of Family Courts under R.A.
No. 8369. A recognition of a foreign judgment is not an action to nullify a marriage. It is an
action for Philippine courts to recognize the effectivity of a foreign judgment, which
presupposes a case which was already tried and decided under foreign law. The procedure
in A.M. No. 02-11-10-SC does not apply in a petition to recognize a foreign judgment annulling
a bigamous marriage where one of the parties is a citizen of the foreign country. Neither can
R.A. No. 8369 define the jurisdiction of the foreign court.

Article 26 of the Family Code confers jurisdiction on Philippine courts to extend the effect of a
foreign divorce decree to a Filipino spouse without undergoing trial to determine the validity of
the dissolution of the marriage. The second paragraph of Article 26 of the Family Code provides
that "[w]here a marriage between a Filipino citizen and a foreigner is validly celebrated and a
divorce is thereafter validly obtained abroad by the alien spouse capacitating him or her to
remarry, the Filipino spouse shall have capacity to remarry under Philippine law." In Republic v.
Orbecido,88 this Court recognized the legislative intent of the second paragraph of Article 26
which is "to avoid the absurd situation where the Filipino spouse remains married to the alien
spouse who, after obtaining a divorce, is no longer married to the Filipino spouse"89 under the
laws of his or her country. The second paragraph of Article 26 of the Family Code only
authorizes Philippine courts to adopt the effects of a foreign divorce decree precisely because the
Philippines does not allow divorce. Philippine courts cannot try the case on the merits because it
is tantamount to trying a case for divorce.

The second paragraph of Article 26 is only a corrective measure to address the anomaly that
results from a marriage between a Filipino, whose laws do not allow divorce, and a foreign
citizen, whose laws allow divorce. The anomaly consists in the Filipino spouse being tied to the
marriage while the foreign spouse is free to marry under the laws of his or her country. The
correction is made by extending in the Philippines the effect of the foreign divorce decree, which
is already effective in the country where it was rendered. The second paragraph of Article 26 of
the Family Code is based on this Courts decision in Van Dorn v. Romillo90 which declared that
the Filipino spouse "should not be discriminated against in her own country if the ends of justice
are to be served."91

The principle in Article 26 of the Family Code applies in a marriage between a Filipino and a
foreign citizen who obtains a foreign judgment nullifying the marriage on the ground of bigamy.
The Filipino spouse may file a petition abroad to declare the marriage void on the ground of
bigamy. The principle in the second paragraph of Article 26 of the Family Code applies because
the foreign spouse, after the foreign judgment nullifying the marriage, is capacitated to remarry
under the laws of his or her country. If the foreign judgment is not recognized in the Philippines,
the Filipino spouse will be discriminatedthe foreign spouse can remarry while the Filipino
spouse cannot remarry.

Under the second paragraph of Article 26 of the Family Code, Philippine courts are empowered
to correct a situation where the Filipino spouse is still tied to the marriage while the foreign
spouse is free to marry. Moreover, notwithstanding Article 26 of the Family Code, Philippine
courts already have jurisdiction to extend the effect of a foreign judgment in the Philippines to
the extent that the foreign judgment does not contravene domestic public policy. A critical
difference between the case of a foreign divorce decree and a foreign judgment nullifying a
bigamous marriage is that bigamy, as a ground for the nullity of marriage, is fully consistent with
Philippine public policy as expressed in Article 35(4) of the Family Code and Article 349 of the
Revised Penal Code. The Filipino spouse has the option to undergo full trial by filing a petition
for declaration of nullity of marriage under A.M. No. 02-11-10-SC, but this is not the only
remedy available to him or her. Philippine courts have jurisdiction to recognize a foreign
judgment nullifying a bigamous marriage, without prejudice to a criminal prosecution for
bigamy.

In the recognition of foreign judgments, Philippine courts are incompetent to substitute their
judgment on how a case was decided under foreign law. They cannot decide on the "family
rights and duties, or on the status, condition and legal capacity" of the foreign citizen who is a
party to the foreign judgment. Thus, Philippine courts are limited to the question of whether to
extend the effect of a foreign judgment in the Philippines. In a foreign judgment relating to the
status of a marriage involving a citizen of a foreign country, Philippine courts only decide
whether to extend its effect to the Filipino party, under the rule of lex nationalii expressed in
Article 15 of the Civil Code.

For this purpose, Philippine courts will only determine (1) whether the foreign judgment is
inconsistent with an overriding public policy in the Philippines; and (2) whether any alleging
party is able to prove an extrinsic ground to repel the foreign judgment, i.e. want of jurisdiction,
want of notice to the party, collusion, fraud, or clear mistake of law or fact. If there is neither
inconsistency with public policy nor adequate proof to repel the judgment, Philippine courts
should, by default, recognize the foreign judgment as part of the comity of nations. Section
48(b), Rule 39 of the Rules of Court states that the foreign judgment is already "presumptive
evidence of a right between the parties." Upon recognition of the foreign judgment, this right
becomes conclusive and the judgment serves as the basis for the correction or cancellation of
entry in the civil registry. The recognition of the foreign judgment nullifying a bigamous
marriage is a subsequent event that establishes a new status, right and fact92 that needs to be
reflected in the civil registry. Otherwise, there will be an inconsistency between the recognition
of the effectivity of the foreign judgment and the public records in the Philippines.1wphi1

However, the recognition of a foreign judgment nullifying a bigamous marriage is without

prejudice to prosecution for bigamy under Article 349 of the Revised Penal Code.93 The
recognition of a foreign judgment nullifying a bigamous marriage is not a ground for extinction
of criminal liability under Articles 89 and 94 of the Revised Penal Code. Moreover, under
Article 91 of the Revised Penal Code, "[t]he term of prescription [of the crime of bigamy] shall
not run when the offender is absent from the Philippine archipelago."

Since A.M. No. 02-11-10-SC is inapplicable, the Court no longer sees the need to address the
questions on venue and the contents and form of the petition under Sections 4 and 5,
respectively, of A.M. No. 02-11-10-SC.

WHEREFORE, we GRANT the petition. The Order dated 31 January 2011 and the Resolution
dated 2 March 2011 of the Regional Trial Court, Branch 107, Quezon City, in Civil Case No. Q-
11-68582 are REVERSED and SET ASIDE. The Regional Trial Court is ORDERED to
REINSTATE the petition for further proceedings in accordance with this Decision.

SO ORDERED.

G.R. No. 169766 March 30, 2011

ESTRELLITA JULIANO-LLAVE, Petitioner,

vs.
REPUBLIC OF THE PHILIPPINES, HAJA PUTRI ZORAYDA A. TAMANO and ADIB
AHMAD A. TAMANO, Respondents.

DECISION

DEL CASTILLO, J.:

A new law ought to affect the future, not what is past. Hence, in the case of subsequent marriage
laws, no vested rights shall be impaired that pertain to the protection of the legitimate union of a
married couple.

This petition for review on certiorari assails the Decision1 dated August 17, 2004 of the Court of
Appeals (CA) in CA-G.R. CV No. 61762 and its subsequent Resolution2 dated September 13,
2005, which affirmed the Decision of the Regional Trial Court (RTC) of Quezon City, Branch 89
declaring petitioner Estrellita Juliano-Llaves (Estrellita) marriage to Sen. Mamintal A.J.
Tamano (Sen. Tamano) as void ab initio.

Factual Antecedents

Around 11 months before his death, Sen. Tamano married Estrellita twice initially under the
Islamic laws and tradition on May 27, 1993 in Cotabato City3 and, subsequently, under a civil
ceremony officiated by an RTC Judge at Malabang, Lanao del Sur on June 2, 1993.4 In their
marriage contracts, Sen. Tamanos civil status was indicated as divorced.

Since then, Estrellita has been representing herself to the whole world as Sen. Tamanos wife,
and upon his death, his widow.

On November 23, 1994, private respondents Haja Putri Zorayda A. Tamano (Zorayda) and her
son Adib Ahmad A. Tamano (Adib), in their own behalf and in behalf of the rest of Sen.
Tamanos legitimate children with Zorayda,5 filed a complaint with the RTC of Quezon City for
the declaration of nullity of marriage between Estrellita and Sen. Tamano for being bigamous.
The complaint6 alleged, inter alia, that Sen. Tamano married Zorayda on May 31, 1958 under
civil rites, and that this marriage remained subsisting when he married Estrellita in 1993. The
complaint likewise averred that:
 11. The marriage of the deceased and Complainant Zorayda, having been celebrated
under the New Civil Code, is therefore governed by this law. Based on Article 35 (4) of
the Family Code, the subsequent marriage entered into by deceased Mamintal with
Defendant Llave is void ab initio because he contracted the same while his prior marriage
to Complainant Zorayda was still subsisting, and his status being declared as "divorced"
has no factual or legal basis, because the deceased never divorced Complainant Zorayda
in his lifetime, and he could not have validly done so because divorce is not allowed
under the New Civil Code;

11.1 Moreover, the deceased did not and could not have divorced Complainant Zorayda
by invoking the provision of P.D. 1083, otherwise known as the Code of Muslim
Personal Laws, for the simple reason that the marriage of the deceased with Complainant
Zorayda was never deemed, legally and factually, to have been one contracted under
Muslim law as provided under Art. 186 (2) of P.D. 1083, since they (deceased and
Complainant Zorayda) did not register their mutual desire to be thus covered by this law;7

Summons was then served on Estrellita on December 19, 1994. She then asked from the court for
an extension of 30 days to file her answer to be counted from January 4, 1995,8 and again,
another 15 days9 or until February 18, 1995, both of which the court granted.10

Instead of submitting her answer, however, Estrellita filed a Motion to Dismiss11 on February 20,
1995 where she declared that Sen. Tamano and Zorayda are both Muslims who were married
under the Muslim rites, as had been averred in the latters disbarment complaint against Sen.
Tamano.12 Estrellita argued that the RTC has no jurisdiction to take cognizance of the case
because under Presidential Decree (PD) No. 1083, or the Code of Muslim Personal Laws of the
Philippines (Muslim Code), questions and issues involving Muslim marriages and divorce fall
under the exclusive jurisdiction of sharia courts.

The trial court denied Estrellitas motion and asserted its jurisdiction over the case for
declaration of nullity.13 Thus, Estrellita filed in November 1995 a certiorari petition with this
Court questioning the denial of her Motion to Dismiss. On December 15, 1995, we referred the
petition to the CA14 which was docketed thereat as CA-G.R. SP No. 39656.

During the pendency of CA-G.R. SP No. 39656, the RTC continued to try the case since there
can be no default in cases of declaration of nullity of marriage even if the respondent failed to
file an answer. Estrellita was allowed to participate in the trial while her opposing parties
presented their evidence. When it was Estrellitas turn to adduce evidence, the hearings set for
such purpose15 were postponed mostly at her instance until the trial court, on March 22, 1996,
suspended the proceedings16 in view of the CAs temporary restraining order issued on February
29, 1996, enjoining it from hearing the case.17

Eventually, however, the CA resolved the petition adverse to Estrellita in its Decision dated
September 30, 1996.18 Estrellita then elevated the appellate courts judgment to this Court by
way of a petition for review on certiorari docketed as G.R. No. 126603.19
Subsequent to the promulgation of the CA Decision, the RTC ordered Estrellita to present her
evidence on June 26, 1997.20 As Estrellita was indisposed on that day, the hearing was reset to
July 9, 1997.21 The day before this scheduled hearing, Estrellita again asked for a
postponement.22

Unhappy with the delays in the resolution of their case, Zorayda and Adib moved to submit the
case for decision,23 reasoning that Estrellita had long been delaying the case. Estrellita opposed,
on the ground that she has not yet filed her answer as she still awaits the outcome of G.R. No.
126603.24

On June 29, 1998, we upheld the jurisdiction of the RTC of Quezon City,25 stating as one of the
reasons that as sharia courts are not vested with original and exclusive jurisdiction in cases of
marriages celebrated under both the Civil Code and PD 1083, the RTC, as a court of general
jurisdiction, is not precluded from assuming jurisdiction over such cases. In our Resolution dated
August 24, 1998,26 we denied Estrellitas motion for reconsideration27 with finality.

A few days before this resolution, or on August 18, 1998, the RTC rendered the aforementioned
judgment declaring Estrellitas marriage with Sen. Tamano as void ab initio.28

Ruling of the Regional Trial Court

The RTC, finding that the marital ties of Sen. Tamano and Zorayda were never severed, declared
Sen. Tamanos subsequent marriage to Estrellita as void ab initio for being bigamous under
Article 35 of the Family Code of the Philippines and under Article 83 of the Civil Code of the
Philippines.29 The court said:

A comparison between Exhibits A and B (supra) immediately shows that the second marriage of
the late Senator with [Estrellita] was entered into during the subsistence of his first marriage with
[Zorayda]. This renders the subsequent marriage void from the very beginning. The fact that the
late Senator declared his civil status as "divorced" will not in any way affect the void character of
the second marriage because, in this jurisdiction, divorce obtained by the Filipino spouse is not
an acceptable method of terminating the effects of a previous marriage, especially, where the
subsequent marriage was solemnized under the Civil Code or Family Code.30

Ruling of the Court of Appeals

In her appeal,31 Estrellita argued that she was denied her right to be heard as

the RTC rendered its judgment even without waiting for the finality of the Decision of the
Supreme Court in G.R. No. 126603. She claimed that the RTC should have required her to file
her answer after the denial of her motion to dismiss. She maintained that Sen. Tamano is
capacitated to marry her as his marriage and subsequent divorce with Zorayda is governed by the
Muslim Code. Lastly, she highlighted Zoraydas lack of legal standing to question the validity of
her marriage to the deceased.
In dismissing the appeal in its Decision dated August 17, 2004,32 the CA held that Estrellita can
no longer be allowed to file her answer as she was given ample opportunity to be heard but
simply ignored it by asking for numerous postponements. She never filed her answer despite the
lapse of around 60 days, a period longer than what was prescribed by the rules. It also ruled that
Estrellita cannot rely on her pending petition for certiorari with the higher courts since, as an
independent and original action, it does not interrupt the proceedings in the trial court.

As to the substantive merit of the case, the CA adjudged that Estrellitas marriage to Sen.
Tamano is void ab initio for being bigamous, reasoning that the marriage of Zorayda and Sen.
Tamano is governed by the Civil Code, which does not provide for an absolute divorce. It noted
that their first nuptial celebration was under civil rites, while the subsequent Muslim celebration
was only ceremonial. Zorayda then, according to the CA, had the legal standing to file the action
as she is Sen. Tamanos wife and, hence, the injured party in the senators subsequent bigamous
marriage with Estrellita.

In its September 13, 2005 Resolution,33 the CA denied Estrellitas Motion for
Reconsideration/Supplemental Motion for Reconsideration where it debunked the additional
errors she raised. The CA noted that the allegation of lack of the public prosecutors report on the
existence of collusion in violation of both Rule 9, Section 3(e) of the Rules of Court34 and Article
48 of the Family Code35 will not invalidate the trial courts judgment as the proceedings between
the parties had been adversarial, negating the existence of collusion. Assuming that the issues
have not been joined before the RTC, the same is attributable to Estrellitas refusal to file an
answer. Lastly, the CA disregarded Estrellitas allegation that the trial court erroneously rendered
its judgment way prior to our remand to the RTC of the records of the case ratiocinating that
G.R. No. 126603 pertains to the issue on the denial of the Motion to Dismiss, and not to the issue
of the validity of Estrellitas marriage to Sen. Tamano.

