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SECOND DIVISION

[G.R. No. 143370. February 6, 2002]

MARIO J. MENDEZONA and TERESITA M. MENDEZONA, LUIS J.


MENDEZONA and MARICAR L. MENDEZONA and TERESITA
ADAD VDA. DE MENDEZONA, petitioners, vs. JULIO H. OZAMIZ,
ROBERTO J. MONTALVAN, JOSE MA. OZAMIZ, CARMEN H.
OZAMIZ, PAZ O. MONTALVAN, MA. TERESA O.F. ZARRAGA,
CARLOS O. FORTICH, JOSE LUIS O. ROS, PAULITA O.
RODRIGUEZ, and LOURDES O. LON, respondents.

DECISION
DE LEON, JR., J.:

Before us is a petition for review on certiorari of the Decision and the


[1]

Resolution of the Court of Appeals dated July 27, 1998 and May 19, 2000,
[2]

respectively, in CA-G.R. CV No. 39752 which reversed and set aside the
Decision dated September 23, 1992 rendered in favor of the petitioners by
[3]

the Regional Trial Court (RTC) of Cebu City, Branch 6 in Civil Case No. CEB-
10766.
Civil Case No. CEB-10766 is a suit for quieting of title. It was instituted
on September 25, 1991 by petitioner spouses Mario
J. Mendezona and Teresita M. Mendezona as initial plaintiffs, and in the
[4]

amended complaint filed on October 7, 1991, herein co-petitioner spouses


Luis J. Mendezona and Maricar L. Mendezona and Teresita Adad Vda.
de Mendezonajoined as co-plaintiffs. [5]

In their complaint, the petitioners, as plaintiffs therein, alleged that


petitioner spouses Mario J. Mendezona and Teresita M. Mendezona,
petitioner spouses Luis J. Mendezona and Maricar L. Mendezona, and
petitioner Teresita Adad Vda. de Mendezona own a parcel of land each in
the Banilad Estate, Lahug, Cebu City with almost similar areas of 3,462
square meters, 3,466 square meters and 3,468 square meters, covered and
described in Transfer Certificate of Title (TCT) Nos. 116834, 116835, and
116836 respectively, of the Registry of Deeds of Cebu City. [6]
The petitioners ultimately traced their titles of ownership over their
respective properties from a notarized Deed of Absolute Sale dated April 28,
[7]

1989 executed in their favor by Carmen Ozamiz for and in consideration of the
sum of One Million Forty Thousand Pesos (P1,040,000.00).
The petitioners initiated the suit to remove a cloud on their said respective
titles caused by the inscription thereon of a notice of lis pendens, which came
about as a result of an incident in Special Proceeding No. 1250 of the RTC
of Oroquieta City. Special Proceeding No. 1250 is a proceeding for
guardianship over the person and properties of Carmen Ozamiz initiated by
the respondents Julio H. Ozamiz, Jose Ma. Ozamiz, Carmen H. Ozamiz, Paz [8]

O. Montalvan, Ma. Teresa O.F. Zarraga, Carlos O. Fortich, Jose Luis


O. Ros, Paulita O. Rodriguez and Lourdes O. Lon. [9]

It appears that on January 15, 1991, the respondents instituted the petition
for guardianship with the Regional Trial Court of Oroquieta City, alleging
therein that Carmen Ozamiz, then 86 years old, after an illness in July 1987,
had become disoriented and could not recognize most of her friends; that she
could no longer take care of herself nor manage her properties by reason of
her failing health, weak mind and absent-mindedness. Mario Mendezona and
Luis Mendezona, herein petitioners who are nephews of Carmen Ozamiz,
and Pilar Mendezona, a sister of Carmen Ozamiz, filed an opposition to the
guardianship petition.
In the course of the guardianship proceeding, the petitioners and
the oppositors thereto agreed that Carmen Ozamiz needed a guardian over
her person and her properties, and thus respondent Paz O. Montalvan was
designated as guardian over the person of Carmen Ozamiz while petitioner
Mario J. Mendezona, respondents Roberto J. Montalvan and Julio
H. Ozamizwere designated as joint guardians over the properties of the said
ward.
As guardians, respondents Roberto J. Montalvan and Julio H. Ozamiz filed
on August 6, 1991 with the guardianship court their inventories and Accounts,
listing therein Carmen Ozamizs properties, cash, shares of stock, vehicles
[10]

and fixed assets, including a 10,396 square meter property known as


the Lahug property. Said Lahug property is the same property covered by the
Deed of Absolute Sale dated April 28, 1989 executed by Carmen Ozamiz in
favor of the petitioners. Respondents Roberto J. Montalvan and Julio
H. Ozamiz caused the inscription on the titles of petitioners a notice
of lis pendens, regarding Special Proceeding No. 1250, thus giving rise to
[11]

the suit for quieting of title, Civil Case No. CEB-10766, filed by herein
petitioners.
In their Answer in Civil Case No. CEB-10766 the respondents opposed
[12]

the petitioners claim of ownership of the Lahug property and alleged that the
titles issued in the petitioners names are defective and illegal, and the
ownership of the said property was acquired in bad faith and without value
inasmuch as the consideration for the sale is grossly inadequate and
unconscionable. Respondents further alleged that at the time of the sale
on April 28, 1989 Carmen Ozamiz was already ailing and not in full
possession of her mental faculties; and that her properties having been placed
in administration, she was in effect incapacitated to contract with petitioners.
The issues for resolution were delimited in the pre-trial to: (a) the propriety
of recourse to quieting of title; (b) the validity or nullity of the Deed of Absolute
Sale dated April 28, 1989 executed by Carmen Ozamiz in favor of herein
petitioners; (c) whether the titles over the subject parcel of land in plaintiffs
names be maintained or should they be cancelled and the subject parcels of
land reconveyed; and (d) damages and attorneys fees. [13]

Trial on the merits ensued with the parties presenting evidence to prove
their respective allegations. Petitioners Mario Mendezona, Teresita Adad Vda.
de Mendezona and Luis Mendezona, as plaintiffs therein, testified on the
circumstances surrounding the sale. Carmencita Cedeno and Martin Yungco,
instrumental witnesses to the Deed of Absolute Sale dated April 28, 1989,
and, Atty. Asuncion Bernades, the notary public who notarized the said
document, testified that on the day of execution of the said contract that
Carmen Ozamiz was of sound mind and that she voluntarily and knowingly
executed the said deed of sale.
For the defendants, the testimonies of respondent Paz O. Montalvan, a
sister of Carmen Ozamiz; Concepcion Agac-ac, an assistant of
Carmen Ozamiz; respondent Julio Ozamiz; Carolina Lagura, a househelper of
Carmen Ozamiz; Joselito Gunio, an appraiser of land; Nelfa Perdido, a part-
time bookkeeper of Carmen Ozamiz, and the deposition of Dr. Faith Go,
physician of Carmen Ozamiz, were offered in evidence.
The petitioners presented as rebuttal witnesses petitioners
Mario Mendezona and Luis Mendezona, to rebut the testimony of respondent
Julio H. Ozamiz; and, Dr. William Buot, a doctor of neurology to rebut aspects
of the deposition of Dr. Faith Go on the mental capacity of Carmen Ozamiz at
the time of the sale.
During the trial, the trial court found that the following facts have been duly
established: [14]
(1) On April 28, 1989, Carmen Ozamiz sold to her nephews, Mario, Antonio and Luis,
all surnamed Mendezona, three (3) parcels of residential land in Cebu City, per a Deed
of Absolute Sale (Exh. D) for a consideration of P1,040,000.00, in which deed
the usufructuary rights were reserved during her lifetime.

(2) The three parcels of land were subsequently transferred to the names of the three
vendees per TCTs Nos. 108729, 108730 and 108731 (Exhs. J, K & L, respectively). A
partition agreement was entered into by the three vendees (Exh. 3) and the parcels of
land are now titled in the names of the plaintiffs.

Mario Mendezona TCT No. 116834 (Exh. A);

Luis Mendezona TCT No. 116835 (Exh. B);

Antonio Mendezona TCT No. 116836 (Exh. C);

(3) The reservation of the usufructuary rights to the vendor Carmen Ozamiz during
her lifetime was confirmed by the plaintiffs-spouses
Mario Mendezona and Teresita Moraza and plaintiffs spouses
Luis Mendezona and Maricar Longa in a sworn statement (Exh. I) executed
on October 15, 1990, which was duly annotated on the titles of the property;

(4) The capital gains tax was paid (Exh. H) on May 5, 1989 and a certificate (Exh. H-
1) was issued by the Bureau of Internal Revenue authorizing the Register of Deeds to
transfer the property to the vendees;

(5) A petition for guardianship over the person and properties of


Carmen Ozamiz (Exh. E) was filed by all the defendants, (except the defendant
Roberto Montalvan) on January 15, 1991 with the Regional Trial Court
of Oroquieta City, denominated as Spec. Proc. No. 1250 and subsequently, an
Inventories and Accounts (Exh. F) was filed by court-appointed guardians
Roberto Montalvan and Julio Ozamiz, in which the property was listed (Exh. F-1) and
a Notice of Lis Pendens was filed with the Register of Deeds of Cebu City on August
13, 1991 by said joint guardians. Plaintiff Mario Mendezona, as another joint guardian
over Carmen Ozamiz, filed his opposition (Exh. R) to the Inventories and Accounts,
with the Oroquieta Court as to the inclusion of the property (Exh.R-1).

(6) Prior to his death, the deceased husband of plaintiff Teresita Adad Mendezona was
granted a General Power of Attorney (Exh. 1) by Carmen Ozamiz on March 23,
1988 and after his demise, Carmen Ozamiz granted Mario Mendezona a General
Power of Attorney (Exh. 2.) on August 11, 1990. Both powers of attorney relate to the
administration of the property, subject of this action, in Cebu City.
On September 23, 1992 the trial court rendered its decision in favor of the
petitioners, the dispositive portion of which reads, to wit:

Wherefore, premises considered, the Court is of the opinion and so declares that:

1. The property described in the complaint was sold, with reservation


of usufructuary rights by Carmen Ozamiz to the plaintiffs under a valid contract,
voluntarily and deliberately entered into while she was of sound mind, for sufficient
and good consideration, and without fraud, force, undue influence or intimidation
having been exercised upon her, and consequently, the Court orders the defendants
herein to acknowledge and recognize the plaintiffs title to the aforecited property and
to refrain from further clouding the same;

2. That the one-third (1/3) share erroneously titled to Antonio Mendezona should be
titled in the name of Teresita Adad vda. de Mendezona as her paraphernal property
and the Register of Deeds of Cebu City is hereby ordered to do so;

3. The Notice of Lis Pendens affecting the property should be eliminated from the
record and the Register of Deeds of Cebu City is ordered to expunge the same.

No pronouncement as to costs.

SO ORDERED.

On appeal to the Court of Appeals, the appellate court reversed the factual
findings of the trial court and ruled that the Deed of Absolute Sale dated April
28, 1989 was a simulated contract since the petitioners failed to prove that the
consideration was actually paid, and, furthermore, that at the time of the
execution of the contract the mental faculties of Carmen Ozamiz were already
seriously impaired. Thus, the appellate court declared that the Deed of
Absolute Sale of April 28, 1989 is null and void. It ordered the cancellation of
the certificates of title issued in the petitioners names and directed the
issuance of new certificates of title in favor of Carmen Ozamiz or her estate.
Petitioners filed a motion for reconsideration of the decision of the
appellate court. Subsequent thereto, the petitioners filed a motion for a new
trial and/or for reception of evidence. They contended, among other things,
that the appellate court totally ignored the testimony of
Judge Teodorico Durias regarding the mental condition of Carmen Ozamiz a
month before the execution of the Deed of Absolute Sale in question. The said
testimony was taken in the Special Proceeding No. 1250 in
the Regional Trial Court of Oroquieta City. However, Judge Duriaswas not
presented as a witness in Civil Case No. CEB-10766 in
the Regional Trial Court of Cebu City. Petitioners alleged that
Judge Duriass testimony is a newly-discovered evidence which could not
have been discovered prior to the trial in the court below by the exercise of
due diligence.
The appellate court denied both motions in its Resolution dated May 19,
2000. Hence, the instant petition anchored on the following grounds:
[15]

I.

THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE APRIL


28, 1989 DEED OF ABSOLUTE SALE WAS A SIMULATED CONTRACT.

A.

THE COURT OF APPEALS GRAVELY ERRED IN IGNORING THE STATUTORY


PRESUMPTIONS OF ACTUAL AND SUFFICIENT CONSIDERATION FOR, AND
OF THE REGULARITY AND TRUTHFULNESS OF, THE NOTARIZED DEED OF
ABSOLUTE SALE.

B.

THE COURT OF APPEALS GRAVELY ERRED IN IMPOSING ON THE


PETITIONERS THE BURDEN OF PROVING PAYMENT, AND IN REFUSING TO
RECOGNIZE AND RULE THAT IT WAS THE RESPONDENTS - AS THE
PARTIES ASSAILING THE DEED OF ABSOLUTE SALE - WHO HAD FAILED
TO DISCHARGE THEIR BURDEN OF PROVING THAT THERE WAS NO
CONSIDERATION FOR THE TRANSACTION.

C.

THE COURT OF APPEALS GRAVELY ERRED IN REFUSING TO RECEIVE IN


EVIDENCE THE THREE (3) CHECKS, WHICH PROVED BEYOND ANY
DOUBT THAT THE PURCHASE PRICE FOR THE LAHUG PROPERTY HAD
BEEN PAID TO CARMEN OZAMIZ, AFTER ASKING FOR THEM AND HAVING
THEM PRESENTED TO IT IN OPEN COURT, THUS COOPERATING WITH
RESPONDENTS EFFORTS TO SUPPRESS THE CHECKS (WHICH THE COURT
ITSELF AND RESPONDENTS CHALLENGED PETITIONERS TO PRODUCE).

II.
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT CARMEN
OZAMIZS MENTAL FACULTIES WERE SERIOUSLY IMPAIRED WHEN SHE
EXECUTED THE DEED OF ABSOLUTE SALE ON APRIL 28, 1989.

A.

THE COURT OF APPEALS GRAVELY ERRED IN IGNORING THE STATUTORY


PRESUMPTION THAT CARMEN OZAMIZ WAS OF SOUND MIND AND HAD
THE REQUISITE CAPACITY TO CONTRACT WHEN SHE EXECUTED THE
DEED OF ABSOLUTE SALE, AND IN REFUSING TO RULE THAT IT WAS THE
RESPONDENTS - AS THE PARTIES ALLEGING MENTAL INCAPACITY- WHO
HAD FAILED TO DISCHARGE THEIR BURDEN OF REBUTTING THAT
PRESUMPTION.

B.

THE COURT OF APPEALS GRAVELY ERRED IN REFUSING TO ACCEPT AND


GIVE DUE AND PREPONDERANT WEIGHT TO UNREFUTED EVIDENCE,
INCLUDING THE UNREFUTED TESTIMONIES OF THE INSTRUMENTAL
WITNESSES AND OF THE NOTARY PUBLIC, THAT CARMEN OZAMIZ
EXECUTED THE DEED OF ABSOLUTE SALE FREELY, VOLUNTARILY,
KNOWINGLY, AND INTELLIGENTLY.

C.

THE COURT OF APPEALS GRAVELY ERRED IN GIVING WEIGHT TO THE


HEARSAY TESTIMONY OF DR. FAITH GO ON THE MENTAL CONDITION OF
CARMEN OZAMIZ ON THE DATE SHE EXECUTED THE DEED OF
ABSOLUTE SALE.

D.

THE COURT OF APPEALS GRAVELY ERRED IN IGNORING, AND IN


REFUSING TO RECEIVE IN EVIDENCE, JUDGE TEODORICO DURIASS
TESTIMONY (THAT CARMEN OZAMIZ WAS OF SOUND MIND WHEN SHE
EXECUTED ANOTHER CONTRACT BARELY A MONTH BEFORE SHE
EXECUTED THE DEED OF ABSOLUTE SALE) ON THE GROUND
THAT THATTESTIMONY WAS FORGOTTEN EVIDENCE.

We shall first rule on the issue of whether to consider the testimony of


Judge Durias as newly discovered evidence. A motion for new trial upon the
ground of newly discovered evidence is properly granted only where there is
concurrence of the following requisites, namely: (a) the evidence had been
discovered after trial; (b) the evidence could not have been discovered and
produced during trial even with the exercise of reasonable diligence; and (c)
the evidence is material and not merely corroborative, cumulative or
impeaching and is of such weight that if admitted, would probably alter the
result. All three (3) requisites must characterize the evidence sought to be
introduced at the new trial.
We find that the requirement of reasonable diligence has not been met by
the petitioners. As early as the pre-trial of the case at bar, the name of
Judge Durias has already cropped up as a possible witness for the
defendants, herein respondents. That the respondents chose not to present
him is not an indicia per se of suppression of evidence, since a party in a civil
case is free to choose who to present as his witness. Neither can
Judge Durias testimony in another case be considered as newly discovered
evidence since the facts to be testified to by Judge Durias which were existing
before and during the trial, could have been presented by the petitioners at
the trial below. The testimony of Judge Durias has been in existence waiting
[16]

only to be elicited from him by questioning.[17]

It has been held that a lack of diligence is exhibited where the newly
discovered evidence was necessary or proper under the pleadings, and its
existence must have occurred to the party in the course of the preparation of
the case, but no effort was made to secure it; there is a failure to make inquiry
of persons who were likely to know the facts in question, especially where
information was not sought from co-parties; there is a failure to seek evidence
available through public records; there is a failure to discover evidence that is
within the control of the complaining party; there is a failure to follow leads
contained in other evidence; and, there is a failure to utilize available
discovery procedures. Thus, the testimony of Judge Duriascannot be
[18]

considered as newly discovered evidence to warrant a new trial.


In this petition at bench, herein petitioners essentially take exception to
two (2) main factual findings of the appellate court, namely, (a) that the
notarized Deed of Absolute Sale dated April 28, 1989 was a simulated
contract, and (b) that Carmen Ozamizs mental faculties were seriously
impaired when she executed the said contract on April 28, 1989. The
petitioners allege that both conclusions are contrary or opposed to well-
recognized statutory presumptions of regularity enjoyed by a notarized
document and that a contracting party to a notarized contract is of sound and
disposing mind when she executes the contract.
The respondents posit a different view. They contend that clear and
convincing evidence refuted the presumptions on regularity of execution of the
Deed of Absolute Sale and existence of consideration thereof. Relying upon
the testimonies of Paz O. Montalvan, Concepcion Agac-ac,
Carolina Lagura and Dr. Faith Go, they aver that they were able to show that
Carmen Ozamiz was already physically and mentally incapacitated since the
latter part of 1987 and could not have executed the said Deed of Absolute
Sale on April 28, 1989 covering the disputed Lahug property. They also
alleged that no error is ascribable to the appellate court for not considering the
allegedly rehearsed testimonies of the instrumental witnesses and the notary
public.
Factual findings of the appellate court are generally conclusive on this
Court which is not a trier of facts. It is not the function of the Supreme Court to
analyze or weigh evidence all over again. However, this rule is not without
exception. If there is a showing that the appellate courts findings of facts
complained of are totally devoid of support in the record or that they are so
glaringly erroneous as to constitute grave abuse of discretion, this Court must
discard such erroneous findings of facts. We find that the exception applies
[19]

in the case at bench.


Simulation is defined as the declaration of a fictitious will, deliberately
made by agreement of the parties, in order to produce, for the purposes of
deception, the appearances of a juridical act which does not exist or is
different from what that which was really executed. The requisites of
[20]

simulation are: (a) an outward declaration of will different from the will of the
parties; (b) the false appearance must have been intended by mutual
agreement; and (c) the purpose is to deceive third persons. None of these
[21]

were clearly shown to exist in the case at bar.


Contrary to the erroneous conclusions of the appellate court, a simulated
contract cannot be inferred from the mere non-production of the checks. It
was not the burden of the petitioners to prove so. It is significant to note that
the Deed of Absolute Sale dated April 28, 1989 is a notarized document duly
acknowledged before a notary public. As such, it has in its favor the
presumption of regularity, and it carries the evidentiary weight conferred upon
it with respect to its due execution. It is admissible in evidence without further
proof of its authenticity and is entitled to full faith and credit upon its face.
[22]

Payment is not merely presumed from the fact that the notarized Deed of
Absolute Sale dated April 28, 1989 has gone through the regular procedure as
evidenced by the transfer certificates of title issued in petitioners names by the
Register of Deeds. In other words, whosoever alleges the fraud or invalidity of
a notarized document has the burden of proving the same by evidence that is
clear, convincing, and more than merely preponderant. Therefore, with this
[23]
well-recognized statutory presumption, the burden fell upon the respondents
to prove their allegations attacking the validity and due execution of the said
Deed of Absolute Sale. Respondents failed to discharge that burden; hence,
the presumption in favor of the said deed stands. But more importantly, that
notarized deed shows on its face that the consideration of One Million Forty
Thousand Pesos (P1,040,000.00) was acknowledged to have been received
by Carmen Ozamiz.
Simulation cannot be inferred from the alleged absence of payment based
on the testimonies of Concepcion Agac-ac, assistant of Carmen Ozamiz,
and Nelfa Perdido, part-time bookkeeper of Carmen Ozamiz. The testimonies
of these two (2) witnesses are unreliable and inconsistent.
While Concepcion Agac-ac testified that she was aware of all the
transactions of Carmen Ozamiz, she also admitted that not all income of
Carmen Ozamiz passed through her since Antonio Mendezona, as appointed
administrator, directly reported to Carmen Ozamiz. With respect [24]

to Nelfa Perdido, she testified that most of the transactions that she recorded
refer only to rental income and expenses, and the amounts thereof were
reported to her by Concepcion Agac-ac only, not by Carmen Ozamiz. She
does not record deposits or withdrawals in the bank accounts of
Carmen Ozamiz. Their testimonies hardly deserve any credit and, hence, the
[25]

appellate court misplaced reliance thereon.


Considering that Carmen Ozamiz acknowledged, on the face of the
notarized deed, that she received the consideration at One Million Forty
Thousand Pesos (P1,040,000.00), the appellate court should not have placed
too much emphasis on the checks, the presentation of which is not really
necessary. Besides, the burden to prove alleged non-payment of the
consideration of the sale was on the respondents, not on the petitioners. Also,
between its conclusion based on inconsistent oral testimonies and a duly
notarized document that enjoys presumption of regularity, the appellate court
should have given more weight to the latter. Spoken words could be
notoriously unreliable as against a written document that speaks a uniform
language. [26]

Furthermore, the appellate court erred in ruling that at the time of the
execution of the Deed of Absolute Sale on April 28, 1989 the mental faculties
of Carmen Ozamiz were already seriously impaired. It placed too much
[27]

reliance upon the testimonies of the respondents witnesses. However, after a


thorough scrutiny of the transcripts of the testimonies of the witnesses, we find
that the respondents core witnesses all made sweeping statements which
failed to show the true state of mind of Carmen Ozamiz at the time of the
execution of the disputed document. The testimonies of the respondents
witnesses on the mental capacity of Carmen Ozamiz are far from being clear
and convincing, to say the least.
Carolina Lagura, a househelper of Carmen Ozamiz, testified that when
Carmen Ozamiz was confronted by Paz O. Montalvan in January 1989 with
the sale of the Lahug property, Carmen Ozamiz denied the same. She
testified that Carmen Ozamiz understood the question then. However, this
[28]

declaration is inconsistent with her (Carolinas) statement that since 1988


Carmen Ozamiz could not fully understand the things around her, that she
was physically fit but mentally could not carry a conversation or recognize
persons who visited her. Furthermore, the disputed sale occurred on April 28,
[29]

1989 or three (3) months after this alleged confrontation in January 1989. This
inconsistency was not explained by the respondents.
The revelation of Dr. Faith Go did not also shed light on the mental
capacity of Carmen Ozamiz on the relevant day - April 28, 1989 when the
Deed of Absolute Sale was executed and notarized. At best, she merely
revealed that Carmen Ozamiz was suffering from certain infirmities in her
body and at times, she was forgetful, but there was no categorical statement
that Carmen Ozamiz succumbed to what the respondents suggest as her
alleged second childhood as early as 1987. The petitioners rebuttal witness,
Dr. William Buot, a doctor of neurology, testified that no conclusion of mental
incapacity at the time the said deed was executed can be inferred from Dr.
Faith Gos clinical notes nor can such fact be deduced from the mere
prescription of a medication for episodic memory loss.
It has been held that a person is not incapacitated to contract merely
because of advanced years or by reason of physical infirmities. Only when
such age or infirmities impair her mental faculties to such extent as to prevent
her from properly, intelligently, and fairly protecting her property rights, is she
considered incapacitated. The respondents utterly failed to show adequate
[30]

proof that at the time of the sale on April 28, 1989 Carmen Ozamiz had
allegedly lost control of her mental faculties.
We note that the respondents sought to impugn only one document,
namely, the Deed of Absolute Sale dated April 28, 1989, executed by
Carmen Ozamiz. However, there are nine (9) other important documents that
were, signed by Carmen Ozamiz either before or after April 28, 1989 which
were not assailed by the respondents. Such is contrary to their assertion of
[31]

complete incapacity of Carmen Ozamiz to handle her affairs since 1987. We


agree with the trial courts assessment that it is unfair for the [respondents] to
claim soundness of mind of Carmen Ozamiz when it benefits them and
otherwise when it disadvantages them. A person is presumed to be of sound
[32]

mind at any particular time and the condition is presumed to continue to exist,
in the absence of proof to the contrary. Competency and freedom from undue
[33]

influence, shown to have existed in the other acts done or contracts executed,
are presumed to continue until the contrary is shown.[34]

All the foregoing considered, we find the instant petition to be meritorious


and the same should be granted.
WHEREFORE, the instant petition is hereby GRANTED and the assailed
Decision and Resolution of the Court of Appeals are hereby REVERSED and
SET ASIDE. The Decision dated September 23, 1992 of
the Regional Trial Court of Cebu City, Branch 6, in Civil Case No. CEB-10766
is REINSTATED. No pronouncement as to costs.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing, and Buena, JJ., concur.

SECOND DIVISION

ROWENA PADILLA-RUMBAUA, G.R. No. 166738


Petitioner,
Present:
*
CARPIO-MORALES,
J.,
- versus - Acting Chairperson,
**
CARPIO,
***
CHICO-
NAZARIO,
****
LEONARDO-
DE CASTRO, and
EDWARD RUMBAUA, BRION, JJ.
Respondent.
Promulgated:

August 14,
2009
x --------------------------------------------------------------------------------------- x

DECISION

BRION, J.:

Petitioner Rowena Padilla-Rumbaua (petitioner) challenges, through her


petition for review on certiorari,[1] the decision dated June 25, 2004[2] and the
resolution dated January 18, 2005[3] of the Court of Appeals (CA) in CA-G.R. CV
No. 75095. The challenged decision reversed the decision[4] of the Regional Trial
Court (RTC) declaring the marriage of the petitioner and respondent Edward
Rumbaua (respondent) null and void on the ground of the latters psychological
incapacity. The assailed resolution, on the other hand, denied the petitioners
motion for reconsideration.

ANTECEDENT FACTS

The present petition traces its roots to the petitioners complaint for the
declaration of nullity of marriage against the respondent before the RTC, docketed
as Civil Case No. 767. The petitioner alleged that the respondent was
psychologically incapacitated to exercise the essential obligations of marriage as
shown by the following circumstances: the respondent reneged on his promise to
live with her under one roof after finding work; he failed to extend financial
support to her; he blamed her for his mothers death; he represented himself as
single in his transactions; and he pretended to be working in Davao, although he
was cohabiting with another woman in Novaliches, Quezon City.

Summons was served on the respondent through substituted service, as


personal service proved futile.[5] The RTC ordered the provincial prosecutor to
investigate if collusion existed between the parties and to ensure that no fabrication
or suppression of evidence would take place.[6] Prosecutor Melvin P. Tiongsons
report negated the presence of collusion between the parties.[7]

The Republic of the Philippines (Republic), through the office of the


Solicitor General (OSG), opposed the petition.[8] The OSG entered its appearance
and deputized the Provincial Prosecutor of Nueva Vizcaya to assist in all hearings
of the case.[9]

The petitioner presented testimonial and documentary evidence to


substantiate her charges.

The petitioner related that she and the respondent were childhood neighbors
in Dupax del Norte, Nueva Vizcaya. Sometime in 1987, they met again and
became sweethearts but the respondents family did not approve of their
relationship. After graduation from college in 1991, the respondent promised to
marry the petitioner as soon as he found a job. The job came in 1993, when the
Philippine Air Lines (PAL) accepted the respondent as a computer engineer. The
respondent proposed to the petitioner that they first have a secret marriage in
order not to antagonize his parents. The petitioner agreed; they were married
in Manila on February 23, 1993. The petitioner and the respondent, however, never
lived together; the petitioner stayed with her sister in Fairview, Quezon City, while
the respondent lived with his parents in Novaliches.
The petitioner and respondent saw each other every day during the first six
months of their marriage. At that point, the respondent refused to live with the
petitioner for fear that public knowledge of their marriage would affect his
application for a PAL scholarship. Seven months into their marriage, the couples
daily meetings became occasional visits to the petitioners house in Fairview; they
would have sexual trysts in motels. Later that year, the respondent enrolled
at FEATI University after he lost his employment with PAL.[10]

In 1994, the parties respective families discovered their secret


marriage. The respondents mother tried to convince him to go to the United
States, but he refused. To appease his mother, he continued living separately from
the petitioner. The respondent forgot to greet the petitioner during her birthday in
1992 and likewise failed to send her greeting cards on special occasions. The
respondent indicated as well in his visa application that he was single.

In April 1995, the respondents mother died. The respondent blamed the
petitioner, associating his mothers death to the pain that the discovery of his secret
marriage brought. Pained by the respondents action, the petitioner severed her
relationship with the respondent. They eventually reconciled through the help of
the petitioners father, although they still lived separately.

In 1997, the respondent informed the petitioner that he had found a job
in Davao. A year later, the petitioner and her mother went to the respondents house
in Novaliches and found him cohabiting with one Cynthia Villanueva
(Cynthia). When she confronted the respondent about it, he denied having an
affair with Cynthia.[11] The petitioner apparently did not believe the respondents
and moved to to Nueva Vizcaya to recover from the pain and anguish that her
discovery brought.[12]
The petitioner disclosed during her cross-examination that communication
between her and respondent had ceased. Aside from her oral testimony, the
petitioner also presented a certified true copy of their marriage contract; [13] and the
testimony, curriculum vitae,[14] and psychological report[15] of clinical psychologist
Dr. Nedy Lorenzo Tayag (Dr. Tayag).

Dr. Tayag declared on the witness stand that she administered the following
tests on the petitioner: a Revised Beta Examination; a Bender Visual Motor Gestalt
Test; a Rorschach Psychodiagnostic Test; a Draw a Person Test; a Sachs Sentence
Completion Test; and MMPI.[16] She thereafter prepared a psychological report
with the following findings:

TEST RESULTS AND EVALUATION

Psychometric tests data reveal petitioner to operate in an average


intellectual level. Logic and reasoning remained intact. She is seen to be
the type of woman who adjusts fairly well into most situations especially
if it is within her interests. She is pictured to be faithful to her
commitments and had reservations from negative criticisms such that she
normally adheres to social norms, behavior-wise. Her age speaks of
maturity, both intellectually and emotionally. Her one fault lies in her
compliant attitude which makes her a subject for manipulation and
deception such that of respondent. In all the years of their relationship, she
opted to endure his irresponsibility largely because of the mere belief that
someday things will be much better for them. But upon the advent of her
husbands infidelity, she gradually lost hope as well as the sense of self-
respect, that she has finally taken her tool to be assertive to the point of
being aggressive and very cautious at times so as to fight with the
frustration and insecurity she had especially regarding her failed marriage.

Respondent in this case, is revealed to operate in a very self-


centered manner as he believes that the world revolves around him.
His egocentrism made it so easy for him to deceitfully use others for
his own advancement with an extreme air of confidence and
dominance. He would do actions without any remorse or guilt feelings
towards others especially to that of petitioner.

REMARKS
Love happens to everyone. It is dubbed to be boundless as it goes
beyond the expectations people tagged with it. In love, age does matter.
People love in order to be secure that one will share his/her life with
another and that he/she will not die alone. Individuals who are in love had
the power to let love grow or let love die it is a choice one had to face
when love is not the love he/she expected.

In the case presented by petitioner, it is very apparent that love


really happened for her towards the young respondent who used love
as a disguise or deceptive tactic for exploiting the confidence she extended
towards him. He made her believe that he is responsible, true, caring and
thoughtful only to reveal himself contrary to what was mentioned. He
lacked the commitment, faithfulness, and remorse that he was able to
engage himself to promiscuous acts that made petitioner look like an
innocent fool. His character traits reveal him to suffer Narcissistic
Personality Disorder - declared to be grave, severe and incurable.
[17]
[Emphasis supplied.]

The RTC Ruling

The RTC nullified the parties marriage in its decision of April 19,
2002. The trial court saw merit in the testimonies of the petitioner and Dr. Tayag,
and concluded as follows:
xxxx

Respondent was never solicitous of the welfare and wishes of his wife.
Respondent imposed limited or block [sic] out communication with his wife,
forgetting special occasions, like petitioners birthdays and Valentines Day; going
out only on occasions despite their living separately and to go to a motel to have
sexual intercourse.

It would appear that the foregoing narration are the attendant facts in this
case which show the psychological incapacity of respondent, at the time of the
celebration of the marriage of the parties, to enter into lawful marriage and to
discharge his marital responsibilities (See Articles 68 to 71, Family Code). This
incapacity is declared grave, severe and incurable.

WHEREFORE, in view of the foregoing, the marriage between petitioner


Rowena Padilla Rumbaua and respondent Edwin Rumbaua is hereby declared
annulled.

SO ORDERED.[18]
The CA Decision

The Republic, through the OSG, appealed the RTC decision to the CA.
[19]
The CA decision of June 25, 2004 reversed and set aside the RTC decision, and
denied the nullification of the parties marriage.[20]

In its ruling, the CA observed that Dr. Tayags psychiatric report did not
mention the cause of the respondents so-called narcissistic personality disorder;
it did not discuss the respondents childhood and thus failed to give the court an
insight into the respondents developmental years. Dr. Tayag likewise failed to
explain why she came to the conclusion that the respondents incapacity was
deep-seated and incurable.

The CA held that Article 36 of the Family Code requires the incapacity to be
psychological, although its manifestations may be physical. Moreover, the
evidence presented must show that the incapacitated party was mentally or
physically ill so that he or she could not have known the marital obligations
assumed, knowing them, could not have assumed them. In other words, the illness
must be shown as downright incapacity or inability, not a refusal, neglect, or
difficulty to perform the essential obligations of marriage. In the present case, the
petitioner suffered because the respondent adamantly refused to live with her
because of his parents objection to their marriage.

The petitioner moved to reconsider the decision, but the CA denied her
motion in its resolution of January 18, 2005. [21]

The Petition and the Issues

The petitioner argues in the present petition that


1. the OSG certification requirement under Republic v.
Molina[22] (the Molina case) cannot be dispensed with because A.M. No.
02-11-10-SC, which relaxed the requirement, took effect only on March
15, 2003;

2. vacating the decision of the courts a quo and remanding the case to the
RTC to recall her expert witness and cure the defects in her testimony, as
well as to present additional evidence, would temper justice with mercy;
and

3. Dr. Tayags testimony in court cured the deficiencies in her psychiatric


report.

The petitioner prays that the RTCs and the CAs decisions be reversed and
set aside, and the case be remanded to the RTC for further proceedings; in the
event we cannot grant this prayer, that the CAs decision be set aside and the RTCs
decision be reinstated.

The Republic maintained in its comment that: (a) A.M. No. 02-11-10-SC
was applicable although it took effect after the promulgation of Molina; (b)
invalidating the trial courts decision and remanding the case for further
proceedings were not proper; and (c) the petitioner failed to establish respondents
psychological incapacity.[23]

The parties simply reiterated their arguments in the memoranda they filed.

THE COURTS RULING

We resolve to deny the petition for lack of merit.

A.M. No. 02-11-10-SC is applicable


In Molina, the Court emphasized the role of the prosecuting attorney or
fiscal and the OSG; they are to appear as counsel for the State in proceedings for
annulment and declaration of nullity of marriages:

(8) The trial court must order the prosecuting attorney or fiscal and the
Solicitor General to appear as counsel for the state. No decision shall be handed
down unless the Solicitor General issues a certification, which will be quoted
in the decision, briefly stating therein his reasons for his agreement or
opposition, as the case may be, to the petition. The Solicitor General, along
with the prosecuting attorney, shall submit to the court such certification within
fifteen (15) days from the date the case is deemed submitted for resolution of the
court. The Solicitor General shall discharge the equivalent function of
the defensor vinculi contemplated under Canon 1095. [Emphasis supplied.]

A.M. No. 02-11-10-SC[24] -- which this Court promulgated on March 15,


2003 and duly published -- is geared towards the relaxation of the OSG
certification that Molina required. Section 18 of this remedial regulation provides:

SEC. 18. Memoranda. The court may require the parties and the public
prosecutor, in consultation with the Office of the Solicitor General, to file their
respective memoranda in support of their claims within fifteen days from the date
the trial is terminated. It may require the Office of the Solicitor General to file its
own memorandum if the case is of significant interest to the State. No other
pleadings or papers may be submitted without leave of court. After the lapse of
the period herein provided, the case will be considered submitted for decision,
with or without the memoranda.

The petitioner argues that the RTC decision of April 19, 2002 should be
vacated for prematurity, as it was rendered despite the absence of the required OSG
certification specified in Molina. According to the petitioner, A.M. No. 02-11-10-
SC, which took effect only on March 15, 2003, cannot overturn the requirements
of Molina that was promulgated as early as February 13, 1997.

The petitioners argument lacks merit.


The amendment introduced under A.M. No. 02-11-10-SC is procedural or
remedial in character; it does not create or remove any vested right, but only
operates as a remedy in aid of or confirmation of already existing rights. The
settled rule is that procedural laws may be given retroactive effect, [25] as we held
in De Los Santos v. Vda. de Mangubat:[26]

Procedural Laws do not come within the legal conception of a


retroactive law, or the general rule against the retroactive operation of statues -
they may be given retroactive effect on actions pending and undetermined at the
time of their passage and this will not violate any right of a person who may feel
that he is adversely affected, insomuch as there are no vested rights in rules of
procedure.

A.M. No. 02-11-10-SC, as a remedial measure, removed the mandatory


nature of an OSG certification and may be applied retroactively to pending
matters. In effect, the measure cures in any pending matter any procedural lapse
on the certification prior to its promulgation. Our rulings in Antonio v.
Reyes[27] and Navales v. Navales[28] have since confirmed and clarified that A.M.
No. 02-11-10-SC has dispensed with the Molina guideline on the matter of
certification, although Article 48 mandates the appearance of the prosecuting attorney or
fiscal to ensure that no collusion between the parties would take place. Thus, what is
important is the presence of the prosecutor in the case, not the remedial requirement that he
be certified to be present. From this perspective, the petitioners objection regarding
the Molina guideline on certification lacks merit.

A Remand of the Case to the RTC is Improper

The petitioner maintains that vacating the lower courts decisions and the remand
of the case to the RTC for further reception of evidence are procedurally permissible. She
argues that the inadequacy of her evidence during the trial was the fault of her former
counsel, Atty. Richard Tabago, and asserts that remanding the case to the RTC would allow
her to cure the evidentiary insufficiencies. She posits in this regard that while mistakes of
counsel bind a party, the rule should be liberally construed in her favor to serve the ends of
justice.

We do not find her arguments convincing.

A remand of the case to the RTC for further proceedings amounts to the grant of a
new trial that is not procedurally proper at this stage. Section 1 of Rule 37 provides that an
aggrieved party may move the trial court to set aside a judgment or final
order already rendered and to grant a new trial within the period for taking an
appeal. In addition, a motion for new trial may be filed only on the grounds of (1)
fraud, accident, mistake or excusable negligence that could not have been guarded
against by ordinary prudence, and by reason of which the aggrieved partys rights
have probably been impaired; or (2) newly discovered evidence that, with
reasonable diligence, the aggrieved party could not have discovered and produced
at the trial, and that would probably alter the result if presented.

In the present case, the petitioner cites the inadequacy of the evidence
presented by her former counsel as basis for a remand. She did not, however,
specify the inadequacy. That the RTC granted the petition for declaration of
nullity prima facie shows that the petitioners counsel had not been negligent in
handling the case. Granting arguendo that the petitioners counsel had been
negligent, the negligence that would justify a new trial must be excusable, i.e. one
that ordinary diligence and prudence could not have guarded against. The
negligence that the petitioner apparently adverts to is that cited in Uy v. First Metro
Integrated Steel Corporation where we explained:[29]

Blunders and mistakes in the conduct of the proceedings in the trial court
as a result of the ignorance, inexperience or incompetence of counsel do not
qualify as a ground for new trial. If such were to be admitted as valid reasons for
re-opening cases, there would never be an end to litigation so long as a new
counsel could be employed to allege and show that the prior counsel had not been
sufficiently diligent, experienced or learned. This will put a premium on the
willful and intentional commission of errors by counsel, with a view to securing
new trials in the event of conviction, or an adverse decision, as in the instant case.
Thus, we find no justifiable reason to grant the petitioners requested remand.

Petitioner failed to establish the


respondents psychological incapacity

A petition for declaration of nullity of marriage is anchored on


Article 36 of the Family Code which provides that a marriage contracted by any
party who, at the time of its celebration, was psychologically incapacitated to
comply with the essential marital obligations of marriage, shall likewise be void
even if such incapacity becomes manifest only after its solemnization. In Santos
v. Court of Appeals,[30] the Court first declared that psychological incapacity must
be characterized by (a) gravity; (b) juridical antecedence; and (c) incurability. The
defect should refer to no less than a mental (not physical) incapacity that causes a
party to be truly incognitive of the basic marital covenants that concomitantly must
be assumed and discharged by the parties to the marriage. It must be confined to
the most serious cases of personality disorders clearly demonstrative of an utter
insensitivity or inability to give meaning and significance to the marriage.

We laid down more definitive guidelines in the interpretation and application


of Article 36 of the Family Code in Republic v. Court of Appeals where we said:
(1) The burden of proof to show the nullity of the marriage belongs to the
plaintiff. Any doubt should be resolved in favor of the existence and continuation
of the marriage and against its dissolution and nullity. This is rooted in the fact
that both our Constitution and our laws cherish the validity of marriage and unity
of the family. Thus, our Constitution devotes an entire Article on the Family,
recognizing it as the foundation of the nation. It decrees marriage as legally
inviolable, thereby protecting it from dissolution at the whim of the parties.
Both the family and marriage are to be protected by the state.
The Family Code echoes this constitutional edict on marriage and the
family and emphasizes their permanence, inviolability and solidarity.
(2) The root cause of the psychological incapacity must be (a)
medically or clinically identified, (b) alleged in the complaint, (c)
sufficiently proven by experts and (d) clearly explained in the decision. Article
36 of the Family Code requires that the incapacity must be psychological - not
physical, although its manifestations and/or symptoms may be physical. The
evidence must convince the court that the parties, or one of them, was mentally or
psychically ill to such an extent that the person could not have known the
obligations he was assuming, or knowing them, could not have given valid
assumption thereof. Although no example of such incapacity need be given here
so as not to limit the application of the provision under the principle of ejusdem
generis, nevertheless such root cause must be identified as a psychological illness
and its incapacitating nature fully explained. Expert evidence may be given by
qualified psychiatrists and clinical psychologists.
(3) The incapacity must be proven to be existing at the time of the
celebration of the marriage. The evidence must show that the illness was
existing when the parties exchanged their I do's. The manifestation of the illness
need not be perceivable at such time, but the illness itself must have attached at
such moment, or prior thereto.
(4) Such incapacity must also be shown to be medically or clinically
permanent or incurable. Such incurability may be absolute or even relative only in
regard to the other spouse, not necessarily absolutely against everyone of the
same sex. Furthermore, such incapacity must be relevant to the assumption of
marriage obligations, not necessarily to those not related to marriage, like the
exercise of a profession or employment in a job. x x x
(5) Such illness must be grave enough to bring about the disability of the
party to assume the essential obligations of marriage. Thus, mild
characteriological peculiarities, mood changes, occasional emotional outbursts
cannot be accepted as root causes. The illness must be shown as downright
incapacity or inability, not a refusal, neglect or difficulty, much less ill will. In
other words, there is a natal or supervening disabling factor in the person, an
adverse integral element in the personality structure that effectively incapacitates
the person from really accepting and thereby complying with the obligations
essential to marriage.
(6) The essential marital obligations must be those embraced by Articles
68 up to 71 of the Family Code as regards the husband and wife as well as
Articles 220, 221 and 225 of the same Code in regard to parents and their
children. Such non-complied marital obligation(s) must also be stated in the
petition, proven by evidence and included in the text of the decision.
(7) Interpretations given by the National Appellate Matrimonial Tribunal
of the Catholic Church in the Philippines, while not controlling or decisive,
should be given great respect by our courts
(8) The trial court must order the prosecuting attorney or fiscal and the
Solicitor General to appear as counsel for the state. No decision shall be handed
down unless the Solicitor General issues a certification, which will be quoted in
the decision, briefly stating therein his reasons for his agreement or opposition, as
the case may be, to the petition. The Solicitor General, along with the prosecuting
attorney, shall submit to the court such certification within fifteen (15) days from
the date the case is deemed submitted for resolution of the court. The Solicitor
General shall discharge the equivalent function of the defensor
vinculi contemplated under Canon 1095.

These Guidelines incorporate the basic requirements we established


in Santos. To reiterate, psychological incapacity must be characterized by: (a)
gravity; (b) juridical antecedence; and (c) incurability.[31] These requisites must be
strictly complied with, as the grant of a petition for nullity of marriage based on
psychological incapacity must be confined only to the most serious cases of
personality disorders clearly demonstrative of an utter insensitivity or inability to
give meaning and significance to the marriage. Furthermore, since the Family
Code does not define psychological incapacity, fleshing out its terms is left to us
to do so on a case-to-case basis through jurisprudence. [32] We emphasized this
approach in the recent case of Ting v. Velez-Ting[33] when we explained:

It was for this reason that we found it necessary to emphasize in Ngo


Te that each case involving the application of Article 36 must be treated distinctly
and judged not on the basis of a priori assumptions, predilections or
generalizations but according to its own attendant facts. Courts should interpret
the provision on a case-to-case basis, guided by experience, the findings of
experts and researchers in psychological disciplines, and by decisions of church
tribunals.

In the present case and using the above standards and approach, we find the
totality of the petitioners evidence insufficient to prove that the respondent is
psychologically unfit to discharge the duties expected of him as a husband.

a. Petitioners testimony did not prove the root cause, gravity and
incurability of respondents condition

The petitioners evidence merely showed that the respondent: (a)


reneged on his promise to cohabit with her; (b) visited her occasionally from 1993
to 1997; (c) forgot her birthday in 1992, and did not send her greeting cards during
special occasions; (d) represented himself as single in his visa application; (e)
blamed her for the death of his mother; and (f) told her he was working in Davao
when in fact he was cohabiting with another woman in 1997.

These acts, in our view, do not rise to the level of the psychological
incapacity that the law requires, and should be distinguished from
the difficulty, if not outright refusal or neglect in the performance of some
marital obligations that characterize some marriages. In Bier v. Bier,[34] we ruled
that it was not enough that respondent, alleged to be psychologically incapacitated,
had difficulty in complying with his marital obligations, or was unwilling to
perform these obligations. Proof of a natal or supervening disabling factor an
adverse integral element in the respondent's personality structure that effectively
incapacitated him from complying with his essential marital obligations had to be
shown and was not shown in this cited case.

In the present case, the respondents stubborn refusal to cohabit with the
petitioner was doubtlessly irresponsible, but it was never proven to be rooted in
some psychological illness. As the petitioners testimony
reveals, respondent merely refused to cohabit with her for fear of jeopardizing his
application for a scholarship, and later due to his fear of antagonizing his family.
The respondents failure to greet the petitioner on her birthday and to send her
cards during special occasions, as well as his acts of blaming petitioner for his
mothers death and of representing himself as single in his visa application, could
only at best amount to forgetfulness, insensitivity or emotional immaturity, not
necessarily psychological incapacity. Likewise, the respondents act of living with
another woman four years into the marriage cannot automatically be equated with
a psychological disorder, especially when no specific evidence was shown that
promiscuity was a trait already existing at the inception of marriage. In fact,
petitioner herself admitted that respondent was caring and faithful when they were
going steady and for a time after their marriage; their problems only came in later.
To be sure, the respondent was far from perfect and had some character
flaws. The presence of these imperfections, however, does not necessarily warrant
a conclusion that he had a psychological malady at the time of the marriage that
rendered him incapable of fulfilling his duties and obligations. To use the words
of Navales v. Navales:[35]

Article 36 contemplates downright incapacity or inability to take cognizance of and


to assume basic marital obligations. Mere difficulty, refusal or neglect in the
performance of marital obligations or ill will on the part of the spouse is different from
incapacity rooted on some debilitating psychological condition or illness. Indeed,
irreconcilable differences, sexual infidelity or perversion, emotional immaturity and
irresponsibility, and the like, do not by themselves warrant a finding of psychological
incapacity under Article 36, as the same may only be due to a person's refusal or
unwillingness to assume the essential obligations of marriage and not due to some
psychological illness that is contemplated by said rule.

b. Dr. Tayags psychological report and court testimony

We cannot help but note that Dr. Tayags conclusions about the respondents
psychological incapacity were based on the information fed to her by only one side
the petitioner whose bias in favor of her cause cannot be doubted. While this
circumstance alone does not disqualify the psychologist for reasons of bias, her
report, testimony and conclusions deserve the application of a more rigid and
stringent set of standards in the manner we discussed above. [36] For, effectively, Dr.
Tayag only diagnosed the respondent from the prism of a third party account; she
did not actually hear, see and evaluate the respondent and how he would have
reacted and responded to the doctors probes.

