2 Castillo

PAGE 2
Dumaguete Cathedral Credit Cooperative v.

G.R. No. 182722 1/22/10
Commissioner of Internal Revenue
G.R. No. 162336 Soriano v. People 2/1/10

G.R. No. 183577 People v. Escoton 2/1/10
G.R. No. 177361 Vidar v. People 2/1/10
G.R. No. 182221 Saño, Jr. v. Commission on Elections 2/3/10
G.R. No. 180302 Areno, Jr. v. Skycable PCC-Baguio 2/5/10
Allied Banking Corporation v. Commissioner of Internal

G.R. No. 175097 2/5/10
Revenue
G.R. No. 179717 People v. Alberto y De Nieva 2/5/10

G.R. No. 169706 Spouses Genato v. Viola 2/5/10
G.R. No. 158385 Palali v. Awisan 2/12/10
G.R. No. 168967 City of Iloilo v. Contreras-Besana 2/12/10
G.R. No. 181809 Doromal v. Biron 2/17/10
G.R. No. 169481 Republic v. Heirs of Ramos 2/22/10
G.R. No. 184546 People v. Suan y Jolongon 2/22/10
Tiger Construction and Development Corporation v.
G.R. No. 164141 2/26/10
Abay
G.R. No. 167415 Gubat v. National Power Corp. 2/26/10
Commissioner of Internal Revenue v. SM Prime

G.R. No. 183505 2/26/10
Holdings, Inc.
Parents-Teachers Association of St. Mathew Christian

G.R. No. 176518 3/2/10
Academy v. Metropolitan Bank and Trust Co.
G.R. No. 190078 Spouses Certeza, Jr. v. Philippine Savings Bank 3/5/10
G.R. No. 179792 LNS International Manpower Services v. Padua, Jr. 3/5/10
G.R. No. 158627 People v. Martinez y Dulay 3/5/10

G.R. No. 185012 People v. Villarino y Mabute 3/5/10
G.R. No. 160506 Aliviado v. Procter & Gamble Phils., Inc. 3/9/10
G.R. No. 171092 Lhuillier v. British Airways 3/15/10
Reno Foods, Inc. v. Nagkakaisang Lakas ng

G.R. No. 164016 3/15/10
Manggagawa-Katipunan
G.R. No. 173510, 174099 Diega y Pajares v. Court of Appeals 3/15/10
Commissioner of Internal Revenue v. Far East Bank &

G.R. No. 173854 3/15/10
Trust Company
Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 182722
DUMAGUETE CATHEDRAL CREDIT COOPERATIVE [DCCCO], Represented by Felicidad L.

Ruiz, its General Manager, Petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
DECISION
DEL CASTILLO, J.:
The clashing interests of the State and the taxpayers are again pitted against each other. Two basic
principles, the State’s inherent power of taxation and its declared policy of fostering the creation and
growth of cooperatives come into play. However, the one that embodies the spirit of the law and the
true intent of the legislature prevails.
This Petition for Review on Certiorari under Section 11 of Republic Act (RA) No. 9282,1 in relation to
Rule 45 of the Rules of Court, seeks to set aside the December 18, 2007 Decision 2 of the Court of
Tax Appeals (CTA), ordering petitioner to pay deficiency withholding taxes on interest from savings
and time deposits of its members for taxable years 1999 and 2000, pursuant to Section 24(B)(1) of
the National Internal Revenue Code of 1997 (NIRC), as well as the delinquency interest of 20% per
annum under Section 249(C) of the same Code. It also assails the April 11, 2008
Resolution3 denying petitioner’s Motion for Reconsideration.
Factual Antecedents
Petitioner Dumaguete Cathedral Credit Cooperative (DCCCO) is a credit cooperative duly registered
with and regulated by the Cooperative Development Authority (CDA).4 It was established on
February 17, 19685 with the following objectives and purposes: (1) to increase the income and
purchasing power of the members; (2) to pool the resources of the members by encouraging savings
and promoting thrift to mobilize capital formation for development activities; and (3) to extend loans
to members for provident and productive purposes.6 It has the power (1) to draw, make, accept,
endorse, guarantee, execute, and issue promissory notes, mortgages, bills of exchange, drafts,
warrants, certificates and all kinds of obligations and instruments in connection with and in
furtherance of its business operations; and (2) to issue bonds, debentures, and other obligations; to
contract indebtedness; and to secure the same with a mortgage or deed of trust, or pledge or lien on
any or all of its real and personal properties.7
On November 27, 2001, the Bureau of Internal Revenue (BIR) Operations Group Deputy
Commissioner, Lilian B. Hefti, issued Letters of Authority Nos. 63222 and 63223, authorizing BIR
Officers Tomas Rambuyon and Tarcisio Cubillan of Revenue Region No. 12, Bacolod City, to
examine petitioner’s books of accounts and other accounting records for all internal revenue taxes
for the taxable years 1999 and 2000.8
Proceedings before the BIR Regional Office
On June 26, 2002, petitioner received two Pre-Assessment Notices for deficiency withholding taxes
for taxable years 1999 and 2000 which were protested by petitioner on July 23, 2002. 9 Thereafter, on
October 16, 2002, petitioner received two other Pre-Assessment Notices for deficiency withholding
taxes also for taxable years 1999 and 2000.10 The deficiency withholding taxes cover the payments
of the honorarium of the Board of Directors, security and janitorial services, legal and professional
fees, and interest on savings and time deposits of its members.
On October 22, 2002, petitioner informed BIR Regional Director Sonia L. Flores that it would only
pay the deficiency withholding taxes corresponding to the honorarium of the Board of Directors,
security and janitorial services, legal and professional fees for the year 1999 in the amount of
₱87,977.86, excluding penalties and interest.11
In another letter dated November 8, 2002, petitioner also informed the BIR Assistant Regional
Director, Rogelio B. Zambarrano, that it would pay the withholding taxes due on the honorarium
and per diems of the Board of Directors, security and janitorial services, commissions and legal &
professional fees for the year 2000 in the amount of ₱119,889.37, excluding penalties and interest,
and that it would avail of the Voluntary Assessment and Abatement Program (VAAP) of the BIR
under Revenue Regulations No. 17-2002.12
On November 29, 2002, petitioner availed of the VAAP and paid the amounts of ₱105,574.62 and
₱143,867.2413corresponding to the withholding taxes on the payments for the compensation,
honorarium of the Board of Directors, security and janitorial services, and legal and professional
services, for the years 1999 and 2000, respectively.
On April 24, 2003, petitioner received from the BIR Regional Director, Sonia L. Flores, Letters of
Demand Nos. 00027-2003 and 00026-2003, with attached Transcripts of Assessment and Audit
Results/Assessment Notices, ordering petitioner to pay the deficiency withholding taxes, inclusive of
penalties, for the years 1999 and 2000 in the amounts of ₱1,489,065.30 and ₱1,462,644.90,
respectively.14
Proceedings before the Commissioner of Internal Revenue
On May 9, 2003, petitioner protested the Letters of Demand and Assessment Notices with the
Commissioner of Internal Revenue (CIR).15 However, the latter failed to act on the protest within the
prescribed 180-day period. Hence, on December 3, 2003, petitioner filed a Petition for Review
before the CTA, docketed as C.T.A. Case No. 6827.16
Proceedings before the CTA First Division

The case was raffled to the First Division of the CTA which rendered its Decision on February 6,
2007, disposing of the case in this wise:
IN VIEW OF ALL THE FOREGOING, the Petition for Review is hereby PARTIALLY GRANTED.
Assessment Notice Nos. 00026-2003 and 00027-2003 are hereby MODIFIED and the assessment
for deficiency withholding taxes on the honorarium and per diems of petitioner’s Board of Directors,
security and janitorial services, commissions and legal and professional fees are hereby
CANCELLED. However, the assessments for deficiency withholding taxes on interests are hereby
AFFIRMED.
Accordingly, petitioner is ORDERED TO PAY the respondent the respective amounts of

₱1,280,145.89 and ₱1,357,881.14 representing deficiency withholding taxes on interests from
savings and time deposits of its members for the taxable years 1999 and 2000. In addition, petitioner
is ordered to pay the 20% delinquency interest from May 26, 2003 until the amount of deficiency
withholding taxes are fully paid pursuant to Section 249 (C) of the Tax Code.
SO ORDERED.17
Dissatisfied, petitioner moved for a partial reconsideration, but it was denied by the First Division in
its Resolution dated May 29, 2007.18
Proceedings before the CTA En Banc
On July 3, 2007, petitioner filed a Petition for Review with the CTA En Banc,19 interposing the lone
issue of whether or not petitioner is liable to pay the deficiency withholding taxes on interest from
savings and time deposits of its members for taxable years 1999 and 2000, and the consequent
delinquency interest of 20% per annum.20
Finding no reversible error in the Decision dated February 6, 2007 and the Resolution dated May 29,
2007 of the CTA First Division, the CTA En Banc denied the Petition for Review21 as well as
petitioner’s Motion for Reconsideration.22
The CTA En Banc held that Section 57 of the NIRC requires the withholding of tax at source.
Pursuant thereto, Revenue Regulations No. 2-98 was issued enumerating the income payments
subject to final withholding tax, among which is "interest from any peso bank deposit and yield, or
any other monetary benefit from deposit substitutes and from trust funds and similar arrangements x
x x". According to the CTA En Banc, petitioner’s business falls under the phrase "similar
arrangements;" as such, it should have withheld the corresponding 20% final tax on the interest from
the deposits of its members.
Issue
Hence, the present recourse, where petitioner raises the issue of whether or not it is liable to pay the
deficiency withholding taxes on interest from savings and time deposits of its members for the
taxable years 1999 and 2000, as well as the delinquency interest of 20% per annum.
Petitioner’s Arguments
Petitioner argues that Section 24(B)(1) of the NIRC which reads in part, to wit:
SECTION 24. Income Tax Rates. —

xxxx
(B) Rate of Tax on Certain Passive Income: —
(1) Interests, Royalties, Prizes, and Other Winnings. — A final tax at the rate of twenty percent
(20%) is hereby imposed upon the amount of interest from any currency bank deposit and yield or
any other monetary benefit from deposit substitutes and from trust funds and similar arrangements; x
xx
applies only to banks and not to cooperatives, since the phrase "similar arrangements" is preceded
by terms referring to banking transactions that have deposit peculiarities. Petitioner thus posits that
the savings and time deposits of members of cooperatives are not included in the enumeration, and
thus not subject to the 20% final tax. To bolster its position, petitioner cites BIR Ruling No. 551-
88823 and BIR Ruling [DA-591-2006]24 where the BIR ruled that interests from deposits maintained by
members of cooperative are not subject to withholding tax under Section 24(B)(1) of the NIRC.
Petitioner further contends that pursuant to Article XII, Section 15 of the Constitution 25and Article 2 of
Republic Act No. 6938 (RA 6938) or the Cooperative Code of the Philippines, 26 cooperatives enjoy a
preferential tax treatment which exempts their members from the application of Section 24(B)(1) of
the NIRC.
Respondent’s Arguments
As a counter-argument, respondent invokes the legal maxim "Ubi lex non distinguit nec nos
distinguere debemos" (where the law does not distinguish, the courts should not distinguish).
Respondent maintains that Section 24(B)(1) of the NIRC applies to cooperatives as the phrase
"similar arrangements" is not limited to banks, but includes cooperatives that are depositaries of their
members. Regarding the exemption relied upon by petitioner, respondent adverts to the
jurisprudential rule that tax exemptions are highly disfavored and construed strictissimi juris against
the taxpayer and liberally in favor of the taxing power. In this connection, respondent likewise points
out that the deficiency tax assessments were issued against petitioner not as a taxpayer but as a
withholding agent.
Our Ruling
The petition has merit.
Petitioner’s invocation of BIR Ruling No. 551-888, reiterated in BIR Ruling [DA-591-2006], is proper.
On November 16, 1988, the BIR declared in BIR Ruling No. 551-888 that cooperatives are not
required to withhold taxes on interest from savings and time deposits of their members. The
pertinent BIR Ruling reads:
November 16, 1988
BIR RULING NO. 551-888

24 369-88 551-888
Gentlemen:
This refers to your letter dated September 5, 1988 stating that you are a corporation established
under P.D. No. 175 and duly registered with the Bureau of Cooperatives Development as full fledged
cooperative of good standing with Certificate of Registration No. FF 563-RR dated August 8, 1985;
and that one of your objectives is to provide and strengthen cooperative endeavor and extend
assistance to members and non-members through credit scheme both in cash and in kind.
Based on the foregoing representations, you now request in effect a ruling as to whether or not you
are exempt from the following:
1. Payment of sales tax
2. Filing and payment of income tax
3. Withholding taxes from compensation of employees and savings account and time
deposits of members. (Underscoring ours)
In reply, please be informed that Executive Order No. 93 which took effect on March 10, 1987
withdrew all tax exemptions and preferential privileges e.g., income tax and sales tax, granted to
cooperatives under P.D. No. 175 which were previously withdrawn by P.D. No. 1955 effective
October 15, 1984 and restored by P.D. No. 2008 effective January 8, 1986. However,
implementation of said Executive Order insofar as electric, agricultural, irrigation and waterworks
cooperatives are concerned was suspended until June 30, 1987. (Memorandum Order No. 65 dated
January 21, 1987 of the President) Accordingly, your tax exemption privilege expired as of June 30,
1987. Such being the case, you are now subject to income and sales taxes.
Moreover, under Section 72(a) of the Tax Code, as amended, every employer making payment of
wages shall deduct and withhold upon such wages a tax at the rates prescribed by Section 21(a) in
relation to section 71, Chapter X, Title II, of the same Code as amended by Batas Pambansa Blg.
135 and implemented by Revenue Regulations No. 6-82 as amended. Accordingly, as an employer
you are required to withhold the corresponding tax due from the compensation of your employees.
Furthermore, under Section 50(a) of the Tax Code, as amended, the tax imposed or prescribed by
Section 21(c) of the same Code on specified items of income shall be withheld by payor-corporation
and/or person and paid in the same manner and subject to the same conditions as provided in
Section 51 of the Tax Code, as amended. Such being the case, and since interest from any
Philippine currency bank deposit and yield or any other monetary benefit from deposit substitutes
are paid by banks, you are not the party required to withhold the corresponding tax on the aforesaid
savings account and time deposits of your members. (Underscoring ours)
Very truly yours,
(SGD.) BIENVENIDO A. TAN, JR.

Commissioner
The CTA First Division, however, disregarded the above quoted ruling in determining whether
petitioner is liable to pay the deficiency withholding taxes on interest from the deposits of its
members. It ratiocinated in this wise:
This Court does not agree. As correctly pointed out by respondent in his Memorandum, nothing in
the above quoted resolution will give the conclusion that savings account and time deposits of
members of a cooperative are tax-exempt. What is entirely clear is the opinion of the Commissioner
that the proper party to withhold the corresponding taxes on certain specified items of income is the
payor-corporation and/or person. In the same way, in the case of interests earned from Philippine
currency deposits made in a bank, then it is the bank which is liable to withhold the corresponding
taxes considering that the bank is the payor-corporation. Thus, the ruling that a cooperative is not
the proper party to withhold the corresponding taxes on the aforementioned accounts is
correct. However, this ruling does not hold true if the savings and time deposits are being maintained
in the cooperative, for in this case, it is the cooperative which becomes the payor-corporation, a
separate entity acting no more than an agent of the government for the collection of taxes, liable to
withhold the corresponding taxes on the interests earned. 27(Underscoring ours)
The CTA En Banc affirmed the above-quoted Decision and found petitioner’s invocation of BIR
Ruling No. 551-88 misplaced. According to the CTA En Banc, the BIR Ruling was based on the
premise that the savings and time deposits were placed by the members of the cooperative in the
bank.28 Consequently, it ruled that the BIR Ruling does not apply when the deposits are maintained
in the cooperative such as the instant case.
We disagree.
There is nothing in the ruling to suggest that it applies only when deposits are maintained in a bank.
Rather, the ruling clearly states, without any qualification, that since interest from any Philippine
currency bank deposit and yield or any other monetary benefit from deposit substitutes are paid by
banks, cooperatives are not required to withhold the corresponding tax on the interest from savings
and time deposits of their members. This interpretation was reiterated in BIR Ruling [DA-591-2006]
dated October 5, 2006, which was issued by Assistant Commissioner James H. Roldan upon the
request of the cooperatives for a confirmatory ruling on several issues, among which is the alleged
exemption of interest income on members’ deposit (over and above the share capital holdings) from
the 20% final withholding tax. In the said ruling, the BIR opined that:
xxxx
3. Exemption of interest income on members’ deposit (over and above the share capital holdings)
from the 20% Final Withholding Tax.
The National Internal Revenue Code states that a "final tax at the rate of twenty percent (20%) is
hereby imposed upon the amount of interest on currency bank deposit and yield or any other
monetary benefit from the deposit substitutes and from trust funds and similar arrangement x x x" for
individuals under Section 24(B)(1) and for domestic corporations under Section 27(D)
(1). Considering the members’ deposits with the cooperatives are not currency bank deposits nor
deposit substitutes, Section 24(B)(1) and Section 27(D)(1), therefore, do not apply to members of
cooperatives and to deposits of primaries with federations, respectively.
It bears stressing that interpretations of administrative agencies in charge of enforcing a law are
entitled to great weight and consideration by the courts, unless such interpretations are in a sharp
conflict with the governing statute or the Constitution and other laws. 29 In this case, BIR Ruling No.
551-888 and BIR Ruling [DA-591-2006] are in perfect harmony with the Constitution and the laws
they seek to implement. Accordingly, the interpretation in BIR Ruling No. 551-888 that cooperatives
are not required to withhold the corresponding tax on the interest from savings and time deposits of
their members, which was reiterated in BIR Ruling [DA-591-2006], applies to the instant case.
Members of cooperatives deserve a preferential tax treatment pursuant to RA 6938, as amended by

RA 9520.
Given that petitioner is a credit cooperative duly registered with the Cooperative Development
Authority (CDA), Section 24(B)(1) of the NIRC must be read together with RA 6938, as amended by
RA 9520.
Under Article 2 of RA 6938, as amended by RA 9520, it is a declared policy of the State to foster the
creation and growth of cooperatives as a practical vehicle for promoting self-reliance and harnessing
people power towards the attainment of economic development and social justice. Thus, to
encourage the formation of cooperatives and to create an atmosphere conducive to their growth and
development, the State extends all forms of assistance to them, one of which is providing
cooperatives a preferential tax treatment.
The legislative intent to give cooperatives a preferential tax treatment is apparent in Articles 61 and
62 of RA 6938, which read:
ART. 61. Tax Treatment of Cooperatives. — Duly registered cooperatives under this Code which do
not transact any business with non-members or the general public shall not be subject to any
government taxes and fees imposed under the Internal Revenue Laws and other tax laws.
Cooperatives not falling under this article shall be governed by the succeeding section.
ART. 62. Tax and Other Exemptions. — Cooperatives transacting business with both members and
nonmembers shall not be subject to tax on their transactions to members. Notwithstanding the
provision of any law or regulation to the contrary, such cooperatives dealing with nonmembers shall
enjoy the following tax exemptions; x x x.
This exemption extends to members of cooperatives. It must be emphasized that cooperatives exist
for the benefit of their members. In fact, the primary objective of every cooperative is to provide
goods and services to its members to enable them to attain increased income, savings, investments,
and productivity.30 Therefore, limiting the application of the tax exemption to cooperatives would go
against the very purpose of a credit cooperative. Extending the exemption to members of
cooperatives, on the other hand, would be consistent with the intent of the legislature. Thus,
although the tax exemption only mentions cooperatives, this should be construed to include the
members, pursuant to Article 126 of RA 6938, which provides:
ART. 126. Interpretation and Construction. – In case of doubt as to the meaning of any provision of
this Code or the regulations issued in pursuance thereof, the same shall be resolved liberally in favor
of the cooperatives and their members.
We need not belabor that what is within the spirit is within the law even if it is not within the letter of
the law because the spirit prevails over the letter.31 Apropos is the ruling in the case of Alonzo v.
Intermediate Appellate Court,32 to wit:
But as has also been aptly observed, we test a law by its results; and likewise, we may add, by its
purposes. It is a cardinal rule that, in seeking the meaning of the law, the first concern of the judge
should be to discover in its provisions the intent of the lawmaker. Unquestionably, the law should
never be interpreted in such a way as to cause injustice as this is never within the legislative intent.
An indispensable part of that intent, in fact, for we presume the good motives of the legislature, is to
render justice.1avvphi1
Thus, we interpret and apply the law not independently of but in consonance with justice. Law and
justice are inseparable, and we must keep them so. To be sure, there are some laws that, while
generally valid, may seem arbitrary when applied in a particular case because of its peculiar
circumstances. In such a situation, we are not bound, because only of our nature and functions, to
apply them just the same, [is] slavish obedience to their language. What we do instead is find a
balance between the word and the will, that justice may be done even as the law is obeyed.
As judges, we are not automatons. We do not and must not unfeelingly apply the law as it is worded,
yielding like robots to the literal command without regard to its cause and consequence. "Courts are
apt to err by sticking too closely to the words of a law," so we are warned, by Justice Holmes again,
"where these words import a policy that goes beyond them." While we admittedly may not legislate,
we nevertheless have the power to interpret the law in such a way as to reflect the will of the
legislature. While we may not read into the law a purpose that is not there, we nevertheless have the
right to read out of it the reason for its enactment. In doing so, we defer not to "the letter that killeth"
but to "the spirit that vivifieth," to give effect to the lawmaker’s will.
The spirit, rather than the letter of a statute determines its construction, hence, a statute must be
read according to its spirit or intent. For what is within the spirit is within the statute although it is not
within the letter thereof, and that which is within the letter but not within the spirit is not within the
statute. Stated differently, a thing which is within the intent of the lawmaker is as much within the
statute as if within the letter; and a thing which is within the letter of the statute is not within the
statute unless within the intent of the lawmakers. (Underscoring ours)
It is also worthy to note that the tax exemption in RA 6938 was retained in RA 9520. The only
difference is that Article 61 of RA 9520 (formerly Section 62 of RA 6938) now expressly states that
transactions of members with the cooperatives are not subject to any taxes and fees. Thus:
ART. 61. Tax and Other Exemptions. Cooperatives transacting business with both members and
non-members shall not be subjected to tax on their transactions with members. In relation to this, the
transactions of members with the cooperative shall not be subject to any taxes and fees, including
but not limited to final taxes on members’ deposits and documentary tax. Notwithstanding the
provisions of any law or regulation to the contrary, such cooperatives dealing with nonmembers shall
enjoy the following tax exemptions: (Underscoring ours)
xxxx
This amendment in Article 61 of RA 9520, specifically providing that members of cooperatives are
not subject to final taxes on their deposits, affirms the interpretation of the BIR that Section 24(B)(1)
of the NIRC does not apply to cooperatives and confirms that such ruling carries out the legislative
intent. Under the principle of legislative approval of administrative interpretation by reenactment, the
reenactment of a statute substantially unchanged is persuasive indication of the adoption by
Congress of a prior executive construction.33
Moreover, no less than our Constitution guarantees the protection of cooperatives. Section 15,
Article XII of the Constitution considers cooperatives as instruments for social justice and economic
development. At the same time, Section 10 of Article II of the Constitution declares that it is a policy
of the State to promote social justice in all phases of national development. In relation thereto,
Section 2 of Article XIII of the Constitution states that the promotion of social justice shall include the
commitment to create economic opportunities based on freedom of initiative and self-reliance.
Bearing in mind the foregoing provisions, we find that an interpretation exempting the members of
cooperatives from the imposition of the final tax under Section 24(B)(1) of the NIRC is more in
keeping with the letter and spirit of our Constitution.
All told, we hold that petitioner is not liable to pay the assessed deficiency withholding taxes on
interest from the savings and time deposits of its members, as well as the delinquency interest of
20% per annum.
In closing, cooperatives, including their members, deserve a preferential tax treatment because of
the vital role they play in the attainment of economic development and social justice. Thus, although
taxes are the lifeblood of the government, the State’s power to tax must give way to foster the
creation and growth of cooperatives. To borrow the words of Justice Isagani A. Cruz: "The power of
taxation, while indispensable, is not absolute and may be subordinated to the demands of social
justice."34
WHEREFORE, the Petition is hereby GRANTED. The assailed December 18, 2007 Decision of the
Court of Tax Appeals and the April 11, 2008 Resolution are REVERSED and SET ASIDE.
Accordingly, the assessments for deficiency withholding taxes on interest from the savings and time
deposits of petitioner’s members for the taxable years 1999 and 2000 as well as the delinquency
interest of 20% per annum are hereby CANCELLED.
SO ORDERED.
MARIANO C. DEL CASTILLO

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
ARTURO D. BRION ROBERTO A. ABAD

Associate Justice Associate Justice
JOSE P. PEREZ
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court’s Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s attestation, it
is hereby certified that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
Footnotes
1
An Act Expanding the Jurisdiction of the Court of Tax Appeals (CTA), Elevating its Rank to
the Level of a Collegiate Court with Special Jurisdiction and Enlarging its Membership,
Amending for the Purpose Certain Sections of Republic Act No. 1125, As Amended,
otherwise known as the Law Creating the Court of Tax Appeals, and for Other Purposes.
2
Rollo, pp. 45-64; penned by Associate Justice Olga Palanca-Enriquez and concurred in by
Presiding Justice Ernesto D. Acosta and Associate Justices Juanito C. Castañeda, Jr., Lovell
R. Bautista, Erlinda P. Uy and Caesar A. Casanova.
3
Id. at 80-81.
4
Id. at 47.
5
Id. at 7.
6
Id. at 57.
7
Id.
8
Id. at 118.
9
Id. at 48.
10
Id.
11
Id. at 48-49.
12
Id. at 49.
13
Id. at 49-50.
14
Id. at 50-51.
15
Id. at 51.
16
Id.
17
Id. at 46-47.
18
Id. at 51.
19
Id. at 11.
20
Id. at 52.
21
Id. at 63.
22
Id. at 80-81.
23
Id. at 18-19.
24
Id. at 75-78.
25
SEC. 15. The Congress shall create an agency to promote the viability and growth of
cooperatives as instruments for social justice and economic development.
26
ART. 2. Declaration of Policy.- It is the declared policy of the State to foster the creation
and growth of cooperatives as a practical vehicle for promoting self-reliance and harnessing
people power towards the attainment of economic development and social justice. The State
shall encourage the private sector to undertake the actual formation and organization of
cooperatives and shall create an atmosphere that is conducive to the growth and
development of these cooperatives.
Toward this end, the Government and all its branches, subdivisions, instrumentalities
and agencies shall ensure the provision of technical guidance, financial assistance
and other services to enable said cooperatives to develop into viable and responsive
economic enterprises and thereby bring about a strong cooperative movement that is
free from any conditions that might infringe upon the autonomy or organizational
integrity of cooperatives.
Further, the State recognizes the principle of subsidiarity under which the
cooperative sector will initiate and regulate within its own ranks the promotion and
organization, training and research, audit and support services relative to
cooperatives with government assistance where necessary.
(Now amended by Republic Act No. 9520 or the Philippine Cooperative Code of
2008.)
27
Rollo, pp. 62-63.
28
Id. at 62.
Nestle Philippines, Inc. v. Court of Appeals, G.R. No. 86738, November 13, 1991, 203
29
SCRA 504, 510.
30
Republic act No. 6938, Article 7.
31
Tañada and Macapagal v. Cuenco, et al., 103 Phil. 1051, 1086 (1957).
32
234 Phil. 267, 272-273 (1987).
Commissioner of Internal Revenue v. American Express International, Inc. (Philippine

33
Branch), 500 Phil. 586 (2005).
Dissenting Opinion of Justice Isagani A. Cruz in Republic of the Philippines v. Judge

34
Peralta, 234 Phil. 40, 59 (1987).

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 162336 February 1, 2010
HILARIO P. SORIANO, Petitioner,

vs.
PEOPLE OF THE PHILIPPINES, BANGKO SENTRAL NG PILIPINAS (BSP), PHILIPPINE
DEPOSIT INSURANCE CORPORATION (PDIC), PUBLIC PROSECUTOR ANTONIO C.BUAN,
and STATE PROSECUTOR ALBERTO R. FONACIER, Respondents.
DECISION
DEL CASTILLO, J.:
A bank officer violates the DOSRI2 law when he acquires bank funds for his personal benefit, even if
such acquisition was facilitated by a fraudulent loan application. Directors, officers, stockholders, and
their related interests cannot be allowed to interpose the fraudulent nature of the loan as a defense
to escape culpability for their circumvention of Section 83 of Republic Act (RA) No. 337. 3
Before us is a Petition for Review on Certiorari4 under Rule 45 of the Rules of Court, assailing the
September 26, 2003 Decision5 and the February 5, 2004 Resolution6 of the Court of Appeals (CA) in
CA-G.R. SP No. 67657. The challenged Decision disposed as follows:
WHEREFORE, premises considered, the instant petition for certiorari is hereby DENIED.7
Factual Antecedents
Sometime in 2000, the Office of Special Investigation (OSI) of the Bangko Sentral ng
Pilipinas (BSP), through its officers,8 transmitted a letter9 dated March 27, 2000 to Jovencito Zuño,
Chief State Prosecutor of the Department of Justice (DOJ). The letter attached as annexes five
affidavits,10 which would allegedly serve as bases for filing criminal charges for Estafa thru
Falsification of Commercial Documents, in relation to Presidential Decree (PD) No. 1689, 11 and for
Violation of Section 83 of RA 337, as amended by PD 1795,12 against, inter alia, petitioner herein
Hilario P. Soriano. These five affidavits, along with other documents, stated that spouses Enrico and
Amalia Carlos appeared to have an outstanding loan of ₱8 million with the Rural Bank of San Miguel
(Bulacan), Inc. (RBSM), but had never applied for nor received such loan; that it was petitioner, who
was then president of RBSM, who had ordered, facilitated, and received the proceeds of the loan;
and that the ₱8 million loan had never been authorized by RBSM's Board of Directors and no report
thereof had ever been submitted to the Department of Rural Banks, Supervision and Examination
Sector of the BSP. The letter of the OSI, which was not subscribed under oath, ended with a request
that a preliminary investigation be conducted and the corresponding criminal charges be filed
against petitioner at his last known address.
Acting on the letter-request and its annexes, State Prosecutor Albert R. Fonacier proceeded with the
preliminary investigation. He issued a subpoena with the witnesses’ affidavits and supporting
documents attached, and required petitioner to file his counter-affidavit. In due course, the
investigating officer issued a Resolution finding probable cause and correspondingly filed two
separate informations against petitioner before the Regional Trial Court (RTC) of Malolos, Bulacan. 13
The first Information,14 dated November 14, 2000 and docketed as Criminal Case No. 237-M-2001,
was for estafa through falsification of commercial documents, under Article 315, paragraph 1(b), of
the Revised Penal Code (RPC), in relation to Article 172 of the RPC and PD 1689. It basically
alleged that petitioner and his co-accused, in abuse of the confidence reposed in them as RBSM
officers, caused the falsification of a number of loan documents, making it appear that one Enrico
Carlos filled up the same, and thereby succeeded in securing a loan and converting the loan
proceeds for their personal gain and benefit.15 The information reads:
That in or about the month of April, 1997, and thereafter, in San Miguel, Bulacan, and within the
jurisdiction of this Honorable Court, the said accused HILARIO P. SORIANO and ROSALINDA
ILAGAN, as principals by direct participation, with unfaithfulness or abuse of confidence and taking
advantage of their position as President of the Rural Bank of San Miguel (Bulacan), Inc. and Branch
Manager of the Rural Bank of San Miguel – San Miguel Branch [sic], a duly organized banking
institution under Philippine Laws, conspiring, confederating and mutually helping one another, did
then and there, willfully and feloniously falsify loan documents consisting of undated loan
application/information sheet, credit proposal dated April 14, 1997, credit proposal dated April 22,
1997, credit investigation report dated April 15, 1997, promissory note dated April 23, 1997,
disclosure statement on loan/credit transaction dated April 23, 1997, and other related documents,
by making it appear that one Enrico Carlos filled up the application/information sheet and filed the
aforementioned loan documents when in truth and in fact Enrico Carlos did not participate in the
execution of said loan documents and that by virtue of said falsification and with deceit and intent to
cause damage, the accused succeeded in securing a loan in the amount of eight million pesos
(PhP8,000,000.00) from the Rural Bank of San Miguel – San Ildefonso branch in the name of Enrico
Carlos which amount of PhP8 million representing the loan proceeds the accused thereafter
converted the same amount to their own personal gain and benefit, to the damage and prejudice of
the Rural Bank of San Miguel – San Ildefonso branch, its creditors, the Bangko Sentral ng Pilipinas,
and the Philippine Deposit Insurance Corporation.
CONTRARY TO LAW.16
The other Information17 dated November 10, 2000 and docketed as Criminal Case No. 238-M-2001,
was for violation of Section 83 of RA 337, as amended by PD 1795. The said provision refers to the
prohibition against the so-called DOSRI loans. The information alleged that, in his capacity as
President of RBSM, petitioner indirectly secured an ₱8 million loan with RBSM, for his personal use
and benefit, without the written consent and approval of the bank's Board of Directors, without
entering the said transaction in the bank's records, and without transmitting a copy of the transaction
to the supervising department of the bank. His ruse was facilitated by placing the loan in the name of
an unsuspecting RBSM depositor, one Enrico Carlos.18 The information reads:
That in or about the month of April, 1997, and thereafter, and within the jurisdiction of this Honorable
Court, the said accused, in his capacity as President of the Rural Bank of San Miguel (Bulacan),
Inc., did then and there, willfully and feloniously indirectly borrow or secure a loan with the Rural
Bank of San Miguel – San Ildefonso branch, a domestic rural banking institution created, organized
and existing under Philippine laws, amounting to eight million pesos (PhP8,000,000.00), knowing
fully well that the same has been done by him without the written consent and approval of the
majority of the board of directors of the said bank, and which consent and approval the said accused
deliberately failed to obtain and enter the same upon the records of said banking institution and to
transmit a copy thereof to the supervising department of the said bank, as required by the General
Banking Act, by using the name of one depositor Enrico Carlos of San Miguel, Bulacan, the latter
having no knowledge of the said loan, and one in possession of the said amount of eight million
pesos (PhP8,000,000.00), accused converted the same to his own personal use and benefit, in
flagrant violation of the said law.
CONTRARY TO LAW.19
Both cases were raffled to Branch 79 of the RTC of Malolos, Bulacan. 20
On June 8, 2001, petitioner moved to quash21 these informations on two grounds: that the court had
no jurisdiction over the offense charged, and that the facts charged do not constitute an offense.
On the first ground, petitioner argued that the letter transmitted by the BSP to the DOJ constituted
the complaint and hence was defective for failure to comply with the mandatory requirements of
Section 3(a), Rule 112 of the Rules of Court, such as the statement of address of petitioner and oath
and subscription.22 Moreover, petitioner argued that the officers of OSI, who were the signatories to
the "letter-complaint," were not authorized by the BSP Governor, much less by the Monetary Board,
to file the complaint. According to petitioner, this alleged fatal oversight violated Section 18, pars. (c)
and (d) of the New Central Bank Act (RA 7653).
On the second ground, petitioner contended that the commission of estafa under paragraph 1(b) of
Article 315 of the RPC is inherently incompatible with the violation of DOSRI law (as set out in
Section 8323 of RA 337, as amended by PD 1795),24 hence a person cannot be charged for both
offenses. He argued that a violation of DOSRI law requires the offender to obtain a loan from his
bank, without complying with procedural, reportorial, or ceiling requirements. On the other hand,
estafa under par. 1(b), Article 315 of the RPC requires the offender to misappropriate or convert
something that he holds in trust, or on commission, or for administration, or under any other
obligation involving the duty to return the same.25
Essentially, the petitioner theorized that the characterization of possession is different in the two
offenses. If petitioner acquired the loan as DOSRI, he owned the loaned money and therefore,
cannot misappropriate or convert it as contemplated in the offense of estafa. Conversely, if petitioner
committed estafa, then he merely held the money in trust for someone else and therefore, did not
acquire a loan in violation of DOSRI rules.
Ruling of the Regional Trial Court
In an Order26 dated August 8, 2001, the trial court denied petitioner's Motion to Quash for lack of
merit. The lower court agreed with the prosecution that the assailed OSI letter was not the
complaint-affidavit itself; thus, it need not comply with the requirements under the Rules of Court.
The trial court held that the affidavits, which were attached to the OSI letter, comprised the
complaint-affidavit in the case. Since these affidavits were duly subscribed and sworn to before a
notary public, there was adequate compliance with the Rules. The trial court further held that the two
offenses were separate and distinct violations, hence the prosecution of one did not pose a bar to
the other.27
Petitioner’s Motion for Reconsideration was likewise denied in an Order dated September 5, 2001. 28
Aggrieved, petitioner filed a Petition for Certiorari29 with the CA, reiterating his arguments before the
trial court.
Ruling of the Court of Appeals

The CA denied the petition on both issues presented by petitioner.
On the first issue, the CA determined that the BSP letter, which petitioner characterized to be a
fatally infirm complaint, was not actually a complaint, but a transmittal or cover letter only. This
transmittal letter merely contained a summary of the affidavits which were attached to it. It did not
contain any averment of personal knowledge of the events and transactions that constitute the
elements of the offenses charged. Being a mere transmittal letter, it need not comply with the
requirements of Section 3(a) of Rule 112 of the Rules of Court.30
The CA further determined that the five affidavits attached to the transmittal letter should be
considered as the complaint-affidavits that charged petitioner with violation of Section 83 of RA 337
and for Estafa thru Falsification of Commercial Documents. These complaint-affidavits complied with
the mandatory requirements set out in the Rules of Court – they were subscribed and sworn to
before a notary public and subsequently certified by State Prosecutor Fonacier, who personally
examined the affiants and was convinced that the affiants fully understood their sworn statements. 31
Anent the second ground, the CA found no merit in petitioner's argument that the violation of the
DOSRI law and the commission of estafa thru falsification of commercial documents are inherently
inconsistent with each other. It explained that the test in considering a motion to quash on the
ground that the facts charged do not constitute an offense, is whether the facts alleged, when
hypothetically admitted, constitute the elements of the offense charged. The appellate court held that
this test was sufficiently met because the allegations in the assailed informations, when
hypothetically admitted, clearly constitute the elements of Estafa thru Falsification of Commercial
Documents and Violation of DOSRI law.32
Petitioner’s Motion for Reconsideration33 was likewise denied for lack of merit.
Hence, this petition.
Issues
Restated, petitioner raises the following issues34 for our consideration:
Whether the complaint complied with the mandatory requirements provided under Section 3(a), Rule
112 of the Rules of Court and Section 18, paragraphs (c) and (d) of RA 7653.
II
Whether a loan transaction within the ambit of the DOSRI law (violation of Section 83 of RA 337, as
amended) could also be the subject of Estafa under Article 315 (1) (b) of the Revised Penal Code.
III
Is a petition for certiorari under Rule 65 the proper remedy against an Order denying a Motion to
Quash?
IV
Whether petitioner is entitled to a writ of injunction.

Our Ruling
The petition lacks merit.
First Issue:
Whether the complaint complied with the mandatory requirements provided under Section
3(a), Rule 112 of the Rules of Court and Section 18, paragraphs (c) and (d) of
Republic Act No. 7653
Petitioner moved to withdraw the first issue from the instant petition
On March 5, 2007, the Court noted35 petitioner's Manifestation and Motion for Partial Withdrawal of
the Petition36dated February 7, 2007. In the said motion, petitioner informed the Court of the
promulgation of a Decision entitled Soriano v. Hon. Casanova,37 which also involved petitioner and
similar BSP letters to the DOJ. According to petitioner, the said Decision allegedly ruled squarely on
the nature of the BSP letters and the validity of the sworn affidavits attached thereto. For this reason,
petitioner moved for the partial withdrawal of the instant petition insofar as it involved the issue of
"whether or not a court can legally acquire jurisdiction over a complaint which failed to comply with
the mandatory requirements provided under Section 3(a), Rule 112 of the Rules of Court and
Section 18, paragraphs (c) and (d) of RA 7653".38
Given that the case had already been submitted for resolution of the Court when petitioner filed his
latest motion, and that all respondents had presented their positions and arguments on the first
issue, the Court deems it proper to rule on the same.
In Soriano v. Hon. Casanova, the Court held that the affidavits attached to the BSP transmittal letter
complied with the mandatory requirements under the Rules of Court.
To be sure, the BSP letters involved in Soriano v. Hon. Casanova39 are not the same as the BSP
letter involved in the instant case. However, the BSP letters in Soriano v. Hon. Casanova and the
BSP letter subject of this case are similar in the sense that they are all signed by the OSI officers of
the BSP, they were not sworn to by the said officers, they all contained summaries of their attached
affidavits, and they all requested the conduct of a preliminary investigation and the filing of
corresponding criminal charges against petitioner Soriano. Thus, the principle of stare decisis
dictates that the ruling in Soriano v. Hon. Casanova be applied in the instant case – once a question
of law has been examined and decided, it should be deemed settled and closed to further
argument.40
We held in Soriano v. Hon. Casanova, after a close scrutiny of the letters transmitted by the BSP to
the DOJ, that these were not intended to be the complaint, as envisioned under the Rules. They did
not contain averments of personal knowledge of the events and transactions constitutive of any
offense. The letters merely transmitted for preliminary investigation the affidavits of people who had
personal knowledge of the acts of petitioner. We ruled that these affidavits, not the letters
transmitting them, initiated the preliminary investigation. Since these affidavits were subscribed
under oath by the witnesses who executed them before a notary public, then there was substantial
compliance with Section 3(a), Rule 112 of the Rules of Court.
Anent the contention that there was no authority from the BSP Governor or the Monetary Board to
file a criminal case against Soriano, we held that the requirements of Section 18, paragraphs (c) and
(d) of RA 7653 did not apply because the BSP did not institute the complaint but merely transmitted
the affidavits of the complainants to the DOJ.
We further held that since the offenses for which Soriano was charged were public crimes, authority
holds that it can be initiated by "any competent person" with personal knowledge of the acts
committed by the offender. Thus, the witnesses who executed the affidavits clearly fell within the
purview of "any competent person" who may institute the complaint for a public crime.
The ruling in Soriano v. Hon. Casanova has been adopted and elaborated upon in the recent case of
Santos-Concio v. Department of Justice.41 Instead of a transmittal letter from the BSP, the Court in
Santos-Concio was faced with an NBI-NCR Report, likewise with affidavits of witnesses as
attachments. Ruling on the validity of the witnesses’ sworn affidavits as bases for a preliminary
investigation, we held:
The Court is not unaware of the practice of incorporating all allegations in one document
denominated as "complaint-affidavit." It does not pronounce strict adherence to only one approach,
however, for there are cases where the extent of one’s personal knowledge may not cover the entire
gamut of details material to the alleged offense. The private offended party or relative of the
deceased may not even have witnessed the fatality, in which case the peace officer or law enforcer
has to rely chiefly on affidavits of witnesses. The Rules do not in fact preclude the attachment of a
referral or transmittal letter similar to that of the NBI-NCR. Thus, in Soriano v. Casanova, the Court
held:
A close scrutiny of the letters transmitted by the BSP and PDIC to the DOJ shows that these
were not intended to be the complaint envisioned under the Rules. It may be clearly inferred from
the tenor of the letters that the officers merely intended to transmit the affidavits of the bank
employees to the DOJ. Nowhere in the transmittal letters is there any averment on the part of the
BSP and PDIC officers of personal knowledge of the events and transactions constitutive of the
criminal violations alleged to have been made by the accused. In fact, the letters clearly stated that
what the OSI of the BSP and the LIS of the PDIC did was to respectfully transmit to the DOJ for
preliminary investigation the affidavits and personal knowledge of the acts of the petitioner. These
affidavits were subscribed under oath by the witnesses who executed them before a notary public.
Since the affidavits, not the letters transmitting them, were intended to initiate the preliminary
investigation, we hold that Section 3(a), Rule 112 of the Rules of Court was substantially complied
with.
Citing the ruling of this Court in Ebarle v. Sucaldito, the Court of Appeals correctly held
that a complaint for purposes of preliminary investigation by the fiscal need not be filed by the
offended party. The rule has been that, unless the offense subject thereof is one that cannot be
prosecuted de oficio, the same may be filed, for preliminary investigation purposes, by any
competent person. The crime of estafa is a public crime which can be initiated by "any competent
person." The witnesses who executed the affidavits based on their personal knowledge of the acts
committed by the petitioner fall within the purview of "any competent person" who may institute the
complaint for a public crime. x x x (Emphasis and italics supplied)
A preliminary investigation can thus validly proceed on the basis of an affidavit of any competent
person, without the referral document, like the NBI-NCR Report, having been sworn to by the law
enforcer as the nominal complainant. To require otherwise is a needless exercise. The cited case
of Oporto, Jr. v. Judge Monserate does not appear to dent this proposition. After all, what is required
is to reduce the evidence into affidavits, for while reports and even raw information may justify the
initiation of an investigation, the preliminary investigation stage can be held only after sufficient
evidence has been gathered and evaluated which may warrant the eventual prosecution of the case
in court.42
Following the foregoing rulings in Soriano v. Hon. Casanova and Santos-Concio v. Department of
Justice, we hold that the BSP letter, taken together with the affidavits attached thereto, comply with
the requirements provided under Section 3(a), Rule 112 of the Rules of Court and Section 18,
paragraphs (c) and (d) of RA 7653.
Second Issue:
Whether a loan transaction within the ambit of the DOSRI law (violation of Section 83 of RA 337, as
amended) could be the subject of Estafa under Article 315 (1) (b) of the
Revised Penal Code
The second issue was raised by petitioner in the context of his Motion to Quash Information on the
ground that the facts charged do not constitute an offense.43 It is settled that in considering a motion
to quash on such ground, the test is "whether the facts alleged, if hypothetically admitted, would
establish the essential elements of the offense charged as defined by law. The trial court may not
consider a situation contrary to that set forth in the criminal complaint or information. Facts that
constitute the defense of the petitioner[s] against the charge under the information must be proved
by [him] during trial. Such facts or circumstances do not constitute proper grounds for a motion to
quash the information on the ground that the material averments do not constitute the offense". 44
We have examined the two informations against petitioner and we find that they contain allegations
which, if hypothetically admitted, would establish the essential elements of the crime of DOSRI
violation and estafa thru falsification of commercial documents.
In Criminal Case No. 238-M-2001 for violation of DOSRI rules, the information alleged that petitioner
Soriano was the president of RBSM; that he was able to indirectly obtain a loan from RBSM by
putting the loan in the name of depositor Enrico Carlos; and that he did this without complying with
the requisite board approval, reportorial, and ceiling requirements.
In Criminal Case No. 237-M-2001 for estafa thru falsification of commercial documents, the
information alleged that petitioner, by taking advantage of his position as president of RBSM,
falsified various loan documents to make it appear that an Enrico Carlos secured a loan of ₱8 million
from RBSM; that petitioner succeeded in obtaining the loan proceeds; that he later converted the
loan proceeds to his own personal gain and benefit; and that his action caused damage and
prejudice to RBSM, its creditors, the BSP, and the PDIC.
Significantly, this is not the first occasion that we adjudge the sufficiency of similarly worded
informations. In Soriano v. People,45 involving the same petitioner in this case (but different
transactions), we also reviewed the sufficiency of informations for DOSRI violation and estafa thru
falsification of commercial documents, which were almost identical, mutatis mutandis, with the
subject informations herein. We held in Soriano v. People that there is no basis for the quashal of
the informations as "they contain material allegations charging Soriano with violation of DOSRI rules
and estafa thru falsification of commercial documents".
Petitioner raises the theory that he could not possibly be held liable for estafa in concurrence with
the charge for DOSRI violation. According to him, the DOSRI charge presupposes that he acquired
a loan, which would make the loan proceeds his own money and which he could neither possibly
misappropriate nor convert to the prejudice of another, as required by the statutory definition of
estafa.46 On the other hand, if petitioner did not acquire any loan, there can be no DOSRI violation to
speak of. Thus, petitioner posits that the two offenses cannot co-exist. This theory does not
persuade us.
Petitioner’s theory is based on the false premises that the loan was extended to him by the bank in
his own name, and that he became the owner of the loan proceeds. Both premises are wrong.
The bank money (amounting to ₱8 million) which came to the possession of petitioner was money
held in trust or administration by him for the bank, in his
fiduciary capacity as the President of said bank.47 It is not accurate to say that petitioner became the
owner of the ₱8 million because it was the proceeds of a loan. That would have been correct if the
bank knowingly extended the loan to petitioner himself. But that is not the case here. According to
the information for estafa, the loan was supposed to be for another person, a certain "Enrico Carlos";
petitioner, through falsification, made it appear that said "Enrico Carlos" applied for the loan when in
fact he ("Enrico Carlos") did not. Through such fraudulent device, petitioner obtained the loan
proceeds and converted the same. Under these circumstances, it cannot be said that petitioner
became the legal owner of the ₱8 million. Thus, petitioner remained the bank’s fiduciary with respect
to that money, which makes it capable of misappropriation or conversion in his hands.
The next question is whether there can also be, at the same time, a charge for DOSRI violation in
such a situation wherein the accused bank officer did not secure a loan in his own name, but was
alleged to have used the name of another person in order to indirectly secure a loan from the bank.
We answer this in the affirmative. Section 83 of RA 337 reads:
Section 83. No director or officer of any banking institution shall, either directly or indirectly, for
himself or as the representative or agent of others, borrow any of the deposits of funds of such
bank, nor shall he become a guarantor, indorser, or surety for loans from such bank to others, or in
any manner be an obligor for moneys borrowed from the bank or loaned by it, except with the written
approval of the majority of the directors of the bank, excluding the director concerned. Any such
approval shall be entered upon the records of the corporation and a copy of such entry shall be
transmitted forthwith to the Superintendent of Banks. The office of any director or officer of a bank
who violates the provisions of this section shall immediately become vacant and the director or
officer shall be punished by imprisonment of not less than one year nor more than ten years and by
a fine of not less than one thousand nor more than ten thousand pesos. x x x
The prohibition in Section 83 is broad enough to cover various modes of borrowing.[48] It covers
loans by a bank director or officer (like herein petitioner) which are made either: (1) directly,
(2) indirectly, (3) for himself, (4) or as the representative or agent of others. It applies even if the
director or officer is a mere guarantor, indorser or surety for someone else's loan or is in any manner
an obligor for money borrowed from the bank or loaned by it. The covered transactions are
prohibited unless the approval, reportorial and ceiling requirements under Section 83 are complied
with. The prohibition is intended to protect the public, especially the depositors,[49] from the
overborrowing of bank funds by bank officers, directors, stockholders and related interests, as such
overborrowing may lead to bank failures.[50] It has been said that "banking institutions are not
created for the benefit of the directors [or officers]. While directors have great powers as directors,
they have no special privileges as individuals. They cannot use the assets of the bank for their own
benefit except as permitted by law. Stringent restrictions are placed about them so that when acting
both for the bank and for one of themselves at the same time, they must keep within certain
prescribed lines regarded by the legislature as essential to safety in the banking business". 51
A direct borrowing is obviously one that is made in the name of the DOSRI himself or where the
DOSRI is a named party, while an indirect borrowing includes one that is made by a third party, but
the DOSRI has a stake in the transaction.52 The latter type – indirect borrowing – applies here. The
information in Criminal Case 238-M-2001 alleges that petitioner "in his capacity as President of
Rural Bank of San Miguel – San Ildefonso branch x x x indirectly borrow[ed] or secure[d] a loan with
[RBSM] x x x knowing fully well that the same has been done by him without the written consent and
approval of the majority of the board of directors x x x, and which consent and approval the said
accused deliberately failed to obtain and enter the same upon the records of said banking institution
and to transmit a copy thereof to the supervising department of the said bank x x x by using the
name of one depositor Enrico Carlos x x x, the latter having no knowledge of the said loan, and
once in possession of the said amount of eight million pesos (₱8 million), [petitioner] converted the
same to his own personal use and benefit".53
The foregoing information describes the manner of securing the loan as indirect; names petitioner as
the benefactor of the indirect loan; and states that the requirements of the law were not complied
with. It contains all the required elements54 for a violation of Section 83, even if petitioner did not
secure the loan in his own name.
The broad interpretation of the prohibition in Section 83 is justified by the fact that it even expressly
covers loans to third parties where the third parties are aware of the transaction (such as principals
represented by the DOSRI), and where the DOSRI’s interest does not appear to be beneficial but
even burdensome (such as in cases when the DOSRI acts as a mere guarantor or surety). If the law
finds it necessary to protect the bank and the banking system in such situations, it will surely be
illogical for it to exclude a case like this where the DOSRI acted for his own benefit, using the name
of an unsuspecting person. A contrary interpretation will effectively allow a DOSRI to use dummies
to circumvent the requirements of the law.
In sum, the informations filed against petitioner do not negate each other.
Third Issue:
Is a Rule 65 petition for certiorari the proper remedy against an Order denying a Motion to
Quash?
This issue may be speedily resolved by adopting our ruling in Soriano v. People, 55 where we held:
In fine, the Court has consistently held that a special civil action for certiorari is not the proper
remedy to assail the denial of a motion to quash an information. The proper procedure in such a
case is for the accused to enter a plea, go to trial without prejudice on his part to present the special
defenses he had invoked in his motion to quash and if after trial on the merits, an adverse decision is
rendered, to appeal therefrom in the manner authorized by law. Thus, petitioners should not have
forthwith filed a special civil action for certiorari with the CA and instead, they should have gone to
trial and reiterated the special defenses contained in their motion to quash. There are no special or
exceptional circumstances in the present case that would justify immediate resort to a filing of a
petition for certiorari. Clearly, the CA did not commit any reversible error, much less, grave abuse of
discretion in dismissing the petition.56
Fourth Issue:
Whether petitioner is entitled to a writ of injunction

The requisites to justify an injunctive relief are: (1) the right of the complainant is clear and
unmistakable; (2) the invasion of the right sought to be protected is material and substantial; and (3)
there is an urgent and paramount necessity for the writ to prevent serious damage. A clear legal
right means one clearly founded in or granted by law or is "enforceable as a matter of law." Absent
any clear and unquestioned legal right, the issuance of an injunctive writ would constitute grave
abuse of discretion.57 Caution and prudence must, at all times, attend the issuance of an injunctive
writ because it effectively disposes of the main case without trial and/or due process. 58 In Olalia v.
Hizon,59 the Court held as follows:
It has been consistently held that there is no power the exercise of which is more delicate, which
requires greater caution, deliberation and sound discretion, or more dangerous in a doubtful case,
than the issuance of an injunction. It is the strong arm of equity that should never be extended
unless to cases of great injury, where courts of law cannot afford an adequate or commensurate
remedy in damages.
Every court should remember that an injunction is a limitation upon the freedom of action of the
[complainant] and should not be granted lightly or precipitately. It should be granted only when the
court is fully satisfied that the law permits it and the emergency demands it.
Given this Court's findings in the earlier issues of the instant case, we find no compelling reason to
grant the injunctive relief sought by petitioner.
WHEREFORE, the petition is DENIED. The assailed September 26, 2003 Decision as well as the
February 5, 2004 Resolution of the Court of Appeals in CA-G.R. SP No. 67657 are AFFIRMED.
Costs against petitioner.
SO ORDERED.

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
RENATO C. CORONA* ARTURO D. BRION

JOSE P. PEREZ
Associate Justice
ATTESTATION
was assigned to the writer of the opinion of the Court's Division.
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson's attestation, it
REYNATO S. PUNO
Chief Justice
Footnotes
* In lieu of Associate Justice Roberto A. Abad who is on leave per Special Order No. 812
dated January 4, 2010.
1
The Petition for Review on Certiorari under Rule 45 filed before the Court erroneously
included Judge Arturo G. Tayag among its public respondents. We have deleted his name in
the case title in accordance with Section 4 (a), Rule 45 of the Rules of Court, which reads:
Sec. 4 Contents of petition. -- The petition shall be filed in eighteen (18) copies, with
the original copy intended for the court being indicated as such by the petitioner, and
shall (a) state the full name of the appealing party as the petitioner and the adverse
party as respondent, without impleading the lower courts or judges thereof either as
petitioners or respondents; x x x (Emphasis supplied)
2
Director, Officer, Stockholder and Related Interest.
3
The General Banking Act.
4
Rollo, pp. 10-23.
5
Id. at 25-36; penned by Associate Justice Arsenio J. Magpale and concurred in by
Associate Justices Conrado M. Vasquez, Jr. and Bienvenido L. Reyes.
6
Id. at 38-39.
7
Id. at 36.
8
Bank Attorney III Jose R. Fajardo, Deputy Director Alfonso C. Peñaco IV, and Director
Vicente S. Aquino. CA rollo, p. 36.
9
Id. at 34-36.
10
Id. at 288-328.
11
Increasing the Penalty for Certain Forms of Swindling or Estafa.
Amending Further Republic Act No. 337, As Amended, Otherwise Known as the "General
12
Banking Act".
13
CA rollo, pp. 38-39.
14
Id. at 21-23.
15
Id.
16
Id. at 21-22.
17
Id. at 24-26.
18
Id.
19
Id. at 24-25.
Presided by Hon. Arturo G. Tayag but subsequently raffled off to Branch 17, Regional Trial
20
Court, Malolos, Bulacan, presided by Judge Ma. Theresa V. Mendoza- Arcega, rollo, p. 838.
21
22
Id. at 28-29.
23
Sec. 83. No director or officer of any banking institution shall, either directly or indirectly, for
himself or as the representative or agent of others, borrow any of the deposits of funds of
such bank, nor shall he become a guarantor, indorser, or surety for loans from such bank to
others, or in any manner be an obligor for moneys borrowed from the bank or loaned by it,
except with the written approval of the majority of the directors of the bank, excluding the
director concerned. Any such approval shall be entered upon the records of the corporation
and a copy of such entry shall be transmitted forthwith to the Superintendent of Banks. The
office of any director or officer of a bank who violates the provisions of this section shall
immediately become vacant and the director or officer shall be punished by imprisonment of
not less than one year nor more than ten years and by a fine of nopan> CA rollo, pp. 30-31.
26
Id. at 17-19.
27
Id. at 18-19.
28
Id. at 20.
29
Id. at 2-16.
30
Rollo, pp. 30-31.
31
Id. at 31-32.
32
Id. at 35.
33
34
Rollo, p. 855.
35
Id. at 887.
36
Id. at 880-886.
37
G.R. No. 163400, March 31, 2006, 486 SCRA 431.
38
Rollo, pp. 881-883.
39
Supra note 36.
40
Ting v. Velez-Ting, G.R. No. 166562, March 31, 2009, 582 SCRA 694.
41
G.R. No. 175057, January 29, 2008, 543 SCRA 70.
42
Id. at 84-85.
43
44
Soriano v. People, G.R. Nos. 159517-18, June 30, 2009, 591 SCRA 244, 257-258,
citing Caballero v. Sandiganbayan, G.R. Nos. 137355-58, September 25, 2007, 534 SCRA
30, 43 and Torres v. Hon. Garchitorena, 442 Phil. 765, 777 (2002).
45
Id. at 257.
46
Rollo, p. 864.
47
Fletcher Cyclopedia of the Law of Corporations §838 (perm. ed., 1986 rev. vol.) states that:
"At common law, and by the modern current of authority in this country, and in
England, the directors of a private corporation, while not regarded as trustees in the
strict, technical sense, are considered in equity as bearing a fiduciary relation to the
corporation and its stockholders. In other words, it is universally recognized that
courts of equity treat the relationship of director and stockholders as a trusteeship, in
order to determine the rights, duties and liabilities of the directors; x x x Moreover,
these rules should be applied even more stringently to an officer and director of a
bank who should be concerned with the welfare of depositors as well as that of
customers and stockholders. The law demands the fullest disclosure and fair dealing
by a director or officer in his relations with a bank. Thus, in the discharge of his high
trust the law holds a bank president to "standards of probity and fidelity more lofty
than those of the ‘market place.’ These high standards this court is not disposed to
whittle down". (Citations omitted and emphasis added)
48
Go v. Bangko Sentral ng Pilipinas, G.R. No. 178429, October 23, 2009.
49
Id.
50
10 Am Jur 2d, Banks, Section 239.
51
People v. Knapp, 206 NY 373, a case cited in Go v. Bangko Sentral ng Pilipinas, supra.
52
People v. Concepcion, 44 Phil. 126 (1922).
53
In Go v. Bangko Sentral ng Pilipinas, supra note 47, the elements of a DOSRI law violation
54
were enumerated:
"1. the offender is a director or officer of any banking institution;
2. the offender, either directly or indirectly, for himself or as representative or agent of

another, performs any of the following acts:
a. he borrows any of the deposits or funds of such bank; or
b. he becomes a guarantor, indorser, or surety for loans from such bank to

others, or
c. he becomes in any manner an obligor for money borrowed from bank

or loaned by it;
3. the offender has performed any of such acts without the written approval of the
majority of the directors of the bank, excluding the offender, as the director
concerned".
55
d=ftn>
56
Id. at 261.
Boncodin v. National Power Corporation Employees Consolidated Union (NECU), G.R.

57
No. 162716, September 27, 2006, 503 SCRA 611, 622-623.
58
F. Regalado, Remedial Law Compendium, Vol. I, p. 639 (7th revised ed., 1999).
59
274 Phil. 66, 75-76 (1991).
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 183577 February 1, 2010
PEOPLE OF THE PHILIPPINES, Appellee,

vs.
HILARIO ESCOTON, Appellant.
DECISION
DEL CASTILLO, J.:
In rape cases, the credibility of the victim is always the single most important issue. 1 In passing upon
this matter, the highest degree of respect must be accorded to the findings of the trial court. 2
The Charge
Impugned in this appeal is the February 5, 2008 Decision3 of the Court of Appeals (CA) in CA-G.R.
CR HC No. 00520 affirming with modification the Decision4 of the Regional Trial Court (RTC) of
Carigara, Leyte, Branch 13, in Criminal Case No. 4071, convicting appellant Hilario Escoton of the
crime of multiple rape against AAA.5 The Information6 contained the following accusatory allegations:
That on or about the 12th day of May, 2001, in x x x, Province of Leyte, Philippines and within the
jurisdiction of this Honorable Court, the above-named accused, with deliberate intent and with lewd
designs, taking advantage of the minority, as well as relationship of the accused with the victim, and
by use of force and intimidation being armed with a sickle (garab) did then and there willfully,
unlawfully and feloniously have carnal knowledge for five (5) times in the same evening of May 12,
2001, with one "AAA", a 10-year-old, a niece of the accused, against her will to her damage and
prejudice.
Contrary to law with the qualifying circumstance that the victim is under 18 years and the offender is
a relative by consanguinity within the third civil degree of the victim.
The appellant pleaded not guilty to the crime charged during his arraignment. After the termination of
the pre-trial conference, trial ensued.
The Version of the Prosecution
The evidence presented by the prosecution established that "AAA" was born on October 29, 1990,
as shown by her Certificate of Live Birth7 and Baptismal Certificate.8 The appellant is the uncle of
"AAA", being the brother of her mother. On May 12, 2001, at around 7 o’clock in the evening, "AAA"
and her brother were asleep in the house of their maternal grandmother with whom they were
residing. The appellant woke up "AAA" and told her to follow him to his house which was about 500
meters away. "AAA’s" brother also woke up and accompanied her. Their grandmother did not give
them permission to leave, but they still proceeded towards their destination.
Upon arrival, the appellant undressed himself and removed the lower garments of "AAA". He made
her lie down on the bamboo floor then inserted his penis into her vagina despite her pleas to
discontinue his hideous act. "AAA" felt pain as the appellant had sex with her. The appellant raped
"AAA" for five times during the night while her brother lay silently beside her.
When daylight came, the appellant ordered "AAA" and her brother to fetch drinking water. However,
instead of heeding appellant’s order, they went home to their grandmother to whom "AAA" tearfully
narrated her ordeal. Upon advice of a relative, they reported the incident to the police and "AAA"
submitted herself to a physical examination in a hospital. Although the doctors who performed the
medical examination on "AAA" the day after she was raped could no longer be located during the
trial, the Records Officer affirmed the authenticity of the document containing the results of said
examination and the signatures of doctors appearing thereon. The record of the medical examination
on "AAA" indicated that her genitalia was normal with incomplete healed lacerations of the hymen at
3, 8, and 9 o’clock positions. The vaginal smear was negative for spermatozoa. 9 1avvphi1
The Version of the Defense
The appellant presented a totally different version of the incident. He testified that on May 12, 2001,
at around 7 o’clock in the evening, he was on his way home after consuming tuba. He passed by the
house of his mother and noticed her in the balcony having a conversation with his aunt Clarita and
her husband. He was then requested to fetch "AAA", who was watching television in the house of
another relative. The appellant obeyed and after finding "AAA" told her to go home. However, "AAA"
got angry, cursed him and insisted on watching the television. Irked by "AAA’s" behavior, appellant
pushed her, which made her fall from the stairs until she landed on the ground. It was only after this
incident that "AAA" went home.
When the appellant returned to his mother’s house, his mother and his aunt Clarita were enraged
and hurled invectives at him. He cursed them in return. His mother warned that he would be sent to
prison for repeatedly beating up "AAA". He replied that the meager amount paid to him by his aunt
Clarita and her husband whenever they hired him to work in their farm was demeaning to his person.
Thereafter, he proceeded to the house of his uncle and slept on the balcony where he awoke at 6
o’clock the next morning.
The appellant asserted that his aunt Clarita initiated this case after he challenged her and her
husband to a fight. He also claimed that "AAA" concocted false accusation against him because he
used to beat her with a whip and push her head to the ground as punishment for her stubbornness.
The Decision of the Regional Trial Court
On June 28, 2004, the trial court rendered its Decision, the dispositive portion of which reads as
follows:
WHEREFORE, premises considered, pursuant to Art. 266-B of the Revised Penal Code as
amended, and further amended by R.A. 8353 (The Anti-Rape Law of 1997) and the amendatory
provision of R.A. No. 7659 (The Death Penalty Law), without any mitigating circumstance, the Court
found accused HILARION ESCOTON, GUILTY, beyond reasonable doubt of the crime of MULTIPLE
RAPE charged under the information and sentenced to suffer the maximum penalty of DEATH and
ordered to pay civil indemnity to "AAA" in the amount of Seventy Five Thousand (₱75,000.00)
Pesos; for moral damages in the amount of Seventy Five Thousand (₱75,000.00) Pesos; and for
exemplary damages in the amount of Twenty Five Thousand (₱25,000.00) Pesos; and
Pay the Cost.

SO ORDERED.10
The Verdict of the Court of Appeals
In its Decision
Q. You said that when you reached thereat you were undressed, by the way, what were you
wearing that time when undressed?
A. I was wearing then a short and a sando.
Q. Now, what was taken off from you first, was it the sando or shorts?
A. My shorts.
Q. Now, do you have a panty that time?
A. Yes, sir.
Q. Now, after the shorts were taken was it one after the other with your panty or
simultaneous?
A. It was taken off simultaneously, the shorts and the panty.
Q. After your shorts and your panty was [sic] taken off from your body, what did the accused
do relative to your upper apparel?
xxxx
A. He did not take off my sando.
PROS. MERIN:
Q. After your shorts and panty was [sic] successfully taken off from your body, what next did
the accused do upon your person?
A. He inserted his penis [into] my vagina.
Q. Was the accused wearing something when he inserted his penis [into] your vagina?
A. He was not wearing anything.
Q. When did he [undress] himself after you were undressed or before you were undressed?
xxxx
A. He took off first his apparel before taking off my shorts and panty.
PROS. MERIN:
Q. You mean, he undressed himself after your arrival at the house?
A. Yes, sir.
Q. What was your relative position when your uncle Hilario Escoton inserted his penis [into]
your vagina?
A. I was then lying.
Q. Lying where?
A. I was then lying on the center of the room.
Q. Now is there any floor to that?
A. Yes, sir.
Q. And what is it made of?
A. Made of bamboo sheets.
Q. Now, after you [were] made to lie on that bamboo splits and his penis was inserted [into]
your vagina, what did you feel?
A. I felt the warmth.
Q. What did [sic] Hilario doing with his penis [into] your vagina?
A. He kept on inserting.
Q. You mean he made a push and pull movement?
xxxx
A. Yes, sir.
PROS. MERIN
Q. Was he successful in inserting his penis [into] your vagina?
A. Yes, sir.
Q. For how long was the accused doing the push and pull movement of his penis [into] your
vagina?
A. I cannot exactly remember because he kept on repeating it.
Q. Now, how [sic] did you feel while the accused was doing the push and pull movement of
his penis [into] your vagina?
A. Pain, sir.
Q. Pain coming from where?
A. In my vagina, sir.
Q. Now, was the accused able to reach his ejaculation?
A. The warm.
Q. Warm what?
A. Warm liquid.
Q. And where was that liquid coming out?
A. From his penis.
Q. Now, after he was able to ejaculate, what did the accused do?
A. He lie [sic] for a while.
Q. How about you what did you do after he was able to ejaculate while lying?
A. I wore my panty.
Q. What did you tell your uncle while he was raping you.
A. I said, don’t do that kuya.
Q. What do you mean kuya, to whom are you addressing the word kuya?
A. To Hilario.
Q. Is that what you address him, your uncle?
A. Yes, sir.
Q. How many times by the way after he rested for a while and you already put your panty,
what next happened tell this Court?
xxxx
A. He repeated again.
PROS. MERIN:
Q. What do you mean he repeated again?

A. He raped me again.
Q. You mean he inserted again his penis [into] your vagina?
A. Yes, sir.
Q. Now, you said a while ago that you wore already a panty did I hear you correctly?
A. Yes, sir.
Q. And what did he do with your panty?
A. He slept for a while.
Q. And when did he wake up?
A. I do not know because he kept on repeating.
Q. You mean, he had repeatedly raped you on that evening?
xxxx
A. Yes, sir.
PROS. MERIN
Q. How many times were you raped that evening?
xxxx
A. Five times, sir.
14
We stress that in rape cases the accused may be convicted based solely on the testimony of the
victim, provided that such testimony is credible, natural, convincing and consistent with human
nature and the normal course of things.15 In this regard, the trial court is in the best position to assess
the credibility of the victim, having personally heard her and observed her deportment and manner of
testifying during the trial. In the absence of any showing that the trial court overlooked,
misunderstood, or misapplied some factor or circumstances of weight that would affect the result of
the case, or that the judge acted arbitrarily, the trial court’s assessment of credibility deserves the
appellate court’s highest respect.16 Here, the appellant fails to persuade us to depart from this
principle and to apply the exception.
The testimony of rape victims are given full weight and credence, considering that no young woman,
especially of tender age, would concoct a story of defloration, allow an examination of her private
parts, and thereafter pervert herself by being subjected to a public trial, if she was not motivated
solely by the desire to seek justice for the wrong done to her.17 It is highly improbable that a girl of
tender years who is not yet exposed to the ways of the world, would impute to any man a crime so
serious as rape if what she claims is false.18 Considering that the victim in this case underwent a
harrowing experience and exposed herself to the rigors of public trial, it is unlikely that she would
concoct false accusations against the appellant, who is her uncle.
It should be noted that "AAA" immediately informed her grandmother of the incident. Upon the
advise of a relative they proceeded to the police station to file a complaint against the appellant.
Thereafter, they proceeded to the hospital for a medical examination. "AAA’s" act of immediately
reporting the commission of the rape strengthens her credibility.19 Her spontaneous revelation of the
assault on her and her unrelenting determination to have the appellant arrested and prosecuted of
rape lend credence to her claim that she was indeed raped.20
Appellant likewise contends that the court a quo grievously erred in relying on the medico-legal
report considering that the examining physician who issued the same was not presented for its
identification. However, medical examination or medical report is not indispensable to prove the
commission of rape, for it is merely corroborative evidence.21 An accused can still be convicted of
rape on the sole basis of the testimony of the victim.22 Here, even if we disregard the medico-legal
report, the result would still be the same – the prosecution, through the testimony of "AAA", has
successfully proved the case of rape against the appellant.
Appellant vehemently denies raping "AAA" and claims that he was already drunk and had fallen
asleep in the house of his uncle during the alleged commission of the crime. However, he failed to
present any witness to corroborate his testimony. Denial and alibi are inherently weak defenses and
constitute self-serving negative evidence which cannot be accorded greater evidentiary weight than
the positive declaration of a credible witness. Between the positive assertions of the victim and the
negative averments of the appellant, the former indisputably deserve more credence and are entitled
to greater evidentiary weight.23
Much less convincing is the proposition of the appellant that "AAA" filed the complaint against him
because she and her other relatives were harboring ill feelings and evil motives against him. Ill
motives become inconsequential where there are affirmative or categorical declarations establishing
the accountability of the appellant for the felony, as in this case.24 Moreover, we have observed that
persons convicted of rape sometimes attribute the charges against them to family feuds, resentment
or revenge.25 However, as borne out by numerous cases, family resentment, revenge or feuds have
never swayed us from giving full credence to the testimony of a complainant for rape, especially a
minor who remained steadfast and unyielding throughout the trial that she was sexually violated. 26
Appellant also argues that the testimony of "AAA" is unworthy of credence since it is replete with
inconsistencies. He contends that if "AAA’s" grandmother was with her at the time he fetched her,
then "AAA" could have easily refused since her grandmother did not allow her to go with him. He
further contends that if he really intended to rape "AAA", he would not have allowed her younger
brother to tag along as an eyewitness.
The factual question raised by the appellant fails to impress. It is an inconsequential matter that does
not bear upon the elements of the crime of rape. The decisive factor in the prosecution for rape is
whether the commission of the crime has been sufficiently proven. For a discrepancy or
inconsistency in the testimony of a witness to serve as a basis for acquittal, it must refer to the
significant facts indispensable to the guilt or innocence of the appellant for the crime charged. 27 As
the inconsistencies alleged by the appellant had nothing to do with the elements of the crime of rape,
they cannot be used as ground for his acquittal.28
Further, victims do not cherish keeping in their memory an accurate account of the manner in which
they were sexually violated. Thus, an errorless recollection of a harrowing experience cannot be
expected of a witness, especially when she is recounting details from an experience as humiliating
and painful as rape. Furthermore, rape victims, especially child victims, should not be expected to
act the way mature individuals would when placed in such a situation.29
In this case, minor inconsistencies are expected because (1) "AAA" was a child witness, (2) she was
made to testify on a painful and humiliating incident, (3) she was sexually assaulted several times,
and (4) she was made to recount details and events that happened two years before she testified. 30
The Penalty
Thus, given the foregoing circumstances, we find no cogent reason to reverse the findings of the trial
court, as affirmed by the Court of Appeals. The prosecution sufficiently proved the guilt beyond
reasonable doubt of the appellant. The trial court correctly meted the penalty of death since the rape
committed against a child under 12 years of age by an offender who is a relative by consanguinity
within the third civil degree merits no less than the imposition of capital punishment under Article
266-B of the Revised Penal Code.31 It is clear from the birth certificate of "AAA" that she was only ten
years old when she was ravished by the appellant, her uncle, being the brother of her mother.
However, with the passage of Republic Act No. 9346 entitled "An Act Prohibiting The Imposition Of
The Death Penalty In The Philippines," the penalty, as correctly imposed by the Court of Appeals,
should be reclusion perpetua.32 Pursuant to the same law, the accused-appellant shall not be eligible
for parole under Act No. 4103, otherwise known as the Indeterminate Sentence Law. 33
While the appellant was meted the proper penalty for committing one count of rape, we must not
overlook the fact that the prosecution established beyond reasonable doubt that the appellant is
guilty of five counts of rape. "AAA" related in detail to the trial court in a simple and straightforward
manner how she was repeatedly ravished by the appellant, thereby leaving no doubt about its
credibility and truthfulness. She testified that the appellant inserted his penis inside her vagina and
after consummating this act, she was raped again for four times under the same circumstances
throughout the night. Thus, appellant must be held guilty of five counts of rape and suffer the penalty
of reclusion perpetua without eligibility of parole for each count.
The Damages
The five counts of rape committed by the appellant also require a modification of the award of
damages by the trial court, as sustained by the Court of Appeals. For each of the five counts of rape,
"AAA" is entitled to an award of ₱75,000.00 as civil indemnity, another ₱75,000.00 as moral
damages and ₱30,000.00 as exemplary damages, in line with prevailing jurisprudence. 34
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CR-H.C. No. 00520, which affirmed
with modification the Decision of the Regional Trial Court of Carigara, Leyte, Branch 13, finding
appellant Hilario Escoton guilty beyond reasonable doubt of committing multiple rape
is AFFIRMED with the following modifications:
(1) For each of the five counts of rape committed, he is sentenced to suffer the penalty of
reclusion perpetua without eligibility of parole; and
(2) For each of the five counts of rape committed, he is ordered to pay complainant civil
indemnity in the amount of ₱75,000.00 and moral damages in the sum of ₱75,000.00, and
₱30,000.00 as exemplary damages.
SO ORDERED.
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
RENATO C. CORONA ARTURO D. BRION

JOSE P. PEREZ
Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1
People v. Ceballos, Jr., G. R. No. 169642, September 14, 2007, 533 SCRA 493, 508. .
2
People v. Balonzo, G.R. No. 176153, September 21, 2007, 533 SCRA 760, 768.
3
CA rollo, 122-146.
4
CA rollo, pp. 14-25; penned by Judge Crisostomo L. Garrido.
5
Pursuant to Section 44 of Republic Act (RA) No. 9262, otherwise known as the Anti-
Violence Against Women and Their Children Act of 2004, and Section 63, Rule XI of the
Rules and Regulations Implementing RA 9262, the real name of the child-victim is withheld
to protect his/her privacy. Fictitious initials are used instead to represent him/her. Likewise,
the personal circumstances or any other information tending to establish or compromise
his/her identity, as well as those of his/her immediate family or household members shall not
be disclosed.
6
Records, p. 1.
7
Folder of Exhibits, Exh. "B".
8
Id., Exh. "C".
9
Id., Exh. "A".
10
Rollo, pp. 5-24. Penned by Associate Justice Amy C. Lazaro-Javier and concurred in by
11
Associate Justices Pampio A. Abarintos and Francisco P. Acosta.
12
Id. at 24.
13
ART. 266-A. Rape; When and How Committed. – Rape is committed –
1) By a man who shall have carnal knowledge of a woman under any of the following
circumstances:
a) Through force, threat or intimidation;
b) When the offended party is deprived of reason or otherwise unconscious;
c) By means of fraudulent machination or grave abuse of authority;
d) When the offended party is under twelve (12) years of age or is demented, even
though none of the circumstances mentioned above be present;
xxxx
14
TSN, July 2, 2003, pp. 8-11.
15
People v. Malones, 469 Phil. 301, 318 (2004).
16
Id. at 319.
17
People v. Villafuerte, G.R. No. 154917, May 18, 2004, 428 SCRA 427, 433.
18
People v. Andales, 466 Phil. 873, 887 (2004).
19
People v. Balbarona, G.R. No. 146854, April 28, 2004, 428 SCRA 127, 137.
20
People v. Torres, 464 Phil. 971, 986 (2004).
21
People v. Ugang, 431 Phil. 552, 565 (2002).
22
People v. Cabalse, 480 Phil 317, 326 (2004).
23
People v. Bang-ayan, G.R. No. 172870, September 22, 2006, 502 SCRA 658, 670.
24
People v. Guambor, 465 Phil. 671, 679-680 (2004).
25
People v. Cariñaga, 456 Phil. 944, 968 (2003).
26
People v. Glodo, G.R. No. 136085, July 7, 2004, 433 SCRA 535, 546.
27
People v. Masapol, 463 Phil. 25, 33 (2003).
28
Supra note 25 at 669.
29
People v. Bejic, G.R. No. 174060, June 25, 2007, 525 SCRA 488, 508-509.
30
People v. Montinola, G.R. No. 178061, January 31, 2008, 543 SCRA 412, 424.
31
ART. 266-B. Penalties. – x x x.
The death penalty shall also be imposed if the crime of rape is committed with any of
the following aggravating/qualifying circumstances:
1) When the victim is under eighteen (18) years of age and the offender is a parent,
ascendant, guardian, relative by consanguinity or affinity within the third civil degree,
or the common-law spouse of the parent of the victim;
x x x x.
32
SEC 2. In lieu of the death penalty, the following shall be imposed:
(a) The penalty of reclusion perpetua, when the law violated makes use of the
nomenclature of the penalties of the Revised Penal Code.
(b) The penalty of life imprisonment, when the law violated does not make use of the
nomenclature of the penalties of the Revised Penal Code.
33
People v. Santos, G.R. No. 172322, September 8, 2006, 501 SCRA 325, 344.
34
Peope v. Araojo, G.R. No. 185203, September 17, 2009.
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 177361 February 1, 2010
ARMANDO VIDAR @ "Ricky", NORBERTO BUTALON,(†) SONNY MARBELLA @ "Spike" and

