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SECOND DIVISION

ORLANDO A. RAYOS, G.R. No. 196063


FE A. RAYOS-DELA PAZ,
represented by Present:
DR. ANTONIO A. RAYOS, and
ENGR. MANUEL A. RAYOS, CARPIO, J., Chairperson,
Petitioners, BRION,
PEREZ,
SERENO,
and
- versus - REYES, JJ.
THE CITY OF MANILA, Promulgated:
Respondent. December 14, 2011
x-----------------------------------------------------------------------------------------x

RESOLUTION

CARPIO, J.:

The Case

This petition, captioned as a petition for review on certiorari and declaratory


relief,1 assails the Order of 6 January 20112 of the Regional Trial Court of Manila,
Branch 49, denying reconsideration of the trial courts Order of 11 March 2010 3 which
denied the motion to dismiss filed by petitioners Orlando A. Rayos, Fe
A. Rayos Dela Paz, and Engr. Manuel A. Rayos.4

The Facts

The present case originated from a complaint for eminent domain filed by respondent
City of Manila against Remedios V. De Caronongan, Patria R. Serrano, Laureano M.
Reyes, Paz B. Sison, Teofila B. Sison, Leticia R. Ventanilla, Rosalinda
R. Barrozo (defendants), docketed as Civil Case No. 03108154.

In its Complaint,5 the City of Manila alleged that it passed Ordinance No. 7949
authorizing the City Mayor to acquire by expropriation, negotiation or by any other legal
means the parcel of land co-owned by defendants, which is covered by TCT No.
227512 and with an area of 1,182.20 square meters. The City of Manila offered to
purchase the property atP1,000.00 per square meter.

In their Answer,6 defendants conveyed their willingness to sell the property to the City of
Manila, but at the price of P50,000.00 per square meter which they claimed was the fair
market value of the land at the time.

In the course of the proceedings, Laureano, one of the defendants, died on 1 December
2003 and was substituted by his son petitioner Manuel A. Rayos. Meanwhile,
petitioner OrlandoA. Rayos intervened while petitioner Fe A. Rayos Dela Paz was
added as a defendant.

On 7 December 2009, petitioners Orlando A. Rayos, Fe A. Rayos Dela Paz, and Engr.
Manuel A. Rayos filed a Motion to Dismiss on the grounds that (1) Ordinance No. 7949
is unconstitutional and (2) the cases of Lagcao v. Labra7 and Jesus Is Lord Christian
School Foundation, Inc. v. Municipality (now City) of Pasig, Metro Manila 8 apply
squarely to the present case.

On 11 March 2010, the trial court denied the motion to dismiss. The trial court ruled that
the motion to dismiss did not show any compelling reason to convince the court that the
doctrine of stare decisis applies. Petitioners failed to demonstrate how or why the facts
in this case are similar with the cited cases in order that the issue in this
case be resolved in the same manner. The trial court disposed of the motion to dismiss
in this wise:

In view of the foregoing, and after intense evaluation of the records on hand, the
Motion to Dismiss cannot be granted.

In order to prevent further delay to the prejudice of all the proper parties in this
case, continue with the trial for the determination of just compensation on July 7,
2010 at one oclock in the afternoon.

SO ORDERED.9

On 6 January 2011, the trial court denied the motion for reconsideration.

Petitioners filed with this Court the present petition reiterating the arguments in their
motion to dismiss, namely, (1) Ordinance No. 7949 is unconstitutional, and (2) the cases
of Lacgaov. Labra10 and Jesus Is Lord Christian School Foundation, Inc. v. Municipality
(now City) of Pasig, Metro Manila11 apply squarely to this case.

The Ruling of the Court

We deny the petition.

An order denying a motion to dismiss is interlocutory and not appealable. 12 An order


denying a motion to dismiss does not finally dispose of the case, and in effect, allows
the case to proceed until the final adjudication thereof by the court. As such, it is merely
interlocutory in nature and thus, not appealable. 13 Section 1(c), Rule 41 of the Rules of
Court provides:

SECTION 1. Subject of appeal. - An appeal may be taken from a judgment or final order
that completely disposes of the case, or of a particular matter therein when declared by
these Rules to be appealable.
No appeal may be taken from:
xxx
(c) An interlocutory order;
xxx
In all the above instances where the judgment or final order is not appealable, the
aggrieved party may file an appropriate special civil action under Rule 65.

Clearly, no appeal, under Rule 45 of the Rules of Court, may be taken from an
interlocutory order. In case of denial of an interlocutory order, the immediate remedy
available to the aggrieved party is to file a special civil action for certiorari under Rule 65
of the Rules of Court.

In this case, since the trial courts order denying the motion to dismiss is not appealable,
petitioners should have filed a petition for certiorari under Rule 65 to assail
such order, and not a petition for review on certiorari under Rule 45 of the Rules of
Court. For being a wrong remedy, the present petition deserves outright dismissal.

Even if the Court treats the present petition as a petition for certiorari under Rule 65,
which is the proper remedy to challenge the order denying the motion to dismiss, the
same must be dismissed for violation of the principle of hierarchy of courts. This wellsettled principle dictates that petitioners should file the petition for certiorari with the
Court of Appeals, and not directly with this Court.