The Parties Respective Arguments

Reiterating her arguments before the court a quo, Estrellita now argues that the CA erred in
upholding the RTC judgment as the latter was prematurely issued, depriving her of the
opportunity to file an answer and to present her evidence to dispute the allegations against the
validity of her marriage. She claims that Judge Macias v. Macias36 laid down the rule that the
filing of a motion to dismiss instead of an answer suspends the period to file an answer and,
consequently, the trial court is obliged to suspend proceedings while her motion to dismiss on the
ground of lack of jurisdiction has not yet been resolved with finality. She maintains that she
merely participated in the RTC hearings because of the trial courts assurance that the
proceedings will be without prejudice to whatever action the High Court will take on her petition
questioning the RTCs jurisdiction and yet, the RTC violated this commitment as it rendered an
adverse judgment on August 18, 1998, months before the records of G.R. No. 126603 were
remanded to the CA on November 11, 1998.37 She also questions the lack of a report of the
public prosecutor anent a finding of whether there was collusion, this being a prerequisite before
further proceeding could be held when a party has failed to file an answer in a suit for declaration
of nullity of marriage.
Estrellita is also steadfast in her belief that her marriage with the late senator is valid as the latter
was already divorced under the Muslim Code at the time he married her. She asserts that such
law automatically applies to the marriage of Zorayda and the deceased without need of
registering their consent to be covered by it, as both parties are Muslims whose marriage was
solemnized under Muslim law. She pointed out that Sen. Tamano married all his wives under
Muslim rites, as attested to by the affidavits of the siblings of the deceased.38

Lastly, Estrellita argues that Zorayda and Adib have no legal standing to file suit because only
the husband or the wife can file a complaint for the declaration of nullity of marriage under
Supreme Court Resolution A.M. No. 02-11-10-SC.39

Refuting the arguments, the Solicitor General (Sol Gen) defends the CAs reasoning and stresses
that Estrellita was never deprived of her right to be heard; and, that filing an original action for
certiorari does not stay the proceedings of the main action before the RTC.

As regards the alleged lack of report of the public prosecutor if there is collusion, the Sol Gen
says that this is no longer essential considering the vigorous opposition of Estrellita in the suit
that obviously shows the lack of collusion. The Sol Gen also supports private respondents legal
standing to challenge the validity of Estrellitas purported marriage with Sen. Tamano, reasoning
that any proper interested party may attack directly or collaterally a void marriage, and Zorayda
and Adib have such right to file the action as they are the ones prejudiced by the marital union.

Zorayda and Adib, on the other hand, did not file any comment.

Issues

The issues that must be resolved are the following:

1. Whether the CA erred in affirming the trial courts judgment, even though the latter
was rendered prematurely because: a) the judgment was rendered without waiting for the
Supreme Courts final resolution of her certiorari petition, i.e., G.R. No. 126603; b) she
has not yet filed her answer and thus was denied due process; and c) the public prosecutor
did not even conduct an investigation whether there was collusion;

2. Whether the marriage between Estrellita and the late Sen. Tamano was bigamous; and

3. Whether Zorayda and Adib have the legal standing to have Estrellitas marriage
declared void ab initio.

Our Ruling

Estrellitas refusal to file an answer eventually led to the loss of her right to answer; and her
pending petition for certiorari/review on certiorari questioning the denial of the motion to
dismiss before the higher courts does not at all suspend the trial proceedings of the principal suit
before the RTC of Quezon City.
Firstly, it can never be argued that Estrellita was deprived of her right to due process. She was
never declared in default, and she even actively participated in the trial to defend her interest.

Estrellita invokes Judge Macias v. Macias40 to justify the suspension of the period to file an
answer and of the proceedings in the trial court until her petition for certiorari questioning the
validity of the denial of her Motion to Dismiss has been decided by this Court. In said case, we
affirmed the following reasoning of the CA which, apparently, is Estrellitas basis for her
argument, to wit:

However, she opted to file, on April 10, 2001, a Motion to Dismiss, instead of filing an Answer
to the complaint. The filing of said motion suspended the period for her to file her Answer to the
complaint. Until said motion is resolved by the Respondent Court with finality, it behooved the
Respondent Court to suspend the hearings of the case on the merits. The Respondent Court, on
April 19, 2001, issued its Order denying the Motion to Dismiss of the Petitioner. Under Section
6, Rule 16 of the 1997 Rules of Civil Procedure [now Section 4], the Petitioner had the balance
of the period provided for in Rule 11 of the said Rules but in no case less than five (5) days
computed from service on her of the aforesaid Order of the Respondent Court within which to
file her Answer to the complaint: x x x41 (Emphasis supplied.)

Estrellita obviously misappreciated Macias. All we pronounced therein is that the trial court is
mandated to suspend trial until it finally resolves the motion to dismiss that is filed before it.
Nothing in the above excerpt states that the trial court should suspend its proceedings should the
issue of the propriety or impropriety of the motion to dismiss be raised before the appellate
courts. In Macias, the trial court failed to observe due process in the course of the proceeding of
the case because after it denied the wifes motion to dismiss, it immediately proceeded to allow
the husband to present evidence ex parte and resolved the case with undue haste even when,
under the rules of procedure, the wife still had time to file an answer. In the instant case,
Estrellita had no time left for filing an answer, as she filed the motion to dismiss beyond the
extended period earlier granted by the trial court after she filed motions for extension of time to
file an answer.

Estrellita argues that the trial court prematurely issued its judgment, as it should have waited first
for the resolution of her Motion to Dismiss before the CA and, subsequently, before this Court.
However, in upholding the RTC, the CA correctly ruled that the pendency of a petition for
certiorari does not suspend the proceedings before the trial court. "An application for certiorari is
an independent action which is not part or a continuation of the trial which resulted in the
rendition of the judgment complained of."42 Rule 65 of the Rules of Court is explicit in stating
that "[t]he petition shall not interrupt the course of the principal case unless a temporary
restraining order or a writ of preliminary injunction has been issued against the public respondent
from further proceeding in the case."43 In fact, the trial court respected the CAs temporary
restraining order and only after the CA rendered judgment did the RTC again require Estrellita to
present her evidence.

Notably, when the CA judgment was elevated to us by way of Rule 45, we never issued any
order precluding the trial court from proceeding with the principal action. With her numerous
requests for postponements, Estrellita remained obstinate in refusing to file an answer or to
present her evidence when it was her turn to do so, insisting that the trial court should wait first
for our decision in G.R. No. 126603. Her failure to file an answer and her refusal to present her
evidence were attributable only to herself and she should not be allowed to benefit from her own
dilatory tactics to the prejudice of the other party. Sans her answer, the trial court correctly
proceeded with the trial and rendered its Decision after it deemed Estrellita to have waived her
right to present her side of the story. Neither should the lower court wait for the decision in G.R.
No. 126603 to become final and executory, nor should it wait for its records to be remanded back
to it because G.R. No. 126603 involves strictly the propriety of the Motion to Dismiss and not
the issue of validity of marriage.

The Public Prosecutor issued a report as

to the non-existence of collusion.

Aside from Article 48 of the Family Code and Rule 9, Section 3(e) of the Rules of Court, the
Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable
Marriages (A.M. No. 02-11-10-SC)44 also requries the participation of the public prosecutor in
cases involving void marriages. It specifically mandates the prosecutor to submit his
investigation report to determine whether there is collusion between the parties:

Sec. 9. Investigation report of public prosecutor.(1) Within one month after receipt of the court
order mentioned in paragraph (3) of Section 8 above, the public prosecutor shall submit a report
to the court stating whether the parties are in collusion and serve copies thereof on the parties
and their respective counsels, if any.

(2) If the public prosecutor finds that collusion exists, he shall state the basis thereof in
his report. The parties shall file their respective comments on the finding of collusion
within ten days from receipt of a copy of the report. The court shall set the report for
hearing and if convinced that the parties are in collusion, it shall dismiss the petition.

(3) If the public prosecutor reports that no collusion exists, the court shall set the case for
pre-trial. It shall be the duty of the public prosecutor to appear for the State at the pre-
trial.

Records show that the trial court immediately directed the public prosecutor to submit the
required report,45 which we find to have been sufficiently complied with by Assistant City
Prosecutor Edgardo T. Paragua in his Manifestation dated March 30, 1995,46 wherein he attested
that there could be no collusion between the parties and no fabrication of evidence because
Estrellita is not the spouse of any of the private respondents.

Furthermore, the lack of collusion is evident in the case at bar. Even assuming that there is a lack
of report of collusion or a lack of participation by the public prosecutor, just as we held in
Tuason v. Court of Appeals,47 the lack of participation of a fiscal does not invalidate the
proceedings in the trial court:
The role of the prosecuting attorney or fiscal in annulment of marriage and legal separation
proceedings is to determine whether collusion exists between the parties and to take care that the
evidence is not suppressed or fabricated. Petitioner's vehement opposition to the annulment
proceedings negates the conclusion that collusion existed between the parties. There is no
allegation by the petitioner that evidence was suppressed or fabricated by any of the parties.
Under these circumstances, we are convinced that the non-intervention of a prosecuting attorney
to assure lack of collusion between the contending parties is not fatal to the validity of the
proceedings in the trial court.48

The Civil Code governs the marriage of Zorayda and the late Sen. Tamano; their marriage was
never invalidated by PD 1083. Sen. Tamanos subsequent marriage to Estrellita is void ab initio.

The marriage between the late Sen. Tamano and Zorayda was celebrated in 1958, solemnized
under civil and Muslim rites.49 The only law in force governing marriage relationships between
Muslims and non-Muslims alike was the Civil Code of 1950, under the provisions of which only
one marriage can exist at any given time.50 Under the marriage provisions of the Civil Code,
divorce is not recognized except during the effectivity of Republic Act No. 39451 which was not
availed of during its effectivity.

As far as Estrellita is concerned, Sen. Tamanos prior marriage to Zorayda has been severed by
way of divorce under PD 1083,52 the law that codified Muslim personal laws. However, PD 1083
cannot benefit Estrellita. Firstly, Article 13(1) thereof provides that the law applies to "marriage
and divorce wherein both parties are Muslims, or wherein only the male party is a Muslim and
the marriage is solemnized in accordance with Muslim law or this Code in any part of the
Philippines." But we already ruled in G.R. No. 126603 that "Article 13 of PD 1083 does not
provide for a situation where the parties were married both in civil and Muslim rites."53

Moreover, the Muslim Code took effect only on February 4, 1977, and this law cannot
retroactively override the Civil Code which already bestowed certain rights on the marriage of
Sen. Tamano and Zorayda. The former explicitly provided for the prospective application of its
provisions unless otherwise provided:

Art. 186 (1). Effect of code on past acts. Acts executed prior to the effectivity of this Code
shall be governed by the laws in force at the time of their execution, and nothing herein except as
otherwise specifically provided, shall affect their validity or legality or operate to extinguish any
right acquired or liability incurred thereby.

It has been held that:

The foregoing provisions are consistent with the principle that all laws operate prospectively,
unless the contrary appears or is clearly, plainly and unequivocably expressed or necessarily
implied; accordingly, every case of doubt will be resolved against the retroactive operation of
laws. Article 186 aforecited enunciates the general rule of the Muslim Code to have its
provisions applied prospectively, and implicitly upholds the force and effect of a pre-existing
body of law, specifically, the Civil Code in respect of civil acts that took place before the
Muslim Codes enactment.54

An instance of retroactive application of the Muslim Code is Article 186(2) which states:

A marriage contracted by a Muslim male prior to the effectivity of this Code in accordance with
non-Muslim law shall be considered as one contracted under Muslim law provided the spouses
register their mutual desire to this effect.

Even granting that there was registration of mutual consent for the marriage to be considered as
one contracted under the Muslim law, the registration of mutual consent between Zorayda and
Sen. Tamano will still be ineffective, as both are Muslims whose marriage was celebrated under
both civil and Muslim laws. Besides, as we have already settled, the Civil Code governs their
personal status since this was in effect at the time of the celebration of their marriage. In view of
Sen. Tamanos prior marriage which subsisted at the time Estrellita married him, their
subsequent marriage is correctly adjudged by the CA as void ab initio.

Zorayda and Adib, as the injured parties, have the legal personalities to file the declaration of
nullity of marriage. A.M. No. 02-11-10-SC, which limits to only the husband or the wife the
filing of a petition for nullity is prospective in application and does not shut out the prior spouse
from filing suit if the ground is a bigamous subsequent marriage.

Her marriage covered by the Family Code of the Philippines,55 Estrellita relies on A.M. No. 02-
11-10-SC which took effect on March 15, 2003 claiming that under Section 2(a)56 thereof, only
the husband or the wife, to the exclusion of others, may file a petition for declaration of absolute
nullity, therefore only she and Sen. Tamano may directly attack the validity of their own
marriage.

Estrellita claims that only the husband or the wife in a void marriage can file a petition for
declaration of nullity of marriage. However, this interpretation does not apply if the reason
behind the petition is bigamy.

In explaining why under A.M. No. 02-11-10-SC only the spouses may file the petition to the
exclusion of compulsory or intestate heirs, we said:

The Rationale of the Rules on Annulment of Voidable Marriages and Declaration of Absolute
Nullity of Void Marriages, Legal Separation and Provisional Orders explicates on Section 2(a) in
the following manner, viz:

(1) Only an aggrieved or injured spouse may file petitions for annulment of voidable marriages
and declaration of absolute nullity of void marriages. Such petitions cannot be filed by the
compulsory or intestate heirs of the spouses or by the State. [Section 2; Section 3, paragraph a]

Only an aggrieved or injured spouse may file a petition for annulment of voidable marriages or
declaration of absolute nullity of void marriages. Such petition cannot be filed by compulsory or
intestate heirs of the spouses or by the State. The Committee is of the belief that they do not have
a legal right to file the petition. Compulsory or intestate heirs have only inchoate rights prior to
the death of their predecessor, and hence can only question the validity of the marriage of the
spouses upon the death of a spouse in a proceeding for the settlement of the estate of the
deceased spouse filed in the regular courts. On the other hand, the concern of the State is to
preserve marriage and not to seek its dissolution.57

Note that the Rationale makes it clear that Section 2(a) of A.M. No. 02-11-10-SC refers to the
"aggrieved or injured spouse." If Estrellitas interpretation is employed, the prior spouse is
unjustly precluded from filing an action. Surely, this is not what the Rule contemplated.

The subsequent spouse may only be expected to take action if he or she had only discovered
during the connubial period that the marriage was bigamous, and especially if the conjugal bliss
had already vanished. Should parties in a subsequent marriage benefit from the bigamous
marriage, it would not be expected that they would file an action to declare the marriage void and
thus, in such circumstance, the "injured spouse" who should be given a legal remedy is the one in
a subsisting previous marriage. The latter is clearly the aggrieved party as the bigamous marriage
not only threatens the financial and the property ownership aspect of the prior marriage but most
of all, it causes an emotional burden to the prior spouse. The subsequent marriage will always be
a reminder of the infidelity of the spouse and the disregard of the prior marriage which sanctity is
protected by the Constitution.

Indeed, Section 2(a) of A.M. No. 02-11-10-SC precludes the son from impugning the subsequent
marriage.1wphi1 But in the case at bar, both Zorayda and Adib have legal personalities to file
an action for nullity. Albeit the Supreme Court Resolution governs marriages celebrated under
the Family Code, such is prospective in application and does not apply to cases already
commenced before March 15, 2003.58

Zorayda and Adib filed the case for declaration of nullity of Estrellitas marriage in November
1994. While the Family Code is silent with respect to the proper party who can file a petition for
declaration of nullity of marriage prior to A.M. No. 02-11-10-SC, it has been held that in a void
marriage, in which no marriage has taken place and cannot be the source of rights, any interested
party may attack the marriage directly or collaterally without prescription, which may be filed
even beyond the lifetime of the parties to the marriage.59 Since A.M. No. 02-11-10-SC does not
apply, Adib, as one of the children of the deceased who has property rights as an heir, is likewise
considered to be the real party in interest in the suit he and his mother had filed since both of
them stand to be benefited or injured by the judgment in the suit.60

Since our Philippine laws protect the marital union of a couple, they should be interpreted in a
way that would preserve their respective rights which include striking down bigamous marriages.
We thus find the CA Decision correctly rendered.

WHEREFORE, the petition is DENIED. The assailed August 17, 2004 Decision of the Court of
Appeals in CA-G.R. CV No. 61762, as well as its subsequent Resolution issued on September
13, 2005, are hereby AFFIRMED.
SO ORDERED.

[G.R. No. 143133. June 5, 2002]

BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and JARDINE DAVIES

TRANSPORT SERVICES, INC., petitioners, vs. PHILIPPINE FIRST INSURANCE CO., INC.,
respondent.