JOHN DOES and PETER DOES, Petitioners,
vs.
PEOPLE OF THE PHILIPPINES, Respondent.
DECISION
DEL CASTILLO, J.:
A person is killed, either by reason or on occasion of the robbery. To sustain a conviction for robbery
with homicide, the prosecution must prove the following elements: (1) taking of personal property
belonging to another; (2) with intent to gain; (3) with the use of violence or intimidation against a
person; and (4) on the occasion or by reason of the robbery, the crime of homicide, as used in its
generic sense, was committed. A conviction requires certitude that the robbery is the malefactor’s
main purpose and objective, and the killing is merely incidental to the robbery. The intent to rob must
precede the taking of human life, but the killing may occur before, during, or after the robbery. 1
In the instant case, the prosecution satisfactorily proved that the crime committed by the petitioners
was robbery with homicide.
Factual Antecedents
It was early evening of April 30, 2001, when army officer, Sgt. Julio D. Dioneda (Dioneda), was
brutally murdered and valuables taken from his house located at Sitio Burabod, Barangay Poblacion,
Bacon District, Sorsogon City.
Consequently, a criminal charge for Robbery with Homicide against herein petitioners Armando
Vidar @ Ricky (Vidar), Norberto Butalon (Butalon), Sonny Marbella @ Spike (Marbella), and several
Does was filed under an Information2 which reads:
The undersigned accuses ARMANDO VIDAR @ "Ricky" of Sto. Domingo, Pto. Diaz, Sorsogon,
NORBERTO BUTALON, of Maslog, Legaspi City, and SONNY MARBELLA @ "Spike" of Lungib,
Pilar, Sorsogon and several other JOHN DOES and PETER DOES, of the crime of ROBBERY WITH
HOMICIDE, defined and penalized under Article 294 par. 1 of the Revised Penal Code, committed
as follows:
That on or about the 30th day of April 2001, at about 7:00 o’clock in the evening at Sitio Burabod,
Barangay Poblacion, Bacon District, Sorsogon City, Philippines and within the jurisdiction of this
Honorable Court, the above named accused, conspiring and confederating together and helping one
another, armed with firearms, did then and there willfully, unlawfully and feloniously and with intent to
gain, enter the dwelling of one Sgt. Julio D. Dioneda and once inside, took therefrom at gunpoint a
Cal. 45 pistol, a wallet containing ₱1,000.00 cash, a crash helmet and a motorcycle all belonging to
the said Sgt. Julio D. Dioneda; that on the occasion of the said robbery and for the purpose of
enabling them to take, steal and carry away the items above mentioned with ease, herein accused,
in pursuance of their conspiracy, did then and there, willfully, unlawfully and feloniously, with
treachery and taking advantage of their superior number and strength and with intent to kill, attack,
assault and repeatedly shot the said Sgt. Julio D. Dioneda, inflicting upon him multiple gunshot
wounds that caused his instantaneous death, to the damage and prejudice of his legal heirs.
CONTRARY TO LAW.
Sorsogon City, Sorsogon, July 8, 2002.
Petitioners, assisted by their counsel de parte, pleaded not guilty to the crime of Robbery with
Homicide as charged in the Information. After pre-trial was terminated, trial on the merits followed.
The antecedent facts of this case as recounted by the prosecution witnesses Florecita Dioneda
(Florecita) and Niña Dioneda Elemanco (Niña) that led to the conviction of the petitioners are as
follows:
At about 7:00 o’clock in the evening of April 30, 2001, Florecita, wife of the victim, and her sister-in-
law Niña, were inside the former’s house at Burabod, Poblacion, Bacon District, Sorsogon City. They
were watching television when three armed men suddenly barged inside. One of them, later
identified as Marbella, poked a gun at Florecita while the other two ransacked the house taking a
wallet, crash helmet and a .45 caliber firearm with its magazine. These items belong to Dioneda who
was then taking a bath outside the house. Florecita and Niña followed the three men when the latter
went out. At the yard, they saw the three men together with more or less 10 other persons
surrounding Dioneda who was lying facing the ground. Despite Florecita’s pleas not to kill her
husband, Marbella and Vidar still fired a volley of shots causing Dioneda’s instantaneous death. The
three then boarded Dioneda’s motorcylcle and fled the area. 1avvphi1
Niña corroborated the material details of the robbery and the killing and testified further that she
could not forget the faces of the three malefactors as she was very sure that they were the ones who
barged inside the house and later killed her brother.
Petitioners vehemently denied the accusations against them. Marbella averred that he does not
know Dioneda and that he was in his house in Lungib, Pilar, Sorsogon on April 30, 2001 while Vidar
asserted that he has no knowledge of the killing of Dioneda. Butalon, on the other hand, professed
his innocence, claiming that he also does not know Dioneda and that he was in his house at
Omoroy, Legaspi City on April 30, 2001. Collectively, they alleged that the possible motive behind
the charge against them is that they were known members of the New People’s Army (NPA).
The Regional Trial Court of Sorsogon, Branch 52, relying on the credible and positive testimonies of
the prosecution witnesses, rejected the defense interposed by the petitioners and accordingly
rendered a Decision3 on September 2, 2004 finding all of them guilty of the crime of robbery with
homicide. The dispositive portion of said Decision reads:
WHEREFORE-, premises considered, the Court finds accused Armando Vidar @ "Ricky", Norberto
Butalon, and Sonny Marbella @ "Spike" guilty beyond reasonable doubt of the crime of Robbery with
Homicide, defined and penalized under Article 294 of the Revised Penal Code with the aggravating
circumstance of treachery, and applying the provision of Art. 63, par. 1 of the Revised Penal Code,
in relation to Article 294 par. 1 of the Revised Penal Code, the Court hereby sentences each one of
them to suffer the maximum penalty of DEATH and to pay jointly and severally, the heirs of the
victim the amount of ₱50,000.00 as civil indemnity and the further sum of ₱5,500.00 as actual
damages, the sum of ₱50,000.00 as moral damages, the amount of ₱3,336,768.00 as unearned
income and the amount of ₱50,000.00 as exemplary damages without subsidiary imprisonment in
case of insolvency and to pay the costs.
The Clerk of Court is hereby ordered to transmit the records of this case to the Honorable Supreme
Court for automatic review, and to prepare the Mittimus immediately.
The Warden of the Bureau of Jail Management and Penology (BJMP) Sorsogon City and/or Legaspi
City is hereby ordered to deliver the accused to the National Penitentiary, Muntinlupa City, with
proper escort and security immediately.
SO ORDERED.
On appeal, petitioners raised the following errors:
The Honorable Court a quo erred in finding the accused-appellants guilty of the crime of robbery with
homicide despite the insufficiency of evidence for the prosecution to support the same.
II
The Honorable Court a quo erred in not finding that robbery and homicide were committed in
furtherance of rebellion as admitted both by the prosecution and the defense witnesses that the
victim was killed by reason of his being a member of the Philippine Army and in the performance of
his duty and the assailants are members of the New People’s Army (NPA) of which the accused-
appellants are also members even up to the time of their arrest.
On December 18, 2006, the Court of Appeals (CA) rendered its Decision 4 finding the appeal to be
unmeritorious. The appellate court gave credence to the eyewitnesses’ account of the victim’s death
and the identity of herein petitioners.
Accordingly, the CA affirmed the findings of the trial court but modified the penalty imposed from
Death to reclusion perpetua. The decretal portion of the decision reads:
WHEREFORE, the judgment of the Regional Trial Court of Sorsogon City, Branch 52, dated
September 2, 2004 convicting the accused-appellants ARMANDO VIDAR alias "RICKY",
NORBERTO BUTALON, SONNY MARBELLA alias "SPIKE" of the crime of Robbery with Homicide
is affirmed. Considering, however, the repeal of R.A 7659 with the passage of Republic Act No. 9346
on June 24, 2006 prohibiting the imposition of the death penalty, in lieu of the trial court’s imposition
of the death penalty, each of the accused-appellants is hereby sentenced to suffer reclusion
perpetua. They are further directed to indemnify the heirs of the victim the amount of ₱50, 000.00 as
civil indemnity, ₱50,000.00 as moral damages, ₱50,000.00 as exemplary damages, ₱5,500.00 as
actual damages and ₱2,224,512.00 for the victim’s loss of earning capacity.
SO ORDERED.5
On August 8, 2007, we issued a Resolution6 treating the instant petition as petitioners’ Supplemental
Brief and notified the Office of the Solicitor General (OSG) that it may file a supplemental brief within
30 days from notice thereof, if it so desires. The OSG filed a Manifestation 7 (in lieu of Supplemental
Brief) that it had already exhaustively argued all the issues relevant to the case in its Appellee’s
Brief8 dated October 17, 2005.
Petitioners’ Arguments
Petitioners contend that the appellate court erred in affirming the decision of the trial court despite
the absence of proof adduced before the court below establishing beyond reasonable doubt that
they committed the crime of robbery with homicide. They maintain that the delay of almost a year in
filing formal charges against them cast serious doubt on the intention and motive of the complainant.
They aver that while the incident took place on April 30, 2001, formal charges against them were
filed only in February 2002.
In refuting petitioners’ contention, the OSG representing the respondent, reiterated the ruling of the
court a quo and sought the affirmation of the assailed decision.
Our Ruling
Petitioners’ arguments are bereft of merit. The delay did not greatly weaken the credibility of the
testimonies of the prosecution witnesses. In the light of the circumstances obtaining in the case at
bar, we believe that the delay in reporting to the police authorities the attendant facts of the crime for
which the petitioners have been charged is consistent with normal human behavior considering that
after a tragic incident, the last thing that the bereaved would want is to provoke further reprisals from
the perpetrators of the felonious act. Although there is a natural tendency to seek the ends of justice
for the treacherous killing of a dearly departed, personal safety takes priority as dictated by our
culture. Moreover, considering private complainant’s honest belief that petitioners are known to be
members of the NPA, the fear of reprisal from them was ever present which caused her momentary
silence. After all, delay in reporting the occurrence of a crime or other unusual event in rural areas is
well known.9 Others reveal the perpetrator of the crime only after the lapse of one year or so to make
sure that the possibility of a threat to his life or to his loved ones is already diminished if not totally
avoided. In People v. Gornes10 we held that:
It is true that the charge against the appellant was initiated only three and a half years after the
commission of the crime. However, the fact of delay alone does not work against the witness.
Thus, the fact of delay attributed to the prosecution witnesses cannot be taken against them. 11 What
is important is that their testimonies regarding the incident bear the earmarks of truth and
dependability.
One thing which bolsters the prosecution witnesses’ credibility is the fact that they had no motive to
prevaricate against the petitioners. They were not actuated by improper motive to fabricate the facts
and to foist a very serious offense against them. Where there is no evidence, as in this case, to
indicate that the prosecution witnesses were actuated by improper motive, the presumption is that
they were not so actuated and that their testimonies are entitled to full faith and credit. 12 For personal
motive on the part of a witness to testify against the accused to be appreciated as showing bias, its
presence should be supported by satisfactory proof.13 Aside from their bare allegation, petitioners
miserably failed in this regard. On the contrary, we are not prepared to disbelieve the prosecution
witnesses’ testimonies on their vital points substantiating the circumstances of time and place of the
offense charged against petitioners.
Petitioners likewise contend that their identification by the prosecution witnesses was attended with
irregularity considering that they were identified merely from among the four photographs presented
at Camp Escudero. They posit that this manner of identification provides an incredible suggestive
procedure.
We beg to disagree.
In ascertaining whether an out-of-court identification is positive or derivative, the Court has adopted
the totality of circumstances test wherein the following factors are taken into consideration: 1) the
witness’s opportunity to view the criminal at the time of the crime; 2) the witness’s degree of
attention at that time; 3) the accuracy of any prior description given by the witness; 4) the level of
certainty demonstrated by the witness at the identification; 5) the length of time between the crime
and the identification; and 6) the suggestiveness of the identification procedure. 14
We have scrutinized with great caution the witnesses’ manner of identifying petitioners vis-a-vis the
foregoing factors and we discern nothing irregular that would result in an erroneous identification.
At the outset, it must be stressed that the prosecution witnesses had an unobstructed view of the
petitioners’ appearance who were not donning masks to hide their faces when the latter barged
inside the house. There is no indication that darkness prevailed inside the house so as to have an
obscure view at the time. They even testified that one of the petitioners even poked a gun at them
while the others were ransacking the house. Thus even for a while, there was a frontal confrontation
between petitioners and the witnesses, giving the latter an opportunity to take a good look at
petitioners. Nothing in the records allows the presence of any distraction that would have disrupted
the witnesses’ attention during the occurrence of the incident. Niña even described to the policemen
the physical appearance of petitioners though no cartographic sketch was presented. 15 Experience
dictates, precisely because of the unusual acts of violence committed right before witnesses’ eyes,
that they remember with a high degree of reliability the identity of criminals. 16 Though a considerable
length of time had elapsed, the witnesses never wavered in their identification of petitioners. They
cannot forget their faces.
It is worth mentioning also that the identification of petitioners was effectively admitted when
petitioners failed to dispute the same before the lower courts. The in-court identification of the
petitioners later on dispels any doubt as to the correctness of their identities. As we held in People v.
Rivera:17
Even assuming arguendo that the appellant Alfonso Rivera’s out-of-court identification was tainted
with irregularity, his subsequent identification in court cured any flaw that may have attended it.
Without hesitation, the two prosecution witnesses, Renato Losaria and Juanito Baylon identified the
appellant as one of the assailants. In People v. Timon, the accused were identified through a show-
up. The accused assailed the process of identification because no other suspect was presented in a
police line-up. We ruled that a police line-up is not essential in identification and upheld the
identification of the accused through a show-up. We also held that even assuming arguendo that the
out-of-court identification was defective, the defect was cured by the subsequent positive
identification in court for the ‘inadmissibility of a police line-up identification x x x should not
necessarily foreclose the admissibility of an independent in-court identification.
Moreover, the burden is on petitioners to prove that their mug shot identification was unduly
suggestive. There is no evidence that the authorities had supplied or even suggested to the
witnesses that petitioners were the suspected gunmen. We, therefore, fail to see any flaw that would
invalidate the eyewitnesses’ identification. As aptly observed by the CA:
Both Florecita Dioneda and Niña Elemanco gave a credible eyewitness’ account of the victim’s x x x
death [by gunshots] in the hands of accused-appellant. Their testimony [sic] giving details of a
startling and shocking incident that cannot easily be fabricated deserves credence and full probative
weight for it indicates sincerity and truthfulness in the narration of events. Both of these witnesses
had a good look at the victim’s assailants, who did not at any time during the incident attempt to
conceal their faces. Accused-appellant MARBELLA even stood less [than] a meter from Florecita
Dioneda as he pointed a gun at her while another accused-appellant even [etched] upon her a
distinct impression of his baldness as repeatedly mentioned by her during her testimony. As there is
nothing to indicate that these two principal witnesses were moved by improper motives, their positive
declarations on the witness stand deserve full faith and credit.18
The fact that the prosecution witnesses are related to the victim will not necessarily taint their
testimonies. The weight of testimony of witnesses is neither impaired nor in any way affected by their
relationship to the victim when there is no showing of improper motive on their
part.19 Relationship per se of a witness with the victim of the crime does not necessarily mean that
the witness is biased.20 These prosecution witnesses are the most aggrieved parties, being the
victim’s widow and sister. Thus, their motive of putting the killers behind bars cannot be considered
improper.21 It would be unnatural for a relative who is interested in avenging the crime to implicate
persons other than the real culprit lest the guilty go unpunished. 22
Deeply entrenched in our jurisprudence is the rule that the assessment of the credibility of witnesses
is a domain best left to the trial court judge because of his unique opportunity to observe their
deportment and demeanor on the witness stand; a vantage point denied appellate courts – and
when his findings have been affirmed by the Court of Appeals, these are generally binding and
conclusive upon this Court.23
Significantly, in the pleadings filed before the trial court and in the appellate court, petitioners were
steadfast in their position that the crime was committed in furtherance of rebellion, obviously to
escape criminal liability for the present charge. This is judicial admission that they indeed committed
the crime. A judicial admission conclusively binds the party making it. He cannot thereafter take a
position contradictory to or inconsistent with his pleading. Acts or facts admitted do not require proof
and cannot be contradicted unless it is shown that the admission was made through palpable
mistake or that no such admission was made.24 Moreover, when a party adopts a certain theory in
the court below, he is not allowed to change his theory on appeal, for to allow him to do so would not
only be unfair to the other party but would also be offensive to the basic rules of fair play, justice and
due process.25
Treachery was also duly proven. The deadly and successive actions of the petitioners did not allow
the victim any opportunity to defend himself. The victim was innocently taking a bath totally unaware
of the planned attack against him. Or while he may have realized a possible danger to his person,
the attack was executed in such a manner as to make defense, not to say counter attack,
impossible. The suddenness of the assault, without the slightest provocation from him who was
unarmed and with nary an opportunity to repel the aggression or defend himself, ineluctably qualified
the crime with alevosia.26
The twin defenses of denial and alibi raised by petitioners must necessarily fail in view of the positive
identification made by the prosecution witnesses. Alibi and denial are inherently weak defenses and
must be brushed aside when the prosecution has sufficiently and positively ascertained the identity
of the accused.27 And it is only axiomatic that positive testimony prevails over negative testimony. 28
The testimonies of the prosecution witnesses thus established beyond reasonable doubt the
elements of robbery with homicide, namely: 1) the taking of personal property was committed with
violence or intimidation against persons; 2) the property taken belongs to another; 3) the taking was
done with animo lucrandi; and 4) by reason of the robbery or on the occasion thereof, the crime of
homicide which is therein used in a generic sense, was committed.29
As to damages, we find the amounts awarded by the trial court as modified by the CA with respect to
the amount of the loss of earning capacity to have been duly substantiated and warranted. We see
no cogent reason to reverse the same.
Finally, we take note that petitioner Butalon died before final judgment. According to the written
report of the Penal Superintendent,30 Butalon died at the New Bilibid Prison Hospital on October 21,
2004. Thus, consistent with our ruling in People v. Bayotas31 that the death of an accused pending
appeal of his conviction extinguishes his criminal liability as well as the civil liability based solely
thereon, we declare the dismissal of the petition of the late Norberto Butalon.
WHEREFORE, the petition for review is DENIED. The challenged Decision of the Court of Appeals
in CA-G.R. CR H.C. No. 00554 dated December 18, 2006 is AFFIRMED with MODIFICATION that
the petition of Norberto Butalon is dismissed, his criminal and civil liability having been extinguished
by reason of his death.
SO ORDERED.

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
RENATO C. CORONA ARTURO D. BRION

ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1
People v. Musa, G.R. No. 170472, July 3, 2009.
2
Records, p. i.
3
Records, pp. 113-119, penned by Judge Honesto A. Villamor.
4
CA rollo, pp. 107-122; penned by Associate Justice Rosmari D. Carandang and concurred
in by Associate Justices Renato C. Dacudao and Estela M. Perlas-Bernabe.
5
Id. at 53.
6
Rollo, p. 89.
7
Id. at 90-91.
8
9
People v. Belon, G.R. No. 87759, February 26, 1991, 194 SCRA 447, 457.
10
G.R No. 104869, February 23, 1994, 230 SCRA 270, 279.
11
People v. Carizo, G.R. No. 96551, July 6, 1994, 233 SCRA 687, 700.
12
People v. Simon, 473 Phil. 336, 365 (2004).
13
People v. Foncardes, 466 Phil. 992, 1005 (2004).
14
People v. Sinco, 408 Phil. 1, 13 (2001).
15
TSN, November 26, 2002, p. 9.
16
People v. Foncardes, supra note 13 at 1006.
17
458 Phil. 856, 876-877 (2003).
18
Rollo, p. 49.
19
Velasco v. People, G.R. No. 166479, February 28, 2006, 483 SCRA 649, 668.
20
Tadeja v. People, G.R. No. 145336, July 21, 2006, 496 SCRA 157, 165.
21
People v. Navales, 334 Phil. 521, 541 (1997).
22
People v. Dulanas, G.R. No. 159058, May 3, 2006, 489 SCRA 58, 76.
Heirs of Florentino Remetio v. Villareal, G.R. No. 132357, May 31, 2006, 490 SCRA 43,
23
47.
Heirs of Pedro Clemena y Zurbano v. Heirs of Irene B. Bien, G.R. No. 155508, September
24
11, 2006, 501 SCRA 405, 414-415.
25
Naval v. Court of Appeals, G.R. No. 167412, February 22, 2006, 483 SCRA 102, 109.
26
People v. Pallarco, 351 Phil. 391, 410 (1998).
27
People v. Torres, G.R No. 176262, September 11, 2007, 532 SCRA 654, 665.
28
People v. Corpuz, G.R No. 168101, February 13, 2006, 482 SCRA 435, 450.
29
People v. Lara, G. R No. 171449, October 23, 2006, 505 SCRA 137, 154.
30
CA rollo, p. 126.
31
G.R No. 102007, September 2, 1994, 236 SCRA 239, 241.
SUPREME COURT
Manila
EN BANC
G.R. No. 182221 February 3, 2010
THEMISTOCLES A. SAÑO, JR., Petitioner,

vs.
COMMISSION ON ELECTIONS, THE MUNICIPAL BOARD OF CANVASSERS OF DULAG,
LEYTE, FERDINAND A. SERRANO, in his capacity as Acting Chairman of the Municipal Board
of Canvassers of Dulag, Leyte, and MANUEL SIA QUE, Respondents.
DECISION
DEL CASTILLO, J.:
This case, with records spanning nearly 2,000 pages, revolves around the simple question of what
issues may be properly alleged in a pre-proclamation controversy. Petitioner has valiantly and
passionately argued his case and invoked every available ground to suspend and annul a
proclamation validly made. Unfortunately, argument is not evidence; advocacy is not legitimacy. The
mere invocation of the grounds of a pre-proclamation controversy, without more, will not justify the
exclusion of election returns which appear regular and authentic on their face.
This Petition for Certiorari filed pursuant to Rule 65 in relation to Rule 64 of the Rules of Court,
assails the Resolution1 dated October 3, 2007 of the Commission on Elections (COMELEC) First
Division in SPC Case No. 07-191, as well as the COMELEC En Banc’s Resolution2 dated February
12, 2008.
Petitioner Themistocles A. Saño (Saño) was the official candidate of Lakas Christian Muslim
Democrats (LAKAS-CMD) for Municipal Mayor of the Municipality of Dulag, Leyte during the May 14,
2007 synchronized national and local elections.3 Private respondent Manuel Sia Que (Que) ran for
the same position under the auspices of the Liberal Party.
Petitioner’s Factual Allegations
Saño alleged that after the casting and counting of votes, at about midnight of May 14, 2007, a man
was seen carrying a ballot box that was not locked; he then inserted certain documents in said ballot
box, took the aluminum seal, sealed the box, and then turned it over to the Reception Group. The
election returns (ERs) allegedly affected by this anomalous activity were ER Nos. 5301624,
5301603, 5301633, 5301602, and 5301668 (the contested ERs) for Precinct Nos. 49-A, 31-A, 58-A,
30-A, and 90-A, respectively (the questioned precincts).
During the canvassing at the Dulag Municipal Hall, Saño sought to have the contested ERs excluded
on the following grounds: massive fraud, illegal proceedings, and tampered/falsified and obviously
manufactured returns. He alleged that timely oral objections were made, and the written Petition for
Exclusion was filed with the Municipal Board of Canvassers (MBOC)4 on May 15, 2007 at 6:50
p.m.5 together with affidavits prepared by his brother, Tancredo A. Saño, and a certain Peter C.
Alicando.6 Upon the filing of the Petition for Exclusion, canvass of the contested ERs was deferred.
Saño further alleged that in the morning of May 16, 2007, Lydia Camposano (Camposano), Election
Officer for Dulag, and Chairperson of the MBOC, was overheard calling a certain "sir" over the
telephone to ask for a ruling. The telephone conversation was video recorded by Wilfredo O. Lazar
(Lazar), who executed an affidavit attesting to said occurrence.7 Saño, through counsel, then
verbally moved for the inhibition of Camposano as MBOC Chairman on the ground of bias and for
prejudgment of the election results. Camposano allegedly acknowledged that she was talking to her
superior, Atty. Jose Nick Medros, Director III of Region VIII and Chairman of the Leyte Provincial
Board of Canvassers, but declined to inhibit herself until she was ordered to do so by her superiors.
The canvassing continued.
At around 9:00 p.m. of May 16, 2007, Saño filed his written Petition for Inhibition together with the
affidavit of Lazar, reiterating his request for the inhibition of the MBOC Chair. 8 At midnight of May 16,
2007, Camposano inhibited herself and declared the canvassing temporarily adjourned.
At around 5:00 p.m. of May 17, 2007, Saño received a copy of the COMELEC Regional Office’s
Memorandum designating Ferdinand Serrano (Serrano) as the Acting Election Officer and MBOC
Chairperson.9 Canvassing resumed at about 6:00 p.m. of May 17, 2007, during which Serrano
verbally ruled that the contested ERs would be opened. Serrano promised that this ruling would be
put in writing within 24 hours. Thereafter, petitioner, through counsel, filed a Notice of Appeal at 5:00
a.m. of May 18, 200710 covering the contested ERs.
Finally, Saño claimed that instead of suspending the canvass as required by law and the canvassing
rules, Serrano proceeded to hastily open and canvass the contested ERs. Despite the filing of
petitioner’s Notice of Appeal, and the fact that the exclusion of the contested ERs would materially
affect the results of the election,11 the MBOC neither made a written ruling nor elevated the appeal to
the COMELEC together with the MBOC’s report and records of the case. Instead, the MBOC
proclaimed Que as Municipal Mayor.
Private Respondent’s Factual Allegations
On the other hand, Que alleged that in the early morning of May 15, 2007, the MBOC of Dulag,
Leyte, convened and started to canvass the ERs.12 At around 3:46 a.m. of May 15, 2007, the ER
from Precinct No. 30-A was temporarily set aside because of lack of data on the number of
registered voters, voters who actually voted, and excess and rejected ballots. At the time that this
ER was opened, no objection to its inclusion was made.13
At around 6:15 a.m. of May 15, 2007, the Board of Election Inspectors (BEI) from Precinct No. 30-A
appeared before the MBOC to complete the data. This time counsel for Saño complained that the
LAKAS-CMD copy had imprints but BEI Chairperson Ruel Congzon explained that the imprints were
due to the carbonized duplicate forms, and that the copies given to the various political parties were
borrowed by the watchers so they could copy the election results. Not finding the explanation
satisfactory, counsel for petitioner moved for the exclusion of said ER because of material defects in
the return. Camposano ruled that the ER from Precinct No. 30-A would be set aside until the
submission of petitioner’s written objection.14
Meanwhile, at around 5:20 a.m. of May 15, 2007, petitioner’s counsel verbally moved for the
exclusion of the ERs from Precinct Nos. 31-A, 49-A, and 58-A on the ground that the ballot boxes
were opened. The ERs were set aside and the members of the BEI from said precincts were
summoned to appear before the MBOC.15
At around 6:30 p.m. of May 15, 2007, counsel for petitioner likewise orally objected to the inclusion
of the ER from Precinct No. 90-A on the ground that it had been tampered with and contained many
erasures.16
At 6:50 p.m. of May 15, 2007, petitioner’s counsel submitted a written Petition for Exclusion of the
five contested ERs.17 Canvass of the contested ERs was deferred until the submission of Que’s
comment. On May 16, 2007 at 10:49 a.m., Que submitted his written Opposition.18
At around 9:17 p.m. of May 16, 2007, petitioner filed a Petition for Inhibition of
Camposano.19 Subsequently, at 12:30 a.m. of May 17, 2007, Camposano manifested that she would
inhibit herself as MBOC Chairperson.20 At 1:12 a.m. of May 17, 2007, canvassing was temporarily
adjourned to await the appointment of a new MBOC Chairperson.21
Canvassing resumed at 5:55 p.m. of May 17, 2007, when the MBOC was reconvened with Serrano
as Acting Chairperson22 at which time, 25 precincts were not yet canvassed. Serrano explained that
he was required by law to finish the canvass, and that the BEIs assigned to the various questioned
precincts would be summoned. He also stated that "these allegations can’t be determined if we won’t
open the election returns x x x the BOC will ascertain if the election return has been tampered [with].
We will see if statistical data of ballots are filled out and [ask] the BEI to correct the statistical data
about the ballots which were not correct".23
While the ERs were being canvassed, counsel for petitioner did not immediately manifest her
intention to appeal the ruling on the canvassing of ER in the questioned precincts. The Minutes of
the Canvass provide:
Precinct Minutes
90-A24 Precinct 90A of San Rafael completed the data (contested)
Envelope serial No. 015884
Envelope Seal – 0916966 (seal open)
ER seal – no seal
ER # 5301668
Valid Votes – 164
Spoil – 0
Excess – 0
Rejected – 0
Atty. Palabrica asked if the result will be tallied separately.

Chairman Serrano: If it is a pre-proclamation issue, then I
will separate. I am inviting you to house rules 6 & 8. You
are alleging massive fraud and [tampering of ERs].
Atty. Palabrica: I did lump the reasons for this objection. [I]
am asking if it’s temporarily tallied.
Chairman Serrano: You alleged that the ER [was] obviously
manufactured.
Atty. Palabrica: The ER was already prepared and that is

why the ballot box was opened. The face of the ER [is]
okey.
Chairman Serrano: Such ground is covered by regular
protest.
Asked Lolita Ducanes, chairman and the third member. Are

these your signatures? Are these the same election returns
that you signed and placed on the ballot box?
Lolita Ducanes: Yes, it’s my signature and they are the

election returns that we signed.
Atty Palabrica: Asked why the ballot box was opened.
Lolita Ducanes: It was opened in the custody group.25

30-A26 At 2:13a.m. to 2:18 p.m. Precinct 30-A of Barangay Arado
was opened and canvassed.
Data
Envelope # 015811
Envelope Seal # 0915307 (seals sticking to envelope)
ER seal # - no inner seal
ER # 5301602
# of valid ballots in compartment for valid ballots – 162
# of spoil[ed] ballots – 0
# of excess ballots – 0
# of rejected ballots – 0
Atty. Palabrica: had it noted that BEI of 30-A of Brgy. Arado

did not give a certificate of votes to the Lakas watchers.
58-A27 At 2:21 a.m. to 2:40 a.m., Precinct 58-A of Barangay Luan
was opened and in good condition.
Data
Envelope # 015854
Envelope Seal # 0916088
ER inner seal # - 0916087
ER # 5301633
# of valid ballots – 162
# of spoiled ballots – 0
49-A28 At 2:40 a.m. to 2:48 a.m. Precinct 49A of Barangay Camote
Data
Envelope # 015803
Envelope Seal # 015803 – envelope partly good otherwise

in good condition
ER seal # - 0915855
ER # 5301624
31-A29 At 2:55 a.m. to 3:05 a.m., Precinct 31-A of Barangay Batug
Envelope Serial # - 015808 (The envelope is torn a little at

the side otherwise in good condition)
Envelope Seal # 0915327
ER seal # - 0915326
ER # 5301603
Chairman Serrano: Called the BEI members:
BEI Chairman - Fatima Ychon
Poll Clerk - Jeralyn Peque,
Third Member - Noel Lagunzad.

Chairman Serrano: Asked the BEI who prepared the
election return.
BEI members: Replied they were the one who prepared the
election return #5301603 of Brgy. Batug.
At 3:00 a.m. of May 18, 2007, all ERs for the municipality had been canvassed and the canvassing
was ordered terminated.30
COMELEC Proceedings
On May 28, 2007, petitioner filed a Petition for Annulment of Proclamation and/or Proceedings of the
Municipal Board of Canvassers of Dulag, Leyte, before the COMELEC, which was docketed as SPC
Case No. 07-191 and raffled to the First Division.31 This petition was amended on July 12, 2007 by
impleading Que as a necessary party.32 In the meantime, Que assumed his position on June 30,
2007.
In his petition, Saño argued that the MBOC violated Section 20, Republic Act (RA) No. 7166 33 and
Section 39 of COMELEC Resolution No. 7859.34 Petitioner also sought to exclude the contested ERs
from the canvass, on the ground that these were tampered with or obviously manufactured. Finally,
he also sought that he be declared and proclaimed, after the exclusion of the contested ERs, as the
winning candidate for the position of Municipal Mayor of that municipality.
Que filed his Answer to the petition on July 26, 2007.35 The MBOC, through Serrano, filed a separate
Consolidated Answer dated July 25, 2007.36
After hearing the case on August 1 and 13, 2007, the COMELEC First Division directed the parties
to submit their respective memoranda.37 Thereafter, the COMELEC issued its Resolution dated
October 3, 2007 upholding the proclamation of Que:38
x x x A pre-proclamation controversy refers to any question pertaining to or affecting the proceedings
of the board of canvassers which may be raised by any candidate or by any registered political party
or coalition of political parties before the board or directly with the Commission, or any matter raised
under Sections 233, 234, 235, and 236 of the Omnibus Election Code in relation to the preparation,
transmission, receipt, custody and appreciation of election returns. On the other hand, Section 243
of the Omnibus Election Code enumerates the issues that may be raised in a pre-proclamation
controversy, viz:
1. Illegal composition or proceedings of the board of canvassers;
2. The canvassed election returns are incomplete, contain material defects, appear to be
tampered with or falsified, or contain discrepancies in the same returns or in other authentic
copies thereof as mentioned in Sections 233, 234, 235 and 236 of the Omnibus Election
Code;
3. The election returns were prepared under duress, threats, coercion, or intimidation, or
they are obviously manufactured or not authentic; and
4. When substitute or fraudulent returns in controverted polling places were canvassed, the
results of which materially affected the standing of the aggrieved candidate.
It is likewise settled that the above enumeration of the grounds that [many] be properly raised in a
pre-proclamation controversy is restrictive and exclusive.
In the case at bar, as borne out by the records, petitioner anchors his petition for the exclusion of the
election returns from Precinct Nos. 49A, 31A, 58A, 31A, and 90A on the following grounds: that the
election returns were (1) obviously manufactured; (2) tampered or falsified; [3]that there was
massive fraud; and [4] illegal proceedings. In support thereto, petitioner attached the affidavits of his
two (2) supporters, who attested that they saw open ballot boxes from Precinct Nos. 49A, 31A, and
58A. A painstaking examination of the records, however, shows that petitioner miserably failed to
substantiate his allegations that the election returns were obviously manufactured, tampered with,
that massive fraud attended the preparation thereof, and that the proceedings of the board were
illegal.
There is an avalanche of jurisprudence which states that to justify the exclusion of election returns,
the allegations that the election returns were obviously manufactured must be evident from the face
of the said documents. In the case at point, however, a meticulous examination of the contested
election returns copies for the Commission, as well as the copy for the dominant majority party
indubitably showed that there is neither a compelling nor cogent reason to warrant their exclusion.
In the same vein, petitioner failed not only to adduce evidence but [also[ to prove his allegation of
massive fraud or illegality of the proceedings of the board. A contrario, the MBoC had done nothing
[amiss. Rather it tolerated] maximum x x x liberal interpretation of election laws in favor of the
petitioner for, despite the clear absence of an issue cognizable as a pre-proclamation controversy
and non-compliance with the rule on submission on petitions or objections before it, the board both
under the chairmanship of Camposano and Serrano [allowed] the petitioner x x x to submit his
petition. [It also addressed] the issues/concerns raised, as shown in the Minutes of the Proceedings
of the Board. The Board is correct in not giving credence to petitioner’s petition for exclusion [of the
questioned returns] as it has been shown that there are no valid grounds raised thereon which falls
within the ambit of Section 234 of the Election Code.
Petitioner moved for reconsideration39 but the motion was denied by the COMELEC En Banc on
February 12, 2008.40
The Parties’ Arguments
Petitioner insists that all five contested ERs were written by only one person, and these ERs were
surreptitiously presented before the MBOC. Thus, he argues that the issues raised before the
MBOC, namely, that the contested ERs were tampered with and/or falsified, obviously
manufactured, and subject of massive fraud, are pre-proclamation controversies as defined in
Section 241 of the Omnibus Election Code and fall within the contemplation of Section 243(b) of said
Code. As such, the contested ERs should have been excluded from the canvass. Consequently, the
MBOC’s proclamation of Que violated Section 39 of Commonwealth Act No. 7859 and Section 20 of
RA 7166.
On the other hand, Que argues that the allegations raised by petitioner on the contested ERs are not
proper in a pre-proclamation controversy; that petitioner failed to substantiate his claim that the
contested ERs were obviously manufactured, tampered with, or falsified; and that petitioner failed to
follow the strict and mandatory procedure under Section 20 of RA 7166 and COMELEC Resolution
No. 8969 for manifesting an appeal.
Our Ruling
The petition is without merit.
A pre-proclamation controversy, as defined in Batas Pambansa (BP) Blg. 881, otherwise known as
the Omnibus Election Code of the Philippines, is:
any question pertaining to or affecting the proceeding of the board of canvassers which may be
raised by any candidate or by any registered political party or coalition of political parties before the
board or directly with the Commission, or any matter raised under Sections 233, 234, 235 and 236 in
relation to the preparation, transmission, receipt, custody and appearance of the election returns. 41
Procedural Matters
It is settled that a pre-proclamation controversy is summary in character; 42 indeed, it is the policy of

the law that pre-proclamation controversies be promptly decided, so as not to delay canvass and
proclamation.43 The Board of Canvassers (BOC) will not look into allegations of irregularity that are
not apparent on the face of ERs that appear otherwise authentic and duly accomplished. 44
Consistent with the summary character and limited scope of a pre-proclamation controversy, Section
20 of RA 7166 lays down the procedure to be followed when ERs are contested before the
BOC.45 Compliance with this procedure is mandatory, so as to permit the BOC to resolve the
objections as quickly as possible. Thus, we held in Siquian, Jr. v. Commission on Elections 46] that:
Compliance with the period set for objections on exclusion and inclusion of election returns is
mandatory. Otherwise, to allow objections after the canvassing would be to open the floodgates to
schemes designed to delay the proclamation and frustrate the electorate’s will by some candidates
who feel that the only way to fight for a lost cause is to delay the proclamation of the winner. It
should be noted that proceedings before the Board of Canvassers is summary in nature which is
why the law grants the parties a short period to submit objections and the Board a short period to
rule on matters brought to them. x x x47]
Section 20 of RA 7166 and Section 36 of COMELEC Resolution 2962 provide that any candidate
may contest the inclusion of an ER by making an oral objection at the time the questioned return is
submitted for canvass; the objecting party shall also submit his objections in writing simultaneously
with the oral objections. The BOC shall consider the written objections and opposition, if any, and
summarily rule on the petition for exclusion. Any party adversely affected by such ruling must
immediately inform the BOC if he intends to appeal such ruling.
After the BOC rules on the contested returns and canvasses all the uncontested returns, it shall
suspend the canvass. Any party adversely affected by the ruling has 48 hours to file a Notice of
Appeal; the appeal shall be filed within five days. Upon receipt of the notice of appeal, the BOC will
make its report to the COMELEC, and elevate the records and evidence.
Moreover, pursuant to Section 235 of the Omnibus Election Code, in cases where the ERs appear to
have been tampered with, altered or falsified, the COMELEC shall examine the other copies of the
questioned returns and, if the other copies are likewise tampered with, altered, falsified, or otherwise
spurious, after having given notice to all candidates and satisfied itself that the integrity of the ballot
box and of the ballots therein have been duly preserved, shall order a recount of the votes cast,
prepare a new return which shall be used by the BOC as basis for the canvass, and direct the
proclamation of the winner accordingly.
Based on the records of this case, we find that petitioner failed to timely make his objections to the
contested ERs.
The minutes of the proceedings before the MBOC reveal that the contested ERs were presented for
inclusion in the canvass, and then orally objected to by the petitioner, at the following times:
Precinct No. Time of Presentation for Grounds for Objection

Canvass/Oral Objection
30-A48 May 15, 2007; 6:15 a.m. Material defect
31-A49 May 15, 2007; 5:20 a.m. Ballot boxes open
90-A52 May 15, 2007; 6:30 p.m. Tampering; many erasures
However, only one written petition for exclusion was filed for the five contested ERs at 6:50 p.m. of
May 15, 2007.53Of course the law does not intend that election lawyers submit their written
objections at exactly the same second as their oral manifestation; however, a lapse of over 12 hours,
long after the ERs have been presented for canvass, is simply inexplicable and unacceptable.
It is also irregular that counsel for petitioner lumped all the objections into one petition for exclusion.
We recognize that this is commonplace among election practitioners, intended for the convenience
of the advocate. However, in cases like these, where each ground for exclusion is separate and
distinct, merging written objections leads to unnecessary chaos in proceedings before the MBOC,
and – is here - as a disservice to the clients.
No evidence that the election returns were falsified or tampered with.
While we are willing to overlook the procedural lapses committed by the petitioner his manifestation
and subsequent Notice of Appeal do not serve to overturn the assailed Resolutions. We find that the
MBOC did not err in proclaiming the private respondent, since the unsubstantiated issues raised by
the petitioner were not proper for a pre-proclamation controversy. As we explained, claims that
contested ERs are obviously manufactured or falsified must be evident from the face of the said
documents themselves.54 But counsel for petitioner herself admitted that "on their face", the ERs
were "okey". Contrary to petitioner’s passionate remonstrations, there is absolutely no indication that
the contested ERs were falsified or tampered with. As such, there was no valid ground to delay the
proclamation.
Petitioner anchors his claim of falsification and tampering on the allegation that the genuine ERs
were replaced with manufactured returns, as evidenced by the purported similarity in handwriting of
the contested ERs. Essentially, petitioner argues that the contested ERs cannot be trusted because
all five of the contested ERs were prepared by one person; thus, no copy of the return can be trusted
and there must be a recount of the ballots. He claims that –
the copies of the questioned election returns for both the dominant majority party as well as
submitted to COMELEC and that of the dominant minority party, are duplicate copies of the original
which are equally tainted with irregularity.
Unfortunately, petitioner has failed to substantiate these allegations. On this, the COMELEC En
Banc ruled:
x x x First, We cannot give due credence to the affidavits of Mr. Peter Alicando and Mr. Tancredo
Saño considering the infirm nature of affidavits. Second, affiant Saño is the brother of herein
petitioner and his affidavit may most likely be considered as self-serving.
In Salafranca v. Philamlife (Pamplona) Village Homeowners Association, Inc., the Supreme Court
held:
"It is settled that no undue importance should be given to a sworn statement of affidavit as piece of
evidence because, being taken ex parte, an affidavit is almost always incomplete and inaccurate".
Nevertheless, the crux of the affidavits above-mentioned pertains to the alleged opening of a ballot
box by a man who placed several documents therein. While a picture was attached to show a
person purportedly placing something inside a ballot box, it is not safe to assume that some
irregularity indeed took place. What is worth noting is the fact that while petitioner claims massive
fraud and tampering, the pieces of evidence only show a single ballot box being opened by an
unknown person that is for one (1) precinct alone and definitely not for five (5) precincts as claimed
by the petitioner. This notwithstanding, it is submitted that the ground relied upon may best be
addressed in a protest case.
xxxx
Finally, an examination of the contested election returns will show that the same appear to be
regular and devoid of any signs of tampering or that the same were manufactured. The allegation
that the same were written by one hand does not hold water. x x x55 (citations omitted)
Absent any clear showing of grave abuse of discretion, this Court is bound to rely on the findings
and conclusions of the COMELEC - the authority tasked by the Constitution to administer and
enforce election laws.56
At any rate, even if we take a second look at the facts, petitioner has still not proven that the ERs
were spurious, falsified, or manufactured. Consider the following:
First, LAKAS-CMD was the dominant majority party in 2007.57 As such, its watchers would have
been given a copy of the ERs in the questioned precincts by the BEI itself. It was never claimed that
LAKAS-CMD never received its copy of the ERs. It seems rather incredulous, therefore, that ALL the
ERs from the questioned precincts were allegedly surreptitiously replaced.
Second, official watchers from the camps of both LAKAS-CMD and petitioner had the opportunity to
take down the tally of votes and obtain a Certificate of Votes from the BEI. Despite this, there has
been no allegation that the votes recorded in favor of petitioner were not the true votes cast in the
election.
lawph!l
Third, the members of the BEI from the questioned precincts themselves affirmed that they prepared
the contested ERs.
Fourth, petitioner never deigned to present any proof on his claim of similarity in handwriting – no
expert opinions, no testimony, no technical examination. Unfortunately, it is not at all evident from
the returns that these were manufactured or fabricated.
Unlike a pre-proclamation controversy, the annulment proceedings before the COMELEC were not
summary in character;58 petitioner had every opportunity to ventilate his case and substantiate his
allegations before the Commission below. This notwithstanding, petitioner failed to present any
evidence sufficient to overcome the presumption that the contested ERs were valid.
WHEREFORE, the Petition for Certiorari is hereby DISMISSED for lack of merit. The Resolution of
the Commission on Elections First Division dated October 3, 2007 in SPC Case No. 07-191
dismissing petitioner’s Petition for Annulment of Proclamation and/or Proceedings of the Municipal
Board of Canvassers of Dulag, Leyte, and the Resolution of the Commission on
Elections En Banc dated February 12, 2008 denying petitioner’s motion for reconsideration,
are AFFIRMED.
SO ORDERED.

Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice
ANTONIO T. CARPIO RENATO C. CORONA

CONCHITA CARPIO MORALES PRESBITERO J. VELASCO, JR.

ANTONIO EDUARDO B. NACHURA TERESITA J. LEONARDO-DE CASTRO

ARTURO D. BRION DIOSDADO M. PERALTA

LUCAS P. BERSAMIN ROBERTO A. ABAD

MARTIN S. VILLARAMA, JR. JOSE P. PEREZ

JOSE C. MENDOZA
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in
the above Decision had been reached in consultation before the case was assigned to the writer of
the opinion of the Court.
REYNATO S. PUNO
Chief Justice
Footnotes
1
Rollo, pp. 63-71; penned by Commissioner Romeo A. Brawner and concurred in by
Commissioner Resurrecion Z. Borra.
2
Id. at 72-76; penned by Commissioner Rene V. Sarmiento and concurred in by
Commissioners Romeo A. Brawner, Nicodemo T. Ferrer, and Moslemen T. Macarambon.
3
Id. at 122-123.
4
Originally composed of Election Officer Lydia S. Camposano as Chairperson, Mr. Enrique
Cabaobao as Vice-Chairman, and Ms. Joquinita P. Capili as Secretary.
5
Rollo, pp. 124-125.
6
Id. at 126-130.
7
Id. at 139.
8
Id. at 136-138.
9
Id. at 141.
10
Id. at 143-144.
11
The total number of votes cast for the petitioner was 8,915 votes while the total number of
votes cast for the private respondent was 9,092 votes. The total number of votes covered by
the contested election returns is 799 votes, of which 288 were credited to petitioner and 511
were credited to the private respondent, as follows:
Election Return Precinct No. Barangay No of Contested Votes

Sano Que
5301602 30-A Arado 42 118
5301603 31-A Batug 47 123
5301624 49-A Camote 74 87
5301633 58-A Luan 72 86
5301668 90-A San Rafael 53 97
TOTAL 288 511
12
Minutes on the National, Provincial, and Local May 14, 2007 Elections of Dulag, Leyte, p.
2, Petitioner’s Annex "U" (hereinafter, Minutes); rollo, pp. 284.
13
Id.
14
Id. at 3; id. at 285.
15
Id.
16
Minutes, p. 4; id. at 286.
17
Rollo, pp. 124-125.
18
Minutes, p. 4; id. at 286.
19
Id. at 8; id. at 290.
20
Id. at 9; id. at 291.
21
Id. at 10; id. at 292.
22
Id.
23
Id.
24
Id. at 12; id. at 292.
25
Id.
26
Id. at 14; id. at 296.
27
Handwritten Notes of MBOC Secretary Joaquinita Capili; Records, Vol. II, p. 45.
28
Minutes, p. 14, rollo, p. 296.
29
Id. at 14-15; id. at 310-311.
30
Id. at 15; id. at 197.
31
Records, Vol. I, pp. 1-45.
32
Id. at 55-93.
An Act Providing For Synchronized National And Local Elections And For Electoral
33
Reforms, Authorizing Appropriations Therefor, And For Other Purposes (1991).
General Instructions for the Municipal/City/Provincial and District Board of Canvassers in

34
Connection with the May 14, 2007 National and Local Elections (April 17, 2007).
35
Records, Vol. I, pp. 100-140.
36
Id. at 152-180.
Both petitioner and private respondent filed their respective Memoranda on August 28,
37
2007; Records, Vol. I, pp. 206-306. Acting Chairman Serrano filed his Memorandum on
September 3, 2007, id. at 345-363; MBOC Members Capili and Cabaobao also filed a
Memorandum on August 31, 2007, id. at 329-342.
38
Rollo, pp. 67-69.
39
Id. at 77-106.
40
Id. at 72-76.
41
See also Sections 233-236 of the Omnibus Election Code, which provide:
Sec. 233. When the election returns are delayed, lost or destroyed. - In case its copy
of the election returns is missing, the board of canvassers shall, by messenger or
otherwise, obtain such missing election returns from the board of election inspectors
concerned, or if said returns have been lost or destroyed, the board of canvassers,
upon prior authority of the Commission, may use any of the authentic copies of said
election returns or a certified copy of said election returns issued by the Commission,
and forthwith direct its representative to investigate the case and immediately report
the matter to the Commission.
The board of canvassers, notwithstanding the fact that not all the election returns
have been received by it, may terminate the canvass and proclaim the candidates
elected on the basis of the available election returns if the missing election returns
will not affect the results of the election.
Sec. 234. Material defects in the election returns. - If it should clearly appear that
some requisites in form or data had been omitted in the election returns, the board of
canvassers shall call for all the members of the board of election inspectors
concerned by the most expeditious means, for the same board to effect the
correction: Provided, That in case of the omission in the election returns of the name
of any candidate and/or his corresponding votes, the board of canvassers shall
require the board of election inspectors concerned to complete the necessary data in
the election returns and affix therein their initials: Provided, further, That if the votes
omitted in the returns cannot be ascertained by other means except by recounting
the ballots, the Commission, after satisfying itself that the identity and integrity of the
ballot box have not been violated, shall order the board of election inspectors to open
the ballot box, and, also after satisfying itself that the integrity of the ballots therein
has been duly preserved, order the board of election inspectors to count the votes for
the candidate whose votes have been omitted with notice thereof to all candidates for
the position involved and thereafter complete the returns.
The right of a candidate to avail of this provision shall not be lost or affected by the
fact that an election protest is subsequently filed by any of the candidates.
Sec. 235. When election returns appear to be tampered with or falsified. - If the
election returns submitted to the board of canvassers appear to be tampered with,
altered or falsified after they have left the hands of the board of election inspectors,
or otherwise not authentic, or were prepared by the board of election inspectors
under duress, force, intimidation, or prepared by persons other than the member of
the board of election inspectors, the board of canvassers shall use the other copies
of said election returns and, if necessary, the copy inside the ballot box which upon
previous authority given by the Commission may be retrieved in accordance with
Section 220 hereof. If the other copies of the returns are likewise tampered with,
altered, falsified, not authentic, prepared under duress, force, intimidation, or
prepared by persons other than the members of the board of election inspectors, the
board of canvassers or any candidate affected shall bring the matter to the attention
of the Commission. The Commission shall then, after giving notice to all candidates
concerned and after satisfying itself that nothing in the ballot box indicate that its
identity and integrity have been violated, order the opening of the ballot box and,
likewise after satisfying itself that the integrity of the ballots therein has been duly
preserved shall order the board of election inspectors to recount the votes of the
candidates affected and prepare a new return which shall then be used by the board
of canvassers as basis of the canvass.
Sec. 236. Discrepancies in election returns. - In case it appears to the board of

canvassers that there exists discrepancies in the other authentic copies of the
election returns from a polling place or discrepancies in the votes of any candidate in
words and figures in the same return, and in either case the difference affects the
results of the election, the Commission, upon motion of the board of canvassers or
any candidate affected and after due notice to all candidates concerned, shall
proceed summarily to determine whether the integrity of the ballot box had been
preserved, and once satisfied thereof shall order the opening of the ballot box to
recount the votes cast in the polling place solely for the purpose of determining the
true result of the count of votes of the candidates concerned.
42
Chu v. Commission on Elections, 359 Phil. 509, 517 (1999).
Omnibus Election Code, Section 246; Abayon v. Commission on Elections, G.R. No.
43
181295, April 2, 2009.
44
Bandala v. Commission on Elections, 468 Phil. 411, 418 (2004).
45
SEC. 20. Procedure in the Disposition of Contested Election Returns.
(a) Any candidate, political party or coalition of parties contesting the inclusion or
exclusion in the canvass of any election returns on any of the grounds authorized
under Article XX or Sections 234, 235 and 236 of Article XIX of the Omnibus Election
Code shall submit their oral objection to the chairman of the board of canvassers at
the time the questioned return is presented for inclusion in the canvass. Such
objection shall be recorded in the minutes of the canvass.
(b) Upon receipt of any such objection, the board of canvassers shall automatically
defer the canvassof the contested returns and shall proceed to canvass the returns
which are not contested by any party.
(c) Simultaneous with the oral objection, the objecting party shall also enter his
objection in the form for written objections to be prescribed by the Commission.
Within twenty-four (24) hours from and after the presentation of such an objection,
the objecting party shall submit the evidence in support of the objection, which shall
be attached to the form for written objections. Within the same period of twenty-four
(24) hours after presentation of the objection, any party may file a written and verified
opposition to the objection in the form also to be prescribed by the Commission,
attaching thereto supporting evidence, if any. The board shall not entertain any
objection or opposition unless reduced to writing in the prescribed forms.
The evidence attached to the objection or opposition, submitted by the

parties, shall be immediately and formally admitted into the records of the
board by the chairman affixing his signature at the back of each and every
page thereof.
(d) Upon receipt of the evidence, the board shall take up the contested returns,
consider the written objections thereto and opposition, if any, and summarily and
immediately rule thereon. The board shall enter its ruling on the prescribed form and
authenticate the same by the signatures of its members.
(e) Any party adversely affected by the ruling of the board shall immediately inform
the board if he intends to appeal said ruling. The board shall enter said information in
the minutes of the canvass, set aside the returns and proceed to consider the other
returns.
(f) After all the uncontested returns have been canvassed and the contested returns
ruled upon by it, the board shall suspend the canvass. Within forty-eight (48) hours
therefrom, any party adversely affected by the ruling may file with the board a written
and verified notice of appeal; and within an unextendible period of five (5) days
thereafter, an appeal may be taken to the Commission.
(g) Immediately upon receipt of the notice of appeal, the board shall make an
appropriate report to the Commission, elevating therewith the complete records and
evidence submitted in the canvass, and furnishing the parties with copies of the
report.
(h) On the basis of the records and evidence elevated to it by the board, the
Commission shall decide summarily the appeal within seven (7) days from receipt of
said records and evidence. Any appeal brought before the Commission on the ruling
of the board, without the accomplished forms and the evidence appended thereto
shall be summarily dismissed.
The decision of the Commission shall be executory after the lapse of seven
(7) days from receipt thereof by the losing party.
(i) The board of canvassers shall not proclaim any candidate as winner unless
authorized by the Commission after the latter has ruled on the objections brought to it
on appeal by the losing party. Any proclamation made in violation hereof shall be
void ab initio, unless the contested returns will not adversely affect the results of the
election.
46
378 Phil 182 (1999). .
47
Id. at 185-186.
48
Id.
49
Minutes, p. 3, rollo, p. 285.
50
Id.
51
Id.
52
Id. at 4, id. at 286.
53
Rollo, pp. 124-125.
54
Dipatuan v. Commission on Elections, G.R. No. 86117, May 7, 1990, 185 SCRA 86, 93.
55
Rollo, pp. 73-75.
56
Constitution, Art. IX-C, Sec. 2(1).
COMELEC Resolution No. 7877, In the Matter of the Accreditation of the Dominant
57
Majority Party, the Dominant Minority Party, and the Other Six (6) Accredited Major Political
Parties in the May 14, 2007 National and Local Elections (May 2, 2007).
58
In Loong v. Commission on Elections, 326 Phil. 792-793 (1996), we held that:
While, however, the COMELEC is restricted, in pre-proclamation cases, to an

examination of the election returns on their face and is without jurisdiction to go
beyond or behind them and investigate election irregularities, the COMELEC is duty
bound to investigate allegations of fraud, terrorism, violence and other analogous
causes in actions for annulment of election results or for declaration of failure of
elections, as the Omnibus Election Code denominates the same. Thus, the
COMELEC, in the case of actions for annulment of election results or declaration of
failure of elections, may conduct technical examination of election documents and
compare and analyze voters’ signatures and fingerprints in order to determine
whether or not the elections had indeed been free, honest and clean. Needless to
say, a pre-proclamation controversy is not the same as an action for annulment of
election results or declaration of failure of elections.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 180302 February 5, 2010
JIMMY ARENO, JR., Petitioner,

vs.
SKYCABLE PCC-BAGUIO, Respondent.
DECISION
DEL CASTILLO, J.:
Disciplinary action against an erring employee is a management prerogative which, generally, is not
subject to judicial interference. However, this policy can be justified only if the disciplinary action is
dictated by legitimate business reasons and is not oppressive, as in this case.
This petition for review on certiorari1 assails the Decision2 dated May 28, 2007 and the
Resolution3 dated October 16, 2007 of the Court of Appeals (CA) in CA-G.R. SP No. 94485, which
affirmed the February 28, 2006 Decision4 of the National Labor Relations Commission (NLRC)
upholding the legality of petitioner Jimmy Areno Jr.’s suspension and subsequent termination from
employment.
Factual Antecedents
On January 17, 1995, petitioner was employed as a cable technician by respondent Skycable PCC-
Baguio. On January 17, 2002, an accounting clerk of respondent, Hyacinth Soriano (Soriano), sent
to the human resource manager a letter-complaint5 against petitioner alleging that on two separate
occasions, the latter spread false rumors about her (the first in the middle of 2001 and the second on
December 22, 2001). On January 27, 2002, she was again insulted by petitioner when the latter
approached her and said that she was seen going out with Aldrin Estrada, their field service
supervisor, at Central Park, Baguio City. During that incident, petitioner uttered, "Ikaw lang ang
nakakaalam ng totoo" with malicious intent and in a provocative manner. Soriano averred that
petitioner’s unscrupulous behavior constituted serious and grave offense in violation of the
company’s Code of Discipline.
On the same day, respondent issued a Memorandum6 requiring petitioner to submit an explanation
within 76 hours from notice thereof. Petitioner submitted his written explanation 7 dated January 23,
2002 denying all the allegations in Soriano’s letter-complaint and further denying having uttered the
statement imputed on him, explaining thus:
2. That on the 7th of January, 2002 at SkyCable office, I greeted her ‘HELLO, HYA’. I thought she
didn’t hear me greet her so I continued saying ‘NAKITA NAMIN KAYO AH…SA CENTRAL
PARK.’ With that she answered, ‘KASAMA KO SI EMMAN.’ Then I added, ‘BA’T NANDOON YUNG
114?’ Then she reacted ‘TSISMOSO KA KASI!’ In that instance, I didn’t intend to insult her as she
was saying because I never really implied anything with my statement nor delivered it with malicious
intent. So I ended by saying, ‘BA’T DI MO SABIHIN YUNG PROBLEMA MO SA AKIN? IKAW LANG
ANG NAKAKAALAM NIYAN E!’ In this statement, I was asking her to tell me frankly the reasons why
she’s mad at me. I want to stress that I never delivered the statement in a provocative manner. 8
An administrative investigation was accordingly conducted on January 31, 2002. In a Memo 9 dated
February 6, 2002, the investigating committee found petitioner guilty of having made malicious
statements against Soriano during the January 7, 2002 conversation, which is categorized as an
offense under the Company Code of Discipline. Consequently, petitioner was suspended for three
days without pay effective February 13-15, 2002. The Memo was allegedly served on February 7,
2002 but petitioner refused to sign it.
Notwithstanding the suspension order, however, petitioner still reported for work on February 13,
2002. By reason thereof, respondent sent petitioner a letter denominated as 1st Notice of
Termination10 requiring him to explain in writing why he should not be terminated for insubordination.
On February 18, 2002, petitioner inquired from respondent whether he is already dismissed or
merely suspended since he was refused entry into the company premises on February 14,
2002.11 Respondent replied that petitioner was merely suspended and gave him additional time to
tender his written explanation to the 1st Notice of Termination.
On March 2, 2002, petitioner again wrote to respondent, this time requesting for further investigation
on his alleged act of spreading rumors against Soriano in order for him to confront his accuser and
present his witnesses with the assistance of counsel. Respondent denied the request reiterating that
there has been substantial compliance with due process and that a reinvestigation is moot because
the suspension was already served.
Anent the new charge of insubordination, petitioner submitted to respondent his written
explanation12 averring that he still reported for work on the first day of his suspension because the
accusation of Soriano is baseless and her testimony is hearsay. Besides, according to petitioner, he
did not defy any order related to his duties, no representative of the management prevented him
from working and that reporting to work without being paid for the service he rendered on that day
did not in any way affect the company’s productivity.
On March 15, 2002, an investigation on the insubordination case was conducted which was
attended by the parties and their respective counsels. Through a Final Notice of Termination dated
April 1, 2002,13 petitioner was dismissed from service on the ground of insubordination or willful
disobedience in complying with the suspension order.
Proceedings before the Labor Arbiter
On April 5, 2002, petitioner filed a complaint14 before the Arbitration Branch of the NLRC against
respondent assailing the legality of his suspension and eventual dismissal. He claimed that his
suspension and dismissal were effected without any basis, and that he was denied his right to due
process.
On July 31, 2003, the Labor Arbiter rendered a Decision15 dismissing petitioner’s complaint for lack
of merit. The Labor Arbiter ruled that the act of petitioner in spreading rumors or intriguing against
the honor of a co-employee was persistent and characterized by willful and wrongful intents. It thus
held that the order suspending petitioner is a legitimate exercise of management prerogative and
that the deliberate refusal of petitioner to comply therewith constitutes willful disobedience.
Proceedings before the NLRC
Petitioner appealed to the NLRC, which, in a Decision16 dated July 22, 2005 found his suspension
and dismissal illegal. It held that the testimonies given during the January 31, 2002 administrative
investigation and used as basis for petitioner’s suspension are hearsay. The NLRC likewise held that
petitioner was deprived of his basic right to due process when he was not allowed to confront his
accuser despite his repeated requests.
Respondent moved for reconsideration.17 Petitioner, for his part, filed a Motion for Partial
Reconsideration18 with respect to the limited award of backwages and to claim payment of attorney’s
fees and damages as well.
The NLRC, in its February 28, 2006 Decision,19 reconsidered its earlier Decision and reinstated the
Labor Arbiter’s Decision dismissing the complaint. In reversing itself, the NLRC opined that as
shown by the transcripts of the investigation conducted on January 31, 2002, the testimony of
Soriano was not, after all, hearsay. The NLRC also considered the Memorandum dated December
10, 2001 which placed petitioner under deactivation for three months due to an offense he earlier
committed. While under said deactivation period, the commission of any further infraction warrants
the imposition of the penalty of suspension. Finally, the NLRC struck down petitioner’s claim that he
has no knowledge of the suspension order since this was never raised before the Labor Arbiter but
only on appeal.
Proceedings before the Court of Appeals
Aggrieved, petitioner filed with the CA a petition for certiorari.20 On May 28, 2007, the CA affirmed
the findings of the NLRC, ruling that the suspension of petitioner was not predicated on hearsay
evidence; that petitioner was not deprived of due process both at the company level and during the
proceedings held before the NLRC; and that petitioner’s failure to comply with respondent’s
suspension order, despite notice thereof, is a case of willful disobedience of a lawful order which is a
valid ground for dismissal.
Petitioner moved for reconsideration.21 Before acting thereon, the CA required respondent to file its
comment.22Although 19 days late, the CA admitted respondent’s comment23 in the interest of
justice.24
On October 16, 2007, the CA resolved petitioner’s Motion for Reconsideration as follows:
Finding no cogent reason with which to modify, much less reverse Our assailed Decision dated May
28, 2007, petitioner’s Motion for Reconsideration filed on June 18, 2007 is hereby DENIED.
SO ORDERED.25
Issues
Hence, the present petition with the following assignment of errors:
I.
WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN AFFIRMING THE

WHIMSICAL AND CAPRICIOUS DECISION OF THE NLRC WHICH REVERSED ITS ORIGINAL
DECISION FINDING THAT WITNESS HYACINTH SORIANO’S TESTIMONY IS NOT HEARSAY
AFTER ALL:
A. BY MEANS OF SELECTIVE CITATION ON A PORTION ON PAGE TWO OF

THE FIVE-PAGE UNSWORN TESTIMONY OF HYACINTH SORIANO THAT HER
TESTIMONY IS NOT HEARSAY AFTER ALL WHEN IN ITS ENTIRETY THE
TESTIMONIES ARE DOUBLE-TRIPLE-HEARSAY AS FOUND [BY] THE
RESPONDENT NLRC IN ITS ORIGINAL DECISION, ASIDE FROM THE FACT
THAT IN THAT JANUARY 31, 2002 HEARING WITNESS HYACINTH SORIANO
DID NOT TESTIFY UNDER OATH AND THE ENTIRE PROCEEDINGS OF THE
MINUTES WAS NOT SIGNED BY THE 3-MEMBER INVESTIGATION COMMITTEE,
HENCE THE BASIS OF THE PETITIONER’S SUSPENSION WHICH PUBLIC
RESPONDENTS FOUND TO BE A LEGAL ORDER IS NOTHING BUT A SCRAP
OF PAPER.
B. BY SIMPLY STATING THAT PETITIONER WAS NOT DENIED DUE PROCESS

BECAUSE HE WAS FURNISHED COPY OF THE TERMINATION NOTICE
STATING THE GROUNDS THERETO ALTHOUGH IN THE PLANT LEVEL
INVESTIGATION/HEARING ON JANUARY 31, 2002, PETITIONER WAS
EXCLUDED OR HIS PRESENCE WAS NOT ALLOWED DURING THE
GUIDED/COUCHED INTERROGATIONS FOR THE TESTIMONIES OF WITNESS
HYACINTH SORIANO AND AFTER WITNESS SORIANO’S GUIDED/COUCHED
TESTIMONIES ENDED, THE PANEL OF INVESTIGATORS SUBSEQUENTLY
TOOK THE TESTIMONIES OF THE PETITIONER, ONE AFTER THE OTHER. IN
SHORT, DESPITE HIS REPEATED DEMANDS FROM THE PRIVATE
RESPONDENT MANAGEMENT THAT HE BE ALLOWED TO CONFRONT HIS
ACCUSER HYACINTH SORIANO, PETITIONER WAS NOT ALLOWED TO
CONFRONT HIS ACCUSER.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FAILING

TO CONSIDER THE UNCONTROVERTED FACT THAT THE SO-CALLED THREE-DAY
SUSPENSION WAS ANCHORED ON A SCRAP OF PAPER BECAUSE IT WAS NOT SIGNED AND
ISSUED BY A COMPANY OFFICIAL OF THE PRIVATE RESPONDENT AUTHORIZED TO
EFFECT ANY DISMISSAL OR SUSPENSION ORDER, THUS PETITIONER DID NOT VIOLATE
ANY LAWFUL ORDER.
III.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN

AFFIRMING THE WHIMSICAL AND CAPRICIOUS SECOND DECISION OF THE RESPONDENT
NLRC WHICH REVERSED ITS ORIGINAL DECISION ON THE ALLEGED GROUND:
A. THAT THE PETITIONER KNEW OF HIS SUSPENSION WHEN HE REPORTED
FOR DUTY ON FEBRUARY 13, 2002 AS DECREED IN THE UNSIGNED SO-
CALLED SUSPENSION ORDER ALLEGEDLY CONSTITUTING
INSUBORDINATION WHEN THE FACTS DISCLOSE THAT PETITIONER
DECLINED TO RECEIVE IT PERSONALLY AND HE ASKED THAT IT BE SENT TO
HIM THROUGH REGISTERED MAIL AND THIS FACT IS ADMITTED BY PRIVATE
RESPONDENT, THUS PUBLIC RESPONDENTS’ FINDINGS AND CONCLUSION
ARE NOT ONLY CONTRARY TO THE ADMISSION OF BOTH PARTIES BUT
BASED ON CONJECTURES AND SURMISES.
B. THAT AS FOUND BY THE COURT OF APPEALS IT IS ONLY ON APPEAL

THAT PETITIONER INTERPOSES THE ARGUMENT THAT HE COULD NOT HAVE
KNOWN ABOUT HIS SUSPENSION THUS HE COULD NOT VIOLATE AN ORDER
WHICH HE HAD NOT KNOWN IN THE FIRST PLACE, IS NOT IN ACCORD WITH
THE APPLICABLE JURISPRUDENCE, MOREOVER, UPON SCRUTINY IT WAS
NOT SIGNED BY A COMPANY OFFICIAL AUTHORIZED TO EFFECT DISMISSAL
OR SUSPENSION ORDER. THUS THE COURT OF APPEALS SERIOUSLY
ERRED IN ITS FINDING ON THIS MATTER.
IV.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN

ADMITTING THE PRIVATE RESPONDENT’S COMMENT DESPITE x x x NON-COMPLIANCE
WITH THE COURT OF APPEALS’ ORDER TO FILE COMMENT [DISREGARDING] THE STRICT
OBSERVANCE OF THE RULES WHICH IS MANDATORY. FURTHERMORE, WHETHER OR NOT
THE COURT OF APPEALS [VIOLATED] THE MANDATE OF SECTION 14, ARTICLE VIII OF THE
CONSTITUTION IN ITS DENIAL OF PETITIONER’S MOTION FOR RECONSIDERATION
WITHOUT STATING THE LEGAL BASIS THEREFOR.26
Petitioner contends that his suspension was without any basis since the testimony of Soriano is
hearsay and was not made under oath. Also, the minutes of the investigative proceeding/hearing
was not signed by the investigators. Petitioner likewise contends that he was denied due process as
he was not given the opportunity to contest the evidence against him. He further insists that the
suspension order is a scrap of paper as it was not signed and issued by an official who is authorized
to effectuate such order. And even assuming that the suspension order is valid, no proof was ever
presented to show that he was indeed served or that he received a copy thereof. Therefore, he could
not have violated any lawful order to justify his dismissal.
Our Ruling
The petition is devoid of merit.
The CA did not err in admitting the comment of respondent despite its late filing.
Petitioner argues that the CA erred in admitting respondent’s Comment to petitioner’s Motion for
Reconsideration which was filed 19 days late.
A close scrutiny of Section 6, Rule 65 of the Rules of Court,27 which grants discretionary authority to
the CA in ordering parties to file responsive and other pleadings in petitions for certiorari filed before
it, will reveal that such rule is merely directory in nature. This is so because the word "may"
employed by the rule shows that it is not mandatory but discretionary on the part of the CA to require
the filing of pleadings which it deems necessary to assist it in resolving the controversies. 28 In the
same way, the admission of any responsive pleading filed by party-litigants is a matter that rests
largely on the sound discretion of the court. At any rate, rules of procedure may be relaxed in the
interest of substantial justice and in order to afford litigants maximum opportunity for the proper and
just determination of their causes.29 Strict adherence to technical adjective rules should never be
unexceptionally required because a contrary precept would result in a failure to decide cases on
their merits.30 The CA could not have erred in admitting the comment, albeit filed late, when it viewed
that the interest of justice would be better served by the policy of liberality.
CA stated legal basis for denying petitioner’s motion for reconsideration.
Petitioner next alleges that the CA denied reconsideration without indicating its legal basis in
violation of the mandate of Section 14, Article VIII of the Constitution, which provides that no petition
for review or motion for reconsideration of a decision of the court shall be refused due course or
denied without stating the legal basis therefor. This requirement, however, was complied with in the
instant case, when the CA, in its resolution denying petitioner’s motion for reconsideration, stated
that it found no cogent reason to modify, much less reverse itself.31
Suspension validly meted out by respondent on petitioner.
Going now to the merits of the case, the 3-day suspension of petitioner is not tainted with
substantive or procedural infirmities. For one, petitioner’s insistent claim that his suspension was
predicated on hearsay testimony deserves scant consideration.
The NLRC initially ruled that Soriano’s testimony during the investigation on the alleged act of
petitioner in spreading rumors is hearsay. Nevertheless, it reversed itself by holding that while
Soriano stated that her allegation with regard to the first two instances that petitioner was spreading
false information about her is based on what she heard from other people, her narration of the third
instance relating to what has transpired during their January 7, 2002 conversation is not hearsay.
The NLRC ruled quoting in part the relevant testimony of Soriano as recorded in the transcript of the
investigation:
x x x. Indeed, complainant had been spreading malicious information against Ms. Soriano. It appears
that Ms. Soriano had averred that this happened on three (3) occasions. The first two (2) instances
happened in midyear of 2001 and another in December 2001. the [sic] first two (2) instances were
merely referred to by the complainant in passing. Thus, she stated:
Raul: So ang pag-uusapan natin dito ay yung number 3, yung January 7?
Hya: Opo. Kasi yung mid last year at yung December 23, iniignore ko lang hanggang nung
Jan 7 harap harapan na.
Tessa: Are you considering numbers 1 and 2? Kasi dito naman nag-ugat yun e.
Hya: Ma’am kasi ang parang point ko dito is to cite na ngayon may proof na ako kasi hinarap
na nya ako unlike noon napuro hearsay lang. Ngayon parang Napatunayan ko na thru’ Jan 7
na totoo nga. Parang ang ano ko kasi dito is yung intrigue. Yung 1 & 2 Rumors lang pero
nung Jan 7, intrigue na un kasi may mga taong nakarinig.
Raul: So ang sinasabi mo ba is talagang ang offense is yung pag-insulto nya? Parang ang
talagang intension nya is awayin ka? Parang alam nya maiinis ka.
Hya: Opo
Raul: Kasi di ba when you’re provoking a fight usually hinahamon mo? In this case ba yung
sinabi ni Toto ay parang gumawa sya ng statement na hindi maganda sa iyo at yung
reaction mo ay x x
Hya: Sir siguro sa part ni Toto hindi kasi he’s used to it na e. Pero on my part x x x
Raul: So yun ang interpretation mo sa offense ni x x x.
Hya: Opo.
The foregoing reveals that Ms. Soriano’s testimony is not ‘hearsay’ and neither is it ‘say-so’." 32
On appeal, the CA affirmed this ruling when it likewise found that the following statements of Soriano
were limited to matters of personal knowledge:
Hya: 12:15, pagbungad ko palang, O HYA KUMAIN PALA KAYO SA CENTRAL PARK? Sabi
ko OO KASAMA KO SI EMAN, sasabihin ko palang yung hindi na nakasama si May, Ang
sabi niya na E NASA LABAS NAMAN YUNG SASAKYAN NI. tapos sinabi nya yung plate #
ni sir Aldrin.
Tessa: Nasa labas daw yung sasakyan ni Aldrin.
Hya: Opo, e di nagtaka ako, nag-argue na kami, tinitingnan na kami ng mga Ae’s tapos
iniwan ko sya.33
The CA and NLRC are in agreement with this finding and since both are supported by evidence on
record, the same must be accorded due respect and finality.
Petitioner still contends that the testimonies elicited during the investigative hearing were not made
under oath, that the record of the proceeding is not admissible for being unsigned, and that he was
not given a chance to confront his accuser, thus, invoking denial of due process.
In this case, petitioner was asked to explain and was informed of the complaint against him. A
committee was formed which conducted an investigation on January 31, 2002 by exhaustively
examining and questioning both petitioner and his accuser, Soriano, separately. Petitioner actively
participated therein by answering the questions interposed by the panel members. The proceeding
was recorded, and the correctness of which was certified by respondent thru its Regional Manager,
Raul Bandonill.34 Undoubtedly, petitioner was given enough opportunity to be heard and defend
himself. It has already been held that the essence of due process is simply an opportunity to be
heard, a formal or trial-type hearing is not essential as the due process requirement is satisfied
where the parties are afforded fair and reasonable opportunity to explain their side. 35
The decision to suspend petitioner was rendered after investigation and a finding by respondent that
petitioner has indeed made malicious statements against a co-employee. The suspension was
imposed due to a repeated infraction within a deactivation period set by the company relating to a
previous similar offense committed. It is axiomatic that appropriate disciplinary sanction is within the
purview of management imposition.36 What should not be overlooked is the prerogative of an
employer company to prescribe reasonable rules and regulations necessary for the proper conduct
of its business and to provide certain disciplinary measures in order to implement said rules to
assure that the same would be complied with.37 Respondent then acted within its rights as an
employer when it decided to exercise its management prerogative to impose disciplinary measure on
its erring employee.
Petitioner was validly dismissed on the ground of willful disobedience in refusing to comply with the
suspension order.
The CA refused to give credence to petitioner’s assertion of having no knowledge of the suspension
because he refused to receive the suspension order preferring that it be sent by registered mail. The
appellate court affirmed the factual finding of the NLRC that petitioner was definitely aware of his
suspension but only feigned ignorance of the same. As a rule, we refrain from reviewing factual
assessments of agencies exercising adjudicative functions. Factual findings of administrative
agencies that are affirmed by the CA are conclusive on the parties and not reviewable by this Court
so long as these findings are supported by substantial evidence.38
Anyhow, evidence on record repudiates petitioner’s pretension. His insistence that he had no notice
of his suspension is belied by evidence as it shows that the suspension order was served on
petitioner on February 7, 2002 by his immediate superior, Al Luzano, but petitioner declined to sign
it. No acceptable reason was advanced for doing so except petitioner’s shallow excuse that it should
be sent to him by registered mail. 1avvphi1
Petitioner also challenges the validity of the suspension order for being unsigned. The same has no
merit. Upon careful examination, it appears that the contention was raised for the first time in
petitioner’s motion for reconsideration of the Decision of the CA. In Arceno v. Government Service
Insurance System,39 the hornbook principle that new issues cannot be raised for the first time on
appeal was reiterated. We emphasized therein that the rule is based on principles of fairness and
due process and is applicable to appealed decisions originating from regular courts, administrative
agencies or quasi-judicial bodies, whether rendered in a civil case, a special proceeding or a criminal
case, citing the case of Tan v. Commission on Elections.40 Even assuming that it was raised, the
same would be without merit because the suspension order bears the signature of respondent’s
engineering manager and petitioner’s immediate superior, Al Luzano, who, in fact, is a member of
the panel committee that conducted an investigation on the complaint of Soriano against petitioner.
As a just cause for dismissal of an employee under Article 28241 of the Labor Code, willful
disobedience of the employer’s lawful orders requires the concurrence of two elements: (1) the
employee’s assailed conduct must have been willful, i.e., characterized by a wrongful and perverse
attitude; and (2) the order violated must have been reasonable, lawful, made known to the
employee, and must pertain to the duties which he had been engaged to discharge. 42 Both requisites
are present in the instant case. It is noteworthy that upon receipt of the notice of suspension,
petitioner did not question such order at the first instance. He immediately defied the order by
reporting on the first day of his suspension. Deliberate disregard or disobedience of rules by the
employee cannot be countenanced. It may encourage him to do even worse and will render a
mockery of the rules of discipline that employees are required to observe. 43
Petitioner was served the first notice of termination and was given time to submit his written
explanation. A hearing was conducted wherein both parties with their respective counsels were
present. After finding cause for petitioner’s termination, a final notice apprising him of the decision to
terminate his employment was served. All things considered, respondent validly dismissed petitioner
for cause after complying with the procedural requirements of the law.
The allegation of fraud should be proven.

On the last point, petitioner posits that the unfavorable Decision of the Labor Arbiter and the
Decision of the NLRC were issued and obtained by means of fraud, which is a valid ground for their
annulment. In our jurisdiction, however, fraud is never presumed and should be proved as mere
allegations are not enough.44 The burden of proof rests on petitioner, which, in this case, he failed to
discharge.
WHEREFORE, the petition is DENIED for lack of merit. The assailed May 28, 2007 Decision and
October 16, 2007 Resolution of the Court of Appeals in CA-G.R. SP No. 94485 are AFFIRMED.
SO ORDERED.

