Republic of the Philippines

SUPREME COURT

THIRD DIVISION

A.M. No. P-04-1857. March 16, 2005

MERLINDA L. DAGOOC, Complainant,
vs.
ROBERTO A. ERLINA, Sheriff IV, RTC, Branch 40, Tandag, Surigao del Sur, Respondents.

RESOLUTION

CORONA, J.:

This is a complaint for misconduct and ignorance of the law filed by Merlinda L. Dagooc of Diatagon,
Lianga, Surigao del Sur, against deputy sheriff Roberto A. Erlina of the Regional Trial Court, Branch
40, Tandag, Surigao del Sur.

Complainant alleged that she was the plaintiff in Civil Case No. L-695 before the Regional Trial
Court, Branch 28, Diatagon, Lianga, Surigao del Sur. The court rendered judgment by compromise
agreement which immediately became final and executory. Complainant moved for the execution of
the decision and, on February 28, 2002, a writ of execution was issued which was endorsed to
respondent deputy sheriff Erlina for execution. The defendants, however, could not pay the money
judgment. Instead of levying on the properties of the defendants to satisfy the judgment, however,
sheriff Erlina asked them to execute promissory notes in favor of complainant which he asked the
latter to collect from the defendants. Complainant further alleged that respondent sheriff indicated in
his return of service that defendants were insolvent. But upon verification with the assessor’s office
of Tandag, Surigao del Sur, complainant discovered that defendants owned real properties, as
evidenced by the real property field appraisal and assessment sheet.

In his comment, respondent sheriff averred that he served a copy of the writ of execution on the
defendants but they could not pay the money judgment despite repeated demands. So he went to
the residence of the defendants to levy on some of their personal properties but he found them to be
exempt from execution pursuant to Section 13, Rule 39 of the Rules of Court. He then went to the
office of the provincial assessor to verify if the defendants owned real properties which he could levy
on. He alleged that he was given a certification that there was none. So he made a return of service
stating that defendants were insolvent. He denied calling up complainant for her to collect
defendant’s payment by means of promissory notes. But he advised her to secure an alias writ of
execution so he could eventually go after defendants’ real properties in Tandag, Surigao del Sur.

We referred the complaint to the Office of the Court Administrator (OCA) for review, evaluation and
recommendation. The OCA found the complaint meritorious and respondent sheriff guilty of
misconduct and gross ignorance of the law. It recommended that respondent be fined ₱5,000, with a
warning that the commission of a similar act in the future shall be dealt with more severely.

We find it strange and highly unusual, to say the least, that respondent sheriff did not know his
duties and functions under Section 9, Rule 39 of the Revised Rules of Court which clearly states
how the execution of money judgments should be made.
Section 9. Execution of judgments for money, how enforced. – (a) Immediate payment on demand. –
The officer shall enforce an execution of a judgment for money by demanding from the judgment
obligor the immediate payment of the full amount stated in the writ of execution and all lawful
fees. The judgment obligor shall pay in cash, certified bank check payable to the judgment
obligee, or any other form of payment acceptable to the latter, the amount of the judgment debt
under proper receipt directly to the judgment obligee or his authorized representative if present at
the time of payment. The lawful fees shall be handed under proper receipt to the executing sheriff
who shall turn over the said amount within the same day to the clerk of court of the court that issued
the writ. (emphasis ours)

The law mandates that in the execution of a money judgment, the judgment debtor shall pay either in
cash, certified bank check payable to the judgment obligee, or any other form of payment acceptable
to the latter. Nowhere does the law mention promissory notes as a form of payment. The only
exception is when such form of payment is acceptable to the judgment debtor. But it was obviously
not acceptable to complainant, otherwise she would not have filed this case against respondent
sheriff. In fact, she objected to it because the promissory notes of the defendants did not satisfy the
money judgment in her favor.

If the judgment debtor cannot pay all or part of the obligation in cash, certified bank check or other
mode of payment acceptable to the judgment obligee, the money judgment shall be satisfied by
levying on the properties of the judgment debtor. Thus,

Section 9(b) Satisfaction by levy. – If the judgment obligor cannot pay all or part of the obligation in
cash, certified bank check or other mode of payment acceptable to the judgment obligee, the officer
shall levy upon the properties of the judgment obligor of every kind and nature whatsoever which
may be disposed of for value and not otherwise exempt from execution giving the latter the option to
immediately choose which property or part thereof may be levied upon, sufficient to satisfy the
judgment. If the judgment obligor does not exercise the option, the officer shall first levy on the
personal properties, if any, and then on the real properties if the personal properties are insufficient
to answer for the judgment.

x x x x x x x x x1

Levy is defined as the act or acts by which an officer of the law and court sets apart or appropriates
a part or the whole of the loser’s (judgment debtor’s) property for the purpose of eventually
conducting an execution sale to the end that the writ of execution may be satisfied, and the judgment
debt, paid.2 However, not all of the judgment debtor’s properties may be levied upon because the
law exempts some of them from execution. 3 But the right of exemption from execution is a personal
privilege granted to the judgment debtor and, as such, it must be claimed not by the sheriff but by
the judgment debtor himself at the time of the levy or within a reasonable period thereafter. 4

Respondent sheriff not only failed to levy on the properties of the judgment debtor when they could
not pay the money judgment in cash but also claimed the exemption for them. His conduct blatantly
manifested his incompetence and ineptitude in discharging his functions. Moreover, respondent
sheriff was seriously remiss in his duties when he stated in his return of service that the defendants
were insolvent without first diligently verifying such fact. As it turned out, the defendants had real
properties he could have levied on to satisfy the money judgment.

But even assuming that the defendants/judgment debtors were insolvent, respondent sheriff should
have garnished their salaries (being paid employees) to enforce the judgment in the subject case as
provided for in Section 9(c), Rule 39 of the Revised Rules of Court.
(c) Garnishment of debts and credits. – The officer may levy on debts due the judgment obligor and
other credits, including bank deposits, financial interests, royalties, commissions and other personal
property not capable of manual delivery in the possession or control of third parties. Levy shall be
made by serving notice upon the person owing such debts or having in his possession or control
such credits to which the judgment obligor is entitled. The garnishment shall cover only such amount
as will satisfy the judgment and all lawful fees.

Either to desperately cover his tracks after it was pointed out to him that the defendants were not
insolvent at all or out of sheer ignorance of the law, respondent sheriff advised complainant to file a
motion for the issuance of an alias writ of execution allegedly so that he could levy on the properties
of the defendants. But there was no need for an alias writ of execution for him to levy on the real
properties of the defendants. The life of the writ was for five years and the judgment of the court had
not yet been fully satisfied. Section 14, Rule 39 of the Revised Rules of Court states that:

Section 14. Return of writ of execution. – The writ of execution shall be returnable to the court
issuing it immediately after the judgment has been satisfied in part or in full. If the judgment cannot
be satisfied in full within thirty (30) days after his receipt of the writ, the officer shall report to the
court and state the reason therefor. Such writ shall continue in effect during the period within
which the judgment may be enforced by motion. The officer shall make a report to the court
every thirty (30) days on the proceedings taken thereon until the judgment is satisfied in full, or its
effectivity expires. x x x (emphasis ours)

Sheriffs, as public officers, are repositories of public trust and are under obligation to perform the
duties of their office honestly, faithfully and to the best of their ability. They are bound to use utmost
skill and diligence in the performance of their official duties particularly where the rights of individuals
may be jeopardized by their neglect. 5 Here, we find respondent sheriff utterly wanting in zeal and
dedication. He was highly incompetent, downright inefficient and grossly ignorant of the law when he
did not faithfully execute the writ of execution to the prejudice of complainant.

Considering that respondent sheriff’s primary duty was the execution of the writ strictly according to
its terms, there was apparently more than mere "harmless" ignorance involved here, which makes
us wonder about the very lame and docile penalty of ₱5,000 being recommended by the OCA.
Applying Rule 4, Section 52 B(2) of the Revised Uniform Rules on Administrative Cases in the Civil
Service, we find respondent guilty of inefficiency and incompetence in the performance of his official
duties and suspend him from the service for one (1) year.

WHEREFORE, in view of the foregoing, we find respondent sheriff ROBERTO A. ERLINA of the
Regional Trial Court, Branch 40, Tandag, Surigao del Sur, GUILTY of inefficiency and incompetence
in the performance of his official duties. He is hereby SUSPENDED from the service for one (1) year
and WARNED that the commission of a similar act in the future shall be dealt with more severely.

SO ORDERED.

Panganiban, (Chairman), Sandoval-Gutierrez, Carpio-Morales, and Garcia, JJ., concur.

 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 154200               July 24, 2007

NATIONAL ELECTRIFICATION ADMINISTRATION and its BOARD OF

ADMINISTRATORS, Petitioners,
vs.
DANILO MORALES, Respondent.

DECISION

AUSTRIA-MARTINEZ, J>:

The sole issue for resolution in the Petition for Review on Certiorari1 before us is whether the Court
of Appeals (CA) committed an error of law in its July 4, 2002 Decision 2 in CA-G.R. SP No. 62919 in
ordering the implementation of a writ of execution against the funds of the National Electrification
Administration (NEA).

There being no dispute as to the facts,3 the following findings of the CA are adopted: 4

Danilo Morales and 105 other employees 5 (Morales, et al.) of the NEA filed with the Regional Trial
Court (RTC), Branch 88, Quezon City, a class suit6 against their employer for payment of rice
allowance, meal allowance, medical/dental/optical allowance, children’s allowance and longevity pay
purportedly authorized under Republic Act (R.A.) No. 6758. 7 In its December 16, 1999 Decision,8 the
RTC ordered NEA, thus:

WHEREFORE, foregoing considered, the petition is hereby GRANTED directing the respondent
NEA, its Board of Administrators to forthwith settle the claims of the petitioners and other employees
similarly situated and extend to them the benefits and allowances to which they are entitled but
which until now they have been deprived of as enumerated under Section 5 of DBM CCC No. 10
and their inclusion in the Provident Funds Membership, retroactive from the date of their
appointments up to the present or until their separation from the service.

No costs.

SO ORDERED.9

Upon motion of Morales, et al., the RTC issued a Writ of Execution dated February 22, 2000, 10 which
reads:

NOW, THEREFORE, you are hereby directed to cause respondents National Electrification
Administration (NEA) and its Board of Administrators with principal office address at 1050 CDC
Bldg., Quezon Avenue, Quezon City to forthwith settle the claims of the petitioners and other
employees similarly situated and extend to them the benefits and allowances to which they are
entitled but which until now they have been deprived of as enumerated under Sec. 5 of DBM CCC
No. 10 and you are further directed to cause their inclusion in the Provident Fund Membership,
retroactive from the date of their appointments up to the present or until their separation from the
service.11

Thereafter, a Notice of Garnishment 12 was issued against the funds of NEA with Development Bank
of the Philippines (DBP) to the extent of ₱16,581,429.00.

NEA filed a Motion to Quash Writs of Execution/Garnishment, 13 claiming that the garnished public
funds are exempt from execution under Section 414 of Presidential Decree (P.D.) No. 1445, 15 but
manifesting that it is willing to pay the claims of Morales, et al.,16 only that it has no funds to cover the
same, although it already requested the Department of Budget and Management (DBM) for a
supplemental budget.17

In its Order of May 17, 2000, the RTC denied the Motion to Quash but, at the same time, held in
abeyance the implementation of the Writ of Execution, thus:

WHEREFORE, the motion to quash writs of execution/ garnishment is DENIED but the
implementation of the judgment is placed on hold for ninety (90) days reckoned from this day. The
respondents are directed to formally inform this Court and the petitioners of the prospect of
obtaining funds from Department of Budget and Management within 30 days from receipt and
every 30 days thereafter, until the 90 day period has lapsed.

The motion to direct DBP to release to the petitioners the NEA funds garnished earlier amounting to
₱16,591.429 is also DENIED.

SO ORDERED.18 (Emphasis ours)

Morales, et al. filed a Partial Motion for Reconsideration 19 but the RTC denied it.20

Meanwhile, in a letter dated June 28, 2000, former DBM Secretary Benjamin E. Diokno informed
NEA Administrator Conrado M. Estrella III of the denial of the NEA request for a supplemental
budget on the ground that the claims under R.A. No. 6758 which the RTC had ordered to be settled
cannot be paid because Morales, et al. are not "incumbents of positions as of July 1, 1989 who are
actually receiving and enjoying such benefits."21

Moreover, in an Indorsement dated March 23, 2000, the Commission on Audit (COA) advised NEA
against making further payments in settlement of the claims of Morales, et al.. Apparently, COA had
already passed upon claims similar to those of Morales, et al. in its earlier "Decision No. 95-074"
dated January 25, 1995. Portions of the Indorsement read as follows:

This Office concurs with the above view. The court may have exceeded its jurisdiction when it
entertained the petition for the entitlement of the after-hired employees which had already
been passed upon by this Commission in COA Decision No. 95-074 dated January 25,
1995. There, it was held that: "the adverse action of this Commission sustaining the disallowance
made by the Auditor, NEA, on the payment of fringe benefits granted to NEA employees hired from
July 1, 1989 to October 31, 1989 is hereby reconsidered. Accordingly, subject disallowance is
lifted."

Thus, employees hired after the extended date of October 31, 1989, pursuant to the above
COA decision cannot defy that decision by filing a petition for mandamus in the lower court.
Presidential Decree No. 1445 and the 1987 Constitution prescribe that the only mode for
appeal from decisions of this Commission is on certiorari to the Supreme Court in the
manner provided by law and the Rules of Court. Clearly, the lower court had no jurisdiction
when it entertained the subject case of mandamus. And void decisions of the lower court can
never attain finality, much less be executed. Moreover, COA was not made a party thereto,
hence, it cannot be compelled to allow the payment of claims on the basis of the questioned
decision.

PREMISES CONSIDERED, the auditor of NEA should post-audit the disbursement vouchers on the
bases of this Commission's decision particularly the above-cited COA Decision No. 94-074 [sic] and
existing rules and regulations, as if there is no decision of the court in the subject special civil action
for mandamus. At the same time, management should be informed of the intention of this Office to
question the validity of the court decision before the Supreme Court through the Office of the
Solicitor General.22 (Emphasis ours)

Parenthetically, the records at hand do not indicate when Morales, et al. were appointed. Even the
December 16, 1999 RTC Decision is vague for it merely states that they were appointed after June
30, 1989, which could mean that they were appointed either before the cut-off date of October 31,
1989 or after.23 Thus, there is not enough basis for this Court to determine that the foregoing COA
Decision No. 95-074 adversely affects Morales, et al.. Moreover, the records do not show whether
COA actually questioned the December 16, 1999 RTC Decision before this Court.

On July 18, 2000, Morales, et al. filed a Motion for an Order to Implement Writ of Execution, pointing
out that the reason cited in the May 17, 2000 RTC Order for suspension of the implementation of the
writ of execution no longer exists given that DBM already denied NEA’s request for funding. 24 They
also filed a Petition to Cite NEA Board of Administrators Mario Tiaoqui, Victoria Batungbacal,
Federico Puno and Remedios Macalingcag in Contempt of Court 25 for allegedly withholding
appropriations to cover their claims.

Acting first on the petition for contempt, the RTC issued a Resolution dated December 11, 2000, to
wit:

The court is aware of its order dated May 17, 2000, particularly the directive upon respondents to
inform this court and the petitioners of the prospect of obtaining funds from the Department of
Budget and Management within the period specified. From the comments of the respondents, it
appears they did or are doing their best to secure the needed funds to satisfy the judgment
sought to be enforced. In this regard, Administrative Circular No. 10-2000 of the Supreme
Court provides:

"In order to prevent possible circumvention of the rules and procedures of the Commission on Audit,
judges are hereby enjoined to observe utmost caution, prudence and judiciousness in the issuance
of writs of execution to satisfy money judgments against government agencies and local government
units.

Judges should bear in mind that in Commissioner of Public Highways v. San Diego (31 SCRA 617,
625 [1970], this Court explicitly stated:

"The universal rule that where the State gives its consent to be sued by private parties either by
general or special law, it may limit claimant's action only up to the completion of proceedings anterior
to the stage of execution and the power of the court ends when the judgment is rendered, since
government funds and properties may not be seized under writs of execution or garnishment to
satisfy such judgment, is based on obvious considerations of public policy. Disbursements of public
funds must be covered by the corresponding appropriation as required by law. The functions and
public services rendered by the State cannot be allowed to be paralyzed or disrupted by the
diversion of public funds from their legitimate and specific objects as appropriated by law."

Moreover, it is settled jurisprudence that upon determination of State liability, the prosecution,
enforcement or satisfaction thereof must still be pursued in accordance with the rules and
procedures laid down in P.D. No. 1445, otherwise known as the Government Auditing Code of the
Philippines (Department of Agriculture v. NLRC, 227 SCRA 693, 701-02 [1993] citing Republic v.
Villasor, 54 SCRA 84 [1973]). All money claims against the Government must "first be filed with the
Commission on Audit which must act upon it within sixty days. Rejection of the claim will authorize
the claimant to elevate the matter to the Supreme Court on certiorari and in effect sue the State
thereby (P.D. 1445, Sections 49-50)."

WHEREFORE, foregoing considered, petition to cite respondents in contempt of court is premature,

hence the same is hereby DENIED.

SO ORDERED.26 (Emphasis ours)

Subsequently, the RTC issued an Order dated January 8, 2001, denying the Motion for an Order to
Implement Writ of Execution, citing the same SC Administrative Circular No. 10-2000.

Upon a Petition for Certiorari27 filed by Morales, et al., the CA rendered the July 4, 2002 Decision
assailed herein, the decretal portion of which reads:

WHEREFORE, the petition is hereby GRANTED. The Order dated January 8, 2001 and the
Resolution of December 11, 2000 of the public respondent Judge are declared NULL and VOID.

Accordingly, the respondent judge is directed to implement the Writ of Execution relative thereto.

SO ORDERED..28

The CA held that NEA can no longer take shelter under the provisions of P.D. No. 1445 and SC
Administrative Circular No. 10-2000 because it is a government-owned or controlled corporation
(GOCC) created under P.D. No. 269, effective August 6, 1973. 29 Citing Philippine National Bank v.
Court of Industrial Relations,30 the CA held that, as such GOCC, petitioner NEA may be subjected to
court processes just like any other corporation; specifically, its properties may be proceeded against
by way of garnishment or levy.31

NEA and its Board of Directors (petitioners) immediately filed herein petition for review. It is their
contention that the CA erred in directing implementation of the writ of execution on two grounds: first,
execution is premature as Morales, et al. (respondents) have yet to file their judgment claim with the
COA in accordance with P.D. No. 1445 and SC Administrative Circular No. 10-2000; 32 and second,
execution is not feasible without DBM as an indispensable party to the petition for certiorari for it is
said department which can certify that funds are available to cover the judgment claim. 33

The petition is meritorious.

Indeed, respondents cannot proceed against the funds of petitioners because the December 16,
1999 RTC Decision sought to be satisfied is not a judgment for a specific sum of money susceptible
of execution by garnishment; it is a special judgment requiring petitioners to settle the claims of
respondents in accordance with existing regulations of the COA.
In its plain text, the December 16, 1999 RTC Decision merely directs petitioners to "settle the claims
of [respondents] and other employees similarly situated." 34 It does not require petitioners to pay a
certain sum of money to respondents. The judgment is only for the performance of an act other than
the payment of money, implementation of which is governed by Section 11, Rule 39 of the Rules of
Court, which provides:

Section 11. Execution of special judgments. - When a judgment requires the performance of any act
other than those mentioned in the two preceding sections, a certified copy of the judgment shall be
attached to the writ of execution and shall be served by the officer upon the party against whom the
same is rendered, or upon any other person required thereby, or by law, to obey the same, and such
party or person may be punished for contempt if he disobeys such judgment.

Garnishment cannot be employed to implement such form of judgment. Under Section 9 of Rule 39,
to wit:

Section 9. Execution of judgments for money, how enforced. -

xxxx

(c) Garnishment of debts and credits. - The officer may levy on debts due the judgment obligor and
other credits, including bank deposits, financial interests, royalties, commissions and other personal
property not capable of manual delivery in the possession or control of third parties. Levy shall be
made by serving notice upon the person owing such debts or having in his possession or control
such credits to which the judgment obligor is entitled. The garnishment shall cover only such amount
as will satisfy the judgment and all lawful fees.

Garnishment is proper only when the judgment to be enforced is one for payment of a sum of
money.

The RTC exceeded the scope of its judgment when, in its February 22, 2000 Writ of Execution, it
directed petitioners to "extend to [respondents] the benefits and allowances to which they are
entitled but which until now they have been deprived of as enumerated under Sec. 5 of DBM CCC
No. 10 and x x x to cause their inclusion in the Provident Fund Membership." 35 Worse, it
countenanced the issuance of a notice of garnishment against the funds of petitioners with DBP to
the extent of ₱16,581,429.00 even when no such amount was awarded in its December 16, 1999
Decision.

However, in its subsequent Orders dated May 17, 2000 and January 8, 2001, the RTC attempted to
set matters right by directing the parties to now await the outcome of the legal processes for the
settlement of respondents’ claims.

That is only right.

Without question, petitioner NEA is a GOCC36 -- a juridical personality separate and distinct from the
government, with capacity to sue and be sued.37 As such GOCC, petitioner NEA cannot evade
execution; its funds may be garnished or levied upon in satisfaction of a judgment rendered against
it.38 However, before execution may proceed against it, a claim for payment of the judgment award
must first be filed with the COA.39

Under Commonwealth Act No. 327,40 as amended by Section 26 of P.D. No. 1445, it is the COA
which has primary jurisdiction to examine, audit and settle "all debts and claims of any sort" due from
or owing the Government or any of its subdivisions, agencies and instrumentalities, including
government-owned or controlled corporations and their subsidiaries. 41 With respect to money claims
arising from the implementation of R.A. No. 6758, their allowance or disallowance is for COA to
decide, subject only to the remedy of appeal by petition for certiorari to this Court.42

All told, the RTC acted prudently in halting implementation of the writ of execution to allow the
parties recourse to the processes of the COA. It may be that the tenor of the March 23, 2000
Indorsement issued by COA already spells doom for respondents’ claims; but it is not for this Court
to preempt the action of the COA on the post-audit to be conducted by it per its Indorsement dated
March 23, 2000. 1avvphi1

In fine, it was grave error for the CA to reverse the RTC and direct immediate implementation of the
writ of execution through garnishment of the funds of petitioners,

WHEREFORE, the petition is GRANTED. The July 4, 2002 Decision of the Court of Appeals
is REVERSED and SET ASIDE. The Resolution dated December 11, 2000 and Order dated
January 8, 2001 of the Regional Trial Court, Branch 88, Quezon City in Special Civil Action No. Q-
99-38275 are REINSTATED.

SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZ

 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

A.M. No. P-07-2383               December 15, 2010

CRISPIN SARMIENTO, Complainant,
vs.
LUISITO P. MENDIOLA, Sheriff III, Metropolitan Trial Court, Branch 20, Manila, Respondent.

DECISION

CARPIO, J.:

The Case

A sheriff performs a sensitive role in the dispensation of justice. He is duty-bound to know the basic
rules in the implementation of a writ of execution and be vigilant in the exercise of that authority.

The Facts

Crispin Sarmiento (Crispin) was charged with eight counts of violation of Batas Pambansa Blg. 22
before the Metropolitan Trial Court of Manila, Branch 20 (MeTC-Br. 20), docketed as Criminal Case
Nos. 345095-102-CR . On 22 September 2003, he was acquitted of the charges for failure of the
prosecution to prove his guilt.1 However, upon the prosecution’s manifestation and motion that the
decision did not mention any civil liability that was impliedly instituted in the criminal action, the trial
court amended its decision on 3 February 2004 ordering Crispin to pay the private complainants,
spouses Daniel and Blesilda Inciong (spouses Inciong), the amount of ₱295,000 as actual damages
plus legal interest of 12% per annum to be reckoned from the filing of the case. 2 After the decision
became final and executory, the spouses Inciong filed a motion for writ of execution which motion
was granted in the Order dated 18 April 2006.3 A writ of execution was issued on 8 August 2006. 4

On 24 August 2007, Crispin filed a Verified Complaint against respondent Luisito P. Mendiola
(respondent), Sheriff III of the MeTC-Br. 20, charging the latter with Grave Misconduct, Manifest
Partiality, Abuse of Authority, Oppression, Usurpation and Violation of Section 3(e) of Republic Act
No. 3019 (RA 3019), otherwise known as the Anti-Graft and Corrupt Practices Act. Crispin alleged
that on 12 February 2007, respondent and his companion, Claro Bacolod, a policeman employed in
the Warrant Section of the Manila Police Department, forcibly took the Mercedes Benz of his brother,
Tirso Sarmiento (Tirso), without presenting any writ of execution from the court. Crispin allegedly
explained to them that he is not the owner of the vehicle but a mere caretaker. He showed to them
the Deed of Sale of the subject vehicle executed on 24 January 2007 between the seller, Efren
Panganiban (Efren), and the buyer, Tirso. He asserted that respondent’s levy of the subject vehicle
was illegal since a sheriff is not authorized to attach property not belonging to the judgment debtor.

In his Comment, respondent denied the charges. He alleged that he showed to Crispin the copy of
the Order dated 18 April 2006 granting the issuance of the writ of execution and a Notice of Levy
Upon Personal Property but Crispin refused to acknowledge these documents. Respondent further
averred that he went to the house of Efren, the alleged seller, prior to the implementation of the writ
of execution and he was assured by the latter’s son that the car was already sold to Crispin about
two or three years ago. Respondent contended that if Tirso was indeed the owner, then he should
have been the one to have filed the instant administrative case. Respondent pointed out that he was
not remiss in his duties as a court personnel and did not violate RA 3019 because he acted in good
faith during the implementation of the writ of execution.

OCA Report and Recommendation

The Office of the Court Administrator (OCA) found respondent guilty of Simple Misconduct. An
examination of the records would show that respondent levied upon the subject vehicle despite the
fact that its ownership belonged to Crispin’s brother as evidenced by the Deed of Sale executed on
24 January 2007, a month before the implementation of the writ of execution on 12 February 2007.
Respondent failed to present evidence to bolster his claim that the subject vehicle was sold to
Crispin.

The OCA opined that the court, in issuing a writ of execution, may enforce its authority only on the
properties of the judgment debtor and the respondent must only subject to execution property
belonging to the judgment debtor. If he levies on the properties of third persons in which the
judgment debtor has no interest, he is acting beyond the limits of his authority. Thus, as found by the
OCA, respondent’s transgression constitutes simple misconduct which is classified as a less grave
offense under Section 52, B(2), Rule IV of the Revised Uniform Rules on Administrative Cases
where the penalty is suspension of one month and one day to six months, for the first offense and,
dismissal from the service, for the second offense. Since this is respondent’s first offense, the OCA
recommended that respondent be fined ₱10,000.

The Court’s Ruling

As admitted by respondent in his Comment, he levied a 1984 model Mercedes Benz with plate
number PKY 703 but Crispin refused to hand the key of the car thus prompting him to engage the
services of a wrecker to tow and bring the car to the court compound. He claims he acted in good
faith and only performed his official duty in implementing the writ of execution.

We do not agree.

Sheriff Clavier M. Cachombo, Jr. (Clavier) was the one who first implemented the writ of execution
on the same Mercedes Benz with plate number PKY 703. Apparently, respondent failed to read
thoroughly the Sheriff’s Partial Return dated 15 September 2006 5 which was annexed in his
Comment. It was stated therein that "upon verification with the Land Transportation Office, it was
found out that the said motor vehicle was registered under the name of Efren Panganiban since
June 2002 and until March 31, 2006 in San Juan, Metro Manila and was never registered under the
name of the defendant." Thus, the service of the writ of execution was temporarily held in abeyance
until such time that any property of the defendant, complainant in this administrative case, had been
positively identified. Clearly, respondent should have refrained from implementing the writ of
execution on the same vehicle.

Respondent claims the son of the registered owner of the subject vehicle assured him that the car
was sold to Crispin, but respondent failed to present concrete evidence to prove his claim. Moreover,
the Deed of Sale presented by Crispin showed that Efren sold the subject vehicle to Tirso and not to
Crispin. This clearly shows that the subject vehicle did not belong to Crispin.

It is a basic principle of law that money judgments are enforceable only against property
unquestionably belonging to the judgment debtor. In the execution of a money judgment, the sheriff
must first make a demand on the obligor for payment of the full amount stated in the writ of
execution. Property belonging to third persons cannot be levied upon. 6 Moreover, the levy upon the
properties of the judgment obligor may be had by the executing sheriff if the judgment obligor cannot
pay all or part of the full amount stated in the writ of execution. If the judgment obligor cannot pay all
or part of the obligation in cash, certified bank check or other mode acceptable to the judgment
obligee, the judgment obligor is given the option to immediately choose which of his property or part
thereof, not otherwise exempt from execution, may be levied upon sufficient to satisfy the judgment.
If the judgment obligor does not exercise the option immediately, or when he is absent or cannot be
located, he waives such right, and the sheriff can now first levy his personal properties, if any, and
then the real properties if the personal properties are insufficient to answer for the judgment. 71avvphi1

Therefore, the sheriff cannot and should not be the one to determine which property to levy if the
judgment obligor cannot immediately pay because it is the judgment obligor who is given the option
to choose which property or part thereof may be levied upon to satisfy the judgment. Since Crispin is
not the owner of the subject vehicle that respondent levied on, it was improper for respondent to
have enforced the writ of execution on a property that did not belong to Crispin, the judgment
debtor/obligor. Respondent evidently failed to perform his duty with utmost diligence.

It is undisputed that the most difficult phase of any proceeding is the execution of judgment. The
officer charged with this delicate task is the sheriff. The sheriff, as an officer of the court upon whom
the execution of a final judgment depends, must necessarily be circumspect and proper in his
behavior. Execution is the fruit and end of the suit and is the life of the judgment. He is to execute
the directives of the court therein strictly in accordance with the letter thereof and without any
deviation therefrom.8

Thus, sheriffs play an important part in the administration of justice. In view of their exalted position,
their conduct should be geared towards maintaining the prestige and integrity of the court.
In Escobar Vda. de Lopez v. Luna,9 we ruled that sheriffs have the obligation to perform the duties of
their office honestly, faithfully and to the best of their abilities. They must always hold inviolate and
invigorate the tenet that a public office is a public trust. As court personnel, their conduct must be
beyond reproach and free from any suspicion that may taint the judiciary. They must be circumspect
and proper in their behavior. They must use reasonable skill and diligence in performing their official
duties, especially when the rights of individuals may be jeopardized by neglect. They are ranking
officers of the court entrusted with a fiduciary role. They play an important part in the administration
of justice and are called upon to discharge their duties with integrity, reasonable dispatch, due care,
and circumspection. Anything less is unacceptable. This is because in serving the court’s writs and
processes and in implementing the orders of the court, sheriffs cannot afford to err without affecting
the efficiency of the process of the administration of justice. Sheriffs are at the grassroots of our
judicial machinery and are indispensably in close contact with litigants, hence their conduct should
be geared towards maintaining the prestige and integrity of the court, for the image of a court of
justice is necessarily mirrored in the conduct, official or otherwise, of the men and women who work
thereat, from the judge to the least and lowest of its personnel.

In Office of the Court Administrator v. Judge Fernandez, 10 the Court defined "misconduct" as any
unlawful conduct, on the part of a person concerned in the administration of justice, prejudicial to the
rights of parties or to the right determination of the cause. It generally means wrongful, improper,
unlawful conduct motivated by a premeditated, obstinate or intentional purpose.

We agree with the OCA’s finding that respondent is guilty of simple misconduct. Under Section 52,
B(2), Rule IV of the Revised Uniform Rules on Administrative Cases in the Civil Service, simple
misconduct is punishable by suspension for one (1) month and one (1) day to six (6) months for the
first offense, and dismissal for the second offense. Since this is respondent’s first offense, we find
the OCA’s recommendation imposing a fine of ₱10,000 to be in order.
WHEREFORE, we find respondent Luisito P. Mendiola, Sheriff III of the Metropolitan Trial Court of
Manila, Branch 20, guilty of Simple Misconduct. We FINE him ₱10,000, with a warning that a
repetition of the same or similar offense in the future shall be dealt with more severely.

SO ORDERED.

ANTONIO T. CARPIO
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 172316               December 8, 2010

SPOUSES JOSE CHUA and MARGARITA CHUA, Petitioners,

vs.
THE HONORABLE PEDRO GUTIERREZ, in his capacity as Presiding Judge of Branch 119,
Regional Trial Court, Pasay City, PEDRO A. ABADILLA, in his capacity as Sheriff IV of Branch
119, Regional Trial Court, Pasay City, and TAN TEK SING, a.k.a. PETER TAN, Respondents.

DECISION

PERALTA, J.:

Before this Court is a petition for review on certiorari, 1 under Rule 45 of the Rules of Court, seeking
to set aside the February 7, 2006 Decision 2 and April 17, 2006 Resolution3 of the Court of Appeals
(CA), in CA-G.R. SP No. 81382.

The facts of the case are as follows:

The dispute involves Townhouse Unit 320, located at Roxas Sea Front Garden, Roxas Boulevard,
Pasay City, which was previously covered by Transfer Certificate of Title (TCT) No. 127330 in the
name of Benito Chua (Benito). Petitioners, spouses Jose and Margarita Chua, claim that Benito sold
the property to them on July 20, 1994 for ₱2,800,000.00. Said sale, however, was only registered
on January 5, 1995.

Meanwhile, on November 11, 1994, respondent Tan Tek Sing filed with the Regional Trial Court
(RTC) of Pasay City, a suit for collection, docketed as Civil Case No. 94-1160, against Benito,
among others, with a prayer for the issuance of a writ of attachment. On November 15, 1994, a writ
of preliminary attachment was issued by the trial court prompting the Sheriff to levy on Townhouse
Unit 320. On November 18, 1994, entry number 94-3278/T-127330, a notice of levy on attachment,
was inscribed in TCT No. 127330 by the Register of Deeds of Pasay City. At the time of said
inscription, TCT No. 127330 was still in the name of Benito.

On December 5, 1994, petitioners filed with the RTC of Pasay City a Motion to Exclude and Remove
Writ of Attachment from Townhouse Unit 320 on the ground that the subject property was already
owned by them by virtue of an unregistered Deed of Absolute Sale 4 executed in their favor by Benito
on July 20, 1994.

On January 5, 1995, petitioners registered the Deed of Absolute Sale with the Register of Deeds of
Pasay City. As a result, TCT No. 127330 was cancelled and TCT No. 134590 was issued in
petitioners’ name. The notice of levy on attachment, however, was carried over in the new title.

On April 26, 1995, the RTC rendered a Decision5 finding Benito liable to respondent. It, however,
excluded Townhouse Unit 320 from attachment. The pertinent portions of the Decision read:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against the defendants BENITO
NG CHUA, HENRY A. CHENG and MASTER FOOTWEAR SALES, INC., ordering the said
defendants to pay the plaintiff the sum of ₱2.6 million, with legal interest thereon from September 3,
1994 until the amount shall have been fully paid; x x x.

xxxx

As prayed for by movants PHILAM, Jose Chua and Chua Tiu Ning Ning, the Unit 320 of the
Townhouse within Roxas Seaport Garden Compound, Aurora III Road, Roxas Boulevard, Pasay
City, is hereby excluded from the attachment enforced by the Sheriff of this Court on November 18,
1994.

SO ORDERED.6

Respondent partially appealed the RTC Decision to the CA in so far as it excluded Townhouse Unit
320 from attachment. The appeal was docketed as CA-G.R. CV No. 49959. On February 18, 1999,
the CA rendered a Decision, 7 granting respondent's appeal, the dispositive portion of which reads:

IN LIGHT OF ALL THE FOREGOING, the herein assailed decision is hereby AFFIRMED, but
MODIFIED in that:

1. The subject Townhouse Unit 320 covered by TCT No. 134590, which is located within the Roxas
Seafront Garden Compound, Aurora III Road, Roxas Boulevard corner Russel Avenue, Pasay
City, is hereby made subject to the writ of attachment enforced by the Sheriff of the court a quo
on November 18, 1994; x x x.

xxxx

SO ORDERED.8

Aggrieved, petitioners filed a motion for reconsideration, but the same was denied by the CA in a
Resolution9 dated March 1, 2001.

Petitioners then appealed the CA Decision to this Court, where it was docketed as G.R. No. 147339.
On June 20, 2001, this Court issued a Resolution dismissing the same for failure to (a) submit a
certification against forum shopping duly executed by petitioners themselves, and (2) properly verify
the petition.

After the denial of petitioners’ appeal by this Court, respondent then moved for execution against
Townhouse Unit 320. The RTC granted respondent's motion. Notwithstanding, the finality of the CA
Decision in CA-G.R. CV No. 49959, petitioners, however, moved to quash the writ of execution and
notice of levy on the grounds that they are not the judgment debtors and the property levied upon
was already sold to them prior to the institution of the suit.

On August 5, 2003, the RTC issued an Order 10 denying petitioners’ motion, the dispositive portion of
which reads:

WHEREFORE, the movant's motion to quash writ of execution and notice of levy and motion to
issue temporary restraining order and/or injunction is hereby denied for lack of merit. 11
Aggrieved, petitioners filed a Motion for Reconsideration, 12 which was, however, denied by the RTC
in its Order13 dated December 3, 2003.

Adamant in excluding Townhouse Unit 320 from execution, petitioners then filed a petition for
certiorari14 with the CA assailing the August 5, 2003 and December 3, 2003 Orders of the RTC. On
February 7,

2006, the CA issued a Decision denying petitioners’ petition, the dispositive portion of which reads:

WHEREFORE, the petition is DENIED DUE COURSE and DISMISSED.

SO ORDERED.15

The CA ruled that a prior registration of a lien creates a preference and that whatever right over the
property petitioners acquired became subordinate and subject to the duly recorded and annotated
attachment and levy.

Petitioners filed a motion for reconsideration, which was, however denied by the CA in a Resolution
dated April 17, 2006.

Hence, herein petition, with petitioners raising a lone issue for this Court's resolution, to wit:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT CONSIDERING THAT THE
POWER OF THE COURT IN [THE] EXECUTION OF JUDGMENT EXTENDS ONLY TO
PROPERTIES UNQUESTIONABLY BELONGING TO THE JUDGMENT DEBTOR. 16

The petition is not meritorious.

The main issue in this case is whether or not a registered writ of attachment is a superior lien over
that of an unregistered deed of sale. The same is not novel.

Petitioners argue that at the time the property was levied, the same was already in their names.
Petitioners thus posit that, since they are not the judgment debtors, their property should not be the
subject of execution.

Petitioners’ arguments deserve scant consideration.

Since the subject property is covered by a Torrens Title, the law applicable is Section 51 17 of
Presidential Decree (PD) No. 1529. Said provision provides:

SEC. 51. Conveyance and other dealings by registered owner. - An owner of registered land may
convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws.
He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient
in law. But no deed, mortgage, lease, or other voluntary instrument, except a will purporting to
convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate
only as a contract between the parties and as evidence of authority to the Registry of Deeds to make
registration.

The act of registration shall be the operative act to convey or affect the land insofar as third
persons are concerned, and in all cases under this Decree, the registration shall be made in the
office of the Register of Deeds for the province or the city where the land lies. 18
The preference given to a duly registered levy on attachment or execution over a prior unregistered
sale is well settled in our jurisdiction. This is because registration is the operative act that binds or
affects the land insofar as third persons are concerned. 19 It is upon registration that there is notice to
the whole world.20

Petitioners cannot escape the fact that when they registered the Deed of Absolute Sale on January
5, 1995, a writ of attachment was already inscribed on TCT No. 127330 as early as November 18,
1994. Accordingly, when TCT No. 127330 was cancelled and TCT No. 134590 was issued in
petitioners’ name, the notice of levy on attachment was carried over in the new title. It bears
stressing that at the time of the inscription of the writ of attachment, Townhouse Unit 320 was still in
the name of Benito.

In Valdevieso v. Damalerio,21 this Court explained that an attachment is a proceeding in rem and that
the right of ownership of an individual over a sale registered after such attachment is limited and
subject to the prior registered lien, to wit:

The preference created by the levy on attachment is not diminished even by the subsequent
registration of the prior sale. This is so because an attachment is a proceeding in rem. It is against
the particular property, enforceable against the whole world. The attaching creditor acquires a
specific lien on the attached property which nothing can subsequently destroy except the very
dissolution of the attachment or levy itself. Such a proceeding, in effect, means that the property
attached is an indebted thing and a virtual condemnation of it to pay the owner’s debt. The lien
continues until the debt is paid, or sale is had under execution issued on the judgment, or until the
judgment is satisfied, or the attachment discharged or vacated in some manner provided by law.

Thus, in the registry, the attachment in favor of respondents appeared in the nature of a real lien
when petitioner had his purchase recorded. The effect of the notation of said lien was to subject and
subordinate the right of petitioner, as purchaser, to the lien. Petitioner acquired ownership of the land
only from the date of the recording of his title in the register, and the right of ownership which he
inscribed was not absolute but a limited right, subject to a prior registered lien of respondents, a right
which is preferred and superior to that of petitioner. 22

It is doctrinal that a levy on attachment, duly registered, has preference over a prior unregistered
sale and, even if the prior unregistered sale is subsequently registered before the sale on execution
but after the levy is made, the validity of the execution sale should be upheld because it retroacts to
the date of levy. The priority enjoyed by the levy on attachment extends, with full force and effect, to
the buyer at the auction sale conducted by virtue of such levy. 23

The sale between petitioners and Benito was undoubtedly a valid transaction between them.
However, in view of the prior levy on attachment on the same property, petitioners took the property
subject to the attachment. Petitioners, in buying registered land, stood exactly in the shoes of their
vendor, Benito, and their title ipso facto became subject to the incidents or results of the pending
litigation24 between Benito and respondent.

Petitioners may have been in good faith when they bought the property from Benito. So also,
petitioners may not have known about the case filed by respondent against Benito and the resulting
grant of a writ of attachment over Townhouse Unit 320. Be that as it may, this Court is concerned not
with actual or personal knowledge, but constructive notice through registration in the Register of
Deeds. Otherwise stated, what this Court should follow is the annotation (or lack thereof) on the
original title on file with the Register of Deeds, not on the duplicate title in the hands of private
parties.25 Furthermore, when a conveyance has been properly recorded, such record is constructive
notice of its contents and all interests, legal and equitable, included therein. Under the rule on notice,
it is presumed that the purchaser has examined every instrument on record affecting the title. Such
presumption is irrefutable and cannot be overcome by any claim of innocence or good faith. 26

There is, however, a known exception to the above-mentioned rules, that is, when a party has
knowledge of a prior existing interest which is unregistered at that time he acquired a right to the
same land, his knowledge of that prior unregistered interest has the effect of registration as to
him.27 Knowledge of an unregistered sale is equivalent to registration. 28 Thus, if it can be proven that
respondent, at the time of the institution of the proceedings before the RTC, had knowledge of the
sale between petitioners and Benito, the same would be considered equivalent to registration as to
him. As far as petitioners are concerned, however, other than their bare allegation that respondent
was aware of the sale of the subject property to them by Benito, the records of the case show no
evidentiary proof that respondent had knowledge of such transaction prior to the institution of the
proceedings before the RTC.

This Court is mindful of one of the arguments raised by petitioners in the proceedings below which
was that they derived their right over the property from Philippine American Life Insurance
(PHILAM). Petitioners argue that prior to the annotation of the attachment lien in favor of respondent,
the subject property was already mortgaged to PHILAM. Thus, petitioners theorize that the
mortgage lien in favor of PHILAM is superior to the attachment lien in favor of respondent.29

The same is without merit.

Petitioners claim in their narration of facts that after the execution of the Deed of Absolute Sale on
July 27, 1994, they notified PHILAM and coordinated with it for the release of the mortgage upon the
full payment of Benito’s debt. PHILAM allegedly required petitioners to first secure a mortgage, but
because of the tedious process, PHILAM finally decided to forego the said plan. Instead, PHILAM
allowed petitioners to pay of the mortgage debt of Benito. It was only on January 3, 1995 when
petitioners finally settled Benito’s obligation. Two days after, a Release of Real Estate
Mortgage30 was executed by PHILAM.31

In Biñan Steel Corporation v. Court of Appeals,32 this Court ruled that the approval of the mortgagee
is essential for the perfection of a sale with assumption of mortgage, to wit:

The Garcias claim they acquired the subject property by means of a deed of sale with assumption of
mortgage dated June 29, 1998, meaning they purchased the property ahead of the inscription of the
levy on attachment thereon on July 27, 1994. But, even if consensual, not all contracts of sale
become automatically and immediately effective. In Ramos vs. Court of Appeals we held:

In sales with assumption of mortgage, the assumption of mortgage is a condition precedent to the
seller’s consent and, therefore, without approval of the mortgagee, the sale is not perfected. 33 1avvphi1

Applied to the case at bar, it is undisputed that the release of the mortgage only occurred on January
5, 1995, when a Release of Real Estate Mortgage was issued by PHILAM. In addition,
notwithstanding PHILAM's approval of the sale and the assumption of mortgage entered into by
petitioners and Benito, there was still another step petitioners had to take and it was the registration
of the sale from Benito to them. To stress, as provided for in Section 51 of PD No. 1529, the act of
registration shall be the operative act to convey or affect the land insofar as third persons are
concerned. Thus, as far as respondent is concerned, his attachment lien, inscribed on November 18,
1994, is superior to whatever right petitioners had by virtue of the Deed of Sale which was only duly
registered on January 5, 1995.
Lastly, this Court notes of the finality of the CA Decision in CA-G.R. CV No. 49959, granting
respondent's partial appeal to have Townhouse Unit 320 subject to attachment. The finality of said
decision is a necessary consequence of this Court's denial of petitioners' appeal in G.R. No. 147339.
This Court may have disposed of petitioners' appeal via a minute resolution, but it is settled that
when a minute resolution denies or dismisses a petition for failure to comply with formal and
substantive requirements, the challenged decision, together with its findings of fact and legal
conclusions, are deemed sustained. 34 Petitioners once came to this Court asking for the

exclusion of the subject property from attachment, it would certainly be iniquitous to allow them to
raise the same issue all over again a second time.

Withal, while this Court sympathizes with petitioners’ plight, law and jurisprudence support
respondent's case. It bears to stress that a levy on attachment, duly registered, has preference over
a prior unregistered sale and, even if the prior unregistered sale is subsequently registered before
the sale on execution but after the levy is made, the validity of the execution sale should be upheld
because it retroacts to the date of levy. At any rate, petitioners, however, are not without recourse,
as they may seek reimbursement from Benito.

WHEREFORE, premises considered, the petition is DENIED. The February 7, 2006 Decision and
April 17, 2006 Resolution of the Court of Appeals, in CA-G.R. SP No. 81382, are AFFIRMED.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice
 FIRST DIVISION

A.M. No. P-06-2131             March 10, 2006

(Formerly OCA I.P.I. No. 05-2132-P)

ROSALINDA PESONGCO, Complainant,
vs.
ERNESTO B. ESTOYA, Clerk of Court VI, ARMANDO LAPOR, Sheriff IV, RTC-OCC, San Jose,
Antique, Respondents.

DECISION

CHICO-NAZARIO, J.:

Before Us is an administrative complaint dated 12 January 2005 of Rosalinda Pesongco charging

Atty. Ernesto B. Estoya, Clerk of Court VI and Mr. Armando Lapor, Sheriff IV of the Regional Trial
Court (RTC) of San Jose, Antique, with Inefficiency and Conduct Prejudicial to the Best Interest of
the Service relative to Civil Case No. 976 entitled, "Jose O. Fernandez, Jr., represented by his
attorney-in-fact Isaias O. Fernandez v. Rosalinda Pesongco" for Unlawful Detainer and Damages.

Jose O. Fernandez Jr. (Jose, Jr.) is one of the heirs of the late Jose U. Fernandez Sr. (Jose, Sr.),
the legal owner of Lot No. 1624 of the San Jose Cadastre. Prior to his death, on 21 July 1975, the
late Jose Sr., jointly with his children and heirs, mortgaged said lot to Douglas Fernandez
for P8,000.00. On 23 March 1981, for a consideration of P11,000.00, Douglas Fernandez, as
mortgagee, entered into a Deed of Assignment of Rights with complainant Pesongco, and agreed
that the assignor (the heirs of Jose Sr.) and one Concepcion Orendain will redeem the land in
question in March 1986. On 6 May 1993, complainant Pesongco executed in favor of Jose Jr. a
Deed of Cancellation of Assignment of Rights and Interest and a Deed of Grant of Grace Period to
Possess a Parcel of Land. Pertinent portions of the Deed of Grant of Grace Period to Possess a
Parcel of Land read:

That in view of the foregoing, I, Jose Fernandez, Jr., do hereby declare to have granted Rosalinda
Pesongco the right of possession over the aforesaid parcel of land for a period of two years from the
date of this instrument, free of charge, and subject to the following terms and conditions:

1. The possessor Rosalinda Pesongco, shall vacate the premises after the period of two
years from this date; however, she has the First Priority to rent the premises if in the event
said premises is leased or to be rented by interested party at the option of the legal
owner/legal heirs;

2. That if and when the subject property cannot be subject to lease or rent or in any event
the premises is needed by any of the legal heirs/legal owners, the possessor shall vacate the
premises without necessity of demand but she, Rosalinda Pesongco shall be entitled to
 reimbursement/refund of her necessary/incidental expenses for the improvement of the
premises but the same shall be limited to light materials. 1 (Underscoring supplied)

On 26 May 1995, Jose Jr. required complainant Pesongco to vacate the premises, but the latter
informed the former in a letter dated 5 June 1995 that she was willing to vacate the premises
provided she would be reimbursed the necessary and incidental expenses she incurred for the
improvement of the land in the amount of not less than P400,000.00. Another letter was sent by
complainant Pesongco to Jose Jr. demanding the reimbursement of P400,000.00.

For refusal of complainant Pesongco to vacate the property, Jose Jr. filed an Unlawful Detainer with
Damages against complainant. On 7 November 1996, a decision was rendered by the Municipal
Trial Court (MTC) of San Jose, Antique, in favor of Jose Jr., pertinent portion of which reads:

Wherefore, premises considered, judgment is rendered in favor of the plaintiff and against the
defendant Rosalinda Pesongco hereby:

1. Ordering the defendant to vacate the leased premises and to restore its possession to the
plaintiff;

2. Ordering the defendant to remove at her expense all the buildings/structures she made on
the land within 15 days from the finality of the decision;

3. Ordering the defendant to pay to the plaintiff P2,000.00 monthly rentals starting December
16, 1995 until possession of the leased premises is turned over to the plaintiff; and

4. Ordering the defendant to pay the plaintiff P5,000.00 as attorney’s fees. 2

On 22 July 1998, the RTC of San Jose, Antique, in the exercise of its appellate jurisdiction, rendered
judgment, the dispositive portion of which reads:

WHEREFORE, IN VIEW OF ALL THE FOREGOING, the appealed decision of the Honorable Court
of Antique, dated November 7, 1996, is hereby reversed and a new one entered:

a. Ordering the case to be remanded to the lower court for reception of evidence and the
determination by appropriate experts of the amount of value of light materials of the building
built in good faith on the land by appellant representing the amount of necessary/incidental
expenses to be reimbursed to her;

b. Ordering appellee to reimburse to appellant the value of the light materials on the
structure she built on the land belonging to the former, representing the amount appellant
incurred for necessary and useful expenses as determined by the lower court;

c. Ordering appellee to pay appellant attorney’s fees in the amount of P10,000.00;

d. Ordering appellee to pay appellant litigation expenses of P5,000.00.3

On 9 September 1999, the RTC issued an amended decision, the fallo of which reads:

Wherefore, finding the motion for reconsideration filed by defendant-appellant to be tenable and in
consonance with the findings of this Court in its Decision dated July 22, 1998, said motion is
granted, and the dispositive portion thereof is hereby amended to read as follows:
 a. Ordering this case to be remanded to the lower court for reception of evidence and
determination by appropriate experts of the amount of values of light materials of the building
in good faith on the land by appellant representing the amount of the necessary incidental
expenses to be reimbursed to her;

b. Ordering appellee to reimburse to appellant the value of the light materials on the
structure she built on the land belonging to the former, representing the amount appellant
incurred for necessary and useful expenses as determined by the lower court;

c. Ordering appellee to pay appellant attorney’s fees in the amount of P10,000.00;

d. Ordering appellee to pay appellant litigation expenses of P5,000.00; and

e. Ordering that the defendant-appellant be reinstated in and granted her right of retention of
possession over the property in litigation until she have been reimbursed of the
aforementioned expenses she introduced over the same property in
question.4 (Underscoring Supplied)

The case was appealed to the Court of Appeals which promulgated a decision on 30 May 2001,
which affirmed with modification the decision of the RTC, thus:

WHEREFORE, premises considered, the instant petition is hereby AFFIRMED with MODIFICATION
that such reimbursement to be paid by Jose Fernandez to Rosalinda Pesongco be limited to the
value of light materials only.5

As may be gleaned from the abovequoted decision, complainant Pesongco was found to be a
builder in good faith with the legal right to retain possession of the premises subject of the case until
she is reimbursed of necessary, useful and incidental expenses, but limited only to the value of the
light materials she incurred in the preservation and maintenance thereof.

On 12 September 2001, a writ of Execution6 was issued by the MTC of San Jose, Antique.

On 26 September 2001, respondents submitted their report 7 stating, among other things, that they
failed to implement the writ, pertinent portion of which reads:

4. That reinstatement of defendant-appellant to the property in litigation failed or was not carried on
because the door or entrance leading to the place where defendant is to be reinstated was
padlocked and Isaias O. Fernandez together with Ferdinand Miguel S. Fernandez (son of Jose O.
Fernandez, Sr.) refused to deliver to the undersigned the key of the said padlocked and they resist
(sic) the opening of the door or the reinstatement of the herein defendant to the property in litigation.

5. That on September 26, 2001 at around 11:30 o’clock in the morning the undersigned
implementing sheriff together with the Ex-Officio Sheriff, Atty. Ernesto B. Estoya made another
attempt to reinstate defendant Rosalinda Pesongco by personally demanding from said Isaias O.
Fernandez and Ferdinand Miguel B. Fernandez a (sic) delivery of the key of the padlock that
secured the property in litigation so that the defendant could be reinstated to the property in litigation
in accordance with the decision of the Court; but both Isaias O. Fernandez and Ferdinand Miguel S.
Fernandez maintained the stand of not delivering the key to the undersigned and not permitting the
defendant-appellant to be reinstated to the property in litigation. (Underscoring Supplied)
On 5 November 2003, upon application of the complainant, an Alias Writ of Execution 8 was issued.
Respondents again failed to enforce the said Alias Writ of Execution as can be gleaned from the
Sheriff’s Return of Service dated 25 November 2003, paragraph 3 of which reads:

3. That Rosalinda Pesongco physically entered in an open space of the northern portion of the
property in litigation (Lot No. 1624) only she was able to enter the sealed entrance and the
surroundings of the building standing more than a meter away inside the boundary line of the
property in litigation, since Isaias O. Fernandez did not allow her and the undersigned to open and
enter said building;"

4. That the undersigned cannot destroy the sealed entrance and surroundings of the building
standing on the property litigation since Sec. 10(d), Rule 39 of the New Rules of Civil Procedure
forbids the Sheriff to do so except upon special order of the court. (Underscoring Supplied)

On 23 January 2004, complainant Pesongco filed a Motion for the Full Enforcement of the Alias Writ
of Execution which the Court granted in its resolution dated 9 February 2004. However, the
aforesaid writ was again not implemented. Paragraph 3 of the Sheriff’s Report dated 26 February
2004 reads:

That on February 24, 2004, the undersigned personally met Isaias O. Fernandez and presented him
a copy of Resolution dated February 9, 2004. After reading the content, the said Isaias O.
Fernandez seriously manifested to the defendant that he will not turnover to the defendant the
possession of the whole area of Lot No. 1624, hence the undersigned cannot accomplish his job
pursuant to said resolution.

Thus, the instant administrative complaint for consistent failure of respondents to enforce the writ of
execution issued as early as 12 September 2001.

On 8 March 2005, Court Administrator Presbitero J. Velasco, Jr., required 9 respondents to file their
comment within 10 days from receipt thereof.

Respondents, in their Joint Comment, 10 claimed that it was not only hard but also hazardous to
implement the writ of execution because of the personal animosity and the raging legal controversy
between complainant Pesongco and Isaias Fernandez, as the latter was decided and firm in his
stand to frustrate the implementation thereof. However, with the aid of some policemen, respondents
alleged that they were able to fully implement the alias writ of execution insofar as the delivery of
possession of the lot in question to complainant Pesongco on 24 November 2003, signed by
complainant Pesongco herself. They further added that as proof thereof, Isaias Fernandez filed in
court a case for Recovery of Possession and Damages docketed as Civil Case No. 2004-7-3451.

Respondents suspect that complainant Pesongco filed the instant complaint because she got angry
with them when they refused to destroy the padlock allegedly installed by Isaias Fernandez in one of
the structures found in Lot No. 1624. They advised complainant Pesongco that the proper legal
recourse is for her to secure a special order from the court to authorize them to destroy and remove
the said padlock. They maintained that they had no legal basis to obey the order of complainant
Pesongco absent such an order from the court.

In her Reply 11 dated 18 April 2005, complainant Pesongco denied the allegations of the respondents
that they were able to restore her to the lot in question as shown in the "Compliance and
Reinstatement of Defendant-Appellant in the Property in Litigation" dated 24 November 2003
considering that the same was submitted only in compliance with an "Alias Writ of Execution," dated
5 November 2003. She claimed that the Sheriff’s Report on the same "Alias Writ of Execution,"
clearly shows on paragraph 3 thereof that she "was not able to enter the sealed entrance and the
surroundings of the building standing more than a meter away inside the boundary line of the
property in litigation, since Isaias Fernandez did not allow her and the [respondent sheriff] to open
and enter said building."

Respondents, in paragraph 3 of their Joint Comment, admitted the existence of a padlock installed
by Isaias Fernandez. Complainant Pesongco clarified, however, that the said padlock was never
removed because respondents believed that they did not have authority to destroy the same. Thus,
it was incorrect for the respondents to claim that they were able to restore to her the complete
possession and control of the lot in question particularly with regard to the area secured by the
subject padlock.

As to respondents’ allegation in their joint-comment that complainant Pesongco should first secure a
special order from the court authorizing them to destroy the padlock in one of the structures found in
Lot 1624, complainant Pesongco argued that such proposition is not applicable in her case because
Section 10(d) of Rule 39 of the Rules of Court covers a situation wherein there is a building or
structure constructed or planted by the losing litigant. It is her contention that a padlock can hardly
be considered a structure or an improvement. Respondents, therefore, have no need for a special
order to fully enforce the writ of execution. As a matter of fact, Section 10 of Rule 39 authorizes the
respondents to employ "such means as may be reasonably necessary to retake possession, and
place the judgment obligee in possession of such property."

In their rejoinder 12 dated 28 April 2005, respondents alleged that complainant Pesongco made
untruthful allegations in her complaint that tended to mislead the Honorable Court Administrator.
They argued that neither the decision of the Honorable Court of Appeals nor the Writ of Execution
dated 12 September 2001, or the Alias Writ of Execution issued on 5 November 2003, mandates
that the makeshift store found inside Lot No. 1624 be also placed in the possession and control of
complainant Pesongco. They explained that complainant Pesongco and her counsel were advised
by respondent sheriff to secure the corresponding order from the court but failed to do so and that
instead of filing this administrative case, complainant Pesongco should have filed contempt
proceedings against Isaias Fernandez for disturbing her possession of the subject lot.

On 21 October 2005, the Office of the Court Administrator (OCA) submitted the following
recommendations: 13

Respectfully submitted for the consideration of the Honorable Court is our recommendation that the
instant I.P.I. be redocketed as a regular administrative matter and respondent sheriff, ARMANDO S.
LAPOS be SUSPENDED for one (1) month and one (1) day from office while respondent Clerk of
Court, and Ex-Officio Sheriff, ATTY. ERNESTO B. ESTOYA be REPRIMANDED, and both be
warned that repetition of the same or similar offense shall be dealt with more severely.

We agree that respondent sheriff is administratively liable. The records show he was remiss in the
performance of his duties.

Respondent sheriff failed to comply with Section 14 Rule 39 of the Rules of Court which provides,
viz:

Sec. 14. Return of writ of execution. The writ of execution shall be returnable to the court issuing it
immediately after the judgment has been satisfied in part or in full. If the judgment cannot be
satisfied in full within thirty (30) days after his receipt of the writ, the officer shall report to the court
and state the reason therefore. Such writ shall continue in effect during the period within which the
judgment may be enforced by motion. The officer shall make a report to the court every (30) days on
the proceedings taken thereon until the judgment is satisfied in full, or its effectivity expires. The
returns or the periodic report shall set forth the whole of the proceedings taken, and shall be filed
with the court and copies thereof promptly furnished the parties.

Pursuant to this Rule, the lifetime of a writ of execution is without limit for as long as the judgment
has not been satisfied, but is "returnable to the court issuing it immediately after the judgment has
been satisfied in part or in full. If the judgment cannot be satisfied in full within thirty (30) days after
his receipt of the writ, the officer shall report to the court and state the reasons therefore." There is,
thus, no need of asking for an alias writ of execution. The officer is mandated to "make a report to
the court every thirty (30) days on the proceedings taken thereon until the judgment is satisfied in
full, or its effectivity expires." The returns or periodic reports shall set forth the whole of the
proceedings taken, and shall be filed with the court and copies thereof promptly furnished the
parties.

In the case at bar, it does not appear that the respondent sheriff rendered periodic reports. Records
show that a writ of execution of the decision dated 09 September 1999 was issued by the MTC
Judge on 12 September 2001 and respondent sheriff submitted his Sheriff’s Report on 26
September 2001. An alias writ of execution was issued on 05 November 2003 and respondent
sheriff submitted his Sheriff’s Return on 25 November 2003. On 23 January 2004, complainant filed
a Motion for the Full Implementation of the Alias Writ of Execution in the lower court. Acting on said
motion, the court issued a Resolution dated 9 February 2004 ordering the full implementation of the
alias writ of execution and respondent sheriff submitted the Sheriff’s Report on 26 February 2004.
Clearly, respondent sheriff failed to make periodic reports, as the rule mandates the sheriff to make
a report to the court every 30 days on the proceedings taken thereon until the judgment is fully
satisfied.

Respondents sought to avoid administrative liability by claiming that they had already served the
writ. Truly, the writ of execution and the alias writ may have been served upon the persons
mentioned in said writs, but no compliance has yet been made. As may be seen from the sheriff’s
report, Isaias Fernandez refused to give the key to the padlock of the door or entrance leading to the
place where possession thereof will be restored to the complainant Pesongco pursuant to the writ of
execution. Under the situation, respondents were not without recourse, not because of Sec.
10(d), 14 Rule 39 of the Rules of Court, but under Sec. 10(c) thereof, i.e., they could have sought the
assistance of appropriate peace officers, and employed such means as may have been reasonably
necessary to retake possession, and place the judgment obligee (complainant) in possession of
such property.15 Conspicuously, in the sheriff’s report no mention was made that respondents sought
assistance from police officers. Belatedly and obviously, as an afterthought, respondents in their
comment16 asserted that they were able to fully implement the writ through the assistance of police
officers.

Additionally, it has been ruled in the case of Vda. De Tisado v. Tablizo, 17 that the mere fact that
defendants in a threatening manner, prohibited the deputy sheriff from entering the premises is no
excuse for the latter to retreat and refuse to enforce the writ of execution.

Respondents’ contention that the decision was fully implemented as shown by the
Compliance dated 24 November 2003, is belied by the records. An examination of the
records shows that the Compliance dated 24 November 2003 was issued in compliance with
the Alias Writ of Execution. But our attention must be focused on the Sheriff’s Return 18 dated
25 November 2003, particularly Paragraphs. 2, 3 and 4 thereof, which states that:

2. That at about 2: 00 o’clock in the afternoon of November 24, 2003 the undersigned
reinstated Rosalinda Pesongco in the property in litigation right after the boundaries of said
 property were identified, as evidenced by the date and signature of said Rosalinda
Pesongco, appearing at the lower portion of the herein attached original copy of sheriff’s
"COMPLIANCE AND REINSTATEMENT OF DEFENDANT-APPELLANT IN THE
PROPERTY IN LITIGATION". Reinstatement proceedings was done without destroying,
demolishing or removing any improvement on the property in litigation, as witnessed by
SPO3 Jose I. Umadhay, PNP, San Jose, Antique.

3. That Rosalinda Pesongco physically entered in an open space of the northern portion of
the property in litigation (Lot No. 1624) only she was able to enter the sealed entrance and
the surroundings of the building standing more than a meter away inside the boundary line of
the property in litigation, since Isaias O. Fernandez did not allow her and the undersigned to
open and enter said building;"

4. That the undersigned cannot destroy the sealed entrance and surroundings of the building
standing on the property litigation since Sec. 10 (d), Rule 39 of the New Rules of Civil
Procedure forbids the Sheriff to do so except upon special order of the court. (Underscoring
Supplied)

As may be gleaned above, although par. 2 thereof stated that complainant Pesongco was reinstated
in the property in question, pars. 3 and 4 thereof stated that she was not able to enter the sealed
entrance and the surroundings of the building as Isaias Fernandez did not allow her and the
respondent sheriff to open and enter said building. In the Sheriff’s Report dated 26 February 2004,
respondent sheriff admitted that he cannot accomplish his job of implementing the writ based on the
manifestation of Isaias Fernandez.

Clearly, the long delay in the full execution of the court’s judgment in favor of complainant Pesongco
demonstrates the respondent sheriff’s inefficiency in the performance of his official duties. His lack of
diligence and zeal in the performance of his duty is truly unfavorable.

A deputy sheriff is a front–line representative of the justice system, and if he shows fear, or worse, is
cowed by mere threats from enforcing the legitimate orders of the court, then by his cowardly act, he
diminishes the judiciary.

It is undisputable that the most difficult phase of any proceeding is the execution of judgment. 19 The
officer charged with this delicate task is the sheriff. 20 The sheriff, as an officer of the court upon
whom the execution of a final judgment depends, must necessarily be circumspect and proper in his
behavior. Execution is the fruit and end of the suit and is the life of the law. 21 He is to execute the
directives of the court therein strictly in accordance with the letter thereof and without any deviation
therefrom. 22 In the case at bar, respondent sheriff departed from the directive of the court by failing
to make periodic reports on the implementation of the writ and to fully implement the said writ.

Sheriffs ought to know that they have a sworn responsibility to serve writs of execution with utmost
dispatch. When writs are placed in their hands, it is their ministerial duty to proceed with reasonable
celerity and promptness to execute them in accordance with their mandate. Unless restrained by a
court order, they should see to it that the execution of judgments is not unduly delayed. Accordingly,
they must comply with their mandated ministerial duty as speedily as possible. 23 As agents of the
law, high standards are expected of sheriffs. 24 As explained in Bernabe v. Eguia, 25 citing Vda. de
Abellera v. Dalisay: 26

At the grassroots of our judicial machinery, sheriffs and deputy sheriffs are indispensably in close
contact with the litigants, hence, their conduct should be geared towards maintaining the prestige
and integrity of the court, for the image of a court of justice is necessarily mirrored in the conduct,
official or otherwise, of the men and women who work thereat, from the judge to the least and lowest
of its personnel; hence, it becomes the imperative sacred duty of each and everyone in the court to
maintain its good name and standing as a temple of justice.

Verily, sheriffs play an important role in the administration of justice. They form an integral part
thereof because they are called upon to serve court writs, execute all processes, and carry into
effect the orders of the court with due care and utmost diligence. 27 Persons involved in the
administration of justice ought to live up to the strictest standard of honesty and integrity in the public
service. 28 As such officer whose duties form an integral part of the administration of justice, a sheriff
and his deputies may be properly dismissed, fined or suspended from office by this tribunal, in the
exercise of administrative supervision over the judicial branch of the government, for actions
committed in violation of the Rules of Court which impedes and detracts from a fair and just
administration of justice. 29

It is clear that by his actuations, respondent sheriff displayed conduct short of the stringent
standards required of Court employees. He is guilty of simple neglect of duty which has been
defined as the failure of an employee to give one’s attention to a task expected of him, and signifies
a disregard of a duty resulting from carelessness or indifference. 30 Civil Service Commission
Memorandum Circular No. 19 classifies simple neglect of duty as a less grave offense, punishable
by suspension without pay for one (1) month and one (1) day to six (6) months, for the first offense.
A suspension of one (1) month would suffice considering that this is his first offense.

As for respondent Clerk of Court Atty. Ernesto B. Estoya, who was designated as the Ex-Officio
Sheriff, he, having control and supervision over his personnel, should have seen to it that all writs
issued by the courts in the province where he is assigned are executed promptly by the deputy
sheriffs under his territorial jurisdiction. 31 He must be reprimanded for not having faithfully played his
role as expected of him. 32 Respondent Lapor was overly but erroneously cautious in the
performance of his job.

WHEREFORE, respondent sheriff Armando S. Lapor is found GUILTY of neglect of duty and is
SUSPENDED for one (1) month. Respondent Clerk of Court VI Atty. Ernesto. B. Estoya is
REPRIMANDED. Upon receipt of this decision, respondents are DIRECTED to immediately
implement fully the subject writ within five (5) days and submit a return hereon to the Regional Trial
Court of San Jose, Antique within the same period of time from implementation of the subject writ.
They are STERNLY WARNED that a repetition of the same or similar acts in the future shall be dealt
with more severely. Let a copy of the decision be attached to their personal records.

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice
AM NO. P-02-1502
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 152343             January 18, 2008

MA. FE BACOS, petitioner,
vs.
DOMINGO ARCEGA, respondent.

DECISION

SANDOVAL-GUTIERREZ, J.:

For our resolution is the instant Petition for Review on Certiorari1 seeking to reverse the
Decision2 dated November 9, 2001 and Resolution dated February 19, 2002 of the Court of Appeals
in CA-G.R. SP No. 64177.

The facts are:

On February 11, 1998, Domingo Arcega, respondent, filed with the Labor Arbiter in Banawe, Quezon
City a complaint for illegal dismissal and

other monetary claims against Viabel International Garments, Inc. (Viabel) and/or Marlon Viado,
docketed as NLRC-NCR Case No. 00-02-01455-98.

On February 25, 1999, Labor Arbiter Daisy G. Cauton-Barcelona rendered a Decision in favor of
respondent, thus:

WHEREFORE, from all the foregoing considerations, We find complainant’s dismissal illegal.
The respondents are hereby ordered to pay complainant his backwages amounting to
NINETY THOUSAND (P90, 000.00) Pesos; separation pay, in lieu of reinstatement, the
amount of FORTY FIVE THOUSAND (P45, 000.00) Pesos; service incentive leave pay of
FIVE THOUSAND ONE HUNDRED NINETY TWO & 40/100 (P5, 192.40) Pesos; 13 th month
pay of TWENTY SEVEN THOUSAND & 48/100 (P27,000.48) Pesos; and attorney’s fees of
SIXTEEN THOUSAND SEVEN HUNDRED NINETEEN & 28/100 (16, 719.28) Pesos.

Claims for moral and exemplary damages are DISMISSED for lack of merit.

SO ORDERED.

On May 21, 1999, due to the failure of Viabel and/or Marlon Viado to appeal to the National Labor
Relations Commission (NLRC), the Labor Arbiter’s Decision became final and executory. Upon
respondent’s motion, a writ of execution was issued.

On June 8, 1999, the sheriff of the NLRC levied twenty-eight (28) sewing machines belonging to
Viabel and/or Marlon Viado and scheduled their sale at public auction on June 17, 1999.
On the same date, June 17, 1999, Maria Fe Bacos, petitioner, filed with the NLRC a notice of third
party claim, alleging that the levied machines were previously sold to her by Marlon Viado in the
amount of One Hundred Fifty Thousand Pesos (P150,000.00) as shown by the Deed of Absolute
Sale notarized by Notary Public Mario Ramos on January 26, 1998.

On June 20, 1999, respondent filed an opposition to petitioner’s third- party claim contending, among
others, that it is "frivolous and spurious."

In an Order dated January 10, 2000, Labor Arbiter Barcelona dismissed the third-party claim on the
ground that the Deed of Absolute Sale appears to be spurious.

On appeal by petitioner, docketed as NLRC CA No. 023229-2000, the NLRC, in its Resolution dated
August 31, 2000, dismissed the same.

In another Resolution dated February 1, 2001, the NLRC denied petitioner’s motion for
reconsideration.

Petitioner then filed with the Court of Appeals a petition for certiorari, docketed as CA-G.R. SP No.
64177.

On November 9, 2001, the Court of Appeals (Tenth Division) rendered its Decision 3 dismissing the
petition, holding that:

The crux of the matter is whether herein petitioner had succeeded in substantiating her claim
that the levied properties, comprising the 18 units of sewing machines of various types, were
sold to her on January 26, 1998 by Marlon Viado, the respondent in NLRC NCR Case No.
00-02-01455-98, or prior to the levy of the same on June 8, 1999 by Percival P. Granado,
the Deputy Sheriff of the NLRC NCR. We hold that petitioner failed in so doing. Aside from
the "Deed of Absolute Sale" which the public respondent NLRC and the Labor Arbiter
considered spurious, the petitioner did not adduce some other more convincing evidence,
e.g., the testimony or affidavit of the notary public who allegedly notarized the contested
document. In fact, petitioner’s claim did not exactly have an auspicious start, for the reason
that her notice of third-party claim did not specify the circumstances attending her alleged
ownership of the subject properties, particularly as to the date she acquired the same, and
from whom she acquired them. In addition, she failed to attach the deed of sale covering the
alleged sale. If she indeed misplaced this important document that would prove her
ownership of the subject properties, she only came up with the claim, which to us savors of a
Johnny-come-lately, and presented the purported document only after the private
respondent commented on her failure to prove her claim.

This is not to say, of course, that we are at all convinced of the genuineness or authenticity
of the purported "Deed of Sale." We adopt the findings of the public respondent with regard
to the non-inclusion of this piece of document by Atty. Mario G. Ramos in his notarial report.
The fact alone that no copy of the "Deed of Sale" dated January 26, 1998 was on file with the
Clerk of Court, is itself a "badge of fraud and simulation" that could "make any court
suspicious and wary of imputing any legitimacy and validity" to the same, and actually
militates against its use as basis for petitioner’s claim. The Executive Judge of the Regional
Trial Court supervises a notary public by requiring submission to the Office of the Clerk of
Court of his monthly notarial report, with copies of acknowledged documents thereto
attached. Under this procedure and requirements of the Notarial Law, the failure to submit
such notarial report and copies of acknowledged documents has dire consequences, which
include the possible revocation of the notary’s notarial commission.
Forthwith, petitioner filed a motion for reconsideration, but it was denied by the appellate court in its
Resolution of February 19, 2002.

Hence, the present petition.

Petitioner contends inter alia that the Court of Appeals erred in dismissing the petition, claiming that
Section 16, Rule 39 of the 1997 Rules of Civil Procedure, as amended, merely requires the third-
party claimant to submit an affidavit of his title to the property. The Rule does not require that her title
of ownership be produced.

The petition lacks merit.

Section 16, Rule 39 of the 1997 Rules of Civil Procedure, as amended, provides:

SEC. 16. Proceedings where property claimed by third person. – If the property levied on is
claimed by any person other than the judgment obligor or his agent, and such person
makes an affidavit of his title thereto or right to the possession thereof, stating the
grounds of such right or title, and serves the same upon the officer making the levy and a
copy thereof upon the judgment obligee, the officer shall not be bound to keep the property,
unless such judgment obligee, on demand of the officer, files a bond approved by the court
to indemnify the third-party claimant in a sum not less than the value of the property levied
on. In case of disagreement as to such value, the same shall be determined by the court
issuing the writ of execution. No claim for damages for the taking or keeping of the property
may be enforced against the bond unless the action therefor is filed within one hundred
twenty (120) days from the date of the filing of the bond.

Corollarily, Sections 2 and 3, Rule VI of the NLRC Manual of Instructions for Sheriffs provide:

Section 2. Proceedings. If property levied upon be claimed by any person other than the
losing party or his agent, such person shall make an affidavit of his title thereto or right to the
possession thereof, stating the grounds of such right or title and shall file the same with the
sheriff and copies thereof served upon the Labor Arbiter or proper officer issuing the writ and
upon the prevailing party. Upon receipt of the third-party claim, all proceedings with respect
to the execution of the property subject of the third-party claim shall automatically be
suspended and the Labor Arbiter or proper officer issuing the writ shall conduct a
hearing with due notice to all parties concerned and resolve the validity of the
claim within ten (10) working days from receipt thereof and his decision is appealable to the
Commission within ten (10) working days from notice, and the Commission shall likewise
resolve the appeal within the same period.

Section 3. Resolution of the Third-Party Claim, Effect. – In the event the third party claim is
declared to be valid, the sheriff shall immediately release the property to the third party
claimant, his agent or representative and the levy on execution shall immediately be lifted or
discharged. However, should the third party claim be found to be without factual or
legal basis, the sheriff must proceed with the execution of the property levied upon as if no
third party claim has been filed.

It is thus clear that a third-party claim must be supported by an affidavit stating the claimant’s title to,
or right to possession of the property, and the grounds therefor. In other words, a mere affidavit will
not suffice. The circumstances supporting the third-party claimant’s ownership or possession of the
levied properties must be specified.
Here, both the Labor Arbiter and the NLRC found that the Deed of Absolute Sale involving the
sewing machines between petitioner and Marlon Viado is spurious. Likewise, the Court of Appeals
found that no copy of the said document is on file with the Clerk of Court. The appellate court aptly
held that the absence of such document is "itself a badge of fraud and simulation that could make
any court suspicious and wary of imputing any legitimacy and validity to the same, and actually
militates against its use as basis for petitioner’s claim."

These factual findings of the Labor Arbiter and the NLRC, affirmed by the Court of Appeals, are
accorded high respect by this Court. It bears stressing that this Court is not a trier of facts. Hence, it
need not pass upon and evaluate the factual findings of the Court of Appeals, unless they are not
supported by evidence, which exception is not present here.

WHEREFORE, we DENY the petition and AFFIRM the challenged Decision and Resolution of the

Court of Appeals in CA-G.R. SP No. 64177. Costs against petitioner.
621 SCRA 254
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 167835               November 15, 2010

SPOUSES ALFREDO and ENCARNACION CHING, Petitioners,

vs.
FAMILY SAVINGS BANK, and SHERIFF OF MANILA, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 188480

ALFREDO CHING, Petitioner,
vs.
FAMILY SAVINGS BANK and THE SHERIFF OF MANILA, Respondent.

DECISION

PERALTA, J.:

Before this Court are two consolidated 1 cases. In G.R. No. 167835, the spouses Alfredo and
Encarnacion Ching (the Spouses Ching), via a petition for review on certiorari, are seeking to annul
and set aside the Resolutions of the Court of Appeals (CA), dated November 17, 2004 and April 7,
2005 in CA-G.R. SP No. 87217. While in G.R. No. 188480, Alfredo Ching (Alfredo), also via a
petition for review on certiorari, is assailing the Decision2 dated July 31, 2008 rendered by the CA in
CA-G.R. SP No. 96675, dismissing the petition, and the Resolution dated June 19, 2009 denying
petitioner’s motion for reconsideration.

The procedural and factual antecedents are as follows:

Cheng Ban Yek and Co., Inc. secured a loan from Family Savings Bank (Bank), now BPI Family
Bank, with Alfredo acting as surety. On August 6, 1981, the Bank filed a Complaint with the then
Court of First Instance (CFI) of Manila, for collection of a sum of money against Cheng Ban Yek and
Co., Inc. and Alfredo, docketed as Civil Case No. 142309. On August 12, 1982, the CFI rendered
summary judgment in favor of the Bank. Alfredo and Cheng Ban Yek and Co., Inc. appealed the
summary judgment before the CA.3 The CA later issued a Decision affirming the summary judgment.
Also, the subsequent petition filed before this Court questioning the CA decision was dismissed for
having been filed out of time.4

Meanwhile, upon motion of the Bank, the CFI issued an Order granting execution pending appeal.
Consequently, the conjugal property of the Spouses Ching, covered by Transfer Certificate of Title
(TCT) No. S-3151, was attached, levied, and thereafter sold at public auction on October 10, 1983,
wherein the Bank emerged as the highest bidder.

G.R. No. 167835

On March 30, 2004, after more than two decades since the levy and auction sale, the Bank filed a
Motion to Retrieve Records, For Issuance of Final Deed of Conveyance, To Order Register of Deeds
of Makati City to Transfer Title and For Writ of Possession5 before the Regional Trial Court (RTC) of
Manila, Branch 40. Alfredo opposed6 the motion and his wife, Encarnacion Ching (Encarnacion),
filed a Motion for Leave to Intervene and to Admit Complaint-in-Intervention. 7

On August 12, 2004, the RTC issued an Order8 granting the Bank’s motion and denying
Encarnacion’s motion, the dispositive portion of which reads:

WHEREFORE, Order is issued directing the retrieval from the archives of the Court records of this
case granting aforesaid motion of plaintiff and ORDERING:

1. the issuance of a Final Deed of Conveyance by Deputy Sheriff Ferdinand J. Guerrero or

the Clerk of Court/Ex-Officio Sheriff or any of her duly authorized deputy sheriffs, all of this
Court, to plaintiff herein (renamed Family Bank and Trust Co., Inc.) as the highest bidder at
the public auction sale;

2. the Register of Deeds of Makati City to issue a new title in the name of Family Bank and
Trust Co., Inc. (formerly Family Savings Bank), after payment of the required taxes and fees;
and

3. the issuance of a Writ of Possession directing the Clerk of Court/Ex-Officio Sheriff of this
court or any of her deputies to place herein plaintiff, thru its duly authorized officers and
employees, in possession of the subject property presently covered by TCT No. S-3151.

SO ORDERED.

In granting the motion, the RTC ratiocinated, to wit:

xxxx

1. The validity of the execution issued on September 22, 1982 by this Court thru Hon.
Augusto E. Villarin is already "res judicata" when it was raised on appeal by co-defendant
Alfredo Ching with the Honorable Court of Appeals in CA-G.R. CV No. 02421, which
dismissed the appeal and the dismissal was affirmed by the Honorable Supreme Court when
co-defendant Alfredo Ching’s Petition for Review was dismissed for being filed out of time
per its Decision dated February 24, 2003, in G.R. No. 118830 (Annex F of plaintiff’s
aforesaid motion to retrieve records etc., dated March 26, 2004, pages 46-55 of record)
which Decision has become final and executory on November 4, 2003 (Annex G-1, supra,
Entry of Judgment; page 56 of record).

2. The judgment of this Court had not prescribed since it was timely executed on October 10,
1983 and the herein plaintiff’s motion to retrieve records, etc. dated March 26, 2004, seeks
only to transfer the registration of title in its name and to take possession of the property as
the new owner thereof by virtue of the execution sale and the return of the writ of execution
to this Court by the executing Deputy Sheriff, Ferdinand J. Guerrero.

3. The issue as to whether the conjugal property of the spouses Alfredo Ching and
Encarnacion Ching could validly be levied upon and executed to answer for the personal
debt of Mr. Alfredo Ching arising from his execution of an accommodation surety, has been
 resolved by the Honorable Supreme Court in its aforesaid Decision, dated February 24, 2003
(Annex F, supra) when it held that:

xxxx

4. Plaintiff does not seek to execute the final decision of the Honorable Supreme Court in
G.R. No. 118830. The statement in paragraph 2 above is reiterated.

5. The cited cases of Ayala Investment and Development Corporation v. CA, 286 SCRA 272
(1998) and Alfredo Ching and Encarnacion Ching v. CA, G.R. No. 124642, February 24,
2004, are not res judicata in the instant case, since the parties involved are not the same
and the facts are completely different. The former case was also cited by them in their
motion for reconsideration, dated March 28, 2003 (pages 155-166 of record) and amended
motion for reconsideration, dated March 31, 2003 (pages 169-187 of record) with the
Honorable Supreme Court in G.R. 118830, but the same was denied with finality in its
Resolution, dated October 13, 2003 (page 188 of record).

6. Defendant Alfredo Ching and movant Encarnacion Ching are to blame since they did not
redeem the property within the one (1) year redemption period which expired on October 20,
1984 and which resulted in the forfeiture of the property in favor of the plaintiff as the
purchaser at the public auction sale.

7. Plaintiff is not liable for damages and, in the first place, this Court has no jurisdiction to
award said damages claimed by spouses Ching.

8. The execution of the final Decision of this Court had been completed in 1983. Movant
Encarnacion Ching cannot anymore intervene under Section 2, Rule 19 of the 1997 Rules of
Civil Procedure, as amended.9

The Spouses Ching filed a Motion for Reconsideration, 10 but it was denied in the Order11 dated
September 28, 2004.

Aggrieved, the Spouses Ching filed a petition for certiorari before the CA, docketed as CA-G.R. SP
No. 87217, arguing that the August 12, 2004 Order of the RTC was an act in grave abuse of
discretion.

On November 17, 2004, the CA issued a Resolution12 dismissing the petition for failure to attach
copies of pertinent pleadings and relevant documents to the petition, the decretal portion of which
reads:

For failure to attach copies of all pleadings and documents relevant and pertinent to the instant
petition, the same is hereby DISMISSED.

SO ORDERED.

The Spouses Ching then filed a motion for reconsideration, but it was denied in the
Resolution13 dated April 7, 2005.

Hence, the petition docketed as G.R. No. 167835.

G.R. No. 188480

In the meantime, during the course of the proceedings in the RTC, the Bank filed an Urgent Ex
Parte Motion to Cancel TCT No. S-3151,14 praying for the RTC to order the Register of Deeds of
Makati City, to cancel TCT No. S-3151 in the names of the Spouses Ching, and issue a new title in
its name.

On June 30, 2005 the RTC issued an Order15 granting the ex parte motion. Alfredo filed a motion for
reconsideration, which the Bank opposed.

During the pendency of the motion, the Bank filed another Urgent Ex Parte Motion to Modify
Order16 dated June 30, 2005 praying that an Order be issued directing the Register of Deeds of
Makati City to cancel not only the original TCT No. S-3151, but also the original duplicate owner’s
certificate of title.

On August 25, 2005, the RTC issued an Order17 granting the second ex parte motion. Alfredo filed a
motion for reconsideration, which the Bank also opposed.

On December 1, 2005, the RTC issued an Order18 denying both motions.

Consequently, the Bank was able to effect the cancellation of TCT No. S-3151 with the Register of
Deeds of Makati City, as well as cause the issuance of TCT No. 221703 19 in its name.

The Spouses Ching then filed a petition for certiorari before the CA, docketed as CA-G.R. SP No.
93199, questioning the Orders of the RTC dated June 30, 2005, August 25, 2005, and December 1,
2005, claiming that these were issued with grave abuse of discretion on the part of the RTC judge.

While the case was pending before the CA, and on account of there having been no temporary
restraining order or writ of preliminary injunction issued, the Bank filed an Urgent Ex Parte Motion to
Resolve Motion for Designation of Another Sheriff to Serve/Enforce Writ of Possession/Court
Processes.20 The motion was stamped as received by the RTC on March 29, 2006. However, it
appears that in its Order21 dated March 28, 2006, or a day before the motion was filed, the RTC
already granted the urgent ex parte motion.

In relation thereto, Alfredo filed an Urgent Motion to Recall and Set Aside Order 22 dated March 28,
2006, which the Bank opposed.

On May 2, 2006, the RTC issued an Order23 denying the motion. Alfredo filed a motion for
reconsideration, but it was denied in the Order 24 dated August 18, 2006.

Aggrieved, Alfredo filed a petition for certiorari before the CA, docketed as CA-G.R. SP No. 96675.

On July 31, 2008, the CA rendered a Decision25 affirming the Orders of the RTC and dismissing the
petition for lack of merit. Alfredo filed a motion for reconsideration, but it was denied in the
Resolution26 dated June 19, 2009.

In affirming the assailed Orders of the RTC, the CA opined that since the urgent ex parte motion of
the Bank merely sought for the designation of another sheriff to enforce the writ of possession
previously issued by the court, it is a non-litigious motion which may be acted upon by the RTC ex
parte without prejudice to the rights of Alfredo. As regards the discrepancy between the date of filing
the ex parte motion and the date of the issuance of the RTC Order, the CA held that considering that
the said issue was only raised for the first time before the CA, the issue could not be touched upon
without violating the rule on due process. It stressed that an issue which was not averred in the
complaint cannot be raised for the first time on appeal.

In addition, the CA ruled that title and ownership to the property is consolidated upon the lapse of the
period of redemption. It is automatic upon the failure of the judgment obligor to exercise his right of
redemption within the period allowed by law. Thus, title may be consolidated in the name of the
purchaser even without a new title issued in his name. The term title, as used in consolidation, does
not pertain to the certificate of title, or piece of paper, issued by the Register of Deeds, which is a
mere evidence of ownership. It is synonymous with ownership. 27

Hence, the petition docketed as G.R. No. 188480.

The Court’s Ruling

Both petitions being interrelated, it is best to resolve the issues collectively. In G.R. No. 167835, the
Spouses Ching raise the following issues:

A. whether or not the court of appeals’ dismissal of the petition for certiorari in ca-g.r. sp no.
82717 is in accord with law and/or applicable decisions of the honorable supreme court.

B. whether or not the trial court’s questioned rulings in civil case no. 142309 are in grave
abuse of discretion, are not In accord with law and/or applicable decisions of the honorable
supreme court, and work to do an injustice to herein petitioners. 28

While in G.R. No. 188480, Alfredo raises the following issues:

a. the Court of Appeals, in denying the petition in CA-g.r. sp no. 96675 and upholding the
actions of the lower court judge, effectively affirmed a violation of the constitutional right of a
third party – who is not a defendant in civil case no. 142309 – against deprivation of property
without due process.

b. the Court of Appeals, in denying the petition in ca-g.r. sp no. 96675, acted in a manner
inconsistent with the ruling of the honorable supreme court in cometa v. intermediate
appellate court (151 SCRA 563) and ysmael v. Court of Appeals (g.r. no. 132497, 16
November 1999) that Both militated against the implementation of a writ of possession on
property on which has been improperly and/or incompletely executed.

c. the Court of Appeals gravely erred in upholding – and in not considering as grave abuse of
discretion, if not totally anomalous – the action of the lower court judge of issuing an order
granting respondent bank’s urgent ex parte motion even before said motion was actually
filed.29

The Spouses Ching contend, among other things, that their subsequent submission of the
documents, which the CA deemed relevant and pertinent to the petition in G.R. No. 167835,
constituted substantial compliance with the Rules. Consequently, by invoking strict compliance with
the Rules in dismissing the petition and denying the motion for reconsideration, the CA relied more
on technicalities than resolving the case on the merits.

The Bank, on the other hand, argues that the resolution of the CA dismissing the petition for failure
to attach all relevant and pertinent
pleadings and documents has legal basis, totally substantiated by the facts of the case, and
supported by jurisprudence.

Indeed, this Court has maintained that the subsequent and substantial compliance of a party-litigant
may warrant the relaxation of the rules of procedure. 30 Thus, in Jaro v. Court of Appeals,31 it was
elucidated that:

x x x In Cusi-Hernandez v. Diaz and Piglas-Kamao v. National Labor Relations Commission, we

ruled that the subsequent submission of the missing documents with the motion for reconsideration
amounts to substantial compliance. The reasons behind the failure of petitioners in these two cases
to comply with the required attachments were no longer scrutinized. What we found noteworthy in
each case was the fact that petitioners substantially complied with the formal requirements. We
ordered the remand of the petitions in these cases to the Court of Appeals, stressing the ruling that
by precipitately dismissing the petitions "the appellate court clearly put a premium on technicalities at
the expense of a just resolution of the case."

We cannot see why the same leniency cannot be extended to petitioner. x x x

If we were to apply the rules of procedure in a very rigid and technical sense, as what the Court of
Appeals would have it in this case, the ends of justice would be defeated. In Cusi-Hernandez v.
Diaz, where the formal requirements were liberally construed and substantial compliance was
recognized, we explained that rules of procedure are mere tools designed to expedite the decision or
resolution of cases and other matters pending in court. Hence, a strict and rigid application of
technicalities that tend to frustrate rather than promote substantial justice must be avoided. We
further declared that:

Cases should be determined on the merits, after full opportunity to all parties for ventilation of their
causes and defenses, rather than on technicality or some procedural imperfections. In that way, the
ends of justice would be served better.

In the similar case of Piglas-Kamao v. National Labor Relations Commission, we stressed the policy
of the courts to encourage the full adjudication of the merits of an appeal. 32

In the case at bar, the CA dismissed the petition in CA-G.R. SP No. 87217 for the Spouses Ching’s
failure to attach copies of all pleading and documents which the CA deemed relevant to the petition.
However, in their Motion for Reconsideration, 33 the Spouses Ching stressed that they have
effectively complied and cured their procedural lapses by submitting all the pleadings and
documents required by the CA in their Amended Petition. 34 The Spouses Ching even explained that
the said documents and pleadings were not relevant and pertinent to the petition, yet they still
submitted them. Hence, the amended petition filed by the Spouses Ching should have been given
due course by the CA.

Nonetheless, this Court deems that the ends of justice would be better served if the issues raised by
the Spouses Ching in their petition before the CA in CA-G.R. SP No. 87217 be resolved in the
present petition.

In their petition, the Spouses Ching mainly argues that the trial court gravely erred in granting the
Bank’s motion, because the RTC no longer had jurisdiction to issue the questioned Orders since the
Bank failed to execute the judgment, to consolidate title, and to secure possession of the subject
property.35 They maintain that the RTC erred in totally disregarding the ruling of this Court in the
cases of Ayala Investment & Development Corp. v. Court of Appeals 36 and Ching v. Court of
Appeals.37 Finally, the Spouses Ching posit that the execution sale of the subject property was void,
considering that the property was conjugal in nature and Encarnacion was not a party to the original
action.

The arguments and contentions of the Spouses Ching cannot be upheld.

First, the Spouses Ching’s reliance on prescription is unavailing in the case at bar. The Spouses
Ching are implying that the RTC violated Section 6, Rule 39 of the Rules of Court, viz.:

Sec. 6. Execution by motion or by independent action. – A final and executory judgment or order
may be executed on motion within five (5) years from the date of its entry. After the lapse of such
time, and before it is barred by the statute of limitations, a judgment may be enforced by action. The
revived judgment may also be enforced by motion within five (5) years from the date of its entry and
thereafter by action before it is barred by the statute of limitations.

However, it must be noted that contrary to their allegation, the summary judgment of the RTC in Civil
Case No. 142309 had in fact already been enforced. During the pendency of the case, the subject
property was already levied upon. Subsequently, after summary judgment and while the case was
on appeal, the RTC granted the Bank’s motion for execution pending appeal. Consequently, on
October 10, 1983, an auction sale of the subject property was conducted, with the Bank emerging as
the highest bidder. Later, a Certificate of Sale in its favor was executed by the Sheriff and, thereafter,
inscribed as a memorandum of encumbrance on TCT No. S-3151. 38

It is settled that execution is enforced by the fact of levy and sale. The result of such execution was
that title over the subject property was vested immediately in the purchaser subject only to the
Spouses Ching’s right to redeem the property within the period provided for by law. 39 The right
acquired by the purchaser at an execution sale is inchoate and does not become absolute until after
the expiration of the redemption period without the right of redemption having been exercised. But
inchoate though it be, it is, like any other right, entitled to protection and must be respected until
extinguished by redemption.40 Since, the Spouses Ching failed to redeem the subject property within
the period allowed by law, they have been divested of their rights over the property.

Verily, the Bank’s "Motion to Retrieve Records, For Issuance of Final Deed of Conveyance, To Order
the Register of Deeds of Makati City to Transfer Title and For Writ of Possession" was merely a
consequence of the execution of the summary judgment as the judgment in Civil Case No. 142309
had already been enforced when the lot was levied upon and sold at public auction, with the Bank as
the highest bidder.

Moreover, contrary to the Spouses Ching’s contention, this Court, in Paredes v. Court of
Appeals,41 citing Rodil v. Benedicto,42 categorically held that the right of the applicant or a
subsequent purchaser to request for the issuance of a writ of possession of the land never
prescribes. A writ of possession is employed to enforce a judgment to recover the possession of
land. It commands the sheriff to enter the land and give possession of it to the person entitled under
the judgment.43 It may be issued in several instances, among which is in execution sales. There was,
therefore, no grave error on the part of the RTC in granting the motion.

Second, the applicability of the cases of Ayala Investment & Development Corp. v. Court of Appeals
and Ching v. Court of Appeals to the present case cannot be sustained. Suffice it to say that these
cases involved different parties and sets of facts, therefore, they did not operate as res judicata or a
case barred by prior judgment in this particular case. However, what could operate as res judicata in
this petition is the case of Spouses Alfredo and Encarnacion Ching v. Court of Appeals 44 and that of
Cheng Ban Yek & Co. v. Intermediate Appellate Court (IAC).45
The doctrine of res judicata is a rule which pervades every well-regulated system of jurisprudence
and is founded upon two grounds embodied in various maxims of the common law, namely: (1)
public policy and necessity, which makes it to the interest of the State that there should be an end to
litigation - republicae ut sit litium, and (2) the hardship on the individual that he should be vexed
twice for the same cause - nemo debet bis vexari et eadem causa. A contrary doctrine would
certainly subject the public peace and quiet to the will and neglect of individuals and prefer the
gratification of the litigious disposition on the part of suitors to the preservation of the public
tranquility and happiness.46

In Cheng Ban Yek & Co. v. IAC, the petition arose when Cheng Ban Yek & Co., together with
Alfredo, appealed the summary judgment in Civil Case No. 142309 to the CA. The CA, however,
affirmed in toto the judgment rendered by the lower court. The matter was then elevated before this
Court via a petition for review, docketed as G.R. No. 73708, but it was eventually dismissed for
having been filed out of time and for lack of merit. Therefore, the decision in Civil Case No. 142309
became final.

In Spouses Alfredo and Encarnacion Ching v. Court of Appeals, the case arose when the Spouses
Ching, in an effort to prevent the deputy sheriff from consolidating the sale of the subject property,
filed an annulment case, Civil Case No. 8389, with the RTC of Makati City. The Spouses Ching
sought to declare void the levy and sale on execution of their conjugal property by arguing that the
branch sheriff had no authority to levy upon a property belonging to the conjugal partnership. The
RTC later rendered judgment in favor of the Spouses Ching and declared as void the levy and sale
on execution upon their conjugal property. The Bank then elevated the decision to the CA, which
decision was reversed and set aside by the latter on the ground that the annulment case was barred
by res judicata in another annulment case. The Spouses Ching sought recourse before this Court,
but the petition was denied and the assailed decision of the CA was affirmed.

It is undeniable, therefore, that the disquisitions of this Court in the above-cited cases are controlling
and should be given great weight and consideration in the resolution of the issues raised by the
Spouses Ching in the present petition. All matters relevant to the action must, and should, conform
to these precedent cases; otherwise, parallel actions emanating from the same case could lead to
conflicting conclusions. The winning party would not enjoy the fruits of his victory; instead, it would
be an empty victory, ultimately ending in the denial of justice on the part on the righteous litigant.

Third, the Spouses Ching maintain that the subject property could not be levied upon and be sold at
public auction because it is conjugal in nature. This Court, in G.R. No. 118830, had this to say:

In any case, even without the intervention of Encarnacion Ching in the collection case, it appears
that Alfredo Ching was able to raise the conjugal nature of the property in both the trial court and
appellate court. A perusal of the records reveals that petitioner Alfredo Ching filed a Motion for
Reconsideration and to Quash Writ of Execution before the CFI of Manila. In the motion, he
specifically argued that the execution was invalid for having been enforced upon their conjugal
property. Alfredo Ching raised this argument again on appeal in CA G.R. CV No. 02421. Evidently,
due process has been afforded to petitioners as regards the execution on their conjugal property. 47

Verily, the issue of the conjugal nature of the subject property has been passed upon by the courts
and this Court several times; it is no longer a novel contention. The Spouses Ching cannot,
therefore, raise the same argument again and again. The Spouses Ching could not even raise such
an argument to bar or prevent the RTC from granting a writ of possession to the Bank or any other
motion in furtherance or as a consequence of the issuance of such writ. From the foregoing, the
Spouses Ching’s petition would logically fail.
Alfredo also contends that the issuance of the Order dated March 28, 2006 by the CA, in CA-G.R.
SP No. 96675, was highly irregular, considering that the motion which the said Order granted was
filed a day after its issuance, or on March 29, 2009. Alfredo insists that contrary to the conclusion of
the CA, he has raised the matter of the Order’s irregular issuance in his urgent motion to recall and
set aside the said order.

For its part, the Bank contends, among other things, that the March 28, 2006 Order was but a result
of the lower court’s failure to act on the Bank’s earlier ex parte motion dated October 7, 2005.
Moreover, the Bank insists that the only logical reason why the lower court stamped "March 29,
2006" as the date of receipt of the ex parte motion is that the said date was erroneously and
inadvertently stamped on the pleading as its date of receipt.

Be it inadvertence or a simple mistake in stamping the appropriate date, to remand the case to the
RTC for it to issue a new order granting the motion for the designation of a new sheriff would not
only be impractical, it would cause more injustice to the parties and protract an already long and
dragging litigation.
1avvphi1

It must be stressed, however, that the RTC Judge should have been more cautious when he issued
the Order, taking into consideration the respective dates wherein the motion was received and the
corresponding order issued. Time and again, this Court has emphasized the heavy burden and
responsibility of court personnel. They have been constantly reminded that any impression of
impropriety, misdeed or negligence in the performance of their official functions must be avoided. 48 A
judge should keep in mind that the delicate nature of work of those involved in the administration of
justice, from the highest judicial official to the lowest personnel, requires them to live up to the
strictest standard of honesty, integrity and uprightness. 49

Alfredo is assailing the validity of the RTC Order dated March 28, 2006, which granted the Bank’s
Urgent Ex Parte Motion To Resolve Motion for Designation of Another Sheriff to Serve/Enforce Writ
of Possession/Court Processes. It is to be noted that the said Order was but an ancillary motion
emanating from the writ of possession granted earlier by the RTC. Corollarily, with regard to a
petition for writ of possession, it is well to state that the proceeding is ex parte and summary in
nature. It is a judicial proceeding brought for the benefit of one party only and without notice by the
court to any person adverse of interest. It is a proceeding wherein relief is granted without giving the
person against whom the relief is sought an opportunity to be heard. 50 Consequently, so too was the
nature of the urgent motion, it was ex-parte and summary in nature.

Moreover, it is settled that the issuance of a writ of possession to a purchaser in a public auction is a
ministerial act. After the consolidation of title in the buyer’s name for failure of the mortgagor to
redeem the property, entitlement to the writ of possession becomes a matter of right. 51 To be sure,
regardless of whether or not there is a pending action for nullification of the sale at public auction,
the purchaser is entitled to a writ of possession without prejudice to the outcome of such
action.52 Undeniably, Alfredo

failed to redeem the property within the redemption period and, thereafter, ownership was
consolidated in favor of the Bank and a new certificate of title, TCT No. 221703, was issued in its
name. It was, therefore, a purely ministerial duty for the trial court to issue a writ of possession in
favor of the Bank and issue the Order granting the motion for designation of another sheriff to serve
the writ, which is merely an order enforcing the writ of possession.

We note, with affirmation, the discussion of the CA on the matter:

The right of the purchaser to the possession of the property after the period of redemption has
lapsed and no redemption was made under the old rule, has not been changed with the advent of
the 1997 Rules of Civil Procedure. The only significant change is the time when the period of
redemption period would start. Under the old Rules, the redemption period would commence after
the sale, while under the present Rule, the period to reckon with is the date of registration of the
certificate of sale with the proper Registry of Deeds.

In the instant case, there is no dispute that the property of the petitioner was sold in an execution
sale in favor of the respondent bank and that no redemption was made by the former over the said
property within the required one-year period. It has been held that a writ of possession may be
issued in favor of the purchaser in an execution sale when the deed of conveyance has been
executed and delivered to him after the period of redemption has expired and no redemption has
been made by the judgment debtor. After such period, the judgment debtor would be divested of his
ownership of the property. Thus, just like in extrajudicial foreclosure, the issuance of the writ of
possession after the lapse of the period of redemption is ministerial on the part of the court.

It is the contention of the petitioner that a writ of possession could only be validly issued upon
consolidation of title and ownership in the name of the purchaser. We agree. The petitioner then
argues that a valid consolidation could be obtained only upon filing of a separate action with the RTC
acting as a cadastral court. That we don’t agree. The petitioner cited the case of Padilla, Jr. v.
Philippine Producers’ Cooperative Marketing Association, Inc., to support his argument. The said
case involved the issuance of a new title in the name of the purchaser. In fact, the primary issue
therein is whether in implementing the involuntary transfer of title of real property levied and sold on
execution, it is enough for the executing party to file a motion with the court which rendered
judgment, or does he need to file a separate action with the Regional Trial Court. There is nothing
therein which states that a new title in the name of the purchaser is necessary for the validity of the
writ of possession. On the contrary, a perusal of the said case would reveal that a purchaser, by
virtue of a levy and an execution sale, would become the new lawful owner of the property sold if not
redeemed within the one-year period.

Following the argument of the petitioner, he might have confused consolidation of title and
ownership with the issuance or application for a new title after the redemption as provided for in
Section 75 of Presidential Decree No. 1529. Title and ownership to the property is consolidated upon
the lapse of the period of redemption. It is automatic upon the failure of the judgment obligor to
exercise his right of redemption within the period allowed by law. Title may be consolidated in the
name of the purchaser even without a new title issued in his name. The term "title" as used in
consolidation does not pertain to the certificate of title, or piece of paper, issued by the Register of
Deeds, which is a mere evidence of ownership. It is synonymous with ownership.

There is neither law nor jurisprudence which requires that the certificate of title to the property must
first be cancelled and a new one be issued in favor of the purchaser before a valid consolidation of
title and ownership could be said to have taken place, and before a court could issue a writ of
possession, or an order designating a sheriff to enforce such writ.