DECISION

PANGANIBAN, J.:

Proof of the delivery of goods in good order to a common carrier and of their arrival in bad order
at their destination constitutes prima facie fault or negligence on the part of the carrier. If no
adequate explanation is given as to how the loss, the destruction or the deterioration of the goods
happened, the carrier shall be held liable therefor.

Statement of the Case

Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the July 15,
1998 Decisioni[1] and the May 2, 2000 Resolutioni[2] of the Court of Appealsi[3] (CA) in CA-GR
CV No. 53571. The decretal portion of the Decision reads as follows:

WHEREFORE, in the light of the foregoing disquisition, the decision appealed from is hereby
REVERSED and SET ASIDE. Defendants-appellees are ORDERED to jointly and severally pay
plaintiffs-appellants the following:

1) FOUR Hundred Fifty One Thousand Twenty-Seven Pesos and 32/100

(P451,027.32) as actual damages, representing the value of the damaged cargo, plus
interest at the legal rate from the time of filing of the complaint on July 25, 1991,
until fully paid;

2) Attorneys fees amounting to 20% of the claim; and

3) Costs of suit.i[4]

The assailed Resolution denied petitioners Motion for Reconsideration.

The CA reversed the Decision of the Regional Trial Court (RTC) of Makati City (Branch 134),
which had disposed as follows:

WHEREFORE, in view of the foregoing, judgment is hereby rendered, dismissing the complaint,
as well as defendants counterclaim.i[5]

The Facts
The factual antecedents of the case are summarized by the Court of Appeals in this wise:

On June 13, 1990, CMC Trading A.G. shipped on board the MN Anangel Sky at Hamburg,
Germany 242 coils of various Prime Cold Rolled Steel sheets for transportation to Manila
consigned to the Philippine Steel Trading Corporation. On July 28, 1990, MN Anangel Sky
arrived at the port of Manila and, within the subsequent days, discharged the subject cargo. Four
(4) coils were found to be in bad order B.O. Tally sheet No. 154974. Finding the four (4) coils in
their damaged state to be unfit for the intended purpose, the consignee Philippine Steel Trading
Corporation declared the same as total loss.

Despite receipt of a formal demand, defendants-appellees refused to submit to the consignees

claim. Consequently, plaintiff-appellant paid the consignee five hundred six thousand eighty six
& 50/100 pesos (P506,086.50), and was subrogated to the latters rights and causes of action
against defendants-appellees. Subsequently, plaintiff-appellant instituted this complaint for
recovery of the amount paid by them, to the consignee as insured.

Impugning the propriety of the suit against them, defendants-appellees imputed that the damage
and/or loss was due to pre-shipment damage, to the inherent nature, vice or defect of the goods,
or to perils, danger and accidents of the sea, or to insufficiency of packing thereof, or to the act
or omission of the shipper of the goods or their representatives. In addition thereto, defendants-
appellees argued that their liability, if there be any, should not exceed the limitations of liability
provided for in the bill of lading and other pertinent laws. Finally, defendants-appellees averred
that, in any event, they exercised due diligence and foresight required by law to prevent any
damage/loss to said shipment.i[6]

Ruling of the Trial Court

The RTC dismissed the Complaint because respondent had failed to prove its claims with the
quantum of proof required by law.i[7]

It likewise debunked petitioners counterclaim, because respondents suit was not manifestly
frivolous or primarily intended to harass them.i[8]

Ruling of the Court of Appeals

In reversing the trial court, the CA ruled that petitioners were liable for the loss or the damage of
the goods shipped, because they had failed to overcome the presumption of negligence imposed
on common carriers.

The CA further held as inadequately proven petitioners claim that the loss or the deterioration of
the goods was due to pre-shipment damage.i[9] It likewise opined that the notation metal
envelopes rust stained and slightly dented placed on the Bill of Lading had not been the
proximate cause of the damage to the four (4) coils.i[10]
As to the extent of petitioners liability, the CA held that the package limitation under COGSA
was not applicable, because the words L/C No. 90/02447 indicated that a higher valuation of the
cargo had been declared by the shipper. The CA, however, affirmed the award of attorneys fees.

Hence, this Petition.i[11]

Issues

In their Memorandum, petitioners raise the following issues for the Courts consideration:

Whether or not plaintiff by presenting only one witness who has never seen the subject shipment
and whose testimony is purely hearsay is sufficient to pave the way for the applicability of
Article 1735 of the Civil Code;

II

Whether or not the consignee/plaintiff filed the required notice of loss within the time required
by law;

III

Whether or not a notation in the bill of lading at the time of loading is sufficient to show pre-
shipment damage and to exempt herein defendants from liability;

IV

Whether or not the PACKAGE LIMITATION of liability under Section 4 (5) of COGSA is
applicable to the case at bar.i[12]

In sum, the issues boil down to three:

1. Whether petitioners have overcome the presumption of negligence of a common carrier

2. Whether the notice of loss was timely filed

3. Whether the package limitation of liability is applicable

This Courts Ruling

The Petition is partly meritorious.

First Issue:
Proof of Negligence
Petitioners contend that the presumption of fault imposed on common carriers should not be
applied on the basis of the lone testimony offered by private respondent. The contention is
untenable.

Well-settled is the rule that common carriers, from the nature of their business and for reasons of
public policy, are bound to observe extraordinary diligence and vigilance with respect to the
safety of the goods and the passengers they transport.i[13] Thus, common carriers are required to
render service with the greatest skill and foresight and to use all reason[a]ble means to ascertain
the nature and characteristics of the goods tendered for shipment, and to exercise due care in the
handling and stowage, including such methods as their nature requires.i[14] The extraordinary
responsibility lasts from the time the goods are unconditionally placed in the possession of and
received for transportation by the carrier until they are delivered, actually or constructively, to
the consignee or to the person who has a right to receive them.i[15]

This strict requirement is justified by the fact that, without a hand or a voice in the preparation of
such contract, the riding public enters into a contract of transportation with common carriers.i[16]
Even if it wants to, it cannot submit its own stipulations for their approval.i[17] Hence, it merely
adheres to the agreement prepared by them.

Owing to this high degree of diligence required of them, common carriers, as a general rule, are
presumed to have been at fault or negligent if the goods they transported deteriorated or got lost
or destroyed.i[18] That is, unless they prove that they exercised extraordinary diligence in
transporting the goods.i[19] In order to avoid responsibility for any loss or damage, therefore,
they have the burden of proving that they observed such diligence.i[20]

However, the presumption of fault or negligence will not arisei[21] if the loss is due to any of the
following causes: (1) flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) an act of the public enemy in war, whether international or civil; (3) an act or omission of the
shipper or owner of the goods; (4) the character of the goods or defects in the packing or the
container; or (5) an order or act of competent public authority.i[22] This is a closed list. If the
cause of destruction, loss or deterioration is other than the enumerated circumstances, then the
carrier is liable therefor.i[23]

Corollary to the foregoing, mere proof of delivery of the goods in good order to a common
carrier and of their arrival in bad order at their destination constitutes a prima facie case of fault
or negligence against the carrier. If no adequate explanation is given as to how the deterioration,
the loss or the destruction of the goods happened, the transporter shall be held responsible.i[24]

That petitioners failed to rebut the prima facie presumption of negligence is revealed in the case
at bar by a review of the records and more so by the evidence adduced by respondent.i[25]

First, as stated in the Bill of Lading, petitioners received the subject shipment in good order and
condition in Hamburg, Germany.i[26]
Second, prior to the unloading of the cargo, an Inspection Reporti[27] prepared and signed by
representatives of both parties showed the steel bands broken, the metal envelopes rust-stained
and heavily buckled, and the contents thereof exposed and rusty.

Third, Bad Order Tally Sheet No. 154979i[28] issued by Jardine Davies Transport Services, Inc.,
stated that the four coils were in bad order and condition. Normally, a request for a bad order
survey is made in case there is an apparent or a presumed loss or damage.i[29]

Fourth, the Certificate of Analysisi[30] stated that, based on the sample submitted and tested, the
steel sheets found in bad order were wet with fresh water.

Fifth, petitioners -- in a letteri[31] addressed to the Philippine Steel Coating Corporation and
dated October 12, 1990 -- admitted that they were aware of the condition of the four coils found
in bad order and condition.

These facts were confirmed by Ruperto Esmerio, head checker of BM Santos Checkers Agency.
Pertinent portions of his testimony are reproduce hereunder:

Q. Mr. Esmerio, you mentioned that you are a Head Checker. Will you inform the
Honorable Court with what company you are connected?

A. BM Santos Checkers Agency, sir.

Q. How is BM Santos Checkers Agency related or connected with defendant Jardine Davies
Transport Services?

A. It is the company who contracts the checkers, sir.

Q. You mentioned that you are a Head Checker, will you inform this Honorable Court your
duties and responsibilities?

A. I am the representative of BM Santos on board the vessel, sir, to supervise the discharge
of cargoes.

xxx xxx xxx

Q. On or about August 1, 1990, were you still connected or employed with BM Santos as a
Head Checker?

A. Yes, sir.

Q. And, on or about that date, do you recall having attended the discharging and inspection
of cold steel sheets in coil on board the MV/AN ANGEL SKY?

A. Yes, sir, I was there.

xxx xxx xxx

Q. Based on your inspection since you were also present at that time, will you inform this
Honorable Court the condition or the appearance of the bad order cargoes that were unloaded
from the MV/ANANGEL SKY?

ATTY. MACAMAY:

Objection, Your Honor, I think the document itself reflects the condition of the cold steel sheets
and the best evidence is the document itself, Your Honor that shows the condition of the steel
sheets.

COURT:

Let the witness answer.

A. The scrap of the cargoes is broken already and the rope is loosen and the cargoes are dent
on the sides.i[32]

All these conclusively prove the fact of shipment in good order and condition and the consequent
damage to the four coils while in the possession of petitioner,i[33] who notably failed to explain
why.i[34]

Further, petitioners failed to prove that they observed the extraordinary diligence and precaution
which the law requires a common carrier to know and to follow, to avoid damage to or
destruction of the goods entrusted to it for safe carriage and delivery.i[35]

True, the words metal envelopes rust stained and slightly dented were noted on the Bill of
Lading; however, there is no showing that petitioners exercised due diligence to forestall or
lessen the loss.i[36] Having been in the service for several years, the master of the vessel should
have known at the outset that metal envelopes in the said state would eventually deteriorate when
not properly stored while in transit.i[37] Equipped with the proper knowledge of the nature of
steel sheets in coils and of the proper way of transporting them, the master of the vessel and his
crew should have undertaken precautionary measures to avoid possible deterioration of the
cargo. But none of these measures was taken.i[38] Having failed to discharge the burden of
proving that they have exercised the extraordinary diligence required by law, petitioners cannot
escape liability for the damage to the four coils.i[39]

In their attempt to escape liability, petitioners further contend that they are exempted from
liability under Article 1734(4) of the Civil Code. They cite the notation metal envelopes rust
stained and slightly dented printed on the Bill of Lading as evidence that the character of the
goods or defect in the packing or the containers was the proximate cause of the damage. We are
not convinced.
From the evidence on record, it cannot be reasonably concluded that the damage to the four coils
was due to the condition noted on the Bill of Lading.i[40] The aforecited exception refers to cases
when goods are lost or damaged while in transit as a result of the natural decay of perishable
goods or the fermentation or evaporation of substances liable therefor, the necessary and natural
wear of goods in transport, defects in packages in which they are shipped, or the natural
propensities of animals.i[41] None of these is present in the instant case.

Further, even if the fact of improper packing was known to the carrier or its crew or was
apparent upon ordinary observation, it is not relieved of liability for loss or injury resulting
therefrom, once it accepts the goods notwithstanding such condition.i[42] Thus, petitioners have
not successfully proven the application of any of the aforecited exceptions in the present
case.i[43]

Second Issue:
Notice of Loss

Petitioners claim that pursuant to Section 3, paragraph 6 of the Carriage of Goods by Sea Act i[44]
(COGSA), respondent should have filed its Notice of Loss within three days from delivery. They
assert that the cargo was discharged on July 31, 1990, but that respondent filed its Notice of
Claim only on September 18, 1990.i[45]

We are not persuaded. First, the above-cited provision of COGSA provides that the notice of
claim need not be given if the state of the goods, at the time of their receipt, has been the subject
of a joint inspection or survey. As stated earlier, prior to unloading the cargo, an Inspection
Reporti[46] as to the condition of the goods was prepared and signed by representatives of both
parties.i[47]

Second, as stated in the same provision, a failure to file a notice of claim within three days will
not bar recovery if it is nonetheless filed within one year.i[48] This one-year prescriptive period
also applies to the shipper, the consignee, the insurer of the goods or any legal holder of the bill
of lading.i[49]

In Loadstar Shipping Co., Inc. v. Court of Appeals,i[50] we ruled that a claim is not barred by
prescription as long as the one-year period has not lapsed. Thus, in the words of the ponente,
Chief Justice Hilario G. Davide Jr.:

Inasmuch as the neither the Civil Code nor the Code of Commerce states a specific prescriptive
period on the matter, the Carriage of Goods by Sea Act (COGSA)--which provides for a one-
year period of limitation on claims for loss of, or damage to, cargoes sustained during transit--
may be applied suppletorily to the case at bar.

In the present case, the cargo was discharged on July 31, 1990, while the Complainti[51] was
filed by respondent on July 25, 1991, within the one-year prescriptive period.

Third Issue:
Package Limitation

Assuming arguendo they are liable for respondents claims, petitioners contend that their liability
should be limited to US$500 per package as provided in the Bill of Lading and by Section
4(5)i[52] of COGSA.i[53]

On the other hand, respondent argues that Section 4(5) of COGSA is inapplicable, because the
value of the subject shipment was declared by petitioners beforehand, as evidenced by the
reference to and the insertion of the Letter of Credit or L/C No. 90/02447 in the said Bill of
Lading.i[54]

A bill of lading serves two functions. First, it is a receipt for the goods shipped.i[55] Second, it is
a contract by which three parties -- namely, the shipper, the carrier, and the consignee --
undertake specific responsibilities and assume stipulated obligations.i[56] In a nutshell, the
acceptance of the bill of lading by the shipper and the consignee, with full knowledge of its
contents, gives rise to the presumption that it constituted a perfected and binding contract.i[57]

Further, a stipulation in the bill of lading limiting to a certain sum the common carriers liability
for loss or destruction of a cargo -- unless the shipper or owner declares a greater valuei[58] -- is
sanctioned by law.i[59] There are, however, two conditions to be satisfied: (1) the contract is
reasonable and just under the circumstances, and (2) it has been fairly and freely agreed upon by
the parties.i[60] The rationale for, this rule is to bind the shippers by their agreement to the value
(maximum valuation) of their goods.i[61]

It is to be noted, however, that the Civil Code does not limit the liability of the common carrier
to a fixed amount per package.i[62] In all matters not regulated by the Civil Code, the right and
the obligations of common carriers shall be governed by the Code of Commerce and special
laws.i[63] Thus, the COGSA, which is suppletory to the provisions of the Civil Code,
supplements the latter by establishing a statutory provision limiting the carriers liability in the
absence of a shippers declaration of a higher value in the bill of lading.i[64] The provisions on
limited liability are as much a part of the bill of lading as though physically in it and as though
placed there by agreement of the parties.i[65]

In the case before us, there was no stipulation in the Bill of Ladingi[66] limiting the carriers
liability. Neither did the shipper declare a higher valuation of the goods to be shipped. This fact
notwithstanding, the insertion of the words L/C No. 90/02447 cannot be the basis for petitioners
liability.