Dr. Tayag, in her report, merely summarized the petitioners narrations, and
on this basis characterized the respondent to be a self-centered, egocentric, and
unremorseful person who believes that the world revolves around him; and who
used love as adeceptive tactic for exploiting the confidence [petitioner]
extended towards him. Dr. Tayag then incorporated her own idea of love; made
a generalization that respondent was a person who lacked commitment,
faithfulness, and remorse, and who engaged in promiscuous acts that made the
petitioner look like a fool; and finally concluded that the respondents character
traits reveal him to suffer Narcissistic Personality Disorder with traces of
Antisocial Personality Disorder declared to be grave and incurable.

We find these observations and conclusions insufficiently in-depth and


comprehensive to warrant the conclusion that a psychological incapacity existed
that prevented the respondent from complying with the essential obligations of
marriage. It failed to identify the root cause of the respondent's narcissistic
personality disorder and to prove that it existed at the inception of the marriage.
Neither did it explain the incapacitating nature of the alleged disorder, nor show
that the respondent was really incapable of fulfilling his duties due to some
incapacity of a psychological, not physical, nature. Thus, we cannot avoid but
conclude that Dr. Tayags conclusion in her Report i.e., that the respondent
suffered Narcissistic Personality Disorder with traces of Antisocial Personality
Disorder declared to be grave and incurable is an unfounded statement, not a
necessary inference from her previous characterization and portrayal of the
respondent. While the various tests administered on the petitioner could have been
used as a fair gauge to assess her own psychological condition, this same statement
cannot be made with respect to the respondents condition. To make conclusions
and generalizations on the respondents psychological condition based on the
information fed by only one side is, to our mind, not different from admitting
hearsay evidence as proof of the truthfulness of the content of such evidence.

Petitioner nonetheless contends that Dr. Tayags subsequent testimony in


court cured whatever deficiencies attended her psychological report.

We do not share this view.


A careful reading of Dr. Tayags testimony reveals that she failed to establish
the fact that at the time the parties were married, respondent was already suffering
from a psychological defect that deprived him of the ability to assume the essential
duties and responsibilities of marriage. Neither did she adequately explain how she
came to the conclusion that respondents condition was grave and incurable. To
directly quote from the records:

ATTY. RICHARD TABAGO:

Q: I would like to call your attention to the Report already marked as


Exh. E-7, there is a statement to the effect that his character traits
begin to suffer narcissistic personality disorder with traces of
antisocial personality disorder. What do you mean? Can you please
explain in laymans word, Madam Witness?

DR. NEDY LORENZO TAYAG:

A: Actually, in a laymans term, narcissistic personality disorder


cannot accept that there is something wrong with his own
behavioral manifestation. [sic] They feel that they can rule the
world; they are eccentric; they are exemplary, demanding financial
and emotional support, and this is clearly manifested by the fact
that respondent abused and used petitioners love. Along the line, a
narcissistic person cannot give empathy; cannot give love simply
because they love themselves more than anybody else; and thirdly,
narcissistic person cannot support his own personal need and
gratification without the help of others and this is where the
petitioner set in.

Q: Can you please describe the personal [sic] disorder?

A: Clinically, considering that label, the respondent behavioral


manifestation under personality disorder [sic] this is already
considered grave, serious, and treatment will be impossible [sic].
As I say this, a kind of developmental disorder wherein it all
started during the early formative years and brought about by one
familiar relationship the way he was reared and cared by the
family. Environmental exposure is also part and parcel of the child
disorder. [sic]

Q: You mean to say, from the formative [years] up to the present?


A: Actually, the respondent behavioral manner was [present] long
before he entered marriage. [Un]fortunately, on the part of the
petitioner, she never realized that such behavioral manifestation of
the respondent connotes pathology. [sic]

xxxx

Q: So in the representation of the petitioner that the respondent is now


lying [sic] with somebody else, how will you describe the
character of this respondent who is living with somebody else?

A: This is where the antisocial personality trait of the respondent [sic]


because an antisocial person is one who indulge in philandering
activities, who do not have any feeling of guilt at the expense of
another person, and this [is] again a buy-product of deep seated
psychological incapacity.

Q: And this psychological incapacity based on this particular deep


seated [sic], how would you describe the psychological incapacity?
[sic]

A: As I said there is a deep seated psychological dilemma, so I would


say incurable in nature and at this time and again [sic] the
psychological pathology of the respondent. One plays a major
factor of not being able to give meaning to a relationship in terms
of sincerity and endurance.

Q: And if this psychological disorder exists before the marriage of the


respondent and the petitioner, Madam Witness?

A: Clinically, any disorder are usually rooted from the early formative
years and so if it takes enough that such psychological incapacity
of respondent already existed long before he entered marriage,
because if you analyze how he was reared by her parents
particularly by the mother, there is already an unhealthy symbiosis
developed between the two, and this creates a major emotional
havoc when he reached adult age.

Q: How about the gravity?

A: This is already grave simply because from the very start


respondent never had an inkling that his behavioral manifestation
connotes pathology and second ground [sic], respondent will never
admit again that such behavior of his connotes again pathology
simply because the disorder of the respondent is not detrimental to
himself but, more often than not, it is detrimental to other party
involved.

xxxx

PROSECUTOR MELVIN TIONGSON:

Q: You were not able to personally examine the respondent here?

DR. NEDY TAYAG:

A: Efforts were made by the psychologist but unfortunately, the


respondent never appeared at my clinic.

Q: On the basis of those examinations conducted with the petitioning


wife to annul their marriage with her husband in general, what can
you say about the respondent?

A: That from the very start respondent has no emotional intent to give
meaning to their relationship. If you analyze their marital
relationship they never lived under one room. From the very start
of the [marriage], the respondent to have petitioner to engage in
secret marriage until that time their family knew of their marriage
[sic]. Respondent completely refused, completely relinquished his
marital obligation to the petitioner.

xxxx

COURT:

Q: Because you have interviewed or you have questioned the


petitioner, can you really enumerate the specific traits of the
respondent?

DR. NEDY TAYAG:

A: One is the happy-go-lucky attitude of the respondent and the


dependent attitude of the respondent.

Q: Even if he is already eligible for employment?

A: He remains to be at the mercy of his mother. He is a happy-go-


lucky simply because he never had a set of responsibility. I think
that he finished his education but he never had a stable job because
he completely relied on the support of his mother.
Q: You give a more thorough interview so I am asking you something
specific?

A: The happy-go-lucky attitude; the overly dependent attitude on the


part of the mother merely because respondent happened to be the
only son. I said that there is a unhealthy symbiosis relationship
[sic] developed between the son and the mother simply because the
mother always pampered completely, pampered to the point that
respondent failed to develop his own sense of assertion or
responsibility particularly during that stage and there is also
presence of the simple lying act particularly his responsibility in
terms of handling emotional imbalance and it is clearly manifested
by the fact that respondent refused to build a home together with
the petitioner when in fact they are legally married. Thirdly,
respondent never felt or completely ignored the feelings of the
petitioner; he never felt guilty hurting the petitioner because on the
part of the petitioner, knowing that respondent indulge with
another woman it is very, very traumatic on her part yet respondent
never had the guts to feel guilty or to atone said act he committed
in their relationship, and clinically this falls under antisocial
personality. [37]

In terms of incurability, Dr. Tayags answer was very vague and inconclusive, thus:
xxxx

ATTY. RICHARD TABAGO

Q: Can this personally be cured, madam witness?

DR. NEDY TAYAG

A: Clinically, if persons suffering from personality disorder curable,


up to this very moment, no scientific could be upheld to alleviate
their kind of personality disorder; Secondly, again respondent or
other person suffering from any kind of disorder particularly
narcissistic personality will never admit that they are suffering
from this kind of disorder, and then again curability will always
be a question. [sic][38]

This testimony shows that while Dr. Tayag initially described the general
characteristics of a person suffering from a narcissistic personality disorder, she did
not really show how and to what extent the respondent exhibited these traits. She
mentioned the buzz words that jurisprudence requires for the nullity of a marriage
namely, gravity, incurability, existence at the time of the marriage, psychological
incapacity relating to marriage and in her own limited way, related these to the
medical condition she generally described. The testimony, together with her
report, however, suffers from very basic flaws.

First, what she medically described was not related or linked to the
respondents exact condition except in a very general way. In short, her testimony
and report were rich in generalities but disastrously short on particulars, most
notably on how the respondent can be said to be suffering from narcissistic
personality disorder; why and to what extent the disorder is grave and incurable;
how and why it was already present at the time of the marriage; and the effects of
the disorder on the respondents awareness of and his capability to undertake the
duties and responsibilities of marriage. All these are critical to the success of the
petitioners case.

Second, her testimony was short on factual basis for her diagnosis because it
was wholly based on what the petitioner related to her. As the doctor admitted to
the prosecutor, she did not at all examine the respondent, only the
petitioner. Neither the law nor jurisprudence requires, of course, that the person
sought to be declared psychologically incapacitated should be personally examined
by a physician or psychologist as a condition sine qua non to arrive at such
declaration.[39] If a psychological disorder can be proven by independent means, no
reason exists why such independent proof cannot be admitted and given credit.
[40]
No such independent evidence, however, appears on record to have been
gathered in this case, particularly about the respondents early life and associations,
and about events on or about the time of the marriage and immediately
thereafter. Thus, the testimony and report appear to us to be no more than a
diagnosis that revolves around the one-sided and meager facts that the petitioner
related, and were all slanted to support the conclusion that a ground exists to justify
the nullification of the marriage. We say this because only the baser qualities of the
respondents life were examined and given focus; none of these qualities were
weighed and balanced with the better qualities, such as his focus on having a job,
his determination to improve himself through studies, his care and attention in the
first six months of the marriage, among others. The evidence fails to mention also
what character and qualities the petitioner brought into her marriage, for example,
why the respondents family opposed the marriage and what events led the
respondent to blame the petitioner for the death of his mother, if this allegation is at
all correct. To be sure, these are important because not a few marriages have
failed, not because of psychological incapacity of either or both of the spouses, but
because of basic incompatibilities and marital developments that do not amount to
psychological incapacity. The continued separation of the spouses likewise never
appeared to have been factored in. Not a few married couples have likewise
permanently separated simply because they have fallen out of love, or have
outgrown the attraction that drew them together in their younger years.

Thus, on the whole, we do not blame the petitioner for the move to secure a
remand of this case to the trial courts for the introduction of additional evidence;
the petitioners evidence in its present state is woefully insufficient to support the
conclusion that the petitioners marriage to the respondent should be nullified on
the ground of the respondents psychological incapacity.

The Court commiserates with the petitioners marital predicament. The


respondent may indeed be unwilling to discharge his marital obligations,
particularly the obligation to live with ones spouse. Nonetheless, we cannot
presume psychological defect from the mere fact that respondent refuses to comply
with his marital duties. As we ruled in Molina, it is not enough to prove that a
spouse failed to meet his responsibility and duty as a married person; it is
essential that he must be shown to be incapable of doing so due to some
psychological illness. The psychological illness that must afflict a party at the
inception of the marriage should be a malady so grave and permanent as to
deprive the party of his or her awareness of the duties and responsibilities of
the matrimonial bond he or she was then about to assume.[41]

WHEREFORE, in view of these considerations, we DENY the petition


and AFFIRM the decision and resolution of the Court of Appeals dated June 25,
2004 and January 18, 2005, respectively, in CA-G.R. CV No. 75095.

SO ORDERED.

THIRD DIVISION

[G.R. No. 146845. July 2, 2002]

SPOUSES MICHAELANGELO and GRACE MESINA, petitioners,


vs. HUMBERTO D. MEER, respondent.

DECISION
PUNO, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court,
[1]

assailing two Resolutions of the Court of Appeals in CA-GR SP No. 52942 dated
October 10, 2000 and January 26, 2001, respectively. The first Resolution denied [2]

petitioners Petition for Relief from Judgment while the second Resolution denied [3]

reconsideration thereof. The antecedent facts are as follows:

Respondent Humberto Meer is a registered owner of a parcel of land located at Lot


15, Block 5, Pandacan, Manila evidenced by TCT No. 158886. Sometime in June 1993,
he applied for a loan to construct a house thereon. However, he discovered that his
certificate of title has been cancelled and a new one, TCT No. 166074, was issued in
the name of spouses Sergio and Lerma Bunquin. The latter acquired said property by
virtue of a deed of sale dated June 3, 1985 purportedly executed by respondent in their
favor.
[4]

On January 12, 1994, respondent sought the cancellation of TCT No. 166074 with
the Metropolitan Trial Court of Manila, Branch 10. On the same day, a notice of lis
pendens was annotated at the back of TCT No. 166074. [5]

On June 15, 1994, while the case was pending, TCT No. 166074 was cancelled and
replaced by TCT No. 216518 issued in the name of the petitioners, spouses
Michaelangelo and Grace Mesina. It appears that the subject property has been
conveyed to the petitioners on September 28, 1993, even prior to the annotation of lis
pendens. The Absolute Deed of Sale evidencing the conveyance was notarized on the
same day, including the payment of taxes appurtenant thereto. The transfer of the title
from Lerma Bunquin to petitioners was effected only on June 15, 1994 because of some
requirements imposed by the National Housing Authority. [6]

Due to the foregoing developments, Meer impleaded petitioners as additional party


defendants. [7]

Defendant-spouses Bunquin never appeared during the hearings, leading the court
to declare them in default. Petitioners, however, participated actively in defense of their
position. [8]

In its Decision dated February 16, 1998, the trial court ruled that the alleged sale
between Meer and Banquin was fraudulent. However, petitioners were adjudged buyers
in good faith and thus were entitled to the possession of the subject property. Pertinent
portion of the decision reads:

It bears notice that defendant-spouses Mesina not only relied on what


appeared in Lerma Bunquins title but beyond the latters title and even made
verification with the NHA and sought legal advice prior to the subject propertys
purchase. Their actuations incline the court to hold and consider that
defendant-spouses Mesina acted in good faith when they acquired subject
property.

As a basic rule, every person dealing with registered land may safely rely on
the correctness of the certificate of title and issued therefore and the law will
no longer oblige to go beyond the certificate to determine the condition of the
property (Director of Lands vs. Abache, 73 Phil. 606). Also, persons dealing
with the property covered by the Torrens certificate of title are not required to
go beyond what appears on the face of the title (Pino vs. CA, 198 SCRA 434).

Measured by the above criteria, defendant-spouses Mesina were indeed


purchasers in good faith and purchasers for value of subject property, and
consequently, they have the right to the possession thereof which is presently
titled in their names. xxx

WHEREFORE, judgment is hereby rendered dismissing the complaint against


defendant-spouses Michael and Grace Mesina and the Register of Deeds of
Manila. The counter-claim of defendant spouses Mesina against the plaintiff is
hereby denied for lack of merit.

Defendant spouses Sergio and Lerma Bunquin are ordered:

1. To pay plaintiff the value of the subject property based on the prevailing
price on the date of the decision;

2. To pay the plaintiff exemplary damages in the amount of P20, 0000.00;

3. To pay attorneys fees in the amount of P30, 000.00.

SO ORDERED. [9]

Respondent Meer filed a Motion for Reconsideration against the said Decision but
the trial court denied the same. Respondent thereafter filed an Appeal with the Regional
Trial Court.

Reversing the ruling of the MeTC, the Regional Trial Court ruled that petitioners
[10]

were not purchasers in good faith, reasoning that it is the registration of the Deed of
Sale, and not the date of its consummation that will confer title to the property. Since the
Deed of Sale was registered subsequent to the annotation of the lis pendens,
petitioners were bound by the outcome of the case, viz:

Having thus correctly ruled that the Deed of Sale between plaintiff Humberto
Meer and Sps. Bunquin was a forgery and that the signature of Humberto
Meer was forged and having recognized that a priorly registered lis pendens is
superior to a belatedly registered Deed of Sale because the efficacy of the
belatedly registered Deed of Sale depends upon the outcome of the case for
which the lis pendens was annotated and having come to the conclusion that
the case filed by Humberto Meer against the Bunquin is legally correct and
justified, this court therefore has no other alternative but to rule in favor of the
appellant and order the cancellation not only of the title issued in favor of the
Bunquin but also of the title issued in favor of the Mesinas. The Court cannot
consider the latter as buyers in good faith.

WHEREFORE and considering the foregoing, the appealed decision is


therefore reversed and a new one is issued in favor of the plaintiff and against
the defendant annulling the Deed of Sale executed by Humberto Meer in favor
of defendants Sergio and Lerma Bunquin and ordering the Register of Deeds
of Manila to cancel TCT No. 166704 issued in the name of the defendants
Bunquin and TCT No. 216518 in the name of defendant Mesinas and restore
TCT No. 158886 in the name of plaintiff Humberto Meer; ordering the
defendant jointly and severally to pay plaintiff the sum of P 50,000.00 as
attorneys fees, plus the costs of suit. The counterclaim of defendant Mesina is
dismissed for lack of merit.

SO ORDERED. [11]

Petitioners appealed to the Court of Appeals, which affirmed the ruling of the
Regional Trial Court in a Resolution dated May 10, 2000. [12]

On July 17, 2000 and after reglementary period for appeal has lapsed, petitioners
filed a Petition for Relief from Judgment and prayed that the Court of Appeals set aside
its Resolution dated May 10, 2000 for the following reasons: (a) extrinsic fraud was
committed which prevented petitioners from presenting his case to the court and/or was
used to procure the judgment without fair submission of the controversy; (b) mistake
and excusable negligence has prevented the petitioner from taking an appeal within the
prescribed period; and (c) petitioner has good and substantial defense in his action. [13]

On the first ground, petitioners argued that there has been collusion between the
respondent and the Bunquins during the trial of the case at the Metropolitan Trial Court.
Had the Bunquins testified in court as to the validity of the Deed of Sale as well as the
authenticity of the respondents signature, petitioners argued that the result would have
been in their favor. Anent the second ground, petitioners averred that their failure to file
the requisite appeal on time was largely due to the delay of counsel of record to
produce the requested documents of the case. Finally, petitioners claim that they have
good and substantial defense. [14]

As aforesaid, the Court of Appeals denied the petition reasoning that:

As aptly pointed out by the respondent, the first ground raised by the
petitioner spouses should have been filed before the court of origin, the
Metropolitan Court of Manila, pursuant to Section 1, Rule 38 of the 1997
Revised Rules of Civil Procedure as amended. As to the second ground, the
petitioner spouses who were the prevailing party before the Metropolitan Trial
Court of Manila, did not mention the alleged extrinsic fraud when the case was
on appeal before the Regional Trial Court. Petitioners cannot now challenge
the decision of this Court for the fraud allegedly perpetrated in the court of
origin.

Besides, it is extremely doubtful that the remedy of a petition for relief under
Rule 38 may be availed of from a judgment of the Court of Appeals in the
exercise of its appellate jurisdiction.

WHEREFORE, premises considered, the petitioners Petition for Relief from


Judgment is DENIED for lack of merit.

SO ORDERED. [15]

Petitioners Motion for Reconsideration was denied, hence, this Petition for Review
raising as issue the availability of Petition for Relief under Rule 38, as a remedy against
the judgment of the Court of Appeals promulgated in the exercise of its appellate
jurisdiction. If the remedy is thus available, petitioners pray that this Court rule whether
or not the grounds relied by them are sufficient to give due course to the petition. [16]

After careful examination of the case, we resolve to deny the petition.

Relief from judgment is an equitable remedy and is allowed only under exceptional
circumstances and only if fraud, accident, mistake, or excusable negligence is present.
Where the defendant has other available or adequate remedy such as a motion for new
trial or appeal from the adverse decision, he cannot avail himself of this remedy. [17]

Under the 1997 Revised Rules of Civil Procedure, the petition for relief must be filed
within sixty (60) days after the petitioner learns of the judgment, final order or other
proceeding to be set aside and must be accompanied with affidavits showing the fraud,
accident, mistake, or excusable negligence relied upon, and the facts constituting the
petitioners good and substantial cause of action or defense, as the case may be. Most [18]

importantly, it should be filed with the same court which rendered the decision, viz:

Section 1. Petition for relief from judgment, order, or other proceedings.-


When a judgment or final order is entered, or any other proceeding is
thereafter taken against a party in any court through fraud, accident, mistake,
or excusable negligence, he may file a petition in such court and in the same
case praying that the judgment, order or proceeding be set aside. [19]
As revised, Rule 38 radically departs from the previous rule as it now allows the
Metropolitan or Municipal Trial Court which decided the case or issued the order to hear
the petition for relief. Under the old rule, petition for relief from the judgment or final
order of municipal trial courts should be filed with the regional trial court, viz:

Section 1. Petition to Court of First Instance for Relief from Judgment of


inferior court.- When a judgment is rendered by an inferior court on a case,
and a party thereto by fraud, accident, mistake, or excusable negligence, has
been unjustly deprived of a hearing therein, or has been prevented from
taking an appeal, he may file a petition in the Court of First Instance of the
province in which the original judgment was rendered, praying that such
judgment be set aside and the case tried upon its merits.

Section 2. Petition to Court of First Instance for relief from the judgment
or other proceeding thereof.- When a judgment order is entered, or any
other proceeding is taken against a party in a Court of First Instance through
fraud, accident, mistake, or excusable negligence, he may file a petition in
such court and in the same cause praying that the judgment, order or
proceeding be set aside.

Petitioners argue that apart from this change, the present Rule extends the remedy
of relief to include judgments or orders of the Court of Appeals since the Rule uses the
phrase any court. We disagree.
[20]

The procedural change in Rule 38 is in line with Rule 5, prescribing uniform


procedure for municipal and regional trial courts and designation of [21]

municipal/metropolitan trial courts as courts of record. While Rule 38 uses the phrase
[22]

any court, it refers only to municipal/metropolitan and regional trial courts.


[23]

The procedure in the Court of Appeals and the Supreme Court are governed by
separate provisions of the Rules of Court and may, from time to time, be supplemented
[24]

by additional rules promulgated by the Supreme Court through resolutions or


circulars. As it stands, neither the Rules of Court nor the Revised Internal Rules of the
Court of Appeals allow the remedy of petition for relief in the Court of Appeals.
[25]

Petitioners beg this Court, on equitable grounds, not to strictly construe the Rules,
arguing that their only earthly possession is at stake. Indeed, in certain occasions, this
[26]

Court has, in the interest of substantial justice and in exercise of its equity jurisdiction,
construed the Rules of Court with liberality.

Nevertheless, the circumstances obtaining in the present case do not convince this
Court to take exception.
As correctly pointed out by the Court of Appeals, the petitioners allegation of
extrinsic fraud should have been brought at issue in the Metropolitan Trial Court. If they
truly believe that the default of the spouses Mesina prejudiced their rights, they should
have questioned this from the beginning. Yet, they chose to participate in the
proceedings and actively presented their defense. And their efforts were rewarded as
the Metropolitan Trial Court ruled in their favor.

When the respondent appealed the case to the Regional Trial Court, they never
raised this issue. Even after the Regional Trial Court reversed the finding of the MeTC,
and the Court of Appeals sustained this reversal, petitioners made no effort to bring this
issue for consideration. This Court will not allow petitioners, in guise of equity, to benefit
from their own negligence.

The same is true with regard to the defenses forwarded by the petitioners in support
of their petition. These contentions should have been raised in the MeTC, as they have
been available to them since the beginning.

Finally, it is a settled rule that relief will not be granted to a party who seeks to be
relieved from the effects of the judgment when the loss of the remedy at law was due to
his own negligence, or a mistaken mode of procedure; otherwise, the petition for relief
will be tantamount to reviving the right of appeal which has already been lost either
because of inexcusable negligence or due to mistaken mode of procedure by counsel.
Petitioners, however, place the blame on their counsel and invoke honest mistake of
[27]

law. They contend that they lack legal education, hence, were not aware of the required
period for filing an appeal.
[28]

In exceptional cases, when the mistake of counsel is so palpable that it amounts to


gross negligence, this Court affords a party a second opportunity to vindicate his right.
But this opportunity is unavailing in the instant case, especially since petitioners have
squandered the various opportunities available to them at the different stages of this
case. Public interest demands an end to every litigation and a belated effort to reopen a
case that has already attained finality will serve no purpose other than to delay the
administration of justice.

IN VIEW WHEREOF, this petition is DENIED for lack of merit and the assailed
Resolutions of the Court of Appeals are AFFIRMED.

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 199283 June 9, 2014

JULIET VITUG MADARANG and ROMEO BARTOLOME, represented by his attorneys-in-fact


and acting in their personal capacities, RODOLFO and RUBY BARTOLOME, Petitioners,
vs.
SPOUSES JESUS D. MORALES and CAROLINA N. MORALES, Respondents.

DECISION

LEONEN, J.:

A petition for relief from judgment is an equitable relief granted only under exceptional
circumstances. To set aside a judgment through a petition for relief, parties must file the petition
1

within 60 days from notice of the judgment and within six (6) months after the judgment or final order
was entered; otherwise, the petition shall be dismissed outright.

If the petition for relief is filed on the ground of excusable negligence of counsel, parties must show
that their counsels negligence could not have been prevented using ordinary diligence and
prudence. The mere allegation that there is excusable negligence simply because counsel was 80
2

years old is a prejudicial slur to senior citizens. It is based on an unwarranted stereotype of people in
their advanced years. It is as empty as the bigotry that supports it.

This is a petition for review on certiorari of the Court of Appeals resolutions dated July 27, 2011 and
3 4

November 10, 2011 in CA-G.R. SP No. 120251. The Court of Appeals dismissed petitioners Juliet
5

Vitug Madarang, Romeo Bartolome, Rodolfo Bartolome, and Ruby Anne Bartolomes petition for
6

certiorari for failure to file a motion for reconsideration of the order denying their petition for relief
7

from judgment.

The facts as established by the pleadings of the parties are as follows:

On January 9, 2001, Spouses Jesus D. Morales and Carolina N. Morales filed with the Regional Trial
Court of Quezon City a complaint for judicial foreclosure of a house and lot located in Bago Bantay,
8

Quezon City.
The Spouses Morales alleged that on March 23, 1993, Spouses Nicanor and Luciana Bartolome
loaned P500,000.00 from them. The Spouses Bartolome agreed to pay within two months with
interest of five percent (5%) per month. To secure their loan, the Spouses Bartolome mortgaged the 9

Bago Bantay property to the Spouses Morales.

The period to pay lapsed without the Spouses Bartolome having paid their loan. After demand, the
Spouses Bartolome only paid part of the loaned amount.

In the meantime, the Spouses Bartolome died. The Spouses Morales, thus, filed a complaint for
judicial foreclosure of the Bago Bantay property against Juliet Vitug Madarang, Romeo Bartolome,
and the Spouses Rodolfo and Ruby Anne Bartolome.

The Spouses Morales sued Madarang as the latter allegedly represented herself as Lita Bartolome
and convinced the Spouses Morales to lend money to the Spouses Bartolome. 10

Romeo and Rodolfo Bartolome were sued in their capacities as legitimate heirs of the Spouses
Bartolome. Ruby Anne Bartolome is Rodolfo Bartolomes wife.

In their answer, defendants assailed the authenticity of the deed of real estate mortgage covering
11

the Bago Bantay property, specifically, the Spouses Bartolomes signatures on the instrument. They
added that the complaint was already barred since it had been dismissed in another branch of the
Regional Trial Court of Quezon City for failure to comply with an order of the trial court.

In its decision dated December 22, 2009, the trial court ordered defendants to pay the Spouses
12

Morales P500,000.00 plus 7% interest per month and costs of suit within 90 days but not more than
120 days from entry of judgment. Should defendants fail to pay, the Bago Bantay property shall be
sold at public auction to satisfy the judgment.

Defendants received a copy of the trial courts decision on January 29, 2010.

On February 8, 2010, defendants filed their motion for reconsideration of the trial courts decision.
They amended their motion for reconsideration and filed a request for a Philippine National Police
handwriting expert to examine the authenticity of the Spouses Bartolomes alleged signatures on the
deed of real estate mortgage.

According to the trial court, the motion for reconsideration and its amendment were pro forma as
defendants failed to specify the findings and conclusions in the decision that were not supported by
the evidence or contrary to law.

As to the request for a handwriting expert, the trial court ruled that the "reasons given therein [were]
not well taken." 13

Thus, in its order dated May 25, 2010, the trial court denied the motion for reconsideration, its
14

amendment, and the request for a handwriting expert.

Defendants received a copy of the May 25, 2010 order on June 24, 2010.

On August 11, 2010, defendants filed a notice of appeal. In its order dated August 13, 2010, the trial
15

court denied due course the notice of appeal for having been filed out of time. According to the trial
court, defendants, through their counsel, Atty. Arturo F. Tugonon, received a copy of the order
denying the motion for reconsideration on June 24, 2010. This is evidenced by the registry return
receipt on file with the court. Consequently, they had 15 days from June 24, 2010, or until July 9,
2010, to appeal the trial courts decision. However, they filed their notice of appeal only on August
11, 2010, which was beyond the 15-day period to appeal.

On September 24, 2010,defendants filed a petition for relief from judgment, blaming their 80-year-
16

old lawyer who failed to file the notice of appeal within the reglementary period. They argued that
Atty. Tugonons failure to appeal within the reglementary period was a mistake and an excusable
negligence due to their former lawyers old age:

15. Undersigned Petitioners counsel is already eighty (80) years of age and the lapses and failure of
their counsel to take appropriate steps immediately for the protection of his client is a mistake and an
excusable negligence due to the latters age and should not be attributable to undersigned
defendants. 17

In its order dated April 27, 2011, the trial court denied the petition for relief from judgment. The trial
18

court held that the petition for relief was filed beyond 60 days from the finality of the trial courts
decision, contrary to Section 3, Rule 38 of the 1997 Rules of Civil Procedure.

On July 13, 2011, Madarang, Romeo, and Rodolfo and Ruby Anne Bartolome filed the petition for
certiorari with the Court of Appeals. In its resolution dated July 27, 2011, the appellate court denied
19 20

outright the petition for certiorari. The Court of Appeals found that petitioners did not file a motion for
reconsideration of the order denying the petition for relief from judgment, a prerequisite for filing a
petition for certiorari.

Petitioners filed a motion for reconsideration that the Court of Appeals denied in its resolution dated
21

November 10, 2011. Petitioners filed the petition for review on certiorari with this court. They argue
22

that they need not file a motion for reconsideration of the order denying their petition for relief from
judgment because the questions they raised in the petition for relief were pure questions of law.
They cite Progressive Development Corporation, Inc. v. Court of Appeals as authority.
23

Petitioners add that the trial court erred in denying their notice of appeal. They personally received a
copy of the decision only on August 11, 2011. They argue that the period to file on appeal must be
counted from August 11, 2011, not on the day their "ailing counsel" received a copy of the decision.
24

A comment was filed on the petition for review on certiorari by respondents Spouses Morales. They
25

argue that the trial court did not err in declaring pro forma petitioners motion for reconsideration of
the trial courts decision.

Respondents contend that the Court of Appeals did not err in denying the petition for certiorari since
petitioners failed to file a motion for reconsideration of the order denying their petition for relief from
judgment.

The issues for our resolution are the following:

I. Whether the failure of petitioners former counsel to file the notice of appeal within the
reglementary period is excusable negligence; and
II. Whether the Court of Appeals erred in dismissing outright petitioners petition for certiorari
for failure to file a motion for reconsideration of the order denying the petition for relief from
judgment.

The petition lacks merit.

A petition for relief from judgment must


be filed within 60 days after petitioner
learns of the judgment, final order, or
proceeding and within six (6) months
from entry of judgment or final order

This court agrees that the petition for relief from judgment was filed out of time. However, the trial
court erred in counting the 60-day period to file a petition for relief from the date of finality of the trial
courts decision. Rule 38, Section 3 of the 1997 Rules of Civil Procedure is clear that the 60-day
period must be counted after petitioner learns of the judgment or final order. The period counted
from the finality of judgment or final order is the six-month period. Section 3, Rule 38 of the 1997
Rules of Civil Procedure states:

Sec. 3. Time for filing petition; contents and verification. A petition provided for in either of the
preceding sections of this Rule must be verified, filed within sixty (60) days after petitioner learns of
the judgment, final order, or other proceeding to be set aside, and not more than six (6) months after
such judgment or final order was entered, or such proceeding was taken; and must be accompanied
with affidavits, showing the fraud, accident, mistake or excusable negligence relied upon and the
facts constituting the petitioners good and substantial cause of action or defense, as the case may
be. (Emphasis supplied)

The double period required under Section 3, Rule 38 is jurisdictional and should be strictly complied
with. A petition for relief from judgment filed beyond the reglementary period is dismissed outright.
26

This is because a petition for relief from judgment is an exception to the public policy of immutability
of final judgments. 27

In Gesulgon v. National Labor Relations Commission, the Labor Arbiter ordered Mariscor
28

Corporation to reinstate Edwin Gesulgon as chief cook on board one of its vessels. Mariscor
Corporation had notice of the decision on March 27, 1987, but it did not appeal the Labor Arbiters
decision. Since decisions of Labor Arbiters become final 10 calendar days from receipt of the
decision, the decision became final on April 6, 1987.

On February 28, 1989, Mariscor Corporation filed a motion to set aside judgment with the National
Labor Relations Commission. The Commission treated the motion as a petition for relief from
judgment and granted the petition for relief from judgment. It remanded the case to the Labor Arbiter
for further proceedings.

This court set aside the order granting the petition for relief from judgment for having been filed
beyond the double period required under Section 3, Rule 38 of the 1997 Rules of Civil Procedure.
This court explained:
A party filing a petition for relief from judgment must strictly comply with two (2) reglementary
periods: (a) the petition must be filed within sixty (60) days from knowledge of the judgment, order or
other proceeding to be set aside; and (b) within a fixed period of six (6) months from entry of such
judgment, order or other proceeding. Strict compliance with these periods is required because
provision for a petition for relief from judgment is a final act of liberality on the part of the State, which
remedy cannot be allowed to erode any further the fundamental principle that a judgment, order or
proceeding must, at some definite time, attain finality in order at last to put an end to litigation. In
Turqueza v. Hernando, this Court stressed once more that:

. . . the doctrine of finality of judgments is grounded on fundamental considerations of public policy


and sound practice that at the risk of occasional error, the judgments of courts must become final at
some definite date fixed by law. The law gives an exception or last chance of a timely petition for
relief from judgment within the reglementary period (within 60 days from knowledge and 6 months
from entry of judgment) under Rule 38, supra, but such grave period must be taken as absolutely
fixed, in extendible, never interruptedand cannot be subjected to any condition or contingency.
Because the period fixed is itself devised to meet a condition or contingency (fraud, accident,
mistake or excusable neglect), the equitable remedy is an act of grace, as it were, designed to give
the aggrieved party another and last chance and failure to avail of such last chance within the grace
period fixed by the statute or Rules of Court is fatal . . . . (Emphasis in the original)
29

In Spouses Reyes v. Court of Appeals and Voluntad, the Regional Trial Court of Bulacan rendered a
30

decision against the Spouses Reyes predecessors-in-interest. The decision became final on
December 8, 1995. The Spouses Reyes had notice of the decision on May 30, 1997 when they
received a Court of Appeals order directing them to comment on the petition for certiorari filed by
respondents heirs of Voluntad. Attached to the Court of Appeals order was a copy of the trial courts
decision.

On June 21, 2000, the Spouses Reyes filed a petition for relief from judgment against the Regional
Trial Court of Bulacans decision. This court affirmed the dismissal of the petition for relief from
judgment for having been filed out of time and said:

It should be noted that the 60-day period from knowledge of the decision, and the 6-month period
from entry of judgment, are both inextendible and uninterruptible. We have also time and again held
that because relief from a final and executory judgment is really more of an exception than a rule
due to its equitable character and nature, strict compliance with these periods, which are definitely
jurisdictional, must always be observed. (Emphasis in the original)
31

In this case, petitioners, through counsel, received a copy of the trial courts decision on January 29,
2010. They filed a motion for reconsideration and an amended motion for reconsideration, which
similarly alleged the following:

The defendants, by the undersigned counsel, to this Honorable Court, respectfully allege:

1. That on January 29, 2010, they received the decision in the above entitled case rendered by this
Honorable Court, dated December 22, 2009;

2. That with due respect to the Honorable Court, the decision is contrary to law & to the defendants[]
evidence presented in court. Hence, this urgent motion.
WHEREFORE, it is most respectfully prayed of this Honorable Court, that the decision sought to be
reversed be reconsidered and another one be rendered in favor of the defendants. 32

Although petitioners filed a motion for reconsideration and amended motion for reconsideration,
these motions were pro forma for not specifying the findings or conclusions in the decision that were
not supported by the evidence or contrary to law. Their motion for reconsideration did not toll the
33

15-day period to appeal. 34

Petitioners cannot argue that the period to appeal should be counted from August 11, 2011, the day
petitioners personally received a copy of the trial courts decision. Notice of judgment on the counsel
of record is notice to the client. Since petitioners counsel received a copy of the decision on
35

January 29, 2010, the period to appeal shall be counted from that date.

Thus, the decision became final 15 days after January 29, 2010, or on February 13, 2010.
Petitioners had six (6) months from February 13, 2010, or until August 12, 2010, to file a petition for
relief from judgment.

Since petitioners filed their petition for relief from judgment on September 24, 2010, the petition for
relief from judgment was filed beyond six (6) months from finality of judgment. The trial court should
have denied the petition for relief from judgment on this ground.

II

Failure of petitioners former counsel to


file the notice of appeal within the
reglementary period is not excusable
negligence

Even if we assume that petitioners filed their petition for relief from judgment within the reglementary
period, petitioners failed to prove that their former counsels failure to file a timely notice of appeal
was due to a mistake or excusable negligence.

Under Section 1, Rule 38 of the 1997 Rules of Civil Procedure, a petition for relief from judgment
may be filed on the ground of fraud, accident, mistake, or excusable negligence:

Section 1. Petition for relief from judgment, order, or other proceedings.

When a judgment or final order is entered, or any other proceeding is thereafter taken against a
party in any court through fraud, accident, mistake, or excusable negligence, he may file a petition in
such court and in the same case praying that the judgment, order or proceeding be set aside.

A petition for relief from judgment is an equitable remedy and is allowed only in exceptional
cases. It is not available if other remedies exist, such as a motion for new trial or appeal.
36 37

To set aside a judgment through a petition for relief, the negligence must be so gross "that ordinary
diligence and prudence could not have guarded against." This is to prevent parties from "reviv[ing]
38

the right to appeal [already] lost through inexcusable negligence." 39


Petitioners argue that their former counsels failure to file a notice of appeal within the reglementary
period was "a mistake and an excusable negligence due to [their former counsels] age." This 40

argument stereotypes and demeans senior citizens. It asks this court to assume that a person with
advanced age is prone to incompetence. This cannot be done.

There is also no showing that the negligence could have been prevented through ordinary diligence
and prudence. As such, petitioners are bound by their counsels negligence. 41

Petitioners had until July 9, 2010 to file a notice of appeal, considering that their former counsel
received a copy of the order denying their motion for reconsideration of the trial courts decision on
June 24, 2010. Since petitioners filed their notice of appeal only on August 11, 2010, the trial court
42 43

correctly denied the notice of appeal for having been filed out of time.

III

The Court of Appeals correctly denied the


petition for certiorari for petitioners
failure to file a motion for reconsideration
of the order denying the petition for relief
from judgment

In its resolution dated July 27, 2011, the Court of Appeals denied petitioners petition for certiorari for
failure to file a motion for reconsideration of the order denying the petition for relief from judgment.
We agree with the appellate court.

Section 1, Rule 65 of the 1997 Rules of Civil Procedure requires that no appeal or any plain, speedy,
and adequate remedy in the ordinary course of law is available to a party before a petition for
certiorari is filed. This section provides:

Section 1. Petition for certiorari.

When any tribunal, board or officer exercising judicial or quasi judicial functions has acted without or
in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary
course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the
facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of
such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.
(Emphasis supplied) In Metro Transit Organization, Inc. v. PIGLAS NFWU-KMU, this court ruled 44

that a motion for reconsideration is the plain, speedy, and adequate remedy in the ordinary course of
law alluded to in Section 1, Rule 65 of the 1997 Rules of Civil Procedure. A motion for
45

reconsideration is required before a petition for certiorari is filed "to grant [the court which rendered
the assailed judgment or order]an opportunity . . . to correct any actual or perceived error attributed
to it by the re-examination of the legal and factual circumstances of the case." 46

In this case, a motion for reconsideration of the order denying the petition for relief from judgment is
the plain, speedy, and adequate remedy in the ordinary course of law. Petitioners failed to avail
themselves of this remedy. Thus, the Court of Appeals correctly dismissed petitioners petition for
certiorari.
Contrary to petitioners claim, the questions they raised in their petition for relief from judgment were
not pure questions of law. They raise the authenticity of the Spouses Bartolomes signatures on the
1wphi1

deed of real estate mortgage and the allegedly excusable negligence of their counsel.

These are questions of fact which put at issue the truth of the facts alleged in the petition for relief
from judgment. Petitioners cannot cite Progressive Development Corporation, Inc. v. Court of
47

Appeals where this court held that "[t]he filing of the motion for reconsideration before availing of
48

the remedy of certiorari is not sine qua non when the issues raised is one purely of law." 49

All told, the Court of Appeals committed no reversible error in denying petitioners petition for
certiorari. The Regional Trial Courts decision dated December 22, 2009 is final and executory.

WHEREFORE, the petition for review on certiorari is DENIED. The Court of Appeals resolutions
dated July 27, 2011 and November 10, 2011 in CA-G.R. SP No. 120251 are AFFIRMED.

SO ORDERED.

FIRST DIVISION

[G.R. No. 119010. September 5, 1997]

PAZ T. BERNARDO, petitioner, vs. COURT OF APPEALS, HON.


OSCAR L. LEVISTE and FLORITA RONQUILLO-
CONCEPCION, respondents.

DECISION
BELLOSILLO, J.:
For an orderly procedure in the disposition of criminal cases the Rules of
Court provides that the prosecution and the defense present their evidence in
the order prescribed in Sec. 3, Rule 119, after which, evaluating the evidence
presented, the trial court renders judgment either of acquittal or
conviction. Under Sec. 15 of the same Rule, after the prosecution has rested
its case, the court may dismiss the case on the ground of insufficiency of
evidence either on its own initiative after giving the prosecution an opportunity
to be heard, or on motion of the accused filed with prior leave of court. If the
court denies the demurrer or motion to dismiss, the accused may adduce
evidence in his defense.

When the accused files such motion to dismiss without express leave of
court, he waives the right to present evidence and submits the case for
judgment on the basis of the evidence for the prosecution.

The new rule on demurrer to evidence was first incorporated in the 1985
Rules on Criminal Procedure which significantly changed the ruling in People
v. Mamacol and Abriol v. Homeres that when a motion to dismiss on
[1] [2]

insufficiency of evidence is denied the accused has a right to present


evidence in his behalf. Earlier the rule was, when after the prosecution has
rested its case, and the accused files a motion to dismiss on insufficiency of
evidence, he waives the right to present evidence and submits the case for
judgment on the basis of the evidence of the prosecution. The rule was
[3]

further modified in 1988 to the effect that only when the accused files a
demurrer or motion to dismiss on insufficiency of evidence without express
leave of court that the accused may be deemed to have waived his right to
present evidence and the case considered submitted for decision on the basis
of the evidence for the prosecution. If the accused has obtained prior leave of
court, in case of denial of his motion to dismiss, he retains his right to present
evidence in his behalf. The court may also motu propriodismiss the case on
insufficiency of evidence, but before doing so, it should give the prosecution
an opportunity to be heard and to oppose the motion. [4]

We are now called upon to apply the new rule on demurrer to evidence.

Paz T. Bernardo was originally charged with four (4) counts of violation of
B.P. Blg. 22 before the Regional Trial Court of Quezon City, docketed as Crim.
Cases Nos. Q-93-46792-95.Subsequently, private complainant, respondent
Florlita Ronquillo-Concepcion, executed an Affidavit of Desistance which led
to the dismissal of Crim. Cases Nos. Q-93-46794 and Q-93-46795, thus
leaving Crim. Cases Nos. Q-93-46792 and Q-93-46793 to be disposed of by
the trial court.

On 20 May 1994, after presenting its last witness, the prosecution rested
its case and formally offered its exhibits. That hearing was set at 8:30 a.m. on
that date for continuation of the reception of the evidence for the prosecution
as reflected in the calendar of the court. After the prosecution had formally
[5]

offered its evidence, the following transpired in open court -

COURT:

Alright, prosecution having rested, defense will now present its evidence. Proceed.

ATTY. MIRAVITE:

Your honor, we respectfully ask for a resetting, for leave of court to file demurrer to
evidence (underscoring supplied).

COURT:

On what ground?

ATTY. MIRAVITE:

On the ground that the prosecution failed to elicit the fact where the checks were
issued and where they were actually dishonored. This is material, your honor, for
purposes of determining jurisdiction.Also, your honor, as we mentioned in our
comments to the evidence presented by the prosecution, there has been no valid
notice of dishonor of the subject checks upon the accused. So, upon those
grounds, we believe that the prosecution has not duly made out a case against the
accused, and we feel those are sufficient for the dismissal of the case as against
the accused.

COURT:

So as to avoid reviewing the records, would you admit that there is no proof where the
checks were issued and where they were dishonored?

PRIVATE PROSECUTOR:

No, we would not admit that, your honor. They were dishonored actually in Manila, but
the check was deposited in the bank of PAR CREDIT ENTERPRISES in Quezon
City, and it was naturally forwarded to the Philippine National Bank where the
same was returned to the bank of PAR CREDIT ENTERPRISES here in Quezon
City.

COURT:

Where does it appear?

PRIVATE PROSECUTOR:

It is at the back of Exhibit A, your honor.

COURT:

Is it mark(ed)?

PRIVATE PROSECUTOR:

Your honor, it states here, deposited to Philippine National Bank, West Avenue,
Quezon City which is at the check marked as exhibit A-4.

COURT:

So, that takes jurisprudence. The elements happened in Quezon City.

PRIVATE PROSECUTOR:

Yes, your honor.

ATTY. MIRAVITE:

The notation read by counsel, your honor, was not marked in


evidence, what was marked is B-4 appearing at the dorsal portion of the
check which pertains only for (sic) the dishonor, the initial and the date. Nothing
was presented as to the fact. If that is so, that was indeed deposited at West
Avenue, Quezon City.

PRIVATE PROSECUTOR:

There is, your honor. The stamp received by the Cashier Division, PNB, Quezon City,
West Avenue.

COURT:

Anyway, was there an offer of that document?

PRIVATE PROSECUTOR:
Yes, there was an offer of exhibit A-4, your honor. The record would
show that we manifested that exhibit B-4 are stamps of the bank reading DAIF
over which there are other stamps.

COURT:

You are saying that the word DAIF was marked at the back and offered as proof of the
dishonor and the place was evidence?

PRIVATE PROSECUTOR:

Yes, your honor, immediately on top of the word, DAIF.

COURT:

Is there any evidence testimonial that these were encashed and dishonored?

PRIVATE PROSECUTOR:

Yes, your honor, the testimony of this witness is very clear that
the checks were deposited and the same was (sic) dishonored by the bank.

COURT:

Do you admit that there was no notice of dishonor?

PRIVATE PROSECUTOR:

We dont admit that, your honor. In fact, there are admissions in handwriting regarding
the claim.

COURT:

Is there any evidence presented that these checks were not paid up to now?

PRIVATE PROSECUTOR:

Yes, your honor. First, is the oral testimony of the witness, that
it has not been paid; second, exhibits 1 and 1-1, which is the Complaint Affidavit of
the witness.

COURT:

Alright, in view of the objections, and in view of the


manifestations of the private prosecutor, the defense grounds for demurrer,
the same not being well taken is hereby DENIED (underscoring supplied). You will
now present your evidence.
ATTY. MIRAVITE:

If your honor please, may we just ask for a reconsideration (underscoring supplied)?