Not even the pendency of another action with the appellate courts involving the validity of the writ of
possession can stop the enforcement of the said writ in the absence of any restraining order or
injunctive writ from the said courts. Accordingly, considering that this Court and the Supreme Court
have not issued any temporary restraining order or preliminary injunction against the order of the
court a quo for the issuance of writ of possession, we see no cogent reason why the said writ could
not be effectively enforced.
The RTC, therefore, acted well within its jurisdiction in issuing the questioned order granting the
urgent ex-parte motion of the respondent bank which proceeds from the writ of possession which
had long been issued. For all the foregoing, there is no need to address the other issues. 53

As regards petitioners’ remaining arguments, suffice it to say that this is not an appeal from the
Decision and Orders of the RTC in the collection case in Civil Case No. 142309 which, to reiterate,
has become final and executory,54 the correctness of the judgment is, therefore, not in issue.
Accordingly, there is no need to address the other errors allegedly committed by the trial court in
issuing the assailed Orders.

WHEREFORE, premises considered, and subject to the above disquisitions, both petitions are
DENIED. The Resolutions of the Court of Appeals, dated November 17, 2004 and April 7, 2005, in
CA-G.R. SP No. 87217; and the Decision and Resolution dated July 31, 2008 and June 19, 2009,
respectively, in CA-G.R. SP No. 96675, are AFFIRMED.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice

WE CONCUR:
Panganiban Case (already given daw)

Navarro vs Metropolitan Bank (already given daw)

 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 175151               September 21, 2011

TOBIAS SELGA and CEFERINA GARANCHO SELGA, Petitioners,

vs.
SONY ENTIERRO BRAR, represented by her Attorney-in-Fact MARINA T.
ENTIERRO, Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

Before Us is a Petition for Review under Rule 45 of the Rules of Court of the Decision 1 dated May
31, 2006 and Resolution2 dated September 28, 2006 of the Court Appeals in CA-G.R. CV No.
72987, which reversed the Decision3 dated July 27, 2001 of Branch 56, Regional Trial Court (RTC)
of Himamaylan City, Negros Occidental (RTC-Branch 56), in Civil Case No. 573 for Legal
Redemption with Damages.

The following facts are not disputed:

Francisco Entierro (Francisco) died intestate on March 7, 1979, and left behind a parcel of land,
identified as Lot 1138-A, located in Himamaylan City, Negros Occidental, with an area of 39,577
square meters, and covered by Transfer Certificate of Title (TCT) No. T-10273 in his name (subject
property).

On May 15, 1985, Francisco’s spouse, Basilia Tabile (Basilia), and legitimate children, Esteban,
Herminia, Elma, Percival, and Gilda, all surnamed Entierro (collectively referred to as Basilia, et al.),
executed a Deed of Sale with Declaration of Heirship. In said Deed, Basilia, et al., declared
themselves to be Francisco’s only heirs who inherited the subject property; and at the same time,
sold the subject property to petitioners, spouses Tobias Selga and Ceferina Garancho Selga, for
₱120,000.00. By reason of said sale, TCT No. T-10273 in Francisco’s name was cancelled and
replaced by TCT No. T-134408 in petitioners’ names.

Seven years later, on July 10, 1992, respondent Sony Entierro Brar, represented by her sister-in-law
and attorney-in-fact, Marina T. Entierro, filed before Branch 55 of the RTC of Himamaylan City,
Negros Occidental (RTC-Branch 55) a Complaint for Annulment of Sale with Damages against
petitioners, which was docketed as Civil Case No. 276. Respondent claimed that she was one of the
legitimate children of Francisco and Basilia, and that she had been preterited and illegally deprived
of her rightful share and interests in the subject property as one of Francisco’s legal heirs. Among
respondent’s allegations in her Complaint was:

10. That as one of the co-heirs of the undivided portion of the questioned lot 1138-A, [herein
respondent] is legally entitled to redeem the said property from the [herein petitioners] for the price
the said [petitioners] have paid her co-heirs as appearing in the Deed of Sale with Declaration of
Heirship, Annex "B."4
Respondent prayed that RTC-Branch 55 render judgment:

1. Declaring the [herein respondent] as one of the legitimate children and legal heirs of the
late Francisco Entierro and is legally entitled to inherit and share in Lot No. 1138-A of
Himamaylan, which the latter had left behind upon his demise on March 7, 1979;

2. Declaring the annulment of the Deed of Sale with Declaration of Heirship, Annex "B",
because [respondent] was unduly preterited therein, as one of the children and heirs of the
late Francisco Entierro and consequently, the said document should be ordered cancelled
insofar as [respondent’s] legal share and participation over the said Lot 1138-A is concerned;

3. Ordering the [respondent] legally entitled to redeem from the [herein petitioners] the
subject Lot 1138-A for the redemption price of ₱52,000.00 as one of the co-heirs and co-
owners proindiviso of the said property at the time, the same was sold and conveyed in favor
of the [petitioners] on May 15, 1985, as shown in Annex "B" hereof;

4. Ordering the [petitioners] to account to the [respondent] her share in the produce of the
land in question with respect to her legal share on said property is concerned from May 15,
1985, up to the time, that [respondent’s] legal share and participation therefrom, shall have
been ordered delivered to her;

5. Ordering the [petitioners] to pay the [respondent] the sum of ₱50,000.00 by way of
attorney’s fee and to pay the costs of this suit;

6. [Respondent] further prays for such other reliefs as may be deemed just and equitable in
the premises.5

After trial on the merits, RTC-Branch 55 rendered a Decision dated May 8, 1996.

According to RTC-Branch 55, it was duly proven that respondent is a legitimate daughter of
Francisco and Basilia; a fact admitted by petitioner Tobias Selga himself during his cross-
examination. Upon Francisco’s death, half of the subject property was inherited by his spouse,
Basilia; while the other half was inherited by his children, pro-indiviso. The property relation of
Francisco’s heirs as regards the subject property was governed by the provisions on co-ownership.
Basilia, et al., validly sold all their rights and interests over the subject property to petitioners,
excluding the rights and interests over the same pertaining to respondent, who did not participate in
the execution of the Deed of Sale. RTC-Branch 55 summed up its findings, thus:

The other heirs have no right to sell the share belonging to the [herein respondent]. Although this
fact is known to the [herein petitioners], the [respondent’s] share was included in the Deed of Sale by
selling the entire Lot No. 1138-A. The [petitioners], knowing that [respondent] Sony Entierro Brar
was preterited during the settlement and disposition of the subject Lot No. 1138-A, was in bad faith
when he caused for the registration of the entire lot in his name. Knowing that there was a flaw in his
title, an implied trust was created with respect to that of the share belonging to respondent Sony
Entierro Brar.6

RTC-Branch 55 finally disposed:

WHEREFORE, based on the foregoing premises and considerations, the Court hereby renders
judgment declaring the annulment of the Deed of Sale with Declaration of heirship dated May 15,
1985 adjudicating ownership of Lot No. 1138-A in the name of [herein respondent] Sony Entierro
Brar being one of the legitimate heirs of spouses Francisco Entierro and Basilia Tabile one eleventh
(1/11) share and ten eleventh (10/11) share in the name of [herein petitioner] Tobias Selga married
to Ceferina Garancho and further orders the following:

1. For the relocation survey of Lot No. 1138-A to establish the definite location of the
respective share of the parties, the expenses to be borne by them proportionately to their
share;

2. The Register of Deeds of the Province of Negros Occidental is hereby directed to cancel
Transfer Certificate of Title No. T-134408 and in lieu thereof issue a new transfer certificate
of title in the name of Tobias Selga consisting of an area of Thirty[-]Seven Thousand Seven
Hundred Seventy[-]Eight (37,778) square meters and another new transfer certificate of title
in the name of Sony Entierro Brar consisting of an area of One Thousand Seven Hundred
Ninety[-]Nine (1,799) square meters upon submission of an approved subdivision plan;

3. For the [petitioners] to account to [respondent] her share in the produce of the land from
May 15, 1985 up to the time that [respondent’s] possession of her share of Lot No. 1138-A is
restored to her; and, finally,

4. For the [petitioners] to pay [respondent] the sum of ₱50,000.00 as attorney’s fee and to
pay the costs of suit.7

Unsatisfied, respondent filed an appeal of the aforequoted judgment of RTC-Branch 55 before the
Court of Appeals, where it was docketed as CA-G.R. CV No. 9520A UDK. However, respondent
subsequently moved to withdraw her appeal, which the Court of Appeals granted in a Resolution
dated June 13, 1997. The Decision dated May 8, 1996 of RTC-Branch 55 eventually attained finality.

In a Letter dated August 11, 1997, respondent informed petitioners that she was exercising her right
to redeem petitioners’ ten-eleventh (10/11) share in the subject property, in accordance with the final
and executory Decision dated May 8, 1996 of RTC-Branch 55 in Civil Case No. 276. In their Reply-
Letter dated August 20, 1997, petitioners’ counsel rejected respondent’s demand for the following
reasons:

Please be informed that your claim re redemption is devoid of complete merit.

It must be remembered that in your complaint, you pleaded redemption as one of your causes of
action and even specifically sought the same as a prayer in your complaint. However, on the basis of
the decision of the Regional Trial Court, dated May 8, 1996, the court did not see fit to grant you the
right of redemption.

It is the considered view of the undersigned that in line with established jurisprudence, you cannot
now or in the future, exercise this right.8

This prompted respondent to institute on January 21, 1998 a Complaint for Legal Redemption with
Damages, which was docketed as Civil Case No. 573 before RTC-Branch 56.

In their Answer with Counterclaim9 in Civil Case No. 576, petitioners invoked the defenses of res
judicata and/or forum shopping, arguing that the cause of action pleaded by respondent was among
those that had already been litigated in Civil Case No. 276 before RTC-Branch 55.
In its Decision dated July 27, 2001, RTC-Branch 56 agreed with petitioners and dismissed Civil Case
No. 573, ratiocinating that:

The primary issue to be resolved in this case is whether or not the present action is barred by res
judicata in view of the finality of the decision in Civil Case No. 276 involving the same parties herein.
Although the prior case was entitled annulment of sale with damages, yet, the averments in the
complaint and the reliefs sought for included the legal redemption of Lot 1138-A, which is the subject
of the present action, particularly paragraph 10 of the complaint and paragraph 3 of the prayer
therein which were earlier quoted. The elements of res judicata are (1) the judgment bring sought to
bar the new action must be final; (2) the decision must have been rendered by a court having
jurisdiction over the subject matter and the parties; (3) the disposition of the case must be based on
a judgment or order on the merits; and (4) there must be identity of parties, subject matter and
causes of action as between the prior and the subsequent actions. Clearly, these elements are
present. It is an elementary rule that the nature of a cause of action is determined by the facts
alleged in the complaint as constituting a cause of action. There is, therefore, identity of parties,
subject matter and cause of action between the two (2) cases.

Since the decision in Civil Case No. 276 was silent on the issue of legal redemption, it can be
inferred therefrom that the court did not see it fit to grant the same. Plaintiff should have moved for
the reconsideration thereof or should have appealed to the Court of Appeals raising this particular
issue. It did not do so. Thus, the decision had become final and executory.

The filing of the present action constitutes forum shopping. "The filing of multiple suits involving the
same parties for the same cause of action, either simultaneously or successively, for the purpose of
obtaining a favorable judgment amounts to forum shopping. Only when the successive filing of the
suits as part of an appeal, or a special civil action, will there be no forum shopping because the party
no longer availed of different fora but, rather, through a review of a lower tribunal’s decision or
order." (Quinsay v. CA, et al., G.R. No. 127058, Aug. 31, 2000.) 10

Respondent’s appeal of the aforementioned judgment of RTC-Branch 56 was docketed as CA-G.R.

CV No. 72987 before the Court of Appeals.

On May 31, 2006, the Court of Appeals promulgated its Decision in CA-G.R. CV No. 72987, which
reversed and set aside the assailed July 27, 2001 Decision of RTC-Branch 56 in Civil Case No. 573.

The Court of Appeals held that respondent had validly exercised her right to redemption of the
subject property:

As a rule, co-heir/s or co-owner/s of undivided property are required to notify in writing the other co-
heir/s or co-owner/s of the actual sale of the former’s share in the co-ownership. And, within one (1)
month or 30 days from the said notice, a co-heir or co-owner who wish to redeem such property
must make a claim for the reconveyance of the same by either consignation in court or offer to
repurchase by tendering the vendor payment of the redemption money. 1âwphi1

A thorough perusal of the records as well as the documentary evidences presented by both parties
reveal that no written notice was given by the heirs of Francisco Entierro to [herein respondent]
regarding the sale of Lot No. 1138-A, because, [respondent] was preterited or omitted in the
inheritance during the settlement and disposition of the subject lot. She was initially not considered
nor included as heir of Francisco Entierro not until she was judicially declared one. However, despite
the absence of a written notice, [respondent], in her complaint in Civil Case No. 276, impleaded
therein her claim to redeem Lot No. 1138-A sold by her co-heirs to [herein petitioners]. Hence, by
such act, [respondent] had effectively enforced her right. 11
The appellate court further ruled that Civil Case No. 573 before RTC-Branch 56 was not barred by
the final judgment in Civil Case No. 276 of RTC-Branch 55:

What had became final and conclusive in Civil Case No. 276 is only with respect to the filiation of
[herein respondent] and [her] right to inherit, but not as to [respondent’s] right to redeem the property
sold by her co-heirs.

We disagree with the court a quo’s holding which provides, to wit: "Since the decision in Civil Case
No. 276 was silent on the issue of legal redemption, it can be inferred therefrom that the court did
not see it fit to grant the same."

Right of legal redemption is a statutory right provided by law – as long as the redemptioner
possesses all the essential requisites and comply with the requirements, such right need not be
judicially declared in order for it to be enforced. The role of the court is only to ascertain whether the
essential requisites and requirements are properly complied with. As the right of redemption is
inherent to every co-heir or co-owner, denial of the said right must be explicitly and expressly
provided and justified by the court and not by mere silence only. Silence of the decision in Civil Case
No. 276 on the issue of [respondent’s] right of redemption does not mean that the same was denied.
Only the issues of filiation and the validity of the Deed of Sale with Declaration of Heirship were
judicially determined by the lower court on the said case. Hence, in the instant case, this Court may
rule upon the issue of redemption.12

The Court of Appeals decreed in the end:

WHEREFORE, premises considered, the assailed Decision of the Regional Trial Court of
Himamaylan City, Negros Occidental, Branch 56 dated July 27, 2001 is hereby REVERSED and
SET ASIDE and a new one is hereby ENTERED by recognizing [herein respondent’s] legal right to
redeem Lot No. 1138-A of Himamaylan Cadastre, Negros Occidental from [herein petitioners].

[Respondent] is hereby given thirty (30) days from the finality of this Decision within which to
exercise his right of redemption over Lot No. 1138-A by reimbursing [petitioners] the price of the sale
in the amount of ₱120,000.00 plus the total value of the improvements, if any, on the subject lot
based on the current fair market value.

Failure of [respondent] to redeem the property within the period herein provided shall vest
[petitioners] absolute right over subject property. 13

Petitioners now come before this Court via the instant Petition for Review, insisting that respondent’s
right to redemption of the subject property from petitioners was among the causes of action already
litigated in Civil Case No. 276 before RTC-Branch 55; and the very same cause of action between
the same parties involving the same subject matter was merely duplicated in Civil Case No. 573
before RTC-Branch 56. Thus, the prior final judgment rendered in Civil Case No. 276 already barred
Civil Case No. 573.

Respondent counters that Civil Case No. 573 before RTC-Branch 56 involving her legal right to
redeem the subject property from petitioners cannot be deemed barred by the final judgment in Civil
Case No. 276 rendered by RTC-Branch 55 because said issue was not explicitly ruled upon in the
latter case.

We find merit in the instant Petition.

Res judicata means "a matter adjudged; a thing judicially acted upon or decided; a thing or matter
settled by judgment." It lays the rule that an existing final judgment or decree rendered on the merits,
without fraud or collusion, by a court of competent jurisdiction, upon any matter within its jurisdiction,
is conclusive of the rights of the parties or their privies, in all other actions or suits in the same or any
other judicial tribunal of concurrent jurisdiction on the points and matters in issue in the first suit. 14

It must be remembered that it is to the interest of the public that there should be an end to litigation
by the parties over a subject fully and fairly adjudicated. The doctrine of res judicata is a rule that
pervades every well-regulated system of jurisprudence and is founded upon two grounds embodied
in various maxims of the common law, namely: (1) public policy and necessity, which dictates that it
would be in the interest of the State that there should be an end to litigation — republicae ut sit
litium; and (2) the hardship on the individual that he should be vexed twice for the same cause —
nemo debet bis vexari pro una et eadem causa. A contrary doctrine would subject public peace and
quiet to the will and neglect of individuals and prefer the gratification of the litigious disposition on the
part of suitors to the preservation of public tranquility and happiness. 15

Res judicata has two concepts. The first is bar by prior judgment under Rule 39, Section 47(b), and
the second is conclusiveness of judgment under Rule 39, Section 47(c). 16 These concepts differ as
to the extent of the effect of a judgment or final order as follows:

SEC. 47. Effect of judgments or final orders. – The effect of a judgment or final order rendered by a
court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as
follows:

xxxx

(b) In other cases, the judgment or final order is, with respect to the matter directly adjudged
or as to any other matter that could have been raised in relation thereto, conclusive between
the parties and their successors in interest by title subsequent to the commencement of the
action or special proceeding, litigating for the same thing and under the same title and in the
same capacity; and

(c) In any other litigation between the same parties or their successors in interest, that only is
deemed to have been adjudged in a former judgment or final order which appears upon its
face to have been so adjudged, or which was actually and necessarily included therein or
necessary thereto.

Jurisprudence taught us well that res judicata under the first concept or as a bar against the
prosecution of a second action exists when there is identity of parties, subject matter and cause of
action in the first and second actions. The judgment in the first action is final as to the claim or
demand in controversy, including the parties and those in privity with them, not only as to every
matter which was offered and received to sustain or defeat the claim or demand, but as to any other
admissible matter which might have been offered for that purpose and of all matters that could have
been adjudged in that case. In contrast, res judicata under the second concept or estoppel by
judgment exists when there is identity of parties and subject matter but the causes of action are
completely distinct. The first judgment is conclusive only as to those matters actually and directly
controverted and determined and not as to matters merely involved herein. 17

The case at bar satisfies the four essential requisites of res judicata under the first concept, bar by
prior judgment, viz:

(a) finality of the former judgment;

 (b) the court which rendered it had jurisdiction over the subject matter and the parties;

(c) it must be a judgment on the merits; and

(d) there must be, between the first and second actions, identity of parties, subject matter
and causes of action.18

It is not disputed that the Decision dated May 8, 1996 of RTC-Branch 55 in Civil Case No. 276 had
become final and executory. Petitioners no longer appealed the said decision, while respondent
withdrew her appeal of the same before the Court of Appeals.

There is also no question that RTC-Branch 55 had jurisdiction over the subject matter and parties in
Civil Case No. 276, and that its Decision dated May 8, 1996 was a judgment on the merits, i.e., one
rendered after a consideration of the evidence or stipulations submitted by the parties at the trial of
the case.19

Controversy herein arises from the fourth requirement: the identity of parties, subject matter and,
particularly, the causes of action between Civil Case No. 276 and Civil Case No. 573.

There is identity of parties. Civil Case No. 276 and Civil Case No. 573 were both instituted by
respondent against petitioners.

There is also identity of subject matter. Civil Case No. 276 and Civil Case No. 573 both involved
respondent’s rights and interests over the subject property as Francisco’s legitimate child and
compulsory heir.

Finally, there is identity of causes of action.

Section 2, Rule 2 of the Rules of Court defines a cause of action as "the act or omission by which a
party violates a right of another." The cause of action in Civil Case No. 273 and Civil Case No. 576 is
the sale of the entire subject property by Basilia, et al., to petitioners without respondent’s knowledge
and consent, hence, depriving respondent of her rights and interests over her pro-indiviso share in
the subject property as a co-heir and co-owner. The annulment of the sale of respondent’s share in
the subject property, the legal redemption by respondent of her co-heirs’ share sold to petitioners,
and the claim for damages should not be mistaken to be the causes of action, but they were the
remedies and reliefs prayed for by the respondent to redress the wrong allegedly committed against
her.

The allegations in respondent’s Complaint in Civil Case No. 573 initially give the impression that the
cause of action therein was petitioners’ refusal to heed respondent’s demand to redeem petitioners’
ten-eleventh (10/11) share in the subject property. But a closer study of said Complaint, as well as
the trial proceedings before RTC-Branch 56, reveal that respondent’s right to redeem petitioners’
ten-eleventh (10/11) share in the subject property also arose from the sale of the said subject
property to petitioners by respondent’s co-heirs and co-owners, alleged to be without respondent’s
knowledge or consent – the very same cause of action at the crux of Civil Case No. 276.

In their Memorandum20 filed on September 3, 2007 before this Court, respondent invoked Articles
1088 and 1620 of the Civil Code of the Philippines in support of their right to redeem the subject
property. The said provisions state:
Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before the partition, any or
all of the co-heirs may be subrogated to the rights of the purchaser by reimbursing him for the price
of the sale, provided they do so within the period of one month from the time they were notified in
writing of the sale by the vendor.

xxxx

Art. 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all the
other co-owners or of any of them, are sold to a third person. If the price of the alienation is grossly
excessive, the redemptioner shall pay only a reasonable one.

Should two or more co-owners desire to exercise the right of redemption, they may only do so in
proportion to the share they may respectively have in the thing owned in common.

In her Complaint in Civil Case No. 276, respondent already alleged her right to redemption and
prayed, among others, the RTC-Branch 55 to order respondent legally entitled to redeem the subject
property for the price of ₱52,000.00. The Decision dated May 8, 1996 of the RTC-Branch 55 neither
discussed respondent’s right to redemption nor ordered in its decretal portion for petitioners to
accept respondent’s offer to redeem the subject property. In consonance with the provisions of Rule
39, Section 47 of the Rules of Court cited above, we hold that all the matters within the issues raised
in Civil Case No. 276 were laid before RTC-Branch 55 and passed upon by it. Resultantly, the
silence of the Decision dated May 8, 1996 in Civil Case No. 276 on respondent’s right to redemption
invoked by the latter does not mean that RTC-Branch 55 did not take cognizance of the same, but
rather, that RTC-Branch 55 did not deem respondent entitled to said right.

Regardless of whether or not RTC-Branch 55 erred in not ordering the redemption by respondent of
the subject property in the Decision dated May 8, 1996 in Civil Case No. 276, said judgment can no
longer be reviewed or corrected by RTC-Branch 56 in Civil Case No. 573. Any error committed by
RTC-Branch 55 in the Decision dated May 8, 1996 in Civil Case No. 276 could only be reviewed or
corrected on appeal. Although respondent initially filed an appeal of said judgment before the Court
of Appeals, she eventually filed a motion to withdraw the same, which was granted by the appellate
court. Hence, the Decision dated May 8, 1996 attained finality.

As we held in Ram’s Studio and Photographic Equipment, Inc. v. Court of Appeals, 21 a judgment
which has acquired finality becomes immutable and unalterable, hence, may no longer be modified
in any respect except to correct clerical errors or mistakes, all the issues between the parties being
deemed resolved and laid to rest. We added in Manila Electric Company v. Philippine Consumers
Foundation, Inc.22 that a final and executory judgment or order can no longer be disturbed or
reopened no matter how erroneous it may be. Although judicial determinations are not infallible,
judicial error should be corrected through appeals, not through repeated suits on the same claim.

We rationalized in Navarro v. Metropolitan Bank & Trust Company 23 the doctrine of immutability of a
final judgment as follows:

No other procedural law principle is indeed more settled than that once a judgment becomes final, it
is no longer subject to change, revision, amendment or reversal, except only for correction of clerical
errors, or the making of nunc pro tunc entries which cause no prejudice to any party, or where the
judgment itself is void. The underlying reason for the rule is two-fold: (1) to avoid delay in the
administration of justice and thus make orderly the discharge of judicial business, and (2) to put
judicial controversies to an end, at the risk of occasional errors, inasmuch as controversies cannot
be allowed to drag on indefinitely and the rights and obligation of every litigant must not hang in
suspense for an indefinite period of time. As the Court declared in Yau v. Silverio:
Litigation must end and terminate sometime and somewhere, and it is essential to an effective and
efficient administration of justice that, once a judgment has become final, the winning party be, not
through a mere subterfuge, deprived of the fruits of the verdict. Courts must therefore guard against
any scheme calculated to bring about that result. Constituted as they are to put an end to
controversies, courts should frown upon any attempt to prolong them.

Indeed, just as a losing party has the right to file an appeal within the prescribed period, the winning
party also has the correlative right to enjoy the finality of the resolution of his case by the execution
and satisfaction of the judgment. Any attempt to thwart this rigid rule and deny the prevailing litigant
his right to savor the fruit of his victory must immediately be struck down. Thus, in Heirs of
Wenceslao Samper v. Reciproco-Noble, we had occasion to emphasize the significance of this rule,
to wit:

It is an important fundamental principle in our Judicial system that every litigation must come to an
end x x x Access to the courts is guaranteed. But there must be a limit thereto. Once a litigant's
rights have been adjudicated in a valid final judgment of a competent court, he should not be granted
an unbridled license to come back for another try. The prevailing party should not be harassed by
subsequent suits. For, if endless litigations were to be encouraged, then unscrupulous litigants will
multiply in number to the detriment of the administration of justice. 24

Exceptions to the immutability of final judgment are allowed only under the most extraordinary of
circumstances. The instant case cannot be considered an exception especially when respondent
had the opportunity to appeal the Decision dated May 8, 1996 of RTC-Branch 55 in Civil Case No.
276, but by her own action, desisted from pursuing the same.

Therefore, Civil Case No. 573 before RTC-Branch 56 should be dismissed, being barred by res
judicata, given the final and executory Decision dated May 8, 1996 of RTC-Branch 55 in Civil Case
No. 276. We stress that res judicata, in the concept of bar by prior judgment, renders the judgment
or final order conclusive between the parties and their privies, not just with respect to a matter
directly adjudged, but also any other matter that could have been raised in relation thereto.

WHEREFORE, the instant Petition is hereby GRANTED. The Decision dated May 31, 2006 and
Resolution dated September 28, 2006 of the Court Appeals in CA-G.R. CV No. 72987 are SET
ASIDE. The Decision dated July 27, 2001 of Branch 56 of the Regional Trial Court of Himamaylan
City, Negros Occidental, dismissing Civil Case No. 573, is REINSTATED.

SO ORDERED.

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

WE CONCUR:
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 183350               January 18, 2012

PRUDENTIAL BANK (now Bank of the Philippine Islands), Petitioner,

vs.
ANTONIO S.A. MAURICIO substituted by his legal heirs, MARIA FE, VOLTAIRE, ANTONIO,
JR., ANTONILO, EARL JOHN, and FRANCISCO ROBERTO all surnamed
MAURICIO, Respondent.

DECISION

VILLARAMA, JR., J.:

Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as
amended, assailing the January 30, 2008 Decision and June 16, 2008 Resolution of the Court of
1  2 

Appeals (CA) in CA-G.R. SP No. 82908. The appellate court ruled that respondent Antonio S.A.
Mauricio was illegally dismissed from employment by petitioner Prudential Bank.

The antecedent facts of the case are as follows:

Respondent Mauricio was hired by petitioner Prudential Bank on August 17, 1960. He was the
Branch Manager of Prudential Bank’s Magallanes Branch in Makati City when he was dismissed
from employment.

On June 25, 1990, Spouses Marcelo and Corazon Cruz (Spouses Cruz) opened a dollar savings
account, FXSD No. 221-6, with an initial cash deposit of US$500.00, in the Bank’s Magallanes
Branch. At that time, Mauricio was already its Branch Manager.

On July 17, 1990, Spouses Cruz executed in favor of the Bank a Deed of Real Estate Mortgage over
their property covered by Transfer Certificate of Title No. 1310-R of the Register of Deeds of San
Juan, Metro Manila. Later, the Spouses Cruz executed another Deed of Real Estate Mortgage over
the same property in favor of the Bank for the amount of ₱600,000.

On September 7, 1992, an audit investigation was conducted in the Magallanes Branch. The salient
portions of the reports of the audit team are summarized as follows:
3 

From March 1991 to August 1991, credits to FXSD No. 221-6 consisted mostly of dollar check
deposits composed of U.S. Treasury Warrants (USTWs), U.S. Postal Money Orders, Travellers
Express and Amexco Money Orders. Despite the fact that Spouses Cruz were not the payees of
said instruments and neither of them endorsed the same, Mauricio allowed immediate withdrawals
against them. Most of the proceeds of the encashments were then deposited to a peso savings
account, S/A No. 3396, also in the name of the Spouses Cruz.

The dollar checks were eventually returned by their drawee banks for having forged endorsements,
alterations to the stated amounts, or being drawn against insufficient funds, among other reasons.
Allegedly, upon receipt of the returned checks at the Magallanes Branch, Mauricio debited FXSD
No. 221-6, but such debits were made against the uncollected deposits of the Spouses Cruz. Some
of the returned checks and USTWs were lodged to accounts receivable because the balance of
FXSD No. 221-6 was not sufficient to cover the returned checks. The other returned checks were
then covered with the personal checks of the Spouses Cruz and their children. Said personal
checks, however, were also returned by the drawee banks.

According to the tellers, it was Mauricio who brings the checks to them with the prepared deposit
slips for S/A No. 3396. He also received the proceeds of the withdrawals and the difference between
the total peso equivalent of the checks and the amount being deposited to S/A No. 3396. When the
available teller’s machine tapes from March 1 to August 30, 1991 were examined, it was shown that
in some instances, cash-in validations on the deposits slips for S/A No. 3396 were effected by the
tellers without actual receipt of cash at the time the validations were made. Simultaneously, cash
withdrawals were allowed even if S/A No. 3396 did not have sufficient balance to cover the
withdrawals at the time they were made. The cash accountability of the tellers will balance only once
the encashment of the USTWs were made later in the day.

On October 16, 1992, Mauricio was directed to report for work at the Head Office immediately.

On November 10, 1992, Prudential Bank President Jose L. Santos issued a Memorandum dated 4 

November 9, 1992 to Mauricio furnishing him with a copy of the audit team’s report and directing him
to report in writing within seventy-two (72) hours from receipt of the memorandum why the bank
should not institute an action against him. The report showed that the bank was exposed to losses
amounting to $774,561.58, broken down as follows:

1. Returned $ checks deposited to FXSD 221-6 $344,600.00

2. Returned $ checks encashed over the counter 3,190.58

Total Checks returned which cannot be debited to the account $347,790.58

3. Checks Expected to be returned:
a. Deposited to FXSD 221-6 $202,685.48
b. Encashments 224,085.52 426,771.00

Total Possible Loss to the Bank   $ 774,561.58

In his reply dated November 12, 1992, Mauricio stated that he is "exhausting all efforts to get the
5 

Spouses Marcelo and Corazon Cruz to settle their obligation immediately" and that they "have
requested the Bank to allow them to fully settle the obligations on or before 31 December 1992." He
further stated that he is willing to face an investigation body to explain his side on the matter so he
can clear his name and reputation.

Incidentally, in the same year, the property subject of the deeds of real estate mortgage was gutted
down by fire. The insurer, Rizal Surety Insurance, paid the proceeds of the policy to the Bank.

As requested by Mauricio, a Hearing Committee was constituted and several hearings were held
starting March 2, 1993. In all the proceedings, Mauricio was duly represented by counsel.

The hearings revolved on the following charges brought against Mauricio:

A. VIOLATIONS OF SPECIFIC ORDERS AND MEMORANDUM

1. Violation of Office Order No. 1516 which enjoin approving officers from encashing U.S.
Treasury Warrants (USTWs) whenever the presenter is not the payee of the check. x x x

2. Violation of Office Memorandum dated 7 March 1985 re: Any claim/s and/or case/s
against the Prudential Bank or where the Bank is involved should be referred immediately to
the Head Office, to Dr. Octavio D. Fule, Vice President and Legal Officer, who will take
necessary and appropriate action on the said claim/s or case/s. x x x

3. Violation of Office Order No. 1666 re: Prohibition on Drawing against Uncollected Deposit.
xxx

4. Violation of Office Order No. 1596 which states that returned items should be lodged to
Accounts Receivable when there is no sufficient balance on the ac[c]ount. x x x

B. COMMISSION OF IMPRUDENT ACTS PREJUDICIAL TO THE INTERESTS OF THE BANK

1. Concealment of the overdrawing effects of the returned checks on FXSD No. 221[-6], by
allowing the depositor to cover the returned checks with other checks which were also
subsequently returned by the drawee banks, instead of reporting it to Management (Lapping)
[.]

2. Approval of encashment of various USTWs without endorsement of Mr. Marcelo Cruz

which placed the interest of the Bank at great risk, the greater portion of which checks were
already returned unpaid by the U.S. Treasury mostly for the reason amount altered, while the
rest are expected to be returned unpaid.

3. Instructing tellers to make cash-in validations of the USTWs when in fact there was no
deposit yet.
6

Answering the above charges, Mauricio alleged:

1. Re: Office Order No. 1516

Office Order No. 1516 is directory because of the use of the word "refrain" and that it applies
only where the presenter is a stranger to the Bank. x x x

2. Re: Office Memorandum dated March 1985

Everytime there was a complaint by a payee of the USTW, he notified Atty. Pablo Magno,
the Bank’s external counsel. He presented a Joint Affidavit, Receipt, Quitclaims and
Withdrawal Memos x x x.

Claims against the US Treasury are not covered by the Office Order and there is no need to
inform Head Office because the Head Office had already debited the amount in favor of the
US Treasury and the Head Office in turn, sends him instructions to debit the client’s account.
xxx

3. Re: Office Order No. 1666

 DAUD [Drawings Against Uncollected Deposits] is a tolerated practice and bank managers
are given discretion to allow DAUD. It was not the act of allowing DAUD that was punished
but the loss resulting therefrom. x x x

4. Re: Office Order No. 1596

To explain the delay in responding to the returned tickets, he said that everytime there is a
returned check, he notifies Mr. Cruz. With respect to the USTWs that are being deposited to
SA 3396, the Sps. Cruz deposited in cash; whereas in FXSD 221[-6], he debits the account
but because it has an uncleared balance, he still asks for additional deposit. These deposits
to FCDU are in the form of personal checks of the Sps. Cruz or relatives but he debits the
account even if these checks have not been cleared. x x x

5. Re: Concealment of Overdrawing Effects of Returned Checks on FXSD 221[-6] instead of

reporting the same to management; and, Approval of Encashment without Endorsement of
Mr. Marcelo Cruz.

He notified Atty. Pablo Magno of the fact of the returned checks. He presented a letter dated
15 May 1992 by Atty. Magno addressed to him assuring the latter that the Sps. Cruz will not
renege on their obligation x x x. He further submitted a letter dated 1 August 1992 which is
the demand letter of Atty. Magno to the Sps. Cruz x x x.

He is not aware of any procedure of reporting to management x x x and there is no prejudice

to the Bank because it earns interest and penalty charges and the Sps. Cruz acknowleged
their obligation to the Bank. x x x He presented three (3) letters of the Sps. Cruz, one dated
30 October 1992 and two dated 14 January 1993 where [the] Sps. Cruz admitted their
obligation to the Bank. x x x

6. Instructing Tellers to make Cash-in Validations when in fact there is no Deposit yet

Mr. Mauricio explained that whenever he instructed the teller to cash-in validate, the USTWs were
already in the Bank but are brought to Mr. Carlos Gresola to prepare the transmittal. The USTWs are
not brought to the teller because they are too many. He further explained that by the time the deposit
slips are validated, the proceeds of the USTWs were already deposited to SA 3396 and sometimes
the amount of cash-in did not tally with the cash-out because Mr. Cruz did not want to withdraw the
entire amount. x x x7

On April 15, 1994, while the investigation against Mauricio was ongoing, the property subject of the
deeds of real estate mortgage executed by the Spouses Cruz was extrajudicially foreclosed by the
Bank for the amount of ₱5,660,000. Spouses Cruz, however, sought the annulment and/or
declaration of nullity of foreclosure in a complaint dated April 18, 1995, filed with the Regional Trial
Court (RTC) of Makati City. 8

In the Bank’s Answer dated June 9, 1995, it claimed that it sent the proper demand letters to the
9 

Spouses but to no avail. Thus, it was constrained to foreclose the mortgaged property extrajudicially
for the settlement of the obligations of the Spouses Cruz including the returned USTWs, checks and
drafts. Later, or on November 24, 1995, and while the investigation against Mauricio was still
ongoing, the Bank filed an Amended Answer to implead Mauricio in its counterclaim contending that
he conspired and confederated with the Spouses Cruz to commit the fraud.
Subsequently, the Bank’s investigation on Mauricio was terminated. The Hearing Committee found
that there was sufficient evidence to hold Mauricio guilty of the charges against him. In a
Memorandum dated November 11, 1996 addressed to the bank’s Board of Directors, it
10 

recommended that Mauricio be dismissed on the ground of loss of trust and confidence.

On February 19, 1997, the Board of Directors issued Resolution No. 11-08-97 adopting the Hearing
11 

Committee’s recommendation:

RESOLVED, as it is hereby resolved, that upon considering the recommendation of the Hearing
Committee, the Board has found Antonio S.A. Mauricio to have violated Bank policies and
regulations and committed imprudent acts prejudicial to the interests of the Bank; resulting in
monetary loss to the Bank and giving rise to loss of trust and confidence;

RESOLVED, further, that the services of Mr. Mauricio be terminated effective immediately and that
his retirement benefits shall be forfeited except those that may be legally determined to be due him;
the dismissal is also without prejudice to the outcome of the civil case entitled "Spouses Marcelo and
Corazon vs. Prudential Bank," with Civil Case No. 95-599, pending before the Regional Trial Court of
Makati City, Branch 46, where Mr. Mauricio is impleaded as additional defendant on counterclaim.

On the same day, A. Benedicto L. Santos, Senior Vice President for the Administrative Department
of the Bank, issued a Memorandum to Mauricio, informing him of the Board’s decision to terminate
his employment effective immediately. Said memorandum was received by Mauricio on February 24,
1997.12

On January 28, 2000, Mauricio filed with the National Labor Relations Commission (NLRC) a
complaint for illegal dismissal with prayer for back wages; retirement and provident benefits;
vacation and sick leave credits; and actual, moral and exemplary damages, plus attorney’s fees. The
parties were enjoined to settle the dispute amicably during the mandatory pre-trial conferences, but
to no avail. Thus, they were required to submit their respective position papers and evidence.

Mauricio, in his Position Paper, explained the questioned transactions, to wit:

13 

a. No irregularity attended the transactions between the Magallanes Branch and Spouses
Marcelo and Corazon Cruz.

b. [He] allowed the US Treasury Warrant (USTW) and foreign check transactions with the
Spouses Cruz on the premise that: (i) the Spouses were valued clients of the Bank, having
been referred by the Bank’s legal counsel, Atty. Pablo Magno and having substantial
deposits and security with the bank, (ii) the Spouses enjoyed a favorable credit standing with
the Bank, as the Bank approved a loan in favor of the spouses, and (iii) the Spouses
undertook to replace any returned USTW and/or foreign checks.

c. Initially, the Spouses were able to replace the returned USTWs and/or foreign checks.
However, when [he] noticed that the spouses were having difficulty in fulfilling their
obligation, he immediately put a stop to the transactions, and started pressuring the spouses
to settle their outstanding obligations.

d. He further intensified his efforts at collecting from the Spouses by making a formal
demand upon the Spouses to settle their obligation. He likewise endorsed the account to the
Bank’s counsel, Atty. Magno, to seek the latter’s assistance in settling the obligations of the
Spouses.
 e. As a result thereof, Atty. Magno assured [him] that the Spouses could settle their
obligation because:

"A. They have an outstanding real estate mortgage in favor of Prudential Bank with a
security worth P5,000,000.00 x x x

B. Their residential house at San Juan xxx was accidentally burned xxx the proceeds
of P1,900,000.00 will be paid directly to the Bank;

C. The spouses have left with [the Bank] various real estate titles to show their good
faith that they will liquidate all their obligation;

D. The spouses were willing to execute any undertaking whereby they will liquidate
their obligation and their intention to pay their accounts."

f. As a result of [his] efforts, he was able to obtain the original copies of the transfer
certificates of title to realties registered under the names of Spouses Cruz, which he
endorsed to the Bank’s counsel. Likewise, he informed Dr. Octavio Fule of the various assets
of the Spouses Cruz to further protect the Bank from losses.

g. Unfortunately, [his] efforts were rendered inutile by the Bank’s inaction. 14

The Bank, on the other hand, contended that the dismissal of Mauricio was for a just cause, citing
the imprudent acts prejudicial to the bank’s interest and violations of several office orders and
regulations which resulted to loss of trust and confidence on him. It further argued that they complied
with the requirements of due process and that complainant was not entitled to payment of separation
pay, back wages, retirement pay and provident fund benefits, moral and exemplary damages, and
attorney’s fees.

While the illegal dismissal complaint was awaiting resolution by the Labor Arbiter, the Makati RTC
rendered a Decision on September 28, 2000 in favor of the Spouses Cruz and Mauricio. The
15 

dispositive portion of the trial court’s decision reads:

WHEREFORE, all the foregoing premises considered, judgment is hereby rendered:

1. Annulling the extrajudicial foreclosure sale conducted on April 15, 1994;

2. Ordering defendant to re-account the obligation of the plaintiffs reflecting the credit of the
insurance proceeds to the mortgage obligation of the plaintiffs;

3. Dismissing defendant’s counterclaim and plaintiffs’ cross-claim for lack of merit.

SO ORDERED. (Emphasis supplied.)

16 

Said decision was affirmed in toto on appeal by the CA in a Decision dated February 27, 2004. The
17 

Bank filed a petition for review on certiorari before this Court appealing the CA decision, but its
petition was denied on the ground that no reversible error was committed by the CA. 18

On June 17, 2002, the labor arbiter rendered a Decision holding that the Bank was justified in
19 

terminating Mauricio’s employment. The labor arbiter ruled that even if Mauricio, as branch manager,
was clothed with discretion, he gravely abused it to the detriment and prejudice of the Bank.
Likewise, Mauricio was afforded procedural due process before he was dismissed. However, the
labor arbiter nonetheless ordered the bank to pay Mauricio his 13th month pay and sick leaves
earned prior to February 24, 1997 and reimburse him his actual contributions to the provident fund,
all with legal interest at 12% per annum from date of the decision until actual payment and/or finality
of the decision.

Mauricio filed a partial appeal of the labor arbiter’s decision with the NLRC, which, however, affirmed
the labor arbiter’s decision on August 29, 2003. 20

Upon recourse to the CA, the CA set aside the NLRC decision and ruled in favor of Mauricio. The
fallo of the CA Decision reads:

WHEREFORE, the appeal is GRANTED. Accordingly, the Resolutions of public respondent NLRC
dated 16 November 2003 and 29 August 2003 are hereby ANNULLED and SET ASIDE and a new
one entered ordering respondent bank to pay petitioner his backwages computed from 27 February
1997, until such time as he would have come under the coverage of said bank’s retirement scheme,
inclusive of his allowances and the monetary equivalent of the other benefits that would have been
due him during such period. Respondent bank is likewise ordered to pay petitioner all gratuity,
retirement benefits and pension fund benefits due the latter from the said retirement plan.

SO ORDERED. 21

The CA ruled that the NLRC should have taken into consideration the evidence presented in the civil
case particularly as to the interpretation of Office Order No. 1516-A. The CA held that as correctly
pointed out by Mauricio, the rule does not exactly prohibit an approving authority from encashing
dubious checks as the rule is more permissive in nature, allowing any such approving authority to
exercise discretion on whether to allow or not the encashment of such checks. The CA noted that it
was the Bank’s own witness, Andres Mangahas, who testified that encashment of, or withdrawal
against USTWs by valued clients, is not prohibited although it is not exactly encouraged.

The CA further held that it is difficult to conclude that Mauricio abused his discretion absent some
semblance of parameters by which such discretion is to be exercised. In the absence of such
guidelines, the appellate court ruled that the validity of Mauricio’s acts may be tested using the
accepted standards of reasonableness, or by determining whether said acts were justified under the
circumstances.

The appellate court also cited the decisions of the RTC and the CA in the civil case where it was
found that Mauricio was not in any way prompted by malicious motive in approving the encashment
and/or withdrawal. Caught in a dilemma of cashing the checks despite the irregularities evident on
their face and refusing such encashment but risk the possibility of losing a valued client, Mauricio
chose the former. The CA held that in doing so, Mauricio could not have acted in gross negligence
because he made sure that in the final analysis, his employer would not be left holding an empty
bag. Mauricio even sought the advice of the bank’s legal counsel who assured him that his actions
were proper given the circumstances, and acted only after being assured that the Spouses Cruz’s
real estate mortgages could be made to answer for the premature encashments.

Further citing the decisions of the RTC and the CA in the civil case, the CA ruled that Mauricio
reported the transactions to the head office, but the head office continued to credit the account of the
spouses for the value of returned checks leading said courts to conclude that the Bank acquiesced
to his transactions. The CA held that it defies reason that the Bank would not immediately call
Mauricio’s attention if it was true that his dealings with the Spouses Cruz were irregular or prohibited.
The CA likewise noted the Banks’s own allegation that under Office Order No. 1596, Mauricio knew,
or he is presumed to know, that he is personally liable for returned dollar checks and treasury
warrants which he encashed or allowed to be withdrawn prior to clearing. The CA ruled that it is a
clear admission that Mauricio is given discretion regarding these matters provided that if hitches
resultantly come up, he should personally answer for the damages. Thus, the CA held that Mauricio
cannot be charged for having violated the trust and confidence reposed in him. The CA went on to
hold that personal responsibility and accountability referred in the Office Order could only mean the
reimbursement of the value of the dishonored checks but certainly not termination of the manager’s
services on the ground of breach of trust and confidence.

Lastly, the CA ruled that the declaration of the Supreme Court in the civil case that the CA did not
commit reversible error only meant that the CA correctly applied the law in holding that Mauricio did
not abuse his discretion to an extent sufficient to terminate his services.

Aggrieved, the Bank filed the instant petition anchored on the following grounds:

I.

THE COURT OF APPEALS’ RELIANCE ON THE CIVIL CASE (CA-G.R. CV No. 73447 x x
x) IS ERRONEOUS BECAUSE THERE ARE DIFFERENCES BETWEEN THE ISSUE AND
THE CAUSE OF ACTION IN THE SAID CIVIL CASE AND IN THE INSTANT LABOR CASE.

II.

MR. MAURICIO WAS DISMISSED FOR A JUST CAUSE AND WAS AFFORDED DUE
PROCESS; AS SUCH, THE NLRC DID NOT COMMIT GRAVE ABUSE OF DISCRETION IN
AFFIRMING THE DECISION OF LABOR ARBITER AZARRAGA.

III.

MR. MAURICIO IS NOT ENTITLED TO GRATUITY BACKWAGES, ALLOWANCE,

BENEFITS, GRATUITY, RETIREMENT PENSION AND PROVIDENT FUND. 22

The Bank argues that the CA erred in adopting the findings in the civil case to the illegal dismissal
case because the issues and the quantum of evidence required in those two cases are different. The
Bank contends that in the civil case, the issue was whether the foreclosure of the properties of the
Spouses Cruz was valid while in the instant case, the issue is whether the dismissal of Mauricio is
valid. The issues being different, the CA likewise erred in applying the principle of the law of the
case. And even if Mauricio was exonerated in the civil case which requires preponderance of
evidence, the instant case merely requires substantial evidence for the Bank to substantiate its basis
to lose its trust and confidence in him.

The Bank adds that the NLRC did not commit grave abuse of discretion in affirming the labor
arbiter’s decision upholding Mauricio’s dismissal as the said decision was in accord with facts and
applicable law and jurisprudence. The Bank insists that what Mauricio did cannot be considered as
mere accommodation to the Spouses Cruz but outright connivance. It asserts that Mauricio violated
every rule on safe banking practices so he could just accommodate them. Mauricio, as Bank
Manager, was in charge of transactions involving millions of pesos and thus, a great degree of
responsibility, care and trustworthiness was expected of him. His failure to exercise the required
extraordinary diligence and prudence resulted in substantial loss and prejudice to the Bank. And
even assuming he was not acting in bad faith, the Bank argues that Mauricio’s failure to be vigilant in
protecting its interests is enough reason for it to lose its trust and confidence in him.

Considering that Mauricio’s dismissal was valid, the Bank contends that he is not entitled to back
wages, allowance, benefits, gratuity retirement benefits and pension fund benefits. Having been
separated for cause, he is not entitled to gratuity or the provident fund contributions of the employer
pursuant to the Bank’s Retirement Plan. Furthermore, Mauricio is not entitled to pension because he
was below 65 when he was terminated for cause even if he had rendered 30 years of service. More,
entitlement to pension requires satisfactory service.

Mauricio, on the other hand, counters that the decision in the civil case must be accorded greater
weight and respect because a higher quantum of evidence has sufficiently established that he acted
within the confines of his managerial powers and duties. He further argues that the issues in the civil
case and in the instant case are closely intertwined such that the issue in the labor case was also
passed upon and resolved in the civil case.

Mauricio likewise argues that the circumstances cited by the Bank negate any indication of
willfulness to breach the trust reposed in him. The circumstances in fact show that he acted in
complete good faith when he dealt with the Spouses Cruz.

Mauricio also insists that Office Order No. 1516-A, which he allegedly violated, is not a restriction but
rather a cautionary measure. Office Order No. 1516-A reads:

The approving officer shall refrain from encashing US Treasury Warrants whenever the presenter is
not the payee and the last endorser of the check. 23

Considering that it is merely a cautionary measure, the bank officer is still given the prerogative to
exercise his sound judgment under the circumstances.

Mauricio likewise contends that the Bank cannot feign ignorance of the accommodation to the
Spouses Cruz as all the subject transactions were reported to the Head Office. Had it found anything
irregular about them, the Head Office should have ordered him to cease from doing such
transactions or at the very least called his attention on the matter.

Mauricio further argues that as testified in the civil case, USTWs are presumed to be cleared as to
funding, within forty-five (45) days from its date of deposit. By the Bank’s own admission, they were
returned only at the very least over one (1) year after they were deposited to the accounts of the
Spouses Cruz. Thus, Mauricio contends that until the time the USTWs and/or checks were returned,
he could not have known that they were already facing problems.

Mauricio also asserts that the additional service he provided to the Spouses Cruz as valued
clients, i.e., bringing checks to the teller with the prepared deposit and withdrawal slips, does not in
any way prove that he favored them over the Bank. The Bank cannot close its eyes to the reality that
bank managers go out of their way to assist important and valued clients.

As to the alleged violation of Office Order No. 1516-A, Mauricio insists that he cannot be held liable
on a vague and/or uncertain policy. The senior supervising examiner of the bank’s audit department,
Mangahas, declared that the "encashment of and/or withdrawal against [USTWs] by valued clients is
not prohibited though it is not exactly encouraged" while Philip Madrigal, former branch manager of
petitioner, declared that the encashment of USTWs by persons who are not the payees is not at all
unusual. Mauricio argues that clearly, said rule is susceptible to different interpretations.
Mauricio also stresses that he did not recklessly enter into the subject transactions as he made sure
that the interests of the Bank were amply protected.

Mauricio further argues that he was separated from service without due process. The Bank filed a
counterclaim against him in the civil case alleging that he conspired with the spouses to defraud the
Bank even prior the termination of the investigation of the charges against him. Thus, his guilt was
already pre-determined even if he was still presenting his defense to the Hearing Committee.

Mauricio also maintains that he was constructively dismissed. When he was transferred to the Head
Office on October 16, 1992, no tasks were assigned to him. He was given no office and given not
even a table or a chair. He bore such treatment for more than five years until his dismissal was
formalized in 1997.

As his dismissal was illegal, Mauricio insists that he is entitled to gratuity, back wages, allowances,
benefits and retirement pension and provident fund.

We affirm the appellate court’s decision.

The Court need not be reminded of the fact that civil and labor cases require different quanta of
proof – the former requiring preponderance of evidence while the latter only calls for substantial
evidence. Despite the dissimilarity, however, this does not spell closing our eyes to facts
conclusively determined in one proceeding when the determination of the very same facts are crucial
in resolving the issues in another proceeding pursuant to the doctrine of res judicata.

The doctrine of res judicata is provided in Section 47, Rule 39 of the Rules of Court:

SEC. 47. Effect of judgments or final orders. – The effect of a judgment or final order rendered by a
court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as
follows:

xxxx

(b) In other cases, the judgment or final order is, with respect to the matter directly adjudged
or as to any other matter that could have been raised in relation thereto, conclusive between
the parties and their successors in interest by title subsequent to the commencement of the
action or special proceeding, litigating for the same thing and under the same title and in the
same capacity; and

(c) In any other litigation between the same parties or their successors in interest, that only is
deemed to have been adjudged in a former judgment or final order which appears upon its
face to have been so adjudged, or which was actually and necessarily included therein or
necessary thereto.

The doctrine of res judicata thus lays down two main rules which may be stated as follows: (1) The
judgment or decree of a court of competent jurisdiction on the merits concludes the parties and their
privies to the litigation and constitutes a bar to a new action or suit involving the same cause of
action either before the same or any other tribunal; and (2) Any right, fact, or matter in issue directly
adjudicated or necessarily involved in the determination of an action before a competent court in
which a judgment or decree is rendered on the merits is conclusively settled by the judgment therein
and cannot again be litigated between the parties and their privies whether the claim or demand,
purpose, or subject matter of the two suits is the same or not. These two main rules mark the
distinction between the principles governing the two typical cases in which a judgment may operate
as evidence. In speaking of these cases, the first general rule above stated, and which corresponds
to the aforequoted paragraph (b) of Section 47, is referred to as "bar by former judgment" while the
24 

second general rule, which is embodied in paragraph (c) of the same section, is known as
"conclusiveness of judgment." 25

In Lopez v. Reyes, we further elaborated the distinction between the two:

26 

The doctrine of res judicata has two aspects. The first is the effect of a judgment as a bar to the
prosecution of a second action upon the same claim, demand or cause of action. The second aspect
is that it precludes the relitigation of a particular fact or issues in another action between the same
parties on a different claim or cause of action.

The general rule precluding the relitigation of material facts or questions which were in issue and
adjudicated in [a] former action [is] commonly applied to all matters essentially connected with the
subject matter of the litigation. Thus, it extends to questions "necessarily involved in an issue, and
necessarily adjudicated, or necessarily implied in the final judgment, although no specific finding
may have been made in reference thereto, and although such matters were directly referred to in the
pleadings and were not actually or formally presented. Under this rule, if the record of the former trial
shows that the judgment could not have been rendered without deciding the particular matter, it will
be considered as having settled that matter as to all future actions between the parties, and if a
judgment necessarily presupposes certain premises, they are as conclusive as the judgment itself. x
x x" (Italics supplied.)http://www.lawphil.net/judjuris/juri2010/jul2010/gr_178495_2010.html - fnt11
27 

The foregoing finds application to the instant case. Irrefutably, the present labor case is closely
related to the civil case that was decided with finality. In the civil case, the Bank’s counterclaim for
actual and exemplary damages against Mauricio was grounded on his alleged violations of office
policies when he allowed the encashment and/or withdrawal prior to clearing of numerous USTWs
and dollar checks and allegedly tried concealing from the Bank the fact that said instruments were
returned. Said violations allegedly caused undue damage and prejudice to the Bank. The Bank, in its
Amended Answer with Counterclaim and Application for Writ of Preliminary Attachment filed before
28 

the Makati RTC, wherein it impleaded Mauricio as defendant, alleged:

19. Plaintiff and defendant Mauricio, in the period spanning from 1990-1992 inclusive, conspired and
confederated with each other to defraud defendant Bank in the total amount of Fourteen Million Nine
Hundred Sixty Nine Thousand Two Hundred Sixty Seven and 53/100 Pesos (P14,969, 267.53).

20. The defraudation was effected in connection with the encashment and/or withdrawal prior to
clearing of numerous U.S. Treasury Warrants and dollar checks.

21. The defraudation was accomplished essentially in the following manner:

FXSD/MAG 357/221-6

21.1 Plaintiffs opened FXSD No. 221-6 on 25 June 1990 in defendant Bank’s Magallanes Branch
with an initial deposit of US$500.00.

21.2 The succeeding credits on the account were mostly dollar check deposits composed of U.S.
Treasury Warrants whose payees were residents of far-flung provinces and foreigners.
21.3 Immediate withdrawals (prior to clearing) against these checks were allowed by the Branch
Manager, defendant Mauricio.

21.4 These checks were subsequently returned by their respective drawee banks for various
reasons such as: forged endorsement, amount altered, no sufficient fund, and refer to maker.

21.5 In order that these returned checks could be debited to plaintiffs’ account, the personal checks
of the plaintiffs and their children were deposited to their account.

xxxx

SA No. 3396-0

21.7 Plaintiffs opened Peso Savings Account No. 3396.

21.8 Most of the cash deposited to SA No. 3396 were proceeds from the encashments of U.S.
Treasury Warrants (USTWs).

21.9 Subsequently, these USTWS were returned for the reasons "forged endorsement" and "amount
altered."
29

The RTC, however, did not give merit to the above-quoted allegations of the Bank and absolved
Mauricio from liability. The RTC ruled:

Further, this court finds that PRUDENTIAL’s branch manager MAURICIO’s act of allowing
SPOUSES CRUZ to immediately withdraw [the] above instruments is well within his functions as a
branch manager. A person occupying such position exercises a certain degree of discretion with
respect to the accommodations extended [to] certain valued clients such as herein plaintiffs
SPOUSES CRUZ. Having been recommended by the legal counsel himself of PRUDENTIAL and in
view of the fact that they have substantial deposit with the same bank, it cannot be doubted that
SPOUSES CRUZ were valued clients. (TSN dated 8, November 1999 p. 14; TSN dated 27 January
1999, p. 10; and TSN dated 12 January 2000, pp. 7-10)[.]

Further, as testified to by Andres Mangahas, witness of PRUDENTIAL, encashment of and/or

withdrawal against US Treasury Warrants by valued client is not prohibited though it is not exactly
encouraged. (TSN dated 27 January 1999, p. 10) This court moreover holds that MAURICIO was
not in anyway prompted by any malicious motive in approving the encashment and/or withdrawal; he
not only tried to collect from herein plaintiffs SPOUSES CRUZ, (Exhibit 8 – Mauricio) he made sure
that worst comes to worst, the withdrawals were covered (TSN dated 8 November 1999, p. 95) and
that all the transactions were reported to the head office. (TSN dated 8 November 1999, pp. 17-18)
In fact, before MAURICIO allowed the encashment of the dollar checks and as testified by
SPOUSES CRUZ, a condition was imposed. (TSN dated 22 July 1998, pp. 10-13) So, if indeed such
transaction was irregular or worse, prohibited, the Head Office of PRUDENTIAL should have
immediately called MAURICIO’s attention to the same. Instead, PRUDENTIAL continued to credit
the account of the spouses for the value of the returned checks. (Emphasis supplied.)
30 

As mentioned above, the above findings were affirmed not only by the CA but also by this Court.

Undeniably, the acts and omissions alleged by the Bank in the civil case as basis of its counterclaim
against Mauricio, are the very same acts and omissions which were used as grounds to terminate
his employment. The Bank, however, now wants this Court to disregard altogether the factual
findings in the civil case concerning the very same acts and omissions and re-evaluate the same
pieces of evidence and make new factual findings in the hopes that the same will, this time, be in its
favor. This would definitely run contrary to the foundation principle upon which the doctrine of res
judicata rests – the parties ought not to be permitted to litigate the same issue more than once; that,
when a right or fact has been judicially tried and determined by a court of competent jurisdiction, or
an opportunity for such trial has been given, the judgment of the court, so long as it remains
unreversed, should be conclusive upon the parties and those in privity with them in law or estate. 31

Moreover, as correctly held by the CA, Mauricio cannot be held to have abused the discretion he
was clothed with absent some semblance of parameters. In the absence of such guidelines, the
validity of Mauricio’s acts can be tested by determining whether they were justified under the
circumstances. Mauricio was faced with a dilemma whether to accommodate the request for
immediate encashment and/or withdrawals against USTWs by a valued client, knowing that under
the Bank’s rules refund of any returned check shall be the personal accountability of the approving
officer. In exercising his discretion to allow the questioned withdrawals, Mauricio took into
consideration the fact that the Spouses Cruz have substantial deposit and security, and enjoyed a
favorable credit standing with the Bank. And, as found by the RTC, no malice can be inferred from
Mauricio’s acts who tried to collect from the Spouses Cruz and reported all the transactions to the
head office; in fact, the Bank never called his attention to any irregularity in the transactions but even
continued to credit the account of the spouses for the value of the returned checks. Under the
circumstances, Mauricio indeed fully considered the interest of his employer before approving the
questioned transactions. 1avvphi1

The Bank should be reminded that for a dismissal based on loss of trust and confidence to be valid,
the breach of trust must be willful, meaning it must be done intentionally, knowingly, and purposely,
without justifiable excuse. Loss of trust and confidence stems from a breach of trust founded on
32 

dishonest, deceitful or fraudulent act. This is obviously not the case here.
33 

Besides, Office Order No. 1596, one of the office orders allegedly violated by Mauricio, provides:

Approving officers shall exercise extreme caution in allowing deposit of, encashment or withdrawals
against foreign and out-of-town checks. Refund to the bank of the amount involved shall be the
personal responsibility and accountability of the officer who authorized the deposit or encashment
over the counter when the check should be returned by the drawee bank for any reason
whatsoever. (Emphasis supplied.)
34 

The above company directive is an explicit admission that Mauricio was clothed with such discretion
to enter into the questioned transactions as well as a forewarning that in case the foreign and out-of-
town checks were returned for whatever reason, the approving officer, in this case, Mauricio, shall
be personally responsible and accountable. We subscribe to the CA’s interpretation that "personal
responsibility and accountability" could only mean the reimbursement of the value of any dishonored
check but does not mean termination of the approving officer’s employment for breaching the bank’s
trust and confidence.

Considering that it has already been conclusively determined with finality in the civil case that the
questioned acts of Mauricio were well within his discretion as branch manager and approving officer
of the Bank, and the same were sanctioned by the Head Office, we find that the CA did not err in
holding that there was no valid or just cause for the Bank to terminate Mauricio’s employment.

WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated January 30, 2008
and Resolution dated June 16, 2008 of the Court of Appeals in CA-G.R. SP No. 82908 are
AFFIRMED.
Costs against the petitioner.

SO ORDERED.

MARTIN S. VILLARAMA, JR.

Associate Justice

WE CONCUR:
 Republic of the Philippines
SUPREME COURT

EN BANC

G.R. No. 141524 September 14, 2005

DOMINGO NEYPES, LUZ FAUSTINO, ROGELIO FAUSTINO, LOLITO VICTORIANO, JACOB

OBANIA AND DOMINGO CABACUNGAN, Petitioners,
vs.
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, Respondent.

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 Bank’s 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 order2 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
reconsideration3 which petitioners received on July 22, 1998. Five days later, on July 27, 1998,
petitioners filed a notice of appeal4 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 ¾ 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 Apuyan’s 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 15th day 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 motion.19 (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
Reorganization20 that drafted BP 129, the raison d’ etre behind the amendment was to shorten the
period of appeal21 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 4328 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 Court’s 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. IAC35 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.

RENATO C. CORONA
 FIRST DIVISION

[G.R. No. 131481, March 16 : 2011]

BUKLOD NANG MAGBUBUKID SA LUPAING RAMOS, INC., PETITIONER, VS. E.

M. RAMOS AND SONS, INC., RESPONDENT.

[G.R. No. 131624]

DEPARTMENT OF AGRARIAN REFORM, PETITIONER, VS. E. M. RAMOS AND

SONS, INC., RESPONDENT.

DECISION

LEONARDO-DE CASTRO, J.:

Before the Court are consolidated Petitions for Review on Certiorari, under Rule 45 of
the 1997 Rules of Civil Procedure, filed by the Buklod ng Maqbubukid Sa Lupaing
Ramos, Inc. (Buklod) and the Department of Agrarian Regorm (DAR), assailing the
Decision[1] dated March 26, 1997 and the Resolution[2] dated November 24, 1997 of the
Court of Appeals in CA G.R. SP No. 40950.

The Court of Appeals declared the parcels of land owned by E.M. Ramos and Sons, Inc.
(EMRASON), located in Barangay Langkaan, Dasmariñas, Cavite (subject property),
exempt from the coverage of the Comprehensive Agrarian Reform Program (CARP),
thus, nullifying and setting aside the Decision[3] dated February 7, 1996 and
Resolution[4] dated May 14, 1996 of the Office of hte President (OP) in O.P. Case No.
5461.

Quoted hereunder are the facts of the case as found by the Court of Appeals:

At the core of the controversy are several parcels of unirrigated land (303.38545
hectares) which from part of a larger expanse with an area of 372 hectares situated at
Barangay Langkaan, Dasmariñas, Cavite.  Originally owned by the MAnila Golf and
Country Club, he property was aquired by the [herein repondent EMRASON] in 1965 for
the purpose of developing the same into a residential subdivision known as "Traveller's
Life Homes".

Sometime in 1971, the Municipal Council of Dasmariñas, Cavite, acting pursuant to

Republic Act (R.A.) No. 2264, otherwise known as the "Loval Autonomy Act", enacteed
Municipal Ordinance No. 1, hereinafter referred to as Ordinance No. 1, enitled "An
Ordinance Providing Subdivision Regulation and Providing Penalties for Violation
Thereof."

In May, 1972, [respondent] E.M. Ramos and Sons, Inc., applied for an authority to
convert and development its aforementioned 372-hectare property into a residential
subdivision, ataching to the apllication detailed development plans and development
proposals from Bancom Development Corporation and San Miguel Corporation.  Acting
thereon the Municipal Council of Dasmariñas, Cavite passed on July 9, 1972 Municipal
Ordinance No. 29-A (Ordinance "No. 29-A, for brevity), approving [EMRASON's]
application. Ordinance No. 29-A pertinently reads:

"Resolved, as it is hereby resolved, to approve the application for subdivision containing

an area of Three Hundred Seventy-Two (372) Hectares situated in Barrios Bocal and
Langkaan, named as Traveller's Life Homes.

Resolved that the Municipal Ordinance regarding subdivision regulations existing in this
municipality shall be strictly followed by the subdivision ".

Subsequently, [EMRASON] paid the fees, dues and licenses needed to proceed with
property development.

It appears, however, that the actual implementation of the subdivision project suffered
delay owing to the confluence of events. Among these was the fact that the property in
question was then mortgaged to, and the titles thereto were in the possession of, the
Overseas Bank of Manila, which during the period material was under liquidation.

On June 15. 1988, Republic Act No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law or CARL, took effect, ushering in a new process of land
classification, acquisition and distribution.

On September 23, 1988, the Municipal Mayor of Dasmariñas, Cavite addressed a

letter to [EMRASON], stating in part, as follows:

"In reply to your letter of June 2, 1988, we wish to clarify that the Municipality
of Dasmariñas, Cavite, has approved the development of your property situated in
Barrios Bukal and Langkaan, Dasmariñas, Cavite, with a total area of 3 72 hectares,
more or less, into residential, industrial, commercial and golf course project.

This conversion conforms with the approved Development Plan of the Municipality
of Dasmariñas Cavite  ".

Then came the Aquino government's plan to convert the tenanted neighboring property
of the National Development Company (NDC) into an industrial estate to be managed
through a joint venture scheme by NDC and the Marubeni Corporation. Part of the
overall conversion package called for providing the tenant-farmers, opting to remain at
the NDC property, with three (3) hectares each. However, the size of the NDC property
turned out to be insufficient for both the demands of the proposed industrial project as
well as the government's commitment to the tenant-farmers. To address this
commitment, the Department of Agrarian Reform (DAR) was thus tasked with acquiring
additional lands from the nearby areas. The DAR earmarked for this purpose the
subject property of [EMRASON].

On August 29, 1990, then OAR Secretary Benjamin Leong sent out the first of four
batches of notices of acquisition, each of which drew protest from [EMRASON]. All told,
these notices covered 303.38545 hectares of land situated at Barangay Langkaan,
Dasmariñas, Cavite owned by [EMRASON].

In the meantime, [EMRASON] filed with the Department of Agrarian Reform

Adjudication Board (DARAB), Region IV, Pasig, Metro Manila, separate petitions to
nullify the first three sets of the above notices. Collectively docketed as DARAB Case
No. IV-Ca-0084-92, these petitions were subsequently referred to the Office of the
Regional Director, Region IV, which had jurisdiction thereon. In his referral action, the
Provincial Agrarian Adjudicator directed the DAR Region IV, through its Operations
Division, to conduct a hearing and/or investigation lo determine whether or not the
subject property is covered by the Comprehensive Agrarian Reform Program (CARP)
and, if not, to cancel the notices of acquisition.

Forthwith, the DAR regional office conducted an on-site inspection of the subject
property.

In the course of the hearing, during which [EMRASON] offered Exhibits :'A" to "UU-2"
as documentary evidence, [EMRASON] received another set of notices of acquisition. As
lo be expected, [EMRASON] again protested.

On August 28, 1992, the Legal Division of DAR, Region IV, through Hearing Officer
Victor Baguilat, rendered a decision declaring as null and void all the notices of
acquisitions, observing that the property covered thereby is, pursuant to Department of
Justice (DOJ) Opinion No. 44, series of 1990, exempt from CARP. The dispositive
portion of the decision reads, as follows;

''WHEREFORE, in the light of the foregoing x x x, considering that the notices of

acquisition dated August 29, 1990 relative to the 39 hectares partly covered by
Transfer Certificate of Title No. T-19298; notices of acquisition all dated April 3, 1991
relative to the 131.41975 hectares partly covered by Transfer Certificates of Title Nos. x
x x; notices of acquisition all dated August 28, 1991 relative lo the 56.9201 hectares
covered by Transfer Certificates of Title Nos. x x x; and notices of acquisition all dated
May 15, 1992 relative to the 76.0456 covered by Transfer Certificates of Title Nos. xx,
all located at Barangay Langkaan, Dasmariñas, Cavite and owned by petitioner EM
RAMOS and SONS, INC. are null and void on the ground that the subject properties are
exempted from CARP coverage pursuant to DOJ Opinion No. 44, Series of 1990, 
therefore, the aforesaid notices of acquisition be cancelled and revoked. "

The DOJ Opinion adverted to, rendered by then Justice Secretary Franklin Drilon,
clarified that lands already converted to non-agricultural uses before June 15, 1988
were no longer covered by CARP.

On September 3, 1992, the Region IV DAR Regional Director motu propio elevated the

case to the Office of the Agrarian Reform Secretary, it being his view that Hearing
Officer Baguilat's decision ran contrary to the department's official position "to pursue
the coverage of the same properties and its eventual distribution to qualified
beneficiaries particularly the Langkaan farmers in fulfillment of the commitment of the
government to deliver to them the balance of thirty-nine hectares x x x".
On January 6, 1993, the herein respondent DAR Secretary Ernesto Garilao [(DAR
Secretary Garilao)] issued an order, the decretal portion of which partly reads:

"WHEREFORE, in the interest of law and justice, an order is hereby rendered:

1.  Affirming the Notices of Acquisition dated August 29, 1990, April 3, 1991, August
28, 1991 and May 15, 1992 covering 303.38545 hectares of the property owned by the
E.M. RAMOS & SONS, INC, located at Barangay Langkaan, Dasmarinas, Cavite x x x;

xxxx

3. Directing the OAR field officials concerned to pursue (he coverage under RA 6657 of
the properties of E.M.  Ramos & Sons,  Inc. for which subject Notices of Acquisition had
been issued.

SO ORDERED".

Its motion for reconsideration of the aforesaid order having been denied by the [DAR
Secretary Garilao] in his subsequent order of January 6, 1993, [EMRASON] appealed to
the Office of the President where the recourse was docketed as O.P. Case No.
5461.

On February 7, 1996, the Office of the President, through herein respondent Deputy

Executive Secretary Renato C. Corona [(Deputy Executive Secretary Corona)],
rendered the herein assailed decision x x x, dismissing [EMRASON's] appeal on the
strength of the following observation:

"To recapitulate, this Office holds that [EMRASON's] property has remained
AGRICULTURAL in classification and therefore falls within the coverage of the CARP, on
the basis of the following:br>

1. [EMRASON] failed to comply with the mandatory requirements and

conditions of Municipal Ordinance Nos. 1 and 29-A, specifically,
among others, the need for approval of the National    Planning  
Commission through the Highway District Engineer, and the Bureau
of Lands before final submission to the Municipal Council and
Municipal Mayor;

2. [EMRASON] failed to comply with Administrative Order No. 152,

dated December 16, 1968, and

3. The  certification  of the  Human Settlements Regulatory

Commission (HSRC)  in  1981  and the Housing and Land Use
Regulatory Board (HLRB) in 1992 that the property of [EMRASON]
is agricultural".

Undaunted, [EMRASON] interposed a motion for reconsideration, followed later by

another motion whereunder it invited attention to legal doctrines involving land
conversion recently enunciated by no less than the Office of the President itself.

On May 14, 1996, the [Deputy Executive Secretary Corona] came out with his second
challenged issuance denying [EMRASON's] aforementioned motion for reconsideration x
x x.[5]

From the denial of its Motion for Reconsideration by the OP, EMRASON filed a Petition
for Review with the Court of Appeals, which was docketed as CA-G.R. SP No. 40950.

On July 3, 1996, the Court of Appeals issued a Temporary Restraining Order (TRO),
[6]
 which enjoined then DAR Secretary Ernesto Garilao and Deputy Executive Secretary
Renato C. Corona  from implementing the OP Decision of February 7, 1996 and
Resolution of May 14, 1996 until further orders from the court. On September 17,
1996, the appellate court issued a Resolution [8] granting the prayer of EMRASON for the
issuance of a writ of preliminary injunction.  The writ of preliminary injunction[9] was
actually issued on September 30, 1996 after EMRASON posted the required bond of
P500,000,00.

The DAR Secretary filed a Motion for Reconsideration of the Resolution dated
September 17, 1996 of the Court of Appeals, with the prayer that the writ of
preliminary injunction already issued be lifted, recalled and/or dissolved.

At this juncture, the DAR had already prepared Certificates of Land Ownership Award
(CLOAs) to distribute the subject property to farmer-beneficiaries.  However, the writ of
preliminary injunction issued by the Court of Appeals enjoined the release of the
CLOAs. Buklod, on behalf of the alleged 300 farmer-beneficiaries of the subject
property, filed a Manifestation and Omnibus Motion, wherein it moved that it be allowed
to intervene as an indispensable party in CA-G.R. SP No. 40950; that the writ of
preliminary injunction be immediately dissolved, having been issued in violation of
Section 55 of the CARL; and that the Petition for Review of EMRASON be dismissed
since the appropriate remedy should have been a petition for certiorari before the
Supreme Court.

On March 26, 1997, the Court of Appeals promulgated its assailed Decision.

The Court of Appeals allowed the intervention of Buklod because -the latter's
participation was "not being in any way prejudicial to the interest of the original parties,
nor will such intervention change the factual legal complexion of the case." The
appellate court, however, affirmed the propriety of the remedy availed by EMRASON
given that under Section 5 of Supreme Court Revised Administrative Circular No. 1-95
dated May 16, 1995, appeals from judgments or final orders of the OP or the DAR
under the CARL shall be taken to the Court of Appeals, through a verified petition for
review; and that under Section 3 of the same Administrative Circular, such a petition
for review may raise questions of facts, law, or mixed questions of facts and law.

Ultimately, the Court of Appeals ruled in favor of EMRASON because the subject
property was already converted/classified as residential by the Municipality of
Dasmariñas prior to the effectivity of the CARL. The appellate court reasoned:
For one, whether or not the Municipality of Dasmariñas, Cavite had in place in the
early seventies a general subdivision plan is to us of no moment. The absence of such
general plan at that time cannot be taken, for the nonce, against the [herein
respondent EMRASON]. To our mind, the more weighty consideration is the
accomplished fact that the municipality, conformably with its statutory-conferred local
autonomy, had passed a subdivision measure, I.e., Ordinance No. 1, and had approved
in line thereto, through the medium of Ordinance No. 29-A, [EMRASON's] application
for subdivision, or with like effect approved the conversion/classification of the lands in
dispute as residential. Significantly, the Municipal Mayor of Dasmariñas, Cavite, in his
letter of September 23, 1988 to [EMRASON], clarified that such conversion conforms
with the approved development plan of the municipality.

For another, the requirement prescribed by the cited Section 16[a] of Ordinance No. 1
relates to the approval in the first instance by the National Planning Commission of the
final plat of the scheme of the subdivision, not the conversion from agricultural to
residential itself. As [EMRASON] aptly puts it:

"x x x the final plat or final plan, map or chart of the subdivision  is not a condition sine
qua non for the conversion x x x as the conversion was already done by the Municipal
Council of Dasmariñas, Cavite. Municipal Ordinance NO. 29-A merely required that
the final plat, or final plan x x x of the subdivision be done in conformity with Municipal
Ordinance No. 1, the same to be followed by (he subdivision itself. [EMRASON]
therefore did not have to undertake the immediate actual development of the subject
parcel of lands as the same had already been converted and declared residential by
law. x x x " (Petition, pp. 17 and 18).

[EMRASON's] pose has the merit of logic. As may be noted, Ordinance No. 29-A
contained two (2) resolutory portions, each interrelated to, but nonetheless
independent of, the other. The first resolution, reading -

"Resolved, as it is hereby resolved, to approve the application for subdivision containing

an area of Three Hundred Seventy-Two (372) Hectares situated in Barrios Bocal and
Langkaan, named as Travellers Life Homes "

approved the application for subdivision or the conversion of the 372-hectare area into
residential, while the second, reading -

"Resolved that the Municipal Ordinance regarding subdivision regulations existing in

this municipality shall be strictly followed by the subdivision "

provides that the subdivision owner/developer shall follow subdivision regulations, it will
be noted further that the second resolution already referred to the [EMRASON's]
property as "'subdivision", suggesting that the Municipal Council already considered as
of that moment [EMRASON's] area to be for residential use.

Another requirement which [EMRASON] allegedly failed to comply with is found in

Administrative Order (A.O.) No. 152, series of 1968, which pertinently provides -
"1. All Municipal Boards or City Councils, and all Municipal Councils in cities and
municipalities in which a subdivision ordinance is in force, shall submit three copies of
every proposed subdivision plan for which approval is sought together with the
subdivision ordinance, to the National Planning Commission for comment and
recommendation ".

This Court is at a loss to understand how [EMRASON] could be expected to heed a

directive addressed to local government legislative bodies. From a perusal of the title of
A.O. No. 152, it is at once obvious from whom it exacts compliance with its command,
thus: "REQUIRING THE MUNICIPAL BOARDS OR CITY COUNCILS AND MUNICIPAL
COUNCILS TO SUBMIT PROPOSED ORDINANCES AND SUBDIVISION PLANS TO THE
NATIONAL PLANNING COMMISSION FOR COMMENT AND RECOMMENDATION, BEFORE
TAKING ACTION ON THE SAME, AND TO FORWARD A COPY OF THEIR APPROVED
SUBDIVISION ORDINANCES TO THE SAID COMMISSION".

To be sure, [EMRASON] cannot be made to bear the consequences for the non-
compliance, if this be the case, by the Municipal Council of Dasmarinas, Cavite with
what A.O. 152 required. A converse proposition would be antithetical to the sporting
idea of fair play.[11]

As for the other requirements which EMRASON purportedly failed to comply with, the
Court of Appeals held that these became obligatory only after the subject property was
already converted to non-agricultural, to wit:

Foregoing considered, this Court holds that everything needed to validly effect the
conversion of the disputed area to residential had been accomplished. The only
conceivable step yet to be taken relates to the obtention of a conversion order from the
DAR, or its predecessor, the Ministry of Agrarian Reform (MAR.) under its rather
intricate procedure established under Memorandum Circular No. 11-79. But then, this
omission can hardly prejudice the [herein respondent EMRASON] for the DAR7MAR
guidelines were promulgated only in 1979, at which time the conversion of
[EMRASON's] property was already a fait accompli.

Like the conversion procedure set up under Memorandum Circular No. 11-79, the
revised methodology under the CARL cannot also be made to apply retroactively to
lands duly converted/classified as residential under the aegis of the Local Autonomy
Act. For, as a rule, a statute is not intended to affect transactions which occurred before
it becomes operational (Tolentino, COMMENTARIES AND JURISPRUDENCE ON THE
CIVIL CODE, Vol. I, 1983 ed.; p. 23). And as the landmark case of Natalia Realty,
Inc. vs. Department of Agrarian Reform, 225 SCRA 278, teaches:

"Indeed, lands not devoted to agricultural activity are outside the coverage of CARL.
These include lands previously converted to non-agricultural uses prior to the effectively
of CARL by government agencies other than respondent DAR x x x.

xxxx

Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is
hound by such conversion.  It was therefore error to  include the underdeveloped
portions x x x within the  coverage  of CARL".
It may be so, as the assailed decision stated, that in Natalia the lands therein involved
received a locational clearance from the Housing and Land Use Regulatory Board
(HLRB, formerly the Human Settlement Regulatory Commission [HSRC], as residential
or commercial, a factor [EMRASON] cannot assert in its favor. This dissimilarity,
however, hardly provides a compelling justification not to apply the lessons of Natalia.
This is because the property involved in this case, unlike that in Natalia, underwent
classification/conversion before the creation on May 13, 1976 of the HSRC, then known
as the Human Settlements Regulatory Commission (P.D. No. 933). Furthermore, what
is recognized as the HSRC's authority to classify and to approve subdivisions and
comprehensive land use development plans of local governments devolved on that
agency only upon its reorganization on February 7, 1981, with the issuance of
Executive Order No. 648 known as the Charter of the Human Settlements
Regulatory Commission. Section 5 of the same executive order invested the HSRC
with the above classifying and approving authority. In fine, the property of [EMRASON]
went into the process of conversion at the time when the intervention thereon of the
HSRC, which was even then non-existent, was unnecessary. Shortly before the creation
of the HSRC, it would appear that to provincial, city, or municipal councils/boards, as
the case may be, belong the prerogative, albeit perhaps not exclusive, to classify
private lands within their respective territorial jurisdiction and approve their conversion
from agricultural to residential or other non-agricultural uses. To paraphrase the
holding in Patalinghug vs. Court of Appeals, 229 SCRA 554, once a local
government has, pursuant to its police power, reclassified an area as residential, that
determination ought to prevail and must be respected. [12]

The Court of Appeals further observed that the subject property has never been
devoted to any agricultural activity and is, in fact, more suitable for non-agricultural
purposes, thus:

It is worthy to note that the CARL defines "agricultural lands" as "lands devqtedto
agricultural activity x x x and not classified as mineral, forest, residential, commercial
or industrial lands" (Sec. 3[c]). Guided by this definition, it is clear that [herein
respondent EMRASON's] area does not fall under the category of agricultural lands. 
For, let alone the reality that the property is not devoted to some agricultural activity,
being in fact unirrigated, and, as implied in the decision of the DAR Hearing Officer
Victor Baguilat, without duly instituted tenants, the same had been effectively classified
as residential.  The bare circumstance of its not being actually developed as subdivision
or that it is underdeveloped would not alter the conclusion. For, according to Natalia,
what actually determines the applicability of the CARL to a given piece of land is its
previous classification and not its current use or stages of development as non-
agricultural property.

As a pragmatic consideration, the disputed area, in terms of its location in relation to

existing commercial/industrial sites and its major economic use, is more suitable for
purposes other than agriculture. In this connection, this Court notes that the property is
situated at the heart of the CALABARZON, and, as Annex "C" of the petition
demonstrates, lies adjacent to huge industrial/commercial complexes. The San Miguel-
Monterey meat plant, the NDC-Marubeni complex and the Reynolds Aluminum plant
may be mentioned. For sure, the Sangguniang Panlalawigan of Cavite, obviously
cognizant of the economic potential of certain areas in the Municipality of Dasmariñas
has, by Resolution No. 105, series of 1988. declared defined tracts of lands in the
Municipality of Dasmariñas as "industrial-residential-institutional mix." [13]

As a last point, the Court of Appeals justified its issuance of a writ of preliminary
injunction enjoining the implementation of the OP Decision dated February 7, 1996 and
Resolution dated May 14, 1996, viz:

As a final consideration, we will address the [herein petitioners] OAR Secretary's and
Buklod's joint concern regarding the propriety of the preliminary injunction issued in
this case. They alleged that the issuance is violative of Section 55 of the CARL which
reads:

"SEC. 55. No Restraining Order or Preliminary

Injunction. - No Court in the Philippines shall have jurisdiction to issue any restraining
order or writ of preliminary injunction against the PARC or any of its duly authorized or
designated agencies in any case, dispute, controversy arising from, necessary to, or in
connection with the application, implementation, enforcement, or interpretation of this
Act and other pertinent laws on agrarian reform". (Underscoring added.)

As will be noted, the aforequoted section specifically mentions the Presidential Agrarian
Reform Council (PARC) of which the DAR Secretary is the Vice Chairman, or any of its
duly designated agencies as protected from an injunctive action of any court. These
agencies include the PARC Executive Committee, the PARC Secretariat, which the DAR
Secretary heads, and. on the local level, the different Agrarian Reform Action
Committees (Sees. 41 to 45, R.A. No. 6657).

From the records, there is no indication that the [petitioner] Agrarian Reform

Secretary acted vis-a-vis the present controversy for, or as an agency of, the PARC.
Hence, he cannot rightfully invoke Section 55 of the CARL and avail himself of the
protective mantle afforded by that provision.  The PARC, it bears to stress, is a policy-
formulating and coordinating body (Sec. 18. E.O. 229, July 22, 1987) without express
adjudicatory mandate, unlike the DAR Secretary who, as department head, is "vested
with primary jurisdiction to determine and adjudicate agrarian reform matters and shall
have exclusive jurisdiction over all matters involving the implementation of agrarian
reform" (Sec. 50. R.A. 6657). Thus, it is easy lo accept the proposition that the
[petitioner] Agrarian Reform Secretary issued his challenged orders in the exercise
of his quasi-judicial power as department head. [14]

In the end, the Court of Appeals decreed:

WHEREFORE, the instant petition for review is hereby GRANTED. Accordingly, the

challenged decision dated February 7, 1996 and the resolution of May 14, 1996 of the
Office of the President in O.P. Case No. 5461 are hereby NULLIFIED,
VACATED and SET ASIDE, and the notices of acquisition issued by the Department of
Agrarian Reform covering the 372-hectare property of the [herein respondent
EMRASON] at Barangay Langkaan, Dasmariñas, Cavite declared VOID.
The writ of preliminary injunction issued by this Court on September 30, 1996 is hereby
made permanent.[15]

Buklod and DAR. filed their respective Motions for Reconsideration of the foregoing
Decision but both Motions were denied by the Court of Appeals in a Resolution dated
November 24, 1997.

Aggrieved, Buklod and DAR filed the instant Petitions, which were consolidated by this
Court in a Resolution[16] dated August 19, 1998.

In G.R. No. 131481, Buklod raises the following arguments:

1] THE MUNICIPAL ORDINANCE INVOKED BY [EMRASON] AS CONVERSION OF THE

PROPERTY IN QUESTION ENACTED ON JULY 9, 1972 BY THE MUNICIPAL COUNCIL OF
DASMARIÑAS, CAVITE IS IMPOTENT BECAUSE THE MUNICIPAL ORDINANCE IMPOSED
CONDITIONS WHICH [EMRASON] NEVER COMPLIED. NO COMPLIANCE NO
CONVERSION.

2] AT THE TIME THE ALLEGED ORDINANCE WAS ENACTED, A LAND REFORM LAW WAS
ALREADY IN EFFECT GRANTING SECURITY OF TENURE TO THE FARMERS SO THAT A
LANDOWNER CANNOT ARBITRARILY CONVERT AN AGRICULTURAL LAND INTO A
DIFFERENT CLASSIFICATION WITHOUT COMPLYING WITH LEGAL REQUIREMENTS (R.A.
3844).

3] A MERE MUNICIPAL ORDINANCE CANNOT NEGATE LAND REFORM RIGHTS GRANTED

TO THE FARMERS BY LEGISLATIVE ENACTMENT UNDER R.A. 3844 AND SUBSEQUENT
LAWS. LAND REFORM LAW BEING A SOCIAL LEGISLATION IS PARAMOUNT.

4] LAND REFORM IS A CONSTITUTIONAL MANDATE FOR THE BENEFIT OF THE

LANDLESS FARMERS SO THAT THE LAND REFORM LAW SHOULD BE CONSTRUED AND
APPLIED IN ORDER TO ATTAIN THE LEGISLATIVE INTENT OF RELIEVING THE FARMERS
FROM THEIR POVERTY AND BONDAGE.  THE COURT OF APPEALS IGNORED THIS
CONSTITUTIONAL MANDATE TO FAVOR THE LANDLORD [EMRASON].

5] THE COURT OF APPEALS ISSUED A RESTRAINING ORDER/INJUNCTION AGAINST

THE CLEAR PROHIBITION IN THE CARL (SEC. 55 RA 6657) AND SO FAR DEPARTED
FROM THE USUAL COURSE OF BY REFUSING TO GRANT THE PETITIONER FARMERS A
HEARING INSPITE OF THE PROCEDURE PRESCRIBED BY RA 7902 (SEC. ]). [17]

In G.R. No. 131624, the DAR ascribes the following errors on the part of the Court of
Appeals:

I.

THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT THE MUNICIPALITY
OF DASMARIÑAS, CAVITE, WAS AUTHORIZED, UNDER THE LOCAL AUTONOMY ACT, TO
CLASSIFY AND/OR RECLASSIFY LANDS CONSIDERING THAT WHAT WAS CONFERRED
THEREUNDER WAS ONLY ZONING AUTHORITY, THUS, RENDER THE EXERCISE
THEREOF BY THE MUNICIPAL COUNCIL OF DASMARIÑAS, CAVITE, ULTRA VIRES;
 II.

EVEN ASSUMING, IN GRATIA ARGUMENTI, THAT THE AUTHORITY TO CLASSIFY AND

RECLASSIFY LANDS IS POSSESSED BY MUNICIPAL CORPORATIONS, STILL THE
HONORABLE COURT OF APPEALS ERRED WHEN IT CONSIDERED THE ALLEGED
PASSAGE OF ORDINANCE NO. 29-A OF THE MUNICIPAL COUNCIL OF DASMARIÑAS,
CAVITE, AS A VALID MEASURE RECLASSIFYING SUBJECT AGRICULTURAL LAND TO
NON-AGRICULTURAL USE CONSIDERING THAT THE SAID APPROVAL OF THE
SUBDIVISION, PER LETTER OF THE MUNICIPAL MAYOR, FAILED TO COMPLY WITH
EXISTING RULES AND REGULATIONS ON THE MATTER AND, THEREFORE,
NONCOMPLYING AND INEFFECTUAL; AND

III.

THE HONORABLE COURT OF APPEALS ERRED WHEN IT APPLIED THE RULING OF THE
HONORABLE COURT IN THE NATALIA REALTY CASE  DUE TO SUBSTANTIAL
DISSIMILARITY IN FACTUAL SETTING AND MILIEU. [18]

At the crux of the present controversy is the question of whether the subject property
could be placed under the CARP.

DAR asserts that the subject property could be compulsorily acquired by the State from
EMRASON and distributed to qualified farmer-beneficiaries under the CARP since it was
still agricultural land when the CARL became effective on June 15, 1988. Ordinance
Nos. 1 and 29-A, approved by the Municipality of Dasmariñas on July 13, 1971 and
July 9, 1972, respectively, did not reclassify the subject property from agricultural to
non-agricultural. The power to reclassify lands is an inherent power of the National
Legislature under Section 9 of Commonwealth Act No. 141, otherwise known as the
Public Land Act, as amended, which, absent a specific delegation, could not be
exercised by any local government unit (LGU). The Local Autonomy Act of 1959 - in
effect when the Municipality of Dasmariñas approved Ordinance Nos. 1 and 29-A -
merely delegated to cities and municipalities zoning authority, to be understood as the
regulation of the uses of property in accordance with the existing character of the land
and structures.  It was only Section 20 of Republic Act No. 7160, otherwise known as
the Local Government Code of 1991, which extended to cities and municipalities limited
authority to reclassity agricultural lands.

DAR also argues that even conceding that cities and municipalities were already
authorized in 1972 to issue an ordinance reclassifying lands from agricultural to non-
agricultural, Ordinance No. 29-A of the Municipality of Dasmariñas was not valid since
it failed to comply with Section 3 of the Local Autonomy Act of 1959, Section 16(a) of
Ordinance No. 1 of the Municipality of Dasmarinas, and Administrative Order No. 152
dated December 16, 1968, which all required review and approval of such an ordinance
by the National Planning Commission (NPC). Subsequent developments further
necessitated review and approval of Ordinance No. 29-A by the Human Settlements
Regulatory Commission (HSRC), which later became the Housing and Land Use
Regulatory Board (HLURB).

DAR further avers that the reliance by the Court of Appeals -on Natalia Realty, Inc. v.
Department of Agrarian Reform[19] (Natalia Realty case)  is misplaced because the lands
involved therein were converted from agricultural to residential use by Presidential
Proclamation No. 1637, issued pursuant to the authority delegated to the President
under Section 71, et seq., of the Public Land Act.[20]

Buklod adopts the foregoing arguments of DAR. In addition, it submits that prior to
Ordinance Nos. 1 and 29-A, there were already laws implementing agrarian reform,
particularly: (1) Republic Act No. 3844, otherwise known as the Agricultural Land
Reform Code, in effect since August 8, 1963, and subsequently amended by Republic
Act No. 6389 on September 1.0, 1971, after which it became known as the Code of
Agrarian Reforms; and (2) Presidential Decree No. 27, otherwise known as the Tenants
Emancipation Decree, which took effect on November 19, 1972. Agricultural land could
not be converted for the purpose of evading land reform for there were already laws
granting farmer-tenants security of tenure, protection from ejectment without just
cause, and vested rights to the land they work on.

Buklod contends that EMRASON failed to comply with Section 36 of the Code of
Agrarian Reforms, which provided that the conversion of land should be implemented
within one year, otherwise, the conversion is deemed in bad faith. Given the failure of
EMRASON to comply with many other requirements for a valid conversion, the subject
property has remained agricultural. Simply put, no compliance means no conversion. 
In fact, Buklod points out, the subject property is still declared as "agricultural" for real
estate tax purposes. Consequently, EMRASON is now estopped from insisting that the
subject property is actually "residential."

Furthermore, Buklod posits that land reform is a constitutional mandate which should
be given paramount consideration. Pursuant to said constitutional mandate, the
Legislature enacted the CARL. It is a basic legal principle that a legislative statute
prevails over a mere municipal ordinance.

Finally, Buklod questions the issuance by the Court of Appeals of a writ of preliminary
injunction enjoining the distribution of the subject property to the farmer-beneficiaries
in violation of Section 55 of the CARL; as well as the refusal of the appellate court to
hold a hearing despite Section 1 of Republic Act No. 7902, [21] prescribing the procedure
for reception of evidence before the Court of Appeals. At such a hearing, Buklod
intended to present evidence that the subject property is actually agricultural and that
Buklod members have been working on said property for decades, qualifying them as
farmer-beneficiaries.

EMRASON, on the other hand, echoes the ruling of the Court of Appeals that the subject
property is exempt from CARP because it had already been reclassified as residential
with the approval of Ordinance No. 29-A by the Municipality of Dasmariñas on July 9,
1972. EMRASON cites Ortigas & Co., Ltd. Partnership v. Feati Bank and Trust Co.
[22]
 (Ortigas case) where this Court ruled that a municipal council is empowered to adopt
zoning and subdivision ordinances or regulations under Section 3 of the Local Autonomy
Act of 1959.

Still relying on the  Ortigas case, EMRASON avows that the Municipality of
Dasmariñas, taking into account the conditions prevailing in the area, could validly
zone and reclassify the subject property in the exercise of its police power in order to
safeguard the health, safety, peace, good order, and general welfare of the people in
the locality. EMRASON describes the whole area surrounding the subject property as
residential subdivisions (i.e., Don Gregorio, Metro Gate, Vine Village, and Cityland
Greenbreeze 1 and 2 Subdivisions) and industrial estates (i.e., Reynolds Aluminum
Philippines, Inc. factory; NDC-Marubeni industrial complex, San Miguel Corporation-
Monterey cattle and piggery farm and slaughterhouse), traversed by national highways
(i.e., Emilio Aguinaldo National Highway, Trece Martirez, Puerto Azul Road, and
Governor's Drive). EMRASON mentions that on March 25, 1988, the Sangguniang
Panlalawigan of the Province of Cavite passed Resolution No. 105 which declared the
area where subject  property  is located as "industrial-residential-institutional mix."

EMRASON further maintains that Ordinance No. 29-A of the Municipality of

Dasmariñas is valid. Ordinance No. 29-A is complete in itself, and there is no more
need to comply with the alleged requisites which DAR and Buklod are insisting upon.
EMRASON quotes from Patalinghug v. Court of Appeals[23] (Patalinghug case) that "once
a local government has reclassified an area as commercial, that determination for
zoning purposes must prevail."

EMRASON points out that Ordinance No. 29-A, reclassifying the subject property, was
approved by the Municipality of Dasmariñas on July 9, 1972. Executive Order No. 648,
otherwise known as the Charter of the Human Settlements Regulatory Commission
(HSRC Charter) - which conferred upon the HSRC the power and duty to review,
evaluate, and approve or disapprove comprehensive land use and development plans
and zoning ordinances of LGUs - was issued only on February 7, 1981. The exercise by
HSRC of such power could not be applied retroactively to this case without impairing
vested rights of EMRASON. EMRASON disputes as well the absolute necessity of
submitting Ordinance No. 29-A to the NPC for approval. Based on the language of
Section 3 of the Local Autonomy Act of 1959, which used the word "may," review by
the NPC of the local planning and zoning ordinances was merely permissive. EMRASON
additionally posits that Ordinance No. 1 of the Municipality of Dasmariñas simply
required approval by the NPC of the final plat or plan, map, or chart of the subdivision,
and not of the rcclassification and/or conversion by the Municipality of the subject
property from agricultural to residential.  As for Administrative Order No. 152 dated
December 16, 1968, it was directed to and should have been complied with by the city
and municipal boards and councils. Thus, EMRASON should not be made to suffer for
the non-compliance by the Municipal Council of Dasmarinas with said administrative
order.

EMRASON likewise reasons that since the subject property was already reclassified as
residential with the mere approval of Ordinance No. 29-A by the Municipality of
Dasmarinas, then EMRASON did not have to immediately undertake actual development
of the subject property. Reclassification and/or conversion of a parcel of land are
different from the implementation of the conversion.

EMRASOK is resolute in its stance that the Court of Appeals correctly applied
the Natalia Realty case to the present case since both have similar facts; the only
difference being that the former involves a presidential fiat while the latter concerns a
legislative fiat.

EMRASON denies that the Buklod members are farmer-tenants of the subject property.
The subject property has no farmer-tenants because, as the Court of Appeals observed,
the property is unirrigated and not devoted to any agricultural activity. The subject
property was placed under the CARP only to accommodate the farmer-tenants of the
NDC property who were displaced by the NDC-Marubeni Industrial Project. Moreover,
the Buklod members are still undergoing a screening process before the DAR-Region IV,
and are yet to be declared as qualified farmer-beneficiaries of the subject property.
Hence, Buklod members tailed to establish they already have vested right over the
subject property.

EMRASON urges the Court not to consider issues belatedly raised by Buklod, It may be
recalled that Buklod intervened in CA-G.R. SP No. 40950 just before the Court of
Appeals rendered judgment in said case. When the appellate court promulgated its
Decision on March 26, 1997 favoring EMRASON, Buklod filed a Motion for
Reconsideration of said judgment, to which EMRASON, in turn, filed a Comment and
Opposition. In its Reply to the aforementioned Comment and Opposition of EMRASON,
Buklod raised new factual matters, specifically, that: (1) EMRASON has not even
subdivided the title to the subject property 27 years after its purported
reclassification/conversion; (2) EMRASON never obtained a development permit nor
mayor's permit to operate a business in Dasmarinas; and (3) the farmer-tenants
represented by Buklod have continuously cultivated the subject property. There was no
cogent or valid reason for the Court oi' Appeals to allow Buklod to present evidence to
substantiate the foregoing allegations. The DAR Region IV Hearing Officer already
conducted extensive hearings during which the farmers were duly represented.
Likewise, Buklod raises for the first time in its Petition before this Court the argument
that the Tenants Emancipation Decree prescribes a procedure for conversion which
EMRASON failed to comply with.

Lastly, EMRASON defends the issuance by the Court of Appeals of a writ of preliminary
injunction in CA-G.R. SP No. 40950. Section 55 of the CARL is inapplicable to the case
at bar because said provision only prohibits the issuance by a court of a TRO or writ of
preliminary injunction "against the PARC or any ol^ its duly authorized or designated
agencies." As the Court of Appeals declared, the PARC is a policy-formulating and
coordinating body. There is no indication whatsoever that the DAR Secretary was acting
herein as an agent of the PARC. The DAR Secretary issued the orders of acquisition for
the subject property in the exercise of his quasi-judicial powers as department head.

The Court, after consideration of the issues and arguments in the Petitions at bar,
affirms the Court of Appeals and rules in favor of EMRASON.

CARP  coverage limited to agricultural land

Section 4, Chapter II of the CARL, as amended,24 particularly defines the coverage of

the CARP, to wit:

SEC. 4. Scope. - The Comprehensive Agrarian Reform Law of 1988 shall cover,
regardless of tenurial arrangement and commodity produced, all public and private
agricultural lands as provided in Proclamation No. 131 and Executive Order No. 229,
including other lands of the public domain suitable for agriculture: Provided, That
landholdings of landowners with a total area of five (5) hectares and below shall not be
covered for acquisition and distribution to qualified beneficiaries.
More specifically, the following lands are covered by the CARP:

(a) All alienable and disposable lands of the public domain devoted to or suitable for
agriculture. No reclassification of forest or mineral lands to agricultural lands shall be
undertaken after the approval of this Act until Congress, taking into account ecological,
developmental and equity considerations, shall have determined by  law, the specific
limits of the public domain;

(b) All lands of the public domain in excess of the specific limits as determined by
Congress in the preceding paragraph;

(c) All other lands owned by the Government devoted to or suitable for agriculture; and

(d) All private lands devoted to or suitable for agriculture regardless of the

agricultural products raised or that can be raised thereon.

A comprehensive inventory system in consonance with the national land use plan shall
be instituted by the Department of Agrarian Reform (DAR), in accordance with the Local
Government Code, for the purpose of properly identifying and classifying farmlands
within one (1) year from effectivity of this /Vet. without prejudice to the
implementation of the land acquisition and distribution." (Emphases supplied.)

Section 3(c), Chapter I of the CARL further narrows down the definition of agricultural
land that is subject to CARP to "land devoted to agricultural activity as defined in this
Act and not classified as mineral, forest, residential, commercial or industrial land."

The CARL took effect on June 15, 1988. To be exempt from the CARP, the subject
property should have already been reclassified as residential prior to said date.

The Local Autonomy Act of 1959

The Local Autonomy Act of 1959, precursor of the Local Government Code of 1991,
provided;

SEC. 3. Additional powers of provincial boards, municipal boards or city councils and
municipal and regularly organized municipal district councils. - x x x

xxxx

Power to adopt zoning and planning ordinances. — Any provision of law to the
contrary notwithstanding, Municipal Boards or City Councils in cities, and Municipal
Councils in municipalities are hereby authorized to adopt zoning and subdivision
ordinances or regulations for their respective cities and municipalities subject to the
approval of the City Mayor or Municipal Mayor, as the case may be. Cities and
municipalities may, however, consult the National Planning Commission on
matters pertaining to planning and zoning. (Emphases supplied.)

Pursuant to the foregoing provision, the Municipal Council of Dasmariñas

approved Ordinance No. 1 on July 13, 1971, which laid down the general subdivision
regulations for the municipality; and Resolution No. 29-A on July 9, 1972, which
approved the application for subdivision of the subject property.

The Court observes that the OP, the Court of Appeals, and even the parties themselves
referred to Resolution No. 29-A as an ordinance. Although it may not be its official
designation, calling Resolution No. 29-A as Ordinance No. 29-A is not completely
inaccurate. In the Ortigas & Co. case, the Court found it immaterial that the then
Municipal Council of Mandaluyong declared certain lots as part of the commercial and
industrial zone through a resolution, rather than an ordinance, because:

Section 3 of R.A. No. 2264, otherwise known as the Local Autonomy Act, empowers a
Municipal Council "to adopt zoning and subdivision ordinances or regulations" for the
municipality. Clearly, the law docs 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 oi' fact the same section declares that
the power exists "(A)ny provision of law to the contrary notwithstanding x x
x."[25] (Emphases supplied.)

Zoning and reclassification

Section 3(c), Chapter I of the CARL provides that a parcel oi^ land reclassified for non-
agricultural uses prior to June 15, 1988 shall no longer be considered agricultural land
subject to CARP. The Court is now faced with the question of whether Resolution No.
29-A of the Municipality of Dasmariñas dated July 9, 1972, which approved the
subdivision of the subject property for residential purposes, had also reclassified the
same from agricultural to residential.

Zoning classification is an exercise by the local government of police power, not the
power of eminent domain. A zoning ordinance is defined as a local city or municipal
legislation which logically arranges, prescribes, defines, and apportions a given political
subdivision into specific land uses as present and future projection of needs. [26]

The Court gave a more extensive explanation of zoning in Pampanga Bus Company,
Inc. v. Municipality of Tarlac,[27] thus:

The appellant argues that Ordinance No. 1 is a zoning ordinance which the Municipal
Council is authorized to adopt. McQuillin in his treaties on Municipal Corporations
(Volume 8, 3rd ed.) says:

Zoning is governmental regulation of the uses of land and buildings according to

districts or zones. It is comprehensive where it is governed by a single plan for the
entire municipality and prevails throughout the municipality in accordance with that
plan. It is partial or limited where it is applicable only to a certain part of the
municipality or to certain uses. Fire limits, height districts and building regulations are
forms of partial or limited zoning or use regulation that are antecedents of modern
comprehensive zoning, (pp. 11-12.)