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSE P. PEREZ
Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1
Rollo, pp. 4-41.
2
Id. at 44-56; penned by Associate Justice Vicente S.E. Veloso and concurred in by
Associate Justices Juan Q. Enriquez, Jr. and Marlene Gonzales-Sison.
3
Id. at 58.
4
Id. at 130-135; penned by Presiding Commissioner Lourdes C. Javier and concurred in by
Commissioners Romeo O. Lagman and Tito F. Genilo.
5
6
Id. at 362.
7
Id. at 365.
8
Id.
9
Id. at 366.
10
Id. at 361.
11
Id. at 368.
12
Id. at 356-359.
13
Id. at 352-355.
14
Id. at 81.
15
Rollo, pp. 137-166; penned by Labor Arbiter Monroe C. Tabingan.
16
Id. at 116-128.
17
Id. at 224-233.
18
Id. at 216-222.
19
Id. at 130-135.
20
CA rollo, pp. 3-28.
21
Id. at 384-399.
22
Id. at 412.
23
Id. at 413-426.
24
Id. at 434.
25
Rollo, p. 58.
26
Id. at 332-334.
27
Sec. 6. Order to comment. -- x x x
In petitions for certiorari before the Supreme Court and the Court of Appeals, the
provisions of Section 2, Rule 56, shall be observed. Before giving due course
thereto, the court may require the respondents to file their comment to, and not a
motion to dismiss, the petition. Thereafter, the court may require the filing of a reply
and such other responsive or other pleadings as it may deem necessary and proper.
28
People v. Ondo, G.R. No. 101361, November 8, 1993, 227 SCRA 562, 569.
29
De Grano v. Lacaba, G.R. No. 158877, June 16, 2009.
Ambrosio v. Intermediate Appellate Court, G.R. No. 75663, January 17, 1990, 181 SCRA
30
99, 104.
31
JRB Realty, Inc. v. Court of Appeals, 337 Phil. 677, 581-682 (1997).
32
Rollo, p. 132.
33
Id. at 75.
34
CA rollo, p. 433.
35
Valiao v. Court of Appeals, 479 Phil. 459, 472 (2004).
San Miguel Corporation v. National Labor Relations Commission, G.R. Nos. 146121-22,
36
April 16, 2008, 551 SCRA 410, 426.
37
Soco v. Mercantile Corporation of Davao, 232 Phil. 488, 494 (1987).
38
Herida v. F & C Pawnshop and Jewelry Store, G.R. No. 172601, April 16, 2009.
39
G.R. No. 162374, June 18, 2009.
40
G.R. Nos. 166143-47, November 20, 2006, 507 SCRA 352.
41
ART. 282. TERMINATION BY EMPLOYER.- An employer may terminate an employment
for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders
of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized
representative; and
(e) Other causes analogous to the foregoing.
42
Gilles v. Court of Appeals, G.R. No. 149273, June 5, 2009.
San Miguel Corporation v. Ubaldo, G.R. No. 92859, February 1, 1993, 218 SCRA 293,
43
300.
Rabaja Ranch Development Corporation v. AFP Retirment and Separation Benefits

44
System, G.R. No. 177181, July 7, 2009.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 175097
ALLIED BANKING CORPORATION, Petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
DECISION
DEL CASTILLO, J.:
The key to effective communication is clarity.
The Commissioner of Internal Revenue (CIR) as well as his duly authorized representative must
indicate clearly and unequivocally to the taxpayer whether an action constitutes a final determination
on a disputed assessment.1 Words must be carefully chosen in order to avoid any confusion that
could adversely affect the rights and interest of the taxpayer.
Assailed in this Petition for Review on Certiorari2 under Section 12 of Republic Act (RA) No. 9282,3 in
relation to Rule 45 of the Rules of Court, are the August 23, 2006 Decision 4 of the Court of Tax
Appeals (CTA) and its October 17, 2006 Resolution5 denying petitioner’s Motion for Reconsideration.
Factual Antecedents
On April 30, 2004, the Bureau of Internal Revenue (BIR) issued a Preliminary Assessment Notice
(PAN) to petitioner Allied Banking Corporation for deficiency Documentary Stamp Tax (DST) in the
amount of ₱12,050,595.60 and Gross Receipts Tax (GRT) in the amount of ₱38,995,296.76 on
industry issue for the taxable year 2001.6 Petitioner received the PAN on May 18, 2004 and filed a
protest against it on May 27, 2004.7
On July 16, 2004, the BIR wrote a Formal Letter of Demand with Assessment Notices to petitioner,
which partly reads as follows:8
It is requested that the above deficiency tax be paid immediately upon receipt hereof, inclusive of
penalties incident to delinquency. This is our final decision based on investigation. If you disagree,
you may appeal the final decision within thirty (30) days from receipt hereof, otherwise said
deficiency tax assessment shall become final, executory and demandable.
Petitioner received the Formal Letter of Demand with Assessment Notices on August 30, 2004. 9
Proceedings before the CTA First Division
On September 29, 2004, petitioner filed a Petition for Review10 with the CTA which was raffled to its
First Division and docketed as CTA Case No. 7062.11
On December 7, 2004, respondent CIR filed his Answer.12 On July 28, 2005, he filed a Motion to
Dismiss13 on the ground that petitioner failed to file an administrative protest on the Formal Letter of
Demand with Assessment Notices. Petitioner opposed the Motion to Dismiss on August 18, 2005. 14
On October 12, 2005, the First Division of the CTA rendered a Resolution 15 granting respondent’s
Motion to Dismiss. It ruled:
Clearly, it is neither the assessment nor the formal demand letter itself that is appealable to this
Court. It is the decision of the Commissioner of Internal Revenue on the disputed assessment that
can be appealed to this Court (Commissioner of Internal Revenue vs. Villa, 22 SCRA 3). As correctly
pointed out by respondent, a disputed assessment is one wherein the taxpayer or his duly
authorized representative filed an administrative protest against the formal letter of demand and
assessment notice within thirty (30) days from date [of] receipt thereof. In this case, petitioner failed
to file an administrative protest on the formal letter of demand with the corresponding assessment
notices. Hence, the assessments did not become disputed assessments as subject to the Court’s
review under Republic Act No. 9282. (See also Republic v. Liam Tian Teng Sons & Co., Inc., 16
SCRA 584.)
WHEREFORE, the Motion to Dismiss is GRANTED. The Petition for Review is hereby DISMISSED
for lack of jurisdiction.
SO ORDERED.16
Aggrieved, petitioner moved for reconsideration but the motion was denied by the First Division in its
Resolution dated February 1, 2006.17
Proceedings before the CTA En Banc
On February 22, 2006, petitioner appealed the dismissal to the CTA En Banc. 18 The case was
docketed as CTA EB No. 167.
Finding no reversible error in the Resolutions dated October 12, 2005 and February 1, 2006 of the
CTA First Division, the CTA En Banc denied the Petition for Review19as well as petitioner’s Motion
for Reconsideration.20
The CTA En Banc declared that it is absolutely necessary for the taxpayer to file an administrative
protest in order for the CTA to acquire jurisdiction. It emphasized that an administrative protest is an
integral part of the remedies given to a taxpayer in challenging the legality or validity of an
assessment. According to the CTA En Banc, although there are exceptions to the doctrine of
exhaustion of administrative remedies, the instant case does not fall in any of the exceptions.
Issue
Hence, the present recourse, where petitioner raises the lone issue of whether the Formal Letter of
Demand dated July 16, 2004 can be construed as a final decision of the CIR appealable to the CTA
under RA 9282.
Our Ruling
The petition is meritorious.
Section 7 of RA 9282 expressly provides that the CTA exercises exclusive appellate jurisdiction to
review by appeal decisions of the CIR in cases involving disputed assessments
The CTA, being a court of special jurisdiction, can take cognizance only of matters that are clearly
within its jurisdiction.21 Section 7 of RA 9282 provides:
Sec. 7. Jurisdiction. — The CTA shall exercise:
(a) Exclusive appellate jurisdiction to review by appeal, as herein provided:
(1) Decisions of the Commissioner of Internal Revenue in cases involving disputed

assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation
thereto, or other matters arising under the National Internal Revenue Code or other laws
administered by the Bureau of Internal Revenue;
(2) Inaction by the Commissioner of Internal Revenue in cases involving disputed

assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation
thereto, or other matters arising under the National Internal Revenue Code or other laws
administered by the Bureau of Internal Revenue, where the National Internal Revenue Code
provides a specific period of action, in which case the inaction shall be deemed a denial;
(Emphasis supplied)
xxxx
The word "decisions" in the above quoted provision of RA 9282 has been interpreted to mean the
decisions of the CIR on the protest of the taxpayer against the assessments. 22 Corollary thereto,
Section 228 of the National Internal Revenue Code (NIRC) provides for the procedure for protesting
an assessment. It states:
SECTION 228. Protesting of Assessment. – When the Commissioner or his duly authorized
representative finds that proper taxes should be assessed, he shall first notify the taxpayer of his
findings: Provided, however, That a preassessment notice shall not be required in the following
cases:
(a) When the finding for any deficiency tax is the result of mathematical error in the
computation of the tax as appearing on the face of the return; or
(b) When a discrepancy has been determined between the tax withheld and the amount
actually remitted by the withholding agent; or
(c) When a taxpayer who opted to claim a refund or tax credit of excess creditable
withholding tax for a taxable period was determined to have carried over and automatically
applied the same amount claimed against the estimated tax liabilities for the taxable quarter
or quarters of the succeeding taxable year; or
(d) When the excise tax due on excisable articles has not been paid; or
(e) When an article locally purchased or imported by an exempt person, such as, but not
limited to, vehicles, capital equipment, machineries and spare parts, has been sold, traded or
transferred to non-exempt persons.
The taxpayers shall be informed in writing of the law and the facts on which the assessment is
made; otherwise, the assessment shall be void.
Within a period to be prescribed by implementing rules and regulations, the taxpayer shall be
required to respond to said notice. If the taxpayer fails to respond, the Commissioner or his duly
authorized representative shall issue an assessment based on his findings.
Such assessment may be protested administratively by filing a request for reconsideration or

reinvestigation within thirty (30) days from receipt of the assessment in such form and manner as
may be prescribed by implementing rules and regulations. Within sixty (60) days from filing of the
protest, all relevant supporting documents shall have been submitted; otherwise, the assessment
shall become final.
If the protest is denied in whole or in part, or is not acted upon within one hundred eighty (180) days
from submission of documents, the taxpayer adversely affected by the decision or inaction may
appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision, or from
the lapse of the one hundred eighty (180)-day period; otherwise, the decision shall become final,
executory and demandable.
In the instant case, petitioner timely filed a protest after receiving the PAN. In response thereto, the
BIR issued a Formal Letter of Demand with Assessment Notices. Pursuant to Section 228 of the
NIRC, the proper recourse of petitioner was to dispute the assessments by filing an administrative
protest within 30 days from receipt thereof. Petitioner, however, did not protest the final assessment
notices. Instead, it filed a Petition for Review with the CTA. Thus, if we strictly apply the rules, the
dismissal of the Petition for Review by the CTA was proper.
The case is an exception to the

rule on exhaustion of administrative remedies
However, a careful reading of the Formal Letter of Demand with Assessment Notices leads us to
agree with petitioner that the instant case is an exception to the rule on exhaustion of administrative
remedies, i.e., estoppel on the part of the administrative agency concerned.
In the case of Vda. De Tan v. Veterans Backpay Commission,23 the respondent contended that
before filing a petition with the court, petitioner should have first exhausted all administrative
remedies by appealing to the Office of the President. However, we ruled that respondent was
estopped from invoking the rule on exhaustion of administrative remedies considering that in its
Resolution, it said, "The opinions promulgated by the Secretary of Justice are advisory in nature,
which may either be accepted or ignored by the office seeking the opinion, and any aggrieved party
has the court for recourse". The statement of the respondent in said case led the petitioner to
conclude that only a final judicial ruling in her favor would be accepted by the Commission.
Similarly, in this case, we find the CIR estopped from claiming that the filing of the Petition for
Review was premature because petitioner failed to exhaust all administrative remedies.
The Formal Letter of Demand with Assessment Notices reads:
Based on your letter-protest dated May 26, 2004, you alleged the following:
1. That the said assessment has already prescribed in accordance with the provisions of
Section 203 of the Tax Code.
2. That since the exemption of FCDUs from all taxes found in the Old Tax Code has been
deleted, the wording of Section 28(A)(7)(b) discloses that there are no other taxes imposable
upon FCDUs aside from the 10% Final Income Tax.
Contrary to your allegation, the assessments covering GRT and DST for taxable year 2001 has not
prescribed for [sic] simply because no returns were filed, thus, the three year prescriptive period has
not lapsed.
With the implementation of the CTRP, the phrase "exempt from all taxes" was deleted. Please refer
to Section 27(D)(3) and 28(A)(7) of the new Tax Code. Accordingly, you were assessed for
deficiency gross receipts tax on onshore income from foreign currency transactions in accordance
with the rates provided under Section 121 of the said Tax Code. Likewise, deficiency documentary
stamp taxes was [sic] also assessed on Loan Agreements, Bills Purchased, Certificate of Deposits
and related transactions pursuant to Sections 180 and 181 of NIRC, as amended.
The 25% surcharge and 20% interest have been imposed pursuant to the provision of Section
248(A) and 249(b), respectively, of the National Internal Revenue Code, as amended.
It is requested that the above deficiency tax be paid immediately upon receipt hereof, inclusive of
penalties incident to delinquency. This is our final decision based on investigation. If you disagree,
you may appeal this final decision within thirty (30) days from receipt hereof, otherwise said
deficiency tax assessment shall become final, executory and demandable.24 (Emphasis supplied)
It appears from the foregoing demand letter that the CIR has already made a final decision on the
matter and that the remedy of petitioner is to appeal the final decision within 30 days.
In Oceanic Wireless Network, Inc. v. Commissioner of Internal Revenue, 25 we considered the

language used and the tenor of the letter sent to the taxpayer as the final decision of the CIR.
In this case, records show that petitioner disputed the PAN but not the Formal Letter of Demand with
Assessment Notices. Nevertheless, we cannot blame petitioner for not filing a protest against the
Formal Letter of Demand with Assessment Notices since the language used and the tenor of the
demand letter indicate that it is the final decision of the respondent on the matter. We have time and
again reminded the CIR to indicate, in a clear and unequivocal language, whether his action on a
disputed assessment constitutes his final determination thereon in order for the taxpayer concerned
to determine when his or her right to appeal to the tax court accrues. 26 Viewed in the light of the
foregoing, respondent is now estopped from claiming that he did not intend the Formal Letter of
Demand with Assessment Notices to be a final decision.
Moreover, we cannot ignore the fact that in the Formal Letter of Demand with Assessment Notices,
respondent used the word "appeal" instead of "protest", "reinvestigation", or "reconsideration".
Although there was no direct reference for petitioner to bring the matter directly to the CTA, it cannot
be denied that the word "appeal" under prevailing tax laws refers to the filing of a Petition for Review
with the CTA. As aptly pointed out by petitioner, under Section 228 of the NIRC, the terms "protest",
"reinvestigation" and "reconsideration" refer to the administrative remedies a taxpayer may take
before the CIR, while the term "appeal" refers to the remedy available to the taxpayer before the
CTA. Section 9 of RA 9282, amending Section 11 of RA 1125,27 likewise uses the term "appeal"
when referring to the action a taxpayer must take when adversely affected by a decision, ruling, or
inaction of the CIR. As we see it then, petitioner in appealing the Formal Letter of Demand with
Assessment Notices to the CTA merely took the cue from respondent. Besides, any doubt in the
interpretation or use of the word "appeal" in the Formal Letter of Demand with Assessment Notices
should be resolved in favor of petitioner, and not the respondent who caused the confusion.
To be clear, we are not disregarding the rules of procedure under Section 228 of the NIRC, as
implemented by Section 3 of BIR Revenue Regulations No. 12-99.28 It is the Formal Letter of
Demand and Assessment Notice that must be administratively protested or disputed within 30 days,
and not the PAN. Neither are we deviating from our pronouncement in St. Stephen’s Chinese Girl’s
School v. Collector of Internal Revenue,29 that the counting of the 30 days within which to institute an
appeal in the CTA commences from the date of receipt of the decision of the CIR on the disputed
assessment, not from the date the assessment was issued. 1avvphi1
What we are saying in this particular case is that, the Formal Letter of Demand with Assessment
Notices which was not administratively protested by the petitioner can be considered a final decision
of the CIR appealable to the CTA because the words used, specifically the words "final decision"
and "appeal", taken together led petitioner to believe that the Formal Letter of Demand with
Assessment Notices was in fact the final decision of the CIR on the letter-protest it filed and that the
available remedy was to appeal the same to the CTA.
We note, however, that during the pendency of the instant case, petitioner availed of the provisions
of Revenue Regulations No. 30-2002 and its implementing Revenue Memorandum Order by
submitting an offer of compromise for the settlement of the GRT, DST and VAT for the period 1998-
2003, as evidenced by a Certificate of Availment dated November 21, 2007. 30 Accordingly, there is
no reason to reinstate the Petition for Review in CTA Case No. 7062.
WHEREFORE, the petition is hereby GRANTED. The assailed August 23, 2006 Decision and the
October 17, 2006 Resolution of the Court of Tax Appeals are REVERSED and SET ASIDE. The
Petition for Review in CTA Case No. 7062 is hereby DISMISSED based solely on the Bureau of
Internal Revenue’s acceptance of petitioner’s offer of compromise for the settlement of the gross
receipts tax, documentary stamp tax and value added tax, for the years 1998-2003.
SO ORDERED.

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSE P. PEREZ
Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1
Surigao Electric Co., Inc. v. Court of Tax Appeals, 156 Phil. 517, 522-523 (1974).
2
Rollo, pp. 7-21.
3
4
Rollo, pp. 23-30; penned by Associate Justice Erlinda P. Uy and concurred in by Presiding
Justice Ernesto D. Acosta, and Associate Justices Juanito C. Castañeda, Jr., Lovell R.
Bautista, and Caesar A. Casanova. Associate Justice Olga Palanca-Enriquez inhibited
herself and did not take part.
5
Id. at 32-34.
6
Id. at 53-54.
7
Id. at 24.
8
Id. at 35-36.
9
Id. at 24.
10
Id. at 37-61.
11
Id. at 24.
12
Id.
13
Id. at 62-66.
14
Id. at 25.
15
Id. at 67-72.
16
Id. at 71-72.
17
Id. at 25.
18
Id. at 23.
19
Id. at 29.
20
Id. at 34.
Rizal Commercial Banking Corporation v. Commissioner of Internal Revenue, G.R. No.

21
168498, April 24, 2007, 522 SCRA 144, 150.
22
Commissioner of Internal Revenue v. Villa, 130 Phil. 3, 6 (1968).
23
105 Phil. 377, 383 (1959).
24
Rollo, p. 36.
25
G.R. No. 148380, December 9, 2005, 477 SCRA 205, 211.
26
Surigao Electric Co., Inc. v. Court of Tax Appeals, supra note 1.
27
Section 11. Who may Appeal; Mode of Appeal; Effect of Appeal; – Any party adversely
affected by a decision, ruling or inaction of the Commissioner of Internal Revenue, the
Commissioner of Customs, the Secretary of Finance, the Secretary of Trade and Industry or
the Secretary of Agriculture or the Central Board of Assessment Appeals or the Regional
Trial Courts may file an appeal with the CTA within thirty (30) days after the receipt of such
decision or ruling or after the expiration of the period fixed by law for action as referred to in
Section 7(a) (2) herein.
xxxx
28
Section 3. Due Process Requirement in the Issuance of a Deficiency Tax Assessment. –
xxxx
3.1.2 Preliminary Assessment Notice (PAN). – If after review and evaluation by the
Assessment Division or by the Commissioner or his duly authorized representative,
as the case may be, it is determined that there exists sufficient basis to assess the
taxpayer for any deficiency tax or taxes, the said Office shall issue to the taxpayer, at
least by registered mail, a Preliminary Assessment Notice (PAN) for the proposed
assessment, showing in detail, the facts and the law, rules and regulations, or
jurisprudence on which the proposed assessment is based. If the taxpayer fails to
respond within fifteen (15) days from date of receipt of the PAN, he shall be
considered in default, in which case, a formal letter of demand and assessment
notice shall be caused to be issued by the said Office, calling for payment of the
taxpayer's deficiency tax liability, inclusive of the applicable penalties.
xxxx
3.1.4 Formal Letter of Demand and Assessment Notice. – The formal letter of
demand and assessment notice shall be issued by the Commissioner or his duly
authorized representative. The letter of demand calling for payment of the taxpayer's
deficiency tax or taxes shall state the facts, the law, rules and regulations, or
jurisprudence on which the assessment is based, otherwise, the formal letter of
demand and assessment notice shall be void. The same shall be sent to the
taxpayer only by registered mail or by personal delivery. x x x
3.1.5 Disputed Assessment – The taxpayer or his duly authorized representative may
protest administratively against the aforesaid formal letter of demand and
assessment notice within thirty (30) days from date of receipt thereof x x x.
The taxpayer shall state the facts, the applicable law, rules and regulations, or
jurisprudence on which his protest is based, otherwise, his protest shall be
considered void and without force and effect x x x.
The taxpayer shall submit the required documents in support of his protest within
sixty (60) days from the date of filing of his letter of protest, otherwise, the
assessment shall become final and executory and demandable x x x
If the taxpayer fails to file a valid protest against the formal letter of demand and
assessment notice within thirty (30) days from date of receipt thereof, the
assessment shall become final, executory and demandable.
If the protest is denied, in whole or in part, by the Commissioner, the taxpayer may
appeal to the Court of Tax Appeals within thirty (30) days from date of receipt of the
said decision, otherwise, the assessment shall become final, executory and
demandable.
In general, if the protest is denied, in whole or in part, by the Commissioner or his

duly authorized representative, the taxpayer may appeal to the Court of Tax Appeals,
within thirty (30) days from date of receipt of the said decision, otherwise, the
assessment shall become final, executory and demandable: Provided, however, that
if the taxpayer elevates his protest to the Commissioner within thirty (30) days from
date of receipt of the final decision of the Commissioner’s duly authorized
representative, the latter’s decision shall not be considered final, executory and
demandable, in which case, the protest shall be decided by the Commissioner.
If the Commissioner or his duly authorized representative fails to act on the

taxpayer’s protest within one hundred eighty (180) days from date of submission, by
the taxpayer, of the required documents in support of his protest, the taxpayer may
appeal to the Court of Tax Appeals within thirty (30) days from the lapse of said 180-
day period, otherwise, the assessment shall become final, executory and
demandable.
xxxx
29
104 Phil. 314, 317 (1958).
30
Annex "A" of petitioner’s Memorandum.

Supreme Court
Manila
SECOND DIVISION
PEOPLE OF THE PHILIPPINES, G.R. No. 179717

Appellee,
Present:
CARPIO, J., Chairperson,

- versus - BRION,
DEL CASTILLO,
ABAD, and
PEREZ, JJ.
NIEVA ALBERTO y DE NIEVA, Promulgated:

Appellant. February 5, 2010
x--------------------------------- -----------------------x
DECISION
DEL CASTILLO, J.:
In a prosecution for violation of the Dangerous Drugs Law, the pivotal issue usually boils
down to the question of credibility of witness. The testimonies of the police officers who
apprehended the accused in a buy-bust operation are usually accorded credence because
of the presumption of regularity in the performance of their duty, which presumption
may be overturned only if there is clear and convincing evidence to the contrary or that
they were inspired by improper motive.[1]
Moreover, non-compliance by the apprehending/buy-bust team with Section 21 of the

Dangerous Drugs Law is not fatal as long as there is justifiable ground therefor and the
integrity and evidentiary value of the confiscated/seized items are properly preserved by
the apprehending officer/team.[2]
The Charge
The present appeal stems from an Information filed before the Regional Trial
Court of Makati, which was subsequently docketed as Criminal Case No. 03-470 and
raffled to Branch 135 of said court. The Information charging appellant Nieva Alberto y
De Nieva with violation of Section 5, Article II of Republic Act (RA) No. 9165 reads:
That on or about the 27th day of January 2003, in the City of Makati, Metro
Manila, Philippines, a place within the jurisdiction of this Honorable Court, the above-
named accused, without the necessary license or prescription and without being
authorized by law, did then and there willfully, unlawfully and feloniously [sic] sell,
deliver and distribute Methylamphetamine Hydrochloride, a dangerous drug, weighing
zero point twenty-five (0.25) gram, in consideration of P500.00.
CONTRARY TO LAW.[3]
On March 5, 2003, the appellant, assisted by counsel, pleaded not guilty to the
offense charged. Pre-trial conference was then conducted and, upon its termination, trial
ensued. The prosecution and the defense presented different versions of the incident.
On January 23, 2003, an informant went to the Drug Enforcement Unit (DEU) of the
Makati Police Station to inform PO1 Alex Inopia (PO1 Inopia) that appellant Nieva
Alberto y De Nieva was selling shabu. An entrapment team was thus immediately
formed consisting of SPO4 Arsenio Mangulabnan, PO1 Jaime Laura, PO1 Inopia and
PO1 Randy Santos (PO1 Santos). PO1 Inopia was designated as poseur-buyer and was
provided with a P500.00 bill marked money.
The informant contacted the appellant through a cellular phone and they agreed to meet
at J.P. Rizal Extension, Comembo, Makati City, to consummate the
transaction. Whereupon, the informant and the police team proceeded to the designated
area.
Upon their arrival thereat, the informant approached the appellant and introduced the
poseur-buyer, PO1 Inopia. The appellant asked PO1 Inopia how much shabu he needed
and the latter handed over the P500.00 buy-bust money. The appellant then gave a small
plastic sachet containing a white crystalline substance. Thereafter, PO1 Inopia lighted his
cigarette, which was the pre-arranged signal for the consummation of the illegal
sale. PO1 Santos responded and together with PO1 Inopia arrested the appellant and
retrieved from her the buy-bust money. The sachet containing the white crystalline
substance was marked with the initials NDA[4] and sent to the crime laboratory for
examination. The examination showed that the contents of the plastic sachet weighed
0.25 gram and are positive for methylamphetamine hydrochloride or shabu, a dangerous
drug.
The disparate version of the incident by the appellant consisted of denial and frame-
up. According to the appellant, she was engaged in the buy and sell of used cellular
phones. A certain Angie Angeles (Angeles) assisted her in searching for prospective
sellers.
On January 23, 2003, Angeles informed her that somebody was looking for a buyer of a
cellphone for P1,500.00. The appellant went to the house of Angeles in
Comembo, Makati to meet the seller, but the latter was not there. The appellant wanted
to leave but Angeles prevailed upon her to stay, believing that the seller may still
arrive. When she could no longer wait and was about to leave, several persons barged
into the house and announced that they were conducting a raid. They poked a gun at her,
handcuffed her, searched her person, and confiscated her money which was intended as
payment for the cellphone. At around seven oclock in the evening, she was taken to the
Criminal Investigation Division.
The appellant claimed that during her detention, a certain Wilmer Antonio
demanded P50,000.00 from her so that she would be not be charged with any
offense. She alleged that she could not file a complaint against the people responsible for
her apprehension since nobody could help her while she was already detained.
On November 28, 2003, the trial court rendered its Decision,[5] the dispositive portion of
which reads as follows:
WHEREFORE, it appearing that the guilt of accused NIEVA ALBERTO y DE NIEVA

was proven beyond reasonable doubt for violation of Section 5, Article II of R.A. 9165,
as principal, with no mitigating or aggravating circumstances, accused is hereby
sentenced to suffer life imprisonment, to pay a fine of P500,000.00, and to pay costs.
Let the zero point twenty-five (0.25) gram of Methylamphetamine Hydrochloride be

turned over to the PDEA for proper disposition.
SO ORDERED.[6]
The trial court found that all the elements for the illegal sale of shabu were satisfactorily
established by the prosecution. The identity of the buyer and the seller, the object, and the
consideration were proven. Likewise, the delivery of the thing sold and the payment
therefor were established.
Thus, appellant filed an appeal raising the following assignment of errors:
I.
THE COURT A QUO GRAVELY ERRED IN GIVING FULL WEIGHT AND
CREDENCE TO INCREDIBLE TESTIMONY OF THE PROSECUTIONS SOLE
WITNESS.
II.
THE COURT A QUO GRAVELY ERRED IN CONVICTING THE ACCUSED-
APPELLANT OF THE OFFENSE CHARGED DESPITE THE FAILURE OF THE
PROSECUTION TO PROVE HER GUILT BEYOND REASONABLE DOUBT.[7]
The Decision of the Court of Appeals
In its Decision[8] promulgated on January 19, 2006, the appellate court affirmed the
decision of the trial court. It held that the trial court did not err in convicting appellant for
violation of Section 5, Article II of RA 9165.
Our Ruling
The appeal lacks merit.
In a successful prosecution for offenses involving the illegal sale of dangerous

drugs under Section 5, Article II of RA 9165, the following elements must concur: (1) the
identities of the buyer and seller, object, and consideration; and (2) the delivery of the
thing sold and the payment thereof.[9] What is material to the prosecution for illegal sale
of dangerous drugs is the proof that the transaction or sale actually occurred, coupled
with the presentation in court of the substance seized as evidence.[10]
In the present case, all the elements of the crime have been sufficiently
established. Prosecution witness PO1 Inopia consistently testified that a buy-bust
operation took place. As the poseur-buyer, he positively identified the appellant as the
seller of a sealed sachet containing a white crystalline substance for a sum
of P500.00. The sachet was confiscated and marked with initials NDA and taken to the
crime laboratory for examination, where a chemical analysis on the contents thereof
confirmed that the same are indeed methylamphetamine hydrochloride or shabu. The
sachet containing said dangerous drug was positively identified by PO1 Inopia during the
trial as the very sachet with white crystalline substance sold and delivered to him by the
appellant. Thus, appellants defense of denial is unavailing. It has been consistently held
that mere denial cannot prevail over the positive testimony of a prosecution witness. A
defense of denial which is unsupported and unsubstantiated by clear and convincing
evidence becomes negative and self-serving, deserving no weight in law, and cannot be
given greater evidentiary value over convincing, straightforward and probable testimony
on affirmative matters.[11]
Likewise unavailing is the defense of the appellant that the police officers arrested
her to extort P50,000.00 and that the case was filed after she refused to give said
amount. This defense of frame-up is viewed with disfavor since, like alibi, it can easily
be concocted and is a common ploy in most prosecutions for violations of the Dangerous
Drugs Law.[12] In fact, aside from the bare assertions of the appellant that she was a
victim of frame-up and extortion, there is no clear and convincing evidence to
substantiate such claim. On the other hand, she admits that there was no existing rancor
between her and the arresting officers,[13] and that there is no reason why the buy-bust
team would single her out for the sole purpose extorting money from her.
Appellant likewise assails the credibility of the lone prosecution

witness. According to the appellant, considering the circumstances under which the buy-
bust operation was conducted as narrated in open court by PO1 Inopia, it is difficult to
believe that the buy-bust team seized only a single sachet of shabu from her. Likewise
unbelievable, per appellants contention, is the amount of P500.00 paid by PO1 Inopia for
the alleged 0.25 gram of shabu, which is grossly inadequate compared to its prevailing
street value. Besides, PO1 Inopias testimony is not worthy of credence for want of
corroborative evidence.
We are not persuaded.
It is well-settled that the trial courts determination on the issue of credibility of

witnesses and its consequent findings of facts must be given great weight and respect on
appeal, unless certain facts or substance have been overlooked, which, if considered,
might affect the result of the case. This is so because of the judicial experience that trial
courts are in a better position to decide the question of credibility, having heard the
witnesses themselves and observed their deportment and manner of testifying during the
trial.[14]
In the case at bench, we have thoroughly reviewed the records and, like the
appellate court, did not find any justification to disturb the findings of the trial court. Our
re-examination of the testimony of PO1 Inopia follows the trial courts conclusion that his
testimony was given in a straightforward and simple manner. Besides, appellant is
questioning the testimony of PO1 Inopia only on matters pertaining to minor details of
the incident that do not, in any way, affect her conviction. The inconsistencies ascribed to
PO1 Inopia involve minor details, too trivial to adversely affect his credibility as
prosecution witness,[15] and do not negate his positive identification of the appellant as the
perpetrator of the crime.[16] On the other hand, the testimony of PO1 Inopia on the
circumstances that occurred on the date of the entrapment operation against the appellant
from the moment he received a confidential tip from his informer until the time the buy-
bust team apprehended the appellant deserves to be given weight and significance as it
emanated from the mouth of a policeman who enjoys the presumption of regularity in the
performance of his duty. Police officers are presumed to have acted regularly in the
performance of their official functions in the absence of clear and convincing proof to the
contrary or proof that they were moved by ill will.[17]
The argument of the appellant that the prosecutions account of the buy-bust
operation is unworthy of belief since no corroborative testimony was presented, fails to
impress. There is no law requiring that in drug cases the testimony of a single witness has
to be corroborated to be believed. Corroborative evidence is vital only when there are
reasons to suspect that the witness twisted the truth, or that his or her observation was
inaccurate. Evidence is assessed in terms of quality, not quantity. It is to be weighed, not
counted. Thus, it is not uncommon to reach a conclusion of guilt on the basis of the
testimony of a lone witness.[18] Moreover, it is on record that the appellant no longer
required the presentation of corroborative testimony.During the trial, the prosecution was
ready to present another witness in the person of PO1 Santos. However, the parties
agreed to dispense with his testimony since it would only be corroborative in nature.[19]
The appellant further asserts that there is a serious doubt as to the veracity of the
offense charged since the Information alleges that the offense was committed on January
27, 2003 while the prosecution witness categorically averred that they arrested her in a
buy-bust operation conducted on January 23, 2003. It does not escape our attention,
however, that this issue has made its debut only in the Court of Appeals. In this regard,
the rule is that issues not raised in the lower courts cannot be raised for the first time on
appeal without offending the basic rules of fair play, justice and due process.[20]
Lastly, the appellant maintains that serious doubt exists on whether the
alleged shabu was actually seized from her due to the failure of the buy-bust team to
observe the proper procedure in the seizure of the alleged shabu and the subsequent
delay in transmitting the same for laboratory examination. The appellant argues that,
under the law, the buy-bust team is mandated to physically inventory and photograph the
seized drug in his presence, or in the presence of his representative or counsel, and
representatives from the media and the Department of Justice.[21] She further contends
that it was also imperative for the prosecution to submit the alleged shabu to the
Philippine Drug Enforcement Agency (PDEA) Forensic Laboratory for qualitative and
quantitative examinations within 24 hours from its confiscation.[22] However, the
laboratory report shows that the said item was submitted for examination only five days
after the alleged buy-bust operation.
The defense of the appellant of alleged non-compliance by the apprehending

police officers with existing procedure is based on Section 21 of RA 9165. It reads:
SEC. 21. Custody and Disposition of Confiscated, Seized, and/or Surrendered

Dangerous Drugs, Plant Sources of Dangerous Drugs, Controlled Precursors and
Essential Chemicals, Instrumental Paraphernalia and/or Laboratory Equipment.The
PDEA shall take charge and have custody of all dangerous drugs, plant sources of
dangerous drugs, controlled precursors and essential chemicals, as well as
instruments/paraphernalia and/or laboratory equipment so confiscated, seized and/or
surrendered, for proper disposition in the following manner:
(1) The apprehending team having initial custody and control of the drugs shall,
immediately after seizure and confiscation, physically inventory and photograph the
same in the presence of the accused or the person/s from whom such items were
confiscated and/or seized, or his/her representative or counsel, a representative from the
media and the Department of Justice (DOJ), and any elected public official who shall be
required to sign the copies of the inventory and be given a copy thereof;
(2) Within twenty-four (24) hours upon confiscation/seizure of dangerous drugs,

plant sources of dangerous drugs, controlled precursors and essential chemicals, as well
as instruments/paraphernalia and/or laboratory equipment, the same shall be submitted to
the PDEA Forensic Laboratory for a qualitative and quantitative examination;
xxxx
However, the prosecutions failure to submit in evidence the required physical
inventory and photograph of the evidence confiscated will not result to appellants
acquittal of the crime charged.[23] Non-compliance with the above-provisions of RA 9165
is not fatal and will not render the arrest of an accused illegal or the items seized from her
inadmissible.[24] What is of utmost importance is the preservation of the integrity and the
evidentiary value of the seized items, as the same would be utilized in the determination
of the guilt or innocence of the appellant.[25]
Here, there is no doubt that the integrity and the evidentiary value of the drug
confiscated from the appellant during the entrapment operation were properly preserved
and safeguarded. The specimen was immediately and adequately marked.Thereafter, it
was sent to the crime laboratory for the requisite chemistry report. In other words, the
sachet of drug seized from the appellant and subsequently marked with initials NDA was
the same specimen submitted to the crime laboratory for chemical analysis. It was not
shown to be contaminated in any manner. The white crystalline substance contained
therein was later on determined to be positive for methylamphetamine hydrochloride,
commonly known as shabu, as shown in Chemistry Report No. D-109-03S
dated January 28, 2003.[26] At this point, it is worth noting that the testimony of the
forensic chemist was dispensed with after both parties stipulated that the specimen
submitted by the police officers was subjected to laboratory tests and the results are
shown in said chemistry report.[27]
Further, appellant did not assail the chain of custody or the issue of the disposition
and preservation of subject drug before the trial court. Consequently, she cannot now be
allowed to question its integrity and evidentiary value. Objection to the admissibility of
evidence raised for the first time on appeal cannot be considered.[28]
The Penalty
Having ruled that the guilt of the appellant of the crime charged has been
established beyond reasonable doubt, a determination of the appropriate imposable
penalty is now in order. Section 5, Article II of RA 9165 penalizes the sale of shabu as
follows:
SEC. 5. Sale, Trading, Administration, Dispensation, Delivery, Distribution and

Transportation of Dangerous Drugs and/or Controlled Precursors and Essential
Chemicals. The penalty of life imprisonment to death and a fine ranging from Five
hundred thousand pesos (P500,000.00) to Ten million pesos (P10,000,000.00) shall be
imposed upon any person, who, unless authorized by law, shall sell, trade, administer,
dispense, deliver, give away to another, distribute, dispatch in transit or transport any
dangerous drug, including any and all species of opium poppy regardless of the quantity
and purity involved, or shall act as a broker in any of such transactions.[29]
For selling 0.25 gram of methylamphetamine hydrochloride to poseur-buyer PO1

Inopia, we find that the trial court, as affirmed by the CA, correctly imposed the penalty
of life imprisonment. We also find the fine of P500,000.00 imposed on appellant to be in
accordance with law.
WHEREFORE, the appeal is DISMMISED. The Decision of the Court of

Appeals in CA-G.R. CR No. 00894 dated January 19, 2006 which sustained the Decision
of the Regional Trial Court of Makati, Branch 135, finding appellant Nieva Alberto y De
Nieva, guilty beyond reasonable doubt of violation of Section 5, Article II of Republic
Act No. 9165 and sentencing her to suffer the penalty of life imprisonment and a fine
of P500,000.00 is AFFIRMED.
SO ORDERED.

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSE P. PEREZ
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before
the case was assigned to the writer of the opinion of the Courts Division.
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons
attestation, it is hereby certified that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the writer of the opinion of the
Courts Division.
REYNATO S. PUNO
Chief Justice
[1]
People v. Garcia, G.R. No. 172975, August 8, 2007, 529 SCRA 519, 533.
[2]
People v. Pringas, G.R. No. 175928, August 31, 2007, 531 SCRA 828, 842,
[3]
Records, p. 1.
[4]
Exhibit E-1, id. at 32.
[5]
Id at 44 47; penned by Judge Francisco B. Ibay.
[6]
Id. at 47.
[7]
CA rollo, p. 30.
[8]
Id. at 90-102; penned by Associate Justice Monina Arevalo-Zenarosa and concurred in by Associate Justices Andres B.
Reyes, Jr. and Rosmari D. Carandang.
[9]
People v. Dumlao, G.R. No. 181599, August 20, 2008, 562 SCRA 762, 770.
[10]
Id.
[11]
People v. Mateo, G.R. No. 179036, July 28, 2008, 560 SCRA 375, 390.
[12]
People v. Astudillo, 440 Phil. 205, 224 (2002).
[13]
TSN, October 1, 2003, p. 13.
[14]
People v. Vallador, 327 Phil. 303, 310-311 (1996).
[15]
People v. Ondalok, 339 Phil. 17, 25 (1997).
[16]
People v. Daen, Jr., 314 Phil. 280, 292 (1995).
[17]
People v. Mateo, supra note 11 at 390.
[18]
People v. Ayupan, 427 Phil. 200, 208-209 (2002).
[19]
TSN, June 25, 2003, pp. 17-18.
[20]
Pascual v. People, G.R. No. 160540, March 22, 2007, 518 SCRA 730, 738.
[21]
Dangerous Drugs Board Resolution No. 01, Section 2.
[22]
Id., Sec. 3.
[23]
People v. Agulay, G.R. No. 181747, September 26, 2008, 566 SCRA 571, 595.
[24]
Id.
[25]
People v. Del Monte, G.R. No.179940, April 23, 2008, 552 SCRA 627.
[26]
Records, p. 35.
[27]
Id. at 23.
[28]
People v. Mateo, supra note 11 at 410.
[29]
REPUBLIC ACT NO. 9165, Article II, Section 5.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 169706 February 5, 2010
SPOUSES WILLIAM GENATO and REBECCA GENATO, Petitioners,

vs.
RITA VIOLA, Respondent.
DECISION
DEL CASTILLO, J.:
When there is a conflict between the title of the case and the allegations in the complaint, the latter
prevail in determining the parties to the action. Jurisprudence directs us to look beyond the form and
into the substance so as to render substantial justice to the parties and determine speedily and
inexpensively the actual merits of the controversy with least regard to technicalities.
In the present Petition for Review, petitioners assail the September 9, 2005 Decision 1 of the Court of
Appeals (CA) in CA-G.R. SP No. 89466 which affirmed the Decision of the Office of the President.
The Office of the President affirmed the Decision of the Housing and Land Use Regulatory Board
(HLURB), First Division which granted the motion to quash the writ of execution issued in HLURB
Case No. REM-102491-4959 (REM-A-950426-0059).
Factual Antecedents
In October 1991, a complaint titled "VILLA REBECCA HOMEOWNERS ASSOCIATION, INC. versus
MR. WILLIAM GENATO and spouse REBECCA GENATO" was filed with the HLURB. The said
complaint was verified by 34 individuals, including the respondent herein, who referred to
themselves as the "Complainants" who "caused the preparation of the foregoing Complaint". 2 The
complaint stated that on various dates, complainants executed Contracts to Sell and/or Lease
Purchase Agreements with the Sps. Genato pertaining to housing units in Villa Rebecca Homes
Subdivision. Sometime thereafter the HLURB issued a cease and desist order (CDO) enjoining the
collection of amortization payments. This CDO was subsequently lifted. Thereafter, complainants
went to the Sps. Genato with the intention of resuming their amortization payments. The latter
however refused to accept their payments and instead demanded for a lump sum payment of all the
accrued amortizations which fell due during the effectivity of the CDO.
From the disorganized, bordering on incomprehensible, complaint, it can be gleaned that the
following reliefs are prayed for: 1) That Sps. Genato accept the complainants' monthly amortization
payments corresponding to the period of effectivity of the (subsequently lifted) CDO, without any
penalty; 2) That the computation of interest on delinquent payments be at 3% per month and not
compounded; 3) That Sps. Genato be responsible for correcting the deficiencies in the construction
and replacement of sub-standard materials to conform with the plans and specifications; 4) That
Sps. Genato be held answerable/liable to make good their undertaking to provide individual deep
wells for the homeowners; 5) That Sps. Genato be responsible for maintaining the street lights and
payment of the corresponding electric bills; 6) That Sps. Genato maintain the contract price of the
units for sale and not increase the prices; and 7) That Sps. Genato be made accountable for the
unregistered dwelling units.
On March 8, 1995, the Housing Arbiter rendered a Decision, the dispositive portion of which states:
WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered ordering
complainants to resume payment of their monthly amortization from date hereof pursuant to the
agreement. Likewise, it is hereby ordered that respondents correct the deficiencies in the
construction of the complaining occupants' units so as to conform to that which is specified in the
plans and specification of the buildings, as well as observe proper drainage requirements pursuant
to law. Likewise, respondents are hereby directed to immediately put up commercial wells and/or
water pumps or facilities in the Villa Rebecca Subdivision and to reimburse complainants and unit
occupants of their total expenditures incurred for their water supply.3
On appeal to the HLURB Board of Commissioners, the Decision was modified, inter alia, by the
additional directive for the complainants to pay 3% interest per month for the unpaid amortizations
due from June 29, 1991. The dispositive portion of the Decision of the HLURB Board of
Commissioners states:
WHEREFORE, premises considered, the decision of the Arbiter is hereby MODIFIED to read as
follows:
1. Ordering complainants to pay respondent the remaining balance of the purchase price.
Complainant must pay 3% interest per month for unpaid amortizations due from June 29,
1991. Thereafter complainant must pay its amortization in accordance with the original term
of the contract. These must be complied with upon finality of this decision.
2. Ordering the respondent to:
a. Accept the amortization payment;
b. Provide drainage outfall;
c. Provide the project with water facilities; and
d. Reimburse complainant the following:
d.1 Electric Bills in the amount of ₱3,146.66
d.2 Cost of construction of water supply to be determined by an appraiser

mutually acceptable to the parties.
Number 2.d to 2.e [sic] must be complied with within thirty (30) days from finality of this
decision.
SO ORDERED.4
This Decision, after being revised and then reinstated, subsequently became final and executory.
On May 26, 2000, Arbiter Marino Bernardo M. Torres issued the Writ of Execution. In connection
therewith, the sheriff seized Rita Viola's two delivery trucks and 315 sacks of rice. Respondent Viola
then filed an Urgent Motion to Quash Execution, with Prayers for Issuance of Temporary Restraining
Order, Clarification and Computation of Correct Amount of Money Judgment and Allowance of
Appeal.
After various incidents and pleadings by the opposing parties, the two trucks were ordered released.
The 315 sacks of rice, however, were sold at public auction to the highest bidder, 5 petitioner
Rebecca Genato in the amount of ₱189,000.00.6
On December 15, 2000, Arbiter Torres issued an Order denying respondent Viola's motion to quash
the writ of execution and directed her to pay the Sps. Genato the amount of ₱739,133.31. The
dispositive portion of the Order reads:
WHEREFORE, premises considered, the motion to quash writ of execution is hereby DENIED.
Movant Rita Viola is hereby directed to pay to the respondents the amount of ₱739,133.31 in
payment of their amortizations up to August 2000.
The bond posted by the movant in compliance with the directive of this Office is likewise ordered
cancelled.
SO ORDERED.7
Viola appealed the said Order and on January 10, 2003, the HLURB, First Division rendered a
Decision, the dispositive portion of which reads:
WHEREFORE, premises considered, the movants' respective Motions to Quash the Writ of
Execution are hereby GRANTED. Accordingly, the Orders dated December 15, [2000] are hereby
SET ASIDE. The respondents are directed to credit as payment the value of the 315 sacks of rice in
the amount of ₱318,500.00, which were seized and auctioned to the account of movant Viola.
SO ORDERED.8
The Sps. Genato appealed the said Decision to the Office of the President. On November 8, 2004,
the Office of the President affirmed in toto the Decision of the HLURB, First Division. The motion for
reconsideration filed by the Sps. Genato was denied. They thus elevated the case to the CA. As
previously mentioned, the CA affirmed the Decision of the Office of the President and disposed as
follows:
WHEREFORE, premises considered, the petition is DENIED and the assailed decision dated
November 4, 2004 and resolution dated March 31, 2005 of the Office of the President in O.P. Case
No. 03-B-057 are hereby AFFIRMED.
SO ORDERED.9
The Sps. Genato no longer filed a motion for reconsideration, they instead filed the present petition
for review.
Issues
Petitioners raise the following issues:
1. WHETHER THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE HLURB
HAS NOT ACQUIRED JURISDICTION OVER THE PERSON OF RESPONDENT RITA VIOLA.
2. WHETHER AFTER THE DECISION HAS BECOME FINAL AND EXECUTORY THE HLURB
COULD STILL RULE ON THE LACK OF JURISDICTION OVER THE PERSON OF RITA VIOLA.
3. WHETHER RESPONDENT VIOLA CAN CLAIM AN AMOUNT HIGHER THAN WHAT APPEARS
ON SHERIFF'S CERTIFICATE OF SALE.
4. WHETHER THE RULE THAT FINDINGS OF FACTS AND CONCLUSIONS OF ANY

ADJUDICATIVE BODY SHOULD BE CONSIDERED AS BINDING AND CONCLUSIVE ON THE
APPELLATE COURT, IS APPLICABLE IN THE CASE AT BAR. 10
Petitioners' Arguments
Petitioners contend that the CA erred in applying the case of Duero v. Court of Appeals,11 which held
that the lack of jurisdiction of the court over an action cannot be waived. They submit that
"jurisdiction of the court over an action" is different from "jurisdiction over the person". They say that
the latter was what the HLURB was referring to because it stated that Rita Viola was never
impleaded. They contend that jurisdiction over the person can be conferred by consent expressly or
impliedly given, as in the case of Rita Viola.
Petitioners also assert that the HLURB Decision subject of the writ of execution has long been final
and executory, hence, said Decision can no longer be modified. They further assert that the
execution of the said Decision is a ministerial duty of the HLURB.
Petitioners further argue that the best evidence of the value of the 315 sacks of rice seized and
auctioned off is the Sheriff's Certificate of Sale; hence the Board's ruling crediting to the account of
Viola an amount other than that stated in the Certificate of Sale has no sound basis.
Finally, the petitioners contend that the findings and conclusions of an adjudicative body resulting
from an erroneous application of law are not binding on the appellate courts.
Respondent's Arguments
On the other hand, respondent contends that the HLURB did not acquire jurisdiction over her person
since she was not a party to the case; hence, the HLURB decision is a nullity as against her and
therefore never acquired finality. With a void judgment, the resultant execution was likewise void.
She also argues that, since the levy and auction were illegal, the correct valuation of the 315 sacks
of rice is not the price paid at the auction but its actual value of ₱318,500.00.
Our Ruling
At the outset, it is worth mentioning that except for respondent Rita Viola, all the other individual
members/buyers/owners of the respective housing units have already paid and settled their
obligations with Sps. Genato.12 Hence, in the present case we only focus on the matters involving
Rita Viola.
For a more orderly presentation, we address the fourth issue raised by petitioners first.
Non-applicability of the doctrine on the binding effect of findings of facts and conclusions of an
adjudicative body
Indeed findings of fact and conclusions of an adjudicative body like the HLURB, which can be
considered as a trier of facts on specific matters within its field of expertise, should be considered as
binding and conclusive upon the appellate courts. This is in addition to the fact that it was in a better
position to assess and evaluate the credibility of the contending parties and the validity of their
respective evidence. However, these doctrines hold true only when such findings and conclusions
are supported by substantial evidence.13
In the present case, we find it difficult to find sufficient evidential support for the HLURB's conclusion
that it did not acquire jurisdiction over the person of Viola. We are thus persuaded that there is
ample justification to disturb the findings of the HLURB.
The HLURB acquired jurisdiction over Viola
It is not the caption of the pleading but the allegations therein that are controlling. 14 The inclusion of
the names of all the parties in the title of a complaint is a formal requirement under Section 3, Rule 7
of the Rules of Court. However, the rules of pleadings require courts to pierce the form and go into
the substance.15 The non-inclusion of one or some of the names of all the complainants in the title of
a complaint, is not fatal to the case, provided there is a statement in the body of the complaint
indicating that such complainant/s was/were made party to such action. This is specially true before
the HLURB where the proceedings are summary in nature without regard to legal technicalities
obtaining in the courts of law16 and where the pertinent concern is to promote public interest and to
assist the parties in obtaining just, speedy and inexpensive determination of every action, application
or other proceedings.17
Respondent Viola, although her name did not appear in the title as a party, was one of the persons
who caused the preparation of the complaint and who verified the same. The allegations in the body
of the complaint indicate that she is one of the complainants. She categorically considered, and held
out, herself as one of the complainants from the time of the filing of the complaint and up to the time
the decision in the HLURB case became final and executory. To repeat, the averments in the body
of the complaint, not the title, are controlling.18 Hence, having been set forth in the body of the
complaint as a complainant, Viola was a party to the case.
For clarity, the complaint should have been amended to reflect in the title the individual
complainants. There being a "defect in the designation of the parties", its correction could be
summarily made at any stage of the action provided no prejudice is caused thereby to the adverse
party.19 In the present case, the specification of the individual complainants in the title of the case
would not constitute a change in the identity of the parties. Only their names were omitted in the title
but they were already parties to the case, most importantly, they were heard through their counsel
whom they themselves chose to prepare the complaint and represent them in the case before the
HLURB. No unfairness or surprise to the complainants, including Viola, or to the Sps. Genato would
result by allowing the amendment, the purpose of which is merely to conform to procedural rules or
to correct a technical error.20
It is now too late to dismiss this petition, and, in effect, nullify all proceedings had before the HLURB
on the ground that Viola does not appear to have been impleaded as a party. The error or defect is
merely formal and not substantial and an amendment to cure such defect is expressly authorized by
Sec. 4, Rule 10 of the Rules of Court.21
Moreover, it was only when the final and executory judgment of the HLURB was already being
executed against Viola that she, for the first time, reversed her position; and claimed that she was
not a party to the case and that the HLURB did not acquire jurisdiction over her. Viola is
estopped22 from taking such inconsistent positions. Where a party, by his or her deed or conduct,
has induced another to act in a particular manner, estoppel effectively bars the former from adopting
an inconsistent position, attitude or course of conduct that causes loss or injury to the latter. The
doctrine of estoppel is based upon the grounds of public policy, fair dealing, good faith and justice,
and its purpose is to forbid one to speak against his own act, representations, or commitments to the
injury of one to whom they were directed and who reasonably relied thereon. After petitioners had
reasonably relied on the representations of Viola that she was a complainant and entered into the
proceedings before the HLURB, she cannot now be permitted to impugn her representations to the
injury of the petitioners.
1avvphi1
At this point, it may be beneficial to elaborate on the matter of jurisdiction. Jurisdiction is defined as
the power and authority of a court to hear, try and decide a case.23 In order for the court or an
adjudicative body to have authority to dispose of the case on the merits, it must acquire jurisdiction
over the subject matter and the parties.24Elementary is the distinction between jurisdiction over the
subject matter and jurisdiction over the person. Jurisdiction over the subject matter is conferred by
the Constitution or by law. In contrast, jurisdiction over the person is acquired by the court by virtue
of the party's voluntary submission to the authority of the court or through the exercise of its coercive
processes. Jurisdiction over the person is waivable unlike jurisdiction over the subject matter which
is neither subject to agreement nor conferred by consent of the parties.25 In civil case, courts acquire
jurisdiction over the plaintiffs upon the filing of the complaint, while jurisdiction over the defendants is
acquired either through the service of summons upon them in the manner required by law or through
their voluntary appearance in court and their submission to its authority. 26
The act of filing the complaint with the HLURB is unequivocally a voluntary submission by the
complainants, including Viola, to the authority of the HLURB. Clearly, the HLURB acquired
jurisdiction over Viola, who was one of the complainants, upon the filing of their complaint.
Final and executory judgment may no longer be modified
The April 27, 1999 HLURB Resolution,27 reinstating the December 18, 1996 Decision,28 has long
been final and executory. Nothing is more settled in the law than that a decision that has acquired
finality becomes immutable and unalterable and may no longer be modified in any respect even if
the modification is meant to correct erroneous conclusions of fact or law and whether it was made by
the court that rendered it or by the highest court of the land.29The only recognized exceptions to the
general rule are the correction of clerical errors, the so-called nunc pro tuncentries which cause no
prejudice to any party, void judgments, and whenever circumstances transpire after the finality of the
decision rendering its execution unjust and inequitable.30 None of the exceptions is present in this
case. The HLURB decision cannot be considered a void judgment, as it was rendered by a tribunal
with jurisdiction over the subject matter of the complaint and, as discussed above, with jurisdiction
over the parties. Hence, the same can no longer be modified.
Amount to be credited on account

of the sale of property levied upon
After a judgment has gained finality, it becomes the ministerial duty of the court or quasi-judicial
tribunal to order its execution.31 In the present case, the final and executory HLURB decision was
partially executed by the sale of the 315 sacks of rice belonging to Viola.
In determining the amount to be credited to the account of Viola, we look at the Sheriff's Partial
Report and the Sheriff's Certificate of Sale. Both documents state that in the auction sale of the 315
sacks of rice, Mrs. Rebecca Genato submitted the highest bid in the amount of ₱189,000.00.
Drawing from Section 19, Rule 39 of the Rules of Court which states that "all sales of property under
execution must be made at public auction, to the highest bidder," it naturally follows that the highest
bid submitted is the amount that should be credited to the account of the judgment debtor.
WHEREFORE, the petition is GRANTED. The assailed September 9, 2005 Decision of the Court of
Appeals is REVERSED and SET ASIDE and the December 15, 2000 Order of Arbiter Marino
Bernardo M. Torres is REINSTATED and AFFIRMED.
SO ORDERED.

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSE P. PEREZ
Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1
CA rollo, pp. 141-152; penned by Associate Justice Remedios A. Salazar-Fernando and
concurred in by Associate Justices Rosmari D. Carandang and Estela M. Perlas-Bernabe.
2
Rollo, pp. 47-53.
3
Id. at 56.
4
Id. at 59.
5
There was one other bidder, Mr. Manuel Rigo, whose bid amounted to only ₱173,250.00.
6
CA rollo, p. 64.
7
Id. at 71.
8
Rollo, p. 80.
9
Id. at 45.
10
Id. at 199.
11
424 Phil. 12, 25 (2002).
12
Rollo, p. 17.
Cabalan Pastulan Negrito Labor Association v. National Labor Relations Commission, 311
13
Phil. 744 , 756 (1995).
See Almuete v. Andres, 421 Phil. 522, 531 (2001); See also Leonardo v. Court of Appeals,
14
G.R. No. 125485, September 13, 2004, 438 SCRA 201, 214.
15
Vlason Enterprises Corporation v. Court of Appeals, 369 Phil. 269, 304 (1999).
16
Section 3. Nature of the Proceedings.-Proceedings before the Board shall be summary in
nature without regard to legal technicalities obtaining in the courts of law. The Rules of Court
shall not apply in said proceedings except in suppletory character and whenever practicable.
Appearance by counsel is optional. (1987 HLURB Rules)
17
Section 4 of the 1987 HLURB Rules.
18
Vlason Enterprises Corporation v. Court of Appeals, supra note 14.
19
Sec. 4. of the Rules of Court states: "Formal amendments. - A defect in the designation of
the parties and other clearly clerical or typographical errors may be summarily corrected by
the court at any stage of the action, at its initiative or on motion, provided no prejudice is
caused thereby to the adverse party".
20
Cf. Juasing Hardware v. Mendoza, G.R. No. L-55687, July 30, 1982, 115 SCRA 783.
Cf. Yao Ka Sin Trading v. Court of Appeals, G.R. No. 53820, June 15, 1992, 209 SCRA
21
763.
22
Article 1431 of the Civil Code states: "Through estoppel an admission or representation is
rendered conclusive upon the person making it and cannot be denied or disproved as
against the person relying thereon".
23
Zamora v. Court of Appeals, G.R. No. 78206, March 19, 1990, 183 SCRA 279, 283-284.
See Perkin Elmer Singapore Pte Ltd. v. Dakila Trading Corporation, G.R. No. 172242,
24
August 14, 2007, 530 SCRA 170, 186; Bank of the Philippine Islands v. Sps. Evangelista,
441 Phil 445, 453 (2002).
25
Arnado v. Buban, A.M. No. MTJ-04-1543, May 31, 2004, 430 SCRA 382, 386.
Perkin Elmer Singapore Pte Ltd. v. Dakila Trading Corporation, supra note 24; Bank of the
26
Philippine Islands v. Sps. Evangelista, supra note 24.
27
Rollo, pp. 63-65.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 158385 February 12, 2010
MODESTO PALALI, Petitioner,

vs.
JULIET AWISAN, represented by her Attorney-in-Fact GREGORIO AWISAN, Respondent.
DECISION
DEL CASTILLO, J.:
A person occupying a parcel of land, by himself and through his predecessors-in-interest, enjoys the
presumption of ownership. Anyone who desires to remove him from the property must overcome
such presumption by relying solely on the strength of his claims rather than on the weakness of the
defense.
This Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assails the September 27,
2002 Decision2 and the April 25, 2003 Resolution3 of the Court of Appeals (CA) in CA-G.R. CV No.
52942. The challenged Decision disposed as follows:
WHEREFORE, premises considered, the assailed decision of the trial court dated May 24, 1996 is
hereby REVERSED AND SET ASIDE and a new one is entered:
1. Awarding the subject land in favor of the [respondent] with the exclusion of the area where
the residential house of the [petitioner] is erected.
2. Ordering the [petitioner] to vacate the rootcrop land and surrender its possession in favor
of the [respondent], and enjoining the [petitioner] to refrain from doing any act disturbing the
[respondent’s] peaceful possession and enjoyment of the same.
3. Cancelling Tax Declaration No. 31297 of the [petitioner] insofar as the rootcrop land
of .0648 hectares is concerned, with the exclusion of his residential land. All other reliefs and
remedies prayed for are DENIED, there being no sufficient evidence to warrant granting
them.
SO ORDERED.4
Factual Antecedents
Respondent Juliet Awisan claimed to be the owner5 of a parcel of land in Sitio Camambaey,
Tapapan, Bauko, Mountain Province, allegedly consisting of 6.6698 hectares6 and covered by Tax
Declaration No. 147 in her name.7On March 7, 1994, she filed an action for quieting of title against
petitioner Modesto Palali, alleging that the latter occupied and encroached on the northern portion of
her property and surreptitiously declared it in his name for tax purposes. 8 We shall refer to this land
occupied by petitioner, which allegedly encroached on the northern portion of respondent’s 6.6698-
hectare land, as the "subject property". Respondent prayed to be declared the rightful owner of the
northern portion, for the cancellation of petitioner’s tax declaration, and for the removal of petitioner
and his improvements from the property.9
Respondent’s (Plaintiff’s) Allegations
According to respondent, the 6.6698 hectare land was originally owned by her father, Cresencio
Cadwising. The latter testified that he and his wife were able to consolidate ownership over the land
by declaring them from public land as well as by purchasing from adjoining landowners. He admitted
including in his tax declaration a communal sacred lot (patpatayan) even if he did not acquire free
patent title over the same. As for the properties he bought, these were generally purchased without
any documentation, save for two.10
Cadwising also claimed having introduced improvements on the subject property as early as the
1960s.11 The 6.6698 hectare land was mortgaged to the Development Bank of the Philippines (DBP),
which acquired it in the foreclosure sale. DBP then sold the land to one Tico Tibong, who eventually
donated the same to respondent.
Petitioner’s (Defendant’s) Allegations
In his defense, petitioner denied the encroachment and asserted ownership over the subject
property. He maintained that he and his ancestors or predecessors-in-interest have openly and
continuously possessed the subject land since time immemorial. He and his siblings were born on
that land and, at that time, the area around the house was already planted with bananas, alnos, and
coffee.12 When his mother died, he buried her in the lot beside the house in 1975; while his father
was buried near the same plot in 1993.13 His own home had been standing on the property for the
past 20 years. Petitioner insisted that during this entire time, no one disturbed his ownership and
possession thereof.14
Sometime in 1974, petitioner declared the said land in his name for taxation purposes. 15 The said
Tax Declaration indicates that the property consists of 200 square meters of residential lot and 648
square meters of rootcrop land (or a total of 848 square meters).
Proceedings before the Regional Trial Court
It is worth mentioning that both the complaint16 and the pre-trial brief17 of respondent alleged
encroachment only on the northern portion of her 6.6698-hectare land. During trial, however,
respondent’s attorney-in-fact, Gregorio Awisan,18 and respondent’s predecessor-in-interest,
Cresencio Cadwising,19 both alleged that there was an encroachment in the southern portion also.
This was done without amending the allegations of the complaint.
Confronted with this new allegation of encroachment on the southern portion, petitioner tried to
introduce his tax declaration over the same (in the name of his deceased father), but was objected to
by respondent on the ground of immateriality.20 After such objection, however, respondent
surprisingly and inconsistently insisted that the ownership of the southern portion was included in the
complaint and was an issue in the case. The ensuing confusion over the subject of the case is
revealed in the following exchange between the parties’ lawyers:21
Atty. Awisan: Where is the land in question located?
Palali: In Tapapan, Bauko, sir.
Atty. Awisan: Where is that situated in relation to your house?
Palali: It is near my house which is enclosed with fence.
Atty. Awisan: How about the land in question situated in the southern portion, do you know
that?
Palali: That is the land our parents gave to us as inheritance. There are terraces there.
Atty. Awisan: So, the land in question [is] located below your house and on the southern
portion?
Atty. Bayogan: As far as the southern portion is concerned, it is not included in the complaint.
Atty. Awisan: It is included.
Atty. Bayogan: The southern portion refer[s] to Lot 3 and it is not included in the complaint. In
fact when I started asking question regarding this land, the counsel objected.
Atty. Awisan: This land indicated as Lot 3 is the southern portion.
The trial court, apparently relying on the allegations of the complaint, ruled on the northern portion as
the subject property of the case.
After due trial, the Regional Trial Court of Bontoc, Mountain Province, Branch 35, dismissed 22 the
complaint. It based its decision on respondent’s failure to prove her allegation of physical possession
of the land. Going by the results of its ocular inspection23 of the land in question, the trial court noted
that Cadwising (respondent’s predecessor-in-interest) could not pinpoint and the court did not see
any of the improvements that Cadwising had allegedly introduced to the land. 24 Thus, the trial court
held that respondent’s claim of ownership was supported solely by her tax declarations and tax
payment receipts which, by themselves, are not conclusive proof of ownership. 25
In contrast, the trial court duly verified during the ocular inspection the existence of the
improvements introduced by petitioner and his predecessors on the subject property. 26 Moreover, the
trial court observed that the witnesses for the petitioner all lived continuously since their births within
or near Sitio Camambaey in Tapapan and that they knew the land very well. They knew petitioner
and his predecessors, as well as the improvements introduced by them to the land. Thus, the trial
court found that the petitioner presented overwhelming proof of actual, open, continuous and
physical possession of the property since time immemorial. Petitioner’s possession, coupled with his
tax declarations, is strong evidence of ownership which convinced the court of his better right to the
property.27
For purposes of clarity, we cite the dispositive portion of the trial court’s Decision thus:
Wherefore, premises considered, judgment is hereby rendered in favor of the defendant Modesto
Palali and against the plaintiff Juliet C. Awisan, represented by her Attorney-in-Fact, Gregorio B.
Awisan, as follows:
a) Ordering the dismissal of the complaint and costs against the plaintiff;
b) Adjudging the defendant Modesto Palali as the owner and lawful possessor of the subject
property; and
c) The court cannot however grant the counterclaim of defendant for lack of evidence to
prove the same.
SO ORDERED.28
Respondent appealed the trial court’s decision to the CA, which reversed the same. The CA found
that petitioner failed to prove actual possession of the entire 6.6698 hectare land, which the CA
believed to be the subject of the case. According to the appellate court, petitioner was only able to
prove actual occupation of the portion where his house was located and the area below where he
had planted fruit-bearing plants.29
The CA also ruled that based on the ocular inspection report of the trial
court, petitioner’s possession did not extend to the entire 6.6698 hectares. In its own words:
Likewise, the report on the ocular inspection of the land in question divulges that the alleged
possession of the land by [petitioner] Modesto Palali does not extend to the entire 6.6698 hectares
of the subject land. Not even in the sketch plan of the land does it illustrate that the possession of
the [petitioner] refers to the entire subject land. Instead, the possession of [petitioner] merely points
to certain portions of the subject land as drawn and prepared by the tax mappers.
From the foregoing testimony, no sufficient indicia could be inferred that the possession of the
[petitioner] refers to the entire portion of the land.30
The appellate court also refused to give credence to petitioner’s tax declaration. The CA held that
petitioner’s Tax Declaration No. 31793, which covers only an 848-square meter property, is
incongruous with his purported claim of ownership over the entire 6.6698-hectare land.
Proceeding from this premise, the CA gave greater weight to the documentary and testimonial
evidence of respondent. The presumption of regularity was given to the public documents from
which respondent traced her title to the subject property.
Thus, the CA awarded the entire 6.6698-hectare property to respondent and ordered the
cancellation of petitioner’s tax declaration (except for the 200-square meter residential lot thereof
which was not being claimed by respondent).31
Petitioner moved for a reconsideration of the unfavorable Decision, but his motion was denied for
lack of merit.
Preliminary Matter
The CA Decision is based on a mistaken understanding of the subject property
It is apparent that the CA Decision proceeded from an erroneous understanding of what the subject
property actually is and what the trial court actually ruled upon. The CA was under the mistaken
impression that the subject property was the entire 6.6698 hectares of land allegedly owned by
respondent under her Tax Declaration No. 147. Because of this, the CA ruled against petitioner on
the ground that he failed to prove possession of the entire 6.6698 hectares. The CA also
disregarded petitioner’s Tax Declaration No. 31793 (despite being coupled with actual possession)
because the said tax declaration covered only an 848-square meter property and did not cover the
entire 6.6698 hectare property. This is clear from the following text lifted from the CA Decision:
The trial court’s finding that the defendant-appellee had acquired the subject land by virtue of
acquisitive prescription cannot be countenanced. At the outset, the subject land being claimed by the
plaintiff-appellant as described in the complaint is the 6.6698 hectares land [boundaries omitted].
The said description is with the exclusion of the portion of land where the residential house of the
defendant-appellee is erected. However, the adverse and exclusive possession offered by the
defendant-appellee, which includes his tax receipt, does not refer to the entire land consisting of
6.6698 hectares being claimed by the plaintiff-appellant. x x x The witnesses for the defendant-
appellee testified that indeed Modesto Palali’s predecessors-in-interest have once built a house in
Camambaey, Tapapan, Bauko, Mt. Province, but whether or not the defendant-appellee or his
predecessor-in-interest have actually, exclusively, notoriously, and adversely possessed the entire
6.6698 hectares of land could not be deduced from their testimonies. It could be gleaned from the
testimony of Consigno Saligen, that what the defendant-appellee actually possessed and claim as
their own is merely that portion where the house is erected and that portion of land below the house
where Modesto Palali planted fruit-bearing plants. x x x
Likewise, the report on ocular inspection of the land in question divulges that the alleged possession
of the land by defendant-appellee Modesto Palali does not extend to the entire 6.6698 hectares of
the subject land. Not even in the sketch plan of the land does it illustrate that the possession of the
defendant-appellee refers to the entire subject land. Instead, the possession of the defendant-
appellee merely points to certain portions of the subject land as drawn and prepared by the "tax
mappers".
From the foregoing testimony, no sufficient indicia could be inferred that the possession of the
defendant-appellee refers to the entire portion of the land.32
This was perhaps not entirely the appellate court’s fault, because a reading of the issues presented
by respondent to the CA gives the wrong impression that the subject property is the entire 6.6698
hectares:
x x x [T]he plaintiff-appellant elevated the matter on appeal assigning the following errors committed
by the trial court:
I
The trial court erred in failing to consider the overwhelming superior documentary and oral evidence
of the plaintiff Juliet C. Awisan showing her ownership on (sic) the land in question consisting of
6.6698 hectares described in her complaint
II
The trial court erred in adjudicating the land in question to the defendant Modesto Palali who is a
squatter on the land whose tax declaration merely overlapped or duplicated that of the plaintiff and
which covered only a small portion of 200 square meters of residential portion [sic] and 648 square
meter of rootcrop land.
x x x x33
The foregoing formulation of the issues presented by respondent before the CA erroneously
described "the land in question" as "consisting of 6.6698 hectares" and erroneously stated that the
trial court "adjudicated the land in question to [petitioner]". Said formulation is very misleading
because the case before the trial court did not involve the ownership of the entire 6.6698 hectares,
but merely the northern portion thereof – the property actually occupied by petitioner and much
smaller than 6.6698 hectares. Even if we go back to the respondent’s complaint, we would find there
that respondent is claiming encroachment merely of the "northern portion" of her 6.6698-hectare
property, and not of the entire 6.6698 property.34
Neither did the trial court adjudicate to petitioner the entire 6.6698-hectare land; it simply upheld
petitioner’s right to the property he is actually occupying. It only declared petitioner as the lawful
owner and possessor of the "subject property", which is the property to the north of the 6.6698-
hectare land and occupied by petitioner. This is evident from the trial court’s summary of the facts
established by the respondent and her witnesses, to wit:
During the hearing of the case, plaintiff and her witnesses established and disclosed: x x x that only
a portion of the entire 6.6 hectares in its northern portion located below and above the residential
house of the defendant Modesto Palali is now the land in question as properly shown in the sketch of
the land covered by Tax Declaration No. 147 in the name of Juliet Awisan x x x. 35
Proceeding from a wrong premise as to what is the subject property, the CA utterly failed to
appreciate the evidence as they relate to the parties’ claims. Thus, while the general rule is that this
Court is not a trier of facts, and that in a petition for review under Rule 45, only questions of law may
be raised, the Court is behooved to admit the instant case as an exception. 36
Issue
The issue in this case is who between the parties has the better right to the subject property.
Our Ruling
Having gone over the parties’ evidence before the trial court, we find adequate support for the trial
court’s ruling in favor of petitioner. The CA erred in reversing the trial court’s findings, particularly
because, as discussed above, such reversal was premised on the CA’s erroneous understanding of
the subject property.
As found by the trial court, petitioner was able to prove his and his predecessors’ actual, open,
continuous and physical possession of the subject property dating at least to the pre-war era (aside
from petitioner’s tax declaration over the subject property). Petitioner’s witnesses were long time
residents of Sitio Camambaey. They lived on the land, knew their neighbors and were familiar with
the terrain. They were witnesses to the introduction of improvements made by petitioner and his
predecessors-in-interest.
From their consistent, unwavering, and candid testimonies, we find that petitioner’s grandfather
Mocnangan occupied the land during the pre-war era. He planted camote on the property because
this was the staple food at that time. He then gave the subject property to his daughter Tammam,
while he gave a separate one to his son Pacolan Mocnangan. In the 1960s, Tammam and her
husband Palalag cultivated the land, built a cogon home, and started a family there. Palalag
introduced terraces and, together with his sons, built earth fences around the property. Palalag’s
family initially planted bananas, coffee, and oranges; they later added avocadoes, persimmons, and
pineapples. When Tammam and Palalag died, their son, petitioner herein, buried them in the subject
property and continued cultivating the land. He also constructed a new home.
On the other hand, respondent relied merely on her tax declaration, but failed to prove actual
possession insofar as the subject property is concerned. To be sure, respondent attempted to prove
possession of the subject property. Her predecessor-in-interest, Cadwising, had allegedly introduced
improvements like a piggery, poultry, terracing, plantings, and a barbed wire fence. However, not
one of these alleged improvements was found during the ocular inspection conducted by the trial
court. The absence of all his alleged improvements on the property is suspicious in light of his
assertion that he has a caretaker living near the subject property for 20 years. Cadwising did not
even bother to explain the absence of the improvements. The trial court’s rejection of Cadwising’s
assertions regarding the introduction of improvements is therefore not baseless. 1avvphi1
Thus, respondent having failed to prove possession, her claim rests solely on her tax declaration.
But tax declarations, by themselves, are not conclusive evidence of ownership of real property. In
the absence of actual, public, and adverse possession, the declaration of the land for tax purposes
does not prove ownership.37Respondent’s tax declaration, therefore, cannot serve as basis to oust
petitioner who has been in possession (by himself and his predecessors) of the subject property
since before the war.
Neither can respondent rely on the public instruments dealing with the 6.6698-hectare property
covered by her tax declaration. Such public documents merely show the successive transfers of the
property covered by said documents. They do not conclusively prove that the transferor actually
owns the property purportedly being transferred, especially as far as third parties are concerned. For
it may very well be that the transferor does not actually own the property he has transferred, in which
case he transfers no better right to his transferee. No one can give what he does not have – nemo
dat quod non habet.38 Thus, since respondent’s predecessor-in-interest Cadwising appeared not to
have any right to the subject property, he transferred no better right to his transferees, including
respondent.
All told, we hold that as between the petitioner and the respondent, it is the petitioner who has the
better claim or title to the subject property. While the respondent merely relied on her tax declaration,
petitioner was able to prove actual possession of the subject property coupled with his tax
declaration. We have ruled in several cases that possession, when coupled with a tax declaration, is
a weighty evidence of ownership.39 It certainly is more weighty and preponderant than a tax
declaration alone.
The preponderance of evidence is therefore clearly in favor of petitioner, particularly considering

that, as the actual possessor under claim of ownership, he enjoys the presumption of
ownership.40 Moreover, settled is the principle that a party seeking to recover real property must rely
on the strength of her case rather than on the weakness of the defense. 41 The burden of proof rests
on the party who asserts the affirmative of an issue. For he who relies upon the existence of a fact
should be called upon to prove that fact. Having failed to discharge her burden to prove her
affirmative allegations, we find that the trial court rightfully dismissed respondent’s complaint.
A final note. Like the trial court, we make no ruling regarding the southern portion of the property (or
Lot 3, as referred to by the parties), because this property was not included in respondent’s
complaint. Although the Rules of Court provide that "when issues not raised by the
pleadings are tried with the express or implied consent of the parties, they
shall be treated in all respects as if they had been raised in the
pleadings,"42 such rule does not apply here. Respondent objected43 when petitioner tried
to prove his ownership of Lot 3 on the ground of immateriality, arguing that ownership of Lot 3 was
not an issue. Respondent cannot now insist otherwise.
WHEREFORE, the petition is GRANTED. The September 27, 2002 Decision as well as the April 25,
2003 Resolution of the Court of Appeals in CA-G.R. CV No. 52942 are REVERSED and SET
ASIDE. The May 24, 1996 Decision of the Regional Trial Court of Bontoc, Mountain Province,
Branch 35 is REINSTATED and AFFIRMED. Costs against respondent.
SO ORDERED.

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSE P. PEREZ
Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1
Rollo, pp. 3-17.
2
Id. at 77-93; penned by Associate Justice Amelita G. Tolentino and concurred in by
Associate Justices Martin S. Villarama, Jr. and Remedios Salazar-Fernando.
3
Id. at 102-103.
4
Id. at 91-92.
5
As donee in a Deed of Donation dated November 6, 1993, records, pp. 6-7.
6
Before the conduct of the pre-trial conference, respondent sold a portion of her property to
a third party (Deed of Sale of a Portion of Real Estate dated May 24, 1994, id. at 59). Thus,
her alleged landholding was reduced to 5.4326 hectares. For some reason unbeknown to
the Court, respondent continued to refer to her property as consisting of 6.6698 hectares (Id.
at 29). Thus, both the trial and appellate courts also referred to her property as consisting of
its original 6.6698 hectares. For convenience, particularly in reviewing the decisions of the
trial and appellate courts, we shall continue to refer to the property allegedly owned by
respondent as consisting of "6.6698 hectares", but it should be kept in mind that the actual
size of the land allegedly owned by respondent was reduced to 5.4326 hectares.
7
The plaintiff describes the land donated to her as follows:
ROOTCROP LAND – situated at sitio Camambaey, Tapapan, Bauko, Mt. Province,

bounded on the north by a Creek and the Provincial Road; on the south by a creek
and public land; on the east by the provincial road, and west by public land and the
municipal road, containing an area of 6.6698 hectares, more or less, and declared for
taxation purposes in the name of plaintiff under TD No. 147 of the Municipal Tax
Rolls of Bauko, Mt. Province, id. at 1.
8
Id. at 2-3.
9
Id. at 3-4.
10
Affidavit of Transfer of Real Property, id. at 75; Deed of Absolute Sale, id. at 73.
11
TSN, September 30, 1994, pp. 13-14.
12
TSN, May 30, 1995, p. 3.
13
Id. at 2-3.
14
Records, p. 32.
15
Tax Declaration No. 31297 was issued in 1974, id. at 111.
16
Id. at 3. The sixth paragraph of the complaint reads:
That said acts of defendant in encroaching, entering the land of herein plaintiff,
particularly the said NORTHERN portion thereof, and thereafter declaring the same
surreptitiously for taxation purposes as abovementioned, and thereby claiming
ownership and possession of said NORTHERN portion, is patently illegal, fraudulent
and unjustified, and which acts of defendant constitute a cloud and a thorn to the title
of ownership of and possession of herein plaintiff, which she now prays for the
removal and consequently cleared and dissipated in accordance with law x x x .
17
Id. at 29-31. The salient portion reads:
x x x That since its acquisition, plaintiff and family, have been in open, adverse,
continuous and uninterrupted possession of the same, tilling and cultivating it until
the present without anyone questioning their said possession and ownership,
including defendant herein. It was only sometime the early months of 1992, and
before the aforementioned donation was formalized, plaintiff, who is residing at
Baguio City, sought assistance from her father-in-law (herein atty-in-fact, Gregorio
Awisan) to look into the present status of the said land, as a result of which, the latter
informed that one by the name of Modesto Palali x x x have encroached and actually
entered the property, particularly the northern side thereof, and even declared a
portion thereof with an area of 848 square meters, more or less, as reflected in the
latter’s Tax Declaration bearing No. 31793 of the Municipal Tax Rolls of Bauko, Mt.
Province.
18
TSN, September 28, 1994, pp. 7-8.
Q: Do you know the portions of this land entered into by the defendants [sic]?
A: Yes.
xxxx
Q: Will you describe the portion of that property?
A: North is near his [petitioner’s] house maybe about 2,000 to 3,000 square meters.
In the south is about 1,500 square meters.
19
TSN, September 30, 1994, pp. 13 and 17-18.
Q: Beside this land of Duclan is a land marked as Palali, Exh. "C-5", what does that
land refer to?
A: This is the land which Palali entered.
Q: Is that the land that is now being litigated in this case?

A: Yes, sir.
xxxx
Q: I show you Exh. "C-6" as claimed by Modesto Palali, what does this exhibit refer
to?
A: This is another portion which Palali entered.
Q: Is this the portion which is the subject of this case?
A: A part of the case.
20
TSN, May 30, 1995, pp. 9 and 11-12.
Q: Do you have tax declaration on the land in question?
A: There is.
xxxx
Q: I am showing to you Exhs. 1, 2, 3 which are tax declaration nos. 31297, 32674,
and 31793; are these the tax declarations on the land in question?
A: Yes, sir.
xxxx
Q: During ocular inspection also, the plaintiff’s representative [sic] named Cresencio
Cadwising included another portion to the south of the property in question; who
owns that property that was included by Cresencio Cadwising on the south?
A: The southern part is also owned by my parents, and distributed among us which
we in turn gave to our children.
Q: In other words, that property which was included by Cresencio Cadwising at the
southern side during ocular inspection also belongs to the Palali clan?
A: Yes, sir.
xxxx
Q: Does your father have tax declaration over that southern property?
A: Yes, sir.
Q: Will you be able to bring that to court if necessary?
A: Yes, sir.
Atty: Awisan (for plaintiff): Immaterial.
Court: Proceed with matters related to the issue.
21
TSN, May 30, 1995, pp. 13-14.
22
Decision dated May 24, 1996; penned by Judge Manuel B. Bragado, records, pp. 153-161.
The ocular inspection was conducted on January 20, 1995. See Transcript of the
23
Proceedings had during the Ocular Inspection of the Land in Question, id at 59-64.
24
Id. at 158.
25
Id. at 160.
26
Id. at 158-159.
27
Id. at 160.
28
Id. at 160-161.
29
Rollo, pp. 87-88.
30
Id. at 88-89.
31
The CA described the subject property as follows:
At the outset, the subject land being claimed by plaintiff-appellant as described in the
complaint is the 6.6698 hectares land bounded by a canal on the northeast and pine
land on the northwest, on the west by a barangay road, by the pine land on the
southwest and riceland on the southeast, and on the east by a provincial road. The
said description is with the exclusion of the portion of land where the residential
house of the defendant-appellee is erected. Id. at 87.
32
Id. at 87-89.
33
Id. at 85. Emphasis supplied.
34
Records, p. 154.
35
Id. at 157.
36
Tio v. Abayata, G.R. No. 160898, June 27, 2008, 556 SCRA 175, 184; Sampayan v. Court
of Appeals, 489 Phil. 200, 207-208 (2005).
37
Daclag v. Macahilig, G.R. No. 159578, July 28, 2008, 560 SCRA 137, 151-152; Cequeña
v. Bolante, 386 Phil. 419, 430-431 (2000).
38
Daclag v. Macahilig, supra at 150-151.
Cequeña v. Bolante, supra; Llanes v. Republic, G.R. No. 177947, November 27, 2008, 572
39
SCRA 258, 271; Heirs of Arzadon-Crisologo v. Rañon, G.R. No. 171068, September 5,
2007, 532 SCRA 391, 410.
40
Philippine National Bank v. Court of Appeals, 424 Phil. 757, 771 (2002).
41
New Civil Code, Article 434.
42
Rules of Court, Rule 10, Section 5.
43
Supra note 20.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 168967 February 12, 2010
CITY OF ILOILO represented by HON. JERRY P. TREÑAS, City Mayor, Petitioner,

vs.
HON. LOLITA CONTRERAS-BESANA, Presiding Judge, Regional Trial Court, Branch 32, and
ELPIDIO JAVELLANA, Respondents.
DECISION
DEL CASTILLO, J.:
It is arbitrary and capricious for the government to initiate expropriation proceedings, seize a
person’s property, allow the order of expropriation to become final, but then fail to justly compensate
the owner for over 25 years. This is government at its most high-handed and irresponsible, and
should be condemned in the strongest possible terms. For its failure to properly compensate the
landowner, the City of Iloilo is liable for damages.
This Petition for Certiorari under Rule 65 of the Rules of Court with a prayer for the issuance of a
temporary restraining order seeks to overturn the three Orders issued by Regional Trial Court (RTC)
of Iloilo City, Branch 32 on the following dates: December 12, 2003 (the First Assailed Order), 1 June
15, 2004 (the Second Assailed Order),2and March 9, 2005 (the Third Assailed Order) (the three
aforementioned Orders are collectively referred to as the Assailed Orders). 3
Factual Antecedents
The essential facts are not in dispute.
On September 18, 1981, petitioner filed a Complaint4 for eminent domain against private respondent
Elpidio T. Javellana (Javellana) and Southern Negros Development Bank, the latter as mortgagee.
The complaint sought to expropriate two parcels of land known as Lot Nos. 3497-CC and 3497-DD
registered in Javellana’s name under Transfer Certificate of Title (TCT) No. T-44894 (the Subject
Property) to be used as a school site for Lapaz High School.5 Petitioner alleged that the Subject
Property was declared for tax purposes in Tax Declaration No. 40080 to have a value of ₱60.00 per
square meter, or a total value of ₱43,560.00. The case was docketed as Civil Case No. 14052 and
raffled to then Court of First Instance of Iloilo, Branch 7.
On December 9, 1981, Javellana filed his Answer6 where he admitted ownership of the Subject
Property but denied the petitioner’s avowed public purpose of the sought-for expropriation, since the
City of Iloilo already had an existing school site for Lapaz High School. Javellana also claimed that
the true fair market value of his property was no less than ₱220.00 per square meter. 7
On May 11, 1982, petitioner filed a Motion for Issuance of Writ of Possession, alleging that it had
deposited the amount of ₱40,000.00 with the Philippine National Bank-Iloilo Branch. Petitioner
claimed that it was entitled to the immediate possession of the Subject Property, citing Section 1 of
Presidential Decree No. 1533,8 after it had deposited an amount equivalent to 10% of the amount of
compensation. Petitioner attached to its motion a Certification issued by Estefanio C. Libutan, then
Officer-in-Charge of the Iloilo City Treasurer’s Office, stating that said deposit was made. 9
Javellana filed an Opposition to the Motion for the Issuance of Writ of Possession10 citing the same
grounds he raised in his Answer – that the city already had a vast tract of land where its existing
school site was located, and the deposit of a mere 10% of the Subject Property’s tax valuation was
grossly inadequate.
On May 17, 1983, the trial court issued an Order11 which granted petitioner’s Motion for Issuance of
Writ of Possession and authorized the petitioner to take immediate possession of the Subject
Property. The court ruled:
Premises considered, the Motion for the Issuance of a Writ of Possession dated May 10, 1982, filed
by plaintiff is hereby granted. Plaintiff is hereby allowed to take immediate possession, control and
disposition of the properties known as Lot Nos. 3497-CC and 3497-DD x x x.12
Thereafter, a Writ of Possession13 was issued in petitioner’s favor, and petitioner was able to take
physical possession of the properties sometime in the middle of 1985. At no time has Javellana ever
denied that the Subject Property was actually used as the site of Lapaz National High School. Aside
from the filing by the private respondent of his Amended Answer on April 21, 1984,14 the
expropriation proceedings remained dormant.
Sixteen years later, on April 17, 2000, Javellana filed an Ex Parte Motion/Manifestation, where he
alleged that when he finally sought to withdraw the ₱40,000.00 allegedly deposited by the petitioner,
he discovered that no such deposit was ever made. In support of this contention, private respondent
presented a Certification from the Philippine National Bank stating that no deposit was ever made for
the expropriation of the Subject Property.15Private respondent thus demanded his just compensation
as well as interest. Attempts at an amicable resolution and a negotiated sale were unsuccessful. It
bears emphasis that petitioner could not present any evidence – whether documentary or testimonial
– to prove that any payment was actually made to private respondent.
Thereafter, on April 2, 2003, private respondent filed a Complaint 16 against petitioner for Recovery of
Possession, Fixing and Recovery of Rental and Damages. The case was docketed as Civil Case
No. 03-27571, and raffled to Branch 28 of the Iloilo City Regional Trial Court. Private respondent
alleged that since he had not been compensated for the Subject Property, petitioner’s possession
was illegal, and he was entitled to recovery of possession of his lots. He prayed that petitioner be
ordered to vacate the Subject Property and pay rentals amounting to ₱15,000.00 per month together
with moral, exemplary, and actual damages, as well as attorney’s fees. 1avvphi1
On May 15, 2003, petitioner filed its Answer,17 arguing that Javellana could no longer bring an action
for recovery since the Subject Property was already taken for public use. Rather, private respondent
could only demand for the payment of just compensation. Petitioner also maintained that the legality
or illegality of petitioner’s possession of the property should be determined in the eminent domain
case and not in a separate action for recovery of possession.
Both parties jointly moved to consolidate the expropriation case (Civil Case No. 14052) and the case
for recovery of possession (Civil Case No. 03-27571),18 which motion was granted by the trial court
in an Order dated August 26, 2003.19 On November 14, 2003, a commission was created to
determine the just compensation due to Javellana.20
On November 20, 2003, private respondent filed a Motion/Manifestation dated November 19, 2003
claiming that before a commission is created, the trial court should first order the condemnation of
the property, in accordance with the Rules of Court. Javellana likewise insisted that the fair market
value of the Subject Property should be reckoned from the date when the court orders the
condemnation of the property, and not the date of actual taking, since petitioner’s possession of the
property was questionable.21 Before petitioner could file its Comment, the RTC issued an Order
dated November 21, 2003 denying the Motion.22
Undeterred, Javellana filed on November 25, 2003, an Omnibus Motion to Declare Null and Void the
Order of May 17, 1983 and to Require Plaintiff to Deposit 10% or ₱254,000.00. Javellana claimed
that the amount is equivalent to the 10% of the fair market value of the Subject Property, as
determined by the Iloilo City Appraisal Committee in 2001, at the time when the parties were trying
to negotiate a settlement.23
First Assailed Order
On December 12, 2003, the RTC issued the First Assailed Order, which nullified the Order dated
May 17, 1983 (concerning the issuance of a writ of possession over the Subject Property). The trial
court ruled:
x x x the Order dated May 17, 1983 is hereby declared null and void and the plaintiff [is] hereby
ordered to immediately deposit with the PNB the 10% of the just compensation after the Commission
shall have rendered its report and have determined the value of the property not at the time it was
condemned but at the time the complaint was filed in court.24 (Emphasis ours)
Second Assailed Order
Neither party sought reconsideration of this Order.25 Nonetheless, about six months later, the RTC
issued the Second Assailed Order, which it denominated as an "Amended Order". The Second
Assailed Order was identical to the first, except that the reckoning point for just compensation was
now the "time this order was issued," which is June 15, 2004.
x x x the Order dated May 17, 1983 is hereby declared null and void and the plaintiff [is] hereby
ordered to immediately deposit with the PNB the 10% of the just compensation after the Commission
shall have rendered its report and have determined the value of the property not at the time it was
condemned but at the time this order was issued. (Underscoring in original text)
This time, petitioner filed a Motion for Reconsideration claiming that there was no legal basis for the
issuance of the Second Assailed Order.26 Javellana opposed, arguing that since the May 17, 1983
Order and the Second Assailed Order were interlocutory in character, they were always subject to
modification and revision by the court anytime.27
Third Assailed Order
After the parties were able to fully ventilate their respective positions, 28 the public respondent issued
the Third Assailed Order, denying the Motion for Reconsideration, and ruling as follows:
The Order dated June 15, 2004 among other things stated that parties and counsels must be bound
by the Commissioner’s Report regarding the value of the property not at the time it was condemned
but at the time this order was issued.
This is true inasmuch as there was no deposit at the PNB and their taking was illegal.
The plaintiff thru [sic] Atty. Laurea alleged that this Court had a change of heart and issued an
Amended Order with the same wordings as the order of December 12, 2003 but this time stated not
at the time it was condemned but at the time the order was issued. Naturally, this Court in the
interest of justice, can amend its order because there was no deposit by plaintiff.
The jurisprudence cited by plaintiff that the just compensation must be determined as of the date of
the filing of the complaint is true if there was a deposit. Because there was none the filing was not in
accordance with law, hence, must be at the time the order was issued.
The allegation of defendant thru [sic] counsel that the orders attacked by plaintiff thru [sic] counsel
saying it has become final and executory are interlocutory orders subject to the control of the Judge
until final judgment is correct. Furthermore, it is in the interes[t] of justice to correct errors. 29
In the meantime, on April 15, 2004, the Commission submitted its Report, providing the following
estimates of value, but without making a proper recommendation:30
Reckoning Value per

Fair Market Value Basis
Point square meter
1981 - at the
based on three or more recorded sales
time the
₱110.00/sqm ₱79,860.00 of similar types of land in the vicinity in
complaint was
the same year
filed
Appraisal by Southern Negros

1981 – at the
Development Bank based on market
time the
₱686.81/sqm ₱498,625.22 value, zonal value, appraised value of
complaint was
other banks, recent selling price of
filed
neighboring lots
Appraisal by the City Appraisal

2002 ₱3,500.00/sqm ₱2,541,000.00
Committee, Office of the City Assessor
Private Appraisal Report (Atty.