COURT:

If you will waive your right to present your evidence, the Court will give
you a period to file a demurrer to evidence. And, if
you dont present your evidence now, you will be considered to have waived
your right to present evidence (underscoring supplied).

xxxx

ATTY. MIRAVITE:

If your honor please, we would like to reiterate our motion to file a demurrer to
evidence (underscoring supplied)?

COURT:

But you have already orally made that demurrer which has been denied (underscoring
supplied).

ATTY. MIRAVITE:

In which case your honor, if there is no leave of court, we will be filing our demurrer to
evidence, your honor (underscoring supplied).

COURT:

That is tantamount to postpone (sic) this case. The Court considers that motion
dilatory (underscoring supplied).

ATTY. MIRAVITE:

Your honor, I think within the option of the parties to take


remedies and at this point, we did prepare for our purposes, that instead of
presenting the accused
or presenting our witnesses, we would justprefer to move for a demurrer to eviden
ce (underscoring supplied).

COURT:

You may include that in your motion for reconsideration. Alright, the prosecution
having rested, and the defense having been considered to have waived
his right to present his evidence, this case
isdeemed submitted for decision. Set the promulgation of this case to June 6,
1994 at 8:30 oclock in the morning (underscoring supplied). [6]

Petitioner assailed the Order of respondent judge hereinbefore


immediately quoted before the Court of Appeals by way of certiorari,
prohibition and mandamus. Petitioner argued that the trial court committed
grave abuse of discretion in considering her to have waived her right to
present evidence after the denial of her motion for leave to file demurrer to
evidence.

On 30 September 1994 the Court of Appeals rendered a decision


modifying in effect that portion of the questioned Order of the RTC-Br. 97,
Quezon City, of 20 May 1994 which states that "the defense having been
considered to have waived her right to present her evidence, this case is
deemed submitted for decision by directing the trial court to set Crim. Cases
[7]

Nos. Q-93-46792 and Q-93-46793 "for trial for reception of evidence for the
[8]

petitioner." Petitioner moved for partial reconsideration of the decision of the


[9]

Court of Appeals but her motion was denied on 7 February 1995.

Petitioner Bernardo filed the instant petition for review on certiorari of the
decision of the Court of Appeals on the ground that when it refused to allow
petitioner to demur to the evidence the appellate court decided the matter not
in accordance with law and applicable decisions of this Court. Petitioner [10]

submits that when her counsel moved for leave to file a demurrer to evidence
on 20 May 1994 this meant that she intended to make a written demurrer after
extensive research and with proper authorities to support the same; that when
the trial court denied her motion, it was in effect a denial only of the motion for
leave to file demurrer to evidence and not the demurrer to evidence itself and,
therefore, the order of respondent appellate court allowing petitioner to
present her evidence was premature. Petitioner further contends that she
should first be given the opportunity to file her demurrer to evidence and wait
for its denial with finality before she could be directed to present her evidence
before the trial court.
[11]

We cannot sustain petitioner. As the trial court observed, her move,


expressed through counsel, was merely "dilatory." But neither can we affirm
[12]

the ruling of respondent Court of Appeals directing the trial court to receive the
evidence of the defense after its motion for leave to file a demurrer to
evidence was denied. It is contrary to the letter and spirit of Sec. 15, Rule 119,
of the Rules of Court.
The implications and consequences of obtaining prior leave before the
accused files a demurrer to evidence were discussed by the Committee on
the Revision of the Rules as reflected in its Minutes of 18 February 1997. Mr.
Justice Jose Y. Feria, Co-Chairman of the Committee, explained -

Objections were raised against the new Rule on the ground that it was prejudicial to
the accused. Hence, the present amended provision was adopted. It is only when the
accused files such a motion to dismiss without express leave of court that he waives
the right to present evidence and submits the case for judgment on the basis of the
evidence for the prosecution x x x x [13]

Chief Justice Andres R. Narvasa, Chairman of the Committee, suggested


that -

x x x there may be instances where it is very plain that


the evidence is insufficient, but there are also instances where the court is in doubt x x
x x it is the court that will now determine whether a demurrer should be filed or not
after getting the opinion of both sides x x x x If the accused asks for leave of court and
the court supports it, it is good; but x x x if it finds the motion dilatory, then it denies
it. But x x xthere should be no waiver if the demurrer is with leave of court, because
there may be a situation where the court itself may want to dismiss the case x x x x If
leave is denied, and the accused still files the demurrer, then there is
waiver (underscoring supplied). [14]

The Committee finally approved the following propositions of the Chief


Justice: (a) The court on its initiative can dismiss the case after giving prior
notice to the prosecution; (b) The accused can file a demurrer only if he is
granted prior leave of court; (c) If the motion for leave or the demurrer is
denied, the accused can present his evidence, and there is no waiver; and, (d)
If the accused files a demurrer without leave, his right to present evidence is
waived. [15]

In fine, under the new rule on demurrer to evidence the accused has the
right to file a demurrer to evidence after the prosecution has rested its case. If
the accused obtained prior leave of court before filing his demurrer, he can still
present evidence if his demurrer is denied. However, if he demurs without
prior leave of court, or after his motion for leave is denied, he waives his right
to present evidence and submits the case for decision on the basis of the
evidence for the prosecution. This power to grant leave to the accused to file a
demurrer is addressed to the sound discretion of the trial court. The purpose
is to determine whether the accused in filing his demurrer is merely stalling
the proceedings. [16]

In the case at bar, petitioner admits that in the hearing of 20 May 1994 the
trial court denied her motion for leave to file a demurrer to evidence. In such
case, the only right petitioner has under Sec. 15, Rule 119, of the Rules of
Court after having been denied leave to submit a demurrer is to adduce
evidence in her defense. However, even without express leave of the trial
court, nay, after her motion for leave was denied, petitioner insisted on filing a
demurrer instead of presenting evidence in her defense.

Judicial action to grant prior leave to file demurrer to evidence is


discretionary upon the trial court. But to allow the accused to present evidence
after he was denied prior leave to file demurrer is not discretionary. Once prior
leave is denied and the accused still files his demurrer to evidence or motion
to dismiss, the court no longer has discretion to allow the accused to present
evidence. The only recourse left for the court is to decide the case on the
basis of the evidence presented by the prosecution. And, unless there is
grave abuse thereof amounting to lack or excess of jurisdiction, which is not
present in the instant case, the trial courts denial of prior leave to file demurrer
to evidence or motion to dismiss may not be disturbed. However, any
[17]

judgment of conviction by a trial court may still be elevated by the accused to


the appellate court. [18]

WHEREFORE, the Petition to allow petitioner to file a demurrer to


evidence is DENIED. The ruling of respondent Court of Appeals directing the
trial court to hear the evidence of the accused is SET ASIDE. The Regional
Trial Court of Quezon City is directed to decide the remaining Crim. Cases
Nos. Q-93-46792 and Q-93-46793 on the basis of the evidence already
presented by the prosecution.

SO ORDERED.
THIRD DIVISION

[G.R. No. 138739. July 6, 2000]

RADIOWEALTH FINANCE COMPANY, petitioner, vs. Spouses VICENTE


and MA. SUMILANG DEL ROSARIO, respondents.

DECISION
PANGANIBAN, J.:

When a demurrer to evidence granted by a trial court is reversed on appeal, the


reviewing court cannot remand the case for further proceedings. Rather, it should
render judgment on the basis of the evidence proffered by the plaintiff. Inasmuch as
defendants in the present case admitted the due execution of the Promissory Note both
in their Answer and during the pretrial, the appellate court should have rendered
judgment on the bases of that Note and on the other pieces of evidence adduced during
the trial.
The Case

Before us is a Petition for Review on Certiorari of the December 9, 1997


Decision[1] and the May 3, 1999 Resolution [2] of the Court of Appeals in CA-GR CV No.
47737. The assailed Decision disposed as follows:

WHEREFORE, premises considered, the appealed order (dated November 4,


1994) of the Regional Trial Court (Branch XIV) in the City of Manila in Civil
Case No. 93-66507 is hereby REVERSED and SET ASIDE. Let the records of
this case be remanded to the court a quo for further proceedings. No
pronouncement as to costs.[3]

The assailed Resolution denied the petitioners Partial Motion for Reconsideration. [4]
The Facts

The facts of this case are undisputed. On March 2, 1991, Spouses Vicente and
Maria Sumilang del Rosario (herein respondents), jointly and severally executed, signed
and delivered in favor of Radiowealth Finance Company (herein petitioner), a
Promissory Note[5] for P138,948. Pertinent provisions of the Promissory Note read:

FOR VALUE RECEIVED, on or before the date listed below, I/We promise to
pay jointly and severally Radiowealth Finance Co. or order the sum of ONE
HUNDRED THIRTY EIGHT THOUSAND NINE HUNDRED FORTY
EIGHT Pesos (P138,948.00) without need of notice or demand, in
installments as follows:

P11,579.00 payable for 12 consecutive months starting on ________


19__ until the amount of P11,579.00 is fully paid. Each installment shall
be due every ____ day of each month.A late payment penalty charge of
two and a half (2.5%) percent per month shall be added to each unpaid
installment from due date thereof until fully paid.

xxxxxxxxx

It is hereby agreed that if default be made in the payment of any of the


installments or late payment charges thereon as and when the same becomes
due and payable as specified above, the total principal sum then remaining
unpaid, together with the agreed late payment charges thereon, shall at once
become due and payable without need of notice or demand.

xxxxxxxxx

If any amount due on this Note is not paid at its maturity and this Note is
placed in the hands of an attorney or collection agency for collection, I/We
jointly and severally agree to pay, in addition to the aggregate of the principal
amount and interest due, a sum equivalent to ten (10%) per cent thereof as
attorneys and/or collection fees, in case no legal action is filed, otherwise, the
sum will be equivalent to twenty-five (25%) percent of the amount due which
shall not in any case be less than FIVE HUNDRED PESOS (P500.00) plus
the cost of suit and other litigation expenses and, in addition, a further sum of
ten per cent (10%) of said amount which in no case shall be less than FIVE
HUNDRED PESOS (P500.00), as and for liquidated damages.[6]

Thereafter, respondents defaulted on the monthly installments. Despite repeated


demands, they failed to pay their obligations under their Promissory Note.

On June 7, 1993, petitioner filed a Complaint [7] for the collection of a sum of money
before the Regional Trial Court of Manila, Branch 14. [8] During the trial, Jasmer
Famatico, the credit and collection officer of petitioner, presented in evidence the
respondents check payments, the demand letter dated July 12, 1991, the customers
ledger card for the respondents, another demand letter and Metropolitan Bank dishonor
slips. Famatico admitted that he did not have personal knowledge of the transaction or
the execution of any of these pieces of documentary evidence, which had merely been
endorsed to him.

On July 4, 1994, the trial court issued an Order terminating the presentation of
evidence for the petitioner.[9] Thus, the latter formally offered its evidence and exhibits
and rested its case on July 5, 1994.

Respondents filed on July 29, 1994 a Demurrer to Evidence [10] for alleged lack of
cause of action. On November 4, 1994, the trial court dismissed [11] the complaint for
failure of petitioner to substantiate its claims, the evidence it had presented being
merely hearsay.

On appeal, the Court of Appeals (CA) reversed the trial court and remanded the
case for further proceedings.

Hence, this recourse.[12]


Ruling of the Court of Appeals

According to the appellate court, the judicial admissions of respondents established


their indebtedness to the petitioner, on the grounds that they admitted the due execution
of the Promissory Note, and that their only defense was the absence of an agreement
on when the installment payments were to begin. Indeed, during the pretrial, they
admitted the genuineness not only of the Promissory Note, but also of the demand letter
dated July 12, 1991. Even if the petitioners witness had no personal knowledge of these
documents, they would still be admissible if the purpose for which [they are] produced is
merely to establish the fact that the statement or document was in fact made or to show
its tenor[,] and such fact or tenor is of independent relevance.
Besides, Articles 19 and 22 of the Civil Code require that every person must -- in the
exercise of rights and in the performance of duties -- act with justice, give all else their
due, and observe honesty and good faith. Further, the rules on evidence are to be
liberally construed in order to promote their objective and to assist the parties in
obtaining just, speedy and inexpensive determination of an action.
Issue

The petitioner raises this lone issue:

The Honorable Court of Appeals patently erred in ordering the remand of this
case to the trial court instead of rendering judgment on the basis of petitioners
evidence.[13]

For an orderly discussion, we shall divide the issue into two parts: (a) legal effect of
the Demurrer to Evidence, and (b) the date when the obligation became due and
demandable.
The Courts Ruling

The Petition has merit. While the CA correctly reversed the trial court, it erred in
remanding the case "for further proceedings."
Consequences of a Reversal, on Appeal, of a Demurrer to Evidence

Petitioner contends that if a demurrer to evidence is reversed on appeal, the


defendant should be deemed to have waived the right to present evidence, and the
appellate court should render judgment on the basis of the evidence submitted by the
plaintiff. A remand to the trial court "for further proceedings" would be an outright
defiance of Rule 33, Section 1 of the 1997 Rules of Court.

On the other hand, respondents argue that the petitioner was not necessarily
entitled to its claim, simply on the ground that they lost their right to present evidence in
support of their defense when the Demurrer to Evidence was reversed on appeal. They
stress that the CA merely found them indebted to petitioner, but was silent on when their
obligation became due and demandable.

The old Rule 35 of the Rules of Court was reworded under Rule 33 of the 1997
Rules, but the consequence on appeal of a demurrer to evidence was not changed. As
amended, the pertinent provision of Rule 33 reads as follows:

SECTION 1. Demurrer to evidence.After the plaintiff has completed the


presentation of his evidence, the defendant may move for dismissal on the
ground that upon the facts and the law the plaintiff has shown no right to
relief. If his motion is denied, he shall have the right to present evidence. If the
motion is granted but on appeal the order of dismissal is reversed he shall be
deemed to have waived the right to present evidence.[14]

Explaining the consequence of a demurrer to evidence, the Court in Villanueva


Transit v. Javellana[15] pronounced:

The rationale behind the rule and doctrine is simple and logical. The
defendant is permitted, without waiving his right to offer evidence in the event
that his motion is not granted, to move for a dismissal (i.e., demur to the
plaintiffs evidence) on the ground that upon the facts as thus established and
the applicable law, the plaintiff has shown no right to relief. If the trial
court denies the dismissal motion, i.e., finds that plaintiffs evidence is
sufficient for an award of judgment in the absence of contrary evidence, the
case still remains before the trial court which should then proceed to hear and
receive the defendants evidence so that all the facts and evidence of the
contending parties may be properly placed before it for adjudication as well as
before the appellate courts, in case of appeal. Nothing is lost. The doctrine is
but in line with the established procedural precepts in the conduct of trials that
the trial court liberally receive all proffered evidence at the trial to enable it to
render its decision with all possibly relevant proofs in the record, thus assuring
that the appellate courts upon appeal have all the material before them
necessary to make a correct judgment, and avoiding the need of remanding
the case for retrial or reception of improperly excluded evidence, with the
possibility thereafter of still another appeal, with all the concomitant
delays. The rule, however, imposes the condition by the same token that if his
demurrer is granted by the trial court, and the order of dismissal is reversed
on appeal, the movant losses his right to present evidence in his behalf and
he shall have been deemed to have elected to stand on the insufficiency of
plaintiffs case and evidence. In such event, the appellate court which reverses
the order of dismissal shall proceed to render judgment on the merits on the
basis of plaintiffs evidence. (Underscoring supplied)

In other words, defendants who present a demurrer to the plaintiffs evidence retain
the right to present their own evidence, if the trial court disagrees with them; if the trial
court agrees with them, but on appeal, the appellate court disagrees with both of them
and reverses the dismissal order, the defendants lose the right to present their own
evidence.[16] The appellate court shall, in addition, resolve the case and render judgment
on the merits, inasmuch as a demurrer aims to discourage prolonged litigations. [17]
In the case at bar, the trial court, acting on respondents demurrer to evidence,
dismissed the Complaint on the ground that the plaintiff had adduced mere hearsay
evidence. However, on appeal, the appellate court reversed the trial court because the
genuineness and the due execution of the disputed pieces of evidence had in fact been
admitted by defendants.

Applying Rule 33, Section 1 of the 1997 Rules of Court, the CA should have
rendered judgment on the basis of the evidence submitted by the petitioner. While the
appellate court correctly ruled that the documentary evidence submitted by the
[petitioner] should have been allowed and appreciated xxx, and that the petitioner
presented quite a number of documentary exhibits xxx enumerated in the appealed
order,[18] we agree with petitioner that the CA had sufficient evidence on record to decide
the collection suit. A remand is not only frowned upon by the Rules, it is also logically
unnecessary on the basis of the facts on record.
Due and Demandable Obligation

Petitioner claims that respondents are liable for the whole amount of their debt and
the interest thereon, after they defaulted on the monthly installments.

Respondents, on the other hand, counter that the installments were not yet due and
demandable. Petitioner had allegedly allowed them to apply their promotion services for
its financing business as payment of the Promissory Note. This was supposedly
evidenced by the blank space left for the date on which the installments should have
commenced.[19] In other words, respondents theorize that the action for immediate
enforcement of their obligation is premature because its fulfillment is dependent on the
sole will of the debtor. Hence, they consider that the proper court should first fix a period
for payment, pursuant to Articles 1180 and 1197 of the Civil Code.

This contention is untenable. The act of leaving blank the due date of the first
installment did not necessarily mean that the debtors were allowed to pay as and when
they could. If this was the intention of the parties, they should have so indicated in the
Promissory Note. However, it did not reflect any such intention.

On the contrary, the Note expressly stipulated that the debt should be amortized
monthly in installments of P11,579 for twelve consecutive months. While the specific
date on which each installment would be due was left blank, the Note clearly provided
that each installment should be payable each month.

Furthermore, it also provided for an acceleration clause and a late payment penalty,
both of which showed the intention of the parties that the installments should be paid at
a definite date. Had they intended that the debtors could pay as and when they could,
there would have been no need for these two clauses.
Verily, the contemporaneous and subsequent acts of the parties manifest their
intention and knowledge that the monthly installments would be due and demandable
each month.[20] In this case, the conclusion that the installments had already became
due and demandable is bolstered by the fact that respondents started paying
installments on the Promissory Note, even if the checks were dishonored by their
drawee bank. We are convinced neither by their avowals that the obligation had not yet
matured nor by their claim that a period for payment should be fixed by a court.

Convincingly, petitioner has established not only a cause of action against the
respondents, but also a due and demandable obligation. The obligation of the
respondents had matured and they clearly defaulted when their checks bounced. Per
the acceleration clause, the whole debt became due one month (April 2, 1991) after the
date of the Note because the check representing their first installment bounced.

As for the disputed documents submitted by the petitioner, the CA ruling in favor of
their admissibility, which was not challenged by the respondents, stands. A party who
did not appeal cannot obtain affirmative relief other than that granted in the appealed
decision.[21]

It should be stressed that respondents do not contest the amount of the principal
obligation. Their liability as expressly stated in the Promissory Note and found by the CA
is P13[8],948.00[22] which is payable in twelve (12) installments at P11,579.00 a month
for twelve (12) consecutive months. As correctly found by the CA, the "ambiguity" in the
Promissory Note is clearly attributable to human error.[23]

Petitioner, in its Complaint, prayed for 14% interest per annum from May 6, 1993
until fully paid. We disagree. The Note already stipulated a late payment penalty of 2.5
percent monthly to be added to each unpaid installment until fully paid. Payment of
interest was not expressly stipulated in the Note. Thus, it should be deemed included in
such penalty.

In addition, the Note also provided that the debtors would be liable for attorneys
fees equivalent to 25 percent of the amount due in case a legal action was instituted
and 10 percent of the same amount as liquidated damages. Liquidated damages,
however, should no longer be imposed for being unconscionable. [24] Such damages
should also be deemed included in the 2.5 percent monthly penalty. Furthermore, we
hold that petitioner is entitled to attorneys fees, but only in a sum equal to 10 percent of
the amount due which we deem reasonable under the proven facts. [25]

The Court deems it improper to discuss respondents' claim for moral and other
damages. Not having appealed the CA Decision, they are not entitled to affirmative
relief, as already explained earlier.[26]
WHEREFORE, the Petition is GRANTED. The appealed Decision is MODIFIED in
that the remand is SET ASIDE and respondents are ordered TO PAY P138,948, plus
2.5 percent penalty charge per month beginning April 2, 1991 until fully paid, and 10
percent of the amount due as attorneys fees. No costs.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 117032 July 27, 2000

MA. PATRICIA GARCIA, BELEN G. GUTIERREZ, NICANOR GUTIERREZ, GRACE M.B.


GUTIERREZ, CAROLYN M.B. GUTIERREZ, GERWIN GARCIA, GERSON GARCIA, and GILMER
GARCIA, petitioners,
vs.
COURT OF APPEALS, HON. PEDRO M. ICAMINA, Judge of the Regional Trial Court, 6th
Judicial Region, Branch 9, Kalibo, Aklan; RURAL BANK OF SARA, INC., RAFAEL C.
DINGLASAN, JR., MARIA ELENA I. DINGLASAN, ANTHONY CABUGSO and LEDA
SUELLO, respondents.

PURISIMA, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to
annul and set aside the Decision of the Court of Appeals1 dated August 31, 1994, in CA-G.R. SP. No.
31231, which sustained the March 30, 1993 Order of Branch 9, Regional Trial Court of Kalibo, Aklan,
denying herein petitioners' motion for summary judgment.

The antecedent facts that matter are as follows:


On October 5, 1987, Florencio Junior Garcia, representing himself as attorney in fact of the herein
petitioners, brought in the name of the latter, an action for collection of sum of money, against the
private respondents, docketed as Civil Case No. 3777 before Branch 9, Regional Trial Court of
Kalibo, Aklan. The said complaint alleged inter alia:

"3. That sometime on February 10, 1984, on representations, of defendant Spouses Rafael
and Elena DINGLASAN, plaintiffs, through their then Attorney in fact, Florencio Junior
Garcia, were prevailed upon to time deposit the following amounts of money issuing to them
the following time deposit certificates:

Time Deposit
Name Amount Maturity Date
Cert. No.

Ma. Patricia Garcia 1275 P35,000 February 11, 1986

Nicanor Gutierrez 1276 40,000 -do-

Belen B. Gutierrez 1277 35,000 -do-

Grace M.B. Gutierrez 1278 40,000 -do-

Caroline M. B. Gutierrez 1279 35,000 -do-

Gerwin Garcia 1280 33,000 -do-

Gerson Garcia 1281 35,788 -do

Gilmer Garcia 1282 30,000 -do

Total P283,788

(Xerox copies attached hereto as Annex A,B,C,D,E,F,G and H) with interest at 17% per
annum starting from Feb. 10, 1984, all defendants assuring plaintiffs that on the maturity
dates (Feb. 11, 1986) of the aforesaid Time Deposit Certificates, the same, upon surrender,
will be paid in cash;

4. That on Feb. 11, 1986, plaintiffs through their Attorney in fact, (Florencio Junior Garcia)
went to defendant Rural Bank, for the purpose of surrendering said Time Deposit
Certificates, and to receive the payment from defendants of the amounts therein stated
totaling P 283,788, plus interest thereon at 17% per annum for 731 days or two years, the
interest then amounting to P 96,487.92 as of Feb. 11, 1986, for a total of P 380,275.92 as of
Feb. 11, 1986;

5. That defendants acting through Anthony Casugbo and Leda Suelo (sic), Manager and
Cashier respectively of defendant Rural Bank, refused to pay, and told plaintiffs' attorney in
fact, to return after one month, which said attorney in fact did, not only one month thereafter,
but on several other occasions thereafter either by himself (attorney in fact), or through other
authorized representatives; on all of these occasions the promises to pay the time deposits
and interest thereon were not fulfilled;
6. That impatient at waiting, plaintiffs, on August 27, 1987, through counsel, sent a letter of
demand to defendants, giving to defendants 30 days from receipt within which to pay the
Time Deposit plus the interest increments thereof, which letter (Annex I) was received by
them on Sept. 4, 1987 (Annex I-1);

However, until the date of the filing of this complaint, which is more than 30 days from Sept.
4, 1987 defendants have not even bothered to reply or to make any arrangements
acceptable to plaintiffs;

xxx xxx xxx2

Respondent Rural Bank of Sara, Inc., Anthony Cabugso, and Leda Suello, (manager and cashier,
respectively, of respondent bank), filed their answer contending by way of special and affirmative
defenses that:

"'4. The Complaint states no cause of action against the defendants in as much as the
deposits (sic) named in paragraph 3 of the Complaint have not at all authorized and
empowered alleged attorney-in-fact, Florencio Junior Garcia, to transact with the defendant
bank, Rural bank of Sara (Iloilo), Inc.. Neither have they authorized him to withdraw their
deposits with defendant bank;

'5. The said depositors named in paragraph 3 of the complaint never in the past nor up to the
present time approached the bank for withdrawal of their deposits, and (sic) reason of and in
compliance with the law on secrecy of deposits, the defendant bank cannot divulge to
anybody who has not been properly authorized, anything about their deposits. Besides the
bank has to be strict with the requirements of specimen signatures of its depositors so that it
usually requires proper authorizations duly notarized by a Notary Public. If anybody
approaches defendant bank for and in behalf of a depositors (sic) the bank would require
such authorization, otherwise no transaction will be made with him;

'6. Since no applications for withdrawal were received by defendant bank from its depositors
named in paragraph 3 of the complaint, there was no reason at all to allow alleged attorney-
in-fact, Florencio Junior Garcia, who never was properly authorized, to transact for and in
behalf of said depositors;

'7. The herein attorney-in-fact, Florencio Junior Garcia, has no capacity to sue and be sued,
being not the real party interest (sic) nor has the (sic) authority from the alleged plaintiffs sue
(sic) and be sued;

8. There was no valid or legal withdrawal made by the alleged plaintiffs of their alleged
deposits, hence it was not legally possible for defendant bank to act with respect to such
deposits in view of the prohibition mandated by the law on secrecy of deposits.'" 3

The respondent spouses, Rafael Dinglasan and Maria Elena Dinglasan, likewise filed their answer
contending by way of special and affirmative defenses, that:

"4. The complaint states no cause of action against defendants;

5. There is no privity of contract between plaintiffs and defendants;


6. Attorney-in-Fact Florencio Junior Garcia has no apparent authority from plaintiffs to file the
instant complaint."4

What the petitioners did was to present a Motion for Summary Judgment, asseverating that they are
entitled to a judgment as a matter of law, since the pleadings and supporting affidavits submitted are
barren of any genuine issue which may be controverted.

On March 30, 1993, the trial court issued its Order under attack denying the motion for summary
judgment.

Dissatisfied therewith, petitioners went to the Court of Appeals, theorizing that the trial court gravely
abused its discretion in denying their subject motion. On August 31, 1994, however, the Court of
Appeals came out with its assailed Decision upholding the March 30, 1993 Order of the lower court.

Undaunted, petitioners found their way to this Court via the present Petition anchored on the
grounds, that:

I. THE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE NOT IN


ACCORD WITH LAW AND APPLICABLE DECISIONS OF THE SUPREME COURT IN
HOLDING THAT THERE ARE GENUINE ISSUES AS TO MATERIAL FACTS THAT BAR
RENDITION OF SUMMARY JUDGMENT.

II. THE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE NOT IN


ACCORD WITH LAW AND APPLICABLE DECISIONS OF THE SUPREME COURT IN NOT
ORDERING RESPONDENT COURT TO GRANT THE MOTION FOR SUMMARY
JUDGMENT.5

The Petition is devoid of merit.

Sections 1 and 3, Rule 34, of the Rules of Court provide:

"SECTION 1. Summary judgment for claimant. - A party seeking to recover upon a claim,
counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the
pleading in answer thereto has been served, move with supporting affidavits for a summary
judgment in his favor upon all or any part thereof."

"SEC. 3. Motion and proceedings thereon. - The motion shall be served at least ten (10)
days before the time specified for the hearing. The adverse party prior to the day of hearing
may serve opposing affidavits. After the hearing, the judgment sought shall be rendered
forthwith if the pleading, depositions, and admissions on file together with the affidavits, show
that, except as to the amount of damages, there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a matter of law." *

A summary judgment is one granted upon motion by a party for an expeditious settlement of the
case, there appearing from the pleadings, depositions, admissions, and affidavits that there are no
important questions or issues of fact posed (except as to the amount of damages) and therefore, the
moving party is entitled to a judgment as a matter of law.6

The aforecited rule does not vest in the trial court jurisdiction to summarily try the issues on
depositions and affidavits but gives it limited authority to render summary judgment only when there
is no genuine issue of material fact at bar. Upon a motion for summary judgment, the sole function of
the court is to determine whether or not there is an issue of fact to be tried, and any doubt as to the
existence of an issue of fact must be resolved against the movant. Courts are quite critical of the
papers presented by the moving party but not of the papers in opposition thereto. Thus, in ruling on
a motion for summary judgment, the court should take that view of the evidence most favorable to
the party against whom it is directed, giving such party the benefit of all favorable inferences. That
one may surmise from plaintiff's showing that defendant is unlikely to prevail upon a trial is not a
sufficient basis to assume that the allegations of defendant are sham, frivolous or unsubstantial. If
the defense relied upon by the defendant is legally sufficient and does not appear patently sham, the
motion for summary judgment should be denied.7

In the case under consideration, the pleadings and exhibits on record reveal that there exist genuine
issues on material or pertinent facts sufficient to preclude a rendition of summary judgment. As
correctly found by the Court of Appeals, the pleadings submitted below by the parties raise the
following issues:

"1. Whether or not Florencio Junior Garcia is properly authorized to file the complaint for the
plaintiffs named in the title of the complaint.

xxx xxx xxx

2. Whether or not defendants (private respondents) spouses Dinglasan may be held jointly
and severally liable with their co-defendant (co-private respondent) rural bank." 8

Verily, there is a need to find out whether Florencio Junior Garcia was duly authorized by the
plaintiffs named in Civil Case No. 3777 to file the complaint against the private respondents. It is
worthy to note that while the complaint states that the plaintiffs therein mentioned empowered
Florencio Junior Garcia to collect the sums due them from the respondent bank, the records on hand
show that only four9 of the eight plaintiffs executed a special power of attorney authorizing Florencio
Junior Garcia to deal with respondent bank. Contrarily, it is argued that the absence of a special
power of attorney to withdraw the time deposit is of no moment, considering that the present case for
collection in the name of the plaintiffs sufficiently shows the latter's intention to collect their money
through Florencio Junior Garcia. Apparently, the foregoing theory is meritorious. But the undeniable
fact, however, is that not one of the plaintiffs verified the contents of the complaint; and neither was
there in the records a special power of attorney authorizing Florencio Junior Garcia to institute the
present case against private respondents. Thus the issue of whether or not the plaintiffs named in
Civil Case No. 3777, constituted Florencio Junior Garcia as their attorney in fact with authority to
bring subject suit for collection of sum of money against the private respondents.

Then too, the issue of whether or not petitioners have a cause of action against the spouses, Rafael
Dinglasan and Maria Elena Dinglasan, calls for a trial on the merits. While the said respondent
spouses insist that there is no privity of contract between them and the petitioners, the latter claim
that the former "prevailed upon them" to time deposit their money with the respondent bank. Indeed,
it is only upon presentation of evidence during the trial can it be determined whether the respondent
spouses may be held jointly and severally liable with respondent bank.

Premises studiedly considered and viewed in proper perspective, the Court is of the ineluctable
conclusion, and so holds, that the Court of Appeals erred not in affirming the Order, dated March 30,
1993, of Branch 9, Regional Trial Court of Kalibo, Aklan, in Civil Case No. 3777.

WHEREFORE, the Petition is DENIED; and the Decision of the Court of Appeals, dated August 31,
1994, in CA-G.R. SP. No. 31231 AFFIRMED. No Pronouncement as to costs.
SO ORDERED.

EN BANC

[G.R. No. 148586. May 25, 2004]

PEOPLE OF THE PHILIPPINES, appellee, vs. LI KA KIM alias


ED, appellant.

DECISION
VITUG, J.:

Faced with the grim scenario of having to suffer the extreme penalty of
death, appellant is now before this Court urging to overturn his conviction for
violation of Section 15, Article III, of Republic Act No. 6425, as so amended by
Republic Act 7659.

The Information filed against appellant was to the following effect; viz:

That on or about September 19, 1999, in Paranaque City, Philippines, and within the
jurisdiction of this Honorable Court, accused Li Ka Kim alias Ed, for the amount of
Four Hundred Thousand (P400,000.00) Pesos, Philippine currency, did then and there,
willfully, unlawfully and feloniously, sell, deliver and give away to a poseur-buyer,
NINE HUNDRED NINETY FOUR POINT SEVEN SEVENTHREE (994.773) grams
of Methamphetamine Hydrochloride commonly know as `Shabu, a regulated drug
without authority of law or the corresponding license therefor.
[1]

Appellant, acting upon advice of counsel, did not enter any plea during his
arraignment; the court was thus constrained to enter a plea of not guilty in his
behalf.

The prosecution presented its evidence.

At six oclock on the morning of 19 September 1999, the Regional


Intelligence and Investigation Division (RIID) of the Philippine National Police,
Region IV Office at Camp Vicente Lim, Calamba, Laguna, received a report
from an informer, named Boy, that a certain alias Ed, known to be a drug
dealer operating in the southern part of Metro Manila, was looking for a buyer
of shabu. At seven-thirty that morning, PO2 Christian Trambulo, an officer
of RIID, made initial contact with Ed through a phone call using Boys cellular
phone. Boy introduced PO2 Trambulo to Ed as Rollie, a buyer of shabu. The [2]

parties agreed to meet at the parking space of McDonalds at Uniwide Coastal


Mall in Paraaque City between four oclock and five-thirty in the afternoon
where Ed was supposed to give PO2 Trambulo (a.k.a. Rollie) a kilo of shabu
and the latter to pay for it an amount of P400,000.00. After the phone call,
PO2 Trambulo was instructed by P/Chief Inspector Julius Caesar Mana to be
the poseur-buyer and was given P4,000.00 in four (4) P1,000.00 genuine bills
which was arranged in such a way as to make it appear to be the agreed
amount of P400,000.00 in boodle money. [3]

At the agreed time and place of the transaction, PO2 Trambulo, together
with sixteen (16) other officers of the RIID, waited for
appellant. PO2 Trambulo noticed a red Honda Civic car passing several times
in front of him. Finally, a Chinese-looking man alighted from the drivers side of
the vehicle. Boy introduced PO2 Trambulo (a.k.a. Rollie) to appellant (a.k.a.
Ed) who also introduced himself to Rollie, using broken Tagalog language. Ed
then gave Rollie a brown paper bag containing a white crystalline substance
wrapped in a Christmas wrapper. After looking at the contents of the wrapper
and pinching it to test the crispiness of the substance, Rollie gave Ed the buy-
bust money. When Ed reached for the money with his hands, Rollieinformed
Ed that he was a police officer. Police Inspector Emerito Estrada came and
informed Ed of his constitutional rights. Appellant was arrested and the boodle
money was recovered. [4]

At the trial, PO2 Trambulo pointed to appellant as being the seller of the
confiscated shabu and positively identified the brown paper bag given to him
by appellant containing the prohibited drug which he marked CVT, his initials
(Christian Ventura Trambulo). [5]

Appellant had a different story to tell.

Testifying through an interpreter, appellant claimed to be a Chinese,


jobless, and born in Fookien, China, unable to speak English or Filipino, who
came to the Philippines on a tourist visa on 13 May 1999, when invited by his
friend Tan Eng Hong. According to appellant, he stayed with Tang Eng Hong
at Room 1003 Gotesco Building, Manila, up until 19 September 1999.He
denied having been in Southern Tagalog. About two to three oclock on the
afternoon of 19 September 1999, he and Tan Eng Hong went out and took a
ride going to the airport. He did not know the name of the commercial center
but he was sure that it was leading to the airport. Upon their arrival, Tan Eng
Hong alighted from the car and went inside the mall. While waiting for Tan Eng
Hong and smoking a cigarette, five persons accosted him. At the point of a
gun, he was forced inside the car, which he and Tan Eng Hong used in going
to the mall. The police officers, who were all armed, brought him to a gasoline
station where he was frisked but they were not able to find anything on him
except for a pack of cigarettes. He heard one of them saying wala and one of
them slapped him. He was asked things he did not understand. Later, he was
brought to the police station. A Chinese woman approached him while he was
at the police station, and he then explained what had happened. He denied
that Trambulo was introduced to him by Boy, the informer, whom he did not
know. The Chinese woman told him in the presence of three or four police
officers that if he could produce P1,000,000.00 and give it to the police officers
who brought him there, he would be allowed to go home.

The court a quo adjudged the case for the prosecution.

The trial court debunked appellants defense of denial. The court found it
hard to believe that appellant would be singled out by the police officers from
scores of people at the mall where he was arrested and later indicted for
selling shabu. Strangely, the court observed, appellants friend, a certain Tan
Eng Hong, did not appear in court to corroborate his testimony.The court
likewise noted that the car, as well as the license plate, used by appellant had
been stolen, and that appellant was an undocumented alien as so shown by
the letter, dated 13 October 2000, of then Commissioner on Immigration and
[6]

Deportation Rufus B. Rodriguez, to State Prosecutor Reynaldo J. Lugtu.

Finding the prosecutions evidence far more credible than that of the
defense and to have overwhelmingly established the elements of the crime
charged, the trial court convicted appellant and decreed the penalty of
death. In arriving at that penalty, the trial court considered the use of a motor
vehicle to be an aggravating circumstance.

Appellant assigned the following errors supposedly committed by the


court a quo:

THE TRIAL COURT ERRED IN FINDING ACCUSED-APPELLANT GUILTY


BEYOND REASONABLE DOUBT OF THE CRIME CHARGED.

ASSUMING ARGUENDO THAT ACCUSED-APPELLANT IS GUILTY OF THE


CRIME CHARGED, NONETHELESS, THE TRIAL COURT ERRED IN
IMPOSING UPON HIM THE SUPREME PENALTY OF DEATH. [7]

Initially, appellant, in this appeal, was represented by Atty. Eldorado Lim,


who filed a brief for the defense. On 04 October 2002, Fernandez, Pacheco &
Dizon Law Offices filed its entry of appearance as being the new counsel for
appellant only to be substituted later by Guzman, Tanedo, & Acain Law
Offices. On 10 June 2003, the Court noted and granted the request of the law
firm to be furnished with copies of all motions, orders, resolutions and
judgment in connection with the case. On 01 September 2003, appellant filed
a motion to remand the case for new trial. In his motion, appellant would
attempt to overturn his conviction or, at the very least, to be given a chance for
a new trial, citing Section 14, Rule 121, of the Rules on Criminal Procedure,
because of newly discovered evidence, i.e., his passport which would
establish his true identity as Huang Xiao Wei, a Chinese National, and as
having entered the Philippines as a tourist. Invoking his constitutional right to
an effective counsel, appellant chides his former counsel for having failed to
secure and present his travel documents.

The Court is not convinced.


The requisites of newly discovered evidence in order to justify a new trial
are that - (a) the evidence is discovered after trial; (b) such evidence could not
have been discovered and produced at the trial even with the exercise of
reasonable diligence; and (c) the evidence is material, not merely cumulative,
corroborative, or impeaching, and of such weight that, if admitted, would likely
change the judgment. [8]

Not one of the requisites mentioned is attendant. Appellants passport


could have easily been presented and produced during the trial. Then, too, the
presentation of appellants passport, would hardly be material to the outcome
of the case. Appellant was positively identified by the prosecution witnesses
as being the perpetrator of the crime. Most importantly, appellant even
identified himself as Li Ka Kim at the trial and not as Huang Xiao Wei, that [9]

bolsters the conclusion that appellant deliberately concealed his true identity
in the nefarious enterprise.

Now to the merits.

The totality of evidence presented is convincing and points to appellant as


being a person engaged in the sale of illegal drugs. The testimony of the
prosecution witnesses identifying appellant to be a seller of illegal drugs
appears to be categorical and unfabricated. No ill motive on the part of the
witnesses has been shown to tarnish their testimony. Such positive evidence
certainly prevails over mere denial and alibi which, if not substantiated by
clear and convincing evidence, are negative and self-serving unworthy of
credible weight in law. [10]

Appellants argument that a surveillance or a test buy should have first


been conducted deserves scant consideration. In a prosecution for illegal
possession of dangerous drugs, it is enough to show that - (1) the accused is
in possession of an item or an object identified to be a prohibited or a
regulated drug; (2) such possession is not authorized by law; and (3) the
accused has freely and consciously possessed the prohibited drug. Neither a
[11]

prior surveillance of the suspected offender nor the presentation of the


[12]

informant would be an indispensable requirement to the successful


prosecution of a drug case. [13]

Appellant was caught in flagrante delicto selling 994.773 grams of shabu


to the poseur buyer on the morning of 19 September 1999. He handed over
the bag containing shabu to the poseur buyer, in exchange of P400,000.00 in
buy bust money. He was promptly arrested and taken into custody after being
informed of his constitutional rights. Clearly, all the elements of the sale of
illegal drugs were established.

The Court has great respect for the judgment of the trial court in passing
upon the credibility of witnesses. It is often said that, unless there appears in
the record some fact or circumstance of weight and substance, and there is
none, which has been overlooked or the significance of which has been
misinterpreted, an appellate court will not interfere in the factual findings of
[14]

the trial court.

There is merit, however, in appellants contention that the court a quo erred
in imposing the penalty of death. Rule 110 of the Rules on Criminal Procedure
requires the recitation in the information of aggravating or qualifying
circumstances in order to be appreciated as such. The use of a motor vehicle
considered by the trial court in decreeing the death penalty is inappropriate,
that aggravating circumstance not having been aptly alleged in the
Information. The pertinent provisions of the rules read:

Sec. 8 Designation of the offense. - The complaint of information shall state the
designation of the offense given by the statute, aver the acts or omissions constituting
the offense, and specify its qualifying and aggravating circumstances. If there is no
designation of the offense, reference shall be made to the section or subsection of the
statute punishing it.

Sec. 9 Cause of the accusation. The acts or omissions complained of as constituting


the offense and the qualifying and aggravating circumstances must be stated in
ordinary and concise language and not necessarily in the language used in the
statute but in terms sufficient to enable a person of common understanding to know
what offense is being charged as well as its qualifying and aggravating circumstances
and for the court to pronounce judgment. (underscoring supplied.)

The requirements are mandatory not only to afford the accused the right to
object to the presentation of evidence showing such aggravating
circumstances not so alleged but also to preclude the court from even taking
such aggravating circumstances into account. [15]

Quite recently, the Court has held that the provisions of the Revised Rules
on Criminal Procedure, particularly Section 8, Rule 110, thereof, must be
given retroactive effect in the light of the well-settled rule that statutes or rules
regulating the procedure of the court will be construed as being applicable to
actions pending and undetermined at the time of their passage. [16]

The quantity of the drugs seized from appellant, which is 994.773 grams of
shabu, warrants the application of the penalty under Section 16, in relation to
Section 17, of Republic Act No. 7659, otherwise also known as An Act to
Impose the Death Penalty on Certain Heinous Crimes, of reclusion
perpetua to death and a fine ranging from five hundred thousand pesos to ten
million pesos. Applying the provisions of Article 63 of the Revised Penal Code,
the lesser penalty should be imposed, there being neither mitigating nor
aggravating circumstances that can be considered, for the commission of the
offense.[17]

WHEREFORE, the judgment of conviction against appellant Li Ka Kim,


a.k.a. Ed, is AFFIRMED with modification in that the penalty of DEATH
imposed by the trial court is hereby reduced to RECLUSION PERPETUA. In
other respects, the judgment of the court a quo is sustained. Costs de oficio.

SO ORDERED.

THIRD DIVISION

[G.R. No. 138571. July 13, 2000]

MERCURY DRUG CORPORATION, petitioner vs. THE HONORABLE


COURT OF APPEALS, and the SPOUSES EDUARDO AND CARMEN
YEE, respondents.

DECISION
GONZAGA-REYES, J.:

This Petition for Review on Certiorari seeks the reversal of the Decision
of the Court of Appeals in CA-G.R. SP No. 437765 entitled "SPOUSES
[1]

EDUARDO AND CARMEN YEE versus HONORABLE ALEJANDRO


VELEZ, RTC JUDGE, BRANCH 20, CAGAYAN DE ORO CITY and
MERCURY DRUG CORPORATION".

The following facts as found by the Court of Appeals are undisputed:

"On 27 January, 1993, petitioners filed a complaint docketed as


Civil Case No. 93-055 in the Regional Trial Court of Cagayan de
Oro City against herein private respondent for annulment and/or
reformation of contract of lease dated 31 March 1984 (Rollo, p.
26) covering (5) twos-storey units specified as door numbers 3, 4,
5, 6 and 7 of a commercial building owned by petitioners located
in front of Carmen Market, Carmen, Cagayan de Oro City. The
complaint prayed that the contract be either annulled or the
rentals increased from P6,900,00 a month as originally stipulated
therein to P50,000.00 a month based on paragraph no. 3 thereof
which reads:

3.....In case of official devaluation of the Philippine pesos,


the parties hereto shall by mutual consent make the
necessary adjustment in the rate of rentals. Should they fail
to agree on the rate of rentals, the same shall be submitted
to a group of arbitrators composed of three (3) members,
one to be appointed by LESSOR, another by LESSEE and
a third one to be agreed upon by the two (2) arbitrators
previously chosen and the parties hereto shall submit to the
decision of the arbitrators;

Petitioners demand for increase of rentals had been refused by


private respondent lessee Mercury Drug Corporation on the
ground that there was no official devaluation of the peso thus no
basis for a rental increase.

On 28 February 1995, the lower court rendered judgment as


follows:
WHEREFORE, judgment is hereby rendered in favor
of the defendant corporation and against the herein
plaintiffs, dismissing the complaints and the claim for
annulment and/or reformation of lease contract as
well as the claim for damages for not being supported
by the law and the pertinent jurisprudence on the
matter, with costs against plaintiffs herein.

However, in the spirit of equity and human justice as


defendant has not shown any unwillingness to quiet
the unease of the plaintiffs if the obligation is not
every burdensome and onerous the defendant
corporation, to maintain the good and harmonious
relations between the parties herein, is hereby
ordered to pay a relative increase in rent over the
property in question, to the plaintiffs spouses, in the
following manner:

a)....an increase of fifteen (15) percent of the


lease contract rental from August 1, 1992 up to
the end of the second five years on May 31,
1994;

b)....an increase of twenty (20) percent in rent


from June 1, 1994 to May 31, 1999 which is the
end of the third third five (5) years of the
contract based on the new rate of the rental
increase in the immediate preceding paragraph
and

c)....an increase of thirty (30) percent of rent


from June 1, 1999 to May 31, 2004 based on
the new rate of the rental increase in the
immediate preceding paragraph as the
computation, without interest.

In view of the desire of the court to put an end to


litigation and preserve the peace, no pronouncement
shall be made by this court on the counterclaim.
'SO ORDERED. (Rollo, p. 39-40)

based principally on the ruling was (sic) that there was no


devaluation of the peso as a result of an extra-ordinary inflation.

The former counsel for the petitioners Atty. Ralph Lou I. Willkom
received a copy of the decision on 3 March 1995 but did not
inform petitioners nor take any step to protect the interests of his
clients by presenting a motion for reconsideration or taking an
appeal. Petitioners learned of the judgment only on 24 March
1995 when they visited his office. The 15-day period within which
to appeal lapsed. On 15 May 1995 petitioners filed thru their
present counsel a petition for relief from judgment under Rule 38
(Rollo, p. 43). The lower court denied the petition, ruling as
follows:

It is true that under Sec. 2, Rule 38 of the New Rules


of Court the verified petition such as this must be filed
within 60 days after petitioners learn of the judgment
and nor (sic) more than six (6) months after such
judgment or order was issued.

The record shows that Atty. Ralph Lou I. Willkom,


former counsel of petitioners, did not inform the
petitioners that he received the judgment in question
on March 3, 1995. It was only on March 24, 1995 that
petitioners learned of the judgment. These facts are
admitted by petitioners on record in their pleadings so
that there is no further need to discuss this matter.

Even if counsel did not inform his client of the


judgment for reasons only known to him still such
failure is ruled by the Supreme Court as an act
binding upon his clients and in this case the herein
petitioners. (B. R. Sebastian Et Al.., Inc. vs. CA, 206
SCRA 28; Suarez vs. Ca, 220 SCRA 274; Ilasco vs.
CA 228 SCRA 413) Since the judgment at bar was
received on March 3, 1995 by petitioners counsel the
sixty (60) days period will expire after May 3, 1995.
The instant petition was filed on May 15, 1995 so
much so that it was filed twelve (12) days after the 60
day period fixed by the Rules but certainly the petition
was filed within six (6) months from the date it was
issued on February 28, 1995.