First, a notation in the Bill of Lading which indicated the amount of the Letter of Credit obtained
by the shipper for the importation of steel sheets did not effect a declaration of the value of the
goods as required by the bill.i[67] That notation was made only for the convenience of the shipper
and the bank processing the Letter of Credit.i[68]

Second, in Keng Hua Paper Products v. Court of Appeals,i[69] we held that a bill of lading was
separate from the Other Letter of Credit arrangements. We ruled thus:
(T)he contract of carriage, as stipulated in the bill of lading in the present case, must be treated
independently of the contract of sale between the seller and the buyer, and the contract of
issuance of a letter of credit between the amount of goods described in the commercial invoice in
the contract of sale and the amount allowed in the letter of credit will not affect the validity and
enforceability of the contract of carriage as embodied in the bill of lading. As the bank cannot be
expected to look beyond the documents presented to it by the seller pursuant to the letter of
credit, neither can the carrier be expected to go beyond the representations of the shipper in the
bill of lading and to verify their accuracy vis--vis the commercial invoice and the letter of credit.
Thus, the discrepancy between the amount of goods indicated in the invoice and the amount in
the bill of lading cannot negate petitioners obligation to private respondent arising from the
contract of transportation.i[70]

In the light of the foregoing, petitioners liability should be computed based on US$500 per
package and not on the per metric ton price declared in the Letter of Credit.i[71] In Eastern
Shipping Lines, Inc. v. Intermediate Appellate Courti[72] we explained the meaning of package:

When what would ordinarily be considered packages are shipped in a container supplied by the
carrier and the number of such units is disclosed in the shipping documents, each of those units
and not the container constitutes the package referred to in the liability limitation provision of
Carriage of Goods by Sea Act.

Considering, therefore, the ruling in Eastern Shipping Lines and the fact that the Bill of Lading
clearly disclosed the contents of the containers, the number of units, as well as the nature of the
steel sheets, the four damaged coils should be considered as the shipping unit subject to the
US$500 limitation.

WHEREFORE, the Petition is partly granted and the assailed Decision MODIFIED. Petitioners
liability is reduced to US$2,000 plus interest at the legal rate of six percent from the time of the
filing of the Complaint on July 25, 1991 until the finality of this Decision, and 12 percent
thereafter until fully paid. No pronouncement as to costs.

SO ORDERED.

[G.R. No. 122823. November 25, 1999]

SEA COMMERCIAL COMPANY, INC., petitioner, vs. THE HONORABLE COURT OF

APPEALS, JAMANDRE INDUSTRIES, INC. and TIRSO JAMANDRE, respondents.

DECISION

GONZAGA-REYES, J.:

In this petition for review by certiorari, SEA Commercial Company, Inc. (SEACOM) assails the
decision of the Court of Appeals in CA-G.R. CV NO. 31263 affirming in toto the decision of the
Regional Trial Court of Manila, Branch 5, in Civil Case No. 122391, in favor of Jamandre
Industries, Inc. (JII) et al., the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the defendant and against the plaintiff,
ordering the plaintiff:

1) To pay defendant the sum of P66,156.15 (minus 18,843.85) with legal interest thereon,
from the date of the filing of the counterclaim until fully paid;

2) To pay defendant P2,000.00 as moral and exemplary damages;

3) To pay attorneys fees in the sum of P10,000.00; and

4) To pay the costs of this suit.

SO ORDERED.

SEACOM is a corporation engaged in the business of selling and distributing agricultural

machinery, products and equipment. On September 20, 1966, SEACOM and JII entered into a
dealership agreement whereby SEACOM appointed JII as its exclusive dealer in the City and
Province of Iloiloi[1] Tirso Jamandre executed a suretyship agreement binding himself jointly
and severally with JII to pay for all obligations of JII to SEACOMi[2]. The agreement was
subsequently amended to include Capiz in the territorial coverage and to make the dealership
agreement on a non-exclusive basisi[3]. In the course of the business relationship arising from the
dealership agreement, JII allegedly incurred a balance of P18,843.85 for unpaid deliveries, and
SEACOM brought action to recover said amount plus interest and attorneys fees.

JII filed an Answer denying the obligation and interposing a counterclaim for damages
representing unrealized profits when JII sold to the Farm System Development Corporation
(FSDC) twenty one (21) units of Mitsubishi power tillers. In the counterclaim, JII alleged that as
a dealer in Capiz, JII contracted to sell in 1977 twenty-four (24) units of Mitsubishi power tillers
to a group of farmers to be financed by said corporation, which fact JII allegedly made known to
petitioner, but the latter taking advantage of said information and in bad faith, went directly to
FSDC and dealt with it and sold twenty one (21) units of said tractors, thereby depriving JII of
unrealized profit of eighty-five thousand four hundred fifteen and 61/100 pesos (P85,415.61).

The trial court rendered its decision on January 24, 1990 ordering JII to pay SEACOM the
amount of Eighteen Thousand Eight Hundred Forty Three and 85/100 (P18,843.85) representing
its outstanding obligation. The trial court likewise granted JIIs counterclaim for unrealized
profits, and for moral and exemplary damages and attorney fees as above quoted.

SEACOM appealed the decision on the counterclaim.

The Court of Appeals held that while there exists no agency relationship between SEACOM and
JII, SEACOM is liable for damages and unrealized profits to JII.
This Court, however, is convinced that with or without the existence of an agency relationship
between appellant SEACOM and appellee JII and notwithstanding the error committed by the
lower court in finding that an agency relationship existed between appellant and defendant
corporation the former is liable for the unrealized profits which the latter could have gained had
not appellant unjustly stepped in and in bad faith unethically intervened.

It should be emphasized that the very purpose of the dealership agreement is for SEACOM to
have JII as its dealer to sell its products in the provinces of Capiz and Iloilo. In view of this
agreement, the second assigned error that the lower court erred in holding that appellant learned
of the FSDC transaction from defendant JII is clearly immaterial and devoid of merit. The fact
that the dealership is on a non-exclusive basis does not entitle appellant SEACOM to join the
fray as against its dealer. To do so, is to violate the norms of conduct enjoined by Art. 19 of the
Civil Code. By virtue of such agreement, the competition in the market as regards the sale of
farm equipment shall be between JII, as the dealer of SEACOM and other companies, not as
against SEACOM itself. However, SEACOM, not satisfied with the presence of its dealer JII in
the market, joined the competition even as the against the latter and, therefore, changed the
scenario of the competition thereby rendering inutile the dealership agreement which they
entered into the manifest prejudice of JII. Hence, the trial court was correct when it applied Art.
19 of the Civil Code in the case at bar in that appellant SEACOM acted in bad faith when it
competed with its own dealer as regards the sale of farm machineries, thereby depriving appellee
JII of the opportunity to gain a clear profit of P85,000.00.

and affirmed the judgment appealed from in toto.

Hence this petition for review on certiorari, which submits the following reasons for the
allowance thereof:

THE RESPONDENT COURT OF APPEALS DECIDED QUESTIONS OF SUBSTANCE IN A

WAY NOT IN ACCORDANCE WITH LAW AND JURISPRUDENCE, CONSIDERING
THAT:

THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT

PETITIONER IS LIABLE TO PAY DAMAGES AND UNREALIZED PROFITS TO THE
PRIVATE RESPONDENTS DESPITE THE FACT THAT NO AGENCY RELATIONSHIP
EXISTS BETWEEN THEM.

THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT

PETITIONER ACTED IN BAD FAITH AGAINST THE PRIVATE RESPONDENT
CORPORATION DESPITE THE FACT THAT SAID RULING IS CONTRARY TO THE
EVIDENCE ON RECORD.
C

THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE

NON-EXCLUSIVITY CLAUSE IN THE DEALERSHIP AGREEMENT EXECUTED
BETWEEN THE PETITIONER AND PRIVATE RESPONDENT CORPORATION
PRECLUDES THE PETITIONER FROM COMPETING WITH THE PRIVATE
RESPONDENT CORPORATION.

THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT

PRIVATE RESPONDENT IS ENTITLED TO UNREALIZED PROFITS, MORAL AND
EXEMPLARY DAMAGES AND ATTORNEYS FEES.i[4]

Petitioner SEACOM disputes the conclusion of the Court of Appeals that despite the fact that no
agency relationship existed between the parties, the SEACOM is still liable in damages and
unrealized profits for the reason that it acted in bad faith. Petitioner SEACOM invokes the non-
exclusivity clause in the dealership agreement and claims that the transaction with FSDC was
concluded pursuant to a public bidding and not on the basis of alleged information it received
from private respondent Tirso Jamandre. Moreover, petitioner SEACOM claims that it did not
underprice its products during the public bidding wherein both SEACOM and JII participated.
Petitioner also disputes the award of moral damages to JII which is a corporation, in the absence
of any evidence that the said corporation had a good reputation which was debased.

Private respondents in their comment, contends that the four assigned errors raise mixed
questions of fact and law and are therefore beyond the jurisdiction of the Supreme Court which
may take cognizance of only questions of law. The assigned errors were also refuted to secure
affirmance of the appealed decision. JII maintains that the bidding set by FSDC on March 24,
1997 was scheduled after the demonstration conducted by JII, and after JII informed SEACOM
about the preference of the farmers to buy Mitsubishi tillers. JII further rebuts the SEACOMs
contention that the transaction with FSDC was pursuant to a public bidding with full disclosure
to the public and private respondent JII considering that JII had nothing to do with the list of 37
bidders and cannot be bound by the listing made by SEACOMs employee; moreover, JII did not
participate in the bidding not having been informed about it. Furthermore, the price at which
SEACOM sold to FSDC was lower than the price it gave to JII. Also, even if the dealership
agreement was not exclusive, it was breached when petitioner in bad faith sold directly to FSDC
with whom JII had previously offered the subject farm equipment. With respect to the awards of
moral and exemplary damages, JII seeks an affirmation of the ruling of the Court of Appeals
justifying the awards.

SEACOM filed Reply defending the jurisdiction of this Court over the instant petition since the
decision of the Court of Appeals was based on a misapprehension of facts. SEACOM insists that
FSDCs purchase was made pursuant to a public bidding, and even if SEACOM did not
participate thereon, JII would not necessarily have closed the deal since thirty seven (37) bidders
participated. SEACOM contends that no evidence was presented to prove that the bidding was a
fraudulent scheme of SEACOM and FSDC. SEACOM further controverts JIIs contention that JII
did not take part in the bidding as Tirso Jamandre was one of the bidders and that SEACOM
underpriced its products to entice FSDC to buy directly from it. In fine, JII is not entitled to the
award of unrealized profits and damages.

In its Rejoinder, private respondents insist that there is an agency relationship, citing the
evidence showing that credit memos and not cash vouchers were issued to JII by SEACOM for
every delivery from November 26, 1976 to December 24, 1978. Private respondents maintain
that SEACOM torpedoed the emerging deal between JII and FSDC after being informed about it
by JII by dealing directly with FSDC at a lower price and after betraying JII, SEACOM would
cover up the deceit by conniving with FSDC to post up a sham public bidding.

SEACOMs sur-rejoinder contains basically a reiteration of its contention in previous pleadings.

Additionally, it is contended that private respondents are barred from questioning in their
Rejoinder, the finding of the Court of Appeals that there is no agency relationship between the
parties since this matter was not raised as error in their comment.

The core issue is whether SEACOM acted in bad faith when it competed with its own dealer as
regards the sale of farm machineries to FSDC.

Both the trial court and the Court of Appeals held affirmatively; the trial court found that JII was
an agent of SEACOM and the act of SEACOM in dealing directly with FSDC was unfair and
unjust to its agent, and that there was fraud in the transaction between FSDC and SEACOM to
the prejudice of JII. On the other hand, the Court of Appeals ruled that there was no agency
relationship between the parties but SEACOM is nevertheless liable in damages for having acted
in bad faith when it competed with its own dealer in the sale of the farm machineries to FSDC.
Both courts invoke as basis for the award Article 19 of the Civil Code which reads as follows:

"Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act
with justice, give everyone his due and observe honesty and good faith.

The principle of abuse of rights stated in the above article, departs from the classical theory that
he who uses a right injures no one. The modern tendency is to depart from the classical and
traditional theory, and to grant indemnity for damages in cases where there is an abuse of rights,
even when the act is not illicit.i[5]

Article 19 was intended to expand the concept of torts by granting adequate legal remedy for the
untold number of moral wrongs which is impossible for human foresight to provide specifically
in statutory law.i[6] If mere fault or negligence in ones acts can make him liable for damages for
injury caused thereby, with more reason should abuse or bad faith make him liable. The absence
of good faith is essential to abuse of right. Good faith is an honest intention to abstain from
taking any unconscientious advantage of another, even through the forms or technicalities of the
law, together with an absence of all information or belief of fact which would render the
transaction unconscientious. In business relations, it means good faith as understood by men of
affairs.i[7]
While Article 19 may have been intended as a mere declaration of principlei[8], the cardinal law
on human conduct expressed in said article has given rise to certain rules, e.g. that where a
person exercises his rights but does so arbitrarily or unjustly or performs his duties in a manner
that is not in keeping with honesty and good faith, he opens himself to liability.i[9] The elements
of an abuse of rights under Article 19 are: (1) there is a legal right or duty; (2) which is exercised
in bad faith; (3) for the sole intent of prejudicing or injuring another.i[10]

The issue whether JII is entitled to recovery on its counterclaim for unrealized profit in the
twenty one (21) units of Mitsubishi power tillers sold by SEACOM to FSDC was resolved by the
trial court in favor of JII on the basis of documentary evidencei[11] showing that (1) JII has
informed SEACOM as early as February 1977 of the promotions undertaken by JII for the sale of
24 contracted units to FSDC and in connection therewith, requested a 50% discount to make the
price competitive, and to increase the warranty period for eight months to one year. In said letter
Jamandre clarified that they were not amenable to SEACOMs offering directly to FSDC and to
be only given the usual overriding commission as we have considerable investments on this
transaction. (2) In response, the general sales manager of SEACOM declined to give the
requested 50% discount and offered a less 30% less 10% up to end March xxx on cash before
delivery basis, granted the requested extension of the warranty period and stated that we are glad
to note that you have quite a number of units pending with the FSDC.

The trial court ruled that with said information, SEACOM dealt directly with FSDC and offered
its units at a lower price, leaving FSDC no choice but to accept the said offer of (SEACOM).

In affirming the judgment of the of the trial court, the Court of Appeals held that by virtue of the
dealership agreement the competition in the market as regards the sale of farm equipment shall
be between JII, as the dealer of SEACOM, and other companies, not as against SEACOM itself,
the Court stated:

However, SEACOM not satisfied with the presence of its dealer JII in the market, joined the
competition even as against the latter, and thereby changed the scenario of the competition
thereby rendering inutile the dealership agreement which they entered into to the manifest
prejudice of JII. Hence the trial court trial court was correct when it applied Art. 19 of the Civil
Code in the case at bar in that appellant SEACOM acted in bad faith when it competed with its
own dealer as regards the sale of farm machineries, thereby depriving appellee JII of the
opportunity to gain a clear profit of P85,000.00.

We find no cogent reason to overturn the factual finding of the two courts that SEACOM joined
the bidding for the sale of the farm equipment after it was informed that JII was already
promoting the sales of said equipment to the FSDC. Moreover, the conclusion of the trial court
that the SEACOM offered FSDC a lower price than the price offered by JII to FSDC is
supported by the evidence: the price offered by JII to FSDC is P27,167 per uniti[12] but the
prices at which SEACOM sold to FSDC were at P22,867.00 for Model CT 83-2, P21,093.50 for
model CT 83-E, and P18,979.25 for model CT 534. The fact that SEACOM may have offered to
JII, in lieu of a requested 50% discount, a discount effectively translating to 37% of the list price
and actually sold to FSDC at 35% less than the list pricei[13] does not detract from the fact that
by participating in the bidding of FSDC, it actually competed with its own dealer who had earlier
conducted demonstrations and promoted its own products for the sale of the very same
equipment, Exh. N for the plaintiff confirms that both SEACOM and Jamandre participated in
the bidding.i[14] However, the SEACOM was awarded the contract directly from Manila.i[15]
The testimony of Tirso Jamandre that JII was the sole representative of SEACOM in the local
demonstrations to convince the farmers and cooperative officers to accept the Mitsubishi brand
of equipment in preference to other brands, was unrebutted by SEACOM.

Clearly, the bad faith of SEACOM was established. By appointing as a dealer of its agricultural
equipment, SEACOM recognized the role and undertaking of JII to promote and sell said
equipment. Under the dealership agreement, JII was to act as a middleman to sell SEACOMs
products, in its area of operations, i.e. Iloilo and Capiz provinces, to the exclusion of other
places,i[16] to send its men to Manila for training on repair, servicing and installation of the items
to be handled by it, and to comply with other personnel and vehicle requirements intended for
the benefit of the dealership.i[17] After being informed of the demonstrations JII had conducted
to promote the sales of SEACOM equipment, including the operations at JIIs expense conducted
for five months, and the approval of its facilities (service and parts) by FSDC,i[18] SEACOM
participated in the bidding for the said equipment at a lower price, placing itself in direct
competition with its own dealer. The actuations of SEACOM are tainted by bad faith.