2004 ₱4,200.00/sqm ₱hP3,049,200.00 Roberto Cal Catolico dated April 6,
2004)
Hence, the present petition.

Petitioner is before us claiming that (1) the trial court gravely abused its discretion amounting to lack
or excess of jurisdiction in overturning the Order dated May 17, 1983, which was already a final
order; and (2) just compensation for the expropriation should be based on the Subject Property’s fair
market value either at the time of taking or filing of the complaint.
Private Respondent’s Arguments
Private respondent filed his Comment on October 3, 2005,31 arguing that (1) there was no error of
jurisdiction correctible by certiorari; and (2) that the Assailed Orders were interlocutory orders that
were subject to amendment and nullification at the discretion of the court.
Issues
There are only two questions we need answer, and they are not at all novel. First, does an order of
expropriation become final? Second, what is the correct reckoning point for the determination of just
compensation?
Our Ruling
Expropriation proceedings have two stages. The first phase ends with an order of dismissal, or a
determination that the property is to be acquired for a public purpose.32 Either order will be a final
order that may be appealed by the aggrieved party.33 The second phase consists of the
determination of just compensation. 34 It ends with an order fixing the amount to be paid to the
landowner. Both orders, being final, are appealable.35
An order of condemnation or dismissal is final, resolving the question of whether or not the plaintiff
has properly and legally exercised its power of eminent domain.36 Once the first order becomes final
and no appeal thereto is taken, the authority to expropriate and its public use can no longer be
questioned.371avvphi1
Javellana did not bother to file an appeal from the May 17, 1983 Order which granted
petitioner’s Motion for Issuance of Writ of Possession and which authorized petitioner to take
immediate possession of the Subject Property. Thus, it has become final, and the petitioner’s right to
expropriate the property for a public use is no longer subject to review. On the first question,
therefore, we rule that the trial court gravely erred in nullifying the May 17, 1983 Order.
We now turn to the reckoning date for the determination of just compensation. Petitioner claims that
the computation should be made as of September 18, 1981, the date when the expropriation
complaint was filed. We agree.
In a long line of cases, we have constantly affirmed that:
x x x just compensation is to be ascertained as of the time of the taking, which usually coincides with
the commencement of the expropriation proceedings. Where the institution of the action precedes
entry into the property, the just compensation is to be ascertained as of the time of the filing of the
complaint.38
When the taking of the property sought to be expropriated coincides with the commencement of the
expropriation proceedings, or takes place subsequent to the filing of the complaint for eminent
domain, the just compensation should be determined as of the date of the filing of the
complaint.39 Even under Sec. 4, Rule 67 of the 1964 Rules of Procedure, under which the complaint
for expropriation was filed, just compensation is to be determined "as of the date of the filing of the
complaint." Here, there is no reason to depart from the general rule that the point of reference for
assessing the value of the Subject Property is the time of the filing of the complaint for
expropriation.40
Private respondent claims that the reckoning date should be in 2004 because of the "clear injustice
to the private respondent who all these years has been deprived of the beneficial use of his
properties."
We commiserate with the private respondent. The school was constructed and has been in
operation since 1985. Petitioner and the residents of Iloilo City have long reaped the benefits of the
property. However, non-payment of just compensation does not entitle the private landowners to
recover possession of their expropriated lot.41
Concededly, Javellana also slept on his rights for over 18 years and did not bother to check with the
PNB if a deposit was actually made by the petitioner. Evidently, from his inaction in failing to
withdraw or even verify the amounts purportedly deposited, private respondent not only accepted the
valuation made by the petitioner, but also was not interested enough to pursue the expropriation
case until the end. As such, private respondent may not recover possession of the Subject Property,
but is entitled to just compensation.42 It is high time that private respondent be paid what was due
him after almost 30 years.
We stress, however, that the City of Iloilo should be held liable for damages for taking private
respondent’s property without payment of just compensation. In Manila International Airport
Authority v. Rodriguez,43 the Court held that a government agency’s prolonged occupation of private
property without the benefit of expropriation proceedings undoubtedly entitled the landowner to
damages:
Such pecuniary loss entitles him to adequate compensation in the form of actual or
compensatory damages, which in this case should be the legal interest (6%) on the value of
the land at the time of taking, from said point up to full payment by the MIAA. This is based on
the principle that interest "runs as a matter of law and follows from the right of the landowner to be
placed in as good position as money can accomplish, as of the date of the taking x x x.
xxxx
For more than twenty (20) years, the MIAA occupied the subject lot without the benefit of
expropriation proceedings and without the MIAA exerting efforts to ascertain ownership of the lot and
negotiating with any of the owners of the property. To our mind, these are wanton and
irresponsible acts which should be suppressed and corrected. Hence, the award of
exemplary damages and attorneys fees is in order. x x x.44 (Emphasis supplied)
WHEREFORE, the petition is GRANTED. The Orders of the Regional Trial Court of Iloilo City,
Branch 32 in Civil Case No. 14052 and Civil Case No. 03-27571 dated December 12, 2003, June
15, 2004, and March 9, 2005 are hereby ANNULLED and SET ASIDE.
The Regional Trial Court of Iloilo City, Branch 32 is DIRECTED to immediately determine the just
compensation due to private respondent Elpidio T. Javellana based on the fair market value of the
Subject Property at the time Civil Case No. 14052 was filed, or on September 18, 1981 with interest
at the legal rate of six percent (6%) per annum from the time of filing until full payment is made.
The City of Iloilo is ORDERED to pay private respondent the amount of ₱200,000.00 as exemplary
damages.
SO ORDERED.

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSE P. PEREZ
Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1
Rollo, pp. 44-45.
2
Id. at 46-47.
3
Id. at 48-49.
4
Id. at 50-52.
5
The expropriation was authorized by Resolution No. 96 dated April 25, 1978 issued by the
Sangguiniang Panglungsod of Iloilo entitled "Authorizing the City Legal Officer to initiate the
expropriation of Lot No. 180 of Arevalo and Lot Nos. 3497-CC and 3497-DD at La Paz for
School Site Purposes". Id. at 50-51.
6
Id. at 53-56.
7
Id.
8
Presidential Decree No. 1533, Establishing A Uniform Basis For Determining Just
Compensation And The Amount Of Deposit For Immediate Possession Of The Property
Involved In Eminent Domain Proceedings (1978).
Section 1. In determining just compensation for private property acquired through

eminent domain proceedings, the compensation to be paid shall not exceed the
value declared by the owner or administrator or anyone having legal interest in the
property or determined by the assessor, pursuant to the Real Property Tax Code,
whichever value is lower, prior to the recommendation or decision of the appropriate
Government office to acquire the property.
Section 2. Upon the filing of the petition for expropriation and the deposit in the
Philippine National Bank at its main office or any of its branches of an amount
equivalent to ten per cent (10%) of the amount of compensation provided in Section
1 hereof, the government or its authorized instrumentality agency or entity shall be
entitled to immediate possession, control and disposition of the real property and the
improvements thereon, including the power of demolition if necessary,
notwithstanding the pendency of the issues before the courts.
9
Rollo, p. 59
10
Id. at 60-61.
11
Id. at 62-64.
12
Id. at 63-64.
13
Id. at 65-66. Private respondent filed a Motion for Reconsideration against the trial court’s
Order, id. at 67-68; petitioner opposed, id. at 69-70. The trial court denied private
respondent’s Motion in an Order dated January 10, 1984, id. at 71.
14
Id. at 74-77.
15
Id. at 88.
16
Id. at 78-87.
17
Id. at 89-93.
18
Records, p. 88.
19
Id. at 89.
20
Rollo, p. 94
21
Id. at 95-96.
22
Id. at 97.
23
Petitioner first claimed that it never received a copy of this Motion, however, private
respondent presented its file copy of the Motion, duly received by the City Legal Office of
Iloilo City.
24
Rollo, p. 45.
25
Petitioner claims that it never received a copy of the Order.
26
Rollo, pp. 105-114.
Petitioner also claimed that it had not been furnished with a copy of the First Assailed Order,
although this was disproved by the lower court. Records, p. 48.
27
Rollo, pp. 115-122.
Petitioner filed a Rejoinder on August 12, 2004; id at 123-126. Private respondent filed a
28
Reply dated August 17, 2004; id at 127-129.
29
Id. at 48-49.
30
Records, pp. 124-155.
31
Id. at 132-145.
32
Estate of Salud Jimenez v. Philippines Export Processing Zone, 402 Phil. 271, 284 (2001).
Municipality of Biñan v. Garcia, G.R. No. 69260, December 22, 1989, 180 SCRA 576, 584-
33
585.
34
City of Manila v. Serrano, 411 Phil. 754, 765 (2001).
35
National Housing Authority v. Heirs of Guivelondo, 452 Phil. 483, 492 (2003).
36
Heirs of Alberto Suguitan v. City of Mandaluyong, 384 Phil. 676, 692 (2000).
37
Estate of Salud Jimenez v. Philippine Export Processing Zone, supra note 32 at 288.
B.H. Berkenkotter & Co. v. Court of Appeals, G.R. No. 89980, December 14, 1992, 216
38
SCRA 584, 587. See also Rules of Court, Rule 67, Sec. 4:
If the objections to and the defenses against the right of the plaintiff to expropriate
the property are overruled, or when no party appears to defend as required by this
Rule, the court may issue an order of expropriation declaring that the plaintiff has a
lawful right to take the property sought to be expropriated, for the public use or
purpose described in the complaint, upon payment of just compensation to be
determined as of the date of the taking of the property or the filing of the complaint
whichever came first.
39
Republic of the Philippines v. Vda. De Castellvi, 157 Phil. 329, 349 (1974).
National Power Corporation v. Co, G.R. No. 166973, February 10, 2009, 578 SCRA 235,
40
246.
Forfom Development Corporation v. Philippine National Railways, G.R. No. 124795,

41
December 10, 2008. 573 SCRA 350, 369.
42
Eusebio v. Luis, G.R. No. 162474, October 13, 2009.
43
G.R. No. 161836, February 28, 2006, 483 SCRA 619, 630-632.
44
See also Forfom Development Corporation v. Philippine National Railways, supra.

SUPREME COURT
Manila
EN BANC
G.R. No. 181809 February 17, 2010
ROSE MARIE D. DOROMAL, Petitioner,

vs.
HERNAN G. BIRON and COMMISSION ON ELECTIONS, Respondents.
DECISION
DEL CASTILLO, J.:
We reiterate settled rulings on the appreciation of election returns in this case, to wit, (1) before a
certificate of votes may be used to prove tampering, alteration, falsification or any other anomaly
committed in the election returns, it must comply with Sections 16 and 17 of Republic Act (RA) No.
6646,1 (2) the exclusion of election returns on the ground of tampering must be approached with
extreme caution and must be based on clear and convincing evidence, and (3) in case of
discrepancy in the other authentic copies of an election return, the procedure in Section 236 of the
Omnibus Election Code2 (OEC) should be followed. For failure to comply with these rules and
principles, we hold that the Commission on Elections (COMELEC) acted with grave abuse of
discretion amounting to lack or excess of jurisdiction and accordingly order it to rectify the unjustified
disenfranchisement of voters in this case.
This Petition for Certiorari under Rules 64 and 65 of the Rules of Court seeks to annul and set aside
the COMELEC En Banc’s February 1, 2008 Resolution.3 The COMELEC En Banc affirmed its
Second Division’s September 12, 2007 Resolution4 in SPC No. 07-147 which ordered the exclusion
of 11 election returns in the canvassing of votes for the position of vice mayor in the Municipality of
Dumangas, Iloilo.
Factual Antecedents
Petitioner Rose Marie D. Doromal (Doromal) and private respondent Hernan G. Biron (Biron) were
the vice mayoralty candidates for the Municipality of Dumangas, Iloilo in the May 14, 2007 elections.
During the canvassing of votes, Biron orally objected to the inclusion of 25 5 election returns. Biron
anchored his objections to the inclusion of the 21 returns on the alleged missing taras6 in Copy 4 of
the contested returns, which he obtained as the standard bearer of LAKAS-CMD, the recognized
dominant majority party in said elections.7 As regards the remaining four contested returns, Biron
opposed their inclusion allegedly because there was a discrepancy between the number of votes
stated in the said returns and those stated in the certificate of votes issued by the Board of Election
Inspectors (BEI). In view thereof, the Municipal Board of Canvassers (MBC) deferred the canvassing
of the said returns. Thereafter, Biron filed his written objections and supporting evidence.
On May 18, 2007, the MBC denied8 the petitions for exclusion. It found that there was no tampering
on the number of taras for Doromal in the copy of the election return for the MBC. It also held that
the copy of the election return of the MBC was complete with no material defect and duly signed and
thumbmarked by the BEIs.9
Aggrieved, Biron appealed to the COMELEC. The case was docketed as SPC No. 07-147 10 and
raffled to the Second Division. Pending the resolution of the appeal, the proclamation of the winning
vice mayoralty candidate was ordered suspended.
Ruling of the COMELEC Second Division
On September 12, 2007, the COMELEC Second Division, voting 2-1, issued a Resolution partially
granting Biron’s appeal. It ordered the exclusion of only 11 contested election returns while at the
same time ordered the inclusion of the remaining 14 election returns in the canvassing of votes, viz:
WHEREFORE, foregoing premises considered, the instant appeal is PARTIALLY GRANTED. The
election returns in Precinct Nos. 17A/18A, 20A, 21A/21B, 30A/31A, 59A/60A, 122A/122B,
162A/163A, 169A, 173A/173B, 174A/174B, 192A, 202A, 204A and 207A, are hereby ordered
INCLUDED in the canvass of returns for the vice-mayoralty position in Dumangas, Iloilo. The
Municipal Board of Canvassers of Dumangas, Iloilo is hereby ordered to RECONVENE and
PROCEED with the canvass of the said election returns and PROCLAIM the candidate who garners
the most number of votes.
The election returns in Precinct Nos. 107-A, 114-A, 6A/6B, 55-A, 67A/67B, 116A/116B, 130A,
42A/43A, 90A/90B, 7A/7B and 208A/208B are hereby ordered EXCLUDED in the canvass of returns
by the Municipal Board of Canvassers of Dumangas, Iloilo.
SO ORDERED.11
The COMELEC Second Division ordered the exclusion of the 11 election returns (subject returns)
because the same were allegedly tampered or falsified. It held that eight of the 11 subject returns
showed that the taras were either closed on the third or fourth vote, instead of on the fifth vote,
resulting in a discrepancy between the number of tarasvis-à-vis the written figures and words in the
said returns. With regard to the remaining three returns, the Second Division noted a glaring
dissimilarity between the votes stated in the said returns and those stated in the certificate of votes.
Further, it lent credence to the affidavits of Biron’s poll watchers stating that numerous irregularities
attended the tallying of the votes at the precinct level. According to the Second Division, these
irregularities pointed to a scheme to increase the votes of Doromal, thus, necessitating the exclusion
of the subject returns.
Commissioner Rene V. Sarmiento (Commissioner Sarmiento) registered a dissent. He reasoned that

the missing taras did not, by themselves, conclusively establish that the subject returns were altered
or tampered. Also, the affidavits of Biron’s poll watchers should not have been given weight for being
self-serving. In his view, the proper recourse was not to exclude the subject returns but to order the
correction of manifest errors so that the number of votes in figures and words would conform to the
number of taras in the subject returns.
Thus, on September 24, 2007, the MBC reconvened and proceeded to canvass the abovementioned
14 returns. As a result, Biron emerged as the winning candidate with 12,497 votes while Doromal
received 12,319 votes, or a winning margin of 178 votes. On even date, Biron was proclaimed as the
duly elected vice mayor of the Municipality of Dumangas, Iloilo.
Ruling of the COMELEC En Banc
On February 1, 2008, the COMELEC En Banc affirmed the ruling of the Second Division. It held that
the Second Division properly appreciated the affidavits of Biron’s poll watchers given the serious
allegations of irregularities that attended the tallying of votes; that the use of the certificate of votes
to establish tampering in the subject returns was proper in a pre-proclamation controversy; and that
an examination of the records of this case supported the Second Division’s findings that the subject
returns were tampered or falsified.
Commissioner Sarmiento maintained his previous dissent that the exclusion of the subject returns
was improper. He further noted that in case correction of manifest errors was not viable, votes may
be recounted pursuant to Section 236 of the OEC.
Issues
The issues raised by petitioner may be summarized as follows:
1. The COMELEC gravely abused its discretion when it failed to compare the contested
returns with the other authentic copies thereof before ruling that there was tampering or
falsification of the said returns.
2. The COMELEC gravely abused its discretion when it used the certificate of votes to
exclude the three contested election returns considering that it cannot go beyond the face of
the returns in establishing that there was tampering or falsification and considering further
that said certificates did not comply with Section 17 of RA 6646.
3. The COMELEC gravely abused its discretion when it gave credence to the self-serving
affidavits of private respondent’s poll watchers.
4. The COMELEC gravely abused its discretion when it ordered the exclusion of the subject
returns because, in case of falsification or tampering, the procedure under Sections 235 and
236 of the OEC should have been followed in order not to disenfranchise the voters. 12
Doromal advances several possible reasons for the missing taras in Copy 4 (i.e., copy of the
dominant majority party) of the subject returns, to wit, (1) the pressure exerted by the poll clerk in
accomplishing duplicate originals of the subject returns was not sufficient as to leave its mark on the
succeeding pages, (2) the carbon paper had poor quality, (3) the election return papers were
misaligned relative to the carbon paper, or (4) the erasures were deliberately made by Biron on
Copy 4 to pave the way for the subject pre-proclamation controversy.
Further, while the instant petition was pending resolution before this Court, Doromal requested the
COMELEC to open the ballot boxes where the COMELEC’s copy of the subject returns (i.e., Copy 3)
was safekept. On April 21, 2008, the COMELEC granted the request and ordered the opening of the
ballot boxes. It thereafter allowed Doromal to photocopy Copy 3 of the subject returns found therein.
On June 17, 2008, petitioner filed a Motion for Leave to File Manifestation 13 with attached
Manifestation14 before this Court summarizing her observations with respect to Copy 3 of the subject
returns. She noted that some of the missing taras in Copy 4 were not found in Copy 3. With respect
to the missing taras in Copy 3 just as in Copy 4, petitioner reiterated that the cause thereof was the
insufficient pressure exerted by the poll clerk in accomplishing the election returns or the
misalignment of the election return copies while the duplicate originals were being accomplished
using carbon paper. Thus, there was no basis for the COMELEC to rule that the subject returns were
falsified or tampered.1avvphi1
Petitioner also claims that the COMELEC never compared Copy 4 of the subject returns with the
other authentic copies of the said returns as required under Section 235 of the OEC. Assuming that
the COMELEC made such comparison with the other authentic copies, this was not done in the
presence of petitioner in violation of her due process rights.
Anent the exclusion of the three subject returns, petitioner asserts that the COMELEC erred in using
the certificate of votes to establish falsification or tampering because the COMELEC cannot go
beyond the face of the returns in a pre-proclamation controversy. Assuming arguendo that the
COMELEC may use the certificate of votes, the requirement set by Section 17 of RA 6646 was not
complied with. Thus, the certificate of votes is inadmissible in evidence.
Petitioner faults the COMELEC for relying on the affidavits of private respondent’s poll watchers in
concluding that irregularities attended the preparation of the subject returns. Evidently, these
affidavits are self-serving and of no probative value.
Lastly, petitioner argues that assuming that the subject returns were falsified or tampered, the proper
recourse would be to follow the procedure outlined in Sections 235 and 236 of the OEC and not to
summarily exclude said returns. Under the aforesaid provisions, the COMELEC should have
authorized the opening of the ballot boxes and thereafter ordered the BEI to recount the votes of the
candidates affected and prepare a new return which shall then be used by the MBOC as the basis of
the new canvass.
Private Respondent’s Arguments
Private respondent contends that the points raised by petitioner are factual in nature, thus, not
proper in a petition for certiorari under Rule 65 which is limited to questions of jurisdiction. He claims
that the findings of the COMELEC with respect to the falsification and tampering of the subject
returns must be accorded respect and even finality by this Court. Biron also points out that in making
such a finding, the COMELEC Second Division compared the subject returns with the other
authentic copies thereof which was affirmed by the COMELEC En Banc after the latter made its own
independent examination of the records of this case.
Biron also claims that there was no denial of due process. Since a pre-proclamation controversy is
summary in nature, Biron posits that the COMELEC properly appreciated the evidence in this case
consisting of the pleadings and documentary evidence of the respective parties without the need of
holding a formal or trial-type hearing.
He also avers that the COMELEC properly gave credence to the affidavits of his poll watchers. He
emphasizes that the subject returns appear to be tampered and falsified on their face so that the
affidavits were merely used to buttress or substantiate the cause of these irregularities.
Finally, Biron claims that the procedure under Sections 235 and 236 of the OEC is not applicable to
this case because the same refers to the board of canvassers and not the COMELEC. Also, these
provisions do not allow the COMELEC to motu proprio order the opening of the ballot boxes.
Our Ruling
The petition is meritorious.
An act done contrary to the Constitution, the law or jurisprudence; or executed whimsically,
capriciously or arbitrarily out of malice, ill will or personal bias constitutes grave abuse of
discretion.15 In the instant case, we find that the COMELEC gravely abused its discretion amounting
to lack or excess of jurisdiction in ordering the exclusion of the subject returns. The ruling
contravenes clear legal provisions as well as long standing jurisprudence on the admissibility of the
certificate of votes and the appreciation of election returns. Lamentably, the refusal of the
COMELEC to heed this Court’s repeated pronouncements has again led to the disenfranchisement
of voters in this case. The writ, therefore, lies to correct this grossly abusive exercise of discretion.
The certificates of votes are inadmissible to prove tampering, alteration or falsification for failure to
comply with Sections 16 and 17 of RA 6646.
In excluding three of the 11 subject returns, specifically, those coming from Precinct Nos. 90A/90B,
7A/7B and 208A, the COMELEC relied on the alleged glaring dissimilarity between the votes stated
in the said returns and those stated in the certificates of votes. Hence, it concluded that the subject
returns were falsified and thereafter ordered their exclusion.
The certificate of votes, which contains the number of votes obtained by each candidate, is issued
by the BEI upon the request of a duly accredited watcher pursuant to Section 16 of RA 6646.
Relative to its evidentiary value, Section 17 of said law provides –
Sec. 17. Certificate of Votes as Evidence. - The provisions of Sections 235 and 236 of Batas
Pambansa Blg. 881 notwithstanding, the certificate of votes shall be admissible in evidence to prove
tampering, alteration, falsification or any anomaly committed in the election returns concerned, when
duly authenticated by testimonial or documentary evidence presented to the board of canvassers by
at least two members of the board of election inspectors who issued the certificate: Provided, That
failure to present any certificate of votes shall not be a bar to the presentation of other evidence to
impugn the authenticity of the election returns.
While the above-quoted provision authorizes the COMELEC to make use of the certificate of votes
to prove tampering, alteration, falsification or any anomaly committed in the election returns, this
presupposes that the certificate of votes was accomplished in accordance with Section 16, viz:
Sec. 16. Certificates of Votes. - After the counting of the votes cast in the precinct and
announcement of the results of the election, and before leaving the polling place, the board of
election inspectors shall issue a certificate of votes upon request of the duly accredited watchers.
The certificate shall contain the number of votes obtained by each candidate written in words
and figures, the number of the precinct, the name of the city or municipality and province, the
total number of voters who voted in the precinct and the date and time issued, and shall be
signed and thumbmarked by each member of the board. (Emphasis supplied)
Thus, in Patoray v Commission on Elections,16 we ruled that the certificate of votes is inadmissible to
prove tampering because it was signed only by the chairperson of the BEI, whereas Section 16
required that the same be signed and thumbmarked by each member of the BEI which issued the
certificate.17 Similarly, in Recabo, Jr. v. Commission of Elections,18 we rejected the certificate of votes
because it did not state (1) the number of votes obtained in words, (2) the number of the precinct, (3)
the total number of voters who voted in the precinct, and (4) the time of issuance. Further, the
certificate was merely certified true and correct by an acting election officer. 19
In the instant case, the certificates of votes from Precinct Nos. 90A/90B 20 and 7A/7B21 are defective,
for they do not contain (1) the thumbmarks of the members of the BEI, (2) the total number of voters
who voted in the precinct, and (3) the time of the issuance of the certificates. Likewise, the certificate
of votes from Precinct 208A22 is defective because it does not contain (1) the names, signatures and
thumbmarks of the members of the BEI, (2) the total number of voters who voted in the precinct, and
(3) the time of the issuance of the certificate. Aida Pineda, private respondent’s poll watcher in said
precinct, claims that she prepared a certificate of votes reflective of the true tally in the election
return, but the members of the BEI refused to affix their signatures thereto. Even if we were to
concede that the BEI members unjustifiedly refused to sign, this would not validate the said
certificate. Private respondent’s remedy was to compel the BEI to issue the certificate of votes under
pain of prosecution for an election offense.23 At any rate, we cannot admit the defective certificate
because, by Pineda’s own admission, she was the one who prepared the entries in the said
certificate and not the BEI as required by Section 16 of RA 6646, thus raising grave doubts as to its
accuracy.24
Moreover, before the certificate of votes may be admitted as evidence of tampering, Section 17
requires that the certificate be duly authenticated by testimonial or documentary evidence presented
to the board of canvassers by at least two members of the board of election inspectors who issued
the certificate. This requirement originated from Section 1125 of House Bill (HB) No. 805 and was
later consolidated, with minor revisions, in Section 1726 of HB 4046 – the precursor of RA 6646.
During the period of interpellations, Representative Zarraga proposed that the aforesaid
authentication requirement be dispensed with, viz:
MR. ZARRAGA. [I]n connection with Sections 16 and 17, on House Bill No. 4046, only insofar as it
concerns the admissibility in evidence of the certificate of votes.
MR. PALACOL. Yes, Mr. Speaker.
MR. ZARRAGA. Under Section 17, the certificate of votes shall be admissible in evidence only when
duly authenticated by testimonial or documentary evidence presented to the Board of Canvassers by
at least two members of the Board of Election Inspectors who issued the certificate.
The presentation of the certificate of votes is, of course, during the proceedings. And said
proceedings may be one, two or three months, probably even more, after the voting has
taken place.
And under Section 16, will the certificate of votes be signed and thumbmarked by each member of
the Board of Inspectors?
MR. PALACOL. Yes, Mr. Speaker.
MR. ZARRAGA. This Representation feels that this should be sufficient to consider the certificate of
votes as duly authenticated, especially because at that time the members have just prepared said
certificate and therefore, there should be no need to further require two members of the board
subsequently because they may no longer be available to authenticate the certificate of
votes.
This Representation would like to inquire from the Gentlemen if the distinguished sponsor will be
willing to also amend Section 16 in such a way that the certificate of votes, when already signed and
thumbmarked by each member of the board, shall be considered as duly authenticated and
admissible in evidence in any subsequent proceedings.
In other words, we should already dispense with requiring two other members at a
subsequent time, when they may no longer be present to authenticate a document which, in
the first place, has already been signed and thumbmarked by each member of the board in
accordance with the proposed Section 16 of House Bill No. 4046.
MR. PALACOL. The Gentlemen [are] assured that we are going to consider all these amendments
during the period of amendments. And I always grant that the Gentlemen from Bohol will submit
valuable amendments in order to ensure a clean and honest election.
MR. ZARRAGA. Thank you very much, Mr. Speaker. x x x27 (Emphasis supplied)
It appears, however, that Representative Zarraga’s proposal was no longer pursued during the
period of amendments as Section 17 of HB 4046 was passed on third reading without any change in
its wording as now found in Section 17 of RA 6646. The clear legislative intent was, thus, to impose
the additional condition under Section 17 before the certificate of votes may be admitted in evidence
to prove tampering.
The rationale of the law is perceptible. By requiring that the certificate of votes be duly authenticated
by at least two members of the BEI who issued the same, the law seeks to safeguard the integrity of
the certificate from the time it is issued by the BEI to the watcher after the counting of votes at the
precinct level up to the time that it is presented to the board of canvassers to prove tampering. The
legislature may have reasonably foreseen that the certificate may be easily altered while in the
hands of the watcher in order to orchestrate a sham pre-proclamation controversy. To
counterbalance this possibility, the law imposes the condition that the certificate, aside from
complying with Section 16, must be subsequently authenticated at the time of its presentment to the
board of canvassers in the event that it shall be used to prove tampering. This way the COMELEC
may be assured that the certificate of votes issued by the BEI to the watcher of a protesting
candidate contains the same entries as the one thereafter presented before the MBC to prove
tampering. The procedure is consistent with the over-all policy of the law to place a premium on an
election return, which appears regular on its face, by imposing stringent requirements before the
certificate of votes may be used to controvert the election return’s authenticity and operate as an
exception to the general rule that in a pre-proclamation controversy, the inquiry is limited to the four
corners of the election return.
In the instant case, the records indicate that Biron failed to comply with the requirements set by
Section 17 with respect to the certificates of votes from Precinct Nos. 208A, 90A/90B and 7A/7B
which he submitted in evidence before the MBC. This should have provided an added reason for the
COMELEC to refuse the admission of said certificates had the COMELEC carefully examined the
certificates of votes appearing in the records of this case.
In sum, the COMELEC gravely abused its discretion in admitting in evidence the aforementioned
certificates of votes which did not comply with Sections 16 and 17 of RA 6646. To make matters
worse, the COMELEC excluded the subject election returns on the basis of these defective
certificates thereby leading to the disenfranchisement of 467 voters as per the records of this
case.28 These votes can materially affect the outcome of the elections considering that private
respondent won by only 178 votes. Accordingly, the COMELEC is ordered to include the election
returns from Precincts 208A, 90A/90B and 7A/7B in the canvass of the votes in this case.
The affidavits of private respondent’s poll watchers are self-serving and grossly inadequate to
establish the tampering of the subject returns. Similarly, the one, or, at most, two missing taras in
each of the eight subject returns, without more, does not establish tampering.
In excluding eight of the 11 subject returns, specifically, those coming from Precinct Nos. 107A,
114A, 6A/6B, 55A, 67A/67B, 116A/116B, 130A and 42A/ 43A, the COMELEC ruled that the said
returns were tampered or falsified based on the missing taras in the other authentic copies of the
said returns, viz:
[A]fter a careful inspection of the contested election returns and other authentic copies of the same,
this Commission finds sufficient basis for the exclusion of some of these returns for being tampered
or falsified. The exclusion of the said returns is based on the following findings:
a. In the election return for Precinct No. 107-A, an examination of the same shows that the
tallies or taras for the fourth box or square for Respondent-Appellee Doromal [were] closed
on the fourth vote;
b. In the election return for Precinct No. 114-A, an examination of the same shows that the
tallies or taras for the twelfth box or square for Respondent-Appellee Doromal [were] closed
on the fourth vote;
c. In the election return for Precinct No. 130-A, an examination of the same shows that the
tallies or taras for the fifth and seventh boxes or squares for Respondent-Appellee Doromal
were closed on the fourth vote;
d. In the election return for clustered Precinct Nos. 6-A and 6-B, an examination of the same
shows that the tallies or taras for the seventh box or square for Respondent-Appellee
Doromal [were] closed on the fourth vote;
e. In the election return for Precinct No. 55-A, an examination of the same shows that the
tallies or taras for the sixth box or square for Respondent-Appellee Doromal [were] closed on
the fourth vote;
f. In the election return for clustered Precinct Nos. 67-A and 67-B, an examination of the
same shows that the tallies or taras for the fifth box or square for Respondent-Appellee
Doromal [were] closed on the fourth vote;
g. In the election return for clustered Precinct Nos. 116-A and 116-B, an examination of the
same shows that the tallies or taras for the eighteenth and nineteenth boxes or squares for
Respondent-Appellee Doromal were closed on the fourth vote;
h. In the election return for clustered Precinct Nos. 42-A and 43-A, an examination of the
same shows that the tallies or taras for the twenty-first box or square for Respondent-
Appellee Doromal [were] closed on the fourth vote;
Considering that a substantial number of these election returns have the same type of
discrepancy, i.e., the taras were not closed on the fifth vote, the said election returns cannot be
relied upon to determine the votes in the said precincts. Evidently, the methodical tampering of these
returns permanently put in doubt their authenticity as valid bases for the results of the elections.
Thus, they should be excluded from the canvass.29
The COMELEC also gave credence to the affidavits of private respondent’s poll watchers, who
stated that numerous irregularities allegedly occurred during the tallying of the votes at the precinct
level.
We find the manner in which the COMELEC excluded the subject returns to be fatally flawed. In the
absence of clearly convincing evidence, the validity of election returns must be upheld. 30 A
conclusion that an election return is obviously manufactured or false and consequently should be
disregarded in the canvass must be approached with extreme caution and only upon the most
convincing proof.31 Corrolarily, any plausible explanation, one which is acceptable to a reasonable
man in the light of experience and of the probabilities of the situation, should suffice to avoid outright
nullification, which results in disenfranchisement of those who exercised their right of suffrage. 32 As
will be discussed shortly, there is a patent lack of basis for the COMELEC’s findings that the subject
returns were tampered. In disregard of the principle requiring "extreme caution" before rejecting
election returns, the COMELEC proceeded with undue haste in concluding that the subject returns
were tampered. This is grave abuse of discretion amounting to lack or excess of jurisdiction.
At the outset, we find that the COMELEC placed undue reliance on the affidavits of Biron’s poll
watchers to establish the irregularities and fraud allegedly committed during the counting of votes.
These affidavits are evidently self-serving. Thus, we have ruled that reliance should not be placed on
affidavits of this nature for purposes of setting aside the validity of election returns. 33
Furthermore, the contents of these affidavits are grossly inadequate to establish tampering. Private
respondent’s poll watchers, namely, Michelle Duhina and Cirilo Demadante,34 Mary Grace Jiz-Deseo
and Lito Duller,35 Victoria Develos and Joy May De La Gante,36 Rizal Artoro Deza III and Reno
Demonteverde,37 Cecile Alcanzarin and Horte May Dimzon,38 Rosie Ventura,39 and Babylyn Dedoroy
and Sarah Dondoy Ano40 stated, in substance, that: (1) some of them were not so situated in the
precinct to see clearly the tallying of the votes in the election returns, (2) there was a 30 minute
brownout in some of the precincts (i.e., Precinct Nos. 107A and 114A), (3) some of them were asked
to affix their signatures and thumb marks ahead of the members of the BEI, (4) some of them were
not given Copy 4 of the subject returns after the counting, and (5) they noticed the discrepancy
between the taras and written figures only later on when they were shown Copy 4 of the election
returns.
While these statements suggest that the watchers failed to assert their rights or to perform their
duties under the OEC,41 we fail to see how they established that the election returns were tampered.
On the contrary, these affidavits reveal that the watchers failed to detect any anomaly during the
actual tallying of the votes at the precinct level because the missing taras were discovered only later
on when Copy 4 was shown to them.
Neither can we deduce from the missing taras the fraud that allegedly marred the tallying of votes
therein. We have examined Copy 4 and Copy 542 of the subject returns as appearing in the records
of this case, and we note that the said returns are regular on their face save for one or, at most, two
missing taras in each of the eight contested election returns.43 We find it significant that in some of
these returns (i.e., those from Precinct Nos. 114A,44 55A45and 42A/43A),46 while one tara is indeed
missing in Copy 4, no such missing tara exists in Copy 5, although the supposed missing tara in
Copy 4 is located very near the border, if not on the border, of the box in Copy 5 of the election
returns. This suggests that in making the duplicate originals, the forms for Copies 2 to 7 of the
election returns were not perfectly aligned with Copy 1 (i.e., the MBC’s copy), resulting in the
misalignment of the taras in the carbon copies of the said returns. This may explain why there
appears to be a missing tara in Copy 4 of these returns. It should also be noted that the number of
votes in written figures and words is not disputed as they appear to be uniform in Copies 4 and 5 of
the subject returns. The discrepancy is, thus, limited to the number of taras vis-à-vis the number of
votes in written figures and words. In view thereof and in the absence of clear and convincing proof,
the evidence on record fails to establish the tampering or falsification of the subject returns. At most,
there are minor discrepancies in Copies 4 and 5 of the subject returns consisting of one or two
missing taras.
In case of discrepancy in the other authentic copies of an election return, the procedure in Section
236 of the Omnibus Election Code should be followed.
In Patoray, we ordered the COMELEC to proceed in accordance with Section 236 of the OEC after it
was determined that there was a discrepancy between the taras vis-à-vis the written figures and
words in the election return.47 With the above finding that there are minor discrepancies in the other
authentic copies of the subject returns, specifically Copies 4 and 5, the proper procedure then is not
to exclude the said returns but to follow Section 236, viz:
SECTION 236. Discrepancies in election returns. — In case it appears to the board of

canvassers that there exists discrepancies in the other authentic copies of the election
returns from a polling place or discrepancies in the votes of any candidate in words and figures in
the same return, and in either case the difference affects the results of the election, the
Commission, upon motion of the board of canvassers or any candidate affected and after due notice
to all candidates concerned, shall proceed summarily to determine whether the integrity of the ballot
box had been preserved, and once satisfied thereof shall order the opening of the ballot box to
recount the votes cast in the polling place solely for the purpose of determining the true result of the
count of votes of the candidates concerned. (Emphasis supplied)
The COMELEC should, thus, order the canvass of the election returns from Precinct Nos. 107A,
114A, 6A/6B, 55A, 67A/67B, 116A/116B, 130A and 42A/ 43A. After canvassing, it should determine
whether the total number of missing taras will affect the result of the elections. If it will not affect the
result, the COMELEC should proclaim as winner the vice mayoralty candidate with the highest
number of votes. On the other hand, if the total number of missing taras will affect the results of the
election, the COMELEC, after due notice to all candidates concerned, should proceed summarily to
determine whether the integrity of the ballot boxes (where the election returns with
missing tara/s were tallied) have been preserved. Once satisfied therewith, the COMELEC should
order the opening of the ballot boxes to recount the votes cast in the polling place solely for the
purpose of determining the true result of the count of votes of the candidates concerned. 48 However,
if the integrity of the ballots has been violated, the COMELEC need not recount the ballots but
should seal the ballot box and order its safekeeping in accordance with Section 237 of the OEC,
thus:
Sec. 237. When integrity of ballots is violated. — If upon the opening of the ballot box as ordered by
the Commission under Sections 234, 235 and 236, hereof, it should appear that there are evidence
or signs of replacement, tampering or violation of the integrity of the ballots, the Commission shall
not recount the ballots but shall forthwith seal the ballot box and order its safekeeping.
In sum, it was highly irregular for the COMELEC to outrightly exclude the subject returns resulting in
the disenfranchisement of some 1,127 voters as per the records of this case. 49 The proper procedure
in case of discrepancy in the other authentic copies of the election returns is clearly spelled out in
Section 236 of the OEC. For contravening this legal provision, the COMELEC acted with grave
abuse of discretion amounting to lack or excess of jurisdiction.
1avvphi1
We end with some observations. Had there been sufficient evidence of tampering in this case, it
would still be highly improper for the COMELEC to outrightly exclude the subject election returns. In
such a case, the COMELEC should proceed in accordance with Section 23550 of the OEC which is
similar to Section 236 in that the COMELEC is authorized to open the ballot box as a measure of last
resort. This has been our consistent ruling as early as in the 1995 case of Patoray followed by Lee
v. Commission on Elections,51 Balindong v. Commission on Elections,52Dagloc v. Commission on
Elections,53 and Cambe v. Commission on Elections.54 It is quite disquieting, therefore, that despite
these repeated pronouncements, the COMELEC persists in summarily excluding the election returns
without undertaking the requisite steps to determine the true will of the electorate as provided in the
pertinent provisions of the OEC. The paramount consideration has always been to protect the
sanctity of the ballot; not to haphazardly disenfranchise voters, especially where, as here, the
election is closely contested. The COMELEC’s constitutional duty is to give effect to the will of the
electorate; not to becloud their choice by defying the methods in the OEC designed to ascertain as
far as practicable the true will of the sovereign people. Verily, the strength and stability of our
democracy depends to a large extent on the faith and confidence of our people in the integrity of the
electoral process where they participate as a particle of democracy. That is the polestar that should
have guided the COMELEC’s actions in this case.
WHEREFORE, the petition is GRANTED. The COMELEC En Banc’s February 1, 2008 Resolution
is NULLIFIED.
The COMELEC is ORDERED to raffle SPC No. 07-147 to one of its divisions which is directed to
resolve the same with deliberate dispatch in accordance with this Decision by:
(1) Including the election returns from Precinct Nos. 90A/90B, 7A/7B and 208A in the
canvassing of votes for the position of vice mayor of the Municipality of Dumangas, Iloilo;
(2) Proceeding in accordance with Section 236 of the Omnibus Election Code, as outlined in
this Decision, with respect to the canvassing of the election returns from Precinct Nos. 107A,
114A, 6A/6B, 55A, 67A/67B, 116A/116B, 130A and 42A/43A for the position of vice mayor of
the Municipality of Dumangas, Iloilo;
(3) Proclaiming the winning candidate for the position of vice mayor of the Municipality of
Dumangas, Iloilo in the May 14, 2007 elections after the canvassing of the aforementioned
election returns.
SO ORDERED.

Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice





MARTIN S. VILLARAMA, JR. JOSE P. PEREZ

JOSE C. MENDOZA
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1
An Act Introducing Additional Reforms in the Electoral System and For Other Purposes.
Effective: January 5, 1988.
2
Batas Pambansa Blg. 881, effective: December 3, 1985.
3
Rollo, pp. 68-72. The Resolution was adopted by Acting Chairman Resurreccion Z. Borra,
Commissioners Florentino A. Tuason, Jr., Romeo A. Brawner, Nicodemo T. Ferrer and
Moslemen T. Macarambon. Commissioner Rene V. Sarmiento dissented.
4
Id. at 33-42; penned by Commissioner Nicodemo T. Ferrer. Presiding Commissioner
Florentino A. Tuason, Jr. concurred in a separate opinion. Commissioner Rene V. Sarmiento
dissented.
5
These were the election returns from Precinct Nos. 204-A, 207-A, 202-A, 107-A, 169-A.
114-A, 20-A, 130-A, 174-A/174-B, 6-A/6-B, 55-A, 162-A/163-A, 67-A/67-B, 90-A/90-B,
21-A/21-B, 7-A/7-B, 208-A/208-B, 173-A/173-B, 116-A/116-B, 59-A/60-A, 42-A/43-A, 192-A,
112-A/112-B, and 30-A/30-B.
6
The term tara refers to the lines representing one vote in the counting of votes at the
precinct level as provided in Section 210 of the OEC, viz:
Sec. 210. Manner of counting votes – x x x
Each vote shall be recorded by a vertical line, except every fifth vote which shall be
recorded by a diagonal line crossing the previous four vertical lines. x x x
In Patoray v. Commission on Elections, [319 Phil. 564, 569 (1995)], we used the
term taras thus:
We hold that the COMELEC’s Second Division correctly ordered the exclusion of
Election Return No. 661290 (Precinct No. 16), it appearing that it contained a
discrepancy between the "taras" and the written figures. In addition, however, the
COMELEC’s Second Division should have ordered a recount of the ballots or used
the Certificate of Votes cast in the precinct in question to determine the votes for
each of the parties in this case. (Emphasis supplied)
7
There were seven (7) copies of the election returns prepared by the BEI. These were
distributed in accordance with Section 1 of RA 8173:
SECTION 1. Section 27 of Republic Act No. 7166, as amended by Republic Act No.
8045, is hereby further amended to read as follows:
SEC. 27. Number of Copies of Election Returns and their Distribution. — The Board
of Election Inspectors shall prepare in handwriting the election returns in their
respective polling places, in the number of copies herein provided and in the form to
be prescribed and provided by the Commission.
The copies of the election returns shall be distributed as follows: x x x
(b) In the election of local officials:
(1) The first copy shall be delivered to the city or municipal board of canvassers;
(2) The second copy, to the Commission;
(3) The third copy, to the provincial board of canvassers;
(4) The fourth copy, to the dominant majority party as determined by the Commission
in accordance with law;
(5) The fifth copy, to the dominant minority party as determined by the Commission in
accordance with law;
(6) The sixth copy, to a citizens' arm authorized by the Commission to conduct an
unofficial count:
Provided, however, That the accreditation of the citizens' arm shall be subject to the
provisions of Section 52(k) of Batas Pambansa Blg. 881; and
(7) The seventh copy shall be deposited inside the compartment of the ballot box for
valid ballots.
8
Records, vol. I, pp. 180-208.
9
Id.
Entitled "In the Matter of the Appeal from the Rulings of the Board of Canvassers of
10
Dumangas, Iloilo, In BOC Case Nos. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17,
18, 19, 20, 21, 22, 23, 24 and 25".
11
Rollo, p. 42.
12
Id. at 258-262.
13
Id. at 127-129.
14
Id. at 130-183.
Information Technology Foundation of the Philippines v. Commission on Elections, 464

15
Phil. 173, 190 (2004).
16
Supra note 6 at 568-569.
17
Id. at 571.
18
368 Phil. 277, 290 (1999).
19
Id.
20
Records, vol. I, p. 64.
21
Id. at 68.
22
Id. at 70.
The unjustified refusal of the BEI to issue a certificate of votes is an election offense under
23
Section 27(c) of RA 6646:

Sec. 27. Election Offenses. - In addition to the prohibited acts and election offenses
enumerated in Sections 261 and 262 of Batas Pambansa Blg. 881, as amended, the
following shall be guilty of an election offense: x x x
(c) Any member of the board of election inspectors who refuses to issue to duly
accredited watchers the certificate of votes provided in Section 16 hereof.
24
Pineda stated in her affidavit, thus:
That after the counting of votes, I, Aida Pineda personally indicated with my
handwriting the votes of candidates for the position of, among others, Vice-Mayor
and made the members of the Board of Election Inspectors (BEI) sign the same. The
votes are as follows:
c. Vice-Mayor
1. Hernan Biron, Jr. thirty one 31
2. Rose Doromal one hundred eight 108
Attached is a copy of the Certificate of Votes that I (Aida Pineda) personally prepared
for clustered precinct 208A as Annex "A" and made an integral part of our affidavit.
That I, Aida Pineda, presented the Certificate of Votes that I prepared to the
Chairman of BEI, Matias Eugenio Piosca but he refused to sign the said Certificate
despite my insistence that he is obliged to do so under the law.
That we were surprised when we learned that the votes for Vice-Mayor Candidate
Rose Doromal increased to 118 from 108 votes or was padded with ten votes in the
Election Return prepared by member of BEI Darwin B. Lico.
That before I presented the Certificate of Votes (Annex "A") to the Chairman of the
BEI, Matias Eugenio Piosca I, Aida Pineda double-checked the Certificate of Votes
that I prepared and I determined that the votes especially for Vice-Mayor Candidate
Rose Doromal was accurate at 108 votes.
That despite my presentation of the authority given by the party to get its copy of the
Election Returns, the BEI did not give me the copy of the Election Returns intended
for the Dominant Majority Party. (COMELEC records, vol. I, p. 299)
25
Section 16. Certificates of Votes. - After the counting of the votes cast in the precinct and
announcement of the results of the election, and before leaving the polling place, the board
of election inspectors shall issue a certificate of votes upon request of the duly accredited
watchers. The certificate shall contain the number of votes obtained by each candidate
written in words and figures, the number of the precinct, the name of the city or municipality
and province, the total number of voters who voted in the precinct and the date and time
issued, and shall be signed and thumbmarked by each member of the board. The certificate
shall be accomplished in duplicate with the use of carbon paper. The original copy shall be
issued to the watcher and the duplicate shall be kept in the custody of the chairman of the
board. Refusal on the part of the board of inspectors to issue such certificate shall constitute
an election offense punishable under the Omnibus Election Code.
26
Section 17 of HB 4046 is of the same wording as Section 17 of RA 6646.
27
Records, House 8th Congress (December 7, 1987).
28
Records, vol. II, pp. 57, 59-60.
29
Rollo, pp. 36-37.
30
Casimiro v. Commission on Elections, 253 Phil. 461, 471 (1989).
Aratuc v. Commission on Elections, 177 Phil. 205, 235 (1979); Pimentel, Jr. v.
31
Commission on Elections, 224 Phil. 260, 283 (1985).
32
Aratuc v. Commission on Elections, id.
33
Casimiro v. Commission on Elections, supra note 30.
34
Duhina and Demadante stated in their joint affidavit, thus:
That before the members of the Board of Election Inspectors (BEI) finished the
preparation of the Election Returns on May 14, 2007, there was a brownout in the
precinct (Precinct No. 107A) for not less than thirty (30) minutes.
That we cannot clearly see the making of the tallies on the Election Returns for Local
positions and only relied on the figures contained in the total number of votes and
were surprised when we were shown copies of the Election Returns for our party,
LAKAS-CMD with missing tallies in the votes for candidate Rose Marie D. Doromal
(less than five lines for one box); records, vol. I, p. 285.
35
Jiz-Deseo and Duller stated in their joint affidavit, thus:
That while the BEI was counting the votes, there was a brownout in the precinct
(Precinct No. 114A) for not less than thirty (30) minutes.
That after the counting of votes was completed, we were requested to sign and
thumb mark the original copy and all the other copies of the Election Returns even
before the BEI affixed their signatures and thumb marks. However, since we were
already tired and in a hurry to leave, we were not able to check and verify the tallies
appearing on the other copies of the Election Returns.
That although we had the necessary authority, the BEI did not give us the copy of the
Election Returns intended for the Dominant Majority Party.
That it was only later when we were shown a copy of the Election Returns for the
Dominant Majority Party that we noticed that there were missing tallies (less than five
lines per box) in the votes for Candidate Rose Marie D. Doromal in said copy; id. at
287.
36
Develos and De La Gante stated in their joint affidavit, thus:
That during the counting of votes [in Precinct No. 130A], the official (brown) tally
sheet was not placed on the board for the public to see but was placed on a table.
That the third member of the Board of Election Inspector (BEI) was a municipal
employee and not a teacher.
That we did not witness the making of the tallies on the Election Returns for Local
Positions and only relied on the figures contained in the total number of votes and we
were surprised when we were shown copies of the Election Returns for our party,
LAKAS-CMD with missing tallies (less than five lines for one box) in the votes for
candidate Rose Marie D. Doromal; id. at 288.
37
Deza III and Demonteverde stated in their joint affidavit, thus:
That during the counting of votes we were assigned to watch the member of the
Board of Election Inspectors (BEI) putting the official tallies on the Election Returns
for Local Positions.
After the counting of votes was completed, we were requested to sign and thumb
mark the original copy and all the other copies of the Election Returns intended for
the Dominant Majority Party.
It was only later when we were shown a copy of the Election Returns for the
Dominant Majority Party that we noticed that the tallies appearing in said copy the
same were different from the tallies in the copy for the Dominant Majority Party were
irregularly placed and there were missing tallies (less than five lines in the box) for
candidate Rose Marie D. Doromal in said copy; id. at 290.
38
Alcanzarin and Dimzon stated in their joint affidavit, thus:
That I, Cecile Alcanzarin was assigned to watch the member of the BEI making the
official tallies on the Election Returns for Local Positions. I was positioned in front of
that member of the BEI making the official tallies since I was not allowed to position
myself at the back of the BEI making it difficult for me to see the tallies on the
Election Returns being made by the said members of the BEI.
That I, Cecile Alcanzarin, brought to the BEI’s attention a discrepancy between the
figures with votes for Vice-Mayoral candidate Hernan Biron, Jr. appearing in the tally
sheet and in the Election Returns, which the BEI then corrected.
That after the counting of the votes were completed, the BEI asked us to sign and
our thumb marks before the BEI even signed and thumb marked the Election
Returns. The BEI also told us that the watchers could already leave the precinct.
That the member of the BEI making the official tallies on the Election Returns was
positioned in a poorly lit place making it doubly difficult for me to see the tallies that
he was making.
It was only later when we were shown a copy of the Election Returns for the
lines in the box) for candidate Rose Marie D. Doromal in said copy; id. at 291.
39
Ventura stated in her affidavit, thus:
That during the counting I was assigned to watch the member of the Board of
Election Inspector (BEI) writing the official tallies on the Election Returns for the
Local Elections. However, I was not able to closely monitor the conduct of the tally
and just relied on the total number of votes reflected in the Election Returns without
scrutinizing the individual tallies.
That after the counting of votes was complete, the BEI requested the watchers to
sign and thumb mark ahead of them.
The BEI did not give the copy of the Election Returns intended for the Dominant
Majority Party to the party’s authorized representatives.
That it was only later when I was shown a copy of the Election Returns for the
Dominant Majority Party that I noticed that there were missing tallies (less than five
lines per box) for the candidate Rose Marie D. Doromal; id. at 294.
40
Dedoroy and Ano stated in their joint affidavit, thus:
That after the counting of votes was completed, we were requested to sign and
thumb mark the original copy and all the other copies of the Election Returns.
However, we were not able to check and verify the tallies appearing on the copies of
the Election Returns.
That it was only later when we were shown a copy of the Election Returns for the
lines per box) in the votes for Candidate Rose Marie D. Doromal in said copy; id. at
302.
41
Section 179 of the OEC provides:
Section 179. Rights and duties of watchers. - Upon entering the polling place, the
watchers shall present and deliver to the chairman of the board of election inspectors
his appointment, and forthwith, his name shall be recorded in the minutes with a
notation under his signature that he is not disqualified under the second paragraph of
Section 178. The appointments of the watchers shall bear the personal signature or
the facsimile signature of the candidate or the duly authorized representatives of the
political party or coalition of political parties who appointed him or of organizations
authorized by the Commission under Section 180. The watchers shall have the right
to stay in the space reserved for them inside the polling place. They shall have the
right to witness and inform themselves of the proceedings of the board of election
inspectors, including its proceedings during the registration of voters, to take notes of
what they may see or hear, to take photographs of the proceedings and incidents, if
any, during the counting of votes, as well as of election returns, tally boards and
ballot boxes, to file a protest against any irregularity or violation of law which they
believe may have been committed by the board of election inspectors or by any of its
members or by any persons, to obtain from the board of election inspectors a
certificate as to the filing of such protest and/or of the resolution thereon, to read the
ballots after they shall have been read by the chairman, as well as the election
returns after they shall have been completed and signed by the members of the
board of election inspectors without touching them, but they shall not speak to any
member of the board of election inspectors, or to any voter, or among themselves, in
such a manner as would distract the proceedings, and to be furnished with a
certificate of the number of votes in words and figures cast for each candidate, duly
signed and thumbmarked by the chairman and all the members of the board of
election inspectors. Refusal of the chairman and the members of the board of
election inspectors to sign and furnish such certificate shall constitute an election
offense and shall be penalized under this Code.
Section 12 of R.A. No. 6646 modified and expanded the rights and duties of the
watchers, viz:
Sec. 12. Official Watchers. - Every registered political party, coalition of political
parties, and every candidate shall each be entitled to one watcher in every polling
place: Provided, That candidates for members of the Sangguniang Panlalawigan,
Sangguniang Panlungsod or Sangguniang Bayan or for city or municipal councilors
belonging to the same slate or ticket shall collectively be entitled only to one watcher.
There shall also be recognized two principal watchers, one representing the ruling
coalition and the other the dominant opposition coalition, who shall sit as observers
in the proceedings of the board. The principal watcher shall be designated on the
basis of the recommendation of the ruling coalition, represented by the political party
of the incumbent elected district representative, and of the dominant opposition
coalition, represented by the political party which performed best or which polled at
least ten percent (10%) of the votes in the last national election.
A duly signed appointment of a watcher shall entitle him to recognition by the board
of election inspectors and the exercise of his rights and discharge of his duties as
such: Provided, however, That only one watcher of each of those authorized to
appoint them can stay at any time inside the polling place.
The watchers shall be permitted full and unimpeded access to the proceedings so
that they can read the names of those written on the ballots being counted with
unaided natural vision, consistent with good order in the polling place.
In addition to their rights and duties under Section 179 of Batas Pambansa Blg. 881,
the two principal watchers representing the ruling coalition and the dominant
opposition in a precinct shall, if available, affix their signatures and thumbmarks on
the election returns for that precinct. If both or either of them is not available,
unwilling or should they refuse to do so, any watcher present, preferably with political
affiliation or alignment compatible with that of the absent or unwilling watcher, may
be required by the board of election inspectors to do so.
42
Copy 5 (i.e., copy of the dominant minority party) was submitted in evidence by petitioner
before the MBC to controvert private respondent’s claim that the subject returns were
tampered.
43
As stated earlier, petitioner endeavored to submit Copy 3 of the subject election returns
while the instant petition was pending resolution before this Court. However, this Court is not
a trier of facts, and we cannot receive such documentary evidence at this late stage in the
proceedings. If it were petitioner’s intention to show that Copy 3 of the subject returns did not
contain missing taras, then petitioner should have done so in the proceedings before the
COMELEC itself. At any rate, even if we were to assume that the Copy 3 belatedly submitted
by petitioners before this Court is authentic, we note that these copies are substantially of the
same import as Copy 5 of the subject returns appearing in the records of this case.
44
Records, vol. I, p. 47 (Copy 4); vol. II p. 49 (Copy 5).
45
Id. at 58 (Copy 4); id. at 54 (Copy 5).
46
Id. at 78 (Copy 4); id. at 64 (Copy 5).
47
Patoray v. Commission on Elections, supra note 6 at 569.
48
See Olondriz, Jr. v. Commission on Elections, 371 Phil. 867, 872 (1999), where we upheld
the decision of the COMELEC to open the ballot box pursuant to Section 236 of the OEC.
The discrepancy between the written words vis-à-vis figures in the contested election return
was 10 votes while the winning candidate won by a margin of 2 votes. Thus, it was
necessary to open the ballot box to determine the true will of the electorate.
49
Records, vol. I, pp. 44, 48, 52, 58, 56, 62, 74 and 78.
50
Section 235. When election returns appear to be tampered with or falsified. - If the election
returns submitted to the board of canvassers appear to be tampered with, altered or falsified
after they have left the hands of the board of election inspectors, or otherwise not authentic,
or were prepared by the board of election inspectors under duress, force, intimidation, or
prepared by persons other than the member of the board of election inspectors, the board of
canvassers shall use the other copies of said election returns and, if necessary, the copy
inside the ballot box which upon previous authority given by the Commission may be
retrieved in accordance with Section 220 hereof. If the other copies of the returns are
likewise tampered with, altered, falsified, not authentic, prepared under duress, force,
intimidation, or prepared by persons other than the members of the board of election
inspectors, the board of canvassers or any candidate affected shall bring the matter to the
attention of the Commission. The Commission shall then, after giving notice to all candidates
concerned and after satisfying itself that nothing in the ballot box indicate that its identity and
integrity have been violated, order the opening of the ballot box and, likewise after satisfying
itself that the integrity of the ballots therein has been duly preserved shall order the board of
election inspectors to recount the votes of the candidates affected and prepare a new return
which shall then be used by the board of canvassers as basis of the canvass.
51
453 Phil. 277, 290 (2003). In Lee, we ruled:
The lack of merit of petitioner's arguments notwithstanding, the COMELEC, in

ordering the exclusion of the questioned return, should have determined the
integrity of the ballot box, the ballot-contents of which were tallied and reflected in
the return, and if it was intact, it should have ordered its opening for a recounting
of the ballots if their integrity was similarly intact. (Emphasis supplied)
52
459 Phil. 1055, 1070-1071 (2003). In Balindong, we stated:
[B]ased on Section 235 of the OEC which this Court elucidated on along with Section
236 in Patoray v. COMELEC, in cases where the election returns appear to have
been tampered with, altered or falsified, the prescribed modality is for the COMELEC
to examine the other copies of the questioned returns and if the other copies are
likewise tampered with, altered, falsified, or otherwise spurious, after having given
notice to all candidates and satisfied itself that the integrity of the ballot box and of
the ballots therein have been duly preserved, to order a recount of the votes cast,
prepare a new return which shall be used by the board of canvassers as basis for the
canvass, and direct the proclamation of the winner accordingly.
The COMELEC failed to observe the foregoing procedure. As admitted in its Order
dated December 13, 2001, it examined only the election returns used by the MBC,
omitting to take a look at the other copies of the questioned returns or ordering a pre-
proclamation recount of the votes of the candidates affected. The failure to take
either step renders the poll body's action consisting of the outright exclusion
of the return for Precinct 80A and the award of 88 votes in the return for
Precinct 47A/48A highly questionable.
The precipitate exclusion from canvass of the return for Precinct 80A resulted
in the unjustified disenfranchisement of the voters thereof. This could have
been avoided had the COMELEC availed of the other courses of action mentioned in
the law, namely: the examination of the other copies of the return and the recount of
the votes by the BEI. (Emphasis supplied)
53
463 Phil. 263, 290-291 (2003). In Dagloc, we ruled:
Outright exclusion of election returns on the ground that they were

fraudulently prepared by some members or non-members of the BEI
disenfranchises the voters. Hence, when election returns are found to be spurious
or falsified, Section 235 of the Omnibus Election Code provides the procedure which
enables the COMELEC to ascertain the will of the electorate.
The COMELEC, therefore, gravely abused its discretion when it excluded outright the
subject election returns after finding that they were fraudulent returns. Instead, the
COMELEC should have followed the procedure laid down in Section 235 of the
Omnibus Election Code: x x x (Emphasis supplied)
54
G.R. No. 178456, January 30, 2008, 543 SCRA 157, 171-174. In Cambe, we reiterated:
In the instant case, Election Return No. 9601666 cannot be considered as regular or
authentic on its face inasmuch as the total votes cast for the vice-mayoralty position,
which is 288, exceeded the total number of the voters who actually voted (230) and
the total number of registered voters (285). The COMELEC therefore is clothed with
ample authority to ascertain under the procedure outlined in the Omnibus Election
Code (OEC) the merits of the petition to exclude Election Return No. 9601666.
Sections 235 and 236 of the OEC read: x x x
xxxx
In the instant case, the MBC, without complying with Section 235 of the OEC,
outrightly excluded Election Return No. 9601666. Worse, the COMELEC found
nothing irregular in the procedure taken by the MBC. The precipitate exclusion
from the canvass of the return for Precincts 66A and 68 resulted in the
unjustified disenfranchisement of the voters thereof. (Emphasis supplied)
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 169481 February 22, 2010
REPUBLIC OF THE PHILIPPINES Petitioner,

vs.
HEIRS OF JULIO RAMOS, represented by REYNALDO RAMOS MEDINA, ZENAIDA RAMOS
MEDINA, DOLORES RAMOS MEDINA, ROMEO RAMOS MEDINA, VIRGIE RAMOS MEDINA,
HERMINIA RAMOS MEDINA, CESAR RAMOS MEDINA and REMEDIOS RAMOS
MEDINA, Respondents.
DECISION
DEL CASTILLO, J.:
In petitions for reconstitution of a lost or destroyed Torrens certificate of title, trial courts are duty-
bound to examine the records of the case to determine whether the jurisdictional requirements have
been strictly complied with. They must also exercise extreme caution in granting the petition, lest
they become unwitting accomplices in the reconstitution of questionable titles instead of being
instruments in promoting the stability of our land registration system.1
This petition2 for review on certiorari seeks to reverse the August 31, 2005 Decision3 of the Court of
Appeals (CA) in CA-G.R. CV No. 75345. The CA’s assailed Decision affirmed the February 19, 2002
Order4 of the Regional Trial Court (RTC), Branch 3, Balanga City, Bataan, which in turn granted
respondents’ Petition5 for Reconstitution of Original Certificate of Title (OCT) No. 3613.
Proceedings before the Regional Trial Court
On February 23, 2001, respondents filed a Petition for Reconstitution of OCT No. 3613, before the
RTC of Balanga City containing the following material averments:
That the late Julio Ramos is being represented by herein petitioners who are all of legal age,
married, Filipinos and residents of Kaparangan, Orani, Bataan;
That the late Julio Ramos, grandfather of herein petitioners, is the original claimant of Lot No. 54 of
the Cadastral Survey of Orani, Bataan, as evidenced by a Relocation Plan of said lot duly approved
by the Chief, Regional Surveys Division, Ruperto P. Sawal, and the Regional Technical Director
Eriberto V. Almazan, the plan hereto attached as Annex "A" and the technical descriptions as Annex
"B";
That the Land Registration Authority issued a Certification to the effect that Lot No. 54 of Orani
Cadastre, Bataan was issued Decree No. 190622 on September 29, 1925, hereto attached as
Annex "C";
That the Acting Registrar of Deeds of Bataan likewise issued a Certification to the effect that OCT
No. 3613 covering Lot No. 54 of Orani Cadastre is not among the salvaged records of the said
Registry, copy hereto attached as Annex "D";
That the owner’s copy of OCT No. 3613 was lost and all efforts exerted to locate the same are in
vain;
That petitioners secured a Lot Data Computation from the Bureau of Lands wherein it is shown that
Julio Ramos is the claimant of Lot No. 54 of Orani Cadastre, certified machine copy hereto attached
as Annex "E";
That the adjoining owners of said Lot No. 54 are:
NE by Lot 58 & 49 – Jose Peña, et al., Orani, Bataan;
SE by Lot 51 – Pedro de Leon, Orani, Bataan;
SW by Jose Zulueta Street;
NW by Lot 55 – Jose Sioson, Orani, Bataan;
That OCT No. 3613 may be reconstituted on the basis of the approved plan and technical
descriptions and the Lot Data Computation;
That said Lot No. 54 is declared for taxation purposes in the name of Julio Ramos and taxes due
thereon are fully paid up to the current year;
That the title is necessary to enable petitioners [to] partition said lot among themselves;
That there is no document pending registration with the Registry of Deeds of Bataan affecting said
Lot 54.6
Respondents prayed for the issuance of an order directing the Registrar of Deeds to reconstitute
OCT No. 3613 on the basis of the approved plan and technical description.
On February 28, 2001, the trial court issued a Notice7 setting the case for initial hearing on August
30, 2001, which was reset to September 27, 2001.8 During the said hearing, respondents presented
several pieces of documentary evidence9 purportedly to establish compliance with the jurisdictional
requirements. Thereafter, trial ensued.
Respondent Reynaldo Ramos Medina (Reynaldo), a 62-year old watch technician, testified on the
material allegations of the petition, as well as on the appended annexes. He likewise declared on the
witness stand that his mother used to keep the owner’s copy of OCT No. 3613. During the Japanese
occupation, however, it was buried in a foxhole and since then it could no longer be found. Reynaldo
further testified that he and his co-heirs are the present occupants of Lot 54. He was not cross-
examined by the public prosecutor, who was then representing the petitioner.
On February 19, 2002, the trial court issued an Order10 granting
respondents’ petition and disposing as follows:

WHEREFORE, the Petition, being in order, is hereby GRANTED.
The Acting Registrar of Deeds of Bataan is directed, upon payment by petitioners of the
corresponding legal fees, to reconstitute Original Certificate of Title No. T-3613 covering Lot No. 54
of the Orani Cadastre based on the approved Relocation Plan and Technical Description.
SO ORDERED.11
Proceedings before the Court of Appeals
Believing that the court a quo erred in granting the petition for reconstitution, petitioner Republic of
the Philippines appealed to the CA ascribing upon the court a quo the following errors:
THE TRIAL COURT ERRED IN GRANTING THE PETITION FOR RECONSTITUTION OF OCT NO.
3613 DESPITE PETITIONERS-APPELLEES’ [sic] FAILURE TO ESTABLISH THAT AT THE TIME
OF ITS ALLEGED LOSS, SUBJECT OCT WAS VALID AND SUBSISTING.
THE TRIAL COURT ERRED IN GRANTING THE PETITION FOR RECONSTITUTION OF OCT NO.
3613 DESPITE PETITIONERS-APPELLEES’ [sic] FAILURE TO ADDUCE ADEQUATE BASIS OR
SOURCE FOR RECONSTITUTION.12
On August 31, 2005, the CA rendered the assailed Decision dismissing the appeal. The appellate
court found that the pieces of documentary evidence presented by the respondents are sufficient to
grant reconstitution of OCT No. 3613. Besides, the respondents had been paying realty taxes.
Moreover, the adjacent lot owners did not oppose the petition despite due notice. The dispositive
portion of the CA’s Decision reads:
WHEREFORE, premises considered, the instant appeal is hereby DISMISSED for lack of merit. The
appealed Order dated February 19, 2002 of the Regional Trial Court of Bataan is AFFIRMED.
SO ORDERED.13
Issues
Petitioner interposed the present recourse anchored on the following grounds:
I.
THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURT’S ORDER GRANTING
RECONSTITUTION OF ORIGINAL CERTIFICATE OF TITLE NO. 3613.
II.
THE COURT OF APPEALS ERRED IN ITS APPLICATION OF PARAGRAPH F, SECTION 2 OF

REPUBLIC ACT NO. 26.14
Petitioner’s Allegations
Petitioner contends that the CA erred in affirming the Order of the trial court granting respondents’
petition for reconstitution considering that respondents failed to present competent proof to establish
their claim. First, respondents anchor their claim on the Certification 15 issued by the Land
Registration Authority (LRA) to prove that Decree No. 190622 was issued for Lot 54. However, said
Certification did not state that Decree No. 190622 was issued in the name Julio Ramos. Second,
when reconstitution is anchored on Section 2(f) of Republic Act (RA) No. 26, 16 just like in this case,
the Relocation Survey Plan and Technical Description are mere supporting evidence to the "other
document which, in the judgment of the court, is sufficient and proper basis for reconstituting the lost
or destroyed certificate of title." Thus, the court a quo erred in ordering reconstitution based on the
Relocation Survey Plan and Technical Description presented by the respondents.
Lastly, petitioner insists that respondents failed to present competent proof of loss of OCT No. 3613.
It maintains that the non-execution of an affidavit of loss by the grandparents of the heirs of Julio
Ramos who, allegedly, were in possession of OCT No. 3613 at the time of its loss, and the failure of
the respondents to inform immediately the Registrar of Deeds of such loss, cast doubt on
respondents’ claim that there existed OCT No. 3613.
Respondents, on the other hand, assert that in a petition for review on certiorari, the only issues that
can be raised are limited to pure questions of law. Here, both the trial court and the appellate court
found factual bases to grant the reconstitution they prayed for. Hence, the present petition should be
denied.
Petitioner counter argues that this case falls under the numerous exceptions to the rule cited by the
respondents.
Our Ruling
The petition is meritorious. Before delving into the arguments advanced by the petitioner, we shall
first tackle some procedural and jurisdictional matters involved in this case.
The instant petition falls under the exceptions to the general rule that factual findings of the appellate
court are binding on this Court.
Ordinarily, this Court will not review, much less reverse, the factual findings of the CA, especially
where such findings coincide with those of the trial court.17 The findings of facts of the CA are, as a
general rule, conclusive and binding upon this Court, since this Court is not a trier of facts and does
not routinely undertake the re-examination of the evidence presented by the contending parties
during the trial of the case.18
The above rule, however, is subject to a number of exceptions, such as (1) when the inference made
is manifestly mistaken, absurd or impossible; (2) when there is grave abuse of discretion; (3) when
the finding is grounded entirely on speculations, surmises, or conjectures; (4) when the judgment of
the CA is based on misapprehension of facts; (5) when the findings of fact are conflicting; (6) when
the CA, in making its findings, went beyond the issues of the case and the same is contrary to the
admissions of both parties; (7) when the findings of the CA are contrary to those of the trial court; (8)
when the findings of fact are conclusions without citation of specific evidence on which they are
based; (9) when the CA manifestly overlooked certain relevant facts not disputed by the parties and
which, if properly considered, would justify a different conclusion; and (10) when the findings of fact
of the CA are premised on the absence of evidence and are contradicted by the evidence on record.
As will be discussed later, this case falls under the last three exceptions and, hence, we opt to take
cognizance of the questions brought to us by petitioner. But first, we shall address a jurisdictional
question although not raised in the petition.
The trial court did not acquire jurisdiction over the petition for reconstitution.
RA 26 lays down the specific procedure for the reconstitution of lost or destroyed Torrens certificates
of title. It confers jurisdiction upon trial courts to hear and decide petitions for judicial reconstitution.
However, before said courts can assume jurisdiction over the petition and grant the reconstitution
prayed for, the petitioner must observe certain special requirements and mode of procedure
prescribed by law. Some of these requirements are enumerated in Sections 12 and 13 of RA 26, viz:
SEC. 12. Petitions for reconstitution from sources enumerated in Sections 2(c), 2(d), 2(e), 2(f), 3(c),
3(d), 3(e), and/or 3(f) of this Act, shall be filed with the [Regional Trial Court], by the registered
owner, his assigns, or any person having an interest in the property. The petition shall state or
contain, among other things, the following: (a) that the owner’s duplicate of the certificate of title had
been lost or destroyed; (b) that no co-owner’s, mortgagee’s, or lessee’s duplicate had been issued,
or, if any had been issued, the same had been lost or destroyed; (c) the location area and
boundaries of the property (d) the nature and description of the building or improvements, if any,
which do not belong to the owner of the land, and the names and addresses of the owners of such
buildings or improvements; (e) the names and addresses of the occupants or persons in possession
of the property, of the owners of the adjoining properties and of all persons who may have any
interest in the property; (f) a detailed description of the encumbrances, if any, affecting the property;
and (g) a statement that no deeds or other instruments affecting the property have been presented
for registration, or if there be any, the registration thereof has not been accomplished, as yet. All the
documents, or authenticated copies thereof, to be introduced in evidence in support of the petition
for reconstitution shall be attached thereto and filed with the same: Provided, That in case the
reconstitution is to be made exclusively from sources enumerated in Section 2(f) or 3(f) of this Act,
the petition shall be further accompanied with a plan and technical description of the property duly
approved by the Chief of the General Land Registration Office or with a certified copy of the
description taken from a prior certificate of title covering the same property.
SEC. 13. The court shall cause a notice of the petition, filed under the preceding section, to be
published, at the expense of the petitioner, twice in successive issues of the Official Gazette, and to
be posted on the main entrance of the provincial building and of the municipal building of the
municipality or city in which the land is situated, at least thirty days prior to the date of hearing. The
court shall likewise cause a copy of the notice to be sent, by registered mail or otherwise, at the
expense of the petitioner, to every person named therein whose address is known, at least thirty
days prior to the date of hearing. Said notice shall state, among other things, the number of the lost
or destroyed certificate of title, if known, the name of the registered owner, the names of the
occupants or persons in possession of the property, the owners of the adjoining properties and all
other interested parties, the location area and boundaries of the property, and the date on which all
persons having any interest therein must appear and file their claim or objections to the petition. The
petitioner shall, at the hearing, submit proof of the publication, posting and service of the notice as
directed by the court. (Emphasis supplied)
Perusal of respondents’ Petition for Reconstitution, for the purpose of verifying whether the strict and
mandatory requirements of RA 26, particularly Section 12 (b) and (e) thereof, have been faithfully
complied with, would reveal that it did not contain an allegation that no co-owner’s, mortgagee’s or
lessees duplicate had been issued or, if any had been issued, the same had been lost or destroyed.
The petition also failed to state the names and addresses of the present occupants of Lot 54.
Correspondingly, the Notice of Hearing issued by the court a quo did not also indicate the names of
the occupants or persons in possession of Lot 54, in gross violation of Section 13 of RA 26. Because
of these fatal omissions, the trial court never acquired jurisdiction over respondents’ petition.
Consequently, the proceedings it conducted, as well as those of the CA, are null and void.
It is unfortunate that despite the mandatory nature of the above requirements 19 and our constant
reminder to courts to scrutinize and verify carefully all supporting documents in petitions for
reconstitution,20 the same still escaped the attention of the trial court and the CA. And while petitioner
also overlooked those jurisdictional infirmities and failed to incorporate them as additional issues in
its petition, this Court has sufficient authority to pass upon and resolve the same since they affect
jurisdiction.21
Respondents failed to present competent source of reconstitution.
Our disquisition could end here. Briefly though, and to explain why this case falls under the
exceptions to the general rule that this Court will not review the CA’s finding of facts, we shall
examine the probative weight of the pieces of evidence presented by the respondents in support of
their Petition for Reconstitution.
Section 2 of RA 26 enumerates in the following order the sources from which reconstitution of lost or
destroyed original certificates of title may be based:
SEC. 2. Original certificates of title shall be reconstituted from such of the sources hereunder
enumerated as may be available in the following order:
(a) The owner’s duplicate of the certificate of title;
(b) The co-owner’s, mortgagee’s, or lessee’s duplicate of the certificate of title;
(c) A certified copy of the certificate of title, previously issued by the register of deeds or by a
legal custodian thereof;
(d) An authenticated copy of the decree of registration or patent, as the case may be,
pursuant to which the original certificate of title was issued;
(e) A document, on file in the Registry of Deeds by which the property, the description of
which is given in said document, is mortgaged, leased or encumbered, or an authenticated
copy of said document showing that its original has been registered; and
(f) Any other document which, in the judgment of the court, is sufficient and proper basis for
reconstituting the lost or destroyed certificate of title.
Respondents predicate their Petition for Reconstitution on Section 2(f) of RA 26. And to avail of its
benefits, respondents presented survey plan,22 technical description,23 Certification issued by the
Land Registration Authority,24 Lot Data Computation,25 and tax declarations.26 Unfortunately, these
pieces of documentary evidence are not similar to those mentioned in subparagraphs (a) to (e) of
Section 2 of RA 26, which all pertain to documents issued or are on file with the Registry of Deeds.
Hence, respondents’ documentary evidence cannot be considered to fall under subparagraph (f).
Under the principle of ejusdem generis, where general words follow an enumeration of persons or
things by words of a particular and specific meaning, such general words are not to be construed in
their widest extent, but are to be held as applying only to persons or things of the same kind or class
as those specifically mentioned.27 Thus, in Republic of the Philippines v. Santua,28 we held that when
Section 2(f) of RA 26 speaks of "any other document," the same must refer to similar documents
previously enumerated therein, that is, those mentioned in Sections 2(a), (b), (c), (d), and (e).
Also, the survey plan and technical description are not competent and sufficient sources of
reconstitution when the petition is based on Section 2(f) of RA 26. They are mere additional
documentary requirements.29 This is the clear import of the last sentence of Section 12, RA 26 earlier
quoted. Thus, in Lee v. Republic of the Philippines,30 where the trial court ordered reconstitution on
the basis of the survey plan and technical description, we declared the order of reconstitution void
for want of factual support.
Moreover, the Certification31 issued by the LRA stating that Decree No. 190622 was issued for Lot 54
means nothing. The Land Registration Act expressly recognizes two classes of decrees in land
registration proceedings, namely, (i) decrees dismissing the application and (ii) decrees of
confirmation and registration.32 In the case at bench, we cannot ascertain from said Certification
whether the decree alluded to by the respondents granted or denied Julio Ramos’ claim. Moreover,
the LRA’s Certification did not state to whom Lot 54 was decreed. Thus, assuming that Decree No.
190622 is a decree of confirmation, it would be too presumptuous to further assume that the same
was issued in the name and in favor of Julio Ramos. Furthermore, said Certification did not indicate
the number of the original certificate of title and the date said title was issued. In Tahanan
Development Corporation v. Court of Appeals,33 we held that the absence of any document, private
or official, mentioning the number of the certificate of title and date when the certificate of title was
issued, does not warrant the granting of such petition.
With regard to the other Certification34 issued by the Registry of Deeds of Balanga City, it cannot be
deduced therefrom that OCT No. 3613 was actually issued and kept on file with said office. The
Certification of said Registry of Deeds that said title "is not among those salvaged records of this
Registry as a consequence of the last World War," did not necessarily mean that OCT No. 3613
once formed part of its records.
Anent the tax declaration submitted, the same covered only taxable year 1998. Obviously, it had no
bearing with what occurred before or during the last world war. Besides, a tax declaration is not a
reliable source of reconstitution of a certificate of title. As we held in Republic of the Philippines v.
Santua,35 a tax declaration can only be prima facie evidence of claim of ownership, which, however,
is not the issue in a reconstitution proceeding. A reconstitution of title does not pass upon the
ownership of land covered by the lost or destroyed title but merely determines whether a re-issuance
of such title is proper.
We also share the observation of petitioner that the non-submission of an affidavit of loss by the
person who was allegedly in actual possession of OCT No. 3613 at the time of its loss, casts doubt
on respondents’ claim that OCT No. 3613 once existed and subsequently got lost. Under Section
10936 of Presidential Decree No. 1529,37 the owner must file with the proper Registry of Deeds a
notice of loss executed under oath. Here, despite the lapse of a considerable length of time, the
alleged owners of Lot 54 or the persons who were in possession of the same, i.e., respondents’
grandparents, never executed an affidavit relative to the loss of OCT No. 3613.
The presentation of such affidavit becomes even more important considering the doubtful testimony
of Reynaldo. When he testified on November 29, 2001, he was only 62 years old and, therefore, he
was barely six years old during the Japanese occupation until the Liberation. Also, his testimony
consisted only of his declaration that his unnamed grandmother used to keep said copy of OCT No.
3613; that it was buried in a foxhole during the Japanese occupation; and, subsequently, got lost. He
did not testify on how he obtained knowledge of the alleged facts and circumstances surrounding the
loss of the owner’s copy of OCT No. 3613. In fact, he neither named the person responsible for the
burying or hiding of the title in a foxhole nor mentioned the place where that foxhole was located.
Reynaldo’s testimony was also lacking in details as to how he participated in searching for the title’s
whereabouts. Indeed, Reynaldo’s testimony is highly suspect and cannot be given the expected
probative weight. 1avvphi1
In fine, we are not convinced that respondents had adduced competent evidence to warrant
reconstitution of the allegedly lost original certificate of title.
WHEREFORE, the instant petition is hereby GRANTED. The August 31, 2005 Decision of the Court
of Appeals in CA-G.R. CV No. 75345 is hereby REVERSED and SET ASIDE. The Petition for
Reconstitution filed by the respondents is DISMISSED.
SO ORDERED.