The term "zoning," ordinarily used with the connotation of comprehensive or general
zoning, refers to governmental regulation of the uses of land and buildings according to
districts or zones. This regulation must and does utilize classification of uses within
districts as well as classification of districts, inasmuch as it manifestly is impossible to
deal specifically with each of the innumerable uses made of land and buildings. 
Accordingly, (zoning has been defined as the confining of certain classes of buildings
and uses to certain localities, areas, districts or zones.) It has been stated that zoning
is the regulation by districts of building development and uses of property, and that the
term "zoning" is not only capable of this definition but has acquired a technical and
artificial meaning in accordance therewith. (Zoning is the separation of the municipality
into districts and the regulation of buildings and structures within the districts so
created, in accordance with their construction, and nature and extent of their use. It is
a dedication of districts delimited to particular uses designed to subserve the general
welfare.) Numerous other definitions of zoning more or less in accordance with these
have been given in the cases, (pp. 27-28.)[28]

According to Section 1(b) of Ordinance No. 1, "[s]ubdivision means the division of a

tract or parcel of land into two or more lots, sites or other divisions for the purpose,
whether immediate or future, o[f| a sale or building development. It includes
resubdivision, and when appropriate to the context, relates to the process of
subdividing as to the land of territory subdivided." Subdivision ordinances or regulations
such as Resolution No. 29-A, in relation to Ordinance No. 1, constitute partial or
limited zoning, for they are applicable to a specific property in the city or municipality
to be devoted for a certain use.

Section 9 of the Public Land Act - cited by the DAR and Buklod as the purported
delegation by the National Legislature of the power to reclassify - is immaterial to the
instant cases.  Said provision reads:

SEC. 9. For the purpose of their administration and disposition, the lands of the public
domain alienable or open to disposition shall be classified, according to the use or
purposes to which such lands are destined, as follows:

(a)    Agricultural;

(b)    Residential,  commercial,  industrial,  or  for  similar productive purposes;

(c)    Educational, charitable, or other similar purposes; and

(d)    Reservations for townsites and for public and quasi-public uses.

The President, upon recommendation by the Secretary of Agriculture and Natural

Resources, shall from time to time make the classifications provided for in this section,
and may, at any time and in a similar manner, transfer lands from one class to another.
(Emphasis supplied.)

The power delegated to the President under the aforequoted provision of the Public
Land Act is limited to the classification of lands of the public domain that are
alienable or open to disposition. It finds no application in the present cases for the
simple reason that the subject property involved herein is no longer part of the public
domain. The subject property is already privately owned and accordingly covered by
certificates of title.

The concept that concerns this Court in the instant cases is the reclassification of
agricultural lands. In Alarcon v. Court of Appeals,[29] the Court had the occasion to
define and distinguish reclassification from conversion as follows:

Conversion is the act of changing the current use of a piece of agricultural land into
some other use as approved by the Department of Agrarian Reform. Reclassification, on
the other hand, is the act of specifying how agricultural lands shall be utilized for non-
agricultural uses such as residential, industrial, commercial, as embodied in the land
use plan, subject to the requirements and procedure for land use conversion, x x x.
(Italics supplied.)

Reclassification also includes the reversion  of non-agricultural  lands to agricultural

use.[31]

Under the present Local Government Code, it is clear that the authority to reclassify
agricultural lands primarily resides in the sanggunian of the city or municipality.  Said
provision reads in full:

Sec. 20. Reclassification of Lands. - (a) A city or municipality may, through an

ordinance passed by the sanggunian after conducting public hearing for the
purpose, authorize the reclassification of agricultural lands and provide for the
manner of their utilization or disposition in the following cases: (X) when the land
ceases to be economically feasible and sound for agricultural purposes as determined
by the Department of Agriculture or (2) where the land shall have substantially greater
economic value for residential, commercial, or industrial purposes, as determined by
the sanggunian concerned: Provided, That such reclassification shall be limited to the
following percentage of the total agricultural land area at the time of the passage of the
ordinance:

(1)    For highly urbanized and independent component cities, fifteen percent (15%);

(2)    For component cities  and first to the third  class municipalities, ten percent
(10%); and

(3)    For fourth to sixth class municipalities, five percent (5%): Provided, further, 
That  agricultural lands  distributed  to agrarian  reform  beneficiaries pursuant  to 
Republic  Act Numbered Sixty-six hundred fifty-seven (R.A. No. 6657), otherwise
known as "The Comprehensive Agrarian Reform Law", shall not be affected by the said
reclassification and the conversion of such lands into other purposes shall be governed
by Section 65 of said Act.

(b)    The President may, when public interest so requires and upon recommendation
of  the National Economic and Development Authority, authorize a city or municipality
to reclassify lands in excess of the limits set in the next preceding paragraph.

(c)    The local government units shall, in conformity with existing laws, continue
to prepare their respective comprehensive land use plans enacted through
zoning ordinances which  shall be  the primary and dominant bases for the future use
of land resources: Provided, That  the requirements for food production, human
settlements, and industrial expansion shall be taken into consideration in the
preparation of such plans.

(d)    When  approval by a national agency is required for reclassification, such approval
shall not be unreasonably withheld. Failure to act on a proper and complete application
for reclassification within three (3) months from receipt of the same shall be deemed as
approval thereof.

(e)    Nothing in this Section shall be construed as repealing, amending, or modifying in

any manner the provisions of R.A. No. 6657. (Emphases supplied.)

Prior to the Local Government Code of 1991, the Local Autonomy Act of 1959 was silent
on the authority to reclassify agricultural lands. What the earlier statute expressly
granted to city and municipal boards and councils, under Section 3 thereof, was the
power to adopt zoning and subdivision ordinances and regulations.

DAR and Buklod insist that zoning is merely the regulation of land use based on
the existing character of the property and the structures thereon; and that zoning is
a lesser power compared to reclassification so that the delegation of the former to the
local government should not be deemed to include the latter.

Such arguments are easily refuted by reference to the definitions of zoning and
reclassification earlier presented herein, which support a more extensive concept of
zoning than that which DAR and BUKLOD assert.

By virtue of a zoning ordinance, the local legislature may arrange, prescribe, define,

and apportion the land within its political jurisdiction into specific uses based not only
on the present, but also on the future projection of needs. To limit zoning to the
existing character of the property and the structures thereon would completely negate
the power of the local legislature to plan land use in its city or municipality. Under such
circumstance, zoning would involve no planning at all, only the rubber-stamping by the
local legislature of the current use of the land.

Moreover, according to the definition of reclassification, the specified non-agricultural

use of the land must be embodied in a land use plan, and the land use plan is enacted
through a zoning ordinance. Thus, zoning and planning  ordinances  take  precedence 
over reclassification.  The reclassification of land use is dependent on the zoning and
land use plan, not the other way around.

It may, therefore, be reasonably presumed that when city and municipal boards and
councils approved an ordinance delineating an area or district in their cities or
municipalities as residential, commercial, or industrial zone, pursuant to the power
granted to them under Section 3 of the Local Autonomy Act of 1959, they were, at the
same time, reclassifying any agricultural lands within the zone for non-agri cultural use;
hence, ensuring the implementation of and compliance with their zoning ordinances. 
The logic and practicality behind such a presumption is more evident when considering
the approval by local legislative bodies of subdivision ordinances and regulations. The
approval by city and municipal boards and councils of an application for subdivision
through an ordinance should already be understood to include approval of the
reclassification of the land, covered by said application, from agricultural to the
intended non-agricultural use. Otherwise, the approval of the subdivision application
would serve no practical effect; for as long as the property covered by the application
remains classified as agricultural, it could not be subdivided and developed for non-
agricultural use.

A liberal interpretation of the zoning power of city and municipal boards and councils,
as to include the power to accordingly reclassify the lands within the zones, would be in
accord with the avowed legislative intent behind the Local Autonomy Act of 1959, which
was to increase the autonomy of local governments. Section 12 of the Local Autonomy
Act of 1959 itself laid down rules for interpretation of the said statute:

SEC. 12. Rules for the interpretation of the Local Autonomy Act. -

1.    Implied power of a province, a city or municipality shall be liberally construed in

its favor. Any 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.

2.   The general welfare clause shall be liberally interpreted in case of doubt so as

to give more power to local governments in promoting the economic condition, social
welfare and material progress of the people in the community.

3.   Vested rights existing at the time of the promulgation of this law arising out of a
contract between a province, city or municipality on one hand and a third party on the
other, should be governed by the original terms and provisions of the same, and in no
case would this act infringe existing rights.

Moreover, the regulation by local legislatures of land use in their respective territorial
jurisdiction through zoning and reclassification is an exercise of police power. In Binay
v. Domingo,32] the Court recognized that police power need not always be expressly
delegated, it may also be inferred:

The police power is a governmental function, an inherent attribute of sovereignty,

which was born with civilized government. It is founded largely on the maxims, "Sic
utere tuo et alienum non laedas" and "Salus populi est suprema lex" Its fundamental
purpose is securing the general welfare, comfort and convenience of the people.

Police power is inherent in the state but not in municipal corporations (Balacuit v. CFI
of Agusan del Norte, 163 SCRA 182). Before a municipal corporation may exercise such
power, there must be a valid delegation of such power by the legislature which is the
repository of the inherent powers of the State. A valid delegation of police power
may arise from express delegation, or be inferred from the mere fact of the
creation of the municipal corporation; and as a general rule, municipal
corporations may exercise police powers within the fair intent and purpose of
their creation which are reasonably proper to give effect to the powers
expressly granted, and statutes conferring powers on public corporations have
been construed as empowering them to do the things essential to the
enjoyment of life and desirable for the safety of the people. (62 C.J.S., p. 277).
The so-called inferred police powers of such corporations are as much delegated powers
as arc those conferred in express terms, the inference of their delegation growing out of
the fact of the creation of the municipal corporation and the additional fact that the
corporation can only fully accomplish the objects of its creation by exercising such
powers. (Crawfordsville vs. Braden, 28 N.E. 849). Furthermore, municipal
corporations, as governmental agencies, must have such measures of the
power as are necessary to enable them to perform their governmental
functions. The power is a continuing one, founded on public necessity. (62 C.J.S. p.
273) Thus, not only does the State effectuate its purposes through the exercise of the
police power but the municipality does also. (U.S. v. Salaveria, 39 Phil. 102).

Municipal governments exercise this power under the general welfare clause:

pursuant thereto they are clothed with authority to "enact such ordinances and issue
such regulations as may be necessary to carry out and discharge the responsibilities
conferred upon it by law, and such as shall be necessary and proper to provide for the
health, safety, comfort and convenience, maintain peace and order, improve public
morals, promote the prosperity and general welfare of the municipality and the
inhabitants thereof, and insure the protection of property therein." (Sections 91, 149,
177 and 208, BP 337). And under Section 7 of BP 337, "every local government unit
shall exercise the powers expressly granted, those necessarily implied therefrom, as
well as powers necessary and proper for governance such as to promote health and
safety, enhance prosperity, improve morals, and maintain peace and order in the local
government unit, and preserve the comfort and convenience of the inhabitants therein."

Police power is the power to prescribe regulations to promote the health, morals,
peace, education, good order or safety and general welfare of the people. It is the most
essential, insistent, and illimitable of powers. In a sense it is the greatest and most
powerful attribute of the government. It is elastic and must be responsive to various
social conditions. (Sangalang, el al. vs. IAC, 176 SCRA 719). On it depends the security
of social order, the life and health of the citizen, the comfort of an existence in a thickly
populated community, the enjoyment of private and social life, and the beneficial use of
property, and it has been said to be the very foundation on which our social system
rests. (16 C.J.S., p. 896) However, it is not confined within narrow circumstances of
precedents resting on past conditions; it must follow the legal progress of a democratic
way of life. (Sangalang, el al. vs. IAC, supra).

xxxx

In the case of Sangalang vs. IAC, supra, We ruled that police power is not capable of an
exact definition but has been, purposely, veiled in general terms to underscore its all-
comprehensiveness. Its scope, over-expanding to meet the exigencies of the times,
even to anticipate the future where it could be done, provides enough room for an
efficient and flexible response to conditions and circumstances thus assuring the
greatest benefits.

The police power of a municipal corporation is broad, and has been said to be
commensurate with, but not to exceed, the duty to provide for the real needs of the
people in their health, safely, comfort, and convenience as consistently as may be with
private rights. It extends to all the great public needs, and, in a broad sense includes all
legislation and almost every function of the municipal government. It covers a wide
scope of subjects, and, while it is especially occupied with whatever affects the peace,
security, health, morals, and general welfare of the community, it is not limited thereto,
but is broadened to deal with conditions which exists so as to bring out of them the
greatest welfare of the people by promoting public convenience or general prosperity,
and to everything worthwhile for the preservation of comfort of the inhabitants of the
corporation (62 C.J.S. Sec. 128). Thus, it is deemed inadvisable to attempt to frame
any definition which shall absolutely indicate the limits of police power. [33] (Emphases
supplied.)

Based on the preceding discussion, it cannot be said that the power to reclassify
agricultural land was first delegated to the city and municipal legislative bodies under
Section 26 of the Local Government Code of 1991. Said provision only articulates a
power of local legislatures, which, previously, had only been implied or inferred.

Compliance with other requirements or conditions 

Resolution No. 29-A is a valid ordinance, which, upon its approval on July 9, 1972,
immediately effected the zoning and reclassifying of the subject property for residential
use. It need not comply with any of the requirements or conditions which DAR and
Buklod are insisting upon.

DAR and Buklod aver that Resolution No. 29-A was not reviewed and approved by the
NPC, in violation of the line in Section 3 of the Local Autonomy Act of 1959, stating that
"[c]ities and municipalities may, however, consult the National Planning Commission on
matters pertaining to planning and zoning." Consideration must be given, however, to
the use of the word "may" in the said sentence. Where the provision reads "may," this
word shows that it is not mandatory but discretionary. It is an auxiliary verb indicating
liberty, opportunity, permission and possibility. [34] The use of the word "may" in a
statute denotes that it is directory in nature and generally permissive only. The "plain
meaning rule" or verba legis in statutory construction is thus applicable in this case.
Where the words of a statute are clear, plain, and free from ambiguity, it must be given
its literal meaning and applied without attempted interpretation. [35] Since consultation
with the NPC was merely discretionary, then there were only two mandatory
requirements for a valid zoning or subdivision ordinance or regulation under Section 3
of the Local Autonomy Act of 1959, namely, that (1) the ordinance or regulation be
adopted by the city or municipal board or council; and (2) it be approved by the city or
municipal mayor, both of which were complied with byl Resolution No. 29-A.

Section 16(a) of Ordinance No. 1 of the Municipality of Dasmariñas likewise mentions

the NPC, to wit:

a. Final plat of subdivision - As essential requirements before a subdivision is accepted

for verification by the Bureau of Lands, the final plat of the scheme of the subdivision
must comply with the provision of this ordinance. Application for plat approval shall
be submitted to the Municipal Mayor and shall be forwarded to the National
Planning Commission thru the Highway District Engineer for comment and/or
recommendations, before action is taken by the Municipal Council. The final
approval of the plat shall be made by the Municipal Mayor upon recommendation of the
Municipal Council by means of a resolution. (Emphasis supplied.)
The aforementioned provision of Ordinance No. 1 refers to the final plat of the
subdivision. The term plat includes "plat, plan, plot or replot." [36] It must be
distinguished from the application for subdivision.

The Court concurs with the analysis of the Court of Appeals that Resolution No. 29-A
actually contains two resolutions. The first reads:

Resolved, As it is hereby Resolved to approve the application for

subdivision containing an area of Three Hundred Seventy-Two Hectares (372) situated
in barrio Bocal and Langkaan, named as Travellers Life Homes. [37]  (Efriphasis supplied.)

It is manifest, even from just a plain reading of said resolution, that the application for
subdivision covering the subject property was categorically and unconditionally
approved by the Municipality of Dasmarinas.  As a consequence of such approval, the
subject property is immediately deemed zoned and reclassified as residential.

Meanwhile, the second resolution in Resolution No. 29-A states:

Resolved, that this municipal ordinance regarding subdivision

regulations existing in this municipality shall be strictly followed by the subdivision.
[38]
  (Emphases supplied.)

Significantly, this second resolution already refers to a "subdivision," supporting the

immediately executory nature of the First resolution.  The municipal ordinance which
the subdivision must follow is Ordinance No. 1, the general subdivision regulations of
the Municipality of Dasmarinas. Most provisions of Ordinance No. 1 laid down the
minimum standards for the streets, roadways, sidewalks, intersections, lots and blocks,
and other improvements in the subdivision, with which the final plat must comply or
conform. Irrefragably, the review of the final plat of the subdivision calls for a certain
level of technical expertise; hence, the directive to the Municipal Mayor to refer the final
plat to the NPC, through the Highway District Engineer, for comments and
recommendation, before the same is approved by the Municipal Council, then the
Mayor.

In relation to the preceding paragraph, Administrative Order No. 152 dated December
16, 1968 required city and municipal boards and councils to submit proposed
subdivision ordinances and plans or forward approved subdivision ordinances to the
NPC. The OP imposed such a requirement because "it has come to the attention of [the]
Office that the minimum standards of such ordinances regarding design, servicing and
streets, and open spaces for parks and other recreational purposes are not being
complied with[.]"[39] Review by the NPC of the proposed subdivision plan was for the
purpose of determining "if it conforms with the subdivision ordinance." [40]

It is apparent that Section 16(a) of Ordinance No. 1 and Administrative Ordinance No.
152 contained the same directive: that the final plat of the subdivision be reviewed by
the NPC to determine its conformity with the minimum standards set in the subdivision
ordinance of the municipality. A closer scrutiny will reveal that Section 16(a) of
Ordinance No. 1 and Administrative Order No. 152 related to the duties and
responsibilities of local government and NPC officials as regards the final plat of the
subdivision. There is no evidence to establish that the concerned public officers herein
did not follow the review process for the final plat as provided in Section 16(a) of
Ordinance No. 1 and Administrative Order No. 152 before approving the same. Under
Section 3(m), Rule 131 of the Rules of Court, there is a presumption that official duty
has been regularly performed. Thus, in the absence of evidence to the contrary, there is
a presumption that public officers performed their official duties regularly and legally
and in compliance with applicable laws, in good faith, and in the exercise of sound
judgment.[41]  And - just as the Court of Appeals observed - even if it is established that
the accountable public officials failed to comply with their duties and responsibilities
under Section 16(a) of Ordinance No. 1 and Administrative Order No. 152, it would be
contrary to the fundamental precepts of fair play to make EMRASON bear the
consequences of such non-compliance.

Although the two resolutions in Resolution No. 29-A may be related to the same
subdivision, they are independent and separate. Non-compliance with the second
resolution may result in the delay or discontinuance of subdivision development, or
even the imposition of the. penalties[42] provided in Ordinance No. 1, but not the
annulment or reversal of the first resolution and its consequences.

The Court again agrees with the Court of Appeals that Resolution No. 29-A need not be
subjected to review and approval by the HSRC/HLURB. Resolution No. 29-A was
approved by the Municipality of Dasmarinas on July 9, 1972, at which time, there was
even no HSRC/HLURB to speak of.

The earliest predecessor of the HSRC, the Task Force on Human Settlements, was
created through Executive Order No. 419 more than a year later on September 19,
1973. And even then, the Task Force had no power to review and approve zoning and
subdivision ordinances and regulations.

It was only on August 9, 1978, with the issuance of Letter of Instructions No. 729,
that local governments were required to submit their existing land use plans, zoning
ordinances, enforcement systems, and procedures to the Ministry of Human
Settlements for review and ratification.

The HSRC was eventually established on February 7, 1981. Section 5(b) of the HSRC
Charter43 contained the explicit mandate for the HSRC to:

b. Review, evaluate and approve or disapprove comprehensive land use

development plans and zoning ordinances of local government; and the zoning
component of civil works and infrastructure projects of national, regional and local
governments; subdivisions, condominiums or estate development projects including
industrial estates, of both the public and private sectors and urban renewal plans,
programs and projects: Provided, that the land use Development Plans and Zoning
Ordinances of Local Governments herein subject to review, evaluation and approval of
the commission shall respect the classification of public lands for forest purposes as
certified by the Ministry of Natural Resources: Provided, further, that the classification
of specific alienable and disposable lands by the Bureau of Lands shall be in accordance
with the relevant zoning ordinance of: Local government where it exists; and provided,
finally, that in cities and municipalities where there are as yet no zoning ordinances, the
Bureau of Lands may dispose of specific alienable and disposable lands in accordance
with its own classification scheme subject to the condition that the classification of
these lands may be subsequently change by the local governments in accordance with
their particular zoning ordinances which may be promulgated later. (Emphases
supplied.)

Neither the Ministry of Human Settlements nor the HSRC, however, could have
exercised its power of review retroactively absent an express provision to that effect in
Letter of Instructions No.  729 or the HSRC Charter, respectively.  A sound cannon of
statutory construction is that a statute operates prospectively only and never
retroactively, unless the legislative intent to the contrary is made manifest either by the
express terms oi' the statute or by necessary implication. Article 4 of the Civil Code
provides that: "Laws shall have no retroactive effect, unless the contrary is provided."
Hence, in order that a law may have retroactive effect, it is necessary that an express
provision to this effect be made in the law, otherwise nothing should be understood
which is not embodied in the law. Furthermore, it must be borne in mind that a law is a
rule established to guide our actions without no binding effect until it is enacted,
wherefore, it has no application to past times but only to future time, and that is why 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. [44]

Subsequent zoning ordinances

Still by the authority vested upon it by Section 3 of the Local Autonomy Act,
the Sangguniang Bayan of Dasmariñas subsequently enacted a Comprehensive
Zoning Ordinance, ratified by the HLURB under Board Resolution No. 42-A-3
dated February 11, 1981 (1981 Comprehensive Zoning Ordinance of Dasmarinas).
Upon the request of the DAR, Engr. Alfredo Gil M. Tan, HLURB Regional Technical
Coordinator, issued a certification[45] dated September 10, 1992 stating that per the
1981 Comprehensive Zoning Ordinance of Dasmarinas, the subject property was within
the agricultural zone. Does this mean that the subject property reverted from
residential to agricultural classification?

The Court answers in the negative. While the subject property may be physically
located within an agricultural zone under the 1981 Comprehensive Zoning Ordinance of
Dasmarinas, said property retained its residential classification.

According to Section 17, the Repealing Clause, of the 1981 Comprehensive Zoning
Ordinance of Dasmarinas: "AH other ordinances, rules or regulations in conflict with the
provision of this Ordinance are hereby repealed: Provided, that rights that have
vested before the cffectivity of this Ordinance shall not be impaired."

In Ayog v. Cusi, Jr.,[46] the Court expounded on vested right and its protection:

That vested right has to be respected. It could not be abrogated by the new
Constitution. Section 2, Article XIII of the 1935 Constitution allows private corporations
to purchase public agricultural lands not exceeding one thousand and twenty-four
hectares. Petitioners' prohibition action is barred by the doctrine of vested rights in
constitutional law.
"All 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).47 (Emphasis supplied.)

It is true that protection of vested rights is not absolute and must yield to the exercise
of police power:

A law enacted in the exercise of police power to regulate or govern certain activities or
transactions could be given retroactive effect and may reasonably impair vested rights
or contracts. Police power legislation is applicable not only to future contracts, but
equally to Ihose already in existence. Non-impairment of contracts or vested rights
clauses will have to yield to the superior and legitimate exercise by the State of police
power to promote the health, morals, peace, education, good order, safety, and general
welfare of the people, x x x.[48]

Nonetheless, the Sangguniang Bayan of Dasmariñas in this case, in its exercise of

police power through the enactment of the 1981 Comprehensive Zoning Ordinance,
itself abided by the general rule and included in the very same ordinance an express
commitment to honor rights that had already vested under previous ordinances, rules,
and regulations. EMRASON acquired the vested right to use and develop the subject
property as a residential subdivision on July 9, 1972 with the approval of Resolution No.
29-A by the Municipality of Dasmarinas. Such right cannot be impaired by the
subsequent enactment of the 1981 Comprehensive Zoning Ordinance of Dasmarinas, in
which the subject property was included in an agricultural zone. Hence, the Municipal
Mayor of Dasmariflas had been continuously and consistently recognizing the subject
property as a residential subdivision.[49]

Incidentally, EMRASON mentions Resolution No. 105, Defining and Declaring the
Boundaries of Industrial and Residential Land Use Plan in the Municipalities of Imus and
Parts of Dasmariflas, Carmona, Gen. Mariano Alvarez, Gen. Trias, Silang, Tanza, Naic,
Rosario, and Trece Martires City, Province o[ Cavite, approved by the Sangguniang
Panlalawigan of Cavite on March 25, 1988. The Sangguniang Panlalawigan  determined
that "the lands extending from the said designated industrial areas would have greater
economic value for residential and institutional uses, and would serve the interest and
welfare for the greatest good of the greatest number of people."50 Resolution No. 105,
approved by the HLURB in 1990, partly reads:

Tracts of land in the Municipality of Carmona from the People's Technology Complex to
parts of the Municipality of Silang, parts of the Municipalities of Dasmariñas,
General Trias, Trece Martires City, Municipalities of Tanza and Naic forming the strip of
land traversed by the Puerto Azul Road extending two kilometers more or less from
each side of the road which are hereby declared as industrial-residential-
institutional mix. (Emphases supplied.)

There is no question that the subject property is located within the afore-described
area.  And even though Resolution No. 105 has no direct bearing on the classification of
the subject property prior to the CARL - it taking effect only in 1990 after being
approved by the HLURB - it is a confirmation that at present, the subject property and
its surrounding areas are deemed by the Province of Cavite better suited and prioritized
for industrial and residential development, than agricultural purposes.

CARP exemption

The Court reiterates that since July 9, 1972, upon approval of Resolution No. 29-A by
the Municipality of Dasmarinas, the subject property had been reclassified from
agricultural to residential. The tax declarations covering the subject property,
classifying the same as agricultural, cannot prevail over Resolution No. 29-A. The
following pronouncements of the Court in the Patalinghug case are of particular
relevance herein:

The reversal by the Court of Appeals of the trial court's decision was based on Tepoot's
building being declared for taxation purposes as residential. It is our considered view,
however, that a tax declaration is not conclusive of (he nature of the property
for zoning purposes.  A property may have been declared by its owner as residential
for real estate taxation purposes but it may well be within a commercial zone. A
discrepancy may thus exist in the determination of the nature of property for real
estate taxation purposes vis-a-vis the determination of a property for zoning purposes.

xxxx

The trial court's determination that Mr. Tepoot's building is commercial and, therefore,
Sec. 8 is inapplicable, is strengthened by the fact that the Sangguniang Panlungsod has
declared the questioned area as commercial or C-2. Consequently, even if Tepoot's
building was declared for taxation purposes as residential, once a local government
has reclassified an area as commercial, that determination for zoning purposes
must prevail. While the commercial character of the questioned vicinity has been
declared thru the ordinance, private respondents have failed to present convincing
arguments to substantiate their claim that Cabaguio Avenue, where the funeral parlor
was constructed, was still a residential zone. Unquestionably, the operation of a funeral
parlor constitutes a "commercial purpose," as gleaned from Ordinance No. 363.
[52]
 (Emphases supplied.)
Since the subject property had been reclassified as residential land by virtue of
Resolution No. 29-A dated July 9, 1972, it is no longer agricultural land by the time the
CARL took effect on June 15, 1988 and is, therefore, exempt from the CARP.

This is not the first time that the Court made such a ruling.

In the Natalia Realty case, Presidential Proclamation No. 1637 dated April 18,

1979 set aside land in the Municipalities of Antipolo, San Mateo, and Montalban,
Province of Rizal, as townsite areas. The properties owned by Natalia Realty, Inc.
(Natalia properties) were situated within the areas proclaimed as townsite reservation. 
The developer of the Natalia properties was granted the necessary clearances and
permits by the PJSRC for the development of a subdivision in the area.  Thus, the
Natalia properties later became the Antipolo Hills Subdivision.  Following the effectivity
of the CARL on June 15, 1988, the DAR placed the undeveloped portions of the Antipolo
Hills Subdivision under the CARP. For having done so, the Court found that the DAR
committed grave abuse of discretion, thus:

Section 4 of R.A. 6657 provides that the CARL shall "cover, regardless of tenurial
arrangement and commodity produced, all public and private agricultural lands." As to
what constitutes "agricultural land," it is referred to as "land devoted to agricultural
activity as defined in this Act and not classified as mineral, forest, residential,
commercial or industrial land." The deliberations of the Constitutional Commission
confirm this limitation. "Agricultural lands" arc only those lands which are "arable and
suitable agricultural lands" and "do not include commercial, industrial and residential
lands."

Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills
Subdivision cannot in any language be considered as "agricultural lands." These lots
were intended for residential use. They ceased to be agricultural lands upon
approval of their inclusion in the Lungsod Silangan Reservation. Even today, the
areas in question continue to be developed as a low-cost housing subdivision, albeit at
a snail's pace, x x x The enormity of the resources needed for developing a
subdivision may have delayed its completion but this does not detract from the
fact that these lands are still residential lands and outside the ambit of the
CARL.

Indeed, lands not devoted to agricultural activity are outside the coverage of CARL.
These include lands previously converted to non-agricultural uses prior to the eifectivity
of CARL by government agencies other than respondent OAR. In its Revised Rules and
Regulations Governing Conversion of Private Agricultural Lands to Non-Agricultural
Uses, DAR itself defined ''agricultural land" thus -

"x x x Agricultural land refers to those devoted to agricultural activity as defined in R.A.
6657 and not classified as mineral or forest by the Department of Environment and
Natural Resources (DENR) and its predecessor agencies, and not classified in town
plans and zoning ordinances as approved by the Housing and Land Use Regulatory
Board (BLURB) and its preceding competent authorities prior to 15 June 1988 for
residential, commercial or industrial use."
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is
bound by such conversion. It was therefore error to include the undeveloped portions of
the Antipolo Hills Subdivision within the coverage of CARL.

Be that as it may, the Secretary of Justice, responding to a query by the Secretary of

Agrarian Reform, noted in an Opinion that lands covered by Presidential Proclamation
No. 1637, inter alia, of which the NATALIA lands are part, having been reserved for
townsite purposes "to be developed as human settlements by the proper land and
housing agency," are "not deemed 'agricultural lands' within the meaning and intent of
Section 3 (c) of R.A. No. 6657." Not being deemed "agricultural lands," they are outside
the coverage of CARL.[53]  (Emphases supplied.)

That the land in the Natalia Realty case was reclassified as residential by a presidential

proclamation, while the subject property herein was reclassified as residential by a local
ordinance, will not preclude the application of the ruling of this Court in the former to
the latter. The operative fact that places a parcel of land beyond the ambit of the CARL
is its valid reclassification from agricultural to non-agricultural prior to the effectivity of
the CARL on June 15, 1988, not by how or whose authority it was reclassified.

In Pasong Bayabas Farmers Association, Inc. v. Court of Appeals [54] (Pasong Bayabas

case), the Court made the following findings:

Under Section 3(c) of Rep. Acl No. 6657. agricultural lands refer to lands devoted to
agriculture as conferred in the said law and not classified as industrial land. Agricultural
lands are only those lands which are arable or suitable lands that do not include
commercial, industrial and residential lands. Section 4(e) of the law provides that it
covers all private lands devoted to or suitable for agriculture regardless of the
agricultural products raised or that can be raised thereon. Rep. Act No. 6657 took effect
only on June 15, 1988. But long before the law took effect, the property subject
of the suit had already been reclassified and converted from agricultural to
non-agricultural or residential land by the following administrative agencies:
(a) the Bureau of Lands, when it approved the subdivision plan of the property
consisting of 728 subdivision lots; (b) the National Planning Commission which
approved the subdivision plan subdivided by the LDC/CAI for the development of the
property into a low-cost housing project; (c) the Municipal Council of Carmona,
Cavite, when it approved Kapasiyahang Blg. 30 on May 30, 1976; (d) Agrarian
Reform Minister Conrado F. Estrella, on July 3, 1979, when he granted the application
of the respondent for the development of the Hakone Housing Project with an area of
35.80 hectares upon the recommendation of the Agrarian Reform Team, Regional
Director of Region IV, which found, after verification and investigation, that the
property was not covered by P.D. No. 27, it being untenanted and not devoted to the
production of palay/or corn and that the property was suitable for conversion to
residential subdivision: (e) by the Ministry of Local Government and Community
Development; (f) the Human Settlements Regulatory Commission which issued a
location clearance, development permit, Certificate of Inspection and License to Sell to
the LDC/private respondent: and, (g) the Housing and Land Use Regulatory Board
which also issued to the respondent CAI/LDC a license to sell the subdivision lots."
(Emphases supplied.)
Noticeably, there were several government agencies which reclassified and converted
the property from agricultural to non-agricultural in the Pasong Bayabas case.  The
CARL though does not specify which specific government agency should have done the
reclassification.  To be exempt from CARP, all that is needed is one valid reclassification
of the land from agricultural to non-agricultural by a duly authorized government
agency before June 15, 1988, when the CARL took effect.  All similar actions as regards
the land subsequently rendered by other government agencies shall merely serve as
confirmation of the reclassification. The Court actually recognized in the Pasong
Bayabas case the power of the local government to convert or reclassify lands through
a zoning ordinance:

Section 3 of Rep. Act No. 2264, amending the Local Government Code,
specifically empowers municipal and/or city councils to adopt zoning and
subdivision ordinances or regulations in consultation with the National
Planning Commission. A zoning ordinance prescribes, defines, and apportions a given
political subdivision into specific land uses as present and future projection of
needs. The power of the local government to convert or reclassify lands to
residential lands to non-agricultural lands rcclassificd is not subject to the
approval of the Department of Agrarian Reform. Section 65 of Rep. Act No. 6657
relied upon by the petitioner applies only to applications by the landlord or the
beneficiary for the conversion of lands previously placed under the agrarian reform law
after the lapse of five years from its award. It docs not apply to agricultural lands
already converted as residential lands prior to the passage of Rep. Act No. 6657.
[56]
 (Emphases supplied.)

At the very beginning of Junto v. Garilao,[57] the  Court already declared that:

Lands already classified and identified as commercial, industrial or residential before

June 15, 1988 - the date of effectivity of the Comprehensive Agrarian Reform Law
(CARL) - are outside the coverage of this law. Therefore, they no longer need any
conversion clearance from the Department of Agrarian Reform (DAR). [58]

The Court then proceeded to uphold the authority of the City Council of Bacolod to
reclassify as residential a parcel of land through Resolution No. 5153-A, series of 1976.
The reclassification was later affirmed by the HSRC. Resultantly, the Court sustained
the DAR Order dated September 13, 1994, exempting the same parcel of land from
CARP Coverage.

The writ of preliminary injunction

Any objection of Buklod against the issuance by the Court of Appeals of a writ of
preliminary injunction, enjoining then DAR Secretary Garilao and Deputy Executive
Secretary Corona from implementing the OP Decision of February 7, 1996 and
Resolution of May 14, 1996 during the pendency of CA-G.R. SP No. 40950, had been
rendered moot and academic when the appellate court already promulgated its Decision
in said case on March 26, 1997 which made the injunction permanent. As the Court
held in Kho v. Court of Appeals[59]:
We cannot likewise overlook the decision of the trial court in the case for final injunction
and damages. The dispositive portion of said decision held that the petitioner does not
have trademark rights on the name and container of the beauty cream product. The
said decision on the merits of the trial court rendered the issuance of the writ of a
preliminary injunction moot and academic notwithstanding the fact that the same has
been appealed in the Court of Appeals. This is supported by our ruling in La Vista
Association, Inc. v. Court of Appeals, to wit:

Considering that preliminary injunction is a provisional remedy which may be granted

at any time after the commencement of the action and before judgment when it is
established that the plaintiff is entitled to the relief demanded and only when his
complaint shows facts entitling such reliefs xxx and it appearing that the trial court had
already granted the issuance of a final injunction in favor of petitioner in its decision
rendered after trial on the merits xxx the Court resolved to Dismiss the instant petition
having been rendered moot and academic. An injunction issued by the trial court after
it has already made a clear pronouncement as to the plaintiffs right thereto, that is,
after the same issue has been decided on the merits, the trial court having appreciated
the evidence presented, is proper, notwithstanding the fact that the decision rendered
is not yet final xxx. Being an ancillary remedy, the proceedings for preliminary
injunction cannot stand separately or proceed independently of the decision rendered
on the merit of the main case for injunction. The merit of the main case having been
already determined in favor of the applicant, the preliminary determination of its non-
existence ceases to have any force and effect, (italics supplied)

La Vista categorically pronounced that the issuance of a final injunction renders any
question on the preliminary injunctive order moot and academic despite the fact that
the decision granting a final injunction is pending appeal. Conversely, a decision
denying the applicant-plaintiffs right to a final injunction, although appealed, renders
moot and academic any objection to the prior dissolution of a writ of preliminary
injunction.[60]

Issues belatedly raised

Buklod sought to intervene in CA-G.R. SP No. 40950, then pending before the Court of
Appeals, by filing a Manifestation and Omnibus Motion in which it argued only two
points: (1) the writ of preliminary injunction be immediately dissolved for having been
issued in violation of Section 55 of the CARL; and (2) that the Petition for Review of
EMRASON be dismissed for being the wrong remedy.

It was only after the Court of Appeals rendered its Decision dated March 26, 1997
unfavorable to both DAR and Buklod did Buklod raise in its Motion for Reconsideration
several other issues, both factual and legal, [61] directly assailing the exemption of the
subject property from the CARP.  The Court of Appeals refused to consider said issues
because they were raised by Buklod for the first time in its Motion for Reconsideration.

Buklod persistently raises the same issues before this Court, and the Court, once more,
refuses to take cognizance of the same.

As a rule, no issue may be raised on appeal unless it has been brought before the lower
tribunal for its consideration. Higher courts are precluded from entertaining matters
neither alleged in the pleadings nor raised during the proceedings below, but ventilated
for the first time only in a motion for reconsideration or on appeal. [62]  The issues were
first raised only in the Motion for Reconsideration of the Decision of the Court of
Appeals, thus, it is as if they were never duly raised in that court at all. "Hence, this
Court cannot now, for the first time on appeal, entertain these issues, for to do so
would plainly violate the basic rule of fair play, justice and due process. The Court
reiterates and emphasizes the well-settled rule that an issue raised for the first time on
appeal and not raised timely in the proceedings in the lower court is barred by estoppel.
[63]

Indeed, there are exceptions to the aforecited rule that no question may be raised for
the first time on appeal. Though not raised below, the issue of lack of jurisdiction over
the subject matter may be considered by the reviewing court, as it may be raised at
any stage. The said court may also consider an issue not properly raised during trial
when there is plain error.  Likewise, it may entertain such arguments when there are
jurisprudential developments affecting the issues, or when the issues raised present a
matter of public policy.[64] Buklod, however, did not allege, much less argue, that its
case falls under any of these exceptions.

Nonetheless, even when duly considered by this Court, the issues belatedly raised by
Buklod are without merit.

Contrary to the contention of Buklod, there is no necessity to carry out the conversion
of the subject property to a subdivision within one year, at the risk of said property
reverting to agricultural classification.

Section 36(1) of the Agricultural Land Reform Code, in effect since August 8, 1963,
provided:

SEC. 36. Possession of Landholding; Exceptions.— Notwithstanding any agreement as

to the period or future surrender, of the land, an agricultural lessee shall continue in
the enjoyment and possession of his landholding except when his dispossession has
been authorized by the Court in a judgment that is final and executory if after due
hearing it is shown that:

(1) The agricultural lessor-owner or a member of his immediate family will personally
cultivate the landholding or will convert the landholding, if suitably located, into
residential, factory, hospital or school site or other useful non-agricultural purposes:
Provided, That the agricultural lessee shall be entitled to disturbance compensation
equivalent to five years rental on his landholding in addition to his rights under Sections
twenty-five and thirty-four, except when the land owned and leased by the agricultural
lessor is not more than five hectares, in which case instead of disturbance
compensation the lessee may be entitled to an advanced notice of at least one
agricultural year before ejectment proceedings are filed against him: Provided,
further, That should the landholder not cultivate the land himself for three years
or fail to substantially carry out such conversion within one year after the
dispossession of the tenant, it shall be presumed that he acted in bad faith and
the tenant shall have the right to demand possession of the land and recover
damages for any loss incurred by him because of said dispossessions; xxx.
(Emphasis supplied.)
On September 10, 1971, the Agricultural Land Reform Code was amended and it
came to be known as the Code of Agrarian Reforms. After its amendment, Section
36(1) stated:

(1) The landholding is declared by the department head upon recommendation of the
National Planning Commission to be suited for residential, commercial, industrial or
some other urban purposes: Provided, That the agricultural lessee shall be entitled to
disturbance compensation equivalent to five times the average of the gross harvests on
his landholding during the last five preceding calendar years.

At the time Resolution No. 29-A was enacted by the Municipality of Dasmarinas on July
9, 1972, the Code of Agrarian Reforms was already in effect. The amended Section
36(3) thereof no longer contained the one-year time frame within which conversion
should be carried out.

More importantly, Section 36(1) of the Code o[ Agrarian Reforms would apply only if
the land in question was subject of an agricultural leasehold, a fact that was not
established in the proceedings below. It may do well for the Buklod members to
remember that they filed their present Petition to seek award of ownership over
portions of the subject property as qualified farmer-beneficiaries under the CARP; and
not payment of disturbance compensation as agricultural lessees under the Code of
Agrarian Reforms. The insistence by Buklod on the requisites under Section 36(1) of the
Agricultural Land Reform Code/Code of Agrarian Reforms only serves to muddle the
issues rather than support its cause.

Buklod likewise invokes the vested rights of its members under the Agricultural Land
Reform Code/Code of Agrarian Reforms and the Tenants Emancipation Decree, which
preceded the CARP.  Yet, for the Buklod

members to be entitled to any of the rights and benefits under the said laws, it is
incumbent upon them to prove first that they qualify as agricultural lessees or farm
workers of the subject property, as defined in Section 166(2) [65] and (15)[66]of the Code
of Agrarian Reforms; and/or they are tenant-farmers of private agricultural lands
primarily devoted to rice and corn, under a system of share-crop or lease tenancy, and
are members of a duly recognized farmer's cooperative, as required by the Tenants
Emancipation Decree. None of these determinative facts were established by Buklod.

Buklod counters that it precisely moved for a hearing before the Court of Appeals so
that it could present evidence to prove such facts, but the appellate court erroneously
denied its motion.

The Court finds that the Court of Appeals did not err on this matter.

In the recent case of Office of the Ombudsman v. Sison,[67] the Court expounded on the
rules on intervention:

It is fundamental that the allowance or disallowance of a Motion 10 Intervene is

addressed to the sound discretion of the court. The permissive tenor of the rules shows
the intention lo give to the court the full measure of discretion in permitting or
disallowing the intervention, thus:

SECTION 1. Who may intervene, - A person who has a Icga) interest in the mailer in
litigation, or in the success of either of the parties, or an interest against both, or is so
situated as to be adversely affected by a distribution or other disposition of property in
the custody of the court or of an officer thereof may, with leave of court, be allowed to
intervene in the action. The court shall consider whether or not the intervention will
unduly delay or prejudice the adjudication of the rights of the original parties, and
whether or not the intcrvenor's rights may be fully protected in a separate proceeding.

SECTION 2. Time to intervene. - The motion to intervene may be filed al any time

before rendition of judgment by the trial court. A copy of the pleading-in-
intervention shall be attached to the motion and served on the original parties.
(Emphasis supplied.)

Simply, intervention is a procedure by which third persons, not originally parties to the
suit but claiming an interest in the subject matter, come into the case in order to
protect their right or interpose their claim. Its main purpose is to settle in one action
and by a single judgment all conflicting claims of, or the whole controversy among, the
persons involved.

To warrant intervention under Rule 19 of the Rules of Court, two requisites must
concur: (1) the movant has a legal interest in the matter in litigation; and (2)
intervention must not unduly delay or prejudice the adjudication of the rights of the
parties, nor should the claim of the intervenor be capable of being properly decided in a
separate proceeding. The interest,' which entitles one to intervene, must involve the
matter in litigation and of such direct and immediate character that the intervenor will
either gain or lose by the direct legal operation and effect of the judgment. [68]

To apply the rules strictly, the motion of Buklod to intervene was filed too late.
According to Section 2, Rule 19 of the Rules of Civil Procedure, "a motion to intervene
may be filed at any time before rendition of judgment by the trial court." Judgment
was already rendered in DARAB Case No. IV-Ca-0084-92 (the petition of EMRASON to
nullify the notices of acquisition over the subject property), not only by the DAR
Hearing Officer, who originally heard the case, but also the DAR Secretary, and then
the OP, on appeal.

Buklod only sought to intervene when the case was already before the Court of
Appeals. The appellate court, in the exercise of its discretion, still allowed the
intervention of Buklod in CA-G.R. SP No. 40950 only because it was "not being in any
way prejudicial to the interest of the original parties, nor will such intervention
change the factual legal complexion of the case."[69] The intervention of Buklod
challenged only the remedy availed by EMRASON and the propriety of the preliminary
injunction issued by the Court of Appeals, which were directly and adequately
addressed by the appellate court in its Decision dated March 26, 1997.

The factual matters raised by Buklod in its Motion for Reconsideration of the March 26,
1997 Decision of the Court of Appeals, and which it sought to prove by evidence,
inevitably changes "the factual legal complexion of the case."  The allegations of Buklod
that its members are tenant-farmers of the subject property who acquired vested rights
under previous agrarian reform laws, go against the findings of the DAR Region IV
Hearing Officer, adopted by the DAR Secretary, the OP, and Court of Appeals, that the
subject property was being acquired under the CARP for distribution to the tenant-
farmers of the neighboring NDC property, after a determination that the latter property
was insufficient for the needs of both the NDC-Marubeni industrial estate and the
tenant-farmers.

Furthermore, these new claims of Buklod are beyond the appellate jurisdiction of the
Court of Appeals, being within the primary jurisdiction of the DAR. As Section 50 of the
CARL, as amended, reads:

SEC. 50. Quasi-Judicial Powers of the DAR. - The DAR is hereby vested with primary
jurisdiction to determine and adjudicate agrarian reform matters and shall have
exclusive original jurisdiction over all matters involving the implementation of agrarian
reform, except those falling under the exclusive jurisdiction of the Department of
Agriculture (DA) and the Department of Environment and Natural Resources (DENR).

In fact, records reveal that Buklod already sought remedy from the DARAB. DARAB
Case No. IV-CA-0261, entitled Buklod nang Magbubukid sa Lupaing Ramos, rep. by
Edgardo Mendoza, et at. v. E.M. Ramos and Sons, Inc., et al., was pending at about the
same time as DARAB Case No. lV-Ca-0084-92, the petition of EMRASON for nullification
of the notices of acquisition covering the subject property. These two cases were
initially consolidated before the DARAB Region IV. The DARAB Region IV eventually
dismissed DARAB Case No. IV-Ca-0084-92 and referred the same to the DAR Region IV
Office, which had jurisdiction over the case. Records failed to reveal the outcome of
DARAB Case No. IV-CA-0261,

On a final note, this Court has stressed more than once that social justice - or any
justice for that matter - is for the deserving, whether he be a millionaire in his mansion
or a pauper in his hovel. It is true that, in case of reasonable doubt, the Court is called
upon to tilt the balance in favor of the poor to whom the Constitution fittingly extends
its sympathy and compassion. But never is it justified to give preference to the poor
simply because they are poor, or to reject the rich simply because they are rich, for
justice must always be served for poor and rich alike, according to the mandate of the
law.[70] Vigilance over the rights of the landowners is equally important because social
justice cannot be invoked to trample on the rights of property owners, who under our
Constitution and laws are also entitled to protection. [71]

WHEREFORE, the Petitions for Review filed by the Buklod Nang Magbubukid Sa
Lupaing Ramos, Inc. in G.R. No. 131481 and the Department of Agrarian Reform in
G.R. No. 131624 are hereby DENIED. The Decision dated March 26, 1997 and the
Resolution dated November 24, 1997 of the Court of Appeals in CA-G.R. SP No. 40950
are hereby AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 178110               June 15, 2011

AYALA LAND, INC. and CAPITOL CITIFARMS, INC., Petitioners,

vs.
SIMEONA CASTILLO, LORENZO PERLAS, JESSIELYN CASTILLO, LUIS MAESA, ROLANDO
BATIQUIN, and BUKLURAN MAGSASAKA NG TIBIG, as represented by their attorney-in-fact,
SIMEONA CASTILLO, Respondents.

DECISION

SERENO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure
questioning the Decision1 dated 31 January 2007 of the Court of Appeals (CA) in CA-G.R. SP No.
86321, which reversed the Decision2 of the Office of the President (OP) dated 28 January 2004. The
OP Decision upheld Conversion Order No. 4-97-1029-051 issued by then Secretary of the
Department of Agrarian Reform (DAR) Ernesto Garilao, as well as the Orders issued by Secretary
Hernani Braganza and Secretary Roberto Pagdanganan both affirming the conversion.

The CA found merit in the OP’s rationale for maintaining the Conversion Order, yet invalidated the
same on the basis that a Notice of Coverage and a Notice of Acquisition had already been issued
over the lands – hence, they could no longer be subject to conversion. Thus, landowner Capitol
Citifarms, Inc. (CCFI) and its successor-in-interest Ayala Land, Inc. (ALI) filed the present petition
imputing error on the appellate court for the following reasons: 1) the CA resolved an issue – that the
alleged Notice of Acquisition prevents the land from being converted – raised for the first time on
appeal, 2) the CA’s finding has no factual basis, 3) the DAR itself found that the subject property has
long been converted to non-agricultural uses, and 4) a Certificate of Finality of the Braganza Order
has already been issued.

We grant certiorari on the following procedural and substantial grounds:

I. For the first time on appeal, respondents raised a new issue that had never been passed
upon by the DAR or by the Office of the President; hence, the CA is barred from entertaining
the claim.

II. The rule that a prior Notice of Acquisition bars the issuance of a Conversion Order is only
a guiding principle; upon applicant’s compliance with the application requirements, the DAR
is rightly authorized to determine the propriety of conversion.
 III. Respondents are barred from appealing the Conversion Order long after it has attained
finality.

IV. The conversion and/ or reclassification of the said lands has become an operative fact.

V. The OP has long resolved that the lands that are the subject of this case are exempted
from the Comprehensive Agrarian Reform Law (CARL) partly to maintain the stability of the
country’s banking system.

The uncontroverted factual antecedents, as culled from the records, are as follows:

CCFI owned two parcels of land with a total area of 221.3048 hectares located at Barangay Tibig in
Silang, Cavite – hereon referred to as the subject land. The subject land was mortgaged in favor of
one of CCFI’s creditors, MBC. Pursuant to Resolution No. 505 of the Monetary Board of the Bangko
Sentral ng Pilipinas (BSP), MBC was placed under receivership on 22 May 1987, in accordance with
Section 29 of the Central Bank Act (Republic Act 265). Pursuant to this law, the assets of MBC were
placed in the hands of its receiver under custodia legis. 3 On 29 September 1989, the DAR issued a
Notice of Coverage placing the property under compulsory acquisition under the Comprehensive
Agrarian Reform Law of 1988.4

In the meantime, CCFI was unable to comply with its mortgage obligations to MBC. The latter
foreclosed on the lien, and the land was awarded to it in an auction sale held on 4 January 1991.
The sale was duly annotated on the titles as Entry No. 5324-44. Subsequently, the Supreme Court in
G.R. No. 85960 ordered MBC’s partial liquidation and allowed the receiver-designate of the BSP to
sell the bank’s assets, including the subject landholding, "at their fair market value, under the best
terms and condition and for the highest price under current real estate appraisals..." 5 In a Deed of
Partial Redemption,6 CCFI was authorized to partially redeem the two parcels of land and sell them
to a third party, pending full payment of the redemption price. Under the Deed, the downpayment,
which was 30% of the purchase price, would be payable to the bank only upon approval of the
exemption of the two parcels of land from the coverage of CARL or upon their conversion to non-
agricultural use.

On the same date as the execution of the Deed of Partial Redemption, 29 December 1995, the
property was sold to petitioner ALI in a Deed of Sale over the properties covered by TCT Nos.
128672 and 144245. The sale was not absolute but conditional, i.e. subject to terms and conditions
other than the payment of the price and the delivery of the titles. The Deed stated that MBC was to
continue to have custody of the corresponding titles for as long as any obligation remained due it.

Prompted by the numerous proceedings for compulsory acquisition initiated by the DAR against
MBC, Governor Reyes requested then DAR Secretary Ernesto Garilao to issue an order exempting
the landholdings of MBC from CARL and to declare a moratorium on the compulsory acquisition of
MBC’s landholdings. On 14 February 1995, Secretary Garilao denied the request. On 1 August
1995, MBC and Governor Reyes filed with the OP a Petition for Review of Secretary Garilao’s
Decision. The OP issued a Stay Order of the appealed Decision. Thereafter, MBC filed with the OP
a motion for the issuance of an order granting the former a period of five years within which to seek
the conversion of its landholdings to non-agricultural use.

Instead of ruling on the motion alone, however, the OP, through Executive Secretary Ruben D.
Torres, decided to rule on the merits of the petition, as "what is involved in this case is the
susceptibility of a bank to undergo rehabilitation which will be jeopardized by the distribution of its
assets…"7 Secretary Torres remanded the case to the DAR and ordered the agency to determine
which parcels of land were exempt from the coverage of the CARL. He stated that the ends of justice
would be better served if BSP were given the fullest opportunity to monetize the bank’s assets that
were outside the coverage of CARL or could be converted into non-agricultural uses. He then
ordered the DAR to respect the BSP’s temporary custody of the landholdings, as well as to cease
and desist from subjecting MBC’s properties to the CARL or from otherwise distributing to farmer-
beneficiaries those parcels of land already covered. 8

Secretary Torres denied the Motion for Reconsideration filed by the DAR. He reiterated the need to
balance the goal of the agrarian reform program vis-à-vis the interest of the bank (under receivership
by the BSP), and the bank’s creditors (85% of whose credit, or a total of P8,771,893,000, was
payable to BSP).9

Secretary Garilao issued a Resolution dated 3 October 1997, granting MBC’s "Request for
Clearance to Sell," with the sale to be undertaken by CCFI. He applied Section 73-A of Republic Act
No. (R.A.) 6657, as amended by R.A. 7881, that allows the sale of agricultural land where such sale
or transfer is necessitated by a bank’s foreclosure of a mortgage. DAR Memorandum Circular No.
05, Series of 1996 further clarified the above provision, stating that foreclosed assets are subject to
existing laws on their compulsory transfer under Section 16 of the General Banking Act. CCFI
thereafter filed an application for conversion and/or exemption pursuant to its prerogative as a
landowner under Part IV of DAR A.O. 12-94 and the procedure outlined therein.

On 31 October 1997, Secretary Garilao issued Conversion Order No. 4-97-1029-051, approving the
conversion and/or exemption of the 221-hectare property in Silang, based on the findings of the
DAR’s Center for Land Use Policy, Planning and Implementation (CLUPPI) and of the Municipal
Agrarian Reform Officer (MARO). These agencies found that the property was exempt from agrarian
reform coverage, as it was beyond eighteen (18) degrees in slope. They recommended conversion,
subject to the submission of several documentary requirements. On 1 December 1997, CCFI
complied by submitting the following groups of documents:

1. A Certification and a copy of Resolution No. 295-S-96 by the Sangguniang Panlalawigan

of Cavite, adopted in its 4th Special Session, approving the conversion/ reclassification of the
said parcels of land from agricultural to residential, commercial, and industrial uses;

2. A copy of Resolution No. ML-08-S-96 adopted by the Sangguniang Bayan of Silang,

recommending conversion based on the favorable findings by the Committee on Housing
and Land Use;10

3. Statement of Justification of economic/social benefits of the proposed subdivision project;

development plan, work and financial plan and proof of financial and organizational
capability;

4. Proof of settlement of claims: a table of the list of tenant-petitioners, the area tilled and the
amount of compensation received by each tenant, the Kasunduan, 11 and a compilation of the
agreements signed by the one hundred and eighteen (118) tenants waiving all claims over
the property.12

The Morales Order Revoking the Grant of Conversion

On 19 May 2000, almost three years after the Conversion Order had been in force and effect, the
farmers tilling the subject land (hereinafter known as farmers) filed a Petition for Revocation of
Conversion Order No. 4-97-1029-051. They alleged (1) that the sale in 1995 by CCFI to ALI was
invalid; and (2) that CCFI and ALI were guilty of misrepresentation in claiming that the property had
been reclassified through a mere Resolution, when the law required an ordinance of the
Sanggunian.13 The issue of the alleged Notice of Acquisition was never raised. Neither was there any
mention of the issuance of a Notice of Coverage.

CCFI and ALI, on the other hand, argued that the claim of the farmers had prescribed, as mandated
by Section 34 of Administrative Order No. (A.O.) 1, Series of 1999, which laid down a one-year
prescriptive period for the filing of a petition to cancel or withdraw conversion. They stated further
that the farmers had already received their disturbance compensation as evidenced in a Kasunduan,
in compliance with the Conversion Order.

On 18 December 2000, DAR Secretary Horacio Morales, Jr. issued an Order declaring that the
action to revoke the conversion had not yet prescribed. According to him, Section 34 of A.O. 1-99
imposing the one-year prescription period did not apply, because administrative rules should be
applied prospectively. Thus, the rule to be followed was that prevailing at the time of the issuance of
the Conversion Order – DAR A.O. 12-94 – not A.O. 1-99, which was the rule prevailing when the
Petition for Revocation was filed.

As for the two issues raised by the farmer-beneficiaries, these were resolved by Secretary Morales
in favor of CCFI and ALI. First, he found that CCFI did not violate the order of conversion when it
sold the land to ALI, because the prohibition to sell is not a condition for the conversion. In fact, the
sale preceded the issuance of the Conversion Order. Second, he ruled that there was no
misrepresentation by CCFI and ALI regarding the lands’ reclassification. However, he found a new
issue for withdrawing the grant of conversion, that was not previously raised by petitioner-farmers.
Apparently unaware of the earlier history of the land as property in custodia legis, he ruled that the
delayed registration of the sale was evidence of respondents’ intention to evade coverage of the
landholding under agrarian reform. Because the sale was concealed from the Register of Deeds,
and the land was still agricultural at that time, Secretary Morales opined that ALI and CCFI violated
the CARL. It must be remembered however, that contrary to Morales’ findings, it was the Supreme
Court itself that ordered the sale of the lands through its Resolution in G.R. No 85960. Thus there
could be no finding by any government body that the sale was illegal.

Secretary Morales never passed upon or even mentioned any matter related to the Notice of
Acquisition. The gist of both the Petition for Revocation and the Morales Decision revolved
exclusively around the illicit intent behind the sale of the land to ALI:

The gravamen of respondents’ acts lies not upon the sale by respondent Capitol of the land to ALI,
and upon ALI having bought the land from Capitol. It lies somewhere deeper: that the sale was done
as early as 1995 prior to the land’s conversion, and was concealed in the application until it was
registered in 1999.

…………

At the time of the registration of the deed on 29 September 1999, the subject land had ceased to be
an agricultural land since it has already been converted to other uses by virtue of an approved
conversion application. As such, the requirement of reporting by the Register of Deeds of any
transaction involving agricultural lands beyond five (5) hectares, was not made as it is no longer
necessary.14

It is important to note, however, that Secretary Morales declared that CCFI and ALI had completed
the payment of disturbance compensation to the farmers, as shown by the Kasunduan, which was a
waiver of all the farmers’ rights over the landholding, and by the Katunayan ng Pagbabayad, which
expressly acknowledged the amounts paid as the full and final settlement of their claims against
CCFI and ALI.
The Braganza Order Reversing the Revocation

On 26 September 2002, acting on the Motion for Reconsideration filed by ALI, DAR Secretary
Hernani Braganza reversed15 the Revocation of Conversion Order 4-97-1029-051. He resolved three
issues to arrive at his Decision, namely: 1) whether the Petition for Revocation had prescribed; 2)
whether ALI was the owner of the subject landholding at the time of the application; and 3) whether
there was complete payment of the disturbance compensation. Again, Secretary Braganza was not
afforded an opportunity to discuss any evidence related to the existence or effect of any Notice of
Acquisition, as the joinder of issues was limited to those already summarized above.

Secretary Braganza found that the Deed of Partial Redemption was conditional, and that there was
no transfer of ownership to CCFI or its successor-in-interest, ALI. Hence, there could be no violation
of the CARL arising from an unauthorized transfer of the land to ALI. In fact, the obligation of ALI to
pay the purchase price did not arise until the DAR’s issuance of an order of exemption or
conversion. In Secretary Braganza’s words:

Was ownership included in the bundle of rights that was transferred from CCFI to ALI? This Office
answers in the negative.

For CCFI to convey ownership to ALI, MBC must have first transferred this right to CCFI under the
DEED OF PARTIAL REDEMPTION for the reason that CCFI can only convey its present rights and
obligations to ALI.

…………

The fact that MBC is holding on to the Transfer Certificates of Title pending full payment of the
purchase price is indicative of the reservation of ownership in MBC.

…………

Thus, it is only upon the full payment of consideration shall the title to the subject landholding be
issued to CCFI or its successor-in-interest, ALI.16

On 14 January 2003, Secretary Braganza granted ALI’s Motion for Extension to develop the land for
another five (5) years.

The Pagdanganan Order Declaring FINALITY

In response to Secretary Braganza’s grant of the Motion for Reconsideration filed by ALI, the
farmers, through their counsel, Atty. Henry So, filed their own Motion for Reconsideration of the
Braganza Order. The farmers questioned the jurisdiction of the DAR to determine the ownership of
the lands and to determine whether or not the sale was conditional, as these issues are within the
ambit of the civil courts. Atty. So found fault with Secretary Braganza’s attention to "the intricate
history of the property,"17 when substantial evidence was all that was required in agrarian cases. He
also claimed that the farmers’ previous counsel, Atty. Dolor, was misleading the farmers into
accepting payment in exchange for their tenancy rights. 18

Secretary Roberto Pagdanganan issued an Order on 13 August 2003, denying the farmers’ Motion
for Reconsideration and affirming the finality of the Braganza Order. He stated therein that the
revocation of the conversion, which came almost three years after the conversion, had not passed
through the CLUPPI-1 Deliberation Committee. In addition, he found that Atty. So had no locus
standi to represent the farmers. Secretary Pagdanganan upheld the Kasunduan the farmers signed
as waiver of their claims and deemed the Braganza Order "final and executory":

WHEREFORE, premises considered, Order is hereby issued DENYING both the Motion for
Reconsideration dated 4 November 2002 and the Urgent Motion for Issuance of Cease and Desist
Order dated 7 May 2003, filed by Atty. Henry So.

FURTHERMORE, the Bureau of Agrarian Legal Assistance is hereby DIRECTED to issue a

Certificate of Finality of the 26 September 2002 order. ACCORDINGLY, this case is deemed close
as far as this office is concern (sic).19

Petitioners’ Appeal before the Office of the President

The farmers then went to the OP and raised only two issues:

The Secretary of Agrarian Reform erred in declaring herein counsel to have no more locus standi to
represent the farmer-petitioners.

The Secretary of Agrarian Reform erred in affirming the Order of 26 September 2002 issued by then
Secretary Hernani Braganza. 20

The Appeal Memorandum pointed out that DAR’s grant of conversion was issued under "suspicious
circumstances." They attached to the Appeal Memorandum an uncertified photocopy of a Notice of
Coverage as "Annex B."21 The photocopy of the Notice of Coverage was mentioned in passing when
the farmers cited paragraph VI-E of Administrative Order No. 12, Series of 1994. Additionally,
farmer-beneficiaries alleged that a Notice of Acquisition was also in existence. No such document,
however, could be found in the memorandum or in any prior or subsequent pleadings filed by
farmer-beneficiaries. They never stated that the issue of the Notice of Acquisition prevents the
conversion of the land.

On 23 January 2004, the Office of the President dismissed the appeal 22 and affirmed the
Pagdanganan Order. The OP found the subject property to have been legally converted into non-
agricultural land, citing the findings of the local agencies of Silang that the property was beyond
eighteen (18) degrees in slope, remained undeveloped, was not irrigated, and was without any other
source of irrigation in the area. The OP stated: "Upon our examination of the voluminous motions,
memoranda, evidence submitted by appellants, but not a single document sufficiently controverts the
factual finding of the DAR that the subject property had long been converted to non-agricultural
uses."23 Farmer-beneficiaries then elevated the case to the CA. The CA reversed the findings of the
OP and the DAR, prompting ALI and CCFI to file the instant Petition.

I. Respondents raised a new issue for the first time on appeal.

The CA found the Conversion Order valid on all points, with the sole exception of the effect of the
alleged issuance of a Notice of Acquisition. In its eight-page Decision, the CA merely asserted in two
lines: "no less than the cited DAR Administrative Order No. 12 enjoins the conversion of lands
directly under a notice of acquisition."24

After perusing the records of the DAR and the OP, however, we find no admissible proof presented
to support this claim. What was attached to the Petition for Review25 to the CA was not a Notice of
Acquisition, but a mere photocopy of the Notice of Coverage. A Notice of Acquisition was never
offered in evidence before the DAR and never became part of the records even at the trial court
level. Thus, its existence is not a fully established fact for the purpose of serving as the sole basis
the entire history of the policy decisions made by the DAR and the OP were to be overturned. The
CA committed reversible error when it gave credence to a mere assertion by the tenant-farmers,
rather than to the policy evaluation made by the OP.

Assuming arguendo however, that the farmers had submitted the proper document to the appellate
court, the latter could not have reversed the OP Decision on nothing more than this submission, as
the issue of the Notice of Acquisition had never been raised before the administrative agency
concerned. In fact, the records show that this issue was not raised in the original Petition for
Revocation in the second Motion for Reconsideration filed by the farmers before the DAR, and that
no Notice of Acquisition was attached to their Appeal Memorandum to the OP. As a consequence,
the OP, Secretary Pagdanganan, Secretary Braganza, and Secretary Morales did not have any
opportunity to dwell on this issue in their Orders and Decision. Instead, what respondents
persistently allege is the concealment of the sale by CCFI and ALI. The three DAR Secretaries,
including Secretary Garilao who issued the Conversion Order, correctly found this allegation bereft
of merit.

We cannot uphold respondents’ proposition for us to disregard basic rules, particularly the rule that
new issues cannot be raised for the first time on appeal. Aside from their failure to raise the non-
issuance of a notice of acquisition before the OP and DAR, they also failed to question the lack of
approved town plan at the DAR level, prompting the OP to correctly rule on the latter, thus:

…Appellants’ lapses in not raising the issues before the DAR which has the expertise to resolve the
same and in a position to conduct due hearings and reception of evidence from contending parties
pertaining to the issue, puts the appellants in estoppel to question the same for the first time on
appeal. Jurisprudence dictates the following:

…The petitioner for the first time, to allow him to assume a different posture when he comes before
the court and challenge the position he had accepted at the administrative level, would be to
sanction a procedure whereby the court – which is supposed to review administrative determinations
– would not review, but determine and decide for the first time, a question not raised at the
administrative forum. This cannot be permitted, for the same reason that underlies the requirement
of prior exhaustion of administrative remedies to give administrative authorities the prior authority to
decide controversies within its competence, and in much the same way that, on the judicial level,
issues not raised in the lower court cannot be raised for the first time on appeal. (Aguinaldo
Industries Corporation vs. Commissioner of Internal Revenue & Court of Tax Appeals, 112 SCRA
136)26

It is well established that issues raised for the first time on appeal and not raised in the proceedings
in the lower court are barred by estoppel. Points of law, theories, issues, and arguments not brought
to the attention of the trial court ought not to be considered by a reviewing court, as these cannot be
raised for the first time on appeal. To consider the alleged facts and arguments belatedly raised
would amount to trampling on the basic principles of fair play, justice, and due process. 27 More
important, if these matters had been raised earlier, they could have been seriously examined by the
administrative agency concerned. 28

Courts will not interfere in matters which are addressed to the sound discretion of the government
agency entrusted with the regulation of activities coming under its special and technical training and
knowledgeand the latter are given wide latitude in the evaluation of evidence and in the exercise of
their adjudicative functions.29 This Court has always given primary importance to the DAR
Secretary’s ruling and will not disturb such ruling without substantial reason:
Considering that these issues involve an evaluation of the DAR’s findings of facts, this Court is
constrained to accord respect to such findings. It is settled that factual findings of administrative
agencies are generally accorded respect and even finality by this Court, if such findings are
supported by substantial evidence. The factual findings of the Secretary of DAR who, by reason of
his official position, has acquired expertise in specific matters within his jurisdiction, deserve full
respect and, without justifiable reason, ought not to be altered, modified or reversed. 30

The CA erred in passing upon and ruling on an issue not raised by the farmers themselves. This
Court must not countenance the violation of petitioner’s right to due process by the CA upholding its
conclusion founded on a legal theory only newly discovered by the CA itself. This is especially
insupportable considering the long history of government affirmation of the conversion of the subject
land.

II. Provision in DAR A.O. 12-94 is only a guiding principle.

Assuming for a moment that the notice of acquisition exists, it is not an absolute, perpetual ban on
conversion. The provision invoked in AO 12-94, paragraph E, disallows applications for conversion
of lands for which the DAR has issued a notice of acquisition. But paragraph E falls under heading
VI, "Policies and Guiding Principles." By no stretch of the imagination can a mere "principle" be
interpreted as an absolute proscription on conversion. Secretary Garilao thus acted within his
authority in issuing the Conversion Order, precisely because the law grants him the sole power to
make this policy judgment, despite the "guiding principle" regarding the notice of acquisition. The CA
committed grave error by favoring a principle over the DAR’s own factual determination of the
propriety of conversion. The CA agreed with the OP that land use conversion may be allowed when
it is by reason of changes in the predominant use brought about by urban development, but the
appellate court invalidated the OP Decision anyway for the following reason:

The argument is valid if the agricultural land is still not subjected to compulsory acquisition under
CARP. But as we saw, there has already been a notice of coverage and notice of acquisition issued
for the property...Verily, no less than the cited DAR Administrative Order No. 12 enjoins conversions
of lands already under a notice of acquisition. The objectives and ends of economic progress must
always be sought after within the framework of the law, not against it, or in spite of it. 31

However, under the same heading VI, on Guiding Principles, is paragraph B (3), which reads:

If at the time of the application, the land still falls within the agricultural zone, conversion shall be
allowed only on the following instances:

a) When the land has ceased to be economically feasible and sound for agricultural
purposes, as certified by the Regional Director of the Department of Agriculture (DA) or

b) When the locality has become highly urbanized and the land will have a greater economic
value for residential, commercial and industrial purposes, as certified by the local
government unit.

The thrust of this provision, which DAR Secretary Garilao rightly took into account in issuing the
Conversion Order, is that even if the land has not yet been reclassified, if its use has changed
towards the modernization of the community, conversion is still allowed.

As DAR Secretary, Garilao had full authority to balance the guiding principle in paragraph E against
that in paragraph B (3) and to find for conversion. Note that the same guiding principle which
includes the general proscription against conversion was scrapped from the new rules on
conversion, DAR A.O. 1, Series of 2002, or the "Comprehensive Rules on Land Use Conversion." It
must be emphasized that the policy allowing conversion, on the other hand, was retained. This is a
complex case in which there can be no simplistic or mechanical solution. The Comprehensive
Agrarian Reform Law is not intractable, nor does it condemn a piece of land to a single use forever.
With the same conviction that the state promotes rural development, 32 it also "recognizes the
indispensable role of the private sector, encourages private enterprise, and provides incentives to
needed investments."33

Respondents herein muddle the issue in contending that a Sangguniang Bayan Resolution was not
a sufficient compliance with the requirement of the Local Government Code that an ordinance must
be enacted for a valid reclassification. Yet there was already a Conversion Order. To correct a
situation in which lands redeemed from the MBC would remain idle, petitioners took the route of
applying for conversion. Conversion and reclassification are separate procedures. 34 CCFI and ALI
submitted the two Resolutions to the DAR (one issued by the Sangguniang Bayan of Silang, the
other by the Sangguniang Panlalawigan of Cavite) only as supporting documents in their application.

Again, paragraph B (3), Part VI of DAR AO 12-94, cited above, allows conversion when the land will
have greater economic value for residential, commercial or industrial purposes "as certified by the
Local Government Unit." It is clear that the thrust of the community and the local government is the
conversion of the lands. To this end, the two Resolutions, one issued by the Sangguniang Bayan of
Silang, the other by the Sangguniang Panlalawigan of Cavite, while not strictly for purposes of
reclassification, are sufficient compliance with the requirement of the Conversion Order.

Paragraph E and paragraph B (3) were thus set merely as guidelines in issues of conversion. CARL
is to be solely implemented by the DAR, taking into account current land use as governed by the
needs and political will of the local government and its people. The palpable intent of the
Administrative Order is to make the DAR the principal agency in deciding questions on conversion.
A.O. 12-94 clearly states:

A. The Department of Agrarian Reform is mandated to "approve or disapprove applications

for conversion, restructuring, or readjustment of agricultural lands into non-agricultural uses,"
pursuant to Section 4 (j) of Executive Order No. 129-A, Series of 1987."

B. Section 5 (1) of E.O. No. 129-A, Series of 1987, vests in the DAR, exclusive authority to
approve or disapprove applications for conversion of agricultural lands for residential,
commercial, industrial, and other land uses.35

III. The Conversion Order has long attained finality and may no longer be questioned.

Respondents came forward as claimants under CARL almost three years after the Conversion Order
was issued. In arguing that the claim of respondents had already prescribed, petitioner ALI applied
DAR A.O. 1, Series of 1999, which lays down a one-year prescriptive period for petitions for
cancellation or withdrawal. Section 34 thereof states:

Filing of Petition – A petition for cancellation or withdrawal of the conversion order may be filed at the
instance of DAR or any aggrieved party before the approving authority within ninety (90) days from
discovery of facts which would warrant such cancellation but not more than one (1) year from
issuance of the order: Provided, that where the ground refers to any of those enumerated in Sec. 35
(b), (e), and (f), the petition may be filed within ninety (90) days from discovery of such facts but not
beyond the period for development stipulated in the order of conversion; Provided further, That
where the ground is lack of jurisdiction, the petition shall be filed with the Secretary and the period
prescribed herein shall not apply.

The Conversion Order was issued by Secretary Garilao on 31 October 1997. Respondents
questioned the Order only on 19 May 2000, almost two years and seven months later. Since the
action was filed during the effectivity of A.O. 01-99, its provision on prescription should apply.

Respondents, on the other hand, state that the applicable rule is A.O. 12 (promulgated in 1994),
which was the rule subsisting at the time the Conversion Order was issued. A.O. 12-94 imposes a
prescriptive period of five (5) years; thus, according to the farmers, the petition was filed well within
the period.

Petitioner ALI’s argument is well-taken. A.O. 01-99 entitled "REVISED RULES AND REGULATIONS
ON THE CONVERSION OF AGRICULTURAL LANDS TO NON-AGRICULTURAL USES," provides
for its own effectivity as follows:

SEC. 56. Effectivity – This Order shall take effect ten (10) days after its publication in two (2) national
newspapers of general circulation.

A.O. 01-99 was promulgated on 30 March 1999 and published in Malaya and Manila Standard on
the following day, 31 March 1999. Thus, A.O. 01-99 was the rule governing the filing of a "petition for
cancellation or withdrawal of the conversion order" at the time the farmers filed their petition.

Respondent farmers argue that, according to A.O. No. 01-99, the one-year prescriptive period
should be reckoned from the issuance of the Conversion Order. They point out that it was impossible
for them to receive notice of this rule when Secretary Garilao issued the Conversion Order, since the
rule was published only one year and seven months after the issuance of the Order. Thus, it should
be A.O. 12-94, or the five-year prescription period, that should be applied to them, and not the one-
year period in A.O. 01-99.

Respondents assume that the rule to be applied is that prevailing at the time of the issuance of the
Conversion Order. This is incorrect. The rule applicable in determining the timeliness of a petition for
cancellation or withdrawal of a conversion order is the rule prevailing at the time of the filing of that
petition, and not at the time of the issuance of the Conversion Order. It is axiomatic that laws have
prospective effect, as the Administrative Code provides. 36 While A.O. 01-99 was not yet promulgated
at the time of the issuance of the Conversion Order, it was already published and in effect when the
Petition for Revocation was filed on 19 May 2000.

Regarding the question on when the one-year prescription period should be reckoned, it must be still
be resolved in conformity with the prospective character of laws and rules. In this case, the one-year
period should be reckoned from the date of effectivity of A.O. 1-99, which is 31 March 1999.
Therefore, no petition for cancellation or withdrawal of conversion of lands already converted as of
30 March 1999 may be filed after 1 March 2000.

The Conversion Order is final and executory. The Court ruled in Villorente v. Aplaya Laiya
Corporation:

Indubitably, the Conversion Order of the DAR was a final order, because it resolved the issue of
whether the subject property may be converted to non-agricultural use. The finality of such
Conversion Order is not dependent upon the subsequent determination, either by agreement of the
parties or by the DAR, of the compensation due to the tenants/occupants of the property caused by
its conversion to non-agricultural use. Once final and executory, the Conversion Order can no longer
be questioned.37

A conversion order is a final judgment and cannot be repeatedly assailed by respondents in

perpetuity, after they have received compensation and exhausted other means. In Villorente, the
Court had occasion to rebuke the would-be beneficiaries who, after accepting the compensation
stipulated in the conversion Order – thereby impliedly acknowledging the validity of the order –
turned around and suddenly assailed it. The Court held:

We are convinced that the petition for review filed by the petitioners with the CA was merely an
afterthought…

…………

It must be stressed that the petitioners agreed to negotiate with the respondent for the disturbance
compensation which they claimed was due them, conformably with the said Conversion Order.
Hence, they cannot now assail the said order without running afoul to (sic) the doctrine of estoppel.
The petitioners cannot approbate and disapprobate at the same time. 38

It must be borne in mind that there can be no vested right to judicial relief, as ruled by the Court in
United Paracale Mining v. Dela Rosa:

There can be no vested right in a judicial relief for this is a mere statutory privilege and not a
property right…the right to judicial relief is not a right which may constitute vested right because to
be vested, a right must have become a title, legal or equitable, to the present or future enjoyment of
property, or to the present or future enforcement of a demand or legal exemption from a demand
made by another.39

IV. The conversion and/or reclassification of the said lands has become an operative fact.

Respondent farmers do not deny that at the time of filing of the Petition for Revocation, the lands in
question were no longer agricultural. Secretary Morales affirmed this fact in his Decision, even as he
revoked Secretary Garilao’s Order of conversion:

When respondent Capitol applied for conversion of the subject land on 7 May 1996, the land is
already reclassified from agricultural to other uses. Respondent Capitol applied for conversion as the
registered owner of the land, although in truth it was no longer the owner of the same by virtue of its
sale to ALI. This fact of transfer of ownership is not known since the absolute sale of the land was
not yet public, the deed of sale not having been registered before the Register of Deeds at that time.

………

At the time of the registration of the deed on 29 September 1999, the subject land had ceased to be
an agricultural land since it has already been converted to other uses by virtue of an approved
conversion application. As such, the requirement of reporting by the Register of Deeds of any
transaction involving agricultural lands beyond five (5) hectares, was not made as it is no longer
necessary.

Clearly, the findings of the CLUPPI, the Sangguniang Bayan of Silang, and Secretary Morales
himself confirm as an operative fact the reclassification and/or conversion of the lands. Both the
DAR and the Sangguniang Bayan anchored their findings on the Certifications from the CLUPPI
(obtained by the CLUPPI’s executive committee as required by the DAR procedure), the National
Irrigation Administration, the Philippine Coconut Authority, and the Department of Environment and
Natural Resources.40 The CLUPPI and the MARO (Municipal Agrarian Reform Office) conducted
their own ocular inspection. The Sangguniang Bayan of Silang conducted plebiscites before issuing
the Resolution for reclassification. 41

In sum, the findings of the different government agencies are as follows:

1. The property is about ten (10) kilometers from the provincial road.

2. The land sits on a mountainside overlooking Santa Rosa Technopark.

3. The property is beyond eighteen (18) degrees in slope and undeveloped.

4. Based on a DAR Soil Investigation Report, the property is only marginally suitable for
agriculture use due to its undulating topography. 42

5. The land is outside the irrigable area of the Cavite Friar Lands Irrigation Systems.

6. DENR Administrative Order No. 08 granted the application for an Environmental

Clearance while presenting these additional findings:

 · The area is unirrigated, and the main source of water supply is rainfall.
 · The occupants have been paid disturbance compensation.
 · The area in question had been granted a Certificate of Eligibility for Conversion by
the DAR on 16 January 1996.

The reclassification/conversion of the land has long been a foregone fact. While respondents insist
that the process by which the land was reclassified was invalid, their claim is immaterial, because,
as stated, the two procedures are distinct. Independently of the Sangguniang Bayan’s own initiative,
the DAR issued a Certificate of Eligibility. These issuances only bolster the fact that, at the time it
was converted, the land was no longer agricultural, and that it would generate more revenue if
reclassified as a residential area. Resolution No. ML-08-S-96, adopted by the Sangguniang Bayan of
Silang, recommended conversion based on the favorable findings of the Committee on Housing and
Land Use. The Resolution states:43

...Whereas based on the favorable findings by the Committee on Housing and Land Use after careful
study and after conducting several public hearings has favorably recommended the approval of the
request of Capitol Citifarms, Inc.;

Whereas, the land use reclassification of the said parcels of land will benefit the people of Silang by
way of increased municipal revenue, generate employment, increased commercial activities and
general (sic) uplift the socio-economic condition of the people particularly those in the vicinity of said
parcels of land.

It is no longer necessary to delve into the allegations of the lack of a valid ordinance or the lack of a
land use plan. Aside from the OP finding that this issue was raised belatedly, the submission of "new
or revised town plans approved by the HLURB" is a requirement only in the process of
reclassification embodied in the Local Government Code. This is not a requirement in the process of
conversion, wherein the DAR is given the sole prerogative to make technical determinations on
changes in land use and to decide whether a particular parcel of agricultural land, due to
modernization and the needs of the community, has indeed been converted to non-agricultural use.

V. It has long been resolved by the Office of the President that the lands in this case are exempted
from CARL coverage, partly in order to maintain the stability of the country’s banking system.

In the first OP Decision dated 11 October 1996, Executive Secretary Ruben D. Torres expressly
declared that the preservation of the assets of the BSP warranted higher consideration, so certain
lands of the MBC were exempt from coverage of the CARL. In remanding the case to the DAR for it
to identify which lands should be exempted, Secretary Torres held:

Upon review of the entire records of the case, this Office is persuaded that a stringent appreciation
of the issues raised by the parties may not do justice to their respective causes, and the public in
general. What is involved is the susceptibility of a bank to undergo rehabilitation which will be
jeopardized by the distribution of its assets…a careful balance between the interest of the petitioner
bank, its creditors (which includes the Bangko Sentral ng Pilipinas) and the general public on the
one hand, and adherence to the implementation of the agrarian reform program on the other, must
be established.

…………

…the ends of justice will be better subserved if the Statutory Receiver is given the fullest opportunity
to monetize the assets of the bank which are supposed to be outside of the coverage of the CARL or
may be converted into non-agricultural uses.44

Secretary Torres denied the Motion for Reconsideration filed by the DAR. The denial was based
precisely on the need to balance the agrarian reform law with another policy consideration, the
stability of the banking system. He explained as follows:

The guiding principle on land use conversion is to preserve prime agricultural lands. On the other
hand, when coinciding with the objectives of the Comprehensive Agrarian Reform Law to promote
social justice, industrialization and the optimum use of lands as a national resource for public
welfare, shall be pursued in a speedy and judicious manner.

………

Finally, we wish to reiterate the need to balance the interest between the petitioner bank (under
receivership by the BSP), its creditors (85% of which or a total of P8, 771, 893, 000 is payable to
BSP) and the general public on one hand, and the faithful implementation of agrarian reform
program on the other hand, with the view to harmonizing them and ensuring that the objectives of
the CAR are met and satisfied.45

The Conversion Order was a product of policy determinations made by the DAR, the Office of the
President, and even the Supreme Court. Secretary Torres had ordered the DAR to "respect the
temporary custody of those properties by the Statutory Receiver (BSP Deputy Governor Alberto
Reyes) by deferring their coverage under the CARL…" This order stemmed in turn from the BSP
Resolution of 22 May 1987 placing MBC’s assets under custodia legis. Bolstered by the need to
save MBC, which was one of BSP’s crucial debtors, the Supreme Court allowed the BSP receiver to
sell MBC’s assets to a third party "under the best terms and conditions," to give it ample opportunity
to rehabilitate MBC. The disposition of MBC’s properties was a judgment call made by the BSP,
which, as the sole agency mandated to assist banks and financial institutions in distress, exercises
asset management on a macro level. The Supreme Court Resolution called the arrangement the
"best solution for Manila Banking and CCFI."

In light of the foregoing, it would be absurd to impute bad faith to ALI solely because it chose to
purchase the redeemed land. Similarly, ALI cannot be held accountable for all the years that the land
remained idle pending conversion. To deny relief to ALI would be tantamount to placing the private
sector in the unjust situation of investing, upon invitation from the government, in a bank’s distressed
assets – among which are lands the government itself has ordered converted – then subsequently
confiscating the same from it.1avvphi1

Petitioners did not renege on their duty to pay disturbance compensation to the tenant-farmers. They
expended substantial amounts in addition to the purchase price of the foreclosed lands – for
litigation and administrative processing costs, the farmers’ compensation, and improvements on the
land. The development projects were grounded on a reliance on national government actions that
support the thrust of Cavite towards urbanization.

It was the OP’s first Decision, together with the Supreme Court Resolution, that ultimately paved the
way for ALI to acquire title to the subject lands as a third party buyer. When the dispute over the
subject land reached the OP for the second time – when the validity of the conversion order was in
dispute – the OP of course found no merit in the allegation of concealment. There is therefore
absolutely no basis for the imputation of bad faith upon ALI simply on account of the alleged delay in
the registration of the sale from CCFI to it.

It must be emphasized that the OP’s ground for supporting conversion finds its moorings in DAR
Memorandum Circular 11-79 governing the conversion of private agricultural lands into other uses.
The Circular states that conversion may be allowed when it is by reason of the changes in the
predominant land use, brought about by urban development. The OP Decision pointed to the fact
that the close proximity of Cavite to Manila opened Cavite to the effects of modernization and
urbanization. While the CA characterized this ground as "novel," it still agreed that land use
conversion may be allowed, if caused by changes in predominant land use due to urban
development.

The DAR found merit in the thrust of the local government to "disperse urban growth towards
neighboring regions of Metro Manila"; to encourage the movement of residential development in the
area; and to support the housing needs not just of the neighboring Santa Rosa Technopark, but also
of other commercial centers. It is helpful to remember that it is the local government, in this case,
that of Silang, Cavite, that occupies the primary policy role of allowing the development of real estate
to generate real property taxes and other local revenues.

The CA Decision effectively enfeebles the Orders of no less than three Secretaries of the DAR and
the policy pronouncements of the OP. The actions of respondents – accepting disturbance
compensation for the land, seeking petitioners’ compliance with the terms of the Conversion Order,
then reversing themselves by assailing the Order itself long after the proper period had prescribed –
contradict this Court’s rule that conversion orders, once final and executory, may no longer be
questioned.

The only justification for the CA ruling – that the lands had already been subjected to a Notice of
Acquisition, hence no conversion thereof can take place – cannot stand in the light of two points: 1)
the record before this Court (including the CA and the DAR records) is bereft of any copy, certified or
otherwise, of the alleged Notice of Acquisition; and 2) even if the land is subject to a Notice of
Acquisition, this issue was never raised before the DAR or the OP, nor was it argued before the CA.
It existed as a single-line statement in petitioners’ Appeal Memorandum. 46 Since the DAR and the
OP had ruled for petitioners CCFI and ALI, and the CA itself admitted that petitioners’ stand would
have been valid if not for the alleged Notice, the CA should have been more circumspect in verifying
whether the evidence on record supported respondents’ self-serving claim.

Before the CA’s unilateral action, this unsupported allegation was never raised as a live legal issue.
Hence, CCFI and ALI were deprived of any opportunity to controvert the fact of the Notice of
Acquisition and its legal effect, because they were never alerted that the existence of such Notice
would in any way endanger their legal position. They had the right to expect that only issues properly
raised before the administrative tribunals needed to be addressed. Even assuming that the Notice of
Acquisition did exist, considering that CCFI and ALI had no chance to controvert the CA finding of its
legal bar to conversion, this Court is unable to ascertain the details of the Notice of Acquisition at this
belated stage, or rule on its legal effect on the Conversion Order duly issued by the DAR, without
undermining the technical expertise of the DAR itself. To do so would run counter to another basic
rule that courts will not resolve a controversy involving a question that is within the jurisdiction of the
administrative tribunal prior to its resolution of that question. 47

CARL cannot be used to stultify modernization. It is not the role of the Supreme Court to apply the
missing notice of acquisition in perpetuity. This is not a case wherein a feudal landowner is unjustly
enriched by the plantings of a long-suffering tenant. ALI is in the precarious position of having been
that third-party buyer who offered the terms and conditions most helpful to CCFI, MBC, and
effectively, the BSP, considering the 85% portion of the total debt of MBC that BSP owns. What this
Court can do positively is to contribute to policy stability by binding the government to its clear policy
decisions borne over a long period of time.

WHEREFORE, premises considered, the Court of Appeals committed reversible error in nullifying
the policy pronouncement of the Office of the President and the Department of Agrarian Reform. The
instant petition for certiorari is hereby GRANTED, and the Order of the Office of the President dated
26 January 2004 is AFFIRMED.

SO ORDERED.

MARIA LOURDES P. A. SERENO

 THIRD DIVISION

G.R. No. 143976            April 3, 2003

Spouses OSCAR and HAYDEE BADILLO, petitioners,

vs.
Hon. ARTURO G. TAYAG as Presiding Judge of the Regional Trial Court, Branch 79, Malolos,
Bulacan; and the NATIONAL HOUSING AUTHORITY, respondents.

x---------------------------------------------------------x

G.R. No. 145846 April 3, 2003

Spouses OSCAR and HAYDEE BADILLO, petitioners,

vs.
Hon. BASILIO A. GABO JR. as Presiding Judge of the Regional Trial Court, Branch 11,
Malolos, Bulacan; and the NATIONAL HOUSING AUTHORITY, respondents.

PANGANIBAN, J.:

The National Housing Authority (NHA), a government-owned and controlled corporation, is exempt
from paying appellate docket fees when it sues or is sued in relation to its governmental function of
providing mass housing. It is likewise exempt from filing a supersedeas bond that will stay the
execution of a forcible entry case. In order to have some bases for fixing the reasonable amount of
rent in a forcible entry case, courts must rely on the evidence presented by the parties.

The Case
Before us are two (2) consolidated Petitions for Review under Rule 45 of the Rules of Court, seeking
to set aside two rulings of the Regional Trial Court (RTC) of Malolos, Bulacan. The first one is the
July 19, 2000 Order1 issued by Branch 79 in Case No. P-410-M-2000, annulling both the May 23,
2000 Order2 and the May 30, 2000 Writ of Execution 3 issued by the Municipal Trial Court (MTC) of
San Jose del Monte, Bulacan. The dispositive portion of this assailed RTC Order reads as follows:

"WHEREFORE, the [O]rder of the [t]riaI [c]ourt dated May 23, 2000 is hereby annulled.

"The [W]rit of [E]xecution issued by the clerk of court of the Municipal Trial Court of San Jose
del Monte Bulacan is also annulled.

"Prohibiting the [t]rial [c]ourt from enforcing the [W]rit; and commanding the Municipal Trial
Court to transmit the records of the case to the Regional Trial Court of Bulacan together with
the Money Order of [t]wo hundred [p]esos Annex ‘I’ and ‘1-2’ as appellate docket fee and the
alleged Supersedeas Bond per [Annex] ‘A’, ‘A-1’, ‘A-2’ to ‘A-3’ of the OPPOSITION TO
MOTION TO CLARIFY (with manifestation) filed by Petitioner NHA received by this [C]ourt
on July 17, 2000 although dated July 14, 2000." 4

The second ruling being contested is the October 23, 2000 Decision 5 of Branch 11 in Civil Case No.
512-M-2000, which modified the February 1, 2000 Decision6 of the MTC of San Jose del Monte,
Bulacan. The challenged RTC Decision disposed as follows:

"WHEREFORE, the appealed decision is hereby AFFIRMED insofar as defendants are

ordered to vacate plaintiffs’ property and return the possession thereof to the latter and to
pay plaintiffs, jointly and severally P20,000.00 for attorney’s fees and P20,000.00 for
litigation expenses and to pay the costs are concerned." 7

Since the parties were the same and the issues related, the two Petitions were consolidated by this
Court in its Resolution of October 17, 2001.8

The Facts

Petitioners are plaintiffs in a forcible entry/ejectment case docketed as Civil Case No. 263-94 in the
MTC of San Jose del Monte, Bulacan, entitled "Spouses Oscar and Haydee Badillo v. Triad
Construction and Development Corporation and National Housing Authority." In its February 1, 2000
Decision,9 the MTC ordered the NHA to vacate the disputed land; to return possession thereof to
petitioners; to pay rental for its use and occupation at the rate of P10 per square meter per month;
and to shoulder the attorney’s fees, the litigation expenses and the costs of suit.

The disputed parcel of land was part of the Bagong Silang Resettlement Project (BSRP) of the NHA.
The NHA contended that the property was part of the Tala Estate and was among the 598 hectares
reserved by the government for its housing resettlement site, pursuant to Presidential Proclamation
No. 843 issued by then President Ferdinand E. Marcos on April 26, 1971.

In June 1994, the NHA offered for bidding the development of certain portions of the BSRP. It
eventually contracted with the Triad Construction and Development Corporation ("Triad") for the
development of parts of the site. These were then developed and subdivided into smaller lots that
were allocated, awarded and distributed by the NHA to qualified beneficiaries.
On the other hand, petitioners claimed that they were the owners and exclusive possessors of a
portion of the land that had been awarded by the NHA to Triad. They argued that the NHA intruded
on, occupied and developed their property despite their protests.

Upon receipt of the February 1, 2000 Decision of the MTC, the NHA filed a Notice of Appeal 10 with
the same court on February 24, 2000. The NHA, however, did not pay the appellate docket fees
within the reglementary period. Consequently, petitioners filed with that court a Motion for the
immediate issuance of a writ of execution and demolition. 11 They contended that because of the
NHA’s failure to pay the appellate docket fees within the prescribed period, the MTC Decision
became final.

After a hearing on the Motion, the MTC promulgated an Order on May 23, 2000, authorizing the
issuance of a writ of execution in favor of petitioners:

"For failure of the National Housing Authority to comply with the requirements laid down
under Section 5 of Rule 40 as regards the payment of docket fee and for its failure to comply
with Section 19 of Rule 70 in regard to the payment of the supersedeas bond, the execution
of the judgment rendered in this case has become a ministerial duty of the court in view of
the mandatory nature of said requirements.

"Let therefore, a writ of execution be issued immediately against the defendants." 12

Thereafter, the Writ of Execution13 was actually issued by the MTC on May 30, 2000. Pursuant
thereto, the sheriff14 served a Notice of Garnishment of NHA’s funds in the Landbank of the
Philippines. The bank, however, refused to release the garnished amount.

On June 9, 2000, the NHA filed a Motion to set aside the Writ of Execution and the Notice of
Garnishment.15 The Motion was, however, denied by the MTC in its June 23, 2000 Order. 16

The NHA paid the appellate dockets fees only on June 29, 2000 -- four months late. It
simultaneously filed a Petition for Certiorari, Prohibition, Mandamus and Injunction 17 before the RTC
of Malolos, Bulacan, assailing the MTC’s May 23, 2000 Order and May 30, 2000 Writ of Execution.

Acting on the NHA Petition, RTC Executive Judge Danio A. Manalastas issued a 72-hour Temporary
Restraining Order.18 Thereafter, the case was assigned to RTC Branch 79, which issued the first
assailed July 19, 2000 Order annulling the Writ. After declaring that the NHA had been able to
perfect its appeal on time, the RTC ordered the MTC to transmit the records of the case for
appropriate appellate proceedings.

Upon transmittal of the records from the MTC, the case was raffled to RTC Branch 11, which issued
the second assailed October 23, 2000 Decision. This Decision was appealed by the NHA to the
Court of Appeals (CA). The appeal, docketed as CA-GR No. 61981, is still pending resolution.

Rulings of the RTC

The NHA was able to perfect its appeal on time despite its nonpayment of appellate docket fees,
according to the ruling of RTC Branch 79. The NHA as a government-owned corporation was
presumed to be always solvent and thus exempt from filing a supersedeas bond, which would stay
the immediate execution of a forcible entry case. With the perfection of the appeal, the MTC lost
jurisdiction to issue and enforce the Writ of Execution.
Partly affirming the MTC, RTC Branch 11 held that petitioners were entitled to the right of
possession of the property and to the award of damages, but that the grant of rental was baseless.

Hence, this recourse.19

Issues

Petitioners raise the following issues for our consideration:

"Whether or not the Order of Respondent Judge Gabo deleting the payment of rentals for the
use and occupation of the lot in question is in accordance with law and existing
jurisprudence on the matter"20

II

"Whether or not NHA perfected its appeal to the RTC Bulacan despite failure to pay the
docket/appeal fee within the 15 day period provided for in Section 5, Rule 40 of the 1997
Rules of Civil Procedure

III

"Whether or not the NHA being a government corporation is exempt from the posting of the
supersedeas bond to stay execution as provided for in Section 19, Rule 70 of the 1997 Rules
of Civil Procedure

IV

"Whether or not RTC Bulacan was correct in annulling the Order dated May 23, 2000; the
Writ of Execution and the Notice of Garnishment issued by MTC, Bulacan" 21

These issues can be more clearly restated thus:

(1) Is the failure of the NHA to pay the appellate docket fee within the fifteen-day
reglementary period a ground to dismiss its appeal?

(2) Is the NHA exempt from filing the supersedeas bond in order to stay the execution of the
MTC judgment?

(3) Was it proper for RTC Branch 11 to delete the rentals awarded by the MTC?

Ruling of the Court

The Petitions are unmeritorious.

First Issue:

Payment of Appellate Docket Fees

Created by virtue of PD No. 757,22 the NHA is a government-owned and controlled corporation with
an original charter. As a general rule, however, such corporations -- with or without independent
charters -- are required to pay legal fees under Section 21 of Rule 141 of the 1997 Rules of Civil
Procedure:

"SEC. 21. Government Exempt. - The Republic of the Philippines, its agencies and
instrumentalities, are exempt from paying the legal fees provided in this rule. Local
governments and government-owned or controlled corporations with or without independent
charters are not exempt from paying such fees."23

On the other hand, the NHA contends that it is exempt from paying all kinds of fees and charges,
because it performs governmental functions. It cites Public Estates Authority v. Yujuico,24 which
holds that the Public Estates Authority (PEA), a government-owned and controlled corporation, is
exempt from paying docket fees whenever it files a suit in relation to its governmental functions.

We agree. People’s Homesite and Housing Corporation v. Court of Industrial Relations 25 declares

that the provision of mass housing is a governmental function:

"Coming now to the case at bar, We note that since 1941 when the National Housing
Commission (predecessor of PHHC, which is now known as the National Housing Authority
[NHA] was created, the Philippine government has pursued a mass housing and
resettlement program to meet the needs of Filipinos for decent housing. The agency tasked
with implementing such governmental program was the PHHC. These can be gleaned from
the provisions of Commonwealth Act 648, the charter of said agency.

"We rule that the PHHC is a governmental institution performing governmental functions.

"This is not the first time We are ruling on the proper characterization of housing as an
activity of the government. In the 1985 case of National Housing Corporation v. Juco and the
NLRC (No. L-64313, January 17, 1985, 134 SCRA 172), We ruled that housing is a
governmental function."

While it has not always been easy to distinguish governmental from proprietary functions, the Court’s
declaration in the Decision quoted above is not without basis. Indeed, the characterization of
governmental functions has veered away from the traditional constituent-ministrant classification that
has become unrealistic, if not obsolete. 26 Justice Isagani A. Cruz avers: "[I]t is now obligatory upon
the State itself to promote social justice,27 to provide adequate social services to promote a rising
standard of living,28 to afford protection to labor to formulate and implement urban and agrarian
reform programs, and to adopt other measures intended to ensure the dignity, welfare and security
of its citizens. x x x. These functions, while traditionally regarded as merely ministrant and optional,
have been made compulsory by the Constitution."29

In addition, the NHA is mandated by PD No. 757 to develop and implement a comprehensive,
integrated housing program30 for the greatest number of people.31 Thus, to be able to perform its
governmental functions, the housing agency is vested with sovereign powers. Such powers include,
among others, the exercise of the right of eminent domain or the right to acquire by purchase
privately owned lands for purposes of housing development, resettlement, and related services and
facilities.32

Furthermore, under the Urban Development and Housing Act of 1992, the NHA, in cooperation with
other government units and agencies, is mandated to identify and acquire lands for socialized
housing for the underprivileged and the homeless. 33
Notably, it was in its performance of this governmental function to provide mass housing that the
NHA was sued by petitioners.

Perfection of the Appeal

We agree with the RTC that, insofar as appeals from the MTC to the RTC are concerned, the 1997
Rules of Civil Procedure do not mandate the dismissal of an appeal as a consequence of the
nonpayment of the required fee.

Martinez v. Court of Appeals34 holds that in such appeals, "the failure to pay the appellate docket
fees does not automatically result in the dismissal of the appeal, the dismissal being discretionary on
the part of the appellate court." While that case was governed by Sections 20 35 and 2336 of the
Interim Rules and Guidelines issued by the Court on January 11, 1983 to implement the Judiciary
Reorganization Act of 1981 (BP Blg. 129), the present Rules lead to a similar conclusion.

Under the 1997 Rules of Civil Procedure, parties perfect an appeal from the judgment of the MTC to
the RTC by filing a notice of appeal within the fifteen day reglementary period, as provided under
Section 4 of Rule 40 and Section 9 of Rule 41:

Rule 40 --

"SEC. 4. Perfection of appeal; effect thereof. – The perfection of the appeal and the effect
thereof shall be governed by the provisions of section 9, Rule 41.

Rule 41--

"SEC. 9. Perfection of appeal; effect thereof. - A party’s appeal by notice of appeal is

deemed perfected as to him upon filing of the notice of appeal in due time.

xxx           xxx           xxx

"In appeals by notice of appeal, the court loses jurisdiction over the case upon the perfection
of the appeals filed in due time and the expiration of the time to appeal of the other party."

Fontanar v. Bonsubre37 is a case in point. It holds that in appeals from the MTC to the RTC, failure to
pay the appellate docket fee within the fifteen-day reglementary period bestows on the appellate
court a directory, not a mandatory, power to dismiss an appeal. The Court ratiocinated as follows:

"x x x [T]his Court restated the importance and real purpose of the remedy of appeal as an
essential part of our judicial system and advised the courts to proceed with caution so as not
to deprive a party of a right to appeal with the instruction that every party-litigant should be
afforded the amplest opportunity for the proper and just disposition if his cause, freed from
the constraints of technicalities. Rightly so, for the payment of the appellate docket fee is not
a requirement for the protection of the prevailing party, and non-compliance therewith within
the time prescribed causes no substantial prejudice to anyone."

On the other hand, the cases cited by petitioners involve appeals -- not from the MTC to the RTC --
but from the RTC to the CA and from the CA to the SC, for which the payment of appellate fees is
indeed mandatory according to the Rules.38 We quote Manalili v. Arsenio and De Leon:39
 "Appeal is not a right, but a mere statutory privilege. Corollary to this principle is that the
appeal must be exercised strictly in accordance with provisions set by law. x x x

"x x x [T]he payment of the appellate docket fee is not a mere technicality of law or
procedure. It is an essential requirement, without which the decision or final order appealed
from would become final and executory as if no appeal was filed at all." 40

In the instant cases, when the NHA filed a Notice of Appeal on February 22, 2000 -- two days before
the appeal period lapsed – it perfected its appeal and the MTC thereby lost its jurisdiction. The MTC
therefore acted without jurisdiction in issuing the May 23, 2000 Order and the May 30, 2000 Writ of
Execution.

Second Issue:

The Filing of a Supersedeas Bond

There is a rationale for requiring a losing party to file a supersedeas bond in order to stay the
immediate execution of a judgment in an ejectment case. Such bond is required to assure the
payment of damages to the winning party in case the appeal is found frivolous.

In the present cases, the posting of a supersedeas bond is not necessary to stay the execution of
the MTC Order. When a case involves provable rents or damages incurred by a government-owned
or controlled corporation, the real party in interest is the Republic of the Philippines. When the State
litigates, it is not required to put up a bond for damages or even an appeal bond -- either directly or
indirectly through its authorized officers -- because it is presumed to be always solvent. 41

Thus, it would be unnecessary to ask the NHA to file a bond because to do so would be to indirectly
require the government to submit the bond. And the State is not required to file a bond for the
obvious reason that it is capable of paying its obligation. 42 In any event, the NHA has already paid
the appellate docket fees and filed the supersedeas bond as ordered by the RTC, albeit late.

Third Issue:

The Award of Rentals

Citing Sia v. Court of Appeals,43 petitioners argue that the MTC may take judicial notice of the
reasonable rental or the general price increase of land in order to determine the amount of rent that
may be awarded to them. In that case, however, this Court relied on the CA’s factual findings, which
were based on the evidence presented before the trial court. In determining reasonable rent, the
RTC therein took account of the following factors: 1) the realty assessment of the land, 2) the
increase in realty taxes, and 3) the prevailing rate of rentals in the vicinity. Clearly, the trial court
relied, not on mere judicial notice, but on the evidence presented before it.

Indeed, courts may fix the reasonable amount of rent for the use and occupation of a disputed
property. However, petitioners herein erred in assuming that courts, in determining the amount of
rent, could simply rely on their own appreciation of land values without considering any evidence. As
we have said earlier, a court may fix the reasonable amount of rent, but it must still base its action on
the evidence adduced by the parties.
In Herrera v. Bollos,44 the trial court awarded rent to the defendants in a forcible entry case.
Reversing the RTC, this Court declared that the reasonable amount of rent could be determined not
by mere judicial notice, but by supporting evidence:

"x x x. A court cannot take judicial notice of a factual matter in controversy. The court may
take judicial notice of matters of public knowledge, or which are capable of unquestionable
demonstration, or ought to be known to judges because of their judicial functions. Before
taking such judicial notice, the court must ‘allow the parties to be heard thereon.’ Hence,
there can be no judicial notice on the rental value of the premises in question without
supporting evidence.45

In the instant cases, the RTC has already declared that there is no evidence on record to support the
MTC’s award of rent. We find no cogent reason to disturb this pronouncement.