Even if the dealership agreement was amended to make it on a non-exclusive basis,i[19]

SEACOM may not exercise its right unjustly or in a manner that is not in keeping with honesty
or good faith; otherwise it opens itself to liability under the abuse of right rule embodied in
Article 19 of the Civil Code above-quoted. This provision, together with the succeeding article
on human relation, was intended to embody certain basic principles that are to be observed for
the rightful relationship between human beings and for the stability of the social order.i[20] What
is sought to be written into the law is the pervading principle of equity and justice above strict
legalism.i[21]

We accordingly resolve to affirm the award for unrealized profits. The Court of Appeals noted
that the trial court failed to specify to which the two appellees the award for moral and
exemplary damages is granted. However, in view of the fact that moral damages are not as a
general rule granted to a corporation, and that Tirso Jamandre was the one who testified on his
feeling very aggrieved and on his mental anguish and sleepless nights thinking of how SEACOM
dealt with us behind (our) backs,i[22] the award should go to defendant Jamandre, President of
JII.

WHEREFORE, the judgment appealed from is AFFIRMED with the modification that the
award of P2,000.00 in moral and exemplary damages shall be paid to defendant Tirso Jamandre.

Costs against appellant.

SO ORDERED.

G.R. No. 96126 August 10, 1992

ESTERIA F. GARCIANO, petitioner,
vs.
THE HON. COURT OF APPEALS, EMERITO LABAJO, LUNISITA MARODA, LALIANA DIONES, CANONISA PANINSORO, DIONISIO
ROSAL, REMEDIOS GALUSO, FLORDELUNA PETALCORIN, MELCHIZEDECH LOON, NORBERTA MARODA and JOSEPH WIERTZ,
respondents.

Basilio E. Duaban for petitioner.

Julius Z. Neri for private respondent.

GRIO-AQUINO, J.:

This is a petition for review of the decision of the Court of Appeals dismissing the complaint for damages filed by the petitioner against the
private respondents.

The petitioner was hired to teach during the 1981-82 school year in the Immaculate Concepcion Institute in the Island of Camotes. On
January 13, 1982, or before the school year ended, she applied for an indefinite leave of absence because her daughter was taking her to
Austria where her daughter was employed (Exh. B). The application was recommended for approval by the school principal, Emerito O.
Labajo, and approved by the President of the school's Board of Directors (Exh. B-1).

On June 1, 1982, Emerito Labajo addressed a letter to the petitioner through her husband, Sotero Garciano (for she was still abroad),
informing her of the decision of Fr. Joseph Wiertz, the school's founder, concurred in by the president of the Parent-Teachers Association
and the school faculty, to terminate her services as a member of the teaching staff because of: (1) the absence of any written contract of
employment between her and the school due to her refusal to sign one; and (2) the difficulty of getting a substitute for her on a temporary
basis as no one would accept the position without a written contract (Exhs. C and 1). Upon her return from Austria in the later part of June,
1982, she received the letter informing her that her services at the Immaculate Concepcion Institute had been terminated. She made
inquiries from the school about the matter and, on July 7, 1982, the members of the Board of Directors of the school, with the exception of Fr.
Joseph Wiertz, signed a letter notifying her that she was "reinstated to report and do your usual duties as Classroom Teacher . . . effective
July 5, 1982," and that "any letter or notice of termination received by you before this date has no sanction or authority by the Board of
Directors of this Institution, therefore it is declared null and void . . ." (Exhs. D and 2).

On July 9, 1982, the president, vice president, secretary, and three members of the Board of Directors, out of a membership of nine (9),
resigned their positions from the Board "for the reason that the ICI Faculty, has reacted acidly to the Board's deliberations for the
reinstatement of Mrs. Esteria F. Garciano, thereby questioning the integrity of the Board's decision" (Exh. E).

On September 3, 1982, petitioner filed a complaint for damages in the Regional Trial Court, Cebu, Branch XI, against Fr. Wiertz, Emerito
Labajo, and some members of the faculty of the school for discrimination and unjust and illegal dismissal.

After trial, the lower court rendered a decision on August 30, 1985, ordering the defendants jointly and severally to pay her P200,000 as
moral damages, P50,000 exemplary damages, P32,400 as lost earnings for nine years, and P10,000 as litigation expenses and attorney's
fees.

The defendants (now private respondents) appealed to the Court of Appeals (CA-G.R. CV No. 10692), which on August 30, 1990 reversed
the trial court's decision thus:

WHEREFORE, the decision appealed from is reversed, the complaint is dismissed, and defendants-appellants are
absolved from any liability to plaintiff-appellee. With costs against plaintiff-appellee. (p. 13, Rollo.)

The plaintiff-appellee (now petitioner) filed a motion for reconsideration which the Court of Appeals denied on October 26, 1990. Hence, this
petition for review wherein the lone error assigned by petitioner reads:

Respondent Court of Appeals gravely erred in absolving the private respondents from liability by faulting the petitioner
for her failure to report back to her work. (p. 6, Rollo.)

After a careful perusal of the petition and the respondents' comments, the Court resolved to deny the petition for lack of merit.

The board of directors of the Immaculate Concepcion Institute, which alone possesses the authority to hire and fire teachers and other
employees of the school, did not dismiss the petitioner. It in fact directed her to report for work. While the private respondents sent her a
letter of termination through her husband, they admittedly had no authority to do so. As the Court of Appeals aptly observed:
 We agree with defendants-appellants, however, that they should not have been held liable to plaintiff-appellee for
damages. Defendants-appellants had no authority to dismiss plaintiff-appellee and the latter was aware of this. Hence,
the letter of termination sent to her through her husband (Exhs. C and 1) by defendants-appellants had no legal effect
whatsoever. It did not effectively prevent her from reporting for work. What is more, it was subsequently repudiated by
the Board of Directors which directed her to report for work. (Exhs. D and 2) There was, therefore, no reason why she
did not continue with her teaching in the school. No evidence had been presented to show that defendants-appellants
prevented her from reporting for work. The fact that defendants-appellants had "acidly" received the action of the Board
of Directors repudiating their decision to terminate plaintiff-appellee is not proof that defendants-appellants had
effectively and physically prevented plaintiff-appellee from resuming her post. It was nothing more than a reaction to
what defendants-appellants perceived as an affront to their collective prestige. It would appear, therefore, that plaintiff-
appellee voluntarily desisted from her teaching job in the school and has no right to recover damages from defendants-
appellants. (p. 13, Rollo.)

Liability for damages under Articles 19, 20 and 21 of the Civil Code arises only from unlawful, willful or negligent acts that are contrary to law,
or morals, good customs or public policy.

Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith.

Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter
for the same.

Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs
or public policy shall compensate the latter for the damage.

The Court of Appeals was correct in finding that petitioner's discontinuance from teaching was her own choice. While the respondents
admittedly wanted her service terminated, they actually did nothing to physically prevent her from reassuming her post, as ordered by the
school's Board of Directors. That the school principal and Fr. Wiertz disagreed with the Board's decision to retain her, and some teachers
allegedly threatened to resign en masse, even if true, did not make them liable to her for damages. They were simply exercising their right of
free speech or their right to dissent from the Board's decision. Their acts were not contrary to law, morals, good customs or public policy.
They did not "illegally dismiss" her for the Board's decision to retain her prevailed. She was ordered to report for work on July 5, 1982, but
she did not comply with that order. Consequently, whatever loss she may have incurred in the form of lost earnings was self-inflicted. Volenti
non fit injuria.

With respect to petitioner's claim for moral damages, the right to recover them under Article 21 is based on equity, and he who comes to
court to demand equity, must come with clean hands. Article 21 should be construed as granting the right to recover damages to injured
persons who are not themselves at fault (Mabutas vs. Calapan Electric Co. [CA] 50 OG 5828, cited in Padilla, Civil Code Annotated, Vol. 1,
1975 Ed., p. 87). Moral damages are recoverable only if the case falls under Article 2219 in relation to Article 21 (Flordelis vs. Mar, 114
SCRA 41). In the case at bar, petitioners is not without fault. Firstly, she went on an indefinite leave of absence and failed to report back in
time for the regular opening of classes. Secondly, for reasons known to herself alone, she refused to sign a written contract of employment.
Lastly, she ignored the Board of Directors' order for her to report for duty on July 5, 1982.

The trial court's award of exemplary damages to her was not justified for she is not entitled to moral, temperate or compensatory damages.
(Art. 2234, Civil Code).

In sum, the Court of Appeals correctly set aside the damages awarded by the trial court to the petitioner for they did not have any legal or
factual basis.

WHEREFORE, the petition is DISMISSED for lack of merit and the decision of the Court of Appeals is AFFIRMED.

SO ORDERED.

[G.R. No. 140420. February 15 , 2001]

SERGIO AMONOY, petitioner, vs. Spouses JOSE GUTIERREZ and ANGELA FORNILDA,
respondents.

DECISION

PANGANIBAN, J.:
Damnum absque injuria. Under this principle, the legitimate exercise of a persons rights, even if
it causes loss to another, does not automatically result in an actionable injury. The law does not
prescribe a remedy for the loss. This principle does not, however, apply when there is an abuse
of a persons right, or when the exercise of this right is suspended or extinguished pursuant to a
court order. Indeed, in the availment of ones rights, one must act with justice, give others their
due, and observe honesty and good faith.
The Case

Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the April 21,
1999 Decisioni[1] of the Court of Appeals (CA) in CA-GR CV No. 41451, which set aside the
judgmenti[2] of the Regional Trial Court (RTC) of Tanay, Rizal. The RTC had earlier dismissed
the Complaint for damages filed by herein respondents against petitioner. The dispositive portion
of the challenged CA Decision reads as follows:

WHEREFORE, the appealed Decision is SET ASIDE, and in its stead judgment is rendered
ordering the defendant-appellee Sergio Amonoy to pay the plaintiffs-appellants Bruno and
Bernardina Gutierrez as actual damages the sum of [t]wo [h]undred [f]ifty [t]housand [p]esos
(P250,000.00).i[3]

Likewise assailed is the October 19, 1999 CA Resolution,i[4] which denied the Motion for
Reconsideration.
The Facts

The appellate court narrated the factual antecedents of this case as follows:

This case had its roots in Special Proceedings No. 3103 of Branch I of the CFI of Pasig, Rizal,
for the settlement of the estate of the deceased Julio Cantolos, involving six (6) parcels of land
situated in Tanay, Rizal. Amonoy was the counsel of therein Francisca Catolos, Agnes Catolos,
Asuncion Pasamba and Alfonso Formilda. On 12 January 1965, the Project of Partition
submitted was approved and x x x two (2) of the said lots were adjudicated to Asuncion Pasamba
and Alfonso Formilda. The attorneys fees charged by Amonoy was P27,600.00 and on 20
January 1965 Asuncion Pasamba and Alfonso Formilda executed a deed of real estate mortgage
on the said two (2) lots adjudicated to them, in favor of Amonoy to secure the payment of his
attorneys fees. But it was only on 6 August 1969 after the taxes had been paid, the claims settled
and the properties adjudicated, that the estate was declared closed and terminated.

Asuncion Pasamba died on 24 February 1969 while Alfonso Fornilda passed away on 2 July
1969. Among the heirs of the latter was his daughter, plaintiff-appellant Angela Gutierrez.

Because his attorneys fees thus secured by the two lots were not paid, on 21 January 1970
Amonoy filed for their foreclosure in Civil Case No. 12726 entitled Sergio Amonoy vs. Heirs of
Asuncion Pasamba and Heirs of Alfonso Fornilda before the CFI of Pasig, Rizal, and this was
assigned to Branch VIII. The heirs opposed, contending that the attorneys fees charged [were]
unconscionable and that the agreed sum was only P11,695.92. But on 28 September 1972
judgment was rendered in favor of Amonoy requiring the heirs to pay within 90 days the
P27,600.00 secured by the mortgage, P11,880.00 as value of the harvests, and P9,645.00 as
another round of attorneys fees. Failing in that, the two (2) lots would be sold at public auction.

They failed to pay. On 6 February 1973, the said lots were foreclosed and on 23 March 1973 the
auction sale was held where Amonoy was the highest bidder at P23,760.00. On 2 May 1973 his
bid was judicially confirmed. A deficiency was claimed and to satisfy it another execution sale
was conducted, and again the highest bidder was Amonoy at P12,137.50.

Included in those sold was the lot on which the Gutierrez spouses had their house.

More than a year after the Decision in Civil Case No. 12726 was rendered, the said decedents
heirs filed on 19 December 1973 before the CFI of Pasig, Rizal[,] Civil Case No. 18731 entitled
Maria Penano, et al vs. Sergio Amonoy, et al, a suit for the annulment thereof. The case was
dismissed by the CFI on 7 November 1977, and this was affirmed by the Court of Appeals on 22
July 1981.

Thereafter, the CFI on 25 July 1985 issued a Writ of Possession and pursuant to which a notice
to vacate was made on 26 August 1985. On Amonoys motion of 24 April 1986, the Orders of 25
April 1986 and 6 May 1986 were issued for the demolition of structures in the said lots,
including the house of the Gutierrez spouses.

On 27 September 1985 the petition entitled David Fornilda, et al vs Branch 164 RTC IVth Pasig,
Deputy Sheriff Joaquin Antonil and Atty. Sergio Amonoy, G.R. No. L-72306, was filed before the
Supreme Court. Among the petitioners was the plaintiff-appellant Angela Gutierrez. On a twin
Musiyun (Mahigpit na Musiyon Para Papanagutin Kaugnay ng Paglalapastangan, and Musiyung
Makahingi ng Utos sa Pagpapapigil ng Pagpapagiba at Pananagutin sa Paglalapastangan) with
full titles as fanciful and elongated as their Petisyung (Petisyung Makapagsuri Taglay and
Pagpigil ng Utos), a temporary restraining order was granted on 2 June 1986 enjoining the
demolition of the petitioners houses.

Then on 5 October 1988 a Decision was rendered in the said G.R. No. L-72306 disposing that:

WHEREFORE, Certiorari is granted; the Order of respondent Trial Court, dated 25 July 1985,
granting a Writ of Possession, as well as its Orders, dated 25 April 1986 and 16 May 1986,
directing and authorizing respondent Sheriff to demolish the houses of petitioners Angela and
Leocadia Fornilda are hereby set aside, and the Temporary Restraining Order heretofore issued,
is made permanent. The six (6) parcels of land herein controverted are hereby ordered returned to
petitioners unless some of them have been conveyed to innocent third persons.i[5]

But by the time the Supreme Court promulgated the above-mentioned Decision, respondents
house had already been destroyed, supposedly in accordance with a Writ of Demolition ordered
by the lower court.
Thus, a Complaint for damages in connection with the destruction of their house was filed by
respondents against petitioner before the RTC on December 15, 1989.

In its January 27, 1993 Decision, the RTC dismissed respondents suit. On appeal, the CA set
aside the lower courts ruling and ordered petitioner to pay respondents P250,000 as actual
damages. Petitioner then filed a Motion for Reconsideration, which was also denied.

Hence, this recourse.i[6]

The Issue

In his Memorandum,i[7] petitioner submits this lone issue for our consideration:

Whether or not the Court of Appeals was correct in deciding that the petitioner [was] liable
to the respondents for damagesi[8]
The Courts Ruling

The Petition has no merit.

Main Issue: Petitioners Liability

Well-settled is the maxim that damage resulting from the legitimate exercise of a persons rights
is a loss without injury -- damnum absque injuria -- for which the law gives no remedy.i[9] In
other words, one who merely exercises ones rights does no actionable injury and cannot be held
liable for damages.

Petitioner invokes this legal precept in arguing that he is not liable for the demolition of
respondents house. He maintains that he was merely acting in accordance with the Writ of
Demolition ordered by the RTC.

We reject this submission. Damnum absque injuria finds no application to this case.