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
TERESITA J. LEONARDO-DE CASTRO* ROBERTO A. ABAD

JOSE P. PEREZ
Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
* Per Raffle dated September 8, 2009.
1
Republic v. Planes, 430 Phil. 848, 851, 869 (2002).
2
Rollo, pp. 18-42.
3
CA rollo, pp 50-55; penned by Associate Justice Eliezer R. De Los Santos and concurred in
by Associate Justices Eugenio S. Labitoria and Arturo D. Brion.
4
Records, pp. 41-43; penned by Judge Remigio M. Escalada, Jr.
5
Id. at 2-4.
6
Id. at 2-3.
7
Id. at 15-16.
8
See Order dated August 30, 2001, id. at 19.
9
Exhibit "A", Notice dated February 28, 2001, id. at 15; Exhibit "B", Certificate of Publication
dated April 18, 2001 issued by the National Printing Office, id. at 18; Exhibit "C", Certificate
of Posting dated March 1, 2001, id. at 17; Exhibit "D", Relocation Plan, id. at 4; Exhibit "E",
Technical Description, id. at 5; Exhibit "F", Certification dated February 17, 1997 issued by
the Land Registration Authority, id. at 8; Exhibit "G", Certification dated July 21, 1997 issued
by the Registry of Deeds of Balanga, Bataan, id. at 9; Exhibit "H", Lot Data Computation, id.
at 10; Exhibit "I", Tax Declaration of Real Property, id. at 11.
10
Id. at 41-43.
11
Id. at 43.
12
13
Id. at 54.
14
Rollo, p. 25.
15
Records, p. 8.
AN ACT PROVIDING A SPECIAL PROCEDURE FOR THE RECONSTITUTION OF

16
TORRENS CERTIFICATE OF TITLE LOST OR DESTROYED.
Ledonio v. Capitol Development Corporation, G.R. No. 149040, July 4, 2007, 526 SCRA
17
379, 392.
Cosmos Bottling Corporation v. Nagrama, Jr., G.R. No. 164403, March 4, 2008, 547 SCRA
18
571, 584-585.
19
Supra note 1.
20
Republic of the Philippines v. El Gobierno de las Islas Filipinas, 498 Phil. 570, 585 (2005).
21
Hi-Tone Marketing Corporation v. Baikal Realty Corporation, 480 Phil. 545, 561 (2004).
22
Exhibit "D", Records, p. 5.
23
Exhibit "E", id. at 6.
24
Exhibit "F", id. at 8.
25
Exhibit "H", id. at 10.
26
Exhibit "I", id. at 11.
27
Parayno v. Jovellanos, G.R. No. 148408, July 14, 2006, 495 SCRA 85, 92.
G.R. No. 155703, September 8, 2008, 564 SCRA 331, 338-339; see also Heirs of
28
Felicidad Dizon v. Hon. Discaya, 362 Phil. 536, 545 (1999).
29
Supra note 27.
30
418 Phil. 793, 802-803 (2001).
31
Records, p. 8. It reads:
This is to certify that after due verification of our "Record Book of Cadastral Lots," it was
found that Lot No. 54 of the Cadastral Survey of Orani, Province of Bataan, Cadastral Case
No. 10, LRC Cadastral Record No. 315, was issued Decree No. 190622, on Sept. 29, 1925
pursuant to the decision rendered thereon. Said lot is subject of annotation to quote: RA 26,
Sec. 12, (LRC) PR-6581.
This certification is issued upon the request of Felix S. Peña (of) Tapulao, Orani, Bataan.
32
De los Reyes v. De Villa, 48 Phil. 227, 231 (1925).
33
203 Phil. 652 (1982).
34
Records, p. 9.
35
Supra note 27 at 340.
36
SECTION 109. Notice and replacement of lost duplicate certificate. – In case of loss or
theft of an owner’s duplicate certificate of title, due notice under oath shall be sent by the
owner or by someone in his behalf to the Register of Deeds of the province or city where the
land lies as soon as the loss or theft is discovered. If a duplicate certificate is lost or
destroyed, or cannot be produced by a person applying for the entry of a new certificate to
him or for the registration of any instrument, a sworn statement of the fact of such loss or
destruction may be filed by the registered owner or other person in interest and registered.
AMENDING AND CODIFYING THE LAWS RELATIVE TO REGISTRATION OF
37
PROPERTY AND FOR OTHER PURPOSES

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 184546 February 22, 2010

vs.
WILSON SUAN y JOLONGON, Appellant.
DECISION
DEL CASTILLO, J.:
Once again we find occasion to reiterate the most echoed constitutional guarantee that an accused
in criminal prosecutions is presumed innocent until his guilt is proven beyond reasonable doubt. 1 To
overcome the presumption of innocence and arrive at a finding of guilt, the prosecution is duty bound
to establish with moral certainty the elemental acts constituting the offense. In prosecutions involving
narcotics, the narcotic substance itself constitutes the corpus delicti of the offense and the fact of its
existence is vital to sustain a judgment of conviction beyond reasonable doubt. 2 The identity of the
narcotic substance must therefore be established beyond reasonable doubt.3
We are compelled to acquit appellant in this case because the prosecution miserably failed to
establish the identity of the substance allegedly seized from him. In addition, we find that there was a
break in the chain of custody thereby casting doubt on the integrity and evidentiary value of the
substance allegedly seized from the appellant.
This is an appeal from the Decision4 dated March 25, 2008 of the Court of Appeals (CA) in CA-G.R.
CR No. 00054. The CA affirmed in toto the Decision5 dated November 17, 2004 of the Regional Trial
Court (RTC) of Lanao del Norte, Branch 01, Iligan City finding appellant Wilson Suan y Jolongon
guilty of violation of Section 11, Article II of Republic Act (RA) No. 9165, the Comprehensive
Dangerous Drugs Act of 2002.
Factual Antecedents
On August 12, 2003, an Information was filed with the RTC of Lanao del Norte, Branch 6 against
appellant for violation of Section 5, Article II of RA 9165. The case was docketed as Criminal Case
No. 10315. Subsequent to his arraignment on September 6, 2003 wherein he pleaded not guilty and
before the pre-trial, appellant filed an Urgent Motion for Re-Investigation 6 which the trial court
granted on September 19, 2003.7 As a result of the re-investigation, an Amended Information8 was
filed charging appellant with violation of Section 11, Article II of RA 9165. The accusatory portion of
the Amended Information reads:
The undersigned Prosecutor III of Iligan City accuses WILSON SUAN y Jolongon for VIOLATION
OF REPUBLIC ACT NO. 9165, committed as follows:
That on or about August 12, 2003, in the City of Iligan, Philippines, and within the jurisdiction of this
Honorable Court, the said accused, without being authorized by law, did then and there willfully,
unlawfully and feloniously have in his possession, custody and control one (1) sachet of
methamphetamine hydrochloride, a dangerous drug commonly known as shabu, weighing more or
less 0.01 gram.
Contrary to and in violation of Republic Act No. 9165, Article II, Section 11, thereof.
City of Iligan, October 13, 2003.
The Amended Information was raffled to Branch 01 wherein appellant was arraigned and to which
offense he pleaded not guilty.
The evidence for the prosecution, as culled from the testimonies of PO2 Allan Labasano (PO2
Labasano), PO1 Samsodim Gondol (PO1 Gondol),9 and Forensic Chemist Police Senior Inspector
April Carvajal10 (Forensic Chemist Carvajal), is as follows:
On August 12, 2003 at about 3:30 a.m., PO2 Labasano and PO1 Gondol conducted a buy-bust
operation at Purok 4, Saray, Iligan City. PO1 Gondol, who was provided with two pieces of
₱50.0011 bills, acted as the buyer while PO2 Labasano served as back-up. Upon reaching the target
area, the two saw appellant sitting outside the house. PO1 Gondol approached appellant and the
latter asked the former if he wanted to buy a narcotic substance. PO1 Gondol replied "I will buy
"Piso", meaning ₱100.00. After a brief exchange of the money and the stuff, appellant was informed
of his constitutional rights and thereafter was arrested. Appellant was brought to the police
headquarters and presented before the investigator. At the police headquarters, PO2 Labasano
prepared a Certificate of Inventory. The buy-bust money and the plastic sachet containing the stuff
they recovered were turned over to the evidence custodian as related by PO1 Gondol, and to the
Team Leader, as testified to by PO2 Labasano. Upon request, the plastic sachet was sent to the
PNP Regional Crime Laboratory for examination.12
Forensic Chemist Carvajal received the written request for laboratory examination of one sachet
containing white crystalline substance submitted to their office.13 She conducted the test and the
result showed that it contained methamphetamine hydrochloride or shabu, a dangerous drug. She
then prepared Chemistry Report No. D-500-200314 on her finding on the tests.
Appellant denied the charge against him. He claimed that while he was sleeping on a bench beside
the road, PO2 Labasano suddenly held his arm and handcuffed him. PO2 Labasano inserted his
hand into appellant’s pocket, frisked him and shabu was later shown to him. He was brought to
Tipanoy for a drug test and detained in jail for violation of the anti-drugs law.
Giving full faith and credence to the prosecution’s version, the trial court found the test-buy and buy-
bust operation established. In its Decision dated November 17, 2004, the trial court found appellant
guilty beyond reasonable doubt of the crime charged and disposed as follows:
WHEREFORE, premises considered, the Court find[s] the guilt of the accused WILSON SUAN y
JOLONGON beyond reasonable doubt of the crime charged against him in the information and
hereby sentences him to suffer the penalty of imprisonment from 12 years and 1 day to 20 years and
to pay a fine of ₱100,000.00.
The shabu taken from him is hereby confiscated in favor of the government.
SO ORDERED.15
Appellant appealed the trial court’s Decision to the CA. Finding no error
committed by the trial court in convicting appellant of the offense of illegal possession of dangerous
drug, the CA affirmed the trial court’s decision.
Undaunted, appellant seeks a final recourse before this Court via the instant appeal.
In the Resolution dated November 24, 2008, we accepted the appeal and notified the parties that
they may file their respective supplemental briefs if they so desire. However, both parties manifested
that they are adopting their respective briefs earlier submitted with the CA.
In support of his prayer for a reversal of the verdict of his conviction, appellant contends: a) that the
testimonies of the police operatives contained material inconsistencies and contradictions as to (i)
whether a surveillance was made prior to the buy-bust operation, (ii) whether there was marked
money used in the operation, and, (iii) the amount of the shabu sold; b) there was no proper
identification of the illegal drug; c) the prosecution witnesses failed to testify on matters regarding the
possession of the illegal drug; and, d) the defense of alibi was not properly appreciated.
Our Ruling
The appeal is meritorious.
The inconsistencies in the testimonies of the police operatives as regards prior surveillance and use
of marked money are immaterial.
While it may be conceded that there are a number of inconsistencies in the testimonies of the
prosecution’s principal witnesses as alluded to above, they are not, in our view, substantial enough
to impair the veracity of the prosecution’s evidence that a buy-bust operation resulting in the arrest of
appellant, was indeed conducted. The maxim falsus in unus, falsus in omnibus does not lay down a
categorical test of credibility. While witnesses may differ in their recollection of an incident, it does
not necessarily follow from their disagreements that both or all of them are not credible and their
testimonies completely discarded as worthless.
A prior surveillance much less a lengthy one, is not necessary during an entrapment as in the case
at bench. To be sure, there is no textbook method of conducting buy-bust operations. The Court has
left to the discretion of police authorities the selection of effective means to apprehend drug dealers.
In this case, the buy-bust operation was set up precisely to test the veracity of the informant’s tip and
to arrest the malefactor if the report proved to be true. Thus in one case 16 we emphasized our refusal
to establish on a priori basis what detailed acts the police authorities might credibly undertake in
their entrapment operations.
The doubt cast by the appellant on whether marked money was used in the operation did not in any
way shatter the factuality of the transaction. Neither law nor jurisprudence requires the presentation
of any of the money used in a buy-bust operation.17 Much less is it required that the money be
marked. In fact, not even the absence or non-presentation of the marked money would weaken the
evidence for the prosecution.18 The elements necessary to show that the crime had indeed been
committed are proof that the illicit transaction took place coupled with the presentation in court of
the corpus delicti or the illicit drug.19
It is a fundamental rule that the trial court’s findings that are factual in nature and that involve
credibility are accorded respect when no glaring errors; gross misapprehension of facts; or
speculative, arbitrary and unsupported conclusions can be gathered from such findings. 20 The rule
finds an even more stringent application where said findings are sustained by the CA. 21 However,
this rule will not apply in this case. As will be discussed shortly, the courts below overlooked two
significant and substantial facts which if considered, as we do now consider, will affect the outcome
of the case.
The prosecution failed to establish beyond reasonable doubt the identity of the substance recovered
from the appellant
The main issue in the case at bench is whether the prosecution witnesses were able to properly
identify the dangerous drug taken from appellant. For while the drug may be admitted in evidence it
does not necessarily follow that the same should be given evidentiary weight. It must be stressed
that admissibility should not be equated with its probative value in proving the corpus delicti.
Appellant submits that the shabu alleged to have been sold was not properly identified by the police
officers thus rendering doubtful and open to suspicion if the shabu submitted for examination is
indeed the same substance sold by him.
We agree. As we have stated at the outset, the prosecution miserably failed to establish the identity
of the substance allegedly recovered from the appellant. Records show that while the police officers
were able to prove the factuality of the buy-bust operation, the prosecution dismally failed to prove
the identity of the substance taken from appellant.
The Certificate of Inventory22 prepared by PO2 Labasano merely stated that a sachet of a substance
weighing 0.01 gram was seized from the appellant. PO2 Labasano made no mention that he placed
some markings on the sachet for purposes of future identification. Thus:
TO WHOM IT MAY CONCERN:
THIS IS TO CERTIFY that an inventory was conducted in connection with the following operation:
Persons Arrested : Wilson Suan Y Jolongon
Date/Time of Arrest : 3:30 AM of 12 August 2003
Place of Arrest : Purok 4, Barangay Saray, Iligan City
This is to certify further that the following items were seized during the said operation:
One [1] sachet of suspected shabu weighing more or less .01 gram
Two [2] pieces Php 50.00 peso bill – marked money
x x x x (Emphasis supplied)
However, we find it rather odd that in the Request for Laboratory Examination/Urine Test 23 prepared
by Police Chief Inspector Jesus Atchico Rebua and addressed to the Provincial Chief of Police,
Lanao del Norte, the item allegedly seized from the appellant was already marked as Exhibit "A".
Thus:
xxxx
2. Request the conduct of laboratory examination of evidence to determine the presence of

Dangerous Drugs or controlled precursors and essential chemicals:
EXHIBITS
Exh. "A" one small heat-sealed, plastic transparent sachet containing white crystalline
granules suspected to be shabu weighing more or less 0.01 grams marked as Exh. "A"
placed in a stapled transparent plastic bag.
Still, in the Memorandum24 for the Regional Chief of the Philippine National Police (PNP) Crime
Laboratory Office prepared by the Provincial Chief, the item subject of the request for laboratory
examination was already referred to as with markings. Thus:
xxxx
2. In connection with the above reference, request conduct laboratory examination on the specimen
described below to determine the presence of dangerous drugs.
EXH. A – One (1) small heat-sealed transparent plastic sachet marked as "Exhibit A"
containing white crystalline substance suspected to be SHABU placed inside a big staple-
sealed transparent plastic pack with markings.
Thus, when the Certificate of Inventory was prepared by P02 Labasano, the item allegedly seized
from the appellant bore no markings. However, in the Request for Laboratory Examination/Urine
Test prepared by the Provincial Chief of Police, the item being subjected for laboratory examination
was already referred to as Exhibit A. Next, in the Memorandum of the Regional Chief of PNP, the
item that was referred to the Forensic Chemist already had other markings. From the foregoing,
there is already doubt as to the identity of the substance being subjected for laboratory examination.
At this time, we are no longer sure whether the item allegedly seized by PO2 Labasano from the
appellant was the same item referred to by the Provincial Chief and then the Regional Chief of PNP
to the Forensic Chemist for laboratory examination.
Worse, in the Certificate of Inventory prepared by PO2 Labasano, the Memorandum prepared by the
Provincial Chief, and the transmittal letter prepared by the Regional Chief, the substance supposedly
weighed 0.01 gram. However, in the Chemistry Report No. D-500-200325 prepared by Forensic
Chemist Carvajal, the substance was indicated as weighing 0.1 gram. Thus:
xxxx
SPECIMEN SUBMITTED:
A = One (1) heat-sealed transparent plastic sachet with markings EXHIBIT A containing 0.1 gram of
white crystalline substance, placed in a transparent plastic bag with markings EXHIBIT A.
xxxx
Indeed there is absolutely nothing in the evidence on record that tends to show identification of the
drug. For sure, the difference particularly in the weight of the substance is fatal to the case of the
prosecution.
Sale or possession of a dangerous drug can never be proven without seizure and identification of
the prohibited drug. In People v. Magat,26 we held that the existence of dangerous drugs is a
condition sine qua non for conviction for the illegal sale and possession of dangerous drugs, it being
the very corpus delicti of the crime. In prosecutions involving narcotics, the narcotic substance itself
constitutes the corpus delicti of the offense and the fact of its existence is vital to sustain a judgment
of conviction beyond reasonable doubt. Of paramount importance therefore in these cases is that
the identity of the dangerous drug be likewise established beyond reasonable doubt. 27
It is lamentable that the trial court and even the appellate court overlooked the significance of the
absence of this glaring detail in the records of the case but instead focused their deliberation on the
warrantless arrest of appellant in arriving at their conclusions.
The prosecution failed to establish the unbroken chain of custody of the confiscated substance.
Not only did the prosecution fail to identify the substance that was allegedly seized from the
appellant; it also failed to establish that the chain of custody of the substance was unbroken.
In his direct testimony, PO2 Labasano testified that:
Q. After arresting the accused, what transpired thereafter?
A. We brought him in our office and we filed a case against him.
Q. By the way, who brought the sachet which you bought from the accused to the crime
laboratory for examination?
A. We, I with Gundol.
Q. And who received that sachet?
A. A certain person who was on duty at that time but I do not know him. 28
In contrast, PO2 Labasano stated during his cross-examination that he entrusted the
substance recovered from the appellant to their team leader. Thus:
Q. Who was in possession of that sachet of shabu?

A. When they approached the accused, I saw the accused taking the sachet of shabu from
his pocket and putting it on his hand and I did not see what had happened already.
Q. You did not see who received the sachet of shabu coming from the suspect?
A. I was able to take of that but it was really Gundol who bought that shabu from him.
Q. And who recovered the marked money from the accused?
A. It was Gundol also.
Q. So, it was PO1 Gundol who was in possession of this marked money and one (1) sachet
of shabu from the time the suspect was arrested, is it not?
A. Yes, sir.
Q. And what did you do with that marked money [or] that alleged shabu being confiscated
from the accused?
A. We turned it over to our team leader.
Q. Are you referring to SPO2 Cañonero?
A. Yes, sir.29
The foregoing testimonies of PO2 Labasano are contradictory. At first, he testified that the substance
recovered from the appellant was delivered to the crime laboratory but he did not know who received
the same. On cross-examination, however, he claimed that the substance was delivered to their
team leader, SPO2 Cañonero.
Notably, the prosecution failed to put on the witness stand SPO2 Cañonero or the person from the
crime laboratory who allegedly received the substance. Consequently, there was a break in the
chain of custody because no mention is made as regards what happened to the substance from the
time SPO2 Cañonero received it to the time the transmittal letter was prepared by Police Chief
Inspector Jesus Atchico Rebua addressed to the Provincial Chief of Police, Lanao del Norte
requesting for laboratory examination/urine test. We do not know how or from whom Police Chief
Inspector Jesus Atchico Rebua received the substance. 1avvphi1
There is no dispute that in the Chemistry Report30 it was established that the object examined was
found positive for methamphetamine hydrochloride or shabu, a dangerous drug. While the Forensic
Chemist showed the contents of the sachet as the substance she examined and confirmed to
be shabu, nonetheless, it is not positively and convincingly clear from her testimony that what was
submitted for laboratory examination and later presented in court as evidence was the
same shabu actually recovered from the appellant. The Forensic Chemist did not testify at all as to
the identity of the person from whom she received the specimen for examination.
Verily, there is a break in the chain of custody of the seized substance. The standard operating
procedure on the seizure and custody of the drug as mandated in Section 21, Article II of RA 9165
and its Implementing Rules and Regulations was not complied with. As we observed, the chain of
custody of the drug from the time the same was turned over to the Team Leader, as testified by PO2
Labasano or the Records Custodian as related by PO1 Gondol, to the time of submission to the
crime laboratory was not clearly shown. There is no indication whether the Team Leader and the
Records Custodian were one and the same person. Neither was there reference to the person who
submitted it to the crime laboratory. The prosecution needs to establish that the Team Leader or
Records Custodian indeed submitted such particular drug to the crime laboratory for examination.
The failure on the part of the Team Leader or Records Custodian as the case may be, to testify on
what he did with the drug while he was in possession resulted in a break in the chain of custody of
the drug. There is obviously a missing link from the point when the drug was in his hands to the point
when the same was submitted for examination. The failure to establish the evidence’s chain of
custody is fatal to the prosecution’s case. Under no circumstance can we consider or even safely
assume that the integrity and evidentiary value of the drug was properly preserved by the
apprehending officers. There can be no crime of illegal possession of a prohibited drug when
nagging doubts persist on whether the item confiscated was the same specimen examined and
established to be the prohibited drug.31
Jurisprudence abounds with cases where deviation from the standard procedure in an anti-narcotics
operation produces doubts as to the identity and origin of the drug which inevitably results to the
acquittal of the accused. In People v. Mapa,32 we acquitted the appellant after the prosecution failed
to clarify whether the specimen submitted to the National Bureau of Investigation for laboratory
examination was the same one allegedly taken from the appellant. Also in People v. Dimuske,33 we
ruled that the failure to prove that the specimen of marijuana examined by the forensic chemist was
that seized from the accused was fatal to the prosecution’s case. The same holds true in People v.
Casimiro34 and in Zarraga v. People35 where the appellant was acquitted for failure of the prosecution
to establish the identity of the prohibited drug which constitutes the corpus delicti. Recently
in Catuiran v. People,36we acquitted the petitioner for failure of the prosecution witnesses to observe
the standard procedure regarding the authentication of the evidence.
In the light of the above disquisition, we find no further need to discuss the
other remaining argument regarding the propriety of appellant’s conviction for violation of Section 11,
Article II of RA 9165 when the evidence adduced and proved during the trial consists mainly of acts
pertaining to a sale of dangerous drugs under Section 5, Article II of the said law. From whatever
angle we look at it, whether it was a sale or merely possession of the dangerous drug, we arrive at
the same conclusion that the prosecution has not proven the indispensable element of corpus
delicti of the crime. To repeat, the existence of dangerous drugs is a condition sine qua non for
conviction for the illegal sale and possession of dangerous drugs, it being the very corpus delicti of
the crime.
Based on these findings and following our precedents in the afore-mentioned cases, we are
compelled to reverse the judgment of conviction in this case. Consequently, we need not pass upon
the merits of appellant’s defense of denial and frame-up. It is a well-entrenched rule in criminal law
that the conviction of an accused must be based on the strength of the prosecution’s evidence and
not on the weakness or absence of evidence of the defense.37
WHEREFORE, on ground of reasonable doubt, the instant appeal is GRANTED and the challenged
Decision of the Court of Appeals in CA-G.R. CR No. 00054 affirming the Decision of the Regional
Trial Court of Lanao del Norte, Branch 01, in Criminal Case No. 10315 is hereby REVERSED.
Appellant WILSON SUAN y JOLONGON is hereby ACQUITTED and ordered released from
detention unless his further confinement is warranted for some other lawful cause or ground.
SO ORDEREDp.
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSE P. PEREZ
Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1
Constitution, Article III, Section 14(12).
2
People v. Simbahon, 449 Phil. 74, 83 (2003); Corino v. People, G.R. No. 178757, March
13, 2009.
3
Malillin v. People, G.R. No. 172953, April 30, 2008, 553 SCRA 619, 632.
4
CA rollo, pp. 129-145; penned by Associate Justice Romulo V. Borja and concurred in by
Associate Justices Mario V. Lopez and Elihu Y. Ybañez.
5
Records, pp. 62-67; penned by Judge Mamindiara P. Mangotara.
6
Id. at 18.
7
Id. at 20.
8
Id. at 21.
9
Spelled as Gundol in the TSN.
10
Sometimes spelled as Carbajal in the records.
11
Exhibit "A" and "A-1", records, p. 53.
12
Exhibit "D", id. at 56.
13
Exhibit "E", id. at 56 (posterior part).
14
Exhibit "F", id. at 57.
15
Id. at 67.
16
People v. Gonzales, 430 Phil. 504, 514 (2002).
17
People v. Fabro, 382 Phil. 166, 177 (2000).
18
People v. Simbulan, G.R. No. 100754, October 13, 1992, 214 SCRA 537, 546.
19
People v. Chang, 382 Phil. 669, 684 (2000).
20
People v. Julian-Fernandez, 423 Phil. 895, 911-912 (2001).
21
People v. Cabugatan, G.R. No. 172019, February 12, 2007, 515 SCRA 537, 547.
22
Exhibit "2", records, p. 6.
23
Exhibit "B", id. at 54.
24
Supra note 12.
25
Supra note 14.
26
27
Catuiran v. People, G.R. No. 175647, May 8, 2009, 587 SCRA 567.
28
TSN, April 12, 2004, pp. 5-6.
29
Id. at 14-15.
30
Supra note 14.
31
Valdez v. People, G.R. No. 170180, November 23, 2007, 538 SCRA 611, 628-629.
32
G.R. No. 91014, March 31, 1993, 220 SCRA 670, 679.
33
G.R. No. 108453, July 11, 1994, 234 SCRA 51, 61.
34
432 Phil. 966, 979 (2002).
35
G.R. No. 162064, March 14, 2006, 484 SCRA 639, 647.
36
G.R. No. 175647, May 8, 2009, 587 SCRA 567.
37
People v. Teves, 408 Phil. 82, 102 (2001).

Supreme Court
Manila
SECOND DIVISION
TIGER CONSTRUCTION AND G.R. No. 164141

DEVELOPMENT CORPORATION,
Petitioner,
- versus -
REYNALDO ABAY, RODOLFO

ARCENAL, ROLANDO ARCENAL,
PEDRO BALANA, JESUS DEL
AYRE, ARNEL EBALE, ARNEL
FRAGA, ANGEL MARAO,
METHODEO SOTERIO, MANUEL
TAROMA, PIO ZETA, ISAIAS
JAMILIANO, ARNALDO RIVERO,
NOEL JAMILIANO JOEL ARTITA,
DANIEL DECENA, ZENAIDA
LAZALA, RONNIE RIVERO,
RAMON ABAY, JOSE ABAY,
HECTOR ABAY, EDISON ABAIS,
DIOGENES ARTITA, FLORENTINO
B. ARTITA, ROLANDO ANTONIO,
JERRY ARAA, MAXIMENO M.
BARRA, ARMANDO BAJAMUNDI,
DANIEL BARRION, RENANTE Present:
BOALOY, ROLANDO BONOAN,
FRANCISCO BAUTISTA, NOEL CARPIO, J., Chairperson,
BENAUAN, EDGARDO BOALOY, BRION,
REYNALDO BONOAN, DIONISIO DEL CASTILLO,
BOSQUILLOS, ROGELIO B. ABAD, and
COPINO, JR., RONNIE DELOS PEREZ, JJ.
SANTOS, FELIX DE SILVA,
REYNALDO LASALA, LARRY
LEVANTINO, DOMINGO LOLINO,
ROSALIO LOLINO, PERFECTO
MACARIO, ROLANDO MALLANTA,
ANASTACIO MARAVILLA,
ROSARIO MARBELLA, GILBERTO
MATUBIS, RODEL MORILLO,
LORENZO PAGLINAWAN, JOSE
PANES, RUBEN PANES, MATEO
PANTELA, SANTOS SALIRE,
GERMAN TALAGTAG, HILARIO
TONAMOR, JESUS TAMAYO, JOSE
TRANQUILO, EDISON VATERO, and Promulgated:
ROBERTO VERGARA,
Respondents. February 26, 2010
x-------------------------------------------------------------------x
DECISION
DEL CASTILLO, J.:

While the general rule is that any decision rendered without jurisdiction is a total nullity
and may be struck down at any time, the party that asserts it must be in good faith and
not evidently availing thereof simply to thwart the execution of an award that has long
become final and executory.
This Petition for Review on Certiorari[1] filed by petitioner Tiger Construction and
Development Corporation (TCDC) assails the February 27, 2004[2] Resolution of the
Court of Appeals (CA) in CA-G.R. SP No. 82344 which dismissed its petition
for certiorari as well as the June 29, 2004[3] Resolution of the same court which denied
its motion for reconsideration. The June 29, 2004 Resolution disposed as follows:
This petition was dismissed on February 27, 2004 as follows:
Considering that the Certification against forum-shopping is signed by

the manager of petitioner-corporation, unaccompanied by proof that he is
authorized to represent the latter in this case, the Court resolves to DISMISS
the petition.
In its Motion for Reconsideration to the Resolution, petitioner attached Annex A which is the certification of
the Board Resolution of TCDC authorizing Mr. Robert Kho to represent the corporation in filing the petition
in this case.
Unfortunately, the Board met for the grant of such authority only on February 24, 2004 or four (4) days
after the petition was filed on February 20, 2004. In other words, the Board Resolution was a mere
afterthought and thus will not serve to cure the fatal omission.
WHEREFORE, the Motion for Reconsideration is DENIED for lack of merit.
SO ORDERED.[4]
Factual Antecedents
On the basis of a complaint filed by respondents Reynaldo Abay and fifty-nine (59)
others before the Regional Office of the Department of Labor and Employment (DOLE),
an inspection was conducted by DOLE officials at the premises of petitioner
TCDC. Several labor standard violations were noted, such as deficiencies in record
keeping, non-compliance with various wage orders, non-payment of holiday pay, and
underpayment of 13th month pay. The case was then set for summary hearing.
However, before the hearing could take place, the Director of Regional Office No. V, Ma.
Glenda A. Manalo (Director Manalo), issued an Order on July 25, 2002, which reads:
Consistent with Article 129 of the Labor Code of the Philippines in relation to Article 217 of the
same Code, this instant case should be referred back to the National Labor Relations Commission (NLRC)
Sub-Arbitration Branch V, Naga City, on the ground that the aggregate money claim of each worker
exceeds the jurisdictional amount of this Office [which] is (sic) Five Thousand Pesos Only (P5,000.00).
WHEREFORE, in view of the foregoing, this case falls under the original and exclusive jurisdiction
of the National Labor Relations Commission as provided under Article 217 of the Labor Code of
the Philippines.[5]
Before the NLRC could take any action, DOLE Secretary Patricia A. Sto. Tomas (Secretary
Sto. Tomas), in an apparent reversal of Director Manalos endorsement, issued another
inspection authority on August 2, 2002 in the same case. Pursuant to such authority,
DOLE officials conducted another investigation of petitioners premises and the same
violations were discovered.
The DOLE officials issued a Notice of Inspection Results to petitioner directing it to

rectify the violations within five days from notice. For failure to comply with the
directive, the case was set for summary hearing on August 19, 2002. On even date,
petitioner allegedly questioned the inspectors findings and argued that the proceedings
before the regional office had been rendered moot by the issuance of the July 25,
2002 Order endorsing the case to the NLRC. According to petitioner, this July 25, 2002
Order was tantamount to a dismissal on the ground of lack of jurisdiction, which
dismissal had attained finality; hence, all proceedings before the DOLE regional office
after July 25, 2002 were null and void for want of jurisdiction.
On September 30, 2002, Director Manalo issued an Order directing TCDC to
pay P2,123,235.90 to its employees representing underpayment of salaries, 13th month
pay, and underpayment of service incentive leave pay and regular holiday pay. TCDC
filed a Motion for Reconsideration on October 17, 2002 and a Supplemental Pleading to
the Motion for Reconsideration on November 21, 2002, reiterating the argument that
Director Manalo had lost jurisdiction over the matter.
Apparently convinced by petitioners arguments, Director Manalo again endorsed the

case to the NLRC Regional Arbitration Branch V (Legaspi City). On January 27, 2003, the
NLRC returned the entire records of the case to Director Manalo on the ground that the
NLRC does not have jurisdiction over the complaint.
Having the case in her office once more, Director Manalo finally issued an Order
dated January 29, 2003 denying petitioners motion for reconsideration for lack of merit.
Since TCDC did not interpose an appeal within the prescribed period, Director Manalo
issued forthwith a Writ of Execution on February 12, 2003.
On May 14, 2003, while the sheriff was in the process of enforcing the Writ of
Execution, and more than three months after the denial of its motion for
reconsideration, TCDC filed an admittedly belated appeal with the DOLE
Secretary. There it reiterated its argument that, subsequent to the July 25, 2002 Order,
all of Director Manalos actions concerning the case are null and void for having been
issued without jurisdiction.
Acting on the ill-timed appeal, Secretary Sto. Tomas issued an Order[6] dated January 19,
2004 dismissing petitioners appeal for lack of merit. Citing Guico v. Quisumbing,
[7]
Secretary Sto. Tomas held that jurisdiction over the case properly belongs with the
regional director; hence, Director Manalos endorsement to the NLRC was a clear
error. Such mistakes of its agents cannot bind the State, thus Director Manalo was not
prevented from continuing to exercise jurisdiction over the case.
Petitioner then filed a petition for certiorari[8] before the CA but the petition was
dismissed for failure to certify against non-forum shopping. Petitioners motion for
reconsideration was likewise denied because the board resolution submitted was found
to be a mere after-thought.
Petitioner thus filed the instant petition, which we initially denied on September 15,
2004[9] on the ground that the petition did not show any reversible error in the assailed
Resolutions of the CA. Undaunted, TCDC filed a Motion for Reconsideration[10] insisting
that the CA erred in dismissing its petition for certiorari on a mere
technicality. Petitioner argues that the strict application of the rule on verification and
certification of non-forum shopping will result in a patent denial of substantial justice.
Since respondents did not[11] file a comment on the motion for reconsideration, we
resolved[12] to grant the same and to reinstate the petition.[13]
Issue
The issue in the case is whether petitioner can still assail the January 29, 2003 Order of
Director Manalo allegedly on the ground of lack of jurisdiction, after said Order has
attained finality and is already in the execution stage.
Our Ruling

Petitioner admits that it failed to appeal the January 29, 2003 Order within the period
prescribed by law. It likewise admits that the case was already in the execution process
when it resorted to a belated appeal to the DOLE Secretary. Petitioner, however,
excuses itself from the effects of the finality of the Order by arguing that it was allegedly
issued without jurisdiction and may be assailed at any time.
While it is true that orders issued without jurisdiction are considered null and void and,
as a general rule, may be assailed at any time, the fact of the matter is that in this
case, Director Manalo acted within her jurisdiction. Under Article
128 (b) of the Labor Code,[14] as amended by Republic Act (RA) No. 7730,[15] the DOLE
Secretary and her representatives, the regional directors, have jurisdiction over labor
standards violations based on findings made in the course of inspection of an employers
premises. The said jurisdiction is not affected by the amount of claim involved, as RA
7730 had effectively removed the jurisdictional limitations found in Articles 129 and 217
of the Labor Code insofar as inspection cases, pursuant to the visitorial and
enforcement powers of the DOLE Secretary, are concerned. [16] The last sentence of
Article 128(b) of the Labor Code recognizes an exception[17] to the jurisdiction of the
DOLE Secretary and her representatives, but such exception is neither an issue nor
applicable here.
Director Manalos initial endorsement of the case to the NLRC, on the mistaken opinion
that the claim was within the latters jurisdiction, did not oust or deprive her of
jurisdiction over the case. She therefore retained the jurisdiction to decide the case
when it was eventually returned to her office by the DOLE Secretary. Jurisdiction or
authority to try a certain case is conferred by law and not by the interested parties,
much less by one of them, and should be exercised precisely by the person in authority
or body in whose hands it has been placed by the law.[18]
We also cannot accept petitioners theory that Director Manalos initial endorsement of the
case to the NLRC served as a dismissal of the case, which prevented her from
subsequently assuming jurisdiction over the same. The said endorsement was evidently
not meant as a final disposition of the case; it was a mere referral to another agency, the
NLRC, on the mistaken belief that jurisdiction was lodged with the latter. It cannot
preclude the regional director from subsequently deciding the case after the mistake was
rectified and the case was returned to her by the DOLE Secretary, particularly since it
was a labor case where procedural lapses may be disregarded in the interest of substantial
justice.[19]
Procedural due process as understood in administrative proceedings follows a more

flexible standard as long as the proceedings were undertaken in an atmosphere of fairness
and justice.[20] Although Director Manalos endorsement of the complaint to the NLRC
turned out to be ill-advised (because the regional director actually had jurisdiction), we
note that no right of the parties was prejudiced by such action. Petitioner was properly
investigated, received a Notice of Inspection Results, participated fully in the summary
hearings, filed a Motion for Reconsideration, and even a Supplemental Pleading to the
Motion for Reconsideration.
There is also reason to doubt the good faith of petitioner in raising the alleged lack of
jurisdiction. If, in all honesty and earnestness, petitioner believed that Director Manalo
was acting without jurisdiction, it could have filed a petition for certiorari under Rule
65 within the proper period prescribed, which is 60 days from notice of the order.[21] Its
failure to do so, without any explanation for such failure, belies its good faith. In such
circumstances, it becomes apparent that petitioner is merely using the alleged lack of
jurisdiction in a belated attempt to reverse or modify an order or judgment that had
already become final and executory. This cannot be done. In Estoesta, Sr. v. Court of
Appeals,[22] cited by petitioner itself (albeit out of context), we ruled that when a
decision has already become final and executory, an appellate court loses jurisdiction to
entertain an appeal much less to alter, modify or reverse the final and executory
judgment. Thus:
Well-settled is the rule that perfection of an appeal in the manner and within the reglementary period
allowed by law is not only mandatory but also jurisdictional. Thus, if no appeal is perfected on time, the
decision becomes final and executory by operation of law after the lapse of the reglementary period of
appeal. Being final and executory the decision in question can no longer be altered, modified, or reversed
by the trial court nor by the appellate court. Accordingly, the prevailing party is entitled as a matter of right
to a writ of execution the issuance of which is a ministerial duty compelled by mandamus.[23]
It is actually within this context that the Court ruled that the appellate court, in
reviewing a judgment that is already final and executory, acts without jurisdiction, and
its decision is thus void and can be assailed at any time.
In view of our ruling above that the January 29, 2003 Order was rendered with
jurisdiction and can no longer be questioned (as it is final and executory), we can no
longer entertain petitioners half-hearted and unsubstantiated arguments that the said
Order was allegedly based on erroneous computation and included non-
employees. Likewise, we find no more need to address petitioners contention that the
CA erred in dismissing its petition on the ground of its belated compliance with the
requirement of certification against forum-shopping.
WHEREFORE, the instant petition is DENIED. The assailed February 27, 2004
Resolution as well as the June 29, 2004 Resolution of the Court of Appeals in CA-G.R.
SP No. 82344 are AFFIRMED insofar as it dismisses Tiger Construction and
Development Corporations petition and motion for reconsideration. Costs against
petitioner.
SO ORDERED.

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
JOSE P. PEREZ
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before
the case was assigned to the writer of the opinion of the Court's Division.
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson's
attestation, it is hereby certified that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the writer of the opinion of the
Courts Division.
REYNATO S. PUNO
Chief Justice
[1]
Rollo, pp. 9-26.
[2]
Id. at 28; penned by Associate Justice Romeo A. Brawner and concurred in by Associate Justices Rebecca De Guia-Salvador
and Jose C. Reyes, Jr.
[3]
Id. at 30.
[4]
Assailed Resolution, id. at 30.
[5]
Id. at 12.
[6]
[7]
359 Phil. 197, 207 (1998).
[8]
CA rollo, pp. 1-18.
[9]
Rollo, p. 76.
[10]
Id. at 77-80.
[11]
Id. at 81, 98.
[12]
Id. at 102-103.
[13]
In light of the parties failure to file their respective memoranda within the fixed periods, the Court resolved on November 12,
2008 (id. at 115) to deem waived the filing of memoranda for both parties.
[14]
Article 128 of the Labor Code provides:
Article 128. VISITORIAL AND ENFORCEMENT POWER. x x x
(b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of
employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the
power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation
based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of
inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for
the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and
enforcement officer and raises issues supported by documentary proofs which were not considered in the course of
inspection.
[15]
Entitled AN ACT FURTHER STRENGTHENING THE VISITORIAL AND ENFORCEMENT POWERS OF THE
SECRETARY OF LABOR AND EMPLOYMENT, AMENDING FOR THE PURPOSE ARTICLE 128 OF P.D. 442,
AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES, dated June 2, 1994.
[16]
Ex-Bataan Veterans Security Agency, Inc. v. Laguesma, G.R. No. 152396, November 20, 2007, 537 SCRA 651, 659; V.L.
Enterprises v. Court of Appeals, G.R. No. 167512, March 12, 2007, 518 SCRA 174, 175; EJR Crafts Corporation v. Court
of Appeals, G.R. No. 154101, March 10, 2006, 484 SCRA 340, 350; Guico v. Quisumbing, supra note 7.
[17]
As explained in Ex-Bataan Veterans Security Agency, Inc. v. Laguesma, supra note 16, if the labor standards case is covered
by the exception clause in Article 128(b) of the Labor Code, then the Regional Director will have to endorse the case to the
appropriate Arbitration Branch of the NLRC. In order to divest the Regional Director or his representatives of jurisdiction,
the following elements must be present: (a) that the employer contests the findings of the labor regulations officer and raises
issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such
matters are not verifiable in the normal course of inspection. The rules also provide that the employer shall raise such
objections during the hearing of the case or at any time after receipt of the notice of inspection results.
[18]
Tolentino v. Quirino, 64 Phil. 873, 874 (1937).
[19]
Pamplona Plantation Company, Inc. v. Tinghil, 491 Phil. 15, 30 (2005); Ranara v. National Labor Relations Commission,
G.R. No. 100969, August 14, 1992, 212 SCRA 631, 634.
[20]
T.H. Valderrama and Sons, Inc. v. Drilon, G.R. No. 78212, January 22, 1990, 181 SCRA 308.
[21]
See National Federation of Labor v. Hon. Laguesma, 364 Phil. 405, 411 (1999).
[22]
G.R. No. 74817, November 8, 1989, 179 SCRA 203, 211-212.
[23]
Id.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 167415 February 26, 2010
ATTY. MANGONTAWAR M. GUBAT, Petitioner,

vs.
NATIONAL POWER CORPORATION, Respondent.
DECISION
DEL CASTILLO, J.:
Truly, there is no doubt that the rights of others cannot be prejudiced by private agreements.
However, before this Court can act and decide to protect the one apparently prejudiced, we should
remember what Aesop taught in one of his fables: Every truth has two sides; it is well to look at both,
before we commit ourselves to either.
A lawyer asserts his right to his contingent fees after his clients, allegedly behind his back, had
entered into an out-of-court settlement with the National Power Corporation (NPC). The trial court
granted his claim by way of summary judgment. However, this was reversed by the Court of Appeals
(CA) because the counsel was allegedly enforcing a decision that was already vacated. In this
petition, petitioner Atty. Mangontawar M. Gubat (Atty. Gubat) attempts to persuade us that the
compensation due him is independent of the vacated decision, his entitlement thereto being based
on another reason: the bad faith of his clients and of the respondent NPC.
Factual Antecedents
In August 1990, plaintiffs Ala Mambuay, Norma Maba, and Acur Macarampat separately filed civil
suits for damages against the NPC before the Regional Trial Court of Lanao del Sur in Marawi City
(RTC), respectively docketed as Civil Case Nos. 294-90, 295-90, and 296-90. In the said complaint,
plaintiffs were represented by Atty. Linang Mandangan (Atty. Mandangan) and petitioner herein,
whose services were engaged at an agreed attorney’s fees of ₱30,000.00 for each case and
₱600.00 for every appearance. Petitioner was the one who signed the complaints on behalf of
himself and Atty. Mandangan.1
During the course of the proceedings, the three complaints were consolidated because the plaintiffs’
causes of action are similar. They all arose from NPC’s refusal to pay the amounts demanded by the
plaintiffs for the cost of the improvements on their respective lands which were destroyed when the
NPC constructed the Marawi-Malabang Transmission Line.
On the day of the initial hearing on the merits, NPC and its counsel failed to appear. Consequently,
respondent was declared in default. Despite the plea of NPC for the lifting of the default order, the
RTC of Marawi City, Branch 8, rendered its Decision2 on April 24, 1991, the dispositive portion of
which provides:
PREMISES CONSIDERED, judgment is hereby rendered in favor of the herein plaintiffs and against
the defendant National Power Corporation as represented by its President Ernesto Aboitiz, P.M.
Durias and Rodrigo P. Falcon, ordering the latter jointly and severally:
(1) In Civil Case No. 204-90 to pay plaintiff Ala Mambuay the sum of ₱103,000.00
representing the value of the improvements and the occupied portion of the land, ₱32,000.00
as attorney’s fees, ₱20,000.00 as moral and/or exemplary damages, ₱50,000.00 as actual
damages and the costs;
(2) In Civil Case No. 295-90 to pay plaintiff Norma Maba represented by Capt. Ali B. Hadji Ali
the sum of ₱146,700.00 representing the value of the improvements and the occupied
portion of the land, ₱32,000.00 as attorney’s fees, P20,000.00 as moral and/or exemplary
damages, ₱50,000.00 as actual damages and the costs;
(3) In Civil Case No. 296-90 to pay plaintiff Acur Macarampat the sum of ₱94,100.00
representing the value of the improvements and the occupied portion of the land, ₱32,000.00
as attorney’s fees, ₱20,000.00 as moral and/or exemplary damages, ₱50,000.00 as actual
damages and the costs.3
NPC appealed to the CA which was docketed as CA-G.R. CV No. 33000. During the pendency of
the appeal, Atty. Gubat filed an Entry and Notice of Charging Lien 4 to impose his attorney’s lien of
₱30,000.00 and appearance fees of ₱2,000.00 on each of the three civil cases he handled, totalling
₱96,000.00.
On August 19, 1992, NPC moved to dismiss its appeal5 alleging that the parties had arrived at a
settlement. Attached to the motion were acknowledgment receipts6 dated April 2, 1992 signed by
plaintiffs Acur Macarampat, Ala Mambuay, and Norma Maba, who received ₱90,060.00,
₱90,000.00, and ₱90,050.00 respectively, in full satisfaction of their claims against the NPC. The
motion stated that copies were furnished to Atty. Mandangan and herein petitioner,
although it was only Atty. Mandangan’s signature which appeared therein. 7
On January 24, 1996, the CA rendered its Decision8 disposing thus:
WHEREFORE, the Order of Default dated December 11, 1990; the Order denying the Motion for
Reconsideration to Lift Order of Default dated January 25, 1991; and the Decision dated April 24,
1991, are hereby ANNULLED and SET ASIDE and the records of Civil Case Nos. 294-90, 295-90
and 296-90 are hereby ordered remanded to the court of origin for new trial. 9
After the cases were remanded to the RTC, petitioner filed a Motion for Partial Summary
Judgment10 on his attorney’s fees. He claimed that the plaintiffs and the NPC deliberately did not
inform him about the execution of the compromise agreement, and that said parties connived with
each other in entering into the compromise agreement in order to unjustly deprive him of his
attorney’s fees. Furthermore, he alleged:
xxxx
12. That, in view of such settlement, there are no more genuine issues between the parties
in the above-entitled cases except as to the attorney’s fees; As such, this Honorable Court
may validly render a partial summary judgment on the claim for attorney’s fees; and
13. That the undersigned counsel hereby MOVES for a partial summary judgment on his
lawful attorney’s fees based on the pleadings and documents on file with the records of this
case.11
xxxx
Petitioner thus prayed that a partial summary judgment be rendered on his attorney’s fess and that
NPC be ordered to pay him directly his lawful attorney’s fees of ₱32,000.00 in each of the above
cases, for a total of ₱96,000.00.
NPC opposed the motion for partial summary of judgment. It alleged that a client may compromise a
suit without the intervention of the lawyer and that petitioner’s claim for attorney’s fees should be
made against the plaintiffs. NPC likewise claimed that it settled the case in good faith and that
plaintiffs were paid in full satisfaction of their claims which included attorney’s fees.
On March 15, 2000, the trial court issued an Order12 granting petitioner’s motion for summary
judgment. It found that the parties to the compromise agreement connived to petitioner’s prejudice
which amounts to a violation of the provisions of the Civil Code on Human Relations. 13 It ruled that:
xxxx
There is no dispute that the Compromise Agreement was executed during the pendency of these
cases with the Honorable Court of Appeals. Despite the knowledge of the defendant that the
services of the movant was on a contingent basis, defendant proceeded with the Compromise
Agreement without the knowledge of Atty. Gubat. The actuation of the defendant is fraudulently
designed to deprive the movant of his lawful attorney’s fees which was earlier determined and
awarded by the Court. Had defendant been in good faith in terminating these cases, Atty. Gubat
could have been easily contacted.
x x x x14
The dispositive portion of the Order reads:
WHEREFORE, premises considered, plaintiffs Ala Mambuay, Norma Maba and Acur Macarampat
as well as defendant National Power Corporation are hereby ordered to pay jointly and solidarily
Atty. Mangontawar M. Gubat the sum of ₱96,000.00.15
NPC filed a Motion for Reconsideration16 but the motion was denied by the
trial court in its June 27, 2000 Order.17 Thus, NPC filed a Petition for Certiorari18 before the CA
docketed as CA-G.R. SP No. 60722, imputing grave abuse of discretion on the court a quo for
granting petitioner’s Motion for Partial Summary Judgment. It prayed that the subject order be set
aside insofar as NPC is concerned.
NPC maintained that it acted in good faith in the execution of the compromise settlement. It likewise
averred that the lower court’s award of attorney’s fees amounting to ₱96,000.00 was clearly based
on the award of attorney’s fees in the April 24, 1991 Decision of the trial court which had already
been reversed and set aside by the CA in CA-G.R. CV No. 33000. Moreover, NPC contended that
petitioner cannot enforce his charging lien because it presupposes that he has secured a favorable
money judgment for his clients. At any rate, since petitioner is obviously pursuing the compensation
for the services he rendered to his clients, thus, recourse should only be against them, the payment
being their personal obligation and not of respondent. NPC further alleged that even assuming that
the subject attorney’s fees are those that fall under Article 2208 of the Civil Code 19 which is in the
concept of indemnity for damages to be paid to the winning party in a litigation, such fees belong to
the clients and not to the lawyer, and this form of damages has already been paid directly to the
plaintiffs.
On the other hand, petitioner claimed that he was not informed of the compromise agreement or
furnished a copy of NPC’s Motion to Dismiss Appeal. He alleged that the same was received only by
Atty. Mandangan who neither signed any of the pleadings nor appeared in any of the hearings
before the RTC. Petitioner clarified that his motion for a partial summary judgment was neither a
request for the revival of the vacated April 24, 1991 Decision nor an enforcement of the lien, but a
grant of his contingent fees by the trial court as indemnity for damages resulting from the fraudulent
act of NPC and of his clients who conspired to deprive him of the fees due him. He asserted that
NPC cannot claim good faith because it knew of the existence of his charging lien when it entered
into a compromise with the plaintiffs.
Petitioner also alleged that NPC’s remedy should have been an ordinary appeal and not a petition
for certiorari because the compromise agreement had settled the civil suits. Thus, when the trial
court granted the motion for partial summary judgment on his fees, it was a final disposition of the
entire case. He also argued that the issue of bad faith is factual which cannot be a subject of
a certiorari petition. He also insisted that NPC’s petition was defective for lack of a board resolution
authorizing Special Attorney Comie Doromal (Atty. Doromal) of the Office of the Solicitor General
(OSG) to sign on NPC’s behalf.
On September 9, 2002, the CA rendered the herein assailed Decision20 ruling that:
The reasoning of Atty. Gubat is a ‘crude palusot’ (a sneaky fallacious reasoning) for how can one
enforce a part of a decision which has been declared void and vacated. In legal contemplation, there
is no more decision because, precisely, the case was remanded to the court a quo for further
proceeding.
It was bad enough that Atty. Gubat tried to pull a fast [one] but it was [worse] that respondent Judge
fell for it resulting in a plainly erroneous resolution.
Like his predecessor Judge Adiong, Judge Macarambon committed basic errors unquestionably
rising to the level of grave abuse of discretion amounting to lack or excess of jurisdiction.
WHEREFORE, finding merit in the petition, the Court issues the writ of certiorari and strikes down as
void the Order dated March 15, 2000 granting Atty. Mangontawar M. Gubat’s Motion for Partial
Summary Judgment as well as the Order dated June 27, 2000 denying petitioner National Power
Corporation’s Motion for Reconsideration.
SO ORDERED.21
Petitioner filed a motion for reconsideration but the motion was denied by the CA in its January 19,
2005 Resolution,22 Hence, this petition.
Petitioner insists on the propriety of the trial court’s order of summary judgment on his attorney’s
fees. At the same time, he imputes grave abuse of discretion amounting to lack or excess of
jurisdiction on the CA for entertaining respondent’s Petition for Certiorari. He maintains that the
petition should have been dismissed outright for being the wrong mode of appeal.
Our Ruling
Petitioner’s resort to Rule 65 is not proper.
At the outset, the petition should have been dismissed outright because petitioner resorted to the
wrong mode of appeal by filing the instant petition for certiorari under Rule 65. Section 1 of the said
Rule explicitly provides that a petition for certiorari is available only when there is no appeal or any
plain, speedy, and adequate remedy in the ordinary course of law. In this case, the remedy of appeal
by way of a petition for review on certiorari under Rule 45 is not only available but also the proper
mode of appeal. For all intents and purposes, we find that petitioner filed the instant petition
for certiorari under Rule 65 as a substitute for a lost appeal. We note that petitioner received a copy
of the January 19, 2005 Resolution of the CA denying his motion for reconsideration on January 28,
2005. Under Section 2 of Rule 45, petitioner has 15 days from notice of the said Resolution within
which to file his petition for review on certiorari. As such, he should have filed his appeal on or
before February 12, 2005. However, records show that the petition was posted on March 1, 2005, or
long after the period to file the appeal has lapsed.
At any rate, even if we treat the instant petition as one filed under Rule 45, the same should still be
denied for failure on the part of the petitioner to show that the CA committed a reversible error
warranting the exercise of our discretionary appellate jurisdiction.
Petitioner’s resort to summary judgment is not proper; he is not entitled to an immediate relief as a
matter of law, for the existence of bad faith is a genuine issue of fact to be tried.
A summary judgment is allowed only if, after hearing, the court finds that except as to the amount of
damages, the pleadings, affidavits, depositions and admissions show no genuine issue as to any
material fact and that the movant is entitled to a judgment as a matter of law. 23 The purpose of a
summary judgment is to avoid drawn out litigations and useless delays because the facts appear
undisputed to the mind of the court. Such judgment is generally based on the facts proven
summarily by affidavits, depositions, pleadings, or admissions of the parties.24 For a full-blown trial to
be dispensed with, the party who moves for summary judgment has the burden of demonstrating
clearly the absence of genuine issues of fact, or that the issue posed is patently insubstantial as to
constitute a genuine issue.25 "Genuine issue" means an issue of fact which calls for the presentation
of evidence as distinguished from an issue which is fictitious or contrived. 26
Petitioner pleaded for a summary judgment on his fees on the claim that the parties intentionally did
not inform him of the settlement. He alleged that he never received a copy of NPC’s Motion to
Withdraw Appeal before the CA and that instead, it was another lawyer who was furnished and who
acknowledged receipt of the motion. When he confronted his clients, he was allegedly told that the
NPC deceived them into believing that what they received was only a partial payment exclusive of
the attorney’s fees. NPC contested these averments. It claimed good faith in the execution of the
compromise agreement. It stressed that the attorney’s fees were already deemed included in the
monetary consideration given to the plaintiffs for the compromise.
The above averments clearly pose factual issues which make the rendition of summary judgment not
proper. Bad faith imports a dishonest purpose or some moral obliquity and conscious doing of a
wrong. It is synonymous with fraud, in that it involves a design to mislead or deceive another. 27 The
trial court should have exercised prudence by requiring the presentation of evidence in a formal trial
to determine the veracity of the parties’ respective assertions. Whether NPC and the plaintiffs
connived and acted in bad faith is a question of fact and is evidentiary. Bad faith has to be
established by the claimant with clear and convincing evidence, and this necessitates an
examination of the evidence of all the parties. As certain facts pleaded were being contested by the
opposing parties, such would not warrant a rendition of summary judgment.
Moreover, the validity or the correct interpretation of the alleged compromise agreements is still in
issue in view of the diverse interpretations of the parties thereto. In fact, in the Decision of the CA
dated January 24, 1996, the appellate court ordered the case to be remanded to the trial court for
new trial, thereby ignoring completely NPC’s motion to dismiss appeal based on the alleged
compromise agreements it executed with the plaintiffs. Even in its assailed Decision of September 9,
2002, the CA did not rule on the validity of the alleged compromise agreements. This is only to be
expected in view of its earlier ruling dated January 24, 1996 which directed the remand of the case
to the court of origin for new trial.
Considering the above disquisition, there is still a factual issue on whether the NPC and the plaintiffs
had already validly entered into a compromise agreement. Clearly, the NPC and the plaintiffs have
diverse interpretations as regards the stipulations of the compromise agreement which must be
resolved. According to the NPC, the amounts it paid to the plaintiffs were in full satisfaction of their
claims. Plaintiffs claim otherwise. They insist that the amounts they received were exclusive of
attorney’s claim. They also assert that NPC undertook to pay the said attorney’s fees to herein
petitioner.
A client may enter into a compromise agreement without the intervention of the lawyer, but the terms
of the agreement should not deprive the counsel of his compensation for the professional services
he had rendered. If so, the compromise shall be subjected to said fees. If the client and the adverse
party who assented to the compromise are found to have intentionally deprived the lawyer of his
fees, the terms of the compromise, insofar as they prejudice the lawyer, will be set aside, making
both parties accountable to pay the lawyer’s fees. But in all cases, it is the client who is bound to pay
his lawyer for his legal representation.
A compromise is a contract whereby the parties, by making reciprocal concessions, avoid litigation
or put an end to one already commenced.28 It is a consensual contract, binding upon the
signatories/privies, and it has the effect of res judicata.29 This cannot however affect third persons
who are not parties to the agreement.30
Contrary to petitioner’s contention, a client has an undoubted right to settle a suit without the
intervention of his lawyer,31 for he is generally conceded to have the exclusive control over the
subject-matter of the litigation and may, at any time before judgment, if acting in good faith,
compromise, settle, and adjust his cause of action out of court without his attorney’s intervention,
knowledge, or consent, even though he has agreed with his attorney not to do so. 32 Hence, a claim
for attorney’s fees does not void the compromise agreement and is no obstacle to a court approval. 33
However, counsel is not without remedy. As the validity of a compromise agreement cannot be
prejudiced, so should not be the payment of a lawyer’s adequate and reasonable compensation for
his services should the suit end by reason of the settlement. The terms of the compromise
subscribed to by the client should not be such that will amount to an entire deprivation of his lawyer’s
fees, especially when the contract is on a contingent fee basis. In this sense, the compromise
settlement cannot bind the lawyer as a third party. A lawyer is as much entitled to judicial protection
against injustice or imposition of fraud on the part of his client as the client is against abuse on the
part of his counsel. The duty of the court is not only to ensure that a lawyer acts in a proper and
lawful manner, but also to see to it that a lawyer is paid his just fees. 34
Even if the compensation of a counsel is dependent only upon winning a case he himself secured for
his client, the subsequent withdrawal of the case on the client’s own volition should never completely
deprive counsel of any legitimate compensation for his professional services.35 In all cases, a client is
bound to pay his lawyer for his services. The determination of bad faith only becomes significant and
relevant if the adverse party will likewise be held liable in shouldering the attorney’s fees. 36
Petitioner’s compensation is a personal obligation of his clients who have benefited from his legal
services prior to their execution of the compromise agreement. This is strictly a contract between
them. NPC would only be made liable if it was shown that it has connived with the petitioner’s clients
or acted in bad faith in the execution of the compromise agreement for the purpose of depriving
petitioner of his lawful claims for attorney’s fees. In each case, NPC should be held solidarily liable
for the payment of the counsel’s compensation. However, as we have already discussed, petitioner’s
resort to summary judgment is not proper. Besides, it is interesting to note that petitioner is the only
one claiming for his attorney’s fees notwithstanding that plaintiffs’ counsels of record were petitioner
herein and Atty. Mandangan. Nevertheless, this is not at issue here. As we have previously
discussed, this is for the trial court to resolve.
The CA soundly exercised its discretion in resorting to a liberal application of the rules. There are no
vested right to technicalities.
1avvphi1
Concededly, the NPC may have pursued the wrong remedy when it filed a petition
for certiorari instead of an appeal since the ruling on attorney’s fees is already a ruling on the merits.
However, we find that the trial court gravely abused its discretion amounting to lack or excess of
jurisdiction when it ordered NPC solidarily liable with the plaintiffs for the payment of the attorney’s
fees. The rule that a petition for certiorari is dismissible when the mode of appeal is available admits
of exceptions, to wit: (a) when the writs issued are null; and, (b) when the questioned order amounts
to an oppressive exercise of judicial authority.37 Clearly, respondent has shown its entitlement to the
exceptions.
The same liberal application should also apply to the question of the alleged lack of authority of Atty.
Doromal to execute the certification of non-forum shopping for lack of a board resolution from the
NPC. True, only individuals vested with authority by a valid board resolution may sign the certificate
of non-forum shopping in behalf of the corporation, and proof of such authority must be attached to
the petition,38 the failure of which will be sufficient cause for dismissal. Nevertheless, it cannot be
said that Atty. Doromal does not enjoy the presumption that he is authorized to represent respondent
in filing the Petition for Certiorari before the CA. As Special Attorney, he is one of the counsels of
NPC in the proceedings before the trial court, and the NPC never questioned his authority to sign the
petition for its behalf.
In any case, the substantive issues we have already discussed are justifiable reasons to relax the
rules of procedure. We cannot allow a patently wrong judgment to be implemented because of
technical lapses. This ratiocination is in keeping with the policy to secure a just, speedy and
inexpensive disposition of every action or proceeding.39 As we have explained in Alonso v. Villamor:40
There is nothing sacred about processes or pleadings, their forms or contents. Their sole purpose is
to facilitate the application of justice to the rival claims of contending parties. They were created, not
to hinder and delay, but to facilitate and promote, the administration of justice. They do not constitute
the thing itself, which courts are always striving to secure to litigants. They are designed as the
means best adopted to obtain that thing. In other words, they are a means to an end. When they
lose the character of the one and become the other, the administration of justice is at fault and
courts are correspondingly remiss in the performance of their obvious duty.
The error in this case is purely technical. To take advantage of it for other purposes than to cure it,
does not appeal to a fair sense of justice. Its presentation as fatal to the plaintiff's case smacks of
skill rather than right. A litigation is not a game of technicalities in which one more deeply schooled
and skilled in the subtle art of movement and position, entraps and destroys the other. It is rather, a
contest in which each contending party fully and fairly lays before the court the facts in issue and
then, brushing aside as wholly trivial and indecisive all imperfections of form and technicalities of
procedure, asks that justice be done upon the merits. Law-suits, unlike duels, are not to be won by a
rapier's thrust. Technicality, when it deserts its proper office as an aid to justice and becomes its
great hindrance and chief enemy, deserves scant consideration from courts. There should be no
vested rights in technicalities. No litigant should be permitted to challenge a record of a court of
these Islands for defect of form when his substantial rights have not been prejudiced thereby.
WHEREFORE, the Petition is hereby DISMISSED for lack of merit. The September 9, 2002 Decision
of the Court of Appeals and its January 19, 2005 Resolution are AFFIRMED.
SO ORDERED.

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSE P. PEREZ
Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1
Rollo, pp. 132, 135, and 138.
2
CA rollo, pp. 48-56; penned by Judge Santos B. Adiong.
3
Id. at 55.
4
Rollo, p. 34.
5
Id. at 38-40.
6
Id. at 35-37. Except as to the amount, name of plaintiff, and the Civil Case No., the
Acknowledgment Receipts signed by each plaintiff were similarly worded in this manner:
This is to acknowledge receipt from the NATIONAL POWER CORPORATION (NPC)
the sum of (amount) as full and complete settlement of the cases entitled in (name of
case) in (civil case no.) which is now pending appeal before the Court of Appeals.
With the execution of this Acknowledgment Receipt, it is understood that I and my

heirs and assigns have no further claim against NPC with respect to the damage to
improvements over my parcel of land which was affected by the 69 KV Transmission
Line.
Iligan City, Philippines, 2 April 1992.
Sgd.
(name of claimant)
Representing NPC:
(Sgd.)
CANDIDATO RAMOS
(Sgd.)
ATTY. ARTHUR L. ABUNDIENTE
Counsel for Defendant-NPC
7
Id. at 40.
8
CA rollo, pp 62-73; penned by Associate Justice Cancio C. Garcia and concurred in by
Associate Justices Eugenio S. Labitoria and Portia Aliño-Hormachuelos.
9
Id. at 72.
10
Id. at 74-77.
11
Id. at 76.
12
Id. at 81-82; penned by Acting Presiding Judge Moslemen T. Macarambon.
Article 19. Every person must, in the exercise of his rights and in the performance of his
13
duties, act with justice, give everyone his due, and observe honesty and good faith.
Article 20. Every person who, contrary to law, willfully or negligently causes damage
to another, shall indemnify the latter for the same.
Article 21. Any person who willfully causes loss or injury to another in a manner that
is contrary to morals, good customs or public policy shall compensate the latter for
the damage.
14
15
Id. at 82.
16
Id. at 83-86.
17
Id. at 87; penned by Judge Santos B. Adiong.
18
Id. at 2-24.
19
In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial
costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled the plaintiff to litigate with
third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the
plaintiff's plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and skilled
workers;
(8) In actions for indemnity under workmen's compensation and employer's liability
laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorney's
fees and expenses of litigation should be recovered.
In all cases, the attorney's fees and expenses of litigation must be reasonable.
Rollo, pp. 26-31; penned by Associate Justice Hilarion L. Aquino and concurred in by
20
Associate Justices Salvador J. Valdez, Jr. and Jose L. Sabio, Jr.
21
Id at 30-31.
22
Id. at 32-33; penned by Associate Justice Jose Sabio, Jr. and concurred in by Associate
Justices Godardo A. Jacinto and Salvador J. Valdez.
23
24
Nocom v. Camerino, G.R. No. 182984, February 10, 2009, 578 SCRA 390, 410.
25
Philippine Countryside Rural Bank v. Toring, G.R. No. 157862, April 16, 2009.
26
Manufacturers Hanover Trust Co. and/or Chemical Bank v. Guerrero, 445 Phil. 770, 776
(2003).
Solidbank Corporation v. Mindanao Ferroalloy Corporation, G.R. No. 153535, July 28,
27
2005, 464 SCRA 409, 426.
28
Civil Code, Article 2028.
29
Civil Code, Article 2037.
University of the East v. Secretary of Labor and Employment, G.R. Nos. 93310-12,
30
November 21 1991, 204 SCRA 254, 262.
31
Rustia v. Judge of First Instance of Batangas, 44 Phil 62, 65 (1922).
32
Samonte v. Samonte, 159-A Phil. 777, 791-792 (1975).
33
Cabildo v. Hon. Navarro, 153 Phil. 310, 314 (1973).
Masmud v. National Labor Relations Commission, G.R. No. 183385, February 13, 2009,
34
579 SCRA 509, 520.
National Power Corporation v. National Power Corporation Employees and Workers

35
Association, 178 Phil. 1, 10-11 (1979).
36
See Aro v. Hon. Nañawa, 137 Phil. 745 (1969).
Jan-Dec Construction Corporation v. Court of Appeals, G.R. No. 146818, February 6,

37
2006, 481 SCRA 556, 564.
Philippine Airlines, Inc. v. Flight Attendants and Stewards Association of the Philippines,
38
G.R. No. 143088, January 24, 2006, 479 SCRA 605, 608.
39
40
16 Phil 315, 321-322 (1910).

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 183505 February 26, 2010
COMMISSIONER OF INTERNAL REVENUE, Petitioner,

vs.
SM PRIME HOLDINGS, INC. and FIRST ASIA REALTY DEVELOPMENT
CORPORATION, Respondents.
DECISION
DEL CASTILLO, J.:
When the intent of the law is not apparent as worded, or when the application of the law would lead
to absurdity or injustice, legislative history is all important. In such cases, courts may take judicial
notice of the origin and history of the law,1 the deliberations during the enactment,2 as well as prior
laws on the same subject matter3 to ascertain the true intent or spirit of the law.
This Petition for Review on Certiorari under Rule 45 of the Rules of Court, in relation to Republic Act
(RA) No. 9282,4 seeks to set aside the April 30, 2008 Decision5 and the June 24, 2008 Resolution6 of
the Court of Tax Appeals (CTA).
Factual Antecedents
Respondents SM Prime Holdings, Inc. (SM Prime) and First Asia Realty Development Corporation
(First Asia) are domestic corporations duly organized and existing under the laws of the Republic of
the Philippines. Both are engaged in the business of operating cinema houses, among others. 7
CTA Case No. 7079
On September 26, 2003, the Bureau of Internal Revenue (BIR) sent SM Prime a Preliminary
Assessment Notice (PAN) for value added tax (VAT) deficiency on cinema ticket sales in the amount
of ₱119,276,047.40 for taxable year 2000.8 In response, SM Prime filed a letter-protest dated
December 15, 2003.9
On December 12, 2003, the BIR sent SM Prime a Formal Letter of Demand for the alleged VAT
deficiency, which the latter protested in a letter dated January 14, 2004. 10
On September 6, 2004, the BIR denied the protest filed by SM Prime and ordered it to pay the VAT
deficiency for taxable year 2000 in the amount of ₱124,035,874.12.11
On October 15, 2004, SM Prime filed a Petition for Review before the CTA docketed as CTA Case
No. 7079.12
CTA Case No. 7085
On May 15, 2002, the BIR sent First Asia a PAN for VAT deficiency on
cinema ticket sales for taxable year 1999 in the total amount of ₱35,823,680.93. 13 First Asia
protested the PAN in a letter dated July 9, 2002.14
Subsequently, the BIR issued a Formal Letter of Demand for the alleged VAT deficiency which was
protested by First Asia in a letter dated December 12, 2002.15
On September 6, 2004, the BIR rendered a Decision denying the protest and ordering First Asia to
pay the amount of ₱35,823,680.93 for VAT deficiency for taxable year 1999. 16
Accordingly, on October 20, 2004, First Asia filed a Petition for Review before the CTA, docketed as
CTA Case No. 7085.17
CTA Case No. 7111
On April 16, 2004, the BIR sent a PAN to First Asia for VAT deficiency on cinema ticket sales for
taxable year 2000 in the amount of ₱35,840,895.78. First Asia protested the PAN through a letter
dated April 22, 2004.18
Thereafter, the BIR issued a Formal Letter of Demand for alleged VAT deficiency. 19 First Asia
protested the same in a letter dated July 9, 2004.20
On October 5, 2004, the BIR denied the protest and ordered First Asia to pay the VAT deficiency in
the amount of ₱35,840,895.78 for taxable year 2000.21
This prompted First Asia to file a Petition for Review before the CTA on December 16, 2004. The
case was docketed as CTA Case No. 7111.22
CTA Case No. 7272
Re: Assessment Notice No. 008-02
A PAN for VAT deficiency on cinema ticket sales for the taxable year 2002 in the total amount of
₱32,802,912.21 was issued against First Asia by the BIR. In response, First Asia filed a protest-letter
dated November 11, 2004. The BIR then sent a Formal Letter of Demand, which was protested by
First Asia on December 14, 2004.23
Re: Assessment Notice No. 003-03
A PAN for VAT deficiency on cinema ticket sales in the total amount of ₱28,196,376.46 for the
taxable year 2003 was issued by the BIR against First Asia. In a letter dated September 23, 2004,
First Asia protested the PAN. A Formal Letter of Demand was thereafter issued by the BIR to First
Asia, which the latter protested through a letter dated November 11, 2004. 24
On May 11, 2005, the BIR rendered a Decision denying the protests. It ordered First Asia to pay the
amounts of ₱33,610,202.91 and ₱28,590,826.50 for VAT deficiency for taxable years 2002 and
2003, respectively.25
Thus, on June 22, 2005, First Asia filed a Petition for Review before the CTA, docketed as CTA
Case No. 7272.26
Consolidated Petitions
The Commissioner of Internal Revenue (CIR) filed his Answers to the Petitions filed by SM Prime
and First Asia.27
On July 1, 2005, SM Prime filed a Motion to Consolidate CTA Case Nos. 7085, 7111 and 7272 with
CTA Case No. 7079 on the grounds that the issues raised therein are identical and that SM Prime is
a majority shareholder of First Asia. The motion was granted.28
Upon submission of the parties’ respective memoranda, the consolidated cases were submitted for
decision on the sole issue of whether gross receipts derived from admission tickets by
cinema/theater operators or proprietors are subject to VAT.29
Ruling of the CTA First Division
On September 22, 2006, the First Division of the CTA rendered a Decision granting the Petition for
Review. Resorting to the language used and the legislative history of the law, it ruled that the activity
of showing cinematographic films is not a service covered by VAT under the National Internal
Revenue Code (NIRC) of 1997, as amended, but an activity subject to amusement tax under RA
7160, otherwise known as the Local Government Code (LGC) of 1991. Citing House Joint
Resolution No. 13, entitled "Joint Resolution Expressing the True Intent of Congress with Respect to
the Prevailing Tax Regime in the Theater and Local Film Industry Consistent with the State’s Policy
to Have a Viable, Sustainable and Competitive Theater and Film Industry as One of its Partners in
National Development,"30 the CTA First Division held that the House of Representatives resolved that
there should only be one business tax applicable to theaters and movie houses, which is the 30%
amusement tax imposed by cities and provinces under the LGC of 1991. Further, it held that
consistent with the State’s policy to have a viable, sustainable and competitive theater and film
industry, the national government should be precluded from imposing its own business tax in
addition to that already imposed and collected by local government units. The CTA First Division
likewise found that Revenue Memorandum Circular (RMC) No. 28-2001, which imposes VAT on
gross receipts from admission to cinema houses, cannot be given force and effect because it failed
to comply with the procedural due process for tax issuances under RMC No. 20-86. 31 Thus, it
disposed of the case as follows:
IN VIEW OF ALL THE FOREGOING, this Court hereby GRANTS the Petitions for Review.
Respondent’s Decisions denying petitioners’ protests against deficiency value-added taxes are
hereby REVERSED. Accordingly, Assessment Notices Nos. VT-00-000098, VT-99-000057, VT-00-
000122, 003-03 and 008-02 are ORDERED cancelled and set aside.
SO ORDERED.32
Aggrieved, the CIR moved for reconsideration which was denied by the First Division in its
Resolution dated December 14, 2006.33
Ruling of the CTA En Banc
Thus, the CIR appealed to the CTA En Banc.34 The case was docketed as CTA EB No. 244.35 The
CTA En Banc however denied36 the Petition for Review and dismissed37 as well petitioner’s Motion
for Reconsideration.
The CTA En Banc held that Section 108 of the NIRC actually sets forth an exhaustive enumeration
of what services are intended to be subject to VAT. And since the showing or exhibition of motion
pictures, films or movies by cinema operators or proprietors is not among the enumerated activities
contemplated in the phrase "sale or exchange of services," then gross receipts derived by cinema/
theater operators or proprietors from admission tickets in showing motion pictures, film or movie are
not subject to VAT. It reiterated that the exhibition or showing of motion pictures, films, or movies is
instead subject to amusement tax under the LGC of 1991. As regards the validity of RMC No. 28-
2001, the CTA En Banc agreed with its First Division that the same cannot be given force and effect
for failure to comply with RMC No. 20-86.
Issue
Hence, the present recourse, where petitioner alleges that the CTA En Banc seriously erred:
(1) In not finding/holding that the gross receipts derived by operators/proprietors of cinema houses
from admission tickets [are] subject to the 10% VAT because:
(a) THE EXHIBITION OF MOVIES BY CINEMA OPERATORS/PROPRIETORS TO

THE PAYING PUBLIC IS A SALE OF SERVICE;
(b) UNLESS EXEMPTED BY LAW, ALL SALES OF SERVICES ARE EXPRESSLY

SUBJECT TO VAT UNDER SECTION 108 OF THE NIRC OF 1997;
(c) SECTION 108 OF THE NIRC OF 1997 IS A CLEAR PROVISION OF LAW AND
THE APPLICATION OF RULES OF STATUTORY CONSTRUCTION AND
EXTRINSIC AIDS IS UNWARRANTED;
(d) GRANTING WITHOUT CONCEDING THAT RULES OF CONSTRUCTION ARE

APPLICABLE HEREIN, STILL THE HONORABLE COURT ERRONEOUSLY
APPLIED THE SAME AND PROMULGATED DANGEROUS PRECEDENTS;
(e) THERE IS NO VALID, EXISTING PROVISION OF LAW EXEMPTING

RESPONDENTS’ SERVICES FROM THE VAT IMPOSED UNDER SECTION 108
OF THE NIRC OF 1997;
(f) QUESTIONS ON THE WISDOM OF THE LAW ARE NOT PROPER ISSUES TO
BE TRIED BY THE HONORABLE COURT; and
(g) RESPONDENTS WERE TAXED BASED ON THE PROVISION OF SECTION

108 OF THE NIRC.
(2) In ruling that the enumeration in Section 108 of the NIRC of 1997 is exhaustive in coverage;
(3) In misconstruing the NIRC of 1997 to conclude that the showing of motion pictures is merely
subject to the amusement tax imposed by the Local Government Code; and
(4) In invalidating Revenue Memorandum Circular (RMC) No. 28-2001.38
Simply put, the issue in this case is whether the gross receipts derived by operators or proprietors of
cinema/theater houses from admission tickets are subject to VAT.
Petitioner argues that the enumeration of services subject to VAT in Section 108 of the NIRC is not
exhaustive because it covers all sales of services unless exempted by law. He claims that the CTA
erred in applying the rules on statutory construction and in using extrinsic aids in interpreting Section
108 because the provision is clear and unambiguous. Thus, he maintains that the exhibition of
movies by cinema operators or proprietors to the paying public, being a sale of service, is subject to
VAT.
Respondents’ Arguments
Respondents, on the other hand, argue that a plain reading of Section 108 of the NIRC of 1997
shows that the gross receipts of proprietors or operators of cinemas/theaters derived from public
admission are not among the services subject to VAT. Respondents insist that gross receipts from
cinema/theater admission tickets were never intended to be subject to any tax imposed by the
national government. According to them, the absence of gross receipts from cinema/theater
admission tickets from the list of services which are subject to the national amusement tax under
Section 125 of the NIRC of 1997 reinforces this legislative intent. Respondents also highlight the fact
that RMC No. 28-2001 on which the deficiency assessments were based is an unpublished
administrative ruling.
Our Ruling
The petition is bereft of merit.
The enumeration of services subject to VAT under Section 108 of the NIRC is not exhaustive
Section 108 of the NIRC of the 1997 reads:
SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties. —
(A) Rate and Base of Tax. — There shall be levied, assessed and collected, a value-added tax
equivalent to ten percent (10%) of gross receipts derived from the sale or exchange of services,
including the use or lease of properties.
The phrase "sale or exchange of services" means the performance of all kinds of services in the
Philippines for others for a fee, remuneration or consideration, including those performed or
rendered by construction and service contractors; stock, real estate, commercial, customs and
immigration brokers; lessors of property, whether personal or real; warehousing services; lessors or
distributors of cinematographic films; persons engaged in milling, processing, manufacturing or
repacking goods for others; proprietors, operators or keepers of hotels, motels, rest houses, pension
houses, inns, resorts; proprietors or operators of restaurants, refreshment parlors, cafes and other
eating places, including clubs and caterers; dealers in securities; lending investors; transportation
contractors on their transport of goods or cargoes, including persons who transport goods or
cargoes for hire and other domestic common carriers by land, air and water relative to their transport
of goods or cargoes; services of franchise grantees of telephone and telegraph, radio and television
broadcasting and all other franchise grantees except those under Section 119 of this Code; services
of banks, non-bank financial intermediaries and finance companies; and non-life insurance
companies (except their crop insurances), including surety, fidelity, indemnity and bonding
companies; and similar services regardless of whether or not the performance thereof calls for the
exercise or use of the physical or mental faculties. The phrase "sale or exchange of services" shall
likewise include:
(1) The lease or the use of or the right or privilege to use any copyright, patent, design or model,
plan, secret formula or process, goodwill, trademark, trade brand or other like property or right;
xxxx
(7) The lease of motion picture films, films, tapes and discs; and
(8) The lease or the use of or the right to use radio, television, satellite transmission and cable
television time.
A cursory reading of the foregoing provision clearly shows that the enumeration of the "sale or
exchange of services" subject to VAT is not exhaustive. The words, "including," "similar services,"
and "shall likewise include," indicate that the enumeration is by way of example only. 39
Among those included in the enumeration is the "lease of motion picture films, films, tapes and
discs." This, however, is not the same as the showing or exhibition of motion pictures or films. As
pointed out by the CTA En Banc:
"Exhibition" in Black’s Law Dictionary is defined as "To show or display. x x x To produce anything in
public so that it may be taken into possession" (6th ed., p. 573). While the word "lease" is defined as
"a contract by which one owning such property grants to another the right to possess, use and enjoy
it on specified period of time in exchange for periodic payment of a stipulated price, referred to as
rent (Black’s Law Dictionary, 6th ed., p. 889). x x x40
Since the activity of showing motion pictures, films or movies by cinema/ theater operators or
proprietors is not included in the enumeration, it is incumbent upon the court to the determine
whether such activity falls under the phrase "similar services." The intent of the legislature must
therefore be ascertained.
The legislature never intended operators
or proprietors of cinema/theater houses to be covered by VAT
Under the NIRC of 1939,41 the national government imposed amusement tax on proprietors, lessees,
or operators of theaters, cinematographs, concert halls, circuses, boxing exhibitions, and other
places of amusement, including cockpits, race tracks, and cabaret.42 In the case of theaters or
cinematographs, the taxes were first deducted, withheld, and paid by the proprietors, lessees, or
operators of such theaters or cinematographs before the gross receipts were divided between the
proprietors, lessees, or operators of the theaters or cinematographs and the distributors of the
cinematographic films. Section 1143 of the Local Tax Code,44 however, amended this provision by
transferring the power to impose amusement tax45 on admission from theaters, cinematographs,
concert halls, circuses and other places of amusements exclusively to the local government. Thus,
when the NIRC of 197746 was enacted, the national government imposed amusement tax only on
proprietors, lessees or operators of cabarets, day and night clubs, Jai-Alai and race tracks. 47
On January 1, 1988, the VAT Law48 was promulgated. It amended certain provisions of the NIRC of
1977 by imposing a multi-stage VAT to replace the tax on original and subsequent sales tax and
percentage tax on certain services. It imposed VAT on sales of services under Section 102 thereof,
which provides:
SECTION 102. Value-added tax on sale of services. — (a) Rate and base of tax. — There shall be
levied, assessed and collected, a value-added tax equivalent to 10% percent of gross receipts
derived by any person engaged in the sale of services. The phrase "sale of services" means the
performance of all kinds of services for others for a fee, remuneration or consideration, including
those performed or rendered by construction and service contractors; stock, real estate, commercial,
customs and immigration brokers; lessors of personal property; lessors or distributors of
cinematographic films; persons engaged in milling, processing, manufacturing or repacking goods
for others; and similar services regardless of whether or not the performance thereof calls for the
exercise or use of the physical or mental faculties: Provided That the following services performed in
the Philippines by VAT-registered persons shall be subject to 0%:
(1) Processing manufacturing or repacking goods for other persons doing business outside
the Philippines which goods are subsequently exported, x x x
xxxx
"Gross receipts" means the total amount of money or its equivalent representing the
contract price, compensation or service fee, including the amount charged for
materials supplied with the services and deposits or advance payments actually or
constructively received during the taxable quarter for the service performed or to be
performed for another person, excluding value-added tax.
(b) Determination of the tax. — (1) Tax billed as a separate item in the invoice. — If
the tax is billed as a separate item in the invoice, the tax shall be based on the gross
receipts, excluding the tax.
(2) Tax not billed separately or is billed erroneously in the invoice. — If the tax is not billed
separately or is billed erroneously in the invoice, the tax shall be determined by multiplying
the gross receipts (including the amount intended to cover the tax or the tax billed
erroneously) by 1/11. (Emphasis supplied)
Persons subject to amusement tax under the NIRC of 1977, as amended, however, were exempted
from the coverage of VAT.49
On February 19, 1988, then Commissioner Bienvenido A. Tan, Jr. issued RMC 8-88, which clarified
that the power to impose amusement tax on gross receipts derived from admission tickets was
exclusive with the local government units and that only the gross receipts of amusement places
derived from sources other than from admission tickets were subject to amusement tax under the
NIRC of 1977, as amended. Pertinent portions of RMC 8-88 read:
Under the Local Tax Code (P.D. 231, as amended), the jurisdiction to levy amusement tax on gross
receipts arising from admission to places of amusement has been transferred to the local
governments to the exclusion of the national government.
xxxx
Since the promulgation of the Local Tax Code which took effect on June 28, 1973 none of the
amendatory laws which amended the National Internal Revenue Code, including the value added tax
law under Executive Order No. 273, has amended the provisions of Section 11 of the Local Tax
Code. Accordingly, the sole jurisdiction for collection of amusement tax on admission receipts in
places of amusement rests exclusively on the local government, to the exclusion of the national
government. Since the Bureau of Internal Revenue is an agency of the national government, then it
follows that it has no legal mandate to levy amusement tax on admission receipts in the said places
of amusement.
Considering the foregoing legal background, the provisions under Section 123 of the National
Internal Revenue Code as renumbered by Executive Order No. 273 (Sec. 228, old NIRC) pertaining
to amusement taxes on places of amusement shall be implemented in accordance with BIR
RULING, dated December 4, 1973 and BIR RULING NO. 231-86 dated November 5, 1986 to wit:
"x x x Accordingly, only the gross receipts of the amusement places derived from sources
other than from admission tickets shall be subject to x x x amusement tax prescribed under
Section 228 of the Tax Code, as amended (now Section 123, NIRC, as amended by E.O.
273). The tax on gross receipts derived from admission tickets shall be levied and collected
by the city government pursuant to Section 23 of Presidential Decree No. 231, as amended x
x x" or by the provincial government, pursuant to Section 11 of P.D. 231, otherwise known as
the Local Tax Code. (Emphasis supplied)
On October 10, 1991, the LGC of 1991 was passed into law. The local government retained the
power to impose amusement tax on proprietors, lessees, or operators of theaters, cinemas, concert
halls, circuses, boxing stadia, and other places of amusement at a rate of not more than thirty
percent (30%) of the gross receipts from admission fees under Section 140 thereof. 50 In the case of
theaters or cinemas, the tax shall first be deducted and withheld by their proprietors, lessees, or
operators and paid to the local government before the gross receipts are divided between said
proprietors, lessees, or operators and the distributors of the cinematographic films. However, the
provision in the Local Tax Code expressly excluding the national government from collecting tax
from the proprietors, lessees, or operators of theaters, cinematographs, concert halls, circuses and
other places of amusements was no longer included.
In 1994, RA 7716 restructured the VAT system by widening its tax base and enhancing its
administration. Three years later, RA 7716 was amended by RA 8241. Shortly thereafter, the NIRC
of 199751 was signed into law. Several amendments52 were made to expand the coverage of VAT.
However, none pertain to cinema/theater operators or proprietors. At present, only lessors or
distributors of cinematographic films are subject to VAT. While persons subject to amusement
tax53 under the NIRC of 1997 are exempt from the coverage of VAT. 54
Based on the foregoing, the following facts can be established:
(1) Historically, the activity of showing motion pictures, films or movies by cinema/theater
operators or proprietors has always been considered as a form of entertainment subject to
amusement tax.
(2) Prior to the Local Tax Code, all forms of amusement tax were imposed by the national
government.
(3) When the Local Tax Code was enacted, amusement tax on admission tickets from
theaters, cinematographs, concert halls, circuses and other places of amusements were
transferred to the local government.
(4) Under the NIRC of 1977, the national government imposed amusement tax only on
proprietors, lessees or operators of cabarets, day and night clubs, Jai-Alai and race tracks.
(5) The VAT law was enacted to replace the tax on original and subsequent sales tax and
percentage tax on certain services.
(6) When the VAT law was implemented, it exempted persons subject to amusement tax
under the NIRC from the coverage of VAT. 1auuphil
(7) When the Local Tax Code was repealed by the LGC of 1991, the local government
continued to impose amusement tax on admission tickets from theaters, cinematographs,
concert halls, circuses and other places of amusements.
(8) Amendments to the VAT law have been consistent in exempting persons subject to
amusement tax under the NIRC from the coverage of VAT.
(9) Only lessors or distributors of cinematographic films are included in the coverage of VAT.
These reveal the legislative intent not to impose VAT on persons already covered by the amusement
tax. This holds true even in the case of cinema/theater operators taxed under the LGC of 1991
precisely because the VAT law was intended to replace the percentage tax on certain services. The
mere fact that they are taxed by the local government unit and not by the national government is
immaterial. The Local Tax Code, in transferring the power to tax gross receipts derived by
cinema/theater operators or proprietor from admission tickets to the local government, did not intend
to treat cinema/theater houses as a separate class. No distinction must, therefore, be made between
the places of amusement taxed by the national government and those taxed by the local
government.
To hold otherwise would impose an unreasonable burden on cinema/theater houses operators or

proprietors, who would be paying an additional 10%55 VAT on top of the 30% amusement tax
imposed by Section 140 of the LGC of 1991, or a total of 40% tax. Such imposition would result in
injustice, as persons taxed under the NIRC of 1997 would be in a better position than those taxed
under the LGC of 1991. We need not belabor that a literal application of a law must be rejected if it
will operate unjustly or lead to absurd results.56 Thus, we are convinced that the legislature never
intended to include cinema/theater operators or proprietors in the coverage of VAT.
On this point, it is apropos to quote the case of Roxas v. Court of Tax Appeals, 57 to wit:
The power of taxation is sometimes called also the power to destroy. Therefore, it should be
exercised with caution to minimize injury to the proprietary rights of a taxpayer. It must be exercised
fairly, equally and uniformly, lest the tax collector kill the "hen that lays the golden egg." And, in order
to maintain the general public's trust and confidence in the Government this power must be used
justly and not treacherously.
The repeal of the Local Tax Code by the LGC of 1991 is not a legal basis for the imposition of VAT
Petitioner, in issuing the assessment notices for deficiency VAT against respondents, ratiocinated
that:
Basically, it was acknowledged that a cinema/theater operator was then subject to amusement tax
under Section 260 of Commonwealth Act No. 466, otherwise known as the National Internal
Revenue Code of 1939, computed on the amount paid for admission. With the enactment of the
Local Tax Code under Presidential Decree (PD) No. 231, dated June 28, 1973, the power of
imposing taxes on gross receipts from admission of persons to cinema/theater and other places of
amusement had, thereafter, been transferred to the provincial government, to the exclusion of the
national or municipal government (Sections 11 & 13, Local Tax Code). However, the said provision
containing the exclusive power of the provincial government to impose amusement tax, had also
been repealed and/or deleted by Republic Act (RA) No. 7160, otherwise known as the Local
Government Code of 1991, enacted into law on October 10, 1991. Accordingly, the enactment of RA
No. 7160, thus, eliminating the statutory prohibition on the national government to impose business
tax on gross receipts from admission of persons to places of amusement, led the way to the valid
imposition of the VAT pursuant to Section 102 (now Section 108) of the old Tax Code, as amended
by the Expanded VAT Law (RA No. 7716) and which was implemented beginning January 1,
1996.58(Emphasis supplied)
We disagree.
The repeal of the Local Tax Code by the LGC of 1991 is not a legal basis for the imposition of VAT
on the gross receipts of cinema/theater operators or proprietors derived from admission tickets. The
removal of the prohibition under the Local Tax Code did not grant nor restore to the national
government the power to impose amusement tax on cinema/theater operators or proprietors. Neither
did it expand the coverage of VAT. Since the imposition of a tax is a burden on the taxpayer, it
cannot be presumed nor can it be extended by implication. A law will not be construed as imposing a
tax unless it does so clearly, expressly, and unambiguously.59 As it is, the power to impose
amusement tax on cinema/theater operators or proprietors remains with the local government.
Revenue Memorandum Circular No. 28-2001 is invalid
Considering that there is no provision of law imposing VAT on the gross receipts of cinema/theater
operators or proprietors derived from admission tickets, RMC No. 28-2001 which imposes VAT on
the gross receipts from admission to cinema houses must be struck down. We cannot
overemphasize that RMCs must not override, supplant, or modify the law, but must remain
consistent and in harmony with, the law they seek to apply and implement. 60
In view of the foregoing, there is no need to discuss whether RMC No. 28-2001 complied with the
procedural due process for tax issuances as prescribed under RMC No. 20-86.
Rule on tax exemption does not apply
Moreover, contrary to the view of petitioner, respondents need not prove their entitlement to an
exemption from the coverage of VAT. The rule that tax exemptions should be construed strictly
against the taxpayer presupposes that the taxpayer is clearly subject to the tax being levied against
him.61 The reason is obvious: it is both illogical and impractical to determine who are exempted
without first determining who are covered by the provision.62 Thus, unless a statute imposes a tax
clearly, expressly and unambiguously, what applies is the equally well-settled rule that the imposition
of a tax cannot be presumed.63 In fact, in case of doubt, tax laws must be construed strictly against
the government and in favor of the taxpayer.64
WHEREFORE, the Petition is hereby DENIED. The assailed April 30, 2008 Decision of the Court of
Tax Appeals En Banc holding that gross receipts derived by respondents from admission tickets in
showing motion pictures, films or movies are not subject to value-added tax under Section 108 of the
National Internal Revenue Code of 1997, as amended, and its June 24, 2008 Resolution denying the
motion for reconsideration are AFFIRMED.
SO ORDERED.

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSE P. PEREZ
Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1
United States v. De Guzman, 30 Phil. 416, 419-420 (1915).
2
People v. Degamo, 450 Phil. 159, 179 (2003).
3
Celestial Nickel Mining Exploration Corporation v. Macroasia Corporation, G.R. Nos.
169080, 172936, 176226 & 176319, December 19, 2007, 541 SCRA 166, 195.
4
5
Rollo, pp. 98-120; penned by Associate Justice Olga Palanca-Enriquez and concurred in by
R. Bautista, and Caesar A. Casanova. Associate Justice Erlinda P. Uy was on official
business.
6
Id. at 121-123; penned by Associate Justice Olga Palanca-Enriquez and concurred in by
R. Bautista, Erlinda P. Uy, and Caesar A. Casanova.
7
Id. at 772.
8
Id. at 100.
9
Id.
10
Id. at 101.
11
Id.
12
Id.
13
Id.
14
Id.
15
Id.
16
Id. at 102.
17
Id.
18
Id.
19
Id.
20
Id.
21
Id. at 25-26.
22
Id. at 103.
23
Id.
24
Id. at 104.
25
Id. at 700.
26
Id. at 104.
27
Id. at 28.
28
Id. at 104-105.
29
Id. at 29.
30
Approved by the House on the Third Reading on November 15, 2005. Its counterpart in the
Senate, Senate Joint Resolution No. 6, entitled "Joint Resolution Expressing the True Intent
of Congress Regarding the Imposition of the Value-Added Tax Particularly on the Theater
Industry," is pending in the Committee.
31
Notice, Publication and Effectivity of Internal Revenue Tax Rules and Regulations, issued
by then Commissioner Bienvenido A. Tan, Jr. on July 24, 1986.
32
Rollo, p. 247.
33
Id. at 249-257.
34
Id. at 32.
35
Id.
36
Id. at 119.
37
Id. at 122.
38
Id. at 35-36.
39
See Binay v. Sandiganbayan, 374 Phil. 413, 440 (1999).
40
Rollo, p. 420.
41
Commonwealth Act No. 466.
42
SECTION 260. Amusement taxes. — There shall be collected from the proprietor, lessee,
or operator of theaters, cinematographs, concert halls, circuses, boxing exhibitions, and
other places of amusement the following taxes:
(a) When the amount paid for admission exceeds twenty centavos but does not
exceed twenty-nine centavos, two centavos on each admission.
xxxx
(i) When the amount paid for admission exceeds ninety-nine centavos, ten centavos
on each admission.
In the case of theaters or cinematographs, the taxes herein prescribed shall first be
deducted and withheld by the proprietors, lessees, or operators of such theaters or
cinematographs and paid to the Collector of Internal Revenue before the gross
receipts are divided between the proprietors, lessees, or operators of the theaters or
cinematographs and the distributors of the cinematographic films.
In the case of cockpits, race tracks, and cabarets, x x x. For the purpose of the
amusement tax, the term "gross receipts" embraces all the receipts of the proprietor,
lessee, or operator of the amusement place, excluding the receipts derived by him
from the sale of liquors, beverages, or other articles subject to specific tax, or from
any business subject to tax under this Code.
xxxx
43
SECTION 11. Taxes transferred. — The imposition of the taxes provided in Sections 12,
13, 14, 15, and 16 of this Code heretofore exercised by the national government or the
municipal government, shall henceforth be exercised by the provincial government, to the
exclusion of the national or municipal government. To avoid any revenue loss, the province
shall levy and collect such taxes as provided in said Sections 12, 13 and 14.
44
Presidential Decree No. 231 (1973).
45
SECTION 13. Amusement tax on admission. — The province shall impose a tax on
admission to be collected from the proprietors, lessees, or operators of theaters,
cinematographs, concert halls, circuses and other places of amusements at the following
rates:
(a) When the amount paid for admission is one peso or less, twenty per cent; and
(b) When the amount paid for admission exceeds one peso, thirty per cent.
In the case of theaters or cinematographs, the taxes herein prescribed shall first be
deducted and withheld by the proprietors, lessees, or operators of the theaters or
cinematographs and paid to the provincial treasurer concerned thru the municipal
treasurer before the gross receipts are divided between the proprietors, lessees, or
operators of the theaters or cinematographs and the distributors of the
cinematographic films.
xxxx
46
Presidential Decree No. 1158.
47
SECTION 268. Amusement taxes. — There shall be collected from the proprietor, lessee
or operator of cabarets, day and night clubs, Jai-Alai and race tracks, a tax equivalent to x x
xx
48
Executive Order No. 273.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 176518 March 2, 2010
THE PARENTS-TEACHERS ASSOCIATION (PTA) OF ST. MATHEW CHRISTIAN ACADEMY,

GREGORIO INALVEZ, JR., ROWENA LAYUG, MALOU MALVAR, MARILOU BARAQUIO, GARY
SINLAO, LUZVIMINDA OCAMPO,MARIFE FERNANDEZ, FERNANDO VICTORIO, ERNESTO
AGANON and RIZALINO MANGLICMOT, represented by their Attorney-in-Fact, GREGORIO
INALVEZ, JR., Petitioners,
vs.
THE METROPOLITAN BANK and TRUST CO., Respondent.
DECISION
DEL CASTILLO, J.:
As a general rule, the issuance of a writ of possession after the foreclosure sale and during the
period of redemption is ministerial. As an exception, it ceases to be ministerial if there is a third party
holding the property adversely to the judgment debtor.
In this case, we find that petitioners’ right over the foreclosed property is not adverse to that of the
judgment debtor or mortgagor. As such, they cannot seek the quashal or prevent the implementation
of the writ of possession.
Factual Antecedents
The facts of this case as summarized by the Court of Appeals (CA) in its assailed Decision 1 dated
November 29, 2006 are as follows:
Sometime in 2001, the spouses Denivin Ilagan and Josefina Ilagan (spouses Ilagan) applied for and
were granted a loan by the [Metropolitan Bank and Trust Co.] in the amount of x x x (₱4,790,000.00)
[secured by] x x x a Real Estate Mortgage over the parcels of land covered by Transfer Certificates
of Title with Nos. 300203, 285299, 278042, 300181, 300184, 300191, 300194, and 300202,
respectively.
Upon default, an extrajudicial foreclosure was conducted with [Metropolitan Bank and Trust Co.]
being the highest bidder x x x and for which a Certificate of Sale was issued in its favor.
During the period of redemption, the respondent Bank filed an Ex-Parte Petition for Issuance of a
Writ of Possession docketed as LRC Case No. 6438 by posting x x x the required bond which was
subsequently approved. x x x
[On June 30, 2005], the St. Mathew Christian Academy of Tarlac, Inc. filed a Petition for Injunction
with Prayer for Restraining Order docketed as Special Civil Action No. 9793 against the respondent
Bank and the Provincial Sheriff of Tarlac.
On August 16, 2005, the x x x Judge issued a Joint Decision in LRC Case No. 6438 and Special
Civil Action No. 9793, the contents of which are x x x as follows:
JOINT DECISION
Metropolitan Bank x x x is now entitled to a writ of possession, it being mandatory even during the
period of redemption.
The school, St. Mathew Christian [Academy] filed the petition for injunction on the ground that it
cannot be ejected being a third party.
x x x St. Mathew Christian Academy is practically owned by the mortgagors, spouses Denivin and
Josefina Ilagan. Firstly, the lease to St. Mathew by the Ilagans, as lessor, was for a period of one
year from the execution of the lease contract in 1998. Therefore, the lease should have expired in
1999. However, since the lease continued after 1999, the lease is now with a definite period, or
monthly, since the payment of lease rental is monthly. (Articles 1670 and 1687, Civil Code).
Therefore, the lease expires at the end of each month.
Secondly, the lease was not registered and annotated at the back of the title, and therefore, not
binding on third persons. (Article 1648, Civil Code)
Thirdly, the spouses are the owners or practically the owners of St. Mathew. Even if it has a
separate personality, nevertheless, "piercing the veil of corporate entity" is resorted to for the
spouses should not be allowed to commit fraud under the separate entity/personality of St. Mathew.
In connection with the allegation of the spouses Ilagans that the mortgage contract contains
provision which is pactum commisorium, the Court does not agree. What is prohibited is the
automatic appropriation without the public sale of the mortgaged properties.
The interest charges may be exorbitant, but it does not of itself cause the nullity of the entire contract
of mortgage. 1avvphi1
There is also no violation on the proscription on forum shopping. What is important is that, there is
really no other case between the parties involving the same subject matter.
In fine, St. Mathew is not really a third person. It is bound by the writ of possession issued by this
Court.
WHEREFORE, the writ of possession issued by this Court dated April 22, 2005 is hereby affirmed,
Civil Case No. 9793 is dismissed. No costs.
SO ORDERED.2
Pending resolution of the motion for reconsideration of the said Joint Decision, herein petitioners
Parents-Teachers Association (PTA) of St. Mathew Christian Academy (SMCA) and Gregorio
Inalvez, Jr., Rowena Layug, Malou Malvar, Marilou Baraquio, Gary Sinlao, Luzviminda Ocampo,
Marife Fernandez, Fernando Victorio, Ernesto Aganon, and Rizalino Manglicmot who are teachers
and students of SMCA, filed a Motion for Leave to file Petition in Intervention 3 in Special Civil Action
No. 9793, which was granted by the trial court in an Order dated November 10, 2005. 4 However, in a
subsequent Order dated December 7, 2005, the trial court reversed its earlier Order by ruling that
petitioners’ intervention would have no bearing on the issuance and implementation of the writ of
possession. Thus, it directed that the writ be implemented by placing respondent Metropolitan Bank
and Trust Company (MBTC) in physical possession of the property.5
Without filing a motion for reconsideration, petitioners assailed the trial court’s Order through a
Petition for Certiorariand Prohibition before the CA. However, said petition was dismissed by the CA
for lack of merit in its assailed Decision dated November 29, 2006. It held thus:
Considering that in this case the writ of possession had already been issued x x x petitioners’
remedy was to file x x x a petition that the sale be set aside and the writ of possession cancelled.
Instead, petitioners filed the instant Petition for Certiorari.
Moreover, no motion for reconsideration of the said Order directing the issuance of a writ of
possession was filed neither was there any motion for reconsideration of the assailed Order of 7
December 2005 prior to the institution of the instant Petition for Certiorari to afford the respondent
Court an opportunity to correct its alleged error. The rule is that certiorari as a special civil action will
not lie unless a motion for reconsideration is filed before the respondent tribunal to allow it to correct
its imputed error. While there are exceptions to the rule, none has been invoked by petitioners.
WHEREFORE, premises considered, the instant Petition is hereby DISMISSED for lack of merit.
SO ORDERED.6
Petitioners filed a Motion for Reconsideration but the motion was denied in a Resolution dated
January 29, 2007.
Hence, petitioners filed this Petition for Review on Certiorari.
Issues
1. THE COURT OF APPEALS COMMITTED A CLEAR AND REVERSIBLE ERROR WHEN IT

FAILED AND REFUSED TO CONSIDER THE GROUNDS RELIED UPON IN THE PETITION
BEFORE IT WHEN THE SAME ARE CLEARLY MERITORIOUS AND ARE BASED ON THE LAW
AND JUSTICE;
2. THE COURT OF APPEALS COMMITTED A CLEAR AND REVERSIBLE ERROR WHEN IT

FAILED AND REFUSED TO CONSIDER THAT THE REMEDY AVAILABLE TO HEREIN
PETITIONERS IS THE SPECIAL CIVIL ACTION OF CERTIORARI AND NOT A PETITION TO SET
ASIDE THE FORECLOSURE SALE IN LRC CASE No. 6438;
3. THE COURT OF APPEALS COMMITTED A CLEAR AND REVERSIBLE ERROR IN RULING

THAT A MOTION FOR RECONSIDERATION IS STILL NEEDED BEFORE THE PETITIONERS
COULD FILE A SPECIAL CIVIL ACTION OF CERTIORARI; and
4. THE COURT OF APPEALS COMMITTED A CLEAR AND REVERSIBLE ERROR IN NOT

HOLDING THAT CONSIDERATIONS OF JUSTICE AND EQUITY, AND NOT TECHNICALITY,
SHOULD BE THE BASES FOR THE RESOLUTION OF THE PETITION BEFORE IT. 7
Our Ruling
The petition is bereft of merit.
Petitioners are not "Third Parties" against whom the writ of possession cannot be issued and
implemented.
As a rule, it is ministerial upon the court to issue a writ of possession after the foreclosure sale and
during the period of redemption.8 Section 7 of Act No. 3135 explicitly authorizes the purchaser in a
foreclosure sale to apply for a writ of possession during the redemption period by filing an ex parte
motion under oath for that purpose "in the registration or cadastral proceedings if the property is
registered, or in special proceedings in the case of property registered under the Mortgage Law" with
the Regional Trial Court of the province or place where the real property or any part thereof is
situated, in the case of mortgages duly registered with the Registry of Deeds. Upon filing of such
motion and the approval of the corresponding bond, the law also directs in express terms the said
court to issue the order for a writ of possession.9
However, this rule is not without exception. In Barican v. Intermediate
Appellate Court,10 we held that the obligation of a court to issue an ex parte writ of possession in
favor of the purchaser in an extrajudicial foreclosure sale ceases to be ministerial once it appears
that there is a third party in possession of the property who is claiming a right adverse to that of the
debtor/mortgagor. This ruling was reiterated in Policarpio v. Active Bank11 where we held that:
Ordinarily, a purchaser of property in an extrajudicial foreclosure sale is entitled to possession of the

property. Thus, whenever the purchaser prays for a writ of possession, the trial court has to issue it
as a matter of course. However, the obligation of the trial court to issue a writ of possession ceases
to be ministerial once it appears that there is a third party in possession of the property claiming a
right adverse to that of the debtor/mortgagor. Where such third party exists, the trial court should
conduct a hearing to determine the nature of his adverse possession. (Emphasis supplied)
In this case, we find that petitioners cannot be considered as third parties because they are not
claiming a right adverse to the judgment debtor. Petitioner-teachers and students did not claim
ownership of the properties, but merely averred actual "physical possession of the subject school
premises".12 Petitioner-teachers’ possession of the said premises was based on the employment
contracts they have with the school. As regards the petitioner-students, Alcuaz v. Philippine School
of Business Administration13 and Non v. Dames II14 characterized the school-student relationship as
contractual in nature. As such, it would be specious to conclude that the teachers and students hold
the subject premises independent of or adverse to SMCA. In fact, their interest over the school
premises is necessarily inferior to that of the school. Besides, their contracts are with the school and
do not attach to the school premises. Moreover, the foreclosure of the current school premises does
not prevent the SMCA from continuing its operations elsewhere.
At this point, it is relevant to note that in the Joint Decision dated August 16, 2005, the trial court
found that SMCA was not a third party and was therefore bound by the said writ of
possession.15 Consequently, it affirmed the issuance of the writ of possession.
MBTC thus correctly argued that petitioners did not have superior rights to that of SMCA over the
subject property because their supposed possession of the same emanated only from the latter.
Since petitioners’ possession of the subject school premises stemmed from their employment or
enrollment contracts with the school, as the case may be, necessarily, their right to possess the
subject school premises cannot be adverse to that of the school and of its owners. As such, the
petitioners cannot be deemed "third parties" as contemplated in Act No. 3135, as amended.
The lack of authority to sign the certificate of non-forum shopping attached to the Petition for
Issuance of Writ of Possession was an insignificant lapse.
Petitioners further claim that the lack of authority to sign the certificate on non-forum shopping
attached to the Petition for the Issuance of the Writ of Possession rendered the same worthless and
should be deemed as non-existent.16 MBTC asserts otherwise, citing Spouses Arquiza v. Court of
Appeals17 where we held that an application for a writ of possession is a mere incident in the
registration proceeding which is in substance merely a motion,18and therefore does not require such
a certification.
Petitioners’ contention lacks basis. In Green Asia Construction and Development Corporation v.
Court of Appeals,19where the issue of validity of the Certificate of Non-Forum Shopping was
questioned in an application for the issuance of a Writ of Possession, we held that:
x x x it bears stressing that a certification on non-forum shopping is required only in a complaint or a

petition which is an initiatory pleading. In this case, the subject petition for the issuance of a writ of
possession filed by private respondent is not an initiatory pleading. Although private respondent
denominated its pleading as a petition, it is more properly a motion. What distinguishes a motion
from a petition or other pleading is not its form or the title given by the party executing it, but its
purpose. The purpose of a motion is not to initiate litigation, but to bring up a matter arising in the
progress of the case where the motion is filed.20 (Emphasis supplied)
It is not necessary to initiate an original action in order for the purchaser at an extrajudicial
foreclosure of real property to acquire possession.21 Even if the application for the writ of possession
was denominated as a "petition", it was in substance merely a motion. 22 Indeed, any insignificant
lapse in the certification on non-forum shopping filed by the MBTC did not render the writ irregular.
After all, no verification and certification on non-forum shopping need be attached to the motion. 23
Hence, it is immaterial that the certification on non-forum shopping in the MBTC’s petition was
signed by its branch head. Such inconsequential oversight did not render the said petition defective
in form.
The trial court’s Order did not violate the petitioner-students’ right to quality education and academic
freedom.
We disagree with petitioners’ assertion that the students’ right to quality education and academic
freedom was violated. The constitutional mandate to protect and promote the right of all citizens to
quality education at all levels24is directed to the State and not to the school.25 On this basis, the
petitioner-students cannot prevent the MBTC from acquiring possession of the school premises by
virtue of a validly issued writ of possession.
There is likewise no violation of the so-called academic freedom. Article XIV, Section 5(2) of the
Constitution mandates "that academic freedom shall be enjoyed in all institutions of higher learning."
Academic freedom did not go beyond the concept of freedom of intellectual inquiry, 26 which includes
the freedom of professionally qualified persons to inquire, discover, publish and teach the truth as
they see it in the field of their competence subject to no control or authority except of rational
methods by which truths and conclusions are sought and established in these disciplines. It also
pertains to the right of the school or college to decide for itself, its aims and objectives, and how best
to attain them - the grant being given to institutions of higher learning - free from outside coercion or
interference save possibly when the overriding public welfare calls for some restraint. 27 In Garcia v.
The Faculty Admission Committee, Loyola School of Theology,28 we held that:
[I]t is to be noted that the reference is to the 'institutions of higher learning' as the recipients of this
boon. It would follow then that the school or college itself is possessed of such a right. It decides for
itself its aims and objectives and how best to attain them. It is free from outside coercion or
interference save possibly when the overriding public welfare calls for some restraint. It has a wide
sphere of autonomy certainly extending to the choice of students. This constitutional provision is not
to be construed in a niggardly manner or in a grudging fashion. That would be to frustrate its
purpose, nullify its intent. x x x It is the business of a university to provide that atmosphere which is
most conducive to speculation, experiment and creation. It is an atmosphere in which there prevail
the 'four essential freedoms' of a university - to determine for itself on academic grounds who may
teach, what may be taught, how it shall be taught, and who may be admitted to study.
In this case, except for their bare allegation that "if the school will be ejected because of the writ of
possession, the students will necessarily be ejected also"29 and "thereby their learning process and
other educational activities shall have been disrupted",30 petitioners miserably failed to show the
relevance of the right to quality education and academic freedom to their case or how they were
violated by the Order granting the writ of possession to the winning bidder in the extrajudicial
foreclosure sale.
The petitioners were accorded due process.

The petitioners argue that the court below did not conduct trial for the presentation of evidence to
support its conclusion that the intervention would have no bearing on the issuance and
implementation of the writ of possession,31 thereby depriving them of due process.
Petitioners’ contention is without merit. It is settled that the issuance of a writ of possession is a
ministerial duty of the court.32 The purchaser of the foreclosed property, upon ex parte application
and the posting of the required bond, has the right to acquire possession of the foreclosed property
during the 12-month redemption period.33
This ex parte petition for the issuance of a writ of possession under Section 7 of Act No. 3135 is not,
strictly speaking, a "judicial process" as contemplated in Article 43334 of the Civil Code.35 As a judicial
proceeding for the enforcement of one's right of possession as purchaser in a foreclosure sale, it is
not an ordinary suit by which one party "sues another for the enforcement of a wrong or protection of
a right, or the prevention or redress of a wrong."36
In Idolor v. Court of Appeals,37 we described the nature of the ex parte petition for issuance of
possessory writ under Act No. 3135 to be a non-litigious proceeding and summary in nature. As
an ex parte proceeding, it is brought for the benefit of one party only, and without notice to, or
consent by any person adversely interested.38 It is a proceeding where the relief is granted without
requiring an opportunity for the person against whom the relief is sought to be heard. 39 It does not
matter even if the herein petitioners were not specifically named in the writ of possession nor notified
of such proceedings.40 In Sagarbarria v. Philippine Business Bank,41 we rejected therein petitioner's
contention that he was denied due process when the trial court issued the writ of possession without
notice.
Here in the present case, we similarly reject petitioners’ contention that the trial court should have
conducted a trial prior to issuing the Order denying their motion to intervene. 42 As it is, the law does
not require that a petition for a writ of possession may be granted only after documentary and
testimonial evidence shall have been offered to and admitted by the court. 43 As long as a verified
petition states the facts sufficient to entitle the petitioner to the relief requested, the court shall issue
the writ prayed for. There is no need for petitioners to offer any documentary or testimonial evidence
for the court to grant the petition.44
The proper remedy for the petitioners is a separate, distinct and independent suit, provided for under
Act No. 3135.
Petitioners assert that Section 8 of Act No. 3135 specifically refers to "the debtor" as the party who is
required to file a petition for the cancellation of the writ of possession in the same proceeding in
which possession was requested.45 As they are not the debtors referred to in the said law, petitioners
argue that the filing of a petition for the cancellation of the writ of possession in the same proceeding
in which possession was requested, does not apply to them.46 Hence, they allege that it was
improper for the CA to conclude that the Petition for Certiorari was the wrong remedy in the case
where the writ of possession was issued.47
Respondent, on the other hand, avers that certiorari is available only when there is grave abuse of
discretion amounting to lack or excess of jurisdiction and there is no appeal, or any plain, speedy
and adequate remedy in the ordinary course of law.48 In the instant case, the respondent argues that
the court merely granted the Writ of Possession in accordance with settled jurisprudence 49 and that
the remedy of certiorari does not lie because there is an available remedy which is an appeal.50
We hold that the CA correctly held that the proper remedy is a separate, distinct and independent
suit provided for in Section 8 of Act No. 313551 viz:
SEC. 8. The debtor may, in the proceedings in which possession was requested, but not later than
thirty days after the purchaser was given possession, petition that the sale be set aside and the writ
of possession canceled, specifying the damages suffered by him, because the mortgage was not
violated or the sale was not made in accordance with the provisions hereof, and the court shall take
cognizance of this petition in accordance with the summary procedure provided for in section one
hundred and twelve of Act Numbered Four hundred and ninety-six; and if it finds the complaint of the
debtor justified, it shall dispose in his favor of all or part of the bond furnished by the person who
obtained possession. Either of the parties may appeal from the order of the judge in accordance with
section fourteen of Act Numbered Four hundred and ninety-six; but the order of possession shall
continue in effect during the pendency of the appeal.
In De Gracia v. San Jose,,52 we held that:
x x x the order for a writ of possession issues as a matter of course upon the filing of the proper
motion and the approval of the corresponding bond. No discretion is left to the court. And any
question regarding the regularity and validity of the sale (and the consequent cancellation of the writ)
is left to be determined in a subsequent proceeding as outlined in section 8. Such question is not to
be raised as a justification for opposing the issuance of the writ of possession, since, under the Act,
the proceeding for this is ex parte. (Emphasis supplied)
Since the writ of possession had already been issued in LRC Case No. 6438 per Order dated
November 29, 2005, the proper remedy is an appeal and not a petition for certiorari,53 in accordance
with our ruling in Metropolitan Bank and Trust Company v. Tan54 and Government Service Insurance
System v. Court of Appeals.55 As long as the court acts within its jurisdiction, any alleged errors
committed in the exercise of its discretion will amount to nothing more than mere errors of judgment,
correctable by an appeal if the aggrieved party raised factual and legal issues; or a petition for
review under Rule 45 of the Rules of Court if only questions of law are involved.
As a general rule, a motion for reconsideration must be filed before resort to the special civil action
of certiorari is made.
As a general rule, a motion for reconsideration should precede recourse to certiorari in order to give
the trial court an opportunity to correct the error that it may have committed. The said rule is not
absolute and may be dispensed with in instances where the filing of a motion for reconsideration
would serve no useful purpose, such as when the motion for reconsideration would raise the same
point stated in the motion56 or where the error is patent for the order is void57 or where the relief is
extremely urgent, as in cases where execution had already been ordered where the issue raised is
one purely of law.58
In the case at bar, the petitioners stated in their Petition for Certiorari and Prohibition before the CA
as follows:59
18. Respondent sheriff and his deputies are now set to implement the said writ of possession and
are now poised to evict the students and teachers from their classrooms, grounds and school
facilities;
19. Petitioners did not anymore file a motion for reconsideration of said order x x x and is proceeding
directly to this Honorable Court because the filing of a motion for reconsideration would serve no
useful purpose x x x Besides the relief sought is extremely urgent as the respondent sheriff is set to
implement the questioned orders x x x and the circumstances herein clearly indicate the urgency of
judicial intervention x x x hence, this petition.
Plainly, the petitioners have the burden to substantiate that their immediate resort to the appellate
court is based on any of the exceptions to the general rule. They have to show the urgent and
compelling reasons for such recourse. The afore-cited allegations of the petitioners in their petition
before the CA did not dispense with the burden of establishing that their case falls under any of the
exceptions to the general rule. Unlike the case of Ronquillo v. Court of Appeals 60 cited by the
petitioners, where not only was a writ of execution issued but petitioner’s properties were already
scheduled to be sold at public auction on April 2, 1980 at 10:00 a.m., the herein petitioners failed to
show the specificity and imminence of the urgency confronting their immediate recourse to the
appellate court.
We therefore hold that the CA correctly found the necessity for a prior resort to a motion for
reconsideration prior to the institution of the Petition for Certiorari.
Considerations of equity do not apply in the instant case.
The petitioners claim that the challenged decision of the CA would show that the petition was
decided on the basis of pure technicality and that the appellate court did not pass upon the merits of
the petition.61 They further assert that considerations of justice and equity and not technicality, should
be the bases for the resolution of the petition.62MBTC, on the other hand, argues that equity may not
apply if there is applicable law and jurisprudence.
In San Luis v. San Luis,63 we expounded on the concept of justice by holding that:
More than twenty centuries ago, Justinian defined justice "as the constant and perpetual wish to
render everyone his due." That wish continues to motivate this Court when it assesses the facts and
the law in every case brought to it for decision. Justice is always an essential ingredient of its
decisions. Thus when the facts warrant, we interpret the law in a way that will render justice,
presuming that it was the intention of the lawmaker, to begin with, that the law be dispensed with
justice.
While equity which has been aptly described as "justice outside legality" is applied only in the
absence of, and never against, statutory law or judicial rules of procedure. 64 Positive rules prevail
over all abstract arguments based on equity contra legem.65 For all its conceded merit, equity is
available only in the absence of law and not as its replacement.66
In this case, justice demands that we conform to the positive mandate of the law as expressed in Act
No. 3135, as amended. Equity has no application as to do so would be tantamount to overruling or
supplanting the express provisions of the law.
In our Resolution67 dated June 4, 2007, we issued a Temporary Restraining Order enjoining
respondent to desist from implementing the Writ of Possession. We also required petitioners to post
a cash or surety bond in the amount of ₱50,000.00 within five days from notice, otherwise the
temporary restraining order shall be automatically lifted. The petitioners posted a cash bond in the
amount of ₱50,000.00 on June 27, 2007 pursuant to our June 4, 2007 Resolution. 68
WHEREFORE, premises considered, the Petition for Review on Certiorari is DENIED for lack of
merit. The temporary restraining order heretofore issued is hereby LIFTED and SET ASIDE. The
Decision of the Court of Appeals dated November 29, 2006 and its Resolution dated January 29,
2007 are AFFIRMED.
SO ORDERED.
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSE P. PEREZ
Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1
CA rollo, pp. 190-197; penned by Associate Justice Arturo G. Tayag and concurred in by
Associate Justices Remedios A. Salazar-Fernando and Noel G. Tijam.
2
Id. at 191-194.
3
Id. at 65-66.
4
Id. at 74.
5
Id. at 75.
6
Id. at 195-196.
7
Rollo, p. 14.
8
Development Bank of the Philippines v. Prime Neighborhood Association, G.R. Nos.
175728 & 178914, May 8, 2009, 587 SCRA 582.
9
Sulit v. Court of Appeals, 335 Phil. 914, 924 (1997).
G.R. No. L-79906, June 20, 1988, 162 SCRA 358, 363, citing IFC Service Leasing and
10
Acceptance Corporation v. Nera, 125 Phil. 595, 598 (1967); Tan Soo Huat v. Ongwico, 63
Phil. 746 (1936).
11
12
Rollo, p. 123.
13
244 Phil. 8, 20 (1988).
14
G.R. No. 89317, May 20, 1990, 185 SCRA 523.
15
CA rollo, p. 133
16
Rollo, pp. 125-126.
17
498 Phil 793, 802-803 (2005).
18
Rollo, pp. 146-147.
19
G.R. No. 163735, November 24, 2006, 508 SCRA 79.
20
Id. at 84.
21
Id.
22
Id.
Metropolitan Bank and Trust Company v. Bance, G.R. No. 167280, April 30, 2008, 553
23
SCRA 507, 519.
24
Constitution, Article XIV, Section 1.
25
University of the Philippines v. Judge Ayson, 257 Phil. 580, 587 (1989).
Joaquin G. Bernas, S.J., The 1987 Constitution of the Republic of the Philippines: A
26
Commentary 2003 edition, p. 1253.
27
Tangonan v. Judge Paño, 221 Phil. 601, 612 (1985).
28
160-A Phil. 929, 943-944 (1975). Citations omitted.
29
Rollo, p. 126
30
Id.
31
Id.
Rayo v. Metropolitan Bank and Trust Company, G.R. No. 165142, December 10, 2007,
32
539 SCRA 571, 579.
33
Act No. 3135, Section 7.
Art. 433. Actual possession under claim of ownership raises a disputable presumption of
34
ownership. The true owner must resort to judicial process for the recovery of the property.
35
Rayo v. Metropolitan Bank and Trust Company, supra at 579-580.
36
Id.
37
490 Phil 808, 816 (2005).
38
Sagarbarria v. Philippine Business Bank, G.R. No. 178330, July 23, 2009.
39
Spouses Santiago v. Merchants Rural Bank of Talavera, Inc., 493 Phil 862, 869 (2005).
40
Rayo v. Metropolitan Bank and Trust Company, supra note 32 at 581.
41
Supra.
42
CA rollo, p. 75.
Oliveros v. Presiding Judge, RTC, Br. 24, Biñan, Laguna, G.R. No. 165963, September 3,
43
2007, 532 SCRA 109, 120.
44
Spouses Santiago v. Merchants Rural Bank of Talavera, Inc., supra at 870.
45
Rollo, p. 129.
46
Id. at 130.
47
Id. at 129
48
Id. at 149.
49
Id.
50
Id
51
CA rollo, p. 196.
52
94 Phil 623, 625-626 (1954).
53
Rollo, pp. 31-32.
54
G.R. No. 159934, June 26, 2008, 555 SCRA 502, 512.
55
251 Phil. 222 (1989).
56
Fortich-Celdran v. Celdran, 125 Phil 903, 908 (1967).
57
Vigan Electric Light Co., Inc. v. Public Service Commission, 119 Phil 304, 313-314 (1964).
58
Central Bank of the Philippines v. Hon. Cloribel, 150-A Phil. 86, 100 (1972).
59
CA rollo, p. 18.
60
217 Phil. 269, 277-278 (1984).
61
Rollo, p. 131.
62
Id.
63
G.R. No. 133743 & 134029, February 6, 2007, 514 SCRA 294, 313, citing Alonzo v.
Intermediate Appellate Court, 234 Phil. 267, 276 (1987).
64
Zabat, Jr. v. Court of Appeals, 226 Phil. 489, 495 (1986).
65
Id.
Tirazona v. Philippine EDS Techno-Service, Inc. (PET, Inc.), G.R. No. 169712, January 20,
66
2009, 576 SCRA 625, 626.
67
Rollo, p. 71.
68
Id. at 77.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 190078 March 5, 2010
SPOUSES NORMAN K. CERTEZA, JR. and MA. ROSANILA V. CERTEZA, AND AMADA P.
VILLAMAYOR and HERMINIO VILLAMAYOR, JR., Petitioners,
vs.
PHILIPPINE SAVINGS BANK, Respondent.
RESOLUTION
DEL CASTILLO, J.:

In this Petition for Review on Certiorari,1 petitioners contend that the auction sale conducted by virtue
of the extrajudicial foreclosure of the mortgage should be declared null and void for failure to comply
with the two-bidder rule.
Factual Antecedents
Petitioners obtained a ₱1,255,000.00 loan from respondent Philippine Savings Bank (PS
Bank),2 secured by two parcels of land, with all the buildings and improvements existing thereon,
covered by Transfer Certificate of Title Nos. N-208706 and N-208770. 3
Petitioners failed to pay their outstanding obligation despite demands hence PS Bank instituted on
May 8, 2002, an action for Extrajudicial Foreclosure of the Real Estate Mortgage pursuant to Act No.
3135,4 as amended.
During the auction sale conducted on February 18, 2003, PS Bank emerged as the sole and highest
bidder.5 A corresponding Certificate of Sale dated February 20, 2003 was issued in favor of PS
Bank, which was registered with the Registry of Deeds of Quezon City on March 25, 2003. 6
During the period of redemption, on December 1, 2003, PS Bank filed an Ex-parte Petition 7 for Writ
of Possession with the Regional Trial Court (RTC) of Quezon City, which was granted in an
Order8 dated September 21, 2004, after the period of redemption for the foreclosed property had
already expired.
On January 20, 2005, petitioners filed an Omnibus Motion for Leave to Intervene and to Stay
Issuance or Implementation of Writ of Possession,9 attaching therein their Petition-in-
Intervention10 pursuant to Sec. 8 of Act No. 3135. They sought the nullification of the extrajudicial
foreclosure sale for allegedly having been conducted in contravention of the procedural
requirements prescribed in A.M. No. 99-10-05-0 (Re: Procedure in Extrajudicial Foreclosure of Real
Estate Mortgages) and in violation of herein petitioners’ right to due process.
PS Bank opposed11 the motion citing Manalo v. Court of Appeals12 where we held that "(T)he
issuance of an order granting the writ of possession is in essence a rendition of judgment within the
purview of Section 2, Rule 19 of the Rules of Court." PS Bank also argued that with the issuance of
the trial court’s Order on September 21, 2004, the Motion for Leave to Intervene can no longer be
entertained.13
The petitioners filed their Reply14 arguing that the filing of their petition before the court where
possession was requested was pursuant to Sec. 8 of Act No. 3135.
On March 3, 2005, the RTC of Quezon City, Branch 217, issued an Order 15 denying the motion for
intervention and to stay the implementation of the writ, to wit: 16
The issuance of writ of possession being ministerial in character, the implementation of such writ by
the sheriff is likewise ministerial. In PNB vs. Adil, 118 SCRA 116 (1982), the Supreme Court held
that "once the writ of possession has been issued, the trial court has no alternative but to enforce the
writ without delay." The Court found it gross error for the judge to have suspended the
implementation of the writ of possession on a very dubious ground as "humanitarian reason."
WHEREFORE, premises considered, the motion to intervene and to stay the implementation of the
writ of possession is hereby denied.
Petitioners filed a motion for reconsideration17 but the motion was denied in the Order dated May 9,
2005.
Petitioners filed a Petition for Certiorari with the Court of Appeals (CA) on June 8, 2005 imputing
grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the trial court in
denying their motion to intervene and to stay the implementation of the writ. 18 The CA, in its
Decision19 dated May 8, 2009, found that (1) the issuance of a writ of possession is a ministerial
function; (2) there was no irregularity in the foreclosure sale; (3) the denial of the motion to intervene
is proper; and (4) certiorari is not the proper remedy. The dispositive portion of the said Decision
reads:20
IN VIEW OF ALL THE FOREGOING, the petition is ordered DISMISSED. The Orders dated March
3, 2005 and May 9, 2005 in LR Case No. Q-17376 (03) are affirmed.
Petitioners filed a timely Motion for Reconsideration, which was denied by the CA in its Resolution
dated October 20, 2009.21
Issues
Petitioners advance the following issues:
I. whether x x x the court of appeals erred in ruling that certiorari is not the proper remedy of
a party in a writ of possession case.
II. whether x x x the court of appeals erred in ruling that the denial of petitioners’ motion to
intervene is proper.
III. whether x x x the court of appeals erred in ruling that there may be only one bidder in a
foreclosure sale.
Petitioners allege that the contents of their Omnibus Motion together with the Petition-in-Intervention,
although entitled as such, sought the nullification of the February 18, 2003 extrajudicial foreclosure
sale and the cancellation of both the certificate of sale and the writ of possession issued in favor of
PS Bank.22 They further submit that the writ of possession is null and void because of patent
irregularities in the conduct of the foreclosure sale.23 In support of their contention, petitioners argue
that A.M. No. 99-10-05-0 which took effect on January 15, 2000, requires that there must be at least
two participating bidders in an auction sale.24 Thus:
5. No auction sale shall be held unless there are at least two (2) participating bidders, otherwise the
sale shall be postponed to another date. If on the new date set for the sale there shall not be at least
two bidders, the sale shall then proceed. The names of the bidders shall be reported by the sheriff or
the notary public who conducted the sale to the Clerk of Court before the issuance of the certificate
of sale.
Our Ruling
The law governing cases of extrajudicial foreclosure of mortgage is Act No. 3135. It provides:
Section 1. When a sale is made under a special power inserted in or attached to any real estate
mortgage hereafter made as security for the payment of money or the fulfillment of any other
obligation, the provisions of the following sections shall govern as to the manner in which the sale
and redemption shall be effected, whether or not provision for the same is made in the power.
xxxx
Sec. 4. The sale shall be made at public auction, between the hours of nine in the morning and four
in the afternoon; and shall be under the direction of the sheriff of the province, the justice or auxiliary
justice of peace of the municipality in which such sale has to be made, or a notary public of said
municipality, who shall be entitled to collect a fee of five pesos for each day of actual work
performed, in addition to his expenses.
Sec. 5. At any sale, the creditor, trustee, or other person authorized to act for the creditor, may
participate in the bidding and purchase under the same conditions as any other bidder, unless the
contrary has been expressly provided in the mortgage or trust deed under which the sale is made.
Sec. 6. In all cases in which an extrajudicial sale is made under the special power hereinbefore
referred to, the debtor, his successors in interest or any judicial creditor or judgment creditor of said
debtor, or any person having a lien on the property subsequent to the mortgage or deed of trust
under which the property is sold, may redeem the same at any time within the term of one year from
and after the date of sale; and such redemption shall be governed by the provisions of sections four
hundred and sixty-four to four hundred and sixty-six, inclusive, of the Code of Civil Procedure, 25 in so
far as these are not inconsistent with the provisions of this Act.
The requirement for at least two participating bidders provided in the original version of paragraph 5
of A.M. No. 99-10-05-0 is not found in Act No. 3135. Hence, in the Resolution 26 of the Supreme
Court en banc dated January 30, 2001, we made the following pronouncements:
It is contended that this requirement is now found in Act No. 3135 and that it is impractical and
burdensome, considering that not all auction sales are commercially attractive to prospective
bidders.
The observation is well taken. Neither Act No. 3135 nor the previous circulars issued by the Court
governing extrajudicial foreclosures provide for a similar requirement. The two-bidder rule is
provided under P.D. No. 1594 and its implementing rules with respect to contracts for government
infrastructure projects because of the public interest involved. Although there is a public interest in
the regularity of extrajudicial foreclosure of mortgages, the private interest is predominant. The
reason, therefore, for the requirement that there must be at least two bidders is not as exigent as in
the case of contracts for government infrastructure projects.
On the other hand, the new requirement will necessitate republication of the notice of auction sale in
case only one bidder appears at the scheduled auction sale. This is not only costly but, more
importantly, it would render naught the binding effect of the publication of the originally scheduled
sale. x x x
Thus, as amended by the January 30, 2001 Resolution, paragraph 5 of A.M. No. 99-10-05-0 now
reads:
5. The name/s of the bidder/s shall be reported by the sheriff or the notary public who conducted the
sale to the Clerk of Court before the issuance of the certificate of sale. 27
Hence, the CA correctly ruled that it is no longer required to have at least two bidders in an
extrajudicial foreclosure of mortgage.28
1avvphi1
Subsequently, on August 7, 2001, we further resolved other matters relating to A.M. No. 99-10-05-0,
specifically on: (1) period of redemption of properties with respect to the change introduced by
Republic Act No. 8791 (The General Banking Law of 2000) to Act No. 3135; (2) ceiling on sheriff’s
fees; and (3) payment of filing fees prescribed in the Rules of Court in addition to sheriff’s fees. 29
Pursuant to A.M. No. 99-10-05-0, as amended by the Resolutions of January 30, 2001 and August
7, 2001, the then Court Administrator (now Associate Justice of this Court) Presbitero J. Velasco, Jr.,
issued Circular No. 7-200230dated January 22, 2002 which became effective on April 22,
2002.31 Section 5(a) of the said circular states:
Sec. 5. Conduct of the extra-judicial foreclosure sale –
a. The bidding shall be made through sealed bids which must be submitted to the Sheriff who shall
conduct the sale between the hours of 9 a.m. and 4 p.m. of the date of the auction (Act 3135, Sec.
4). The property mortgaged shall be awarded to the party submitting the highest bid and in case of a
tie, an open bidding shall be conducted between the highest bidders. Payment of the winning bid
shall be made either in cash or in managers check, in Philippine currency, within five (5) days from
notice.
The use of the word "bids" (in plural form) does not make it a mandatory requirement to have more
than one bidder for an auction sale to be valid. A.M. No. 99-10-05-0, as amended, no longer
prescribes the requirement of at least two bidders for a valid auction sale. We further held that
"Except for errors or omissions in the notice of sale which are calculated to deter or mislead bidders,
to depreciate the value of the property, or to prevent it from bringing a fair price, simple mistakes or
omissions are not considered fatal to the validity of the notice and the sale made pursuant thereto". 32
In view of the foregoing, the extra-judicial foreclosure sale conducted in this case is regular and
valid. Consequently, the subsequent issuance of the writ of possession is likewise regular and valid.
Hence, it is no longer necessary for this Court to rule on the other issues presented by the
petitioners, which are also grounded on the supposed irregularity in the auction.
WHEREFORE, the instant petition is DENIED. The assailed Decision of the Court of Appeals dated
May 8, 2009 and its Resolution dated October 20, 2009 are hereby AFFIRMED.
SO ORDERED.

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSE P. PEREZ
Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1
Rollo, pp. 10-29.
2
Id. at 31-32.
3
Id. at 32.
4
An Act to Regulate the Sale of Property under Special Powers Inserted In or Annexed To
Real Estate Mortgages, (1924).
5
Rollo, p. 34.
6
Id. at 34.
7
Id. at 80-85; docketed as LRC No. Q-17376 (03).
8
Id. at 87-88; penned by Judge Lydia Querubin Layosa.
9
Id. at 89-92.
10
Id. at 93-102.
11
Id. at 103-107.
12
419 Phil. 215, 235 (2001).
13
Rollo, p. 104.
14
Id. at 108-112.
15
Id. at 113-115; penned by Judge Lydia Querubin Layosa.
16
Id. at 115.
17
Id. at 116-121.
18
Id. at 36.
Id. at 30-44; penned by Associate Justice Teresita Dy-Liacco Flores and concurred in by
19
Associate Justices Rosmari D. Carandang and Ramon R. Garcia.
20
Id. at 43-44.
21
Id. at 45-46.
22
Id. at 20.
23
Id. at 9.
24
Id. at 21.
25
Rules of Court, now Rule 39, Sections 29, 30 and 34.
26
A.M. No. 99-10-05-0 dated January 30, 2001, p. 2.
27
A.M. No. 99-10-05-0 (as further amended, August 7, 2001), p. 4. This Resolution took
effect on September 1, 2001.
28
Rollo, p. 39.
29
A.M. No. 99-10-05-0 dated August 7, 2001.
Guidelines for the Enforcement of Supreme Court Resolution of December 14, 1999 in
30
Administrative Matter No. 99-10-05-0 (Re: Procedure in Extra-judicial Foreclosure of

Mortgage), as amended by the Resolutions dated January 30, 2001 and August 7, 2001.
31
Section 11 of Circular No. 7-2002.
32
Supra note 26.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 179792 March 5, 2010
LNS INTERNATIONAL MANPOWER SERVICES, Petitioner,

vs.
ARMANDO C. PADUA, JR., Respondent.
DECISION
DEL CASTILLO, J.:
Bare and unsubstantiated allegations do not constitute substantial evidence and have no probative
value.
This petition for review on certiorari1 assails the Decision2 dated November 30, 2006 of the Court of
Appeals (CA) in CA-G.R. SP No. 90526, which affirmed the Order3 dated October 16, 2004 of the
Department of Labor and Employment (DOLE), which in turn affirmed the Order 4 dated April 28,
2004 of the Philippine Overseas Employment Administration (POEA), which held petitioner LNS
International Manpower Services (LNS) liable for misrepresentation and non-issuance of official
receipt. Also assailed is the CA Resolution dated September 12, 2007 5 which denied the motion for
reconsideration.
Factual Antecedents
On January 6, 2003, respondent Armando C. Padua, Jr. (Padua) filed a Sworn Statement 6 before
the Adjudication Office of the POEA against LNS and Sharikat Al Saedi International Manpower
(Sharikat) for violation of Section 2(b), (d), and (e) of Rule I, Part VI of the 2002 POEA Rules and
Regulations Governing the Recruitment and Employment of Land-based Overseas Workers which
provides:
Section 2. Grounds for imposition of administrative sanctions:
xxxx
b. Charging or accepting directly or indirectly any amount greater than that of specified in the
schedule of allowable fees prescribed by the Secretary, or making a worker pay any amount greater
than that actually received by him as a loan or advance;
xxxx
d. Collecting any fee from a worker without issuing the appropriate receipt clearly showing the
amount paid and the purpose for which payment was made;
e. Engaging in act/s of misrepresentation in connection with recruitment and placement of workers,
such as furnishing or publishing any false notice, information or document in relation to recruitment
or employment;
xxxx
Padua alleged that on July 12, 2002, he applied as auto electrician with petitioner LNS and was
assured of a job in Saudi Arabia. He paid LNS the amounts of ₱15,000.00 as processing fees,
₱6,000.00 for medical expenses, and ₱1,000.00 for trade test, but he was not issued the
corresponding receipts. He further alleged that he signed an employment contract with LNS as a
body builder with a monthly salary of US$370.00.
Padua further alleged that it was another agency, Sharikat, which processed his papers and
eventually deployed him on September 29, 2002 to Saudi Arabia. However, he returned to the
Philippines on December 23, 2002 because he was not allegedly paid his salaries and also because
of violations in the terms and conditions of his employment contract.
LNS and Sharikat filed their respective Answers.
In its Verified Answer,7 LNS averred that it is a sole proprietorship owned and managed by Ludevina
E. Casabuena. It admitted that Padua applied for employment abroad but he withdrew all the
documents he submitted to LNS on July 27, 2002. As proof, LNS attached the withdrawal letter duly
signed by Padua.
LNS alleged that it did not know that Padua applied with Sharikat or that he was eventually deployed
by the latter to Saudi Arabia. LNS denied that it endorsed Padua’s application papers to Sharikat.
LNS claimed that after Padua withdrew his documents, it no longer had any knowledge whether he
applied with another employment agency. LNS insisted that the contract of employment submitted
by Padua to the POEA clearly indicated that the same was only between him and Sharikat and not
LNS.
Thus, LNS claimed that it could not be held liable for non-issuance of receipt or misrepresentation.
For its part, Sharikat admitted that it processed Padua’s papers for
employment in Saudi Arabia.8 However, it argued that it cannot be held liable for any alleged
violation of labor standards because its principal in Saudi Arabia faithfully complied with the terms
and conditions of Padua’s employment.9 Sharikat also argued that Padua’s contentions are vague
and unsubstantiated and deserve no probative weight at all. Aside from his bare allegations, Padua
did not present evidence to show that he was not paid his salaries or that he was illegally
dismissed.10
In his Reply to Answer of LNS,11 Padua admitted signing the withdrawal letter but alleged that he did
not actually receive the documents because he was made to understand that the same would be
endorsed to Sharikat.
Ruling of POEA
On April 28, 2004, the POEA issued its Order finding LNS liable for non-issuance of receipt and
misrepresentation. As to Sharikat, the POEA found no sufficient evidence to hold it liable for the
violations charged. The dispositive portion of the said Order reads:
WHEREFORE, premises considered, We find and so hold respondent LNS International liable for
violation of Section 2(d) Rule 1, part VI of the 2002 POEA Rules and Regulations and the penalty of
Four (4) months suspension or fine of P40,000.00 is hereby imposed, being its first offense and for
violation of Section 2(e) Rule 1, part VI of the 2002 POEA Rules and Regulations, the penalty of
Eight (8) months suspension or fine of P80,000.00 is hereby imposed, being its second offense.
The charges against SHARIKAT AL SAIDI INTERNATIONAL MANPOWER are hereby dismissed for
insufficiency of evidence.
SO ORDERED.12
Ruling of the Secretary of DOLE
Only LNS filed its Appeal Memorandum with the DOLE.13 Padua did not appeal from the said POEA
Order absolving Sharikat from any liability. Hence, the same is already deemed final as against
Sharikat.
On December 16, 2004, the DOLE dismissed the appeal of petitioner and affirmed the ruling of the
POEA. The decretal portion of the Order reads:
WHEREFORE, the Appeal, herein treated as Petition for Review, filed by L.N.S. International
Manpower Services is hereby DISMISSED for lack of merit. The Order dated April 28, 2004 of the
POEA Administrator, finding petitioner liable for violation of Section 2 (d) and (e), Rule I, Part VI of
the POEA Rules and Regulations, and imposing upon it the penalty of suspension of license for a
period of twelve (12) months or, in lieu thereof, the payment of fine in the amount of One Hundred
Twenty Thousand Pesos (₱120,000.00), is AFFIRMED.
SO ORDERED.14
Petitioner moved for reconsideration, but the motion was denied for lack of merit in an Order dated
May 12, 2005.15
Aggrieved, petitioner filed with the CA a petition for certiorari but it was dismissed in its November
30, 2006 Decision. The CA opined that the affirmative assertion of respondent that he paid petitioner
a placement fee is entitled to great weight than the bare denials of petitioner; and, that respondent
was made to believe that petitioner would be solely responsible for the processing of his
employment abroad.
Petitioner filed a Motion for Reconsideration which was denied by the CA in its Resolution dated
September 12, 2007.
Issue
The lone issue in this petition for review on certiorari is whether petitioner is liable for non-issuance
of receipt and misrepresentation.
Petitioner contends that the CA gravely abused its discretion in giving credence to respondent’s
claims which were all anchored on bare allegations. According to petitioner, the CA erred in ruling
that its defense is purely denial since the same was corroborated by a document indubitably
showing respondent’s withdrawal of his application for overseas employment. Considering such
withdrawal, petitioner is naturally not bound to issue any receipt and could not as well be responsible
for the recruitment of respondent. Petitioner likewise asserts that it never asked or received any
payment from the respondent.
Our Ruling
We grant the petition.
As a general rule, factual findings of administrative and quasi-judicial agencies specializing in their
respective fields, especially when affirmed by the CA, must be accorded high respect, if not
finality.16 However, we are not bound to adhere to the general rule if we find that the factual findings
do not conform to the evidence on record or are not supported by substantial evidence, 17 as in the
instant case.
The self-serving and unsubstantiated allegations of respondent cannot defeat the concrete evidence
submitted by petitioner. We note that respondent did not deny the due execution of the withdrawal
form as well as the genuineness of his signature and thumb mark affixed therein. On the contrary, he
admitted signing the same. When he voluntarily signed the document, respondent is bound by the
terms stipulated therein.18
We are not persuaded by respondent’s contention that he signed the withdrawal form upon
representations by LNS that it would endorse his papers to Sharikat. This really makes no sense at
all. Why would LNS allow Padua to withdraw his application papers, and even go through the
process of making him execute a withdrawal form, if its ultimate intention is to endorse the said
papers to Sharikat? If respondent’s allegation is to be believed, why then would LNS relinquish its
possession over said documents if it will refer them anyway to Sharikat?
Moreover, we are inclined to give more evidentiary weight to the allegation of petitioner that it did not
receive any amount from the respondent. This conclusion is more logical considering that it has
been duly established that respondent had withdrawn all his documents from LNS. Having
withdrawn said documents, there is no more reason for him to pay any fees to LNS. In his Sworn
Statement filed before the POEA, respondent alleged that he paid the ₱15,000.00 processing fees
and ₱6,000.00 medical fees to LNS sometime in August, 2002. This self-serving and
unsubstantiated allegation deserves no credence at all considering that even before August, 2002,
respondent had already withdrawn his documents from LNS. It has not escaped our notice that the
withdrawal form was dated and signed by respondent on July 27, 2002. As such, after said date,
there is no more reason for respondent to pay any fees to LNS. Hence, we are not convinced or
persuaded by respondent’s allegation that he still paid LNS in August 2002 after having withdrawn
his documents on July 27, 2002.
There is likewise no basis for the POEA, DOLE, and the CA’s conclusion that it was petitioner that
endorsed respondent’s documents to Sharikat. Other than respondent’s self-serving claim, there is
no proof whatsoever that petitioner endorsed respondent’s application papers to Sharikat. Bare
allegations which are not supported by any evidence, documentary or otherwise, sufficient to support
a claim, fall short to satisfy the degree of proof needed.19On the other hand, petitioner’s denial of
these allegations was corroborated by the withdrawal form proffered as evidence, the existence and
due execution of which were not disputed by respondent. In addition, if respondent’s allegations
were to be believed, we find it rather odd that LNS would require him to fill up the withdrawal form if
the intention of LNS was to endorse the papers to Sharikat. If LNS allowed respondent to withdraw
all his documents, then there is nothing left for LNS to endorse to Sharikat. 1avvphi1
No evidence whatsoever was adduced that LNS was acting as a conduit of Sharikat. Likewise, there
is no evidence, other than respondent’s unsubstantiated claim, that petitioner endorsed his
application to Sharikat. On the contrary, this was belied by the withdrawal letter the existence of
which was not even denied by the respondent. In fact, he admitted its due execution and his
signature which appeared thereon. There is also no denying that respondent was deployed to Saudi
Arabia. In fact, Sharikat admitted in its Answer that it was the one responsible for respondent’s
deployment to Saudi Arabia. From the foregoing, it is more logical that it was Sharikat to whom
respondent eventually paid the corresponding fees. However, for failure to interpose any appeal
from the judgment of the POEA insofar as it absolved Sharikat, respondent is thereby bound by it
and is considered final as to him.20
In fine, for failure to adduce any shred of evidence of payment made to petitioner, or that petitioner
referred or endorsed respondent for employment abroad to another agency, the charges of non-
issuance of receipt and misrepresentation against petitioner could not possibly prosper. By the
voluntary withdrawal of respondent’s application from petitioner, the latter could not have been
involved in the recruitment and placement of respondent and consequently could not be held liable
for any violation.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No.
90526 dated November 30, 2006, and its Resolution dated September 12, 2007,
are REVERSED and SET ASIDE. The complaint against petitioner LNS International Manpower
Services is hereby DISMISSED for lack of merit. Accordingly, the amounts of ₱40,000.00 and
₱80,000.00 representing petitioner’s appeal bond are ordered REFUNDED.
SO ORDERED.

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSE P. PEREZ
Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1
Rollo, pp. 8-25.
2
Id. at 29-39; penned by Associate Justice Portia Aliño-Hormachuelos and concurred in by
Associate Justices Amelita G. Tolentino and Arcangelita Romilla-Lontok.
3
CA rollo, pp.55-58.
4
Id. at 37-41.
5
Rollo, p. 41.
6
7
Id. at 21-25.
8
Id. at 27.
9
Id. at 28.
10
Id.
11
Id. at 30-32.
12
Id. at 41.
13
Id. at 42-52.
14
Id. at 58.
15
Id. at 66-68.
V.V. Aldaba Engineering v. Ministry of Labor and Employment, G.R. No. 76925,
16
September 26, 1994, 237 SCRA 31, 38-39.
Pleyto v. Philippine National Police Criminal Investigation and Detection Group (PNP-
17
CIDG), G.R. No. 169982, November 23, 2007, 538 SCRA 534, 554-555.
18
Camacho v. Court of Appeals, G.R. No. 127520, February 9, 2007, 515 SCRA 242, 261.
19
Cuizon v. Court of Appeals, 329 Phil. 456, 483 (1996).
Pison-Arceo Agricultural and Development Corp. v. National Labor Relations Commission,

20
344 Phil. 723, 736 (1997).

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 158627 March 5, 2010

vs.
MARITESS MARTINEZ y DULAY, Appellant.
DECISION
DEL CASTILLO, J.:
No less than the Constitution ordains that labor – local and overseas, organized and unorganized –
shall be given full protection. Further it mandates the promotion of full employment and equality of
employment opportunities. Thus, if an individual illegally recruits another for employment abroad, he
shall be meted the penalty of life imprisonment and fined. The same individual could also be held
liable for the crime of Estafa.1
This appeal assails the December 11, 2002 Decision2 of the Court of Appeals (CA) in CA-G.R. CR
No. 24144 which affirmed with modifications the October 12, 1999 Decision 3 of the Regional Trial
Court (RTC) of Manila, Branch 3, finding appellant guilty of the crimes of Illegal Recruitment in large
scale and four counts of Estafa.
Factual Antecedents
On June 21, 1995, herein appellant Maritess Martinez and her daughter, Jenilyn Martinez, were
charged with seven counts of Estafa before the RTC of Manila. The cases were docketed as
Criminal Case Nos. 95-143311,4 95-143312,5 95-143313,6 95-143314,7 95-143315,8 95-143316,9 and
95-143317.10
Except for the dates of commission of the crimes, the amounts defrauded, and the names of the
complainants, the Informations for Estafa were similarly worded as follows:
That in or about and during the period comprised between __________,11 inclusive, in the City of
Manila, Philippines, the said accused, conspiring and confederating and helping with one Julius
Martinez who was previously charged [with] the same offense before the Regional Trial Court of
Manila, Branch ___, docketed under Criminal Case No[s]. 94-139797 to 139803 did then and there
willfully and feloniously defraud __________12 in the following manner, to wit: the said accused, by
means of false manifestations and fraudulent representations which she/he/they made to said
__________13 to the effect that he had the power and capacity to recruit and employ as factory
worker in Korea and could facilitate the processing of the pertinent papers if given the necessary
amount to meet the requirements thereof, and by means of other similar deceits, induced and
succeeded in inducing said __________14 to give and deliver, as in fact he/she/they gave and
delivered to said accused the amount of __________15 on the strength of said manifestations and
representations, said accused well knowing that the same were false and fraudulent and were made
solely to obtain, as in fact she/he/they did obtain the amount of __________ 16 which amount once in
her/his/their possession, with intent to defraud, willfully, unlawfully and feloniously misappropriated,
misapplied and converted to her/his/their own personal use and benefit, to the damage and
prejudice of said __________17 in the aforesaid amount of __________18 Philippine Currency.
Contrary to law.
On even date, appellant together with her children Jenilyn Martinez and Julius Martinez, were also
charged with the crime of Illegal Recruitment in large scale which was docketed as Criminal Case
No. 95-143318.19 The accusatory portion of the Information reads:
That in or about and during the period comprised between February 1993 and July, 1994, in the City
of Manila, Philippines, the said accused, conspiring and confederating together and helping one
another, representing themselves to have the capacity to contract, enlist and transport Filipino
workers for employment abroad, did then and there willfully and unlawfully for a fee recruit and
promise employment/job placement abroad to the following persons, to wit: NELSON LAPLANO,
CRIZALDO FERNANDEZ Y MARTINEZ, WALTER ISUAN Y ORTIZ, NECITO SERQUINA 20 Y
TUVERA, DOMINADOR ILASIN21, ARNULFO SUYAT Y LOYOLA, and VIVENCIO22 MARTINEZ Y
CORNELIO without first having secured the necessary license or authority from the Department of
Labor and Employment (POEA).
Contrary to law.23
The cases were raffled to Branch 3 of the RTC of Manila. Thereafter, warrants of arrest 24 were
issued against the three accused. However, the same were served only against appellant 25 and
Julius Martinez26 whereas accused Jenilyn Martinez remains at large.
During his arraignment on August 18, 1995, Julius Martinez pleaded not guilty to the charge of Illegal
Recruitment.27Meanwhile, appellant was arraigned on September 6, 1995 where she entered a plea
of not guilty to the charges of Estafa and Illegal Recruitment in large scale. 28
The cases were consolidated upon motion of the prosecution.29 Trial on the merits thereafter ensued.
The following complainants were presented by the prosecution as witnesses, to wit: Dominador
Ilacin, Necito Serquiña, Vivencio Martinez, and Arnulfo Suyat. However, complainants Walter Isuan,
Nelson Laplano, and Crizaldo Fernandez failed to testify despite being given several
opportunities.30 Thus, on February 14, 1996, the trial court issued an Order viz:
For failure of the complaining witnesses, Nelson Laplano y Malapit, Crizaldo Fernandez y Martinez,
and Walter Isuan y Ortiz, to appear at today’s trial, despite personal service of notice of this setting,
as prayed for by the accused’ counsel and without objection from the public prosecutor, insofar as
Crim. Case No. 95-143312, 95-143314, and 95-143316 are concerned, the same are hereby
PROVISIONALLY DISMISSED, with the express consent of accused Maritess Martinez y Dulay
only. With costs de oficio.
SO ORDERED.31
On October 12, 1999, the trial court issued its Decision acquitting Julius
Martinez of the crime of Illegal Recruitment in large scale while finding appellant guilty of Illegal
Recruitment and four counts of Estafa.
The trial court found that appellant was not a holder of a license or authority to deploy workers
abroad; that appellant falsely represented herself to have the capacity to send complainants as
factory workers in South Korea; that she asked from complainants various amounts allegedly as
placement and processing fees; that based on said false representations, complainants parted with
their money and gave the same to appellant; that appellant appropriated for herself the amounts
given her to the damage and prejudice of the complainants; and that she failed to deploy
complainants for work abroad.
The trial court did not lend credence to appellant’s allegation that she merely assisted complainants
in their applications with JH Imperial Organization Placement Corp. Instead, it held that complainants
directly applied with the appellant, viz:
x x x Maritess was not licensed to recruit workers for overseas employment by the POEA. She is
directly accountable to complainants as the recipient of the money. Besides, no one from Imperial
Agency was even presented to show that it was the entity handling the recruitment. They relied on
her representations that she could send them abroad to work. x x x32
The dispositive portion of the trial court’s Decision reads:
WHEREFORE, accused Julius Martinez is acquitted while accused Maritess Martinez is FOUND
GUILTY of estafa on 4 counts and illegal recruitment. She is hereby sentenced to an imprisonment
of from 10 years, 8 months and 21 days to 11 years, 11 months and 10 days of prision mayor for 4
counts of estafa. Further, she shall suffer an imprisonment of from 5 years, 5 months and 11 days to
6 years, 8 months and 20 days of prision correccional for illegal recruitment.
Accused shall also indemnify private complainants for actual damages, as follows: ₱40,000.00 to
Dominador Ilacin, ₱40,000.00 to Necito Serquiña, ₱55,000.00 to Vivencio Martinez, and ₱45,000.00
to Arnulfo Suyat; and to pay the costs.
SO ORDERED.33
Appellant appealed to the CA arguing that no evidence was presented to show that she falsely
represented herself as having the capacity to send complainants as factory workers in South
Korea.34 She alleged that there was no proof that she personally undertook to deploy them for work
abroad.35 She maintained that she merely assisted complainants in their applications with JH
Imperial Organization Placement Corp. and that she was merely an agent of the latter. 36 She claimed
that there is no truth to the claim of the complainants that she was holding office in her residence
considering its very limited space and that the same is occupied by her six family members. 37
On December 11, 2002, the CA rendered its assailed Decision denying the appeal for lack of merit.
It found appellant guilty of Illegal Recruitment in large scale for having "committed acts of recruitment
such as making promises of profitable overseas employment to complainants"38 and of "collecting
from the complainants payment for their passports, placement fees and other sundry expenses". 39 It
likewise found that appellant "did not have the authority to recruit workers for overseas
employment".40 The appellate court disregarded appellant’s argument that she merely assisted
complainants in their applications with JH Imperial Organization Placement Corp. The CA likewise
affirmed appellant’s conviction for four counts of Estafa.
The dispositive portion of the CA Decision reads:
Accordingly, the Court modifies the penalties imposed by the trial court, viz:
In Criminal Case No. 95-143311, the amount involved is ₱30,000.00 ([appellant] having returned to
complainant Dominador Ilacin the amount of ₱10,000.00). The minimum term of the indeterminate
sentence should be four (4) years and two (2) months of prision correccional and the maximum term
should be eight (8) years of prision mayor.
In Criminal Case No. 95-143313, the amount involved is ₱40,000.00. The minimum term of the
indeterminate sentence should be four (4) years and two (2) months of prision correccional and the
maximum term should at least be eight (8) years of prision mayor plus a period of one (1) year [one
(1) year for each additional ₱10,000.00] or a total maximum period of nine (9) years of prision
mayor.
complainant Vivencio Martinez the amount of ₱16,000.00). The minimum term of the indeterminate
should be at least eight (8) years of prision mayor plus a period of one (1) year [one (1) year for each
additional ₱10,000.00] for a total maximum period of nine (9) years of prision mayor.
complainant Arnulfo Suyat the amount of ₱16,000.00). The minimum term of the indeterminate
should be eight (8) [years] of prision mayor.
In Criminal Case No. 95-143318, large scale illegal recruitment is punishable with life imprisonment
and a fine of One Hundred Thousand Pesos (Article 39, Labor Code).
The amount of actual damages awarded to the three complainants is modified there being partial
payments made by the appellant, viz:
1) Dominador Ilacin - ₱30,000.00
2) Vivencio Martinez - ₱39,000.00
3) Arnulfo Suyat - ₱29,000.00
WHEREFORE, considering that the imposable penalty in Criminal Case No. 95-143318 (Illegal
Recruitment in Large Scale) is life imprisonment consistent with Section 13, paragraph (b), Rule 124
of the 2000 Revised Rules on Criminal Procedure, the Court hereby certifies this case and elevates
the entire records to the Honorable Supreme Court for the mandated review.
SO ORDERED.41
Hence, this appeal filed by appellant raising the following assignment of errors:
Issues
I.
THE COURT OF APPEALS COMMITTED PALPABLE ERROR IN NOT FINDING [THAT] THE
PROSECUTION EVIDENCE IS INSUFFICIENT TO PROVE THE GUILT OF THE [APPELLANT].
II.
THE COURT OF APPEALS DECIDED [THE CASE] IN A WAY PROBABLY NOT IN ACCORD WITH
LAW OR WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT. 42
Appellant’s Arguments
As regards the crime of Illegal Recruitment in large scale, appellant maintains that she could not be
convicted of the same because she merely assisted complainants in their applications with the
recruitment agency. She likewise insists that she turned over the amounts she received from the
complainants to JH Imperial Organization Placement Corp.43
Appellant insists that the courts below erred in finding her guilty of the crime of Estafa because there
is no proof that she falsely represented to have the capacity to send complainants as factory workers
in South Korea. She also avers that there is no evidence presented to show that she personally
undertook to deploy complainants for work abroad.44
Appellee’s Arguments
Appellee argues that the trial court and the CA correctly convicted
appellant of the crime of Illegal Recruitment in large scale. There is proof beyond reasonable doubt
that she impressed upon the complainants that she had the authority to deploy them for employment
abroad. She even received money from the complainants and issued corresponding receipts. There
was also proof that she was not a licensee or holder of authority to deploy workers abroad. In fact,
her admission that she merely "referred" the complainants to JH Imperial Organization Placement
Corp. was already an act of recruitment under Article 13(b) of the Labor Code. Appellee also argues
that all the elements of Estafa were satisfactorily proven by the prosecution.
Our Ruling
Article 13(b) of the Labor Code defines "recruitment and placement" viz:
(b) "Recruitment and placement" refers to any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring, or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not: Provided, That any person or
entity which, in any manner, offers or promises for a fee employment to two or more persons shall
be deemed engaged in recruitment and placement.
In this case, all the four complainants unanimously declared that appellant offered and promised
them employment abroad. They also testified that they gave various amounts to appellant as
payment for placement and processing fees. Notwithstanding said promises and payments, they
were not able to leave for abroad to work. These testimonies, as well as the documentary evidence
they submitted consisting of the receipts issued them by the appellant, all prove that the latter was
engaged in recruitment and placement activities.
Even conceding that appellant merely referred the complainants to JH Imperial Organization
Placement Corp., the same still constituted an act of recruitment. As explicitly enumerated in Article
13(b) of the Labor Code, "recruitment and placement" includes the act of making referrals, whether
for profit or not. Thus, the CA correctly held that:
x x x Even if [appellant] did no more that "suggest" to complainants where they could apply for
overseas employment, her act constituted "referral" within the meaning of Article 13(b) of the Labor
Code (People v. Ong, 322 SCRA 38). Referral is the act of passing along or forwarding of an
applicant for employment after an initial interview of a selected applicant for employment to a
selected employer, placement officer or bureau. (People v. Goce, 247 SCRA 780). 45
Having already established that appellant was engaged in "recruitment and placement," the issue
that must be resolved next is whether such activities may be considered illegal and whether the acts
were committed in large scale.
Article 38 of the Labor Code defines "illegal recruitment" as:
ART. 38. ILLEGAL RECRUITMENT. – (a) Any recruitment activities, including the prohibited
practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-
holders of authority46 shall be deemed illegal and punishable under Article 39 of this Code. x x x
(b) Illegal recruitment when committed by a syndicate or in large scale shall be considered an
offense involving economic sabotage and shall be penalized in accordance with Article 39 hereof. 1avvphi1
Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more
persons conspiring and/or confederating with one another in carrying out any unlawful or illegal
transaction, enterprise or scheme defined under the first paragraph hereof. Illegal recruitment is
deemed committed in large scale if committed against three (3) or more persons individually or as a
group.
In the instant case, the prosecution satisfactorily established that appellant was not a licensee or
holder of authority to deploy workers abroad. By this fact alone, she is deemed to have engaged in
illegal recruitment and the same was committed in large scale because it was carried out against the
four complainants.
The fact that JH Imperial Organization Placement Corp. was a holder of a valid license to deploy
workers abroad did not serve to benefit herein appellant. There was no evidence at all that said
recruitment agency authorized herein appellant to act as its agent. As aptly noted by the appellate
court:
From the testimonies of the complainants, it is clearly shown that [appellant] did more than just make
referrals. It was [appellant] whom they approached regarding their plans of working overseas. It was
[appellant] who collected the fees and receipts [therefor] were issued in her name. It was x x x
[appellant] from whom they learned what papers or documents to submit. Despite the denial,
[appellant], nevertheless, failed to explain why recruitment activities were done in her residence.
Likewise, she failed to present Milagros Lopez, one of the staff of Imperial, to whom she allegedly
turned over the money she collected from the complainants or any officer from the recruitment
agency to prove that she was merely a conduit thereof. x x x47
The three elements of the crime of illegal recruitment, to wit: a) the offender has no valid license or
authority required by law to enable him to lawfully engage in recruitment and placement of workers;
b) the offender undertakes any of the activities within the meaning of "recruitment and placement"
under Article 13(b) of the Labor Code, or any of the prohibited practices enumerated under Article 34
of the said Code (now Section 6 of RA 8042); and c) the offender committed the same against three
or more persons, individually or as a group,48 are present in the instant case. Consequently, we rule
that the trial court and the CA correctly found appellant guilty of Illegal Recruitment in large scale.
In the instant case, the applicable law at the time of the commission of the crime of Illegal
Recruitment in large scale was Article 39 of the Labor Code. Under said law, the imposable penalty
is life imprisonment and a fine of ₱100,000.00. The CA therefore correctly imposed upon herein
appellant the penalty of life imprisonment and a fine of ₱100,000.00 in Criminal Case No. 95-
143318.
We also affirm the findings of the trial court and the CA that appellant is guilty of four counts of
Estafa, the elements of which are: a) the accused defrauded another by abuse of confidence or by
means of deceit; and b) the offended party suffered damage or prejudice capable of pecuniary
estimation.49 In the instant case, we agree with the observations of the CA that:
In this case, [appellant] misrepresented herself to the complainants as one who can make
arrangements for job placements in South Korea as factory workers. By reason of her
misrepresentations, false assurances, and deceit, complainants were induced to part with their
money. The recruits waited for at least a year, only to realize that they were hoodwinked, as no jobs
were waiting for them abroad.
Criminal liability for estafa already committed is not affected by the fact that [appellant] returned a
portion of their money. Compromise or novation of contract pertains and affects only the civil aspect
of the case. Estafa is a public offense that must be prosecuted and punished by the Court in its
motion even though complete reparation should have been made of the damage suffered by the
offended party. x x x 50
Anent the penalties for the four counts of Estafa, we held in People v. Temporada 51 that:
The prescribed penalty for estafa under Article 315, par. 2(d) of the RPC, when the amount
defrauded exceeds ₱22,000.00, is prision correccional maximum to prision mayor minimum. The
minimum term is taken from the penalty next lower or anywhere within prision correccional minimum
and medium (i.e., from 6 months and 1 day to 4 years and 2 months). Consequently, the RTC
correctly fixed the minimum term for the five estafa cases at 4 years and 2 months of prision
correccional since this is within the range of prision correccional minimum and medium.
On the other hand, the maximum term is taken from the prescribed penalty of prision correccional
maximum to prision mayor minimum in its maximum period, adding 1 year of imprisonment for every
₱10,000.00 in excess of ₱22,000,00, provided that the total penalty shall not exceed 20 years.
However, the maximum period of the prescribed penalty of prision correccional maximum to prision
mayor minimum is not prision mayor minimum as apparently assumed by the RTC. To compute the
maximum period of the prescribed penalty, prision correccional maximum to prision mayor minimum
should be divided into three equal portions of time each of which portion shall be deemed to form
one period in accordance with Article 65 of the RPC. Following this procedure, the maximum period
of prision correccional maximum to prision mayor minimum is from 6 years, 8 months and 21 days to
8 years. The incremental penalty, when proper, shall thus be added to anywhere from 6 years, 8
months and 21 days to 8 years, at the discretion of the court.
In computing the incremental penalty, the amount defrauded shall be subtracted by ₱22,000.00, and
the difference shall be divided by ₱10,000.00. Any fraction of a year shall be discarded as was done
starting with the case of People v. Pabalan in consonance with the settled rule that penal laws shall
be construed liberally in favor of the accused. x x x52
Following the aforementioned procedure, we find that the penalties imposed by the appellate court
are proper.
WHEREFORE, the December 11, 2002 Decision of the Court of Appeals in CA-G.R. CR No. 24144
which affirmed with modifications the October 12, 1999 Decision of the Regional Trial Court of
Manila, Branch 3, finding appellant Maritess Martinez guilty of the crimes of Illegal Recruitment in
large scale and four counts of Estafa is AFFIRMED.
SO ORDERED.

