upon checking with the teller's blotter, Nadelline Orallo, the resident auditor of LBP,
OPHELIA HERNAN, Petitioner,
vs.
THE HONORABLE SANDIGANBAYAN,, Respondent
DECISION
PERALTA, J.:
Before the Court is a special civil action for certiorari under Rule 65 of the Rules of
Court seeking to reverse and set aside the Resolution1 dated February 2, 2015 and
Decision2 dated November 13, 2009 of the Sandiganbayan 2nd Division which affirmed,
with modification, the Decision dated June 28, 2002 of the Regional Trial Court (RTC),
Branch 7, Baguio City convicting petitioner of the crime of malversation of public funds
in Criminal Case No. 15722-R.
The antecedent facts are as follows:
In October 1982, petitioner Ophelia Hernan joined the Department of Transportation and
Communication (DOTC), Cordillera Administrative Region (CAR) in Baguio City wherein
she served as an accounting clerk. In September 1984, she was promoted to the
position of Supervising Fiscal Clerk by virtue of which she was designated as cashier,
disbursement and collection officer.3 As such, petitioner received cash and other
collections from customers and clients for the payment of telegraphic transfers, toll
foes, and special message fees. The collections she received were deposited at the bank
account of the DOTC at the Land Bank of the Philippines (LBP), Baguio City Branch.4
On December 17, 1996, Maria Imelda Lopez, an auditor of the Commission on Audit (COA),
conducted a cash examination of the accounts handled by petitioner as instructed by
her superior, Sherelyn Narag. As a result, Lopez came across deposit slips dated
September 19, 1996 and November 29, 1996 bearing the amounts of ₱11,300.00 and
₱81,348.20, rcspectively.5 Upon close scrutiny, she noticed that said deposit slips did
not bear a stamp of receipt by the LBP nor was it machine validated. Suspicious about
what she found, she and Narag verified all the reports and other documents turned-
over to them by petitioner.6 On the basis of said findings, Narag sent a letter to the LBP
to confirm the remittances made by petitioner. After adding all the deposits made and
found that no deposits were made by petitioner for the account of DOTC on September
19, 1996 for the amount of ₱11,300.00 and November 29, 1996 for the amount of
₱81,340.20.7
Thereafter, the LBP's officer-in-charge, Rebecca R. Sanchez, instructed the bank's
teller, Catalina Ngaosi, to conduct their own independent inquiry. It was discovered that
on September 19, 1996, the only deposit in favor of the DOTC was that made by its Ifugao
office in the Lagawe branch of the LBP.8 This prompted Lopez to write to petitioner
informing her that the two (2) aforesaid remittances were not acknowledged by the
bank. The auditors then found that petitioner duly accounted for the ₱81,348.20
remittance but not for the ₱11,300.00. Dissatisfied with petitioner's explanation as to
the whereabouts of the said remittance, Narag reported the matter to the COA Regional
Director who, in turn wrote to the LBP for confirmation. The LBP then denied receiving
any ₱11,300.00 deposit on September 19, 1996 from petitioner for the account of the
DOTC.9 Thus, the COA demanded that she pay the said amount. Petitioner, however,
refused. Consequently, the COA filed a complaint for malversation of public funds
against petitioner with the Office of the Ombudsman for Luzon which, after due
investigation, recommended her indictment for the loss of ₱11,300.00.10 Accordingly,
petitioner was charged before the RTC of Baguio City in an Information, the accusatory
portion of which reads:
That on or about September 16, 1996, or sometime prior or subsequent thereto, in the
City of Baguio, Philippines, and within the jurisdiction of this Honourable Court, the
above-named accused, a public officer, being then the Disbursing Officer of the
Department of Transportation and Communications, Baguio City, and as such an
accountable officer, entrusted with and responsible for the amount of ₱1 1,300.00
which accused received and collected for the DOTC, and intended for deposit under the
account of DOTC with the Land Bank of the Philippines-Baguio City, by reason of her
position, while in the performance of her official functions, taking advantage of her
position, did then and there, wilfully, feloniously, and unlawfully misappropriate or
consent, or through abandonment or negligence, permit other persons to take such
amount of ₱11,300.00 to the damage and prejudice of the government.
CONTRARY TO LAW.11
Upon arraignment on July 31, 1998, petitioner pleaded not guilty to the offense charged.
Hence, trial on the merits ensued.
To establish its case, the prosecution presented the testimonies of two (2) COA
auditors, namely, Maria Lopez and Sherelyn Narag as well as three (3) LBP employees,
namely, Rebecca Sanchez, Catalina Ngaosi, and Nadelline Orallo.12 In response, the
defense presented the lone testimony of petitioner, which can be summarized as
follows:
On September 19, 1996, petitioner and her supervisor, Cecilia Paraiso, went to the LBP
Baguio branch and personally deposited the exact amount of ₱11,300.00 with
accomplished deposit slips in six (6) copies.13 Since there were many clients who came
ahead of her, she decided to go with her usual arrangement of leaving the money with
the teller and telling her that she would just come back to retrieve the deposit slip.
Thus, she handed the money to Teller No. 2, whom she identified as Catalina Ngaosi.
Upon her return at around 3 o'clock in the afternoon, she retrieved four (4) copies of
the deposit slip from Ngaosi. She noticed that the same had no acknowledgment mark
on it. Being contented with the initials of the teller on the deposit slips, she returned to
her office and kept them in her vault. It was only during the cash count conducted by
auditor Lopez when she found out that the said amount was not remitted to the account
of the LBP. When demand was made on her to return the amount, she requested that
she be allowed to pay only after investigation of a complaint of Estafa that she would file
with the National Bureau of Investigation against some personnel of the bank,
particularly Catalina Ngaosi.14 The complaint, however, was eventually dismissed.15
After trial, the RTC found petitioner guilty beyond reasonable doubt of the crime
charged in the Information. The dispositive portion of the decision states:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered convicting
accused Ophelia Hernan of Malversation and hereby sentences her, after applying the
Indeterminate Sentence Law, to suffer imprisonment from 7 years, 4 months, and 1 day
of prision mayor medium period, as minimum, to 11 years, 6 months and 21 days of
prision mayor as maximum period to reclusion temporal maximum period, as maximum,
and to pay a fine of ₱11,300.00.
Accused Ophelia Hernan is further sentenced to suffer the penalty of perpetual special
disqualification.
Likewise, accused Ophelia Hernan is hereby ordered to pay back to the government the
amount of ₱11,300.00 plus legal interest thereon at the rate of 12% per annum to be
computed from the date of the filing of the Information up to the time the same is
actually paid.
Costs against the accused.
SO ORDERED.16
Erroneously, petitioner appealed to the Court of Appeals (CA), which affirmed her
conviction but modified the penalty imposed. Upon motion, however, the CA set aside its
decision on the finding that it has no appellate jurisdiction over the case. Instead, it is
the Sandiganbayan which has exclusive appellate jurisdiction over petitioner occupying
a position lower than Salary Grade 27.17 Petitioner's new counsel, Atty. Leticia Gutierrez
Hayes-Allen, then appealed the case to the Sandiganbayan. In a Decision dated
November 13, 2009, the Sandiganbayan affirmed the RTC's judgment of conviction but
modified the penalty imposed, the dispositive opinion of which reads:
WHEREFORE, in view of all the foregoing, the appealed decision is hereby AFFIRMED, with
the modifications that the indeterminate penalty to be imposed on the accused should
be from 6 years and 1 day of prision mayor as minimum, to 11 years, 6 months, and 21
days of prision mayor as maximum, together with the accessory penalties under Article
42 of the Revised Penal Code, and that interest of only 6% shall be imposed on the
amount of ₱11,300.00 to be restored by the accused.
SO ORDERED.18
Petitioner filed a Motion for Reconsideration dated December 21, 2009 alleging that
during the trial before the RTC, her counsel was unable to elicit many facts which would
show her innocence. Said counsel principally failed to present certain witnesses and
documents that would supposedly acquit her from the crime charged. The
Sandiganbayan, however, denied the motion in a Resolution dated August 31, 2010 on the
ground that evidence not formally offered before the court below cannot be considered
on appeal.19
On June 26, 2013, the Resolution denying petitioner's Motion for Reconsideration
became final and executory and was recorded in the Book of Entries of Judgments.20
On July 26, 2013, petitioner's new counsel, Atty. Meshack Macwes, filed an Urgent Motion
to Reopen the Case with Leave of Court and with Prayer to Stay the Execution.21 In a
Resolution22 dated December 4, 2013, however, the Sandiganbayan denied the motion
and directed the execution of the judgment of conviction. It noted the absence of the
following requisites for the reopening of a case: (1) the reopening must be before
finality of a judgment of conviction; (2) the order is issued by the judge on his own
initiative or upon motion; (3) the order is issued only after a hearing is conducted; (4)
the order intends to prevent a miscarriage of justice; and (5) the presentation of
additional and/or further evidence should be terminated within thirty (30) days from
the issuance of the order.23
Unfazed, petitioner filed on January 9, 2014 a Petition for Reconsideration with Prayer
for Recall of Entry of Judgment in lieu of the Prayer for Stay of Execution of Judgment
praying for a reconsideration of the Sandiganbayan' s recent Resolution, that the case
be reopened for further reception of evidence, and the recall of the Entry of Judgment
dated June 26, 2013.24 In a Resolution dated February 2, 2015, the Sandiganbayan
denied the petition for lack of merit. According to the said court, the motion is clearly a
third motion for reconsideration, which is a prohibited pleading under the Rules of
Court. Also, the grounds raised therein were merely a rehash of those raised in the two
previous motions. The claims that the accused could not contact her counsel on whom
she merely relied on for appropriate remedies to be filed on her behalf, and that she
has additional evidence to present, were already thoroughly discussed in the August 31,
2010 and December 4, 2013 Resolutions. Moreover, the cases relied upon by petitioner
are not on point.25
On May 14, 2015, petitioner filed the instant petition invoking the following arguments:
I.
THE SANDIGANBA YAN GRAVELY ERRED AS IT ACTED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN CONCLUDING THAT THE MOTION TO
REOPEN WAS FILED OUT OF TIME CONSIDERING TI-IE EXTRAORDINARY AND EXCEPTIONAL
CIRCUMSTANCES SURROUNDING THE CASE.