True, petitioner commenced the demolition of respondents house on May 30, 1986 under the
authority of a Writ of Demolition issued by the RTC. But the records show that a Temporary
Restraining Order (TRO), enjoining the demolition of respondents house, was issued by the
Supreme Court on June 2, 1986. The CA also found, based on the Certificate of Service of the
Supreme Court process server, that a copy of the TRO was served on petitioner himself on June
4, 1986.

Petitioner, however, did not heed the TRO of this Court. We agree with the CA that he
unlawfully pursued the demolition of respondents house well until the middle of 1987. This is
clear from Respondent Angela Gutierrezs testimony. The appellate court quoted the following
pertinent portion thereof:i[10]
Q. On May 30, 1986, were they able to destroy your house?

A. Not all, a certain portion only

xxx xxx xxx

Q. Was your house completely demolished?

A. No, sir.

Q. How about the following day?

A. It was completely demolished

xxx xxx xxx

Q. Until when[,] Mrs. Witness?

A. Until 1987.

Q. About what month of 1987?

A. Middle of the year.

Q. Can you tell the Honorable Court who completed the demolition?

A. The men of Fiscal Amonoy.i[11]

The foregoing disproves the claim of petitioner that the demolition, which allegedly commenced
only on May 30, 1986, was completed the following day. It likewise belies his allegation that the
demolitions had already ceased when he received notice of the TRO.

Although the acts of petitioner may have been legally justified at the outset, their continuation
after the issuance of the TRO amounted to an insidious abuse of his right. Indubitably, his
actions were tainted with bad faith. Had he not insisted on completing the demolition,
respondents would not have suffered the loss that engendered the suit before the RTC. Verily, his
acts constituted not only an abuse of a right, but an invalid exercise of a right that had been
suspended when he received the TRO from this Court on June 4, 1986. By then, he was no
longer entitled to proceed with the demolition.

A commentator on this topic explains:

The exercise of a right ends when the right disappears, and it disappears when it is abused,
especially to the prejudice of others. The mask of a right without the spirit of justice which gives
it life, is repugnant to the modern concept of social law. It cannot be said that a person exercises
a right when he unnecessarily prejudices another x x x. Over and above the specific precepts of
positive law are the supreme norms of justice x x x; and he who violates them violates the law.
For this reason, it is not permissible to abuse our rights to prejudice others.i[12]

Likewise, in Albenson Enterprises Corp. v. CA,i[13] the Court discussed the concept of abuse of
rights as follows:

Article 19, known to contain what is commonly referred to as the principle of abuse of rights,
sets certain standards which may be observed not only in the exercise of ones rights but also in
the performance of ones duties. These standards are the following: to act with justice; to give
everyone his due; and to observe honesty and good faith. The law, therefore, recognizes the
primordial limitation on all rights: that in their exercise, the norms of human conduct set forth in
Article 19 must be observed. A right, though by itself legal because recognized or granted by law
as such, may nevertheless become the source of some illegality. When a right is exercised in a
manner which does not conform with norms enshrined in Article 19 and results in damage to
another, a legal wrong is thereby committed for which the wrongdoer must be held responsible x
x x.

Clearly then, the demolition of respondents house by petitioner, despite his receipt of the TRO,
was not only an abuse but also an unlawful exercise of such right. In insisting on his alleged
right, he wantonly violated this Courts Order and wittingly caused the destruction of respondents
house.

Obviously, petitioner cannot invoke damnum absque injuria, a principle premised on the valid
exercise of a right.i[14] Anything less or beyond such exercise will not give rise to the legal
protection that the principle accords. And when damage or prejudice to another is occasioned
thereby, liability cannot be obscured, much less abated.

In the ultimate analysis, petitioners liability is premised on the obligation to repair or to make
whole the damage caused to another by reason of ones act or omission, whether done
intentionally or negligently and whether or not punishable by law.i[15]

WHEREFORE, the Petition is DENIED and the appealed Decision AFFIRMED. Costs against
petitioner.

SO ORDERED.

G.R.NO. L-36249 March 29, 1985

ANIANO OBAA, petitioner,

vs.
THE COURT OF APPEALS AND ANICETO SANDOVAL, respondents.

MELENCIO-HERRERA, J.:
Petitioner seeks a review of the Decision of respondent Appellate Court (in CA-G.R. No.
44345-R) ordering him in an action for Replevin to return to Aniceto SANDOVAL,
private respondent herein, 170 cavans of rice or to pay its value in the amount of
P37.25 per cavan, with legal interest from the filing of the Complaint until fully paid.

SANDOVAL is the owner and manager of the "Sandoval and Sons Rice Mill" located in
Rosales, Pangasinan. He is engaged in the buying and selling of palay.

On November 21, 1964, SANDOVAL was approached by a certain Chan Lin who
offered to purchase from him 170 cavans of clean rice (wagwag variety) at the price of
P37.26 per cavan, delivery to be made the following day at petitioner's store in San
Fernando, La Union, with payment to be made thereat by Chan Lin to SANDOVAL's
representative. SANDOVAL accepted the offer as he knew petitioner and had had
previous transactions with him.

As agreed, the 170 cavans of rice were transported the following day on a truck
belonging to SANDOVAL to petitioner's store in San Fernando, La Union. Chan Lin
accompanied the shipment. Upon arrival thereat, the goods were unloaded but when
the truck driver attempted to collect the purchase price from Chan Lin, the latter was
nowhere to be found. The driver tried to collect from petitioner, but the latter refused
stating that he had purchase the goods from Chan Lin at P33.00 per cavan and that the
price therefore had already been paid to Chan Lin.

Further demands having been met with refusal, SANDOVAL, as plaintiff, filed suit for
replevin against petitioner, then the defendant, before the Municipal Court of San
Fernando, La Union, which ordered petitioner-defendant to pay to SANDOVAL one-half
() of the cost of the rice or P2,805.00.

On appeal by petitioner-defendant to the then Court of First Instance of La Union, the

parties agreed to adopt SANDOVAL's testimony before the Municipal Court. After trial
de novo, judgment was rendered dismissing the complaint against petitioner-defendant.

On appeal to respondent Appellate Court, SANDOVAL obtained a reversal in his favor,

as follows:

WHEREFORE, the appealed decision is hereby set aside and another one
entered ordering defendant-appellee to return the one hundred and
seventy cavans of rice to plaintiff- appellant or to pay its value in the
amount of P 37.25 per cavan, with legal interest from the filing of the
complaint until fully paid and with costs against the appellee. 1

Before us, petitioner-defendant takes issue with the following Appellate Court findings:
 From the evidence presented by the parties, it is evident that this is a
simple case of swindling perpetuated by Chan Lin at the expense of the
plaintiff and the defendant. The act of Chan Lin in purchasing plaintiff's
rice at the price of P 37.25 per cavan and thereafter offering the same
goods to defendant at a much lower price is an indication that it was never
his intention to comply with his obligation to plaintiff. It is clear that Chan
Lin's only purpose in entering into said contract with plaintiff was to
acquire the physical possession of the goods and then to pass them on to
defendant on the pretext that he is the owner thereof. Premises
considered, therefore, Chan Lin cannot be considered as the owner of the
goods at the time the same was said to have been sold to the defendant-
appellee. Considering that defendant acquired the 170 cavans of rice from
a person who is not the owner thereof, it is therefore clear that he acquired
no greater right than his predecessor-in-interest.

Finally, on principle of equity, it is but proper that plaintiff-appellant be

allowed to recover the one-hundred and seventy cavans of rice or its
value. Being the undisputed owner of the above mentioned goods, the
appellant cannot be deprived of its ownership without the corresponding
payment. 2

We agree with petitioner-defendant that there was a perfected sale. Article 1475 of the
Civil Code lays down the general rule that there is perfection when there is consent
upon the subject matter and price, even if neither is delivered.

The contract of sale is perfected at the moment there is a meeting of

minds upon the thing which is the object of the contract and upon the
price.

xxx xxx xxx

Ownership of the rice, too, was transferred to the vendee, Chan Lin, upon its delivery to
him at San Fernando, La Union, the place stipulated 3 and pursuant to Articles 1477
and 1496 of the same Code:

Art. 1477. The ownership of the thing sold shall be transferred to the
vendee upon the actual or constructive delivery thereof.

Art. 1496. The ownership of the thing sold is acquired by the vendee from
the moment it is delivered to him in any of the ways specified in Articles
1497 to 1501, or in any manner signifying an agreement that the
possession is transferred from the vendor to the vendee.
At the very least, Chan Lin had a rescissible title to the goods for the non-payment of
the purchase price, but which had not been rescinded at the time of the sale to
petitioner.

However, from petitioner-defendant's own testimony before the Court of

First Instance, he admits that three days after the delivery, he was repaid
the sum of P5,600.00 by Chan Lin, who was then accompanied by
SANDOVAL's driver, and that he had delivered the rice back to them. On
rebuttal, however, the driver denied that the rice had ever been returned. 4
The driver's version is the more credible, for, as SANDOVAL's counsel
had manifested in open Court, if return of the rice had been effected, they
would have withdrawn the complaint. 5 Following is the admission made
by petitioner-defendant:
Q After the third day ... when that request for you to hold the rice was already overdue, what
happened?

A This is what happened. Chan Lin and the driver with the same truck that they used to unload
the rice, came to me.

Q What day was that?

A That was I think, Thursday, about 4:30 P.M.

Q Do you know the date?

A November 26, I think.

Q What did they do when this driver and Mr. Chan Lin came back?

A They told me that they wanted the rice back and give my money back.

Q Did they give you your money back?

A Yes.

Q How much?

A They gave me P5.600.

COURT:

Q They gave you that amount?

A Yes, sir.

ATTY. GUALBERTO:

Q Did they tell you why they were getting back the rice and giving you back your money?

A Yes. The complete rice, and Vallo (SANDOVAL's driver) told me, he wanted to return the rice to
the ricemill, that is what Vallo and the Chinese agreed with Aniceto Sandoval.
 Q Did the Chinese tell you that he made agreement with Sandoval to get back the rice?

A Yes.

COURT:

Q Did you receive the money?

A Yes , sir6

Having been repaid the purchases price by Chan Lin , the sale, as between them, had been voluntarily rescinded, and petitioner-defendant
was thereby divested of any claim to the rice. Technically, therefore, he should return the rice to Chan Lin, but since even the latter, again
from petitioner-defendant's own testimony above-quoted, was ready to return the rice to SANDOVAL, and the latter's driver denies that the
rice had been returned by petitioner-defendant cannot be allowed to unjustly enrich himself at the expense of another by holding on to
property no longer belonging to him.7 In law and in equity, therefore, SANDOVAL is entitled to recover the rice, or the value theref since
hewas not paid the price therefor.

WHEREFORE, albeit on a different premise, the judgment under review is hereby AFFIRMED. Costs against petitioner.

SO ORDERED.

G.R. No. L-30204 October 29, 1976

PACIFIC MERCHANDISING CORPORATION, plaintiff-appellee,

vs.
CONSOLACION INSURANCE & SURETY CO., INC., defendant-appellee,

CONSOLACION INSURANCE & SURETY CO., INC., third party plaintiff-appellee,

vs.
GREGORIO V. PAJARILLO, third party defendant-appellant.

Vicente T. Velasco, Jr. & Associates for plaintiff-appellee.

Castro, Panlaque & De Pano for defendant and third-party plaintiff-appellee.

Yuseco, Abdon & Yuseco for third-party defendant-appellant.

ANTONIO, J.:

Appeal, on a question of law, from the judgment of the Court of First Instance Of Manila,
dated August 8, 1964, affirming the decision of the City Court in Civil Case No. 117811.
The issue arose from the following facts:

In Civil Case No. 117811, which was an action instituted by Pacific Merchandising
Corporation (plaintiff-appellee) to collect the sum of P2,562.88 from Consolacion
Insurance & Surety Co., Inc., (defendant- appellee) who in turn filed a third-party
complaint against Gregorio V. Pajarillo (third-party defendant-appellant). the City Court
of Manila rendered judgment on April 6, 1964, the dispositive portion of which reads, in
part, thus:

WHEREFORE, in view of the foregoing, judgment is hereby rendered in

favor of the plaintiff and against the defendant, ordering the latter to pay
the former the sum of P2,562.88 with interest thereon at the rate of 12%
per annum from May 30, 1963 until fully paid, P100.00 as for attorney's
fees, plus the costs of suit; condemning third defendant to pay third-party
plaintiff for whatever sums or amounts tlie latter paid the plaintiff on
account of this judgment.

By virtue of the appeal interposed by the third-party defendant Gregorio V. Pajarillo, the
case was elevated, on May 12, 1964, to the Court of First Instance of Manila. On July
21, 1964, the parties, through their respective counsel, submitted the following
Stipulation of Facts:

1. That on the 19th day of October, 1962, a Writ of Execution as isstica Iy

the Court of First Instance of Manila under Civil Case No. 49691, entitled
Pacific Merchandising Corporation vs. Leo Enterprises, Inc., a copy of the
said Writ of Execution is attached as ANNEX Ato the complaint;

2. That by virtue of the aforesaid Writ of Execution, the Sheriff of Manila

levied and attached the following:

'l. Second Hand AUTOMATICKET Machine No. MG-31833;and

'2. Cinema Projectors Complete, trademark SIMPLEX PEERLESS

MAGNARC NOS. 52625 and 62387' which items were advertised for sale
on March 2, 1963, copy of Notice of sale attached as ANNEX 'B' to the
Complaint;

3. That Atty. Greg V. Pajarillo was appointed on March 2, 1963 as

Receiver of all the assets, properties and equipment of Paris Theatre,
olwrated by Leo Enterprises, Inc. under Civil Case No. 50201 entitled
Gregorio V. Pajarillo vs. Leo Enterprises, Inc.;

4. That the sale at public auction of the above described properties was
postponed and was later cancelled due to thc representation of Atty. Greg
V. Pajarillo as Receiver of Paris Theatre operated by Leo Enterprises, Inc.
in which he undertook the 1anient of the judgment rendered in favor of the
plaintiff against Leo Enterprises, Inc. as Ier undertaking dated March 11,
1963, copy of which is attached as ANNEX 'C' to the complaint;

5. That on or about hie third of March, 1963, third-party defendant Pajarillo

approached the third-party plaintiff and applied for a surety bond in the
amount of P5,000.00 to be rated in favor of the abovenamed plaintiff in
order to guarantee to said plaintiff the payment of obligations in its favor
by the Leo Enterprises, Inc.;

6. That the bond applied for was in fact executed in favor of the pIaintiff
rith third-party defendant Pajarillo as principal and third-party plaintiff as
surety in the context of the allegations of the preceding paragraph and a
copy of the said bond is attached a ANNEX 'A' to the third party complaint;

7. That to protect thirrd party plaintiff against damage and injury, the third
party defendant Pajarillo executed in favor of the former an INDEMNITY
AGREEMENT, copy of which is attached as ANNEX 'B' to third party
complaint; tlie trms of which aie incorporated by reference;

8. That the plaintiff received from hie aid principal, Greg V. Pajarillo the
sum of P2,000.00 leaving a balance of P2,562.88 still unpaid aside from
interest at the rate of 1% per month and atto lnen s f cluiaient to 25% of tht
amount due as provided for in said undertaking (ANNEX 'C' to tlie
complaint);

9. That on July 1, 1963, a decision was rendered tne court of First

Instance of Manila in Civil case No. 50201, copy of' which is attached its
ANNEX 'A' to Answer to Third Party Complaint, by virtue of which Greg V.
Pajarillo, as said Received stololcl making payments to plaintiff;

10. That the said decision in Civl Case No. 50201 dated July 1, 1963 was
appealed lix defendant Leo Enterprises, Inc. to the court of Appeals and
that the records kere eleattd to the aid ApiIiat court on August 27, 1963;

11. That on October 9, 1963, plaintiff's counsel demanded from the said
principal, Greg V. Paiarillo, the payment of the installments corresponding
to the months of May, June, July, August and September, 1963, which
remain unpaid in spite of said demand, copy of said letter being, attached
as ANNEX 'E' to the complaint;

12. That the defendant was duly notified of the demand made on the
principal, Greg V. Pajarillo and in spite of said notice the defendant has
failed and refused to pay the unpaid obligation;

13. That on December 19, 1963, plaintiff's counsel demanded from the
defendant the payment of the unpaid obligation of the principal, Greg V.
Pajarillo but refused and failed to pay the same in spite of said demand;

14. That when reminded by third-party plaintiff regarding his obligations in

favor of the plaintiff, the third-party defendant, Greg V. Pajarillo replied that
 he no longer was bound to pay because he had ceased to be the receiver
of Paris Theatre operated by Leo Enterprises, Inc. by virtue of the decision
of the Court in Civil Case No. 50201 cited above, and for this reason,
third- party plaintiff refused to pay the demand of the plaintiff 2

On the basis of the foregoing Stipulation of Facts, the Court of First Instance rendered
judgment on August 8, 1964, which judgment was amended on August 25, 1964,
affirming the appealed decision of the City Court .2*

The trial court predicated its judgment on the following considerations: (1) Since the
unpaid claim represents the cost of certain materials used in the construction of the
Paris Theatre, the possession of which reverted to Gregorio V. Pajarillo as owner of
said property by virtue of the judgment in Civil Case No. 50201, "it is only simple justice
that Pajarillo should pay for the said claim. otherwise he would be enriching himself by
having the said building without paying plaintiff for the cost of certain materials that went
into its construction"; (2) "under Section 7 of Rule 61 of the former Rules of Court, one
of the powers of a receiver i8 to pay outstanding debts, and since the said plaintiff's
claim has been outstanding since August 27, 1962, if not before, Pajarillo should have
paid the same long before the alleged termination of the receivership on July 1, 1963";
(3) the procedure outlined in Section 8 of the Rule, namely, that whenever the court
"shall determine that the necessity for a receiver no longer exists, it shall, after due
notice to all interested parties and hearing, settle the accounts of the receiver, direct the
delivery of the funds and other property in his hands to the persons adjudged entitled to
receive them, and order the discharge of the receiver from further duty as such," has not
been followed; and (4) when Gregorio V. Pajarillo undertook to pay the amount owed to
plaintiff (Annex "C") and executed the surety bond (Annex "D") in favor of plaintiff, he 4
6 stepped into the shoes" of the dr Leo Enterprises, Inc., .4 and the properties of the
said debtor having all subsequently passed on to Pajarillo, there is no reason, legal or
otherwise, for relieving defendants of their said undertaking."

