You are on page 1of 14

G.R. No.

83086 June 19, 1991 For failure of HCTC to pay the monthly amortization as stipulated in the
REYNALDO C. HONRADO, JR., petitioner, vs. COURT OF APPEALS promissory note, private respondent Jardine-Manila Finance, Inc. filed on
and JARDINE-MANILA FINANCE, INC., respondent. May 22, 1979 an action for replevin and damages with the Regional Trial
Court of Makati, Branch CXL docketed as Civil Case No. 2096, praying for
FERNAN, C.J.: the seizure and delivery of the questioned motor vehicle to private
respondent, with alternative prayer, that in the event the normal delivery
In this petition for review on certiorari, petitioner Reynaldo C. Honrado, Jr. of the motor vehicle cannot be effected, judgment be rendered ordering
seeks the reversal of the decision of the Court of Appeals dated August 5, HCTC to pay P41,011.34 with 14% interest per annum from the date the
19871 which affirmed the decision dated January 22, 1986 of the Regional obligation became due and demandable until fully paid. Private respondent
Trial Court, Branch CXL at Makati, Metro Manila. The dispositive portion of impleaded petitioner Reynaldo Honrado, Jr. as party-defendant on the
the affirmed decision reads as follows: contention that he signed the documents as co-maker.

WHEREFORE, judgment is hereby rendered ordering defendant Reynaldo C. After an answer with compulsory counterclaim was filed on November 7,
Honrado, Jr., to pay plaintiff MB Finance, formerly Jardine-Manila Finance 1981 by herein petitioner as defendant therein, the case was thereafter set
Corporation, as follows: for pre-trial conference.

1. P81,325.05, of which P40,769.00 representing balance of the On September 14, 1983, private respondent informed the trial court that it
principal amount due shall earn interest of 14% per annum from January was waiving the recovery of the motor vehicle and chose to pursue instead
1984; its alternative prayer considering that since the filing of the complaint, it
has not been able to recover said motor vehicle, and that even if
2. P4,076.00 as liquidated damages; recovered, its current value would not allegedly be commensurate to the
amount of P41,011.34.
3. P6,115.35 as attorney's fees; and
On the same day, private respondent moved to dismiss the case against
4. The costs of suit.2 HCTC without prejudice on the ground that summons could not be served
on said defendant corporation since it was no longer holding office at its
The factual background of this case as found by the trial court and affirmed given address and its present address could not be ascertained. This
by the Court of Appeals is as follows: motion was granted by the trial court on October 3, 1983.

On August 21, 1978, Hadd Construction and Trading Corporation (HCTC for In due time, the trial court rendered the assailed decision against
brevity) purchased on installment basis a Toyota Corolla Hardtop, 2 Door, petitioner who seasonably appealed to the Court of Appeals.1wphi1 On
1978 Model with Engine No. 3K-7515608, Serial No. KE 35-915409, Plate August 5, 1987, the Court of Appeals promulgated its decision affirming
No. B-YE-290 from Cressida Sales Corporation (Cressida for brevity). HCTC that of the trial court.
represented by petitioner Reynaldo C. Honrado, Jr. as president, executed a
promissory note in favor of Cressida, in the amount of P49,120.20, payable Hence the present recourse of petitioner.
at the rate of P1,364.45 a month for thirty six (36) months beginning
September 25, 1978 and every 25th day of the month thereafter until full To support his prayer for reversal of the appellate court's decision,
payment. In said promissory note, HCTC agreed to a waiver of formal petitioner argues that he signed the promissory note and deed of chattel
demand and presentment as well as notices of protest and dishonor, mortgage in his official capacity as president of HCTC only. He never
among others. Petitioner Honrado signed the promissory note a second intended to sign these documents as co-maker. Thus, petitioner in his
time as co-maker of HCTC.3 Memorandum raises the following issues:

A chattel mortgage on the motor vehicle was also executed by HCTC in 1) WAS PRIVATE RESPONDENT CORRECT IN ITS CONTENTION THAT
favor of Cressida. PETITIONER WAS A CO-MAKER OF HCTC IN THE EXECUTION OF THE
PROMISSORY NOTE AND DEED OF CHATTEL MORTGAGE IN QUESTION?
On September 4, 1978, Cressida executed a deed of assignment of the
promissory note with warranty of soundness in favor of Jardine-Manila 2) WAS THE COURT OF APPEALS CORRECT IN ITS INTERPRETATION OF
Finance, Inc. for and in consideration of P30,985.54. This was executed SUBJECT PROMISSORY NOTE AND DEED OF CHATTEL MORTGAGE IN FAVOR
with HCTC's conformity, represented again by petitioner as its president. OF PRIVATE RESPONDENT AND AGAINST PETITIONER?5
Petitioner Honrado likewise signed this deed of assignment as co-maker.4
On the first issue, petitioner Honrado vehemently denies any liability as co- xxx xxx xxx
maker of HCTC on the ground that the body of the documents in question,
namely, the promissory note and deed of chattel mortgage, indicates that Q Also, at the right hand margin of the promissory note there
the contract was between HCTC and Cressida only. In addition, petitioner appears a signature above the typewritten name Reynaldo C. Honrado, Jr.,
cites the testimony of Mr. George Caruncho, the sales agent of Cressida, co-maker, is this your signature?
who stated that petitioner was asked to sign these documents in his official
capacity as president of HCTC. A Yes, sir, that is my signature.7

We find no merit in the above contention. Petitioner Honrado cannot plead Since petitioner Honrado did not question and in fact admitted the
that he signed these documents in his official capacity only as president of genuineness and due execution of these documents, including the
HCTC and not as co-maker with HCTC. The documents in question, genuineness of his signatures, then these documents must be given legal
including the deed of assignment which contains petitioner's signatures as effects.
co-maker, whose genuineness and due execution were admitted by
petitioner, clearly indicate otherwise. As stated by respondent Court of The testimony of the sales agent, Mr. Caruncho, can not change the legal
Appeals: effect of these documents.1wphi1 Granting that he told petitioner to sign
these documents in his official capacity as president of HCTC the mere fact
The promissory note (Exhibit "A") clearly shows on its face that the that petitioner also signed voluntarily as co-maker proves his participation
appellant signed the same in his capacity as President of the Hadd in the transactions as a co-maker. Furthermore, Mr. Caruncho testified that
Construction & Trading Corp. and again as co-maker in his private capacity when petitioner signed these documents, all the type-written words
(Exhibits "A-2" & "A-3"). Appellant also signed the Deed of Chattel already appeared therein.
Mortgage and the Affidavit of Good Faith four (4) times; twice as President
and twice as co-maker (Exhibit "B"). And the appellant lastly signed his On the matter of interpretation of contracts, it is basic and fundamental
conformity to the Deed of Assignment (Exhibit "C") as president and again that if the terms of the contract are clear, the literal meaning of the
as co-maker. stipulation shall control.8 The intention of the parties to a contract must be
determined from the contract itself. When petitioner Honrado signed
From the above facts, petitioner, by signing these documents several times several times on these documents as president of HCTC and as co-maker,
as co-maker, is presumed to be aware of the consequences of his actions. there is no other interpretation but to conclusively presume that he bound
Considering that petitioner Honrado is of age and a businessman, holding himself also as co-maker. He cannot therefore renege on the obligations
the highest position in Hadd Construction Trading Corporation, he is and liabilities attached to a co-maker. When the terms of a contract are
presumed to have acted with due care, and to have signed the documents clear and do not leave room for doubt as to the intention of the contracting
in question with full knowledge of its contents as well as the attendant parties, it is not necessary to interpret the same, the literal meaning of its
obligations and responsibilities. As aptly observed by the trial court: clauses should be followed.9

. . . defendant Honrado is presumed to have intended the ordinary The promissory note clearly stipulates a solidary obligation as shown by
consequences of his voluntary act and taken ordinary care of his concerns. the following clause "For value received I/We jointly and severally promised
When defendant signed eight times on three documents, and always as to pay Cressida Motor Sales Corp. . . . Signed: Hadd Construction & Trading
president and as co-maker, it is presumed that he had exercised care in Corporation by Reynaldo C. Honrado, Jr., President and Reynaldo C.
verifying his involvement in the transaction, considering his age, business Honrado, Jr., Co-maker". In the case of Parot vs. Gemora,10 this Court had
life, intelligence and the fact that he occupied the highest office in the occasion to state:
corporation.6
Where a promissory note is signed by two or more persons promissing to
Furthermore, there is no evidence of fraud. Petitioner on cross-examination pay the amount of the said note juntos o separadamente, such co-makers
testified as follows: are individually liable for the payment of the full amount of the obligation
of such contract.