Indeed, this Court, the Court of Appeals and the Regional Trial Courts exercise
concurrent jurisdiction to issue writs of certiorari,
prohibition, mandamus, quo warranto, habeas corpusand injunction.14 However, such
concurrence in jurisdiction does not give petitioners unbridled freedom of choice of court
forum.15 In Heirs of Bertuldo Hinog v. Melicor,16 citingPeople v. Cuaresma,17 the Court
held:

This Courts original jurisdiction to issue writs of certiorari is not exclusive. It is


shared by this Court with Regional Trial Courts and with the Court of Appeals. This
concurrence of jurisdiction is not, however, to be taken as according to parties seeking
any of the writs an absolute, unrestrained freedom of choice of the court to which
application therefor will be directed.There is after all a hierarchy of courts. That
hierarchy is determinative of the venue of appeals, and also serves as a general
determinant of the appropriate forum for petitions for the extraordinary writs. A becoming
regard for that judicial hierarchy most certainly indicates that petitions for the issuance
of extraordinary writs against first level (inferior) courts should be filed with the Regional
Trial Court, and those against the latter, with the Court of Appeals. A direct invocation
of the Supreme Courts original jurisdiction to issue these writs should be allowed
only when there are special and important reasons therefor, clearly and
specifically set out in the petition. This is [an] established policy. It is a policy
necessary to prevent inordinate demands upon the Courts time and attention which are
better devoted to those matters within its exclusive jurisdiction, and to prevent further
over-crowding of the Courts docket. (Emphasis supplied.)

In short, to warrant a direct recourse to this Court, petitioners must show exceptional
and compelling reasons therefor, clearly and specifically set out in the petition. This
petitionersfailed to do.

Petitioners merely rehashed the arguments in their motion to dismiss, which consist
mainly of unsubstantiated allegations. Petitioners invoke the cases of Lagcao v.
Labra18 and Jesus Is Lord Christian School Foundation, Inc. v. Municipality (now City) of
Pasig, Metro Manila19 in challenging the constitutionality of Ordinance No. 7949 without,

however, showing clearly the applicability and similarity of those cases to the present
controversy. Neither did petitioners explain why Ordinance No. 7949 is repugnant to the
Constitution. Nor did petitioners specifically and sufficiently set forth any extraordinary
and important reason to justify direct recourse to this Court. 20

Likewise, assuming the present petition is one for declaratory relief, 21 as can be gleaned
from the caption of the petition, this Court has only appellate, not original, jurisdiction
over such a petition. While this Court may treat a petition for declaratory relief as one for
prohibition22 or mandamus, over which this Court exercises original jurisdiction, 23 it must
be stressed that this special treatment is undertaken only in cases with far reaching
implications and transcendental issues that need to be resolved. 24

In the present case, there is absolutely nothing which shows that it has far-reaching
implications and involves transcendental questions deserving of this Courts treatment of
the petition as one for prohibition or mandamus.

WHEREFORE, we DENY the petition.

EN BANC

UNITED CLAIMANTS
ASSOCIATION OF NEA (UNICAN),
represented by its representative
BIENVENIDO R. LEAL, in his
official capacity as its President and in
his own individual capacity,
EDUARDO R. LACSON, ORENCIO
F. VENIDA, JR., THELMA V.
OGENA, BOBBY M. CARANTO,
MARILOU B. DE JESUS, EDNA G.
RAA, and ZENAIDA P. OLIQUINO,
in their own capacities and in behalf
of all those similarly situated officials
and employees of the National
Electrification Administration,
Petitioners,
- versus -

G.R. No. 187107


Present:
CORONA, C.J.,
CARPIO,
VELASCO, JR.,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,*
VILLARAMA, JR.,
PEREZ,
MENDOZA,**
SERENO,*
REYES, and
PERLAS-BERNABE, JJ.

NATIONAL ELECTRIFICATION
ADMINISTRATION (NEA), NEA
BOARD OF ADMINISTRATORS
(NEA BOARD), ANGELO T. REYES
as Chairman of the NEA Board of
Administrators, EDITHA S. BUENO,
Ex-Officio Member and NEA
Administrator, and WILFRED L.
BILLENA, JOSPEPH D.
KHONGHUN, and FR. JOSE
VICTOR E. LOBRIGO, Members,
Promulgated:
NEA Board,
January 31, 2012
Respondents.
x-----------------------------------------------------------------------------------------x
DECISION
VELASCO, JR., J.:
The Case

This is an original action for Injunction to restrain and/or prevent the


implementation of Resolution Nos. 46 and 59, dated July 10, 2003 and September 3,

2003, respectively, otherwise known as the National Electrification Administration (NEA)


Termination Pay Plan, issued by respondent NEA Board of Administrators (NEA Board).
The Facts
Petitioners are former employees of NEA who were terminated from their
employment with the implementation of the assailed resolutions.
Respondent NEA is a government-owned and/or controlled corporation created
in accordance with Presidential Decree No. (PD) 269 issued on August 6, 1973. Under
PD 269, Section 5(a)(5), the NEA Board is empowered to organize or reorganize NEAs
staffing structure, as follows:
Section 5. National Electrification
Administrators; Administrator.