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSE P. PEREZ
Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1
People v. Africa, G.R. No. 176638, December 2, 2009. (Unsigned Resolution)
2
CA rollo, pp. 101-113; penned by Associate Justice Juan Q. Enriquez, Jr. and concurred in
by Associate Justices Bernardo P. Abesamis and Edgardo F. Sundiam.
3
Records, pp. 378-381; penned by Judge Antonio I. De Castro.
4
Id. at 2-3.
5
Id. at 8-9.
6
Id. at 14-15.
7
Id. at 18-19.
8
Id. at 45-46.
9
Id. at 50-51.
10
Id. at 57-58.
February 9, 1993 and February 24, 1993 for Criminal Case No. 95-143311, id. at 2;
11
February 5, 1993 for Criminal Case No. 95-143312, id. at 8; November 29, 1993 and
February 8, 1994 for Criminal Case No. 95-143313, id. at 14; October 26, 1993 for Criminal
Case No. 95-143314, id. at 18; February 4, 1993 and August 14, 1994 for Criminal Case No.
95-143315, id. at 45; February 8, 1993 for Criminal Case No. 95-143316, id. at 50; and
November 1993 and July 1994 for Criminal Case No. 95-143317, id. at 57.
12
Dominador Ilacin y Pascua for Criminal Case No. 95-143311, id. at 2; Nelson Laplano y
Malapit for Criminal Case No. 95-143312, id. at 8; Necito Serquina y Tuvera for Criminal
Case No. 95-143313, id. at 14; Crizaldo Fernandez y Martinez for Criminal Case No. 95-
143314, id. at 18; Vevencio Martinez y Cornelio for Criminal Case No. 95-143315, id. at 45;
Walter Isuan y Ortiz for Criminal Case No. 95-143316, id. at 50; and Arnulfo Suyat y Loyola
for Criminal Case No. 95-143317, id. at 57.
13
Id.
14
Id.
₱40,000.00 in Criminal Case No. 95-143311, id. at 2; ₱25,000.00 in Criminal Case No. 95-
15
143312, id. at 8; ₱40,000.00 95-143313, id. at 14; ₱40,000.00 in Criminal Case No. 95-
143314, id. at 18; ₱55,000.00 in Criminal Case No. 95-143315, id. at 45; ₱23,000.00 in
Criminal Case No. 95-143316, id. at 50; and ₱45,000.00 in Criminal Case No. 95-143317, id.
at 57.
16
Id.
17
Supra note 12.
18
Supra note 15.
19
Records, pp. 61-62.
20
Sometimes spelled as "Serquiña" in the records.
21
Sometimes spelled as "Ilacin" in the records.
22
Sometimes spelled as "Vevencio" in the records.
23
Records, p. 61.
24
Id. at 78-79.
25
Id. at 89.
26
Id. at 92.
27
Id. at 110.
28
Id. at 124.
29
Id. at 1.
30
Id. at 182, 186, 191, 195.
31
Id. at 203; penned by Judge Antonio I. De Castro.
32
Id. at 380.
33
Id. at 381. Underscoring in the original text.
34
CA rollo, p. 54.
35
Id.
36
Id.
37
Id. at 55.
38
Id. at 110.
39
Id.
40
Id.
41
Id. at 112-113.
42
Rollo, p. 14.
43
Id. at 16.
44
Id. at 15.
45
CA rollo, p. 110.
46
This has been amended by Republic Act (RA) No. 8042 or the Migrant Workers and
Overseas Filipinos Act of 1995, which considers as illegal recruiter even a licensee or holder
of authority who commits acts prohibited under Article 34 of the Labor Code. Moreover, the
failure to deploy recruits is also considered as illegal recruitment under Section 6 of RA
8042.
47
CA rollo, p. 110.
48
See People v. Temporada, G.R. No. 173473, December 17, 2008, 574 SCRA 258, 279.
49
Id. at 282-283.
50
CA rollo, p. 111.
51
Supra note 48.
52
Id. at 283-284.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 185012 March 5, 2010

vs.
VICTOR VILLARINO y MABUTE, Appellant.
DECISION
DEL CASTILLO, J.:

In this special complex crime of rape with homicide, the unsolicited and spontaneous confession of
guilt by the appellant to the police officer is admissible in evidence. The circumstantial evidence is
also sufficient to sustain the conviction of the appellant even if no spermatozoa was found in the
victim’s body during an autopsy.
Factual Antecedents
On August 3, 1995, an Information1 was filed charging appellant Victor Villarino y Mabute with the
special complex crime of rape with homicide. The Information contained the following accusatory
allegations:
That on or about the 29th day of April, 1995, at about 5:00 o’clock in the afternoon, at Barangay
"D1", Municipality of Almagro, Province of Samar, Philippines, and within the jurisdiction of this
Honorable Court, the above named accused, with lewd design, by means of force, violence and
intimidation, did then and there, willfully, unlawfully and feloniously have carnal knowledge against a
minor ten (10) years [sic], "AAA",2 without the latter’s consent and against her will, and thereafter,
with deliberate intent to kill, did then and there willfully, unlawfully and feloniously inflict upon the said
"AAA" mortal wounds on x x x different parts of her body, which caused her untimely death.
CONTRARY TO LAW.
Appellant pleaded not guilty to the crime charged. After the termination of the pre-trial conference,
trial ensued.
The case against the appellant, as culled from the evidence presented by the prosecution, is as
follows:
On April 28, 1995, "BBB", together with her 10-year old daughter "AAA" and her younger son "CCC"
went to the house of their relative in Barangay "D" to attend the fiesta to be held the next day.3
On even date, from 7:00 o’clock to 9:00 o’clock in the evening, SPO4 Jesus Genoguin (SPO4
Genoguin) was in his house in Barangay "D" entertaining his guests, one of whom was appellant.
While personally serving food and drinks to appellant, SP04 Genoguin noticed that the latter was
wearing a bracelet and a necklace with pendant. Appellant even allowed SPO4 Genoguin to put on
the bracelet.4
On April 29, 1995, at around 9:00 o’clock in the morning, the appellant who was on his way
to Barangay "D", passed by the house of Rodrigo Olaje (Rodrigo). At that time, Rodrigo noticed
appellant wearing a bracelet and a necklace with pendant. He was also wearing a white sleeveless t-
shirt (sando).5
At 11:00 o’clock in the morning, appellant was at the house of "BBB’s" aunt. "BBB" offered him food.
"BBB" also noticed that he was dressed in a white sando and that he wore jewelry consisting of a
bracelet and a necklace with pendant.6 At 1:00 o’clock in the afternoon, he was seen wearing the
same sando and jewelry while drinking at the basketball court in Barangay "D".7
At around 3:00 o’clock in the afternoon, "BBB" told "AAA" to go home to Barangay "D1" to get a t-
shirt for her brother. "AAA" obeyed. However, she no longer returned. While "BBB" was anxiously
waiting for "AAA" in the house of her aunt in Barangay "D",8 she received information that a dead
child had been found in Barangay "D1". She proceeded to the area where she identified the child’s
body as that of her daughter, "AAA".9
At around 4:00 o’clock in the afternoon, Rodrigo, who was the barangay captain of Barangay "D1"
received information that a dead child was found in their barangay. He instructed
a barangay tanod to inform the police about the incident. Thereafter, Rodrigo proceeded to the
specified area together with other barangay tanods.10
SPO4 Genoguin also went to the crime scene after being informed by his commander. 11 Upon
arrival, he saw the corpse of a little girl behind a big boulder that was about 10 meters away from the
trail junction of the barangays.12People had gathered seven to 10 meters away from the dead body,
but no one dared to approach.13
"AAA’s" lifeless body lay face up with her buttocks on top of a small rock. Her body was slanted
downward with her legs spread apart and dangling on the sides of the small boulder. She was no
longer wearing short pants and panty, and blood oozed from her vagina. Wrapped around her right
hand, which was positioned near her right ear, was a white sando.14
"AAA’s" panty was found a meter away from her body, while her short pants was about two meters
farther. A bracelet and a pendant were also recovered from the crime scene. Rodrigo and "BBB"
identified these pieces of jewelry as those seen on the appellant. They also identified the sando on
"AAA’s" arm as the appellant’s.15 Thus, the hunt for appellant began.16
On the same day, the appellant was found in the house of Aurelia Susmena near the seashore
of Barangay "D1". He was drunk and violent. He resisted arrest and had to be bodily carried to the
motorboat that would take him to the municipal building in Almagro, Samar. The arresting team
made the appellant take off his clothes since they were wet. When he complied, his briefs revealed
bloodstains.17
"AAA’s" corpse was taken to Calbayog District Hospital for autopsy. The Medico Legal Necropsy
Report indicated the following injuries sustained by "AAA":
- Lacerated wounds:
# 1 – 2 cm. in length forehead
# 2 – 2 cm. in length globella
# 3 – 2.5 cm. in length, left lateral supraorbital region
# 4 – 3 cm. in length, left infraorbital region with fracture of underlying bone
# 5 – 4 cm. in left occiput with linear fracture of underlying bone
- Hematoma, confluent abrasion, 3 cm. in diameter, sacrum
- Genitalia grossly female, pre-pubertal
- Vaginal orifice admits two fingers with ease
- Laceration, posterior vagina wall 3 cm.

- Laceration, anterior vaginal wall (12 o’clock) 1.5 cm.
CAUSE OF DEATH: Cardiorespiratory Arrest secondary to:
Cerebral hemorrhage and concussion secondary to multiple lacerated wounds to skull

fissure
Hypovolomic shock secondary to Massive Hemorrhage, secondary to third degree vaginal

laceration.18
Dr. Arleen P. Lim, Medical Officer III, testified that four of the five lacerated wounds could have been
caused by a hard irregular or blunt object, like a rock or stone.19 While the fifth lacerated wound
could have been the result of a strong force, as when the head is forcibly banged. 20 "AAA’s"
hematoma was just above her buttocks.21 She further testified that the ease with which two fingers
entered "AAA’s" vaginal orifice could have been caused by sexual intercourse. The lacerations in her
vaginal wall could also have been the result of sexual intercourse or by the forcible entry of an object
into the vaginal canal, such as a penis.22 Dr. Lim confirmed that the cause of death of "AAA" was
cardio-respiratory arrest secondary to multiple lacerated wounds and skull fracture. 23
Due to the death of "AAA", "BBB" incurred (1) ₱2,200.00 for the embalming and for the coffin (2)
₱700.00 for transportation and (3) ₱4,000.00 for the wake and construction of the tomb.
On May 2, 1995, the police brought appellant to Calbayog City for medical examination since he had
scratches and abrasions on his body. While waiting for a boat ride at 4:00 o’clock in the morning, the
police team took a coffee break. SPO4 Genoguin was momentarily left alone to guard the appellant.
During this short period, the appellant voluntarily admitted to SPO4 Genoguin that he committed the
crime charged. He also told SPO4 Genoguin that he could keep the pendant and bracelet if he
would retrieve the t-shirt and throw it into the sea. SPO4 Genoguin rejected the appellant’s offer and
reminded him of his right to a counsel and that everything the appellant said could be used against
him in court. Unperturbed, the appellant reiterated his offer. 24
When they boarded the motorboat, the appellant repeatedly offered to give SPO4 Genoguin
₱20,000.00 if he would throw the sando into the sea. However, the police officer ignored the offer
and instead reported the matter to the Chief of Police of Almagro, SPO4 Basilio M. Yabao. 25 Later,
the appellant’s mother, Felicidad Mabute y Legaspi, asked him not to testify against her son. 26
At the Calbayog District Hospital, Senior Resident Physician Dr. Jose V. Ong, found that appellant’s
body had 10 healed abrasions and two linear abrasions or scratches, particularly, on his breast,
knees, as well as right and left ears, that could have been caused by fingernails. 27
The Version of the Appellant
In the afternoon of April 29, 1995, the appellant and his mother were at the residence of Aurelia
Susmena. The appellant was sleeping in a hammock when he was abruptly awakened by Rodrigo,
SPO4 Genoguin, and several policemen and barangay tanods. They tied his hands and feet with a
nylon rope, and dragged him towards the seashore. Rodrigo hit the nape of the appellant with a gun
then poked it at the appellant’s mother, who wanted to help him. The appellant was then forcibly
loaded in a motorboat.28
The appellant denied owning the bracelet, the pendant, and the sando found at the scene of the
crime. He claimed it was impossible for him to buy these pieces of jewelry since he was only a cook
in the fishing venture managed by Rodrigo. He maintained that he was not even paid for his
services, for which reason he abandoned his work. This resulted in the failure of the fishing venture
to operate for a day, which allegedly angered Rodrigo making him testify against him. 29
On May 19, 1999, the Regional Trial Court of Calbayog City, Branch 32 rendered a Decision 30 finding
the appellant guilty beyond reasonable doubt of the complex crime of rape with homicide. It disposed
as follows:
WHEREFORE, judgment is hereby rendered, finding the accused, VICTOR VILLARINO y Mabute,
guilty beyond reasonable doubt of the crime of rape with Homicide of a ten-year old minor, for which
he is hereby sentenced to suffer the supreme penalty of DEATH, as provided for under R.A. No.
7659, to pay the complainant, BBB, the sum of ₱50,000.00 and ₱6,900.00 for actual expenses, plus
all the accessory penalties provided by law, without subsidiary imprisonment in case of insolvency
and to pay the costs.
IT IS SO ORDERED.
The Verdict of the Court of Appeals
The Court of Appeals (CA) found the appellant guilty only of homicide. The dispositive portion of its
Decision31reads as follows:
WHEREFORE, the Decision dated May 19, 1999, of the RTC of Calbayog City, in Criminal Case No.
2069 is MODIFIED. As modified, accused-appellant VICTOR VILLARINO y MABUTE is found
GUILTY of HOMICIDE and he is hereby sentenced to suffer an indeterminate penalty ranging from
twelve (12) years of prision mayor in its maximum period, as minimum, to seventeen (17) years and
four (4) months of reclusion temporal in its medium period, as maximum. The appealed Decision is
AFFIRMED in all other respects.
SO ORDERED.32
Still unsatisfied, the appellant comes to us raising the following assignment of errors:
Issues
THE TRIAL COURT ERRED IN CONVICTING ACCUSED-APPELLANT OF RAPE WITH

HOMICIDE SOLELY ON THE BASIS OF CIRCUMSTANTIAL EVIDENCE.
II.
THE TRIAL COURT ERRED IN RENDERING A VERDICT OF CONVICTION DESPITE THE FACT
THAT THE GUILT OF ACCUSED-APPELLANT WAS NOT PROVEN BEYOND REASONABLE
DOUBT.33
Our Ruling

In the special complex crime of rape with homicide, the following elements
must concur: (1) the appellant had carnal knowledge of a woman; (2) carnal knowledge of a woman
was achieved by means of force, threat or intimidation; and (3) by reason or on occasion of such
carnal knowledge by means of force, threat or intimidation, the appellant killed a woman. 34 When the
victim is a minor, however, it is sufficient that the evidence proves that the appellant had sexual
intercourse or sexual bodily connections with the victim.35
In the instant case, appellant voluntarily confessed to raping and killing "AAA" to SPO4 Genoguin.
He even offered to give the pieces of jewelry to the latter if his sando is thrown into the sea. The
appellant did not deny this accusation nor assail its truthfulness.
When appellant confessed to the crime, he was alone with SPO4 Genoguin, and no force or
intimidation was employed against him. The confession was spontaneously made and not elicited
through questioning. The trial court did not, therefore, err in holding that compliance with the
constitutional procedure on custodial interrogation is not applicable in the instant case. 36
In People v. Dy,37 we held that:
Contrary to the defense contention, the oral confession made by the Accused to Pat. Padilla that "he
had shot a tourist" and that the gun he had used in shooting the victim was in his bar which he
wanted surrendered to the Chief of Police (t.s.n., October 17, 1984, pp. 6-9), is competent evidence
against him. The declaration of an accused acknowledging his guilt of the offense charged may be
given in evidence against him (Sec. 29, Rule 130, Rules of Court). It may in a sense be also
regarded as part of the res gestae. The rule is that, any person, otherwise competent as a witness,
who heard the confession, is competent to testify as to the substance of what he heard if he heard
and understood all of it. An oral confession need not be repeated verbatim, but in such a case it
must be given in substance (23 C.J.S. 196, cited in People v. Tawat, G.R. No. 62871, May 25, 1985,
129 SCRA 431).
What was told by the Accused to Pat. Padilla was a spontaneous statement not elicited through
questioning, but given in an ordinary manner. No written confession was sought to be presented in
evidence as a result of formal custodial investigation. (People v. Taylaran, G.R. No. L-19149,
October 31, 1981, 108 SCRA 373). The Trial Court, therefore, cannot be held to have erred in
holding that compliance with the constitutional procedure on custodial interrogation is not applicable
in the instant case, as the defense alleges in its Error VII.38
At any rate, even without his confession, appellant could still be convicted of the complex crime of
rape with homicide. The prosecution established his complicity in the crime through circumstantial
evidence which were credible and sufficient, and led to the inescapable conclusion that the appellant
committed the complex crime of rape with homicide. When considered together, the circumstances
point to the appellant as the culprit.
First. Prior to the incident, three witnesses saw the appellant wearing the white sleeveless t-
shirt, a necklace with pendant and a bracelet. Rodrigo saw the appellant wearing the same
sando and pieces of jewelry when the latter was working in his fishing venture. He again saw
the appellant wearing the same apparel and jewelry on the day the victim was raped and
murdered. SPO4 Genoguin recalled that he saw appellant wearing the necklace with
pendant and the bracelet on the eve of the commission of the crime. On that fateful day, he
noticed that the appellant was wearing the white sleeveless t-shirt and the same pieces of
jewelry in a drinking spree a kilometer away from the crime scene. "BBB" also testified that
on the day of her daughter’s death, she saw the appellant wearing a white sleeveless t-shirt,
a necklace with pendant, and a bracelet.
Second. The pendant and bracelet were later recovered a few meters away from the lifeless
body of "AAA". The white sando was also found clasped in the right hand of the victim.
Third. The appellant could no longer produce the sando and pieces of jewelry after his
arrest.
Fourth. The physical examination on the appellant revealed 10 healed abrasions and two
linear abrasions or scratches on his breast, knees and ears which could have been caused
by the fingernails of the victim. Appellant offered no plausible explanation on how he
sustained said injuries.
Fifth. The victim had blood oozing from her vaginal orifice, while the appellant had human
blood-stains on his briefs.
Sixth. The appellant attempted to bribe SPO4 Genoguin and the policemen who were
escorting him to Calbayog City, by offering them ₱20,000.00 in exchange for the disposal of
his white sleeveless t-shirt found in the crime scene.
Seventh. The appellant’s mother requested SPO4 Genoguin not to testify against her son.
The appellant argues that the trial court erred in giving credence to the testimonies of the
prosecution witnesses which were replete with contradictions and improbabilities. According to him,
Rodrigo’s declaration that it was around 2:00 o’clock in the afternoon of April 29, 1995 when he was
told of the discovery of a dead body contradicts "BBB’s" testimony that she instructed the victim to
go home to Barangay "D1" at around 3:00 o’clock in the afternoon of the same day. Moreover,
Rodrigo’s claim that the appellant, a fisherman, always wore the pieces of jewelry in question while
at work, is contrary to human experience. Lastly, SPO4 Genoguin’s contention that he saw appellant
wearing the pieces of jewelry on separate occasions prior to the commission of the crime is
inconsistent with his subsequent testimony that he was not even sure of the ownership of the said
jewelry.
Appellant’s contentions are not worthy of credence. A perusal of the transcript of stenographic notes
reveals that it was Prosecutor Feliciano Aguilar who supplied the time of 2:00 o’clock in the
afternoon when Rodrigo was informed that a dead body of a child was found, thus:
Q On April 29, 1995 at around 4:00 o’clock in the afternoon where were you?
A I was in the house.
Q Your house in what barangay or what place?
A In Barangay "D1", Almagro, Samar.
Q While you were in your house in Barangay "D1", Almagro, Samar was there any unusual
incident that happened that you came to know [of] on April 29, 1995 in the afternoon at
around 2:00 o’clock?
A Yes, there was.39

Moreover, the time when Rodrigo was informed of the incident and the time stated by "BBB" when
she sent "AAA" on an errand to Barangay "D1", were mere approximations, which cannot impair
their credibility. An error in the estimation of time does not discredit the testimony of a witness when
time is not an essential element.40
The inconsistencies indicated by the appellant are likewise inconsequential since they do not detract
from the fact that "BBB" sent "AAA" on an errand in Barangay "D1" where her dead body was later
discovered. Far from being badges of fraud and fabrication, the discrepancies in the testimonies of
witnesses may be justifiably considered as indicative of the truthfulness on material points of the
facts testified to. These minor deviations also confirm that the witnesses had not been rehearsed. 41
The credibility of SPO4 Genoguin is not adversely affected by his inability to immediately identify the
ownership of the jewelry found near the dead body of the victim despite his testimony that he saw
the appellant wearing the same jewelry on previous occasions. The workings of a human mind
placed under emotional stress are unpredictable leading people to act differently. 42 There is simply
no standard form of behavioral response that can be expected from anyone when confronted with a
startling or frightful occurrence.43 SPO4 Genoguin, despite being a policeman since 1977,44 was
affected by the gruesome crime. His years in the police service did not prepare him to witness the
lifeless body of a 10-year old girl who had been brutally raped and murdered.
In sum, the inconsistencies raised by the appellant are too inconsequential to warrant a reversal of
the trial court’s ruling. The decisive factor in the prosecution for rape with homicide is whether the
commission of the crime has been sufficiently proven. For a discrepancy or inconsistency in the
testimony of a witness to serve as a basis for acquittal, it must establish beyond doubt the innocence
of the appellant for the crime charged.45 As the contradictions alleged by the appellant had nothing to
do with the elements of the crime of rape with homicide, they cannot be used as ground for his
acquittal.46
The appellant imputes improper motive to witness Rodrigo who, allegedly, had an axe to grind
against him because Rodrigo’s fishing venture incurred huge losses after appellant abandoned his
job as a cook. Such imputation, however, deserves scant consideration. Other than appellant’s self-
serving allegation, there is no proof that his sudden departure from work adversely affected the
operations of the fishing venture.1avvphi1
Against the prosecution’s evidence, the appellant could only offer a mere denial and alibi. However,
denial and alibi are intrinsically weak defenses and must be supported by strong evidence of non-
culpability in order to be credible. Courts likewise view the defense of alibi with suspicion and
caution, not only because it is inherently weak and unreliable, but also because it can be fabricated
easily.47 Also, the testimonies of appellant’s mother and Aurelia Susmena, a close family friend,
deserve no probative weight. In People v. Sumalinog, Jr.,48 we held that when a defense witness is a
family member, relative or close friend, courts should view such testimony with skepticism.
Besides, in order for alibi to prosper, it is not enough to prove that the appellant was somewhere
else during the commission of the crime; it must also be shown that it would have been impossible
for him to be anywhere within the vicinity of the crime scene.49 In the case at bench, the appellant
was in the house of Aurelia Susmena which is located in the same barangay where the body of the
victim was discovered. Thus, it was not at all impossible for the appellant to be at the scene of the
crime during its commission.
Hence, the appellant’s twin defenses of denial and alibi pale in the light of the array of circumstantial
evidence presented by the prosecution.50 The positive assertions of the prosecution witnesses
deserve more credence and evidentiary weight than the negative averments of the appellant and his
witnesses.
The CA ruled that the evidence adduced by the prosecution are sufficient to produce a conviction for
homicide but not for the crime of rape. In so ruling, the CA ratiocinated that while there were
lacerations in the vaginal orifice of the victim, the absence of spermatozoa, however, belied that she
was raped.
We disagree. The absence of spermatozoa does not necessarily result in the conclusion that rape
was not committed.51 Convictions for rape with homicide have been sustained on purely
circumstantial evidence.52 In those cases, the prosecution presented other tell-tale signs of rape such
as the laceration and description of the victim’s pieces of clothing, especially her undergarments, the
position of the body when found and the like.53
Here, we reiterate that there is an unbroken chain of circumstantial evidence from which we can infer
that the appellant raped "AAA". In a secluded area, her undisturbed corpse was discovered lying
face-up and slanting downward with her buttocks on top of a small boulder. Her 10-year old lifeless
body was naked from waist down with legs spread apart and dangling from the rock. Blood oozed
from the vaginal orifice. Wrapped around her right hand was the appellant’s sando. Her shorts were
found a few meters away, just like the appellant’s pendant and bracelet. Moreover, the appellant
confessed to having raped "AAA". These circumstances lead to one fair and reasonable conclusion
that appellant raped and murdered "AAA".
The Penalty
Article 335 of the Revised Penal Code in relation to RA 765954 provides that when by reason or on
the occasion of the rape a homicide is committed, the penalty shall be death. However, in view of the
passage on June 24, 2006 of RA 9346, entitled "An Act Prohibiting the Imposition of the Death
Penalty in the Philippines" we are mandated to impose on the appellant the penalty of reclusion
perpetua without eligibility for parole.55
The Damages
In line with current jurisprudence,56 the heirs of the victim are entitled to an award of ₱100,000.00 as
civil indemnity, which is commensurate with the gravity of the complex crime committed. As actual
damages, the heirs of "AAA" are entitled to an award of ₱6,900.00 only since this was the amount of
expenses incurred for "AAA’s" burial. Moral damages in the amount of ₱75,000.00 must also be
awarded.57 Lastly, the heirs are entitled to an award of exemplary damages in the sum of
₱50,000.00.58 Article 229 of the Civil Code allows the award of exemplary damages in order to deter
the commission of similar acts and to allow the courts to forestall behavior that would pose grave
and deleterious consequences to society.59
WHEREFORE, the appeal is DISMISSED. The Decision of the Court of Appeals in CA-G.R. CR-
H.C. No. 00065 is MODIFIED. Appellant Victor Villarino y Mabute is found guilty beyond reasonable
doubt of the complex crime of rape with homicide and is hereby sentenced to suffer the penalty of
reclusion perpetua without eligibility for parole and to pay the heirs of "AAA" the amounts of
₱100,000.00 as civil indemnity, ₱6,900.00 as actual damages, ₱75,000.00 as moral damages, and
₱50,000.00 as exemplary damages. No costs.
SO ORDERED.
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSE P. PEREZ
Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1
Records, p. 1.
2
Rules and Regulations Implementing RA 9262, the real name of the child-victim is withheld
to protect his/her privacy. Fictitious initials are used instead to represent him/her. Likewise,
the personal circumstances or any other information tending to establish or compromise
his/her identity, as well as those of his/her immediate family or household members shall not
be disclosed.
3
TSN, June 19, 1996, pp. 6-7, 9 and 28.
4
TSN, March 7, 1996, pp. 27-28.
5
TSN, November 13, 1995, p. 72
6
TSN, June 19, 1996, pp. 8-9 and 25-26.
7
TSN, March 8, 1996, p. 13.
8
Id. at 29-30.
9
Id. at 10-11, 30.
10
TSN, November 13, 1995, pp. 18, 20-22.
11
TSN, March 7, 1996, pp. 26-27.
12
Id. at 27-28; TSN, March 8, 1996, pp. 18-19.
13
Id. at 28 and 34; TSN, March 7, 1996, p. 28.
14
Id. at 34-35; TSN, March 8, 1996, pp. 9-11; TSN, November 13, 1995, pp. 23-24.
TSN, November 13, 1995, pp. 69-72; TSN, June 19, 1996, pp. 10, 14-17; March 7, 1996,
15
pp. 30-32 and 38-39.
16
TSN, March 7, 1996, pp. 35-36.
17
TSN, November 13, 1995, pp. 29-30, 36-37.
18
Records, p. 8.
19
TSN, November 15, 1995, pp. 9-13.
20
Id. at 13-14.
21
TSN, November 14, 1995, p. 15.
22
Id. at 20-21.
23
Id. at 21-22.
24
TSN, March 7, 1996, pp. 56-61; TSN, March 8, 1996, pp. 7-8.
25
Id.; id. at 18-19 and 32-35.
26
Id. at 63-65.
27
TSN, June 20, 1996, pp. 2 and 5-20.
TSN, June 2, 1997, pp. 6-10; TSN, June 3, 1997, pp. 9-17; TSN, February 18, 1998, pp.
28
13-20.
29
TSN, March 18, 1998, pp. 10-11, 14.
30
Records, pp. 242-250; penned by Judge Renato G. Navidad.
Rollo, pp. 4-21; penned by Associate Justice Francisco P. Acosta and concurred in by
31
Associate Justices Pampio A. Abarintos and Amy C. Lazaro-Javier.
32
Id. at 21.
33
Id. at 65.
34
People v. Yatar, G.R. No. 150224, May 19, 2004, 428 SCRA 504, 521.
35
People v. Domantay, 366 Phil. 459, 478 (1999)
36
People v. Dy, 241 Phil. 904, 917 (1988).
37
Id.
38
Id. at 916-917.
39
TSN, November 13, 1995, pp. 20-21.
40
People v. Baniego, 427 Phil. 405, 415 (2002).
41
People v. Empleo, G.R. No. 96009, September 15, 1993, 226 SCRA 454, 470-471.
42
People v. Peñero, 342 Phil. 531, 536 (1997).
43
People v. Dulay, G.R. No. 174775, October 11, 2007, 535 SCRA 656, 661.
44
TSN, March 7, 1996, p. 22.
45
People v. Masapol, 463 Phil. 25, 33 (20003).
46
People v. Bang-ayan, G.R. No. 172870, September 22, 2006, 502 SCRA 658, 669.
47
People v. Pascual, G.R. No. 172326, January 19, 2009, 576 SCRA 242, 259.
48
466 Phil. 637, 650-651 (2004).
49
People v. Espino, Jr., G.R. No. 176742, June 17, 2008, 554 SCRA 682, 702.
50
See People v. Pascual, supra note 47.
51
People v. Magana, 328 Phil. 721, 745 (1996).
52
People v. Domantay, 366 Phil. 459, 481-482 (1999).
See People v. Develles, G.R. No. 97434, April 10, 1992, 208 SCRA 101; People v.
53
Magana, supra.
54
The prevailing law at the time of the commission of the crime in 1995.
People v. Pascual, supra note 47 at 260; People v. Bascugin, G.R. No. 184704, June 30,
55
2009.
56
Id at 261.
57
Id.
58
Id.
59
Id.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 160506 June 6, 2011
JOEB M. ALIVIADO, ARTHUR CORPUZ, ERIC ALIVIADO, MONCHITO AMPELOQUIO,

ABRAHAM BASMAYOR, JONATHAN MATEO, LORENZO PLATON, JOSE FERNANDO
GUTIERREZ, ESTANISLAO BUENAVENTURA, LOPE SALONGA, FRANZ DAVID, NESTOR
IGNACIO, JULIO REY, RUBEN MARQUEZ, JR., MAXIMINO PASCUAL, ERNESTO CALANAO,
ROLANDO ROMASANTA, RHUEL AGOO, BONIFACIO ORTEGA, ARSENIO SORIANO, JR.,
ARNEL ENDAYA, ROBERTO ENRIQUEZ, NESTOR BAQUILA, EDGARDO QUIAMBAO,
SANTOS BACALSO, SAMSON BASCO, ALADINO GREGORO, JR., EDWIN GARCIA,
ARMANDO VILLAR, EMIL TAWAT, MARIO P. LIONGSON, CRESENTE J. GARCIA, FERNANDO
MACABENTE, MELECIO CASAPAO, REYNALDO JACABAN, FERDINAND SALVO, ALSTANDO
MONTOS, RAINER N. SALVADOR, RAMIL REYES, PEDRO G. ROY, LEONARDO P. TALLEDO,
ENRIQUE F. TALLEDO, WILLIE ORTIZ, ERNESTO SOYOSA, ROMEO VASQUEZ, JOEL
BILLONES, ALLAN BALTAZAR, NOLI GABUYO, EMMANUEL E. LABAN, RAMIR E. PIAT,
RAUL DULAY, TADEO DURAN, JOSEPH BANICO, ALBERT LEYNES, ANTONIO DACUNA,
RENATO DELA CRUZ, ROMEO VIERNES, JR., ELAIS BASEO, WILFREDO TORRES,
MELCHOR CARDANO, MARIANO NARANIAN, JOHN SUMERGIDO, ROBERTO ROSALES,
GERRY C. GATPO, GERMAN N. GUEVARRA, GILBERT Y. MIRANDA, RODOLFO C. TOLEDO,
ARNOLD D. LASTONA, PHILIP M. LOZA, MARIO N. CULDAYON, ORLANDO P. JIMENEZ,
FRED P. JIMENEZ, RESTITUTO C. PAMINTUAN, JR., ROLANDO J. DE ANDRES, ARTUZ
BUSTENERA, ROBERTO B. CRUZ, ROSEDY O. YORDAN, DENNIS DACASIN, ALEJANDRINO
ABATON, and ORLANDO S. BALANGUE, Petitioners,
vs.
PROCTER & GAMBLE PHILS., INC., and PROMM-GEM INC., Respondents.
DECISION
DEL CASTILLO, J.:
Labor laws expressly prohibit "labor-only" contracting. To prevent its circumvention, the Labor Code
establishes an employer-employee relationship between the employer and the employees of the
‘labor-only’ contractor.
The instant petition for review assails the March 21, 2003 Decision1 of the Court of Appeals (CA) in
CA-G.R. SP No. 52082 and its October 20, 2003 Resolution2 denying the motions for
reconsideration separately filed by petitioners and respondent Procter & Gamble Phils. Inc. (P&G).
The appellate court affirmed the July 27, 1998 Decision of the National Labor Relations Commission
(NLRC), which in turn affirmed the November 29, 1996 Decision3 of the Labor Arbiter. All these
decisions found Promm-Gem, Inc. (Promm-Gem) and Sales and Promotions Services (SAPS) to be
legitimate independent contractors and the employers of the petitioners.
Factual Antecedents
Petitioners worked as merchandisers of P&G from various dates, allegedly starting as early as 1982
or as late as June 1991, to either May 5, 1992 or March 11, 1993, more specifically as follows:
Name Date Employed Date Dismissed

1. Joeb M. Aliviado November, 1985 May 5, 1992
2. Arthur Corpuz 1988 March 11, 1993
3. Eric Aliviado 1985 March 11, 1993
4. Monchito Ampeloquio September, 1988 March 11, 1993
5. Abraham Basmayor[, Jr.] 1987 March 11, 1993
6. Jonathan Mateo May, 1988 March 11, 1993
7. Lorenzo Platon 1985 March 11, 1993
8. Jose Fernando Gutierrez 1988 May 5, 1992
9. Estanislao Buenaventura June, 1988 March 11, 1993
10. Lope Salonga 1982 March 11, 1993
11. Franz David 1989 March 11, 1993
12. Nestor Ignacio 1982 March 11, 1993
13. Julio Rey 1989 May 5, 1992
14. Ruben [Vasquez], Jr. 1985 May 5, 1992
15. Maximino Pascual 1990 May 5, 1992
16. Ernesto Calanao[, Jr.] 1987 May 5, 1992
17. Rolando Romasanta 1983 March 11, 1993
18. [Roehl] Agoo 1988 March 11, 1993
19. Bonifacio Ortega 1988 March 11, 1993
20. Arsenio Soriano, Jr. 1985 March 11, 1993
21. Arnel Endaya 1983 March 11, 1993
22. Roberto Enriquez December, 1988 March 11, 1993
23. Nestor [Es]quila 1983 May 5, 1992
24. Ed[g]ardo Quiambao 1989 March 11, 1993
25. Santos Bacalso 1990 March 11, 1993
26. Samson Basco 1984 March 11, 1993
27. Aladino Gregor[e], Jr. 1980 May 5, 1992
28. Edwin Garcia 1987 May 5, 1992
29. Armando Villar 1990 May 5, 1992
30. Emil Tawat 1988 March 11, 1993
31. Mario P. Liongson 1991 May 5, 1992
32. Cresente J. Garcia 1984 March 11, 1993
33. Fernando Macabent[a] 1990 May 5, 1992
34. Melecio Casapao 1987 March 11, 1993
35. Reynaldo Jacaban 1990 May 5, 1992
36. Ferdinand Salvo 1985 May 5, 1992
37. Alstando Montos 1984 March 11, 1993
38. Rainer N. Salvador 1984 May 5, 1992
39. Ramil Reyes 1984 March 11, 1993
40. Pedro G. Roy 1987
41. Leonardo [F]. Talledo 1985 March 11, 1993
42. Enrique [F]. Talledo 1988 March 11, 1993
43. Willie Ortiz 1987 May 5, 1992
44. Ernesto Soyosa 1988 May 5, 1992
45. Romeo Vasquez 1985 March 11, 1993
46. Joel Billones 1987 March 11, 1993
47. Allan Baltazar 1989 March 11, 1993
48. Noli Gabuyo 1991 March 11, 1993
49. Emmanuel E. Laban 1987 May 5, 1992
50. Ramir[o] E. [Pita] 1990 May 5, 1992
51. Raul Dulay 1988 May 5, 1992
52. Tadeo Duran[o] 1988 May 5, 1992
53. Joseph Banico 1988 March 11, 1993
54. Albert Leynes 1990 May 5, 1992
55. Antonio Dacu[m]a 1990 May 5, 1992
56. Renato dela Cruz 1982
57. Romeo Viernes, Jr. 1986
58. El[ia]s Bas[c]o 1989
59. Wilfredo Torres 1986 May 5, 1992
60. Melchor Carda[ñ]o 1991 May 5, 1992
61. [Marino] [Maranion] 1989 May 5, 1992
62. John Sumergido 1987 May 5, 1992
63. Roberto Rosales May, 1987 May 5, 1992
64. Gerry [G]. Gatpo November, 1990 March 11, 1993
65. German N. Guevara May, 1990 March 11, 1993
66. Gilbert Y. Miranda June, 1991 March 11, 1993
67. Rodolfo C. Toledo[, Jr.] May 14, 1991 March 11, 1993
68. Arnold D. [Laspoña] June 1991 March 11, 1993
69. Philip M. Loza March 5, 1992 March 11, 1993
70. Mario N. C[o]ldayon May 14, 1991 March 11, 1993
71. Orlando P. Jimenez November 6, 1992 March 11, 1993
72. Fred P. Jimenez September, 1991 March 11, 1993
73. Restituto C. Pamintuan, Jr. March 5, 1992 March 11, 1993
74. Rolando J. de Andres June, 1991 March 11, 1993
75. Artuz Bustenera[, Jr.] December, 1989 March 11, 1993
76. Roberto B. Cruz May 4, 1990 March 11, 1993
77. Rosedy O. Yordan June, 1991 May 5, 1992
78. Dennis Dacasin May. 1990 May 5, 1992
79. Alejandrino Abaton 1988 May 5, 1992
80. Orlando S. Balangue March, 1989 March 11, 19934
They all individually signed employment contracts with either Promm-Gem or SAPS for periods of
more or less five months at a time.5 They were assigned at different outlets, supermarkets and
stores where they handled all the products of P&G. They received their wages from Promm-Gem or
SAPS.6
SAPS and Promm-Gem imposed disciplinary measures on erring merchandisers for reasons such
as habitual absenteeism, dishonesty or changing day-off without prior notice. 7
P&G is principally engaged in the manufacture and production of different consumer and health
products, which it sells on a wholesale basis to various supermarkets and distributors. 8 To enhance
consumer awareness and acceptance of the products, P&G entered into contracts with Promm-Gem
and SAPS for the promotion and merchandising of its products.9
In December 1991, petitioners filed a complaint10 against P&G for regularization, service incentive
leave pay and other benefits with damages. The complaint was later amended 11 to include the matter
of their subsequent dismissal.
Ruling of the Labor Arbiter
On November 29, 1996, the Labor Arbiter dismissed the complaint for lack of merit and ruled that
there was no employer-employee relationship between petitioners and P&G. He found that the
selection and engagement of the petitioners, the payment of their wages, the power of dismissal and
control with respect to the means and methods by which their work was accomplished, were all done
and exercised by Promm-Gem/SAPS. He further found that Promm-Gem and SAPS were legitimate
independent job contractors. The dispositive portion of his Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered Dismissing the above-entitled

cases against respondent Procter & Gamble (Phils.), Inc. for lack of merit.
SO ORDERED.12
Ruling of the NLRC
Appealing to the NLRC, petitioners disputed the Labor Arbiter’s findings. On July 27, 1998, the
NLRC rendered a Decision13 disposing as follows:
WHEREFORE, premises considered, the appeal of complainants is hereby DISMISSED and the
decision appealed from AFFIRMED.
SO ORDERED.14
Petitioners filed a motion for reconsideration but the motion was denied in the November 19, 1998
Resolution.15
Petitioners then filed a petition for certiorari with the CA, alleging grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of the Labor Arbiter and the NLRC. However,
said petition was also denied by the CA which disposed as follows:
WHEREFORE, the decision of the National Labor Relations Commission dated July 27, 1998 is
AFFIRMED with the MODIFICATION that respondent Procter & Gamble Phils., Inc. is ordered to pay
service incentive leave pay to petitioners.
SO ORDERED.16
Petitioners filed a motion for reconsideration but the motion was also denied. Hence, this petition.
Issues
Petitioners now come before us raising the following issues:
I.
WHETHER X X X THE HONORABLE COURT OF APPEALS HAS COMMITTED [A]

REVERSIBLE ERROR WHEN IT DID NOT FIND THE PUBLIC RESPONDENTS TO HAVE
ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR IN
EXCESS OF JURISDICTION IN RENDERING THE QUESTIONED JUDGMENT WHEN,
OBVIOUSLY, THE PETITIONERS WERE ABLE TO PROVE AND ESTABLISH THAT
RESPONDENT PROCTER & GAMBLE PHILS., INC. IS THEIR EMPLOYER AND THAT
THEY WERE ILLEGALLY DISMISSED BY THE FORMER.
II.
WHETHER X X X THE HONORABLE COURT OF APPEALS HAS COMMITTED [A]

REVERSIBLE ERROR WHEN IT DID NOT DECLARE THAT THE PUBLIC RESPONDENTS
HAD ACTED WITH GRAVE ABUSE OF DISCRETION WHEN THE LATTER DID NOT FIND
THE PRIVATE RESPONDENTS LIABLE TO THE PETITIONERS FOR PAYMENT OF
ACTUAL, MORAL AND EXEMPLARY DAMAGES AS WELL AS LITIGATION COSTS AND
ATTORNEY’S FEES.17
Simply stated, the issues are: (1) whether P&G is the employer of petitioners; (2) whether petitioners
were illegally dismissed; and (3) whether petitioners are entitled for payment of actual, moral and
exemplary damages as well as litigation costs and attorney’s fees.
Petitioners’ Arguments
Petitioners insist that they are employees of P&G. They claim that they were recruited by the
salesmen of P&G and were engaged to undertake merchandising chores for P&G long before the
existence of Promm-Gem and/or SAPS. They further claim that when the latter had its so-called re-
alignment program, petitioners were instructed to fill up application forms and report to the agencies
which P&G created.18
Petitioners further claim that P&G instigated their dismissal from work as can be gleaned from its
letter19 to SAPS dated February 24, 1993, informing the latter that their Merchandising Services
Contract will no longer be renewed.
Petitioners further assert that Promm-Gem and SAPS are labor-only contractors providing services
of manpower to their client. They claim that the contractors have neither substantial capital nor tools
and equipment to undertake independent labor contracting. Petitioners insist that since they had
been engaged to perform activities which are necessary or desirable in the usual business or trade
of P&G, then they are its regular employees.20
Respondents’ Arguments
On the other hand, P&G points out that the instant petition raises only questions of fact and should
thus be thrown out as the Court is not a trier of facts. It argues that findings of facts of the NLRC,
particularly where the NLRC and the Labor Arbiter are in agreement, are deemed binding and
conclusive on the Supreme Court.
P&G further argues that there is no employment relationship between it and petitioners. It was
Promm-Gem or SAPS that (1) selected petitioners and engaged their services; (2) paid their
salaries; (3) wielded the power of dismissal; and (4) had the power of control over their conduct of
work.
P&G also contends that the Labor Code neither defines nor limits which services or activities may be
validly outsourced. Thus, an employer can farm out any of its activities to an independent contractor,
regardless of whether such activity is peripheral or core in nature. It insists that the determination of
whether to engage the services of a job contractor or to engage in direct hiring is within the ambit of
management prerogative.
At this juncture, it is worth mentioning that on January 29, 2007, we deemed as waived the filing of
the Comment of Promm-Gem on the petition.21 Also, although SAPS was impleaded as a party in the
proceedings before the Labor Arbiter and the NLRC, it was no longer impleaded as a party in the
proceedings before the CA.22 Hence, our pronouncements with regard to SAPS are only for the
purpose of determining the obligations of P&G, if any.
Our Ruling
As a rule, the Court refrains from reviewing factual assessments of lower courts and agencies
exercising adjudicative functions, such as the NLRC. Occasionally, however, the Court is
constrained to wade into factual matters when there is insufficient or insubstantial evidence on
record to support those factual findings; or when too much is concluded, inferred or deduced from
the bare or incomplete facts appearing on record.23 In the present case, we find the need to review
the records to ascertain the facts.
Labor-only contracting and job contracting
In order to resolve the issue of whether P&G is the employer of petitioners, it is necessary to first
determine whether Promm-Gem and SAPS are labor-only contractors or legitimate job contractors.
The pertinent Labor Code provision on the matter states:
ART. 106. Contractor or subcontractor. – Whenever an employer enters into a contract with another
person for the performance of the former’s work, the employees of the contractor and of the latter’s
subcontractor, if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in
accordance with this Code, the employer shall be jointly and severally liable with his contractor or
subcontractor to such employees to the extent of the work performed under the contract, in the same
manner and extent that he is liable to employees directly employed by him.
The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of
labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he
may make appropriate distinctions between labor-only contracting and job contracting as well as
differentiations within these types of contracting and determine who among the parties involved shall
be considered the employer for purposes of this Code, to prevent any violation or circumvention of
any provision of this Code.
There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such person are performing activities which are
directly related to the principal business of such employer. In such cases, the person or intermediary
shall be considered merely as an agent of the employer who shall be responsible to the workers in
the same manner and extent as if the latter were directly employed by him. (Emphasis and
underscoring supplied.)
Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor Code, as amended by
Department Order No. 18-02,24 distinguishes between legitimate and labor-only contracting:
xxxx
Section 3. Trilateral Relationship in Contracting Arrangements. In legitimate contracting, there exists

a trilateral relationship under which there is a contract for a specific job, work or service between the
principal and the contractor or subcontractor, and a contract of employment between the contractor
or subcontractor and its workers. Hence, there are three parties involved in these arrangements, the
principal which decides to farm out a job or service to a contractor or subcontractor, the contractor or
subcontractor which has the capacity to independently undertake the performance of the job, work or
service, and the contractual workers engaged by the contractor or subcontractor to accomplish the
job[,] work or service.
xxxx
Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared

prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the
contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or
service for a principal, and any of the following elements are present:
i) The contractor or subcontractor does not have substantial capital or investment which
relates to the job, work or service to be performed and the employees recruited, supplied or
placed by such contractor or subcontractor are performing activities which are directly related
to the main business of the principal; or
ii) [T]he contractor does not exercise the right to control over the performance of the work of
the contractual employee.
The foregoing provisions shall be without prejudice to the application of Article 248 (c) of the Labor
Code, as amended.
"Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case
of corporations, tools, equipment, implements, machineries and work premises, actually and directly
used by the contractor or subcontractor in the performance or completion of the job, work or service
contracted out.
The "right to control" shall refer to the right reserved to the person for whom the services of the
contractual workers are performed, to determine not only the end to be achieved, but also the
manner and means to be used in reaching that end.
x x x x (Underscoring supplied.)
Clearly, the law and its implementing rules allow contracting arrangements for the performance of
specific jobs, works or services. Indeed, it is management prerogative to farm out any of its activities,
regardless of whether such activity is peripheral or core in nature. However, in order for such
outsourcing to be valid, it must be made to anindependent contractor because the current labor rules
expressly prohibit labor-only contracting.
To emphasize, there is labor-only contracting when the contractor or sub-contractor merely recruits,
supplies or places workers to perform a job, work or service for a principal25 and any of the following
elements are present:
i) The contractor or subcontractor does not have substantial capital or investment which
relates to the job, work or service to be performed and the employees recruited, supplied or
placed by such contractor or subcontractor are performing activities which are directly related
to the main business of the principal; or
ii) The contractor does not exercise the right to control over the performance of the work of
the contractualemployee. (Underscoring supplied)
In the instant case, the financial statements26 of Promm-Gem show that it
has authorized capital stock of ₱1 million and a paid-in capital, or capital available for operations, of
₱500,000.00 as of 1990.27 It also has long term assets worth ₱432,895.28 and current assets of
₱719,042.32. Promm-Gem has also proven that it maintained its own warehouse and office space
with a floor area of 870 square meters.28 It also had under its name three registered vehicles which
were used for its promotional/merchandising business.29Promm-Gem also has other clients30 aside
from P&G.31 Under the circumstances, we find that Promm-Gem has substantial investment which
relates to the work to be performed. These factors negate the existence of the element specified in
Section 5(i) of DOLE Department Order No. 18-02.
The records also show that Promm-Gem supplied its complainant-workers with the relevant
materials, such as markers, tapes, liners and cutters, necessary for them to perform their work.
Promm-Gem also issued uniforms to them. It is also relevant to mention that Promm-Gem already
considered the complainants working under it as its regular, not merely contractual or project,
employees.32 This circumstance negates the existence of element (ii) as stated in Section 5 of DOLE
Department Order No. 18-02, which speaks of contractual employees. This, furthermore, negates –
on the part of Promm-Gem – bad faith and intent to circumvent labor laws which factors have often
been tipping points that lead the Court to strike down the employment practice or agreement
concerned as contrary to public policy, morals, good customs or public order.33
Under the circumstances, Promm-Gem cannot be considered as a labor-only contractor. We find

that it is a legitimate independent contractor.
On the other hand, the Articles of Incorporation of SAPS shows that it has a paid-in capital of only
₱31,250.00. There is no other evidence presented to show how much its working capital and assets
are. Furthermore, there is no showing of substantial investment in tools, equipment or other assets.
In Vinoya v. National Labor Relations Commission,34 the Court held that "[w]ith the current economic
atmosphere in the country, the paid-in capitalization of PMCI amounting to ₱75,000.00 cannot be
considered as substantial capital and, as such, PMCI cannot qualify as an independent
contractor."35 Applying the same rationale to the present case, it is clear that SAPS – having a paid-
in capital of only ₱31,250 - has no substantial capital. SAPS’ lack of substantial capital is underlined
by the records36 which show that its payroll for its merchandisers alone for one month would already
total ₱44,561.00. It had 6-month contracts with P&G.37 Yet SAPS failed to show that it could
complete the 6-month contracts using its own capital and investment. Its capital is not even sufficient
for one month’s payroll. SAPS failed to show that its paid-in capital of ₱31,250.00 is sufficient for the
period required for it to generate its needed revenue to sustain its operations independently.
Substantial capital refers to capitalization used in the performance or completion of the job, work or
service contracted out. In the present case, SAPS has failed to show substantial capital.
Furthermore, the petitioners have been charged with the merchandising and promotion of the
products of P&G, an activity that has already been considered by the Court as doubtlessly directly
related to the manufacturing business,38 which is the principal business of P&G. Considering that
SAPS has no substantial capital or investment and the workers it recruited are performing activities
which are directly related to the principal business of P&G, we find that the former is engaged in
"labor-only contracting".
"Where ‘labor-only’ contracting exists, the Labor Code itself establishes an employer-employee
relationship between the employer and the employees of the ‘labor-only’ contractor." 39 The statute
establishes this relationship for a comprehensive purpose: to prevent a circumvention of labor laws.
The contractor is considered merely an agent of the principal employer and the latter is responsible
to the employees of the labor-only contractor as if such employees had been directly employed by
the principal employer.40
Consequently, the following petitioners, having been recruited and supplied
by SAPS41 -- which engaged in labor-only contracting -- are considered as the employees of P&G:
Arthur Corpuz, Eric Aliviado, Monchito Ampeloquio, Abraham Basmayor, Jr., Jonathan Mateo,
Lorenzo Platon, Estanislao Buenaventura, Lope Salonga, Franz David, Nestor Ignacio, Jr., Rolando
Romasanta, Roehl Agoo, Bonifacio Ortega, Arsenio Soriano, Jr., Arnel Endaya, Roberto Enriquez,
Edgardo Quiambao, Santos Bacalso, Samson Basco, Alstando Montos, Rainer N. Salvador, Pedro
G. Roy, Leonardo F. Talledo, Enrique F. Talledo, Joel Billones, Allan Baltazar, Noli Gabuyo, Gerry
Gatpo, German Guevara, Gilbert V. Miranda, Rodolfo C. Toledo, Jr., Arnold D. Laspoña, Philip M.
Loza, Mario N. Coldayon, Orlando P. Jimenez, Fred P. Jimenez, Restituto C. Pamintuan, Jr.,
Rolando J. De Andres, Artuz Bustenera, Jr., Roberto B. Cruz, Rosedy O. Yordan, Orlando S.
Balangue, Emil Tawat, Cresente J. Garcia, Melencio Casapao, Romeo Vasquez, Renato dela Cruz,
Romeo Viernes, Jr., Elias Basco and Dennis Dacasin.
The following petitioners, having worked under, and been dismissed by Promm-Gem, are
considered the employees of Promm-Gem, not of P&G: Wilfredo Torres, John Sumergido, Edwin
Garcia, Mario P. Liongson, Jr., Ferdinand Salvo, Alejandrino Abaton, Emmanuel A. Laban, Ernesto
Soyosa, Aladino Gregore, Jr., Ramil Reyes, Ruben Vasquez, Jr., Maximino Pascual, Willie Ortiz,
Armando Villar, Jose Fernando Gutierrez, Ramiro Pita, Fernando Macabenta, Nestor Esquila, Julio
Rey, Albert Leynes, Ernesto Calanao, Roberto Rosales, Antonio Dacuma, Tadeo Durano, Raul
Dulay, Marino Maranion, Joseph Banico, Melchor Cardano, Reynaldo Jacaban, and Joeb Aliviado. 42
Termination of services
We now discuss the issue of whether petitioners were illegally dismissed. In cases of regular
employment, the employer shall not terminate the services of an employee except for a just 43 or
authorized44 cause.
In the instant case, the termination letters given by Promm-Gem to its employees uniformly specified
the cause of dismissal as grave misconduct and breach of trust, as follows:
xxxx
This informs you that effective May 5, 1992, your employment with our company, Promm-Gem, Inc.
has been terminated. We find your expressed admission, that you considered yourself as an
employee of Procter & Gamble Phils., Inc…. and assailing the integrity of the Company as legitimate
and independent promotion firm, is deemed as an act of disloyalty prejudicial to the interests of our
Company: serious misconduct and breach of trust reposed upon you as employee of our Company
which [co]nstitute just cause for the termination of your employment.
x x x x45
Misconduct has been defined as improper or wrong conduct; the transgression of some established
and definite rule of action, a forbidden act, a dereliction of duty, unlawful in character implying
wrongful intent and not mere error of judgment. The misconduct to be serious must be of such grave
and aggravated character and not merely trivial and unimportant.46 To be a just cause for dismissal,
such misconduct (a) must be serious; (b) must relate to the performance of the employee’s duties;
and (c) must show that the employee has become unfit to continue working for the employer. 47
In other words, in order to constitute serious misconduct which will warrant the dismissal of an
employee under paragraph (a) of Article 282 of the Labor Code, it is not sufficient that the act or
conduct complained of has violated some established rules or policies. It is equally important and
required that the act or conduct must have been performed with wrongful intent. 48 In the instant case,
petitioners-employees of Promm-Gem may have committed an error of judgment in claiming to be
employees of P&G, but it cannot be said that they were motivated by any wrongful intent in doing so.
As such, we find them guilty of only simple misconduct for assailing the integrity of Promm-Gem as a
legitimate and independent promotion firm. A misconduct which is not serious or grave, as that
existing in the instant case, cannot be a valid basis for dismissing an employee.
Meanwhile, loss of trust and confidence, as a ground for dismissal, must be based on the willful
breach of the trust reposed in the employee by his employer. Ordinary breach will not suffice. A
breach of trust is willful if it is done intentionally, knowingly and purposely, without justifiable excuse,
as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. 49
Loss of trust and confidence, as a cause for termination of employment, is premised on the fact that
the employee concerned holds a position of responsibility or of trust and confidence. As such, he
must be invested with confidence on delicate matters, such as custody, handling or care and
protection of the property and assets of the employer. And, in order to constitute a just cause for
dismissal, the act complained of must be work-related and must show that the employee is unfit to
continue to work for the employer.50 In the instant case, the petitioners-employees of Promm-Gem
have not been shown to be occupying positions of responsibility or of trust and confidence. Neither is
there any evidence to show that they are unfit to continue to work as merchandisers for Promm-
Gem.
All told, we find no valid cause for the dismissal of petitioners-employees of Promm-Gem.
While Promm-Gem had complied with the procedural aspect of due process in terminating the
employment of petitioners-employees, i.e., giving two notices and in between such notices, an
opportunity for the employees to answer and rebut the charges against them, it failed to comply with
the substantive aspect of due process as the acts complained of neither constitute serious
misconduct nor breach of trust. Hence, the dismissal is illegal.
With regard to the petitioners placed with P&G by SAPS, they were given no written notice of
dismissal. The records show that upon receipt by SAPS of P&G’s letter terminating their
"Merchandising Services Contact" effective March 11, 1993, they in turn verbally informed the
concerned petitioners not to report for work anymore. The concerned petitioners related their
dismissal as follows:
xxxx
5. On March 11, 1993, we were called to a meeting at SAPS office. We were told by Mr. Saturnino
A. Ponce that we should already stop working immediately because that was the order of Procter
and Gamble. According to him he could not do otherwise because Procter and Gamble was the one
paying us. To prove that Procter and Gamble was the one responsible in our dismissal, he showed
to us the letter51 dated February 24, 1993, x x x
February 24, 1993
Sales and Promotions Services

Armon’s Bldg., 142 Kamias Road,
Quezon City
Attention: Mr. Saturnino A. Ponce

President & General Manager
Gentlemen:
Based on our discussions last 5 and 19 February 1993, this formally informs you that we will not be
renewing our Merchandising Services Contract with your agency.
Please immediately undertake efforts to ensure that your services to the Company will terminate
effective close of business hours of 11 March 1993.
This is without prejudice to whatever obligations you may have to the company under the
abovementioned contract.
Very truly yours,
(Sgd.)
EMMANUEL M. NON
Sales Merchandising III
6. On March 12, 1993, we reported to our respective outlet assignments. But, we were no longer
allowed to work and we were refused entrance by the security guards posted. According to the
security guards, all merchandisers of Procter and Gamble under S[APS] who filed a case in the
Dept. of Labor are already dismissed as per letter of Procter and Gamble dated February 25, 1993. x
x x52
Neither SAPS nor P&G dispute the existence of these circumstances. Parenthetically, unlike
Promm-Gem which dismissed its employees for grave misconduct and breach of trust due to
disloyalty, SAPS dismissed its employees upon the initiation of P&G. It is evident that SAPS does
not carry on its own business because the termination of its contract with P&G automatically meant
for it also the termination of its employees’ services. It is obvious from its act that SAPS had no other
clients and had no intention of seeking other clients in order to further its merchandising business.
From all indications SAPS, existed to cater solely to the need of P&G for the supply of employees in
the latter’s merchandising concerns only. Under the circumstances prevailing in the instant case, we
cannot consider SAPS as an independent contractor.
Going back to the matter of dismissal, it must be emphasized that the onus probandi to prove the
lawfulness of the dismissal rests with the employer.53 In termination cases, the burden of proof rests
upon the employer to show that the dismissal is for just and valid cause.54 In the instant case, P&G
failed to discharge the burden of proving the legality and validity of the dismissals of those
petitioners who are considered its employees. Hence, the dismissals necessarily were not justified
and are therefore illegal.
Damages
We now go to the issue of whether petitioners are entitled to damages. Moral
and exemplary damages are recoverable where the dismissal of an employee was attended by bad
faith or fraud or constituted an act oppressive to labor or was done in a manner contrary to morals,
good customs or public policy.55
With regard to the employees of Promm-Gem, there being no evidence of bad faith, fraud or any
oppressive act on the part of the latter, we find no support for the award of damages.
As for P&G, the records show that it dismissed its employees through SAPS in a manner oppressive
to labor. The sudden and peremptory barring of the concerned petitioners from work, and from
admission to the work place, after just a one-day verbal notice, and for no valid cause bellows
oppression and utter disregard of the right to due process of the concerned petitioners. Hence, an
award of moral damages is called for.
Attorney’s fees may likewise be awarded to the concerned petitioners who were illegally dismissed
in bad faith and were compelled to litigate or incur expenses to protect their rights by reason of the
oppressive acts56 of P&G.
Lastly, under Article 279 of the Labor Code, an employee who is unjustly dismissed from work shall
be entitled to reinstatement without loss of seniority rights and other privileges, inclusive of
allowances, and other benefits or their monetary equivalent from the time the compensation was
withheld up to the time of actual reinstatement.57 Hence, all the petitioners, having been illegally
dismissed are entitled to reinstatement without loss of seniority rights and with full back wages and
other benefits from the time of their illegal dismissal up to the time of their actual reinstatement.
1avvphi1
WHEREFORE, the petition is GRANTED. The Decision dated March 21, 2003 of the Court of
Appeals in CA-G.R. SP No. 52082 and the Resolution dated October 20, 2003
are REVERSED and SET ASIDE. Procter & Gamble Phils., Inc. and Promm-Gem, Inc.
are ORDERED to reinstate their respective employees immediately without loss of seniority rights
and with full backwages and other benefits from the time of their illegal dismissal up to the time of
their actual reinstatement. Procter & Gamble Phils., Inc. is further ORDERED to pay each of those
petitioners considered as its employees, namely Arthur Corpuz, Eric Aliviado, Monchito Ampeloquio,
Abraham Basmayor, Jr., Jonathan Mateo, Lorenzo Platon, Estanislao Buenaventura, Lope Salonga,
Franz David, Nestor Ignacio, Rolando Romasanta, Roehl Agoo, Bonifacio Ortega, Arsenio Soriano,
Jr., Arnel Endaya, Roberto Enriquez, Edgardo Quiambao, Santos Bacalso, Samson Basco, Alstando
Montos, Rainer N. Salvador, Pedro G. Roy, Leonardo F. Talledo, Enrique F. Talledo, Joel Billones,
Allan Baltazar, Noli Gabuyo, Gerry Gatpo, German Guevara, Gilbert Y. Miranda, Rodolfo C. Toledo,
Jr., Arnold D. Laspoña, Philip M. Loza, Mario N. Coldayon, Orlando P. Jimenez, Fred P. Jimenez,
Restituto C. Pamintuan, Jr., Rolando J. De Andres, Artuz Bustenera, Jr., Roberto B. Cruz, Rosedy
O. Yordan, Orlando S. Balangue, Emil Tawat, Cresente J. Garcia, Melencio Casapao, Romeo
Vasquez, Renato dela Cruz, Romeo Viernes, Jr., Elias Basco and Dennis Dacasin, ₱25,000.00 as
moral damages plus ten percent of the total sum as and for attorney’s fees.
Let this case be REMANDED to the Labor Arbiter for the computation, within 30 days from receipt of
this Decision, of petitioners’ backwages and other benefits; and ten percent of the total sum as and
for attorney’s fees as stated above; and for immediate execution.
SO ORDERED.

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSE P. PEREZ
Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1
Rollo, pp. 86-95; penned by Associate Justice Edgardo P. Cruz and concurred in by
Associate Justices Salvador J. Valdez, Jr. and Mario L. Guariña III.
2
Id. at 97-98.
3
Id. at 298-312.
4
Id. at 30-31.
5
Id. at 434-435.
6
Id. at 438-440.
7
Id. at 441-442.
8
Id. at 105.
9
Id. at 406-414.
10
Id. at 158-164.
11
Records, Vol. I, pp. 345-346, 373-392; Records, Vol. II, pp. 396-412.
12
Rollo, pp. 112-113.
13
Id. at 115-135.
14
Id. at 135.
15
Id. at 137-157.
16
Id. at 94-95.
17
Id. at 668.
18
Id. at 679.
19
Id. at 192.
20
Id. at 693-697.
21
Id. at 652.
22
Id. at 89.
23
Pascua v. National Labor Relations Commission (Third Division), 351 Phil 48, 61 (1998).
Rules Implementing Articles 106 to 109 of the Labor Code, As Amended, approved
24
February 21, 2002.
25
Escario v. National Labor Relations Commission, 388 Phil. 929, 938 (2000).
26
Records, Vol. I, p. 208.
27
Id. at 211.
28
Rollo, p. 453; TSN, February 22, 1994, p. 9.
29
Rollo, pp 580-582.
30
a. Adidas Division, Rubberworld Phil., Inc.; b. CFC Corporation; c. Focus Enterprise, Inc.,
d. Procter & Gamble Phil., Inc., e. Roche Phil., Inc.; f. Sterling Products Int’l., Inc.; g.
Southeast Asia Foods, Inc.; h. Pepsi Co., Inc.; i. Kraft General Foods Phil., Inc.; j. Universal
Robina Corp.; k. Wrigley Phil., Inc.; l. Asia Brewery, Inc.; m. Ayala Land, Inc.; n. Citibank,
N.A.; o. S.C. Johnson, Inc.; p. Glaxo Phil., Inc.; q. Bank of the Phil. Island-Loyola Branch; r.
Republic Chemical, Inc.; s. Metrolab, Inc.; and, t. First Pacific Metro Corp. Records, Vol. I, p.
192.
31
Id.
32
Records, Vol. II, pp. 599-623.
33
The act of hiring and re-hiring workers over a period of time without considering them as
regular employees evinces bad faith on the part of the employer. San Miguel Corporation v.
National Labor Relations Commission, G.R. No. 147566, December 6, 2006, 510 SCRA 181,
189; Bustamante v. National Labor Relations Commission, G. R. No. 111651, March 15,
1996, 255 SCRA 145, 150.
34
381 Phil. 460 (2000). This case involved an employee who was dismissed and filed a labor
case in 1991, about the same time frame as that involved in this case for purposes of taking
judicial notice of the economic atmosphere in the country.
35
Id. at 476.
36
Records, Vol. I, p. 556.
37
Rollo, p. 412.
38
Tabas v. California Manufacturing Co., Inc., 251 Phil. 448, 454 (1989).
Neri v. National Labor Relations Commission, G.R. Nos. 97008-09, July 23, 1993, 224
39
SCRA 717, 720, citing Philippine Bank of Communications v. National Labor Relations
Commission, 230 Phil. 430, 440 (1986).
40
San Miguel Corporation v. Aballa, G.R. No. 149011, June 28, 2005, 461 SCRA 392, 422.
41
Records, Vol. I, p. 340. SAPS has admitted that the complainants are its employees.
42
Records, Vol. I, p. 193; Vol. II, pp. 666-692.
43
Labor Code of the Philippines,
ART. 282. Termination by employer. - An employer may terminate an employment

for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders
of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized
representative; and
(e) Other causes analogous to the foregoing.
44
ART. 283. Closure of establishment and reduction of personnel. – The employer may also
terminate the employment of any employee due to the installation of labor saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Ministry of Labor
and Employment at least one (1) month before the intended date thereof x x x
ART. 284. Disease as ground for termination. – An employer may terminate the
services of an employee who has been found to be suffering from any disease and
whose continued employment is prohibited by law or is prejudicial to his health as
well as to the health of his co-employees: x x x
45
Records, Vol. II, p. 447.
National Labor Relations Commission v. Salgarino, G.R. No. 164376, July 31, 2006, 497
46
SCRA 361, 375; Molina v. Pacific Plans, Inc., G.R. No.165476, March 10, 2006, 484 SCRA
498, 518; Samson v. National Labor Relations Commission, 386 Phil. 669, 682 (2000).
Bañez v. De La Salle University, G.R. No. 167177, September 27, 2006, 503 SCRA 691,
47
700; Phil. Aeolus Automotive United Corp. v. National Labor Relations Commission, 387
Phil. 250, 261 (2000).
48
National Labor Relations Commission v. Salgarino, supra at 376.
Velez v. Shangri-La’s Edsa Plaza Hotel, G.R. No. 148261, October 9, 2006, 504 SCRA 13,
49
25.
50
Id. at 26.
51
Rollo, p. 192.
52
Records, Vol. II, p. 413.
53
National Labor Relations Commission v. Salgarino, supra note 46 at 383.
Royal Crown Internationale v. National Labor Relations Commission, G.R. No. 78085,
54
October 16, 1989, 178 SCRA 569, 578.
Labor Code of the Philippines,
ART. 279. – Security of Tenure. − In cases of regular employment, the employer

shall not terminate the services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges and to his
full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to
the time of his actual reinstatement.
55
Pascua v. National Labor Relations Commission (Third Division), supra note 23 at
72; Acuña v. Court of Appeals, G.R. No.159832, May 5, 2006, 489 SCRA 658, 668; Quadra
v. Court of Appeals, G.R. No. 147593, July 31, 2006, 497 SCRA 221, 227.
56
See Pascua v. National Labor Relations Commission (Third Division), supra note 23 at 74.
In the instant case, P&G’s act of taking an unconscionable and unscrupulous advantage of
the utter powerlessness of the individual concerned petitioners to prevent the trampling of
their rights to due process and security of tenure constitutes bad faith.
Premier Development Bank v. Mantal, G.R. No. 167716, March 23, 2006, 485 SCRA 234,
57
242-243; Philippine Amusement and Gaming Corporation v. Angara, G.R. No. 142937, July
25, 2006, 496 SCRA 453, 457.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 171092 March 15, 2010
EDNA DIAGO LHUILLIER, Petitioner,

vs.
BRITISH AIRWAYS, Respondent.
DECISION
DEL CASTILLO, J.:
Jurisdictio est potestas de publico introducta cum necessitate juris dicendi. Jurisdiction is a power
introduced for the public good, on account of the necessity of dispensing justice. 1
Factual Antecedents
On April 28, 2005, petitioner Edna Diago Lhuillier filed a Complaint 2 for damages against respondent
British Airways before the Regional Trial Court (RTC) of Makati City. She alleged that on February
28, 2005, she took respondent’s flight 548 from London, United Kingdom to Rome, Italy. Once on
board, she allegedly requested Julian Halliday (Halliday), one of the respondent’s flight attendants,
to assist her in placing her hand-carried luggage in the overhead bin. However, Halliday allegedly
refused to help and assist her, and even sarcastically remarked that "If I were to help all 300
passengers in this flight, I would have a broken back!"
Petitioner further alleged that when the plane was about to land in Rome, Italy, another flight
attendant, Nickolas Kerrigan (Kerrigan), singled her out from among all the passengers in the
business class section to lecture on plane safety. Allegedly, Kerrigan made her appear to the other
passengers to be ignorant, uneducated, stupid, and in need of lecturing on the safety rules and
regulations of the plane. Affronted, petitioner assured Kerrigan that she knew the plane’s safety
regulations being a frequent traveler. Thereupon, Kerrigan allegedly thrust his face a mere few
centimeters away from that of the petitioner and menacingly told her that "We don’t like your
attitude."
Upon arrival in Rome, petitioner complained to respondent’s ground manager and demanded an
apology. However, the latter declared that the flight stewards were "only doing their job."
Thus, petitioner filed the complaint for damages, praying that respondent be ordered to pay ₱5
million as moral damages, ₱2 million as nominal damages, ₱1 million as exemplary damages,
₱300,000.00 as attorney’s fees, ₱200,000.00 as litigation expenses, and cost of the suit.
On May 16, 2005, summons, together with a copy of the complaint, was served on the respondent
through Violeta Echevarria, General Manager of Euro-Philippine Airline Services, Inc. 3
On May 30, 2005, respondent, by way of special appearance through counsel, filed a Motion to
Dismiss4 on grounds of lack of jurisdiction over the case and over the person of the respondent.
Respondent alleged that only the courts of London, United Kingdom or Rome, Italy, have jurisdiction
over the complaint for damages pursuant to the Warsaw Convention,5 Article 28(1) of which
provides:
An action for damages must be brought at the option of the plaintiff, either before the court of
domicile of the carrier or his principal place of business, or where he has a place of business through
which the contract has been made, or before the court of the place of destination.
Thus, since a) respondent is domiciled in London; b) respondent’s principal place of business is in

London; c) petitioner bought her ticket in Italy (through Jeepney Travel S.A.S, in Rome); 6 and d)
Rome, Italy is petitioner’s place of destination, then it follows that the complaint should only be filed
in the proper courts of London, United Kingdom or Rome, Italy.
Likewise, it was alleged that the case must be dismissed for lack of jurisdiction over the person of
the respondent because the summons was erroneously served on Euro-Philippine Airline Services,
Inc. which is not its resident agent in the Philippines.
On June 3, 2005, the trial court issued an Order requiring herein petitioner to file her
Comment/Opposition on the Motion to Dismiss within 10 days from notice thereof, and for
respondent to file a Reply thereon.7 Instead of filing a Comment/Opposition, petitioner filed on June
27, 2005, an Urgent Ex-Parte Motion to Admit Formal Amendment to the Complaint and Issuance of
Alias Summons.8 Petitioner alleged that upon verification with the Securities and Exchange
Commission, she found out that the resident agent of respondent in the Philippines is Alonzo Q.
Ancheta. Subsequently, on September 9, 2005, petitioner filed a Motion to Resolve Pending Incident
and Opposition to Motion to Dismiss.9
On October 14, 2005, the RTC of Makati City, Branch 132, issued an Order 10 granting respondent’s
Motion to Dismiss. It ruled that:
The Court sympathizes with the alleged ill-treatment suffered by the plaintiff. However, our Courts
have to apply the principles of international law, and are bound by treaty stipulations entered into by
the Philippines which form part of the law of the land. One of this is the Warsaw Convention. Being a
signatory thereto, the Philippines adheres to its stipulations and is bound by its provisions including
the place where actions involving damages to plaintiff is to be instituted, as provided for under Article
28(1) thereof. The Court finds no justifiable reason to deviate from the indicated limitations as it will
only run counter to the provisions of the Warsaw Convention. Said adherence is in consonance with
the comity of nations and deviation from it can only be effected through proper denunciation as
enunciated in the Santos case (ibid). Since the Philippines is not the place of domicile of the
defendant nor is it the principal place of business, our courts are thus divested of jurisdiction over
cases for damages. Neither was plaintiff’s ticket issued in this country nor was her destination Manila
but Rome in Italy. It bears stressing however, that referral to the court of proper jurisdiction does not
constitute constructive denial of plaintiff’s right to have access to our courts since the Warsaw
Convention itself provided for jurisdiction over cases arising from international transportation. Said
treaty stipulations must be complied with in good faith following the time honored principle of pacta
sunt servanda.
The resolution of the propriety of service of summons is rendered moot by the Court’s want of
jurisdiction over the instant case.
WHEREFORE, premises considered, the present Motion to Dismiss is hereby GRANTED and this
case is hereby ordered DISMISSED.
Petitioner filed a Motion for Reconsideration but the motion was denied in an Order 11 dated January
4, 2006.
Petitioner now comes directly before us on a Petition for Review on Certiorari on pure questions of
law, raising the following issues:
Issues
I. WHETHER X X X PHILIPPINE COURTs HAVE JURISDICTION OVER A TORTIOUS CONDUCT

COMMITTED AGAINST A FILIPINO CITIZEN AND RESIDENT BY AIRLINE PERSONNEL OF A
FOREIGN CARRIER TRAVELLING BEYOND THE TERRITORIAL LIMIT OF ANY FOREIGN
COUNTRY; AND THUS IS OUTSIDE THE AMBIT OF THE WARSAW CONVENTION.
II. WHETHER x x x RESPONDENT AIR CARRIER OF PASSENGERS, IN FILING ITS MOTION TO

DISMISS BASED ON LACK OF JURISDICTION OVER THE SUBJECT MATTER OF THE CASE
AND OVER ITS PERSON MAY BE DEEMED AS HAVING IN FACT AND IN LAW SUBMITTED
ITSELF TO THE JURISDICTION OF THE LOWER COURT, ESPECIALLY SO, WHEN THE VERY
LAWYER ARGUING FOR IT IS HIMSELF THE RESIDENT AGENT OF THE CARRIER.
Petitioner argues that her cause of action arose not from the contract of carriage, but from the
tortious conduct committed by airline personnel of respondent in violation of the provisions of the
Civil Code on Human Relations. Since her cause of action was not predicated on the contract of
carriage, petitioner asserts that she has the option to pursue this case in this jurisdiction pursuant to
Philippine laws.
In contrast, respondent maintains that petitioner’s claim for damages fell within the ambit of Article
28(1) of the Warsaw Convention. As such, the same can only be filed before the courts of London,
United Kingdom or Rome, Italy.
Our Ruling
The petition is without merit.
The Warsaw Convention has the force and effect of law in this country.
It is settled that the Warsaw Convention has the force and effect of law in this country. In Santos III
v. Northwest Orient Airlines,12 we held that:
The Republic of the Philippines is a party to the Convention for the Unification of Certain Rules
Relating to International Transportation by Air, otherwise known as the Warsaw Convention. It took
effect on February 13, 1933. The Convention was concurred in by the Senate, through its Resolution
No. 19, on May 16, 1950. The Philippine instrument of accession was signed by President Elpidio
Quirino on October 13, 1950, and was deposited with the Polish government on November 9, 1950.
The Convention became applicable to the Philippines on February 9, 1951. On September 23, 1955,
President Ramon Magsaysay issued Proclamation No. 201, declaring our formal adherence thereto,
"to the end that the same and every article and clause thereof may be observed and fulfilled in good
faith by the Republic of the Philippines and the citizens thereof."
The Convention is thus a treaty commitment voluntarily assumed by the Philippine government and,
as such, has the force and effect of law in this country.13
The Warsaw Convention applies because the air travel, where the alleged tortious conduct occurred,
was between the United Kingdom and Italy, which are both signatories to the Warsaw Convention.
Article 1 of the Warsaw Convention provides:
1. This Convention applies to all international carriage of persons, luggage or goods

performed by aircraft for reward. It applies equally to gratuitous carriage by aircraft
performed by an air transport undertaking.
2. For the purposes of this Convention the expression "international carriage" means any
carriage in which, according to the contract made by the parties, the place of departure and
the place of destination, whether or not there be a break in the carriage or a
transhipment, are situated either within the territories of two High Contracting Parties, or
within the territory of a single High Contracting Party, if there is an agreed stopping place
within a territory subject to the sovereignty, suzerainty, mandate or authority of another
Power, even though that Power is not a party to this Convention. A carriage without such an
agreed stopping place between territories subject to the sovereignty, suzerainty, mandate or
authority of the same High Contracting Party is not deemed to be international for the
purposes of this Convention. (Emphasis supplied)
Thus, when the place of departure and the place of destination in a contract of carriage are situated
within the territories of two High Contracting Parties, said carriage is deemed an "international
carriage". The High Contracting Parties referred to herein were the signatories to the Warsaw
Convention and those which subsequently adhered to it.14
In the case at bench, petitioner’s place of departure was London, United Kingdom while her place of
destination was Rome, Italy.15 Both the United Kingdom16 and Italy17 signed and ratified the Warsaw
Convention. As such, the transport of the petitioner is deemed to be an "international carriage" within
the contemplation of the Warsaw Convention.
Since the Warsaw Convention applies in the instant case, then the jurisdiction over the subject
matter of the action is governed by the provisions of the Warsaw Convention.
Under Article 28(1) of the Warsaw Convention, the plaintiff may bring the action for damages before
–
1. the court where the carrier is domiciled;
2. the court where the carrier has its principal place of business;
3. the court where the carrier has an establishment by which the contract has been made; or
4. the court of the place of destination.
In this case, it is not disputed that respondent is a British corporation domiciled in London, United
Kingdom with London as its principal place of business. Hence, under the first and second
jurisdictional rules, the petitioner may bring her case before the courts of London in the United
Kingdom. In the passenger ticket and baggage check presented by both the petitioner and
respondent, it appears that the ticket was issued in Rome, Italy. Consequently, under the third
jurisdictional rule, the petitioner has the option to bring her case before the courts of Rome in Italy.
Finally, both the petitioner and respondent aver that the place of destination is Rome, Italy, which is
properly designated given the routing presented in the said passenger ticket and baggage check.
Accordingly, petitioner may bring her action before the courts of Rome, Italy. We thus find that the
RTC of Makati correctly ruled that it does not have jurisdiction over the case filed by the petitioner.
Santos III v. Northwest Orient Airlines18 applies in this case.
Petitioner contends that Santos III v. Northwest Orient Airlines19 cited by the trial court is inapplicable
to the present controversy since the facts thereof are not similar with the instant case.
We are not persuaded.