The court a quo likewise declared that (1) "the receivership was not terminated by virtue
of the appeal interposed by Leo Enterprises, Inc., one of the defendants in Civil Case
No. 50201, because a decision which is appealed cannot be the subject of execution";
(2) "granting arguendo that the decision is final and executory, the said decision cannot
bind nor can it be enforced against the plaintiff in the present case because it is not a
party in Civil Case No. 50201"; and (3) "when Atty. Pajarillo assumed the obligation of
Leo Enterprises, Inc., as a Receiver, there was a subrogation of the party liable and,
therefore, the plaintiff cannot enforce the judgment in Civil Case No. 49691 against Leo
Enterprises, Inc."

From the foregoing judgment, third-party defendant Gregorio V. Pajarillo interposed an

appeal to the Court of Appeals. The aforesaid Appellate Court, in turn certified the same
to this Court on the ground that there is no question of fact involved, but only one of law.
The legal question is whether or not third party defendant-appellant Gregorio V. Pajarillo
is, under the facts and circumstances obtaining, liable to plaintiff for the unpaid amount
claimed. Upon the resolution of this issue will in turn depend the liability of defendant-
third-party plaintiff Consolacion Insurance & surety Co., Inc. under the Surety Bond, on
the basis of which it was ordered by the court a quo to pay the amount involved to
plaintiff-appellee.

1. A receiver is not an agent or representative of any party to the action. He is an officer

of the court exercising his functions in the interest of neither plaintiff nor defendant, but
for the common benefit of all the parties in interest. 3 He performs his duties "subject to
the control of the Court," and every question involved in the receivership may be
determined by the court taking cognizance of the receivership proceedings. 4 Thus, "a
receiver, strictly speaking, has no right or power to make any contract binding the
property or fund in his custody or to pay out funds in his hands without the authority or
approval of the court ... . 5 As explained by Justice Moran, speaking for the Court in a
1939 case 6 ... The custody of the receiver is the custody of the court. His acts and
possession are the acts and possession of the court, and his contracts and liabilities
are, in contemplation of law, the contracts and liabilities of the court. As a necessary
consequence, receiver is f subject to the control and supervision of the court at every
step in his management of the property or funds placed in his hands. ... 7 He cannot
operate independently of the court, and cannot enter into any contract without its
approval.

... El depositario no puede obrar independientemente del jusgado;

contrata bajo el control del mismo; sin su autorizacion o aprobaci6n
expresa, el depositario no puede perfeccionar ningun contrato. ... 8

2. In the case at bar, appellant Pajarillo does not dispute the fact that he never secured
the court's approal of either the agreement of March 11, 1963, with Pacific
Merchandising Corporation or of his Indemnity Agreement with the Consolacion
Insurance & Surety Co., Inc. on March 14, 1963, in consideration of the performance
bond submitted by the latter to Pacific Merchandising Corporation to guarantee the
payment of the obligation. As the person to whom the possession of the theater and its
equipment was awarded by the court in Civil Case No. 50201, it was certainly to his
personal profit and advantage that the sale at public auction of the liquipment of the
theater was prevented by his execution of the aforesaid agreement and submission of
the afore-mentioned bond. In order to bind the property or fund in his hands as receiver,
he should have applied for and obtained from the court authority to enter into the
aforesaid contract. 9 Unauthorized contracts of a receiver do not bind the court in
charge of receivership. They are the receiver's own contracts and are not recognized by
the courts as contracts of the receivership. 10 Consequently, the aforesaid agreement
and undertaking entered into by appellant Pajarillo not having been approved or
authorized by the receivership court should, therefore, be considered as his personal
undertaking or obligation. Certainly, if such agreements were known by the receivership
court, it would not have terminated the receivership without due notice to the judgment
creditor as required by Section 8 of Rule 59 of the Rules of Court. This must be
assumed because of the legal presumption that official duty has been regularly
performed. 11 Indeed, if it were true that he entered into the agreement and undertaking
as a receiver, he should have, as such receiver, submitted to the court an account of
the status of the properties in his hands including the outstanding obligations of the
receivership. 12 Had he done so, it is reasonable to assume that the judgment creditor
would have opposed the termination of the receivership, unless its claim was paid.
Having failed to perform his duty, to the prejudice of the creditor, appellant should not
be permitted to take advantage of his own wrong. The judgment creditor having been
induced to enter into the aforesaid agreement by appellant Pajarillo it was the duty of
the latter to comply with is end of the bargain. He not only failed to perform his
undertaking, but now attempts to evade completely his liability. Under such
circumstances, appellant is not entitled to equitable relief. No ground for equitable relief
can be found in a case where a party has not only failed to perform the conditions upon
which he alone obtained the execution of the contract, but where it is clear that he
never, at any time, intended to perform them.13

3. Moreover, it will be recalled that the obligation due the Pacific Merchandising
Corporation represented the cost of materials used in the construction of the Paris
Theatre. There can not be any question that such improvements, in the final analysis,
redounded to the advantage and personal profit of appellant Pajarillo because the
judgment in Civil Case No. 50201, which was in substance affirmed by the Appellate
Court, ordered that the "possession of the lands, building equipment, furniture, and
accessories ..." of the theater be transferred to said appellant as owner thereof.

As the trial court aptly observed "... it is only simple justice that Pajarillo should pay for
the said claim, otherwise he would be enriching himself without paying plaintiff for the
cost of certain materials that went into its construction. ... It is argLicd however, that he
did so only as a receiver of Leo Pajarillo by virtue of the judgment in Civil Case No.
50201 all of the properties of Leo Enterprises, Inc. passed on to Pajarillo by virtue of the
judgment in Civil Case No. %201 ...". This Roman Law principle of "Nemo Cum
alterious detrimento locupletari protest" is embodied in Article 22 (Human Relations), 14
and Articles 2142 to 2175 (QuasiContracts) of the New Civil Code. Long before the
enactment of this Code, however, the principle of unjust enrichment which is basic in
every legal system, was already expressly recognized in this jurisdiction.

As early as as 1903, in Perez v. Pomar, 15 this Court ruled that where one has
rendered services to another, and these services are accepted by the latter, in the
absence of proof that the service ",as rendered gratuitously, it is but just that he should
pay a reasonable remuneration therefore because "it is a wellknown principle of law,
that no one should be permitted to enrich himself to the damage of another." Similarly in
1914, this Court declared that in this jurisdiction, even in the absence of statute," ...
under the general principle that one person may not enrich himself at the expense of
another, a judgment creditor would not be permitted to retain the purchase price of land
sold as the property of the judgment debtor after it has been made to appear that the
judgment debtor had no title to the land and that the purchaser had failed to secure title
thereto ... 16 The foregoing equitable principle which springs from hie fountain of good
conscience are applicable to the case at bar.

ACCORDINGLY, in view of the foregoing, the judgment unirilleal is httcf AFFIRMED.

Costs against appellant.

G.R. No. L-35697-99 April 15, 1988

ELADlA DE LIMA, POTENCIANO REQUIJO, NEMESIO FLORES, REYNALDO

REQUIJO, DOMINADOR REQUIJO and MARIO REQUIJO, petitioners,
vs.
LAGUNA TAYABAS CO., CLARO SAMONTE, SANTIAGO SYJUCO, INC., (SEVEN-
UP BOTTLING CO., OF THE PHILIPPINES) and PORVENIR ABAJAR BARRETO,
respondents.

Leon O. Ty, Gesmundo and Gesmundo and Renato B. Vasquez for petitioners.

Domingo E. de Lara and Associates for respondents.

GANCAYCO, J.:
Before Us is a petition for review on certiorari of the decision De Lima vs. Laguna Tayabas Co. of the Court of Appeals 1 affirming the
decision of the court a quo with modification to include an award of legal interest on the amounts adjudged in favor of the petitioners from the
date of the decision of the Court of Appeals to the time of actual payment.

This present action arose from a collision between a passenger bus of the Laguna Tayabas Bus Co. (LTB) and a delivery truck of the Seven-
up Bottling Co. of the Philippines which took place on June 3, 1958 resulting in the death of Petra de la Cruz and serious physical injuries of
Eladia de Lima and Nemesio Flores, all passengers of the LTB bus. Three civil suits were filed against herein respondents which were
consolidated for trial before the Court of First Instance of Laguna (San Pablo City).

On December 27, 1963, the court a quo rendered its decision, the dispositive part of which reads as follows:

WHEREFORE, in view of all the foregoing considerations, judgment is hereby rendered against the defendants LTB
Co. Inc. and Claro Samonte, who are hereby ordered to pay jointly and severally, the resolve plaintiffs.

In Civil Case No. SP-239; Plaintiff Eladia de Lima:

For loss of money and medical P960.00

1 expenses.
.
2 For loss of earnings from June 3,
. 1958 to

November 3, 1958 . 924.00

3 For expenses of litigation and attorney's

.
 fees . .1,000.00

TOTAL P 2,884.00

In Civil Case No. SP-240; Plaintiffs Requijos:

For the death of Petra de la Cruz P 3,883.82

1
including funeral expenses

2 For the money lost during the trip 800.00

3 Moral damages for mental anguish

(of Mercado vs. Lira, et al.) 3,000.00

4 For the loss of earning capacity for

5 years 8,000.00

5 For expenses of litigation and

attorney's fees 2,500.00

TOTAL P18,183.82

In Civil Case No. SP-268: To Plaintiff Nemesio Flores:

For loss of earning capacity for

1.
5 year from June 3, 1958 at
the

rate of P228.00 a month P 3,680.00

2. For expenses of litigation

and

attorney's fees. 1,000.00

TOTAL P14,680.00

Plaintiffs in Civil Cases Nos. SP-239 and SP-240 filed a motion for reconsideration of the decision seeking an award of legal interest on the
amounts adjudged in their favor from the date of the said decision but their motion was not acted upon by the court a quo.

All of the plaintiffs voluntarily desisted from appealing the decision by reason of financial necessity and in the hope that the defendants LTB
Co. and its driver Claro Samonte will be persuaded to make immediate payment to them as adjudged by the court a quo. Only the said
defendants appealed the decision to the Court of Appeals.

In the motion of petitioners dated December 29, 1971 filed with the Court of Appeals, 2 they sought for an immediate decision of the case
with a prayer for the granting of legal interest from the date of the decision of the court a quo and for the increase to P12,000.00 of the civil
indemnity of P3,000.00 awarded for the death of Petra de la Cruz.

On January 31, 1972, the now disputed decision of the Court of Appeals was promulgated. 3
Petitioners moved for a reconsideration of this decision 4 seeking its modification so that the legal interest awarded by the Appellate, Court
will start to run from the date of the decision of the trial court on December 27, 1963 instead of January 31, 1972, the date of the decision of
the Court of Appeals. Petitioner potenciano Requijo as heir of the deceased Petra de la Cruz further sought an increase in the civil indemnity
of P3,000.00 to P 12,000.00.

The Appellate Court denied the motion for reconsideration holding that since the plaintiffs did not appeal from the failure of the court a quo to
award interest on the damages and that the court on its own discretion awarded such interest in view of Art. 2210 of the Civil Code, the
effectivity of the interest should not be rolled back to the time the decision of the court a quo was rendered. 5

Hence this petition.

The assignment of errors raised the following issues, to wit:

1) Whether or not the Court of Appeal; erred in granting legal interest on damages to start only from the date of its decision instead of from
the date of the trial court's decision;

2) Whether or not the Court of Appeals erred in not increasing the indemnity for the death of Petra de La Cruz (in Civil Case No. SP-240)
from P3,000 to P12,000.00.

We find merit in the petition.

Under the first issue, petitioners contend that the ruling of she Appellate Court departs from the consistent rulings of this court that the award
of the legal rate of interest should be computed from the promulgation of the decision of the tonal court.

Respondents counter that petitioners having failed to appeal from the lower court's decision they. are now precluded from questioning the
ruling of the Court of Appeals.

It is true that the rule is well-settled that a party cannot impugn the correctness of a judgment not appealed from by him, and while he may
make counter assignment of errors, he can do so only to sustain the judgment on other grounds but not to seek modification or reversal
thereof, 6 for in such case he must appeal. 7 A party who does not appeal from the decision may not obtain any affirmative relief from the
appellate court other than what he has obtained from the lower court, if any, whose decision is brought up on appeal. 8

However, respondents failed to note that the legal interest was awarded by the Appellate Court in its discretion based on equitable grounds
which is duly sanctioned by Art. 2210 of the Civil Code which provides

Interest may, in the discretion of the court, be allowed upon damages awarded for breach of contract.

Thus, the Appellate Court pointed out

A further examination of the record will also show that the plaintiffs in Civil Cases Nos. SP-239 and SP-240 moved for
the reconsideration of the decision appealed from to include the award of legal interest on the amounts adjudicated
from the date of the decision, but said motion was not acted upon by the court a quo. Although said plaintiffs failed to
appeal on this issue, and did not file their brief to reiterate their claim for interest thereon, the plaintiff in Civil Case No.
SP-268, Nemesio Flores, filed his brief and prayed for the imposition of interest from the date of the decision. We are
not left without discretion to resolve this issue, considering the provision of Article 2210, New Civil Code, stating that
"Interest may, in the petition of the court, be allowed upon damages awarded for breach of contract." There is no doubt
that the damages awarded in these civil cases arise from the breach of a contractual obligation on the part of the
defendants- appellants. But to grant the imposition of interest on the amounts awarded to and as prayed for by one of
the plaintiffs and deny the same to the others considering that the cases arose from one single incident would be, to
Our mind, unfair and inequitous. In the light, therefore, not only of the provision of the Civil Code above referred to, but
also the facts and circumstances obtaining in these cases. We believe that on equitable grounds legal interest, should
be allowed on the amounts adjudged in favor of the plaintiffs from the date of this decision up to the time of actual
payment thereof.

