2015 Bernabe

September 09, 2015
G.R. No. 207949
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,

vs.
ARMANDO DIONALDO y EBRON, RENATO DIONALDO y EBRON, MARIANO GARIGUEZ,
JR. y RAMOS, and RODOLFO LARIDO y EBRON, Accused-Appellants.
RESOLUTION
PERLAS-BERNABE, J.:
On July 23, 2014, the Court rendered its Resolution in this case finding accused-appellants
1
Armando Dionaldo y Ebron, Renato Dionaldo y Ebron (Renato), Mariano Gariguez, Jr. y Ramos,

and Rodolfo Lari do y Ebron (accused-appellants) guilty beyond reasonable doubt of the special
complex crime of Kidnapping for Ransom with Homicide, the dispositive portion of which reads:
WHEREFORE, the appeal is DISMISSED. The Decision dated February 15, 2013 of the Court of
Appeals in CA-G.R. CR-H.C. No. 02888 is hereby AFFIRMED with the MODIFICATION that all the
accused-appellants herein are equally found GUILTY of the special complex crime of Kidnapping for
Ransom with Homicide, and are sentenced to each suffer the penalty of reclusion perpetua, without
eligibility for parole, and to pay, jointly and severally, the family of the kidnap victim Edwin Navarro
the following amounts: (1) PI00,000.00 as civil indemnity; (2) PI00,000.00 as moral damages; and
(3) Pl00,000.00 as exemplary damages, all with interest at the rate of six percent (6%) per annum
from the date of finality of judgment until fully paid.
SO ORDERED.
Accused-appellants collectively moved for reconsideration thereof, which the court denied with
2
finality in it’s Resolution dated September 24, 2014.

3
On even date, the Court received a letter from the Bureau of Corrections dated September 16, 2014
4
informing Us of the death of one of the accused-appellants in this case, Renato, on June I 0, 2014,
as evidenced by the Certificate of Death attached thereto. As Renato's death transpired before the
5
1âwphi1
promulgation of the Court's July 23, 2014 Resolution in this case, i.e., when his appeal before the
Court was still pending resolution, his criminal liability is totally extinguished in view of the provisions
of Article 89 of the Revised Penal Code which states:
Art. 89. How criminal liability is totally extinguished. - Criminal liability is totally extinguished:
1. By the death of the convict, as to the personal penalties; and as to pecuniary penalties,
liability therefor is extinguished only when the death of the offender occurs before final
judgment;
xxxx
In People v. Amistoso, the Court explained that the death of the accused pending appeal of his
6
conviction extinguishes his criminal liability, as well as his civil liability ex delicto. Consequently,
7
Renato's death on une 10, 2014 renders the Court's July 23, 2014 Resolution irrelevant and
ineffectual as to him, and is therefore set aside. Accordingly, the criminal case against Renato is
dismissed.
WHEREFORE, the Resolutions dated July 23, 2014 and September 24, 2014 of the Court are
hereby SET ASIDE and Criminal Case No. C-68329 before the Regional Trial Court of Caloocan
City, Branch 129 is DISMISSED insofar as accused-appellant RENATO DIONALDO y EBRON is
concerned, in view of his demise.
SO ORDERED.
ESTELA M. PERLAS-BERNABE
Associate Justice
WE CONCUR:
MARIA LOURDES P. A. SERENO

Chief Justice
Chairperson
TERESITA J. LEONARDO-DE CASTRO LUCAS P. BERSAMIN

Associate Justice Associate Justice
JOSE PORTUGAL PEREZ

Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above
Resolution had been reached in consultation before the case was assigned to the writer of the
opinion of the Court's Division.
MARIA LOURDES P.A. SERENO

Chief Justice
G.R. No. 209822 July 8, 2015
DIONISIO DACLES, Petitioner,

*
vs.
MILLENIUM ERECTORS CORPORATION and/or RAGAS TIU, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari are the Decision dated April 8, 2013 and the
1 2
Resolution dated October 11, 2013 of the Court of Appeals (CA) in CA-G.R. SP No. 122928, which
3
annulled and set aside the Decision dated October 17, 2011 and the Resolution dated December 2,
4 5
2011 of the National Labor Relations Commission (NLRC) in NLRC Case No. NCR 06-07985-10,
thereby reinstating the Decision dated April 4, 2010 of the Labor Arbiter (LA) dismissing petitioner
6
Dionisio Dacles's (petitioner) illegal dismissal complaint.
The Facts
Respondent Millenium Erectors Corporation (MEC) is a domestic · corporation engaged in the

construction business. On October 6, 2010, petitioner instituted a complaint for illegal dismissal with
7 8
money claims against MEC and its owner/manager, respondent Ragas Tiu (respondents), before
9
the NLRC, National Capital Region, docketed as NLRC-NCR-06-07985-10.
Petitioner claimed that he was hired by respondents as a mason in 1998. On June 7, 2010, while he
was working on a project in Malakas Street, Quezon City (QC), he was advised by respondent's
officer, Mr. Bongon, to move to another project in Robinson's Cubao, QC. However, upon arrival at
the site, he was instructed to return to his former job site and, thereafter, was given a run-around for
the two (2) succeeding days. When he requested to be given a post or assigned to a new project, he
was told by the paymaster not to report for work anymore, prompting him to file the illegal dismissal
complaint, with claims for service incentive leave (SIL) pay, overtime pay, holiday pay, 13th month
pay, rest day and premium pay, and salary differentials. 10
For their part, respondents denied having illegally dismissed petitioner, claiming that he was a mere
project employee whose contract expired on June 4, 2010 upon the completion of his masonry work
assignment in the Residential & Commercial Building Project (RCB-Malakas Project) along East
Avenue, QC. Respondents further denied having employed petitioner since 1998 because it was
11
only organized and started business operations in February 2000. They averred that petitioner
12
applied and was hired as a mason on October 8, 2009 and assigned to the Newport Entertainment
and Commercial Center Project in Pasay City (NECC Project), which was completed on March 3,
2010. Thereafter, petitioner applied anew and was hired as a mason on April 15, 2010 to work on
the RCB-Malakas Project. Petitioner's termination from both projects was then duly reported to the
13
Department of Labor and Employment (DOLE) Makati/Pasay Field Office. 14
The LA Ruling
In a Decision dated April 4, 2010, the LA dismissed the illegal dismissal complaint, finding that
15
petitioner is a project employee given that: (a) the employment contracts between MEC and
petitioner show that the latter, although repeatedly rehired, was engaged in particular projects and
for specific periods; ( b) the periods of employment were determinable with a known beginning and
termination; and ( c) the DOLE was notified of petitioner's termination at the end of each project.
Consequently, the LA held that petitioner cannot validly claim that he was illegally dismissed
because his separation was a consequence of the completion of his contract. The LA likewise
16
denied petitioner's money claims for lack of evidentiary support. 17
Aggrieved, petitioner appealed to the NLRC, docketed as NLRC LAC No. 05-001356-11.
18
The NLRC Ruling
In a Decision dated October 17, 2011, the NLRC reversed the LA ruling and instead, declared that
19
petitioner was a regular employee. At the outset, the NLRC denied respondents' assertion that
respondents could not have employed petitioner in 1998 since it was only registered with the
20
Securities and Exchange Commission on February 1, 2000, as evinced by its Certificate of

Incorporation, ruling that the said document only proves that MEC has been operating as such
21
without the benefit of registration; thus, the same should not be taken against petitioner's positive
assertion that he was employed way back in 1998.
Accordingly, the NLRC ruled that petitioner was a regular employee since he was originally
employed in 1998 without a fixed period to perform tasks that were necessary and desirable to
MEC's business, and which status cannot be altered by a subsequent contract stating otherwise. To
this end, it pointed out that petitioner cannot be lawfully dismissed based on the completion of the
last two (2) projects to which he was assigned and that the employment contracts and termination
reports submitted by MEC were merely issued to circumvent the law on regularization of the
employment of construction workers. The NLRC, however, denied petitioner's other money claims
22
for lack of legal basis. In fine, respondents were ordered to reinstate petitioner with full back wages,
23
plus attorney's fees. 24
Dissatisfied, respondents moved for reconsideration which was denied in a Resolution dated
25 26
December 2, 2011. Hence, they filed a petition for review on certiorari before the CA.
27
The CA Ruling
In a Decision dated April 8, 2013, the CA annulled and set aside the NLRC' s ruling and reinstated
28
the LA' s ruling. It held that petitioner has not presented evidence to substantiate his claim of illegal
29
dismissal. In this relation, it observed that the NLRC made a hasty conclusion that MEC has been
operating without the benefit of registration as early as 1998, and in so doing, erroneously relied on
the self-serving and unsubstantiated statement of petitioner. Therefore, the CA upheld the LA' s
finding that petitioner is a project employee who was first hired as a mason for the NECC Project
from October 8, 2009 until its completion on March 3, 2010, and second, for the RCB-Malakas
Project from April 15, 2010 also until its completion. It further gave emphasis on the fact that
petitioner's termination was duly reported by respondents to the DOLE. 30
Petitioner moved for reconsideration but was denied m a Resolution dated October 11, 2013;
31 32
hence, this petition.
The Issue Before the Court
The essential issue for the Court's resolution is whether or not the CA committed reversible error in
holding that the NLRC gravely abused its discretion in declaring that petitioner was a regular
employee, and not a project employee.
The Court's Ruling
The petition is without merit.
First, it must be stressed that to justify the grant of the extraordinary remedy of certiorari, petitioner
must satisfactorily show that the court or quasi-judicial authority gravely abused the discretion
conferred upon it. Grave abuse of discretion connotes judgment exercised in a capricious and
whimsical manner that is tantamount to lack of jurisdiction. To be considered "grave," discretion
must be exercised in a despotic manner by reason of passion or personal hostility, and must be so
patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the
duty enjoined by or to act at all in contemplation of law. 33
In labor disputes, grave abuse of discretion may be ascribed to the NLRC when, inter alia, its
findings and the conclusions reached thereby are not supported by substantial evidence, "or that 34
amount of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion."35
Tested against these considerations, the Court finds that the CA correctly granted respondents'
certiorari petition before it, since the NLRC gravely abused its discretion in ruling that petitioner was
a regular employee of MEC when the latter had established by substantial evidence that petitioner
was merely a project employee. On the other hand, there is no evidence on record to substantiate
petitioner's claim that he was employed as early as 1998. Article 294 of the Labor Code, as
36 37
amended, distinguishes a project-based employee from a regular employee as follows:
Art. 294. Regular and casual employment. - The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where the employment
has been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season. 1âwphi1
x x x x (Emphasis and underscoring supplied)
Thus, for an employee to be considered project-based, the employer must show that: (a) the
employee was assigned to carry out a specific project or undertaking; and ( b) the duration and
scope of which were specified at the time the employee was engaged for such project. Being 38
assigned to a project or a phase thereof which begins and ends at determined or determinable
times, the services of project employees may be lawfully terminated at the completion of such
project or phase. Consequently, in order to safeguard the rights of workers against the arbitrary use
39
of the word "project" to prevent them from attaining regular status, employers claiming that their
workers are project employees should prove that: (a) the duration and scope of the employment was
specified at the time they were engaged; and (b) there was indeed a project. 40
In this case, records reveal that petitioner was adequately informed of his employment status (as
project employee) at the time of his engagement for the NECC and RCB-Malakas Projects. This is
clearly substantiated by the latter's employment contracts duly signed by him, explicitly stating that:
41
(a) he was hired as a project employee; and (b) his employment was for the indicated starting dates
therein "and will end on completion/phase of work of project." To the Court's mind, said contracts
42
sufficiently apprised petitioner that his security of tenure with MEC would only last as long as the
specific project or a phase thereof to which he was assigned was subsisting. Hence, when the
project or phase was completed, he was validly terminated from employment, his engagement being
co-terminus only with such project or phase.
Further, pursuant to Department Order No. 19, or the "Guidelines Governing the Employment of
Workers in the Construction Industry," respondent duly submitted the required Establishment
Employment Reports to the DOLE Makati/Pasay Field Office regarding the "permanent termination"
43
of petitioner from both of the projects for which he was engaged (i.e., the NECC and RCB-Malakas
Projects). As aptly pointed out by the CA, such submission is an indication of project employment. In
Tomas Lao Construction v. NLRC, the Court elucidated:
44
Moreover, if private respondents were indeed employed as "project employees," petitioners should
have submitted a report of termination to the nearest public employment office every time their
employment was terminated due to completion of each construction project. The records show that
they did not. Policy Instruction No. 20 is explicit that employers of project employees are exempted
from the clearance requirement but not from the submission of termination report. We have
1âwphi1
consistently held that failure of the employer to file termination reports after every project completion
proves that the employees are not project employees. Nowhere in the New Labor Code is it provided
that the reportorial requirement is dispensed with. The fact is that Department Order No. 19
superseding Policy Instruction No. 20 expressly provides that the report of termination is one of the
indicators of project employment. (Emphasis supplied)
On the other hand, the records are bereft of any substantial evidence to support petitioner's claim
that he had been continuously rehired by respondent as a mason for 22 years as to accord him with
45
a regular employment status. Petitioner proffered a bare and self-serving claim that he has been
employed by respondent since 1998. It is well-settled that a party alleging a critical fact must
46
support his allegation with substantial evidence as allegation is not evidence. Ultimately, nothing on
47
record evinces the existence of an employer-employee relationship between him and respondent
48
prior to his employment as a project employee in the NECC Project.
At any rate, the repeated and successive rehiring of project employees does not, by and of itself,
qualify them as regular employees. Case law states that length of service (through rehiring) is not
the controlling determinant of the employment tenure, but whether the employment has been fixed
for a specific project or undertaking, with its completion having been determined at the time of the
engagement of the employee. While generally, length of service provides a fair yardstick for
49
determining when an employee initially hired on a temporary basis becomes a permanent one,
entitled to the security and benefits of regularization, this standard will not be fair, if applied to the
construction industry because construction firms cannot guarantee work and funding for its payrolls
beyond the life of each project as they have no control over the decisions and resources of project
proponents or owners. Thus, once the project is completed it would be unjust to require the
50
employer to maintain these employees in their payroll since this would be tantamount to making the
employee a privileged retainer who collects payment from his employer for work not done, and
amounts to labor coddling at the expense of management. 51
All told, since respondents have duly proven by substantial evidence that petitioner, although
rehired, was engaged for specific projects, the duration and scope of which were specified at the
times he was engaged, and that he was apprised of his status as a project employee at the onset,
the NLRC gravely abused its discretion in ruling that petitioner was a regular employee. Therefore,
the affirmance of the CA's ruling is in order.
WHEREFORE, the petition is DENIED. The Decision dated April 8, 2013 and the Resolution dated
October 11, 2013 of the Court of Appeals in CA-G.R. SP No. 122928 are hereby AFFIRMED.
SO ORDERED.
Associate Justice
WE COCNUR:

Chief Justice
Chairperson

JOSE PORTUGAL PEREZ
Associate Justice
CERTIFICATION
Decision had been reached in consultation before the case was assigned to the writer of the opinion
of the Court's Division.

Chief Justice
Footnotes
*
Dionesio A. Dacles" in some parts of the records; see rollo, p. 52.
1
Id. at 14-46.
Id. at 51-64. Penned by Associate Justice Agnes Reyes-Carpio with Associate Justices
2
Rosalinda Asuncion-Vicente and Priscilla J. Baltazar-Padilla concurring.
3
Id. at 67-68.
4
Id. at 145-153. Penned by Commissioner Nieves E. Vivar-De Castro with Commissioner
Isabel G. Panganiban-Ortiguerra concurring.
5
Records, pp. 155-156.
6
Id. at 88-101. Penned by Labor Arbiter Fe S. Cellan.
7
Id. at 37.
8
Id. at 22.
9
Rollo, p. 14.
10
Records, pp. 28-29, and 38.
11
Id. at 38, 40, and 69.
12
Id. at 67.
13
Id. at 38, 49, and 53.
14
See Establishment Employment Reports; id. at 50-51, 58-59.
15
Id. at 88-101.
Id. at 98.
16
Id. at 99-100.
17
Id. at 106-120.
18
Rollo, pp. 145-153.

19
Erroneously stated as 1988; see id. at 145 and 150.

20
CA rollo, p. 87.

21
Rollo, pp. 148-151.

22
Id. at 151.
23
Id. at 152.
24
See respondent's Motion for Reconsideration dated November 8, 2011; records, pp. 143-
25
151.
Id. at 155-156.
26
Rollo, pp. 90-121.

27
Id. at 51-64.
28
Id. at 63.
29
Id. at 60-63.
30
See petitioner's Motion for Reconsideration dated April 24, 2013; id. at 70-89.
31
Id. at 67-68.
32
See Gadia v. Sykes Asia, Inc., G.R. No. 209499, January 28, 20I5.
33
Id.
34
RULES OF COURT, RULE 133, SECTION 5.

35
Formerly Article 280. As renumbered pursuant to Section 5 of Republic Act No. 10151,
36
entitled "AN ACT ALLOWING THE EMPLOYMENT OF NIGHT WORKERS, THEREBY

REPEALING ARTICLES 130 AND 131 OF PRESIDENTIAL DECREE NUMBER FOUR
HUNDRED FORTY-TWO, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE
OF THE PHILIPPINES" (approved on June 21, 2011).
Presidential Decree No. 442 entitled "A DECREE INSTITUTING A LABOR CODE
37
THEREBY REVISING AND CONSOLIDATING LABOR AND SOCIAL LAWS TO AFFORD

PROTECTION TO LABOR, PROMOTE EMPLOYMENT AND HUMAN RESOURCES
DEVELOPMENT AND INSURE INDUSTRIAL PEACE BASED ON SOCIAL JUSTICE"
(approved on May 1, 1974).
See Gadia v. Sykes Asia, Inc., supra note 33.

38
See Omni Hauling Services, Inc. v. Bon, G. R. No. 199388, September 3, 2014, 734 SCRA
39
270, 277-282. See also Section 1 (c), Rule XXIII (Termination of Employment), Book V of the
Omnibus Rules Implementing the Labor Code [as amended by DOLE Department Order No.
9, Series of 1997], which govern termination of project employees states:
Section 1. Security of tenure. - x x x .
xxxx
(c) In cases of project employment or employment covered by legitimate contracting

or sub-contracting arrangements, no employee shall be dismissed prior to the
completion of the project or phase thereof for which the employee was engaged, or
prior to the expiration of the contract between the principal and contractor, unless the
dismissal is for just or authorized cause subject to the requirements of due process
or prior notice, or is brought about by the completion of the phase of the project or
contract for which the employee was engaged.
See Gadia v. Sykes Asia, Inc., supra note 33, citing Omni Hauling Services, Inc. v. Bon,
40
supra note 39.
Records, pp. 49 and 53.

41
Id.
42
Id. at 50-51 and 58-59.

43
344 Phil. 268, 282 (1997); citations omitted.

44
Rollo, p. 38.
45
Records, p. 28.
46
Tan Brothers Corporation of Basilan City v. Escudero, G.R. No. 188711, July 3, 2013, 700
47
SCRA 583, 593.
See Caurdanetaan Piece Workers Union v. Laguesma, 350 Phil. 35, 64 (1998).
48
William Uy Construction Corp. v. Trinidad, 629 Phil. 185, 190 (2010), citing Caseres v.
49
Universal Robina Sugar Milling Corp. (URSUMCO), 560 Phil. 615, 623 (2007).
Id.
50
See Malicdem v. Maru/as Industrial Corporation, G.R. No. 204406, February 26, 2014, 717
51
SCRA 563; Archbuild Masters and Construction, Inc. v. NLRC, 321 Phil. 869, 875-876
(1995).
March 20, 2017
G.R. No. 220940
JOY VANESSA M. SEBASTIAN, Petitioner

vs
SPOUSES NELSON C. CRUZ AND CRISTINA P. CRUZ and THE REGISTER OF DEEDS FOR
THE PROVINCE OF PANGASINAN, Respondents
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari are the Resolutions dated March 13, 2015 and
1 2
October 9, 2015 of the Court of Appeals (CA) in CA-G.R. SP No. 136564 dismissing the petition for
3
annulment of judgment filed by petitioner Joy Vanessa M. Sebastian (Sebastian) before it.
The Facts
The instant case stemmed from a petition for annulment of judgment filed by Sebastian before the
4
CA, praying for the annulment of the Decision dated March 27, 2014 of the Regional Trial Court of
5
Lingayen, Pangasinan, Branch 69 (RTC) in LRC Case No. 421. Petitioner alleged that respondent
Nelson C. Cruz (Nelson), married to Cristina P. Cruz (Cristina; collectively, Spouses Cruz), is the
registered owner of a 40,835-square meter parcel of land located in Brgy. Bogtong-Bolo,
Mangatarem, Pangasinan and covered by Katibayan ng Orihinal na Titulo Big. (OCT No.) P-
41566 (subject land). Sometime in November 2009, Nelson, through his father and attomey-infact,
6
Lamberto P. Cruz (Lamberto), then sold the subject lot in favor of Sebastian, as evidenced by a
Deed of Absolute Sale executed by the parties. Upon Sebastian's payment of the purchase price,
7
Lamberto then surrendered to her the possession of the subject land, OCT No. P-41566, and his
General Power of Attomey together with a copy of Tax Declaration No. 9041 and Property Index No.
8
013-26-019-0322. Sebastian then paid the corresponding capital gains tax, among others, to cause
9
the transfer of title to her name. However, upon her presentment of the aforesaid documents to the
10
Register of Deeds of the Province of Pangasinan (RD-Pangasinan), the latter directed her to secure
a Special Power of Attorney executed by Spouses Cruz authorizing Lamberto to sell the subject land
to her. Accordingly, Sebastian requested the execution of such document to Lamberto, who
promised to do so, but failed to comply. Thus, Sebastian was constrained to cause the annotation of
an adverse claim in OCT No. P-41566 on August 2, 2011 in order to protect her rights over the
subject land. 11
According to Sebastian, it was only on July 14, 2014 upon her inquiry with RD-Pangasinan about the
status of the aforesaid title when she discovered that: (a) Nelson executed an Affidavit of Loss dated
September 23, 2013 attesting to the loss of owner's duplicate copy of OCT No. P- 41566, which he
registered with the RD-Pangasinan; (b) the Spouses Cruz filed before the R TC a petition for the
issuance of a second owner's copy of OCT No. P-41566, docketed as LRC Case No. 421; and (c) on
March 27, 2014, the RTC promulgated a Decision granting Spouses Cruz's petition and,
consequently, ordered the issuance of a new owner's duplicate copy of OCT No. P-41566 in their
names. In view of the foregoing incidents, Sebastian filed the aforesaid petition for annulment of
12
judgment before the CA on the ground of lack of jurisdiction. Essentially, she contended that the
RTC had no jurisdiction to take cognizance of LRC Case No. 421 as the duplicate copy of OCT No.
P-41566 - which was declared to have no further force in effect - was never lost, and in fact, is in her
possession all along. 13
The CA Ruling
In a Resolution dated March 13, 2015, the CA did not give due course to Sebastian's petition and,
14
consequently, dismissed the same outright. It held that the compliance by Spouses Cruz with the
15
jurisdictional requirements of publication and notice of hearing clothed the RTC with jurisdiction to
take cognizance over the action in rem, and constituted a constructive notice to the whole world of
its pendency. As such, personal notice to Sebastian of the action was no longer necessary. 16
Aggrieved, petitioner moved for reconsideration, which was, however, denied in a

17
Resolution dated October 9, 2015; hence, this petition.

18 19
The core issue for the Court's resolution is whether or not the CA correctly denied due course to
Sebastian's petition for annulment of judgment, resulting in its outright dismissal.
The Court's Ruling
The petition is meritorious.
Under Section 2, Rule 4 7 of the Rules of Court, the only grounds for annulment of judgment are
extrinsic fraud and lack of jurisdiction. Lack of jurisdiction as a ground for annulment of judgment
refers to either lack of jurisdiction over the person of the defending party or over the subject matter of
the claim. In case of absence, or lack, of jurisdiction, a court should not take cognizance of the case.
Thus, the prevailing rule is that where there is want of jurisdiction over a subject matter, the
judgment is rendered null and void. A void judgment is in legal effect no judgment, by which no rights
are divested, from which no right can be obtained, which neither binds nor bars any one, and under
which all acts performed and all claims flowing out are void. It is not a decision in contemplation of
law and, hence, it can never become executory. It also follows that such a void judgment cannot
constitute a bar to another case by reason of res judicata. 20
As will be explained hereunder, the CA erred in denying due course to Sebastian's petition for
annulment of judgment and, resultantly, in dismissing the same outright.
The governing law for judicial reconstitution of title is Republic Act No. (RA) 26, Section 15 of which
21
provides when reconstitution of a title should be allowed:
Section 15. If the court, after hearing, finds that the documents presented, as supported by parole
evidence or otherwise, are sufficient and proper to warrant the reconstitution of the lost or destroyed
certificate of title, and that petitioner is the registered owner of the property or has an interest therein,
that the said certificate of title was in force at the time it was lost or destroyed, and that the
description, area and boundaries of the property are substantially the same as those contained in
the lost or destroyed certificate of title, an order of reconstitution shall be issued. The clerk of court
shall forward to the register of deeds a certified copy of said order and all the documents which,
pursuant to said order, are to be used as the basis of the reconstitution. If the court finds that there is
no sufficient evidence or basis to justify the reconstitution, the petition shall be dismissed, but such
dismissal shall not preclude the right of the party or parties entitled thereto to file an application for
confirmation of his or their title under the provisions of the Land Registration Act. (Emphasis and
underscoring supplied)
From the foregoing, it appears that the following requisites must be complied with for an order for
reconstitution to be issued: (a) that the certificate of title had been lost or destroyed; (b) that the
documents presented by petitioner are sufficient and proper to warrant reconstitution of the lost or
destroyed certificate of title; (c) that the petitioner is the registered owner of the property or had an
interest therein; (d) that the certificate of title was in force at the time it was lost and destroyed; and
(e) that the description, area and boundaries of the property are substantially the same as those
contained in the lost or destroyed certificate of title. Verily, the reconstitution of a certificate of title
denotes restoration in the original form and condition of a lost or destroyed instrument attesting the
title of a person to a piece of land. The purpose of the reconstitution of title is to have, after
observing the procedures prescribed by law, the title reproduced in exactly the same way it has been
when the loss or destruction occurred. RA 26 presupposes that the property whose title is sought to
be reconstituted has already been brought under the provisions of the Torrens System. 22
Indubitably, the fact of loss or destruction of the owner's duplicate certificate of title is crucial in
clothing the RTC with jurisdiction over the judicial reconstitution proceedings. In Spouses Paulino v.
CA, the Court reiterated the rule that when the owner's duplicate certificate of title was not actually
23
lost or destroyed, but is in fact in the possession of another person, the reconstituted title is void
because the court that rendered the order of reconstitution had no jurisdiction over the subject
matter of the case, viz.:
As early as the case of Strait Times, Inc. v. CA, the Court has held that when the owner's duplicate
certificate of title has not been lost, but is, in fact, in the possession of another person, then the
reconstituted certificate is void, because the court that rendered the decision had no jurisdiction.
Reconstitution can be validly made only in case of loss of the original certificate. This rule was
reiterated in the cases of Villamayor v. Arante, Rexlon Realty Group, Inc. v. [CA], Eastworld Motor
Industries Corporation v. Skunac Corporation, Rodriguez v. Lim, Villanueva v. Viloria, and Camitan
v. Fidelity Investment Corporation. Thus, with evidence that the original copy of the TCT was not lost
during the conflagration that hit the Quezon City Hall and that the owner's duplicate copy of the title
was actually in the possession of another, the RTC decision was null and void for lack of
jurisdiction.
1âwphi1
xxxx
In reconstitution proceedings, the Court has repeatedly ruled that before jurisdiction over the case
can be validly acquired, it is a condition sine qua non that the certificate of title has not been issued
to another person. If a certificate of title has not been lost but is in fact in the possession of another
person, the reconstituted title is void and the court rendering the decision has not acquired
jurisdiction over the petition for issuance of new title. The courts simply have no jurisdiction over
petitions by (such) third parties for reconstitution of allegedly lost or destroyed titles over lands that
are already covered by duly issued subsisting titles in the names of their duly registered owners. The
existence of a prior title ipso facto nullifies the reconstitution proceedings. The proper recourse is to
assail directly in a proceeding before the regional trial court the validity of the Torrens title already
issued to the other person. (Emphases and underscoring supplied)
24
In this case, Sebastian's petition for annulment of judgment before the CA clearly alleged that,
contrary to the claim of Spouses Cruz in LRC Case No. 421, the owner's duplicate copy of OCT No.
P-41566 was not really lost, as the same was surrendered to her by Lamberto, Nelson's father and
attorney-in-fact, and was in her possession all along. Should such allegation be proven following
25
the conduct of further proceedings, then there would be no other conclusion than that the RTC had
no jurisdiction over the subject matter of LRC Case No. 421. As a consequence, the Decision dated
March 27, 2014 of the RTC in the said case would then be annulled on the ground of lack of
jurisdiction.
Thus, the Court finds prima facie merit in Sebastian's petition for annulment of judgment before the
CA. As such, the latter erred in denying it due course and in dismissing the same outright. In this
light, the Court finds it more prudent to remand the case to the CA for further proceedings to first
resolve the above-discussed jurisdictional issue, with a directive to: (a) grant due course to the
petition; and (b) cause the service of summons on Spouses Cruz and the RD-Pangasinan, in
accordance with Section 5, Rule 47 of the Rules of Court.
26
WHEREFORE, the petition is GRANTED. The Resolutions dated March 13, 2015 and October 9,
2015 of the Court of Appeals (CA) in CAG. R. SP No. 136564 are hereby REVERSED and SET
ASIDE. Accordingly, the instant case is REMANDED to the CA for further proceedings.
SO ORDERED.
Associate Justice
WE CONCUR:

Associate Justice
Chairperson
TERESITA J. LEONARDO-DE CASTRO MARIANO C. DEL CASTILLO

ALFREDO BENJAMIN S. CAGUIOA

Associate Justice
CERTIFICATION
Pursuant to the Section 13, Article VIII of the Constitution, I certify that the conclusions in the above
of the Court’s Division.

Chief Justice
Footnotes
1
Rollo, pp. 8-23.
Id. at 25-28. Penned by Associate Justice Jane Aurora C. Lantion with Associate Justices
2
Magdangal M. De Leon and Nina G. Antonio-Valenzuela concurring.
3
Id. at 30-31.
4
Dated July 31, 2014. Id. at 70-78.
5
Id. at 66-69. Penned by Presiding Judge Loreto S. Alog, Jr.
6
Id. at 39-42.
7
Dated November 9, 2009. Id. at 38.
8
Id. at 44-45.
9
Id. at 46, including dorsal portion.
As evidenced by Capital Gains Tax Return (id. at 47-48), Documentary Stamp Tax
10
Declaration/Return (id. at 49), Tax Clearance Certificate (id. at 50-53), and Certificate
Authorizing Registration (id. at 54- 55).
11
See id. at 72-73.
12
See id. at 26, 71, and 74.
13
See id. at 75-77.
14
Id. at 25-28.
15
Id. at 28.
16
See id. at 26-28.
17
See motion for reconsideration dated April 20, 2015; id. at 85-90.
18
Id. at 30-31.
19
Id. at 8-23.
Spouses Paulino v. CA, 735 Phil. 448, 459 (2014), citing Hilado v. Chavez, 482 Phil. 104,
20
133 (2004).
Entitled "AN ACT PROVIDING A SPECIAL PROCEDURE FOR THE RECONSTITUTION

21
OF TORRENS CERTIFICATES OF TITLE LOST OR DESTROYED" (September 25, 1946).
22
Republic v. Tuastumban, 604 Phil. 491, 504-505 (2009).
23
Supra note 20.
24
Id. at 459-460 and 462; citations omitted.
25
See rollo, pp. 72 and 76.
26
Section 5, Rule 47 of the Rules of Court reads:
Section 5. Action by the court. - Should the court find no substantial merit in the
petition, the same may be dismissed outright with specific reasons for such
dismissal.
Should prim a facie merit be found in the petition, the same shall be given due
course and summons shall be served on the respondent.
March 15, 2017
G.R. No. 224834
JONATHAN Y. DEE, Petitioner
vs
HARVEST ALL INVESTMENT LIMITED, VICTORY FUND LIMITED, BOND EAST PRIVATE
LIMITED, and ALBERT HONG HIN KAY, as Minority Shareholders of ALLIANCE SELECT
FOODS INTERNATIONAL, INC., and HEDY S.C. YAP-CHUA, as Director and Shareholder of
ALLIANCE SELECT FOODS INTERNATIONAL, INC., Respondents
x-----------------------x
G.R. No. 224871
HARVEST ALL INVESTMENT LIMITED, VICTORY FUND LIMITED, BOND EAST PRIVATE
LIMITED, ALBERT HONG HIN KAY, as Minority Shareholders of Alliance Select Foods
International, Inc., and HEDY S.C. YAP-CHUA, as a Director and Shareholder of Alliance
Select Foods International, Inc., Petitioners,
vs.
ALLIANCE SELECT FOODS INTERNATIONAL, INC., GEORGE E. SYCIP, JONATHAN Y. DEE,
RAYMUND K.H. SEE, MARY GRACE T. VERA-CRUZ, ANTONIO C. PACIS, ERWIN M.
ELECHICON, and BARBARA ANNE C. MIGALLOS, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in these consolidated petitions for review on certiorari are the Decision dated February 15,
1 2
2016 and the Resolution dated May 25, 2016 of the Court of Appeals (CA) in CA-G.R. SP No.
3
142213, which reversed the Resolution dated August 24, 2015 of the Regional Trial Court of Pasig
4
City, Branch 159 (RTC) in COMM'L. CASE NO. 15-234 and, accordingly, reinstated the case and
remanded the same to the court a quo for further proceedings after payment of the proper legal
fees.
The Facts
Harvest All Investment Limited, Victory Fund Limited, Bondeast Private Limited, Albert Hong Hin
Kay, and Hedy S.C. Yap Chua (Harvest All, et al.) are, in their own capacities, minority stockholders
of Alliance Select Foods International, Inc. (Alliance), with Hedy S.C. Yap Chua acting as a member
of Alliance's Board of Directors. As per Alliance's by-laws, its Annual Stockholders' Meeting (ASM)
5
is held every June 15. However, in a Special Board of Directors Meeting held at three (3) o'clock in
6
the afternoon of May 29, 2015, the Board of Directors, over Hedy S.C. Yap Chua's objections,
passed a Board Resolution indefinitely postponing Alliance's 2015 ASM pending complete
subscription to its Stock Rights Offering (SRO) consisting of shares with total value of ₱l Billion
which was earlier approved in a Board Resolution passed on February 17, 2015. As per Alliance's
Disclosure dated May 29, 2015 filed before the Philippine Stock Exchange, such postponement was
made "to give the stockholders of [Alliance] better representation in the annual meeting, after taking
into consideration their subscription to the [SRO] of [Alliance]." This prompted Harvest All, et al. to
7
file the instant Complaint (with Application for the Issuance of a Writ of Preliminary Mandatory
Injunction and Temporary Restraining Order/Writ of Preliminary Injunction) involving an intra-
8
corporate controversy against Alliance, and its other Board members, namely, George E. Sycip,
Jonathan Y. Dee, Raymund K.H. See, Mary Grace T. Vera-Cruz, Antonio C. Pacis, Erwin M.
Elechicon, and Barbara Anne C. Migallos (Alliance Board). In said complaint, Harvest All, et
al. principally claimed that the subscription to the new shares through the SRO cannot be made a
condition precedent to the exercise by the current stockholders of their right to vote in the 2015
ASM; otherwise, they will be deprived of their full voting rights proportionate to their existing
shareholdings. Thus, Harvest All, et al., prayed for, inter alia, the declaration of nullity of the Board
9
Resolution dated May 29, 2015 indefinitely postponing the 2015 ASM, as well as the Board
Resolution dated February 17, 2015 approving the SR0. The Clerk of Court of the RTC assessed
10
Harvest All, et al. with filing fees amounting to ₱8,860.00 which they paid accordingly. Later on,
11
Harvest All, et al. filed an Amended Complaint: (a) deleting its prayer to declare null and void the
12
Board Resolution dated February 17, 2015 approving the SRO; and (b) instead, prayed that the
Alliance Board be enjoined from implementing and carrying out the SRO prior to and as a condition
for the holding of the 2015 ASM. 13
For its part, the Alliance Board raised the issue of lack of jurisdiction on the ground of Harvest All, et
al.'s failure to pay the correct filing fees. It argued that the latter should have paid P20 Million, more
or less, in filing fees based on the SRO which was valued at Pl Billion. However, Harvest All, et
al. did not mention such capital infusion in their prayers and, as such, were only made to pay the
measly sum of ₱8,860.00. On the other hand, Harvest All, et al. maintained that they paid the correct
filing fees, considering that the subject of their complaint is the holding of the 2015 ASM and not a
claim on the aforesaid value of the SRO. Harvest All, et al. likewise pointed out that they simply
relied on the assessment of the Clerk of Court and had no intention to defraud the government. 14
The RTC Ruling
In a Resolution dated August 24, 2015, the RTC dismissed the instant complaint for lack of
15
jurisdiction due to Harvest All, et al.'s failure to pay the correct filing fees. Citing Rule 141 of the
16
Rules of Court, as amended by A.M. No. 04-2-04-SC, and the Court's pronouncement in Lu v. Lu
17
Ym, Sr. (Lu), the RTC found that the basis for the computation of filing fees should have been the ₱l
18
Billion value of the SRO, it being the property in litigation. As such, Harvest All, et al. should have
paid filing fees in the amount of more or less ₱20 Million and not just ₱5,860.00. In this regard, the
RTC also found that Harvest All, et al.'s payment of incorrect filing fees was done in bad faith and
with clear intent to defraud the government, considering that: (a) when the issue on correct filing
fees was first raised during the hearing on the application for TRO, Harvest All, et al. never
manifested their willingness to abide by the Rules by paying additional filing fees when so required;
(b) despite Harvest All, et al.'s admission in their complaint that the SRO was valued at Pl Billion,
they chose to keep mum on the meager assessment made by the Clerk of Court; and (c) while
Harvest All, et al. made mention of the SRO in the body of their complaint, they failed to indicate the
same in their prayer, thus, preventing the Clerk of Court from making the correct assessment of filing
fees.19
Aggrieved, Harvest All, et al. appealed to the CA.
20
The CA Ruling
In a Decision dated February 15, 2016, the CA reversed the RTC's order of dismissal and,
21
accordingly, reinstated the case and remanded the same to the court a quo for further proceedings
after payment of the proper legal fees. Also citing Rule 141 of the Rules of Court, as amended by
22
A.M. No. 04-2-04-SC, and Lu, the CA held that the prevailing rule is that all intra-corporate
controversies always involve a property in litigation. Consequently, it agreed with the RTC's finding
that the basis for the computation of filing fees should have been the ₱l Billion value of the SRO and,
thus, Harvest All, et al. should have paid filing fees in the amount of more or less ₱20 Million and not
just ₱5,860.00. However, in the absence of contrary evidence, the CA held that Harvest All, et
23
al. were not in bad faith and had no intention of defrauding the government, as they merely relied in
the assessment of the Clerk of Court. Thus, in the interest of substantial justice, the CA ordered the
reinstatement of Harvest All, et al.' s complaint and the remand of the same to the RTC for further
proceedings, provided that they pay the correct filing fees. 24
The parties moved for reconsideration, which were, however, denied in a Resolution dated May
25 26
25, 2016. Hence, these consolidated petitions.
The Issues Before the Court
The primordial issues raised for the Court's resolution are: (a) whether or not Harvest All, et al. paid
insufficient filing fees for their complaint, as the same should have been based on the Pl Billion value
of the SRO; and (b) if Harvest All, et al. indeed paid insufficient filing fees, whether or not such act
was made in good faith and without any intent to defraud the government.
The Court's Ruling
The petition in G.R. No. 224834 is denied, while the petition in G.R. No. 224871 is partly granted.
I.
At the outset, the Court notes that in ruling that the correct filing fees for Harvest All, et
al.'s complaint should be based on the Pl Billion value of the SRO - and, thus, essentially holding
that such complaint was capable of pecuniary estimation - both the RTC and the CA heavily relied
on the
Court's pronouncement in Lu. In Lu, the Court mentioned that in view of A.M. No. 04-2-04-SC dated
July 20, 2004 which introduced Section 21 (k) to Rule 141 of the Rules of Court, it seemed that "an
27
intra-corporate controversy always involves a property in litigation" and that "there can be no case of
intra-corporate controversy where the value of the subject matter cannot be estimated." 28
However, after a careful reading of Lu, it appears that Harvest All, et al. correctly pointed out that
29
the foregoing statements were in the nature of an obiter dictum.
To recount, in Lu, the Court ruled, inter alia, that the case involving an intra-corporate controversy
instituted therein, i.e., declaration of nullity of share issuance, is incapable of pecuniary estimation
and, thus, the correct docket fees were paid. Despite such pronouncement, the Court still went on
30
to say that had the complaint therein been filed during the effectivity of A.M. No. 04-2-04-SC, then it
would have ruled otherwise because the amendments brought about by the same "seem to imply
that there can be no case of intra-corporate controversy where the value of the subject matter
cannot be estimated," viz.:
31
The new Section 21 (k) of Rule 141 of the Rules of Court, as amended by A.M. No. 04-2-04-SC (July
20, 2004), expressly provides that "[f]or petitions for insolvency or other cases involving intra-
corporate controversies, the fees prescribed under Section 7 (a) shall apply." Notatu dignum is that
paragraph (b) 1 & 3 of Section 7 thereof was omitted from the reference. Said paragraph refers to
docket fees for filing "[a]ctions where the value of the subject matter cannot be estimated" and "all
other actions not involving property."
By referring the computation of such docket fees to paragraph (a) only, it denotes that an intra-
corporate controversy always involves a property in litigation, the value of which is always the basis
for computing the applicable filing fees. The latest amendments seem to imply that there can be no
case of intra-corporate controversy where the value of the subject matter cannot be estimated. Even
one for a mere inspection of corporate books.
If the complaint were filed today, one could safely find refuge in the express phraseology of Section
21 (k) of Rule 141 that paragraph (a) alone applies.
In the present case, however, the original Complaint was filed on August 14, 2000 during which time
Section 7, without qualification, was the applicable provision. Even the Amended Complaint was filed
on March 31, 2003 during which time the applicable rule expressed that paragraphs (a) and (b) 1 & 3
shall be the basis for computing the filing fees in intra-corporate cases, recognizing that there could
be an intra-corporate controversy where the value of the subject matter cannot be estimated, such
as an action for inspection of corporate books. The immediate illustration shows that no mistake can
even be attributed to the RTC clerk of court in the assessment of the docket fees. (Emphases and
32
Accordingly, the passages in Lu that "an intra-corporate controversy always involves a property in
litigation" and that "there can be no case of intra-corporate controversy where the value of the
subject matter cannot be estimated" are clearly non-determinative of the antecedents involved in that
case and, hence, cannot be controlling jurisprudence to bind our courts when it adjudicates similar
cases upon the principle of stare decisis. As it is evident, these passages in Lu only constitute an
opinion delivered by the Court as a "by the way" in relation to a hypothetical scenario (i.e., if the
complaint was filed during the effectivity of A.M. No. 04-2-04-SC, which it was not) different from the
actual case before it.
In Land Bank of the Philippines v. Santos, the Court had the opportunity to define an obiter
33
dictum and discuss its legal effects as follows:
[An obiter dictum] "x x x is a remark made, or opinion expressed, by a judge, in his decision upon a
cause by the way, that is, incidentally or collaterally, and not directly upon the question before him,
or upon a point not necessarily involved in the determination of the cause, or introduced by way of
illustration, or analogy or argument. It does not embody the resolution or determination of the court,
and is made without argument, or full consideration of the point. It lacks the force of an adjudication,
being a mere expression of an opinion with no binding force for purposes of res
judicata." (Emphasis and underscoring supplied)
34
For these reasons, therefore, the courts a quo erred in applying the case of Lu.
II.
In any event, the Court finds that the obiter dictum stated in Lu was actually incorrect. This is
because depending on the nature of the principal action or remedy sought, an intra-corporate
controversy may involve a subject matter which is either capable or incapable of pecuniary
estimation.
In Cabrera v. Francisco, the Court laid down the parameters in determining whether an action is
35
considered capable of pecuniary estimation or not:
In determining whether an action is one the subject matter of which is not capable of pecuniary
estimation this Court has adopted the criterion of first ascertaining the nature of the principal action
or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered
capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the [C]ourts
of [F]irst [I]nstance would depend on the amount of the claim. However, where the basic issue is
something other than the right to recover a sum of money, where the money claim is purely
incidental to, or a consequence of, the principal relief sought, this Court has considered such actions
as cases where the subject of the litigation may not be estimated in terms of money, and are
cognizable exclusively by [C]ourts of [F]irst [I]nstance (now Regional Trial Courts). (Emphases and
36
This case is a precise illustration as to how an intra-corporate controversy may be classified as an

action whose subject matter is incapable of pecuniary estimation. A cursory perusal of Harvest All, et
al.'s Complaint and Amended Complaint reveals that its main purpose is to have Alliance hold its
2015 ASM on the date set in the corporation's bylaws, or at the time when Alliance's SRO has yet to
fully materialize, so that their voting interest with the corporation would somehow be preserved.
Thus, Harvest All, et al. sought for the nullity of the Alliance Board Resolution passed on May 29,
2015 which indefinitely postponed the corporation's 2015 ASM pending completion of subscription to
the SR0. Certainly, Harvest All, et al.'s prayer for nullity, as well as the concomitant relief of holding
37
the 2015 ASM as scheduled in the by-laws, do not involve the recovery of sum of money. The mere
mention of Alliance's impending SRO valued at ₱l Billion cannot transform the nature of Harvest
All, et al.'s action to one capable of pecuniary estimation, considering that: (a) Harvest All, et al. do
not claim ownership of, or much less entitlement to, the shares subject of the SRO; and (b) such
mention was merely narrative or descriptive in order to emphasize the severe dilution that their
voting interest as minority shareholders would suffer if the 2015 ASM were to be held after the SRO
was completed. If, in the end, a sum of money or anything capable of pecuniary estimation would be
recovered by virtue of Harvest All, et al.'s complaint, then it would simply be the consequence of
their principal action.
Clearly therefore, Harvest All, et al.'s action was one incapable of pecuniary estimation.
At this juncture, it should be mentioned that the Court passed A.M. No. 04-02-04-SC dated October
38
5, 2016, which introduced amendments to the schedule of legal fees to be collected in various
commercial cases, including those involving intra-corporate controversies. Pertinent portions of A.M.
No. 04-02-04-SC read:
RESOLUTION
xxxx
Whereas, Rule 141 of the Revised Rules of Court, as amended by A.M. No. 04-2-04-SC effective 16
August 2004, incorporated the equitable schedule of legal fees prescribed for petitions for
rehabilitation under Section 21 (i) thereof and, furthermore, provided under Section 21(k) thereof that
the fees prescribed under Section 7(a) of the said rule shall apply to petitions for insolvency or other
cases involving intra-corporate controversies;
xxxx
NOW, THEREFORE, the Court resolves to ADOPT a new schedule of filing fees as follows:
xxxx
4. Section 21 (k) of Rule 141 of the Revised Rules of Court is hereby DELETED as the fees covering
petitions for insolvency are already provided for in this Resolution. As for cases involving intra-
corporate controversies, the applicable fees shall be those provided under Section 7 (a), 7 (b) (1), or
7 (b) (3) of Rule 141 of the Revised Rules of Court depending on the nature of the action.
xxxx
This Resolution shall take effect fifteen (15) days following its publication in the Official Gazette or in
two (2) newspapers of national circulation. The Office of the Court Administrator (OCA) is directed to
circularize the same upon its effectivity. (Emphases and underscoring supplied)
Verily, the deletion of Section 21 (k) of Rule 141 and in lieu thereof, the application of Section 7 (a)
[fees for actions where the value of the subject matter can be determined/estimated], 7 (b) (1) [fees
for actions where the value of the subject matter cannot be estimated], or 7 (b) (3) [fees for all other
actions not involving property] of the same Rule to cases involving intra-corporate controversies for
the determination of the correct filing fees, as the case may be, serves a dual purpose: on the one
hand, the amendments concretize the Court's recognition that the subject matter of an intra-
corporate controversy may or may not be capable of pecuniary estimation; and on the other hand,
they were also made to correct the anomaly created by A.M. No. 04-2-04-SC dated July 20, 2004
(as advanced by the Lu obiter dictum) implying that all intra-corporate cases involved a subject
matter which is deemed capable of pecuniary estimation.
While the Court is not unaware that the amendments brought by A.M. No. 04-02-04-SC dated
October 5, 2016 only came after the filing of the complaint subject of this case, such amendments
may nevertheless be given retroactive effect so as to make them applicable to the resolution of the
instant consolidated petitions as they merely pertained to a procedural rule, i.e., Rule 141, and not
substantive law. In Tan, Jr. v. CA, the Court thoroughly explained the retroactive effectivity of
39
procedural rules, viz.:
The general rule that statutes are prospective and not retroactive does not ordinarily apply to
procedural laws. It has been held that "a retroactive law, in a legal sense, is one which takes away or
impairs vested rights acquired under laws, or creates a new obligation and imposes a new duty, or
attaches a new disability, in respect of transactions or considerations already past. Hence, remedial
statutes or statutes relating to remedies or modes of procedure, which do not create new or take
away vested rights, but only operate in furtherance of the remedy or confirmation of rights already
existing, do not come within the legal conception of a retroactive law, or the general rule against the
retroactive operation of statutes." The general rule against giving statutes retroactive operation
whose effect is to impair the obligations of contract or to disturb vested rights does not prevent the
application of statutes to proceedings pending at the time of their enactment where they neither
create new nor take away vested rights. A new statute which deals with procedure only is
presumptively applicable to all actions - those which have accrued or are pending.
Statutes regulating the procedure of the courts will be construed as applicable to actions pending
and undetermined at the time of their passage. Procedural laws are retroactive in that sense and to
1âwphi1
that extent. The fact that procedural statutes may somehow affect the litigants' rights may not
preclude their retroactive application to pending actions. The retroactive application of procedural
laws is not violative of any right of a person who may feel that he is adversely affected. Nor is the
retroactive application of procedural statutes constitutionally objectionable. The reason is that as a
general rule no vested right may attach to, nor arise from, procedural laws. It has been held that "a
person has no vested right in any particular remedy, and a litigant cannot insist on the application to
the trial of his case, whether civil or criminal, of any other than the existing rules of
procedure." (Emphases and underscoring supplied)
40
In view of the foregoing, and having classified Harvest All, et al.'s action as one incapable of
pecuniary estimation, the Court finds that Harvest All, et al. should be made to pay the appropriate
docket fees in accordance with the applicable fees provided under Section 7 (b) (3) of Rule 141 [fees
for all other actions not involving property] of the Revised Rules of Court, in conformity with A.M. No.
04-02-04-SC dated October 5, 2016. The matter is therefore remanded to the R TC in order:
(a) to FIRST Determine if Harvest, et al.'s payment of filing fees in the amount of ₱8,860.00, as
initially assessed by the Clerk of Court, constitutes sufficient compliance with A.M. No. 04-02-04-SC;
(b) if Harvest All, et al.'s payment of ₱8,860.00 is insufficient, to require Harvest, et al.' s payment of
any discrepancy within a period of fifteen (15) days from notice, and after such payment, proceed
with the regular proceedings of the case with dispatch; or
(c) if Harvest All, et al.'s payment of ₱8,860.00 is already sufficient, proceed with the regular
proceedings of the case with dispatch.
WHEREFORE, the petition in G.R. No. 224834 is DENIED, while the petition in G.R. No. 224871 is
PARTLY GRANTED. The Decision dated February 15, 2016 and the Resolution dated May 25,
2016 of the Court of Appeals in CA-G.R. SP No. 142213 are
hereby AFFIRMED with MODIFICATION in that COMM'L. CASE NO. 15-234 is
hereby REMANDED to the Regional Trial Court of Pasig City, Branch 159 for further proceedings as
stated in the final paragraph of this Decision.
SO ORDERED.
Associate Justice
WE CONCUR:

Associate Justice
Chairperson
PRESBITERO J. VELASCO, JR. TERESITA J. LEONARDO-DE CASTRO

ALFREDO BENJAMIN S. CAGUIOA

Associate Justice
CERTIFICATION
Pursuant to the Section 13, Article VIII of the Constitution, I certify that the conclusions in the above
of the Court’s Division.

Chief Justice
Footnotes
1
Rollo (G.R. No. 224834), Vol. I, pp. 45-108; rollo (G.R. No. 224871), Vol. I, pp. 14-44.
Rollo (G.R. No. 224834), Vol. I, pp. 12-22. Penned by Associate Justice Mario V. Lopez
2
with Associate Justices Rosmari D. Carandang and Myra V. Garcia-Fernandez concurring.
3
Id. at 24-28.
4
Id. at 311-318. Penned by Presiding Judge Elma M. Rafallo-Lingan.
5
See rollo (G.R. No. 224871), Vol. I, pp. 14 and 19.
6
See id. at 121.
7
See id. at 19-20. See also rollo (G.R. No. 224834), Vol. I, p. 13.
8
Dated July 31, 2015. Rollo (G.R. No. 224871), Vol. I, pp. 544-577.
9
See id. at 558-568.
10
See id. at 575.
11
See rollo (G.R. No. 224834), Vol. I, p. 14.
12
See Amended Complaint; rollo (G.R. No. 224871), Vol. I, pp. 107-144.
13
See id. at l37-138.
14
See rollo (G.R. No. 224834), Vol. I, pp. 13-14.
15
Id.at311-318.
16
See id. at 3 l '5-317.
Entitled "RE: PROPOSED REVISION OF RULE 141, REVISED RULES OF COURT,

17
LEGAL FEES" (August 16, 2004).

658Phil.156(2011).
18
See rollo (G.R. No. 224834), Vol. I, pp. 312-316.

19
See Petition for Review (with Prayer for the Issuance of a Temporary Restraining Order
20
and/or Preliminary Injunction) dated September 8, 2015; id. at 331-377.
Id. at 12-22.
21
See id. at 21.

22
See id. at 15-18.

23
See id. at 19-21.

24
See id. at 24.

25
Id. at 24-28.
26
Section 21 (k), Rule 141 of the Rules of Court reads:

27
Section 21. Other fees. - The following fees shall also be collected by the clerks of
the Regional Trial Courts or courts of the first level, as the case may be:
xxxx
(k) For petitions for insolvency or other cases involving intra-corporate controversies,
the fees prescribed under Section 7 (a) shall apply.
Lu v. Lu Ym, Sr., supra note 18, at 190.

28
See rollo (G.R. No. 224871), Vol. I, pp. 39-40

29
See Lu v. Lu Ym, Sr., supra note 18, at 179-184.

30
Id. at 190.
31
Id. at 190-191.
32
See G.R. Nos. 213863 and 214021, January 27, 2016.

33
See id.; citations omitted.

34
716 Phil. 574 (2013).

35
Id. at 586-587, citing De Ungria v. CA, 669 Phil. 585, 597 (2011).

36
See rollo (G.R. No. 224871), Vol. I, pp. 138 and 575.

37
Entitled "THE LEGAL FEES TO BE COLLECTED IN CASES OF LIQUIDATION OF
38
SOLVENT JURIDICAL DEBTORS, LIQUIDATION OF INSOLVENT JURIDICAL AND

INDIVIDUAL DEBTORS, CONVERSION FROM REHABILITATION TO LIQUIDATION
PROCEEDINGS, SUSPENSION or PAYMENTS or INSOLVENT INDIVIDUAL DEBTORS
AND PETITIONS IN AN OUT OF COURT RESTRUCTURING AGREEMENT PROVIDED
UNDER A.M. Nos. 12-12-11-SC AND 15-04-06-SC."
424 Phil. 556 (2002).

39
Id. at 569; citation omitted.

40
G.R. No. 204866 January 21, 2015
RUKS KONSULT AND CONSTRUCTION, Petitioner,

vs.
ADWORLD SIGN AND ADVERTISING CORPORATION* and TRANSWORLD MEDIA ADS,
INC., Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari are the Decision dated November 16, 2011 and the
1 2
Resolution dated December 10, 2012 of the Court of Appeals (CA) in CA-G.R. CV No. 94693 which
3
affirmed the Decision dated August 25, 2009 of the Regional Trial Court of Makati City, Branch 142
4
(RTC) in Civil Case No. 03-1452 holding, inter alia, petitioner Ruks Konsult and Construction (Ruks)
and respondent Transworld Media Ads, Inc. (Transworld) jointly and severally liable to respondent
Adworld Sign and Advertising Corporation (Adworld) for damages.
The Facts
The instant case arose from a complaint for damages filed by Adworld against Transworld and
Comark International Corporation (Comark) before the RTC. In the complaint, Adworld alleged that
5
it is the owner of a 75 ft. x 60 ft. billboard structure located at EDSA Tulay, Guadalupe, Barangka
Mandaluyong, which was misaligned and its foundation impaired when, on August 11, 2003, the
adjacent billboard structure owned by Transworld and used by Comark collapsed and crashed
against it. Resultantly, on August 19, 2003, Adworld sent Transworld and Comark a letter
demanding payment for the repairs of its billboard as well asloss of rental income. On August 29,
2003, Transworld sent its reply, admitting the damage caused by its billboard structure on Adworld’s
billboard, but nevertheless, refused and failed to pay the amounts demanded by Adworld. As
Adworld’s final demand letter also went unheeded, it was constrained to file the instant complaint,
praying for damages in the aggregate amount of ₱474,204.00, comprised of ₱281,204.00 for
materials, ₱72,000.00 for labor, and ₱121,000.00 for indemnity for loss of income. 6
In its Answer with Counterclaim, Transworld averred that the collapse of its billboard structure was
due to extraordinarily strong winds that occurred instantly and unexpectedly, and maintained that the
damage caused to Adworld’s billboard structure was hardly noticeable. Transworld likewise filed a
Third-Party Complaint against Ruks, the company which built the collapsed billboard structure in the
former’s favor. It was alleged therein that the structure constructed by Ruks had a weak and poor
1âwphi1
foundation not suited for billboards, thus, prone to collapse, and as such, Ruks should ultimately be
held liable for the damages caused to Adworld’s billboard structure. 7
For its part, Comark denied liability for the damages caused to Adworld’s billboard structure,
maintaining that it does not have any interest on Transworld’s collapsed billboard structure as it only
contracted the use of the same. In this relation, Comark prayed for exemplary damages from
Transworld for unreasonably includingit as a party-defendant in the complaint. 8
Lastly, Ruks admitted that it entered into a contract with Transworld for the construction of the
latter’s billboard structure, but denied liability for the damages caused by its collapse. It contended
that when Transworld hired its services, there was already an existing foundation for the billboard
and that it merely finished the structure according to the terms and conditions of its contract with the
latter.
9
The RTC Ruling
In a Decision dated August 25, 2009, the RTC ultimately ruled in Adworld’s favor, and accordingly,
10
declared, inter alia, Transworld and Ruks jointly and severally liable to Adworld in the amount of
₱474,204.00 as actual damages, with legal interest from the date of the filing of the complaint until
full payment thereof, plus attorney’s fees in the amount of ₱50,000.00. The RTC found both
11
Transworld and Ruks negligent in the construction of the collapsed billboard as they knew that the
foundation supporting the same was weak and would pose danger to the safety of the motorists and
the other adjacent properties, such as Adworld’s billboard, and yet, they did not do anything to
remedy the situation. In particular, the RTC explained that Transworld was made aware by Ruks
12
that the initial construction of the lower structure of its billboard did not have the proper foundation
and would require additional columns and pedestals to support the structure. Notwithstanding,
however, Ruks proceeded with the construction of the billboard’s upper structure and merely
assumed that Transworld would reinforce its lower structure. The RTC then concluded that these
13
negligent acts were the direct and proximate cause of the damages suffered by Adworld’s billboard. 14
Aggrieved, both Transworld and Ruks appealed to the CA. In a Resolution dated February 3, 2011,
the CA dismissed Transworld’s appeal for its failure to file an appellant’s brief on time. Transworld
15
elevated its case before the Court, docketed as G.R. No. 197601. However, in a Resolution dated
16 17
November 23, 2011, the Court declared the case closed and terminated for failure of Transworld to
file the intended petition for review on certiorariwithin the extended reglementary period.
Subsequently, the Court issued an Entry of Judgment dated February 22, 2012 in G.R. No. 197601
18
declaring the Court’s November 23, 2011 Resolution final and executory.
The CA Ruling
In a Decision dated November 16, 2011, the CA denied Ruks’s appeal and affirmed the ruling of the
19
RTC. It adhered to the RTC’s finding of negligence on the part of Transworld and Ruks which
brought about the damage to Adworld’s billboard. It found that Transworld failed to ensure that Ruks
will comply with the approved plans and specifications of the structure, and that Ruks continued to
install and finish the billboard structure despite the knowledge that there were no adequate columns
to support the same. 20
Dissatisfied, Ruks moved for reconsideration, which was, however, denied in a Resolution dated
21 22
December 10, 2012,hence, this petition.

On the other hand, Transworld filed another appeal before the Court, docketed as G.R. No.
205120. However, the Court denied outright Transworld’s petition in a Resolution dated April 15,
23 24
2013, holding that the same was already bound by the dismissal of its petition filed in G.R. No.
197601.
The primordial issue for the Court’s resolution is whether or not the CA correctly affirmed the ruling
of the RTC declaring Ruks jointly and severally liable with Transworld for damages sustained by
Adworld.
The Court’s Ruling
At the outset, it must be stressed that factual findings of the RTC, when affirmed by the CA, are
entitled to great weight by the Court and are deemed final and conclusive when supported by the
evidence on record. Absent any exceptions to this rule – such as when it is established that the trial
25
court ignored, overlooked, misconstrued, or misinterpreted cogent facts and circumstances that, if
considered, would change the outcome of the case – such findings must stand.
26
After a judicious perusal of the records, the Court sees no cogent reason to deviate from the findings
of the RTC and the CA and their uniform conclusion that both Transworld and Ruks committed acts
resulting in the collapse of the former’s billboard, which in turn, caused damage to the adjacent
billboard of Adworld.
Jurisprudence defines negligence as the omission to do something which a reasonable man, guided
by those considerations which ordinarily regulate the conduct of human affairs, would do, or the
doing of something which a prudent and reasonable man would not do. It is the failure to observe
27
for the protection of the interest of another person that degree of care, precaution, and vigilance
which the circumstances justly demand, whereby such other person suffers injury. 28
In this case, the CA correctly affirmed the RTC’s finding that Transworld’s initial construction of its
billboard’s lower structure without the proper foundation, and that of Ruks’s finishing its upper
structure and just merely assuming that Transworld would reinforce the weak foundation are the two
(2) successive acts which were the direct and proximate cause of the damages sustained by
Adworld. Worse, both Transworld and Ruks were fully aware that the foundation for the former’s
billboard was weak; yet, neither of them took any positive step to reinforce the same. They merely
relied on each other’s word that repairs would be done to such foundation, but none was done at all.
Clearly, the foregoing circumstances show that both Transworld and Ruks are guilty of negligence in
the construction of the former’s billboard, and perforce, should be held liable for its collapse and the
resulting damage to Adworld’s billboard structure. As joint tortfeasors, therefore, they are solidarily
liable to Adworld. Verily, "[j]oint tortfeasors are those who command, instigate, promote, encourage,
advise, countenance, cooperate in, aid or abet the commission of a tort, or approve of it after it is
done, if done for their benefit. They are also referred to as those who act together in committing
wrong or whose acts, if independent of each other, unite in causing a single injury. Under Article
2194 of the Civil Code, joint tortfeasors are solidarily liable for the resulting damage. In other words,
29
joint tortfeasors are each liable as principals, to the same extent and in the same manner as if they
had performed the wrongful act themselves." The Court’s pronouncement in People v. Velasco is
30 31
instructive on this matter, to wit:

32
Where several causes producing an injury are concurrent and each is an efficient cause without
which the injury would not have happened, the injury may be attributed to all or any of the causes
and recovery may be had against any or all of the responsible persons although under the
circumstances of the case, it may appear that one of them was more culpable, and that the duty
owed by them to the injured person was not same. No actor's negligence ceases to be a proximate
cause merely because it does not exceed the negligence of other actors. Each wrongdoer is
responsible for the entire result and is liable as though his acts were the sole cause of the injury.
There is no contribution between joint [tortfeasors] whose liability is solidary since both of them are
liable for the total damage. Where the concurrent or successive negligent acts or omissions of two
1âwphi1
or more persons, although acting independently, are in combination the direct and proximate cause
of a single injury to a third person, it is impossible to determine in what proportion each contributed
to the injury and either of them is responsible for the whole injury. x x x. (Emphases and
In conclusion, the CA correctly affirmed the ruling of the RTC declaring Ruks jointly and severally
liable with Transworld for damages sustained by Adworld.
WHEREFORE, the petition is DENIED. The Decision dated November 16, 2011 and the Resolution
dated December 10, 2012 of the Court of Appeals in CA-G.R. CV No. 94693 are hereby AFFIRMED.
SO ORDERED.
Associate Justice
WE CONCUR:

Chief Justice
Chairperson

JOSE PORTUGAL PEREZ

Associate Justice
CERTIFICATION

Chief Justice
Footnotes
* "Adworld Signs and Advertising Corporation" in some parts of the records.
1
Rollo (G.R. No. 204866), pp. 11-55.
Id. at 73-87. Penned by Associate Justice Juan Q. Enriquez, Jr. with Associate Justices
2
Apolinario D. Bruselas, Jr. and Manuel M. Barrios, concurring.
Id. at 59-61. Penned by Associate Justice Apolinario D. Bruselas, Jr. with Associate
3
Justices Noel G. Tijam and Ricardo R. Rosario, concurring.
4
Id. at 97-109. Penned by Presiding Judge Dina Pestano Teves.
5
Id. at 97.
6
See id. at 74-76.
7
Id. at 76-77.
8
Id. at 77.
9
Id.
10
Id. at 97-109.
11
Id. at 109.
12
Id. at 105-106.
13
Id. at 104.
14
Id. at 106.
15
Id. at 78.
16
Entitled "Transworld Media Ads, Inc. v. Adworld Sign and Advertising Corporation, et al."
17
Rollo (G.R. No. 197601), p. 7.
18
Id. at 11.
19
Rollo (G.R. No. 204866), pp. 73-87.
20
Id. at 85.
21
See Motion for Reconsideration dated December 8, 2011; id. at 63-71.
22
Id. at 59-61.
23
Entitled "Transworld Media Ads, Inc. v. Adworld Signs and Advertising Corp."
Rollo (G.R. No. 205120), p. 164.
24
See Guevarra v. People, G.R. No. 170462, February 5, 2014, citing Maxwell Heavy
25
Equipment Corporation v. Yu, G.R. No. 179395, December 15, 2010, 638 SCRA 653, 658.
People v. Anod, 613 Phil. 565, 572 (2009).

26
Bank of the Philippine Islands v. Lifetime Marketing Corporation, 578 Phil. 354, 362 (2008),
27
citing Philippine Bank of Commerce v. CA, 336 Phil. 667, 676 (1997).
Garcia, Jr. v. Salvador, 547 Phil. 463, 470 (2007), citing Child Learning Center, Inc. v.
28
Tagorio, 512 Phil. 618, 623-624 (2005).
Article 2194 of the Civil Code reads:

29
Art. 2194. The responsibility of two or more persons who are liable for a quasi-delict
is solidary.
See People v. Velasco, G.R. No. 195668, June 25, 2014, citations omitted.
30
Id.
31
See id., citing Far Eastern Shipping Company v. CA, 357 Phil. 703, 751 (1998).
32
October 21, 2015
G.R. No. 194159
PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, Petitioner

vs.
MA. MERCEDITAS NAVARRO-GUTIERREZ (as then Ombudsman), DON M. FERRY, JOSE R.
TENGCO, JR., ROLANDO M. ZOSA, CESAR C. ZALAMEA, OFELIA I. CASTELL, and RAFAEL
A. SISON, Public Respondents,
RODOLFO M. CUENCA, MANUEL I. TINIO, and ANTONIO R. ROQUE, Private Respondent.
DECISION
PERLAS-BERNABE, J.:
Before the Court is a petition for certiorari assailing the Resolution dated May 30, 2007 and the
1 2
Order dated April 13, 2009 of the Office of the Ombudsman (Ombudsman) in OMB-C-C-03-0500-I,
3
which dismissed the affidavit-complaint of petitioner Presidential Commission on Good Government
4
(PCGG) charging individual respondents Don M. Ferry (Ferry), Jose R. Tengco, Jr. (Tengco),
Rolando M. Zosa (Zosa), Cesar C. Zalamea (Zalamea), Ofelia I. Castell (Castell), Rafael A. Sison
(Sison), Rodolfo M. Cuenca (Cuenca), Manuel I. Tinio (Tinio), and Antonio R. Roque (Roque) for
allegedly violating Sections 3 (e) and (g) of Republic Act No. (RA) 3019, for lack of probable cause.
5
The Facts
The instant case arose from an Affidavit-Complaint dated July 15, 2003 filed by the PCGG – through
6
Rene B. Gorospe, the Legal Consultant in-charge of reviewing behest loan cases – against former
officers/directors of the Development Bank of the Philippines (DBP), namely, Ferry, Tengco, Zosa,
Zalamea, Castell, and Sison, as well as former officers/stockholders of National Galleon Shipping
Corporation (Galleon), namely, Cuenca, Tinio, and Roque charging them of violating Sections 3 (e)
7
and (g) of RA 3019. In the Affidavit-Complaint, the PCGG alleged that on October 8, 1992, then
President Fidel V. Ramos (President Ramos) issued Administrative Order No. 13, creating the
8
Presidential Ad Hoc Fact-Finding Committee on Behest Loans (Ad Hoc Committee) in order to
identify various anomalous behest loans entered into by the Philippine Government in the past. Later
on, President Ramos issued Memorandum Order No. 61 on November 9, 1992, laying down the
9
criteria which the Ad Hoc Committee may use as a frame of reference in determining whether or not
a loan is behest in nature. Thereafter, the Ad Hoc Committee, with the assistance of a Technical
Working Group (TWG) consisting of officers and employees of different government financial
institutions (GFIs), examined and studied documents relative to loan accounts extended by GFIs to
various corporations during the regime of the late President Ferdinand E. Marcos (President Marcos)
- one of which is the loan account granted by the DBP to Galleon. 10
After examining the aforesaid loan account, the TWG found, inter alia, that: (a) on September 19,
1979, DBP, pursuant to its Board Resolution No. 3002, approved guarantees in favor of Galleon in
11
the aggregate amount of US$90,280,000.00 for the purpose of securing foreign currency borrowings
from financial institutions related to Galleon’s acquisition of five (5) brand new and two (2)
secondhand vessels; (b) Board Resolution No. 3002 specifically stated that such accommodation
12
"shall be undertaken at the behest of the Philippine Government;" (c) as a condition for the grant of
13
the guarantees, Board Resolution No. 3002 required Galleon to raise its paid up capital to ₱98.963
Million by 1981, but Galleon was only able to raise its capital to ₱46,740.755.00; (d) despite
14 15
Galleon’s failure to comply with such condition, DBP still granted the guarantees; (e) as of June 30,
1981, Galleon’s arrearages had already amounted to ₱40,684,059.37, while the aggregate DBP
obligations of Galleon already totaled ₱691,058,027.92; (f) despite the outstanding debts, DBP still
16
issued Board Resolution Nos. 4008 and 3001, approving further accommodations in Galleon’s
17 18
favor in the form of one-year foreign currency loans to refinance the latter’s arrearages, which
amounted to ₱58,101,718.89 as of September 30, 1982; (g) despite Galleon’s arrearages
19
amounting to ₱128,182,654.38 and obligations accumulating to ₱904,277,536.96, DBP still

approved the release of Galleon’s two (2) secondhand vessels as collaterals resulting in collateral
deficiency; and (h) as of March 31, 1984, Galleon’s total obligations to DBP amounted to
20
₱2,039,284,390.85, while the value of its collaterals was only ₱539,000,000.00. These findings
21
were then collated in an Executive Summary which was submitted to the Ad Hoc Committee.
22
Based on the foregoing, the Ad Hoc Committee concluded that the loans/accommodations obtained
by Galleon from DBP possessed positive characteristics of behest loans, considering that: (a)
Galleon was undercapitalized; (b) the loan itself was undercollateralized; (c) the major stockholders
of Galleon were known to be cronies of President Marcos; and (d) certain documents pertaining to
the loan account were found to bear "marginal notes" of President Marcos himself. Resultantly, the
23
PCGG filed the instant criminal complaint against individual respondents, docketed as OMB-C-C-03-
0500-I.
Except for Roque, Zalamea, Tengco, and Castell, the other individual respondents impleaded in the
affidavit-complaint did not file their respective counter-affidavits despite due notice. 24
In his defense, Roque denied being a Marcos crony, and averred that he was only a minor
25
shareholder of Galleon and that he was in no position to influence the DBP in extending the subject
loan to Galleon. For his part, Zalamea maintained that he had no participation or hand in the
26 27
subject loan transactions as he joined the DBP as Chairman only in 1982, while the execution of the
transactions pertaining to such loan was done in 1979-1981, and that the criminal charges against
them are barred by prescription since it had been more than 20 years before the complaint against
them was filed on July 15, 2003. Similarly, Tengco also argued that the criminal charges against
28 29
them had already prescribed. He also contended that his participation in the approval of the subject
loan was at the board level only and was done in the exercise of his sound business judgment
through the collective act of the DBP Board of Directors. Finally, Castell pleaded that her role in
30 31
the handling of the projects and transactions of Galleon involved only the supervision of employees,
but with no approving authority for matters like those involving the transactions pertaining to the
subject loan obtained by Galleon from DBP. 32
The Ombudsman Ruling
In a Resolution dated May 30, 2007, the Ombudsman found no probable cause against private
33
respondents and, accordingly, dismissed the criminal complaint against them. It found that the
34
pieces of evidence attached to the case records were not sufficient to establish probable cause
against the individual respondents, considering that the documents presented by the PCGG
consisted mostly of executive summaries and technical reports, which are hearsay, self-serving, and
of little probative value. In this relation, the Ombudsman noted that the PCGG failed to present "the
35
documents which would directly establish the alleged illegal transactions like, the Loan Agreement
between DBP and [Galleon], the approved Board Resolutions by the DBP officers/board of directors,
the participation/voting that transpired at the board meetings wherein the alleged behest loans were
granted."36
Aggrieved, the PCGG moved for reconsideration, which was, however, denied in an Order dated
37 38
April 13, 2009; hence, this petition. 39
The issue raised for the Court’s resolution is whether or not the OMB gravely abused its discretion in
finding no probable cause to indict respondents of violating Sections 3 (e) and (g) of RA 3019.
At the outset, it must be stressed that the Court has consistently refrained from interfering with the
discretion of the Ombudsman to determine the existence of probable cause and to decide whether
or not an Information should be filed. Nonetheless, the Court is not precluded from reviewing the
Ombudsman’s action when there is a charge of grave abuse of discretion. Grave abuse of discretion
implies a capricious and whimsical exercise of judgment tantamount to lack of jurisdiction. The
40
Ombudsman’s exercise of power must have been done in an arbitrary or despotic manner which
must be so patent and gross as to amount to an evasion of a positive duty or a virtual refusal to
perform the duty enjoined or to act at all in contemplation of law. The Court’s pronouncement
41
in Ciron v. Gutierrez is instructive on this matter, to wit:

42
x x x this Court’s consistent policy has been to maintain noninterference in the determination
of the Ombudsman of the existence of probable cause, provided there is no grave abuse in
the exercise of such discretion. This observed policy is based not only on respect for the
investigatory and prosecutory powers granted by the Constitution to the Office of the
Ombudsman but upon practicality as well. Otherwise, the functions of the Court will be seriously
hampered by innumerable petitions assailing the dismissal of investigatory proceedings conducted
by the Office of the Ombudsman with regard to complaints filed before it, in much the same way that
the courts would be extremely swamped with cases if they could be compelled to review the
exercise of discretion on the part of the fiscals or prosecuting attorneys each time they decide to file
an information in court or dismiss a complaint by a private complainant. (Emphasis and
43
underscoring in the original)
In this regard, it is worthy to note that the conduct of preliminary investigation proceedings – whether
by the Ombudsman or by a public prosecutor – is geared only to determine whether or not probable
cause exists to hold an accused-respondent for trial for the supposed crime that he committed. In
Fenequito v. Vergara, Jr., the Court defined probable cause
44
and the parameters in finding the existence thereof in the following manner,
to wit:
Probable cause, for the purpose of filing a criminal information, has been defined as such facts as
are sufficient to engender a wellfounded belief that a crime has been committed and that
respondent is probably guilty thereof. The term does not mean "actual or positive cause" nor
does it import absolute certainty. It is merely based on opinion and reasonable belief. Probable
cause does not require an inquiry whether there is sufficient evidence to procure a
conviction. It is enough that it is believed that the act or omission complained of constitutes
the offense charged.
A finding of probable cause needs only to rest on evidence showing that, more likely than not, a
crime has been committed by the suspects. It need not be based on clear and convincing
evidence of guilt, not on evidence establishing guilt beyond reasonable doubt, and definitely
not on evidence establishing absolute certainty of guilt. In determining probable cause, the
average man weighs facts and circumstances without resorting to the calibrations of the rules of
evidence of which he has no technical knowledge. He relies on common sense. What is
determined is whether there is sufficient ground to engender a well-founded belief that a
crime has been committed, and that the accused is probably guilty thereof and should be
held for trial. It does not require an inquiry as to whether there is sufficient evidence to
secure a conviction. (Emphases and underscoring supplied)
45
Verily, preliminary investigation is merely an inquisitorial mode of discovering whether or not there is
reasonable basis to believe that a crime has been committed and that the person charged should be
held responsible for it. Being merely based on opinion and belief, a finding of probable cause does
not require an inquiry as to whether there is sufficient evidence to secure a conviction. "[A
46
preliminary investigation] is not the occasion for the full and exhaustive display of [the prosecution’s]
evidence. The presence and absence of the elements of the crime is evidentiary in nature and is a
matter of defense that may be passed upon after a full-blown trial on the merits." Hence, "the validity
47
and merits of a party’s defense or accusation, as well as the admissibility of testimonies and
evidence, are better ventilated during trial proper than at the preliminary investigation level."48
Guided by the foregoing considerations, the Court finds that the Ombudsman gravely abused its
discretion in dismissing the criminal complaint against individual respondents for lack of probable
cause, as will be explained hereunder.
As already stated, individual respondents were accused of violating Section 3 (e) of RA 3019, the
elements of which are as follows: (a) that the accused must be a public officer discharging
administrative, judicial, or official functions (or a private individual acting in conspiracy with such
public officers); (b) that he acted with manifest partiality, evident bad faith, or inexcusable
negligence; and (c) that his action caused any undue injury to any party, including the government,
or giving any private party unwarranted benefits, advantage, or preference in the discharge of his
functions. In the same vein, they were likewise charged with violation of Section 3 (g) of the same
49
law, which has the following elements: (a) that the accused is a public officer; (b) that he entered into
a contract or transaction on behalf of the government; and (c) that such contract or transaction is
grossly and manifestly disadvantageous to the government. Notably, private individuals may also
50
be charged with violation of Section 3 (g) of RA 3019 if they conspired with public officers. 51
A review of the records of the case reveals that Galleon made a request for guarantees from DBP to
cover its foreign borrowings for the purpose of acquiring new and secondhand vessels. In an
evaluation memorandum dated August 27, 1979, the DBP itself already raised various red flags
52
regarding Galleon’s request, such as the following: (a) its guarantee accommodation request covers
100% of its project cost, which is in excess of DBP’s normal practice of financing only 80% of such
cost; (b) its net profit margin was experiencing a steady decrease due to high operating costs; (c) its
paid-up capital is only ₱9.95 Million; and (d) aside from its proposal to source the increase in equity
from the expected profits from the operations of the vessels to be acquired, Galleon has not shown
any concrete proof on how it will be funding its equity build-up. Despite the foregoing, DBP still
53
agreed to grant Galleon’s request under certain conditions (e.g., increase in paid-up capital,
placement of adequate collaterals), which were eventually not complied with. Further, when
Galleon’s arrearages and obligations skyrocketed due to its failure to service its debts, DBP, instead
of securing its interest by demanding immediate payment or the foreclosure of the collaterals,
granted Galleon further accommodations in the form of foreign currency loans and release of certain
collaterals. As a result of the foregoing, among other things, Galleon’s total obligations to DBP
ballooned all the way to ₱2,039,284,390.85, while the collaterals securing such obligations were only
valued at ₱539,000,000.00 as of March 31, 1984. Further, Galleon’s paid-up capital remained only
54
at ₱46,740,755.00 as of June 30, 1981. 55
In light of the foregoing considerations, the Ad Hoc Committee concluded that the accommodations
extended by DBP to Galleon were in the nature of behest loans, which then led to the filing of
criminal cases against individual respondents, who were high-ranking officers and/or directors of
either Galleon or DBP, as evidenced by the various documents on record. Specifically, Cuenca,
Tinio, and Roque were Galleon stockholders and were its President, Executive Vice-President and
Treasurer, and Corporate Secretary, respectively. On the other hand, the following individual
56
respondents exercised official functions for the DBP during the time it extended Galleon the
aforesaid accommodations: (a) Ferry as DBP Vice Chairman and Acting Chairman; (b) Tengco as
57
DBP Board Member, Supervising Governor, and Acting Chairman; (c) Zosa as DBP Supervising
58
Governor and Chairman of the Loan Committee; (d) Zalamea as DBP Chairman; (e) Castell as
59 60
DBP Executive Officer and Manager of the Industrial Projects Development III; and (f) Sison as
61
DBP Board Member and Acting Chairman. As may be gleaned from the documents on record, it
62
appears that each of these high-ranking officers and/or directors of DBP had a hand in
recommending the approval and/or the actual approval of the series of accommodations that DBP
granted in favor of Galleon, which constituted the behest loans received by the latter during the
regime of the late President Marcos.
In view of the accusations that they were involved in the grant of behest loans, Roque, Zalamea,
Tengco, and Castell merely denied liability by maintaining that they had no participation in such
grant. Suffice it to say that these are matters of defense that are better ventilated during the trial
proper. On the other hand, Ferry, Zosa, Cuenca, Tinio, and Sison miserably failed to debunk the
charges against them by not filing their respective counter-affidavits despite due notice. Indubitably,
the foregoing establishes probable cause to believe that individual respondents may have indeed
committed acts constituting the crimes charged against them, and as such they must defend
themselves in a full-blown trial on the merits.
Finally, it was error for the Ombudsman to simply discredit the TWG’s findings contained in the
Executive Summary which were adopted by the Ad Hoc Committee for being hearsay, self-serving,
and of little probative value. It is noteworthy to point out that owing to the initiatory nature of
preliminary investigations, the technical rules of evidence should not be applied in the course of its
proceedings. In the recent case of Estrada v. Ombudsman, the Court declared that hearsay
63 64
evidence is admissible in determining probable cause in preliminary investigations because such

investigation is merely preliminary, and does not finally adjudicate rights and obligations of parties.
Citing a case decided by the Supreme Court of the United States, it was held that probable cause
can be established with hearsay evidence, as long as there is substantial basis for crediting the
hearsay, viz.:
Justice Brion’s pronouncement in Unilever that "the determination of probable cause does not
depend on the validity or merits of a party’s accusation or defense or on the admissibility or veracity
of testimonies presented" correctly recognizes the doctrine in the United States that the
determination of probable cause can rest partially, or even entirely, on hearsay evidence, as long as
the person making the hearsay statement is credible. In United States v. Ventresca, the United
States Supreme Court held:
While a warrant may issue only upon a finding of "probable cause," this Court has long held that "the
term ‘probable cause’ . . . means less than evidence which would justify condemnation," x x x and
that a finding of "probable cause" may rest upon evidence which is not legally competent in a
criminal trial. x x x As the Court stated in Brinegar v. United States x x x, "There is a large difference
between two things to be proved (guilt and probable cause), as well as between the tribunals which
determine them, and therefore a like difference in the quanta and modes of proof required to
establish them." Thus, hearsay may be the bases for issuance of the warrant "so long as there
… [is] a substantial basis for crediting the hearsay." x x x And, in Aguilar, we recognized that "an
affidavit may be based on hearsay information and need not reflect the direct personal
observations of the affiant," so long as the magistrate is "informed of some of the underlying
circumstances" supporting the affiant’s conclusions and his belief that any informant
involved "whose identity need not be disclosed…" was "credible" or his information
"reliable." x x x.
Thus, probable cause can be established with hearsay evidence, as long as there is

substantial basis for crediting the hearsay. Hearsay evidence is admissible in determining
1âwphi1
probable cause in a preliminary investigation because such investigation is merely

preliminary, and does not finally adjudicate rights and obligations of parties. x x
x. (Emphases and underscoring supplied)
65
In this case, assuming arguendo that the factual findings contained in the Executive Summary
prepared by the TWG from which the Ad Hoc Committee based its conclusions are indeed hearsay,
self-serving, and of little probative value, there is nevertheless substantial basis to credit the same,
as such factual findings appear to be based on official documents prepared by DBP itself in
connection with the behest loans it allegedly extended in favor of Galleon. In this regard, it must be
emphasized that in determining the elements of the crime charged for purposes of arriving at a
finding of probable cause, only facts sufficient to support a prima facie case against the respondents
are required, not absolute certainty. Probable cause implies mere probability of guilt, i.e., a finding
based on more than bare suspicion, but less than evidence that would justify a conviction. To66
reiterate, the validity of the merits of a party's defense or accusations and the admissibility of
testimonies and evidences are better ventilated during the trial stage than in the preliminary stage. 67
In sum, the Court is convinced that there is probable cause to indict individual respondents of
violating Sections 3 (e) and (g) of RA 3019. Hence, the Ombudsman committed grave abuse of
discretion amounting to lack or excess of jurisdiction in dismissing the criminal complaint against
them.
WHEREFORE, the petition is GRANTED. The Resolution dated May 30, 2007 and the Order dated
April 13, 2009 of the Office of the Ombudsman in OMB-C-C-03-0500-I are
hereby REVERSED and SET ASIDE. Accordingly, the Office of the Ombudsman is DIRECTED to
issue the proper resolution indicting individual respondents Don M. Ferry, Jose R. Tengco, Jr.,
Rolando M. Zosa, Cesar C. Zalamea, Ofelia I. Castell, Rafael A. Sison, Rodolfo M. Cuenca, Manuel
I. Tinio, and Antonio R. Roque of violating Sections 3 (e) and (g) of Republic Act No. 3019, in
accordance with this Decision.
SO ORDERED.
Associate Justice
WE CONCUR:

Chief Justice
Chairperson
PRESBITERO J. VELASCO, JR. TERESITA J. LEONARDO-DE CASTRO

LUCAS P. BERSAMIN
Associate Justice
CERTIFICATION
Pursuant to the Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation,
I certify that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court’s Division.

Chief Justice
Footnotes
*
Designated Acting Member per Special Order No. 2253 dated October 14, 2015.
1
Rollo, Vol. I, pp. 3-57.
Id. at 64-92. Penned by Graft Investigation and Prosecution Officer II Rolando B Zoleta and
2
approved by herein respondent then Ombudsman Ma. Merceditas N. Gutierrez.

Id. at 93-97. Penned by Graft Investigation and Prosecution Officer I Ruth Laura A. Mella
3
and approved by Overall Deputy Ombudsman Orlando C. Casimiro.
4
Id. at 142-158.
5
Entitled "ANTI-GRAFT AND CORRUPT PRACTICES ACT," approved on August 17, 1960.
6
7
Formerly known as "Galleon Shipping Corporation."
Entitled "CREATING A PRESIDENTIAL AD HOC FACT-FINDING COMMITTEE ON

8
BEHEST LOANS"; rollo, Vol. I, pp. 159-160.
9
Section 1 of Memorandum Order No. 61, entitled "BROADENING THE SCOPE OF THE AD
HOC FACT FINDING COMMITTEE ON BEHEST LOANS CREATED PURSUANT TO
ADMINISTRATIVE ORDER NO. 13, DATED 8 OCTOBER 1992," provides the following
criteria which may be utilized as a frame of reference in determining a behest loan: (a) the
loan is undercollaterized; (b) the borrower corporation is undercapitalized; (c) direct or
indirect endorsement by high government officials like presence of marginal notes; (d)
stockholders, officers or agents of the borrower corporation are identified as cronies; (e)
deviation of use of loan proceeds from the purpose intended; (f) use of corporate layering;
(g) non-feasibility of the project for which financing is being sought; and (h) extra-ordinary
speed in which the loan release was made. See id. at 161-162.
10
See id. at 142-144.
11
Id. at 281-289. See also id. at 102-141.
12
Id. at 146-147 and 281.
13
Id. at 283 and104.
14
Id. at 131.
15
Id. at 150.
16
Id. at 150-151.
17
Id. at 368-370.
18
Id. at 371-372.
19
Id. at 151-152.
20
Id. at 152-153.
21
Id. at 155.
22
Id. at 191-201.
Id. at 155. See also Fourteenth (14th) Report of Presidential Ad Hoc Fact-Finding
23
Committee on "Behest" Loans dated July 15, 1993; id. at 202-221.
Id. at 82 and 86.

24
See Counter-Affidavit dated October 8, 2003; id. at 464-467.

25
See id. at 82-83.

26
See Comment (in lieu of Counter-Affidavit) dated November 15, 2003; id. at 486-490.
27
Id. at 84.
28
See Counter-Affidavit dated December 11, 2003; id. at 468-485.

29
Id. at 85.
30
See Counter-Affidavit dated December 3, 2003; id. at 491-506.

31
Id. at 86.
32
Id. at 64-92.
33
Id. at 91.
34
Id. at 86-87.
35
Id. at 87-88.
36
See Motion for Reconsideration dated November 18, 2008; id. at 98-101.
37
Id. at 93-97.
38
Likewise impleading then Ombudsman Ma. Merceditas Navarro-Gutierrez as respondent;

39
id. at 3 and 6.
See Ciron v. Gutierrez, G.R. Nos. 194339-41, April 20, 2015.

40
See id., citing Soriano v. Marcelo, 610 Phil. 72, 79 (2009).

41
See id.
42
See id., citing Tetangco v. Ombudsman, 515 Phil. 230, 234-235 (2006).

43
G.R. No. 172829, July 18, 2012, 677 SCRA 113.

44
Id. at 121, citing Reyes v. Pearlbank Securities, Inc., 582 Phil. 505, 518-519 (2008).
45
See Clay & Feather International, Inc. v. Lichaytoo, 664 Phil. 764, 771 (2011).
46
Lee v. KBC Bank N.V., 624 Phil. 115, 126 (2010), citing Andres v. Cuevas, 499 Phil. 36,
47
49-50 (2005).
Id. at 126-127.
48
See Ciron v. Gutierrez, supra note 40, citations omitted.

49
Go v. The Fifth Division, Sandiganbayan, 549 Phil. 783, 809 (2007), citations omitted.
50
See id. at 800-801, citing Singian, Jr. v. Sandiganbayan, 514 Phil. 536 (2005).
51

52
See id. at 148.

53
Id. at 155.
54
Id. at 150.
55
Id. at 109, 112, 145, 191, and 355.

56
Id. at 398, 402, and 421.

57
Id. at 85,294, 402, and 469.

58
Id. at 391 and 458.

59
Id. at 391, 458, and 487.

60
Id. at 86, 294, 390, and 430.

61
Id. at 141.
62
De Chavez v. Ombudsman, 543 Phil. 600, 620 (2007).

63
See G.R. Nos. 212140-41, January 21, 2015.

64
See id., citing United States v. Ventresca, 380 U.S. 102, 107-108 (1965).
65
Shu v. Dee, G.R. No. 182573, April 23, 2014, 723 SCRA 512, 523.
66
De Chavez v. Ombudsman, supra note 63.

67
September 9, 2015
G.R. No. 194906
LORALEI P. HALILI, Petitioner,
vs.
JUSTICE FOR CHILDREN INTERNATIONAL, ROB MORRIS, and GUNDELINA A.
VELAZCO, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari is the Decision dated December 23, 2010 of the
1 2
Court of Appeals (CA) in CA-G.R. SP No. 107209, which reversed the Decision dated July 30, 2008
3
and the Resolution dated November 25, 2008 of the National Labor Relations Commission (NLRC)
4
in NLRC LAC Case No. 12-003358-07, and thereby found petitioner Loralei P. Halili (Halili) to have
been validly dismissed by respondent Justice For Children International (JFCI).
The Facts
JFCI is an international non-governmental organization whose primary thrust is to provide aftercare

to sexually trafficked children. On April 18, 2006, it hired Halili as its Consultant Program
5
Coordinator, with the following duties and responsibilities, among others: (a) to take charge of JFCI's
daily operations, especially the training sessions, conferences, meetings, and other activities of the
aftercare program; (b) to coordinate with partners regarding the logistical and essential needs of the
program; and ( c) to perform the necessary functions in relation to the program as may be assigned
by the Director for Aftercare or the President. 6
Respondents Gundelina A. Velazco (Velazco) and Rob Morris (Morris), in their respective capacities
as Director and President, executed an employment contract with Halili for a term of one (1) year,
7
with the condition that either party may terminate the same "at anytime by giving four [( 4)] weeks
written notice" (termination clause ).
8
On July 13, 2006, JFCI enforced the termination clause by informing Halili that they are terminating
9
her services as Consultant Program Coordinator, effective August 16, 2006. Claiming that she was
10
illegally dismissed, Halili filed a complaint against JFCI, Velazco and Morris (respondents) before
11
the NLRC, docketed as NLRC-NCR-00-08-07048-06.
In her Position Paper dated November 8, 2006, Halili contended that while the right to pre-terminate
12
her employment was expressly stipulated in the contract, the arbitrary manner in which it was
exercised by JFCI was in clear violation of the doctrine of abuse of rights. Halili likewise averred
13
that in her termination, JFCI failed to observe the twin requirements of due process, hence, her
dismissal was illegal. 14
In opposition, respondents maintained that: (a) they could not have illegally dismissed Halili in the
15
absence of an employer-employee relationship between them; and ( b) even on the assumption

16
that Halili was its employee, there was no illegal dismissal considering that her employment was for
a term that lapsed when she was given a notice of termination. 17
The Labor Arbiter's Ruling

In a Decision dated September 28, 2007, the Labor Arbiter (LA) ordered respondents to jointly and
18
severally pay Halili the total of US$9,225.00, representing her unpaid salaries for the remaining
portion of her contract, to be paid in Philippine currency at the exchange rate prevailing at the time of
payment. 19
Dissatisfied, respondents filed their appeai before the NLRC.

22
The NLRC Ruling
In a Decision dated July 30, 2008, the NLRC affirmed the LA's ruling in toto. It also found that
23
Halili's consent was vitiated when JFCI led her to believe that the termination clause was a standard
item to conform to the format of JFCI contracts. lt further held that JFCI cannot simply rely on the
24
tennination clause in dismissing Halili, but instead on a valid cause and with observance of
procedural due process. Moreover, the NLRC debunked respondents' new theory that Halili was
25
terminated for loss of trust and confidence for having been raised for the first time on appeal. 26
Unperturbed, respondents moved for reconsideration which the NLRC denied in a

27
Resolution dated November 25, 2008, prompting the filing of a petition for certiorari before the CA.
28 29
The CA Ruling
In a Decision dated December 23, 2010, the CA reversed the NLRC ruling, attributing to it grave
30
abuse of discretion in affirming the illegality of Halili's dismissal.

31
It observed that while there was an initial apprehension on the part of Halili with respect to the terms
of her employment contract, she nonetheless voluntarily gave her consent thereto and signed the
same. As such, the contract has the force of law and the stipulations contained therein must be
observed. Consequently, the termination clause, among others, was validly enforced by JFCI. 32
At odds with the CA's ruling, Halili seeks its reversal through the present petition.
The primary issue in this case is whether or not the CA erred in granting respondents' petition
for certiorari, thereby validating the termination of Halili's employment.
The Court's Ruling
Applicable laws form part of, and are read into, contracts without need for any express reference
thereto; more so, when it pe1iains to a labor contract which is imbued with public interest. Each
33 34
contract thus contains not only what was explicitly stipulated therein, but also the statutory provisions
that have any bearing on the matter. 35
In this case, it is undisputed that the contract entered into by JFCI and Halili is a fixed-term
employment contract, covering a period of one (1) year. The peculiar feature, however, of this
contract lies in its termination clause which reads that either party may terminate the same "at
anytime by giving four (4) weeks written notice":
WRITTEN AGREEMENT REGARDING THE EMPLOYMENT OF [HALILI] BY [JFCI] AS CONSUL
TANT PROGRAM COORDINATOR FOR AFTERCARE
This Agreement is made between [JFCI] and [Halili], for mutual consideration, the receipt and
adequacy of which is acknowledged by the parties, who agree:
1. Term. [Halili] is independently contracted by JFCI to serve as Consultant Program

Coordinator for Aftercare of JFCI for a contracted period of 46 weeks within one year,
beginning May 15, 2006 and ending May 14, 2007, with said term being capable of
extension by mutual review and written agreement of both parties.
xx xx
5. Termination of Agreement. Either party may terminate this agreement at anytime by giving
four weeks written notice. 36
x x x x (Emphases supplied)
While said clause is silent on the requirement of a legal cause for the same to be operative,
the fundamental principle - as above-stated - is that the law is read into every contract.
Hence, the contract's termination clause should not be interpreted as a form of blanket-
license by which each of the parties may just abdicate the contract at will. Rather, it is a
clause which allows any of the parties to pre-terminate the employment contract within the
stipulated fixed-term period of one year, provided that the party invoking the same has: (g) a
legal cause for terminating it; and (Q) notifies the other party in writing four ( 4) weeks prior to
the intended date of termination.
That the parties had intended to dispense with the need for a legal cause for the termination
clause to be operative does not sufficiently appear in this case. Had they so intended, then
1âwphi1
the contract should have so indicated, as in Price v. Innodata Phils., Inc., which contractual
37
provision explicitly allowing the employer to pre-terminate the same "with or without cause"
was, however, struck down as invalid:
As a final observation, the Court also takes note of several other provisions in petitioners'
employment contracts that display utter disregard for their security of tenure. Despite fixing a
period or term of employment, i.e., one year, INNODATA reserved the right to preterminate
petitioners' employment under the following circumstances:
6.1 x x x Further should the Company have no more need for the EMPLOYEE's services on
account of completion of the project, lack of work (sic) business losses, introduction of new
production processes and techniques, which will negate the need for personnel, and/or
overstaffing, this contract maybe pre-terminated by the EMPLOYER upon giving of three (3)
days notice to the employee.
xx xx
6.4 The EMPLOYEE or the EMPLOYER may preterminate this CONTRACT, with or without
cause, by giving at least Fifteen - (15) [day] notice to that effect. Provided, that such pre-
termination shall be effective only upon issuance of the appropriate clearance in favor of the
said EMPLOYEE.
Pursuant to the afore-quoted provisions, petitioners have no right at all to expect security of tenure,
even for the supposedly one-year period of employment provided in their contracts, because they
can still be preterminated (1) upon the completion of an unspecified project; or (2) with or without
cause, for as long as they are given a three-day notice. Such contract provisions are repugnant
to the basic tenet in labor law that no employee may be terminated except for just or
authorized cause.
Under Section 3, Article XVI of the Constitution, it is the policy of the State to assure the workers of
security of tenure and free them from the bondage of uncertainty of tenure woven by some
employers into their contracts of employment. This was exactly the purpose of the legislators in
1âwphi1
drafting Article 280 of the Labor Code - to prevent the circumvention by unscrupulous employers of
the employee's right to be secure in his tenure by indiscriminately and completely ruling out all
written and oral agreements inconsistent with the concept of regular employment. 38
(Emphases and underscoring supplied)
Here, it is clear that the first requisite of legal cause was not complied with by JFCI. No just or
authorized cause was proven by substantial evidence in support of its invocation of the termination
clause stated in its contract with Halili. As such, the pre-termination of the contract was infirm. Thus,
considering further that respondents' argument on its purported loss of trust and confidence in Halili
cannot be taken into account at this stage since it was belatedly raised for the first time on
appeal, the NLRC did not gravely abuse its discretion in ruling that Halili 's dismissal was illegal.
39
The CA's issuance of a writ of certiorari was perforce improper.
WHEREFORE, the petition is GRANTED. The Decision dated December 23, 2010 of the Court of
Appeals in CA-G.R. SP No. 107209 is hereby REVERSED and SET ASIDE. The Decision dated
July 30, 2008 and the Resolution dated November 25, 2008 of the National Labor Relations
Commission in NLRC LAC Case No. 12-003358-07 are REINSTATED.
SO ORDERED.
Associate Justice
WE CONCUR:

Associate Justice
Chairperson

JOSE PORTUGAL PEREZ

Associate Justice
CERTIFICATION
Chief Justice
Footnotes
1
Rollo. pp. 3-62.
Id. at 66-72. Penned by Associate Justice Samuel H. Gaerlan with Associate Justices
2
Hakim S. Abdulwahid and Ricardo R. Rosario concurring.
Id. at 117-122. Penned by Presiding Commissioner Benedicto R. Palacol with

3
Commissioners Isabel G. Panganiban-Ortiguerra and Nieves Vivar-De Castro concurring.
4
Id. at 123-124.
5
Id. at 118.
6
See id. at 14-15 and 118.
7
Id. at 227-228.
8
See id. at 118 and 228.
9
See Letter dated July 13, 2006; id. at 231.
10
See id. at 118 and 23 I.
11
Id. at 232.
12
Id. at 125-147.
13
See id~ at 135-140.
14
See id. at 144-145.
15
See respondents' Position Paper dated November 9, 2006; id. at 148-161.
16
See id. at 157- l 58.
17
See id. at 159-160.
18
Id. at 259-270. Penned by Labor Arbiter Ligerio V. Ancheta.
19
Id. at 270.
20
See id. at 265-266.
See id. at 267-269.
21
See Notice of Appeal dated November 12, 2007; id. at 271.

22
Id. at 117-122.
23
See id. at 120-121.

24
See id. at 121.

25
Id.
26
See motion for reconsideration dated August 13, 2008; id. at 298-302.
27
Id. at 123-124.
28
Id. at 73-11 I.
29
Id. at 66-72.
30
See id. at 71.

31
See id. at 69-71.

32
Power Sector A.1sets and Liabilities Management Corp. v. Pozzolanic Phil.1·., Inc., 671
33
Phil. 731, 763-764 (2011).
Atiicle 1700 of the Civil Code reads:

34
Att. 1700. The relations be<ween capi:al and labor are not merely contractual.
They are so impressed with public interest that labor contracts must yield to the
common good. Therefore, such contracts <!re subji.ct lo the special laws on labor
unil1ns. collective bargaining. strikes and lockouts. closed shop, wa~es, working
conditions. hours of labor and similar subjects.
Intra-Strata Assurance Corp. v. Repui1lic o(ih<! Philippines, 579 Phil. 631, 640 (2008).
35
citing Maritime Company of the Phil. v. Reparations Commission, 148-B Phil. 65, 69-70

(1971).
Rollo, pp. 227-228.
36
588 Phil. 568 (2008).

37
Id. at 586-587.
38
"[W]ell-settled is the rule, also applicable in labor cases, that issues not raised below
39
cannot be raised for the first time on appeal. Points of law, theories, issues and arguments
not brought to the attention of the lower court need not be, and ordinarily will not be,
considered by the reviewing court, as they cannot be raised for the first time at that late
stage. Basic considerations of due process impel this rule." (Pag-Asa Steel Works,
Inc. v. CA, 520 Phil. 1006, 1023-1024 [2006].)
G.R. No. 185664 April 8, 2015
ANGELES P. BALINGHASAY, RENATO M. BERNABE, ALODIA L. DEL ROSARIO, CATALINA

T. FUNTILA, TERESITA L. GAYANILO, RUSTICO A. JIMENEZ, ARCELI P. JO, ESMERALDA D.
MEDINA, CECILIA S. MONTALBAN, VIRGILIO R. OBLEPIAS, CARMENCITA R. PARRENO,
EMMA L. REYES, REYNALDO L. SAVET, SERAPIO P. TACCAD, VICENTE I. VALDEZ,
SALVACION F. VILLAMORA, and DIONISIA M. VILLAREAL,Petitioners,
vs.
CECILIA CASTILLO, OSCAR DEL ROSARIO, ARTURO S. FLORES, XERXES NAVARRO,
MARIAANTONIAA. TEMPLO and MEDICAL CENTER PARAÑAQUE, INC., Respondents.
DECISION
REYES, J.:
The instant Petition for Review on Certiorari assails the Decision dated May 23, 2008 and
1 2
Resolution dated December 12, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 89279. The
3
CA reversed and set aside the Decision dated March 22, 2005 of the Regional Trial Court (RTC) of
Parañaque City, Branch 258, in Civil Case No. 01-0140, which dismissed the amended complaint for
injunction, accounting and damages filed by Cecilia Castillo (Castillo), Oscar del Rosario (Oscar),
Arturo Flores (Flores), Xerxes Navarro (Navarro), Maria Antonia Templo (Templo) and Medical
Center Parañaque, Inc. (MCPI) (respondents) against Angeles Balinghasay (Balinghasay), Renato
Bernabe (Bernabe), Alodia Del Rosario (Alodia), Catalina Funtila, Teresita Gayanilo, Rustico
Jimenez (Jimenez), Arceli Jo, Esmeralda Medina, Cecilia Montalban, Virgilio Oblepias (Oblepias),
Carmencita Parreño, Emma Reyes, Reynaldo Savet (Savet), Commodore Serapio Taccad, Vicente
Valdez (Valdez), Salvacion Villamora (Villamora) and Dionisia Villareal (Villareal) (petitioners).
4
Antecedents
The MCPI, a domestic corporation organized in 1977, operates the Medical Center Parañaque
(MCP) locatedin Dr. A. Santos Avenue, Sucat, Parañaque City. Castillo, Oscar, Flores, Navarro, and
Templo are minority stockholders of MCPI. Each of them holds 25 Class B shares. On the other
hand, nine of the herein petitioners, namely, Balinghasay, Bernabe, Alodia, Jimenez, Oblepias,
Savet, Villamora,Valdez and Villareal, are holders of Class A shares and were Board Directors of
MCPI. The other eight petitioners are holders of Class B shares. The petitioners are part of a group
who invested in the purchase of ultrasound equipment, the operation of and earnings from which
gave rise to the instant controversy.
Before 1997, the laboratory, physical therapy, pulmonary and ultrasound services in MCP were
provided to patients by way of concessions granted to independent entities. When the concessions
expired in 1997, MCPI decided that it would provide on its own the said services, except ultrasound. 5
In 1997, the MCPI’s Board of Directors awarded the operation of the ultrasound unit to a group of
investors (ultrasound investors) composed mostly of Obstetrics-Gynecology (Ob-gyne) doctors. The
ultrasound investors held either Class A or Class B shares of MCPI. Among them were nine of the
herein petitioners, who were then, likewise, MCPI Board Directors. The group purchased a Hitachi
model EUB-200 C ultrasound equipment costing ₱850,000.00 and operated the same. Albeit
awarded by the Board of Directors, the operation was not yet covered by a written contract. 6
In the meeting of the MCPI’s Board of Directors held on August 14, 1998, seven (7) of the twelve
(12) Directors present were part of the ultrasound investors. The Board Directors made a counter
offer anent the operation of the ultrasound unit. Hence, essentially then, the award of the ultrasound
operation still bore no formal stamp of approval.
7
On February 5, 1999, twelve (12) Board Directors attended the Board meeting and eight (8) of them
were among the ultrasound investors. A Memorandum of Agreement (MOA) was entered into by and
between MCPI, represented by its President then, Bernabe, and the ultrasound investors,
represented by Oblepias. Per MOA, the gross income to be derived from the operation of the
ultrasound unit, minus the sonologists’ professional fees, shall be divided between the ultrasound
investors and MCPI, in the proportion of 60% and 40%, respectively. Come April 1, 1999, MCPI’s
share would be 45%, while the ultrasound investors would receive 55%. Further, the ownership of
the ultrasound machine would eventually be transferred to MCPI. 8
On October 6, 1999, Flores wrote MCPI’s counsel a letter challenging the Board of Directors’
approval of the MOA for being prejudicial to MCPI’s interest. Thereafter, on February 7, 2000, Flores
manifested to MCPI’s Board of Directors and President his view regarding the illegality of the MOA,
which, therefore, cannot be validly ratified.
9
On March 22, 2001, the herein respondents filed with the RTC a derivative suit against the
10
petitioners for violation of Section 31 of the Corporation Code. Among the prayers in the Complaint
11
were: (a) the annulment of the MOA and the accounting of and refund by the petitioners of all profits,
income and benefits derived from the said agreement; and (b) payment of damages and attorney’s
fees. 12
In their Answer with Counterclaim, the petitioners argued that the derivative suit must be dismissed
for non-joinder of MCPI, an indispensable party. The petitioners likewise claimed that under Section
32 of the Corporation Code, the MOA was merely voidable. Since there was no proof that the
13
subsequent Board of Directors of MCPI moved to annul the MOA, the same should be considered as
having been ratified. Further, in the Annual Stockholders Meeting held on February 11, 2000, the
MOA had already been discussed and passed upon. 14
To implead MCPI as a party-plaintiff, the individual respondents filed an Amended Complaint dated
September 11, 2001. The RTC admitted the said amended complaint on October 12, 2001.
15
Rulings of the RTC and the CA
On March 22, 2005, the RTC rendered a Decision dismissing the respondents’ amended complaint.
The RTC found that MCPI had, in effect, impliedly ratified the MOA by accepting or retaining benefits
flowing therefrom. Moreover, the elected MCPI’s Board Directors for the years 1998 to 2000 did not
institute legal actions against the petitioners. MCPI slept on its rights for almost four years, and
estoppel had already set in before the derivative suit was filed in 2001. The RTC likewise stressed
that the sharing agreement, per MOA provisions, was fair, just and reasonable. From the ultrasound
unit’s operations for the years 1997 to 1999, MCPI received a net share of ₱1,567,699.78, while the
ultrasound investors only got ₱803,723.00. Further, under the "business judgment rule," the trial
court cannot undertake to control the discretion of the corporation’s board as long as good faith
attends its exercise.16
The petitioners challenged the RTC’s judgment before the CA.
On May 23, 2008, the CA rendered the herein assailed decision, the dispositive portion of which
reads:
WHEREFORE, premises considered, the Petition for Review is GRANTED. The Decision dated 22
March 2005 of the [RTC] of Parañaque City, Branch 258 in Civil Case No. 01-0140is REVERSED
and SET ASIDEand a new one entered declaring the [MOA] (ultrasound contract) as invalid. Further,
[petitioners] Angeles Balinghasay, Dr. Renato Bernabe, Dr. Alodia del Rosario, Dr. Rustico Jimenez,
Dr. Virgilio Oblepias, Dr. Reynaldo Savet, Dr. Salvacion Villamoraand Dr. Humberto Villarealare
hereby ordered to fully account to [respondent MCPI] all the profits from said ultrasound contract
which otherwise would have accrued to [MCPI]and to jointly and severally pay the amount of
₱200,000.00 as attorney’s fees in favor of the [respondents]. Costs against said named [petitioners].
SO ORDERED. 17
The CA, however, denied the respondents’ claims for moral and exemplary damages. The appellate
court explained that moral damages cannot be awarded in favor of a corporation, which in this case
is MCPI, the real party-in-interest. Further, there is no ample evidence to prove that the petitioners
acted wantonly, recklessly and oppressively. 18
In declaring the invalidity of the MOA, the CA explained that:
"Quorum" is defined as that number of members of a body which, when legally assembled in their
proper places, will enable the body to transact its proper business. "Majority," when required to
constitute a quorum, means the greater number than half or more than half of any total.
In the case at bar, the majority of the number of directors, if it is indeed thirteen (13), is seven (7),
while if it is eleven (11), the majority is six (6). During the meetings held by the MCPI Board of
Directors i.e.1) 14 August 1998 meeting x x x, twelve (12)directors were present, and of said
number, seven (7) of them belong to the ultrasound investors x x x, and at which meeting, the Board
decided to make a counter-offer x x x to the ultrasound group and; 2) 05 February 1999 meeting x x
x, twelve (12) directors were present, and of said number, eight (8) of them belong to the ultrasound
investors x x x, and at which meeting, the Board decided to proceed with the signing of the [MOA] x
x x. As can be gleaned from the Minutes of said Board meetings, without the presence of the
[petitioners] directors/ultrasound investors, there can be no quorum. At any rate, during the Board
meeting on 14 August 1998, the [MOA] was not approved as only a counter-offer was agreed upon.
As to the 05 February 1999 Board meeting, without considering the votes of the [petitioners]
directors/ultrasound investors, in connection with the signing of the [MOA], no valid decision can be
made. It further appears that x x x [Oblepias], who signed the [MOA] on behalf of the ultrasound/Ob-
Gyne group as OWNER of the ultrasound equipment, and x x x President Dr. Bernabe, who signed
the same on behalf of MCPI x x x, are both ultrasound investors. Thus, We find that the [MOA] was
not validly approved by the MCPI Board. Plainly, [the petitioners/directors] x x x, in acquiring an
interest adverse to the corporation, are liable as trustees for the corporation and must account for
the profits under the [MOA] which otherwise would have accrued to MCPI.
xxxx
x x x [T]he presence of the [petitioners] directors/ultrasound investors who approved the signing of
the [MOA] was necessary to constitute a quorum for such meeting on 05 February 1999 and the
votes of [the petitioners] directors/ultrasound investors were necessary in connection with the
decision to proceed with the signing of the [MOA]. Further, there is no clear and convincing evidence
that the [MOA] was ratified by the vote of 2/3 of the outstanding capital stock of MCPI in a meeting
called for the purpose and that a full disclosure of the interest of the [petitioners] directors/ultrasound
investors, was made at such meeting. At any rate, if the ultrasound contract has indeed been
impliedly ratified[,] there would have been no need to submit the matter repeatedly to the
stockholders of MCPI in a vain attempt to have the same ratified.
The [RTC’s] observation that [the respondents’] silence and acquiescence to the [MOA] impliedly
ratified the same is also belied by the fact that [the respondents] did not stop questioning the validity
of the [MOA]. x x x.
Further, under the Corporation Code, where a corporation is an injured party, its power to sue is
lodged with its board of directors or trustees. But an individual stockholder may be permitted to
institute a derivative suit in behalf of the corporation in order to protect or vindicate corporate rights
whenever the officials of the corporation refuse to sue, or when a demand upon them to file the
necessary action would be futile because they are the ones to be sued, or because they hold control
of the corporation. In such actions, the corporation is the real party-in-interest while the suing
stockholder, in behalf of the corporation, is only a nominal party.
xxxx
In the instant case, [the respondents] filed an Amended Complaint dated 11 September 2001.
Paragraphs 1a, 3 and 17-24 thereof sufficiently allege their derivative action. There was compliance
with Section 1, Rule 8 of the Interim Rules of Procedure for Intra-Corporate Controversies. x x x It is
undisputed that [the respondents] are stockholders of MCPI x x x; [the respondents] exerted all
reasonable efforts to exhaust all remedies available to them x x x; there are no appraisal rights
available to [the respondents] for the act complained of; and the case is clearly not a nuisance or
harassment suit. x x x
xxxx
It is clear that under the "business judgment rule", the courts are barred from intruding into the
business judgments of the corporation, when the same are made in good faith.
xxxx
[The petitioners] MCPI directors, who are ultrasound investors, in violation of their duty as such
directors, acquired an interest adverse to the corporation when they entered into the ultrasound
contract. By doing so, they have unjustly profited from the transaction which otherwise would have
accrued to MCPI. In fact, as reflected in the ultrasound income x x x for the year 1997 to 2001, the
ultrasound investors earned a net share of ₱4,417,573.81. [The petitioners] directors/ultrasound
investors failed to inhibit themselves from participating in the meeting and from voting with respect to
the decision to proceed with the signing of the [MOA]. Certainly, said [petitioners]
directors/ultrasound investors have dealt in their behalf and took an interest adverse to MCPI.
Moreover, based on the audited financial statements of MCPI x x x for the year 1996-2000, it
appears that the corporation has available cash to purchase its own ultrasound unit. It was testified
to by Dr. Villamora that the cost of the ultrasound unit is ₱850,000.00, while the cash and cash
equivalents of MCPI for the year 1996 is ₱5,479,242.00; for the year 1997, ₱5,509,058.51; and for
the year 1998, ₱8,662,909.00. (Citations omitted)
19
In the now assailed Resolution issued on December 12, 2008, the CA denied the Motion for
20
Reconsideration filed by the herein petitioners.
Issues
Undaunted, the petitioners are before this Court raising the issues of whether or not the CA: (1)
committed an error of law in ignoring the circumstances under which the MOA was conceived and
implemented; (2) failed to consider that the MOA was a very informal agreement meant to address
an urgent hospital necessity; (3) committed an error of law in not applying the "business judgment
rule"; and (4) committed an error of law in assessing attorney’s fees of ₱200,000.00against the
directors-contributors.21
The petitioners allege that the ultrasound equipment was purchased for its transvaginal probe
capacity. Prior to its purchase, the Philippine Board of Obstetrics and Gynecology of the Philippine
Obstetrical and Gynecology Society adopted a policy enjoining the Ob-gyne departments of
hospitals to have their own ultrasound equipment for the purpose of being able to pinpoint
responsibility for their use.22
Further, the MCP’s Ob-gyne doctors observed that the absence of ultrasound equipment within MCP
may compel the patients to go instead to other hospitals, thus, resulting to both loss of income and
an unpleasant reputation of being ill-equipped. The MCP’s Ob-gyne doctors were, hence, moved to
pass around the hat to raise the amount of ₱850,000.00 for the equipment’s purchase. However, not
all of the Board Directors and holders of Class A shares contributed as there was no guaranteed
return of investments to speak of. Several holders of Class B shares participated though. As for
MCPI, it was then interested to acquire a lot adjacent to the hospital and was, therefore, not in the
financial position to buy the ultrasound equipment. 23
Admittedly, little formality was observed by the MCP’s Ob-gyne doctors in raising the funds for and
purchasing the ultrasound equipment, but the endeavor was motivated by good faith. At the outset,
24
the antecedents leading to the purchase and operation of the ultrasound equipment were not
introduced into the records, but the respondents themselves acknowledged these circumstances in
the petition they filed before the CA. 25
The petitioners likewise reiterate the RTC’s declaration that "[q]uestions of policy or of management
are left solely to the honest decision of the board as the business manager of the corporation, and
the court is without authority to substitute its judgment for that of the board, and as long as its acts in
good faith and in the exercise of honest judgment in the interest of the corporation, its orders are not
reviewable by the courts." 26
As regards the award of attorney’s fees, the petitioners claim the same to be erroneous as their acts
were all performed in good faith and profit was not their consideration. 27
In their Motion to Dismiss filed on January 19, 2009 and Comment filed on April 30, 2009, the
28 29
respondents argue that the instant petition should be outrightly dismissed as the material portions of
the records, to wit, copies of the MOA, complaint, answer and RTC decision, are not attached. 30
Moreover, the issues raised herein are essentially all factual in nature, requiring a recalibration of the
evidence offered by the parties. Specifically, the instant petition prays for the Court to determine the
existence of: (a) circumstances surrounding the purchase and operation of the ultrasound
equipment; (b) an urgent hospital necessity justifying the MOA’s approval; (c) conditions precedent
to the application of the business judgment rule; and (d) or absence of justifications for the award of
attorney’s fees, which the CA had supposedly all ignored. 31
In the case at bar, to the petitioners’ own detriment, they admit that the antecedents and
circumstances surrounding the operation of the ultrasound unit, which they invoke to prove good
faith on their part, were not introduced into the records during the trial.
32
The respondents once again stress that MCPI’s Balance Sheets for the years 1996 up to 2000
unequivocally show that the corporation had more than enough cash and cash equivalents to
purchase and operate the ultrasound equipment. Hence, the petitioners were either impelled by bad
33
faith or were grossly negligent when they failed to conduct a simple examination of MCPI’s financial
records. As regards MCPI’s intent to buy the lot adjacent to the hospital, the respondents claim that
34
the allegation is an afterthought and no evidence supports it. The respondents also contend that
35
estoppel does not apply in the instant case as they had repeatedly, but in vain, asked the MCPI’s
Board of Directors for a copy of the MOA, and letters were thereafter sent to challenge its validity.36
The respondents aver as well that the petitioners’ several attempts for the MOA’s ratification by the
stockholders through the required two-third votes had failed in the years 2000 up to2003. Despite
the foregoing, the ultrasound investors continue to operate the unit and receive income therefrom
causing prejudice to MCPI. Pursuant to Section 31 of the Corporation Code, the petitioners should
37
therefore be liable not just for the profits or revenues they had received from the ultrasound unit’s
operation, but for all profits which otherwise would have accrued to MCPI. 38
Ruling of the Court
The Court affirms but clarifies and modifies the CA’s disquisition.
The instant petition raises mere

factual issues and no exceptional
grounds exist for the Court to
re-evaluate the evidence submitted
by the parties.
Century Iron Works, Inc. v. Banas explains what the proper subjects of a petition filed under Rule
39
45 of the Rules of Court are, viz:
A petition for review on certiorari under Rule 45 is an appeal from a ruling of a lower tribunal on pure
questions of law. It is only in exceptional circumstances that we admit and review questions of fact.
40
A question of law arises when there is doubt as to what the law is on a certain state of facts, while
there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. For a
question to be one of law, the question must not involve an examination of the probative value of the
evidence presented by the litigants or any of them. The resolution of the issue must rest solely on
what the law provides on the given set of circumstances. Once it is clear that the issue invites a
review of the evidence presented, the question posed is one of fact. Thus, the test of whether a
question is one of law or of fact is not the appellation given to such question by the party raising the
same; rather, it is whether the appellate court can determine the issue raised without reviewing or
evaluating the evidence, in which case, it is a question of law; otherwise it is a question of
fact. (Citations omitted)
41
In the instant petition, the Court agrees with the respondents that the issues presented are not legal.
The RTC and the CA differed in their factual findings and their appreciation of the same. However,
no compelling grounds exist for this Court to apply the exception in lieu of the general rule that
evidence shall not be re-evaluated.
As acknowledged by the petitioners and aptly pointed out by the respondents, the existence of the
circumstances and urgent hospital necessity justifying the purchase and operation of the ultrasound
unit by the investors were not at the outset offered as evidence. Having been belatedly raised, the
aforesaid defenses were not scrutinized during the trial and their truth or falsity was not uncovered.
This is fatal to the petitioners’ cause. The CA thus cannot be faulted for ruling against the petitioners
in the face of evidence showing that: (a) there was no quorum when the Board meetings were held
on August 14, 1998 and February 5, 1999; (b) the MOA was not ratified by a vote of two-thirds of
MCPI’s outstanding capital stock; and (c) the Balance Sheets for the years 1996 to 2000 indicated
that MCPI was in a financial position to purchase the ultrasound equipment.
The petitioners harp on their lofty purpose, which had supposedly moved them to purchase and
operate the ultrasound unit. Unfortunately, their claims are not evident in the records. Further, even
1âwphi1
if their claims were to be assumed as true for argument’s sake, the fact remains that the Board
Directors, who approved the MOA, did not outrightly inform the stockholders about it. The ultrasound
equipment was purchased and had been in operation since 1997, but the matter was only brought
up for ratification by the stockholders in the annual meetings held in the years 2000 to 2003. This
circumstance lends no credence to the petitioners’ cause.
The Court thus finds the CA’s ruling anent the invalidity of the MOA as amply supported by both
evidence and jurisprudence.
The acts of petitioner MCPI Board

of Directors compelled the
respondents to litigate, hence, the
CA’s award of attorney’s fees is
proper.
Anent when attorney’s fees should be awarded, the Court, in Benedicto v. Villaflores, declared that:
42
It is settled that the award of attorney’s fees is the exception rather than the rule and counsel’s fees
are not to be awarded every time a party wins suit. The power of the court to award attorney’s fees
under Article 2208 of the Civil Code demands factual, legal, and equitable justification; its basis
cannot be left to speculation or conjecture. Where granted, the court must explicitly state in the body
of the decision, and not only in the dispositive portion thereof, the legal reason for the award of
attorney’s fees.43
In the case before this Court, the CA awarded the amount of ₱200,000.00 as attorney’s fees in favor
of the respondents, predicating the same on the unjustified acts of the petitioners and the interval of
time it took for the controversy to be resolved. The CA had laid down the basis for the award and the
Court now finds the same to be reasonable under the circumstances.
However, the herein assailed decision and resolution still need to be modified lest unjust enrichment
flows therefrom.
To prevent unjust enrichment, the

ultrasound investors should retain
ownership of the equipment.
Article 22 of the New Civil Code provides that "every person who through an act of performance by
another, or any other means, acquires or comes into possession of something at the expense of the
latter without just or legal ground, shall return the same to him." The main objective of the principle
against unjust enrichment is to prevent one from enriching himself at the expense of another without
just cause or consideration.44
In the case at bar, the ultrasound investors pooled together the amount of ₱850,000.00, which was
used to purchase the equipment. Because of the MOA’s invalidity, the ultrasound investors can no
1âwphi1
longer operate the ultrasound unit within MCP. Nonetheless, it is only fair for the ultrasound
investors to retain ownership of the equipment, which they may use or dispose of independently of
MCPI.
IN VIEW OF THE FOREGOING, the instant petition is DENIED. The Decision dated May 23, 2008
and Resolution dated December 12, 2008 of the Court of Appeals in CA-G.R. SP No. 89279 are
AFFIRMED but with the following CLARIFICATIONS/ MODIFICATIONS:
(a) The petitioners Angeles Balinghasay, Renato Bernabe, Alodia del Rosario, Rustico
Jimenez, Virgilio Oblepias, Reynaldo Savet, Salvacion Villamora and Dionisia Villareal are
directed, within SIXTY (60) DAYS from notice hereof, to FULLY ACCOUNT FOR and
RETURN TO Medical Center Parañaque, Inc. ALL INCOME the corporation should have
earned from the operation of the ultrasound unit from 1997 to present;
(b) The petitioners Angeles Balinghasay, Renato Bernabe, Alodia del Rosario, Rustico
Jimenez, Virgilio Oblepias, Reynaldo Savet, Salvacion Villamora and Dionisia Villareal are
also directed to JOINTLY AND SEVERALLY PAY the amount of ₱200,000.00 as
ATTORNEY'S FEES to respondents Cecilia Castillo, Oscar del Rosario, Arturo Flores,
Xerxes Navarro, Maria Antonia Templo and Medical Center Parañaque, Inc.; and
(c) In accordance with Nacar v. Gallery Frames, the NET INCOME to be RETURNED to
45
Medical Center Parafiaque, Inc., plus ₱200,000.00 awarded as ATTORNEY'S FEES, shall
be subject to INTEREST at the rate of six percent (6%) per annum, to be reckoned sixty
days from notice of this Resolution until full satisfaction thereof.
The Court's directives are without prejudice to the right of reimbursement, which the petitioners
Angeles Balinghasay, Renato Bernabe, Alodia del Rosario, Rustico Jimenez, Virgilio Oblepias,
Reynaldo Savet, Salvacion Villamora and Dionisia Villareal may pursue against the rest of the
ultrasound investors.
SO ORDERED.
BIENVENIDO L. REYES
Associate Justice
WE CONCUR:
PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson
DIOSDADO M. PERALTA JOSE CATRAL MENDOZA*

FRANCIS H. JARDELEZA
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court's Division.
PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case

Chief Justice
Footnotes
* Additional Member per Special Order No. 1966 dated March 30, 2015 vice Associate
Justice Martin S. Villarama, Jr.
1
Rollo, pp. 3-41.
Penned by Associate Justice Celia C. Librea-Leagogo with Associate Justices Regalado E.

2
Maambong and Agustin S. Dizon concurring; id. at 43-80.
3
Id. at 81-83.
In representation of her husband, Dr. Humberto Villareal, who died on July 1, 2008; id. at
4
5. Id. at 45-46.

5
6
Id. at 46, 50-51, 68-69.
7
Id. at 70-71.
8
Id. at 68-70.
9
Id. at 72.
10
Docketed as Civil Case No. CV-01-0140, RTC of Parañaque City, Branch 258, id. at 11.
11
Sec. 31. Liability of directors, trustees or officers. - Directors or trustees who willfully and
knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of
gross negligence or bad faith in directing the affairs of the corporation or acquire any
personal or pecuniary interest in conflict with their duty as such directors or trustees shall be
liable jointly and severally for all damages resulting therefrom suffered by the corporation, its
stockholders or members and other persons.
When a director, trustee or officer attempts to acquire or acquires, in violation of his duty, any
interest adverse to the corporation in respect of any matter which has been reposed in him in
confidence, as to which equity imposes a disability upon him to deal in his own behalf, he
shall be liable as a trustee for the corporation and must account for the profits which
otherwise would have accrued to the corporation.
Rollo, p. 46.
12
Sec. 32. Dealings of directors, trustees or officers with the corporation. - A contract of the
13
corporation with one or more of its directors or trustees or officers is voidable, at the option of
such corporation, unless all the following conditions are present:
1. That the presence of such director or trustee in the board meeting in which the
contract was approved was not necessary to constitute a quorum for such meeting;
2. That the vote of such director or trustee was not necessary for the approval of the
contract;
3. That the contract is fair and reasonable under the circumstances; and
4. That in case of an officer, the contract has been previously authorized by the
board of directors.
Where any of the first two conditions set forth in the preceding paragraph is absent,
in the case of a contract with a director or trustee, such contract may be ratified by
the vote of the stockholders representing at least two-thirds (2/3) of the outstanding
capital stock or of at least two-thirds (2/3) of the members in a meeting called for the
purpose: Provided, That full disclosure of the adverse interest of the directors or
trustees involved is made at such meeting: Provided, however, That the contract is
fair and reasonable under the circumstances.
Rollo, pp. 47-48.

14
Id. at 18.
15
Id. at 57-62.
16
Id. at 76.
17
Id. at 75.
18
Id. at 70-75.
19
Id. at 81-83.
20
Id. at 20-21.
21
Id. at 25.
22
Id. at 25-30.
23
Id. at 27.
24
Id. at 28.
25
Id. at 34.
26
Id. at 34-35.
27
Id. at 88-104.
28
Id. at 121-161.
29
Id. at 90-91.
30
Id. at 96-98.
31
Id. at 140.
32
Id. at 131.
33
Id. at 148-149.
34
Id. at 150.
35
Id. at 131-132.
36
Id. at 132-133.
37
Id. at 151.
38
G.R. No. 184116, June 19, 2013, 699 SCRA 157.

39
40
In New City Builders, Inc. v. NLRC, 499 Phil. 207, 212-213 (2005), citing The Insular Life
Assurance Company, Ltd. v. CA, G.R. No. 126850, April 28, 2004, 428 SCRA 79, this Court
recognized several exceptions to this rule, to wit: (1) when the findings are grounded entirely
on speculation, surmises or conjectures; (2) when the inference made is manifestly
mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the
judgment is based on a misapprehension of facts; (5) when the findings of facts are
conflicting; (6) when in making its findings the CA went beyond the issues of the case, or its
findings are contrary to the admissions of both the appellant and the appellee; (7) when the
findings are contrary to the trial court; (8) when the findings are conclusions without citation
of specific evidence on which they are based; (9) when the facts set forth in the petition as
well as in the petitioner’s main and reply briefs are not disputed by the respondent; (10)
when the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record; and (11) when the CA anifestly overlooked certain
relevant facts not disputed by the parties, which, if properly considered, would justify a
different conclusion.
Supra note 39, at 166-167.

41
646 Phil. 733 (2010).

42
Id. at 742, citing Mindex Resources Devt. v. Murillo, 428 Phil. 934, 949 (2002).
43
Flores v. Spouses Lindo, Jr., 664 Phil. 210, 221 (2011).

44
G.R. No. 189871, August 13, 2013, 703 SCRA 439.

45
G.R. Nos. 163356-57 July 10, 2015
JOSE A. BERNAS, CECILE H. CHENG, VICTOR AFRICA, JESUS B. MARAMARA, JOSE T.

FRONDOSO, IGNACIO T. MACROHON, JR., AND PAULINO T. LIM, ACTING IN THEIR CAP A
CITY AS INDIVIDUAL DIRECTORS OF MAKATI SPORTS CLUB, INC., AND ON BEHALF OF
THE BOARD OF DIRECTORS OF MAKATI SPORTS CLUB, Petitioners,
vs.
JOVENCIO F. CINCO, VICENTE R. AYLLON, RICARDO G. LIBREA, SAMUEL L. ESGUERRA,
ROLANDO P. DELA CUESTA, RUBEN L. TORRES, ALEX Y. PARDO, MA. CRISTINA SIM,
ROGER T. AGUILING, JOSE B. QUIMSON, CELESTINO L. ANG, ELISEO V. VILLAMOR, FELIPE
L. GOZON, CLAUDIO B. ALTURA, ROGELIO G. VILLAROSA, MANUEL R. SANTIAGO,
BENJAMIN A. CARANDANG, REGINA DE LEON-HERLIHY, CARLOS Y. RAMOS, JR.,
ALEJANDRO Z. BARIN, EFRENILO M. CAYANGA AND JOHN DOES, Respondents.
x-----------------------x
G.R. Nos. 163368-69
JOVENCIO F. CINCO, RICARDO G. LIBREA AND ALEX Y. PARDO, Petitioners,

vs.
JOSE A BERNAS, CECILE H. CHENG AND IGNACIO A. MACROHON, Respondents.
DECISION
PEREZ, J.:
Before us are two consolidated Petitions for Review on Certiorari assailing the 28 April 2003
1
Decision and the 27 April 2004 Resolution of the Court of Appeals in CA-G.R. SP No. 62683, which
2
declared the 17 December 1997 Special Stockholders' Meeting of the Makati Sports Club invalid for
having been improperly called but affirmed the actions taken during the Annual Stockholders'
Meeting held on 20 April 1998, 19 April 1999 and 17 April 2000. The dispositive portion of the
assailed decision reads:
WHEREFORE, foregoing considered, the instant petition for review is hereby GRANTED. The
appealed Decision dated December 12, 2000 of the SEC en bane is SET ASIDE and the Decision
dated April 20, 1998 of the Hearing Officer is REINSTATED and AMENDED as follows:
1. The supposed Special Stockholders' Meeting of December 17, 1997 was prematurely or
invalidly called by the [Cinco Group]. It therefore failed to produce any legal effects and did
not effectively remove [the Bernas Group] as directors of the Makati Sports Club, Inc.;
2. The expulsion of petitioner Jose A. Bernas as well as the public auction of his share[s] is
hereby declared void and without legal effect;
3. The ratification of the removal of [the Bernas Group] as directors, the expulsion of
petitioner Bernas and the sale of his share by the defendants and by the stockholders held in
their Regular Stockholders' Meeting held in April of 1998, 1999 and 2000, is void and
produces no effects as they were not the proper party to cause the ratification;
4. All other actions of the [Cinco Group] and stockholders taken during the Regular
Stockholders' Meetings held in April 1998, 1999 and 2000, including the election of the
[Cinco Group] as directors after the expiration of the term of office of petitioners as directors,
are hereby declared valid;
5. No awards for damages and attorney's fees. 3
The Facts
Makati Sports Club (MSC) is a domestic corporation duly organized and existing under Philippine
laws for the primary purpose of establishing, maintaining, and providing social, cultural, recreational
and athletic . activities among its members.
Petitioners in G.R. Nos. 163356-57, Jose A. Bernas (Bernas), Cecile H. Cheng, Victor Africa, Jesus
Maramara, Jose T. Frondoso, Ignacio T. Macrohon and Paulino T. Lim (Bernas Group) were among
the Members of the Board of Directors and Officers of the corporation whose terms were to expire
either in 1998 or 1999.
Petitioners in G.R. Nos. 163368-69 Jovencio Cinco, Ricardo Librea · and Alex Y. Pardo (Cinco
Group) are the members and stockholders of the corporation who were elected Members of the
Board of Directors and Officers of the club during the 17 December 1997 Special Stockholders
Meeting.
The antecedent events of the meeting and its results, follow:
Alarmed with the rumored anomalies in handling the corporate funds, the MSC Oversight Committee
(MSCOC), composed of the past presidents of the club, demanded from the Bernas Group, who
were then incumbent officers of the corporation, to resign from their respective positions to pave the
way for the election of new set of officers. Resonating this clamor were the stockholders of the
4
corporation representing at least 100 shares who sought the assistance of the MSCOC to call for a
special stockholders meeting for the purpose of removing the sitting officers and electing new
ones. Pursuant to such request, the MSCOC called a Special Stockholders' Meeting and sent out
5
notices to all stockholders and members stating therein the time, place and purpose of the meeting.
6
For failure of the Bernas Group to secure an injunction before the Securities Commission (SEC), the
meeting proceeded wherein Jose A. Bernas, Cecile H. Cheng, Victor Africa, Jesus Maramara, Jose
T. Frondoso, Ignacio T. Macrohon, Jr. and Paulino T. Lim were removed from office and, in their
place and stead, Jovencio F. Cinco, Ricardo G. Librea, Alex Y. Pardo, Roger T. Aguiling, Rogelio G.
· Villarosa, Armando David, Norberto Maronilla, Regina de Leon-Herlihy and Claudio B. Altura, were
elected. 7
Aggrieved by the turn of events, the Bernas Group initiated an action before the Securities
Investigation and Clearing Department (SICD) of the SEC docketed as SEC Case No. 5840 seeking
for the nullification of the 17 December 1997 Special Stockholders Meeting on the ground that it was
improperly called. Citing Section 28 of the Corporation Code, the Bernas Group argued that the
authority to call a meeting lies with the Corporate . Secretary and not with the MSCOC which
functions merely as an oversight body and is not vested with the power to call corporate meetings.
For being called by the persons not authorized to do so, the Bernas Group urged the SEC. to
declare the 17 December 1997 Special Stockholders' Meeting, including the removal of the sitting
officers and the election of new ones, be nullified.
For their part, the Cinco Group insisted that the 17 December 1997 Special Stockholders' Meeting is
sanctioned by the Corporation Code and the MSC by-laws. In justifying the call effected by the
MSCOC, they reasoned that Section 25 of the MSC by-laws merely authorized the Corporate
8
Secretary to issue notices of meetings and nowhere does it state that such authority solely belongs
to him. It was further asseverated by the Cinco Group that it would be useless to course the request
to call a meeting thru the Corporate Secretary because he repeatedly refused to call a special
stockholders' meeting despite demands and even "filed a suit to restrain the holding of a special
meeting. 9
Meanwhile, the newly elected directors initiated an investigation on the alleged anomalies in
administering the corporate affairs and after finding Bernas guilty of irregularities, the Board
10
resolved to expel him from the club by selling his shares at public auction. After the
11
notice requirement was complied with, Bernas' shares was accordingly sold for ₱902,000.00 to the
12
highest bidder:
Prior to the resolution of SEC Case No. 5840, an Annual Stockholders' Meeting was held on 20 April
1998 pursuant to Section 8 of the MSC bylaws. During the said meeting, which was attended by
13
1,017 stockholders representing 2/3 of the outstanding shares, the majority resolved to approve,
confirm and ratify, among others, the calling and · holding of 17 December 1997 Special
Stockholders' Meeting, the acts and resolutions adopted therein including the removal of Bernas
Group from the Board and the election of their replacements. 14
Due to the filing of several petitions for and against the removal of the Bernas Group from the Board
pending before the SEC resulting in the piling up of legal controversies involving MSC, the SEC En
Banc, in its Decision dated 30 March 1999, resolved to supervise the holding of the 1999 Annual
15
Stockholders' Meeting. During the said meeting, the stockholders once again approved, ratified and
confirmed the holding of the 17 December 1997 Special Stockholders' Meeting.
The conduct of the 17 December 1997 Special Stockholders' Meeting was likewise ratified by the
stockholders during the 2000 Annual Stockholders' Meeting which was held on 17 April 2000. 16
On 9 May 2000, the SICD rendered a Decision in SEC Case No. 12-. 97-5840 finding, among
17
others, that the 17 December 1997 Special Stockholders' Meeting and the Annual Stockholders'
Meeting conducted on 20 April 1998 and 19 April 1999 are invalid. The SICD likewise nullified the
expulsion of Bernas from the corporation and the sale of his share at the public auction. The
dispositive portion of the said decision reads:
WHEREFORE, in view of the foregoing considerations this Office, through the undersigned Hearing
Officer, hereby declares as follows:
(1) The supposed Special Stockholders' Meeting of December 17, 1997 was prematurely or
invalidly called by the [the Cinco Group]. It therefore failed to produce any legal effects and
did not effectively remove [the Bernas Group] as directors of the Makati Sports Club, Inc.
(2) The April 20, 1998 meeting was not attended by a sufficient number of valid proxies. No
quorum could have been present at the said meeting. No corporate business could have
been validly completed and/or transacted during the said meeting. Further, it was not called
by the validly elected Corporate Secretary Victor Africa nor presided over by the validly
elected president Jose A. Bernas. Even if the April 20, 1998 meeting was valid, it could not
ratify the December 17, 1997 meeting because being a void meeting, the December 1 7,
1997 meeting may not be ratified.
(3) The April 1998 meeting was null and void and therefore produced no legal effect.
(4) The April 1999 meeting has not been raised as a defense in the Answer nor assailed in a
supplemental complaint. However, it has been raised by [the Cinco Group] in a manifestation
dated April 21, 1999 and in their position paper dated April 8, 2000. Its legal effects must be
the subject of this Decision in order to put an end to the controversy at hand. In the first
place, by [the Cinco Group's] own admission, the alleged attendance at the April 1999
meeting amounted to less than 2/3 of the stockholders entitled to vote, the minimum number
required to effect a removal. No removal or ratification of a removal may be effected by less
than 2/3 vote of the stockholders. Further, it cannot ratify the December 1997 meeting for
failure to adhere to the requirement of the By-laws on notice as explained in paragraph (2)
above, even if it was accompanied by valid proxies, which it was not.
(5) The [the Cinco Group], their agents, representatives and all persons acting for and
conspiring on their behalf, are hereby permanently enjoined from carrying into effect the
resolutions and actions adopted during the 17 December 1997 and April 20, 1998 meetings
and of the Board of Directors and/or other stockholders' meetings resulting therefrom, and
from performing acts of control and management of the club.
(6) The expulsion of complainant Jose A. Bernas as well as the public auction of his share is
hereby declared void and without legal effect, as prayed for. While it is true that [the Cinco
Group] were no.t restrained from acting as directors during the pendency of this case, their
tenure as directors prior to this Decision is in the nature of de facto directors of a de facto
Board. Only the ordinary acts of administration which [the Cinco Group] carried out de facto
in good faith are valid. Other acts, such as political acts and the expulsion or other
disciplinary acts imposed on the [the Bernas Group] may not be appropriately taken by de
facto officers because the legality of their tenure as directors is not complete and subject to
the outcome of this case. (7) No awards for damages and attorney's fees. 18
On appeal, the SEC En Banc, in its 12 December 2000 Decision reversed the findings of the SICD
19
and validated the holding of the 17 December 1997 Special Stockholders' Meeting as well as the
Annual Stockholders' Meeting held on 20 April 1998 and 19 April 1999.
On 28 April 2003, the Court of Appeals rendered a Decision declaring the 17 December 1997
20
Special Stockholders' Meeting invalid for being improperly called but affirmed the actions taken
during the Annual Stockholders' Meeting held on 20 April 1998, 19 April 1999 and 17 April 2000.
In a Resolution dated 27 April 2004, the appellate court refused to reconsider its earlier decision.
21
Aggrieved by the disquisition of the Court of Appeals, both parties elevated the case before this
Court by filing their respective Petitions for Review on Certiorari. While the Bernas Group agrees
with the disquisition of the appellate court that the Special Stockholders' Meeting is invalid for being
called by the persons not authorized to do so, they urge the Court to likewise invalidate the holding
of the subsequent Annual Stockholders' Meetings invoking the application of the holdover principle.
The Cinco Group, for its part, insists that the holding. of 17 December 1997 Special Stockholders'
Meeting is valid and binding underscoring the overwhelming ratification made by the stockholders
during the subsequent annual stockholders' meetings and the previous refusal of the Corporate
Secretary to call a special stockholders' meeting despite demand. For the resolution of the Court are
the following issues:
The Issues
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE 17
DECEMBER 1997 SPECIAL STOCKHOLDERS' MEETING IS INVALID; AND
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO NULLIFY

THE HOLDING OF THE ANNUAL STOCKHOLDERS' MEETING ON 20 APRIL 1998, 19 APRIL
1999 AND 17 APRIL 2000.
The Court's Ruling
The Corporation Code laid down the rules on the removal of the Directors of the corporation by
providing, inter alia, the persons authorized to call the meeting and the number of votes required for
the purpose of removal, thus:
Sec. 28. Removal of directors or trustees. -Any director or trustee of a corporation may be removed
from office by a vote of the stockholders holding or representing at least two-thirds (2/3) of the
outstanding capital stock, or if the corporation be a non-stock corporation, by a vote of at least two-
thirds (2/3) of the members entitled to vote: Provided, That such removal shall take place either at a
regular meeting of the corporation or at a special meeting called for the purpose, and in either case,
after previous notice to stockholders or members of the corporation of the intention to propose such
removal at the meeting. A special meeting of the stockholders or members of a corporation for the
purpose of removal of directors or trustees, or any of them, must be called by the secretary on order
of the president or on the written demand of the stockholders representing or holding at least a
majority of the outstanding capital stock, or, if it be a non-stock corporation, on the written demand of
a majority of the members entitled to vote. Should the secretary fail or refuse to call the special
meeting upon such demand or fail or refuse to give the notice, or if there is no secretary, the call for
the meeting may be addressed directly to the stockholders or members by any stockholder or
member of the corporation signing the demand. Notice of the time and place of such meeting, as
well as of the intention to propose such removal, must be given by publication or by written notice
prescribed in this Code. Removal may be with or without cause: Provided, That removal without
cause may not be used to deprive minority stockholders or members of the right of representation to
which they may be entitled under Section 24 of this Code. (Emphasis supplied)
Corollarily, the pertinent provisions of MSC by-laws which govern the manner of calling and sending
of notices of the annual stockholders' meeting and the special stockholders' meeting provide:
SEC. 8. Annual Meetings. The annual meeting of stockholders shall be held at the Clubhouse on the
third Monday of April of every year unless such day be a holiday in which case the annual meeting
shall be held on the next succeeding business day. At such meeting, the President shall render a
report to the stockholders of the clubs.
xxxx
SEC. 10. Special Meetings. Special meetings of stockholders shall be held at the Clubhouse when
called by the President or by the Board of Directors or upon written request of the stockholders
representing not less than one hundred (100) shares. Only matters specified in the notice and call
will be taken up at special meetings.
xxxx
SEC. 25. Secretary. The Secretary shall keep the stock and transfer book and the corporate seal,
which he shall stamp on all documents requiring such seal, fill and sign together with the President,
all the certificates of stocks issued, give or caused to be given all notices required by law of these
By-laws as well as notices of all meeting of the Board and of the stockholders; shall certify as to
quorum at meetings; shall approve and sign all correspondence pertaining to the Office of the
Secretary; shall keep the minutes of all meetings of the stockholders, the Board of Directors and of
all committees in a book or books kept for that purpose; and shall be acting President in the absence
of the President and Vice-:President. The Secretary must be a citizen and a resident of the
Philippines. The Secretary shall keep a record of all the addresses and telephone numbers of all
stockholders.22
Textually, only the President and the Board of Directors are authorized by the by-laws to call a
special meeting. In cases where the person authorized to call a meeting refuses, fails or neglects to
call a meeting, then the stockholders representing at least 100 shares, upon written request, may file
a petition to call a special stockholder's meeting.
In the instant case, there is no dispute that the 17 December 1997 Special Stockholders' Meeting
was called neither by the President nor by the Board of Directors but by the MSCOC. While the
MSCOC, as its name suggests, is created for the purpose of overseeing the affairs of the
corporation, nowhere in the by-laws does it state that it is authorized to exercise corporate powers,
such as the power to call a special meeting, solely vested by law and the MSC by-laws on the
President or the Board of Directors.
The board of directors is the directing and controlling body of the corporation. It is a creation of the
stockholders and derives its power to control and direct the affairs of the corporation from them. The
board of directors, in drawing to itself the power of the corporation, occupies a position of trusteeship
in relation to the stockholders, in the sense that the board should exercise not only care and
diligence, but utmost good faith in the management of the corporate affairs. 23
The underlying policy of the Corporation Code is that the business and affairs of a corporation must
be governed by a board of directors whose members have stood for election, and who have actually
been elected by the stockholders, on an annual basis. Only in that way can the continued
accountability to shareholders, and the legitimacy of their decisions that bind the corporation's
stockholders, be assured. The shareholder vote is critical to the theory that legitimizes the exercise
of power by the directors or officers over the properties that they do not own. 24
Even the Corporation Code is categorical in stating that a corporation exercises its powers through
its board of directors and/or its duly authorized officers and agents, except in instances where the
Corporation Code requires stockholders' approval for certain specific acts:
SEC. 23. The Board of Directors or Trustees. - Unless otherwise provided in this Code, the
corporate powers of all the corporations formed under this Code shall be exercised, all business
conducted and all property of such corporations controlled and held by the board of directors and
trustees x x x.
A corporation's board of directors is understood to be that body which (1) exercises all powers
provided for under the Corporation Code; (2) conducts all business of the corporation; and (3)
controls and holds all the property of the corporation. Its members have been characterized as
trustees or directors clothed with fiduciary character.25
It is ineluctably clear that the fiduciary relation is between the stockholders and the board of directors
and who are vested with the power to manage the affairs of the corporation. The ordinary trust
relationship of · directors of a corporation and stockholders is not a matter of statutory or technical
law. It springs from the fact that directors have the control and guidance of corporate affairs and
26
property and hence of the property interests of the stockholders. Equity recognizes that
27
stockholders are the proprietors of the corporate interests and are ultimately the only beneficiaries
thereof. Should the board fail to perform its fiduciary duty to safeguard the interest of the
28
stockholders or commit acts prejudicial to their interest, the law and the by-laws provide mechanisms
to remove and replace the erring director. 29
Relative to the powers of the Board of Directors, nowhere in the Corporation Code or in the MSC by-
laws can it be gathered that the Oversight Committee is authorized to step in wherever there is
breach of fiduciary duty and call a special meeting for the purpose of removing the existing officers
and electing their replacements even if such call was made upon the request of shareholders.
Needless to say, the MSCOC is neither · empowered by law nor the MSC by-laws to call a meeting
and the subsequent ratification made by the stockholders did not cure the substantive infirmity, the
defect having set in at the time the void act was done. The defect goes into the very authority of the
persons who made the call for the meeting. It is apt to recall that illegal acts of a corporation which
contemplate the doing of an act which is contrary to law, morals or public order, or contravenes
some rules of public policy or public duty, are, like similar transactions between individuals,
void. They cannot serve as basis for a court action, nor acquire validity by performance, ratification
30
or estoppel. The same principle can apply in the present case. The void election of 17 December
31
1997 cannot be ratified by the subsequent Annual Stockholders' Meeting.
A distinction should be made between corporate acts or contracts which are illegal and those which
are merely ultra vires. The former contemplates the doing of an act which are contrary to law, morals
or public policy or public duty, and are, like similar transactions between individuals, void: They
cannot serve as basis of a court action nor acquire validity by performance, ratification or estoppel.
Mere ultra vires acts, on the other hand, or those which are not illegal or void ab initio, but are not
merely within the scope of the articles of incorporation, are merely voidable and may become
binding and enforceable when ratified by the stockholders. The 1 7 December 1997 Meeting
32
belongs to the category of the latter, that is, it is void ab initio and cannot be validated.
Consequently, such Special Stockholders' Meeting called by the Oversight Committee cannot have
any legal effect. The removal of the Bernas Group, as well as the election of the Cinco Group,
effected by the assembly in that improperly called meeting is void, and since the Cinco Group has no
legal right to sit in the board, their subsequent acts of expelling Bernas from the club and the selling
of his shares. at the public auction, are likewise invalid.
The Cinco Group cannot invoke the application of de facto officership doctrine to justify the actions
taken after the invalid election since the operation of the principle is limited to third persons who
were originally not part of the corporation but became such by reason of voting of government-
sequestered shares. In Cojuangco v. Roxas, the Court deemed the directors who were elected
33 34
through the voting of government of sequestered shares who assumed office in good faith as de
facto officers, viz:
In the light of the foregoing discussion, the Court finds and so holds that the PCGG has no right to
vote the sequestered shares of petitioners including the sequestered corporate shares. Only their
owners, duly authorized representatives or proxies may vote the said shares. Consequently, the
election of private respondents Adolfo Azcuna, Edison Coseteng and Patricio Pineda as members of
the board of directors of SMC for 1990-1991 should be set aside. However, petitioners cannot be
declared as duly elected members of the board of directors thereby. An election for the purpose
should be held where the questioned shares may be voted by their owners and/or their proxies.
Such election may be held at the next shareholders' meeting in April 1991 or at such date as may be
set under the by-laws of SMC.
Private respondents in both cases are hereby declared to be de facto officers who in good faith
assumed their duties and responsibilities as duly elected members of the board of directors of the
SMC. They are thereby legally entitled to emoluments of the office including salary, fees and other
compensation attached to the office until they vacate the same. (Emphasis supplied)
Apparently, the assumption of office of the Cinco Group did not bear parallelism with the factual
milieu in Cojuangco and as such they cannot be considered as de facto officers and thus, they are
without colorable authority to authorize the removal of Bernas and the sale of his shares at the public
auction. They cannot bind the corporation to third persons who acquired the shares of Bernas and
such third persons cannot be deemed as buyer in good faith. 35
The case would have been different if the petitioning stockholders went directly to the SEC and
sought its assistance to call a special stockholders' meeting citing the previous refusal of the
Corporate Secretary to call a meeting. Where there is an officer authorized to call a meeting and that
officer refuses, fails, or neglects to call a meeting, the SEC can assume jurisdiction and issue an
order to the petitioning stockholder to call a meeting pursuant to its regulatory and administrative
powers to implement the Corporation Code. This is clearly provided for by Section 50 of the
36
Corporation Code which we quote:
Sec. 50. Regular and special meetings of stockholders or members. - x x x
xxxx
Whenever, for any cause, there is no person authorized to call a meeting, the Securities and
Exchange Commission, upon petition of a stockholder or member, and on a showing of good cause
therefore, may issue an order to the petitioning stockholder or member directing him to call a
meeting of the corporation by giving proper notice required by this Code or by the by-laws. The
petitioning stockholder or member shall preside thereat until at least majority of the stockholders or
members present have chosen one of their member[s] as presiding officer.
As early as Ponce v. Encarnacion, etc. and Gapol, the Court of First Instance (now the SEC) is
37 38
empowered to call a meeting upon petition of the stockholder or member and upon showing of good
cause, thus:
On the showing of good cause therefore, the court may authorize a stockholder to call a meeting and
to preside thereat until the majority stockholders representing a majority of the stock present and
permitted to be voted shall have chosen one among them to preside it. And this showing of good
cause therefor exists when the court is apprised of the fact that the by-laws of the corporation
require the calling of a general meeting of the stockholders to elect the board of directors but the call
for such meeting has not been done. 39
The same jurisprudential rule resonates in Philippine National Construction Corporation v.

Pabion, where the Court validated the order of the SEC to compel the corporation to conduct a
40
stockholders' meeting in the exercise of its regulatory and administrative powers to implement the
Corporation Code:
SEC's assumption of jurisdiction over this case is proper, as the controversy involves the election of
PNCC's directors. Petitioner does not really contradict the nature of the question presented and
agrees that there is an intra-corporate question involved.
xxxx
Prescinding from the above premises, it necessarily follows that SEC can compel PNCC to hold a
stockholders' meeting for the purpose of electing members of the latter's board of directors.
xxxx
As respondents point out, the SEC's action is also justified by its regulatory and administrative
powers to implement the Corporation Code, specifically to compel the PNCC to hold a stockholders'
meeting for election purposes. 41
Given the broad administrative and regulatory powers of the SEC outlined under Section 50 of the
Corporation Code and Section 6 of Presidential Decree (PD) No. 902-A, the Cinco Group cannot
claim that if was left without recourse after the Corporate Secretary previously refused to heed its
demand to call a special stockholders' meeting. If it be true that the Corporate Secretary refused to
call a meeting despite fervent demand from the MSCOC, the remedy of the stockholders would have
been to file a petition to the SEC to direct him to call a meeting by giving proper notice required
under the Code. To rule otherwise would open the floodgates to abuse where any stockholder, who
consider himself aggrieved by certain corporate actions, could call a special stockholders' meeting
for the purpose of removing the sitting officers in direct violation of the rules pertaining to the call of
meeting laid down in the by-laws.
Every corporation has the inherent power to adopt by-laws for its internal government, and to
regulate the conduct and prescribe the rights and duties of its members towards itself and among
themselves in reference to the management of its affairs. The by-laws of a corporation are its own
42
private laws which substantially have the same effect as the laws of the corporation. They are in
effect written into the charter. In this sense they become part of the fundamental law of the
corporation with which the corporation and its directors and officers must comply. The general rule
43
is that a corporation, through its board of directors, should act in the manner and within the
formalities, if any, prescribed in its charter or by the general law. Thus, directors must act as a body
in a meeting called pursuant to the law or the corporation's by-laws, otherwise, any action taken
therein may be questioned by the objecting director or shareholder. 44
Certainly, the rules set in the by-laws are mandatory for every member of the corporation to
respect. They are the fundamental law of the corporation with which the corporation and its officers
1âwphi1
and members must comply. It is on this score that we cannot upon the other hand sustain the
Bernas Group's stance that the subsequent annual stockholders' meetings were invalid.
First, the 20 April 1998 Annual Stockholders Meeting was valid because it was sanctioned by
Section 8 of the MSC bylaws. Unlike in Special Stockholders Meeting wherein the bylaws
45 46
mandated that such meeting shall be called by specific persons only, no such specific requirement
can be obtained under Section 8.
Second, the 19 April 1999 Annual Stockholders Meeting is likewise valid because in addition to the
fact that it was conducted in accordance to Section 8 of the MSC bylaws, such meeting was
supervised by the SEC in the exercise of its regulatory and administrative powers to implement the
Corporation Code. 47
Needless to say, the conduct of SEC supervised Annual Stockholders Meeting gave rise to the
presumption that the corporate officers who won the election were duly elected to their positions and
therefore can be rightfully considered as de jure officers. As de jure officials, they can lawfully
exercise functions and legally perform such acts that are within the scope of the business of the
corporation except ratification of actions that are deemed void from the beginning.
Considering that a new set of officers were already duly elected in 1998 and 1999 Annual
Stockholders Meetings, the Bernas Group cannot be permitted to use the holdover principle as a
shield to perpetuate in office. Members of the group had no right to continue as directors of the
corporation unless reelected by the stockholders in a meeting called for that purpose every
year. They had no right to hold-over brought about by the failure to perform the duty incumbent
48
upon them. If they were sure to be reelected, why did they fail, neglect, or refuse to call the meeting
49
to elect the members of the board? 50
Moreover, it is fundamental rule that factual findings of quasi-judicial agencies like the SEC, if
supported by substantial evidence, are generally accorded not only great respect but even finality,
and are binding upon this Court unless it was shown that the quasi-judicial agencies had arbitrarily
disregarded evidence before it had misapprehended evidence to such an extent as to compel a
contrary conclusion if such evidence had been properly appreciated. It is not the function of this
51
Court to analyze or weigh all over again the evidence and credibility of witnesses presented before
the lower court, tribunal, or office, as we are not trier of facts. Our jurisdiction is limited to reviewing
52
and revising errors of law imputed to the lower court, the latter's finding of facts being conclusive and
not reviewable by this Court. However, when it can be shown that administrative bodies grossly
53
misappreciated evidence of such nature as to compel a contrary conclusion, the Court will not
hesitate to reverse its factual findings. In the case at bar, the incongruent findings of the SEC on the
54
one hand, and the Court of Appeals on the other, constrained the Court to review the records to
ascertain which body correctly appreciated the facts vis-a-vis the standing statutory and
jurisprudential principles.
After finding that the ruling of the appellate court was in accordance with the existing laws and
jurisprudence as exhaustively discussed above, we hereby quote with approval its disquisition: (1)
The supposed Special Stockholders' Meeting of 1 7 December 1997 was prematurely or invalidly
called by the [Cinco Group]. It therefore failed to produce any legal effects and did not effectively
remove [the Bernas Group] as directors of the Makati Sports Club, Inc.;
(2) The expulsion of [Bernas] as well as the public auction of his shares is hereby declared
void and without legal effect;
(3) The ratification of the removal of [the Bernas Group] as directors, the expulsion of Bernas
and the sale of his share by the [Cinco Group] and by the stockholders held in their Regular
Stockholders' Meeting held in April of 1998, 1999 and 2000, is void and produces no effects
as they were not the proper party to cause the ratification;
(4) All other actions of the [Cinco Group] and stockholders taken during the Regular
Stockholders' Meetings held in April 1998, 1999 and 2000, including the election of the
[Cinco Group] as directors after the expiration of the term of office of [Bernas Group] as
directors, are hereby declared valid.55
In fine, we hold that 17 December 1997 Special Stockholders' Meeting is null and void and produces
no effect; the resolution expelling the Bernas Group from the corporation and authorizing the sale of
Bernas' shares at the public auction is likewise null and void. The subsequent Annual Stockholders'
Meeting held on 20 April 1998, 19 April 1999 and 17 April 2000 are valid and binding except the
ratification of the removal of the Bernas Group and the sale of Bernas' shares at the public auction
effected by the body during the said meetings. The expulsion of the Bernas Group and the
subsequent auction of Bernas' shares are void from the very beginning and therefore the ratifications
effected during the subsequent meetings cannot be sustained. A void act cannot be the subject of
ratification.
56
WHEREFORE, premises considered, the petitions of Jose A. Bernas, Cecile. H. Cheng, Victor
Africa, Jesus B. Maramara, Jose T. Frondoso, Ignacio A. Macrohon and Paulino T. Lim in G.R. Nos.
163356-57 and of Jovencio Cinco, Ricardo Librea and Alex Y. Pardo in G.R. Nos. 163368-69 are
hereby DEN~ED. The assailed Decision dated 28 April 2003 and Resolution dated 27 April 2004 of
the Court of Appeals are hereby AFFIRMED.
SO ORDERED.
JOSE PORTUGAL PEREZ

Associate Justice
WE CONCUR:

Chief Justice
Chairperson
TERESITA J. LEONARDO DE-CASTRO LUCAS P. BERSAMIN

Please see Separate Concurring Opinion

Associate Justice
CERTIFICATION
Decision were reached in consultation before the case was assigned to the writer of the opinion of
the Court's Division.
Chief Justice
Footnotes
1
Rollo (G.R. Nos. 163368-69), pp. 38-78. Rollo (G.R. Nos. 163356-57), pp. 44-99.
Id. at 10-35 (G.R. No. 163368-69; Penned by Associate Justice Eugenio S. Labitoria with
2
Associate Justices Andres B. Reyes, Jr. and Rega!ado E. Maambong concurring.
3
Id. at 23-24.
4
Id. at 129-130.
5
Id. at 120-127.
6
Id. at 150.
7
Id. at 175-179.
8
Id. at 115; Amended By-Laws of the MSC.
SEC. 25. Secretary. The Secretary shall keep the stock and transfer book and the
corporate seal, which he shall stamp on all documents requiring such seal; fill and
.sign together with the President, all the certificates of stocks issued, give or caused
to be given all notices required by law of these By-laws as well as notices of all
meeting of the Board and of the stockholders; shall certify as to quorum at meetings;
shall approve and sign all correspondence pertaining to the Office of the Secretary;
shall keep the minutes of all meetings of the stockholders, the Board of Directors and
of all committees in a book or books kept for that purpose; and shall be acting
President in the absence of the President and Vice-:President. The Secretary must
be a citizen and a resident of the Philippines. The Secretary shall keep a record of all
the addresses and telephone numbers of all stockholders.
9
Id. at 245-310.
10
Id. at 185-200.
11
Id. at 201-203.
12
Id. at 204.
13
Id. at 112; Amended By-Laws of the MSC
SEC. 8. Annual Meetings. The annual meeting of stockholders shall be held at the
Clubhouse on the third Monday of April of every year unless such day be a holiday in
which case the annual meeting shall be held on the next succeeding business day.
At such meeting, the President shall render a report to the stockholders of the clubs.
Id. at 83-84.
14
Rollo (G.R. Nos. 163356-57), pp. 114-146.

15
Rollo (G.R. Nos. 163368-69), pp. 233-239.

16
Id. at 311-322.
17
Id. at 321-322.
18
Id. at 323-345 .
19
Id. at 10-26.
20
Id. at 27-35.
21
Rollo (G.R. Nos. 163368-69, p. 112 and 115; Amended By-laws of the Makati Sports Club.
22
Valle Verde Country Club, Inc. et al. v. Africa, 614 Phil. 391, 399-400 (2009).
23
Id. at 400.
24
Raniel v. Jochico, 546 Phil. 54, 60 (2007).

25
Gokongwei, Jr. v. Securities and Exchange Commission, 178 Phil. 266, 299 (1979).
26
Id.
27
Id .
28
Id.
29
Pirovano, et al. v. De la Rama Steamship Co., 96 Phil. 335, 360 (1954).

30
Id.
31
Id.
32
Cojuangco, Jr. v. Roxas, 273 Phil. 168 (1991 ).

33
Id. at 187.
34
A purchaser in good faith and for value is one who buys the property of another without
35
notice that some other person has a right to or interest in it, and who pays therefor a full and
fair price at the time of the purchase or before receiving such notice. (Potenciano v.
Reynoso, 449 Phil. 396, 410 [2003])
Section 6 of Presidential Decree No. 902-A provides:
36
SECTION 6. In order to effectively exercise such jurisdiction [referring to Section 5],

the Commission shall possess the following powers:
x x xx
(c) To compel the officers of any corporation or association registered by it to call

meetings of stockholders or members thereof under its supervision;
94 Phil. 81 (1953).

37
Under the provisions of Republic Act No. 296 (Judiciary Act of 1948) which took effect on
38
17 June 1948, the court of first Instance have original jurisdiction to entertain "all cases
which the demand, exclusive of interests, or the value of the property in controversy amounts
to more than ₱2,000.00." Likewise they have the power to issue writs of injunction, certiorari,
madamus, prohibition, quo warranto and habeas corpus in their respective provinces and
districts in the manner provided for in the Rules of Court.
On the other hand, Presidential Decree No. 902-A (SEC Reorganization Act) on 11
March 1976, confers upon the SEC, "in addition to (its) regulatory and administrative
functions, original and exclusive jurisdiction to hear and decide cases involving
fraudulent devices or schemes, intra-corporate or partnership disputes, and
controversies n elections and appointments of directors and officers. Thus, in Phil ex
Mining Corporation v. Reyes, (No. L-57707, 19 November 1982, 118 SCRA 602,
607), the Court held "the controversy between the parties being clearly an intra-
corporate one, it is the SEC, as held by it and not respondent Court of First Instance,
that has original exclusive jurisdiction, by express mandate of law."
Pursuant to Republic Act No. 8799 (Securities Regulation Code of 2001) which took
effect on 8 August 2000, the jurisdiction of the SEC to decide cases involving intra-
corporate dispute was transferred to the courts of general jurisdiction and, in
accordance therewith, all cases of this nature, with the exception only of those
submitted for decision, were transferred to the regular courts. See Pascual v. Court
of Appeals, 393 Phil. 497 (2000).
Ponce v. Encarnacion, etc. and Gapol, supra note 37 at 85.

39
377 Phil. 1019 (1999).

40
Id. at 1040-1041.
41
Gokongwei, Jr. v. Securities and Exchange Commission, supra note 26 at 296.

42
Pena v. Court of Appeals, 271 Phil. 751, 765 (1991).

43
Lopez Realty, Inc., v. Fontecha, 317 Phil. 216, 226 (1995).

44
SEC. 8. Annual Meetings. The annual meeting of stockholders shall be held at the
45
Clubhouse on the third Monday of April of every year unless such day be a holiday in which
case the annual meeting shall be held on the next succeeding business day. At such
meeting, the President shall render a report to the stockholders of the clubs. (Rollo (G.R.
Nos. 1663368-69), p. 112).
SEC. 10. Special Meetings. Special meetings of stockholders shall be held at the
46
clubhouse when called by the President pr by the Board of Directors or upon written request
of the stockholders representing not less than one hundred ( 100) shares. Only matters
specified in the notice and call will be taken up at special meetings. (Id.).
Sec. 50. Regular and special meetings of stockholders or members. - x x x Whenever, for
47
any cause, there is no person authorized to call a meeting, the Securities and Exchange
Commission, upon petition of a stockholder or member, and on showing of good cause
therefore, may issue an order to the petitioning stockholder or member directing him to call a
meeting of the corporation by giving proper notice required by this Code or by the by-laws.
The petitioning stockholder or member shall preside thereat until at least majority of the
stockholders or members present have chosen one of their member[s] as presiding officer.
Ponce v. Encarnacion, etc. and Gapol, supra note 37 at 87.

48
Id.
49
Id.
50
Batangas Laguna Tayabas Bus Co., Inc. v. Bitanga, 415 Phil. 43, 59 (2001).
51
Cuenca v. Atas, 561 Phil. 186, 220 (2007).

52
Id.
53
Fujitsu Computer Products, Corp. v. Court of Appeals, 494 Phil. 697, 716 (2005).
54
Rollo (G.R. Nos. 163368-69), p. 24.

55
Pirovano v. De la Rama Steamship Co., supra note 30 at 361.

56
March 18, 2015
G.R. No. 203240
NORTHERN ISLANDS, CO., INC., Petitioner,

vs.
SPOUSES DENNIS and CHERYLIN GARCIA, doing business under the name and style
*
"Ecolamp Multi Resources,", Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari are the Decision dated January 19, 2012 and the
1 2
Resolution dated August 24, 2012 of the Court of Appeals (CA) in CA-G.R. SP No. 97448, ordering
3
the Regional Trial Court of Quezon City, Branch 215 (RTC) to appoint a commissioner to determine
the value of the attached properties of respondents Spouses Dennis and Cherylin Garcia
(respondents), and to discharge any excessive attachment found thereby.
The Facts
On September 23, 2005, petitioner Northern Islands Co., Inc. (petitioner) filed a Complaint with
4
application for a writ of preliminary attachment, before the RTC against respondents, docketed as
Civil Case No. Q-05-53699 (Main Case), which was subsequently amended on October 25, 2005. It
5 6
alleged that: (a) from March to July 2004, petitioner caused the delivery to respondents of various
appliances in the aggregate amount of P8,040,825.l 7; (b) the goods were transported, shipped, and
7
delivered by Sulpicio Lines, Inc., and were accepted in good order and condition by respondents'
representatives; (c) the parties agreed that the goods delivered were payable within 120 days, and
8
that the unpaid amounts would earn interest at a rate of eighteen percent (18%) per annum; (d) 9
however, the value of the goods were not paid by respondents despite repeated demands; and (e) 10
respondents fraudulently asserted that petitioner had no proof that they had indeed received the
quantity of the subject goods.11
In connection with the application for a writ of preliminary attachment, petitioner posted a bond,
through Visayan Surety and Insurance Corporation, in the amount of P8,040,825.l 7. On November
7, 2005, the RTC issued the writ sought for. 12
Instead of filing an answer, respondents filed on November 11, 2001, an Urgent Motion for
Extension of Time to File Proper Pleading and Motion for Discovery (Production and
Inspection) (November 11, 2001 Motion), asking the RTC to allow them to photocopy and
13
personally examine the original invoices, delivery cargo receipts, and bills of lading attached to the
Amended Complaint, claiming that they could not "come up with an intelligent answer" without being
presented with the originals of such documents. 14
Thereafter, or on January 11, 2006, respondents filed a Motion to Discharge Excess

Attachment, alleging that the attachment previously ordered by the RTC exceeded by
15
P9,232,564.56 given that the estimated value of the attached properties, including the garnished
bank accounts, as assessed by their appraiser, Gaudioso W. Lapaz (Lapaz), amounted to Pl
7,273,409.73, while the attachment bond is only in the amount of P8,040,825.17. 16
In an Order dated February 28, 2006, the RTC denied the November 11, 2001 Motion, and,
17
instead, directed respondents to file their answer, which the latter complied with through the filing of
their Answer Ad Cautelam Ex Abudante with Compulsory Counterclaim on April 3, 2006. Despite
18
this, respondents again filed a Motion for Leave of Court to File Motion for Discovery (Production
and Inspection) (Motion for Discovery) on April 7, 2006.
19 20
The RTC Ruling
In an Order dated June 21, 2006, the RTC, among others, denied the Motion to Discharge Excess
21
Attachment, finding that the appraisal made by Lapaz was not reflective of the true valuation of the
properties, adding too that the bond posted by petitioner stands as sufficient security for whatever
damages respondents may sustain by reason of the attachment. 22
On the other hand, the RTC granted the Motion for Discovery in accordance with Rule 27 of the
Rules of Court, despite petitioner's claim that it did not have the originals of the documents being
sought.23
However, no production or inspection was conducted on July 10, 2006 as the RTC directed since
respondents received the copy of the above order only on July 11, 2006. 24
On July 25, 2006, respondents filed a Motion for Partial Reconsideration of the Order dated June 21,
2006, specifically assailing the denial of their Motion to Discharge Excess Attachment. In this
relation, they prayed that the RTC refer to a commissioner, pursuant to Rule 32 of the Rules of
Court, the factual determination of the total aggregate amount of respondents' attached properties so
as to ascertain if the attachment was excessive. Also, they prayed that the order for production and
inspection be modified and that petitioner be ordered to produce the original documents anew for
their inspection and copying. 25
The foregoing motion was, however, denied by the RTC in an Order dated August 23, 2006 for lack
26
of merit. Thus, respondents elevated the matter to the CA via petition for certiorari and
mandamus, docketed as CA-G.R. SP No. 97448 (Certiorari Case).
27
In the interim, the RTC rendered a Decision dated September 21, 2011 in the Main Case.
28
Essentially, it dismissed petitioner's Amended Complaint due to the absence of any evidence to
prove that respondents had agreed to the pricing of the subject goods. 29
The RTC's September 21, 2011 Decision was later appealed by petitioner before the CA on
30
October 27, 2011. Finding that the Notice of Appeal was seasonably filed, with the payment of the
appropriate docket fees, the RTC, in an Order dated January 25, 2012, ordered the elevation of the
31
entire records of the Main Case to the CA. The appeal was then raffled to the CA's Eighth Division,
and docketed as CA-GR. CV No. 98237. On the other hand, records do not show that respondents
filed any appeal.32
The CA Ruling in the Certiorari Case
Meanwhile, the CA, in a Decision dated January 19, 2012, partly granted the certiorari petition of
33
respondents, ordering the RTC to appoint a commissioner as provided under Rule 32 of the Rules of
Court as well as the subsequent discharge of any excess attachment if so found therein, and, on the
other hand, denying respondents' Motion for Discovery. 34
It held that: (a) on the issue of attachment, trial by commissioners under Rule 32 of the Rules of
Court was proper so that the parties may finally settle their conflicting valuations; and (b) on the
35
matter of discovery, petitioner could not be compelled to produce the originals sought by
respondents for inspection since they were not in the former's possession. 36
Aggrieved, petitioner filed a Motion for Partial Reconsideration on February 13, 2012 but was,
37
however, denied in a Resolution dated August 24, 2012, hence, the present petition.
38
The Issues Before the Court
The issues presented for the Court's resolution are: (a) whether the RTC had lost jurisdiction over
the matter of the preliminary attachment after petitioner appealed the decision in the Main Case, and
thereafter ordered the transmittal of the records to the CA; and (b) whether the CA erred in ordering
the appointment of a commissioner and the subsequent discharge of any excess attachment found
by said commissioner.
The Court's Ruling
Section 9, Rule 41 of the Rules of Court provides that in appeals by notice of appeal, the court
loses jurisdiction over the case upon the perfection of the appeals filed in due time and the
expiration of the time to appeal of the other parties.
In this case, petitioner had duly perfected its appeal of the RTC's September 21, 2011 Decision
resolving the Main Case through the timely filing of its Notice of Appeal dated October 27, 2011,
together with the payment of the appropriate docket fees. The RTC, in an Order dated January 25,
39
2012, had actually confirmed this fact, and thereby ordered the elevation of the entire records to the
CA. Meanwhile, records do not show that.respondents filed any appeal, resulting in the lapse of its
own period to appeal therefrom. Thus, based on Section 9, Rule 41, it cannot be seriously doubted
that the RTC had already lost jurisdiction over the Main Case.
With the RTC's loss of jurisdiction over the Main Case necessarily comes its loss of jurisdiction all
over matters merely ancillary thereto. Thus, the propriety of conducting a trial by commissioners in
order to determine the excessiveness of the subject preliminary attachment, being a mere ancillary
matter to the Main Case, is now mooted by its supervening appeal in CA-G.R. CV No. 98237.
Note that in Sps. Olib v. Judge Pastoral, the Court, in view of the nature of a preliminary
40
attachment, definitively ruled that the attachment itself cannot be the subject of a separate action
independent of the principal action because the attachment was only an incident of such action, viz.:
Attachment is defined as a provisional remedy by which the property of an adverse party is taken
into legal custody, either at the commencement of an action or at any time thereafter, as a security
for the satisfaction of any judgment that may be recovered by the plaintiff or any proper party.
It is an auxiliary remedy and cannot have an independent existence apart from the main suit or claim
instituted by the plaintiff against the defendant.isi Being merely ancillary to a principal
proceeding, the attachment must fail if the suit itself cannot be maintained as the purpose of
the writ can no longer be justified.
The consequence is that where the main action is appealed, the attachment which may have been
issued as an incident of that action, is also considered appealed and so also removed from the
jurisdiction of the court a quo. The attachment itself cannot be the subject of a separate action
independent of the principal action because the attachment was only an incident of such
action. (Emphases supplied)
41
That being said, it is now unnecessary to discuss the other issues raised herein. In fine, the petition
is granted and the assailed CA rulings are set aside.
WHEREFORE, the petition is GRANTED. The Decision dated January 19, 2012 and the Resolution
dated August 24, 2012 of the Court of Appeals in CA-G.R. SP No. 97448 are hereby SET ASIDE.
SO ORDERED.
Associate Justice
WE CONCUR:
TERESITA J. LEONARDO-DE CASTRO **
Associate Justice
Acting Chairperson
LUCAS P. BERSAMIN JOSE PORTUGAL PEREZ

FRANCIS H. JARDELEZA ***
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the case
TERESITA J. LEONARDO-DE CASTRO

Associate Justice
Acting Chairperson, First Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Acting Chairperson's
Attestation, I certify that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court's Division.
ANTONIO T. CARPIO
Acting Chief Justice
Footnotes
*
"Cherrylyn" and "Cherilyn" in some parts of the rollo.
**
Per Special Order No. 1946 dated March 12, 20 I5.
***
Designated Additional Member per Special Order No. 1952 dated March 18, 2015.
1
Rollo, pp. 3-23.
Id. at 29-47. Penned by Associate Justice Romeo F. Barza with Associate Justices Noel G.
2
Tijam and Edwin D. Sorongon concurring.

Id. at 49-50. Penned by Associate Justice Romeo F. Barza with Associate Justices Noel G.
3
Tijam and Edwin D. Sorongon concurring.
4
Not attached to the rollo.
See Amended Complaint (with Ex Parte Application for Issuance of Writ of Preliminary
5
Attachment) dated October 17, 2002; rollo, pp. 82-89.
6
Id. at 30.
7
Id. at 83.
8
Id.
9
Id.
10
Id. at 84.
11
Id. at 86.
12
Id. at 30-31.
13
14
Rollo, p. 31.
15
Dated January 11, 2006. Id. at 91-102.
16
Id. at 32.
17
18
19
20
Rollo, pp. 8-9 and 32.
21
Id. at 137-139. Penned by Judge Ma. Luisa C. Quijano-Padilla.
22
Id.atl38.
23
Id.
24
Id. at 33.
25
Id. at 33-34.
26
Id. at 140.
Erroneously titled as a petition for review on certiorari dated December 15, 2006. Id. at
27
141-174.
Id. at 62-76. Penned by Judge Ma. Luisa C. Quijano-Padilla.

28
Id. at 72.
29
Dated October 24, 2011. Id. at 267-269.

30
Id. at 81 and 271.

31
Id. at 10.
32
Id. at 29-47.
33
Id. at 46.
34
See id. at 41-42.

35
See id. at 45-46.

36
Dated February 6, 2012. Id. at 51-60.

37
Id. at 49-50.
38

39
266 Phil 762 (1990).

40
Id. at 766-767.
41
G.R. No. 207804 June 17, 2015
ACE NAVIGATION COMPANY and VELA INTERNATIONAL MARINE LIMITED, Petitioners,

vs.
SANTOS D. GARCIA, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari are the Decision dated December 14, 2012 and the
1 2
Resolution dated June 19, 2013 of the Court of Appeals (CA) in CA-G.R. SP No. 123272, which
3
reversed and set aside the Decision dated October 24, 2011 and the Resolution dated December
4 5
12, 2011 of the National Labor Relations Commission (NLRC) in NLRC LAC No. 08-000688-11 and,
accordingly, ordered petitioners Ace Navigation Company (Ace Navigation) and Vela International
Marine Limited (Vela International; collectively, petitioners) to jointly and severally pay respondent
Santos D. Garcia (Garcia) total and permanent disability benefits in the amount of US$80,000.00
and attorney's fees of ten percent (10%) of the total monetary award, both at its peso equivalent at
the time of actual payment.
The Facts
On November 3, 2009, Ace Navigation hired Garcia to work as a fitter for the vessel M/T Capricorn
Star, owned by Vela International, for a period of eight (8) months, with a basic monthly salary of
US$850.00, guaranteed overtime pay of US$475.07, and vacation leave pay of US$223.56. As a 6
registered member of the Associated Marine Officers’ and Seamen’s Union of the Philippines
(AMOSUP), Garcia’s employment was covered by a Collective Bargaining Agreement executed 7
between petitioners and AMOSUP (VELA-AMOSUP CBA). Pursuant to the employment

contract, Garcia boarded Vela International’s vessel, M/T Capricorn Star on November 11, 2009.
8 9
On February 9, 2010, Garcia claimed that while doing grinding work, he slipped and fell, causing
pain in his right arm, shoulder, and chest. As his condition persisted, he requested his superior for a
10
medical check-up at the nearest port of call. Upon arrival of the vessel in Venezuela on May 17,
11
2010, Garcia underwent a medical consultation where he was diagnosed with "Contracture
12
Muscular Abnormality" and was recommended to be repatriated. Thus, on May 20, 2010, Garcia was
repatriated back to the Philippines. 13
Following Garcia’s repatriation, he was initially diagnosed by company-designated physician Dr.
14
Susannah Ong-Salvador (Dr. Salvador) to be suffering from a work-related bilateral shoulder

strain/sprain and a non-work-related ganglion cyst on his right wrist, as well as an incidental finding
of ureterolithiasis. Garcia also underwent numerous magnetic resonance imaging examinations
15
where it was discovered that he was suffering from bulges on his spine. Thus, through numerous
medical consultations with the company-designated physician, Garcia received treatment for his
medical condition that resulted from his accident, as well as for his subsequently-diagnosed kidney
ailment.16
Sometime in November 2010, Garcia received medical treatment from another company-designated
physician, Dr. Nicomedes Cruz (Dr. Cruz), for the persistent pain he was experiencing on his
shoulder and posterior cervical spine. Garcia was then advised to undergo operation to remove a
disc in his spine, which he refused. 17
On November 8, 2010, Garcia filed a claim for total and permanent disability benefits against
18
petitioners before the NLRC, docketed as NLRC NCR (M)-11-15744-10. In support of his position,
19
Garcia averred that he consulted an independent physician, Dr. Nicanor F. Escutin (Dr. Escutin),
who diagnosed him with a work-related total and permanent injury on his cervical spine, rendering
him unfit to be a seaman in whatever capacity. 20
In their defense, petitioners asserted that Garcia’s illnesses, i.e., ganglion cyst and nephrolithiasis,
are not work-related, and he was already declared fit to work on October 28, 2010 by his
urologist. While petitioners admitted that Garcia continued to suffer pain on his right shoulder which
21
necessitated continuous physical therapy sessions and medication, they nevertheless rejected
Garcia’s claim for total disability. In this relation, petitioners pointed out that on January 12, 2011,
22
Dr. Cruz already recommended that Garcia be accorded disability rating of "Grade 10 – Moderate
stiffness or two-thirds (⅔) loss of motion of the neck, based on the [Philippine Overseas Employment
Administration (POEA)] Schedule of Disability Grading." Lastly, petitioners maintained that the
23
aforesaid findings of the company-designated physician should be accorded utmost respect and
consideration. 24
The LA Ruling
In a Decision dated June 28, 2011, the Labor Arbiter (LA) ruled in Garcia’s favor, and accordingly,
25
ordered petitioners to jointly and severally pay him permanent total disability benefits in the amount
of US$80,000.00 and attorney’s fees of ten percent (10%) of the total monetary award, both at its
peso equivalent at the time of payment. 26
The LA found that Garcia is entitled to permanent total disability benefits given that his physical
condition prevented him from resuming his trade as a seaman since his repatriation on May 20,
2010 until the present, or for a period of more than 120 days. The LA gave credence to the findings
27
of the independent physician, Dr. Escutin, over that of the company-designated physician, Dr. Cruz,
opining that the assessment and declarations of a company-designated physician should not
prejudice Garcia’s claim for disability benefits, considering that a seafarer may resort to other equally
competent medical professionals to prove the nature of his injury. Lastly, the LA granted Garcia’s
28
claim for attorney’s fees since he was forced to litigate and incur expenses for the protection of his
rights and interests. 29
Dissatisfied, petitioners appealed to the NLRC, which was docketed as NLRC LAC No. 08-000688-
30
11.
The NLRC Ruling
In a Decision dated October 24, 2011, the NLRC granted the appeal, and thereby, decreased the
31
award of Garcia’s disability benefits to US$10,075.00 and deleted the award of attorney’s fees in his
favor.
32
Contrary to the findings of the LA, the NLRC found that since the company-designated physician, Dr.
Cruz, assessed Garcia with a Grade 10 disability rating and that no other disability rating appears on
record, Garcia was, thus, bound thereto. As such, he is only entitled to the aforesaid amount
33
pursuant to the VELA-AMOSUP CBA, which is the prevailing law between petitioners and
Garcia. The NLRC discredited the declaration of the independent physician, Dr. Escutin, that Garcia
34
was permanently unfit for sea duty given that his disability report did not show that he conducted
independent tests to verify his physical condition, but merely based his review on the medical
findings of petitioners’ designated physicians. Finally, the NLRC deleted the award of attorney’s
35
fees since petitioners acted within their rights in denying Garcia’s claim for permanent total disability
benefits. 36
Garcia moved for reconsideration which the NLRC denied in a Resolution dated December 12,
37 38
2011. Aggrieved, he filed a petition for certiorari before the CA.

39
The CA Ruling
In a Decision dated December 14, 2012, the CA reversed and set aside the ruling of the NLRC, and
40
accordingly, reinstated that of the LA. The CA agreed with the LA that Garcia’s inability to perform
41
any gainful employment for a continuous period of 120 days from his repatriation rendered his
disability total and permanent, and thus, Garcia should be entitled to the award of disability benefits
in the amount of US$80,000.00, as stated in the VELA-AMOSUP CBA. 42
Undaunted, petitioners sought for reconsideration, which was, however, denied in a

43
Resolution dated June 19, 2013; hence, this petition.

44
The issue for the Court’s resolution is whether or not the CA correctly declared Garcia to be entitled
to permanent total disability benefits.
The Court's Ruling
To justify the grant of the extraordinary remedy of certiorari, petitioners must satisfactorily show that
the court or quasi-judicial authority gravely abused the discretion conferred upon it. Grave abuse of
discretion connotes a capricious and whimsical exercise of judgment, done in a despotic manner by
reason of passion or personal hostility, the character of which being so patent and gross as to
amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to act
at all in contemplation of law.45
findings and the conclusions reached thereby are not supported by substantial evidence, or that
amount of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion. In a seafarer’s claim for disability, the onus probandi falls on the seafarer to establish his
claim for disability benefits by the requisite quantum of evidence to justify the relief sought.
46
Guided by the foregoing considerations, the Court finds that the CA erred in ascribing grave abuse
of discretion on the part of the NLRC in ruling that Garcia is not entitled to total and permanent
disability benefits, considering that the same is supported by substantial evidence and in accord with
prevailing law and jurisprudence, as will be explained hereunder.
A judicious review of the records reveals that Garcia was indeed unable to obtain any gainful
employment for more than 120 days after his repatriation; however, this fact does not ipso facto
render his disability total and permanent. In Vergara v. Hammonia Maritime Services, Inc., the47
Court held that the company-designated physician is given a leeway of an additional 120 days, or a
total of 240 days from repatriation, to give the seafarer further treatment and, thereafter, make a
declaration as to the nature of the latter’s disability. Thus, it is only upon the lapse of 240 days, or
when so declared by the company-designated physician, that a seafarer may be deemed totally and
permanently disabled, viz.:
As these provisions operate, the seafarer, upon sign-off from his vessel, must report to the
company-designated physician within three (3) days from arrival for diagnosis and treatment. For the
duration of the treatment but in no case to exceed 120 days, the seaman is on temporary total
disability as he is totally unable to work. He receives his basic wage during this period until he is
declared fit to work or his temporary disability is acknowledged by the company to be permanent,
either partially or totally, as his condition is defined under the POEA Standard Employment Contract
[(SEC)] and by applicable Philippine laws. If the 120 days initial period is exceeded and no such
declaration is made because the seafarer requires further medical attention, then the temporary total
disability period may be extended up to a maximum of 240 days, subject to the right of the employer
to declare within this period that a permanent partial or total disability already exists. The seaman
may of course also be declared fit to work at any time such declaration is justified by his medical
condition.
xxxx
As we outlined above, a temporary total disability only becomes permanent when so declared by the
company physician within the periods he is allowed to do so, or upon the expiration of the maximum
240-day medical treatment period without a declaration of either fitness to work or the existence of a
permanent disability. In the present case, while the initial 120-day treatment or temporary total
disability period was exceeded, the company-designated doctor duly made a declaration well within
the extended 240-day period that the petitioner was fit to work. (Emphases and underscoring
48
supplied)
It is undisputed that Garcia was repatriated on May 20, 2010 and was immediately subjected to
medical treatment. Despite the lapse of the initial 120-day period on September 17, 2010, such
1âwphi1
treatment continued and in fact, on January 12, 2011– or 237 days from Garcia’s repatriation – the
company-designated physician, Dr. Cruz, declared that the former suffers from a disability rating of
"Grade 10 – Moderate stiffness or two-thirds (⅔) loss of motion of the neck, based on the POEA
Schedule of Disability Grading" and not from a permanent and total disability. Thus, pursuant to the
49
provisions of the VELA-AMOSUP CBA, as supplemented by the POEA-SEC, Garcia is only entitled
to a rate of compensation for an impediment with a Grade 10 rating in the amount of US$10,075.00. 50
In this relation, the NLRC correctly relied on the findings of the company-designated physicians (Dr.
Salvador and Dr. Cruz) despite the contrary findings of the independent physician (Dr. Escutin). It is
well to note that Article 21.7 of the VELA-AMOSUP CBA specifically provides for a conflict-resolution
procedure in cases of disagreement between the company-designated physician and the seafarer’s
independent physician, viz.:
21.7. The percentage degree of disability the COMPANY shall be liable for shall be determined by a
competent medical doctor appointed by the COMPANY. In the event a medical doctor appointed by
the Seaman and the UNION disagree with the percentage degree of disability determined by the
COMPANY appointed doctor, a third medical doctor shall be agreed upon by the UNION and the
COMPANY to provide an independent determination of the percentage degree of disability. No other
Party or Group shall be authorized to seek or provide input regarding the percentage degree of
disability, but such designation shall be established by a competent medical professional which the
Parties shall mutually and exclusively select in good faith. In such event, the parties shall accept the
findings of the third doctor regarding the percentage degree of disability of the Seaman. (Emphasis
51
and underscoring supplied)
It is clear from the foregoing CBA stipulation that should there be a discrepancy between the findings
of the company-designated physician and the seafarer’s independent physician, it is necessary to
appoint a third physician whose findings shall be controlling. The use of the word "shall" in said
stipulation indicates the mandatory nature of such requirement. More so, the CBA is the law
52
between the parties, hence they are obliged to comply with its provisions. 53
As earlier stated, Dr. Cruz, the company-designated physician, found Garcia to be suffering from a
Grade 10 disability rating, as opposed to that of Garcia’s own physician, Dr. Escutin, who diagnosed
him with a work-related total and permanent injury on his cervical spine, rendering him unfit to be a
seaman in whatever capacity. In view of such contrasting diagnoses, Garcia should have resorted to
the conflict-resolution mechanism provided under the VELA-AMOSUP CBA. His non-compliance
with the same would necessarily result in the affirmance of the findings of the company-designated
physician.
In any case, the findings of Dr. Salvador and Dr. Cruz, the company-esignated physicians, should
prevail considering that they examined, diagnosed, and treated Garcia from his repatriation on May
20, 2010 until he was assessed with a Grade 10 disability rating; whereas the independent
physician, Dr. Escutin, only examined Garcia sparingly on April 25, 201154 after he filed his claim for
total and permanent disability benefits before the NLRC on November 8, 2010.55 Jurisprudence
holds that, under these circumstances, the assessment of the company-designated physician should
be given more credence for having been arrived at after months of medical attendance and
diagnosis, compared with the assessment of a private physician done in one day on the basis of an
examination or existing medical records. 56
All told, the NLRC correctly ruled that in light of the conclusive findings of the company-designated
physicians that Garcia only suffers from a Grade 10 disability, he is entitled to only US$10,075.00 –
in accordance with the provisions of the VELA-AMOSUP CBA – no more, no less. In view thereof, a
reversal of the CA ruling is warranted.
As a final note, it must be stressed that while the Court adheres to the principle of liberality in favor
of the seafarer, it cannot allow claims for compensation based on whims and caprices. When the
evidence presented negates compensability, the claim must fail, lest it causes injustice to the
employer. 57
WHEREFORE, the petition is GRANTED. The Decision dated December 14, 2012 and the
Resolution dated June 19, 2013 of the Court of Appeals in CA-G.R. SP No. 123272 are hereby
REVERSED and SET ASIDE. Accordingly, the Decision dated October 24, 2011 and the Resolution
dated December 12, 2011 of the National Labor Relations Commission in NLRC LAC No. 08-
000688-11 are hereby REINSTATED.
SO ORDERED.
Associate Justice
WE CONCUR:
MARIA LOURDES P. A. SERENO

Chief Justice
Chairperson

JOSE PORTUGAL PEREZ

Associate Justice
CERTIFICATION

Chief Justice
Footnotes
1
Rollo, pp. 31-61.
Id. at 13-26. Penned by Associate Justice Danton Q. Bueser with Associate Justices
2
Amelita G. Tolentino and Ramon R. Garcia concurring.
3
Id. at 28-29.
CA rollo, pp. 29-39. Penned by Commissioner Napoleon Menese with Presiding
4
Commissioner Raul T. Aquino concurring, and Commissioner Teresita D. Castillon-Lora

dissenting.
Id. at 43-44. Penned by Commissioner Napoleon M. Menese with Presiding Commissioner

5
Raul T. Aquino concurring. Commissioner Teresita D. Castillon-Lora took no part.
6
See Contract of Employment dated November 3, 2009; id. at 227.
7
Id. at 228-261.
8
Id. at 227.
9
Rollo, pp. 14-15.
10
Id. at 17. See also CA rollo, p. 312.
11
CA rollo, p. 312
12
See Shore Medical Treatment; CA rollo, p. 189.
13
Rollo, p. 15; CA rollo, p. 312.
14
See Initial Medical Report dated May 24, 2010; CA rollo, pp. 263-264.
15
CA rollo, p. 31. See also rollo, p. 15.
16
Rollo, pp. at 15-16.
17
Id. at 16-17.
18
See Complaint; CA rollo, pp. 46-47.
19
Rollo, p. 17.
20
See Disability Report dated April 25, 2011; CA rollo, pp. 193-194. See also rollo, p. 17.
21
CA rollo, p. 203.
22
Rollo, p. 18.
CA rollo, p. 289. See also petitioners Position Paper Ex Abundante Ad Cautelam filed on
23
April 14, 2011; id. at 208.
24
Rollo, p. 18; CA rollo, p. 209.
CA rollo, pp. 311-321. Penned by Labor Arbiter Enrique L. Flores, Jr.
25
Id. at 320.
26
Id.
27
Id. at 317-318.
28
Id. at 320.
29
See Notice of Appeal with Memorandum of Appeal filed on July 25, 2011; id. at 322-343.
30
Id. at 29-39.
31
Id. at 38-39.
32
Id. at 36.
33
Id. at 34-35.
34
To note, Garcia was attended to by company-designated physicians, Dr. Salvador and Dr.
35
Cruz. Id. at 37.
Id. at 38.
36
Not attached to the records of the case.

37
CA rollo, pp. 43-44.

38
Id. at 5-26.
39
Rollo, pp. 13-26.

40
Id. at 26.
41
See id. at 24-25.

42
See Motion for Reconsideration filed on January 7, 2013; id. at 78-112.

43
Id. at 28-29.
44
See Bahia Shipping Services, Inc. v. Hipe, Jr., G.R. No. 204699, November 12, 2014, citing
45
Ayungo v. Beamko Shipmanagement Corporation, G.R. No. 203161, February 26, 2014.
See id.; citations omitted.

46
588 Phil. 895 (2008).

47
Id. at 912-913; citations omitted.

48
CA rollo, p. 289.
49
Id. at 111.
50
See id.
51
See Commissioner of Internal Revenue v. Enron Subic Power Corporation, 596 Phil. 229,
52
235 (2009).
See TSPIC Corporation v. TSPIC Employees Union (FFW), 568 Phil. 774, 783 (2008),
53
citing Centro Escolar University Faculty and Allied Workers Union-Independent v. CA, 523
Phil. 427, 439 (2006).
See also Disability Report dated April 25, 2011; CA rollo, pp. 193-194. See also rollo, p. 17.
54
See complaint; CA rollo, pp. 46-47.

55
See Formerly INC Shipmanagement Incorporated (now INC Navigation Co. Philippines,
56
Inc.) v. Rosales, G.R. No. 195832, October 1, 2014.
Francisco v. Bahia Shipping Services, Inc., 650 Phil. 200, 207 (2010).
57
G.R. No. 212081 February 23, 2015
DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (DENR), Petitioner,

vs.
UNITED PLANNERS CONSULTANTS , INC. (UPCI), Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari is the Decision dated March 26, 2014 of the Court of
1 2
Appeals (CA) in CA-G.R. SP No. 126458 which dismissed the petition for certiorari filed by petitioner
the Department of Environment and Natural Resources (petitioner).
The Facts
On July 26, 1993, petitioner, through the Land Management Bureau (LMB), entered into an
Agreement for Consultancy Services (Consultancy Agreement) with respondent United Planners
3
Consultants, Inc. (respondent) in connection with the LMB' s Land Resource Management Master
Plan Project (LRMMP). Under the Consultancy Agreement, petitioner committed to pay a total
4
contract price of ₱4,337,141.00, based on a predetermined percentage corresponding to the

particular stage of work accomplished. 5
In December 1994, respondent completed the work required, which petitioner formally accepted on
December 27, 1994. However, petitioner was able to pay only 47% of the total contract price in the
6
amount of ₱2,038,456.30. 7
On October 25, 1994, the Commission on Audit (COA) released the Technical Services Office
Report (TSO) finding the contract price of the Agreement to be 84.14% excessive. This
8 9
notwithstanding, petitioner, in a letter dated December 10, 1998, acknowledged its liability to
respondent in the amount of ₱2,239,479.60 and assured payment at the soonest possible time. 10
For failure to pay its obligation under the Consultancy Agreement despite repeated demands,
respondent instituted a Complaint against petitioner before the Regional Trial Court of Quezon City,
11
Branch 222 (RTC), docketed as Case No. Q-07-60321. 12
Upon motion of respondent, the case was subsequently referred to arbitration pursuant to the
arbitration clause of the Consultancy Agreement, which petitioner did not oppose. As a result, Atty.
13 14
Alfredo F. Tadiar, Architect Armando N. Alli, and Construction Industry Arbitration Commission
(CIAC) Accredited Arbitrator Engr. Ricardo B. San Juan were appointed as members of the Arbitral
Tribunal. The court-referred arbitration was then docketed as Arbitration Case No. A-001. 15
During the preliminary conference, the parties agreed to adopt the CIAC Revised Rules Governing
Construction Arbitration (CIAC Rules) to govern the arbitration proceedings. They further agreed to
16 17
submit their respective draft decisions in lieu of memoranda of arguments on or before April 21,
2010, among others. 18
On the due date for submission of the draft decisions, however, only respondent complied with the
given deadline, while petitioner moved for the deferment of the deadline which it followed with
19
another motion for extension of time, asking that it be given until May 11, 2010 to submit its draft
decision. 20
In an Order dated April 30, 2010, the Arbitral Tribunal denied petitioner’s motions and deemed its
21
non-submission as a waiver, but declared that it would still consider petitioner’s draft decision if
submitted before May 7, 2010, or the expected date of the final award’s promulgation. Petitioner 22
filed its draft decision only on May 7, 2010.

23
The Arbitral Tribunal rendered its Award dated May 7, 2010 (Arbitral Award) in favor of respondent,
24
directing petitioner to pay the latter the amount of (a) ₱2,285,089.89 representing the unpaid
progress billings, with interest at the rate of 12% per annum from the date of finality of the Arbitral
Award upon confirmation by the RTC until fully paid; (b) ₱2,033,034.59 as accrued interest thereon;
(c) ₱500,000.00 as exemplary damages; and (d) ₱150,000.00 as attorney’s fees. It also ordered
25
petitioner to reimburse respondent its proportionate share in the arbitration costs as agreed upon in
the amount of ₱182,119.44. 26
Unconvinced, petitioner filed a motion for reconsideration, which the Arbitral Tribunal merely noted
27
without any action, claiming that it had already lost jurisdiction over the case after it had submitted to
the RTC its Report together with a copy of the Arbitral Award. 28
Consequently, petitioner filed before the RTC a Motion for Reconsideration dated May 19, 2010
29
(May 19, 2010 Motion for Reconsideration)and a Manifestation and Motion dated June 1, 2010
30
(June 1, 2010 Manifestation and Motion), asserting that it was denied the opportunity to be heard
when the Arbitral Tribunal failed to consider its draft decision and merely noted its motion for
reconsideration. It also denied receiving a copy of the Arbitral Award by either electronic or
31
registered mail. For its part, respondent filed an opposition thereto and moved for the
32
confirmation of the Arbitral Award in accordance with the Special Rules of Court on Alternative
33
Dispute Resolution (Special ADR Rules). 34
In an Order dated March 30, 2011, the RTC merely noted petitioner’s aforesaid motions, finding
35
that copies of the Arbitral Award appear to have been sent to the parties by the Arbitral Tribunal,
including the OSG, contrary to petitioner’s claim. Onthe other hand, the RTC confirmed the Arbitral
Award pursuant to Rule 11.2 (A) of the Special ADR Rules and ordered petitioner to pay
36
respondent the costs of confirming the award, as prayed for, in the total amount of ₱50,000.00. From
this order, petitioner did not file a motion for reconsideration.
Thus, on June 15, 2011, respondent moved for the issuance of a writ of execution, to which no
comment/opposition was filed by petitioner despite the RTC’s directive therefor. In an Order dated 37
September 12, 2011, the RTC granted respondent’s motion. 38
Petitioner moved to quash the writ of execution, positing that respondent was not entitled to its
39
monetary claims. It also claimed that the issuance of said writ was premature since the RTC should
have first resolved its May 19, 2010 Motion for Reconsideration and June 1, 2010 Manifestation and
Motion, and not merely noted them, thereby violating its right to due process. 40
The RTC Ruling
In an Order dated July 9, 2012, the RTC denied petitioner’s motion to quash.
41
It found no merit in petitioner’s contention that it was denied due process, ruling that its May 19,
2010 Motion for Reconsideration was a prohibited pleading under Section 17.2, Rule 17 of the 42
CIAC Rules. It explained that the available remedy to assail an arbitral award was to file a motion for
correction of final award pursuant to Section 17.1 of the CIAC Rules, and not a motion for
43
reconsideration of the said award itself. On the other hand, the RTC found petitioner’s June 1, 2010
44
Manifestation and Motion seeking the resolution of its May 19, 2010 Motion for Reconsideration to
be defective for petitioner’s failure to observe the three day notice rule. Having then failed to avail of
45
the remedies attendant to an order of confirmation, the Arbitral Award had become final and
executory. 46
On July 12, 2012, petitioner received the RTC’s Order dated July 9, 2012 denying its motion to
quash. 47
Dissatisfied, it filed on September 10, 2012a petition for certiorari before the CA, docketed as CA-
48
G.R. SP No. 126458, averring in the main that the RTC acted with grave abuse of discretion in
confirming and ordering the execution of the Arbitral Award.
The CA Ruling
In a Decision dated March 26, 2014, the CA dismissed the certiorari petition on two (2) grounds,
49
namely: (a) the petition essentially assailed the merits of the Arbitral Award which is prohibited under
Rule 19.7 of the Special ADR Rules; and (b) the petition was filed out of time, having been filed
50 51
way beyond 15 days from notice of the RTC’s July 9, 2012 Order, in violation of Rule 19.28 in 52
relation to Rule 19.8 of said Rules which provide that a special civil action for certiorari must be filed
53
before the CA within 15 days from notice of the judgment, order, or resolution sought to be annulled
or set aside (or until July 27, 2012). Aggrieved, petitioner filed the instant petition.

The core issue for the Court’s resolution is whether or not the CA erred in applying the provisions of
the Special ADR Rules, resulting in the dismissal of petitioner’s special civil action for certiorari.
The petition lacks merit.
I.
Republic Act No. (RA) 9285, otherwise known as the Alternative Dispute Resolution Act of 2004,"
54
institutionalized the use of an Alternative Dispute Resolution System (ADR System) in the
55
Philippines. The Act, however, was without prejudice to the adoption by the Supreme Court of any
ADR system as a means of achieving speedy and efficient means of resolving cases pending before
all courts in the Philippines.
56
Accordingly, A.M. No. 07-11-08-SC was created setting forth the Special Rules of Court on
Alternative Dispute Resolution (referred herein as Special ADR Rules) that shall govern the
procedure to be followed by the courts whenever judicial intervention is sought in ADR proceedings
in the specific cases where it is allowed. 57
Rule 1.1 of the Special ADR Rules lists down the instances when the said rules shall apply, namely:
"(a) Relief on the issue of Existence, Validity, or Enforceability of the Arbitration Agreement; (b)
Referral to Alternative Dispute Resolution ("ADR"); (c) Interim Measures of Protection; (d)
Appointment of Arbitrator; (e) Challenge to Appointment of Arbitrator; (f) Termination of Mandate of
Arbitrator; (g) Assistance in Taking Evidence; (h) Confirmation, Correction or Vacation of Award in
Domestic Arbitration; (i) Recognition and Enforcement or Setting Aside of an Award in International
Commercial Arbitration; (j) Recognition and Enforcement of a Foreign Arbitral Award; (k)
Confidentiality/Protective Orders; and (l) Deposit and Enforcement of Mediated Settlement
Agreements." 58
Notably, the Special ADR Rules do not automatically govern the arbitration proceedings itself. A
pivotal feature of arbitration as an alternative mode of dispute resolution is that it is a product of party
autonomy or the freedom of the parties to make their own arrangements to resolve their own
disputes. Thus, Rule 2.3 of the Special ADR Rules explicitly provides that "parties are free to agree
59
on the procedure to be followed in the conduct of arbitral proceedings. Failing such agreement, the
arbitral tribunal may conduct arbitration in the manner it considers appropriate." 60
In the case at bar, the Consultancy Agreement contained an arbitration clause. Hence, respondent,
61
after it filed its complaint, moved for its referral to arbitration which was not objected to by
62
petitioner. By its referral to arbitration, the case fell within the coverage of the Special ADR Rules.
63
However, with respect to the arbitration proceedings itself, the parties had agreed to adopt the CIAC
Rules before the Arbitral Tribunal in accordance with Rule 2.3 of the Special ADR Rules.
On May 7, 2010, the Arbitral Tribunal rendered the Arbitral Award in favor of respondent. Under
Section 17.2, Rule 17 of the CIAC Rules, no motion for reconsideration or new trial may be sought,
but any of the parties may file a motion for correction of the final award, which shall interrupt the
64
running of the period for appeal, based on any of the following grounds, to wit: a. an evident
65
miscalculation of figures, a typographical or arithmetical error;
b. an evident mistake in the description of any party, person, date, amount, thing or property
referred to in the award;
c. where the arbitrators have awarded upon a matter not submitted to them, not affecting the
merits of the decision upon the matter submitted;
d. where the arbitrators have failed or omitted to resolve certain issue/s formulated by the
parties in the Terms of Reference (TOR) and submitted to them for resolution, and
e. where the award is imperfect in a matter of form not affecting the merits of the
controversy.
The motion shall be acted upon by the Arbitral Tribunal or the surviving/remaining members. 66
Moreover, the parties may appeal the final award to the CA through a petition for review under
Rule43 of the Rules of Court. 67
Records do not show that any of the foregoing remedies were availed of by petitioner. Instead, it
filed the May 19, 2010 Motion for Reconsideration of the Arbitral Award, which was a prohibited
pleading under the Section 17.2, Rule 17 of the CIAC Rules, thus rendering the same final and
68
executory.
Accordingly, the case was remanded to the RTC for confirmation proceedings pursuant to Rule 11 of
the Special ADR Rules which requires confirmation by the court of the final arbitral award. This is
consistent with Section 40, Chapter 7 (A) of RA 9285 which similarly requires a judicial confirmation
of a domestic award to make the same enforceable:
SEC. 40. Confirmation of Award.– The confirmation of a domestic arbitral award shall be governed
by Section 23 of R.A. 876.
69 70
A domestic arbitral award when confirmed shall be enforced in the same manner as final and
executory decisions of the regional trial court.
The confirmation of a domestic award shall be made by the regional trial court in accordance with
the Rules of Procedure to be promulgated by the Supreme Court.
A CIAC arbitral award need not be confirmed by the regional trial court to be executory as provided
under E.O. No. 1008. (Emphases supplied)
During the confirmation proceedings, petitioners did not oppose the RTC’s confirmation by filing a
petition to vacate the Arbitral Award under Rule 11.2 (D) of the Special ADR Rules. Neither did it
71
seek reconsideration of the confirmation order in accordance with Rule 19.1 (h) thereof. Instead,
petitioner filed only on September 10, 2012 a special civil action for certiorari before the CA
questioning the propriety of (a) the RTC Order dated September 12, 2011 granting respondent’s
motion for issuance of a writ of execution, and (b) Order dated July 9,2012 denying its motion to
quash. Under Rule 19.26 of the Special ADR Rules, "[w]hen the Regional Trial Court, in making a
ruling under the Special ADR Rules, has acted without or in excess of its jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal or any plain,
speedy, and adequate remedy in the ordinary course of law, a party may file a special civil action for
certiorari to annul or set aside a ruling of the Regional Trial Court." Thus, for failing to avail of the
foregoing remedies before resorting to certiorari, the CA correctly dismissed its petition.
II.
Note that the special civil action for certiorari described in Rule 19.26 above may be filed to annul or
set aside the following orders of the Regional Trial Court.
a. Holding that the arbitration agreement is in existent, invalid or unenforceable;
b. Reversing the arbitral tribunal’s preliminary determination upholding its jurisdiction;
c. Denying the request to refer the dispute to arbitration;
d. Granting or refusing an interim relief;
e. Denying a petition for the appointment of an arbitrator;
f. Confirming, vacating or correcting a domestic arbitral award;
g. Suspending the proceedings to set aside an international commercial arbitral award and
referring the case back to the arbitral tribunal;
h. Allowing a party to enforce an international commercial arbitral award pending appeal;
i. Adjourning or deferring a ruling on whether to set aside, recognize and or enforce an

international commercial arbitral award;
j. Allowing a party to enforce a foreign arbitral award pending appeal; and
k. Denying a petition for assistance in taking evidence. (Emphasis supplied)
Further, Rule 19.7 of the Special ADR Rules precludes a party to an arbitration from filing a petition
72
for certiorari questioning the merits of an arbitral award.
If so falling under the above-stated enumeration, Rule 19.28 of the Special ADR Rules provide that
said certiorari petition should be filed "with the [CA] within fifteen (15) days from notice of the
judgment, order or resolution sought to be annulled or set aside. No extension of time to file the
petition shall be allowed."
In this case, petitioner asserts that its petition is not covered by the Special ADR Rules (particularly,
Rule 19.28 on the 15-day reglementary period to file a petition for certiorari) but by Rule 65 of the
Rules of Court (particularly, Section 4 thereof on the 60-day reglementary period to file a petition for
certiorari), which it claimed to have suppletory application in arbitration proceedings since the
Special ADR Rules do not explicitly provide for a procedure on execution. The position is untenable.
Execution is fittingly called the fruit and end of suit and the life of the law. A judgment, if left
unexecuted, would be nothing but an empty victory for the prevailing party. 73
While it appears that the Special ADR Rules remain silent on the procedure for the execution of a
confirmed arbitral award, it is the Court’s considered view that the Rules’ procedural mechanisms
cover not only aspects of confirmation but necessarily extend to a confirmed award’s execution in
light of the doctrine of necessary implication which states that every statutory grant of power, right or
privilege is deemed to include all incidental power, right or privilege. In Atienza v. Villarosa, the
74
doctrine was explained, thus:

No statute can be enacted that can provide all the details involved in its application. There is always
1âwphi1
an omission that may not meet a particular situation. What is thought, at the time of enactment, to be
an all embracing legislation may be inadequate to provide for the unfolding of events of the future.
So-called gaps in the law develop as the law is enforced. One of the rules of statutory construction
used to fill in the gap is the doctrine of necessary implication. The doctrine states that what is implied
in a statute is as much a part thereof as that which is expressed. Every statute is understood, by
implication, to contain all such provisions as may be necessary to effectuate its object and purpose,
or to make effective rights, powers, privileges or jurisdiction which it grants, including all such
collateral and subsidiary consequences as may be fairly and logically inferred from its terms. Ex
necessitate legis. And every statutory grant of power, right or privilege is deemed to include all
incidental power, right or privilege. This is so because the greater includes the lesser, expressed in
the maxim, in eo plus sit, simper inest et minus. (Emphases supplied)
75
As the Court sees it, execution is but a necessary incident to the Court’s confirmation of an arbitral
award. To construe it otherwise would result in an absurd situation whereby the confirming court
previously applying the Special ADR Rules in its confirmation of the arbitral award would later shift to
the regular Rules of Procedure come execution. Irrefragably, a court’s power to confirm a judgment
award under the Special ADR Rules should be deemed to include the power to order its execution
for such is but a collateral and subsidiary consequence that may be fairly and logically inferred from
the statutory grant to regional trial courts of the power to confirm domestic arbitral awards.
All the more is such interpretation warranted under the principle of ratio legis est anima which
provides that a statute must be read according to its spirit or intent, for what is within the spirit is
76
within the statute although it is not within its letter, and that which is within the letter but not within the
spirit is not within the statute. Accordingly, since the Special ADR Rules are intended to achieve
77
speedy and efficient resolution of disputes and curb a litigious culture, every interpretation thereof
78
should be made consistent with these objectives.
Thus, with these principles in mind, the Court so concludes that the Special ADR Rules, as far as
practicable, should be made to apply not only to the proceedings on confirmation but also to the
confirmed award’s execution.
Further, let it be clarified that – contrary to petitioner’s stance – resort to the Rules of Court even in a
suppletory capacity is not allowed. Rule 22.1 of the Special ADR Rules explicitly provides that "[t]he
provisions of the Rules of Court that are applicable to the proceedings enumerated in Rule 1.1 of
these Special ADR Rules have either been included and incorporated in these Special ADR Rules or
specifically referred to herein." Besides, Rule 1.13 thereof provides that "[i]n situations where no
79
specific rule is provided under the Special ADR Rules, the court shall resolve such matter summarily
and be guided by the spirit and intent of the Special ADR Rules and the ADR Laws."
As above-mentioned, the petition for certiorari permitted under the Special ADR Rules must be filed
within a period of fifteen (15) days from notice of the judgment, order or resolution sought to be
annulled or set aside. Hence, since petitioner’s filing of its certiorari petition in CA-G.R. SP No.
80
126458 was made nearly two months after its receipt of the RTC’s Order dated July 9, 2012,or on
September 10, 2012, said petition was clearly dismissible.
81 82
III.
Discounting the above-discussed procedural considerations, the Court still finds that the certiorari
petition had no merit.
Indeed, petitioner cannot be said to have been denied due process as the records undeniably show
that it was accorded ample opportunity to ventilate its position. There was clearly nothing out of line
when the Arbitral Tribunal denied petitioner’s motions for extension to file its submissions having
failed to show a valid reason to justify the same or in rendering the Arbitral Award sans petitioner’s
draft decision which was filed only on the day of the scheduled promulgation of final award on May
7, 2010. The touchstone of due process is basically the opportunity to be heard. Having been given
83
such opportunity, petitioner should only blame itself for its own procedural blunder.
On this score, the petition for certiorari in CA-G.R. SP No. 126458 was likewise properly dismissed.
IV.
Nevertheless, while the Court sanctions the dismissal by the CA of the petition for certiorari due to
procedural infirmities, there is a need to explicate the matter of execution of the confirmed Arbitral
Award against the petitioner, a government agency, in the light of Presidential Decree No. (PD)
1445 otherwise known as the "Government Auditing Code of the Philippines." Section 26 of PD
84
1445 expressly provides that execution of money judgment against the Government or any of its
subdivisions, agencies and instrumentalities is within the primary jurisdiction of the COA, to wit:
SEC. 26. General jurisdiction. The authority and powers of the Commission shall extend to and
comprehend all matters relating to auditing procedures, systems and controls, the keeping of the
general accounts of the Government, the preservation of vouchers pertaining thereto for a period of
ten years, the examination and inspection of the books, records, and papers relating to those
accounts; and the audit and settlement of the accounts of all persons respecting funds or property
received or held by them in an accountable capacity, as well as the examination, audit, and
settlement of all debts and claims of any sort due from or owing to the Government or any of its
subdivisions, agencies and instrumentalities. The said jurisdiction extends to all government-owned
or controlled corporations, including their subsidiaries, and other self-governing boards,
commissions, or agencies of the Government, and as herein prescribed, including non-governmental
entities subsidized by the government, those funded by donation through the government, those
required to pay levies or government share, and those for which the government has put up a
counterpart fund or those partly funded by the government. (Emphases supplied)
From the foregoing, the settlement of respondent’s money claim is still subject to the primary
jurisdiction of the COA despite finality of the confirmed arbitral award by the RTC pursuant to the
Special ADR Rules. Hence, the respondent has to first seek the approval of the COA of their
85
monetary claim. This appears to have been complied with by the latter when it filed a "Petition for
Enforcement and Payment of Final and Executory Arbitral Award" before the COA. Accordingly, it is
86
now the COA which has the authority to rule on this latter petition. WHEREFORE, the petition is
DENIED. The Decision dated March 26, 2014 of the Court of Appeals in CA-G.R. SP No. 126458
which dismissed the petition for certiorari filed by petitioner the Department of Environment and
Natural Resources is hereby AFFIRMED.
SO ORDERED.
Associate Justice
WE CONCUR:
Chief Justice
Chairperson

JOSE PORTUGAL PEREZ

Associate Justice
CERTIFICATION

Chief Justice
Footnotes
1
Rollo, pp. 19-35.
Id. at 8-15. Penned by Associate Justice Nina G. Antonio-Valenzuela with Justices Vicente
2
S.E. Veloso and Jane Aurora C. Lantion concurring.
3
Not attached to rollo.
4
Rollo, pp. 20 and 62.
5
Id. at 62-63.
6
Id. at 63.
7
Id. at 9.
8
See Consultancy Contracts Review Report dated April 28, 1994; id. at 129-131.
9
Id. at 9, 63, and 131.
10
Id. at 9 and 64.
11
12
See id. at 21.
13
See Order dated January 18, 2010 issued by Judge Edgar Dalmacio Santos; id. at 83.
14
See id. at 55.

15
As amended by CIAC Resolution Nos. 15-2006, 16-2006, 18-2006, 19-2006, 02-2007, 07-
16
2007, 13-2007, 02-2008, 03-2008, 11-2008, 01-2010, 04-2010, and 07-2010, which took
effect on December 15, 2005.
Id. at 58 and 99.

17
Id. at 59.
18
Id. at 61.
19
Id.
20
Id. at 104-105.
21
Id. at 105.
22
Id. at 113-127.
23
Id. at 55-80. Signed by Chairman Alfredo F. Tadiar, Armando N. Alli, and Ricardo B. San
24
Juan, as members.
Id. at 78.
25
Id. at 79.
26
Dated May 19, 2010. Id. at 139-154.

27
Id. at 108 and 178-179.

28
29
The Motion for Reconsideration filed in the RTC is the same Motion for Reconsideration
filed in the Arbitral Tribunal.
Id. at 107-112.
30
Id. at 108.
31
Id. at 107-108.
32
By way of an Opposition/Motion for Confirmation dated September 30, 2010 as mentioned
33
in petitioner’s Oppositions dated November 18, 2010 and July 15, 2011; id. at 166 and 180.
A.M. No. 07-11-08-SC, entitled "SPECIAL RULES OF COURT ON ALTERNATIVE

34
DISPUTE RESOLUTION" (October 30, 2009).
Rollo, p. 178.
35
Rule 11.2. When to request confirmation, correction/modification or vacation. –
36
(A) Confirmation. - At any time after the lapse of thirty (30) days from receipt by the
petitioner of the arbitral award, he may petition the court to confirm that award.
Rollo, p. 184.
37
Id. at 42.
38
See Motion to Quash the Writ of Execution dated November 22, 2011; id. at 185-193.
39
Id. at 190.
40
Id. at 194-198.
41
SEC. 17.2 Motion for reconsideration or new trial.– A motion for reconsideration or new trial
42
shall be considered a prohibited pleading.
SEC. 17.1 Motion for correction of final award. – Any of the parties may file a motion for
43
correction of the Final award within fifteen (15) days from receipt thereof upon any of the
following grounds:
xxxx
Rollo, p. 195.
44
Id. at 196-197.
45
Id. at 196.
46
See id. at 46.

47
Id. at 204-232.
48
Id. at 39-49.
49
Rule 19.7. No appeal or certiorari on the merits of an arbitral award.– An agreement to

50
refer a dispute to arbitration shall mean that the arbitral award shall be final and binding.
Consequently, a party to an arbitration is precluded from filing an appeal or a petition for
certiorari questioning the merits of an arbitral award.
Rollo, p. 44.
51
Rule 19.28. When to file petition. – The petition must be filed with the Court of Appeals
52
within fifteen (15) days from notice of the judgment, order or resolution sought to be annulled
or set aside. No extension of time to file the petition shall be allowed.
Rule 19.8. Subject matter and governing rules.– The remedy of an appeal through a
53
petition for review or the remedy of a special civil action of certiorari from a decision of the
Regional Trial Court made under the Special ADR Rules shall be allowed in the instances,
and instituted only in the manner, provided under this Rule.
Entitled "AN ACT TO INSTITUTIONALIZE THE USE OF AN ALTERNATIVE DISPUTE

54
RESOLUTION SYSTEM IN THE PHILIPPINES AND TO ESTABLISH THE OFFICE FOR

ALTERNATIVE DISPUTE RESOLUTION,AND FOR OTHER PURPOSES"; promulgated on
April 2, 2004.
It is defined as "any process or procedure used to resolve a dispute or controversy, other
55
than by adjudication of a presiding judge of a court or an officer of a government agency, x x

x, in which a neutral third party participates to assist in the resolution of issues, which
includes arbitration, mediation, conciliation, early neutral evaluation, mini-trial, or any
combination thereof." See SEC. 3 (a) of RA 9285.
See Section 2 of RA 9285.

56
Benchbook for Trial Courts (Revised and Expanded), Volume I, 2011, p. H-38.
57
See Rule 1.1 of the Special ADR Rules; emphasis supplied.

58
See Rule 2.1 of the Special ADR Rules.

59
See Rule 2.3 of the Special ADR Rules; emphasis and underscoring supplied.
60
See rollo, pp. 9 and 21.

61
Under Rule 4.1 of the Special ADR Rules, "[a] party to a pending action filed in violation of
62
the arbitration agreement, whether contained in an arbitration clause or in a submission

agreement, may request the court to refer the parties to arbitration in accordance with such
agreement."
See rollo, p. 83.

63
CIAC Rules, Rule 17, Sec. 17.1.

64
CIAC Rules, Rule 17, Sec. 17.1.1.

65
See Sec. 17.1, Rule 17 of the CIAC Rules; citations omitted.

66
See Sec. 18.2, Rule18 of the CIAC Rules.

67
See Sec. 17.2, Rule 17 of the CIAC Rules.

68
SEC. 23. Confirmation of award. – At any time within one month after the award is made,
69
any party to the controversy which was arbitrated may apply to the court having jurisdiction,
as provided in section twenty-eight, for an order confirming the award; and thereupon the
court must grant such order unless the award is vacated, modified or corrected, as
prescribed herein. Notice of such motion must be served upon the adverse party or his
attorney as prescribed by law for the service of such notice upon an attorney in action in the
same court.
Otherwise known as The Arbitration Law, entitled "AN ACT TO AUTHORIZE THE MAKING
70
OF ARBITRATION AND SUBMISSION AGREEMENTS, TO PROVIDE FOR THE

APPOINTMENT OF ARBITRATORS AND THE PROCEDURE FOR ARBITRATION IN CIVIL
CONTROVERSIES, AND FOR OTHER PURPOSES"; approved on June 19, 1953.
Rule 11.2. When to request confirmation, correction/modification or vacation.–

71
xxxx
(D) A petition to vacate the arbitral award may be filed, in opposition to a petition to
confirm the arbitral award, not later than thirty (30) days from receipt of the award by
the petitioner. A petition to vacate the arbitral award filed beyond the reglementary
period shall be dismissed.
Rule 19.7. No appeal or certiorari on the merits of an arbitral award. – An agreement to

72
refer a dispute to arbitration shall mean that the arbitral award shall be final and binding.
Consequently, a party to an Arbitration is precluded from filing an appeal or a petition for
certiorari questioning the merits of an arbitral award.
Heirs of Mateo Pidacan v. Air Transportation Office, G.R. No. 186192, August 25, 2010,
73
629 SCRA 451, 461.
497 Phil. 689 (2005).

74
Id. at 702-703, citing Chua v. Civil Service Commission, G.R. No. 88979, February 7, 1992,
75
206 SCRA 65,77.
See Roa v. Collector of Customs, 23 Phil. 315, 339 (1912).

76
Id. Also cited in Alonzo v. Intermediate Appellate Court, 234 Phil. 267, 273 (1987).
77

78
See Rule 22.1 of the Special ADR Rules; emphases supplied.

79

80
See rollo, p. 204.

81
Rule 19.30 of the Special ADR Rules provides:

82
Rule 19.30. Court to dismiss petition. – The court shall dismiss the petition if it fails to
comply with Rules 19.27 and 19.28 above, or upon consideration of the ground
alleged and the legal briefs submitted by the parties, the petition does not appear to
be prima facie meritorious.
Rollo, pp. 41 and 113.

83
Entitled "ORDAINING AND INSTITUTING A GOVERNMENT AUDITING CODE OF THE

84
PHILIPPINES"; approved on June 11, 1978.

See University of the Philippines v. Dizon, G.R. No.171182, August 23, 2012, 679 SCRA
85
54, 79-80.
See Rollo, p. 266.

86
November 20, 2017
G.R. No. 225146
ROGELIO B. ANTONE, Petitioner
vs.
PEOPLE OF THE PHILIPPINES, Respondent
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari are the Decision dated July 31, 2015 and the
1 2
Resolution dated April 22, 2016 of the Court of Appeals (CA) in CA-G.R. CR-HC No. 01327, which
3
affirmed the conviction of petitioner Rogelio B. Antone (Antone) for two (2) counts of the crime of
Statutory Rape.
The Facts
The instant case stemmed from two (2) separate Informations filed before the Regional Trial Court
4
of Guihulngan, Negros Oriental, Branch 64 (RTC) each charging Antone of raping his then eleven
(11)-year old niece-in- law, AAA, the accusatory portions of which reads:
5
Criminal Case FC No. 99-028-G
That on August 1997, in the Municipality of Guihulngan, Negros Oriental, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused did then and there willfully, unlawfully
and feloniously, by means of force and intimidation did lie and succeed in having carnal knowledge
with AAA, an eleven (11) year old minor child, the accused being the husband of her Aunt Aniceta
Bontigao, the elder sister of the father of AAA.
Criminal Case FC No. 99-029-G
That on November 1997, in the Municipality of Guihulngan, Negros Oriental, Philippines, and within
the jurisdiction of this Honorable Court, the above-named accused did then and there willfully,
unlawfully and feloniously, by means of force and intimidation did lie and succeed in having carnal
knowledge with AAA, an eleven (11) year old minor child, the accused being the husband of her
Aunt Aniceta Bontigao, the elder sister of the father of AAA.
6
The prosecution alleged that starting 1995, AAA started living in the house of her Aunt Aniceta and
her husband, Antone. AAA's mother and brother, BBB and DDD, lived in another house about 200
7
meters away, while her father, CCC, lived in Mandaue City where he worked as a security guard
8
and only came home about twice a month. At around three o'clock in the afternoon of a Saturday in
August 1997, AAA was preparing dinner when she saw Antone staring strangely at her. Initially, AAA
ignored what Antone was doing, but after a while, Antone approached her, grabbed her hand, and
carried her into the master's bedroom. Thereat, Antone locked the door, approached AAA, and
removed her shorts and underwear. He then removed his own lower garments, separated AAA's
legs and mounted her. However, since his penis remained flaccid, he made AAA hold his penis, and
thereafter, repositioned himself on top of her and made pumping motions. At this point, AAA
surmised that Antone's penis was already erect at that time as she felt it penetrate her vagina,
causing her to feel pain. After Antone ejaculated, he got a rag then used the same to wipe his penis
as well as AAA's vagina before instructing the latter to put her shorts and underwear back on. Before
leaving the room, Antone threatened AAA to kill her should she tell what just happened. 9
A similar incident happened in November 1997 when Antone commanded AAA to give him a
massage, to which the latter obliged. After a while, Antone again brought AAA to the master's
bedroom, locked the door, removed AAA's shorts and panty, had carnal knowledge of her until he
ejaculated, and threatened to kill her if she revealed to anyone about what happened. 10
According to AAA, the incident happened several times more and she eventually started to like what
Antone was doing to her. When AAA returned to her parents' house, she started missing her sexual
1âwphi1
activities, which caused her to seduce her own brother, DDD. Eventually, word came out of their
incestuous relationship, prompting BBB to confront her about it.· It was only then that AAA admitted
to her mother about her sexual encounters with Antone. Accordingly, AAA' s parents had her
medically examined and filed the instant criminal cases against Antone. 11
In his defense, Antone denied the charges against him, averring that it was impossible for him to
rape AAA as there were a lot of people residing in their house. He then claimed that AAA and DDD
were caught red handed by their grandmother engaging in incestuous relations and BBB and CCC
only made it appear that he was the one who abused AAA in order to cover up the family
embarrassment. 12
The RTC Ruling
In a Judgment dated January 6, 2011, the RTC found Antone guilty beyond reasonable doubt of
13
two (2) counts of Simple Statutory Rape, and accordingly, sentenced him to suffer the penalty
of reclusion perpetua for each count of rape, and ordered him to indemnify AAA the amounts of
₱50,000.00 as civil indemnity and ₱30,000.00 as exemplary damages for each count of rape,
without subsidiary imprisonment in case of insolvency. 14
Aggrieved, Antone appealed to the CA.

15
The CA Ruling
In a the Decision dated July 31, 2015, the CA affirmed the RTC ruling with modification, adjusting
16
the award of damages in favor of AAA to ₱l00,000.00 as civil indemnity, ₱l00,000.00 as moral
damages, and ₱l00,000.00 as exemplary damages, plus legal interest at the rate of six percent
(6%) per annum from finality of the ruling until fully paid.17
The CA held that AAA's clear and straightforward testimony positively identifying Antone as her
assailant is enough to establish the fact of statutory rape, considering that she was just eleven (11)
years of age when the sexual abuses occurred. The CA noted that as a minor who has no ill motive
to falsely testify against Antone, AAA's testimony must be given full faith and credence. 18
Dissatisfied, Antone moved for reconsideration but the same was denied in a Resolution dated April
19
22, 2016; hence, this petition.
The issue for the Court's resolution is whether or not Antone's conviction must be upheld.
The Court's Ruling
The petition must be dismissed.
At the outset, the Court notes that Antone made a procedural lapse in elevating the case before the
Court via a petition for review on certiorari under Rule 45 of the Rules of Court. Section 3 (e), Rule
122 of the Revised Rules on Criminal Procedure (Rules) especially provides that "[e]xcept as
provided in the last paragraph of Section 13, Rule 124, all other appeals to the Supreme Court shall
be by petition for review on certiorari under Rule 45. In this regard, Section 13, Rule 124 of the Rules
states:
Section 13. Certification or appeal of case to the Supreme Court. - (a) Whenever the Court of
Appeals finds that the penalty of death should be imposed, the court shall render judgment but
refrain from making an entry of judgment and forthwith certify the case and elevate its entire record
to the Supreme Court for review.
(b) Where the judgment also imposes a lesser penalty for offenses committed on the same occasion
or which arose out of the same occurrence that gave rise to the more severe offense for which the
penalty of death is imposed, and the accused appeals, the appeal shall be included in the case
certified for review to the Supreme Court.
(c) In cases where the Court of Appeals imposes reclusion perpetua, life imprisonment or a lesser
penalty, it shall render and enter judgment imposing such penalty. The judgment may be appealed
to the Supreme Court by notice of appeal filed with the Court of Appeals. (Emphases and
In this case, the CA affirmed the imposition of the penalty of reclusion perpetua to Antone for each
count of Statutory Rape committed against AAA. As such, he should have filed a notice of appeal
before the CA instead of filing a petition for review on certiorari before the Court.
Accordingly, Antone's failure to timely file a notice of appeal before the CA resulted in the latter
court's Decision dated July 31, 2015 and the Resolution dated April 22, 2016 lapsing into finality.
Time and again, the Court has repeatedly held that "a decision 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 and law, and whether it be made by the court that
rendered it or by the Highest Court of the land. This principle, known as the doctrine of immutability
of judgment, has a two-fold purpose, namely: (a) to avoid delay in the administration of justice and
thus, procedurally, to make orderly the discharge of judicial business; and (b) to put an end to
judicial controversies, at the risk of occasional errors, which is precisely why courts exist. Verily, it
fosters the judicious perception that the rights and obligations of every litigant must not hang in
suspense for an indefinite period of time. As such, it is not regarded as a mere technicality to be
easily brushed aside, but rather, a matter of public policy which must be faithfully complied." 20
While the Court notes that there are exceptions to the application of this principle, none of which
properly obtains in this case. In fine, Antone's conviction remains.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
DIOSDADO M. PERALTA ALFREDO BENJAMIN S. CAGUIOA

On Official Leave
ANDRES B. REYES, JR. *
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decisionhad been reached in consultation before the case
was assigned to the writer of the opinion of the Court’s Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
CERTIFICATION
Pursuant to the Section 13, Article VIII of the Constitution, and the Division Chairperson’s
Attestation, I certify that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court’s Division.

Chief Justice
Footnotes
*
On official leave.
1
Rollo, pp. 12-37.
Id. at 39-67. Penned by Associate Justice Jhosep Y. Lopez with Associate Justices Pamela
2
Ann Abella Maxino and Germano Francisco D. Legaspi concurring.
3
Not attached to the rollo. See id. at 13.
4
5
The identity of the victim or any information which could establish or compromise her
identity, as well as those of her immediate family or household members, shall be withheld
pursuant to RA 7610, entitled "AN ACT PROVIDING FOR STRONGER DETERRENCE AND
SPECIAL PROTECTION AGAINST CHILD ABUSE, EXPLOITATION AND
DISCRIMINATION, AND FOR OTHER PURPOSES," approved on June 17, 1992; RA 9262,
entitled "AN ACT DEFINING VIOLENCE AGAINST WOMEN AND THEIR CHILDREN,
PROVIDING FOR PROTECTIVE MEASURES FOR VICTIMS, PRESCRIBING PENAL TIES
THEREFORE, AND FOR OTHER PURPOSES," approved on March 8, 2004; and Section
40 of A.M. No. 04-10-11-SC, otherwise known as the "Rule on Violence against Women and
Their Children" (November 15, 2004). (See footnote 4 in People v. Cadano, Jr., 729 Phil.
576, 578 [2014], citing People v. lomaque, 710 Phil. 338, 342 [2013 ]).
6
Rollo, pp. 46-47.
7
See note 5.
8
Id.
9
Id. at 40-41.
10
Id. at 42.
11
Id.at42-45.
12
See id. at 15-16, 44-45, and 48.
13
Not attached to the rollo. See id. at 39-40 and 47.
14
Id.
15
16
Id. at 39-67.
17
Id. at 66.
18
Id. at 48-62.
19
Not attached to the rollo. See id. at 13.
See Uy v. Del Castillo, G.R. No. 223610, July 24, 2017, citing National Housing Authority v.
20
CA, 731 Phil. 401, 405-406 (2014).
A.C. No. 10628 July 1, 2015
MAXIMINO NOBLE III, Complainant,

vs.
ATTY. ORLANDO O. AILES, Respondent.
RESOLUTION
PERLAS-BERNABE, J.:
This instant administrative case arose from a verified Complaint for disbarment dated April 16, 2012
1
filed by complainant Maximino Noble III (Maximino) against respondent Atty. Orlando O. Ailes
(Orlando) before the Integrated Bar of the Philippines (IBP).
The Facts
Maximino alleged that on August 18, 2010, Orlando, a lawyer, filed a Complaint for damages
2
against his own brother, Marcelo 0. Ailes, Jr. (Marcelo), whom Maximino represented, together with
other defendants, therein. In the said complaint, Orlando stated the following data: "IBP-774058-
12/07 /09-QC x x x MCLE Compliance No. II-0008689 /Issued on March 10, 2008." Maximino
3 4
claimed that at the time of the filing of the said complaint. Orlando’s IBP O.R. number should have
already reflected payment of his IBP annual dues for the year 2010, not 2009, and that he should
have finished his third Mandatory Continuing Legal Education (MCLE) Compliance, not just the
second.
Sometime in December 2011, Maximino learned from Marcelo that the latter had filed a separate
case for grave threats and estafa against Orlando .. When Maximino was furnished a copy · of the
5
complaint, he discovered that, through text messages, Orlando had been maligning him and
dissuading Marcelo from retaining his services as counsel, claiming that he was incompetent and
that he charged exorbitant fees, saying, among others: " x x x Better dismiss [your] hi-track lawyer
who will impoverish [you] with his unconscionable [professional] fee. Max Noble, as shown in court
records, never appeared even once, that's why you lost in the pre-trial stage. x x x get rid of [Noble]
as [your] lawyer. He is out to squeeze a lot of money from [you]. x x x daig mo nga mismong
abogado mong polpol." Records show that Orlando even prepared a Notice to Terminate Services
6
of CounseI7 in the complaint for damages, which stated that Maximina "x x x has never done
anything to protect the interests of the defendants in a manner not befitting his representation as a
seasoned law practitioner and, aside from charging enormous amount of professional fees and
questionable expenses, said counsel's contracted services reached as far only in preparing and filing
uncalled for motions to dismiss x x x" as well as a Compromise Agreement, both of which he sent to
8
Marcelo for his signature. Affronted, Maximino filed the instant complaint charging Orlando with
violation of Rule 7.03 of Canon 7, the entire Canon 8 of the Code of Professional Responsibility
(CPR), Bar Matter (BM) Nos. 850 and 1922 , and prayed for the disbarment of respondent as well as
9 10
the award of damages.

In his defense, Orlando denied the charges against him and claimed that his late submission of the
11
third MCLE compliance is not a ground for disbarment and that the Notice to Terminate Services of
Counsel and Compromise Agreement were all made upon the request of Marcelo when the latter
was declared in default in the aforementioned civil case. Moreover, he insisted that the allegedly
offensive language in his text messages sent to Marcelo was used in a "brother-to-brother
communication" and were uttered in good faith. 12
Meanwhile, the criminal case for grave threats and estafa filed by Marcelo against Orlando was
downgraded to unjust vexation and, on June 19, 2012, after voluntarily entering a plea of guilty,
13
Orlando was convicted of the crime of unjust vexation, consisting in his act of vexing or annoying
Marcelo by "texting insulting, threatening and persuading words to drop his lawyer over a case x x x.
"
14
IBP Report and Recommendation
In a Report and Recommendation dated April 30, 2013, the IBP Commissioner recommended the
15
dismissal of the case against Orlando, finding that a transgression of the MCLE compliance
requirement is not a ground for disbarment as in fact, failure to disclose the required information
would merely cause the dismissal of the case and the expunction of the pleadings from the records.
Neither did the IBP Commissioner find any violation of the CPR so gross or grave as to warrant any
administrative liability on the part of Orlando, considering that the communication between Orlando
and Marcelo, who are brothers, was done privately and not directly addressed to Maximino nor
intended to be published and known by third persons.
In a Resolution dated May 11, 2013, the IBP Board of Governors adopted and approved the IBP
16
Commissioner's Report and Recommendation and dismissed the case against Orlando, warning him
to be more circumspect in his dealings. Maximino moved for reconsideration which was however
17
denied in a Resolution dated May 3, 2014 with modification deleting the warning.
18
Aggrieved, Maximino filed the present petition for review on certiorari. 19
The issue for the Court's resolution is whether or not the IBP correctly dismissed the complaint
against Orlando.
The Court's Ruling
The petition is partly meritorious.
The practice of law is a privilege bestowed on lawyers who meet high standards of legal proficiency
and morality. It is a special privilege burdened with conditions before the legal profession, the
20
courts, their clients and the society such that a lawyer has the duty to comport himself in a manner
as to uphold integrity and promote the public's faith in the profession. Consequently, a lawyer must
21
at all times, whether in public or private life, act in a manner beyond reproach especially when
dealing with fellow lawyers. 22
In this relation, Rule 7.03 of Canon 7 as well as Canon 8 of the CPR provides:
Rule 7.03 - A lawyer shall not engage in conduct that adversely reflects on his fitness to practice law,
nor shall he, whether in public or private life, behave in a scandalous manner to the discredit of the
legal profession.
Canon 8 - A lawyer shall conduct himself with courtesy, fairness and candor toward his professional
colleagues, and shall avoid harassing tactics against opposing counsel.
Rule 8.01 - A lawyer shall not, in his professional dealings, use language which is abusive, offensive
or otherwise improper.
Rule 8.02 - A lawyer shall not, directly or indirectly, encroach upon the professional employment of
another lawyer; however, it is the right of any lawyer, without fear or favor, to give proper advice and
assistance to those seeking relief against unfaithful or neglectful counsel.
Though a lawyer's language may be forceful and emphatic, it should always be dignified and
respectful, befitting the dignity of the legal profession. The use of intemperate language and unkind
1âwphi1
ascriptions has no place in the dignity of the judicial forum. In Buatis Jr. v. People, the Court
23 24
treated a lawyer's use of the words "lousy," "inutile," "carabao English," "stupidity," and "satan" in a
letter addressed to another colleague as defamatory and injurious which effectively maligned his
integrity. Similarly, the hurling of insulting language to describe the opposing counsel is considered
conduct unbecoming of the legal profession. In this case, the IBP found the text messages that
25
Orlando sent to his brother Marcelo as casual communications considering that they were conveyed
privately. To the Court's mind, however, the tenor of the messages cannot be treated lightly. The text
messages were clearly intended to malign and annoy Maximino, as evident from the use of the word
''polpol" (stupid). Likewise, Orlando's insistence that Marcelo immediately terminate the services of
Maximino indicates Orlando's offensive conduct against his colleague, in violation of the above-
quoted rules. Moreover, Orlando's voluntary plea of guilty to the crime of unjust vexation in the
criminal case filed against him by Marcelo was, for all intents and purposes, an admission that he
spoke ill, insulted, and disrespected Maximino - a departure from the judicial decorum which
exposes the lawyer to administrative liability.
On this score, it must be emphasized that membership in the bar is a privilege burdened with
conditions such that a lawyer's words and actions directly affect the public's opinion of the legal
profession. Lawyers are expected to observe such conduct of nobility and uprightness which should
remain with them, whether in their public or private lives, and may be disciplined in the event their
conduct falls short of the standards imposed upon them. Thus, in this case, it is inconsequential that
26
the statements were merely relayed to Orlando's brother in private. As a member of the bar, Orlando
should have been more circumspect in his words, being fully aware that they pertain to another
lawyer to whom fairness as well as candor is owed. It was highly improper for Orlando to interfere
and insult Maximino to his client.
Indulging in offensive personalities in the course of judicial proceedings, as in this case, constitutes
unprofessional conduct which subjects a lawyer to disciplinary action. While a lawyer is entitled to
27
present his case with vigor and courage, such enthusiasm does not justify the use of offensive and
abusive language. The Court has consistently reminded the members of the bar to abstain from all
28
offensive personality and to advance no fact prejudicial to the honor and reputation of a party.
Considering the circumstances, it is glaringly clear how Orlando transgressed the CPR when he
maligned Maximino to his client. 29
With regard to Orlando's alleged violation of BM No. 1922, the Court agrees with the IBP that his
failure to disclose the required information for MCLE compliance in the complaint for damages he
had filed against his brother Marcelo is not a ground for disbarment. At most, his violation shall only
be cause for the dismissal of the complaint as well as the expunction thereof from the records. 30
WHEREFORE, the Court finds respondent Atty. Orlando O. Ailes GUILTY of violating Rule 7.03 of
Canon 7 as well as the entire Canon 8 of the Code of Professional Responsibility. He is hereby
ADMONISHED to be more circumspect in dealing with his professional colleagues and STERNLY
WARNED that a commission of the same or similar acts in the future shall be dealt with more
severely.
SO ORDERED.
Associate Justice
WE CONCUR:

Chief Justice
Chairperson

JOSE PORTUGAL PEREZ

Associate Justice
Footnotes
1
Rollo, pp. 2-6.
Entitled "Orlando O. Ailes v. Marcelo O. Ailes Jr., et al." before the Regional Trial Court of
2
Caloocan City docketed as Civil Case No. C-22601; id. at 7-13.
Complainant erroneously wrote "MCLE Compliance No. 11-00086899" in his Complaint

3
dated April 16, 2012, id. at 2-3. See also Certification of MCLE Office dated February 16,
2012; id. at 14.
4
Id. at 2-3. See also p. 12.
5
Id. at 16-22.
6
Id. at 17-21.
7
Id. at 25-26.
8
Id. at 27-28.
Mandatory Continuing Legal Education (MCLE) Adopting the Rules on Mandatory

9
Continuing Legal Education for Members of the Integrated Bar of the Philippines (August 22,
2000).
Re: Recommendation of the Mandatory Continuing Legal Education (MCLE) Board to
10
Indicate in All Pleadings Filed with the Courts the Counsel's MCLE Certificate of Compliance
or Certificate of Exemption (June 3, 2008).
See Answer; rollo, pp. 49-52.

11
Id. at 51.
12
See Maximino's Position Paper dated November 14, 2012; id. at 84.
13
Id. at 93. Penned by Judge Mario V. Manayon.

14
Id. at 192-195. Penned by Commissioner Oliver A. Cachapero.

15
Id. at 191. Penned by National Secretary Nasser A. Marohomsalic.

16
Id. at 276-280.
17
Id. at 287.
18
Id. at 220-230.
19
Barandon, Jr. v. Ferrer, Sr., 630 Phil. 524, 530 (2010).

20
Foodsphere, Inc. v. Mauricio, Jr., 611 Phil. 1, 13 (2009).

21
See Spouses Olbes v. Deciembre, 496 Phil. 799, 809-810 (2005).

22
Barandon, Jr. v. Ferrer, Sr., supra note 20, at 532.

23
520 Phil. 149, 161 (2006).

24
Nunez v. Astorga, 492 Phil. 450, 459-460 (2005).

25
Spouses Gibes v. Deciembre, supra note 22.

26
Asa v. Castillo, 532 Phil. 9, 20 (2006).

27
Foodsphere, Inc. v. Mauricio Jr., supra note 21, at 14 citing Saberon v. Larong, 574 Phil.
28
510 (2008).
See Spouses Gibes v. Deciembre, supra note 22, at 811.

29
Bar Matter No. 1922. x x x

30
The Court further Resolved, upon the recommendation of the Committee on Legal Education
and Bar Matters, to REQUIRE practicing members of the bar to INDICATE in all pleadings
filed before the courts or quasi-judicial bodies, the number and date of issue of their MCLE
Certificate of Compliance or Certificate of Exemption, as may be applicable, for the
immediately preceding compliance period. Failure to disclose the required information would
cause the dismissal of the case and the expunction of the pleadings from the records.
G.R. No. 215764 July 6, 2015
RICHARD K. TOM, Petitioner,
vs.
SAMUEL N. RODRIGUEZ, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari are the Resolutions of the Court of Appeals (CA)
1
dated May 16, 2014 and November 5, 2014, in CA-G.R. SP No. 06075, which denied the prayer for
2 3
issuance of a temporary restraining order (TRO) and/or writ of preliminary injunction sought for by
petitioner Richard K. Tom (Tom) in his petition for certiorari filed before the CA.
The Facts
Golden Dragon International Terminals, Inc. (GDITI) is the exclusive Shore Reception Facility (SRF)
Service Provider of the Philippine Ports Authority (PPA) tasked to collect, treat, and dispose of all
ship-generated oil wastes in all bases and private ports under the PPA’s jurisdiction. 4
Records show that sometime in December 2008, Fidel Cu (Cu) sold viaDeed of Conditional Sale his
17,237 shares of stock in GDITI to Virgilio S. Ramos (Ramos) and Cirilo C. Basalo, Jr.
(Basalo). When the latter failed to pay the purchase price, Cu sold 15,233 of the same shares
5
through a Deed of Sale in favor of Edgar D. Lim (Lim), Eddie C. Ong (Ong), and Arnold Gunnacao
(Gunnacao), who also did not pay the consideration therefor. 6
On September 11, 2009, the following were elected as officers of GDITI: Lim as President and
Chairman of the Board, Basalo as Vice President for Visayas and Mindanao, Ong as Treasurer and
Vice President for Luzon, and Gunnacao as Director, among others. However, a group led by
7 8
Ramos composed of individuals who were not elected as officers of GDITI – which included Tom –
forcibly took over the GDITI offices and performed the functions of its officers. This prompted GDITI,
through its duly-elected Chairman and President, Lim, to file an action for injunction and damages
against Ramos, et al., before the Regional Trial Court of Manila, Branch 46 (RTC-Manila), docketed
as Civil Case No. 09-122149 (injunction case). Pending the injunction case, Cu resold his shares of
9
stock in GDITI to Basalo for a consideration of 60,000,000.00, as evidenced by an

Agreement dated April 30, 2010 (April 30,2010 Agreement). Under the said agreement, Cu sold not
10
only his remaining 1,997 shares of stock in GDITI, but also the shares of stock subject of the
previously-executed Deed of Conditional Sale in favor of Ramos, as well as the Deed of Sale in
favor of Lim, Ong, and Gunnacao, where the respective considerations were not paid. As such, Cu
11
intervened in the injunction case claiming that, as an unpaid seller, he was still the legal owner of the
shares of stock subject of the previous contracts he entered into with Ramos, Lim, Ong, and
Gunnacao. In an Order dated October 11, 2010, the RTC-Manila granted Cu’s application for
12 13
Preliminary Mandatory and Preliminary Prohibitory Injunctions, and thereafter issued corresponding
writs therefor on October 20, 2010, which, inter alia, directed the original parties (plaintiff Lim and
14
those acting under his authority, and defendants Ramos, et al.) to cease and desist from performing
or causing the performance of any and all acts of management and control over GDITI, and to give
Cu, as intervenor, the authority to put in order GDITI’s business operations. 15
In view of his successful intervention in the injunction case, Cu executed a Special Power of
Attorney (SPA) dated October 18, 2010 in favor of Cezar O. Mancao II (Mancao) constituting the
16
latter as his duly authorized representative to exercise the powers granted to him in the October 11,
2010 Order, and to perform all acts of management and control over GDITI. Thereafter, Cu and
Basalo entered into an Addendum to Agreement (Addendum) setting forth the terms of payment of
17
the sale of the shares of stock subject of the April 30, 2010 Agreement.
However, in a letter dated September 5, 2011 addressed to Mancao, Basalo, and the Board of
18
Directors of GDITI filed before the RTC-Manila, Cu expressly revoked the authority that he had
previously granted to Mancao and Basalo under the SPA and other related documents, effectively
reinstating the power to control and manage the affairs of GDITI unto himself. Thus, Mancao and
19
Basalo filed the present Complaint for Specific Performance with Prayer for the Issuance of a
Temporary Restraining Order (TRO) and a Writ of Preliminary Injunction against Cu, Tom, and
20
several John and Jane Does before the Regional Trial Court of Nabunturan, Compostela Valley,
Branch 3 (RTC-Nabunturan), docketed as Civil Case No. 1043 (specific performance case). The
complaint impleaded Tom on the allegation that Cu had authorized him to exercise control and
management over GDITI and, on the strength thereof, had made representations before the PPA
that enabled him to enter the ports in a certain region, to the exclusion of the other agents of
GDITI. Thus, the complaint prayed that: (a) a TRO be issued ex parte enjoining Cu, Tom and all
21
persons acting for and under Cu’s authority from exercising control and management over GDITI
and/or interfering with Mancao and Basalo’s affairs; (b) after hearing, a writ of preliminary injunction
be issued; and (c) judgment be rendered ordering Cu to faithfully comply with his obligations under
the agreements he executed with them. 22
Thereafter, herein respondent Samuel N. Rodriguez (Rodriguez) filed a Complaint-in-

Intervention, alleging that in a Memorandum of Agreement (MOA) dated May 2, 2012, Basalo
23 24
authorized him to take over, manage, and control the operations of GDITI in the Luzon area, and, in
such regard, effectively revoked whatever powers Basalo had previously given to Mancao. In the
said MOA, Basalo and Rodriguez agreed to divide between them the monthly net profit of GDITI
equally. However, as Basalo purportedly refused to honor the terms and conditions of the MOA
despite demand, Rodriguez sought to intervene in the specific performance case to compel Basalo
25
to faithfully comply with his undertaking. Likewise, Rodriquez prayed for the issuance of a writ of
preliminary injunction directing Basalo, his agents, deputies, and successors, and all other persons
acting for and on his behalf, to honor his obligations under the MOA by: (a) giving the management
and control of GDITI in the Luzon area to Rodriguez; (b) allocating the power to administer and
manage the Visayas and Mindanao regions of GDITI to Rodriguez in the concept of a partner; (c)
granting to Rodriguez the right to provide the manpower services for the operations of GDITI; and (d)
giving to Rodriguez his share in the net proceeds of GDITI. Finally, he prayed that after trial, such
injunction be made permanent. 26
Basalo failed to present any evidence to contradict Rodriguez’s allegations, despite having been
given the opportunity to do so. 27
The RTC-Nabunturan Ruling
In an Order dated November 13, 2013, the RTC-Nabunturan granted Rodriguez’s application for
28
the issuance of a writ of preliminary mandatory injunction, conditioned on the filing of a bond in the
amount of 1,000,000.00. It found credence in the MOA executed between him and Basalo which
remained uncontroverted. Accordingly, the RTC-Nabunturan ordered Basalo to: (a) place the
29
management and control of GDITI in Luzon to Rodriguez as representative of Basalo; (b)allocate the
power to administer and manage the Visayas and Mindanao regions of GDITI to Rodriguez in the
concept of a partner of Basalo; (c) allow Rodriguez to provide the manpower services for the
operations of GDITI; and (d) give to Rodriguez his share in the monthly net proceeds from GDITI’s
operations, subject to the rules of the corporation on fees relative to the management contracts. 30
The original parties, plaintiffs Basalo and Mancao, and defendant Tom, separately filed motions for
reconsideration thereof, which were denied in an Order dated December 11, 2013. Aggrieved, Tom
31
elevated the matter before the CA via petition for certiorari with prayer for the issuance of a TRO
and/or writ of preliminary injunction, docketed as CA-G.R. SP No. 06075, seeking to nullify the
32
November 13, 2013 and December 11, 2013 Orders of the RTC-Nabunturan in the specific
performance case. 33
The CA Ruling
In a Resolution dated May 16, 2014, the CA, without touching upon the merits of the case, denied
34
Tom’s prayer for the issuance of a TRO and/or writ of preliminary injunction, finding no extreme
urgency on the matter raised by Tom, and that no clear and irreparable injury would be suffered if
the injunctive writ was not granted.35
Dissatisfied, Tom filed a motion for reconsideration, but was denied in a Resolution dated
36 37
November 5, 2014; hence, this petition.
The issue for the Court’s resolution is whether or not the CA committed grave abuse of discretion in
denying Tom’s prayer for the issuance of a TRO and/or writ of preliminary injunction.
The Court's Ruling
At the outset, it is observed that Tom has erroneously invoked the Court’s appellate jurisdiction
under Rule 45 of the Rules of Court in assailing the CA’s Resolutions denying his prayer for
injunctive relief. Considering that the assailed CA Resolutions merely disposed of Tom’s prayer for
the issuance of a TRO and/or writ of preliminary injunction – hence, interlocutory orders – the proper
remedy should have been to file a petition for certiorari, not a petition for review, before this Court.
38
On this score, therefore, the instant petition would have been dismissible outright.
However, in accordance with the liberal spirit pervading the Rules of Court and in the interest of
substantial justice, as justified by the merits of the petition, which was filed within the 60-day
39
reglementary period under Rule 65 of the Rules of Court, and alleged that the CA "departed from the
accepted and usual course of judicial proceedings," the Court deems it proper to treat Tom’s
40
petition for review on certiorari as a petition for certiorari and, thus, proceeds to determine whether
41
the CA gravely abused its discretion in denying Tom’s prayer for the issuance of a TRO and/or writ
of preliminary injunction.
As traditionally described, grave abuse of discretion refers to capricious or whimsical exercise of

judgment as is equivalent to lack of jurisdiction. In Yu v. Reyes-Carpio, the Court explained that:
1âwphi1
42
The term "grave abuse of discretion" has a specific meaning. An act of a court or tribunal can only
be considered as with grave abuse of discretion when such act is done in a "capricious or whimsical
exercise of judgment as is equivalent to lack of jurisdiction." The abuse of discretion must be so
patent and gross as to amount to an "evasion of a positive duty or to a virtual refusal to perform a
duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an
arbitrary and despotic manner by reason of passion and hostility." Furthermore, the use of a petition
for certiorari is restricted only to "truly extraordinary cases wherein the act of the lower court or
quasi-judicial body is wholly void."
43
As the existence of grave abuse of discretion in this case relates to the propriety of issuing a TRO
and/or writ of preliminary injunction, which, by nature, are injunctive reliefs and preservative
remedies for the protection of substantive rights and interests, it is important to lay down the
issuance’s requisites, namely: (1) there exists a clear and unmistakable right to be protected; (2) this
right is directly threatened by an act sought to be enjoined; (3) the invasion of the right is material
and substantial; and (4) there is an urgent and paramount necessity for the writ to prevent serious
and irreparable damage. Case law holds that the issuance of an injunctive writ rests upon the
44
sound discretion of the court that took cognizance of the case; as such, the exercise of judicial
discretion by a court in injunctive matters must not be interfered with, except when there is grave
abuse of discretion.45
Keeping the foregoing in mind, the Court finds that the CA committed grave abuse of discretion
amounting to lack or excess of jurisdiction in denying Tom’s prayer for the issuance ofa TRO and/or
writ of preliminary injunction. The issuance of an injunctive writ is warranted to enjoin the RTC-
Nabunturan from implementing its November 13, 2013 and December 11, 2013 Orders in the
specific performance case placing the management and control of GDITI to Rodriguez, among other
directives. This pronouncement follows the well-entrenched rule that a corporation exercises its
powers through its board of directors and/or its duly authorized officers and agents, except in
instances where the Corporation Code requires stockholders’ approval for certain specific acts. As
46
statutorily provided for in Section 23 of Batas Pambansa Bilang 68, otherwise known as "The
47
Corporation Code of the Philippines":
SEC. 23. The board of directors or trustees. – Unless otherwise provided in this Code, the corporate
powers of all corporations formed under this Code shall be exercised, all business conducted and all
property of such corporations controlled and held by the board of directors or trustees to be elected
from among the holders of stocks, or where there is no stock, from among the members of the
corporation, who shall hold office for one (1) year until their successors are elected and qualified.
Every director must own at least one (1) share of the capital stock of the corporation of which he is a
director, which share shall stand in his name on the books of the corporation. Any director who
ceases to be the owner of at least one (1) share of the capital stock of the corporation of which he is
a director shall thereby cease to be a director. Trustees of non-stock corporations must be members
thereof. A majority of the directors or trustees of all corporations organized under this Code must be
residents of the Philippines. (Emphasis and underscoring supplied) Accordingly, it cannot be
doubted that the management and control of GDITI, being a stock corporation, are vested in its duly
elected Board of Directors, the body that: (1) exercises all powers provided for under the Corporation
Code; (2) conducts all business of the corporation; and (3) controls and holds all property of the
corporation. Its members have been characterized as trustees or directors clothed with a fiduciary
character.48
Thus, by denying Tom's prayer for the issuance of a TRO and/or writ of preliminary injunction, the
CA effectively affirmed the RTC's Order placing the management and control of GDITI to Rodriguez,
a mere intervenor, on the basis of a MOA between the latter and Basalo, in violation of the foregoing
provision of the Corporation Code. In so doing, the CA committed grave abuse of discretion
amounting to lack or excess of jurisdiction, which is correctible by certiorari.
As a final point, it is apt to clarify that Tom has legal standing to seek the issuance of an injunctive
writ, considering that he is the original party-defendant in the specific performance case pending
before the RTC-Nabunturan from which this petition arose, and in which Rodriguez merely
intervened. It likewise appears from the records that pending these proceedings, Tom has been
49
elected as a member of the current Board of Directors of GDITI, hence, the injunctive writ must issue
in line with the above-disquisition, without prejudice to the resolution on the merits of the specific
performance case pending before the RTC-Nabunturan of which the the instant petition is but a
mere incident.
WHEREFORE, the petition is GRANTED. The Resolutions dated May 16, 2014 and November 5,
2014 of the Court of Appeals in CA-G.R. SP No. 06075 are hereby NULLIFIED and SET ASIDE.
Accordingly, let a Writ of Preliminary Injunction be ISSUED against respondent Samuel N.
Rodriguez, his agents, and all persons acting under his authority to refrain and desist from further
exercising any powers of management and control over Golden Dragon International Terminals, Inc.
SO ORDERED.
Associate Justice
WE CONCUR:

Chief Justice
Chairperson

JOSE PORTUGAL PEREZ

Associate Justice
CERTIFICATION

Chief Justice
Footnotes
1
Filed in the Court is a "Verified Petition for Review on Certiorari." Rollo, pp. 43-59.
Id. at 118-119. Penned by Associate Justice Edward B. Contreras with Associate Justices
2
Romulo V. Borja and Edgardo T. Lloren concurring.

Id. at 120-121. Penned by Associate Justice Edward B. Contreras with Associate Justices
3
Romulo V. Borja and Edgardo A. Camello concurring.
4
Id. at 64 and 165.
5
Id. at 165. The Complaint for Specific Performance with Specific Performance with Prayer
for the Issuance of a Temporary Restraining Order and a Writ of Preliminary Injunction
subject of the instant case, however, indicated that the Deed of Conditional Sale was
executed between Cu and Tom (see also id. at 64.
6
Id. at 165.
7
Id. at 166.
Composed of Ramos, Peter F. Mutuc, Richard K.Tom, Fernando A. Cutab, Julio S.

8
Tanagon, Jr., Jojo T. Pintang, Manuel B. Javines,Jr., and Mike Cicilio (Ramos, et al.). Id. at
166.
9
Id.
10
Id. at 77-78.
11
See Item 2 of the Agreement; id. at 77.
12
Id. at 167.
13
See Id. at 79-80.
14
Id. at 79-80. Issued by Judge Aida E. Layug.
15
See id. at 80. See also id. at 152-153.
16
Id. at 81-82.
17
Id. at 83-84.
18
Id. at 85-87.
19
See id. at 86-87 and 168.
20
Id. at 63-76.
21
Id. at 44 and 73.
22
Id. at 75.
23
Dated December 17, 2012. Id. at 93-103.
24
Id. at 104-105.
See Rodriguez’s letter, through his counsel, dated December 10, 2012; id. at 107.
25
Id. at 101.
26
Id. at 110.
27
Id. at 109-113. Penned by Judge Dorothy P. Montejo-Gonzaga.

28
See id. at 111.

29
Id. at 113.
30
Id. at 114-116.
31

32

33
Id. at 118-119.
34
Id. at 119.
35

36
Id. at 120-121.
37
38
"An interlocutory order is one which ‘does not finally dispose of the case, and does not end
the Court’s task of adjudicating the parties’ contentions and determining their rights and
liabilities as regards each other, but obviously indicates that other things remain to be done
by the Court.’ To be clear, certiorari under Rule 65 is appropriate to strike down an
interlocutory order only when the following requisites concur: (1) when the tribunal issued
such order without or in excess of jurisdiction or with grave abuse of discretion; and (2) when
the assailed interlocutory order is patently erroneous and the remedy of appeal would not
afford adequate and expeditious relief." (Yu v. Reyes-Carpio, 667 Phil. 474, 483 [2001]).
Rollo, p. 49.
39
Id. at 50.
40
In several cases, the Court has treated petitions for certiorari as petitions for review on
41
certiorari particularly: (1) if the petition for certiorari was filed within the reglementary period
within which to file a petition for review on certiorari; (2) when errors of judgment are averred;
and (3) when there is sufficient reason to justify the relaxation of the rules. (See, inter alia,
The City of Manila v. GreciaCuerdo, G.R. No. 175723, February 4, 2014, 715 SCRA 182;
Oaminal v. Castillo, 459 Phil. 542, 556-557 [2003]; Delsan Transport Lines, Inc. v. Court of
Appeals, 335 Phil. 1066, 1075 [1997]).
Accounting for the same considerations prompting the relaxation of the Rules, the
inverse is in order here. "Likewise, in previous rulings, [the Court has]treated
differently labeled actions as special civil actions for certiorari under Rule 65 for
reasons such as justice, equity, and fair play." (See Benguet State University v.
Commission on Audit,551 Phil. 878, 883 [2007]; Partido ng Manggawa v.
Commission of Elections, 519 Phil. 644, 659 [2006]; and ABS-CBN Supervisors
Employees Union Members v. ABS-CBN Broadcasting Corporation, 364 Phil. 133
[1999]).
Supra note 38.

42
Id. at 481-482.
43
Australian Professional Realty, Inc. v. Municipality of Padre Garcia Batangas Province, 684
44
Phil. 283, 292 (2012), citing Medina v. City Sheriff of Manila, 342 Phil. 90, 96 (1997).
Id. at 292-293, citing Barbieto v. CA, G.R. No. 184645, 619 Phil. 819, 835 (2009).
45
Raniel v. Jochico, 546 Phil. 54, 60 (2007).

46
Approved on May 1, 1980.

47
Hornilla v. Salunat, 453 Phil. 108, 112 (2003).

48
While the injunction case in the RTC-Manila is pending, records show that Tom was duly
49
elected as President of the Board of Directors of GDITI during the Annual Stockholders
Meeting of GDITI on March 21, 2014. (See rollo, pp. 143-145.)
A.C. No. 10681 February 3, 2015
SPOUSES HENRY A. CONCEPCION and BLESILDA S. CONCEPCION, Complainants,

vs.
ATTY. ELMER A. DELA ROSA, Respondent.
DECISION
PERLAS-BERNABE, J.:
This is an administrative case that stemmed from a Verified Complaint filed by complainants
1
Spouses Henry A. Concepcion (Henry) and Blesilda S. Concepcion (Blesilda; collectively

complainants) against respondent Atty. Elmer A. dela Rosa (respondent), charging him with gross
misconduct for violating, among others, Rule 16.04 of the Code of Professional Responsibility
(CPR).
The Facts
In their Verified Complaint, complainants alleged that from 19972 until August 2008, respondent
3
served as their retained lawyer and counsel. In this capacity, respondent handled many of their
cases and was consulted on various legal matters, among others, the prospect of opening a
pawnshop business towards the end of 2005. Said business, however, failed to materialize. 4
Aware of the fact that complainantshad money intact from their failed business venture, respondent,
on March 23, 2006, called Henry to borrow the amount of ₱2,500,000.00, which he promised to
return, with interest, five (5) days thereafter. Henry consulted his wife, Blesilda, who, believing that
respondent would be soon returning the money, agreed to lend the aforesaid sum to respondent.
She thereby issued three (3) EastWest Bank checks in respondent’s name:
5 6
Check No. Date Amount Payee
0000561925 03-23-06 ₱750,000.00 Elmer dela Rosa
0000561926 03-23-06 ₱850,000.00 Elmer dela Rosa
0000561927 03-23-06 ₱900,000.00 Elmer dela Rosa
Total: ₱2,500,000.00
Upon receiving the checks, respondent signed a piece of paper containing: (a) photocopies of the
checks; and (b) an acknowledgment that he received the originals of the checksand that he agreed
to return the ₱2,500,000.00, plus monthly interest of five percent (5%), within five (5) days. In the
7
afternoon of March 23, 2006, the foregoing checks were personally encashed by respondent. 8
On March 28, 2006, or the day respondent promised to return the money, he failed to pay
complainants. Thus, in April 2006, complainants began demanding payment but respondent merely
made repeated promises to pay soon. On July 7, 2008,Blesilda sent a demand letter to respondent,
9
which the latter did not heed. On August 4, 2008, complainants, through their new counsel, Atty.
10
Kathryn Jessica dela Serna, sent another demand letter to respondent. In his Reply, the latter
11 12 13
denied borrowing any money from the complainants. Instead, respondent claimed that a certain
Jean Charles Nault (Nault), one of his other clients, was the real debtor. Complainants brought the
matter to the Office of the Lupong Tagapamayapa in Barangay Balulang, Cagayan de Oro City. The
parties, however, failed to reach a settlement. 14
On January 11, 2010, the IBP-Misamis Oriental Chapter received complainants’ letter-
complaint charging respondent with violation of Rule 16.04 of the CPR. The rule prohibits lawyers
15
from borrowing money from clients unless the latter’s interests are fully protected by the nature of
the case or by independent advice. 16
In his Comment, respondent denied borrowing ₱2,500,000.00 from complainants, insisting that
17
Nault was the real debtor. He also claimed that complainants had been attempting to collect from
18
Nault and that he was engaged for that specific purpose. 19
In their letter-reply, complainants maintained that they extended the loan to respondent alone, as
20
evidenced by the checks issued in the latter’s name. They categorically denied knowing Nault and
pointed out that it defies common sense for them to extend an unsecured loan in the amount of
₱2,500,000.00 to a person they do not even know. Complainants also submitted a copy of the
Answer to Third Party Complaint which Nault filed as third-party defendant in a related collection
21
case instituted by the complainants against respondent. In said pleading, Nault explicitly denied
22
knowing complainants and alleged thatit was respondent who incurred the subject loan from them. 23
On November 23, 2010, the IBP-Misamis Oriental Chapter endorsed the letter-complaint to the IBP-
Commission on Bar Discipline (CBD), which was later docketed as CBD Case No. 11-2883. In the
24 25
course of the proceedings, respondent failed to appear during the scheduled mandatory
conferences. Hence, the same were terminated and the parties were directed to submit their
26
respective position papers. Respondent, however, did not submit any.

27
The IBP Report and Recommendation
On April 19, 2013, the IBP Investigating Commissioner, Jose I. de La Rama, Jr. (Investigating
Commissioner), issued his Report finding respondent guilty of violating: (a) Rule 16.04 of the CPR
28
which provides that a lawyer shall not borrow money from his clients unless the client’s interests are
fully protected by the nature of the case or by independent advice; (b) Canon 7 which states that a
lawyer shall uphold the integrity and dignity of the legal profession and support the activities of the
IBP; and (c) Canon 16 which provides that a lawyer shall hold in trust all monies and properties of
his client that may come into his possession. 29
The Investigating Commissioner observed that the checks were issued in respondent’s name and
that he personally received and encashed them. Annex "E" of the Verified Complaint shows that
30
respondent acknowledged receipt of the three (3) EastWest Bank checks and agreed to return the
₱2,500,000.00, plus a pro-rated monthly interest of five percent (5%), within five (5) days. 31
On the other hand, respondent’s claim that Nault was the real debtor was found to be implausible.
The Investigating Commissioner remarked that if it is true that respondent was not the one who
obtained the loan, he would have responded to complainants’ demand letter; however, he did
not. He also observed that the acknowledgment Nault allegedly signed appeared to have been
32 33
prepared by respondent himself. Finally, the Investigating Commissioner cited Nault’s Answer tothe
34
Third Party Complaint which categorically states that he does not even know the complainants and
that it was respondent alone who obtained the loan from them. 35
In fine, the Investigating Commissioner concluded that respondent’s actions degraded the integrity of
the legal profession and clearly violated Rule 16.04 and Canons 7 and 16 of the CPR. Respondent’s
failure to appear during the mandatory conferences further showed his disrespect to the IBP-
CBD. Accordingly, the Investigating Commissioner recommended that respondent be disbarred and
36
that he be ordered to return the ₱2,500,000.00 to complainants, with stipulated interest. 37
Finding the recommendation to be fully supported by the evidence on record and by the applicable
laws and rule, the IBP Board of Governors adopted and approved the Investigating Commissioner’s
Report in Resolution No. XX-2013-617 dated May 11, 2013, but reduced the penalty against the
38
respondent to indefinite suspension from the practice of law and ordered the return of the
₱2,500,000.00 to the complainants with legal interest, instead of stipulated interest.
Respondent sought a reconsideration of Resolution No. XX-2013-617 which was, however, denied
39
in Resolution No. XXI-2014-294 dated May 3, 2014.

40
The central issue in this case is whether or not respondent should be held administratively liable for
violating the CPR.

The Court concurs with the IBP’s findings except as to its recommended penalty and its directive to
return the amount of ₱2,500,000.00, with legal interest, to complainants.
I.
Respondent’s receipt of the ₱2,500,000.00 loan from complainants is amply supported by

substantial evidence. As the records bear out, Blesilda, on March 23, 2006, issued three (3)
EastWest Bank Checks, in amounts totalling to ₱2,500,000.00, with respondent as the payee. Also,41
Annex "E" of the Verified Complaint shows that respondent acknowledged receipt of the checks and
42
agreed to pay the complainants the loan plus the pro-rated interest of five percent (5%) per month
within five (5) days. The dorsal sides of the checks likewise show that respondent personally
43
encashed the checks on the day they were issued. With respondent’s direct transactional
44
involvement and the actual benefit he derived therefrom, absent too any credible indication tothe
contrary, the Court is thus convinced that respondent was indeedthe one who borrowed the amount
of ₱2,500,000.00 from complainants, which amount he had failed to return, despite their insistent
pleas.
Respondent’s theory that Nault is the real debtor hardly inspires belief. While respondent submitted
a document purporting to be Nault’s acknowledgment of his debt to the complainants, Nault, in his
Answer to Third Party Complaint, categorically denied knowing the complainants and incurring the
same obligation.
Moreover, as correctly pointed out by complainants, it would be illogical for them to extend a
₱2,500,000.00 loan without any collateral or security to a person they do not even know. On the
other hand, complainants were able to submit documents showing respondent’s receipt of the
checks and their encashment, as well as his agreement to return the ₱2,500,000.00 plus interest.
This is bolstered by the fact that the loan transaction was entered into during the existence of a
lawyer-client relationship between him and complainants, allowing the former to wield a greater
45
influence over the latter in view of the trust and confidence inherently imbued in such relationship.
Under Rule 16.04, Canon 16 of the CPR, a lawyer is prohibited from borrowing money from his client
unless the client’s interests are fully protected:
CANON 16 – A lawyer shall hold in trust all moneys and properties of his clients that may come into
his possession.
Rule 16.04 – A lawyer shall not borrow money from his client unless the client’s interests are fully
protected by the nature of the case or by independent advice. Neither shall a lawyer lend money to a
client except, when in the interest of justice, he has to advance necessary expenses in a legal matter
he is handling for the client."
The Court has repeatedly emphasized that the relationship between a lawyer and his client is one
imbued with trust and confidence. And as true as any natural tendency goes, this "trust and
confidence" is prone to abuse. The rule against borrowing of money by a lawyer from his client is
intended to prevent the lawyer from taking advantage of his influence over his client. The rule
46
presumes that the client is disadvantaged by the lawyer’s ability to use all the legal maneuverings to
renege on his obligation. In Frias v. Atty. Lozada (Frias) the Court categorically declared that a
47 48
lawyer’s act of asking a client for a loan, as what herein respondent did, is unethical, to wit:
Likewise, her act of borrowing money from a client was a violation of [Rule] 16.04 of the Code of
Professional Responsibility:
A lawyer shall not borrow money from his client unless the client’s interests are fully protected by the
nature of the case and by independent advice.
A lawyer’s act of asking a client for a loan, as what respondent did, is very unethical. It comes within
1âwphi1
those acts considered as abuse of client’s confidence. The canon presumes that the client is
disadvantaged by the lawyer’s ability to use all the legal maneuverings to renege on her
obligation. (Emphasis supplied)
49
As above-discussed, respondent borrowed money from complainants who were his clients and
whose interests, by the lack of any security on the loan, were not fully protected. Owing to their trust
and confidence in respondent, complainants relied solely on the former’s word that he will return the
money plus interest within five (5) days. However, respondent abused the same and reneged on his
obligation, giving his previous clients the runaround up to this day. Accordingly, there is no quibble
that respondent violated Rule 16.04 of the CPR.
In the same vein, the Court finds that respondent also violated Canon 7 of the CPR which reads:
CANON 7 - A LAWYER SHALL AT ALL TIMES UPHOLD THE INTEGRITY AND DIGNITY OF THE
LEGAL PROFESSION AND SUPPORT THE ACTIVITIES OF THE INTEGRATED BAR.
In unduly borrowing money from the complainants and by blatantly refusing to pay the same,
respondent abused the trust and confidence reposed in him by his clients, and, in so doing, failed to
uphold the integrity and dignity of the legal profession.Thus, he should be equally held
administratively liable on this score.
That being said, the Court turns tothe proper penalty to be imposed and the propriety of the IBP’s
return directive.
II.
The appropriate penalty for an errant lawyer depends on the exercise of sound judicial discretion
based on the surrounding facts. 50
In Frias, the Court suspended the lawyer from the practice of law for two (2) years after borrowing
₱900,000.00 from her client, refusing to pay the same despite court order, and representing
conflicting interests. Considering the greater amount involved in this case and respondent's
51
continuous refusal to pay his deQt, the Court deems it apt to suspend him from the practice of law
for three (3) years, instead of the IBP's recommendation to suspend him indefinitely.
The Court also deems it appropriate to modify the IBP's Resolution insofar as it orders respondent to
return to complainants the amount of ₱2,500,000.00 and the legal interest thereon. It is settled that
in disciplinary proceedings against lawyers, the only issue is whether the officer of the court is still fit
to be allowed to continue as a member of the Bar. In such cases, the Court's only concern is the
52
determination of respondent's administrative liability; it should not involve his civil liability for money
received from his client in a transaction separate, distinct, and not intrinsically linked to his
professional engagement. In this case, respondent received the ₱2,500,000.00 as a loan from
complainants and not in consideration of his professional services. Hence, the IBP's recommended
return of the aforementioned sum lies beyond the ambit of this administrative case, and thus cannot
be sustained.
WHEREFORE, respondent Atty. Elmer A. dela Rosa is found guilty of violating Canon 7 and Rule
16.04, Canon 16 of the Code of Professional Responsibility. Accordingly, he is hereby SUSPENDED
from the practice of law for a period of three (3) years effective upon finality of this Decision, with a
stem warning that a commission of the same or similar acts will be dealt with more severely. This
Decision is immediately executory upon receipt.
Let a copy of this Decision be furnished the Office of the Bar Confidant, the Integrated Bar of the
Philippines, and the Office of the Court Administration for circulation to all the courts.
SO ORDERED.
Associate Justice
WE CONCUR:

Chief Justice
ANTONIO T. CARPIO PRESBITERO J. VELASCO, JR.

On Leave
ARTURO D. BRION*
Associate Justice
Associate Justice
DIOSDADO M. PERALTA LUCAS P. BERSAMIN

MARIANO C. DEL CASTILLO MARTIN S. VILLARAMA, JR.

JOSE PORTUGAL PEREZ JOSE CATRAL MENDOZA

BIENVENIDO L. REYES MARVIC MARIO VICTOR F. LEONEN

Associate Justice
Footnotes
* On leave.
Rollo, pp. 78-93. See also complainants' letter-complaint to the Integrated Bar of the
1
Philippines (IBP)-Misamis Oriental Chapter filed on January 11, 2010; id. at 3-5.
2
See Retainer Contract dated October 9, 1997; id. at 84-87.
3
See letter of termination of legal service dated August 20, 2008; id. at 93.
4
Id. at 3 and 78-79.
5
See id. at 88.
6
Id. at 3 and 79.
7
Id. at 89.
8
Id. at 88.
9
Id. at 90.
10
Id. at 80.
11
Id. at 91.
12
Id. at 80.
13
Dated August 7, 2008. Id. at 36-39.
14
Id. at 92.
15
Id. at 3-5.
16
Id. at 5.
17
Dated March 10, 2010. Id. at 17-68.
18
As evidenced by the Acknowledgment dated March 23, 2006. See id. at 40.
19
Id. at 19.
20
Id at 69-70.
21
22
Id. at 70.
23
Id. at 73.
See 1st Endorsement dated November 23, 2010; id. at 2.
24
See id. at 95.

25
Id. at 214.
26
See Order dated December 12, 2011 issued by Commissioner Jose I. De La Rama, Jr.; id.
27
at 125.
Id. at 209-221.
28
Id. at 219-220.
29
Id. at 89.
30
Id. at 215.
31
Id.
32
Id. at 35.
33
Id. at 216.
34
Id. at 219.
35
Id. at 220.
36
Id. at 220-221.
37
Signed by National Secretary Nasser A. Marohomsalic. Id. at 208.

38
See Motion for Reconsideration with Prayer to Re-Open Investigation and/or Admit
39
Evidence dated September 6, 2013; id. at 224-234.
Id. at 283-284
40
Id. at 88.
41
Id. at 89.
42
Id.
43
Id. at 88, see dorsal portion.

44
Id. at 22.
45
Junio v. Atty. Grupo, 423 Phil. 808, 816 (2001).

46
Frias v. Atty. Lozada, 513 Phil. 512, 521-522 (2005).

47
Id.
48
Id.
49
Sps. Soriano v. Atty. Reyes, 523 Phil. 1, 16 (2006).

50
Supra note 47, at 522.

51
Roav. Atty. Moreno, 633 Phil. 1, 8 (2010) ... See alsoSuzukiv. Atty. Tiamson, 508 Phil. 130,
52
142 (2005).
G.R. No. 209499 January 28, 2015
MA. CHARITO C. GADIA, ERNESTO M. PENAS, GEMMABELLE B. REMO, LORENA S.

QUESEA, MARIE JOY FRANCISCO, BEVERLY A. CABINGAS, IVEE U. BALINGIT, ROMA
ANGELICA 0. BORJA, MARIE JOAN RAMOS, KIM GUEVARRA, LYNN S. DE LOS SANTOS,
CAREN C. ENCANTO, EIDEN BALDOVINO, JACQUELINE B. CASTRENCE,MA.ESTRELLA V.
LAPUZ, JOSELITO L. LORD, RAYMOND G. SANTOS, ABIGAIL M. VILORIA, ROMMEL C.
ACOSTA, FRANCIS JAN S. BAYLON, ERIC 0. PADIERNOS, MA. LENELL P. AARON,
CRISNELL P. AARON, and LAWRENCE CHRISTOPHER F. PAPA, Petitioners,
vs.
SYKES ASIA, INC./ CHUCK SYKES/ MIKE HINDS/ MICHAEL HENDERSON, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari are the Decision dated April 29, 2013 and the
1 2
Resolution dated October 3, 2013 of the Court of Appeals (CA) in CA-G.R. SP No. 120433, which
3
annulled and set aside the Decision dated November 15, 2010 and the Resolution dated May 10,
4 5
2011 of the National Labor Relations Commission (NLRC), in NLRC LAC No. 07-001583-10, and
reinstated the Decision dated June 23, 2010 of the Labor Arbiter (LA), holding that herein petitioners
6
Ma. Charito C. Gadia (Gadia), Ernesto M. Peñas, Gemmabelle B. Remo (Remo), Lorena S.
7 8
Quesea (Quesea), Marie Joy Francisco, Beverly A. Cabingas, Ivee U. Balingit (Balingit), Roma
9
Angelica O. Borja, Marie Joan Ramos, Kim Guevarra, Lynn S. De Los Santos, Caren C. Encanto,
Eiden Baldovino, Jacqueline B. Castrence (Castrence), Ma. Estrella V.Lapuz (Lapuz), Joselito L.
Lord (Lord), Raymond G. Santos, Abigail M. Viloria (Viloria), Rommel C. Acosta (Acosta), Francis
10
Jan S. Baylon,Eric O. Padiernos, Ma. Lenell P. Aaron, Crisnell P. Aaron, and Lawrence Christopher
F.Papa (petitioners) are project employees of respondent Sykes Asia, Inc. (Sykes Asia), and thus,
were validly terminated from employment.
The Facts
Sykes Asia is a corporation engaged in Business Process Outsourcing (BPO) which provides
support to its international clients from various sectors (e.g., technology, telecommunications, retail
services) by carrying on some of their operations, governed by service contracts that it enters with
them. On September 2, 2003, Alltel Communications, Inc. (Alltel), a United States-based
11 12
telecommunications firm, contracted Sykes Asia’s services to accommodate the needs and
demands of Alltel clients for its postpaid and prepaid services (Alltel Project). Thus, on different
dates, Sykes Asia hired petitioners as customer service representatives, team leaders, and trainers
for the Alltel Project. 13
Services for the said project went on smoothly until Alltel sent two (2) letters to Sykes Asia dated
August 7, 2009 and September 9, 2009 informing the latter that it was terminating all support
14 15
services provided by Sykes Asia related to the Alltel Project. In view of this development, Sykes Asia
sent each of the petitioners end-of-life notices, informing them of their dismissal from employment
16
due to the termination of the Alltel Project. Aggrieved, petitioners filed separate complaints for illegal
17
dismissal against respondents Sykes Asia, Chuck Sykes, the President and Chief Operating Officer
of Sykes Enterprise, Inc., and Mike Hinds and Michael Henderson, the President and Operations
Director, respectively, of Sykes Asia (respondents), praying for reinstatement, backwages, 13th
month pay, service incentive leave pay, night shift differential, moral and exemplary damages, and
attorney’s fees. In their complaints, petitioners alleged that their dismissal from service was unjust as
the same was effected without substantive and procedural due process. 18
In their defense, respondents averred that petitioners were not regular employees but merely
19
project-based employees, and as such, the termination of the Alltel Project served as a valid ground
for their dismissal. In support of their position, respondents noted that it was expressly indicated in
20
petitioners’ respective employment contracts that their positions are "project-based" and thus, "co-
terminus to the project." Respondents further maintained that they complied with the requirements
21
of procedural due process in dismissing petitioners by furnishing each of them their notices of
termination at least thirty (30) days prior to their respective dates of dismissal. 22
The LA Ruling
In a Decision dated June 23, 2010 the LA ruled in favor of respondents, and accordingly, dismissed
23
petitioners’ complaints for lack of merit. It found that petitioners are merely project-based
24
employees, as their respective employment contracts indubitably provided for the duration and term
of their employment, as well as the specific project to which they were assigned, i.e., the Alltel
Project. Hence, the LA concluded that the cessation of the Alltel Project naturally resulted in the
25
termination of petitioners’ employment in Sykes Asia. Dissatisfied, petitioners appealed to the
26 27
NLRC.
The NLRC Ruling
In a Decision dated November 15, 2010, the NLRC modified the LA Decision, ruling that petitioners
28
are regular employees but were validly terminated due to redundancy. Accordingly, petitioners,
29
except Viloria and Acosta whose complaints were dismissed without prejudice for failure to
prosecute, were awarded their separation pay with interest of 12% per annum reckoned from the
30
date of their actual dismissal until full payment, plus attorney’s fees amounting to 10% of the total
monetary award. In addition, the NLRC awarded nominal damages in the amount of ₱10,000.00
each to petitioners Gadia, Remo, Quesea, Balingit, Castrence, Lapuz, and Lord for respondents’
failure to furnish them the required written notice of termination within the prescribed period. 31
Contrary to the LA’s finding, the NLRC found that petitioners could not be properly characterized as
project-based employees, ratiocinating that while it was made known to petitioners that their
employment would be co-terminus to the Alltel Project, it was neither determined nor made known to
petitioners, at the time of hiring, when the said project would end, be terminated, or be
completed. In this relation, the NLRC concluded that inasmuch as petitioners had been engaged to
32
perform activities which are necessary or desirable in respondents’ usual business or trade of BPO,
petitioners should be deemed regular employees of Sykes Asia. This notwithstanding, and in view
33
of the cessation of the Alltel Project, the NLRC found petitioners’ employment with Sykes Asia to be
redundant; hence, declared that they were legally dismissed from service and were only entitled to
receive their respective separation pay. 34
Respondents moved for reconsideration, which was, however, denied in a Resolution dated May
35 36
10, 2011. Unconvinced, Sykes Asia elevated the case to the CA on certiorari.
37 38
The CA Ruling
In a Decision dated April 29, 2013, the CA annulled and set aside the ruling of the NLRC, and
39
accordingly, reinstated that of the LA. It held that a perusal of petitioners’ respective employment
40
contracts readily shows that they were hired exclusively for the Alltel Project and that it was
specifically stated therein that their employment would be project-based. The CA further held that
41
petitioners’ employment contracts need not state an actual date as to when their employment would
end, opining that it is enough that such date is determinable. 42
Petitioners moved for reconsideration, which was, however, denied in a Resolution dated October
43 44
3, 2013, hence, this petition.
The primordial issue for the Court’s resolution is whether or not the CA correctly granted
respondents’ petition for certiorari, thereby setting aside the NLRC’s decision holding that petitioners
were regular employees and reinstating the LA ruling that petitioners were merely project-based
employees, and thus, validly dismissed from service.
At the outset, it must be stressed that to justify the grant of the extraordinary remedy of certiorari,
petitioners must satisfactorily show that the court or quasi-judicial authority gravely abused the
discretion conferred upon it. Grave abuse of discretion connotes judgment exercised in a capricious
and whimsical manner that is tantamount to lack of jurisdiction. To be considered "grave," discretion
must be exercised in a despotic manner by reason of passion or personal hostility, and must be so
patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the
duty enjoined by or to act at all in contemplation of law. 45
findings and the conclusions reached thereby are not supported by substantial evidence. This
requirement of substantial evidence is clearly expressed in Section 5, Rule 133 of the Rules of Court
which provides that "in cases filed before administrative or quasi-judicial bodies, a fact may be
deemed established if it is supported by substantial evidence, or that amount of relevant evidence
which a reasonable mind might accept as adequate to justify a conclusion." 46
Tested against these considerations, the Court finds that the CA correctly granted respondents’
certiorari petition before it, since the NLRC gravely abused its discretion in ruling that petitioners
were regular employees of Sykes Asia when the latter had established by substantial evidence that
they were merely project-based.
Article 294 of the Labor Code, as amended, distinguishes a project-based employee from a regular
47 48
employee as follows:
Art. 294. Regular and casual employment.—The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where the employment
has been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.
x x x x (Emphasis and underscoring supplied)
In Omni Hauling Services, Inc. v. Bon, the Court extensively discussed how to determine whether
49
an employee may be properly deemed project-based or regular, to wit:
A project employee is assigned to a project which begins and ends at determined or determinable
times. Unlike regular employees who may only be dismissed for just and/or authorized causes
1âwphi1
under the Labor Code, the services of employees who are hired as "project[-based] employees" may
be lawfully terminated at the completion of the project.
According to jurisprudence, the principal test for determining whether particular employees are
properly characterised as "project[-based] employees" as distinguished from "regular employees," is
whether or not the employees were assigned to carry out a "specific project or undertaking," the
duration (and scope) of which were specified at the time they were engaged for that project. The
project could either be (1) a particular job or undertaking that is within the regular or usual business
of the employer company, but which is distinct and separate, and identifiable as such, from the other
undertakings of the company; or (2) a particular job or undertaking that is not within the regular
business of the corporation. In order to safeguard the rights of workers against the arbitrary use of
the word "project" to prevent employees from attaining a regular status, employers claiming that their
workers are project[-based] employees should not only prove that the duration and scope of the
employment was specified at the time they were engaged, but also, that there was indeed a
project. (Emphases and underscoring supplied)
50
Verily, for an employee to be considered project-based, the employer must show compliance with
two (2) requisites, namely that: (a) the employee was assigned to carry out a specific project or
undertaking; and (b) the duration and scope of which were specified at the time they were engaged
for such project.
In this case, records reveal that Sykes Asia adequately informed petitioners of their employment
status at the time of their engagement, as evidenced by the latter’s employment contracts which
similarly provide that they were hired in connection with the Alltel Project, and that their positions
were "project-based and as such is co-terminus to the project." In this light, the CA correctly ruled
that petitioners were indeed project-based employees, considering that: (a) they were hired to carry
out a specific undertaking, i.e., the Alltel Project; and (b) the duration and scope of such project were
made known to them at the time of their engagement, i.e., "co-terminus with the project."
As regards the second requisite, the CA correctly stressed that "[t]he law and jurisprudence dictate
that ‘the duration of the undertaking begins and ends at determined or determinable times’" while
clarifying that "[t]he phrase ‘determinable times’ simply means capable of being determined or
fixed." In this case, Sykes Asia substantially complied with this requisite when it expressly indicated
51
in petitioners’ employment contracts that their positions were "co-terminus with the project." To the
mind of the Court, this caveat sufficiently apprised petitioners that their security of tenure with Sykes
Asia would only last as long as the Alltel Project was subsisting. In other words, when the Alltel
Project was terminated, petitioners no longer had any project to work on, and hence, Sykes Asia
may validly terminate them from employment. Further, the Court likewise notes the fact that Sykes
Asia duly submitted an Establishment Employment Report and an Establishment Termination
52
Report to the Department of Labor and Employment Makati-Pasay Field Office regarding the
53
cessation of the Alltel Project and the list of employees that would be affected by such cessation. As
correctly pointed out by the CA, case law deems such submission as an indication that the
employment was indeed project-based. 54
In sum, respondents have shown by substantial evidence that petitioners were merely project-based
employees, and as such, their services were lawfully terminated upon the cessation of the Alltel
Project.
WHEREFORE, the petition is DENIED. Accordingly, the Decision dated April 29, 2013 and the
Resolution dated October 3, 2013 of the Court of Appeals in CA-G.R. SP No. 120433 are hereby
AFFIRMED.
SO ORDERED.
Associate Justice
WE CONCUR:

Chief Justice
Chairperson

JOSE PORTUGAL PEREZ

Associate Justice
CERTIFICATION

Chief Justice
Footnotes
1
Rollo, pp. 11-30.
Id. at 47-58. Penned by Associate Justice Edwin D. Sorongon with Associate Justices
2
Marlene Gonzales Sison and Hakim S. Abdulwahid, concurring.
3
Id. at 60-62.
Id. at 108-B-125. Penned by Presiding Commissioner Gerardo C. Nograles with

4
Commissioners Perlita B. Velasco and Romeo L. Go, concurring.
5
Id. at 127-129.
6
Id. at 416-425. Penned by Labor Arbiter Romelita N. Rioflorido.
7
"Charito Cabrera" in some parts of the records.
8
"Ernesto M. Penas" in some parts of the records.
9
"Ivee Untalan" in some parts of the records.
10
"Rommer C. Acosta" in some parts of the records.
11
Rollo, p. 48.
12
September 3, 2002 in some parts of the records.
13
Rollo, pp. 48-49.
14
Id. at 194.
15
Id. at 195.
16
See id. at 270-300.
17
Not attached to the records of the case.
18
Id. at 49.
19
See Position Paper dated February 24, 2010; id. at 157-183.
20
See id. at 169-173.
21
See Employment Contracts; id. at 196-259. See also id. at 171.
22
Id. at 49 and 173-174.
23
Id. at 416-425.
24
Id. at 425.
25
Id. at 420.
Id. at 424.
26
See Memorandum of Appeal dated July 12, 2010; id. at 426-437.

27
Id. at 108-B-125.
28
Id. at 122.
29
See id. at 114.

30
Id. at 121 and 123-124.

31
Id. at 116.
32
See id. at 116-117.

33
See id. at 121-122.

34
See Motion for Reconsideration dated December 6, 2010; id. at 130-153.

35
Id. at 127-129.
36
Only Sykes Asia appealed to the CA.

37
Id. at 63-104.
38
Id. at 47-58.
39
Id. at 57.
40
Id. at 55.
41
See id. at 56.

42
See Motion for Reconsideration dated May 23, 2013; id. at 657-660.
43
Id. at 60-62.
44
See Omni Hauling Services, Inc. v. Bon, G.R. No. 199388, September 3, 2014; citation
45
omitted.
Id.
46
Formerly Article 280. As renumbered pursuant to Section 5 of Republic Act No. 10151,
47
entitled "AN ACT ALLOWING THE EMPLOYMENT OF NIGHT WORKERS, THEREBY

REPEALING ARTICLES 130AND 131OF PRESIDENTIAL DECREE NUMBER FOUR
HUNDRED FORTY-TWO,AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE
OF THE PHILIPPINES" (July 26 2010).
Presidential Decree No. 442 entitled "A DECREE INSTITUTING A LABOR CODE
48
THEREBY REVISING AND CONSOLIDATING LABOR AND SOCIAL LAWS TO AFFORD

PROTECTION TO LABOR, PROMOTE EMPLOYMENT AND HUMAN RESOURCES
DEVELOPMENT AND INSURE INDUSTRIAL PEACE BASED ON SOCIAL JUSTICE" (May
1, 1974).
Supra note 45.

49
Id.; citations omitted.

50
Rollo, p. 56.
51
Id. at 260-269.
52
Id. at 301-307.
53
See Goma v. Pamplona Plantation Incorporated, 579 Phil. 402, 413 (2008); Fi/systems,
54
Inc. v. Puente, 493 Phil. 923, 932 (2005); Association of Trade Unions v. Hon. Abella, 380
Phil. 6, 20 (2000).
G.R. No. 213792 June 22, 2015
GUILLERMO WACOY y BITOL, Petitioner,

vs.
PEOPLE OF THE PHILIPPINES, Respondent,
x-----------------------x
G.R. No. 213886
JAMES QUIBAC y RAFAEL, Petitioner,

vs.
PEOPLE OF THE PHILIPPINES, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in these consolidated petitions for review on certiorari are the Decision dated December 6,
1 2
2013 and the Resolution dated July 21, 2014 of the Court of Appeals (CA) in CA-G.R. CR No.
3
34078, which, inter alia, found petitioners Guillermo Wacoy y Bitol (Wacoy) and James Quibac
Rafael (Quibac) guilty beyond reasonable doubt of the crime of Homicide.
The Facts
In an Information dated June 10, 2004, Wacoy and Quibac were charged with the crime of Homicide,
defined and penalized under Article 249 of the Revised Penal Code (RPC), before the Regional Trial
Court of Benguet, Branch 10 (RTC), as follows:
That on or about the 11th day of April 2004, at Ambongdolan, Municipality of Tublay, Province of
Benguet, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused,
conspiring, confederating and mutually aiding each other, with intent to kill, did then and there
willfully, unlawfully and feloniously attack, assault, maul and kick the stomach of one ELNER ARO y
LARUAN, thereby inflicting upon him blunt traumatic injuries which directly caused his death
thereafter.
That the offense committed was attended by the aggravating circumstance of superior strength.
CONTRARY TO LAW. 4
According to prosecution witness Edward Benito (Benito), at around 3 o'clock in the afternoon of
April 11, 2004, he was eating corn at a sari-sari store located at Bungis Ambongdolan, Tublay,
Benguet, when he heard a commotion at a nearby establishment. Upon checking what the ruckus
was all about, he saw his cousin, Elner Aro (Aro), already sprawled on the ground. While in that
position, he saw Wacoy kick Aro's stomach twice, after which, Wacoy picked up a rock to throw at
Aro but was restrained from doing so. As Aro stood up, Quibac punched him on the stomach,
causing him to collapse and cry in pain. Thereafter, Aro was taken to the hospital.5
At the hospital, Aro was diagnosed to be suffering from "blunt abdominal trauma with injury to the
jejunum" and was set for operation. It was then discovered that he sustained a perforation on his
ileum, i.e., the point where the small and large intestines meet, that caused intestinal bleeding, and
that his entire abdominal peritoneum was filled with air and fluid contents from the bile. However, Aro
suffered cardiac arrest during the operation, and while he was revived through cardiopulmonary
resuscitation, he lapsed into a coma after the operation.6
Due to financial constraints, Aro was taken out of the hospital against the doctor's orders and
eventually, died the next day. While Aro's death certificate indicated that the cause of his
death was "cardiopulmonary arrest antecedent to a perforated ileum and generalized peritonitis
secondary to mauling," an autopsy performed on his remains revealed that the cause of his death
was "rupture of the aorta secondary to blunt traumatic injuries."
7
In their defense, herein petitioners, Wacoy and Quibac, denied the charge against them. They
averred that while playing pool, they saw Aro drunk and lying down. Suddenly, Aro became unruly
and kicked the leg of the pool table, causing Wacoy to shout and pick up a stone to throw at Aro but
Quibac pacified him. They also claimed that Aro almost hit Wacoy with a 2x3 piece of wood if not for
Quibac' s intervention. Wacoy ran but Aro chased him and then tripped and fell to the ground.
Quiniquin Carias (Kinikin), Aro's companion, followed Wacoy to the waiting shed nearby, cornered
and kicked the latter, and the two engaged in a fist fight. Quibac came over to pacify the two and told
Wacoy to go home. 8
The RTC Ruling In a Judgment dated February 28, 2011, the RTC found Wacoy and Quibac guilty
9
beyond reasonable doubt of the crime of Death Caused in a Tumultuous Affray under Article 251 of
the RPC and, accordingly, sentenced them to suffer the penalty of imprisonment for an
indeterminate period of six (6) months and one (1) day of prision correccional, as minimum, to eight
(8) years and one (1) day of prision mayor , as maximum, and ordered them to pay Aro's heirs the
amounts of ₱25,000.00 as temperate damages, ₱50,000.00 as civil indemnity ex delicto, and
₱50,000.00 as moral damages. 10
The RTC found that Benito's testimony on the mauling incident does not firmly establish that Wacoy
and Quibac conspired in the killing of Aro, and that the medical reports were neither categorical in
stating that the injuries Aro sustained from the mauling directly contributed to his death. 11
In this relation, it opined that "[a]s conspiracy was not proven and the prosecution has failed to show
the extent and effect of injury [that Wacoy and Quibac] personally inflicted on [Aro] that led to his
death xx x," Wacoy and Quibac should be held criminally liable for the crime of Death Caused in a
Tumultuous Affray and not for Homicide. 12
Aggrieved, Wacoy and Quibac appealed to the CA. 13
The CA Ruling
In a Decision dated December 6, 2013, the CA modified Wacoy and Quibac's conviction to that of
14
Homicide under A1iicle 249 of the RPC with the mitigating circumstance of lack of intent to commit
so grave a wrong, and accordingly adjusted their prison term to an indeterminate period of six (6)
years and one (1) day of prision mayor, as minimum, to twelve (12) years and one ( 1) day of
reclusion temporal, as maximum. Further, the CA also imposed a legal interest of six percent ( 6%)
per annum on the damages awarded by the RTC pursuant to prevailing jurisprudence. 15
In so ruling, the CA gave credence to Benito's simple, direct, and straightforward testimony. In this
relation, it observed that the mere fact that Benito is Aro's cousin should not militate against his
credibility since there was no proof that his testimony was driven by any ill motive. However,
16
contrary to the RTC's findings, the CA ruled that Wacoy and Quibac should not be convicted of the
crime of Death Caused in a Tumultuous Affray since there were only (2) persons who inflicted harm
on the victim, and that there was no tumultuous affray involving several persons. Instead, they were
convicted of the crime of Homicide, with the mitigating circumstance of lack of intent to commit so
grave a wrong appreciated as it was shown that the purpose of their assault on Aro was only to
maltreat or inflict physical harm on him.
17
Aggrieved, Wacoy and Quibac separately moved for reconsideration. In a Resolution dated July
18 19
21, 2014, the CA denied Quibac's motions for reconsideration; hence, the instant petitions.
20
The core issue for the Court's resolution is whether or not the CA correctly found Wacoy and Quibac
guilty beyond reasonable doubt of the crime of Homicide.
The Court's Ruling
At the outset, it must be stressed that in criminal cases, an appeal throws the entire case wide open
for review and the reviewing tribunal can correct errors, though unassigned in the appealed
judgment, or even reverse the trial court's decision based on grounds other than those that the
parties raised as errors. The appeal confers upon the appellate court full jurisdiction over the case
and renders such court competent to examine records, revise the judgment appealed from, increase
the penalty, and cite the proper provision of the penal law. 21
Proceeding from the foregoing, the Court agrees with the CA's ruling modifying Wacoy and Quibac' s
conviction from Death Caused in a Tumultuous Affray to that of Homicide, as will be explained
hereunder.
Article 251 of the RPC defines and penalizes the crime of Death Caused in a Tumultuous Affray as
follows:
Art. 251. Death caused in a tumultuous affray. - When, while several persons, not composing groups
organized for the common purpose of assaulting and attacking each other reciprocally, quarrel and
assault each other in a confused and tumultuous manner, and in the course of the affray someone is
killed, and it cannot be ascertained who actually killed the deceased, but the person or persons who
inflicted serious physical injuries can be identified, such person or persons shall be punished by
prision mayor.
If it cannot be determined who inflicted the serious physical injuries on the deceased, the penalty of
prision correccional in its medium and maximum periods shall be imposed upon all those who shall
have used violence upon the person of the victim.
The elements of Death Caused in a Tumultuous Affray are as follows: (a) that there be several
persons; (b) that they did not compose groups organized for the common purpose of assaulting and
attacking each other reciprocally; (c) that these several persons quarrelled and assaulted one
another in a confused and tumultuous manner; (d) that someone was killed in the course of the
affray; (e) that it cannot be ascertained who actually killed the deceased; and (j) that the person or
persons who inflicted serious physical injuries or who used violence can be identified. Based on
22
case law, a tumultuous affray takes place when a quarrel occurs between several persons and they
engage in a confused and tumultuous affray, in the course of which some person is killed or
wounded and the author thereof cannot be ascertained. 23
On the other hand, the crime of Homicide is defined and penalized under Article 249 of the RPC,
which reads:
Art. 249. Homicide. - Any person who, not falling within the provisions of Article 246, shall kill
another, without the attendance of any of the circumstances enumerated in the next preceding
article, shall be deemed guilty of homicide and be punished by reclusion temporal. The elements of
Homicide are the following: (a) a person was killed; (b) the accused killed him without any justifying
circumstance; (c) the accused had the intention to kill, which is presumed; and (d) the killing was not
attended by any of the qualifying circumstances of Murder, or by that of Parricide or Infanticide.
24
In the instant case, there was no tumultuous affray between groups of persons in the course of
which Aro died. On the contrary, the evidence clearly established that there were only two (2)
1âwphi1
persons, Wacoy and Quibac, who picked on one defenseless individual, Aro, and attacked him
repeatedly, taking turns in inflicting punches and kicks on the poor victim. There was no confusion
and tumultuous quarrel or affray, nor was there a reciprocal aggression in that fateful
incident. Since Wacoy and Quibac were even identified as the ones who assaulted Aro, the latter's
25
death cannot be said to have been caused in a tumultuous affray. Therefore, the CA correctly held
26
that Wacoy and Quibac' s act of mauling Aro was the proximate cause of the latter's death; and as
27
such, they must be held criminally liable therefore, specifically for the crime of Homicide.
On this note, the Court does not find merit in Wacoy's contention that in view of their intent only to
inflict slight physical injuries on Aro, they should only be meted the corresponding penalty therefore
in its maximum period, pursuant to Article 49 of the RPC. The said provision reads:
28
Art. 49. Penalty to be imposed upon the principals when the crime committed is different from that
intended. - In cases in which the felony committed is different from that which the offender intended
to commit, the following rules shall be observed.
1. If the penalty prescribed for the felony committed be higher than that corresponding to the
offense which the accused intended to commit, the penalty corresponding to the latter shall
be imposed in its maximum period.
2. If the penalty prescribed for the felony committed be lower than that corresponding to the
one which the accused intended to commit, the penalty for the former shall be imposed in its
maximum period.
3. The rule established by the next preceding paragraph shall not be applicable if the acts
committed by the guilty person shall also constitute an attempt or frustration of another
crime, if the law prescribes a higher penalty for either of the latter offenses, in which case the
penalty provided for the attempt or the frustrated crime shall be imposed in the maximum
period.
Jurisprudence instructs that such provision should only apply where the crime committed is different
from that intended and where the felony committed befalls a different person (error in personae); and
not to cases where more serious consequences not intended by the offender result from his
felonious act (praeter intentionem), 29
as in this case. It is well-settled that if the victim dies because of a deliberate act of the malefactors,
intent to kill is conclusively presumed. In such case, even if there is no intent to kill, the crime is
30
Homicide because with respect to crimes of personal violence, the penal law looks particularly to the
material results following the unlawful act and holds the aggressor responsible for all the
consequences thereof. 31
Be that as it may, the penalty for the crime of Homicide must be imposed in its minimum period due
to the presence of the mitigating circumstance of lack of intention to commit so grave a wrong under
Article 13 (3) of the RPC in favor of Wacoy and Quibac, as correctly appreciated by the CA. In
determining the presence of this circumstance, it must be considered that since intention is a mental
process and is an internal state of mind, the accused's intention must be judged by his conduct and
external overt acts. In this case, the aforesaid mitigating circumstance is available to Wacoy and
32
Quibac, given the absence of evidence showing that, apart from kicking and punching Aro on the
stomach, something else had been done; thus, evincing the purpose of merely maltreating or
inflicting physical harm, and not to end the life of Aro.
Anent the proper penalty to be imposed on Wacoy and Quibac, the CA correctly imposed the penalty
of imprisonment for an indeterminate period of six ( 6) years and one ( 1) day of prision mayor, as
minimum, to twelve (12) years and one (1) day of reclusion temporal, as maximum, taking into
consideration the provisions of the Indeterminate Sentence Law.
Finally, the awards of civil indemnity and moral damages in the original amount of ₱50,000.00 each
are increased to ₱75,000.00 each in order to conform with prevailing jurisprudence. All other
33
awards, as well as the imposition of interest at the rate of six percent ( 6%) per annum on all the
monetary awards from the date of finality of judgment until the same are fully paid, are retained.
WHEREFORE, the petition is DENIED. The Decision dated December 6, 2013 and the Resolution
dated July 21, 2014 of the Court of Appeals in CA-G.R. CR No. 34078 are hereby AFFIRMED with
MODIFICATION. Accordingly, petitioners Guillermo Wacoy y Bitol and James Quibac y Rafael are
found GUILTY beyond reasonable doubt of the crime of Homicide defined and penalized under
Article 249 of the Revised Penal Code with the mitigating circumstance of lack of intent to commit so
grave a wrong under Article 13 (3) of the same Code. They are sentenced to suffer the penalty of
imprisonment for an indeterminate period of six ( 6) years and one (1) day of prision mayor, as
minimum, to twelve (12) years and one (1) day of reclusion temporal, as maximum, and ordered to
pay the heirs of Elner Aro the amounts of ₱25,000.00 as temperate damages, ₱75,000.00 as civil
indemnity ex delicto, and ₱75,000.00 as moral damages, all with interest at the rate of six percent
(6%) per annum from the finality of this Decision until fully paid.
SO ORDERED.
Associate Justice
WE CONCUR:

Chief Justice
Chairperson

JOSE PORTUGAL PEREZ

Associate Justice
CERTIFICATION
Decision had been reached in consultation before the cases were assigned to the writer of the
opinion of the Court’s Division.

Chief Justice
Footnotes
1
Rollo (G.R. No. 213792), pp. 5-13; rollo (G.R. No. 213886),pp. 4-19.
Rollo (G.R. No. 213792), pp. 16-30; rollo (G.R. No. 213886), pp. 23-37. Penned by
2
Associate Justice Melchor Q.C. Sadang with Associate Justices Celia C. Librea-Leagogo
and Franchito N. Diamante concurring.
3
Rollo (G.R. No. 213792), pp. 37-38
4
Rollo (G.R. No. 213792), pp. 17 and 39; rollo (G.R. No. 213886), p. 24.
5
See Rollo (G.R. No. 213792), p. 18; and rollo (G.R. No. 213886), p. 25.
6
Rollo (G.R. No. 213792), pp. 18-19; rollo (G.R. No. 213886), pp. 25-26.
7
Rollo (G.R. No. 213792), p. 19; rollo (G.R. No. 213886), p. 26.
8
Rollo, (G.R. No. 213792), pp. 39-45. Penned by Presiding Judge Edgardo B. Diaz De
9
Rivera, Jr.
10
Id. at 45.
11
See id. at 42-44.
12
See id. at 44.
13
Not attached to the rollos.
14
15
See ro!lo (G.R. No. 213792), pp. 29-30; and rollo (G.R. No. 213886), pp. 36-37.
16
See rollo (G .R. No. 213792), pp. 23-26; and rollo (G.R. No. 213886), pp. 30-33.
17
See rollo (G.R. No. 213792), pp. 26-29; and rollo (G.R. No. 213886), pp. 33-36.
See Wacoy's motion for reconsideration dated January 6, 2014; rollo (G.R. No. 213792),
18
pp. 31-35. Meanwhile, Quibac filed a motion for reconsideration dated January 3, 2014 and
another motion for reconsideration (with Notice of Entry of Appearance for the Accused-
Appellant) dated January 20, 2014 (both not attached to the rollo ); see rollo (G.R. No.
213792), p. 3 7.
19
Rollo (G.R. No. 213792), pp. 37-38.
The rollo docs not contain any attachment that resolves Wacoy's motion for
20
reconsideration.
People v. Arguta, G.R. No. 213216, April 22, 2015, citing Luz v. People, G.R. No. 197788,
21
February 29, 2012, 667 SCRA 421, 428 and Eusebio-Calderon v. People, 484 Phil. 87, 98
(2004).
22
People v. Julianda, Jr., 422 Phil. 28, 51 (2001).
Sison v. People, 320 Phil. 112, 134 (1995), citing United States v. Tandoc, 40 Phil. 954,
23
957 (1920).
24
Villanueva v. Caparas, G.R. No. 190969, January 30, 2013, 689 SCRA 679, 686.
25
See Sison v. People, supra note 23.
26
See People v. Dalabajan, 345 Phil. 944, 961 (1997).
"Proximate cause is defined as 'that cause, which, in natural and continuous sequence,
27
unbroken by any efficient intervening cause, produces the injury, and without which the
result would not have occurred."' (People v. Villacorta, 672 Phil. 712, 722 (2011), citing
Calimutan v. People,517 Phil. 272, 284 [2006).)
See Wacoy's Petition; rollo (G.R. No. 213792), pp. 9-11.

28
See People v. Tomotorgo, 220 Phil. 617, 623 (1985); citations omitted.
29
Yapyuco v. Sandiganbayan, G.R. Nos. 120744-46, 122677, and 122676, June 25, 2012,
30
674 SCRA 420, 461, citing People v. Delim, 444 Phil. 430, 450 (2003).
Id., citing United States v. Gloria, 3 Phil. 333, 335 (1904).

31
See People v. Regato, 212 Phil. 268, 274 (1984).

32
See People v. Villalba, G.R. No. 207629, October 22, 2014.

33
A.C. No. 10681 February 3, 2015
SPOUSES HENRY A. CONCEPCION and BLESILDA S. CONCEPCION, Complainants,

vs.
ATTY. ELMER A. DELA ROSA, Respondent.
DECISION
PERLAS-BERNABE, J.:
This is an administrative case that stemmed from a Verified Complaint filed by complainants
1
Spouses Henry A. Concepcion (Henry) and Blesilda S. Concepcion (Blesilda; collectively

complainants) against respondent Atty. Elmer A. dela Rosa (respondent), charging him with gross
misconduct for violating, among others, Rule 16.04 of the Code of Professional Responsibility
(CPR).
The Facts
In their Verified Complaint, complainants alleged that from 19972 until August 2008, respondent
3
served as their retained lawyer and counsel. In this capacity, respondent handled many of their
cases and was consulted on various legal matters, among others, the prospect of opening a
pawnshop business towards the end of 2005. Said business, however, failed to materialize. 4
Aware of the fact that complainantshad money intact from their failed business venture, respondent,
on March 23, 2006, called Henry to borrow the amount of ₱2,500,000.00, which he promised to
return, with interest, five (5) days thereafter. Henry consulted his wife, Blesilda, who, believing that
respondent would be soon returning the money, agreed to lend the aforesaid sum to respondent.
She thereby issued three (3) EastWest Bank checks in respondent’s name:
5 6
Check No. Date Amount Payee
0000561925 03-23-06 ₱750,000.00 Elmer dela Rosa
0000561926 03-23-06 ₱850,000.00 Elmer dela Rosa
0000561927 03-23-06 ₱900,000.00 Elmer dela Rosa
Total: ₱2,500,000.00
Upon receiving the checks, respondent signed a piece of paper containing: (a) photocopies of the
checks; and (b) an acknowledgment that he received the originals of the checksand that he agreed
to return the ₱2,500,000.00, plus monthly interest of five percent (5%), within five (5) days. In the 7
afternoon of March 23, 2006, the foregoing checks were personally encashed by respondent. 8
On March 28, 2006, or the day respondent promised to return the money, he failed to pay
complainants. Thus, in April 2006, complainants began demanding payment but respondent merely
made repeated promises to pay soon. On July 7, 2008,Blesilda sent a demand letter to respondent, 9
which the latter did not heed. On August 4, 2008, complainants, through their new counsel, Atty.
10
Kathryn Jessica dela Serna, sent another demand letter to respondent. In his Reply, the latter
11 12 13
denied borrowing any money from the complainants. Instead, respondent claimed that a certain
Jean Charles Nault (Nault), one of his other clients, was the real debtor. Complainants brought the
matter to the Office of the Lupong Tagapamayapa in Barangay Balulang, Cagayan de Oro City. The
parties, however, failed to reach a settlement. 14
On January 11, 2010, the IBP-Misamis Oriental Chapter received complainants’ letter-
complaint charging respondent with violation of Rule 16.04 of the CPR. The rule prohibits lawyers
15
from borrowing money from clients unless the latter’s interests are fully protected by the nature of
the case or by independent advice. 16
In his Comment, respondent denied borrowing ₱2,500,000.00 from complainants, insisting that
17
Nault was the real debtor. He also claimed that complainants had been attempting to collect from
18
Nault and that he was engaged for that specific purpose. 19
In their letter-reply, complainants maintained that they extended the loan to respondent alone, as
20
evidenced by the checks issued in the latter’s name. They categorically denied knowing Nault and
pointed out that it defies common sense for them to extend an unsecured loan in the amount of
₱2,500,000.00 to a person they do not even know. Complainants also submitted a copy of the
Answer to Third Party Complaint which Nault filed as third-party defendant in a related collection
21
case instituted by the complainants against respondent. In said pleading, Nault explicitly denied
22
knowing complainants and alleged thatit was respondent who incurred the subject loan from them. 23
On November 23, 2010, the IBP-Misamis Oriental Chapter endorsed the letter-complaint to the IBP-
Commission on Bar Discipline (CBD), which was later docketed as CBD Case No. 11-2883. In the
24 25
course of the proceedings, respondent failed to appear during the scheduled mandatory
conferences. Hence, the same were terminated and the parties were directed to submit their
26
respective position papers. Respondent, however, did not submit any.

27
The IBP Report and Recommendation

On April 19, 2013, the IBP Investigating Commissioner, Jose I. de La Rama, Jr. (Investigating
Commissioner), issued his Report finding respondent guilty of violating: (a) Rule 16.04 of the CPR
28
which provides that a lawyer shall not borrow money from his clients unless the client’s interests are
fully protected by the nature of the case or by independent advice; (b) Canon 7 which states that a
lawyer shall uphold the integrity and dignity of the legal profession and support the activities of the
IBP; and (c) Canon 16 which provides that a lawyer shall hold in trust all monies and properties of
his client that may come into his possession. 29
The Investigating Commissioner observed that the checks were issued in respondent’s name and
that he personally received and encashed them. Annex "E" of the Verified Complaint shows that
30
respondent acknowledged receipt of the three (3) EastWest Bank checks and agreed to return the
₱2,500,000.00, plus a pro-rated monthly interest of five percent (5%), within five (5) days. 31
On the other hand, respondent’s claim that Nault was the real debtor was found to be implausible.
The Investigating Commissioner remarked that if it is true that respondent was not the one who
obtained the loan, he would have responded to complainants’ demand letter; however, he did
not. He also observed that the acknowledgment Nault allegedly signed appeared to have been
32 33
prepared by respondent himself. Finally, the Investigating Commissioner cited Nault’s Answer tothe
34
Third Party Complaint which categorically states that he does not even know the complainants and
that it was respondent alone who obtained the loan from them. 35
In fine, the Investigating Commissioner concluded that respondent’s actions degraded the integrity of
the legal profession and clearly violated Rule 16.04 and Canons 7 and 16 of the CPR. Respondent’s
failure to appear during the mandatory conferences further showed his disrespect to the IBP-
CBD. Accordingly, the Investigating Commissioner recommended that respondent be disbarred and
36
that he be ordered to return the ₱2,500,000.00 to complainants, with stipulated interest. 37
Finding the recommendation to be fully supported by the evidence on record and by the applicable
laws and rule, the IBP Board of Governors adopted and approved the Investigating Commissioner’s
Report in Resolution No. XX-2013-617 dated May 11, 2013, but reduced the penalty against the
38
respondent to indefinite suspension from the practice of law and ordered the return of the
₱2,500,000.00 to the complainants with legal interest, instead of stipulated interest.
Respondent sought a reconsideration of Resolution No. XX-2013-617 which was, however, denied
39
in Resolution No. XXI-2014-294 dated May 3, 2014.

40
The central issue in this case is whether or not respondent should be held administratively liable for
violating the CPR.
The Court concurs with the IBP’s findings except as to its recommended penalty and its directive to
return the amount of ₱2,500,000.00, with legal interest, to complainants.
I.
Respondent’s receipt of the ₱2,500,000.00 loan from complainants is amply supported by

substantial evidence. As the records bear out, Blesilda, on March 23, 2006, issued three (3)
EastWest Bank Checks, in amounts totalling to ₱2,500,000.00, with respondent as the payee. Also, 41
Annex "E" of the Verified Complaint shows that respondent acknowledged receipt of the checks and
42
agreed to pay the complainants the loan plus the pro-rated interest of five percent (5%) per month
within five (5) days. The dorsal sides of the checks likewise show that respondent personally
43
encashed the checks on the day they were issued. With respondent’s direct transactional
44
involvement and the actual benefit he derived therefrom, absent too any credible indication tothe
contrary, the Court is thus convinced that respondent was indeedthe one who borrowed the amount
of ₱2,500,000.00 from complainants, which amount he had failed to return, despite their insistent
pleas.
Respondent’s theory that Nault is the real debtor hardly inspires belief. While respondent submitted
a document purporting to be Nault’s acknowledgment of his debt to the complainants, Nault, in his
Answer to Third Party Complaint, categorically denied knowing the complainants and incurring the
same obligation.
Moreover, as correctly pointed out by complainants, it would be illogical for them to extend a
₱2,500,000.00 loan without any collateral or security to a person they do not even know. On the
other hand, complainants were able to submit documents showing respondent’s receipt of the
checks and their encashment, as well as his agreement to return the ₱2,500,000.00 plus interest.
This is bolstered by the fact that the loan transaction was entered into during the existence of a
lawyer-client relationship between him and complainants, allowing the former to wield a greater
45
influence over the latter in view of the trust and confidence inherently imbued in such relationship.
Under Rule 16.04, Canon 16 of the CPR, a lawyer is prohibited from borrowing money from his client
unless the client’s interests are fully protected:
CANON 16 – A lawyer shall hold in trust all moneys and properties of his clients that may come into
his possession.
Rule 16.04 – A lawyer shall not borrow money from his client unless the client’s interests are fully
protected by the nature of the case or by independent advice. Neither shall a lawyer lend money to a
client except, when in the interest of justice, he has to advance necessary expenses in a legal matter
he is handling for the client."
The Court has repeatedly emphasized that the relationship between a lawyer and his client is one
imbued with trust and confidence. And as true as any natural tendency goes, this "trust and
confidence" is prone to abuse. The rule against borrowing of money by a lawyer from his client is
intended to prevent the lawyer from taking advantage of his influence over his client. The rule
46
presumes that the client is disadvantaged by the lawyer’s ability to use all the legal maneuverings to
renege on his obligation. In Frias v. Atty. Lozada (Frias) the Court categorically declared that a
47 48
lawyer’s act of asking a client for a loan, as what herein respondent did, is unethical, to wit:
Likewise, her act of borrowing money from a client was a violation of [Rule] 16.04 of the Code of
Professional Responsibility:
A lawyer shall not borrow money from his client unless the client’s interests are fully protected by the
nature of the case and by independent advice.
A lawyer’s act of asking a client for a loan, as what respondent did, is very unethical. It comes within
1âwphi1
those acts considered as abuse of client’s confidence. The canon presumes that the client is
disadvantaged by the lawyer’s ability to use all the legal maneuverings to renege on her
obligation. (Emphasis supplied)
49
As above-discussed, respondent borrowed money from complainants who were his clients and
whose interests, by the lack of any security on the loan, were not fully protected. Owing to their trust
and confidence in respondent, complainants relied solely on the former’s word that he will return the
money plus interest within five (5) days. However, respondent abused the same and reneged on his
obligation, giving his previous clients the runaround up to this day. Accordingly, there is no quibble
that respondent violated Rule 16.04 of the CPR.
In the same vein, the Court finds that respondent also violated Canon 7 of the CPR which reads:
CANON 7 - A LAWYER SHALL AT ALL TIMES UPHOLD THE INTEGRITY AND DIGNITY OF THE
LEGAL PROFESSION AND SUPPORT THE ACTIVITIES OF THE INTEGRATED BAR.
In unduly borrowing money from the complainants and by blatantly refusing to pay the same,
respondent abused the trust and confidence reposed in him by his clients, and, in so doing, failed to
uphold the integrity and dignity of the legal profession.Thus, he should be equally held
administratively liable on this score.
That being said, the Court turns tothe proper penalty to be imposed and the propriety of the IBP’s
return directive.
II.
The appropriate penalty for an errant lawyer depends on the exercise of sound judicial discretion
based on the surrounding facts. 50
In Frias, the Court suspended the lawyer from the practice of law for two (2) years after borrowing
₱900,000.00 from her client, refusing to pay the same despite court order, and representing
conflicting interests. Considering the greater amount involved in this case and respondent's
51
continuous refusal to pay his deQt, the Court deems it apt to suspend him from the practice of law
for three (3) years, instead of the IBP's recommendation to suspend him indefinitely.
The Court also deems it appropriate to modify the IBP's Resolution insofar as it orders respondent to
return to complainants the amount of ₱2,500,000.00 and the legal interest thereon. It is settled that
in disciplinary proceedings against lawyers, the only issue is whether the officer of the court is still fit
to be allowed to continue as a member of the Bar. In such cases, the Court's only concern is the
52
determination of respondent's administrative liability; it should not involve his civil liability for money
received from his client in a transaction separate, distinct, and not intrinsically linked to his
professional engagement. In this case, respondent received the ₱2,500,000.00 as a loan from
complainants and not in consideration of his professional services. Hence, the IBP's recommended
return of the aforementioned sum lies beyond the ambit of this administrative case, and thus cannot
be sustained.
WHEREFORE, respondent Atty. Elmer A. dela Rosa is found guilty of violating Canon 7 and Rule
16.04, Canon 16 of the Code of Professional Responsibility. Accordingly, he is hereby SUSPENDED
from the practice of law for a period of three (3) years effective upon finality of this Decision, with a
stem warning that a commission of the same or similar acts will be dealt with more severely. This
Decision is immediately executory upon receipt.
Let a copy of this Decision be furnished the Office of the Bar Confidant, the Integrated Bar of the
Philippines, and the Office of the Court Administration for circulation to all the courts.
SO ORDERED.
Associate Justice
WE CONCUR:

Chief Justice
ANTONIO T. CARPIO PRESBITERO J. VELASCO, JR.

On Leave
ARTURO D. BRION*
Associate Justice
Associate Justice
DIOSDADO M. PERALTA LUCAS P. BERSAMIN

MARIANO C. DEL CASTILLO MARTIN S. VILLARAMA, JR.

JOSE PORTUGAL PEREZ JOSE CATRAL MENDOZA

BIENVENIDO L. REYES MARVIC MARIO VICTOR F. LEONEN

Associate Justice
Footnotes
* On leave.
Rollo, pp. 78-93. See also complainants' letter-complaint to the Integrated Bar of the
1
Philippines (IBP)-Misamis Oriental Chapter filed on January 11, 2010; id. at 3-5.
2
See Retainer Contract dated October 9, 1997; id. at 84-87.
3
See letter of termination of legal service dated August 20, 2008; id. at 93.
4
Id. at 3 and 78-79.
5
See id. at 88.
6
Id. at 3 and 79.
7
Id. at 89.
8
Id. at 88.
9
Id. at 90.
10
Id. at 80.
11
Id. at 91.
12
Id. at 80.
13
Dated August 7, 2008. Id. at 36-39.
14
Id. at 92.
15
Id. at 3-5.
16
Id. at 5.
17
Dated March 10, 2010. Id. at 17-68.
18
As evidenced by the Acknowledgment dated March 23, 2006. See id. at 40.
19
Id. at 19.
20
Id at 69-70.
21
22
Id. at 70.
23
Id. at 73.
24
See 1st Endorsement dated November 23, 2010; id. at 2.
25
See id. at 95.
26
Id. at 214.
See Order dated December 12, 2011 issued by Commissioner Jose I. De La Rama, Jr.; id.
27
at 125.
Id. at 209-221.
28
Id. at 219-220.
29
Id. at 89.
30
Id. at 215.
31
Id.
32
Id. at 35.
33
Id. at 216.
34
Id. at 219.
35
Id. at 220.
36
Id. at 220-221.
37
Signed by National Secretary Nasser A. Marohomsalic. Id. at 208.

38
See Motion for Reconsideration with Prayer to Re-Open Investigation and/or Admit
39
Evidence dated September 6, 2013; id. at 224-234.
Id. at 283-284
40
Id. at 88.
41
Id. at 89.
42
Id.
43
Id. at 88, see dorsal portion.

44
Id. at 22.
45
Junio v. Atty. Grupo, 423 Phil. 808, 816 (2001).

46
Frias v. Atty. Lozada, 513 Phil. 512, 521-522 (2005).

47
Id.
48
Id.
49
Sps. Soriano v. Atty. Reyes, 523 Phil. 1, 16 (2006).

50
Supra note 47, at 522.

51
Roav. Atty. Moreno, 633 Phil. 1, 8 (2010) ... See alsoSuzukiv. Atty. Tiamson, 508 Phil. 130,
52
142 (2005).

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September 09, 2015

G.R. No. 207949

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,

Armando Dionaldo y Ebron, Renato Dionaldo y Ebron (Renato), Mariano Gariguez, Jr. y Ramos,

finality in it’s Resolution dated September 24, 2014.

MARIA LOURDES P. A. SERENO

TERESITA J. LEONARDO-DE CASTRO LUCAS P. BERSAMIN

JOSE PORTUGAL PEREZ

MARIA LOURDES P.A. SERENO

G.R. No. 209822 July 8, 2015

DIONISIO DACLES, Petitioner,

Dionisio Dacles's (petitioner) illegal dismissal complaint.

Respondent Millenium Erectors Corporation (MEC) is a domestic · corporation engaged in the

the NLRC, National Capital Region, docketed as NLRC-NCR-06-07985-10.

Department of Labor and Employment (DOLE) Makati/Pasay Field Office. 14

denied petitioner's money claims for lack of evidentiary support. 17

The NLRC Ruling

Securities and Exchange Commission on February 1, 2000, as evinced by its Certificate of

plus attorney's fees. 24

hence, this petition.

The Issue Before the Court

The Court's Ruling

The petition is without merit.

amended, distinguishes a project-based employee from a regular employee as follows:

x x x x (Emphasis and underscoring supplied)

prior to his employment as a project employee in the NECC Project.

MARIA LOURDES P.A. SERENO

TERESITA J. LEONARDO-DE CASTRO LUCAS P. BERSAMIN

MARIA LOURDES P.A. SERENO

Rosalinda Asuncion-Vicente and Priscilla J. Baltazar-Padilla concurring.

Rollo, pp. 145-153.

Erroneously stated as 1988; see id. at 145 and 150.

CA rollo, p. 87.

Rollo, pp. 148-151.

Rollo, pp. 90-121.

RULES OF COURT, RULE 133, SECTION 5.

entitled "AN ACT ALLOWING THE EMPLOYMENT OF NIGHT WORKERS, THEREBY

THEREBY REVISING AND CONSOLIDATING LABOR AND SOCIAL LAWS TO AFFORD

See Gadia v. Sykes Asia, Inc., supra note 33.

Section 1. Security of tenure. - x x x .

(c) In cases of project employment or employment covered by legitimate contracting

supra note 39.

Records, pp. 49 and 53.

Id. at 50-51 and 58-59.

344 Phil. 268, 282 (1997); citations omitted.

SCRA 583, 593.

G.R. No. 220940

JOY VANESSA M. SEBASTIAN, Petitioner

Aggrieved, petitioner moved for reconsideration, which was, however, denied in a

Resolution dated October 9, 2015; hence, this petition.

The Issue Before the Court

The Court's Ruling

The petition is meritorious.

provides when reconstitution of a title should be allowed:

MARIA LOURDES P.A. SERENO

TERESITA J. LEONARDO-DE CASTRO MARIANO C. DEL CASTILLO

ALFREDO BENJAMIN S. CAGUIOA

MARIA LOURDES P.A. SERENO

Magdangal M. De Leon and Nina G. Antonio-Valenzuela concurring.

Entitled "AN ACT PROVIDING A SPECIAL PROCEDURE FOR THE RECONSTITUTION

OF TORRENS CERTIFICATES OF TITLE LOST OR DESTROYED" (September 25, 1946).

March 15, 2017

G.R. No. 224834