Finally, the belated prayer of the NHA for the dismissal of the forcible entry case cannot be granted,
because it appealed the RTC Decision to the CA, not to this Court. As a mere respondent in these
appealed cases, the NHA is not entitled to any affirmative relief. Besides, we would not want to
preempt the CA’s action on the said appeal.

WHEREFORE, the Petitions are hereby DENIED. Costs against petitioners.

SO ORDERED.

Puno, Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.

Footnotes

1
 See pp. 24-39 of the rollo in GR No. 143976; penned by Judge Arturo G. Tayag.

2
 Id., p. 51.

3
 Id., pp. 52-54.

4
 Assailed RTC Order, p. 16; page 39 of the rollo in GR No. 143973.

5
 Penned by Judge Basilio Gabo Jr.; see pp. 17-19 of the rollo in GR No. 145846.

6
 Written by Judge Aznar D. Lindayag; pp. 20-30 of the rollo in GR No. 145846.

7
 Id., p. 19.

8
 October 17, 2001 Resolution; id., p. 111.

9
 GR No. 143976; rollo, pp. 40-50.

10
 Records, Vol. II, pp. 280-281.
11
 Id., pp. 292-294.

12
 GR No. 143976; rollo, p. 51.

13
 Id., pp. 52-54.

14
 Benjamin C. Hao; id., p. 55.

15
 Records, Vol. II, pp. 364-367.

16
 GR No. 143976; rollo, pp. 59-60.

17
 Records, Vol. III, pp. 1-32.

18
 Dated June 29, 2000; records, Vol. III, pp. 64-65.

 This case was deemed submitted for decision on December 18, 2001, upon receipt by this
19

Court of respondents’ Memorandum signed by Mario P. Escobar, Ma. Magdalena T. de

Leon-Siacon and Jose M. Manuel Jr. of the Legal Department of the NHA. Petitioners’
Memorandum, signed by Walter T. Young, was received by this Court on November 26,
2001.

20
 See Petitioners’ Memorandum, p. 5; GR No. 145846; rollo, p. 116. Original in upper case.

 See Petitioner’s Memorandum, pp. 6-7; GR No. 143976; rollo, pp. 131-132. Original in
21

upper case.

 Entitled "Creating the National Housing Authority and Dissolving the Existing Housing
22

Agencies, Defining Its Powers and Functions, Providing Funds Therefor, and for Other
Purposes"; dated July 31, 1975.

 Resolution Amending Rule 141 (Legal Fees) of the Rules of Court, issued in AM No. 00-2-
23

01-SC.

24
 351 SCRA 280, February 6, 2001.

25
 150 SCRA 296, May 29, 1987, per Cortes, J.

 People’s Homesite and Housing Corporation v. Court of Industrial Relations, 150 SCRA
26

296, May 29, 1987.

 Constitution, Art. II, Sec. 10. "The State shall promote social justice in all phases of
27

national development."

28
 Constitution, Art. II, Sec. 9. "The State shall promote a just and dynamic social order that
will ensure the prosperity and independence of the nation, free the people from poverty
through policies that provide adequate social services, promote full employment, a rising 
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 187104               August 3, 2010

SAINT LOUIS UNIVERSITY, INC., Petitioner,

vs.
EVANGELINE C. COBARRUBIAS, Respondent.

DECISION

BRION, J.:

We resolve the present petition for review on certiorari1 filed by petitioner Saint Louis University, Inc.
(SLU), to challenge the decision2 and the resolution3 of the Court of Appeals (CA) in CA-G.R. SP No.
101708.4

The Factual Background

The facts of the case, gathered from the records, are briefly summarized below.

Respondent Evangeline C. Cobarrubias is an associate professor of the petitioner’s College of

Human Sciences. She is an active member of the Union of Faculty and Employees of Saint Louis
University (UFESLU).

The 2001-20065 and 2006-20116 Collective Bargaining Agreements (CBAs) between SLU and

UFESLU contain the following common provision on forced leave:
Section 7.7. For teaching employees in college who fail the yearly evaluation, the following
provisions shall apply:

(a) Teaching employees who are retained for three (3) cumulative years in five (5) years shall be on
forced leave for one (1) regular semester during which period all benefits due them shall be
suspended.7

SLU placed Cobarrubias on forced leave for the first semester of School Year (SY) 2007-2008 when
she failed the evaluation for SY 2002-2003, SY 2005-2006, and SY 2006-2007, with the rating of 85,
77, and 72.9 points, respectively, below the required rating of 87 points.

To reverse the imposed forced leave, Cobarrubias sought recourse from the CBA’s grievance
machinery. Despite the conferences held, the parties still failed to settle their dispute, prompting
Cobarrubias to file a case for illegal forced leave or illegal suspension with the National Conciliation
and Mediation Board of the Department of Labor and Employment, Cordillera Administrative Region,
Baguio City. When circulation and mediation again failed, the parties submitted the issues between
them for voluntary arbitration before Voluntary Arbitrator (VA) Daniel T. Fariñas.

Cobarrubias argued that the CA already resolved the forced leave issue in a prior case between the
parties, CA-G.R. SP No. 90596, 8 ruling that the forced leave for teachers who fail their evaluation for
three (3) times within a five-year period should be coterminous with the CBA in force during the
same five-year period.9

SLU, for its part, countered that the CA decision in CA-G.R. SP No. 90596 cannot be considered in
deciding the present case since it is presently on appeal with this Court (G.R. No. 176717) 10 and,
thus, is not yet final. It argued that the forced leave provision applies irrespective of which CBA is
applicable, provided the employee fails her evaluation three (3) times in five (5) years. 11

The Voluntary Arbitrator Decision

On October 26, 2007, VA Daniel T. Fariñas dismissed the case. 12 He found that the CA decision in
CA-G.R. SP No. 90596 is not yet final because of the pending appeal with this Court. He noted that
the CBA clearly authorized SLU to place its teaching employees on forced leave when they fail in the
evaluation for three (3) years within a five-year period, without a distinction on whether the three
years fall within one or two CBA periods. Cobarrubias received the VA’s decision on November 20,
2007.13

On December 5, 2007, Cobarrubias filed with the CA a petition for review under Rule 43 of the Rules
of Court, but failed to pay the required filing fees and to attach to the petition copies of the material
portions of the record.14

Thus, on January 14, 2008, the CA dismissed the petition outright for Cobarrubias’ procedural
lapses.15 Cobarrubias received the CA resolution, dismissing her petition, on January 31, 2008. 16

On February 15, 2008, Cobarrubias filed her motion for reconsideration, arguing that the ground
cited is technical. She, nonetheless, attached to her motion copies of the material portions of the
record and the postal money orders for ₱4,230.00. She maintained that the ends of justice and fair
play are better served if the case is decided on its merits. 17
On July 30, 2008, the CA reinstated the petition. It found that Cobarrubias substantially complied
with the rules by paying the appeal fee in full and attaching the proper documents in her motion for
reconsideration.18

SLU insisted that the VA decision had already attained finality for Cobarrubias’ failure to pay the
docket fees on time.

The CA Decision

The CA brushed aside SLU’s insistence on the finality of the VA decision and annulled it, declaring
that the "three (3) cumulative years in five (5) years" phrase in Section 7.7(a) of the 2006-2011 CBA
means within the five-year effectivity of the CBA. Thus, the CA ordered SLU to pay all the benefits
due Cobarrubias for the first semester of SY 2007-2008, when she was placed on forced leave. 19

When the CA denied20 the motion for reconsideration that followed, 21 SLU filed the present petition
for review on certiorari.22

The Petition

SLU argues that the CA should not have reinstated the appeal since Cobarrubias failed to pay the
docket fees within the prescribed period, and rendered the VA decision final and executory. Even if
Cobarrubias’ procedural lapse is disregarded, SLU submits that Section 7.7(a) of the 2006-2011
CBA should apply irrespective of the five-year effectivity of each CBA. 23

The Case for Cobarrubias

Cobarrubias insists that the CA settled the appeal fee issue, in its July 30, 2008 resolution, when it
found that she had substantially complied with the rules by subsequently paying the docket fees in
full. She submits that the CA’s interpretation of Section 7.7(a) of the 2006-2011 CBA is more in
accord with law and jurisprudence. 24

The Issues

The core issues boil down to whether the CA erred in reinstating Cobarrubias’ petition despite her
failure to pay the appeal fee within the reglementary period, and in reversing the VA decision. To
state the obvious, the appeal fee is a threshold issue that renders all other issues unnecessary if
SLU’s position on this issue is correct.

The Court’s Ruling

We find the petition meritorious.

Payment of Appellate Court Docket Fees

Appeal is not a natural right but a mere statutory privilege, thus, appeal must be made strictly in
accordance with the provision set by law.25 Rule 43 of the Rules of Court provides that appeals from
the judgment of the VA shall be taken to the CA, by filing a petition for review within fifteen (15) days
from the receipt of the notice of judgment.26 Furthermore, upon the filing of the petition, the petitioner
shall pay to the CA clerk of court the docketing and other lawful fees; 27 non-compliance with the
procedural requirements shall be a sufficient ground for the petition’s dismissal. 28 Thus, payment in
full of docket fees within the prescribed period is not only mandatory, but also jurisdictional. 29 It is an
essential requirement, without which, the decision appealed from would become final and executory
as if no appeal has been filed. 30

As early as the 1932 case of Lazaro v. Endencia and Andres, 31 we stressed that the payment of the
full amount of the docket fee is an indispensable step for the perfection of an appeal. In Lee v.
Republic,32 we decided that even though half of the appellate court docket fee was deposited, no
appeal was deemed perfected where the other half was tendered after the period within which
payment should have been made. In Aranas v. Endona, 33 we reiterated that the appeal is not
perfected if only a part of the docket fee is deposited within the reglementary period and the
remainder is tendered after the expiration of the period.

The rulings in these cases have been consistently reiterated in subsequent cases: Guevarra v. Court
of Appeals,34 Pedrosa v. Spouses Hill,35 Gegare v. Court of Appeals,36 Lazaro v. Court of
Appeals,37 Sps. Manalili v. Sps. de Leon,38 La Salette College v. Pilotin, 39 Saint Louis University v.
Spouses Cordero,40 M.A. Santander Construction, Inc. v. Villanueva, 41 Far Corporation v.
Magdaluyo,42 Meatmasters Int’l. Corp. v. Lelis Integrated Dev’t. Corp., 43 Tamayo v. Tamayo,
Jr.,44 Enriquez v. Enriquez,45 KLT Fruits, Inc. v. WSR Fruits, Inc.,46 Tan v. Link,47 Ilusorio v. Ilusorio-
Yap,48 and most recently in Tabigue v. International Copra Export Corporation (INTERCO), 49 and
continues to be the controlling doctrine.

In the present case, Cobarrubias filed her petition for review on December 5, 2007, fifteen (15) days
from receipt of the VA decision on November 20, 2007, but paid her docket fees in full only after
seventy-two (72) days, when she filed her motion for reconsideration on February 15, 2008 and
attached the postal money orders for ₱4,230.00. Undeniably, the docket fees were paid late, and
without payment of the full docket fees, Cobarrubias’ appeal was not perfected within the
reglementary period.

Exceptions to the Rule on Payment of Appellate Court Docket Fees not applicable

Procedural rules do not exist for the convenience of the litigants; the rules were established primarily
to provide order to and enhance the efficiency of our judicial system. 50 While procedural rules are
liberally construed, the provisions on reglementary periods are strictly applied, indispensable as they
are to the prevention of needless delays, and are necessary to the orderly and speedy discharge of
judicial business.51

Viewed in this light, procedural rules are not to be belittled or dismissed simply because their non-
observance may have prejudiced a party's substantive rights; like all rules, they are required to be
followed. However, there are recognized exceptions to their strict observance, such as: (1) most
persuasive and weighty reasons; (2) to relieve a litigant from an injustice not commensurate with his
failure to comply with the prescribed procedure; (3) good faith of the defaulting party by immediately
paying within a reasonable time from the time of the default; (4) the existence of special or
compelling circumstances; (5) the merits of the case; (6) a cause not entirely attributable to the fault
or negligence of the party favored by the suspension of the rules; (7) a lack of any showing that the
review sought is merely frivolous and dilatory; (8) the other party will not be unjustly prejudiced
thereby; (9) fraud, accident, mistake or excusable negligence without the appellant's fault; (10)
peculiar, legal and equitable circumstances attendant to each case; (11) in the name of substantial
justice and fair play; (12) importance of the issues involved; and (13) exercise of sound discretion by
the judge, guided by all the attendant circumstances. 52 Thus, there should be an effort, on the part of
the party invoking liberality, to advance a reasonable or meritorious explanation for his/her failure to
comply with the rules. 1avvphi1
In Cobarrubias' case, no such explanation has been advanced. Other than insisting that the
ends of justice and fair play are better served if the case is decided on its merits, Cobarrubias
offered no excuse for her failure to pay the docket fees in full when she filed her petition for review.
To us, Cobarrubias’ omission is fatal to her cause.

We, thus, find that the CA erred in reinstating Cobarrubias’ petition for review despite the
nonpayment of the requisite docket fees within the reglementary period. The VA decision had lapsed
to finality when the docket fees were paid; hence, the CA had no jurisdiction to entertain the appeal
except to order its dismissal.

WHEREFORE, the present petition is GRANTED. The assailed decision and resolution of the Court
of Appeals in CA-G.R. SP No. 101708 are hereby DECLARED VOID and are consequently SET
ASIDE. The decision of the voluntary arbitrator, that the voided Court of Appeals decision and
resolution nullified, stands. No pronouncement as to costs.

SO ORDERED.

ARTURO D. BRION

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 178933               September 16, 2009

RICARDO S. SILVERIO, JR. Petitioner,

vs.
COURT OF APPEALS (Fifth Division) and NELIA S. SILVERIO-DEE, Respondents.

DECISION

VELASCO, JR., J.:

The Case

This Petition for Review on Certiorari under Rule 65 seeks the reversal of the May 4, 2007
Resolution1 and July 6, 2007 Decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 98764,
entitled Nelia S. Silverio-Dee and Ricardo C. Silverio, Sr. (impleaded as necessary party) v. Reinato
G. Quilala, in his capacity as Presiding Judge of the RTC of Makati, Branch 57, Ricardo S. Silverio,
Jr., Edmundo S. Silverio, represented by Nestor Dela Merced II, and Sheriff Villamor R. Villegas.

The assailed resolution granted private respondent’s prayer for the issuance of a Temporary
Restraining Order against public respondent Judge Quilala. On the other hand, the assailed decision
set aside the Writ of Execution dated April 17, 2007 and the Notice to Vacate dated April 19, 2007
while directing the respondent lower court to give due course to the appeal of herein private
respondent.
 The Facts

The instant controversy stemmed from the settlement of estate of the deceased Beatriz Silverio.
After her death, her surviving spouse, Ricardo Silverio, Sr., filed an intestate proceeding for the
settlement of her estate. The case was docketed as SP. PROC. NO. M-2629 entitled In Re: Estate
of the Late Beatriz D. Silverio, Ricardo C. Silverio, Sr. v. Ricardo S. Silverio Jr., et al. pending before
the Regional Trial Court (RTC) of Makati City, Branch 57 (RTC).

On November 16, 2004, during the pendency of the case, Ricardo Silverio, Jr. filed a petition to
remove Ricardo C. Silverio, Sr. as the administrator of the subject estate. On November 22, 2004,
Edmundo S. Silverio also filed a comment/opposition for the removal of Ricardo C. Silverio, Sr. as
administrator of the estate and for the appointment of a new administrator.

On January 3, 2005, the RTC issued an Order granting the petition and removing Ricardo Silverio,
Sr. as administrator of the estate, while appointing Ricardo Silverio, Jr. as the new administrator.

On January 26, 2005, Nelia S. Silverio-Dee filed a Motion for Reconsideration of the Order dated
January 3, 2005, as well as all other related orders.

On February 4, 2005, Ricardo Silverio Jr. filed an Urgent Motion for an Order Prohibiting Any Person
to Occupy/Stay/Use Real Estate Properties Involved in the Intestate Estate of the Late Beatriz
Silverio, Without Authority from this Honorable Court. 3

Then, on May 31, 2005, the RTC issued an Omnibus Order 4 affirming its Order dated January 3,
2005 and denying private respondent’s motion for reconsideration. In the Omnibus Order, the RTC
also authorized Ricardo Silverio, Jr. to, upon receipt of the order, immediately exercise his duties as
administrator of the subject estate. The Omnibus Order also directed Nelia S. Silverio-Dee to vacate
the property at No. 3, Intsia, Forbes Park, Makati City within fifteen (15) days from receipt of the
order.

Nelia Silverio-Dee received a copy of the Omnibus Order dated May 31, 2005 on June 8, 2005.

On June 16, 2005, private respondent filed a Motion for Reconsideration dated June 15, 2005 5 of the
Omnibus Order. This was later denied by the RTC in an Order dated December 12, 2005, which was
received by private respondent on December 22, 2005.

Notably, the RTC in its Order dated December 12, 20056 also recalled its previous order granting
Ricardo Silverio, Jr. with letters of administration over the intestate estate of Beatriz Silverio and
reinstating Ricardo Silverio, Sr. as the administrator.

From the Order dated December 12, 2005, Ricardo Silverio, Jr. filed a motion for reconsideration
which was denied by the RTC in an Order dated October 31, 2006. In the same order, the RTC also
allowed the sale of various properties of the intestate estate of the late Beatriz Silverio to partially
settle estate taxes, penalties, interests and other charges due thereon. Among the properties
authorized to be sold was the one located at No. 3 Intsia Road, Forbes Park, Makati City. 7

Meanwhile, on January 6, 2006, Nelia Silverio-Dee filed a Notice of Appeal dated January 5,
20068 from the Order dated December 12, 2005 while the Record on Appeal dated January 20,
20069 was filed on January 23, 2006.
Thereafter, on October 23, 2006, Ricardo Silverio, Jr. filed a Motion to Dismiss Appeal and for
Issuance of a Writ of Execution10 against the appeal of Nelia Silverio-Dee on the ground that the
Record on Appeal was filed ten (10) days beyond the reglementary period pursuant to Section 3,
Rule 41 of the Rules of Court.

Thus, on April 2, 2007, the RTC issued an Order11 denying the appeal on the ground that it was not
perfected within the reglementary period. The RTC further issued a writ of execution for the
enforcement of the Order dated May 31, 2005 against private respondent to vacate the premises of
the property located at No. 3, Intsia, Forbes Park, Makati City. The writ of execution was later issued
on April 17, 200712 and a Notice to Vacate13 was issued on April 19, 2007 ordering private
respondent to leave the premises of the subject property within ten (10) days.

Consequently, private respondent filed a Petition for Certiorari and Prohibition (With Prayer for TRO
and Writ of Preliminary Injunction) dated May 2, 200714 with the CA.

On May 4, 2007, the CA issued the assailed Resolution granting the prayer for the issuance of a
TRO. In issuing the TRO, the CA ruled that the Notice of Appeal was filed within the reglementary
period provided by the Rules of Court applying the "fresh rule period" enunciated by this Court in
Neypes v. Court of Appeals15 as reiterated in Sumaway v. Union Bank.16

Afterwards, on July 6, 2007, the CA issued the assailed decision granting the petition of private
respondent. The dispositive portion reads:

WHEREFORE, in view of the foregoing, the instant petition is GRANTED and GIVEN DUE
COURSE. Accordingly, the Order, dated April 2, 2007, the writ of execution, dated April 17, 2007,
and the Notice to Vacate, dated April 19, 2007, are ANNULLED AND SET ASIDE. Further, the court
a quo is hereby directed to give due course to the appeal of Nelia S. Silverio-Dee.

SO ORDERED.

Hence, the instant petition.

The Issues

-A-

The Omnibus Order dated May 31, 2005 (Annex G of Annex C) and the Order dated December 12,
2005 are Interlocutory Orders which are not subject to appeal under Sec. 1 of Rule 41;

-B-

The respondent Court seriously erred and/or committed grave abuse of discretion amounting to lack
of or excess of jurisdiction, in deliberately failing to decide that the basis of the occupancy of Nelia S.
Silverio-Dee are fraudulent documents, without any authority from the Intestate Court;

-C-

The respondent Court seriously erred and/or committed grave abuse of discretion amounting to lack
of or excess of jurisdiction, in issuing precipitately the temporary restraining order (TRO) in its
Resolution dated May 4, 2007 (Annex A-1);
 -D-

The respondent Court seriously erred and/or committed grave abuse of discretion amounting to lack
of or excess of jurisdiction in annulling the Order dated April 2, 2007, the Writ of Execution dated
April 17, 2007, and the Notice to Vacate dated April 19, 2007 because the respondent Silverio-Dee’s
occupancy of the Intestate property located at No. 3 Intsia Road, Forbes Park, Makati City (Annex N
of Annex C) will prevent the sale authorized by the Order dated October 31, 2006 to secure funds for
the payment of taxes due which are now high and rapidly increasing payment of which must not be
enjoined.17

The Court’s Ruling

This petition is meritorious.

The May 31, 2005 Order of the RTC Is an Interlocutory Order, Not Subject to an Appeal

To recapitulate, the relevant facts to the instant issue are as follows:

On May 31, 2005, the RTC issued an Omnibus Order ordering Nelia Silverio-Dee to vacate the
premises of the property located at No. 3, Intsia Road, Forbes Park, Makati City. She received a
copy of the said Order on June 8, 2005. Instead of filing a Notice of Appeal and Record on Appeal,
private respondent filed a motion for reconsideration of the Order. This motion for reconsideration
was denied in an Order dated December 12, 2005. This Order was received by private respondent
on December 22, 2005. On January 6, 2006, private respondent filed her Notice of Appeal while she
filed her Record on Appeal on January 23, 2006. 1avvphi1

Thus, in denying due course to the Notice/Record on Appeal, the RTC, in its Order dated April 2,
2007, ruled:

Verily, the appeal taken by the movant Nelia Silverio-Dee from the Order of this Court dated
December 12, 2005 denying the Motion for Reconsideration is misplaced as no appeal may be taken
from the order denying the motion for reconsideration (see Section 1, Rule 41 of the 1997 Rules of
Civil Procedure in relation to Section 1(f), Rule 109 of the Rules of Court). Furthermore, assuming
that what said movant had appealed is the final Order dated May 31, 2005, still, the appeal cannot
be given due course as the Record on Appeal had been filed beyond the thirty-day period to appeal
(see Section 3 Rule 41 of the Rules of Court)

WHEREFORE, the appeal filed by Nelia Silverio is hereby DENIED due course.

Let a writ of execution issue to enforce the Order dated May 31, 2005 against Nelia Silverio-Dee
requiring her to vacate the premises at No. 3 Intsia, Forbes Park, Makati City.

SO ORDERED.

Thus, the denial of due course by the RTC was based on two (2) grounds: (1) that Nelia Silverio-
Dee’s appeal was against an order denying a motion for reconsideration which is disallowed under
Sec. 1(a), Rule 41 of the Rules of Court; and (2) that Nelia Silverio-Dee’s Record on Appeal was
filed beyond the reglementary period to file an appeal provided under Sec. 3 of Rule 41.

Sec. 1(a), Rule 41 of the Rules of Court provides:

 RULE 41
APPEAL FROM THE REGIONAL TRIAL COURTS

SECTION 1. Subject of appeal.—An appeal may be taken from a judgment or final order that
completely disposes of the case, or of a particular matter therein when declared by these Rules to
be appealable.

No appeal may be taken from:

(a) An order denying a motion for new trial or reconsideration;

xxxx

In all the above instances where the judgment or final order is not appealable, the aggrieved party
may file an appropriate special civil action under Rule 65.

Petitioner argues that because private respondent filed a Notice of Appeal from the Order dated
December 12, 2005 which denied her motion for reconsideration of the Omnibus Order dated May
31, 2005, her appeal is of an order denying a motion for reconsideration. Thus, petitioner alleges
that private respondent employed the wrong remedy in filing a notice of appeal and should have filed
a petition for certiorari with the CA under Rule 65 of the Rules of Court instead.

The CA, however, ruled that the filing of the Notice of Appeal in this case was proper saying that the
appeal pertained to the earlier Omnibus Order dated May 31, 2005. The CA, citing Apuyan v.
Haldeman,18 argued that an order denying a motion for reconsideration may be appealed as such
order is the "final order" which disposes of the case. In that case, we stated:

In the recent case of Quelnan v. VHF Philippines, Inc., We held, thus:

… [T]his Court finds that the proscription against appealing from an order denying a motion for
reconsideration refers to an interlocutory order, and not to a final order or judgment. That that was
the intention of the above-quoted rules is gathered from Pagtakhan v. CIR, 39 SCRA 455 (1971),
cited in above-quoted portion of the decision in Republic, in which this Court held that an order
denying a motion to dismiss an action is interlocutory, hence, not appealable.

The rationale behind the rule proscribing the remedy of appeal from an interlocutory order is to
prevent undue delay, useless appeals and undue inconvenience to the appealing party by having to
assail orders as they are promulgated by the court, when they can be contested in a single appeal.
The appropriate remedy is thus for the party to wait for the final judgment or order and assign such
interlocutory order as an error of the court on appeal.

The denial of the motion for reconsideration of an order of dismissal of a complaint is not an
interlocutory order, however, but a final order as it puts an end to the particular matter resolved, or
settles definitely the matter therein disposed of, and nothing is left for the trial court to do other than
to execute the order.

Not being an interlocutory order, an order denying a motion for reconsideration of an order of
dismissal of a complaint is effectively an appeal of the order of dismissal itself.
The reference by petitioner, in his notice of appeal, to the March 12, 1999 Order denying his
Omnibus Motion—Motion for Reconsideration should thus be deemed to refer to the January 17,
1999 Order which declared him non-suited and accordingly dismissed his complaint.

If the proscription against appealing an order denying a motion for reconsideration is applied to any
order, then there would have been no need to specifically mention in both above-quoted sections of
the Rules "final orders or judgments" as subject to appeal. In other words, from the entire provisions
of Rule 39 and 41, there can be no mistaking that what is proscribed is to appeal from a denial of a
motion for reconsideration of an interlocutory order. (Emphasis supplied.)

Thus, the question posed is whether the Omnibus Order dated May 31, 2005 is an interlocutory
order.

On this aspect, the CA ruled that the Omnibus Order dated May 31, 2005 was a final order, to wit:

We note that the Order, dated December 12, 2005, is an offshoot of the Omnibus Order, dated May
31, 2005. In the Omnibus Order, the court a quo ruled that the petitioner, as an heir of the late
Beatriz S. Silverio, had no right to use and occupy the property in question despite authority given to
her by Ricardo Silverio, Sr. when it said, thus:

x x x In the first place, Nelia S. Silverio-Dee cannot occupy the property in Intsia, Forbes Park,
admittedly belonging to the conjugal estate and subject to their proceedings without authority of the
Court. Based on the pretenses of Nelia Silverio-Dee in her memorandum, it is clear that she would
use and maintain the premises in the concept of a distributee. Under her perception, Section 1 Rule
90 of the Revised Rules of Court is violated. x x x

xxxx

For the property at Intsia, Forbes Park cannot be occupied or appropriated by, nor distributed to
Nelia S. Silverio-Dee, since no distribution shall be allowed until the payment of the obligations
mentioned in the aforestated Rule is made. In fact, the said property may still be sold to pay the
taxes and/or other obligations owned by the estate, which will be difficult to do if she is allowed to
stay in the property.

Moreover, the alleged authority given by SILVERIO, SR. for Nelia S. Silverio-Dee to occupy the
property dated May 4, 2004, assuming it is not even antedated as alleged by SILVERIO, JR., is null
and void since the possession of estate property can only be given to a purported heir by virtue of an
Order from this Court (see Sec. 1 Rule 90, supra; and Sec. 2 Rule 84, Revised Rules of Court). In
fact, the Executor or Administrator shall have the right to the possession and management of the
real as well as the personal estate of the deceased only when it is necessary for the payment of the
debts and expenses of administration (See Sec. 3 Rule 84, Revised Rules of Court). With this in
mind, it is without an iota of doubt that the possession by Nelia S. Silverio-Dee of the property in
question has absolutely no legal basis considering that her occupancy cannot pay the debts and
expenses of administration, not to mention the fact that it will also disturb the right of the new
Administrator to possess and manage the property for the purpose of settling the estate’s legitimate
obligations.

In the belated Memorandum of Nelia Silverio-Dee, she enclosed a statement of the expenses she
incurred pertaining to the house renovation covering the period from May 26, 2004 to February 28,
2005 in the total amount of Php12,434,749.55, which supports this Court’s conclusion that she is
already the final distributee of the property. Repairs of such magnitude require notice, hearing of the
parties and approval of the Court under the Rules. Without following this process, the acts of Nelia
Silverio-Dee are absolutely without legal sanction.

To our mind, the court a quo’s ruling clearly constitutes a final determination of the rights of the
petitioner as the appealing party. As such, the Omnibus Order, dated May 31, 2002 (the
predecessor of the Order dated December 12, 2002) is a final order; hence, the same may be
appealed, for the said matter is clearly declared by the rules as appealable and the proscription does
not apply.19 (Emphasis supplied.)

An interlocutory order, as opposed to a final order, was defined in Tan v. Republic: 20

A final order is one that disposes of the subject matter in its entirety or terminates a particular
proceeding or action, leaving nothing else to be done but to enforce by execution what has been
determined by the court, while an interlocutory order is one which does not dispose of the case
completely but leaves something to be decided upon. (Emphasis supplied.)

Additionally, it is only after a judgment has been rendered in the case that the ground for the appeal
of the interlocutory order may be included in the appeal of the judgment itself. The interlocutory order
generally cannot be appealed separately from the judgment. It is only when such interlocutory order
was rendered without or in excess of jurisdiction or with grave abuse of discretion that certiorari
under Rule 65 may be resorted to.21

In the instant case, Nelia Silverio-Dee appealed the May 31, 2005 Order of the RTC on the ground
that it ordered her to vacate the premises of the property located at No. 3 Intsia Road, Forbes Park,
Makati City. On that aspect the order is not a final determination of the case or of the issue of
distribution of the shares of the heirs in the estate or their rights therein. It must be borne in mind that
until the estate is partitioned, each heir only has an inchoate right to the properties of the estate,
such that no heir may lay claim on a particular property. In Alejandrino v. Court of Appeals, we
succinctly ruled:

Art. 1078 of the Civil Code provides that where there are two or more heirs, the whole estate of the
decedent is, before partition, owned in common by such heirs, subject to the payment of the debts of
the deceased. Under a co-ownership, the ownership of an undivided thing or right belongs to
different persons. Each co-owner of property which is held pro indiviso exercises his rights over the
whole property and may use and enjoy the same with no other limitation than that he shall not injure
the interests of his co-owners. The underlying rationale is that until a division is made, the respective
share of each cannot be determined and every co-owner exercises, together with his co-participants,
joint ownership over the pro indiviso property, in addition to his use and enjoyment of the same.

Although the right of an heir over the property of the decedent is inchoate as long as the estate has
not been fully settled and partitioned, the law allows a co-owner to exercise rights of ownership over
such inchoate right. Thus, the Civil Code provides:

Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits
pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another
person in its enjoyment, except when personal rights are involved. But the effect of the alienation or
the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to
him in the division upon the termination of the co-ownership. 22 (Emphasis supplied.)

Additionally, the above provision must be viewed in the context that the subject property is part of an
estate and subject to intestate proceedings before the courts. It is, thus, relevant to note that in Rule
84, Sec. 2 of the Rules of Court, the administrator may only deliver properties of the estate to the
heirs upon order of the Court. Similarly, under Rule 90, Sec. 1 of the Rules of Court, the properties
of the estate shall only be distributed after the payment of the debts, funeral charges, and other
expenses against the estate, except when authorized by the Court.

Verily, once an action for the settlement of an estate is filed with the court, the properties included
therein are under the control of the intestate court. And not even the administrator may take
possession of any property that is part of the estate without the prior authority of the Court.

In the instant case, the purported authority of Nelia Silverio-Dee, which she allegedly secured from
Ricardo Silverio, Sr., was never approved by the probate court. She, therefore, never had any real
interest in the specific property located at No. 3 Intsia Road, Forbes Park, Makati City. As such, the
May 31, 2005 Order of the RTC must be considered as interlocutory and, therefore, not subject to an
appeal.1avvphi1

Thus, private respondent employed the wrong mode of appeal by filing a Notice of Appeal with the
RTC. Hence, for employing the improper mode of appeal, the case should have been dismissed. 23

The implication of such improper appeal is that the notice of appeal did not toll the reglementary
period for the filing of a petition for certiorari under Rule 65, the proper remedy in the instant case.
This means that private respondent has now lost her remedy of appeal from the May 31, 2005 Order
of the RTC.

Therefore, there is no longer any need to consider the other issues raised in the petition.

WHEREFORE, the May 4, 2007 Resolution and July 6, 2007 Decision of the CA in CA-G.R. SP No.
98764 are REVERSED and SET ASIDE. Thus, the Decision dated April 2, 2007 of the RTC denying
due course to the appeal of Nelia Silverio-Dee; the Writ of Execution dated April 17, 2007; and the
Notice to Vacate dated April 19, 2007 are hereby REINSTATED.

No costs.

SO ORDERED.

PRESBITERO J. VELASCO, JR.

Associate Justice
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 173390               June 27, 2012

MELCHOR L. LAGUA, Petitioner,
vs.
THE HON. COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, Respondent.

DECISION

SERENO, J.:

In dismissing the present Petition filed under Rule 65 of the Rules of Court, we find no valid,
justifiable reason for petitioner’s failure to file his appellant’s brief with the Court of Appeals (CA) that
would warrant a reversal of the CA Resolutions dated 25 November 2005 and 17 May 2006. To rule
1  2 

otherwise would make light of this Court’s extraordinary certiorari jurisdiction, which operates only
upon a clear showing of grave abuse of discretion tantamount to lack or excess of jurisdiction on the
part of the appellate tribunal.3

On 11 April 2003, the Regional Trial Court (RTC) of Pasig rendered a Decision in Criminal Case
Nos. 118032-H and 118033-H finding the accused petitioner guilty of homicide and sentencing him
to 8 years of prision mayor as minimum to 14 years of reclusion temporal as maximum in each case.
On 19 May 2003, petitioner filed a Notice of Appeal with the CA, docketed as CA-G.R. CR No.
27423. On 18 June 2003, he filed a Very Urgent Petition for Bail Pending Appeal, which the CA
granted without objection from the Office of the Solicitor General. On 6 November 2003, an Order of
4 

release upon bond was issued in his favor by the Division Clerk of Court of the CA. 5

On 14 October 2003, petitioner received the Order from the CA requiring, within 45 days from receipt
thereof, or until 28 November 2003, the filing of his Appellant’s Brief. He filed a Motion for Extension
6 

of another 45 days from 28 November 2003, or until 12 January 2004, within which to file the said
brief. On 8 January 2004, he filed a Second Motion for Extension asking for an additional 45 days,
which the CA granted with a warning that no further extension shall be allowed. Thus, petitioner had
7 

45 days from 12 January 2004 or until 26 February 2004.

Despite the two extensions, petitioner Lagua still failed to file his appellant’s brief. On 5 May 2004,
the CA ordered him through counsel to show cause, within five days from receipt, why the appeal
should not be dismissed pursuant to Section 8, Rule 124 of the Rules of Court. He again failed to
submit his brief within the reglementary period and to comply with the Court’s 5 May 2004
Resolution. Thus, on 1 September 2004, the CA issued a Resolution declaring the appeal
abandoned and accordingly dismissed pursuant to the Rules.

On 14 October 2004, petitioner’s counsel of record, Atty. Salvador Quimpo, manifested to the Court
that he had already withdrawn as defense counsel for petitioner, but that he had failed to secure the
latter’s conformity. The following day, petitioner himself filed a Motion for Reconsideration of the 1
8 

September 2004 Resolution, requesting more time to secure the services of another counsel. On 20
October 2004, the Solicitor General, manifesting that accused-appellant’s abandonment of his
appeal rendered the judgment of conviction final and executory, moved for his immediate arrest and
confinement at the New Bilibid Prison. 9

In its Resolution dated 9 February 2005, the CA stated that it had never received a Notice of
Withdrawal from Atty. Quimpo, but nevertheless granted a 30-day period for petitioner and his new
counsel to file a Notice of Appearance. Again, petitioner failed to comply. On 8 July 2005, the CA
issued another Show Cause Order, directing him to explain within 10 days why he had not caused
the appearance of his new counsel, and why the appeal should not be considered abandoned.
Instead of filing a timely compliance, petitioner’s new counsel, Atty. Emerson Barrientos filed a
Notice of Appearance on 8 March 2005 or almost a month after the Show Cause Order.

On 17 August 2005, the CA filed a Resolution stating that in the interest of justice, the Notice of
Appearance was considered sufficient compliance with the Order of 8 July 2005. It granted the
Motion for Reconsideration, set aside the Order of Dismissal issued on 1 September 2004, and gave
petitioner and his new counsel a non-extendible period of 30 days within which to file the appellant’s
brief.

Notwithstanding the new non-extendible period, petitioner again failed to seasonably file his brief,
prompting the CA to issue the first assailed Resolution dated 25 November 2005, which, for the
second time, declared his appeal abandoned and accordingly dismissed. Roused from inaction, he
filed another Motion for Reconsideration with Motion to Admit Appellant’s Brief on 19 December
2005, or 18 days after his counsel received the 25 November 2005 Resolution.

In its second assailed Resolution issued on 17 May 2006, the CA denied petitioner’s Motion for
Reconsideration and ordered the Appellant’s Brief to be expunged from the records, viz:
Indeed the present appeal has been dismissed twice by the Court because of accused-appellant’s
failure to file his brief. The present motion for reconsideration of the second dismissal of the appeal
was even filed three (3) days beyond the reglementary period. Ineluctably, the dismissal of the
present appeal has become final and accused-appellant has lost his right to appeal.

It bears stressing that accused-appellant cannot simply trifle with the rules of procedure on the
pretext that his life and liberty are at stake. For appeal is a mere statutory privilege to be exercised in
the manner and in accordance with the provisions of the law granting the privilege. x x x.
10 

Petitioner comes to this Court alleging grave abuse of discretion on the part of the lower court in
declaring the appeal abandoned, pointing to the negligence and errors of his counsel as the cause of
the two-year delay in coming up with the brief. Petitioner reasons that there would be no prejudice to
the People if his appeal is reinstated, and that he has a good defense that can lead to his acquittal.

We dismiss the Petition.

The certiorari jurisdiction of the Supreme Court is rigorously streamlined, such that Rule 65 only
admits cases based on the specific grounds provided therein. The Rule applies if there is no appeal
or any other plain, speedy, and adequate remedy in the ordinary course of law. The independent
action for certiorari will lie only if grave abuse of discretion is alleged and proven to exist. Grave
abuse of discretion is the arbitrary or despotic exercise of power due to passion, prejudice or
personal hostility; or the whimsical, arbitrary, or a capricious exercise of power that amounts to an
evasion or a refusal to perform a positive duty enjoined by law or to act at all in contemplation of law.
For an act to be struck down as having been done with grave abuse of discretion, the abuse of
discretion must be patent and gross. 11

In the present case, petitioner would have us strike down the Resolutions of the CA declaring his
appeal as abandoned for purportedly being issued in grave abuse of discretion. Yet, far from
committing the grievous error petitioner presents it to be, the CA merely exercised the authority
expressly granted to it under Rule 124, which we quote below:

Sec. 8. Dismissal of appeal for abandonment or failure to prosecute. – The appellate court may,
upon motion of the appellee or on its own motion and notice to the appellant, dismiss the appeal if
the appellant fails to file his brief within the time prescribed by this rule, except in case the appellant
is represented by a counsel de oficio.

Petitioner was represented by private counsel (and not counsel de oficio) to whom the CA had
granted multiple extensions: two for Atty. Quimpo; and two for Atty. Barrientos, whose Notice of
Appearance was submitted a month after the Show Cause Order of 8 July 2005. As for Atty.
Quimpo, he filed his Manifestation more than a month after the CA had first issued the dismissal. It
was only because of the plea for compassion in petitioner’s Motion for Reconsideration that the CA
granted him another 30 days in order to secure the services of another lawyer. Again, petitioner
failed to comply. Both he and the new counsel, Atty. Barrientos, also failed to comply with the
second Show Cause Order.

Yet again, the CA allowed Atty. Barrientos’ Notice of Appearance and considered it substantial
compliance with the second Show Cause Order. Out of the CA’s liberality, petitioner was given
another 30 days to come up with the Appellant’s Brief. This he failed to submit, prompting the CA, for
the second and final time, to declare his appeal as abandoned. Even then, his Motion for
Reconsideration with Motion to Admit Appellant’s Brief was filed 18 days after his counsel received
the CA Resolution.
In his Petition, Lagua bewails the negligence and mishandling by his two previous counsels as the
reason for the delay, which has lasted for more than two years. However, it is clear from the facts
that despite the liberality and consideration afforded to him by the CA, he is by no means blameless.
More importantly, his excuse cannot serve as a substitute for the jurisdictional requirements under
Rule 65. It does not amount to any grave abuse of discretion tantamount to lack or excess of
discretion that may be attributable to the appellate court. Under the circumstances, the CA was well
within the authority granted to it under the cited rule.

Nothing is more settled than the rule that the negligence and mistakes of counsel are binding on the
client. Otherwise, there would never be an end to a suit, so long as counsel could allege its own
12 

fault or negligence to support the client’s case and obtain remedies and reliefs already lost by the
operation of law.

The rationale for this rule is reiterated in the recent case Bejarasco v. People:

The general rule is that a client is bound by the counsel’s acts, including even mistakes in the realm
of procedural technique. The rationale for the rule is that a counsel, once retained, holds the
implied authority to do all acts necessary or, at least, incidental to the prosecution and
management of the suit in behalf of his client, such that any act or omission by counsel
within the scope of the authority is regarded, in the eyes of the law, as the act or omission of
the client himself.

It is the client’s duty to be in contact with his lawyer from time to time in order to be informed
of the progress and developments of his case; hence, to merely rely on the bare reassurances of
his lawyer that everything is being taken care of is not enough. (Emphasis supplied.)
13 

In Tan v. Court of Appeals, the Court explained:

As clients, petitioners should have maintained contact with their counsel from time to time, and
informed themselves of the progress of their case, thereby exercising that standard of care "which
an ordinarily prudent man bestows upon his business."

Even in the absence of the petitioner’s negligence, the rule in this jurisdiction is that a party is bound
by the mistakes of his counsel. In the earlier case of Tesoro v. Court of Appeals, we emphasized –

It has been repeatedly enunciated that "a client is bound by the action of his counsel in the conduct
of a case and cannot be heard to complain that the result might have been different had he
proceeded differently. A client is bound by the mistakes of his lawyer. If such grounds were to be
admitted as reasons for reopening cases, there would never be an end to a suit so long as new
counsel could be employed who could allege and show that prior counsel had not been sufficiently
diligent or experienced or learned."

Thus, with the ordinary remedy of appeal lost through the petitioner’s own fault, we affirm that no
reversible error was committed in the dismissal of the petition by the appellate court. 14

Petitioner was granted bail, and he had all the time to contact his counsel or follow up on the appeal
himself.  He is similarly responsible for procuring the services of new counsel after having been told
1âwphi1

of Atty. Quimpo’s withdrawal. Yet he offered no explanation why it took him so long to apprise Atty.
Barrientos of the case, or why they had repeatedly failed to comply with the CA’s Orders after
several extensions. As he has lost the ordinary remedy of appeal because of his own laxity, we
cannot allow him to haphazardly take advantage of the remedy of certiorari.
The Court cannot tolerate habitual failure to follow the procedural rules, which are indispensable for
the orderly and speedy disposition of justice. Otherwise these rules would be rendered useless. In 15 

Polintan v. People, the Court of Appeals gave the petitioner therein a total of 75 days to submit his
Appellant’s Brief, but he failed to do so. In that case, the accused Polintan filed a "Very Urgent Ex-
Parte Motion to Admit Appellant’s Brief." This Court affirmed the CA Resolution declaring his appeal
abandoned, after finding his excuses too flimsy to warrant reversal.

In the present case, accused Lagua was given more time, not only to file his Appellant’s Brief, but
also to secure new counsel to adequately prepare the appeal. The CA issued two Show Cause
Orders and two Resolutions declaring the appeal as abandoned. Despite these issuances, his
second Motion for Reconsideration was filed 18 days after his receipt of the second and final CA
Resolution. To our mind, this delay is indicative of sheer laxity and indifference on his part, for which
he has lost the statutory right of appeal. Even during the intervening period after counsel has
withdrawn, litigants are expected to be vigilant and conscious of the status of their cases, viz:

The appellate court committed no error therefore in dismissing the appeal. Petitioners-appellants
have shown no valid and justifiable reason for their inexplicable failure to file their brief and have
only themselves to blame for their counsel’s utter inaction and gross indifference and neglect in not
having filed their brief for a year since receipt of due notice to file the same. They could not even
claim ignorance of the appellate court’s notice to file brief since it had required withdrawing counsel
Valente to secure their written conformity before granting his withdrawal as counsel, and certainly
they must have ascertained from him as well as new counsel the status of their appeal — which
accounts for Atty. Valente’s repeated prayers in his two motions for withdrawal for the granting of
sufficient time for new counsel to file the brief. They had almost a year thereafter to make sure that
their new counsel did attend to their appeal and did file the brief.
16

In Estate of Felomina G. Macadangdang v. Gaviola, the Court made a clear finding of negligence on
17 

the part of the lawyer handling the petitioner’s case, but nevertheless affirmed the denial of the
appeal. It confirmed that the petitioner was bound by his counsel’s negligence. It ruled that "the right
to appeal is not a natural right or a part of due process, but is merely a statutory privilege that may
be exercised only in the manner prescribed by the law."

Neither can we deem petitioner Lagua’s Motion for Reconsideration with Motion to Admit Appellant’s
Brief as substantial compliance with the procedural requirement. In Cariño v. Espinoza, the18 

appellate court rightly disallowed the submission of the Appellant’s Brief after a delay of seven
months. In this case, it took petitioner almost two years from 26 February 2004 (after the CA gave
him a second non-extendible period of 45 days) to finally submit his Appellant’s Brief on 19
December 2005.

Lastly, it is erroneous for petitioner to declare that there would be no prejudice to the People if his
appeal is reinstated. The judgment of conviction having attained finality, respondent is now entitled
19 

to execution as a matter of right. This Court has recently declared:

Nothing is more settled in law than that once a judgment attains finality it thereby becomes
immutable and unalterable. The enforcement of such judgment should not be hampered or evaded,
for the immediate enforcement of the parties’ rights, confirmed by final judgment, is a major
component of the ideal administration of justice. This is the reason why we abhor any delay in the
full execution of final and executory decisions. Thus, a remedy intended to frustrate, suspend, or
enjoin the enforcement of a final judgment must be granted with caution and upon a strict
observance of the requirements under existing laws and jurisprudence. x x x.
20 
WHEREFORE, the Petition is DISMISSED. The assailed Resolutions issued by the Court of Appeals
on 25 November 2005 and 17 May 2006 in CA-G.R. CR No. 27423 are hereby AFFIRMED.

SO ORDERED.

MARIA LOURDES P. A. SERENO

Associate Justice

WE CONCUR:

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 159941               August 17, 2011

HEIRS OF SPOUSES TEOFILO M. RETERTA and ELISA RETERTA, namely: EDUARDO M.

RETERTA, CONSUELO M. RETERTA, and AVELINA M. RETERTA, Petitioners,
vs.
SPOUSES LORENZO MORES and VIRGINIA LOPEZ, Respondents.

DECISION

BERSAMIN, J.:

The original and exclusive jurisdiction over a complaint for quieting of title and reconveyance
involving friar land belongs to either the Regional Trial Court (RTC) or the Municipal Trial Court
(MTC). Hence, the dismissal of such a complaint on the ground of lack of jurisdiction due to the land
in litis being friar land under the exclusive jurisdiction of the Land Management Bureau (LMB)
amounts to manifest grave abuse of discretion that can be corrected through certiorari.
The petitioners, whose complaint for quieting of title and reconveyance the RTC had dismissed, had
challenged the dismissal by petition for certiorari, but the Court of Appeals (CA) dismissed their
petition on the ground that certiorari was not a substitute for an appeal, the proper recourse against
the dismissal. They now appeal that ruling of the CA promulgated on April 25, 2003. 1

Antecedents

On May 2, 2000, the petitioners commenced an action for quieting of title and reconveyance in the
RTC in Trece Martires City (Civil Case No. TM-983), 2 averring that they were the true and real
owners of the parcel of land (the land) situated in Trez Cruzes, Tanza, Cavite, containing an area of
47,708 square meters, having inherited the land from their father who had died on July 11, 1983;
that their late father had been the grantee of the land by virtue of his occupation and cultivation; that
their late father and his predecessors in interest had been in open, exclusive, notorious, and
continuous possession of the land for more than 30 years; that they had discovered in 1999 an
affidavit dated March 1, 1966 that their father had purportedly executed whereby he had waived his
rights, interests, and participation in the land; that by virtue of the affidavit, Sales Certificate No. V-
769 had been issued in favor of respondent Lorenzo Mores by the then Department of Agriculture
and Natural Resources; and that Transfer Certificate of Title No. T-64071 had later issued to the
respondents.

On August 1, 2000, the respondents, as defendants, filed a motion to dismiss, insisting that the RTC
had no jurisdiction to take cognizance of Civil Case No. TM-983 due to the land being friar land, and
that the petitioners had no legal personality to commence Civil Case No. TM-983.

On October 29, 2001, the RTC granted the motion to dismiss, holding: 3

Considering that plaintiffs in this case sought the review of the propriety of the grant of lot 2938 of
the Sta. Cruz de Malabon Friar Lands Estate by the Lands Management Bureau of the defendant
Lorenzo Mores through the use of the forged Affidavit and Sales Certificate No. V-769 which
eventually led to the issuance of T.C.T. No. T-64071 to defendant Lorenzo Mores and wife Virginia
Mores, and considering further that the land subject of this case is a friar land and not land of the
public domain, consequently Act No. 1120 is the law prevailing on the matter which gives to the
Director of Lands the exclusive administration and disposition of Friar Lands. More so, the
determination whether or not fraud had been committed in the procurement of the sales certificate
rests to the exclusive power of the Director of Lands. Hence this Court is of the opinion that it has no
jurisdiction over the nature of this action. On the second ground relied upon by the defendants in
their Motion To Dismiss, suffice it to state that the Court deemed not to discuss the same.

IN VIEW OF THE FOREGOING, let this instant case be dismissed as it is hereby dismissed.

SO ORDERED.

The petitioners then timely filed a motion for reconsideration, but the RTC denied their motion for
reconsideration on February 21, 2002.4

On May 15, 2002, therefore, the petitioners assailed the dismissal via petition for certiorari, but the
CA dismissed the petition on April 25, 2003, holding: 5

Thus, the basic requisite for the special civil action of certiorari to lie is that there is no appeal, nor
any plain, speedy and adequate remedy in the ordinary course of law.
In the case at bench, when the court rendered the assailed decision, the remedy of the petitioners
was to have appealed the same to this Court. But petitioners did not. Instead they filed the present
special civil action for certiorari on May 15, 2002 after the decision of the court a quo has become
final.

The Order dismissing the case was issued by the court a quo on 29 October 2001, which Order was
received by the petitioners on November 16, 2001. Petitioners filed a motion for reconsideration
dated November 26, 2001 but the same was denied by the court a quo on 21 February 2002. The
Order denying the motion for reconsideration was received by the petitioners on 20 March 2002.

Petitioners filed this petition for certiorari on May 15, 2002. Certiorari, however cannot be used as a
substitute for the lost remedy of appeal.

In Bernardo vs. Court of Appeals, 275 SCRA 423, the Supreme Court had the following to say:

"We have time and again reminded members of the bench and bar that a special civil action for
certiorari under Rule 65 lies only when "there is no appeal nor plain, speedy and adequate remedy in
the ordinary course of law." Certiorari cannot be allowed when a party to a case fails to appeal a
judgment despite the availability of that remedy, certiorari not being a substitute for lost appeal. The
remedies of appeal and certiorari are mutually exclusive and not alternative or successive."

WHEREFORE, in view of the foregoing, the instant petition is hereby DISMISSED.

SO ORDERED.

On September 9, 2003, the CA denied the petitioners’ motion for reconsideration. 6

Hence, this appeal.

Issues

The petitioners submit that:

I.

IT IS REVERSIBLE ERROR OF THE HONORABLE COURT OF APPEALS TO DISREGARD THE

PROVISIONS OF SECTION 1, RULE 41, SECOND PARAGRAPH, SUBPARAGRAPH (a), AND
SECTION 9, RULE 37, 1997 RULES OF COURT;

II.

IT IS REVERSIBLE ERROR FOR THE HONORABLE COURT OF APPEALS TO APPLY THE

RULING IN THE CASE OF ROSETE vs. COURT OF APPEALS, 339 SCRA 193, 199,
NOTWITHSTANDING THE FACT THAT THE 1997 RULES OF CIVIL PROCEDURE ALREADY
TOOK EFFECT ON JULY 1, 1997.

III.

IT IS REVERSIBLE ERROR FOR THE HONORABLE COURT OF APPEALS IN NOT FINDING

THAT THE TRIAL JUDGE GRAVELY ABUSED ITS DISCRETION WHEN IT DISMISSED THE
COMPLAINT RULING THAT IT HAS NO JURISDICTION OVER THE NATURE OF THE ACTION,
AND IN NOT FINDING THAT THE TRIAL JUDGE HAS JURISDICTION OVER THE SAME. 7

Briefly stated, the issue is whether or not the CA erred in dismissing the petition for certiorari.

Ruling

The appeal is meritorious.

1.

Propriety of certiorari as remedy

against dismissal of the action

The CA seems to be correct in dismissing the petition for certiorari, considering that the order
granting the respondents’ motion to dismiss was a final, as distinguished from an interlocutory, order
against which the proper remedy was an appeal in due course. Certiorari, as an extraordinary
remedy, is not substitute for appeal due to its being availed of only when there is no appeal, or plain,
speedy and adequate remedy in the ordinary course of law. 8

Nonetheless, the petitioners posit that a special civil action for certiorari was their proper remedy to
assail the order of dismissal in light of certain rules of procedure, specifically pointing out that the
second paragraph of Section 1 of Rule 37 of the Rules of Court ("An order denying a motion for new
trial or reconsideration is not appealable, the remedy being an appeal from the judgment or final
order") prohibited an appeal of a denial of the motion for reconsideration, and that the second
paragraph of Section 1 of Rule 41 of the Rules of Court ( "No appeal may be taken from: xxx An
order denying a motion for new trial or reconsideration") expressly declared that an order denying a
motion for reconsideration was not appealable. They remind that the third paragraph of Section 1 of
Rule 41 expressly provided that in the instances "where the judgment or final order is not
appealable, the aggrieved party may file an appropriate special civil action under Rule 65."

The petitioners’ position has no basis.

For one, the order that the petitioners really wanted to obtain relief from was the order granting the
respondents’ motion to dismiss, not the denial of the motion for reconsideration. The fact that the
order granting the motion to dismiss was a final order for thereby completely disposing of the case,
leaving nothing more for the trial court to do in the action, truly called for an appeal, instead of
certiorari, as the correct remedy.

The fundamental distinction between a final judgment or order, on one hand, and an interlocutory
order, on the other hand, has been outlined in Investments, Inc. v. Court of Appeals, 9 viz:

The concept of ‘final’ judgment, as distinguished from one which has ‘become final’ (or ‘executory’ as
of right [final and executory]), is definite and settled. A ‘final’ judgment or order is one that finally
disposes of a case, leaving nothing more to be done by the Court in respect thereto, e.g., an
adjudication on the merits which, on the basis of the evidence presented at the trial declares
categorically what the rights and obligations of the parties are and which party is in the right; or a
judgment or order that dismisses an action on the ground, for instance, of res judicata or
prescription. Once rendered, the task of the Court is ended, as far as deciding the controversy or
determining the rights and liabilities of the litigants is concerned. Nothing more remains to be done
by the Court except to await the parties’ next move (which among others, may consist of the filing of
a motion for new trial or reconsideration, or the taking of an appeal) and ultimately, of course, to
cause the execution of the judgment once it becomes ‘final’ or, to use the established and more
distinctive term, ‘final and executory.’

xxx

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

Moreover, even Section 9 of Rule 37 of the Rules of Court, cited by the petitioners, indicates that the
proper remedy against the denial of the petitioners’ motion for reconsideration was an appeal from
the final order dismissing the action upon the respondents’ motion to dismiss. The said rule explicitly
states thusly:

Section 9. Remedy against order denying a motion for new trial or reconsideration. – An order
denying a motion for new trial or reconsideration is not appealable, the remedy being an appeal from
the judgment or final order.

The restriction against an appeal of a denial of a motion for reconsideration independently of a

judgment or final order is logical and reasonable. A motion for reconsideration is not putting forward
a new issue, or presenting new evidence, or changing the theory of the case, but is only seeking a
reconsideration of the judgment or final order based on the same issues, contentions, and evidence
either because: (a) the damages awarded are excessive; or (b) the evidence is insufficient to justify
the decision or final order; or (c) the decision or final order is contrary to law. 10 By denying a motion
for reconsideration, or by granting it only partially, therefore, a trial court finds no reason either to
reverse or to modify its judgment or final order, and leaves the judgment or final order to stand. The
remedy from the denial is to assail the denial in the course of an appeal of the judgment or final
order itself.

The enumeration of the orders that were not appealable made in the 1997 version of Section 1, Rule
41 of the Rules of Court – the version in force at the time when the CA rendered its assailed decision
on May 15, 2002 – included an order denying a motion for new trial or motion for reconsideration, to
wit:

Section 1. Subject of appeal. — An appeal may be taken from a judgment or final order that
completely disposes of the case, or of a particular matter therein when declared by these Rules to
be appealable.

No appeal may be taken from:

(a) An order denying a motion for new trial or reconsideration;

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

(d) An order disallowing or dismissing an appeal;

(e) An order denying a motion to set aside a judgment by consent, confession or

compromise on the ground of fraud, mistake or duress, or any other ground vitiating consent;

(f) An order of execution;

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

(h) An order dismissing an action without prejudice.

In all the above instances where the judgment or final order is not appealable, the aggrieved party
may file an appropriate special civil action under Rule 65. (n)

It is true that Administrative Matter No. 07-7-12-SC, effective December 27, 2007, has since
amended Section 1, Rule 41, supra, by deleting an order denying a motion for new trial or motion for
reconsideration from the enumeration of non-appealable orders, and that such a revision of a
procedural rule may be retroactively applied. However, to reverse the CA on that basis would not be
right and proper, simply because the CA correctly applied the rule of procedure in force at the time
when it issued its assailed final order.

2.

RTC or MTC has jurisdiction over the action

The settled rule precluding certiorari as a remedy against the final order when appeal is available
notwithstanding, the Court rules that the CA should have given due course to and granted the
petition for certiorari for two exceptional reasons, namely: (a) the broader interest of justice
demanded that certiorari be given due course to avoid the undeserved grossly unjust result that
would befall the petitioners otherwise; and (b) the order of the RTC granting the motion to dismiss on
ground of lack of jurisdiction over the subject matter evidently constituted grave abuse of discretion
amounting to excess of jurisdiction.

On occasion, the Court has considered certiorari as the proper remedy despite the availability of
appeal, or other remedy in the ordinary course of law. In Francisco Motors Corporation v. Court of
Appeals,11 the Court has declared that the requirement that there must be no appeal, or any plain
speedy and adequate remedy in the ordinary course of law admits of exceptions, such as: (a) when
it is necessary to prevent irreparable damages and injury to a party; (b) where the trial judge
capriciously and whimsically exercised his judgment; (c) where there may be danger of a failure of
justice; (d) where an appeal would be slow, inadequate, and insufficient; (e) where the issue raised
is one purely of law; (f) where public interest is involved; and (g) in case of urgency.

Specifically, the Court has held that the availability of appeal as a remedy does not constitute
sufficient ground to prevent or preclude a party from making use of certiorari if appeal is not an
adequate remedy, or an equally beneficial, or speedy remedy. It is inadequacy, not the mere
absence of all other legal remedies and the danger of failure of justice without the writ, that must
usually determine the propriety of certiorari.12 A remedy is plain, speedy and adequate if it will
promptly relieve the petitioner from the injurious effects of the judgment, order, or resolution of the
lower court or agency.13 It is understood, then, that a litigant need not mark time by resorting to the
less speedy remedy of appeal in order to have an order annulled and set aside for being patently
void for failure of the trial court to comply with the Rules of Court. 14

Nor should the petitioner be denied the recourse despite certiorari not being available as a proper
remedy against an assailed order, because it is better on balance to look beyond procedural
requirements and to overcome the ordinary disinclination to exercise supervisory powers in order
that a void order of a lower court may be controlled to make it conformable to law and
justice.15 Verily, the instances in which certiorari will issue cannot be defined, because to do so is to
destroy the comprehensiveness and usefulness of the extraordinary writ. The wide breadth and
range of the discretion of the court are such that authority is not wanting to show that certiorari is
more discretionary than either prohibition or mandamus, and that in the exercise of superintending
control over inferior courts, a superior court is to be guided by all the circumstances of each
particular case "as the ends of justice may require." Thus, the writ will be granted whenever
necessary to prevent a substantial wrong or to do substantial justice. 16

The petitioners’ complaint – self-styled as being for the "quieting of title and reconveyance,
declaration of nullity of affidavit & Sales Certificate, reconveyance and damages" – would challenge
the efficacy of the respondents’ certificate of title under the theory that there had been no valid
transfer or assignment from the petitioners’ predecessor in interest to the respondents of the rights
or interests in the land due to the affidavit assigning such rights and interests being a forgery and
procured by fraud.

The petitioners’ cause of action for reconveyance has support in jurisprudence bearing upon the
manner by which to establish a right in a piece of friar land. According to Arayata v. Joya, 17 in order
that a transfer of the rights of a holder of a certificate of sale of friar lands may be legally effective, it
is necessary that a formal certificate of transfer be drawn up and submitted to the Chief of the
Bureau of Public Lands for his approval and registration. The law authorizes no other way of
transferring the rights of a holder of a certificate of sale of friar lands. In other words, where a person
considered as a grantee of a piece of friar land transfers his rights thereon, such transfer must
conform to certain requirements of the law. Under Director of Lands v. Rizal, 18 the purchaser in the
sale of friar lands under Act No. 1120 is already treated by law as the actual owner of the lot
purchased even before the payment of the full payment price and before the execution of the final
deed of conveyance, subject to the obligation to pay in full the purchase price, the role or position of
the Government becoming that of a mere lien holder or mortgagee. 19

Thus, pursuant to Section 16 of Act No. 1120,20 had grantee Teofilo Reterta perfected his title, the
petitioners as his heirs would have succeeded him and taken title from him upon his death. By law,
therefore, should the execution of the deed in favor of the respondents be held invalid, the interests
of Teofilo Reterta should descend to the petitioners and the deed should issue in their favor. Adding
significance to the petitioners’ claim was their allegation in the complaint that they were in
possession of the land. Moreover, as alleged in the petitioners’ opposition to the motion to dismiss of
the respondents, Teofilo Reterta had partially paid the price of the land. 21

Given the foregoing, the petitioners’ complaint made out a good case for reconveyance or reversion,
and its allegations, if duly established, might well warrant the reconveyance of the land from the
respondents to the petitioners. It did not matter that the respondents already held a certificate of title
in their names. In essence, an action for reconveyance respects the incontrovertibility of the decree
of registration but seeks the transfer of the property to its rightful and legal owner on the ground of its
having been fraudulently or mistakenly registered in another person’s name. There is no special
ground for an action for reconveyance, for it is enough that the aggrieved party asserts a legal claim
in the property superior to the claim of the registered owner, and that the property has not yet
passed to the hands of an innocent purchaser for value. 22 On this score, it is also worthy to stress
that the title of a piece of a friar land obtained by a grantee from the Government without conforming
with the requirements set by the law may be assailed and nullified.

Was the petitioners’ action for reconveyance within the jurisdiction of the regular court?

We answer the query in the affirmative.

The law governing jurisdiction is Section 19 (2) of Batas Pambansa Blg. 129, 23 as amended by
Republic Act No. 7691,24 which provides:

Section 19. Jurisdiction in Civil Cases. — Regional Trial Courts shall exercise exclusive original
jurisdiction: xxx

xxx

(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein,
where the assessed value of the property involved exceeds Twenty thousand pesos (₱20,000.00) or
for civil actions in Metro Manila, where such value exceeds Fifty thousand pesos (₱50,000.00)
except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction
over which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts;

xxx

Conformably with the provision, because an action for reconveyance or to remove a cloud on one’s
title involves the title to, or possession of, real property, or any interest therein, exclusive original
jurisdiction over such action pertained to the RTC, unless the assessed value of the property did not
exceed ₱20,000.00 (in which instance the MTC having territorial jurisdiction would have exclusive
original jurisdiction). Determinative of which regular court had jurisdiction would be the allegations of
the complaint (on the assessed value of the property) and the principal relief thereby sought. 25

The respondents’ reliance on Section 12 and Section 18 of Act No. 1120 to sustain their position that
the Bureau of Public Lands (now LMB) instead had exclusive jurisdiction was without basis. The
provisions read:

Section 12. xxx the Chief of the Bureau of Public Lands shall give the said settler and occupant a
certificate which shall set forth in detail that the Government has agreed to sell to such settler and
occupant the amount of land so held by him, at the price so fixed, payable as provided in this Act at
the office of the Chief of Bureau of Public Lands xxx and that upon the payment of the final
installment together with all accrued interest the Government will convey to such settler and
occupant the said land so held by him by proper instrument of conveyance, which shall be issued
and become effective in the manner provided in section one hundred and twenty-two of the Land
Registration Act xxx.

Section 18. No lease or sale made by Chief of the Bureau of Public Lands under the provisions of
this Act shall be valid until approved by the Secretary of the Interior. 1awphi1

As the provisions indicate, the authority of LMB under Act No. 1120, being limited to the
administration and disposition of friar lands, did not include the petitioners’ action for reconveyance.
LMB ceases to have jurisdiction once the friar land is disposed of in favor of a private person and
title duly issues in the latter’s name. By ignoring the petitioners’ showing of its plain error in
dismissing Civil Case No. TM-983, and by disregarding the allegations of the complaint, the RTC
acted whimsically and capriciously.

Given all the foregoing, the RTC committed grave abuse of discretion amounting to lack of
jurisdiction. The term grave abuse of discretion connotes whimsical and capricious exercise of
judgment as is equivalent to excess, or lack of jurisdiction. 26 The abuse must be so patent and gross
as to amount to an evasion of a positive duty or to a virtual refusal to perform a duty enjoined by law,
or to act at all in contemplation of law as where the power is exercised in an arbitrary and despotic
manner by reason of passion or hostility.27

The dismissal of Civil Case No. TM-983, unless undone, would leave the petitioners bereft of any
remedy to protect their substantial rights or interests in the land. As such, they would suffer grave
injustice and irreparable damage. In that situation, the RTC’s dismissal should be annulled through
certiorari, for the task of the remedy was to do justice to the unjustly aggrieved. 28

WHEREFORE, the Court grants the petition for certiorari; sets aside the decision the Court of
Appeals promulgated on April 25, 2003; and directs Branch 23 of the Regional Trial Court in Trece
Martires City to resume the proceedings in Civil Case No. TM-983 with dispatch.

The respondents shall pay the costs of suit.

SO ORDERED.

LUCAS P. BERSAMIN
Associate Justice

WE CONCUR:

RENATO C. CORONA
Chief Justice
Cha

20 scra 850
 FIRST DIVISION

G.R. No. 130228             July 27, 2004

BERNABE FOSTER-GALLEGO, petitioner,
vs.
SPOUSES ROMEO and VIVIEN GALANG, VIVE REALTY CORPORATION, MUNICIPALITY OF
PARAÑAQUE, TREASURER OF PARAÑAQUE, REGISTER OF DEEDS OF
PARAÑAQUE, respondents.

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review assailing the Decision of 22 July 1997 of the Court of
1  2 

Appeals in CA-G.R. CV No. 43439.  The Court of Appeals affirmed with modification the Decision of 3 

8 July 1993 of the Regional Trial Court of Makati, Metro Manila, Branch 148, in Civil Case No. 89-
3898.  The trial court rendered judgment against Lito Gallego ("Gallego") and declared Romeo and
Vivien Galang ("Spouses Galang"), the owners of the parcel of land subject of this case.

Antecedent Facts

Vive Realty Corporation ("VRC") acquired several properties at a public auction held by the
Municipal Treasurer of Parañaque ("Treasurer") on 29 October 1982.  Among these properties was
a parcel of land ("Property") with an area of 330 square meters located in Barrio Kaybiga,
Parañaque, Metro Manila, and covered by TCT No. 435402.  The Treasurer executed a Final Bill of
Sale over the Property in favor of VRC on 25 November 1983.  VRC then filed a petition, docketed
4 

as Civil Case No. 5801, to cancel the titles of the properties VRC had purchased during the public
auction.  In a Decision dated 19 December 1983, the Regional Trial Court of Makati, Branch 138
5 

("RTC-Branch 138"), ordered the Register of Deeds to cancel 11 transfer certificates of title,
including TCT No. 435402, and to issue new titles in the name of VRC.

On 22 June 1984, the Spouses Galang purchased the Property from VRC through a Deed of
Absolute Sale. The Register of Deeds later issued TCT No. (86872) 22786 over the Property in the
6 

name of the Spouses Galang.  The Spouses Galang took possession of the Property and had it
declared in their name for taxation purposes.  They diligently paid the corresponding real property
taxes.

In April 1989, Romeo Galang came home from Saudi Arabia and discovered a hollow block fence
along the perimeter of the Property.  Gallego built the fence in March 1989.  Although the Spouses
Galang brought the matter to the Barangay Lupon for possible settlement, Gallego failed to appear
at the barangay hall and instead sent his lawyer.  On 16 May 1989, the Spouses Galang filed a
complaint for Quieting of Title with Damages against Gallego.  The case was raffled to the Regional
7 

Trial Court of Makati, Branch 146 ("RTC-Branch 146").

8 

In his Answer with Counterclaim, Gallego alleged that his brother, Bernabe Foster-Gallego, owned
the Property.  Gallego denied that his brother was delinquent in the payment of real property taxes. 
Gallego asserted that his brother had never received a notice of delinquency or a notice of the public
auction of the Property, much less a copy of RTC-Branch 138's decision cancelling TCT No.
435402.  Gallego pointed out that TCT No. 435402 and Tax Declaration No. A-022-00019 clearly
indicated his brother's address as No. 15 Tiller Green S.W. Washington D.C., USA. Since his brother
is the true and lawful owner of the Property, Gallego argued that the Spouses Galang should not
disturb his possession as caretaker of the Property.

As Gallego subsequently failed to appear at the pre-trial conference and to submit his pre-trial brief,
RTC-Branch 146 issued an Order on 16 February 1990 declaring Gallego in default and allowing the
9 

Spouses Galang to present their evidence ex parte.  On 10 March 1990, Gallego filed a motion to lift
the order of default and to admit his pre-trial brief.  On the same day, Bernabe Foster-Gallego
("petitioner") filed a motion for intervention with an attached answer-in-intervention.  RTC-Branch
146 denied Gallego's motion but granted petitioner's motion and admitted the answer-in-intervention.

RTC-Branch 146 set a pre-trial conference between the Spouses Galang and petitioner.  However,
the pre-trial did not push through because petitioner filed on 2 August 1990 a motion to admit third-
party complaint, which RTC-Branch 146 granted.  Summonses were issued on third-party defendant
VRC, as well on the Municipality (now City), Treasurer, and Register of Deeds of Parañaque.   VRC
failed to file an answer to the third-party complaint.

The case was subsequently re-raffled to the Regional Trial Court of Makati, Branch 65 ("RTC-
10 

Branch 65").  On 4 March 1991, the Spouses Galang started presenting their evidence ex
parte against Gallego.  Petitioner filed a motion to strike out these proceedings and to hold in
abeyance the hearing scheduled on 8 April 1991 on the ground that not all the third-party defendants
had filed their answers and pre-trial briefs.  RTC-Branch 65 denied the motion in an Order dated 6
May 1991. 11

Gallego and petitioner jointly filed a petition for certiorari with the Court of Appeals praying to annul
the order.  The appellate court dismissed the petition for lack of merit.  Gallego and petitioner then
elevated the matter to this Court, which denied their petition and subsequent motion for
reconsideration for lack of reversible error.

The Spouses Galang continued to present their evidence ex parte against Gallego on 17 August
1992.  On 24 August 1992, they submitted their written offer of evidence and RTC-Branch 65
deemed the case involving the Gallego and the Spouses Galang submitted for decision.  RTC-
Branch 65 also ordered the Spouses Galang and petitioner to submit their position papers on the
procedure to receive further evidence in the case.  Both parties complied in September 1992.

In October 1992, petitioner filed a motion to inhibit Judge Abad Santos who granted the motion and
inhibited himself.  The case was re-raffled to the Regional Trial Court of Makati, Branch 148 ("trial
court").  The trial court eventually decided the original case in favor of the Spouses Galang, and
denied petitioner's intervention and third-party complaint.

The Ruling of the Trial Court

The dispositive portion of the Decision of 8 July 1993 of the trial court reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs

and against defendant Lito Gallego removing any cloud or quieting of title and ownership
over the parcel of land covered by TCT No. (86872) 22786 of the Register of Deeds of Pasay
City with an area of 330 square meters more or less situated in Barrio Kaybiga, Parañaque,
Metro Manila, declaring them at this point in time as exclusive owner of said land and that
said defendant Lito Gallego is hereby ordered to pay plaintiffs moral damages in the amount
 of P10,000.00;  attorney's fees in the amount of P25,000.00 including the appearance fees
and P3,000.00 as litigation expenses.

With costs against the defendant Lito Gallego.

SO ORDERED. 12

Dissatisfied with the trial court's decision, Gallego and the Spouses Galang appealed to the Court of
Appeals.

The trial court also set for hearing the issue of whether trial on the merits should proceed on
petitioner's intervention and third-party complaint.  After hearing the arguments of the parties
concerned and receiving their respective memoranda, the trial court issued on 12 October 1993 the
following Order:

WHEREFORE, premises considered,

(1) the order admitting the Answer in Intervention by Bernabe Gallego is hereby
reconsidered, and the Motion to Admit the same is hereby DENIED, and the Answer in
Intervention is hereby stricken off the record.

(2) the third party complaint filed by Bernabe Gallego is hereby denied admission, and if it
was already admitted, the admission is hereby reconsidered and said third party complaint is
hereby stricken off the records.

SO ORDERED. 13

Petitioner received the trial court's order on 21 October 1993.  Petitioner filed a motion for
reconsideration on 5 November 1993, which the trial court denied.  Petitioner received a copy of the
trial court's denial on 23 January 1995.  Petitioner then filed on 26 January 1995 a notice that he was
appealing the Order to the Court of Appeals.  Instead of filing his own brief, however, petitioner
joined in Gallego's appeal.

The Ruling of the Court of Appeals

The Court of Appeals held that petitioner had no legal personality to join Gallego's appeal, thus:

In fact, with the denial of his motion for intervention, intervenor-appellant never became a
party to the case.  Thus, he had no legal personality to join defendant-appellant in this
appeal to impugn the decision of 8 July 1993, much less to use this appeal as a mode to
question the orders denying his intervention.  Under Section 2, Rule 12 of the Rules of Court,
the Rule then prevailing at the time the intervention of intervenor-appellant was denied, any
person desiring to intervene shall file a motion for leave of court and that allowance or
disallowance of the motion is addressed to the sound discretion of the court.  xxx once the
court exercises its discretion, the same cannot be reviewed save in instances where such
discretion has been so exercised in an arbitrary or capricious manner in which case a
petition for certiorari may be pursued.  In other words, if intervenor-appellant believes that
the lower court gravely abused its discretion in denying his motion for intervention, his proper
forum is elsewhere and not in this appeal.

xxx
 But even assuming that the questioned orders are final such that they can be the proper
subject of appeal, an examination of the records will show that intervenor-appellant's appeal
was interposed out of time.  The order of 12 October 1993 denying the motion for
intervention of intervenor-appellant was received by him on 21 October 1993; hence,
pursuant to Section 39 of Batas Pambansa Bilang 129, he only had a period of fifteen (15)
days, or until 5 November 1993, within which to perfect an appeal.  Intervenor-appellant
instead filed a motion for reconsideration on 5 November 1993 but this was denied by the
lower court on 26 December 1994, a copy of the order of which was served on him on 23
January 1995.  This means that intervenor-appellant had until the next day, 24 January
1995, within which to perfect his appeal considering that he filed his motion for
reconsideration on the very last day to appeal.  It will be noted, however, that intervenor-
appellant failed to beat his deadline as he filed his notice of appeal only on 26 January
1995.  This Court therefore has no jurisdiction to review the assailed orders as they already
lapsed into finality. xxx

xxx

One last note.  Intervenor-appellant is not without any remedy with the denial of his motion
for intervention.  Whatever right or interest he may have over the subject property will not in
any way be affected by the judgment rendered against defendant-appellant.  If indeed there
were some irregularities in the sale at public auction of the property and in the cancellation of
his title, intervenor-appellant may still avail of the proper remedies under the rules.
14

The Court of Appeals also affirmed the decision of the trial court but deleted the award of damages
to the Spouses Galang for lack of basis, as follows:

WHEREFORE, premises considered, the 8 July 1993 decision appealed from is hereby
AFFIRMED, with MODIFICATION that the award in favor of plaintiffs-appellants for moral
damages, attorney's fees and litigation expenses is DELETED.

SO ORDERED. 15

Gallego and the Spouses Galang did not appeal the appellate court's Decision of 22 July 1997. 
However, petitioner filed before this Court a petition for review on certiorari assailing the Decision.

The Issues

Petitioner contends that:

1.   THE COURT OF APPEALS SERIOUSLY ERRED IN NOT SETTING ASIDE THE
ORDER DATED OCTOBER 12, 1993 AND THE ORDER DATED DECEMBER 26, 1994 AS
WELL AS THE DECISION DATED JULY 8, 1993 AND IN NOT RENDERING A DECISION
RULING THAT:

a)      THE TRIAL COURT ERRED IN RECONSIDERING THE ORDER DATED

APRIL 16, 1990 xxx;

b)      THE TRIAL COURT GRAVELY ERRED IN REASONING THAT THE

DEFAULT ORDER AGAINST GALLEGO PRECLUDED THE ADMISSION OF THE
VERIFIED ANSWER-IN-INTERVENTION AND THE VERIFIED THIRD-PARTY
COMPLAINT OF PETITIONER WHICH HAVE IPSO FACTO AND EFFECTIVELY
 ADMITTED OR INSTALLED PETITIONER AS DEFENDANT OR BECAME THE
MAIN DEFENDANT AND INDISPENSABLE PARTY OF THE CASE;

c)      THE TRIAL COURT GRAVELY ERRED IN RULING THAT THE

INTERVENTION OF PETITIONER IS MERELY ANCILLARY TO THE MAIN ACTION
xxx;

d)      THE TRIAL COURT GRAVELY ERRED IN NOT CONCLUDING THAT THE
NOTICE OF AUCTION SALE AND ITS PUBLICATION, THE CERTIFICATE OF
SALE, AND THE FINAL BILL OF SALE INVOLVED  ARE ALL VOID AB INITIO AND
DID NOT AFFECT THE EFFECTIVE AND STANDING VALIDITIY AND EXISTENCE
OF TCT NO. 435402 xxx;

e)      THE TRIAL COURT GRAVELY ERRED IN NOT DECIDING THAT xxx CIVIL
CASE NO. 5801 OF THE RTC, BRANCH 138, MAKATI, AND THE PROCEEDINGS
AND DECISION DATED DECEMBER 19, 1993 16 THEREUNDER ARE VOID;

f)      THE TRIAL COURT COMMITTED A SERIOUS ERROR IN NOT DECIDING

THAT EVEN ASSUMING THAT THE AUCTION PROCEEDINGS WERE VALID,
PETITIONER IN EFFECT HAD REDEEMED HIS PROPERTY WHICH WAS
ALLEGEDLY AUCTIONED, WITHIN THE REDEMPTION PERIOD OF ONE (1)
YEAR BASED ON UNDISPUTED FACTS ON RECORD;

g)      THE TRIAL COURT COMMITTED A SERIOUS MISTAKE IN NOT DECIDING

THAT THE DOCTRINE OF AN INNOCENT PURCHASER FOR VALUE IS NOT
APPLICABLE IN THIS CASE, BECAUSE THE SPOUSES GALANG PURCHASED
NOTHING FROM VIVE REALTY CORPORATION WHOSE TITLE IS VOID AB
INITIO AND THEREFORE HAD NOTHING TO SELL;

h)      THE TRIAL COURT SERIOUSLY ERRED IN NOT RULING THAT TCT NO.
86872 (22786) IN THE NAME OF THE SPOUSES GALANG IS VOID AB
INITIO AND PETITIONER'S TCT NO. 435402 WHICH REMAINS UNCANCELLED
IN THE NAME OF PETITIONER AND IN HIS POSSESSION, IS STILL LEGALLY
EXISTING AND VALID;

i)      THE TRIAL COURT GRAVELY ERRED IN NOT RULING THAT THE
ANSWER-IN-INTERVENTION IS A DIRECT ATTACK, NOT COLLATERAL, ON THE
TITLE OF SPOUSES GALANG;

2.      THE COURT OF APPEALS SERIOUSLY ERRED IN CONCLUDING THAT IT

CANNOT REVIEW THE ORDER DATED OCTOBER 12, 1993 AND THE ORDER DATED
DECEMBER 26, 1994;

3.      THE COURT OF APPEALS SERIOUSLY ERRED IN RULING THAT PETITIONER

FILED HIS NOTICE OF APPEAL LATE; BUT EVEN ASSUMING IT TO BE SO, THE ONE-
DAY TARDINESS IS EXCUSABLE AND STRICTLY TECHNICAL TO DEFEAT
17 

PETITIONER'S PROPERTY RIGHT OF WHICH HE IS BEING DEPRIVED WITHOUT DUE

PROCESS OF LAW; and

4.      THE COURT OF APPEALS COMMITTED A SERIOUS ERROR IN THAT, ASSUMING

PETITIONER HAD NO PERSONALITY TO JOIN THE APPEAL OF GALLEGO AND THAT
 THE ORDERS DATED OCTOBER 12, 1993 AND DATED DECEMBER 26, 1993
RESPECTIVELY ARE INTERLOCUTORY, PETITIONER HAS STILL A REMEDY TO FILE
HIS OWN ACTION TO ANNUL TCT NO. (86872) 22786 IN THE NAMES OF THE
SPOUSES GALANG. 18

The original parties to this case chose not to appeal the Court of Appeals' Decision of 22 July 1997. 
The ruling of this Court thus pertains to petitioner only.  We will not delve into the issues between the
Spouses Galang and Gallego.

In sum, the issues of this case are:  (1) whether the Court of Appeals erred in dismissing petitioner's
appeal from the trial court's orders disallowing petitioner's intervention; (2) whether RTC-Branch
138's Decision of 19 December 1983 can be declared void in an action for quieting of title; and (3)
whether petitioner is an indispensable party to the action for quieting of title.

The Ruling of the Court

The Court of Appeals Did Not Err in

Dismissing Petitioner's Appeal

True, this Court has on occasion held that an order denying a motion for intervention is
appealable. Where the lower court's denial of a motion for intervention amounts to a final order, an
19 

appeal is the proper remedy, as when the denial leaves the intervenor without further remedy or
20 

resort to judicial relief.

However, the issue of whether petitioner correctly appealed the assailed orders of the trial court to
the Court of Appeals is beside the point since petitioner did not interpose his own appeal. 
Petitioner merely joined Gallego's appeal from the trial court's decision.

A prospective intervenor's right to appeal applies only to the denial of his intervention.   Not being a
21 

party to the case, a person whose intervention the court denied has no standing to question the
decision of the court. Petitioner thus had no legal personality to join Gallego in assailing the decision
22 

of the trial court.  Petitioner could question only the trial court's orders denying his intervention and
striking off from the records his answer-in-intervention, not the decision itself.

Moreover, petitioner filed his notice of appeal out of time.  The Court of Appeals ruled that:

xxx The order of 12 October 1993 denying the motion for intervention of intervenor-appellant
was received by him on 21 October 1993;  hence, pursuant to Section 39 of Batas
Pambansa Bilang 129, he only had a period of fifteen (15) days, or until 5 November 1993,
within which to perfect an appeal.  Intervenor-appellant instead filed a motion for
reconsideration on 5 November 1993 but this was denied by the lower court on 26
December 1994, a copy of the order of which was served on him on 23 January 1995.  This
means that intervenor-appellant had until the next day, 24 January 1995, within which to
perfect his appeal considering that he filed his motion for reconsideration on the very last day
to appeal.  It will be noted, however, that intervenor-appellant failed to beat his deadline as
he filed his notice of appeal only on 26 January 1995. 23

Petitioner disputes the appellate court's findings.  Petitioner claims that he filed his motion for
reconsideration on 3 November 1993, and not on 5 November.  The deadline for his appeal was on
25 January 1995 and not on 24 January 1995.  Petitioner concedes that he filed his appeal a day
late on 26 January 1993, but argues that this brief delay is strictly technical.
The records show that petitioner filed with the trial court his motion for reconsideration by registered
mail on 3 November 1993, and not on 5 November.  However, as petitioner himself admits, he still
24 

filed his appeal a day beyond the 25 January 1993 deadline.

An appeal from a court's judgment or final order is a statutory right, subject to the law and the rules
of procedure.  The perfection of an appeal within the statutory or reglementary period is not only
mandatory but also jurisdictional. Failure to interpose a timely appeal renders the assailed decision
25 

final and executory, and deprives the appellate court of jurisdiction to alter the final judgment or to
entertain the appeal. 26

Petitioner lost his right to appeal when he exceeded the fifteen-day period granted by law. 
27 

Petitioner filed his motion for reconsideration on the thirteenth day of his fifteen-day period to
appeal.  The filing of a motion for reconsideration merely suspends the running of the period to
appeal. Once the court denies the motion, the aggrieved party has only the remaining period from
28 

receipt of the order of denial to file his appeal. Petitioner thus had only two days from his receipt on
29 

23 January 1995 of the trial court's order denying the reconsideration, or up to 25 January 1995, to
perfect his appeal to the Court of Appeals.  Petitioner's failure to interpose his appeal on time
rendered the assailed orders of the trial court final.

Petitioner argues that his tardiness of one day is excusable, and cannot defeat his property rights. 
Petitioner does not, however, offer any valid justification for the late filing of his appeal.  Petitioner
merely cites the lame excuse that his counsel's assistant attorney must have mistaken the
handwritten received date of "1/23/95" on counsel's copy of the trial court's order denying petitioner's
motion for reconsideration as "1/25/95". Although the Court, under exceptional circumstances, has
30 

allowed late appeals in the interest of justice and equity, this only applies to highly meritorious cases
to prevent a grave injustice. That is not the case here.
31 

The allowance or disallowance of a motion to intervene is addressed to the sound discretion of the
court hearing the case. This discretion, once exercised, is not reviewable
32 

by certiorari or mandamus save in instances where such discretion is exercised in an arbitrary or

capricious manner. Petitioner has not shown that the trial court acted capriciously or arbitrarily. That
33 

the trial court initially allowed petitioner to intervene but subsequently reconsidered and withdrew its
permission does not prove, by itself, that the trial court acted in a manner warranting review.  This is
certainly not the first time a trial court initially allowed a motion for intervention and later reconsidered
and denied it. 34

The trial court had a valid reason to deny petitioner's intervention.  An intervention is ordinarily not
permitted if the prospective intervenor's rights can be fully protected in a separate proceeding. In 35 

this case, even if the trial court allowed it, petitioner's intervention in the action for quieting of title
would have been futile.

Reliefs Sought by Petitioner are Not Available

in an Action to Quiet Title

It is evident from most of the issues raised and the reliefs prayed for that petitioner's principal aim is
to overturn the 19 December 1983 Decision of RTC-Branch 138 ("RTC-Branch 138 Decision")
cancelling his title.  Petitioner seeks to set aside the RTC-Branch 138 Decision, to uphold the validity
of his title, and to annul the title held by the Spouses Galang.  To this end, petitioner impleaded
VRC, and the Municipality (now City), Treasurer and Register of Deeds of Parañaque in a third-party
complaint, alleging that these parties committed fraud and deprived petitioner of due process.
However, these issues – whether fraud tainted the proceedings before RTC-Branch 138, whether
the Treasurer of Parañaque notified petitioner of the public auction of the Property, and whether
there was denial of petitioner's right to due process – cannot be resolved in a proceeding for quieting
of title.  The only issue in an action to quiet title is whether there is a cloud on a title to real property
because of any instrument, record, claim, encumbrance or proceeding that has a prima
facie appearance of validity. 36

The issues petitioner raised would also necessarily require the trial court to review the decision of
another regional trial court.  This is plainly beyond the powers of the trial court.  Under the doctrine of
non-interference, a trial court has no authority to interfere with the proceedings of a court of equal
jurisdiction, much less to annul the final judgment of a co-equal court. The Court held
37  38 

in Metropolitan Bank & Trust Co. v. Alejo that an action for quieting of title is not the appropriate
39 

remedy where the action would require the court hearing it to modify or interfere with the judgment or
order of another co-equal court.

Even if it wanted to, the trial court could not declare the RTC-Branch 138 Decision void, since that
would be tantamount to annulling the decision of a co-equal court.  The jurisdiction to annul the
judgment of a regional trial court lies with the Court of Appeals, and not with another regional trial
40 

court.  The trial court also did not err when it recognized the auction sale of the Property, which
RTC-Branch 138 had already upheld.

The instant petition must also fail because it anchors petitioner's claim on a cancelled certificate of
title.  Petitioner's cancelled title cannot cast a cloud on the current title the Spouses Galang now
hold.  On 19 December 1983, RTC-Branch 138 cancelled TCT No. 435402 in its decision in Civil
Case No. 5801.  With the lapse of more than two decades, RTC-Branch 138's Decision has long
gained finality by operation of law.  A judgment becomes final upon the lapse of the reglementary
period to appeal if no appeal is perfected. Being final, the RTC-Branch 138 Decision is no longer
41 

subject to review by appeal.

What petitioner is barred from directly appealing, however, he seeks to overturn through an appeal
from another case heard by a different trial court.  Obviously, petitioner cannot do this. When a
judgment of a lower court becomes final and executory, it is no longer reviewable, directly or
indirectly, by a higher court, not even by the Supreme Court. 42

Moreover, as correctly pointed out by the Court of Appeals, a certificate of title is not subject to
collateral attack.  An attack is collateral when, in an action to obtain a different relief, an attack on the
judgment is nevertheless made as an incident in the action. Under the Property Registration
43 

Decree, titles issued under the Torrens system can only be altered, modified or cancelled in direct
proceedings in accordance with the law.44

In this case, petitioner raised the alleged nullity of TCT No. (86872) 22786 in his answer-in-
intervention to the suit the Spouses Galang filed to quiet title.  The petitioners in Villanueva v. Court
of Appeals also raised the supposed invalidity of respondents' titles in their answer to respondents'
45 

complaint for recovery of ownership.  The Court disallowed the defense on the ground that it was a
collateral attack on respondents' title, that is, an indirect challenge to the final judgment and decree
of registration that resulted in the issuance of the assailed title.   In Villanueva, the Court declared
that Section 48 of the Property Registration Decree required no less than a direct action for
reconveyance filed within the period provided by law. 46

Petitioner argues that these rules do not apply to him.  Citing Ferrer v. Bautista, petitioner alleges
47 

that the Spouses Galang's title is void ab initio because it originated from the allegedly void title
issued to VRC.  The Court held in Ferrer that a void title is susceptible to direct and collateral
attack. 48

Ferrer does not apply to the case at bar. The void title referred to in Ferrer was based on a free
patent issued by the Director of Lands over alluvial property.  The patent nullity of the assailed title
in Ferrer arose, not from fraud or deceit, but from the fact that the Bureau of Lands had no
jurisdiction over land that had passed to private ownership. 49

In this case, the trial court ordered the cancellation of petitioner's title and the issuance of a new title
to VRC. The trial court's decision has long attained finality. Regional trial courts exercise exclusive
original jurisdiction over all civil actions involving title to real property. The law authorizes regional
50 

trial courts, acting as land registration courts, to order the cancellation and issuance of certificates of
title.
51

Unlike in Ferrer, there is also insufficient evidence in the records to verify at this time petitioner's
allegations that RTC-Branch 138, the City Treasurer and Register of Deeds of Parañaque failed to
observe the legal requirements of notice and due process on tax sales of real property.  Worse,
petitioner anchors many of his arguments assailing the public auction of the Property on the
outmoded Assessment Law of 1939. Presidential Decree No. 464 had long superseded the
52 

Assessment Law, which was no longer the applicable law when the tax sale of the Property took
place in 1982. 53

Petitioner's allegations are better ventilated in a full-blown trial, and not in an action for quieting of
title, which operates under the rules on declaratory relief.  Petitioner's charge that the proceedings
and decision of RTC-Branch 138 were void because of alleged due process violations cannot be
resolved in a suit to quiet title.    The issue of whether a title was procured by falsification or fraud
should be raised in an action expressly instituted for the purpose. 54

Petitioner is Not an Indispensable Party

to the Action for Quieting of Title

An indispensable party is a party who has such an interest in the controversy or subject matter that a
final adjudication cannot be made, in his absence, without injuring or affecting that interest. A 55 

person is not an indispensable party if his interest in the controversy or subject matter is separable
from the interest of the other parties, so that he will not necessarily be injuriously affected by a
decree that does complete justice between the other parties. He is also not indispensable if his
56 

presence would merely permit complete relief between him and those already parties to the action or
will simply avoid multiple litigations.57

Petitioner, whose title RTC-Branch 138 cancelled, is not an indispensable party to the action for
quieting of title. The assailed decision quieting title in favor of the Spouses Galang has no
appreciable effect on petitioner's title.  Petitioner's title could still be cancelled with or without the trial
court's declaration that the Spouses Galang are the owners of the Property "at this time." 58

Further, the assailed decision does not bind petitioner.  The rules on quieting of title expressly
59 

provide that any declaration in a suit to quiet title shall not prejudice persons who are not parties to
the action.  Given that the trial court denied petitioner's intervention and struck it off from the records,
petitioner is not a party to the instant case.  Suits to quiet title are actions quasi in rem, and the
judgment in such proceedings is conclusive only between the parties to the action. 60
There is also no legal basis for petitioner's argument that the order declaring Gallego in default
rendered petitioner the ipso facto defendant of this case.  Petitioner could have but did not move to
substitute Gallego during the proceedings before the court a quo.

On a final note, the Court fully agrees with the Court of Appeals that petitioner is not without other
remedy.  Assuming petitioner can prove his allegations, petitioner is at the least entitled to recover
damages from the parties that defrauded or deprived him of due process.

WHEREFORE, we DENY the instant petition and AFFIRM the Decision of 22 July 1997 of the Court
of Appeals in CA-G.R. CV No. 43439.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, andAzcuna, JJ., concur.

Footnotes

Under Rule 45 of the Rules of Court.

1 

Penned by Associate Justice Romeo A. Brawner with Associate Justices Antonio M.

2 

Martinez and Lourdes K. Tayao-Jaguros concurring.

Penned by Judge Oscar B. Pimentel.

3 

Exhibit "F," Records, p. 365.

4 

Exhibit "F-1," Records, p. 367.

5 

Rollo, p. 87.
6 

Records, p. 1.
7 

Presided by Judge Salvador S. Tensuan.

8 

Records, p. 70.
9 

10 
Presided by Judge Salvador S. Abad Santos.
 THIRD DIVISION

G.R. No. 145391            August 26, 2002

AVELINO CASUPANAN and ROBERTO CAPITULO, petitioners,

vs.
MARIO LLAVORE LAROYA, respondent.

CARPIO, J.:

The Case

This is a petition for review on certiorari to set aside the Resolution 1 dated December 28, 1999
dismissing the petition for certiorari and the Resolution2 dated August 24, 2000 denying the motion
for reconsideration, both issued by the Regional Trial Court of Capas, Tarlac, Branch 66, in Special
Civil Action No. 17-C (99).

The Facts

Two vehicles, one driven by respondent Mario Llavore Laroya ("Laroya" for brevity) and the other
owned by petitioner Roberto Capitulo ("Capitulo" for brevity) and driven by petitioner Avelino
Casupanan ("Casupanan" for brevity), figured in an accident. As a result, two cases were filed with
the Municipal Circuit Trial Court ("MCTC" for brevity) of Capas, Tarlac. Laroya filed a criminal case
against Casupanan for reckless imprudence resulting in damage to property, docketed as Criminal
Case No. 002-99. On the other hand, Casupanan and Capitulo filed a civil case against Laroya for
quasi-delict, docketed as Civil Case No. 2089.

When the civil case was filed, the criminal case was then at its preliminary investigation stage.
Laroya, defendant in the civil case, filed a motion to dismiss the civil case on the ground of forum-
shopping considering the pendency of the criminal case. The MCTC granted the motion in the Order
of March 26, 1999 and dismissed the civil case.

On Motion for Reconsideration, Casupanan and Capitulo insisted that the civil case is a separate
civil action which can proceed independently of the criminal case. The MCTC denied the motion for
reconsideration in the Order of May 7, 1999. Casupanan and Capitulo filed a petition for certiorari
under Rule 65 before the Regional Trial Court ("Capas RTC" for brevity) of Capas, Tarlac, Branch
66,3 assailing the MCTC’s Order of dismissal.

The Trial Court’s Ruling

The Capas RTC rendered judgment on December 28, 1999 dismissing the petition for certiorari for
lack of merit. The Capas RTC ruled that the order of dismissal issued by the MCTC is a final order
which disposes of the case and therefore the proper remedy should have been an appeal. The
Capas RTC further held that a special civil action for certiorari is not a substitute for a lost appeal.
Finally, the Capas RTC declared that even on the premise that the MCTC erred in dismissing the
civil case, such error is a pure error of judgment and not an abuse of discretion.

Casupanan and Capitulo filed a Motion for Reconsideration but the Capas RTC denied the same in
the Resolution of August 24, 2000.

Hence, this petition.

The Issue

The petition premises the legal issue in this wise:

"In a certain vehicular accident involving two parties, each one of them may think and believe
that the accident was caused by the fault of the other. x x x [T]he first party, believing himself
to be the aggrieved party, opted to file a criminal case for reckless imprudence against the
second party. On the other hand, the second party, together with his operator, believing
themselves to be the real aggrieved parties, opted in turn to file a civil case for quasi-delict
against the first party who is the very private complainant in the criminal case." 4

Thus, the issue raised is whether an accused in a pending criminal case for reckless imprudence
can validly file, simultaneously and independently, a separate civil action for quasi-delict against the
private complainant in the criminal case.

The Court’s Ruling

Casupanan and Capitulo assert that Civil Case No. 2089, which the MCTC dismissed on the ground
of forum-shopping, constitutes a counterclaim in the criminal case. Casupanan and Capitulo argue
that if the accused in a criminal case has a counterclaim against the private complainant, he may file
the counterclaim in a separate civil action at the proper time. They contend that an action on quasi-
delict is different from an action resulting from the crime of reckless imprudence, and an accused in
a criminal case can be an aggrieved party in a civil case arising from the same incident. They
maintain that under Articles 31 and 2176 of the Civil Code, the civil case can proceed independently
of the criminal action. Finally, they point out that Casupanan was not the only one who filed the
independent civil action based on quasi-delict but also Capitulo, the owner-operator of the vehicle,
who was not a party in the criminal case.

In his Comment, Laroya claims that the petition is fatally defective as it does not state the real
antecedents. Laroya further alleges that Casupanan and Capitulo forfeited their right to question the
order of dismissal when they failed to avail of the proper remedy of appeal. Laroya argues that there
is no question of law to be resolved as the order of dismissal is already final and a petition for
certiorari is not a substitute for a lapsed appeal.

In their Reply, Casupanan and Capitulo contend that the petition raises the legal question of whether
there is forum-shopping since they filed only one action - the independent civil action for quasi-
delict against Laroya.

Nature of the Order of Dismissal

The MCTC dismissed the civil action for quasi-delict on the ground of forum-shopping under
Supreme Court Administrative Circular No. 04-94. The MCTC did not state in its order of
dismissal5 that the dismissal was with prejudice. Under the Administrative Circular, the order of
dismissal is without prejudice to refiling the complaint, unless the order of dismissal expressly states
it is with prejudice.6 Absent a declaration that the dismissal is with prejudice, the same is deemed
without prejudice. Thus, the MCTC’s dismissal, being silent on the matter, is a dismissal without
prejudice.

Section 1 of Rule 417 provides that an order dismissing an action without prejudice is not appealable.
The remedy of the aggrieved party is to file a special civil action under Rule 65. Section 1 of Rule 41
expressly states that "where the judgment or final order is not appealable, the aggrieved party may
file an appropriate special civil action under Rule 65." Clearly, the Capas RTC’s order dismissing the
petition for certiorari, on the ground that the proper remedy is an ordinary appeal, is erroneous.

Forum-Shopping

The essence of forum-shopping is the filing of multiple suits involving the same parties for the same
cause of action, either simultaneously or successively, to secure a favorable judgment. 8 Forum-
shopping is present when in the two or more cases pending, there is identity of parties, rights of
action and reliefs sought.9 However, there is no forum-shopping in the instant case because the law
and the rules expressly allow the filing of a separate civil action which can proceed independently of
the criminal action.

Laroya filed the criminal case for reckless imprudence resulting in damage to property based on the
Revised Penal Code while Casupanan and Capitulo filed the civil action for damages based on
Article 2176 of the Civil Code. Although these two actions arose from the same act or omission, they
have different causes of action. The criminal case is based on culpa criminal punishable under the
Revised Penal Code while the civil case is based on culpa aquiliana actionable under Articles 2176
and 2177 of the Civil Code. These articles on culpa aquiliana read:

"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. 2177. Responsibility for fault or negligence under the preceding article is entirely
separate and distinct from the civil liability arising from negligence under the Penal Code. But
the plaintiff cannot recover damages twice for the same act or omission of the defendant."

Any aggrieved person can invoke these articles provided he proves, by preponderance of evidence,
that he has suffered damage because of the fault or negligence of another. Either the private
complainant or the accused can file a separate civil action under these articles. There is nothing in
the law or rules that state only the private complainant in a criminal case may invoke these articles.

Moreover, paragraph 6, Section 1, Rule 111 of the 2000 Rules on Criminal Procedure ("2000 Rules"
for brevity) expressly requires the accused to litigate his counterclaim in a separate civil action, to
wit:

"SECTION 1. Institution of criminal and civil actions. – (a) x x x.

No counterclaim, cross-claim or third-party complaint may be filed by the accused in the

criminal case, but any cause of action which could have been the subject thereof may be
litigated in a separate civil action." (Emphasis supplied)
Since the present Rules require the accused in a criminal action to file his counterclaim in a separate
civil action, there can be no forum-shopping if the accused files such separate civil action.

Filing of a separate civil action

Section 1, Rule 111 of the 1985 Rules on Criminal Procedure ("1985 Rules" for brevity), as amended
in 1988, allowed the filing of a separate civil action independently of the criminal action provided the
offended party reserved the right to file such civil action. Unless the offended party reserved the civil
action before the presentation of the evidence for the prosecution, all civil actions arising from the
same act or omission were deemed "impliedly instituted" in the criminal case. These civil actions
referred to the recovery of civil liability ex-delicto, the recovery of damages for quasi-delict, and the
recovery of damages for violation of Articles 32, 33 and 34 of the Civil Code on Human Relations.

Thus, to file a separate and independent civil action for quasi-delict under the 1985 Rules, the
offended party had to reserve in the criminal action the right to bring such action. Otherwise, such
civil action was deemed "impliedly instituted" in the criminal action. Section 1, Rule 111 of the 1985
Rules provided as follows:

"Section 1. – Institution of criminal and civil actions. – When a criminal action is instituted, the
civil action for the recovery of civil liability is impliedly instituted with the criminal action,
unless the offended party waives the action, reserves his right to institute it separately, or
institutes the civil action prior to the criminal action.

Such civil action includes recovery of indemnity under the Revised Penal Code, and
damages under Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines arising
from the same act or omission of the accused.

A waiver of any of the civil actions extinguishes the others. The institution of, or the
reservation of the right to file, any of said civil actions separately waives the others.

The reservation of the right to institute the separate civil actions shall be made before the
prosecution starts to present its evidence and under circumstances affording the offended
party a reasonable opportunity to make such reservation.

In no case may the offended party recover damages twice for the same act or omission of
the accused.

x x x." (Emphasis supplied)

Section 1, Rule 111 of the 1985 Rules was amended on December 1, 2000 and now provides as
follows:

"SECTION 1. Institution of criminal and civil actions. – (a) When a criminal action is
instituted, the civil action for the recovery of civil liability arising from the offense
charged shall be deemed instituted with the criminal action unless the offended party
waives the civil action, reserves the right to institute it separately or institutes the civil action
prior to the criminal action.