Also noteworthy is the case of Fores v. Miranda 9 where this Court upheld the granting by the Court of Appeals of attorney's fees even if the
respondent, a jeepney passenger injured in a vehicular accident, did not appeal from the decision of the trial court. The Appellate Court
found the award to be justified because the respondent asked for damages in his answer and the said court considered the attorney's fees as
included in the concept of damages which can be awarded whenever the court deems it just and equitable (Art. 2208, Civil Code of the
Philippines).

At any rate, this Court is inclined to adopt a liberal stance in this case as We have done in previous decisions where We have held that
litigations should, as much as possible be decided on their merits and not on technicality. 10
We take note of the fact that petitioners are litigating as paupers. Although they may not have appealed, they had filed their motion for
reconsideration with the court a quo which unfortunately did not act on it. By reason of their indigence, they failed to appeal but petitioners De
Lima and Requijo had filed their manifestation making reference to the law and jurisprudence upon which they base their prayer for relief
while petitioner Flores filed his brief.

Pleadings as well as remedial laws should be construed liberally in order that the litigants may have ample opportunity to pursue their
respective claims and that a possible denial of substantial justice due to legal technicalities may be avoided. 11

Moreover, under the circumstances of this case where the heirs of the victim in the traffic accident chose not to appeal in the hope that the
transportation company will pay the damages awarded by the lower court but unfortunately said company still appealed to the Court of
Appeals, which step was obviously dilatory and oppressive of the rights of the said claimants: that the case had been pending in court for
about 30 years from the date of the accident in 1958 so that as an exception to the general rule aforestated, the said heirs who did not
appeal the judgment, should be afforded equitable relief by the courts as it must be vigilant for their protection. 12 The claim for legal interest
and increase in the indemnity should be entertained in spite of the failure of the claimants to appeal the judgment.

We take exception to the ruling of the Appellate Court as to the date when the legal interest should commence to ran. In view of the
consistent rulings of this Court, We hold that the legal interest of six percent (6) 13 on the amounts adjudged in favor of petitioners should
start from the time of the rendition of the trial court's decision on December 27, 1963 instead of January 31, 1972, the promulgation of the
decision of the Court of Appeals. 14

As to the second issue, civil indemnity for the death of Petra de la Cruz was properly awarded by virtue of Art. 1764 in relation to Art. 2206 of
the Civil Code of the Philippines which allows a minimum indemnity of P3,000.00 for the death of a passenger caused by the breach of
contract by a common carrier. In accordance with prevailing jurisprudence the indemnity of P3,000.00 should be increased to P30,000.00
and not P12,000.00 as prayed for by petitioner.

If the transportation company had only accepted the judgment of the trial court and paid its just awards instead of appealing the same to the
Court of Appeals, no further delay would have been occasioned on the simple issue of interest and indemnity. To mitigate the impact of such
a great delay in this case the Court finds ample justification in the aforesaid award for interest and indemnity. We hope this relief is not too
late.

WHEREFORE, the petition is hereby GRANTED, the subject decision is modified in that the legal interest on the damages awarded to
petitioners commences from the date of the decision of the court a quo until actual payment while the civil indemnity for the death of Petra de
la Cruz is increased to P 30,000.00. This judgment is immediately executory and no motion for extension of time to file motion for
reconsideration shall be entertained.

SO ORDERED.
 P/Supt. MANUEL P. BARCENA, A.M. No. RTJ-03-1794

Complainant, [Formerly OCA IPI No. 00-941-RTJ]

Present:

Davide, Jr., C.J.,

- versus - (Chairman),

Quisumbing,

Ynares-Santiago,

Carpio, and

Azcuna, JJ.

Judge HENRICK F. GINGOYON, Promulgated:

Respondent.

October 25, 2005

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

RESOLUTION

QUISUMBING, J.:

On April 27, 2000, complainant P/Supt. Manuel P. Barcena filed with the Office of
the Chief Justice, a verified letter-complaint[1] charging respondent Judge Henrick
F. Gingoyon, presiding judge of the Regional Trial Court, Branch 117 in Pasay
City, with gross ignorance of the law, grave abuse of authority, and bias and
partiality.
Complainant alleges that he was formerly the Chief of the Regional Drug
Enforcement Office of the PNP-NCRPO. On August 25, 1998, complainant and
his men conducted a buy-bust operation in 2817 P. Zamora St., Pasay City. They
arrested and charged two persons, Shien Ngo Chiao and Ping Chua Shoing, with
violations of Republic Act No. 6425, the Dangerous Drugs Act of 1972. Their
cases were docketed as Criminal Cases Nos. 98-1124 and 98-1125. Also seized
were a 1998 Mitsubishi Lancer, with Plate No. WEW 323, registered to one John
Chua, and a 1995 Nissan Sentra, with Plate No. UDE 228, registered to a certain
Willy Quintos. These were allegedly used in the commission of the crime.

Complainant states that Criminal Cases Nos. 98-1124 and 98-1125 were raffled to
Branch 116 of the RTC in Pasay City, and jointly tried by respondent in his
capacity as pairing judge of the branch. On December 7, 1998, respondent granted
accuseds demurrer to evidence.[2] Later, despite a judgment of acquittal, he issued
an order on December 11, 1998, giving due course to the prosecutions notice of
appeal.[3]

Further, complainant adds, respondent gave custody of the cars to Sheriffs Leoncio
Gutierrez, Jr., and Reynaldo Mulat, and ordered complainant to turn over the cars
to them despite the elevation of the records of the cases to the Court of Appeals.[4]
Respondent likewise issued an order on January 3, 2000,[5] denying a motion for
the release of the vehicles that was filed by the counsel for the accused on behalf of
the registered owners.

Complainant further alleges that on March 25, 2000, while performing his
functions as the new Chief of Police of Bacoor, Cavite, he chanced upon the
Lancer parked in a vacant lot in Soldiers Hills IV Subdivision in Molino, Bacoor.
He learned from nearby residents that Sheriff Mulat had been using the car for the
past eight months. Complainant asked Sheriff Mulat for the registration papers and
his authority to use the car. When Sheriff Mulat could not produce any,
complainant and his men towed the car to their station for verification and proper
disposition.[6]

Sheriff Mulat submitted a report of the incident to respondent on March 27, 2000,
alleging that complainant and his men forcibly took the vehicle. On even date,
respondent issued an order[7] against complainant and his men requiring them to
show cause why they should not be cited for contempt for towing the vehicle,
which they knew was in custodia legis. Included in the order was a directive that
copies of it be sent to the Ombudsman, the Secretary of the Department of Interior
and Local Government, the Chief of the Philippine National Police, and the
National Police Commission, for possible administrative or criminal prosecution of
complainant.

Complainant avers that respondent is guilty of gross ignorance of the law for
allowing the prosecution to appeal a judgment of acquittal.[8]

Complainant also charges respondent with grave abuse of authority supposedly for
allowing Sheriff Mulat to use the car for the latters personal benefit. Complainant
argues that respondent should have known that Sheriff Mulat had been using the
car and keeping it in a vacant lot in Soldiers Hills IV Subdivision near the latters
house because respondent lived nearby. Complainant adds that respondent should
have ordered the car impounded. According to complainant, respondents failure to
discharge the car despite the lapse of eight months, when considered with the fact
that respondent issued the show cause order with celerity the same day Sheriff
Mulats report was filed, shows that respondent approved of the illegal use of the
car.[9]

Complainant further avers that respondent issued an order on January 3, 2000,

denying the motions for the release of the vehicles despite the fact that Criminal
Cases Nos. 98-1124 and 98-1125 were already elevated to the Court of Appeals.
Complainant speculates that the order was intended to make it appear that the case
was still pending before the trial court to justify Sheriff Mulats continued
possession and use of the car.[10]

Lastly, complainant charges respondent with bias and partiality. He argues that
respondent acted with undue haste in issuing the show cause order. He likewise
contends that respondent had prejudged him and his men liable for contempt. He
adds that respondent without first conducting a hearing to verify the veracity of
Sheriff Mulats report furnished copies of the show cause order to the Ombudsman,
the DILG Secretary, the PNP Chief and the NAPOLCOM for possible filing of
administrative complaints against complainant and his men. Further, according to
complainant, respondent had declared in open court that he wanted to resolve the
contempt incident on the first day of hearing and was reluctant to grant them
extension of time to controvert the additional evidence Sheriff Mulat had submitted
during said hearing.[11]

In his comment dated May 2, 2000,[12] respondent explains that he gave due
course to the notice of appeal despite the judgment of acquittal not because the
notice was meritorious, but because it was filed within the reglementary
period.[13] Respondent cites the ruling of this Court that a special civil action
brought to question the judgment of acquittal does not place the accused in double
jeopardy if the judgment of acquittal was in effect a denial of the States right to
due process.[14]

Moreover, respondent claims he acted in good faith. He avers that he repeatedly

advised the handling prosecutor to file a special civil action for certiorari instead of
an appeal. He also made it clear that the notice was given due course only because
it was filed within the reglementary period. He adds that he qualifiedly and
reluctantly gave due course to the appeal to afford the prosecution latitude for legal
activism, as judges are called upon to be judicial activists or to be receptive to
innovative views, paradigmatic shifts and blazing new jurisprudential trails.[15]

Respondent denies the charge of grave abuse of authority and points out that
complainant relies wholly on speculations and surmises. Respondent adds that
there is nothing irregular about his order placing custody of the car with Sheriffs
Leoncio Gutierrez, Jr., and Reynaldo Mulat because courts in Pasay City, like most
courts, have no impounding area, and it is a matter of practice to instruct sheriffs to
keep the impounded vehicles in their own places of storage.[16] He admits that he
instructed Sheriff Mulat to drive the car to the court on several occasions in
connection with the hearings on motions filed for the release of the vehicles. And
this act is not prohibited.

Respondent insists that he could entertain the motions for the release of the
impounded vehicles because he never lost jurisdiction over the civil aspect of the
case and only the jurisdiction of the court over the criminal aspect of the case was
lost upon the perfection of the appeal and the elevation of the records to the Court
of Appeals.[17]

Further, respondent denies he issued the show cause order with undue haste,
contending he was simply being efficient. He likewise denies depriving
complainant and his men of their right to be heard. He points out that he gave them
an extension of five days to file their supplemental affidavit, as well as granted
their prayer to be allowed to confront the witnesses for Sheriff Mulat. That he
furnished copies of his order to the Ombudsman, the DILG Secretary, the PNP
Chief and the NAPOLCOM also cannot be taken as proof of bias and partiality
because according to him, keeping the charges to himself may constitute
misprision of a potential felony.[18]
After the Office of the Court Administrator recommended that the matter be
investigated, we referred the case to Court of Appeals Associate Justice Rebecca
De Guia-Salvador for investigation, report, and recommendation.[19]

In her report dated July 10, 2002, Justice De Guia-Salvador found no proof that
respondent was impelled by bad faith, malice, an impulse to do an injustice,
corrupt consideration, or any other similar motive in issuing the erroneous order
granting due course to the notice of appeal. Thus, she recommended that the charge
of gross ignorance of the law be dismissed for lack of merit.

Justice De Guia-Salvador likewise found no proof that respondent acted with grave
abuse of authority or with manifest bias and partiality. She stated that because the
appeal was a patent nullity, the trial court never lost jurisdiction over the case and
all its incidents, including the resolution of the motions for the release of the
vehicles.

Despite Justice De Guia-Salvadors report, the OCA recommended that respondent

be reprimanded for gross ignorance of the law. The OCA also recommended that
the complaint be treated as an administrative complaint against Sheriff Mulat
because of the gravity of the offenses imputed to him.

We agree with OCAs recommendation.

While judges should not be held to answer criminally, civilly or administratively

for every erroneous decision rendered by him in good faith,[20] it is imperative
that they be conversant with basic legal principles.[21] Rule 1.01, Canon 1 of the
Code of Judicial Conduct requires them to be the embodiment of competence,
integrity, and independence.

Here, respondent manifested gross ignorance of the law when he issued an order
giving due course to the prosecutions notice of appeal. If a demurrer to evidence is
sustained, such dismissal being on the merits, is equivalent to an acquittal. This is
basic. Hence, the prosecution cannot appeal as it would place the accused in double
jeopardy.[22] No person shall be put twice in jeopardy of punishment for the same
offense.[23]

True, as pointed out by respondent, this Court has consistently ruled that double
jeopardy does not attach where the State is deprived of a fair opportunity to
prosecute and prove its case,[24] or where the dismissal of an information or
complaint is purely capricious or devoid of reason,[25] or when there is lack of
proper notice and absolute lack of opportunity to be heard.[26] These exceptional
circumstances are not herein present and respondent should have known that
granting the appeal would constitute double jeopardy. The proper recourse would
be a special civil action for certiorari under Rule 65 of the Rules of Court.

Respondents claim that he gave due course to the appeal in the exercise of judicial
activism is mere afterthought. A second look at his order clearly shows his
ignorance of the well-settled rule categorically prohibiting appeals from judgments
of acquittals.[27] Respondent said that the notice of appeal is filed within the
reglementary period and that at least for that reason, the same is given due course.
His interpretation of the rule is without any basis in law. When the law is clear and
basic, a judge owes it to his office to simply apply it. Anything less than that
constitutes gross ignorance of the law.[28] Judges sit as the embodiment of the
peoples sense of justice, their last recourse where all other institutions have failed,
so much so that a judges ignorance cannot be allowed to erode the peoples belief in
the justice system.

Respondent, additionally, should not have ordered the transfer of possession of the
car to Sheriff Mulat for the latter to keep in his own place of storage. Section D(4),
Chapter VII of the Manual for Clerks of Court provides, All exhibits used as
evidence and turned over to the court and before the case/s involving such
evidence shall have been terminated shall be under the custody and safekeeping
of the Clerk of Court. Besides, the proper place of storage is a bonded warehouse.
In giving custody of the vehicle to Sheriff Mulat, respondent has stirred suspicions
that judicial administrators are appropriating for their personal use valuable court
exhibits. Canon 2 of the Code of Judicial Conduct enjoins him to avoid not only
impropriety in his conduct but even the mere appearance of impropriety.

Nonetheless, because there is no evidence that respondent allowed the illegal use
of the car, or that Sheriff Mulat had been using the car, we cannot declare that any
impropriety on this matter have been committed. The charges of misconduct
against Sheriff Mulat were investigated separately as A.M. OCA IPI No. 00-856-P
and dismissed by this Court on September 25, 2002, for lack of evidence.
Furthermore, complainant did not present anything irregular in respondents
continued exercise of jurisdiction over the two motor vehicles in custodia legis,
considering that the trial court never lost jurisdiction over the case, the appeal
being contrary to law. In administrative proceedings, the burden of proof that
respondent committed the act complained of rests on the complainant. If the
complainant fails in this, the charge must be dismissed.[29]
Similarly, there is no factual support to complainants charge of bias and partiality.
The fact alone that respondent immediately acted on Sheriff Mulats report
concerning the forcible taking and confiscation of the car by issuing the show
cause order against complainant and furnishing copies thereof to the Office of the
Ombudsman, DILG Secretary, PNP Chief, and NAPOLCOM in no way indicates
bias and partiality against complainant. Mere suspicion that a judge was partial is
not enough.[30]

We come to the matter of penalties. The OCA, taking into consideration that in
approving the prohibited notice of appeal respondent did not act with malice, bad
faith, or corrupt motives, recommended that respondent be reprimanded. Such
penalty, however, is inappropriate in view of the nature of the offense. To our
mind, considering the circumstances herein, a fine of P20,000 is proper, pursuant
to Rule 140 of the Rules of Court, in effect at the time the offense was
committed.[31] On the alleged abuse of authority, it was not shown that respondent
was impelled by any improper motive in allowing Sheriff Mulat to keep the car in
the latters own place of storage for an extended period of time. Thus, admonition
suffices in this instance.

WHEREFORE, respondent Judge Henrick F. Gingoyon, presiding judge of the

Pasay City Regional Trial Court, Branch 117, is found LIABLE for gross
ignorance of the law. He is ORDERED to pay a fine of twenty thousand pesos
(P20,000.00), with a STERN WARNING that a repetition of the same or similar
violation will be dealt with more severely. He is also ADMONISHED to exercise
due care in the performance of his duties and is reminded to be more careful in
issuing orders involving court exhibits.

SO ORDERED.