Administration;

Board

of

(a) For the purpose of administering the provisions of this Decree,


there is hereby established a public corporation to be known as the
National Electrification Administration. All of the powers of the corporation
shall be vested in and exercised by a Board of Administrators, which shall
be composed of a Chairman and four (4) members, one of whom shall be
the Administrator as ex-officio member. The Chairman and the three other
members shall be appointed by the President of the Philippines to serve
for a term of six years. x x x
xxxx
The Board shall, without limiting the generality of the foregoing,
have the following specific powers and duties.
1. To implement the provisions and purposes of this Decree;
xxxx
5. To establish policies and guidelines for employment on the basis
of merit, technical competence and moral character, and, upon the
recommendation of the Administrator to organize or reorganize NEAs
staffing structure, to fix the salaries of personnel and to define their
powers and duties. (Emphasis supplied.)

Thereafter, in order to enhance and accelerate the electrification of the whole


country, including the privatization of the National Power Corporation, Republic Act No.
(RA) 9136, otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA
Law), was enacted, taking effect on June 26, 2001. The law imposed upon NEA
additional mandates in relation to the promotion of the role of rural electric cooperatives
to achieve national electrification. Correlatively, Sec. 3 of the law provides:
Section 3. Scope. - This Act shall provide a framework for
the restructuring of the electric power industry, including the
privatization of the assets of NPC, the transition to the desired competitive
structure, and the definition of the responsibilities of the various
government agencies and private entities. (Emphasis supplied.)
Sec. 77 of RA 9136 also provides:
Section 77. Implementing Rules and Regulations. - The DOE shall,
in consultation with the electric power industry participants and end-users,
promulgate the Implementing Rules and Regulations (IRR) of this Act
within six (6) months from the effectivity of this Act, subject to the approval
by the Power Commission.
Thus, the Rules and Regulations to implement RA 9136 were issued on February
27, 2002. Under Sec. 3(b)(ii), Rule 33 of the Rules and Regulations, all the NEA
employees and officers are considered terminated and the 965 plantilla positions of
NEA vacant, to wit:
Section 3. Separation and Other Benefits.
(a) x x x
(b) The following shall govern the application of Section 3(a) of this
Rule:
xxxx
(ii) With respect to NEA officials and employees, they
shall be considered legally terminated and shall be entitled to
the benefits or separation pay provided in Section 3(a) herein
when a restructuring of NEA is implemented pursuant to a law
enacted by Congress or pursuant to Section 5(a)(5) of
Presidential Decree No. 269. (Emphasis supplied.)

Meanwhile, on August 28, 2002, former President Gloria Macapagal- Arroyo


issued Executive Order No. 119 directing the NEA Board to submit a reorganization
plan. Thus, the NEA Board issued the assailed resolutions.
On September 17, 2003, the Department of Budget and Management approved
the NEA Termination Pay Plan.
Thereafter, the NEA implemented an early retirement program denominated as
the Early Leavers Program, giving incentives to those who availed of it and left NEA
before the effectivity of the reorganization plan. The other employees of NEA were
terminated effective December 31, 2003.
Hence, We have this petition.
The Issues
Petitioners raise the following issues:
1.
The NEA Board has no power to terminate all the NEA employees;
2.
Executive Order No. 119 did not grant the NEA Board the power to
terminate all NEA employees; and
3.
Resolution Nos. 46 and 59 were carried out in bad faith.
On the other hand, respondents argue in their Comment dated August 20, 2009
that:
1.
The Court has no jurisdiction over the petition;
2.
Injunction is improper in this case given that the assailed resolutions
of the NEA Board have long been implemented; and
3.
The assailed NEA Board resolutions were issued in good faith.
The Courts Ruling
This petition must be dismissed.

The procedural issues raised by respondents shall first be discussed.


This Court Has Jurisdiction over the Case
Respondents essentially argue that petitioners violated the principle of hierarchy of
courts, pursuant to which the instant petition should have been filed with the Regional
Trial Court first rather than with this Court directly.
We explained the principle of hierarchy of courts in Mendoza v. Villas,[1] stating:
In Chamber of Real Estate and Builders Associations, Inc.
(CREBA) v. Secretary of Agrarian Reform, a petition for certiorari filed
under Rule 65 was dismissed for having been filed directly with the Court,
violating the principle of hierarchy of courts, to wit:
Primarily, although this Court, the Court of Appeals and the
Regional Trial Courts have concurrent jurisdiction to issue writs of
certiorari, prohibition, mandamus, quo warranto, habeas corpus
and injunction, such concurrence does not give the petitioner
unrestricted freedom of choice of court forum. In Heirs of Bertuldo
Hinog v. Melicor, citing People v. Cuaresma, this Court made the
following pronouncements:
This Courts original jurisdiction to issue writs of
certiorari is not exclusive. It is shared by this Court with
Regional Trial Courts and with the Court of Appeals. This
concurrence of jurisdiction is not, however, to be taken as
according to parties seeking any of the writs an absolute,
unrestrained freedom of choice of the court to which
application therefor will be directed. There is after all a
hierarchy of courts. That hierarchy is determinative of the
venue of appeals, and also serves as a general determinant
of the appropriate forum for petitions for the extraordinary
writs. A becoming regard for that judicial hierarchy most
certainly indicates that petitions for the issuance of
extraordinary writs against first level (inferior) courts
should be filed with the Regional Trial Court, and those
against the latter, with the Court of Appeals. A direct
invocation of the Supreme Courts original jurisdiction to
issue these writs should be allowed only when there are
special and important reasons therefor, clearly and
specifically set out in the petition. This is [an] established
policy. It is a policy necessary to prevent inordinate demands