The reservation of the right to institute separately the civil action shall be made before the
prosecution starts presenting its evidence and under circumstances affording the offended
party a reasonable opportunity to make such reservation.
 xxx

(b) x x x

Where the civil action has been filed separately and trial thereof has not yet commenced, it
may be consolidated with the criminal action upon application with the court trying the latter
case. If the application is granted, the trial of both actions shall proceed in accordance with
section 2 of this rule governing consolidation of the civil and criminal actions." (Emphasis
supplied)

Under Section 1 of the present Rule 111, what is "deemed instituted" with the criminal action is only
the action to recover civil liability arising from the crime or ex-delicto. All the other civil actions under
Articles 32, 33, 34 and 2176 of the Civil Code are no longer "deemed instituted," and may be filed
separately and prosecuted independently even without any reservation in the criminal action. The
failure to make a reservation in the criminal action is not a waiver of the right to file a separate and
independent civil action based on these articles of the Civil Code. The prescriptive period on the civil
actions based on these articles of the Civil Code continues to run even with the filing of the criminal
action. Verily, the civil actions based on these articles of the Civil Code are separate, distinct and
independent of the civil action "deemed instituted" in the criminal action. 10

Under the present Rule 111, the offended party is still given the option to file a separate civil action
to recover civil liability ex-delicto by reserving such right in the criminal action before the prosecution
presents its evidence. Also, the offended party is deemed to make such reservation if he files a
separate civil action before filing the criminal action. If the civil action to recover civil liability ex-
delicto is filed separately but its trial has not yet commenced, the civil action may be consolidated
with the criminal action. The consolidation under this Rule does not apply to separate civil actions
arising from the same act or omission filed under Articles 32, 33, 34 and 2176 of the Civil Code. 11

Suspension of the Separate Civil Action

Under Section 2, Rule 111 of the amended 1985 Rules, a separate civil action, if reserved in the
criminal action, could not be filed until after final judgment was rendered in the criminal action. If the
separate civil action was filed before the commencement of the criminal action, the civil action, if still
pending, was suspended upon the filing of the criminal action until final judgment was rendered in
the criminal action. This rule applied only to the separate civil action filed to recover liability ex-
delicto. The rule did not apply to independent civil actions based on Articles 32, 33, 34 and 2176 of
the Civil Code, which could proceed independently regardless of the filing of the criminal action.

The amended provision of Section 2, Rule 111 of the 2000 Rules continues this procedure, to wit:

"SEC. 2. When separate civil action is suspended. – After the criminal action has been
commenced, the separate civil action arising therefrom cannot be instituted until final
judgment has been entered in the criminal action.

If the criminal action is filed after the said civil action has already been instituted, the
latter shall be suspended in whatever stage it may be found before judgment on the
merits. The suspension shall last until final judgment is rendered in the criminal
action. Nevertheless, before judgment on the merits is rendered in the civil action, the same
may, upon motion of the offended party, be consolidated with the criminal action in the court
trying the criminal action. In case of consolidation, the evidence already adduced in the civil
action shall be deemed automatically reproduced in the criminal action without prejudice to
the right of the prosecution to cross-examine the witnesses presented by the offended party
 in the criminal case and of the parties to present additional evidence. The consolidated
criminal and civil actions shall be tried and decided jointly.

During the pendency of the criminal action, the running of the period of prescription of the
civil action which cannot be instituted separately or whose proceeding has been suspended
shall be tolled.

x x x." (Emphasis supplied)

Thus, Section 2, Rule 111 of the present Rules did not change the rule that the separate civil action,
filed to recover damages ex-delicto, is suspended upon the filing of the criminal action. Section 2 of
the present Rule 111 also prohibits the filing, after commencement of the criminal action, of a
separate civil action to recover damages ex-delicto.

When civil action may proceed independently

The crucial question now is whether Casupanan and Capitulo, who are not the offended parties in
the criminal case, can file a separate civil action against the offended party in the criminal case.
Section 3, Rule 111 of the 2000 Rules provides as follows:

"SEC 3. When civil action may proceed independently. - In the cases provided in Articles 32,
33, 34 and 2176 of the Civil Code of the Philippines, the independent civil action may be
brought by the offended party. It shall proceed independently of the criminal action and
shall require only a preponderance of evidence. In no case, however, may the offended party
recover damages twice for the same act or omission charged in the criminal action."
(Emphasis supplied)

Section 3 of the present Rule 111, like its counterpart in the amended 1985 Rules, expressly allows
the "offended party" to bring an independent civil action under Articles 32, 33, 34 and 2176 of the
Civil Code. As stated in Section 3 of the present Rule 111, this civil action shall proceed
independently of the criminal action and shall require only a preponderance of evidence. In no case,
however, may the "offended party recover damages twice for the same act or omission charged in
the criminal action."

There is no question that the offended party in the criminal action can file an independent civil action
for quasi-delict against the accused. Section 3 of the present Rule 111 expressly states that the
"offended party" may bring such an action but the "offended party" may not recover damages twice
for the same act or omission charged in the criminal action. Clearly, Section 3 of Rule 111 refers to
the offended party in the criminal action, not to the accused.

Casupanan and Capitulo, however, invoke the ruling in Cabaero vs. Cantos12 where the Court held
that the accused therein could validly institute a separate civil action for quasi-delict against the
private complainant in the criminal case. In Cabaero, the accused in the criminal case filed his
Answer with Counterclaim for malicious prosecution. At that time the Court noted the "absence of
clear-cut rules governing the prosecution on impliedly instituted civil actions and the necessary
consequences and implications thereof." Thus, the Court ruled that the trial court should confine
itself to the criminal aspect of the case and disregard any counterclaim for civil liability. The Court
further ruled that the accused may file a separate civil case against the offended party "after the
criminal case is terminated and/or in accordance with the new Rules which may be promulgated."
The Court explained that a cross-claim, counterclaim or third-party complaint on the civil aspect will
only unnecessarily complicate the proceedings and delay the resolution of the criminal case.
Paragraph 6, Section 1 of the present Rule 111 was incorporated in the 2000 Rules precisely to
address the lacuna mentioned in Cabaero. Under this provision, the accused is barred from filing a
counterclaim, cross-claim or third-party complaint in the criminal case. However, the same provision
states that "any cause of action which could have been the subject (of the counterclaim, cross-claim
or third-party complaint) may be litigated in a separate civil action." The present Rule 111 mandates
the accused to file his counterclaim in a separate civil actiosn which shall proceed independently of
the criminal action, even as the civil action of the offended party is litigated in the criminal action.

Conclusion

Under Section 1 of the present Rule 111, the independent civil action in Articles 32, 33, 34 and 2176
of the Civil Code is not deemed instituted with the criminal action but may be filed separately by the
offended party even without reservation. The commencement of the criminal action does not
suspend the prosecution of the independent civil action under these articles of the Civil Code. The
suspension in Section 2 of the present Rule 111 refers only to the civil action arising from the crime,
if such civil action is reserved or filed before the commencement of the criminal action.

Thus, the offended party can file two separate suits for the same act or omission. The first a criminal
case where the civil action to recover civil liability ex-delicto is deemed instituted, and the other a
civil case for quasi-delict - without violating the rule on non-forum shopping. The two cases can
proceed simultaneously and independently of each other. The commencement or prosecution of the
criminal action will not suspend the civil action for quasi-delict. The only limitation is that the offended
party cannot recover damages twice for the same act or omission of the defendant. In most cases,
the offended party will have no reason to file a second civil action since he cannot recover damages
twice for the same act or omission of the accused. In some instances, the accused may be insolvent,
necessitating the filing of another case against his employer or guardians.

Similarly, the accused can file a civil action for quasi-delict for the same act or omission he is
accused of in the criminal case. This is expressly allowed in paragraph 6, Section 1 of the present
Rule 111 which states that the counterclaim of the accused "may be litigated in a separate civil
action." This is only fair for two reasons. First, the accused is prohibited from setting up any
counterclaim in the civil aspect that is deemed instituted in the criminal case. The accused is
therefore forced to litigate separately his counterclaim against the offended party. If the accused
does not file a separate civil action for quasi-delict, the prescriptive period may set in since the
period continues to run until the civil action for quasi-delict is filed.

Second, the accused, who is presumed innocent, has a right to invoke Article 2177 of the Civil Code,
in the same way that the offended party can avail of this remedy which is independent of the criminal
action. To disallow the accused from filing a separate civil action for quasi-delict, while refusing to
recognize his counterclaim in the criminal case, is to deny him due process of law, access to the
courts, and equal protection of the law.

Thus, the civil action based on quasi-delict filed separately by Casupanan and Capitulo is proper.
The order of dismissal by the MCTC of Civil Case No. 2089 on the ground of forum-shopping is
erroneous.

We make this ruling aware of the possibility that the decision of the trial court in the criminal case
may vary with the decision of the trial court in the independent civil action. This possibility has
always been recognized ever since the Civil Code introduced in 1950 the concept of an independent
civil action under Articles 32, 33, 34 and 2176 of the Code. But the law itself, in Article 31 of the
Code, expressly provides that the independent civil action "may proceed independently of the
criminal proceedings and regardless of the result of the latter." In Azucena vs. Potenciano,13 the
Court declared:

"x x x. There can indeed be no other logical conclusion than this, for to subordinate the civil
action contemplated in the said articles to the result of the criminal prosecution — whether it
be conviction or acquittal — would render meaningless the independent character of the civil
action and the clear injunction in Article 31 that this action 'may proceed independently of the
criminal proceedings and regardless of the result of the latter.’"

More than half a century has passed since the Civil Code introduced the concept of a civil action
separate and independent from the criminal action although arising from the same act or omission.
The Court, however, has yet to encounter a case of conflicting and irreconcilable decisions of trial
courts, one hearing the criminal case and the other the civil action for quasi-delict. The fear of
conflicting and irreconcilable decisions may be more apparent than real. In any event, there are
sufficient remedies under the Rules of Court to deal with such remote possibilities.

One final point. The Revised Rules on Criminal Procedure took effect on December 1, 2000 while
the MCTC issued the order of dismissal on December 28, 1999 or before the amendment of the
rules. The Revised Rules on Criminal Procedure must be given retroactive effect considering the
well-settled rule that -

"x x x statutes regulating the procedure of the court will be construed as applicable to actions
pending and undetermined at the time of their passage. Procedural laws are retroactive in
that sense and to that extent."14

WHEREFORE, the petition for review on certiorari is hereby GRANTED. The Resolutions dated
December 28, 1999 and August 24, 2000 in Special Civil Action No. 17-C (99) are ANNULLED and
Civil Case No. 2089 is REINSTATED.

SO ORDERED.
 FIRST DIVISION

G.R. No. 162692, August 26, 2015

NILO V. CHIPONGIAN, Petitioner, v. VICTORIA BENITEZ-LIRIO, FEODOR

BENITEZ AGUILAR, AND THE COURT OF APPEALS, Respondents.

DECISION

BERSAMIN, J.:

This appeal seeks the review and reversal of the decision promulgated on October 30,
2002,1 whereby the Court of Appeals (CA) dismissed the petition for certiorari that the
petitioner had instituted to annul the dismissal by the trial court of his complaint-in-
intervention in Special Proceedings No. SP-797 entitled In the matter of the Intestate
Estate of Vicente O. Benitez, Petition for Letters of Administration. Victoria Benitez Lirio
and Feodor Benitez Aguilar, Petitioners.

Antecedents

The late Vicente Benitez was married to Isabel Chipongian, the petitioner's sister. Isabel
had predeceased Vicente, who died on November 13, 1989. The couple had no
offspring.2 On July 20, 1982, after the death of Isabel, Vicente and the petitioner had
executed a deed of extrajudicial settlement respecting the estate of Isabel, whereby the
latter waived all his rights to the estate of Isabel in favor of Vicente. 3 According to the
petitioner, however, Vicente executed an affidavit on the same date whereby he
affirmed that the waiver did not extend to the paraphernal properties of Isabel. 4

Upon the death of Vicente, Victoria Benitez Lirio (Victoria), a sister of Vicente, and
Feodor Benitez Aguilar (Feodor), a nephew of Vicente, initiated proceedings for the
settlement of the estate of Vicente in the Regional Trial Court on September 24, 1990
(RTC).5 In its order dated May 13, 1994,6 the RTC appointed Feodor the administrator
of Vicente's estate. On May 20, 1994,7 it issued the letters of administration to Feodor.

The petitioner intervened in Special Proceedings No. SP-797. 8 On May 27, 1994, he
sought the partial revocation of the May 13, 1994 order in order to exclude the
paraphernal properties of Isabel from inclusion in the estate of Vicente. 9 He cited the
affidavit of Vicente in support of the partial revocation.

Feodor countered with the request that he be allowed to continue to administer all the
properties left by Vicente, including the paraphernal properties of Isabel. 10

On June 8, 1994, the petitioner specifically moved for the exclusion of the paraphernal
properties of Isabel from Vicente's estate. However, he withdrew the motion even
before the RTC could rule on it. Instead, he filed a Motion for Leave to Intervene and to
Admit Complaint-in-Intervention.11

Respondents Victoria and Feodor opposed the complaint-in-intervention. 12

The RTC granted the Motion for Leave to Intervene and to Admit Complaint-in-
Intervention, and admitted the complaint-in-intervention of the petitioner. 13

Judgment of the RTC

On August 21, 1998, the RTC rendered judgment dismissing the complaint-in-
intervention, and ordering the costs of suit to be paid by the petitioner, 14 pertinently
holding:cralawlawlibrary

There is no dispute that the estate of the late Isabel Chipongian was extra-judicially
settled on July 20, 1982 by and between Vicente O. Benitez and Nilo V. Chipongian and
was published in the BAYANIHAN Weekly News on August 16, 23, and 30, 1982. The
herein intervenor actively participated in the execution of the extra-judicial settlement
of his sister's estate. As a matter of fact the intervenor therein "agreed x x x x x x to
quitclaim and waive all my rights to the estate left by my declared sister Isabel
Chipongian and I hereby adjudicated them in favor of my brother-in-law Vicente O.
Benitez" (Exh. 23-B)

Section 4, Rule 74 of the Rules, provides for a limitation of 2 years after the settlement
and distribution of an estate in accordance with either Section 1 or Section 2 of the
same Rule, within which an heir or other person deprived of his lawful participation in
the estate may compel the settlement of the said estate in the Courts for the purpose
of satisfying such lawful participation (Tinatan v. Serilla, 54 O.G. p. 6080 9/15/58). The
intervenor took part and had knowledge of the extra-judicial settlement of the estate
and is therefore bound thereby. If he was indeed deprived of his lawful share or right in
his sister's estate, it comes as a surprise why it took him more than 12 years assert the
purported affidavit allegedly executed in his favor by Vicente O. Benitez.

Careful note was taken of the fact that the purported affidavit of Vicente O. Benitez in
favor of the herein intervenor was executed simultaneously with the deed of extra-
judicial settlement of Isabel Chipongian's estate which was published but the affidavit
was not. No reason was advanced by the intervenor why Vicente O. Benitez's affidavit
was not published and why it was only after 12 long years that intervenor brought it
out.

It is well-settled that the negligence or omission to assert a right within a reasonable

time warrants not only a presumption that the party entitled to assert it either had
abandoned it or declined to assert it but also casts doubt on the validity of the claim of
ownership. Such neglect to assert a right taken in conjunction with the lapse of time
more or less great and other circumstances causing prejudice to the adverse party
operates as a bar in a Court of equity (Guerrero v. CA, 126 SCRA 109).

WHEREFORE, on the foregoing premises, the complaint in intervention is hereby

dismissed with costs. The petitioner's counterclaim is also dismissed.
SO ORDERED.15
chanrobleslaw

The petitioner moved for the reconsideration of the judgment, 16 but the RTC denied
the Motion for Reconsideration on March 8, 1999.17

Thus, on March 19, 1999, the petitioner filed a notice of appeal. 18

On March 30, 1999, the RTC denied due course to the notice of appeal for having been
filed beyond the reglementary period.19

On April 19, 1999, the petitioner filed a Motion for Reconsideration vis-a-vis the order
denying due course to his notice of appeal.20

On July 5, 1999, the RTC issued its order whereby it conceded that the petitioner had
timely filed the notice of appeal, but still denied the Motion for Reconsideration  on the
ground that he had not perfected his appeal because of his failure to pay the appellate
court docket fees.21

On July 26, 1999, the petitioner brought his Motion to Set Aside  the July 5, 1999 order
denying his Motion for Reconsideration.22

On August 13, 1999, the RTC denied the Motion to Set Aside.23

Decision of the CA

On October 26, 1999, the petitioner instituted his petition for certiorari in the
CA,24 alleging that the RTC had committed grave abuse of discretion amounting to lack
or excess of jurisdiction in dismissing his appeal, and denying his Motion for
Reconsideration. He averred that on March 19, 1999, he filed the notice of
appeal;25 that he paid the appellate court docket fees on March 31, 1999; 26 that the
RTC denied due course to the notice of appeal on the ground that it had been filed
beyond the reglementary period; that he thus filed his Motion for Reconsideration
against the order denying due course;27 that on July 5, 1999, the RTC issued its order
whereby it conceded that the petitioner had timely filed the notice of appeal, but still
denied the Motion for Reconsideration on the ground that he had not perfected his
appeal because of his failure to pay the appellate court docket fees; 28 that he filed
his Motion to Set Aside Order, appending thereto the copies of the official receipts of
the payment of the appellate court docket fees;29 that through the order of August 13,
1999, the RTC still denied the Motion to Set Aside Order, a copy of which order was
received by his counsel on August 27, 1999;30 that his last day to bring the special civil
action for certiorari was on October 26 1999, the 60th day from such date; and that
there was no appeal, or any plain, speedy and adequate remedy in the ordinary course
of law.31

On October 30, 2002, the CA dismissed the petition for certiorari,32 opining thusly: cralawlawlibrary

The Supreme Court has time and again stressed that the perfection of appeals in the
manner and within the period permitted by law is not only mandatory but jurisdictional.
The failure to perfect an appeal renders the decision of the trial court final and
executory. [Bank of America, NT & SA v. Gerochi, Jr., 230 SCRA 9 (1994) citing Alto
Sales Corp. v. IAC, 197 SCRA 618 (1991), Falcon Mfg. v. NLRC, 199 SCRA 814 (1991),
Kabushin Kaisha Isetan v. IAC, 203 SCRA 583 (1991)]

This rule is founded upon the principle that the right to appeal is not part of due
process of law but is a mere statutory privilege to be exercised only in the manner and
in accordance with the provisions of the law. [Bello v. Fernando, 4 SCRA 135 (1962);
Borre v. Court of Appeals, 158 SCRA 660 (1998); Pedrosa v. Hill, 257 SCRA 373
(1996); People v. Esparas, 260 SCRA 539 (1996)]

Petitioner paid the appeal fees only on March 31, 1999, but as admitted by him in his
Motion for Reconsideration (Rollo, p. 61), the last day to perfect his appeal was on
August 21, 1998. (Rollo, p. 68) In a long line of cases, the Supreme Court has held that
failure to comply with the requirement for payment on time of the appeal fees renders
the decision final. (Republic of the Philippines vs. Court of Appeals, 322 SCRA at 90;
Pedrosa vs. Hill, 257 SCRA 373; Luna vs. NLRC, 270 SCRA 227) We see no compelling
reason to depart from this rule.

We find no further need to rule on the other assigned error. Suffice it to state that the
respondent court acted pursuant to law and established jurisprudence; hence, did not
commit any abuse of discretion.

WHEREFORE, for lack of merit, the petition is DISMISSED.

SO ORDERED.33
chanrobleslaw

On November 28, 2002, the petitioner sought reconsideration, 34 but the CA denied his
Motion for Reconsideration on March 9, 2004.35

Issues

Hence, this appeal, whereby the petitioner contends that the CA gravely abused its
discretion in dismissing his petition for certiorari assailing the dismissal of his
complaint-in-intervention and the denial of due course to his notice of appeal by the
RTC on the ground of the late payment of the appellate court docket fees. He argues
that he should not be deprived of his right to appeal solely on the basis of the late
payment of the appellate court docket fees.36

In contrast, respondents Victoria and Feodor seek the denial of the petition for review
because the petitioner did not file a record on appeal, 37 as mandated under Section 2(a)
Rule 41 of the Rules of Court.

In his reply to the respondents' comment, 38 the petitioner submits: cralawlawlibrary

x x x It is to be noted that the appeal was from the decision of the trial court to dismiss
petitioner's complaint-in-intervention and not 'the final order or judgment rendered in
the case', obviously referring to the main case, that is, the intestate estate case. Since
the intervention was not an independent proceeding but only ancillary or supplemental
to the main case, the rule on multiple appeals does not apply and the filing of a record
on appeal is not a pre-requisite to the acceptance and consideration of the appeal by
the appellate court.
chanrobleslaw
 Ruling of the Court

The appeal lacks merit.

Intervention is "a remedy by which a third party, not originally impleaded in the
proceedings, becomes a litigant therein to enable him, her or it to protect or preserve a
right or interest which may be affected by such proceedings." 39 If an intervention makes
a third party a litigant in the main proceedings, his pleading-in-intervention should form
part of the main case.  Accordingly, when the petitioner intervened in Special
Proceedings No. SP-797, his complaint-in-intervention, once admitted by the RTC,
became part of the main case, rendering any final disposition thereof subject to the
rules specifically applicable to special proceedings, including Rule 109 of the Rules of
Court, which deals with appeals in special proceedings.

Section 1 of Rule 41 enunciates the final judgment  rule by providing that an appeal

"may be taken from a judgment or final order that completely disposes of the case, or
of a particular matter therein when declared by these Rules to be appealable." In the
context of the  final judgment rule, Section 1 of Rule 109 does not limit the appealable
orders and judgments in special proceedings to the final order or judgment rendered in
the main case, but extends the remedy of appeal to other orders or dispositions that
completely determine a particular matter in the case, to wit: cralawlawlibrary

Rule 109. - Appeals in Special Proceedings

Section 1. Orders or judgments from which appeals may be taken.  - An interested

person may appeal in special proceedings from an order or judgment rendered by a
Court of First Instance or a Juvenile and Domestic Relations Court, where such order or
judgment: chanRoblesvirtualLawlibrary

(a) Allows or disallows a will; ChanRoblesVirtualawlibrary

(b) Determines who are the lawful heirs of a deceased person, or the distributive share
of the estate to which such person is entitled; ChanRoblesVirtualawlibrary

(c) Allows or disallows, in whole or in part, any claim against the estate of a
deceased person, or any claim presented on behalf of the estate in offset to a
claim against it;

(d) Settles the account of an executor, administrator, trustee or guardian; ChanRoblesVirtualawlibrary

(e)  Constitutes, in proceedings relating to the settlement of the estate of a

deceased person, or the administration of a trustee or guardian, a final
determination in the lower court of the rights of the party appealing, except
that no appeal shall be allowed from the appointment of a special
administrator; and

(f) Is the final order or judgment rendered in the case, and affects the substantial rights
of the person appealing, unless it be an order granting or denying a motion for a new
trial or for reconsideration. chanrobleslaw

The dismissal of the petitioner's intervention constituted "a final determination in the
lower court of the rights of the party appealing," that is, his right in the paraphernal
properties of his deceased sister. As such, it fell under paragraph (c) of Section
1, supra, because it had the effect of disallowing his claim against the estate of Vicente,
as well as under paragraph (e) of Section 1, supra, because it was a final determination
in the trial court of his intervention. Conformably with either or both paragraphs, which
are boldly underscored above for easier reference, the dismissal was the proper subject
of an appeal in due course by virtue of its nature of completely disposing of his
intervention.

The proper mode of appealing a judgment or final order in special proceedings is by

notice of appeal and record on appeal. This is pursuant to Section 2(a), Rule 41 of
the Rules of Court, viz.: cralawlawlibrary

Section 2. Modes of appeal. -

(a) Ordinary appeal. - The appeal to the Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a
notice of appeal with the court which rendered the judgment or final order appealed
from and serving a copy thereof upon the adverse party. No record on appeal shall
be required except in special proceedings and other cases of multiple or
separate appeals where the law or these Rules so require. In such cases, the
record on appeal shall be filed and served in like manner.

xxxx
chanrobleslaw

Under Section 3 of Rule 41, a party who wants to appeal a judgment or final order in
special proceedings has 30 days from notice of the judgment or final order within which
to perfect an appeal because he will be filing not only a notice of appeal but also a
record on appeal that will require the approval of the trial court with notice to the
adverse party, to wit: cralawlawlibrary

Section 3. Period of ordinary appeal. - The appeal shall be taken within fifteen (15)
days from notice of the judgment or final order appealed from. Where a record on
appeal is required, the appellant shall file a notice of appeal and a record on
appeal within thirty (30) days from notice of judgment or final order. However,
an appeal in habeas corpus cases shall be taken within forty-eight (48) hours from
notice of the judgment or fmal order appealed from.

The period of appeal shall be interrupted by a timely motion for new trial or
reconsideration. No motion for extension of time to file a motion for new trial or
reconsideration shall be allowed, (n) (bold emphasis supplied) chanrobleslaw

For the petitioner, therefore, the period for perfecting the appeal by record on appeal
was 30 days from notice of the final order dismissing the intervention. The start of the
period of 30 days happened on September 18, 1998, the date when his counsel
received the decision dismissing his intervention. However, the entire time from the
filing of his Motion for Reconsideration on October 2, 1998 until his receipt of the denial
of the Motion for Reconsideration  on March 18, 1999 should be deducted from the
reckoning of the period to perfect his appeal. He filed the notice of appeal on March 19,
1999, and paid the appellate court docket fees on March 31, 1999. 40 Initially, the RTC
denied due course to the notice of appeal on the ground that it had been filed beyond
the reglementary period; hence, the petitioner filed his Motion for
Reconsideration against the order denying due course.41 On July 5, 1999, the RTC
issued its order whereby it conceded that the petitioner had timely filed the notice of
appeal, but still denied the Motion for Reconsideration on the ground that he had not
perfected his appeal because of his failure to pay the appellate court docket
fees.42 Hence, he filed a Motion to Set Aside Order, to which he appended the copies of
the official receipts of the payment of the appellate court docket fees. 43 Nonetheless, on
August 13, 1999, the RTC denied the Motion to Set Aside Order, and a copy of the
order of denial was received by his counsel on August 27, 1999. 44

In Lebin v. Mirasol,45 the Court has discussed the justification for requiring the record
on appeal in appeals in special proceedings, viz.: cralawlawlibrary

The changes and clarifications recognize that appeal is neither a natural nor a
constitutional right, but merely statutory, and the implication of its statutory character
is that the party who intends to appeal must always comply with the procedures and
rules governing appeals, or else the right of appeal may be lost or squandered.

As the foregoing rules further indicate, a judgment or final order in special proceedings
is appealed by record on appeal. A judgment or final order determining and terminating
a particular part is usually appealable, because it completely disposes of a particular
matter in the proceeding, unless otherwise declared by the Rules of Court. The
ostensible reason for requiring a record on appeal instead of only a notice of appeal is
the multipart nature of nearly all special proceedings, with each part susceptible of
being finally determined and terminated independently of the other parts. An appeal by
notice of appeal is a mode that envisions the elevation of the original records to the
appellate court as to thereby obstruct the trial court in its further proceedings regarding
the other parts of the case. In contrast, the record on appeal enables the trial court to
continue with the rest of the case because the original records remain with the trial
court even as it affords to the appellate court the full opportunity to review and decide
the appealed matter.

xxxx

The elimination of the record on appeal under Batas Pambansa Blg. 129  made feasible
the shortening of the period of appeal from the original 30 days to only 15 days from
notice of the judgment or final order. Section 3, Rule 41 of the Rules of Court, retains
the original 30 days as the period for perfecting the appeal by record on appeal to take
into consideration the need for the trial court to approve the record on appeal. Within
that 30-day period a party aggrieved by a judgment or final order issued in special
proceedings should perfect an appeal by filing both a notice of appeal and a record on
appeal in the trial court, serving a copy of the notice of appeal and a record on appeal
upon the adverse party within the period; in addition, the appealing party shall pay
within the period for taking an appeal to the clerk of court that rendered the appealed
judgment or final order the full amount of the appellate court docket and other lawful
fees. A violation of these requirements for the timely perfection of an appeal by record
on appeal, or the non-payment of the full amount of the appellate court docket and
other lawful fees to the clerk of the trial court may be a ground for the dismissal of the
appeal.46chanrobleslaw

Considering that the petitioner did not submit a record on appeal in accordance with
Section 3 of Rule 41, he did not perfect his appeal of the judgment dismissing his
intervention. As a result, the dismissal became final and immutable. He now has no one
to blame but himself. The right to appeal, being statutory in nature, required strict
compliance with the rules regulating the exercise of the right. As such, his perfection of
his appeal within the prescribed period was mandatory and jurisdictional, and his failure
to perfect the appeal within the prescribed time rendered the judgment final and
beyond review on appeal. Indeed, we have fittingly pronounced in Lebin v. Mirasol: cralawlawlibrary

In like manner, the perfection of an appeal within the period laid down by law is
mandatory and jurisdictional, because the failure to perfect the appeal within the time
prescribed by the Rules of Court causes the judgment or final order to become final as
to preclude the appellate court from acquiring the jurisdiction to review the judgment or
final order. The failure of the petitioners and their counsel to file the record on appeal
on time rendered the orders of the RTC final and unappealable. Thereby, the appellate
court lost the jurisdiction to review the challenged orders, and the petitioners were
precluded from assailing the orders.47 chanrobleslaw

In view of the foregoing, the petitioner lost his right to appeal through his failure to file
the record on appeal, and rendered the dismissal of his intervention final and
immutable. With this outcome, we no longer need to dwell on the denial of due course
to his notice of appeal because of the late payment of the appellate court docket fees.

WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals promulgated

on October 30, 2002 subject to the foregoing clarification on the correct justification for
the dismissal of the appeal being upon the petitioner's failure to perfect his appeal in
accordance with Section 2(a) and Section 3 of Rule 41 of the Rules of
Court; and ORDERS the petitioner to pay the costs of suit.

SO ORDERED. chanroblesvirtuallawlibrary
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 185595               January 9, 2013

MA. CARMINIA C. CALDERON represented by her Attorney-In-Fact, Marycris V.

Baldevia, Petitioner,
vs.
JOSE ANTONIO F. ROXAS and COURT OF APPEALS, Respondents.

DECISION

VILLARAMA, JR., J.:

Before us is a petition for review on certiorari under Rule 45 assailing the Decision 1 dated September
9, 2008 and Resolution2 dated December 15, 2008 of the Court of Appeals (CA) in CA-G.R. CV No.
85384. The CA affirmed the Orders dated March 7, 2005 and May 4, 2005 of the Regional Trial
Court (RTC) of Parañaque City, Branch 260 in Civil Case No. 97-0608.

Petitioner Ma. Carminia C. Calderon and private respondent Jose Antonio F. Roxas, were married
on December 4, 1985 and their union produced four children. On January 16, 1998, petitioner filed
an Amended Complaint3 for the declaration of nullity of their marriage on the ground of psychological
incapacity under Art. 36 of the Family Code of the Philippines.

On May 19, 1998, the trial court issued an Order 4 granting petitioner’s application for support
pendente lite. Said order states in part:

…Accordingly, the defendant is hereby ordered to contribute to the support of the above-named
minors, (aside from 50% of their school tuition fees which the defendant has agreed to defray, plus
expenses for books and other school supplies), the sum of P42,292.50 per month, effective May 1,
1998, as his share in the monthly support of the children, until further orders from this Court. The first
monthly contribution, i.e., for the month of May 1998, shall be given by the defendant to the plaintiff
within five (5) days from receipt of a copy of this Order. The succeeding monthly contributions of
P42,292.50 shall be directly given by the defendant to the plaintiff without need of any demand,
within the first five (5) days of each month beginning June 1998. All expenses for books and other
school supplies shall be shouldered by the plaintiff and the defendant, share and share alike. Finally,
it is understood that any claim for support-in-arrears prior to May 1, 1998, may be taken up later in
the course of the proceedings proper.

xxxx

SO ORDERED.5

The aforesaid order and subsequent orders for support pendente lite were the subject of G.R. No.
139337 entitled "Ma. Carminia C. Roxas v. Court of Appeals and Jose Antonio F. Roxas" decided by
this Court on August 15, 2001. 6 The Decision in said case declared that "the proceedings and orders
issued by the trial court in the application for support pendente lite (and the main complaint for
annulment of marriage) in the re-filed case, that is, in Civil Case No. 97-0608 were not rendered null
and void by the omission of a statement in the certificate of non-forum shopping regarding the prior
filing and dismissal without prejudice of Civil Case No. 97-0523 which involves the same parties."
The assailed orders for support pendente lite were thus reinstated and the trial court resumed
hearing the main case.

On motion of petitioner’s counsel, the trial court issued an Order dated October 11, 2002 directing
private respondent to give support in the amount of P42,292.50 per month starting April 1, 1999
pursuant to the May 19, 1998 Order.7

On February 11, 2003, private respondent filed a Motion to Reduce Support citing, among other
grounds, that the P42,292.50 monthly support for the children as fixed by the court was even higher
than his then P20,800.00 monthly salary as city councilor. 8

After hearing, the trial court issued an Order9 dated March 7, 2005 granting the motion to reduce
support and denying petitioner’s motion for spousal support, increase of the children’s monthly
support pendente lite and support-in-arrears. The trial court considered the following circumstances
well-supported by documentary and testimonial evidence: (1) the spouses’ eldest child, Jose
Antonio, Jr. is a Sangguniang Kabataan Chairman and is already earning a monthly salary; (2) all
the children stay with private respondent on weekends in their house in Pasay City; (3) private
respondent has no source of income except his salary and benefits as City Councilor; (4) the
voluminous documents consisting of official receipts in payment of various billings including school
tuition fees, private tutorials and purchases of children’s school supplies, personal checks issued by
private respondent, as well as his own testimony in court, all of which substantiated his claim that he
is fulfilling his obligation of supporting his minor children during the pendency of the action; (5) there
is no proof presented by petitioner that she is not gainfully employed, the spouses being both
medical doctors; (6) the unrebutted allegation of private respondent that petitioner is already in the
United States; and (7) the alleged arrearages of private respondent was not substantiated by
petitioner with any evidence while private respondent had duly complied with his obligation as
ordered by the court through his overpayments in other aspects such as the children’s school tuition
fees, real estate taxes and other necessities.

Petitioner’s motion for partial reconsideration of the March 7, 2005 Order was denied on May 4,
2005.10

On May 16, 2005, the trial court rendered its Decision11 in Civil Case No. 97-0608 decreeing thus:

WHEREFORE, judgment is hereby rendered declaring (sic):

1. Declaring null and void the marriage between plaintiff Ma.Carmina C. Roxas and defendant Jose
Antonio Roxas solemnized on December 4, 1985 at San Agustin Convent, in Manila. The Local Civil
Registrar of Manila is hereby ordered to cancel the marriage contract of the parties as appearing in
the Registry of Marriage as the same is void;

2. Awarding the custody of the parties’ minor children Maria Antoinette Roxas, Julian Roxas and
Richard Roxas to their mother herein petitioner, with the respondent hereby given his visitorial and
or custodial rights at [sic] the express conformity of petitioner.

3. Ordering the respondent Jose Antonio Roxas to provide support to the children in the amount of
P30,000.00 a month, which support shall be given directly to petitioner whenever the children are in
her custody, otherwise, if the children are in the provisional custody of respondent, said amount of
support shall be recorded properly as the amounts are being spent. For that purpose the respondent
shall then render a periodic report to petitioner and to the Court to show compliance and for
monitoring. In addition, the respondent is ordered to support the proper schooling of the children
providing for the payment of the tuition fees and other school fees and charges including
transportation expenses and allowances needed by the children for their studies.

4. Dissolving the community property or conjugal partnership property of the parties as the case may
be, in accordance with law.

Let copies of this decision be furnished the Office of the Solicitor General, the Office of the City
Prosecutor, Paranaque City, and the City Civil Registrar of Paranaque City and Manila.

SO ORDERED.12

On June 14, 2005, petitioner through counsel filed a Notice of Appeal from the Orders dated March
7, 2005 and May 4, 2005.

In her appeal brief, petitioner emphasized that she is not appealing the Decision dated May 16, 2005
which had become final as no appeal therefrom had been brought by the parties or the City
Prosecutor or the Solicitor General. Petitioner pointed out that her appeal is "from the RTC Order
dated March 7, 2005, issued prior to the rendition of the decision in the main case", as well as the
May 4, 2005 Order denying her motion for partial reconsideration. 13

By Decision dated September 9, 2008, the CA dismissed the appeal on the ground that granting the
appeal would disturb the RTC Decision of May 16, 2005 which had long become final and executory.
The CA further noted that petitioner failed to avail of the proper remedy to question an interlocutory
order.

Petitioner’s motion for reconsideration was likewise denied by the CA.

Hence, this petition raising the following issues:

A. DID THE CA COMMIT A GRAVE ABUSE OF DISCRETION and/or REVERSIBLE

ERROR WHEN IT RULED THAT THE RTC ORDERS DATED MARCH 7, 2005 AND MAY 4,
2005 ARE MERELY INTERLOCUTORY?

B. DID THE CA COMMIT A GRAVE ABUSE OF DISCRETION and/or REVERSIBLE

ERROR WHEN IT DISMISSED OUTRIGHT THE APPEAL FROM SAID RTC ORDERS,
WHEN IT SHOULD HAVE DECIDED THE APPEAL ON THE MERITS? 14

The core issue presented is whether the March 7, 2005 and May 4, 2005 Orders on the matter of
support pendente lite are interlocutory or final.

This Court has laid down the distinction between interlocutory and final orders, as follows:

x x x A "final" judgment or order is one that finally disposes of a case, leaving nothing more to be
done by the Court in respect thereto, e.g., an adjudication on the merits which, on the basis of the
evidence presented at the trial, declares categorically what the rights and obligations of the parties
are and which party is in the right; or a judgment or order that dismisses an action on the ground, for
instance, of res judicata or prescription. Once rendered, the task of the Court is ended, as far as
deciding the controversy or determining the rights and liabilities of the litigants is concerned. Nothing
more remains to be done by the Court except to await the parties’ next move (which among others,
may consist of the filing of a motion for new trial or reconsideration, or the taking of an appeal) and
ultimately, of course, to cause the execution of the judgment once it becomes "final" or, to use the
established and more distinctive term, "final and executory."

xxxx

Conversely, an order that does not finally dispose of the case, and does not end the Court’s task of
adjudicating the parties’ contentions and determining their rights and liabilities as regards each
other, but obviously indicates that other things remain to be done by the Court, is "interlocutory" e.g.,
an order denying a motion to dismiss under Rule 16 of the Rules, or granting a motion for extension
of time to file a pleading, or authorizing amendment thereof, or granting or denying applications for
postponement, or production or inspection of documents or things, etc. Unlike a "final" judgment or
order, which is appealable, as above pointed out, an "interlocutory" order may not be questioned on
appeal except only as part of an appeal that may eventually be taken from the final judgment
rendered in the case.15 [Emphasis supplied]

The assailed orders relative to the incident of support pendente lite and support in arrears, as the
term suggests, were issued pending the rendition of the decision on the main action for declaration
of nullity of marriage, and are therefore interlocutory. They did not finally dispose of the case nor did
they consist of a final adjudication of the merits of petitioner’s claims as to the ground of
psychological incapacity and other incidents as child custody, support and conjugal assets.

The Rules of Court provide for the provisional remedy of support pendente lite which may be availed
of at the commencement of the proper action or proceeding, or at any time prior to the judgment or
final order.16 On March 4, 2003, this Court promulgated the Rule on Provisional Orders 17 which shall
govern the issuance of provisional orders during the pendency of cases for the declaration of nullity
of marriage, annulment of voidable marriage and legal separation. These include orders for spousal
support, child support, child custody, visitation rights, hold departure, protection and administration
of common property.

Petitioner contends that the CA failed to recognize that the interlocutory aspect of the assailed
orders pertains only to private respondent’s motion to reduce support which was granted, and to her
own motion to increase support, which was denied. Petitioner points out that the ruling on support in
arrears which have remained unpaid, as well as her prayer for reimbursement/payment under the
May 19, 1998 Order and related orders were in the nature of final orders assailable by ordinary
appeal considering that the orders referred to under Sections 1 and 4 of Rule 61 of the Rules of
Court can apply only prospectively. Thus, from the moment the accrued amounts became due and
demandable, the orders under which the amounts were made payable by private respondent have
ceased to be provisional and have become final.

We disagree.

The word interlocutory refers to something intervening between the commencement and the end of
the suit which decides some point or matter but is not a final decision of the whole controversy. 18 An
interlocutory order merely resolves incidental matters and leaves something more to be done to
resolve the merits of the case. In contrast, a judgment or order is considered final if the order
disposes of the action or proceeding completely, or terminates a particular stage of the same
action.19 Clearly, whether an order or resolution is final or interlocutory is not dependent on
compliance or non-compliance by a party to its directive, as what petitioner suggests. It is also
important to emphasize the temporary or provisional nature of the assailed orders.
Provisional remedies are writs and processes available during the pendency of the action which may
be resorted to by a litigant to preserve and protect certain rights and interests therein pending
rendition, and for purposes of the ultimate effects, of a final judgment in the case. They are
provisional because they constitute temporary measures availed of during the pendency of the
action, and they are ancillary because they are mere incidents in and are dependent upon the result
of the main action.20 The subject orders on the matter of support pendente lite are but an incident to
the main action for declaration of nullity of marriage.

Moreover, private respondent’s obligation to give monthly support in the amount fixed by the RTC in
the assailed orders may be enforced by the court itself, as what transpired in the early stage of the
proceedings when the court cited the private respondent in contempt of court and ordered him
arrested for his refusal/failure to comply with the order granting support pendente lite. 21 A few years
later, private respondent filed a motion to reduce support while petitioner filed her own motion to
increase the same, and in addition sought spousal support and support in arrears. This fact
underscores the provisional character of the order granting support pendente lite. Petitioner’s theory
that the assailed orders have ceased to be provisional due to the arrearages incurred by private
respondent is therefore untenable. 1âwphi1

Under Section 1, Rule 41 of the 1997 Revised Rules of Civil Procedure, as amended, appeal from
interlocutory orders is not allowed. Said provision reads:

SECTION 1. Subject of appeal. - An appeal may be taken from a judgment or final order that
completely disposes of the case, or of a particular matter therein when declared by these Rules to
be appealable.

No appeal may be taken from:

(a) An order denying a motion for new trial or reconsideration;

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

(c) An interlocutory order;

(d) An order disallowing or dismissing an appeal;

(e) An order denying a motion to set aside a judgment by consent, confession or

compromise on the ground of fraud, mistake or duress, or any other ground vitiating consent;

(f) An order of execution;

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

(h) An order dismissing an action without prejudice;

In all the above instances where the judgment or final order is not appealable, the aggrieved party
may file an appropriate special civil action under Rule 65. (Emphasis supplied.)

The remedy against an interlocutory order not subject of an appeal is an appropriate special civil
action under Rule 65 provided that the interlocutory order is rendered without or in excess of
jurisdiction or with grave abuse of discretion. Having chosen the wrong remedy in questioning the
subject interlocutory orders of the RTC, petitioner's appeal was correctly dismissed by the CA.

WHEREFORE, the petition for review on certiorari is DENIED, for lack of merit. The Decision dated
September 9, 2008 and Resolution dated December 15, 2008 of the Court of Appeals in CA-G.R.
CV No. 85384 are AFFIRMED.

With costs against the petitioner.

SO ORDERED.

MARTIN S. VILLARAMA, JR.

Associate Justice
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 156407               January 15, 2014

THELMA M. ARANAS, Petitioner,
vs.
TERESITA V. MERCADO, FELIMON V. MERCADO, CARMENCITA M. SUTHERLAND, RICHARD
V. MERCADO, MA. TERESITA M. ANDERSON, and FRANKLIN L. MERCADO, Respondents.

DECISION

BERSAMIN, J.:

The probate court is authorized to determine the issue of ownership of properties for purposes of
their inclusion or exclusion from the inventory to be submitted by the administrator, but its
determination shall only be provisional unless the interested parties are all heirs of the decedent, or
the question is one of collation or advancement, or the parties consent to the assumption of
jurisdiction by the probate court and the rights of third parties are not impaired. Its jurisdiction
extends to matters incidental or collateral to the settlement and distribution of the estate, such as the
determination of the status of each heir and whether property included in the inventory is the
conjugal or exclusive property of the deceased spouse.

Antecedents

Emigdio S. Mercado (Emigdio) died intestate on January 12, 1991, survived by his second wife,
Teresita V. Mercado (Teresita), and their five children, namely: Allan V. Mercado, Felimon V.
Mercado, Carmencita M. Sutherland, Richard V. Mercado, and Maria Teresita M. Anderson; and his
two children by his first marriage, namely: respondent Franklin L. Mercado and petitioner Thelma M.
Aranas (Thelma).

Emigdio inherited and acquired real properties during his lifetime. He owned corporate shares in
Mervir Realty Corporation (Mervir Realty) and Cebu Emerson Transportation Corporation (Cebu
Emerson). He assigned his real properties in exchange for corporate stocks of Mervir Realty, and
sold his real property in Badian, Cebu (Lot 3353 covered by Transfer Certificate of Title No. 3252) to
Mervir Realty.

On June 3, 1991, Thelma filed in the Regional Trial Court (RTC) in Cebu City a petition for the
appointment of Teresita as the administrator of Emigdio’s estate (Special Proceedings No. 3094-
CEB).  The RTC granted the petition considering that there was no opposition. The letters of
1

administration in favor of Teresita were issued on September 7, 1992.

As the administrator, Teresita submitted an inventory of the estate of Emigdio on December 14,
1992 for the consideration and approval by the RTC. She indicated in the inventory that at the time
of his death, Emigdio had "left no real properties but only personal properties" worth ₱6,675,435.25
in all, consisting of cash of ₱32,141.20; furniture and fixtures worth ₱20,000.00; pieces of jewelry
valued at ₱15,000.00; 44,806 shares of stock of Mervir Realty worth ₱6,585,585.80; and 30 shares
of stock of Cebu Emerson worth ₱22,708.25. 2
Claiming that Emigdio had owned other properties that were excluded from the inventory, Thelma
moved that the RTC direct Teresita to amend the inventory, and to be examined regarding it. The
RTC granted Thelma’s motion through the order of January 8, 1993.

On January 21, 1993, Teresita filed a compliance with the order of January 8, 1993,  supporting her
3

inventory with copies of three certificates of stocks covering the 44,806 Mervir Realty shares of
stock;  the deed of assignment executed by Emigdio on January 10, 1991 involving real properties
4

with the market value of ₱4,440,651.10 in exchange for 44,407 Mervir Realty shares of stock with
total par value of ₱4,440,700.00;  and the certificate of stock issued on January 30, 1979 for 300
5

shares of stock of Cebu Emerson worth ₱30,000.00. 6

On January 26, 1993, Thelma again moved to require Teresita to be examined under oath on the
inventory, and that she (Thelma) be allowed 30 days within which to file a formal opposition to or
comment on the inventory and the supporting documents Teresita had submitted.

On February 4, 1993, the RTC issued an order expressing the need for the parties to present
evidence and for Teresita to be examined to enable the court to resolve the motion for approval of
the inventory.
7

On April 19, 1993, Thelma opposed the approval of the inventory, and asked leave of court to
examine Teresita on the inventory.

With the parties agreeing to submit themselves to the jurisdiction of the court on the issue of what
properties should be included in or excluded from the inventory, the RTC set dates for the hearing
on that issue.
8

Ruling of the RTC

After a series of hearings that ran for almost eight years, the RTC issued on March 14, 2001 an
order finding and holding that the inventory submitted by Teresita had excluded properties that
should be included, and accordingly ruled:

WHEREFORE, in view of all the foregoing premises and considerations, the Court hereby denies the
administratrix’s motion for approval of inventory. The Court hereby orders the said administratrix to
re-do the inventory of properties which are supposed to constitute as the estate of the late Emigdio
S. Mercado by including therein the properties mentioned in the last five immediately preceding
paragraphs hereof and then submit the revised inventory within sixty (60) days from notice of this
order.

The Court also directs the said administratrix to render an account of her administration of the estate
of the late Emigdio S. Mercado which had come to her possession. She must render such
accounting within sixty (60) days from notice hereof.

SO ORDERED. 9

On March 29, 2001, Teresita, joined by other heirs of Emigdio, timely sought the reconsideration of
the order of March 14, 2001 on the ground that one of the real properties affected, Lot No. 3353
located in Badian, Cebu, had already been sold to Mervir Realty, and that the parcels of land
covered by the deed of assignment had already come into the possession of and registered in the
name of Mervir Realty.  Thelma opposed the motion.
10
On May 18, 2001, the RTC denied the motion for reconsideration,  stating that there was no cogent
11

reason for the reconsideration, and that the movants’ agreement as heirs to submit to the RTC the
issue of what properties should be included or excluded from the inventory already estopped them
from questioning its jurisdiction to pass upon the issue.

Decision of the CA

Alleging that the RTC thereby acted with grave abuse of discretion in refusing to approve the
inventory, and in ordering her as administrator to include real properties that had been transferred to
Mervir Realty, Teresita, joined by her four children and her stepson Franklin, assailed the adverse
orders of the RTC promulgated on March 14, 2001 and May 18, 2001 by petition for certiorari,
stating:

THE HONORABLE RESPONDENT JUDGE HAS COMMITTED GRAVE ABUSE OF JURISDICTION

(sic) AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN HOLDING THAT THE REAL
PROPERTY WHICH WAS SOLD BY THE LATE EMIGDIO S. MERCADO DURING HIS LIFETIME
TO A PRIVATE CORPORATION (MERVIR REALTY CORPORATION) BE INCLUDED IN THE
INVENTORY OF THE ESTATE OF THE LATE EMIGDIO S. MERCADO.

II

THE HONORABLE RESPONDENT JUDGE HAS COMMITTED GRAVE ABUSE OF JURISDICTION

(sic) AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN HOLDING THAT REAL
PROPERTIES WHICH ARE IN THE POSSESSION OF AND ALREADY REGISTERED IN THE
NAME (OF) PRIVATE CORPORATION (MERVIR REALTY CORPORATION) BE INCLUDED IN
THE INVENTORY OF THE ESTATE OF THE LATE EMIGDIO S. MERCADO.

III

THE HONORABLE RESPONDENT JUDGE HAS COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN HOLDING THAT PETITIONERS ARE
NOW ESTOPPED FROM QUESTIONING ITS JURISDICTION IN PASSING UPON THE ISSUE OF
WHAT PROPERTIES SHOULD BE INCLUDED IN THE INVENTORY OF THE ESTATE OF THE
LATE EMIGDIO MERCADO. 12

On May 15, 2002, the CA partly granted the petition for certiorari, disposing as follows: 13

WHEREFORE, FOREGOING PREMISES CONSIDERED, this petition is GRANTED partially. The

assailed Orders dated March 14, 2001 and May 18, 2001 are hereby reversed and set aside insofar
as the inclusion of parcels of land known as Lot No. 3353 located at Badian, Cebu with an area of
53,301 square meters subject matter of the Deed of Absolute Sale dated November 9, 1989 and the
various parcels of land subject matter of the Deeds of Assignment dated February 17, 1989 and
January 10, 1991 in the revised inventory to be submitted by the administratrix is concerned and
affirmed in all other respects.

SO ORDERED.

The CA opined that Teresita, et al. had properly filed the petition for certiorari because the order of
the RTC directing a new inventory of properties was interlocutory; that pursuant to Article 1477 of the
Civil Code, to the effect that the ownership of the thing sold "shall be transferred to the vendee" upon
its "actual and constructive delivery," and to Article 1498 of the Civil Code, to the effect that the sale
made through a public instrument was equivalent to the delivery of the object of the sale, the sale by
Emigdio and Teresita had transferred the ownership of Lot No. 3353 to Mervir Realty because the
deed of absolute sale executed on November 9, 1989 had been notarized; that Emigdio had thereby
ceased to have any more interest in Lot 3353; that Emigdio had assigned the parcels of land to
Mervir Realty as early as February 17, 1989 "for the purpose of saving, as in avoiding taxes with the
difference that in the Deed of Assignment dated January 10, 1991, additional seven (7) parcels of
land were included"; that as to the January 10, 1991 deed of assignment, Mervir Realty had been
"even at the losing end considering that such parcels of land, subject matter(s) of the Deed of
Assignment dated February 12, 1989, were again given monetary consideration through shares of
stock"; that even if the assignment had been based on the deed of assignment dated January 10,
1991, the parcels of land could not be included in the inventory "considering that there is nothing
wrong or objectionable about the estate planning scheme"; that the RTC, as an intestate court, also
had no power to take cognizance of and determine the issue of title to property registered in the
name of third persons or corporation; that a property covered by the Torrens system should be
afforded the presumptive conclusiveness of title; that the RTC, by disregarding the presumption, had
transgressed the clear provisions of law and infringed settled jurisprudence on the matter; and that
the RTC also gravely abused its discretion in holding that Teresita, et al. were estopped from
questioning its jurisdiction because of their agreement to submit to the RTC the issue of which
properties should be included in the inventory.

The CA further opined as follows:

In the instant case, public respondent court erred when it ruled that petitioners are estopped from
questioning its jurisdiction considering that they have already agreed to submit themselves to its
jurisdiction of determining what properties are to be included in or excluded from the inventory to be
submitted by the administratrix, because actually, a reading of petitioners’ Motion for
Reconsideration dated March 26, 2001 filed before public respondent court clearly shows that
petitioners are not questioning its jurisdiction but the manner in which it was exercised for which they
are not estopped, since that is their right, considering that there is grave abuse of discretion
amounting to lack or in excess of limited jurisdiction when it issued the assailed Order dated March
14, 2001 denying the administratrix’s motion for approval of the inventory of properties which were
already titled and in possession of a third person that is, Mervir Realty Corporation, a private
corporation, which under the law possessed a personality distinct and separate from its
stockholders, and in the absence of any cogency to shred the veil of corporate fiction, the
presumption of conclusiveness of said titles in favor of Mervir Realty Corporation should stand
undisturbed.

Besides, public respondent court acting as a probate court had no authority to determine the
applicability of the doctrine of piercing the veil of corporate fiction and even if public respondent court
was not merely acting in a limited capacity as a probate court, private respondent nonetheless failed
to adjudge competent evidence that would have justified the court to impale the veil of corporate
fiction because to disregard the separate jurisdictional personality of a corporation, the wrongdoing
must be clearly and convincingly established since it cannot be presumed. 14

On November 15, 2002, the CA denied the motion for reconsideration of Teresita, et al. 15

Issue

Did the CA properly determine that the RTC committed grave abuse of discretion amounting to lack
or excess of jurisdiction in directing the inclusion of certain properties in the inventory
notwithstanding that such properties had been either transferred by sale or exchanged for corporate
shares in Mervir Realty by the decedent during his lifetime?

Ruling of the Court

The appeal is meritorious.

Was certiorari the proper recourse

to assail the questioned orders of the RTC?

The first issue to be resolved is procedural. Thelma contends that the resort to the special civil action
for certiorari to assail the orders of the RTC by Teresita and her co-respondents was not proper.

Thelma’s contention cannot be sustained.

The propriety of the special civil action for certiorari as a remedy depended on whether the assailed
orders of the RTC were final or interlocutory in nature. In Pahila-Garrido v. Tortogo,  the Court
16

distinguished between final and interlocutory orders as follows:

The distinction between a final order and an interlocutory order is well known. The first disposes of
the subject matter in its entirety or terminates a particular proceeding or action, leaving nothing more
to be done except to enforce by execution what the court has determined, but the latter does not
completely dispose of the case but leaves something else to be decided upon. An interlocutory order
deals with preliminary matters and the trial on the merits is yet to be held and the judgment
rendered. The test to ascertain whether or not an order or a judgment is interlocutory or final is: does
the order or judgment leave something to be done in the trial court with respect to the merits of the
case? If it does, the order or judgment is interlocutory; otherwise, it is final.

The order dated November 12, 2002, which granted the application for the writ of preliminary
injunction, was an interlocutory, not a final, order, and should not be the subject of an appeal. The
reason for disallowing an appeal from an interlocutory order is to avoid multiplicity of appeals in a
single action, which necessarily suspends the hearing and decision on the merits of the action during
the pendency of the appeals. Permitting multiple appeals will necessarily delay the trial on the merits
of the case for a considerable length of time, and will compel the adverse party to incur unnecessary
expenses, for one of the parties may interpose as many appeals as there are incidental questions
raised by him and as there are interlocutory orders rendered or issued by the lower court. An
interlocutory order may be the subject of an appeal, but only after a judgment has been rendered,
with the ground for appealing the order being included in the appeal of the judgment itself.

The remedy against an interlocutory order not subject of an appeal is an appropriate special civil
action under Rule 65, provided that the interlocutory order is rendered without or in excess of
jurisdiction or with grave abuse of discretion. Then is certiorari under Rule 65 allowed to be resorted
to.

The assailed order of March 14, 2001 denying Teresita’s motion for the approval of the inventory
and the order dated May 18, 2001 denying her motion for reconsideration were interlocutory. This is
because the inclusion of the properties in the inventory was not yet a final determination of their
ownership. Hence, the approval of the inventory and the concomitant determination of the ownership
as basis for inclusion or exclusion from the inventory were provisional and subject to revision at
anytime during the course of the administration proceedings.

In Valero Vda. De Rodriguez v. Court of Appeals,  the Court, in affirming the decision of the CA to
17

the effect that the order of the intestate court excluding certain real properties from the inventory was
interlocutory and could be changed or modified at anytime during the course of the administration
proceedings, held that the order of exclusion was not a final but an interlocutory order "in the sense
that it did not settle once and for all the title to the San Lorenzo Village lots." The Court observed
there that:

The prevailing rule is that for the purpose of determining whether a certain property should or should
not be included in the inventory, the probate court may pass upon the title thereto but such
determination is not conclusive and is subject to the final decision in a separate action regarding
ownership which may be instituted by the parties (3 Moran’s Comments on the Rules of Court, 1970
Edition, pages 448-9 and 473; Lachenal vs. Salas, L-42257, June 14, 1976, 71 SCRA 262,
266).  (Bold emphasis supplied)
18

To the same effect was De Leon v. Court of Appeals,  where the Court declared that a "probate
19

court, whether in a testate or intestate proceeding, can only pass upon questions of title
provisionally," and reminded, citing Jimenez v. Court of Appeals, that the "patent reason is the
probate court’s limited jurisdiction and the principle that questions of title or ownership, which result
in inclusion or exclusion from the inventory of the property, can only be settled in a separate action."
Indeed, in the cited case of Jimenez v. Court of Appeals,  the Court pointed out:
20

All that the said court could do as regards the said properties is determine whether they should or
should not be included in the inventory or list of properties to be administered by the administrator. If
there is a dispute as to the ownership, then the opposing parties and the administrator have to resort
to an ordinary action for a final determination of the conflicting claims of title because the probate
court cannot do so. (Bold emphasis supplied)

On the other hand, an appeal would not be the correct recourse for Teresita, et al. to take against
the assailed orders. The final judgment rule embodied in the first paragraph of Section 1, Rule 41,
Rules of Court,  which also governs appeals in special proceedings, stipulates that only the
21

judgments, final orders (and resolutions) of a court of law "that completely disposes of the case, or of
a particular matter therein when declared by these Rules to be appealable" may be the subject of an
appeal in due course. The same rule states that an interlocutory order or resolution (interlocutory
because it deals with preliminary matters, or that the trial on the merits is yet to be held and the
judgment rendered) is expressly made non-appealable.

Multiple appeals are permitted in special proceedings as a practical recognition of the possibility that
material issues may be finally determined at various stages of the special proceedings. Section 1,
Rule 109 of the Rules of Court enumerates the specific instances in which multiple appeals may be
resorted to in special proceedings, viz:

Section 1. Orders or judgments from which appeals may be taken. - An interested person may
appeal in special proceedings from an order or judgment rendered by a Court of First Instance or a
Juvenile and Domestic Relations Court, where such order or judgment:

(a) Allows or disallows a will;

(b) Determines who are the lawful heirs of a deceased person, or the distributive share of the
estate to which such person is entitled;
 (c) Allows or disallows, in whole or in part, any claim against the estate of a deceased
person, or any claim presented on behalf of the estate in offset to a claim against it;

(d) Settles the account of an executor, administrator, trustee or guardian;

(e) Constitutes, in proceedings relating to the settlement of the estate of a deceased person,
or the administration of a trustee or guardian, a final determination in the lower court of the
rights of the party appealing, except that no appeal shall be allowed from the appointment of
a special administrator; and

(f) Is the final order or judgment rendered in the case, and affects the substantial rights of the
person appealing, unless it be an order granting or denying a motion for a new trial or for
reconsideration.

Clearly, the assailed orders of the RTC, being interlocutory, did not come under any of the instances
in which multiple appeals are permitted.

II

Did the RTC commit grave abuse of discretion

in directing the inclusion of the properties
in the estate of the decedent?

In its assailed decision, the CA concluded that the RTC committed grave abuse of discretion for
including properties in the inventory notwithstanding their having been transferred to Mervir Realty
by Emigdio during his lifetime, and for disregarding the registration of the properties in the name of
Mervir Realty, a third party, by applying the doctrine of piercing the veil of corporate fiction.

Was the CA correct in its conclusion?

The answer is in the negative. It is unavoidable to find that the CA, in reaching its conclusion,
ignored the law and the facts that had fully warranted the assailed orders of the RTC.

Under Section 6(a), Rule 78 of the Rules of Court, the letters of administration may be granted at the
discretion of the court to the surviving spouse, who is competent and willing to serve when the
person dies intestate. Upon issuing the letters of administration to the surviving spouse, the RTC
becomes duty-bound to direct the preparation and submission of the inventory of the properties of
the estate, and the surviving spouse, as the administrator, has the duty and responsibility to submit
the inventory within three months from the issuance of letters of administration pursuant to Rule 83
of the Rules of Court, viz:

Section 1. Inventory and appraisal to be returned within three months. – Within three (3) months
after his appointment every executor or administrator shall return to the court a true inventory and
appraisal of all the real and personal estate of the deceased which has come into his possession or
knowledge. In the appraisement of such estate, the court may order one or more of the inheritance
tax appraisers to give his or their assistance.

The usage of the word all in Section 1, supra, demands the inclusion of all the real and personal
properties of the decedent in the inventory.  However, the word all is qualified by the phrase which
22

has come into his possession or knowledge, which signifies that the properties must be known to the
administrator to belong to the decedent or are in her possession as the administrator. Section 1
allows no exception, for the phrase true inventory implies that no properties appearing to belong to
the decedent can be excluded from the inventory, regardless of their being in the possession of
another person or entity.

The objective of the Rules of Court in requiring the inventory and appraisal of the estate of the
decedent is "to aid the court in revising the accounts and determining the liabilities of the executor or
the administrator, and in making a final and equitable distribution (partition) of the estate and
otherwise to facilitate the administration of the estate."  Hence, the RTC that presides over the
23

administration of an estate is vested with wide discretion on the question of what properties should
be included in the inventory. According to Peralta v. Peralta,  the CA cannot impose its judgment in
24

order to supplant that of the RTC on the issue of which properties are to be included or excluded
from the inventory in the absence of "positive abuse of discretion," for in the administration of the
estates of deceased persons, "the judges enjoy ample discretionary powers and the appellate courts
should not interfere with or attempt to replace the action taken by them, unless it be shown that there
has been a positive abuse of discretion."  As long as the RTC commits no patently grave abuse of
25

discretion, its orders must be respected as part of the regular performance of its judicial duty.

There is no dispute that the jurisdiction of the trial court as an intestate court is special and limited.
The trial court cannot adjudicate title to properties claimed to be a part of the estate but are claimed
to belong to third parties by title adverse to that of the decedent and the estate, not by virtue of any
right of inheritance from the decedent. All that the trial court can do regarding said properties is to
determine whether or not they should be included in the inventory of properties to be administered
by the administrator. Such determination is provisional and may be still revised. As the Court said in
Agtarap v. Agtarap: 26

The general rule is that the jurisdiction of the trial court, either as a probate court or an intestate
court, relates only to matters having to do with the probate of the will and/or settlement of the estate
of deceased persons, but does not extend to the determination of questions of ownership that arise
during the proceedings. The patent rationale for this rule is that such court merely exercises special
and limited jurisdiction. As held in several cases, a probate court or one in charge of estate
proceedings, whether testate or intestate, cannot adjudicate or determine title to properties claimed
to be a part of the estate and which are claimed to belong to outside parties, not by virtue of any
right of inheritance from the deceased but by title adverse to that of the deceased and his estate. All
that the said court could do as regards said properties is to determine whether or not they should be
included in the inventory of properties to be administered by the administrator. If there is no dispute,
there poses no problem, but if there is, then the parties, the administrator, and the opposing parties
have to resort to an ordinary action before a court exercising general jurisdiction for a final
determination of the conflicting claims of title.

However, this general rule is subject to exceptions as justified by expediency and convenience.

First, the probate court may provisionally pass upon in an intestate or a testate proceeding the
question of inclusion in, or exclusion from, the inventory of a piece of property without prejudice to
final determination of ownership in a separate action. Second, if the interested parties are all heirs to
the estate, or the question is one of collation or advancement, or the parties consent to the
assumption of jurisdiction by the probate court and the rights of third parties are not impaired, then
the probate court is competent to resolve issues on ownership. Verily, its jurisdiction extends to
matters incidental or collateral to the settlement and distribution of the estate, such as the
determination of the status of each heir and whether the property in the inventory is conjugal or
exclusive property of the deceased spouse.  (Italics in the original; bold emphasis supplied)
27
It is clear to us that the RTC took pains to explain the factual bases for its directive for the inclusion
of the properties in question in its assailed order of March 14, 2001, viz:

In the first place, the administratrix of the estate admitted that Emigdio Mercado was one of the heirs
of Severina Mercado who, upon her death, left several properties as listed in the inventory of
properties submitted in Court in Special Proceedings No. 306-R which are supposed to be divided
among her heirs. The administratrix admitted, while being examined in Court by the counsel for the
petitioner, that she did not include in the inventory submitted by her in this case the shares of
Emigdio Mercado in the said estate of Severina Mercado. Certainly, said properties constituting
Emigdio Mercado’s share in the estate of Severina Mercado should be included in the inventory of
properties required to be submitted to the Court in this particular case.

In the second place, the administratrix of the estate of Emigdio Mercado also admitted in Court that
she did not include in the inventory shares of stock of Mervir Realty Corporation which are in her
name and which were paid by her from money derived from the taxicab business which she and her
husband had since 1955 as a conjugal undertaking. As these shares of stock partake of being
conjugal in character, one-half thereof or of the value thereof should be included in the inventory of
the estate of her husband.

In the third place, the administratrix of the estate of Emigdio Mercado admitted, too, in Court that she
had a bank account in her name at Union Bank which she opened when her husband was still alive.
Again, the money in said bank account partakes of being conjugal in character, and so, one-half
thereof should be included in the inventory of the properties constituting as estate of her husband.

In the fourth place, it has been established during the hearing in this case that Lot No. 3353 of Pls-
657-D located in Badian, Cebu containing an area of 53,301 square meters as described in and
covered by Transfer Certificate of Title No. 3252 of the Registry of Deeds for the Province of Cebu is
still registered in the name of Emigdio S. Mercado until now. When it was the subject of Civil Case
No. CEB-12690 which was decided on October 19, 1995, it was the estate of the late Emigdio
Mercado which claimed to be the owner thereof. Mervir Realty Corporation never intervened in the
said case in order to be the owner thereof. This fact was admitted by Richard Mercado himself when
he testified in Court. x x x So the said property located in Badian, Cebu should be included in the
inventory in this case.

Fifthly and lastly, it appears that the assignment of several parcels of land by the late Emigdio S.
Mercado to Mervir Realty Corporation on January 10, 1991 by virtue of the Deed of Assignment
signed by him on the said day (Exhibit N for the petitioner and Exhibit 5 for the administratrix) was a
transfer in contemplation of death. It was made two days before he died on January 12, 1991. A
transfer made in contemplation of death is one prompted by the thought that the transferor has not
long to live and made in place of a testamentary disposition (1959 Prentice Hall, p. 3909). Section 78
of the National Internal Revenue Code of 1977 provides that the gross estate of the decedent shall
be determined by including the value at the time of his death of all property to the extent of any
interest therein of which the decedent has at any time made a transfer in contemplation of death. So,
the inventory to be approved in this case should still include the said properties of Emigdio Mercado
which were transferred by him in contemplation of death. Besides, the said properties actually
appeared to be still registered in the name of Emigdio S. Mercado at least ten (10) months after his
death, as shown by the certification issued by the Cebu City Assessor’s Office on October 31, 1991
(Exhibit O).28

Thereby, the RTC strictly followed the directives of the Rules of Court and the jurisprudence relevant
to the procedure for preparing the inventory by the administrator. The aforequoted explanations
indicated that the directive to include the properties in question in the inventory rested on good and
valid reasons, and thus was far from whimsical, or arbitrary, or capricious.

Firstly, the shares in the properties inherited by Emigdio from Severina Mercado should be included
in the inventory because Teresita, et al. did not dispute the fact about the shares being inherited by
Emigdio.

Secondly, with Emigdio and Teresita having been married prior to the effectivity of the Family Code
in August 3, 1988, their property regime was the conjugal partnership of gains.  For purposes of the
29

settlement of Emigdio’s estate, it was unavoidable for Teresita to include his shares in the conjugal
partnership of gains. The party asserting that specific property acquired during that property regime
did not pertain to the conjugal partnership of gains carried the burden of proof, and that party must
prove the exclusive ownership by one of them by clear, categorical, and convincing evidence.  In the
30

absence of or pending the presentation of such proof, the conjugal partnership of Emigdio and
Teresita must be provisionally liquidated to establish who the real owners of the affected properties
were,  and which of the properties should form part of the estate of Emigdio. The portions that
31

pertained to the estate of Emigdio must be included in the inventory.

Moreover, although the title over Lot 3353 was already registered in the name of Mervir Realty, the
RTC made findings that put that title in dispute. Civil Case No. CEB-12692, a dispute that had
involved the ownership of Lot 3353, was resolved in favor of the estate of Emigdio, and

Transfer Certificate of Title No. 3252 covering Lot 3353 was still in Emigdio’s name.  Indeed, the
1âwphi1

RTC noted in the order of March 14, 2001, or ten years after his death, that Lot 3353 had remained
registered in the name of Emigdio.

Interestingly, Mervir Realty did not intervene at all in Civil Case No. CEB-12692. Such lack of
interest in Civil Case No. CEB-12692 was susceptible of various interpretations, including one to the
effect that the heirs of Emigdio could have already threshed out their differences with the assistance
of the trial court. This interpretation was probable considering that Mervir Realty, whose business
was managed by respondent Richard, was headed by Teresita herself as its President. In other
words, Mervir Realty appeared to be a family corporation.

Also, the fact that the deed of absolute sale executed by Emigdio in favor of Mervir Realty was a
notarized instrument did not sufficiently justify the exclusion from the inventory of the properties
involved. A notarized deed of sale only enjoyed the presumption of regularity in favor of its
execution, but its notarization did not per se guarantee the legal efficacy of the transaction under the
deed, and what the contents purported to be. The presumption of regularity could be rebutted by
clear and convincing evidence to the contrary.  As the Court has observed in Suntay v. Court of
32

Appeals: 33

x x x. Though the notarization of the deed of sale in question vests in its favor the presumption of
regularity, it is not the intention nor the function of the notary public to validate and make binding an
instrument never, in the first place, intended to have any binding legal effect upon the parties
thereto. The intention of the parties still and always is the primary consideration in determining the
true nature of a contract. (Bold emphasis supplied)

It should likewise be pointed out that the exchange of shares of stock of Mervir Realty with the real
properties owned by Emigdio would still have to be inquired into. That Emigdio executed the deed of
assignment two days prior to his death was a circumstance that should put any interested party on
his guard regarding the exchange, considering that there was a finding about Emigdio having been
sick of cancer of the pancreas at the time.  In this regard, whether the CA correctly characterized the
34
exchange as a form of an estate planning scheme remained to be validated by the facts to be
established in court.

The fact that the properties were already covered by Torrens titles in the name of Mervir Realty
could not be a valid basis for immediately excluding them from the inventory in view of the
circumstances admittedly surrounding the execution of the deed of assignment. This is because:

The Torrens system is not a mode of acquiring titles to lands; it is merely a system of registration of
titles to lands.  However, justice and equity demand that the titleholder should not be made to bear
1âwphi1

the unfavorable effect of the mistake or negligence of the State’s agents, in the absence of proof of
his complicity in a fraud or of manifest damage to third persons. The real purpose of the Torrens
system is to quiet title to land and put a stop forever to any question as to the legality of the title,
except claims that were noted in the certificate at the time of registration or that may arise
subsequent thereto. Otherwise, the integrity of the Torrens system shall forever be sullied by the
ineptitude and inefficiency of land registration officials, who are ordinarily presumed to have regularly
performed their duties. 35

Assuming that only seven titled lots were the subject of the deed of assignment of January 10, 1991,
such lots should still be included in the inventory to enable the parties, by themselves, and with the
assistance of the RTC itself, to test and resolve the issue on the validity of the assignment. The
limited jurisdiction of the RTC as an intestate court might have constricted the determination of the
rights to the properties arising from that deed,  but it does not prevent the RTC as intestate court
36

from ordering the inclusion in the inventory of the properties subject of that deed. This is because the
RTC as intestate court, albeit vested only with special and limited jurisdiction, was still "deemed to
have all the necessary powers to exercise such jurisdiction to make it effective." 37

Lastly, the inventory of the estate of Emigdio must be prepared and submitted for the important
purpose of resolving the difficult issues of collation and advancement to the heirs. Article 1061 of the
Civil Code required every compulsory heir and the surviving spouse, herein Teresita herself, to
"bring into the mass of the estate any property or right which he (or she) may have received from the
decedent, during the lifetime of the latter, by way of donation, or any other gratuitous title, in order
that it may be computed in the determination of the legitime of each heir, and in the account of the
partition." Section 2, Rule 90 of the Rules of Court also provided that any advancement by the
decedent on the legitime of an heir "may be heard and determined by the court having jurisdiction of
the estate proceedings, and the final order of the court thereon shall be binding on the person raising
the questions and on the heir." Rule 90 thereby expanded the special and limited jurisdiction of the
RTC as an intestate court about the matters relating to the inventory of the estate of the decedent by
authorizing it to direct the inclusion of properties donated or bestowed by gratuitous title to any
compulsory heir by the decedent. 38

The determination of which properties should be excluded from or included in the inventory of estate
properties was well within the authority and discretion of the RTC as an intestate court. In making its
determination, the RTC acted with circumspection, and proceeded under the guiding policy that it
was best to include all properties in the possession of the administrator or were known to the
administrator to belong to Emigdio rather than to exclude properties that could turn out in the end to
be actually part of the estate. As long as the RTC commits no patent grave abuse of discretion, its
orders must be respected as part of the regular performance of its judicial duty. Grave abuse of
discretion means either that the judicial or quasi-judicial power was exercised in an arbitrary or
despotic manner by reason of passion or personal hostility, or that the respondent judge, tribunal or
board evaded a positive duty, or virtually refused to perform the duty enjoined or to act in
contemplation of law, such as when such judge, tribunal or board exercising judicial or quasi-judicial
powers acted in a capricious or whimsical manner as to be equivalent to lack of jurisdiction. 39
In light of the foregoing, the CA's conclusion of grave abuse of discretion on the part of the RTC was
unwarranted and erroneous.

WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and SETS
ASIDE the decision promulgated on May 15, 2002; REINSTATES the orders issued on March 14,
2001 and May 18, 2001 by the Regional Trial Court in Cebu; DIRECTS the Regional Trial Court in
Cebu to proceed with dispatch in Special Proceedings No. 3094-CEB entitled Intestate Estate of the
late Emigdio Mercado, Thelma Aranas, petitioner, and to resolve the case; and ORDERS the
respondents to pay the costs of suit.

SO ORDERED.

LUCAS P. BERSAMIN
Associate Justice
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 183965               September 18, 2009

JOANIE SURPOSA UY, Petitioner,

vs.
JOSE NGO CHUA, Respondent.

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review under Rule 45 of the Rules of Court assailing the Resolution dated 25
June 2008 of the Regional Trial Court (RTC) of Cebu City, Branch 24, which granted the demurrer to
evidence of respondent Jose Ngo Chua, resulting in the dismissal of Special Proceeding No. 12562-
CEB.

Petitioner Joanie Surposa Uy filed on 27 October 2003 before the RTC a Petition 1 for the issuance of
a decree of illegitimate filiation against respondent. The Complaint was docketed as Special
Proceeding No. 12562-CEB, assigned to RTC-Branch 24.

Petitioner alleged in her Complaint that respondent, who was then married, had an illicit relationship
with Irene Surposa (Irene). Respondent and Irene had two children, namely, petitioner and her
brother, Allan. Respondent attended to Irene when the latter was giving birth to petitioner on 27 April
1959, and instructed that petitioner’s birth certificate be filled out with the following names:
"ALFREDO F. SURPOSA" as father and "IRENE DUCAY" as mother. Actually, Alfredo F. Surposa
was the name of Irene’s father, and Ducay was the maiden surname of Irene’s mother. Respondent
financially supported petitioner and Allan. Respondent had consistently and regularly given petitioner
allowances before she got married. He also provided her with employment. When petitioner was still
in high school, respondent required her to work at the Cebu Liberty Lumber, a firm owned by his
family. She was later on able to work at the Gaisano- Borromeo Branch through respondent’s efforts.
Petitioner and Allan were introduced to each other and became known in the Chinese community as
respondent’s illegitimate children. During petitioner’s wedding, respondent sent his brother Catalino
Chua (Catalino) as his representative, and it was the latter who acted as father of the bride.
Respondent’s relatives even attended the baptism of petitioner’s daughter. 2

In his Answer3 to the Complaint, filed on 9 December 2003, respondent denied that he had an illicit
relationship with Irene, and that petitioner was his daughter. 4 Hearings then ensued during which
petitioner testified that respondent was the only father she knew; that he took care of all her needs
until she finished her college education; and that he came to visit her on special family occasions.
She also presented documentary evidence to prove her claim of illegitimate filiation. Subsequently,
on 27 March 2008, respondent filed a Demurrer to Evidence 5 on the ground that the Decision dated
21 February 2000 of RTC-Branch 9 in Special Proceeding No. 8830-CEB had already been barred
by res judicata in Special Proceeding No. 12562-CEB before RTC-Branch 24.

It turned out that prior to instituting Special Proceeding No. 12562-CEB on 27 October 2003,
petitioner had already filed a similar Petition for the issuance of a decree of illegitimate affiliation
against respondent. It was docketed as Special Proceeding No. 8830-CEB, assigned to RTC-Branch
9. Petitioner and respondent eventually entered into a Compromise Agreement in Special
Proceeding No. 8830-CEB, which was approved by RTC-Branch 9 in a Decision 6 dated 21 February
2000. The full contents of said Decision reads:

Under consideration is a Compromise Agreement filed by the parties on February 18, 2000, praying
that judgment be rendered in accordance therewith, the terms and conditions of which follows:

"1. Petitioner JOANIE SURPOSA UY declares, admits and acknowledges that there is no
blood relationship or filiation between petitioner and her brother Allan on one hand and
[herein respondent] JOSE NGO CHUA on the other. This declaration, admission or
acknowledgement is concurred with petitioner’s brother Allan, who although not a party to
the case, hereby affixes his signature to this pleading and also abides by the declaration
herein.

2. As a gesture of goodwill and by way of settling petitioner and her brother’s (Allan) civil,
monetary and similar claims but without admitting any liability, [respondent] JOSE NGO
CHUA hereby binds himself to pay the petitioner the sum of TWO MILLION PESOS
(₱2,000,000.00) and another TWO MILLION PESOS (₱2,000,000.00) to her brother, ALLAN
SURPOSA. Petitioner and her brother hereby acknowledge to have received in full the said
compromise amount.

3. Petitioner and her brother (Allan) hereby declare that they have absolutely no more
claims, causes of action or demands against [respondent] JOSE NGO CHUA, his heirs,
successors and assigns and/or against the estate of Catalino Chua, his heirs, successors
and assigns and/or against all corporations, companies or business enterprises including
Cebu Liberty Lumber and Joe Lino Realty Investment and Development Corporation where
defendant JOSE NGO CHUA or CATALINO NGO CHUA may have interest or participation.

4. [Respondent] JOSE NGO CHUA hereby waives all counterclaim or counter-demand with
respect to the subject matter of the present petition.

5. Pursuant to the foregoing, petitioner hereby asks for a judgment for the permanent
dismissal with prejudice of the captioned petition. [Respondent] also asks for a judgment
permanently dismissing with prejudice his counterclaim."

Finding the said compromise agreement to be in order, the Court hereby approves the same.
Judgment is rendered in accordance with the provisions of the compromise agreement. The parties
are enjoined to comply with their respective undertakings embodied in the agreement. 7

With no appeal having been filed therefrom, the 21 February 2000 Decision of RTC-Branch 9 in
Special Proceeding 8830-CEB was declared final and executory.

Petitioner filed on 15 April 2008 her Opposition8 to respondent’s Demurrer to Evidence in Special
Proceeding No. 12562-CEB. Thereafter, RTC-Branch 24 issued its now assailed Resolution dated
25 June 2008 in Special Proceeding No. 12562-CEB, granting respondent’s Demurrer.

RTC-Branch 24 summarized the arguments of respondent and petitioner in the Demurrer and
Opposition, respectively, as follows:
This is to resolve the issues put across in the Demurrer to the Evidence submitted to this Court; the
Opposition thereto; the Comment on the Opposition and the Rejoinder to the Comment.

xxxx

1. The instant case is barred by the principle of res judicata because there was a judgment
entered based on the Compromise Agreement approved by this multiple-sala Court, branch
09, on the same issues and between the same parties.

2. That such decision of Branch 09, having attained finality, is beyond review, reversal or
alteration by another Regional Trial Court and not even the Supreme Court, no matter how
erroneous.

3. Judicial Admissions or admission in petitioner’s pleadings to the effect that there is no

blood relationship between petitioner and respondent, which is a declaration against interest,
are conclusive on her and she should not be permitted to falsify.

4. That the Certificate of Live Birth showing that petitioner’s father is Alfredo Surposa is a
public document which is the evidence of the facts therein stated, unless corrected by judicial
order.

5. After receiving the benefits and concessions pursuant to their compromise agreement, she
is estopped from refuting on the effects thereof to the prejudice of the [herein respondent].

The summary of the Opposition is in this wise:

1. That the illegitimate filiation of petitioner to respondent is established by the open, and
continuous possession of the status of an illegitimate child.

2. The Demurrer to the evidence cannot set up the affirmative grounds for a Motion to
Dismiss.

3. The question on the civil status, future support and future legitime can not be subject to
compromise.

4. The decision in the first case does not bar the filing of another action asking for the same
relief against the same defendant. 9

Taking into consideration the aforementioned positions of the parties, RTC-Branch 24 held that:

Looking at the issues from the viewpoint of a judge, this Court believes that its hands are tied.
Unless the Court of Appeals strikes down the Compromise Judgment rendered by Branch 09 of the
Regional Trial Court of Cebu City, this Court will not attempt to vacate, much more annul, that
Judgment issued by a co-equal court, which had long become final and executory, and in fact
executed.

This court upholds the Policy of Judicial Stability since to do otherwise would result in patent abuse
of judicial discretion amounting to lack of jurisdiction. The defense of lack of jurisdiction cannot be
waived. At any rate, such is brought forth in the Affirmative Defenses of the Answer.
This Court, saddled with many cases, suffers the brunt of allowing herein case involving same
parties to re-litigate on the same issues already closed. 10

In the end, RTC-Branch 24 decreed:

WHEREFORE, in view of the foregoing, the Demurrer to the Evidence is hereby given due course,
as the herein case is hereby ordered DISMISSED. 11

RTC-Branch 24 denied petitioner’s Motion for Reconsideration 12 in a Resolution13 dated 29 July

2008.

Petitioner then filed the instant Petition raising the following issues for resolution of this Court:

Whether or not the principle of res judicata is applicable to judgments predicated upon a
compromise agreement on cases enumerated in Article 2035 of the Civil Code of the Philippines;

II

Whether or not the compromise agreement entered into by the parties herein before the Regional
Trial Court, Branch 09 of Cebu City effectively bars the filing of the present case. 14

At the outset, the Court notes that from the RTC Resolution granting respondent’s Demurrer to
Evidence, petitioner went directly to this Court for relief. This is only proper, given that petitioner is
raising pure questions of law in her instant Petition. a1f

Section 1, Rule 45 of the Rules of Court provides:

SECTION 1. Filing of petition with Supreme Court. – A party desiring to appeal by certiorari from a
judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial
Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition
for review on certiorari. The petition shall raise only questions of law which must be distinctly set
forth.

Clearly, a party may directly appeal to this Court from a decision or final order or resolution of the
trial court on pure questions of law. A question of law lies, on one hand, when the doubt or difference
arises as to what the law is on a certain set of facts; a question of fact exists, on the other hand,
when the doubt or difference arises as to the truth or falsehood of the alleged facts. Here, the facts
are not disputed; the controversy merely relates to the correct application of the law or jurisprudence
to the undisputed facts.15

The central issue in this case is whether the Compromise Agreement entered into between petitioner
and respondent, duly approved by RTC-Branch 9 in its Decision dated 21 February 2000 in Special
Proceeding No. 8830-CEB, constitutes res judicata in Special Proceeding No. 12562-CEB still
pending before RTC-Branch 24. 1avvphi1

The doctrine of res judicata is a rule that pervades every well- regulated system of jurisprudence and
is founded upon two grounds embodied in various maxims of the common law, namely: (1) public
policy and necessity, which makes it in the interest of the State that there should be an end to
litigation, interest reipublicae ut sit finis litium, and (2) the hardship of the individual that he should be
vexed twice for the same cause, nemo debet bis vexari pro eadem causa. 16

For res judicata, to serve as an absolute bar to a subsequent action, the following requisites must
concur: (1) there must be a final judgment or order; (2) the court rendering it must have jurisdiction
over the subject matter and the parties; (3) it must be a judgment or order on the merits; and (4)
there must be, between the two cases, identity of parties, subject matter, and causes of action. 17

It is undeniable that Special Proceeding No. 8830-CEB, previously before RTC-Branch 9, and
Special Proceeding No. 12562-CEB, presently before RTC-Branch 24, were both actions for the
issuance of a decree of illegitimate filiation filed by petitioner against respondent. Hence, there is
apparent identity of parties, subject matter, and causes of action between the two cases. However,
the question arises as to whether the other elements of res judicata exist in this case.

The court rules in the negative.

A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation
or put an end to one already commenced. 18 In Estate of the late Jesus S. Yujuico v. Republic, 19 the
Court pronounced that a judicial compromise has the effect of res judicata. A judgment based on a
compromise agreement is a judgment on the merits.

It must be emphasized, though, that like any other contract, a compromise agreement must comply
with the requisites in Article 1318 of the Civil Code, to wit: (a) consent of the contracting parties; (b)
object certain that is the subject matter of the contract; and (c) cause of the obligation that is
established. And, like any other contract, the terms and conditions of a compromise agreement must
not be contrary to law, morals, good customs, public policy and public order. Any compromise
agreement that is contrary to law or public policy is null and void, and vests no rights in and holds no
obligation for any party. It produces no legal effect at all. 20

In connection with the foregoing, the Court calls attention to Article 2035 of the Civil Code, which
states:

ART. 2035. No compromise upon the following questions shall be valid:

(1) The civil status of persons;

(2) The validity of a marriage or a legal separation;

(3) Any ground for legal separation;

(4) Future support;

(5) The jurisdiction of courts;

(6) Future legitime. (Emphases ours.)

The Compromise Agreement between petitioner and respondent, executed on 18 February 2000
and approved by RTC-Branch 9 in its Decision dated 21 February 2000 in Special Proceeding No.
8830-CEB, obviously intended to settle the question of petitioner’s status and filiation, i.e., whether
she is an illegitimate child of respondent. In exchange for petitioner and her brother Allan
acknowledging that they are not the children of respondent, respondent would pay petitioner and
Allan ₱2,000,000.00 each. Although unmentioned, it was a necessary consequence of said
Compromise Agreement that petitioner also waived away her rights to future support and future
legitime as an illegitimate child of respondent. Evidently, the Compromise Agreement dated 18
February 2000 between petitioner and respondent is covered by the prohibition under Article 2035 of
the Civil Code.

Advincula v. Advincula21 has a factual background closely similar to the one at bar. Manuela
Advincula (Manuela) filed, before the Court of First Instance (CFI) of Iloilo, Civil Case No. 3553 for
acknowledgment and support, against Manuel Advincula (Manuel). On motion of both parties, said
case was dismissed. Not very long after, Manuela again instituted, before the same court, Civil Case
No. 5659 for acknowledgment and support, against Manuel. This Court declared that although Civil
Case No. 3553 ended in a compromise, it did not bar the subsequent filing by Manuela of Civil Case
No. 5659, asking for the same relief from Manuel. Civil Case No. 3553 was an action for
acknowledgement, affecting a person’s civil status, which cannot be the subject of compromise.

It is settled, then, in law and jurisprudence, that the status and filiation of a child cannot be
compromised. Public policy demands that there be no compromise on the status and filiation of a
child.22 Paternity and filiation or the lack of the same, is a relationship that must be judicially
established, and it is for the Court to declare its existence or absence. It cannot be left to the will or
agreement of the parties.23

Being contrary to law and public policy, the Compromise Agreement dated 18 February 2000
between petitioner and respondent is void ab initio and vests no rights and creates no obligations. It
produces no legal effect at all. The void agreement cannot be rendered operative even by the
parties' alleged performance (partial or full) of their respective prestations. 24

Neither can it be said that RTC-Branch 9, by approving the Compromise Agreement, in its Decision
dated 21 February 2000 in Special Proceeding No. 8830-CEB, already made said contract valid and
legal. Obviously, it would already be beyond the jurisdiction of RTC-Branch 9 to legalize what is
illegal. RTC-Branch 9 had no authority to approve and give effect to a Compromise Agreement that
was contrary to law and public policy, even if said contract was executed and submitted for approval
by both parties. RTC-Branch 9 would not be competent, under any circumstances, to grant the
approval of the said Compromise Agreement. No court can allow itself to be used as a tool to
circumvent the explicit prohibition under Article 2035 of the Civil Code. The following quote in
Francisco v. Zandueta25 is relevant herein:

It is a universal rule of law that parties cannot, by consent, give a court, as such, jurisdiction in a
matter which is excluded by the laws of the land. In such a case the question is not whether a
competent court has obtained jurisdiction of a party triable before it, but whether the court itself is
competent under any circumstances to adjudicate a claim against the defendant. And where there is
want of jurisdiction of the subject-matter, a judgment is void as to all persons, and consent of parties
can never impart to it the vitality which a valid judgment derives from the sovereign state, the court
being constituted, by express provision of law, as its agent to pronounce its decrees in controversies
between its people. (7 R. C. L., 1039.)

A judgment void for want of jurisdiction is no judgment at all. It cannot be the source of any right or
the creator of any obligation. All acts performed pursuant to it and all claims emanating from it have
no legal effect. Hence, it can never become final, and any writ of execution based on it is void. It may
be said to be a lawless thing that can be treated as an outlaw and slain on sight, or ignored
wherever and whenever it exhibits its head.26
In sum, Special Proceeding No. 12562-CEB before RTC-Branch 24 is not barred by res judicata,
since RTC-Branch 9 had no jurisdiction to approve, in its Decision dated 21 February 2000 in
Special Proceeding No. 8830-CEB, petitioner and respondent’s Compromise Agreement, which was
contrary to law and public policy; and, consequently, the Decision dated 21 February 2000 in Special
Proceeding No. 8830-CEB, being null and void for having been rendered by RTC-Branch 9 without
jurisdiction, could not have attained finality or been considered a judgment on the merits.

Nevertheless, the Court must clarify that even though the Compromise Agreement between
petitioner and respondent is void for being contrary to law and public policy, the admission petitioner
made therein may still be appreciated against her in Special Proceeding No. 12562-CEB. RTC-
Branch 24 is only reminded that while petitioner’s admission may have evidentiary value, it does not,
by itself, conclusively establish the lack of filiation. 27

Proceeding from its foregoing findings, the Court is remanding this case to the RTC-Branch 24 for
the continuation of hearing on Special Proceedings No. 12562-CEB, more particularly, for
respondent’s presentation of evidence.

Although respondent’s pleading was captioned a Demurrer to Evidence, it was more appropriately a
Motion to Dismiss on the ground of res judicata.

Demurrer to Evidence is governed by Rule 33 of the Rules of Court, Section 1 of which is

reproduced in full below:

SECTION 1. Demurrer to evidence. – After the plaintiff has completed the presentation of his
evidence, the defendant may move for dismissal on the ground that upon the facts and the law the
plaintiff has shown no right to relief. If his motion is denied, he shall have the right to present
evidence. If the motion is granted but on appeal the order of dismissal is reversed he shall be
deemed to have waived the right to present evidence.

Demurrer to evidence authorizes a judgment on the merits of the case without the defendant having
to submit evidence on his part, as he would ordinarily have to do, if plaintiff's evidence shows that he
is not entitled to the relief sought. Demurrer, therefore, is an aid or instrument for the expeditious
termination of an action, similar to a motion to dismiss, which the court or tribunal may either grant or
deny.28

The Court has recently established some guidelines on when a demurrer to evidence should be
granted, thus:

A demurrer to evidence may be issued when, upon the facts and the law, the plaintiff has shown no
right to relief. Where the plaintiff's evidence together with such inferences and conclusions as may
reasonably be drawn therefrom does not warrant recovery against the defendant, a demurrer to
evidence should be sustained. A demurrer to evidence is likewise sustainable when, admitting every
proven fact favorable to the plaintiff and indulging in his favor all conclusions fairly and reasonably
inferable therefrom, the plaintiff has failed to make out one or more of the material elements of his
case, or when there is no evidence to support an allegation necessary to his claim. It should be
sustained where the plaintiff's evidence is prima facie insufficient for a recovery. 29

The essential question to be resolved in a demurrer to evidence is whether petitioner has been able
to show that she is entitled to her claim, and it is incumbent upon RTC-Branch 24 to make such a
determination. A perusal of the Resolution dated 25 June 2008 of RTC-Branch 24 in Special
Proceeding No. 12562-CEB shows that it is barren of any discussion on this matter. It did not take
into consideration any of the evidence presented by petitioner. RTC-Branch 24 dismissed Special
Proceedings No. 12562-CEB on the sole basis of res judicata, given the Decision dated 21 February
2000 of RTC-Branch 9 in Special Proceeding No. 8830-CEB, approving the Compromise Agreement
between petitioner and respondent. Hence, the Resolution dated 25 June 2008 of RTC-Branch 24
should be deemed as having dismissed Special Proceeding No. 12562-CEB on the ground of res
judicata rather than an adjudication on the merits of respondent’s demurrer to evidence. Necessarily,
the last line of Section 1, Rule 33 of the Rules of Court should not apply herein and respondent
should still be allowed to present evidence before RTC-Branch 24 in Special Proceedings No.
12562-CEB.

It must be kept in mind that substantial justice must prevail. When there is a strong showing that
grave miscarriage of justice would result from the strict application of the Rules, this Court will not
hesitate to relax the same in the interest of substantial justice. The Rules of Court were conceived
and promulgated to set forth guidelines in the dispensation of justice but not to bind and chain the
hand that dispenses it, for otherwise, courts will be mere slaves to or robots of technical rules, shorn
of judicial discretion. That is precisely why courts in rendering real justice have always been, as they
in fact ought to be, conscientiously guided by the norm that when on the balance, technicalities take
backseat against substantive rights, and not the other way around. 30

WhereforE, premises considered, the Resolution dated 25 June 2008 of the Regional Trial Court of
Cebu City, Branch 24, in Special Proceeding No. 12562-CEB is REVERSED and set aside. This
case is ordered REMANDED to the said trial court for further proceedings in accordance with the
ruling of the Court herein. No costs.

SO ORDERED.

MINITA V. CHICO-NAZARIO
 Republic of the Philippines
SUPREME COURT

FIRST DIVISION

G.R. No. 161882 July 8, 2005

BUKIDNON DOCTORS’ HOSPITAL, INC., Petitioners,

vs.
METROPOLITAN BANK & TRUST CO., Respondent.

DECISION

DAVIDE, JR., C.J.:

At issue in this petition for review on certiorari is whether a writ of possession is the proper remedy
for evicting a mortgagor who became a lessee of the mortgaged properties after the mortgagee has
consolidated ownership over the properties and was issued new certificates of title.

The facts are as follows:

Sometime in 1995, petitioner Bukidnon Doctors’ Hospital, Inc., obtained a loan of ₱25 million from
respondent Metropolitan Bank and Trust Company to be used for the construction of its hospital. To
secure this loan, the petitioner mortgaged six parcels of land located in Valencia, Bukidnon, covered
by TCT Nos. T-52197, T-52198, T-52199, T-52200, T-52201, and T-52202 and registered in the
name of Dr. Rene Sison and Rory P. Roque, President and Administrator, respectively, of the
petitioner. Upon petitioner’s default in the payment of the loan, the mortgage was extrajudicially
foreclosed and the mortgaged lots were sold in a public auction to respondent bank, being the sole
and highest bidder. The petitioner failed to redeem the properties within the period of redemption.
Forthwith, the respondent consolidated its ownership over the properties and was issued new
certificates of title on 1 October 2001. 1

Earlier, in a letter received by the respondent on 7 July 2001, the petitioner expressed its desire to
continue staying in the subject premises so that the operation of the hospital erected thereon would
not be disrupted. For that purpose, the petitioner proposed to pay rent in the amount of ₱100,000
per month for a period of, but not limited to, three years.2 On 17 December 2001, the respondent
agreed to lease the properties but subject to the following terms: (1) the monthly rental would be
₱200,000 with a one month advance rental and a deposit equivalent to three months rental; (2) the
effectivity of the lease contract would be from June 2001; and (3) the contract would be subject to
review every six months.3 The terms finally agreed upon by the parties, as culled from respondent’s
letter to the petitioner of 30 May 2002, were (1) a monthly rental of ₱150,000, and (2) the effectivity
of the lease contract in November 2001. 4
In its letter of 16 July 2003, or approximately a year and eight months after the agreed effectivity
date of the lease contract, the respondent asked the petitioner to vacate the leased premises within
fifteen days. The petitioner refused, invoking the subsisting lease agreement.

On 21 August 2003, the respondent filed with the Regional Trial Court (RTC) of Malaybalay City,
Bukidnon, an Ex Parte Motion for a Writ of Possession. The case was docketed as Misc. Case No.
735-03 and raffled to Branch 9 of that court.

On 17 November 2003, the trial court issued an order granting respondent’s ex parte motion for a
writ of possession. The pertinent portion of the order reads as follows:

Since all the requirements or requisites for the issuance are present in this case, the court finds that
it has no choice or other alternative but to issue the same, the duty of the Court being ministerial in
character. The respondent can ventilate all its defenses in a separate case that the respondent may
file for that purpose….

...

After the expiration of the period of redemption, a writ of possession can be demanded by a
purchaser of the foreclosed property as a matter of right. Even during the period of redemption,
possession can be demanded provided a bond is posted in accordance with Section 7, Act No. 3135
(Vda. De Zaballero vs. CA, 229 SCRA 810).5

Its motion for reconsideration having been denied by the trial court in the Order of 23 January
2004,6 the petitioner filed on 29 January 2004 (the day it received the denial order) a Notice of
Appeal stating that it was appealing to the Court of Appeals on both questions of fact and
law.7 Earlier, or on 27 November 2003, the petitioner filed with the trial court an action for specific
performance, injunction, and damages, docketed as Civil Case No. 3312-03. 8 Also, on 30 January
2004, the petitioner filed a petition for rehabilitation before the RTC of Cagayan de Oro City, Branch
18, docketed as Spec. Pro. Case No. 2004-019.

On 11 February 2004, before its Notice of Appeal could be acted upon by the trial court, the
petitioner filed a Manifestation and Motion stating that due to the nature of the appeal that it intended
to file, it was withdrawing the Notice of Appeal. 9 Two days thereafter, or on 13 February 2004, which
was the last day within which to appeal the 29 January 2004 Order, it filed with us a motion for
extension of thirty days from the expiration of the reglementary period to file a petition for review
on certiorari or until 14 March 2004. We granted this motion for extension in our Resolution of 3
March 2004. Then, on 4 March 2004, the petitioner instituted the instant petition for review
on certiorari under Rule 45, in relation to Section 2(c) of Rule 41, of the Rules of Court, raising a
single issue for our consideration, to wit:

Whether [OR] NOT the court a quo correctly ruled that respondent, a former mortgagee-buyer, was
still entitled to a writ of possession as a matter of right as provided under Act 3135, as amended,
despite a lease agreement between itself and the former mortgagor-seller executed after respondent
became the absolute owner of the foreclosed properties. 10

In its Comment,11 the respondent asserts that the petitioner is guilty of forum-shopping for having
"gone to four different courts for the same relief." Besides, by filing an ordinary appeal under Rule 41
of the Rules of Court, the petitioner had already waived its right to file a petition for review
on certiorari under Rule 45, since the two modes of appeal are mutually exclusive and governed by
different rules. Pursuant to the principle of hierarchy of courts, the petitioner should have first filed
the instant petition with the Court of Appeals, which has concurrent jurisdiction with the Supreme
Court to resolve cases involving only questions of law. As to the main issue, the respondent argues
that as a purchaser in a valid extrajudicial foreclosure sale under Act No. 3135 and as the absolute
owner of the subject parcels of land, it was entitled as a matter of right to the issuance of a writ of
possession. The subsequent "agreement to stay" between the parties did not negate respondent’s
right to take possession of the subject properties through a writ of possession. In any event, the
"agreement to stay" on the subject properties was deemed to be on a month-to-month basis, since
the period therefor was not fixed.

The petitioner rebuts, in its Reply, respondent’s arguments, contending that it did not shop for a
favorable forum, since the three cases where it is either a defendant/oppositor or plaintiff/petitioner
do not involve the same subject matter, causes of action, and parties. Contrary to the claim of the
respondent, it immediately withdrew by proper motion its notice of appeal in the trial court after
realizing that the proper remedy was a petition for review on certiorari under Rule 45 of the Rules of
Court, not a petition for review under Rule 42. Rule 42 is not applicable to the case at bar because it
is the Supreme Court that has jurisdiction over the petition as it involves a pure question of law
pursuant to Section 2(c) of Rule 41 and Section 1 of Rule 45 of the Rules of Court. Lastly, the trial
court clearly erred in granting respondent’s ex parte motion for a writ of possession because of the
existence of a lease agreement between the parties, which was executed after the respondent
consolidated its title to the subject properties.

In our Resolution of 2 August 2004, we gave due course to the petition and resolved to decide the
case based on the pleadings already filed.12

On 17 December 2004, the respondent filed a Manifestation and Motion to Dismiss Petition. 13 It
brings to our attention petitioner’s letter dated 3 November 2004 informing it that the petitioner had
decided to close its hospital operations and to turn over the premises to the respondent on 30
November 2004 in view of the expiration of the lease agreement. According to the respondent,
petitioner’s express and unequivocal recognition of the expiration of the alleged lease agreement
and its act of turning over the possession of the subject property to the respondent had rendered the
instant petition moot and academic. The petitioner countered that the legal issue of whether a writ of
possession may be issued despite the existence of a lease agreement must be resolved by this
Court, since this issue may again arise as "banks continue to foreclose, seek possession and/or
lease out the foreclosed premises to previous mortgagors."

Indeed, because of petitioner’s act of surrendering the possession of the subject properties owing to
the expiration of the lease agreement, the instant petition praying (1) for the reversal of the order for
the issuance of a writ of possession and (2) for full possession by the petitioner of the subject
properties was rendered moot and academic. Nonetheless, for the guidance of the bench and the
bar, we shall proceed to resolve the important issue of whether a writ of possession will lie to recover
the material possession of previously mortgaged properties that have been leased to the mortgagor
after the mortgagee consolidated its ownership over the properties.

However, we shall first take up the procedural issues raised by the respondent.

We are not convinced that the petitioner is guilty of forum- shopping.

Forum-shopping is an act of a party against whom an adverse judgment or order has been rendered
in one forum of seeking and possibly getting a favorable opinion in another forum, other than by
appeal or special civil action for certiorari. It may also be the institution of two or more actions or
proceedings grounded on the same cause on the supposition that one or the other court would make
a favorable disposition. The elements are as follows: (1) identity of parties, or at least such parties as
would represent the same interest in both actions; (2) identity of rights asserted and relief prayed for,
the relief being founded on the same facts; and (3) identity of the two preceding particulars such that
any judgment in the other action, regardless of which party is successful, will amount to res
judicata in the action under consideration. 14

Before filing on 4 March 2004 the petition in this case, the petitioner had filed two other cases,
namely, (1) an Action for Specific Performance, Injunction, and Damages with the RTC of
Malaybalay City, docketed as Civil Case No. 3312-03 and (2) a Petition for Corporate Rehabilitation
with the RTC of Cagayan de Oro City, docketed therein as S.P. Case No. 2004-019. However, these
two cases involve causes of action different from the one at bar. In Civil Case No. 3312-03, the
petitioner sought the enforcement of the lease contract between it and the respondent, with prayer
for damages for the latter’s breach of its contractual obligation. In S.P. Case No. 2004-019, the
petitioner prayed for rehabilitation pursuant to the Interim Rules on Corporation Rehabilitation.

Upon the other hand, in this case, the ex parte motion for a writ of possession was filed at the
instance of the respondent. When the motion was granted, the petitioner filed a notice of appeal to
the Court of Appeals, which it later withdrew. Thereafter, it appealed to us via Rule 45 of the Rules of
Court questioning the propriety of the issuance of a writ of possession for the purpose of evicting the
petitioner despite the lease agreement subsequently entered into by the parties after the expiration
of the redemption period. As can be clearly seen, the two cases and the appeal filed by the petitioner
involved different causes of action. Thus, the petitioner cannot be said to have engaged in forum-
shopping.

Neither can the petitioner be deemed to have waived its right to file this petition. Realizing that the
remaining issue was a pure question of law, it withdrew its Notice of Appeal stating that it was
appealing the 28 January 2002 Order on both questions of law and fact. Section 9 of Rule 41 of the
Rules of Court provides that prior to the transmittal of the original record, the court may allow
withdrawal of the appeal.

Nothing in the Rules prevents a party from filing a petition under Rule 45 of the Rules of Court after
seasonably withdrawing the Notice of Appeal as long as it is done within the reglementary period
and the issue involved is purely one of law. In this case it was before the lapse of the reglementary
period to appeal that the petitioner withdrew its Notice of Appeal to the Court of Appeals and filed
with us a motion for extension of time to file a petition under Rule 45 of the Rules of Court. And the
petition was filed within the extended period we granted, raising only one question of law.

Nor is there a violation of the doctrine of hierarchy of courts. Section 2(c), Rule 41 of the Rules of
Court categorically provides that in all cases where only questions of law are raised, the appeal from
a decision or order of the Regional Trial Court shall be to the Supreme Court by petition for review
on certiorari in accordance with Rule 45. Section 2(c) of Rule 41 of the Rules of Court reads:

SEC. 2. Modes of appeal. –

(a) Ordinary appeal. – The appeal to the Court of Appeals in cases decided by the Regional Trial
Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the
court which rendered the judgment or final order appealed from and serving a copy thereof upon the
adverse party. No record on appeal shall be required except in special proceedings and other cases
of multiple or separate appeals where the law or these Rules so require. In such cases, the record
on appeal shall be filed and served in like manner.