In several cases the Supreme court had uniformly


ruled that both the 60 days from knowledge and the
six (6) months from issuance must concur before a
petition for relief from the judgment can be given due
course, when the Supreme Court said this wise, to
wit:

Motion for relief from judgment is, subject to a


fixed period inextendible, never interrupted and
cannot be subjected to any condition or
contingency. (Arcilla vs. Arcilla, Sept. 16, 1985)

Considering the rule of notice to counsel as notice to


client it becomes evidently clear that the requirements
fixed by law and jurisprudence on petitioner for relief
from judgment have not been met by the petitioners
herein, ergo the petition must fall on its own dead
weight. Besides, this court does not consider that
there was negligence on the part of Atty. Ralph
Willkom in not taking any appeal from the judgment of
this court especially if one considers the character
and the convictions of a person who adheres to his
lawyers oath. Lawyers of known perceptions normally
do not appeal from a judgment that had granted an
award in equity even in the face of a very palpably
adverse ruling of the Supreme Court that beset his
clients. The act of counsel in respecting the final
judgment is one that led to a conflict of interest
between attorney and client but certainly not an act of
omission or neglect on his part.

The other grounds raised like devaluation and


reformation of contract does not merit any further
discussion here because petitioners do not have any
legal authority to declare their national devaluation
thru the expedience of this petition. Parties never
availed of the arbitration procedure as agreed in the
contract hence, the matter of increase in rent by the
avenues of the contract was totally foreclosed by the
failure of the plaintiffs to exhaust all administrative
remedies before going to court.

WHEREFORE, except that portion which as in all


good faith rectified by this court as far as the building
in question is concerned as belonging to and having
been built by the herein petitioners, for lack of merit
and legal basis, the petition is hereby DISMISSED by
reason of the foregoing premises, with costs against
petitioners. (Rollo, pp. 59-60)

Petitioners motion for reconsideration was likewise denied (Rollo,


p. 61)."
[2]

Aggrieved by the Order of the RTC, the spouses Eduardo and Carmen
[3]

Yee (YEES), the herein respondents, appealed to the Court of Appeals,


which granted their Petition and set aside the order of the RTC the
dispositive portion of the Decision reads:

"WHEREFORE, the petition is hereby GRANTED. The assailed


orders as well as the Decision dated February 28, 1995 are
hereby SET ASIDE. This case is remanded to the court a quo for
further proceedings and thereafter to render judgment accordingly.
Without pronouncement as to costs."

In reversing the RTC, the Court of Appeals held inapplicable the general
rule that notice to counsel is notice to client. The Court of Appeals
considered that it was precisely the inaction of the counsel of the YEES
in not informing them of the decision which resulted in the lapse of the
period to appeal forcing them to file their petition for relief through
another lawyer. Their former counsel also failed to point out the
erroneous finding of the lower court that it was MERCURY, which,
constructed the building subject of the lease contract. Such finding,
which was later corrected by the trial court, was the basis for said courts
ruling that the YEES were bound to accept low rentals inasmuch as the
building supposedly constructed by MERCURY would in the end be
owned by the YEES after the expiration of the lease. These facts led the
Court of Appeals to conclude that the YEES counsel was grossly
negligent and clearly demonstrates why the lower court ratiocinated as
follows:

"Under the foregoing circumstances, we hold inapplicable the


commonly observed rule that notice to counsel be deemed notice
to the client for to do otherwise would result in a grave
miscarriage of justice. The rule that mistakes of counsel bind his
client should not be applied, when as a result of counsels reckless
and gross negligence, the client (would be) deprived of his
property without due process of law (Legarda vs. Court of
Appeals, 195 SCRA 418).

Our courts are not only courts of justice but also of equity (Air
Manila Inc. vs. Commissioner of Internal Revenue 83 SCRA 589).
Procedural technicalities should not be made a bar to the
vindication of a legitimate grievance (Peoples Homesite &
Housing Corporation PHHC) vs. Tiongco, Nov. 28, 1964 (12
SCRA 471). In the foregoing case our Supreme Court allowed the
late filing of a petition for relief from judgment arising from the
mistake of counsel when as a result of counsels reckless and
gross negligence, the client was deprived of due process of law.
Thus, the period to file was computed from the date of receipt of
the writ of execution by the client.

There, as in this case, the very allegations in the petition for relief
justify the setting aside of the assailed Decision and the remand
of the case to the court a quo to hear and determine the case as if
a timely motion for new trial or reconsideration has been granted
by it (Rule 38 sec. 6, Rules of Civil Procedure)." [4]

Motion for Reconsideration was denied. Hence this petition where the
[5]

petitioner, Mercury Drug Corporation (MERCURY) raises the following


issues:
"A. Whether the Court of Appeals erred in not applying the
law and jurisprudence providing that notice to counsel is
likewise notice to the party;

B. Whether the Court of Appeals erred in disregarding the


rule that a party-litigant is bound by the mistakes of his
counsel;

C. Whether the Court of Appeals erred in reckoning the sixty-


day period to file the Petition for Relief from judgment from
the alleged date of actual receipt by Respondents of a copy
of the decision of the trial court and not from the date of
receipt thereof by their counsel;

D. Whether the Court of Appeals departed from the accepted


and usual course of judicial proceedings when it decided the
merits of Respondents Petition for Relief from Judgment
notwithstanding that the only issue that should have been
passed upon in the certiorari petition before it was whether
the trial court gravely abused its discretion in dismissing the
Petition for Relief from Judgment for having been filed out of
time; and

E. Whether the Court of Appeals erred in remanding the case


to the trial court for further proceedings notwithstanding that
the remedy of reformation of the Contract of Lease is clearly
not available to any of the parties there being no mistake or
ambiguity in the instrument embodying the terms thereof." [6]

The petitioner contends that the respondents petition for relief from
judgment failed to comply with the requirements of the Rules of Court
inasmuch as the petition was filed more than sixty days from the receipt
by their lawyer of the decision of the RTC. Petitioner argues that it is
long established by jurisprudence that notice to the counsel is binding
upon the client and that the client is bound by the mistakes of his
lawyer. The failure of the YEES lawyer to inform them of the decision
resulting in the failure to appeal therefrom is not the accident, mistake or
excusable negligence referred to in the Rules that would warrant the
granting of the petition for relief. The petitioner further argues that
respondents counsel did not corroborate their allegation that they only
learned of the judgment in Civil Case No. 93-055 against them on
March 24, 1995. It should be presumed that their lawyer, Attorney
Willkom, communicated to the respondents receipt by him of the
judgment. MERCURY also maintains that the YEES cannot claim that
they were denied due process considering that the YEES were given a
chance to present and submit their evidence during the trial of the
merits of the case. Their failure to appeal the decision against them
cannot be considered a denial of due process for the right to appeal is
purely statutory and must be prosecuted within the time and pursuant to
the procedure prescribed for it.[7]

The threshold issue to be resolved in this present petition is whether the


YEES timely filed their petition for relief.

After a careful analysis of the issues presented for consideration, we


rule in the negative and find the petition impressed with merit.

A petition for relief from judgment is governed by Rule 38 "RELIEF


FROM JUDGMENTS, ORDERS, OR OTHER PROCEEDINGS" - of the
1997 Rules on Civil Procedure. Sections 1 and 3 of the aforementioned
[8]

rule read:

"Section 1. Petition for relief from judgment, order, or other


proceedings. When a judgment or final order is entered, or any
other proceeding is thereafter taken against a party in any court
through fraud, accident, mistake, or excusable negligence, he
may file a petition in such court and in the same case praying that
the judgment, order or proceeding be set aside.

Sec. 3. Time for filing petition; contents and verification. A petition


provided for in either of the preceding sections of the Rule must
be verified, filed within sixty (60) days after the petitioner learns of
the judgment, final order, or other proceeding to be set aside, and
not more than six (6) months after such judgment or final order
was entered, or such proceeding was taken; and must be
accompanied with affidavits showing the fraud, accident, mistake,
or excusable negligence relied upon, and the facts constituting the
petitioners good and substantial cause of action or defense, as
the case may be."

A petition for relief from judgment is an equitable remedy that is allowed


only in exceptional cases when there is no other available or adequate
remedy. When a party has another remedy available to him, which may
be either a motion for new trial or appeal from an adverse decision of
the trial court, and he was not prevented by fraud, accident, mistake or
excusable negligence from filing such motion or taking such appeal, he
cannot avail himself of this petition. In order for a petition for relief to be
[9]

entertained by the court, the petitioner must satisfactorily show that he


has faithfully and strictly complied with the provisions of Rule 38. It is
[10]

also incumbent upon the petitioner to show that the said petition was
filed within the reglementary period specified in Section 3, Rule 38
(within sixty (60) days after the petitioner learns of the judgment, final
order, or other proceeding to be set aside, and not more than six (6)
months after such judgment or final order was entered, or such
proceeding was taken). And the rule is that the reglementary period is
[11]

reckoned from the time the partys counsel receives notice of the
decision for notice to counsel of the decision is notice to the party for
purposes of Section 3 of Rule 38. [12]

In the present case, the YEES were served a copy of the judgment of
the lower court through their counsel, Attorney Ralph Lou I. Willkom on
March 3, 1995. Thus, the YEES are considered to have received notice
on March 3, 1995 when their counsel was served notice and not on
March 24, 1995 when they actually learned of the adverse decision.
Consequently, their petition for relief, which was filed on May 15, 1995
or over sixty days from notice of their counsel, was filed out of time. This
Court has consistently held that the failure of a partys counsel to notify
him on time of the adverse judgment to enable him to appeal therefrom
is negligence, which is not excusable. However, notice sent to counsel
[13]

of record is binding upon the client and the neglect or failure of counsel
to inform him of an adverse judgment resulting in the loss of his right to
appeal is not a ground for setting aside a judgment valid and regular on
its face.
[14]

We find no basis for respondents insistence on the application of the


doctrines enunciated by this court in Legarda vs. Court of
Appeals and Peoples Homesite and Housing Corporation vs.
[15]

Tiongco , where this Court departed from the established rule that
[16]

notice to counsel is notice to the client considering that in said cases,


the lawyers miserably failed in their duty to maintain their clients cause
and that the lawyers inaction and wanton disregard of procedural rules
were extremely reckless and grossly negligent and amounted to a
deprivation of their clients property without due process of law.

First, this Court reversed its ruling in Legarda on reconsideration in a


Resolution dated October 16, 1997 for the reason that the judgment
[17]

sought to be annulled became final when the petitioner failed to avail of


the remedies available to her such as filing a motion for reconsideration
or appealing the case despite her claim that her lawyer never informed
her of the decision against her. This Court emphasized the need to
impose finality on judgments and that public policy and sound practice
demand that, at the risk of occasional errors, judgments should become
final at some definite date fixed by law. And when judgments of lower
courts become final, not even the Supreme Court can in anyway review
or modify them directly or indirectly. This Court clearly recognized that
[18]

the negligence of the petitioners counsel in failing to protect her


interests was binding upon her despite counsels failure to inform her of
the adverse decision of her case.

Second, the case of Peoples Homesite is not squarely in point. In said


case, we gave due course to a petition for relief from judgment despite
the fact that it was filed out of time, the lawyer having failed to inform his
clients of the scheduled hearing of the case which was heard in their
absence. When judgment was rendered against them, their lawyer
failed to take any steps to protect the interest of their clients. In giving
due course to the petition for relief, this Court found that "there was
something fishy with the actuations" of their lawyer which deprived the
petitioners of their day in court. Consequently, we ruled that the client
was denied due process and gave due course to their petition.

The circumstances in the case at bar are different. We are not


persuaded by the YEES claim that they were denied due process
inasmuch as they were not denied their day in court. In fact, they were
able to prosecute their action and actively participated through counsel
in the proceedings before the lower court. Their failure to file an appeal
from the decision rendering it final and executory is not a denial of due
process. They may have lost their right to appeal but they were not
denied their day in court. The right to appeal is not a natural right or a
part of due process; it is merely a statutory privilege, and may be
exercised only in the manner and in accordance with the provisions of
the law. In the same manner, the YEES failure to file their petition for
[19]

relief within the period provided for under the Rules is not tantamount to
a denial of due process. More important, no evidence was presented to
support respondents bare and self-serving allegation that their lawyer
did not inform them of the decision against them. It bears stress that we
are not concerning ourselves with the lawyers duty to his client but with
the timeliness of the filing of the petition for relief which cannot be given
due course on the simple and expedient claim of a party that their
lawyer failed to inform them of the decision in the case. Relief will not be
granted to a party who seeks avoidance from the effects of the judgment
when the loss of remedy at law was due to his own negligence;
otherwise the petition for relief can be used to revive the right to appeal
which had been lost+- though inexcusable negligence. [20]

Parenthetically, it is noted that in its decision, the Court of Appeals


stated that the finding of ownership was a pivotal consideration for the
trial courts ruling to the effect that the YEES were bound to accept low
rentals because the building which was supposed to be constructed by
MERCURY would ultimately be owned by the YEES. However, a
reading of the trial courts decision shows that the primary basis for its
ruling was that there was no devaluation in currency, which would entitle
the YEES to a reformation of their contract. On the contrary, the trial
court, in granting the YEES an increase in the stipulated rentals
contained in their contract with MERCURY based its ruling on the
"meteoric boom" that the City of Cagayan de Oro was experiencing
which equity and human justice could not ignore. Moreover, MERCURY
did not show unwillingness to the said adjustments in order to maintain
good and harmonious relations with the YEES. Thus, even
assuming arguendo that the YEES petition for relief is given due course,
the judgment of the trial court denying the YEES principal prayer to
reform the contract on the ground of the devaluation of the currency is
not affected for the reason that the finding of the trial court as to whether
it is Mercury or the YEES who built the building is irrelevant to the
determination of whether there was indeed a devaluation in the
currency.

ACCORDINGLY, the instant petition is GRANTED and the decision of


the Court of Appeals in CA-G.R. SP No. 43765 is REVERSED and SET
ASIDE. The Order of the Regional Trial Court of Misamis Oriental,
Branch 20 dated October 17, 1995 dismissing the respondents Petition
for Relief from judgment is hereby AFFIRMED and REINSTATED.

No pronouncement as to costs.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 161864 April 27, 2007

SPS. ROLANDO DELA CRUZ and TERESITA DELA CRUZ, Petitioners,


vs.
SPS. FELICIANO ANDRES and ERLINDA AUSTRIA, and the DIRECTOR OF
LANDS, Respondents.

RESOLUTION

QUISUMBING, J.:

This petition for review on certiorari assails the Resolutions dated October 21, 2003 1 and January
21, 20042 of the Court of Appeals in CA-G.R. SP No. 67966, which dismissed the petition for relief
from judgment instituted by petitioners and denied their motion for reconsideration, respectively.

The petition stemmed from the following factual antecedents:

Spouses Rolando Dela Cruz and Teresita Dela Cruz filed a complaint for annulment of title and/or
reconveyance with damages against spouses Feliciano Andres and Erlinda Austria and the Director
of Lands on July 28, 1993. The case was docketed as Civil Case No. 523 and assigned to the
Municipal Circuit Trial Court (MCTC) of Laur and Gabaldon in Laur, Nueva Ecija.
The MCTC ordered the Director of Lands to cancel Original Certificate of Title No. 11859 insofar as
the 410 square meters owned and occupied by petitioners were concerned. On appeal, the Regional
Trial Court of Palayan City, Branch 40, reversed and set aside the decision of the MCTC.

On December 4, 2001, petitioners, assisted by Atty. Rafael E. Villarosa, filed with the Court of
Appeals a petition for review docketed as CA-G.R. SP No. 67966.3 The appellate court dismissed the
petition since the Certification of Non-Forum Shopping was signed by Atty. Villarosa instead of
petitioners in violation of Section 5, Rule 7 of the 1997 Rules of Civil Procedure. 4 Petitioners moved
for reconsideration but it was denied.

Thereafter, Atty. Villarosa withdrew his appearance. On March 20, 2002, petitioners, assisted by Atty.
Guillermo M. Hernandez, Jr., requested for an extension of time to file their petition before this Court.
Later, they abandoned the motion and the case was declared closed and terminated.

On May 6, 2002, petitioners filed with the Court of Appeals a petition for relief from judgment praying
that the dismissal of their petition for review be set aside since the gross negligence of their previous
counsel did not bind them.5 The appellate court, however, denied their petition. It ruled that
petitioners were bound by the action of their counsel as well as by his mistake or negligence. It
added that petitioners could not belatedly complain on petition or appeal about their counsels
incompetence since they could have easily dismissed him at the initial or trial stage if they were not
satisfied with his performance. Since petitioners slept on their rights, they had no one to blame but
themselves.

With the denial of their motion for reconsideration, petitioners came to this Court raising the following
issues:

I.

Whether or not the filing of a Petition [for] Relief from Judgment pursuant to Rule 38 of the 1997
Rules of Civil Procedure is available when the case is already pending with the Court of Appeals
and/or with this Honorable Court;

II.

Whether or not the Court of Appeals gravely abused its discretion in not finding that the petitioners
previous counsels acts are to be considered as gross negligence;

III.

Whether or not the Court of Appeals gravely abused its discretion in finding that the petitioners have
allegedly slept on their right to complain about the incompetence of their previous counsel and to
dismiss such counsel; and

IV.

Whether or not the Court of Appeals gravely abused its discretion in not considering the case on the
merits.6
The threshold issue before us is: Can petitioners avail of a petition for relief under Rule 38 of the
1997 Rules of Civil Procedure from a judgment of the Court of Appeals due to their counsels
negligence when he signed the Certification of Non-Forum Shopping?

Petitioners plead that they be spared the consequences of their procedural lapse since it was
caused by their counsels gross negligence in ignoring a well-established rule that it is the party
himself who should verify and certify the pleading.

Respondents, on the other hand, maintain that petitioners counsel was not negligent and in fact did
his best since he filed the petition for review on time.

After considering the submission of the parties, we deny the petition for lack of merit.

A petition for relief from judgment under Rule 38 of the 1997 Rules of Civil Procedure is an equitable
remedy that is allowed only in exceptional cases when there is no other available or adequate
remedy.7 It may be availed of only after a judgment, final order or other proceeding was taken
against the petitioner in any court through fraud, accident, mistake, or excusable negligence. 8

While the law uses the phrase "any court," it refers only to Municipal/Metropolitan and Regional Trial
Courts.9 The procedure in the Court of Appeals and this Court are governed by separate provisions
of the Rules of Court and may, from time to time, be supplemented by additional rules promulgated
by this Court through resolutions or circulars. As it stands, neither the Rules of Court nor the Revised
Internal Rules of the Court of Appeals allows the remedy of petition for relief in the Court of
Appeals.10

Moreover, under Section 1(b), Rule 41 of the 1997 Rules of Civil Procedure, the denial of a petition
for relief from judgment is subject only to a special civil action for certiorari under Rule 65. In seeking
to reverse the appellate courts decision denying their petition for relief from judgment by a petition
for review on certiorari under Rule 45, petitioners have availed of the wrong remedy twice. 11

Nevertheless, even if this Court were to delve into the merits of this petition, the same must still be
denied. What petitioners counsel did in this case was to attach an improper Certification of Non-
Forum Shopping to their petition for review with the appellate court. While this omission can
plausibly qualify as simple negligence, it does not amount to gross negligence to justify the
annulment of the proceedings below.

For a claim of counsels gross negligence to prosper, nothing short of clear abandonment of the
clients cause must be shown.12 The negligence of counsel must be so gross that the client is
deprived of his day in court, the result of which is that he is deprived of his property without due
process of law. Thus, where a party was given the opportunity to defend his interests in due course,
he cannot be said to have been denied due process of law, for this opportunity to be heard is the
very essence of due process.13 Here, the case underwent a full-blown trial. Both parties were
adequately heard, and all issues were ventilated before the decision was promulgated.

It should be pointed out that in petitions for relief from judgment, meritorious defenses must be
accompanied by the ground relied upon, whether it is fraud, accident, mistake, excusable
negligence, extrinsic fraud or lack of jurisdiction.14 In the instant case, there being neither excusable
nor gross negligence amounting to a denial of due process, meritorious defenses cannot alone be
considered.
While it is true that rules of procedure are not cast in stone, it is equally true that strict compliance
with the Rules is indispensable for the prevention of needless delays and for the orderly and
expeditious dispatch of judicial business.15 Utter disregard of the rules cannot justly be rationalized
by harking on the policy of liberal construction.16

WHEREFORE, the instant petition is DENIED for lack of merit. The assailed Resolutions dated
October 21, 2003 and January 21, 2004 of the Court of Appeals in CA-G.R. SP No. 67966,
are AFFIRMED.

Costs against petitioners.

SO ORDERED.

SECOND DIVISION

ANTONIO CABADOR, G.R. No. 186001

Petitioner,

Present:

Ynares-Santiago, J.,*

- versus - Carpio Morales,**


Acting Chairperson,
Brion,
Del Castillo, and
Abad, JJ.
PEOPLE OF THE PHILIPPINES,
Respondent. Promulgated:

October 2, 2009
x ---------------------------------------------------------------------------------------- x

DECISION

ABAD, J.:

Before the Court is a petition for review on certiorari, assailing the Court of
Appeals (CA) Decision of August 4, 2008 [1] and Resolution of October 28,
2008[2] in CA-G.R. SP 100431 that affirmed the August 31, 2006 Order [3] of the
Regional Trial Court (RTC) of Quezon City.

The facts are not disputed.

On June 23, 2000 the public prosecutor accused petitioner Antonio Cabador
before the RTC of Quezon City in Criminal Case Q-00-93291 of murdering, in
conspiracy with others, Atty. Jun N. Valerio. [4] On February 13, 2006, after
presenting only five witnesses over five years of intermittent trial, the RTC
declared at an end the prosecutions presentation of evidence and required the
prosecution to make a written or formal offer of its documentary evidence
within 15 days from notice.[5] But the public prosecutor asked for three
extensions of time, the last of which was to end on July 28, 2006. Still, the
prosecution did not make the required written offer.

On August 1, 2006 petitioner Cabador filed a motion to dismiss the case,


[6]
complaining of a turtle-paced proceeding in the case since his arrest and
detention in 2001 and invoking his right to a speedy trial. Further, he claimed
that in the circumstances, the trial court could not consider any evidence
against him that had not been formally offered. He also pointed out that the
prosecution witnesses did not have knowledge of his alleged part in the crime
charged.

Unknown to petitioner Cabador, however, four days earlier or on July 28,


2006 the prosecution asked the RTC for another extension of the period for its
formal offer, which offer it eventually made on August 1, 2006, the day
Cabador filed his motion to dismiss.[7]

On August 31, 2006 the RTC issued an Order treating petitioner Cabadors
August 1, 2006 motion to dismiss as a demurrer to evidence. And, since he
filed his motion without leave of court, the RTC declared him to have waived
his right to present evidence in his defense. The trial court deemed the case
submitted for decision insofar as he was concerned. Cabador filed a motion
for reconsideration of this Order but the RTC denied it on February 19, 2007.
[8]
Cabador questioned the RTCs actions before the CA but on August 4, 2008
the latter denied his petition and affirmed the lower courts actions.
[9]
With the CAs denial of his motion for reconsideration, on October 28, 2008
petitioner came to this Court via a petition for review on certiorari.

The issue in this case is whether or not petitioner Cabadors motion to dismiss
before the trial court was in fact a demurrer to evidence filed without leave of
court, with the result that he effectively waived his right to present evidence in
his defense and submitted the case for decision insofar as he was concerned.
The trial proper in a criminal case usually has two stages: first, the
prosecutions presentation of evidence against the accused and, second, the
accuseds presentation of evidence in his defense. If, after the prosecution has
presented its evidence, the same appears insufficient to support a conviction,
the trial court may at its own initiative or on motion of the accused dispense
with the second stage and dismiss the criminal action. [10] There is no point for
the trial court to hear the evidence of the accused in such a case since the
prosecution bears the burden of proving his guilt beyond reasonable
doubt. The order of dismissal amounts to an acquittal.

But because some have in the past used the demurrer in order to delay the
proceedings in the case, the remedy now carries a caveat. When the accused
files a demurrer without leave of court, he shall be deemed to have waived the
right to present evidence and the case shall be considered submitted for
judgment.[11] On occasions, this presents a problem such as when, like the
situation in this case, the accused files a motion to dismiss that, to the RTC,
had the appearance of a demurrer to evidence. Cabador insists that it is not
one but the CA, like the lower court, ruled that it is.

This Court held in Enojas, Jr. v. Commission on Elections[12] that, to determine


whether the pleading filed is a demurer to evidence or a motion to dismiss, the
Court must consider (1) the allegations in it made in good faith; (2) the stage
of the proceeding at which it is filed; and (3) the primary objective of the
party filing it.
Here, the pertinent portions of petitioner Cabadors motion to dismiss read as
follows:

2. On November 9, 2001, the accused was arrested and


subsequently brought to the Quezon City jail through a commitment
order dated November 21, 2001 where he had been detained during
the course of this case.

3. The accused was arraigned on January 8, 2002 and trial


began soon after.

4. UP-OLA entered its appearance as counsel for the accused on


January 20, 2005.

5. On February 10, 2006, the Honorable Court terminated the


presentation of evidence for the prosecution considering that the
case has been going on for 5 years already and during that period
the prosecution has only presented 5 witnesses. Moreover, xxx there
had been numerous postponements due to failure of the prosecution
to ensure the presence of its witnesses.

6. In an order dated March 31, 2006, the Honorable court


required the public prosecutor to submit its formal offer of evidence
within fifteen (15) days from receipt of such order.

7. On April 17, 2006, the public prosecutor was again absent


so the presentation of evidence for the accused was reset to June 6,
2006.

8. During the same hearing, the Prosecution was again


granted an additional fifteen (15) days within which to file their
formal offer of evidence.

9. On June 6, 2006, the public prosecutor again failed to


appear and to file their formal offer of evidence. In an order, the
Honorable Court again extended to the prosecution an additional
fifteen (15) days from receipt of the order within which to file their
formal offer of evidence.

10. On June 28, 2006, the Honorable Court issued an order


granting the prosecution a thirty-day extension, or until July 28,
2006 within which to file their formal offer of evidence since the
public prosecutor was on leave.

11. Upon the expiration of the extension granted by the


Honorable Court, the prosecution failed to file their formal offer of
evidence.

10. (Sic) Despite three (3) extensions, the prosecution failed to


file formal offer of evidence.

11. (Sic) Sec. 34, Rule 132 of the Rules of Court provides that
the court shall consider no evidence which has not been formally
offered. A formal offer is necessary, since judges are required to base
their findings of fact and their judgment solely and strictly upon the
evidence offered by the parties at the trial (Ong vs. CA, GR No.
117103). Hence, without any formal offer of evidence, this Honorable
Court has no evidence to consider.

12. The charge against the accused has no leg to stand on. The
witnesses that had been presented by the prosecution testified
mainly on the occurrences on the night of the incident and had no
knowledge of any connection with or any participation by the
accused in the incident.

13. The hearings of the case have been delayed since 2001
through no fault of the defense to the prejudice of the rights of the
accused to a speedy trial, mandated by no less than Art. III, Sec. 16
of the Constitution.
14. Since UP-OLA had entered its appearance in 2005, the
case had been reset for twelve (12) times, most of which are due to
the fault or absence of the prosecution. For the five year duration of
the case, the prosecution still has not presented any evidence to
prove the guilt of the accused beyond reasonable doubt. Meanwhile,
the accused has been unduly stripped of this liberty for more than
five (5) years upon an unsubstantiated charge.

15. The accused was injured and debilitated in the course of


his arrest which resulted in the amputation of his left leg. His
movement is severely hampered and his living conditions are less
adequate. To subject him to further delays when there is no
substance to the charge against him would tantamount to injustice.
[13]

It can be seen from the above that petitioner Cabador took pains to point out
in paragraphs 2, 3, 5, 6, 7, 8, 9, 10, 11, 10 (sic), 13, 14, and 15 above how trial
in the case had painfully dragged on for years. The gaps between proceedings
were long, with hearings often postponed because of the prosecutors
absence. This was further compounded, Cabador said, by the prosecutions
repeated motions for extension of time to file its formal offer and its failure to
file it within such time. Cabador then invoked in paragraph 13 above his right
to speedy trial. But the RTC and the CA simply chose to ignore these extensive
averments and altogether treated Cabadors motion as a demurrer to evidence
because of a few observations he made in paragraphs 11 (sic) and 12
regarding the inadequacy of the evidence against him.

In criminal cases, a motion to dismiss may be filed on the ground of denial of


the accuseds right to speedy trial.[14] This denial is characterized by
unreasonable, vexatious, and oppressive delays without fault of the accused,
or by unjustified postponements that unreasonably prolonged the trial. [15] This
was the main thrust of Cabadors motion to dismiss and he had the right to
bring this up for a ruling by the trial court.

Cabador of course dropped a few lines in his motion to dismiss in paragraphs


11 (sic) and 12, saying that the trial court has no evidence to consider, the
charge has no leg to stand on, and that the witnesses x x x had no knowledge
of any connection with or any participation by the accused in the incident. But
these were mere conclusions, highlighting what five years of trial had
accomplished.

The fact is that Cabador did not even bother to do what is so fundamental in
any demurrer. He did not state what evidence the prosecution had presented
against him to show in what respects such evidence failed to meet the elements
of the crime charged. His so-called demurrer did not touch on any particular
testimony of even one witness. He cited no documentary exhibit. Indeed, he
could not because, he did not know that the prosecution finally made its
formal offer of exhibits on the same date he filed his motion to dismiss. [16] To
say that Cabador filed a demurrer to evidence is equivalent to the proverbial
blind man, touching the side of an elephant, and exclaiming that he had
touched a wall.

Besides, a demurrer to evidence assumes that the prosecution has already


rested its case. Section 23, Rule 119 of the Revised Rules of Criminal
Procedure, reads:

Demurrer to evidence. After the prosecution rests its case, the


court may dismiss the action on the ground of insufficiency of
evidence (1) on its own initiative after giving the prosecution the
opportunity to be heard or (2) upon demurrer to the evidence filed
by the accused with or without leave of court. (Emphasis supplied)
Here, after the prosecution filed its formal offer of exhibits on August 1, 2006,
the same day Cabador filed his motion to dismiss, the trial court still needed
to give him an opportunity to object to the admission of those exhibits. It also
needed to rule on the formal offer. And only after such a ruling could the
prosecution be deemed to have rested its case. Since Cabador filed his motion
to dismiss before he could object to the prosecutions formal offer, before the
trial court could act on the offer, and before the prosecution could rest its case,
it could not be said that he had intended his motion to dismiss to serve as a
demurrer to evidence.
In sum, tested against the criteria laid down in Enojas, the Court finds
that petitioner Cabador filed a motion to dismiss on the ground of violation of
his right to speedy trial, not a demurrer to evidence. He cannot be declared to
have waived his right to present evidence in his defense.

On a final note, a demurrer to evidence shortens the proceedings in


criminal cases. Caution must, however, be exercised[17] in view of its
pernicious consequence on the right of the accused to present evidence in his
defense, the seriousness of the crime charged, and the gravity of the penalty
involved.

WHEREFORE, the petition is GRANTED, the August 4, 2008 Decision and the
October 28, 2008 Resolution of the Court of Appeals in CA-G.R. SP 100431
are REVERSED and SET ASIDE, and the August 31, 2006 Order of the
Regional Trial Court of Quezon City, Branch 81 is NULLIFIED. The latter
court is DIRECTED to resolve petitioner Antonio Cabadors motion to dismiss
based on the circumstances surrounding the trial in the case.

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. Nos.195011-19 September 30, 2013

GREGORIO SINGIAN, JR., Petitioner,


vs.
SANDIGANBAYAN (3RD DIVISION), THE PEOPLE OF THE PHILIPPINES, and THE
PRESIDENTIAL COMMISSIONON GOOD GOVERNMENT, Respondents.

DECISION

DEL CASTILLO, J.:

The grant or denial of a Demurrer to Evidence is left to the sound discretion of the court, and its
ruling on the matter shall not be disturbed in the absence of a grave abuse of such discretion. This
Petition for Certiorari Ad Cautelam1 seeks to set aside the August 5, 2010 Resolution2 of the
Sandiganbayan in Criminal Case Nos. 26297-26305,denying petitioner Gregorio Singian, Jr.'s
Demurrer to Evidence3 and the November 18, 2010 Resolution4 denying reconsideration thereof.

Antecedents

The criminal cases involved in the present Petition have been the subject of a previous disposition of
the Court, specifically Singian, Jr. v. Sandiganbayan. 5 In said case, the Court made the following
recital of facts:

Atty. Orlando L. Salvador was Presidential Commission On Good Government Consultant on detail
with the Presidential Ad Hoc Committee on Behest Loans (Committee). He was also the coordinator
of the Technical Working Group composed of officers and employees of government financing
institutions to examine and study the reports and recommendations of the Asset Privatization Trust
relating to loan accounts in all government financing institutions. Among the accounts acted upon by
the Committee were the loans granted to Integrated Shoe, Inc. (ISI) by the Philippine National Bank
(PNB).

It would appear that on 18 January 1972, ISI applied for a five-year confirmed irrevocable deferred
letter of credit amounting to US$2,500,000.00 (P16,287,500.00) to finance its purchase of a
complete line of machinery and equipment. The letter of credit was recommended to the PNB Board
of Directors by then Senior Vice[-]President, Mr. Constantino Bautista.

On 27 January 1972, the PNB approved the loan, subject to certain stipulations. The said letter of
credit was to be secured by the following collaterals: a) a second mortgage on a 10,367-square
meter lot under Transfer Certificate of Title No. 218999 with improvements, machinery and
equipment; b) machinery and equipment to be imported under the subject letter of credit; and c)
assignment of US$0.50 per pair of shoes of ISIs export sales. It was further subjected to the
following pertinent conditions: a) that the letter of credit be subject to joint and several signatures of
Mr. Francisco J. Teodoro, Mrs. Leticia T. Teodoro, Marfina T. Singian, Tomas Teodoro, and Gregorio
Singian, Jr.; b) that ISI, which has a paid-up capital amounting to P1,098,750.00 as of January1972,
shall increase its authorized capital to P5,000,000.00, and in the event that cash receipts do not
come up to the projections, or as may be required by the bank, ISI will further increase its
capitalization and the present stockholders will subscribe to their present holdings; and c) that ISI
shall submit other collaterals incase the appraised value of the new machinery and equipment be
insufficient.

ISI was further extended the following subsequent loan accommodations:

1. P1,500,000.00 on 10 February 1972 for the purchase of raw materials;

2. P1,000,000.00 on 18 January 1973 as export advance;

3. P1,500,000.00 on 21 March 1973 as export advance;

4. P600,000.00 on 06 March 1974 as credit line;

5. P2,500,000.00 renewed on 15 December 1976;

6. P5,000,000.00 on 19 November 1978 as export advance;

7. P1,500,000.00 on 04 August 1980 as export advance; and

8. P7,000,000.00 on 15 December 1980 also as an export advance.

The Committee found that the loans extended to ISI bore characteristics of behest loans specifically
for not having been secured with sufficient collaterals and obtained with undue haste.

As a result, Atty. Orlando Salvador filed with the Office of the Ombudsman a sworn complaint dated
20 March 1996, for violation of Section 3, paragraphs (e) and (g), of Republic Act No. 3019, as
amended, against the following: Panfilo Domingo, former PNB President, Constantino Bautista,
former PNB Senior Vice-President, Domingo Ingco, former member of the PNB Board of Directors,
John Does, former members of the PNB Board of Directors, Francisco Teodoro, President of ISI,
Leticia Teodoro, Vice-President of ISI, Marfina Singian, Incorporator of ISI, Tomas Teodoro, General
Manager of ISI, and Gregorio Singian, Jr., Executive Vice-President of ISI. The complaint, docketed
as OMB-0-96-0967, was assigned to Graft Investigation Officer I Atty. Edgar R. Navales (Investigator
Navales) of the Evaluation and Preliminary Investigation Bureau (EPIB) for investigation.

xxxx
Hence, the corresponding eighteen (18) Informations against petitioner and his co-accused for
violation of Section 3(e) and (g) of Rep. Act No. 3019,docketed as Criminal Cases No. 26297 to No.
26314, were filed before the Sandiganbayan and were raffled to the Third Division thereof. The
eighteen (18)Informations correspond to the nine (9) loan accommodations granted to ISI, each loan
being the subject of two informations alleging violations of both paragraphs of Section 3 of Rep. Act
No. 3019.6

Thus, herein petitioner was charged with nine counts of violation of Section 3(e), 7 and another nine
counts of violation of Section 3(g),8 of Republic Act No.3019 (RA 3019), or the Anti-Graft and Corrupt
Practices Act. Docketed as Criminal Case Nos. 26297-26314, the cases involved the purported
granting of behest loans by the governments Philippine National Bank (PNB) to Integrated Shoes,
Inc. (ISI), in various amounts and on different dates as above-enumerated.

The Informations9 covering Section 3(e) charged that Panfilo Domingo(Domingo), then PNB
Director/President/Vice-President (Europe); Domingo C. Ingco (Ingco), then PNB Director; and
Constantino Bautista (Bautista), then PNB Senior Executive Vice-President, while in the
performance of their official functions and taking advantage of their official positions, conspired with
private individuals, specifically officers of ISI, including petitioner, who was ISIs Executive Vice-
President, in willfully, unlawfully and criminally causing undue injury to the government and giving
unwarranted benefits, advantage and preference to ISI by accommodating and granting several
loans and advances to the latter, despite knowing that it lacked sufficient capitalization, or failed to
give adequate collateral or raise its working capital to secure the governments interest in case it
failed to pay said loans, as in fact it failed to pay these loans.

On the other hand, the Informations10 covering Section 3(g) charged the above individuals, including
petitioner, with conspiring, confederating, and willfully, unlawfully and criminally entering into the
above-mentioned loan transactions which are grossly and manifestly disadvantageous to the
government, for lack of sufficient capitalization or adequate collateral, and for failure of ISI to raise its
working capital to secure the governments interest in case it failed to pay said loans, which indeed
ISI failed to pay.

On January 27, 2004, petitioner entered a plea of not guilty on all counts. All the other accused were
arraigned as well, except for Bautista, who passed away prior to his scheduled arraignment.

On April 29, 2005, the Sandiganbayan dismissed Criminal Case Nos.26306-26314. 11 On October 6,
2007, the accused Ingco passed away; as a result, the cases against him were dismissed as well.
Accused Domingo likewise passed away on June 26, 2008 resulting in an October 29, 2008
Resolution wherein the Sandiganbayan dropped the cases against him.

Trial with respect to the remaining cases ensued. For its testimonial evidence, the prosecution called
to the stand nine witnesses:

1. Director Danilo R.V. Daniel, then Coordinator of the Technical Working Group on Behest
Loans (TWG) and Director of the Research Division of the Presidential Commission on Good
Government (PCGG), who testified on the investigation conducted by the TWG of the ISI
account and on various documents relative thereto, including the Fourteenth (14th) Report of
Presidential Ad Hoc Fact-Finding Committee on Behest Loans12 (Ad Hoc Committee) dated
July15, 1993 which he drafted, and which characterized the ISI account as a behest loan; 13
2. Atty. Reginald Bacolor from the Legal Department, Privatization Management Office of the
Asset Privatization Trust (APT), who testified on the deeds, documents and titles covering
the foreclosed properties offered as collaterals in the ISI account and thereafter sold by the
government through the APT;14

3. Atty. Edwin Flor V. Barroga, then Deputy Registrar of Deeds of Binangonan, Rizal, who
testified on the property offered as collateral by ISI, which was the subject of a prior
encumbrance to the Government Service Insurance System (GSIS);15

4. Atty. Cinderella Benitez, Securities Counsel II of the Securities and Exchange Commission
(SEC), who testified on ISIs SEC documents, specifically its capitalization and financial
status. She identified certified copies of ISIs Articles of Incorporation, By-Laws, Amended
Articles of Incorporation, Certificates of Increase of Capital Stock, etc.; 16

5. Atty. Mary Ann B. Morales, SEC Securities Counsel III from its Registration and Monitoring
Department, who likewise testified on ISIs SEC documents. She identified ISIs General
Information Sheets, Schedule of Stockholders, Subscribed and Paid-Up Capital, Certificate
of Corporate Filing/Information, etc. She testified, among others, that as of 1973, ISIs
subscribed capital stock was only P1.6 million, while its paid-up capital was
merelyP1,298,750.00;17

6. Cesar Luis Pargas, of the Privatization Management Office, APT, custodian of ISIs loan
documents, who testified on and brought with him the loan documents, deeds, titles, notes,
etc. covering the ISI account;18

7. Claro Bernardino, Senior Manager of PNBs Human Resource Group, who brought the
personnel records/certificates of employment of the accused Domingo and Ingco; 19

8. Ramonchito Bustamante, Manager of the Loans and Implementing Services Division of


PNB, expert witness on banking policy and PNBs loan policies, as well as ISIs loan data;
and20

9. Stephen Tanchuling, Chief Administrative Officer of the Records Division of the Research
Department of the PCGG, custodian of documents turned over to PCGG by the Ad Hoc
Committee. He testified that his function was to authenticate documents in his custody, which
consisted of records transmitted to the Ad Hoc Committee by different government agencies.
He identified as well the Executive Summary21 of the ISI account; the Fourteenth (14th)
Report of Presidential Ad Hoc Fact-Finding Committee on Behest Loans dated July 15,
1993; the Executive Summary of the Ad Hoc Committee Findings; and other relevant
documents.22

For its documentary evidence, the prosecution presented the following, among others:

1) Photocopy of the Fourteenth (14th) Report of Presidential Ad Hoc Fact-Finding Committee


on Behest Loans23 which listed ISI as among the corporations with loans obtained from the
government or government banks (in this case, PNB)which were found to possess the
characteristics of a behest loan;
2) Photocopy of an Executive Summary of Findings of the Ad Hoc Committee, 24 detailing the
particulars of the ISI account;

3) Photocopy of the certified true copy of the January 10, 1972 Memorandum 25 from Bautista
to the PNB Board of Directors, detailing Bautistas findings and recommendations regarding
ISIs application for a $2.5 million(P16,287,500.00) letter of credit for the purpose of
purchasing machinery and equipment for a new shoe factory then being built in Bataan.

4) Certified photocopy of a Deed of Undertaking and Conformity to Bank Conditions 26 (Deed


of Undertaking) dated March 24, 1972 executed by ISI in favor of PNB;

5) Certified photocopy of a Deed of Assignment27 dated March 24, 1972,assigning $0.50 per
pair of shoes of all export sales of ISI in favor of PNB;

6) Certified photocopy of Chattel Mortgage with Power of Attorney28 executed by ISI in favor
of PNB;

7) Certified true copy of Certificate of Filing of Certificate of Increase of Capital Stock 29 issued
by the SEC dated February 6, 1974, showing that ISI increased its authorized capital stock
from P3 million to P7 million; and

8) Certified true copy of the By-Laws of Integrated Pacific, Inc. (ISIs predecessor
corporation).30

After the presentation of its testimonial and documentary evidence, the prosecution rested its case
and filed its Formal Offer of Exhibits.31 The respondent court admitted in toto the States
documentary exhibits.

Petitioners Demurrer to Evidence

On February 17, 2010, petitioner, with prior leave, filed a Demurrer to Evidence 32 anchored on the
following grounds: (1) lack of proof of conspiracy with any PNB official; (2) the contracts with PNB
contained provisions that are beneficial, and not manifestly and grossly disadvantageous, to the
government; (3)the loans could not be characterized as behest loans because they were secured by
sufficient collaterals and ISI increased its capitalization; and (4) assuming the loans are behest
loans, petitioner could not be held liable for lack of any participation. 33

In particular, petitioner claimed that the prosecution failed to adduce evidence of conspiracy to
defraud the government because his co-accused from PNB had no power to approve the alleged
behest loans; that if a theory of conspiracy were to be pursued, then all the members of the PNBs
Board of Directors at the time the loans and credit accommodations to ISI were approved, and not
only Domingo and Ingco, should have been impleaded as they were the ones who directed PNBs
affairs; that the prosecution failed to show that he exercised any kind of influence over PNBs Board
of Directors in order to ensure the grant of the loans and accommodations applied for; and for failure
to present evidence that the accused colluded with each other in entering into the loan agreements
and accommodations.

Petitioner contended further that the contracts and agreements entered into by and between PNB
and ISI were standard contracts used by PNB in its dealings with its clients; that the terms thereof
were couched in words and fashioned in a manner that favored the bank; that the agreements
guaranteed repayment of the loan and the putting up of sufficient collateral, and provided for interest
and penalties in the event of breach, and thus were not grossly and manifestly disadvantageous to
the government.

Next, petitioner argued that the subject loans were not undercollateralized; that ISI was not
undercapitalized as the corresponding increase in its authorized capital stock and paid-up capital
was timely made; and that the loans could not have been characterized as behest loans considering
the following stipulations: a) the assets intended for acquisition through the letter of credit would
serve as the collateral therefor; b) the officers and majority stockholders of ISI were made jointly and
severally liable for its obligations; c) ISI may not declare dividends while the loans are subsisting; d)
PNB is given the right to designate its Comptroller in ISI; and e) even if it is assumed for the sake of
argument that the subject loans were undercollateralized, this fact standing alone does not make
for a behest loan, as the presence of at least two (2) criteria out of the eight enumerated in
Presidential Memorandum Order No. 61 dated November 9, 1992is required to characterize the
loans as behest loans.

Assuming that the loan agreements are behest loans, petitioner claimed that he may not be held
liable because his indictment was based solely on the Deed of Undertaking which was altered such
that his name was stricken out and instead the name "Gregorio T. Teodoro" was inserted; that the
accountee-mortgagor-assignor under said deed was ISI; that the obligations were assumed by ISI;
that ISI had already fully complied with all its obligations under the deed; and that he was not a
member of ISIs Board of Directors, which alone was tasked as ISIs governing body with the
observance of the obligations set forth under the deed; nor may he seek to compel action thereon at
a stockholders meeting, as he is not a shareholder of ISI either.

Finally, petitioner claimed that the Ad Hoc Committee documents specifically the Executive
Summary and Fourteenth (14th) Report of Presidential Ad Hoc Fact-Finding Committee on Behest
Loans are inadmissible for not being photocopies of the originals, but mere copies of photocopies
in the custody of the PCGG; and that they were prepared and issued by individuals who have no
personal knowledge of the facts and circumstances which transpired during the proceedings
adverted to.

Petitioner thus prayed that as against him, Criminal Case Nos. 26297-26305 be dismissed for
insufficiency of evidence.

Prosecutions Opposition

In its Opposition,34 the prosecution insisted that conspiracy may be inferred from the following pattern
of events:

a. The frequency of the loans or closeness of the dates at which they were granted;

b. The quantity of the loans granted;

c. The failure of PNB to verify and to take any action on ISIs failure to put up additional
capitalization and additional collaterals; and d. The eventual absence of any action by PNB
to collect full payment from ISI.35
The prosecution noted that without ISI putting up additional capitalization or collateral, PNB kept
granting loans to it, such that in 1973, its in debtedness already rose to P16,360,000.00 while its
capital stock stood at only P7 million; that petitioner is intimately connected with the incorporators
and officers of ISI Leticia Teodoro is his mother-in-law, while Francisco Teodoro is his father-in-law;
and Marfina Teodoro-Singian is his wife; that as of 1983, ISIs debt to PNB amounted
to P71,847,217.00, as a result of the undercapitalized and undercollateralized loans extended to it;
and that as signatory to the Deed of Undertaking, petitioner assumed the obligations of a surety.

Finally, the prosecution noted that petitioners arguments in his Demurrer to Evidence constitute
matters of defense which should be passed upon only after trial on the merits.

Ruling of the Sandiganbayan

On August 5, 2010, the Sandiganbayan issued the first assailed Resolution, which decreed as
follows:

WHEREFORE, considering all the foregoing, this Court DENIES the Demurrer to Evidence filed by
accused Gregorio Singian, Jr. as the evidence for the prosecution sufficiently established the
essential elements of the offense charged and overcame the presumption of innocence in favor of
said accused.

SO ORDERED.36

Petitioners Motion for Reconsideration37 having been denied on November 18, 2010 by the
respondent court, he filed the present Petition for Certiorari.

Issues

Petitioner raises the following issues:

THE RESPONDENT SANDIGANBAYAN ACTED WITH GRAVE ABUSEOF DISCRETION


AMOUNTING TO LACK OR EXCESS OFJURISDICTION WHEN IT ISSUED THE ASSAILED
RESOLUTIONS XX X CONSIDERING THAT:

I.

THE FIRST ELEMENT OF SECTION 3(G) OF R.A. 3019 IS NOT PRESENTBECAUSE THE
EXISTENCE OF CONSPIRACY IS NEGATED BY THEFACT THAT THE PUBLIC OFFICERS WHO
WERE RESPONSIBLE FOR GRANTING THE LOANS IN QUESTION WERE NEVER CHARGED,
ACCUSED OR INCLUDED IN THE INFORMATIONS SUBJECT OFTHESE CASES.

II.

EVEN IF IT IS PRESUMED, PURELY IN GRATIA ARGUMENT IS, THAT ACONSPIRACY


ATTENDED THE GRANT OF THE QUESTIONED LOANSTO ISI, THERE IS, NEVERTHELESS, NO
OVERT ACT ATTRIBUTABLETO THE PETITIONER THAT EVEN REMOTELY JUSTIFIES
HISINCLUSION IN THE PROSECUTIONS CONSPIRACY DRAGNET.