upon the Courts time and attention which are better devoted
to those matters within its exclusive jurisdiction, and to
prevent further over-crowding of the Courts docket.
(Emphasis supplied.)
Evidently, the instant petition should have been filed with the RTC. However, as an
exception to this general rule, the principle of hierarchy of courts may be set aside for
special and important reasons. Such reason exists in the instant case involving as it
does the employment of the entire plantilla of NEA, more than 700 employees all told,
who were effectively dismissed from employment in one swift stroke. This to the mind of
the Court entails its attention.
Moreover, the Court has made a similar ruling in National Power Corporation Drivers
and Mechanics Association (NPC-DAMA) v. National Power Corporation (NPC).[2] In that
case, the NPC-DAMA also filed a petition for injunction directly with this Court assailing
NPC Board Resolution Nos. 2002-124 and 2002-125, both dated November 18, 2002,
directing the termination of all employees of the NPC on January 31, 2003. Despite
such apparent disregard of the principle of hierarchy of courts, the petition was given
due course. We perceive no compelling reason to treat the instant case differently.

The Remedy of Injunction Is still Available


Respondents allege that the remedy of injunction is no longer available to petitioners
inasmuch as the assailed NEA Board resolutions have long been implemented.
Taking respondents above posture as an argument on the untenability of the
petition on the ground of mootness, petitioners contend that the principle of mootness is
subject to exceptions, such as when the case is of transcendental importance.
In Funa v. Executive Secretary,[3] the Court passed upon the seeming moot issue
of the appointment of Maria Elena H. Bautista (Bautista) as Officer-in-Charge (OIC) of
the Maritime Industry Authority (MARINA) while concurrently serving as Undersecretary
of the Department of Transportation and Communications. There, even though Bautista

later on was appointed as Administrator of MARINA, the Court ruled that the case was
an exception to the principle of mootness and that the remedy of injunction was still
available, explaining thus:
A moot and academic case is one that ceases to present a
justiciable controversy by virtue of supervening events, so that a
declaration thereon would be of no practical use or value. Generally,
courts decline jurisdiction over such case or dismiss it on ground of
mootness. However, as we held in Public Interest Center, Inc. v. Elma,
supervening events, whether intended or accidental, cannot prevent the
Court from rendering a decision if there is a grave violation of the
Constitution. Even in cases where supervening events had made the
cases moot, this Court did not hesitate to resolve the legal or constitutional
issues raised to formulate controlling principles to guide the bench, bar,
and public.
As a rule, the writ of prohibition will not lie to enjoin acts
already done. However, as an exception to the rule on mootness,
courts will decide a question otherwise moot if it is capable of
repetition yet evading review. (Emphasis supplied.)
Similarly, in the instant case, while the assailed resolutions of the NEA Board
may have long been implemented, such acts of the NEA Board may well be repeated by
other government agencies in the reorganization of their offices. Petitioners have not
lost their remedy of injunction.
The Power to Reorganize Includes the Power to Terminate
The meat of the controversy in the instant case is the issue of whether the NEA Board
had the power to pass Resolution Nos. 46 and 59 terminating all of its employees.
This must be answered in the affirmative.
Under Rule 33, Section 3(b)(ii) of the Implementing Rules and Regulations of the EPIRA
Law, all NEA employees shall be considered legally terminated with the implementation
of a reorganization program pursuant to a law enacted by Congress or pursuant to Sec.
5(a)(5) of PD 269 through which the reorganization was carried out, viz:
Section 5. National Electrification
Administrators; Administrator.

Administration;

Board

of

(a) For the purpose of administering the provisions of this Decree,


there is hereby established a public corporation to be known as the
National Electrification Administration. x x x
xxxx
The Board shall, without limiting the generality of the foregoing,
have the following specific powers and duties.
xxxx
5. To establish policies and guidelines for employment on the basis
of merit, technical competence and moral character, and, upon the
recommendation of the Administrator to organize or reorganize NEAs
staffing structure, to fix the salaries of personnel and to define their
powers and duties. (Emphasis supplied.)
Thus, petitioners argue that the power granted unto the NEA Board to organize
or reorganize does not include the power to terminate employees but only to reduce
NEAs manpower complement.
Such contention is erroneous.
In Betoy v. The Board of Directors, National Power Corporation,[4] the Court upheld the
dismissal of all the employees of the NPC pursuant to the EPIRA Law. In ruling that the
power of reorganization includes the power of removal, the Court explained:
[R]eorganization involves the reduction of personnel, consolidation
of offices, or abolition thereof by reason of economy or redundancy of
functions. It could result in the loss of ones position through
removal or abolition of an office. However, for a reorganization for the
purpose of economy or to make the bureaucracy more efficient to be
valid, it must pass thetest of good faith; otherwise, it is void ab initio.
(Emphasis supplied.)
Evidently, the termination of all the employees of NEA was within the NEA Boards
powers and may not successfully be impugned absent proof of bad faith.
Petitioners Failed to Prove that the NEA Board Acted in Bad Faith