(b) Petition for review. – The appeal to the Court of Appeals in cases decided by the Regional Trial
Court in the exercise of its appellate jurisdiction shall be by petition for review in accordance with
Rule 42.
(c) Appeal by certiorari. – In all cases where only questions of law are raised or involved, the appeal
shall be to the Supreme Court by petition for review on certiorari in accordance with Rule 45.

Section 1 of Rule 45 provides:

SECTION 1. Filing of petition with Supreme Court. – A party desiring to appeal by certiorari from a
judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial
Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition
for review on certiorari. The petition shall raise only questions of law which must be distinctly set
forth.

A question of law exists when the doubt or controversy concerns the correct application of law or
jurisprudence to a certain set of facts; or when the issue does not call for an examination of the
probative value of the evidence presented, the truth or falsehood of facts being admitted. A question
of fact exists when the doubt or difference arises as to the truth or falsehood of facts or when the
query invites calibration of the whole evidence considering mainly the credibility of the witnesses, the
existence and relevancy of specific surrounding circumstances, as well as their relation to each other
and to the whole, and the probability of the situation. 15

As earlier stated, the only issue raised in this petition is "whether [or] not the court a quo correctly
ruled that respondent, a former mortgagee-buyer, was still entitled to a writ of possession as a
matter of right as provided under act 3135, as amended, despite a lease agreement between itself
and the former mortgagor-seller executed after respondent became the absolute owner of the
foreclosed properties."

This question is undoubtedly one of law. The existence of a lease agreement between the parties,
which is a question of fact, ceased to be an issue in view of the admission thereof by both the
petitioner and the respondent. 16 Thus, with only a question of law raised in this petition, direct resort
to this Court is proper.

In sum, the petition at bar is not tainted with any of the procedural errors attributed to it by the
respondent.

We shall now consider the issue of the propriety of the issuance of a writ of possession in favor of
the respondent.

The law17 and jurisprudence18 are clear that in extrajudicial foreclosure proceedings, an order for a
writ of possession issues as a matter of course, upon proper motion, after the expiration of the
redemption period without the mortgagor exercising the right of redemption, or even during the
redemption period provided a bond is posted to indemnify the debtor in case the foreclosure sale is
shown to have been conducted without complying with the requirements of the law or without the
debtor violating the mortgage contract.19 The rationale for the ministerial issuance of a writ of
possession is to put the foreclosure buyer in possession of the property sold without delay, since the
right to possession is founded on ownership of the property. 20

However, in the instant case, a writ of possession was not the correct remedy for the purpose of
ousting the petitioner from the subject premises. It must be noted that possession is the holding of a
thing or the enjoyment of a right. 21 It is acquired by the material occupation of a thing or the exercise
of a right, or by the fact that a thing or right is subject to the action of one’s will, or by the proper acts
and legal formalities established for acquiring such right. 22 "By material occupation of a thing," it is
not necessary that the person in possession should be the occupant of the property; the occupancy
can be held by another in his name.23 Thus Articles 524 and 525 of the Civil Code provide:
Art. 524. Possession may be exercised in one’s own name or in that of another.

Art. 525. The possession of things or rights may be had in one of two concepts: either in the concept
of owner, or in that of the holder of the thing or right to keep or enjoy it, the ownership pertaining to
another person.

In other words, an owner of a real estate has possession, either when he himself is physically
occupying the property, or when another person who recognizes his rights as owner is occupying it.

In the case at bar, it is not disputed that after the foreclosure of the property in question and the
issuance of new certificates of title in favor of the respondent, the petitioner and the respondent
entered into a contract of lease of the subject properties. This new contractual relation presupposed
that the petitioner recognized that possession of the properties had been legally placed in the hands
of the respondent, and that the latter had taken such possession but delivered it to the former as
lessee of the property. By paying the monthly rentals, the petitioner also recognized the superior
right of the respondent to the possession of the property as owner thereof. And by accepting the
monthly rentals, the respondent enjoyed the fruits of its possession over the subject
property.24 Clearly, the respondent is in material possession of the subject premises. Thus, the trial
court’s issuance of a writ of possession is not only superfluous, but improper under the law.
Moreover, as a lessee, the petitioner was a legitimate possessor of the subject properties under
Article 525 of the Civil Code. Thus, it could not be deprived of its lawful possession by a mere ex
parte motion for a writ of possession.

Apropos to this case is Banco de Oro Savings and Mortgage Bank v. Court of Appeals.25 There, the
spouses Nery were not able to redeem the property they mortgaged to the bank; hence, the latter
was able to consolidate the title to the property in its name. The Nerys requested the bank for more
time to repurchase the subject property, obligating themselves to pay monthly rentals or reasonable
compensation for the continued occupation of the premises on the ground that they had leased
portions of the building to tenants. Since neither the Nerys nor their tenants vacated the subject
premises nor paid reasonable compensation for the use thereof, the bank instituted three separate
ejectment suits against them before the Metropolitan Trial Court of Parañaque. The Nerys argued
that the proper remedy that should have been taken by the bank as mortgagee was to obtain a writ
of possession and not an action for ejectment. We rejected Nerys’ argument and ruled that it was
proper for the bank to sue for ejectment. Thus:

The Nerys forget, however, that they had asked the Bank for a grace period within which to
repurchase the mortgaged property and to be allowed to pay monthly rentals or reasonable
compensation for the use of the premises. In fact, they did pay rentals for several months. Their
continued stay in the property was thereby converted to one by tolerance or permission. "A person
who occupies the land of another at the latter’s tolerance or permission, without any contract
between them, is necessarily bound by an implied promise that he will vacate upon demand, failing
which, a summary action for ejectment is proper against him" (Dakudao v. Consolacion, L-54573, 24
June 1983, 112 SCRA 877). The Nerys refused to vacate upon demand, the last of which was made
by letter, dated 25 July 1984, as found by the Trial Court, and not 9 September 1983 as the Nerys
allege. An ejectment suit, therefore, was proper, with the legally prescribed period to institute the
same having been complied with.

Significantly, too, with the consolidation of title in the Bank, it had become the owner of the subject
premises. As such, it could bring an action for ejectment to obtain possession and occupation. Thus,
Section 1, Rule 70 provides "an action for unlawful detainer may be brought by a landlord, vendor,
vendee, or other person against whom the possession of any land or building is unlawfully withheld
after the expiration or termination of the right to hold possession xxx."
It is indeed, correct that in ordinary extra-judicial foreclosure cases, the mortgagee’s remedy is to
apply for a Writ of Possession. As already intimated, however, the stay of the Nerys in the premises
had been converted to one by permission with a corresponding commitment to pay rentals. An
implied lease was thereby treated between the parties. "Where the question relates to the relation
between landlord and tenant, the nature of the lease premises involved, the reasonableness of the
rentals demanded, the right or lack of right of the tenant to continue occupying the premises against
the will of the landlord, the applicability of the rental law, etc., a case for ejectment is
proper. (Commander Realty, Inc.,
vs.
Court of Appeals, L-77227, 9 May 1988, 161 SCRA 264). Notably, too, there were other tenants
in the premises who were not privy to the foreclosure proceedings but had to be rejected as
well. (emphasis ours)26

In a nutshell, where a lease agreement, whether express or implied, is subsequently entered

into by the mortgagor and the mortgagee after the expiration of the redemption period and
the consolidation of title in the name of the latter, a case for ejectment or unlawful detainer,
not a motion for a writ of possession, is the proper remedy in order to evict from the
questioned premises a mortgagor-turned-lessee. The rationale for this rule is that a new
relationship between the parties has been created. What applies is no longer the law on
extrajudicial foreclosure, but the law on lease. And when an issue arises, as in the case at
bar, regarding the right of the lessee to continue occupying the leased premises, the rights of
the parties must be heard and resolved in a case for ejectment or unlawful detainer under
Rule 70 of the Rules of Court.

WHEREFORE, the petition is hereby GRANTED. The Orders of the Regional Trial Court of
Malaybalay City, Bukidnon, Branch 9, in Misc. Case. No. 735-03 dated 17 November 2003 and
23 January 2004, are hereby REVERSED and SET ASIDE.

No pronouncement as to costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 143331             October 5, 2007

FIVE STAR MARKETING CO., INC., represented by its President SALVADOR BOOC, petitioner,
vs.
JAMES L. BOOC, respondent.

DECISION

AZCUNA, J.:

Before the Court is a petition for review on certiorari assailing the Decision1 of the Regional Trial
Court (RTC), Branch 4, Iligan City dated April 25, 2000 in Civil Case No. 5023 which set aside the
Decision2 of the Municipal Trial Court in Cities (MTCC), Branch 1, Iligan City dated November 10,
1999 in Civil Case No. (10808-AF) I-1201; and the RTC's Order 3 dated May 30, 2000 denying
petitioner's motion for reconsideration.

The antecedents are as follows:

Petitioner is a corporation duly organized and existing under Philippine laws, 4 the incorporators of
which include the children of the late Antonio Booc and Ong Chuy Tiok, namely, Sheikding, Rufino,
Felisa, Salvador, Jose, and Roque. 5 Said corporation came into existence in 1979, when the heirs of
the late Nicolas Abarca offered to sell to the heirs of the late Antonio Booc Lot 69-A located in
Quezon Avenue, Iligan City.6 Considering that the siblings were to contribute unequal shares of the
purchase price, they decided to create a corporation, Five Star Marketing Company, Inc., the
petitioner herein, whose shares of stock reflected the amount of their contribution in purchasing the
subject property.7 On December 12, 1979, the heirs of Nicolas Abarca and petitioner executed a
Deed of Sale8 where the former sold Lot 69-A to petitioner for the sum of P50,000. Consequently,
Transfer Certificate of Title No. T-19209 (a.f.)9 was issued in the name of petitioner.

In 1982, when the existing structure in the subject property was completely razed by fire, petitioner
constructed thereon a four-storey building financed mainly by a loan secured from Northern
Mindanao Development Bank using the subject property as collateral. 10 The entire ground floor and
the fourth floor were allotted to Rufino, the second floor to the family matriarch, Ong Chuy Tiok, and
the third floor to Sheikding, all of whom occupied the same rent-free. 11

Sometime in the late 1980, on the insistence of Ong Chuy Tiok, James Booc, the son of Sheikding
and respondent herein, was allowed to use one-half of the ground floor for his business rent-free. In
1993, petitioner and respondent entered into an Agreement 12 wherein the latter became the lessee of
the space formerly occupied by Rufino and that of De Leon Gun Store.
Several years later, the board of directors of petitioner passed and approved a
resolution13 terminating the free-rental privilege given to all the occupants of the building. It stressed
that the privileges shall be good only up to March 31, 1999, after which, the building will be open for
lease with the following rates.

Ground floor door 1 P 50,000

Ground floor door 2 40,000
2nd floor 50,000
3rd floor 40,000
4th floor 30,000
Roof deck 15,00014

On March 15, 1999, petitioner notified all the occupants that it had withdrawn all privileges granted to
them. It likewise notified them of the rental rates of the units concerned and further required any
interested occupant to negotiate and enter into a lease agreement with petitioner. 15 Respondent was
informed that the rental rate for ground floor, door 2, is P40,000.00 per month effective April 1,
1999.16 However, respondent did not enter into a lease contract with petitioner and, despite repeated
demands, failed to vacate the premises.17

Thus, on May 25, 1999, petitioner filed an action for unlawful detainer against respondent before the
MTCC, Iligan City. The same was docketed as Civil Case No. (10808-AF) I-1201 and raffled to
Branch 1.

Petitioner prayed, thus:

WHEREFORE, premises considered, the plaintiff most respectfully prays of this Honorable
Court, after due hearing, judgment be rendered in favor of the plaintiff and against the
defendant by:

a) Ordering the defendant to vacate the above-described premises, and return the
possession thereof to the plaintiff;

b) Ordering the defendant to pay the monthly rentals of P40,000.00 of said premises from
April 1999 until the defendant delivers possession of the premises to the plaintiff, as and by
way of actual and compensatory damages;

c) Ordering the defendant to pay the amount of P20,000.00, as and by way of attorney's fees
plus P2,000.00 per court appearance;

d) To pay costs of suit.

Other relief and remedies as may be just and equitable under the premises are likewise
prayed for.18

In his answer, respondent raised several defenses among which being that petitioner has no cause
of action for ejectment against respondent; that petitioner has no legal personality to sue; that the
court has no jurisdiction over the subject matter; and that the premises in question have been
occupied by the respondent for free since the erection of the building, they being the share of his
father Sheikding; and that respondent and his father filed a case in the Securities and Exchange
Commission against petitioner and against the president of petitioner corporation. 19
During the preliminary conference on July 13, 1999, the MTCC directed the parties to explore the
possibility of an amicable settlement. Consequently, the preliminary conference was reset to August
3, 1999.

On July 24, 1999, respondent, through counsel, sent petitioner a telegram asking for a
postponement of the preliminary conference set on August 3, 1999. 20 On July 26, 1999, respondent's
counsel filed a Motion to Reset21 the preliminary conference set for August 3, 1999 to August 24,
1999, allegedly due to an unpostponable personal engagement.

Petitioner, through counsel, opposed the motion arguing that the motion violated the provision of
Sec. 11, Rule 13 of the 1997 Rules of Civil Procedure, 22 hence, it is considered as not filed; that it is
a dilatory motion, a prohibited pleading pursuant to Sec. 19 of the Revised Rule on Summary
Procedure;23 and that no motion for postponement of the preliminary conference shall be allowed
except on meritorious grounds.24

On August 3, 1999, the scheduled preliminary conference pushed through. Petitioner and its counsel
appeared but respondent and his counsel failed to appear despite due notice.

On August 18, 1999, the MTCC issued an Order25 denying respondent's motion to reset on the
grounds that it failed to comply with the required explanation why service was not done personally
pursuant to Sec. 11, Rule 13 of the Rules 26 and that counsel failed to establish that his motion is
meritorious. Consequently, the court ruled on the basis of the facts alleged in the complaint. The
dispositive portion of the order reads as follows:

WHEREFORE, finding the defendant's motion to reset the preliminary conference not
sufficiently impressed with merit, the same is hereby denied. The court shall now render
judgment as may be warranted by the facts alleged in the complaint pursuant to Sec. 7 & 8,
Rule 70 of the Revised Rules of Court of Appeals.

SO ORDERED.

A Verified Motion for Reconsideration,27 dated September 13, 1999, was filed by respondent,
followed by a Supplement to the Motion for Reconsideration, 28 dated September 15, 1999, which the
MTCC denied in its Order29 dated October 12, 1999.

On November 10, 1999, the MTCC rendered a Decision30 in favor of petitioner and against
respondent, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff

and against defendant, ordering that:

1. Defendant vacate the premises in question, and return possession thereof to the plaintiff;

2. Defendant to pay plaintiff monthly rental of P40,000.00 for the said premises from April
1999 until possession thereof is restored to the plaintiff;

3. Defendant to pay plaintiff the sum of P3,000.00 as and for attorney's fees;

4. Defendant to pay the cost of suit.

SO ORDERED.
The MTCC reasoned that respondent's stay on the property is merely by tolerance of petitioner.
Since there is no lease agreement between the parties and respondent is not paying any rental for
the subject premises, respondent's occupancy on the subject premises is entirely dependent upon
the will of petitioner. As such, respondent is liable to surrender the premises and to pay reasonable
compensation for their use.

Respondent appealed the decision to the RTC, assigning the following errors:

[1] THE LOWER COURT GRIEVOUSLY ERRED IN DECIDING EX-PARTE THE

UNLAWFUL DETAINER SUIT IN FAVOR OF THE APPELLEE BASED SOLELY ON THE
ALLEGATIONS IN THE COMPLAINT – ALLEGATIONS WHICH MISERABLY FAILED TO
SHOW COMPLIANCE WITH THE TWIN JURISDICTIONAL REQUIREMENTS OF A
DEMAND TO PAY RENTALS IN ARREARS AND A DEMAND TO VACATE

[2] THE LOWER COURT GRIEVIOUSLY ERRED IN DENYING APPELLANT'S FIRST

MOTION FOR CONTINUANCE OF THE PRE-TRIAL AND IN DENYING APPLLANT'S
MOTION FOR RECONSIDERATION

On January 14, 2000, the RTC issued an Order 31 setting aside the decision appealed from, as well
as the order denying respondent's motion for reconsideration and consequently remanding the case
to the court of origin. The RTC opined that in denying respondent's motion to reset the preliminary
conference, the MTCC gave more weight to procedural technicalities than in hearing and deciding
the case on the merits. The RTC reiterated that judgment by default is frowned upon because it is
something which is only a little less than a denial of due process. Also, the RTC added that the
MTCC should have passed upon the issue of ownership considering that ownership is indispensable
to the resolution of the issue of possession. The fallo reads:

WHEREFORE, premises considered, the default judgment appealed from is hereby set
aside, and the Order of the Court a quo, dated October 12, 1999 denying the appellant's
motion for reconsideration is also set aside.

Let the records of the above-entitled complaint be remanded to the court of origin, MTCC
Branch 01, for further proceeding.

SO ORDERED.

Petitioner then filed a Motion to Set Aside Order32 assailing the order of the RTC for being contrary to
law, insisting that it was not given the opportunity to submit its own memorandum as required by the
rules. On February 4, 2000, the RTC issued a Resolution 33 in favor of petitioner, the dispositive
portion of which reads:

WHEREFORE, the Court finds the motion to be impressed with merit and hereby sets aside
the questioned order of the Court dated January 14, 2000 and in its stead, allows the plaintiff
appellee to submit its memorandum within fifteen (15) days from receipt hereof.

SO ORDERED.34

Petitioner subsequently filed a motion for the issuance of a writ of execution pending appeal, which
motion was denied by the RTC in its Order35 dated March 29, 2000. Petitioner then filed a petition for
mandamus36 before the Court of Appeals (CA) questioning the said order, but the petition was later
dismissed by the appellate court.
On March 31, 2000, petitioner filed its appeal memorandum. 37

On April 25, 2000, the RTC rendered a Decision38 reiterating its January 14, 2000 order. The
dispositive portion of which reads:

WHEREFORE, premises considered, the default judgment appealed from is hereby set
aside, and the Order of the Court a quo, dated October 12, 1999 denying the appellant's
motion for reconsideration is also set aside.

Let the record of the above-entitled complaint be remanded to the court of origin, MTCC
Branch 01, for further proceeding.

SO ORDERED.

The RTC opined that respondent had been in effect denied his day in court; that procedural laws are
technicalities which are adopted not as ends in themselves but means conducive to the realization of
law and justice.39

Petitioner filed a Motion for Reconsideration 40 which was denied in the assailed Order41 dated May
30, 2000.

Hence, this petition, raising the following issues:

(A) WHETHER OR NOT THE LOWER COURT GRIEVOUSLY ERRED IN HOLDING THAT
RESPONDENT WAS DENIED HIS DAY IN COURT BY THE COURT A QUO IN SPITE OF
RESPONDENT AND HIS COUNSEL'S UNJUSTIFIED FAILURE TO APPEAR DURING THE
PRELIMINARY CONFERENCE WHICH IS MANDATORY UNDER THE RULE ON
SUMMARY PROCEDURE;

(B) WHETHER OR NOT THE LOWER COURT CAN SET ASIDE THE ORDER DATED
OCTOBER 12, 1999 OF THE COURT A QUO BY MERE CONCLUSION.

(C) WHETHER OR NOT THE LOWER COURT CAN SET ASIDE THE DECISION OF THE
COURT A QUO DATED NOVEMBER 10, 1999, WITHOUT JUSTIFIED CONCLUSION OF
ITS OWN VOID ORDER OF JANUARY 14, 2000 (ANNEX "N")

(D) WHETHER OR NOT THE LOWER COURT SHOULD HAVE DECIDED THE CASE
BASED ON THE RECORD, PLEADINGS, OR MEMORANDA FILED PURSUANT TO THE
RULES INSTEAD OF REMANDING (THE) CASE TO THE COURT OF ORIGIN FOR
FURTHER PROCEEDINGS, THAT WOULD ONLY UNDULY PROLONG AND DELAY THE
RESOLUTION OF THIS SIMPLE EJECTMENT SUIT.

Petitioner maintains that respondent's motion to reset the preliminary conference and his
subsequent motion for reconsideration of its denial are violative of the Rules on Summary Procedure
and the Rules of Court, particularly Rule 70, Sec. 13 regarding prohibited pleadings and motions.

Petitioner also argues that it is no longer necessary to delve into the issue of ownership since
respondent already acknowledged that fact that it is the registered owner of the subject property.

Finally, petitioner insists that under the Rules on Summary Procedure, the MTCC no longer
conducts hearing for the reception of testimonial evidence and the adjudication of ejectment cases is
done merely on the basis of affidavits and such position papers as may be required by the court.
Consequently, the RTC may decide the case without remanding the case to the MTCC. To rule
otherwise would only delay the final adjudication of the present case.

The petition is meritorious.

The instant case arose from an ejectment case commenced by the petitioner before the MTCC
which was later elevated to the RTC on appeal under Rule 40 of the Rules of Court. Aggrieved by
the RTC's reversal of the MTCC decision, petitioner directly elevated the case to this Court on pure
questions of law.

The Court, in Murillo v. Consul,42 Suarez v. Villarama, Jr.43 and Velayo-Fong v. Velayo,44 had the

occasion to clarify the three modes of appeal from decisions of the RTC, namely: a) ordinary appeal
or appeal by writ of error, where judgment was rendered in a civil or criminal action by the RTC in
the exercise of its original jurisdiction; b) petition for review, where judgment was rendered by the
RTC in the exercise of its appellate jurisdiction; and c) petition for review to this Court. The first
mode of appeal is governed by Rule 41, and is taken to the CA on questions of fact or mixed
questions of fact and law. The second mode, covered by Rule 42, is brought to the CA on questions
of fact, of law, or mixed questions of fact and law. The third mode, provided for by Rule 45, is
elevated to this Court only on questions of law.

A question of law arises when there is doubt as to what the law is on a certain state of facts, while
there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. 45 For a
questions to be one of law, the same must not involve an examination of the probative value of the
evidence presented by the litigants or any of them. The resolution of the issue must rest solely on
what the law provides on the given set of circumstances. 46

In the present case, petitioner comes before this Court raising a pure question of law. It impugns the
propriety of decision of the RTC which would remand the ejectment case to the MTCC for the
reception of evidence and for further proceedings on the issue of ownership of the subject property.
Petitioner further assails the finding of the RTC that the respondent was denied due process when
the MTCC decided on the basis of the complaint alone for failure of the respondent and his counsel
to appear during the preliminary conference. Otherwise stated, the issues are: the effect of the non-
appearance of defendant and counsel during the preliminary conference of an ejectment case and
the propriety of remanding the case for further proceedings.

Clearly, petitioner raises only questions of law which require the interpretation and application of the
rules of procedure laid down by the Rules of Court. However, considering that the assailed decision
was rendered by the RTC in the exercise of its appellate jurisdiction as it was brought before it from
the MTCC, petitioner should have elevated the case to the CA under Rule 42 via the second mode
of appeal, instead of appealing directly before this Court under Rule 45.

Section 447 of Circular 2-90 in effect provides that an appeal taken either to this Court or to the CA by
the wrong mode or inappropriate mode shall be dismissed. This rule is now incorporated in Section
5, Rule 56 of the Rules of Court. Moreover, the filing of the case directly with this Court departs from
the hierarchy of courts. Normally, direct resort from the lower courts to this Court will not be
entertained unless the appropriate remedy cannot be obtained in the lower tribunals. 48

Petitioner, therefore, availed itself of the wrong or inappropriate mode of appeal. On this score alone,
the petition could have been outrightly dismissed. 49 Nevertheless, in the interest of justice and in
view of the erroneous conclusion of the trial judge clearly shown in the RTC decision, this Court shall
proceed to address the issues involving a well-settled question of law. 50
Forcible entry and unlawful detainer cases are summary proceedings designed to provide for an
expeditious means of protecting actual possession or the right to the possession of the property
involved. It does not admit of a delay in the determination thereof. It is a "time procedure" designed
to remedy the situation.51 Stated in another way, the avowed objective of actions for forcible entry
and unlawful detainer, which have purposely been made summary in nature, is to provide a
peaceful, speedy and expeditious means of preventing an alleged illegal possessor of property from
unjustly continuing his possession for a long time, thereby ensuring the maintenance of peace and
order in the community; otherwise, the party illegally deprived of possession might feel the despair of
long waiting and decide as a measure of self-protection to take the law into his hands and seize the
same by force and violence. And since the law discourages continued wrangling over possession of
property for it involves perturbation of social order which must be restored as promptly as possible,
technicalities or details of procedure which may cause unnecessary delays should accordingly and
carefully be avoided.52

In accordance with the above objective, the Revised Rules on Summary Procedure set forth the
steps to expeditiously dispose of the cases covered by the rules, as in ejectment. Specifically, the
rules prohibit dilatory motions for postponements without justifiable cause; and make the
appearance of parties and their counsels, during the preliminary conference, mandatory.

Pertinent provisions of the Rules on Summary Procedure, provide:

Sec. 6. Effect of failure to answer. – Should the defendant fail to answer the complaint within
the period above provided, the court, motu proprio, or on motion of the plaintiff, shall render
judgment as may be warranted by the facts alleged in the complaint and limited to what is
prayed for therein xxx.

SEC. 7 Preliminary conference; appearance of parties. – Not later than thirty (30) days after
the last answer is filed, a preliminary conference shall be held. The rules on pre-trial in
ordinary cases shall be applicable to the preliminary conference unless inconsistent with the
provisions of this Rule.

The failure of the plaintiff to appear in the preliminary conference shall be a cause for the
dismissal of his complaint. The defendant who appears in the absence of the plaintiff shall be
entitled to judgment on his counter-claim in accordance with Section 6 hereof, all cross-
claims shall be dismissed.

If the sole defendant shall fail to appear, the plaintiff shall be entitled to judgment in
accordance with Section 6 hereof. This rule shall not apply where one of two or more
defendants sued under a common cause of action who had pleaded a common defense
shall appear at the preliminary conference.53

Applying the foregoing provisions, the MTCC was indeed empowered to decide the case on the
basis of the complaint filed by the petitioner. The Court once pronounced in the case of Tubiano v.
Razo54 that the MTC and the RTC were correct in declaring the decision submitted for decision
based solely on the complaint, upon failure of the petitioner (respondent herein) to appear at the
preliminary conference.55 The word "shall" used in the above cited provision makes the appearance
of the parties mandatory. The Court excuses the non-appearance only in cases where there is a
justifiable cause offered for the failure to attend.

The record reveals that both the respondent and his counsel failed to appear at the preliminary
conference scheduled on August 3, 1999. The only explanation offered to justify their non-
appearance was the counsel's unpostponable personal engagement in Manila, without specification
as to the details thereof. Assuming that the counsel's justification is acceptable, the same should be
applied only as an explanation for the his non-appearance. However, no explanation at all was
offered with respect to the respondent's failure to appear. At the very least, the respondent should
have attended the preliminary conference notwithstanding the absence of his counsel. Absent any
clear justification for the party and counsel's non-appearance, the defiance of the lawful order of the
court as well as the well-entrenched rule laid down by the rules of procedure on the effect of non-
appearance, cannot be allowed.

This Court cannot ignore the fact that even on appeal to the RTC, the respondent likewise failed to
offer a sufficient explanation for defying the Rules. It is thus unfortunate that the RTC ruled in his
favor on the sole ground that Rules may be liberally applied especially when its strict observance will
result in the denial of due process.

Rules of procedure are essential to the proper, efficient and orderly dispensation of justice. Such
rules are to be applied in a manner that will help secure and not defeat justice. 56 Thus, the Court had
the occasion to rule against the dismissal of appeals based solely on technicalities, especially so
when the appellant had substantially complied with the formal requirements. Substantial compliance
warrants a prudent and reasonable relaxation of the rules of procedure. Circumspect leniency will
give the appellant the fullest opportunity to establish the merits of his complaint rather than to lose
life, liberty, honor or property on technicalities.57 The Rules are relaxed when rigidity would result in a
defeat of equity and substantial justice.58

To reiterate, respondent offered no explanation for his defiance of the rules on preliminary
conference. Neither did he exert effort to substantially comply by appearing before the court even
without his counsel. Thus, there is no reason to affirm the theory of the RTC on the relaxation of the
Rules.

The Court notes that the decision and order of the RTC are for remanding the case to the MTCC on
the mistaken conclusion that there was denial of due process for failure of the respondent to present
his evidence. As discussed above, the decision of the MTCC on the basis of petitioner's complaint is
fully warranted. Furthermore, the RTC should have decided the case on the merits, as an appeal
before it, and not prolong the determination of the issues by remanding it to the MTCC. It must be
emphasized that in cases governed by the Rules on Summary Procedure, no hearing is conducted;
rather, the parties are required to submit their respective position papers. On appeal to the RTC, the
parties are required to submit their memoranda. The RTC should have decided the appeal on the
basis of the records elevated by the MTCC, as well as the memoranda of the parties. To remand it is
a superfluity and contrary to the summary nature of the case. Finally, had the RTC decided the case
in the manner required, the result could only have been to affirm the MTCC decision, since
respondent did not contest it on the merits.

All told, therefore, the decision and order of the RTC must be set aside and the decision of the
MTCC must stand, there being no contrary evidence presented by respondent, and the fact of
ownership by petitioner of the building being undisputed.

WHEREFORE, premises considered, the instant petition is GRANTED. The Decision of the
Regional Trial Court dated April 25, 2000 and its Order dated May 30, 2000 are
hereby ANNULLED and SET ASIDE. The Decision of the Municipal Trial Court in Cities dated
November 10, 1999 is REINSTATED and AFFIRMED.

No costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 194247               June 19, 2013

BASES CONVERSION DEVELOPMENT AUTHORITY, Petitioner,

vs.
ROSA REYES, CENANDO, REYES and CARLOS REYES, Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari 1 are the May 7, 20102 and October 15,
20103 Resolutions of the Court of Appeals (CA) in CA-G.R. CV No. 92181, dismissing petitioner
Bases Conversion Development Authority’s appeal from the November 27, 2007 Order 4 issued by
the Regional Trial Court of Dinalupihan, Bataan, Branch 5 (RTC) in Civil Case Nos. DH-1136-07,
DH-1137-07 and DH-1138-07 for lack of jurisdiction, as only questions of law were raised on the
aforesaid appeal.

The Facts

On February 13, 2007, petitioner filed a complaint5 before the RTC, docketed as Civil Case No. DH-
1136-07, seeking to expropriate 308 square meters of a parcel of land located in Barangay San
Ramon, Dinalupihan, Bataan, registered in the name of respondent Rosa Reyes (Rosa) under
Transfer Certificate of Title (TCT) No. CLOA-10265, in view of the construction of the Subic-Clark-
Tarlac Expressway (SCTEx). It claimed that the said property is an irrigated riceland with a zonal
value of ₱20.00 per square meter, based on the relevant zonal valuation of the Bureau of Internal
Revenue (BIR). Consequently, pursuant to Section 4(a) 6 of Republic Act No. 89747 (RA 8974),
petitioner deposited the amount of ₱6,120.00, 8 representing 100% of the zonal value of the same.

Similar complaints for expropriation, docketed as Civil Case Nos. DH-1137-07 and DH-1138-07,
were also filed over the 156 and 384 square meter portions of certain parcels of land owned by
respondents Cenando Reyes9 (Cenando) and Carlos Reyes10 (Carlos), respectively, for which
petitioner deposited the sums of ₱3,120.0011 and ₱7,680.0012 also in accordance with Section 4(a) of
RA 8974.

In their separate Answers,13 respondents uniformly alleged that while they had no objection to
petitioner’s right to expropriate, they claimed that the amount of just compensation which petitioner
offered was ridiculously low considering that the subject properties were already re-classified into
residential lots as early as October 6, 2003 and as such, their zonal value ranged from ₱3,000.00 to
₱6,000.00 per square meter, as determined by the BIR. Nevertheless, to expedite the proceedings,
respondents expressed that they were amenable to be paid the rate of ₱3,000.00 per square meter,
at the lowest, translating to ₱924,000.00 for Rosa, 14 ₱468,000.00 for Cenando15 and ₱1,152,000.00
for Carlos.16

The three (3) cases were subsequently consolidated as per the RTC’s Order dated May 23,
200717 and a writ of possession was granted in petitioner’s favor on December 12, 2007. 18
Meanwhile, on April 27, 2007, respondents filed a Motion for Summary Judgment 19 (motion for
summary judgment), contending that there were no genuine issues left for resolution, except for the
amount of damages to be paid as just compensation.

In opposition,20 petitioner argued that Rule 35 of the Rules of Court on summary judgment applies
only to ordinary civil actions for recovery of money claims and not to expropriation cases. Moreover,
it claimed that the mandatory constitution of a panel of commissioners for the purpose of
ascertaining the amount of just compensation due under Section 5, Rule 67 of the Rules of Court
precludes a summary judgment.

In turn, respondents filed a Reply,21 asserting that Rule 35 of the Rules of Court applies to both
ordinary and special civil actions.

The RTC Ruling

On November 27, 2007, the RTC issued an Order, 22 granting the motion for summary judgment and
thereby ordered petitioner to pay respondents just compensation at the rate of ₱3,000.00 per square
meter, for a total of ₱924,000.00 for Rosa, ₱1,152,000.00 for Carlos and ₱468,000.00 for Cenando.

In ruling for respondents, the RTC observed that the subject properties were already re-classified
from agricultural to residential in 2004, or long before the corresponding expropriation complaints
were filed in February 2007. In this regard, it held that the amount of just compensation should be
pegged anywhere between the range of ₱3,000.00 to ₱6,000.00 per square meter, pursuant to the
relevant zonal valuation of the BIR as published in the December 9, 2002 issue of the Official
Gazette.23 Thus, considering that respondents had already signified their willingness to accept the
rate of ₱3,000.00 per square meter as just compensation, it ruled that there was nothing left for it to
do but to terminate the proceedings through summary judgment. In view of the foregoing, the RTC
brushed aside petitioner’s insistence for the constitution of a panel of commissioners under Section
5, Rule 67 of the Rules of Court, dismissing the same as a futile exercise which would only delay the
proceedings.24

Dissatisfied, petitioner filed a motion for reconsideration 25 based on the following grounds: (a)
respondents failed to prove that the properties sought to be expropriated were properly re-classified;
(b) the RTC erred in fixing the value thereof at the rate of ₱3,000.00 per square meter given that
they are not located along a national highway or road but are inner lots which should be classified as
"all other streets" and hence, accorded a lower zonal valuation; (c) the non-appointment of the panel
of commissioners was fatal; and (d) the issues surrounding the overlap of Rosa’s and Cenando’s
properties with that of the Philippine National Bank26 must first be resolved so as not to prejudice the
rights of the parties. In line with these factual issues, petitioner maintained that a full-blown trial
should have been conducted by the RTC.

Petitioner’s motion for reconsideration was, however, denied in an Order 27 dated May 12, 2008,
prompting it to file a notice of appeal. 28

For their part, respondents filed a Motion to Dismiss Appeal, 29 averring that an appeal from a
summary judgment raises only questions of law; hence, the proper recourse to assail its propriety
should be a petition for review on certiorari under Rule 45 of the Rules of Court and not an ordinary
appeal under Rule 41 as adopted by petitioner.

In response, petitioner filed a Comment, 30 asserting that its appeal raised both questions of fact and
law and thus, was properly lodged before the CA.
 The CA Ruling

On May 7, 2010, the CA rendered a Resolution, 31 dismissing petitioner’s appeal for being the wrong
mode to assail the RTC’s summary judgment.

It found that the errors raised in petitioner’s appeal essentially pertained to the propriety of the RTC’s
grant of respondents’ motion for summary judgment and thus, involved only questions of law of
which the CA had no jurisdiction. Hence, considering its dismissal of petitioner’s appeal, it held that
the assailed RTC Orders fixing the amount of just compensation had already become final and
executory.

Petitioner moved for reconsideration which was, however, denied in a Resolution dated October 15,
2010,32 prompting it to file the instant petition.

Issue Before The Court

The sole issue in this case is whether or not the CA erred in dismissing petitioner’s appeal.

The Court’s Ruling

The petition is meritorious.

A. Propriety of the CA’s dismissal

of petitioner’s appeal.

Under Section 2, Rule 4133 of the Rules of Court, there are two (2) modes of appealing a judgment or
final order of the RTC in the exercise of its original jurisdiction:

(a) If the issues raised involve questions of fact or mixed questions of fact and law, the
proper recourse is an ordinary appeal to the CA in accordance with Rule 41 in relation to
Rule 44 of the Rules of Court; and

(b) If the issues raised involve only questions of law, the appeal shall be to the Court by
petition for review on certiorari in accordance with Rule 45 of the Rules of Court.

Corollary thereto, should a party raise only questions of law through an ordinary appeal taken under
Rule 41, Section 2, Rule 50 of the Rules of Court provides that the said appeal shall be dismissed. 34

Jurisprudence dictates that there is a "question of law" when the doubt or difference arises as to
what the law is on a certain set of facts or circumstances; on the other hand, there is a "question of
fact" when the issue raised on appeal pertains to the truth or falsity of the alleged facts. The test for
determining whether the supposed error was one of "law" or "fact" is not the appellation given by the
parties raising the same; rather, it is whether the reviewing court can resolve the issues raised
without evaluating the evidence, in which case, it is a question of law; otherwise, it is one of fact. 35 In
other words, where there is no dispute as to the facts, the question of whether or not the conclusions
drawn from these facts are correct is a question of law.36 However, if the question posed requires a
re-evaluation of the credibility of witnesses, or the existence or relevance of surrounding
circumstances and their relationship to each other, the issue is factual. 37

Applying these principles, the Court finds that the CA did not err in dismissing petitioner’s appeal.
Records show that petitioner raised four (4) issues38 in its appeal before the CA:

First, whether or not summary judgment was properly rendered by the RTC;

Second, whether or not there is any evidence on record to support the conclusion that the subject
lots had already been re-classified from agricultural to residential; and if in the affirmative, whether or
not the same may be considered as "interior lots" which would necessarily affect its zonal valuation;

Third, whether or not the appointment of commissioners is indispensable in an expropriation case;

and

Fourth, whether or not the properties of Cenando and Rosa Reyes overlap that of the Philippine
National Bank.

At the outset, it bears to note that the second and fourth issues were not raised by petitioner in its
opposition to respondents’ motion for summary judgment 39 but only in its motion for reconsideration
from the RTC’s Order dated November 27, 2007. 40 It has been consistently held that appellate courts
are precluded from entertaining matters neither alleged nor raised during the proceedings below, but
ventilated for the first time only in a motion for reconsideration or on appeal. 41 Thus, while these
issues may be classified as questions of fact since their resolution would require an evaluation of the
evidence on record, the CA was precluded from considering the same. Consequently, only the first
and third issues were left for its determination.

Unlike the second and fourth issues, the first and third issues can be properly classified as questions
of law since their resolution would not involve an examination of the evidence but only an application
of the law on a particular set of facts.

To elucidate, the first issue regarding the propriety of the RTC’s summary judgment involves only a
question of law since one need not evaluate the evidence on record to assess if the unresolved
issues in this case, i.e., the classification of the properties expropriated, its location and valuation,
constitute genuine issues.42 This is in line with the rule that a summary judgment is not warranted
when there are genuine issues which call for a full blown trial. 43 Similarly, the third issue concerning
the propriety of the appointment of a panel of commissioners only requires an application of Section
5, Rule 67 of the Rules of Court,44 without the need of examining the evidence on record. Thus,
given that the issues to be resolved on appeal only involve questions of law, no reversible error was
committed by the CA in dismissing petitioner’s appeal. The proper recourse should have been to file
a petition for review on certiorari under Rule 45 of the Rules of Court. 1âwphi1

B. Relaxation of procedural rules.

While the RTC’s November 27, 2007 Order should – as a matter of course – already be regarded as
final and executory due to petitioner’s erroneous appeal, the Court, nonetheless, deems it proper to
relax the rules of procedure and remand the case to the RTC in order to re-evaluate, on trial, the
proper amount of just compensation. Two (2) reasons impel this course of action:

First, petitioner’s appeal – at least as to the first issue – would have been granted due to its merit
were it not for the foregoing procedural lapse.

As earlier discussed, genuine issues remain to be threshed out in this case which thereby negate
the propriety of a summary judgment. In this respect, the RTC improperly issued the November 27,
2007 Order which granted respondents’ motion for summary judgment.
Second, expropriation cases involve the expenditure of public funds and thus, are matters of public
interest. In this light, trial courts are required to be more circumspect in their evaluation of the just
compensation to be awarded to the owner of the expropriated property, 45 as in this case.

Records, however, show that the adjudged amount of just compensation was not arrived at
judiciously since the RTC based the same solely on respondents’ intimation that they were willing to
settle for the rate of ₱3,000.00 per square meter.46 It is settled that the final conclusions on the
proper amount of just compensation can only be made after due ascertainment of the requirements
set forth under RA 8974 and not merely based on the declarations of the parties. 47

Further, it is observed that the RTC simply glossed over the issue regarding the proper classification
of the subject properties as either residential or agricultural lands when the said matter should have
been circumspectly resolved considering that land classification accounts for a significant
discrepancy in the valuation of the property. Based on the evidence on record, the residential lots in
Barangay San Ramon, Dinalupihan, Bataan have a zonal valuation ranging from ₱2,000.00 (for all
other streets) to ₱6,000.00 per square meter (for those situated within the vicinity of the national
highway and San Juan to Payumo Streets).48 On the other hand, petitioner claims . that agricultural
lands command a zonal valuation of only ₱20.00. 49 Moreover, a property's zonal valuation cannot, by
and of itself, be considered as the sole basis for just compensation"; hence, the RTC was duty
bound to look at other indices of fair market value. 50 Unfortunately, records show that it did not.

In fine, given the special and compelling reasons as above-discussed, the Court finds it appropriate
to relax the rules of procedure in the interest of substantial justice. In Twin Towers Condominium
Corp. v. CA,51 the Court held that the merits of the case may be regarded as a special or compelling
reason to relax procedural rules. Likewise, in Apo Fruits Corporation v. Land Bank of the
Philippines,52 special and compelling reasons constitute recognized exceptions to the rule on
immutability of judgment, viz:

As a rule, a final judgment may no longer be altered, amended or modified, even if the alteration,
amendment or modification is meant to correct what is perceived to l:1e an erroneous conclusion of
fact or law and regardless of what court, be it the highest Court of the land, rendered it. In the past,
however, we have recognized exceptions to this rule by reversing judgments and recalling their
entries in the interest of substantial justice and where special and compelling reasons for such
actions. (Emphasis supplied)

Accordingly, the case is hereby remanded to the RTC for further proceedings in order to determine
the proper amount of just compensation due to respondents.

WHEREFORE, the petition is GRANTED. The May 7, 2010 and October 15, 2010 Resolutions of the
Court of Appeals in CA-G.R. CV No. 92181 and the November 27, 2007 and May 12,2008 Orders of
the Regional Trial Court of Dinalupihan, Bataan, Branch 5 are hereby SET ASIDE. Let the records of
this case be REMANDED to the trial court for further proceedings to determine the proper amount of
just compensation.

SO ORDERED.

ESTELA M. PERLAS-BERNABE
Associate Justice

WE CONCUR:
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 152827             February 6, 2007

GERARDO MENDOZA, TRINIA and IYLENE all surnamed MENDOZA, Petitioners,

vs.
SOLEDAD SALINAS, Respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

Assailed in the present Petition for Review on Certiorari is the Order dated April 2, 2002 issued by
the Regional Trial Court (RTC) of Olongapo City, Branch 72, acting as Land Registration Court, in
LRC Case No. N-04-0-97, granting respondent's prayer for the issuance of a writ of possession in
her favor.1

The assailed Order was issued by the RTC after it rendered a favorable judgment on respondent's
application for registration in its Decision dated November 3, 1998, and Original Certificate of Title
(OCT) No. P-10053 was issued in her name covering a parcel of land described as follows:

A parcel of land (Plan Psu-224228, LR Case No. N-04-0-97, LRA Record No. N-68955), situated in
the Barrio of Barretto, Municipality of Olongapo, Province of Zambales, Island of Luzon, Bounded on
the NW., points 1-3 by Road (6.00 m. wide) (unimproved); on the NE., points 3-4 by Public Land
claimed by C. Panaligan; on the E., SE., and SW., points 4-19 by Makinaya River (10.00 m. wide);
on the SW., points 19-29 by Public Land; and on the NW., points 29-1 by Road (6.00 m. wide)
unimproved. Beginning at a point marked "1" on plan, being S.84 deg. 47'E., 2644.65 m. from
B.L.B.M. 2, Barrio of Matain, Subic, Zambales, thence

xxxx

beginning; containing an area of TWENTY THOUSAND ONE HUNDRED FORTY NINE (20, 149)
SQUARE METERS, more or less. x x x2

Petitioners opposed respondent's application for the issuance of a writ of possession claiming that
they were not oppositors/parties to the registration case and they have been in actual physical
possession of the property since 1964. The RTC, however, rejected their arguments and granted
respondent's application for the issuance of a writ of possession per herein assailed Order.

Hence, the present petition. 1avvphi1.net

Petitioners set forth the lone assignment of error that the RTC erred in issuing the writ of possession
and acted with grave abuse of discretion amounting to lack and excess of jurisdiction. 3 Petitioners
reiterate their argument that they cannot be ousted of their possession of the property, having been
in actual possession of the property since 1964, as evidenced by petitioner Gerardo C. Mendoza's
Sales Application made in January 1986 over the following property:
A parcel of land situated at Burgos St., Bo. Barretto, O.C. Bounded on the North., by Benjamin
Salinas; South., by Gloria Montemayor; East., by Benjamin Salinas & Conrado Pilapil and West.,
Burgos St. situated in Bo. Barretto, Olongapo City, Zambales, and containing an area of 932 square
meters x x x.4

and a Declaration of Real Property for the years 1976 and 1985, 5 among others.

Respondent counters that the present petition should be dismissed, arguing that the petition should
have been initially with the Court of Appeals, based on the principle of hierarchy of courts, and that
the general order of default on October 8, 1998 issued by the RTC binds them and personal notice
was not necessary.

The petition must be granted.

On the procedural issue, it should be pointed out that what petitioners filed with the Court is a
petition for review on certiorari under Rule 45 of the Rules of Court of Court, and not a special civil
action for certiorari under Rule 65. The principle of hierarchy of courts does not find any application
in this case. Under Section 2(c), Rule 41 of the Rules of Court, it is provided that in all cases where
only questions of law are raised, the appeal from a decision or order of the RTC shall be to the
Supreme Court by petition for review on certiorari in accordance with Rule 45, Section 1 of which
provides:

SECTION 1. Filing of petition with Supreme Court. – A party desiring to appeal by certiorari from a
judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial
Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition
for review on certiorari. The petition shall raise only questions of law which must be distinctly set
forth.

A question of law exists when the doubt or controversy concerns the correct application of law or
jurisprudence to a certain set of facts; or when the issue does not call for an examination of the
probative value of the evidence presented, the truth or falsehood of facts being admitted. A question
of fact exists when the doubt or difference arises as to the truth or falsehood of facts or when the
query invites calibration of the whole evidence considering mainly the credibility of the witnesses, the
existence and relevancy of specific surrounding circumstances, as well as their relation to each other
and to the whole, and the probability of the situation. 6

The substantive issue posed for resolution in the present case pertains to the propriety of the
issuance of the writ of possession by the RTC. This, obviously, is a question of law; consequently,
direct resort to this Court is proper.

There is no question that the writ of possession granted in this case was made by the RTC acting as
a land registration court, after finality of its Decision dated November 3, 1998 and the corresponding
OCT No. P-10053 was issued in the name of respondent. As the soundness of the order granting
the writ of possession is a matter of judgment, the remedy is ordinary appeal by way of petition for
review on certiorari. An error of judgment committed by a court in the exercise of its legitimate
jurisdiction is not the same as "grave abuse of discretion." Errors of judgment are correctible by
appeal, while those of jurisdiction are reviewable by certiorari.7

Petitioners, therefore, filed the proper petition before the Court.

On the substantive issue of the propriety of the issuance of the writ of possession, the Court finds
that the RTC committed a reversible error in granting the issuance of the writ of possession.

A writ of possession may be issued under the following instances: (1) land registration proceedings
under Sec. 17 of Act No. 496; (2) judicial foreclosure, provided the debtor is in possession of the
mortgaged realty and no third person, not a party to the foreclosure suit, had intervened; and (3)
extrajudicial foreclosure of a real estate mortgage under Sec. 7 of Act No. 3135 as amended by Act
No. 4118.

In land registration cases, principles regarding the issuance of a writ of possession are well-settled.
A judgment confirming the title of the applicant in a registration case and ordering its registration in
his name necessarily carries with it the delivery of possession which is an inherent element of the
right of ownership.8 This is sanctioned by existing laws in this jurisdiction and by the generally
accepted principle upon which the administration of justice rests.9

Also, a writ of possession may be issued not only against the person who has been defeated in a
registration case but also against anyone unlawfully and adversely occupying the land or any portion
thereof during the land registration proceedings up to the issuance of the final decree, 10 and it is the
duty of the registration court to issue said writ when asked for by the successful claimant. 11

Based on these tenets, the issuance of a writ of possession, therefore, is clearly a ministerial duty of
the land registration court. Such ministerial duty, however, ceases to be so with particular regard to
petitioners who are actual possessors of the property under a claim of ownership. Actual possession
under claim of ownership raises a disputable presumption of ownership. This conclusion is
supported by Article 433 of the Civil Code, which provides:

Actual possession under claim of ownership raises a disputable presumption of ownership. The true
owner must resort to judicial process for the recovery of the property.

Under said provision, one who claims to be the owner of a property possessed by another must
bring the appropriate judicial action for its physical recovery. The term "judicial process" could mean
no less than an ejectment suit or reinvindicatory action, in which the ownership claims of the
contending parties may be properly heard and adjudicated. 12

It is noted that there already exists a final and executory decision disregarding respondent's claim for
possession over the property. In a Decision dated January 21, 2002, rendered by the Municipal Trial
Court in Cities (MTCC) of Olongapo City, Branch 3, in Civil Case No. 4643, an action for unlawful
detainer filed by respondent and her spouse against petitioners and several other occupants of the
property, the case against petitioners was dismissed by the MTCC for lack of cause of
action.13 While the MTCC Decision was appealed by the other defendants, respondent and her
spouse manifested that they will not appeal the decision and, instead, will file for a writ of possession
in LRC Case No. N-04-0-97.

Note should also be made that petitioners registered their opposition to respondent's application for
the issuance of a writ of possession and apprised the RTC of their actual, peaceful, physical and
uninterrupted possession since 1964,14 including therein documents supporting their claim,
consisting of Gerardo C. Mendoza's Sales Application made on January 1986 and a Declaration of
Real Property for the years 1976 and 1985, among others. 15 The RTC, nevertheless, disregarded
their opposition and, instead, relied on the ruling in Serra Serra v. Court of Appeals [195 SCRA
482],16 that a writ of possession may be issued in a land registration proceeding.
A reading of the Serra Serra case, however, supports the Court's conclusion that a writ of
possession should not have been issued in this case. It was ruled by the Court that while a writ of
possession may be issued only pursuant to a decree of registration in an original land registration
proceedings, it cannot issue against possessors under claim of ownership, as actual possession
under claim of ownership raises a disputable presumption of ownership, and the true owner must
resort to judicial process for the recovery of the property, not summarily through a motion for the
issuance of a writ of possession.17

Thus, it was erroneous for the RTC to have issued the writ of possession against petitioners. This
conclusion, of course, is without prejudice to any case that respondent may file for the recovery of
the property.

WHEREFORE, the petition is GRANTED. The Order dated April 2, 2002 issued by the Regional
Trial Court of Olongapo City, Branch 72, acting as Land Registration Court, in LRC Case No. N-04-
0-97, is NULLIFIED and SET ASIDE. Respondent’s application for the issuance of a writ of
possession is DENIED, without prejudice to any case that she may file for recovery of the property.

SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice
 FIRST DIVISION

[G.R. No. 131481, March 16 : 2011]

BUKLOD NANG MAGBUBUKID SA LUPAING RAMOS, INC., PETITIONER, VS. E.

M. RAMOS AND SONS, INC., RESPONDENT.

[G.R. No. 131624]

DEPARTMENT OF AGRARIAN REFORM, PETITIONER, VS. E. M. RAMOS AND

SONS, INC., RESPONDENT.

DECISION

LEONARDO-DE CASTRO, J.:

Before the Court are consolidated Petitions for Review on Certiorari, under Rule 45 of
the 1997 Rules of Civil Procedure, filed by the Buklod ng Maqbubukid Sa Lupaing
Ramos, Inc. (Buklod) and the Department of Agrarian Regorm (DAR), assailing the
Decision[1] dated March 26, 1997 and the Resolution[2] dated November 24, 1997 of the
Court of Appeals in CA G.R. SP No. 40950.

The Court of Appeals declared the parcels of land owned by E.M. Ramos and Sons, Inc.
(EMRASON), located in Barangay Langkaan, Dasmariñas, Cavite (subject property),
exempt from the coverage of the Comprehensive Agrarian Reform Program (CARP),
thus, nullifying and setting aside the Decision[3] dated February 7, 1996 and
Resolution[4] dated May 14, 1996 of the Office of hte President (OP) in O.P. Case No.
5461.

Quoted hereunder are the facts of the case as found by the Court of Appeals:

At the core of the controversy are several parcels of unirrigated land (303.38545
hectares) which from part of a larger expanse with an area of 372 hectares situated at
Barangay Langkaan, Dasmariñas, Cavite.  Originally owned by the MAnila Golf and
Country Club, he property was aquired by the [herein repondent EMRASON] in 1965 for
the purpose of developing the same into a residential subdivision known as "Traveller's
Life Homes".

Sometime in 1971, the Municipal Council of Dasmariñas, Cavite, acting pursuant to

Republic Act (R.A.) No. 2264, otherwise known as the "Loval Autonomy Act", enacteed
Municipal Ordinance No. 1, hereinafter referred to as Ordinance No. 1, enitled "An
Ordinance Providing Subdivision Regulation and Providing Penalties for Violation
Thereof."
In May, 1972, [respondent] E.M. Ramos and Sons, Inc., applied for an authority to
convert and development its aforementioned 372-hectare property into a residential
subdivision, ataching to the apllication detailed development plans and development
proposals from Bancom Development Corporation and San Miguel Corporation.  Acting
thereon the Municipal Council of Dasmariñas, Cavite passed on July 9, 1972 Municipal
Ordinance No. 29-A (Ordinance "No. 29-A, for brevity), approving [EMRASON's]
application. Ordinance No. 29-A pertinently reads:

"Resolved, as it is hereby resolved, to approve the application for subdivision containing

an area of Three Hundred Seventy-Two (372) Hectares situated in Barrios Bocal and
Langkaan, named as Traveller's Life Homes.

Resolved that the Municipal Ordinance regarding subdivision regulations existing in this
municipality shall be strictly followed by the subdivision ".

Subsequently, [EMRASON] paid the fees, dues and licenses needed to proceed with
property development.

It appears, however, that the actual implementation of the subdivision project suffered
delay owing to the confluence of events. Among these was the fact that the property in
question was then mortgaged to, and the titles thereto were in the possession of, the
Overseas Bank of Manila, which during the period material was under liquidation.

On June 15. 1988, Republic Act No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law or CARL, took effect, ushering in a new process of land
classification, acquisition and distribution.

On September 23, 1988, the Municipal Mayor of Dasmariñas, Cavite addressed a

letter to [EMRASON], stating in part, as follows:

"In reply to your letter of June 2, 1988, we wish to clarify that the Municipality
of Dasmariñas, Cavite, has approved the development of your property situated in
Barrios Bukal and Langkaan, Dasmariñas, Cavite, with a total area of 3 72 hectares,
more or less, into residential, industrial, commercial and golf course project.

This conversion conforms with the approved Development Plan of the Municipality
of Dasmariñas Cavite  ".

Then came the Aquino government's plan to convert the tenanted neighboring property
of the National Development Company (NDC) into an industrial estate to be managed
through a joint venture scheme by NDC and the Marubeni Corporation. Part of the
overall conversion package called for providing the tenant-farmers, opting to remain at
the NDC property, with three (3) hectares each. However, the size of the NDC property
turned out to be insufficient for both the demands of the proposed industrial project as
well as the government's commitment to the tenant-farmers. To address this
commitment, the Department of Agrarian Reform (DAR) was thus tasked with acquiring
additional lands from the nearby areas. The DAR earmarked for this purpose the
subject property of [EMRASON].
On August 29, 1990, then OAR Secretary Benjamin Leong sent out the first of four
batches of notices of acquisition, each of which drew protest from [EMRASON]. All told,
these notices covered 303.38545 hectares of land situated at Barangay Langkaan,
Dasmariñas, Cavite owned by [EMRASON].

In the meantime, [EMRASON] filed with the Department of Agrarian Reform

Adjudication Board (DARAB), Region IV, Pasig, Metro Manila, separate petitions to
nullify the first three sets of the above notices. Collectively docketed as DARAB Case
No. IV-Ca-0084-92, these petitions were subsequently referred to the Office of the
Regional Director, Region IV, which had jurisdiction thereon. In his referral action, the
Provincial Agrarian Adjudicator directed the DAR Region IV, through its Operations
Division, to conduct a hearing and/or investigation lo determine whether or not the
subject property is covered by the Comprehensive Agrarian Reform Program (CARP)
and, if not, to cancel the notices of acquisition.

Forthwith, the DAR regional office conducted an on-site inspection of the subject
property.

In the course of the hearing, during which [EMRASON] offered Exhibits :'A" to "UU-2"
as documentary evidence, [EMRASON] received another set of notices of acquisition. As
lo be expected, [EMRASON] again protested.

On August 28, 1992, the Legal Division of DAR, Region IV, through Hearing Officer
Victor Baguilat, rendered a decision declaring as null and void all the notices of
acquisitions, observing that the property covered thereby is, pursuant to Department of
Justice (DOJ) Opinion No. 44, series of 1990, exempt from CARP. The dispositive
portion of the decision reads, as follows;

''WHEREFORE, in the light of the foregoing x x x, considering that the notices of

acquisition dated August 29, 1990 relative to the 39 hectares partly covered by
Transfer Certificate of Title No. T-19298; notices of acquisition all dated April 3, 1991
relative to the 131.41975 hectares partly covered by Transfer Certificates of Title Nos. x
x x; notices of acquisition all dated August 28, 1991 relative lo the 56.9201 hectares
covered by Transfer Certificates of Title Nos. x x x; and notices of acquisition all dated
May 15, 1992 relative to the 76.0456 covered by Transfer Certificates of Title Nos. xx,
all located at Barangay Langkaan, Dasmariñas, Cavite and owned by petitioner EM
RAMOS and SONS, INC. are null and void on the ground that the subject properties are
exempted from CARP coverage pursuant to DOJ Opinion No. 44, Series of 1990, 
therefore, the aforesaid notices of acquisition be cancelled and revoked. "

The DOJ Opinion adverted to, rendered by then Justice Secretary Franklin Drilon,
clarified that lands already converted to non-agricultural uses before June 15, 1988
were no longer covered by CARP.

On September 3, 1992, the Region IV DAR Regional Director motu propio elevated the

case to the Office of the Agrarian Reform Secretary, it being his view that Hearing
Officer Baguilat's decision ran contrary to the department's official position "to pursue
the coverage of the same properties and its eventual distribution to qualified
beneficiaries particularly the Langkaan farmers in fulfillment of the commitment of the
government to deliver to them the balance of thirty-nine hectares x x x".

On January 6, 1993, the herein respondent DAR Secretary Ernesto Garilao [(DAR

Secretary Garilao)] issued an order, the decretal portion of which partly reads:

"WHEREFORE, in the interest of law and justice, an order is hereby rendered:

1.  Affirming the Notices of Acquisition dated August 29, 1990, April 3, 1991, August
28, 1991 and May 15, 1992 covering 303.38545 hectares of the property owned by the
E.M. RAMOS & SONS, INC, located at Barangay Langkaan, Dasmarinas, Cavite x x x;

xxxx

3. Directing the OAR field officials concerned to pursue (he coverage under RA 6657 of
the properties of E.M.  Ramos & Sons,  Inc. for which subject Notices of Acquisition had
been issued.

SO ORDERED".

Its motion for reconsideration of the aforesaid order having been denied by the [DAR
Secretary Garilao] in his subsequent order of January 6, 1993, [EMRASON] appealed to
the Office of the President where the recourse was docketed as O.P. Case No.
5461.

On February 7, 1996, the Office of the President, through herein respondent Deputy

Executive Secretary Renato C. Corona [(Deputy Executive Secretary Corona)],
rendered the herein assailed decision x x x, dismissing [EMRASON's] appeal on the
strength of the following observation:

"To recapitulate, this Office holds that [EMRASON's] property has remained
AGRICULTURAL in classification and therefore falls within the coverage of the CARP, on
the basis of the following:br>

1. [EMRASON] failed to comply with the mandatory requirements and conditions of

Municipal Ordinance Nos. 1 and 29-A, specifically, among others, the need for
approval of the National    Planning   Commission through the Highway District
Engineer, and the Bureau of Lands before final submission to the Municipal
Council and Municipal Mayor;

2. [EMRASON] failed to comply with Administrative Order No. 152,

dated December 16, 1968, and

3. The  certification  of the  Human Settlements Regulatory

Commission (HSRC)  in  1981  and the Housing and Land Use
Regulatory Board (HLRB) in 1992 that the property of [EMRASON]
is agricultural".
Undaunted, [EMRASON] interposed a motion for reconsideration, followed later by
another motion whereunder it invited attention to legal doctrines involving land
conversion recently enunciated by no less than the Office of the President itself.

On May 14, 1996, the [Deputy Executive Secretary Corona] came out with his second
challenged issuance denying [EMRASON's] aforementioned motion for reconsideration x
x x.[5]

From the denial of its Motion for Reconsideration by the OP, EMRASON filed a Petition
for Review with the Court of Appeals, which was docketed as CA-G.R. SP No. 40950.

On July 3, 1996, the Court of Appeals issued a Temporary Restraining Order (TRO),
[6]
 which enjoined then DAR Secretary Ernesto Garilao and Deputy Executive Secretary
Renato C. Corona  from implementing the OP Decision of February 7, 1996 and
Resolution of May 14, 1996 until further orders from the court. On September 17,
1996, the appellate court issued a Resolution [8] granting the prayer of EMRASON for the
issuance of a writ of preliminary injunction.  The writ of preliminary injunction[9] was
actually issued on September 30, 1996 after EMRASON posted the required bond of
P500,000,00.

The DAR Secretary filed a Motion for Reconsideration of the Resolution dated
September 17, 1996 of the Court of Appeals, with the prayer that the writ of
preliminary injunction already issued be lifted, recalled and/or dissolved.

At this juncture, the DAR had already prepared Certificates of Land Ownership Award
(CLOAs) to distribute the subject property to farmer-beneficiaries.  However, the writ of
preliminary injunction issued by the Court of Appeals enjoined the release of the
CLOAs. Buklod, on behalf of the alleged 300 farmer-beneficiaries of the subject
property, filed a Manifestation and Omnibus Motion, wherein it moved that it be allowed
to intervene as an indispensable party in CA-G.R. SP No. 40950; that the writ of
preliminary injunction be immediately dissolved, having been issued in violation of
Section 55 of the CARL; and that the Petition for Review of EMRASON be dismissed
since the appropriate remedy should have been a petition for certiorari before the
Supreme Court.

On March 26, 1997, the Court of Appeals promulgated its assailed Decision.

The Court of Appeals allowed the intervention of Buklod because -the latter's
participation was "not being in any way prejudicial to the interest of the original parties,
nor will such intervention change the factual legal complexion of the case." The
appellate court, however, affirmed the propriety of the remedy availed by EMRASON
given that under Section 5 of Supreme Court Revised Administrative Circular No. 1-95
dated May 16, 1995, appeals from judgments or final orders of the OP or the DAR
under the CARL shall be taken to the Court of Appeals, through a verified petition for
review; and that under Section 3 of the same Administrative Circular, such a petition
for review may raise questions of facts, law, or mixed questions of facts and law.

Ultimately, the Court of Appeals ruled in favor of EMRASON because the subject
property was already converted/classified as residential by the Municipality of
Dasmariñas prior to the effectivity of the CARL. The appellate court reasoned:

For one, whether or not the Municipality of Dasmariñas, Cavite had in place in the
early seventies a general subdivision plan is to us of no moment. The absence of such
general plan at that time cannot be taken, for the nonce, against the [herein
respondent EMRASON]. To our mind, the more weighty consideration is the
accomplished fact that the municipality, conformably with its statutory-conferred local
autonomy, had passed a subdivision measure, I.e., Ordinance No. 1, and had approved
in line thereto, through the medium of Ordinance No. 29-A, [EMRASON's] application
for subdivision, or with like effect approved the conversion/classification of the lands in
dispute as residential. Significantly, the Municipal Mayor of Dasmariñas, Cavite, in his
letter of September 23, 1988 to [EMRASON], clarified that such conversion conforms
with the approved development plan of the municipality.

For another, the requirement prescribed by the cited Section 16[a] of Ordinance No. 1
relates to the approval in the first instance by the National Planning Commission of the
final plat of the scheme of the subdivision, not the conversion from agricultural to
residential itself. As [EMRASON] aptly puts it:

"x x x the final plat or final plan, map or chart of the subdivision  is not a condition sine
qua non for the conversion x x x as the conversion was already done by the Municipal
Council of Dasmariñas, Cavite. Municipal Ordinance NO. 29-A merely required that
the final plat, or final plan x x x of the subdivision be done in conformity with Municipal
Ordinance No. 1, the same to be followed by (he subdivision itself. [EMRASON]
therefore did not have to undertake the immediate actual development of the subject
parcel of lands as the same had already been converted and declared residential by
law. x x x " (Petition, pp. 17 and 18).

[EMRASON's] pose has the merit of logic. As may be noted, Ordinance No. 29-A
contained two (2) resolutory portions, each interrelated to, but nonetheless
independent of, the other. The first resolution, reading -

"Resolved, as it is hereby resolved, to approve the application for subdivision containing

an area of Three Hundred Seventy-Two (372) Hectares situated in Barrios Bocal and
Langkaan, named as Travellers Life Homes "

approved the application for subdivision or the conversion of the 372-hectare area into
residential, while the second, reading -

"Resolved that the Municipal Ordinance regarding subdivision regulations existing in

this municipality shall be strictly followed by the subdivision "

provides that the subdivision owner/developer shall follow subdivision regulations, it will
be noted further that the second resolution already referred to the [EMRASON's]
property as "'subdivision", suggesting that the Municipal Council already considered as
of that moment [EMRASON's] area to be for residential use.
Another requirement which [EMRASON] allegedly failed to comply with is found in
Administrative Order (A.O.) No. 152, series of 1968, which pertinently provides -

"1. All Municipal Boards or City Councils, and all Municipal Councils in cities and
municipalities in which a subdivision ordinance is in force, shall submit three copies of
every proposed subdivision plan for which approval is sought together with the
subdivision ordinance, to the National Planning Commission for comment and
recommendation ".

This Court is at a loss to understand how [EMRASON] could be expected to heed a

directive addressed to local government legislative bodies. From a perusal of the title of
A.O. No. 152, it is at once obvious from whom it exacts compliance with its command,
thus: "REQUIRING THE MUNICIPAL BOARDS OR CITY COUNCILS AND MUNICIPAL
COUNCILS TO SUBMIT PROPOSED ORDINANCES AND SUBDIVISION PLANS TO THE
NATIONAL PLANNING COMMISSION FOR COMMENT AND RECOMMENDATION, BEFORE
TAKING ACTION ON THE SAME, AND TO FORWARD A COPY OF THEIR APPROVED
SUBDIVISION ORDINANCES TO THE SAID COMMISSION".

To be sure, [EMRASON] cannot be made to bear the consequences for the non-
compliance, if this be the case, by the Municipal Council of Dasmarinas, Cavite with
what A.O. 152 required. A converse proposition would be antithetical to the sporting
idea of fair play.[11]

As for the other requirements which EMRASON purportedly failed to comply with, the
Court of Appeals held that these became obligatory only after the subject property was
already converted to non-agricultural, to wit:

Foregoing considered, this Court holds that everything needed to validly effect the
conversion of the disputed area to residential had been accomplished. The only
conceivable step yet to be taken relates to the obtention of a conversion order from the
DAR, or its predecessor, the Ministry of Agrarian Reform (MAR.) under its rather
intricate procedure established under Memorandum Circular No. 11-79. But then, this
omission can hardly prejudice the [herein respondent EMRASON] for the DAR7MAR
guidelines were promulgated only in 1979, at which time the conversion of
[EMRASON's] property was already a fait accompli.

Like the conversion procedure set up under Memorandum Circular No. 11-79, the
revised methodology under the CARL cannot also be made to apply retroactively to
lands duly converted/classified as residential under the aegis of the Local Autonomy
Act. For, as a rule, a statute is not intended to affect transactions which occurred before
it becomes operational (Tolentino, COMMENTARIES AND JURISPRUDENCE ON THE
CIVIL CODE, Vol. I, 1983 ed.; p. 23). And as the landmark case of Natalia Realty,
Inc. vs. Department of Agrarian Reform, 225 SCRA 278, teaches:

"Indeed, lands not devoted to agricultural activity are outside the coverage of CARL.
These include lands previously converted to non-agricultural uses prior to the effectively
of CARL by government agencies other than respondent DAR x x x.

xxxx
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is
hound by such conversion.  It was therefore error to  include the underdeveloped
portions x x x within the  coverage  of CARL".

It may be so, as the assailed decision stated, that in Natalia the lands therein involved
received a locational clearance from the Housing and Land Use Regulatory Board
(HLRB, formerly the Human Settlement Regulatory Commission [HSRC], as residential
or commercial, a factor [EMRASON] cannot assert in its favor. This dissimilarity,
however, hardly provides a compelling justification not to apply the lessons of Natalia.
This is because the property involved in this case, unlike that in Natalia, underwent
classification/conversion before the creation on May 13, 1976 of the HSRC, then known
as the Human Settlements Regulatory Commission (P.D. No. 933). Furthermore, what
is recognized as the HSRC's authority to classify and to approve subdivisions and
comprehensive land use development plans of local governments devolved on that
agency only upon its reorganization on February 7, 1981, with the issuance of
Executive Order No. 648 known as the Charter of the Human Settlements
Regulatory Commission. Section 5 of the same executive order invested the HSRC
with the above classifying and approving authority. In fine, the property of [EMRASON]
went into the process of conversion at the time when the intervention thereon of the
HSRC, which was even then non-existent, was unnecessary. Shortly before the creation
of the HSRC, it would appear that to provincial, city, or municipal councils/boards, as
the case may be, belong the prerogative, albeit perhaps not exclusive, to classify
private lands within their respective territorial jurisdiction and approve their conversion
from agricultural to residential or other non-agricultural uses. To paraphrase the
holding in Patalinghug vs. Court of Appeals, 229 SCRA 554, once a local
government has, pursuant to its police power, reclassified an area as residential, that
determination ought to prevail and must be respected. [12]

The Court of Appeals further observed that the subject property has never been
devoted to any agricultural activity and is, in fact, more suitable for non-agricultural
purposes, thus:

It is worthy to note that the CARL defines "agricultural lands" as "lands devqtedto
agricultural activity x x x and not classified as mineral, forest, residential, commercial
or industrial lands" (Sec. 3[c]). Guided by this definition, it is clear that [herein
respondent EMRASON's] area does not fall under the category of agricultural lands. 
For, let alone the reality that the property is not devoted to some agricultural activity,
being in fact unirrigated, and, as implied in the decision of the DAR Hearing Officer
Victor Baguilat, without duly instituted tenants, the same had been effectively classified
as residential.  The bare circumstance of its not being actually developed as subdivision
or that it is underdeveloped would not alter the conclusion. For, according to Natalia,
what actually determines the applicability of the CARL to a given piece of land is its
previous classification and not its current use or stages of development as non-
agricultural property.

As a pragmatic consideration, the disputed area, in terms of its location in relation to

existing commercial/industrial sites and its major economic use, is more suitable for
purposes other than agriculture. In this connection, this Court notes that the property is
situated at the heart of the CALABARZON, and, as Annex "C" of the petition
demonstrates, lies adjacent to huge industrial/commercial complexes. The San Miguel-
Monterey meat plant, the NDC-Marubeni complex and the Reynolds Aluminum plant
may be mentioned. For sure, the Sangguniang Panlalawigan of Cavite, obviously
cognizant of the economic potential of certain areas in the Municipality of Dasmariñas
has, by Resolution No. 105, series of 1988. declared defined tracts of lands in the
Municipality of Dasmariñas as "industrial-residential-institutional mix." [13]

As a last point, the Court of Appeals justified its issuance of a writ of preliminary
injunction enjoining the implementation of the OP Decision dated February 7, 1996 and
Resolution dated May 14, 1996, viz:

As a final consideration, we will address the [herein petitioners] OAR Secretary's and
Buklod's joint concern regarding the propriety of the preliminary injunction issued in
this case. They alleged that the issuance is violative of Section 55 of the CARL which
reads:

"SEC. 55. No Restraining Order or Preliminary

Injunction. - No Court in the Philippines shall have jurisdiction to issue any restraining
order or writ of preliminary injunction against the PARC or any of its duly authorized or
designated agencies in any case, dispute, controversy arising from, necessary to, or in
connection with the application, implementation, enforcement, or interpretation of this
Act and other pertinent laws on agrarian reform". (Underscoring added.)

As will be noted, the aforequoted section specifically mentions the Presidential Agrarian
Reform Council (PARC) of which the DAR Secretary is the Vice Chairman, or any of its
duly designated agencies as protected from an injunctive action of any court. These
agencies include the PARC Executive Committee, the PARC Secretariat, which the DAR
Secretary heads, and. on the local level, the different Agrarian Reform Action
Committees (Sees. 41 to 45, R.A. No. 6657).

From the records, there is no indication that the [petitioner] Agrarian Reform

Secretary acted vis-a-vis the present controversy for, or as an agency of, the PARC.
Hence, he cannot rightfully invoke Section 55 of the CARL and avail himself of the
protective mantle afforded by that provision.  The PARC, it bears to stress, is a policy-
formulating and coordinating body (Sec. 18. E.O. 229, July 22, 1987) without express
adjudicatory mandate, unlike the DAR Secretary who, as department head, is "vested
with primary jurisdiction to determine and adjudicate agrarian reform matters and shall
have exclusive jurisdiction over all matters involving the implementation of agrarian
reform" (Sec. 50. R.A. 6657). Thus, it is easy lo accept the proposition that the
[petitioner] Agrarian Reform Secretary issued his challenged orders in the exercise
of his quasi-judicial power as department head. [14]

In the end, the Court of Appeals decreed:

WHEREFORE, the instant petition for review is hereby GRANTED. Accordingly, the

challenged decision dated February 7, 1996 and the resolution of May 14, 1996 of the
Office of the President in O.P. Case No. 5461 are hereby NULLIFIED,
VACATED and SET ASIDE, and the notices of acquisition issued by the Department of
Agrarian Reform covering the 372-hectare property of the [herein respondent
EMRASON] at Barangay Langkaan, Dasmariñas, Cavite declared VOID.

The writ of preliminary injunction issued by this Court on September 30, 1996 is hereby
made permanent.[15]

Buklod and DAR. filed their respective Motions for Reconsideration of the foregoing
Decision but both Motions were denied by the Court of Appeals in a Resolution dated
November 24, 1997.

Aggrieved, Buklod and DAR filed the instant Petitions, which were consolidated by this
Court in a Resolution[16] dated August 19, 1998.

In G.R. No. 131481, Buklod raises the following arguments:

1] THE MUNICIPAL ORDINANCE INVOKED BY [EMRASON] AS CONVERSION OF THE

PROPERTY IN QUESTION ENACTED ON JULY 9, 1972 BY THE MUNICIPAL COUNCIL OF
DASMARIÑAS, CAVITE IS IMPOTENT BECAUSE THE MUNICIPAL ORDINANCE IMPOSED
CONDITIONS WHICH [EMRASON] NEVER COMPLIED. NO COMPLIANCE NO
CONVERSION.

2] AT THE TIME THE ALLEGED ORDINANCE WAS ENACTED, A LAND REFORM LAW WAS
ALREADY IN EFFECT GRANTING SECURITY OF TENURE TO THE FARMERS SO THAT A
LANDOWNER CANNOT ARBITRARILY CONVERT AN AGRICULTURAL LAND INTO A
DIFFERENT CLASSIFICATION WITHOUT COMPLYING WITH LEGAL REQUIREMENTS (R.A.
3844).

3] A MERE MUNICIPAL ORDINANCE CANNOT NEGATE LAND REFORM RIGHTS GRANTED

TO THE FARMERS BY LEGISLATIVE ENACTMENT UNDER R.A. 3844 AND SUBSEQUENT
LAWS. LAND REFORM LAW BEING A SOCIAL LEGISLATION IS PARAMOUNT.

4] LAND REFORM IS A CONSTITUTIONAL MANDATE FOR THE BENEFIT OF THE

LANDLESS FARMERS SO THAT THE LAND REFORM LAW SHOULD BE CONSTRUED AND
APPLIED IN ORDER TO ATTAIN THE LEGISLATIVE INTENT OF RELIEVING THE FARMERS
FROM THEIR POVERTY AND BONDAGE.  THE COURT OF APPEALS IGNORED THIS
CONSTITUTIONAL MANDATE TO FAVOR THE LANDLORD [EMRASON].

5] THE COURT OF APPEALS ISSUED A RESTRAINING ORDER/INJUNCTION AGAINST

THE CLEAR PROHIBITION IN THE CARL (SEC. 55 RA 6657) AND SO FAR DEPARTED
FROM THE USUAL COURSE OF BY REFUSING TO GRANT THE PETITIONER FARMERS A
HEARING INSPITE OF THE PROCEDURE PRESCRIBED BY RA 7902 (SEC. ]). [17]

In G.R. No. 131624, the DAR ascribes the following errors on the part of the Court of
Appeals:

I.

THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT THE MUNICIPALITY
OF DASMARIÑAS, CAVITE, WAS AUTHORIZED, UNDER THE LOCAL AUTONOMY ACT, TO
CLASSIFY AND/OR RECLASSIFY LANDS CONSIDERING THAT WHAT WAS CONFERRED
THEREUNDER WAS ONLY ZONING AUTHORITY, THUS, RENDER THE EXERCISE
THEREOF BY THE MUNICIPAL COUNCIL OF DASMARIÑAS, CAVITE, ULTRA VIRES;

II.

EVEN ASSUMING, IN GRATIA ARGUMENTI, THAT THE AUTHORITY TO CLASSIFY AND

RECLASSIFY LANDS IS POSSESSED BY MUNICIPAL CORPORATIONS, STILL THE
HONORABLE COURT OF APPEALS ERRED WHEN IT CONSIDERED THE ALLEGED
PASSAGE OF ORDINANCE NO. 29-A OF THE MUNICIPAL COUNCIL OF DASMARIÑAS,
CAVITE, AS A VALID MEASURE RECLASSIFYING SUBJECT AGRICULTURAL LAND TO
NON-AGRICULTURAL USE CONSIDERING THAT THE SAID APPROVAL OF THE
SUBDIVISION, PER LETTER OF THE MUNICIPAL MAYOR, FAILED TO COMPLY WITH
EXISTING RULES AND REGULATIONS ON THE MATTER AND, THEREFORE,
NONCOMPLYING AND INEFFECTUAL; AND

III.

THE HONORABLE COURT OF APPEALS ERRED WHEN IT APPLIED THE RULING OF THE
HONORABLE COURT IN THE NATALIA REALTY CASE  DUE TO SUBSTANTIAL
DISSIMILARITY IN FACTUAL SETTING AND MILIEU. [18]

At the crux of the present controversy is the question of whether the subject property
could be placed under the CARP.

DAR asserts that the subject property could be compulsorily acquired by the State from
EMRASON and distributed to qualified farmer-beneficiaries under the CARP since it was
still agricultural land when the CARL became effective on June 15, 1988. Ordinance
Nos. 1 and 29-A, approved by the Municipality of Dasmariñas on July 13, 1971 and
July 9, 1972, respectively, did not reclassify the subject property from agricultural to
non-agricultural. The power to reclassify lands is an inherent power of the National
Legislature under Section 9 of Commonwealth Act No. 141, otherwise known as the
Public Land Act, as amended, which, absent a specific delegation, could not be
exercised by any local government unit (LGU). The Local Autonomy Act of 1959 - in
effect when the Municipality of Dasmariñas approved Ordinance Nos. 1 and 29-A -
merely delegated to cities and municipalities zoning authority, to be understood as the
regulation of the uses of property in accordance with the existing character of the land
and structures.  It was only Section 20 of Republic Act No. 7160, otherwise known as
the Local Government Code of 1991, which extended to cities and municipalities limited
authority to reclassity agricultural lands.

DAR also argues that even conceding that cities and municipalities were already
authorized in 1972 to issue an ordinance reclassifying lands from agricultural to non-
agricultural, Ordinance No. 29-A of the Municipality of Dasmariñas was not valid since
it failed to comply with Section 3 of the Local Autonomy Act of 1959, Section 16(a) of
Ordinance No. 1 of the Municipality of Dasmarinas, and Administrative Order No. 152
dated December 16, 1968, which all required review and approval of such an ordinance
by the National Planning Commission (NPC). Subsequent developments further
necessitated review and approval of Ordinance No. 29-A by the Human Settlements
Regulatory Commission (HSRC), which later became the Housing and Land Use
Regulatory Board (HLURB).
DAR further avers that the reliance by the Court of Appeals -on Natalia Realty, Inc. v.
Department of Agrarian Reform[19] (Natalia Realty case)  is misplaced because the lands
involved therein were converted from agricultural to residential use by Presidential
Proclamation No. 1637, issued pursuant to the authority delegated to the President
under Section 71, et seq., of the Public Land Act.[20]

Buklod adopts the foregoing arguments of DAR. In addition, it submits that prior to
Ordinance Nos. 1 and 29-A, there were already laws implementing agrarian reform,
particularly: (1) Republic Act No. 3844, otherwise known as the Agricultural Land
Reform Code, in effect since August 8, 1963, and subsequently amended by Republic
Act No. 6389 on September 1.0, 1971, after which it became known as the Code of
Agrarian Reforms; and (2) Presidential Decree No. 27, otherwise known as the Tenants
Emancipation Decree, which took effect on November 19, 1972. Agricultural land could
not be converted for the purpose of evading land reform for there were already laws
granting farmer-tenants security of tenure, protection from ejectment without just
cause, and vested rights to the land they work on.

Buklod contends that EMRASON failed to comply with Section 36 of the Code of
Agrarian Reforms, which provided that the conversion of land should be implemented
within one year, otherwise, the conversion is deemed in bad faith. Given the failure of
EMRASON to comply with many other requirements for a valid conversion, the subject
property has remained agricultural. Simply put, no compliance means no conversion. 
In fact, Buklod points out, the subject property is still declared as "agricultural" for real
estate tax purposes. Consequently, EMRASON is now estopped from insisting that the
subject property is actually "residential."

Furthermore, Buklod posits that land reform is a constitutional mandate which should
be given paramount consideration. Pursuant to said constitutional mandate, the
Legislature enacted the CARL. It is a basic legal principle that a legislative statute
prevails over a mere municipal ordinance.

Finally, Buklod questions the issuance by the Court of Appeals of a writ of preliminary
injunction enjoining the distribution of the subject property to the farmer-beneficiaries
in violation of Section 55 of the CARL; as well as the refusal of the appellate court to
hold a hearing despite Section 1 of Republic Act No. 7902, [21] prescribing the procedure
for reception of evidence before the Court of Appeals. At such a hearing, Buklod
intended to present evidence that the subject property is actually agricultural and that
Buklod members have been working on said property for decades, qualifying them as
farmer-beneficiaries.

EMRASON, on the other hand, echoes the ruling of the Court of Appeals that the subject
property is exempt from CARP because it had already been reclassified as residential
with the approval of Ordinance No. 29-A by the Municipality of Dasmariñas on July 9,
1972. EMRASON cites Ortigas & Co., Ltd. Partnership v. Feati Bank and Trust Co.
[22]
 (Ortigas case) where this Court ruled that a municipal council is empowered to adopt
zoning and subdivision ordinances or regulations under Section 3 of the Local Autonomy
Act of 1959.

Still relying on the  Ortigas case, EMRASON avows that the Municipality of
Dasmariñas, taking into account the conditions prevailing in the area, could validly
zone and reclassify the subject property in the exercise of its police power in order to
safeguard the health, safety, peace, good order, and general welfare of the people in
the locality. EMRASON describes the whole area surrounding the subject property as
residential subdivisions (i.e., Don Gregorio, Metro Gate, Vine Village, and Cityland
Greenbreeze 1 and 2 Subdivisions) and industrial estates (i.e., Reynolds Aluminum
Philippines, Inc. factory; NDC-Marubeni industrial complex, San Miguel Corporation-
Monterey cattle and piggery farm and slaughterhouse), traversed by national highways
(i.e., Emilio Aguinaldo National Highway, Trece Martirez, Puerto Azul Road, and
Governor's Drive). EMRASON mentions that on March 25, 1988, the Sangguniang
Panlalawigan of the Province of Cavite passed Resolution No. 105 which declared the
area where subject  property  is located as "industrial-residential-institutional mix."

EMRASON further maintains that Ordinance No. 29-A of the Municipality of

Dasmariñas is valid. Ordinance No. 29-A is complete in itself, and there is no more
need to comply with the alleged requisites which DAR and Buklod are insisting upon.
EMRASON quotes from Patalinghug v. Court of Appeals[23] (Patalinghug case) that "once
a local government has reclassified an area as commercial, that determination for
zoning purposes must prevail."

EMRASON points out that Ordinance No. 29-A, reclassifying the subject property, was
approved by the Municipality of Dasmariñas on July 9, 1972. Executive Order No. 648,
otherwise known as the Charter of the Human Settlements Regulatory Commission
(HSRC Charter) - which conferred upon the HSRC the power and duty to review,
evaluate, and approve or disapprove comprehensive land use and development plans
and zoning ordinances of LGUs - was issued only on February 7, 1981. The exercise by
HSRC of such power could not be applied retroactively to this case without impairing
vested rights of EMRASON. EMRASON disputes as well the absolute necessity of
submitting Ordinance No. 29-A to the NPC for approval. Based on the language of
Section 3 of the Local Autonomy Act of 1959, which used the word "may," review by
the NPC of the local planning and zoning ordinances was merely permissive. EMRASON
additionally posits that Ordinance No. 1 of the Municipality of Dasmariñas simply
required approval by the NPC of the final plat or plan, map, or chart of the subdivision,
and not of the rcclassification and/or conversion by the Municipality of the subject
property from agricultural to residential.  As for Administrative Order No. 152 dated
December 16, 1968, it was directed to and should have been complied with by the city
and municipal boards and councils. Thus, EMRASON should not be made to suffer for
the non-compliance by the Municipal Council of Dasmarinas with said administrative
order.

EMRASON likewise reasons that since the subject property was already reclassified as
residential with the mere approval of Ordinance No. 29-A by the Municipality of
Dasmarinas, then EMRASON did not have to immediately undertake actual development
of the subject property. Reclassification and/or conversion of a parcel of land are
different from the implementation of the conversion.

EMRASOK is resolute in its stance that the Court of Appeals correctly applied
the Natalia Realty case to the present case since both have similar facts; the only
difference being that the former involves a presidential fiat while the latter concerns a
legislative fiat.
EMRASON denies that the Buklod members are farmer-tenants of the subject property.
The subject property has no farmer-tenants because, as the Court of Appeals observed,
the property is unirrigated and not devoted to any agricultural activity. The subject
property was placed under the CARP only to accommodate the farmer-tenants of the
NDC property who were displaced by the NDC-Marubeni Industrial Project. Moreover,
the Buklod members are still undergoing a screening process before the DAR-Region IV,
and are yet to be declared as qualified farmer-beneficiaries of the subject property.
Hence, Buklod members tailed to establish they already have vested right over the
subject property.

EMRASON urges the Court not to consider issues belatedly raised by Buklod, It may be
recalled that Buklod intervened in CA-G.R. SP No. 40950 just before the Court of
Appeals rendered judgment in said case. When the appellate court promulgated its
Decision on March 26, 1997 favoring EMRASON, Buklod filed a Motion for
Reconsideration of said judgment, to which EMRASON, in turn, filed a Comment and
Opposition. In its Reply to the aforementioned Comment and Opposition of EMRASON,
Buklod raised new factual matters, specifically, that: (1) EMRASON has not even
subdivided the title to the subject property 27 years after its purported
reclassification/conversion; (2) EMRASON never obtained a development permit nor
mayor's permit to operate a business in Dasmarinas; and (3) the farmer-tenants
represented by Buklod have continuously cultivated the subject property. There was no
cogent or valid reason for the Court oi' Appeals to allow Buklod to present evidence to
substantiate the foregoing allegations. The DAR Region IV Hearing Officer already
conducted extensive hearings during which the farmers were duly represented.
Likewise, Buklod raises for the first time in its Petition before this Court the argument
that the Tenants Emancipation Decree prescribes a procedure for conversion which
EMRASON failed to comply with.

Lastly, EMRASON defends the issuance by the Court of Appeals of a writ of preliminary
injunction in CA-G.R. SP No. 40950. Section 55 of the CARL is inapplicable to the case
at bar because said provision only prohibits the issuance by a court of a TRO or writ of
preliminary injunction "against the PARC or any ol^ its duly authorized or designated
agencies." As the Court of Appeals declared, the PARC is a policy-formulating and
coordinating body. There is no indication whatsoever that the DAR Secretary was acting
herein as an agent of the PARC. The DAR Secretary issued the orders of acquisition for
the subject property in the exercise of his quasi-judicial powers as department head.

The Court, after consideration of the issues and arguments in the Petitions at bar,
affirms the Court of Appeals and rules in favor of EMRASON.

CARP  coverage limited to agricultural land

Section 4, Chapter II of the CARL, as amended,24 particularly defines the coverage of

the CARP, to wit:

SEC. 4. Scope. - The Comprehensive Agrarian Reform Law of 1988 shall cover,
regardless of tenurial arrangement and commodity produced, all public and private
agricultural lands as provided in Proclamation No. 131 and Executive Order No. 229,
including other lands of the public domain suitable for agriculture: Provided, That
landholdings of landowners with a total area of five (5) hectares and below shall not be
covered for acquisition and distribution to qualified beneficiaries.

More specifically, the following lands are covered by the CARP:

(a) All alienable and disposable lands of the public domain devoted to or suitable for
agriculture. No reclassification of forest or mineral lands to agricultural lands shall be
undertaken after the approval of this Act until Congress, taking into account ecological,
developmental and equity considerations, shall have determined by  law, the specific
limits of the public domain;

(b) All lands of the public domain in excess of the specific limits as determined by
Congress in the preceding paragraph;

(c) All other lands owned by the Government devoted to or suitable for agriculture; and

(d) All private lands devoted to or suitable for agriculture regardless of the

agricultural products raised or that can be raised thereon.

A comprehensive inventory system in consonance with the national land use plan shall
be instituted by the Department of Agrarian Reform (DAR), in accordance with the Local
Government Code, for the purpose of properly identifying and classifying farmlands
within one (1) year from effectivity of this /Vet. without prejudice to the
implementation of the land acquisition and distribution." (Emphases supplied.)

Section 3(c), Chapter I of the CARL further narrows down the definition of agricultural
land that is subject to CARP to "land devoted to agricultural activity as defined in this
Act and not classified as mineral, forest, residential, commercial or industrial land."

The CARL took effect on June 15, 1988. To be exempt from the CARP, the subject
property should have already been reclassified as residential prior to said date.

The Local Autonomy Act of 1959

The Local Autonomy Act of 1959, precursor of the Local Government Code of 1991,
provided;

SEC. 3. Additional powers of provincial boards, municipal boards or city councils and
municipal and regularly organized municipal district councils. - x x x

xxxx

Power to adopt zoning and planning ordinances. — Any provision of law to the
contrary notwithstanding, Municipal Boards or City Councils in cities, and Municipal
Councils in municipalities are hereby authorized to adopt zoning and subdivision
ordinances or regulations for their respective cities and municipalities subject to the
approval of the City Mayor or Municipal Mayor, as the case may be. Cities and
municipalities may, however, consult the National Planning Commission on
matters pertaining to planning and zoning. (Emphases supplied.)
Pursuant to the foregoing provision, the Municipal Council of Dasmariñas
approved Ordinance No. 1 on July 13, 1971, which laid down the general subdivision
regulations for the municipality; and Resolution No. 29-A on July 9, 1972, which
approved the application for subdivision of the subject property.

The Court observes that the OP, the Court of Appeals, and even the parties themselves
referred to Resolution No. 29-A as an ordinance. Although it may not be its official
designation, calling Resolution No. 29-A as Ordinance No. 29-A is not completely
inaccurate. In the Ortigas & Co. case, the Court found it immaterial that the then
Municipal Council of Mandaluyong declared certain lots as part of the commercial and
industrial zone through a resolution, rather than an ordinance, because:

Section 3 of R.A. No. 2264, otherwise known as the Local Autonomy Act, empowers a
Municipal Council "to adopt zoning and subdivision ordinances or regulations" for the
municipality. Clearly, the law docs 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 oi' fact the same section declares that
the power exists "(A)ny provision of law to the contrary notwithstanding x x
x."[25] (Emphases supplied.)

Zoning and reclassification

Section 3(c), Chapter I of the CARL provides that a parcel oi^ land reclassified for non-
agricultural uses prior to June 15, 1988 shall no longer be considered agricultural land
subject to CARP. The Court is now faced with the question of whether Resolution No.
29-A of the Municipality of Dasmariñas dated July 9, 1972, which approved the
subdivision of the subject property for residential purposes, had also reclassified the
same from agricultural to residential.

Zoning classification is an exercise by the local government of police power, not the
power of eminent domain. A zoning ordinance is defined as a local city or municipal
legislation which logically arranges, prescribes, defines, and apportions a given political
subdivision into specific land uses as present and future projection of needs. [26]

The Court gave a more extensive explanation of zoning in Pampanga Bus Company,
Inc. v. Municipality of Tarlac,[27] thus:

The appellant argues that Ordinance No. 1 is a zoning ordinance which the Municipal
Council is authorized to adopt. McQuillin in his treaties on Municipal Corporations
(Volume 8, 3rd ed.) says:

Zoning is governmental regulation of the uses of land and buildings according to

districts or zones. It is comprehensive where it is governed by a single plan for the
entire municipality and prevails throughout the municipality in accordance with that
plan. It is partial or limited where it is applicable only to a certain part of the
municipality or to certain uses. Fire limits, height districts and building regulations are
forms of partial or limited zoning or use regulation that are antecedents of modern
comprehensive zoning, (pp. 11-12.)
The term "zoning," ordinarily used with the connotation of comprehensive or general
zoning, refers to governmental regulation of the uses of land and buildings according to
districts or zones. This regulation must and does utilize classification of uses within
districts as well as classification of districts, inasmuch as it manifestly is impossible to
deal specifically with each of the innumerable uses made of land and buildings. 
Accordingly, (zoning has been defined as the confining of certain classes of buildings
and uses to certain localities, areas, districts or zones.) It has been stated that zoning
is the regulation by districts of building development and uses of property, and that the
term "zoning" is not only capable of this definition but has acquired a technical and
artificial meaning in accordance therewith. (Zoning is the separation of the municipality
into districts and the regulation of buildings and structures within the districts so
created, in accordance with their construction, and nature and extent of their use. It is
a dedication of districts delimited to particular uses designed to subserve the general
welfare.) Numerous other definitions of zoning more or less in accordance with these
have been given in the cases, (pp. 27-28.)[28]

According to Section 1(b) of Ordinance No. 1, "[s]ubdivision means the division of a

tract or parcel of land into two or more lots, sites or other divisions for the purpose,
whether immediate or future, o[f| a sale or building development. It includes
resubdivision, and when appropriate to the context, relates to the process of
subdividing as to the land of territory subdivided." Subdivision ordinances or regulations
such as Resolution No. 29-A, in relation to Ordinance No. 1, constitute partial or
limited zoning, for they are applicable to a specific property in the city or municipality
to be devoted for a certain use.

Section 9 of the Public Land Act - cited by the DAR and Buklod as the purported
delegation by the National Legislature of the power to reclassify - is immaterial to the
instant cases.  Said provision reads:

SEC. 9. For the purpose of their administration and disposition, the lands of the public
domain alienable or open to disposition shall be classified, according to the use or
purposes to which such lands are destined, as follows:

(a)    Agricultural;

(b)    Residential,  commercial,  industrial,  or  for  similar productive purposes;

(c)    Educational, charitable, or other similar purposes; and

(d)    Reservations for townsites and for public and quasi-public uses.

The President, upon recommendation by the Secretary of Agriculture and Natural

Resources, shall from time to time make the classifications provided for in this section,
and may, at any time and in a similar manner, transfer lands from one class to another.
(Emphasis supplied.)

The power delegated to the President under the aforequoted provision of the Public
Land Act is limited to the classification of lands of the public domain that are
alienable or open to disposition. It finds no application in the present cases for the
simple reason that the subject property involved herein is no longer part of the public
domain. The subject property is already privately owned and accordingly covered by
certificates of title.

The concept that concerns this Court in the instant cases is the reclassification of
agricultural lands. In Alarcon v. Court of Appeals,[29] the Court had the occasion to
define and distinguish reclassification from conversion as follows:

Conversion is the act of changing the current use of a piece of agricultural land into
some other use as approved by the Department of Agrarian Reform. Reclassification, on
the other hand, is the act of specifying how agricultural lands shall be utilized for non-
agricultural uses such as residential, industrial, commercial, as embodied in the land
use plan, subject to the requirements and procedure for land use conversion, x x x.
(Italics supplied.)

Reclassification also includes the reversion  of non-agricultural  lands to agricultural

use.[31]

Under the present Local Government Code, it is clear that the authority to reclassify
agricultural lands primarily resides in the sanggunian of the city or municipality.  Said
provision reads in full:

Sec. 20. Reclassification of Lands. - (a) A city or municipality may, through an

ordinance passed by the sanggunian after conducting public hearing for the
purpose, authorize the reclassification of agricultural lands and provide for the
manner of their utilization or disposition in the following cases: (X) when the land
ceases to be economically feasible and sound for agricultural purposes as determined
by the Department of Agriculture or (2) where the land shall have substantially greater
economic value for residential, commercial, or industrial purposes, as determined by
the sanggunian concerned: Provided, That such reclassification shall be limited to the
following percentage of the total agricultural land area at the time of the passage of the
ordinance:

(1)    For highly urbanized and independent component cities, fifteen percent (15%);

(2)    For component cities  and first to the third  class municipalities, ten percent
(10%); and

(3)    For fourth to sixth class municipalities, five percent (5%): Provided, further, 
That  agricultural lands  distributed  to agrarian  reform  beneficiaries pursuant  to 
Republic  Act Numbered Sixty-six hundred fifty-seven (R.A. No. 6657), otherwise
known as "The Comprehensive Agrarian Reform Law", shall not be affected by the said
reclassification and the conversion of such lands into other purposes shall be governed
by Section 65 of said Act.

(b)    The President may, when public interest so requires and upon recommendation
of  the National Economic and Development Authority, authorize a city or municipality
to reclassify lands in excess of the limits set in the next preceding paragraph.
(c)    The local government units shall, in conformity with existing laws, continue
to prepare their respective comprehensive land use plans enacted through
zoning ordinances which  shall be  the primary and dominant bases for the future use
of land resources: Provided, That  the requirements for food production, human
settlements, and industrial expansion shall be taken into consideration in the
preparation of such plans.

(d)    When  approval by a national agency is required for reclassification, such approval
shall not be unreasonably withheld. Failure to act on a proper and complete application
for reclassification within three (3) months from receipt of the same shall be deemed as
approval thereof.

(e)    Nothing in this Section shall be construed as repealing, amending, or modifying in

any manner the provisions of R.A. No. 6657. (Emphases supplied.)

Prior to the Local Government Code of 1991, the Local Autonomy Act of 1959 was silent
on the authority to reclassify agricultural lands. What the earlier statute expressly
granted to city and municipal boards and councils, under Section 3 thereof, was the
power to adopt zoning and subdivision ordinances and regulations.

DAR and Buklod insist that zoning is merely the regulation of land use based on
the existing character of the property and the structures thereon; and that zoning is
a lesser power compared to reclassification so that the delegation of the former to the
local government should not be deemed to include the latter.

Such arguments are easily refuted by reference to the definitions of zoning and
reclassification earlier presented herein, which support a more extensive concept of
zoning than that which DAR and BUKLOD assert.

By virtue of a zoning ordinance, the local legislature may arrange, prescribe, define,

and apportion the land within its political jurisdiction into specific uses based not only
on the present, but also on the future projection of needs. To limit zoning to the
existing character of the property and the structures thereon would completely negate
the power of the local legislature to plan land use in its city or municipality. Under such
circumstance, zoning would involve no planning at all, only the rubber-stamping by the
local legislature of the current use of the land.

Moreover, according to the definition of reclassification, the specified non-agricultural

use of the land must be embodied in a land use plan, and the land use plan is enacted
through a zoning ordinance. Thus, zoning and planning  ordinances  take  precedence 
over reclassification.  The reclassification of land use is dependent on the zoning and
land use plan, not the other way around.

It may, therefore, be reasonably presumed that when city and municipal boards and
councils approved an ordinance delineating an area or district in their cities or
municipalities as residential, commercial, or industrial zone, pursuant to the power
granted to them under Section 3 of the Local Autonomy Act of 1959, they were, at the
same time, reclassifying any agricultural lands within the zone for non-agri cultural use;
hence, ensuring the implementation of and compliance with their zoning ordinances. 
The logic and practicality behind such a presumption is more evident when considering
the approval by local legislative bodies of subdivision ordinances and regulations. The
approval by city and municipal boards and councils of an application for subdivision
through an ordinance should already be understood to include approval of the
reclassification of the land, covered by said application, from agricultural to the
intended non-agricultural use. Otherwise, the approval of the subdivision application
would serve no practical effect; for as long as the property covered by the application
remains classified as agricultural, it could not be subdivided and developed for non-
agricultural use.

A liberal interpretation of the zoning power of city and municipal boards and councils,
as to include the power to accordingly reclassify the lands within the zones, would be in
accord with the avowed legislative intent behind the Local Autonomy Act of 1959, which
was to increase the autonomy of local governments. Section 12 of the Local Autonomy
Act of 1959 itself laid down rules for interpretation of the said statute:

SEC. 12. Rules for the interpretation of the Local Autonomy Act. -

1.    Implied power of a province, a city or municipality shall be liberally construed in

its favor. Any 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.

2.   The general welfare clause shall be liberally interpreted in case of doubt so as

to give more power to local governments in promoting the economic condition, social
welfare and material progress of the people in the community.

3.   Vested rights existing at the time of the promulgation of this law arising out of a
contract between a province, city or municipality on one hand and a third party on the
other, should be governed by the original terms and provisions of the same, and in no
case would this act infringe existing rights.

Moreover, the regulation by local legislatures of land use in their respective territorial
jurisdiction through zoning and reclassification is an exercise of police power. In Binay
v. Domingo,32] the Court recognized that police power need not always be expressly
delegated, it may also be inferred:

The police power is a governmental function, an inherent attribute of sovereignty,

which was born with civilized government. It is founded largely on the maxims, "Sic
utere tuo et alienum non laedas" and "Salus populi est suprema lex" Its fundamental
purpose is securing the general welfare, comfort and convenience of the people.

Police power is inherent in the state but not in municipal corporations (Balacuit v. CFI
of Agusan del Norte, 163 SCRA 182). Before a municipal corporation may exercise such
power, there must be a valid delegation of such power by the legislature which is the
repository of the inherent powers of the State. A valid delegation of police power
may arise from express delegation, or be inferred from the mere fact of the
creation of the municipal corporation; and as a general rule, municipal
corporations may exercise police powers within the fair intent and purpose of
their creation which are reasonably proper to give effect to the powers
expressly granted, and statutes conferring powers on public corporations have
been construed as empowering them to do the things essential to the
enjoyment of life and desirable for the safety of the people. (62 C.J.S., p. 277).
The so-called inferred police powers of such corporations are as much delegated powers
as arc those conferred in express terms, the inference of their delegation growing out of
the fact of the creation of the municipal corporation and the additional fact that the
corporation can only fully accomplish the objects of its creation by exercising such
powers. (Crawfordsville vs. Braden, 28 N.E. 849). Furthermore, municipal
corporations, as governmental agencies, must have such measures of the
power as are necessary to enable them to perform their governmental
functions. The power is a continuing one, founded on public necessity. (62 C.J.S. p.
273) Thus, not only does the State effectuate its purposes through the exercise of the
police power but the municipality does also. (U.S. v. Salaveria, 39 Phil. 102).

Municipal governments exercise this power under the general welfare clause:

pursuant thereto they are clothed with authority to "enact such ordinances and issue
such regulations as may be necessary to carry out and discharge the responsibilities
conferred upon it by law, and such as shall be necessary and proper to provide for the
health, safety, comfort and convenience, maintain peace and order, improve public
morals, promote the prosperity and general welfare of the municipality and the
inhabitants thereof, and insure the protection of property therein." (Sections 91, 149,
177 and 208, BP 337). And under Section 7 of BP 337, "every local government unit
shall exercise the powers expressly granted, those necessarily implied therefrom, as
well as powers necessary and proper for governance such as to promote health and
safety, enhance prosperity, improve morals, and maintain peace and order in the local
government unit, and preserve the comfort and convenience of the inhabitants therein."

