G.R. No. 212683, November 12, 2018 name of Tortal, married to Taniguchi.6 Judgment.
Judgment. The property was then sold
JERSON E.
TORTAL, Petitioner, v. CHIZURU
TANIGUCHI, Respondent.
DECISION
LEONEN, J.:
An allegation of a trial court's lack of
jurisdiction to render the assailed
judgment, final order, or resolution
must be brought in a separate action
for annulment of judgment under Rule
47 of the Rules of Civil Procedure.
This resolves the Petition for Review
on Certiorari1 filed by Jerson E. Tortal
(Tortal) assailing the Court of Appeals
December 13, 2013 Decision2 and May
14, 2014 Resolution3 in CA-G.R. CV
No. 98955. The assailed judgments
upheld the Regional Trial Court
October 28, 2011 Decision, which
annulled the levy and sale of a house
and lot covered by a compromise
agreement between Tortal and
Sevillana P. Sales (Sales).4
On June 8, 1999,5 Tortal married
Chizuru Taniguchi (Taniguchi). They
lived in a 250 m2 house and lot in BF
Homes, Parañaque City, which was
covered by Transfer Certificate of Title
(TCT) No. 142089 and registered in the
On April 11, 2000, Taniguchi filed a
petition for the nullity of her marriage
with Tortal. The petition was docketed
as Civil Case No. CV-00-0149 and was
raffled to Branch 260, Regional Trial
Court, Parañaque City.7
On August 25, 2003, the Regional Trial
Court granted the petition and annulled
Tortal and Taniguchi's marriage. In the
same decision annulling their marriage,
the Regional Trial Court declared the
house and lot to be Taniguchi's
exclusive property.8 Tortal did not
move for the reconsideration of this
decision. Hence, it became final and
executory on October 14, 2005.9
While the petition for nullity of marriage
was pending, Sales filed a complaint
for collection of sum of money against
Tortal. The collection complaint was
docketed as Civil Case No. C-1262
and raffled to Branch 63, Regional Trial
Court, Calauag, Quezon. Sales and
Tortal eventually entered into a
compromise agreement, which was
approved by the Regional Trial Court of
Calauag.10
On December 3, 2003, Tortal and
Taniguchi's house and lot was levied
upon in accordance with the Regional
Trial Court of Calauag's Compromise
at a public auction to Sales for
P3,500,000.00.11
On May 24, 2005,12 Taniguchi filed a
Complaint for Reivindication of Title,
Annulment of Levy and Sale in
Execution, Injunction, Damages and
Attorney's Fees against Tortal and
Sales. She prayed that an injunction be
issued against the Register of Deeds of
Parañaque City, and that the levy over
the house and lot and the sale to Sales
be declared null and void.13 Her
complaint was docketed as Civil Case
No. 05-0198 and was raffled to Branch
257, Regional Trial Court, Parañaque
City.14
On September 14, 2005, the Regional
Trial Court of Parañaque City granted
Taniguchi's application for injunction
and enjoined the Registry of Deeds of
Parañaque City from cancelling TCT
No. 142089 and from issuing a new
one in Sales' favor.15
On October 28, 2011, the Regional
Trial Court of Parañaque City nullified
the levy and the sale of the house and
lot to Sales, and made permanent the
injunction against the Registry of
Deeds of Parañaque City. The fallo of
its Decision read:
WHEREFORE, the preliminary
injunction issued on September 14,
2005 is hereby made permanent. The
levy and sale by public auction of the
property covered by TCT No. 142089
of the Registry of Deeds of Parañaque
conducted by Sheriff Benedicta G.
Hebron and the Certificate of Sale
issued pursuant thereto are declared
null and void. Defendant Jerson E.
Tortal is ordered to pay plaintiff Chizuru
Taniguchi the amount of P50,000.00
for moral damages, P50,000.00 for
exemplary damages, and P50,000.00
for attorney's fees and the cost of suit.
IT IS SO ORDERED.16
Tortal and Sales appealed the
Regional Trial Court October 28, 2011
Decision but on December 13, 2013,
the Court of Appeals17 dismissed their
appeal and upheld the assailed
Decision.
The Court of Appeals rejected Tortal's
allegations about the supposed defects
of the Regional Trial Court August 25,
2003 Decision nullifying his marriage
with Taniguchi. It pointed out that this
Decision had long become final and
executory.18
It likewise rejected Tortal's assertions
that Taniguchi had no right to acquire
property because she was not a
Filipino citizen. It emphasized that
Tortal failed to bring up Taniguchi's
citizenship during pre-trial and only did
so for the first time on appeal. 19
It also stressed that Tortal should have
assailed the Regional Trial Court
August 25, 2003 Decision nullifying his
marriage with a petition for annulment
of judgment, not in the present case
which only questioned the nullity of the
levy and sale of the house and lot to
Sales. Nonetheless, it asserted that the
period for filing a petition for annulment
of judgment had likewise long
passed.20
The fallo of the Court of Appeals
December 13, 2013 Decision read:
WHEREFORE, the Appeal is
hereby DENIED. The Decision dated
28 October 2011 of the Regional Trial
Court of Parañaque City, Branch 257,
in Civil Case No. 05-0198,
is AFFIRMED.
21
SO ORDERED.  (Emphasis in the
original)
Only Tortal moved for the
reconsideration of the Court of Appeals
December 13, 2013 Decision, but on
May 14, 2014, the Court of
Appeals22 denied his motion.
In his Petition for Review on
Certiorari23 before this Court, petitioner
Tortal maintains that the Regional Trial
Court August 25, 2003 Decision
nullifying his marriage with respondent
was null and void as there was no valid
service of summons on him. He further
claims that substituted service of
summons by publication was
improperly complied with; thus, the
Regional Trial Court never obtained
jurisdiction over him.24
Petitioner likewise asserts that
Taniguchi's foreign citizenship
precludes her from owning real
property under Philippine law.25
Finally, petitioner declares that contrary
to the Court of Appeals' findings, the
issue of respondent's capacity to
acquire real property was "impliedly
included or inferable from the issues
raised"26 before the Regional Trial
Court during pre-trial.
In her Comment27 to the petition,
respondent Taniguchi contends that
the Regional Trial Court August 25,
2003 Decision, which granted her
petition for nullity of marriage and
upheld her exclusive ownership over
the house and lot, attained finality as
early as October 14, 2005 because
neither respondent nor the Solicitor
General moved for its reconsideration.
Hence, she presses that the same
issues may no longer be reopened or
relitigated.28
Respondent then maintains that the
issue of her citizenship and lack of
capacity to own property was never
brought up before the Regional Trial
Court. Furthermore, she asserts that
petitioner failed to explain how the pre
trial order impliedly included the issue
regarding her supposed lack of c pacity
or how this issue could be inferred from
it.29
In his Reply,30 petitioner merely
reiterates his previous arguments
regarding the Regional Trial Court's
lack of jurisdiction over the petition for
nullity of his marriage with respondent
and respondent's lack of capacity to
own real property.31
The only issue for this Court's
resolution is whether or not petitioner
Jerson E. Tortal may assail a final and
executory judgment nullifying his
marriage with respondent Chizuru
Taniguchi in his appeal of the Court of
Appeals December 13, 2013 Decision,
which granted respondent's petition for
annulment of levy and sale in
execution.
The Petition lacks merit.
Petitioner claims that he failed to
participate in the proceedings for the
nullity of his marriage with respondent
before Branch 260, Regional Trial
Court, Parañaque City because
summons was never served on him,
either personally or by substitution.32
If indeed summons was not properly
served on petitioner, then his remedy
was to file a petition for annulment of
judgment under Rule 47 of the Rules of
Civil Procedure. An action for the
annulment of judgment is an equitable
recourse that is independent of the
case and is allowed only in exceptional
cases, such as when there is no more
available or other adequate remedy.33
A petition for the annulment of
judgment of Regional Trial Courts may
be given due course if it is sufficiently
proven that the "ordinary remedies of
new trial, appeal, petition for relief or
other appropriate remedies are no
longer available through no fault of the
petitioner."34
Furthermore, Rule 47, Section 2 of the
Rules of Civil Procedure provides only
two (2) grounds for an action for
annulment or judgment: extrinsic fraud
and lack of jurisdiction. Nonetheless,
extrinsic fraud cannot be considered a
valid ground in an action under Rule 47
"if it was availed of, or could have been
availed of, in a motion for new trial or
petition for relief."35
Rule 47, Section 3 then provides that
an action for annulment of judgment, if
based on extrinsic fraud, should be
filed within four (4) years from
discovery of the fraud, or if based on
lack of jurisdiction, then before the
action is barred by laches or estoppel.
In the action for the nullity of his
marriage with respondent, petitioner
claims that respondent deliberately
indicated a non-existent address,
instead of his real address; thus, he
never received the summons and the
Regional Trial Court failed to acquire
jurisdiction over him.36
However, instead of directly assailing
the Regional Trial Court August 25,
2003 Decision, which granted the
nullity of his marriage in an action for
annulment of judgment, petitioner
chose to tackle the issue in his appeal
of the Regional Trial Court October 28,
2011 Decision, which nullified the levy
and sale by auction of the house and
lot to Sales. This is clearly not the
correct remedy. The Court of Appeals
did not err in dismissing his appeal and
in upholding the Regional Trial Court
October 28, 2011 Decision, striking
down the levy and sale by auction,
thus:
Still and all, appellant Tortal is not left
without any recourse. If, indeed, he
believes that the RTC, Br. 260 erred in
awarding the property to appellee
despite being a Japanese national, he
should have filed a Petition for
Annulment of Judgment under Rule 47
of the 1997 Rules of Civil Procedure.
Upon this point, the court a quo's
disquisition is well-taken -
It is doubtful that defendant Tortal
could in the instant case assail the
validity of the final decision of RTC
Br. 260. Following the principle of res
judicata, the dispute on ownership was
deemed to have been put to rest with
the finality of the said decision. Under
the doctrine of res judicata, a matter
that has been adjudicated by a court of
competent jurisdiction must be deemed
to have been finally and conclusively
settled if it arises in any subsequent
litigation between the same parties and
for the same cause . . . . Certainly, the
remedy available to defendant Tortal
is not in this proceeding, but
through a petition for annulment of
judgment with the Court of Appeals
under Rule 47 of the Rules of
Court.37 (Emphasis in the original)
Without a ruling from the Court of
Appeals nullifying the Regional Trial
Court August 25, 2003 Decision, which
granted the nullity of petitioner and
respondent's marriage and declared
respondent as the exclusive owner of
the house and lot, this Decision
remains valid and subsisting.
Moreover, it became final and
executory as early as October 14,
2005;38 hence, the lower courts did not
err in granting the petition for nullity of
levy and sale at auction since
respondent was the established
exclusive owner of the house and lot.
Thus, petitioner had no authority to use
the real property as security for his
indebtedness with Sales.
WHEREFORE, premises considered,
the Petition for Review is DENIED. The
assailed Court of Appeals December
13, 2013 Decision and May 14, 2014
Resolution in CA-G.R. CV No. 98955
are AFFIRMED.
THIRD DIVISION
G.R. No. 204594, November 07, 2018
SINDOPHIL,
INC., Petitioner, v. REPUBLIC OF THE
PHILIPPINES, Respondent.
DECISION
LEONEN, J.:
The presumption that a holder of a
Torrens title is an innocent purchaser
for value is disputable and may be
overcome by contrary evidence. Once
a prima facie case disputing this
presumption is established, the
adverse party cannot simply rely on the
presumption of good faith and must put
forward evidence that the property was
acquired without notice of any defect in
its title.
This resolves Sindophil, Inc.'s
(Sindophil) Petition for Review on
Certiorari1 assailing the June 19, 2012
Resolution2 and November 23, 2012
Resolution3 of the Court of Appeals in
CA-G.R. CV No. 96660. The Court of
Appeals deemed as abandoned and,
consequently, dismissed Sindophil's
joint appeal with a certain Marcelo R.
Teodoro (Teodoro) for their failure to
file their Appellants' Brief within the
required period.4
This case involves a 2,791-square-
meter parcel of land (Tramo property)
located on Aurora Boulevard (Tramo),
Pasay City, currently in Sindophil's
possession. Sindophil anchors its right
to the Tramo property on Transfer
Certificate of Title (TCT) No. 132440,
which was purportedly issued by the
Register of Deeds of Pasay City.5
On July 27, 1993, the Republic of the
Philippines filed a Complaint6 for
revocation, annulment, and
cancellation of certificates of title
before the Pasay City Regional Trial
Court, and impleaded Sindophil as one
of the defendants.
In its Complaint, the Republic alleged
that per TCT No. 10354,7 issued by the
Register of Deeds of Pasay City, the
Tramo property was initially registered
under the name of Teodoro on
November 12, 1964. Teodoro then sold
it to a certain Reynaldo Puma (Puma),
causing the cancellation of TCT No.
10354 and the issuance of TCT No.
128358.8 Subsequently, Puma sold it to
a certain Lourdes Ty (Ty). Puma's TCT
No. 128358 was cancelled and TCT
No. 129957 was issued to Ty.9 Finally,
on May 3, 1991,10 Ty sold the property
to Sindophil, causing the cancellation
of TCT No. 129957 and the issuance of
TCT No. 132440 to Sindophil on March
24, 1993.11
Despite the issuance of certificates of
title over the Tramo property, the
Republic claimed that TCT No. 10354
in the name of Teodoro was "spurious
or of do4btful authenticity."12 For one,
the registry records of the Register of
Deeds of Pasay City showed that it
was issued for a parcel of land in the
name of a certain Maximo Escobar, not
Teodoro.13 Another instance was that
Teodoro's TCT No. 10354 provided
that it emanated from TCT No. 3632;
but the memorandum of cancellation
annotated on TCT No. 3632 provided
that it was cancelled by TCT No. 8081
issued to a certain Efigenia A. Vda. de
Inocencio, not by TCT No. 10354
supposedly issued to
Teodoro.14 Furthermore, TCT No.
10354 provided that it covered Lot
3270-B of the subdivision plan Psd-
18572, allegedly a portion of Lot 3270
registered in the name of the Republic
of the Philippines under TCT No. 6735.
An examination of TCT No. 6735,
however, revealed that it was never
subdivided and that it remained under
the name of the Republic. Neither was
there a record of subdivision plan Psd-
18572 recorded with the Department of
Environment and Natural
15
Resources.  For these reasons, the
Republic argued that TCT No. 10354
and all certificates of title that
emanated from it, including Sindophil's
TCT No. 132440, were null and void
and should accordingly be cancelled.16
In their Answer,17 Teodoro, Puma, Ty,
and Sindophil countered that the
Republic was estopped from
questioning the transfers considering
that it had allowed the series of
transfers and even accepted the
"tremendous amount[s] paid"18 as
capital gains tax. They added that the
Complaint was filed because of the
Register of Deeds' "personal
grudge"19 against them because they
had questioned a consulta issued by
the Register of Deeds before the
Administrator of the Land Registration
Authority.20 Finally, they contended that
they were innocent purchasers for
value and, in the absence of evidence
to the contrary, reconveyance should
not lie.21 Arguing that the Republic had
no cause of action against them, they
prayed for the dismissal of the
Complaint.22
During trial, only the Republic was able
to present its evidence. Defendants
Teodoro, Puma, Ty, and Sindophil
were all deemed to have waived their
right to present evidence when they
failed to present any evidence or
witness despite several settings. The
parties were then ordered to file their
respective memoranda; but instead of
filing a memorandum, Sindophil filed a
Motion to Re-Open Case,23 praying that
it be allowed to present evidence that it
was a buyer in good faith. As to why it
failed to present evidence during trial,
Sindophil explained that its witness,
Sindophil President Victoria Y. Chalid
(Chalid), suffered a stroke which
prevented her from testifying during
trial.24 Lastly, it pointed out that the
Regional Trial Court granted the
Republic a total of 110 days to file a
formal offer of evidence. Thus, Trial Court November 13, 2009 Section 1(e) of Rule SO of the 1997
Sindophil prayed that it be "given equal Decision read: Rules of Civil Procedure.
opportunity to present [its] defense
since the [Regional Trial Court] had WHEREFORE, in view of the IT IS SO ORDERED.34 (Emphasis in
been very lenient to [the Republic's foregoing, TCT No. 10354 in the name the original)
counsel,] the Office of the Solicitor of Marcelo R. Teodoro and all Sindophil filed a Motion for
General[.]"25 subsequent titles derived therein, TCT Reconsideration35 with its appellant's
Nos. 128358, 129957 and 132440, in brief36 annexed to it. It explained that it
The Regional Trial Court, however, the names of Reynaldo Puma, Lourdes failed to file its appeal brief on time
went on to decide the case without Ty and Sindophil, Inc., respectively, are because its counsel, Atty. Rovenel O.
acting on Sindophil's Motion to Re- hereby declared Null and Void. The Obligar (Atty. Obligar), transferred his
Open Case. In its November 13, 2009 Re[gi]ster of Deeds is hereby ordered law office from Pasig City to Las Piñas
Decision,26 it ruled in favor of the to effect the cancellation of the same. City and, in the process, his house
Republic and voided the certificates of Likewise, defendants are hereby helpers probably lost or inadvertently
title issued to defendants Teodoro, directed to refrain from exercising or disposed of the Resolution directing
Puma, Ty, and Sindophil. It found that representing acts of ownership and/or the filing of appeal brief.37
the Tramo property claimed by possession over the land covered by
Teodoro under TCT No. 10354 was the titles declared Null and Void. In its November 23, 2012
derived from TCT No. 6735 registered Resolution,38 the Court of Appeals
in the name of the SO ORDERED.31 (Emphasis in the denied Sindophil's Motion for
Republic.27 However, no annotation of original) Reconsideration, thus:
the supposed transfer to Teodoro was This has reference to the motion filed
Sindophil, together with Teodoro,
annotated on TCT No. 6735.28 by the defendant-appellant Sindophil,
appealed before the Court of
Appeals.32 However, for failure to file Inc., through its counsel, for
On the claim of defendants that they reconsideration of the resolution
their appellants' brief within the
were innocent purchasers for value, promulgated in this case on June 19,
required period, the Court of Appeals
the Regional Trial Court said that this 2012.
deemed the appeal abandoned and
defense was "just a mere [assertion]
consequently dismissed it. The Court
and was never supported by any We find no cogent reason to warrant a
of Appeals June 19, 2012
documents."29 It stated that defendants reconsideration of the aforementioned
Resolution33 stated:
failed to discharge the burden of resolution. The petitioner, through its
In view of the failure of the defendants-
proving that they were purchasers in counsel, admitted in its motion that it
appellants to file their Appellants' Brief
good faith and for value, thus, rejecting committed lapses. It has to suffer the
within the period allowed to them, we
their argument.30 consequence of such lapses.
hereby consider their appeal
as ABANDONED and,
The dispositive portion of the Regional Procedural rules have their own
consequently, DISMISSED pursuant to
wholesome rationale in the orderly
administration of justice. Justice is to
be administered according to the rules
in order to obviate arbitrariness,
caprice or whimsicality (Vasco vs.
Court of Appeals, G.R. No. L-46763,
February 28, 1978, 81 SCRA 763,
766).
Thus, procedural rules are not to be
belittled or dismissed simply because
their non-observance may have
resulted in prejudice to a party's
substantive rights. Like all rules, they
are required to be followed except only
when, for the most persuasive of
reasons, they may be relaxed to relieve
a litigant of an injustice not
commensurate with the degree of his
thoughtlessness in not complying with
the procedure prescribed. While it is
true that litigation is not a game of
technicalities, this does not mean that
the Rules of Court may be ignored at
will and at random to the prejudice of
the orderly presentation and
assessment of the issues and their just
resolution. As held by the Supreme
Court in Garbo vs. Court of Appeals,
G.R. No. 107698, July 5, 1996, 258
SCRA 159:
"Procedural rules are tools designed to
facilitate the adjudication of cases.
Courts and litigants alike are thus
enjoined to abide strictly by the rules.
And while the Court, in some
instances, allows a relaxation in the
application of the rules, this, we stress,
was never intended to forge a bastion
of erring litigants to violate the rules
with impunity. The liberality in the
interpretation and application of the
rules applies only in proper cases and
under justifiable causes and
circumstances. While it is true that
litigation is not a game of technicalities,
it is equally true that every case must
be prosecuted in accordance with the
prescribed procedure to insure an
orderly and speedy administration of
justice."
Procedural rules, therefore, are not to
be disdained as mere technicalities
that may be ignored at will to suit the
convenience of a party (Santos vs.
Court of Appeals, G.R. No. 92862, July
4, 1991, 198 SCRA 806). We find the
instant case to be not an exception to
the aforementioned rule.
WHEREFORE, in view of the foregoing
premises, we hereby DENY the motion
for reconsideration filed in this case by
the defendant-appellant Sindophil, Inc.
SO ORDERED.39
On January 18, 2013, Sindophil filed its
Petition for Review on
Certiorari40 before this Court. After four
(4) Motions41 for Extension, the
Republic filed its Comment42 on July
15, 2013. In its July 31, 2013
Resolution,43 this Court noted the
Comment and directed Sindophil to file
its Reply within 10 days from notice.
Sindophil was served a copy of the
Comment on September 18, 2013 and
had until September 28, 2013 to file its
Reply.44 However, Sindophil failed to
file its Reply within the required period
and its counsel was required to show
cause45 why he should not be
disciplinarily dealt with and was again
required to file a Reply. On May 15,
2014, Sindophil filed its Reply46 with its
counsel apologizing for failing to file it
within the required period "because he
honestly believed that the filing of one
is optional and not mandatory."47 This
Court noted the Reply in its July 7,
2014 Resolution.48
The parties raise both procedural and
substantive issues for resolution of this
Court. The procedural issues in this
case are:
First, whether or not the Court of
Appeals erred in dismissing Sindophil's
appeal for failure to file an appeal brief
within the required period; and
Second, whether or not the Regional
Trial Court erred in deciding the case
despite Sindophil's filing of a Motion to
Re-Open Case.
The substantive issues are:
First, whether or not the certificates of
title emanating from TCT No. 10354
are null and void; and
Second, whether or not the Regional
Trial Court erred in not awarding
Sindophil, compensation from the
Assurance Fund.
On the procedural issues, Sindophil
mainly argues that it was deprived of
the right to "genuine" due process both
by the Regional Trial Court and the
Court of Appeals. According to
Sindophil, its failure to present
evidence during trial and its failure to
file the appeal brief within the required
period are "technical grounds"49 that
the Regional Trial Court and the Court
of Appeals could have excused in the
interest of substantial justice.
On the merits, Sindophil maintains that
when it bought the Tramo property
from Ty, it was a buyer in good faith
and had no notice of any infirmities in
his title.50 Considering that under the
Torrens System, "[a] purchaser is not
bound by the original certificate of title
but only by the certificate of title of the
person from whom he purchased the
property[,]"51 the Regional Trial Court
erred in voiding its title to the Tramo
property because of the supposed
anomalies surrounding the issuance of
TCT No. 10354 to Teodoro. Assuming
that its title is indeed void, Sindophil
nevertheless argues that it should have
been awarded compensation from the
Assurance Fund per Section 9552 of the
Property Registration Decree, as
amended.53
As for respondent, it argues that there
was no deprivation of due process
because Sindophil was given more
than enough opportunity to present its
case but repeatedly and unjustifiably
failed to do so. Its reasons for failing to
file the appeal brief-the Resolution
directing the filing of the brief was lost
either because of its counsel's transfer
of office from Pasig City to Las Piñas
City or because it might have been
disposed by the counsel's house
helpers-are inexcusable and are all
due to the negligence of its counsel.
With appeal being a mere statutory
privilege, respondent argues that the
Court of Appeals did not err in
dismissing Sindophil's appeal for failure
to comply with the Rules ofCourt.54
Furthermore, respondent maintains
that the issue of whether a buyer is in
good faith is a question of fact. The
issue of whether Sindophil is entitled to
compensation from the Assurance
Fund is likewise a question of fact as
entitlement to compensation
presupposes that the claimant is a
buyer in good faith. These issues being
questions of fact, respondent argues
that this Court may not resolve them
because only questions of law may be
brought before this Court on a petition
for review on certiorari under Rule 45
of the Rules of Court.55 In any case,
even if the case is resolved on the
merits, respondent avers that Sindophil
still had the burden of proving that it
was a buyer in good faith, an assertion
that Sindophil miserably failed to
establish. According to respondent, it
was error for Sindophil to rely solely on
the presumption of good faith without
proving its case.56
This Petition must be denied.
I
Rule 50, Section 1(e) of the Rules of
Court is the basis for dismissing an
appeal for failure to file the appellant's
brief within the required period:
RULE 50
Dismissal of Appeal
Section 1. Grounds for Dismissal of
Appeal. - An appeal may be dismissed
by the Court of Appeals, on its own
motion or on that of the appellee, on
the following grounds:
    . . . . 
(e) Failure of the appellant to serve
and file the required number of
copies of his brief or
memorandum within the time
provided by these Rules[.]
With the use of the permissive "may," it
has been held that the dismissal is
directory, not mandatory, with the
discretion to be exercised soundly and
"in accordance with the tenets of
justice and fair play"57 and "having in
mind the circumstances obtaining in
each case."58 In Bigornia v. Court of
Appeals:59
Technically, the Court of Appeals may
dismiss an appeal for failure of the
appellant to file the appellants' brief on
time. But, the dismissal is directory,
not mandatory. Hence, the court has
discretion to dismiss or not to dismiss
the appeal. It is a power conferred on
the court, not a duty. The discretion,
however, must be a sound one, to be
exercised in accordance with the
tenets of justice and fair play, having in
mind the circumstances obtaining in
each case.60 (Emphasis in the original,
citation omitted)
In Bigornia, this Court ordered the
reinstatement of the appeal despite the
late filing of the appellant's brief. The
petitioners in Bigornia were police
officers who, this Court said, "receive
meager salaries for risking life and
limb."61 With the police officers having
been adjudged liable for substantial
amounts in damages, this Court said
that "[i]t is but fair that [petitioners] be
heard on the merits of their case before
being made to pay damages, for what
could be, a faithful performance of
duty."62
The appeal was likewise reinstated
in Aguam v. Court of Appeals,63 where
a motion for extension of time to file
appellant's brief was denied by the
Court of Appeals for having been filed
nine (9) days64 beyond the period for
filing the appellant's brief. The motion
for reconsideration with attached
appellant's brief was likewise
denied.65 However, it was established
that the notice to file appellant's brief
was received by an employee of the
realty firm with whom the appellant's
lawyer was sharing office, not by the
appellant's lawyer who was a solo
practitioner.66 Thus, this Court ordered
the Court of Appeals to admit the
appellant's brief in the higher interest of
justice.67
The same extraordinary circumstances
similar to Bigornia and Aguam are not
present here. In Sindophil's Motion for
Reconsideration68 before the Court of
Appeals, Sindophil's counsel, Atty.
Obligar, explained that his law office
used to be located in Pasig City.
However, when two (2) of his staff left
due to "family reasons,"69 he had to
transfer his office to Las Piñas City,
which was near Parañaque City where
he resided. He then speculated that in
the course of the transfer, the Court of
Appeals' resolution directing Sindophil
to file its appeal brief might have been
one of the files lost or inadvertently
disposed of by his house helpers.70
Atty. Obligar's excuse is unacceptable.
While he is not prohibited from hiring
clerks and other staff to help him in his
law practice, it is still, first and
foremost, his duty to monitor the
receipt of notices such as the Court of
Appeals' resolution directing the filing
of the appellant's brief. He cannot
blame his staff or house helpers as it is
already settled that the negligence of
the clerks and employees of a lawyer
binds the latter.71 That he is not even
sure what happened to the Resolution
shows his carelessness, and this
negligence is one that ordinary
diligence could have guarded against.
He should have devised a system in
his law office whereby his clerks are to
immediately route the notices they
receive to the handling lawyer because
the reglementary period for filing an
appeal brief runs from their
receipt.72 Under the circumstances, the
Court of Appeals exercised its
discretion soundly by deeming
Sindophil's appeal as abandoned and,
consequently, dismissing the appeal.
II
Neither did the Regional Trial Comi err
in deciding the case despite Sindophil's
filing of a Motion to Re-Open Case.
The order of trial is governed by Rule
30, Section 5 of the Rules of Court,
with item (f) specifically governing the
reopening of a case to introduce new
evidence, thus:
Section 5. Order of trial. - Subject to
the provisions of Section 2 of Rule 31,
and unless the court for special
reasons otherwise directs, the trial
shall be limited to the issues stated in
the pre-trial order and shall proceed as
follows:
(a) The plaintiff shall adduce
evidence in support of his
complaint;
(b) The defendant shall then
adduce evidence in support of
his defense, counterclaim,
cross-claim and third-party
complaint;
(c) The third-party defendant, if
any, shall adduce evidence of
his defense, counterclaim,
cross-claim and fourthparty
complaint;
(d) The fourth-party, and so forth, if
any, shall adduce evidence of
the material facts pleaded by
them;
(e) The parties against whom any
counterclaim or crossclaim has
been pleaded, shall adduce
evidence in support of their
defense, in the order to be
prescribed by the court;
(f) The parties may then
respectively adduce rebutting
evidence only, unless the court,
for good reasons and in the
furtherance of justice, permits
them to adduce evidence upon
their original case; and
(g) Upon admission of the
evidence, the case shall be
deemed submitted for decision,
unless the court directs the
parties to argue or to submit
their respective memoranda or
any further pleadings.
If several defendants or third-party
defendants, and so forth, having
separate defenses appear by different
counsel, the court shall determine the
relative order of presentation of their
evidence. (Underscoring provided)
Republic v. Sandiganbayan73 explained
Rule 30, Section 5 in this wise:
Under this rule, a party who has the
burden of proof must introduce, at the
first instance, all the evidence he relies
upon and such evidence cannot be
given piecemeal. The obvious rationale
of the requirement is to avoid injurious
surprises to the other party and the
consequent delay in the administration
of justice.
A party's declaration of the completion
of the presentation of his evidence
prevents him from introducing further
evidence; but where the evidence
is rebuttal in character, whose
necessity, for instance, arose from the
shifting of the burden of evidence from
one party to the other; or where the
evidence sought to be presented is in
the nature of newly
discovered evidence, the party's right
to introduce further evidence must be
recognized. Otherwise, the aggrieved
party may avail of the remedy
of certiorari.
Largely, the exercise of the court's
discretion under the exception of
Section 5 (f), Rule 30 of the Ru1es of
Court depends on the attendant facts
i.e., on whether the evidence would
qualify as a "good reason" and be in
furtherance of "the interest of justice."
For a reviewing court to properly
interfere with the lower court's exercise
of discretion, the petitioner must show
that the lower court's action was
attended by grave abuse of discretion.
Settled jurisprudence has defined this
term as the capricious and whimsical
exercise of judgment, equivalent to
lack of jurisdiction; or, the exercise of
power in an arbitrary manner by reason
of passion, prejudice, or personal
hostility, so patent or so gross as to
amount to an evasion of a positive
duty, to a virtual refusal to perform the
mandated duty, or to act at all in
contemplation of the law. Grave abuse
of discretion goes beyond the bare and
unsupported imputation of caprice,
whimsicality or arbitrariness, and
beyond allegations that merely
constitute errors of judgment or mere
abuse of discretion.
In Lopez v. Liboro, we had occasion to
make the following pronouncement:
After the parties have produced their
respective direct proofs, they are
allowed to offer rebutting evidence
only, but, it has been held, the court,
for good reasons, in the furtherance of
justice, may permit them to offer
evidence upon their original case, and
its ruling will not be disturbed in the
appellate court where no abuse of
discretion appears. So, generally,
additional evidence is allowed when it
is newly discovered, or where it has
been omitted through inadvertence or
mistake, or where the purpose of the
evidence is to correct evidence
previously offered. The omission to
present evidence on the testator's
knowledge of Spanish had not been
deliberate. It was due to a additional
misapprehension or oversight.
Likewise, in Director of Lands v.
Roman Archbishop of Manila, we ruled:
The strict rule is that the plaintiff must
try his case out when he commences.
Nevertheless, a relaxation of the rule is
permitted in the sound discretion of the
court. "The proper rule for the exercise
of this discretion," it has been said by
an eminent author, "is, that material
testimony should not be excluded
because offered by the plaintiff after
the defendant has rested, although not
in rebuttal, unless it has been kept
back by a trick, and for the purpose of
deceiving the defendant and affecting
his case injuriously."
These principles find their echo in
Philippine remedial law. While the
general rule is rightly recognized, the
Code of Civil Procedure authorizes the
judge "for special reasons," to change
the order of the trial, and "for good
reason, in the furtherance of justice," to
permit the parties "to offer evidence
upon their original case." . . .
In his commentaries, Chief Justice
Moran had this to say:
However, the court for good reasons,
may, in the furtherance of justice,
permit the parties to offer evidence
upon their original case, and its ruling
will not be disturbed where no abuse of
discretion appears, Generally,
evidence is allowed
when . . .; but it may be properly
disallowed where it was withheld
deliberately and without
justification.74 (Emphasis in the original,
citations omitted)
The introduction of new evidence even
after a party has rested its case may,
therefore, be done but only if the court
finds that it is for good reasons and in
the furtherance of justice. The
admission is discretionary on the part
of the court and, as explained
in Republic, may only be set aside if
the admission was done with grave
abuse of discretion or:
[T]he capricious and whimsical
exercise of judgment, equivalent to
lack of jurisdiction; or, the exercise of
power in an arbitrary manner by reason
of passion, prejudice, or personal
hostility, so patent or so gross as to
amount to an evasion of a positive
duty, to a virtual refusal to perform the
mandated duty, or to act at all in
contemplation of the law.75 (citation
omitted)
To recall, Sindophil filed an Urgent
Motion to Reset Hearing with Notice of
Change of Address one (1) day before
its scheduled initial presentation of
evidence. On motion by the Solicitor
General, representing the Republic, the
Regional Trial Court denied the Motion
to Reset Hearing for having been filed
on short notice and deemed as waived
Sindophil's right to present evidence.
The parties were then ordered to file
their respective memoranda thirty (30)
days from notice, after which the case
would be deemed submitted for
decision.76
Thereafter, Sindophil filed a motion for
extension, praying for an additional
fifteen (15) days or until February 26,
2009, to file its memorandum.77 The
Regional Trial Court granted the
motion in its February 24, 2009
Order.78 However, despite the grant of
extension, Sindophil did not file the
required memorandum. Instead, it filed
the Motion to Re-Open Case79 more
than a month later or on March 31,
2009. In its Motion to Re-Open Case,
Sindophil alleged that its witness,
Sindophil President Chalid, had
previously suffered a stroke that
rendered her indisposed to take the
stand.80
The stroke suffered by Sindophil's
President was not a good reason to
reopen the case. In its Pre-Trial Brief,
Sindophil indicated the Register of
Deeds of Pasay City as its other
witness.81 It could have very well
presented the Register of Deeds first
while Chalid recovered from her stroke.
Why it did not do so is only known to
Sindophil.
Furthermore, while illness is a valid
ground for postponing a hearing,82 it
does not appear that Sindophil raised
Chalid's stroke as a ground to
postpone its initial presentation of
defense evidence. The illness was only
alleged in the Motion to Re-Open Case
filed on March 31, 2009, more than
three (3) months after the scheduled
presentation of evidence on December
10, 2008. The excuse, therefore,
appears to be an afterthought.
Neither can Sindophil claim that it was
not given equal opportunity to present
its case. Atty. Obligar, counsel for
Sindophil, admitted that he never
objected to the motions for extension to
file formal offer of evidence filed by the
Republic.83 Even if this Court believes
that he did not object to the extensions
"as a gesture of consideration bearing
in mind the work load and bulk of
cases being attended to by the [Office
of the Solicitor General],"84 he was still
not entitled to expect that the Office of
the Solicitor General would grant him
the same leniency by not objecting to
the Motion to Reset the initial
presentation of defense evidence.
Litigation is primarily an adversarial
proceeding. Counsels are to take every
opportunity, so long as it is within the
bounds of the law, to advocate their
clients' causes.
Furthermore, contrary to Sindophil's
claim, the Regional Trial Court
entertained the Motion to Re-Open
Case that it even set the Motion for
clarificatory hearing and oral
argument.85 However, Atty. Obligar
again absented himself during the
scheduled hearing.
Given the foregoing, the Regional Trial
Court did not gravely abuse its
discretion in deciding the case despite
the filing of the Motion to ReOpen
Case.
III
Sindophil insists that it bought the
Tramo property from Ty in good faith
and that it was an innocent purchaser
for value. However, the presumption of
good faith and that a holder of a title is
an innocent purchaser for value may
be overcome by contrary evidence.
Here, the Republic presented evidence
that TCT No. 10354, from which
Sindophil's TCT No. 132440 was
derived, was void. As found by the
Regional Trial Court:
Record shows that Certificate of Title
No. 6735, wherein the lot claimed by
defendant, Marcelo R. Teodoro, lot
3270-B, is derived therefrom, is under
the name of the Republic of the
Philippines, dated October 17, 1913.
Nothing in the subsequent annotations
was under the name of any of the
defendants and neither the subject
TCT No. 10354.86
With the Republic having put forward
evidence that the Tramo property
claimed by Sindophil belongs to the
Republic, the burden of evidence
shifted to Sindophil to prove that its title
to it was valid. Concomitantly, it had
the burden of proving that it was
indeed a buyer in good faith and for
value. As this Court said in Baltazar v.
Court of Appeals,87 "the burden of
proving the status of a purchaser in
good faith and for value lies upon him
who asserts that status"88 and "[i]n
discharging that burden, it is not
enough to invoke the ordinary
presumption of good faith, i.e., that
everyone is presumed to act in good
faith. The good faith that is [essential
here] is integral with the very status
which must be proved."89
Unfortunately for Sindophil, it utterly
failed to discharge the burden of
evidence because its counsel failed to
attend the scheduled initial
presentation of evidence.
Further, looking at the records, the
defects in Sindophil's title could be
inferred from the annotations in TCT
No. 129957, the certificate of title held
by Sindophil's immediate predecessor,
Ty. A certain Antonio C. Mercado had
filed an adverse claim against Ty
because the Tramo property had been
previously sold to him by Puma, Ty's
predecessor.90 The alleged double sale
should have prompted Sindophil to
look into Puma's title, TCT No. 128358,
where it can be gleaned that Teodoro
likewise filed an adverse claim.91 These
annotations show that the Tramo G.R. No. 205409, June 13, 2018
property is controversial and has been
the subject of several adverse claims, CITIGROUP,
INC., Petitioner, v. CITYSTATE
belying Sindophil's contention that it
acquired the property in good faith. SAVINGS BANK, INC. Respondent.
DECISION
With Sindophil failing to prove that it
was a buyer in good faith, it cannot
recover damages to be paid out of the LEONEN, J.:
Assurance Fund under Section 9592 of
the Property Registration Decree. In La This resolves a Petition for Review on
Urbana v. Bernardo,93 this Court held Certiorari1 assailing the August 29,
that "it is a condition sine qua non that 2012 Decision2 and the January 15,
the person who brings an action for 2013 Resolution3 of the Court of
damages against the assurance fund Appeals in CA-G.R. SP No. 109679.
be the registered owner, and, as to
holders of transfer certificates of title, The facts which led to the controversy
that they be innocent purchasers in before this Court, as summarized by
good faith and for value."94 the Court of Appeals, are as follows:
WHEREFORE, the Petition for Review Petitioner Citigroup, Inc. is a
on Certiorari is DENIED. The June 19, corporation duly organized under the
2012 Resolution and November 23, laws of the State of Delaware engaged
2012 Resolution of the Court of in banking and financial services.
Appeals in CA-G.R. CV No. 96660
are AFFIRMED. In the late 1970s, Citibank N.A., a
wholly-owned subsidiary of petitioner,
SO ORDERED. installed its first automated teller
machines in over a hundred New York
City branches. In 1984, Citibank N.A.,
Philippine Branch, began the
development of its domestic
Automated Teller Machine (ATM)
network, and started operating ATMs
and issuing ATM cards in the
Philippines. Citibank N.A., Philippine
Branch then joined Bancnet Inc.
("Bancnet") in 1990, the first year
Bancnet commenced operations. To
date, Citibank N.A., Philippine Branch
has six branches and 22 ATMs in the
Philippines.
In 2005, Citibank Savings, Inc. became
an indirect wholly-owned subsidiary of
Citibank, N.A. As a pre-existing thrift
bank, it offered ATM services in the
Philippines in 1995 and joined Bancnet
in 2005. Citibank Savings, Inc. now has
36 branches and 27 ATMs in the
Philippines.
Combining the branches and ATMs of
Citibank N.A., Philippine Branch and
Citibank Savings, Inc., there are a total
of 42 branches and 29 ATMs in the
Philippines marketed and identified to
the public under the CITI family of
marks.
The ATM cards issued by Citibank
N.A., Philippine Branch and Citibank
Savings, Inc. are labelled "CITICARD".
The trademark CITICARD is owned by
Citibank N.A. and is registered in the
[Intellectual Property Office] of the
Philippines on 27 September 1995
under Registration Number 34731.
In addition, petitioner or Citibank N.A.,
a wholly-owned subsidiary of petitioner,
owns the following other trademarks
currently registered with the Philippine
[Intellectual Property Office], to wit:
"CITI and arc design", "CITIBANK",
"CITIBANK PAYLINK", "CITIBANK
SPEEDCOLLECT", "CITIBANKING",
"CITICARD", "CITICORP",
"CITIFINANCIAL", "CITIGOLD",
"CITIGROUP", "CITIPHONE
BANKING'', and "CITISERVICE".
On the other hand, sometime in the
mid-nineties, a group of Filipinos and
Singaporean companies formed a
consortium to establish respondent
Citystate Savings Bank, Inc. The
consortium included established
Singaporean companies, specifically
Citystate Insurance Group and
Citystate Management Group Holdings
Pte, Ltd.
Respondent's registered mark has in
its name affixed a lion's head, which is
likened to the national symbol of
Singapore, the Merlion. On 08 August
1997, respondent opened its initial
branch in Makati City. From then on, it
endeavored to expand its branch
network. At present it has 19 branches
in key cities and municipalities
including 3 branches in the province of
Bulacan and 1 in Cebu City.
Respondent had also established off
site ATMs in key locations in the
Philippines as one of its banking
products and services.
In line with this, respondent filed an
application for registration with the
[Intellectual Property Office] on 21
June 2005 of the trademark "CITY
CASH WITH GOLDEN LION'S HEAD"
for its ATM service, under Application
Serial No. 42005005673.4
After respondent Citystate Savings
Bank, Inc. (Citystate) applied for
registration of its trademark "CITY
CASH WITH GOLDEN LION'S HEAD"
with the Intellectual Property Office,
Citigroup, Inc. (Citigroup) filed an
opposition to Citystate's application.
Citigroup claimed that the "CITY CASH
WITH GOLDEN LION'S HEAD" mark is
confusingly similar to its own "CITI"
marks.5 After an exchange of
pleadings, the Director of the Bureau of
Legal Affairs of the Intellectual Property
Office rendered a Decision6 dated
November 20, 2008. The Intellectual
Property Office concluded that the
dominant features of the marks were
the words "CITI" and "CITY," which
were almost the same in all aspects. It
further ratiocinated that Citigroup had
the better right over the mark,
considering that 'its "CITI" and "CITI"-
related marks have been registered
with the Intellectual Property Office, as
well as with the United States Patent
and Trademark Office, covering
"financial services" under Class 36 of
the International Classification of
Goods.7 Thus, applying the dominancy
test and considering that Citystate's
dominant feature of the applicant's
mark was identical or confusingly
similar to a registered trademark, the
Intellectual Property Office ruled that
approving it would be contrary to
Section 138 of the Intellectual Property
Code and Citigroup's exclusive right to
use its marks.
This was appealed to the Office of the
Director General of the Intellectual
Property Office. In a Decision8 dated
July 3, 2009, Director General Adrian
S. Cristobal, Jr. (Director General
Cristobal) reversed the November 20,
2008 Decision of the Director of the
Bureau of Legal Affairs and gave due
course to Citystate's trademark
application. He made a visual
comparison of the parties' respective
marks and considered the golden lion
head device to be the prominent or
dominant feature of Citystate's mark,
and not the word "CITY." Thus,
Citystate's mark did not resemble
Citigroup's mark such that deception or
confusion was likely. Director General
Cristobal found plausible Citystate's
explanation for choosing
"CITYSTATE," i.e., that its name was
based on the country of Singapore,
which was referred to as "city-state,"
and that the golden lion head device
was similar to the national symbol of
Singapore, the merlion.9 He
appreciated that availing of the
products and services related to the
parties' marks would entail very
detailed procedures, like sales
representatives explaining the products
and clients filling up and submitting
application forms, such that customers
would necessarily be well informed and
not confused.10
Thus, Citigroup filed a Petition for
Review11 before the Court of Appeals,
which dismissed the petition. The Court
of Appeals found that Director General
Cristobal did not act with grave abuse
of discretion in ruling that the parties'
trademarks were not confusingly
similar, and in giving due course to
Citystate's trademark application.12 It
found that Citystate's mark was not
confusingly or deceptively similar to
Citigroup's marks:
[Citystate's] trademark is the entire
"CITY CASH WITH GOLDEN LION'S
HEAD". Although the words "CITY
CASH" are prominent, the entirety of
the trademark must be considered, and
focus should not be made solely on the
phonetic similarity of the words "CITY"
and "CITI".
The dissimilarities between the two
marks are noticeable and substantial.
[Citystate's] mark, "CITY CASH WITH
GOLDEN LION'S HEAD", has an
insignia of a golden lion's head at the
left side of the words "CITY CASH",
while [Citigroup's] "CITI" mark usually
has an arc between the two I's. A
further scrutiny of the other "CITI"
marks of [Citigroup] would show that
their font type, font size, and color
schemes of the said "CITI" marks vary
for each product or service. Most of the
time, [Citigroup's] "CITI" mark is joined
with another term to form a single
word, with each product or service
having different font types and color
schemes. On the contrary, the
trademark of [Citystate] consists of the
words "CITY CASH", with a golden
lion's head emblem on the left side. It
is, therefore, improbable that the public
would immediately and naturally
conclude that [Citystate's] "CITY CASH
WITH GOLDEN LION'S HEAD" is but
another variation under [Citigroup's]
"CITI" marks.
Verily, the variations in the appearance
of the "CITI" marks by [Citigroup],
when conjoined with other words,
would dissolve the alleged similarity
between them and the trademark of
[Citystate]. These dissimilarities, and
the insignia of a golden lion's head
before the words "CITY CASH" in the
mark of [Citystate] would sufficiently
acquaint and apprise the public that
[Citystate's] trademark "CITY CASH
WITH GOLDEN LION'S HEAD" is not
connected with the "CITI" marks of
[Citigroup].
Moreover, more credit should be given
to the "ordinary purchaser." Cast in this
particular controversy, the ordinary
purchaser is not the "completely
unwary consumer" but is the "ordinarily
intelligent buyer" considering the type
of product involved. It bears to
emphasize that the mark "CITY CASH
WITH GOLDEN LION'S HEAD" is a
mark of [Citystate] for its ATM services
which it offers to the public. It cannot
be gainsaid that an ATM service is not
an ordinary product which could be
obtained at any store without the public
noticing its association with the
banking institution that provides said
service. Naturally, the customer must
first open an account with a bank
before it could avail of its ATM service.
Moreover, the name of the banking
institution is written and posted either
inside or outside the ATM booth, not to
mention the fact that the name of the
bank that operates the ATM is
constantly flashed at the screen of the
ATM itself. With this, the public would
accordingly be apprised that
[Citystate's] "CITY CASH" is an ATM
service of [Citystate], and not that of
[Citigroup's].13 (Citation omitted)
Thus, the Court of Appeals quoted
Director General Cristobal:
In evaluating the relevance of the prefix
"CITI", due attention should be given
not only to the other features of the
competing marks but also to the
attendant circumstances of the case.
Otherwise, a blind adherence to
[Citigroup's] claim over the prefix CITI
is tantamount to handing it a monopoly
of all marks with such prefix or with a
prefix that sounds alike but with a
different spelling like the word "city".
Accordingly, the kind of products and
services involved should likewise be
scrutinized.
....
Thus, this Court finds no cogent reason
to believe [Citigroup's] contention that
consumers may confuse the products
and services covered by the competing
trademarks as coming from the same
source of origin. The fear that the
consumer may mistake the products as
to the source or origin, or that the
consumers seeking its products and
services will be redirected or diverted
to [Citystate], is unfounded. The
products or services involved are not
the ordinary everyday products that
one can just pick up in a supermarket
or grocery stores (sic). These products
generally require sales representatives
explaining to their prospective
customers the features of and
entitlements thereto. Availing the
products and services involved follows
certain procedures that ordinarily and
routinely gives the prospective
customers or clients opportunity to
know exactly with whom they are
dealing with (sic). The procedures
usually include the clients filling-up and
submitting a pro-forma application form
and other documentary requirements,
which means that the person is wel[l]-
informed and thus, cannot be misled
into believing that the product or
service is that of [Citystate] when in
fact it is different from [Citigroup's].
The likelihood of confusion between
two marks should be taken from the
viewpoint of the prospective buyer.
In Emerald Garment Manufacturing
Corp. vs. Court of Appeals, et al., the
Supreme Court ruled that:
"Finally, in line with the foregoing
discussions, more credit should be
given to the 'ordinary purchaser.' Cast
in this particular controversy, the
ordinary purchaser is not the
'completely unwary consumer' but is
the 'ordinarily intelligent buyer'
considering the type of product
involved.
The definition laid down in Dy Buncio
v. Tan Tiao Bok is better suited to the
present case. There, the 'ordinary
purchaser' was defined as one
'accustomed to buy, and therefore to
some extent familiar with, the goods in
question. The test of fraudulent
simulation is to be found in the
likelihood of the deception of some
persons in some measure acquainted
with an established design and
desirous of purchasing the commodity
with which that design has been
associated. The test is not found in the
deception, or the possibility of
deception, of the person who knows
nothing about the design which has
been counterfeited, and who must be
indifferent between that and the other.
The simulation, in order to be
objectionable, must be such as
appears likely to mislead the ordinary
intelligent buyer who has a need to
supply and is familiar with the article
that he seeks to purchase."14
Citigroup filed a Motion for
Reconsideration,15 which the Court of
Appeals denied in its January 15, 2013
Resolution.16
Thus, Citigroup filed a Petition for
Review17 against Citystate before this
Court. After respondent filed its
Comment/Opposition18 and petitioner
filed its Reply,19 respondent filed its
Memorandum.20
Petitioner claims that the Court of
Appeals erred in finding that there was
no confusing similarity between the
trademark that respondent applied for
and petitioner's own trademarks.21 It
avers that Emerald Manufacturing
Company v. Court of Appeals22 is not
applicable to this case.23 Contrary to
the Court of Appeals' finding, the arc
design is not an integral part of
petitioner's "CITI" family of marks.24
Petitioner asserts that when the
dominancy test is applied to the Court
of Appeals' findings of fact, the
necessary result is a finding of
confusing similarity.25 It points out that
the Court of Appeals found that "CITY
CASH" is the dominant feature of
respondent's applied trademark.
However, because the word "CASH"
was disclaimed in respondent's
trademark application, only "CITY" may
be considered the dominant part of the
mark. "'CITY' ... appears nearly
identical to 'CITI'."26
Further, petitioner argues that the
Court of Appeals did not understand
the services offered in relation to
respondent's mark when it said that the
mark is to be applied only in relation to
respondent's ATMs and within the bank
premises. It insists that in actuality, the
mark could be used outside the bank
premises, such as in radio,
newspapers, and the internet, where
there would not necessarily be a
"GOLDEN LION'S HEAD" symbol to
disambiguate the mark from any of
petitioner's marks. It argues that the
Court of Appeals should have
appreciated the difference between
basic financial services on one hand,
which include ATM services, and
sophisticated financial services on the
other hand. It avers that customers do
not select ATM services after cautious
evaluation, and that ATM services are
marketed to ordinary consumers. Thus,
petitioner claims that the Court of
Appeals erred when it concluded that
customers are intelligent purchasers,
and failed to consider ordinary
purchasers who have not yet used the
financial services of petitioner and
respondent.27
It further holds that it is not claiming a
monopoly of all marks prefixed by
words sounding like "city." It stresses
that it opposes only marks which are
registered under class 36 used in
products directly related and in
competition with its "CITI" family of
marks, sold under the same business
channels, and sold to the same group
of consumers.28

Respondent argues that its mark is not
confusingly similar to petitioner's29 and
that petitioner's fears are purely
speculative.30 It claims that the
phonetic similarity between "CITY" and
"CITI" is not sufficient to deny its
registration, asserting that this Court
has ruled that idem sonans alone is
insufficient basis for a determination of
the existence of confusing similarity. As
for petitioner's arguments on possible
confusion due to advertising,
respondent states that advertisement
aims to inform the public of a certain
entity's product and that not mentioning
a supplier's trade name in its
advertisement defeats the purpose of
advertisement. It disputes petitioner's
claims on ATM services and the kind of
caution exercised prior to obtaining an
ATM card, asserting that before
customers may avail of ATM services,
they have to open an account with the
bank offering them.31
This Court denies the Petition.
The sole issue for this Court's
resolution is whether or not the Court
of Appeals committed an error of law in
finding that there exists no confusing
similarity between petitioner Citigroup,
Inc.'s and respondent Citystate
Savings Bank, Inc.'s marks.
In La Chemise Lacoste, S.A. v.
Fernandez,32 this Court explained why
trademarks are protected in the
market:
The purpose of the law protecting a
trademark cannot be overemphasized.
They are to point out distinctly the
origin or ownership of the article to
which it is affixed, to secure to him,
who has been instrumental in bringing
into market a superior article of
merchandise, the fruit of his industry
and skill, and to prevent fraud and
imposition (Etepha v. Director of
Patents, 16 SCRA 495).
The legislature has enacted laws to
regulate the use of trademarks and
provide for the protection thereof.
Modem trade and commerce demands
that depredations on legitimate trade
marks of non-nationals including those
who have not shown prior registration
thereof should not be countenanced.
The law against such depredations is
not only for the protection of the owner
of the trademark but also, and more
importantly, for the protection of
purchasers from confusion, mistake, or
deception as to the goods they are
buying. (Asari Yoko Co., Ltd. v. Kee
Boc, 1 SCRA 1; General Garments
Corporation v. Director of Patents, 41
SCRA 50).
The law on trademarks and
tradenames is based on the principle of
business integrity and common justice.
This law, both in letter and spirit, is laid
upon the premise that, while it
encourages fair trade in every way and
aims to foster, and not to hamper,
competition, no one, especially a
trader, is justified in damaging or
jeopardizing another's business by
fraud, deceit, trickery or unfair methods
of any sort. This necessarily precludes
the trading by one dealer upon the
good name and reputation built up by
another (Baltimore v. Moses, 182 Md
229, 34 A (2d) 338).33
In Mirpuri v. Court of Appeals,34 this
Court traced the historical development
of trademark law:
A "trademark" is defined under R.A.
166, the Trademark Law, as including
"any word, name, symbol, emblem,
sign or device or any combination
thereof adopted and used by a
manufacturer or merchant to identify
his goods and distinguish them from
those manufactured, sold or dealt in by
others." This definition has been
simplified in R.A. No. 8293, the
Intellectual Property Code of the
Philippines, which defines a
"trademark" as "any visible sign
capable of distinguishing goods." In
Philippine jurisprudence, the function of
a trademark is to point out distinctly the
origin or ownership of the goods to
which it is affixed; to secure to him,
who has been instrumental in bringing
into the market a superior article of
merchandise, the fruit of his industry
and skill; to assure the public that they
are procuring the genuine article; to
prevent fraud and imposition; and to
protect the manufacturer against
substitution and sale of an inferior and
different article as his product.
Modern authorities on trademark law
view trademarks as performing three
distinct functions: ( 1) they indicate
origin or ownership of the articles to
which they are attached; (2) they
guarantee that those articles come up
to a certain standard of quality; and (3)
they advertise the articles they
symbolize.
Symbols have been used to identify the
ownership or origin of articles for
several centuries. As early as 5,000
B.C., markings on pottery have been
found by archaeologists. Cave
drawings in southwestern Europe show
bison with symbols on their flanks.
Archaeological discoveries of ancient
Greek and Roman inscriptions on
sculptural works, paintings, vases,
precious stones, glassworks, bricks,
etc. reveal some features which are
thought to be marks or symbols. These
marks were affixed by the creator or
maker of the article, or by public
authorities as indicators for the
payment of tax, for disclosing state
monopoly, or devices for the settlement
of accounts between an entrepreneur
and his workmen.
In the Middle Ages, the use of many
kinds of marks on a variety of goods
was commonplace. Fifteenth century
England saw the compulsory use of
identifying marks in certain trades.
There were the baker's mark on bread,
bottlemaker's marks, smith's marks,
tanner's marks, watermarks on
paper, etc. Every guild had its own
mark and every master belonging to it
had a special mark of his own. The
marks were not trademarks but police
marks compulsorily imposed by the
sovereign to let the public know that
the goods were not "foreign" goods
smuggled into an area where the guild
had a monopoly, as well as to aid in
tracing defective work or poor
craftsmanship to the artisan. For a
similar reason, merchants also used
merchants' marks. Merchants dealt in
goods acquired from many sources
and the marks enabled them to identify
and reclaim their goods upon recovery
after shipwreck or piracy.
With constant use, the mark acquired
popularity and became voluntarily
adopted. It was not intended to create
or continue monopoly but to give the
customer an index or guarantee of
quality. It was in the late 18th century
when the industrial revolution gave rise
to mass production and distribution of
consumer goods that the mark became
an important instrumentality of trade
and commerce. By this time,
trademarks did not merely identify the
goods; they also indicated the goods to
be of satisfactory quality, and thereby
stimulated further purchases by the
consuming public. Eventually, they
came to symbolize the goodwill and
business reputation of the owner of the
product and became a property right
protected by law. The common law
developed the doctrine of trademarks
and tradenames "to prevent a person
from palming off his goods as
another's, from getting another's
business or injuring his reputation by
unfair means, and, from defrauding the
public." Subsequently, England and the
United States enacted national
legislation on trademarks as part of the
law regulating unfair trade. It became
the right of the trademark owner to
exclude others from the use of his
mark, or of a confusingly similar mark
where confusion resulted in diversion
of trade or financial injury. At the same
time, the trademark served as a
warning against the imitation or faking
of products to prevent the imposition of
fraud upon the public.
Today, the trademark is not merely a
symbol of origin and goodwill; it is often
the most effective agent for the actual
creation and protection of goodwill. It
imprints upon the public mind an
anonymous and impersonal guaranty
of satisfaction, creating a desire for
further satisfaction. In other words, the
mark actually sells the goods. The
mark has become the "silent
salesman," the conduit through which
direct contact between the trademark
owner and the consumer is assured. It
has invaded popular culture in ways
never anticipated that it has become a
more convincing selling point than
even the quality of the article to which it
refers. In the last half century, the
unparalleled growth of industry and the
rapid development of communications
technology have enabled trademarks,
tradenames and other distinctive signs
of a product to penetrate regions where
the owner does not actually
manufacture or sell the product itself.
Goodwill is no longer confined to the
territory of actual market penetration; it
extends to zones where the marked
article has been fixed in the public
mind through advertising. Whether in
the print, broadcast or electronic
communications medium, particularly
on the Internet, advertising has paved
the way for growth and expansion of
the product by creating and earning a
reputation that crosses over borders,
virtually turning the whole world into
one vast marketplace.35 (Citations
omitted)
There is also an underlying economic
justification for the protection of
trademarks: an effective trademark
system helps bridge the information
gap between producers and
consumers, and thus, lowers the costs
incurred by consumers in searching for
and deciding what products to
purchase. As summarized in a report of
the World Intellectual Property
Organization:
Economic research has shown that
brands play an important role in
bridging so-called asymmetries of
information between producers and
consumers. In many modem markets,
product offerings differ across a wide
range of quality characteristics.
Consumers, in turn, cannot always
discern these characteristics at the
moment of purchase; they spend time
and money researching different
offerings before deciding which product
to buy. Brand reputation helps
consumers to reduce these search
costs. It enables them to draw on their
past experience and other information
about products - such as
advertisements and third party
consumer reviews. However, the
reputation mechanism only works if
consumers are confident that they will
purchase what they intend to purchase.
The trademark system provides the
legal framework underpinning this
confidence. It does so by granting
exclusive rights to names, signs and
other identifiers in commerce. In
addition, by employing trademarks,
producers and sellers create concise
identifiers for specific goods and
services, thereby improving
communication about those goods and
services.36
Recognizing the significance, and to
further the effectivity of our trademark
system,37 our legislators proscribed the
registration of marks under certain
circumstances:
Section 123. Registrability. - 123.1. A
mark cannot be registered if it:
(a) Consists of immoral, deceptive or
scandalous matter, or matter which
may disparage or falsely suggest a
connection with persons, living or
dead, institutions, beliefs, or national
symbols, or bring them into contempt
or disrepute;
(b) Consists of the flag or coat of arms
or other insignia of the Philippines or
any of its political subdivisions, or of
any foreign nation, or any simulation
thereof;
(c) Consists of a name, portrait or
signature identifying a particular living
individual except by his written
consent, or the name, signature, or
portrait of a deceased President of the
Philippines, during the life of his widow,
if any, except by written consent of the
widow;
(d) Is identical with a registered mark
belonging to a different proprietor or a
mark with an earlier filing or priority
date, in respect of:
(i) The same goods or services, or
(ii) Closely related goods or services,
or
(iii) If it nearly resembles such a mark
as to be likely to deceive or cause
confusion;
(e) Is identical with, or confusingly
similar to, or constitutes a translation of
a mark which is considered by the
competent authority of the Philippines
to be well-known internationally and in
the Philippines, whether or not it is
registered here, as being already the
mark of a person other than the
applicant for registration, and used for
identical or similar goods or
services: Provided, That in determining
whether a mark is well known, account
shall be taken of the knowledge of the
relevant sector of the public, rather
than of the public at large, including
knowledge in the Philippines which has
been obtained as a result of the
promotion of the mark;
(f) Is identical with, or confusingly designate the kind, quality, quantity,
similar to, or constitutes a translation of intended purpose, value, geographical
a mark considered well-known in origin, time or production of the goods
accordance with the preceding or rendering of the services, or other
paragraph, which is registered in the characteristics of the goods or
Philippines with respect to goods or services;
services which are not similar to those
with respect to which registration is (k) Consists of shapes that may be
applied for: Provided, That use of the necessitated by technical factors or by
mark in relation to those goods or the nature of the goods themselves or
services would indicate a connection factors that affect their intrinsic value;
between those goods or services, and
the owner of the registered (l) Consists of color alone, unless
mark: Provided, further, That the defined by a given form; or
interests of the owner of the registered
mark are likely to be damaged by such (m) Is contrary to public order or
use; morality.
Based on this proscription, petitioner
(g) Is likely to mislead the public, insists that respondent's mark cannot
particularly as to the nature, quality, be registered because it is confusingly
characteristics or geographical origin of similar to its own set of marks. Thus,
the goods or services; granting the petition rests solely on the
question of likelihood of confusion
(h) Consists exclusively of signs that between petitioner's and respondent's
are generic for the goods or services respective marks.
that they seek to identify;
There is no objective test for
(i) Consists exclusively of signs or of determining whether the confusion is
indications that have become likely. Likelihood of confusion must be
customary or usual to designate the determined according to the particular
goods or services in everyday circumstances of each case.38 To aid in
language or in bona fide and determining the similarity and likelihood
established trade practice; of confusion between marks, our
jurisprudence has developed two (2)
(j) Consists exclusively of signs or of tests: the dominancy test and the
indications that may serve in trade to holistic test. This Court explained these
tests in Coffee Partners, Inc. v. San
Francisco Coffee & Roastery, Inc.39:
The dominancy test focuses on the
similarity of the prevalent features of
the competing trademarks that might
cause confusion and deception, thus
constituting infringement. If the
competing trademark contains the
main, essential, and dominant features
of another, and confusion or deception
is likely to result, infringement occurs.
Exact duplication or imitation is not
required. The question is whether the
use of the marks involved is likely to
cause confusion or mistake in the mind
of the public or to deceive consumers.
In contrast, the holistic test entails a
consideration of the entirety of the
marks as applied to the products,
including the labels and packaging, in
determining confusing similarity. The
discerning eye of the observer must
focus not only on the predominant
words but also on the other features
appearing on both marks in order that
the observer may draw his conclusion
whether one is confusingly similar to
the other.40 (Citations omitted)
With these guidelines in mind, this
Court considered "the main, essential,
and dominant features" of the marks in
this case, as well as the contexts in
which the marks are to be used. This
Court finds that the use of the "CITY
CASH WITH GOLDEN LION'S HEAD"
mark will not result in the likelihood of sees that the prevalent feature of
confusion in the minds of customers. respondent's mark, the golden lion's
head device, is not present at all in any
A visual comparison of the marks of petitioner's marks. The only similar
reveals no likelihood of confusion. feature between respondent's mark
and petitioner's collection of marks is
Respondent's mark is: the word "CITY" in the former, and the
"CITI" prefix found in the latter. This
(See image) Court agrees with the findings of the
Court of Appeals that this similarity
This Court agrees with the observation alone is not enough to create a
of Director General Cristobal that the likelihood of confusion.
most noticeable part of this mark is the The dis[s]imilarities between the two
golden lion's head device,41 and finds marks are noticeable and substantial.
that after noticing the image of the Respondent's mark, "CITY CASH
lion's head, the words "CITY" and WITH GOLDEN LION'S HEAD", has
"CASH" are equally prominent. an insignia of a golden lion's head at
the left side of the words "CITY CASH",
On the other hand, petitioner's marks, while petitioner's "CITI" mark usually
as noted by the Court of Appeals, often has an arc between the two I's. A
include the red arc device: further scrutiny of the other "CITI"
marks of petitioner would show that
(See image) their font type, font size, and color
schemes of the said "CITI" marks vary
Petitioner's other registered marks for each product or service. Most of the
which do not contain the red arc device time, petitioner's "CITI" mark is joined
include the following: with another term to form a single
word, with each product or service
(See image) having different font types and color
schemes. On the contrary, the
Examining these marks, this Court trademark of respondent consists of
finds that petitioner's marks can best the words "CITY CASH", with a golden
be described as consisting of the prefix lion's head emblem on the left side. It
"CITI" added to other words. is, therefore, improbable that the public
would immediately and naturally
Applying the dominancy test, this Court conclude that respondent's "CITY
CASH WITH GOLDEN LION'S HEAD"
is but another variation under
petitioner's "CITI" marks.
Verily, the variations in the appearance
of the "CITI" marks by petitioner, when
conjoined with other words, would
dissolve the alleged similarity between
them and the trademark of respondent.
These dissimilarities, and the insignia
of a golden lion's head before the
words "CITY CASH" in the mark of the
respondent would sufficiently acquaint
and apprise the public that
respondent's trademark "CITY CASH
WITH GOLDEN LION'S HEAD" is not
connected with the "CITI" marks of
petitioner.42
This Court also agrees with the Court
of Appeals that the context where
respondent's mark is to be used,
namely, for its ATM services, which
could only be secured at respondent's
premises and not in an open market of
ATM services, further diminishes the
possibility of confusion on the part of
prospective customers. Thus, this
Court quotes with approval the Court of
Appeals, which made reference
to Emerald Manufacturing:
Moreover, more credit should be given
to the "ordinary purchaser." Cast in this
particular controversy, the ordinary
purchaser is not the "completely
unwary consumer" but is the "ordinarily
intelligent buyer" considering the type
of product involved. It bears to
emphasize that the mark "CITY CASH
WITH GOLDEN LION'S HEAD" is a
mark of respondent for its ATM
services which it offers to the public. It
cannot be gainsaid that an ATM
service is not an ordinary product
which could be obtained at any store
without the public noticing its
association with the banking institution
that provides said service. Naturally,
the customer must first open an
account with a bank before it could
avail of its ATM service. Moreover, the
name of the banking institution is
written and posted either inside or
outside the ATM booth, not to mention
the fact that the name of the bank that
operates the ATM is constantly flashed
at the screen of the ATM itself. With
this, the public would accordingly be
apprised that respondent's "CITY
CASH" is an ATM service of the
respondent bank, and not of the
petitioner's.43
Petitioner argues that Emerald
Manufacturing is distinguishable from
this case, insisting that ATM services
are more akin to ordinary household
items than they are akin to brand name
jeans, in terms of how their customers
choose their providers:
73. The Emerald Manufacturing case
involved the marks "Lee" and "Stylistic
Mr. Lee", and the Supreme Court
focused on the nature of the products
as "not the ordinary household items",
pointing to the fact that, "the average
Filipino consumer generally buys his
jeans by brand. He does not ask the
sales clerk for his generic jeans but for,
say a Levis, Guess, Wrangler or even
an Armani."
74. In contrast, when an ordinary
consumer of ATM services wishes to
withdraw cash, more often than not he
will simply locate the nearest ATM,
without reference to brand as long as
the ATM accepts his card. When
dealing with banks that belong to an
ATM network such as Bancnet, which
both parties do, the cards are almost
universally and interchangeably
accepted.44
This scenario is unclear, and thus,
unconvincing and insufficient to
support a finding of error on the part of
the Court of Appeals. Petitioner
hypothesizes that there could be some
confusion because ATM users "simply
locate the nearest ATM, without
reference to brand as long as the ATM
accepts [their] card."45 This Court is at
a loss to see how this supports
petitioner's claims that ATM users
locate the nearest ATMs and use them
without reference to brand as long as
the ATM accepts their cards. If
petitioner's speculation is true, then
bank branding is wholly irrelevant after
the ATM service has been secured.
This Court is hard pressed to accept
this assumption. In any case, this Court
simply cannot agree that a bank or
ATM service is more akin to ordinary
household items than it is to brand
name Jeans.
More relevant than the scenario
discussed by petitioner is the stage
when a bank is trying to attract
customers to avail of its services.
Petitioner points out that in
advertisements, such as in radio,
newspapers, and the internet, which
are shown beyond the bank premises,
there may be no golden lion's head
device to disambiguate "CITY CASH"
from any of petitioner's own marks and
services.46 This Court finds this
unconvincing. ATM services, like other
bank services, are generally not
marketed as independent products.
Indeed, as pointed out by petitioner
itself, ATM cards accompany the basic
deposit product in most banks.47 They
are generally adjunct to the main
deposit service provided by a bank.
Since ATM services must be secured
and contracted for at the offering
bank's premises, any marketing
campaign for an ATM service must
focus first and foremost on the offering
bank. Hence, any effective internet and
newspaper advertisement for
respondent would include and
emphasize the golden lion's head
device. Indeed, a radio advertisement
would not have it. It should not be
forgotten, however, that a mark is a
question of visuals, by statutory
definition.48 Thus, the similarity
between the sounds of "CITI" and
"CITY" in a radio advertisement alone
neither is sufficient for this Court to
conclude that there is a likelihood that
a customer would be confused nor can
operate to bar respondent from
registering its mark. This Court notes
that any confusion that may arise from
using "CITY CASH" in a radio
advertisement would be the same
confusion that might arise from using
respondent's own trade name. Aurally,
respondent's very trade name, which is
not questioned, could be mistaken as
"CITISTATE SAVINGS BANK," and all
of petitioner's fears of possible
confusion would be just as likely.
This Court agrees with Director
General Cristobal's recognition of
respondent's history and of "Citystate"
as part of its name.49 Upon
consideration, it notes that it may have
been more aligned with the purpose of
trademark protection for respondent to
have chosen the trademark
"CITYSTATE CASH" instead of "CITY
CASH" to create a stronger association
between its trade name and the service
provided. Nonetheless, there is no law
requiring that trademarks match the
offeror's trade name precisely to be
registrable. The only relevant issue is
the likelihood of confusion.
This Court also recognizes that there
could be other situations involving a
combination of the word "city" and
another word that could result in
confusion among customers. However,
it is not convinced that this is one of
those situations.
Thus, having examined the
particularities of this case, this Court
affirms the Court of Appeals' finding
that Director General Cristobal of the
Intellectual Property Office did not
commit any grave abuse of discretion
in allowing the registration of
respondent's trademark.
WHEREFORE, the petition is DENIED.
The Court of Appeals August 29, 2012
Decision and January 15, 2013
Resolution in CA-G.R. SP No. 109679
are AFFIRMED.
SO ORDERED.
G.R. No. 185484, June 27, 2018
FRANCISCO I.
CHAVEZ, Petitioner, v. IMELDA R.
MARCOS, Respondent.
DECISION
LEONEN, J.:
This Court will not require a judge to
inhibit himself in the absence of clear
and convincing evidence to overcome
the presumption that he will dispense
justice in accordance with law and
evidence.1 This Court will also not
allow itself to become an instrument to
paper over fatal errors done by the
petitioner and the prosecution in the
lower court.
This is a Petition for Review on
Certiorari,2 assailing the Court of
Appeals February 28, 2008
Decision3 and November 24, 2008
Resolution4 in CA-G.R. SP No. 98799,
dismissing Francisco I. Chavez's
(Chavez) Petition for Certiorari5 and
affirming the Regional Trial Court
order, which denied the prosecution's
motion for inhibition.6
This case involves 33 consolidated
criminal cases, namely, Criminal Case
Nos. 91-101732-39, 91-101879-83, 91-
101884-92, and 92-101959-69,7 filed
against Imelda R. Marcos (Imelda),
among others, for violations of Section
4 of Central Bank Circular No. 960,8 in
relation to Section 34 of Republic Act
No. 265,9 or the Central Bank Act.10
The Information in Criminal Case No.
91-101732 read, in part:
That from 1973 up to December 26,
1985, both dates inclusive, and for
sometime thereafter, the above-named
accused, in conspiracy with her late
husband, then President Ferdinand E.
Marcos, while both residing in
Malacanang Palace in the City of
Manila, Philippines, and within the
jurisdiction of this Honorable Court, did
then and there wilfully, unlawfully and
feloniously open and maintain foreign
exchange accounts abroad, particularly
in Banque de Paris et des Pays-Bas
(also known as Banque Paribas) in
Geneva, Switzerland, later transferred
to another bank known as LOMBARD,
ODIER ET CIE also in Geneva, in the
names of several establishments
organized by their dummy or attorney-
in-fact identified as Stephane A.
Cattaui, among which were accounts
036-517 J, Establishment BULLSEYE;
037-973 R, Establishment MABARI;
038-150 L, Establishment
GLADIATOR: 038-489Z, Establishment
VOLUBILIS, 32.529 X,
INTERNATIONAL INTELLIGENCE
FUND; PRETORIEN created under the
name INTELLIGENCE; Establishment
GARDENIA; Establishment
GLADIATOR; Establishment CESAR;
Establishment ESG; account numbers
23-0734H, 22-98SC, 23-285; 3652IN;
and 073 043 P in the name of accused
who executed a power of attorney in
favour of her husband on September
29, 1980 giving the latter the authority
to do anything with respect to her
accounts; which accounts were
reduced to five, namely; 036 517 J;
037-973 R; 038 150 L; 038 489 Z, and
036 521 N which were later on
transferred to LOMBARD, ODIER ET
CIE for credit to the account COGES
00777 per instruction on May 17, 1984
of the accused's husband and attorney-
in-fact to their dummy and duly
appointed administrator Stephane
Cattaui who also transferred to said
Lombard Odier et Cie in order to
continue managing for them their
hidden accounts, including the
investment of $15-million in Philippine
issued dollar-denominated treasury
notes which was fully paid together
with the interests on December 26,
1985 and which payment was remitted
to LOMBARD, ODIER ET CIE for the
credit of Account COGES 00777 of the
accused and her late husband, which
act of maintaining said foreign
exchange accounts abroad was not
pem1itted under the Central Bank
regulations.

CONTRARY TO LAW.11
The informations for Criminal Case
Nos. 91-101733-39 read similarly,
except for the dates of the offense, the
name/s of the dummy/ies used, the
amounts maintained in the foreign
exchange accounts, and the names of
the foreign banks where the accounts
were allegedly held by the accused.12
The Information in Criminal Case No.
91-101888 read, in part:
That from September 1, 1983 up to
1987, both dates inclusive, and for
sometime thereafter, both accused,
conspiring and confederating with each
other and with the late President
Ferdinand E. Marcos, all residents of
Manila, Philippines, and within the
jurisdiction of this Honorable Court, did
then and there wilfully, unlawfully and
feloniously fail to submit reports in the
prescribed form and/or register with the
Foreign Exchange Department of the
Central Bank within 90 days from
October 21, 1983 as required of them
being residents habitually/customarily
earning, acquiring or receiving foreign
exchange from whatever source or
from invisibles locally or from abroad,
despite the fact they actually earned
interests regularly every six (6) months
for the first two years and then
quarterly thereafter for their investment
of $50-million, later reduced to $25-
million in December 1985, in
Philippine-issued dollar denominated
treasury notes with floating rates and in
bearer form, in the name of Bank
Hofmann, AG, Zurich, Switzerland, for
the benefit of Avertina Foundation,
their front organization established for
economic advancement purposes with
secret foreign exchange account
Category (Rubric) C.A.R. No. 211 925-
02 in Swiss Credit Bank (also known
as SKA) in Zurich, Switzerland, which
earned, acquired or received for the
accused Imelda Romualdez Marcos
and her late husband an interest of
$2,267,892 as of December 16, 1985
which was remitted to Bank Hofmann,
AG, through Citibank, New York,
United States of America, for the credit
of said Avertina account on December
19, 1985, aside from the redemption of
$25 million (one-half of the original
$50-M) as of December 16, 1985 and
outwardly remitted from the Philippines
in the amounts of $7,495,297.49 and
$17,489,062.50 on December 18, 1985
for further investment outside the
Philippines without first complying with
the Central Bank reporting/registering
requirements.
CONTRARY TO LAW.13
The Information in Criminal Case No.
91-1 01879 read, in part:
That from September 21, 1983 up to
December 26, 1985, both dates
inclusive, and for sometime thereafter,
all accused, conspiring and
confederating with one another and
with the late President Ferdinand E.
Marcos, all residing and/or doing
business in Manila, Philippines, and
within the jurisdiction of this Honorable
Court, and assisted by their foreign
agent or attorney-in-fact Stephane G.
Cattaui, did then and there wilfully,
unlawfully and feloniously fail to submit
reports in the prescribed form and/or
register with the Foreign Exchange
Department of the Central Bank within
90 days from October 21, 1983 as
required of them being residents
habitually/customarily earning,
acquiring/receiving foreign exchange
from whatever source or from invisibles
locally or from abroad, despite the fact
that they actually earned interests
regularly for their investment of
FIFTEEN MILLION ($15-million)
DOLLARS, U.S. currency, in
Philippine-issued dollar-denominated
treasury notes with floating rates and in
bearer form, in the name of Banque de
Paris et des Pays-Bas (also known as
Banque Paribas) in Geneva,
Switzerland but which was transferred
on May 17, 1984 to Lombard, Odier et
Cie, a bank also in Geneva, for the
account of COGES 00777 being
managed by Mr. Stephane Cattaui for
the Marcoses who also arranged the
said investment of $15-million through
respondents Roberto S. Benedicto and
Hector T. Rivera by using the Royal
Traders Bank in Manila as the
custodian of the said dollar-
denominated treasury notes, which
earned, acquired or received for the
accused Imelda Romualdez Marcos
and her late husband an interest of
$876,875.00 as of June 15, 1984 which
was remitted to Banque Paribas
through Chemical Bank in New York,
United States of America, for the Credit
of said Account COGES 00777 of the
Marcoses for further investment
outside the Philippines without first
complying with the reporting/registering
requirements of the Central Bank.
CONTRARY TO LAW.14
The other charges in the other
informations read substantially the
same, save for the dates of the
offense, the name/s of the dummy/ies
used, the amounts maintained in the
foreign exchange accounts, and the
names of the foreign banks where the
accounts were allegedly held by the
accused.15
The prosecution's version of facts
leading to the filing of the informations
was summarized as follows:
In September 1983, the Central Bank
of the Philippines issued dollar-
denominated treasury notes (dollar t-
notes for brevity) in the total amount of
$125-million, U.S. currency. $75-million
of these notes were purchased by
three Swiss banks holding the hidden
wealth of then President Ferdinand E.
Marcos and his wife Imelda Romualdez
Marcos (the Marcoses, for brevity). The
purchases were recorded in the
Central Bank under the name of the
Marcoses' front man, then Ambassador
Roberto S. Benedicto.
Of this $75-million, $50-million came
from Bank Hofmann, $10-million from
the Swiss Bank Corporation (SBC),
and $15-million from Banque Paribas.
The purchases by Bank Hofmann and
SBC were made through accounts
owned by foundations called Avertina,
Maler I, and Maler II, which were
owned by the Marcoses, and which act
of opening and maintaining foreign
exchange accounts abroad without CB
authorization is a violation of Sec. 4 of
the CB's Foreign Exchange
Restrictions as consolidated in 1983 in
CB Circular No. 960.
The purchase by Banque Paribas (later
transferred to Lombard, Odier et Cie)
was arranged by the Marcoses'
attorney-in-fact Stephane Cattaui
through Traders Royal Bank (TRB)
which acted as custodian of the
securities. The contact person at TRB
was Hector T. Rivera, vice president of
the bank's Trust Department.
Avertina's $50-million investment
earned an interest of $13,623,540.77
from 1983 to 1986; Maler I and Maler
II's $10-million investment earned
$3,369,479.18 in interest from 1984 to
1987; and Banque Paribas/Lombard
Odier et Cie's $15-million investment
earned $3,579,479.16 from 1984 to
1985.
Total interest earned by the Marcoses
out of the dollar t-notes amounted to
$20,572,499.11 from 1984 to 1987. All
of these interest [illegible] department
in violation of Sec. 10 of CB Circular
No. 960.
The transactions came to light only
after the so-called EDSA People Power
Revolution in February 1986 when
documents relating to the Marcoses'
Swiss bank accounts and dollar t-note
purchases were found in Malacanang
Palace after the Marcos family had
fled.
The Malacanang documents revealed
that the Marcoses maintained a
number of Swiss bank accounts,
among them:
A. In Banque de Paris et des Pays-Bas
(also known as Banque Paribas) in
Geneva, Switzerland, later transferred
to another bank known as LOMBARD,
ODIER ET CIE also in Geneva, in the 10. Establishment B. In Swiss Credit Bank (also known as
names of several establishments ESG; SKA) in Switzerland in the names of
organized by the Marcoses' attorney- 11. Accounts 23- foundations which were organized
in-fact identified as Stephane A. 0734H, 22- successively or one after the other by
Cattaui - 98SC, 23-285; the Marcoses' nominees, fronts, agents
3652IN; and 073 or duly appointed administrators -
1. Account 036-517 043 P in the
J, Establishment name of Mrs. 1. Charis
BULLSEYE; Marcos who Foundation
2. Account 037-973 executed a which was
R, Establishment power of succeeded by
MABARI; attorney in Azio Foundation
3. Account 038- favour of her on June 11,
[illegible], husband on 1971, renamed
Establishment September 29, Verso
GLADIATOR; 1980 giving the Foundation on
4. Account 038-489 latter the August 29, 1978,
Z, Establishment authority to do which was
VOLUBILIS; anything with dissolved on
5. Account 32.529 respect to her June 25, 1981
X, accounts, which and the funds
INTERNATIONA accounts were transferred to
L reduced to five, Fides Trust
INTELLIGENCE namely; 036 517 Company in
FUND; J; 037-973 R; Bank Hofmann,
6. Account 038 150 L; 038 which transferred
PRETORIEN 489 Z, and 036 the same to
created under 521 N which Vibur Foundation
the name were later on under the
INTELLIGENCE; transferred to account
7. Establishment LOMBARD, "Reference
GARDENIA; ODIER ET CIE OSER" on
8. Establishment for credit to the September 10,
GLADIATOR; account COGES 1981;
9. Establishment 00777;
CESAR;
2. Trinidad effected the 1981, but which
Foundation, transfer of said also transferred
succeeded by assets and/or the funds to
Rayby funds to Avertina Avertina
Foundation on Foundation; Foundation;
June 22, 1973,
which was 4. Charis C. In Swiss Bank Corporation (SBC) in
dissolved on Foundation, Geneva, Switzerland: Establishment,
March 10, 1981 which was later transformed into Maler
and whose funds renamed Scolari Foundation, which was organized by
were transferred Foundation on the Marcoses' nominees, fronts, agents
to Bank December 13, or duly appointed administrators,
Hofmann in favor 1974 and then among them Jean Louis Sunier -
of Fides Trust renamed Valamo
Company under Foundation on 1. Maler I;
account August 29, 1978, 2. Account No.
"Reference which was 98929 NY under
DIDO" which dissolved on Maler II;
organized Palmy June 25, 1981 3. Rosalys
Foundation; and its assets Foundation,
and/or funds which was
3. Xandy transferred to dissolved on
Foundation, Fides Trust December 19,
which was Company under 1985, and its
renamed Wintrop the account assets and/or
Foundation on "Reference funds transferred
August 29, 1978, OMAL" in Bank to Aguamina
whose assets Hofmann, which Corporation's
and/or funds effected the (Panama)
were transferred transfer of said Account No.
on May 10, 1981 assets and/or 53300 with SBC.
to Fides Trust funds to Spinus
Company under Foundation The newly-installed government of
the account which opened an President Corazon Aquino represented
"Reference account with by then Solicitor General Sedfrey
OMAL" in Bank SKA on Ordonez lost no time in filing an
Hofmann, which September 10,
application with the Swiss authorities
for mutual assistance in the matter of
the Marcos dollar deposits in
Switzerland.
The request for assistance was
eventually granted by Swiss
investigating magistrate Peter
Cosenday. Cosenday issued a freeze
order on all the Swiss banks where the
Marcoses and their foundations had
accounts, and he further required these
banks and the foundations to submit
relevant documents and information
concerning the accounts.
The Marcoses and the foundations
appealed Cosenday's decision. The
result of the appeals was that on
December 21, 1990, the Federal
Supreme Court of Switzerland
rendered twin decisions sustaining the
position of the Philippine government
and giving it a one-year deadline to file
the appropriate cases against the
Marcoses and their cronies, otherwise
the freeze order covering the Marcos
bank accounts in Switzerland would be
lifted.
The Presidential Commission on Good
Government (PCGG) thereupon
decided to request the Solicitor
General (now Francisco Chavez) to file
the appropriate cases against the
estate of the late President Marcos,
Mrs. Marcos, and other members of
their family based on documents
already turned over and still to be
turned over by the Swiss authorities.16
During the trial, the prosecution
presented only two (2) witnesses. Its
first witness was former Assistant
Solicitor General and Presidential
Commission on Good Government
Commissioner Caesario Del Rosario
(Del Rosario). He identified Swiss bank
documents and testified that they were
personally received by petitioner
Chavez before they were referred to
him for study, evaluation, and
determination of probative value. He
also identified several documents
signed by the late President Ferdinand
Marcos and respondent Imelda. He
averred that he assisted in drafting the
complaints connected to the recovery
of the Marcos' properties.17
As its second witness, the prosecution
presented petitioner Chavez. He was
presented as an expert witness in the
field of law, and he corroborated Del
Rosario's testimony. He testified on the
formation of the task force, of which
Del Rosario was a member and which
prepared the criminal complaints
against the Marcoses and their
cronies.18 However, petitioner's
presentation as a witness was
hampered by a series of scheduling
issues, which resulted in several
postponements and absences.
Chavez's claim of bias was based
largely on his perception of how
Regional Trial Court Presiding Judge
Silvino T. Pampilo, Jr. (Judge Pampilo)
scheduled his testimony, combined
with what transpired when he failed to
testify on April 24, 2007. Thus, the
relevant facts from the record shall be
set forth in detail.
On the matter of scheduling, the
Regional Trial issued its January 10,
2007 Order, requiring Chavez to
appear in court on January 16, 17, 23,
24, 30, 31, and February 6, 7, 13, 14,
20, 21, 27, and 28, 2007 to testify. This
Order stated further that the hearings
were "intransferrable in character."19 In
his January 11, 2007 letter, Chavez
advised the Regional Trial Court that
his entire calendar for January and the
beginning of February 2007 were full,
and requested later dates for his
testimony, including February 20, 21,
27, and 28.20 The Regional Trial Court
reconsidered its January 10, 2007
Order and reset Chavez's examination
to February 21, 27, and 28, again with
the warning that these trial dates were
not transferable.21 On March 6, 2007, a
day that was set for the continuation of
the direct examination of Chavez, the
prosecution moved that the March 6
and 7 hearings be moved on the
ground that Chavez was unavailable,
for he would be attending to his
detained clients in Camp Capinpin,
Tanay, Riza1.22 The Regional Trial
Court granted this as well with the
following warning:
[I]f the former Solicitor General failed to
testify on the next scheduled hearing,
all his testimonies will be stricken off
the record and the prosecution be
directed to formally offer its exhibits.23
On March 20, 2007, Prosecutor
George H. Yarte, Jr. (Prosecutor Yarte)
filed a Motion to Cancel Hearing of
April 11, 2007, on the ground that he
would be attending the National
Prosecutors League of the Philippines'
Annual Convention in Boracay Island
from April 11 to 13. Thereafter, in a
letter dated March 21, 2007, Chavez
asked to be excused from attending
the April 10, 2007 hearing due to an
intransferrable Court Martial setting in
Camp Capinpin, Tanay, Rizal,24 but
advised the Regional Trial Court that
he would be available to testify on the
April 11 and 24, 2007
25
hearings.  Judge Pampilo denied
Chavez's request in a letter dated
March 22, 2007 and the prosecution's
Motion to Cancel the April 11, 2007
hearing.26 Thereafter, Chavez pleaded
that Judge Pampilo reconsider the
denial and made a commitment that he
would no longer request for further
postponements.27
Thus, Chavez did not attend the April
10, 2007 hearing. He attended the
succeeding hearing on April 11, 2007.
However, he was unable to testify as
the documents he was supposed to
identify were with Prosecutor Yarte,
who was attending the prosecutors'
annual convention in Boracay.28
Subsequently, Chavez was scheduled
to continue his direct testimony on April
24, 2007. However, the prosecution
filed a Motion to Inhibit,29 seeking
Judge Pampilo's inhibition, and set it to
be heard on April 24, 2007.30 Reacting
to the Motion to Inhibit, Chavez
explained in a letter dated April 23,
200731 that he would not appear in
court on April 24, 2007:
I would have decided to go to court to
continue my direct testimony on April
24, 2007 at 1:00 p.m. were it not for the
receipt of this motion to inhibit.
As a witness, I cannot presume that
the motion to inhibit, which is set for
hearing also on April 24, 2007 at 2:00
p.m., will be outrightly denied by this
Honorable Court who would then direct
the prosecution to continue with the
presentation of its evidence. In line with
due process, I proceed along the
assumption that at the hearing of the
motion to inhibit, Your Honor will give
the accused an opportunity to submit
their comment thereon, thus
necessarily resulting in the cancellation
of the April 24, 2007 setting. I say that
the cancellation of the April 24, 2007
setting follows as a necessary
consequence of the motion to inhibit
because such motion raises a
question of first priority which must
be first resolved by Your Honor before
further proceedings are undertaken.
. . . .
In view of the foregoing considerations,
I most respectfully submit that my
presence at the April 24, 2007 setting
would no longer be necessary. I hasten
to reaffirm my commitment to continue
my direct testimony once the issue of
Your Honor's inhibition shall have been
resolved with finality.32 (Emphasis in
the original)
Thus, Chavez did not attend the
hearing on April 24, 2007 despite being
scheduled for direct examination.33
Atty. Napoleon Uy Galit (Atty. Galit), a
lawyer from the Presidential
Commission on Good Government,
appeared before the court with a
memorandum from then Secretary of
Justice Raul Gonzales, authorizing him
to prosecute the consolidated cases.
As Chavez took issue with Atty. Galit's
appearance, this Court shall quote
extensively from the transcript of
stenographic notes of the trial on April
24, 2007:
Atty. Galit:
Good afternoon, your Honor, Attorney
Napoleon Uy Galit for the PCGG. Your
Honor, just a brief manifestation before
the start of the proceedings. A while
ago your Honor, before this Honorable
Court convened the proceedings, I
showed this memorandum to
Prosecutor Yarte dated April 17, 2007
signed by Honorable Secretary Raul
Gonzales which your Honor the
wordings is quite, probably this letter
will state for itself, your Honor, and I
am showing this to Prosecutor Yarte
and for an eventual filing into the
records of this Honorable Court. This
Memorandum simply designates this
humble representation authorizing,
your Honor, to prosecute this case
even in the presence or without the
presence of any public prosecutor.
Court:
So even without Prosecutor Yarte, you
can proceed with the presentation of
that memorandum with or without the
prosecutor. What can you say
prosecutor?
Pros. Yarte:
Well your Honor, I still have to check
with the office. As of now, I cannot
confirm or deny the truthfulness or the
authenticity of this memorandum.
Court:
You mean to say you are not familiar
with the signature of your boss?
Pros. Yarte:
I am familiar with the signature of my
boss, your Honor, but since this
appears to be a xeroxed copy, I cannot
yet confirm or deny. In any case your
Honor, this representation will not
contradict the wishes of my boss. I will
accept the contents of this
memorandum your Honor after the
manifestation of Atty. Galit.
Court:
Proceed Atty. Galit because I will no
longer allow Atty. Yarte to speak for
and behalf of the DOJ as well as the
PCGG.
Pros. Yarte:
If your Honor please (interrupted)
Court:
Go ahead Atty. Galit.
Atty. Galit:
If your Honor, into the records, I am
submitting this April 17, 2007
Memorandum.
Court:
Yes, place it on the record and that you
are from DOJ then understood . . .
Atty. Galit:
Without prejudice to the authority given
to this humble representation, may I be
allowed your Honor that prosecutor
Yarte be given the courtesy to speak.
Court:
Go ahead, Atty. Yarte. Pros. Yarte:
Your Honor please, we have a pending
Motion to Inhibit and I think it is a
matter of preferential . . . that this
Motion to Inhibit be first ruled upon by
this Honorable Court. Court: It's ok with
me, I can rule it today. Considering that
there is already an opposition and/or
summary filed by (interrupted)
Pros. Yarte:
Your Honor please, I haven't received
a copy of that opposition.
Court:
Can you furnish him a copy of that
today?

Atty. Sison:
Yes, your Honor.
Pros. Yarte:
Your Honor please again, I would like
that my copy be formally served with
the office as an official receipt. In the
first place your Honor, this is not a
receiving clerk of the office and I
suggest that I receive it officially, your
Honor.
Court:
There is a proof of service that it was
sent in your office.
Pros. Yarte:
Yes, your Honor, I still have to receive
it in the office.
 
Court:
What is your comment Atty. Galit being
the lead prosecutor?
Atty. Galit:
Your Honor, I have so much respect to
the distinguished public prosecutor but
it is of judicial notice that furnishing a
copy is not limited to furnishing the
copy that the office of any particular
counsel. As a matter of fact, that can
be very well made at this moment in
time if the defense counsel your Honor,
has an extra copy, I suggest that he
give it to Prosecutor Yarte, your Honor.
Pros. Yarte:
I vehemently object to that, in the first
place your Honor, I manifested a while
ago that I still have to check on the
authenticity of the memorandum your
Honor but it seems that this Honorable
Court has egged Atty. Gal it to proceed
and take over my function as the public
prosecutor your Honor. I haven't seen
or checked with the office whether or
not Atty. Galit was sent a copy of this
(interrupted)
Court:
Okay, we will have a 10 minutes
recess we will call the office of the
Secretary. I will ask my clerk of court to
call the office of the Secretary to
confirm.
(Recess for 10 minutes)
-session resumed-
Clerk of Court:
Your Honor, I have called already the
Office of the Secretary and she said
that this Memorandum is authentic,
your Honor.
Pros. Yarte:
Okay, your Honor.34
Having resolved the issue of the
authenticity of the Memorandum
authorizing Atty. Galit to prosecute the
case, the Regional Trial Court
proceeded to resolve the other pending
incidents:
Court:
There are two (2) pending incidents,
one is the oral motion citing for
contempt and the other one is a Motion
to Inhibit the Honorable Judge as well
as the opposition. You can now argue.
Pros. Yarte:
Yes, your Honor, with respect to the
first I have filed an explanation
yesterday and I have confirmed with
the Clerk of Court if they received the
copy of the explanation.
Court:
Do you want to counter argue the
explanation? Did you give him a copy
of that explanation?
Pros. Yarte:
I sent a copy through registry receipt,
your Honor, and if he would like your
Honor I can give him a copy of the
explanation. I have a copy, I have it
photocopied.
Atty. Sison:
I don't need, your Honor. I will just
submit, your Honor.
Court:
Okay, second incident is the Motion to
Excuse (interrupted)
Pros. Yarte:
Your Honor please, as stated by the
counsel for the accused, he has filed
an opposition or comment to the
Motion and this representation would
humbly request only for a period within
which to reply on it and then it will be
up to the counsel for the accused
whether or not he will Answer to that
Reply and we can submit it for
resolution. That is my request, your
Honor.
Court:
He is already authorized because there
is already a Memorandum.
 
Atty. Galit:
May I say something, your Honor.
Court:
You are no longer authorized by the
DOJ to represent.
Pros. Yarte:
With the kind permission of Atty. Galit,
your Honor.
Atty. Galit:
Your Honor, may we hear your Honor
that position of the (interrupted)
Atty. Sison:
Your Honor, I understand today we
have another incident. We have a
hearing set today based on the
previous order by the Honorable Court
for the presentation of the last witness.
This is supposed to be the continuation
of his direct testimony your Honor and I
recall the Order of April 11 that today's
hearing is intransferrable and that was
said in the presence of the
distinguished witness your Honor, the
former Solicitor General Frank Chavez.
Court:
Yes, I received a copy of the letter
coming from the witness. You want to
read it?
Atty. Sison:
Your Honor, as I gathered from the
record that there was no Motion to
Reset the hearing set today so I don't
think the Court should be bound by the
letter of a witness because this is
merely a request but the Order dated
April 11 was very clear and
intransferrable and that in the event the
prosecution failed to present the said
witness in today's hearing, your Honor,
the direct testimony of the said witness
be stricken off the record. Now, in so
far as the second incident which is a
Motion to Inhibit this Honorable Court, I
also gathered from the Motion that it
was set for hearing today in order to
allow the parties, the prosecution
especially to err out or to further
elaborate the allegations or averment
in the said motion your Honor. This
representation received only yesterday
a copy of the said Motion and in this
we managed to prepare an opposition
and filed it early this morning your
Honor. And in view of that, we are
submitting that Motion to Inhibit
together with our opposition thereto to
the sound discretion of the Honorable
Court.
Court:
How about you from the PCGG?

Atty. Galit:
Your Honor, I . . . to Prosecutor Yarte
that he confirm the authority
designation of this humble
representation as authorized by the
Honorable Justice Secretary. Now on
the first incident with regards to the
Motion to cite for indirect contempt the
good prosecutor Honorable Prosecutor
George H. Yarte, your Honor, my
proposition is this, your Honor. I do
believe that oral Motion of defense
counsel Atty. Roberto Sison may be
procedural. The said Motion your
Honor, by the express provision of
Rule 71 should be filed separately and
be properly . . . Indirect contempt
proceedings should be filed in [a]
separate petition and I have come to
the rescue, your Honor, of good
prosecutor Yarte in so far concerned.
Now on the second incident of the
Inhibition, the Motion for Inhibition is
part of the proceedings, part of the
prosecution of this particular case and
this representation having been so
authorized by the Justice Secretary,
your Honor, I humbly submit that the
same should also be addressed under
my control and supervision. Earlier,
giving courtesy to Prosecutor Yarte, I
requested this Honorable Court that he
be allowed to be heard in so far as his
position but that suggestion is without
prejudice to this humble representation
whatever position I may have. Your
Honor, in fairness to this Honorable
Court, I may not take the stand . . . by
the public prosecutor considering the
fact that I have read in this Motion the
grounds cited thereon . . . Nonetheless
your Honor considering the fact that
the defense counsel had already filed
its opposition, it is this Honorable
Court's call now to resolve the same
without any further proceedings. And
so as your Honor, not to be accused
any further of delaying this case, it has
been the position of the defense
counsel, it is my humble submission
that the subject motion for Inhibition be
now resolved.
Atty. Sison:
This is something on the issue of citing
in contempt of Court. I recall during the
previous hearing, your Honor, that I
just asked the Court that Prosecutor
Yarte be asked to explain why he was
absent and it was the witness your
Honor who suggested that it was
contempt and he asked me if it was
direct or indirect and I answered him
that it was direct contempt and he said
it is wrong. There should be a proper
procedure which has to be followed.
You are referring to an indirect
contempt that is what he said, your
Honor and believing and thinking that
he was correct although now I realized
it is wrong your Honor. I mentioned
also indirect contempt but I wasn't . . .
that the public prosecutor be cited
indirect contempt. I did not say that,
your Honor.
....
Pros. Yarte:
In my case your Honor, I have filed my
explanation and I think the matter can
now be resolved in respect to the
manifestation of Atty. Galit, your Honor.
In the terms of Atty. Galit, your Honor,
we would like the matter of Motion to
Inhibit be resolved with or without the
earlier request of this representation
that it be given a period within which to
reply, your Honor. Again, your Honor,
since the Motion to Inhibit was a
product and a toil of this
representation, your Honor, and was
actually based on his personal
observations, may I still request that I
still be given a period within which to
react on the opposition, your Honor,
filed by the defense counsel.
Court:
If you want, you can argue now
because according to the lead
prosecutor now, Atty. Galit, he moves
that the two (2) incidents be submitted
for resolution today.
Atty. Sison:
We are willing to argue in open court.
Pros. Yarte:
Your Honor, I cannot argue on it
because I haven't read the copy of the
opposition.
Atty. Sison:
I can make an oral manifestation, your
Honor.
Pros. Yarte:
And besides, your Honor, I think it is
wiser for me to read it and think it over
rather than just stand here and argue
based on what I will hear, your Honor.
Court:
You ask the authorized prosecutor.
....
Atty. Galit:
Your Honor, in the continuation of my
statement regarding the incident of the
Motion for Inhibition, my position is
clear on that matter . . . as the
designated lead prosecutor in this
case, your Honor, it is my proposition
that the subject incident be considered
submitted for resolution your Honor
because the very ground are very
simple. The defense counsel was
already heard. On the third incident
and this is the very important one
because probably the Department of
Justice is alarmed by the barrage of
accusations coming from the defense
counsel that this case has been
delaying for several years and it is part
of the records, your Honor. As a matter
of fact, this humble representation
brought a letter to Judge del Rosario
suggesting that we should always be
prepared with all the exhibits or
fees . . . that we lose this case by
technicality and I have written a letter
to that duly filed with the legal office,
your Honor. Now this is now the
pending incident where the Solicitor
General Frank Chavez would have to
continue his testimony with regards to
some other areas not yet testified to.
Now Atty. Chavez is not around.
Likewise the records your Honor are
not brought by Public Prosecutor Yarte,
your Honor. So, that is now the
dilemma of the Honorable Court. Now
the defense counsel is firm on its stand
that the prosecution be deemed the
right to have waived to complete the
testimony of Frank Chavez. To settle
the issue, your Honor, in the presence
of Judge del Rosario your Honor who
has been handling this case and
Prosecutor Yarte. There are several
documents which the object of the
continuation of testimony of Solicitor
General Frank Chavez. I have been
vocal enough challenging your Honor
the defense counsel to just admit the
existence of these documents. If he
has the nerved to show and admit the
same, probably your Honor there is no
reason, your Honor, why we cannot
proceed with the formal offer of
documentary exhibits and I challenge
this, your Honor, in this appropriate
proceedings to the defense
counsel.35 (Grammatical errors in the
original)
Thereafter, the exchange which led to
the termination of presentation of
evidence for the prosecution
commenced, thus:
Atty. Sison:
May I know what these documents are
because if I recall it right, as early as
late last year your Honor the said
witness would be presented for the
purpose of identifying only three (3)
documents which are the . . . Affidavit
and the newspaper clipping which
mentioned his name your Honor. It was
an article about him. So I cannot
understand why this representation is
being asked again to admit on the
truthfulness or existence for several
documents that agreed upon to be
marked and identified in the course of
the direct examination of said witness.
Atty. Galit:
Judge del Rosario is present your What are these two (2) documents? part and parcel of the testimony
Honor, and with that memorandum he already adduced before this Honorable
is still designated subject to his Atty. Galit: Court by the said witness Frank
physical condition and even in the Chavez. If defense counsel would
presence of Public Prosecutor Yarte. The two (2) affidavits, your Honor, stipulate on that.
The defense counsel is talking of three Supplemental Affidavit and /
(3) documents: The two (2) affidavits of Supplement to the Supplement Atty. Sison:
Solicitor General Frank Chavez and Affidavit. Three (3) Affidavits, your
the subject newspaper clipping. Now if Honor. Yes, your Honor, but not on the
that would be the case, would the truthfulness of the contents. Only on
defense counsel stipulate the said two Court: the existence.
(2) affidavits and the newspaper
clippings your Honor has existent and Another one? Court:
the contents of the two (2) affidavits to  
form part your Honor of the testimony Atty. Galit: You will only stipulate on the existence
of Solicitor General Frank Chavez. of the three (3) affidavits as well as the
Newspaper clipping. newspaper clipping?
Court:
Court: Atty. Sison:
Yes, what can you say Attorney?
So three (3) Affidavits as well as the Two Affidavits, your Honor.
Atty. Sison: newspaper clipping?
....
Your Honor, I think this representation Atty. Galit:
was very clear on that matter if only to Pros. Yarte:
dispense with the presence of that Yes, your Honor.
witness, we already agreed as early as Three (3) affidavits with several
before last December to the existence .... annexes.
of the documents, your Honor and
however, unfortunately for this Atty. Galit: Atty. Galit:
representation, the prosecution insisted
in presenting the witness despite the If the defense counsel would like to The reason why I am doing this is I
admission that we already made in so stipulate, your Honor, first, my request would like to emphasized [sic] before
far as the existence of these for stipulation is this. The existence of this Honorable Court that it is only the
documents. those documents as I have mentioned. defense who is much willing to the
Second, your Honor, the contents of early disposition of this case. Only the
Court: this Affidavit should be considered as prosecution is so circumstance your
Honor that there is a need for the
continuance of the testimony of
Solicitor General Frank Chavez to
further identify those documents. Now
if he is not willing, we are willing to
proceed with the form[al] offer of
exhibits.36 (Grammatical errors in the
original)
At this point, the Regional Trial Court
returned to the Issue of the Motion for
Inhibition:
Court:
There is a pending oral motion that
based on the letter of former Solicitor
General Frank Chavez that he
requested that he will not attend for
today's hearing because the Court first
resolves the Motion for Inhibition.
Atty. Sison:
Yes, your Honor, but I think the witness
is too presumptuous that the Motion
will not be resolved today. May I say
something your Honor in so far as the
Motion to Inhibit is concerned because
this representation would want to avert
further delays in the administration of
this case. In lieu of the opposition that
this representation filed today, may I be
allowed to just withdraw that and make
my opposition oral today to give
counsel or the public prosecutor to
orally argue out also on what I have to
say in so far as the Motion to Inhibit is
concerned.
Court:
You mean to say that you will withdraw
your written opposition?
Atty. Sison:
Because the contention of the public
prosecutor your Honor is that they will
be asking for ten (10) days from receipt
of that and there is no telling when they
will receive that your Honor and there
is also no telling when Frank Chavez
will be available again, your Honor, and
as shown by the records, he has been
asking for resetting not on a weekly
basis but on a monthly, your Honor.
Court:
As prayed for, the written opposition is
now withdrawn from the records of this
case. You can argue your opposition.
Atty. Sison:
Your Honor, we would like to oppose
the Motion filed by the prosecution as
showing the records of this case as
early as November or December of
2006, the prosecution was already
ready to rest their case and on the last
minute they made an effort to defer the
filing of the formal offer, your Honor,
and despite the objection of this
representation, the prosecution was
granted the request and they were
allowed to present their witness Mr.
Frank Chavez your Honor and during
the course of this hearing, it was
agreed by the parties in open Court
that the said witness will only be asked
to identify two (2) affidavits and a
newspaper clipping which he has done
already your Honor. And in succeeding
hearings . . . over the objection of this
representation despite all these
objections, the Motion to reset at the
instance of the prosecution was
granted by this Honorable Court and it
should be noted also your Honor that
the settings were suggested by the
witness. In other words, your Honor,
they were done in coordination with the
schedule of the witness and in all these
instances, the prosecution was granted
their request. Now in so far as the
allegation giving suspicion on the
impartiality of the Honorable Judge
when it said that all hearings are
intransferrable in . . ., I think it is normal
in any jurisdiction in the most courts
your Honor because if we will not have
that, the case will not come to an end,
your Honor. Also your Honor, in so far
as the allegation here in this Motion
that my client will be running based on
the newspaper clipping, your Honor, in
the Manila Times dated February 12,
2007, this representation your Honor,
obtained from the Commission on
Elections a Certification that my client
did not file any Certificate of Candidacy
for the coming elections, your Honor.
So . . . the suspicion of the prosecution
that the Motion to Inhibit should be
granted because my client is running
for public in this jurisdiction, your
Honor.
Court:
Okay, you want to argue the
comment/opposition on the Motion to
Inhibit?
Pros. Yarte:
Your Honor, everything has been fully
ventilated with that Motion. If your
Honor please, I have to fetch my
daughter in Makati at 2:30 and it[']s
now 2:30. May I be allowed to be
excused, your Honor. Atty. Galit is
here, I have to go to Makati to fetch my
daughter. May I be allowed to be
excused?
Atty. Galit:
It is alright.
Court:
So what is now the pleasure of the
counsels present? You want that the
Motion now submitted for resolution?
Atty. Galit:
Submitted, your Honor.
Court:
Order. As prayed for by both parties
and after consideration of the written
motion for inhibition as well as the oral
comment/opposition thereto, this Court
resolves to deny the same and
considering that the Judge has not
manifested any partiality or exhibited
bias in favor of the accused.
Wherefore, the Motion for Inhibition is
Denied. So likewise the manifestation
and explanation of prosecutor Yarte
about the show cause order, this Court
is satisfied with the explanation of
Prosecutor George Yarte. So
ordered.37 (Grammatical errors in the
original)
Having resolved the Motion for
Inhibition, the Regional Trial Court
continued to the next incident and the
issue of Chavez's absence:
Atty. Sison:
Your Honor, the incident today is
supposed to be continuation of direct
examination of the witness for the
prosecution and I don't see him around
your Honor, despite that he should be
present for today's hearing.
Court:
That is why I show you the letter
coming from the former Solicitor
General the reason behind why he did
not attend in today's hearing.
Atty. Sison:
Yes your Honor, as I said also, the
witness is too presumptuous that the
Motion to Inhibit will not be resolved
immediately your Honor so in view of
that, we will move that the testimonial
evidence given by the said witness be
stricken off the record . . . of the Order
of this Honorable Court dated April 11.
Atty. Galit:
Your Honor, it is too much on the part
of the defense counsel to move for the
striking out of the testimony of the said
witness. As I have said, the issues are
simple. The witness has already
testified and the witness is still very
much willing to continue his testimony.
Your Honor, to continue testifying on
those three (3) affidavits with all those
annexes, rather than strike the
testimonies of the witness from the
records of this case which would
amount your Honor to issue of
technicality not favor by jurisprudential
authorities, I would like to challenge the
defense counsel to allow us, your
Honor, to have those testimonies stay
on the record and . . . on the contents Atty. Galit: Court:
of those three (3) affidavits as well as
those annexes at least as to the The pending Motion to strike out So the testimony of former Solicitor
existence your Honor and allow the seems to have been super[s]eded, General Frank Chavez is now deemed
prosecution to wind up your Honor their your Honor, by the defense counsel terminated, correct me if I'm wrong.
evidence by filing the complete formal himself when he entered into
offer of exhibits. In that way, your stipulation regarding the existence of Atty. Galit:
Honor, any technicality will be avoided. these documents, your Honor, whom
those annexes in the affidavit of Frank Yes, your Honor.
Atty. Sison: Chavez and as a matter of act without
waiving the stipulations made by the Court:
Your Honor, I said that if only to give defense counsel, the Sandigan
teeth to the order of the Honorable Prosecutor Wendell Barreras Sulit is You want to cross examine the
Court last April 11, in any event, your showing your Honor to the defense Solicitor General?
Honor, this representation has counsel the original of those
maintained as early as five months ago documents. Atty. Sison:
that he is willing to stipulate your Honor
on the existence of the affidavits of Court: I will like to ask for one setting to cross
Atty. Chavez as well as the existence examine him, your Honor / and that
of the newspaper clippings but not as Is that correct Atty. Sison that the one said setting I will be presenting my
to the truth and veracity thereof, your testimony of former Solicitor General first witness.
Honor. Frank Chavez remains in the records
considering the existence of three (3) Court:
Atty. Galit: affidavits as well as the newspaper
clipping and the annexes? How about formal offer of exhibits?
Including annexes of those three (3)
affidavits, I would like to call the Atty. Sison: Atty. Galit:
attention of this Honorable Court that
Prosecutor Sulit is around and now if Yes, your Honor. Only as to the We will be formally offering our
the position of the defense counsel existence of these documents, it is exhibits.
would be to stipulate on the existence subject to our cross examination.
of these documents, then we will be Court:
willing enough to wind up our Atty. Galit:
presentation of evidence and submit Is that correct, is it procedural
the formal offer of evidence . . . So the affidavit dated October 6, 1999. Prosecutor Sulit that (interrupted)

Prosecutor Sulit:
At the same time you will cross
examine?
Atty. Galit:
We will file our formal offer of exhibits
ten (10) days from today.
Court:
But you will cross examine the witness
Frank Chavez after the cross
examination, you will file your formal
offer after the cross examination.
Atty. Sison:
Your Honor, I will not cross examine
anymore.
Court:
Okay[.] Order. Considering the
manifestation of both counsels, the
testimony of the former Solicitor
General Frank Chavez is now deemed
terminated and that the defense
counsel manifested that he is no longer
cross examining the witness. So
ordered.38
Thereafter, the formal offer of the
prosecution was discussed:
Court:
....
Do you want to formally offer orally or
in writing?
Atty. Galit:
I could not do that, your Honor.
Court:
How many days prosecutor?
Pros. Sulit:
Your Honor, I thought your Honor that I
am here for the comparison of the
records and I brought with me the
authenticated and may I show to the
Honorable Court for the Honorable
Court's appreciation of the originals of
the annexes of Solicitor General Frank
Chavez' affidavit of October 9, 1999.
Court:
I will just delegate my clerk of court.
Pros. Sulit:
Yes, your Honor, but I would wish that
the Honorable Judge himself will go
over a sample of the authenticated
copies from our consulate in Berne,
Switzerland. These documents, your
Honor, were released to us by the
District Magistrate of Zurich, Peter
Consandey, and the process is that:
He had these documents authenticated
by their own judges and thereafter
authenticated by our own Consular
[O]fficer Fe Pangilinan Klinger in
Berne, Switzerland. And afterwards,
these documents were again sent to
the Solicitor General Frank Chavez
who was then the Solicitor General
who initiated these complaints via
diplomatic vouch, your Honor, thru
Ambassador Aschalon who was then
our Ambassador in Switzerland.
Court:
Okay, noted.
Pros. Sulit:
The marked of authentications are all
there, your Honor.
Atty. Galit:
May we put on the records, your
Honor, that the Honorable Court was
handed by Prosecutor Wendell, an
original of the said document.
Court:
Okay.
Pros. Sulit:
Your Honor, we have several of those
documents all made attachments to the
affidavit of former Solicitor General
Frank Chavez which I believe he has
testified already and identified in the
course of his direct testimony in your
previous trial. We are now in the
process of comparing these documents
your Honor, in the presence of the
defense counsel.
Court:
Can you make a manifestation whether
or not faithful reproduction of the
original?
Pros. Sulit:
Yes, your Honor, we are now in exhibit
"G".
Court:
So what is your manifestation Atty.
Sison?
Atty. Sison:
Well in so far as exhibits "A-F" and
submarkings are concerned, your
Honor, they appear to be faithful
reproduction of the documents
identified by the witness.
....
unofficial translations, we made it
Atty. Sison: included them to form part of the
record for our clearer understanding of
Exhibit "I" and "H" earlier identified by the foreign document.
the witness are faithful reproduction of
the original kept by Prosecutor Sulit, Court:
however, your Honor I would like to
make an additional manifestation that I will note your manifestation
the translations attached to the Prosecutor Sulit.
originals are unofficial borne by the
very documents, your Honor which I Atty. Sison:
quote unofficial translation by M. R.
Aguinaldo. Can we make an understanding with
the prosecution your Honor that the
Pros. Sulit: translators are the translators
designated by the prosecution alone?
May I be allowed to speak, your Honor.
Pros. Sulit:
Court:
By the Department of Justice. Judge
Yes, go ahead. del Rosario is here, he would know
your Honor, because he was part of
Pros. Sulit: the Task Force Umungos.
As explained to me by Atty. Chavez, at Court:
the time that they were crafting these
complaints against the Marcoses, there Department of Justice or Department
were documents in the foreign of Foreign Affairs?
languages like French, German and
Swiss documents that need to be Judge del Rosario:
translated into English and they form a
task force Umungos and I think two (2) Department of Foreign Affairs.
of the ladies or maybe four (4) of them
came from the Department of Foreign Atty. Sison:
Affairs and they were the Official
translators and so they did the Without the participation of the
unofficial although it is called there accused, your Honor.

Court:
I will note your manifestation.
Atty. Sison:
Thank you, your Honor. The document
identified as exhibit "J" by the witness
in his Affidavit is a faithful reproduction
of the original which is with Prosecutor
Sulit and I make the same
manifestation in so far as the
translation is concerned that it was
clone in the instance of the
prosecution, your Honor, without the
participation of the accused.
Atty. Sulit:
I think there is no translation here, your
Honor. This is an original document.
Your Honor, this was signed by Martin
Grossman in English language this
time.
Atty. Sison:
Yes, your Honor, I stand corrected your
Honor but I would like to manifest that
this Certificate of Authenticity marked
as exhibit "J- 2" is also a photocopy.
Atty. Sulit:
A photocopy certified true by the
Presidential Commission on Good
Government, this is a certified true
copy and duplicate photocopy are
faithful reproduction of the documents
on file with the PCGG under the
custodian Lourdes Magno your Honor.
Atty. Sison:
Without indicating that this was derived
out of an original copy that is kept with
the PCGG.
Court:
I will note both manifestations. Next
exhibit.
Atty. Sison:
I would like to manifest, your Honor,
that these documents identified by the
witness marked as exhibit "K-Q" are
faithful reproduction of the photocopies
brought along by Prosecutor Sulit. In
other words, your Honor, these
documents are also photocopied, your
Honor.
Atty. Galit:
This are certified true copy by the
PCGG office, your Honor.
Atty. Sison:
Yes, your Honor, but I don't think the
witness was ever presented.
Court:
Anyway, I will note both manifestations
made by Prosecutor Sulit, Atty. Galit
and Atty. Sison.
Atty. Galit:
Your Honor, we hereby manifest that
the custodian of subject document in
the person of Lourdes Magno will be
available in these coming days to
present the original of these
documents from which source the said
documents were certified.
Court:
Okay, noted.
Atty. Sison:
Is counsel telling this representation
that they have the original of exhibit "Q-
6"?
Pros. Sulit:
I saw them, your Honor, only that they
cannot give that to me and I don't know
why. They kept it in their files.
Court:
The originals are with the PCGG?
 Next exhibit? How about the second supplemental
Pros. Sulit: affidavit on the Trinidad foundation
Atty. Sison: dated February 16, 2001?
Yes, your Honor. I think those
documents were sent to them directly, I Exhibit "R". The documents presented Atty. Sison:
don't know how but they are not willing by the prosecution except that exhibit
to . . . with the original but I saw the "R" is concerned, the best document is The existence again, your Honor.
original. a certified true copy correct photocopy
of the document on file which does not Pros. Sulit:
Atty. Galit: say if it is original or not.
And how about the attached
These documents were only marked as Pros. Sulit: documents which were also certified
certified true copy of the original from Xerox copy of the PCGG under the
the PCGG. How about the other documents, do same person Ma. Lourdes Magno.
you want me to bring it?
Atty. Sison: Atty. Sison:
Court:
Anyway, I would like to manifest that I May we browse to the original of these
think the parties should not lost track of So no more? documents.
the fact that this is a case of dollar
salting your Honor. (off the Pros. Sulit: Pros. Sulit:
record)39 (Grammatical errors in the
original) No, there is another your Honor. The Okay.
original copies, compliance dated
The parties then proceeded to the
February 16, 2001 and the attached Atty. Sison:
comparison of the exhibits intended to
First Supplemental Affidavit of
prove the existence of the foundations,
Francisco Chavez dated February 15, The records will tell out they are
the names of which were used to
2001. certified Xerox copies. I don't know
create the bank accounts:
what that means by the records
Atty. Sulit:
Atty. Sison: custodian of the PCGG.
We are now going to the documents
We admit the existence of that already, Atty. Galit:
that will prove the existence of the
your Honor.
foundations, Trinidad, Palmy, Maler,
Your Honor these are being certified
Rayby and any other documents.
Pros. Sulit: Xerox copy as indicated in the subject
document.
Court:
 with the DOJ, the original 10 days is
Court: Pros. Sulit: allocated to the prosecution may we
ask that we be given additional five (5)
I will note both manifestations. And there are document number. This days to make a total of fifteen (15)
document were given serial numbers days.
Pros. Sulit: from Switzerland.
Court:
Statement of Account of Trinidad Atty. Galit:
Foundation and they are all certified No objection?
Xerox copy on the one filed at the Trinidad Foundation 010101.
PCGG. They were sent to the PCGG. Atty. Sison:
Pros. Sulit:
Judge del Rosario: We leave it to the sound discretion of
Those are the control number when the Honorable Court.
Yes, statement of accounts of they were sent to the Philippines.
Marcoses. Court:
Atty. Galit:
Pros. Sulit: Fifteen days from today to formally
Second supplemental affidavit of offer your exhibits. How many days to
We are willing to stipulate that the February 16, 2001. file your comment? You want it orally
existence of the annexes of the or written?
supplemental affidavit of the witnesses, Pros. Sulit:
your Honor, existence as contained Atty. Sison:
part of the annexes of the We stipulate that they do exist as part
supplemental affidavit. of the annex of the second I will just ask for two (2) days to file
supplemental affidavit of Frank your written comment/opposition.
Atty. Galit: Chavez.
Atty. Galit:
Your Honor, we would like to put it on Court:
record that the document bears the I undertake to furnish the defense
stamped of Certified Xerox copy and Noted. So how many days you will counsel on a personal basis.
under the name of Ma. Lourdes Magno formally offer your exhibits?
of the PCGG, your Honor. Court:
Atty. Galit:
Court: I will now set the case for initial
Considering your Honor the presentation of defense evidence. Can
Noted. predicament that the records are still you set it on several dates?

Atty. Galit:
Yes, your Honor.40 (Grammatical errors
in the original)
After the April 24, 2007 hearing,
Chavez filed a Petition for Certiorari,
Prohibition, and Mandamus41 dated
May 3, 2007 with the Court of Appeals,
docketed as C.A.-G.R. No. 98799,
praying that the Court of Appeals
declare null and void Judge Pampilo's
order in open court denying the motion
to inhibit. Chavez also asked that the
Court of Appeals issue a temporary
restraining order or a writ of preliminary
injunction, ex-parte, and that it enjoin
Judge Pampilo from further proceeding
with, hearing, and deciding the criminal
cases against Imelda. Finally, he
prayed that Judge Pampilo be
mandated to inhibit himself in the
criminal cases against Imelda.42
In its May 22, 2007 Resolution, the
Court of Appeals granted the prayer for
the issuance of a writ of preliminary
injunction.43
The Court of Appeals resolved the
petition in its February 28, 2008
Decision44 and denied Chavez's
petition for certiorari, on the basis that
Judge Pampilo's alleged bias was not
sufficiently substantiated. It found that
none of the grounds for mandatory
inhibition of Judge Pampilo was
present in this case. Further, there was
insufficient showing of bias to
substantiate Chavez's claim of bias on
the part of Judge Pampilo. The Court
of Appeals found that the prosecution's
own acts delayed its presentation of
evidence and that the prosecution had
been granted a six (6)-month extension
to complete its presentation of
evidence. Thus, the Court of Appeals
ratiocinated that there was no undue
haste on the part of Judge Pampilo
when he ordered that the prosecution
rest its case. It further found that the
claims of prejudice against Prosecutor
Yarte were likewise unsubstantiated.45
The dispositive portion of the Court of
Appeals February 28, 2008 Decision
read:
WHEREFORE, in view of the
foregoing, the petition for certiorari is
hereby DISMISSED.46
Thus, on March 10, 2008,  the 47
Regional Trial Court rendered its May
28, 2007 Decision, acquitting accused
Imelda and Hector T. Rivera on the
ground of reasonable doubt.
It found the prosecution evidence
wanting and did not mince words in
describing the various failures of the
prosecution.
It noted that only two (2) witnesses
were presented and that the
prosecution's evidence was based on
hearsay.48 It found that the
prosecution's case was anchored on
documents secured from the Swiss
authorities, but that the only witness
presented to identify the documents
was former Assistant Solicitor General
and Presidential Commission on Good
Government Commissioner Del
Rosario.49 It quoted the transcript of
stenographic notes to illustrate that Del
Rosario had no personal knowledge
about the documents which he testified
on:
Atty. Sison:
Q: Now, Mr. Witness the documents
that you attached in your main affidavit
and supplemental affidavits may I know
where you obtained these documents
all of them Mr. Witness?
A: Well, I obtained them from the
PCGG and the OSG . . .
Q: Did you come to know where the
PCGG or the OSG derived these
documents?
A: It came from Switzerland all these
documents, Swiss bank documents.
Q: So in other words Mr. Witness all of
the documents which you identified in
the proceedings in this case were
derived from Switzerland?
A: Yes, sir.
Q: There is not any document that you
identified that was derived from any
other source Mr. Witness?
A: Yes, sir . . .50 (Grammatical errors in
the original)
The Regional Trial Court faulted the
prosecution's reliance on hearsay
testimony. It held:
To give weight to hearsay testimony
gravely violates the constitutional right
of the accused to meet the witnesses
face-to-face and to subject the source
of the information to the rigid test of
crossexamination, which is the only
effective means to test their
truthfulness, memory, and intelligence.
Furthermore, the prosecution in this
case presented as evidence
voluminous documents purporting to
be authentic records of the Marcos
accounts in Swiss banks yet not one of
the bank officers who had personal
knowledge of said accounts was ever
presented in Court to identify the
documents and attest to the veracity of
their contents. Even assuming that the
said bank officers could not possibly
make the trip to the Philippines, there
was no reason why their testimonies
could not have been taken in
Switzerland by deposition.
Del Rosario himself admitted during
the course of his testimony in these
cases that he was authorized to take
depositions of witnesses, and again the
Court quotes from the stenographic
notes . . .
"ACSP Mariano
Q: Judge, you stated in your previous
statement that you are now special
counsel or legal consultant of PCGG.
What are your main functions as such
special counsel or legal consultant?
(Del Rosario)
A: My special function as consultant of
PCGG, I am tasked to assist in the
prosecution of all criminal cases
against Mrs. Imelda Marcos all in the
Regional Trial Court and in the
Sandiganbayan and I am also tasked
to take depositions of witnesses, rather
evaluate additional evidence for the
purpose of effectively prosecuting
these cases against Mrs. Marcos . . .
During the course of the trial in these
cases, Del Rosario revealed that he
had been to Switzerland in connection
with his investigation of these cases,
and that sometimes he went alone and
at other times he went with Solicitor
General Chavez, which this Court
takes to mean that he (Del Rosario)
had been to Switzerland many times.
Yet he never bothered to communicate
with, let alone take depositions, of the
bank officers who could have identified
the Swiss bank documents presented
by the prosecution as evidence in
these cases.
Even assuming that Del Rosario was
too busy with his investigative functions
that he simply did not have time to take
depositions, there were other persons
available in Switzerland who could
have legally taken such depositions if
only Solicitor General Chavez, or any
of his agents like Del Rosario had the
foresight and the good sense to
request it.51
The Regional Trial Court named
several witnesses that the prosecution
should have presented:
1. Peter Cosandey, the
magistrate who
examined the bank
documents;
2. Dr. Theo Bertheau of
Zurich, who, according
to Del Rosario, was
instructed by the
Marcoses to arrange for
a lawyer in
Liechtenstein to create
Azio Foundation;
 3. The alleged Marcos
trustees in Switzerland:
Mr. C. Walter Fessler,
Cusnach Souviron, Jr.,
Mr. Ernest Scheller, and
Dr. Helmuth Merlin;
4. Martin Grossman who
signed the Certificate of
Authentication of
52
Business Records[.]
The Regional Trial Court noted that the
prosecution repeatedly asked Del
Rosario to identify signatures that he
was not competent to identify:
Many times during the course of the
trial in these cases, the prosecution
asked Del Rosario to identify
signatures of persons whose
handwriting he was not competent to
testify on and despite his own
admission that he was not a
handwriting expert. And again, the
Court quotes from its own stenographic
records. (TSN, June 10, 2003, page
17-19):
"(State prosecutor)
Q: Now on page 2 of this Exh. "X-
Common" appears a legible signature
of Imelda Romualdez Marcos. In the
course of your investigation, were you
able to determine the person who
affixed that signature?
(Del Rosario)
A: The very usual and familiar
A: Yes, your honor, I found out after signature of the late President
investigation that this contract really Ferdinand E. Marcos.
signed by Imelda Romualdez Marcos,
this belongs to her, this contract SP Carretas: May I request that the
opening of account in Swiss Credit signature of Ferdinand E. Marcos
Bank . . . appearing on the lower right hand
margin of page 2 of Exhibit W-
Q: Do you know who this Imelda Common be marked as Exhibit "W-2."
Marcos referred to in that document?
Court: Mark it.
Atty. Parungao: Excuse me, your
honor, may we be allowed to see the SP Carretas
document first? Your honor, may I just
manifest that the signature has no print Q: And on the lower left hand margin of
or any indication that the signature page 2 of the same exhibit appears a
belongs to a certain person. It is just a signature below the printed words
signature which if read, reads Imelda Swiss Credit Bank. Were you able to
Romualdez Marcos but there is no find out in the course of your
indication whose signature this is. investigation the person who affixed
this signature?
Court: No printed name.
A: I do not know the name of the
Atty. Parungao: Yes, your honor." person who affixed the signature but
And in another instance . . . this could be the authorized
"SP Carretas representative of Swiss Credit Bank.
Q: Now on the lower right hand margin Q: Why do you say so?
of page 2 of Exhibit "W-Common"
appear a signature below the printed A: Because it appear below the words
word the Depositor. In the course of Swiss Credit Bank and it is a contract,
your investigation, were you able to sir."
identify or know the signature affixed in Similar exchanges between the state
this document below the printed words prosecutor and star witness Del
the Depositor? Rosario were repeated many times
during the course of the trial with
respect to the signatures of the late
President Marcos and Mrs. Marcos.
But the most absurd of all was when on
cross-examination, Del Rosario could
not identify the signature of Martin
Grossman, the person who issued the
Certificate of Authenticity of the Swiss
bank documents used by the
prosecution in these cases, to wit
(TSN, Oct. 10, 2006):
"Q: Now Mr. Witness in this Certificate
of Authenticity of Business Records,
appears a signature above the printed
name Martin Grossman. Do you
recognize that signature?
A: I am not familiar with the signature,
sir.
Q: You are not familiar. So in other
words, you do not know if this is the
signature of Mr. Martin Grossman,
whose printed name appears below
that?
A: Yes, but I rely on the
Certification . . ."53
The Regional Trial Court also noted
that the documents presented were
photocopies and that the prosecution
had not established any basis for
presenting them instead of the original
documents.54
Thus, the Regional Trial Court found
that the prosecution failed to present
competent proof of the alleged offense
and of the conspiracy among the
accused. Regarding the prosecution's
attempt to establish the conspiracy, the
Regional Trial Court held:
The prosecution merely presented
documentary evidence that Roberto S.
Benedicto invested in the Philippine-
issued dollar-denominated treasury
notes. It did not say that Mr. Benedicto
did the transaction for herein accused.
He did it for himself alone. In fact,
under the Compromise Agreement
executed in November 1990 between
the government and Mr. Benedicto,
there was no mention about the above
alleged investments of Mr. Benedicto in
behalf of herein accused. Otherwise,
Mr. Benedicto would have made his
being the alleged dummy a part of the
Compromise Agreement.
Furthermore, neither did the
prosecution submit any documentary
proof that the three Swiss banks from
where the alleged dollar remittances
emanated, namely, Bank Hofmann,
SBC and Banque Paribas, held the
dollar notes for accused Marcos . . .
The Court is cognizant of the fact that
the government has expended untold
time, effort and money in the
prosecution of these cases, but the
accused has the Constitutional
presumption of innocence. The
prosecution in these cases failed to
discharge the burden of proof required
in criminal cases. This court cannot in
all conscience convict the accused on
the basis of mere hearsay and on the
basis of documents which were not
authenticated and proved in the proper
manner.55
The dispositive portion of the Regional
Trial Court Decision read:
WHEREFORE, foregoing premises
considered and pursuant to applicable
jurisprudence and law on the matter,
the accused IMELDA ROMUALDEZ
MARCOS and HECTOR T. RIVERA
are hereby ACQUITTED on the ground
of reasonable doubt.56
Chavez filed a Motion for
Reconsideration57 of the Court of
Appeals February 28, 2008 Decision.
As the Regional Trial Court Decision
was promulgated soon thereafter, on
March 10, 2008,58 and within Chavez's
period for filing a motion for
reconsideration with the Court of
Appeals, Chavez included in his motion
a prayer for nullification of the Regional
Trial Court's judgment of acquittal.
In support of this prayer, Chavez
argued that the acquittal was in
violation of the Court of Appeals
injunction, pointing out that the
injunction dated July 20, 2007 stated
that it would subsist "pending final
resolution of the present petition or
unless a contrary order is hereafter
issued by this Court."59 He insisted that
his case before the Court of Appeals
was still pending final resolution
because of his motion for
reconsideration and that there had
been no order dissolving the
injunction.60
In its November 24, 2008 Resolution,
the Court of Appeals denied the Motion
for Reconsideration and the prayer for
nullification of the Regional Trial Court
March 10, 2008 Decision. It held that
the prayer for nullification was improper
considering that it was not covered in
the original petition for certiorari. It also
noted that the assailed Regional Trial
Court Decision was rendered after the
Court of Appeals had already denied
the petition for certiorari. The
dissolution of the writ of injunction was
deemed carried with the dismissal of
the petition for certiorari.61
Thus, Chavez filed this Petition for
Review on Certiorari before this Court.
After Imelda filed her Comment62 and
Chavez filed his Reply,63 this Court
gave due course to the
petition.64 Chavez filed his
Memorandum,65 and Imelda, after
seeking four (4) extensions of time to
file,66 finally filed her Memorandum67 by
mail on January 4, 2010. On October
3, 2016, this Court required the parties
to move in the premises and to inform
this Court of pertinent developments
which may be of help in the disposition
of this case, or which may have
rendered it moot and academic.68 On
November 18, 2016, counsel for
petitioner informed this Court that
petitioner Chavez passed away on
September 11, 2013.69 Thereafter,
counsel for petitioner filed a Motion for
Resolution70 arguing that petitioner's
action survives his death as it involves
an issue not personal to him, namely,
the national coffers, and that his death
does not render the remedies prayed
for moot and academic, or
impossible.71
Petitioner claims that the Court of
Appeals should have appreciated
Judge Pampilo's demeanor and over-
eagerness to decide the case as
evidence of grave abuse of
discretion.72 He characterized Judge
Pampilo's scheduling of the
prosecution's witness as a "noose-
tightening tactic."73 He claimed that due
to the unreasonableness of the
schedule for his testimonies, it was
inevitable that the prosecution would
have to request for adjustments, and
thereafter accept any resetting with the
warning that its presentation of
evidence would be deemed
terminated.74 Judge Pampilo made it
impossible for petitioner or for
Department of Justice State Prosecutor
Yarte to appear at the hearing dates
set by the court.75 By orally denying the
Motion to Inhibit on April 24, 2007,
Judge Pampilo essentially forced the
prosecution to present its evidence on
the very same day, or end its
presentation of evidence.76 Petitioner
also claims that Judge Pampilo, Atty.
Galit, and Atty. Robert Sison (Atty.
Sison) all acted with a common
objective of railroading the cases. He
insists that this common objective is
evident from what transpired on April
24, 2007.77 In particular, petitioner
points out the fact that Judge Pampilo
interpreted the Department of Justice
Memorandum dated April 17, 2007 as
designating Atty. Galit as the lead
prosecutor and refused to allow
Prosecutor Yarte to argue as the lead
prosecutor. This is despite the fact that
the Department of Justice
Memorandum did not designate Atty.
Galit as the lead prosecutor or exclude
Prosecutor Yarte from arguing before
the court. Petitioner alleges that the
Department of Justice Memorandum
stated:
[A] directive is hereby made
authorizing and/or designating PCGG
Special Counsel, Atty. Napoleon Uy
Galit with or without the presence of
any public prosecutors to prosecute the
above-referred cases . . .78
Petitioner maintains that it was
revealing that Judge Pampilo swept
aside the arguments of Prosecutor
Yarte.79 He also faulted Judge Pampilo
for orally deciding the Motion to
Inhibit,80 averring that it was hastily
done.81 He believes that Atty. Galit
acted as if he were Prosecutor Yarte's
adversary instead of a fellow
prosecutor82 and that because of this
concerted action among Judge
Pampilo, Atty. Sison, and Atty. Galit,
Prosecutor Yarte had to walk out of the
hearing.83
Petitioner asserts that the commonality
of purpose was also shown by the risky
procedure resorted to by Atty. Sison,
who, in one hearing, waived his written
opposition to the Motion to Inhibit, the
cross-examination of petitioner, and
the presentation of evidence:
17. Also, the conduct of counsel for
Imelda Marcos provides yet another
glimpse into a sort of "commonality of
purpose" shared by Judge Pampilo and
Imelda Marcos. When Prosecutor
Yarte insisted on his right to file a reply
to Atty. Sison's opposition to
the Motion to Inhibit, the latter
conveniently withdrew his written
opposition. When Judge Pampilo
realized that he could not proceed with
the presentation of evidence for the
accused without first requiring the
prosecution to submit its formal offer of
evidence, Atty. Sison, who had earlier
sought a single setting for petitioner's
cross-examination and the
presentation of Imelda Marcos'
evidence, suddenly relinquished his
intention to cross-examine the
petitioner. Then, later, when it was
already time for him to present
evidence for the accused (Imelda
Marcos), Atty. Sison merely bracketed
and marked a solitary statement in the
testimony of Atty. Cesario del Rosario
and then waived further presentation of
evidence. He resorted to this risky
procedure instead of being more
cautious by filing a Demurrer to
Evidence.84
Petitioner also assails the
circumstances surrounding the
promulgation of Judge Pampilo's
decision. He suggests that there must
have been a direct liaison between
Judge Pampilo and Atty. Sison,
because without one, under the
circumstances, respondent Imelda
would not have been able to file an
Urgent Motion to Lift Temporary
Restraining Order Ad Cautelam in time
for the original scheduled promulgation
to proceed.85 Further, he alleges that
Judge Pampilo told reporters that
promulgation would proceed on May
23, 2007 despite the issuance of the
Temporary Restraining Order because
respondent Imelda was working on
having the Temporary Restraining
Order lifted:
25.  . . . On 23 May 2007, Judge
Pampilo went to court ready to
promulgate his decision despite the
fact that he was already served with
the trial court's TRO in the afternoon of
22 May 2007. When Judge o was
approached by news reporters if the
promulgation would push through,
Judge Pampilo answered in the
affirmative since Imelda Marcos is
supposedly working out a way to have
the TRO lifted, obviously referring to
Imelda Marcos' Motion to Lift
TRO dated 23 May 2007. When no
order from the Court of Appeals came,
Judge Pampilo asked the reporters to
come back by 2:00 p.m. of that same
day, since according to him, by that
time, Imelda Marcos might be able to
secure the lifting of the TRO. Having
failed in his expectations, Judge
Pampilo rescheduled the promulgation
of judgment to 30 May 2007 as may be
gleaned from page 43 of his Decision.
He just would not give up in his
attempts to grant Imelda Marcos an
early acquittal despite orders from the
Court of Appeals. How can such a
conduct be explained?
26. Then, finally, as mentioned earlier,
Judge Pampilo did not even await final
resolution of the instant case when he
promulgated on 10 March 2008 his
judgment of acquittal. Again, consistent
with the Rules of Court, it must be
stressed that petitioner was permitted
to file and had in fact filed - his Motion
for Reconsideration of the Court of
Appeals' 28 February 2008 Decision.
Therefore, the 28 February 2008
Decision is not yet final. As such, the
writ of preliminary injunction issued by
the Court of Appeals is still effective
because the Court of Appeals' 20 July
2007 Resolution clearly states that the
writ of preliminary injunction shall
subsist "pending final resolution of the
present petition or unless a contrary
order is hereafter issued by this Court."
Judge Pampilo's apparent fervor to
exculpate Imelda Marcos even in
violation of the Court of Appeals'
injunction is only consistent with
something glaringly obvious from the
very beginning: his bias and partiality.86
Petitioner further argues that Judge
Pampilo acted with grave abuse of
discretion for promulgating his decision
in violation of a subsisting
87
injunction,  and for abruptly
terminating petitioner's testimony.88 He
insists that his testimony would have
been sufficient to render admissible the
documents which Judge Pampilo found
inadmissible as evidence.89
Respondent Imelda argues that the
petition should be dismissed for raising
questions of fact. Further, the
undisputed facts on record constitute attributes the following errors to the
sufficient justification for Judge Court of Appeals:
Pampilo's decision to tenninate the a. The Court of Appeals committed
prosecution's presentation of reversible error by refusing to consider
evidence.90 Judge Pampilo's demeanor and over-
eagerness to decide the criminal cases
This Court resolves the following against Imelda Marcos intended to
issues: culminate in a judgment of acquittal -
as clear evidence of grave abuse of
First, whether or not the petition should discretion warranting the issuance of a
be dismissed for raising questions of Writ of Certiorari.
fact;
b. The Court of Appeals committed
Second, whether or not the Regional reversible error by refusing to consider
Trial Court May 28, 2007 Decision Judge Pampilo's flagrant violation of a
acquitting respondent Imelda R. subsisting writ of preliminary injunction
Marcos was issued in violation of a and, ultimately, the prosecution's
subsisting injunction; and constitutional right to due process.92
Essentially, petitioner takes issue with
Finally, whether or not the records how the Court of Appeals interpreted
show that Judge Silvino T. Pampilo, Jr. the acts of Judge Pampilo and found
acted with bias in favor of respondent no manifest partiality, which are clearly
Imelda R. Marcos. not questions of law. He did not even
attempt to frame the issues as
This Court denies the Petition. questions of law. By claiming that
Judge Pampilo violated a writ of
I
injunction, petitioner attempts to cloak
the second alleged error with some
A petition for review on certiorari under
semblance of being a question of law.
Rule 45 shall only pertain to questions
However, petitioner does not provide
of law. Further, the Rules of Court
any legal basis or coherent legal
mandate that petitions for review
argument to support the claim that a
distinctly set forth the questions of law
writ of injunction was violated, and this
raised.91
claim is totally specious.
This petition for review on certiorari
Although this Court may, in exceptional
cases, delve into questions of fact,
these exceptions must be alleged,
substantiated, and proved by the
parties before this Court may evaluate
and review facts of the
case.93 Petitioner having failed to
establish the basis for this Court to
evaluate and review the facts in this
case, the petition may be dismissed on
this ground.
II
The Regional Trial Court Decision
dated May 28, 2007 and promulgated
on March 10, 2008 was not issued in
violation of the Court of Appeals writ of
injunction. When this Regional Trial
Court Decision was promulgated, the
writ of injunction had already been
dissolved.
As stated by the Court of Appeals in its
November 24, 2008 Resolution, the
denial of the petition for certiorari
carried with it the dissolution of the writ
of injunction.94
Petitioner makes much ado of the fact
that the text of the injunction stated that
it subsisted "pending final resolution" of
the petition, ignoring the rest of the text
which provided that it would be
dissolved if a contrary order was
issued by the Court of
95
Appeals.  Indeed, the Court of
Appeals, in its November 24, 2008
Resolution, resolved this issue, stating:
[I]t should also be considered that at
the time of the rendition of the said
RTC decision, the Decision of this
Court denying the petition for certiorari
had already been issued. Although the
said Decision itself did not expressly
provide for the dissolution of the writ of
injunction the same is deemed carried
with the dismissal of the petition for
certiorari.96
In other words, the Court of Appeals'
decision denying the petition for
certiorari carried with it a contrary order
dissolving the injunction. Petitioner fails
to address this point and does not
show how it is an error of law. Thus,
the argument that a subsisting
injunction was violated is clearly
frivolous, if not misleading, and
intended only to make it appear as
though the petition has some
semblance of basis.
III
Whether or not to voluntarily inhibit
from hearing a case is a matter within
the judge's discretion. Absent clear and
convincing evidence to overcome the
presumption that the judge will
dispense justice in accordance with law
and evidence, this Court will not
interfere.97
On the inhibition of judges, Rule 137 of
the Rules of Court provides:
Section 1. Disqualification of judges. -
No judge or judicial officer shall sit in
any case in which he, or his wife or
child, is pecuniarily interested as heir,
legatee, creditor or otherwise, or in
which he is related to either party
within the sixth degree of consanguinity
or affinity, or to counsel within the
fourth degree, computed according to
the rules of the civil law, or in which he
has been executor, administrator,
guardian, trustee or counsel, or in
which he has presided in any inferior
court when his ruling or decision is the
subject of review, without the written
consent of all parties in interest, signed
by them and entered upon the record.
A judge may, in the exercise of his
sound discretion, disqualify himself
from sitting in a case, for just or valid
reasons other than those mentioned
above.
The import of Rule 137, Section 1 of
the Rules of Court was explained
in Pimentel v. Salanga:98
Thus, the genesis of the provision
(paragraph 2, Section 1, Rule 137), not
to say the letter thereof, clearly
illumines the course of construction we
should take. The exercise of sound
discretion - mentioned in the rule-has
reference exclusively to a situation
where a judge disqualifies himself, not
when he goes forward with the case.
For, the permissive authority given a
judge in the second paragraph of
Section 1, Rule 137, is only in the
matter of disqualification, not
otherwise. Better stated yet, when a
judge does not inhibit himself, and he
is not legally disqualified by the first
paragraph of Section 1, Rule 137, the
rule remains as it has been he has to
continue with the case.
So it is, that the state of the law, with
respect to the situation before us, is
unaffected by the amendment
(paragraph 2 of Section I, Rule 137)
introduced in the 1964 Rules. And it is
this: A judge cannot be disqualified by
a litigant or his lawyer for grounds
other than those specified in the first
paragraph of Section I, Rule 137.
This is not to say that all avenues of
relief are closed to a party properly
aggrieved. If a litigant is denied a fair
and impartial trial, induced by the
judge's bias or prejudice, we will not
hesitate to order a new trial, if
necessary, in the interest of justice.
Such was the view taken by this Court
in Dais vs. Torres, 57 Phil. 897, 902-
904. In that case, we found that the
filing of charges by a party against a
judge generated "resentment" on the
judge's part that led to his "bias or
prejudice which is reflected in the
decision," We there discoursed on the
"principle of impartiality,
disinterestedness, and fairness on the
part of the judge" which "is as old as
the history of court." We followed this
with the pronouncement that, upon the
circumstances obtaining, we did not
feel assured that the trial judge's
findings were not influenced by bias or
prejudice. Accordingly, we set aside
the judgment and directed a new trial.
Efforts to attain fair, just and impartial
trial and decision, have a natural and
alluring appeal. But, we are not
licensed to indulge in unjustified
assumptions, or make a speculative
approach to this ideal. It ill behooves
this Court to tar and feather a judge as
biased or prejudiced, simply because
counsel for a party litigant happens to
complain against him. As applied here,
respondent judge has not as yet
crossed the line that divides partiality
and impartiality. He has not thus far
stepped to one side of the fulcrum. No
act or conduct of his would show
arbitrariness or prejudice. Therefore,
we are not to assume what respondent
judge, not otherwise legally
disqualified, will do in a case before
him. We have had occasion to rule in a
criminal case that a charge made
before trial that a party "will not be
given a fair, impartial and just hearing"
is "premature." Prejudice is not to be
presumed. Especially if weighed
against a judge's legal obligation under
his oath to administer justice, "without
respect to person and do equal right to
the poor and the rich." To disqualify or
not to disqualify himself then, as far as
respondent judge is concerned, is a
matter of conscience.
All the foregoing notwithstanding, this
should be a good occasion as any to
draw attention of all judges to
appropriate guidelines in a situation
where their capacity to try and decide a
case fairly and judiciously comes to the
force by way of challenge from any one
of the parties. A judge may not be
legally prohibited from sitting in a
litigation. But when suggestion is made
of record that he might be induced to
act in favor of one party or with bias or
prejudice against a litigant arising out
of circumstances reasonably capable
of inciting such a state of mind, he
should conduct a careful self-
examination. He should exercise his
discretion in a way that the people's
faith in the courts of justice is not
impaired. A salutary norm is that he
reflect on the probability that a losing
party might nurture at the back of his
mind the thought that the judge had
unmeritoriously tilted the scales of
justice against him. That passion on
the part of a judge may be generated
because of serious charges of
misconduct against him by a suitor or
his counsel, is not altogether remote.
He should, therefore, exercise great
care and caution before making up his
mind to act in or withdraw from a suit
where that party or counsel is involved.
He could in good grace inhibit himself
where that case could be heard by
another judge and where no
appreciable prejudice would be
occasioned to others involved therein.
On the result of his decision to sit or
not to sit may depend to a great extent
the all-important confidence in the
impartiality of the judiciary. If after
reflection he should resolve to
voluntarily desist from sitting in a case
where his motives or fairness might be
seriously impugned, his action is to be
interpreted as giving meaning and
substances to the second paragraph of
Section 1, Rule 137. He serves the
cause of the law who forestalls
miscarriage of justice.99 (Emphasis in
the original)
Thus, since the second paragraph of
Rule 137, Section 1 was introduced,
this Court has periodically repeated
that it shall always presume that a
judge will decide on the merits of the
case without bias. Allowing a judge to
inhibit without concrete proof of
personal interest or any showing that
his bias stems from an extrajudicial
source will open the floodgates to
abuse.100
No concrete proof of Judge Pampilo's
personal interest in the case was
presented. There was no showing that
his bias stems from an extrajudicial
source. Not only that, but none of his
acts, as shown on the record, was
characterized by any error.
Petitioner finds fault in the scheduling
of his testimony but fails to show how it
was irregular. He characterizes the
scheduling as "noose-tightening," for
being scheduled on "unreasonably
proximate" dates.101 Far from the
scheduling being evidence of partiality,
it was aligned with this Court's rules on
expeditious disposition of cases and
the mandatory continuous trial system.
Supreme Court Administrative Circular
No. 3-90 requires all trial courts to
adopt the mandatory continuous trial
system pursuant to Administrative
Circular No. 4 and Circular No. 1-89.
On trials for civil and criminal cases,
Supreme Court Circular No. 1-89
provides, in part:
II. TRIAL (Civil, Criminal)
. . . .
4. The issuance and services
of subpoenas shall be done in
accordance with Administrative
Circular No. 4 dated September 22,
1988.
5. A strict policy on postponements
shall be observed.
6. The judge shall conduct the trial with
utmost dispatch, with judicious
exercise of the court's power to control
the trial to avoid delay.
7. The trial shall be terminated within
ninety (90) days from initial hearing.
Appropriate disciplinary sanctions may
be imposed on the judge and the
lawyers for failure to comply with this
requirement due to causes attributable
to them.
8. Each party is bound to complete the
presentation of his evidence within the
trial dates assigned to him. After the
lapse of said dates, the party is
deemed to have completed his
evidence presentation. However, upon
verified motion based on serious
reasons, the judge may allow a party
additional trial dates in the afternoon;
provided that said extension will not go
beyond the three-month limit computed
from the first trial date.
Thus, the dates provided for
petitioner's testimony were in
accordance with the rules and
guidelines issued by this Court.
Petitioner also claims that Judge
Pampilo could have accommodated
the prosecution's requests for
postponement, but he did not.
However, Judge Pampilo's reluctance
in sanctioning further delays and in
denying motions to postpone hearings
was also in accordance with the rules
on the expeditious resolution of cases.
This Court cannot assume bias or
arbitrariness based on the denial of
requests of postponement.102
There was nothing remarkable about
the denial of the Motion to Inhibit. It
was not hasty, and whether to deny it
orally in court is the prerogative of the
judge, who could have decided it as
soon as its factual basis had been
clearly laid.103 Further, counsel for the
prosecution expressly agreed that the
motion be submitted for resolution.104
Petitioner's claims that Atty. Galit acted
as an adversary instead of co counsel
for Prosecutor Yarte are outlandish.
The transcript reveals that Atty. Galit
was nothing if not courteous to
Prosecutor Yarte. Petitioner also avers
that Prosecutor Yarte had to walk out
of the hearing because of the
concerted action taken against
him.105 However, the transcript shows
that he asked permission from Judge
Pampilo to allow him to pick up his
daughter in Makati.106 This incident was
not the first questionable act taken by
Prosecutor Yarte as it appears that he
chose to attend an event in Boracay
instead of the April 11, 2007 hearing,
despite the denial of his motion to
cancel it. In no way can these actions
be attributed to bias on the part of
Judge Pampilo.
Petitioner Chavez believes that
respondent Imelda would not have
been acquitted had he been allowed to
testify. However, Judge Pampilo did
not even have to decide on whether to
allow petitioner Chavez to continue his
testimony because both parties agreed
that his testimony would be terminated
during the April 24, 2007 hearing:
Atty. Sison:
Your Honor, the incident today is
supposed to be continuation of direct
examination of the witness for the
prosecution and I don't see him around
your Honor, despite that he should be
present for today's hearing.
Court:
That is why I show you the letter
coming from the former Solicitor
General the reason behind why he did
not attend in today's hearing.
Atty. Sison:
Yes your Honor, as I said also, the
witness is too presumptuous that the
Motion to Inhibit will not be resolved
immediately your Honor so in view of
that, we will move that the testimonial
evidence given by the said witness be
stricken off the record . . . of the Order
of this Honorable Court dated April 11.
Atty. Galit:
Your Honor, it is too much on the part
of the defense counsel to move for the
striking out of the testimony of the said
witness. As I have said, the issues are
simple. The witness has already
testified and the witness is still very
much willing to continue his testimony.
Your Honor, to continue testifying on
those three (3) affidavits with all those
annexes, rather than strike the
testimonies of the witness from the
records of this case which would
amount your Honor to issue of
technicality not favor by jurisprudential
authorities, I would like to challenge the
defense counsel to allow us, your
Honor, to have those testimonies stay
on the record and . . . on the contents
of those three (3) affidavits as well as
those annexes at least as to the
existence your Honor and allow the
prosecution to wind up your Honor their
evidence by filing the complete formal
offer of exhibits. In that way, your
Honor, any technicality will be avoided.
Atty. Sison:
Your Honor, I said that if only to give
teeth to the order of the Honorable
Court last April 11, in any event, your
Honor, this representation has
maintained as early as five months ago
that he is willing to stipulate your Honor
on the existence of the affidavits of
Atty. Chavez as well as the existence
of the newspaper clippings but not as
to the truth and veracity thereof, your
Honor.
Atty. Galit:
Including annexes of those three (3)
affidavits, I would like to call the
attention of this Honorable Court that
Prosecutor Sulit is around and now if
the position of the defense counsel
would be to stipulate on the existence
of these documents, then we will be
willing enough to wind up our
presentation of evidence and submit
the formal offer of evidence . . .
Atty. Galit:
The pending Motion to strike out
seems to have been super[s]eded,
your Honor, by the defense counsel
himself when he entered into
stipulation regarding the existence of
these documents, your Honor, whom
those annexes in the affidavit of Frank
Chavez and as a matter of fact without
waiving the stipulations made by the
defense counsel, the Sandigan
Prosecutor Wendell Barreras Sulit is
showing your Honor to the defense
counsel the original of those
documents.
Court:
Is that correct Atty. Sison that the
testimony of former Solicitor General
Frank Chavez remains in the records
considering the existence of three (3)
affidavits as well as the newspaper
clipping and the annexes?
Atty. Sison:
Yes, your Honor. Only as to the
existence of these documents, it is
subject to our cross examination.
Atty. Galit:
So the affidavit dated October 6, 1999.
Court:
So the testimony of former Solicitor
General Frank Chavez is now deemed
terminated, correct me if I'm wrong.
Atty. Galit:
Yes, your Honor.
....
Court:
But you will cross examine the witness
Frank Chavez after the cross
examination, you will file your formal
offer after the cross examination.
Atty. Sison:
Your Honor, I will not cross examine
anymore.
Court:
Okay[.] Order. Considering the
manifestation of both counsels, the
testimony of the former Solicitor
General Frank Chavez is now deemed
terminated and that the defense
counsel manifested that he is no longer
cross examining the witness. So
ordered.107
As is apparent from the records,
petitioner's testimony was not
terminated abruptly by Judge Pampilo.
Rather, the termination of his testimony
was expressly agreed to by the
prosecution, having obtained a
stipulation from the defense counsel on
the existence of the documents which
petitioner was to identify.
Petitioner's claim that respondent
Imelda would not have been acquitted
had petitioner been allowed to continue
his testimony is not only wildly
speculative, but it is also devoid of
basis. What he would have identified
was a Certification of Swiss banking
documents, addressed to petitioner in
his capacity as Solicitor General of the
Philippines, stating, in part:
There is no disposition in any of the
criminal proceedings applicable in
Switzerland providing for the
certification of banking documents. If a
witness or a bank submits Xerox
copies to a criminal authority, these
documents become automatically and
without any certification conclusive
evidence.
In legal assistance proceedings, the
acts of investigation are performed
according to the applicable law of the
requested State, in casu of
Switzerland. In international legal
assistance proceedings, the requesting
State usually recognizes the evidence
collected according to the dispositions
of the law of the requested State.
Art. 92 of the Federal Law on
international legal assistance in
criminal matters of March 20, 1981
(EIMP) indicates that all the acts of
investigation performed by the
authorities of a foreign State according
to its law have the same value in the
proceeding as the corresponding Swiss
acts of investigation.
We know that especially in Anglo-
Saxon law countries there are very
strict rules concerning the formal
constitution of conclusive evidence.
Art. 65 litt. b EIMP therefore provides
that in order to permit the formal
admission of other evidence (especially
of documents) the express desiderata
of the requesting authority must be
considered. In the Treaty between the
Confederation of Switzerland and the
United States of American mutual legal
assistance in criminal matters of May
25, 1973 the certification of documents
is specifically provided for. Practically,
this certification is in the form of two
certificates. Through the "Certificate of
Authenticity of Business Records", the
holder of the documents certifies their
authenticity; the competent examining
magistrate issues the "Certificate of the
Swiss Authority executing Request for
Documents" to attest that he checked
himself the documents and is
convinced that they are "genuine,
authenticated and certified true
copies". The American Courts admit
without further formalities Swiss
banking documents so certified.
Concerning the documents of Swiss
Credit Bank collected in Zurich, I gave
you during your visit of August 13,
1991 two such certificates for each
document which authenticated the
banking documents. To my knowledge,
the examining magistrate of Geneva,
Vladimir Sternberger, also prepared
similar certificates. In my opinion, these
Swiss certificates of the genuine
character of the documents are
sufficient to present the evidence
obtained in Switzerland in the
Philippine Courts. A further certification
of each of the several thousand
documents is therefore neither
necessary nor proportionate.108
Petitioner claims that his testimony
would controvert Judge Pampilo's
conclusion that the bank documents
are private documents, and that they
were, thus, inadmissible as
109
hearsay.  However, he failed to lay
the legal basis to justify the conclusion
that his testimony would have
established that the bank records are
public documents. In People v.
Patamama:110
Also of little evidentiary value is the
PAGASA certification presented by the
defense respecting the rising and
setting of the moon on the night in
question; and this, because it is clearly
hearsay, having been prepared and
signed by a certain Carmelito
Calimbas, allegedly the Officer in
Charge of the Astronomy Research
and Development Section of PAGASA.
Calimbas was not presented in court
for identification and to show that he
was technically qualified to make and
issue such certification. The rules of
evidence properly exclude the
testimony of witnesses demonstrably
incompetent, as well as evidence that
can not be tested by cross-
examination.111 (Citations omitted)
In this case, petitioner would have
identified a certification which was not
issued by him, but by a certain Peter
Cosandey, who, as properly noted by
the Regional Trial Court, was not
presented in court. Thus, considering
that petitioner was not the one who
prepared the certificate, his testimony
would have been of little evidentiary
value. The claim that his testimony
would have saved the prosecution's
case is baseless.
Finally, petitioner's speculations
regarding the strategy employed by
respondent Imelda's counsel are wild
and baseless. Respondent Imelda's
counsel may have filed an Urgent
Motion to Lift Temporary Restraining
Order Ad Cautelam very quickly, but
timeliness alone cannot and should not
be viewed with suspicion. Counsel for
respondent did not need a direct liaison
to manage this, and filing pleadings in
a timely manner should not be so out
of the ordinary that it suggests
misdeeds.
There is one allegation which, if true,
might suggest some bias on the part of
Judge Pampilo. In particular, petitioner
alleges that Judge Pampilo told news
reporters that the promulgation would
proceed despite the subsisting Court of
Appeals Temporary Restraining Order
because respondent Imelda was
working on lifting said injunction:
25. Petitioner also submits that he
made manifestations before the Court
of Appeals during the 25 July 2007
hearing, which manifestations were not
denied by counsel for Imelda Marcos.
On 23 May 2007, Judge Pampilo went
to court ready to promulgate his
decision despite the fact that he was
already served with the trial court's
TRO in the afternoon of 22 May
2007. When Judge Pampilo was
approached by news reporters if the
promulgation would push through,
Judge Pampilo answered in the
affirmative since Imelda Marcos is
supposedly working out a way to have
the TRO lifted, obviously referring to
Imelda Marcos' Motion to Lift
TRO dated 23 May 2007. When no
order from the Court of Appeals came,
Judge Pampilo asked the reporters to
come back by 2:00 p.m. ofthat same /
day, since according to him, by that
time, Imelda Marcos might be able to
secure the lifting of the TRO. Having
failed in his expectations, Judge
Pampilo rescheduled the promulgation
of judgment to 30 May 2007 as may be
gleaned from page 43 of his Decision.
He just would not give up in his
attempts to grant Imelda Marcos an
early acquittal despite orders from the
Court of Appeals. How can such a
conduct be explained?112 (Emphasis in
the original)
If it is true that Judge Pampilo told
news reporters that he was expecting
the Court of Appeals Temporary
Restraining Order to be lifted within the
day, this could suggest that Judge
Pampilo was coordinating with
respondent Imelda's lawyers. However,
no evidence was presented to support
this allegation. Allegation does not
substitute proof, so this claim must be
rejected.
This petition arose from what appears
to have been such an important case
for the government, which involves
accountability for millions of pesos
spirited away by respondent, filed in
the lower court. Yet, it appears that the
government's resolve to prosecute has
been lackadaisical, to say the least.
The prosecution and their witness
appear to have requested several
postponements on grounds which, to
this Court, do not outweigh the grave
public interest suggested by the
various Informations filed against
respondent.
The lower court's liberality in granting
the various continuances does not
seem to have been met by the
presentation of evidence with a depth
and quality that would have shown the
diligence and seriousness of the
prosecution.
Prosecutors for the government should
always remember that their work does
not end with public announcements
relating to the filing of informations
against those who have committed
nefarious raids on our public coffers.
Their work is to professionally present
the evidence marshalled through
painstaking and fastidious
investigation. Prosecutors should avoid
the soundbite that will land them the
headlines in all forms of media.
Instead, they should do their work and
attain justice and reparations for our
people wronged by selfish conniving
politicians who do not deserve their
public offices.
Apathetic prosecution allows impunity.
It is difficult as enough as it is to
discover wrongdoing, protect key
witnesses, preserve the evidence, and
guard against the machinations of
powerful and moneyed individuals.
Prosecutors must not only be
courageous but must also show their
dedication to public interest through
their competence. Otherwise, the
system will invite suspicion that there
had been unholy collusion.
Fatal errors that should have been
avoided by veteran litigators, such as a
habit of postponements and a lack of Inserting a finger in a 12-year-old girl's
preparation, cannot be papered over vagina and mashing her breasts are
by a labyrinth of appeals that reaches not only acts of lasciviousness but also
this Court. That is a fool's strategy that amount to child abuse punished under
will only contribute to increasing the Republic Act No. 7610.
dockets of this Court, thereby denying
time and resources from deserving This is a Petition for Review on
petitioners. Certiorari1 under Rule 45 of the 1997
Rules of Civil Procedure, praying that
The prosecution could have done the September 30, 2011 Decision2 and
better in this case. Sadly, it failed. April 10, 2012 Resolution3 of the Court
of Appeals in CA-G.R. CR No. 33290
WHEREFORE, the Petition for Review be reversed and set aside.4 The Court
on Certiorari is DENIED. The Court of of Appeals affirmed the March 8, 2010
Appeals February 28, 2008 Decision Judgment5 of the Regional Trial Court,
and November 24, 2008 Resolution in which found Pedro Perez (Perez) guilty
CA-GR. SP No. 98799 are beyond reasonable doubt of violation of
hereby AFFIRMED. Section S(b) of Republic Act No. 7610.
SO ORDERED. On March 29, 1999, an Information
was filed against Perez, charging him
with violation of Section S(b) of
Republic Act No. 7610 or the Special
Protection of Children against Child
Abuse, Exploitation and Discrimination
Act:6
[T]hat on or about the 7th day of
G.R. No. 201414, April 18, 2018
November 1998, in Quezon City,
Philippines, the said accused, with
PEDRO PEREZ, Petitioner, lewd design, did, then and there
v. PEOPLE OF THE willfully, unlawfully, feloniously commit
PHILIPPINES, Respondent. an act of sexual abuse upon the
person of [AAA], a minor, 12 years of
DECISION age, by then and there inserting his
finger [into] her private organ while
LEONEN, J.:
mashing her breast against her will and
without her consent which act debases,
degrades or demeans the intrinsic
worth and dignity of complainant as a
human being, to the damage and
prejudice of the said offended party.
CONTRARY TO LAW.7
Perez pleaded not guilty during
arraignment.8 Pre-trial was held,
wherein the prosecution and the
defense stipulated the following:
1. That at the time of the
commission of the
crime, the minor, the
victim in this case was
only 12 years of age;
and
2. That the accused was
residing at that time at
No. 4, Pangasinan
Street, Luzviminda
Street, Brgy. Batasan
Hills, Quezon City.9
Thereafter, trial on the merits
ensued.10 The prosecution presented
AAA,11 SPO4 Mila Billones (SPO4
Billones), and Dr. Winston Tan (Dr.
Tan) as its witnesses.12
AAA testified that she met Perez for
the first time on November 6, 1998
when she attended her cousin BBB's
birthday party. The next day,
November 7, 1998, she saw Perez
again when she visited her friend CCC
at her house. Aside from her, Perez,
and CCC, their other companions
inside the house were BBB, DDD, and
EEE.13
AAA recalled that she was wearing a
sleeveless blouse, a skirt, and cycling
shorts under her skirt that day.14
AAA narrated that she "went to the
kitchen to drink water."15 She saw
Perez following her.16 After drinking,
Perez "kissed her on the nape and
simultaneously told her to keep
silent."17 Then, Perez slid his finger in
her vagina while mashing her breasts.
AAA stated that it was painful when
Perez inserted his finger. She
attempted to remove his hands but he
forced himself. Because she was very
afraid, she failed to fight back. Perez
succeeded in his sexual advances,
which lasted for around ten seconds.
He then told her not to tell anybody
about what happened.18
AAA later narrated what happened to
her other cousin FFF, who disclosed
the incident to AAA's parents. Her
parents reported the incident to the
barangay officials, who eventually
referred the matter to the police for
investigation.19
SPO4 Billones testified that she was
the women's desk officer who
interviewed AAA. At first, AAA
hesitated to answer the questions but
eventually disclosed what happened.
SPO4 Billones observed that AAA
almost cried when she narrated that
Perez inserted his finger into her
vagina. After the interview, she
prepared AAA's statement and
thereafter filed the case. She also
recommended AAA to undergo further
medical examination.20
Dr. Tan testified that he was a Medico-
Legal Officer of the Philippine National
Police Crime Laboratory in Camp
Crame, Quezon City.21 He examined
AAA and stated in his Medico Legal
Report that there were "signs of
physical abuse, particularly, deep
healed laceration at three (3) o'clock on
the hymen of [AAA] and ecchymosis in
the right mammary region."22 He noted
that the laceration was consistent with
AAA's allegation of sexual abuse and
that the ecchymosis or bruising
matched with the date of the alleged
incident.23 However, he also testified
that the "injuries can likewise be
inflicted in a consensual relationship."24
Meanwhile, he defense presented
Perez; his sister, Alma Perez (Alma);
and CCC as its witnesses.25

At the time of his testimony on May 23,
2005, Perez mentioned that he was 26
years old. Thus, he was about 19 years
old in 1998 when the offense was
committed.26
Perez denied abusing AAA. He stated
that he first met AAA on October 17,
1998. AAA purportedly infonned him
that she was already 16 years old. He
testified that he was not romantically
involved with AAA. However, AAA
supposedly gave him a love letter
through Alma but he did not
reciprocate her affection. He admitted
that he met AAA again at BBB's
birthday on November 6, 1998.27
Perez narrated that on the day of the
alleged incident, he and his aunt, Nena
Rodrigo, went to a school in New
Manila. He left her aunt around
6:00p.m. and went straight home.28
Perez added that on November 11,
1998, AAA filed a complaint against
him for slander before the barangay.
They were able to settle the matter,
and their agreement was put in
writing.29
Alma testified that she noticed that
AAA liked her brother Perez. She was
also surprised when AAA gave her a
love letter for her brother. She stated doubt of Violation of R.A. 7610,
that AAA went to their place frequently otherwise known as the "Special
and that she talked to her at BBB 's Protection of Children Against Child
party.30 Abuse, Exploitation and Discrimination
Act in relation to Article 336 of the
CCC testified that she, AAA, and BBB Revised Penal Code, as amended, and
were together on the day of the alleged is sentenced to suffer an indeterminate
incident. However, she swore that she penalty of EIGHT (8) YEARS and ONE
did not see Perez enter her house. She (1) DAY OF PRISION MAYOR IN ITS
also did not see anything unusual with MEDIUM PERIOD AS MINIMUM TO
AAA that day. She claimed that they FOURTEEN (14) YEARS and EIGHT
just slept for five (5) hours the whole (8) MONTHS OF RECLUSION
time they were together.31 TEMPORAL IN ITS MINIMUM
PERIOD AS MAXIMUM.
On March 8, 2010, the Regional Trial
Court rendered a Judgment,32 finding Accused Pedro Perez is likewise
Perez guilty beyond reasonable doubt ordered to pay FIFTY THOUSAND
of violation of Section S(b) of Republic PESOS (P50,000.00) as moral
Act No. 7610, in relation to Article 336 damages and TWENTY[]FIVE
of the Revised Penal Code.33 It held THOUSAND PESOS (P25,000.00) as
that the prosecution was able to exemplary damages plus costs of suit.
establish the presence of all elements
of violation of Section S(b). Perez SO ORDERED.36 (Emphasis in the
likewise failed to provide proof of his original)
alibi.34 Lastly, it noted that "the location Perez filed an appeal37 before the
as well as the presence of other Court of Appeals.38
persons [are] not a barometer that a
rapist will be deterred in his lustful On September 30, 2011, the Court of
intentions to commit the crime of rape if Appeals promulgated a
and when his urgings call for it."35 Decision,39 dismissing the appeal and
affirming the trial court's
The dispositive portion of the trial court Judgment.40 The dispositive portion of
Judgment provided: this Decision provided:
WHEREFORE, judgment is hereby WHEREFORE, premises considered,
rendered finding accused Pedro the instant appeal is
Perez GUILTY beyond reasonable hereby DISMISSED. Accordingly, the
assailed Judgment of the Regional
Trial Court of Quezon City (RTC),
Branch 94, dated March 8, 2010
is AFFIRMED in toto.
SO ORDERED.41 (Emphasis in the
original)
Perez moved for
42
reconsideration,  which was denied by
the Court of Appeals in its April 10,
2012 Resolution.43
On May 30, 2012, Perez filed a Petition
for Review44 before this Court.
Respondent People of the Philippines,
through the Office of the Solicitor
General, filed its Comment45 on
September 6, 2013. Meanwhile,
petitioner filed a Manifestation and
Motion (In Lieu of Reply)46 on
September 30, 2013.
On April 7, 2014, this Court issued a
Resolution47 giving due course to the
petition. The parties subsequently
submitted their respective
Memoranda. 48
In his pleadings, petitioner asserts that
the situation created by AAA is
improbable and not in line with
common human experience, given her
tight fitting clothes at the time of the
incident. Although not impenetrable,
her attire was restricting and the time
needed to consummate the alleged act
was enough for her to ask for help from
her companions. AAA likewise fails to
mention how petitioner subdued her in
spite of her resistance. Petitioner
stresses that the alleged crime
occurred in close proximity of other
persons. It is then impossible that
nobody noticed what was happening.49
Petitioner points out that the medico-
legal officer testified that there was a
possibility that the injuries sustained by
AAA were inflicted with her consent in
a sexual relationship.50 In addition to
his denial of any romantic relationship
with AAA,51 he claims that "the medico-
legal report did not conclusively prove
that [he] was responsible for [AAA's]
vaginal laceration."52
Finally, petitioner contends that
assuming a crime was committed, it
should only be acts of lasciviousness
under Article 336 of the Revised Penal
Code since the prosecution failed to
prove beyond reasonable doubt the
presence of the elements of child
abuse.53 Petitioner explains:
[B]efore an accused may be convicted
of child abuse through lascivious
conduct involving a minor below twelve
(12) years of age, the requisites for
acts of lasciviousness under Article
336 of the Revised Penal Code must
be met IN ADDITION to the requisites
for sexual abuse under Section 5 of
R.A. No. 7610. The elements of the
offense aforementioned, are as follows:
"1. The accused commits the acts
of sexual intercourse
or lascivious conduct.
2. The said act is performed with
a child exploited in
prostitution or subjected to
other sexual abuse.
3. The child, whether male or
female, is below 18 years of
age."54 (Emphasis in the
original, citations omitted)
Petitioner claims that the prosecution
failed to allege the second element
either in the Complaint or in the
Information. According to petitioner, the
prosecution must also prove that AAA
was "exploited in prostitution or
subjected to other sexual abuse" aside
from being subjected to acts of
lasciviousness since these are
separate and distinct elements.55
On the other hand, respondent avers
that petitioner tried to challenge the
credibility of the prosecution's
witnesses when he raised the matter of
the attire worn by AAA and when he
questioned her reaction during the
incident. However, respondent pointed
out that the trial court already found its
witnesses credible. Hence, the trial
court's findings should be given great
weight considering that it did not
commit any misappreciation of facts.56
Respondent maintains that AAA's
garment, no matter how tight-fitting as
petitioner claims, is not unpiercable
and petitioner could have easily slid his
hand inside it. AAA's inaction is also
understandable since she was only 12
years old when the incident happened
and fear already overcame her when
petitioner threatened her not to speak
or shout.57
In addition, the medico-legal report
verifies AAA's claim that she was
sexually assaulted. This report and Dr.
Tan's testimony corroborate AAA's
allegation that it was petitioner who
committed the crime.58
Respondent also counters that
petitioner failed to timely question the
nature of his indictment since he only
raised it for the first time on appeal.
Moreover, the allegations contained in
the Information sufficiently support a
conviction for Child Abuse under
Section 5(b) of Republic Act No. 7610
in relation to Article 336 of the Revised
Penal Code.59
There are two (2) issues for this Court's
resolution:
First, whether the evidence sufficiently
establishes AAA's narrative; and
Second, whether all the elements
charged m the Information are
sufficiently proven beyond reasonable
doubt.
I ascendancy that adults have over
Petitioner advances the seeming
impossibility of AAA's allegation of child
abuse considering AAA's outfit that
day, her inaction during and after the
commission of the alleged act, and the
presence of other persons in the house
where it happened.
Petitioner's contention has no merit.
This Court cannot accept this
reasoning of petitioner. As correctly
found by the Court of Appeals:
This type of reasoning borders on the
preposterous in that the accused
literally made it sound like the victim's
cycling shorts were made of
impenetrable steel like a chastity belt.
That, or he is trying to portray himself
as a hapless human being with wispy
cotton for arms such that the act of
lifting a child's blouse or adjusting her
undergarment's waistband (to
accommodate his hand) pose a serious
physical challenge that a man of his
age and built cannot hope to
accomplish. This, at all, does not run
afoul with hurr1an experience as the
accused so conveniently puts it. On the
contrary, this particular act of
indecency is easily attainable given the
disparity in his strength and that of the
child's, the unique access by which the
accused succeeded in his dastardly act
and, for good measure, the customary
children.
As so clearly described by the victim,
the manner by which the accused
committed lasciviousness against her
is not far removed from the [other
victims of acts of lasciviousness]
before her. She stated that the
accused sneaked in after her when she
walked toward the kitchen to fetch
herself a glass of water. There, hidden
from everyone else (the living room
and the kitchen [were] separated by a
room), the accused took advantage of
the situation by inserting his fingers
from behind her and fumbled her
breast that visibly resulted in a bruise.
Young as she is, she struggled as best
as she could to remove herself from his
grip but the accused warned her not to
scream or shout for help. For a child of
tenders (sic) age, such a stern warning
from a fully grown man was enough to
kill off whatever courage she might
have had to scream for the others for
assistance.60
In Awas v. People,61 the 10-year-old
victim likewise failed to shout for help
when the accused touched her
vagina.62 This Court held that "[t]here is
no standard behavior for a victim of a
crime against chastity."63 Moreover,
"[b]ehavioral psychology teaches that
people react to similar situations
dissimilarly."64
In People v. Lomaque,65 the accused
sexually abused the victim since she
was eight (8) years old until she was
14 years old.66 The accused inserted
either his penis or his finger in the
victim's vagina in more than 10
instances.67 The victim also failed to cry
for help.68 This Court held:
Neither the failure of "AAA" to struggle
nor at least offer resistance during the
rape incidents would tarnish her
credibility. "Physical resistance need
not be established when intimidation is
brought to bear on the victim and the
latter submits herself out of fear. As
has been held, the failure to shout or
offer tenuous resistance does not
make voluntary the victim's submission
to the criminal acts of the accused."
Rape is subjective and not everyone
responds in the same way to an attack
by a sexual fiend. Although an older
person may have shouted for help
under similar circumstances, a young
victim such as "AAA" is easily
overcome by fear and may not be able
to cry for help.
We have consistently ruled that "no
standard form of behavior can be
anticipated of a rape victim following
her defilement, particularly a child who
could not be expected to fully
comprehend the ways of an adult.
People react differently to emotional
stress and rape victims are no different
from them."69 (Citations omitted)
People v. Barcela70 further elucidated
the reaction of a minor when
something extremely and unexpectedly
dreadful happens to him or her:
Behavioral psychology teaches us that,
even among adults, people react to
similar situations differently, and there
is no standard form of human
behavioral response when one is
confronted with a startling or frightful
experience. Let it be underscored that
these cases involve victims of tender
years, and with their simple,
unsophisticated minds, they must not
have fully understood and realized at
first the repercussions of the
contemptible nature of the acts
committed against them. This Court
has repeatedly stated that no standard
form of behavior could be anticipated
of a rape victim following her
defilement, particularly a child who
could not be expected to fully
comprehend the ways of an
adult.71 (Citations omitted)
It is also not impossible for petitioner to
commit the crime even if there were
other people nearby. In Barcela, the
accused was able to insert his finger
inside the vagina of his 14-year-old
stepdaughter while the victim's mother
and her other sister were sleeping in
the same room.72 In People v.
Divinagracia, Sr.,73 the accused
inserted his finger in the vagina of his
eight (8)-year-old daughter and raped
her afterwards while his nine (9)year-
old daughter was lying beside
her.74 In People v. Gaduyon,75 the
accused inserted his finger into the
vagina of his 12-year-old daughter who
was then sleeping on the upper portion
of a double-deck bed while his other
daughter was on the lower portion.76
This Court cannot emphasize enough
that "lust is no respecter of time and
place."77 Thus, "rape can be committed
even in places where people
congregate, in parks, along the
roadside, within school premises and
even inside a house where there are
other occupants or where other
members of the family are also
sleeping."78
Furthermore, the victim in this case
was able to positively identify her
assailant. She made a clear and
categorical statement that petitioner
was the person who committed the
crime against her. Aside from
petitioner's denial, he failed to present
his aunt as a witness or other
documentary evidence to corroborate
his alibi that he went to a school on the
day of the incident. In light of AAA's
positive declaration, petitioner's
unsubstantiated defense must fail
following the doctrine that "positive
identification prevails over denial and
alibi."79
In People v. Amarela,80 this Court had
occasion to correct a generalization of
all women, which amounted to a
stereotype, thus:
More often than not, where the alleged
victim survives to tell her story of
sexual depredation, rape cases are
solely decided based on the credibility
of the testimony of the private
complainant. In doing so, we have
hinged on the impression that no
young Filipina of decent repute would
publicly admit that she has been
sexually abused, unless that is the
truth, for it is her natural instinct to
protect her honor. However, this
misconception, particularly in this day
and age, not only puts the accused at
an unfair disadvantage, but creates a
travesty of justice.
The "women's honor" doctrine surfaced
in our jurisprudence sometime in 1960.
In the case of People v. Taño, the
Court affirmed the conviction of three
(3) armed robbers who took turns
raping a person named Herminigilda
Domingo. The Court, speaking through
Justice Alejo Labrador, said:
It is a well-known fact that women,
especially Filipinos, would not admit
that they have been abused unless that
abuse had actually happened. This is
due to their natural instinct to protect
their honor. We cannot believe that the
offended party would have positively
stated that intercourse took place
unless it did actually take place.
This opinion borders on the fallacy
of non sequitor. And while the factual
setting back then would have been
appropriate to say it is natural for a
woman to be reluctant in disclosing a
sexual assault[,] today, we simply
cannot be stuck to the Maria
Clara stereotype of a demure and
reserved Filipino woman. We, should
stay away from such mindset and
accept the realities of a woman's
dynamic role in society today; she who
has over the years transformed into a
strong and confidently intelligent and
beautiful person, willing to fight for her
rights.81 (Emphasis in the original,
citations omitted)
This Court then found the alleged
victim's statement as less credible than
the inferences from the other
established evidence and proceeded to
acquit the accused.
This Court in Amarela, however, did
not go as far as denying the existence
of patriarchal dominance in many
social relationships. Courts must
continue to be sensitive to the power
relations that come clothed in gender
roles. In many instances, it does take
courage for girls or women to come
forward and testify against the boys or
men in their lives who, perhaps due to
cultural roles, dominate them. Courts
must continue to acknowledge that the
dastardly illicit and lustful acts of men
are often veiled in either the power of
coercive threat or the inconvenience
inherent in patriarchy as a culture.
Even if it were true that AAA was
infatuated with the accused, it did not
justify the indignity done to her. At the
tender age of 12, adolescents will
nonnally be misled by their hormones
and mistake regard or adoration for
love. The aggressive expression of
infatuation from a 12-year-old girl is
never an invitation for sexual
indignities. Certainly, it does not
deserve the accused's mashing of her
breasts or the insertion of his finger
into her vagina.
Consistent with our pronouncement
in Amarela, AAA was no Maria Clara.
Not being the fictitious and generalized
demure girl, it does not make her
testimony less credible especially when
supported by the other pieces of
evidence presented in this case.
II
Petitioner asserts that even assuming
that he is liable, he is only liable for
acts of lasciviousness since the
prosecution failed to prove all elements
of child abuse under Section S(b) of
Republic Act No. 7610.
Petitioner is mistaken.
Article III, Section S(b) of Republic Act
No. 7610 provides:
ARTICLE III
CHILD PROSTITUTION AND OTHER
SEXUAL ABUSE
Section 5. Child Prostitution and Other
Sexual Abuse. - Children, whether
male or female, who for money, profit,
or any other consideration or due to the
coercion or influence of any adult,
syndicate or group, indulge in sexual
intercourse or lascivious conduct, are
deemed to be children exploited in
prostitution and other sexual abuse.
The penalty of reclusion temporal in its
medium period to reclusion
perpetua shall be imposed upon the
following:
....
(b) Those who commit the act of
sexual intercourse or lascivious
conduct with a child exploited in
prostitution or subjected to other
sexual abuse; Provided, That when the
victim is under twelve (12) years of
age, the perpetrators shall be
prosecuted under Article 335,
paragraph 3, for rape and Article 336 of
Act No. 3815, as amended, the
Revised Penal Code, for rape or
lascivious conduct, as the case may
be: Provided, That the penalty for
lascivious conduct when the victim is
under twelve (12) years of age shall
be reclusion temporal in its medium
period[.] (Emphasis supplied)
Under Section 5(b), the elements of
sexual abuse are:
(1) The accused commits the act of
sexual intercourse or lascivious
conduct[;]
(2) The said act is performed with a
child exploited in prostitution or
subjected to other sexual abuse[; and]
(3) The child, whether male or female,
is below 18 years of age.82
The presence of the first and third
elements is already established.
Petitioner admits in the pre-trial that
AAA was only 12 years old at the
commission of the crime. He also
concedes that if ever he is liable, he is
liable only for acts of lasciviousness.
However, petitioner claims that the
second element is wanting. For
petitioner, the prosecution must show
that AAA was "exploited in prostitution
or subjected to other sexual abuse."
A thorough review of the records
reveals that the second element is
present in this case.
This Court in People v.
Villacampa83 explained:
[T]he second element is that the act is
performed with a child exploited in
prostitution or subjected to other sexual
abuse. To meet this element, the child
victim must either be exploited in
prostitution or subjected to other sexual
abuse. In Quimvel v. People, the Court
held that the fact that a child is under
the coercion and influence of an adult
is sufficient to satisfy this second
element and will classify the child
victim as one subjected to other sexual
abuse. The Court held:
To the mind of the Court, the
allegations are sufficient to classify the
victim as one "exploited in prostitution
or subject to other sexual abuse." This
is anchored on the very definition of the
phrase in Sec. 5 of RA 7610, which
encompasses children who indulge in
sexual intercourse or lascivious
conduct (a) for money, profit, or any
other consideration; or (b) under the
coercion or influence of any adult,
syndicate or group.
Correlatively, Sec. S(a) of RA 7610
punishes acts pertaining to or
connected with child prostitution
wherein the child is abused primarily
for profit. On the other hand, paragraph
(b) punishes sexual intercourse or
lascivious conduct committed on a
child subjected to other sexual abuse.
It covers not only a situation where a
child is abused for profit but also one in
which a child, through coercior.,
intimidation or influence, engages in
sexual intercourse or lascivious
conduct. Hence, the law punishes not
only child prostitution but also other
forms of sexual abuse against
children....84 (Emphasis supplied,
citations omitted)
In Ricalde v. People,85 this Court
clarified:
The first paragraph of Article III,
Section 5 of Republic Act No. 7610
clearly provides that "children ... who ...
due to the coercion ... of any adult ...
indulge in sexual intercourse ... are
deemed to be children exploited in
prostitution and other sexual abuse."
The label "children exploited in ... other
sexual abuse" inheres in a child who
has been the subject of coercion and
sexual intercourse.
Thus, paragraph (b) refers to a
specification only as to who is liable
and the penalty to be imposed. The
person who engages in sexual
intercourse with a child already
coerced is liable.86 (Underscoring in the
original)
By analogy with the ruling in Ricalde,
children who are likewise coerced in
lascivious conduct are "deemed to be
children exploited in prostitution and
other sexual abuse." When petitioner
inserted his finger into the vagina of
AAA, a minor, with the use of threat
and coercion, he is already liable for
sexual abuse.
III
This Court affirms the finding of guilt
beyond reasonable doubt of petitioner
for the charge of child abuse under
Section 5(b) of Republic Act No. 7610.
However, this Court modifies the
penalty imposed by the trial court, as
affirmed by the Court of Appeals.
Under Section 5(b), "the penalty for
lascivious conduct when the victim is
under twelve (12) years of age shall
be reclusion temporal in its medium
period." Reclusion temporal in its
medium period is fourteen (14) years,
eight (8) months, and one (1) day to
seventeen (17) years and four (4)
months.
In People v. Pusing,87 this Court
imposed the indeterminate penalty of
fourteen (14) years, eight (8) months,
and one (1) day of reclusion
temporal as minimum, to seventeen
(17) years and four (4) months
of reclusion temporal as maximum for
the criminal case of child abuse.88 This
Court also awarded P50,000.00 as civil
indemnity, P50,000.00 as moral
damages, and P30,000.00 as
exemplary damages.89 Additionally,
"interest at the legal rate of 6% per
annum [was imposed on all damages
awarded] from the date of finality of
[the] judgment until fully paid."90
WHEREFORE, this Court ADOPTS the
findings of fact and conclusions of law
of the Court of Appeals September 30,
2011 Decision in CA-G.R. CR No.
33290, with MODIFICATION as
follows:
WHEREFORE, judgment is hereby
rendered finding accused Pedro
Perez GUILTY beyond reasonable
doubt of violation of R.A. 7610,
otherwise known as the "Special
Protection of Children Against Child
Abuse, Exploitation and Discrimination
Act in relation to Article 336 of the
Revised Penal Code, as amended, and
is sentenced to suffer an indeterminate
penalty of FOURTEEN (14) YEARS,
EIGHT (8) MONTHS, and ONE (1)
DAY OF RECLUSION TEMPORAL
AS MINIMUM TO SEVENTEEN (17)
YEARS and FOUR (4) MONTHS OF LEONEN, J.: Contracts of Lease: Baluarte De
RECLUSION TEMPORAL AS San Andres, with an area of 2,793
MAXIMUM. The sole issue in ejectment sq. m.;4 Baluarte De San Francisco
proceedings is determining which of De Dilao, with an area of 1,880 sq.
Accused Pedro Perez is likewise the parties has the better right to m.;5 and Revellin De Recoletos,
ordered to pay FIFTY THOUSAND physical possession of a piece of with an area of 1,036 sq. m.6  All
PESOS (P50,000.00) as civil property. The defendant's claims three (3) properties were leased for
indemnity, FIFTY THOUSAND and allegations in its answer or five (5) years, from September 1,
PESOS (P50,000.00) as moral motion to dismiss do not oust a trial 1998 to August 31, 2003. All their
damages, and THIRTY THOUSAND court's jurisdiction to resolve this lease contracts also made reference
PESOS (P30,000.00) as exemplary issue. to an August 20, 1998
damages plus costs of suit. memorandum of stipulations, which
This is a Petition for Review on included a provision for lease
All awards for damages shall earn Certiorari1 under Rule 45 of the renewals every five (5) years upon
interest at the legal rate of six Rules of Court, assailing the April the parties' mutual agreement.7
percent (6%) per annum from the 14, 2011 Decision2 of Branch 173,
date of finality of this judgment until Regional Trial Court, Manila in Civil Offshore Construction occupied and
fully paid. Case No. 10-124740. The Regional introduced improvements in the
Trial Court affirmed in toto the leased premises. However,
SO ORDERED. October 19, 2010 Order3 of Branch Intramuros and the Department of
SO ORDERED. 24, Metropolitan Trial Court, Manila Tourism halted the projects due to
in Civil Case No. 186955-CV, Offshore Construction's non-
dismissing Intramuros conformity with Presidential Decree
Administration's (Intramuros) No. 1616, which required 16th to
Complaint for Ejectment against 19th centuries' Philippine-Spanish
G.R. No. 196795, March 07, Offshore Construction and architecture in the
2018 Development Company (Offshore area.8 Consequently, Offshore
Construction) on the grounds of Construction filed a complaint with
forum shopping and lack of prayer for preliminary injunction
INTRAMUROS
jurisdiction. and temporary restraining order
ADMINISTRATION, Petitioner, v. 
against Intramuros and the
OFFSHORE CONSTRUCTION
In 1998, Intramuros leased certain Department of Tourism before the
DEVELOPMENT
real properties of the national Manila Regional Trial Court,9 which
COMPANY, Respondent.
government, which it administered was docketed as Civil Case No. 98-
to Offshore Construction. Three (3) 91587.10
DECISION
properties were subjects of
Eventually, the parties executed a
Compromise Agreement on July 26,
1999,11which the Manila Regional
Trial Court approved on February 8,
2000.12 In the Compromise
Agreement, the parties affirmed the
validity of the two (2) lease
contracts but terminated the one
over Revellin de Recoletos.[13 The
Compromise Agreement retained
the five (5)-year period of the
existing lease contracts and stated
the areas that may be occupied by
Offshore Construction:
FROM:
(1) Baluarte de San Andres
TO:
(1) Only the stable house, the gun
powder room and two (2)
Chambers with comfort rooms,
will be utilized for restaurants.
All other structures built and
introduced including trellises
shall be transferred/relocated to:
(a) Two (2) restaurants as
Asean Garden. Each will
have an aggregate area of
two hundred square meters
(200 sq. mtrs.);
(b) One (1) kiosk at Puerta
Isabel Garden fronting
Terraza de la Reyna with
an aggregate area of
twenty (20) square meters;
(c) Three (3) restaurants at the
chambers of Puerta Isabel
II with an aggregate area of
1,180.5 sq.m.;
(d) One (1) restaurant at Fort
Santiago American
Barracks. Subject to IA
Guidelines, the maximum
floor area will be the
perimeter walls of the old
existing building;
FROM:
(2) Baluarte De San Francisco Dilao
TO:
(2) All seven (7) structures
including the [Offshore
Construction] Administration
Building and Trellises shall be
transferred [t]o Cuartel de Sta.
Lucia, [O]therwise known as the
PC Barracks[.]14
During the lease period, Offshore
Construction failed to pay its utility
bills and rental fees, despite several
demand letters.15 Intramuros
tolerated the continuing occupation,
hoping that Offshore Construction
would pay its arrears. As of July 31,
2004, these arrears allegedly
totaled P6,762,153.70.16
To settle its arrears, Offshore
Construction proposed to pay the
Department of Tourism's monthly
operational expenses for lights and
sound equipment, electricity, and
performers at the Baluarte Plano
Luneta de Sta. Isabel. Intramuros
and the Department of Tourism
accepted the offer, and the parties
executed a Memorandum of
Agreement covering the period of
August 15, 2004 to August 25,
2005.17
However, Offshore Construction
continued to fail to pay its arrears,
which amounted to P13,448,867.45
as of December 31, 2009. On March
26, 2010, Offshore Construction
received Intramuros' latest demand
letter.18
Intramuros filed a Complaint for
Ejectment before the Manila
Metropolitan Trial Court on April 28,
2010.19 Offshore Construction filed
its Answer with Special and
Affirmative Defenses and
Compulsory Counterclaim.20
 over the subject matter.26 Intramuros prayed that the
On July 12, 2010, Offshore Regional Trial Court determine
Construction filed a Very Urgent The Metropolitan Trial Court found which between Offshore
Motion,21 praying that Intramuros' that Intramuros committed forum Construction and Intramuros was
complaint be dismissed on the shopping and that it had no the rightful lessor of Puerta de
grounds of violation of the rule on jurisdiction over the case.27 Isabel II.30
non-forum shopping, lack of
jurisdiction over the case, and litis First, it pointed out that there were The Metropolitan Trial Court found
pendentia. First, it claimed that two (2) pending cases at the time that the cause of action in
Intramuros failed to inform the Intramuros filed its complaint: Civil Intramuros' complaint was similar
Metropolitan Trial Court that there Case No. 08-119138 for specific with those in the specific
were two (2) pending cases with performance filed by Offshore performance and interpleader
the Manila Regional Trial Court over Construction against Intramuros, cases. Any judgment in any of
Puerta de Isabel II.22 Second, it and SP CA No. 10-123257 for those cases would affect the
argued that the Metropolitan Trial interpleader against Offshore resolution or outcome in the
Court did not acquire jurisdiction Construction and Intramuros filed ejectment case, since they would
over the case since the relationship by 4H Intramuros, Inc. (4H involve Offshore Construction's
between the parties was not one of Intramuros),28 which claimed to be right to have its expenses offset
lessor-lessee but governed by a a group of respondent's tenants.29 from the rentals it owed
concession agreement.23 Finally, it Intramuros, and the determination
contended that Intramuros' cause The Metropolitan Trial Court found of the rightful lessor of Puerta de
of action was barred by litis that the specific performance case Isabel II. The Metropolitan Trial
pendentia, since the pending was anchored on Offshore Court pointed to the arrears in
Regional Trial Court cases were Construction's rights under the rentals that Intramuros prayed for
over the same rights, claims, and Compromise Agreement. In that as part of its complaint. Further,
interests of the parties.24 case, Offshore Construction claimed Intramuros failed to disclose the
that it complied with its specific performance and
In its October 19, 2010 Order,25 the undertakings, but Intramuros failed interpleader cases in its certification
Metropolitan Trial Court granted the to perform its obligations when it against forum shopping.31
motion and dismissed the case. refused to offset Offshore
Preliminarily, it found that while a Construction's expenses with the Second, the Metropolitan Trial Court
motion to dismiss is a prohibited alleged unpaid rentals. The held that it had no jurisdiction over
pleading under the Rule on interpleader case, on the other the complaint. While there were
Summary Procedure, Offshore hand, dealt with Offshore lease contracts between the parties,
Construction's motion was Construction's threats to evict the the existence of the other contracts
grounded on the lack of jurisdiction tenants of Puerta de Isabel II. 4H between them made Intramuros
and Offshore Construction's Regional Trial Court erred in there was litis pendentia  and forum
relationship as one of concession. upholding the Metropolitan Trial shopping. It contends that the sole
Under this concession agreement, Court findings that it had no issue in an ejectment suit is the
Offshore Construction undertook to jurisdiction over Intramuros' summary restoration of possession
develop several areas of the ejectment complaint36 and that it of a piece of land or building to the
Intramuros District, for which it committed forum shopping.37 party that was deprived of
incurred expenses. The trial court it.40 Thus, the Metropolitan Trial
found that the issues could not be First, Intramuros argues that Court gravely erred in granting
mere possession and rentals only.32 Offshore Construction's Very Urgent Offshore Construction's motion to
Motion should not have been dismiss despite having jurisdiction
Intramuros appealed the October entertained by the Metropolitan over the subject matter of
19, 2010 Order with the Regional Trial Court as it was a motion to Intramuros' complaint.41
Trial Court. On April 14, 2011, the dismiss, which was prohibited under
Regional Trial Court affirmed the the Rule on Summary Second, Intramuros avers that it
Municipal Trial Court October 19, Procedure.38 It claims that the did not commit forum shopping as
2010 Order in toto.33 Metropolitan Trial Court could have to warrant the dismissal of its
determined the issue of jurisdiction complaint. It claims that while there
On May 25, 2011, Intramuros, based on the allegations in its were pending specific performance
through the Office of the Solicitor complaint. It points out that and interpleader cases related to
General, filed a Motion for "jurisdiction over the subject matter the ejectment case, Intramuros was
Extension of Time to File Petition for is determined by the allegations not guilty of forum shopping since it
Review on Certiorari (Motion for [in] the complaint" and that the instituted neither action and did not
Extension) before this Court. It trial court's jurisdiction is not lost seek a favorable ruling as a result
prayed for an additional 30 days, or "just because the defendant makes of an earlier adverse opinion in
until June 16, 2011, within which to a contrary allegation" in its these cases.42 Intramuros points out
file its petition for review on solely defense.39 In ejectment cases, that it was Offshore Construction
on questions of law.34 courts do not lose jurisdiction by a and 4H Intramuros which filed the
defendant's mere allegation that it specific performance and
On June 16, 2011, Intramuros filed has ownership over the  litigated interpleader cases,
its Petition for Review on property. It holds that the respectively.43 In both cases,
Certiorari,35 assailing the April 14, Metropolitan Trial Court did not lose Intramuros was the defendant and
2011 Decision of the Regional Trial jurisdiction when Offshore did not seek possession of Puerta
Court. Construction alleged that its de Isabel II as a relief in its
relationship with Intramuros is one answers to the
44
In its Petition for Review, of concession, that the cause of complaints.  Moreover, the issues
Intramuros argues that the action accrued in 2003, and that raised in these earlier cases were
different from the issue of for Extension and requiring Offshore Court is proper because the issues
possession in the ejectment case. Construction to comment on the it raises in its Petition for Review do
The issue in the specific Petition for Review. not require review of evidence to
performance case was whether or resolve, and the facts of the case
not Intramuros should offset the On October 10, 2011, Offshore are undisputed.55 It claims that the
rentals in arrears from Offshore Construction filed its Comment49 to nature of Intramuros and Offshore
Construction's expenses in the Petition for Review. In its Construction's relationship is never
continuing the WOW Philippines Comment, Offshore Construction an tssue because all the documents
Project.45 Meanwhile, the issue in argues that the Petition for Review referenced and relied upon by the
the interpleader case was to should be dismissed because it parties were lease agreements.56
determine which between violates the principle of hierarchy of
Intramuros and Offshore courts and raises questions of On August 23, 2012, this Court
Construction was the rightful lessor fact.50 It points out that Intramuros gave due course to the Petition for
of Puerta de Isabel II.46 did not move for the Review and ordered both parties to
reconsideration of the Regional Trial submit their memoranda.57
Finally, Intramuros maintains that Court April 14, 2011 Decision.
there is no concession agreement Instead of directly filing with this On January 7, 2013, Intramuros
between the parties, only lease Court, Intramuros should have filed filed its Memorandum,58 while
contracts that have already expired a Petition for Review with the Court Offshore Construction filed its
and are not renewed. It argues that of Appeals, in accordance with Rule Memorandum59  on August 16,
there is no basis for alleging the 42 of the Rules of Court.51 It claims 2013.
existence of a concession that Intramuros raises questions of
agreement. It points out that in the fact in its Petition for Review, In its Memorandum, Offshore
Contracts of Lease and namely, the expiration of the Construction claims that it occupies
Memorandum of Agreement entered Contracts of Lease and the business Puerta de Isabel II by virtue of a
into by Intramuros and Offshore concession in favor of Offshore legal concession based not only on
Construction, the expiry of the Construction.52 the parties' contracts but also on
leases would be on August 31, the contemporaneous and
2003. Afterwards, Intramuros In its November 21, 2011 subsequent acts of Intramuros and
tolerated Offshore Construction's Resolution, this Court noted the Offshore Construction. It argues
continued occupation of its Comment and required Intramuros that under the Contracts of Lease,
properties in hopes that it would to file its Reply.53 Offshore Construction was required
pay its arrears in due course. 47 to invest around P20,000,000.00
On March 12, 2012, Intramuros worth of investments in the leased
On July 20, 2011, this Court issued filed its Reply54 to the Comment. It properties and that it lost its initial
its Resolution48 granting the Motion argues that direct resort to this investments, which were
demolished due to adverse criticism
by then- Intramuros Administrator
Anna Maria L. Harper. Under the
Compromise Agreement, Offshore
Construction was again required to
make new developments, again
worth millions of pesos. Offshore
Construction claims that these
conditions make their relationship
not one of mere lessor and lessee.60
Further, it attests that Intramuros
committed illegal and inhuman acts,
and injustice against it and its
sublessees, allegedly because the
Contracts of Lease had
expired.61 Moreover, it points out
that Intramuros only filed the
ejectment complaint in 2010, even
though the Contracts of Lease
expired on August 31, 2003. It
argues that Intramuros was guilty
of estoppel in pais, since it
continued to accept rental
payments as late as July 10,
2009.62 Assuming that the lease
contracts had expired, these
contracts were impliedly renewed
by the mutual and voluntary acts of
the parties, in accordance with
Article 1670 of the Civil
Code.63 Offshore Construction
claims that there is now novation of
the Contracts of Lease, and the
courts may fix a period for them,
[64
 pursuant to Article 1687 of the
Civil Code.65 It reiterates its prayer
that the Petition for Review be
dismissed, due to questions of fact
more properly cognizable by the
Court of Appeals.66
The issues to be resolved by this
Court are:
First, whether or not direct resort to
this Court is proper;
Second, whether or not the
Metropolitan Trial Court had
jurisdiction over the ejectment
complaint filed by Intramuros
Administration;
Third, whether or not Intramuros
Administration committed forum
shopping when it filed its ejectment
complaint despite the pending cases
for specific performance and
interpleader; and
Finally, whether or not Intramuros
Administration is entitled to possess
the leased premises and to collect
unpaid rentals.
I and served within fifteen (15) days
At the outset, petitioner should
have filed a petition for review
under Rule 42 of the Rules of Court
to assail the Regional Trial Court's
ruling upholding the Metropolitan
Trial Court October 19, 2010 Order
instead of filing a petition for review
on certiorari under Rule 45 with this
Court.
Under Rule 42, Section 1 of the
Rules of Court, the remedy from an
adverse decision rendered by a
Regional Trial Court exercising its
appellate jurisdiction is to file a
verified petition for review with the
Court of Appeals:
Section 1. How appeal taken; time
for filing. — A party desiring to
appeal from a decision of the
Regional Trial Court rendered in the
exercise of its appellate jurisdiction
may file a verified petition for
review with the Court of Appeals,
paying at the same time to the
clerk of said court the
corresponding docket and other
lawful fees, depositing the amount
of P500.00 for costs, and furnishing
the Regional Trial Court and the
adverse party with a copy of the
petition. The petition shall be filed
from notice of the decision sought
to be reviewed or of the denial of
petitioner's motion for new trial or
reconsideration filed in due time
after judgment. Upon proper
motion and the payment of the full
amount of the docket and other
lawful fees and the deposit for costs
before the expiration of the
reglementary period, the Court of
Appeals may grant an additional
period of fifteen (15) days only
within which to file the petition for
review. No further extension shall
be granted except for the most
compelling reason and in no case to
exceed fifteen (15) days.
Petitioner puts in issue before this
Court the findings of the
Metropolitan Trial Court that it has
no jurisdiction over the ejectment
complaint and that petitioner
committed forum shopping when it
failed to disclose two (2) pending
cases, one filed by respondent
Offshore Construction and the other
filed by respondent's group of
tenants, 4H Intramuros. Both of
these cases raise questions of law,
which are cognizable by the Court
of Appeals in a petition for review
under Rule 42.
"A question of law exists when the
law applicable to a particular set of
facts is not settled, whereas a
question of fact arises when the
truth or falsehood of alleged facts is
in doubt."67 This Court has ruled
that the jurisdiction of a court over
the subject matter of a committed by the Regional Trial
68
complaint  and the existence of
forum shopping69 are questions of
law.
A petition for review under Rule 42
may include questions of fact, of
law, or mixed questions of fact and
law.70 This Court has recognized
that the power to hear cases on
appeal in which only questions of
law are raised is not vested
exclusively in this Court.71 As
provided in Rule 42, Section 2,
errors of fact or law, or both,
allegedly committed by the
Regional Trial Court in its decision
must be specified in the petition for
review:
Section 2. Form and Contents. —
The petition shall be filed in seven
(7) legible copies, with the original
copy intended for the court being
indicated as such by the petitioner,
and shall (a) state the full names of
the parties to the case, without
impleading the lower courts or
judges thereof either as petitioners
or respondents; (b) indicate the
specific material dates showing that
it was filed on time; (c) set forth
concisely a statement of the
matters involved, the issues
raised, the specification of errors of
fact or law, or both, allegedly
Court,  and the reasons or
arguments relied upon for the
allowance of the appeal; (d) be
accompanied by clearly legible
duplicate originals or true copies of
the judgments or final orders of
both lower courts, certified correct
by the clerk of court of the Regional
Trial Court, the requisite number of
plain copies thereof and of the
pleadings and other material
portions of the record as would
support the allegations of the
petition.
The petitioner shall also submit
together with the petition a
certification under oath that he has
not theretofore commenced any
other action involving the same
issues in the Supreme Court, the
Court of Appeals or different
divisions thereof, or any other
tribunal or agency; if there is such
other action or proceeding, he must
state the status of the same; and if
he should thereafter learn that a
similar action or proceeding has
been filed or is pending before the
Supreme Court, the Court of
Appeals, or different divisions
thereof, or any other tribunal or
agency, he undertakes to promptly
inform the aforesaid courts and
other tribunal or agency thereof
within five (5) days therefrom.
(Emphasis supplied)
Petitioner's direct resort to this
Court, instead of to the Court of
Appeals for intermediate review as
sanctioned by the rules, violates the
principle of hierarchy of
courts.72 In Diocese of Bacolod v.
Commission on Elections:73
The doctrine that requires respect
for the hierarchy of courts was
created by this court to ensure that
every level of the judiciary performs
its designated roles in an effective
and efficient manner. Trial courts
do not only determine the facts
from the evaluation of the evidence
presented before them. They are
likewise competent to determine
issues of law which may include the
validity of an ordinance, statute, or
even an executive issuance in
relation to the Constitution. To
effectively perform these functions,
they are territorially organized into
regions and then into branches.
Their writs generally reach within
those territorial boundaries.
Necessarily, they mostly perform
the all-important task of inferring
the facts from the evidence as
these are physically presented
before them. In many instances,
the facts occur within their
territorial jurisdiction, which
properly present the 'actual case'
that makes ripe a determination of
the constitutionality of such action.
The consequences, of course, would
be national in scope. There are,
however, some cases where resort
to courts at their level would not be
practical considering their decisions
could still be appealed before the
higher courts, such as the Court of
Appeals.74 (Citation omitted)
Nonetheless, the doctrine of
hierarchy of courts is not inviolable,
and this Court has provided several
exceptions to the doctrine.75 One of
these exceptions is the exigency of
the situation being litigated.76 Here,
the controversy between the parties
has been dragging on since 2010,
which should not be the case when
the initial dispute—an ejectment
case—is, by nature and design, a
summary procedure and should
have been resolved with
expediency.
Moreover, this Court's rules of
procedure permit the direct resort
to this Court from a decision of the
Regional Trial Court upon questions
of law, such as those which
petitioner raises in this case.
In Barcenas v. Spouses Tomas and
Caliboso:77
Nonetheless, a direct recourse to
this Court can be taken for a review
of the decisions, final orders or
resolutions of the RTC, but only on
questions of law. Under Section 5 of
Article VIII of the Constitution, the
Supreme Court has the power to
(2) Review, revise, reverse, modify,
or affirm on appeal or certiorari as
the law or the Rules of Court may
provide, final judgments and orders
of lower courts in:
....
(e) All cases in which only an error
or question of law is involved.
This kind of direct appeal to this
Court of RTC judgments, final
orders or resolutions is provided for
in Section 2(c) of Rule 41, which
reads:
SEC. 2. Modes of appeal. —
....
(c) Appeal by certiorari. — In all
cases where only questions of law
are raised or involved, the appeal
shall be to the Supreme Court by
petition for review on certiorari in
accordance with Rule 45.
Procedurally then, petitioners could
have appealed the RTC Decision
affirming the MTC (1) to this Court
on questions oflaw only; or (2) if
there are factual questions
involved, to the CA — as they in
fact did.78
Thus, petitioner's resort to this
Court is proper and warranted
under the circumstances.
II
In dismissing the complaint, the
Metropolitan Trial Court found that
"[t]he issues . . . between the
parties cannot be limited to a
simple determination of who has
the better right of possession of the
subject premises or whether or not
[petitioner] is entitled [to] rentals
in arrears."79 It held that the
relationship between the parties
was a "more complicated situation
where jurisdiction is better lodged
with the regional trial court,"80 upon
a finding that there was a
concession, rather than a lease
relationship between the parties.81
(4) within one year from the last
It is settled that the only issue that demand on defendant to vacate the
must be settled in an ejectment property, the plaintiff instituted the
proceeding is physical possession of complaint for ejectment.85 (Citation
the property involved.82 Specifically, omitted)
action for unlawful detainer is
brought against a possessor who
unlawfully withholds possession A review of petitioner's Complaint
after the termination and expiration for Ejectment shows that all of
of the right to hold possession.83 these allegations were made.
To determine the nature of the First, petitioner alleges that
action and the jurisdiction of the respondent is its lessee by virtue of
court, the allegations in the
three (3) Contracts of Lease. The
complaint must be examined. The validity of these contracts was later
jurisdictional facts must be evident affirmed in a Compromise
on the face of the Agreement, which modified certain
complaint.84 There is a case for provisions of the previous leases
unlawful detainer if the complaint but retained the original lease
states the following: period. Respondent does not
dispute these contracts' existence
(1) initially, possession of property
or their validity.
by the defendant was by contract
with or by tolerance of the plaintiff;
Second, following respondent's
failure to pay rentals, petitioner
(2) eventually, such possession
alleges that it has demanded that
became illegal upon notice by
respondent vacate the leased
plaintiff to defendant of the
premises.
termination of the latter's right of
possession;
Third, respondent continues to
occupy and possess the leased
(3) thereafter, the defendant
premises despite petitioner's
remained in possession of the
demand. This is admitted by
property and deprived the plaintiff
respondent, which seeks to retain
of the enjoyment thereof; and
possession and use of the
properties to "recoup its multi-
million pesos worth of
investment."86
Fourth, petitioner filed its Complaint
for Ejectment on April 28,
2010,87 within one (1) year of its
last written demand to respondent,
made on March 18, 2010 and
received by respondent on March
26, 2010.88 Contrary to
respondent's claim, the one (1)-
year period to file the complaint
must be reckoned from the date of
last demand, in instances when
there has been more than one (1)
demand to vacate.89
The Metropolitan Trial Court
seriously erred in finding that it did
not have jurisdiction over
petitioner's complaint because the
parties' situation has allegedly
become "more complicated"90 than
one of lease. Respondent's defense
that its relationship with petitioner
is one of concession rather than
lease does not determine whether
or not the Metropolitan Trial Court
has jurisdiction over petitioner's
complaint. The pleas or theories set
up by a defendant in its answer or
motion to dismiss do not affect the
court's jurisdiction.91 In Morta v.
Occidental:92
It is axiomatic that what determines been shown that the requisite
the nature of an action as well as jurisdictional facts have been
which court has jurisdiction over it, alleged, such as in this case. Courts
are the allegations in the complaint are reminded not to abdicate their
and the character of the relief jurisdiction to resolve the issue of
sought. "Jurisdiction over the physical possession, as there is a
subject matter is determined upon public need to prevent a breach of
the allegations made in the the peace by requiring parties to
complaint, irrespective of whether resort to legal means to recover
the plaintiff is entitled to recover possession of real property.95
upon a claim asserted therein — a
matter resolved only after and as a III
result of the trial. Neither can the
jurisdiction of the court be made to
depend upon the defenses made by In its October 19, 2010 Order, the
the defendant in his answer or Metropolitan Trial Court found that
motion to dismiss. If such were the petitioner committed forum
rule, the question of jurisdiction shopping when it failed to disclose
would depend almost entirely upon that there were two (2) pending
the defendant."93 (Citations cases in other trial courts
omitted) concerning the same parties and
similar causes of action. These two
(2) cases were Civil Case No. 08-
119138 for specific performance
Not even the claim that there is an
filed by respondent against
implied new lease or tacita
petitioner; and SP CA Case No. 10-
reconduccion will remove the
123257 for interpleader filed by 4H
Metropolitan Trial Court's
Intramuros. Both cases were
jurisdiction over the complaint.94 To
pending with the Manila Regional
emphasize, physical possession,
Trial Court. The Metropolitan Trial
or de facto possession, is the sole
Court found that if it decides
issue to be resolved in ejectment
petitioner's Complaint for
proceedings. Regardless of the
Ejectment, its ruling would conflict
claims or defenses raised by a
with any resolution in the specific
defendant, a Metropolitan Trial
performance and interpleader
Court has jurisdiction over an
cases, since the same contracts
ejectment complaint once it has
were involved in all three (3) cases. The requisites of litis pendentia are: In respondent's amended complaint
It found that the parties were the (a) the identity of parties, or at for specific performance, it prays
same and the reliefs prayed for least such as representing the same that petitioner be compelled to
were the same. interests in both actions; (b) the offset respondent's unpaid rentals,
identity of rights asserted and relief with the expenses that respondent
Forum shopping is the practice of prayed for, the relief being founded supposedly incurred due to the
resorting to multiple fora for the on the same facts; and (c) the Department of Tourism's WOW
same relief, to increase the chances identity of the two cases such that Philippines project,99 pursuant to a
of obtaining a favorable judgment in one, regardless of July 27, 2004 Memorandum of
judgment.96 In Spouses Reyes v. which party is successful, would Agreement. Concededly, one of
Spouses Chung:97 amount to res judicata  in the other. respondent's reliefs prayed for is for
On the other hand, the elements petitioner to respect respondent's
It has been jurisprudentially of res judicata,  also known as bar lease over Puerta de Isabel II,
established that forum shopping by prior judgment, are: (a) the Asean Garden and Revellin de
exists when a party avails himself former judgment must be final; (b) Recoletos:
of several judicial remedies in the court which rendered it had
different courts, simultaneously or jurisdiction over the subject matter 2. Order [Department of Tourism],
successively, all substantially and the parties; (c) it must be a [Intramuros Administration] and
founded on the same transactions judgment on the merits; and (d) [Anna Maria L. Harper] to perform
and the same essential facts and there must be, between the first their obligation under the
circumstances, and all raising and second actions, identity of "Memorandum of Agreement" dated
substantially the same issues either parties, subject matter, and causes 27 July 2004 by OFFSETTING the
pending in or already resolved of action.98 (Citation omitted) rentals in arrears from the
adversely by some other courts. expenses incurred by Offshore in
the continuance of the Department
The test to determine whether a of Tourism's WOW Philippines
As observed by the Metropolitan
party violated the rule against Project and to allow Offshore to
Trial Court, there is an identity of
forum shopping is whether the recover their investment at
parties in the specific performance
elements of litis pendentia are Intramuros by respecting their
and interpleader cases, and the
present, or whether a final lease over Puerta Isabel II, Asean
Complaint for Ejectment. However,
judgment in one case will amount Garden and Revellin de
there is no identity of asserted
to res judicata  in another. Simply Recoletos[.]100
rights or reliefs prayed for, and a
put, when litis pendentia  or res
judgment in any of the three (3)
judicata  does not exist, neither can
cases will not amount to res
forum shopping exist. Nevertheless, the Memorandum of
judicata in the two others.
Agreement expressly stated that its
purpose was for respondent to pay
petitioner and the Department of
Tourism rentals in arrears as of July
31, 2004:
WHEREAS, [respondent] has been
indebted to [petitioner] in the form
of rental and utility consumption
arrears for the occupancy of Puerta
Isabel Chambers, Asean Gardens
and Baluarte de San Andres (Stable
House) in the amount of Six Million
Seven Hundred Sixty[-]Two
Thousand One Hundred
Fifty[-]Three and 70/100
(P6,762,153.70) as of July 31, 2004
and as a way of settling said
arrears, [respondent] had proposed
to pay its obligations with
[petitioner] as shown in the
breakdown in "Annex A" hereof
through [respondent's] assumption
of [Department of Tourism's]
monthly operational expenses for
lights and sound equipment,
electricity, and performers at the
Baluarte Plano Luneta de Sta.
Isabel in Intramuros, Manila[.][101
This was affirmed in petitioner's
May 29, 2005 letter to respondent,
in which petitioner stated:
During our meeting last May 5,
2005 with Mr. Rico Cordova, it was
reiterated that the subject of the complaint.
[Memorandum of Agreement] for
the lights and sound at Plano In its Amended Answer in the
Luneta de Sta. Isabel was your specific performance case,
accumulated account as of July petitioner sets up the counterclaim
2004. Subsequent rentals have to that "[respondent] be ordered to
be remitted to [Intramuros] as they pay its arrears of (P13,448,867.45)
become due and demandable. We as of December 31, 2009 plus such
have emphasized this concern in rent and surcharges as may be
our letter of November 12, 2004.102 incurred until [respondent] has
completely vacated the [leased]
premises."103 This counterclaim is
exactly the same as one of
A final judgment in the specific
petitioner's prayers in its ejectment
performance case will not affect the
complaint:
outcome of the ejectment case. As
pointed out by petitioner,
WHEREFORE, premises considered,
respondent's right to possess the
it is most respectfully prayed that
leased premises is founded initially
JUDGMENT be rendered
on the Contracts of Lease and, upon
ORDERING:
their expiration, on petitioner's
....
tolerance in hopes of payment of
(2) DEFENDANT [OFFSHORE
outstanding arrears. The July 27,
CONSTRUCTION] TO PAY ITS
2004 Memorandum of Agreement
ARREARS OF THIRTEEN MILLION
subject of the specific performance
FOUR HUNDRED FORTY-EIGHT
case cannot be the source of
THOUSAND, EIGHT HUNDRED
respondent's continuing right of
SIXTY-SEVEN PESOS AND FORTY-
possession, as it expressly stated
FIVE CENTAVOS (P13,448,867.45),
there that the offsetting was only
PLUS INTEREST OF 1% PER MONTH
for respondent's outstanding
AS STIPULATED IN THE LEASE
arrears as of July 31, 2004. Any
CONTRACTS[.]104
favorable judgment compelling
petitioner to comply with its
obligation under this agreement will
not give new life to the expired A compulsory counterclaim is a
Contracts of Lease, such as would defendant's claim for money or
repel petitioner's unlawful detainer other relief which arises out of, or is
necessarily connected with, the
subject matter of the complaint.
In Spouses Ponciano v. Hon.
Parentela, Jr.:105
A compulsory counterclaim is any
claim for money or other relief
which a defending party may have
against an opposing party, which at
the time of suit arises out of, or is
necessarily connected with, the
same transaction or occurrence that
is the subject matter of plaintiff's
complaint. It is compulsory in the
sense that if it is within the
jurisdiction of the court, and does
not require for its adjudication the
presence of third parties over whom
the court cannot acquire
jurisdiction, it must be set up
therein, and will be barred in the
future if not set up.106 (Citation
omitted)
In its complaint for specific
performance, respondent claimed
that petitioner should offset its
outstanding rentals and that it was
petitioner which had an outstanding
debt to respondent:
16. In compliance with the
Memorandum of Agreement,
Offshore incurred expenses
amounting to Seven Million Eight
Hundred Twenty[-]Five Thousand
Pesos (P7,825,000.00) by way of
Expenses for Rentals of Lights &
Sound System, Electrical Bill and
Performers Fees. This amount is
excluding the expenses incurred
during the period Offshore supplied
the Light & Sound System, as well
as Performers, aforementioned
started in October 2004. A copy of
the Statement of Account is hereto
appended as ANNEX "H" to "H-4";
17. Based on Offshore's records,
upon re-computation of Actual Area
used during all these period[s] from
July 2001 to March 30, 2008, copy
of Statement of Accounts has been
sent to Intramuros Administration
for reconciliation, Offshore's total
obligation by way of back and
current rentals up to March 30,
2008 is only in the amount of Six
Million Four Hundred Three
Thousand Three Hundred
Sixty[-]Four Pesos
(P6,403,364.00);
18. Obviously, when both accounts
are offset, it will clearly show that
[Intramuros] still owes Offshore the
amount of One Million Four Hundred
Twenty[-]One Thousand Six
Hundred Thirty[-]Six Pesos
(P1,421,636.00) as of March 2008;
19. Unfortunately, despite this
glaring fact that [Intramuros] owes
Offshore, Defendant [Anna Maria
L.] Harper (who has already
showed sour and adverse treatment
of Offshore in the past), being the
new Administrator of Intramuros
Administration, sent a Letter dated
09 April 2008 demanding from
Offshore to pay [Intramuros]
alleged rentals in arrears in the
amount of P12,478[,]461.74, within
seven (7) days from receipt. A copy
of the Letter is hereto attached and
marked as Annex "I" to "I-1";
20. It can be deduced from the
attachment to the aforementioned
letter that [Intramuros] did not
honor the obligations imposed in
the Memorandum of Agreement
because the monthly expenses
incurred by Offshore for the
payment of the Lights and Sound
System, Electricity and Performers
Fees for the continuance of the
Department of Tourism WOW
Project at Baluarte Plano, Luneta de
Sta. Isabel which were duly
furnished [Intramuros] in the
amount of Seven Million Eight
Hundred Twenty[-]Five Thousand
Pesos (P7,825,000.00) as expressly
agreed by [Department of
Tourism], [Intramuros] and
Offshore in the Memorandum of
Agreement were NOT deducted Construction] has been remiss in was executed because [Offshore
from the rentals due[.] 107 performing its obligations stated in Construction], at that time, had
the Lease Contracts (Annexes A to been indebted to defendant
A-15; B to B-14 and C to C-14 of [Intramuros] in the form of rental
Petitioner's counterclaim in its the Complaint), Compromise and utility consumption arrears for
Amended Answer was set up to Agreement (Annexes E to E-17 of the occupancy of Puerta Isabel
defend itself against such a claim: the Complaint) and Memorandum of Chambers, Asean Gardens and
Agreement (Annexes F to F-16 of Baluarte de San Andres in the
26. [Offshore Construction] has not the Complaint). [Intramuros and amount of six million seven
established its right, or the reality Anna Maria L. Harper] are therefore hundred sixty[-]two thousand one
is, [Offshore Constructioin] has constrained to demand payment hundred fifty[-]three and seventy
been delinquent in the payment of from [Offshore Construction] for the centavos (P6,762,153.70)....
its financial obligations which are latter's failure or refusal to honor its ....
specifically provided in its contract just and valid obligations.
with defendant [Intramuros], such Necessarily, [Intramuros and Anna 32. Even after July 27, 2004, and
as rental fees. Maria L. Harper] will not hesitate to up to this time, [Offshore
seek legal remedies if [Offshore Construction] remained in
27. [Offshore Construction] has to Construction] continues to be possession of, used and/or
pay rent for being still in possession delinquent. subleased the subject premises. As
of Puerta Isabel II and Asean such, [Offshore Construction] still
Garden. Moreover, plaintiff has 29. Essentially, [Offshore has to pay rental fees, aside from
enjoyed the fruits of subleasing Construction] is protesting the the aforesaid arrears. The rental
these premises for years and yet it computation of its arrears fees continued to pile up and
has continuously failed to remit all (P12,478,461.74) in the demand triggered the imposition of
rental fees and surcharges despite letter sent by Administrator [Anna surcharges as [Offshore
repeated demands from Maria L.] Harper on April 9, 2008. Construction] again failed to remit
defendants. It bears stressing that [Offshore Construction] also asserts payments thereon. This explains
as of December 31, 2009, [Offshore that it only owes defendant the demandable amount of
Construction's] arrears has already [Intramuros] six million four P13,448,867.45 (Annex I to I1 of
ballooned to thirteen million four hundred three thousand and three Complaint). [Offshore Construction]
hundred and forty[-]eight thousand hundred sixty[-]four pesos is therefore mistaken in believing
eight hundred and sixty[-]seven (P6,403,364.00). that it only owes defendant
pesos and forty[-]five centavos [Intramuros] the arrears subject of
(P13,448,867.45). 30. [Offshore Construction] is the [Memorandum of Agreement] of
misguided. The [Memorandum of July 27, 2004 and nothing more.108
28. Glaringly, [Offshore Agreement] dated July 27, 2004
 determined from petitioner's ejectment proceedings.115 Given
Answer111 and from respondent's that there appears sufficient
Clearly, petitioner's counterclaim is Memorandum112 that the members evidence on record to make this
compulsory, arising as it did out of, of 4H Intramuros are respondent's determination, judicial economy
and being necessarily connected sublessees. dictates that this Court now resolve
with, the parties' respective the issue of possession.116
obligations under the July 27, 2004 A sublessee cannot invoke a
Memorandum of Agreement. superior right over that of the It is undisputed that respondent's
Petitioner cannot be faulted for sublessor.113 A judgment of eviction occupation and use of Baluarte de
raising the issue of unpaid rentals against respondent will affect its San Andres, Baluarte de San
in the specific performance case or sublessees since the latter's right of Francisco de Dilao, and Revellin de
for raising the same issue in the possession depends entirely on that Recoletos started on September 1,
present ejectment case, since it of the former.114 A complaint for 1998 by virtue of Contracts of
appears that respondent's alleged interpleader by sublessees cannot Lease all dated August 20,
failure to pay the rent led to the bar the recovery by the rightful 1998.117 The Contracts of Lease
non-renewal of the Contracts of possessor of physical possession of were modified through Addendums
Lease. However, it must be the leased premises. to the Contracts likewise dated
emphasized that any recovery August 20, 1998.118
made by petitioner of unpaid Since neither the specific
rentals in either its ejectment case performance case nor the Then, to amicably settle Civil Case
or in the specific performance case interpleader case constituted forum No. 98-91587 entitled Offshore
must bar recovery in the other, shopping by petitioner, the Construction and Development
pursuant to the principle of unjust Metropolitan Trial Court erred in Company v. Hon. Gemma Cruz-
enrichment.109 dismissing its Complaint for Araneta and Hon. Dominador
Ejectment. Ferrer, Jr., then pending before
A judgment in the Complaint for Branch 47, Regional Trial Court,
Interpleader will likewise not be res IV Manila,119 the parties and the
judicata against the ejectment Department of Tourism entered into
complaint. The plaintiff in the a July 26, 1999 Compromise
interpleader case, 4H Intramuros, Ordinarily, this case would now be Agreement. In the Compromise
allegedly representing the tenants remanded to the Metropolitan Trial Agreement, the parties affirmed the
occupying Puerta de Isabel II, does Court for the determination of the validity of the lease contracts, but
not expressly disclose in its rightful possessor of the leased agreed to transfer the areas to be
Complaint110 for Interpleader the premises. However, this would occupied and used by respondent in
source of its right to occupy those cause needless delay inconsistent Baluarte de San Andres and
premises. However, it can be with the summary nature of Baluarte de San Francisco de Dilao
due to improvements that it had had done, respondent's possession
introduced to the leased became illegal and it should have
120
premises.  The lease over Revellin left the leased premises. In Cañiza
de Recoletos was terminated.121 It v. Court of Appeals:125
appears that under this
Compromise Agreement, the The Estradas' first proffered defense
original five (5)-year period of the derives from a literal construction of
Contracts of Lease were Section 1, Rule 70 of the Rules of
122
retained,  such that the leases Court which inter alia authorizes the
would expire on August 31, 2003, institution of an unlawful detainer
and renewable for another five (5) suit when "the possession of any
years upon the parties' mutual land or building is unlawfully
agreement.123 withheld after the expiration or
termination of the right to hold
Thereafter, the Contracts of Lease possession, by virtue of any
expired. Respondent does not contract, express or implied." They
concede this, but there is no proof contend that since they did not
that there has been any contract acquire possession of the property
mutually agreed upon by the in question "by virtue of any
parties for any extensions of the contract, express or implied" —
leases. Respondent can only argue they having been, to repeat,
that petitioner's continuing "allowed to live temporarily ...
tolerance of respondent's (therein) for free, out of ...
possession and acceptance of (Cañiza's) kindness" — in no sense
respondent's rental payments could there be an "expiration or
impliedly renewed the Contracts of termination of ... (their) right to
Lease.124 hold possession, by virtue of any
contract, express or implied." Nor
But petitioner's tolerance of would an action for forcible entry lie
respondent's occupation and use of against them, since there is no
the leased premises after the end of claim that they had "deprived
the lease contracts does not give (Cañiza) of the possession of ...
the latter a permanent and (her property) by force,
indefeasible right of possession in intimidation, threat, strategy, or
its favor. When a demand to vacate stealth."
has been made, as what petitioner
The argument is arrant sophistry.
Cañiza's act of allowing the
Estradas to occupy her house, rent-
free, did not create a permanent
and indefeasible right of possession
in the latter's favor. Common
sense, and the most rudimentary
sense of fairness clearly require
that act of liberality be implicitly,
but no less certainly, accompanied
by the necessary burden on the
Estradas of returning the house to
Cañiza upon her demand. More
than once has this Court adjudged
that a person who occupies the land
of another at the latter's tolerance
or permission without any contract
between them is necessarily bound
by an implied promise that he will
vacate upon demand, failing which
a summary action for ejectment is
the proper remedy against
him. The situation is not much
different from that of a tenant
whose lease expires but who
continues in occupancy by
tolerance of the owner, in which
case there is deemed to be an
unlawful deprivation or withholding
of possession as of the date of the
demand to vacate. In other words,
one whose stay is merely tolerated
becomes a deforciant illegally
occupying the land or property the
moment he is required to
leave. Thus, in Asset Privatization
Trust vs. Court of Appeals, where a
company, having lawfully obtained
possession of a plant upon its
undertaking to buy the same,
refused to return it after failing to
fulfill its promise of payment
despite demands, this Court held
that "(a)fter demand and its
repudiation, ... (its) continuing
possession ... became illegal and
the complaint for unlawful detainer
filed by the ... (plant's owner) was
its proper remedy."126 (Emphasis
supplied, citations omitted)
The existence of an alleged
concession agreement between
petitioner and respondent is
unsupported by the evidence on
record. The Metropolitan Trial Court
found that a concession agreement
existed due to the agreements
entered into by the parties:
This Court agrees with the
defendant. The various contracts of
lease between the parties
notwithstanding, the existence of
the other agreements involved
herein cannot escape the scrutiny
of this Court. Although couched in
such words as "contracts of lease",
the relationship between the parties
has evolved into another kind – that
of a concession agreement whereby
defendant [Offshore Construction] definite or indefinite. However, no
undertook to develop several areas lease for more than ninety-nine
of the Intramuros District, years shall be valid.
defendant [Offshore Construction]
actually commenced the
development of the subject The restrictions and limitations on
premises and incurred expenses for respondent's use of the leased
the said development, effectively premises are consistent with
making the relationship more than petitioner's right as lessor to
an ordinary lessor-lessee but one stipulate the use of the properties
governed by concession whereby being leased.128 Neither the
both parties undertook other Contracts of Lease nor their
obligations in addition to their basic respective Addendums to the
obligations under the contracts of Contract contain any stipulation
lease. Consensus facit legem (The that respondent may occupy and
parties make their own law by their use the leased premises until it
agreement). It behooves this Court recovers the expenses it incurred
to respect the parties' contracts, for improvements it introduced
including the memoranda of there. Instead, the lease period was
agreement that ensued after it....127 fixed at five (5) years, renewable
for another five (5) years upon
mutual agreement:
Respondent claims that the parties'
agreement was for it to operate the 3. CONTRACT TERM.
leased premises to recover its (Leased Period) This
investments and to make profits. lease shall be for a
However, a review of the Contracts period of FIVE YEARS
of Lease show that they are lease (5 YRS) commencing
contracts, as defined in Article 1643 from September 1,
of the Civil Code: 1998 to August 31,
2003, renewable for
Article 1643. In the lease of things, another period of FIVE
one of the parties binds himself to YEARS (5 YRS) under
give to another the enjoyment or such terms and
use of a thing for a price certain, condition that may be
and for a period which may be mutually agreed upon
 in writing by the Review on Certiorari When Republic Act No. 6552 or the
parties[.]129 is GRANTED. The April 14, 2011 Maceda Law speaks of paying "at
Decision of Branch 173, Regional least two years of installments" in
Trial Court, Manila in Civil Case No. order for the benefits under its
10-124740 is REVERSED AND SET Section 31 to become available, it
The subsequent contracts, namely, ASIDE, and a new decision is refers to the buyer's payment of
the July 26, 1999 Compromise hereby rendered ordering two (2) years' worth of the
Agreement and the July 27, 2004 respondent Offshore Construction stipulated fractional, periodic
Memorandum of Agreement, also and Development Company and payments due to the seller. When
do not point to any creation of a any and all its sublessees and the buyer's payments fall short of
"concession" in favor of respondent. successors-in-interest to vacate the the equivalent of two (2) years'
The Compromise Agreement affirms leased premises immediately. worth of installments, the benefits
the validity of the lease contracts, that the buyer may avail of are
while the Memorandum of Branch 37, Regional Trial Court, limited to those under Section
Agreement was for the payment of Manila is DIRECTED to resolve Civil 4.2 Should the buyer still fail to
respondent's arrears until July Case No. 08-119138 with dispatch. make payments within Section 4's
2004. grace period, the seller may cancel
SO ORDERED. the contract. Any such cancellation
However, this Court cannot award is ineffectual, however, unless it is
unpaid rentals to petitioner made through a valid notarial act.
pursuant to the ejectment
proceeding, since the issue of This resolves a Petition for Review
rentals in Civil Case No. 08-119138 on Certiorari3 under Rule 45 of the
is currently pending with Branch 37, 1997 Rules of Civil Procedure
Regional Trial Court, Manila, by praying that the assailed October
virtue of petitioner's counterclaim. 11, 2012 Decision4 and July 3, 2013
G.R. No. 208185, September 06,
As the parties dispute the amounts Resolution5 of the Court of Appeals
2017
to be offset under the July 27, 2004 in CA-G.R. SP No. 118285 be
Memorandum of Agreement and reversed and set aside.
PRISCILLA ZAFRA
respondent's actual back and
ORBE, Petitioner, v. FILINVEST The assailed Court of Appeals
current rentals due,130 the
LAND, INC., Respondent. October 11, 2012 Decision reversed
resolution of that case is better left
to the Regional Trial Court for trial the prior rulings of the Office of the
on the merits. DECISION President, the Board of
Commissioners of the Housing and
WHEREFORE, the Petition for LEONEN, J.: Land Use Regulator; Board (HLURB
Board of Commissioners), and of Payable year
Housing and Land Use Arbiter
on [P]54,818.0 From June 17, 2001 to July 14,
Leonard Jacinto A. Soriano (Arbiter   :
installme 0 monthly 2004, Orbe paid a total of
Soriano) of the Expanded National
Capital Region Field Office of the nts P608,648.20. These were mainly
Housing and Land Use Regulatory through several Metrobank checks,
from for which Filinvest issued official
Board (HLURB Field Office). It held   8/4/01-  
that petitioner Priscilla Zafra Orbe receipts.10 Check payments were
4/4/02 made as follows:
(Orbe) is entitled to the benefits of
Section 3 of Republic Act No. [P]2,053,43 METROB
6552.6 The assailed Court of Balance   : ANK DA                      
6.00  
Appeals July 3, 2013 Resolution CHECK TE AMOUNT
denied Orbe's Motion for Payable NO.
Reconsideration. 7
on
    Metro
installme June
Sometime in June 2001, Orbe nts Bank
entered into a purchase agreement
17, [P]20,000.00  
Check No.
with respondent Filinvest Land, Inc. for a 2001
0306533
(Filinvest) over a 385-square-meter   period of  
lot identified as Lot 1, Block 10, 7 years Metro
July
Phase 1, Highlands Pointe, Taytay, Bank
from 29, [P]54,818.00  
Rizal. The total contract price was Check No.
P2,566,795.00, payable on   5/8/024/8   2001
0306544
installment basis8 under the /09
following terms: Metro
[P]27,936.8 Aug.
First year   : Bank
4 monthly 29, [P]54,818.00  
Check No.
Total 2001
[P]2,566,79 Second [P]39,758.8 0306545
Contract   :   :
5.00 year 4 monthly
Price Metro
Sept
Third [P]41,394.8 Bank
Reservati [P]20,000.0   : . 29, [P]54,818.00  
  : year 4 monthly Check No.
on Fee 0 2001
0306546
Down [P]493,357. Fourth   : [P]42,138.8
  : year to 4 monthly9 Metro May [P]100,000.00  
Payments 00
Seventh Bank 8,
Check No. PRISCILLA Z. ORBE Makati City                      )S.S.
2002 #107 Morena St. Villaverde Homes
032()243
Novaliches, Q,C. SUBSCRIBED AND SWORN to
Metro before me this OCT 06 2004, affiant
May                 Re: Account No.    exhibiting to me Community Tax
Bank
22, [P]100,000.00   6181426 Certificate No. 05465460 issued on
Check No.
2002                       Project             February 09, 2004 at Manila.
0320244
HIGH
Metro Mar                       Phase               1              (sgd.)
Bank ch                       Block               10 AVELIO L. SALCEDO
[P]80,000.00                         Lot                   1     NOTARY PUBLIC
Check No. 26,
0370882 2003 UNTIL DECEMBER 31, 2004
Gentlemen (sic): PTR NO. 3703389 3/01/04 SAN
Metro JUAN
Apri IBP N0.609984 2/04/04 PASIG CITY
Bank Our records show that your account
l 26, [P]75,789.00   remains unpaid despite our written
Check No.
2003 request for your payment. We have Doc. No. 314
0370883
in fact given you sixty (60) days to Page No. 64
Metro update but you failed to settle your Book No. XVIII
Feb.
Bank account. Accordingly, please be Series of 200415
12, [P]37,811.00  
Check No. informed that we are now hereby Noting that "efforts . . . to seek for
2004 canceling your account effective
0401000 a reconsideration of said
thirty (30) days from receipt cancellation . . . proved futile," and
Metro hereof,
July that the parcel had since been sold
Bank
14, [P]30,000.0011   by Filinvest to a certain Ruel Ymana
Check No. Very truly yours, "in evident bad faith,"16 Orbe filed
2004
0531301 against Filinvest a Complaint for
Orbe was unable to make further COLLECTION DEPARTMENT refund with damages dated
payments allegedly on account of November 13, 2007 before the
financial difficulties.12 By: HLURB Field Office.17 Orbe
emphasized that she had made
On October 4, 2004, Filinvest sent a _________________(sgd.)_______ payments "beginning June, 2001 up
notice of cancellation,13 which was __________ to October, 2004."18 She further
received by Orbe on October 18,                  MA. LOUELLA D. SENIA asserted that the October 4, 2004
2004.14 The notice and its Notice did not amount to an
accompanying jurat read: Republic of the Philippines ) "effective cancellation by notarial
act."19
In its Answer with Counterclaim,
Filinvest asserted that Orbe failed
to make 24 monthly amortization
payments on her account, and thus,
could not benefit from Section 3 of
Republic Act No. 6552. According to
Filinvest, the P608,648.20 paid by
Orbe from June 17, 2001 to July
14, 2004 covered only the
reservation fee, down payment, and
late payment charges, exclusive of
the monthly amortization payments
stipulated in the Purchase
Agreement.20
In his July 25, 2008
21
Decision,  Arbiter Soriano of the
HLURB Field Office ruled in favor of
Orbe. He held that since Orbe made
payments "from 17 June 2001 to 14
July 2004, or a period of more than
two years,"22 all of which should be
credited to the principal,23 she was
entitled to a refund of the cash
surrender value equivalent to 50%
of the total payments she had
made, pursuant to Section 3 of
Republic Act No. 6552.24
Filinvest appealed to the HLURB
Board of Commissioners.25
In its April 15, 2009 Decision,26 the
HLURB Board of Commissioners
affirmed Arbiter Soriano's the Court of Appeals,34 arguing
Decision.27 It disagreed with Arbiter that:
Soriano's conclusion that Orbe had [W]hat [Republic Act No. 6552]
paid two (2) years' installments. It requires for refund of the cash
specifically noted rather, that the surrender value is not the length of
buyer's payments fell two (2) time of at least two years from the
months short of the equivalent of first payment to the last payment,
two years of installments.28 It but the number of installments
added, however, that "[e]quity . . . paid, that is, at least two ears of
should come in especially where, as installments or twenty[-]four (24)
here, the payment period is monthly installments paid.35
relatively short and the monthly Thus, Section 3, which requires the
installment is relatively of refund of the cash surrender value,
29
substantial amounts."  Thus, it will only apply when the buyer has
concluded that Orbe was still made at least 24 installment
entitled to a 50% refund.30 payments.36
Filinvest then appealed to the Office In its assailed October 11, 2012
of the President.31 Decision,37 the Court of Appeals
reversed the prior rulings of the
In its February 4, 2011 Office of the President, of the
Decision,32 the Office of the HLURB Board of Commissioners,
President sustained the conclusion and of Arbiter Soriano; and
that Orbe was entitled to a 50% dismissed Orbe's Complaint.38
refund. It disagreed with the HLURB
Board of Commissioners' finding The Court of Appeals reasoned that
that Section 3's benefits were the phrase "two years of
available to Orbe purely as a matter installments" under Section 3
of equity. It agreed instead with means that total payments made
Arbiter Soriano's reliance on how should at least be equivalent to two
Orbe "ha[d] made installment years' worth of
payments for more than two (2) installments.39 Considering that
years."33 Orbe's total payment of
P608,648.20 was short of the
Filinvest made another appeal to required two (2) years' worth of
installments, she could not avail of
the benefits of Section 3.40 What
applied instead was Section 4,
enabling a grace period of 60 days
from the day the installment
became due and further enabling
the seller to cancel or rescind the
contract through a notarial act,
should the buyer still fail to pay
within the grace period.41 It found
Filinvest to have sent Orbe a valid,
notarized notice of cancellation
thereby precluding any further
relief.42
In its assailed July 3, 2013
Resolution,43 the Court of Appeals
denied Orbe's Motion for
Reconsideration.
Hence, the present petition was
filed.44
For resolution is the issue of
whether or not petitioner Priscilla
Zafra Orbe is entitled to a refund or
to any other benefit under Republic
Act No. 6552.
The Court of Appeals correctly held
that petitioner was not entitled to
benefits under Section 3 of Republic
Act No. 6552 as she had failed to
pay two (2) years' worth of
installments pursuant to the terms
of her original agreement with
respondent. It also correctly held
that with the shortage in
petitioner's payment, what applies Republic Act No. 6552, the Realty
is Section 4, instead of Section 3. Installment Buyer Act or more
This means that respondent could popularly reffered to as the Maceda
cancel the contract since petitioner Law, named after its author, the
failed to pay within the 60-day late Sen. Ernesto Maceda, was
grace period. adopted with the purpose of
"protect[ing] buyers of real estate
The Court of Appeals, however, on installment payments against
failed to realize that the notice of onerous and oppressive
cancellation made by respondent conditions."51 It "delineat[es] the
was an invalid notarial act. Failing rights and remedies of . . . buyers
to satisfy all of Section 4's and protect[s] them from one-sided
requisites for a valid cancellation, and pernicious contract
respondent's cancellation was stipulations":52
ineffectual. The contract between Its declared public policy is to
petitioner and respondent should protect buyers of real estate on
then be deemed valid and installment basis against onerous
45
subsisting.  Considering however, and oppressive conditions. The law
that respondent ha.s since sold the seeks to address the acute housing
lot to another person, an equitable shortage problem in our country
ruling is proper. Therefore, this that has prompted thousands of
Court rules in a manner consistent middle and lower class buyers of
with how it resolved Olympia houses, lots and condominium units
Housing v. Panasiatic to enter into all sorts of contracts
Travel,46Pagtalunan v. Vda. de with private housing developers
Manzano,47Active Realty and involving installment schemes. Lot
Development v. buyers, mostly low income earners
Daroya,48Associated Marine Officers eager to acquire a lot upon which to
and Seamen's Union of the build their homes, readily affix their
Philippines PTGWO-ITF v. signatures on these contracts,
Decena,49 and Gatchalian Realty v. without an opportunity to question
Angeles.50 the onerous provisions therein as
the contract is offered to them on a
I "take it or leave it" basis. Most of
these contracts of adhesion, drawn
exclusively by the developers,
entrap innocent buyers by requiring
cash deposits for reservation
agreements which often times
include, in fine print, onerous
default clauses where all the
installment payments made will be
forfeited upon failure to pay any
installment due even if the buyers
had made payments for several
years. Real estate developers thus
enjoy an unnecessary advantage
over lot buyers who[m] they often
exploit with iniquitous results. They
get to forfeit all the installment
payments of defaulting buyers and
resell the same lot to another buyer
with the same exigent conditions.
To help especially the low income
lot buyers, the legislature enacted
R.A. No. 6552 delineating the rights
and remedies of lot buyers and
protect[ing] them from one-sided
and pernicious contract
stipulations. 53
Having been adopted with the
explicit objective of protecting
buyers against what it recognizes to
be disadvantageous and onerous
conditions, the Maceda Law's
provisions must be liberally
construed in favor of buyers. Within
the bounds of reason, fairness, and
justice, doubts in its interpretation
must be resolved in a manner that
will afford buyers the fullest extent
of its benefits.
II
Sections 3 and 4 of the Maceda Law
spell out the rights of defaulting
buyers on installment payments,
depending on the extent of
payments made.
Section 3 governs situations in
which a buyer "has paid at least
two years of installments":
Section 3. In all transactions or
contracts involving the sale or
financing of real estate on
installment payments, including
residential condominium
apartments but excluding industrial
lots, commercial buildings and sales
to tenants under Republic Act
Numbered Thirty eight hundred
forty-four, as amended by Republic
Act Numbered Sixty-three hundred
eighty-nine, where the buyer has
paid at least two years of
installments, the buyer is entitled to
the following rights in case he
defaults in the payment of
succeeding installments:
(a) To pay, without additional
interest, the unpaid installments
due within the total grace period
earned by him, which is hereby
fixed at the rate of one month
grace period for every one year
of installment payments
made: Provided, That this right
shall be exercised by the buyer
only once in every five years of
the life of the contract and its
extensions, if any.
(b) If the contract is cancelled, the
seller shall refund to the buyer
the cash surrender value of the
payments on the property
equivalent to fifty per cent of
the total payments made and,
after five years of installments,
an additional five per cent every
year but not to exceed ninety per
cent of the total payments
made: Provided, That the actual
cancellation of the contract shall
take place after thirty days from
receipt by the buyer of the
notice of cancellation or the
demand for rescission of the
contract by a notarial act and
upon full payment of the cash
surrender value to the buyer.
Down payments, deposits or
options on the contract shall be
included in the computation of the
total number of installment defers full payment of the purchase unduly claiming the rights provided
payments made. price and ratably apportions in Section 3 of R.A.
56
Section 4 governs situations "where payment across a period. It is 6552.  (Emphasis supplied)
less than two years of installments typified by regular, fractional The phrase "at least two years of
were paid": payments. It is these regular, installments" refers to value and
Section 4, In case where less than fractional payments that are time. It does not only refer to the
two years of installments were paid, referred to as "installments."54 period when the buyer has been
the seller shall give the buyer a making payments, with total
grace period of not less than sixty Thus, when Section 3 speaks of disregard for the value that the
days from the date the installment paying "at least two years buyer has actually conveyed.57 It
became due. If the buyer fails to of installments," it refers to the refers to the proportionate value of
pay the installments due at the equivalent of the totality of the installments made, as well as
expiration of the grace period, the payments diligently or consistently payments having been made for at
seller may cancel the contract after made throughout a period of two least two (2) years.
thirty days from receipt by the (2) years. Accordingly, where
buyer of the notice of cancellation installments are to be paid on a Laws should never be so interpreted
or the demand for rescission of the monthly basis, paying "at least two as to produce results that are
contract by a notarial act. years of installments" pertains to absurd or
the aggregate value of 24 monthly unreasonable.58 Sustaining
In both Sections 3 and 4, defaulting installments. As explained
buyers are afforded grace periods in petitioner's contention that spe falls
in Gatchalian Realty v. Angeles:55 within Section 3's protection just
which they may pay the It should be noted that Section 3 of
installments due. Should they fail to because she has been paying for
R.A. 6552 and paragraph six of more than two (2) years goes
make payment within the applicable Contract Nos. 2271 and 2272,
period, cancellation of their beyond a justified, liberal
speak of "two years of construction of the Maceda Law. It
agreement with the seller may installments." The basis for
ensue. facilitates arbitrariness, as
computation of the term refers to intermittent payments of fluctuating
the installments that correspond to amounts would become
III the number of months of payments, permissible, so long as they stretch
and not to the number of months for two (2) years. Worse, it
Contrary to petitioner's allegations, that the contract is in effect as well
she did not pay "at least two years condones an absurdity. It sets a
as any grace period that has been precedent that would endorse
of installments" as to fall within the given. Both the law and the
protection of Section 3. minimal, token payments that
contracts thus prevent any buyer extend for two (2) years. A buyer
who has not been diligent in paying could, then, literally pay loose
In a sale by installment, a buyer his monthly installments tom change for two (2) years and still
come under Section 3's protection. P121,666.66, rather than the of P750,000 is to be deducted from
monthly amortization. This Court the total payment of P846,600, the
Reckoning payment of "at least two justified this by referencing Section remainder is only P96,600. Since
years of installments" on the basis 3's injunction that "[d]own respondent was able to pay the
of the regular, factional payments payments, deposits or options on down payment in full eleven (11)
due from the buyer was the contract shall be included in the months after the last monthly
demonstrated in Marina Properties computation of the total number of installment was due, and the sum
Corp. v. Court of Appeals.59 There, installment payments made": of P76,600 representing penalty for
the monthly amortization of The total purchase price of the delay of payment is deducted from
P67,024.22 was considered in property is P2,500,000. As provided the remaining P96,600, only a
determining the validity of the in the Reservation Application, the balance of P20,000 remains.
cancellation of the contract by the 30% down payment on the
seller: purchase price or P750,000 was to As respondent failed to pay at least
We likewise uphold the finding that be paid in six monthly installments two years of installments, he is not,
MARINA's cancellation of the of P121,666.66. Under the Contract under above-quoted Section 3 of
Contract To Buy and To Sell was to Sell, the 70% balance of R.A. No. 6552, entitled to a refund
clearly illegal. Prior to MARINA's P1,750,000.00 on the purchase of the cash surrender value of his
unilateral act of rescission, H.L. price was to be paid in 10 years payments.62
CARLOS had already paid through monthly installments of Jestra was wrong to use the
P1,810,330.70, or more than 50% P34,983, which was later increased installment payments on the down
of the contract price of to P39,468 in accordance with the payment as divisor. It is an error to
P3,614,000.00. Moreover, the sum agreement to restructure the same. reckon the payment of two (2)
H.L. CARLOS had disbursed years' worth of installments on the
amounted to more than the total of While, under the above-quoted apportionment of the down
24 installments, i.e., two years' Section 3 of R.A. No. 6552, the payment because, even in cases
worth of installments computed at a down payment is included in where the down payment is broken
monthly installment rate of computing the total number of down into smaller, more affordable
P67,024.22, inclusive of the installment payments made, the portions, payments for it still do not
downpayment.60 proper divisor is neither P34,983 embody the ratable apportionment
In Jestra Development and nor P39,468, but P121,666.66, the of the contract price throughout
Management Corporation v. monthly installment on the down the entire duration of the contract
Pacifico,61 where down payment payment. term. Rather than the partial
was itself payable in portions, this payments for the down payment, it
Court reckoned the monthly The P750,000 down payment was is the partition of the contract price
installment payment for the down to be paid in six monthly into monthly amortizations that
payment amounting to installments. If the down payment manifests the ratable
apportionment across a complete
contract term that is the essence of
sales on installment. The correct
standard is that which was used
in Marina, not in Jestra.
Marina also correctly demonstrated
how Section 3's injunction that
"[d]own payments, deposits or
options on the contract shall be
included in the computation of the
total number of installment
payments made" should operate.
In Marina, the total amount of
P1,810,330.70 paid by the buyer
was inclusive of payments for down
payment worth P1,034,200.00 and
cash deposit worth P50,000.00. In
concluding that the buyer
in Marina had paid more than two
(2) years' or 24 months' worth of
installments, what this Court
considered was the total amount of
P1,810,330.70 and not merely the
payments on amortizations.
Following Marina, this Court reckons
petitioner's satisfaction of the
requisite two (2) years' or 24
months' worth of installments using
as divisor the monthly
amortizations due from petitioner.
However, this Court notes that the
mon1hly amortizations due from
petitioner were stipulated to
escalate on a yearly basis. In
keeping with the need to construe
the Maceda Law in a manner
favorable to the buyer, this Court
uses as basis the monthly
amortizations set for the first
year, i.e., P27,936.84. With this as
the divisor, it shall appear that
petitioner has only paid 21.786
months' worth of installments. This
falls short of the requisite two (2)
years' or 24 months' worth of
installments.
IV
Failing to satisfy Section 3's
threshold, petitioner's case is
governed by Section 4 of the
Maceda Law.
Thus, she was "entitled to a grace
period of not less than sixty (60)
days from the due date within
which to make [her] installment
payment. [Respondent], on the
other hand, ha[d] the right to
cancel the contract after thirty (30)
days from receipt by [petitioner] of
the notice of cancellation."63
For cancellations under Section 4 to
be valid, three (3) requisites must
concur, First, the buyer must have
been given a 60-day grace period
but failed to utilize it. Second, the
seller must have sent a notice of
cancellation or demand for
rescission by notarial act And third,
the cancellation shall take effect
only after 30 days of the buyer's
receipt of the notice of cancellation:
Essentially, the said provision
provides for three (3) requisites
before the seller may actually
cancel the subject contract: first,
the seller shall give the buyer a 60-
day grace period to be reckoned
from the date the installment
became due; second, the seller
must give the buyer a notice of
cancellation/demand for
rescission by notarial act if the
buyer fails to pay the installments
due at the expiration of the said
grace period; and third, the seller
may actually cancel the contract
only after thirty (30) days from the
buyer's receipt of the said notice of
cancellation/demand for rescission
by notarial act.64 (Emphasis in the
original)
Respondent's October 4, 2004
notice indicates that petitioner
failed to utilize the 60-day grace
period. It also indicates that
cancellation was to take effect
"thirty (30) days from [its] receipt":
Our records show that your account
remains unpaid despite our written
request for your payment. We have
in fact given you sixty (60) days to
update but you failed to settle your
account. Accordingly, please be SECTION 1. Acknowledgment. - statutory right of unilateral
informed that we are now hereby "Acknowledgment" refers to an act cancellation by the seller of a
canceling your account effective in which an individual on a single perfected contract. If an
thirty (30) days from receipt occasion: acknowledgement is necessary in
hereof.65 the customary rendition of public
The notice of cancellation was also (a) appears in person before the documents, with greater reason
accompanied by a jurat; thereby notary public and presents an should an acknowledgement be
making it appear to have been a imperative in notices of cancellation
integrally complete instrument
valid notarial act: or demands for rescission made
or document; under Sections 3 and 4 of the
SUBSCRIBED AND SWORN to
before me this OCT 06 2004, affiant (b) is attested to be personally Maceda Law.
exhibiting to me Community Tax known to the notary public or
Certificate No. 05465460 issued on identified by the notary public Through an acknowledgement,
February 09, 2004 at individuals acting as
through competent evidence of
lvfanila.66 (Emphasis supplied) representatives declare that they
identity as defined by these are authorized to act as such
This is not, however, the valid Rules; and representatives. This is particularly
notarial act contemplated by the crucial with respect to signatories to
(c) represents to the notary public
Maceda Law. notices of cancellation or demands
that the signature on the
for rescission under Sections 3 and
In ordinary circumstances, instrument or document was
4 of the Maceda Law. In a great
"[n]otarization of a private voluntarily affixed by him for number of cases, the sellers of real
document converts the document the purposes stated in the property shall be juridical persons
into a public one making it instrument or document, acting through representatives. In
admissible in court without further declares that he has executed the these cases, it is imperative that
proof of its authenticity."67 To instrument or document as his the officer signing for the seller
enable this conversion, Rule 132, free and voluntary act and deed, indicate that he or she is duly
Section 19 of the Revised Rules of and, if he acts in a particular authorized to effect the cancellation
Evidence specifically requires that a representative capacity, that he of an otherwise perfected contract.
document be "acknowledged before has the authority to sign in that Not all personnel are capacitated to
a notary public."68 effect these cancellations;
capacity.
individuals purporting to do so must
Rule II, Section 1 of A.M. No. 02-8- Notarization under the Maceda Law demonstrate their specific
13-SC, the 2004 Rules on Notarial extends beyond converting private authority. In the case of
Practice, defines an documents into public ones. Under corporations, this authority is
acknowledgement, as follows: Sections 3 and 4, notarization vested through board resolutions,
enables the exercise of the
or by stipulations in the articles of before the notary public as to (a) at least one current
incorporation or by-laws.
such instrument or document. identification document issued
Even if respondent's notarization by by an official agency bearing the
Respondent's notice of cancellation
here was executed by an individual jurat and not by acknowledgement photograph and signature of the
identified only as belonging to were to be condoned, respondent's individual; or
respondent's Collection jurat was not even a valid jurat
executed according to the (b) the oath or affirmation of one
Department. It was also
requirements of the 2004 Rules on credible witness not privy to the
accompanied not by an
Notarial Practice. instrument, document or
acknowledgement, but by a jurat.
transaction who is personally
A jurat is a distinct notarial act, The 2004 Rules on Notarial Practice known to the notary public and
which makes no averment took effect on August 1, 2004.69 It who personally knows the
concerning the authority of a governed respondent's October 4, individual, or of two credible
representative. It is defined by Rule 2004 notice, which was notarized witnesses neither of whom is
II, Section 6 of the 2004 Rules on on October 6, 2004. As Rule II, privy to the instrument,
Notarial Practice, as follows: Section 6 of these Rules clearly document or transaction who
SECTION 6. Jurat. - "Jurat" refers states, the person signing the
each personally knows the
to an act in which an individual on a document must be "personally
individual and shows to the
single occasion: known to the notary public or
identified by the notary public
notary public documentary
through competent evidence of identification.
(a) appears in person before the identity." The proof of identity used by the
notary public and presents an signatory to respondent's notice of
instrument or document; Rule II, Section 12, in turn, defines cancellation was a community tax
(b) is personally known to the "competent evidence of identity." certificate, which no longer satisfies
As originally worded, when the this requirement.
notary public or identified by
2004 Rules on Notarial Practice
the notary public through came into effect on August 1, 2004, Rule II, Section 12 was eventually
competent evidence of identity Rule II, Section 12 read: amended by A.M. No. 02-8-13-SC.
as defined by these Rules; Section 12. Competent Evidence of As amended, it specifically rebukes
(c) signs the instrument or Identity. - The phrase "competent the validity of a community tax
evidence of identity" refers to the certificate as a competent evidence
document in the presence of the
identification of an individual based of identity:
notary; and on: Section 12. Competent Evidence of
(d) takes an oath or affirmation Identity. - The phrase "competent
evidence of identity" refers to the certificate of specifically excluded as a
identification of an individual based registration, permissible proof of identity:
on: government office ID, As a matter of fact, recognizing the
certification from the established unreliability of a
a. at least one current National Council for community tax certificate in proving
identification the Welfare of the identity of a person who wishes
document issued by Disabled Persons to have his document notarized, we
an official agency (NCWDP), Department did not include it in the list of
bearing the of Social Welfare and competent evidence of identity that
photograph and Development (DSWD) notaries public should use in
signature of the certification; or ascertaining the identity of persons
individual, such as but appearing before them to have their
not limited to, b. the oath or affirmation documents notarized.71
passport, driver's of one credible
Marina Properties v. Court of
license, Professional witness not privy to
Appeals72 was unequivocal: "[I]n
Regulations the instrument,
order to effect the cancellation of a
Commission ID, document or
contract, a notarial cancellation
National Bureau of transaction who is
must first be had."73Realty
Investigation personally known to
Exchange Venture Corp. v.
clearance, police the notary public and
Sendino74 explained, "Since R.A.
clearance, postal ID, who personally knows
6552 mandates cancellation by
voter's ID, Barangay the individual, or of
notarial act - among other
certification, two credible witnesses
requirements before any
Government Service neither of whom is
cancellation of a contract may be
and Insurance System privy to the
effected, petitioners' precipitate
(GSIS) e-card, Social instrument, document
cancellation of its contract with
Security System or transaction who
private respondent without
(SSS) card, Philhealth each personally knows
observing the conditions imposed
card, senior citizen the individual and
by the said law was invalid and
card, Overseas shows to the notary
improper."75 In Active Realty and
Workers Welfare public documentary
Development v. Daroya,76 where
Administration identification.
the seller "failed to send a notarized
(OWWA) ID, OFW ID, notice of cancellation,"77 this Court
seaman's book, alien Baylon v. Almo70 explained why decried the iniquity foisted upon a
certificate of community tax certificates were buyer. "[W]e find it illegal and
registration/immigrant iniquitous that petitioner, without
complying with the mandatory legal This Court is mindful of infractions. In contrast, this case
requirements for canceling the jurisprudence in which it has been concerns Section 4's definite
contract, forfeited both lenient with the requirement of precondition for the seller's exercise
respondent's land and hard-earned presenting a competent evidence of of its option to repudiate a contract.
money."78 identity before a notary public. At stake in Galicto, Coca-Cola,
Victorio-Aquino, and Reyes was the
In ordinary circumstances, where Galicto v. Aquino,80Coca Cola right to be heard in judicial
notarization serves merely to Bottlers Philippines, Inc. v. Dela proceedings, a cognate of due
convert a private document into a Cruz,81Victorio-Aquino v. Pacific process. What is at stake here is
public document, notaries public Plans, Inc.,82 and Reyes v. different: the grant of a statutory
have been admonished about Glaucoma privilege relating to a civil contract.
faithfully observing the rules
governing notarial acts: "Faithful Research Foundation, To be effective, sellers'
83
observance and utmost respect of Inc.  concerned verifications and cancellations under the Maceda Law
the legal solemnity of an oath in an certifications of non-forum shopping must strictly comply with the
acknowledgment or jurat is in which jurats did not indicate the requirements of Sections 3 and 4.
sacrosanct."79 It is with greater required competent evidence of This Court clarifies here that with
reason that the diligent observance identity. In these cases, this Court respect to notices of cancellation or
of notarial rules should be overlooked the defects considering demands for rescission by notarial
impressed in cases concerned with that "defective jurat in the act, an acknowledgement is
a seller's exercise of a statutory Verification/Certification of Non- imperative. Moreover, when these
privilege through cancellations Forum Shopping is not a fatal are made through representatives
under the Maceda Law. defect . . . The verification is only a of juridical persons selling real
formal, not a jurisdictional, property, the authority of these
Respondent's failure to diligently requirement that the Court may representatives must be duly
satisfy the imperatives of the 2004 waive."84 Likewise, this Court demonstrated. For corporations, the
Rules on Notarial Practice considered it more appropriate to representative's authority must
constrains this Court to consider its not hinder the consideration of have either been granted by a
notice as an invalid notarial act. pleadings in order that party- board resolution or existing in the
This amounts to respondent's litigants may exhaustively plead seller's articles of incorporation or
failure to satisfy the second their cases.85 by-laws.
requisite for valid cancellations
under Section 4, ultimately Galicto, Coca-Cola, Victorio-Aquino, With the Maceda Law's avowed
rendering its cancellation of the and Reyes are markedly different purpose of extending benefits to
purchase agreement ineffectual. from the present controversy. They disadvantaged buyers and
merely concerned formal liberating them from onerous and
oppressive conditions, it necessarily
follows that the Maceda Law's
permission for sellers to cancel
contracts becomes available only
when its conditions are heedfully
satisfied. No liberal construction of
the Maceda Law can be made in
favor of the seller and at the same
time burdening the buyer.
V payment, the developer shall issue
There being no valid cancellation,
the purchase agreement between
petitioner and respondent "remains
valid and subsisting."86 However,
respondent has already sold the lot
purchased by petitioner to a certain
Ruel Ymana.87
Gatchalian Realty v.
Angeles88 confronted a similar
predicament. In determining the
most judicious manner of disposing
of the controversy, this Court
considered the analogous cases
of Olympia Housing v. Panasiatic
Travel,89Pagtalunan v. Vda. de
Manzano,90Active Realty and
Development v.
91
Daroya,  and Associated Marine
Officers and Seamen's Union of the
Philippines PTGWO-ITF v. Decena:92
In Olympia, this Court dismissed
the complaint for recovery of
possession for having been
prematurely filed without complying
with the mandate of R.A. 6552. We
ordered the defaulting buyer to pay
the developer the balance as of the
date of the filing of the complaint
plus 18% interest per annum
computed from the day after the
date of the filing of the complaint,
but within 60 days from the receipt
of a copy of the decision. Upon
the corresponding certificate of title
in favor of the defaulting buyer, If
the defaulting buyer fails to pay the
full amount, then the defaulting
buyer shall vacate the subject
property without need of demand
and all payments will be charged as
rentals to the property. There was
no award for damages and
attorney's fees, and no costs were
charged to the parties.
In Pagtalunan, this Court dismissed
the complaint for unlawful detainer.
We also ordered the defaulting
buyer to pay the developer the
balance of the purchase price plus
interest at 6% per annum from the
date of filing of the complaint up to
the finality of judgment, and
thereafter, at the rate of 12% per
annum. Upon payment, the
developer shall issue a Deed of
Absolute Sale of the subject
property and deliver the
corresponding certificate of title in
favor of the defaulting buyer. If the
defaulting buyer fails to pay the full
amount within 60 days from finality
of the decision, then the defaulting
buyer should vacate the subject
property without need of demand
and all payments will be charged as
rentals to the property. No costs
were charged to the parties.
In Active, this Court held that the
Contract to Sell between the parties
remained valid because of the
developer's failure to send a
notarized notice of cancellation and
to refund the cash surrender value.
The defaulting buyer thus had the
right to offer to pay the balance of
the purchase price, and the
developer had no choice but to
accept payment. However,  the
defaulting buyer was unable to
exercise this right because the
developer sold the subject lot.
This Court ordered the developer to
refund to the defaulting buyer the
actual value of the lot with 12%
interest per annum computedfrom
the date of the filing of the
complaint until fully paid, or to
deliver a substitute lot at the option
of the defaulting buyer.
In Associated, this Court dismissed
the complaint for unlawful detainer.
We held that the Contract to Sell
between the parties remained valid
because the developer failed to
send to the defaulting buyer a
notarized notice of cancellation and
to refund the cash surrender value.
We ordered the MeTC to conduct a
hearing within 30 days from receipt
of the decision to determine the
unpaid balance of the full value of
the subject properties as well as the
current reasonable amount of rent
for the subject properties. We
ordered the defaulting buyer to
pay, within 60 days from the trial
court's determination of the
amounts, the unpaid balance of the
full value of the subject properties
with interest at 6% per annum
computed from the date of sending
of the notice of final demand up to
the date of actual payment. Upon
payment, we ordered the developer
to execute a Deed of Absolute Sale
over the subject properties and
deliver the transfer certificate of
title to the defaulting buyer. In case
of failure to pay within the
mandated 60 day period, we
ordered the defaulting buyer to
immediately vacate the premises
without need for further demand.
The developer should also pay the
defaulting buyer the cash surrender
value, and the contract should be
deemed cancelled 30 days after the
defaulting buyer's receipt of the full
payment of the cash surrender
value. If the defaulting buyer failed
to vacate the premises, he should
be charged reasonable rental in the
amount determined by the trial
court.93 (Emphasis supplied)
Gatchalian proceeded to, first,
assert the propriety of equitably
resolving the controversy, and
second, consider the options
available to the buyer. It
specifical1y noted that in the event
that its subject properties were no
longer available, only two (2)
options remained: a refund or an
offer of substitute properties. It was
exclusively for the buyer to choose
between these options:
We observe that this case has, from
the institution of the complaint,
been pending with the courts for 10
years. As both parties prayed for
the issuance of reliefs that are just
and equitable under the premises,
and in the exercise of our
discretion, we resolve to dispose of
this case in an equitable manner.
Considering that GRI did not validly
rescind Contracts to Sell Nos. 2271
and 2272, Angeles has two options:
1. The option to pay, within 60 days
from the MeTC's determination of
the proper amounts, the unpaid
balance of the full value of the
purchase price of the subject
properties plus interest at 6% per
annum from 11 November 2003,
the date of filing of the complaint,
up to the finality of this Decision,
and thereafter, at the rate of 6%
per annum. Upon payment of the
full amount, GRI shall immediately
execute Deeds of Absolute Sale
over the subject properties and
deliver the corresponding transfer
certificate of title to Angeles.
In the event that the subject
properties are no longer available,
GRI should offer substitute
properties of equal value.
Acceptance the suitability of the
substitute properties is Angeles'
sole prerogative. Should Angeles
refuse the substitute properties,
GRI shall refund to Angeles the
actual value of the subject
properties with 6% interest per
annum computed from 11
November 2003, the date of the
filing of the complaint, until fully
paid; and
2. The option to accept from GRI
P574,148.40, the cash surrender
value of the subject properties, with
interest at 6% per annum,
computed from 11 November 2003,
the date of the filing of the
complaint, until fully paid. Contracts
to Sell Nos. 2271 and 2272 shall be
deemed cancelled 30 days after
Angeles' receipt of GRI's full
payment of the cash surrender
value. No rent is further charged
upon Angeles as GRI already had
possession of the subject properties
on 10 October 2006.94 (Emphasis
supplied)
This case is most akin to Active.
There, as in this case, the subject
property was actually sold by the
seller to a third
person. Gatchalian mirrored Active i
n discerning an equitable ruling in
the event that its subject properties
had been sold by the seller to
another person.
It was Active that originally
identified two (2) options where a
seller wrongly cancelled a contract
with a buyer and had since sold
that property to a third person,
refunding the actual95 value of the
lot sold plus interest or delivering a
substitute lot to the buyer:
Thus, for failure to cancel the
contract in accordance with the
procedure provided by law, we hold
that the contract to sell between
the parties remains valid and
subsisting. Following Section 3(a) of
R.A. No. 6552, respondent has the
right to offer to pay for the balance
of the purchase price, without
interest, which she did in this case.
Ordinarily, petitioner would have
had no other recourse but to accept
payment. However, respondent can
no longer exercise this right as the
subject lot was already sold by the
petitioner to another buyer which
lot, as admitted by the petitioner,
was valued at P1,700.00 per square
meter. As respondent lost her
chance to pay for the balance of the
P875,000.00 lot, it is only just and
equitable that the petitioner be
ordered to refund to respondent
the actual value of the lot
resold, i.e., P875,000.00, with
12% interest per annum computed
from August 26, 1991 until fully
paid or to deliver a substitute lot at
the option of the
respondent.96 (Emphasis supplied)
In Active, the buyer managed to
pay the full price of the principal
value of the lot but was still short of
the total contract price net of
interest.97 Unlike the buyer
in Active, petitioner here has only
made partial payments. Thus, a full
refund of the actual value of the lot,
as Active and Gatchalian ordered, is
improper. In addition, petitioner
has disavowed any interest in
proceeding with the purchase.98 She
has even admitted to not having
the financial capacity for this.99 The
antecedents, too, demonstrate that
petitioner made no further attempt
at proceeding with the purchase.
Therefore, this Court
follows Active's precedent, as it did
in Gatchalian, but makes
adjustments in consideration of the
peculiarities of this case.
Considering that it did not validly
cancel its contract with petitioner
and has also sold the lot to another
person, it is proper that respondent
be ordered to refund petitioner.
This refund shall not be the full,
actual value of the lot resold, as
was ordered
in Active and Gatchalian, lest
petitioner be unjustly enriched.
Rather, it shall only be the amount
actually paid by petitioner to
respondent, i.e., P608,648.20. In
view of Nacar v. Gallery Frames,
this amount shall be subject to legal
interest at the rate of twelve
percent (12%) per annum reckoned
from the filing of petitioner's
Complaint100 until June 30, 2013;
and six percent (6%) per annum
from July 1, 2013 until fully paid.101
WHEREFORE, the Petition for
Review on Certiorari is GRANTED.
The assailed October 11, 2012
Decision and July 3, 2013
Resolution of the Court of Appeals
in CA-G.R. SP No. 118285
are REVERSED and SET ASIDE.
Respondent Filinvest Land, Inc. is
ordered to refund petitioner Priscilla
Zafra Orbe the amount
P608,648.20. This refund shall earn
legal interest at twelve percent
(12%) per annum from November
17, 2004 to June 30, 2013, and six
percent (6%) per annum, reckoned
from July 1, 2013 until fully paid.
This case is REMANDED to the
Housing and Land Use Regulatory
Board Expanded National Capital
Regional Field Office FOR PROPER
EXECUTION.
SO ORDERED.
G.R. No. 202364, August 30,
2017
ARTURO C.
CALUBAD, Petitioner, v. RICARCE
N DEVELOPMENT
CORPORATION, Respondent.
DECISION
LEONEN, J.:
When a corporation intentionally or
negligently clothes its agent with
apparent authority to act in its
behalf, it is estopped from denying
its agent's apparent authority as to
of innocent third parties who dealt
with this agent in good faith.1
This resolves the Petition for Review
on Certiorari2 filed by petitioner
Arturo C. Calubad (Calubad),
assailing the January 25, 2012
Decision3 and June 20, 2012
4
Resolution  of the Court of Appeals
in CA-GR. CV No. 93185, which
upheld the January 6, 2009
Decision5 of Branch 218, Regional
Trial Court, Quezon City in Civil
Case No. Q-03-50584.
Respondent Ricarcen Development
Corporation (Ricarcen) was a Ricarcen
domestic corporation engaged in
renting out real estate. It was the
registered owner of a parcel of land
located at 53 Linaw St., Sta. Mesa
Heights, Quezon City.6 This parcel
of land was covered by Transfer
Certificate of Title (TCT) No. RT-
84937 (166018)7 and was
subdivided into two (2) lots.8
Ricarcen was a family corporation.
Marilyn R. Soliman (Marilyn) was its
president from 2001 to August
2003. The other members of the
board of directors during that time
were Marilyn's mother, Erlinda
Villanueva (Erlinda), her brother,
Josefelix R. Villanueva (Josefelix),
her aunt, Maura Rico, and her
sisters, Ma. Elizabeth V. Chamorro
(Elizabeth), Ma. Theresa R.
Villanueva, and Annabelle R.
9
Villanueva.
On October 15, 2001, Marilyn,
acting on Ricarcen's behalf as its
president, took out a P4,000,000.00
loan from Calubad. This loan was
secured by a real estate mortgage
over Ricarcen's Quezon City
property covered by TCT No. RT-
84937 (166018), as evidenced by a
Deed of Real Estate Mortgage. 10
The terms of the loan provided that
would pay the
P4,000,000.00 loan within a period
of six (6) months with "a
compounded interest at the rate of
FIVE (5%) percent for the first
month and THREE (3%) percent for
[the] succeeding months and a
penalty of ONE (1%) percent per
month on the principal sum in case
of delay in payment."11 The terms
of the loan also provided that the
first monthly interest payment of
P200,000.00 would be deducted
from the loan proceeds.12
On December 6, 2001, Ricarcen,
through Marilyn, and Calubad
amended and increased the loan to
P5,000,000.00 in the Amendment
of Deed of Mortgage (Additional
Loan of P1,000,000.00),13 with the
same property used as security and
under the same terms and
conditions as those of the original
Deed of Real Estate Mortgage.
On May 8, 2002, Ricarcen, again
acting through Marilyn, took out an
additional loan of 2,000,000.00
from Calubad, as evidenced by the
executed Second Amendment of
Deed of Mortgage (Additional Loan
of P2,000,000.00).14
To prove her authority to execute
the three (3) mortgage contracts in
Ricarcen's behalf, Marilyn presented
Calubad with a Board Resolution
dated October 15, 2001.15 This
Resolution empowered her to
borrow money and use the Quezon
City property covered by TCT No.
RT-84937 (166018) as collateral for
the loans. Marilyn also presented
two (2) Secretary's Certificates
dated December 6, 200116 and May
8, 2002,17 executed by Marilyn's
sister and Ricarcen's corporate
secretary, Elizabeth.
Sometime in 2003, after Ricarcen
failed to pay its loan, Calubad
initiated extrajudicial foreclosure
proceedings on the real estate
mortgage. The auction sale was set
on March 19, 2003.18
Calubad was the highest bidder
during the scheduled auction sale;
thus, on March 27, 2003, he was
issued a Certificate of Sale.19
On April 10, 2003, the Certificate of
Sale was annotated on TCT No. RT-
84937 (166018).20
Ricarcen claimed that it only
learned of Marilyn's transactions
with Calubad sometime in July
2003.21
Upon confirming that the Quezon
City property had indeed been
mortgaged, foreclosed, and sold to
Calubad as a result of Marilyn's
actions, Ricarcen's board of
directors removed her as president
and appointed Josefelix as its new
president. Josefelix was also
authorized to initiate the necessary
court actions to protect Ricarcen's
interests over the Quezon City
property.22
On September 9, 2003, Ricarcen
filed its Complaint for Annulment of
Real Estate Mortgage and
Extrajudicial Foreclosure of
Mortgage and Sale with Damages
against Marilyn, Calubad, and
employees of the Registry of Deeds
of Quezon City and of the Regional
Trial Court of Quezon City.23
On October 9, 2003, the Clerk of
Court and Ex-Officio Sheriff of the
Regional Trial Court of Quezon City.
Atty. Mercedes S. Gatmaytan, was
discharged as party-defendant.24
In its Complaint, Ricarcen claimed
that it never authorized its former
president Marilyn to obtain loans
from Calubad or use the Quezon
City property as collateral for the
loans.25
On the other hand, Calubad insisted
that the incidents which led to the
foreclosure and sale of the Quezon
City property were all above board
and were not marked with
irregularity. Furthermore, he
asserted that he exercised the
necessary diligence required under
the circumstances by requiring
Marilyn to submit the necessary
documents to prove her authority
from Ricarcen. Calubad likewise
argued that even if Ricarcen did not
authorize Marilyn, it was already
estopped from denying her
authority since the loan proceeds
had been released and Ricarcen had
benefited from them.26
For their part, spouses Marilyn and
Napoleon Soliman denied any
knowledge of or participation in the
allegedly falsified documents and
claimed that the falsification was
perpetrated by their broker, Nena
leo, and Calubad's broker, a certain
Malou, without their permission.27
On January 6, 2009, the Regional
Trial Court28 granted Ricarcen's
complaint and annulled the
mortgage contracts, extrajudicial
foreclosure, and sale by public
auction.
The Regional Trial Court held that
Marilyn failed to present a special
power of attorney as evidence of
her authority from Ricarcen. The
lack of a special power of attorney
should have been enough for
Calubad to be put on guard and to
require further evidence of Marilyn's
authority from Ricarcen.29
The Regional Trial Court also ruled
that the Board Resolution and
Secretary's Certificates, which were
supposedly executed by Ricarcen's
Board of Directors, had been
unmasked to be merely fabricated.
Furthermore, Atty. William S.
Merginio, who purportedly notarized
the Board Resolution and
Secretary's Certificates, denied that
he notarized those documents since
they did not appear in his notarial
register.30
The Regional Trial Court then
dismissed the complaint against the
Registry of Deeds employees for
Ricarcen's failure to show any
irregularity in the performance of
their duties.31 The dispositive
portion of the Regional Trial Court
Decision read:
WHEREFORE, premises considered,
judgment is hereby rendered in
favor of plaintiff Ricarcen
Development Corporation and
further:
1. Declaring as null and void the
following:
 Deed of Real Estate
Mortgage dated 15
October 2001;
 Amendment of Real
Estate Mortgage dated
06 December 2001;
 Second Amendment of
Deed of Mortgage
dated 08 May
2002;and
 Extrajudicial
Foreclosure of
Mortgage and Sale by
public auction in favor
of Arturo Calubad[;]
2. Canceling TCT No. 261881 in the
name of Arturo Calubad and
reinstating TCT No. RT-84937
(166018), both by the Regist[ry] of
Deeds of Quezon City; and
3. Ordering defendants spouses
Solimans and Calubad to pay jointly
and severally damages in the
amount of Two Hundred Fifty
Thousand Pesos (Php250,000.00)
as attorney's fees and costs of
litigation.
SO ORDERED.32
Only Calubad appealed the Regional
Trial Court Decision to the Court of
Appeals.
On January 25, 2012, the Court of
Appeals dismissed Calubad's appeal
and affirmed the Regional Trial
Court Decision. The Court of
Appeals emphasized that the rule
on the presumption of validity of a
notarized board resolution and of a
secretary's certificate is not
absolute and may be validly
overcome by contrary
33
evidence;  thus:
In order to defeat the presumption,
it is incumbent upon RICARCEN to
prove "with clear, convincing,
strong and irrefutable proof' that
the board resolution and secretary's
certificates purportedly authorizing
Marilyn Soliman to secure a loan
and mortgage the subject property
in behalf of the corporation are, in
fact, invalid.
In the case at bench, RICARCEN
was able to discharge this burden.
The truth of the contents of the
board resolution and secretary's
certificates relied upon by Calubad
had been overthrown by the
records of this case which clearly
show that such documents were not
in fact executed by the board of
directors of RICARCEN, and are,
therefore, fabricated.34
The Court of Appeals also
disregarded Calubad's argument
that Ricarcen was guilty of laches,
ruling that Ricarcen's board of
directors only found out about the
mortgage contracts in July 2003,
when they received a copy of the
notice of foreclosure of mortage.
Upon verifying with the Registry of
Deeds of Quezon City, Ricarcen
took immediate action by removing
Marilyn as president and instituting
a case for annulment and
cancellation of mortgage against
Calubad and Marilyn.35
The Court of Appeals likewise set
aside Calubad's argument that
Ricarcen was estopped from
denying the contracts. The Court of
Appeals held that since Ricarcen did
not know about the existence of the
contracts of mortgage between
Caluband and Marilyn, it could not
have ratified them or knowingly
accepted any benefits from the loan
proceeds.36
The dispositive portion of the Court
of Appeals Decision read:
WHEREFORE, in view of the
foregoing premises, the instant
appeal is hereby
ordered DISMISSED, and the
appealed decision is AFFIRMED in
toto.
SO ORDERED.37 (Emphasis in the
original)
On August 10, 2012, Calubad filed
his Petition38 before this Court.
Petitioner claims that Ricarcen is
barred by estoppel from denying
Marilyn's authority to enter into a
contract of loan and mortgage with
Calubad for several reasons. He
argues that Ricarcen clothed
Marilyn in apparent authority to act
in its behalf.39 that it benefited from
the loans proceeds,40 and that it
impliedly agreed to the mortgage
loans by paying the monthly
interest payments.41
Petitioner avers that Elizabeth
executed four (4) separate
document which gave Marilyn the
authority to secure loans, use the
Quezon City property as collateral,
and execute all documents needed
for those purposes.42
The four (4) documents which
petitioner claimed to have proved
Marilyn's authority to act in behalf
of Ricarcen were:
a) Board Resolution dated October
15, 2001, which read:
RESOLVED, AS IT IS HEREBY
RESOLVED, that the President
MARILYN R. SOLIMAN, is the
authorized signatory of the
corporation to transact any and all
documents necessary for the
purpose of securing monetary loan
using a parcel of land owned by the
corporation located at No. 53 Linaw
St., Quezon City covered by TCT
No. RT 84937 (166018) of the
Registry of Deeds of [Quezon City]
with a total area of 840 square
meters more or less, as
collateral/security.