Next, petitioners challenge the reorganization claiming bad faith on the part of the
NEA Board.
Congress itself laid down the indicators of bad faith in the reorganization of
government offices in Sec. 2 of RA 6656, an Act to Protect the Security of Tenure of
Civil Service Officers and Employees in the Implementation of Government
Reorganization, to wit:
Section 2. No officer or employee in the career service shall be
removed except for a valid cause and after due notice and hearing. A valid
cause for removal exists when, pursuant to a bona fide reorganization, a
position has been abolished or rendered redundant or there is a need to
merge, divide, or consolidate positions in order to meet the exigencies of
the service, or other lawful causes allowed by the Civil Service Law. The
existence of any or some of the following circumstances may be
considered as evidence of bad faith in the removals made as a result
of reorganization, giving rise to a claim for reinstatement or
reappointment by an aggrieved party:
(a) Where there is a significant increase in the number of
positions in the new staffing pattern of the department or agency
concerned;
(b) Where an office is abolished and other performing
substantially the same functions is created;
(c) Where incumbents are replaced by those less
qualified in terms of status of appointment, performance and
merit;
(d) Where there is a reclassification of offices in the
department or agency concerned and the reclassified offices
perform substantially the same function as the original offices;
(e) Where the removal violates the order of separation
provided in Section 3 hereof. (Emphasis supplied.)
It must be noted that the burden of proving bad faith rests on the one alleging it. As the
Court ruled in Culili v. Eastern Telecommunications, Inc.,[5] According to jurisprudence,
basic is the principle that good faith is presumed and he who alleges bad faith has the
duty to prove the same. Moreover, in Spouses Palada v. Solidbank Corporation,[6] the

Court stated, Allegations of bad faith and fraud must be proved by clear and convincing
evidence.
Here, petitioners have failed to discharge such burden of proof.
In alleging bad faith, petitioners cite RA 6656, particularly its Sec. 2, subparagraphs (b)
and (c). Petitioners have the burden to show that: (1) the abolished offices were
replaced by substantially the same units performing the same functions; and (2)
incumbents are replaced by less qualified personnel.
Petitioners failed to prove such facts. Mere allegations without hard evidence cannot be
considered as clear and convincing proof.
Next, petitioners state that the NEA Board should not have abolished all the offices of
NEA and instead made a selective termination of its employees while retaining the other
employees.
Petitioners argue that for the reorganization to be valid, it is necessary to only
abolish the offices or terminate the employees that would not be retained and the
retention of the employees that were tasked to carry out the continuing mandate of
NEA. Petitioners argue in their Memorandum dated July 27, 2010:
A valid reorganization, pursued in good faith, would have resulted to: (1)
the abolition of old positions in the NEAs table of organization that pertain
to the granting of franchises and rate fixing functions as these were all
abolished by Congress (2) the creation of new positions that pertain to the
additional mandates of the EPIRA Law and (3) maintaining the old
positions that were not affected by the EPIRA Law.
The Court already had the occasion to pass upon the validity of the similar
reorganization in the NPC. In the aforecited case of Betoy,[7] the Court upheld the policy
of the Executive to terminate all the employees of the office before rehiring those
necessary for its operation. We ruled in Betoy that such policy is not tainted with bad
faith:
It is undisputed that NPC was in financial distress and the solution
found by Congress was to pursue a policy towards its privatization. The
privatization of NPC necessarily demanded the restructuring of its

operations. To carry out the purpose, there was a need to terminate


employees and re-hire some depending on the manpower
requirements of the privatized companies. The privatization and
restructuring of the NPC was, therefore, done in good faith as its
primary purpose was for economy and to make the bureaucracy
more efficient. (Emphasis supplied.)
Evidently, the fact that the NEA Board resorted to terminating all the incumbent
employees of NPC and, later on, rehiring some of them, cannot, on that ground alone,
vitiate the bona fides of the reorganization.
WHEREFORE, the instant petition is hereby DISMISSED. Resolution Nos. 46
and 59, dated July 10, 2003 and September 3, 2003, respectively, issued by the NEA
Board of Directors are hereby UPHELD.
No costs.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 196200

September 11, 2013

ERNESTO DY, Petitioner,


vs.
HON. GINA M. BIBAT- PALAMOS, in her capacity as Presiding Judge of the
Regional Trial Court, Branch 64, Makati City, and ORIX METRO LEASING AND
FINANCE CORPORATION, Respondents.
DECISION
MENDOZA, J.:
This petition for certiorari under Rule 65 of the 1997 Revised Rules of Civil Procedure
questions the December 13, 2010 and March 7, 2011Orders 1 of the Regional Trial Court
of Makati, Branch 64 (RTC), in Civil Case No. 92-2311, granting the motion for
execution of petitioner, but denying his prayer for the return of his cargo vessel in the
condition when the possession thereof was seized from him.