Q At the left hand margin of the promissory note there appears a
signature over the name Reynaldo C. Honrado Jr., President, Hadd Therefore, petitioner Honrado is solidarily liable to pay the full amount of
Construction and Trading Corp. Will you kindly tell us if this is your the obligation as stipulated in the promissory note to which private
signature? respondent is entitled.

A Yes, sir. However, the award of P81,325.00 based on the Statement of Account as
of December 10, 1983,11 prepared by private respondent includes other
charges aside from the principal obligation. These charges have not been also a subdivision plan and a vicinity map of the property. Respondent
satisfactorily proved during the trial. Moreover, a careful examination of Castro handled the sale for the registered owner.
the records of the case failed to support these charges. The records are
bereft of any evidence to show how these charges were computed nor is When the petitioner's board of directors resolved to buy the property for
there an adequate showing that private respondent is entitled thereto. A P22.00 a square meter, it imposed a condition that the location and vicinity
mere mention of the outstanding obligation of petitioner in the amount of plans would be verified by a reputable surveyor and the legal papers
P81,747.05 as of December 10, 1985 in the testimony of Alfonso Flores, pertaining to the property should be verified to be genuine, true, and
private respondent's manager for collection,12 is not sufficient without correct.
proof presented before the court of the expenses and other charges
imputed to petitioner. Thus, in the interest of justice and equity, petitioner The petitioner's board of directors authorized its treasurer, Mr. Manuel
should be liable only for the outstanding balance based on the promissory Chua to act for the corporation in negotiating and consummating the sale.
note in the amount of P40,769.00. This is computed by deducting the total The petitioner also engaged the services of Honorato R. Sta. Maria, a
payments equivalent to four (4) monthly installments made by HCTC in the geodetic engineer and surveyor, for the purpose of verifying the ownership
amount of P8,351.20 from the principal amount of the promissory note of and title of the land and Identifying and relocating the property.
P49,120.20. In addition, this amount of P40,769.00 shall earn interest at
the rate of 14% per annum to be computed from March 10, 1979 when the While the corporation's engineer-surveyor was conducting his verification,
total amount of the principal obligation became due and demandable13 respondent Castro submitted to it a deed of absolute sale executed by
until actual payment. The award of 10% liquidated damages and 15% Benjamin Sarmiento conveying to the petitioner the subject parcel of land.
attorney's fees based on the principal obligation is found to be equitable. Manuel Chua signed the deed in behalf of the petitioner but it was agreed
that the purchase price would be paid only upon receipt of the full report of
WHEREFORE, the assailed decision is hereby AFFIRMED, with modification Geodetic Engineer Sta. Maria.
as indicated below, ordering petitioner Honrado to pay private respondent
MB Finance, formerly Jardine-Manila Finance Corporation as follows: The sale was registered and a transfer certificate of title issued in the
name of the petitioner. When the transfer certificate of title and the other
1) P40,769.00 with 14 % interest per annum from March 10, 1979 papers were delivered to the petitioner, respondent Castro stated in writing
until actual payment; that it was understood that the surveyor's report would be submitted in a
day's time. He also asked for an acknowledgment that, notwithstanding
2) P4,076.90 as liquidated damages; the sale and transfer, his client had not yet been paid the agreed
consideration for the sale.
3) P6,115.35 as attorney's fees; and
The initial report of Engineer Sta. Maria was apparently satisfactory to Mr.
4) The costs of the suit. SO ORDERED Manuel Chua because four (4) checks in the amount of P150,000.00 were
given to respondent Castro for delivery to Benjamin Sarmiento as part
G.R. No. L-64143 February 28, 1986 payment of the purchase price for the land.
PREMIER INSURANCE & SURETY CORPORATION, petitioner,
vs.HON. INTERMEDIATE APPELLATE COURT and MAURO M. CASTRO, Shortly after turning over the checks, however, the petitioner ordered their
respondents. payment stopped. Sarmiento also had some problems encashing the
petitioner's crossed checks. To enable the payment of the purchase price,
GUTIERREZ, JR., J: respondent Castro not only presented a special power of attorney from
Sarmiento but also executed the "Agreement and Statement of Warranties"
This is a petition to review an amended decision of the Court of Appeals, which is now disputed in this petition for review.
now Intermediate Appellate Court, insofar as it declared the private
respondent not jointly and severally liable with Benjamin R. Sarmiento to The agreement and statement reads:
the petitioner under an agreement and statement of warranties executed
in connection with the sale of a parcel of land. NOW THEREFORE, for and in consideration of the premises, I hereby
warrant to the Premier Insurance and Surety Corp. that Benjamin R.
The property purchased by the petitioner is a 17,121 square meter lot in Sarmiento was until his sale of the above-mentioned property to the
lbayo, Paranaque covered by Transfer Certificate of Title No. 254170 in the Premier Insurance & Surety Corp., the true and absolute owner of the said
name of Benjamin R. Sarmiento. The lot was declared for taxation purposes property, and that the same was, at the time of said sale, free from all liens
and covered by a certificate of payment of real property taxes. There was and encumbrances, and that said Benjamin R. Sarmiento had the legal
right to execute the above mentioned Deed of Absolute Sale;
THE RESPONDENT COURT, IN REVERSING ITS ORIGINAL DECISION, ERRED
That I hereby hold myself jointly and severally liable with said Benjamin R. IN CONCLUDING THAT THE AGREEMENT AND STATEMENT OF WARRANTIES
Sarmiento in whatever liability he might have in connection with the DID NOT EXPRESS THE TRUE INTENT AND AGREEMENT OF PARTIES, THAT IT
Vendor's warranties in the above-mentioned Deed of Absolute Sale; WAS SIMULATED, NOT INTENDED TO BE ENFORCED, AND WAS ONLY A
FORMALITY.
That, after first being duly sworn, I also certify that the said Benjamin R.
Sarmiento whom I have known for more than four years, is a person of III
juridical capacity and with legal capacity to act and that he is of legal age
and single. THE RESPONDENT COURT, IN REVERSING ITS ORIGINAL., DECISION, ERRED
IN HOLDING THAT PETITIONER CANNOT ENFORCE THE STIPULATIONS IN
Upon the execution of the above warranty, the petitioner paid the entire THE AGREEMENT AND STATEMENT OF WARRANTIES BECAUSE
consideration of P376,662.00, giving the checks to respondent Castro for RESPONDENT SIGNED THE SAME IN HIS PERSONAL CAPACITY AND NOT AS
delivery to Sarmiento. AGENT OF BENJAMIN SARMIENTO AND THERE WAS NO AUTHORITY GIVEN
HIM ON THIS MATTER.
Later on, when the petitioner tried to sell the piece of land to Solid Realty
and Financing Corporation, it discovered that there were actually two IV
Torrens titles to the same property. One title, that of Benjamin R.
Sarmiento, had been acquired from a certain Teresita Lorenzo who THE RESPONDENT COURT, IN REVERSING ITS ORIGINAL POSITION, ERRED
executed an absolute deed of sale in his favor on June 11, 1969. Teresita IN CONCLUDING THAT THERE WAS NO CLOUD OF DOUBT DURING THE
Lorenzo in turn secured her Original Certificate of Title through a WHOLE PERIOD OF SALE AS REGARDS TO PARTNERSHIP AND TlTLE OF
Miscellaneous Sales Patent dated June 24, 1967 from the Bureau of Lands. BENJAMIN SARMIENTO, AS SUCH CONCLUSION WAS BASED ON
MISAPPREHENSION OF THE EVIDENCE ON RECORD.