II.
THE SANDIGANBA YAN GRAVELY ERRED AS IT ACTED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN FINDING THAT THE EVIDENCE
INTENDED TO BE PRESENTED BY PETITIONER SHOULD HER MOTTON FOR REOPENING BE
GRANTED, WAS PASSED UPON BY THE TRIAL COURT.
III.
THE SANDIGANBA YAN GRAVELY ERRED AS IT ACTED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN PRONOUNCING THAT THE MOTION TO
REOPEN AND THE PETITION FOR RECONSIDERATION FILED BY PETITIONER ARE CONSIDERED
AS THE SECOND AND THIRD MOTIONS TO THE DENIAL OF THE DECISION.
Petitioner posits that her counsel, Atty. Hayes-Allen, never received the August 31, 2010
Resolution of the Sandiganbayan denying her Motion for Reconsideration. This is
because notice thereof was erroneously sent to said counsel's previous office at
Poblacion, La Trinidad, Benguet, despite the fact that it was specifically indicated in the
Motion for Reconsideration that the new office is at the Public Attorney's Office of
Tayug, Pangasinan, following her counsel's appointment as public attorney. Thus, since
her counsel was not properly notified of the subject resolution, the entry of judgment is
premature.26 In support of her assertion, she cites Our ruling in People v. Chavez,27
wherein We held that an entry of judgment without receipt of the resolution is
premature.
Petitioner also claims that during trial, she could not obtain the necessary evidence for
her defense due to the fact that the odds were against her. Because of this, she asks
the Court to relax the strict application of the rules and consider remanding the case to
the lower court for further reception of evidence.28 In particular, petitioner seeks the
reception of an affidavit of a certain John L. Ziganay, an accountant at the Depaiiment of
Science and Technology (DOST), who previously worked at the DOTC and COA, as well as
two (2) deposit slips. According to petitioner, these pieces of evidence would show that
the ₱11,300.00 deposited at the Lagawe branch of the LBP was actually the deposit
made by petitioner and not by a certain Lanie Cabacungan, as the prosecution suggests.
This is because the ₱11,300.00 deposit made by Cabacungan consists of two (2)
different amounts, which, if proper accounting procedure is followed, shall be recorded
in the bank statement as two (2) separate amounts and not their total sum of
₱11,300.00.29 Thus, the Sandiganbayan's denial of petitioner's motion to reopen the
case is capricious, despotic, and whimsical since the admission of her additional
evidence will prevent a miscarriage.
Finally, petitioner denies the Sandiganbayan's ruling that her motion to reopen and
petition for reconsideration are considered as a second and third motion for
reconsideration, and are thus, prohibited pleadings. This is because the additional
evidence she seeks to introduce were not available during the trial of her case.
The petition is devoid of merit.
At the outset, the Court notes that as pointed out by respondent Office of the Special
Prosecutor, petitioner's resort to a petition for certiorari under Rule 65 of the Rules of
Court is an improper remedy. In determining the appropriate remedy or remedies
available, a party aggrieved by a cou1i order, resolution or decision must first correctly
identify the nature of the order, resolution or decision he intends to assail.30 It bears
stressing that the extraordinary remedy of certiorari can be availed of only if there is
no appeal or any other plain, speedy, and adequate remedy in the ordinary course of
law.31 If the Order or Resolution sought to be assailed is in the nature of a final order,
the remedy of the aggrieved party would be to file a petition for review on certiorari
under Rule 45 of the Rules of Court. Otherwise, the appropriate remedy would be to file
a petition for certiorari under Rule 65.32 Petitioner, in the instant case, seeks to assail
the Sandiganbayan's Resolutions dated December 4, 2013 and February 2, 2015 wherein
said court denied her motion to reopen the malversation case against her. Said
resolutions are clearly final orders that dispose the proceedings completely. The instant
petition for certiorari under Rule 65 is, therefore, improper.
Even if We assume the propriety of petitioner's chosen action, the Court still cannot
grant the reliefs she prays for, specifically: (1) the reversal of the Sandiganbayan's
December 4, 2013 and February 2, 2015 Resolutions denying her motion to reopen and
petition for reconsideration; (2) the reopening of the case for further reception of
evidence; and (3) the recall of the Entry of Judgment dated June 26, 2013.33
First of all, there is no merit in petitioner's claim that since her counsel was not
properly notified of the August 31, 2010 Resolution as notice thereof was erroneously
sent to her old office address, the entry of judgment is premature. As the Court sees it,
petitioner has no one but herself to blame. Time and again, the Court has held that in the
absence of a proper and adequate notice to the court of a change of address, the
service of the order or resolution of a court upon the parties must be made at the last
address of their counsel on record.34 It is the duty of the party and his counsel to
device a system for the receipt of mail intended for them, just as it is the duty of the
counsel to inform the court officially of a change in his address.35 If counsel moves to
another address without informing the court of that change, such omission or neglect is
inexcusable and will not stay the finality of the decision. The court cannot be expected to
take judicial notice of the new address of a lawyer who has moved or to ascertain on its
own whether or not the counsel of record has been changed and who the new counsel
could possibly be or where he probably resides or holds office.36
Here, it is undisputed that petitioner's counsel failed to inform the court of the change
in her office address from Poblacion, La Trinidad, Benguet, to the Public Attorney's
Office in Tayug, Pangasinan. The fact that said new address was indicated in petitioner's
Motion for Reconsideration does not suffice as "proper and adequate notice" to the
court. As previously stated, courts cannot be expected to take notice of every single
time the counsel of a party changes address. Besides, it must be noted that petitioner
even expressly admitted having received the subject resolution "sometime in
September or October 2010."37 Easily, she could have informed her counsel of the
same. As respondent posits, it is not as if petitioner had no knowledge of the
whereabouts of her counsel considering that at the time of the filing of her Motion for
Reconsideration, said counsel was already with the PA0.38 Moreover, the Court cannot
permit petitioner's reliance on the Chavez case because there, petitioner did not
receive the resolution of the Court of Appeals through no fault or negligence on his
paii.39 Here, however, petitioner's non-receipt of the subject resolution was mainly
attributable not only to her counsel's negligence but hers, as well. Thus, the Court
deems it necessary to remind litigants, who are represented by counsel, that they
should not expect that all they need to do is sit back, relax and await the outcome of
their case. They should give the necessary assistance to their counsel for what is at
stake is their interest in the case. It is, therefore, their responsibility to check the
status of their case from time to time.40
To recall, petitioner, on December 21, 2009, filed her Motion for Reconsideration seeking
a reversal of the Sandiganbayan's November 13, 2009 Decision which affirmed the RTC's
ruling convicting her of the crime of malversation. In a Resolution dated August 31, 2010,
the Sandiganbayan denied petitioner's Motion for Reconsideration. Said resolution
became final in the absence of any pleading filed thereafter, and hence, was recorded in
the Book of Entries of Judgments on June 26, 2013. Subsequently, on July 12, 2013,
petitioner, through her new counsel, filed an Urgent Motion to Reopen the Case with
Leave of Court and with Prayer to Stay the Execution, which was denied through the
Sandiganbayan's Resolution dated December 4, 2013.41 Undeterred, petitioner filed her
Petition for Reconsideration with Prayer for Recall of Entry of Judgment in lieu of the
Prayer for the Stay of Execution of Judgement on January 9, 2014 which was likewise
denied in the Sandiganbayan's February 2, 2015 Resolution.
It seems, therefore, that petitioner waited almost an entire three (3) year period from
the denial of her Motion for Reconsideration to act upon the malversation case against
her through the filing of her urgent motion to reopen. In fact, her filing of said motion
may very well be prompted only by her realization that the case has finally concluded by
reason of the entry of judgment. Stated otherwise, the Court is under the impression
that had she not heard of the recording of the August 31, 2010 Resolution in the Book of
Entries of Judgments on June 26, 2013, petitioner would not even have inquired about
the status of her case. As respondent puts it, the urgent motion to reopen appears to
have been filed as a substitute for the lost remedy of an appeal via a petition for review
on certiorari before the Court.42 On this inexcusable negligence alone, the Court finds
sufficient basis to deny the instant petition.