The Facts
The present controversy finds its roots in the Courts decision in Orix Metro Leasing and
Finance Corporation v. M/V "Pilar-I" and Spouses Ernesto Dy and Lourdes Dy 2 involving
the same parties. The facts, as culled from the Courts decision in the said case and the
records, are not disputed by the parties.
Petitioner Ernesto Dy (petitioner) and his wife, Lourdes Dy (Lourdes), were the
proprietors of Limchia Enterprises which was engaged in the shipping business. In
1990, Limchia Enterprises, with Lourdes as co-maker, obtained a loan from Orix Metro
Leasing and Finance Corporation (respondent) to fund its acquisition of M/V Pilar-I, a
cargo vessel. As additional security for the loan, Limchia Enterprises executed the Deed
of Chattel Mortgage over M/V Pilar-I.3
Due to financial losses suffered when M/V Pilar-I was attacked by pirates, Spouses Dy
failed to make the scheduled payments as required in their promissory note. After
receiving several demand letters from respondent, Spouses Dy applied for the
restructuring of their loan. Meanwhile, Lourdes issued several checks to cover the
remainder of their loan but the same were dishonored by the bank, prompting
respondent to institute a criminal complaint for violation of the Bouncing Checks Law.
Lourdes appealed to respondent with a new proposal to update their outstanding loan
obligations.4
On August 18, 1992, respondent filed the Complaint and Petition for Extrajudicial
Foreclosure of Preferred Ship Mortgage under Presidential Decree No. 1521 with
Urgent Prayer for Attachment with the RTC. Following the filing of an affidavit of merit
and the posting of bond by respondent, the RTC ordered the seizure of M/V Pilar-I and
turned over its possession to respondent. On September 28, 1994, respondent
transferred all of its rights, title to and interests, as mortgagee, in M/V Pilar-I to Colorado
Shipyard Corporation (Colorado).5
On July 31, 1997, the RTC rendered a decision in favor of Spouses Dy, ruling that they
had not yet defaulted on their loan because respondent agreed to a restructured
schedule of payment. There being no default, the foreclosure of the chattel mortgage on
M/V Pilar-I was premature. The RTC ordered that the vessel be returned to Spouses
Dy.6 This was affirmed by the Court of Appeals (CA), with the modification that Spouses
Dy be ordered to reimburse the respondent for repair and dry docking expenses while
the vessel was in the latters possession.7 On appeal, the Court promulgated its
Decision, dated September 11, 2009, upholding the findings of the CA but deleting the
order requiring Spouses Dy to reimburse respondent. 8

Consequently, on August 17, 2010, petitioner filed a motion for execution of judgment
with the RTC. In the intervening period, Colorado filed its Manifestation/Motion, dated
July 29, 2010, informing the RTC that M/V Pilar-I, which was in its possession, had
sustained severe damage and deterioration and had sunk in its shipyard because of its
exposure to the elements. For this reason, it sought permission from the court to cut the
sunken vessel into pieces, sell its parts and deposit the proceeds in escrow.9 In his
Comment/Objection, petitioner insisted that he had the right to require that the vessel be
returned to him in the same condition that it had been at the time it was wrongfully
seized by respondent or, should it no longer be possible, that another vessel of the
same tonnage, length and beam similar to that of M/V Pilar-I be delivered. 10 Colorado,
however, responded that the vessel had suffered severe damage and deterioration that
refloating or restoring it to its former condition would be futile, impossible and very
costly; and should petitioner persist in his demand that the ship be refloated, it should
be done at the expense of the party adjudged by the court to pay the same. 11
The RTC issued its questioned December 13, 2010 Order granting the motion for
execution but denying petitioners prayer for the return of M/V Pilar-I in the same state in
which it was taken by respondent. In so resolving, the RTC ratiocinated:
First, the judgment of the Supreme Court does not require the delivery of M/V Pilar in
the state the defendants wanted it to be. Secondly, said judgment has now become final
and it is axiomatic that after judgment has become executory, the court cannot amend
the same, except: x x x None of the three circumstances where a final and executory
judgment may be amended is present in this case. And third, the present deplorable
state of M/V Pilar certainly did not happen overnight, thus, defendants should have
brought it to the attention of this Court, the Court of Appeals or the Supreme Court after
it became apparent. Their inaction until after the judgment has become final, executory
and immutable rendered whatever right they may have to remedy the situation to be
nugatory. [Underlining supplied]
Petitioner moved for reconsideration but the motion was denied by the RTC in its March
7, 2011 Order.12
Hence, this petition.
The Issues
Petitioner raises the following issues in its Memorandum:
1. Whether or not the rule on hierarchy of courts is applicable to the instant
petition?