The other title in the names of Caridad Almendras and Alejandro D.
Almendras came from a certain Justina Lorenzo who sold the lot to them on The petitioner contends that the appellate court in ruling that the
February 10, 1970. The original title of Justina Lorenzo was issued pursuant "Agreement and Statement of Warranties", Exhibit "L" was a mere
to a judgment dated January 9, 1967 and a decree dated October 8, 1968 formality which did not express the true intent of the parties was, in effect,
rendered by the Court of First Instance of Rizal in LRC Case No. T-70. granting a reformation of the instrument without legal basis. It states that
there is no basis for reformation.
The trial court sustained the Almendras' title as the valid title and declared
the Sarmiento's title null and void. It also absolved the Register of Deeds of According to the petitioner, Exhibit "L" is explicit and clear, leaving no
Rizal and the Assurance Fund of the National Treasury from any liability. room for different interpretation, that it was drawn in clear and simple
Benjamin Sarmiento and respondent Castro were declared jointly and language, and that it could not have possibly misled respondent Castro, a
solidarily liable for the P376,662.00 consideration for the sale P3,850.00 lawyer with vast experience and superior knowledge in this line of
expenses incurred during the sale, 12 percent interest per annum from business, It states that the private respondent with his experience and
August 14, 1969, P20,000.00 attorney's fees, and costs. As earlier stated, knowledge would not have involved himself in a liability to pay the full
the Court of Appeals in its amended decision absolved respondent Castro price of the land without having received its equivalent value.
from any liability arising from his agreement and statement of warranties.
It is with regards to this amended decision that the petitioner raises the Crucial to the resolution of this petition are two factual issues resolved by
following assignments of errors: the respondent court against the petitioner(1) whether or not Benjamin
Sarmiento is a fictitious person whom the petitioner's officers never met
I personally, and (2) whether or not the petitioner ordered the stop
payments on the four (4) checks representing the initial payments because
THE RESPONDENT COURT, IN CONCLUDING THAT THE AGREEMENT AND of doubts about the validity of Sarmiento's title.
STATEMENT OF WARRANTIES DID NOT EXPRESS THE TRUE INTENT OF THE
PARTIES, FAILED TO REALIZE THAT IT GRANTED A REFORMATION OF We affirm the factual findings of the respondent court. The testimony of
AGREEMENT WITHOUT THE RESPONDENT CASTRO SATISFYING THE WELL- the respondent on these issues is not only credible but is also unrebutted
SETTLED STRINGENT REQUIREMENTS FOR REFORMATION OF by the petitioner. It states:
INSTRUMENTS.
Q Mr. Witness, what you have testified the last time, is that (you
II testified that) after the execution of the deed of sale, plaintiff Premier
Insurance and Surety Corporation paid Sarmiento several post dated
checks and four (4) of which are in the amount of (P150,000.00) One Q What then was the reason . . . Were the payment of those checks
Hundred Fifty Thousand Pesos, now represented and covered by the receipt however, stopped, Mr. Witness?
marked as Exhibit J namely: ABC Check No. 1507 Metropolitan No. 374697,
and PPC 1146821, Check No. 736140, do you know whether or not Mr. A Yes, the payments were stopped because notwithstanding that the
Sarmiento was able to encash these four checks which are stated in your cross markings were removed, Mr. Sarmiento was unable to encash the
receipt of August 7, 1969, Exhibit J? checks for the reason that Mr. Manuel Chua refused to sign on the dorsal
side Identifying the signature of Mr. Sarmiento. Subsequently, Mr.
A I know that Mr. Sarmiento had not been able to encash one of the Sarmiento was informed of the stop-payment order; that nevertheless and
two checks which I cannot remember that the checks as evidenced by my after sometime Mr. Sarmiento was informed that with respect to the check
receipt were crossed check for deposit, sir. the two checks were stopped payment on the two checks was stopped by
Premier Insurance & Surety Corporation
Q Did you deliver to Mr. Sarmiento the four (4) checks that were
received by you under this receipt Exhibit J? Q Did you eventually come to know the reason why at least two (2) of
the four (4) checks were stopped payment?
A Yes, sir I delivered.
A Mr. Sarmiento and I went to see Mr. Manuel Chua. Although he did
Q When you delivered these checks you said that these checks were not tell Mr. Sarmiento certain matters and Mr. Chua instead he confided to
crossed checks. What did Mr. Sarmiento do with said checks? me that certain funds of the Premier Insurance & Surety Corporation were
invested or placed in the money market of General Acceptance and
A Mr. Sarmiento wanted to encash those checks because he needed Finance Corporation were not yet really cancelled but rather the checks
very badly to bring the money to Pangasinan and he requested me to help bounced for insufficient funds.
him to encash the crossed checks marking on the checks to cancel the
crossed markings, so that he can cash the checks, sir. Manuel Chua, therefore, transacted personally with Sarmiento and the
initial checks were cancelled because of insufficiency of funds at that time.
Q Why, did you accede to his request that you had the checks, the That the petitioner could not have doubted the title during the negotiations
crossed-checks, the markings on the crossedchecks be cancelled and leading to the sale and during the payment of the consideration is shown
encash the same? by the report of the engineer-surveyor which it commissioned to
investigate the purchased property. Respondent Castro stresses that he did
A Yes, sir I told him to bring the check to the Premier Insurance & not know Engineer Sta. Maria and-that there is no intimation at all in the
Surety Corporation and have the crossedchecks markings be removed. records that he had any knowledge about the verifications and reports
submitted by Mr. Sta. Maria to the petitioner.
Q Were you able to have these checks, the cross markings, cancelled
at the Premier Insurance & Surety Corporation, Mr. Witness? The Sta. Maria report states that "as far as authenticity of the titles are
concerned, there is no question the present title of Benjamin R. Sarmiento
A I accompanied Mr. Sarmiento and we both saw Mr. Manuel Chua of is genuine." The report apprised the petitioner of a possible risk of
the Premier Insurance, rather we both saw Mr. Manuel Chua the Treasurer overlapping claims with third parties who may have claimed under
of plaintiff corporation and he agreed to cancel the crossed markings on voluntary registration. Mr. Sta. Maria described the risk as "minimal"
the checks, sir. because the risk was attributed only to government negligence in selling
the lot to Teresita Lorenzo without ascertaining her actual occupation or
Q Now, Mr. Manuel said-Now, Mr. Manuel Chua said when he testified introduction of improvements, which are requisites for miscellaneous sales
before this Honorable Court that the Premier Insurance & Surety patents.
Corporation, the plaintiff corporation in this case, that it had actually
stopped the payment of these four (4) checks because you were not able The so-called doubts of the petitioner, if any, could not have referred to the
to present Mr. Sarmiento to him, is that correct, Mr. Witness? Almendras' title because Engineer Sta. Maria looked into this matter and
specifically reported it to the petitioner. Thus his report on verification of
A Precisely, I brought Mr. Sarmiento to Mr. Manuel Chua in connection ownership (Exhibit "I") reads in part:
with his request to cross the crossedmarkings on the checks and Mr.