Police power is the power to prescribe regulations to promote the health, morals,
peace, education, good order or safety and general welfare of the people. It is the most
essential, insistent, and illimitable of powers. In a sense it is the greatest and most
powerful attribute of the government. It is elastic and must be responsive to various
social conditions. (Sangalang, el al. vs. IAC, 176 SCRA 719). On it depends the security
of social order, the life and health of the citizen, the comfort of an existence in a thickly
populated community, the enjoyment of private and social life, and the beneficial use of
property, and it has been said to be the very foundation on which our social system
rests. (16 C.J.S., p. 896) However, it is not confined within narrow circumstances of
precedents resting on past conditions; it must follow the legal progress of a democratic
way of life. (Sangalang, el al. vs. IAC, supra).

xxxx

In the case of Sangalang vs. IAC, supra, We ruled that police power is not capable of an
exact definition but has been, purposely, veiled in general terms to underscore its all-
comprehensiveness. Its scope, over-expanding to meet the exigencies of the times,
even to anticipate the future where it could be done, provides enough room for an
efficient and flexible response to conditions and circumstances thus assuring the
greatest benefits.

The police power of a municipal corporation is broad, and has been said to be
commensurate with, but not to exceed, the duty to provide for the real needs of the
people in their health, safely, comfort, and convenience as consistently as may be with
private rights. It extends to all the great public needs, and, in a broad sense includes all
legislation and almost every function of the municipal government. It covers a wide
scope of subjects, and, while it is especially occupied with whatever affects the peace,
security, health, morals, and general welfare of the community, it is not limited thereto,
but is broadened to deal with conditions which exists so as to bring out of them the
greatest welfare of the people by promoting public convenience or general prosperity,
and to everything worthwhile for the preservation of comfort of the inhabitants of the
corporation (62 C.J.S. Sec. 128). Thus, it is deemed inadvisable to attempt to frame
any definition which shall absolutely indicate the limits of police power. [33] (Emphases
supplied.)

Based on the preceding discussion, it cannot be said that the power to reclassify
agricultural land was first delegated to the city and municipal legislative bodies under
Section 26 of the Local Government Code of 1991. Said provision only articulates a
power of local legislatures, which, previously, had only been implied or inferred.

Compliance with other requirements or conditions 

Resolution No. 29-A is a valid ordinance, which, upon its approval on July 9, 1972,
immediately effected the zoning and reclassifying of the subject property for residential
use. It need not comply with any of the requirements or conditions which DAR and
Buklod are insisting upon.

DAR and Buklod aver that Resolution No. 29-A was not reviewed and approved by the
NPC, in violation of the line in Section 3 of the Local Autonomy Act of 1959, stating that
"[c]ities and municipalities may, however, consult the National Planning Commission on
matters pertaining to planning and zoning." Consideration must be given, however, to
the use of the word "may" in the said sentence. Where the provision reads "may," this
word shows that it is not mandatory but discretionary. It is an auxiliary verb indicating
liberty, opportunity, permission and possibility. [34] The use of the word "may" in a
statute denotes that it is directory in nature and generally permissive only. The "plain
meaning rule" or verba legis in statutory construction is thus applicable in this case.
Where the words of a statute are clear, plain, and free from ambiguity, it must be given
its literal meaning and applied without attempted interpretation. [35] Since consultation
with the NPC was merely discretionary, then there were only two mandatory
requirements for a valid zoning or subdivision ordinance or regulation under Section 3
of the Local Autonomy Act of 1959, namely, that (1) the ordinance or regulation be
adopted by the city or municipal board or council; and (2) it be approved by the city or
municipal mayor, both of which were complied with byl Resolution No. 29-A.

Section 16(a) of Ordinance No. 1 of the Municipality of Dasmariñas likewise mentions

the NPC, to wit:

a. Final plat of subdivision - As essential requirements before a subdivision is accepted

for verification by the Bureau of Lands, the final plat of the scheme of the subdivision
must comply with the provision of this ordinance. Application for plat approval shall
be submitted to the Municipal Mayor and shall be forwarded to the National
Planning Commission thru the Highway District Engineer for comment and/or
recommendations, before action is taken by the Municipal Council. The final
approval of the plat shall be made by the Municipal Mayor upon recommendation of the
Municipal Council by means of a resolution. (Emphasis supplied.)

The aforementioned provision of Ordinance No. 1 refers to the final plat of the

subdivision. The term plat includes "plat, plan, plot or replot." [36] It must be
distinguished from the application for subdivision.

The Court concurs with the analysis of the Court of Appeals that Resolution No. 29-A
actually contains two resolutions. The first reads:

Resolved, As it is hereby Resolved to approve the application for

subdivision containing an area of Three Hundred Seventy-Two Hectares (372) situated
in barrio Bocal and Langkaan, named as Travellers Life Homes. [37]  (Efriphasis supplied.)

It is manifest, even from just a plain reading of said resolution, that the application for
subdivision covering the subject property was categorically and unconditionally
approved by the Municipality of Dasmarinas.  As a consequence of such approval, the
subject property is immediately deemed zoned and reclassified as residential.

Meanwhile, the second resolution in Resolution No. 29-A states:

Resolved, that this municipal ordinance regarding subdivision

regulations existing in this municipality shall be strictly followed by the subdivision.
[38]
  (Emphases supplied.)

Significantly, this second resolution already refers to a "subdivision," supporting the

immediately executory nature of the First resolution.  The municipal ordinance which
the subdivision must follow is Ordinance No. 1, the general subdivision regulations of
the Municipality of Dasmarinas. Most provisions of Ordinance No. 1 laid down the
minimum standards for the streets, roadways, sidewalks, intersections, lots and blocks,
and other improvements in the subdivision, with which the final plat must comply or
conform. Irrefragably, the review of the final plat of the subdivision calls for a certain
level of technical expertise; hence, the directive to the Municipal Mayor to refer the final
plat to the NPC, through the Highway District Engineer, for comments and
recommendation, before the same is approved by the Municipal Council, then the
Mayor.

In relation to the preceding paragraph, Administrative Order No. 152 dated December
16, 1968 required city and municipal boards and councils to submit proposed
subdivision ordinances and plans or forward approved subdivision ordinances to the
NPC. The OP imposed such a requirement because "it has come to the attention of [the]
Office that the minimum standards of such ordinances regarding design, servicing and
streets, and open spaces for parks and other recreational purposes are not being
complied with[.]"[39] Review by the NPC of the proposed subdivision plan was for the
purpose of determining "if it conforms with the subdivision ordinance." [40]

It is apparent that Section 16(a) of Ordinance No. 1 and Administrative Ordinance No.
152 contained the same directive: that the final plat of the subdivision be reviewed by
the NPC to determine its conformity with the minimum standards set in the subdivision
ordinance of the municipality. A closer scrutiny will reveal that Section 16(a) of
Ordinance No. 1 and Administrative Order No. 152 related to the duties and
responsibilities of local government and NPC officials as regards the final plat of the
subdivision. There is no evidence to establish that the concerned public officers herein
did not follow the review process for the final plat as provided in Section 16(a) of
Ordinance No. 1 and Administrative Order No. 152 before approving the same. Under
Section 3(m), Rule 131 of the Rules of Court, there is a presumption that official duty
has been regularly performed. Thus, in the absence of evidence to the contrary, there is
a presumption that public officers performed their official duties regularly and legally
and in compliance with applicable laws, in good faith, and in the exercise of sound
judgment.[41]  And - just as the Court of Appeals observed - even if it is established that
the accountable public officials failed to comply with their duties and responsibilities
under Section 16(a) of Ordinance No. 1 and Administrative Order No. 152, it would be
contrary to the fundamental precepts of fair play to make EMRASON bear the
consequences of such non-compliance.

Although the two resolutions in Resolution No. 29-A may be related to the same
subdivision, they are independent and separate. Non-compliance with the second
resolution may result in the delay or discontinuance of subdivision development, or
even the imposition of the. penalties[42] provided in Ordinance No. 1, but not the
annulment or reversal of the first resolution and its consequences.

The Court again agrees with the Court of Appeals that Resolution No. 29-A need not be
subjected to review and approval by the HSRC/HLURB. Resolution No. 29-A was
approved by the Municipality of Dasmarinas on July 9, 1972, at which time, there was
even no HSRC/HLURB to speak of.

The earliest predecessor of the HSRC, the Task Force on Human Settlements, was
created through Executive Order No. 419 more than a year later on September 19,
1973. And even then, the Task Force had no power to review and approve zoning and
subdivision ordinances and regulations.

It was only on August 9, 1978, with the issuance of Letter of Instructions No. 729,
that local governments were required to submit their existing land use plans, zoning
ordinances, enforcement systems, and procedures to the Ministry of Human
Settlements for review and ratification.

The HSRC was eventually established on February 7, 1981. Section 5(b) of the HSRC
Charter43 contained the explicit mandate for the HSRC to:

b. Review, evaluate and approve or disapprove comprehensive land use

development plans and zoning ordinances of local government; and the zoning
component of civil works and infrastructure projects of national, regional and local
governments; subdivisions, condominiums or estate development projects including
industrial estates, of both the public and private sectors and urban renewal plans,
programs and projects: Provided, that the land use Development Plans and Zoning
Ordinances of Local Governments herein subject to review, evaluation and approval of
the commission shall respect the classification of public lands for forest purposes as
certified by the Ministry of Natural Resources: Provided, further, that the classification
of specific alienable and disposable lands by the Bureau of Lands shall be in accordance
with the relevant zoning ordinance of: Local government where it exists; and provided,
finally, that in cities and municipalities where there are as yet no zoning ordinances, the
Bureau of Lands may dispose of specific alienable and disposable lands in accordance
with its own classification scheme subject to the condition that the classification of
these lands may be subsequently change by the local governments in accordance with
their particular zoning ordinances which may be promulgated later. (Emphases
supplied.)

Neither the Ministry of Human Settlements nor the HSRC, however, could have
exercised its power of review retroactively absent an express provision to that effect in
Letter of Instructions No.  729 or the HSRC Charter, respectively.  A sound cannon of
statutory construction is that a statute operates prospectively only and never
retroactively, unless the legislative intent to the contrary is made manifest either by the
express terms oi' the statute or by necessary implication. Article 4 of the Civil Code
provides that: "Laws shall have no retroactive effect, unless the contrary is provided."
Hence, in order that a law may have retroactive effect, it is necessary that an express
provision to this effect be made in the law, otherwise nothing should be understood
which is not embodied in the law. Furthermore, it must be borne in mind that a law is a
rule established to guide our actions without no binding effect until it is enacted,
wherefore, it has no application to past times but only to future time, and that is why 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. [44]

Subsequent zoning ordinances

Still by the authority vested upon it by Section 3 of the Local Autonomy Act,
the Sangguniang Bayan of Dasmariñas subsequently enacted a Comprehensive
Zoning Ordinance, ratified by the HLURB under Board Resolution No. 42-A-3
dated February 11, 1981 (1981 Comprehensive Zoning Ordinance of Dasmarinas).
Upon the request of the DAR, Engr. Alfredo Gil M. Tan, HLURB Regional Technical
Coordinator, issued a certification[45] dated September 10, 1992 stating that per the
1981 Comprehensive Zoning Ordinance of Dasmarinas, the subject property was within
the agricultural zone. Does this mean that the subject property reverted from
residential to agricultural classification?

The Court answers in the negative. While the subject property may be physically
located within an agricultural zone under the 1981 Comprehensive Zoning Ordinance of
Dasmarinas, said property retained its residential classification.

According to Section 17, the Repealing Clause, of the 1981 Comprehensive Zoning
Ordinance of Dasmarinas: "AH other ordinances, rules or regulations in conflict with the
provision of this Ordinance are hereby repealed: Provided, that rights that have
vested before the cffectivity of this Ordinance shall not be impaired."

In Ayog v. Cusi, Jr.,[46] the Court expounded on vested right and its protection:

That vested right has to be respected. It could not be abrogated by the new
Constitution. Section 2, Article XIII of the 1935 Constitution allows private corporations
to purchase public agricultural lands not exceeding one thousand and twenty-four
hectares. Petitioners' prohibition action is barred by the doctrine of vested rights in
constitutional law.

"All 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).47 (Emphasis supplied.)

It is true that protection of vested rights is not absolute and must yield to the exercise
of police power:

A law enacted in the exercise of police power to regulate or govern certain activities or
transactions could be given retroactive effect and may reasonably impair vested rights
or contracts. Police power legislation is applicable not only to future contracts, but
equally to Ihose already in existence. Non-impairment of contracts or vested rights
clauses will have to yield to the superior and legitimate exercise by the State of police
power to promote the health, morals, peace, education, good order, safety, and general
welfare of the people, x x x.[48]

Nonetheless, the Sangguniang Bayan of Dasmariñas in this case, in its exercise of

police power through the enactment of the 1981 Comprehensive Zoning Ordinance,
itself abided by the general rule and included in the very same ordinance an express
commitment to honor rights that had already vested under previous ordinances, rules,
and regulations. EMRASON acquired the vested right to use and develop the subject
property as a residential subdivision on July 9, 1972 with the approval of Resolution No.
29-A by the Municipality of Dasmarinas. Such right cannot be impaired by the
subsequent enactment of the 1981 Comprehensive Zoning Ordinance of Dasmarinas, in
which the subject property was included in an agricultural zone. Hence, the Municipal
Mayor of Dasmariflas had been continuously and consistently recognizing the subject
property as a residential subdivision.[49]

Incidentally, EMRASON mentions Resolution No. 105, Defining and Declaring the
Boundaries of Industrial and Residential Land Use Plan in the Municipalities of Imus and
Parts of Dasmariflas, Carmona, Gen. Mariano Alvarez, Gen. Trias, Silang, Tanza, Naic,
Rosario, and Trece Martires City, Province o[ Cavite, approved by the Sangguniang
Panlalawigan of Cavite on March 25, 1988. The Sangguniang Panlalawigan  determined
that "the lands extending from the said designated industrial areas would have greater
economic value for residential and institutional uses, and would serve the interest and
welfare for the greatest good of the greatest number of people."50 Resolution No. 105,
approved by the HLURB in 1990, partly reads:

Tracts of land in the Municipality of Carmona from the People's Technology Complex to
parts of the Municipality of Silang, parts of the Municipalities of Dasmariñas,
General Trias, Trece Martires City, Municipalities of Tanza and Naic forming the strip of
land traversed by the Puerto Azul Road extending two kilometers more or less from
each side of the road which are hereby declared as industrial-residential-
institutional mix. (Emphases supplied.)

There is no question that the subject property is located within the afore-described
area.  And even though Resolution No. 105 has no direct bearing on the classification of
the subject property prior to the CARL - it taking effect only in 1990 after being
approved by the HLURB - it is a confirmation that at present, the subject property and
its surrounding areas are deemed by the Province of Cavite better suited and prioritized
for industrial and residential development, than agricultural purposes.

CARP exemption

The Court reiterates that since July 9, 1972, upon approval of Resolution No. 29-A by
the Municipality of Dasmarinas, the subject property had been reclassified from
agricultural to residential. The tax declarations covering the subject property,
classifying the same as agricultural, cannot prevail over Resolution No. 29-A. The
following pronouncements of the Court in the Patalinghug case are of particular
relevance herein:

The reversal by the Court of Appeals of the trial court's decision was based on Tepoot's
building being declared for taxation purposes as residential. It is our considered view,
however, that a tax declaration is not conclusive of (he nature of the property
for zoning purposes.  A property may have been declared by its owner as residential
for real estate taxation purposes but it may well be within a commercial zone. A
discrepancy may thus exist in the determination of the nature of property for real
estate taxation purposes vis-a-vis the determination of a property for zoning purposes.

xxxx

The trial court's determination that Mr. Tepoot's building is commercial and, therefore,
Sec. 8 is inapplicable, is strengthened by the fact that the Sangguniang Panlungsod has
declared the questioned area as commercial or C-2. Consequently, even if Tepoot's
building was declared for taxation purposes as residential, once a local government
has reclassified an area as commercial, that determination for zoning purposes
must prevail. While the commercial character of the questioned vicinity has been
declared thru the ordinance, private respondents have failed to present convincing
arguments to substantiate their claim that Cabaguio Avenue, where the funeral parlor
was constructed, was still a residential zone. Unquestionably, the operation of a funeral
parlor constitutes a "commercial purpose," as gleaned from Ordinance No. 363.
[52]
 (Emphases supplied.)

Since the subject property had been reclassified as residential land by virtue of
Resolution No. 29-A dated July 9, 1972, it is no longer agricultural land by the time the
CARL took effect on June 15, 1988 and is, therefore, exempt from the CARP.

This is not the first time that the Court made such a ruling.

In the Natalia Realty case, Presidential Proclamation No. 1637 dated April 18,

1979 set aside land in the Municipalities of Antipolo, San Mateo, and Montalban,
Province of Rizal, as townsite areas. The properties owned by Natalia Realty, Inc.
(Natalia properties) were situated within the areas proclaimed as townsite reservation. 
The developer of the Natalia properties was granted the necessary clearances and
permits by the PJSRC for the development of a subdivision in the area.  Thus, the
Natalia properties later became the Antipolo Hills Subdivision.  Following the effectivity
of the CARL on June 15, 1988, the DAR placed the undeveloped portions of the Antipolo
Hills Subdivision under the CARP. For having done so, the Court found that the DAR
committed grave abuse of discretion, thus:

Section 4 of R.A. 6657 provides that the CARL shall "cover, regardless of tenurial
arrangement and commodity produced, all public and private agricultural lands." As to
what constitutes "agricultural land," it is referred to as "land devoted to agricultural
activity as defined in this Act and not classified as mineral, forest, residential,
commercial or industrial land." The deliberations of the Constitutional Commission
confirm this limitation. "Agricultural lands" arc only those lands which are "arable and
suitable agricultural lands" and "do not include commercial, industrial and residential
lands."

Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills
Subdivision cannot in any language be considered as "agricultural lands." These lots
were intended for residential use. They ceased to be agricultural lands upon
approval of their inclusion in the Lungsod Silangan Reservation. Even today, the
areas in question continue to be developed as a low-cost housing subdivision, albeit at
a snail's pace, x x x The enormity of the resources needed for developing a
subdivision may have delayed its completion but this does not detract from the
fact that these lands are still residential lands and outside the ambit of the
CARL.

Indeed, lands not devoted to agricultural activity are outside the coverage of CARL.
These include lands previously converted to non-agricultural uses prior to the eifectivity
of CARL by government agencies other than respondent OAR. In its Revised Rules and
Regulations Governing Conversion of Private Agricultural Lands to Non-Agricultural
Uses, DAR itself defined ''agricultural land" thus -

"x x x Agricultural land refers to those devoted to agricultural activity as defined in R.A.
6657 and not classified as mineral or forest by the Department of Environment and
Natural Resources (DENR) and its predecessor agencies, and not classified in town
plans and zoning ordinances as approved by the Housing and Land Use Regulatory
Board (BLURB) and its preceding competent authorities prior to 15 June 1988 for
residential, commercial or industrial use."

Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is
bound by such conversion. It was therefore error to include the undeveloped portions of
the Antipolo Hills Subdivision within the coverage of CARL.

Be that as it may, the Secretary of Justice, responding to a query by the Secretary of

Agrarian Reform, noted in an Opinion that lands covered by Presidential Proclamation
No. 1637, inter alia, of which the NATALIA lands are part, having been reserved for
townsite purposes "to be developed as human settlements by the proper land and
housing agency," are "not deemed 'agricultural lands' within the meaning and intent of
Section 3 (c) of R.A. No. 6657." Not being deemed "agricultural lands," they are outside
the coverage of CARL.[53]  (Emphases supplied.)

That the land in the Natalia Realty case was reclassified as residential by a presidential

proclamation, while the subject property herein was reclassified as residential by a local
ordinance, will not preclude the application of the ruling of this Court in the former to
the latter. The operative fact that places a parcel of land beyond the ambit of the CARL
is its valid reclassification from agricultural to non-agricultural prior to the effectivity of
the CARL on June 15, 1988, not by how or whose authority it was reclassified.

In Pasong Bayabas Farmers Association, Inc. v. Court of Appeals [54] (Pasong Bayabas

case), the Court made the following findings:

Under Section 3(c) of Rep. Acl No. 6657. agricultural lands refer to lands devoted to
agriculture as conferred in the said law and not classified as industrial land. Agricultural
lands are only those lands which are arable or suitable lands that do not include
commercial, industrial and residential lands. Section 4(e) of the law provides that it
covers all private lands devoted to or suitable for agriculture regardless of the
agricultural products raised or that can be raised thereon. Rep. Act No. 6657 took effect
only on June 15, 1988. But long before the law took effect, the property subject
of the suit had already been reclassified and converted from agricultural to
non-agricultural or residential land by the following administrative agencies:
(a) the Bureau of Lands, when it approved the subdivision plan of the property
consisting of 728 subdivision lots; (b) the National Planning Commission which
approved the subdivision plan subdivided by the LDC/CAI for the development of the
property into a low-cost housing project; (c) the Municipal Council of Carmona,
Cavite, when it approved Kapasiyahang Blg. 30 on May 30, 1976; (d) Agrarian
Reform Minister Conrado F. Estrella, on July 3, 1979, when he granted the application
of the respondent for the development of the Hakone Housing Project with an area of
35.80 hectares upon the recommendation of the Agrarian Reform Team, Regional
Director of Region IV, which found, after verification and investigation, that the
property was not covered by P.D. No. 27, it being untenanted and not devoted to the
production of palay/or corn and that the property was suitable for conversion to
residential subdivision: (e) by the Ministry of Local Government and Community
Development; (f) the Human Settlements Regulatory Commission which issued a
location clearance, development permit, Certificate of Inspection and License to Sell to
the LDC/private respondent: and, (g) the Housing and Land Use Regulatory Board
which also issued to the respondent CAI/LDC a license to sell the subdivision lots."
(Emphases supplied.)

Noticeably, there were several government agencies which reclassified and converted
the property from agricultural to non-agricultural in the Pasong Bayabas case.  The
CARL though does not specify which specific government agency should have done the
reclassification.  To be exempt from CARP, all that is needed is one valid reclassification
of the land from agricultural to non-agricultural by a duly authorized government
agency before June 15, 1988, when the CARL took effect.  All similar actions as regards
the land subsequently rendered by other government agencies shall merely serve as
confirmation of the reclassification. The Court actually recognized in the Pasong
Bayabas case the power of the local government to convert or reclassify lands through
a zoning ordinance:

Section 3 of Rep. Act No. 2264, amending the Local Government Code,
specifically empowers municipal and/or city councils to adopt zoning and
subdivision ordinances or regulations in consultation with the National
Planning Commission. A zoning ordinance prescribes, defines, and apportions a given
political subdivision into specific land uses as present and future projection of
needs. The power of the local government to convert or reclassify lands to
residential lands to non-agricultural lands rcclassificd is not subject to the
approval of the Department of Agrarian Reform. Section 65 of Rep. Act No. 6657
relied upon by the petitioner applies only to applications by the landlord or the
beneficiary for the conversion of lands previously placed under the agrarian reform law
after the lapse of five years from its award. It docs not apply to agricultural lands
already converted as residential lands prior to the passage of Rep. Act No. 6657.
[56]
 (Emphases supplied.)

At the very beginning of Junto v. Garilao,[57] the  Court already declared that:

Lands already classified and identified as commercial, industrial or residential before

June 15, 1988 - the date of effectivity of the Comprehensive Agrarian Reform Law
(CARL) - are outside the coverage of this law. Therefore, they no longer need any
conversion clearance from the Department of Agrarian Reform (DAR). [58]

The Court then proceeded to uphold the authority of the City Council of Bacolod to
reclassify as residential a parcel of land through Resolution No. 5153-A, series of 1976.
The reclassification was later affirmed by the HSRC. Resultantly, the Court sustained
the DAR Order dated September 13, 1994, exempting the same parcel of land from
CARP Coverage.

The writ of preliminary injunction

Any objection of Buklod against the issuance by the Court of Appeals of a writ of
preliminary injunction, enjoining then DAR Secretary Garilao and Deputy Executive
Secretary Corona from implementing the OP Decision of February 7, 1996 and
Resolution of May 14, 1996 during the pendency of CA-G.R. SP No. 40950, had been
rendered moot and academic when the appellate court already promulgated its Decision
in said case on March 26, 1997 which made the injunction permanent. As the Court
held in Kho v. Court of Appeals[59]:
We cannot likewise overlook the decision of the trial court in the case for final injunction
and damages. The dispositive portion of said decision held that the petitioner does not
have trademark rights on the name and container of the beauty cream product. The
said decision on the merits of the trial court rendered the issuance of the writ of a
preliminary injunction moot and academic notwithstanding the fact that the same has
been appealed in the Court of Appeals. This is supported by our ruling in La Vista
Association, Inc. v. Court of Appeals, to wit:

Considering that preliminary injunction is a provisional remedy which may be granted

at any time after the commencement of the action and before judgment when it is
established that the plaintiff is entitled to the relief demanded and only when his
complaint shows facts entitling such reliefs xxx and it appearing that the trial court had
already granted the issuance of a final injunction in favor of petitioner in its decision
rendered after trial on the merits xxx the Court resolved to Dismiss the instant petition
having been rendered moot and academic. An injunction issued by the trial court after
it has already made a clear pronouncement as to the plaintiffs right thereto, that is,
after the same issue has been decided on the merits, the trial court having appreciated
the evidence presented, is proper, notwithstanding the fact that the decision rendered
is not yet final xxx. Being an ancillary remedy, the proceedings for preliminary
injunction cannot stand separately or proceed independently of the decision rendered
on the merit of the main case for injunction. The merit of the main case having been
already determined in favor of the applicant, the preliminary determination of its non-
existence ceases to have any force and effect, (italics supplied)

La Vista categorically pronounced that the issuance of a final injunction renders any
question on the preliminary injunctive order moot and academic despite the fact that
the decision granting a final injunction is pending appeal. Conversely, a decision
denying the applicant-plaintiffs right to a final injunction, although appealed, renders
moot and academic any objection to the prior dissolution of a writ of preliminary
injunction.[60]

Issues belatedly raised

Buklod sought to intervene in CA-G.R. SP No. 40950, then pending before the Court of
Appeals, by filing a Manifestation and Omnibus Motion in which it argued only two
points: (1) the writ of preliminary injunction be immediately dissolved for having been
issued in violation of Section 55 of the CARL; and (2) that the Petition for Review of
EMRASON be dismissed for being the wrong remedy.

It was only after the Court of Appeals rendered its Decision dated March 26, 1997
unfavorable to both DAR and Buklod did Buklod raise in its Motion for Reconsideration
several other issues, both factual and legal, [61] directly assailing the exemption of the
subject property from the CARP.  The Court of Appeals refused to consider said issues
because they were raised by Buklod for the first time in its Motion for Reconsideration.

Buklod persistently raises the same issues before this Court, and the Court, once more,
refuses to take cognizance of the same.

As a rule, no issue may be raised on appeal unless it has been brought before the lower
tribunal for its consideration. Higher courts are precluded from entertaining matters
neither alleged in the pleadings nor raised during the proceedings below, but ventilated
for the first time only in a motion for reconsideration or on appeal. [62]  The issues were
first raised only in the Motion for Reconsideration of the Decision of the Court of
Appeals, thus, it is as if they were never duly raised in that court at all. "Hence, this
Court cannot now, for the first time on appeal, entertain these issues, for to do so
would plainly violate the basic rule of fair play, justice and due process. The Court
reiterates and emphasizes the well-settled rule that an issue raised for the first time on
appeal and not raised timely in the proceedings in the lower court is barred by estoppel.
[63]

Indeed, there are exceptions to the aforecited rule that no question may be raised for
the first time on appeal. Though not raised below, the issue of lack of jurisdiction over
the subject matter may be considered by the reviewing court, as it may be raised at
any stage. The said court may also consider an issue not properly raised during trial
when there is plain error.  Likewise, it may entertain such arguments when there are
jurisprudential developments affecting the issues, or when the issues raised present a
matter of public policy.[64] Buklod, however, did not allege, much less argue, that its
case falls under any of these exceptions.

Nonetheless, even when duly considered by this Court, the issues belatedly raised by
Buklod are without merit.

Contrary to the contention of Buklod, there is no necessity to carry out the conversion
of the subject property to a subdivision within one year, at the risk of said property
reverting to agricultural classification.

Section 36(1) of the Agricultural Land Reform Code, in effect since August 8, 1963,
provided:

SEC. 36. Possession of Landholding; Exceptions.— Notwithstanding any agreement as

to the period or future surrender, of the land, an agricultural lessee shall continue in
the enjoyment and possession of his landholding except when his dispossession has
been authorized by the Court in a judgment that is final and executory if after due
hearing it is shown that:

(1) The agricultural lessor-owner or a member of his immediate family will personally
cultivate the landholding or will convert the landholding, if suitably located, into
residential, factory, hospital or school site or other useful non-agricultural purposes:
Provided, That the agricultural lessee shall be entitled to disturbance compensation
equivalent to five years rental on his landholding in addition to his rights under Sections
twenty-five and thirty-four, except when the land owned and leased by the agricultural
lessor is not more than five hectares, in which case instead of disturbance
compensation the lessee may be entitled to an advanced notice of at least one
agricultural year before ejectment proceedings are filed against him: Provided,
further, That should the landholder not cultivate the land himself for three years
or fail to substantially carry out such conversion within one year after the
dispossession of the tenant, it shall be presumed that he acted in bad faith and
the tenant shall have the right to demand possession of the land and recover
damages for any loss incurred by him because of said dispossessions; xxx.
(Emphasis supplied.)
On September 10, 1971, the Agricultural Land Reform Code was amended and it
came to be known as the Code of Agrarian Reforms. After its amendment, Section
36(1) stated:

(1) The landholding is declared by the department head upon recommendation of the
National Planning Commission to be suited for residential, commercial, industrial or
some other urban purposes: Provided, That the agricultural lessee shall be entitled to
disturbance compensation equivalent to five times the average of the gross harvests on
his landholding during the last five preceding calendar years.

At the time Resolution No. 29-A was enacted by the Municipality of Dasmarinas on July
9, 1972, the Code of Agrarian Reforms was already in effect. The amended Section
36(3) thereof no longer contained the one-year time frame within which conversion
should be carried out.

More importantly, Section 36(1) of the Code o[ Agrarian Reforms would apply only if
the land in question was subject of an agricultural leasehold, a fact that was not
established in the proceedings below. It may do well for the Buklod members to
remember that they filed their present Petition to seek award of ownership over
portions of the subject property as qualified farmer-beneficiaries under the CARP; and
not payment of disturbance compensation as agricultural lessees under the Code of
Agrarian Reforms. The insistence by Buklod on the requisites under Section 36(1) of the
Agricultural Land Reform Code/Code of Agrarian Reforms only serves to muddle the
issues rather than support its cause.

Buklod likewise invokes the vested rights of its members under the Agricultural Land
Reform Code/Code of Agrarian Reforms and the Tenants Emancipation Decree, which
preceded the CARP.  Yet, for the Buklod

members to be entitled to any of the rights and benefits under the said laws, it is
incumbent upon them to prove first that they qualify as agricultural lessees or farm
workers of the subject property, as defined in Section 166(2) [65] and (15)[66]of the Code
of Agrarian Reforms; and/or they are tenant-farmers of private agricultural lands
primarily devoted to rice and corn, under a system of share-crop or lease tenancy, and
are members of a duly recognized farmer's cooperative, as required by the Tenants
Emancipation Decree. None of these determinative facts were established by Buklod.

Buklod counters that it precisely moved for a hearing before the Court of Appeals so
that it could present evidence to prove such facts, but the appellate court erroneously
denied its motion.

The Court finds that the Court of Appeals did not err on this matter.

In the recent case of Office of the Ombudsman v. Sison,[67] the Court expounded on the
rules on intervention:

It is fundamental that the allowance or disallowance of a Motion 10 Intervene is

addressed to the sound discretion of the court. The permissive tenor of the rules shows
the intention lo give to the court the full measure of discretion in permitting or
disallowing the intervention, thus:

SECTION 1. Who may intervene, - A person who has a Icga) interest in the mailer in
litigation, or in the success of either of the parties, or an interest against both, or is so
situated as to be adversely affected by a distribution or other disposition of property in
the custody of the court or of an officer thereof may, with leave of court, be allowed to
intervene in the action. The court shall consider whether or not the intervention will
unduly delay or prejudice the adjudication of the rights of the original parties, and
whether or not the intcrvenor's rights may be fully protected in a separate proceeding.

SECTION 2. Time to intervene. - The motion to intervene may be filed al any time

before rendition of judgment by the trial court. A copy of the pleading-in-
intervention shall be attached to the motion and served on the original parties.
(Emphasis supplied.)

Simply, intervention is a procedure by which third persons, not originally parties to the
suit but claiming an interest in the subject matter, come into the case in order to
protect their right or interpose their claim. Its main purpose is to settle in one action
and by a single judgment all conflicting claims of, or the whole controversy among, the
persons involved.

To warrant intervention under Rule 19 of the Rules of Court, two requisites must
concur: (1) the movant has a legal interest in the matter in litigation; and (2)
intervention must not unduly delay or prejudice the adjudication of the rights of the
parties, nor should the claim of the intervenor be capable of being properly decided in a
separate proceeding. The interest,' which entitles one to intervene, must involve the
matter in litigation and of such direct and immediate character that the intervenor will
either gain or lose by the direct legal operation and effect of the judgment. [68]

To apply the rules strictly, the motion of Buklod to intervene was filed too late.
According to Section 2, Rule 19 of the Rules of Civil Procedure, "a motion to intervene
may be filed at any time before rendition of judgment by the trial court." Judgment
was already rendered in DARAB Case No. IV-Ca-0084-92 (the petition of EMRASON to
nullify the notices of acquisition over the subject property), not only by the DAR
Hearing Officer, who originally heard the case, but also the DAR Secretary, and then
the OP, on appeal.

Buklod only sought to intervene when the case was already before the Court of
Appeals. The appellate court, in the exercise of its discretion, still allowed the
intervention of Buklod in CA-G.R. SP No. 40950 only because it was "not being in any
way prejudicial to the interest of the original parties, nor will such intervention
change the factual legal complexion of the case."[69] The intervention of Buklod
challenged only the remedy availed by EMRASON and the propriety of the preliminary
injunction issued by the Court of Appeals, which were directly and adequately
addressed by the appellate court in its Decision dated March 26, 1997.

The factual matters raised by Buklod in its Motion for Reconsideration of the March 26,
1997 Decision of the Court of Appeals, and which it sought to prove by evidence,
inevitably changes "the factual legal complexion of the case."  The allegations of Buklod
that its members are tenant-farmers of the subject property who acquired vested rights
under previous agrarian reform laws, go against the findings of the DAR Region IV
Hearing Officer, adopted by the DAR Secretary, the OP, and Court of Appeals, that the
subject property was being acquired under the CARP for distribution to the tenant-
farmers of the neighboring NDC property, after a determination that the latter property
was insufficient for the needs of both the NDC-Marubeni industrial estate and the
tenant-farmers.

Furthermore, these new claims of Buklod are beyond the appellate jurisdiction of the
Court of Appeals, being within the primary jurisdiction of the DAR. As Section 50 of the
CARL, as amended, reads:

SEC. 50. Quasi-Judicial Powers of the DAR. - The DAR is hereby vested with primary
jurisdiction to determine and adjudicate agrarian reform matters and shall have
exclusive original jurisdiction over all matters involving the implementation of agrarian
reform, except those falling under the exclusive jurisdiction of the Department of
Agriculture (DA) and the Department of Environment and Natural Resources (DENR).

In fact, records reveal that Buklod already sought remedy from the DARAB. DARAB
Case No. IV-CA-0261, entitled Buklod nang Magbubukid sa Lupaing Ramos, rep. by
Edgardo Mendoza, et at. v. E.M. Ramos and Sons, Inc., et al., was pending at about the
same time as DARAB Case No. lV-Ca-0084-92, the petition of EMRASON for nullification
of the notices of acquisition covering the subject property. These two cases were
initially consolidated before the DARAB Region IV. The DARAB Region IV eventually
dismissed DARAB Case No. IV-Ca-0084-92 and referred the same to the DAR Region IV
Office, which had jurisdiction over the case. Records failed to reveal the outcome of
DARAB Case No. IV-CA-0261,

On a final note, this Court has stressed more than once that social justice - or any
justice for that matter - is for the deserving, whether he be a millionaire in his mansion
or a pauper in his hovel. It is true that, in case of reasonable doubt, the Court is called
upon to tilt the balance in favor of the poor to whom the Constitution fittingly extends
its sympathy and compassion. But never is it justified to give preference to the poor
simply because they are poor, or to reject the rich simply because they are rich, for
justice must always be served for poor and rich alike, according to the mandate of the
law.[70] Vigilance over the rights of the landowners is equally important because social
justice cannot be invoked to trample on the rights of property owners, who under our
Constitution and laws are also entitled to protection. [71]

WHEREFORE, the Petitions for Review filed by the Buklod Nang Magbubukid Sa
Lupaing Ramos, Inc. in G.R. No. 131481 and the Department of Agrarian Reform in
G.R. No. 131624 are hereby DENIED. The Decision dated March 26, 1997 and the
Resolution dated November 24, 1997 of the Court of Appeals in CA-G.R. SP No. 40950
are hereby AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 171146               December 7, 2011

RODOLFO MORLA, Petitioner,
vs.
CORAZON NISPEROS BELMONTE, ABRAHAM U. NISPEROS, PERLITA NISPEROS OCAMPO,
ARMANDO U. NISPEROS, ALBERTO U. NISPEROS, HILARIO U. NISPEROS, ARCHIMEDES U.
NISPEROS, BUENAFE NISPEROS PEREZ, ARTHUR U. NISPEROS, AND ESPERANZA
URBANO NISPEROS, Respondents.

DECISION

LEONARDO-DE CASTRO, J.:

This petition for review on certiorari 1 seeks to annul and set aside the March 9, 2005 Decision 2 and
December 29, 2005 Resolution3 of the Court of Appeals in CA-G.R. CV No. 53527, which affirmed
with modification the February 19, 1996 Judgment 4 of the Regional Trial Court (RTC) of Ilagan,
Isabela, Branch 17 in Civil Case No. 810.

Spouses Alfredo Nisperos and Esperanza Urbano (the Nisperos spouses) were the original
homesteaders of an 80,873-square meter tract of public land known and identified as Lot No. 4353
of Pls. 62, situated in Caliguian, Burgos, Isabela, 5 by virtue of Original Certificate of Title (OCT) No.
P-1542, issued on May 4, 1951.6

On June 8, 1988, the Nisperos spouses executed a Partial Deed of Absolute Sale, 7 wherein they
sold a portion of Lot No. 4353 with an area of 50,000 square meters (subject land) to the brothers
Ramon and Rodolfo Morla (the Morla brothers) for the sum of Two Hundred Fifty Thousand Pesos
(₱ 250,000.00).

On August 2, 1988, the Morla brothers acknowledged and confirmed in writing (the "1988 contract")
that they had bought from the Nisperos spouses the subject land, and that they had agreed to give
the Nisperos spouses a period of ten (10) years within which to repurchase the subject land for the
price of Two Hundred Seventy-Five Thousand Pesos (₱ 275,000.00). The 1988 contract was written
in Ilocano and executed at the Office of the Barangay Captain in the Municipality of Burgos, Province
of Isabela.8

On June 27, 1994, the Nisperos spouses filed a Complaint 9 for Repurchase and/or Recovery of
Ownership Plus Damages against the Morla brothers. They alleged that the deed of sale was
registered by the Morla brothers only when they had signified their intention to repurchase their
property.10 Thus, Transfer Certificate of Title (TCT) No. 225544 for the subject land was issued in
favor of the Morla brothers, and TCT No. 225545,11 for the remaining 30,870 square meters of Lot
No. 4353, to the Nisperos spouses.

In response,12 the Morla brothers claimed that the Nisperos spouses had no cause of action, as the
repurchase of the subject land was improper for being outside the five-year period provided under
Section 119 of Commonwealth Act No. 141. 13

At the pre-trial conference held on June 19, 1995, the parties settled that the only issue to be
resolved by the RTC was whether the 1988 contract executed by the parties, wherein it was
stipulated that the Nisperos spouses may repurchase the land sold to the Morla brothers within a
period of ten (10) years, was valid or not.14

On July 28, 1995, the RTC issued an Order15 requiring the parties to submit their position papers or
memoranda in light of their agreement to submit the case for Summary Judgment on the issue of the
validity of the 1988 contract.

The Nisperos spouses then filed a Motion for Summary Judgment 16 on the ground that there was no
genuine issue of material facts in the case except for damages and attorney’s fees, which may be
heard separately and independently.

On September 15, 1995, the Nisperos spouses deposited the amount of ₱ 275,000.00, with the clerk
of court of the RTC for the repurchase of the subject land. 17

The RTC rendered its Judgment dated February 19, 1996, the dispositive portion of which reads:

WHEREFORE, for and in consideration of the foregoing, judgment is hereby rendered in favor of the
plaintiffs and against the defendants ordering the defendants to reconvey the portion of five (5)
hectares of plaintiff’s land covered by their original title, Original Certificate of Title No. P-1542 unto
the plaintiffs and to receive and accept the ₱ 275,000.00 from the plaintiffs as repurchase; to pay
attorney’s fees in the amount of ₱ 5,000.00 and to pay the costs of this suit. 18

The RTC said that the only issue to be resolved was the validity of the 1988 contract, which the
Morla brothers neither attacked nor denied. The RTC held that it was clear from the 1988 contract,
which the Morla brothers executed, that they had bound themselves to its terms and conditions. The
RTC further proclaimed that what was prohibited was the shortening of the five-year redemption
period under Section 119 of Commonwealth Act No. 141, and not its prolongation. 19

On March 14, 1996, the Morla brothers moved for the reconsideration 20 of the RTC’s judgment on
the ground that it could not affect them since they were no longer the real parties-in-interest as they
had already sold the subject land to Rosie Ocampo, married to Delfin Gragasin, and Hilario
Bernardino, married to Manolita Morla, on May 2, 1994. 21

The Nisperos spouses, in their Opposition to the Motion for Reconsideration, 22 attacked the validity
of the purported sale and alleged that such sale in favor of the Morla brothers’ close relatives was a
last ditch attempt to win the case. The Nisperos spouses pointed out that the Morla brothers never
mentioned such sale considering that it supposedly happened in May 1994, before the case was
instituted in June 1994.23

The RTC denied the Morla brothers’ motion for reconsideration in an Order 24 dated July 19, 1996.
The RTC noted how such purported sale was not mentioned by the Morla brothers in their
confrontations with the Nisperos spouses prior to the filing of the case, or in any of their pleadings
filed before the RTC. The RTC agreed with the Nisperos spouses’ contention that if the sale really
did happen, then the Morla brothers should have brought it up at the earliest opportune time. Finally,
the RTC said that the belated issue would not in any way affect the standing of the parties.

The Morla brothers timely25 appealed this decision to the Court of Appeals and assigned the
following errors in support thereof:

The TRIAL COURT GRAVELY ERRED IN HOLDING THAT APPELLANTS’ AUGUST 2,

1988 private writing, Exh. "A" WAS AN AGREEMENT BY PARTIES FOR APPELLEES TO
REPURCHASE WITHIN TEN (10) YEARS THEREFROM THE FIVE (5) HECTARES
PORTION OF THEIR HOMESTEAD THEY SOLD TO THE FORMER AS PER JUNE 28,
1988 PARTIAL DEED OF ABSOLUTE SALE, EXH. "1" NOTWITHSTANDING THE
MANDATORY FIVE (5) YEARS REPURCHASE PERIOD FROM THE DATE OF SALE
PROVIDED BY SECTION 119 OF THE PUBLIC LAND LAW (COMMONWEALTH ACT NO.
141).

II

THE TRIAL COURT GRAVELY ERRED IN RELYING ON THE PRECEDENT LAID IN THE
CASES OF MENJE, ET AL., VS. ANGELES, 101 PHIL. 563 AND MANUEL VS. PHILIPPINE
NATIONAL BANK, 101 PHIL. 568, WHICH TREAT OF REDEMPTION OF FORECLOSED
HOMESTEAD AFTER FORECLOSURE SALES NOTWITHSTANDING THE CLEAR ISSUE
IN THE CASE AT BAR WHICH IS FOR REPURCHASE OF A PORTION OF A
HOMESTEAD. 26

On March 9, 2005, the Court of Appeals affirmed the RTC’s decision, with the deletion of the award
of attorney’s fees for lack of basis in the decision, as the only modification. While the Court of
Appeals agreed with the Morla brothers’ assertion that the cases cited by the RTC were not
applicable to their case, it declared that the RTC did not err in allowing the Nisperos spouses to
repurchase the subject land. The Court of Appeals immediately noted that there clearly was no
genuine issue as to any material fact, except for the claim of attorney’s fees. It upheld the validity of
the 1988 contract and concurred with the RTC’s rationale that the arrangement to prolong the period
for redemption of the subject land was not prohibited by law as it was in line with the intent of
Section 119 "to give the homesteader or patentee every chance to preserve for himself and his
family the land that the State had gratuitously given to him as a reward for his labor in cleaning and
cultivating it." The Court of Appeals further held that the 1988 contract, contrary to the Morla
brothers’ contention, was not unenforceable as the necessity to embody certain contracts in a public
instrument was only for convenience and not for its validity or enforceability. 27

The Morla brothers sought to have this decision reconsidered on the strength of a "newly
discovered" Contract of Sale of farm land dated June 28, 1978 (1978 contract). The Morla brothers
alleged that this contract, which covered the subject land, was found only upon the prodding of their
new lawyer; thus, even the ten-year period to repurchase the subject land under Article 1606 of the
Civil Code had already expired. 28

The Court of Appeals issued a Resolution29 on December 29, 2005, denying the Morla brothers’
motion for reconsideration in this wise:

[The Morla brothers] assert a new theory on the basis of a handwritten "contract" dated June 28,
1978 – a private document – allegedly executed by [the Nisperos spouses]. Said document is being
introduced for the first time on appeal. And it is settled that issues not raised in the court a quo
cannot be raised for the first time on appeal – in the case at bench, in a motion for reconsideration –
for being offensive to the basic rules of fair play, justice and due process x x x. 30

As Ramon Morla died on March 5, 2001, single and without any descendants or ascendants,
Rodolfo Morla (petitioner), by himself, elevated the instant case before this Court with the Nisperos
spouses as respondents. Alfredo Nisperos, however, also died on September 19,
2010.31 Consequently, Alfredo Nisperos’ legal heirs filed a motion 32 to be substituted as respondents,
in lieu of their deceased father. This motion was granted on October 3, 2011 33 thus, Corazon
Nisperos Belmonte, Abraham U. Nisperos, Perlita Nisperos Ocampo, Armando U. Nisperos, Alberto
U. Nisperos, Hilario U. Nisperos, Archimedes U. Nisperos, Buenafe Nisperos Perez, and Arthur U.
Nisperos, now join their mother Esperanza Urbano Nisperos as respondents in this case.

Issue

Petitioner, claiming that his petition is of transcendental importance as it poses a novel question of
law, is asking us to resolve the following question:

[M]ay parties to a deed of sale of a land covered by a homestead patent extend or prolong the 5-
year period of repurchase under Section 119 of Act 141, under a private writing subsequently
executed by them?34

The Court’s Ruling

This Court would like to address the admissibility of the 1978 contract at the outset as petitioner
posits that by virtue of this contract, the respondents’ claim had already prescribed, even if the
redemption period under Section 119 of Commonwealth Act No. 141 were extended to ten years.
Petitioner claims that the June 8, 1988 Partial Deed of Sale was actually the formal culmination of an
earlier transaction between the Morla brothers and the Nisperos spouses, as shown by the 1978
contract. Hence, more than ten years have already lapsed from the time such contract was executed
to the time the right to repurchase was sought to be exercised. 35

Contrary to petitioner’s allegation in its Motion for Reconsideration before the Court of Appeals, the
1978 contract did not surface only after the appeal; it was actually attached to the Morla brothers’
Answer36 filed with the RTC on July 12, 1994. Referencing this 1978 contract, the Morla brothers
stated the following in their Answer:

8. Since June 28, 1978 and continuously up to the present, the defendants are in the open,
continuous, exclusive, and notorious actual physical possession, occupation, and cultivation of the
(50,000 SQUARE METERS) portion of Lot No. 4353, Pls-62, as evidenced by a private document, a
xerox copy of which document is hereto attached as Annex "2" to this answer. 37

During the pre-trial, the Morla brothers and the Nisperos spouses also agreed on only the following
stipulation of facts, as stated in the RTC’s June 19, 1995 Order:

1. That the land is a Homestead originally applied for by the plaintiffs and a Homestead
Patent and Original Certificate of Title were issued to the plaintiffs;

2. That on August 2, 1988, at Caliguian, Burgos, Isabela, in the presence of the Barangay
Captain, an Ilocano writing or contract was acknowledged and confirmed by the defendants
and the defendants admitted as to its authenticity;
 3. That the Transfer Certificate of Title No. T-225545 is the remaining portion of Three (3)
hectares or 30, 873 square meters, which was only issued by the Register of Deeds of
Isabela on March 11, 1994, and this remaining portion was derived from the Original
Certificate of Title of Alfredo Nisperos, which is OCT No. P-1542 issued in 1951;

4. That on June 8, 1988, a Partial Deed of Absolute Sale was prepared, as per Doc. No. 419;
Page 84; Book 17; Series of 1988, entered into the Notarial Book of Notary Public Severo
Ladera;

5. That Transfer Certificate of Title No. T-225544 was registered in the name of the
defendants, Rodolfo Morla and Ramon Morla at the Office of the Registry of Deeds of
Isabela on March 11, 1994. 38

The Morla brothers’ Position Paper/Memorandum39 likewise reiterated that the sale of the subject
land happened on June 8, 1988, and referred to the 1978 contract only to prove their long
possession of the subject land, just as they did in their Answer.

If it were true that the subject land’s ownership was ceded to the Morla brothers as early as 1978,
then it is inconceivable that they would forget to bring up this important fact and use it as their key
defense when they filed their Answer to the Complaint on July 12, 1994. Even then, the Morla
brothers had every opportunity to correct this lapse as they had always been aware and in
possession of the 1978 contract. They could have stipulated it during the pre-trial conference, or at
least stated it in their Position Paper. The theory advanced by the Morla brothers from the very
beginning is that they are entitled to the possession of the subject land as the owner thereof
because the property was sold to them by virtue of the Partial Deed of Sale executed on June 8,
1988. They presented the 1978 contract only to prove that they had been in continuous and open
possession since 1978. The first time the Morla brothers claimed ownership, and not mere
possession, of the subject land by virtue of the 1978 contract, was in their motion for
reconsideration, after they had lost their appeal before the Court of Appeals. The Court of Appeals
was correct in not considering this argument for not having been raised at the earliest opportunity. It
is a well-settled rule that "a party who deliberately adopts a certain theory upon which the case was
decided by the lower court will not be permitted to change [it] on appeal." 40 "Petitioner is bound by
the statements and stipulations he made while the case was being heard in the lower courts." 41 In
Manila Electric Company v. Benamira,42 we said:

[I]t is a fundamental rule of procedure that higher courts are precluded from entertaining matters
neither alleged in the pleadings nor raised during the proceedings below, but ventilated for the first
time only in a motion for reconsideration or on appeal. The individual respondents are bound by their
submissions that AFSISI is their employer and they should not be permitted to change their theory.
Such a change of theory cannot be tolerated on appeal, not due to the strict application of
procedural rules but as a matter of fairness. A change of theory on appeal is objectionable because
it is contrary to the rules of fair play, justice and due process.43

Having settled the inadmissibility of the 1978 contract, we now go to the legality of the 1988 contract.

Since the subject land was acquired by the Nisperos spouses pursuant to a homestead
patent, the applicable law is Commonwealth Act No. 141, or the Public Land Act. 44 Section 119
thereof specifically speaks about repurchases of a homestead or free patent land:

Sec. 119. Every conveyance of land acquired under the free patent or homestead provisions, when
proper, shall be subject to repurchase by the applicant, his widow, or legal heirs, within a period of
five years from the date of the conveyance.
The petitioner does not dispute the existence or validity of the 1988 contract. He simply argues that
the 10-year repurchase period he and his brother Ramon Morla had agreed to grant the Nisperos
spouses, as evidenced by the 1988 contract, was contrary to law and jurisprudence, viz:

In no uncertain terms can the statutory period of five (5) years, which is fixed and non-extendible, be
prolonged or extended by agreement of the parties since it runs athwart with the express limitation of
the right to repurchase provided for in Section 119, Act 141. Spouses Nisperos cannot, therefore,
use the August 2, 1988 private writing to extend the already expired period granted under the law.
To do so is to violate the law. The law must control over the revised intention of the
parties.45 (Emphasis supplied.)

Elucidating on the purpose of the homestead laws, this Court held in Republic of the Philippines v.
Court of Appeals46 :

It is well-known that the homestead laws were designed to distribute disposable agricultural lots of
the State to land-destitute citizens for their home and cultivation. Pursuant to such benevolent
intention the State prohibits the sale or encumbrance of the homestead (Section 116) within five
years after the grant of the patent. After that five-year period the law impliedly permits alienation of
the homestead; but in line with the primordial purpose to favor the homesteader and his family the
statute provides that such alienation or conveyance (Section 117) shall be subject to the right of
repurchase by the homesteader, his widow or heirs within five years. This section 117 is
undoubtedly a complement of section 116. It aims to preserve and keep in the family of the
homesteader that portion of public land which the State had gratuitously given to him. It would,
therefore, be in keeping with this fundamental idea to hold, as we hold, that the right to repurchase
exists not only when the original homesteader makes the conveyance, but also when it is made by
his widow or heirs. This construction is clearly deducible from the terms of the statute. 47

In Fontanilla, Sr. v. Court of Appeals,48 we said:

The applicant for a homestead is to be given all the inducement that the law offers and is entitled to
its full protection. Its blessings, however, do not stop with him. This is particularly so in this case as
the appellee is the son of the deceased. There is no question then as to his status of being a legal
heir. The policy of the law is not difficult to understand. The incentive for a pioneer to venture into
developing virgin land becomes more attractive if he is assured that his effort will not go for naught
should perchance his life be cut short. This is merely a recognition of how closely bound parents and
children are in Filipino family. Logic, the sense of fitness and of right, as well as pragmatic
considerations thus call for continued adherence to the policy that not the individual applicant alone
but those so closely related to him as are entitled to legal succession may take full advantage of the
benefits the law confers.49

We are in full accord with the clear findings and apt ruling of the lower courts. Nowhere in
Commonwealth Act No. 141 does it say that the right to repurchase under Section 119 thereof could
not be extended by mutual agreement of the parties involved. Neither would extending the period in
Section 119 be against public policy as "the evident purpose of the Public Land Act, especially the
provisions thereof in relation to homesteads, is to conserve ownership of lands acquired as
homesteads in the homesteader or his heirs."50 "What cannot be bartered away is the homesteader’s
right to repurchase the homestead within five years from its conveyance, as this is what public policy
by law seeks to preserve."51 "This, in our opinion, is the only logical meaning to be given to the law,
which must be liberally construed in order to carry out its purpose." 52

Petitioner does not dispute that the 1988 contract was executed freely and willingly between him and
his late brother, and the Nisperos spouses. "The freedom of contract is both a constitutional and
statutory right,"53 and "the contracting parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy."54 The 1988 contract neither shortens the period provided
under Section 119 nor does away with it. Instead, it gives the Nisperos spouses more time to
reacquire the land that the State gratuitously gave them. The 1988 contract therefore is not contrary
to law; instead it is merely in keeping with the purpose of the homestead law. Since the 1988
contract is valid, it should be given full force and effect. In Roxas v. De Zuzuarregui, Jr., 55 we held:

It is basic that a contract is the law between the parties. Obligations arising from contracts have the
force of law between the contracting parties and should be complied with in good faith. Unless the
stipulations in a contract are contrary to law, morals, good customs, public order or public policy, the
same are binding as between the parties.56

Petitioner, who freely signed the 1988 contract, cannot now be allowed to renege on his obligation
under it, simply because he changed his mind. Article 1308 of the Civil Code provides:

The contract must bind both contracting parties; its validity or compliance cannot be left to the will of
one of them. 1avvphi1

Petitioner is thus bound by the terms of the 1988 Contract, and must comply with it in good faith.
Since the right to repurchase was exercised by the Nisperos spouses before the expiration of the
time given to them by the Morla brothers, the lower courts correctly ruled in their favor.

WHEREFORE, the Petition is hereby DENIED and the March 9, 2005 Decision and December 29,
2005 Resolution of the Court of Appeals in CA-G.R. CV No. 53527, are AFFIRMED.

SO ORDERED.

TERESITA J. LEONARDO-DE CASTRO

Associate Justice
 Republic of the Philippines
SUPREME COURT
Manila

THIRD Division

G.R. No. 165748               September 14, 2011

HEIRS OF POLICRONIO M. URETA, SR., namely: CONRADO B. URETA, MACARIO B. URETA,

GLORIA URETA-GONZALES, ROMEO B. URETA, RITA URETA-SOLANO, NENA URETA-
TONGCUA, VENANCIO B. URETA, LILIA URETA-TAYCO, and HEIRS OF POLICRONIO B.
URETA, JR., namely: MIGUEL T. URETA, RAMON POLICRONIO T. URETA, EMMANUEL T.
URETA, and BERNADETTE T. URETA, Petitioners,
vs.
HEIRS OF LIBERATO M. URETA, namely: TERESA F. URETA, AMPARO URETA-CASTILLO,
IGNACIO F. URETA, SR., EMIRITO F. URETA, WILKIE F. URETA, LIBERATO F. URETA, JR.,
RAY F. URETA, ZALDY F. URETA, and MILA JEAN URETA CIPRIANO; HEIRS OF PRUDENCIA
URETA PARADERO, namely: WILLIAM U. PARADERO, WARLITO U. PARADERO,
CARMENCITA P. PERLAS, CRISTINA P. CORDOVA, EDNA P. GALLARDO, LETICIA P. REYES;
NARCISO M. URETA; VICENTE M. URETA; HEIRS OF FRANCISCO M. URETA, namely: EDITA
T. URETA-REYES and LOLLIE T. URETA-VILLARUEL; ROQUE M. URETA; ADELA URETA-
GONZALES; HEIRS OF INOCENCIO M. URETA, namely: BENILDA V. URETA, ALFONSO V.
URETA II, DICK RICARDO V. URETA, and ENRIQUE V. URETA; MERLINDA U. RIVERA;
JORGE URETA; ANDRES URETA, WENEFREDA U. TARAN; and BENEDICT
URETA, Respondents.

x - - - - - - - - - - - - - - - -x

G.R. No. 165930              

HEIRS OF LIBERATO M. URETA, namely: TERESA F. URETA, AMPARO URETA-CASTILLO,

IGNACIO F. URETA, SR., EMIRITO F. URETA, WILKIE F. URETA, LIBERATO F. URETA, JR.,
RAY F. URETA, ZALDY F. URETA, and MILA JEAN URETA CIPRIANO; HEIRS OF PRUDENCIA
URETA PARADERO, namely: WILLIAM U. PARADERO, WARLITO U. PARADERO,
CARMENCITA P. PERLAS, CRISTINA P. CORDOVA, EDNA P. GALLARDO, LETICIA P. REYES;
NARCISO M. URETA; VICENTE M. URETA; HEIRS OF FRANCISCO M. URETA, namely: EDITA
T. URETA-REYES and LOLLIE T. URETA-VILLARUEL; ROQUE M. URETA; ADELA URETA-
GONZALES; HEIRS OF INOCENCIO M. URETA, namely: BENILDA V. URETA, ALFONSO V.
URETA II, DICK RICARDO V. URETA, and ENRIQUE V. URETA; MERLINDA U. RIVERA;
JORGE URETA; ANDRES URETA, WENEFREDA U. TARAN; and BENEDICT
URETA,Petitioners,
vs.
HEIRS OF POLICRONIO M. URETA, SR., namely: CONRADO B. URETA, MACARIO B. URETA,
GLORIA URETA-GONZALES, ROMEO B. URETA, RITA URETA-SOLANO, NENA URETA-
TONGCUA, VENANCIO B. URETA, LILIA URETA-TAYCO, and HEIRS OF POLICRONIO B.
URETA, JR., namely: MIGUEL T. URETA, RAMON POLICRONIO T. URETA, EMMANUEL T.
URETA, and BERNADETTE T. URETA, Respondents.

DECISION

MENDOZA, J.:

These consolidated petitions for review on certiorari under Rule 45 of the 1997 Revised Rules of
Civil Procedure assail the April 20, 2004 Decision1 of the Court of Appeals (CA), and its October 14,
2004 Resolution2 in C.A.-G.R. CV No. 71399, which affirmed with modification the April 26, 2001
Decision3 of the Regional Trial Court, Branch 9, Kalibo, Aklan (RTC) in Civil Case No. 5026.

The Facts

In his lifetime, Alfonso Ureta (Alfonso) begot 14 children, namely, Policronio, Liberato, Narciso,

Prudencia, Vicente, Francisco, Inocensio, Roque, Adela, Wenefreda, Merlinda, Benedicto, Jorge,
and Andres. The children of Policronio (Heirs of Policronio), are opposed to the rest of Alfonso’s
children and their descendants (Heirs of Alfonso).

Alfonso was financially well-off during his lifetime. He owned several fishpens, a fishpond, a sari-sari
store, a passenger jeep, and was engaged in the buying and selling of copra. Policronio, the eldest,
was the only child of Alfonso who failed to finish schooling and instead worked on his father’s lands.

Sometime in October 1969, Alfonso and four of his children, namely, Policronio, Liberato, Prudencia,
and Francisco, met at the house of Liberato. Francisco, who was then a municipal judge, suggested
that in order to reduce the inheritance taxes, their father should make it appear that he had sold
some of his lands to his children. Accordingly, Alfonso executed four (4) Deeds of Sale covering
several parcels of land in favor of Policronio, 4 Liberato,5 Prudencia,6 and his common-law wife,
Valeriana Dela Cruz.7 The Deed of Sale executed on October 25, 1969, in favor of Policronio,
covered six parcels of land, which are the properties in dispute in this case.

Since the sales were only made for taxation purposes and no monetary consideration was given,
Alfonso continued to own, possess and enjoy the lands and their produce.

When Alfonso died on October 11, 1972, Liberato acted as the administrator of his father’s estate.
He was later succeeded by his sister Prudencia, and then by her daughter, Carmencita Perlas.
Except for a portion of parcel 5, the rest of the parcels transferred to Policronio were tenanted by the
Fernandez Family. These tenants never turned over the produce of the lands to Policronio or any of
his heirs, but to Alfonso and, later, to the administrators of his estate.

Policronio died on November 22, 1974. Except for the said portion of parcel 5, neither Policronio nor
his heirs ever took possession of the subject lands.

On April 19, 1989, Alfonso’s heirs executed a Deed of Extra-Judicial Partition, 8 which included all the
lands that were covered by the four (4) deeds of sale that were previously executed by Alfonso for
taxation purposes. Conrado, Policronio’s eldest son, representing the Heirs of Policronio, signed the
Deed of Extra-Judicial Partition in behalf of his co-heirs.

After their father’s death, the Heirs of Policronio found tax declarations in his name covering the six
parcels of land. On June 15, 1995, they obtained a copy of the Deed of Sale executed on October
25, 1969 by Alfonso in favor of Policronio.
Not long after, on July 30, 1995, the Heirs of Policronio allegedly learned about the Deed of Extra-
Judicial Partition involving Alfonso’s estate when it was published in the July 19, 1995 issue of the
Aklan Reporter.

Believing that the six parcels of land belonged to their late father, and as such, excluded from the
Deed of Extra-Judicial Partition, the Heirs of Policronio sought to amicably settle the matter with the
Heirs of Alfonso. Earnest efforts proving futile, the Heirs of Policronio filed a Complaint for
Declaration of Ownership, Recovery of Possession, Annulment of Documents, Partition, and
Damages9 against the Heirs of Alfonso before the RTC on November 17, 1995 where the following
issues were submitted: (1) whether or not the Deed of Sale was valid; (2) whether or not the Deed of
Extra-Judicial Partition was valid; and (3) who between the parties was entitled to damages.

The Ruling of the RTC

On April 26, 2001, the RTC dismissed the Complaint of the Heirs of Policronio and ruled in favor of
the Heirs of Alfonso in a decision, the dispositive portion of which reads:

WHEREFORE, the Court finds that the preponderance of evidence tilts in favor of the defendants,
hence the instant case is hereby DISMISSED.

The counterclaims are likewise DISMISSED.

With costs against plaintiffs.

SO ORDERED.

The RTC found that the Heirs of Alfonso clearly established that the Deed of Sale was null and void.
It held that the Heirs of Policronio failed to rebut the evidence of the Heirs of Alfonso, which proved
that the Deed of Sale in the possession of the former was one of the four (4) Deeds of Sale executed
by Alfonso in favor of his 3 children and second wife for taxation purposes; that although tax
declarations were issued in the name of Policronio, he or his heirs never took possession of the
subject lands except a portion of parcel 5; and that all the produce were turned over by the tenants
to Alfonso and the administrators of his estate and never to Policronio or his heirs.

The RTC further found that there was no money involved in the sale. Even granting that there was,
as claimed by the Heirs of Policronio, ₱2,000.00 for six parcels of land, the amount was grossly
inadequate. It was also noted that the aggregate area of the subject lands was more than double the
average share adjudicated to each of the other children in the Deed of Extra-Judicial Partition; that
the siblings of Policronio were the ones who shared in the produce of the land; and that the Heirs of
Policronio only paid real estate taxes in 1996 and 1997. The RTC opined that Policronio must have
been aware that the transfer was merely for taxation purposes because he did not subsequently take
possession of the properties even after the death of his father.

The Deed of Extra-Judicial Partition, on the other hand, was declared valid by the RTC as all the
heirs of Alfonso were represented and received equal shares and all the requirements of a valid
extra-judicial partition were met. The RTC considered Conrado’s claim that he did not understand
the full significance of his signature when he signed in behalf of his co-heirs, as a gratutitous
assertion. The RTC was of the view that when he admitted to have signed all the pages and
personally appeared before the notary public, he was presumed to have understood their contents.
Lastly, neither party was entitled to damages. The Heirs of Alfonso failed to present testimony to
serve as factual basis for moral damages, no document was presented to prove actual damages,
and the Heirs of Policronio were found to have filed the case in good faith.

The Ruling of the CA

Aggrieved, the Heirs of Policronio appealed before the CA, which rendered a decision on April 20,
2004, the dispositive portion of which reads as follows:

WHEREFORE, the appeal is PARTIALLY GRANTED. The appealed Decision, dated 26 April 2001,
rendered by Hon. Judge Dean R. Telan of the Regional Trial Court of Kalibo, Aklan, Branch 9, is
hereby AFFIRMED with MODIFICATION:

1.) The Deed of Sale in favor of Policronio Ureta, Sr., dated 25 October 1969, covering six
(6) parcels of land is hereby declared VOID for being ABSOLUTELY SIMULATED;

2.) The Deed of Extra-Judicial Partition, dated 19 April 1989, is ANNULLED;

3.) The claim for actual and exemplary damages are DISMISSED for lack of factual and legal
basis.

The case is hereby REMANDED to the court of origin for the proper partition of ALFONSO URETA’S
Estate in accordance with Rule 69 of the 1997 Rules of Civil Procedure. No costs at this instance.

SO ORDERED.

The CA affirmed the finding of the RTC that the Deed of Sale was void. It found the Deed of Sale to
be absolutely simulated as the parties did not intend to be legally bound by it. As such, it produced
no legal effects and did not alter the juridical situation of the parties. The CA also noted that Alfonso
continued to exercise all the rights of an owner even after the execution of the Deed of Sale, as it
was undisputed that he remained in possession of the subject parcels of land and enjoyed their
produce until his death.

Policronio, on the other hand, never exercised any rights pertaining to an owner over the subject
lands from the time they were sold to him up until his death. He never took or attempted to take
possession of the land even after his father’s death, never demanded delivery of the produce from
the tenants, and never paid realty taxes on the properties. It was also noted that Policronio never
disclosed the existence of the Deed of Sale to his children, as they were, in fact, surprised to
discover its existence. The CA, thus, concluded that Policronio must have been aware that the
transfer was only made for taxation purposes.

The testimony of Amparo Castillo, as to the circumstances surrounding the actual arrangement and
agreement between the parties prior to the execution of the four (4) Deeds of Sale, was found by the
CA to be unrebutted. The RTC’s assessment of the credibility of her testimony was accorded
respect, and the intention of the parties was given the primary consideration in determining the true
nature of the contract.

Contrary to the finding of the RTC though, the CA annulled the Deed of Extra-Judicial Partition due
to the incapacity of one of the parties to give his consent to the contract. It held that before Conrado
could validly bind his co-heirs to the Deed of Extra-Judicial Partition, it was necessary that he be
clothed with the proper authority. The CA ruled that a special power of attorney was required under
Article 1878 (5) and (15) of the Civil Code. Without a special power of attorney, it was held that
Conrado lacked the legal capactiy to give the consent of his co-heirs, thus, rendering the Deed of
Extra-Judicial Partition voidable under Article 1390 (1) of the Civil Code.

As a consequence, the CA ordered the remand of the case to the RTC for the proper partition of the
estate, with the option that the parties may still voluntarily effect the partition by executing another
agreement or by adopting the assailed Deed of Partition with the RTC’s approval in either case.
Otherwise, the RTC may proceed with the compulsory partition of the estate in accordance with the
Rules.

With regard to the claim for damages, the CA agreed with the RTC and dismissed the claim for
actual and compensatory damages for lack of factual and legal basis.

Both parties filed their respective Motions for Reconsideration, which were denied by the CA for lack
of merit in a Resolution dated October 14, 2004.

In their Motion for Reconsideration, the Heirs of Policronio argued that the RTC violated the best
evidence rule in giving credence to the testimony of Amparo Castillo with regard to the simulation of
the Deed of Sale, and that prescription had set in precluding any question on the validity of the
contract.

The CA held that the oral testimony was admissible under Rule 130, Section 9 (b) and (c), which
provides that evidence aliunde may be allowed to explain the terms of the written agreement if the
same failed to express the true intent and agreement of the parties thereto, or when the validity of
the written agreement was put in issue. Furthermore, the CA found that the Heirs of Policronio
waived their right to object to evidence aliunde having failed to do so during trial and for raising such
only for the first time on appeal. With regard to prescription, the CA ruled that the action or defense
for the declaration of the inexistence of a contract did not prescribe under Article 1410 of the Civil
Code.

On the other hand, the Heirs of Alfonso argued that the Deed of Extra-Judicial Partition should not
have been annulled, and instead the preterited heirs should be given their share. The CA reiterated
that Conrado’s lack of capacity to give his co-heirs’ consent to the extra-judicial settlement rendered
the same voidable.

Hence, the present Petitions for Review on Certiorari.

The Issues

The issues presented for resolution by the Heirs of Policronio in G.R. No. 165748 are as follows:

I.

Whether the Court of Appeals is correct in ruling that the Deed of Absolute Sale of 25
October 1969 is void for being absolutely fictitious and in relation therewith, may parol
evidence be entertained to thwart its binding effect after the parties have both died?

Assuming that indeed the said document is simulated, whether or not the parties
thereto including their successors in interest are estopped to question its validity,
they being bound by Articles 1412 and 1421 of the Civil Code?
 II.

Whether prescription applies to bar any question respecting the validity of the Deed of
Absolute Sale dated 25 October 1969? Whether prescription applies to bar any
collateral attack on the validity of the deed of absolute sale executed 21 years earlier?

III.

Whether the Court of Appeals correctly ruled in nullifying the Deed of Extrajudicial
Partition because Conrado Ureta signed the same without the written authority from
his siblings in contravention of Article 1878 in relation to Article 1390 of the Civil Code
and in relation therewith, whether the defense of ratification and/or preterition raised
for the first time on appeal may be entertained?

The issues presented for resolution by the Heirs of Alfonso in G.R. No. 165930 are as
follows:

I.

Whether or not grave error was committed by the Trial Court and Court of Appeals in
declaring the Deed of Sale of subject properties as absolutely simulated and null and
void thru parol evidence based on their factual findings as to its fictitious nature, and
there being waiver of any objection based on violation of the parol evidence rule.

II.

Whether or not the Court of Appeals was correct in holding that Conrado Ureta’s lack
of capacity to give his co-heirs’ consent to the Extra-Judicial Partition rendered the
same voidable.

III.

Granting arguendo that Conrado Ureta was not authorized to represent his co-heirs
and there was no ratification, whether or not the Court of Appeals was correct in
ordering the remand of the case to the Regional Trial Court for partition of the estate
of Alfonso Ureta.

IV.

Since the sale in favor of Policronio Ureta Sr. was null and void ab initio, the
properties covered therein formed part of the estate of the late Alfonso Ureta and was
correctly included in the Deed of Extrajudicial Partition even if no prior action for
nullification of the sale was filed by the heirs of Liberato Ureta.

V.

Whether or not the heirs of Policronio Ureta Sr. can claim that estoppel based on
Article 1412 of the Civil Code as well as the issue of prescription can still be raised on
appeal.
These various contentions revolve around two major issues, to wit: (1) whether the Deed of Sale is
valid, and (2) whether the Deed of Extra-Judicial Partition is valid. Thus, the assigned errors shall be
discussed jointly and in seriatim.

The Ruling of the Court

Validity of the Deed of Sale

Two veritable legal presumptions bear on the validity of the Deed of Sale: (1) that there was
sufficient consideration for the contract; and (2) that it was the result of a fair and regular private
transaction. If shown to hold, these presumptions infer prima facie the transaction’s validity, except
that it must yield to the evidence adduced. 10

As will be discussed below, the evidence overcomes these two presumptions.

Absolute Simulation

First, the Deed of Sale was not the result of a fair and regular private transaction because it was
absolutely simulated.

The Heirs of Policronio argued that the land had been validly sold to Policronio as the Deed of Sale
contained all the essential elements of a valid contract of sale, by virtue of which, the subject
properties were transferred in his name as evidenced by the tax declaration. There being no
invalidation prior to the execution of the Deed of Extra-Judicial Partition, the probity and integrity of
the Deed of Sale should remain undiminished and accorded respect as it was a duly notarized public
instrument.

The Heirs of Policronio posited that his loyal services to his father and his being the eldest among
Alfonso’s children, might have prompted the old man to sell the subject lands to him at a very low
price as an advance inheritance. They explained that Policronio’s failure to take possession of the
subject lands and to claim their produce manifests a Filipino family practice wherein a child would
take possession and enjoy the fruits of the land sold by a parent only after the latter’s death.
Policronio simply treated the lands the same way his father Alfonso treated them - where his children
enjoyed usufructuary rights over the properties, as opposed to appropriating them exclusively to
himself. They contended that Policronio’s failure to take actual possession of the lands did not prove
that he was not the owner as he was merely exercising his right to dispose of them. They argue that
it was an error on the part of the CA to conclude that ownership by Policronio was not established by
his failure to possess the properties sold. Instead, emphasis should be made on the fact that the tax
declarations, being indicia of possession, were in Policronio’s name.

They further argued that the Heirs of Alfonso failed to appreciate that the Deed of Sale was clear
enough to convey the subject parcels of land. Citing jurisprudence, they contend that there is a
presumption that an instrument sets out the true agreement of the parties thereto and that it was
executed for valuable consideration, 11 and where there is no doubt as to the intention of the parties
to a contract, the literal meaning of the stipulation shall control. 12 Nowhere in the Deed of Sale is it
indicated that the transfer was only for taxation purposes. On the contrary, the document clearly
indicates that the lands were sold. Therefore, they averred that the literal meaning of the stipulation
should control.

The Court disagrees.

The Court finds no cogent reason to deviate from the finding of the CA that the Deed of Sale is null
and void for being absolutely simulated. The Civil Code provides:

Art. 1345. Simulation of a contract may be absolute or relative. The former takes place when the
parties do not intend to be bound at all; the latter, when the parties conceal their true agreement.

Art. 1346. An absolutely simulated or fictitious contract is void. A relative simulation, when it does not
prejudice a third person and is not intended for any purpose contrary to law, morals, good customs,
public order or public policy binds the parties to their real agreement.

Valerio v. Refresca13 is instructive on the matter of simulation of contracts:

In absolute simulation, there is a colorable contract but it has no substance as the parties have no
intention to be bound by it. The main characteristic of an absolute simulation is that the apparent
contract is not really desired or intended to produce legal effect or in any way alter the juridical
situation of the parties. As a result, an absolutely simulated or fictitious contract is void, and the
parties may recover from each other what they may have given under the contract. However, if the
parties state a false cause in the contract to conceal their real agreement, the contract is relatively
simulated and the parties are still bound by their real agreement. Hence, where the essential
requisites of a contract are present and the simulation refers only to the content or terms of the
contract, the agreement is absolutely binding and enforceable between the parties and their
successors in interest.

Lacking, therefore, in an absolutely simulated contract is consent which is essential to a valid and
enforceable contract.14 Thus, where a person, in order to place his property beyond the reach of his
creditors, simulates a transfer of it to another, he does not really intend to divest himself of his title
and control of the property; hence, the deed of transfer is but a sham. 15 Similarly, in this case,
Alfonso simulated a transfer to Policronio purely for taxation purposes, without intending to transfer
ownership over the subject lands.

The primary consideration in determining the true nature of a contract is the intention of the parties.
If the words of a contract appear to contravene the evident intention of the parties, the latter shall
prevail. Such intention is determined not only from the express terms of their agreement, but also
from the contemporaneous and subsequent acts of the parties. 16 The true intention of the parties in
this case was sufficiently proven by the Heirs of Alfonso.

The Heirs of Alfonso established by a preponderance of evidence 17 that the Deed of Sale was one of
the four (4) absolutely simulated Deeds of Sale which involved no actual monetary consideration,
executed by Alfonso in favor of his children, Policronio, Liberato, and Prudencia, and his second
wife, Valeriana, for taxation purposes.

Amparo Castillo, the daughter of Liberato, testified, to wit:

Q: Now sometime in the year 1969 can you recall if your grandfather and his children [met] in your
house?

A: Yes sir, that was sometime in October 1969 when they [met] in our house, my grandfather, my
late uncle Policronio Ureta, my late uncle Liberato Ureta, my uncle Francisco Ureta, and then my
auntie Prudencia Ureta they talk[ed] about, that idea came from my uncle Francisco Ureta to [sell]
some parcels of land to his children to lessen the inheritance tax whatever happened to my
grandfather, actually no money involved in this sale.
Q: Now you said there was that agreement, verbal agreement. [W]here were you when this Alfonso
Ureta and his children gather[ed] in your house?

A: I was near them in fact I heard everything they were talking [about]

xxx

Q: Were there documents of sale executed by Alfonso Ureta in furtherance of their verbal
agreement?

A: Yes sir.

Q: To whom in particular did your grandfather Alfonso Ureta execute this deed of sale without money
consideration according to you?

A: To my uncle Policronio Ureta and to Prudencia Ureta Panadero.

Q: And who else?

A: To Valeriana dela Cruz.

Q: How about your father?

A: He has.18

The other Deeds of Sale executed by Alfonso in favor of his children Prudencia and Liberato, and
second wife Valeriana, all bearing the same date of execution, were duly presented in evidence by
the Heirs of Alfonso, and were uncontested by the Heirs of Policronio. The lands which were the
subject of these Deeds of Sale were in fact included in the Deed of Extra-Judicial Partition executed
by all the heirs of Alfonso, where it was expressly stipulated:

That the above-named Amparo U. Castillo, Prudencia U. Paradero, Conrado B. Ureta and Merlinda
U. Rivera do hereby recognize and acknowledge as a fact that the properties presently declared in
their respective names or in the names of their respective parents and are included in the foregoing
instrument are actually the properties of the deceased Alfonso Ureta and were transferred only for
the purpose of effective administration and development and convenience in the payment of taxes
and, therefore, all instruments conveying or affecting the transfer of said properties are null and void
from the beginning.19

As found by the CA, Alfonso continued to exercise all the rights of an owner even after the execution
of the Deeds of Sale. It was undisputed that Alfonso remained in possession of the subject lands
and enjoyed their produce until his death. No credence can be given to the contention of the Heirs of
Policrionio that their father did not take possession of the subject lands or enjoyed the fruits thereof
in deference to a Filipino family practice. Had this been true, Policronio should have taken
possession of the subject lands after his father died. On the contrary, it was admitted that neither
Policronio nor his heirs ever took possession of the subject lands from the time they were sold to
him, and even after the death of both Alfonso and Policronio.

It was also admitted by the Heirs of Policronio that the tenants of the subject lands never turned over
the produce of the properties to Policronio or his heirs but only to Alfonso and the administrators of
his estate. Neither was there a demand for their delivery to Policronio or his heirs. Neither did
Policronio ever pay real estate taxes on the properties, the only payment on record being those
made by his heirs in 1996 and 1997 ten years after his death. In sum, Policronio never exercised
any rights pertaining to an owner over the subject lands.

The most protuberant index of simulation of contract is the complete absence of an attempt in any
manner on the part of the ostensible buyer to assert rights of ownership over the subject properties.
Policronio’s failure to take exclusive possession of the subject properties or, in the alternative, to
collect rentals, is contrary to the principle of ownership. Such failure is a clear badge of simulation
that renders the whole transaction void. 20

It is further telling that Policronio never disclosed the existence of the Deed of Sale to his children.
This, coupled with Policronio’s failure to exercise any rights pertaining to an owner of the subject
lands, leads to the conclusion that he was aware that the transfer was only made for taxation
purposes and never intended to bind the parties thereto.

As the above factual circumstances remain unrebutted by the Heirs of Policronio, the factual findings
of the RTC, which were affirmed by the CA, remain binding and conclusive upon this Court. 21

It is clear that the parties did not intend to be bound at all, and as such, the Deed of Sale produced
no legal effects and did not alter the juridical situation of the parties. The Deed of Sale is, therefore,
void for being absolutely simulated pursuant to Article 1409 (2) of the Civil Code which provides:

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

xxx

(2) Those which are absolutely simulated or fictitious;

xxx

For guidance, the following are the most fundamental characteristics of void or inexistent contracts:

1) As a general rule, they produce no legal effects whatsoever in accordance with the
principle "quod nullum est nullum producit effectum."

2) They are not susceptible of ratification.

3) The right to set up the defense of inexistence or absolute nullity cannot be waived or
renounced.

4) The action or defense for the declaration of their inexistence or absolute nullity is
imprescriptible.

5) The inexistence or absolute nullity of a contract cannot be invoked by a person whose

interests are not directly affected.22

Since the Deed of Sale is void, the subject properties were properly included in the Deed of Extra-
Judicial Partition of the estate of Alfonso.

Absence and Inadequacy of Consideration

The second presumption is rebutted by the lack of consideration for the Deed of Sale.

In their Answer,23 the Heirs of Alfonso initially argued that the Deed of Sale was void for lack of
consideration, and even granting that there was consideration, such was inadequate. The Heirs of
Policronio counter that the defenses of absence or inadequacy of consideration are not grounds to
render a contract void.

The Heirs of Policronio contended that under Article 1470 of the Civil Code, gross inadequacy of the
price does not affect a contract of sale, except as it may indicate a defect in the consent, or that the
parties really intended a donation or some other act or contract. Citing jurisprudence, they argued
that inadequacy of monetary consideration does not render a conveyance inexistent as liberality may
be sufficient cause for a valid contract, whereas fraud or bad faith may render it either rescissible or
voidable, although valid until annulled.24 Thus, they argued that if the contract suffers from
inadequate consideration, it remains valid until annulled, and the remedy of rescission calls for
judicial intervention, which remedy the Heirs of Alfonso failed to take.

It is further argued that even granting that the sale of the subject lands for a consideration of
₱2,000.00 was inadequate, absent any evidence of the fair market value of the land at the time of its
sale, it cannot be concluded that the price at which it was sold was inadequate. 25 As there is nothing
in the records to show that the Heirs of Alfonso supplied the true value of the land in 1969, the
amount of ₱2,000.00 must thus stand as its saleable value.

On this issue, the Court finds for the Heirs of Alfonso.

For lack of consideration, the Deed of Sale is once again found to be void. It states that Policronio
paid, and Alfonso received, the ₱2,000.00 purchase price on the date of the signing of the contract:

That I, ALFONSO F. URETA, x x x for and in consideration of the sum of TWO THOUSAND
(₱2,000.00) PESOS, Philippine Currency, to me in hand paid by POLICRONIO M. URETA, x x x, do
hereby CEDE, TRANSFER, and CONVEY, by way of absolute sale, x x x six (6) parcels of land x x
x.26 [Emphasis ours]

Although, on its face, the Deed of Sale appears to be supported by valuable consideration, the RTC
found that there was no money involved in the sale. 27 This finding was affirmed by the CA in ruling
that the sale is void for being absolutely simulated. Considering that there is no cogent reason to
deviate from such factual findings, they are binding on this Court.

It is well-settled in a long line of cases that where a deed of sale states that the purchase price has
been paid but in fact has never been paid, the deed of sale is null and void for lack of
consideration.28 Thus, although the contract states that the purchase price of ₱2,000.00 was paid by
Policronio to Alfonso for the subject properties, it has been proven that such was never in fact paid
as there was no money involved. It must, therefore, follow that the Deed of Sale is void for lack of
consideration.

Given that the Deed of Sale is void, it is unnecessary to discuss the issue on the inadequacy of
consideration.

Parol Evidence and Hearsay

The Heirs of Policronio aver that the rules on parol evidence and hearsay were violated by the CA in
ruling that the Deed of Sale was void.
They argued that based on the parol evidence rule, the Heirs of Alfonso and, specifically, Amparo
Castillo, were not in a position to prove the terms outside of the contract because they were not
parties nor successors-in-interest in the Deed of Sale in question. Thus, it is argued that the
testimony of Amparo Castillo violates the parol evidence rule.

Stemming from the presumption that the Heirs of Alfonso were not parties to the contract, it is also
argued that the parol evidence rule may not be properly invoked by either party in the litigation
against the other, where at least one of the parties to the suit is not a party or a privy of a party to the
written instrument in question and does not base a claim on the instrument or assert a right
originating in the instrument or the relation established thereby. 29

Their arguments are untenable.

The objection against the admission of any evidence must be made at the proper time, as soon as
the grounds therefor become reasonably apparent, and if not so made, it will be understood to have
been waived. In the case of testimonial evidence, the objection must be made when the
objectionable question is asked or after the answer is given if the objectionable features become
apparent only by reason of such answer.30 In this case, the Heirs of Policronio failed to timely object
to the testimony of Amparo Castillo and they are, thus, deemed to have waived the benefit of the
parol evidence rule.

Granting that the Heirs of Policronio timely objected to the testimony of Amparo Castillo, their
argument would still fail.

Section 9 of Rule 130 of the Rules of Court provides:

Section 9. Evidence of written agreements. — When the terms of an agreement have been reduced
to writing, it is considered as containing all the terms agreed upon and there can be, between the
parties and their successors in interest, no evidence of such terms other than the contents of the
written agreement.

However, a party may present evidence to modify, explain or add to the terms of written agreement if
he puts in issue in his pleading:

(a) An intrinsic ambiguity, mistake or imperfection in the written agreement;

(b) The failure of the written agreement to express the true intent and agreement of the
parties thereto;

(c) The validity of the written agreement; or

(d) The existence of other terms agreed to by the parties or their successors in interest after
the execution of the written agreement.

The term "agreement" includes wills.

[Emphasis ours]

Paragraphs (b) and (c) are applicable in the case at bench.

The failure of the Deed of Sale to express the true intent and agreement of the parties was clearly
put in issue in the Answer31 of the Heirs of Alfonso to the Complaint. It was alleged that the Deed of
Sale was only made to lessen the payment of estate and inheritance taxes and not meant to transfer
ownership. The exception in paragraph (b) is allowed to enable the court to ascertain the true intent
of the parties, and once the intent is clear, it shall prevail over what the document appears to be on
its face.32 As the true intent of the parties was duly proven in the present case, it now prevails over
what appears on the Deed of Sale.

The validity of the Deed of Sale was also put in issue in the Answer, and was precisely one of the
issues submitted to the RTC for resolution. 33 The operation of the parol evidence rule requires the
existence of a valid written agreement. It is, thus, not applicable in a proceeding where the validity of
such agreement is the fact in dispute, such as when a contract may be void for lack of
consideration.34 Considering that the Deed of Sale has been shown to be void for being absolutely
simulated and for lack of consideration, the Heirs of Alfonso are not precluded from presenting
evidence to modify, explain or add to the terms of the written agreement.

The Heirs of Policronio must be in a state of confusion in arguing that the Heirs of Alfonso may not
question the Deed of Sale for not being parties or successors-in-interest therein on the basis that the
parol evidence rule may not be properly invoked in a proceeding or litigation where at least one of
the parties to the suit is not a party or a privy of a party to the written instrument in question and
does not base a claim on the instrument or assert a right originating in the instrument or the relation
established thereby. If their argument was to be accepted, then the Heirs of Policronio would
themselves be precluded from invoking the parol evidence rule to exclude the evidence of the Heirs
of Alfonso.

Indeed, the applicability of the parol evidence rule requires that the case be between parties and
their successors-in-interest.35 In this case, both the Heirs of Alfonso and the Heirs of Policronio are
successors-in-interest of the parties to the Deed of Sale as they claim rights under Alfonso and
Policronio, respectively. The parol evidence rule excluding evidence aliunde, however, still cannot
apply because the present case falls under two exceptions to the rule, as discussed above.

With respect to hearsay, the Heirs of Policronio contended that the rule on hearsay was violated
when the testimony of Amparo Castillo was given weight in proving that the subject lands were only
sold for taxation purposes as she was a person alien to the contract. Even granting that they did not
object to her testimony during trial, they argued that it should not have been appreciated by the CA
because it had no probative value whatsoever.36

The Court disagrees.

It has indeed been held that hearsay evidence whether objected to or not cannot be given credence
for having no probative value.37 This principle, however, has been relaxed in cases where, in addition
to the failure to object to the admissibility of the subject evidence, there were other pieces of
evidence presented or there were other circumstances prevailing to support the fact in issue. In Top-
Weld Manufacturing, Inc. v. ECED S.A.,38 this Court held:

Hearsay evidence alone may be insufficient to establish a fact in an injunction suit (Parker v.
Furlong, 62 P. 490) but, when no objection is made thereto, it is, like any other evidence, to be
considered and given the importance it deserves. (Smith v. Delaware & Atlantic Telegraph &
Telephone Co., 51 A 464). Although we should warn of the undesirability of issuing judgments solely
on the basis of the affidavits submitted, where as here, said affidavits are overwhelming,
uncontroverted by competent evidence and not inherently improbable, we are constrained to uphold
the allegations of the respondents regarding the multifarious violations of the contracts made by the
petitioner.

In the case at bench, there were other prevailing circumstances which corroborate the testimony of
Amparo Castillo. First, the other Deeds of Sale which were executed in favor of Liberato, Prudencia,
and Valeriana on the same day as that of Policronio’s were all presented in evidence. Second, all
the properties subject therein were included in the Deed of Extra-Judicial Partition of the estate of
Alfonso. Third, Policronio, during his lifetime, never exercised acts of ownership over the subject
properties (as he never demanded or took possession of them, never demanded or received the
produce thereof, and never paid real estate taxes thereon). Fourth, Policronio never informed his
children of the sale.

As the Heirs of Policronio failed to controvert the evidence presented, and to timely object to the
testimony of Amparo Castillo, both the RTC and the CA correctly accorded probative weight to her
testimony.

Prior Action Unnecessary

The Heirs of Policronio averred that the Heirs of Alfonso should have filed an action to declare the
sale void prior to executing the Deed of Extra-Judicial Partition. They argued that the sale should
enjoy the presumption of regularity, and until overturned by a court, the Heirs of Alfonso had no
authority to include the land in the inventory of properties of Alfonso’s estate. By doing so, they
arrogated upon themselves the power of invalidating the Deed of Sale which is exclusively vested in
a court of law which, in turn, can rule only upon the observance of due process. Thus, they
contended that prescription, laches, or estoppel have set in to militate against assailing the validity of
the sale.

The Heirs of Policronio are mistaken.

A simulated contract of sale is without any cause or consideration, and is, therefore, null and void; in
such case, no independent action to rescind or annul the contract is necessary, and it may be
treated as non-existent for all purposes.39 A void or inexistent contract is one which has no force and
effect from the beginning, as if it has never been entered into, and which cannot be validated either
by time or ratification. A void contract produces no effect whatsoever either against or in favor of
anyone; it does not create, modify or extinguish the juridical relation to which it refers. 40 Therefore, it
was not necessary for the Heirs of Alfonso to first file an action to declare the nullity of the Deed of
Sale prior to executing the Deed of Extra-Judicial Partition.

Personality to Question Sale

The Heirs of Policronio contended that the Heirs of Alfonso are not parties, heirs, or successors-in-
interest under the contemplation of law to clothe them with the personality to question the Deed of
Sale. They argued that under Article 1311 of the Civil Code, contracts take effect only between the
parties, their assigns and heirs. Thus, the genuine character of a contract which personally binds the
parties cannot be put in issue by a person who is not a party thereto. They posited that the Heirs of
Alfonso were not parties to the contract; neither did they appear to be beneficiaries by way of
assignment or inheritance. Unlike themselves who are direct heirs of Policronio, the Heirs of Alfonso
are not Alfonso’s direct heirs. For the Heirs of Alfonso to qualify as parties, under Article 1311 of the
Civil Code, they must first prove that they are either heirs or assignees. Being neither, they have no
legal standing to question the Deed of Sale.
They further argued that the sale cannot be assailed for being barred under Article 1421 of the Civil
Code which provides that the defense of illegality of a contract is not available to third persons
whose interests are not directly affected.

Again, the Court disagrees.

Article 1311 and Article 1421 of the Civil Code provide:

Art. 1311. Contracts take effect only between the parties, their assigns and heirs, x x x

Art. 1421. The defense of illegality of contracts is not available to third persons whose interests are
not directly affected.

The right to set up the nullity of a void or non-existent contract is not limited to the parties, as in the
case of annullable or voidable contracts; it is extended to third persons who are directly affected by
the contract. Thus, where a contract is absolutely simulated, even third persons who may be
prejudiced thereby may set up its inexistence.41 The Heirs of Alfonso are the children of Alfonso, with
his deceased children represented by their children (Alfonso’s grandchildren). The Heirs of Alfonso
are clearly his heirs and successors-in-interest and, as such, their interests are directly affected,
thereby giving them the right to question the legality of the Deed of Sale.

Inapplicability of Article 842

The Heirs of Policronio further argued that even assuming that the Heirs of Alfonso have an interest
in the Deed of Sale, they would still be precluded from questioning its validity. They posited that the
Heirs of Alfonso must first prove that the sale of Alfonso’s properties to Policronio substantially
diminished their successional rights or that their legitimes would be unduly prejudiced, considering
that under Article 842 of the Civil Code, one who has compulsory heirs may dispose of his estate
provided that he does not contravene the provisions of the Civil Code with regard to the legitime of
said heirs. Having failed to do so, they argued that the Heirs of Alfonso should be precluded from
questioning the validity of the Deed of Sale.

Still, the Court disagrees.

Article 842 of the Civil Code provides:

Art. 842. One who has no compulsory heirs may dispose by will of all his estate or any part of it in
favor of any person having capacity to succeed.

One who has compulsory heirs may dispose of his estate provided he does not contravene the
provisions of this Code with regard to the legitime of said heirs.

This article refers to the principle of freedom of disposition by will. What is involved in the case at
bench is not a disposition by will but by Deed of Sale. Hence, the Heirs of Alfonso need not first
prove that the disposition substantially diminished their successional rights or unduly prejudiced their
legitimes.

Inapplicability of Article 1412

The Heirs of Policronio contended that even assuming that the contract was simulated, the Heirs of
Alfonso would still be barred from recovering the properties by reason of Article 1412 of the Civil
Code, which provides that if the act in which the unlawful or forbidden cause does not constitute a
criminal offense, and the fault is both on the contracting parties, neither may recover what he has
given by virtue of the contract or demand the performance of the other’s undertaking. As the Heirs of
Alfonso alleged that the purpose of the sale was to avoid the payment of inheritance taxes, they
cannot take from the Heirs of Policronio what had been given to their father.

On this point, the Court again disagrees.

Article 1412 of the Civil Code is as follows:

Art. 1412. If the act in which the unlawful or forbidden cause consists does not constitute a criminal
offense, the following rules shall be observed:

(1) When the fault is on the part of both contracting parties, neither may recover what he has given
by virtue of the contract, or demand the performance of the other’s undertaking;

(2) When only one of the contracting parties is at fault, he cannot recover what he has given by
reason of the contract, or ask for the fulfillment of what has been promised him. The other, who is
not at fault, may demand the return of what he has given without any obligation to comply with his
promise.

Article 1412 is not applicable to fictitious or simulated contracts, because they refer to contracts with
an illegal cause or subject-matter. 42 This article presupposes the existence of a cause, it cannot refer
to fictitious or simulated contracts which are in reality non-existent. 43 As it has been determined that
the Deed of Sale is a simulated contract, the provision cannot apply to it.

Granting that the Deed of Sale was not simulated, the provision would still not apply. Since the
subject properties were included as properties of Alfonso in the Deed of Extra-Judicial Partition, they
are covered by corresponding inheritance and estate taxes. Therefore, tax evasion, if at all present,
would not arise, and Article 1412 would again be inapplicable.

Prescription

From the position that the Deed of Sale is valid and not void, the Heirs of Policronio argued that any
question regarding its validity should have been initiated through judicial process within 10 years
from its notarization in accordance with Article 1144 of the Civil Code. Since 21 years had already
elapsed when the Heirs of Alfonso assailed the validity of the Deed of Sale in 1996, prescription had
set in. Furthermore, since the Heirs of Alfonso did not seek to nullify the tax declarations of
Policronio, they had impliedly acquiesced and given due recognition to the Heirs of Policronio as the
rightful inheritors and should, thus, be barred from laying claim on the land.

The Heirs of Policronio are mistaken.

Article 1410 of the Civil Code provides:

Art. 1410. The action for the declaration of the inexistence of a contract does not prescribe.

This is one of the most fundamental characteristics of void or inexistent contracts. 44

As the Deed of Sale is a void contract, the action for the declaration of its nullity, even if filed 21
years after its execution, cannot be barred by prescription for it is imprescriptible. Furthermore, the
right to set up the defense of inexistence or absolute nullity cannot be waived or
renounced.45 Therefore, the Heirs of Alfonso cannot be precluded from setting up the defense of its
inexistence.

Validity of the Deed of Extra-Judicial Partition

The Court now resolves the issue of the validity of the Deed of Extra-Judicial Partition.

Unenforceability

The Heirs of Alfonso argued that the CA was mistaken in annulling the Deed of Extra-Judicial
Partition due to the incapacity of Conrado to give the consent of his co-heirs for lack of a special
power of attorney. They contended that what was involved was not the capacity to give consent in
behalf of the co-heirs but the authority to represent them. They argue that the Deed of Extra-Judicial
Partition is not a voidable or an annullable contract under Article 1390 of the Civil Code, but rather, it
is an unenforceable or, more specifically, an unauthorized contract under Articles 1403 (1) and 1317
of the Civil Code. As such, the Deed of Extra-Judicial Partition should not be annulled but only be
rendered unenforceable against the siblings of Conrado.

They further argued that under Article 1317 of the Civil Code, when the persons represented without
authority have ratified the unauthorized acts, the contract becomes enforceable and binding. They
contended that the Heirs of Policronio ratified the Deed of Extra-Judicial Partition when Conrado
took possession of one of the parcels of land adjudicated to him and his siblings, and when another
parcel was used as collateral for a loan entered into by some of the Heirs of Policronio. The Deed of
Extra-Judicial Partition having been ratified and its benefits accepted, the same thus became
enforceable and binding upon them.

The Heirs of Alfonso averred that granting arguendo that Conrado was not authorized to represent
his co-heirs and there was no ratification, the CA should not have remanded the case to the RTC for
partition of Alfonso’s estate. They argued that the CA should not have applied the Civil Code general
provision on contracts, but the special provisions dealing with succession and partition. They
contended that contrary to the ruling of the CA, the extra-judicial parition was not an act of strict
dominion, as it has been ruled that partition of inherited land is not a conveyance but a confirmation
or ratification of title or right to the land. 46 Therefore, the law requiring a special power of attorney
should not be applied to partitions.

On the other hand, the Heirs of Policronio insisted that the CA pronouncement on the invalidity of the
Deed of Extra-Judicial Partition should not be disturbed because the subject properties should not
have been included in the estate of Alfonso, and because Conrado lacked the written authority to
represent his siblings. They argued with the CA in ruling that a special power of attorney was
required before Conrado could sign in behalf of his co-heirs.

The Heirs of Policronio denied that they ratified the Deed of Extra-Judicial Partition. They claimed
that there is nothing on record that establishes that they ratified the partition. Far from doing so, they
precisely questioned its execution by filing a complaint. They further argued that under Article 1409
(3) of the Civil Code, ratification cannot be invoked to validate the illegal act of including in the
partition those properties which do not belong to the estate as it provides another mode of acquiring
ownership not sanctioned by law.

Furthermore, the Heirs of Policronio contended that the defenses of unenforceability, ratification, and
preterition are being raised for the first time on appeal by the Heirs of Alfonso. For having failed to
raise them during the trial, the Heirs of Alfonso should be deemed to have waived their right to do
so.

The Court agrees in part with the Heirs of Alfonso.

To begin, although the defenses of unenforceability, ratification and preterition were raised by the
Heirs of Alfonso for the first time on appeal, they are concomitant matters which may be taken up.
As long as the questioned items bear relevance and close relation to those specifically raised, the
interest of justice would dictate that they, too, must be considered and resolved. The rule that only
theories raised in the initial proceedings may be taken up by a party thereto on appeal should refer
to independent, not concomitant matters, to support or oppose the cause of action. 47

In the RTC, the Heirs of Policronio alleged that Conrado’s consent was vitiated by mistake and
undue influence, and that he signed the Deed of Extra-Judicial Partition without the authority or
consent of his co-heirs.

The RTC found that Conrado’s credibility had faltered, and his claims were rejected by the RTC as
gratuitous assertions. On the basis of such, the RTC ruled that Conrado duly represented his
siblings in the Deed of Extra-Judicial Partition.

On the other hand, the CA annulled the Deed of Extra-Judicial Partition under Article 1390 (1) of the
Civil Code, holding that a special power of attorney was lacking as required under Article 1878 (5)
and (15) of the Civil Code. These articles are as follows:

Art. 1878. Special powers of attorney are necessary in the following cases:

xxx

(5) To enter into any contract by which the ownership of an immovable is transmitted or acquired
either gratuitously or for a valuable consideration;

xxx

(15) Any other act of strict dominion.

Art. 1390. The following contracts are voidable or annullable, even though there may have been no
damage to the contracting parties:

(1) Those where one of the parties is incapable of giving consent to a contract;

(2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.

These contracts are binding, unless they are annulled by a proper action in court. They are
susceptible of ratification.

This Court finds that Article 1878 (5) and (15) is inapplicable to the case at bench. It has been held
in several cases48 that partition among heirs is not legally deemed a conveyance of real property
resulting in change of ownership. It is not a transfer of property from one to the other, but rather, it is
a confirmation or ratification of title or right of property that an heir is renouncing in favor of another
heir who accepts and receives the inheritance. It is merely a designation and segregation of that part
which belongs to each heir. The Deed of Extra-Judicial Partition cannot, therefore, be considered as
an act of strict dominion. Hence, a special power of attorney is not necessary.

In fact, as between the parties, even an oral partition by the heirs is valid if no creditors are affected.
The requirement of a written memorandum under the statute of frauds does not apply to partitions
effected by the heirs where no creditors are involved considering that such transaction is not a
conveyance of property resulting in change of ownership but merely a designation and segregation
of that part which belongs to each heir.49

Neither is Article 1390 (1) applicable. Article 1390 (1) contemplates the incapacity of a party to give
consent to a contract. What is involved in the case at bench though is not Conrado’s incapacity to
give consent to the contract, but rather his lack of authority to do so. Instead, Articles 1403 (1), 1404,
and 1317 of the Civil Code find application to the circumstances prevailing in this case. They are as
follows:

Art. 1403. The following contracts are unenforceable, unless they are ratified:

(1) Those entered into in the name of another person by one who has been given no authority or
legal representation, or who has acted beyond his powers;

Art. 1404. Unauthorized contracts are governed by Article 1317 and the principles of agency in Title
X of this Book.

Art. 1317. No one may contract in the name of another without being authorized by the latter, or
unless he has by law a right to represent him.

A contract entered into in the name of another by one who has no authority or legal representation,
or who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or
impliedly, by the person on whose behalf it has been executed, before it is revoked by the other
contracting party.

Such was similarly held in the case of Badillo v. Ferrer:

The Deed of Extrajudicial Partition and Sale is not a voidable or an annullable contract under Article
1390 of the New Civil Code. Article 1390 renders a contract voidable if one of the parties is
incapable of giving consent to the contract or if the contracting party’s consent is vitiated by mistake,
violence, intimidation, undue influence or fraud. x x x

The deed of extrajudicial parition and sale is an unenforceable or, more specifically, an unauthorized
contract under Articles 1403(1) and 1317 of the New Civil Code. 50

Therefore, Conrado’s failure to obtain authority from his co-heirs to sign the Deed of Extra-Judicial
Partition in their behalf did not result in his incapacity to give consent so as to render the contract
voidable, but rather, it rendered the contract valid but unenforceable against Conrado’s co-heirs for
having been entered into without their authority.

A closer review of the evidence on record, however, will show that the Deed of Extra-Judicial
Partition is not unenforceable but, in fact, valid, binding and enforceable against all the Heirs of
Policronio for having given their consent to the contract. Their consent to the Deed of Extra-Judicial
Partition has been proven by a preponderance of evidence.
Regarding his alleged vitiated consent due to mistake and undue influence to the Deed of Extra-
Judicial Partition, Conrado testified, to wit:

Q: Mr. Ureta you remember having signed a document entitled deed of extra judicial partition
consisting of 11 pages and which have previously [been] marked as Exhibit I for the plaintiffs?

A: Yes sir.

Q: Can you recall where did you sign this document?

A: The way I remember I signed that in our house.

Q: And who requested or required you to sign this document?

A: My aunties.

Q: Who in particular if you can recall?

A: Nay Pruding Panadero.

Q: You mean that this document that you signed was brought to your house by your Auntie Pruding
Pa[r]adero [who] requested you to sign that document?

A: When she first brought that document I did not sign that said document because I [did] no[t] know
the contents of that document.

Q: How many times did she bring this document to you [until] you finally signed the document?