III.
THE PROSECUTIONS EXHIBITS "C" (ALSO MARKED AS EXHIBIT"RR") AND "QQ" WHICH THE
PROSECUTION FOISTED TO MAKE ITAPPEAR THAT THE CREDIT ACCOMMODATIONS
SUBJECT OF THECRIMINAL CASES BELOW ARE BEHEST LOANS, DO NOT HAVE
ANYPROBATIVE VALUE AND ARE COMPLETELY INADMISSIBLEBECAUSE THEY ARE
UNDISPUTABLY AND BLATANTLYHEARSAY.38

Petitioners Arguments

Essentially, petitioner reiterates all his arguments in his Demurrer to Evidence and Motion for
Reconsideration of the respondent courts denial thereof. He emphasizes, however, that he had
nothing to do with the application and grant of the questioned loans, since he was never a member
of ISIs Board of Directors which, under the law and ISI by-laws, had the sole power and authority to
approve and obtain loans and give collaterals to secure the same; nor is he a stockholder of ISI. Nor
has it been shown from the testimonial and documentary evidence that as Executive Vice-President,
he participated in ISIs loan and credit transactions, or that he actively participated in the commission
of the crimes of which he is charged. Without such proof, petitioner believes that he may not be
charged with conspiracy.

Petitioner adds that no evidence was presented as well to show that he had any participation in
PNBs failure to verify and take action against ISI to compel it to put up additional capital and
collaterals, or that he was responsible for PNBs failure to collect or secure full payment of the ISI
credit.

Finally, petitioner justifies his resort to certiorari on the argument that the collective acts of the
prosecution and the respondent court constitute a denial of his constitutional right to due process,
which gives ground for the availment of the extraordinary remedy.39

Respondents Arguments

In its Comment,40 the prosecution asserts that the respondent court did not commit grave abuse of
discretion in denying the Demurrer to Evidence arguing that in petitioners case, all the elements
under Section 3(g) exist to hold petitioner liable. It adds that petitioner was part of the conspiracy to
defraud the government, as evidenced by his participation and signature in the Deed of Undertaking,
the terms of which ISI violated and PNB failed to enforce.

On the other hand, the PCGG in its Comment41 adopts the arguments of the prosecution and asserts
that the respondent court arrived at its conclusion after careful examination of the record and the
evidence, which justify a finding sustaining petitioners indictment. It adds that all the elements of the
crime under Section 3(g) have been proved, which thus justifies a denial of petitioners Demurrer to
Evidence.

Our Ruling

The Court dismisses the Petition.

Demurrer to evidence

"A demurrer to the evidence is an objection by one of the parties in an action, to the effect that the
evidence which his adversary produced is in sufficient in point of law, whether true or not, to make
out a case or sustain the issue. The party demurring challenges the sufficiency of the whole
evidence to sustain a verdict. The court, in passing upon the sufficiency of the evidence raised in a
demurrer, is merely required to ascertain whether there is competent or sufficient evidence to sustain
the indictment or to support a verdict of guilt."42

"Sufficient evidence for purposes of frustrating a demurrer thereto is such evidence in character,
weight or amount as will legally justify the judicial or official action demanded according to the
circumstances. To be considered sufficient therefore, the evidence must prove: (a) the commission
of the crime, and (b) the precise degree of participation therein by the accused." 43

Elements of Section 3(g), RA 3019

For one to be successfully prosecuted under Section 3(g) of RA 3019, the following elements must
be proven: "1) the accused is a public officer; 2) the public officer entered into a contract or
transaction on behalf of the government; and 3) the contract or transaction was grossly and
manifestly disadvantageous to the government."44 However, private persons may likewise be
charged with violation of Section 3(g) of RA 3019 if they conspired with the public officer. Thus, "if
there is an allegation of conspiracy, a private person may be held liable together with the public
officer, in consonance with the avowed policy of the Anti-Graft and Corrupt Practices Act which is to
repress certain acts of public officers and private persons alike which may constitute graft or corrupt
practices or which may lead thereto."45

The Sandiganbayan found competent


or sufficient evidence to sustain the
indictment or to support a verdict of
guilt for violation of Section 3(g), RA 3019

The Sandiganbayan found that the prosecution presented sufficient or competent evidence to
establish the three material elements of Section 3(g) of RA3019. First, although petitioner is a private
person, he was shown to have connived with his co-accused. Second, ISI and PNB entered into
several loan transactions and credit accommodations. Finally, the loan transactions proved
disadvantageous to the government.

There is no grave abuse of discretion on


the part of the Sandiganbayan in
denying petitioners Demurrer to
Evidence

At the outset, we emphasize that "the resolution of a demurrer to evidence should be left to the
exercise of sound judicial discretion. A lower courts order of denial shall not be disturbed, that is, the
appellate courts will not review the prosecutions evidence and precipitately decide whether such
evidence has established the guilt of the accused beyond a reasonable doubt, unless accused has
established that such judicial discretion has been gravely abused, there by amounting to a lack or
excess of jurisdiction. Mere allegations of such abuse will not suffice."46

"Grave abuse of discretion is the capricious and whimsical exercise of judgment on the part of the
public officer concerned which is equivalent to an excess or lack of jurisdiction. The abuse of
discretion must be so patent and gross as to amount to an evasion of a positive duty or a virtual
refusal to perform a duty enjoined by law, or to act at all in contemplation of law as where the power
is exercised in an arbitrary and despotic manner by reason of passion or hostility." 47

In this case, petitioner miserably failed to present an iota of evidence to show that the
Sandiganbayan abused, much more, gravely abused, its discretion in denying petitioners Demurrer
to Evidence. We agree with the PCGGs observation that the Sandiganbayan arrived at its
conclusion after a careful and deliberate examination and assessment of all the evidence submitted.
A closer scrutiny of the assailed Resolutions would indeed show that the Sandiganbayan
meticulously discussed both testimonial and documentary evidence presented by the
prosecution.48 It was only after a careful analysis of the facts and evidence presented did the
respondent court lay down its findings and conclusions.49

Based on the evidence presented, the Sandiganbayan was convinced that all three elements of
Section 3(g), RA 3019 were satisfactorily established. It found that PNB and ISI entered into several
contracts or loan transactions. The Sandiganbayan also assessed that petitioner conspired with his
co-accused in defrauding the government considering "(1) the frequency of the loans or closeness of
the dates at which they were granted; (2) the quantity of the loans granted; (3) the failure of the bank
to verify and to take any action on the failure of ISI to put up additional capitalization and additional
collaterals; and (4) the eventual absence of any action by the Bank to collect full payment from
ISI."50 The Sandiganbayan ratiocinated that

x x x the loans subject of this case refer to not just one but several loans. The first two loans were
granted in a span of two months x x x The first loan was in the amount of P16,287,500.00 when the
capital stock of ISI amounted to onlyP1,000,000.00. This was followed by two additional loans in
January and March 1973 x x x then another loan x x x in the following year x x x. Two years later x x
x ISI obtained another loan x x x which was succeeded by an additional loan x x x. Still, ISI was
granted two more loans x x x.

xxxx

However, all loans subject of this case were granted despite failure of ISI to raise its working capital,
and to put up additional collateral. The Certificate of Filing of Amended Articles of Incorporation and
the Amended Articles of Incorporation likewise show that ISI last increased its authorized capital
stock toP7,000,000.00 on April 27, 1973, when the indebtedness of the corporation was
already P16,360,000.00. Indeed, it would appear that inaction on the part of the PNB to notify ISI to
further increase its capital and the corresponding inaction on the part of ISI to comply with its
undertaking indicate conspiracy between the accused.

Accused-movant further negates his liability by asserting that his name does not appear in the Deed
of Undertaking, and neither has he signed the same. A cursory examination of the Deed, however,
reveals otherwise. It also bears stressing at this point that as he has never denied his position as
Executive Vice-President of ISI, he would undeniably have participation in its transactions, especially
where loan accommodations of the corporation are concerned. 51

The Sandiganbayan also found that the loan transactions were grossly and manifestly
disadvantageous to the government. Based on the documentary evidence presented by the
prosecution, it noted that ISI was undercapitalized while the loans were undercollateralized. It also
noted that the government was only able to foreclose properties amounting to P3 million whereas
ISIs indebtedness stood at more than P71 million.
Based on the foregoing, we find no showing that "the conclusions made by the Sandiganbayan on
the sufficiency of the evidence of the prosecution at the time the prosecution rested its case, were
manifestly mistaken."52 The Sandiganbayan did not exercise its judgment in a whimsical or
capricious manner. As we aptly held:
1wphi1

Given the sufficiency of the testimonial and documentary evidence against petitioner, it would,
therefore, be premature at this stage of the proceedings to conclude that the prosecutions evidence
failed to establish petitioners participation in the alleged conspiracy to commit the crime. Likewise,
the Court cannot, at this point, make a categorical pronouncement that the guilt of the petitioner has
not been proven beyond reasonable doubt. As there is competent and sufficient evidence to sustain
the indictment for the crime charged, it behooves petitioner to adduce evidence on his behalf to
controvert the asseverations of the prosecution. Withal, respondent court did not gravely abuse its
discretion when it found that there was a prima facie case against petitioner warranting his having to
go forward with his defensive evidence.

The determination of the sufficiency or insufficiency of the evidence presented by the prosecution as
to establish a prima facie case against an accused is left to the exercise of sound judicial discretion.
Unless there is a clear showing of a grave abuse of discretion amounting to lack or excess of
jurisdiction, the trial courts denial of a motion to dismiss or a demurrer to evidence may not be
disturbed.53

Similarly, we have also ruled that:

When there is no showing of such grave abuse, certiorari is not the proper remedy. Rather, the
appropriate recourse from an order denying a demurrer to evidence is for the court to proceed with
the trial, after which the accused may file an appeal from the judgment of the lower court rendered
after such trial. In the present case, we are not prepared to rule that the Sandiganbayan has gravely
abused its discretion when it denied petitioners demurrer to evidence. Public respondent found that
the prosecutions evidence satisfactorily established the elements of the crime charged.
Correspondingly, there is nothing in the records of this case nor in the pleadings of petitioner that
would show otherwise.54

At this juncture, it is worth mentioning that the issues raised herein are almost the same as those
raised by petitioner before the Court when he questioned the Sandiganbayans denial of his Motion
for Re-determination of Existence of Probable Cause.55 In resolving petitioners contention that he
should not be made liable for ISIs failure to put up additional capitalization and collaterals because
he is not a member of the Board of Directors, the Court declared that:

True, the power to increase capitalization and to offer or give collateral to secure indebtedness are
lodged with the corporations Board of Directors. However, this does not mean that the officers of the
corporation other than the Board of Directors cannot be made criminally liable for their criminal acts
if it can be proven that they participated therein. In the instant case, there is evidence that petitioners
participated in the loan transactions when he signed the undertaking. x x x56

Anent the issue regarding the sufficiency of ISIs collateral, we also declared the same to be "a
matter of defense which should be best ventilated in a full-blown trial." 57 Moreover, we declared that

Fifth. It is petitioner's view that the prosecution failed to adduce evidence that he took part in any
conspiracy relative to the grant of the loan transactions. Suffice it to state that the alleged absence of
any conspiracy among the accused is evidentiary in nature and is a matter of defense, the truth of
which can be best passed upon after a full-blown trial on the merits. 58

In fine, we hold that "the presence or absence of the elements of the crime is evidentiary in nature
and is a matter of defense that may be passed upon after a full-blown trial on the merits," and "the
validity and merits of a party's defense or accusation, as well as admissibility of testimonies and
evidence, are better ventilated during trial proper."59 Petitioner's claims and defenses in his Demurrer
to Evidence can best be tackled during trial. In the presentation of his defense, he shall have the
opportunity to explain or show why he should not be made liable. For example, if there is any truth to
the allegation in his Demurrer of Evidence that the Deed of Undertaking was altered, or that the
signature therein affixed is not his own, such that there arise serious doubts as to his participation in
the execution of said document, this can be resolved only upon proof presented during trial.
Petitioner must present evidence regarding such claim, the truth of which he can demonstrate during
trial. Since this Court is not a trier of facts, there is no way that this issue can be resolved by this
Court at this stage of he proceedings.

In light of the foregoing, the Court finds that the respondent court did not commit grave abuse of
discretion in denying petitioner's Demurrer to Evidence; it was done in the proper exercise of its
jurisdiction.

WHEREFORE, the Petition is DISMISSED.

SO ORDERED.

THIRD DIVISION

PEOPLE OF THE PHILIPPINES, G.R. No. 183619


Appellee,
Present:
CARPIO, J.,
Chairperson,
- versus -
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.

Promulgated:
SALVINO SUMINGWA,
Appellant.
October 13, 2009

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

DECISION

NACHURA, J.:

On appeal before us is the January 31, 2008 Court of Appeals (CA)


Decision[1] in CA-G.R. CR No. 30045 affirming with modification the
February 14, 2006 Regional Trial Court[2] (RTC) Consolidated
Judgment[3] against appellant Salvino Sumingwa in Criminal Case Nos. 1644
and 1645 for Acts of Lasciviousness; 1646, 1649 and 1654 for Rape; 1651
for Attempted Rape; and 1655 for Unjust Vexation. Assailed also is the June 5,
2008 CA Resolution[4] denying appellants motion for reconsideration.

In twelve Informations, the prosecution charged appellant with two (2) counts
of Acts of Lasciviousness,[5] four (4) counts of Rape,[6] three (3) counts of
Unjust Vexation,[7]one (1) count of Other Light Threats, [8] one (1) count of
Maltreatment,[9] and one (1) count of Attempted Rape [10] for acts committed
against his minor[11] daughter AAA from 1999-2001.

Appellant pleaded not guilty to all the charges. On September 24, 2004, the
RTC dismissed[12] Criminal Case Nos. 1647 for Rape; 1648 for Unjust
Vexation; 1650 for Other Light Threats; 1652 for Unjust Vexation; and 1653
for Maltreatment, on the basis of the Demurrer to Evidence [13] filed by
appellant.

Sometime in August 1999, between 8:00 and 10:00 in the morning, AAA,
together with her brothers and her father, appellant herein, was in their
residence in MountainProvince, watching television. Appellant called AAA
and ordered her to sit in front of him. As she was sitting, appellant told her
that it was not good for a girl to have small breasts. Suddenly, he inserted his
hands into AAAs shirt then fondled her breast. AAA resisted by moving her
hands backwards.[14]

One afternoon in September 1999, AAAs mother and brothers went to school
leaving AAA and appellant in their house. While in the masters bedroom,
appellant ordered AAA to join him inside. There, appellant removed his
undergarments then forced her to grasp and fondle his penis until he
ejaculated. Appellant thereafter told her not to be malicious about it.[15]
The same incident took place in August 2000. This time, appellant forced AAA
to lie down on the bed, went on top of her, removed her short pants and panty,
then rubbed his penis against her vaginal orifice. AAA resisted by crossing her
legs but appellant lifted her right leg and partially inserted his penis into her
vagina. As she struggled, appellant stood up then ejaculated. AAA felt
numbness on her buttocks after the bestial act committed against her.[16]

Appellant repeated his dastardly act against AAA on separate occasions in


September and November 2000. During these times, appellant satisfied
himself by rubbing his penis against AAAs vagina without trying to penetrate
it. After reaching the top of his lust, he used AAAs short pants to wipe his
mess. Instead of keeping her harrowing experience to herself, AAA narrated it
to her best friend.[17]

On November 24, 2000, appellant approached AAA and told her that he
wanted to have sex with her. When she refused, appellant forcibly removed
her pants and boxed her right buttock. AAA still refused, which angered
appellant. He then went to the kitchen and returned with a bolo which he used
in threatening her. Luckily, AAAs grandmother arrived, prompting appellant
to desist from his beastly desires.[18]

On December 20, 2000, AAA and her best friend were doing their school work
in front of the formers house. When appellant arrived, he embraced AAA. He,
thereafter, pulled her inside the house and kissed her on the lips.[19]

The last incident occurred inside the comfort room of their house on May 27,
2001. When AAA entered, appellant pulled down her short pants and panty,
unzipped his trousers, brought out his penis, then repeatedly rubbed it on her
vagina while they were in a standing position.[20]

AAA decided to report the sexual abuses to her grandmother who forthwith
brought her to the National Bureau of Investigation where she was examined
by the medico-legal officer. It was found during the examination that there
were no extragenital physical injuries on AAAs body but there were old,
healed, and incomplete hymenal lacerations.[21]

Appellant denied all the accusations against him. He claimed that in August
and September 1999, he was at the house of his mistress in Antipolo City. He
also explained that in August 2000, he stayed in Baguio City and worked there
as a karate instructor. He added that he only went home in September 2000
but left again in October for Quirino, Ilocos Sur where he stayed for three
weeks. When he went back home, his wife informed him that AAA had not
been coming home. Thereafter, appellant went to Baguio City to buy medicine
for his wife, then returned home again on the third week of December
2000. While there, he was confronted by his wife about his womanizing. His
wife got mad and refused to forgive him despite his repeated pleas.
Consequently, he became furious and almost choked his wife to death when
she ignored and refused to talk to him. This prompted him to leave and go
back to Baguio.[22]

Sometime in April 2001, appellant went back home to reconcile with his
wife. While talking to his wife and the latters family, his mother-in-law
berated him and demanded his separation from his wife. Appellant got mad
and threatened to kill his wifes family. His mother-in-law, in turn, threatened
to file charges against him.[23]

To belie the claim of AAA that she was sexually abused in August, November
and December 2000, allegedly during school hours, her teacher testified that
the former was not absent in class during those times.[24]

On November 24, 2004, AAA executed an Affidavit of Recantation[25] claiming


that while appellant indeed committed lascivious acts against her, she
exaggerated her accusations against him. She explained that appellant did not
actually rape her, as there was no penetration. She added that she charged
appellant with such crimes only upon the prodding of her mother and
maternal grandmother.

On February 14, 2006, the RTC rendered a decision convicting appellant of


six (6) counts of acts of lasciviousness, [26] one (1) count of attempted
rape[27] and one (1) count of unjust vexation,[28] the dispositive portion of which
reads:

WHEREFORE, a Consolidated Judgment is hereby rendered


sentencing Salvino Sumingwa to suffer

1. The penalty of six (6) months of [arresto mayor] as


minimum to six (6) years of [prision correccional] as maximum; and
ordering him to pay the offended party P10,000.00 [as] indemnity
[ex-delicto], P10,000.00 as moral damages and P5,000.00 as
exemplary damages for each count of Acts of Lasciviousness charged
in Crim. Cases 1644, 1645, 1646, 1649 and 1654;

2. The penalty of six (6) years of [prision correccional] as


minimum to twelve (12) years of [prision mayor] as maximum; and
ordering said offender to pay the victim P15,000.00 as indemnity
[ex-delicto], P15,000.00 as moral damages and P10,000.00 as
exemplary damages in Crim. Case 1651 for Attempted Rape; and

3. The penalty of thirty (30) days of [arresto menor] and fine


of P200.00 for Unjust Vexation in Crim. Case 1655.

[29]
SO ORDERED.
The trial court gave credence to AAAs testimonies on the alleged lascivious
acts committed against her. In view of the withdrawal of her earlier claim of
the fact of penetration, the court sustained the innocence of appellant on the
rape charges and concluded that the crime committed was only Acts of
Lasciviousness.

In Criminal Case No. 1651, the RTC found that appellant committed all the
acts of execution of the crime of Rape, but failed to consummate it because of
the arrival of AAAs grandmother. Hence, he was convicted of attempted
rape. In embracing and kissing AAA in full view of the latters best friend,
appellant was convicted of Unjust Vexation.

On appeal, the CA affirmed the conviction of appellant, except that in


Criminal Case No. 1646; it convicted him of Qualified Rape instead of Acts of
Lasciviousness. The pertinent portion of the assailed decision reads:

WHEREFORE, premises considered, herein appeal is


hereby DISMISSED for evident lack of merit and the assailed
Consolidated Judgment dated 14 February 2006 is
hereby AFFIRMED with the following MODIFICATION:

1. The Appellant SALVINO SUMINGWA is hereby convicted


of the crime of QUALIFIED RAPE in Criminal Case No.
1646 and the penalty of RECLUSION PERPETUA is
hereby imposed upon him. The Appellant is likewise
ordered to pay the Victim, [AAA], civil indemnity in the
amount of Php75,000.00 as well as moral damages in
the amount of Php50,000.00, in conformity with
prevailing jurisprudence.

2. In Criminal Case No. 1651 for Attempted Rape, the


Appellant, is hereby ordered to indemnify the victim
[AAA] in the sum of P30,000.00 as civil indemnity, plus
the sum of P25,000.00 as moral damages.

[30]
SO ORDERED.

The appellate court concluded that, notwithstanding AAAs retraction of


her previous testimonies, the prosecution sufficiently established the
commission of the crime of Rape. It added that the qualifying circumstances
of minority and relationship were adequately proven.

Hence, this appeal.

First, in light of the recantation of AAA, appellant questions the


credibility of the prosecution witnesses and insists that his constitutional right
to be presumed innocent be applied.[31] Second, he argues that in Criminal
Case No. 1651 for Attempted Rape, he should only be convicted of Acts of
Lasciviousness, there being no overt act showing the intent to have sexual
intercourse.[32] Lastly, he insists that he could not be convicted of all the
charges against him for failure of the prosecution to show that he employed
force, violence or intimidation against AAA; neither did the latter offer
resistance to appellants advances.[33]
In rape cases particularly, the conviction or acquittal of the accused most
often depends almost entirely on the credibility of the complainants
testimony. By the very nature of this crime, it is generally unwitnessed and
usually the victim is left to testify for herself. When a rape victims testimony is
straightforward and marked with consistency despite grueling examination, it
deserves full faith and confidence and cannot be discarded. [34] If such
testimony is clear, consistent and credible to establish the crime beyond
reasonable doubt, a conviction may be based on it, notwithstanding its
subsequent retraction. Mere retraction by a prosecution witness does not
necessarily vitiate her original testimony. [35]

A retraction is looked upon with considerable disfavor by the courts.


[36]
It is exceedingly unreliable for there is always the probability that such
recantation may later on be repudiated. It can easily be obtained from
witnesses through intimidation or monetary consideration.[37] Like any other
testimony, it is subject to the test of credibility based on the relevant
circumstances and, especially, on the demeanor of the witness on the stand.[38]

As correctly held by the CA, AAAs testimony is credible notwithstanding her


subsequent retraction. We quote with approval its ratiocination in this wise:

Clearly, the retraction made by the Victim is heavily unreliable. The


primordial factor that impelled the Victim to retract the rape
charges against her father was her fear and concern for the welfare
of her family especially her four (4) siblings. It does not go against
reason or logic to conclude that a daughter, in hopes of bringing
back the harmony in her family tormented by the trauma of rape,
would eventually cover for the dastardly acts committed by her own
father. Verily, the Victims subsequent retraction does not negate her
previous testimonies accounting her ordeal in the hands for (sic) her
[39]
rapist.
We now proceed to discuss the specific crimes with which appellant was
charged.

Criminal Case Nos. 1646, 1649 and 1654 for Rape

The CA correctly convicted appellant of Qualified Rape in Criminal Case No.


1646, and of Acts of Lasciviousness in Criminal Case Nos. 1649 and 1654.

The crime of rape is defined in Article 266-A of the Revised Penal Code
(RPC), as amended by the Anti-Rape Law of 1997, as follows:

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.

In her direct testimony, AAA stated that appellant removed her short pants and
panty, went on top of her and rubbed his penis against her vaginal orifice. She
resisted by crossing her legs but her effort was not enough to prevent appellant
from pulling her leg and eventually inserting his penis into her vagina. Clearly,
there was penetration.
It is noteworthy that appellant pulled AAAs leg, so that he could insert his
penis into her vagina. This adequately shows that appellant employed force in
order to accomplish his purpose. Moreover, in rape committed by a father against
his own daughter, the formers moral ascendancy and influence over the latter may
substitute for actual physical violence and intimidation. The moral and physical
dominion of the father is sufficient to cow the victim into submission to his beastly
desires, and no further proof need be shown to prove lack of the victims consent to
her own defilement.[40]

While appellants conviction was primarily based on the prosecutions


testimonial evidence, the same was corroborated by physical evidence consisting
of the medical findings of the medico-legal officer that there were hymenal
lacerations. When a rape victims account is straightforward and candid, and is
corroborated by the medical findings of the examining physician, the same is
sufficient to support a conviction for rape.[41]

Aside from the fact of commission of rape, the prosecution likewise


established that appellant is the biological father of AAA and that the latter was
then fifteen (15) [42]years old. Thus, the CA aptly convicted him of qualified rape,
defined and penalized by Article 266-B of the RPC, viz.:

ART. 266-B. Penalties. x x x.

xxxx
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, step-parent, guardian, relative by
consanguinity or affinity within the third civil
degree, or the common law spouse of the
parent of the victim.

In view of the effectivity of Republic Act (R.A.) 9346, appellant was correctly
meted the penalty of reclusion perpetua, without eligibility for parole.

As to damages, appellant should pay AAA P75,000.00 as civil indemnity,


which is awarded if the crime is qualified by circumstances that warrant the
imposition of the death penalty.[43] In light of prevailing jurisprudence,[44] we
increase the award of moral damages from P50,000.00
to P75,000.00. Further, the award of exemplary damages in the amount
of P30,000.00[45] is authorized due to the presence of the qualifying
circumstances of minority and relationship.[46]
In Criminal Case Nos. 1649 and 1654, although appellant was charged
with qualified rape allegedly committed on the second week of November 2000
and May 27, 2001, he should be convicted with Acts of Lasciviousness
committed against a child under Section 5(b), Article III of R.A. 7610,
[47]
which reads:

SEC. 5. Child Prostitution and Other Sexual Abuse. Children,


whether male or female, who for money, profit, or any other
consideration or due to the coercion or influence of any adult,
syndicate or group, indulge in sexual intercourse or lascivious
conduct, are deemed to be children exploited in prostitution and
other sexual abuse.

The penalty of reclusion temporal in its medium period


to reclusion perpetua shall be imposed upon the following:

xxxx

(b) Those who commit the act of sexual intercourse


or lascivious conduct with a child exploited in prostitution or
subjected to other sexual abuse: Provided, That when the victim is
under twelve (12) years of age, the perpetrators shall be prosecuted
under Article 335, paragraph 3, for rape and Article 336 of Act No.
3815, as amended, the Revised Penal Code, for rape or lascivious
conduct, as the case may be: Provided, That the penalty for
lascivious conduct when the victim is under twelve (12) years of age
shall be reclusion temporal in its medium period; x x x. (Italics
supplied.)
The elements of sexual abuse under the above provision are as follows:

1. The accused commits the act of sexual intercourse or lascivious


conduct.

2. The said act is performed with a child exploited in prostitution or


subjected to other sexual abuse.

3. The child, whether male or female, is below 18 years of age.


[48]

AAA testified that in November 2000, while she and appellant were
inside the bedroom, he went on top of her and rubbed his penis against her
vaginal orifice until he ejaculated.[49] She likewise stated in open court that on
May 27, 2001, while inside their comfort room, appellant rubbed his penis
against her vagina while they were in a standing position. [50] In both instances,
there was no penetration, or even an attempt to insert his penis into her
vagina.

The aforesaid acts of the appellant are covered by the definitions of


sexual abuse and lascivious conduct under Section 2(g) and (h) of the Rules
and Regulations on the Reporting and Investigation of Child Abuse Cases
promulgated to implement the provisions of R.A. 7610:
(g) Sexual abuse includes the employment,
use, persuasion, inducement, enticement or coercion of a child to
engage in, or assist another person to engage in, sexual intercourse
or lascivious conduct or the molestation, prostitution, or incest with
children;

(h) Lascivious conduct means the intentional touching, either


directly or through clothing, of the genitalia, anus, groin, breast,
inner thigh, or buttocks, or the introduction of any object into the
genitalia, anus or mouth, of any person, whether of the same or
opposite sex, with an intent to abuse, humiliate, harass, degrade,
or arouse or gratify the sexual desire of any person, bestiality,
masturbation, lascivious exhibition of the genitals or public area of
a person.

Following the variance doctrine embodied in Section 4, in relation to


Section 5, Rule 120 of the Rules of Criminal Procedure, appellant can be
found guilty of the lesser crime of Acts of Lasciviousness committed against a
child. The pertinent provisions read:

SEC. 4. Judgment in case of variance between allegation and proof.


When there is variance between the offense charged in the complaint
or information and that proved, and the offense as charged is
included in or necessarily includes the offense proved, the accused
shall be convicted of the offense proved which is included in the
offense charged, or of the offense charged which is included in the
offense proved.
SEC. 5. When an offense includes or is included in another. An
offense charged necessarily includes the offense proved when some
of the essential elements or ingredients of the former, as alleged in
the complaint or information, constitute the latter. And an offense
charged is necessarily included in the offense proved, when the
essential ingredients of the former constitute or form part of those
constituting the latter.

As the crime was committed by the father of the offended party, the
alternative circumstance of relationship should be appreciated. In crimes
against chastity, such as Acts of Lasciviousness, relationship is always
aggravating.[51]

Section 5(b) of R.A. 7610 prescribes the penalty of reclusion temporal in


its medium period to reclusion perpetua. Since there is an aggravating
circumstance and no mitigating circumstance, the penalty shall be applied in
its maximum period --- reclusion perpetua for each count.[52]

Consistent with previous rulings[53] of the Court, appellant must also


indemnify AAA in the amount of P15,000.00 as moral damages and pay a fine
in the same amount in Criminal Case Nos. 1649 and 1654.

Criminal Case Nos. 1644 and 1645 for Acts of Lasciviousness

Appellant is likewise guilty of two (2) counts of Acts of Lasciviousness under


Section 5(b), Article III, R.A. 7610 committed against AAA on the second
week of August 1999 and on the first week of September 1999. AAA testified
that in August, appellant, with lewd design, inserted his hands inside her shirt
then fondled her breasts; and in September, he forced her to hold his penis
until he ejaculated.

The trial and the appellate courts were correct in giving credence to the
victims testimony, in dismissing appellants defense of denial and alibi, and in
disbelieving that AAA initiated the criminal cases only upon the prodding of
the latters grandmother. Settled jurisprudence tells us that the mere denial of
ones involvement in a crime cannot take precedence over the positive
testimony of the offended party.[54]

We are not unmindful of the fact that appellant was specifically charged
in an Information for Acts of Lasciviousness defined and penalized by Article
336 of the RPC. However, the failure to designate the offense by statute, or to
mention the specific provision penalizing the act, or an erroneous specification
of the law violated, does not vitiate the information if the facts alleged clearly
recite the facts constituting the crime charged. [55] The character of the crime is
not determined by the caption or preamble of the information nor from the
specification of the provision of law alleged to have been violated, but by the
recital of the ultimate facts and circumstances in the complaint or
information.[56]

In the present case, the body of the information contains an averment of


the acts alleged to have been committed by appellant which unmistakably
refers to acts punishable under Section 5(b), Article III, R.A. 7610.

Appellant should, therefore, be meted the same penalties and be made to


answer for damages as in Criminal Case Nos. 1649 and 1654.

Criminal Case No. 1651 for Attempted Rape


AAA testified that on November 24, 2000, while AAA and her brothers were
sleeping inside their parents bedroom, appellant entered and asked AAA to
have sex with him. When AAA refused, appellant forcibly removed her clothes
and boxed her right buttock. As she still resisted, he took a bolo, which he
poked at her. Appellant desisted from committing further acts because of the
timely arrival of AAAs grandmother. With these, appellant was charged with
Other Light Threats in Criminal Case No. 1650; Attempted Rape in Criminal
Case No. 1651; Unjust Vexation in Criminal Case No. 1652; and Maltreatment
in Criminal Case No. 1653.

On September 24, 2004, the RTC dismissed Criminal Case Nos. 1650, 1652
and 1653 for insufficiency of evidence. Criminal Case No. 1651, among others,
proceeded, however.Eventually, appellant was convicted of Attempted Rape,
which the CA affirmed.

A careful review of the records reveals, though, that the evidence is


insufficient to support appellants conviction of Attempted Rape.
Rape is attempted when the offender commences the commission of
rape directly by overt acts and does not perform all the acts of execution by
reason of some cause or accident other than his own spontaneous desistance.
[57]
The prosecution must, therefore, establish the following elements of an
attempted felony:

1. The offender commences the commission of the felony directly


by overt acts;

2. He does not perform all the acts of execution which should


produce the felony;

3. The offenders act be not stopped by his own spontaneous


desistance;
4. The non-performance of all acts of execution was due to cause or
[58]
accident other than his spontaneous desistance.

The attempt that the RPC punishes is that which has a logical
connection to a particular, concrete offense; and that which is the beginning of
the execution of the offense by overt acts of the perpetrator, leading directly to
its realization and consummation.[59] In the instant case, the primary question
that comes to the fore is whether or not appellants act of removing AAAs
pants constituted an overt act of Rape.

We answer in the negative.

Overt or external act has been defined as some physical activity or deed,
indicating the intention to commit a particular crime, more than a mere
planning or preparation, which if carried out to its complete termination
following its natural course, without being frustrated by external obstacles
nor by the voluntary desistance of the perpetrator, will logically and
necessarily ripen into a concrete offense.[60]

The evidence on record does not show that the above elements are
present. The detailed acts of execution showing an attempt to rape are simply
lacking. It would be too strained to construe appellants act of removing AAAs
pants as an overt act that will logically and necessarily ripen into rape. Hence,
appellant must be acquitted of Attempted Rape.

Neither can we hold appellant liable for Other Light Threats for threatening
AAA with a bolo; for Unjust Vexation for undressing her without her consent,
causing disturbance, torment, distress, and vexation; nor for Maltreatment for
boxing the right side of AAAs buttocks. Although all of the above acts were
alleged in the Information for Attempted Rape in the Order dated September
24, 2004, Criminal Case Nos. 1650, 1652 and 1653 involving the above crimes
were dismissed for insufficiency of evidence based on the demurrer to
evidence filed by appellant.

The order granting appellants demurrer to evidence was a resolution of the


case on the merits, and it amounted to an acquittal. Any further prosecution
of the accused after an acquittal would violate the proscription on double
jeopardy.[61] Accordingly, appellants conviction of any of the above crimes,
even under Criminal Case No. 1651, would trench in his constitutional right
against double jeopardy.
Criminal Case No. 1655 for Unjust Vexation

Appellant was charged with Unjust Vexation, defined and penalized by Article
287 of the RPC, which reads:

ART. 287. Light coercions. Any person who, by means of violence,


shall seize anything belonging to his debtor for the purpose of
applying the same to the payment of the debt, shall suffer the
penalty of arresto mayor in its minimum period and a fine
equivalent to the value of the thing, but in no case less than 75 pesos.

Any other coercion or unjust vexation shall be punished


by arresto menor or a fine ranging from 5 to 200 pesos, or both.

The second paragraph of this provision is broad enough to include any human
conduct that, although not productive of some physical or material harm,
could unjustifiably annoy or vex an innocent person. The paramount question
to be considered is whether the offenders act caused annoyance, irritation,
torment, distress, or disturbance to the mind of the person to whom it was
directed.[62]

Appellants acts of embracing, dragging and kissing AAA in front of her friend
annoyed AAA. The filing of the case against appellant proved that AAA was
disturbed, if not distressed by the acts of appellant.

The penalty for coercion falling under the second paragraph of Article 287 of
the RPC is arresto menor or a fine ranging from P5.00 to P200.00 or both.
Accordingly, appellant is sentenced to 30 days of arresto menor and to pay a
fine of P200.00, with the accessory penalties thereof.

WHEREFORE, the Court AFFIRMS the January 31, 2008 Court of


Appeals Decision in CA-G.R. CR No. 30045 with MODIFICATIONS. The
Court finds appellant Salvino Sumingwa:

1. GUILTY of QUALIFIED RAPE in Criminal Case No. 1646. He is


sentenced to suffer the penalty of reclusion perpetua without eligibility for
parole and ordered to pay AAA P75,000.00 as civil indemnity, P75,000.00 as
moral damages, and P30,000.00 as exemplary damages.

2. GUILTY of four (4) counts of ACTS OF LASCIVIOUSNESS under


Section 5 (b) Article III of R.A. 7610 in Criminal Case Nos. 1644, 1645, 1649,
and 1654. He is sentenced to suffer the penalty of reclusion perpetua and
ordered to pay AAA P15,000.00 as moral damages and a fine of P15,000.00,
for EACH COUNT.

3. NOT GUILTY in Criminal Case No. 1651.


4. GUILTY of UNJUST VEXATION in Criminal Case No. 1655. He is
sentenced to suffer 30 days of arresto menor and to pay a fine of P200.00, with
the accessory penalties thereof.
SO ORDERED.

SECOND DIVISION

G.R. No. 201427, March 18, 2015

TEOFILO B. ADOLFO, Petitioner, v. FE. T. ADOLFO, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 seeks to set aside: 1) the October 6, 2009 Decision2 of the Court of
Appeals (CA) in CA-G.R. CV No. 01783 reversing the October 2, 2006 Order 3 of the Regional Trial Court,
7th Judicial Region, Mandaue City (RTC Mandaue), Branch 55 in Civil Case No. MAN-4821; as well as 2) the
CAs March 2, 2012 Resolution4 denying petitioners Motion for Reconsideration5 and Supplement6 thereto.

Civil Case No. MAN-4821

On April 14, 2004, petitioner Teofilo B. Adolfo filed with the RTC Mandaue a Petition 7 for judicial separation of
property against his estranged wife, respondent Fe Adolfo, nee Tudtud. Docketed as Civil Case No. MAN-
4821 and assigned to Branch 55, the petition alleged that the parties were married on November 26, 1966;
that the union bore one child; that during the marriage, they acquired through conjugal funds Lot 1087-A-2-
E, a 3,652-square meter property in Brgy. Cabancalan, Mandaue City, Cebu (the subject property) covered
by Transfer Certificate of Title No. (TCT) 18368; that later on, the parties separated due to irreconcilable
differences; that since reunion was no longer feasible, petitioner suggested a separation of the conjugal
property, but respondent adamantly refused; that respondent denied petitioners co-ownership of the
subject property, claiming the same as her paraphernal property; that several earnest efforts to amicably
settle the matter between them proved unavailing; and that a judicial separation of property is proper under
the circumstances and pursuant to Article 135(6) of the Family Code. 8 Petitioner thus prayed that judgment
be rendered decreeing a separation of the conjugal property and the subdivision or sale thereof, to the end
of dividing the same or the proceeds thereof; and ordering respondent to pay petitioner P50,000.00 as
attorneys fees, appearance fees (P2,000.00 per hearing), and P20,000.00 litigation costs.

In her Answer9 with counterclaim, respondent contended that while she remained married to petitioner, she
is the sole owner of the subject property, the same being her paraphernal property which she inherited from
her mother; that petitioner is a lazy bum, gambler, drunkard, wife abuser, and neglectful father; that
respondent found all means to support the family even as petitioner neglected it; that respondent bought on
installment a tricycle for the petitioners use in business, but he kept the proceeds thereof to himself and
used the same in his gambling and drinking sprees; that respondent alone took the initiative to support the
family and found ways to take care of the daily needs of her child; that she caused to be built on a portion of
her mothers land a house even while petitioner was bumming around; that one day, petitioner destroyed
the roof of the house that was then being built; that petitioner subsequently abandoned her and their child
in 1968, and transferred to Davao City where he took a mistress and begot four children by her; that in
1986, petitioner returned to Cebu City seeking reconciliation with respondent; that respondent took
petitioner back, but in 1987 they once more separated; that thereafter, respondent never again saw or
heard from petitioner.

Respondent claimed in her Answer that the subject property was a portion of a bigger lot (mother lot)
owned by her mother Petronila Tudtud which was covered by TCT T-15941. On October 11, 1967, her
mother executed a quitclaim deed transferring a portion of the mother lot the subject property to
respondent. The mother title TCT T-15941 was then cancelled and a new one, TCT (17216)-5415, was
issued in respondents name. Respondent then sold the subject property to her brother on January 19,
1968, and a new TCT (17833)-5515 was issued in her brothers name. Her brother then mortgaged the
property to Development Bank of the Philippines (DBP), which foreclosed on the same. TCT 18231 was
issued in DBPs name. DBP then sold the property to the spouses Antonio and Lucy Garcia (the Garcias),
and TCT 18266 was in turn issued in their name. Finally, on May 25, 1983, the Garcias sold back the
subject property to respondent, and a new title TCT 1836810 was then issued in the name of respondent
FE M. TUDTUD, x x x married to Teofilo Adolfo.

Respondent argued that she is the sole owner of the subject property, the same being her paraphernal
property which she alone redeemed from the Garcias; that the inclusion of petitioners name in TCT 18368
does not make him a co-owner of the property, but was merely necessary to describe respondents civil
status; and that under Article 13511 of the Civil Code, all property brought by the wife to the marriage as
well as all property she acquires during the marriage in accordance with Article 148 12 of the same Code
constitutes paraphernal property.

Respondent thus prayed that the petition be dismissed. By way of counterclaim, she sought the payment of
moral, exemplary, and nominal damages, attorneys fees, and litigation expenses.

Civil Case No. MAN-2683

In 1996, respondents sister Florencia Tudtud and her husband Juanito Gingoyon (the Gingoyons) filed a
case for partition with damages against respondent. The case was docketed as Civil Case No. MAN-2683
and raffled to Branch 55 of the RTC Mandaue. The Complaint13 therein alleged that in 1988, respondent
executed a deed of sale in favor of the Gingoyons over a 300-square meter portion of the subject property,
but that respondent refused to partition/subdivide the same even after the Gingoyons paid the taxes, fees
and expenses of the sale. For her defense, respondent claimed in her Answer 14 that when the sale to the
Gingoyons was made, the subject property constituted conjugal property of her marriage with petitioner;
that as early as 1983, or when the Garcias executed the deed of sale in her favor, the subject property
became a conjugal asset; since petitioner did not sign the deed of sale in favor of the Gingoyons as he was
in Davao at the time and knew nothing about the sale, the sale was null and void.

On May 15, 2002, the trial court rendered its Decision 15 in Civil Case No. MAN-2683, declaring that the
subject property constituted conjugal property of the marriage. It thus nullified the 1988 deed of sale
executed by respondent in favor of the Gingoyons for lack of consent on the part of petitioner, citing Article
124 of the Family Code.16 The trial court likewise awarded moral and exemplary damages, attorney's fees
and litigation expenses in favor of the respondent in the total amount of P107,000.00.

The Gingoyons filed an appeal with the CA, which was docketed as CA-G.R. CV No. 78971.

Motion for Judgment Based on the Pleadings in Civil Case No. MAN-4821

Meanwhile, during the pre-trial conference in Civil Case No. MAN-4821, petitioner submitted as part of his
evidence and for marking certified true copies of the Gingoyons Complaint in Civil Case No. MAN-2683,
respondents Answer thereto, and the trial courts May 15, 2002 Decision in said case.

On August 1, 2005, petitioner filed a Request for Admission 17 of 1) the genuineness of the duly marked
certified true copies of the Complaint, Answer, and Decision in Civil Case No. MAN-2683 (Exhibits F, G
and H, respectively); 2) respondents declaration in said Answer that the subject property constituted
conjugal property of the marriage; and 3) the trial courts pronouncement in said case that the subject
property forms part of the conjugal estate.
Respondent failed to file her answer or response to the request for admission.

On September 5, 2005, petitioner filed a Motion for Judgment Based on the Pleadings, 18 stating that since
respondent failed to answer his request for admission, the matters contained in the request are deemed
admitted pursuant to Rule 26, Section 2 of the 1997 Rules of Civil Procedure 19 (1997 Rules); that as a
consequence of the application of the rule, respondent is in effect considered to have admitted that the
subject property is a conjugal asset of their subsisting marriage which may thus be the subject of his
petition for judicial separation of property; and that on account of said admission, a hearing on the merits
becomes unnecessary and, instead, Rule 3420 of the 1997 Rules on judgments on the pleadings should
apply. Petitioner thus prayed that the trial court render judgment in his favor based on the pleadings.

Respondent filed an Opposition.21 In her Opposition to Plaintiffs Memorandum,22 respondent argued among
others that the request for admission was premature considering that the decision in Civil Case No. MAN-
2683 was the subject of an appeal, and thus not yet final.

In an October 11, 2005 Order,23 the trial court directed the transfer of Civil Case No. MAN-4821 to Branch 55
of the RTC Mandaue, since it is said court which decided the closely related Civil Case No. MAN-2683.

On October 2, 2006, Branch 55 issued an Order24 granting petitioners motion for judgment on the
pleadings. It held as follows:chanRoblesvirtualLa wlibrary

This court has painstakingly exerted effort in going over the record and took serious note of all the
pleadings, documents and others on file. After serious consideration, the court believes and so holds that
there is basis in rendering judgment. The Motion for Judgment Based on the Pleadings though denominated
as such but [sic] shall be treated as a move to seek summary judgment. x x x

xxxx

The court in arriving at this resolution was guided by the following pronouncements by the Supreme Court in
the case of Diman vs. Alumbres, G.R. No. 131466, November 27, 1998, 299 SCRA 459 x x x:
xxxx

In the same case, it was held

It is also the law which determines when a summary judgment is proper. It declares that although the
pleadings on their face appear to raise issues of fact e.g., there are denials of, or a conflict in, factual
allegations if it is shown by admissions, depositions or affidavits, that those issues are sham, fictitious, or
not genuine, or, in the language of the Rules, that except as to the amount of damages, there is no genuine
issue as to any material fact and that the moving party is entitled to a judgment as a matter of law, the
Court shall render a summary judgment for the plaintiff or the defendant, as the case may be. (Italics and
underscoring supplied)

On the other hand, in the case of a summary judgment[,] issues apparently exist i.e.. facts are asserted in
the complaint regarding which there is as yet no admission, disavowal or qualification; or specific denials or
affirmative defenses are in truth set out in the answer but the issues thus arising from the pleadings are
sham, fictitious, not genuine, as shown by [affidavits], depositions or admissions. In other words, as a
noted authority remarks, a judgment on the pleadings is a judgment on the facts as pleaded, while a
summary judgment is a judgment on the facts as summarily proven by affidavits, depositions or
admissions. (Italics and underscoring supplied)

xxxx cralawla wlibrary

Defendant25 did not file any verified answer or a pleading denying under oath the genuineness and
authenticity of the documents attached to the Request for Admission and of the other matters therein set
forth. This failure has far reaching implications in that the following are deemed admitted: a) the
genuineness of Exhibits F, G and H, all attached to the Request for Admission; b) that she admitted in
paragraph 10 in her Answer to Civil Case No. MAN-2683 that Lot 1087-A-2-E was no longer paraphernal
property but rather a conjugal property of Spouses Teofilo and Fe Adolfo and; c) that RTC, Branch 55,
Mandaue City, sustained and/or held the view of defendant (Fe Tudtud) that Lot 1087-A-2-E is a conjugal
property of Spouses Teofilo and Fe Adolfo, thus, dismissed Civil Case No. MAN-2683 and awarded damages
to the defendant.
Judicial admissions may be made in (a) the pleadings filed by the parties, (b) in the course of the trial either
by verbal or written manifestations or stipulations, or (c) in other stages of the judicial proceeding, as in the
pre-trial of the case. Admissions obtained through depositions, written interrogatories or requests for
admission are also considered judicial admissions. Page 686, Remedial Law Compendium, Vol. II, 9 th Rev.
Ed., Regalado

With the admission that Lot 1087-A-2-E is a conjugal property, it follows as its necessary and logical
consequence, that plaintiff26 is entitled to the relief demanded.chanroble slaw

xxxx

A DECISION in Civil Case No. MAN-2683 had already been rendered by RTC, Branch 55, on the 15th day of
May 2002 with the court finding that Lot 1087-A-2-E is a conjugal property x x x

xxxx

For reason[s] of expediency and convenience, the court may even take judicial notice of its earlier decision
finding Lot 1087-A-2-E as a conjugal property.27 cralawred

xxxx

Under the circumstances, judicial separation of property is proper. Aware that the separation has the effect
of a dissolution of the conjugal partnership property regime, the presumptive legitime of Nilo Adolfo (the
only common child of the spouses) has to be delivered in accordance with Article 51 in relation to paragraph
(8) Article 127 and Article 137 of the Family Code of the Philippines.

WHEREFORE, premises considered, judgment is hereby rendered directing the partition of Lot 1087-A-2-E
between the plaintiff and the defendant in equal share of what remains after allocating to Nilo Adolfo a
portion of Nine hundred thirteen (913) square meters representing his presumptive legitime.

The plaintiff is directed to submit to this court the proposed subdivision plan for its consideration before
submitting the same for approval to the Bureau of Lands.

In case of disagreement as to their respective location, the same shall be done through raffle to be
conducted by the sheriff who shall see to it that judgment in this case shall be fully implemented.

SO ORDERED.28 cralawla wlibrary

Respondent instituted an appeal with the CA, which was docketed as CA-G.R. CV No. 01783.