Second of all, petitioner's claim that the Sandiganbayan's denial of her motion to reopen
the case is capricious, despotic, and whimsical since the admission of her additional
evidence will prevent a miscarriage has no legal nor factual leg to stand on. Section 24,
Rule 119 and existing jurisprudence provide for the following requirements for the
reopening a case: (l) the reopening must be before the finality of a judgment of
conviction; (2) the order is issued by the judge on his own initiative or upon motion; (3)
the order is issued only after a hearing is conducted; (4) the order intends to prevent a
miscarriage of justice; and (5) the presentation of additional and/or further evidence
should be terminated within thirty days from the issuance of the order.43
But as the Sandiganbayan ruled, the absence of the first requisite that the reopening
must be before the finality of a judgment of conviction already cripples the
motion. 1âwphi1 The records of the case clearly reveal that the August 3l, 2010
Resolution of the Sandiganbayan denying petitioner's Motion for Reconsideration had
already become final and executory and, in fact, was already recorded in the Entry Book
of Judgments on June 26, 2013. Moreover, petitioner's supposed predicament about her
former counsel failing to present witnesses and documents should have been advanced
before the trial court.44 It is the trial court, and neither the Sandiganbayan nor the
Court, which receives evidence and rules over exhibits formally offered.45 Thus, it was,
indeed, too late in the day to advance additional allegations for petitioner had all the
opportunity to do so in the lower court. An appellate court will generally not disturb the
trial court's assessment of factual matters except only when it clearly overlooked
certain facts or where the evidence fails to substantiate the lower court's findings or
when the disputed decision is based on a misapprehension of facts.46
Ultimately, it bears stressing that the Court does not find that the Sandiganbayan acted
in a capricious, despotic, or whimsical manner when it denied petitioner's motion to
reopen especially in view of the fact that the rulings it seeks to refute are legally sound
and appropriately based on the evidences presented by the parties. On this score, the
elements of malversation of public funds under Article 217 of the Revised Penal Code
(RPC) are: (1) that the offender is a public officer; (2) that he had the custody or control
of funds or property by reason of the duties of his office; (3) that those funds or
property were public funds or prope1iy for which he was accountable; and (4) that he
appropriated, took, misappropriated or consented or, through abandonment or
negligence, permitted another person to take them. This article establishes a
presumption that when a public officer fails to have duly forthcoming any public funds
with which he is chargeable, upon demand by any duly authorized officer, it shall be
prima facie evidence that he has put such missing funds to personal uses.47
As duly found by the trial court, and affinned by the Sandiganbayan, petitioner's defense
that she, together with her supervisor Cecilia Paraiso, went to the LBP and handed the
subject ₱11,300.00 deposit to the teller Ngaosi and, thereafter, had no idea as to where
the money went failed to overcome the presumption of law. For one, Paraiso was never
presented to corroborate her version. For another, when questioned about the subject
deposit, not only did petitioner fail to make the same readily available, she also could
not satisfactorily explain its whereabouts. Indeed, in the crime of malversation, all that
is necessary for conviction is sufficient proof that the accountable officer had received
public funds, that she did not have them in her possession when demand therefor was
made, and that she could not satisfactorily explain her failure to do so.48 Thus, even if it
is assumed that it was somebody else who misappropriated the said amount, petitioner
may still be held liable for malversation. The Comi quotes, with approval, the trial
court's ruling, viz.:
Even if the claim of Hernan, i.e., that she actually left the amount of ₱11,300.00
and the corresponding deposit slip with the Bank Teller Ngaosi and she came
back to retrieve the deposit slip later, is to be believed and then it came out that
the said ₱11,300.00 was not credited to the account of DOTC with the Land Bank
and was in fact missing, still accused Hernan should be convicted of malversation
because in this latter situation she permits through her inexcusable negligence
another person to take the money. And this is still malversation under Article
217.49
Said ruling was, in fact, duly reiterated by the Sandiganbayan in its Decision, thus:
Shifting our gaze to the possibility that it was the bank teller Catalina Ngaosi who
misappropriated the amount and should therefore be held liable, as the accused would
want to poltray, the Court doubts the tenability of that position. As consistently ruled by
jurisprudence, a public officer may be held liable for malversation even if he does not
use public property or funds under his custody for his personal benefit, but consents to
the taking thereof by another person, or, through abandonment or negligence,
permitted such taking. The accused, by her negligence, simply created the
opportunity for the misappropriation. Even her justification that her deposits
which were not machine-validated were nonetheless acknowledged by the bank
cannot fortify her defense. On the contrary, it all the more emphasizes her
propensity for negligence each time that she accepted deposit slips which were
not machinevalidated, her only proof of receipt of her deposits. 50
In view of the foregoing, the Court agrees with the Sandiganbayan's finding that
petitioner's motion to reopen and petition for reconsideration are practically second
and third motions for reconsideration from its Decision dated November 13, 2009.
Under the rules, the motions are already prohibited pleadings under Section 5, Rule 37
of the Rules of Court due to the fact that the grounds raised in the petition for
reconsideration are merely a rehash of those raised in the two (2) previous motions
filed before it. These grounds were already thoroughly discussed by the Sandiganbayan
in its subject resolutions. Hence, as duly noted by the Sandiganbayan, in the law of
pleading, courts are called upon to pierce the form and go into the substance, not to be
misled by a false or wrong name given to a pleading because the title thereof is not
controlling and the court should be guided by its averments.51 Thus, the fact that the
pleadings filed by petitioner are entitled Urgent Motion to Reopen the Case with Leave of
Court and with Prayer to Stay Execution and Petition for Reconsideration with Prayer
for Recall of Entry of Judgment in lieu of the Prayer for Stay of Execution of Judgment
does not exempt them from the application of the rules on prohibited pleadings.
Let it be remembered that the doctrine of finality of judgment is grounded on the
fundamental principle of public policy and sound practice that, at the risk of occasional
error, the judgment of courts and the award of quasi-judicial agencies must become
final on some definite date fixed by law. The only exceptions to the general rule are the
correction of clerical errors, the so-called nunc pro tune entries which cause no
prejudice to any party, void judgments, and whenever circumstances transpire after the
finality of the decision which render its execution unjust and inequitable.52 None of the
exceptions is present in this case.
Indeed, every litigation must come to an end once a judgment becomes final, executory
and unappealable. Just as a losing party has the right to file an appeal within the
prescribed period, the winning party also has the correlative right to enjoy the finality
of the resolution of his case by the execution and satisfaction of the judgment, which is
the "life of the law." To frustrate it by dilatory schemes on the part of the losing party is
to frustrate all the efforts, time and expenditure of the courts. It is in the interest of
justice that this Court should write finis to this litigation.53
The foregoing notwithstanding, the Court finds that it is still necessary to reopen the
instant case and recall the Entry of Judgment dated June 26, 2013 of the
Sandiganbayan, not for further reception of evidence, however, as petitioner prays for,
but in order to modify the penalty imposed by said court. The general rule is that a
judgment that has acquired finality becomes immutable and unalterable, and may no
longer be modified in any respect even if the modification is meant to correct
erroneous conclusions of fact or law and whether it will be made by the court that
rendered it or by the highest court of the land.54 When, however, circumstances
transpire after the finality of the decision rendering its execution unjust and inequitable,
the Court may sit en bane and give due regard to such exceptional circumstance
warranting the relaxation of the doctrine of immutability. The same is in line with
Section 3(c),55 Rule II of the Internal Rules of the Supreme Court, which provides that
cases raising novel questions of law are acted upon by the Court en bane. To the Court,
the recent passage of Republic Act (R.A.) No. 10951 entitled An Act Adjusting the Amount
or the Value of Property and Damage on which a Penalty is Based and the Fines Imposed
Under the Revised Penal Code Amending for the Purpose Act No. 3815 Otherwise Known
as the "Revised Penal Code" as Amended which accordingly reduced the penalty
applicable to the crime charged herein is an example of such exceptional circumstance.
Section 40 of said Act provides:
SEC. 40. Article 217 of the same Act, as amended by Republic Act. No. 1060, is hereby
further amended to read as follows:
ART. 217. Malversation of public funds or property; Presumption of malversation. - Any
public officer who, by reason of the duties of his office, is accountable for public funds
or property, shall appropriate the same, or shall take or misappropriate or shall
consent, through abandonment or negligence, shall permit any other person to take
such public funds, or property, wholly or partially, or shall otherwise be guilty of the
misappropriation or malversation of such funds or property, shall suffer:
1. The penalty of pnswn correccional in its medium and maximum periods, if the
amount involved in the misappropriation or malversation docs not exceed Forty
thousand pesos (₱40,000.00).
xxxx
In all cases, persons guilty of malversation shall also suffer the penalty of perpetual
special disqualification and a fine equal to the amount of the funds malversed or equal
to the total value of the property embezzled.
Pursuant to the aforequoted provision, therefore, We have here a novel situation
wherein the judgment convicting the accused, petitioner herein, has already become
final and executory and yet the penalty imposed thereon has been reduced by virtue of
the passage of said law. Because of this, not only must petitioner's sentence be
modified respecting the settled rule on the retroactive effectivity of laws, the
sentencing being favorable to the accused,56 she may even apply for probation,57 as
long as she does not possess any ground for disqualification,58 in view of recent
legislation on probation, or R.A. No. 10707 entitled An Act Amending Presidential Decree
No. 968, otherwise known as the "Probation Law of 1976," As Amended. allowing an
accused to apply for probation in the event that she is sentenced to serve a maximum
term of imprisonment of not more than six (6) years when a judgment of conviction
imposing a non-probationable penalty is appealed or reviewed, and such judgment is
modified through the imposition of a probationable penalty.59
Thus, in order to effectively avoid any injustice that petitioner may suffer as well as a
possible multiplicity of suits arising therefrom, the Court deems it proper to reopen the
instant case and recall the Entry of Judgment dated June 26, 2013 of the
Sandiganbayan, which imposed the penalty of six (6) years and one (1) day of prision
mayor, as minimum, to eleven (11) years, six (6) months, and twenty-one (21) days of
prision mayor, as maximum. Instead, since the amount involved herein is ₱11,300.00,
which does not exceed ₱40,000.00, the new penalty that should be imposed is prision
correccional in its medium and maximum periods, which has a prison term of two (2)
years, four (4) months, and one (1) day, to six (6) years. The Court, however, takes note
of the presence of the mitigating circumstance of voluntary surrender appreciated by
the Sandiganbayan in favor of petitioner.60 Hence, taking into consideration the
absence of any aggravating circumstance and the presence of one (1) mitigating
circumstance, the range of the penalty that must be imposed as the maximum term
should be prision correccional medium to prision correccional maximum in its minimum
period, or from two (2) years, four (4) months, and one (1) day, to three (3) years, six
(6) months, and twenty (20) days, in accordance with Article 6461 of the RPC. Applying
the Indeterminate Sentence Law, the range of the minimum term that should be
imposed upon petitioners is anywhere within the period of arresto mayor, maximum to
prision correccional minimum with a range of four (4) months and one (1) day to two (2)
years and four (4) months. Accordingly, petitioner is sentenced to suffer the
indeterminate penalty of six (6) months of arresto mayor, as minimum, to three (3)
years, six (6) months, and twenty (20) days prision correccional, as maximum.
On a final note, judges, public prosecutors, public attorneys, private counsels, and such
other officers of the law are hereby advised to similarly apply the provisions of RA No.
10951 whenever it is, by reason of justice and equity, called for by the facts of each
case. Hence, said recent legislation shall find application in cases where the imposable
penalties of the affected crimes such as theft, qualified theft, estafa, robbery with force
upon things, malicious mischief, malversation, and such other crimes, the penalty of
which is dependent upon the value of the object in consideration thereof, have been
reduced, as in the case at hand, taking into consideration the presence of existing
circumstances attending its commission. For as long as it is favorable to the accused,
said recent legislation shall find application regardless of whether its effectivity comes
after the time when the judgment of conviction is rendered and even if service of
sentence has already begun. The accused, in these applicable instances, shall be entitled
to the benefits of the new law warranting him to serve a lesser sentence, or to his
release, if he has already begun serving his previous sentence, and said service already
accomplishes the term of the modified sentence. In the latter case, moreover, the
Court, in the interest of justice and expediency, further directs the appropriate filing of
an action before the Court that seeks the reopening of the case rather than an original
petition filed for a similar purpose.
Indeed, when exceptional circumstances exist, such as the passage of the instant
amendatory law imposing penalties more lenient and favorable to the accused, the
Court shall not hesitate to direct the reopening of a final and immutable judgment, the
objective of which is to correct not so much the findings of guilt but the applicable
penalties to be imposed.
Henceforth: (1) the Directors of the National Penitentiary and Correctional Institution for
Women are hereby ordered to determine if there are accused serving final sentences
similarly situated as the accused in this particular case and if there are, to coordinate
and communicate with the Public Attorney's Office and the latter, to represent and file
the necessary pleading before this Court in behalf of these convicted accused in light of
this Court's pronouncement; (2) For those cases where the accused are undergoing
preventive imprisonment, either the cases against them are non-bailable or cannot put
up the bail in view of the penalties imposable under the old law, their respective
counsels are hereby ordered to file the necessary pleading before the proper courts,
whether undergoing trial in the RTC or undergoing appeal in the appellate courts and
apply for bail, for their provisional liberty; (3) For those cases where the accused are
undergoing preventive imprisonment pending trial or appeal, their respective counsels
are hereby ordered to file the necessary pleading if the accused have already served
the minimum sentence of the crime charged against them based on the penalties
imposable under the new law, R.A. No. 10951, for their immediate release in accordance
with A.M. No. 12-11-2-SC or the Guidelines For Decongesting Holding Jails By Enforcing
The Rights Of Accused Persons To Bail And To Speedy Trial; 62 and (4) Lastly, all courts,
including appellate courts, are hereby ordered to give priority to those cases covered
by R.A. No. 10951 to avoid any prolonged imprisonment.
WHEREFORE, premises considered, the instant petition is DENIED. The Resolution dated
February 2, 2015 and Decision dated November 13, 2009 of the Sandiganbayan 2nd
Division are AFFIRMED with MODIFICATION. Petitioner is hereby sentenced to suffer
the indeterminate penalty of six (6) months of arresto mayor, as minimum term, to
three (3) years, six (6) months, and twenty (20) days prision correccional, as maximum
term.
Let copies of this Decision be furnished to the Office of the Court Administrator (OCA)
for dissemination to the First and Second Level courts, and also to the Presiding
Justices of the appellate courts, the Department of Justice, Office of the Solicitor
General, Public Attorney's Office, Prosecutor General's Office, the Directors of the
National Penitentiary and Correctional Institution for Women, and the Integrated Bar of
the Philippines for their information, guidance, and appropriate action.
Likewise, let the Office of the President, the Senate of the Philippines, and the House of
Representatives, be furnished copies of this Decision for their information.
SO ORDERED.
G.R. No. L-68374 June 18, 1985
HORACIO LUNA and LIBERTY HIZON-LUNA, petitioners,
vs.
INTERMEDIATE APPELLATE COURT, HON ROQUE A. TAMAYO, as Presiding Judge of
Regional Trial Court, NCR Branch CXXXI1 Makati, Metro Manila, MARIA LOURDES
SANTOS, and SIXTO SALUMBIDES, respondents.
CONCEPCION, JR., J.:
Review on certiorari of the decision of the respondent appellate court in case CA-G. R.
No. SP-01869, entitled: " Horacio Luna, et al., petitioners, versus Hon. Roque A. Tamayo,
etc., et al., respondents, " which affirmed an order denying a motion to restrain the
execution of a final judgment rendered in a habeas corpus case.
The records of the case show that the herein private respondent Maria Lourdes Santos
is an illegitimate child of the petitioner Horacio Luna who is married to his co-petitioner
Liberty Hizon-Luna. Maria Lourdes Santos is married to her correspondent Sixto
Salumbides, and are the parents of Shirley Santos Salumbides, also known as Shirley
Luna Salumbides, who is the subject of this child custody case.
It appears that two or four months after the birth of the said Shirley Salumbides on
April 7, 1975, her parents gave her to the petitioners, a childless couple with
considerable means, who thereafter showered her with love and affection and brought
her up as their very own. The couple doted upon Shirley who called them "Mama" and
"Papa". She calls her natural parents "Mommy" and "Daddy." When Shirley reached the
age of four (4) years in 1979, she was enrolled at the Maryknoll College in Quezon City,
where she is now in Grade I I I.
A few months before September, 1980, her "Mama" and "Papa" decided to take Shirley
abroad and show her Disneyland and other places of interest in America. Shirley looked
forward to this trip and was excited about it. However, when the petitioners asked for
the respondents' written consent to the child's application for a U.S. visa, the
respondents refused to give it, to the petitioners' surprise and chagrin Shirley was
utterly disappointed. As a result, the petitioners had to leave without Shirley whom they
left with the private respondents, upon the latter's request. The petitioners, however,
left instructions with their chauffeur to take and fetch Shirley from Maryknoll College
every school day.
When the petitioners returned on October 29, 1980, they learned that the respondents
had transferred Shirley to the St. Scholastica College. The private respondents also
refused to return Shirley to them. Neither did the said respondents allow Shirley to visit
the petitioners. In view thereof, the petitioners filed a petition for habeas corpus with
the Court of First Instance of Rizal, Branch XV, against the private respondents to
produce the person of Shirley and deliver her to their care and custody. The case was
docketed in court as Spec. Proc. No. 9417, and after the filing of an answer and due
hearing, a decision was rendered on March 9, 1981, declaring the petitioners entitled to
the child's custody and forthwith granted the writ prayed for.
The private respondents appealed to the then Court of Appeals where the case was
docketed as CA-G.R. No. SP-12212, and in a decision dated April 7, 1982, the appealed
decision was reversed and set aside and another entered, ordering the petitioners,
among other things, to turn over Shirley to the private respondents. The herein
petitioners filed a motion for the reconsideration of the decision but their motion was
denied.
Consequently, the petitioners filed a petition for review of the decision of the appellate
court. The case was docketed herein as G.R. No. 60860 and on November 10, 1982, this
Court, in a minute resolution, denied the petition for lack of merit.
Upon finality of the judgment, the case was remanded to the court of origin and
assigned to Regional Trial Court, NCJR Branch CXXXII Makati, Metro Manila, presided
over by respondent Judge Roque A. Tamayo who, thereafter, issued an order directing
the issuance of a writ of execution to satisfy and enforce the resolution of the Supreme
Court which affirmed the decision of the Court of Appeals.
The execution of the judgment was vigorously opposed by the petitioners who filed a
motion for the reconsideration of the order and to set aside the writ of execution on the
ground of supervening events and circumstances, more particularly, the subsequent
emotional, psychological, and physiological condition of the child Shirley which make the
enforcement of the judgment sought to be executed unduly prejudicial, unjust and
unfair, and cause irreparable damage to the welfare and interests of the child. By
reason thereof, the respondent judge called a conference among the parties and their
counsels, and conducted hearings on the petitioners' motion for reconsideration and to
set aside the writ of execution. Shirley made manifest during the hearing that she would
kill herself or run away from home if she should ever be separated from her Mama and
Papa, the petitioners herein, and forced to stay with the respondents. A portion of her
testimony is quoted hereunder:
ATTY. CASTRO:
 xxx xxx xxx
Q Would you want to have with your daddy and
mommy, referring to Sixto Salumbides and
Maria Lourdes Salumbides
A No, sir.
Q Why not?
A Because they are cruel to me. They always
spank me and they do not love me. Whenever I
am eating, they are not attending to me. It is
up to me whether I like the food or not.
xxx xxx xxx
Q Now, if you will be taken from your papa and
mama (Luna spouses) and given to your daddy
and mommy (Salumbides spouses), what
would you do if you will do anything?
A I will either kill myself or I will escape. Even
now they said they love me. I don't believe
them. I know they are not sincere. They are
only saying that to me. And I know those words
were not coming from their hearts. If they will
get me from my papa and mama, they will be
hurt because they know that my papa and
mama love me very much. 1
Dra. Cynthia Dulay Bruce, a child psychologist, affirmed her findings that —
... She (Shirley) has only grown more embittered, cautions,
distrusting of her biological parents. She threatens to kill herself
or run away if given to her biological parents. She claims she would
be very unhappy with her biological parents since they do not
understand her needs are selfish to her, and don't know how to
care for her. Presently, she is very difficult to encourage in seeing
her biological parents in a different light. 2
and that —
... I reviewed with them (Salumbides spouse) that at the present
time, to get Shirley back in this emotionally charged transaction,
would hinder Shirley seeing them as truly loving and concerned
parents. She would more deeply distrust them if they uproot her
from the home of the choice of Mr. and Mrs. Luna. The biological
parents wish to do what is also helpful to Shirley. I discussed with
both parties the recommendations of placement and follow up. 3
But, the respondent judge denied the petitioners' motion to set aside the writ of
execution The petitioners filed a motion for the reconsideration of the order and when it
was denied, they filed a petition for certiorari and prohibition with preliminary injunction
and restraining order with the respondent Intermediate Appellate Court, which was
docketed therein as CA-G.R. No. SP-01869, to stop altogether the execution of the
decision of the Court of Appeals rendered in CA-G.R. No. SP-12212. The petition was duly
heard, after which a decision was rendered on May 25, 1984, dismissing the petition,
Hence, the present recourse.
The issue is whether or not procedural rules more particularly the duty of lower courts
to enforce a final decision of appellate courts in child custody cases, should prevail over
and above the desire and preference of the child, to stay with her grandparents instead
of her biological parents and who had signified her intention Up kill herself or run away
from home if she should be separated from her grandparents and forced to live with
her biological parents.
It is a well-known doctrine that when a judgment of a higher court is returned to the
lower court, the only function of the latter court is the ministerial one of issuing the
order of execution. The lower court cannot vary the mandate of the superior court, or
examine it, for any other purpose than execution; nor review it upon any matter decided
on appeal or error apparent; nor intermeddle with it further than to settle so much as
has been demanded. However, it is also equally well-known that a stay of execution of a
final judgment may be authorized whenever it is necessary to accomplish the ends of
justice as when there had been a change in the situation of the parties which makes
such execution inequitable; or when it appears that the controversy had never been
submitted to the judgment of the court; or when it appears that the writ of execution
has been improvidently issued; or that it is defective in substance; or is issued against
the wrong party; or that the judgement debt has been paid or otherwise satisfied; or
when the writ has been issued without authority.
In the instant case, the petitioners claim that the child's manifestation to the trial court
that she would kill herself or run away from home if she should be forced to live with
the private respondents is a supervening event that would justify the cancellation of the
execution of the final decision rendered by the Court of Appeals in CA-G.R. No. SP-12212.
The respondents, upon the other hand, maintain that there are no supervening
developments and circumstances since these events are not new as the Court of
Appeals had taken into account the physiological and emotional consideration of the
transfer of custody of Shirley when it reversed the decision of the trial court and gave
to the private respondents the custody of the child Shirley; and besides, the wishes and
desires of the child is no hindrance to the parents' right to her custody since the right
of the parents to the custody of their children paramount.
We find merit in the petitioner. The manifestation of the child Shirley that she would kill
herself or run away from home if she should be taken away from the herein petitioners
and forced to live with the private respondents, made during the hearings on the
petitioners' motion to set aside the writ of execution and reiterated in her letters to the
members of the Court dated September 19, 1984 4 and January 2, 1985, 5 and during the
hearing of the case before this Court, is a circumstance that would make the execution
of the judgment rendered in Spec. Proc. No. 9417 of the Court of First Instance of Rizal
inequitable, unfair and unjust, if not illegal. Article 363 of the Civil Code provides that in
all questions relating to the care, custody, education and property of the children, the
latter's welfare is paramount. This means that the best interest of the minor can
override procedural rules and even the rights of parents to the custody of their
children. Since, in this case, the very life and existence of the minor is at stake and the
child is in an age when she can exercise an intelligent choice, the courts can do no less
than respect, enforce and give meaning and substance to that choice and uphold her
right to live in an atmosphere conducive to her physical, moral and intellectual
development. 6 The threat may be proven empty, but Shirley has a right to a wholesome
family life that will provide her with love, care and understanding, guidance and
counseling. and moral and material security. 7 But what if the threat is for real.?
Besides, in her letters to the members of the Court, Shirley depicted her biological
parents as selfish and cruel and who beat her often; and that they do not love her. And,
as pointed out by the child psychologist, Shirley has grown more embitered cautious
and dismissing of her biological parents. To return her to the custody of the private
respondents to face the same emotional environment which she is now complaining of
would be indeed traumatic and cause irreparable damage to the child. As requested by
her, let us not destroy her future.
WHEREFORE, the petition should be, as it is hereby GRANTED and the writ prayed for
issued, setting aside the judgment of the respondent Intermediate Appellate Court in
CA-G.R. No. SP-01869, and restraining the respondent judge and/or his successors
from enforcing the judgment rendered by the Court of Appeals in CA-G.R. No. SP-12212.
entitled: "Horacio Luna and Liberty Hizon-Luna, petitioners-appellees, versus Maria
Lourdes Santos and Sixto Salumbides, respondents-appellants." The decision rendered
in Spec. Proc. No. 9417 of the Court of First Instance of Rizal granting the herein
petitioners custody of the child Shirley Salumbides should be maintained. Without costs.
SO ORDERED.
Abad Santos, Escolin and Cuevas, JJ., concur.
G.R. No. 49549 August 30, 1990
EVELYN CHUA-QUA, petitioner,
vs.
HON. JACOBO C. CLAVE, in his capacity as Presidential Executive Assistant, and
TAY TUNG HIGH SCHOOL, INC., respondents.
William C. Gunitang and Jaime Opinion for petitioner.
Laogan Law Offices for private respondent.
REGALADO, J.:
This would have been just another illegal dismissal case were it not for the
controversial and unique situation that the marriage of herein petitioner, then a
classroom teacher, to her student who was fourteen (14) years her junior, was
considered by the school authorities as sufficient basis for terminating her services.
Private respondent Tay Tung High School, Inc. is an educational institution in Bacolod
City. Petitioner had been employed therein as a teacher since 1963 and, in 1976 when
this dispute arose, was the class adviser in the sixth grade where one Bobby Qua was
enrolled. Since it was the policy of the school to extend remedial instructions to its
students, Bobby Qua was imparted such instructions in school by petitioner. 1 In the
course thereof, the couple fell in love and on December 24, 1975, they got married in a
civil ceremony solemnized in Iloilo City by Hon. Cornelio G. Lazaro, City Judge of Iloilo.2
Petitioner was then thirty (30) years of age but Bobby Qua being sixteen (16) years old,
consent and advice to the marriage was given by his mother, Mrs. Concepcion Ong.3
Their marriage was ratified in accordance with the rites of their religion in a church
wedding solemnized by Fr. Nick Melicor at Bacolod City on January 10, 1976. 4
On February 4, 1976, private respondent filed with the sub-regional office of the
Department of Labor at Bacolod City an application for clearance to terminate the
employment of petitioner on the following ground: "For abusive and unethical conduct
unbecoming of a dignified school teacher and that her continued employment is inimical
to the best interest, and would downgrade the high moral values, of the school." 5
Petitioner was placed under suspension without pay on March 12, 1976. 6 Executive
Labor Arbiter Jose Y. Aguirre, Jr. of the National Labor Relations Commission, Bacolod
City, to whom the case was certified for resolution, required the parties to submit their
position papers and supporting evidence. Affidavits 7 were submitted by private
respondent to bolster its contention that petitioner, "defying all standards of decency,
recklessly took advantage of her position as school teacher, lured a Grade VI boy under
her advisory section and 15 years her junior into an amorous relation." 8 More
specifically, private respondent raised issues on the fact that petitioner stayed alone
with Bobby Qua in the classroom after school hours when everybody had gone home,
with one door allegedly locked and the other slightly open.
On September 17, 1976, Executive Labor Arbiter Jose Y. Aguirre, Jr., without conducting
any formal hearing, rendered an "Award" in NLRC Case No. 956 in favor of private
respondent granting the clearance to terminate the employment of petitioner. It was
held therein that —
The affidavits . . . although self-serving but were never disputed by
the respondent pointed out that before the marriage of respondent
to Bobby Qua, fourteen (14) years her junior and during her
employment with petitioner, an amorous relationship existed
between them. In the absence of evidence to the contrary, the
undisputed written testimonies of several witnesses convincingly
picture the circumstances under which such amorous relationship
was manifested within the premises of the school, inside the
classroom, and within the sight of some employees. While no direct
evidences have been introduced to show that immoral acts were
committed during these times, it is however enough for a sane and
credible mind to imagine and conclude what transpired and took
place during these times. . . . 9
Petitioner, however, denied having received any copy of the affidavits referred to. 10
On October 7, 1976, petitioner appealed to the National Labor Relations Commission
claiming denial of due process for not having been furnished copies of the aforesaid
affidavits relied on by the labor arbiter. She further contended that there was nothing
immoral, nor was it abusive and unethical conduct unbecoming of a dignified school
teacher, for a teacher to enter into lawful wedlock with her student.11
On December 27, 1976, the National Labor Relations Commission unanimously reversed
the Labor Arbiter's decision and ordered petitioner's reinstatement with backwages,
with the following specific findings:
Affiant Maselliones deposed and said that he saw appellant and Qua
sitting on the student desk inside a classroom after classes. The
depositions of affiants Despi and Chin are of the same tenor. No
statements whatever were sworn by them that they were
eyewitnesses to immoral or scandalous acts.
 xxx xxx xxx
Even if we have to strain our sense of moral values to
accommodate the conclusion of the Arbiter, we could not deduce
anything immoral or scandalous about a girl and a boy talking
inside a room after classes with lights on and with the door open.
xxx xxx xxx
Petitioner-appellee naively insisted that the clearance application
was precipitated by immoral acts which did not lend dignity to the
position of appellant. Aside from such gratuitous assertions of
immoral acts or conduct by herein appellant, no evidence to
support such claims was introduced by petitioner-appellee. We
reviewed the the sequence of events from the beginning of the
relationship between appellant Evelyn Chua and Bobby Qua up to
the date of the filing of the present application for clearance in
search of evidence that could have proved detrimental to the
image and dignity of the school but none has come to our attention.
. . . 12
The case was elevated by private respondent to the Minister of Labor who, on March 30,
1977, reversed the decision of the National Labor Relations Commission. The petitioner
was, however, awarded six (6) months salary as financial assistance. 13
On May 20, 1977, petitioner appealed the said decision to the Office of the President of
the Philippines. 14 After the corresponding exchanges, on September 1, 1978 said office,
through Presidential Executive Assistant Jacobo C. Clave, rendered its decision
reversing the appealed decision. Private respondent was ordered to reinstate petitioner
to her former position without loss of seniority rights and other privileges and with full
back wages from the time she was not allowed to work until the date of her actual
reinstatement. 15
Having run the gamut of three prior adjudications of the case with alternating
reversals, one would think that this decision of public respondent wrote finis to
petitioner's calvary. However, in a resolution dated December 6, 1978, public
respondent, acting on a motion for reconsideration 16 of herein private respondent and
despite opposition thereto, 17 reconsidered and modified the aforesaid decision, this
time giving due course to the application of Tay Tung High School, Inc. to terminate the
services of petitioner as classroom teacher but giving her separation pay equivalent to
her six (6) months salary. 18
In thus reconsidering his earlier decision, public respondent reasoned out in his
manifestation/comment filed on August 14, 1979 in this Court in the present case:
That this Office did not limit itself to the legal issues involved in the
case, but went further to view the matter from the standpoint of
policy which involves the delicate task of rearing and educating of
children whose interest must be held paramount in the school
community, and on this basis, this Office deemed it wise to uphold
the judgment and action of the school authorities in terminating the
services of a teacher whose actuations and behavior, in the belief
of the school authorities, had spawned ugly rumors that had cast
serious doubts on her integrity, a situation which was considered
by them as not healthy for a school campus, believing that a school
teacher should at all times act with utmost circumspection and
conduct herself beyond reproach and above suspicion; 19
In this petition for certiorari, petitioner relies on the following grounds for the reversal
of the aforesaid resolution of public respondent, viz.:
1. The dismissal or termination of petitioner's employment, despite
Tay Tung's claim to the contrary, was actually based on her
marriage with her pupil and is, therefore, illegal.