In Santos III v. Northwest Orient Airlines,20 Augusto Santos III, a resident of the Philippines,
purchased a ticket from Northwest Orient Airlines in San Francisco, for transport between San
Francisco and Manila via Tokyo and back to San Francisco. He was wait-listed in the Tokyo to
Manila segment of his ticket, despite his prior reservation. Contending that Northwest Orient Airlines
acted in bad faith and discriminated against him when it canceled his confirmed reservation and
gave his seat to someone who had no better right to it, Augusto Santos III sued the carrier for
damages before the RTC. Northwest Orient Airlines moved to dismiss the complaint on ground of
lack of jurisdiction citing Article 28(1) of the Warsaw Convention. The trial court granted the motion
which ruling was affirmed by the Court of Appeals. When the case was brought before us, we denied
the petition holding that under Article 28(1) of the Warsaw Convention, Augusto Santos III must
prosecute his claim in the United States, that place being the (1) domicile of the Northwest Orient
Airlines; (2) principal office of the carrier; (3) place where contract had been made (San Francisco);
and (4) place of destination (San Francisco).21
We further held that Article 28(1) of the Warsaw Convention is jurisdictional in character. Thus:
A number of reasons tends to support the characterization of Article 28(1) as a jurisdiction and not a
venue provision. First, the wording of Article 32, which indicates the places where the action for
damages "must" be brought, underscores the mandatory nature of Article 28(1). Second, this
characterization is consistent with one of the objectives of the Convention, which is to "regulate in a
uniform manner the conditions of international transportation by air." Third, the Convention does not
contain any provision prescribing rules of jurisdiction other than Article 28(1), which means that the
phrase "rules as to jurisdiction" used in Article 32 must refer only to Article 28(1). In fact, the last
sentence of Article 32 specifically deals with the exclusive enumeration in Article 28(1) as
"jurisdictions," which, as such, cannot be left to the will of the parties regardless of the time when the
damage occurred.
xxxx
In other words, where the matter is governed by the Warsaw Convention, jurisdiction takes on a dual
concept. Jurisdiction in the international sense must be established in accordance with Article 28(1)
of the Warsaw Convention, following which the jurisdiction of a particular court must be established
pursuant to the applicable domestic law. Only after the question of which court has jurisdiction is
determined will the issue of venue be taken up. This second question shall be governed by the law
of the court to which the case is submitted.22
Contrary to the contention of petitioner, Santos III v. Northwest Orient Airlines 23 is analogous to the
instant case because (1) the domicile of respondent is London, United Kingdom; 24 (2) the principal
office of respondent airline is likewise in London, United Kingdom;25 (3) the ticket was purchased in
Rome, Italy;26 and (4) the place of destination is Rome, Italy.27 In addition, petitioner based her
complaint on Article 217628 of the Civil Code on quasi-delict and Articles 1929 and 2130 of the Civil
Code on Human Relations. In Santos III v. Northwest Orient Airlines, 31Augusto Santos III similarly
posited that Article 28 (1) of the Warsaw Convention did not apply if the action is based on tort.
Hence, contrary to the contention of the petitioner, the factual setting of Santos III v. Northwest
Orient Airlines32 and the instant case are parallel on the material points.
Tortious conduct as ground for the petitioner’s complaint is within the purview of the Warsaw
Convention.
Petitioner contends that in Santos III v. Northwest Orient Airlines, 33 the cause of action was based on
a breach of contract while her cause of action arose from the tortious conduct of the airline
personnel and violation of the Civil Code provisions on Human Relations.34 In addition, she claims
that our pronouncement in Santos III v. Northwest Orient Airlines 35 that "the allegation of willful
misconduct resulting in a tort is insufficient to exclude the case from the comprehension of the
Warsaw Convention," is more of an obiter dictum rather than the ratio decidendi. 36 She maintains
that the fact that said acts occurred aboard a plane is merely incidental, if not irrelevant. 37
We disagree with the position taken by the petitioner. Black defines obiter dictum as "an opinion
entirely unnecessary for the decision of the case" and thus "are not binding as precedent." 38 In
Santos III v. Northwest Orient Airlines,39 Augusto Santos III categorically put in issue the applicability
of Article 28(1) of the Warsaw Convention if the action is based on tort.
In the said case, we held that the allegation of willful misconduct resulting in a tort is insufficient to
exclude the case from the realm of the Warsaw Convention. In fact, our ruling that a cause of action
based on tort did not bring the case outside the sphere of the Warsaw Convention was our ratio
decidendi in disposing of the specific issue presented by Augusto Santos III. Clearly, the contention
of the herein petitioner that the said ruling is an obiter dictum is without basis.
Relevant to this particular issue is the case of Carey v. United Airlines, 40 where the passenger filed
an action against the airline arising from an incident involving the former and the airline’s flight
attendant during an international flight resulting to a heated exchange which included insults and
profanity. The United States Court of Appeals (9th Circuit) held that the "passenger's action against
the airline carrier arising from alleged confrontational incident between passenger and flight
attendant on international flight was governed exclusively by the Warsaw Convention, even though
the incident allegedly involved intentional misconduct by the flight attendant." 41
In Bloom v. Alaska Airlines,42 the passenger brought nine causes of action against the airline in the
state court, arising from a confrontation with the flight attendant during an international flight to
Mexico. The United States Court of Appeals (9th Circuit) held that the "Warsaw Convention governs
actions arising from international air travel and provides the exclusive remedy for conduct which falls
within its provisions." It further held that the said Convention "created no exception for an injury
suffered as a result of intentional conduct" 43 which in that case involved a claim for intentional
infliction of emotional distress.
It is thus settled that allegations of tortious conduct committed against an airline passenger during
the course of the international carriage do not bring the case outside the ambit of the Warsaw
Convention.
Respondent, in seeking remedies from the trial court through special appearance of counsel, is not
deemed to have voluntarily submitted itself to the jurisdiction of the trial court.
Petitioner argues that respondent has effectively submitted itself to the jurisdiction of the trial court
when the latter stated in its Comment/Opposition to the Motion for Reconsideration that "Defendant
[is at a loss] x x x how the plaintiff arrived at her erroneous impression that it is/was Euro-Philippines
Airlines Services, Inc. that has been making a special appearance since x x x British Airways x x x
has been clearly specifying in all the pleadings that it has filed with this Honorable Court that it is the
one making a special appearance."44
In refuting the contention of petitioner, respondent cited La Naval Drug Corporation v. Court of
Appeals45 where we held that even if a party "challenges the jurisdiction of the court over his person,
as by reason of absence or defective service of summons, and he also invokes other grounds for the
dismissal of the action under Rule 16, he is not deemed to be in estoppel or to have waived his
objection to the jurisdiction over his person."46
This issue has been squarely passed upon in the recent case of Garcia v. Sandiganbayan, 47 where
we reiterated our ruling in La Naval Drug Corporation v. Court of Appeals 48 and elucidated thus:
Special Appearance to Question a Court’s Jurisdiction Is Not
Voluntary Appearance
The second sentence of Sec. 20, Rule 14 of the Revised Rules of Civil Procedure clearly provides:
Sec. 20. Voluntary appearance. – The defendant’s voluntary appearance in the action shall be
equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside from
lack of jurisdiction over the person of the defendant shall not be deemed a voluntary appearance.
Thus, a defendant who files a motion to dismiss, assailing the jurisdiction of the court over his
person, together with other grounds raised therein, is not deemed to have appeared voluntarily
before the court. What the rule on voluntary appearance – the first sentence of the above-quoted
rule – means is that the voluntary appearance of the defendant in court is without qualification, in
which case he is deemed to have waived his defense of lack of jurisdiction over his person due to
improper service of summons.
The pleadings filed by petitioner in the subject forfeiture cases, however, do not show that she
voluntarily appeared without qualification. Petitioner filed the following pleadings in Forfeiture I: (a)
motion to dismiss; (b) motion for reconsideration and/or to admit answer; (c) second motion for
reconsideration; (d) motion to consolidate forfeiture case with plunder case; and (e) motion to
dismiss and/or to quash Forfeiture I. And in Forfeiture II: (a) motion to dismiss and/or to quash
Forfeiture II; and (b) motion for partial reconsideration.
The foregoing pleadings, particularly the motions to dismiss, were filed by petitioner solely for special
appearance with the purpose of challenging the jurisdiction of the SB over her person and that of her
three children. Petitioner asserts therein that SB did not acquire jurisdiction over her person and of
her three children for lack of valid service of summons through improvident substituted service of
summons in both Forfeiture I and Forfeiture II. This stance the petitioner never abandoned when she
filed her motions for reconsideration, even with a prayer to admit their attached Answer Ex
Abundante Ad Cautelam dated January 22, 2005 setting forth affirmative defenses with a claim for
damages. And the other subsequent pleadings, likewise, did not abandon her stance and defense of
lack of jurisdiction due to improper substituted services of summons in the forfeiture cases.
Evidently, from the foregoing Sec. 20, Rule 14 of the 1997 Revised Rules on Civil Procedure,
petitioner and her sons did not voluntarily appear before the SB constitutive of or equivalent to
service of summons.
Moreover, the leading La Naval Drug Corp. v. Court of Appeals applies to the instant case. Said
case elucidates the current view in our jurisdiction that a special appearance before the court––
challenging its jurisdiction over the person through a motion to dismiss even if the movant invokes
other grounds––is not tantamount to estoppel or a waiver by the movant of his objection to
jurisdiction over his person; and such is not constitutive of a voluntary submission to the jurisdiction
of the court.
1avvphi1
Thus, it cannot be said that petitioner and her three children voluntarily appeared before the SB to
cure the defective substituted services of summons. They are, therefore, not estopped from
questioning the jurisdiction of the SB over their persons nor are they deemed to have waived such
defense of lack of jurisdiction. Consequently, there being no valid substituted services of summons
made, the SB did not acquire jurisdiction over the persons of petitioner and her children. And
perforce, the proceedings in the subject forfeiture cases, insofar as petitioner and her three children
are concerned, are null and void for lack of jurisdiction. (Emphasis supplied)
In this case, the special appearance of the counsel of respondent in filing the Motion to Dismiss and
other pleadings before the trial court cannot be deemed to be voluntary submission to the jurisdiction
of the said trial court. We hence disagree with the contention of the petitioner and rule that there was
no voluntary appearance before the trial court that could constitute estoppel or a waiver of
respondent’s objection to jurisdiction over its person.
WHEREFORE, the petition is DENIED. The October 14, 2005 Order of the Regional Trial Court of
Makati City, Branch 132, dismissing the complaint for lack of jurisdiction, is AFFIRMED.
SO ORDERED.

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSE PORTUGAL PEREZ

Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1
50 C.J.S. 1089.
2
Records, pp. 1-5.
3
Id. at 11.
4
Id. at 12-16.
5
Convention for the Unification of Certain Rules Relating To International Transportation by
Air, signed at Warsaw on October 12, 1929.
6
Records, p. 8.
7
Id. at 21
8
Id. at 25-27.
9
Id. at 37-41.
10
Id. at 56-57; penned by Judge Rommel O. Baybay. Emphasis in the original text.
11
Id. at 75.
12
G.R. No. 101538, June 23, 1992, 210 SCRA 256.
13
Id. at 260-261.
14
Mapa v. Court of Appeals, 341 Phil. 281, 295 (1997).
15
Rollo, pp. 155-157.
16
The United Kingdom signed the Warsaw Convention on October 12, 1929 and ratified the
same on February 14, 1933. The Convention became effective in the United Kingdom on
March 15, 1933.
Italy signed the Warsaw Convention on October 12, 1929 and ratified the same on
17
February 14, 1933. The Convention became effective in Italy on May 15, 1933.
18
Supra note 12.
19
Id.
20
Id.
In said case, we distinguished between a "destination" and an "agreed stopping place." We

21
held that:
Article 1(2) also draws a distinction between a "destination" and an "agreed stopping
place." It is the "destination" and not an "agreed stopping place" that controls for
purposes of ascertaining jurisdiction under the Convention.
The contract is a single undivided operation, beginning with the place of departure
and ending with the ultimate destination. The use of the singular in the expression
indicates the understanding of the parties to the Convention that every contract of
carriage has one place of departure and one place of destination. An intermediate
place where the carriage may be broken is not regarded as a "place of destination."
Id. at 270-271.
22
Id. at 266-267.
23
Id.
24
Rollo, p. 139.
25
Id.
26
Id. at 174.
27
Id. at 155-157.
28
Article 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 provisions of this Chapter.
Article 19. Every person must, in the exercise of his rights and in the performance of his
29
duties, act with justice, give everyone his due and observe honesty and good faith.
30
Article 21. Any person, who willfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for the
damage.
31
Supra note 12.
32
Id.
33
Id.
34
Rollo, pp. 159 and 162.
35
Supra note 12.
36
Rollo, p. 159.
37
Id. at 162.
38
Black’s Law Dictionary, 6th ed., 1990.
39
Supra note 12.
40
255 F.3d 1044.
41
Id.
42
36 Fed. Appx. 278, 2002 WL 1136727 (C.A. 9).
43
Id.
44
Rollo, p. 169.
45
G.R. No. 103200, August 31, 1994, 236 SCRA 78.
46
Id. at 89.
47
G.R. No. 170122, October 12, 2009.
48
Supra.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 164016 March 15, 2010
RENO FOODS, INC., and/or VICENTE KHU, Petitioners,

vs.
Nagkakaisang Lakas ng Manggagawa (NLM) - KATIPUNAN on behalf of its member, NENITA
CAPOR,Respondent.
DECISION
DEL CASTILLO, J.:
There is no legal or equitable justification for awarding financial assistance to an employee who was
dismissed for stealing company property. Social justice and equity are not magical formulas to erase
the unjust acts committed by the employee against his employer. While compassion for the poor is
desirable, it is not meant to coddle those who are unworthy of such consideration.
This Petition for Review on Certiorari1 assails the June 3, 2004 Decision2 of the Court of Appeals
(CA) in CA-G.R. SP No. 76789 which denied the petition for certiorari filed by the petitioners and
affirmed the award of financial assistance to respondent Nenita Capor.
Factual Antecedents
Petitioner Reno Foods, Inc. (Reno Foods) is a manufacturer of canned meat products of which
Vicente Khu is the president and is being sued in that capacity. Respondent Nenita Capor (Capor)
was an employee of Reno Foods until her dismissal on October 27, 1998.
It is a standard operating procedure of petitioner-company to subject all its employees to reasonable

search of their belongings upon leaving the company premises. On October 19, 1998, the guard on
duty found six Reno canned goods wrapped in nylon leggings inside Capor’s fabric clutch bag. The
only other contents of the bag were money bills and a small plastic medicine container.
Petitioners accorded Capor several opportunities to explain her side, often with the assistance of the
union officers of Nagkakaisang Lakas ng Manggagawa (NLM) – Katipunan. In fact, after petitioners
sent a Notice of Termination to Capor, she was given yet another opportunity for reconsideration
through a labor-management grievance conference held on November 17, 1999. Unfortunately,
petitioners did not find reason to change its earlier decision to terminate Capor’s employment with
the company.
On December 8, 1998, petitioners filed a complaint-affidavit against Capor for qualified theft in the
Office of the City Prosecutor, Malabon-Navotas Substation. On April 5, 1999, a Resolution 3 was
issued finding probable cause for the crime charged. Consequently, an Information was filed against
Capor docketed as Criminal Case No. 207-58-MN.
Meanwhile, the Nagkakaisang Lakas ng Manggagawa (NLM) – Katipunan filed on behalf of Capor a
complaint4 for illegal dismissal and money claims against petitioners with the Head Arbitration Office
of the National Labor Relations Commission (NLRC) for the National Capital Region. The complaint
prayed that Capor be paid her full backwages as well as moral and exemplary damages. The
complaint was docketed as NLRC NCR Case No. 00-01-00183-99.
Ruling of the Labor Arbiter
In the proceedings before the Labor Arbiter, Capor alleged that she was unaware that her clutch bag
contained the pilfered canned products. She claimed that petitioners might have planted the
evidence against her so it could avoid payment of her retirement benefits, as she was set to retire in
about a year’s time.
After the submission of the parties’ respective position papers, the Labor Arbiter rendered his
Decision5 dated November 16, 1999 finding Capor guilty of serious misconduct which is a just cause
for termination.
The Labor Arbiter noted that Capor was caught trying to sneak out six cans of Reno products without
authority from the company. Under Article 232 of the Labor Code, an employer may terminate the
services of an employee for just cause, such as serious misconduct. In this case, the Labor Arbiter
found that theft of company property is tantamount to serious misconduct; as such, Capor is not
entitled to reinstatement and backwages, as well as moral and exemplary damages.
Moreover, the Labor Arbiter ruled that consistent with prevailing jurisprudence, an employee who
commits theft of company property may be validly terminated and consequently, the said employee
is not entitled to separation pay.6
Ruling of the National Labor Relations Commission
On appeal, the NLRC affirmed the factual findings and monetary awards of the Labor Arbiter but
added an award of financial assistance. The decretal portion of the September 20, 2002
Decision7 reads:
WHEREFORE, premises considered, the decision under review is hereby MODIFIED by granting an
award of financial assistance in the form of separation pay equivalent to one-half month pay for
every year of service. In all other respects the decision stands affirmed. All other claims of the
complainant are dismissed for lack of merit.8
Both parties moved for a reconsideration of the NLRC Decision. Petitioners asked that the award of
financial assistance be deleted, while Capor asked for a finding of illegal dismissal and for
reinstatement with full backwages.9
On February 28, 2003, the NLRC issued its Resolution10 denying both motions for reconsideration for
lack of merit.
Aggrieved, petitioners filed a Petition for Certiorari11 before the CA imputing grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of the NLRC for awarding financial
assistance to Capor.
Citing Philippine Long Distance Telephone Company v. National Labor Relations

Commission,12 petitioners argued that theft of company property is a form of serious misconduct
under Article 282(a) of the Labor Code for which no financial assistance in the form of separation
pay should be allowed.
Unimpressed, the appellate court affirmed the NLRC’s award of financial assistance to Capor. It
stressed that the laborer’s welfare should be the primordial and paramount consideration when
carrying out and interpreting provisions of the Labor Code. It explained that the mandate laid down in
Philippine Long Distance Telephone Company v. National Labor Relations Commission 13 was not
absolute, but merely directory.
Issue
The issue before us is whether the NLRC committed grave abuse of discretion amounting to lack or
excess of jurisdiction in granting financial assistance to an employee who was validly dismissed for
theft of company property.
Our Ruling
We grant the petition.

Conviction in a criminal case is not necessary to find just cause for termination of employment.
On the date that the appellate court issued its Decision, Capor filed a Manifestation 14 informing the
CA of her acquittal in the charge of qualified theft. The dispositive portion of said Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered acquitting Nenita Capor of the
crime charged against her in this case on the ground of reasonable doubt with costs de oficio.
Capor thus claims that her acquittal in the criminal case proves that petitioners failed to present
substantial evidence to justify her termination from the company. She therefore asks for a finding of
illegal dismissal and an award of separation pay equivalent to one month pay for every year of
service.
On the other hand, petitioners argue that the dismissal of a criminal action should not carry a
corresponding dismissal of the labor action since a criminal conviction is unnecessary in warranting
a valid dismissal for employment.
Petitioners further maintain that the ruling in Philippine Long Distance Telephone Company v.
National Labor Relations Commission15 regarding the disallowance of separation pay for those
dismissed due to serious misconduct or moral turpitude is mandatory. Petitioners likewise argue that
in Zenco Sales, Inc. v. National Labor Relations Commission,16 the Supreme Court found grave
abuse of discretion on the part of the NLRC when it ignored the principles laid down in the Philippine
Long Distance Telephone Company v. National Labor Relations Commission. Thus, petitioners pray
for the reversal of the CA Decision and reinstatement of the Labor Arbiter’s Decision dated
November 16, 1999.
Capor was acquitted in Criminal Case No. 207-58-MN based on reasonable doubt. In his Decision,
the trial judge entertained doubts regarding the guilt of Capor because of two circumstances: (1) an
ensuing labor dispute (though it omitted to state the parties involved), and (2) the upcoming
retirement of Capor. The trial judge made room for the possibility that these circumstances could
have motivated petitioners to plant evidence against Capor so as to avoid paying her retirement
benefits. The trial court did not categorically rule that the acts imputed to Capor did not occur. It did
not find petitioners’ version of the event as fabricated, baseless, or unreliable. It merely
acknowledged that seeds of doubt have been planted in the juror’s mind which, in a criminal case, is
enough to acquit an accused based on reasonable doubt. The pertinent portion of the trial court’s
Decision reads:
During the cross examination of the accused, she was confronted with a document that must be
related to a labor dispute. x x x The Court noted very clearly from the transcript of stenographic
notes that it must have been submitted to the NLRC. This is indicative of a labor dispute which,
although not claimed directly by the accused, could be one of the reasons why she insinuated that
evidence was planted against her in order to deprive her of the substantial benefits she will be
receiving when she retires from the company. Incidentally, this document was never included in the
written offer of evidence of the prosecution.
Doubt has, therefore, crept into the mind of the Court concerning the guilt of accused Nenita Capor
which in this jurisdiction is mandated to be resolved in favor of her innocence.
Pertinent to the foregoing doubt being entertained by this Court, the Court of Appeals citing People
v. Bacus, G.R. No. 60388, November 21, 1991: "the phrase ‘beyond reasonable doubt’ means not a
single iota of doubt remains present in the mind of a reasonable and unprejudiced man that a person
is guilty of a crime. Where doubt exists, even if only a shred, the Court must and should set the
accused free." (People v. Felix, CA-G.R. No. 10871, November 24, 1992)
WHEREFORE, premises considered, judgment is hereby rendered acquitting accused Nenita Capor
of the crime charged against her in this case on the ground of reasonable doubt, with costs de oficio.
SO ORDERED.17
In Nicolas v. National Labor Relations Commission,18 we held that a criminal conviction is not
necessary to find just cause for employment termination. Otherwise stated, an employee’s acquittal
in a criminal case, especially one that is grounded on the existence of reasonable doubt, will not
preclude a determination in a labor case that he is guilty of acts inimical to the employer’s interests. 19
Criminal cases require proof beyond reasonable doubt while labor disputes require only substantial
evidence, which means such relevant evidence as a
reasonable mind might accept as adequate to justify a conclusion.20 The evidence in this case was
reviewed by the appellate court and two labor tribunals endowed with expertise on the matter – the
Labor Arbiter and the NLRC. They all found substantial evidence to conclude that Capor had been
validly dismissed for dishonesty or serious misconduct. It is settled that factual findings of quasi-
judicial agencies are generally accorded respect and finality so long as these are supported by
substantial evidence. In the instant case, we find no compelling reason to doubt the common
findings of the three reviewing bodies.
The award of separation pay is not warranted under the law and jurisprudence.
We find no justification for the award of separation pay to Capor. This award is a deviation from
established law and jurisprudence. 21
The law is clear. Separation pay is only warranted when the cause for termination is not attributable
to the employee’s fault, such as those provided in Articles 283 and 284 of the Labor Code, as well as
in cases of illegal dismissal in which reinstatement is no longer feasible.22 It is not allowed when an
employee is dismissed for just cause,23 such as serious misconduct.
Jurisprudence has classified theft of company property as a serious misconduct and denied the
award of separation pay to the erring employee.24 We see no reason why the same should not be
similarly applied in the case of Capor. She attempted to steal the property of her long-time employer.
For committing such misconduct, she is definitely not entitled to an award of separation pay.
It is true that there have been instances when the Court awarded financial assistance to employees
who were terminated for just causes, on grounds of equity and social justice. The same, however,
has been curbed and rationalized in Philippine Long Distance Telephone Company v. National Labor
Relations Commission.25 In that case, we recognized the harsh realities faced by employees that
forced them, despite their good intentions, to violate company policies, for which the employer can
rightfully terminate their employment. For these instances, the award of financial assistance was
allowed. But, in clear and unmistakable language, we also held that the award of financial assistance
shall not be given to validly terminated employees, whose offenses are iniquitous or reflective of
some depravity in their moral character. When the employee commits an act of dishonesty,
depravity, or iniquity, the grant of financial assistance is misplaced compassion. It is tantamount not
only to condoning a patently illegal or dishonest act, but an endorsement thereof. It will be an insult
to all the laborers who, despite their economic difficulties, strive to maintain good values and moral
conduct.
In fact, in the recent case of Toyota Motors Philippines, Corp. Workers Association (TMPCWA) v.
National Labor Relations Commission,26 we ruled that separation pay shall not be granted to all
employees who are dismissed on any of the four grounds provided in Article 282 of the Labor Code.
Such ruling was reiterated and further explained in Central Philippines Bandag Retreaders, Inc. v.
Diasnes:27
To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must demur the award of
separation pay based on social justice when an employee’s dismissal is based on serious
misconduct or willful disobedience; gross and habitual neglect of duty; fraud or willful breach of trust;
or commission of a crime against the person of the employer or his immediate family – grounds
under Art. 282 of the Labor Code that sanction dismissals of employees. They must be most
judicious and circumspect in awarding separation pay or financial assistance as the constitutional
policy to provide full protection to labor is not meant to be an instrument to oppress the employers.
The commitment of the Court to the cause of labor should not embarrass us from sustaining the
employers when they are right, as here. In fine, we should be more cautious in awarding financial
assistance to the undeserving and those who are unworthy of the liberality of the law. 1avvphi1
We are not persuaded by Capor’s argument that despite the finding of theft, she should still be
granted separation pay in light of her long years of service with petitioners. We held in Central
Pangasinan Electric Cooperative, Inc. v. National Labor Relations Commission 28 that:
Although long years of service might generally be considered for the award of separation benefits or
some form of financial assistance to mitigate the effects of termination, this case is not the
appropriate instance for generosity x x x. The fact that private respondent served petitioner for more
than twenty years with no negative record prior to his dismissal, in our view of this case, does not
call for such award of benefits, since his violation reflects a regrettable lack of loyalty and worse,
betrayal of the company. If an employee’s length of service is to be regarded as justification for
moderating the penalty of dismissal, such gesture will actually become a prize for disloyalty,
distorting the meaning of social justice and undermining the efforts of labor to clean its ranks of
undesirables.
Indeed, length of service and a previously clean employment record cannot simply erase the gravity
of the betrayal exhibited by a malfeasant employee.29 Length of service is not a bargaining chip that
can simply be stacked against the employer. After all, an employer-employee relationship is
symbiotic where both parties benefit from mutual loyalty and dedicated service. If an employer had
treated his employee well, has accorded him fairness and adequate compensation as determined by
law, it is only fair to expect a long-time employee to return such fairness with at least some respect
and honesty. Thus, it may be said that betrayal by a long-time employee is more insulting and
odious for a fair employer. As stated in another case:
x x x The fact that [the employer] did not suffer pecuniary damage will not obliterate respondent’s
betrayal of trust and confidence reposed by petitioner. Neither would his length of service justify his
dishonesty or mitigate his liability. His length of service even aggravates his offense. He should have
been more loyal to petitioner company from which he derived his family bread and butter for
seventeen years.30
While we sympathize with Capor’s plight, being of retirement age and having served petitioners for
39 years, we cannot award any financial assistance in her favor because it is not only against the
law but also a retrogressive public policy. We have already explained the folly of granting financial
assistance in the guise of compassion in the following pronouncements:
x x x Certainly, a dishonest employee cannot be rewarded with separation pay or any financial
benefit after his culpability is established in two decisions by competent labor tribunals, which
decisions appear to be well-supported by evidence. To hold otherwise, even in the name of
compassion, would be to send a wrong signal not only that "crime pays" but also that one can enrich
himself at the expense of another in the name of social justice. And courts as well as quasi-judicial
entities will be overrun by petitioners mouthing dubious pleas for misplaced social justice. Indeed,
before there can be an occasion for compassion and mercy, there must first be justice for all.
Otherwise, employees will be encouraged to steal and misappropriate in the expectation that
eventually, in the name of social justice and compassion, they will not be penalized but instead
financially rewarded. Verily, a contrary holding will merely encourage lawlessness, dishonesty, and
duplicity. These are not the values that society cherishes; these are the habits that it abhors. 31
WHEREFORE, the petition is GRANTED. The assailed June 3, 2004 Decision of the Court of
Appeals in CA-G.R. SP No. 76789 affirming the September 20, 2002 Decision of the National Labor
Relations Commission is ANNULLED and SET ASIDE. The November 16, 1999 Decision of the
Labor Arbiter is REINSTATED and AFFIRMED.
SO ORDERED.

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSE PORTUGAL PEREZ

Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1
Rollo, pp. 3-20.
2
Id. at 65-75; penned by Associate Justice Bienvenido L. Reyes and concurred in by
Associate Justices Rosalinda Asuncion-Vicente and Jose C. Reyes, Jr.
3
CA rollo, p. 60.
4
Id. at 27.
5
Rollo, pp. 21-37.
6
Id. at 29-36.
7
Rollo, pp. 38-44.
8
Id. at 43.
9
Id. at 45-61; CA rollo, pp. 169-185.
10
Rollo, pp. 62-63.
11
CA rollo, pp. 2-25.
12
G.R. No. L-80609, August 23, 1988, 164 SCRA 671, 679-680.
13
Id.
14
15
Supra note 12.
16
G.R. No. 111110, August 2, 1994, 234 SCRA 689.
17
Rollo, pp. 129-130.
18
327 Phil. 883, 886-887 (1996).
Vergara v. National Labor Relations Commission, 347 Phil. 161, 173-174 (1997); Chua v.
19
National Labor Relations Commission, G.R. No. 105775, February 8, 1993, 218 SCRA 545,
548; See MGG Marine Services, Inc. v. National Labor Relations Commission, 328 Phil.
1047, 1068 (1996).
See Patna-an v. National Labor Relations Commission, G.R. No. 92878, March 6, 1992,
20
207 SCRA 106; Iriga Telephone Co., Inc. v. National Labor Relations Commission, 350 Phil.
245, 253 (1998).
21
See Philippine Long Distance Telephone Company v. National Labor Relations
Commission, supra note 12; Zenco Sales, Inc. v. National Labor Relations Commission,
supra note 16; Philippine National Construction Corporation v. National Labor Relations
Commission, 252 Phil. 211 (1989).
Section 4(b), Rule I, Book VI of the Implementing Rules and Regulations of the Labor
22
Code.
Article 282 of the Labor Code and Section 7, Rule I, Book VI of the Implementing Rules
23
and Regulations of the Labor Code.
24
Philippine Long Distance Telephone Company v. National Labor Relations Commission,
supra note 12; Zenco Sales, Inc. v. National Labor Relations Commission, supra note 16.
25
Supra note 12.
26
G.R. Nos. 158798-99, October 19, 2007, 537 SCRA 171, 219-223.
27
G.R. No. 163607, July 14, 2008, 558 SCRA 194, 207.
28
G.R. No. 163561, July 24, 2007, 528 SCRA 146, 151-152.
See Philippine Long Distance Telephone Company v. The Late Romeo F. Bolso, G.R. No.
29
159701, August 17, 2007, 530 SCRA 550, 563-564; Central Pangasinan Electric
Cooperative, Inc. v. National Labor Relations Commission, supra; Philippine Long Distance
Telephone Company v. National Labor Relations Commission, supra note 12; United South
Dockhandlers, Inc. v. National Labor Relations Commission, 335 Phil. 76, 81-82 (1997).
30
United South Dockhandlers, Inc. v. National Labor Relations Commission, supra note 29.
31
San Miguel Corporation v. National Labor Relations Commission, 325 Phil. 940, 952
(1996).

SUPREME COURT
Manila
EN BANC
G.R. No. 173510 March 15, 2010
ERPASCUAL DIEGA y PAJARES, Petitioner,

vs.
COURT OF APPEALS, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 174099

vs.
ERPASCUAL DIEGA y PAJARES, Appellant.
DECISION
DEL CASTILLO, J.:
The accused may be convicted on the basis of circumstantial evidence, provided the proven
circumstances constitute an unbroken chain leading to one fair reasonable conclusion pointing to the
accused, to the exclusion of all others, as the guilty person.1
The instant appeal assails the Decision2 of the Court of Appeals (CA) dated February 9, 2006 in CA-
G.R. CR-H.C. No. 01384 which affirmed with modification the Decision 3 of the Regional Trial Court
(RTC) of Malolos, Bulacan, Branch 21 dated March 3, 1991 in Criminal Case No. 949-M-95, finding
appellant guilty beyond reasonable doubt of the complex crime of rape with homicide.
Factual Antecedents
The Amended Information4 against the appellant contains the following accusatory allegations:
That on or about the 17th day of March, 1995, in the Municipality of San Jose del Monte, Province of
Bulacan, Philippines and within the jurisdiction of this Honorable Court the above-named accused,
with lewd design, by means of force and intimidation, did then and there willfully, unlawfully and
feloniously have carnal knowledge of "AAA"5 against the latter’s will and without her consent, and by
reason or on occasion of the said rape, said accused did then and there, willfully, unlawfully and
feloniously, with intent to kill the said "AAA", attack, strangulate and assault her with wood vine and
blunt instrument, thereby inflicting upon her mortal injuries/wounds which directly caused her death.
Contrary to law.
Upon arraignment, the appellant entered a plea of not guilty. Thereafter, trial ensued.
The Brief for the Appellee6 contains a summary of the following evidence
for the prosecution:
The victim, "AAA", was a 13-year old girl residing with her family in Rodriguez, Rizal. She was a 1st
year high school student and would usually leave her home at 4:00 o’clock in the morning and walk
for about a kilometer to a terminal where she could take a ride to school. The path towards the
terminal passes a farm within a 50-hectare plantation located at Upper Ciudad Real, Araneta, San
Jose Del Monte, Bulacan, where the appellant was employed as a stay-in security guard. "AAA"
uses the same route on her way home.
On March 17, 1995, "AAA" failed to return home at the usual time. Her parents frantically searched
for her, but it was only on the next day, March 18, 1995, between 9:00 and 10:00 o’clock in the
morning, when the dead body of "AAA" was discovered inside the plantation.
"AAA’s" corpse was covered with leaves. A wood vine was tied around her neck and her head bore
several wounds. Her school uniform was crumpled and her panty was missing. The medico-legal
examination conducted around 24 hours from "AAA’s" death indicated that she died of "asphyxia by
strangulation, hemorrhages as a result of traumatic injuries, head and body". There were deep, fresh
lacerations at 3:00 and 9:00 o’clock positions and a shallow fresh laceration at 7:00 o’clock position
in her hymen which "are compatible with recent loss of virginity." Moreover, the doctor who
conducted the examination on the cadaver of "AAA" saw several injuries in the middle left forearm,
suggesting that "AAA" used her hands to protect herself.
The police investigation revealed that on March 17, 1995, between 1:00 and 2:00 o’clock in the
afternoon, Juanito Manalo III (Juanito) was tending to the grazing carabaos inside the plantation
when he saw the appellant stooping down. The appellant stood up clad only in his shorts and waved
his pistol to call Juanito. As Juanito approached, he saw that the appellant had a menacing look and
noticed "AAA" lying unconscious on the ground. The appellant then pointed his pistol to Juanito and
ordered him to touch the body of "AAA" and to tie a vine around her neck. Out of fear, Juanito
obeyed and discovered that "AAA" no longer had undergarments. He was permitted to leave, but
only after the appellant threatened to kill him and his family if he would reveal to anyone what he
witnessed. As Juanito fled from the scene, he was seen by Martin Gailan (Martin) and Arnel
Alminana (Arnel).
Martin and Arnel were also privy to the death threats made by the appellant against Juanito on
several occasions causing Juanito to leave his abode temporarily. They also claimed that although
the appellant reported for work on March 17, 1995, he was not in his post and could not be located.
At the time the appellant was questioned by the police, it was observed that he had fresh scratches
on his arms, neck, and back.
The police investigation also revealed that prior to the commission of the crime, "AAA" and her aunt
used to pass by the plantation and every time the appellant would see them, especially when he was
drunk, he would whistle at "AAA" and even touch her upper arm. At one time, the appellant uttered
to "AAA’s" aunt, "Misis, ingatan mo ang iyong pamangkin." According to the aunt, the appellant
always looked lecherously at "AAA".
Initially the appellant voluntarily submitted himself to detention. However, he was released to the
custody of his former counsel after his waiver was withdrawn. Pending trial, he absconded and
remained at-large until his arrest in his hometown in Baybay Gamay in Northern Samar.
The appellant denied any wrongdoing. According to him, he did not know "AAA". He claimed he was
at Balete, in the center of the farm from midnight to 10:00 o’clock in the morning of March 17, 1995.
Thereafter, until 3:00 o’clock in the afternoon, he was in Makabod, Montalban, Rizal, which was on
the other side of the river where the crime was committed.
The appellant alleged that he was being falsely accused of the rape-slay because he informed the
farm manager that "AAA’s" family was squatting within the farm and that he prevented their
carabaos from grazing inside the compound. He belied the claim of Juanito but admitted not knowing
of any motive why Juanito would falsely testify against him.
On March 19, 1995, the police invited him and other employees of the farm for questioning. After all
of them were questioned, he was the only one who was not allowed to leave. On March 22, 1995,
the police prepared his statement despite the fact that he was not assisted by counsel. Thereafter,
the statement was subscribed before one of the officers.
The appellant claimed that he was released after five days of incarceration without a case having
been filed against him. However, on March 26, 1995, or two days after being released, he was again
brought to the police station for questioning. During his imprisonment, the parents of "AAA" allegedly
admitted in a confrontation held in the presence of the jail warden and the investigating police officer
that they filed the complaint due to the land dispute with the owners of the farm and not because of
the death of their daughter, "AAA".
On April 4, 1995, the appellant further claimed that he was released from detention, again without
any complaint being filed against him. However, on April 10, 1995 a warrant of arrest was issued
against him based on the sworn statement of Juanito. The police attempted to serve the warrant at
his workplace but failed since he was no longer an employee of the farm. It was only on October 30,
1997 that he was arrested in his home province of Northern Samar.
On March 3, 1999, the RTC rendered judgment convicting the appellant of rape with homicide. The
dispositive portion of the Decision reads:
WHEREFORE, all premises considered, this Court resolves that the prosecution has successfully
undertaken its burden to prove the guilt of the accused beyond reasonable doubt. Accordingly,
accused Erpascual Diega y Pajares is hereby found GUILTY of the crime of Rape with Homicide as
charged. In view thereof and pursuant to Article 335 of the Revised Penal Code as amended,
considering that by reason or on occasion of the Rape, Homicide [was] committed, the accused is
sentenced to suffer the penalty of DEATH by lethal injection.
He is further directed to indemnify [the] heirs of "AAA" the sum of ₱50,000.00 for the latter’s death,
the amount of ₱42,000.00 for actual damages and the additional sum of ₱100,000.00 for moral
damages.
With costs against the accused.7
The case was forwarded to this Court for automatic review and docketed as G.R. No. 138232.
However, in consonance with our ruling in People v. Mateo,8 the case was transferred to the CA for
proper disposition.
The CA affirmed with modification the trial court’s Decision and disposed as follows:
WHEREFORE, in view of the foregoing, the Decision dated March 13, 1999 of the Regional Trial
Court of Malolos, Bulacan, Branch 21 is AFFIRMED with MODIFICATION that the civil indemnity ex
delicto be increased from ₱50,000.00 to ₱100,000.00 conformably with the ruling in People vs.
Paraiso, 349 SCRA 335.
SO ORDERED.9
The case once again reached this Court and was docketed as G.R. No. 174099. Meanwhile, the
appellant’s counsel filed a motion for extension to file petition for review on certiorari which was
docketed as G.R. No. 173510. The motion was granted10 and a petition for review was filed.11 G.R.
Nos. 174099 and 173510 were subsequently consolidated since both cases involve the same parties
and issues and assail the same Decision of the CA.12
The Issue
Appellant attributes the following error to the appellate court:
THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION IN UPHOLDING
THE FINDINGS OF THE REGIONAL TRIAL COURT THAT CIRCUMSTANTIAL EVIDENCE ARE
STRONG ENOUGH TO CONVICT THE ACCUSED AND SENTENCED HIM TO DEATH. 13
Our Ruling
In a special complex crime of rape with homicide, the following elements must concur: (1) the
appellant had carnal knowledge of a woman; (2) carnal knowledge of a woman was achieved by
means of force, threat or intimidation; and (3) by reason or on occasion of such carnal knowledge by
means of force, threat or intimidation, the appellant killed a woman. 14 Both rape and homicide must
be established beyond reasonable doubt.15
Considering that there were no witnesses to the commission of the crime charged herein, the weight
of the prosecution’s evidence must then be appreciated in light of the well-settled rule that an
accused can be convicted even in the absence of an eyewitness, as long as sufficient circumstantial
evidence is presented by the prosecution to prove beyond reasonable doubt that the accused
committed the crime.16
Circumstantial evidence consists of proof of collateral facts and circumstances from which the
existence of the main fact may be inferred according to reason and common experience. 17 It is
sufficient to sustain conviction if: (a) there is more than one circumstance; (b) the facts from which
the inferences were derived have been established; and (c) the combination of all circumstances is
such as to warrant a finding of guilt beyond reasonable doubt.18
For circumstantial evidence to be sufficient to support a conviction, all the circumstances must be
consistent with each other, consistent with the hypothesis that accused is guilty and at the same
time inconsistent with the hypothesis that he is innocent, and with every other rational hypothesis
except that of guilt.19 In other words, a judgment of conviction based on circumstantial evidence can
be sustained when the circumstances proved form an unbroken chain that results in a fair and
reasonable conclusion pointing to the accused, to the exclusion of all others, as the perpetrator. 20
Here, the circumstantial evidence presented by the prosecution leads to the inescapable conclusion
that the appellant committed the complex crime of rape with homicide. When considered together,
the circumstances point to the appellant as the culprit to the exclusion of all others.
First. The appellant lived and worked as a security guard in the farm where "AAA" was raped
and killed. Due to the nature of his job, he had all the opportunity to observe the people who
travelled to and from the farm.
Second. "AAA" routinely passed by the farm in going to school. She used the same path on
her way home.
Third. The appellant displayed lewd interest whenever he saw "AAA" by touching her arms
and making lewd comments.
Fourth. Although the appellant reported for duty on the day the crime was committed, he was
not on his post and could not be located.
Fifth. On March 17, 1995, at around 1:00 to 2:00 o’clock in the afternoon, Juanito identified
the appellant, clad only in short pants, as the only person beside the unconscious "AAA",
whose blouse was unbuttoned and crumpled, and whose skirt was raised above her knees,
near the banana grove inside the farm.
Sixth. The appellant threatened to kill Juanito, and with the use of a pistol, ordered him to
touch the body of "AAA" and to tie a vine around her neck.
Seventh. When Juanito obeyed, he noticed that "AAA" no longer had undergarments.
Eighth. The threat on the life of Juanito by the appellant was persistent. Prosecution
witnesses Martin and Arnel testified that the appellant continued to threaten Juanito on
several occasions.
Ninth. During the police investigation, the appellant had several scratches on his arms, neck,
and body, which the investigators determined to have been caused by fingernails.
Tenth. The autopsy revealed that "AAA" was raped, beaten and strangled to death on or
about the time and date Juanito saw the appellant beside the unconscious body of "AAA".
Eleventh. The appellant was observed to be restless after the crime.
Twelfth. As soon as the waiver was withdrawn by the former counsel of the appellant, the
latter abandoned his job and never returned.
Thirteenth. The appellant also fled his residence before the warrant of arrest could be served
by the police. The case was even delayed for two years until his capture in a remote
barangay in Northern Samar.
The appellant however assails the sufficiency of the circumstantial evidence and alleges that Juanito
was the perpetrator of the crime. According to appellant, on the day the crime was committed,
Juanito left the office at 1:00 o’clock in the afternoon, which is the time "AAA" usually passes through
the farm every school day. At 1:30 o’clock in the afternoon, he was seen by his co-workers
scampering towards the forest. Thereafter, the police invited him for questioning and thus had the
opportunity to tell the police what he witnessed. However, he remained silent. Juanito even went into
hiding momentarily after the discovery of the crime.
The appellant also claims that he could not have threatened Juanito since he was already detained
pending police investigation of the incident. The threat against Juanito was merely imagined.
Further, the appellant argues that the testimonies of Martin and Arnel that they saw Juanito run from
the scene of the crime are unworthy of credence because they did not inform the police of this
incident at the very instance they were invited for questioning.
The appellant likewise posits that the police imputed the rape and murder of "AAA" to him since
there was no other lead in solving the case. There were also no pieces of physical evidence
recovered from the crime scene. The police instead relied on the alleged scratches found on his
back and arms to link him to the crime. However, the appellant argues that this is unbelievable since
he was not subjected to a medical examination to determine whether the alleged scratches were
indeed inflicted by fingernails. At the very least, the police should have taken pictures of said
scratches, but they did not do so.
The appellant assails the trial court’s finding that he had a motive for committing the crime in view of
the testimony of "AAA’s" aunt that he touched "AAA" maliciously and uttered lewd remarks. He
claims that if the testimony of "AAA’s" aunt were true, then a complaint should have been filed
against him or, at least, the aunt should have told the parents of "AAA" of this incident. However, she
did not do so. Appellant likewise alleges that the family of the victim had ill motives in filing the case
against him because they had a previous land dispute.
The appellant further insists that his voluntary submission to a polygraph examination despite the
absence of a lawyer is indicative of his innocence. Moreover, he claims to have been in the office at
around 10:00 o’clock in the morning on the day the crime was committed. He was also seen on the
same day by the prosecution witness on board a truck at around 3:00 o’clock in the afternoon and
again sometime around 5 o’clock in the afternoon.
Lastly, the appellant contends that he was denied due process since it was only the sworn
statements of the prosecution witnesses that the police investigators prepared that served as basis
for the issuance of a warrant for his arrest. The appellant claims that Juanito and the other witnesses
should have been presented to the Municipal Trial Court judge, who, in turn, should have examined
them personally by way of probing questions. He further avers that the illegality of his arrest is also
apparent from his detention for five days without being charged with any offense.
The appellant’s arguments fail to impress.
Juanito’s presence at the crime scene at the time "AAA" was raped and killed does not necessarily
mean that he was the author of the crime. Juanito has sufficiently explained in a clear and
categorical manner his presence thereat. He testified on how he unexpectedly found the appellant
clad only in his shorts stooping down on the grassy portion of the banana grove inside the farm. He
recounted how the appellant told him to approach the unconscious body of "AAA" and forced him
under threat of death, to tie her with a wood vine. He also narrated his flight after the appellant
decided to let him go. Juanito’s testimony deserves credence since it was unshaken by cross-
examination and unflawed by contradictions.
The credibility of Juanito is not adversely affected by his initial silence since he was under constant
threat by the appellant. After learning of the fate suffered by "AAA" at the hands of the appellant, it
was only natural for Juanito to take the threat against him and his family seriously. The threat was
real and present even after Juanito left. In fact, appellant told Martin and Arnel that he would kill
Juanito.
Moreover, it is not true that Juanito kept the matter to himself. He told his mother of the crime he
witnessed and even wrote a letter to her before leaving for the province to avoid the appellant. 21
Similarly, the belated disclosure of Martin and Arnel that they saw Juanito run from the banana grove
at the time "AAA" was raped and slain does not diminish their credibility. People react differently to
what they observed depending on their situation and state of mind. Martin and Arnel did not bother
to report to the police investigators that they saw Juanito running from the plantation because, at that
time, they did not know that it was somehow related to the fateful incident. They also knew that
Juanito was a good-natured boy incapable of committing misdemeanors. It was, therefore, difficult
for them to link him to the rape and murder of "AAA".
Further, these prosecution witnesses would not fabricate and concoct such a tale against a man with
whom they had no previous misunderstanding or quarrel, and are in fact telling the truth, motivated
by a sincere desire to obtain justice for the criminal acts committed by the appellant on the young
and defenseless "AAA".
We find absurd the contention of the appellant that he was implicated by the police since the latter
had no other leads in their investigation. Among the 12 employees of the farm who were questioned
by the police investigators, the appellant became the prime suspect due to his inability to explain the
fingernail scratches discovered on different parts of his body. Although he vehemently denied having
scratches, the prosecution sufficiently established the contrary. At the police station, he explained
that the scratches on his arm were caused by a barbwire while the scratches in other parts of his
body were caused by mosquito bites. However, the ocular inspection conducted by the police
investigators revealed that the barbwire was only knee-high and could not have caused the
scratches on appellant’s arms. Moreover, it was clear from the appearance of the fresh scratches on
the appellant’s body that the same were not caused by mosquito bites. They were more compatible
with fingernail marks. The lack of a medical examination does not diminish their evidentiary weight.
After all, it was the appellant’s counsel who refused to have him examined. 22
Motive has also been proven by the prosecution. "AAA’s" aunt testified that prior to the commission
of the crime, the appellant maliciously stared at and uttered remarks with sexual overtones to "AAA"
on several occasions. Her failure to relay these incidents to "AAA’s" parents did not render her
testimony unworthy of credence. While it may have been best for the aunt to report the malicious
acts of the appellant to the parents of "AAA", there was no legal imperative to do so.
Conversely, the evil motive imputed to the aunt of "AAA" due to a land dispute between the
appellant’s employer and the parents of "AAA" deserves scant consideration. The charge of revenge
and resentment is nothing more than unmitigated speculation as not a shred of evidence was offered
in support thereof. While there was evidence of an existing land dispute between the family of the
victim and the employer of the appellant, there was no proof to substantiate the allegation that the
said hostility motivated the aunt of "AAA" to testify falsely against him. Besides, the land dispute was
between the plantation owner and the family of "AAA" and not between the latter and the appellant.
In the absence of evidence that the prosecution witnesses were actuated by improper motive, the
presumption is that they were not so actuated and that their testimonies are entitled to credence. 23
Appellant’s voluntary submission to a polygraph test even without the assistance of counsel also
deserves scant consideration. When he was taken to the polygraph section of the police department,
appellant was declared unfit for a polygraph test. Thus, he was told to return on another day, but did
not comply. Consequently, no polygraph examination was ever conducted on the appellant.
Against the prosecution’s evidence, the appellant presents the defense of denial and alibi. Denial is
intrinsically a weak defense and must be supported by strong evidence of non-culpability in order to
be credible. Courts likewise view the defense of alibi with suspicion and caution, not only because it
is inherently weak and unreliable, but also because it can be fabricated easily.24 For alibi to prevail, it
must also be established by positive, clear and satisfactory proof that it was physically impossible for
the appellant to have been at the scene of the crime at the time of its commission, and not merely
that the appellant was somewhere else.25
Here, the appellant stated that he was about 400 meters away from the crime scene at the
approximate time "AAA" was raped and murdered. An hour later, the appellant was with a certain
Capt. Antonio Dionisio at a place that was two kilometers away from the crime scene. Thus, it was
not at all physically impossible for the appellant to be at the place of the incident at the time it
occurred. The fact that Capt. Antonio Dionisio did not corroborate the appellant’s alibi puts more
doubt in the latter’s defense.1avvphi1
Thus, the appellant’s twin defenses of denial and alibi pale in the light of the array of circumstantial
evidence presented by the prosecution.26 The positive assertions of the prosecution witnesses
deserve more credence and evidentiary weight than the negative averments of the appellant.
Lastly, the appellant’s contention that his arrest was attended with irregularity is unworthy of
credence. Records show that the "prepared statements" were given by the witnesses after they
answered the questions of the police authorities.27 His arrest, therefore, was not based merely on
statements prepared by the police authorities for the prosecution witnesses.
Further, we agree with the CA that, even if his arrest was unlawful because of the absence of a valid
warrant of arrest, he was deemed to have waived his right to assail the same as he never bothered
to question the legality thereof and, in fact, even voluntarily entered his plea. 28 The appellant was
deemed to have waived his right to assail the legality of his arrest when he voluntarily submitted
himself to the court by entering a plea instead of filing a motion to quash the information for lack of
jurisdiction over his person.29
The Proper Imposable Penalty
Rape with Homicide under Article 335 of the Revised Penal Code in relation to RA 7659, provides
that when by reason or on the occasion of rape, homicide is committed, the penalty shall be death.
However, in view of the subsequent passage of RA 9346, entitled "An Act Prohibiting the Imposition
of the Death Penalty in the Philippines," we are mandated to impose on the appellant the penalty of
reclusion perpetua without eligibility for parole.30
The Damages
As to damages, civil indemnity ex delicto in the amount of ₱100,000.00 was correctly awarded by
the CA. However, the award of actual damages amounting to ₱42,000.00 is not proper since it was
not sufficiently proven. It is settled that actual damages must be substantiated by documentary
evidence, such as receipts to prove the expenses incurred as a result of the death of the
victim.31 Here, the amount is not supported by any document on record. In lieu of actual damages,
we award temperate damages in the amount of ₱25,000.00.32 Moral damages in the amount of
₱100,000.00 awarded by the trial court and affirmed by the CA must be reduced to ₱75,000.00 in
line with current jurisprudence.33 An award of exemplary damages in the amount of ₱50,000.00 is,
however, justified.34Article 2229 of the Civil Code grants an award of exemplary damages in order to
deter the commission of similar acts and to allow the courts to forestall behavior that can have grave
and deleterious consequences on society.35
WHEREFORE, the Decision of the Court of Appeals dated February 9, 2006 in CA-G.R. CR-H.C.
No. 01384 is AFFIRMED with MODIFICATIONS. Appellant Erpascual Diega y Pajares is
found GUILTY beyond reasonable doubt of the complex crime of rape with homicide and sentenced
to suffer the penalty of reclusion perpetua without eligibility for parole. Appellant is ordered to pay the
heirs of "AAA" the amounts of ₱100,000.00 as civil indemnity, ₱75,000.00 as moral damages,
₱50,000.00 as exemplary damages, and ₱25,000.00 as temperate damages.
SO ORDERED.

Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice





MARTIN S. VILLARAMA, JR. JOSE PORTUGAL PEREZ

JOSE CATRAL MENDOZA

Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1
People v. Asis, 439 Phil. 707, 717–718 (2002).
2
CA rollo, pp. 203-236; penned by Associate Justice Bienvenido L. Reyes and concurred in
by Associate Justices Arturo D. Brion (now a Member of this Court) and Mariflor Punzalan
Castillo.
3
Records, pp. 204-211; penned by Judge Cesar M. Solis.
4
Id. at 53. Emphasis in the original text.
5
Rules and Regulations Implementing R.A. No. 9262, the real name of the child-victim is
withheld to protect his/her privacy. Fictitious initials are used instead to represent him/her.
Likewise, the personal circumstances or any other information tending to establish or
compromise his/her identity, as well as those of his/her immediate family or household
members shall not be disclosed.
6
7
Records, p. 211.
8
G.R. Nos. 147678-87, July 7, 2004, 433 SCRA 640.
9
CA rollo, p. 236.
10
Rollo (G.R. No. 173510), p. 7
11
Id. at 9-23.
12
Per Resolution dated October 16, 2006.
13
Rollo (G.R. No. 173510), p. 15.
14
People v. Yatar, G.R. No. 150224, May 19, 2004, 428 SCRA 504, 521.
15
People v. Nanas, 415 Phil. 683, 696 (2001).
16
People v. Yatar, supra note 14 at 513.
17
People v. Darilay, 465 Phil. 747, 767 (2004).
18
19
People v. Darilay, supra.
20
People v. Pascual, G.R. No. 172326, January 19, 2009, 576 SCRA 242 252.
21
TSN, April 29, 1998, p. 7.
22
TSN, March 6, 1998, p. 7.
23
People v. Diaz, 443 Phil. 67, 86 (2003).
24
People v. Pascual, supra note 20 at 259.
25
People v. De la Cruz, G.R. No. 173308, June 25, 2008, 555 SCRA 329, 340.
26
27
TSN, February 25, 1998, p. 8.
28
People v. De la Cruz, supra at 338.
29
Id.
30
31
People v. Sison, G.R. No. 172752, June 28, 2008, 555 SCRA 156, 173.
32
People v. Bascugin, G.R. No. 184704, June 30, 2009.
33
Id.
34
Id.
35
Id.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 173854 March 15, 2010
COMMISSIONER OF INTERNAL REVENUE,

vs.
FAR EAST BANK & TRUST COMPANY (NOW BANK OF THE PHILIPPINE
ISLANDS), Respondent.
DECISION
DEL CASTILLO, J.:
Entitlement to a tax refund is for the taxpayer to prove and not for the government to disprove.
This Petition for Review on Certiorari assails the January 31, 2006 Decision1 of the Court of Appeals
(CA) in CA-G.R. SP No. 56773 which reversed and set aside the October 4, 1999 Decision 2 of the
Court of Tax Appeals (CTA) in CTA Case No. 5487. Also assailed is the July 19, 2006 Resolution 3 of
the CA denying the motion for reconsideration.
The CTA found that respondent Far East Bank & Trust Company failed to prove that the income
derived from rentals and sale of real property from which the taxes were withheld were reflected in
its 1994 Annual Income Tax Return. The CA found otherwise.
Factual Antecedents
On April 10, 1995, respondent filed with the Bureau of Internal Revenue (BIR) two Corporate Annual
Income Tax Returns, one for its Corporate Banking Unit (CBU)4 and another for its Foreign Currency
Deposit Unit (FCDU),5 for the taxable year ending December 31, 1994. The return for the CBU
consolidated the respondent’s overall income tax liability for 1994, which reflected a refundable
income tax of ₱12,682,864.00, computed as follows:
FCDU CBU
Gross Income ₱13,319,068 5,348,080,630
Less: Deductions 1,397,157 5,432,828,719
Net Income 11,921,911 [84,748,089]

Tax Rate 35% 35%
Income Tax Due Thereon 4,172,669 NIL
Consolidated Tax Due for

Both CBU and FCDU Operations ₱ 4,172,669
Less:
Quarterly Income Tax Payments

CBU -1st Quarter 633,085
-2nd Quarter 11,844,333
FCDU -1st Quarter 955, 280
-2nd Quarter 1,104,942
Less:
Creditable Taxes 2,317,893
Withheld at Source
Refundable Income Tax [₱12,682,864]6
Pursuant to Section 697 of the old National Internal Revenue Code (NIRC),
the amount of ₱12,682,864.00 was carried over and applied against respondent’s income tax liability
for the taxable year ending December 31, 1995. On April 15, 1996, respondent filed its 1995 Annual
Income Tax Return, which showed a total overpaid income tax in the amount of ₱17,443,133.00,
detailed as follows:
FCDU CBU
Gross Income ₱16,531,038 7,076,497,628
Less: Deductions 1,327,549 7,086,821,354
Net Income 15,203,539 [10,423,728]

Tax Rate 35% 35%
Income Tax Due Thereon 5,321,239 NIL
Consolidated Tax Due for

Both CBU and FCDU Operations ₱ 5,321,239
Less:
Prior year’s (1994) excess 12,682,864
income tax credit
Additional prior year’s excess 6,283,484
income tax credit
Creditable Taxes
Withheld at Source 3,798,024
Refundable Income Tax [₱17,443,133]8
Out of the ₱17,433,133.00 refundable income tax, only ₱13,645,109.00 was sought to be refunded
by respondent. As to the remaining ₱3,798,024.00, respondent opted to carry it over to the next
taxable year.
On May 17, 1996, respondent filed a claim for refund of the amount of ₱13,645,109.00 with the BIR.
Due to the failure of petitioner Commissioner of Internal Revenue (CIR) to act on the claim for
refund, respondent was compelled to bring the matter to the CTA on April 8, 1997 via a Petition for
Review docketed as CTA Case No. 5487.
After the filing of petitioner’s Answer, trial ensued.
To prove its entitlement to a refund, respondent presented the following documents:
Exhibits Nature and Description
A Corporate Annual Income Tax Return covering income of respondent’s CBU for the year
ended December 31, 1994 together with attachments
B Corporate Annual Income Tax Return covering income of respondent’s FCDU for the year
C Corporate Annual Income Tax Return covering income of respondent’s CBU for the year
D Corporate Annual Income Tax Return covering income of respondent’s FCDU for the year
N to Z; Certificates of Creditable
AA to UU Withholding Tax and Monthly Remittance Returns of Income Taxes Withheld

issued by various withholding agents for the year ended December 31, 1994
VV Letter claim for refund dated May 8, 1996 filed with the Revenue District Office No. 33 on
May 17, 19969
Petitioner, on the other hand, did not present any evidence.
Ruling of the Court of Tax Appeals
On October 4, 1999, the CTA rendered a Decision denying respondent’s claim for refund on the
ground that respondent failed to show that the income derived from rentals and sale of real property
from which the taxes were withheld were reflected in its 1994 Annual Income Tax Return.
On October 20, 1999, respondent filed a Motion for New Trial based on excusable negligence. It
prayed that it be allowed to present additional evidence to support its claim for refund.
However, the motion was denied on December 16, 1999 by the CTA. It reasoned, thus:
[Respondent] is reminded that this case was originally submitted for decision as early as September
22, 1998 (p. 497, CTA Records). In view, however, of the Urgent Motion to Admit Memorandum filed
on April 27, 1999 by Atty. Louella Martinez, who entered her appearance as collaborating counsel of
Atty. Manuel Salvador allegedly due to the latter counsel’s absences, this Court set aside its
resolution of September 22, 1998 and considered this case submitted for decision as of May 7,
1999. Nonetheless, it took [respondent] another five months after it was represented by a new
counsel and after a decision unfavorable to it was rendered before [respondent] realized that an
additional material documentary evidence has to be presented by way of a new trial, this time
initiated by a third counsel coming from the same law firm. x x x
Furthermore, in ascertaining whether or not the income upon which the taxes were withheld were
included in the returns of the [respondent], this Court based its findings on the income tax returns
and their supporting schedules prepared and reviewed by the [respondent] itself and which, to Us,
are enough to support the conclusion reached. 1avvphi1
WHEREFORE, in view of the foregoing, [respondent’s] Motion for New Trial is hereby DENIED for
lack of merit.
SO ORDERED.10
On appeal, the CA reversed the Decision of the CTA. The CA found that respondent has duly proven
that the income derived from rentals and sale of real property upon which the taxes were withheld
were included in the return as part of the gross income.
Hence, this present recourse.
Issue
The lone issue presented in this petition is whether respondent has proven its entitlement to the
refund.11
Our Ruling
We find that the respondent miserably failed to prove its entitlement to the refund. Therefore, we
grant the petition filed by the petitioner CIR for being meritorious.
A taxpayer claiming for a tax credit or refund of creditable withholding tax must comply with the
following requisites:
1) The claim must be filed with the CIR within the two-year period from the date of payment
of the tax;
2) It must be shown on the return that the income received was declared as part of the gross
income; and
3) The fact of withholding must be established by a copy of a statement duly issued by the
payor to the payee showing the amount paid and the amount of the tax withheld. 12
The two-year period requirement is based on Section 229 of the NIRC of 1997 which provides that:
SECTION 229. Recovery of Tax Erroneously or Illegally Collected. — No suit or proceeding shall be
maintained in any court for the recovery of any national internal revenue tax hereafter alleged to
have been erroneously or illegally assessed or collected, or of any penalty claimed to have been
collected without authority, or of any sum alleged to have been excessive or in any manner
wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but
such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid
under protest or duress.
In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the
date of payment of the tax or penalty regardless of any supervening cause that may arise after
payment: Provided, however, That the Commissioner may, even without a written claim therefor,
refund or credit any tax, where on the face of the return upon which payment was made, such
payment appears clearly to have been erroneously paid. (Formerly Section 230 of the old NIRC)
While the second and third requirements are found under Section 10 of Revenue Regulation No. 6-
85, as amended, which reads:
Section 10. Claims for tax credit or refund. — Claims for tax credit or refund of income tax deducted
and withheld on income payments shall be given due course only when it is shown on the return that
the income payment received was declared as part of the gross income and the fact of withholding is
established by a copy of the statement duly issued by the payer to the payee (BIR Form No. 1743.1)
showing the amount paid and the amount of tax withheld therefrom.
Respondent timely filed its claim for refund.
There is no dispute that respondent complied with the first requirement. The filing of respondent’s
administrative claim for refund on May 17, 1996 and judicial claim for refund on April 8, 1997 were
well within the two-year period from the date of the filing of the return on April 10, 1995. 13
Respondent failed to prove that the income derived from rentals and sale of real property were
included in the gross income as reflected in its return.
However, as to the second and third requirements, the tax court and the appellate court arrived at
different factual findings.
The CTA ruled that the income derived from rentals and sales of real property were not included in
respondent’s gross income. It noted that in respondent’s 1994 Annual Income Tax Return, the
phrase "NOT APPLICABLE" was printed on the space provided for rent, sale of real property and
trust income. The CTA also declared that the certifications issued by respondent cannot be
considered in the absence of the Certificates of Creditable Tax Withheld at Source. The CTA ruled
that:
x x x the Certificates of Creditable Tax Withheld at Source submitted by [respondent] pertain to

rentals of real property while the Monthly Remittance Returns of Income Taxes Withheld refer to
sales of real property. But, if we are to look at Schedules 3, 4, and 5 of the Annual Income Tax
Return of [respondent] for 1994 (Exhibit "A"), there was no showing that the Rental Income and
Income from Sale of Real Property were included as part of the gross income appearing in Section A
of the said return. In fact, under the said schedules, the phrase "NOT APPLICABLE" was printed by
[respondent]. Verily, the income of [respondent] coming from rent and sale of real property upon
which the creditable taxes withheld were based were not duly reflected. As to the certifications
issued by the [respondent] (Exh. UU), the same cannot be considered in the absence of the requisite
Certificates of Creditable Tax Withheld at Source.
Based on the foregoing, [respondent] has failed to comply with two essential requirements for a valid
claim for refund. Consequently, the same cannot be given due course. 14 (Emphasis supplied)
On the other hand, the CA found thus:

We disagree with x x x CTA’s findings. In the case of Citibank, N.A. vs. Court of Appeals (280 SCRA
459), the Supreme Court held that:
"a refund claimant is required to prove the inclusion of the income payments which were the basis of
the withholding taxes and the fact of withholding. However, a detailed proof of the truthfulness of
each and every item in the income tax return is not required. x x x
x x x The grant of a refund is founded on the assumption that the tax return is valid; that is, the facts
stated therein are true and correct. x x x"
In the case at bench, the BIR examined [respondent] Bank’s Corporate Annual Income Tax Returns
for the years 1994 and 1995 when they were filed on April 10, 1995 and April 15, 1996, respectively.
Presumably, the BIR found no false declaration in them because it did not allege any false
declaration thereof in its Answer (to the petition for review) filed before x x x CTA. Nowhere in the
Answer, did the BIR dispute the amount of tax refund being claimed by [respondent] Bank as
inaccurate or erroneous. In fact, the reason given by the BIR (in its Answer to the petition for review)
why the claimed tax refund should be denied was that "x x x the amount of ₱13,645,109.00 was not
illegally or erroneously collected, hence, the petition for review has no basis" [see Record, p. 32].
The amount of ₱17,433,133.00 reflected as refundable income tax in [respondent] Bank’s Corporate
Annual Income Tax Return for the year 1995 was not disputed by the BIR to be inaccurate because
there were certain income not included in the return of the [respondent]. Verily, this leads Us to a
conclusion that [respondent] Bank’s Corporate Annual Income Tax Returns submitted were
accepted as regular and even accurate by the BIR.
Incidentally, under Sec. 16 of the NIRC, the Commissioner of the BIR is tasked to make an
examination of returns and assess the correct amount of tax, to wit:
"Sec. 16. Power of the Commissioner to make assessment and prescribe additional requirements for
tax administration and enforcement.
(a) After a return is filed as required under the provision of this Code, the Commissioner shall
examine it and assess the correct amount of tax. x x x"
which the [petitioner] Commissioner undeniably failed to do. Moreover, noteworthy is the fact that
during the hearing of the petition for review before the CTA, [petitioner] Commissioner of the BIR
submitted the case for decision "in view of the fact that he has no evidence to present nor records to
submit relative to the case" x x x
Thus, although it is a fact that [respondent] failed to indicate said income payments under the
appropriate Schedules 3, 4, and 5 of Section C of its 1994 Annual Income Tax Return (Exhibit "A"),
however, We give credence to [respondent] Bank’s assertion that it reported the said income
payments as part of its gross income when it included the same as part of the "Other Income," "Trust
Income," and "Interest Income" stated in the Schedule of Income (referred to as an attachment in
Section C of Exhibit "A", x x x and in the 1994 audited Financial Statements (FS) supporting
[respondent’s] 1994 Annual Corporate Income Tax Return. The reason why the phrase "NOT
APPLICABLE" was indicated in schedules 3, 4, and 5 of Section C of [respondent’s] 1994 Annual
Income Tax Return is due to the fact that [respondent] Bank already reported the subject rental
income and income from sale of real property in the Schedule of Income under the headings "Other
Income/Earnings," "Trust Income" and "Interest Income." Therefore, [respondent] Bank still complied
with the second requirement that the income upon which the taxes were withheld are included in the
return as part of the gross income.
xxxx
[Respondent] Bank’s various documentary evidence showing that it had satisfied all requirements
under the Tax Code vis-à-vis the Bureau of Internal Revenue’s failure to adduce any evidence in
support of their denial of the claim, [respondent] Bank should, therefore, be granted the present
claim for refund.15 (Emphasis supplied)
Between the decision of the CTA and the CA, it is the former’s that is based on the evidence and in
accordance with the applicable law and jurisprudence.
To establish the fact of withholding, respondent submitted Certificates of Creditable Tax Withheld at
Source and Monthly Remittance Returns of Income Taxes Withheld, which pertain to rentals and
sales of real property, respectively. However, a perusal of respondent’s 1994 Annual Income Tax
Return shows that the gross income was derived solely from sales of services. In fact, the phrase
"NOT APPLICABLE" was printed on the schedules pertaining to rent, sale of real property, and trust
income.16 Thus, based on the entries in the return, the income derived from rentals and sales of real
property upon which the creditable taxes were withheld were not included in respondent’s gross
income as reflected in its return. Since no income was reported, it follows that no tax was withheld.
To reiterate, it is incumbent upon the taxpayer to reflect in his return the income upon which any
creditable tax is required to be withheld at the source.17
Respondent’s explanation that its income derived from rentals and sales of real properties were
included in the gross income but were classified as "Other Earnings" in its Schedule of
Income18 attached to the return is not supported by the evidence. There is nothing in the Schedule of
Income to show that the income under the heading "Other Earnings" includes income from rentals
and sales of real property. No documentary or testimonial evidence was presented by respondent to
prove this. In fact, respondent, upon realizing its omission, filed a motion for new trial on the ground
of excusable negligence with the CTA. Respondent knew that it had to present additional evidence
showing the breakdown of the "Other Earnings" reported in its Schedule of Income attached to the
return to prove that the income from rentals and sales of real property were actually included under
the heading "Other Earnings."19 Unfortunately, the CTA was not convinced that there was excusable
negligence to justify the granting of a new trial.
Accordingly, the CA erred in ruling that respondent complied with the second requirement.
Respondent failed to present all the Certificates of Creditable Tax Withheld at Source.
The CA likewise failed to consider in its Decision the absence of several Certificates of Creditable
Tax Withheld at Source. It immediately granted the refund without first verifying whether the fact of
withholding was established by the Certificates of Creditable Tax Withheld at Source as required
under Section 10 of Revenue Regulation No. 6-85. As correctly pointed out by the CTA, the
certifications (Exhibit UU) issued by respondent cannot be considered in the absence of the required
Certificates of Creditable Tax Withheld at Source.
The burden is on the taxpayer to prove its entitlement to the refund.
Moreover, the fact that the petitioner failed to present any evidence or to
refute the evidence presented by respondent does not ipso facto entitle the respondent to a tax
refund. It is not the duty of the government to disprove a taxpayer’s claim for refund. Rather, the
burden of establishing the factual basis of a claim for a refund rests on the taxpayer. 20
And while the petitioner has the power to make an examination of the returns and to assess the
correct amount of tax, his failure to exercise such powers does not create a presumption in favor of
the correctness of the returns. The taxpayer must still present substantial evidence to prove his
claim for refund. As we have said, there is no automatic grant of a tax refund. 21
Hence, for failing to prove its entitlement to a tax refund, respondent’s claim must be denied. Since
tax refunds partake of the nature of tax exemptions, which are construed strictissimi juris against the
taxpayer, evidence in support of a claim must likewise be strictissimi scrutinized and duly proven.22
WHEREFORE, the petition is GRANTED. The assailed January 31, 2006 Decision of the Court of
Appeals in CA-G.R. SP No. 56773 and its July 19, 2006 Resolution are REVERSED and SET
ASIDE. The October 4, 1999 Decision of the Court of Tax Appeals denying respondent’s claim for
tax refund for failure to prove that the income derived from rentals and sale of real property from
which the taxes were withheld were reflected in its 1994 Annual Income Tax Return, is
REINSTATED and AFFIRMED.
SO ORDERED.

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSE PORTUGAL PEREZ

Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1
Rollo, pp. 127-139; penned by Associate Justice Edgardo F. Sundiam and concurred in by
Associate Justices Martin S. Villarama, Jr. (now a Member of this Court) and Japar B.
Dimaampao.
2
Id. at 142-151; penned by Associate Justice Amancio Q. Saga and concurred in by
Presiding Justice Ernesto D. Acosta and Associate Justice Ramon O. De Veyra.
3
Id. at 140-141.
4
Id. at 154-155.
5
Id. at 178.
6
Id. at 143.
7
Section 69. Final Adjustment Return. — Every corporation liable to tax under Section 24
shall file a final adjustment return covering the total net income for the preceding calendar or
fiscal year. If the sum of the quarterly tax payments made during the said taxable year is not
equal to the total tax due on the entire taxable net income of that year the corporation shall
either:
(a) Pay the excess still due; or
(b) Be refunded the excess amount paid, as the case may be.
In case the corporation is entitled to a refund of the excess estimated quarterly

income taxes paid, the refundable amount shown on its final adjustment return may
be credited against the estimated quarterly income tax liabilities for the taxable
quarters of the succeeding taxable year. (Now Section 76 of the NIRC of 1997).
8
Rollo, p. 143.
9
Id. at 147-148.
10
Id. at 152-153.
11
Id. at 111.
Banco Filipino Savings and Mortgage Bank v. Court of Appeals, G.R. No. 155682, March
12
27, 2007, 519 SCRA 93, 96.
13
Rollo, p. 149.
14
Id. at 150.
15
Id. at 136 to 138.
16
Id. at 155.
Far East Bank and Trust Company v. Court of Appeals, G.R. No. 129130, December 9,
17
2005, 477 SCRA 49, 54.
18
Rollo, p. 173.
19
Philippine Long Distance Telephone Company v. Commissioner of Internal Revenue, G.R.

20
No. 157264, January 31, 2008, 543 SCRA 329, 335.
Philam Asset Management, Inc. v. Commissioner of Internal Revenue, G.R. Nos. 156637
21
and 162004, December 14, 2005, 477 SCRA 761, 775.
Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal

22
Revenue, G.R. No. 159490, February 18, 2008, 546 SCRA 150, 163.

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PAGE 2

Dumaguete Cathedral Credit Cooperative v.

G.R. No. 162336 Soriano v. People 2/1/10

G.R. No. 180302 Areno, Jr. v. Skycable PCC-Baguio 2/5/10

Allied Banking Corporation v. Commissioner of Internal

G.R. No. 179717 People v. Alberto y De Nieva 2/5/10

Commissioner of Internal Revenue v. SM Prime

Parents-Teachers Association of St. Mathew Christian

G.R. No. 158627 People v. Martinez y Dulay 3/5/10

G.R. No. 171092 Lhuillier v. British Airways 3/15/10

Reno Foods, Inc. v. Nagkakaisang Lakas ng

Commissioner of Internal Revenue v. Far East Bank &

Republic of the Philippines

G.R. No. 182722

DUMAGUETE CATHEDRAL CREDIT COOPERATIVE [DCCCO], Represented by Felicidad L.

DEL CASTILLO, J.:

Proceedings before the BIR Regional Office

Proceedings before the Commissioner of Internal Revenue

Proceedings before the CTA First Division

Accordingly, petitioner is ORDERED TO PAY the respondent the respective amounts of

Proceedings before the CTA En Banc

SECTION 24. Income Tax Rates. —

(B) Rate of Tax on Certain Passive Income: —

The petition has merit.

November 16, 1988

BIR RULING NO. 551-888

1. Payment of sales tax

2. Filing and payment of income tax

Very truly yours,

(SGD.) BIENVENIDO A. TAN, JR.

Members of cooperatives deserve a preferential tax treatment pursuant to RA 6938, as amended by

MARIANO C. DEL CASTILLO

ARTURO D. BRION ROBERTO A. ABAD

SCRA 504, 510.

Commissioner of Internal Revenue v. American Express International, Inc. (Philippine

Branch), 500 Phil. 586 (2005).

Dissenting Opinion of Justice Isagani A. Cruz in Republic of the Philippines v. Judge

Peralta, 234 Phil. 40, 59 (1987).

G.R. No. 162336 February 1, 2010

HILARIO P. SORIANO, Petitioner,

DEL CASTILLO, J.:

Both cases were raffled to Branch 79 of the RTC of Malolos, Bulacan. 20

Ruling of the Regional Trial Court

Ruling of the Court of Appeals

Hence, this petition.

Restated, petitioner raises the following issues34 for our consideration:

Whether petitioner is entitled to a writ of injunction.

The petition lacks merit.

Republic Act No. 7653

Revised Penal Code

Whether petitioner is entitled to a writ of injunction

MARIANO C. DEL CASTILLO

RENATO C. CORONA* ARTURO D. BRION

"1. the offender is a director or officer of any banking institution;

2. the offender, either directly or indirectly, for himself or as representative or agent of

a. he borrows any of the deposits or funds of such bank; or

b. he becomes a guarantor, indorser, or surety for loans from such bank to

c. he becomes in any manner an obligor for money borrowed from bank

Boncodin v. National Power Corporation Employees Consolidated Union (NECU), G.R.

No. 162716, September 27, 2006, 503 SCRA 611, 622-623.