Court of Appeals Decision in CA-G.R. CV No. 78971

Meanwhile, on May 30, 2007, the CA rendered its Decision 29 in CA-G.R. CV No. 78971. It reversed the May
15, 2002 Decision of the trial court in Civil Case No. MAN-2683. It declared, among others, that the subject
property was respondents paraphernal property. Thus, it held: chanRoblesvirtualLa wlibrary

Proceeding from the foregoing consideration, the finding that Lot No. 1087-A-2-E is a conjugal property does
not have any basis, hence, does not have any merit at all. On the contrary, plaintiffs-appellants30 sufficiently
proved that the aforesaid lot was defendant-appellees31 paraphernal property as the latter even admitted
that she inherited the same from her mother although she claimed it as a conjugal property based on the
TCTs attached to her answer. Another strong indication that Lot No. 1087-A-2-E is solely owned by
defendant-appellee is the fact that in another case (Civil Case No. MAN-2008) involving the same property
and the same parties but for a different issue (road right of way), defendant-appellee alone signed the
compromise agreement ceding a portion of the subject lot as a right of way perpetually open and
unobstructed for the benefit of plaintiffs-appellants, defendant-appellee, their respective heirs, assigns and
transferees and guests. The same compromise agreement which became the decision of the case attained
finality without defendant-appellee questioning the absence of her husbands signature. chanrobleslaw

xxxx
WHEREFORE, prescinding from the foregoing premises, the appeal is hereby GRANTED and the Decision of
the Regional Trial Court of Mandaue City, Branch 55, dated 15 May 2002, in Civil Case No. MAN-2683 is
REVERSED and SET ASIDE.

Let the partition of Lot No. 1087-A-2-E consisting of 300 square meters bought by plaintiffs-appellants from
defendant-appellee be done in accordance to [sic] the sketch plan executed for that purpose.

SO ORDERED.32
cralawla wlibrary
cralawred

On June 23, 2007, the above CA decision became final and executory.33 cralawred

Ruling of the Court of Appeals in CA-G.R. CV No. 01783

In CA-G.R. CV No. 01783, respondent filed her Appellants Brief,34 where she argued that the trial court
erred in issuing its October 2, 2006 Order directing the partition or sale of the subject property; that it was
error for the trial court to take judicial notice of its own judgment in Civil Case No. MAN-2683 and thus
declare that the subject property is conjugal, since the issue of whether it constitutes conjugal or
paraphernal property was still pending in the appeal in CA-G.R. CV No. 78971; that since the proceedings in
Civil Case No. MAN-2683 have not been terminated and the issue regarding the character of the subject
property has not been resolved with finality, then petitioners resort to a request for admission and motion
for judgment on the pleadings was premature; and that with the May 30, 2007 Decision in CA-G.R. CV No.
78971, petitioner and the trial court should submit to the finding therein that the subject property is her
paraphernal property.

In his Appellees Brief,35 petitioner insisted that the trial court did not err in treating his motion for judgment
on the pleadings as one for summary judgment; that respondents Answer in Civil Case No. MAN-2683
constituted a judicial admission that the subject property was a conjugal asset, which required no further
proof; that respondents failure to reply to his written request for admission also resulted in the
acknowledgment that the subject property is a conjugal asset; that the trial court correctly took judicial
notice of the proceedings in Civil Case No. MAN-2683, as they were relevant and material to the resolution
of Civil Case No. MAN-4821; that since it was not respondent who appealed the May 15, 2002 decision in
Civil Case No. MAN-2683, then the finding therein that the subject property is conjugal should bind her; and
that the CAs eventual finding in CA-G.R. CV No. 78971 that the subject lot was respondents paraphernal
property cannot bind him because he was not a party to Civil Case No. MAN-2683.

On October 6, 2009, the CA issued the assailed Decision containing the following decretal portion: chanRoblesvirtualLa wlibrary

WHEREFORE, based from the foregoing premises, the Order of the Regional Trial Court, Branch 55, Mandaue
City, in Civil Case No. MAN-4821, is hereby REVERSED and SET ASIDE and the records of this case are
remanded to RTC (Branch 55), Mandaue City, for further proceedings.

SO ORDERED.36 cralawla wlibrary

In arriving at the above conclusion, the CA held that the trial court cannot treat petitioners motion for
judgment on the pleadings as one for summary judgment. It stated that in a proper case for judgment on
the pleadings, there are no ostensible issues at all on account of the defending partys failure to raise an
issue in his answer, while in a proper case for summary judgment, such issues exist, although they are
sham, fictitious, or not genuine as shown by affidavits, depositions or admissions. In other words, a
judgment on the pleadings is a judgment on the facts as pleaded, while a summary judgment is a judgment
on the facts as summarily proved by affidavits, depositions, or admissions. 37 It added that respondents
Answer appeared on its face to tender an issue; it disputed petitioners claim that the subject property is
their conjugal property. The next thing to be determined is whether this issue is fictitious or sham as to
justify a summary judgment.

The CA added that although respondent was bound by the resulting admission prompted by her failure to
reply to petitioners request for admission, her claims and documentary exhibits clearly contradict what
petitioner sought to be admitted in his request; that the trial court disregarded the fact that the issue of
whether the subject property is conjugal was still unresolved as CA-G.R. CV No. 78971 was still pending;
and that finally, the trial court should have been guided by the principles that trial courts have but limited
authority to render summary judgments and that summary judgments should not be rendered hastily.38 cralawre d
Petitioner moved to reconsider, but in a March 2, 2012 Resolution, he was rebuffed. Hence, the present
Petition was filed on April 30, 2012.

In a March 20, 2013 Resolution,39 the Court resolved to give due course to the instant Petition. chanroble svirtuallawlibrary

Issue

Petitioner now claims that the Court of Appeals erred in deciding the case on a question of substance not in
accord with law, Rule 26 of the 1997 Rules, and applicable jurisprudence. 40 cralawred

Petitioners Arguments

In his Petition seeking to reverse and set aside the assailed CA dispositions and thus reinstate the October 2,
2006 Order of the trial court, petitioner insists that respondents failure to reply to his written request for
admission resulted in her admitting that the subject property is a conjugal asset, applying Rule 26, Section 2
of the 1997 Rules; that the CA grossly erred in disregarding the rule; that with the resulting admission,
there remains no genuine issue to be resolved in Civil Case No. MAN-4821, such that judgment based on the
pleadings is proper. Finally, petitioner adds that respondents trifling with the law and rules of procedure
by conveniently claiming in one case that the subject property is conjugal, and then in another that it is
paraphernal should not be countenanced; she should be held to her original declaration that the subject
property is conjugal.

Respondents Arguments

In her Comment,41 respondent counters that, as correctly ruled by the CA, petitioner elected the wrong
remedy in filing a motion for judgment on the pleadings when he should have moved for summary
judgment; that in a motion for judgment on the pleadings, the movant is deemed to admit the truth of all of
the opposing partys material and relevant allegations, and rest his motion on those allegations taken
together with that of his own as are admitted in the pleadings; 42 that the effect of this is that petitioner is
deemed to have admitted that the subject property is paraphernal, as claimed in her Answer; that with the
final and executory May 30, 2007 Decision of the CA in CA-G.R. CV No. 78971, the subject property should
now be considered as her paraphernal property, and petitioners case for partition on the claim that the
subject property is conjugal should be dismissed for being moot and academic.

Our Ruling

The Court denies the Petition.

Judgment on the pleadings is proper where an answer fails to tender an issue, or otherwise admits the
material allegations of the adverse partys pleading.43 Summary judgment, on the other hand, will be
granted if the pleadings, supporting affidavits, depositions, and admissions on file, show that, except as to
the amount of damages, there is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.44cralawred

We have elaborated on the basic distinction between summary judgment and judgment on the pleadings,
thus:chanRoble svirtualLawlibrary

The existence or appearance of ostensible issues in the pleadings, on the one hand, and their sham or
fictitious character, on the other, are what distinguish a proper case for summary judgment from one for a
judgment on the pleadings. In a proper case for judgment on the pleadings, there is no ostensible issue at
all because of the failure of the defending partys answer to raise an issue. On the other hand, in the case of
a summary judgment, issues apparently exist ? i.e. facts are asserted in the complaint regarding which
there is as yet no admission, disavowal or qualification; or specific denials or affirmative defenses are in
truth set out in the answer?but the issues thus arising from the pleadings are sham, fictitious or not
genuine, as shown by affidavits, depositions, or admissions. 45 cralawlawlibrary

An answer would fail to tender an issue if it does not deny the material allegations in the complaint or
admits said material allegations of the adverse partys pleadings by confessing the truthfulness thereof
and/or omitting to deal with them at all. Now, if an answer does in fact specifically deny the material
averments of the complaint and/or asserts affirmative defenses (allegations of new matter which, while
admitting the material allegations of the complaint expressly or impliedly, would nevertheless prevent or bar
recovery by the plaintiff), a judgment on the pleadings would naturally be improper.46 cralawred

On the other hand, whether x x x the issues raised by the Answer are genuine is not the crux of inquiry in a
motion for judgment on the pleadings. It is so only in a motion for summary judgment. In a case for
judgment on the pleadings, the Answer is such that no issue is raised at all. The essential question in such
a case is whether there are issues generated by the pleadings.47 A genuine issue is an issue of fact which
requires the presentation of evidence as distinguished from a sham, fictitious, contrived or false claim.
When the facts as pleaded appear uncontested or undisputed, then there is no real or genuine issue or
question as to the facts, and summary judgment is called for.48 cralawre d

In rendering summary judgment, the trial court relied on respondents failure to reply to petitioners request
for admission, her admission in Civil Case No. MAN-2683, as well as its May 15, 2002 Decision declaring that
the subject property is a conjugal asset. It took judicial notice of the proceedings in said case. While there
is nothing irregular with this as courts may take judicial notice of a decision or the facts prevailing in
another case sitting in the same court if (1) the parties present them in evidence, absent any opposition
from the other party; or (2) the court, in its discretion, resolves to do so 49 the trial court however
disregarded the fact that its decision was then the subject of a pending appeal in CA-G.R. CV No. 78971. It
should have known that until the appeal is resolved by the appellate court, it would be premature to render
judgment on petitioners motion for judgment on the pleadings; that it would be presumptuous to assume
that its own decision would be affirmed on appeal. One of the issues raised in the appeal is precisely
whether the subject property is conjugal, or a paraphernal asset of the respondent. Thus, instead of
resolving petitioners motion for judgment on the pleadings, the trial court should have denied it or held it in
abeyance. It should have guided petitioner to this end, instead of aiding in the hasty resolution of his case.
In the first place, Civil Case No. MAN-4821 was transferred to it from Branch 56 precisely for the reason that
it was the court which tried the closely related Civil Case No. MAN-2683.

Even if respondent is deemed to have admitted the matters contained in petitioners request for admission
by her failure to reply thereto, the trial court should have considered the pending appeal in CA-G.R. CV No.
78971. It cannot take judicial notice solely of the proceedings in Civil Case No. MAN-2683, and ignore the
appeal in CA-G.R. CV No. 78971. After all, CA-G.R. CV No. 78971 is merely a continuation of Civil Case No.
MAN-2683; an appeal is deemed a continuation of the same case commenced in the lower court. 50 cralawred

On the part of petitioner, it must be said that he could not have validly resorted to a motion for judgment on
the pleadings or summary judgment. While it may appear that under Rules 34 and 35 of the 1997 Rules, he
may file a motion for judgment on the pleadings or summary judgment as a result of the consequent
admission by respondent that the subject property is conjugal, this is not actually the case. Quite the
contrary, by invoking the proceedings and decision in Civil Case No. MAN-2683, petitioner is precluded from
obtaining judgment while the appeal in said case is pending, because the result thereof determines whether
the subject property is indeed conjugal or paraphernal. He may not preempt the appeal in CA-G.R. CV No.
78971.

While it is true that a judgment cannot bind persons who are not parties to the action, 51 petitioner cannot,
after invoking the proceedings in Civil Case No. MAN-2683 to secure affirmative relief against respondent
and thereafter failing to obtain such relief, be allowed to repudiate or question the CAs ruling in CA-G.R. CV
No. 78971. The principle of estoppel bars him from denying the resultant pronouncement by the appellate
court, which became final and executory, that the subject property is respondents paraphernal property.
In estoppel, a person, who by his deed or conduct has induced another to act in a particular manner, is
barred from adopting an inconsistent position, attitude or course of conduct that thereby causes loss or
injury to another. It further bars him from denying the truth of a fact which has, in the contemplation of
law, become settled by the acts and proceeding of judicial or legislative officers or by the act of the party
himself, either by conventional writing or by representations, express or implied or in pais.52 cralawred

Finally, the Court notes that the appellate court overlooked the May 30, 2007 Decision in CA-G.R. CV No.
78971, which became final and executory on June 23, 2007. The respondent included this development in
her appellees brief, but the CA did not take it into account. As an unfortunate consequence, the case was
not appreciated and resolved completely.

Thus, with the development in Civil Case No. MAN-2683 brought upon by the final and executory decision in
CA-G.R. CV No. 78971, petitioners case is left with no leg to stand on. There being no conjugal property to
be divided between the parties, Civil Case No. MAN-4821 must be dismissed.

WHEREFORE, the Petition is DENIED. The October 6, 2009 Decision and March 2, 2012 Resolution of the
Court of Appeals in CA-G.R. CV No. 01783 are AFFIRMED WITH MODIFICATION in that Civil Case No.
MAN-4821 is ordered DISMISSED.

SO ORDERED. cralawla wlibrary

SECOND DIVISION

PHILIPPINE BANK OF G.R. No. 175514


COMMUNICATIONS,
Petitioner, Present:

CARPIO, J., Chairperson,


NACHURA,
- versus - PERALTA,
ABAD, and
MENDOZA, JJ.

SPOUSES JOSE C. GO
and ELVY T. GO, Promulgated:
Respondents.
February 14, 2011

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

DECISION
MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 filed by petitioner


Philippine Bank of Communications (PBCom) seeking to set aside the July 28,
2006 Decision,[1]and the November 27, 2006 Resolution[2] of the Court of
Appeals (CA) in CA G.R. CV No. 77714. The CA decision reversed and set aside
the January 25, 2002 Decision of the Regional Trial Court, Branch
42, Manila (RTC), which granted the motion for summary judgment and rendered
judgment on the basis of the pleadings and attached documents.

THE FACTS
On September 30, 1999, respondent Jose C. Go (Go) obtained two loans
from PBCom, evidenced by two promissory notes, embodying his commitment to
pay P17,982,222.22 for the first loan, and P80 million for the second loan, within a
ten-year period from September 30, 1999 to September 30, 2009.[3]

To secure the two loans, Go executed two (2) pledge agreements, both
dated September 29, 1999, covering shares of stock in Ever Gotesco Resources and
Holdings, Inc. The first pledge, valued at P27,827,122.22, was to secure payment
of the first loan, while the second pledge, valued at P70,155,100.00, was to secure
the second loan.[4]

Two years later, however, the market value of the said shares of stock
plunged to less than P0.04 per share. Thus, PBCom, as pledgee, notified Go in
writing on June 15, 2001, that it was renouncing the pledge agreements.[5]

Later, PBCom filed before the RTC a complaint [6] for sum of money with
prayer for a writ of preliminary attachment against Go and his wife, Elvy T.
Go (Spouses Go), docketed as Civil Case No. 01-101190. PBCom alleged that
Spouses Go defaulted on the two (2) promissory notes, having paid only three (3)
installments on interest paymentscovering the months of September, November
and December 1999. Consequently, the entire balance of the obligations of Go
became immediately due and demandable. PBCom made repeated demands upon
Spouses Go for the payment of said obligations, but the couple imposed conditions
on the payment, such as the lifting of garnishment effected by the Bangko Sentral
ng Pilipinas (BSP) on Gos accounts.[7]
Spouses Go filed their Answer with Counterclaim[8] denying the material
allegations in the complaint and stating, among other matters, that:

8. The promissory note referred to in the complaint expressly


state that the loan obligation is payable within the period of ten (10) years.
Thus, from the execution date of September 30, 1999, its due date falls
on September 30, 2009 (and not 2001 as erroneously stated in the
complaint). Thus, prior to September 30, 2009, the loan obligations
cannot be deemed due and demandable.

In conditional obligations, the acquisition of rights, as well as the


extinguishment or loss of those already acquired, shall depend upon the
happening of the event which constitutes the condition. (Article 1181, New
Civil Code)

9. Contrary to the plaintiffs proferrence, defendant Jose C. Go


had made substantial payments in terms of his monthly payments. There
is, therefore, a need to do some accounting works (sic) to reconcile the
records of both parties.

10. While demand is a necessary requirement to consider the


defendant to be in delay/default, such has not been complied with by the
plaintiff since the former is not aware of any demand made to him by the
latter for the settlement of the whole obligation.

11. Undeniably, at the time the pledge of the shares of stock


were executed, their total value is more than the amount of the loan or at
the very least, equal to it. Thus, plaintiff was fully secured insofar as its
exposure is concerned.

12. And even assuming without conceding, that the present


value of said shares x x x went down, it cannot be considered as something
permanent since the prices of stocks in the market either increases (sic) or
decreases (sic) depending on the market forces. Thus, it is highly
speculative for the plaintiff to consider said shares to have suffered
tremendous decrease in its value. More so, it is unfair for the plaintiff to
renounce or abandon the pledge agreements.

On September 28, 2001, PBCom filed a verified motion for summary


judgment[9] anchored on the following grounds:
I. MATERIAL AVERMENTS OF THE COMPLAINT ADMITTED
BY DEFENDANT-SPOUSES IN THEIR ANSWER TO OBVIATE THE
NECESSITY OF TRIAL
II. NO REAL DEFENSES AND NO GENUINE ISSUES AS TO
ANY MATERIAL FACT WERE TENDERED BY THE DEFENDANT-
SPOUSES IN THEIR ANSWER

III. PLANTIFFS CAUSES OF ACTIONS ARE SUPPORTED BY


VOLUNTARY ADMISSIONS AND AUTHENTIC DOCUMENTS WHICH
MAY NOT BE CONTRADICTED.[10]

PBCom contended that the Answer interposed no specific denials on the material
averments in paragraphs 8 to 11 of the complaint such as the fact of default, the
entire amount being already due and demandable by reason of default, and the fact
that the bank had made repeated demands for the payment of the obligations.[11]

Spouses Go opposed the motion for summary judgment arguing that they had
tendered genuine factual issues calling for the presentation of evidence.[12]

The RTC granted PBComs motion in its Judgment [13] dated January 25, 2002, the
dispositive portion of which states:

WHEREFORE, in view of all the foregoing, judgment is rendered


for the plaintiff and against the defendants ordering them to pay plaintiff
jointly and severally the following:

1. The total amount of P117,567,779.75, plus interests and


penalties as stipulated in the two promissory notes;

2. A sum equivalent to 10% of the amount involved in this


case, by way of attorneys fees; and

3. The costs of suit.

SO ORDERED.[14]

Spouses Go moved for a reconsideration but the motion was denied in an


order[15] dated March 20, 2002.

RULING OF THE COURT OF APPEALS


In its Decision dated July 28, 2006, the CA reversed and set aside the assailed
judgment of the RTC, denied PBComs motion for summary judgment, and ordered
the remand of the records to the court of origin for trial on the merits. The
dispositive portion of the decision states:
WHEREFORE, premises considered, the assailed judgment of the
Regional Trial Court, Branch 42 of Manila in Civil Case No. 01-101190 is
hereby REVERSED and SET ASIDE, and a new one entered denying
plaintiff-appellees motion for summary judgment. Accordingly, the
records of the case are hereby remanded to the court of origin for trial on
the merits.

SO ORDERED.[16]

The CA could not agree with the conclusion of the RTC that Spouses Go admitted
paragraphs 3, 4 and 7 of the complaint. It found the supposed admission to be
insufficient to justify a rendition of summary judgment in the case for sum of
money, since there were other allegations and defenses put up by Spouses Go in
their Answer which raised genuine issues on the material facts in the action.[17]

The CA agreed with Spouses Go that paragraphs 3 and 4 of the complaint merely
dwelt on the fact that a contract of loan was entered into by the parties, while
paragraph 7 simply emphasized the terms of the promissory notes executed by Go
in favor of PBCom. The fact of default, the amount of the outstanding obligation,
and the existence of a prior demand, which were all material to PBComs claim,
were hardly admitted[18] by Spouses Go in their Answer and were, in fact,
effectively questioned in the other allegations in the Answer.[19]

PBComs motion for reconsideration was denied in a resolution [20] dated November
27, 2006.

Thus, this petition for review.


THE ISSUES

I
WHETHER THE COURT OF APPEALS ERRED OR ACTED IN GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK, OR EXCESS OF
JURISDICTION IN RULING THAT THERE EXISTS A GENUINE ISSUE
AS TO MATERIAL FACTS IN THE ACTION IN SPITE OF THE
UNEQUIVOCAL ADMISSIONS MADE IN THE PLEADINGS BY
RESPONDENTS; AND

II
WHETHER THE COURT OF APPEALS ERRED OR ACTED IN GRAVE
ABUSE OF JURISDICTION [DISCRETION] IN HOLDING THAT
ISSUES WERE RAISED ABOUT THE FACT OF DEFAULT, THE
AMOUNT OF THE OBLIGATION, AND THE EXISTENCE OF PRIOR
DEMAND, EVEN WHEN THE PLEADING CLEARLY POINTS TO THE
CONTRARY.

Petitioner PBComs Position:


Summary judgment was proper, as
there were no genuine issues raised
as to any material fact.

PBCom argues that the material averments in the complaint categorically admitted
by Spouses Go obviated the necessity of trial. In their Answer, Spouses Go
admitted the allegations in paragraphs 3 and 4 of the Complaint pertaining to the
security for the loans and the due execution of the promissory notes, [21] and those in
paragraph 7 which set forth the acceleration clauses in the promissory note. Their
denial of paragraph 5 of the Complaint pertaining to the Schedules of Payment for
the liquidation of the two promissory notes did not constitute a specific denial
required by the Rules.[22]

Even in the Comment[23] of Spouses Go, the clear, categorical and unequivocal
admission of paragraphs 3, 4, and 7 of the Complaint had been conceded.[24]

PBCom faults the CA for having formulated non-existent issues pertaining


to the fact of default, the amount of outstanding obligation and the existence of
prior demand, none of which is borne by the pleadings or the records.[25]

The Spouses Go, PBCom argues, cannot negate or override the legal effect
of the acceleration clauses embodied in each of the two promissory notes executed
by Go. Moreover, the non-payment of arrearages constituting default was admitted
by Go in his letters to PBCom dated March 3 and April 7, 2000, respectively.
[26]
Therefore, by such default, they have lost the benefit of the period in their favor,
pursuant to Article 1198[27] of the Civil Code.
Further, PBCom claims that its causes of action are supported by authentic
documents and voluntary admissions which cannot be contradicted. It cites the
March 3 and April 7, 2000 letters of Go requesting deferment of interest payments
on his past due loan obligations to PBCom, as his assets had been placed under
attachment in a case filed by the BSP.[28] PBCom emphasizes that the said letters, in
addition to its letters of demand duly acknowledged and received by Go, negated
their claim that they were not aware of any demand having been made.[29]

Respondent spouses position:


Summary judgment was not proper.

The core contention of Spouses Go is that summary judgment was not proper under
the attendant circumstances, as there exist genuine issues with respect to the fact of
default, the amount of the outstanding obligation, and the existence of prior
demand, which were duly questioned in the special and affirmative defenses set
forth in the Answer. Spouses Go agree with the CA that the admissions in the
pleadings pertained to the highlight of the terms of the contract. Such admissions
merely recognized the existence of the contract of loan and emphasized its terms
and conditions.[30] Moreover, although they admitted paragraphs 3, 4, and 7, the
special and affirmative defenses contained in the Answer tendered genuine issues
which could only be resolved in a full-blown trial.[31]

On the matter of specific denial, Spouses Go posit that the Court decisions cited by
PBCom[32] do not apply on all fours in this case. Moreover, the substance of the
repayment schedule was not set forth in the complaint. It, therefore, follows that the
act of attaching copies to the complaint is insufficient to secure an implied
admission. Assuming arguendo that it was impliedly admitted, the existence of said
schedule and the promissory notes would not immediately make private
respondents liable for the amount claimed by PBCom. [33] Before respondents may
be held liable, it must be established, first, that they indeed defaulted; and second,
that the obligations has remained outstanding.[34]

Spouses Go also state that although they admitted paragraphs 3, 4 and 7 of


the Complaint, the fact of default, the amount of outstanding obligation and the
existence of prior demand were fully questioned in the special and affirmative
defenses.[35]

RULING OF THE COURT


The Court agrees with the CA that [t]he supposed admission of defendants-
appellants on the x x x allegations in the complaint is clearly not sufficient to
justify the rendition of summary judgment in the case for sum of money,
considering that there are other allegations embodied and defenses raised by the
defendants-appellants in their answer which raise a genuine issue as to the material
facts in the action.[36]

The CA correctly ruled that there exist genuine issues as to three material facts,
which have to be addressed during trial: first, the fact of default; second, the
amount of the outstanding obligation, and third, the existence of prior demand.
Under the Rules, following the filing of pleadings, if, on motion of a party and after
hearing, the pleadings, supporting affidavits, depositions and admissions on file
show that, except as to the amount of damages, there is no genuine issue as to any
material fact, and that the moving party is entitled to a judgment as a matter of law,
[37]
summary judgment may be rendered. This rule was expounded in Asian
Construction and Development Corporation v. Philippine Commercial
International Bank,[38] where it was written:
Under Rule 35 of the 1997 Rules of Procedure, as amended, except
as to the amount of damages, when there is no genuine issue as to any
material fact and the moving party is entitled to a judgment as a matter of
law, summary judgment may be allowed. [39] Summary or accelerated
judgment is a procedural technique aimed at weeding out sham claims or
defenses at an early stage of litigation thereby avoiding the expense and
loss of time involved in a trial.[40]
Under the Rules, summary judgment is appropriate when there are
no genuine issues of fact which call for the presentation of evidence in a
full-blown trial. Even if on their face the pleadings appear to raise issues,
when the affidavits, depositions and admissions show that such issues are
not genuine, then summary judgment as prescribed by the Rules must
ensue as a matter of law. The determinative factor, therefore, in a motion
for summary judgment, is the presence or absence of a genuine issue as to
any material fact.
A genuine issue is an issue of fact which requires the presentation
of evidence as distinguished from a sham, fictitious, contrived or false
claim. When the facts as pleaded appear uncontested or undisputed, then
there is no real or genuine issue or question as to the facts, and summary
judgment is called for. The party who moves for summary judgment has
the burden of demonstrating clearly the absence of any genuine issue of
fact, or that the issue posed in the complaint is patently unsubstantial so
as not to constitute a genuine issue for trial. Trial courts have limited
authority to render summary judgments and may do so only when there is
clearly no genuine issue as to any material fact. When the facts as pleaded
by the parties are disputed or contested, proceedings for summary
judgment cannot take the place of trial.[41] (Underscoring supplied.)

Juxtaposing the Complaint and the Answer discloses that the material facts here
are not undisputed so as to call for the rendition of a summary judgment. While the
denials of Spouses Go could have been phrased more strongly or more
emphatically, and the Answer more coherently and logically structured in order to
overthrow any shadow of doubt that such denials were indeed made, the pleadings
show that they did in fact raise material issues that have to be addressed and
threshed out in a full-blown trial.

PBCom anchors its arguments on the alleged implied admission by Spouses Go


resulting from their failure to specifically deny the material allegations in the
Complaint, citing as precedent Philippine Bank of Communications v. Court of
Appeals,[42] and Morales v. Court of Appeals. Spouses Go, on the other hand, argue
that although admissions were made in the Answer, the special and affirmative
defenses contained therein tendered genuine issues.

Under the Rules, every pleading must contain, in a methodical and logical form, a
plain, concise and direct statement of the ultimate facts on which the party pleading
relies for his claim or defense, as the case may be, omitting the statement of mere
evidentiary facts.[43]

To specifically deny a material allegation, a defendant must specify each material


allegation of fact the truth of which he does not admit, and whenever practicable,
shall set forth the substance of the matters upon which he relies to support his
denial. Where a defendant desires to deny only a part of an averment, he shall
specify so much of it as is true and material and shall deny only the remainder.
Where a defendant is without knowledge or information sufficient to form a belief
as to the truth of a material averment made in the complaint, he shall so state, and
this shall have the effect of a denial.[44]

Rule 8, Section 10 of the Rules of Civil Procedure contemplates three (3) modes of
specific denial, namely: 1) by specifying each material allegation of the fact in the
complaint, the truth of which the defendant does not admit, and whenever
practicable, setting forth the substance of the matters which he will rely upon to
support his denial; (2) by specifying so much of an averment in the complaint as is
true and material and denying only the remainder; (3) by stating that the defendant
is without knowledge or information sufficient to form a belief as to the truth of a
material averment in the complaint, which has the effect of a denial.[45]

The purpose of requiring the defendant to make a specific denial is to make him
disclose the matters alleged in the complaint which he succinctly intends to
disprove at the trial, together with the matter which he relied upon to support the
denial. The parties are compelled to lay their cards on the table.[46]

Again, in drafting pleadings, members of the bar are enjoined to be clear and
concise in their language, and to be organized and logical in their composition and
structure in order to set forth their statements of fact and arguments of law in the
most readily comprehensible manner possible. Failing such standard, allegations
made in pleadings are not to be taken as stand-alone catchphrases in the interest of
accuracy. They must be contextualized and interpreted in relation to the rest of the
statements in the pleading.

In Spouses Gaza v. Lim, the Court ruled that the CA erred in declaring that the
petitioners therein impliedly admitted respondents' allegation that they had prior
and continuous possession of the property, as petitioners did in fact enumerate their
special and affirmative defenses in their Answer. They also specified therein each
allegation in the complaint being denied by them. The Court therein stated:
The Court of Appeals held that spouses Gaza, petitioners,
failed to deny specifically, in their answer, paragraphs 2, 3 and 5
of the complaint for forcible entry quoted as follows:
xxx xxx xxx
2. That plaintiffs are the actual and joint
occupants and in prior continuous physical
possession since 1975 up to Nov. 28, 1993 of a certain
commercial compound described as follows:
A certain parcel of land situated in Bo. Sta.
Maria, Calauag, Quezon. Bounded on the N., & E., by
Julian de Claro; on the W., by Luis Urrutia.
Containing an area of 5,270 square meters, more or
less. Declared under Ramon J. Lim's Tax Dec. No.
4576 with an Ass. Value of P26,100.00
3. That plaintiffs have been using the premises
mentioned for combined lumber and copra business.
Copies of plaintiffs' Lumber Certificate of
Registration No. 2490 and PCA Copra Business
Registration No. 6265/76 are hereto attached as
Annexes "A" and "B" respectively; the Mayor's
unnumbered copra dealer's permit dated Dec. 31,
1976 hereto attached as Annex "C";
xxx xxx xxx
5. That defendants' invasion of plaintiffs'
premises was accomplished illegally by detaining
plaintiffs' caretaker Emilio Herrera and his daughter
inside the compound, then proceeded to saw the
chain that held plaintiffs' padlock on the main gate of
the compound and then busted or destroyed the
padlock that closes the backyard gate or exit. Later,
they forcibly opened the lock in the upstairs room of
plaintiff Agnes J. Lim's quarters and defendants
immediately filled it with other occupants now. Copy
of the caretaker's (Emilio Herrera) statement
describing in detail is hereto attached as Annex "D";
xxx xxx xxx.7
The Court of Appeals then concluded that since petitioners
did not deny specifically in their answer the above-quoted
allegations in the complaint, they judicially admitted that Ramon
and Agnes Lim, respondents, "were in prior physical possession
of the subject property, and the action for forcible entry which
they filed against private respondents (spouses Gaza) must be
decided in their favor. The defense of private respondents that
they are the registered owners of the subject property is
unavailing."
We observe that the Court of Appeals failed to consider
paragraph 2 of petitioners' answer quoted as follows:
2. That defendants specifically deny the
allegations in paragraph 2 and 3 of the complaint for
want of knowledge or information sufficient to form a
belief as to the truth thereof, the truth of the matter
being those alleged in the special and affirmative
defenses of the defendants;"8
Clearly, petitioners specifically denied the allegations
contained in paragraphs 2 and 3 of the complaint that
respondents have prior and continuous possession of the disputed
property which they used for their lumber and copra business.
Petitioners did not merely allege they have no knowledge or
information sufficient to form a belief as to truth of those
allegations in the complaint, but added the following:
SPECIAL AND AFFIRMATIVE DEFENSES
That defendants hereby reiterate, incorporate
and restate the foregoing and further allege:
5. That the complaint states no cause of action;
"From the allegations of plaintiffs, it appears
that their possession of the subject property was not
supported by any concrete title or right, nowhere in
the complaint that they alleged either as an owner or
lessee, hence, the alleged possession of plaintiffs is
questionable from all aspects. Defendants Sps.
Napoleon Gaza and Evelyn Gaza being the registered
owner of the subject property has all the right to enjoy
the same, to use it, as an owner and in support thereof,
a copy of the transfer certificate of title No. T-47263 is
hereto attached and marked as Annex "A-Gaza" and a
copy of the Declaration of Real Property is likewise
attached and marked as Annex "B-Gaza" to form an
integral part hereof;
6. That considering that the above-entitled case
is an ejectment case, and considering further that the
complaint did not state or there is no showing that the
matter was referred to a Lupon for conciliation under
the provisions of P.D. No. 1508, the Revised Rule on
Summary Procedure of 1991, particularly Section 18
thereof provides that such a failure is jurisdictional,
hence subject to dismissal;
7. That the Honorable Court has no jurisdiction
over the subject of the action or suit;
The complaint is for forcible entry and the
plaintiffs were praying for indemnification in the sum
of P350,000.00 for those copra, lumber, tools, and
machinery listed in par. 4 of the complaint
and P100,000.00 for unrealized income in the use of
the establishment, considering the foregoing amounts
not to be rentals, Section 1 A (1) and (2) of the Revised
Rule on Summary Procedure prohibits recovery of the
same, hence, the Honorable Court can not acquire
jurisdiction over the same. Besides, the defendants
Napoleon Gaza and Evelyn Gaza being the owners of
those properties cited in par. 4 of the complaint except
for those copra and two (2) live carabaos outside of the
subject premises, plaintiffs have no rights whatsoever
in claiming damages that it may suffer, as and by way
of proof of ownership of said properties cited in
paragraph 4 of the complaint attached herewith are
bunche[s] of documents to form an integral part
hereof;
8. That plaintiffs' allegation that Emilio Herrera
was illegally detained together with his daughter was
not true and in support thereof, attached herewith is a
copy of said Herrera's statement and marked as Annex
"C-Gaza."
xxx xxx xxx.9
The above-quoted paragraph 2 and Special and Affirmative
Defenses contained in petitioners' answer glaringly show that
petitioners did not admit impliedly that respondents have been in
prior and actual physical possession of the property. Actually,
petitioners are repudiating vehemently respondents' possession,
stressing that they (petitioners) are the registered owners and
lawful occupants thereof.
Respondents' reliance on Warner Barnes and Co., Ltd. v.
Reyes in maintaining that petitioners made an implied admission
10

in their answer is misplaced. In the cited case, the defendants'


answer merely alleged that they were "without knowledge or
information sufficient to form a belief as to the truth of the
material averments of the remainder of the complaint" and "that
they hereby reserve the right to present an amended answer with
special defenses and counterclaim."11 In the instant
case, petitioners enumerated their special and affirmative
defenses in their answer. They also specified therein each
allegation in the complaint being denied by them. They
particularly alleged they are the registered owners and lawful
possessors of the land and denied having wrested possession of the
premises from the respondents through force, intimidation, threat,
strategy and stealth. They asserted that respondents' purported
possession is "questionable from all aspects." They also averred
that they own all the personal properties enumerated in
respondents' complaint, except the two carabaos. Indeed, nowhere
in the answer can we discern an implied admission of the
allegations of the complaint, specifically the allegation that
petitioners have priority of possession.
Thus, the Court of Appeals erred in declaring that herein
petitioners impliedly admitted respondents' allegation that they
have prior and continuous possession of the property.
[47]
(Underscoring supplied.)

In this case, as in Gaza, the admissions made by Spouses Go are to be read and
taken together with the rest of the allegations made in the Answer, including the
special and affirmative defenses.

For instance, on the fact of default, PBCom alleges in paragraph 8 of the Complaint
that Go defaulted in the payment for both promissory notes, having paid only three
interest installments covering the months of September, November, and December
1999.

In paragraph 6 of the Answer, Spouses Go denied the said allegation, and further
alleged in paragraphs 8 to 13 that Go made substantial payments on his monthly
loan amortizations.

The portions of the pleadings referred to are juxtaposed below:

Complaint Answer

8. The defendant defaulted in the 6. Defendants deny the allegations in


payment of the obligations on the two (2) paragraphs 8, 9, 10 and 11 of the
promissory notes (Annexes A and B Complaint;
hereof) as he has paid only three (3)
installments on interests (sic) payments xxx
covering the months of September,
8. The promissory notes referred to in the
November and December, 1999, on both
complaint expressly state that the loan
promissory notes, respectively. As a
obligation is payable within the period of
consequence of the default, the entire
ten (10) years. Thus, from the execution
balance due on the obligations of the
date of September 30, 1999, its due date
defendant to plaintiff on both promissory
falls on September 3o, 2009 (and not
notes immediately became due and
2001 as erroneously stated in the
demandable pursuant to the terms and
complaint). Thus, prior to September 30,
conditions embodied in the two (2)
2009, the loan obligations cannot be
promissory notes;[48]
deemed due and demandable.
In conditional obligations, the acquisition
of rights, as well as the extinguishment or
loss of those already acquired, shall
depend upon the happening of the event
which constitutes the condition. (Article
1181, New Civil Code)
9. Contrary to the plaintiffs preference,
defendant Jose C. Go has made
substantial payments in terms of his
monthly payments. There is therefore, a
need to do some accounting works (sic)
just to reconcile the records of both
parties.
10. While demand is a necessary
requirement to consider the defendant to
be in delay/default, such has not been
complied with by the plaintiff since the
former is not aware of any demand made
to him by the latter for the settlement of
the whole obligation.
11. Undeniably, at the time the pledge of
the shares of stocks were executed, their
total value is more than the amount of the
loan, or at the very least, equal to it. Thus,
plaintiff was fully secured insofar as its
exposure is concerned.[49]
12. And even assuming without
conceding, that the present value of said
shares has went (sic) down, it cannot be
considered as something permanent
since, the prices of stocks in the market
either increases (sic) or (sic) decreases
depending on the market forces. Thus, it
is highly speculative for the plaintiff to
consider said shares to have suffered
tremendous decrease in its value. Moreso
(sic), it is unfair for the plaintiff to
renounce or abandon the pledge
agreements.
13. As aptly stated, it is not aware of any
termination of the pledge agreement
initiated by the plaintiff.

Moreover, in paragraph 10 of the Answer, Spouses Go also denied the existence of


prior demand alleged by PBCom in paragraph 10 of the Complaint. They stated
therein that they were not aware of any demand made by PBCom for the settlement
of the whole obligation. Both sections are quoted below:

Complaint Answer

10. Plaintiff made repeated demands from 10. While demand is a necessary
(sic) defendant for the payment of the requirement to consider the defendant to
obligations which the latter acknowledged be in delay/default, such has not been
to have incurred however, defendant complied with by the plaintiff since the
imposed conditions such as [that] his former is not aware of any demand made
[effecting] payments shall depend upon to him by the latter for the settlement of
the lifting of garnishment effected by the the whole obligation.
Bangko Sentral on his accounts.
Photocopies of defendants
communication dated March 3, 2000 and
April 7, 2000, with plaintiff are hereto
attached as Annexes F and Ghereof, as
well as its demand to pay dated April 18,
2000. Demand by plaintiff is hereto
attached as Annex H hereof.
[50]
[Emphases supplied]

Finally, as to the amount of the outstanding obligation, PBCom alleged in


paragraph 9 of the Complaint that the outstanding balance on the couples
obligations as of May 31, 2001 was P21,576,668.64 for the first loan
and P95,991,111.11, for the second loan or a total of P117,567,779.75.

In paragraph 9 of the Answer, however, Spouses Go, without stating any specific
amount, averred that substantial monthly payments had been made, and there was a
need to reconcile the accounting records of the parties.
Complaint Answer

9. Defendants outstanding obligations 9. Contrary to the plaintiffs preference,


under the two (2) promissory notes as defendant Jose C. Go has made
of May 31, 2001 are: P21,576,668.64 substantial payments in terms of his
(Annex A) and P95,991,111.11 (Annex B), monthly payments. There is therefore, a
or a total of P117,567,779.75. Copy of the need to do some accounting works just to
Statement of Account is hereto attached reconcile the records of both parties.[52]
as Annex E hereof.[51]

Clearly then, when taken within the context of the entirety of the pleading, it
becomes apparent that there was no implied admission and that there were indeed
genuine issues to be addressed.

As to the attached March 3, 2000 letter, the Court is in accord with the CA when it
wrote:

The letter dated March 3, 2000 is insufficient to support the


material averments in PBComs complaint for being equivocal and capable
of different interpretations. The contents of the letter do not address all
the issues material to the banks claim and thus do not conclusively
establish the cause of action of PBCom against the spouses Go. As regards
the letter dated April 7, 2000, the trial court itself ruled that such letter
addressed to PBCom could not be considered against the defendants-
appellants simply because it was not signed by defendant-appellant Jose
Go.

Notably, the trial court even agreed with the defendant-appellants


on the following points:

The alleged default and outstanding obligations are


based on the Statement of Account. This Court agrees with
the defendants that since the substance of the document was
not set forth in the complaint although a copy thereof was
attached thereto, or the said document was not set forth
verbatim in the pleading, the rule on implied admission does
not apply.[53]
It must also be pointed out that the cases cited by PBCom do not apply to this case.
Those two cases involve denial of lack of knowledge of facts so plainly and
necessarily within [the knowledge of the party making such denial] that such
averment of ignorance must be palpably untrue.[54] Also, in both cases, the
documents denied were the same documents or deeds sued upon or made the basis
of, and attached to, the complaint.

In Philippine Bank of Communications v. Court of Appeals,[55] the Court ruled that


the defendants contention that it had no truth or information sufficient to form a
belief as to the truth of the deed of exchange was an invalid or ineffectual denial
pursuant to the Rules of Court,[56] as it could have easily asserted whether or not it
had executed the deed of exchange attached to the petition. Citing Capitol Motors
Corporations v. Yabut,[57] the Court stated that:

x x x The rule authorizing an answer to the effect that the defendant


has no knowledge or information sufficient to form a belief as to the truth
of an averment and giving such answer the effect of a denial, does not
apply where the fact as to which want of knowledge is asserted, is so
plainly and necessarily within the defendants knowledge that his
averment of ignorance must be palpably untrue.[58]

The Warner Barnes case cited above sprung from a suit for foreclosure of
mortgage, where the document that defendant denied was the deed of mortgage
sued upon and attached to the complaint. The Court then ruled that it would have
been easy for the defendants to specifically allege in their answer whether or not
they had executed the alleged mortgage.

Similarly, in Capitol Motors, the document denied was the promissory note sued
upon and attached to the complaint. In said case, the Court ruled that although a
statement of lack of knowledge or information sufficient to form a belief as to the
truth of a material averment in the complaint was one of the modes of specific
denial contemplated under the Rules, paragraph 2 of the Answer in the said case
was insufficient to constitute a specific denial.[59] Following the ruling in
the Warner Barnes case, the Court held that it would have been easy for defendant
to specifically allege in the Answer whether or not it had executed the promissory
note attached to the Complaint.[60]

In Morales v. Court of Appeals,[61] the matter denied was intervenors knowledge of


the plaintiffs having claimed ownership of the vehicle in contention. The Court
therein stated:

Yet, despite the specific allegation as against him, petitioner, in his


Answer in Intervention with Counterclaim and Crossclaim, answered the
aforesaid paragraph 11, and other paragraphs, merely by saying that he
has no knowledge or information sufficient to form a belief as to its truth.
While it may be true that under the Rules one could avail of this statement
as a means of a specific denial, nevertheless, if an allegation directly and
specifically charges a party to have done, performed or committed a
particular act, but the latter had not in fact done, performed or committed
it, a categorical and express denial must be made. In such a case, the
occurrence or non-occurrence of the facts alleged may be said to be within
the partys knowledge. In short, the petitioner herein could have simply
expressly and in no uncertain terms denied the allegation if it were
untrue. It has been held that when the matters of which a defendant
alleges of having no knowledge or information sufficient to form a belief,
are plainly and necessarily within his knowledge, his alleged ignorance or
lack of information will not be considered as specific denial. His denial
lacks the element of sincerity and good faith, hence, insufficient.[62]

Borrowing the phraseology of the Court in the Capitol Motors case, clearly, the fact
of the parties having executed the very documents sued upon, that is, the deed of
exchange, deed or mortgage or promissory note, is so plainly and necessarily
within the knowledge of the denying parties that any averment of ignorance as to
such fact must be palpably untrue.

In this case, however, Spouses Go are not disclaiming knowledge of the transaction
or the execution of the promissory notes or the pledge agreements sued upon. The
matters in contention are, as the CA stated, whether or not respondents were in
default, whether there was prior demand, and the amount of the outstanding loan.
These are the matters that the parties disagree on and by which reason they set forth
vastly different allegations in their pleadings which each will have to prove by
presenting relevant and admissible evidence during trial.

Furthermore, in stark contrast to the cited cases where one of the parties disclaimed
knowledge of something so patently within his knowledge, in this case, respondents
Spouses Go categorically stated in the Answer that there was no prior demand, that
they were not in default, and that the amount of the outstanding loan would have to
be ascertained based on official records.

WHEREFORE, the petition is DENIED.

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 166330 September 11, 2013

SMART COMMUNICATIONS, INC., Petitioner,


vs.
ARSENIO ALDECOA, JOSE B. TORRE, CONRADO U. PUA, GREGORIO V. MANSANO, JERRY
CORPUZ and ESTELITAACOSTA, Respondents.

DECISION

LEONARDO-DE CASTRO, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by
petitioner Smart Communications, Inc., seeking the reversal of the Decision 1 dated July 16, 2004
and Resolution2 dated December 9, 2004 of the Court of Appeals in CA-G.R. CV No. 71337. The
appellate court (I) reversed and set aside the Order3 dated January 16, 2001 of the Regional Trial
Court (RTC), Branch 23, of Roxas, Isabela, in Civil Case No. Br. 23-632-2000 dismissing the
complaint for abatement of nuisance and injunction against petitioner, and (2) entered a new
judgment declaring petitioner's cellular base station located in Barangay Vira, Municipality of Roxas,
Province of Isabela, a nuisance and ordering petitioner to cease and desist from operating the said
cellular base station.

The instant Petition arose from the following facts:

Petitioner is a domestic corporation engaged in the telecommunications business. On March 9,


2000, petitioner entered into a contract of lease4 with Florentino Sebastian in which the latter agreed
to lease to the former a piece of vacant lot, measuring around 300 square meters, located in
Barangay Vira, Roxas, Isabela (leased property).Petitioner, through its contractor, Allarilla
Construction, immediately constructed and installed a cellular base station on the leased property.
Inside the cellular base station is a communications tower, rising as high as150 feet, with antennas
and transmitters; as well as a power house open on three sides containing a 25KVA diesel power
generator. Around and close to the cellular base station are houses, hospitals, clinics, and
establishments, including the properties of respondents Arsenio Aldecoa, Jose B. Torre, Conrado U.
Pua, Gregorio V. Mansano, Jerry Corpuz, and Estelita Acosta.