2. Whether or not the honorable trial court gravely abused its discretion,
amounting to lack or excess of jurisdiction, in finding that petitioner is not entitled
to the return of M/VPilar-1 in the condition that it had when it was wrongfully
seized by Orix Metro, or in the alternative, to a vessel of similar tonnage, length,
beam, and other particulars as M/VPilar-1;
3. Whether or not petitioner is estopped from asking for the return of the vessel in
the condition it had at the time it was seized?
4. Whether or not it was petitioners duty to look out for the vessels condition? 13
To be succinct, only two central issues need to be resolved: (1) whether petitioner was
justified in resorting directly to this Court via a petition for certiorari under Rule 65; and
(2) whether petitioner is entitled to the return of M/V Pilar-I in the same condition when it
was seized by respondent.
The Courts Ruling
The Court finds the petition to be partly meritorious.
Hierarchy of Courts; Direct Resort
To The Supreme Court Justified
Petitioner argues that his situation calls for the direct invocation of this Courts
jurisdiction in the interest of justice. Moreover, as pointed out by the RTC, what is
involved is a judgment of the Court which the lower courts cannot modify. Hence,
petitioner deemed it proper to bring this case immediately to the attention of this Court.
Lastly, petitioner claims that the present case involves a novel issue of law that is,
whether in an action to recover, a defendant in wrongful possession of the subject
matter in litigation may be allowed to return the same in a deteriorated condition without
any liability.14
Respondent, on the other hand, contends that the petition should have been filed with
the CA, following the doctrine of hierarchy of courts. It pointed out that petitioner failed
to state any special or important reason or any exceptional and compelling
circumstance which would warrant a direct recourse to this Court. 15
Under the principle of hierarchy of courts, direct recourse to this Court is improper
because the Supreme Court is a court of last resort and must remain to be so in order
for it to satisfactorily perform its constitutional functions, thereby allowing it to devote its
time and attention to matters within its exclusive jurisdiction and preventing the
overcrowding of its docket. 16 Nonetheless, the invocation of this Courts original

jurisdiction to issue writs of certiorari has been allowed in certain instances on the
ground of special and important reasons clearly stated in the petition, such as,(1) when
dictated by the public welfare and the advancement of public policy; (2) when
demanded by the broader interest of justice; (3) when the challenged orders were
patent nullities; or (4) when analogous exceptional and compelling circumstances called
for and justified the immediate and direct handling of the case. 17
This case falls under one of the exceptions to the principle of hierarchy of courts.
Justice demands that this Court take cognizance of this case to put an end to the
controversy and resolve the matter which has been dragging on for more than twenty
(20) years. Moreover, in light of the fact that what is involved is a final judgment
promulgated by this Court, it is but proper for petitioner to call upon its original
jurisdiction and seek final clarification.
Wrong Mode of Appeal;
Exception
Petitioner asserts that the RTC committed grave abuse of discretion when it failed to
rule in his favor despite the fact that he had been deprived by respondent of his property
rights over M/V Pilar-I for the past eighteen(18) years. Moreover, the change in the
situation of the parties calls for a relaxation of the rules which would make the execution
of the earlier decision of this Court inequitable or unjust. According to petitioner, for the
RTC to allow respondent to return the ship to him in its severely damaged and
deteriorated condition without any liability would be to reward bad faith. 18
Conversely, respondent submits that there was no grave abuse of discretion on the part
of the RTC as the latter merely observed due process and followed the principle that an
execution order may not vary or go beyond the terms of the judgment it seeks to
enforce.19 Respondent adds that the proper remedy should have been an ordinary
appeal, where a factual review of the records can be made to determine the condition of
the ship at the time it was taken from petitioner, and not a special civil action for
certiorari.20
There are considerable differences between an ordinary appeal and a petition for
certiorari which have been exhaustively discussed by this Court in countless cases. The
remedy for errors of judgment, whether based on the law or the facts of the case or on
the wisdom or legal soundness of a decision, is an ordinary appeal. 21 In contrast, a
petition for certiorari under Rule 65 is an original action designed to correct errors of
jurisdiction, defined to be those "in which the act complained of was issued by the court,
officer, or quasi-judicial body without or in excess of jurisdiction, or with grave abuse of

discretion which is tantamount to lack of in excess of jurisdiction." 22 A court or tribunal


can only be considered to have acted with grave abuse of discretion if its exercise of
judgment was so whimsical and capricious as to be equivalent to a lack of jurisdiction.
The abuse must be extremely patent and gross that it would amount to an "evasion of a
positive duty or to virtual refusal to perform a duty enjoined by law, or to act at all in
contemplation of law, as where the power is exercised in an arbitrary and despotic
manner by reason of passion and hostility." 23
Therefore, a misappreciation of evidence on the part of the lower court, as asserted by
petitioner, may only be reviewed by appeal and not by certiorari because the issue
raised by the petitioner does not involve any jurisdictional ground. 24 It is a general rule of
procedural law that when a party adopts an inappropriate mode of appeal, his petition
may be dismissed outright to prevent the erring party from benefiting from his neglect
and mistakes.25 There are exceptions to this otherwise ironclad rule, however. One is
when the strict application of procedural technicalities would hinder the expeditious
disposition of this case on the merits,26 such as in this case.
Petitioner Not Barred from Demanding
Return of the Vessel in its Former Condition
Petitioner insists that it is respondent who should bear the responsibility for the
deterioration of the vessel because the latter, despite having in its possession the
vessel M/V Pilar-I during the pendency of the foreclosure proceedings, failed to inform
the court and petitioner himself about the actual condition of the ship. For estoppel to
take effect, there must be knowledge of the real facts by the party sought to be
estopped and reliance by the party claiming estoppel on the representation made by the
former. In this case, petitioner cannot be estopped from asking for the return of the
vessel in the condition that it had been at the time it was seized by respondent because
he had not known of the deteriorated condition of the ship. 27
On the contrary, respondent argues that petitioner is barred from asking for a
modification of the judgment since he never prayed for the return of M/V Pilar-I in the
same condition that it had been at the time it was seized. 28Petitioner could have prayed
for such relief in his prior pleadings and presented evidence thereon before the
judgment became final and executory. During the course of the trial, and even at the
appellate phase of the case, petitioner failed to ask the courts to look into the naturally
foreseeable depreciation of M/V Pilar-I and to determine who should pay for the wear
and tear of the vessel. Consequently, petitioner can no longer pursue such relief for the
first time at this very late stage.29 Moreover, respondent posits that it can only be held
liable for the restoration and replacement of the vessel if it can be proven that M/V PilarI deteriorated through the fault of respondent. Nowhere in the prior decision of this