2. Petitioner's right to due process under the Constitution was
violated when the hearsay affidavits of Laddy Maselliones, Eleuterio
Despi, Pina D. Chiu, and Ong Lee Bing, were admitted and
considered in evidence without presenting the affiants as
witnesses and affording the petitioner the right to confront and
cross-examine them.
 3. No sufficient proofs were adduced to show that petitioner
committed serious misconduct or breached the trust reposed on
her by her employer or committed any of the other grounds
enumerated in Article 283 (Now Article 282) of the Labor Code
which will justify the termination of her employment. 20
We first dispose of petitioner's claim that her right to due process was violated. We do
not agree. There is no denial of due process where a party was afforded an opportunity
to present his side. Also, the procedure by which issues are resolved based on position
papers, affidavits and other documentary evidence is recognized as not violative of
such right. Moreover, petitioner could have insisted on a hearing to confront and cross-
examine the affiants but she did not do so, obviously because she was convinced that
the case involves a question of law. Besides, said affidavits were also cited and
discussed by her in the proceedings before the Ministry of Labor.
Now, on the merits. Citing its upright intention to preserve the respect of the
community toward the teachers and to strengthen the educational system, private
respondent submits that petitioner's actuations as a teacher constitute serious
misconduct, if not an immoral act, a breach of trust and confidence reposed upon her
and, thus, a valid and just ground to terminate her services. It argues that as a school
teacher who exercises substitute parental authority over her pupils inside the school
campus, petitioner had moral ascendancy over Bobby Qua and, therefore, she must not
abuse such authority and respect extended to her. Furthermore, it charged petitioner
with having allegedly violated the Code of Ethics for teachers the pertinent provision of
which states that a "school official or teacher should never take advantage of his/her
position to court a pupil or student." 21
On the other hand, petitioner maintains that there was no ground to terminate her
services as there is nothing wrong with a teacher falling in love with her pupil and,
subsequently, contracting a lawful marriage with him. She argued that she was
dismissed because of her marriage with Bobby Qua This contention was sustained in the
aforesaid decision of the National Labor Relations Commission thus:
. . . One thing, however, has not escaped our observation: That the
application for clearance was filed only after more than one month
elapsed from the date of appellant's marriage to Bobby Qua
Certainly, such belated application for clearance weakens instead
of strengthening the cause of petitioner-appellee. The alleged
immoral acts transpired before the marriage and if it is these
alleged undignified conduct that triggered the intended separation,
then why was the present application for clearance not filed at that
time when the alleged demoralizing effect was still fresh and
abrasive?22
After a painstaking perusal of the records, we are of the considered view that the
determination of the legality of the dismissal hinges on the issue of whether or not
there is substantial evidence to prove that the antecedent facts which culminated in the
marriage between petitioner and her student constitute immorality and/or grave
misconduct. To constitute immorality, the circumstances of each particular case must
be holistically considered and evaluated in the light of prevailing norms of conduct and
the applicable law. Contrary to what petitioner had insisted on from the very start, what
is before us is a factual question, the resolution of which is better left to the trier of
facts.
Considering that there was no formal hearing conducted, we are constrained to review
the factual conclusions arrived at by public respondent, and to nullify his decision
through the extraordinary writ of certiorari if the same is tainted by absence or excess
of jurisdiction or grave abuse of discretion. The findings of fact must be supported by
substantial evidence; otherwise, this Court is not bound thereby.23
We rule that public respondent acted with grave abuse of discretion. As vividly and
forcefully observed by him in his original decision:
Indeed, the records relied upon by the Acting Secretary of Labor
(actually the records referred to are the affidavits attached as
Annexes "A" to "D" of the position paper dated August 10, 1976 filed
by appellee at the arbitration proceedings) in arriving at his
decision are unbelievable and unworthy of credit, leaving many
question unanswered by a rational mind. For one thing, the
affidavits refer to certain times of the day during off school hours
when appellant and her student were found together in one of the
classrooms of the school. But the records of the case present a
 ready answer: appellant was giving remedial instruction to her
student and the school was the most convenient place to serve the
purpose. What is glaring in the affidavits is the complete absence
of specific immoral acts allegedly committed by appellant and her
student. For another, and very important at that, the alleged acts
complained of invariably happened from September to December,
1975, but the disciplinenary action imposed by appellee was sought
only in February, 1976, and what is more, the affidavits were
executed only in August, 1976 and from all indications, were
prepared by appellee or its counsel. The affidavits heavily relied
upon by appellee are clearly the product of after-thought. . . . The
action pursued by appellee in dismissing appellant over one month
after her marriage, allegedly based on immoral acts committed
even much earlier, is open to basis of the action sought seriously
doubted; on the question. The basis of the action sought is
seriously doubted; on the contrary, we are more inclined to believe
that appellee had certain selfish, ulterior and undisclosed motives
known only to itself. 24
As earlier stated, from the outset even the labor arbiter conceded that there was no
direct evidence to show that immoral acts were committed. Nonetheless, indulging in a
patently unfair conjecture, he concluded that "it is however enough for a sane and
credible mind to imagine and conclude what transpired during those times." 25 In
reversing his decision, the National Labor Relations Commission observed that the
assertions of immoral acts or conducts are gratuitous and that there is no direct
evidence to support such claim, 26 a finding which herein public respondent himself
shared.
We are, therefore, at a loss as to how public respondent could adopt the volte-face in
the questioned resolution, which we hereby reject, despite his prior trenchant
observations hereinbefore quoted. What is revealing however, is that the reversal of his
original decision is inexplicably based on unsubstantiated surmises and non sequiturs
which he incorporated in his assailed resolution in this wise:
. . . While admittedly, no one directly saw Evelyn Chua and Bobby
Qua doing immoral acts inside the classroom it seems obvious and
this Office is convinced that such a happening indeed transpired
within the solitude of the classrom after regular class hours. The
marriage between Evelyn Chua and Bobby Qua is the best proof
which confirms the suspicion that the two indulged in amorous
relations in that place during those times of the day. . . . 27
With the finding that there is no substantial evidence of the imputed immoral acts, it
follows that the alleged violation of the Code of Ethics governing school teachers would
have no basis. Private respondent utterly failed to show that petitioner took advantage
of her position to court her student. If the two eventually fell in love, despite the
disparity in their ages and academic levels, this only lends substance to the truism that
the heart has reasons of its own which reason does not know. But, definitely, yielding to
this gentle and universal emotion is not to be so casually equated with immorality. The
deviation of the circumstances of their marriage from the usual societal pattern cannot
be considered as a defiance of contemporary social mores.
It would seem quite obvious that the avowed policy of the school in rearing and
educating children is being unnecessarily bannered to justify the dismissal of petitioner.
This policy, however, is not at odds with and should not be capitalized on to defeat the
security of tenure granted by the Constitution to labor. In termination cases, the burden
of proving just and valid cause for dismissing an employee rests on the employer and
his failure to do so would result in a finding that the dismissal is unjustified.
The charge against petitioner not having been substantiated, we declare her dismissal
as unwarranted and illegal. It being apparent, however, that the relationship between
petitioner and private respondent has been inevitably and severely strained, we believe
that it would neither be to the interest of the parties nor would any prudent purpose be
served by ordering her reinstatement.
WHEREFORE, the petition for certiorari is GRANTED and the resolution of public
respondent, dated December 6, 1978 is ANNULLED and SET ASIDE. Private respondent
Tay Tung High School, Inc. is hereby ORDERED to pay petitioner backwages equivalent to
three (3) years, without any deduction or qualification, and separation pay in the
amount of one (1) month for every year of service.
SO ORDERED.

ROYAL L. RUTTER, plaintiff-appellant,
vs.
PLACIDO J. ESTEBAN, defendant-appellee.
Susano A. Velasquez for appellant.
Teodoro R. Dominguez for appellee.
BAUTISTA ANGELO, J.:
On August 20, 1941, Royal L. Rutter sold to Placido J.Esteban two parcels of land situated
in the city of Manila for the sum of P9,600 of which P4,800 were paid outright, and the
balance of P4,800 was made payable as follows: P2,400 on or before August 7, 1942,
and P2,400 on or before August 27, 1943, with interest at the rate of 7 percent per
annum.
To secure the payment of said balance of P4,800, a first mortgage over the same
parcels of land has been constituted in favor of the plaintiff. The deed of sale having
been registered, a new title was issued in favor of Placido J.Esteban with a mortgage
duly annotated on the back thereof.
Placido J. Esteban failed to pay the two installments as agreed upon, as well as the
interest that had accrued there-on, and so on August 2, 1949, Royal L. Rutter instituted
this action in the Court of First Instance of Manila to recover the balance due, the
interest due thereon, and the attorney's fees stipulated in the contract. The complaint
also contains a prayer for sale of the properties mortgaged in accordance with law.
Placido J. Esteban admitted the averments of the complaint, but set up a defense the
moratorium clause embodied in Republic Act No. 342. He claims that this is a prewar
obligation contracted on August 20, 1941; that he is a war sufferer, having filed his claim
with the Philippine War Damage Commission for the losses he had suffered as a
consequence of the last war; and that under section 2 of said Republic Act No. 342,
payment of his obligation cannot be enforced until after the lapse of eight years from
the settlement of his claim by the Philippine War Damage Commission, and this period
has not yet expired.
After a motion for summary judgment has been presented by the defendant, and the
requisite evidence submitted covering the relevant facts, the court rendered judgment
dismissing the complaint holding that the obligation which plaintiff seeks to enforce is
not yet demandable under the moratorium law. Plaintiff filed a motion for
reconsideration wherein he raised for the first time the constitutionality of the
moratorium law, but the motion was denied. Hence this appeal.
The only question to be determined hinges on the validity of Republic Act No. 342 which
was approved by Congress on July 26, 1948. It is claimed that this act if declared
applicable to the present case is unconstitutional being violative of the constitutional
provision forbidding the impairement of the obligation of contracts (Article III, section 1,
Constitution of the Philippines).
Section 2 of Republic Act No. 342 provides that all debts and other monetary obligations
contracted before December 8, 1941, any provision in the contract creating the same or
any subsequent aggreement affecting such obligation to the contrary notwithstanding,
shall not due and demandable for a period of eight (8) years from and after settlement
of the war damage claim of the debtor by the Philippine War Damage Commission; and
section 3 of said Act provides that should the provision of section 2 be declared void
and unenforceable, then as regards the obligation affected thereby, the provisions of
Executive Order No. 25 dated November 18, 1944, as amended by Executive Order No. 32,
dated March 10, 1945, relative to debt moratorium, shall continue to be in force and
effect, any contract affecting the same to the contrary notwithstanding, until
subsequently repealed or amended by a legislative enactment. It thus clearly appears in
said Act that the nullification of its provisions will have the effect of reviving the
previous moratorium orders issued by the President of the Philippines.
Statutes declaring a moratorium on the enforcement of monetary obligations are not of
recent enactment. These moratorium laws are not new. "For some 1,400 years western
civilization has made use of extraordinary devices for saving the credit structure,
devices generally known as moratoria. The moratorium is postponement of fulfillment of
obligations decreed by the state through the medium of the courts or the legislature. Its
essence is the application of the sovereign power" (58 C.J. S., p. 1208 footnote 87). In
the United States, may state legislatures have adopted moratorium laws "during times
of financial distress, especially when incident to, or caused by, a war" (41 C.J., p.213).
Thus, such laws "were passed by many state legislatures at the time of the civil war
suspending the rights of creditors for a definite and reasonable time, . . . whether they
suspend the right of action or make dilatory the remedy" (12 C.J., p 1078). The laws were
declared constitutional. However, some courts have also declared that "such statutes
are void as to contracts made before their passage where the suspension of remedied
prescribed is indefinite or unreasonable in duration" (12C.J., 1078). The true test,
therefore, of the constitutionality of the moratorium statute lies in the determination of
the period of a suspension of the remedy. It is required that such suspension be definite
and reasonable, otherwise it would be violative of the constitution.
One of the arguments advanced against the validity of the moratorium law is the fact
that it impairs the obligation of contracts which is prohibited by the Constitution. This
argument, however does not now hold water. While this may be conceded, it is however
justified as a valid exercise by the State of its police power. The leading case on the
matter is Home Building and Loan Association vs. Blaisdell, 290 U. S., 398, decide by the
Supreme Court of the United States on January 8, 1934. Here appellant contested the
validity of charter 339 of the laws of Minnesota of 1993, approved April 13, 1933, called
the Minnesota Mortgage Moratorium Law, as being repugnant to the contract clause of
the Federal Constitution. The statute was sustained by the Supreme Court of Minnesota
as an emergency measure. "Although coceding that the obligations of the mortgage
contract was impaired, the court decided that what it thus described as an impairment
was, notwithstanding the contract clause of the Federal Constitution, within the police
power of the State as that power was called into exercise by the public economic
emergency which the legislative had found to exist". This theory was up-held by the
Supreme Court. Speaking through Chief Justice Hughes, the court made the following
pronouncements:
Not only is the constitutional provision qualified by the measure of control
which the State retains over remedial processes, but the State also
continues to possess authority to safeguard the vital interest of its people. It
does not matter that legislation appropriate to that end "has the result of
modifying or abrogating contracts already in effect." . . . . Not only are
existing laws read into contracts in order to fix obligations as between the
parties, but the reservation of essential attributes of sovereign power is also
read into contracts as a postulate of the legal order. The policy of protecting
contracts against impairement presupposes the maintenance of a
government by virtue of which contractual relations are worthwhile a
government which retains adequate authority to secure the peace and good
order of society. This principle of harmonizing the constitutional prohibition
with the necessary residuum of state power has had progressive recognition
in the decision of this Court.
xxx xxx xxx
The economic interests of the State may justify the exercise of its continuing
and dominant protective power notwithstanding interference with contracts. .
..
xxx xxx xxx
Similarly, where the protective power of the State is exercised in a manner
otherwise appropriate in the regulation of a business it is no objection that
the performance of existing contracts may be frustrated by the prohibition of
injurious practices. . . .
. . . . The question is not whether the legislative action affects contracts
incidentally, or directly or indirectly, but whether the legislation is addressed
to a legitimate end and the measures taken are reasonable and appropriate
to that end.
xxx xxx xxx
Undoubtedly, whatever is reserved of state power must be consistent with
the fair intent of the constitutional limitation of that power. The reserved
power cannot be construed to destroy the limitation to be construed so as to
destroy the reserved power in its essential aspects. They must be construed
to harmony with each other. This principle precludes a construction which
would permit the State to adopt as its policy the repudiation of debts or the
destruction of contracts or the denial of means to enforce them. But it does
not follow that conditions may not arise in which a temporary restraint of
enforcement may be consistent with the spirit and purpose of the
constitutional provision and thus be found to be within the range of the
reserved power of the state to protect the vital interests of the community. It
 cannot be maintained that the constitutional prohibition should be so
construed as to prevent limited and temporary interpositions with respect to
the enforcement of contracts if made necessary by great public calamity
such as fire, flood, or earthquake. See American Land Co. vs. Zeiss, 219 U.S.
47, 55 L. ed. 82, 31 S. Ct. 200. The reservation of state power appropriate to
such extraordinary conditions may be deemed to be as much a part of all
contracts, as is the reservation of state power to protect the public interest
in the other situation to which we have referred. And if state power exists to
give temporary relief from the enforcement of contracts in the present of
disasters due to physical causes such as fire, flood or earthquake, that
power cannot be said to be nonexistent when the urgent public need
demanding such relief is produced by other and economic causes (78 L.ed.
426, 428-429.)
This decision elicited several comments. One came from the Harvard Law Review. It
said: "Forsaking its well-trodden of the new mortgage moratory laws meet its scrutiny,
and in so doing announced an elastic concept of the contract clause which, if not newly
formulated, at least received such unequivocal expression that it bids fair to
revolutionize a tradition of constitutional interpretation. . . . The court rested its
decision on the ground that laws altering existing contracts constitute an impairment
within the meaning of the contract clause only if they are unreasonable in the light of
the circumstances occasioning their enactment. Application of this 'rule of reason was
justified on the theory that all contracts are made subject to an implied reservation of
the protective power of the state, and that therefore statutes which validly exercise
this reserved power, rather than impairing the obligations of an existing contract, are
comprehended within them" (47 Harvard Law Review, pp. 660, 661-662).
But the ruling in the Blaisdell case has its limitations which should not be overlooked in
the determination of the extent to be given to the legislation which attempts to
encroach upon the enforcement of a monetary obligation. It must be noted that the
application of the reserved power of the State to protect the integrity of the
government and the security of the people should be limited to its proper bounds and
must be addressed to a legitimate purpose. If these bounds are transgressed, there is
no room for the exercise of the power, for the constitutional inhibition against the
impairment of contracts would assert itself. We can cite instances by which these
bounds may be transgressed. One of them is that the impairment should only refer to
the remedy and not to a substantive right. The State may postpone the enforcement of
the obligation but cannot destroy it by making the remedy futile (W.B. Worthen Co. vs.
Kavanaugh, 79 L.ed. 1298, 1301-1303). Another limitation refers to the propriety of the
remedy. The rule requires that the alteration or change that the new legislation desires
to write into an existing contract must not be burdened with restrictions and conditions
that would make the remedy hardly pursuing (Bronson vs. Kinziel, I How, 311, 317; 46 Har.
Law Review, p. 1070). In other words, the Blaisdell case postulates that the protective
power of the State, the police power, may only be invoked and justified by an
emergency, temporary in nature, and can only be exercised upon reasonable conditions
in order that it may not infringe the constitutional provision against impairment of
contracts (First Trust Co. of Lincoln vs. Smith 277 N.W., pp. 762, 769). As justice Cardozo
aptly said, "A different situation is presented when extensions are so piled up as to
make the remedy a shadow . . . The changes of remedy now challenged as invalid are to
be viewed in combination, with the cumulative significance that each imparts to all. So
viewed they are seen to be an oppressive and unnecessary destruction of nearly all the
incidents that give attractiveness and value to collateral security (W.B. Worthen vs.
Kavanaugh, 295 U.S. 56, 62). In fine, the decision in the Blaisdell case is predicated on
the ground that the laws altering existing contracts will constitute an impairment of the
contract clause of the Constitution only if they are unreasonable in the light of the
circumstances occasioning their enactment (47 Harvard Law Review, p. 660).
The question now to be determined is, is the period of eight (8) years which Republic Act
No. 342 grants to debtors of a monetary obligation contracted before the last global
war and who is a war sufferer with a claim duly approved by the Philippine War Damage
Commission reasonable under the present circumstances?
It should be noted that Republic Act No. 342 only extends relief to debtors of prewar
obligations who suffered from the ravages of the last war and who filed a claim for their
losses with the Philippine War Damage Commission. It is therein provided that said
obligation shall not be due and demandable for a period of eight (8) years from and
after settlement of the claim filed by the debtor with said Commission. The purpose of
the law is to afford to prewar debtors an opportunity to rehabilitate themselves by
giving them a reasonabled time within which to pay their prewar debts so as to prevent
them from being victimized buy their creditors. While it is admitted in said law that
since liberation conditions have gradually returned to normal, this is not so with regard
to those who have suffered the ravages of war and so it was therein declared as a
policy that as to them the debt moratorium should be continued in force (section 1).
But we should not lost sight of the fact that these obligations had been pending since
1945 as a result of the issuance of Executive Orders Nos. 25 and 32 and at present their
enforcement is still inhibited because of the enactment of Republic Act No. 342 and
would continue to be unenforceable during the eight-year period granted to prewar
debtors to afford them an opportunity to rehabilitate themselves, which in plain
languaged means that the creditors would have to observe a vigil of at least twelve (12)
years before they could effect a liquidation of their investment dating as far back as
1941. This period seems to us unreasonable, if not oppressive. while the purpose of
Congress is plausible, and should be commended, the relief accorded works injustice to
creditors who are practically left at the mercy of the debtors. Their hope to effect
collection becomes extremely remote, more so if the credits are unsecured. And the
injustice is more patent when, under the law, the debtor is not even required to pay
interest during the operation of the relief, unlike similar statutes in the United States
(Home Building and Loan Association vs. Blaisdell, supra).
There are at least three cases where the Supreme Court of the United States declared
the moratorium laws violative of the contract clause of the constitution because the
period granted to debtors as a relief was found unwarranted by the contemplated
emergency. One of them is W. B. Worthen Co. vs. Thomas, 292 U. S., 426-435; 78 L. ed.,
1344, 1347. Here the Legislature of Arkansas passed na act providing for an exemption,
"without limitation as to amount or restriction with respect to particular circumstances
or relations, of all moneys paid or payable to any resident of the state under any life,
sick, accident or disability insurance policy, from liability for the payment of the debts
of the recipient", and an attempt was made to apply the statute to debts owing before
its approval. The court held that "such an exemption, applied in the case of debts owing
before the exemption was created by the legislature, constitutes an unwarranted
interference with the obligation of contracts in violation of the constitutional provision",
and cannot be sustained even as emergency legislation, because it contains no
limitation as to time, amount, circumstances or need (supra, 292 U. S., pp. 426-432).
The other case is W. B. Worthen vs. Kavanaugh (supra). Here certain Municipal
Improvement Districts organized under the laws of Arkansas were empowered to issue
bonds and to mortgage benefit assessments as security therefor. One of these districts
acted upon the powers thus conferred. Some of the bonds were in default for
nonpayment of principal and interest. So an action was brought by the bond-holders to
foreclose the assessment upon the lots of delinquent owners. These bonds and
mortgages were executed under the statutes then in force. Later the legislature of
Arkansas passed three acts making changes in the remedies available under the former
statutes, which changes were attacked as an unconstitutional impairment of contracts.
The court sustained this view holding that the "changes in the remedies available for the
enforcement of a mortgage may not, even when the public welfare is invoked as an
excuse, be pressed so far as to cut down the security of a mortgage without
moderation or reason or in a spirit of oppression. . . . A State is free to regulate the
procedure in its courts even with reference to contracts already made, and moderate
extensions of the time for pleading or for trial will ordinarily fall within the power so
reversed; by a different situation is presented when extensions are so piled up to make
the remedy a shadow."
The third case is Louisville joint Stock Land Bank vs. Radford, 295 U. S. 555, 79 L. ed
1593. This case presented for decision the question whether subsection (s) added to
section 75 of the Bankruptcy Act by the Frazier-Lemke Act, June 28, 1934, chap. 869, 48
Stat. at L. 1289 U. S. C. title 11, sec. 203, is consistent with the Federal Constitution. The
court said that it is unconstitutional if applied to farm mortgages already existing,
holding that "property rights of holders of farm mortgages are unconstitutionally taken,
in violation of the Fifth Amendment, by a statute (Bankruptcy Act, sec. 75(s) Frazier-
Lemke Act of June 28, 1934, chap. 869, 48 Stat. at L. 1286) applicable only to debts
existing at the time of its enactment which provides that a farmer whose farm is
mortgaged, and who has failed to obtain the consents necessary to a composition under
the Bankruptcy Act, may, upon being adjudged a bankrupt, if the mortgagee assents,
purchase the mortgaged property at its them appraised value by agreeing to make
deferred payments of stated percentages of the appraised value over a period of six
years, with interests at 1 per cent per annum, or, if the mortgagee refuses his assent to
such purchase, may obtain a stay of all proceedings for a period of five years , during
which he shall retain possession of all or any part of his property, under the control of
the court, provided he pays a reasonable rental therefor, and that at the end of five
years he may pay into court the appraised price thereof, or, if a lien holder shall
request a reappraisal by the court, the reappraised price, whereupon the court shall, by
an order, turn over full possession and title of the property to the debtor, and he may
apply for his discharge."
In addition, we may cite leading state court decisions which practically involved the
same ruling and which reflect the tendency of the courts towards legislation involving
modification of mortgage or monetary contracts which contains provisions that are
deemed unreasonable or oppressive. Some of those which may be deemed
representative follows:
1. Pouquette vs. O'Brien, 100 Pac. 2nd series, 979 (1940). The Supreme Court of Arizona
held unconstitutional a 1937 statute authorizing courts to extend for a period of not
longer than two years all actions or foreclosures of real estate mortgages, and a 1939
statutes authorizing the courts to extend foreclosure proceedings not later than March
4, 1941.
2. First Trust Joint Stock Land Bank of Chicago vs. Adolph Arp et al., 283 N.W. 441, 120
A.L.R. 932 (1939). The Supreme Court of Iowa declared unconstitutional the Moratorium
Acts enacted in 1933, 1935 and 1937, providing for extension of the 1933 Moratorium Act
covering a period of six years.
3. First Trust Co. of Lincoln vs. Smith et al., 227 N.W. 762 (1938). The Supreme Court of
Nebraska declared unconstitutional the Nebraska Moratorium Law as reenacted,
extending the benefit of the remedy to a period of six years, as being repugnant to the
contract clause of the Constitution.
4. Milkint vs. McNeely, Clerk of court, et al., 169 S.E. 790 (1933). The Supreme Court of
Appeals of West Virginia declared unconstitutional certain acts of legislature enacted in
1932, extending the period of redemption three years beyond the one-year period then
allowed by statute, being an impairment of contract as to sales made prior to
enactment thereof.
5. Haynes vs. Treadway, 65 Pac. 892 (1901). The Supreme Court of California declared
unconstitutional a statute which extends the right of redemption from six months twelve
months being a substantial impairment of the obligation contracts if applied to a
mortgage already executed.
6. Swinburne vs. Mills, 50 Pac. 489 (1879). The Supreme Court of Washington declared a
statute unconstitutional in so far as it provides that, on a decree for foreclosure of a
mortgage executed before the act was passed, the debtor shall be entitled to have the
order of sale stayed for one year, as being an impairment of the obligation of contract.
These cases apply with added force in this jurisdiction considering the conditions no
prevailing in our country. We do not need to go far to appreciate this situation. We can
see it and feel it as we gaze around to observe the wave of reconstruction and
rehabilitation that has swept the country since liberation thanks to the aid of America
and the innate progressive spirit of our people. This aid and this spirit have worked
wonders in so short a time that it can now be safely stated that in the main the financial
condition of our country and our people, individually and collectively, has practically
returned to normal notwithstanding occasional reverses caused by local dissidence and
the sporadic disturbance of peace and order in our midst. Business, industry and
agriculture have picked up and developed at such stride that we can say that we are
now well on the road to recovery and progress. This is so not only as far as our
observation and knowledge are capable to take note and comprehend but also because
of the official pronouncements made by our Chief Executive in public addresses and in
several messages he submitted to Congress on the general state of the nation. To bear
this out, it would suffice for us to state some of those public statements which we deem
to be most expressive and representative of the general situation. We quote:
We have balanced our national budget. We shall again have at the end of the
current fiscal year a sizeable surplus. . . .
We have greatly improved the economic and financial conditions of the
country. Through the Rehabilitation Finance Corporation, loans amounting to
P90,480,136 have been granted for the recontruction and rehabilitation
purposes. . . .
We have set up the Central bank to expand our credit, stabilize our currency
and provide a new source of financing for the agricultural and industrial
development of the nation.
xxx xxx xxx
. . . The commitment thus far made is not only a favorable sign ushering in
finally the implementation of our plans of economic development, but a
significantly successful test of the solvency of our foreign credit, for it was
accepted only after a thorough examination of our resources and
development plans by a board of economists of international authority (Pres.
Quirino's "State-of-the-Nation" Message of the Joint Session of Congress on
Jan. 24, 1949, 45 Off. Gaz., Ja., 1949).
We have strengthened, . . . our internal and external finances. Six years ago,
we were a country prostrate from the destruction of war. . . . today, we can
say that our people not only have returned to their prewar activities, but . . .
have progressed and prospered far beyond what they ever dreamed of
before the war.
. . . Three years ago the national income stood at four billion pesos; today it is
over seven billion pesos. . . . The government income has been steadily rising
from 60 million pesos in 1946 to approximately 600 million pesos today, also
a progress in six years.
xxx xxx xxx
. . . The ravages of war are fast disappearing, and instead, what beautiful
vistas unfold themselves before our eyes at this moment in our immediate
surroundings. Compare this beautiful view with that of the past and all that
we have accomplished in scarcely six years of struggle, sacrifice,
determination, and bold decision. (Applause.) We have brought this nation out
of the paralysis of destruction into economic normalcy and financial stability.
...
. . . Our external finances have greatly improved, and . . . our pesos is one of
the most stable currencies in the world today. (Applause.) I repeat, our pesos
is one of the most stable currencies in the world today.
All these find grateful reflection in a better-sheltered, better-clothed, better-
fed, and healthier population that has grown from 18 million to 20 million in a
half dozen years, in a school enrollment that has doubled since the outbreak
of the last war from less than 2 million to over 4 million young students in the
public schools, and in democratic processes that are gaining in vigor and
permanence with each passing year" (Address of his Excellency Quirino,
President of the Philippines, on the occasion of the celebration of the sixth
anniversary of the independence of the Philippines, July 4, 1952, Luneta,
Manila, 48 Off. Gaz., pp. 3287-3289).
In the face of the foregoing observations, and consistent with what we believe to be as
the only course dictated by justice, fairness and righteousness, we feel that the only
way open to us under the present circumstances is to declare that the continued
operation and enforcement of Republic Act No. 342 at the present time is unreasonable
and oppressive, and should not be prolonged a minute longer, and, therefore, the same
should be declared null and void and without effect. And what we say here with respect
to said Act also holds true as regards Executive Orders Nos. 25 and 32, perhaps with
greater force and reason as to the latter, considering that said Orders contain no
limitation whatsoever in point of time as regards the suspension of the enforcement
and effectivity of monetary obligations. And there is need to make this pronouncement
in view of the revival clause embodied in said Act if and when it is declared
unconstitutional or invalid.
Wherefore, the decision appealed from will be reversed, without pronouncement as to
costs.
Judgment is hereby rendered ordering the defendant to pay the plaintiff the sum of
P4,800 with interest thereon at the rate of 7 per cent annum from August 27, 1942, until
its full payment, plus 12 per cent as attorney's fees. Failure to pay this judgment as
stated, the properties mortgaged will be sold at public auction and the proceeds applied
to its payment in accordance with law. So ordered.