Respondents filed before the RTC on May 23, 2000 a Complaint against petitioner for abatement of
nuisance and injunction with prayer for temporary restraining order and writ of preliminary injunction,
docketed as Civil Case No. Br. 23-632-2000. Respondents alleged in their Complaint that:

5. Petitioners communications tower is 150 feet in height equivalent to a 15-storey building.


It is a tripod-type tower made of tubular steel sections and the last section, to which the huge
and heavy antenna/transponder array will be attached, about to be bolted on. Weight of the
antenna mast is estimated at one (1) to three (3) tons, more or less. As designed, the
antenna/transponder array are held only by steel bolts without support of guy wires;
6. This SMART tower is no different from the Mobiline tower constructed at Reina Mercedes,
Isabela which collapsed during a typhoon that hit Isabela in October 1998, an incident which
is of public knowledge;

7. With its structural design, SMARTs tower being constructed at Vira, Roxas, Isabela, is
weak, unstable, and infirm, susceptible to collapse like the Mobiline tower which fell during a
typhoon as earlier alleged, and its structural integrity being doubtful, and not earthquake
proof, this tower poses great danger to life and limb of persons as well as their property,
particularly, the respondents whose houses a but, or are near or within the periphery of the
communications tower;

8. This tower is powered by a standby generator that emitsnoxious and deleterious fumes,
not to mention the constant noise it produces, hence, a hazard to the health, not only of the
respondents, but the residents in the area as well;

9. When in operation, the tower would also pose danger to the life and health of respondents
and residents of the barangay, especially children, because of the ultra high frequency (UHF)
radio wave emissions it radiates. Only recently, Cable News Network (CNN) reported that
cell phones, with minimal radiated power, are dangerous to children, so more it is for this
communications tower, whose radiated power is thousands of times more than that of a
cellphone;

10. Worse, and in violation of law, petitioner constructed the tower without the necessary
public hearing, permit of the barangay, as well as that of the municipality, the Environmental
Compliance Certificate of the [Department of Environment and Natural Resources
(DENR)],construction permit, and other requirements of the National Telecommunications
Commission (NTC), and in fact committed fraud in its application by forging an undated
certification " that Barangay Vira does not interpose any objection to the proposed
construction of a 150 ft. tower & site development, " as this certification was never issued
byrespondent Jose Torre, the Barangay Captain of Vira, Roxas, Isabela, and without the
official barangay seal, attached as Annex "A" and Certification of the Barangay Officer of the
Day that no public hearing was held, attached as Annex "B" made integral part hereof;

11. Not being armed with the requisite permits/authority as above mentioned, the
construction of the tower is illegal and should be abated;

12. Respondents and petitioner should not wait for the occurrence of death, injuries and
damage on account of this structure and judicial intervention is needed to ensure that such
event will not happen.5

Respondents thus prayed for the RTC to:

1. Issue a temporary restraining order and after due hearing to issue a writ of
preliminary mandatory injunction;

2. Render judgment:

- Making the writ of preliminary mandatory injunction permanent;


- Declaring the construction of the SMART tower as a nuisance per se or per
accidens;

- Ordering the abatement of this nuisance by ordering the removal and/or


demolition of petitioners communication tower;

- Condemning petitioner to pay respondents moral damages in the sum


of P150,000.00 and exemplary damages in the sum of P30,000.00;

- Ordering petitioner to pay attorneys fees in the amount of P20,000.00 plus


trial honoraria of P1,000.00 for every appearance in Court;

- Ordering petitioner to refund to respondents litigation expenses in the


amount of not less than P10,000.00;

3. And for such other reliefs as are just and equitable in the premises. 6

In its Answer/Motion to Oppose Temporary Restraining Order with Compulsory


Counterclaim, petitioner raised the following special and affirmative defenses:

13. Petitioner through its contractor, Allarilla Construction(hereafter Allarilla), applied


for a Building Permit through the office of Municipal engineer Virgilio A. Batucal on 13
April 2000 and subsequently received its approval 17 April 2000. (a copy of the
Official receipt and the Building Permit is hereto attached respectively as Annex "A"
and "B" and made an integral part hereof)

14. Petitioner, again through Allarilla applied for an Environmental Compliance


Certificate (ECC) the approval of which, at present, remains pending with the DENR-
[Environment Management Bureau (EMB)].

15. Petitioner should not in anyway be liable for fraud or bad faith as it had
painstakingly secured the consent of majority of the residents surrounding the
location of the Tower in order to seek their approval therewith. (a copy of the list of
residents who consented there to is attached herewith as Annex "C" and made an
integral part hereof)

16. Among the residents who signed the consent list secured by petitioner include
the respondent Jose B. Torre and a certain Linaflor Aldecoa, who is related to
respondent Arsenio Aldecoa.

17. Petitioner did not forge the Barangay Certification but actually secured the
consent of Barangay Captain Jose Torre through the efforts of Sangguniang Bayan
(SB) Board Member Florentino Sebastian.(a copy of the Barangay Certification is
attached herewith as Annex "D" and made an integral part hereof)

18. Petitioner Towers safety has been pre-cleared and is unlikely to cause harm in
exposing the members of the public to levels exceeding health limits considering that
the antenna height of the Tower is 45.73 meters or equivalent to 150 feet as stated in
a Radio Frequency Evaluation report by Elizabeth H. Mendoza health Physicist II, of
the Department of Health Radiation Health Service dated 9 May 2000. (a copy is
hereto attached as Annex "E" and made an integral part hereof)

19. The structural stability and soundness of the Tower has been certified by Engr.
Melanio A. Guillen Jr. of the Engineering Consulting firm Microflect as contained in
their Stress Analysis Report (a copy is hereto attached as Annex "F" and made an
integral part hereof)

20. petitioners impetus to push through with the construction of the Tower is spurred
by the Telecommunications Act of 1995 or Republic Act 7925 which states that the
"expansion of the telecommunications network shall give priority to improving and
extending basic services to areas not yet served." Article II, Sec. 4 par. B.(a copy of
RA 7925 is hereto attached as Annex "G" and made an integral part hereof) 7

In the end, petitioner sought the dismissal of respondents Complaint; the denial of respondents
prayer for the issuance of a temporary restraining order and writ of preliminary mandatory injunction;
the award of moral, nominal, and exemplary damages in the amounts which the court deem just and
reasonable; and the award of attorneys fees in the sum of P500,000.00 and litigation expenses as
may be proven at the trial.

Respondents then contested petitioners allegations and averred in their Reply and Answer to
Counterclaim that:

- Petitioners cell site relay antenna operates on the ultra high frequency (UHF) band, or
gigabyte band, that is much higher than that of TV and radio broadcasts which operates only
on the Very High Frequency (VHF) band, hence, petitioners equipment generates
dangerously high radiation and emission that is hazardous to the people exposed to it like
respondents, whose houses are clustered around petitioners cell site
antenna/communications tower;

- As admitted, petitioner has not secured the required Environmental Compliance Certificate
(ECC). It has not even obtained the initial compliance certificate (ICC). In short,petitioner
should have waited for these documents before constructing its tower, hence, it violated the
law and such construction is illegal and all the more sustains the assertions of respondents;

- The alleged building permit issued to petitioner is illegal because of the lack of an ECC and
that petitioners application for a building permit covered only a building and not a cell site
antenna tower. Moreover, the petitioner failed to obtain a National Telecommunications
Commission (NTC) Clearance to construct the communications tower. As will be seen in the
application and permit, the documents are dated April, 2000 while the construction begun in
March, 2000;

- The technical data that served as the basis of the Radio Frequency Radiation Evaluation of
petitioners mobile telephone base station was provided solely by the petitioner and in fact
misled the DOH Radiation Health Service. It states an absurdly low transmitted power of
twenty (20) watts for a dual band mobile phone service such as petitioner Smarts GSM
900/1800 Dual Band which is the standard service it offers to the public;
- The Stress Analysis Report is self-serving and tested against the communications tower,
the structural integrity is flawed;

- While respondents may yield to the mandate of Republic Act No.7925, otherwise known as
the Telecommunications Act of 1995,extending and improving or upgrading of basic services
to are as not yet served, this should not be taken as a license to gamble and/or destroy the
health and well-being of the people;

- Petitioners alleged certification (Annex "D", should be Annex "4") is the very same
certification appended to respondents complaint which they have assailed as a forgery and
which respondent Jose Torre, the Barangay Captain of Vira, Roxas, Isabela, emphatically
denies having signed and/or issued the same. Moreover, the certification gives petitioner
away because respondent Jose Torre has no technical education using the
telecommunications term "SMART GSM & ETACS project," in said falsified certification;

- Petitioners claim that it is not liable for fraud or bad faith, proudly stating that it has
painstakingly secured the consent of the majority of the residents surrounding the tower site,
is belied by the alleged Conformity of Host Community (Residential) Annex "C" should be
Annex "3" where only a handful of residents signed the document prepared by petitioner
and the contents of which were misrepresented by a Sangguniang Bayan Member in the
person of Nick Sebastian who is an interested party being the owner of the land where the
tower is constructed. It was misrepresented to Linaflor Aldecoa, wife of respondent Arsenio
Aldecoa that it was already anyway approved and signed by Barangay Captain Jose Torre
when in truth his signature was again forged by the petitioner and/or its employees or agents
or person working for said company. Also, there are persons who are not residents of Vira,
Roxas, Isabela who signed the document such as Melanio C. Gapultos of Rizal, Roxas,
Isabela, Carlito Castillo of Nuesa, Roxas, Isabela, and another, Gennie Feliciano from San
Antonio, Roxas, Isabela. Certainly six (6) persons do not constitute the conformity of the
majority of the residents of Vira, Roxas, Isabela, and those immediately affected by the
cellsite tower like respondents. This document is likewise flawed and cannot help petitioners
cause. Besides, respondents and other residents, sixty-two (62) of them, communicated their
protest against the erection of the cell tower specifying their reasons therefor and expressing
their sentiments and fears about petitioners communications tower, xerox copy attached as
Annex "A" and made integral part hereof;

- Respondents likewise specifically deny the truth of the allegation in paragraph 12 of the
answer, the truth being that the lot leased to petitioner is owned by SB Member Nick
Sebastian and that Florentino Sebastian is dummying for the former in avoidance of possible
anti-graft charges against his son concerning this project. It is also further denied for lack of
knowledge or information sufficient to form a belief as to the truth thereof. Moreover, the
lease contract, copy not annexed to petitioners answer, would automatically be terminated
or ended in the event of complaints and/or protests from the residents. 8

Civil Case No. Br. 23-632-2000 was set for pre-trial on September 28, 2000. 9

On September 11, 2000, petitioner filed its Pre-Trial Brief in which it identified the following issues:

4.1. Whether respondents have a cause of action against the petitioner SMART for this
Honorable Court to issue a Preliminary Mandatory Injunction over the SMART tower in
Roxas, Isabela as it allegedly poses a threat to the lives and safety of the residents within the
area and if respondents are entitled to moral and exemplary damages as well as attorneys
fees and expenses of litigation.

4.2 Whether the complaint should be dismissed in that the claim or demand set forth in the
Complaint is fictitious, imaginary, sham and without any real basis.

4.3. What petitioner SMART is entitled under its compulsory counterclaim against
respondents for moral and exemplary damages, attorneys fees, and other expenses of
litigation.10

On even date, petitioner filed a Motion for Summary Judgment that reads:

Petitioner SMART Communications Inc., thru counsel, respectfully manifests that:

1. There is no need for a full-blown trial as the causes of action and issues have already
been identified in all the pleadings submitted to this Honorable court by both respondents
and petitioner

2. There is clearly no genuine issue as to any material fact or cause in the action.

3. There is no extreme urgency to issue a Preliminary Mandatory Injunction as stated in an


affidavit executed by SMART Senior Supervisor Andres V. Romero in an affidavit hereto
attached as Annex "A"

4. Petitioner seeks immediate declaratory relief from respondents contrived allegations as


set forth in their complaint;

Wherefore, it is most respectfully prayed of this Honorable Court that summary judgment be
rendered pursuant to Rule 35 of the Revised Rules of Court. 11

Respondents filed their Pre-Trial Brief on September 21, 2000, proposing to limit the issues,

viz:

- Whether petitioners communications tower is a nuisance per se/per accidens and together
with its standby generator maybe abated for posing danger to the property and life and limb
of the residents of Vira, Roxas, Isabela more particularly the respondents and those whose
houses are clustered around or in the periphery of the cell site.

- Damages, attorneys fees, litigation expenses and other claims. 12

Respondents likewise filed on September 21, 2000 their Opposition to petitioners Motion for
Summary Judgment, maintaining that there were several genuine issues relating to the cause of
action and material facts of their Complaint. They asserted that there was a need for a full blown trial
to prove the allegations in their Complaint, as well as the defenses put up by petitioner.13

In its Order14 dated September 28, 2000, the RTC indefinitely postponed the pre-trial until it has
resolved petitioners Motion for Summary Judgment. In the same Order, the RTC directed the
counsels of both parties to submit their memoranda, including supporting affidavits and other
documents within 30 days.

Petitioner submitted its Memorandum15 on October 26, 2000; while respondents, following several
motions for extension of time, filed their Memorandum16 on November 22, 2000. In their
Memorandum, respondents additionally alleged that:

The cellsite base station is powered by a roaring 25 KVA power generator. Operated 24 hours since
it started more than a month ago, it has sent "jackhammers into the brains" of all the inhabitants
nearby. Everyone is going crazy. A resident just recently operated for breast cancer is complaining
that the noise emanating from the generator is fast tracking her appointment with death. She can no
longer bear the unceasing and irritating roar of the power generator.

For this, the residents, led by the respondents, sought a noise emission test of the power generator
of petitioner SMART Communications with the DENR. The test was conducted on November 14 and
15, 2000 and the result shows that the petitioners power generator failed the noise emission test,
day and night time. Result of this test was furnished the Municipal Mayor of Roxas, Isabela (See
Communication of DENR Regional Director Lorenzo C. Aguiluz to Mayor Benedicto Calderon dated
November 16, 2000 and the Inspection Monitoring Report).

With these findings, the power generator is also a nuisance. It must also be abated. 17

On January 16, 2001, the RTC issued its Order granting petitioners Motion for Summary Judgment
and dismissing respondents Complaint. The RTC ruled as follows:

What is of prime importance is the fact that contrary to the respondents speculation, the radio
frequency radiation as found out by the Department of Health is much lower compared to that of TV
and radio broadcast. The respondents counter to this claim is that the Department of Health was
misled. This is a mere conclusion of the respondents.

The respondents in opposing the Smarts construction of their cellsite is anchored on the supposition
that the operation of said cellsite tower would pose a great hazard to the health of the alleged cluster
of residents nearby and the perceived danger that the said tower might also collapse in case of a
strong typhoon that fell the Mobiline Cellsite tower of Mobiline (sic). The structured built of the
Smarts Cellsite tower is similar to that of the Mobiline.

Now, as to the Courts assessment of the circumstances obtaining, we find the claim of the
respondents to be highly speculative, if not an isolated one. Elsewhere, we find several cellsite
towers scattered (sic) allover, both of the Smart, Globe, and others, nay even in thickly populated
areas like in Metro Manila and also in key cities nationwide, yet they have not been outlawed or
declared nuisance as the respondents now want this Court to heed. To the thinking of the Court, the
respondents are harping imagined perils to their health for reason only known to them perhaps
especially were we to consider that the Brgy. Captain of Vira earlier gave its imprimatur to this
project. Noteworthy is the fact that the alleged cluster of residential houses that abut the cellsite
tower in question might be endangered thereby, the respondents are but a few of those residents. If
indeed, all those residents in Vira were adversely affected for the perceived hazards posed by the
tower in question, they should also have been joined in as respondents in a class suit. The sinister
motive is perhaps obvious.
All the foregoing reasons impel this Court to grant the petitioners motion for the dismissal of the
complaint, the perceived dangers being highly speculative without any bases in fact. Allegations in
the complaint being more imaginary than real, do not constitute factual bases to require further
proceeding or a trial. As to the claim that there is no certification or clearance from the DENR for the
petitioner to lay in wait before the construction, suffice it to say that no action as yet has been taken
by said office to stop the ongoing operation of said cellsite now in operation. There has been no hue
and cry from among the greater majority of the people of Roxas, Isabela, against it. Al contrario, it is
most welcome to them as this is another landmark towards the progress of this town. 18

The dispositive portion of the RTC Order reads:

WHEREFORE, in view of the foregoing considerations, the Court hereby renders judgment
dismissing the complaint as the allegations therein are purely speculative and hence no basis in fact
to warrant further proceedings of this case.

The Court finds no compelling grounds to award damages.

Without costs.19

In another Order20 dated February 27, 2001, the RTC denied respondents Motion for
Reconsideration.

Respondents filed an appeal with the Court of Appeals, docketed as CA-G.R. CV No. 71337.

The Court of Appeals rendered its Decision on July 16, 2004. The appellate court declared the
cellular base station of petitioner a nuisance that endangered the health and safety of the residents
of Barangay Vira, Roxas, Isabela because: (1) the locational clearance granted to petitioner was a
nullity due to the lack of approval by majority of the actual residents of the

barangay and a barangay resolution endorsing the construction of the cellular base station; and (2)
the sound emission of the generator at the cellular base station exceeded the Department of
Environment and Natural Resources (DENR) standards. Consequently, the Court of Appeals
decreed:

WHEREFORE, the appealed decision is hereby REVERSED and SET ASIDE. A new one is entered
declaring the communications tower or base station of petitioner Smart Communications, Inc.
located at Brigido Pascual Street in Vira, Municipality of Roxas, Province of Isabela, a nuisance.
Petitioner is ordered to cease and desist from operating the said tower or station. 21

Petitioner filed its Motion for Reconsideration arguing that: (1) the basis for the judgment of the
appellate court that the cellular base station was a nuisance had been extinguished as the generator
subject of the Complaint was already removed; and (2) there had been substantial compliance in
securing all required permits for the cellular base station.22

The Court of Appeals, in a Resolution dated December 9, 2004,refused to reconsider its earlier
Decision, reasoning that:

Petitioner principally anchors its pleas for reconsideration on the Certification issued by Roxas,
Isabela Municipal Engineer Virgilio Batucal, declaring that upon actual inspection, no Denyo
Generator Set has been found in the companys cell site in Roxas, Isabela. We hold, however, that
the certification dated August 12, 2004, taken on its own, does not prove Smarts allegation that it
has abandoned using diesel- powered generators since January 2002. Respondents current
photographs of the cell site clearly shows (sic) that Smart continues to use a mobile generator
emitting high level of noise and fumes.

We have gone over [petitioners] other arguments and observed that they are merely repetitive of
previous contentions which we have judiciously ruled upon.23 (Citations omitted.)

Petitioner seeks recourse from the Court through the instant Petition, assigning the following errors
on the part of the Court of Appeals:

21.0 The Court of Appeals erred when it encroached upon an executive function of
determining the validity of a locational clearance when it declared, contrary to the
administrative findings of the Housing Land Use and Regulatory Board ("HLURB"), that the
locational clearance of Petitioner was void.

22.0 The Court of Appeals erred when it resolved an issue that was not submitted to it for
resolution and in the process had usurped a purely executive function.

23.0 The Court of Appeals erred in declaring Petitioners entire base station a nuisance
considering that it was only a small part of the base station, a generator that initially powered
the base station, that was reportedly producing unacceptable levels of noise.

24.0 The Court of Appeals erred in not considering that the supervening event of shut down
and pull out of the generator in the base station, the source of the perceived nuisance, made
the complaint for abatement of nuisance academic. 24

The Petition is partly meritorious. While the Court agrees that the Court of Appeals should not have
taken cognizance of the issue of whether the locational clearance for petitioners cellular base
station is valid, the Court will still not reinstate the RTC Order dated January 16, 2001 granting
petitioners Motion for Summary Judgment and entirely dismissing Civil Case No. Br. 23-632-2000.
The issues of (1) whether petitioners cellular base station is a nuisance, and (2) whether the
generator at petitioners cellular base station is, by itself, also a nuisance, ultimately involve disputed
or contested factual matters that call for the presentation of evidence at a full-blown trial.

On the finding of the Court of


Appeals that petitioners locational
clearance for its cellular base station
is a nullity

Based on the principle of exhaustion of administrative remedies and its corollary doctrine of primary
jurisdiction, it was premature for the Court of Appeals to take cognizance of and rule upon the issue
of the validity or nullity of petitioners locational clearance for its cellular base station.

The principle of exhaustion of administrative remedies and the doctrine of primary jurisdiction were
explained at length by the Court in Province of Zamboanga del Norte v. Court of Appeals, 25 as
follows:
The Court in a long line of cases has held that before a party is allowed to seek the intervention of
the courts, it is a pre-condition that he avail himself of all administrative processes afforded him.
Hence, if a remedy within the administrative machinery can be resorted to by giving the
administrative officer every opportunity to decide on a matter that comes within his jurisdiction, then
such remedy must be exhausted first before the court's power of judicial review can be sought. The
premature resort to the court is fatal to one's cause of action. Accordingly, absent any finding of
waiver or estoppel, the case may be dismissed for lack of cause of action.

The doctrine of exhaustion of administrative remedies is not without its practical and legal reasons.
Indeed, resort to administrative remedies entails lesser expenses and provides for speedier
disposition of controversies. Our courts of justice for reason of comity and convenience will shy away
from a dispute until the system of administrative redress has been completed and complied with so
as to give the administrative agency every opportunity to correct its error and to dispose of the case.

xxxx

The doctrine of primary jurisdiction does not warrant a court to arrogate unto itself the authority to
resolve a controversy the jurisdiction over which is initially lodged with an administrative body of
special competence.

We have held that while the administration grapples with the complex and multifarious problems
caused by unbridled exploitation of our resources, the judiciary will stand clear. A long line of cases
establishes the basic rule that the court will not interfere in matters which are addressed to the
sound discretion of government agencies entrusted with the regulation of activities coming under the
special technical knowledge and training of such agencies.

In fact, a party with an administrative remedy must not merely initiate the prescribed administrative
procedure to obtain relief, but also pursue it to its appropriate conclusion before seeking judicial
intervention. The underlying principle of the rule on exhaustion of administrative remedies rests on
the presumption that when the administrative body, or grievance machinery, is afforded a chance to
pass upon the matter, it will decide the same correctly. (Citations omitted.)

The Court again discussed the said principle and doctrine in Addition Hills Mandaluyong Civic &
Social Organization, Inc. v. Megaworld Properties & Holdings, Inc., et al., 26 citing Republic v.
Lacap,27 to wit:

We have consistently declared that the doctrine of exhaustion of administrative remedies is a


cornerstone of our judicial system. The thrust of the rule is that courts must allow administrative
agencies to carry out their functions and discharge their responsibilities within the specialized areas
of their respective competence. The rationale for this doctrine is obvious. It entails lesser expenses
and provides for the speedier resolution of controversies. Comity and convenience also impel courts
of justice to shy away from a dispute until the system of administrative redress has been completed.

In the case of Republic v. Lacap, we expounded on the doctrine of exhaustion of administrative


remedies and the related doctrine of primary jurisdiction in this wise:

The general rule is that before a party may seek the intervention of the court, he should first avail of
all the means afforded him by administrative processes. The issues which administrative agencies
are authorized to decide should not be summarily taken from them and submitted to a court without
first giving such administrative agency the opportunity to dispose of the same after due deliberation.

Corollary to the doctrine of exhaustion of administrative remedies is the doctrine of primary


jurisdiction; that is, courts cannot or will not determine a controversy involving a question which is
within the jurisdiction of the administrative tribunal prior to the resolution of that question by the
administrative tribunal, where the question demands the exercise of sound administrative discretion
requiring the special knowledge, experience and services of the administrative tribunal to determine
technical and intricate matters of fact. (Citations omitted.)

The Housing and Land Use Regulatory Board (HLURB)28 is the planning, regulatory, and quasi-
judicial instrumentality of government for land use development.29 In the exercise of its mandate to
ensure rational land use by regulating land development, it issued HLURB Resolution No.R-626,
series of 1998, Approving the Locational Guidelines for Base Stations of Cellular Mobile Telephone
Service, Paging Service, Trunking Service, Wireless Loop Service and Other Wireless
Communication Services (HLURB Guidelines). Said HLURB Guidelines aim to protect" providers
and users, as well as the public in general while ensuring efficient and responsive communication
services."

Indeed, the HLURB Guidelines require the submission of several documents for the issuance of a
locational clearance for a cellular base station, including:

IV. Requirements and Procedures in Securing Locational Clearance

A. The following documents shall be submitted in duplicate:

xxxx

g. Written Consent:

g.1 Subdivisions

xxxx

g. 1.2 In the absence of an established Homeowners Association, consent/affidavit of non-objection


from majority of actual occupants and owners of properties within a radial distance equivalent to the
height of the proposed base station measured from its base, including all those whose properties is
adjoining the proposed site of the base station.(Refer to Figure 2)

xxxx

h. Barangay Council Resolution endorsing the base station.

Correlatively, the HLURB provides administrative remedies for non-compliance with its requirements.

In 2000, when factual precedents to the instant case began to take place, HLURB Resolution No. R-
586, series of 1996, otherwise known as the 1996 HLURB Rules of Procedure, as amended, was in
effect. The original 1996 HLURB Rules of Procedure was precisely amended by HLURB Resolution
No. R-655, series of 1999, "so as to afford oppositors with the proper channel and expeditious
means to ventilate their objections and oppositions to applications for permits, clearances and
licenses, as well as to protect the rights of applicants against frivolous oppositions that may cause
undue delay to their projects. "Under the 1996 HLURB Rules of Procedure, as amended, an
opposition to an application for a locational clearance for a cellular base station or a complaint for
the revocation of a locational clearance for a cellular base station already issued, is within the
original jurisdiction of the HLURB Executive Committee. Relevant provisions read:

RULE III

Commencement of Action, Summons and Answer

xxxx

SECTION 2. Opposition to Application for Permit/License/ Clearance. When an opposition is filed


to an application for a license, permit or clearance with the Board or any of its Regional Field Office,
the Regional Officer shall make a preliminary evaluation and determination whether the case is
impressed with significant economic, social, environmental or national policy implications. If he/she
determines that the case is so impressed with significant economic, social, environmental or national
policy implications, such as, but not limited to:

1) Projects of national significance, for purposes of this rule, a project is of national


significance if it is one or falls under any of those enumerated in Rule III, Section 3 of these
Rules, as amended;

2) Those involving zoning variances and exceptions;

3) Those involving significant public interest or policy issues;

4) Those endorsed by the zoning administrators of local government units.

The Regional Officer shall cause the records of the case to be transmitted to the Executive
Committee which shall assume original jurisdiction over the case, otherwise, the Regional Officer
shall act on and resolve the Opposition.

SECTION 3. A project is of national significance if it involves any of the following:

a) Power generating plants (e.g., coal-fired thermal plants)and related facilities (e.g.,
transmission lines);

b) Airport/seaports; dumping sites/sanitary landfills; reclamation projects;

c) Large-scale piggery and poultry projects;

d) Mining/quarrying projects;

e) National government centers;

f) Golf courses;
g) Fish ponds and aqua culture projects;

h) Cell sites and telecommunication facilities;

i) Economic zones, regional industrial centers, regional agro-industrial centers, provincial


industrial centers;

j) All other industrial activities classified as high-intensity uses (1-3 Projects).

SECTION 4. Any party aggrieved, by reason of the elevation or non-elevation of any contested
application by the Regional Officer, may file a verified petition for review thereof within thirty (30)
days from receipt of the notice of elevation or non-elevation of the contested application with the
Executive Committee which shall resolve whether it shall assume jurisdiction thereon.

The contested application for clearance, permit or license shall be treated as a complaint and all
other provisions of these rules on complaints not inconsistent with the preceding section shall, as far
as practicable, be made applicable to oppositions except that the decision of the Board en banc on
such contested applications shall be final and executory as provided in Rule XIX, Section 2 of these
Rules, as amended.

The Rules pertaining to contested applications for license, permit or clearance shall, by analogy,
apply to cases filed primarily for the revocation thereof.

xxxx

RULE XVII
Proceedings Before the Board of Commissioners

xxxx

SECTION 15. The Executive Committee. The Executive Committee shall be composed of the four
regular Commissioners and the Ex-Officio Commissioner from the Department of Justice.

xxxx

The Executive Committee shall act for the Board on policy matters, measures or proposals
concerning the management and substantive administrative operations of the Board subject to
ratification by the Board en banc, and shall assume original jurisdiction over cases involving
opposition to an application for license, permit or clearance for projects or cases impressed with
significant economic, social, environmental or national policy implications or issues in accordance
with Section 2, Rule II of these Rules, as amended. It shall also approve the proposed agenda of the
meetings of the Board en banc. (Emphases supplied.)

After the HLURB Executive Committee had rendered its Decision, the aggrieved party could still
avail itself of a system of administrative appeal, also provided in the 1996 HLURB Rules of
Procedure, as amended:

RULE XII
Petition for Review
SECTION 1. Petition for Review. Any party aggrieved by the Decision of the Regional Officer, on
any legal ground and upon payment of the review fee may file with the Regional Office a verified
Petition for Review of such decision within thirty (30) calendar days from receipt thereof.

In cases decided by the Executive Committee pursuant to Rule II, Section 2 of these Rules, as
amended, the verified Petition shall be filed with the Executive Committee within thirty (30) calendar
days from receipt of the Committees Decision. Copy of such petition shall be furnished the other
party and the Board of Commissioners. No motion for reconsideration or mere notice of petition for
review of the decision shall be entertained.

Within ten (10) calendar days from receipt of the petition, the Regional Officer, or the Executive
Committee, as the case may be, shall elevate the records to the Board of Commissioner together
with the summary of proceedings before the Regional Office. The Petition for Review of a decision
rendered by the Executive Committee shall betaken cognizance of by the Board en banc.

RULE XVIII
Appeal from Board Decisions

SECTION 1.

Motion for Reconsideration. Within the period for filing an appeal from a Board decision, order or
ruling of the Board of Commissioners, any aggrieved party may file a motion for reconsideration with
the Board only on the following grounds: (1) serious errors of law which would result in grave
injustice if not corrected; and (2) newly discovered evidence.

Only one (1) motion for reconsideration shall be entertained.

Motions for reconsideration shall be assigned to the division from which the decision, order or ruling
originated.

SECTION 2. Appeal. Any party may upon notice to the Board and the other party appeal a decision
rendered by the Board of Commissioners en banc or by one of its divisions to the Office of the
President within fifteen (15) calendar days from receipt thereof, in accordance with P.D. No. 1344
and A.O. No. 18 Series of 1987.

RULE XIX
Entry of Judgment

xxxx

SECTION 2. Rules on Finality. For purposes of determining when a decision or order has become
final and executory for purposes of entry in the Book of Judgment, the following shall be observed:

a. Unless otherwise provided in a decision or resolution rendered by the Regional Officer, the
Executive Committee, or the Board of Commissioners, as the case may be, the orders contained
therein shall become final as regards a party thirty (30) calendar days after the date of receipt
thereof and no petition for review or appeal therefrom has been filed within the said period.
(Emphases supplied.)
There is no showing that respondents availed themselves of the afore-mentioned administrative
remedies prior to instituting Civil Case No. Br. 23-632-2000 before the RTC. While there are
accepted exceptions to the principle of exhaustion of administrative remedies and the doctrine of
primary jurisdiction,30 respondents never asserted nor argued any of them. Thus, there is no cogent
reason for the Court to apply the exceptions instead of the general rule to this case.

Ordinarily, failure to comply with the principle of exhaustion of administrative remedies and the
doctrine of primary jurisdiction will result in the dismissal of the case for lack of cause of action.
However, the Court herein will not go to the extent of entirely dismissing Civil Case No. Br. 23-632-
2000. The Court does not lose sight of the fact that respondents Complaint in Civil Case No. Br. 23-
632-2000 is primarily for abatement of nuisance; and respondents alleged the lack of HLURB
requirements for the cellular base station, not to seek nullification of petitioners locational clearance,
but to support their chief argument that said cellular base station is a nuisance which needs to be
abated. The issue of whether or not the locational clearance for said cellular base station is valid is
actually separate and distinct from the issue of whether or not the cellular base station is a nuisance;
one is not necessarily determinative of the other. While the first is within the primary jurisdiction of
the HLURB and, therefore, premature for the courts to rule upon in the present case, the latter is
within the jurisdiction of the courts to determine but only after trial proper.

On the declaration of the Court of


Appeals that petitioners cellular
base station is a nuisance that must
be abated

Article 694 of the Civil Code defines nuisance as:

ART. 694. A nuisance is any act, omission, establishment, business, condition of property, or
anything else which:

(1) Injures or endangers the health or safety of others; or

(2) Annoys or offends the senses; or

(3) Shocks, defies or disregards decency or morality; or

(4) Obstructs or interferes with the free passage of any public highway or street, or any body
of water; or

(5) Hinders or impairs the use of property.

The term "nuisance" is so comprehensive that it has been applied to almost all ways which have
interfered with the rights of the citizens, either in person, property, the enjoyment of his property, or
his comfort.31

The Court, in AC Enterprises, Inc. v. Frabelle Properties Corporation,32 settled that a simple suit for
abatement of nuisance, being incapable of pecuniary estimation, is within the exclusive jurisdiction of
the RTC. Although respondents also prayed for judgment for moral and exemplary damages,
attorneys fees, and litigation expenses, such claims are merely incidental to or as a consequence
of, their principal relief.
Nonetheless, while jurisdiction over respondents Complaint for abatement of nuisance lies with the
courts, the respective judgments of the RTC and the Court of Appeals cannot be upheld.

At the outset, the RTC erred in granting petitioners Motion for Summary Judgment and ordering the
dismissal of respondents Complaint in Civil Case No. Br. 23-632-2000.

Summary judgments are governed by Rule 35 of the Rules of Court, pertinent provisions of which
state:

SEC. 2. Summary judgment for defending party. A party against whom a claim, counterclaim, or
cross-claim is asserted or a declaratory relief is sought may, at any time, move with supporting
affidavits, depositions or admissions for a summary judgment in his favor as to all or any part
thereof.

SEC. 3. Motion and proceedings thereon. The motion shall be served at least ten (10) days before
the time specified for the hearing. The adverse party may serve opposing affidavits, depositions, or
admissions at least three (3) days before the hearing. After the hearing, the judgment sought shall
be rendered forthwith if the pleadings, supporting affidavits, depositions, and admissions on file,
show that, except as to the amount of damages, there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a matter of law. (Emphases supplied.)

In Rivera v. Solidbank Corporation,33 the Court discussed extensively when a summary judgment is
proper:

For a summary judgment to be proper, the movant must establish two requisites: (a) there must be
no genuine issue as to any material fact, except for the amount of damages; and (b) the party
presenting the motion for summary judgment must be entitled to a judgment as a matter of law.
Where, on the basis of the pleadings of a moving party, including documents appended thereto, no
genuine issue as to a material fact exists, the burden to produce a genuine issue shifts to the
opposing party. If the opposing party fails, the moving party is entitled to a summary judgment.

A genuine issue is an issue of fact which requires the presentation of evidence as distinguished from
an issue which is a sham, fictitious, contrived or a false claim.

The trial court can determine a genuine issue on the basis of the pleadings, admissions, documents,
affidavits or counter affidavits submitted by the parties. When the facts as pleaded appear
uncontested or undisputed, then there is no real or genuine issue or question as to any fact and
summary judgment called for. On the other hand, where the facts pleaded by the parties are
disputed or contested, proceedings for a summary judgment cannot take the place of a trial. The
evidence on record must be viewed in light most favorable to the party opposing the motion who
must be given the benefit of all favorable inferences as can reasonably be drawn from the evidence.

Courts must be critical of the papers presented by the moving party and not of the
papers/documents in opposition thereto. Conclusory assertions are insufficient to raise an issue of
material fact. A party cannot create a genuine dispute of material fact through mere speculations or
compilation of differences. He may not create an issue of fact through bald assertions, unsupported
contentions and conclusory statements. He must do more than rely upon allegations but must come
forward with specific facts in support of a claim. Where the factual context makes his claim
implausible, he must come forward with more persuasive evidence demonstrating a genuine issue
for trial. (Emphases supplied; citations omitted.)

Judging by the aforequoted standards, summary judgment cannot be rendered in this case as there
are clearly factual issues disputed or contested by the parties. As respondents correctly argued in
their Opposition to petitioners Motion for Summary Judgment:

1. Contrary to the claim of petitioner, there are several genuine issues as to the cause of action and
material facts related to the complaint. For one there is an issue on the structural integrity of the
tower, the ultra high frequency (UHF) radio wave emission radiated by the communications tower
affecting the life, health and well being of the[respondents] and the barangay residents, especially
their children. Also, the noxious/deleterious fumes and the noise produce[d] by the standby
generator and the danger posted by the tower if it collapses in regard to life and limb as well as the
property of the [respondents] particularly those whose houses abut, or are near/within the periphery
of the communications tower. x x x34

Likewise constituting real or genuine issues for trial, which arose from subsequent events, are the
following: whether the generator subject of respondents Complaint had been removed; whether said
generator had been replaced by another that produces as much or even more noise and fumes; and
whether the generator is a nuisance that can be abated separately from the rest of the cellular base
station.

Furthermore, the Court demonstrated in AC Enterprises, Inc. the extensive factual considerations of
a court before it can arrive at a judgment in an action for abatement of nuisance:

Whether or not noise emanating from a blower of the air conditioning units of the Feliza Building is
nuisance is to be resolved only by the court in due course of proceedings. The plaintiff must prove
1wphi1

that the noise is a nuisance and the consequences thereof. Noise is not a nuisance per se. It may be
of such a character as to constitute a nuisance, even though it arises from the operation of a lawful
business, only if it affects injuriously the health or comfort of ordinary people in the vicinity to an
unreasonable extent. Injury to a particular person in a peculiar position or of especially sensitive
characteristics will not render the noise an actionable nuisance. In the conditions of present living,
noise seems inseparable from the conduct of many necessary occupations. Its presence is a
nuisance in the popular sense in which that word is used, but in the absence of statute, noise
becomes actionable only when it passes the limits of reasonable adjustment to the conditions of the
locality and of the needs of the maker to the needs of the listener. What those limits are cannot be
fixed by any definite measure of quantity or quality; they depend upon the circumstances of the
particular case. They may be affected, but are not controlled, by zoning ordinances. The delimitation
of designated areas to use for manufacturing, industry or general business is not a license to emit
every noise profitably attending the conduct of any one of them.

The test is whether rights of property, of health or of comfort are so injuriously affected by the noise
in question that the sufferer is subjected to a loss which goes beyond the reasonable limit imposed
upon him by the condition of living, or of holding property, in a particular locality in fact devoted to
uses which involve the emission of noise although ordinary care is taken to confine it within
reasonable bounds; or in the vicinity of property of another owner who, though creating a noise, is
acting with reasonable regard for the rights of those affected by it.
Commercial and industrial activities which are lawful in themselves may become nuisances if they
are so offensive to the senses that they render the enjoyment of life and property uncomfortable. The
fact that the cause of the complaint must be substantial has often led to expressions in the opinions
that to be a nuisance the noise must be deafening or loud or excessive and unreasonable. The
determining factor when noise alone is the cause of complaint is not its intensity or volume. It is that
the noise is of such character as to produce actual physical discomfort and annoyance to a person
of ordinary sensibilities, rendering adjacent property less comfortable and valuable. If the noise does
that it can well be said to be substantial and unreasonable in degree, and reasonableness is a
question of fact dependent upon all the circumstances and conditions. There can be no fixed
standard as to what kind of noise constitutes a nuisance.

The courts have made it clear that in every case the question is one of reasonableness. What is a
reasonable use of ones property and whether a particular use is an unreasonable invasion of
anothers use and enjoyment of his property so as to constitute a nuisance cannot be determined by
exact rules, but must necessarily depend upon the circumstances of each case, such as locality and
the character of the surroundings, the nature, utility and social value of the use, the extent and
nature of the harm involved, the nature, utility and social value of the use or enjoyment invaded, and
the like.

Persons who live or work in thickly populated business districts must necessarily endure the usual
annoyances and of those trades and businesses which are properly located and carried on in the
neighborhood where they live or work. But these annoyances and discomforts must not be more
than those ordinarily to be expected in the community or district, and which are incident to the lawful
conduct of such trades and businesses. If they exceed what might be reasonably expected and
cause unnecessary harm, then the court will grant relief.

A finding by the LGU that the noise quality standards under the law have not been complied with is
not a prerequisite nor constitutes indispensable evidence to prove that the defendant is or is not
liable for a nuisance and for damages. Such finding is merely corroborative to the testimonial and/or
other evidence to be presented by the parties. The exercise of due care by the owner of a business
in its operation does not constitute a defense where, notwithstanding the same, the business as
conducted, seriously affects the rights of those in its vicinity.35(Citations omitted.)

A reading of the RTC Order dated January 16, 2001 readily shows that the trial court did not take
into account any of the foregoing considerations or tests before summarily dismissing Civil Case No.
Br. 23-632-2000. The reasoning of the RTC that similar cellular base stations are scattered in heavily
populated areas nationwide and are not declared nuisances is unacceptable. As to whether or not
this specific cellular base station of petitioner is a nuisance to respondents is largely dependent on
the particular factual circumstances involved in the instant case, which is exactly why a trial for
threshing out disputed or contested factual issues is indispensable. Evidently, it was the RTC which
engaged in speculations and unsubstantiated conclusions.

For the same reasons cited above, without presentation by the parties of evidence on the contested
or disputed facts, there was no factual basis for declaring petitioner's cellular base station a nuisance
and ordering petitioner to cease and desist from operating the same.

Given the equally important interests of the parties in this case, i.e., on one hand, respondents'
health, safety, and property, and on the other, petitioner's business interest and the public's need for
accessible and better cellular mobile telephone services, the wise and prudent course to take is to
remand the case to the RTC for trial and give the parties the opportunity to prove their respective
factual claims.

WHEREFORE, premises considered, the instant Petition is PARTIALLY GRANTED. The Decision
dated July 16, 2004 and Resolution dated December 9, 2004 of the Court of Appeals in CA-G.R. CV
No. 71337 are REVERSED and SET ASIDE. Let the records of the case be REMANDED to the
Regional Trial Court, Branch 23, of Roxas, Isabela, which is DIRECTED to reinstate Civil Case No.
Br. 23-632-2000 to its docket and proceed with the trial and adjudication thereof with appropriate
dispatch in accordance with this Decision.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. Nos. 178034 & 178117 G R. Nos. 186984-85 October 17, 2013

ANDREW JAMES MCBURNIE, Petitioner,


vs.
EULALIO GANZON, EGI-MANAGERS, INC. and E. GANZON, INC., Respondents.

RESOLUTION

REYES, J.:

For resolution are the

(1) third motion for reconsideration1 filed by Eulalio Ganzon (Ganzon), EGI-Managers, Inc.
(EGI) and E. Ganzon, Inc. (respondents) on March 27, 2012, seeking a reconsideration of
the Courts Decision2 dated September 18, 2009 that ordered the dismissal of their appeal to
the National Labor Relations Commission (NLRC) for failure to post additional appeal bond
in the amount of P54,083,910.00; and
(2) motion for reconsideration3 filed by petitioner Andrew James McBurnie (McBurnie) on
September 26, 2012, assailing the Court en bancs Resolution4 dated September 4, 2012
that (1) accepted the case from the Courts Third Division and (2) enjoined the
implementation of the Labor Arbiters (LA) decision finding him to be illegally dismissed by
the respondents.

Antecedent Facts

The Decision dated September 18, 2009 provides the following antecedent facts and proceedings

On October 4, 2002, McBurnie, an Australian national, instituted a complaint for illegal dismissal and
other monetary claims against the respondents. McBurnie claimed that on May 11, 1999, he signed
a five-year employment agreement5 with the company EGI as an Executive Vice-President who shall
oversee the management of the companys hotels and resorts within the Philippines. He performed
work for the company until sometime in November 1999, when he figured in an accident that
compelled him to go back to Australia while recuperating from his injuries. While in Australia, he was
informed by respondent Ganzon that his services were no longer needed because their intended
project would no longer push through.

The respondents opposed the complaint, contending that their agreement with McBurnie was to
jointly invest in and establish a company for the management of hotels. They did not intend to create
an employer-employee relationship, and the execution of the employment contract that was being
invoked by McBurnie was solely for the purpose of allowing McBurnie to obtain an alien work permit
in the Philippines. At the time McBurnie left for Australia for his medical treatment, he had not yet
obtained a work permit.

In a Decision6 dated September 30, 2004, the LA declared McBurnie as having been illegally
dismissed from employment, and thus entitled to receive from the respondents the following
amounts: (a) US$985,162.00 as salary and benefits for the unexpired term of their employment
contract, (b) P2,000,000.00 as moral and exemplary damages, and (c) attorneys fees equivalent to
10% of the total monetary award.

Feeling aggrieved, the respondents appealed the LAs Decision to the NLRC. 7 On November 5,
2004, they filed their Memorandum of Appeal8 and Motion to Reduce Bond9, and posted an appeal
bond in the amount of P100,000.00. The respondents contended in their Motion to Reduce Bond,
inter alia, that the monetary awards of the LA were null and excessive, allegedly with the intention of
rendering them incapable of posting the necessary appeal bond. They claimed that an award of
"more than P60 Million Pesos to a single foreigner who had no work permit and who left the country
for good one month after the purported commencement of his employment" was a patent
nullity.10 Furthermore, they claimed that because of their business losses that may be attributed to an
economic crisis, they lacked the capacity to pay the bond of almost P60 Million, or even the millions
of pesos in premium required for such bond.

On March 31, 2005, the NLRC denied11 the motion to reduce bond, explaining that "in cases
involving monetary award, an employer seeking to appeal the [LAs] decision to the Commission is
unconditionally required by Art. 223, Labor Code to post bond in the amount equivalent to the
monetary award x x x."12 Thus, the NLRC required from the respondents the posting of an additional
bond in the amount of P54,083,910.00.

When their motion for reconsideration was denied,13 the respondents decided to elevate the matter
to the Court of Appeals (CA) via the Petition for Certiorari and Prohibition (With Extremely Urgent
Prayer for the Issuance of a Preliminary Injunction and/or Temporary Restraining Order) 14 docketed
as CA-G.R. SP No. 90845.

In the meantime, in view of the respondents failure to post the required additional bond, the NLRC
dismissed their appeal in a Resolution15 dated March 8, 2006. The respondents motion for
reconsideration was denied on June 30, 2006.16 This prompted the respondents to file with the CA
the Petition for Certiorari (With Urgent Prayers for the Immediate Issuance of a Temporary
Restraining Order and a Writ of Preliminary Injunction) 17docketed as CA-G.R. SP No. 95916, which
was later consolidated with CA-G.R. SP No. 90845.

CA-G.R. SP Nos. 90845 and 95916

On February 16, 2007, the CA issued a Resolution18 granting the respondents application for a writ
of preliminary injunction. It directed the NLRC, McBurnie, and all persons acting for and under their
authority to refrain from causing the execution and enforcement of the LAs decision in favor of
McBurnie, conditioned upon the respondents posting of a bond in the amount of P10,000,000.00.
McBurnie sought reconsideration of the issuance of the writ of preliminary injunction, but this was
denied by the CA in its Resolution19 dated May 29, 2007.

McBurnie then filed with the Court a Petition for Review on Certiorari 20 docketed as G.R. Nos.
178034 and 178117, assailing the CA Resolutions that granted the respondents application for the
injunctive writ. On July 4, 2007, the Court denied the petition on the ground of McBurnies failure to
comply with the 2004 Rules on Notarial Practice and to sufficiently show that the CA committed any
reversible error.21 A motion for reconsideration was denied with finality in a Resolution22 dated
October 8, 2007.

Unyielding, McBurnie filed a Motion for Leave (1) To File Supplemental Motion for Reconsideration
and (2) To Admit the Attached Supplemental Motion for Reconsideration, 23 which was treated by the
Court as a second motion for reconsideration, a prohibited pleading under Section 2, Rule 56 of the
Rules of Court. Thus, the motion for leave was denied by the Court in a Resolution 24 dated
November 26, 2007. The Courts Resolution dated July 4, 2007 then became final and executory on
November 13, 2007; accordingly, entry of judgment was made in G.R. Nos. 178034 and 178117. 25

In the meantime, the CA ruled on the merits of CA-G.R. SP No. 90845 and CA-G.R. SP No. 95916
and rendered its Decision26 dated October 27, 2008, allowing the respondents motion to reduce
appeal bond and directing the NLRC to give due course to their appeal. The dispositive portion of
the CA Decision reads:

WHEREFORE, in view of the foregoing, the petition for certiorari and prohibition docketed as CA GR
SP No. 90845 and the petition for certiorari docketed as CA GR SP No. 95916 are GRANTED.
Petitioners Motion to Reduce Appeal Bond is GRANTED. Petitioners are hereby DIRECTED to post
appeal bond in the amount of P10,000,000.00. The NLRC is hereby DIRECTED to give due course
to petitioners appeal in CA GR SP No. 95916 which is ordered remanded to the NLRC for further
proceedings.

SO ORDERED.27

On the issue28 of the NLRCs denial of the respondents motion to reduce appeal bond, the CA ruled
that the NLRC committed grave abuse of discretion in immediately denying the motion without fixing
an appeal bond in an amount that was reasonable, as it denied the respondents of their right to
appeal from the decision of the LA.29The CA explained that "(w)hile Art. 223 of the Labor Code
requiring bond equivalent to the monetary award is explicit, Section 6, Rule VI of the NLRC Rules of
Procedure, as amended, recognized as exception a motion to reduce bond upon meritorious
grounds and upon posting of a bond in a reasonable amount in relation to the monetary award." 30

On the issue31 of the NLRCs dismissal of the appeal on the ground of the respondents failure to
post the additional appeal bond, the CA also found grave abuse of discretion on the part of the
NLRC, explaining that an appeal bond in the amount of P54,083,910.00 was prohibitive and
excessive. Moreover, the appellate court cited the pendency of the petition for certiorari over the
denial of the motion to reduce bond, which should have prevented the NLRC from immediately
dismissing the respondents appeal.32

Undeterred, McBurnie filed a motion for reconsideration. At the same time, the respondents moved
that the appeal be resolved on the merits by the CA. On March 3, 2009, the CA issued a
Resolution33 denying both motions. McBurnie then filed with the Court the Petition for Review on
Certiorari34 docketed as G.R. Nos. 186984-85.

In the meantime, the NLRC, acting on the CAs order of remand, accepted the appeal from the LAs
decision, and in its Decision35 dated November 17, 2009, reversed and set aside the Decision of the
LA, and entered a new one dismissing McBurnies complaint. It explained that based on records,
McBurnie was never an employee of any of the respondents, but a potential investor in a project that
included said respondents, barring a claim of dismissal, much less, an illegal dismissal. Granting that
there was a contract of employment executed by the parties, McBurnie failed to obtain a work permit
which would have allowed him to work for any of the respondents. 36 In the absence of such permit,
the employment agreement was void and thus, could not be the source of any right or obligation.

Court Decision dated September 18, 2009

On September 18, 2009, the Third Division of this Court rendered its Decision37 which reversed the
CA Decision dated October 27, 2008 and Resolution dated March 3, 2009. The dispositive portion
reads:

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP Nos.
90845 and 95916 dated October 27, 2008 granting respondents Motion to Reduce Appeal Bond and
ordering the National Labor Relations Commission to give due course to respondents appeal, and
its March 3, 2009 Resolution denying petitioners motion for reconsideration, are REVERSED and
SET ASIDE. The March 8, 2006 and June 30, 2006 Resolutions of the National Labor Relations
Commission in NLRC NCR CA NO. 042913-05 dismissing respondents appeal for failure to perfect
an appeal and denying their motion for reconsideration, respectively, are REINSTATED and
AFFIRMED.

SO ORDERED.38

The Court explained that the respondents failure to post a bond equivalent in amount to the LAs
monetary award was fatal to the appeal.39 Although an appeal bond may be reduced upon motion by
an employer, the following conditions must first be satisfied: (1) the motion to reduce bond shall be
based on meritorious grounds; and (2) a reasonable amount in relation to the monetary award is
posted by the appellant. Unless the NLRC grants the motion to reduce the cash bond within the 10-
day reglementary period to perfect an appeal from a judgment of the LA, the employer is mandated
to post the cash or surety bond securing the full amount within the said 10-day period. 40 The
respondents initial appeal bond of P100,000.00 was grossly inadequate compared to the LAs
monetary award.
The respondents first motion for reconsideration41 was denied by the Court for lack of merit via a
Resolution42dated December 14, 2009.

Meanwhile, on the basis of the Courts Decision, McBurnie filed with the NLRC a motion for
reconsideration with motion to recall and expunge from the records the NLRC Decision dated
November 17, 2009.43 The motion was granted by the NLRC in its Decision44 dated January 14,
2010.45

Undaunted by the denial of their first motion for reconsideration of the Decision dated September 18,
2009, the respondents filed with the Court a Motion for Leave to Submit Attached Second Motion for
Reconsideration46 and Second Motion for Reconsideration,47 which motion for leave was granted in a
Resolution48 dated March 15, 2010. McBurnie was allowed to submit his comment on the second
motion, and the respondents, their reply to the comment. On January 25, 2012, however, the Court
issued a Resolution49 denying the second motion "for lack of merit," "considering that a second
motion for reconsideration is a prohibited pleading x x x."50

The Courts Decision dated September 18, 2009 became final and executory on March 14, 2012.
Thus, entry of judgment51 was made in due course, as follows:

ENTRY OF JUDGMENT

This is to certify that on September 18, 2009 a decision rendered in the above-entitled cases was
filed in this Office, the dispositive part of which reads as follows:

xxxx

and that the same has, on March 14, 2012 become final and executory and is hereby recorded in the
Book of Entries of Judgments.52

The Entry of Judgment indicated that the same was made for the Courts Decision rendered in G.R.
Nos. 186984-85.

On March 27, 2012, the respondents filed a Motion for Leave to File Attached Third Motion for
Reconsideration, with an attached Motion for Reconsideration (on the Honorable Courts 25 January
2012 Resolution) with Motion to Refer These Cases to the Honorable Court En Banc. 53 The third
motion for reconsideration is founded on the following grounds:

I.

THE PREVIOUS 15 MARCH 2010 RESOLUTION OF THE HONORABLE COURT ACTUALLY


GRANTED RESPONDENTS "MOTION FOR LEAVE TO SUBMIT A SECOND MOTION FOR
RECONSIDERATION."

HENCE, RESPONDENTS RESPECTFULLY CONTEND THAT THE SUBSEQUENT 25 JANUARY


2012 RESOLUTION CANNOT DENY THE " SECOND MOTION FOR RECONSIDERATION " ON
THE GROUND THAT IT IS A PROHIBITED PLEADING. MOREOVER, IT IS RESPECTFULLY
CONTENDED THAT THERE ARE VERY PECULIAR CIRCUMSTANCES AND NUMEROUS
IMPORTANT ISSUES IN THESE CASES THAT CLEARLY JUSTIFY GIVING DUE COURSE TO
RESPONDENTS "SECOND MOTION FOR RECONSIDERATION," WHICH ARE:

II.
THE 10 MILLION PESOS BOND WHICH WAS POSTED IN COMPLIANCE WITH THE OCTOBER
27, 2008 DECISION OF THE COURT OF APPEALS IS A SUBSTANTIAL AND SPECIAL
MERITORIOUS CIRCUMSTANCE TO MERIT RECONSIDERATION OF THIS APPEAL.

III.

THE HONORABLE COURT HAS HELD IN NUMEROUS LABOR CASES THAT WITH RESPECT
TO ARTICLE 223 OF THE LABOR CODE, THE REQUIREMENTS OF THE LAW SHOULD BE
GIVEN A LIBERAL INTERPRETATION, ESPECIALLY IF THERE ARE SPECIAL MERITORIOUS
CIRCUMSTANCES AND ISSUES.

IV. THE LAS JUDGMENT WAS PATENTLY VOID SINCE IT AWARDS MORE THAN P60 MILLION
PESOS TO A SINGLE FOREIGNER WHO HAD NO WORK PERMIT, AND NO WORKING VISA.

V.

PETITIONER MCBURNIE DID NOT IMPLEAD THE NATIONAL LABOR RELATIONS COMMISSION
(NLRC) IN HIS APPEAL HEREIN, MAKING THE APPEAL INEFFECTIVE AGAINST THE NLRC.

VI.

NLRC HAS DISMISSED THE COMPLAINT OF PETITIONER MCBURNIE IN ITS NOVEMBER 17,
2009 DECISION.

VII.

THE HONORABLE COURTS 18 SEPTEMBER 2009 DECISION WAS TAINTED WITH VERY
SERIOUS IRREGULARITIES.

VIII.

GR NOS. 178034 AND 178117 HAVE BEEN INADVERTENTLY INCLUDED IN THIS CASE.

IX.

THE HONORABLE COURT DID NOT DULY RULE UPON THE OTHER VERY MERITORIOUS
ARGUMENTS OF THE RESPONDENTS WHICH ARE AS FOLLOWS:

(A) PETITIONER NEVER ATTENDED ANY OF ALL 14 HEARINGS BEFORE THE


[LA] (WHEN 2 MISSED HEARINGS MEAN DISMISSAL).

(B) PETITIONER REFERRED TO HIMSELF AS A "VICTIM" OF LEISURE


EXPERTS, INC., BUT NOT OF ANY OF THE RESPONDENTS.

(C) PETITIONERS POSITIVE LETTER TO RESPONDENT MR. EULALIO GANZON


CLEARLY SHOWS THAT HE WAS NOT ILLEGALLY DISMISSED NOR EVEN
DISMISSED BY ANY OF THE RESPONDENTS AND PETITIONER EVEN
PROMISED TO PAY HIS DEBTS FOR ADVANCES MADE BY RESPONDENTS.
(D) PETITIONER WAS NEVER EMPLOYED BY ANY OF THE RESPONDENTS.
PETITIONER PRESENTED WORK FOR CORONADO BEACH RESORT WHICH IS
[NEITHER] OWNED NOR CONNECTED WITH ANY OF THE RESPONDENTS.

(E) THE [LA] CONCLUDED THAT PETITIONER WAS DISMISSED EVEN IF THERE
WAS ABSOLUTELY NO EVIDENCE AT ALL PRESENTED THAT PETITIONER WAS
DISMISSED BY THE RESPONDENTS.

(F) PETITIONER LEFT THE PHILIPPINES FOR AUSTRALIA JUST 2 MONTHS


AFTER THE START OF THE ALLEGED EMPLOYMENT AGREEMENT, AND HAS
STILL NOT RETURNED TO THE PHILIPPINES AS CONFIRMED BY THE BUREAU
OF IMMIGRATION.

(G) PETITIONER COULD NOT HAVE SIGNED AND PERSONALLY APPEARED


BEFORE THE NLRC ADMINISTERING OFFICER AS INDICATED IN THE
COMPLAINT SHEET SINCE HE LEFT THE COUNTRY 3 YEARS BEFORE THE
COMPLAINT WAS FILED AND HE NEVER CAME BACK.54

On September 4, 2012, the Court en banc55 issued a Resolution56 accepting the case from the Third
Division. It also issued a temporary restraining order (TRO) enjoining the implementation of the LAs
Decision dated September 30, 2004. This prompted McBurnies filing of a Motion for
Reconsideration,57 where he invoked the fact that the Courts Decision dated September 18, 2009
had become final and executory, with an entry of judgment already made by the Court.

Our Ruling

In light of pertinent law and jurisprudence, and upon taking a second hard look of the parties
arguments and the records of the case, the Court has ascertained that a reconsideration of this
Courts Decision dated September 18, 2009 and Resolutions dated December 14, 2009 and January
25, 2012, along with the lifting of the entry of judgment in G.R. No. 186984-85, is in order.

The Courts acceptance of the

third motion for reconsideration

At the outset, the Court emphasizes that second and subsequent motions for reconsideration are, as
a general rule, prohibited. Section 2, Rule 52 of the Rules of Court provides that "no second motion
for reconsideration of a judgment or final resolution by the same party shall be entertained." The rule
rests on the basic tenet of immutability of judgments. "At some point, a decision becomes final and
executory and, consequently, all litigations must come to an end."58

The general rule, however, against second and subsequent motions for reconsideration admits of
settled exceptions. For one, the present Internal Rules of the Supreme Court, particularly Section 3,
Rule 15 thereof, provides:

Sec. 3. Second motion for reconsideration. The Court shall not entertain a second motion for
reconsideration, and any exception to this rule can only be granted in the higher interest of justice by
the Court en banc upon a vote of at least two-thirds of its actual membership. There is
reconsideration "in the higher interest of justice" when the assailed decision is not only legally
erroneous, but is likewise patently unjust and potentially capable of causing unwarranted and
irremediable injury or damage to the parties. A second motion for reconsideration can only be
entertained before the ruling sought to be reconsidered becomes final by operation of law or by the
Courts declaration.

x x x x (Emphasis ours)

In a line of cases, the Court has then entertained and granted second motions for reconsideration "in
the higher interest of substantial justice," as allowed under the Internal Rules when the assailed
decision is "legally erroneous," "patently unjust" and "potentially capable of causing unwarranted and
irremediable injury or damage to the parties." In Tirazona v. Philippine EDS Techno-Service, Inc.
(PET, Inc.),59 we also explained that a second motion for reconsideration may be allowed in
instances of "extraordinarily persuasive reasons and only after an express leave shall have been
obtained."60 In Apo Fruits Corporation v. Land Bank of the Philippines,61 we allowed a second motion
for reconsideration as the issue involved therein was a matter of public interest, as it pertained to the
proper application of a basic constitutionally-guaranteed right in the governments implementation of
its agrarian reform program. In San Miguel Corporation v. NLRC,62 the Court set aside the decisions
of the LA and the NLRC that favored claimants-security guards upon the Courts review of San
Miguel Corporations second motion for reconsideration. In Vir-Jen Shipping and Marine Services,
Inc. v. NLRC, et al.,63 the Court en banc reversed on a third motion for reconsideration the ruling of
the Courts Division on therein private respondents claim for wages and monetary benefits.

It is also recognized that in some instances, the prudent action towards a just resolution of a case is
for the Court to suspend rules of procedure, for "the power of this Court to suspend its own rules or
to except a particular case from its operations whenever the purposes of justice require it, cannot be
questioned."64 In De Guzman v. Sandiganbayan,65 the Court, thus, explained:

The rules of procedure should be viewed as mere tools designed to facilitate the attainment of
justice. Their strict and rigid application, which would result in technicalities that tend to frustrate
rather than promote substantial justice, must always be avoided. Even the Rules of Court envision
this liberality. This power to suspend or even disregard the rules can be so pervasive and
encompassing so as to alter even that which this Court itself has already declared to be final, as we
are now compelled to do in this case. x x x.

xxxx

The Rules of Court was conceived and promulgated to set forth guidelines in the dispensation of
justice but not to bind and chain the hand that dispenses it, for otherwise, courts will be mere slaves
to or robots of technical rules, shorn of judicial discretion. That is precisely why courts in rendering
real justice have always been, as they in fact ought to be, conscientiously guided by the norm that
when on the balance, technicalities take a backseat against substantive rights, and not the other way
around. Truly then, technicalities, in the appropriate language of Justice Makalintal, "should give way
to the realities of the situation." x x x.66 (Citations omitted)

Consistent with the foregoing precepts, the Court has then reconsidered even decisions that have
attained finality, finding it more appropriate to lift entries of judgments already made in these cases.
In Navarro v. Executive Secretary,67 we reiterated the pronouncement in De Guzman that the power
to suspend or even disregard rules of procedure can be so pervasive and compelling as to alter
even that which this Court itself has already declared final. The Court then recalled in Navarro an
entry of judgment after it had determined the validity and constitutionality of Republic Act No. 9355,
explaining that:

Verily, the Court had, on several occasions, sanctioned the recall of entries of judgment in light of
attendant extraordinary circumstances. The power to suspend or even disregard rules of procedure
can be so pervasive and compelling as to alter even that which this Court itself had already declared
final. In this case, the compelling concern is not only to afford the movants-intervenors the right to be
heard since they would be adversely affected by the judgment in this case despite not being original
parties thereto, but also to arrive at the correct interpretation of the provisions of the [Local
Government Code (LGC)] with respect to the creation of local government units. x x x. 68 (Citations
omitted)

In Munoz v. CA,69 the Court resolved to recall an entry of judgment to prevent a miscarriage of
justice. This justification was likewise applied in Tan Tiac Chiong v. Hon. Cosico, 70 wherein the Court
held that:

The recall of entries of judgments, albeit rare, is not a novelty. In Muoz v. CA , where the case was
elevated to this Court and a first and second motion for reconsideration had been denied with finality
, the Court, in the interest of substantial justice, recalled the Entry of Judgment as well as the letter
of transmittal of the records to the Court of Appeals. 71 (Citation omitted)

In Barnes v. Judge Padilla,72 we ruled:

A final and executory judgment can no longer be attacked by any of the parties or be modified,
directly or indirectly, even by the highest court of the land.

However, this Court has relaxed this rule in order to serve substantial justice considering (a) matters
of life, liberty, honor or property, (b) the existence of special or compelling circumstances, (c) the
merits of the case, (d) a cause not entirely attributable to the fault or negligence of the party favored
by the suspension of the rules, (e) a lack of any showing that the review sought is merely frivolous
and dilatory, and (f) the other party will not be unjustly prejudiced thereby.73 (Citations omitted)

As we shall explain, the instant case also qualifies as an exception to, first, the proscription against
second and subsequent motions for reconsideration, and second, the rule on immutability of
judgments; a reconsideration of the Decision dated September 18, 2009, along with the Resolutions
dated December 14, 2009 and January 25, 2012, is justified by the higher interest of substantial
justice.

To begin with, the Court agrees with the respondents that the Courts prior resolve to grant , and not
just merely note, in a Resolution dated March 15, 2010 the respondents motion for leave to submit
their second motion for reconsideration already warranted a resolution and discussion of the motion
for reconsideration on its merits. Instead of doing this, however, the Court issued on January 25,
2012 a Resolution74 denying the motion to reconsider for lack of merit, merely citing that it was a
"prohibited pleading under Section 2, Rule 52 in relation to Section 4, Rule 56 of the 1997 Rules of
Civil Procedure, as amended."75 In League of Cities of the Philippines (LCP) v. Commission on
Elections,76 we reiterated a ruling that when a motion for leave to file and admit a second motion for
reconsideration is granted by the Court, the Court therefore allows the filing of the second motion for
reconsideration. In such a case, the second motion for reconsideration is no longer a prohibited
pleading. Similarly in this case, there was then no reason for the Court to still consider the
respondents second motion for reconsideration as a prohibited pleading, and deny it plainly on such
ground. The Court intends to remedy such error through this resolution.

More importantly, the Court finds it appropriate to accept the pending motion for reconsideration and
resolve it on the merits in order to rectify its prior disposition of the main issues in the petition. Upon
review, the Court is constrained to rule differently on the petitions. We have determined the grave
error in affirming the NLRCs rulings, promoting results that are patently unjust for the respondents,
as we consider the facts of the case, pertinent law, jurisprudence, and the degree of the injury and
damage to the respondents that will inevitably result from the implementation of the Courts Decision
dated September 18, 2009.

The rule on appeal bonds

We emphasize that the crucial issue in this case concerns the sufficiency of the appeal bond that
was posted by the respondents. The present rule on the matter is Section 6, Rule VI of the 2011
NLRC Rules of Procedure, which was substantially the same provision in effect at the time of the
respondents appeal to the NLRC, and which reads:

RULE VI
APPEALS

Sec. 6. BOND. In case the decision of the Labor Arbiter or the Regional Director involves a
monetary award, an appeal by the employer may be perfected only upon the posting of a cash or
surety bond. The appeal bond shall either be in cash or surety in an amount equivalent to the
monetary award, exclusive of damages and attorneys fees.

xxxx

No motion to reduce bond shall be entertained except on meritorious grounds and upon the posting
of a bond in a reasonable amount in relation to the monetary award.

The filing of the motion to reduce bond without compliance with the requisites in the preceding
paragraph shall not stop the running of the period to perfect an appeal. (Emphasis supplied)

While the CA, in this case, allowed an appeal bond in the reduced amount of P10,000,000.00 and
then ordered the cases remand to the NLRC, this Courts Decision dated September 18, 2009
provides otherwise, as it reads in part:

The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary
awards from the decision of the Labor Arbiter. The lawmakers clearly intended to make the bond a
mandatory requisite for the perfection of an appeal by the employer as inferred from the provision
that an appeal by the employer may be perfected "only upon the posting of a cash or surety bond."
The word "only" makes it clear that the posting of a cash or surety bond by the employer is the
essential and exclusive means by which an employers appeal may be perfected. x x x.

Moreover, the filing of the bond is not only mandatory but a jurisdictional requirement as well, that
must be complied with in order to confer jurisdiction upon the NLRC. Non-compliance therewith
renders the decision of the Labor Arbiter final and executory. This requirement is intended to assure
the workers that if they prevail in the case, they will receive the money judgment in their favor upon
the dismissal of the employers appeal. It is intended to discourage employers from using an appeal
to delay or evade their obligation to satisfy their employees just and lawful claims.

xxxx

Thus, it behooves the Court to give utmost regard to the legislative and administrative intent to
strictly require the employer to post a cash or surety bond securing the full amount of the monetary
award within the 10[-]day reglementary period. Nothing in the Labor Code or the NLRC Rules of
Procedure authorizes the posting of a bond that is less than the monetary award in the judgment, or
would deem such insufficient posting as sufficient to perfect the appeal.
While the bond may be reduced upon motion by the employer, this is subject to the conditions that
(1) the motion to reduce the bond shall be based on meritorious grounds; and (2) a reasonable
amount in relation to the monetary award is posted by the appellant, otherwise the filing of the
motion to reduce bond shall not stop the running of the period to perfect an appeal. The qualification
effectively requires that unless the NLRC grants the reduction of the cash bond within the 10-day
reglementary period, the employer is still expected to post the cash or surety bond securing the full
amount within the said 10-day period. If the NLRC does eventually grant the motion for reduction
after the reglementary period has elapsed, the correct relief would be to reduce the cash or surety
bond already posted by the employer within the 10-day period.77 (Emphasis supplied; underscoring
ours)

To begin with, the Court rectifies its prior pronouncement the unqualified statement that even an
appellant who seeks a reduction of an appeal bond before the NLRC is expected to post a cash or
surety bond securing the full amount of the judgment award within the 10-day reglementary period to
perfect the appeal.

The suspension of the period to


perfect the appeal upon the filing of
a motion to reduce bond

To clarify, the prevailing jurisprudence on the matter provides that the filing of a motion to reduce
bond, coupled with compliance with the two conditions emphasized in Garcia v. KJ Commercial 78 for
the grant of such motion, namely, (1) a meritorious ground, and (2) posting of a bond in a reasonable
amount, shall suffice to suspend the running of the period to perfect an appeal from the labor
arbiters decision to the NLRC.79 To require the full amount of the bond within the 10-day
reglementary period would only render nugatory the legal provisions which allow an appellant to
seek a reduction of the bond. Thus, we explained in Garcia:

The filing of a motion to reduce bond and compliance with the two conditions stop the running of the
period to perfect an appeal. x x x

xxxx

The NLRC has full discretion to grant or deny the motion to reduce bond, and it may rule on the
motion beyond the 10-day period within which to perfect an appeal. Obviously, at the time of the
filing of the motion to reduce bond and posting of a bond in a reasonable amount, there is no
assurance whether the appellants motion is indeed based on "meritorious ground" and whether the
bond he or she posted is of a "reasonable amount." Thus, the appellant always runs the risk of failing
to perfect an appeal.

x x x In order to give full effect to the provisions on motion to reduce bond, the appellant must be
allowed to wait for the ruling of the NLRC on the motion even beyond the 10-day period to perfect an
appeal. If the NLRC grants the motion and rules that there is indeed meritorious ground and that the
amount of the bond posted is reasonable, then the appeal is perfected. If the NLRC denies the
motion, the appellant may still file a motion for reconsideration as provided under Section 15, Rule
VII of the Rules. If the NLRC grants the motion for reconsideration and rules that there is indeed
meritorious ground and that the amount of the bond posted is reasonable, then the appeal is
perfected. If the NLRC denies the motion, then the decision of the labor arbiter becomes final and
executory.

xxxx
In any case, the rule that the filing of a motion to reduce bond shall not stop the running of the period
to perfect an appeal is not absolute. The Court may relax the rule. In Intertranz Container Lines, Inc.
v. Bautista, the Court held:

"Jurisprudence tells us that in labor cases, an appeal from a decision involving a monetary award
may be perfected only upon the posting of cash or surety bond. The Court, however, has relaxed this
requirement under certain exceptional circumstances in order to resolve controversies on their
merits. These circumstances include: (1) fundamental consideration of substantial justice; (2)
prevention of miscarriage of justice or of unjust enrichment; and (3) special circumstances of the
case combined with its legal merits, and the amount and the issue involved." 80 (Citations omitted and
emphasis ours)

A serious error of the NLRC was its outright denial of the motion to reduce the bond, without even
considering the respondents arguments and totally unmindful of the rules and jurisprudence that
allow the bonds reduction. Instead of resolving the motion to reduce the bond on its merits, the
NLRC insisted on an amount that was equivalent to the monetary award, merely explaining:

We are constrained to deny respondents motion for reduction. As held by the Supreme Court in a
recent case, in cases involving monetary award, an employer seeking to appeal the Labor Arbiters
decision to the Commission is unconditionally required by Art. 223, Labor Code to post bond in the
amount equivalent to the monetary award (Calabash Garments vs. NLRC, G.R. No. 110827, August
8, 1996). x x x81 (Emphasis ours)

When the respondents sought to reconsider, the NLRC still refused to fully decide on the motion. It
refused to at least make a preliminary determination of the merits of the appeal, as it held:

We are constrained to dismiss respondents Motion for Reconsideration. Respondents contention


that the appeal bond is excessive and based on a decision which is a patent nullity involves the
merits of the case. x x x82

Prevailing rules and jurisprudence


allow the reduction of appeal bonds.

By such haste of the NLRC in peremptorily denying the respondents motion without considering the
respondents arguments, it effectively denied the respondents of their opportunity to seek a reduction
of the bond even when the same is allowed under the rules and settled jurisprudence. It was
equivalent to the NLRCs refusal to exercise its discretion, as it refused to determine and rule on a
showing of meritorious grounds and the reasonableness of the bond tendered under the
circumstances.83 Time and again, the Court has cautioned the NLRC to give Article 223 of the Labor
Code, particularly the provisions requiring bonds in appeals involving monetary awards, a liberal
interpretation in line with the desired objective of resolving controversies on the merits. 84 The NLRCs
failure to take action on the motion to reduce the bond in the manner prescribed by law and
jurisprudence then cannot be countenanced. Although an appeal by parties from decisions that are
adverse to their interests is neither a natural right nor a part of due process, it is an essential part of
our judicial system. Courts should proceed with caution so as not to deprive a party of the right to
appeal, but rather, ensure that every party has the amplest opportunity for the proper and just
disposition of their cause, free from the constraints of technicalities.85 Considering the mandate of
labor tribunals, the principle equally applies to them.

Given the circumstances of the case, the Courts affirmance in the Decision dated September 18,
2009 of the NLRCs strict application of the rule on appeal bonds then demands a re-examination.
Again, the emerging trend in our jurisprudence is to afford every party-litigant the amplest
opportunity for the proper and just determination of his cause, free from the constraints of
technicalities.86 Section 2, Rule I of the NLRC Rules of Procedure also provides the policy that "the
Rules shall be liberally construed to carry out the objectives of the Constitution, the Labor Code of
the Philippines and other relevant legislations, and to assist the parties in obtaining just, expeditious
and inexpensive resolution and settlement of labor disputes."87

In accordance with the foregoing, although the general rule provides that an appeal in labor cases
from a decision involving a monetary award may be perfected only upon the posting of a cash or
surety bond, the Court has relaxed this requirement under certain exceptional circumstances in
order to resolve controversies on their merits. These circumstances include: (1) the fundamental
consideration of substantial justice; (2) the prevention of miscarriage of justice or of unjust
enrichment; and (3) special circumstances of the case combined with its legal merits, and the
amount and the issue involved.88 Guidelines that are applicable in the reduction of appeal bonds
were also explained in Nicol v. Footjoy Industrial Corporation.89 The bond requirement in appeals
involving monetary awards has been and may be relaxed in meritorious cases, including instances in
which (1) there was substantial compliance with the Rules, (2) surrounding facts and circumstances
constitute meritorious grounds to reduce the bond, (3) a liberal interpretation of the requirement of
an appeal bond would serve the desired objective of resolving controversies on the merits, or (4) the
appellants, at the very least, exhibited their willingness and/or good faith by posting a partial bond
during the reglementary period.90

In Blancaflor v. NLRC,91 the Court also emphasized that while Article 22392 of the Labor Code, as
amended by Republic Act No. 6715, which requires a cash or surety bond in an amount equivalent
to the monetary award in the judgment appealed from may be considered a jurisdictional
requirement for the perfection of an appeal, nevertheless, adhering to the principle that substantial
justice is better served by allowing the appeal on the merits to be threshed out by the NLRC, the
foregoing requirement of the law should be given a liberal interpretation.

As the Court, nonetheless, remains firm on the importance of appeal bonds in appeals from
monetary awards of LAs, we stress that the NLRC, pursuant to Section 6, Rule VI of the NLRC
Rules of Procedure, shall only accept motions to reduce bond that are coupled with the posting of a
bond in a reasonable amount. Time and again, we have explained that the bond requirement
imposed upon appellants in labor cases is intended to ensure the satisfaction of awards that are
made in favor of appellees, in the event that their claims are eventually sustained by the courts. 93 On
the part of the appellants, its posting may also signify their good faith and willingness to recognize
the final outcome of their appeal.

At the time of a motion to reduce appeal bonds filing, the question of what constitutes "a reasonable
amount of bond" that must accompany the motion may be subject to differing interpretations of
litigants. The judgment of the NLRC which has the discretion under the law to determine such
amount cannot as yet be invoked by litigants until after their motions to reduce appeal bond are
accepted.

Given these limitations, it is not uncommon for a party to unduly forfeit his opportunity to seek a
reduction of the required bond and thus, to appeal, when the NLRC eventually disagrees with the
partys assessment. These have also resulted in the filing of numerous petitions against the NLRC,
citing an alleged grave abuse of discretion on the part of the labor tribunal for its finding on the
sufficiency or insufficiency of posted appeal bonds.

It is in this light that the Court finds it necessary to set a parameter for the litigants and the NLRCs
guidance on the amount of bond that shall hereafter be filed with a motion for a bonds reduction. To
ensure that the provisions of Section 6, Rule VI of the NLRC Rules of Procedure that give parties the
chance to seek a reduction of the appeal bond are effectively carried out, without however defeating
the benefits of the bond requirement in favor of a winning litigant, all motions to reduce bond that are
to be filed with the NLRC shall be accompanied by the posting of a cash or surety bond equivalent to
10% of the monetary award that is subject of the appeal, which shall provisionally be deemed the
reasonable amount of the bond in the meantime that an appellants motion is pending resolution by
the Commission. In conformity with the NLRC Rules, the monetary award, for the purpose of
computing the necessary appeal bond, shall exclude damages and attorneys fees. 94 Only after the
posting of a bond in the required percentage shall an appellants period to perfect an appeal under
the NLRC Rules be deemed suspended.

The foregoing shall not be misconstrued to unduly hinder the NLRCs exercise of its discretion, given
that the percentage of bond that is set by this guideline shall be merely provisional. The NLRC
retains its authority and duty to resolve the motion and determine the final amount of bond that shall
be posted by the appellant, still in accordance with the standards of "meritorious grounds" and
"reasonable amount". Should the NLRC, after considering the motions merit, determine that a
greater amount or the full amount of the bond needs to be posted by the appellant, then the party
shall comply accordingly. The appellant shall be given a period of 10 days from notice of the NLRC
order within which to perfect the appeal by posting the required appeal bond.

Meritorious ground as a condition


for the reduction of the appeal bond

In all cases, the reduction of the appeal bond shall be justified by meritorious grounds and
accompanied by the posting of the required appeal bond in a reasonable amount.

The requirement on the existence of a "meritorious ground" delves on the worth of the parties
arguments, taking into account their respective rights and the circumstances that attend the case.
The condition was emphasized in University Plans Incorporated v. Solano, 95 wherein the Court held
that while the NLRCs Revised Rules of Procedure "allows the [NLRC] to reduce the amount of the
bond, the exercise of the authority is not a matter of right on the part of the movant, but lies within
the sound discretion of the NLRC upon a showing of meritorious grounds." 96 By jurisprudence, the
merit referred to may pertain to an appellants lack of financial capability to pay the full amount of the
bond,97 the merits of the main appeal such as when there is a valid claim that there was no illegal
dismissal to justify the award,98 the absence of an employer-employee relationship, 99 prescription of
claims,100 and other similarly valid issues that are raised in the appeal.101 For the purpose of
determining a "meritorious ground", the NLRC is not precluded from receiving evidence, or from
making a preliminary determination of the merits of the appellants contentions. 102

In this case, the NLRC then should have considered the respondents arguments in the
memorandum on appeal that was filed with the motion to reduce the requisite appeal bond. Although
a consideration of said arguments at that point would have been merely preliminary and should not
in any way bind the eventual outcome of the appeal, it was apparent that the respondents defenses
came with an indication of merit that deserved a full review of the decision of the LA. The CA, by its
Resolution dated February 16, 2007, even found justified the issuance of a preliminary injunction to
enjoin the immediate execution of the LAs decision, and this Court, a temporary restraining order on
September 4, 2012.

Significantly, following the CAs remand of the case to the NLRC, the latter even rendered a Decision
that contained findings that are inconsistent with McBurnies claims. The NLRC reversed and set
aside the decision of the LA, and entered a new one dismissing McBurnies complaint. It explained
that McBurnie was not an employee of the respondents; thus, they could not have dismissed him
from employment. The purported employment contract of the respondents with the petitioner was
qualified by the conditions set forth in a letter dated May 11, 1999, which reads:

May 11, 1999

MR. ANDREW MCBURNIE

Re: Employment Contract

Dear Andrew,

It is understood that this Contract is made subject to the understanding that it is effective only when
the project financing for our Baguio Hotel project pushed through.

The agreement with EGI Managers, Inc. is made now to support your need to facilitate your work
permit with the Department of Labor in view of the expiration of your contract with Pan Pacific.

Regards,

Sgd. Eulalio Ganzon (p. 203, Records)103

For the NLRC, the employment agreement could not have given rise to an employer-employee
relationship by reason of legal impossibility. The two conditions that form part of their agreement,
namely, the successful completion of the project financing for the hotel project in Baguio City and
McBurnies acquisition of an Alien Employment Permit, remained unsatisfied.104 The NLRC
concluded that McBurnie was instead a potential investor in a project that included Ganzon, but the
said project failed to pursue due to lack of funds. Any work performed by McBurnie in relation to the
project was merely preliminary to the business venture and part of his "due diligence" study before
pursuing the project, "done at his own instance, not in furtherance of the employment contract but for
his own investment purposes."105 Lastly, the alleged employment of the petitioner would have been
void for being contrary to law, since it is undisputed that McBurnie did not have any work permit. The
NLRC declared:

Absent an employment permit, any employment relationship that McBurnie contemplated with the
respondents was void for being contrary to law. A void or inexistent contract, in turn, has no force
and effect from the beginning as if it had never been entered into. Thus, without an Alien
Employment Permit, the "Employment Agreement" is void and could not be the source of a right or
obligation. In support thereof, the DOLE issued a certification that McBurnie has neither applied nor
been issued an Alien Employment Permit (p. 204, Records).106

McBurnie moved to reconsider, citing the Courts Decision of September 18, 2009 that reversed and
set aside the CAs Decision authorizing the remand. Although the NLRC granted the motion on the
said ground via a Decision107 that set aside the NLRCs Decision dated November 17, 2009, the
findings of the NLRC in the November 17, 2009 decision merit consideration, especially since the
findings made therein are supported by the case records.

In addition to the apparent merit of the respondents appeal, the Court finds the reduction of the
appeal bond justified by the substantial amount of the LAs monetary award. Given its considerable
amount, we find reason in the respondents claim that to require an appeal bond in such amount
could only deprive them of the right to appeal, even force them out of business and affect the
livelihood of their employees.108 In Rosewood Processing, Inc. v. NLRC,109 we emphasized: "Where a
decision may be made to rest on informed judgment rather than rigid rules, the equities of the case
must be accorded their due weight because labor determinations should not be secundum rationem
but also secundum caritatem."110

What constitutes a reasonable


amount in the determination of the
final amount of appeal bond

As regards the requirement on the posting of a bond in a "reasonable amount," the Court holds that
the final determination thereof by the NLRC shall be based primarily on the merits of the motion and
the main appeal.

Although the NLRC Rules of Procedure, particularly Section 6 of Rule VI thereof, provides that the
bond to be posted shall be "in a reasonable amount in relation to the monetary award ," the merit of
the motion shall always take precedence in the determination. Settled is the rule that procedural
rules were conceived, and should thus be applied in a manner that would only aid the attainment of
justice. If a stringent application of the rules would hinder rather than serve the demands of
substantial justice, the former must yield to the latter.111

Thus, in Nicol where the appellant posted a bond of P10,000,000.00 upon an appeal from the LAs
award of P51,956,314.00, the Court, instead of ruling right away on the reasonableness of the
bonds amount solely on the basis of the judgment award, found it appropriate to remand the case to
the NLRC, which should first determine the merits of the motion. In University Plans, 112 the Court also
reversed the outright dismissal of an appeal where the bond posted in a judgment award of more
than P30,000,000.00 was P30,000.00. The Court then directed the NLRC to first determine the
merit, or lack of merit, of the motion to reduce the bond, after the appellant therein claimed that it
was under receivership and thus, could not dispose of its assets within a short notice. Clearly, the
rule on the posting of an appeal bond should not be allowed to defeat the substantive rights of the
parties.113

Notably, in the present case, following the CAs rendition of its Decision which allowed a reduced
appeal bond, the respondents have posted a bond in the amount of P10,000,000.00. In Rosewood,
the Court deemed the posting of a surety bond of P50,000.00, coupled with a motion to reduce the
appeal bond, as substantial compliance with the legal requirements for an appeal from
a P789,154.39 monetary award "considering the clear merits which appear, res ipsa loquitor, in the
appeal from the LAs Decision, and the petitioners substantial compliance with rules governing
appeals."114 The foregoing jurisprudence strongly indicate that in determining the reasonable amount
of appeal bonds, the Court primarily considers the merits of the motions and appeals.

Given the circumstances in this case and the merits of the respondents arguments before the
NLRC, the Court holds that the respondents had posted a bond in a "reasonable amount", and had
thus complied with the requirements for the perfection of an appeal from the LAs decision. The CA
was correct in ruling that:

In the case of Nueva Ecija I Electric Cooperative, Inc. (NEECO I) Employees Association, President
Rodolfo Jimenez, and members, Reynaldo Fajardo, et al. vs. NLRC, Nueva Ecija I Electric
Cooperative, Inc. (NEECO I) and Patricio de la Pea (GR No. 116066, January 24, 2000), the
Supreme Court recognized that: "the NLRC, in its Resolution No. 11-01-91 dated November 7, 1991
deleted the phrase "exclusive of moral and exemplary damages as well as attorneys fees in the
determination of the amount of bond, and provided a safeguard against the imposition of excessive
bonds by providing that "(T)he Commission may in meritorious cases and upon motion of the
appellant, reduce the amount of the bond."
In the case of Cosico, Jr. vs. NLRC, 272 SCRA 583, it was held:

"The unreasonable and excessive amount of bond would be oppressive and unjust and would have
the effect of depriving a party of his right to appeal."

xxxx

In dismissing outright the motion to reduce bond filed by petitioners, NLRC abused its discretion. It
should have fixed an appeal bond in a reasonable amount. Said dismissal deprived petitioners of
their right to appeal the Labor Arbiters decision.

xxxx

NLRC Rules allow reduction of appeal bond on meritorious grounds (Sec. 6, Rule VI, NLRC Rules of
Procedure). This Court finds the appeal bond in the amount of P54,083,910.00 prohibitive and
excessive, which constitutes a meritorious ground to allow a motion for reduction thereof. 115

The foregoing declaration of the Court requiring a bond in a reasonable amount, taking into account
the merits of the motion and the appeal, is consistent with the oft-repeated principle that letter-
perfect rules must yield to the broader interest of substantial justice. 116

The effect of a denial of the appeal

to the NLRC

In finding merit in the respondents motion for reconsideration, we also take into account the
unwarranted results that will arise from an implementation of the Courts Decision dated September
18, 2009. We emphasize, moreover, that although a remand and an order upon the NLRC to give
due course to the appeal would have been the usual course after a finding that the conditions for the
reduction of an appeal bond were duly satisfied by the respondents, given such results, the Court
finds it necessary to modify the CAs order of remand, and instead rule on the dismissal of the
complaint against the respondents.

Without the reversal of the Courts Decision and the dismissal of the complaint against the
respondents, McBurnie would be allowed to claim benefits under our labor laws despite his failure to
comply with a settled requirement for foreign nationals.

Considering that McBurnie, an Australian, alleged illegal dismissal and sought to claim under our
labor laws, it was necessary for him to establish, first and foremost, that he was qualified and duly
authorized to obtain employment within our jurisdiction. A requirement for foreigners who intend to
work within the country is an employment permit, as provided under Article 40, Title II of the Labor
Code which reads:

Art. 40. Employment permit for non-resident aliens. Any alien seeking admission to the Philippines
for employment purposes and any domestic or foreign employer who desires to engage an alien for
employment in the Philippines shall obtain an employment permit from the Department of Labor.

In WPP Marketing Communications, Inc. v. Galera,117 we held that a foreign nationals failure to seek
an employment permit prior to employment poses a serious problem in seeking relief from the
Court.118 Thus, although the respondent therein appeared to have been illegally dismissed from
employment, we explained:
This is Galeras dilemma: Galera worked in the Philippines without proper work permit but now wants
to claim employees benefits under Philippine labor laws.

xxxx

The law and the rules are consistent in stating that the employment permit must be acquired prior to
employment. The Labor Code states: "Any alien seeking admission to the Philippines for
employment purposes and any domestic or foreign employer who desires to engage an alien for
employment in the Philippines shall obtain an employment permit from the Department of Labor."
Section 4, Rule XIV, Book I of the Implementing Rules and Regulations provides:

"Employment permit required for entry. No alien seeking employment, whether as a resident or
non-resident, may enter the Philippines without first securing an employment permit from the
Ministry. If an alien enters the country under a non-working visa and wishes to be employed
thereafter, he may be allowed to be employed upon presentation of a duly approved employment
permit."

Galera cannot come to this Court with unclean hands. To grant Galeras prayer is to sanction the
violation of the Philippine labor laws requiring aliens to secure work permits before their
employment. We hold that the status quo must prevail in the present case and we leave the parties
where they are. This ruling, however, does not bar Galera from seeking relief from other
jurisdictions.119 (Citations omitted and underscoring ours)

Clearly, this circumstance on the failure of McBurnie to obtain an employment permit, by itself,
necessitates the dismissal of his labor complaint.

Furthermore, as has been previously discussed, the NLRC has ruled in its Decision dated November
17, 2009 on the issue of illegal dismissal. It declared that McBurnie was never an employee of any of
the respondents.120 It explained:

All these facts and circumstances prove that McBurnie was never an employee of Eulalio Ganzon or
the respondent companies, but a potential investor in a project with a group including Eulalio
Ganzon and Martinez but said project did not take off because of lack of funds.

McBurnie further claims that in conformity with the provision of the employment contract pertaining to
the obligation of the respondents to provide housing, respondents assigned him Condo Unit # 812 of
the Makati Cinema Square Condominium owned by the respondents. He was also allowed to use a
Hyundai car. If it were true that the contract of employment was for working visa purposes only, why
did the respondents perform their obligations to him?

There is no question that respondents assigned him Condo Unit # 812 of the MCS, but this was not
free of charge. If it were true that it is part of the compensation package as employee, then McBurnie
would not be obligated to pay anything, but clearly, he admitted in his letter that he had to pay all the
expenses incurred in the apartment.

Assuming for the sake of argument that the employment contract is valid between them, record
shows that McBurnie worked from September 1, 1999 until he met an accident on the last week of
October. During the period of employment, the respondents must have paid his salaries in the sum
of US$26,000.00, more or less.
However, McBurnie failed to present a single evidence that [the respondents] paid his salaries like
payslip, check or cash vouchers duly signed by him or any document showing proof of receipt of his
compensation from the respondents or activity in furtherance of the employment contract. Granting
again that there was a valid contract of employment, it is undisputed that on November 1, 1999,
McBurnie left for Australia and never came back. x x x.121 (Emphasis supplied)

Although the NLRCs Decision dated November 17, 2009 was set aside in a Decision dated January
14, 2010, the Courts resolve to now reconsider its Decision dated September 18, 2009 and to affirm
the CAs Decision and Resolution in the respondents favor effectively restores the NLRCs basis for
rendering the Decision dated November 17, 2009.

More importantly, the NLRCs findings on the contractual relations between McBurnie and the
respondents are supported by the records.

First, before a case for illegal dismissal can prosper, an employer-employee relationship must first
be established.122 Although an employment agreement forms part of the case records, respondent
Ganzon signed it with the notation "per my note."123 The respondents have sufficiently explained that
the note refers to the letter124 dated May 11, 1999 which embodied certain conditions for the
employments effectivity. As we have previously explained, however, the said conditions, particularly
on the successful completion of the project financing for the hotel project in Baguio City and
McBurnies acquisition of an Alien Employment Permit, failed to materialize. Such defense of the
respondents, which was duly considered by the NLRC in its Decision dated November 17, 2009,
was not sufficiently rebutted by McBurnie.

Second, McBurnie failed to present any employment permit which would have authorized him to
obtain employment in the Philippines. This circumstance negates McBurnies claim that he had been
performing work for the respondents by virtue of an employer-employee relationship. The absence of
the employment permit instead bolsters the claim that the supposed employment of McBurnie was
merely simulated, or did not ensue due to the non-fulfillment of the conditions that were set forth in
the letter of May 11, 1999.

Third, besides the employment agreement, McBurnie failed to present other competent evidence to
prove his claim of an employer-employee relationship. Given the parties conflicting claims on their
true intention in executing the agreement, it was necessary to resort to the established criteria for the
determination of an employer-employee relationship, namely: (1) the selection and engagement of
the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the
employees conduct.125 The rule of thumb remains: the onus probandi falls on the claimant to
establish or substantiate the claim by the requisite quantum of evidence. Whoever claims entitlement
to the benefits provided by law should establish his or her right thereto. 126McBurnie failed in this
regard. As previously observed by the NLRC, McBurnie even failed to show through any document
1wphi1

such as payslips or vouchers that his salaries during the time that he allegedly worked for the
respondents were paid by the company. In the absence of an employer-employee relationship
between McBurnie and the respondents, McBurnie could not successfully claim that he was
dismissed, much less illegally dismissed, by the latter. Even granting that there was such an
employer-employee relationship, the records are barren of any document showing that its
termination was by the respondents dismissal of McBurnie.

Given these circumstances, it would be a circuitous exercise for the Court to remand the case to the
NLRC, more so in the absence of any showing that the NLRC should now rule differently on the
cases merits. In Medline Management, Inc. v. Roslinda,127 the Court ruled that when there is enough
basis on which the Court may render a proper evaluation of the merits of the case, the Court may
dispense with the time-consuming procedure of remanding a case to a labor tribunal in order "to
prevent delays in the disposition of the case," "to serve the ends of justice" and when a remand
"would serve no purpose save to further delay its disposition contrary to the spirit of fair play." 128 In
Real v. Sangu Philippines, Inc.,129 we again ruled:

With the foregoing, it is clear that the CA erred in affirming the decision of the NLRC which dismissed
petitioners complaint for lack of jurisdiction. In cases such as this, the Court normally remands the
case to the NLRC and directs it to properly dispose of the case on the merits. "However, when there
is enough basis on which a proper evaluation of the merits of petitioners case may be had, the
Court may dispense with the time-consuming procedure of remand in order to prevent further delays
in the disposition of the case." "It is already an accepted rule of procedure for us to strive to settle
the entire controversy in a single proceeding, leaving no root or branch to bear the seeds of
litigation. If, based on the records, the pleadings, and other evidence, the dispute can be resolved by
us, we will do so to serve the ends of justice instead of remanding the case to the lower court for
further proceedings." x x x.130 (Citations omitted)

It bears mentioning that although the Court resolves to grant the respondents motion for
reconsideration, the other grounds raised in the motion, especially as they pertain to insinuations on
irregularities in the Court, deserve no merit for being founded on baseless conclusions. Furthermore,
the Court finds it unnecessary to discuss the other grounds that are raised in the motion, considering
the grounds that already justify the dismissal of McBurnies complaint.

All these considered, the Court also affirms its Resolution dated September 4, 2012; accordingly,
McBurnies motion for reconsideration thereof is denied.

WHEREFORE, in light of the foregoing, the Court rules as follows:

(a) The motion for reconsideration filed on September 26, 2012 by petitioner Andrew James
McBurnie is DENIED;

(b) The motion for reconsideration filed on March 27, 2012 by respondents Eulalio Ganzon,
EGI-Managers, Inc. and E. Ganzon, Inc. is GRANTED.

(c) The Entry of Judgment issued in G.R. Nos. 186984-85 is LIFTED. This Courts Decision
dated September 18, 2009 and Resolutions dated December 14, 2009 and January 25, 2012
are SET ASIDE. The Court of Appeals Decision dated October 27, 2008 and Resolution
dated March 3, 2009 in CA-G.R. SP No. 90845 and CA-G.R. SP No. 95916 are AFFIRMED
WITH MODIFICATION. In lieu of a remand of the case to the National Labor Relations
Commission, the complaint for illegal dismissal filed by petitioner Andrew James McBurnie
against respondents Eulalio Ganzon, EGI-Managers, Inc. and E. Ganzon, Inc. is
DISMISSED.

Furthermore, on the matter of the filing and acceptance of motions to reduce appeal bond, as
provided in Section 6, Rule VI of the 2011 NLRC Rules of Procedure, the Court hereby RESOLVES
that henceforth, the following guidelines shall be observed:

(a) The filing o a motion to reduce appeal bond shall be entertained by the NLRC subject to
the following conditions: (1) there is meritorious ground; and (2) a bond in a reasonable
amount is posted;
(b) For purposes o compliance with condition no. (2), a motion shall be accompanied by the
posting o a provisional cash or surety bond equivalent to ten percent (10,) of the monetary
award subject o the appeal, exclusive o damages and attorney's fees;

(c) Compliance with the foregoing conditions shall suffice to suspend the running o the 1 0-
day reglementary period to perfect an appeal from the labor arbiter's decision to the NLRC;

(d) The NLRC retains its authority and duty to resolve the motion to reduce bond and
determine the final amount o bond that shall be posted by the appellant, still in accordance
with the standards o meritorious grounds and reasonable amount; and

(e) In the event that the NLRC denies the motion to reduce bond, or requires a bond that
exceeds the amount o the provisional bond, the appellant shall be given a fresh period o ten
1 0) days from notice o the NLRC order within which to perfect the appeal by posting the
required appeal bond.

SO ORDERED.