A: Perhaps 3 times.

Q: Can you tell the court why you finally signed it?

A: Because the way she explained it to me that the land of my grandfather will be partitioned.

Q: When you signed this document were your brothers and sisters who are your co-plaintiffs in this
case aware of your act to sign this document?

A: They do not know.

xxx

Q: After you have signed this document did you inform your brothers and sisters that you have
signed this document?

No I did not. 51

xxx

Q: Now you read the document when it was allegedly brought to your house by your aunt Pruding
Pa[r]adero?
A: I did not read it because as I told her I still want to ask the advise of my brothers and sisters.

Q: So do I get from you that you have never read the document itself or any part thereof?

A: I have read the heading.

xxx

Q: And why is it that you did not read all the pages of this document because I understand that you
know also how to read in English?

A: Because the way Nay Pruding explained to me is that the property of my grandfather will be
partitioned that is why I am so happy.

xxx

Q: You mean to say that after you signed this deed of extra judicial partition up to the present you
never informed them?

A: Perhaps they know already that I have signed and they read already the document and they have
read the document.

Q: My question is different, did you inform them?

A: The document sir? I did not tell them.

Q: Even until now?

A: Until now I did not inform them.52

This Court finds no cogent reason to reverse the finding of the RTC that Conrado’s explanations
were mere gratuitous assertions not entitled to any probative weight. The RTC found Conrado’s
credibility to have faltered when he testified that perhaps his siblings were already aware of the
Deed of Extra-Judicial Partition. The RTC was in the best position to judge the credibility of the
witness’ testimony. The CA also recognized that Conrado’s consent was not vitiated by mistake and
undue influence as it required a special power of attorney in order to bind his co-heirs and, as such,
the CA thereby recognized that his signature was binding to him but not with respect to his co-heirs.
Findings of fact of the trial court, particularly when affirmed by the CA, are binding to this Court. 53

Furthermore, this Court notes other peculiarities in Conrado’s testimony. Despite claims of undue
influence, there is no indication that Conrado was forced to sign by his aunt, Prudencia Paradero. In
fact, he testified that he was happy to sign because his grandfather’s estate would be partitioned.
Conrado, thus, clearly understood the document he signed. It is also worth noting that despite the
document being brought to him on three separate occasions and indicating his intention to inform his
siblings about it, Conrado failed to do so, and still neglected to inform them even after he had signed
the partition. All these circumstances negate his claim of vitiated consent. Having duly signed the
Deed of Extra-Judicial Partition, Conrado is bound to it. Thus, it is enforceable against him.

Although Conrado’s co-heirs claimed that they did not authorize Conrado to sign the Deed of Extra-
Judicial Partition in their behalf, several circumstances militate against their contention.
First, the Deed of Extra-Judicial Partition was executed on April 19, 1989, and the Heirs of Policronio
claim that they only came to know of its existence on July 30, 1995 through an issue of the Aklan
Reporter. It is difficult to believe that Conrado did not inform his siblings about the Deed of Extra-
Judicial Partition or at least broach its subject with them for more than five years from the time he
signed it, especially after indicating in his testimony that he had intended to do so.

Second, Conrado retained possession of one of the parcels of land adjudicated to him and his co-
heirs in the Deed of Extra-Judicial Partition.

Third, after the execution of the partition on April 19, 1989 and more than a year before they claimed
to have discovered the existence of the Deed of Extra-Judicial Partition on July 30, 1995, some of
the Heirs of Policronio, namely, Rita Solano, Macario Ureta, Lilia Tayco, and Venancio Ureta
executed on June 1, 1994, a Special Power of Attorney 54 in favor of their sister Gloria Gonzales,
authorizing her to obtain a loan from a bank and to mortgage one of the parcels of land adjudicated
to them in the Deed of Extra-Judicial Partition to secure payment of the loan. They were able to
obtain the loan using the land as collateral, over which a Real Estate Mortgage 55 was constituted.
Both the Special Power of Attorney and the Real Estate Mortgage were presented in evidence in the
RTC, and were not controverted or denied by the Heirs of Policronio.

Fourth, in the letter dated August 15, 1995, sent by the counsel of the Heirs of Policronio to the Heirs
of Alfonso requesting for amicable settlement, there was no mention that Conrado’s consent to the
Deed of Extra-Judicial Partition was vitiated by mistake and undue influence or that they had never
authorized Conrado to represent them or sign the document on their behalf. It is questionable for
such a pertinent detail to have been omitted. The body of said letter is reproduced hereunder as
follows:

Greetings:

Your nephews and nieces, children of your deceased brother Policronio Ureta, has referred to me for
appropriate legal action the property they inherited from their father consisting of six (6) parcels of
land which is covered by a Deed of Absolute Sale dated October 25, 1969. These properties ha[ve]
already been transferred to the name of their deceased father immediately after the sale, machine
copy of the said Deed of Sale is hereto attached for your ready reference.

Lately, however, there was published an Extra-judicial Partition of the estate of Alfonso Ureta, which
to the surprise of my clients included the properties already sold to their father before the death of
said Alfonso Ureta. This inclusion of their property is erroneous and illegal because these properties
were covered by the Deed of Absolute Sale in favor of their father Policronio Ureta no longer form
part of the estate of Alfonso Ureta. Since Policronio Ureta has [sic] died in 1974 yet, these properties
have passed by hereditary succession to his children who are now the true and lawful owners of the
said properties.

My clients are still entitled to a share in the estate of Alfonso Ureta who is also their grandfather as
they have stepped into the shoes of their deceased father Policronio Ureta. But this estate of Alfonso
Ureta should already exclude the six (6) parcels of land covered by the Deed of Absolute Sale in
favor of Policronio Ureta.

My clients cannot understand why the properties of their late father [should] be included in the estate
of their grandfather and be divided among his brothers and sisters when said properties should only
be divided among themselves as children of Policronio Ureta.
Since this matter involves very close members of the same family, I have counseled my clients that
an earnest effort towards a compromise or amicable settlement be first explored before resort to
judicial remedy is pursued. And a compromise or amicable settlement can only be reached if all the
parties meet and discuss the problem with an open mind. To this end, I am suggesting a meeting of
the parties on September 16, 1995 at 2:00 P.M. at B Place Restaurant at C. Laserna St., Kalibo,
Aklan. It would be best if the parties can come or be represented by their duly designated attorney-
in-fact together with their lawyers if they so desire so that the problem can be discussed
unemotionally and intelligently.

I would, however, interpret the failure to come to the said meeting as an indication that the parties
are not willing to or interested in amicable settlement of this matter and as a go signal for me to
resort to legal and/or judicial remedies to protest the rights of my clients.

Thank you very much.56

Based on the foregoing, this Court concludes that the allegation of Conrado’s vitiated consent and
lack of authority to sign in behalf of his co-heirs was a mere afterthought on the part of the Heirs of
Policronio. It appears that the Heirs of Policronio were not only aware of the existence of the Deed of
Extra-Judicial Partition prior to June 30, 1995 but had, in fact, given Conrado authority to sign in their
behalf. They are now estopped from questioning its legality, and the Deed of Extra-Judicial Partition
is valid, binding, and enforceable against them.

In view of the foregoing, there is no longer a need to discuss the issue of ratification.

Preterition

The Heirs of Alfonso were of the position that the absence of the Heirs of Policronio in the partition
or the lack of authority of their representative results, at the very least, in their preterition and not in
the invalidity of the entire deed of partition. Assuming there was actual preterition, it did not render
the Deed of Extra-Judicial Partition voidable. Citing Article 1104 of the Civil Code, they aver that a
partition made with preterition of any of the compulsory heirs shall not be rescinded, but the heirs
shall be proportionately obliged to pay the share of the person omitted. Thus, the Deed of Extra-
Judicial Partition should not have been annulled by the CA. Instead, it should have ordered the
share of the heirs omitted to be given to them.

The Heirs of Alfonso also argued that all that remains to be adjudged is the right of the preterited
heirs to represent their father, Policronio, and be declared entitled to his share. They contend that
remand to the RTC is no longer necessary as the issue is purely legal and can be resolved by the
provisions of the Civil Code for there is no dispute that each of Alfonso’s heirs received their rightful
share. Conrado, who received Policronio’s share, should then fully account for what he had received
to his other co-heirs and be directed to deliver their share in the inheritance.

These arguments cannot be given credence.

Their posited theory on preterition is no longer viable. It has already been determined that the Heirs
of Policronio gave their consent to the Deed of Extra-Judicial Partition and they have not been
excluded from it. Nonetheless, even granting that the Heirs of Policronio were denied their lawful
participation in the partition, the argument of the Heirs of Alfonso would still fail.

Preterition under Article 854 of the Civil Code is as follows:

Art. 854. The preterition or omission of one, some, or all of the compulsory heirs in the direct line,
whether living at the time of the execution of the will or born after the death of the testator, shall
annul the institution of heir; but the devises and legacies shall be valid insofar as they are not
inofficious.

If the omitted compulsory heirs should die before the testator, the institution shall be effectual,
without prejudice to the right of representation.

Preterition has been defined as the total omission of a compulsory heir from the inheritance.  It 1âwphi1

consists in the silence of the testator with regard to a compulsory heir, omitting him in the testament,
either by not mentioning him at all, or by not giving him anything in the hereditary property but
without expressly disinheriting him, even if he is mentioned in the will in the latter case. 57 Preterition
is thus a concept of testamentary succession and requires a will. In the case at bench, there is no
will involved. Therefore, preterition cannot apply.

Remand Unnecessary

The Deed of Extra-Judicial Partition is in itself valid for complying with all the legal requisites, as
found by the RTC, to wit:

A persual of the Deed of Extra-judicial Partition would reveal that all the heirs and children of Alfonso
Ureta were represented therein; that nobody was left out; that all of them received as much as the
others as their shares; that it distributed all the properties of Alfonso Ureta except a portion of parcel
29 containing an area of 14,000 square meters, more or less, which was expressly reserved; that
Alfonso Ureta, at the time of his death, left no debts; that the heirs of Policronio Ureta, Sr. were
represented by Conrado B. Ureta; all the parties signed the document, was witnessed and duly
acknowledged before Notary Public Adolfo M. Iligan of Kalibo, Aklan; that the document expressly
stipulated that the heirs to whom some of the properties were transferred before for taxation
purposes or their children, expressly recognize and acknowledge as a fact that the properties were
transferred only for the purpose of effective administration and development convenience in the
payment of taxes and, therefore, all instruments conveying or effecting the transfer of said properties
are null and void from the beginning (Exhs. 1-4, 7-d).58

Considering that the Deed of Sale has been found void and the Deed of Extra-Judicial Partition valid,
with the consent of all the Heirs of Policronio duly given, there is no need to remand the case to the
court of origin for partition.
1ªvvph!1

WHEREFORE, the petition in G.R. No. 165748 is DENIED. The petition in G.R. No. 165930
is GRANTED. The assailed April 20, 2004 Decision and October 14, 2004 Resolution of the Court of
Appeals in CA-G.R. CV No. 71399, are hereby MODIFIED in this wise:

(1) The Deed of Extra-Judicial Partition, dated April 19, 1989, is VALID, and

(2) The order to remand the case to the court of origin is hereby DELETED.

SO ORDERED.

JOSE CATRAL MENDOZA

Associate Justice

WE CONCUR:
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 154034             February 5, 2007

FIRST AQUA SUGAR TRADERS, INC. and CBN INTERNATIONAL(HK)

CORPORATION, Petitioners,
vs.
BANK OF THE PHILIPPINE ISLANDS,1 Respondent.

DECISION

CORONA, J.:

Petitioners First Aqua Sugar Traders, Inc. and CBN International Corporation were the plaintiffs in
Civil Case No. 99-9302 filed in the Regional Trial Court of Makati, Branch 57. 3 Respondent Bank of
the Philippine Islands was the defendant in that case.

On October 16, 2000, the trial court rendered a summary judgment dismissing the
complaint.4 Petitioners received a copy of the judgment on October 27, 2000. Hence, they had fifteen
days to file a notice of appeal. 5 Instead, on November 6, 2000, or 10 days after, they opted to file a
motion for reconsideration which was denied in the order dated January 30, 2001. 6

Petitioners claim they received a copy of the January 30, 2001 order on February 16, 2001 and that
they filed a notice of appeal7 on the same day.

On February 19, 2001, the trial court gave due course to the notice of appeal on the premise that the
same was filed within the prescribed period. 8

Respondent, on the other hand, filed a motion to declare the October 16, 2000 judgment final
alleging that petitioners’ notice of appeal was filed out of time. According to respondent, the January
30, 2001 order was sent to the address of petitioners’ counsel and was received there by a certain
Lenie Quilatan on February 9, 2001. Hence, petitioners had only five days9 left to file the notice of
appeal counted from February 9, 2001, or until February 14, 2001. Thus, the February 16, 2001 filing
was out of time.10

Petitioners disputed respondent’s allegation and maintained their position that the reckoning point of
the remaining 5-day period should be the date of their actual receipt which was February 16,
2001.11 They claimed that Quilatan, who allegedly received the January 30, 2001 order on February
9, 2001, was not in any way connected to them or their counsel.

On March 30, 2001, the trial court ruled for the respondents.

… the Registred Letter No. B-341 sent by the Court to R.Z. Francisco and Associates was duly
delivered and received by Lenie Quilatan, an authorized representative, on February 9, 2001. It is
therefore not true that the receipt of the Order denying the motion for reconsideration [was] on
February 16, 2001 but rather it was on February 9, 2001, thus making the appeal interposed to have
been filed out of time.12

On certiorari, the Court of Appeals sustained the trial court’s finding and dismissed the petition. 13 The
motion for reconsideration was denied.14 Hence this recourse.

The only issue before us is whether the notice of appeal was filed on time. 1awphi1.net

The actual date of receipt of the notice of denial of the motion for reconsideration dated January 30,
2001 is a factual issue which the trial court and the Court of Appeals have already ruled on.
Accordingly, this Court, not being a trier of facts15 and having no reason to reverse the said finding,
holds that the date of receipt of the January 30, 2001 order was February 9, 2001.

However, we disagree with the lower courts’ finding that the notice of appeal was filed late. In the
recent case of Neypes v. Court of Appeals, 16 we stated that:

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. (emphasis ours)

In the light of this decision, a party litigant may now file his notice of appeal either within fifteen days
from receipt of the original decision or within fifteen days from the receipt of the order denying the
motion for reconsideration.17 Being procedural in nature, Neypes is deemed to be applicable to
actions pending and undetermined at the time of its effectivity and is thus retroactive in that sense
and to that extent.18

Petitioners’ notice of appeal filed on February 16, 2001 was therefore well-within the fresh period of
fifteen days from the date of their receipt of the January 30, 2001 order on February 9, 2001.

WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals dated April
25, 2002 in CA-G.R. SP No. 64230 is SET ASIDE. Accordingly, let the records of this case be
remanded to the Court of Appeals for further proceedings.

No costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 171365               October 6, 2010

ERMELINDA C. MANALOTO, AURORA J. CIFRA, FLORDELIZA J. ARCILLA, LOURDES J.

CATALAN, ETHELINDA J. HOLT, BIENVENIDO R. JONGCO, ARTEMIO R. JONGCO, JR. and
JOEL JONGCO, Petitioners,
vs.
ISMAEL VELOSO III, Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

Before Us is a Petition for Review on Certiorari of the Decision 1 dated January 31, 2006 of the Court
Appeals in CA-G.R. CV No. 82610, which affirmed with modification the Resolution 2 dated
September 2, 2003 of Branch 227 of the Regional Trial Court (RTC-Branch 227) of Quezon City in
Civil Case No. Q-02-48341.

We partly reproduce below the facts of the case as culled by the Court of Appeals from the records:

This case is an off-shoot of an unlawful detainer case filed by [herein petitioners] Ermelinda C.
Manaloto, Aurora J. Cifra, Flordeliza J. Arcilla, Lourdes J. Catalan, Ethelinda J. Holt, Bienvenido R.
Jongco, Artemio R. Jongco, Jr. and Joel Jongco against [herein respondent]. In said complaint for
unlawful detainer, it was alleged that they are the lessors of a residential house located at No. 42 Big
Horseshoe Drive, Horseshoe Village, Quezon City [subject property] which was leased to
[respondent] at a monthly rental of ₱17,000.00. The action was instituted on the ground of
[respondent's] failure to pay rentals from May 23, 1997 to December 22, 1998 despite repeated
demands. [Respondent] denied the non-payment of rentals and alleged that he made an advance
payment of ₱825,000.00 when he paid for the repairs done on the leased property.

After trial, the Metropolitan Trial Court (MeTC) decided in favor of [petitioners] by ordering
[respondent] to (a) vacate the premises at No. 42 Big Horseshoe Drive, Horseshoe Village, Quezon
City; (b) pay [petitioners] the sum of ₱306,000.00 corresponding to the rentals due from May 23,
1997 to November 22, 1998, and the sum of ₱17,000.00 a month thereafter until [respondent]
vacates the premises; and (c) pay [petitioners] the sum of ₱5,000.00 as attorney's fees.
On appeal to the Regional Trial Court (RTC) [Branch 88, Quezon City], the MeTC decision was
reversed. [Respondent] was ordered to pay arrearages from May 23, 1997 up to the date of the
decision but he was also given an option to choose between staying in the leased property or
vacating the same, subject to the reimbursement by [petitioners] of one-half of the value of the
improvements which it found to be in the amount of ₱120,000.00. [Respondent] was also given the
right to remove said improvements pursuant to Article 1678 of the Civil Code, should [petitioners]
refuse to pay ₱60,000.00.

When both parties moved for the reconsideration of the RTC decision, the RTC issued an Order
dated February 23, 2001 modifying its previous ruling by increasing the value of the improvements
from ₱120,000.00 to ₱800,000.00.

After successive appeals to the Court of Appeals and the Supreme Court, the decision of the RTC
dated November 29, 2000 which reversed the decision of the MeTC, became final and executory. 3

Whilst respondent's appeal of the Metropolitan Trial Court (MeTC) judgment in the unlawful detainer
case was pending before the RTC-Branch 88, respondent filed before the RTC-Branch 227 on
November 26, 2002 a Complaint for Breach of Contract and Damages 4 against the petitioners,
docketed as Civil Case No. Q-02-48341. The said complaint alleged two causes of action. The first
cause of action was for damages because the respondent supposedly suffered embarrassment and
humiliation when petitioners distributed copies of the above-mentioned MeTC decision in the
unlawful detainer case to the homeowners of Horseshoe Village while respondent's appeal was still
pending before the Quezon City RTC-Branch 88. The second cause of action was for breach of
contract since petitioners, as lessors, failed to make continuing repairs on the subject property to
preserve and keep it tenantable. Thus, respondent sought the following from the court a quo:

PRAYER

WHEREFORE, premises considered, it is respectfully prayed that after hearing the court render a
decision against the [herein petitioners] and in favor of the [herein respondent] by -

1. Ordering [petitioners] to pay [respondent] the following amounts:

a) ₱1,500,000.00 as moral damages and consequential damages;

b) ₱500,000.00 as exemplary damages;

c) ₱425,000.00 representing the difference of the expenses of the improvements of

₱825,000.00 and ₱400,000.00 pursuant to Art. 1678 of the Civil Code;

d) ₱594,000.00 representing interest for three (3) years from 1998 to 2000 on the
₱825,000.00 advanced by the [respondent] at the rate of 24% per annum;

e) ₱250,000.00 as compensation for the [respondent's] labor and efforts in overseeing and
attending the needs of contractors the repair/renovation of the leased premises;

f) ₱250,000.00, plus 20% of all recoveries from [petitioners] and ₱2,500.00 per hearing as
attorney's fees;

g) Cost of suit.
[Respondent] further prays for such other reliefs and remedies which are just and equitable under
the premises.5

The petitioners filed an Omnibus Motion6 on February 18, 2003 praying for, among other reliefs, the
dismissal of respondent's complaint in Civil Case No. Q-02-48341. Petitioners argued that
respondent had no cause of action against them because the MeTC decision in the unlawful
detainer case was a matter of public record and its disclosure to the public violated no law or any
legal right of the respondent. Moreover, petitioners averred that the respondent's present Complaint
for Breach of Contract and Damages was barred by prior judgment since it was a mere replication of
respondent's Answer with Compulsory Counterclaim in the unlawful detainer case before the MeTC.
The said unlawful detainer case was already judicially decided with finality.

On September 2, 2003, the RTC-Branch 227 issued a Resolution dismissing respondent's complaint
in Civil Case No. Q-02-48341 for violating the rule against splitting of cause of action, lack of
jurisdiction, and failure to disclose the pendency of a related case. The RTC-Branch 227 adjudged
that Civil Case No. Q-02-48341 involved the same facts, parties, and causes of action as those in
the unlawful detainer case, and the MeTC had already properly taken cognizance of the latter case.

Respondent received a copy of the RTC-Branch 227 decision in Civil Case No. Q-02-48341 on
September 26, 2003. He filed a Motion for Reconsideration 7 of said judgment on October 10, 2003,
which RTC-Branch 227 denied in an Order8 dated December 30, 2003.

Respondent received a copy of the RTC-Branch 227 order denying his Motion for Reconsideration
on February 20, 2004, and he filed his Notice of Appeal 9 on March 1, 2004. However, the RTC-
Branch 227, in an Order10 dated March 23, 2004, dismissed respondent's appeal for being filed out of
time.

Respondent received a copy of the RTC-Branch 27 order dismissing his appeal on April 30, 2004
and he filed a Motion for Reconsideration11 of the same on May 3, 2004. The RTC-Branch 227, in
another Order12 dated May 31, 2004, granted respondent's latest motion because it was "convinced
that it is but appropriate and fair to both parties that this matter of whether or not the Appeal was
filed on time, be resolved by the appellate court rather than by this Court." The RTC-Branch 227
then ordered that the records of the case be forwarded as soon as possible to the Court of Appeals
for further proceedings.

The Court of Appeals, in a Resolution 13 dated February 8, 2005, resolved to give due course to
respondent's appeal. Said appeal was docketed as CA-G.R. CV No. 82610.

On January 31, 2006, the Court of Appeals rendered its Decision in CA-G.R. CV No. 82610. The
Court of Appeals fully agreed with the RTC-Branch 227 in dismissing respondent's second cause of
action (i.e., breach of contract) in Civil Case No. Q-02-48341. The appellate court, however, held
that RTC-Branch 227 should have proceeded with the trial on the merits of the first cause of action
(i.e., damages) in Civil Case No. Q-02-48341, because "[a]lthough [herein respondent] may have
stated the same factual antecedents that transpired in the unlawful detainer case, such allegations
were necessary to give an overview of the facts leading to the institution of another case between
the parties before the RTC acting in its original jurisdiction." 14

The Court of Appeals then went on to find that petitioners were indeed liable to respondent for
damages:

No doubt, distributing the copies was primarily intended to embarrass [herein respondent] in the
community he mingled in. We are not unmindful of the fact that court decisions are public documents
and the general public is allowed access thereto to make inquiries thereon or to secure a copy
thereof. Nevertheless, under the circumstances of this case, although court decisions are public
documents, distribution of the same during the pendency of an appeal was clearly intended to cause
[respondent] some form of harassment and/or humiliation so that [respondent] would be ostracized
by his neighbors. The appeal may have delayed the attainment of finality of the determination of the
rights of the parties and the execution in the unlawful detainer case but it did not justify [herein
petitioners'] pre-emption of the outcome of the appeal. By distributing copies of the MeTC decision,
[petitioners] appeared to have assumed that the MeTC decision would simply be affirmed and
therefore they tried to cause the early ouster of [respondent] thinking that a humiliated [respondent]
would scurry out of the leased premises. Clearly, there was evident bad faith intended to mock
[respondent's] right to appeal which is a statutory remedy to correct errors which might have been
committed by the lower court.

Thus, moral damages may be awarded since [petitioners] acted in bad faith. Bad faith does not
simply connote bad judgment or negligence, it imports a dishonest purpose or some moral obliquity
and conscious doing of a wrong, a breach of known duty through some motive or interest or ill will
that partakes of the nature of fraud. However, an award of moral damages would require certain
conditions to be met, to wit: (1) first, there must be an injury, whether physical, mental or
psychological, clearly sustained by the claimant; (2) second, there must be culpable act or omission
factually established; (3) third, the wrongful act or omission of the defendant is the proximate cause
of the injury sustained by the claimant; and (4) fourth, the award of damages is predicated on any of
the cases stated in Article 2219 of the Civil Code.

But it must again be stressed that moral damages are emphatically not intended to enrich a plaintiff
at the expense of the defendant. When awarded, moral damages must not be palpably and
scandalously excessive as to indicate that it was the result of passion, prejudice or corruption on the
part of the trial court judge. For this reason, this Court finds an award of ₱30,000.00 moral damages
sufficient under the circumstances.

On the other hand, to warrant the award of exemplary damages, the wrongful act must be
accompanied by bad faith, and an award of damages would be allowed only if the guilty party acted
in a wanton, fraudulent, reckless or malevolent manner. Accordingly, exemplary damages in the
amount of ₱10,000.00 is appropriate. 15

In the end, the Court of Appeals decreed:

WHEREFORE, the decision of the Regional Trial Court is AFFIRMED with the MODIFICATION that
the case is dismissed only as to the second cause of action. As to the first cause of action, [herein
petitioners] are ordered to pay [herein respondent] moral damages of ₱30,000.00 and exemplary
damages of ₱10,000.00.16

Hence, the instant Petition for Review.

Petitioners assert that respondent's appeal of the RTC-Branch 227 Resolution dated September 2,
2003, which dismissed the latter's complaint in Civil Case No. Q-02-48341, was filed out of time.
Respondent received a copy of the said resolution on September 26, 2003, and he only had 15 days
from such date to file his appeal, or until October 11, 2003. Respondent, instead, filed a Motion for
Reconsideration of the resolution on October 10, 2003, which left him with only one more day to file
his appeal. The RTC-Branch 227 subsequently denied respondent's Motion for Reconsideration in
an Order dated December 30, 2003, which the respondent received on February 20, 2004.
Respondent only had until the following day, February 21, 2004, to file the appeal. However,
respondent filed his Notice of Appeal only on March 1, 2004. Hence, petitioners conclude that the
dismissal of respondent's complaint in Civil Case No. Q-02-48341 already attained finality.

Petitioners argue in the alternative that the award of damages in respondent's favor has no factual
and legal bases. They contend that the Court of Appeals erred in awarding moral and exemplary
damages to respondent based on the bare and unproven allegations in the latter's complaint and
without the benefit of any hearing or trial. While the appellate court declared that RTC-Branch 227
should have proceeded with the trial on the merits involving the action for damages, it surprisingly
went ahead and ruled on petitioners' liability for said damages even without trial. Even assuming for
the sake of argument that respondent's allegations in his complaint are true, he still has no cause of
action for damages against petitioners, for the disclosure of a court decision, which is part of public
record, did not cause any legal and compensable injury to respondent.

Respondent, on the other hand, maintains that his appeal of the September 2, 2003 Resolution of
the RTC-Branch 227 to the Court of Appeals was timely filed and that the same was aptly given due
course. In addition, respondent asserts that the appellate court was correct in holding petitioners
liable for damages even without any hearing or trial since petitioners, in filing their omnibus motion
praying for the dismissal of respondent's complaint on the ground of "no cause of action," were
deemed to have hypothetically admitted as true the allegations in said complaint.

The petition is partly meritorious.

We note, at the outset, that the propriety of the dismissal by the RTC-Branch 227 of respondent's
second cause of action against petitioners (e.g., for breach of contract) was no longer disputed by
the parties. Thus, the present appeal pertains only to respondent's first cause of action (e.g., for
damages), and in connection therewith, we are called upon to resolve the following issues: (1)
whether respondent timely filed his appeal of the Resolution dated September 2, 2003 of the RTC-
Branch 227 before the Court of Appeals; and (2) whether respondent is entitled to the award of
moral and exemplary damages.

We answer the first issue on the timeliness of respondent's appeal affirmatively.

Jurisprudence has settled the "fresh period rule," according to which, an ordinary appeal from the
RTC to the Court of Appeals, under Section 3 of Rule 41 of the Rules of Court, shall be taken within
fifteen (15) days either from receipt of the original judgment of the trial court or from receipt of the
final order of the trial court dismissing or denying the motion for new trial or motion for
reconsideration. In Sumiran v. Damaso,17 we presented a survey of the cases applying the fresh
period rule:

As early as 2005, the Court categorically declared in Neypes v. Court of Appeals that by virtue of the
power of the Supreme Court to amend, repeal and create new procedural rules in all courts, the
Court is allowing a fresh period of 15 days within which to file a notice of appeal in the RTC, counted
from receipt of the order dismissing or denying a motion for new trial or motion for reconsideration.
This would standardize the appeal periods provided in the Rules and do away with the confusion as
to when the 15-day appeal period should be counted. Thus, the Court stated:

To recapitulate, a party-litigant may either file his notice of appeal within 15 days from receipt of the
Regional Trial Court's 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.
The foregoing ruling of the Court was reiterated in Makati Insurance Co., Inc. v. Reyes, to wit:

Propitious to petitioner is Neypes v. Court of Appeals, promulgated on 14 September 2005 while the
present Petition was already pending before us. x x x.

xxxx

With the advent of the "fresh period rule" parties who availed themselves of the remedy of motion for
reconsideration are now allowed to file a notice of appeal within fifteen days from the denial of that
motion.

The "fresh period rule" is not inconsistent with Rule 41, Section 3 of the Revised Rules of Court
which states that the appeal shall be taken "within fifteen (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 which it ordinarily implies.
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," x x x.

xxxx

The "fresh period rule" finally eradicates the confusion as to when the 15-day appeal period should
be counted - from receipt of notice of judgment or from receipt of notice of "final order" appealed
from.

Taking our bearings from Neypes, in Sumaway v. Urban Bank, Inc., we set aside the denial of a
notice of appeal which was purportedly filed five days late. With the fresh period rule, the 15-day
period within which to file the notice of appeal was counted from notice of the denial of the therein
petitioner's motion for reconsideration.

We followed suit in Elbiña v. Ceniza, wherein we applied the principle granting a fresh period of 15
days within which to file the notice of appeal, counted from receipt of the order dismissing a motion
for new trial or motion for reconsideration or any final order or resolution.

Thereafter, in First Aqua Sugar Traders, Inc. v. Bank of the Philippine Islands, we held that a party-
litigant may now file his notice of appeal either within fifteen days from receipt of the original decision
or within fifteen days from the receipt of the order denying the motion for reconsideration.

In De los Santos v. Vda. de Mangubat, we applied the same principle of "fresh period rule,"
expostulating that procedural law refers to the adjective law which prescribes rules and forms of
procedure in order that courts may be able to administer justice. Procedural laws do not come within
the legal conception of a retroactive law, or the general rule against the retroactive operation of
statutes. The "fresh period rule" is irrefragably procedural, prescribing the manner in which the
appropriate period for appeal is to be computed or determined and, therefore, can be made
applicable to actions pending upon its effectivity, such as the present case, without danger of
violating anyone else's rights.18 (Emphases supplied.)

Also in Sumiran, we recognized the retroactive application of the fresh period rule to cases pending
and undetermined upon its effectivity:
The retroactivity of the Neypes rule in cases where the period for appeal had lapsed prior to the date
of promulgation of Neypes on September 14, 2005, was clearly explained by the Court in Fil-Estate
Properties, Inc. v. Homena-Valencia, stating thus:

The determinative issue is whether the "fresh period" rule announced in Neypes could retroactively
apply in cases where the period for appeal had lapsed prior to 14 September 2005 when Neypes
was promulgated. That question may be answered with the guidance of the general rule that
procedural laws may be given retroactive effect to actions pending and undetermined at the time of
their passage, there being no vested rights in the rules of procedure. Amendments to procedural
rules are procedural or remedial in character as they do not create new or remove vested rights, but
only operate in furtherance of the remedy or confirmation of rights already existing. 19 (Emphases
supplied.)

In the case before us, respondent received a copy of the Resolution dated September 2, 2003 of the
RTC-Branch 227 dismissing his complaint in Civil Case No. Q-02-48341 on September 26, 2003.
Fourteen days thereafter, on October 10, 2003, respondent filed a Motion for Reconsideration of
said resolution. The RTC-Branch 227 denied respondent's Motion for Reconsideration in an Order
dated December 30, 2003, which the respondent received on February 20, 2004. On March 1, 2004,
just after nine days from receipt of the order denying his Motion for Reconsideration, respondent
already filed his Notice of Appeal. Clearly, under the fresh period rule, respondent was able to file his
appeal well-within the prescriptive period of 15 days, and the Court of Appeals did not err in giving
due course to said appeal in CA-G.R. CV No. 82610.

We likewise agree with the Court of Appeals that the RTC-Branch 227 should not have dismissed
respondent's complaint for damages on the ground of failure to state a cause of action.

According to Rule 2, Section 2 of the Rules of Court, a cause of action is the act or omission by
which a party violates a right of another.

When the ground for dismissal is that the complaint states no cause of action, such fact can be
determined only from the facts alleged in the complaint and from no other, and the court cannot
consider other matters aliunde. The test, therefore, is whether, assuming the allegations of fact in
the complaint to be true, a valid judgment could be rendered in accordance with the prayer stated
therein.20

Respondent made the following allegations in support of his claim for damages against petitioners:

FIRST CAUSE OF ACTION

28. After the promulgation of the Metropolitan Trial Court of its Decision dated August 3, 1999,
ordering the [herein respondent] and all person claiming rights under him to -

(a) Vacate the leased premises;

(b) pay the [herein petitioners] the sum of ₱306,000.00 as unpaid rentals from May 23, 1997
to November 22, 1998; and

(c) pay the sum of ₱5,000.00 as attorneys fees;

But while said Decision was still pending appeal with the Regional Trial Court, the [petitioners],
through [petitioner] Manaloto, already distributed copies of said Decision to some of the
homeowners of Horseshoe Village, who personally know the [respondent]. This act is a direct
assault or character assassination on the part of the [respondent] because as stated in the said
decision, [respondent] has been staying in the premises but did not or refused to pay his monthly
rentals for a long period of time when in truth and in fact was untrue.

29. That from the time the said decision was distributed to said members homeowners, the
[respondent] became the subject of conversation or talk of the town and by virtue of which
[respondent's] good name within the community or society where he belongs was greatly damaged;
his reputation was besmirched; [respondent] suffered sleepless night and serious anxiety.
[Respondent], who is the grandson of the late Senator Jose Veloso and Congressman Ismael
Veloso, was deprived of political career and to start with was to run as candidate for Barangay
Chairman within their area which was being offered to him by the homeowners but this offer has
started to fade and ultimately totally vanished after the distribution of said Decision. Damages to his
good names and reputations and other damages which he suffered as a consequence thereof, may
be reasonably compensated for at least ₱1,500,000.00 as moral and consequential damages.

30. In order to deter [petitioners] and others from doing as abovementioned, [petitioners] should
likewise be assessed exemplary damages in the amount of ₱500,000.00. 21

A cause of action (for damages) exists if the following elements are present: (1) a right in favor of the
plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the
part of the named defendant to respect or not to violate such right; and (3) an act or omission on the
part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of
defendant to the plaintiff for which the latter may maintain an action for recovery of damages. 22 We
find that all three elements exist in the case at bar. Respondent may not have specifically identified
each element, but it may be sufficiently determined from the allegations in his complaint.

First, respondent filed the complaint to protect his good character, name, and reputation. Every man
has a right to build, keep, and be favored with a good name. This right is protected by law with the
recognition of slander and libel as actionable wrongs, whether as criminal offenses or tortuous
conduct.23

Second, petitioners are obliged to respect respondent's good name even though they are opposing
parties in the unlawful detainer case. As Article 19 of the Civil Code requires, "[e]very 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." A violation of such principle constitutes an abuse of
rights, a tortuous conduct. We expounded in Sea Commercial Company, Inc. v. Court of
Appeals24 that:

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.

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. If mere fault or negligence in one's 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.
While Article 19 may have been intended as a mere declaration of principle, 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. 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. 25

Petitioners are also expected to respect respondent's "dignity, personality, privacy and peace of
mind" under Article 26 of the Civil Code, which provides:

ART. 26. Every person shall respect the dignity, personality, privacy and peace of mind of his
neighbors and other persons. The following and similar acts, though they may not constitute a
criminal offense, shall produce a cause of action for damages, prevention and other relief:

(1) Prying into the privacy of another's residence;

(2) Meddling with or disturbing the private life or family relations of another;

(3) Intriguing to cause another to be alienated from his friends;

(4) Vexing or humiliating another on account of his religious beliefs, lowly station in life, place
of birth, physical defect, or other personal condition.

Thus, Article 2219(10) of the Civil Code allows the recovery of moral damages for acts and actions
referred to in Article 26, among other provisions, of the Civil Code.

In Concepcion v. Court of Appeals,26 we explained that:

The philosophy behind Art. 26 underscores the necessity for its inclusion in our civil law. The Code
Commission stressed in no uncertain terms that the human personality must be exalted. The
sacredness of human personality is a concomitant consideration of every plan for human
amelioration. The touchstone of every system of law, of the culture and civilization of every country,
is how far it dignifies man. If the statutes insufficiently protect a person from being unjustly
humiliated, in short, if human personality is not exalted - then the laws are indeed defective. Thus,
under this article, the rights of persons are amply protected, and damages are provided for violations
of a person's dignity, personality, privacy and peace of mind.

It is petitioner's position that the act imputed to him does not constitute any of those enumerated in
Arts. 26 and 2219. In this respect, the law is clear. The violations mentioned in the codal provisions
are not exclusive but are merely examples and do not preclude other similar or analogous acts.
Damages therefore are allowable for actions against a person's dignity, such as profane, insulting,
humiliating, scandalous or abusive language. Under Art. 2217 of the Civil Code, moral damages
which include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar injury, although incapable of
pecuniary computation, may be recovered if they are the proximate result of the defendant's
wrongful act or omission.27

And third, respondent alleged that the distribution by petitioners to Horseshoe Village homeowners
of copies of the MeTC decision in the unlawful detainer case, which was adverse to respondent and
still on appeal before the RTC-Branch 88, had no apparent lawful or just purpose except to humiliate
respondent or assault his character. As a result, respondent suffered damages - becoming the talk
of the town and being deprived of his political career.1avvphi1

Petitioners reason that respondent has no cause of action against them since the MeTC decision in
the unlawful detainer case was part of public records.

It is already settled that the public has a right to see and copy judicial records and
documents.28 However, this is not a case of the public seeking and being denied access to judicial
records and documents. The controversy is rooted in the dissemination by petitioners of the MeTC
judgment against respondent to Horseshoe Village homeowners, who were not involved at all in the
unlawful detainer case, thus, purportedly affecting negatively respondent's good name and
reputation among said homeowners. The unlawful detainer case was a private dispute between
petitioners and respondent, and the MeTC decision against respondent was then still pending
appeal before the RTC-Branch 88, rendering suspect petitioners' intentions for distributing copies of
said MeTC decision to non-parties in the case. While petitioners were free to copy and distribute
such copies of the MeTC judgment to the public, the question is whether they did so with the intent
of humiliating respondent and destroying the latter's good name and reputation in the community.

Nevertheless, we further declare that the Court of Appeals erred in already awarding moral and
exemplary damages in respondent's favor when the parties have not yet had the chance to present
any evidence before the RTC-Branch 227. In civil cases, he who alleges a fact has the burden of
proving it by a preponderance of evidence. It is incumbent upon the party claiming affirmative relief
from the court to convincingly prove its claim. Bare allegations, unsubstantiated by evidence are not
equivalent to proof under our Rules. In short, mere allegations are not evidence. 29

At this point, the finding of the Court of Appeals of bad faith and malice on the part of petitioners has
no factual basis. Good faith is presumed and he who alleges bad faith has the duty to prove the
same. Good faith refers to the state of the mind which is manifested by the acts of the individual
concerned. It consists of the intention to abstain from taking an unconscionable and unscrupulous
advantage of another. Bad faith, on the other hand, does not simply connote bad judgment to simple
negligence. It imports a dishonest purpose or some moral obliquity and conscious doing of a wrong,
a breach of known duty due to some motive or interest or ill will that partakes of the nature of fraud.
Malice connotes ill will or spite and speaks not in response to duty. It implies an intention to do
ulterior and unjustifiable harm.30

We cannot subscribe to respondent's argument that there is no more need for the presentation of
evidence by the parties since petitioners, in moving for the dismissal of respondent's complaint for
damages, hypothetically admitted respondent's allegations. The hypothetical admission of
respondent's allegations in the complaint only goes so far as determining whether said complaint
should be dismissed on the ground of failure to state a cause of action. A finding that the complaint
sufficiently states a cause of action does not necessarily mean that the complaint is meritorious; it
shall only result in the reinstatement of the complaint and the hearing of the case for presentation of
evidence by the parties.

WHEREFORE, in view of all the foregoing, the petition is PARTIALLY GRANTED. The Decision
dated January 31, 2006 of the Court of Appeals in CA-G.R. CV No. 82610 is AFFIRMED WITH
MODIFICATIONS. The award of moral and exemplary damages made by the Court of Appeals in
favor of respondent Ismael Veloso III is DELETED. The complaint of respondent Ismael Veloso III in
Civil Case No. Q-02-48341 is hereby REINSTATED before Branch 227 of the Regional Trial Court of
Quezon City only in so far as the first cause of action is concerned. The said court is DIRECTED to
hear and dispose of the case with dispatch.
SO ORDERED.

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 190660               April 11, 2011

LAND BANK OF THE PHILIPPINES, Petitioner,

vs.
COURT OF APPEALS and ELIZABETH DIAZ, represented by FRANCISCA P. DE GUZMAN as
Attorney-in-Fact, Respondents.

DECISION

CARPIO MORALES, J.:

Private respondent Elizabeth P. Diaz (Elizabeth) was the registered owner of a parcel of agricultural
land measuring approximately 15 hectares, situated in San Ricardo, Talavera, Nueva Ecija and
covered by Transfer Certificate of Title (TCT) No. 197132. Ten hectares of the land were
expropriated by the Department of Agrarian Reform (DAR) under Presidential Decree No. 27 and
Executive Order No. 228.

The DAR valued the expropriated land (the land) at ₱54,880.59 plus increment of ₱143,041.59 or a
total of ₱197,922.18. Not satisfied with the valuation, Elizabeth, through her attorney-in-fact
Francisca P. De Guzman (Francisca), filed a complaint1 on November 28, 2001 against the Land
Bank of the Philippines (Land Bank) and the DAR before the Regional Trial Court of Guimba, Nueva
Ecija, Branch 33, acting as a Special Agrarian Court (SAC). The complaint, docketed as Special
Agrarian Case No. 1194-G, prayed that just compensation be fixed at ₱350,000 per hectare or a
total of ₱5,250.000.

Upon Elizabeth’s motion, three Commissioners were appointed to determine the just compensation
for the land.

By Decision of June 21, 2006, 2 the SAC, adopted the DAR’s valuation on the basis of average gross
production and fixed the just compensation plus increment at ₱19,107.235 per hectare or a total of
₱197,922.29. It held that given the formula used in Gabatin v. LBP, 3 the Commissioner’s Report and
the fair market or assessed value of the land can not be considered in the valuation.
Elizabeth’s motion for reconsideration was denied by Order dated August 31, 2006, 4 hence, she
elevated the case to the Court of Appeals.5

Land Bank and the DAR failed to file their appellees’ brief. During the pendency of the appeal, Land
Bank filed a Motion for Leave to Admit Defendant-Appellee[’s] Motion to Dismiss
Appeal,6 maintaining that the appeal should be dismissed because an ordinary appeal is the wrong
remedy, the proper mode being by way of a petition for review, citing Section 60 of Republic Act No.
6657 or the Comprehensive Agrarian Reform Law. Hence, Land Bank concluded that the appellate
court had no jurisdiction over the case, the SAC decision having attained finality following Land Bank
of the Philippines v. De Leon7 which held that failure of a party to file the proper remedy within fifteen
(15) days from receipt of notice of the assailed decision renders it final.

By Resolution8 of June 2, 2009, the appellate court denied Land Bank’s motion to dismiss. It faulted
Land Bank for not filing an appellee’s brief as directed, and for filing the motion to dismiss the appeal
after the lapse of 157 days from the last day for filing the brief.

Hence, the present petition for review on certiorari, 9 Land Bank maintaining that the SAC Decision
had become final and executory and, therefore, the appellate court never acquired jurisdiction over
the appeal filed by Elizabeth, a wrong mode of appeal.

Additionally, Land Bank ascribes bad faith on the part of Elizabeth for, instead of sending a copy of
her motion for reconsideration before the SAC and her subsequent Notice of Appeal to Land Bank’s
counsel of record Atty. Graciela L. Gutierrez at her address at the Land Bank Field Office in
Cabanatuan City, Elizabeth sent them to the Land Bank’s main office in Malate, Manila where, it
points out, the lawyers neither have control nor possession of the records of the case.

In view of the filing of the present petition, action on Elizabeth’s appeal was held in abeyance by the
appellate court per Resolution dated June 7, 2010. 10

The petition is meritorious.

Indeed, following Land Bank of the Philippines v. De Leon, 11 the proper mode of appeal from
decisions of Regional Trial Courts sitting as SACs is by petition for review under Rule 42 of the
Rules of Court and not through an ordinary appeal under Rule 41. The Court, in the immediately
cited case of Land Bank, observing that "before the instant case reached us, Land Bank of the
Philippines had no authoritative guideline on how to appeal decisions of SACs considering the
seemingly conflicting provisions of Sections 60 and 61 of RA 6657," held that "Sec. 60 of RA
665712 clearly and categorically states that the said mode of appeal (petition for review) should be
adopted."

First, there is no conflict between Section[s] 60 and 61 of RA 6657 inasmuch as the Rules of Court
do not at all prescribe the procedure for ordinary appeals as the proper mode of appeal for decisions
of Special Agrarian Courts. Section 61 in fact makes no more than a general reference to the Rules
of Court and does not even mention the procedure for ordinary appeals in Section 2, Rule 41 of the
1997 Revised Rules of Civil Procedure as the appropriate method of elevating to the Court of
Appeals decisions of Special method of elevating to the Court of Appeals decisions of Special
Agrarian Courts in eminent domain cases.

Second, the failure to mention Special Agrarian Courts in Section 1 of Rule 43 of the Revised Rules
of Civil Procedure cannot be construed to mean that a petition for review is not permissible for
decisions of the said special courts. In fact, the said Rule is not relevant to determine whether a
petition for review is the proper mode of appeal from decisions of Regional Trial Courts in agrarian
cases, that is, why they act as Special Agrarian Courts. Section 1 of Rule 43 of the 1997 Revised
Rules of Civil Procedure merely mentions the Court of Tax Appeals and the other different quasi-
judicial agencies without exclusivity in its phraseology. Such omission cannot be construed to justify
the contention that a petition for review is prohibited for decisions on special agrarian cases
inasmuch as the category is for quasi-judicial agencies and tax courts to which the Regional Trial
Courts do not properly belong. Although Supreme Court of Circular No. 1-91 (precursor to Rule 43 of
the Revised Rules of Civil Procedure) included the decisions of Special Agrarian Courts in the
enumeration requiring petition for review, its non-inclusion later on in Rule 43 merely signifies that it
was inappropriately classified as a quasi-judicial agencies.

What is indisputable is that Section 60 expressly regards a petition for review as the proper way of
appealing decisions of agrarian courts. So far, there is no rule prescribed by this Court expressly
disallowing the said procedure.

Third, far from being in conflict, Section 61 of RA 6657 can easily be harmonized with Section 60.
The reference to the Rules of Court means that the specific rules for petitions for review in the Rules
of Court and other relevant procedures in appeals filed before the Court of Appeals shall be followed
in appealed decisions of Special Agrarian Courts. Considering that RA 6657 cannot and does not
provide the details on how the petition for review shall be conducted, a suppletory application of the
pertinent provisions of the Rules of Court is necessary. In fact, Section 61 uses the word "review" to
designate the mode by which the appeal is to be effected. The reference therefore by Section 61 to
the Rules of Court only means that the procedure under Rule 42 for petitions for review is to be
followed for appeals in agrarian cases.13 (italics in the original; emphasis and underscoring supplied)

The adoption of a petition for review as the mode of appeal is justified in order to "hasten" the
resolution of cases involving issues on just compensation of expropriated lands under RA 6657.
Thus the Court, still in the immediately cited Land Bank case, pronounced:

The reason why it is permissible to adopt a petition for review when appealing cases decided by the
Special Agrarian Courts in eminent domain case is the need for absolute dispatch in the
determination of just compensation. Just compensation means not only paying the correct amount
but also paying for the land within a reasonable time from its acquisition. Without prompt payment,
compensation cannot be considered "just" for the property owner is made to suffer the
consequences of being immediately deprived of his land while being made to wait for a decade or
more before actually receiving the amount necessary to cope with his loss. Such objective is more
in keeping with the nature of a petition for review.
1avvphi1

Unlike an ordinary appeal, a petition for review dispenses with the filing of a notice of appeal or
completion of records as requisites before any pleading is submitted. A petition for review hastens
the award of fair recompense to deprived landowners for the government-acquired property, an end
not foreseeable in an ordinary appeal. . . .14 (Italics in the original; emphasis and underscoring
supplied)

Following then the same Land Bank case, resort by Elizabeth to a wrong mode of appeal was fatal
to her cause as it resulted in rendering the decision appealed from final and executory. Her notice of
appeal did not, it bears emphasis, stop the running of the reglementary period to file a petition for
review.

Although appeal is an essential part of our judicial process, it has been held, time and again, that the
right thereto is not a natural right or a part of due process but is merely a statutory privilege. Thus,
the perfection of an appeal in the manner and within the period prescribed by law is not only
mandatory but also jurisdictional and failure of a party to conform to the rules regarding appeal will
render the judgment final and executory. Once a decision attains finality, it becomes the law of the
case irrespective of whether the decision is erroneous or not and no court - not even the Supreme
Court - has the power to revise, review, change or alter the same. The basic rule of finality of
judgment is grounded on the fundamental principle of public policy and sound practice that, at the
risk of occasional error, the judgment of courts and the award of quasi-judicial agencies must
become final at some definite date fixed by law.15 (emphasis and underscoring supplied)

WHEREFORE, the petition is GRANTED. The Resolution of the Court of Appeals dated June 2,
2009 is SET ASIDE.

The Decision dated June 21, 2006 of the Regional Trial Court of Guimba, Nueva Ecija, Branch 33
sitting as a Special Agrarian Court in Agr. Case No. 1194-G is deemed final and executory.

SO ORDERED.

CONCHITA CARPIO MORALES

Associate Justice

WE CONCUR:
G.R. No. 131094             May 16, 2005

ATTY. JESUS F. FERNANDEZ, petitioner,

vs.
HON. COURT OF APPEALS and CONCEPCION OLIVARES, respondents.

DECISION

CHICO-NAZARIO, J.:

The undisputed facts of this case show that a Complaint dated 23 January 1993 for unlawful
detainer docketed as Civil Case No. 140953 was filed by private respondent Concepcion Olivares
against the herein petitioner Jesus Fernandez. 1 The Metropolitan Trial Court of Manila (MeTC),
Branch XV, dismissed the Complaint for lack of sufficient cause of action. 2

Olivares appealed to the Regional Trial Court (RTC) of Manila, Branch 46, and the latter reversed
the MeTC, ordering Fernandez to pay rental arrearages, attorney's fees, litigation expenses and
costs3 in a decision dated 02 May 1994. 4

On 28 June 1994, Fernandez received a copy of the decision. On 12 July 1994 or 14 days after
receipt of the decision, he filed a Motion for Reconsideration. 5 On 29 November 1994, Fernandez
received an order denying his motion for reconsideration. 6 On 01 December 1994, Fernandez filed
with the Court of Appeals a Motion for Extension of Time to File Petition for Review which was
granted.7 Said resolution was received by Fernandez on 12 December 1994.

In the meantime, on 09 December 1994, Fernandez filed a Motion for New Trial, 8 docketed as Civil
Case No. 93-67034, before the RTC of Manila, Branch 46, citing newly discovered evidence of
receipts proving his rental payments. In view of his Motion for New Trial, Fernandez, thru counsel,
filed on 29 December 1994 in the Court of Appeals a Motion to Withdraw his Petition For
Review9 which the court duly noted in its resolution dated 19 January 1995. 10

In an Order11 dated 06 February 1995, the RTC denied the Motion for New Trial. It explained that
when Fernandez went to the Court of Appeals and filed a Motion for Extension of Time to File
Petition for Review, and the Court of Appeals accordingly acted on the same by granting the
extension sought, jurisdiction of the Court of Appeals over the parties and the subject matter had
already attached.

Fernandez filed a motion for reconsideration which the trial court denied in its Order dated 14
December 1995.12 Fernandez filed a Motion to Reconsider the Order, while Olivares moved for the
execution of the judgment of the RTC citing Section 21 of the Revised Rules on Summary
Procedure.13 In an Order dated 30 January 1996, the RTC granted the Motion for Execution and
denied the Motion for Reconsideration.14 A writ of execution was in fact issued by the RTC on 31
January 1996.15

This prompted Fernandez to file a Petition for Certiorari, Prohibition and Mandamus with prayer for
the issuance of a writ of preliminary injunction and temporary restraining order, docketed as CA-G.R.
SP No. 39655, before the Court of Appeals.16

The Court of Appeals, in a resolution dated 14 February 1996 temporarily restrained the
respondents from proceeding with the enforcement of the writ of execution, "so as not to render the
petition moot and ineffectual pending fuller consideration thereof, as well as for the preservation of
the rights of the parties."17 In a decision18 dated 16 May 1997, the Court of Appeals denied the
Petition and affirmed the stance of the RTC. It ruled:

When petitioner herein elected to file before this Court a motion for extension of time to file
petition for review, he in effect opted to appeal the adverse decision of the Regional Trial
Court of Manila to the Court of Appeals. This is so because appeal to this Court is perfected
by petition for review, where judgment was rendered by the Regional Trial Court in the
exercise of appellate jurisdiction. This Court's assumption of appellate jurisdiction resulted
initially in the issuance of the resolution granting petitioner an extension of fifteen (15) days
within which to file the petition for review. Since this Court acquired appellate jurisdiction, the
only proper thing for the court below to do was to deny the motion for new trial. 19

Fernandez filed a Motion for Reconsideration which the Court of Appeals denied in a resolution
dated 13 October 1997.20

Hence, this petition.

In a resolution of this Court dated 26 January 1998, 21 respondents were required to file their
Comment on the Petition. Private respondent Olivares submitted her Comment on 26 February
1998.22 Fernandez, in turn, was directed to file his Reply.23 After the submission of Fernandez's
reply,24 the parties were then required by this Court, in a resolution 25 dated 02 December 1998, to
submit their respective memoranda.

The only issue26 submitted for resolution in this case is:

WHETHER OR NOT THE MERE FILING BY PETITIONER OF A MOTION FOR

EXTENSION OF TIME TO FILE PETITION FOR REVIEW (WHICH INTENTION [sic] WAS
LATER WITHDRAWN), AUTOMATICALLY DIVESTED THE REGIONAL TRIAL COURT
(RTC) OF ITS JURISDICTION OVER THE CASE, AS TO ENTERTAIN A MOTION FOR
NEW TRIAL.

In general, in order for a Court to have authority to dispose of the case on the merits, it must acquire
jurisdiction over the subject matter and over the parties. 27 Jurisdiction over the subject matter, or the
jurisdiction to hear and decide a case, is conferred by law.28 Jurisdiction over the person, on the
other hand, is acquired by service of summons or by voluntary appearance. 29

At first glance and mindful of the rule that the filing of motions seeking affirmative relief, such as the
motion for extension of time to file petition for review filed by Fernandez in this case, is considered
voluntary submission to the jurisdiction of the court 30 it may seem at once apparent that the Court of
Appeals had in fact acquired jurisdiction over his person. It has been repeatedly held that an
appearance in whatever form, without expressly objecting to the jurisdiction of the court over the
person, is a submission to the jurisdiction of the court over the person. He may appear by presenting
a motion, for example, and unless by such appearance he specifically objects to the jurisdiction of
the court, he thereby gives his assent to the jurisdiction of the court over his person. 31

As we are dealing here with the jurisdiction of an appellate court, additional rules are required for
jurisdiction to attach therein, to wit: (1) the petitioner must have invoked the jurisdiction of the Court
of Appeals within the time for doing so;32 (2) he must have filed his petition for review likewise within
the time for doing so;33 (3) he must have paid the necessary docket fees; 34 and (4) the other parties
must have perfected their appeals in due time. 35

The Rule requires that in an appeal by way of Petition For Review, the appeal is deemed perfected
as to the petitioner upon the timely filing of the petition and the payment of docket and other lawful
fees.36 In the discussion of the Committee on the revision of the Rules of Court, it was emphasized
that to perfect the appeal, the party has to file the petition for review and to pay the docket fees
within the prescribed period. The law and its intent are clear and unequivocal that the petition is
perfected upon its filing and the payment of the docket fees.

Thus, it may be argued, and rightly so, that the Court of Appeals has not yet acquired jurisdiction
over the case because Fernandez merely filed a motion for extension of time to file petition but not
the petition itself. Withal, sans the petition, it cannot be said that the Court of Appeals has acquired
jurisdiction over the case as to say that the trial court is without authority to act on a motion for new
trial. It is axiomatic that if a statute is clear, plain and free from ambiguity, it must be given its literal
meaning and applied without attempted interpretation. 37 Indeed, when the law speaks in clear and
categorical language, there is no room for interpretation, vacillation or construction, but only for
application.38 On this point we fully agree in the position taken by Fernandez that when he filed the
motion for extension of time to file petition for review, jurisdiction of the Court of Appeals had not yet
attached, such that his failure to file the petition itself would normally have the effect of rendering the
decision of the lower court final and executory.39

The consequential question is: what is the legal effect of the filing by Fernandez of a motion for new
trial before the trial court?

Assuming that Fernandez filed his motion for new trial on time, we hold that the trial court still had
jurisdiction to rule on the matter as the jurisdiction it originally acquired had not yet been lost.

The appellate jurisdiction of the trial court is to be juxtaposed with its residual jurisdiction as set forth
in Rule 42, Section 8(a), 3rd paragraph of the Rules of Court. Before the Court of Appeals gives due
course to a Petition for Review, the RTC retains jurisdiction for specified instances enumerated
therein, to wit:

(1) To issue orders for the protection and preservation of the rights of the parties which do
not involve any matter litigated by the appeal, such as, the appointment of a receiver, and
the issuance of writs of preliminary attachment or preliminary injunction.

(2) To approve compromises.

(3) To permit appeals of indigent litigants.

(4) To order execution pending appeal in accordance with section 2 of Rule 39.
 (5) To allow withdrawal of the appeal. 40

The residual jurisdiction of the trial court is available at a stage in which the court is normally
deemed to have lost jurisdiction over the case or the subject matter involved in the appeal. This
stage is reached upon the perfection of the appeals by the parties or upon the approval of the
records on appeal, but prior to the transmittal of the original records or the records on
appeal.41 Considering that no appeal was perfected in this case and the records of the case have not
yet been transmitted to the Court of Appeals, the case has not as yet attained the residual
jurisdiction stage so as to say that the trial court already lost the jurisdiction it first acquired and that
it is left with only its residual powers.

The foregoing considered, the inevitable recourse would have been to remand this case to the trial
court for hearing on his motion for new trial. Such is not to be, however.

So much has been said by the parties over the issue of whether or not jurisdiction attaches to the
Court of Appeals upon the filing of a motion for extension of time to file petition for review thereby
divesting the court of origin the power to rule on a motion for new trial. As shall be hereunder shown,
however, it turns out that the unraveling of this issue is quite peripheral and that the resolution of this
case hinges on another matter totally different from that raised by the parties.

From the records of the case, the ultimate issue to be tackled concerns the proper computation of
the period to file a motion for new trial.

Rule 37, Section 1 of the Revised Rules of Court providing for the period to file a motion for new trial
in relation to Rule 41, Section 3 is in point.

Rule 37. . . .

Section 1. Grounds of and period for filing motion for new trial or reconsideration. – Within
the period for taking an appeal, the aggrieved party may move the trial court to set aside the
judgment or final order and grant a new trial for one or more of the following causes
materially affecting the substantial rights of said party.

Rule 41 . . . .

Sec. 3. Period of ordinary appeal. – The appeal shall be taken within fifteen (15) days from
notice of the judgment or final order appealed from. Where a record on appeal is required,
the appellant shall file a notice of appeal and a record on appeal within thirty (30) days from
notice of the judgment or final order.

The period of appeal shall be interrupted by a timely motion for new trial or reconsideration.
No motion for extension of time to file a motion for new trial or reconsideration shall be
allowed.

It is without question that Fernandez received a copy of the RTC Decision on 28 June 1994.
Fourteen (14) days after the receipt of the decision or specifically on 12 July 1994, he filed a motion
for reconsideration. This motion was denied by the RTC and the Order of denial was received by
Fernandez on 29 November 1994. Applying Rule 37, Section 1 of the Revised Rules of Court, he
had only one (1) day left to file a motion for new trial since a motion for new trial should be filed
within the period to appeal, that is, within fifteen (15) days from notice of the judgment. 42 The motion
for new trial suspends the running of the period to appeal but does not extend the time within which
an appeal must be perfected.43 Hence if denied, a movant, like Fernandez in this case has only the
balance of the reglementary period within which to appeal. 44 It bears repeating that Fernandez
received a copy of the RTC decision on 28 June 1994. Applying Rule 41, Section 3 of the Revised
Rules of Court, he had fifteen (15) days from receipt of the RTC decision to file a motion for new trial
or reconsideration. He filed a motion for reconsideration fourteen (14) days after receipt of the
decision. The motion was denied and he had only the remaining one (1) day to file a motion for new
trial which day fell on 01 December 1994. Since 30 November 1994 was a holiday, Fernandez had
up to 01 December 1994 to file the motion for new trial. Extant from the records, instead of a motion
for new trial, he filed before the Court of Appeals on 01 December 1994 the motion for extension of
time to file petition for review. Thereafter, and pending the resolution of his motion before the Court
of Appeals, Fernandez went back to the RTC and filed on 09 December 1994 a motion for new trial.

Applying the foregoing, Fernandez's motion for new trial was filed out of time. The fifteen (15)-day
period for filing a motion for new trial cannot be extended. As early as the case of Habaluyas v.
Japzon,45  cited in  Naguiat v. Intermediate Appellate Court,46 and reiterated in Tung Chin Hui v.
Rodriguez,47 motions for extension of time to file a motion for new trial or reconsideration may no
longer be filed before all courts, lower than the Supreme Court. The rule in Habaluyas applies even if
the motion is filed before the expiration of the period sought to be extended because the fifteen (15)
days period for filing a motion for new trial or reconsideration with said court is non-extendible. Thus,
motions for extension of time to file a motion for new trial or reconsideration may be filed only in
connection with cases pending before the Supreme Court, which may in its sound discretion either
grant or deny the extension requested. No such motion may be filed before any lower courts. 48

IN SUM, considering that a motion for new trial must be filed during the period for filing an appeal
and that such period cannot be extended, Fernandez, by filing his motion for new trial beyond the
period to appeal, had unwittingly sealed his fate and stripped himself of any further relief.

WHEREFORE, premises considered, the instant petition is DENIED for lack of merit. The Regional
Trial Court of Manila, Branch 46, is ordered to execute the decision dated 02 May 1994 in Civil Case
No. 93-67034.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 110571 March 10, 1994

FIRST LEPANTO CERAMICS, INC., petitioner,

vs.
THE COURT OF APPEALS and MARIWASA MANUFACTURING, INC., respondents.

Castillo, Laman, Tan & Pantaleon for petitioner.

De Borja, Medialdea, Ata, Bello, Guevarra & Serapio for private respondent.

NOCON, J.:

Brought to fore in this petition for certiorari and prohibition with application for preliminary injunction
is the novel question of where and in what manner appeals from decisions of the Board of
Investments (BOI) should be filed. A thorough scrutiny of the conflicting provisions of Batas
Pambansa Bilang 129, otherwise known as the "Judiciary Reorganization Act of 1980," Executive
Order No. 226, also known as the Omnibus Investments Code of 1987 and Supreme Court Circular
No. 1-91 is, thus, called for.

Briefly, this question of law arose when BOI, in its decision dated December 10, 1992 in BOI Case
No. 92-005 granted petitioner First Lepanto Ceramics, Inc.'s application to amend its BOI certificate
of registration by changing the scope of its registered product from "glazed floor tiles" to "ceramic
tiles." Eventually, oppositor Mariwasa filed a motion for reconsideration of the said BOI decision
while oppositor Fil-Hispano Ceramics, Inc. did not move to reconsider the same nor appeal
therefrom. Soon rebuffed in its bid for reconsideration, Mariwasa filed a petition for review with
respondent Court of Appeals pursuant to Circular 1-91.

Acting on the petition, respondent court required the BOI and petitioner to comment on Mariwasa's
petition and to show cause why no injunction should issue. On February 17, 1993, respondent court
temporarily restrained the BOI from implementing its decision. This temporary restraining order
lapsed by its own terms on March 9, 1993, twenty (20) days after its issuance, without respondent
court issuing any preliminary injunction.

On February 24, 1993, petitioner filed a "Motion to Dismiss Petition and to Lift Restraining Order" on
the ground that respondent court has no appellate jurisdiction over BOI Case No. 92-005, the same
being exclusively vested with the Supreme Court pursuant to Article 82 of the Omnibus Investments
Code of 1987.

On May 25, 1993, respondent court denied petitioner's motion to dismiss, the dispositive portion of
which reads as follows:

WHEREFORE, private respondent's motion to dismiss the petition is hereby

DENIED, for lack of merit.

Private respondent is hereby given an inextendible period of ten (10) days from
receipt hereof within which to file its comment to the petition. 1

Upon receipt of a copy of the above resolution on June 4, 1993, petitioner decided not to file any
motion for reconsideration as the question involved is essentially legal in nature and immediately
filed a petition for certiorari and prohibition before this Court.

Petitioner posits the view that respondent court acted without or in excess of its jurisdiction in issuing
the questioned resolution of May 25, 1993, for the following reasons:

I. Respondent court has no jurisdiction to entertain Mariwasa's appeal from the BOI's
decision in BOI Case No. 92-005, which has become final.

II. The appellate jurisdiction conferred by statute upon this Honorable Court cannot
be amended or superseded by Circular No. 1-91. 2

Petitioner then concludes that:

III. Mariwasa has lost it right to appeal . . . in this case. 3

Petitioner argues that the Judiciary Reorganization Act of 1980 or Batas Pambansa Bilang 129 and
Circular 1-91, "Prescribing the Rules Governing Appeals to the Court of Appeals from a Final Order
or Decision of the Court of Tax Appeals and Quasi-Judicial Agencies" cannot be the basis of
Mariwasa's appeal to respondent court because the procedure for appeal laid down therein runs
contrary to Article 82 of E.O. 226, which provides that appeals from decisions or orders of the BOI
shall be filed directly with this Court, to wit:

Judicial relief. — All orders or decisions of the Board

(of Investments) in cases involving the provisions of this Code shall immediately be
executory. No appeal from the order or decision of the Board by the party adversely
affected shall stay such an order or decision; Provided, that all appeals shall be filed
directly with the Supreme Court within thirty (30) days from receipt of the order or
decision.

On the other hand, Mariwasa maintains that whatever "obvious inconsistency" or "irreconcilable
repugnancy" there may have been between B.P. 129 and Article 82 of E.O. 226 on the question of
venue for appeal has already been resolved by Circular 1-91 of the Supreme Court, which was
promulgated on February 27, 1991 or four (4) years after E.O. 226 was enacted.

Sections 1, 2 and 3 of Circular 1-91, is herein quoted below:

1. Scope. — These rules shall apply to appeals from final orders or decisions of the
Court of Tax Appeals. They shall also apply to appeals from final orders or decisions
of any quasi-judicial agency from which an appeal is now allowed by statute to the
Court of Appeals or the Supreme Court. Among these agencies are the Securities
and Exchange Commission, Land Registration Authority, Social Security
Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and
Technology Transfer, National Electrification Administration, Energy Regulatory
Board, National Telecommunications Commission, Secretary of Agrarian Reform and
Special Agrarian Courts under RA 6657, Government Service Insurance System,
Employees Compensation Commission, Agricultural Inventions Board, Insurance
Commission and Philippine Atomic Energy Commission.

2. Cases not covered. — These rules shall not apply to decisions and interlocutory
orders of the National Labor Relations Commission or the Secretary of Labor and
Employment under the Labor Code of the Philippines, the Central Board of
Assessment Appeals, and other quasi-judicial agencies from which no appeal to the
courts is prescribed or allowed by statute.

3. Who may appeal and where to appeal. — The appeal of a party affected by a final
order, decision, or judgment of the Court of Tax Appeals or of a quasi-judicial agency
shall be taken to the Court of Appeals within the period and in the manner herein
provided, whether the appeal involves questions of fact or of law or mixed questions
of fact and law. From final judgments or decisions of the Court of Appeals, the
aggrieved party may appeal by certiorari to the Supreme Court as provided in Rule
45 of the Rules of Court.

It may be called that Section 9(3) of B.P. 129 vests appellate jurisdiction over all final judgments,
decisions, resolutions, orders or awards of quasi-judicial agencies on the Court of Appeals, to wit:

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders, awards of Regional Trial Courts and
quasi-judicial agencies, instrumentalities, boards or commissions, except those
falling within the appellate jurisdiction of the Supreme Court in accordance with the
Constitution, the provisions of this Act, and of subparagraph (1) of the third
paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the
Judiciary Act of 1948.

The Intermediate Appellate Court shall have the power to try cases and conduct
hearings, receive evidence and perform any and all acts necessary to resolve factual
issues raised in cases falling within its original and appellate jurisdiction, including
the power to grant and conduct new trials or further proceedings.

These provisions shall not apply to decisions and interlocutory orders issued under
the Labor Code of the Philippines and by the Central Board of Assessment Appeals.

Clearly evident in the aforequoted provision of B.P. 129 is the laudable objective of providing a
uniform procedure of appeal from decisions of all quasi-judicial agencies for the benefit of the bench
and the bar. Equally laudable is the twin objective of B.P. 129 of unclogging the docket of this Court
to enable it to attend to more important tasks, which in the words of Dean Vicente G. Sinco, as
quoted in our decision in Conde v. Intermediate Appellate Court  is "less concerned with the
4

decisions of cases that begin and end with the transient rights and obligations of particular
individuals but is more intertwined with the direction of national policies, momentous economic and
social problems, the delimitation of governmental authority and its impact upon fundamental rights.

In Development Bank of the Philippines vs. Court of Appeals,  this Court noted that B.P. 129 did not
5

deal only with "changes in the rules on procedures" and that not only was the Court of Appeals
reorganized, but its jurisdiction and powers were also broadened by Section 9 thereof. Explaining
the changes, this Court said:

. . . Its original jurisdiction to issue writs of mandamus,

prohibition, certiorari and habeas corpus, which theretofore could be exercised only
in aid of its appellate jurisdiction, was expanded by (1) extending it so as to include
the writ of quo warranto, and also (2) empowering it to issue all said extraordinary
writs "whether or not in aid of its appellate jurisdiction." Its appellate jurisdiction was
also extended to cover not only final judgments of Regional Trial Courts, but also "all
final judgments, decisions, resolutions, orders or awards of . . . quasi-judicial
agencies, instrumentalities, boards or commissions, except those falling within the
appellate jurisdiction of the Supreme Court in accordance with the Constitution, the
provisions of this Act, and of sub-paragraph (1) of the third paragraph and
subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948,"
it being noteworthy in this connection that the text of the law is broad and
comprehensive, and the explicitly stated exceptions have no reference whatever to
the Court of Tax Appeals. Indeed, the intention to expand the original and appellate
jurisdiction of the Court of Appeals over quasi-judicial agencies, instrumentalities,
boards, or commissions, is further stressed by the last paragraph of Section 9 which
excludes from its provisions, only the "decisions and interlocutory orders issued
under the Labor Code of the Philippines and by the Central Board of Assessment
Appeals." 6

However, it cannot be denied that the lawmaking system of the country is far from perfect. During
the transitional period after the country emerged from the Marcos regime, the lawmaking power was
lodged on the Executive Department. The obvious lack of deliberation in the drafting of our laws
could perhaps explain the deviation of some of our laws from the goal of uniform procedure which
B.P. 129 sought to promote.

In exempli gratia, Executive Order No. 226 or the Omnibus Investments Code of 1987 provides that
all appeals shall be filed directly with the Supreme Court within thirty (30) days from receipt of the
order or decision.

Noteworthy is the fact that presently, the Supreme Court entertains ordinary appeals only from
decisions of the Regional Trial Courts in criminal cases where the penalty imposed is reclusion
perpetua or higher. Judgments of regional trial courts may be appealed to the Supreme Court only
by petition for review on certiorari within fifteen (15) days from notice of judgment in accordance with
Rule 45 of the Rules of Court in relation to Section 17 of the Judiciary Act of 1948, as amended, this
being the clear intendment of the provision of the Interim Rules that "(a)ppeals to the Supreme Court
shall be taken by petition for certiorari which shall be governed by Rule 45 of the Rules of Court."
Thus, the right of appeal provided in E.O. 226 within thirty (30) days from receipt of the order or
decision is clearly not in consonance with the present procedure before this Court. Only decisions,
orders or rulings of a Constitutional Commission (Civil Service Commission, Commission on
Elections or Commission on Audit), may be brought to the Supreme Court on original petitions
for certiorari under Rule 65 by the aggrieved party within thirty (30) days form receipt of a copy
thereof.7

Under this contextual backdrop, this Court, pursuant to its Constitutional power under Section 5(5),
Article VIII of the 1987 Constitution to promulgate rules concerning pleading, practice and procedure
in all courts, and by way of implementation of B.P. 129, issued Circular 1-91 prescribing the rules
governing appeals to the Court of Appeals from final orders or decisions of the Court of Tax Appeals
and quasi-judicial agencies to eliminate unnecessary contradictions and confusing rules of
procedure.

Contrary to petitioner's contention, although a circular is not strictly a statute or law, it has, however,
the force and effect of law according to settled jurisprudence.  In Inciong v. de Guia,  a circular of this
8 9

Court was treated as law. In adopting the recommendation of the Investigating Judge to impose a
sanction on a judge who violated Circular No. 7 of this Court dated
September 23, 1974, as amended by Circular No. 3 dated April 24, 1975 and Circular No. 20 dated
October 4, 1979, requiring raffling of cases, this Court quoted the ratiocination of the Investigating
Judge, brushing aside the contention of respondent judge that assigning cases instead of raffling is a
common practice and holding that respondent could not go against the circular of this Court until it is
repealed or otherwise modified, as "(L)aws are repealed only by subsequent ones, and their violation
or non-observance shall not be excused by disuse, or customs or practice to the contrary." 10

The argument that Article 82 of E.O. 226 cannot be validly repealed by Circular 1-91 because the
former grants a substantive right which, under the Constitution cannot be modified, diminished or
increased by this Court in the exercise of its rule-making powers is not entirely defensible as it
seems. Respondent correctly argued that Article 82 of E.O. 226 grants the right of appeal from
decisions or final orders of the BOI and in granting such right, it also provided where and in what
manner such appeal can be brought. These latter portions simply deal with procedural aspects
which this Court has the power to regulate by virtue of its constitutional rule-making powers.

The case of Bustos v. Lucero  distinguished between rights created by a substantive law and those
11

arising from procedural law:

Substantive law creates substantive rights . . . . Substantive rights is a term which

includes those rights which one enjoys under the legal system prior to the
disturbance of normal relations (60 C.J., 980). Substantive law is that part of the law
which creates, defines and regulates rights, or which regulates rights and duties
which give rise to a cause of action, as oppossed to adjective or remedial law, which
prescribes the method of enforcing rights or obtains a redress for their invasion. 12

Indeed, the question of where and in what manner appeals from decisions of the BOI should be
brought pertains only to procedure or the method of enforcing the substantive right to appeal granted
by E.O. 226. In other words, the right to appeal from decisions or final orders of the BOI under E.O.
226 remains and continues to be respected. Circular 1-91 simply transferred the venue of appeals
from decisions of this agency to respondent Court of Appeals and provided a different period of
appeal, i.e., fifteen (15) days from notice. It did not make an incursion into the substantive right to
appeal.

The fact that BOI is not expressly included in the list of quasi-judicial agencies found in the third
sentence of Section 1 of Circular 1-91 does not mean that said circular does not apply to appeals
from final orders or decision of the BOI. The second sentence of Section 1 thereof expressly states
that "(T)hey shall also apply to appeals from final orders or decisions of any quasi-judicial agency
from which an appeal is now allowed by statute to the Court of Appeals or the Supreme Court." E.O.
266 is one such statute. Besides, the enumeration is preceded by the words "(A)mong these
agencies are . . . ," strongly implying that there are other quasi-judicial agencies which are covered
by the Circular but which have not been expressly listed therein. More importantly, BOI does not fall
within the purview of the exclusions listed in Section 2 of the circular. Only the following final
decisions and interlocutory orders are expressly excluded from the circular, namely, those of: (1) the
National Labor Relations Commission; (2) the Secretary of Labor and Employment; (3) the Central
Board of Assessment Appeals and (4) other quasi-judicial agencies from which no appeal to the
courts is prescribed or allowed by statute. Since in DBP v. CA  we upheld the appellate jurisdiction
13

of the Court of Appeals over the Court of Tax Appeals despite the fact that the same is not among
the agencies reorganized by B.P. 129, on the ground that B.P. 129 is broad and comprehensive,
there is no reason why BOI should be excluded from
Circular 1-91, which is but implementary of said law.

Clearly, Circular 1-91 effectively repealed or superseded Article 82 of E.O. 226 insofar as the
manner and method of enforcing the right to appeal from decisions of the BOI are concerned.
Appeals from decisions of the BOI, which by statute was previously allowed to be filed directly with
the Supreme Court, should now be brought to the Court of Appeals.

WHEREFORE, in view of the foregoing reasons, the instant petition for certiorari and prohibition with
application for temporary restraining order and preliminary injunction is hereby DISMISSED for lack
of merit. The Temporary Restraining Order issued on July 19, 1993 is hereby LIFTED.

SO ORDERED.
 SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 191567               March 20, 2013

MARIE CALLO-CLARIDAD, Petitioner,
vs.
PHILIP RONALD P. ESTEBAN and TEODORA ALYN ESTEBAN, Respondents.

DECISION

BERSAMIN, J.:

The determination of probable cause to file a criminal complaint or information in court is exclusively
within the competence of the Executive Department, through the Secretary of Justice. The courts
cannot interfere in such determination, except upon a clear showing that the Secretary of Justice
committed grave abuse of discretion amounting to lack or excess of jurisdiction.

The Case

Under review is the decision promulgated on November 20, 2009, 1 whereby the Court of Appeals
(CA) upheld the resolution dated April 16, 2009 issued by the Secretary of Justice dismissing for lack
of probable cause the complaint for murder filed against the respondents. 2

Antecedents

The petitioner is the mother of the late Cheasare Armani "Chase" Callo Claridad, whose lifeless but
bloodied body was discovered in the evening of February 27, 2007 between vehicles parked at the
carport of a residential house located at No.10 Cedar Place, Ferndale Homes, Quezon City.
Allegedly, Chase had been last seen alive with respondent Philip Ronald P. Esteban (Philip) less
than an hour before the discovery of his lifeless body.

Based on the petition, the following are the background facts.

Around 5:30 p.m. of February 27, 2007, Chase returned home from visiting his girlfriend, Ramonna
Liza "Monnel" Hernandez. Around 7:00 p.m., Chase’s sister Ariane was sitting at the porch of their
house when she noticed a white Honda Civic car parked along the street. Recognizing the driver to
be Philip, Ariane waved her hand at him. Philip appeared nonchalant and did not acknowledge her
gesture. Ariane decided to stay behind and leave with their house helpers, Marivic Guray and
Michelle Corpus, only after Chase had left on board the white Honda Civic car.

In the meanwhile, Chase exchanged text messages with his girlfriend Monnel starting at 7:09 p.m.
and culminating at 7:31 p.m. Among the messages was: Ppnta n kunin gulong…yam iniisip k prn n d
tyo magksma. sbrang lungkot k ngun (On the way to get the tires… I still think about us not being
together I’m very sad right now)

Security Guard (SG) Rodolph Delos Reyes and SG Henry Solis, who were stationed at the main
gate of Ferndale Homes, logged the arrival at 7:26 p.m. on February 27, 2007 of Philip on board a
white Honda Civic bearing plate CRD 999 with a male companion in the passenger seat. It was
determined later on that the white Honda Civic bearing plate CRD 999 was owned by one Richard
Joshua Ulit, who had entrusted the car to Philip who had claimed to have found a buyer of the car.
Ulit, Pamela Ann Que, and car shop owner Edbert Ylo later attested that Philip and Chase were
friends, and that they were unaware of any rift between the two prior to the incident.

Marivic Rodriguez, a house helper of Shellane Yukoko, the resident of No. 9 Cedar Place, Ferndale
Homes, was with her co-employee nanny Jennylyn Buri and the latter’s ward, Joei Yukoko, when
they heard somebody crying coming from the crime scene: Help! Help! This was at about 7:30 p.m.
Even so, neither of them bothered to check who had been crying for help. It was noted, however,
that No. 10 Cedar Place, which was owned by one Mrs. Howard, was uninhabited at the time. Based
on the initial investigation report of the Megaforce Security and Allied Services, Inc., 3 the Estebans
were illegally parking their cars at Mrs. Howard’s carport. The initial investigation report stated that
the SGs would regularly remind the Estebans to use their own parking garage, which reminders had
resulted in heated discussions and altercations. The SGs kept records of all the illegal parking
incidents, and maintained that only the Estebans used the carport of No. 10 Cedar Place.

Around 7:45 p.m., respondent Teodora Alyn Esteban (Teodora) arrived at Ferndale Homes on board
a vehicle bearing plate XPN 733, as recorded in the subdivision SG’s logbook. At that time, three
cars were parked at the carport of No. 10 Cedar place, to wit: a Honda CRV with plate ZAE 135
parked parallel to the Honda Civic with plate CRD 999, and another Honda Civic with plate JTG 333,
the car frequently used by Philip, then parked diagonally behind the two cars. Some witnesses
alleged that prior to the discovery of the Chase’s body, they had noticed a male and female inside
the car bearing plate JTG 333 engaged in a discussion.

At around 7:50 p.m., SG Abelardo Sarmiento Jr., while patrolling around the village, noticed that the
side of the Honda Civic with plate JTG 333 had red streaks, which prompted him to move towards
the parked cars. He inspected the then empty vehicle and noticed that its radio was still turned on.
He checked the cars and discovered that the rear and side of the Honda Civic with plate CRD 999
were smeared with blood. He saw on the passenger seat a cellular phone covered with blood. It was
then that he found the bloodied and lifeless body of Chase lying between the parallel cars. The body
was naked from the waist up, with a crumpled bloodied shirt on the chest, and with only the socks
on. SG Sarmiento called for back-up. SG Rene Fabe immediately barricaded the crime scene.

Around 7:55 p.m., SG Solis received a phone call from an unidentified person who reported that a
"kid" had met an accident at Cedar Place. SG Solis later identified and confirmed the caller to be
"Mr. Esteban Larry" when the latter entered the village gate and inquired whether the "kid" who had
met an accident had been attended to. Moreover, when SG Fabe and SG Sarmiento were securing
the scene of the crime, they overheard from the radio that somebody had reported about a "kid" who
had been involved in an accident at Cedar Place. SG Fabe thereafter searched the village premises
but did not find any such accident. When SG Fabe got back, there were already several onlookers at
the crime scene.
The Scene-of-the-Crime Operations (SOCO) team arrived. Its members prepared a sketch and took
photographs of the crime scene. They recovered and processed the cadaver of Chase, a
bloodstained t-shirt, blood smears, green nylon cord, fingerprints, wristwatch, and a bloodied Nokia
N90 mobile phone.

According to the National Bureau of Investigation (NBI) Medico-Legal Report No N-07-163 signed by
Dr. Valentin Bernales, Acting Medico-Legal Division Chief, and Dr. Cesar B. Bisquera, Medico-Legal
Officer, the victim sustained two stab wounds, to wit: one on the left side of the lower chest wall with
a depth of 9 cm., which fractured the 4th rib and pierced the heart, and the other on the middle third
of the forearm. The findings corroborated the findings contained in Medico-Legal Report No. 131-07
of Police Chief Insp. Filemon C. Porciuncula Jr.

Resolution of the
Office of the City Prosecutor

The Office of the City Prosecutor (OCP) of Quezon City dismissed the complaint in its resolution
dated December 18, 2007.4

The OCP observed that there was lack of evidence, motive, and circumstantial evidence sufficient to
charge Philip with homicide, much less murder; that the circumstantial evidence could not link Philip
to the crime; that several possibilities would discount Philip’s presence at the time of the crime,
including the possibility that there were more than one suspect in the fatal stabbing of Chase; that
Philip was not shown to have any motive to kill Chase; that their common friends attested that the
two had no ill-feelings towards each other; that no sufficient evidence existed to charge Teodora with
the crime, whether as principal, accomplice, or accessory; and that the allegation that Teodora could
have been the female person engaged in a discussion with a male person inside the car with plate
JTG 333 was unreliable being mere hearsay.

The petitioner moved for the reconsideration of the dismissal, but the OCP denied the motion on
December 15, 2008.5

Resolution by the Secretary of Justice

On petition for review,6 the Secretary of Justice affirmed the dismissal of the complaint on April 16,
2009.7

The Secretary of Justice stated that the confluence of lack of an eyewitness, lack of motive,
insufficient circumstantial evidence, and the doubt as to the proper identification of Philip by the
witnesses resulted in the lack of probable cause to charge Philip and Teodora with the crime
alleged.

The Secretary of Justice held that the only circumstantial evidence connecting Philip to the crime
was the allegation that at between 7:00 to 7:30 o’clock of the evening in question, Chase had
boarded the white Honda Civic car driven by Philip; that the witnesses’ positive identification of Philip
as the driver of the car was doubtful, however, considering that Philip did not alight from the car, the
windows of which were tinted; and that the rest of the circumstances were pure suspicions, and did
not indicate that Philip had been with Chase at the time of the commission of the crime.

After her motion for reconsideration was denied by the Secretary of Justice on May 21, 2009, 8 the
petitioner elevated the matter to the CA by petition for review under Rule 43, Rules of Court.
 Ruling of the CA

In her petition for review in the CA, the petitioner assigned to the Secretary of Justice the following
errors, to wit:

I. THE HONORABLE SECRETARY OF JUSTICE MANIFESTLY ERRED IN DENYING THE

PETITION FOR REVIEW AND MOTION FOR RECONSIDERATION THEREOF FILED BY
PETITIONER CONSIDERING THAT PROBABLE CAUSE EXISTS AGAINST
RESPONDENTS FOR THE CRIME OF MURDER UNDER ARTICLE 248 OF THE REVISED
PENAL CODE.

II. THE HONORABLE SECRETARY OF JUSTICE ERRED IN NOT FINDING THE

NUMEROUS PIECES OF CIRCUMSTANTIAL EVIDENCE PRESENTED AGAINST
RESPONDENTS TO HOLD THEM LIABLE FOR THE CRIME OF MURDER AS EXTANT IN
THE RECORDS OF THE CASE.

III. THE HONORABLE SECRETARY OF JUSTICE ERRED IN NOT FINDING THAT ALL
THE ELEMENTS OF THE CRIME OF MURDER ARE PRESENT IN THE INSTANT CASE.9

On November 20, 2009, the CA promulgated its assailed decision, 10 dismissing the petition for
review.

The petitioner filed a motion for reconsideration, but the CA denied the motion for its lack of merit.

Hence, this appeal by petition for review on certiorari.

The petitioner prays that Philip and Teodora be charged with murder on the strength of the several
pieces of circumstantial evidence; that the qualifying aggravating circumstances of evident
premeditation and treachery be appreciated in the slaying of her son, given the time, manner, and
weapon used in the commission of the crime and the location and degree of the wounds inflicted on
the victim.

Issue

Whether the CA committed a reversible error in upholding the decision of the Secretary of Justice
finding that there was no probable cause to charge Philip and Teodora with murder for the killing of
Chase.

Ruling

We deny the petition for review, and sustain the decision of the CA.

We note, to start with, that the petitioner assailed the resolution of the Secretary of Justice by filing in
the CA a petition for review under Rule 43, Rules of Court. That was a grave mistake that
immediately called for the outright dismissal of the petition. The filing of a petition for review under
Rule 43 to review the Secretary of Justice’s resolution on the determination of probable cause was
an improper remedy.11 Indeed, the CA had no appellate jurisdiction vis-à-vis the Secretary of Justice.

A petition for review under Rule 43 is a mode of appeal to be taken only to review the decisions,
resolutions or awards by the quasi-judicial officers, agencies or bodies, particularly those specified in
Section 1 of Rule 43.12 In the matter before us, however, the Secretary of Justice was not an officer
performing a quasi-judicial function. In reviewing the findings of the OCP of Quezon City on the
matter of probable cause, the Secretary of Justice performed an essentially executive function to
determine whether the crime alleged against the respondents was committed, and whether there
was probable cause to believe that the respondents were guilty thereof. 13

On the other hand, the courts could intervene in the Secretary of Justice’s determination of probable
cause only through a special civil action for certiorari. That happens when the Secretary of Justice
acts in a limited sense like a quasi-judicial officer of the executive department exercising powers akin
to those of a court of law.14 But the requirement for such intervention was still for the petitioner to
demonstrate clearly that the Secretary of Justice committed grave abuse of discretion amounting to
lack or excess of jurisdiction. Unless such a clear demonstration is made, the intervention is
disallowed in deference to the doctrine of separation of powers. As the Court has postulated in
Metropolitan Bank & Trust Co. (Metrobank) v. Tobias III: 15

Under the doctrine of separation of powers, the courts have no right to directly decide matters over
which full discretionary authority has been delegated to the Executive Branch of the Government, or
to substitute their own judgments for that of the Executive Branch, represented in this case by the
Department of Justice. The settled policy is that the courts will not interfere with the executive
determination of probable cause for the purpose of filing an information, in the absence of grave
abuse of discretion. That abuse of discretion must be so patent and gross as to amount to an
evasion of a positive duty or a virtual refusal to perform a duty enjoined by law or to act at all in
contemplation of law, such as where the power is exercised in an arbitrary and despotic manner by
reason of passion or hostility. x x x

Secondly, even an examination of the CA’s decision indicates that the CA correctly concluded that
the Secretary of Justice did not abuse his discretion in passing upon and affirming the finding of
probable cause by the OCP.

A preliminary investigation, according to Section 1, Rule 112 of the Rules of Court, is "an inquiry or
proceeding to determine whether there is sufficient ground to engender a well-founded belief that a
crime has been committed and the respondent is probably guilty thereof, and should be held for
trial." The investigation is advisedly called preliminary, because it is yet to be followed by the trial
proper in a court of law. The occasion is not for the full and exhaustive display of the parties’
evidence but for the presentation only of such evidence as may engender a well-founded belief that
an offense has been committed and that the accused is probably guilty of the offense. 16 The role and
object of preliminary investigation were "to secure the innocent against hasty, malicious, and
oppressive prosecutions, and to protect him from open and public accusation of crime, from the
trouble, expenses and anxiety of a public trial, and also to protect the State from useless and
expensive prosecutions."17

In Arula vs. Espino,18 the Court rendered the three purposes of a preliminary investigation, to wit: (1)
to inquire concerning the commission of a crime and the connection of the accused with it, in order
that he may be informed of the nature and character of the crime charged against him, and, if there
is probable cause for believing him guilty, that the State may take the necessary steps to bring him
to trial; (2) to preserve the evidence and keep the witnesses within the control of the State; and (3) to
determine the amount of bail, if the offense is bailable. The officer conducting the examination
investigates or inquires into facts concerning the commission of a crime with the end in view of
determining whether an information may be prepared against the accused.

The determination of the existence of probable cause lies within the discretion of the public
prosecutor after conducting a preliminary investigation upon the complaint of an offended
party.19 Probable cause for purposes of filing a criminal information is defined as such facts as are
sufficient to engender a well-founded belief that a crime has been committed and that the
respondent is probably guilty thereof. A finding of probable cause needs only to rest on evidence
showing that more likely than not a crime has been committed, and that it was committed by the
accused. Probable cause, although it requires less than evidence justifying a conviction, demands
more than bare suspicion.20

A public prosecutor alone determines the sufficiency of evidence that establishes the probable cause
justifying the filing of a criminal information against the respondent because the determination of
existence of a probable cause is the function of the public prosecutor. 21 Generally, the public
prosecutor is afforded a wide latitude of discretion in the conduct of a preliminary investigation.
Consequently, it is a sound judicial policy to refrain from interfering in the conduct of preliminary
investigations, and to just leave to the Department of Justice the ample latitude of discretion in the
determination of what constitutes sufficient evidence to establish probable cause for the prosecution
of supposed offenders. Consistent with this policy, courts do not reverse the Secretary of Justice’s
findings and conclusions on the matter of probable cause except in clear cases of grave abuse of
discretion.22 By way of exception, however, judicial review is permitted where the respondent in the
preliminary investigation clearly establishes that the public prosecutor committed grave abuse of
discretion, that is, when the public prosecutor has exercised his discretion in an arbitrary, capricious,
whimsical or despotic manner by reason of passion or personal hostility, patent and gross enough as
to amount to an evasion of a positive duty or virtual refusal to perform a duty enjoined by
law.23 Moreover, the trial court may ultimately resolve the existence or non-existence of probable
cause by examining the records of the preliminary investigation when necessary for the orderly
administration of justice.24 Although policy considerations call for the widest latitude of deference to
the public prosecutor’s findings, the courts should never shirk from exercising their power, when the
circumstances warrant, to determine whether the public prosecutor’s findings are supported by the
facts, and by the law.25

Under the circumstances presented, we conclude to be correct the CA’s determination that no prima
facie evidence existed that sufficiently indicated the respondents’ involvement in the commission of
the crime. It is clear that there was no eyewitness of the actual killing of Chase; or that there was no
evidence showing how Chase had been killed, how many persons had killed him, and who had been
the perpetrator or perpetrators of his killing. There was also nothing that directly incriminated the
respondents in the commission of either homicide or murder.

Admittedly, the petitioner relies solely on circumstantial evidence, which she insists to be enough to
warrant the indictment of respondents for murder.

We disagree.

For circumstantial evidence to be sufficient to support a conviction, all the circumstances must be
consistent with one another and must constitute an unbroken chain leading to one fair and
reasonable conclusion that a crime has been committed and that the respondents are probably guilty
thereof. The pieces of evidence must be consistent with the hypothesis that the respondents were
probably guilty of the crime and at the same time inconsistent with the hypothesis that they were
innocent, and with every rational hypothesis except that of guilt. 26 Circumstantial evidence is
sufficient, therefore, if: (a) there is more than one circumstance, (b) the facts from which the
inferences are derived have been proven, and (c) the combination of all the circumstances is such
as to produce a conviction beyond reasonable doubt. 27

The records show that the circumstantial evidence linking Philip to the killing of Chase derived from
the bare recollections of Ariane (sister of Chase), and of Guray and Corpus (respectively, the
househelp and nanny in the household of a resident of the subdivision) about seeing Chase board
the white Honda Civic at around 7:00 p.m. of February 27, 2007, and about Philip being the driver of
the Honda Civic. But there was nothing else after that, because the circumstances revealed by the
other witnesses could not even be regarded as circumstantial evidence against Philip. To be sure,
some of the affidavits were unsworn.28 The statements subscribed and sworn to before the officers of
the Philippine National Police (PNP) having the authority to administer oaths upon matters
connected with the performance of their official duties undeniably lacked the requisite certifications
to the effect that such administering officers had personally examined the affiants, and that such
administering officers were satisfied that the affiants had voluntarily executed and understood their
affidavits.29

The lack of the requisite certifications from the affidavits of most of the other witnesses was in
violation of Section 3, Rule 112 of the Rules of Court, which pertinently provides thusly:

Section 3. Procedure. — The preliminary investigation shall be conducted in the following manner:

(a) The complaint shall state the address of the respondent and shall be accompanied by the
affidavits of the complainant and his witnesses, as well as other supporting documents to establish
probable cause. They shall be in such number of copies as there are respondents, plus two (2)
copies for the official file. The affidavits shall be subscribed and sworn to before any prosecutor or
government official authorized to administer oath, or, in their absence or unavailability, before a
notary public, each of who must certify that he personally examined the affiants and that he is
satisfied that they voluntarily executed and understood their affidavits.

xxxx

The CA explained that the requirement for the certifications under the aforecited rule was designed
to avoid self-serving and unreliable evidence from being considered for purposes of the preliminary
investigation, the present rules for which do not require a confrontation between the parties and their
witnesses; hence, the certifications were mandatory, to wit:

In Oporto, Jr. vs. Monserate, it was held that the requirement set forth under Section 3, Rule 112 of
the Revised Rules of Criminal Procedure is mandatory. This is so because the rules on preliminary
investigation does not require a confrontation between the parties. Preliminary investigation is
ordinarily conducted through submission of affidavits and supporting documents, through submission
of affidavits and supporting documents, through the exchange of pleadings. Thus, it can be inferred
that the rationale for requiring the affidavits of witnesses to be sworn to before a competent officer so
as to ensure that the affidavits supporting the factual allegations in the Complaint have been sworn
before a competent officer and that the affiant has signed the same in the former’s presence
declaring on oath the truth of the statement made considering that this becomes part of the bases in
finding probable guilt against the respondent. Well-settled is the rule that persons, such as an
employee, whose unsworn declarations in behalf of a party, or the employee’s employer in this case,
are not admissible in favor of the latter. Further, it has been held that unsworn statements or
declarations are self-serving and self-serving declarations are not admissible in evidence as proof of
the facts asserted, whether they arose by implication from acts and conduct or were made orally or
reduced in writing. The vital objection to the admission to this kind of evidence is its hearsay
character.

In the case at bar, a perusal of the statements/affidavits accompanying the complaint shows that out
of the total of 16 statements/affidavits corresponding to the respective witnesses, only nine (9)
thereof were sworn to before a competent officer. These were the affidavits of the following: (1) SG
Sarmiento; (2) SG Solis; (3) SG Fabe; (4) SG Marivic Rodriguez; (5) Jennylyn Buri; (6) Richard
Joshua Sulit; (7) Marites Navarro; (8) Pamela-Ann Que; and (9) Edbert Ylo, which were sworn to or
subscribed before a competent officer.

Thus, it is imperative that the circumstantial evidence that the victim was last seen in the company of
respondent Philip must be established by competent evidence required by the rules in preliminary
investigation. Here, it was allegedly Chase’s sister, Ariane, and their two household helpers, Marivic
Guray and Michelle Corpus, who saw respondent Philip pick up Chase at around 7:00 o’clock in the
evening of February 27, 2007. Yet, such fact from which the inference is derived was not duly
proven. The statements of Marivic and Michelle both executed on February 28, 2007 were not sworn
to before the proper officer. Neither was the affidavit dated July 3, 2009 of Ariane Claridad duly
notarized nor is there any explanation why the same was belatedly executed.

It cannot thus be used to prove the circumstance that it was respondent Philip who drove the white
car parked in front of their house at around 7:00 o’clock in the evening of February 27, 2007 and that
the factual allegation that the car used bore the Plate no. CRD-999. Further, since their affidavits
were not in the nature of a public document, it is incumbent upon the complainant to prove its due
execution and authenticity before the same is admitted in evidence. It is a well-settled rule that
private documents must be proved as to their due execution and authenticity before they may be
received in evidence.

Likewise, the circumstance that the victim sent a text message to his girlfriend Monet that he was on
his way to get the tires at around 7:09 o’clock in the evening of February 27, 2007 is likewise
inadmissible in evidence because Monet’s affidavit was not sworn to before a competent officer.
There was also no evidence of the alleged text message pursuant to the law on admissibility of
electronic evidence. Besides, it cannot be inferred therefrom who the victim was with at that time and
where he was going to get the tires.

Neither can the handwritten unsworn statement dated February 28, 2007 of SG Rodolph delos
Reyes and handwritten sworn statement dated March 8, 2008 of SG Henry Solis be of any help in
claiming that the victim was in the company of respondent Philip when the latter entered the village
at around 7:26 o’clock in the evening of February 27, 2007. Suffice it to state that their statements
only identified respondent Philip driving the white Honda Civic bearing Plate No. CRD-999. However,
both were unsure if they saw respondent Philip with a passenger because it was already dark and
the car was tinted.30

Also, the CA cited in its decision the further consequences of not complying with the aforequoted
rule, to wit:

It also follows that the succeeding pieces of circumstantial evidence relied upon by complainant are
not admissible for either being incompetent or hearsay evidence, to wit:

(a) that at around 7:45 p.m., respondent Teodora Alyn Esteban, on board a vehicle bearing
plate no. XPN-733 entered Ferndale Homes is inadmissible because it is not supported by
any sworn affidavit of a witness

(b) that at around the same time, two unidentified persons, a male and female were heard
talking inside Honda Civic bearing plate no. JTG-333 allegedly belonging to respondent
Philip, which was one of the vehicles parked at the carport of #10 Cedar Place, inside
Ferndale Homes is inadmissible because it is not supported by any sworn affidavit of a
witness;
 (c) that the Esteban family was temporarily using the carport of #10 Cedar Place as a
carpark for their vehicles at that time is inadmissible because it is not supported by any
sworn affidavit of a witness;

(d) that when the guards went to the house of the Esteban family, the same was unusually
dark and dim is inadmissible because it is not supported by any sworn affidavit of a witness;

(e) that while the crime scene was being processed, Mr. Esteban sought assistance from the
police and requested that they escort his son, respondent Philip Esteban, to St. Luke’s
Medical Center, as the latter also allegedly suffered injuries is inadmissible because it is not
supported by any sworn affidavit of a witness;

(f) that during the investigation, Philip, Mrs. Teodora Alyn Esteban and their family refused to
talk and cooperate with the authorities and that they neither disclosed the extent of Philip’s
alleged injuries nor disclosed as to how or why he sustained them is inadmissible because it
is not supported by any sworn affidavit of a witness; and

(g) Mrs. Edith Flores, speaking for respondents’ family, reportedly communicated with the
family of the deceased on numerous occasions and offered to pay for the funeral expenses
is inadmissible because it is not supported by any sworn affidavit of a witness.

This now leaves this Court with the remaining pieces of circumstantial evidence supported by the
sworn statement dated March 6, 2007 of Marivic Rodriguez, handwritten sworn statement dated
March 8, 2007 of SG Abelardo Sarmiento, Jr. and handwritten sworn statement dated March 8, 2007
of SG Rene Fabe as follows:

(a) at around 7:30 p.m., Marivic Guray and Jennylyn Buri heard a commotion (loud cries
saying "Help! Help!) at No. 10, Cedar Place inside Ferndale Homes;

(b) at around 7:50 p.m., the body of the deceased was discovered lying in a pool of blood in
the carport of #10 Cedar Place;

(c) there was blood inside and outside the white Honda Civic bearing plate no. CRD-999;

(d) that at around 7:55 p.m., respondent Philip Esteban’s father, Lauro Esteban, who was
then outside the village, called the security guard at the entrance gate of the village to report
the incident through his mobile phone;

(e) that at around 9:09 p.m., Mr. Esteban entered the village and admitted that he was the
one who called for assistance regarding an incident that transpired at Cedar Place; and

(f) as per Autopsy Report, the cause of Chase’s death was a stab wound in the chest and
that the said wound was 9 centimeters deep, or around 3.6 inches and cut the descending
aorta of his heart.

The above pieces of circumstantial evidence, though duly supported by sworn statements of
witnesses, when taken as a whole, do not, however, lead to a finding of probable cause that
respondents committed the crime charged.

The factual allegations of the complaint merely show that at around 7:30 o’clock in the evening of
February 27, 2007, Marivic Rodriguez heard a male voice, coming from the front of their employer’s
house, shouting "Help! Help!"; that at around 7:50 p.m., the body of the deceased was discovered
lying in a pool of blood in the carport of #10 Cedar Place; that there was blood inside and outside the
white Honda Civic bearing plate no. CRD-999; and, that as per Autopsy Report, the cause of
Chase’s death was a stab wound in the chest and that the said wound was 9 centimeters deep, or
around 3.6 inches and cut the descending aorta of his heart. However, all of these do not prove the
presence of respondents at the scene of the crime nor their participation therein.

We likewise agree with the DOJ Secretary that there was no motive on the part of the respondents
to kill the victim. This was supported by the sworn statement dated March 1, 2007 of Richard Joshua
Ulit; the sworn statement dated March 10, 2007 of Pamela-Ann Que; and, the sworn statement
dated March 10, 2007 of Egbert Ylo, who all knew the victim and respondent Philip and claimed that
the two were good friends and that they were not aware of any misunderstanding that occurred
between the concerned parties. Jurisprudence is replete that motive becomes of vital importance
when there is doubt as to the identity of the perpetrator.
1âwphi1

In Preferred Home Specialties, Inc., et al. vs. Court of Appeals, et al., the Supreme Court held that
while probable cause should be determined in a summary manner, there is a need to examine the
evidence with care to prevent material damage to a potential accused’s constitutional right to liberty,
the guarantees of freedom and fair play, and to protect the State from the burden of unnecessary
expenses in prosecuting alleged offenses and holding trials arising from false, fraudulent or
groundless charges.31

It is clear from the foregoing disquisitions of the CA that the Secretary of Justice reasonably reached
the conclusion that the dismissal by the OCP of Quezon City of the complaint for murder had been
based on the lack of competent evidence to support a finding of probable cause against the
respondents. Accordingly, such finding of probable cause by the Executive Department, through the
Secretary of Justice, could not be undone by the CA, in the absence of a clear showing that the
Secretary of Justice had gravely abused his discretion. Grave abuse of discretion means that the
abuse of discretion must be so patent and gross as to amount to an evasion of a positive duty or a
virtual refusal to perform a duty enjoined by law or to act at all in contemplation of law, such as
where the power is exercised in an arbitrary and despotic manner by reason of passion or
hostility.32 That showing was not made herein.

WHEREFORE, the Court DENIES the petition for review on certiorari, and AFFIRMS the decision of
the Court of Appeals promulgated on November 20, 2009.

The petitioner shall pay the costs of suit.

SO ORDERED.

LUCAS P. BERSAMIN