Manuel Chua met Mr. Sarmiento and Mr. Chua agreed to remove the A research in the Bureau of Lands, Land Registration Commission, Court of
crossed markings, 'crossed checkson those checks, sir. First Instance of Rizal, and the Court of Appeals of cases of conflicting
claims and overlapping surveys in the vicinity of Barrio Ibayo, Municipality
of Paranaque, Province of Rizal did not reveal any.
payments are already ready. Defendant Castro and Manuel Chua, the duly
An alleged claim that Lot 3641 of which Lot 3641-A is a portion is in conflict authorized representative of plaintiff, has had several previous business
with plan Psu-170496 (Caridad C. Almendras) was verified to be true in and professional dealings in the past and as a matter of fact defendant
1967. However, prior to the issuance of Original Certificate of Title No. 156, Castro was the lawyer who handled Manuel Chua's naturalization case.
the conflict was resolved in favor of the government. As a result, on August
7, 1967, the original plan Psu170496 was corrected giving way to the In trying to convince the appellate court of the above as the true meaning
release of the portion applied under Miscellaneous Sales Patent. The Land and intent of the agreement of warranty, the respondent pointed to his
Registration case covering the amendment of Psu-170496 (Caridad C. close personal relations with the petitioner's principal officers, its president
Almendras) is Land Registration Case No. N-2183, Land Registration Vicente Sayson, treasurer Manuel Chua, and legal counsel Dean Feliciano
Commission Rec. No. N-16585. Jover Ledesma. When Sayson was president of Filipinas Merchandising
Corporation, which handled the importation of reparations goods from
Outside of the above-mentioned case, our researchers have not found any Japan, respondent Castro was vice president and legal counsel. The
other possible risk of future litigation which may involve the lot in question. respondent was also the lawyer of Manuel Chua since 1954 and apart from
the latter's naturalization case handled land transactions such as the
It is clear from the records that the petitioner corporation took the acquisition by Chua of the Golden Gate Hotel.
necessary steps to have the property it was purchasing as well as all
papers relative to the purchase verified before it paid the agreed The respondent pointed to indices of close relationship to sustain his
consideration. version of the meaning of the disputed agreement:

The private respondent contended in his defense that the special power of 1. The Deed of Absolute Sale (Exhibit B) was executed on 1 August
attorney constituted him an attorney-in-fact of Sarmiento only for purposes 1969. Even before payment of the purchase price, appellant acceded to
of collecting the purchase price of the property. Sarmiento was then in the request of Chua that the sale be immediately registered in the name of
Pangasinan campaigning for the candidacy of Luis Garcia who was running plaintiff-appellee and, accordingly, appellant convinced Sarmiento to agree
for Congress. to the request and to cause such registration, as in fact it was so
registered.
The private respondent states:
2. Notwithstanding that the agreement on the sale document was for
xxx xxx xxx full payment of the purchase price in cash, appellant made representations
for and in behalf of plaintiff-appellee to be allowed to make a partial
. . . Defendant Castro could not have guaranteed the title of defendant payment of the purchase price. So that, even after the surveyor's reports
Sarmiento since the property was covered by a torrens certificate of title (Exhibits L and L-1), plaintiff-appellee paid only P150,000 notwithstanding
which on its face did not disclose any liens or encumbrances on said the commitment of its board of directors to pay in full after receiving the
property, and consequently any party dealing with said property has the said surveyor's reports.
right to assume that the registered owner had clean title to the property
and the right to convey title thereto for such is the very foundation of our 3. Even after the execution of the 'Agreement and Statement of
Torrens System. Any undertaking on the part of defendant Castro to further Warranties' on 14 August 1969, appellant made representations with
guarantee the title of the vendor of said property was superfluous and was Sarmiento, for and in behalf of plaintiff-appellee, to accept plaintiff-
furthermore null and void for lack of consideration. Actually the true appellee's checks post-dated to 22 August, 4 September, 23 September,
intention of the parties to the Agreement and Statement of Warranties, 11 October and 16 October 1969 in varying amounts (Vide, Exhibits M-4 to
Annex "D" to the Complaint, namely plaintiff and defendant Castro was M-9, inclusive).
that Castro was merely to guarantee that the payment of the purchase
price was to Benjamin R. Sarmiento, the registered owner of the property, Ordinarily business transactions of this nature would have required strict
and that any payment made to him (Castro) as attorney-in-fact of adherence to and enforcement of verbal and written agreements,
Benjamin R. Sarmiento would discharge plaintiff from any further liability especially as to the payment of the stipulated consideration. But, because
with respect to the purchase price of the property. The reason why of appellant's close relationships with the officers of plaintiff-appellee,
Sarmiento had to appoint any attorney-in-fact to receive payment for him appellant prevailed upon Sarmiento to accommodate plaintiff-appellee's
was that at that time he (Sarmiento) was residing in the province and since repeated departures from the strict compliance of its obligations even
the actual date of payment was not certain because plaintiff wanted first to without the formalities of a written amendment to a duly executed sale
wait for the result of the relocation survey and investigation being agreement.
undertaken by Engineer Sta. Maria, it would be very inconvenient for him
(Sarmiento) to come from time to time to Manila to verify whether the
The same close relationships impelled appellant to overlook the strict Respondent Castro tries to resuscitate the issue on the nullity of
formalities in the preparation, and terminologies, of the disputed Sarmiento's title, to wit:
Agreement.
xxx xxx xxx
In retrospect, he should not have allowed sentimentalities to rule his
conduct or his decision, he should have insisted on a strict literal . . . [T]he Original Certificate of Title 156 Exh. S) issued to Teresita Lorenzo,
documentation of agreements, representations and assurances made by Sarmiento's vendor, on the basis of a Miscellaneous Sale Patent (predated
plaintiff-appellee's officers. But, it must be appreciated that at that time, the registration of the land in question by Justina A. Lorenzo, the vendor of
when no one had any inkling that anything was amiss or would eventually the Almendras spouses. Teresita's title, O.C.T. No. 156, was issued on June
go wrong-at least not in appellant's mind-it seemed out of step and totally 24, 1967 yet, while that of Justina's O.C.T. No. 8318 was issued only on
incongruous with the spirit of mutual trust and friendship that pervaded October 30, 1969 and transcribed in the Registration Book of the Registry
the transaction for appellant to doubt the verbal assurances made and to of Rizal only on November 5, 1969. Even the decree from which it sprung
require them to be placed in writing. was issued by the Court of First Instance of Rizal in LRC Case No. N-70 only
on October 8, 1968. Nowhere in the abovequoted portions of petitioner's
To hold appellant liable, therefore, to the strict, literal terms of the brief is it contended, much less alleged as proven, that any irregularity or
questioned Agreement would be to put undue reliance on the words flaw attended the issuance of O.C.T. No. 156 to Teresita Lorenzo, To be
employed by the parties therein to the total disregard of their true sure, if there is anything questionable in the above narration in petitioner's
intention and agreement and it would thus be grossly unfair, iniquitous and brief, it is the unexplained registration of the land issue in favor of Justina
unconscionable to enforce the same against appellant." A. Lorenzo when there was already an outstanding title in the name of
Teresita Lorenzo duly issued more than two (2) years earlier and which has
The petitioner cites Article 1359 of the Civil Code on reformation of not been shown to have been invalidated by any duly constituted authority
instruments and the case of Bank of the Philippine Islands v. Fidelity & whether judicial or administrative. . .
Surety Co. (51 Phil. 57) to show that there is no proof of the clearest and
most satisfactory character of a mutual mistake as would justify a This issue is no longer before us. The trial court has decided that the
reformation of the Agreement. We agree with the private respondent that Almendras title is the valid title and not that of Sarmiento. Since the
he was only introducing evidence on the true intent and meaning of the petitioner cannot recover what it paid either from Sarmiento or from the
instrument as a matter of defense and that the exception to the parol Assurance Fund, the only issue is whether it should be allowed to recover
evidence rule is more in point. from Sarmiento's lawyer and attorney-in-fact or whether, under the
circumstances, it should shoulder the loss itself.
While it is a general rule that parol evidence is not admissible for the
purpose of varying the terms of a contract, when an issue is squarely The petitioner has failed to sustain its contention that the respondent court
presented that a contract does not express the true intention of the committed clearly reversible errors in drawing erroneous conclusions from
parties, courts will, when a proper foundation is laid therefore, hear established facts. We apply the established rule that the findings of facts of
evidence for the purpose of ascertaining the true intention of the parties. the appellate court are deemed conclusive unless it is shown that there is
Once the intent is clear, then it shall prevail over what on its face the no substantial evidence to support them (Amigo v. Teves, 96 Phil. 252;
document appears to be. (Labasan v. Lacuesta, 86 SCRA 16, 22). The court Alsua-Betts v. Court of Appeals, 92 SCRA 332). There is no such showing.
does not reform the instrument. It remains as it was written. However, the
court receives evidence to find out how the parties really bound WHEREFORE, the petition for review is DISMISSED for lack of merit. The
themselves. The second exception to the parol evidence rule enables the judgment of the appellate court is AFFIRMED. No costs.
court to ascertain the intent of the parties.
SO ORDERED.
Respondent Castro testified that it was petitioner's counsel the late Dean
Jover Ledesma who prepared the disputed Agreement, Exhibit "L" and
states that the testimony of Manuel Chua on Exhibit "L" and on the
warranty assumed by Castro should not be given any credence because
Chua had no part in Ledesma's preparation of Exhibit "L" nor was Chua G.R. No. 159139 June 15, 2005
present during the conversation and understanding between Ledesma and
Castro as to the purpose and object of the Agreement. In fact any INFORMATION TECHNOLOGY FOUNDATION OF THE PHILIPPINES,
ambiguity must be construed against the party who drafted the document. MA. CORAZON M. AKOL, MIGUEL UY, EDUARDO H. LOPEZ, AUGUSTO
(Coscolluela v. Vaiderama, 2 SCRA 1095). C. LAGMAN, REX C. DRILON, MIGUEL HILADO, LEY SALCEDO, and
MANUEL ALCUAZ JR., Petitioners,
vs. 2004. In its January 18, 2005 Resolution, the Court required the parties to
COMMISSION ON ELECTIONS; COMELEC CHAIRMAN BENJAMIN comment. After careful deliberation on all pleadings at hand, we now
ABALOS SR.; COMELEC BIDDING and AWARD COMMITTEE resolve the Motion.
CHAIRMAN EDUARDO D. MEJOS and MEMBERS GIDEON DE
GUZMAN, JOSE F. BALBUENA, LAMBERTO P. LLAMAS, and Background Information
BARTOLOME SINOCRUZ JR.; MEGA PACIFIC eSOLUTIONS, INC.; and
MEGA PACIFIC CONSORTIUM, Respondents. At the outset, we stress that the Decision in the present case, promulgated
on January 13, 2004, has long attained finality.3 In our February 17, 2004
RESOLUTION Resolution, we denied with finality Comelecs Motion for Reconsideration
dated January 28, 2004, as well as private respondents Omnibus Motion
PANGANIBAN, J.: dated January 26, 2004. The Decision was recorded in the Book of Entries
of Judgments on March 30, 2004.
Our Decision1 in the present case voided the Contract entered into by the
Commission on Elections (Comelec) for the supply of automated counting Recall that our Decision declared Comelec to have acted with grave abuse
machines (ACMs) because of "clear violation of law and jurisprudence" and of discretion when, by way of its Resolution No. 6074, it awarded the
"reckless disregard of [Comelecs] own bidding rules and procedure." Contract for the supply of automated counting machines (ACMs) to private
Moreover, "Comelec awarded this billion-dollar undertaking with respondents. It did so, not only in clear violation of law and jurisprudence,
inexplicable haste, without adequately checking and observing mandatory but also with inexplicable haste and reckless disregard of its own bidding
financial, technical and legal requirements. x x x. The illegal, imprudent rules and procedures; particularly the mandatory financial, technical and
and hasty actions of the Commission have not only desecrated legal and legal requirements. It further manifested such grave abuse of discretion
jurisprudential norms, but have also cast serious doubts upon the poll when it accepted the subject computer hardware and software even
bodys ability and capacity to conduct automated elections." As a result, though, at the time of the award, these had patently failed to pass eight
the ACMs illegally procured and improvidently paid for by Comelec were critical requirements designed to safeguard the integrity of the elections.
not used during the 2004 national elections. Consequently, this Court was constrained to exercise its constitutional duty
by voiding the assailed Resolution No. 6074 awarding the Contract to Mega
In its present Motion, the poll body expressly admits that the Decision "has Pacific Consortium, as well as the subject Contract itself executed between
become final and executory," and that "COMELEC and MPC-MPEI are under Comelec and Mega Pacific eSolutions, Inc.
obligation to make mutual restitution." Otherwise stated, this admission
implies that the ACMs are to be returned to MPC-MPEI, and that the sum of Comelec was further ordered to refrain from implementing any other
over one billion pesos illegally paid for them be refunded to the public contract or agreement it had entered into with regard to the said project.
purse.2 In short, ownership of the ACMs never left MPC-MPEI and the We also declared that, as a necessary consequence of such nullity and
money paid for them still belongs, and must be returned, to the illegality, the purchase of the ACMs and the software, along with all
government. payments made for them, had no basis in law. Hence, the public funds
spent must be recovered from the payees and/or the persons who made
Consequently, the ACMs, which "admittedly failed to pass legally mandated the illegal disbursements possible, without prejudice to possible criminal
technical requirements" cannot be used during the forthcoming elections prosecutions against them.4
in the Autonomous Region for Muslim Mindanao (ARMM). Apart from
formidable legal, jurisprudential, technical and financial obstacles, the use Likewise, our February 17, 2004 Resolution denying reconsideration found
of the machines would expose the ARMM elections to the same electoral movants to have raised the same procedural and substantive issues
pitfalls and frauds pointed out in our Decision. If the ACMs were not good already exhaustively discussed and definitively passed upon in our
enough for the 2004 national elections, why should they be good enough Decision. In that Resolution, we emphasized (and we reiterate here) that
now for the 2005 ARMM elections, considering that nothing has been done the Decision did not prohibit automation of the elections. Neither did the
by Comelec to correct the legal, jurisprudential and technical flaws Court say that it was opposed to such project (or the use of ACMs) as a
underscored in our final and executory Decision? general proposition. We repeated our explanation that the reason for
voiding the assailed Resolution and the subject Contract was the grave
The Motion abuse of discretion on the part of Comelec; as well as its violations of law --
specifically RA 9184, RA 8436, and RA 6955 as amended by RA 7718;
Before us is the Commission on Elections "Most Respectful Motion for prevailing jurisprudence (the latest of which was Agan v. Philippine
Leave to Use the Automated Counting Machines in [the] Custody of the International Air Terminals Co., Inc.5); and the bidding rules and policies of
Commission on Elections for use (sic) in the August 8, 2005 Elections in the the Commission itself.
Autonomous Region for Muslim Mindanao (ARMM)," dated December 9,
Comelecs Claims demandable and enforceable; and (2) determining whether there has been
a grave abuse of discretion amounting to lack or excess of jurisdiction on
Notwithstanding our Decision and Resolution, the present Motion claims, the part of any branch or instrumentality of government.
inter alia, that the ARMM elections are slated to be held on August 8, 2005,
and are mandated by RA 9333 to be automated; that the government has Petitioners assert that there is no longer any live case or controversy to
no available funds to finance the automation of those elections; that speak of -- an existing case or controversy that is appropriate or ripe for
considering its present fiscal difficulties, obtaining a special appropriation determination, not merely conjectural or anticipatory; and that Comelecs
for the purpose is unlikely; that, on the other hand, there are in Comelecs allegations in its Motion do not amount to an actual case or controversy
custody at present 1,991 ACMs, which were previously delivered by private that would require this Court to render a decision or resolution in the
respondents; that these machines would deteriorate and become obsolete legitimate exercise of its judicial power. This lack of actual controversy is
if they remain idle and unused; that they are now being stored in the clearly seen in the relief prayed for in the Motion: the grant of a leave to
Comelec Maxilite Warehouse along UN Avenue, at "storage expenses of use the ACMs during the ARMM elections. Obviously, Comelec merely
P329,355.26 a month, or P3,979,460.24 annually." seeks an advisory opinion from this Court on whether its proposal to use
the ACMs during the said elections might be in violation of this Courts
The Motion further alleges that "information technology experts," who Decision dated January 13, 2004, and Resolution dated February 17, 2004.
purportedly supervised all stages of the software development for the
creation of the final version to be used in the ACMs, have unanimously Assuming arguendo that the present Motion might somehow be justified by
confirmed that this undertaking is in line with the internationally accepted the governments fiscal difficulties, petitioners further argue that
standards (ISO/IEC 12207) for software life cycle processes, "with its permitting Comelec to use the ACMs would nevertheless allow it to do
quality assurance that it would be fit for use in the elections x x x." indirectly what it was not permitted by this Court to do directly. They argue
that the instant Motion is merely a subterfuge on the poll bodys part to
Comelec also points out that the process of "enhancement" of the counting resurrect a lost case via a request for an advisory opinion.
and canvassing software has to be commenced at least six (6) months
prior to the August 8, 2005 ARMM elections, in order to be ready by then. It The OSGs Comment
asserts that its Motion is (a) without prejudice to the ongoing Civil Case No.
04-346 pending before the Regional Trial Court of Makati City, Branch 59, The Office of the Solicitor General (OSG) declares in its Comment that, in
entitled "Mega Pacific eSolutions, Inc. v. Republic of the Philippines compliance with this Courts directive for it to "take measures to protect
(represented by the Commission on Elections)," for the collection of a the government and vindicate public interest from the ill effects of the
purported P200 million balance due from Comelec under the voided illegal disbursements of public funds made by reason of the void [Comelec]
Contract; and (b) with a continuing respectful recognition of the finality and Resolution and Contract," it filed on behalf of the Republic on July 7, 2004,
legal effects of our aforesaid Decision. At bottom, Comelec prays that it be an Answer with Counterclaim in Civil Case No. 04-346. The OSG prayed for
granted leave to use the ACMs in its custody during the said ARMM the return of all payments made by Comelec to Mega Pacific under the void
elections. Contract, amounting to P1,048,828,407.

Private Respondents Contentions The OSG also manifests that it received a copy of the Complaint-Affidavit
dated September 15, 2004, filed with the Office of the Ombudsman by the
Commenting on the present Motion, private respondents take the position Bantay Katarungan Foundation and the Kilosbayan Foundation against the
that, since the subject ACMs have already been delivered to, paid for and Comelec commissioners who had awarded the Contract for the ACMs; and
used by Comelec, the Republic of the Philippines is now their owner, the private individuals involved, including the incorporators and officers of
without prejudice to Mega Pacific eSolutions, Inc.s claim for damages in Mega Pacific eSolutions, Inc. This Complaint-Affidavit was for violation of
the case pending before the RTC of Makati; and that, consequently, as far the Anti-Plunder Law (RA 7030), the Anti-Graft and Corrupt Practices Act
as private respondents are concerned, the question of using the subject (RA 3019 as amended), and the Code of Conduct and Ethical Standards for
ACMs for the ARMM elections is dependent solely on the discretion of the Public Officials and Employees (RA 6713).
owner, the Republic of the Philippines.
The complainants alleged immense kickbacks and horrendous overpricing
Petitioners Comment involved in the purchase of the 1,991 ACMs. Based on the OSGs available
records, it appears that Comelec withdrew from Land Bank P1.03 billion,
On the other hand, petitioners contend that Comelec is asking this Court to but actually paid Mega Pacific only P550.81 million. Furthermore,
render an advisory opinion, in contravention of the constitutional commercial invoices and bank applications for documentary credits reveal
provision6 that explicitly states that the exercise of judicial power is that each ACM cost only P276,650.00, but that Comelec agreed to pay
confined to (1) settling actual controversies involving rights that are legally Mega Pacific P430,394.17 per unit -- or a differential of P153,744.17 per
unit or an aggregate differential of P306.10 million. Moreover, Mega Pacific legal issues closely intertwined with the elements of the offenses charged
charged P83.924 million for value-added taxes (VAT) and P81.024 million in the criminal and administrative cases pending before it. "For one,
more for customs duties and brokerage fees, when in fact -- under the utilizing illegally procured goods or the intentional non-return thereof to
nullified Contract -- it was supposed to be exempt from VAT, customs the supplier may have a bearing on the determination of evident bad faith
duties and brokerage fees. Lastly, Comelec agreed to peg the ACM price at or manifest partiality, an essential element in any prosecution under the
the exchange rate of P58 to $1, when the exchange rate was P55 to $1 at anti-graft law, and may, at the same time, be constitutive of misconduct
the time of the bidding, resulting in additional losses for the government penalized under relevant disciplinary laws."
amounting to about P30 million.
Consequently, out of prudential considerations, the OMB prayed to be
The OSG hews to the view that the automation of elections, if properly excused from commenting on the merits of the present Motion, to avoid
carried out, is a desirable objective, but is mindful of the need for mutual any perception of prejudgment, bias or partiality on its part, in connection
restitution by the parties as a result of the final Decision nullifying the with the criminal and administrative cases pending before it.
Contract for the ACMs. Nevertheless, in apparent response to Comelecs
clamor to use the ACMs in the ARMM elections, the OSG manifests that it The Courts Ruling
has no objection to the proposal to use the machines, provided however
that (1) Comelec should show with reasonable certainty that the hardware Decision Subverted by the Motion
and software of the ACMs can be effectively used for the intended purpose;
(2) Mega Pacific should be made to return to the Republic at least a There are several reasons why the present Motion must be denied. First,
substantial portion of the overprice they charged for the purchase of the although it professes utmost respect for the finality of our Decision of
ACMs; and (3) the use of these machines, if authorized by this Court, January 13, 2004 -- an inescapable and immutable fact from which spring
should be without prejudice to the prosecution of the related criminal cases equally ineludible consequences -- granting it would have the effect of
pending before the Office of the Ombudsman (OMB). illegally reversing and subverting our final Decision. Plainly stated, our final
Decision bars the grant of the present Motion.
The OMBs Manifestation
To stress, as a direct result of our January 13, 2004 Decision, the Contract
For its part, the Office of the Ombudsman manifested that as a result of the for the supply of the subject ACMs was voided, and the machines were not
nullification of the Contract, various fact-finding investigations had been used in the 2004 national elections. Furthermore, the OSG was directed "to
conducted, and criminal and administrative charges filed before it against take measures to protect the government and vindicate public interest
the persons who appeared to be responsible for the anomalous Contract; from the ill-effects of the illegal disbursements of public funds made by
and that the various cases had been consolidated, and preliminary reason of the void Resolution." Accordingly, in Civil Case No. 04-346, the
investigation conducted in respect of the non-impeachable Comelec government counsel has prayed for mutual restitution; and for the "return
officials and co-conspirators/private individuals. Furthermore, the OMB is in of all payments, amounting to P1,048,828,407.00 made by Comelec to
the process of determining whether a verified impeachment complaint may Mega Pacific under the void Contract."
be filed against the poll bodys impeachable officials concerned.
In the meantime, Comelec has done nothing -- at least, nothing has been
A Supplemental Complaint prepared and filed by the Field Investigation reported in the present Motion -- to abide by and enforce our Decision.
Office of the Ombudsman reveals that the ACMs were overpriced by about Apparently, it has not done anything to rectify its violations of laws,
P162,000.00 per unit; that, additionally, Mega Pacific unduly benefited by jurisprudence and its own bidding rules referred to in our judgment.
including VAT and import duties amounting to P194.60 million in its bid Neither has it reported any attempt to correct and observe the "mandatory
price for the ACMs, despite Section 8 of RA 8436 exempting such financial, technical and legal requirements" needed to computerize the
equipment from taxes and duties; that Comelec nonetheless awarded the elections.
Contract to Mega Pacific at the same bid price of P1.249 billion, inclusive of
VAT, import duties and so on; and that the Commission allowed Mega Apparently, it has simply filed the present Motion asking permission to do
Pacific to peg the ACM price using an exchange rate of P58 to $1 instead of what it has precisely been prohibited from doing under our final and
P53 to $1, which further inflated Mega Pacifics windfall. executory Decision. If law and jurisprudence bar it from using the subject
ACMs during the last elections, why should it even propose to use these
The foregoing notwithstanding, the OMB had allegedly prepared a machines in the forthcoming ARMM elections? True, these elections are
comment on the present Motion, stating its position on the issue of utilizing important. But they cannot be more important than the 2004 national
the ACMs, but upon further reflection decided not to file that comment. It elections. Note that the factual premises and the laws involved in the
came to the conclusion that ventilating its position on the matter might procurement and use of the ACMs have not changed. Indeed, Comelec has
engender certain impressions that it had already resolved factual and/or
not even alleged, much less proven, any supervening factual or legal reopen what has been decided; they will not allow the same parties or their
circumstances to justify its Motion. privies to litigate anew a question that has been considered and decided
with finality.
Basic and primordial is the rule that when a final judgment becomes
executory, it thereby becomes immutable and unalterable. In other words, Besides, the letter of January 22, 2004, laden as it is with technical jargon
such a judgment may no longer undergo any modification, much less any and impressive concepts, does not serve to alter by even the minutest
reversal, even if it is meant to correct what is perceived to be an erroneous degree our finding of grave abuse of discretion by Comelec, on account of
conclusion of fact or law; and even if it is attempted by the court rendering its clear violations of law and jurisprudence and its unjustifiable and
it or by this Court.7 Equally well-entrenched is the doctrine that what is not reckless disregard of its own bidding rules and procedures.
permitted to be done directly may not be done indirectly either. In the
instant case, it is unarguable that the inexorable result of granting the Furthermore, the letter would obviously not contain anything that might
present Motion will precisely be a subversion of the Decision, or at least a serve to persuade us that the situation obtaining in January 2004 has so
modification that would render the latter totally ineffective and nugatory. changed in the interim as to justify the use of the ACMs in August 2005.

To support its present Motion, Comelec appended as Annex 1 a letter dated The Commission seems to think that it can resurrect the dead case by
January 22, 2004. Addressed to its chairman, the Annex was signed by waving at this Court a letter replete with technical jargon, much like a
four8 self-proclaimed "information technology experts,"9 who had witch doctor muttering unintelligible incantations to revive a corpse.
gratuitously contended that this Courts Decision was "one of the most
inopportune rulings ever to come out of the hallowed halls of that High In its main text, the Motion concedes that our Decision "has become final
Tribunal"; blame the Decision for supposedly forcing our people "to entrust and executory," and that all that remains to be done is "to make mutual
their votes to a manual system of counting and canvassing that have been restitution."13 So, what is the relevance of all these useless
proven to be prone to massive fraud in the past"; and mouth argumentations and pontifications in Annex 1 by the Commissions self-
legal/technical arguments that have already been repeatedly debunked in proclaimed "experts"? For its own illegal acts, imprudence and grave abuse
the Decision and Resolution here. The letter also included a long-winded, of discretion, why blame this Court? For Comelec to know immediately
tortuous discussion of the software development life cycle. which culprit should bear full responsibility for its miserable failure to
automate our elections, it should simply face the mirror.
A quick check of the case records confirmed our suspicion. The very same
letter dated January 22, 2004 had previously been appended as Annex 2 to Recovery of Government Funds Barred by the Motion
private respondents "Omnibus Motion A) for reconsideration of the
Decision dated 13 January 2004; b) to admit exhibits in refutation of the Second, the grant of the Motion will bar or jeopardize the recovery of
findings of fact of the Court; c) to have the case set for hearing and/or government funds improvidently paid to private respondents, funds that to
reception of evidence if deemed necessary by the Court." The only date the OSG estimates to be over one billion pesos. At the very least,
difference is that this time around, Comelec overlooked or failed to granting the Motion will be antagonistic to the directive in our Decision for
photocopy the last page (page 17) of the letter, bearing the signatures of the OSG to recover the "illegal disbursements of public funds made by
the four other purported "information technology experts."10 In other reason of the void Resolution and Contract."
words, to support its present Motion, it merely recycled an earlier exhibit
that had already been used in seeking reconsideration of our aforesaid Indeed, if the government is conned into not returning the ACMs but
Decision. instead keeping and utilizing them, there would be no need for Mega
Pacific to refund the payments made by Comelec. In fact, such recovery
While expressing utmost reverence for the finality of the Decision, Comelec will no longer be possible. Consequently, all those who stood to benefit (or
implicitly seeks, nevertheless, to have this Court take up anew matters have already benefited) financially from the deal would no longer be liable
that have already been passed upon and disposed of with finality. for the refund. They can argue that there was nothing wrong with the
voided Resolution and Contract, nothing wrong with the public bidding,
It is a hornbook doctrine that courts are presumed to have passed upon all nothing wrong with the machines and software, since the government has
points that were raised by the parties in their various pleadings, and that decided to keep and utilize them. This argument can be stretched to abate
form part of the records of the case. Our Resolution, disposing of the criminal prosecutions pending before the OMB and the impeachment
respondents arguments on reconsideration, did not explicitly and proceedings it is considering. After all, "reasonable doubt" is all that is
specifically address all of the matters raised in the said letter of January needed to secure acquittal in a criminal prosecution.
22, 2004. It is presumed however, that all matters within an issue raised in
a case were passed upon by the Court,11 as indeed they were in the In brief, the poll bodys Motion not only asks for what is legally impossible
instant case. And as we have held elsewhere,12 courts will refuse to to do (to reverse and subvert a final and executory Decision of the highest
court of the land), but also prevents the Filipino people from recovering
illegally disbursed public funds running into billions of pesos. Verily, by Motion Inadequate and Vague
subverting the Decision of this Court, the Motion would be unduly favoring
and granting virtual immunity from criminal prosecution to the parties Fourth, assuming arguendo that the foregoing formidable legal, financial
responsible for the illegal disbursement of scarce public funds. and technical obstacles could be overcome or set aside, still, the Motion
cannot be granted because it is vague; it does not contain enough details
Use of the ACMs and Software Detrimental to ARMM Elections to enable this Court to act appropriately.

Third, the use of the unreliable ACMs and the nonexistent software that is The sham nature of the Motion is evident from the following
supposed to run them will expose the ARMM elections to the same considerations. While Comelec asserts a pressing need for the ACMs to be
electoral ills pointed out in our final and executory Decision. Be it used in the ARMM elections, strangely enough, it has not bothered to
remembered that this Court expressly ruled that the proffered hardware determine the number of units that will be required for the purpose, much
and software had undeniably failed to pass eight critical requirements less tried to justify such quantification. It contracted for a total of 1,991
designed to safeguard the integrity of elections, especially the following ACMs, intended for use throughout the entire country during the 2004
three items: elections. Are we to believe that all 1,991 units would be utilized to count
and canvass the votes cast in the ARMM elections? Such a scenario is
" They failed to achieve the accuracy rating criterion of 99.9995 percent highly unlikely, even ridiculous.
set up by the Comelec itself.
A genuine, bona fide proposal for the utilization of the ACMs would
" They were not able to detect previously downloaded results at various naturally have included a well-thought-out plan of action, indicating the
canvassing or consolidation levels and to prevent these from being number of units to be deployed, places of utilization, number of operators
inputted again. and other personnel required, methods/periods of deployment and
recovery or retrieval, assessments of costs and risks involved in
" They were unable to print the statutorily required audit trails of the implementing the proposal, and concomitant justifications, among other
count/canvass at different levels without any loss of data."14 things. Now, either "The Plan" is being kept absolutely top secret, or it is
completely nonexistent.
The Motion has not at all demonstrated that these technical requirements
have been addressed from the time our Decision was issued up to now. In Furthermore, once the ACMs are deployed and utilized, they will no longer
fact, Comelec is merely asking for leave to use the machines, without be in the same condition as when they were first delivered to Comelec. In
mentioning any specific manner in which the foregoing requirements have fact, it is quite probable that by the time election day comes around, some
been satisfactorily met. of the machines would have been mishandled and damaged, maybe even
beyond repair. What steps has the poll body taken to make certain that
Equally important, we stressed in our Decision that "[n]othing was said or such eventualities, if not altogether preventable, can at least be minimized
done about the software -- the deficiencies as to detection and prevention so as to ensure the eventual return of the ACMs and the full recovery of the
of downloading and entering previously downloaded data, as well as the payments made for them? A scrutiny of the 4-page Motion16 ends in
capability to print an audit trail. No matter how many times the machines futility. It is all too clear that a failure or inability of Comelec to return the
were tested and retested, if nothing was done about the programming machines sans damage would most assuredly be cited as a ground to
defects and deficiencies, the same danger of massive electoral fraud refuse the refund of the moneys paid. Yet, if Comelec has given any
remains."15 thought at all to this or any other contingency, such fact has certainly not
been made evident to us.
Other than vaguely claiming that its four so-called "experts" have
"unanimously confirmed that the software development which the Comelec ARMM Elections Not Jeopardized by Nonuse of ACMs
undertook, [was] in line with the internationally accepted standards
(ISO/IEC 12207) [for] software life cycle processes," the present Motion has Fifth, there is no basis for the claim that unless the subject ACMs are used,
not shown that the alleged "software development" was indeed extant and the ARMM elections would not be held.
capable of addressing the "programming defects and deficiencies" pointed
out by this Court. At the outset, if such elections are not held, the blame must be laid
squarely at the doorstep of Comelec. To stress, had it not gravely abused
At bottom, the proposed use of the ACMs would subject the ARMM its discretion, the automation of the vote counting and canvassing
elections to the same dangers of massive electoral fraud that would have processes would have already become a reality over a year ago, and the
been inflicted by the projected automation of the 2004 national elections.
ACMs that would have been used in the 2004 national elections would now What is most odious is the resort to the present Motion seeking the use of
be available for the ARMM elections. the subject ACMs despite the availability of viable alternative courses of
action17 that will not tend to disturb or render this Courts final Decision
In any event, the Commission in its Motion argues that the government, ineffectual. Thus, the present Motion is wholly unnecessary and
given its present fiscal difficulties, has no available funds to finance the unwarranted. Upon it, however has Comelec pinned all its hopes, instead of
automation of the ARMM elections. Without even asking under what focusing on what the poll body can and ought to do under the
authority it has assumed the role of Treasury spokesman, we emphasize circumstances. The consequences of granting its lamentable Motion, we
that there would not now be any lack of funds for election automation had repeat, will indubitably subvert and thwart the Decision of this Court in the
it not improvidently turned over P1 billion of taxpayers moneys to Mega instant case.
Pacifics bank accounts.
Equally reprehensible is the attempt of the Commission to pass the onus of
Nevertheless, had the poll body been honestly and genuinely intent on its mismanagement problems on to this Court. For instance, the Motion
implementing automated counting and canvassing for the ARMM elections, quotes the cost of storage of the ACMs in its Maxilite Warehouse at
it ought to have informed Congress of the non-availability of the subject P329,355.26 per month or P3,979,460.24 per annum. Assuming for the
ACMs due to our Decisions and of the need for special appropriations, nonce that the machines have to be held in storage pending the decision in
instead of wasting this Courts time on its unmeritorious Motion. In fact, if the civil case (as it would simply not do to throw the machines out into the
only it had taken proper heed of our Decision of January 13, 2004, it could streets), why must it assume the cost of storage? Per our Decision, the
have conducted an above-board public bidding for the supply of acceptable machines are to be returned to Mega Pacific. If it refuses to accept them
ACMs. back, it does not follow that Comelec must pick up the tab. Instead of
further wasting the taxpayers money, it can simply send the bill to Mega
Certainly, this option or course of action was not foreclosed by our Pacific for collection.
Decision. Moreover, there was sufficient time within which to conduct the
public bidding process. RA 9333, which set the second Monday of August It would be entirely improper, bordering on unmitigated contempt of court,
2005 (August 8, 2005) as the date of the ARMM elections, was enacted on for the Commission to try to pass on the problem to this Court through its
September 21, 2004. Undoubtedly, Comelec was made aware of the Motion.
proposed date of the ARMM elections way before the passage of RA 9333.
Thus, the poll body had about ten (10) months at the very least (between No Actual Case or Controversy
the end of September 2004, when RA 9333 came into force and effect, and
August 8, 2005) to lobby Congress, properly conduct a public bidding, Finally, the Motion presents no actual justiciable case or controversy over
award the appropriate contracts, deliver and test the new machines, and which this Court can exercise its judicial authority. It is well-established in
make final preparations for the election. this jurisdiction that "x x x for a court to exercise its power of adjudication,
there must be an actual case or controversy -- one which involves a conflict
Even assuming that a new public bidding for ACMs was not a viable option, of legal rights, an assertion of opposite legal claims susceptible of judicial
still, Comelec has had more than sufficient lead time -- about ten months resolution; the case must not be moot or academic or based on extra-legal
counted from the end of September 2004 until August 8, 2005 -- to prepare or other similar considerations not cognizable by a court of justice. x x x
for manual counting and canvassing in the ARMM elections. It publicly [C]ourts do not sit to adjudicate mere academic questions to satisfy
declared, sometime in late January 2004, that notwithstanding our Decision scholarly interest, however intellectually challenging."18 The controversy
nullifying the Mega Pacific Contract, it would still be able to implement must be justiciable -- definite and concrete, touching on the legal relations
such manualization for the May 10, 2004 national elections. It made this of parties having adverse legal interests.19 In other words, the pleadings
declaration even though it had a mere three months or so to set up the must show an active antagonistic assertion of a legal right, on the one
mechanics. In this present instance involving elections on a much smaller hand, and a denial thereof on the other; that is, it must concern a real and
scale, it will definitely be able to implement manual processes if it wants not a merely theoretical question or issue.20 There ought to be an actual
to. and substantial controversy admitting of specific relief through a decree
conclusive in nature, as distinguished from an opinion advising what the
There is therefore absolutely no basis for any apprehension that the ARMM law would be upon a hypothetical state of facts.21
elections would not push through simply because the present Motion
cannot pass muster. More to the point, it would be ridiculous to regard the A perusal of the present Motion will readily reveal the utter absence of a
grant of permission to use the subject ACMs as the conditio sine qua non live case before us, involving a clash of legal rights or opposing legal
for the holding of the ARMM elections. claims. At best, it is merely a request for an advisory opinion, which this
Court has no jurisdiction to grant.22
EPILOGUE any system shoved into its bosom through improper and illegal methods.
As the saying goes, the end never justifies the means. Penumbral
We close this Resolution by repeating the last two paragraphs of our final contracting will not produce enlightened results."23
and executory Decision:
Comelec must follow and not skirt our Decision. Neither may it short-circuit
"True, our country needs to transcend our slow, manual and archaic our laws and jurisprudence. It should return the ACMs to MPC-MPEI and
electoral process. But before it can do so, it must first have a diligent and recover the improvidently disbursed funds. Instead of blaming this Court
competent electoral agency that can properly and prudently implement a for its illegal actions and grave abuse of discretion, the Commission should,
well-conceived automated election system. for a change, devise a legally and technically sound plan to computerize
our elections and show our people that it is capable of managing the
"At bottom, before the country can hope to have a speedy and fraud-free transition from an archaic to a modern electoral system.
automated election, it must first be able to procure the proper
computerized hardware and software legally, based on a transparent and WHEREFORE, the Motion is hereby DENIED for utter lack of merit.
valid system of public bidding. As in any democratic system, the ultimate
goal of automating elections must be achieved by a legal, valid and above- SO ORDERED.
board process of acquiring the necessary tools and skills therefor. Though
the Philippines needs an automated electoral process, it cannot accept just