Court, however, does it appear that respondent was found to have been negligent in its
care of the vessel. In fact, respondent points out that, for a certain period, it even paid
for the repair and maintenance of the vessel and engaged the services of security
guards to watch over the vessel. It reasons that the vessels deterioration was
necessarily due to its exposure to sea water and the natural elements for the almost
twenty years that it was docked in the Colorado shipyard. 30
On this matter, the Court finds for petitioner.
This Court is not unaware of the doctrine of immutability of judgments. When a
judgment becomes final and executory, it is made immutable and unalterable, meaning
it can no longer be modified in any respect either by the court which rendered it or even
by this Court. Its purpose is to avoid delay in the orderly administration of justice and to
put an end to judicial controversies. Even at the risk of occasional errors, public policy
and sound practice dictate that judgments must become final at some point. 31
As with every rule, however, this admits of certain exceptions. When a supervening
event renders the execution of a judgment impossible or unjust, the interested party can
petition the court to modify the judgment to harmonize it with justice and the facts. 32 A
supervening event is a fact which transpires or a new circumstance which develops
after a judgment has become final and executory. This includes matters which the
parties were unaware of prior to or during trial because they were not yet in existence at
that time.33
In this case, the sinking of M/V Pilar-I can be considered a supervening
event.1wphi1 Petitioner, who did not have possession of the ship, was only informed of
its destruction when Colorado filed its Manifestation, dated July 29, 2010, long after the
September 11, 2009 Decision of this Court in Orix Metro Leasing and Finance
Corporation v. M/V "Pilar-I" and Spouses Ernesto Dy and Lourdes Dy attained finality on
January 19, 2010. During the course of the proceedings in the RTC, the CA and this
Court, petitioner could not have known of the worsened condition of the vessel because
it was in the possession of Colorado.
It could be argued that petitioner and his lawyer should have had the foresight to ask for
the return of the vessel in its former condition at the time respondent took possession of
the same during the proceedings in the earlier case. Nonetheless, the modification of
the Courts decision is warranted by the superseding circumstances, that is, the severe
damage to the vessel subject of the case and the belated delivery of this information to
the courts by the party in possession of the same.

Having declared that a modification of our earlier judgment is permissible in light of the
exceptional incident present in this case, the Court further rules that petitioner is entitled
to the return of M/V Pilar-I in the same condition in which respondent took possession of
it. Considering, however, that this is no longer possible, then respondent should pay
petitioner the value of the ship at such time.
This disposition is not without precedent. In the case of Metro Manila Transit
Corporation v. D.M. Consortium, Inc.,34 D.M. Consortium, Inc. (DMCI) acquired 228
buses under a lease purchase agreement with Metro Manila Transit Corporation
(MMTC). MMTC later alleged that DMCI was in default of its amortization, as a result of
which, MMTC took possession of all the buses. This Court upheld the right of DMCI,
after having been unjustly denied of its right of possession to several buses, to have
them returned by MMTC. Considering, however, that the buses could no longer be
returned in their original state, the Court sustained the resolution of the CA ordering
MMTC to pay DMCI the value of the buses at the time of repossession.
The aforecited case finds application to the present situation of petitioner. After having
been deprived of his vessel for almost two decades, through no fault of his own, it would
be the height of injustice to permit there turn of M/V Pilar-I to petitioner in pieces,
especially after a judgment by this very same Court ordering respondent to restore
possession of the vessel to petitioner. To do so would leave petitioner with nothing but a
hollow and illusory victory for although the Court ruled in his favor and declared that
respondent wrongfully took possession of his vessel, he could no longer enjoy the
beneficial use of his extremely deteriorated vessel that it is no longer seaworthy and has
no other commercial value but for the sale of its parts as scrap.
Moreover, the incongruity only becomes more palpable when consideration is taken of
the fact that petitioner's obligation to respondent, for which the now practically worthless
vessel serves as security, is still outstanding.35The Court cannot countenance such an
absurd outcome. It could not have been the intention of this Court to perpetrate an
injustice in the guise of a favorable decision. As the court of last resort, this Court is the
final bastion of justice where litigants can hope to correct any error made in the lower
courts.
WHEREFORE, the petition is PARTIALLYGRANTED. Respondent is ordered to pay
petitioner the value of M/V Pilar- I at the time it was wrongfully seized by it. The case is
hereby REMANDED to the Regional Trial Court, Branch 64, Makati City, for the proper
determination of the value of the vessel at said time.
SO ORDERED.

JOSE CATRAL MENDOZA


Associate Justice
WE CONCUR: