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#1 G.R. No.

183239 June 2, 2014

GREGORIO DE LEON, doing business as G.D.L. MARKETING, Petitioner,


vs.
HERCULES AGRO INDUSTRIAL CORPORATION and/or JESUS CHUAAND RUMI RUNGIS
MILK,Respondents.

DECISION

PERALTA, J.:

Before us is a petition for review on certiorari which assails the Resolution1 dated January 7, 2008
and the Resolution2 dated June 2, 2008 of the Court of Appeals (CA) in CA-G.R. CV No. 87212.

Petitioner filed with the Regional Trial Court (RTC) of Manila an action for breach of contract
with damages and a prayer for a writ of preliminary attachment against respondent Hercules
Agro Industrial Corporation, represented by Jesus Chua, and respondent Rumi Rungis Milk.

The case was docketed as Civil Case No. 98-89938 and was raffled off to Branch 20.

Trial thereafter ensued. On September 23, 2005, the RTC promulgated its Decision,3 the dispositive
portion of which reads:

WHEREFORE, judgment is hereby rendered finding defendant RUMI RUNGIS liable to the herein
plaintiff, as follows:

1. $142,080 at the conversion rate of P26.41 to a dollar plus legal interest

2. P100,000.00 in attorney's fees

3. P477,622.00 for customs duties and taxes

4. P6,358.40 representing payment for the analysis of the delivered milk and the milk
sample.

The case against defendants Hercules Agro Industrial Corporation and Jesus Chua are hereby
DISMISSED for want of evidence. The counterclaims of defendants Hercules Agro Industrial
1wphi 1

Corporation and Jesus Chua is hereby DISMISSED absent concrete evidence to support it.

SO ORDERED.4

On October 19, 2005, petitioner, through counsel, filed a Motion for Time,5 asking for an additional
period of 10 days from October 19, 2005 to file a motion for reconsideration. Petitioner,
subsequently, filed on October 24, 2005 his Motion for Partial Reconsideration6 of the September 23,
2005 decision. In an Order7 dated October 27, 2005, the RTC denied the Motion for Time, as the
period for filing a motion for reconsideration is non-extendible.

On November 2, 2005, respondent Rumi Rungis Milk filed its Motion for Reconsideration8 of the
September 23, 2005 decision and to dismiss the complaint for lack of jurisdiction over the defendant
foreign corporation not doing business in the Philippines. On January 9, 2006, the RTC issued its
Order9denying respondent Rumi Rungis Milk's motion for reconsideration.
On February 13, 2006, petitioner filed a Notice of Partial Appeal10 from the Order dated January9,
2006.

On February 15, 2006, the RTC issued an Order11 which stated that petitioner's notice of partial
appeal cannot be given due course as the same had been filed beyond the reglementary period to
appeal. Petitioner filed a Motion for Reconsideration, Supplement to Petitioner's Motion for
Reconsideration and Reply to respondent's comment.

Earlier, on February 13, 2006,petitioner also moved for partial Execution12 of the RTC Decision dated
September 23, 2005. The RTC denied the motion, since the case against respondent Rumi
Rungis Milk was not yet final and executory as its notice of appeal13 had been timely filed.
Petitioners partial reconsideration was denied in an Order14 dated June 1, 2006 for failure of
petitioner or counsel to appear on the date the motion was set for hearing. Petitioner had also filed a
Notice of Appeal15 of the June 1, 2006 Order.

On November 16, 2006, petitioner received a notice16 from the CA requiring him to file appellant's
brief which he did on December 28, 2006.17 On the other hand, respondent Rumi Rungis Milk filed a
motion for extension of time to file its appellants brief, which the CA denied in a Resolution dated
March 15, 2007.

Respondent Hercules Agro Industrial Corporation filed a Motion18 to strike out or dismiss petitioner's
appeal and motion for leave of court to lift the amended order of attachment and release the
properties in custodia legis. Petitioner filed his Opposition thereto with motion for refund of
overpayment of fees.

On January 7, 2008, the CA issued its first assailed Resolution, which ordered petitioners brief
stricken off the records and dismissing the appeal.

In so ruling, the CA found that the appeal could not be legally entertained, since it was filed out of
time and denied due course by the RTC. With regards to petitioners contention of overpayment of
appeal and docket fees, his claim of refund should be referred to the Chief Justice through the Court
Administrator, pursuant to A.M. No. 05-9-256-MeTCdated October 12, 2005. Respondents Motion to
Lift the Amended Order of Attachment dated September 25,2000 and release the properties in
custodia legis should be filed before the trial court. Leave of court to file said motion is, therefore,
denied.

The CA also ordered the Appellant's Brief dated March 5, 2007, filed by respondent Rumi Rungis
Milk, expunged from the records taking into account the Resolution promulgated on March 15, 2007
denying respondent Rumi Rungis Milk's motion for extension of time to file appellant's brief and
dismissing its appeal.

Both petitioner and respondent Rumi Rungis Milk filed their respective motions for econsideration,
which the CA denied in its second assailed Resolution dated June 2, 2008.

Hence, this petition filed by petitioner.

The issue for resolution is whether the CA erred when it ordered petitioner's appellant's brief filed
with it be stricken off the records.

We find no merit in the petition.


The records show that the RTC Decision dated September 23, 2005 was received by petitioner on
October 4, 2005; thus, he had until October 19, 2005 within which to file an appeal or a motion for
reconsideration. Petitioner, however, filed on October 19,2005 a motion for time praying for an
additional 10 days or until October 29, 2005 to file his motion for partial reconsideration. The RTC
denied the motion to which we agree, since such motion is a transgression of the mandatory
prohibition on the filing of a motion for extension to file a motion for reconsideration.

In Habaluyas Enterprises Inc. v. Japson:19

Beginning one month after the promulgation of this Resolution, the rule shall be strictly enforced that
no motion for extension of time to file a motion for new trial or reconsideration may be filed with the
Metropolitan or Municipal Trial Courts, the Regional Trial Courts, and the Intermediate Appellate
Court. Such a motion may be filed only in cases pending with the Supreme Court as the court of last
resort, which may in its sound discretion either grant or deny the extension requested.20

In Rolloque v. Court of Appeals,21 we restated the rule, thus:

The filing by petitioners of a motion for extension of time to file motion for reconsideration did not toll
the fifteen-day period before a judgment becomes final and executory.22

It has, likewise, been explicitly stated in Section 2, Rule 40 and Section 3, Rule 41 of the 1997 Rules
of Civil Procedure that in appeals from municipal trial courts or regional trial courts, no motion for
extension of time to file a motion for reconsideration shall be allowed.

As the period to file a motion for reconsideration is non-extendible, petitioner's motion for extension
of time to file a motion for reconsideration did not toll the reglementary period to appeal; thus,
petitioner had already lost his right to appeal the September 23, 2005 decision. As such, the RTC
decision became final as to petitioner when no appeal was perfected after the lapse of the
prescribed period.

Doctrinally-entrenched is that the right to appeal is a statutory right and the one who seeks to avail
that right must comply with the statute or rules. The requirements for perfecting an appeal within the
reglementary period specified in the law must be strictly followed as they are considered
indispensable interdictions against needless delays. Moreover, the perfection of appeal in the
manner and within the period set by law is not only mandatory but jurisdictional as well, hence,
failure to perfect the same renders the judgment final and executory.23

The CA correctly ordered that petitioner's appellant's brief be stricken off the records. As the CA
said, the parties who have not appealed in due time cannot legally ask for the modification of the
judgment or obtain affirmative relief from the appellate court. A party who fails to question an
adverse decision by not filing the proper remedy within the period prescribed by law loses his right to
do so.24 As petitioner failed to perfect his appeal within the period for doing so, the September 23,
2005 decision has become final as against him. The rule is clear that no modification of judgment
could be granted to a party who did not appeal. It is enshrined as one of the basic principles in our
rules of procedure, specifically to avoid ambiguity in the presentation of issues, facilitate the setting
forth of arguments by the parties, and aid the court in making its determinations. It is not installed in
the rules merely to make litigations laborious and tedious for the parties. It is there for a reason.25

Petitioner claims that when respondent Rumi Ringis Milk's motion for reconsideration of the
September 23, 2005 decision was denied by the RTC in its Order dated January 9, 2006, he
immediately filed his notice of partial appeal within 15 days from receipt of such Order; thus, the CA
erred in finding that his Notice of Partial Appeal dated February 10, 2006 was filed out of time. He
also contends that respondent Rumi Rungis Milk's filing of its motion for reconsideration from the
Decision dated September 23, 2005 prevented the decision from obtaining finality as to all parties;
and that a motion for reconsideration opens the entire case for review, citing the case of Seventh
Day Adventist Conference Church of Southern Philippines, Inc. v. Northeastern Mindanao Mission of
Seventh Day Adventist Inc.26

We find the arguments devoid of merit.

The Order dated January 9, 2006 denying respondent Rumi Rungis Milk's motion for reconsideration
of the Decision dated September 23, 2005 could not be relied upon by petitioner to make it appear
that he can still appeal the said decision. Petitioner had already lost his right to appeal the
September 23, 2005 decision as early as October 19, 2005 when he failed to file his motion for
partial reconsideration of such decision within the reglementary period. He cannot be allowed to
appeal the decision at any time he might choose as it would violate the rule on perfection of appeal.
Perfection of appeal is not an empty procedural rule, but is grounded on fundamental considerations
of public policy and sound practice.27

The Seventh Day Adventist Conference Church of Southern Philippines, Inc. case cited by petitioner
has no application in this case, since the former did not deal with the issue on the period to appeal
as herein discussed.

Petitioner's insistence that the RTC Order dated February 15, 2006 denying due course to his notice
of partial appeal had not attained finality, because of the RTC's failure to rule on his motion of
reconsideration therefrom, is not meritorious. It has already been established that as early as
October 19, 2005, the reglementary period within which petitioner could appeal the September 23,
2005 decision had already lapsed. Petitioner, therefore, has no more right to file a notice of partial
appeal from the January 9, 2006 Order which denied respondent Rumi Rungi Milk's motion for
reconsideration of the September 23, 2005 decision.

Petitioner argues that jurisprudence is replete with instances wherein an expressly non-extendible
period for filing a pleading was nevertheless extended.

We are not persuaded.

In Building Care Corporation/Leopard Security & Investigation Agency v. Macaraeg,28 We said:

It should be emphasized that the resort to a liberal application, or suspension of the application of
procedural rules, must remain as the exception to the well-settled principle that rules must be
complied with for the orderly administration of justice. In Marohomsalic v. Cole, the Court stated:

While procedural rules may be relaxed in the interest of justice, it is well-settled that these are tools
designed to facilitate the adjudication of cases. The relaxation of procedural rules in the interest of
justice was never intended to be a license for erring litigants to violate the rules with impunity.
Liberality in the interpretation and application of the rules can be invoked only in proper cases and
under justifiable causes and circumstances. While litigation is not a game of technicalities, every
case must be prosecuted in accordance with the prescribed procedure to ensure an orderly and
speedy administration of justice.

The later case of Daikoku Electronics Phils., Inc. v. Raza, further explained that:
To be sure, the relaxation of procedural rules cannot be made without any valid reasons proffered
for or underpinning it. To merit liberality, petitioner must show reasonable cause justifying its non-
1w phi1

compliance with the rules and must convince the Court that the outright dismissal of the petition
would defeat the administration of substantial justice. x x x. The desired leniency cannot be
accorded absent valid and compelling reasons for such a procedural lapse. x x x.

We must stress that the bare invocation of "the interest of substantial justice" line is not some magic
want that will automatically compel this Court to suspend procedural rules. Procedural rules are not
to be belittled, let alone dismissed simply because their non-observance may have resulted in
prejudice to a partys substantial rights. Utter disregard of the rules cannot be justly rationalized by
harping on the policy of liberal construction.29

Petitioner's plea that the rules be not strictly applied so that the ends of justice will be served is not
meritorious. We found that petitioner had not shown any satisfactory reason which would merit the
relaxation of the rules. Petitioner moved for motion of time to file his motion for partial
reconsideration alleging heavy volume of work and the need to attend to other urgent matters in
other equally urgent cases, which we cannot consider as exceptional circumstances to justify the
non-observance of the rules of procedure.

WHEREFORE, the petition for review is DENIED. The Resolutions dated January 7, 2008 and June
2, 2008 of the Court of Appeals are hereby AFFIRMED.

SO ORDERED.

#2G.R. No. 192074 June 10, 2014

LIGHT RAIL TRANSIT AUTHORITY, represented by its Administrator MELQUIADES A.


ROBLES, Petitioner,
vs.
AURORA A. SALVAA, Respondent.

DECISION

LEONEN, J.:

An administrative agency has standing to appeal the Civil Service Commission's repeal or
modification of its original decision. In such instances, it is included in the concept of a "party
adversely affected" by a decision of the Civil Service Commission granted the statutory right to
appeal:

We are asked in this petition for review1 filed by the Light Rail Transit Authority (LRTA), a
government-owned and -controlled corporation, to modify the Civil Service Commissions finding that
respondent was guilty only of simple dishonesty.

This case developed as follows:

On May 12, 2006, then Administrator of the Light Rail Transit Authority, Melquiades Robles, issued
Office Order No. 119, series of 2006.2 The order revoked Atty. Aurora A. Salvaas designation as
Officer-in-Charge (OIC) of the LRTA Administrative Department. It "direct[ed] her instead to handle
special projects and perform such other duties and functions as may be assigned to her"3 by the
Administrator.
Atty. Salvaa was directed to comply with this office order through a memorandum issued on May
22, 2006 by Atty. Elmo Stephen P. Triste, the newly designated OIC of the administrative
department. Instead of complying, Salvaa questioned the order with the Office of the President.4

In the interim, Salvaa applied for sick leave of absence on May 12, 2006 and from May 15 to May
31, 2006.5 In support of her application, she submitted a medical certificate6 issued by Dr. Grace
Marie Blanco of the Veterans Memorial Medical Center (VMMC).

LRTA discovered that Dr. Blanco did not issue this medical certificate. Dr. Blanco also denied having
seen or treated Salvaa on May 15, 2006, the date stated on her medical certificate.7 On June 23,
2006, Administrator Robles issued a notice of preliminary investigation. The notice directed Salvaa
to explain in writing within 72 hours from her receipt of the notice "why no disciplinary action should
be taken against [her]"8 for not complying with Office Order No. 119 and for submitting a falsified
medical certificate.9

Salvaa filed her explanation on June 30, 2006.10 She alleged that as a member of the Bids and
Awards Committee, she "refused to sign a resolution"11 favoring a particular bidder. She alleged that
Office Order No. 119 was issued by Administrator Robles to express his "ire and
vindictiveness"12 over her refusal to sign.

The LRTAs Fact-finding Committee found her explanation unsatisfactory. On July 26, 2006, it
issued a formal charge against her for Dishonesty, Falsification of Official Document, Grave
Misconduct, Gross Insubordination, and Conduct Prejudicial to the Best Interest of the Service.13

On August 5, 2006, "Salvaa tendered her irrevocable resignation."14 None of the pleadings alleged
that this irrevocable resignation was accepted, although the resolution of the Fact-finding Committee
alluded to Administrator Robles acceptance of the resignation letter.

In the meantime, the investigation against Salvaa continued, and the prosecution presented its
witnesses.15Salvaa "submitted a manifestation dated September 6, 2006, stating that the
Committee was biased and that [Administrator] Robles was both the accuser and the hearing
officer."16

On October 31, 2006, the Fact-finding Committee issued a resolution "finding Salvaa guilty of all
the charges against her and imposed [on] her the penalty of dismissal from . . . service with all the
accessory penalties."17 The LRTA Board of Directors approved the findings of the Fact-finding
Committee18

Salvaa appealed with the Civil Service Commission. "In her appeal, [she] claimed that she was
denied due process and that there [was] no substantial evidence to support the charges against
her."19

On July 18, 2007, the Civil Service Commission modified the decision and issued Resolution No.
071364.The Civil Service Commission found that Salvaa was guilty only of simple dishonesty. She
was meted a penalty of suspension for three months.20

LRTA moved for reconsideration21 of the resolution. This was denied in a resolution dated May 26,
2008.22 LRTA then filed a petition for review with the Court of Appeals.23

On November 11, 2009, the Court of Appeals24 dismissed the petition and affirmed the Civil Service
Commissions finding that Salvaa was only guilty of simple dishonesty. The appellate court also
ruled that Administrator Robles had no standing to file a motion for reconsideration before the Civil
Service Commission because that right only belonged to respondent in an administrative
case.25 LRTA moved for reconsideration26 of this decision but was denied.27

Hence, LRTA filed this present petition.

Petitioner argues that it has the legal personality to appeal the decision of the Civil Service
Commission before the Court of Appeals.28 It cites Philippine National Bank v. Garcia29 as basis for its
argument that it can be considered a "person adversely affected" under the pertinent rules and
regulations on the appeal of administrative cases.30 It also argues that respondents falsification of
the medical certificate accompanying her application for sick leave was not merely simple but
serious dishonesty.31

Respondent agrees with the ruling of the Court of Appeals that petitioner had no legal personality to
file the appeal since it was not the "person adversely affected" by the decision. She counters that
Administrator Robles had no authority to file the appeal since he was unable to present a resolution
from the Board of Directors authorizing him to do so.32 She also agrees with the Civil Service
Commissions finding that she was merely guilty of simple dishonesty.33

In its reply,34 petitioner points out that it presented a secretarys certificate35 dated July 17, 2008 and
which it attached to the petitions before the Civil Service Commission, Court of Appeals, and this
court. It argues that the certificate authorizes the LRTA and its Administrator to file the necessary
motion for reconsideration or appeal regarding this case, and this authorization has yet to be
revoked.36

Both parties filed their respective memoranda before this court on May 23, 201237 and December 6,
2012.38

The legal issues that will determine the results of this case are:

1. Whether the LRTA, as represented by its Administrator, has the standing to appeal the
modification by the Civil Service Commission of its decision

2. Whether Salvaa was correctly found guilty of simple dishonesty only

We grant the petition.

The parties may appeal in administrative cases involving members of the civil service

It is settled that "[t]he 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."39 If it is not granted by the Constitution, it can only be availed of when a statute provides
for it.40 When made available by law or regulation, however, a person cannot be deprived of that right
to appeal. Otherwise, there will be a violation of the constitutional requirement of due process of law.

Article IX (B), Section 3 of the Constitution mandates that the Civil Service Commission shall be "the
central personnel agency of the Government."41 In line with the constitutionally enshrined policy that
a public office is a public trust, the Commission was tasked with the duty "to set standards and to
enforce the laws and rules governing the selection, utilization, training, and discipline of civil
servants."42
Civil servants enjoy security of tenure, and "[n]o officer or employee in the Civil Service shall be
suspended or dismissed except for cause as provided by law and after due process."43 Under
Section 12, Chapter 3, Book V of the Administrative Code, it is the Civil Service Commission that
has the power to "[h]ear and decide administrative cases instituted by or brought before it directly or
on appeal."

The grant of the right to appeal in administrative cases is not new. In Republic Act No. 2260 or the
Civil Service Law of 1959, appeals "by the respondent"44 were allowed on "[t]he decision of the
Commissioner of Civil Service rendered in an administrative case involving discipline of subordinate
officers and employees."45

Presidential Decree No. 807, while retaining the right to appeal in administrative cases, amended the
phrasing of the party allowed to appeal. Section 37, paragraph (a), and Section 39, paragraph (a),of
Presidential Decree No. 807 provide:

Sec. 37. Disciplinary Jurisdiction. - (a) The Commission shall decide upon appeal all administrative
cases involving the imposition of a penalty of suspension for more than thirty days, or fine in an
amount exceeding thirty days' salary, demotion in rank or salary or transfer, removal or dismissal
from office.

Sec. 39. Appeals. - (a) Appeals, where allowable, shall be made by the party adversely affected by
the decision within fifteen days from receipt of the decision unless a petition shall be decided within
fifteen days. (Emphasis supplied)

Additionally, Section 47, paragraph (1), and Section 49, paragraph (1), of the Administrative Code
provide:

SECTION 47. Disciplinary Jurisdiction.(1) The Commission shall decide upon appeal all
administrative disciplinary cases involving the imposition of a penalty of suspension for more than
thirty days, or fine in an amount exceeding thirty days salary, demotion in rank or salary or transfer,
removal or dismissal from office.

SECTION 49. Appeals.(1) Appeals, where allowable, shall be made by the party adversely
affected by the decision within fifteen days from receipt of the decision unless a petition for
reconsideration is seasonably filed, which petition shall be decided within fifteen days.(Emphasis
supplied)

The phrase, "person adversely affected," was not defined in either Presidential Decree No. 807 or
the Administrative Code. This prompted a series of cases46 providing the interpretation of this phrase.

The first of these cases, Paredes v. Civil Service Commission,47 declared:

Based on [Sections 37 (a) and 39 (a) of Presidential Decree No. 807], appeal to the Civil Service
Commission in an administrative case is extended to the party adversely affected by the decision,
that is, the person or the respondent employee who has been meted out the penalty of suspension
for more than thirty days; or fine in an amount exceeding thirty days salary demotion in rank or
salary or transfer, removal or dismissal from office. The decision of the disciplining authority is even
final and not appealable to the Civil Service Commission in cases where the penalty imposed is
suspension for not more than thirty days or fine in an amount not exceeding thirty days
salary.48 (Emphasis supplied)
This ruling was repeated in Mendez v. Civil Service Commission49 where this court stated that:

A cursory reading of P.D. 807, otherwise known as "The Philippine Civil Service Law" shows that
said law does not contemplate a review of decisions exonerating officers or employees from
administrative charges.

....

By inference or implication, the remedy of appeal may be availed of only in a case where the
respondent is found guilty of the charges filed against him. But when the respondent is exonerated
of said charges, as in this case, there is no occasion for appeal.50 (Emphasis supplied)

The same ratio would be reiterated and become the prevailing doctrine on the matter in Magpale, Jr.
v. Civil Service Commission,51 Navarro v. Civil Service Commission and Export Processing
Zone,52 University of the Philippines v. Civil Service Commission,53 and Del Castillo v. Civil Service
Commission.54

In these cases, this court explained that the right to appeal being merely a statutory privilege can
only be availed of by the party specified in the law. Since the law presumes that appeals will only be
made in decisions prescribing a penalty, this court concluded that the only parties that will be
adversely affected are the respondents that are charged with administrative offenses. Since the right
to appeal is a remedial right that may only be granted by statute, a government party cannot by
implication assert that right as incidental to its power, since the right to appeal does not form part of
due process.55

In effect, this court equated exonerations in administrative cases to acquittals in criminal cases
wherein the State or the complainant would have no right to appeal.56 When the Civil Service
Commission enacted the Uniform Rules on Administrative Cases in the Civil Service, or the
URACCS, on September 27, 1999, it applied this courts definition. Thus, Section 2, paragraph
(l),Rule I, and Section 38,Rule III of the URACCS defined "party adversely affected" as follows:

Section 2. Coverage and Definition of Terms.

....

(l) PARTY ADVERSELY AFFECTED refers to the respondent against whom a decision in a
disciplinary case has been rendered.

For some time, government parties were, thus, barred from appealing exonerations of civil servants
they had previously sanctioned. It was not until the promulgation by this court of Civil Service
Commission v. Dacoycoy57 on April 29, 1999 that the issue would be revisited.

Civil Service Commission v. Dacoycoyand Philippine National Bank v. Garcia

In Civil Service Commission v. Dacoycoy,58 an administrative complaint for habitual drunkenness,


misconduct, and nepotism was filed against the Vocational School Administrator of Balicuatro
College of Arts and Trade in Allen, Northern Samar. The Civil Service Commission found Dacoycoy
guilty, but the Court of Appeals overturned this finding and exonerated Dacoycoy of all charges. The
Civil Service Commission then appealed the ruling of the appellate court. This court, in addressing
the issue of the Commissions standing, stated that:
Subsequently, the Court of Appeals reversed the decision of the Civil Service Commission and held
respondent not guilty of nepotism. Who now may appeal the decision of the Court of Appeals to the
Supreme Court? Certainly not the respondent, who was declared not guilty of the charge. Nor the
complainant George P. Suan, who was merely a witness for the government. Consequently, the Civil
Service Commission has become the party adversely affected by such ruling, which seriously
prejudices the civil service system. Hence, as an aggrieved party, it may appeal the decision of the
Court of Appeals to the Supreme Court. By this ruling, we now expressly abandon and overrule
extant jurisprudence that "the phrase party adversely affected by the decision refers to the
government employee against whom the administrative case is filed for the purpose of disciplinary
action which may take the form of suspension, demotion in rank or salary, transfer, removal or
dismissal from office" and not included are "cases where the penalty imposed is suspension for not
more than thirty (30) days or fine in an amount not exceeding thirty days salary" or "when the
respondent is exonerated of the charges, there is no occasion for appeal." In other words, we
overrule prior decisions holding that the Civil Service Law "does not contemplate a review of
decisions exonerating officers or employees from administrative charges" enunciated in Paredes v.
Civil Service Commission; Mendez v. Civil Service Commission; Magpale v. Civil Service
Commission; Navarro v. Civil Service Commission and Export Processing Zone Authority and more
recently Del Castillo v. Civil Service Commission.59 (Emphasis supplied; citations omitted)

In his concurring opinion, then Chief Justice Puno summed up the rationale for allowing government
parties to appeal, thus:

In truth, the doctrine barring appeal is not categorically sanctioned by the Civil Service Law. For what
the law declares as "final" are decisions of heads of agencies involving suspension for not more than
thirty (30) days or fine in an amount not exceeding thirty (30) days salary.

But there is a clear policy reason for declaring these decisions final. These decisions involve minor
offenses. They are numerous for they are the usual offenses committed by government officials and
employees. To allow their multiple level appeal will doubtless overburden the quasi-judicial
machinery of our administrative system and defeat the expectation of fast and efficient action from
these administrative agencies. Nepotism, however, is not a petty offense. Its deleterious effect on
government cannot be over-emphasized. And it is a stubborn evil. The objective should be to
eliminate nepotic acts, hence, erroneous decisions allowing nepotism cannot be given immunity from
review, especially judicial review. It is thus non sequitur to contend that since some decisions
exonerating public officials from minor offenses cannot be appealed, ergo, even a decision acquitting
a government official from a major offense like nepotism cannot also be appealed.60 (Emphasis
supplied)

The decision in Dacoycoy would be reiterated in 2002 when this court promulgated Philippine
National Bank v. Garcia.61 Philippine National Bank categorically allowed the disciplining authority to
appeal the decision exonerating the disciplined employee.

In that case, the bank charged Ricardo V. Garcia, Jr., one of its check processors and cash
representatives, with gross neglect of duty when he lost P7 million in connection with his duties. Both
the Civil Service Commission and the Court of Appeals reversed the bank and exonerated Garcia
from all liability.

This court, however, upheld Philippine National Banks right to appeal the case. Citing Dacoycoy,
this court ruled:

Indeed, the battles against corruption, malfeasance and misfeasance will be seriously undermined if
we bar appeals of exoneration. After all, administrative cases do not partake of the nature of criminal
actions, in which acquittals are final and unappealable based on the constitutional proscription of
double jeopardy.

Furthermore, our new Constitution expressly expanded the range and scope of judicial review. Thus,
to prevent appeals of administrative decisions except those initiated by employees will effectively
and pervertedly erode this constitutional grant.

Finally, the Court in Dacoycoy ruled that the CSC had acted well within its rights in appealing the
CAs exoneration of the respondent public official therein, because it has been mandated by the
Constitution to preserve and safeguard the integrity of our civil service system. In the same light,
herein Petitioner PNB has the standing to appeal to the CA the exoneration of Respondent Garcia.
After all, it is the aggrieved party which has complained of his acts of dishonesty. Besides, this Court
has not lost sight of the fact that PNB was already privatized on May 27, 1996. Should respondent
be finally exonerated indeed, it might then be incumbent upon petitioner to take him back into its
fold. It should therefore be allowed to appeal a decision that in its view hampers its right to select
honest and trustworthy employees, so that it can protect and preserve its name as a premier
banking institution in our country.62 (Emphasis supplied) Thus, the Civil Service Commission issued
Resolution No. 021600 published on December 29, 2002, which amended the URACCS, to allow the
disciplining authority to appeal the decision exonerating the employee:

Section 2. Coverage and Definition of Terms.

....

(l) PARTY ADVERSELY AFFECTED refers to the respondent against whom a decision in a
disciplinary case has been rendered or to the disciplining authority in an appeal from a decision
exonerating the said employee.

Subsequent decisions continued to reiterate the rulings in Dacoycoy and Philippine National Bank.

In Constantino-David v. Pangandaman-Gania,63 this court explained the rationale of allowing the Civil
Service Commission to appeal decisions of exonerations as follows:

That the CSC may appeal from an adverse decision of the Court of Appeals reversing or modifying
its resolutions which may seriously prejudice the civil service system is beyond doubt. In Civil
Service Commission v. Dacoycoy[,] this Court held that the CSC may become the party adversely
affected by such ruling and the aggrieved party who may appeal the decision to this Court.

The situation where the CSCs participation is beneficial and indispensable often involves complaints
for administrative offenses, such as neglect of duty, being notoriously undesirable, inefficiency and
incompetence in the performance of official duties, and the like, where the complainant is more often
than not acting merely as a witness for the government which is the real party injured by the illicit
act. In cases of this nature, a ruling of the Court of Appeals favorable to the respondent employee is
understandably adverse to the government, and unavoidably the CSC as representative of the
government may appeal the decision to this Court to protect the integrity of the civil service system.

The CSC may also seek a review of the decisions of the Court of Appeals that are detrimental to its
constitutional mandate as the central personnel agency of the government tasked to establish a
career service, adopt measures to promote morale, efficiency, integrity, responsiveness,
progressiveness and courtesy in the civil service, strengthen the merit and rewards system, integrate
all human resources development programs for all levels and ranks, and institutionalize a
management climate conducive to public accountability. Nonetheless, the right of the CSC to appeal
the adverse decision does not preclude the private complainant in appropriate cases from similarly
elevating the decision for review.64

Then in Civil Service Commission v. Gentallan,65 this court declared:

At the outset, it should be noted that the Civil Service Commission, under the Constitution, is the
central personnel agency of the government charged with the duty of determining questions of
qualifications of merit and fitness of those appointed to the civil service. Thus, the CSC, as an
institution whose primary concern is the effectiveness of the civil service system, has the standing to
appeal a decision which adversely affects the civil service. We hold, at this juncture, that CSC has
the standing to appeal and/or to file its motion for reconsideration.66

The right to appeal by government parties was not limited to the Civil Service Commission.

In Pastor v. City of Pasig,67 this court ruled that the City of Pasig had standing to appeal the decision
of the Civil Service Commission reinstating a city employee to her former position, despite the city
government having reassigned her to another unit.

In Geronga v. Varela,68 this court ruled that the Mayor of Cadiz City had the right to file a motion for
reconsideration of a decision by the Civil Service Commission exonerating a city employee on the
ground that "as the appointing and disciplining authority, [he] is a real party in interest."69

In Department of Education v. Cuanan,70 this court ruled that the Department of Education "qualifie[d]
as a party adversely affected by the judgment, who can file an appeal of a judgment of exoneration
in an administrative case."71

There are, however, cases, which sought to qualify this right to appeal.

In National Appellate Board v. Mamauag,72 an administrative complaint for grave misconduct was
filed by Quezon City Judge Adoracion G. Angeles against several members of the Philippine
National Police (PNP). The Central Police District Command (CPDC) of Quezon City, upon
investigation, dismissed the complaint. Dissatisfied, Judge Angeles moved for a reinvestigation by
then PNP Chief Recaredo Sarmiento II.

PNP Chief Sarmiento issued a decision finding the accused police officers guilty of the offenses
charged. Some were meted the penalty of suspension while others were dismissed from service.
Upon motion for reconsideration by Judge Angeles, Chief Sarmiento modified his ruling and ordered
the dismissal of the suspended police officers.

One of the officers, Police Inspector John Mamauag, appealed the decision with the National
Appellate Board of the National Police Commission. The National Appellate Board, however, denied
the appeal. Mamauag appealed the denial with the Court of Appeals. The Court of Appeals reversed
the decision of the National Appellate Board and ruled that it was the Philippine National Police, not
Judge Angeles, which had the right to appeal the decision of PNP Chief Sarmiento, as it was the
party adversely affected. The National Appellate Board then appealed this decision with this court.

This court, while citing Dacoycoy, declared that Judge Angeles, as complainant, had no right to
appeal the dismissal by CPDC of the complaint against Mamauag. It qualified the right of
government agencies to appeal by specifying the circumstances by which the right may be given,
thus:
However, the government party that can appeal is not the disciplining authority or tribunal which
previously heard the case and imposed the penalty of demotion or dismissal from the service. The
government party appealing must be one that is prosecuting the administrative case against the
respondent. Otherwise, an anomalous situation will result where the disciplining authority or tribunal
hearing the case, instead of being impartial and detached, becomes an active participant in
prosecuting the respondent. Thus, in Mathay, Jr. v. Court of Appeals, decided after Dacoycoy, the
Court declared:

To be sure, when the resolutions of the Civil Service Commission were brought before the Court of
Appeals, the Civil Service Commission was included only as a nominal party. As a quasi-judicial
body, the Civil Service Commission can be likened to a judge who should "detach himself from
cases where his decision is appealed to a higher court for review."

In instituting G.R. No. 126354, the Civil Service Commission dangerously departed from its role as
adjudicator and became an advocate. Its mandated function is to "hear and decide administrative
cases instituted by or brought before it directly or on appeal, including contested appointments and
to review decisions and actions of its offices and agencies," not to litigate.73 (Emphasis supplied)

The ruling in National Appellate Boardwas applied in Montoya v. Varilla,74 Pleyto v. PNP-CIDG,75 and
Ombudsman v. Liggayu.76

The present rule is that a government party is a "party adversely affected" for purposes of appeal
provided that the government party that has a right to appeal must be the office or agency
prosecuting the case.

Despite the limitation on the government partys right to appeal, this court has consistently upheld
that right in Dacoycoy. In Civil Service Commission v. Almojuela,77 we stated that:

More than ten years have passed since the Court first recognized in Dacoycoy the CSCs standing
to appeal the CAs decisions reversing or modifying its resolutions seriously prejudicial to the civil
service system. Since then, the ruling in Dacoycoy has been subjected to clarifications and
qualifications but the doctrine has remained the same: the CSC has standing as a real party in
interest and can appeal the CAs decisions modifying or reversing the CSCs rulings, when the CA
action would have an adverse impact on the integrity of the civil service. As the governments central
personnel agency, the CSC is tasked to establish a career service and promote morale, efficiency,
integrity, responsiveness, progressiveness, and courtesy in the civil service; it has a stake in
ensuring that the proper disciplinary action is imposed on an erring public employee, and this stake
would be adversely affected by a ruling absolving or lightening the CSC-imposed penalty. Further, a
decision that declares a public employee not guilty of the charge against him would have no other
appellant than the CSC. To be sure, it would not be appealed by the public employee who has been
absolved of the charge against him; neither would the complainant appeal the decision, as he acted
merely as a witness for the government. We thus find no reason to disturb the settled Dacoycoy
doctrine.78 (Citations omitted)

Indeed, recent decisions showed that this court has allowed appeals by government parties.
Notably, the government parties right to appeal in these cases was not brought up as an issue by
either of the parties.

In Civil Service Commission v. Yu,79 this court allowed the Civil Service Commission to appeal the
Court of Appeals decision granting the reinstatement of a government employee whose
appointment had been revoked by the Commission.
In National Power Corporation v. Civil Service Commission and Tanfelix,80 the National Power
Corporation had previously filed an administrative complaint against one of its employees, Rodrigo
Tanfelix, resulting in his dismissal from service. When the Civil Service Commission exonerated
Tanfelix and the Court of Appeals affirmed the exoneration, the National Power Corporation was
allowed to appeal.

These cases, however, allowed the disciplining authority to appeal only from a decision exonerating
the said employee. In this case, respondent was not exonerated; she was found guilty, but the
finding was modified. This court previously stated that:

If the administrative offense found to have been actually committed is of lesser gravity than the
offense charged, the employee cannot be considered exonerated if the factual premise for the
imposition of the lesser penalty remains the same.81

Dacoycoy, Philippine National Bank, and the URACCS failed to contemplate a situation where the
Civil Service Commission modified the penalty from dismissal to suspension. The erring civil servant
was not exonerated, and the finding of guilt still stood. In these situations, the disciplinary authority
should be allowed to appeal the modification of the decision.

The LRTA had standing to appeal the modification by the Civil Service Commission of its decision

The employer has the right "to select honest and trustworthy employees."82 When the government
office disciplines an employee based on causes and procedures allowed by law, it exercises its
discretion. This discretion is inherent in the constitutional principle that "[p]ublic officers and
employees must, at all times, be accountable to the people, serve them with utmost responsibility,
integrity, loyalty, and efficiency; act with patriotism and justice, and lead modest lives."83 This is a
principle that can be invoked by the public as well as the government office employing the public
officer.

Here, petitioner already decided to dismiss respondent for dishonesty. Dishonesty is a serious
offense that challenges the integrity of the public servant charged. To bar a government office from
appealing a decision that lowers the penalty of the disciplined employee prevents it from ensuring its
mandate that the civil service employs only those with the utmost sense of responsibility, integrity,
loyalty, and efficiency.

Honesty and integrity are important traits required of those in public service. If all decisions by quasi-
judicial bodies modifying the penalty of dismissal were allowed to become final and unappealable, it
would, in effect, show tolerance to conduct unbecoming of a public servant. The quality of civil
service would erode, and the citizens would end up suffering for it.

During the pendency of this decision, or on November 18, 2011, the Revised Rules on
Administrative Cases in the Civil Service or RACCS was promulgated. The Civil Service Commission
modified the definition of a "party adversely affected" for purposes of appeal.

Section 4. Definition of Terms.

....

k. PARTY ADVERSELY AFFECTED refers to the respondent against whom a decision in an


administrative case has been rendered or to the disciplining authority in an appeal from a decision
reversing or modifying the original decision. (Emphasis supplied)
Procedural laws have retroactive application. In Zulueta v. Asia Brewery:84

As a general rule, laws have no retroactive effect. But there are certain recognized exceptions, such
as when they are remedial or procedural in nature. This Court explained this exception in the
following language:

It is true that under the Civil Code of the Philippines, "(l)aws shall have no retroactive effect, unless
the contrary is provided. But there are settled exceptions to this general rule, such as when the
statute is CURATIVE or REMEDIAL in nature or when it CREATES NEW RIGHTS.

....

On the other hand, remedial or procedural laws, i.e., those statutes relating to remedies or modes of
procedure, which do not create new or take away vested rights, but only operate in furtherance of
the remedy or confirmation of such rights, ordinarily do not come within the legal meaning of a
retrospective law, nor within the general rule against the retrospective operation of statutes.

Thus, procedural laws may operate retroactively as to pending proceedings even without express
provision to that effect. Accordingly, rules of procedure can apply to cases pending at the time of
their enactment. In fact, statutes regulating the procedure of the courts will be applied on actions
undetermined at the time of their effectivity. Procedural laws are retrospective in that sense and to
that extent.85 (Emphasis supplied)

Remedial rights are those rights granted by remedial or procedural laws. These are rights that only
operate to further the rules of procedure or to confirm vested rights. As such, the retroactive
application of remedial rights will not adversely affect the vested rights of any person. Considering
that the right to appeal is a right remedial in nature, we find that Section 4, paragraph (k), Rule I of
the RACCS applies in this case. Petitioner, therefore, had the right to appeal the decision of the Civil
Service Commission that modified its original decision of dismissal.

Recent decisions implied the retroactive application of this rule. While the right of government parties
to appeal was not an issue, this court gave due course to the appeals filed by government agencies
before the promulgation of the Revised Rules on Administrative Cases in the Civil Service.

In Civil Service Commission v. Clave,86 the Government Service and Insurance System (GSIS) found
one of its employees, Aurora M. Clave, guilty of simple neglect of duty. The Civil Service
Commission affirmed the GSISs findings. The Court of Appeals, however, while affirming the Civil
Service Commission, reduced the penalty. Both the GSIS and the Civil Service Commission were
given standing to appeal the decision of the Court of Appeals.

In GSIS v. Chua,87 the GSIS dismissed Heidi R. Chua for grave misconduct, dishonesty, and conduct
prejudicial to the best interest of service. The Civil Service Commission affirmed the GSIS, but the
Court of Appeals, while affirming the findings of the Commission, modified the penalty to simple
misconduct. The GSIS was then allowed to bring an appeal of the modification of the penalty with
this court.

Thus, we now hold that the parties adversely affected by a decision in an administrative case who
may appeal shall include the disciplining authority whose decision dismissing the employee was
either overturned or modified by the Civil Service Commission.

The offense committed was less serious dishonesty, not simple dishonesty
Dishonesty has been defined "as the disposition to lie, cheat, deceive, or defraud;
untrustworthiness, lack of integrity . . . ."88 Since the utmost integrity is expected of public servants,
its absence is not only frowned upon but punished severely.

Section 52, Rule IV of the URACCS provides:

Section 52. Classification of Offenses. Administrative offenses with corresponding penalties are
classified into grave, less grave or light, depending on their gravity or depravity and effects on the
government service.

A. The following are grave offenses with their corresponding penalties:

1. Dishonesty - 1st Offense Dismissal

....

In Remolona v. Civil Service Commission,89 this court explained the rationale for the severity of the
penalty:

It cannot be denied that dishonesty is considered a grave offense punishable by dismissal for the
first offense under Section 23, Rule XIV of the Rules Implementing Book V of Executive Order No.
292. And the rule is that dishonesty, in order to warrant dismissal, need not be committed in the
course of the performance of duty by the person charged. The rationale for the rule is that if a
government officer or employee is dishonest or is guilty of oppression or grave misconduct, even if
said defects of character are not connected with his office, they affect his right to continue in office.
The Government cannot tolerate in its service a dishonest official, even if he performs his duties
correctly and well, because by reason of his government position, he is given more and ample
opportunity to commit acts of dishonesty against his fellow men, even against offices and entities of
the government other than the office where he is employed; and by reason of his office, he enjoys
and possesses a certain influence and power which renders the victims of his grave misconduct,
oppression and dishonesty less disposed and prepared to resist and to counteract his evil acts and
actuations. The private life of an employee cannot be segregated from his public life. Dishonesty
inevitably reflects on the fitness of the officer or employee to continue in office and the discipline and
morale of the service.90 (Emphasis supplied)

However, on April 4, 2006, the Civil Service Commission issued Resolution No. 06-0538 or the
Rules on the Administrative Offense of Dishonesty.

Resolution No. 06-0538 recognizes that dishonesty is a grave offense punishable by dismissal from
service.91 It, however, also recognizes that "some acts of Dishonesty are not constitutive of an
offense so grave as to warrant the imposition of the penalty of dismissal from the service."92

Recognizing the attendant circumstances in the offense of dishonesty, the Civil Service Commission
issued parameters "in order to guide the disciplining authority in charging the proper offense"93 and to
impose the proper penalty.

The resolution classifies dishonesty in three gradations: (1) serious; (2) less serious; and (3) simple.
Serious dishonesty is punishable by dismissal.94 Less serious dishonesty is punishable by
suspension for six months and one day to one year for the first offense and dismissal for the second
offense.95 Simple dishonesty is punishable by suspension of one month and one day to six months
for the first offense, six months and one day to one year for the second offense, and dismissal for
the third offense.96

The medical certificate respondent submitted to support her application for sick leave was falsified.
The question remains as to whether this act could be considered serious dishonesty, less serious
dishonesty, or simple dishonesty.

According to the Civil Service Commissions finding in its resolution:

In the instant case, the prosecution was able to establish that the medical certificate submitted by
Salvaa was spurious or not genuine as the physician-signatory therein, Dr. Blanco[,] testified that
she did not examine/treat the appellant nor did she issue a medical certificate on May 15, 2006 since
she was on sick leave of absence on that particular day. Worthy [of] mention is that the appellant
never bothered to submit any evidence, documentary or otherwise, to rebut the testimony of Blanco.

Thus, the Commission rules and so holds that the appellant is liable for Dishonesty but applying the
aforementioned CSC Resolution No. 06-0538, her dishonest act would be classified only as Simple
Dishonesty as the same did not cause damage or prejudice to the government and had no direct
relation to or did not involve the duties and responsibilities of the appellant. The same is true with the
falsification she committed, where the information falsified was not related to her
employment.97 (Emphasis supplied)

In Cuerdo v. Commission on Audit,98 this court previously ruled that "it is the general policy of this
Court to sustain the decisions of administrative authorities not only on the basis of the doctrine of
separation of powers but also for their presumed knowledge ability and even expertise in the laws
they are entrusted to enforce."99 The same case also stated that:

. . . . we reaffirmed the oft-repeated rule that findings of administrative agencies are generally
accorded not only respect but also finality when the decision and order . . . are not tainted with
unfairness or arbitrariness that would amount to abuse of discretion or lack of jurisdiction. The
findings off acts must be respected, so long as they are supported by substantial evidence even if
not overwhelming or preponderant.100

Petitioner insists that respondent committed serious dishonesty when she submitted the falsified
medical certificate. Under Section 3 of Resolution No. 06-0538, serious dishonesty comprises the
following acts:

Section 3. Serious Dishonesty. The presence of any one of the following attendant circumstances
in the commission of the dishonest act would constitute the offense of Serious Dishonesty:

a. The dishonest act causes serious damage and grave prejudice to the government.

b. The respondent gravely abused his authority in order to commit the dishonest act.

c. Where the respondent is an accountable officer, the dishonest act directly involves
property, accountable forms or money for which he is directly accountable and the
respondent shows an intent to commit material gain, graft and corruption.

d. The dishonest act exhibits moral depravity on the part of the respondent.
e. The respondent employed fraud and/or falsification of official documents in the
commission of the dishonest act related to his/her employment.

f. The dishonest act was committed several times or in various occasions.

g. The dishonest act involves a Civil Service examination, irregularity or fake Civil Service
eligibility such as, but not limited to, impersonation, cheating and use of crib sheets.

h. Other analogous circumstances. (Emphasis supplied)

Simple dishonesty, on the other hand, comprises the following offenses:

Section 5. The presence of any of the following attendant circumstances in the commission of the
dishonest act would constitute the offense of Simple Dishonesty:

a. The dishonest act did not cause damage or prejudice to the government.

b. The dishonest act had no direct relation to or does not involve the duties and
responsibilities of the respondent.

c. In falsification of any official document, where the information falsified is not related to
his/her employment.

d. That the dishonest act did not result in any gain or benefit to the offender.

e. Other analogous circumstances. (Emphasis supplied)

This court previously ruled that "[f]alsification of an official document, as an administrative offense, is
knowingly making false statements in official or public documents."101 Respondent, in her defense,
states that she merely relied on her Health Maintenance Organizations (HMO) advice that it was
going to issue her a medical certificate after she had gone to the hospital complaining of
hypertension.102 She maintains that she did not know that her medical certificate was falsified. We do
not find this defense credible.

Respondent knew that she was not examined by Dr. Blanco, the medical certificates signatory. She
knew that she would not be able to fully attest to the truthfulness of the information in the certificate.
Despite this, she still submitted the certificate in support of her application for leave.

The Civil Service Commission, however, found that the medical certificate was falsified. Dr. Blanco
repudiated the certificate. Respondent did not present any evidence to defend its validity. Her
application for sick leave, therefore, should not have been granted since it was unaccompanied by
the proper documents. The Commission correctly found respondent guilty of dishonesty.

However, it would be wrong to classify this offense as simple dishonesty.

By law, all employees in the civil service are entitled to leave of absence for a certain number of
days, with or without pay.103 Under Section 1, Rule XVI of the Omnibus Rules Implementing Book V
of the Administrative Code, government employees are entitled to 15 days of sick leave annually
with full pay.
The grant of sick leave with pay is an exception to the principle of "no work, no pay," i.e., entitlement
to compensation only upon actual service rendered. As such, applications for leave must be properly
filled out and filed accordingly. Section 16, Rule XVI of the Omnibus Rules Implementing Book V of
the Administrative Code provides the rules for an application for sick leave:

SECTION 16. All applications for sick leaves of absence for one full day or more shall be on the
prescribed form and shall be filed immediately upon the employee's return from such leave. Notice of
absence, however, should be sent to the immediate supervisor and/or to the office head. Application
for sick leave in excess of five days shall be accompanied by a proper medical certificate.

Respondents application for sick leave, if approved, would allow her to be absent from work without
any deductions from her salary. Being a government employee, respondent would have received her
salaries coming from government funds.

Since her application for sick leave was supported by a false medical certificate, it would have been
improperly filed, which made all of her absences during this period unauthorized. The receipt,
therefore, of her salaries during this period would be tantamount to causing damage or prejudice to
the government since she would have received compensation she was not entitled to receive.

This act of causing damage or prejudice, however, cannot be classified as serious since the
information falsified had no direct relation to her employment. Whether or not she was suffering from
hypertension is a matter that has no relation to the functions of her office.

Given these circumstances, the offense committed can be properly identified as less serious
dishonesty. Under Section 4 of Resolution No. 06-0538, less serious dishonesty is classified by the
following acts:

Section 4. The presence of any one of the following attendant circumstances in the commission of
the dishonest act would constitute the offense of Less Serious Dishonesty:

a. The dishonest act caused damage and prejudice to the government which is not so
serious as to qualify under the immediately preceding classification.

b. The respondent did not take advantage of his/her position in committing the dishonest act.

c. Other analogous circumstances. (Emphasis supplied)

We hold, therefore, that respondent Atty. Aurora A. Salvaa is guilty of less serious dishonesty.

A final note

The records showed that respondent tendered her irrevocable resignation on August 5, 2006.
Petitioners acceptance of respondents resignation was not mentioned in any of the pleadings.
However, the resolution by the Fact-finding Committee stated that "[o]n 16 August 2006, the Office
of the Administrator received the resignation."104 On the issue of whether respondents resignation
mooted its proceedings, it concluded that:

[I]n the response of the Administrator to the letter of resignation filed by Respondent there was no
unconditional acceptance of the same. In fact it was specified therein that her resignation is "without
prejudice to any appropriate action on any malfeasance or misfeasance committed during her
tenure[."]There can [sic] be no other conclusion from the above that her resignation does not prevent
the administration from proceeding with any charge/s appropriate under the
circumstances.105 (Emphasis in the original)

Resignation from public office, to be effective, requires the acceptance of the proper government
authority. In Republic v. Singun,106 this court stated:

Resignation implies an expression of the incumbent in some form, express or implied, of the
intention to surrender, renounce, and relinquish the office and the acceptance by competent and
lawful authority. To constitute a complete and operative resignation from public office, there must be:
(a) an intention to relinquish a part of the term; (b) an act of relinquishment; and (c) an acceptance
by the proper authority.

....

In our jurisdiction, acceptance is necessary for resignation of a public officer to be operative and
effective. Without acceptance, resignation is nothing and the officer remains in office. Resignation to
be effective must be accepted by competent authority, either in terms or by something tantamount to
an acceptance, such as the appointment of the successor. A public officer cannot abandon his office
before his resignation is accepted, otherwise the officer is subject to the penal provisions of Article
238 of the Revised Penal Code. The final or conclusive act of a resignations acceptance is the
notice of acceptance. The incumbent official would not be in a position to determine the acceptance
of his resignation unless he had been duly notified therefor.107 (Emphasis supplied)

If there was evidence to show that petitioner did not, in fact, accept respondents resignation, her
resignation would have been ineffective. Respondents continued absence from her post would have
been deemed abandonment from her office, of which she could be criminally charged.

Although the response of Administrator Robles was not attached to the record, it can be concluded
from the resolution of the Fact-finding Committee that he accepted the resignation, albeit with the
qualification that it be "without prejudice to any appropriate action on any malfeasance or
misfeasance committed during her tenure."108

The qualified acceptance of Administrator Robles, however, did not affect the validity of respondents
resignation. Section 1, Rule XII of the Civil Service Commission Memorandum Circular No. 40,
1wphi1

series of 1998, as amended by Civil Service Commission Memorandum Circular No. 15, series of
1999, requires:

Sec. 1. Resignation. The following documents shall be submitted to the Commission for record
purposes:

a. The voluntary written notice of the employee informing the appointing authority that he is
relinquishing his position and the efffectivity date of said resignation; and,

b. The acceptance of resignation in writing by the agency head or appointing authority which
shall indicate the date of effectivity of the resignation.

An officer or employee under investigation may be allowed to resign pending decision of his case
without prejudice to the continuation of the proceedings until finally terminated.
The qualification placed by Administrator Robles on his acceptance does not make respondents
resignation any less valid. The rules and regulations allow the acceptance of resignations while the
administrative case is pending provided that the proceedings will still continue.

We also note that the unauthorized absences were incurred after the issuance of Office Order No.
119. Atrespondents refusal to comply, she was administratively charged, which prompted her
resignation from office. If there were irregularities in the issuance of Office Order No. 119, what
respondent should have done would be to occupy the new position and then file the proper
remedies. She should not have defied the orders of her superiors.

Because of her resignation on August 5, 2006, any modification as to the service of her suspension
became moot. Her permanent employment record, however, must reflect the modified penalty.
Considering that she is also a member of the Bar, this court furnishes the Office of the Bar Confidant
with a copy of this decision to initiate the proper disciplinary action against respondent.

WHEREFORE, the petition is GRANTED. The decision dated November 11, 2009 of the Court of
Appeals in CA-G.R. SP. No. 104225 and Resolution No. 071364 dated July 18, 2007 of the Civil
Service Commission is AFFIRMED with the MODIFICATION that respondent, Atty. Aurora A.
Salvaa, is found guilty of Less Serious Dishonesty. The Civil Service Commission is DIRECTED to
attach a copy of this decision to respondent's permanent employment record.

Let a copy of this decision be given to the Office of the Bar Confidant to initiate the proper
disciplinary action against respondent Atty. Aurora A. Salvaa.

SO ORDERED.

#3.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.1 To set aside a judgment through a petition for relief, parties must file the petition
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.2 The mere allegation that there is excusable negligence simply because counsel
was 80 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 petition3 for review on certiorari of the Court of Appeals resolutions dated July 27,
20114 and November 10, 20115 in CA-G.R. SP No. 120251. The Court of Appeals dismissed
petitioners Juliet Vitug Madarang, Romeo Bartolome, Rodolfo Bartolome, and Ruby Anne
Bartolomes6 petition for certiorari for failure to file a motion for reconsideration of the order7 denying
their petition for relief 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 complaint8 for judicial foreclosure of a house and lot located in
Bago Bantay, Quezon City.

The Spouses Morales alleged that on March 23, 1993, Spouses Nicanor and Luciana Bartolome
loanedP500,000.00 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 mortgaged9 the
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,11 defendants assailed the authenticity of the deed of real estate mortgage covering
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 decision12 dated December 22, 2009, the trial court ordered defendants to pay the Spouses
MoralesP500,000.00 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 order14 dated May 25, 2010, the trial court denied the motion for reconsideration, its
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 order15 dated August 13, 2010, the
trial 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,16 blaming their 80-year-
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 order18 dated April 27, 2011, the trial court denied the petition for relief from judgment. The trial
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
certiorari19 with the Court of Appeals. In its resolution20 dated July 27, 2011, the appellate court
denied 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 resolution21 dated
November 10, 2011. Petitioners filed the petition22 for review on certiorari with this court. They argue
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 Appeals23 as authority.

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"24 received a copy of the decision.

A comment25 was filed on the petition for review on certiorari by respondents Spouses Morales. They
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.26 A petition for relief from judgment filed beyond the reglementary period is dismissed outright.
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,28 the Labor Arbiter ordered Mariscor
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 . . . .29 (Emphasis in the original)

In Spouses Reyes v. Court of Appeals and Voluntad,30 the Regional Trial Court of Bulacan rendered
a 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.31 (Emphasis in the original)

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.33 Their motion for reconsideration did not toll the
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.35 Since petitioners counsel received a copy of the decision on
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.36 It is not available if other remedies exist, such as a motion for new trial or appeal.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."38 This is to prevent parties from "reviv[ing]
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."40 This
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, 2010.42 Since petitioners filed their notice of appeal only on August 11, 2010,43 the trial court
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,44 this court ruled
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.45 A motion for
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.47 Petitioners cannot cite Progressive Development Corporation, Inc. v. Court of
Appeals48 where this court held that "[t]he filing of the motion for reconsideration before availing of
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.

#4G.R. No. 190106 January 15, 2014

MAGDALENA T. VILLASI, Petitioner,


vs.
FILOMENO GARCIA, substituted by his heirs, namely, ERMELINDA H. GARCIA, LIZA
GARCIA-GONZALEZ, THERESA GARCIA-TIANGSON, MARIVIC H. GARCIA, MARLENE
GARCIA-MOMIN, GERARDO H. GARCIA, GIDEON H. GARCIA and GENEROSO H. GARCIA,
and ERMELINDA H. GARCIA, Respondents.

DECISION

PEREZ, J.:

This is a Petition for Review on Certiorari1 filed pursuant to Rule 45 of the Revised Rules of Court,
assailing the 19 May 2009 Decision2 rendered by the Sixth Division of the Court of Appeals in CA-
G.R. SP No. 92587. The appellate court affirmed the Order3 of the Regional Trial Court R TC) of
Quezon City, Branch 77, directing the Deputy Sheriff to suspend the conduct of the execution sale of
the buildings levied upon by him.

The Facts

Sometime in 1990, petitioner Magdalena T Villasi (Villasi) engaged the services of respondent Fil-
Garcia Construction, Inc. (FGCI) to construct a seven-storey condominium building located at Aurora
Boulevard corner N. Domingo Street, Cubao, Quezon City. For failure of Villasi to fully pay the
contract price despite several demands, FGCI initiated a suit for collection of sum of money before
the RTC of Quezon City, Branch 77. In its action docketed as Civil Case No. Q-91-8187, FGCI
prayed, among others, for the payment of the amount ofP2,865,000.00, representing the unpaid
accomplishment billings. Served with summons, Villasi filed an answer specifically denying the
material allegations of the complaint. Contending that FGCI has no cause of action against her,
Villasi averred that she delivered the total amount of P7,490,325.10 to FGCI but the latter
accomplished only 28% of the project. After the pre-trial conference was terminated without the
parties having reached an amicable settlement, trial on the merits ensued.

Finding that FGCI was able to preponderantly establish by evidence its right to the unpaid
accomplishment billings, the RTC rendered a Decision4 dated 26 June 1996 in FGCIs favor. While
the trial court brushed aside the allegation of Villasi that an excess payment was made, it upheld the
claim of FGCI to the unpaid amount of the contract price and, thus, disposed:
WHEREFORE, judgment is hereby rendered:

1. Ordering [Villasi] to pay [FGCI] the sum of P2,865,000.00 as actual damages and unpaid
accomplishment billings;

2. Ordering [Villasi] to pay [FGCI] the amount of P500,000.00 representing the value of
unused building materials;

3. Ordering [Villasi] to pay [FGCI] the amount of P100,000.00, as moral damages


and P100,000.00 as attorneys fees.5

Elevated on appeal and docketed as CA-GR CV No. 54750, the Court of Appeals reversed the
disquisition of the RTC in its Decision6 dated 20 November 2000. The appellate court ruled that an
overpayment was made by Villasi and thereby directed FGCI to return the amount that was paid in
excess, viz:

WHEREFORE, premises considered, the present appeal is hereby GRANTED and the appealed
decision in Civil Case No. Q-91-8187 is hereby REVERSED and SET ASIDE and judgment is
hereby rendered ordering the [FGCI] to return to [Villasi] the sum of P1,244,543.33 as overpayment
under their contract, and the further sum ofP425,004.00 representing unpaid construction materials
obtained by it from [Villasi]. [FGCI] is likewise hereby declared liable for the payment of liquidated
damages in the sum equivalent to 1/10 of 1% of the contract price for each day of delay computed
from March 6, 1991.

No pronouncement as to costs.7

Unrelenting, FGCI filed a Petition for Review on Certiorari before this Court, docketed as G.R. No.
147960, asseverating that the appellate court erred in rendering the 20 November 2000 Decision.
This Court, however, in a Resolution dated 1 October 2001, denied the appeal for being filed out of
time. The said resolution became final and executory on 27 November 2001, as evidenced by the
Entry of Judgment8 made herein.

To enforce her right as prevailing party, Villasi filed a Motion for Execution of the 20 November 2000
Court of Appeals Decision, which was favorably acted upon by the RTC.9 A Writ of Execution was
issued on 28 April 2004, commanding the Sheriff to execute and make effective the 20 November
2000 Decision of the Court of Appeals.

To satisfy the judgment, the sheriff levied on a building located at No. 140 Kalayaan Avenue,
Quezon City, covered by Tax Declaration No. D-021-01458, and built in the lots registered under
Transfer Certificates of Title (TCT) Nos. 379193 and 379194. While the building was declared for
taxation purposes in the name of FGCI, the lots in which it was erected were registered in the names
of the Spouses Filomeno Garcia and Ermelinda Halili-Garcia (Spouses Garcia). After the mandatory
posting and publication of notice of sale on execution of real property were complied with, a public
auction was scheduled on 25 January 2006.

To forestall the sale on execution, the Spouses Garcia filed an Affidavit of Third Party Claim10 and a
Motion to Set Aside Notice of Sale on Execution,11 claiming that they are the lawful owners of the
property which was erroneously levied upon by the sheriff. To persuade the court a quo to grant their
motion, the Spouses Garcia argued that the building covered by the levy was mistakenly assessed
by the City Assessor in the name of FGCI. The motion was opposed by Villasi who insisted that its
ownership belongs to FGCI and not to the Spouses Garcia as shown by the tax declaration.
After weighing the arguments of the opposing parties, the RTC issued on 24 February 2005 an
Order12 directing the Sheriff to hold in abeyance the conduct of the sale on execution, to wit:

WHEREFORE, premises considered, the Court hereby orders Deputy Sheriff Angel Doroni to
suspend or hold in abeyance the conduct of the sale on execution of the buildings levied upon by
him, until further orders from the Court.13

The motion for reconsideration of Villasi was denied by the trial court in its 11 October 2005 Order.14

Arguing that the RTC gravely abused its discretion in ordering the suspension of the sale on
execution, Villasi timely filed a Petition for Certiorari before the Court of Appeals. In a
Decision15 dated 19 May 2009, the appellate court dismissed the petition. In a Resolution16 dated 28
October 2009, the Court of Appeals refused to reconsider its decision.

Villasi is now before this Court via this instant Petition for Review on Certiorariassailing the adverse
Court of Appeals Decision and Resolution and raising the following issues:

The Issues

I.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN


UPHOLDING THE DECISION OF THE TRIAL COURT TO SUSPEND AND HOLD IN ABEYANCE
THE SALE ON EXECUTION OF THE BUILDINGS LEVIED UPON ON THE BASIS OF
RESPONDENTS AFFIDAVIT OF THIRD-PARTY CLAIM;

II.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED WHEN IT


HELD THAT THERE IS NO REASON TO PIERCE THE VEIL OF [FGCIS] CORPORATE FICTION
IN THE CASE AT BAR; [AND]

III.

WHETHER OR NOT THE BRANCH SHERIFF OF THE REGIONAL TRIAL COURT OF QUEZON
CITY, BRANCH 77 SHOULD BE DIRECTED TO FILE THE APPROPRIATE NOTICE OF LEVY
WITH THE REGISTER OF DEEDS OF QUEZON CITY.17

The Courts Ruling

It is a basic principle of law that money judgments are enforceable only against the property
incontrovertibly belonging to the judgment debtor, and if the property belonging to any third person is
mistakenly levied upon to answer for another mans indebtedness, such person has all the right to
challenge the levy through any of the remedies provided for under the Rules of Court. Section
16,18 Rule 39 specifically provides that a third person may avail himself of the remedies of either
terceria, to determine whether the sheriff has rightly or wrongly taken hold of the property not
belonging to the judgment debtor or obligor, or an independent "separate action" to vindicate his
claim of ownership and/or possession over the foreclosed property. However, the person other than
the judgment debtor who claims ownership or right over levied properties is not precluded from
taking other legal remedies to prosecute his claim.19
Indeed, the power of the court in executing judgments extends only to properties unquestionably
belonging to the judgment debtor alone. An execution can be issued only against a party and not
against one who did not have his day in court. The duty of the sheriff is to levy the property of the
judgment debtor not that of a third person. For, as the saying goes, one man's goods shall not be
sold for another man's debts.20

Claiming that the sheriff mistakenly levied the building that lawfully belongs to them, the Spouses
Garcia availed themselves of the remedy of terceria under Section 16, Rule 39 of the Revised Rules
of Court. To fortify their position, the Spouses Garcia asserted that as the owners of the land, they
would be deemed under the law as owners of the building standing thereon. The Spouses Garcia
also asserted that the construction of the building was financed thru a loan obtained from Metrobank
in their personal capacities, and they merely contracted FGCI to construct the building. Finally, the
Spouses Garcia argued that the tax declaration, based on an erroneous assessment by the City
Assessor, cannot be made as basis of ownership.

For her part, Villasi insists that the levy effected by the sheriff was proper since the subject property
belongs to the judgment debtor and not to third persons. To dispute the ownership of the Spouses
Garcia, Villasi pointed out that the levied property was declared for tax purposes in the name of
FGCI. A Certification issued by the Office of the City Engineering of Quezon City likewise showed
that the building permit of the subject property was likewise issued in the name of FGCI. We grant
the petition.

The right of a third-party claimant to file a terceria is founded on his title or right of
possession. Corollary thereto, before the court can exercise its supervisory power to direct the
1avvph i1

release of the property mistakenly levied and the restoration thereof to its rightful owner, the claimant
must first unmistakably establish his ownership or right of possession thereon. In Spouses Sy v.
Hon. Discaya,21 we declared that for a third-party claim or a terceria to prosper, the claimant must
first sufficiently establish his right on the property:

[A] third person whose property was seized by a sheriff to answer for the obligation of the judgment
debtor may invoke the supervisory power of the court which authorized such execution. Upon due
application by the third person and after summary hearing, the court may command that the property
be released from the mistaken levy and restored to the rightful owner or possessor. What said court
can do in these instances, however, is limited to a determination of whether the sheriff has acted
rightly or wrongly in the performance of his duties in the execution of judgment, more specifically, if
he has indeed taken hold of property not belonging to the judgment debtor. The court does not and
cannot pass upon the question of title to the property, with any character of finality. It can treat of the
matter only insofar as may be necessary to decide if the sheriff has acted correctly or not. It can
require the sheriff to restore the property to the claimant's possession if warranted by the evidence.
However, if the claimant's proofs do not persuade the court of the validity of his title or right of
possession thereto, the claim will be denied.22 (Emphasis and underscoring supplied).

Our perusal of the record shows that, as the party asserting their title, the Spouses Garcia failed to
prove that they have a bona fide title to the building in question. Aside from their postulation that as
title holders of the land, the law presumes them to be owners of the improvements built thereon, the
Spouses Garcia were unable to adduce credible evidence to prove their ownership of the property.
In contrast, Villasi was able to satisfactorily establish the ownership of FGCI thru the pieces of
evidence she appended to her opposition. Worthy to note is the fact that the building in litigation was
declared for taxation purposes in the name of FGCI and not in the Spouses Garcias. While it is true
that tax receipts and tax declarations are not incontrovertible evidence of ownership, they constitute
credible proof of claim of title over the property.23 In Buduhan v. Pakurao,24 we underscored the
significance of a tax declaration as proof that a holder has claim of title, and, we gave weight to the
demonstrable interest of the claimant holding a tax receipt:

Although tax declarations or realty tax payment of property are not conclusive evidence of
ownership, nevertheless, they are good indicia of possession in the concept of owner for no one in
his right mind would be paying taxes for a property that is not in his actual or at least constructive
possession. They constitute at least proof that the holder has a claim of title over the property. The
voluntary declaration of a piece of property for taxation purposes manifests not only ones sincere
and honest desire to obtain title to the property and announces his adverse claim against the State
and all other interested parties, but also the intention to contribute needed revenues to the
Government. Such an act strengthens ones bona fide claim of acquisition of ownership.25

It likewise failed to escape our attention that FGCI is in actual possession of the building and as the
payment of taxes coupled with actual possession of the land covered by tax declaration strongly
supports a claim of ownership.26 Quite significantly, all the court processes in an earlier collection suit
between FGCI and Villasi were served, thru the formers representative Filomeno Garcia, at No. 140
Kalayaan Avenue, Quezon City, where the subject property is located. This circumstance is
consistent with the tax declaration in the name of FGCI.

The explanation proffered by the Spouses Garcia, that the City Assessor merely committed an error
when it declared the property for taxation purposes in the name of FGCI, appears to be suspect in
the absence of any prompt and serious effort on their part to have it rectified before the onset of the
instant controversy. The correction of entry belatedly sought by the Spouses Garcia is indicative of
its intention to put the property beyond the reach of the judgment creditor. Every prevailing party to a
suit enjoys the corollary right to the fruits of the judgment and, thus, court rules provide a procedure
to ensure that every favorable judgment is fully satisfied.27 It is almost trite to say that execution is the
fruit and end of the suit. Hailing it as the "life of the law,"

ratio legis est anima,28 this Court has zealously guarded against any attempt to thwart the rigid rule
and deny the prevailing litigant his right to savour the fruit of his victory.29 A judgment, if left
unexecuted, would be nothing but an empty triumph for the prevailing party.30

While it is a hornbook doctrine that the accessory follows the principal,31 that is, the ownership of the
property gives the right by accession to everything which is produced thereby, or which is
incorporated or attached thereto, either naturally or artificially,32 such rule is not without exception. In
cases where there is a clear and convincing evidence to prove that the principal and the accessory
are not owned by one and the same person or entity, the presumption shall not be applied and the
actual ownership shall be upheld. In a number of cases, we recognized the separate ownership of
the land from the building and brushed aside the rule that accessory follows the principal.

In Carbonilla v. Abiera,33 we denied the claim of petitioner that, as the owner of the land, he is
likewise the owner of the building erected thereon, for his failure to present evidence to buttress his
position:

To set the record straight, while petitioner may have proven his ownership of the land, as there can
be no other piece of evidence more worthy of credence than a Torrens certificate of title, he failed to
present any evidence to substantiate his claim of ownership or right to the possession of the
building. Like the CA, we cannot accept the Deed of Extrajudicial Settlement of Estate (Residential
Building) with Waiver and Quitclaim of Ownership executed by the Garcianos as proof that petitioner
acquired ownership of the building. There is no showing that the Garcianos were the owners of the
building or that they had any proprietary right over it. Ranged against respondents proof of
possession of the building since 1977, petitioners evidence pales in comparison and leaves us
totally unconvinced.34

In Caltex (Phil.) Inc. v. Felias,35 we ruled that while the building is a conjugal property and therefore
liable for the debts of the conjugal partnership, the lot on which the building was constructed is a
paraphernal property and could not be the subject of levy and sale:

x x x. In other words, when the lot was donated to Felisa by her parents, as owners of the land on
which the building was constructed, the lot became her paraphernal property. The donation
transmitted to her the rights of a landowner over a building constructed on it. Therefore, at the time
of the levy and sale of the sheriff, Lot No. 107 did not belong to the conjugal partnership, but it was
paraphernal property of Felisa. As such, it was not answerable for the obligations of her husband
which resulted in the judgment against him in favor of Caltex.36

The rule on accession is not an iron-clad dictum. On instances where this Court was confronted with
cases requiring judicial determination of the ownership of the building separate from the lot, it never
hesitated to disregard such rule. The case at bar is of similar import. When there are factual and
evidentiary evidence to prove that the building and the lot on which it stands are owned by different
persons, they shall be treated separately. As such, the building or the lot, as the case may be, can
be made liable to answer for the obligation of its respective owner.

Finally, the issue regarding the piercing of the veil of corporate fiction is irrelevant in this case. The
Spouses Garcia are trying to protect FGCI from liability by asserting that they, not FGCI, own
the levied property. The Spouses Garcia are asserting their separation from FGCI. FGCI, the
judgment debtor, is the proven owner of the building. Piercing FGCIs corporate veil will not
protect FGCI from its judgment debt. Piercing will result in the identification of the Spouses
Garcia as FGCI itself and will make them liable for FGCIs judgment debt.

WHEREFORE, premises considered, the petition is GRANTED. The assailed Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 92587 are hereby REVERSED and SET
ASIDE. The Deputy Sheriff is hereby directed to proceed with the conduct of the sale on execution of
the levied building.

SO ORDERED.

#5G.R. No. 212081 February 23, 2015

DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (DENR), Petitioner,


vs.
UNITED PLANNERS CONSULTANTS , INC. (UPCI), Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 is the Decision2 dated March 26, 2014 of the Court of
Appeals (CA) in CA-G.R. SP No. 126458 which dismissed the petition for certiorari filed by petitioner
the Department of Environment and Natural Resources (petitioner).

The Facts
On July 26, 1993, petitioner, through the Land Management Bureau (LMB), entered into an
Agreement for Consultancy Services3 (Consultancy Agreement) with respondent United
Planners Consultants, Inc. (respondent) in connection with the LMB' s Land Resource
Management Master Plan Project (LRMMP).4 Under the Consultancy Agreement, petitioner
committed to pay a total contract price of P4,337,141.00, based on a predetermined percentage
corresponding to the particular stage of work accomplished.5

In December 1994, respondent completed the work required, which petitioner formally accepted on
December 27, 1994.6 However, petitioner was able to pay only 47% of the total contract price in the
amount of P2,038,456.30.7

On October 25, 1994, the Commission on Audit (COA) released the Technical Services Office
Report8 (TSO) finding the contract price of the Agreement to be 84.14% excessive.9 This
notwithstanding, petitioner, in a letter dated December 10, 1998, acknowledged its liability to
respondent in the amount of P2,239,479.60 and assured payment at the soonest possible time.10

For failure to pay its obligation under the Consultancy Agreement despite repeated demands,
respondent instituted a Complaint11 against petitioner before the Regional Trial Court of Quezon City,
Branch 222 (RTC), docketed as Case No. Q-07-60321.12

Upon motion of respondent, the case was subsequently referred to arbitration pursuant to the
arbitration clause of the Consultancy Agreement,13 which petitioner did not oppose.14 As a result,
Atty. Alfredo F. Tadiar, Architect Armando N. Alli, and Construction Industry Arbitration Commission
(CIAC) Accredited Arbitrator Engr. Ricardo B. San Juan were appointed as members of the Arbitral
Tribunal. The court-referred arbitration was then docketed as Arbitration Case No. A-001.15

During the preliminary conference, the parties agreed to adopt the CIAC Revised Rules Governing
Construction Arbitration16 (CIAC Rules) to govern the arbitration proceedings.17 They further agreed
to submit their respective draft decisions in lieu of memoranda of arguments on or before April 21,
2010, among others.18

On the due date for submission of the draft decisions, however, only respondent complied with the
given deadline,19 while petitioner moved for the deferment of the deadline which it followed with
another motion for extension of time, asking that it be given until May 11, 2010 to submit its draft
decision.20

In an Order21 dated April 30, 2010, the Arbitral Tribunal denied petitioners motions and deemed its
non-submission as a waiver, but declared that it would still consider petitioners draft decision if
submitted before May 7, 2010, or the expected date of the final awards promulgation.22 Petitioner
filed its draft decision23 only on May 7, 2010.

The Arbitral Tribunal rendered its Award24 dated May 7, 2010 (Arbitral Award) in favor of respondent,
directing petitioner to pay the latter the amount of (a) P2,285,089.89 representing the unpaid
progress billings, with interest at the rate of 12% per annum from the date of finality of the Arbitral
Award upon confirmation by the RTC until fully paid; (b) P2,033,034.59 as accrued interest thereon;
(c) P500,000.00 as exemplary damages; and (d)P150,000.00 as attorneys fees.25 It also ordered
petitioner to reimburse respondent its proportionate share in the arbitration costs as agreed upon in
the amount of P182,119.44.26

Unconvinced, petitioner filed a motion for reconsideration,27 which the Arbitral Tribunal merely noted
without any action, claiming that it had already lost jurisdiction over the case after it had submitted to
the RTC its Report together with a copy of the Arbitral Award.28
Consequently, petitioner filed before the RTC a Motion for Reconsideration29 dated May 19, 2010
(May 19, 2010 Motion for Reconsideration)and a Manifestation and Motion30 dated June 1, 2010
(June 1, 2010 Manifestation and Motion), asserting that it was denied the opportunity to be heard
when the Arbitral Tribunal failed to consider its draft decision and merely noted its motion for
reconsideration.31 It also denied receiving a copy of the Arbitral Award by either electronic or
registered mail.32 For its part, respondent filed an opposition thereto and moved for the
confirmation33 of the Arbitral Award in accordance with the Special Rules of Court on Alternative
Dispute Resolution (Special ADR Rules).34

In an Order35 dated March 30, 2011, the RTC merely noted petitioners aforesaid motions,
finding that copies of the Arbitral Award appear to have been sent to the parties by the
Arbitral Tribunal, including the OSG, contrary to petitioners claim. Onthe other hand, the RTC
confirmed the Arbitral Award pursuant to Rule 11.2 (A)36 of the Special ADR Rules and
ordered petitioner to pay respondent the costs of confirming the award, as prayed for, in the
total amount of P50,000.00. From this order, petitioner did not file a motion for
reconsideration.

Thus, on June 15, 2011, respondent moved for the issuance of a writ of execution, to which no
comment/opposition was filed by petitioner despite the RTCs directive therefor. In an Order37 dated
September 12, 2011, the RTC granted respondents motion.38

Petitioner moved to quash39 the writ of execution, positing that respondent was not entitled to its
monetary claims. It also claimed that the issuance of said writ was premature since the RTC should
have first resolved its May 19, 2010 Motion for Reconsideration and June 1, 2010 Manifestation and
Motion, and not merely noted them, thereby violating its right to due process.40

The RTC Ruling

In an Order41 dated July 9, 2012, the RTC denied petitioners motion to quash.

It found no merit in petitioners contention that it was denied due process, ruling that its May 19,
2010 Motion for Reconsideration was a prohibited pleading under Section 17.2,42 Rule 17 of the
CIAC Rules. It explained that the available remedy to assail an arbitral award was to file a motion for
correction of final award pursuant to Section 17.143 of the CIAC Rules, and not a motion for
reconsideration of the said award itself.44 On the other hand, the RTC found petitioners June 1, 2010
Manifestation and Motion seeking the resolution of its May 19, 2010 Motion for Reconsideration to
be defective for petitioners failure to observe the three day notice rule.45 Having then failed to avail of
the remedies attendant to an order of confirmation, the Arbitral Award had become final and
executory.46

On July 12, 2012, petitioner received the RTCs Order dated July 9, 2012 denying its motion to
quash.47

Dissatisfied, it filed on September 10, 2012a petition for certiorari48 before the CA, docketed as CA-
G.R. SP No. 126458, averring in the main that the RTC acted with grave abuse of discretion in
confirming and ordering the execution of the Arbitral Award.

The CA Ruling

In a Decision49 dated March 26, 2014, the CA dismissed the certiorari petition on two (2) grounds,
namely: (a) the petition essentially assailed the merits of the Arbitral Award which is prohibited under
Rule 19.750 of the Special ADR Rules;51 and (b) the petition was filed out of time, having been filed
way beyond 15 days from notice of the RTCs July 9, 2012 Order, in violation of Rule 19.2852 in
relation to Rule 19.853 of said Rules which provide that a special civil action for certiorari must be filed
before the CA within 15 days from notice of the judgment, order, or resolution sought to be annulled
or set aside (or until July 27, 2012). Aggrieved, petitioner filed the instant petition.

The Issue Before the Court

The core issue for the Courts resolution is whether or not the CA erred in applying the
provisions of the Special ADR Rules, resulting in the dismissal of petitioners special civil
action for certiorari.

The Courts Ruling

The petition lacks merit.

I.

Republic Act No. (RA) 9285,54 otherwise known as the Alternative Dispute Resolution Act of 2004,"
institutionalized the use of an Alternative Dispute Resolution System (ADR System)55 in the
Philippines. The Act, however, was without prejudice to the adoption by the Supreme Court of any
ADR system as a means of achieving speedy and efficient means of resolving cases pending before
all courts in the Philippines.56

Accordingly, A.M. No. 07-11-08-SC was created setting forth the Special Rules of Court on
Alternative Dispute Resolution (referred herein as Special ADR Rules) that shall govern the
procedure to be followed by the courts whenever judicial intervention is sought in ADR proceedings
in the specific cases where it is allowed.57

Rule 1.1 of the Special ADR Rules lists down the instances when the said rules shall apply, namely:
"(a) Relief on the issue of Existence, Validity, or Enforceability of the Arbitration Agreement; (b)
Referral to Alternative Dispute Resolution ("ADR"); (c) Interim Measures of Protection; (d)
Appointment of Arbitrator; (e) Challenge to Appointment of Arbitrator; (f) Termination of Mandate of
Arbitrator; (g) Assistance in Taking Evidence; (h) Confirmation, Correction or Vacation of Award in
Domestic Arbitration; (i) Recognition and Enforcement or Setting Aside of an Award in International
Commercial Arbitration; (j) Recognition and Enforcement of a Foreign Arbitral Award; (k)
Confidentiality/Protective Orders; and (l) Deposit and Enforcement of Mediated Settlement
Agreements."58

Notably, the Special ADR Rules do not automatically govern the arbitration proceedings itself.
A pivotal feature of arbitration as an alternative mode of dispute resolution is that it is a product of
party autonomy or the freedom of the parties to make their own arrangements to resolve their own
disputes.59 Thus, Rule 2.3 of the Special ADR Rules explicitly provides that "parties are free to agree
on the procedure to be followed in the conduct of arbitral proceedings. Failing such agreement, the
arbitral tribunal may conduct arbitration in the manner it considers appropriate."60

In the case at bar, the Consultancy Agreement contained an arbitration clause.61 Hence, respondent,
after it filed its complaint, moved for its referral to arbitration62 which was not objected to by
petitioner.63 By its referral to arbitration, the case fell within the coverage of the Special ADR Rules.
However, with respect to the arbitration proceedings itself, the parties had agreed to adopt the CIAC
Rules before the Arbitral Tribunal in accordance with Rule 2.3 of the Special ADR Rules.
On May 7, 2010, the Arbitral Tribunal rendered the Arbitral Award in favor of respondent. Under
Section 17.2, Rule 17 of the CIAC Rules, no motion for reconsideration or new trial may be sought,
but any of the parties may file a motion for correction64 of the final award, which shall interrupt the
running of the period for appeal,65 based on any of the following grounds, to wit: a. an evident
miscalculation of figures, a typographical or arithmetical error;

b. an evident mistake in the description of any party, person, date, amount, thing or property
referred to in the award;

c. where the arbitrators have awarded upon a matter not submitted to them, not affecting the
merits of the decision upon the matter submitted;

d. where the arbitrators have failed or omitted to resolve certain issue/s formulated by the
parties in the Terms of Reference (TOR) and submitted to them for resolution, and

e. where the award is imperfect in a matter of form not affecting the merits of the
controversy.

The motion shall be acted upon by the Arbitral Tribunal or the surviving/remaining members.66

Moreover, the parties may appeal the final award to the CA through a petition for review under
Rule43 of the Rules of Court.67

Records do not show that any of the foregoing remedies were availed of by petitioner. Instead, it
filed the May 19, 2010 Motion for Reconsideration of the Arbitral Award, which was a
prohibited pleading under the Section 17.2,68Rule 17 of the CIAC Rules, thus rendering the
same final and executory.

Accordingly, the case was remanded to the RTC for confirmation proceedings pursuant to Rule 11 of
the Special ADR Rules which requires confirmation by the court of the final arbitral award. This is
consistent with Section 40, Chapter 7 (A) of RA 9285 which similarly requires a judicial confirmation
of a domestic award to make the same enforceable:

SEC. 40. Confirmation of Award. The confirmation of a domestic arbitral award shall be governed
by Section 2369 of R.A. 876.70

A domestic arbitral award when confirmed shall be enforced in the same manner as final and
executory decisions of the regional trial court.

The confirmation of a domestic award shall be made by the regional trial court in accordance with
the Rules of Procedure to be promulgated by the Supreme Court.

A CIAC arbitral award need not be confirmed by the regional trial court to be executory as provided
under E.O. No. 1008. (Emphases supplied)

During the confirmation proceedings, petitioners did not oppose the RTCs confirmation by filing
a petition to vacate the Arbitral Award under Rule 11.2 (D)71 of the Special ADR Rules. Neither
did it seek reconsideration of the confirmation order in accordance with Rule 19.1 (h) thereof.
Instead, petitioner filed only on September 10, 2012 a special civil action for certiorari before the CA
questioning the propriety of (a) the RTC Order dated September 12, 2011 granting respondents
motion for issuance of a writ of execution, and (b) Order dated July 9,2012 denying its motion to
quash. Under Rule 19.26 of the Special ADR Rules, "[w]hen the Regional Trial Court, in making a
ruling under the Special ADR Rules, has acted without or in excess of its 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 party may file a special civil action for
certiorari to annul or set aside a ruling of the Regional Trial Court." Thus, for failing to avail of the
foregoing remedies before resorting to certiorari, the CA correctly dismissed its petition.

II.

Note that the special civil action for certiorari described in Rule 19.26 above may be filed to annul or
set aside the following orders of the Regional Trial Court.

a. Holding that the arbitration agreement is in existent, invalid or unenforceable;

b. Reversing the arbitral tribunals preliminary determination upholding its jurisdiction;

c. Denying the request to refer the dispute to arbitration;

d. Granting or refusing an interim relief;

e. Denying a petition for the appointment of an arbitrator;

f. Confirming, vacating or correcting a domestic arbitral award;

g. Suspending the proceedings to set aside an international commercial arbitral award and
referring the case back to the arbitral tribunal;

h. Allowing a party to enforce an international commercial arbitral award pending appeal;

i. Adjourning or deferring a ruling on whether to set aside, recognize and or enforce an


international commercial arbitral award;

j. Allowing a party to enforce a foreign arbitral award pending appeal; and

k. Denying a petition for assistance in taking evidence. (Emphasis supplied)

Further, Rule 19.772 of the Special ADR Rules precludes a party to an arbitration from filing a petition
for certiorari questioning the merits of an arbitral award.

If so falling under the above-stated enumeration, Rule 19.28 of the Special ADR Rules provide that
said certiorari petition should be filed "with the [CA] within fifteen (15) days from notice of the
judgment, order or resolution sought to be annulled or set aside. No extension of time to file the
petition shall be allowed."

In this case, petitioner asserts that its petition is not covered by the Special ADR Rules
(particularly, Rule 19.28 on the 15-day reglementary period to file a petition for certiorari) but
by Rule 65 of the Rules of Court (particularly, Section 4 thereof on the 60-day reglementary
period to file a petition for certiorari), which it claimed to have suppletory application in
arbitration proceedings since the Special ADR Rules do not explicitly provide for a procedure
on execution. The position is untenable.
Execution is fittingly called the fruit and end of suit and the life of the law. A judgment, if left
unexecuted, would be nothing but an empty victory for the prevailing party.73

While it appears that the Special ADR Rules remain silent on the procedure for the execution of a
confirmed arbitral award, it is the Courts considered view that the Rules procedural mechanisms
cover not only aspects of confirmation but necessarily extend to a confirmed awards execution in
light of the doctrine of necessary implication which states that every statutory grant of power, right or
privilege is deemed to include all incidental power, right or privilege. In Atienza v. Villarosa,74 the
doctrine was explained, thus:

No statute can be enacted that can provide all the details involved in its application. There is 1wph i1

always an omission that may not meet a particular situation. What is thought, at the time of
enactment, to be an all embracing legislation may be inadequate to provide for the unfolding of
events of the future. So-called gaps in the law develop as the law is enforced. One of the rules of
statutory construction used to fill in the gap is the doctrine of necessary implication. The doctrine
states that what is implied in a statute is as much a part thereof as that which is expressed. Every
statute is understood, by implication, to contain all such provisions as may be necessary to
effectuate its object and purpose, or to make effective rights, powers, privileges or jurisdiction which
it grants, including all such collateral and subsidiary consequences as may be fairly and logically
inferred from its terms. Ex necessitate legis. And every statutory grant of power, right or privilege is
deemed to include all incidental power, right or privilege. This is so because the greater includes the
lesser, expressed in the maxim, in eo plus sit, simper inest et minus.75 (Emphases supplied)

As the Court sees it, execution is but a necessary incident to the Courts confirmation of an
arbitral award. To construe it otherwise would result in an absurd situation whereby the confirming
court previously applying the Special ADR Rules in its confirmation of the arbitral award would later
shift to the regular Rules of Procedure come execution. Irrefragably, a courts power to confirm a
judgment award under the Special ADR Rules should be deemed to include the power to order its
execution for such is but a collateral and subsidiary consequence that may be fairly and logically
inferred from the statutory grant to regional trial courts of the power to confirm domestic arbitral
awards.

All the more is such interpretation warranted under the principle of ratio legis est anima which
provides that a statute must be read according to its spirit or intent,76 for what is within the spirit is
within the statute although it is not within its letter, and that which is within the letter but not within the
spirit is not within the statute.77 Accordingly, since the Special ADR Rules are intended to achieve
speedy and efficient resolution of disputes and curb a litigious culture,78 every interpretation thereof
should be made consistent with these objectives.

Thus, with these principles in mind, the Court so concludes that the Special ADR Rules, as far as
practicable, should be made to apply not only to the proceedings on confirmation but also to the
confirmed awards execution.

Further, let it be clarified that contrary to petitioners stance resort to the Rules of Court
even in a suppletory capacity is not allowed. Rule 22.1 of the Special ADR Rules explicitly
provides that "[t]he provisions of the Rules of Court that are applicable to the proceedings
enumerated in Rule 1.1 of these Special ADR Rules have either been included and incorporated in
these Special ADR Rules or specifically referred to herein."79 Besides, Rule 1.13 thereof provides
that "[i]n situations where no specific rule is provided under the Special ADR Rules, the court shall
resolve such matter summarily and be guided by the spirit and intent of the Special ADR Rules and
the ADR Laws."
As above-mentioned, the petition for certiorari permitted under the Special ADR Rules must
be filed within a period of fifteen (15) days from notice of the judgment, order or resolution
sought to be annulled or set aside.80Hence, since petitioners filing of its certiorari petition in
CA-G.R. SP No. 126458 was made nearly two months after its receipt of the RTCs Order
dated July 9, 2012,or on September 10, 2012,81 said petition was clearly dismissible.82

III.

Discounting the above-discussed procedural considerations, the Court still finds that the certiorari
petition had no merit.

Indeed, petitioner cannot be said to have been denied due process as the records undeniably show
that it was accorded ample opportunity to ventilate its position. There was clearly nothing out of line
when the Arbitral Tribunal denied petitioners motions for extension to file its submissions having
failed to show a valid reason to justify the same or in rendering the Arbitral Award sans petitioners
draft decision which was filed only on the day of the scheduled promulgation of final award on May
7, 2010.83 The touchstone of due process is basically the opportunity to be heard. Having been given
such opportunity, petitioner should only blame itself for its own procedural blunder.

On this score, the petition for certiorari in CA-G.R. SP No. 126458 was likewise properly dismissed.

IV.

Nevertheless, while the Court sanctions the dismissal by the CA of the petition for certiorari due to
procedural infirmities, there is a need to explicate the matter of execution of the confirmed Arbitral
Award against the petitioner, a government agency, in the light of Presidential Decree No. (PD)
144584 otherwise known as the "Government Auditing Code of the Philippines." Section 26 of PD
1445 expressly provides that execution of money judgment against the Government or any of its
subdivisions, agencies and instrumentalities is within the primary jurisdiction of the COA, to wit:

SEC. 26. General jurisdiction. The authority and powers of the Commission shall extend to and
comprehend all matters relating to auditing procedures, systems and controls, the keeping of the
general accounts of the Government, the preservation of vouchers pertaining thereto for a period of
ten years, the examination and inspection of the books, records, and papers relating to those
accounts; and the audit and settlement of the accounts of all persons respecting funds or property
received or held by them in an accountable capacity, as well as the examination, audit, and
settlement of all debts and claims of any sort due from or owing to the Government or any of its
subdivisions, agencies and instrumentalities. The said jurisdiction extends to all government-owned
or controlled corporations, including their subsidiaries, and other self-governing boards,
commissions, or agencies of the Government, and as herein prescribed, including non-governmental
entities subsidized by the government, those funded by donation through the government, those
required to pay levies or government share, and those for which the government has put up a
counterpart fund or those partly funded by the government. (Emphases supplied)

From the foregoing, the settlement of respondents money claim is still subject to the primary
jurisdiction of the COA despite finality of the confirmed arbitral award by the RTC pursuant to
the Special ADR Rules.85 Hence, the respondent has to first seek the approval of the COA of
their monetary claim. This appears to have been complied with by the latter when it filed a
"Petition for Enforcement and Payment of Final and Executory Arbitral Award"86 before the
COA. Accordingly, it is now the COA which has the authority to rule on this latter petition.
WHEREFORE, the petition is DENIED. The Decision dated March 26, 2014 of the Court of Appeals
in CA-G.R. SP No. 126458 which dismissed the petition for certiorari filed by petitioner the
Department of Environment and Natural Resources is hereby AFFIRMED.

SO ORDERED.

#6G.R. No. 167052

BANK OF THE PHILIPPINE ISLANDS SECURITIES CORPORATION, Petitioner,


vs.
EDGARDO V. GUEVARA, Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

Before the Court is a Petition for Review under Rule 45 of the Rules of Court seeking the reversal
and setting aside of the Decision1 dated December 19, 2003 and Resolution2 dated February 9, 2005
of the Court Appeals in CA-G.R. CV No. 69348, affirming the Decision3 dated September 11, 2000 of
the Regional Trial Court (RTC) of Makati City, Branch 57 in Civil Case No. 92-1445. The RTC acted
favorably on the action instituted by respondent Edgardo V. Guevara for the enforcement of a
foreign judgment, particularly, the Order4 dated March 13, 1990 of the United States (U.S.) District
Court for the Southern District of Tex.as, Houston Division (U.S. District Court), in Civil Action No. H-
86-440, and ordered petitioner Bank of the Philippine Islands (BPI) Securities Corporation to pay
respondent (a) the sum of US$49,500.00 with legal interest; (b) P250,000.00 attorney's fees and
litigation ex.penses; and (c) costs of suit.

The facts are culled from the records of the case.

Ayala Corporation, a holding company, and its subsidiaries are engaged in a wide array of
businesses including real estate, financial services, telecommunications, water and used water,
electronics manufacturing services, automotive dealership and distributorship, business process
outsourcing, power, renewable energy, and transport infrastructure.5

In the 1980s, Ayala Corporation was the majority stockholder of Ayala Investment and
Development Corporation (AIDC). AIDC, in turn, wholly owned Philsec Investment Corporation
(PHILSEC), a domestic stock brokerage firm, which was subsequently bought by petitioner; and
Ayala International Finance Limited (AIFL), a Hong Kong deposit-taking corporation, which
eventually became BPI International Finance Limited (BPI-IFL). PHILSEC was a member of the
Makati Stock Exchange and the rules of the said organization required that a stockbroker maintain
an amount of security equal to at least 50% of a client's outstanding debt.

Respondent was hired by Ayala Corporation in 1958. Respondent later became the Head of the
Legal Department of Ayala Corporation and then the President of PHILSEC from September 1, 1980
to December 31, 1983. Thereafter, respondent served as Vice-President of Ayala Corporation until
his retirement on August 31, 1997.

While PHILSEC President, one of respondent's obligations was to resolve the outstanding loans of
Ventura O. Ducat (Ducat), which the latter obtained separately from PHILSEC and AIFL. Although
Ducat constituted a pledge of his stock portfolio valued at approximately US$1.4 million, Ducat's
loans already amounted to US$3.1 million. Because the security for Ducat's debts fell below the 50%
requirement of the Makati Stock Exchange, the trading privileges of PHILSEC was in peril of being
suspended.

Ducat proposed to settle his debts by an exchange of assets. Ducat owned several pieces of real
estate in Houston, Texas, in partnership with Drago Daic (Daic), President of 1488, Inc., a U.S.-
based corporation. Respondent relayed Ducat's proposal to Enrique Zobel (Zobel), the Chief
Executive Officer of Ayala Corporation. Zobel was amenable to Ducat's proposal but advised
respondent to send Thomas Gomez (Gomez), an AIFL employee who traveled often to the U.S., to
evaluate Ducat's properties.

In December of 1982, Gomez examined several parcels of real estate that were being offered by
Ducat and 1488, Inc. for the exchange. Gomez, in a telex to respondent, recommended the
acceptance of a parcel of land in Harris County, Texas (Harris County property), which was believed
to be worth around US$2.9 million. Gomez further opined that the "swap would be fair and
reasonable" and that it would be better to take this opportunity rather than pursue a prolonged legal
battle with Ducat. Gomez's recommendation was brought to Zobel's attention. The property-for-debt
exchange was subsequently approved by the AIFL Board of Directors even without a prior appraisal
of the Harris County property. However, before the exchange actually closed, an AIFL director asked
respondent to obtain such an appraisal.

William Craig (Craig), a former owner of the Harris County property, conducted the appraisal of the
market value of the said property. In his January 1983 appraisal, Craig estimated the fair market
value of the Harris County property at US$3,365,000.

Negotiations finally culminated in an Agreement,6 executed on January 27, 1983 in Makati City,
Philippines, among 1488, Inc., represented by Daic; Ducat, represented by Precioso Perlas (Perlas);
AIFL, represented by Joselito Gallardo (Gallardo); and PHILSEC and Athona Holdings, N. V.
(ATHONA), both represented by respondent. Under the Agreement, the total amount of Ducat's
debts was reduced from US$3.1 million to US$2.5 million; ATHONA, a company wholly owned by
PHILSEC and AIFL, would buy the Harris County property from 1488, Inc. for the price of
US$2,807,209.02; PHILSEC and AIFL would grant ATHONA a loan of US$2.5 million, which
ATHONA would entirely use as initial payment for the purchase price of the Harris County property;
ATHONA would execute a promissory note in favor of 1488, Inc. in the sum of US$307,209.02 to
cover the balance of the purchase price for the Harris County property; upon its receipt of the initial
payment of US$2.5 million from ATHONA, 1488, Inc. would then fully pay Ducat's debts to PHILSEC
and AIFL in the same amount; for their part, PHILSEC and AIFL would release and transfer
possession of Ducat's pledged stock portfolio to 1488, Inc.; and 1488, Inc. would become the new
creditor of Ducat, subject to such other terms as they might agree upon.

The series of transactions per the Agreement was eventually executed. However, after acquiring the
Harris County property, ATHONA had difficulty selling the same. Despite repeated demands by
1488, Inc., ATHONA failed to pay its promissory note for the balance of the purchase price for the
Harris County property, and PHILSEC and AIFL refused to release the remainder of Ducat's stock
portfolio, claiming that they were defrauded into believing that the said property had a fair market
value higher than it actually had.

Civil Action No. H-86-440 before the


U.S. District Court of Southern
District of Texas, Houston Division

On October 17, 1985, 1488, Inc. instituted a suit against PHILSEC, AIFL, and ATHONA for (a)
misrepresenting that an active market existed for two shares of stock included in Ducat's portfolio
when, in fact, said shares were to be withdrawn from the trading list; (b) conversion of the stock
portfolio; (c) fraud, as ATHONA had never intended to abide by the provisions of its promissory note
when they signed it; and (d) acting in concert as a common enterprise or in the alternative, that
ATHONA was the alter ego of PHILSEC and AIFL. The suit was docketed as Civil Action No. H-86-
440 before the U.S. District Court.

PHILSEC, AIFL, and ATHONA filed counterclaims against 1488, Inc., Daic, Craig, Ducat, and
respondent, for the recovery of damages and excess payment or, in the alternative, the rescission of
the sale of the Harris County property, alleging fraud, negligence, and conspiracy on the part of
counter-defendants who knew or should have known that the value of said property was less than
the appraisal value assigned to it by Craig.

Before the referral of the case to the jury for verdict, the U.S. District Court dropped respondent as
counter-defendant for lack of evidence to support the allegations against him. Respondent then
moved in open court to sanction petitioner (formerly PHILSEC), AIFL, and ATHONA based on Rule
11 of the U.S. Federal Rules of Civil Procedure.7

In its Order dated March 13, 1990, the U.S. District Court stated that on February 14, 1990, after
trial, the jury returned a verdict for 1488, Inc. In the same Order, the U.S. District Court ruled
favorably on respondent's pending motion for sanction, thus:

During the course of the trial, the Court was required to review plaintiff's Exhibit No. 91 to determine
whether the exhibit should be admitted. After reviewing the exhibit and hearing the evidence, the
Court concluded that the defendants' counterclaims against Edgardo V. Guevara are frivolous and
brought against him simply to humiliate and embarrass him. It is the opinion of the Court that the
defendants, Philsec Investment Corporation, A/K/A BPI Securities, Inc., and Ayala International
Finance Limited, should be sanctioned appropriately based on Fed. R. Civ. P. 11 and the Court's
inherent powers to punish unconscionable conduct. Based upon the motion and affidavit of Edgardo
V. Guevara, the Court finds that $49,450 is reasonable punishment.

ORDERED that defendants, Philsec Investment Corporation A/K/A BPI Securities, Inc., and Ayala
International Finance Limited, jointly and severally, shall pay to Edgardo V. Guevara $49,450 within
30 days of the entry of this order.8

Petitioner, AIFL, and ATHONA appealed the jury verdict, as well as the aforementioned order of the
U.S. District Court for them to pay respondent US$49,450.00; while 1488, Inc. appealed a post-
judgment decision of the U.S. District Court to amend the amount of attorney's fees awarded. The
appeals were docketed as Case No. 90-2370 before the U.S. Court of Appeals, Fifth Circuit.

The U.S. Court of Appeals rendered its Decision on September 3, 1991 affirming the verdict in favor
of 1488, Inc. The U.S. Court of Appeals found no basis for the allegations of fraud made by
petitioner, AIFL, and ATHONA against 1488, Inc., Daic, Craig, and Ducat:

[2] To state a cause of action for fraud under Texas law, a plaintiff must allege sufficient facts to
show:

(1)that a material representation was made;

(2)that it was false;


(3)that when the speaker made it he knew that it was false or made it recklessly without any
knowledge of the truth and as a positive assertion;

(4)that he made it with the intention that it should be acted on by the party;

(5)that the party acted in reliance upon it;

(6)that he thereby suffered injury.

Stone v. Lawyers Title Ins. Corp., 554 S.W.2d 183, 185 (Tex.1977). We agree with the district court's
decision to grant a directed verdict against the defendants. The defendants failed to allege sufficient
facts to establish the elements necessary to demonstrate fraud. In particular, the defendants have
failed to allege any facts that would tend to show that the plaintiff or any of the third party defendants
made a false representation or a representation with reckless disregard as to its truth.

The Houston real estate market was extremely volatile during the late 1970's and the early 1980's.
Like a stream of hot air, property values rose rapidly as the heat and fury generated by speculation
and construction plans mounted, but, just as rapidly, the climate cooled and the high-flying market
came crashing to an all time low. The real estate transaction involved in this case was certainly
affected by this environment of capriciousness. Moreover, a number of additional variables may
have contributed to the uncertainty of its value. For instance, the land abutted a two-lane asphalt
road that had been targeted by the state for conversion into a major multi-lane divided highway.
Water and sewage treatment facilities were located near the boundary lines of the property. In
addition, Houston's lack of conventional zoning ordinances meant that the value of the property
could fluctuate depending upon the use (commercial or residential) for which the property would
ultimately be used.

[3]The fact that the defendants were unable to sell the property at the price for which it had been
appraised does not demonstrate that the plaintiff or the third party defendants knew that the value of
the property was less than the appraised value, nor does it establish that the opposing parties were
guilty of negligent misrepresentation or negligence.

[4]In support of their allegation of fraud, the defendants rely heavily on a loan application completed
by 1488 shortly before the subject property was transferred to Athona. See Defendant's Exhibit 29.
At the time, 1488 still owed approximately $300,000 to Republic of Texas Savings Association on its
original loan for the subject property. The debt had matured and 1488 was planning to move the loan
to Home Savings Association of Houston, that is, take out a loan from Home Savings to pay off the
debt to Republic. 1488 had planned to borrow $350,000 for that purpose. A line item on the Home
Savings loan application form asked for the amount of the loan as a percentage of the appraised
value of the land. A figure of thirty-nine percent was typed into that space, and the defendants
suggest that this proves that the plaintiff knew Craig's appraisal was erroneous. The defendants
reason that if the $350,000 loan amount was only thirty-nine percent of the land's appraised value,
then the real estate must have been worth approximately $897,436.

Although their analysis is sound, the conclusion reached by the defendants cannot withstand
additional scrutiny. At the time that the loan application was completed, 1488 did not request to have
a new appraisal done for the property. Instead, 1488 planned to use the numbers that had been
generated for a quasi-appraisal done in 1977. The 1977 report purported only to "supplement" an
earlier appraisal that had been conducted in 1974, and the supplement described its function as
estimating market value "for mortgage loan purposes" only. See Defendant's Trial Exhibit 4. The two
page supplement was based on such old information that even the Home Savings Association would
not accept it without additional collateral as security for the loan. See Record on Appeal, Vol. 17 at
5-29 to 5-30. The loan, however, was never made because the property was transferred to Athona,
and the outstanding loan to Republic was paid off as part of that transaction. In addition, the loan
application itself was never signed by anyone affiliated with 1488. The district court was correct in
dismissing this argument in support of the defendant's fraud allegations.

[5] The defendants also allege that the plaintiff and counter defendants knew that Craig's appraisal
was fraudulent because the purchaser's statement signed by their own representative, and the
seller's statement, signed by the plaintiff, as well as the title insurance policy all recited a purchase
price of $643,416.12. Robert Higgs, general counsel for 1488, explained that because of the nature
of the transaction, 1488, for tax purposes, wanted the purchase price on the closing statement to
reflect only that amount of cash actually exchanged at the closing as well as the promissory note
given at the closing. See Record on Appeal, Vol. 17 at 5- 127. Although the closing documents recite
a purchase price well under the actual sales price, nothing indicates that any of the parties actually
believed the property to be worth less than the sales amount.

The defendants also assert that it was error for the district court to deny them permission to
designate O. Frank McPherson, a Houston appraiser, as an expert witness after the cutoff date
established by a pretrial order for such designations. The defendants contend that the error
prevented them from presenting facts that would support their fraud allegations. Although the
defendants were allowed to present the testimony of another expert witness on the subject of
valuation, they argue that McPherson's testimony was critical because he had performed an
appraisal of the property for the Texas Highway Department close to the time period during which
Craig had made his appraisal. McPherson's appraisal was performed as part of the State's
condemnation proceedings that preceded the planned highway expansion next to the subject
property.

xxxx

[9] In their briefs, the defendants fail to provide an adequate explanation for their failure to identify
their expert witness in accordance with the district court's pretrial order. This law suit was initiated in
1985, and the defendants had until November of 1988 to designate their expert witnesses. The
defendants were aware of the condemnation proceedings, and they, therefore, had approximately
three years to determine the identity of any appraiser used by the state. The defendants simply
failed to make this inquiry.

Enforcement of the district court's pretrial order did not leave the defendants without an expert
witness on the issue of valuation, and the available expert had also conducted appraisals for the
Texas Highway Department in the area surrounding the subject property. x x x

Although the degree of prejudice suffered by the plaintiff due to the late designation of an expert
would not have been great, a district court still has the discretion to control pretrial discovery and
sanction a party's failure to follow a scheduling order. See id. at 791. Such action is particularly
appropriate here, where the defendants have failed to provide an adequate explanation for their
failure to identify their expert within the designated timetable.

xxxx

The defendants failed to produce enough evidence from which fraud could be inferred to justify the
submission of the issue to a jury. Conclusional allegations or speculation regarding what the plaintiff
knew or did not know concerning the value of the subject property are insufficient to withstand a
motion for a directed verdict. The district court committed no error in granting the motion.
xxxx

Since the defendants failed to present the district court with any facts that would tend to show that
the plaintiffs committed a fraud against them, their claim of a conspiracy to commit fraud must also
fail.9

The U.S. Court of Appeals likewise adjudged that petitioner, AIFL, and ATHONA failed to prove
negligence on the part of 1488, Inc., Daic, Craig, and Ducat in the appraisal of the market value of
the said property:

[10, 11] The defendants have likewise failed to present any facts that would tend to support their
claim of negligent misrepresentation or negligence. The defendants rely on assumptions and
unsupportable conclusions of law in establishing their case for negligence: "Assuming the Property's
true value is less than $800,000, it is reasonable to assume that the counter defendants failed to
exercise reasonable care or competence . . ." Brief for Athona at 45-46 x x x. A party may not rely on
assumptions of fact to carry their case forward. The defendants have presented no facts to suggest
that the plaintiff was negligent in acquiring its appraisal. The plaintiff hired Craig, a real estate broker,
to perform the appraisal after the defendants had already given their initial approval for the
transaction. Craig had performed real estate appraisals in the past, and Texas law permits real
estate brokers to conduct such appraisals, see Tex.Rev.Civ.Stat.Ann. art. 6573a, 2(2)(E) (Vernon
Supp. 1988) (Original version at Tex.Rev.Civ.Stat.Ann. art. 6573a, 4(1)(e) (Vernon 1969). These
facts do not support a claim of negligence.

For the foregoing reasons the district court committed no error in granting a directed verdict against
the counterclaims advanced by the defendants.10

The U.S. Court of Appeals, however, vacated the award of exemplary damages in favor of 1488, Inc.
for the fraudulent misrepresentation regarding the marketability of the two shares of stock in Ducat's
portfolio. Under Texas law, a jury may not award damages unless it was determined that the plaintiff
had also sustained actual damages. The U.S. Court of Appeals agreed with petitioner, AIFL, and
ATHONA that 1488, Inc. brought its suit alleging fraudulent misrepresentation after the two-year
statute of limitation had expired. The misrepresentation issue should never have gone to the jury.
Therefore, the jury's finding of actual damages is nullified; and since the jury verdict is left without a
specific finding of actual damages, the award of exemplary damages must be vacated.

The U.S. Court of Appeals also vacated the award of Rule 11 sanctions in favor of respondent and
against petitioner, AIFL, and ATHONA for being rendered without due process, and remanded the
issue to the U.S. District Court:

[18-20] The Rule 11 motion was first made by Guevara on February 14, 1990, and the court
immediately ruled on the issue without giving the defendants an opportunity to prepare a written
response. See Record on Appeal, Vol. 22 at 10-25 to 10-37. Although, the defendants were given an
opportunity to speak, we conclude that the hearing failed to comport with the requirements of due
process, which demand that the defendants be provided with adequate notice and an opportunity to
prepare a response. See Henderson v. Department of Public Safety and Corrections, 901 F.2d
1288, 1293-94 (5th Cir.1990). Providing specific notice and an opportunity to respond is particularly
important in cases, such as the one before us, in which the sanctions have been imposed on the
clients and not the attorneys. See Donaldson v. Clark, 819 F.2d 1551, 1560 (11th Cir.1987) ("If
sanctions are proposed to be imposed on the client, due process will demand more specific notice
because the client is likely unaware of the existence of Rule 11 and should be given the opportunity
to prepare a defense."). A separate hearing is not a prerequisite to the imposition of Rule 11
sanctions, see Donaldson, 819 F.2d at 1560 n. 12, but the defendants in this case, should have
been given more of an opportunity to respond to the motion than that provided at the hearing in
which the motion was first raised. Providing the defendant with an opportunity to mount a defense
"on the spot" does not comport with due process. Given that the defendants were not provided with
adequate notice or an opportunity to be heard, we vacate the award of sanctions and remand so that
the district court can provide the defendants with an adequate opportunity to be heard.11

Finally, the U.S. Court of Appeals similarly vacated the award of attorney's fees and remanded the
matter to the U.S. District Court for recalculation to conform with the requirements provided in the
promissory note.

In accordance with the Decision dated September 3, 1991 of the U.S. Court of Appeals, the U.S.
District Court issued an Order12 dated October 28, 1991 giving petitioner, AIFL, and ATHONA 20
days to formally respond to respondent's motion for Rule 11 sanctions. Petitioner, AIFL, and
ATHONA jointly filed before the U.S. District Court their opposition to respondent's motion for Rule
11 sanctions.13 Respondent filed his reply to the opposition, to which petitioner, AIFL, and ATHONA,
in turn, filed a reply-brief.14

In an Order15 dated December 31, 1991, the U.S. District Court still found respondent's motion for
Rule 11 sanctions meritorious and reinstated its Order dated March 13, 1990:

The basis of the Court's prior decision as well as now is the fact that the defendants filed suit against
Guevara with knowledge that the basis of the suit was unfounded. In the defendants' file was an
appraisal from an international appraisal firm, which the defendants refused to disclose during
discovery and was only discovered at a bench conference during a discussion about appraisers.
Based on the defendants' own appraisers, no basis existed for a suit by the defendants against their
employee.

The previous judgment entered by this Court is REINSTATED.

The above-quoted Order of the U.S. District Court attained finality as it was no longer appealed by
petitioner, AIFL, and ATHONA.

Through a letter dated February 18, 1992, respondent demanded that petitioner pay the amount of
US$49,450.00 awarded by the U.S. District Court in its Order dated March 13, 1990. Given the
continuous failure and/or refusal of petitioner to comply with the said Order of the U.S. District Court,
respondent instituted an action for the enforcement of the same, which was docketed as Civil Case
No. 92-1445 and raffled to the RTC of Makati City, Branch 57.

Civil Case No. 92-1445 before


Branch 57 of the RTC of Makati City

In his Complaint for the enforcement of the Order dated March 13, 1990 of the U.S. District Court in
Civil Action No. H-86-440, respondent prayed that petitioner be ordered to pay:

1.The sum of US$49,450.00 or its equivalent in Philippine Pesos x x x with interest from date
of demand;

2.Attorney's fees and litigation expenses in the sum of P250,000.00;

3.Exemplary damages of P200,000.00; and


4.Costs of the suit.16

In its Amended Answer Ad Cautelam,17 petitioner opposed the enforcement of the Order dated March
13, 1990 of the U.S. District Court on the grounds that it was rendered upon a clear mistake of law or
fact and/or in violation of its right to due process.

In the course of the pre-trial and scheduled trial proceedings, the parties respectively manifested
before the court that they were dispensing with the presentation of their witnesses since the subject
matter of their testimonies had already been stipulated upon.18

Thereafter, the parties formally offered their respective evidence which entirely consisted of
documentary exhibits. Respondent submitted authenticated and certified true copies of Rule 11 of
the U.S. Federal Rules of Civil Procedure;19 the Orders dated March 13, 1990, October 28, 1991, and
December 31, 1991 of the U.S. District Court in Civil Action No. H-86- 440;20 the Decision dated
September 3, 1991 of the U.S. Court of Appeals in Case No. 90-2370;21 and the opposition to
respondent's motion for Rule 11 sanctions and reply-brief filed by PHILSEC, AIFL, and ATHONA
before the U.S. District Court.22 Petitioner presented photocopies of pleadings, documents, and
transcripts of stenographic notes in Civil Action No. H-86- 440 before the U.S. District Court;23 the
pleadings filed in other cases related to Civil Case No. 92-1440;24 and a summary of lawyer's fees
incurred by petitioner in the U.S.25 The RTC admitted in evidence the documentary exhibits of the
parties in its Orders dated September 21, 1998 and February 8, 1999,26 and then deemed the case
submitted for decision.

The RTC rendered a Decision on September 11, 2000 with the following dispositive portion:

WHEREFORE, judgment is hereby rendered in favor of [respondent] Edgardo V. Guevara ordering


[petitioner] BPI Securities Corporation to pay [respondent] the following:

1.the sum of US$49,500.00 with legal interest from the filing of this case until fully paid;

2.the sum of P250,000.00 as attorney's fees and litigation expenses; and

3.the costs of suit.

An award of exemplary damages for P200,000.00 is denied for being speculative.27

Petitioner appealed to the Court of Appeals, assigning the following errors on the part of the RTC:

A.The trial court erred in not passing upon the merit or validity of [petitioner's] defenses
against the enforcement of the foreign judgment in the Philippines. Had the trial court
considered [petitioner's] defenses, it would have concluded that the foreign judgment was
not enforceable because it was made upon a clear mistake of law or fact and/or was made in
violation of the [petitioner's] right to due process.

B.The trial court erred in not utilizing the standard for determining the enforceability of the
foreign award that was agreed upon by the parties to this case during the pre-trial, namely,
did the defendants in the Houston case (PHILSEC, AIFL, AND ATHONA) have reasonable
grounds to implead [respondent] in the Houston case based upon the body of the evidence
submitted therein. Thus, whether or not PHILSEC, AIFL and ATHONA ultimately prevailed
against [respondent] was immaterial or irrelevant; the question only was whether they had
reasonable grounds to proceed against him, for if they had, then there was admittedly no
basis for the Rule 11 award against them by the Houston Court.

xxxx

C.In the light of its ruling, the trial court failed to pass upon and resolve the other issues
and/or defenses expressly raised by [petitioner], including the defense that PHILSEC, AIFL,
and ATHONA were deprived of their right to defend themselves against the Rule 11 sanction
and the main decision because of the prohibitive cost of legal representation in the us and
also because of the gross negligence of its US counsel. x x x.28

In its Decision dated December 19, 2003, the Fifth Division of the Court of Appeals decreed:

WHEREFORE, the Decision dated 11 September 2000 in Civil Case No. 92-1445 of the Regional
Trial Court of Makati, Branch 57, is hereby AFFIRMED in all respect with costs against [petitioner].29

In its Motion for Reconsideration,30 petitioner lamented that the Fifth Division of the Court of Appeals
failed to resolve on its own petitioner's appeal as the Decision dated December 19, 2003 of the said
Division was copied almost verbatim from respondent's brief. Thus, petitioner prayed that the Fifth
Division of the Court of Appeals recuse itself from deciding petitioner's Motion for Reconsideration
and that the case be re-raffled to another division.

The Fifth Division of the Court of Appeals maintained in its Resolution dated May 25, 2004 that the
issues and contentions of the parties were all duly passed upon and that the case was decided
according to its merits. The said Division, nonetheless, abstained from resolving petitioner's Motion
for Reconsideration and directed the re-raffle of the case.31

Petitioner's Motion for Reconsideration was re-raffled to and subsequently resolved by the Tenth
Division of the Court of Appeals. In its Resolution dated February 9, 2005, the Tenth Division of the
appellate court denied the said Motion for lack of merit.32

Hence, petitioner seeks recourse from this Court via the instant Petition for Review, insisting that the
Court of Appeals erred in affirming the RTC judgment which enforced the Order dated March 13,
1990 of the U.S. District Court in Civil Action No. H-86-440.

Petitioner contends that it was not accorded by the Court of Appeals the right to refute the
foreign judgment pursuant to Rule 39, Section 48 of the Rules of Court because the appellate
court gave the effect of res judicata to the said foreign judgment. The Court of Appeals copied
wholesale or verbatim the respondent's brief without addressing the body of evidence adduced by
petitioner showing that it had reasonable grounds to implead respondent in Civil Action No. H-86-
440.

Petitioner asserts that the U.S. District Court committed a clear mistake of law and fact in its
issuance of the Order dated March 13, 1990, thus, said Order is unenforceable in this jurisdiction.
Petitioner discusses in detail its evidence proving that respondent, together with 1488, Inc., Ducat,
Craig, and Daic, induced petitioner to agree to a fraudulent deal. Petitioner points out that
respondent had the duty of looking for an independent and competent appraiser of the market value
of the Harris County property; that instead of choosing an unbiased and skilled appraiser,
respondent connived with 1488, Inc., Ducat, and Daic in selecting Craig, who turned out to be the
former owner of the Harris County property and a close associate of 1488, Inc. and Daic; and that
respondent endorsed to petitioner Craig's appraisal of the market value of the Harris County
property, which was overvalued by more than 400%.
According to petitioner, it had reasonable grounds to implead respondent in Civil Action No. H-86-
440 so the sanction imposed upon it under Rule 11 of the U.S. Federal Rules of Civil Procedure was
unjustified. Petitioner additionally argues that there is no basis for the U.S. District Court to impose
upon it the Rule 11 sanction as there is nothing in the said provision which allows "the imposition of
sanctions for simply bringing a meritless lawsuit." If the Rule 11 sanction was imposed upon
petitioner as punishment for impleading a party (when it had reasonable basis for doing so) and not
prevailing against said party, then, petitioner claims that such a sanction is against Philippine public
policy and should not be enforced in this jurisdiction. Settled in this jurisdiction that there should be
no premium attached to the right to litigate, otherwise parties would be very hesitant to assert a
claim in court.

Petitioner further alleges that it was denied due process in Civil Action No H-86-440 because: (1) the
U.S. District Court imposed the Rule 11 sanction on the basis of a single document, i.e., the letter
dated September 26, 1983 of Bruce C. Bossom, a partner at Jones Lang Wooton, a firm of chartered
surveyors and international real estate consultants, addressed to a Mr. Senen L. Matoto of AIFL
(marked as Exhibit 91 before the U.S. District Court), which was never admitted into evidence; (2) in
said letter, Jones Lang Wooton was "soliciting a listing agreement" and in which the "said firm
unilaterally, without being asked as to the value of the [Harris County] property, indicated a value for
the [same] which approximate[d] with the value given in the Craig appraisal," hence, it cannot be
used as basis to conclude that petitioner, AIFL, and ATHONA assented to Craig's appraisal of the
Harris County property; (3) the counsel who represented petitioner, AIFL, and ATHONA in Civil
Action No. H-86-440 before the U.S. District Court was grossly ignorant and/or negligent in the
prosecution of their counterclaims and/or in proving their defenses, such as when said counsel failed
to present an expert witness who could have testified as to the actual market value of the Harris
County property or when said counsel failed to discredit respondent's credibility despite the
availability of evidence that respondent had been previously fined by the Philippine Securities and
Exchange Commission for "stock manipulation;" and (4) the excessive and unconscionable legal
fees charged by their U.S. counsel effectively prevented them from making further appeal.

The Court finds the Petition bereft of merit.

In Mijares v. Raada,33 the Court extensively discussed the underlying principles for the recognition
and enforcement of foreign judgments in Philippine jurisdiction:

There is no obligatory rule derived from treaties or conventions that requires the Philippines
to recognize foreign judgments, or allow a procedure for the enforcement thereof. However, 1wphi1

generally accepted principles of international law, by virtue of the incorporation clause of the
Constitution, form part of the laws of the land even if they do not derive from treaty
obligations. The classical formulation in international law sees those customary rules accepted as
binding result from the combination two elements: the established, widespread, and consistent
practice on the part of States; and a psychological element known as the opinion juris sive
necessitates (opinion as to law or necessity). Implicit in the latter element is a belief that the practice
in question is rendered obligatory by the existence of a rule of law requiring it.

While the definite conceptual parameters of the recognition and enforcement of foreign judgments
have not been authoritatively established, the Court can assert with certainty that such an
undertaking is among those generally accepted principles of international law. As earlier
demonstrated, there is a widespread practice among states accepting in principle the need for such
recognition and enforcement, albeit subject to limitations of varying degrees. The fact that there is no
binding universal treaty governing the practice is not indicative of a widespread rejection of the
principle, but only a disagreement as to the imposable specific rules governing the procedure for
recognition and enforcement.
Aside from the widespread practice, it is indubitable that the procedure for recognition and
enforcement is embodied in the rules of law, whether statutory or jurisprudential, adopted in various
foreign jurisdictions. In the Philippines, this is evidenced primarily by Section 48, Rule 39 of the
Rules of Court which has existed in its current form since the early 1900s. Certainly, the Philippine
legal system has long ago accepted into its jurisprudence and procedural rules the viability
of an action for enforcement of foreign judgment, as well as the requisites for such valid
enforcement, as derived from internationally accepted doctrines. Again, there may be
distinctions as to the rules adopted by each particular state, but they all prescind from the premise
that there is a rule of law obliging states to allow for, however generally, the recognition and
enforcement of a foreign judgment. The bare principle, to our mind, has attained the status of opinio
juris in international practice.

This is a significant proposition, as it acknowledges that the procedure and requisites


outlined in Section 48, Rule 39 derive their efficacy not merely from the procedural rule, but
by virtue of the incorporation clause of the Constitution. Rules of procedure are promulgated by
the Supreme Court, and could very well be abrogated or revised by the high court itself. Yet the
Supreme Court is obliged, as are all State components, to obey the laws of the land, including
generally accepted principles of international law which form part thereof, such as those ensuring the
qualified recognition and enforcement of foreign judgments. (Citations omitted.)

It is an established international legal principle that final judgments of foreign courts of competent
jurisdiction are reciprocally respected and rendered efficacious subject to certain conditions that vary
in different countries.34 In the Philippines, a judgment or final order of a foreign tribunal cannot
be enforced simply by execution. Such judgment or order merely creates a right of action,
and its non-satisfaction is the cause of action by which a suit can be brought upon for its
enforcement.35 An action for the enforcement of a foreign judgment or final order in this
jurisdiction is governed by Rule 39, Section 48 of the Rules of Court, which provides:

SEC. 48. Effect of foreign judgments or final orders. - The effect of a judgment or final order of a
tribunal of a foreign country, having jurisdiction to render the judgment or final order is as follows:

(a) In case of a judgment or final order upon a specific thing, the judgment or final order is
conclusive upon the title to the thing; and

(b) In case of a judgment or final order against a person, the judgment or final order is
presumptive evidence of a right as between the parties and their successors in interest by a
subsequent title.

In either case, the judgment or final order may be repelled by evidence of a want of jurisdiction, want
of notice to the party, collusion, fraud, or clear mistake of law or fact.

The Court expounded in Mijares on the application of the aforequoted provision:

There is an evident distinction between a foreign judgment in an action in rem and one in personam.
For an action in rem, the foreign judgment is deemed conclusive upon the title to the thing,
while in an action in personam, the foreign judgment is presumptive, and not conclusive, of a
right as between the parties and their successors in interest by a subsequent title. However,
in both cases, the foreign judgment is susceptible to impeachment in our local courts on the grounds
of want of jurisdiction or notice to the party, collusion, fraud, or clear mistake of law or fact. Thus, the
party aggrieved by the foreign judgment is entitled to defend against the enforcement of such
decision in the local forum. It is essential that there should be an opportunity to challenge the
foreign judgment, in order for the court in this jurisdiction to properly determine its efficacy.
It is clear then that it is usually necessary for an action to be filed in order to enforce a foreign
judgment, even if such judgment has conclusive effect as in the case of in rem actions, if only for
the purpose of allowing the losing party an opportunity to challenge the foreign judgment,
and in order for the court to properly determine its efficacy. Consequently, the party attacking a
foreign judgment has the burden of overcoming the presumption of its validity.

The rules are silent a s to what initiatory procedure must be undertaken in order to enforce a foreign
judgment in the Philippines. But there is no question that the filing of a civil complaint is an
appropriate measure for such purpose. A civil action is one by which a party sues another for the
enforcement or protection of a right, and clearly an action to enforce a foreign judgment is in
essence a vindication of a right prescinding either from a "conclusive judgment upon title" or the
"presumptive evidence of a right." Absent perhaps a statutory grant of jurisdiction to a quasi-judicial
body, the claim for enforcement of judgment must be brought before the regular courts.

There are distinctions, nuanced but discernible, between the cause of action arising from the
enforcement of a foreign judgment, and that arising from the facts or allegations that occasioned the
foreign judgment. They may pertain to the same set of facts, but there is an essential difference in
the right-duty correlatives that are sought to be vindicated. For example, in a complaint for damages
against a tortfeasor, the cause of action emanates from the violation of the right of the complainant
through the act or omission of the respondent. On the other hand, in a complaint for the enforcement
of a foreign judgment awarding damages from the same tortfeasor, for the violation of the same right
through the same manner of action, the cause of action derives not from the tortious act but from the
foreign judgment itself.

More importantly, the matters for proof are different. Using the above example, the complainant will
have to establish before the court the tortious act or omission committed by the tortfeasor,
who in turn is allowed to rebut these factual allegations or prove extenuating circumstances.
Extensive litigation is thus conducted on the facts, and from there the right to and amount of damages
are assessed. On the other hand, in an action to enforce a foreign judgment, the matter left for proof
is the foreign judgment itself, and not the facts from which it prescinds.

As stated in Section 48, Rule 39, the actionable issues are generally restricted to a review of
jurisdiction of the foreign court, the service of personal notice, collusion, fraud, or mistake of
fact or law. The limitations on review [are] in consonance with a strong and pervasive policy in all
legal systems to limit repetitive litigation on claims and issues. Otherwise known as the policy of
preclusion, it seeks to protect party expectations resulting from previous litigation, to safeguard
against the harassment of defendants, to insure that the task of courts not be increased by never-
ending litigation of the same disputes, and - in a larger sense - to promote what Lord Coke in the
Ferrer's Case of 1599 stated to be the goal of all law: "rest and quietness." If every judgment of a
foreign court were reviewable on the merits, the plaintiff would be forced back on his/her original
cause of action, rendering immaterial the previously concluded litigation.36

(Emphases supplied, citations omitted.)

Also relevant herein are the following pronouncements of the Court in

Minoru Fujiki v. Marinay37:

A petition to recognize a foreign judgment declaring a marriage void does not require relitigation
under a Philippine court of the case as if it were a new petition for declaration of nullity of marriage.
Philippine courts cannot presume to know the foreign laws under which the foreign judgment was
rendered. They cannot substitute their judgment on the status, condition and legal capacity of the
foreign citizen who is under the jurisdiction of another state. Thus, Philippine courts can only
recognize the foreign judgment as a fact according to the rules of evidence.

Section 48(b), Rule 39 of the Rules of Court provides that a foreign judgment or final order
against a person creates a "presumptive evidence of a right as between the parties and their
successors in interest by a subsequent title." Moreover, Section 48 of the Rules of Court states
that "the judgment or final order may be repelled by evidence of a want of jurisdiction, want of notice
to the party, collusion, fraud, or clear mistake of law or fact." Thus, Philippine courts exercise limited
review on foreign judgments. Courts are not allowed to delve into the merits of a foreign judgment.
Once a foreign judgment is admitted and proven in a Philippine court, it can only be repelled on
grounds external to its merits, i.e., "want of jurisdiction, want of notice to the party, collusion, fraud, or
clear mistake of law or fact." The rule on limited review embodies the policy of efficiency and the
protection of party expectations, as well as respecting the jurisdiction of other states. (Emphases
supplied, citations omitted.)

As the foregoing jurisprudence had established, recognition and enforcement of a foreign judgment
or final order requires only proof of fact of the said judgment or final order. In an action in personam,
as in the case at bar, the foreign judgment or final order enjoys the disputable presumption of
validity. It is the party attacking the foreign judgment or final order that is tasked with the burden of
overcoming its presumptive validity.38 A foreign judgment or final order may only be repelled on
grounds external to its merits, particularly, want of jurisdiction, want of notice to the party, collusion,
fraud, or clear mistake of law or fact.

The fact of a foreign final order in this case is not disputed. It was duly established by evidence
submitted to the RTC that the U.S. District Court issued an Order on March 13, 1990 in Civil Action
No. H-86-440 ordering petitioner, AIFL, and ATHONA, to pay respondent the sum of US$49,450.00
as sanction for filing a frivolous suit against respondent, in violation of Rule 11 of the U.S. Federal
Rules of Civil Procedure. The said Order became final when its reinstatement in the Order dated
December 31, 1991 of the U.S. District Court was no longer appealed by petitioner, AIFL, and/or
ATHONA.

The Order dated March 13, 1990 of the U.S. District Court in Civil Action No. H-86-440 is
presumptive evidence of the right of respondent to demand from petitioner the payment of
US$49,450.00 even in this jurisdiction. The next question then is whether petitioner was able to
discharge the burden of overcoming the presumptive validity of said Order.

The Court rules in the negative.

In complete disregard of the limited review by Philippine courts of foreign judgments or final orders,
petitioner opposes the enforcement of the Order dated March 13, 1990 of the U.S. District
Court on the very same allegations, arguments, and evidence presented before and
considered by the U.S. District Court when it rendered its verdict imposing the Rule 11
sanction against petitioner. Petitioner attempts to convince the Court that it is necessary to
look into the merits of the Order dated March 13, 1990 because the U.S. District Court
committed clear mistake of law and fact in issuing the same. The Court, however, is not
convinced. A Philippine court will not substitute its own interpretation of any provision of the law or
rules of procedure of another country, nor review and pronounce its own judgment on the sufficiency
of evidence presented before a competent court of another jurisdiction. Any purported mistake
petitioner attributes to the U.S. District Court in the latter's issuance of the Order dated March
13,1990 would merely constitute an error of judgment in the exercise of its legitimate jurisdiction,
which could have been corrected by a timely appeal before the U.S. Court of Appeals.
Petitioner cannot insist that the RTC and the Court of Appeals resolve the issue of whether or not
petitioner, AIFL, and ATHONA had reasonable grounds to implead respondent as a counter-
defendant in Civil Action No. H-86-440. Although petitioner submitted such an issue for resolution by
the RTC in its Pre-Trial Brief, the RTC did not issue any pre-trial order actually adopting the same. In
addition, petitioner was also unable to lay the basis, whether in U.S. or Philippine jurisdiction, for the
use of the "reasonable grounds standard" for determining a party's liability for or exemption from the
sanctions imposed for violations of Rule 11 of the U.S. Federal Rules of Civil Procedure. Equally
baseless is petitioner's assertion that the Rule 11 sanction is contrary to public policy and in effect,
puts a premium on the right to litigate. It bears to stress that the U.S. District Court imposed the Rule
11 sanction upon petitioner, AIFL, and ATHONA for their frivolous counterclaims against respondent
intended to simply humiliate and embarrass respondent; and not because petitioner, AIFL, and
ATHONA impleaded but lost to respondent.

Contrary to the claims of petitioner, both the RTC and the Court of Appeals carefully considered the
allegations, arguments, and evidence presented by petitioner to repel the Order dated March 13,
1990 of the U.S. District Court in Civil Action No. H-86-440. Worthy of reproducing herein are the
following portions of the RTC judgment:

[Petitioner's] contention that the judgment sought to be enforced herein is violative of its right to due
process and contrary to public policy because the Houston Court relied upon Exhibit 91 (which is
[petitioner BPI Securities'] Exh. "1" in this case) and the US Court disregarded the evidence on
record in the Houston Action is unavailing. Whether or not said Exhibit 91 (petitioner's Exh. "1") is
inadmissible or is not entitled to any weight is a question which should have been addressed to the
US of Court of Appeals by [petitioner]. To ask a Philippine court to pass upon the admissibility or
weight of Exh. 91 is violative of our public policy not to substitute our judgment for that of a
competent court of another jurisdiction.

[Petitioner] does not deny the fact that the judgment awarding sanctions based on [Rule 11 of the
U.S.] Federal Rules of Civil Procedure was elevated to the United States Court of Appeals for the
Fifth Circuit which remanded the case to the District Court precisely to give [petitioner] a reasonable
opportunity to be heard. After remand, the District Court ordered [petitioner] to file its response to the
motion of [respondent] for sanctions and after the filing of their respective briefs, the District Court
reinstated the former judgment.

Certainly, under these circumstances, the claim of violation of due process cannot be sustained
since [petitioner] was given reasonable opportunity to present its side before the imposition of
sanctions.

xxxx

[Petitioner] likewise argued that the US District Court committed a clear mistake of law or fact and in
support thereof presented Exhibits "10" to "18" to establish that the fair market value of the Houston
property in January 1983 was no longer US$800,000.00 by the admissions against interest of 1488
itself, of Craig who submitted the fraudulent appraisal, and by the previous owners of the said
property and to "show that [respondent] Guevara was either directly involved in the conspiracy
against the Houston defendants in submitting to the latter a fraudulent appraisal of W. Craig (or was
at least responsible to the Houston defendants for the injury that they suffered) and that the Houston
defendants had reasonable basis to implead him as a defendant in the Houston Case on account of
his participation in the conspiracy or his fault of responsibility for the injury suffered by them."

However, none of these documents show that [respondent] had any participation nor knowledge in
the execution, custody or other intervention with respect to the said. Thus, said Exhibits "10" to "18"
are irrelevant and immaterial to the issue of the enforceability of a foreign judgment. It must be
emphasized that the imposition of the sanctions under [Rule 11 of the U.S.] Federal Rules of Civil
Procedure did not flow from the merits of the civil case in the US District Court but from the lack of
even an iota of evidence against [respondent] Guevara. To quote the US District Court:

THE COURT

xxxx

I am disturbed about that. I don't see any evidence at all in this case, after listening to all of this
evidence, that there ever was a lawsuit that could have been brought against Guevara, and even
after all of the discovery was done, there was still no evidence of a conspiracy. There is no evidence
of any conspiracy to this good day that he could have been, but there is no proof of it, and that's
what we base these lawsuits on. That's what the Rule 11 is designed to do, to deal with the
circumstance.

So, I brought it up to Mr. Guevara because I know the frustration, and irrespective as to whether or
not he brought it up, it would have been my position, my own position as an officer of this Court to
sanction the defendants in this case. That is my opinion, that they are to be sanctioned because they
have brought all of the power that they have in the Philippines to bear and put pressure on this man
so that he would have to come over 10,000 miles to defend himself or to hire lawyers to defend
himself against a totally frivolous claim.39 (Emphases supplied.)

As for petitioner's contention that the Fifth Division of the Court of Appeals, in its Decision dated
December 19, 2003, copied verbatim or wholesale from respondent's brief, the Court refers to its
ruling in Halley v. Printwell, Inc.,40 thus:

It is noted that the petition for review merely generally alleges that starting from its page 5, the
decision of the RTC "copied verbatim the allegations of herein Respondents in its Memorandum
before the said court," as if "the Memorandum was the draft of the Decision of the Regional Trial
Court of Pasig," but fails to specify either the portions allegedly lifted verbatim from the
memorandum, or why she regards the decision as copied. The omission renders the petition for
review insufficient to support her contention, considering that the mere similarity in language or
thought between Printwell's memorandum and the trial court's decision did not necessarily justify the
conclusion that the RTC simply lifted verbatim or copied from the memorandum.

It is to be observed in this connection that a trial or appellate judge may occasionally view a party's
memorandum or brief as worthy of due consideration either entirely or partly. When he does so, the
judge may adopt and incorporate in his adjudication the memorandum or the parts of it he deems
suitable, and yet not be guilty of the accusation of lifting or copying from the memorandum. This is
because of the avowed objective of the memorandum to contribute in the proper illumination and
correct determination of the controversy. Nor is there anything untoward in the congruence of ideas
and views about the legal issues between himself and the party drafting the memorandum. The
frequency of similarities in argumentation, phraseology, expression, and citation of authorities
between the decisions of the courts and the memoranda of the parties, which may be great or small,
can be fairly attributable to the adherence by our courts of law and the legal profession to widely
know nor universally accepted precedents set in earlier judicial actions with identical factual milieus
or posing related judicial dilemmas. (Citations omitted.)

The Court is unmoved by petitioner's allegations of denial of due process because of its U.S.
counsel's exorbitant fees and negligence. As aptly pointed out by respondent in his Memorandum:
1wphi 1
On the specific claim that petitioner has been denied legal representation in the United States in
view of the exorbitant legal fees of US counsel, petitioner is now estopped from asserting that the
costs of litigation resulted in a denial of due process because it was petitioner which impleaded
Guevara. If petitioner cannot prosecute a case to its final stages, then it should not have filed a
counterclaim against Guevara in the first place. Moreover, there is no showing that petitioner could
not find a less expensive counsel. Surely, petitioner could have secured the services of another
counsel whose fees were more "affordable."41

Moreover, petitioner is bound by the negligence of its counsel. The declarations of the Court in
Gotesco Properties, Inc. v. Moral42 is applicable to petitioner:

The general rule is that a client is bound by the acts, even mistakes, of his counsel in the realm of
procedural technique. The basis is the tenet that an act performed by counsel within the scope of a
1w phi 1

"general or implied authority" is regarded as an act of the client. While the application of this general
rule certainly depends upon the surrounding circumstances of a given case, there are exceptions
recognized by this Court: "(1) where reckless or gross negligence of counsel deprives the client of
due process of law; (2) when its application will result in outright deprivation of the client's liberty or
property; or (3) where the interests of justice so require."

The present case does not fall under the said exceptions. In Amil v. Court of Appeals, the Court held
that "to fall within the exceptional circumstance relied upon x x x, it must be shown that the
negligence of counsel must be so gross that the client is deprived of his day in court. Thus, "where a
party was given the opportunity to defend [its] interests in due course, [it] cannot be said to have
been denied due process of law, for this opportunity to be heard is the very essence of due process."
To properly claim gross negligence on the part of the counsel, the petitioner must show that the
counsel was guilty of nothing short of a clear abandonment of the client's cause. (Citations omitted.)

Finally, it is without question that the U.S. District Court, in its Order dated March 13, 1990 in Civil
Action No. H-86-440, ordered petitioner, AIFL, and ATHONA to pay respondent US$49,450.00 as
sanction for violating Rule 11 of the U.S. Federal Rules of Civil Procedure. The Court noticed that
throughout its Decision dated September 11, 2000 in Civil Case No. 92-1445, the RTC variably
mentioned the amount of Rule 11 sanction imposed by the U.S. District Court as US$49,450.00 and
US$49,500.00, the latter obviously being a typographical error. In the dispositive portion, though, the
RTC ordered petitioner to pay respondent US$49,500.00, which the Court hereby corrects motu
proprio to US$49,450.00 in conformity with the U.S. District Court Order being enforced.

The Court notes that during the pendency of the instant Petition before this Court, respondent
passed away on August 17, 2007, and is survived and substituted by his heirs, namely: Ofelia B.
Guevara, Ma. Leticia G. Allado, Jose Edgardo B. Guevara, Jose Emmanuel B. Guevara, and Ma.
Joselina G. Gepuela.

WHEREFORE, the instant Petition is hereby DENIED for lack of merit. The Decision dated
December 19, 2003 and Resolution dated February 9, 2005 of the Court Appeals in CA-G.R. CV No.
69348, affirming the Decision dated September 11, 2000 of the Regional Trial Court of Makati City,
Branch 57 in Civil Case No. 92-1445, is hereby AFFIRMED with MODIFICATION that petitioner BPI
Securities Corporation is ordered to pay respondent Edgardo V. Guevara the sum of US$49,450.00
or its equivalent in Philippine Peso, with interest at six percent (6%) per annum from the filing of the
case before the trial court on May 28, 1992 until fully paid.43

SO ORDERED.
#7G.R. No. 161909 April 25, 2012

PHILTRANCO SERVICE ENTERPRISES, INC., Petitioner,


vs.
FELIX PARAS AND INLAND TRAILWAYS, INC., AND HON. COURT OF
APPEALS, Respondents.

DECISION

BERSAMIN, J.:

In an action for breach of contract of carriage commenced by a passenger against his


common carrier, the plaintiff can recover damages from a third-party defendant brought into
the suit by the common carrier upon a claim based on tort or quasi-delict. The liability of the
third-party defendant is independent from the liability of the common carrier to the passenger.

Philtranco Service Enterprises, Inc. (Philtranco) appeals the affirmance with modifications by the Court
of Appeals (CA) of the decision of the Regional Trial Court (RTC) awarding moral, actual and
temperate damages, as well as attorneys fees and costs of suit, to respondent Felix Paras (Paras),
and temperate damages to respondent Inland Trailways, Inc. (Inland), respectively the plaintiff and the
defendant/third-party plaintiff in this action for breach of contract of carriage, upon a finding that the
negligence of the petitioner and its driver had caused the serious physical injuries Paras sustained
and the material damage Inlands bus suffered in a vehicular accident.

Antecedents

The antecedent facts, as summarized by the CA, are as follows:

Plaintiff-appellant [respondent] Felix Paras (Paras for brevity), who hails from Cainta, Rizal is
engaged in the buy and sell of fish products. Sometime on 08 February 1987, on his way home
to Manila from Bicol Region, he boarded a bus with Body No. 101 and Plate No. EVE 508, owned
and operated by Inland Trailways, Inc. (Inland for brevity) and driven by its driver Calvin Coner
(Coner for brevity).

At approximately 3:50 oclock in the morning of 09 February 1987, while the said bus was travelling
along Maharlika Highway, Tiaong, Quezon, it was bumped at the rear by another bus with Plate No.
EVB 259, owned and operated by Philtranco Service Enterprises, Inc. (Philtranco for brevity). As
a result of the strong and violent impact, the Inland bus was pushed forward and smashed into a
cargo truck parked along the outer right portion of the highway and the shoulder thereof.
Consequently, the said accident bought considerable damage to the vehicles involved and
caused physical injuries to the passengers and crew of the two buses, including the death of
Coner who was the driver of the Inland Bus at the time of the incident.

Paras was not spared from the pernicious effects of the accident. After an emergency treatment at
the San Pablo Medical Center, San Pablo City, Laguna, Paras was taken to the National Orthopedic
Hospital. At the latter hospital, he was found and diagnosed by Dr. Antonio Tanchuling, Jr. to be
affected with the following injuries: a) contusion/hematoma; b) dislocation of hip upon fracture of the
fibula on the right leg; c) fractured small bone on the right leg; and d) close fracture on the tibial
plateau of the left leg. (Exh. "A", p. 157, record)
On 04 March 1987 and 15 April 1987, Paras underwent two (2) operations affecting the fractured
portions of his body. (Exhs. "A-2" and "A-3", pp. 159 and 160 respectively, record)

Unable to obtain sufficient financial assistance from Inland for the costs of his operations,
hospitalization, doctors fees and other miscellaneous expenses, on 31 July 1989, Paras filed
a complaint for damages based on breach of contract of carriage against Inland.

In its answer, defendant Inland denied responsibility, by alleging, among others, that its driver Coner
had observed an utmost and extraordinary care and diligence to ensure the safety of its passengers.
In support of its disclaimer of responsibility, Inland invoked the Police Investigation Report
which established the fact that the Philtranco bus driver of [sic] Apolinar Miralles was the one
which violently bumped the rear portion of the Inland bus, and therefore, the direct and
proximate cause of Paras injuries.

On 02 March 1990, upon leave of court, Inland filed a third-party complaint against Philtranco
and Apolinar Miralles (Third Party defendants). In this third-party complaint, Inland, sought for
exoneration of its liabilities to Paras, asserting that the latters cause of action should be
directed against Philtranco considering that the accident was caused by Miralles lack of care,
negligence and reckless imprudence. (pp. 50 to 56, records).

After trial, the RTC (Branch 71) in Antipolo, Rizal rendered its judgment on July 18, 1997,1 viz:

WHEREFORE, third-party defendant Philtranco and Apolinar Miralles are hereby ordered to pay
plaintiff jointly and severally, the following amounts:

1.P54,000.00 as actual damages;

2.P50,000.00 as moral damages;

3.P20,000.00 as attorneys fees and costs.

SO ORDERED.

All the parties appealed to the CA on different grounds.

On his part, Paras ascribed the following errors to the RTC, to wit:

I. THE TRIAL COURT ERRED IN HOLDING THAT ONLY THIRD-PARTY DEFENDANT-


APPELLANT PHILTRANCO IS LIABLE FOR THE DAMAGES SUFFERED BY APPELLANT
PARAS.

II. THE TRIAL COURT ERRED IN NOT HOLDING APPELLANT INLAND TRAILWAYS INC.
TO BE JOINTLY AND SEVERALLY LIABLE FOR THE DAMAGES SUFFERED BY PARAS.

III. THE TRIAL COURT ERRED IN NOT AWARDING UNEARNED INCOME AS


ADDITIONAL ACTUAL DAMAGES SUFFERED BY APPELLANT PARAS AS HIS
PHYSICAL DISABILITY IS PERMANENT IN NATURE.

IV. THE TRIAL COURT ERRED IN NOT AWARDING EXEMPLARY DAMAGES IN FAVOR
OF APPELLANT PARAS.
On the other hand, Inland assigned the following errors to the RTC, namely:

THE TRIAL COURT ERRED WHEN IT FAILED TO AWARD DAMAGES UNTO THE THIRD PARTY
PLAINTIFF NOTWITHSTANDING CLEAR FINDING THAT:

It is clear from the evidence that the plaintiff sustained injuries because of the reckless, negligence,
and lack of precaution of third party defendant Apolinar Miralles, an employee of Philtranco.

AND, COMPLETELY DISREGARDED THE UNCONTROVERTED ORAL AND DOCUMENTARY


EVIDENCES ESTABLISHING THE EXTENT AND DEGREE OF DAMAGES SUSTAINED BY THE
THIRD PARTY PLAINTIFF.

Lastly, Philtranco stated that the RTC erred thuswise:

THE COURT A QUO MISERABLY ERRED IN AWARDING ACTUAL DAMAGES GREATER


THAN WHAT WAS ALLEGED IN THE COMPLAINT ITSELF, AND EVEN MUCH MORE
GREATER THAN WHAT WERE PROVED DURING THE TRIAL, HENCE, PERPETUATING
UNJUST ENRICHMENT.

II

THE COURT A QUO SERIOUSLY ERRED IN AWARDING MORAL DAMAGES TO A


CAUSE OF ACTION OF CULPA-CONTRACTUAL EVEN WITHOUT ANY EVIDENCE OF
GROSS BAD FAITH; HENCE, CONTRARY TO THE ESTABLISHED DOCTRINE IN THE
CASES OF PHIL. RABBIT BUS LINES VS. ESGUERRA; SOBERANO VS. BENGUET
AUTO LINE AND FLORES VS. MIRANDA.

III

THE COURT A QUO MISERABLY ERRED IN HOLDING THAT MIRALLES WAS THE ONE
AT FAULT MERELY ON THE STRENGHT OF THE TESTIMONY OF THE POLICE
INVESTIGATOR WHICH IS IN TURN BASED ON THE STATEMENTS OF ALLEGED
WITNESSES WHO WERE NEVER PRESENTED ON THE WITNESS STAND.

IV

THE COURT A QUO COMMITTED A GRIEVOUS ERROR IN DISREGARDING THE


TESTIMONY OF APPELLANTS WITNESSES WHO TESTIFIED AS TO THE DEFENSE OF
EXERCISE OF DUE DILIGENCE IN THE SELECTION AND SUPERVISION OF
EMPLOYEES PURSUANT TO ART. 2180, LAST PARAGRAPH, NEW CIVIL CODE.

On September 25, 2002, the CA promulgated its decision,2 disposing:

WHEREFORE, in consideration of the foregoing premises, the assailed decision dated 18 July
19(9)7 is perforce affirmed with the following modifications:

1. Third party defendants-appellants Philtranco and Apolinar Miralles are ordered to pay
plaintiff-appellant Felix Paras jointly and severally the following amounts:
a) P1,397.95 as actual damages;

b) P50,000.00 as temperate damages;

c) P50,000.00 as moral damages; and

d) P20,000.00 as attorneys fees and costs of suit.

2. On the third party plaintiff-appellant Inlands claims, the third party defendant-appellants
Philtranco and Apolinar Miralles are hereby ordered to pay the former (Inland) jointly and
severally the amount ofP250,000.00 as and by way of temperate damages.

SO ORDERED.

The CA agreed with the RTCs finding that no trace of negligence at the time of the accident was
attributable to Inlands driver, rendering Inland not guilty of breach of contract of carriage; that faulty
brakes had caused Philtrancos bus to forcefully bump Inlands bus from behind, making it hit the
rear portion of a parked cargo truck; that the impact had resulted in considerable material damage to
the three vehicles; and that Paras and others had sustained various physical injuries.

Accordingly, the CA: (a) sustained the award of moral damages of P50,000.00 in favor of Paras
pursuant to Article 2219 of the Civil Code based on quasi-delict committed by Philtranco and its
driver; (b) reduced the actual damages to be paid by Philtranco to Paras from P54,000.00
to P1,397.95 because only the latter amount had been duly supported by receipts; (c) granted
temperate damages of P50,000.00 (in lieu of actual damages in view of the absence of competent
proof of actual damages for his hospitalization and therapy) to be paid by Philtranco to Paras; and
(d) awarded temperate damages of P250,000.00 under the same premise to be paid by Philtranco to
Inland for the material damage caused to Inlands bus.

Philtranco moved for reconsideration,3 but the CA denied its motion for reconsideration on January
21, 2004.4

Issues

Hence, this appeal, in which the petitioner submits that the CA committed grave abuse of discretion
amounting to lack of jurisdiction in awarding moral damages to Paras despite the fact that the
complaint had been anchored on breach of contract of carriage; and that the CA committed a
reversible error in substituting its own judgment by motu proprio awarding temperate damages
of P250,000.00 to Inland and P50,000.00 to Paras despite the clear fact that temperate damages
were not raised on appeal by Paras and Inland.

Ruling

The appeal lacks merit.

The Court does not disturb the unanimous findings by the CA and the RTC on the negligence
of Philtranco and its driver being the direct cause of the physical injuries of Paras and the
material damage of Inland.

Nonetheless, we feel bound to pass upon the disparate results the CA and the RTC reached
on the liabilities of Philtranco and its driver.
1.

Paras can recover moral damages


in this suit based on quasi-delict

Philtranco contends that Paras could not recover moral damages because his suit was based
on breach of contract of carriage, pursuant to which moral damages could be recovered only
if he had died, or if the common carrier had been guilty of fraud or bad faith. It argues that
Paras had suffered only physical injuries; that he had not adduced evidence of fraud or bad faith on
the part of the common carrier; and that, consequently, Paras could not recover moral damages
directly from it (Philtranco), considering that it was only being subrogated for Inland.

The Court cannot uphold the petitioners contention.

As a general rule, indeed, moral damages are not recoverable in an action predicated on a breach of
contract. This is because such action is not included in Article 2219 of the Civil Code5 as one of the
actions in which moral damages may be recovered. By way of exception, moral damages are
recoverable in an action predicated on a breach of contract: (a) where the mishap results in the
death of a passenger, as provided in Article 1764,6 in relation to Article 2206, (3),7 of the Civil Code;
and (b) where the common carrier has been guilty of fraud or bad faith,8 as provided in Article
22209 of the Civil Code.

Although this action does not fall under either of the exceptions, the award of moral damages
to Paras was nonetheless proper and valid. There is no question that Inland filed its third-party
complaint against Philtranco and its driver in order to establish in this action that they, instead
of Inland, should be directly liable to Paras for the physical injuries he had sustained because
of their negligence. To be precise, Philtranco and its driver were brought into the action on the
theory of liability that the proximate cause of the collision between Inlands bus and
Philtrancos bus had been "the negligent, reckless and imprudent manner defendant Apolinar
Miralles drove and operated his driven unit, the Philtranco Bus with Plate No. 259, owned and
operated by third-party defendant Philtranco Service Enterprises, Inc."10 The apparent objective of
Inland was not to merely subrogate the third-party defendants for itself, as Philtranco
appears to suggest,11 but, rather, to obtain a different relief whereby the third-party
defendants would be held directly, fully and solely liable to Paras and Inland for whatever
damages each had suffered from the negligence committed by Philtranco and its driver. In
other words, Philtranco and its driver were charged here as joint tortfeasors who would be jointly and
severally be liable to Paras and Inland.

Impleading Philtranco and its driver through the third-party complaint filed on March 2, 1990
was correct. The device of the third-party action, also known as impleader, was in accord with
Section 12, Rule 6 of the Revised Rules of Court, the rule then applicable, viz:

Section 12. Third-party complaint. A third-party complaint is a claim that a defending party may,
with leave of court, file against a person not a party to the action, called the third-party defendant, for
contribution, indemnity, subrogation or any other relief, in respect of his opponents claim.12

Explaining the application of Section 12, Rule 6, supra, the Court said in Balbastro v. Court of
Appeals,13 to wit:

Section 12 of Rule 6 of the Revised Rules of Court authorizes a defendant to bring into a lawsuit any
person "not a party to the action . . . for contribution, indemnity, subrogation or any other relief in
respect of his opponent's claim." From its explicit language it does not compel the defendant to bring
the third-parties into the litigation, rather it simply permits the inclusion of anyone who meets the
standard set forth in the rule. The secondary or derivative liability of the third-party is central
whether the basis is indemnity, subrogation, contribution, express or implied warranty or some other
theory. The impleader of new parties under this rule is proper only when a right to relief exists
under the applicable substantive law. This rule is merely a procedural mechanism, and
cannot be utilized unless there is some substantive basis under applicable law.

Apart from the requirement that the third-party complainant should assert a derivative or secondary
claim for relief from the third-party defendant there are other limitations on said partys ability to
implead. The rule requires that the third-party defendant is "not a party to the action" for otherwise
the proper procedure for asserting a claim against one who is already a party to the suit is by means
of counterclaim or cross-claim under sections 6 and 7 of Rule 6. In addition to the aforecited
requirement, the claim against the third-party defendant must be based upon plaintiff's claim against
the original defendant (third-party claimant). The crucial characteristic of a claim under section
12 of Rule 6, is that the original "defendant is attempting to transfer to the third-party
defendant the liability asserted against him by the original plaintiff."

Accordingly, the requisites for a third-party action are, firstly, that the party to be impleaded
must not yet be a party to the action; secondly, that the claim against the third-party
defendant must belong to the original defendant; thirdly, the claim of the original defendant
against the third-party defendant must be based upon the plaintiffs claim against the original
defendant; and, fourthly, the defendant is attempting to transfer to the third-party defendant
the liability asserted against him by the original plaintiff.14

As the foregoing indicates, the claim that the third-party complaint asserts against the third-party
defendant must be predicated on substantive law. Here, the substantive law on which the right of
Inland to seek such other relief through its third-party complaint rested were Article 2176 and
Article 2180 of the Civil Code, which read:

Article 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is called a quasi-delict and is governed by the
provisions of this chapter. (1902a)

Article 2180. The obligation imposed by article 2176 is demandable not only for ones own acts or
omissions, but also for those of persons for whom one is responsible.

xxx

Employers shall be liable for the damages caused by their employees and household helpers acting
within the scope of their assigned tasks, even though the former are not engaged in any business or
industry.

xxx

The responsibility treated of in this article shall cease when the persons herein mentioned prove that
they observed all the diligence of a good father of a family to prevent damage. (1903a)

Paras cause of action against Inland (breach of contract of carriage) did not need to be the
same as the cause of action of Inland against Philtranco and its driver (tort or quasi-delict) in
the impleader. It is settled that a defendant in a contract action may join as third-party defendants
those who may be liable to him in tort for the plaintiffs claim against him, or even directly to the
plaintiff.15 Indeed, Prof. Wright, et al., commenting on the provision of the Federal Rules of
Procedure of the United States from which Section 12, supra, was derived, observed so, to wit:16

The third-party claim need not be based on the same theory as the main claim. For example, there
are cases in which the third-party claim is based on an express indemnity contract and the original
complaint is framed in terms of negligence. Similarly, there need not be any legal relationship
between the third-party defendant and any of the other parties to the action. Impleader also is
proper even though the third partys liability is contingent, and technically does not come into
existence until the original defendants liability has been established. In addition, the words is or
may be liable in Rule 14(a) make it clear that impleader is proper even though the third-party
defendants liability is not automatically established once the third-party plaintiffs liability to the
original plaintiff has been determined.

Nor was it a pre-requisite for attachment of the liability to Philtranco and its driver that Inland
be first declared and found liable to Paras for the breach of its contract of carriage with
him.17 As the Court has cogently discoursed in Samala v. Judge Victor:18

Appellants argue that since plaintiffs filed a complaint for damages against the defendants on a
breach of contract of carriage, they cannot recover from the third-party defendants on a cause of
action based on quasi-delict. The third party defendants, they allege, are never parties liable with
respect to plaintiff s claim although they are with respect to the defendants for indemnification,
subrogation, contribution or other reliefs. Consequently, they are not directly liable to the plaintiffs.
Their liability commences only when the defendants are adjudged liable and not when they are
absolved from liability as in the case at bar.

Quite apparent from these arguments is the misconception entertained by appellants with respect to
the nature and office of a third party complaint.

Section 16, Rule 6 of the Revised Rules of Court defines a third party complaint as a "claim that a
defending party may, with leave of court, file against a person not a party to the action, called the
third-party defendant, for contribution, indemnification, subrogation, or any other relief, in respect of
his opponents claim." In the case ofViluan vs. Court of Appeals, et al., 16 SCRA 742 [1966], this
Court had occasion to elucidate on the subjects covered by this Rule, thus:

... As explained in the Atlantic Coast Line R. Co. vs. U.S. Fidelity & Guaranty Co., 52 F. Supp. 177
(1943:)

From the sources of Rule 14 and the decisions herein cited, it is clear that this rule, like the
admiralty rule, covers two distinct subjects, the addition of parties defendant to the main cause of
action, and the bringing in of a third party for a defendants remedy over. xxx

If the third party complaint alleges facts showing a third partys direct liability to plaintiff on the claim
set out in plaintiffs petition, then third party shall make his defenses as provided in Rule 12 and his
counterclaims against plaintiff as provided in Rule 13. In the case of alleged direct liability, no
amendment (to the complaint) is necessary or required. The subject-matter of the claim is contained
in plaintiff's complaint, the ground of third partys liability on that claim is alleged in third party
complaint, and third partys defense to set up in his answer to plaintiff's complaint. At that point and
without amendment, the plaintiff and third party are at issue as to their rights respecting the claim.

The provision in the rule that, The third-party defendant may assert any defense which the third-
party plaintiff may assert to the plaintiffs claim, applies to the other subject, namely, the alleged
liability of third party defendant. The next sentence in the rule, The third-party defendant is bound by
the adjudication of the third party plaintiffs liability to the plaintiff, as well as of his own to the plaintiff
or to the third-party plaintiff applies to both subjects. If third party is brought in as liable only to
defendant and judgment is rendered adjudicating plaintiff's right to recover against defendant and
defendants rights to recover against third party, he is bound by both adjudications.That part of the
sentence refers to the second subject. If third party is brought in as liable to plaintiff, then third
party is bound by the adjudication as between him and plaintiff. That refers to the first
subject. If third party is brought in as liable to plaintiff and also over to defendant, then third
party is bound by both adjudications. xxx

Under this Rule, a person not a party to an action may be impleaded by the defendant either (a) on
an allegation of liability to the latter; (b) on the ground of direct liability to the plaintiff-; or, (c) both (a)
and (b). The situation in (a) is covered by the phrase "for contribution, indemnity or subrogation;"
while (b) and (c) are subsumed under the catch all "or any other relief, in respect of his opponents
claim."

The case at bar is one in which the third party defendants are brought into the action as
directly liable to the plaintiffs upon the allegation that "the primary and immediate cause as
shown by the police investigation of said vehicular collision between (sic) the above-
mentioned three vehicles was the recklessness and negligence and lack of imprudence (sic)
of the third-party defendant Virgilio (should be Leonardo) Esguerra y Ledesma then driver of
the passenger bus." The effects are that "plaintiff and third party are at issue as to their rights
respecting the claim" and "the third party is bound by the adjudication as between him and plaintiff."
It is not indispensable in the premises that the defendant be first adjudged liable to plaintiff
before the third-party defendant may be held liable to the plaintiff, as precisely, the theory of
defendant is that it is the third party defendant, and not he, who isdirectly liable to plaintiff.
The situation contemplated by appellants would properly pertain to situation (a) above wherein the
third party defendant is being sued for contribution, indemnity or subrogation, or simply stated, for a
defendant's "remedy over".19

It is worth adding that allowing the recovery of damages by Paras based on quasi-delict, despite his
complaint being upon contractual breach, served the judicial policy of avoiding multiplicity of suits
and circuity of actions by disposing of the entire subject matter in a single litigation.20

2.

Award of temperate damages was in order

Philtranco assails the award of temperate damages by the CA considering that, firstly, Paras and
Inland had not raised the matter in the trial court and in their respective appeals; secondly, the CA
could not substitute the temperate damages granted to Paras if Paras could not properly establish
his actual damages despite evidence of his actual expenses being easily available to him; and,
thirdly, the CA gravely abused its discretion in granting motu proprio the temperate damages
of P250,000.00 to Inland although Inland had not claimed temperate damages in its pleading or
during trial and even on appeal.

The Court cannot side with Philtranco.

Actual damages, to be recoverable, must not only be capable of proof, but must actually be proved
with a reasonable degree of certainty. The reason is that the court "cannot simply rely on
speculation, conjecture or guesswork in determining the fact and amount of damages," but "there
must be competent proof of the actual amount of loss, credence can be given only to claims which
are duly supported by receipts."21
The receipts formally submitted and offered by Paras were limited to the costs of medicines
purchased on various times in the period from February 1987 to July 1989 (Exhibits E to E-35,
inclusive) totaling only P1,397.95.22 The receipts by no means included hospital and medical
expenses, or the costs of at least two surgeries as well as rehabilitative therapy. Consequently, the
CA fixed actual damages only at that small sum of P1,397.95. On its part, Inland offered no definite
proof on the repairs done on its vehicle, or the extent of the material damage except the testimony of
its witness, Emerlinda Maravilla, to the effect that the bus had been damaged beyond economic
repair.23 The CA rejected Inlands showing of unrealized income worth P3,945,858.50 for 30 months
(based on alleged average weekly income of P239,143.02 multiplied by its guaranteed revenue
amounting to 55% thereof, then spread over a period of 30 months, the equivalent to the remaining
40% of the vehicles un-depreciated or net book value), finding such showing arbitrary, uncertain and
speculative.24 As a result, the CA allowed no compensation to Inland for unrealized income.

Nonetheless, the CA was convinced that Paras should not suffer from the lack of definite proof of his
actual expenses for the surgeries and rehabilitative therapy; and that Inland should not be deprived
of recourse to recover its loss of the economic value of its damaged vehicle. As the records
indicated, Paras was first rushed for emergency treatment to the San Pablo Medical Center in San
Pablo City, Laguna, and was later brought to the National Orthopedic Hospital in Quezon City where
he was diagnosed to have suffered a dislocated hip, fracture of the fibula on the right leg, fracture of
the small bone of the right leg, and closed fracture on the tibial plateau of the left leg. He underwent
surgeries on March 4, 1987 and April 15, 1987 to repair the fractures.25 Thus, the CA awarded to him
temperate damages of P50,000.00 in the absence of definite proof of his actual expenses towards
that end. As to Inland, Maravillas testimony of the bus having been damaged beyond economic
repair showed a definitely substantial pecuniary loss, for which the CA fixed temperate damages
of P250,000.00. We cannot disturb the CAs determination, for we are in no position today to judge
its reasonableness on account of the lapse of a long time from when the accident occurred.26

In awarding temperate damages in lieu of actual damages, the CA did not err, because Paras and
Inland were definitely shown to have sustained substantial pecuniary losses. It would really be a
travesty of justice were the CA now to be held bereft of the discretion to calculate moderate or
temperate damages, and thereby leave Paras and Inland without redress from the wrongful act of
Philtranco and its driver.27 We are satisfied that the CA exerted effort and practiced great care to
ensure that the causal link between the physical injuries of Paras and the material loss of Inland, on
the one hand, and the negligence of Philtranco and its driver, on the other hand, existed in fact. It
also rejected arbitrary or speculative proof of loss. Clearly, the costs of Paras surgeries and
consequential rehabilitation, as well as the fact that repairing Inlands vehicle would no longer be
economical justly warranted the CA to calculate temperate damages of P50,000.00
and P250,000.00 respectively for Paras and Inland.

There is no question that Article 2224 of the Civil Code expressly authorizes the courts to award
temperate damages despite the lack of certain proof of actual damages, to wit:

Article 2224. Temperate or moderate damages, which are more than nominal but less than
compensatory damages, may be recovered when the court finds that some pecuniary loss has been
suffered but its amount cannot, from the nature of the case, be proved with certainty.

The rationale for Article 2224 has been stated in Premiere Development Bank v. Court of
Appeals28 in the following manner:

Even if not recoverable as compensatory damages, Panacor may still be awarded damages in the
concept of temperate or moderate damages. When the court finds that some pecuniary loss has
been suffered but the amount cannot, from the nature of the case, be proved with certainty,
temperate damages may be recovered. Temperate damages may be allowed in cases where from
the nature of the case, definite proof of pecuniary loss cannot be adduced, although the court is
convinced that the aggrieved party suffered some pecuniary loss.

The Code Commission, in explaining the concept of temperate damages under Article 2224, makes
the following comment:

In some States of the American Union, temperate damages are allowed. There are cases where
from the nature of the case, definite proof of pecuniary loss cannot be offered, although the court is
convinced that there has been such loss. For instance, injury to ones commercial credit or to the
goodwill of a business firm is often hard to show with certainty in terms of money. Should damages
be denied for that reason? The judge should be empowered to calculate moderate damages in such
cases, rather than that the plaintiff should suffer, without redress from the defendants wrongful act.

3.

Paras loss of earning capacity


must be compensated

In the body of its decision, the CA concluded that considering that Paras had a minimum monthly
income ofP8,000.00 as a trader he was entitled to recover compensation for unearned income
during the 3-month period of his hospital confinement and the 6-month period of his recovery and
rehabilitation; and aggregated his unearned income for those periods to P72,000.00.29 Yet, the CA
omitted the unearned income from the dispositive portion.

The omission should be rectified, for there was credible proof of Paras loss of income during his
disability. According to Article 2205, (1), of the Civil Code, damages may be recovered for loss or
impairment of earning capacity in cases of temporary or permanent personal injury. Indeed,
indemnification for damages comprehends not only the loss suffered (actual damages or damnum
emergens) but also the claimants lost profits (compensatory damages or lucrum cessans).30 Even
so, the formula that has gained acceptance over time has limited recovery to net earning capacity;
hence, the entire amount of P72,000.00 is not allowable. The premise is obviously that net earning
capacity is the persons capacity to acquire money, less the necessary expense for his own
living.31 To simplify the determination, therefore, the net earning capacity of Paras during the 9-
month period of his confinement, surgeries and consequential therapy is pegged at only half of his
unearned monthly gross income of P8,000.00 as a trader, or a total of P36,000.00 for the 9-month
period, the other half being treated as the necessary expense for his own living in that period.

It is relevant to clarify that awarding the temperate damages (for the substantial pecuniary losses
corresponding to Parass surgeries and rehabilitation and for the irreparability of Inlands damaged
bus) and the actual damages to compensate lost earnings and costs of medicines give rise to no
incompatibility. These damages cover distinct pecuniary losses suffered by Paras and Inland,32 and
do not infringe the statutory prohibition against recovering damages twice for the same act or
omission.33

4.

Increase in award of attorneys fees

Although it is a sound policy not to set a premium on the right to litigate,34 we consider the grant to
Paras and Inland of reasonable attorneys fees warranted. Their entitlement to attorneys fees was
by virtue of their having been compelled to litigate or to incur expenses to protect their interests,35 as
well as by virtue of the Court now further deeming attorneys fees to be just and equitable.36

In view of the lapse of a long time in the prosecution of the claim,37 the Court considers it reasonable
and proper to grant attorneys fees to each of Paras and Inland equivalent to 10% of the total
amounts hereby awarded to them, in lieu of only P20,000.00 for that purpose granted to Paras.

5.

Legal interest on the amounts awarded

Pursuant to Eastern Shipping Lines, Inc. v. Court of Appeals,38 legal interest at the rate of 6% per
annum accrues on the amounts adjudged reckoned from July 18, 1997, the date when the RTC
rendered its judgment; and legal interest at the rate of 12% per annum shall be imposed from the
finality of the judgment until its full satisfaction, the interim period being regarded as the equivalent of
a forbearance of credit.

WHEREFORE, the Court AFFIRMS WITH MODIFICATION the decision of the Court of Appeals
promulgated on September 25, 2002, by ordering PHILTRANCO SERVICE ENTERPRISES, INC.
and APOLINAR MIRALLES to pay, jointly and severally, as follows:

1. To Felix Paras:

(a) P1,397.95, as reimbursement for the costs of medicines purchased between


February 1987 and July 1989;

(b) P50,000.00 as temperate damages;

(c) P50,000.00 as moral damages;

(d) P36,000.00 for lost earnings;

(e) 10% of the total of items (a) to (d) hereof as attorneys fees; and

(f) Interest of 6% per annum from July 18, 1997 on the total of items (a) to (d) hereof
until finality of this decision, and 12% per annum thereafter until full payment.

2. To Inland Trailways, Inc.:

(a) P250,000.00 as temperate damages;

(b) 10% of item (a) hereof; and

(c) Interest of 6% per annum on item (a) hereof from July 18, 1997 until finality of this
decision, and 12% per annum thereafter until full payment.

3. The petitioner shall pay the costs of suit.

SO ORDERED.
#8G.R. No. 174082 January 16, 2012

GEORGIA T. ESTEL, Petitioner,


vs.
RECAREDO P. DIEGO, SR. and RECAREDO R. DIEGO, JR., Respondents.

DECISION

PERALTA, J.

Before the Court is a petition for review on certiorari seeking to annul and set aside the
Decision1 promulgated on September 30, 2005 and Resolution2 dated August 10, 2006 by the Court
of Appeals (CA) in CA-G.R. SP No. 77197. The assailed Decision affirmed the Decision dated
October 7, 2002 of the Regional Trial Court (RTC) of Gingoog City, Branch 27, Misamis Oriental,
while the questioned Resolution denied petitioner's Motion for Reconsideration.

The factual and procedural antecedents of the case are as follows:

The present petition originated from a Complaint for Forcible Entry, Damages and Injunction with
Application for Temporary Restraining Order filed by herein respondents Recaredo P. Diego,
Sr., and Recaredo R. Diego, Jr. with the Municipal Trial Court in Cities (MTCC) of Gingoog City,
Misamis Oriental. Respondents alleged that on April 16, 1991, they entered into a contract of sale of
a 306 square-meter parcel of land, denominated as Lot 19, with petitioner; after receiving the
amount of P17,000.00 as downpayment, petitioner voluntarily delivered the physical and material
possession of the subject property to respondents; respondents had been in actual, adverse and
uninterrupted possession of the subject lot since then and that petitioner never disturbed, molested,
annoyed nor vexed respondents with respect to their possession of the said property; around 8:30 in
the morning of July 20, 1995, petitioner, together with her two grown-up sons and five other persons,
uprooted the fence surrounding the disputed lot, after which they entered its premises and then cut
and destroyed the trees and plants found therein; respondent Recaredo R. Diego, Jr. witnessed the
incident but found himself helpless at that time. Respondents prayed for the restoration of their
possession, for the issuance of a permanent injunction against petitioner as well as payment of
damages, attorney's fees and costs of suit.3

On July 26, 1995, the MTCC issued a Temporary Restraining Order4 against petitioner and any
person acting in her behalf.

In her Answer with Special/Affirmative Defenses and Counterclaims, petitioner denied the material
allegations in the Complaint contending that respondents were never in physical, actual, public,
adverse and uninterrupted possession of the subject lot; full possession and absolute ownership of
the disputed parcel of land, with all improvements thereon, had always been that of petitioner and
her daughter; the agreement she entered into with the wife of respondent Recaredo P. Diego, Sr. for
the sale of the subject lot had been abrogated; she even offered to return the amount she received
from respondents, but the latter refused to accept the same and instead offered an additional
amount of P12,000.00 as part of the purchase price but she also refused to accept their offer; the
subject of the deed of sale between petitioner and respondents and what has been delivered to
respondents was actually Lot 16 which is adjacent to the disputed Lot 19; that they did not destroy
the improvements found on the subject lot and, in fact, any improvements therein were planted by
petitioner's parents.5

On February 16, 2002, the MTCC rendered a Decision, the dispositive portion of which reads as
follows:
WHEREFORE, viewed in the light of the foregoing, judgment is hereby rendered in favor of the
plaintiffs [herein respondents], dismissing defendant's [herein petitioner's] counterclaim and ordering
the defendant, her agents and representatives:

1. To vacate the premises of the land in question and return the same to the plaintiffs;

2. To pay plaintiffs, the following, to wit:

a) P100.00 a month as rentals for the use of the litigated property reckoned from the
filing of the complaint until the defendant vacates the property;

b) P5,000.00 representing the value of the fence and plants damaged by the
defendants as actual damages;

c) P20,000.00 as and for attorney's fees;

d) P2,000.00 for litigation expenses;

3. Ordering the defendant to pay the cost of suit;

Execution shall immediately issue upon motion unless an appeal has been perfected and the
defendant to stay execution files a supersedeas bond which is hereby fixed at P10,000.00 approved
by this Court and executed in favor of the plaintiffs, to pay the rents, damages and costs accruing
down to the time of the judgment appealed from and unless, during the pendency of the appeal,
defendant deposits with the appellate court the amount ofP100.00 as monthly rental due from time to
time on or before the 10th day of each succeeding month or period.

SO ORDERED.6

Aggrieved, petitioner appealed to the RTC of Gingoog City.7

On October 7, 2002, the RTC rendered its Decision8 affirming the assailed Decision of the MTCC.

Petitioner then filed a petition for review with the CA.

On September 30, 2005, the CA promulgated its Decision which affirmed the Decision of the RTC.

Petitioner filed a Motion for Reconsideration, but the CA denied it in its Resolution dated August 10,
2006.

Hence, the instant petition based on the following arguments:

[THE] COURT OF APPEALS, 23rd DIVISION, ERRED IN FAILING TO CONSIDER THAT THE RTC
BRANCH 27 OF GINGOOG CITY ERRONEOUSLY CONCLUDED THAT THE MTCC OF
GINGOOG CITY HAS JURISDICTION OVER THE SUBJECT MATTER OF THE ACTION.

[THE] COURT OF APPEALS ERRED IN NOT RECOGNIZING THAT THE RTC BRANCH 27 OF
GINGOOG CITY FAILED TO MAKE A FINDING OF FACT THAT THE COMPLAINT STATES NO
CAUSE OF ACTION.
THE COURT OF APPEALS ERRED LIKEWISE IN AFFIRMING THE DECISION OF THE
REGIONAL TRIAL COURT BRANCH 27 OF GINGOOG CITY OVERLOOKING THE FACT THAT
ITS FINDING OF FACTS AND CONCLUSIONS ARE AGAINST OR NOT SUPPORTED BY
COMPETENT MATERIAL EVIDENCE.9

Petitioner contends that since respondents failed to allege the location of the disputed parcel of
land in their complaint, the MTCC did not acquire jurisdiction over the subject matter of the said
complaint. Petitioner also avers that the MTCC did not acquire jurisdiction over the case for
failure of respondents to specifically allege facts constitutive of forcible entry. On the bases of
these two grounds, petitioner argues that the MTCC should have dismissed the complaint motu
proprio.

Petitioner also avers that the complaint states no cause of action because the verification and
certificate of non-forum shopping accompanying the complaint are defective and, as such,
the complaint should be treated as an unsigned pleading. As to the verification, petitioner
contends that it should be based on respondent's personal knowledge or on authentic record
and not simply upon "knowledge, information and belief." With respect to the certificate of non-
forum shopping, petitioner claims that its defect consists in respondents' failure to make an
undertaking therein that if they should learn that a similar action or proceeding has been filed or is
pending before the Supreme Court, the Court of Appeals or any other tribunal or agency, they shall
report that fact within five (5) days therefrom to the court or agency wherein the original pleading and
sworn certification have been filed.

The Court does not agree.

A review of the records shows that petitioner did not raise the issue of jurisdiction or venue in
her Answer filed with the MTCC. The CA correctly held that even if the geographical location of the
subject property was not alleged in the Complaint, petitioner failed to seasonably object to the same
in her Affirmative Defense, and even actively participated in the proceedings before the MTCC. In
fact, petitioner did not even raise this issue in her appeal filed with the RTC. Thus, she is
already estopped from raising the said issue in the CA or before this Court. Estoppel sets in
when a party participates in all stages of a case before challenging the jurisdiction of the
lower court.10 One cannot belatedly reject or repudiate the lower court's decision after voluntarily
submitting to its jurisdiction, just to secure affirmative relief against one's opponent or after failing to
obtain such relief.11 The Court has, time and again, frowned upon the undesirable practice of a party
submitting a case for decision and then accepting the judgment, only if favorable, and attacking it for
lack of jurisdiction when adverse.12

In any case, since the Complaint is clearly and admittedly one for forcible entry, the jurisdiction over
the subject matter of the case is, thus, upon the MTCC of Gingoog City. Section 33 of Batas
Pambansa Bilang 129, as amended by Section 3 of Republic Act (R.A.) No. 7691, as well as Section
1, Rule 70 of the Rules of Court, clearly provides that forcible entry and unlawful detainer cases fall
within the exclusive original jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts. Hence, as the MTCC has jurisdiction over the action, the question
whether or not the suit was brought in the place where the land in dispute is located was no
more than a matter of venue and the court, in the exercise of its jurisdiction over the case,
could determine whether venue was properly or improperly laid.13 There having been no
objection on the part of petitioner and it having been shown by evidence presented by both parties
that the subject lot was indeed located in Gingoog City, and that it was only through mere
inadvertence or oversight that such information was omitted in the Complaint, petitioner's objection
became a pure technicality.
As to respondents' supposed failure to allege facts constitutive of forcible entry, it is settled that in
actions for forcible entry, two allegations are mandatory for the municipal court to acquire
jurisdiction.14 First, the plaintiff must allege his prior physical possession of the property.15 Second,
he must also allege that he was deprived of his possession by any of the means provided for in
Section 1, Rule 70 of the Revised Rules of Court, namely, force, intimidation, threats, strategy, and
stealth.16

In the present case, it is clear that respondents sufficiently alleged in their Complaint the material
facts constituting forcible entry, as they explicitly claimed that they had prior physical possession of
the subject property since its purchase from petitioner, who voluntarily delivered the same to them.
They also particularly described in their complaint how petitioner, together with her two sons and five
other persons, encroached upon the subject property and dispossessed them of the same.
Respondents' complaint contains the allegations that petitioner, abetting and conspiring with other
persons, without respondents' knowledge and consent and through the use of force and intimidation,
entered a portion of their land and, thereafter, uprooted and destroyed the fence surrounding the
subject lot, as well as cut the trees and nipa palms planted thereon. Unlawfully entering the subject
property and excluding therefrom the prior possessor would necessarily imply the use of force and
this is all that is necessary.17 In order to constitute force, the trespasser does not have to institute a
state of war.18 No other proof is necessary.19 In the instant case, it is, thus, irrefutable that
respondents sufficiently alleged that the possession of the subject property was wrested
from them through violence and force.

Anent respondents' alleged defective verification, the Court again notes that this issue was not
raised before the MTCC. Even granting that this matter was properly raised before the court a quo,
the Court finds that there is no procedural defect that would have warranted the outright dismissal of
respondents' complaint as there is compliance with the requirement regarding verification.

Section 4, Rule 7 of the Rules of Court, as amended by A.M. No. 00-2-10-SC provides:

Sec. 4. Verification. Except when otherwise specifically required by law or rule, pleadings need not
be under oath, verified or accompanied by affidavit.

A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations
therein are true and correct of his personal knowledge or based on authentic records.

A pleading required to be verified which contains a verification based on "information and belief" or
upon "knowledge, information and belief" or lacks a proper verification, shall be treated as an
unsigned pleading.

A reading of respondents verification reveals that they complied with the abovequoted procedural
rule. Respondents confirmed that they had read the allegations in the Complaint which were
1awp++i1

true and correct based on their personal knowledge. The addition of the words "to the best"
1wphi1

before the phrase "of our own personal knowledge" did not violate the requirement under Section 4,
Rule 7, it being sufficient that the respondents declared that the allegations in the complaint
are true and correct based on their personal knowledge.20

Verification is deemed substantially complied with when, as in the instant case, one who has ample
knowledge to swear to the truth of the allegations in the complaint or petition signs the verification,
and when matters alleged in the petition have been made in good faith or are true and correct.21

As to respondents' certification on non-forum shopping, a reading of respondents


Verification/Certification reveals that they, in fact, certified therein that they have not commenced
any similar action before any other court or tribunal and to the best of their knowledge no such other
action is pending therein. The only missing statement is respondents' undertaking that if they
should thereafter learn that the same or similar action has been filed or is pending, they shall
report such fact to the court. This, notwithstanding, the Court finds that there has been
substantial compliance on the part of respondents.

It is settled that with respect to the contents of the certification against forum shopping, the rule of
substantial compliance may be availed of.22 This is because the requirement of strict compliance with
the provisions regarding the certification of non-forum shopping merely underscores its mandatory
nature in that the certification cannot be altogether dispensed with or its requirements completely
disregarded.23 It does not thereby interdict substantial compliance with its provisions under justifiable
circumstances, as the Court finds in the instant case.24

WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of
Appeals areAFFIRMED.

SO ORDERED.

#9G.R. No. 176949 June 27, 2012

ASIAN CONSTRUCTION AND DEVELOPMENT CORPORATION, Petitioner,


vs.
LOURDES K. MENDOZA, Respondent.

DECISION

DEL CASTILLO, J.:

In civil cases, the party with the most convincing evidence prevails.

This Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assails the
Decision2 dated April 28, 2006 and the Resolution3 dated March 9, 2007 of the Court of Appeals
(CA) in CA-G.R. CV No. 69180.

Factual Antecedents

On January 6, 2000, respondent Lourdes K. Mendoza, sole proprietor of Highett Steel Fabricators
(Highett), filed before the Regional Trial Court (RTC) of Caloocan City, Branch 126, a Complaint4 for
a sum of money, docketed as Civil Case No. C-19100, against petitioner Asian Construction and
Development Corporation, a duly registered domestic corporation.

In the complaint, respondent alleged that from the period August 7, 1997 to March 4, 1998, petitioner
purchased from Highett various fabricated steel materials and supplies amounting to P1,206,177.00,
exclusive of interests;5that despite demand, petitioner failed and/or refused to pay;6 and that due to
the failure and/or refusal of petitioner to pay the said amount, respondent was compelled to engage
the services of counsel.7

Petitioner moved for a bill of particulars on the ground that no copies of the purchase orders and
invoices were attached to the complaint to enable petitioner to prepare a responsive pleading to the
complaint.8 The RTC, however, in an Order dated March 1, 2000, denied the motion.9 Accordingly,
petitioner filed its Answer with Counterclaim10 denying liability for the claims and interposing the
defense of lack of cause of action.11

To prove her case, respondent presented the testimonies of (1) Artemio Tejero (Tejero), the
salesman of Highett who confirmed the delivery of the supplies and materials to petitioner, and (2)
Arvin Cheng, the General Manager of Highett.12

The presentation of evidence for petitioner, however, was deemed waived and terminated due to the
repeated non-appearance of petitioner and its counsel.13

Ruling of the Regional Trial Court

On December 1, 2000, the RTC rendered a Decision14 in favor of respondent, to wit:

WHEREFORE, in view of the foregoing, judgment is hereby rendered ordering the [petitioner]
corporation to pay the [respondent] the following:

a. P1,206,177.00, representing the principal amount, which is the purchase price of the
materials and other supplies ordered by and delivered to [petitioner];

b. P244,288.59, representing the accrued interest as of August 31, 1999 plus xxx additional
interest to be computed at the rate of 12% per annum until the total indebtedness is paid in
full;

c. P150,000.00 for and as Attorneys fees; and

d. Cost of suit.

SO ORDERED.15

Ruling of the Court of Appeals

On appeal, the CA affirmed with modification the Decision of the RTC. The decretal portion of the
CA Decision16reads:

WHEREFORE, the assailed Decision of the RTC [Br. 126, Caloocan City] dated December 1, 2000
is herebyAFFIRMED with the MODIFICATION, in that the reckoning point for the computation of the
1% monthly interest shall be 30 days from date of each delivery.

SO ORDERED.17

Petitioner sought reconsideration but the same was unavailing.18

Issues

Hence, this petition raising the following issues:

I. WHETHER X X X THE CHARGE INVOICES ARE ACTIONABLE DOCUMENTS.


II. WHETHER X X X THE DELIVERY OF THE ALLEGED MATERIALS [WAS] DULY
PROVEN.

III. WHETHER X X X RESPONDENT IS ENTITLED TO ATTORNEYS FEES.19

Petitioners Arguments

Petitioner argues that a charge or sales invoice is not an actionable document; thus, petitioners
failure to deny under oath its genuineness and due execution does not constitute an admission
thereof.20 Petitioner likewise insists that respondent was not able to prove her claim as the invoices
offered as evidence were not properly authenticated by her witnesses.21 Lastly, petitioner claims that
the CA erred in affirming the award of attorneys fees as the RTC Decision failed to expressly state
the basis for the award thereof.22

Respondents Arguments

Respondent, in her Comment,23 prays for the dismissal of the petition contending that the arguments
raised by petitioner are a mere rehash of those presented and already passed upon by the
CA.24 She maintains that charge invoices are actionable documents,25 and that these were properly
identified and authenticated by witness Tejero, who testified that upon delivery of the supplies and
materials, the invoices were stamped received by petitioners employee.26 Respondent contends that
the award of attorneys fees was justified as the basis for the award was clearly established during
the trial.27

Our Ruling

The petition is partly meritorious.

The charge invoices are not actionable documents

Section 7 of Rule 8 of the Rules of Court states:

SEC. 7. Action or defense based on document. Whenever an action or defense is based upon a
written instrument or document, the substance of such instrument or document shall be set forth in
the pleading, and the original or a copy thereof shall be attached to the pleading as an exhibit, which
shall be deemed to be a part of the pleading, or said copy may with like effect be set forth in the
pleading. (Emphasis supplied.)

Based on the foregoing provision, a document is actionable when an action or defense is grounded
upon such written instrument or document. In the instant case, the Charge Invoices28 are not
actionable documents per se as these "only provide details on the alleged transactions."29 These
documents need not be attached to or stated in the complaint as these are evidentiary in nature.30 In
fact, respondents cause of action is not based on these documents but on the contract of sale
between the parties.

Delivery of the supplies and materials was duly proved

But although the Charge Invoices are not actionable documents, we find that these, along with the
Purchase Orders,31 are sufficient to prove that petitioner indeed ordered supplies and materials from
Highett and that these were delivered to petitioner.
Moreover, contrary to the claim of petitioner, the Charge Invoices were properly identified and
authenticated by witness Tejero who was present when the supplies and materials were delivered to
petitioner and when the invoices were stamped received by petitioners employee, Roel Barandon.32

It bears stressing that in civil cases, only a preponderance of evidence or "greater weight of the
evidence" is required.33 In this case, except for a bare denial, no other evidence was presented by
petitioner to refute respondents claim. Thus, we agree with the CA that the evidence preponderates
in favor of respondent.

Basis for the award of Attorneys fees must be stated in the decision

However, with respect to the award of attorneys fees to respondent, we are constrained to disallow
the same as the rationale for the award was not stated in

the text of the RTC Decision but only in the dispositive portion.34 1wphi1

WHEREFORE, the petition is hereby PARTLY GRANTED. The assailed Decision dated April 28,
2006 and the Resolution dated March 9, 2007 of the Court of Appeals in CA-G.R. CV No. 69180 are
hereby AFFIRMED with MODIFICATION. The award of attorneys fees in the amount
of P150,000.00 is hereby DELETED.

SO ORDERED

#10G.R. No. 195592 September 5, 2012

MAGDIWANG REALTY CORPORATION, RENATO P. DRAGON and ESPERANZA


TOLENTINO, Petitioners,
vs.
THE MANILA BANKING CORPORATION, substituted by FIRST SOVEREIGN ASSET
MANAGEMENT (SPV-AMC), INC., Respondent.

DECISION

REYES, J.:

This resolves the petition for review on certiorari filed under Rule 45 of the Rules of Court which
questions. the Decision1 dated October 11, 201 0 and Resolution2 dated January 31, 2011 of the
Court of Appeals (CA) in CA-G .R. CV No. 90098 entitled The Manila Banking Corporation,
substituted by First Sovereign Asset Management, Inc., Plaintiff-Appellee, v. Magdiwang Realty
Corporation, Renata P. Dragon and Esperanza Tolentino, Defendants-Appellants.

The Factual Antecedents

The case stems from a complaint3 for sum of money filed on April 18, 2000 before the Regional Trial
Court (RTC), Makati City by herein respondent, The Manila Banking Corporation (TMBC), against
herein petitioners, Magdiwang Realty Corporation (Magdiwang), Renato P. Dragon (Dragon) and
Esperanza Tolentino (Tolentino), after said petitioners allegedly defaulted in the payment of their
debts under the five promissory notes4 they executed in favor of TMBC, which contained the
following terms:
Maturity Date Amount
Promissory Note No. 4953 December 27, 1976 Php500,000.00

Promissory Note No. 10045 March 27, 1982 Php500,000.00

Promissory Note No. 10046 March 27, 1982 Php500,000.00


Promissory Note No. 10047 March 27, 1982 Php500,000.00
Promissory Note No. 10048 March 27, 1982 Php500,000.00

All promissory notes included stipulations on the payment of interest and additional charges in case
of default by the debtors. Despite several demands for payment made by TMBC, the petitioners
allegedly failed to heed to the banks demands, prompting the filing of the complaint for sum of
money. The case was docketed as Civil Case No. 00-511 and raffled to Branch 148 of the RTC of
Makati City.

Instead of filing a responsive pleading with the trial court, the petitioners filed on October 12, 2000,
which was notably beyond the fifteen (15)-day period allowed for the filing of a responsive pleading,
a Motion for Leave to Admit Attached Motion to Dismiss5 and a Motion to Dismiss,6 raising therein
the issues of novation, lack of cause of action against individuals Dragon and Tolentino, and the
impossibility of the novated contract due to a subsequent act of the Congress. The motions were
opposed by the respondent TMBC, via its Opposition7 which likewise asked that the petitioners be
declared in default for their failure to file their responsive pleading within the period allowed under
the law.

Acting on these incidents, the RTC issued an Order8 on July 5, 2001 declaring the petitioners in
default given the following findings:

The record shows that as per Officers Return dated 19 September 2000, summons were served on
even date by way of substituted service. Summons were received by a certain LINDA G.
MANLIMOS, a person of sufficient age and discretion then working/residing at the address indicated
in the Complaint at No. 15 Tamarind St., Forbes Park, Makati City.

Consequently, in accordance with the Rules, defendants should have filed an Answer or Motion to
Dismiss or any responsive pleading for that matter within the reglementary period, which is fifteen
(15) days from receipt of Summons and a copy of the complaint with attached annexes. Accordingly,
defendants should have filed their responsive pleading on October 2, 2000 but no pleading was filed
on the aforesaid date, not even a Motion for Extension of Time. Instead, defendants Motion to
Dismiss found its way into the court only on the 13th day of October, clearly beyond the period
contemplated by the Rules. A perusal of the Motion for Leave to Admit the Motion to Dismiss filed by
defendants reveals that the case, as claimed by the counsel for defendants, was just referred to the
counsel only on October 10, and further insinuated that the Motion to Dismiss was only filed on the
said date in view of the complicated factual and legal issues involved. While this Court appreciates
the efforts and tenacity shown by defendants counsel for having prepared a [lengthy] pleading for
his clients in so short a time, the Court will have to rule that the Motion to Dismiss was nonetheless
filed out of time, hence, there is sufficient basis to declare defendants in default. x x x.9

The decretal portion of the Order then reads:


WHEREFORE, premises considered, defendants Motion to Dismiss is hereby treated as a pleading
which has not been filed at all and cannot be ruled upon by the Court anymore for the same has
been filed out of time. Plaintiffs prayer to declare defendants in default is hereby GRANTED, and as
a consequence, defendants are hereby declared in DEFAULT.

SO ORDERED.10

The petitioners motion for reconsideration was denied by the trial court in its Order11 dated August 2,
2005. The ex parte presentation of evidence by the bank before the trial courts Presiding Judge was
scheduled in the same Order.

Unsatisfied with the RTC orders, the petitioners filed with the CA a petition for certiorari, which was
docketed as CA-G.R. SP No. 91820. In a Decision12 dated December 2, 2006, the CA affirmed the
RTC orders after ruling that the trial court did not commit grave abuse of discretion when it declared
herein petitioners in default. The denial of petitioners motion for reconsideration prompted the filing
of a petition for review on certiorari before this Court, which, through its Resolutions dated March 5,
200813 and June 25, 2008,14 denied the petition for lack of merit.

In the meantime, TMBCs presentation of evidence ex parte proceeded before Presiding Judge
Oscar B. Pimentel of the RTC of Makati City.

The Ruling of the RTC

On May 20, 2007, the RTC rendered its Decision15 in favor of TMBC and against herein petitioners.
The decisions dispositive portion reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff as against:

1. Defendant Magdiwang Realty Corporation, requiring said defendant to pay plaintiff the sum
of P 500,000.00 as indicated in Promissory Note No. 4953;

2. Requiring defendant Magdiwang Realty Corporation to pay the plaintiff interest to the principal
loan at the rate of 14% per annum from 27 December 1976 until the amount is paid;

3. Requiring the defendant Magdiwang Realty Corporation to pay plaintiff penalty charges of 4% per
annum from December 27, 1976 until the whole amount is paid; and

4. Requiring defendant Magdiwang Realty Corporation to pay plaintiff attorneys fees equivalent to
10% of the total outstanding obligation.

Further, judgment is rendered in favor of plaintiff and against defendants Magdiwang Realty
Corporation, Renato Dragon and Esperanza Tolentino ordering said defendants to jointly and
severally pay the plaintiff the following:

1. The principal amount of P 500,000.00 as indicated in Promissory Note No. 10045;

2. To pay the principal amount of P 500,000.00 as indicated in Promissory Note No.


10046;

3. To pay the principal amount of P 500,000.00 as indicated in Promissory Note No.


10047;
4. To pay the principal amount of P 500,000.00 as indicated in Promissory Note No.
10048;

5. To pay interest in the principal loan at the rate of sixteen (16%) percent per annum
as stipulated in PN Nos. 10045, 10046, 10047 and 10048 from March 27, 1981 until
the whole amount is paid;

6. To pay penalty at the rate of one percent a month (1%) on the principal amount
[of] loan plus unpaid interest at the rate of 16% per annum in PN Nos. 10045, 10046,
10047 and 10048 starting from March 27, 1981 until the whole amount is paid; and

7. To pay 10% of the total amount due and outstanding under PN Nos. 10045,
10046, 10047 and 10048 as attorneys fees.

Costs against the defendants.

SO ORDERED.16

The petitioners motion for reconsideration was denied by the trial court via its Order17 dated
November 5, 2007. Feeling aggrieved, the petitioners appealed to the CA, imputing error on the part
of the trial court in: (1) not declaring that TMBCs cause of action was already barred by the statute
of limitations; (2) declaring herein petitioners liable to pay TMBC despite the alleged novation of the
subject obligations; (3) declaring TMBC entitled to its claims despite the alleged failure of the bank to
substantiate its claims; (4) declaring TMBC entitled to attorneys fees and litigation expenses; and
(5) declaring herein petitioners in default.

While appeal was pending before the appellate court, TMBC and First Sovereign Asset Management
(SPV-AMC), Inc. (FSAMI) filed a Joint Motion for Substitution, asking that TMBC be substituted by
FSAMI after the former executed in favor of the latter a Deed of Assignment covering all of its rights,
title and interest over the loans subject of the case.

The Ruling of the CA

On October 11, 2010, the CA rendered its Decision18 dismissing the petitioners appeal. The
decisions dispositive portion reads:

WHEREFORE, in view of the foregoing premises, the appeal filed in this case is
hereby DENIED and, consequently, DISMISSED. The assailed Decision dated May 20, 2007 and
Order dated November 5, 2007 of the Regional Trial Court, Branch 148, in Makati City in Civil Case
No. 00-511 are herebyAFFIRMED.

SO ORDERED.19

On the issue of prescription, the CA cited the rule that the prescriptive period is interrupted in any of
the following instances: (1) when an action is filed before the court; (2) when there is a written
extrajudicial demand by the creditors; and (3) when there is any written acknowledgment of the debt
by the debtor. The appellate court held:

As shown by the evidence, we arrived at the conclusion that the prescriptive period was legally
interrupted on September 19, 1984 when the defendants-appellants, through several letters,
proposed for the restructuring of their loans until the plaintiff-appellee sent its final demand letter on
September 10, 1999. Indeed, the period during which the defendants-appellants were seeking
reconsideration for the non-settlement of their loans and proposing payment schemes of the same
should not be reckoned against it. When prescription is interrupted, all the benefits acquired so far
from the lapse of time cease and, when prescription starts anew, it will be entirely a new one. This
concept should not be equated with suspension where the past period is included in the computation
being added to the period after prescription is resumed. Consequently, when the plaintiff-appellee
sent its final demand letter to the defendants appellants, thus, foreclosing all possibilities of reaching
a settlement of the loans which could be favorable to both parties, the period of ten years within
which to enforce the five promissory notes under Article 1142 of the New Civil Code began to run
again and, therefore, the action filed on April 18, 2000 to compel the defendants-appellants to pay
their obligations under the promissory notes had not prescribed. The written communications of the
defendants-appellants proposing for the restructuring of their loans and the repayment scheme are,
in our view, synonymous to an express acknowledgment of the obligation and had the effect of
interrupting the prescription. x x x.20 (Citation omitted)

The defense of novation was also rejected by the CA, citing the absence of two requirements for a
valid novation, namely: (1) the clear and express release of the original debtor from the obligation
upon the assumption by the new debtor of the obligation; and (2) the consent of the creditor thereto.

A motion for reconsideration filed by the petitioners was denied by the CA in its Resolution21 dated
January 31, 2011. Hence, the present petition for review on certiorari.

The Present Petition

The petitioners present the following grounds to support their petition:

1. THE COURT OF APPEALS ERRED WHEN IT HELD THAT THE PRESCRIPTIVE PERIOD WAS
LEGALLY INTERRUPTED ON 19 SEPTEMBER 1984 WHEN PETITIONERS, THROUGH
SEVERAL LETTERS, PROPOSED FOR THE RESTRUCTURING OF THEIR LOANS UNTIL THE
RESPONDENT SENT ITS FINAL DEMAND LETTER ON 10 SEPTEMBER 1999.

2. THE COURT OF APPEALS ERRED WHEN IT HELD THAT THE PRINCIPLE OF NOVATION BY
THE SUBSTITUTION OF DEBTORS WAS ERRONEOUSLY EMPLOYED BY THE PETITIONERS
TO EXTRICATE THEMSELVES FROM THEIR OBLIGATION TO RESPONDENT.

3. THE COURT OF APPEALS ERRED WHEN IT AFFIRMED THE TRIAL COURTS RULING
HOLDING THAT PETITIONERS ARE LIABLE FOR ATTORNEYS FEES.22

This Courts Ruling

The petition is dismissible.

At the outset, we explain that based on the issues being raised by the petitioners, together with the
arguments and the evidence being invoked in support thereof, we hold that the petition involves
questions of fact that are beyond the ambit of a petition for review on certiorari. Section 1, Rule 45 of
the Rules of Court, as amended, reads:

Sec. 1. Filing of petition with Supreme Court. A party desiring to appeal by certiorari from a
judgment, final order or resolution of the Court of Appeals, the Sandiganbayan, the Court of Tax
Appeals, the Regional Trial Court or other courts, whenever authorized by law, may file with the
Supreme Court a verified petition for review on certiorari. The petition may include an application for
a writ of preliminary injunction or other provisional remedies and shall raise only questions of law,
which must be distinctly set forth. The petitioner may seek the same provisional remedies by verified
motion filed in the same action or proceeding at any time during its pendency. (Emphasis ours)

Section 1, Rule 45 then categorically states that a petition for review on certiorari shall raise only
questions of law, which must be distinctly set forth. A question of law arises when there is doubt as
to what the law is on a certain state of facts, while there is a question of fact when the doubt arises
as to the truth or falsity of the alleged facts. For a question to be one of law, the same must not
involve an examination of the probative value of the evidence presented by the litigants or any of
them. The resolution of the issue must rest solely on what the law provides on the given set of
circumstances. Once it is clear that the issue invites a review of the evidence presented, the
question posed is one of fact.23

On the first issue of prescription, the petitioners argue that there was no written extrajudicial demand
by the creditor TMBC that could have validly interrupted the ten (10)-year prescriptive period.24 They
claim, among other things, that the bank failed to prove that it sent the demand letter dated
September 10, 1999 to the petitioners, and that it was actually received by said petitioners. The
petitioners also question the several other letters supposedly exchanged between the parties. These
contentions are now being raised even after the trial court that admitted the evidence of the
respondent has categorically declared in its Decision dated May 20, 2007 the fact of the
respondents service, and the petitioners receipt, of the demands.25 In its Order dated November 5,
2007, the trial court had also cited the several other correspondences exchanged between the
parties, including the letters of November 14, 1984, March 24, 1987, February 14, 1990 and
September 10, 1999 that negated the defenses of prescription and novation.26

On appeal, these factual findings were even affirmed by the CA, which again cited the several letters
exchanged between the parties in relation to the subject debts, and which correspondences were
declared to have effectively interrupted the running of the prescriptive period to initiate the action for
sum of money against the petitioners.

Applying the guidelines laid down by jurisprudence on the criteria for distinguishing a question of law
from a question of fact, it is clear that the petitioners are now asking this Court to determine a
question of fact, as their arguments delve on the truth or falsity of the trial and appellate courts
factual findings, the existence and authenticity of the respondents documentary evidence, as well as
the truth or falsity of the TMBCs narration of facts in their complaint and the testimonial evidence
presented before the Presiding Judge in support of said allegations.

Similarly, the issue of the alleged novation involves a question of fact, as it necessarily requires a
factual determination on the existence of the following requisites of novation: (1) there must be a
previous valid obligation; (2) the parties concerned must agree to a new contract; (3) the old contract
must be extinguished; and (4) there must be a valid new contract.27 Needless to say, the
respondents entitlement to attorneys fees also depends upon the questioned factual findings.

The settled rule is that conclusions and findings of fact of the trial court are entitled to great weight
on appeal and should not be disturbed unless for strong and cogent reasons because the trial court
is in a better position to examine real evidence, as well as observe the demeanor of the witnesses
while testifying in the case. The fact that the CA adopted the findings of fact of the trial court makes
the same binding upon this Court.28 The Supreme Court is not a trier of facts. It is not our function to
review, examine and evaluate or weigh the probative value of the evidence presented. A question of
fact would arise in such event.29 Although jurisprudence admits of several exceptions to the
foregoing rules, the present case does not fall under any of them.
Even granting that the issues being raised by the petitioners may still be validly entertained by this
Court through the instant petition for review on certiorari, we hold that their arguments and defenses
are bound to fail for lack of merit.

Significantly, the petitioners failed to file their answer to TMBCs complaint within the reglementary
period allowed under the Rules of Court. The validity of the trial courts declaration of their default is
a settled matter, following the denial of the petitions previously brought by the petitioners before the
CA and this Court questioning it. As correctly stated by the CA in the Decision dated October 11,
2010:

At the outset, it behooves this Court to accentuate that the Order of the trial court declaring the
defendants-appellants in default for their failure to file their responsive pleading to the complaint
within the period prescribed under Section 3 of Rule 9 of the Revised Rules of Court had been
declared final and beyond review already by the Supreme Court through its Resolution dated March
5, 2008 and June 25, 2008. Judicial decisions of the Supreme Court, as the final arbiter of any
justiciable controversy, assume the same authority as the law itself. Thus, the issue raised by the
defendants-appellants questioning the wisdom of the trial courts decision in declaring them in
default is now rendered moot and academic by the aforecited Supreme Court resolutions.30

The petitioners default by their failure to file their answer led to certain consequences. Where
defendants before a trial court are declared in default, they thereby lose their right to object to the
reception of the plaintiffs evidence establishing his cause of action.31 This is akin to a failure to,
despite due notice, attend in court hearings for the presentation of the complainants evidence,
which absence would amount to the waiver of such defendants right to object to the evidence
presented during such hearing, and to cross-examine the witnesses presented therein.32

Taking into consideration the banks allegations in its complaint and the totality of the evidence
presented in support thereof, coupled with the said circumstance that the petitioners, by their own
inaction, failed to make their timely objection or opposition to the evidence, both documentary and
testimonial, presented by TMBC to support its case, we find no cogent reason to reverse the trial
and appellate courts findings. We stress that in civil cases, the party having the burden of proof
must establish his case only by a preponderance of evidence. Preponderance of evidence is the
weight, credit, and value of the aggregate evidence on either side and is usually considered to be
synonymous with the term "greater weight of evidence" or "greater weight of the credible evidence."
Preponderance of evidence is a phrase which, in the last analysis, means probability to truth. It is
evidence which is more convincing to the court as worthier of belief than that which is offered in
opposition thereto.33

We agree with the trial and appellate courts, for as the records bear, that the ten (10)-year
prescriptive period to file an action based on the subject promissory notes was interrupted by the
several letters exchanged between the parties. This is in conformity with the second and third
circumstances under Article 1155 of the New Civil Code (NCC) which provides that the prescription
of actions is interrupted when: (1) they are filed before the court; (2) there is a written extrajudicial
demand by the creditors; and (3) there is any written acknowledgment of the debt by the debtor. In
TMBCs complaint against the petitioners, the bank sufficiently made the allegations on its service
and the petitioners receipt of the subject demand letters, even attaching thereto copies thereof for
the trial courts consideration. Thus, the complaint states in part:

23. However, despite numerous demands by plaintiff for the payment of the loan obligations
obtained by defendants and evidenced by the five Promissory Notes, defendants MAGDIWANG,
Dragon and Tolentino failed to settle their obligations with plaintiff.
Copies of plaintiffs demand letters with respect to the five Promissory Notes (PN Nos. 4953, 10045,
10046, 10047, 10048) duly received by defendants, as well as defendants letters in reply to the
demand letters and requesting for restructuring of loan or extension of time to pay the same are
herewith attached as Annexes "F" to "O", respectively, and made integral parts of this Complaint.34

During the banks presentation of evidence ex parte, the testimony of witness Mr. Megdonio Isanan
was also offered to further support the claim on the demand made by the bank upon the petitioners.
In the absence of a timely objection from the petitioners on these claims, no error can be imputed on
the part of the trial court, and even the appellate court, in taking due consideration thereof.
1wphi1

As against the bare denial belatedly made by the petitioners of their receipt of the written
extrajudicial demands made by TMBC, especially of the letter of September 10, 1999 which was the
written demand sent closest in time to the institution of the civil case, the appreciation of evidence
and pronouncements of the trial court in its Order dated November 5, 2007 shall stand, to wit:

In the 14 November 1984 Letter of Kalilid Wood Industries, Inc., through Mr. Uriel Balboa, the
counter-offer of the plaintiff was acknowledged but Kalilid, while manifesting that the counter offer is
acceptable, made some reservations and other conditions which likewise constitute as counter
offers. Hence, no meeting of the minds happened regarding the restructuring of the loan. Likewise,
based on this letter, the debt was also acknowledged. Another letter dated 24 March 1987 was
issued and a repayment plan has been proposed by the Magdiwang Realty Corporation. There was
also a correspondence dated February 14, 1990 from defendant Renato P. Dragons Office
regarding the obligation. While a demand letter dated September 1999 was given by the plaintiff to
the defendants. Hence, from all indications, the prescription of the obligation does not set in.35

In addition to these, we take note that letters prior to the letter of September 1999 also form part of
the case records, and the existence of said letters were not directly denied by the petitioners. The
following letters that form part of the complaint and included in TMBCs formal offer of exhibits were
correctly claimed by the respondents in their Comment36 as also containing the petitioners
acknowledgment of their debts and TMBCs demand to its debtors: (1) Exhibit "M-29", which is a
letter dated January 4, 1995 requesting for an updated Statement of Account of the corporations
owned by petitioner Dragon, including the account of petitioner Magdiwang; and (2) Exhibit "M-30",
which is the letter dated January 12, 1995 from the Office of the Statutory Receiver of TMBC and
providing the Statements of Account requested for in the letter of January 4, 1995. Significantly, the
petitioners failed to adequately negate the authority of the first letters signatory to act for and on
behalf of the petitioners, the reasonable conclusion being that said signatory and the company it
represented were designated by the petitioners, as the debtors in the loans therein indicated, to deal
with the TMBC.

On the issue of novation, no evidence was presented to adequately establish that such novation
ensued. What the letters being invoked by the petitioners as supposedly establishing novation only
1wphi1

indicate that efforts on a repayment scheme were exerted by the parties. However, nowhere in the
records is it indicated that such novation ever materialized.

Regarding the award of attorneys fees, the applicable provision is Article 2208(2) of the NCC which
allows the grant thereof when the defendants act or omission compelled the plaintiff to litigate or to
incur expenses to protect its interest. Considering the circumstances that led to the filing of the
complaint in court, and the clear refusal of the petitioners to satisfy their existing debt to the bank
despite the long period of time and the accommodations granted to it by the respondent to enable
them to satisfy their obligations, we agree that the respondent was compelled by the petitioners' acts
to litigate for the protection of the bank's interests, making the award of attorney's fees proper.
WHEREFORE, premises considered, the instant petition is hereby DENIED. The Decision dated
October 11, 2010 and Resolution dated January 31, 2011 of the Court of Appeals in CA-G.R. CV
No. 90098 are hereby AFFIRMED.

SO ORDERED.

#11G.R. No. 152154 July 15, 2003

REPUBLIC OF THE PHILIPPINES, petitioner,


vs.
HONORABLE SANDIGANBAYAN (SPECIAL FIRST DIVISION), FERDINAND E. MARCOS
(REPRESENTED BY HIS ESTATE/HEIRS: IMELDA R. MARCOS, MARIA IMELDA [IMEE]
MARCOS-MANOTOC, FERDINAND R. MARCOS, JR. AND IRENE MARCOS-ARANETA) AND
IMELDA ROMUALDEZ MARCOS, respondents.

CORONA, J.:

This is a petition for certiorari under Rule 65 of the Rules of Court seeking to (1) set aside the
Resolution dated January 31, 2002 issued by the Special First Division of the Sandiganbayan in Civil
Case No. 0141 entitledRepublic of the Philippines vs. Ferdinand E. Marcos, et. al., and (2) reinstate
its earlier decision dated September 19, 2000 which forfeited in favor of petitioner Republic of the
Philippines (Republic) the amount held in escrow in the Philippine National Bank (PNB) in the
aggregate amount of US$658,175,373.60 as of January 31, 2002.

BACKGROUND OF THE CASE

On December 17, 1991, petitioner Republic, through the Presidential Commission on Good
Government (PCGG), represented by the Office of the Solicitor General (OSG), filed a petition for
forfeiture before the Sandiganbayan, docketed as Civil Case No. 0141 entitled Republic of the
Philippines vs. Ferdinand E. Marcos, represented by his Estate/Heirs and Imelda R. Marcos,
pursuant to RA 13791 in relation to Executive Order Nos. 1,2 2,3 144 and 14-A.5

In said case, petitioner sought the declaration of the aggregate amount of US$356 million (now
estimated to be more than US$658 million inclusive of interest) deposited in escrow in the PNB, as
ill-gotten wealth. The funds were previously held by the following five account groups, using various
foreign foundations in certain Swiss banks:

(1) Azio-Verso-Vibur Foundation accounts;

(2) Xandy-Wintrop: Charis-Scolari-Valamo-Spinus- Avertina Foundation accounts;

(3) Trinidad-Rayby-Palmy Foundation accounts;

(4) Rosalys-Aguamina Foundation accounts and

(5) Maler Foundation accounts.

In addition, the petition sought the forfeiture of US$25 million and US$5 million in treasury notes
which exceeded the Marcos couple's salaries, other lawful income as well as income from
legitimately acquired property. The treasury notes are frozen at the Central Bank of the Philippines,
now Bangko Sentral ng Pilipinas, by virtue of the freeze order issued by the PCGG.
On October 18, 1993, respondents Imelda R. Marcos, Maria Imelda M. Manotoc, Irene M. Araneta
and Ferdinand R. Marcos, Jr. filed their answer.

Before the case was set for pre-trial, a General Agreement and the Supplemental
Agreements6 dated December 28, 1993 were executed by the Marcos children and then PCGG
Chairman Magtanggol Gunigundo for a global settlement of the assets of the Marcos family.
Subsequently, respondent Marcos children filed a motion dated December 7, 1995 for the approval
of said agreements and for the enforcement thereof.

The General Agreement/Supplemental Agreements sought to identify, collate, cause the inventory of
and distribute all assets presumed to be owned by the Marcos family under the conditions contained
therein. The aforementioned General Agreement specified in one of its premises or "whereas
clauses" the fact that petitioner "obtained a judgment from the Swiss Federal Tribunal on December
21, 1990, that the Three Hundred Fifty-six Million U.S. dollars (US$356 million) belongs in principle
to the Republic of the Philippines provided certain conditionalities are met x x x." The said decision
of the Swiss Federal Supreme Court affirmed the decision of Zurich District Attorney Peter
Consandey, granting petitioner's request for legal assistance.7 Consandey declared the various
deposits in the name of the enumerated foundations to be of illegal provenance and ordered that
they be frozen to await the final verdict in favor of the parties entitled to restitution.

Hearings were conducted by the Sandiganbayan on the motion to approve the


General/Supplemental Agreements. Respondent Ferdinand, Jr. was presented as witness for the
purpose of establishing the partial implementation of said agreements.

On October 18, 1996, petitioner filed a motion for summary judgment and/or judgment on the
pleadings. Respondent Mrs. Marcos filed her opposition thereto which was later adopted by
respondents Mrs. Manotoc, Mrs. Araneta and Ferdinand, Jr.

In its resolution dated November 20, 1997, the Sandiganbayan denied petitioner's motion for
summary judgment and/or judgment on the pleadings on the ground that the motion to approve the
compromise agreement "(took) precedence over the motion for summary judgment."

Respondent Mrs. Marcos filed a manifestation on May 26, 1998 claiming she was not a party to the
motion for approval of the Compromise Agreement and that she owned 90% of the funds with the
remaining 10% belonging to the Marcos estate.

Meanwhile, on August 10, 1995, petitioner filed with the District Attorney in Zurich, Switzerland, an
additional request for the immediate transfer of the deposits to an escrow account in the PNB. The
request was granted. On appeal by the Marcoses, the Swiss Federal Supreme Court, in a decision
dated December 10, 1997, upheld the ruling of the District Attorney of Zurich granting the request for
the transfer of the funds. In 1998, the funds were remitted to the Philippines in escrow.
Subsequently, respondent Marcos children moved that the funds be placed in custodia
legis because the deposit in escrow in the PNB was allegedly in danger of dissipation by petitioner.
The Sandiganbayan, in its resolution dated September 8, 1998, granted the motion.

After the pre-trial and the issuance of the pre-trial order and supplemental pre-trial order dated
October 28, 1999 and January 21, 2000, respectively, the case was set for trial. After several
resettings, petitioner, on March 10, 2000, filed another motion for summary judgment pertaining to
the forfeiture of the US$356 million, based on the following grounds:

I
THE ESSENTIAL FACTS WHICH WARRANT THE FORFEITURE OF THE FUNDS
SUBJECT OF THE PETITION UNDER R.A. NO. 1379 ARE ADMITTED BY
RESPONDENTS IN THEIR PLEADINGS AND OTHER SUBMISSIONS MADE IN THE
COURSE OF THE PROCEEDING.

II

RESPONDENTS' ADMISSION MADE DURING THE PRE-TRIAL THAT THEY DO NOT


HAVE ANY INTEREST OR OWNERSHIP OVER THE FUNDS SUBJECT OF THE ACTION
FOR FORFEITURE TENDERS NO GENUINE ISSUE OR CONTROVERSY AS TO ANY
MATERIAL FACT IN THE PRESENT ACTION, THUS WARRANTING THE RENDITION OF
SUMMARY JUDGMENT.8

Petitioner contended that, after the pre-trial conference, certain facts were established, warranting a
summary judgment on the funds sought to be forfeited.

Respondent Mrs. Marcos filed her opposition to the petitioner's motion for summary judgment, which
opposition was later adopted by her co-respondents Mrs. Manotoc, Mrs. Araneta and Ferdinand, Jr.

On March 24, 2000, a hearing on the motion for summary judgment was conducted.

In a decision9 dated September 19, 2000, the Sandiganbayan granted petitioner's motion for
summary judgment:

CONCLUSION

There is no issue of fact which calls for the presentation of evidence.

The Motion for Summary Judgment is hereby granted.

The Swiss deposits which were transmitted to and now held in escrow at the PNB are
deemed unlawfully acquired as ill-gotten wealth.

DISPOSITION

WHEREFORE, judgment is hereby rendered in favor of the Republic of the Philippines and
against the respondents, declaring the Swiss deposits which were transferred to and now
deposited in escrow at the Philippine National Bank in the total aggregate value equivalent to
US$627,608,544.95 as of August 31, 2000 together with the increments thereof forfeited in
favor of the State.10

Respondent Mrs. Marcos filed a motion for reconsideration dated September 26, 2000. Likewise,
Mrs. Manotoc and Ferdinand, Jr. filed their own motion for reconsideration dated October 5, 2000.
Mrs. Araneta filed a manifestation dated October 4, 2000 adopting the motion for reconsideration of
Mrs. Marcos, Mrs. Manotoc and Ferdinand, Jr.

Subsequently, petitioner filed its opposition thereto.

In a resolution11 dated January 31, 2002, the Sandiganbayan reversed its September 19, 2000
decision, thus denying petitioner's motion for summary judgment:
CONCLUSION

In sum, the evidence offered for summary judgment of the case did not prove that the money
in the Swiss Banks belonged to the Marcos spouses because no legal proof exists in the
record as to the ownership by the Marcoses of the funds in escrow from the Swiss Banks.

The basis for the forfeiture in favor of the government cannot be deemed to have been
established and our judgment thereon, perforce, must also have been without basis.

WHEREFORE, the decision of this Court dated September 19, 2000 is reconsidered and set
aside, and this case is now being set for further proceedings.12

Hence, the instant petition. In filing the same, petitioner argues that the Sandiganbayan, in reversing
its September 19, 2000 decision, committed grave abuse of discretion amounting to lack or excess
of jurisdiction considering that --

PETITIONER WAS ABLE TO PROVE ITS CASE IN ACCORDANCE WITH THE


REQUISITES OF SECTIONS 2 AND 3 OF R.A. NO. 1379:

A. PRIVATE RESPONDENTS CATEGORICALLY ADMITTED NOT ONLY THE


PERSONAL CIRCUMSTANCES OF FERDINAND E. MARCOS AND IMELDA R.
MARCOS AS PUBLIC OFFICIALS BUT ALSO THE EXTENT OF THEIR SALARIES
AS SUCH PUBLIC OFFICIALS, WHO UNDER THE CONSTITUTION, WERE
PROHIBITED FROM ENGAGING IN THE MANAGEMENT OF FOUNDATIONS.

B. PRIVATE RESPONDENTS ALSO ADMITTED THE EXISTENCE OF THE SWISS


DEPOSITS AND THEIR OWNERSHIP THEREOF:

1. ADMISSIONS IN PRIVATE RESPONDENTS' ANSWER;

2. ADMISSION IN THE GENERAL / SUPPLEMENTAL AGREEMENTS


THEY SIGNED AND SOUGHT TO IMPLEMENT;

3. ADMISSION IN A MANIFESTATION OF PRIVATE RESPONDENT


IMELDA R. MARCOS AND IN THE MOTION TO PLACE THE RES IN
CUSTODIA LEGIS; AND

4. ADMISSION IN THE UNDERTAKING TO PAY THE HUMAN RIGHTS


VICTIMS.

C. PETITIONER HAS PROVED THE EXTENT OF THE LEGITIMATE INCOME OF


FERDINAND E. MARCOS AND IMELDA R. MARCOS AS PUBLIC OFFICIALS.

D. PETITIONER HAS ESTABLISHED A PRIMA FACIE PRESUMPTION OF


UNLAWFULLY ACQUIRED WEALTH.

II
SUMMARY JUDGMENT IS PROPER SINCE PRIVATE RESPONDENTS HAVE NOT
RAISED ANY GENUINE ISSUE OF FACT CONSIDERING THAT:

A. PRIVATE RESPONDENTS' DEFENSE THAT SWISS DEPOSITS WERE


LAWFULLY ACQUIRED DOES NOT ONLY FAIL TO TENDER AN ISSUE BUT IS
CLEARLY A SHAM; AND

B. IN SUBSEQUENTLY DISCLAIMING OWNERSHIP OF THE SWISS DEPOSITS,


PRIVATE RESPONDENTS ABANDONED THEIR SHAM DEFENSE OF
LEGITIMATE ACQUISITION, AND THIS FURTHER JUSTIFIED THE RENDITION
OF A SUMMARY JUDGMENT.

III

THE FOREIGN FOUNDATIONS NEED NOT BE IMPLEADED.

IV

THE HONORABLE PRESIDING JUSTICE COMMITTED GRAVE ABUSE OF DISCRETION


IN REVERSING HIMSELF ON THE GROUND THAT ORIGINAL COPIES OF THE
AUTHENTICATED SWISS DECISIONS AND THEIR "AUTHENTICATED TRANSLATIONS"
HAVE NOT BEEN SUBMITTED TO THE COURT, WHEN EARLIER THE
SANDIGANBAYAN HAS QUOTED EXTENSIVELY A PORTION OF THE TRANSLATION
OF ONE OF THESE SWISS DECISIONS IN HIS "PONENCIA" DATED JULY 29, 1999
WHEN IT DENIED THE MOTION TO RELEASE ONE HUNDRED FIFTY MILLION US
DOLLARS ($150,000,000.00) TO THE HUMAN RIGHTS VICTIMS.

PRIVATE RESPONDENTS ARE DEEMED TO HAVE WAIVED THEIR OBJECTION TO


THE AUTHENTICITY OF THE SWISS FEDERAL SUPREME COURT DECISIONS.13

Petitioner, in the main, asserts that nowhere in the respondents' motions for reconsideration and
supplemental motion for reconsideration were the authenticity, accuracy and admissibility of the
Swiss decisions ever challenged. Otherwise stated, it was incorrect for the Sandiganbayan to use
the issue of lack of authenticated translations of the decisions of the Swiss Federal Supreme Court
as the basis for reversing itself because respondents themselves never raised this issue in their
motions for reconsideration and supplemental motion for reconsideration. Furthermore, this
particular issue relating to the translation of the Swiss court decisions could not be resurrected
anymore because said decisions had been previously utilized by the Sandiganbayan itself in
resolving a "decisive issue" before it.

Petitioner faults the Sandiganbayan for questioning the non-production of the authenticated
translations of the Swiss Federal Supreme Court decisions as this was a marginal and technical
matter that did not diminish by any measure the conclusiveness and strength of what had been
proven and admitted before the Sandiganbayan, that is, that the funds deposited by the Marcoses
constituted ill-gotten wealth and thus belonged to the Filipino people.

In compliance with the order of this Court, Mrs. Marcos filed her comment to the petition on May 22,
2002. After several motions for extension which were all granted, the comment of Mrs. Manotoc and
Ferdinand, Jr. and the separate comment of Mrs. Araneta were filed on May 27, 2002.
Mrs. Marcos asserts that the petition should be denied on the following grounds:

A.

PETITIONER HAS A PLAIN, SPEEDY, AND ADEQUATE REMEDY AT THE


SANDIGANBAYAN.

B.

THE SANDIGANBAYAN DID NOT ABUSE ITS DISCRETION IN SETTING THE CASE FOR
FURTHER PROCEEDINGS.14

Mrs. Marcos contends that petitioner has a plain, speedy and adequate remedy in the ordinary
course of law in view of the resolution of the Sandiganbayan dated January 31, 2000 directing
petitioner to submit the authenticated translations of the Swiss decisions. Instead of availing of said
remedy, petitioner now elevates the matter to this Court. According to Mrs. Marcos, a petition for
certiorari which does not comply with the requirements of the rules may be dismissed. Since
petitioner has a plain, speedy and adequate remedy, that is, to proceed to trial and submit
authenticated translations of the Swiss decisions, its petition before this Court must be dismissed.
Corollarily, the Sandiganbayan's ruling to set the case for further proceedings cannot and should not
be considered a capricious and whimsical exercise of judgment.

Likewise, Mrs. Manotoc and Ferdinand, Jr., in their comment, prayed for the dismissal of the petition
on the grounds that:

(A)

BY THE TIME PETITIONER FILED ITS MOTION FOR SUMMARY JUDGMENT ON 10


MARCH 2000, IT WAS ALREADY BARRED FROM DOING SO.

(1) The Motion for Summary Judgment was based on private respondents' Answer and other
documents that had long been in the records of the case. Thus, by the time the Motion was
filed on 10 March 2000, estoppel by laches had already set in against petitioner.

(2) By its positive acts and express admissions prior to filing the Motion for Summary
Judgment on 10 March 1990, petitioner had legally bound itself to go to trial on the basis of
existing issues. Thus, it clearly waived whatever right it had to move for summary judgment.

(B)

EVEN ASSUMING THAT PETITIONER WAS NOT LEGALLY BARRED FROM FILING THE
MOTION FOR SUMMARY JUDGMENT, THE SANDIGANBAYAN IS CORRECT IN RULING
THAT PETITIONER HAS NOT YET ESTABLISHED A PRIMA FACIE CASE FOR THE
FORFEITURE OF THE SWISS FUNDS.

(1) Republic Act No. 1379, the applicable law, is a penal statute. As such, its provisions,
particularly the essential elements stated in section 3 thereof, are mandatory in nature.
These should be strictly construed against petitioner and liberally in favor of private
respondents.
(2) Petitioner has failed to establish the third and fourth essential elements in Section 3 of
R.A. 1379 with respect to the identification, ownership, and approximate amount of the
property which the Marcos couple allegedly "acquired during their incumbency".

(a) Petitioner has failed to prove that the Marcos couple "acquired" or own the Swiss
funds.

(b) Even assuming, for the sake of argument, that the fact of acquisition has been
proven, petitioner has categorically admitted that it has no evidence showing how
much of the Swiss funds was acquired "during the incumbency" of the Marcos couple
from 31 December 1965 to 25 February 1986.

(3) In contravention of the essential element stated in Section 3 (e) of R.A. 1379,
petitioner has failed to establish the other proper earnings and income from
legitimately acquired property of the Marcos couple over and above their government
salaries.

(4) Since petitioner failed to prove the three essential elements provided in paragraphs
(c)15 (d),16 and (e)17 of Section 3, R.A. 1379, the inescapable conclusion is that the prima
facie presumption of unlawful acquisition of the Swiss funds has not yet attached. There can,
therefore, be no premature forfeiture of the funds.

(C)

IT WAS ONLY BY ARBITRARILY ISOLATING AND THEN TAKING CERTAIN


STATEMENTS MADE BY PRIVATE RESPONDENTS OUT OF CONTEXT THAT
PETITIONER WAS ABLE TO TREAT THESE AS "JUDICIAL ADMISSIONS" SUFFICIENT
TO ESTABLISH A PRIMA FACIE AND THEREAFTER A CONCLUSIVE CASE TO JUSTIFY
THE FORFEITURE OF THE SWISS FUNDS.

(1) Under Section 27, Rule 130 of the Rules of Court, the General and Supplemental
Agreements, as well as the other written and testimonial statements submitted in relation
thereto, are expressly barred from being admissible in evidence against private respondents.

(2) Had petitioner bothered to weigh the alleged admissions together with the other
statements on record, there would be a demonstrable showing that no such "judicial
admissions" were made by private respondents.

(D)

SINCE PETITIONER HAS NOT (YET) PROVEN ALL THE ESSENTIAL ELEMENTS TO
ESTABLISH A PRIMA FACIE CASE FOR FORFEITURE, AND PRIVATE RESPONDENTS
HAVE NOT MADE ANY JUDICIAL ADMISSION THAT WOULD HAVE FREED IT FROM ITS
BURDEN OF PROOF, THE SANDIGANBAYAN DID NOT COMMIT GRAVE ABUSE OF
DISCRETION IN DENYING THE MOTION FOR SUMMARY JUDGMENT. CERTIORARI,
THEREFORE, DOES NOT LIE, ESPECIALLY AS THIS COURT IS NOT A TRIER OF
FACTS.18

For her part, Mrs. Araneta, in her comment to the petition, claims that obviously petitioner is unable
to comply with a very plain requirement of respondent Sandiganbayan. The instant petition is
allegedly an attempt to elevate to this Court matters, issues and incidents which should be properly
threshed out at the Sandiganbayan. To respondent Mrs. Araneta, all other matters, save that
pertaining to the authentication of the translated Swiss Court decisions, are irrelevant and
impertinent as far as this Court is concerned. Respondent Mrs. Araneta manifests that she is as
eager as respondent Sandiganbayan or any interested person to have the Swiss Court decisions
officially translated in our known language. She says the authenticated official English version of the
Swiss Court decisions should be presented. This should stop all speculations on what indeed is
contained therein. Thus, respondent Mrs. Araneta prays that the petition be denied for lack of merit
and for raising matters which, in elaborated fashion, are impertinent and improper before this Court.

PROPRIETY OF PETITIONER'S ACTION FOR CERTIORARI

But before this Court discusses the more relevant issues, the question regarding the propriety of
petitioner Republic's action for certiorari under Rule 6519 of the 1997 Rules of Civil Procedure
assailing the Sandiganbayan Resolution dated January 21, 2002 should be threshed out.

At the outset, we would like to stress that we are treating this case as an exception to the general
rule governing petitions for certiorari. Normally, decisions of the Sandiganbayan are brought before
this Court under Rule 45, not Rule 65.20 But where the case is undeniably ingrained with immense
public interest, public policy and deep historical repercussions, certiorari is allowed notwithstanding
the existence and availability of the remedy of appeal.21

One of the foremost concerns of the Aquino Government in February 1986 was the recovery of the
unexplained or ill-gotten wealth reputedly amassed by former President and Mrs. Ferdinand E.
Marcos, their relatives, friends and business associates. Thus, the very first Executive Order (EO)
issued by then President Corazon Aquino upon her assumption to office after the ouster of the
Marcoses was EO No. 1, issued on February 28, 1986. It created the Presidential Commission on
Good Government (PCGG) and charged it with the task of assisting the President in the "recovery of
all ill-gotten wealth accumulated by former President Ferdinand E. Marcos, his immediate family,
relatives, subordinates and close associates, whether located in the Philippines or abroad, including
the takeover or sequestration of all business enterprises and entities owned or controlled by them
during his administration, directly or through nominees, by taking undue advantage of their public
office and/or using their powers, authority, influence, connections or relationship." The urgency of
this undertaking was tersely described by this Court in Republic vs. Lobregat22:

surely x x x an enterprise "of great pith and moment"; it was attended by "great
expectations"; it was initiated not only out of considerations of simple justice but also out of
sheer necessity - the national coffers were empty, or nearly so.

In all the alleged ill-gotten wealth cases filed by the PCGG, this Court has seen fit to set
aside technicalities and formalities that merely serve to delay or impede judicious resolution.
This Court prefers to have such cases resolved on the merits at the Sandiganbayan. But
substantial justice to the Filipino people and to all parties concerned, not mere legalisms or
perfection of form, should now be relentlessly and firmly pursued. Almost two decades have
passed since the government initiated its search for and reversion of such ill-gotten wealth.
The definitive resolution of such cases on the merits is thus long overdue. If there is proof of
illegal acquisition, accumulation, misappropriation, fraud or illicit conduct, let it be brought out
now. Let the ownership of these funds and other assets be finally determined and resolved
with dispatch, free from all the delaying technicalities and annoying procedural sidetracks.23

We thus take cognizance of this case and settle with finality all the issues therein.

ISSUES BEFORE THIS COURT


The crucial issues which this Court must resolve are: (1) whether or not respondents raised any
genuine issue of fact which would either justify or negate summary judgment; and (2) whether or not
petitioner Republic was able to prove its case for forfeiture in accordance with Sections 2 and 3 of
RA 1379.

(1) THE PROPRIETY OF SUMMARY JUDGMENT

We hold that respondent Marcoses failed to raise any genuine issue of fact in their pleadings. Thus,
on motion of petitioner Republic, summary judgment should take place as a matter of right.

In the early case of Auman vs. Estenzo24, summary judgment was described as a judgment which a
court may render before trial but after both parties have pleaded. It is ordered by the court upon
application by one party, supported by affidavits, depositions or other documents, with notice upon
the adverse party who may in turn file an opposition supported also by affidavits, depositions or
other documents. This is after the court summarily hears both parties with their respective proofs
and finds that there is no genuine issue between them. Summary judgment is sanctioned in this
jurisdiction by Section 1, Rule 35 of the 1997 Rules of Civil Procedure:

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, depositions or
admissions for a summary judgment in his favor upon all or any part thereof.25

Summary judgment is proper when there is clearly no genuine issue as to any material fact in the
action.26 The theory of summary judgment is that, although an answer may on its face appear to
tender issues requiring trial, if it is demonstrated by affidavits, depositions or admissions that those
issues are not genuine but sham or fictitious, the Court is justified in dispensing with the trial and
rendering summary judgment for petitioner Republic.

The Solicitor General made a very thorough presentation of its case for forfeiture:

xxx

4. Respondent Ferdinand E. Marcos (now deceased and represented by his Estate/Heirs)


was a public officer for several decades continuously and without interruption as
Congressman, Senator, Senate President and President of the Republic of the Philippines
from December 31, 1965 up to his ouster by direct action of the people of EDSA on February
22-25, 1986.

5. Respondent Imelda Romualdez Marcos (Imelda, for short) the former First Lady who ruled
with FM during the 14-year martial law regime, occupied the position of Minister of Human
Settlements from June 1976 up to the peaceful revolution in February 22-25, 1986. She
likewise served once as a member of the Interim Batasang Pambansa during the early years
of martial law from 1978 to 1984 and as Metro Manila Governor in concurrent capacity as
Minister of Human Settlements. x x x

xxx xxx xxx

11. At the outset, however, it must be pointed out that based on the Official Report of the
Minister of Budget, the total salaries of former President Marcos as President form 1966 to
1976 was P60,000 a year and from 1977 to 1985, P100,000 a year; while that of the former
First Lady, Imelda R. Marcos, as Minister of Human Settlements from June 1976 to February
22-25, 1986 was P75,000 a year xxx.

ANALYSIS OF RESPONDENTS LEGITIMATE INCOME

xxx

12. Based on available documents, the ITRs of the Marcoses for the years 1965-1975 were
filed under Tax Identification No. 1365-055-1. For the years 1976 until 1984, the returns were
filed under Tax Identification No. M 6221-J 1117-A-9.

13. The data contained in the ITRs and Balance Sheet filed by the "Marcoses are
summarized and attached to the reports in the following schedules:

Schedule A:

Schedule of Income (Annex "T" hereof);

Schedule B:

Schedule of Income Tax Paid (Annex "T-1" hereof);

Schedule C:

Schedule of Net Disposable Income (Annex "T-2" hereof);

Schedule D:

Schedule of Networth Analysis (Annex "T-3" hereof).

14. As summarized in Schedule A (Annex "T" hereof), the Marcoses reported


P16,408,442.00 or US$2,414,484.91 in total income over a period of 20 years from 1965 to
1984. The sources of income are as follows:

Official Salaries - P 2,627,581.00 - 16.01%


Legal Practice - 11,109,836.00 - 67.71%
Farm Income - 149,700.00 - .91%
Others - 2,521,325.00 - 15.37%
Total P16,408,442.00 - 100.00%

15. FM's official salary pertains to his compensation as Senate President in 1965 in the
amount of P15,935.00 and P1,420,000.00 as President of the Philippines during the period
1966 until 1984. On the other hand, Imelda reported salaries and allowances only for the
years 1979 to 1984 in the amount of P1,191,646.00. The records indicate that the reported
income came from her salary from the Ministry of Human Settlements and allowances from
Food Terminal, Inc., National Home Mortgage Finance Corporation, National Food Authority
Council, Light Rail Transit Authority and Home Development Mutual Fund.
16. Of the P11,109,836.00 in reported income from legal practice, the amount of
P10,649,836.00 or 96% represents "receivables from prior years" during the period 1967 up
to 1984.

17. In the guise of reporting income using the cash method under Section 38 of the National
Internal Revenue Code, FM made it appear that he had an extremely profitable legal practice
before he became a President (FM being barred by law from practicing his law profession
during his entire presidency) and that, incredibly, he was still receiving payments almost 20
years after. The only problem is that in his Balance Sheet attached to his 1965 ITR
immediately preceeding his ascendancy to the presidency he did not show any Receivables
from client at all, much less the P10,65-M that he decided to later recognize as income.
There are no documents showing any withholding tax certificates. Likewise, there is nothing
on record that will show any known Marcos client as he has no known law office. As
previously stated, his networth was a mere P120,000.00 in December, 1965. The joint
income tax returns of FM and Imelda cannot, therefore, conceal the skeletons of their
kleptocracy.

18. FM reported a total of P2,521,325.00 as Other Income for the years 1972 up to 1976
which he referred to in his return as "Miscellaneous Items" and "Various Corporations."
There is no indication of any payor of the dividends or earnings.

19. Spouses Ferdinand and Imelda did not declare any income from any deposits and
placements which are subject to a 5% withholding tax. The Bureau of Internal Revenue
attested that after a diligent search of pertinent records on file with the Records Division, they
did not find any records involving the tax transactions of spouses Ferdinand and Imelda in
Revenue Region No. 1, Baguio City, Revenue Region No.4A, Manila, Revenue Region No.
4B1, Quezon City and Revenue No. 8, Tacloban, Leyte. Likewise, the Office of the Revenue
Collector of Batac. Further, BIR attested that no records were found on any filing of capital
gains tax return involving spouses FM and Imelda covering the years 1960 to 1965.

20. In Schedule B, the taxable reported income over the twenty-year period was
P14,463,595.00 which represents 88% of the gross income. The Marcoses paid income
taxes totaling P8,233,296.00 or US$1,220,667.59. The business expenses in the amount of
P861,748.00 represent expenses incurred for subscription, postage, stationeries and
contributions while the other deductions in the amount of P567,097.00 represents interest
charges, medicare fees, taxes and licenses. The total deductions in the amount of
P1,994,845.00 represents 12% of the total gross income.

21. In Schedule C, the net cumulative disposable income amounts to P6,756,301.00 or


US$980,709.77. This is the amount that represents that portion of the Marcoses income that
is free for consumption, savings and investments. The amount is arrived at by adding back to
the net income after tax the personal and additional exemptions for the years 1965-1984, as
well as the tax-exempt salary of the President for the years 1966 until 1972.

22. Finally, the networth analysis in Schedule D, represents the total accumulated networth
of spouses, Ferdinand and Imelda. Respondent's Balance Sheet attached to their 1965 ITR,
covering the year immediately preceding their ascendancy to the presidency, indicates an
ending networth of P120,000.00 which FM declared as Library and Miscellaneous assets. In
computing for the networth, the income approach was utilized. Under this approach, the
beginning capital is increased or decreased, as the case may be, depending upon the
income earned or loss incurred. Computations establish the total networth of spouses
Ferdinand and Imelda, for the years 1965 until 1984 in the total amount of US$957,487.75,
assuming the income from legal practice is real and valid x x x.

G. THE SECRET MARCOS DEPOSITS IN SWISS BANKS

23. The following presentation very clearly and overwhelmingly show in detail how both
respondents clandestinely stashed away the country's wealth to Switzerland and hid the
same under layers upon layers of foundations and other corporate entities to prevent its
detection. Through their dummies/nominees, fronts or agents who formed those foundations
or corporate entities, they opened and maintained numerous bank accounts. But due to the
difficulty if not the impossibility of detecting and documenting all those secret accounts as
well as the enormity of the deposits therein hidden, the following presentation is confined to
five identified accounts groups, with balances amounting to about $356-M with a reservation
for the filing of a supplemental or separate forfeiture complaint should the need arise.

H. THE AZIO-VERSO-VIBUR FOUNDATION ACCOUNTS

24. On June 11, 1971, Ferdinand Marcos issued a written order to Dr. Theo Bertheau, legal
counsel of Schweizeresche Kreditanstalt or SKA, also known as Swiss Credit Bank, for him
to establish the AZIO Foundation. On the same date, Marcos executed a power of attorney
in favor of Roberto S. Benedicto empowering him to transact business in behalf of the said
foundation. Pursuant to the said Marcos mandate, AZIO Foundation was formed on June 21,
1971 in Vaduz. Walter Fessler and Ernst Scheller, also of SKA Legal Service, and Dr.
Helmuth Merling from Schaan were designated as members of the Board of Trustees of the
said foundation. Ferdinand Marcos was named first beneficiary and the Marcos Foundation,
Inc. was second beneficiary. On November 12, 1971, FM again issued another written order
naming Austrahil PTY Ltd. In Sydney, Australia, as the foundation's first and sole beneficiary.
This was recorded on December 14, 1971.

25. In an undated instrument, Marcos changed the first and sole beneficiary to CHARIS
FOUNDATION. This change was recorded on December 4, 1972.

26. On August 29, 1978, the AZIO FOUNDATION was renamed to VERSO FOUNDATION.
The Board of Trustees remained the same. On March 11, 1981, Marcos issued a written
directive to liquidated VERSO FOUNDATION and to transfer all its assets to account of
FIDES TRUST COMPANY at Bank Hofman in Zurich under the account "Reference OSER."
The Board of Trustees decided to dissolve the foundation on June 25, 1981.

27. In an apparent maneuver to bury further the secret deposits beneath the thick layers of
corporate entities, FM effected the establishment of VIBUR FOUNDATION on May 13, 1981
in Vaduz. Atty. Ivo Beck and Limag Management, a wholly-owned subsidiary of Fides Trust,
were designated as members of the Board of Trustees. The account was officially opened
with SKA on September 10, 1981. The beneficial owner was not made known to the bank
since Fides Trust Company acted as fiduciary. However, comparison of the listing of the
securities in the safe deposit register of the VERSO FOUNDATION as of February 27, 1981
with that of VIBUR FOUNDATION as of December 31, 1981 readily reveals that exactly the
same securities were listed.

28. Under the foregoing circumstances, it is certain that the VIBUR FOUNDATION is the
beneficial successor of VERSO FOUNDATION.
29. On March 18, 1986, the Marcos-designated Board of Trustees decided to liquidate
VIBUR FOUNDATION. A notice of such liquidation was sent to the Office of the Public
Register on March 21, 1986. However, the bank accounts and respective balances of the
said VIBUR FOUNDATION remained with SKA. Apparently, the liquidation was an attempt
by the Marcoses to transfer the foundation's funds to another account or bank but this was
prevented by the timely freeze order issued by the Swiss authorities. One of the latest
documents obtained by the PCGG from the Swiss authorities is a declaration signed by Dr.
Ivo Beck (the trustee) stating that the beneficial owner of VIBUR FOUNDATION is Ferdinand
E. Marcos. Another document signed by G. Raber of SKA shows that VIBUR FOUNDATION
is owned by the "Marcos Familie"

30. As of December 31, 1989, the balance of the bank accounts of VIBUR FOUNDATION
with SKA, Zurich, under the General Account No. 469857 totaled $3,597,544.00

I. XANDY-WINTROP: CHARIS-SCOLARI-
VALAMO-SPINUS-AVERTINA FOUNDATION ACCOUNTS

31. This is the most intricate and complicated account group. As the Flow Chart hereof
shows, two (2) groups under the foundation organized by Marcos dummies/nominees for
FM's benefit, eventually joined together and became one (1) account group under the
AVERTINA FOUNDATION for the benefit of both FM and Imelda. This is the biggest group
from where the $50-M investment fund of the Marcoses was drawn when they bought the
Central Bank's dollar-denominated treasury notes with high-yielding interests.

32. On March 20, 1968, after his second year in the presidency, Marcos opened bank
accounts with SKA using an alias or pseudonym WILLIAM SAUNDERS, apparently to hide
his true identity. The next day, March 21, 1968, his First Lady, Mrs. Imelda Marcos also
opened her own bank accounts with the same bank using an American-sounding alias,
JANE RYAN. Found among the voluminous documents in Malacaang shortly after they fled
to Hawaii in haste that fateful night of February 25, 1986, were accomplished forms for
"Declaration/Specimen Signatures" submitted by the Marcos couple. Under the caption
"signature(s)" Ferdinand and Imelda signed their real names as well as their respective
aliases underneath. These accounts were actively operated and maintained by the Marcoses
for about two (2) years until their closure sometime in February, 1970 and the balances
transferred to XANDY FOUNDATION.

33. The XANDY FOUNDATION was established on March 3, 1970 in Vaduz. C.W. Fessler,
C. Souviron and E. Scheller were named as members of the Board of Trustees.

34. FM and Imelda issued the written mandate to establish the foundation to Markus Geel of
SKA on March 3, 1970. In the handwritten Regulations signed by the Marcos couple as well
as in the type-written Regulations signed by Markus Geel both dated February 13, 1970, the
Marcos spouses were named the first beneficiaries, the surviving spouse as the second
beneficiary and the Marcos children Imee, Ferdinand, Jr. (Bongbong) and Irene as equal
third beneficiaries.

35. The XANDY FOUNDATION was renamed WINTROP FOUNDATION on August 29,
1978. The Board of Trustees remained the same at the outset. However, on March 27, 1980,
Souviron was replaced by Dr. Peter Ritter. On March 10. 1981, Ferdinand and Imelda
Marcos issued a written order to the Board of Wintrop to liquidate the foundation and transfer
all its assets to Bank Hofmann in Zurich in favor of FIDES TRUST COMPANY. Later,
WINTROP FOUNDATION was dissolved.
36. The AVERTINA FOUNDATION was established on May 13, 1981 in Vaduz with Atty. Ivo
Beck and Limag Management, a wholly-owned subsidiary of FIDES TRUST CO., as
members of the Board of Trustees. Two (2) account categories, namely: CAR and NES,
were opened on September 10, 1981. The beneficial owner of AVERTINA was not made
known to the bank since the FIDES TRUST CO. acted as fiduciary. However, the securities
listed in the safe deposit register of WINTROP FOUNDATION Category R as of December
31, 1980 were the same as those listed in the register of AVERTINA FOUNDATION
Category CAR as of December 31, 1981. Likewise, the securities listed in the safe deposit
register of WINTROP FOUNDATION Category S as of December 31, 1980 were the same
as those listed in the register of Avertina Category NES as of December 31, 1981.Under the
circumstances, it is certain that the beneficial successor of WINTROP FOUNDATION is
AVERTINA FOUNDATION. The balance of Category CAR as of December 31, 1989
amounted to US$231,366,894.00 while that of Category NES as of 12-31-83 was
US$8,647,190.00. Latest documents received from Swiss authorities included a declaration
signed by IVO Beck stating that the beneficial owners of AVERTINA FOUNDATION are FM
and Imelda. Another document signed by G. Raber of SKA indicates that Avertina
Foundation is owned by the "Marcos Families."

37. The other groups of foundations that eventually joined AVERTINA were also established
by FM through his dummies, which started with the CHARIS FOUNDATION.

38. The CHARIS FOUNDATION was established in VADUZ on December 27, 1971. Walter
Fessler and Ernst Scheller of SKA and Dr. Peter Ritter were named as directors. Dr. Theo
Bertheau, SKA legal counsel, acted as founding director in behalf of FM by virtue of the
mandate and agreement dated November 12, 1971. FM himself was named the first
beneficiary and Xandy Foundation as second beneficiary in accordance with the handwritten
instructions of FM on November 12, 1971 and the Regulations. FM gave a power of attorney
to Roberto S. Benedicto on February 15, 1972 to act in his behalf with regard to Charis
Foundation.

39. On December 13, 1974, Charis Foundation was renamed Scolari Foundation but the
directors remained the same. On March 11, 1981 FM ordered in writing that the Valamo
Foundation be liquidated and all its assets be transferred to Bank Hofmann, AG in favor of
Fides Trust Company under the account "Reference OMAL". The Board of Directors decided
on the immediate dissolution of Valamo Foundation on June 25, 1981.

40 The SPINUS FOUNDATION was established on May 13, 1981 in Vaduz with Atty. Ivo
Beck and Limag Management, a wholly-owned subsidiary of Fides Trust Co., as members of
the Foundation's Board of Directors. The account was officially opened with SKA on
September 10, 1981. The beneficial owner of the foundation was not made known to the
bank since Fides Trust Co. acted as fiduciary. However, the list of securities in the safe
deposit register of Valamo Foundation as of December 31, 1980 are practically the same
with those listed in the safe deposit register of Spinus Foundation as of December 31, 1981.
Under the circumstances, it is certain that the Spinus Foundation is the beneficial successor
of the Valamo Foundation.

41. On September 6, 1982, there was a written instruction from Spinus Foundation to SKA to
close its Swiss Franc account and transfer the balance to Avertina Foundation. In
July/August, 1982, several transfers from the foundation's German marks and US dollar
accounts were made to Avertina Category CAR totaling DM 29.5-M and $58-M, respectively.
Moreover, a comparison of the list of securities of the Spinus Foundation as of February 3,
1982 with the safe deposit slips of the Avertina Foundation Category CAR as of August 19,
1982 shows that all the securities of Spinus were transferred to Avertina.

J. TRINIDAD-RAYBY-PALMY FOUNDATION ACCOUNTS

42. The Trinidad Foundation was organized on August 26, 1970 in Vaduz with C.W. Fessler
and E. Scheller of SKA and Dr. Otto Tondury as the foundation's directors. Imelda issued a
written mandate to establish the foundation to Markus Geel on August 26, 1970. The
regulations as well as the agreement, both dated August 28, 1970 were likewise signed by
Imelda. Imelda was named the first beneficiary and her children Imelda (Imee), Ferdinand,
Jr. (Bongbong) and, Irene were named as equal second beneficiaries.

43. Rayby Foundation was established on June 22, 1973 in Vaduz with Fessler, Scheller and
Ritter as members of the board of directors. Imelda issued a written mandate to Dr. Theo
Bertheau to establish the foundation with a note that the foundation's capitalization as well as
the cost of establishing it be debited against the account of Trinidad Foundation. Imelda was
named the first and only beneficiary of Rayby foundation. According to written information
from SKA dated November 28, 1988, Imelda apparently had the intention in 1973 to transfer
part of the assets of Trinidad Foundation to another foundation, thus the establishment of
Rayby Foundation. However, transfer of assets never took place. On March 10, 1981, Imelda
issued a written order to transfer all the assets of Rayby Foundation to Trinidad Foundation
and to subsequently liquidate Rayby. On the same date, she issued a written order to the
board of Trinidad to dissolve the foundation and transfer all its assets to Bank Hofmann in
favor of Fides Trust Co. Under the account "Reference Dido," Rayby was dissolved on April
6, 1981 and Trinidad was liquidated on August 3, 1981.

44. The PALMY FOUNDATION was established on May 13, 1981 in Vaduz with Dr. Ivo Beck
and Limag Management, a wholly-owned subsidiary of Fides Trust Co, as members of the
Foundation's Board of Directors. The account was officially opened with the SKA on
September 10, 1981. The beneficial owner was not made known to the bank since Fides
Trust Co. acted as fiduciary. However, when one compares the listing of securities in the
safe deposit register of Trinidad Foundation as of December 31,1980 with that of the Palmy
Foundation as of December 31, 1980, one can clearly see that practically the same
securities were listed. Under the circumstances, it is certain that the Palmy Foundation is the
beneficial successor of the Trinidad Foundation.

45. As of December 31, 1989, the ending balance of the bank accounts of Palmy Foundation
under General Account No. 391528 is $17,214,432.00.

46. Latest documents received from Swiss Authorities included a declaration signed by Dr.
Ivo Beck stating that the beneficial owner of Palmy Foundation is Imelda. Another document
signed by Raber shows that the said Palmy Foundation is owned by "Marcos Familie".

K. ROSALYS-AGUAMINA FOUNDATION ACCOUNTS

47. Rosalys Foundation was established in 1971 with FM as the beneficiary. Its Articles of
Incorporation was executed on September 24, 1971 and its By-Laws on October 3, 1971.
This foundation maintained several accounts with Swiss Bank Corporation (SBC) under the
general account 51960 where most of the bribe monies from Japanese suppliers were
hidden.
48. On December 19, 1985, Rosalys Foundation was liquidated and all its assets were
transferred to Aguamina Corporation's (Panama) Account No. 53300 with SBC. The
ownership by Aguamina Corporation of Account No. 53300 is evidenced by an opening
account documents from the bank. J. Christinaz and R.L. Rossier, First Vice-President and
Senior Vice President, respectively, of SBC, Geneva issued a declaration dated September
3, 1991 stating that the by-laws dated October 3, 1971 governing Rosalys Foundation was
the same by-law applied to Aguamina Corporation Account No. 53300. They further
confirmed that no change of beneficial owner was involved while transferring the assets of
Rosalys to Aguamina. Hence, FM remains the beneficiary of Aguamina Corporation Account
No. 53300.

As of August 30, 1991, the ending balance of Account No. 53300 amounted to
$80,566,483.00.

L. MALER FOUNDATION ACCOUNTS

49. Maler was first created as an establishment. A statement of its rules and regulations was
found among Malacaang documents. It stated, among others, that 50% of the Company's
assets will be for sole and full right disposal of FM and Imelda during their lifetime, which the
remaining 50% will be divided in equal parts among their children. Another Malacaang
document dated October 19,1968 and signed by Ferdinand and Imelda pertains to the
appointment of Dr. Andre Barbey and Jean Louis Sunier as attorneys of the company and as
administrator and manager of all assets held by the company. The Marcos couple, also
mentioned in the said document that they bought the Maler Establishment from SBC,
Geneva. On the same date, FM and Imelda issued a letter addressed to Maler
Establishment, stating that all instructions to be transmitted with regard to Maler will be
signed with the word "JOHN LEWIS". This word will have the same value as the couple's
own personal signature. The letter was signed by FM and Imelda in their signatures and as
John Lewis.

50. Maler Establishment opened and maintained bank accounts with SBC, Geneva. The
opening bank documents were signed by Dr. Barbey and Mr. Sunnier as authorized
signatories.

51. On November 17, 1981, it became necessary to transform Maler Establishment into a
foundation. Likewise, the attorneys were changed to Michael Amaudruz, et. al. However,
administration of the assets was left to SBC. The articles of incorporation of Maler
Foundation registered on November 17, 1981 appear to be the same articles applied to
Maler Establishment. On February 28, 1984, Maler Foundation cancelled the power of
attorney for the management of its assets in favor of SBC and transferred such power to
Sustrust Investment Co., S.A.

52. As of June 6, 1991, the ending balance of Maler Foundation's Account Nos. 254,508 BT
and 98,929 NY amount SF 9,083,567 and SG 16,195,258, respectively, for a total of SF
25,278,825.00. GM only until December 31, 1980. This account was opened by Maler when
it was still an establishment which was subsequently transformed into a foundation.

53. All the five (5) group accounts in the over-all flow chart have a total balance of about
Three Hundred Fifty Six Million Dollars ($356,000,000.00) as shown by Annex "R-5" hereto
attached as integral part hereof.

xxx x x x.27
Respondents Imelda R. Marcos, Maria Imelda M. Manotoc, Irene M. Araneta and Ferdinand Marcos,
Jr., in their answer, stated the following:

xxx xxx xxx

4. Respondents ADMIT paragraphs 3 and 4 of the Petition.

5. Respondents specifically deny paragraph 5 of the Petition in so far as it states that


summons and other court processes may be served on Respondent Imelda R. Marcos at the
stated address the truth of the matter being that Respondent Imelda R. Marcos may be
served with summons and other processes at No. 10-B Bel Air Condominium 5022 P.
Burgos Street, Makati, Metro Manila, and ADMIT the rest.

xxx xxx xxx

10. Respondents ADMIT paragraph 11 of the Petition.

11. Respondents specifically DENY paragraph 12 of the Petition for lack of knowledge
sufficient to form a belief as to the truth of the allegation since Respondents were not privy to
the transactions and that they cannot remember exactly the truth as to the matters alleged.

12. Respondents specifically DENY paragraph 13 of the Petition for lack of knowledge or
information sufficient to form a belief as to the truth of the allegation since Respondents
cannot remember with exactitude the contents of the alleged ITRs and Balance Sheet.

13. Respondents specifically DENY paragraph 14 of the Petition for lack of knowledge or
information sufficient to form a belief as to the truth of the allegation since Respondents
cannot remember with exactitude the contents of the alleged ITRs.

14. Respondents specifically DENY paragraph 15 of the Petition for lack of knowledge or
information sufficient to form a belief as to the truth of the allegation since Respondents
cannot remember with exactitude the contents of the alleged ITRs.

15. Respondents specifically DENY paragraph 16 of the Petition for lack of knowledge or
information sufficient to form a belief as to the truth of the allegation since Respondents
cannot remember with exactitude the contents of the alleged ITRs.

16. Respondents specifically DENY paragraph 17 of the Petition insofar as it attributes willful
duplicity on the part of the late President Marcos, for being false, the same being pure
conclusions based on pure assumption and not allegations of fact; and specifically DENY the
rest for lack of knowledge or information sufficient to form a belief as to the truth of the
allegation since Respondents cannot remember with exactitude the contents of the alleged
ITRs or the attachments thereto.

17. Respondents specifically DENY paragraph 18 of the Petition for lack of knowledge or
information sufficient to form a belief as to the truth of the allegation since Respondents
cannot remember with exactitude the contents of the alleged ITRs.

18. Respondents specifically DENY paragraph 19 of the Petition for lack of knowledge or
information sufficient to form a belief as to the truth of the allegation since Respondents
cannot remember with exactitude the contents of the alleged ITRs and that they are not privy
to the activities of the BIR.

19. Respondents specifically DENY paragraph 20 of the Petition for lack of knowledge or
information sufficient to form a belief as to the truth of the allegation since Respondents
cannot remember with exactitude the contents of the alleged ITRs.

20. Respondents specifically DENY paragraph 21 of the Petition for lack of knowledge or
information sufficient to form a belief as to the truth of the allegation since Respondents
cannot remember with exactitude the contents of the alleged ITRs.

21. Respondents specifically DENY paragraph 22 of the Petition for lack of knowledge or
information sufficient to form a belief as to the truth of the allegation since Respondents
cannot remember with exactitude the contents of the alleged ITRs.

22. Respondents specifically DENY paragraph 23 insofar as it alleges that Respondents


clandestinely stashed the country's wealth in Switzerland and hid the same under layers and
layers of foundation and corporate entities for being false, the truth being that Respondents
aforesaid properties were lawfully acquired.

23. Respondents specifically DENY paragraphs 24, 25, 26, 27, 28, 29 and 30 of the Petition
for lack of knowledge or information sufficient to form a belief as to the truth of the allegation
since Respondents were not privy to the transactions regarding the alleged Azio-Verso-Vibur
Foundation accounts, except that as to Respondent Imelda R. Marcos she specifically
remembers that the funds involved were lawfully acquired.

24. Respondents specifically DENY paragraphs 31, 32, 33, 34, 35, 36,37, 38, 39, 40, and 41
of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of
the allegations since Respondents are not privy to the transactions and as to such
transaction they were privy to they cannot remember with exactitude the same having
occurred a long time ago, except that as to Respondent Imelda R. Marcos she specifically
remembers that the funds involved were lawfully acquired.

25. Respondents specifically DENY paragraphs 42, 43, 44, 45, and 46, of the Petition for
lack of knowledge or information sufficient to form a belief as to the truth of the allegations
since Respondents were not privy to the transactions and as to such transaction they were
privy to they cannot remember with exactitude the same having occurred a long time ago,
except that as to Respondent Imelda R. Marcos she specifically remembers that the funds
involved were lawfully acquired.

26. Respondents specifically DENY paragraphs 49, 50, 51 and 52, of the Petition for lack of
knowledge or information sufficient to form a belief as to the truth of the allegations since
Respondents were not privy to the transactions and as to such transaction they were privy to
they cannot remember with exactitude the same having occurred a long time ago, except
that as to Respondent Imelda R. Marcos she specifically remembers that the funds involved
were lawfully acquired.

Upon careful perusal of the foregoing, the Court finds that respondent Mrs. Marcos and the Marcos
children indubitably failed to tender genuine issues in their answer to the petition for forfeiture. A
genuine issue is an issue of fact which calls for the presentation of evidence as distinguished from
an issue which is fictitious and contrived, set up in bad faith or patently lacking in substance so as
not to constitute a genuine issue for trial. Respondents' defenses of "lack of knowledge for lack of
privity" or "(inability to) recall because it happened a long time ago" or, on the part of Mrs. Marcos,
that "the funds were lawfully acquired" are fully insufficient to tender genuine issues. Respondent
Marcoses' defenses were a sham and evidently calibrated to compound and confuse the issues.

The following pleadings filed by respondent Marcoses are replete with indications of a spurious
defense:

(a) Respondents' Answer dated October 18, 1993;

(b) Pre-trial Brief dated October 4, 1999 of Mrs. Marcos, Supplemental Pre-trial Brief dated
October 19, 1999 of Ferdinand, Jr. and Mrs. Imee Marcos-Manotoc adopting the pre-trial
brief of Mrs. Marcos, and Manifestation dated October 19, 1999 of Irene Marcos-Araneta
adopting the pre-trial briefs of her co- respondents;

(c) Opposition to Motion for Summary Judgment dated March 21, 2000, filed by Mrs. Marcos
which the other respondents (Marcos children) adopted;

(d) Demurrer to Evidence dated May 2, 2000 filed by Mrs. Marcos and adopted by the
Marcos children;

(e) Motion for Reconsideration dated September 26, 2000 filed by Mrs. Marcos; Motion for
Reconsideration dated October 5, 2000 jointly filed by Mrs. Manotoc and Ferdinand, Jr., and
Supplemental Motion for Reconsideration dated October 9, 2000 likewise jointly filed by Mrs.
Manotoc and Ferdinand, Jr.;

(f) Memorandum dated December 12, 2000 of Mrs. Marcos and Memorandum dated
December 17, 2000 of the Marcos children;

(g) Manifestation dated May 26, 1998; and

(h) General/Supplemental Agreement dated December 23, 1993.

An examination of the foregoing pleadings is in order.

Respondents' Answer dated October 18, 1993.

In their answer, respondents failed to specifically deny each and every allegation contained in the
petition for forfeiture in the manner required by the rules. All they gave were stock answers like "they
have no sufficient knowledge" or "they could not recall because it happened a long time ago," and,
as to Mrs. Marcos, "the funds were lawfully acquired," without stating the basis of such assertions.

Section 10, Rule 8 of the 1997 Rules of Civil Procedure, provides:

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 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.28
The purpose of requiring respondents to make a specific denial is to make them disclose facts which
will disprove the allegations of petitioner at the trial, together with the matters they rely upon in
support of such denial. Our jurisdiction adheres to this rule to avoid and prevent unnecessary
expenses and waste of time by compelling both parties to lay their cards on the table, thus reducing
the controversy to its true terms. As explained in Alonso vs. Villamor,29

A litigation is not a game of technicalities in which one, more deeply schooled and skilled in
the subtle art of movement and position, entraps and destroys the other. It is rather a contest
in which each contending party fully and fairly lays before the court the facts in issue and
then, brushing aside as wholly trivial and indecisive all imperfections of form and
technicalities of procedure, asks that justice be done upon the merits. Lawsuits, unlike duels,
are not to be won by a rapier's thrust.

On the part of Mrs. Marcos, she claimed that the funds were lawfully acquired. However, she failed
to particularly state the ultimate facts surrounding the lawful manner or mode of acquisition of the
subject funds. Simply put, she merely stated in her answer with the other respondents that the funds
were "lawfully acquired" without detailing how exactly these funds were supposedly acquired legally
by them. Even in this case before us, her assertion that the funds were lawfully acquired remains
bare and unaccompanied by any factual support which can prove, by the presentation of evidence at
a hearing, that indeed the funds were acquired legitimately by the Marcos family.

Respondents' denials in their answer at the Sandiganbayan were based on their alleged lack of
knowledge or information sufficient to form a belief as to the truth of the allegations of the petition.

It is true that one of the modes of specific denial under the rules is a denial through a statement that
the defendant is without knowledge or information sufficient to form a belief as to the truth of the
material averment in the complaint. The question, however, is whether the kind of denial in
respondents' answer qualifies as the specific denial called for by the rules. We do not think so. In
Morales vs. Court of Appeals,30 this Court ruled that if an allegation directly and specifically charges
a party with having done, performed or committed a particular act which the latter did not in fact do,
perform or commit, a categorical and express denial must be made.

Here, despite the serious and specific allegations against them, the Marcoses responded by simply
saying that they had no knowledge or information sufficient to form a belief as to the truth of such
allegations. Such a general, self-serving claim of ignorance of the facts alleged in the petition for
forfeiture was insufficient to raise an issue. Respondent Marcoses should have positively stated how
it was that they were supposedly ignorant of the facts alleged.31

To elucidate, the allegation of petitioner Republic in paragraph 23 of the petition for forfeiture stated:

23. The following presentation very clearly and overwhelmingly show in detail how both
respondents clandestinely stashed away the country's wealth to Switzerland and hid the
same under layers upon layers of foundations and other corporate entities to prevent its
detection. Through their dummies/nominees, fronts or agents who formed those foundations
or corporate entities, they opened and maintained numerous bank accounts. But due to the
difficulty if not the impossibility of detecting and documenting all those secret accounts as
well as the enormity of the deposits therein hidden, the following presentation is confined to
five identified accounts groups, with balances amounting to about $356-M with a reservation
for the filing of a supplemental or separate forfeiture complaint should the need arise.32

Respondents' lame denial of the aforesaid allegation was:


22. Respondents specifically DENY paragraph 23 insofar as it alleges that Respondents
clandestinely stashed the country's wealth in Switzerland and hid the same under layers and
layers of foundations and corporate entities for being false, the truth being that Respondents'
aforesaid properties were lawfully acquired.33

Evidently, this particular denial had the earmark of what is called in the law on pleadings as
a negative pregnant, that is, a denial pregnant with the admission of the substantial facts in the
pleading responded to which are not squarely denied. It was in effect an admission of the averments
it was directed at.34 Stated otherwise, a negative pregnant is a form of negative expression which
carries with it an affirmation or at least an implication of some kind favorable to the adverse party. It
is a denial pregnant with an admission of the substantial facts alleged in the pleading. Where a fact
is alleged with qualifying or modifying language and the words of the allegation as so qualified or
modified are literally denied, has been held that the qualifying circumstances alone are denied while
the fact itself is admitted.35

In the instant case, the material allegations in paragraph 23 of the said petition were not specifically
denied by respondents in paragraph 22 of their answer. The denial contained in paragraph 22 of the
answer was focused on the averment in paragraph 23 of the petition for forfeiture that "Respondents
clandestinely stashed the country's wealth in Switzerland and hid the same under layers and layers
of foundations and corporate entities." Paragraph 22 of the respondents' answer was thus a denial
pregnant with admissions of the following substantial facts:

(1) the Swiss bank deposits existed and

(2) that the estimated sum thereof was US$356 million as of December, 1990.

Therefore, the allegations in the petition for forfeiture on the existence of the Swiss bank deposits in
the sum of about US$356 million, not having been specifically denied by respondents in their
answer, were deemed admitted by them pursuant to Section 11, Rule 8 of the 1997 Revised Rules
on Civil Procedure:

Material averment in the complaint, xxx shall be deemed admitted when not specifically
denied. xxx.36

By the same token, the following unsupported denials of respondents in their answer were pregnant
with admissions of the substantial facts alleged in the Republic's petition for forfeiture:

23. Respondents specifically DENY paragraphs 24, 25, 26, 27, 28, 29 and 30 of the Petition
for lack of knowledge or information sufficient to form a belief as to the truth of the allegation
since respondents were not privy to the transactions regarding the alleged Azio-Verso-Vibur
Foundation accounts, except that, as to respondent Imelda R. Marcos, she specifically
remembers that the funds involved were lawfully acquired.

24. Respondents specifically DENY paragraphs 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41 of
the Petition for lack of knowledge or information sufficient to form a belief as to the truth of
the allegations since respondents were not privy to the transactions and as to such
transactions they were privy to, they cannot remember with exactitude the same having
occurred a long time ago, except as to respondent Imelda R. Marcos, she specifically
remembers that the funds involved were lawfully acquired.

25. Respondents specifically DENY paragraphs 42, 43, 45, and 46 of the petition for lack of
knowledge or information sufficient to from a belief as to the truth of the allegations since
respondents were not privy to the transactions and as to such transaction they were privy to,
they cannot remember with exactitude, the same having occurred a long time ago, except
that as to respondent Imelda R. Marcos, she specifically remembers that the funds involved
were lawfully acquired.

26. Respondents specifically DENY paragraphs 49, 50, 51 and 52 of the petition for lack of
knowledge and information sufficient to form a belief as to the truth of the allegations since
respondents were not privy to the transactions and as to such transaction they were privy to
they cannot remember with exactitude the same having occurred a long time ago, except
that as to respondent Imelda R. Marcos, she specifically remembers that the funds involved
were lawfully acquired.

The matters referred to in paragraphs 23 to 26 of the respondents' answer pertained to the creation
of five groups of accounts as well as their respective ending balances and attached documents
alleged in paragraphs 24 to 52 of the Republic's petition for forfeiture. Respondent Imelda R. Marcos
never specifically denied the existence of the Swiss funds. Her claim that "the funds involved were
lawfully acquired" was an acknowledgment on her part of the existence of said deposits. This only
reinforced her earlier admission of the allegation in paragraph 23 of the petition for forfeiture
regarding the existence of the US$356 million Swiss bank deposits.

The allegations in paragraphs 4737 and 4838 of the petition for forfeiture referring to the creation and
amount of the deposits of the Rosalys-Aguamina Foundation as well as the averment in paragraph
52-a39 of the said petition with respect to the sum of the Swiss bank deposits estimated to be
US$356 million were again not specifically denied by respondents in their answer. The respondents
did not at all respond to the issues raised in these paragraphs and the existence, nature and amount
of the Swiss funds were therefore deemed admitted by them. As held in Galofa vs. Nee Bon Sing,40 if
a defendant's denial is a negative pregnant, it is equivalent to an admission.

Moreover, respondents' denial of the allegations in the petition for forfeiture "for lack of knowledge or
information sufficient to form a belief as to the truth of the allegations since respondents were not
privy to the transactions" was just a pretense. Mrs. Marcos' privity to the transactions was in fact
evident from her signatures on some of the vital documents41 attached to the petition for forfeiture
which Mrs. Marcos failed to specifically deny as required by the rules.42

It is worthy to note that the pertinent documents attached to the petition for forfeiture were even
signed personally by respondent Mrs. Marcos and her late husband, Ferdinand E. Marcos, indicating
that said documents were within their knowledge. As correctly pointed out by Sandiganbayan Justice
Francisco Villaruz, Jr. in his dissenting opinion:

The pattern of: 1) creating foundations, 2) use of pseudonyms and dummies, 3) approving
regulations of the Foundations for the distribution of capital and income of the Foundations to
the First and Second beneficiary (who are no other than FM and his family), 4) opening of
bank accounts for the Foundations, 5) changing the names of the Foundations, 6)
transferring funds and assets of the Foundations to other Foundations or Fides Trust, 7)
liquidation of the Foundations as substantiated by the Annexes U to U-168, Petition [for
forfeiture] strongly indicate that FM and/or Imelda were the real owners of the assets
deposited in the Swiss banks, using the Foundations as dummies.43

How could respondents therefore claim lack of sufficient knowledge or information regarding the
existence of the Swiss bank deposits and the creation of five groups of accounts when Mrs. Marcos
and her late husband personally masterminded and participated in the formation and control of said
foundations? This is a fact respondent Marcoses were never able to explain.
Not only that. Respondents' answer also technically admitted the genuineness and due execution of
the Income Tax Returns (ITRs) and the balance sheets of the late Ferdinand E. Marcos and Imelda
R. Marcos attached to the petition for forfeiture, as well as the veracity of the contents thereof.

The answer again premised its denials of said ITRs and balance sheets on the ground of lack of
knowledge or information sufficient to form a belief as to the truth of the contents thereof. Petitioner
correctly points out that respondents' denial was not really grounded on lack of knowledge or
information sufficient to form a belief but was based on lack of recollection. By reviewing their own
records, respondent Marcoses could have easily determined the genuineness and due execution of
the ITRs and the balance sheets. They also had the means and opportunity of verifying the same
from the records of the BIR and the Office of the President. They did not.

When matters regarding which respondents claim to have no knowledge or information sufficient to
form a belief are plainly and necessarily within their knowledge, their alleged ignorance or lack of
information will not be considered a specific denial.44 An unexplained denial of information within the
control of the pleader, or is readily accessible to him, is evasive and is insufficient to constitute an
effective denial.45

The form of denial adopted by respondents must be availed of with sincerity and in good faith, and
certainly not for the purpose of confusing the adverse party as to what allegations of the petition are
really being challenged; nor should it be made for the purpose of delay.46 In the instant case, the
Marcoses did not only present unsubstantiated assertions but in truth attempted to mislead and
deceive this Court by presenting an obviously contrived defense.

Simply put, a profession of ignorance about a fact which is patently and necessarily within the
pleader's knowledge or means of knowing is as ineffective as no denial at all.47 Respondents'
ineffective denial thus failed to properly tender an issue and the averments contained in the petition
for forfeiture were deemed judicially admitted by them.

As held in J.P. Juan & Sons, Inc. vs. Lianga Industries, Inc.:

Its "specific denial" of the material allegation of the petition without setting forth the
substance of the matters relied upon to support its general denial, when such matters were
plainly within its knowledge and it could not logically pretend ignorance as to the same,
therefore, failed to properly tender on issue.48

Thus, the general denial of the Marcos children of the allegations in the petition for forfeiture "for lack
of knowledge or information sufficient to form a belief as to the truth of the allegations since they
were not privy to the transactions" cannot rightfully be accepted as a defense because they are the
legal heirs and successors-in-interest of Ferdinand E. Marcos and are therefore bound by the acts of
their father vis-a-vis the Swiss funds.

PRE-TRIAL BRIEF DATED OCTOBER 18, 1993

The pre-trial brief of Mrs. Marcos was adopted by the three Marcos children. In said brief, Mrs.
Marcos stressed that the funds involved were lawfully acquired. But, as in their answer, they failed to
state and substantiate how these funds were acquired lawfully. They failed to present and attach
even a single document that would show and prove the truth of their allegations. Section 6, Rule 18
of the 1997 Rules of Civil Procedure provides:

The parties shall file with the court and serve on the adverse party, x x x their respective pre-trial
briefs which shall contain, among others:
xxx

(d) the documents or exhibits to be presented, stating the purpose thereof;

xxx

(f) the number and names of the witnesses, and the substance of their respective
testimonies.49

It is unquestionably within the court's power to require the parties to submit their pre-trial briefs and
to state the number of witnesses intended to be called to the stand, and a brief summary of the
evidence each of them is expected to give as well as to disclose the number of documents to be
submitted with a description of the nature of each. The tenor and character of the testimony of the
witnesses and of the documents to be deduced at the trial thus made known, in addition to the
particular issues of fact and law, it becomes apparent if genuine issues are being put forward
necessitating the holding of a trial. Likewise, the parties are obliged not only to make a formal
identification and specification of the issues and their proofs, and to put these matters in writing and
submit them to the court within the specified period for the prompt disposition of the action.50

The pre-trial brief of Mrs. Marcos, as subsequently adopted by respondent Marcos children, merely
stated:

xxx

WITNESSES

4.1 Respondent Imelda will present herself as a witness and reserves the right to present
additional witnesses as may be necessary in the course of the trial.

xxx

DOCUMENTARY EVIDENCE

5.1 Respondent Imelda reserves the right to present and introduce in evidence documents
as may be necessary in the course of the trial.

Mrs. Marcos did not enumerate and describe the documents constituting her evidence. Neither the
names of witnesses nor the nature of their testimony was stated. What alone appeared certain was
the testimony of Mrs. Marcos only who in fact had previously claimed ignorance and lack of
knowledge. And even then, the substance of her testimony, as required by the rules, was not made
known either. Such cunning tactics of respondents are totally unacceptable to this Court. We hold
that, since no genuine issue was raised, the case became ripe for summary judgment.

OPPOSITION TO MOTION FOR SUMMARY JUDGMENT


DATED MARCH 21, 2000

The opposition filed by Mrs. Marcos to the motion for summary judgment dated March 21, 2000 of
petitioner Republic was merely adopted by the Marcos children as their own opposition to the said
motion. However, it was again not accompanied by affidavits, depositions or admissions as required
by Section 3, Rule 35 of the 1997 Rules on Civil Procedure:
x x x The adverse party may serve opposing affidavits, depositions, or admissions at least
three (3) days before hearing. After 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.51

The absence of opposing affidavits, depositions and admissions to contradict the sworn declarations
in the Republic's motion only demonstrated that the averments of such opposition were not genuine
and therefore unworthy of belief.

Demurrer to Evidence dated May 2, 2000;52


Motions for Reconsideration;53 and Memoranda
of Mrs. Marcos and the Marcos children54

All these pleadings again contained no allegations of facts showing their lawful acquisition of the
funds. Once more, respondents merely made general denials without alleging facts which would
have been admissible in evidence at the hearing, thereby failing to raise genuine issues of fact.

Mrs. Marcos insists in her memorandum dated October 21, 2002 that, during the pre-trial, her
counsel stated that his client was just a beneficiary of the funds, contrary to petitioner Republic's
allegation that Mrs. Marcos disclaimed ownership of or interest in the funds.

This is yet another indication that respondents presented a fictitious defense because, during the
pre-trial, Mrs. Marcos and the Marcos children denied ownership of or interest in the Swiss funds:

PJ Garchitorena:

Make of record that as far as Imelda Marcos is concerned through the statement of
Atty. Armando M. Marcelo that the US$360 million more or less subject matter of the
instant lawsuit as allegedly obtained from the various Swiss Foundations do not
belong to the estate of Marcos or to Imelda Marcos herself. That's your statement of
facts?

Atty. MARCELO:

Yes, Your Honor.

PJ Garchitorena:

That's it. Okay. Counsel for Manotoc and Manotoc, Jr. What is your point here? Does
the estate of Marcos own anything of the $360 million subject of this case.

Atty. TECSON:

We joined the Manifestation of Counsel.

PJ Garchitorena:

You do not own anything?

Atty. TECSON:
Yes, Your Honor.

PJ Garchitorena:

Counsel for Irene Araneta?

Atty. SISON:

I join the position taken by my other compaeros here, Your Honor.

xxx

Atty. SISON:

Irene Araneta as heir do (sic) not own any of the amount, Your Honor.55

We are convinced that the strategy of respondent Marcoses was to confuse petitioner Republic as to
what facts they would prove or what issues they intended to pose for the court's resolution. There is
no doubt in our mind that they were leading petitioner Republic, and now this Court, to perplexity, if
not trying to drag this forfeiture case to eternity.

Manifestation dated May 26, 1998 filed by MRS.


Marcos; General/Supplemental Compromise
Agreement dated December 28, 1993

These pleadings of respondent Marcoses presented nothing but feigned defenses. In their earlier
pleadings, respondents alleged either that they had no knowledge of the existence of the Swiss
deposits or that they could no longer remember anything as it happened a long time ago. As to Mrs.
Marcos, she remembered that it was lawfully acquired.

In her Manifestation dated May 26, 1998, Mrs. Marcos stated that:

COMES NOW undersigned counsel for respondent Imelda R. Marcos, and before this
Honorable Court, most respectfully manifests:

That respondent Imelda R, Marcos owns 90% of the subject matter of the above-entitled
case, being the sole beneficiary of the dollar deposits in the name of the various foundations
alleged in the case;

That in fact only 10% of the subject matter in the above-entitled case belongs to the estate of
the late President Ferdinand E. Marcos.

In the Compromise/Supplemental Agreements, respondent Marcoses sought to implement the


agreed distribution of the Marcos assets, including the Swiss deposits. This was, to us, an
unequivocal admission of ownership by the Marcoses of the said deposits.

But, as already pointed out, during the pre-trial conference, respondent Marcoses denied knowledge
as well as ownership of the Swiss funds.
Anyway we look at it, respondent Marcoses have put forth no real defense. The "facts" pleaded by
respondents, while ostensibly raising important questions or issues of fact, in reality comprised mere
verbiage that was evidently wanting in substance and constituted no genuine issues for trial.

We therefore rule that, under the circumstances, summary judgment is proper.

In fact, it is the law itself which determines when summary judgment is called for. Under the rules,
summary judgment is appropriate when there are no genuine issues of fact requiring the
presentation of evidence in a full-blown trial. Even if on their face the pleadings appear to raise
issue, if 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.56

In sum, mere denials, if unaccompanied by any fact which will be admissible in evidence at a
hearing, are not sufficient to raise genuine issues of fact and will not defeat a motion for summary
judgment.57 A summary judgment is one granted upon motion of a party for an expeditious
settlement of the case, it appearing from the pleadings, depositions, admissions and affidavits that
there are no important questions or issues of fact posed and, therefore, the movant is entitled to a
judgment as a matter of law. A motion for summary judgment is premised on the assumption that the
issues presented need not be tried either because these are patently devoid of substance or that
there is no genuine issue as to any pertinent fact. It is a method sanctioned by the Rules of Court for
the prompt disposition of a civil action where there exists no serious controversy.58 Summary
judgment is a procedural device for the prompt disposition of actions in which the pleadings raise
only a legal issue, not a genuine issue as to any material fact. The theory of summary judgment is
that, although an answer may on its face appear to tender issues requiring trial, if it is established by
affidavits, depositions or admissions that those issues are not genuine but fictitious, the Court is
justified in dispensing with the trial and rendering summary judgment for petitioner.59

In the various annexes to the petition for forfeiture, petitioner Republic attached sworn statements of
witnesses who had personal knowledge of the Marcoses' participation in the illegal acquisition of
funds deposited in the Swiss accounts under the names of five groups or foundations. These sworn
statements substantiated the ill-gotten nature of the Swiss bank deposits. In their answer and other
subsequent pleadings, however, the Marcoses merely made general denials of the allegations
against them without stating facts admissible in evidence at the hearing, thereby failing to raise any
genuine issues of fact.

Under these circumstances, a trial would have served no purpose at all and would have been totally
unnecessary, thus justifying a summary judgment on the petition for forfeiture. There were no
opposing affidavits to contradict the sworn declarations of the witnesses of petitioner Republic,
leading to the inescapable conclusion that the matters raised in the Marcoses' answer were false.

Time and again, this Court has encountered cases like this which are either only half-heartedly
defended or, if the semblance of a defense is interposed at all, it is only to delay disposition and gain
time. It is certainly not in the interest of justice to allow respondent Marcoses to avail of the appellate
remedies accorded by the Rules of Court to litigants in good faith, to the prejudice of the Republic
and ultimately of the Filipino people. From the beginning, a candid demonstration of respondents'
good faith should have been made to the court below. Without the deceptive reasoning and
argumentation, this protracted litigation could have ended a long time ago.

Since 1991, when the petition for forfeiture was first filed, up to the present, all respondents have
offered are foxy responses like "lack of sufficient knowledge or lack of privity" or "they cannot recall
because it happened a long time ago" or, as to Mrs. Marcos, "the funds were lawfully acquired." But,
whenever it suits them, they also claim ownership of 90% of the funds and allege that only 10%
belongs to the Marcos estate. It has been an incredible charade from beginning to end.

In the hope of convincing this Court to rule otherwise, respondents Maria Imelda Marcos-Manotoc
and Ferdinand R. Marcos Jr. contend that "by its positive acts and express admissions prior to filing
the motion for summary judgment on March 10, 2000, petitioner Republic had bound itself to go to
trial on the basis of existing issues. Thus, it had legally waived whatever right it had to move for
summary judgment."60

We do not think so. The alleged positive acts and express admissions of the petitioner did not
preclude it from filing a motion for summary judgment.

Rule 35 of the 1997 Rules of Civil Procedure provides:

Rule 35

Summary Judgment

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, depositions
or admissions for a summary judgment in his favor upon all or any part thereof.

Section 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. (Emphasis ours)61

Under the rule, the plaintiff can move for summary judgment "at any time after the pleading in
answer thereto (i.e., in answer to the claim, counterclaim or cross-claim) has been served." No fixed
reglementary period is provided by the Rules. How else does one construe the phrase "any time
after the answer has been served?"

This issue is actually one of first impression. No local jurisprudence or authoritative work has
touched upon this matter. This being so, an examination of foreign laws and jurisprudence,
particularly those of the United States where many of our laws and rules were copied, is in order.

Rule 56 of the Federal Rules of Civil Procedure provides that a party seeking to recover upon a
claim, counterclaim or cross-claim may move for summary judgment at any time after the expiration
of 20 days from the commencement of the action or after service of a motion for summary judgment
by the adverse party, and that a party against whom a claim, counterclaim or cross-claim is asserted
may move for summary judgment at any time.

However, some rules, particularly Rule 113 of the Rules of Civil Practice of New York, specifically
provide that a motion for summary judgment may not be made until issues have been joined, that is,
only after an answer has been served.62 Under said rule, after issues have been joined, the motion
for summary judgment may be madeat any stage of the litigation.63 No fixed prescriptive period is
provided.

Like Rule 113 of the Rules of Civil Practice of New York, our rules also provide that a motion for
summary judgment may not be made until issues have been joined, meaning, the plaintiff has to wait
for the answer before he can move for summary judgment.64 And like the New York rules, ours do
not provide for a fixed reglementary period within which to move for summary judgment.

This being so, the New York Supreme Court's interpretation of Rule 113 of the Rules of Civil Practice
can be applied by analogy to the interpretation of Section 1, Rule 35, of our 1997 Rules of Civil
Procedure.

Under the New York rule, after the issues have been joined, the motion for summary judgment may
be made at any stage of the litigation. And what exactly does the phrase "at any stage of the
litigation" mean? In Ecker vs. Muzysh,65 the New York Supreme Court ruled:

"PER CURIAM.

Plaintiff introduced her evidence and the defendants rested on the case made by the plaintiff.
The case was submitted. Owing to the serious illness of the trial justice, a decision was not
rendered within sixty days after the final adjournment of the term at which the case was tried.
With the approval of the trial justice, the plaintiff moved for a new trial under Section 442 of
the Civil Practice Act. The plaintiff also moved for summary judgment under Rule 113 of the
Rules of Civil Practice. The motion was opposed mainly on the ground that, by
proceeding to trial, the plaintiff had waived her right to summary judgment and that the
answer and the opposing affidavits raised triable issues. The amount due and unpaid under
the contract is not in dispute. The Special Term granted both motions and the defendants
have appealed.

The Special Term properly held that the answer and the opposing affidavits raised no triable
issue. Rule 113 of the Rules of Civil Practice and the Civil Practice Act prescribe no
limitation as to the time when a motion for summary judgment must be made. The
object of Rule 113 is to empower the court to summarily determine whether or not a
bona fide issue exists between the parties, and there is no limitation on the power of
the court to make such a determination at any stage of the litigation." (emphasis ours)

On the basis of the aforequoted disquisition, "any stage of the litigation" means that "even if the
plaintiff has proceeded to trial, this does not preclude him from thereafter moving for summary
judgment."66

In the case at bar, petitioner moved for summary judgment after pre-trial and before its scheduled
date for presentation of evidence. Respondent Marcoses argue that, by agreeing to proceed to trial
during the pre-trial conference, petitioner "waived" its right to summary judgment.

This argument must fail in the light of the New York Supreme Court ruling which we apply by
analogy to this case. In Ecker,67 the defendant opposed the motion for summary judgment on a
ground similar to that raised by the Marcoses, that is, "that plaintiff had waived her right to summary
judgment" by her act of proceeding to trial. If, as correctly ruled by the New York court, plaintiff was
allowed to move for summary judgment even after trial and submission of the case for resolution,
more so should we permit it in the present case where petitioner moved for summary
judgment before trial.

Therefore, the phrase "anytime after the pleading in answer thereto has been served" in Section 1,
Rule 35 of our Rules of Civil Procedure means "at any stage of the litigation." Whenever it becomes
evident at any stage of the litigation that no triable issue exists, or that the defenses raised by the
defendant(s) are sham or frivolous, plaintiff may move for summary judgment. A contrary
interpretation would go against the very objective of the Rule on Summary Judgment which is to
"weed out sham claims or defenses thereby avoiding the expense and loss of time involved in a
trial."68

In cases with political undertones like the one at bar, adverse parties will often do almost anything to
delay the proceedings in the hope that a future administration sympathetic to them might be able to
influence the outcome of the case in their favor. This is rank injustice we cannot tolerate.

The law looks with disfavor on long, protracted and expensive litigation and encourages the speedy
and prompt disposition of cases. That is why the law and the rules provide for a number of devices
to ensure the speedy disposition of cases. Summary judgment is one of them.

Faithful therefore to the spirit of the law on summary judgment which seeks to avoid unnecessary
expense and loss of time in a trial, we hereby rule that petitioner Republic could validly move for
summary judgment any time after the respondents' answer was filed or, for that matter, at any
subsequent stage of the litigation. The fact that petitioner agreed to proceed to trial did not in any
way prevent it from moving for summary judgment, as indeed no genuine issue of fact was ever
validly raised by respondent Marcoses.

This interpretation conforms with the guiding principle enshrined in Section 6, Rule 1 of the 1997
Rules of Civil Procedure that the "[r]ules should be liberally construed in order to promote their
objective of securing a just, speedy and inexpensive disposition of every action and proceeding."69

Respondents further allege that the motion for summary judgment was based on respondents'
answer and other documents that had long been in the records of the case. Thus, by the time the
motion was filed on March 10, 2000, estoppel by laches had already set in against petitioner.

We disagree. Estoppel by laches is the failure or neglect for an unreasonable or unexplained length
of time to do that which, by exercising due diligence, could or should have been done earlier,
warranting a presumption that the person has abandoned his right or declined to assert it.70 In effect,
therefore, the principle of laches is one of estoppel because "it prevents people who have slept on
their rights from prejudicing the rights of third parties who have placed reliance on the inaction of the
original parties and their successors-in-interest".71

A careful examination of the records, however, reveals that petitioner was in fact never remiss in
pursuing its case against respondent Marcoses through every remedy available to it, including the
motion for summary judgment.

Petitioner Republic initially filed its motion for summary judgment on October 18, 1996. The motion
was denied because of the pending compromise agreement between the Marcoses and petitioner.
But during the pre-trial conference, the Marcoses denied ownership of the Swiss funds, prompting
petitioner to file another motion for summary judgment now under consideration by this Court. It was
the subsequent events that transpired after the answer was filed, therefore, which prevented
petitioner from filing the questioned motion. It was definitely not because of neglect or inaction that
petitioner filed the (second) motion for summary judgment years after respondents' answer to the
petition for forfeiture.

In invoking the doctrine of estoppel by laches, respondents must show not only unjustified inaction
but also that some unfair injury to them might result unless the action is barred.72

This, respondents failed to bear out. In fact, during the pre-trial conference, the Marcoses disclaimed
ownership of the Swiss deposits. Not being the owners, as they claimed, respondents did not have
any vested right or interest which could be adversely affected by petitioner's alleged inaction.
But even assuming for the sake of argument that laches had already set in, the doctrine of estoppel
or laches does not apply when the government sues as a sovereign or asserts governmental
rights.73 Nor can estoppel validate an act that contravenes law or public policy.74

As a final point, it must be emphasized that laches is not a mere question of time but is principally a
question of the inequity or unfairness of permitting a right or claim to be enforced or
asserted.75 Equity demands that petitioner Republic should not be barred from pursuing the people's
case against the Marcoses.

(2) The Propriety of Forfeiture

The matter of summary judgment having been thus settled, the issue of whether or not petitioner
Republic was able to prove its case for forfeiture in accordance with the requisites of Sections 2 and
3 of RA 1379 now takes center stage.

The law raises the prima facie presumption that a property is unlawfully acquired, hence subject to
forfeiture, if its amount or value is manifestly disproportionate to the official salary and other lawful
income of the public officer who owns it. Hence, Sections 2 and 6 of RA 137976 provide:

xxx xxx

Section 2. Filing of petition. Whenever any public officer or employee has acquired during
his incumbency an amount or property which is manifestly out of proportion to his salary as
such public officer or employee and to his other lawful income and the income from
legitimately acquired property, said property shall be presumed prima facie to have been
unlawfully acquired.

xxx xxx

Sec. 6. Judgment If the respondent is unable to show to the satisfaction of the court that he
has lawfully acquired the property in question, then the court shall declare such property in
question, forfeited in favor of the State, and by virtue of such judgment the property aforesaid
shall become the property of the State.Provided, That no judgment shall be rendered within
six months before any general election or within three months before any special election.
The Court may, in addition, refer this case to the corresponding Executive Department for
administrative or criminal action, or both.

From the above-quoted provisions of the law, the following facts must be established in order that
forfeiture or seizure of the Swiss deposits may be effected:

(1) ownership by the public officer of money or property acquired during his incumbency,
whether it be in his name or otherwise, and

(2) the extent to which the amount of that money or property exceeds, i. e., is grossly
disproportionate to, the legitimate income of the public officer.

That spouses Ferdinand and Imelda Marcos were public officials during the time material to the
instant case was never in dispute. Paragraph 4 of respondent Marcoses' answer categorically
admitted the allegations in paragraph 4 of the petition for forfeiture as to the personal circumstances
of Ferdinand E. Marcos as a public official who served without interruption as Congressman,
Senator, Senate President and President of the Republic of the Philippines from December 1, 1965
to February 25, 1986.77 Likewise, respondents admitted in their answer the contents of paragraph 5
of the petition as to the personal circumstances of Imelda R. Marcos who once served as a member
of the Interim Batasang Pambansa from 1978 to 1984 and as Metro Manila Governor, concurrently
Minister of Human Settlements, from June 1976 to February 1986.78

Respondent Mrs. Marcos also admitted in paragraph 10 of her answer the allegations of paragraph
11 of the petition for forfeiture which referred to the accumulated salaries of respondents Ferdinand
E. Marcos and Imelda R. Marcos.79 The combined accumulated salaries of the Marcos couple were
reflected in the Certification dated May 27, 1986 issued by then Minister of Budget and Management
Alberto Romulo.80 The Certification showed that, from 1966 to 1985, Ferdinand E. Marcos and
Imelda R. Marcos had accumulated salaries in the amount of P1,570,000 and P718,750,
respectively, or a total of P2,288,750:

Ferdinand E. Marcos, as President

1966-1976 at P60,000/year P660,000


1977-1984 at P100,000/year 800,000
1985 at P110,000/year 110,000
P1,570,00

Imelda R. Marcos, as Minister

June 1976-1985 at P75,000/year P718,000

In addition to their accumulated salaries from 1966 to 1985 are the Marcos couple's combined
salaries from January to February 1986 in the amount of P30,833.33. Hence, their total accumulated
salaries amounted to P2,319,583.33. Converted to U.S. dollars on the basis of the corresponding
peso-dollar exchange rates prevailing during the applicable period when said salaries were received,
the total amount had an equivalent value of $304,372.43.

The dollar equivalent was arrived at by using the official annual rates of exchange of the Philippine
peso and the US dollar from 1965 to 1985 as well as the official monthly rates of exchange in
January and February 1986 issued by the Center for Statistical Information of the Bangko Sentral ng
Pilipinas.

Prescinding from the aforesaid admissions, Section 4, Rule 129 of the Rules of Court provides that:

Section 4. Judicial admissions An admission, verbal or written, made by a party in the


course of the proceedings in the same case does not require proof. The admission may be
contradicted only by showing that it was made through palpable mistake or that no such
admission was made.81

It is settled that judicial admissions may be made: (a) in 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
judicial proceedings, as in the pre-trial of the case.82 Thus, facts pleaded in the petition and answer,
as in the case at bar, are deemed admissions of petitioner and respondents, respectively, who are
not permitted to contradict them or subsequently take a position contrary to or inconsistent with such
admissions.83
The sum of $304,372.43 should be held as the only known lawful income of respondents since they
did not file any Statement of Assets and Liabilities (SAL), as required by law, from which their net
worth could be determined. Besides, under the 1935 Constitution, Ferdinand E. Marcos as President
could not receive "any other emolument from the Government or any of its subdivisions and
instrumentalities".84 Likewise, under the 1973 Constitution, Ferdinand E. Marcos as President could
"not receive during his tenure any other emolument from the Government or any other source."85 In
fact, his management of businesses, like the administration of foundations to accumulate funds, was
expressly prohibited under the 1973 Constitution:

Article VII, Sec. 4(2) The President and the Vice-President shall not, during their tenure,
hold any other office except when otherwise provided in this Constitution, nor may they
practice any profession, participate directly or indirectly in the management of any business,
or be financially interested directly or indirectly in any contract with, or in any franchise or
special privilege granted by the Government or any other subdivision, agency, or
instrumentality thereof, including any government owned or controlled corporation.

Article VII, Sec. 11 No Member of the National Assembly shall appear as counsel before
any court inferior to a court with appellate jurisdiction, x x x. Neither shall he, directly or
indirectly, be interested financially in any contract with, or in any franchise or special privilege
granted by the Government, or any subdivision, agency, or instrumentality thereof including
any government owned or controlled corporation during his term of office. He shall not
intervene in any matter before any office of the government for his pecuniary benefit.

Article IX, Sec. 7 The Prime Minister and Members of the Cabinet shall be subject to the
provision of Section 11, Article VIII hereof and may not appear as counsel before any court
or administrative body, or manage any business, or practice any profession, and shall also
be subject to such other disqualification as may be provided by law.

Their only known lawful income of $304,372.43 can therefore legally and fairly serve as basis for
determining the existence of a prima facie case of forfeiture of the Swiss funds.

Respondents argue that petitioner was not able to establish a prima facie case for the forfeiture of
the Swiss funds since it failed to prove the essential elements under Section 3, paragraphs (c), (d)
and (e) of RA 1379. As the Act is a penal statute, its provisions are mandatory and should thus be
construed strictly against the petitioner and liberally in favor of respondent Marcoses.

We hold that it was not for petitioner to establish the Marcoses' other lawful income or income from
legitimately acquired property for the presumption to apply because, as between petitioner and
respondents, the latter were in a better position to know if there were such other sources of lawful
income. And if indeed there was such other lawful income, respondents should have specifically
stated the same in their answer. Insofar as petitioner Republic was concerned, it was enough to
specify the known lawful income of respondents.

Section 9 of the PCGG Rules and Regulations provides that, in determining prima facie evidence of
ill-gotten wealth, the value of the accumulated assets, properties and other material possessions of
those covered by Executive Order Nos. 1 and 2 must be out of proportion to the known lawful
income of such persons. The respondent Marcos couple did not file any Statement of Assets and
Liabilities (SAL) from which their net worth could be determined. Their failure to file their SAL was in
itself a violation of law and to allow them to successfully assail the Republic for not presenting their
SAL would reward them for their violation of the law.
Further, contrary to the claim of respondents, the admissions made by them in their various
pleadings and documents were valid. It is of record that respondents judicially admitted that the
money deposited with the Swiss banks belonged to them.

We agree with petitioner that respondent Marcoses made judicial admissions of their ownership of
the subject Swiss bank deposits in their answer, the General/Supplemental Agreements, Mrs.
Marcos' Manifestation and Constancia dated May 5, 1999, and the Undertaking dated February 10,
1999. We take note of the fact that the Associate Justices of the Sandiganbayan were unanimous in
holding that respondents had made judicial admissions of their ownership of the Swiss funds.

In their answer, aside from admitting the existence of the subject funds, respondents likewise
admitted ownershipthereof. Paragraph 22 of respondents' answer stated:

22. Respondents specifically DENY PARAGRAPH 23 insofar as it alleges that respondents


clandestinely stashed the country's wealth in Switzerland and hid the same under layers and
layers of foundations and corporate entities for being false, the truth being that respondents'
aforesaid properties were lawfully acquired. (emphasis supplied)

By qualifying their acquisition of the Swiss bank deposits as lawful, respondents unwittingly admitted
their ownership thereof.

Respondent Mrs. Marcos also admitted ownership of the Swiss bank deposits by failing to deny
under oath the genuineness and due execution of certain actionable documents bearing her
signature attached to the petition. As discussed earlier, Section 11, Rule 886 of the 1997 Rules of
Civil Procedure provides that material averments in the complaint shall be deemed admitted when
not specifically denied.

The General87 and Supplemental88 Agreements executed by petitioner and respondents on


December 28, 1993 further bolstered the claim of petitioner Republic that its case for forfeiture was
proven in accordance with the requisites of Sections 2 and 3 of RA 1379. The whereas clause in the
General Agreement declared that:

WHEREAS, the FIRST PARTY has obtained a judgment from the Swiss Federal Tribunal on
December 21, 1990, that the $356 million belongs in principle to the Republic of the
Philippines provided certain conditionalities are met, but even after 7 years, the FIRST
PARTY has not been able to procure a final judgment of conviction against the PRIVATE
PARTY.

While the Supplemental Agreement warranted, inter alia, that:

In consideration of the foregoing, the parties hereby agree that the PRIVATE PARTY shall
be entitled to the equivalent of 25% of the amount that may be eventually withdrawn from
said $356 million Swiss deposits.

The stipulations set forth in the General and Supplemental Agreements undeniably indicated the
manifest intent of respondents to enter into a compromise with petitioner. Corollarily, respondents'
willingness to agree to an amicable settlement with the Republic only affirmed their ownership of the
Swiss deposits for the simple reason that no person would acquiesce to any concession over such
huge dollar deposits if he did not in fact own them.
Respondents make much capital of the pronouncement by this Court that the General and
Supplemental Agreements were null and void.89 They insist that nothing in those agreements could
thus be admitted in evidence against them because they stood on the same ground as an accepted
offer which, under Section 27, Rule 13090 of the 1997 Rules of Civil Procedure, provides that "in civil
cases, an offer of compromise is not an admission of any liability and is not admissible in evidence
against the offeror."

We find no merit in this contention. The declaration of nullity of said agreements was premised on
the following constitutional and statutory infirmities: (1) the grant of criminal immunity to the Marcos
heirs was against the law; (2) the PCGG's commitment to exempt from all forms of taxes the
properties to be retained by the Marcos heirs was against the Constitution; and (3) the government's
undertaking to cause the dismissal of all cases filed against the Marcoses pending before the
Sandiganbayan and other courts encroached on the powers of the judiciary. The reasons relied
upon by the Court never in the least bit even touched on the veracity and truthfulness of
respondents' admission with respect to their ownership of the Swiss funds. Besides, having made
certain admissions in those agreements, respondents cannot now deny that they voluntarily admitted
owning the subject Swiss funds, notwithstanding the fact that the agreements themselves were later
declared null and void.

The following observation of Sandiganbayan Justice Catalino Castaeda, Jr. in the decision dated
September 19, 2000 could not have been better said:

x x x The declaration of nullity of the two agreements rendered the same without legal effects
but it did not detract from the admissions of the respondents contained therein. Otherwise
stated, the admissions made in said agreements, as quoted above, remain binding on the
respondents.91

A written statement is nonetheless competent as an admission even if it is contained in a document


which is not itself effective for the purpose for which it is made, either by reason of illegality, or
incompetency of a party thereto, or by reason of not being signed, executed or delivered.
Accordingly, contracts have been held as competent evidence of admissions, although they may be
unenforceable.92

The testimony of respondent Ferdinand Marcos, Jr. during the hearing on the motion for the
approval of the Compromise Agreement on April 29, 1998 also lent credence to the allegations of
petitioner Republic that respondents admitted ownership of the Swiss bank accounts. We quote the
salient portions of Ferdinand Jr.'s formal declarations in open court:

ATTY. FERNANDO:

Mr. Marcos, did you ever have any meetings with PCGG Chairman Magtanggol C.
Gunigundo?

F. MARCOS, JR.:

Yes. I have had very many meetings in fact with Chairman.

ATTY. FERNANDO:

Would you recall when the first meeting occurred?


PJ GARCHITORENA:

In connection with what?

ATTY. FERNANDO:

In connection with the ongoing talks to compromise the various cases initiated by
PCGG against your family?

F. MARCOS, JR.:

The nature of our meetings was solely concerned with negotiations towards
achieving some kind of agreement between the Philippine government and the
Marcos family. The discussions that led up to the compromise agreement were
initiated by our then counsel Atty. Simeon Mesina x x x.93

xxx xxx xxx

ATTY. FERNANDO:

What was your reaction when Atty. Mesina informed you of this possibility?

F. MARCOS, JR.:

My reaction to all of these approaches is that I am always open, we are always open,
we are very much always in search of resolution to the problem of the family and any
approach that has been made us, we have entertained. And so my reaction was the
same as what I have always why not? Maybe this is the one that will finally put an
end to this problem.94

xxx xxx xxx

ATTY. FERNANDO:

Basically, what were the true amounts of the assets in the bank?

PJ GARCHITORENA:

So, we are talking about liquid assets here? Just Cash?

F. MARCOS, JR.:

Well, basically, any assets. Anything that was under the Marcos name in any of the
banks in Switzerland which may necessarily be not cash.95

xxx xxx xxx

PJ GARCHITORENA:
x x x What did you do in other words, after being apprised of this contract in
connection herewith?

F. MARCOS, JR.:

I assumed that we are beginning to implement the agreement because this was
forwarded through the Philippine government lawyers through our lawyers and then,
subsequently, to me. I was a little surprised because we hadn't really discussed the
details of the transfer of the funds, what the bank accounts, what the mechanism
would be. But nevertheless, I was happy to see that as far as the PCGG is
concerned, that the agreement was perfected and that we were beginning to
implement it and that was a source of satisfaction to me because I thought that finally
it will be the end.96

Ferdinand Jr.'s pronouncements, taken in context and in their entirety, were a confirmation of
respondents' recognition of their ownership of the Swiss bank deposits. Admissions of a party in his
testimony are receivable against him. If a party, as a witness, deliberately concedes a fact, such
concession has the force of a judicial admission.97 It is apparent from Ferdinand Jr.'s testimony that
the Marcos family agreed to negotiate with the Philippine government in the hope of finally putting an
end to the problems besetting the Marcos family regarding the Swiss accounts. This was doubtlessly
an acknowledgment of ownership on their part. The rule is that the testimony on the witness stand
partakes of the nature of a formal judicial admission when a party testifies clearly and unequivocally
to a fact which is peculiarly within his own knowledge.98

In her Manifestation99 dated May 26, 1998, respondent Imelda Marcos furthermore revealed the
following:

That respondent Imelda R. Marcos owns 90% of the subject matter of the above-entitled
case, being the sole beneficiary of the dollar deposits in the name of the various foundations
alleged in the case;

That in fact only 10% of the subject matter in the above-entitled case belongs to the estate of
the late President Ferdinand E. Marcos;

xxx xxx xxx

Respondents' ownership of the Swiss bank accounts as borne out by Mrs. Marcos' manifestation is
as bright as sunlight. And her claim that she is merely a beneficiary of the Swiss deposits is belied
by her own signatures on the appended copies of the documents substantiating her ownership of the
funds in the name of the foundations. As already mentioned, she failed to specifically deny under
oath the authenticity of such documents, especially those involving "William Saunders" and "Jane
Ryan" which actually referred to Ferdinand Marcos and Imelda Marcos, respectively. That failure of
Imelda Marcos to specifically deny the existence, much less the genuineness and due execution, of
the instruments bearing her signature, was tantamount to a judicial admission of the genuineness
and due execution of said instruments, in accordance with Section 8, Rule 8100 of the 1997 Rules of
Civil Procedure.

Likewise, in her Constancia101 dated May 6, 1999, Imelda Marcos prayed for the approval of the
Compromise Agreement and the subsequent release and transfer of the $150 million to the rightful
owner. She further made the following manifestations:

xxx xxx xxx


2. The Republic's cause of action over the full amount is its forfeiture in favor of the
government if found to be ill-gotten. On the other hand, the Marcoses defend that it is a
legitimate asset. Therefore, both parties have an inchoate right of ownership over the
account. If it turns out that the account is of lawful origin, the Republic may yield to the
Marcoses. Conversely, the Marcoses must yield to the Republic. (underscoring supplied)

xxx xxx xxx

3. Consistent with the foregoing, and the Marcoses having committed themselves to helping
the less fortunate, in the interest of peace, reconciliation and unity, defendant MADAM
IMELDA ROMUALDEZ MARCOS, in firm abidance thereby, hereby affirms her agreement
with the Republic for the release and transfer of the US Dollar 150 million for proper
disposition, without prejudice to the final outcome of the litigation respecting the ownership of
the remainder.

Again, the above statements were indicative of Imelda's admission of the Marcoses' ownership of
the Swiss deposits as in fact "the Marcoses defend that it (Swiss deposits) is a legitimate (Marcos)
asset."

On the other hand, respondents Maria Imelda Marcos-Manotoc, Ferdinand Marcos, Jr. and Maria
Irene Marcos-Araneta filed a motion102 on May 4, 1998 asking the Sandiganbayan to place the res
(Swiss deposits) in custodia legis:

7. Indeed, the prevailing situation is fraught with danger! Unless the aforesaid Swiss deposits
are placed in custodia legis or within the Court's protective mantle, its dissipation or
misappropriation by the petitioner looms as a distinct possibility.

Such display of deep, personal interest can only come from someone who believes that he has a
marked and intimate right over the considerable dollar deposits. Truly, by filing said motion, the
Marcos children revealed their ownership of the said deposits.

Lastly, the Undertaking103 entered into by the PCGG, the PNB and the Marcos foundations on
February 10, 1999, confirmed the Marcoses' ownership of the Swiss bank deposits. The subject
Undertaking brought to light their readiness to pay the human rights victims out of the funds held in
escrow in the PNB. It stated:

WHEREAS, the Republic of the Philippines sympathizes with the plight of the human rights
victims-plaintiffs in the aforementioned litigation through the Second Party, desires to assist
in the satisfaction of the judgment awards of said human rights victims-plaintiffs, by
releasing, assigning and or waiving US$150 million of the funds held in escrow under the
Escrow Agreements dated August 14, 1995, although the Republic is not obligated to do so
under final judgments of the Swiss courts dated December 10 and 19, 1997, and January 8,
1998;

WHEREAS, the Third Party is likewise willing to release, assign and/or waive all its rights
and interests over said US$150 million to the aforementioned human rights victims-plaintiffs.

All told, the foregoing disquisition negates the claim of respondents that "petitioner failed to prove
that they acquired or own the Swiss funds" and that "it was only by arbitrarily isolating and taking
certain statements made by private respondents out of context that petitioner was able to treat these
as judicial admissions." The Court is fully aware of the relevance, materiality and implications of
every pleading and document submitted in this case. This Court carefully scrutinized the proofs
presented by the parties. We analyzed, assessed and weighed them to ascertain if each piece of
evidence rightfully qualified as an admission. Owing to the far-reaching historical and political
implications of this case, we considered and examined, individually and totally, the evidence of the
parties, even if it might have bordered on factual adjudication which, by authority of the rules and
jurisprudence, is not usually done by this Court. There is no doubt in our mind that respondent
Marcoses admitted ownership of the Swiss bank deposits.

We have always adhered to the familiar doctrine that an admission made in the pleadings cannot be
controverted by the party making such admission and becomes conclusive on him, and that all
proofs submitted by him contrary thereto or inconsistent therewith should be ignored, whether an
objection is interposed by the adverse party or not.104 This doctrine is embodied in Section 4, Rule
129 of the Rules of Court:

SEC. 4. Judicial admissions. An admission, verbal or written, made by a party in the


course of the proceedings in the same case, does not require proof. The admission may be
contradicted only by showing that it was made through palpable mistake or that no such
admission was made.105

In the absence of a compelling reason to the contrary, respondents' judicial admission of ownership
of the Swiss deposits is definitely binding on them.

The individual and separate admissions of each respondent bind all of them pursuant to Sections 29
and 31, Rule 130 of the Rules of Court:

SEC. 29. Admission by co-partner or agent. The act or declaration of a partner or agent of
the party within the scope of his authority and during the existence of the partnership or
agency, may be given in evidence against such party after the partnership or agency is
shown by evidence other than such act or declaration. The same rule applies to the act or
declaration of a joint owner, joint debtor, or other person jointly interested with the party.106

SEC. 31. Admission by privies. Where one derives title to property from another, the act,
declaration, or omission of the latter, while holding the title, in relation to the property, is
evidence against the former.107

The declarations of a person are admissible against a party whenever a "privity of estate" exists
between the declarant and the party, the term "privity of estate" generally denoting a succession in
rights.108 Consequently, an admission of one in privity with a party to the record is
competent.109 Without doubt, privity exists among the respondents in this case. And where several
co-parties to the record are jointly interested in the subject matter of the controversy, the admission
of one is competent against all.110

Respondents insist that the Sandiganbayan is correct in ruling that petitioner Republic has failed to
establish aprima facie case for the forfeiture of the Swiss deposits.

We disagree. The sudden turn-around of the Sandiganbayan was really strange, to say the least, as
its findings and conclusions were not borne out by the voluminous records of this case.

Section 2 of RA 1379 explicitly states that "whenever any public officer or employee has acquired
during his incumbency an amount of property which is manifestly out of proportion to his salary as
such public officer or employee and to his other lawful income and the income from legitimately
acquired property, said property shall be presumed prima facie to have been unlawfully acquired. x x
x"
The elements which must concur for this prima facie presumption to apply are:

(1) the offender is a public officer or employee;

(2) he must have acquired a considerable amount of money or property during his
incumbency; and

(3) said amount is manifestly out of proportion to his salary as such public officer or
employee and to his other lawful income and the income from legitimately acquired property.

It is undisputed that spouses Ferdinand and Imelda Marcos were former public officers. Hence, the
first element is clearly extant.

The second element deals with the amount of money or property acquired by the public officer
during his incumbency. The Marcos couple indubitably acquired and owned properties during their
term of office. In fact, the five groups of Swiss accounts were admittedly owned by them. There is
proof of the existence and ownership of these assets and properties and it suffices to comply with
the second element.

The third requirement is met if it can be shown that such assets, money or property is manifestly out
of proportion to the public officer's salary and his other lawful income. It is the proof of this third
element that is crucial in determining whether a prima facie presumption has been established in this
case.

Petitioner Republic presented not only a schedule indicating the lawful income of the Marcos
spouses during their incumbency but also evidence that they had huge deposits beyond such lawful
income in Swiss banks under the names of five different foundations. We believe petitioner was able
to establish the prima facie presumption that the assets and properties acquired by the Marcoses
were manifestly and patently disproportionate to their aggregate salaries as public officials.
Otherwise stated, petitioner presented enough evidence to convince us that the Marcoses had dollar
deposits amounting to US $356 million representing the balance of the Swiss accounts of the five
foundations, an amount way, way beyond their aggregate legitimate income of only US$304,372.43
during their incumbency as government officials.

Considering, therefore, that the total amount of the Swiss deposits was considerably out of
proportion to the known lawful income of the Marcoses, the presumption that said dollar deposits
were unlawfully acquired was duly established. It was sufficient for the petition for forfeiture to state
the approximate amount of money and property acquired by the respondents, and their total
government salaries. Section 9 of the PCGG Rules and Regulations states:

Prima Facie Evidence. Any accumulation of assets, properties, and other material
possessions of those persons covered by Executive Orders No. 1 and No. 2, whose value is
out of proportion to their known lawful income is prima facie deemed ill-gotten wealth.

Indeed, the burden of proof was on the respondents to dispute this presumption and show by clear
and convincing evidence that the Swiss deposits were lawfully acquired and that they had other
legitimate sources of income. A presumption is prima facie proof of the fact presumed and, unless
the fact thus prima facie established by legal presumption is disproved, it must stand as proved.111

Respondent Mrs. Marcos argues that the foreign foundations should have been impleaded as they
were indispensable parties without whom no complete determination of the issues could be made.
She asserts that the failure of petitioner Republic to implead the foundations rendered the judgment
void as the joinder of indispensable parties was a sine qua non exercise of judicial power.
Furthermore, the non-inclusion of the foreign foundations violated the conditions prescribed by the
Swiss government regarding the deposit of the funds in escrow, deprived them of their day in court
and denied them their rights under the Swiss constitution and international law.112

The Court finds that petitioner Republic did not err in not impleading the foreign foundations. Section
7, Rule 3 of the 1997 Rules of Civil Procedure,113 taken from Rule 19b of the American Federal
Rules of Civil Procedure, provides for the compulsory joinder of indispensable parties. Generally, an
indispensable party must be impleaded for the complete determination of the suit. However, failure
to join an indispensable party does not divest the court of jurisdiction since the rule regarding
indispensable parties is founded on equitable considerations and is not jurisdictional. Thus, the court
is not divested of its power to render a decision even in the absence of indispensable parties, though
such judgment is not binding on the non-joined party.114

An indispensable party115 has been defined as one:

[who] must have a direct interest in the litigation; and if this interest is such that it cannot be
separated from that of the parties to the suit, if the court cannot render justice between the
parties in his absence, if the decree will have an injurious effect upon his interest, or if the
final determination of the controversy in his absence will be inconsistent with equity and good
conscience.

There are two essential tests of an indispensable party: (1) can relief be afforded the plaintiff without
the presence of the other party? and (2) can the case be decided on its merits without prejudicing
the rights of the other party?116 There is, however, no fixed formula for determining who is an
indispensable party; this can only be determined in the context and by the facts of the particular suit
or litigation.

In the present case, there was an admission by respondent Imelda Marcos in her May 26, 1998
Manifestation before the Sandiganbayan that she was the sole beneficiary of 90% of the subject
matter in controversy with the remaining 10% belonging to the estate of Ferdinand
Marcos.117 Viewed against this admission, the foreign foundations were not indispensable parties.
Their non-participation in the proceedings did not prevent the court from deciding the case on its
merits and according full relief to petitioner Republic. The judgment ordering the return of the $356
million was neither inimical to the foundations' interests nor inconsistent with equity and good
conscience. The admission of respondent Imelda Marcos only confirmed what was already generally
known: that the foundations were established precisely to hide the money stolen by the Marcos
spouses from petitioner Republic. It negated whatever illusion there was, if any, that the foreign
foundations owned even a nominal part of the assets in question.

The rulings of the Swiss court that the foundations, as formal owners, must be given an opportunity
to participate in the proceedings hinged on the assumption that they owned a nominal share of the
assets.118 But this was already refuted by no less than Mrs. Marcos herself. Thus, she cannot now
argue that the ruling of the Sandiganbayan violated the conditions set by the Swiss court. The
directive given by the Swiss court for the foundations to participate in the proceedings was for the
purpose of protecting whatever nominal interest they might have had in the assets as formal owners.
But inasmuch as their ownership was subsequently repudiated by Imelda Marcos, they could no
longer be considered as indispensable parties and their participation in the proceedings became
unnecessary.
In Republic vs. Sandiganbayan,119 this Court ruled that impleading the firms which are the res of the
action was unnecessary:

"And as to corporations organized with ill-gotten wealth, but are not themselves guilty of
misappropriation, fraud or other illicit conduct in other words, the companies themselves
are not the object or thing involved in the action, the res thereof there is no need to implead
them either. Indeed, their impleading is not proper on the strength alone of their having been
formed with ill-gotten funds, absent any other particular wrongdoing on their part

Such showing of having been formed with, or having received ill-gotten funds, however
strong or convincing, does not, without more, warrant identifying the corporations in question
with the person who formed or made use of them to give the color or appearance of lawful,
innocent acquisition to illegally amassed wealth at the least, not so as place on the
Government the onus of impleading the former with the latter in actions to recover such
wealth. Distinguished in terms of juridical personality and legal culpability from their erring
members or stockholders, said corporations are not themselves guilty of the sins of the latter,
of the embezzlement, asportation, etc., that gave rise to the Government's cause of action
for recovery; their creation or organization was merely the result of their members' (or
stockholders') manipulations and maneuvers to conceal the illegal origins of the assets or
monies invested therein. In this light, they are simply the res in the actions for the recovery of
illegally acquired wealth, and there is, in principle, no cause of action against them and no
ground to implead them as defendants in said actions."

Just like the corporations in the aforementioned case, the foreign foundations here were set up to
conceal the illegally acquired funds of the Marcos spouses. Thus, they were simply the res in the
action for recovery of ill-gotten wealth and did not have to be impleaded for lack of cause of action or
ground to implead them.

Assuming arguendo, however, that the foundations were indispensable parties, the failure of
petitioner to implead them was a curable error, as held in the previously cited case of Republic vs.
Sandiganbayan:120

"Even in those cases where it might reasonably be argued that the failure of the Government
to implead the sequestered corporations as defendants is indeed a procedural abberation, as
where said firms were allegedly used, and actively cooperated with the defendants, as
instruments or conduits for conversion of public funds and property or illicit or fraudulent
obtention of favored government contracts, etc., slight reflection would nevertheless lead to
the conclusion that the defect is not fatal, but one correctible under applicable adjective rules
e.g., Section 10, Rule 5 of the Rules of Court [specifying the remedy of amendment during
trial to authorize or to conform to the evidence]; Section 1, Rule 20 [governing amendments
before trial], in relation to the rule respecting omission of so-called necessary or
indispensable parties, set out in Section 11, Rule 3 of the Rules of Court. It is relevant in this
context to advert to the old familiar doctrines that the omission to implead such parties "is a
mere technical defect which can be cured at any stage of the proceedings even after
judgment"; and that, particularly in the case of indispensable parties, since their presence
and participation is essential to the very life of the action, for without them no judgment may
be rendered, amendments of the complaint in order to implead them should be freely
allowed, even on appeal, in fact even after rendition of judgment by this Court, where it
appears that the complaint otherwise indicates their identity and character as such
indispensable parties."121
Although there are decided cases wherein the non-joinder of indispensable parties in fact led to the
dismissal of the suit or the annulment of judgment, such cases do not jibe with the matter at hand.
The better view is that non-joinder is not a ground to dismiss the suit or annul the judgment. The rule
on joinder of indispensable parties is founded on equity. And the spirit of the law is reflected in
Section 11, Rule 3122 of the 1997 Rules of Civil Procedure. It prohibits the dismissal of a suit on the
ground of non-joinder or misjoinder of parties and allows the amendment of the complaint at any
stage of the proceedings, through motion or on order of the court on its own initiative.123

Likewise, jurisprudence on the Federal Rules of Procedure, from which our Section 7, Rule 3124 on
indispensable parties was copied, allows the joinder of indispensable parties even after judgment
has been entered if such is needed to afford the moving party full relief.125 Mere delay in filing the
joinder motion does not necessarily result in the waiver of the right as long as the delay is
excusable.126 Thus, respondent Mrs. Marcos cannot correctly argue that the judgment rendered by
the Sandiganbayan was void due to the non-joinder of the foreign foundations. The court had
jurisdiction to render judgment which, even in the absence of indispensable parties, was binding on
all the parties before it though not on the absent party.127 If she really felt that she could not be
granted full relief due to the absence of the foreign foundations, she should have moved for their
inclusion, which was allowable at any stage of the proceedings. She never did. Instead she assailed
the judgment rendered.

In the face of undeniable circumstances and the avalanche of documentary evidence against them,
respondent Marcoses failed to justify the lawful nature of their acquisition of the said assets. Hence,
the Swiss deposits should be considered ill-gotten wealth and forfeited in favor of the State in
accordance with Section 6 of RA 1379:

SEC. 6. Judgment. If the respondent is unable to show to the satisfaction of the court that
he has lawfully acquired the property in question, then the court shall declare such property
forfeited in favor of the State, and by virtue of such judgment the property aforesaid shall
become property of the State x x x.

THE FAILURE TO PRESENT AUTHENTICATED TRANSLATIONS OF THE SWISS DECISIONS

Finally, petitioner Republic contends that the Honorable Sandiganbayan Presiding Justice Francis
Garchitorena committed grave abuse of discretion in reversing himself on the ground that the
original copies of the authenticated Swiss decisions and their authenticated translations were not
submitted to the court a quo. Earlier PJ Garchitorena had quoted extensively from the unofficial
translation of one of these Swiss decisions in hisponencia dated July 29, 1999 when he denied the
motion to release US$150 Million to the human rights victims.

While we are in reality perplexed by such an incomprehensible change of heart, there might
nevertheless not be any real need to belabor the issue. The presentation of the authenticated
translations of the original copies of the Swiss decision was not de rigueur for the public respondent
to make findings of fact and reach its conclusions. In short, the Sandiganbayan's decision was not
dependent on the determination of the Swiss courts. For that matter, neither is this Court's.

The release of the Swiss funds held in escrow in the PNB is dependent solely on the decision of this
jurisdiction that said funds belong to the petitioner Republic. What is important is our own
assessment of the sufficiency of the evidence to rule in favor of either petitioner Republic or
respondent Marcoses. In this instance, despite the absence of the authenticated translations of the
Swiss decisions, the evidence on hand tilts convincingly in favor of petitioner Republic.
WHEREFORE, the petition is hereby GRANTED. The assailed Resolution of the Sandiganbayan
dated January 31, 2002 is SET ASIDE. The Swiss deposits which were transferred to and are now
deposited in escrow at the Philippine National Bank in the estimated aggregate amount of
US$658,175,373.60 as of January 31, 2002, plus interest, are hereby forfeited in favor of petitioner
Republic of the Philippines.

SO ORDERED.