RESOLVED FURTHER, AS IT IS
HEREBY RESOLVED, that she is
authorized to sign all documents
required for the monetary loan for
and in behalf of the corporation.43
b) Secretary's Certificate dated
October 15, 2001, which read:
BE IT RESOLVED, AS IT IS HEREBY
RESOLVED, that the corporation will
borrow from ARTURO CALUBAD,
Filipino, of legal age, and residing
at 89 East Maya Philam Homes
Village, Quezon City.
FURTHERMORE, BE IT RESOLVED,
that the corporation is authorizing
MARILYN R. SOLIMAN, President, to
sign for and in behalf of the
corporation.44
c) Secretary's Certificate dated
December 6, 2001, which read:
RESOLVED, as it is hereby resolved
that the President, MARILYN R.
SOLIMAN, is hereby authorized to
secure ADDITIONAL LOAN OF
[P]1,000,000.00 from MR. ARTURO
CALUBAD, using as collateral two
(2) parcels of land with the
improvements existing thereon,
situated in Quezon City, Metro
Manila, covered and embraced by
Transfer Certificate of Title No. RT-
84937 (166018) of the Registry of
Deeds of Quezon City, Metro
Manila, and in such amount that
she deems it most proper and
beneficial to the corporation.
RESOLVED FINALLY, that the
President is hereby authorized to
sign Amendment of Deed of Real
Estate Mortgage, Acknowledgment
Receipt and other pertinent
documents and get and receive the
loan either in cash or check/s with
any bank lawfully doing business in
the Philippines for and in behalf of
the corporation.45
d) Secretary's Certificate dated May
8, 2002, which read:
BE IT RESOLVED, AS IT IS HEREBY
RESOLVED, that the corporation will
secure additional monetary loan of
P2,000,000.00 from ARTURO
CALUBAD, Filipino, of legal age, and
residing at 89 East Maya Philam
Homes Village, Quezon City, using a
parcel of land owned by the
corporation located at No. 53 Linaw
St., Quezon City covered by TCT
No. RT-84937 (166018) of the
Registry of Deeds of [Quezon City]
with a total area of 840 square
meters more or less, as
collateral/security.
FURTHERMORE, BE IT RESOLVED,
that the corporation is authorizing
MARILYN R. SOLIMAN, President, to
sign for and in behalf of the
corporation.46
All these four (4) documents were
signed by Elizabeth in her capacity
as Ricarcen's corporate secretary.
Elizabeth later on denied signing
any of these four (4) documents
cited by petitioner, saying that she
regularly signed blank documents
and left them with her sister
Marilyn. She opined that the Board
Resolution and Secretary's
Certificates, which purportedly gave
Marilyn the authority to transact
with petitioner in Ricarcen's behalf,
might have been some of the blank
documents she had earlier signed.47
However, petitioner asserts that the
fact that Elizabeth entrusted signed,
blank documents to Marilyn proved
that Ricarcen authorized her to
secure loans and use its properties
as collateral for the loans.48
Petitioner also points out that
Marilyn had possession of the
owner's duplicate copy of TCT No.
RT-84937 (166018), and thus, he
had no reason but to believe that
she was authorized by Ricarcen to
deal and transact in its behalf. 49
Additionally, the loan proceeds were
issued through checks payable to
Ricarcen, which were deposited in
its bank account and were cleared.
As further evidence of Ricarcen's
receipt of the loan proceeds,
petitioner presented several checks
drawn and issued by Elizabeth or
Erlinda, jointly with Marilyn,
representing loan payments.50
Petitioner also presented several
withdrawal slips signed by either
Elizabeth or Erlinda, jointly with
Marilyn, authorizing a certain
Lilydale Ombina to repeatedly
withdraw from Ricarcen's bank
account.51
Petitioner likewise presented
several checks drawn from
Ricarcen's bank account, issued by
Elizabeth or Erlinda, jointly with
Marilyn, payable to third persons or
to cash.52 Petitioner maintains that
the foregoing evidence is
indubitable proof that the loan
proceeds have been used by
Ricarcen.53
Petitioner then claims that Ricarcen,
in a check drawn and issued by
Erlinda and Marilyn, paid the 3%
monthly interest for the first loan of
P4,000,000.00. This bolstered his
belief that Ricarcen and its officers
knew of and approved that loan,
and induced him to grant Ricarcen,
through Marilyn, additional loans.54
Petitioner asserts that the acts of
Elizabeth and Erlinda are equivalent
to clothing Marilyn with apparent
authority to deal with him and use
the Quezon City property as
collateral:
Their acts are also a manifestation
of their acquiescence to Marilyn
Soliman's availment of loans and
execution of real estate mortgage
with petitioner.
Thus, even if Marilyn Soliman had
acted without or in excess of her
actual authority, if she acted within
the scope of an apparent authority
with which [Ricarcen] has clothed
her by holding her out or permitting
her to appear as having such
authority, [Ricarcen] is bound
thereby in favor of petitioner who in
good faith relied on such apparent
authority.55
On November 12, 2012, this Court
required Ricarcen to comment on
the Petition.56
On February 4, 2013, Ricarcen filed
its Comment,57 where it claims that
the Petition raised questions of fact,
which are not proper in a petition
for review on certiorari. It also
avers that petitioner failed to raise
any exceptional circumstances, and
thus, should be dismissed
58
outright.
Ricarcen asserts that while the
documents it purportedly issued
enjoy the presumption of validity,
this presumption is not absolute
and it has shown convincing
evidence as to the invalidity of the
Board Resolution and of the
Secretary's Certificates.59
Ricarcen points out that Marilyn
clearly acted without authority
when she entered into a loan and
mortgage agreement with
petitioner. Being void, the contracts
of loan and mortgage can never be
ratified.60
Ricarcen also denied that it was
guilty of laches since it only learned
about Marilyn's loan with Calubad in
July 2003, when it received a notice
of foreclosure. Upon lean1ing of the
extrajudicial foreclosure and sale by
public auction, it immediately
removed Marilyn as president and
authorized Josefelix to file the
necessary actions to protect
Ricarcen's interests.61
Ricarcen likewise claims that it
cannot be held guilty of estoppel in
pais since it never induced nor led
petitioner to believe that Marilyn
was duly authorized to take out a
loan and to mortgage the Quezon
City property as collateral.
Additionally, "it did not knowingly
accept any benefit" from the loan
proceeds.62
Ricarcen declares that petitioner
either connived with Marilyn or, at
the very least, failed to exercise
reasonable diligence and prudence
in ascertaining Marilyn's supposed
agency from Ricarcen.63
On March 11, 2013, this Court
noted Ricarcen's Comment and
required Calubad to reply to the
Comment,64
On May 9, 2013, Calubad filed his
Reply,65 where he denied that he
raised purely questions of fact in his
Petition since the issue raised was
"the law and jurisprudence
applicable to the facts of this case,
or whether the conclusion drawn by
the Court of Appeals from those
facts is correct or not."66
Petitioner likewise claims that the
findings of the Court of Appeals
were contradicted by the evidence
on record, and hence, were not
conclusive or binding on the
parties.67
On April 6, 2016, this Court noted
Calubad's motion for early decision
dated March 21, 2016.68
The only issue presented for this
Court's resolution is whether or not
Ricarcen Development Corporation
is estopped from denying or
disowning the authority of Marilyn
R. Soliman, its former President,
from entering into a contract of loan
and mortgage with Arturo C.
Calubad.
The petition is meritorious.
I appellee . . .; (7) The findings of
The Rules of Court categorically
state that a review of appeals filed
before this Court is "not a matter of
right, but of sound judicial
discretion."69 The Rules of Court
further require that only questions
of law should be raised in petitions
filed under Rule 4570 since factual
questions are not the proper
subject of an appeal by certiorari. It
is not this Court's function to
analyze or weigh all over again
evidence that has already been
considered in the lower courts.71
However, these rules admit
exceptions. Medina v. Mayor
Asistio, Jr.72 listed down 10
recognized exceptions:
(1) When the conclusion is a finding
grounded entirely on speculation,
surmises or conjectures . . .; (2)
When the inference made is
manifestly mist en, absurd or
impossible . . .; (3) Where there is
a grave abuse of discretion . . .; (4)
When the judgment is based on a
misapprehension of facts . . .; (5)
When the findings of fact are
conflicting . . .; (6) When the Court
of Appeals, in making its findings,
went beyond the issues of the case
and the same is contrary to the
admissions of both appellant and
the Court of Appeals are contrary to
those of the trial court . . .; (8)
When the findings of fact 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
petitioners' main and reply briefs
are not disputed by the respondents
. . .; and (10) The finding of fact of
the Court of Appeals is premised on
the supposed absence of evidence
and is contradicted by the evidence
on record...73
Pascual v. Burgos74 instructed that
parties must demonstrate by
convincing evidence that the case
clearly falls under the exceptions to
the rule:
Parties praying that this court
review the factual findings of the
Court of Appeals must demonstrate
and prove that the case clearly falls
under the exceptions to the rule.
They have the burden of proving to
this court that a review of the
factual findings is necessary. Mere
assertion and claim that the case
falls under the exceptions do not
suffice.75
Petitioner claims that his case falls
under the exceptions to the general
rule on a Rule 45 appeal since the
findings of the lower courts are
contradicted by the evidence on
record.76 After a careful study of the
records, this Court is convinced that
this case falls under the exceptions
cited in Medina, particularly in that
"the inference made is manifestly
mistaken," making a Rule 45 appeal
proper.
II
As a corporation, Ricarcen exercises
its powers and conducts its
business through its board of
directors, as provided for by Section
23 of the Corporation Code:
Section 23. The board of directors
or trustees. - Unless otherwise
provided in this Code, the corporate
powers of all corporations formed types of authorities conferred upon
under this Code shall be exercised, a corporate officer or agent in
all business conducted and all dealing with third persons.80
property of such corporations
controlled and held by the board of Actual authority can either be
directors or trustees to be elected express or implied. Express actual
from among the holders of stocks, authority refers to the power
or where there is no stock, from delegated to the agent by the
among the members of the corporation, while an agent's
corporation, who shall hold office implied authority can be measured
for one (1) year until their by his or her prior acts which have
successors are elected and been ratified by the corporation or
qualified. whose benefits have been accepted
However, the board of directors by the corporation.81
may validly delegate its functions
and powers to its officers or agents. On the other hand, apparent
The authority to bind the authority is based on the principle
corporation is derived from law, its of estoppel. The Civil Code
corporate by-laws, or directly from provides:
the board of directors, "either Article 1431. Through estoppel an
expressly or impliedly by habit, admission or representation is
custom or acquiescence in the rendered conclusive upon the
general course of business."77 person making it, and cannot be
denied or disproved as against the
The general principles of agency person relying thereon.
govern the relationship between a
corporation and its . . . .
representatives.78 Article 131779 of
the Civil Code similarly provides Article 1869. Agency may be
that the principal must delegate the express, or implied from the acts of
necessary authority before anyone the principal, from his silence or
can act on his or her behalf. lack of action, or his failure to
repudiate the agency, knowing that
Nonetheless, law and jurisprudence another person is acting on his
recognize actual authority and behalf without authority.
apparent authority as the two (2)
Agency may be oral, unless the law
requires a specific form.
Yao Ka Sin Trading v. Court of
Appeals82 instructed that an agent's
apparent authority from the
principal may also be ascertained
through:
(1) the general manner by which
the corporation holds out an officer
or agent as having power to act or,
in other words, the apparent
authority with which it clothes him
to act in general, or (2) the
acquiescence in his acts of a
particular nature, with actual or
constructive knowledge thereof,
whether within or without the scope
of his ordinary powers.
The doctrine of apparent authority
provides that even if no actual
authority has been conferred on an
agent, his or her acts, as long as
they are within his or her apparent
scope of authority, bind the
principal. However, the principal's
liability is limited to third persons
who are reasonably led to believe
that the agent was authorized to
act for the principal due to the
principal's conduct.83
Apparent authority is determined by
the acts of the principal and not by
the acts of the agent.84 Thus, it is
incumbent upon Calubad to prove
how Ricarcen's acts led him to
believe that Marilyn was duly
authorized to represent it.
III
As the former president of Ricarcen,
it was within Marilyn's scope of
authority to act for and enter into
contracts in Ricarcen's behalf. Her
broad authority from Ricarcen can
be seen with how the corporate
secretary entrusted her with blank
yet signed sheets of paper to be
used at her discretion.85 She also
had possession of the owner's
duplicate copy of the land title
covering the property mortgaged to
Calubad, further proving her
authority from Ricarcen.86
The records show that on October
15, 2001, Calubad drew and issued
two (2) checks payable to Ricarcen
representing the loan proceeds for
the first mortgage. The first check
was Equitable PCI Bank check
number 0024416 for P2,920,000.00
and the second check was Equitable
PCI Bank check number 0000461
for P600,000.00. Both checks were
deposited in Ricarcen 's bank
account with Banco de Oro, Banawe
Branch, and were honored by the
drawee bank.87
On December 6, 2001, Marilyn
negotiated for an additional
P1,000,000.00 loan with Calubad,
under the same terms and
conditions.88
From December 15, 2001 to April
15, 2002, Ricarcen paid and issued
several checks payable to Calubad,
which he claimed were the monthly
interest payments of the mortgage
loans. The following checks were
drawn by Erlinda and Marilyn for
Ricarcen:
(a) Banco de Oro check number
0000067624 dated December
15, 2001 for P120,000.00;
(b) Banco de Oro check number
0000067622 dated January 15,
2002 for P120,000.00;
(c) Banco de Oro check number
000067626 dated February 15,
2002 for P120,000.00;
(d) Banco de Oro check number
0000067673 dated March 6,
2002 for P30,000.00;
(e) Banco de Oro check number
0000067625 dated March 15,
2002 for P120,000.00;
(f) Banco de Oro check number
 0000067674 dated April 6, 2002
for P30,000.00; and
(g) Banco de Oro check number
0002422 dated April 15, 2002
for P120,000.00.89
Calubad deposited the January 15,
2002 check into his Metrobank,
EDSA-Caloocan Branch account,
while the rest of the checks were
deposited in his bank account with
Equitable PCI Bank, A. De Jesus-
EDSA Branch. All the checks from
Ricarcen cleared.90
For the additional loan of
P2,000,000.00 obtained on May 8,
2002, Ricarcen again issued several
Banco de Oro checks dated June
15, 2002 to December 6, 2002 as
payments for this loan and its
monthly interest. These checks
were made to Calubad's order and
were drawn by either Erlinda or
Elizabeth with Marilyn.91
However, Banco de Oro check
number 0082424 dated June 15,
2002 for P120,000.00, Banco de
Oro check number 0082425 dated
July 15, 2002 for P120,000.00, and
Banco de Oro check number
0082426 dated August 15, 2002 for
P120,000 were all dishonored by
the drawee bank for insufficiency of
funds.92
Calubad states that he no longer
deposited the following checks from
Ricarcen upon Marilyn's request,
since she claimed that Ricarcen's
funds were by then insufficient to
pay the issued checks:
(a) Banco de Oro check number
0082467 dated July 6, 2002 for
P30,000.00;
(b) Banco de Oro check number
0082447 dated July 8, 2002 for
P60,000.00;
(c) Banco de Oro check number
0082448 dated August 8, 2002
for P2,000,000.00;
(d) Banco de Oro check number
0082469 dated September 6,
2002 for P30,000.00;
(e) Banco de Oro check number
0082427 dated September 15,
2002 for P120,000.00;
(f) Banco de Oro check number
0082470 dated October 6, 2002
for P30,000.00;
(g) Banco de Oro check number
0082428 dated October 15, 2002
for P4,000,000.00;
(h) Banco de Oro check number
0082471 dated November 6,
2002 for P30,000.00; and
(i) Banco de Oro check number
0082472 dated December 6,
2002 for P1,000,000.00.93
Calubad could not be faulted for
continuing to transact with Marilyn,
even agreeing to give out additional
loans, because Ricarcen clearly
clothed her with apparent authority.
Likewise, it reasonably appeared
that Ricarcen's officers knew of the
mortgage contracts entered into by
Marilyn in Ricarcen's behalf as
proven by the issued Banco De Oro
checks as payments for the monthly
interest and the principal loan.
Ricarcen claimed that it never
granted Marilyn authority to
transact with Calubad or use the
Quezon City property as collateral
for the loans, but its actuations say
otherwise. It appears as if Ricarcen
and its officers gravely erred in
putting too much trust in Marilyn.
However, Calubad, as an innocent
third party dealing in good faith
with Marilyn, should not be made to
suffer because of Ricarcen's
negligence in conducting its own
business affairs. This finds support
in Yao Ka Sin Trading:94
Also, "if a private corporation
intentionally or negligently clothes
its officers or agents with apparent
power to perform acts for it, the
corporation will be estopped to
deny that such apparent authority
is real, as to innocent third persons
dealing in good faith with such
officers or agents."95
IV
Nonetheless, petitioner's prayer for
the award of damages must be
denied for failing to provide factual
or legal basis for the award.
Moral damages are not
automatically awarded when there
is a breach of contract. It must also
be proven that the party who
breached the contract acted
fraudulently or in bad faith, in
wanton disregard of the contracted
obligation.96 In addition, the
following conditions must be met
before moral damages may be
awarded:
(1) first, there must be an injury,
whether physical, mental or
psychological, clearly sustained by
the claimant; (2) second, there
must be culpable act or omission
factually established; (3) third, the
wrongful act or omission of the
defendant is the proximate cause of
the injury sustained by the
claimant; and (4) fourth, the award
of damages is predicated on any of
the cases stated in Article 2219 of
the Civil Code.97 (Emphasis
supplied)
Petitioner failed to allege that
Ricarcen acted fraudulently or
wantonly when it breached the loan
Md mortgage contract. Neither is
this Court convinced that fraud, bad
faith, or wanton disregard of its
obligation can be imputed to
Ricarcen due to its bad business
judgment and negligence in putting
too much trust in Marilyn. It was
not sufficiently shown that Ricarcn
was spurred by a dishonest purpose
or was motivated by ill will or fraud
when it assailed the contract
entered into by Marilyn and
Calubad.
In the same manner, exemplary
damages98 cannot be awarded in
the absence of evidence that
Ricarcen acted fraudulently or
wantonly. Finally, in the absence of
exemplary damages, attorney's
fees, and costs of suit also cannot
be recovered.99
VHEREFORE, the Petition
is GRANTED. The assailed January
25, 2012 Decision and June 20,
2012 Resolution of the Court of
Appeals in CA-GR. CV No. 93185
are REVERSED and SET ASIDE.
Ricarcen Development Corporation's
Amended Complaint in. Civil Case
No. Q-03-50584 before Branch 218,
Regional Trial Court, Quezon City is
hereby DISMISSED for lack of
merit.
SO ORDERED.
[ G.R. No. 192725, August 09, 2017 ]
CE CONSTRUCTION
CORPORATION, PETITIONER, VS.
ARANETA CENTER INC.,
RESPONDENT.
DECISION
LEONEN, J.:
A tribunal confronted not only with
ambiguous contractual terms but also
with the total absence of an instrument
which definitively articulates the
contracting parties' agreement does
not act in excess of jurisdiction when it
employs aids in interpretation, such as
those articulated in Articles 1370 to
1379 of the Civil Code. In so doing, a
tribunal does not conjure its own
contractual terms and force them upon
the parties.
In addressing an iniquitous
predicament of a contractor that
actually renders services but remains
inadequately compensated, arbitral
tribunals of the Construction Industry
Arbitration Commission (CIAC) enjoy a
wide latitude consistent with their
technical expertise and the arbitral
process' inherent inclination to afford
the most exhaustive means for dispute
resolution. When their awards become
the subject of judicial review, courts
must defer to the factual findings borne
by arbitral tribunals' technical expertise
and irreplaceable experience of
presiding over the arbitral process.
Exceptions may be availing but only in
instances when the integrity of the
arbitral tribunal itself has been put in
jeopardy. These grounds are more
exceptional than those which are
regularly sanctioned in Rule 45
petitions.
This resolves a Petition for Review on
Certiorari[1] under Rule 45 of the 1997
Rules of Civil Procedure, praying that
the assailed April 28, 2008 Decision[2]
and July 1, 2010 Amended Decision[3]
Petitioner CECON was a construction
of the Court of Appeals in CA-G.R. SP
contractor, which, for more than 25
No. 96834 be reversed and set aside.
years, had been doing business with
It likewise prays that the October 25,
respondent ACI, the developer of
2006 Decision[4] of the CIAC Arbitral
Araneta Center, Cubao, Quezon City.
Tribunal be reinstated.
[8]
The CIAC Arbitral Tribunal October 25,
In June 2002, ACI sent invitations to
2006 Decision awarded a total sum of
different construction companies,
P217,428,155.75 in favor of petitioner
including CECON, for them to bid on a
CE Construction Corporation
project identified as "Package #4
(CECON). This sum represented
Structure/Mechanical, Electrical, and
adjustments in unit costs plus interest,
Plumbing/Finishes (excluding Part A
variance in take-out costs, change
Substructure)," a part of its
orders, time extensions, attendance
redevelopment plan for Araneta Center
fees, contractor-supplied equipment,
Complex.[9] The project would
and costs of arbitration. This amount
eventually be the Gateway Mall. As
was net of the countervailing awards in
described by ACI, "[t]he Project
favor of respondent Araneta Center,
involved the design, coordination,
Inc. (ACI), for defective and incomplete
construction and completion of all
works, permits, licenses and other
architectural and structural portions of
advances.[5]
Part B of the Works[;] and the
construction of the architectural and
structural portions of Part A of the
The assailed Court of Appeals April 28,
Works known as Package 4 of the
2008 Decision modified the CIAC
Araneta Center Redevelopment
Arbitral Tribunal October 25, 2006
Project."[10]
Decision by awarding a net amount of
P82,758,358.80 in favor of CECON.[6]
The Court of Appeals July 1, 2010
Amended Decision adjusted this
amount to P93,896,335.71.[7]
As part of its invitation to prospective
contractors, ACI furnished bidders with
Tender Documents, consisting of:
Volume I: Tender Invitation, Project
Description, Instructions to Tenderers,
Form of Tender, Dayworks,
Preliminaries and General
Requirements, and Conditions of
Contract;
Volume II: Technical Specifications for
the Architectural, Structural,
Mechanical, Plumbing, Fire Protection
and Electrical Works; and
Addenda Nos. 1, 2, 3, and 4 relating to
modifications to portions of the Tender
Documents.[11]
The Tender Documents described the
project's contract sum to be a "lump
sum" or "lump sum fixed price" and
restricted cost adjustments, as follows:
6 TYPE OF CONTRACT
6.1
This is a Lump Sum Contract and the
price is a fixed price not subject to
measurement or recalculation should
the actual quantities of work and
materials differ from any estimate
available at the time of contracting,
except in regard to Cost-Bearing
Changes which may be ordered by the
Owner which shall be valued under the
terms of the Contract in accordance
with the Schedule of Rates, and with
regard to the Value Engineering
Proposals under Clause 27. The
Contract Sum shall not be adjusted for
changes in the cost of labour, materials
or other matters.[12]
TENDER AND CONTRACT
Fixed Price Contract
The Contract Sum payable to the
Contactor is a Lump Sum Fixed Price
and will not be subject to adjustment,
save only where expressly provided for
within the Contract Documents and the
Form of Agreement.
The Contract Sum shall not be subject
to any adjustment "in respect of rise
and fall in the cost of materials[,] labor,
plant, equipment, exchange rates or
any other matters affecting the cost of
execution of Contract, save only where
expressly provided for within the
Contract Documents or the Form of
Agreement.
The Contract Sum shall further not be
subject to any change in subsequent
legislation, which causes additional or
reduced costs to the Contractor.[13]
The bidders' proposals for the project
were submitted on August 30, 2002.
These were based on "design and
construct" bidding.[14]
CECON submitted its bid, indicating a
tender amount of P1,449,089,174.00.
This amount was inclusive of "both the
act of designing the building and
executing its construction." Its bid and
tender were based on schematic
drawings, i.e., conceptual designs and
suppositions culled from ACI's Tender
Documents. CECON's proposal
"specifically stated that its bid was valid
for only ninety (90) days, or only until
29 November 2002." This tender
proposed a total of 400 days, or until
January 10, 2004, for the
implementation and completion of the
project.[15]
CECON offered the lowest tender
amount. However, ACI did not award
the project to any bidder, even as the
validity of CECON's proposal lapsed on
November 29, 2002. ACI only
subsequently informed CECON that
the contract was being awarded to it.
ACI elected to inform CECON verbally
and not in writing.[16]
In a phone call on December 7, 2002,
ACI instructed CECON to proceed with
excavation works on the project. ACI,
however, was unable to deliver to
CECON the entire project site. Only
half, identified as the Malvar-to-Roxas
portion, was immediately available.
The other half, identified as the Roxas
to-Coliseum portion, was delivered only
about five (5) months later.[17]
As the details of the project had yet to
be finalized, ACI and CECON pursued
further negotiations. ACI and CECON
subsequently agreed to include in the
project the construction of an office
tower atop the portion identified as Part
A of the project. This escalated
CECON's project cost to
P1,582,810,525.00.[18]
After further negotiations, the project
cost was again adjusted to
P1,613,615,244.00. Still later, CECON
extended to ACI a P73,615,244.00
discount, thereby"reducing its offered
project cost to P1,540,000.00.[19]
Despite these developments, ACI still
failed to formally award the project to
CECON. The parties had yet to
execute a formal contract. This
prompted CECON to write a letter to
ACI, dated December 27, 2002,[20]
emphasizing that the project cost
quoted to ACI was "based upon the
prices prevailing at December 26,
2002" price levels.[21]
By January 2003 and with the project
yet to be formally awarded, the prices
of steel products had increased by 5%
and of cement by P5.00 per bag. On
January 8, 2003, CECON again wrote
ACI notifying it of these increasing
costs and specifically stating that
further delays may affect the contract
sum.[22]
Still without a formal award, CECON
again wrote to ACI on January 21,
2003[23] indicating cost and time
adjustments to its original proposal.
Specifically, it referred to an 11.52%
increase for the cost of steel products,
totalling P24,921,418.00 for the project;
a P5.00 increase per bag of cement,
totalling P3,698,540.00 for the project;
and costs incurred because of changes
to the project's structural framing,
totalling P26,011,460.00. The contract
sum, therefore, needed to be increased
to P1,594,631,418.00. CECON also
specifically stated that its tender
relating to these adjusted prices were
valid only until January 31, 2003, as
further price changes may be
forthcoming. CECON emphasized that
its steel supplier had actually already
advised it of a forthcoming 10%
increase in steel prices by the first
week of February 2003. CECON
further impressed upon ACI the need
to adjust the 400 days allotted for the
completion of the project.[24]
On February 4, 2003, ACI delivered to
CECON the initial tranche of its down
payment for the project. By then, prices
of steel had been noted to have
increased by 24% from December
2002 prices. This increase was
validated by ACI.[25]
Subsequently, ACI informed CECON
that it was taking upon itself the design
component of the project, removing
from CECON's scope of work the task
of coming up with designs.[26]
On June 2, 2003, ACI finally wrote a
letter[27] to CECON indicating its
acceptance of CECON's August 30,
2002 tender for an adjusted contract
sum of P1,540,000.00 only:
Araneta Center, Inc. (ACI) hereby
accepts the C-E Construction
Corporation (CEC) tender dated
August 30, 2002, submitted to ACI in
the adjusted sum of One Billion Five
Hundred Forty Million Pesos Only
(P1,540,000,000.00), which sum
includes all additionally quoted and
accepted items within this acceptance
letter and attachments, Appendix A,
consisting of one (1) page, and
Appendix B, consisting of seven (7)
pages plus attachments, which sum of
One Billion Five Hundred Forty Million
Pesos Only (P1,540,000,000.00) is As it assumed the design aspect of the
inclusive of any Government Customs project, ACI issued to CECON the
Duty and Taxes including Value Added construction drawings for the project.
Tax (VAT) and Expanded Value Added Unlike schematics, these drawings
Tax (EVAD, and which sum is specified "the kind of work to be done
hereinafter referred to as the Contract and the kind of material to be
Sum.[28] used."[33] CECON laments, however,
that "ACI issued the construction
Item 4, Appendix B of this acceptance
drawings in piece-meal fashion at
letter explicitly recognized that "all
times of its own choosing."[34] From
design except support to excavation
the commencement of CECON's
sites, is now by ACI."[29] It thereby
engagement until its turnover of the
confirmed that the parties were not
project to ACI, ACI issued some 1,675
bound by a design-and-construct
construction drawings. CECON
agreement, as initially contemplated in
emphasized that many of these
ACI's June 2002 invitation, but by a
drawings were partial and frequently
construct-only agreement. The letter
pertained to revisions of prior items of
stated that "[CECON] acknowledge[s]
work.[35] Of these drawings, more than
that a binding contract is now
600 were issued by ACI well after the
existing."[30] However, consistent with
intended completion date of January
ACI's admitted changes, it also
10, 2004: Drawing No. 1040 was
expressed ACI's corresponding
issued on January 12, 2004, and the
undertaking: "This notwithstanding,
latest, Drawing No. 1675, was issued
formal contract documents embodying
on November 26, 2004.[36]
these positions will shortly be prepared
and forwarded to you for
execution."[31]
Apart from shifting its arrangement with
CECON from design-and-construct to
construct only, ACI introduced other
Despite ACI's undertaking, no formal
changes to its arrangements with
contract documents were delivered to
CECON. CECON underscored two (2)
CECON or otherwise executed
of the most notable of these changes
between ACI and CECON.[32]
which impelled it to seek legal relief.

First, on January 30, 2003, ACI issued
Change Order No. 11,[37] which
shifted the portion identified as Part B
of the project from reinforced concrete
framing to structural steel framing.
Deleting the cost for reinforced
concrete framing meant removing
P380,560,300.00 from the contract
sum. Nevertheless, replacing
reinforced concrete framing with
structural steel framing "entailed
substitute cost of Php217,585,000, an
additional Php44,281,100 for the
additional steel frames due to
revisions, and another Php1,950,000
for the additional pylon."[38]
Second, instead of leaving it to
CECON, ACI opted to purchase on its
own certain pieces of equipment-
elevators, escalators, chillers,
generator sets, indoor substations,
cooling towers, pumps, and tanks-
which were to be installed in the
project. This entailed "take-out costs";
that is, the value of these pieces of
equipment needed to be removed from
the total amount due to CECON. ACI
considered a sum totalling
P251,443,749.00 to have been
removed from the contract sum due to
CECON. This amount of costs claimed by ACI. It instead
P251,443,749.00 was broken down, as claimed P26,892,019.00 by way of
follows: compensation for the work that it
rendered.[41]
(a) For elevators/escalators,
PhP106,000,000;
(b) For Chillers, PhP41,152,900; With many changes to the project and
ACI's delays in delivering drawings and
(c) For Generator Sets,
specifications, CECON increasingly
PhP53,040,000;
found itself unable to complete the
(d) For Indoor Substation, project on January 10, 2004. It noted
PhP23,024,150; that it had to file a total of 15 Requests
for Time Extension from June 10, 2003
(e) For Cooling Towers, PhP5,472,809; to December 15, 2003, all of which ACI
and failed to timely act on.[42]
(f) For Pumps and Tanks,
PhP22,753,890.[39]
Exasperated, CECON served notice
CECON avers that in removing the upon ACI that it would avail of
sum of P251,443,749.00, ACI "simply arbitration. On January 29, 2004, it
deleted the amount in the cost filed with the CIAC its Request for
breakdown corresponding to each of Adjudication.[43] It prayed that a total
the items taken out in the contract sum of P183,910,176.92 representing
documents."[40] ACI thereby adjusted project costs be awarded in
disregarded that the corresponding its favor.[44]
stipulated costs pertained not only to
the acquisition cost of these pieces of
equipment but also to so-called
On March 31, 2004, CECON and ACI
"builder's works" and other costs
filed before the CIAC a Joint
relating to their preparation for and
Manifestation[45] indicating that some
installation in the project. Finding it
issues between them had already been
unjust to be performing auxiliary
settled. Proceedings before the CIAC
services practically for free, CECON
were then suspended to enable
proposed a reduction in the take-out
CECON and ACI to arrive at an
amicable settlement.[46] On October
14, 2004, ACI filed a motion before the
CIAC noting that it has validated
P85,000,000.00 of the total amount
claimed by CECON. It prayed for more
time to arrive at a settlement.[47]
In the meantime, CECON completed
the project and turned over Gateway
Mall to ACI.[48] It had its blessing on
November 26, 2004.[49]
As negotiations seemed futile, on
December 29, 2004, CECON filed with
the CIAC a Motion to Proceed with
arbitration proceedings. ACI filed an
Opposition.[50]
After its Opposition was denied, ACI
filed its Answer dated January 26,
2005.[51] It attributed liability for delays
to CECON and sought to recover
counterclaims totalling P180,752
297.84. This amount covered
liquidated damages for CECON's
supposed delays, the cost of defective
works which had to be rectified, the
cost of procuring permits and licenses,
and ACI's other advances.[52]
be adjusted to P324,113,410.08. The
CIAC Arbitral Tribunal, thus, directed
On February 8, 2005, ACI filed a
CECON to file an Amended Request
Manifestation and Motion seeking the
for Adjudication/Amended Complaint.
CIAC's clearance for the parties to
[57]
enter into mediation. Mediation was
then instituted with Atty. Sedfrey
Ordonez acting as mediator.[53]
Following the filing of CECON's
Amended Request for
Adjudication/Amended Complaint and
After mediation failed, an arbitral
the ensuing responsive pleadings,
tribunal was constituted through a
another preliminary conference was set
March 16, 2005 Order of the CIAC. It
on May 13, 2005. The initial hearing of
was to be composed of Dr. Ernesto S.
the case was then set on June 10,
De Castro, who acted as Chairperson
2005.[58]
with Engr. Reynaldo T. Viray and Atty.
James S. Villafranca as members.[54]
At the initial hearing, the CIAC Arbitral
Tribunal resolved to exclude the
ACI filed a Motion for Reconsideration
amount of P20,483,505.12 from
of the CIAC March 16, 2005 Order.
CECON's claims as these pertained to
This was denied in the Order dated
unpaid accomplishments that did not
March 30, 2005.[55]
relate to the issue of cost adjustments
attributed to ACI, as originally pleaded
by CECON.[59]
In the Order dated April 1, 2005, the
CIAC Arbitral Tribunal set the
preliminary conference on April 13,
Following the conduct of hearings, the
2005.[56]
submission of the parties' memoranda
and offers of exhibits, the CIAC Arbitral
Tribunal rendered its Decision on
At the preliminary conference, CECON October 25, 2006. It awarded a total of
indicated that, the total sum it was P229,223,318.69 to CECON, inclusive
entitled to recover from ACI needed to
of the costs of arbitration. It completely
denied ACI's claims for liquidated
damages, but awarded to ACI a total of
P11,795,162.93 on account of
defective and rectification works, as
well as permits, licenses, and other
advances.[60] Thus, the net amount
due to CECON was determined to be
P217,428,155.75.
The CIAC Arbitral Tribunal noted that
while ACI's initial invitation to bidders
was for a lump-sum design-and-
construct arrangement, the way that
events actually unfolded clearly
indicated a shift to an arrangement
where the designs were contingent
upon ACI itself. Considering that the
premise for CECON's August 30, 2002
lump-sum offer of P1,540,000.00 was
no longer availing, CECON was no
longer bound by its representations in
respect of that lump-sum amount. It
may then claim cost adjustments
totalling P16,429,630.74, as well as
values accruing to the various change
orders issued by ACI, totalling
P159,827,046.94.[61]
The CIAC Arbitral Tribunal found ACI
liable for the delays. This entitled
CECON to extended overhead costs
and the ensuing extension cost of its
Contractor's All Risk Insurance. For
these costs, the CIAC Arbitral Tribunal
awarded CECON the total amount of
P16,289,623.08. As it was ACI that
was liable for the delays, the CIAC
Arbitral Tribunal ruled that ACI was not
entitled to liquidated damages.[62]
The CIAC Arbitral Tribunal ruled that
CECON was entitled to a differential in
take out costs representing builder's
works and related costs with respect to
the equipment purchased by ACI. This
differential cost was in the amount of
P15,332,091.47.[63] The CIAC Arbitral
Tribunal further noted that while ACI
initially opted to purchase by itself
pumps, tanks, and cooling towers and
removed these from CECON's scope
of work, it subsequently elected to still
obtain these through CECON.
Considering that the corresponding
amount deducted as take-out costs did
not encompass the overhead costs and
profits under day work, which should
have accrued to CECON because of
these equipment, the CIAC Arbitral
Tribunal ruled that CECON was
entitled to 18% day work rate or a total
of P21,267,908.00.[64]
The CIAC Arbitral Tribunal also found
that, apart from adjusted costs incurred
on account of ACI's own activities, it
also became necessary for CECON, as
main contractor, to continue extending
auxiliary services to the project's
subcontractors because of the delays.
Thus, the CIAC Arbitral Tribunal
awarded CECON attendance fees-the
main contractor's mark-up for auxiliary
services extended to subcontractors -
totalling P14,335,674.88. This amount
was lower than the original amount
prayed for by CECON (i.e.,
P19,544,667.81)[65] as the CIAC
Arbitral Tribunal ruled that CECON
may not claim attendance fees
pertaining to subcontractors which
directly dealt with ACI.[66]
Considering that CECON's
predicament was borne by ACI's fault,
the CIAC Arbitral Tribunal saw it fit to
award to CECON the costs of
arbitration totalling P1,083,802.58.[67]
While mainly ruling in CECON's favor,
the CIAC Arbitral Tribunal found
CECON liable for discolored and
mismatched tiles. It noted that CECON
had engaged the services of a
subcontractor for the installation of
tiles, for which it claimed attendance
fees. Thus, it awarded P7,980,000.00
to ACI.[68] In addition, it found CECON
liable to ACI for amounts paid in
advance for permits and licenses for
the additional office tower, electrical
consumption, and garbage collection.
Thus, it awarded another
P3,815,162.93 to ACI.[69]
The dispositive portion of the CIAC
Arbitral Tribunal Decision read:
WHEREFORE, Respondent is hereby
ordered to pay the Claimant the
amount of PESOS TWO HUNDRED
SEVENTEEN MILLION, FOUR
HUNDRED TWENTY-EIGHT
THOUSAND, ONE HUNDRED FIFTY[-
-]FIVE PESOS AND SEVENTY[-]FIVE
CENTAVOS (Php217,428,155.75)
within thirty (30) days upon
promulgation of the award. Interest 6%
per annum shall be imposed on the
award for any balance remaining from
the promulgation of the award up to the
time the award becomes final and
executory. Thereafter, interest of 12%
per annum shall be imposed on any
balance of the award until fully paid.
SO ORDERED.[70]
On December 4, 2006, ACI filed before
the Court of Appeals a Petition for
Review[71] under Rule 43 of the 1997
Rules of Civil Procedure.
In the meantime, on December 28,
2006, the CIAC Arbitral Tribunal issued
an Order[72] acknowledging
arithmetical errors in its October 25,
2006 Decision, Thus, it modified its
October 25, 2006 Decision, indicating
that the net amount due to CECON
was P231,357,136.72, rather than
P217,428,155.75.[73]
In its assailed April28, 2008 Decision,
[74] the Court of Appeals reduced the
award in favor of CECON to
P114,324,605.00 and increased the
award to ACI to P31,566,246.20.[75]
The Court of Appeals held as inviolable
the lump-sum fixed price arrangement
between ACI and CECON. It faulted
the CIAC Arbitral Tribunal for acting in
excess of jurisdiction as it supposedly
took it upon itself to unilaterally modify
the arrangement between ACI and
CECON.[76]
Thus, the Court of Appeals deleted the
CIAC Arbitral Tribunal's award
representing cost adjustments.
However, the Court of Appeals also
noted that in ACI's and CECON's
March 30, 2004 Joint Ma11ifestation
before CIAC, ACI conceded that
P10,266,628.00 worth of cost
adjustments was due to CECON and
undertook to pay CECON that amount.
The Court of Appeals, hence,
maintained a P10,266,628.00 award of
cost adjustment in favor of CECON.
[77]
On the cost increases borne by
Change Order No. 11-the shift from
reinforced concrete to structural steel
framing-and by transitions from
schematic diagrams to construction
drawings, the Court of Appeals
dismissed the CIAC Arbitral Tribunals
award to CECON as arising from "pity"
and unwarranted by the lump-sum,
fixed-price arrangement.[78]
The Court of Appeals held ACI liable to
CECON for the sum of P12,672,488.36
for miscellaneous change orders,
which it construed to be "separate
contracts that have been entered into
at the time [ACI] required them."[79] It
likewise held ACI liable for
P1,132,946.17 representing the
balance of 12 other partially paid
change orders.[80]
The Court of Appeals noted that
CECON was not entitled to time
extensions because the arrangement
between ACI and CECON had never
been altered. Consequently, it was not
entitled to acceleration co ts, additional
overhead, ru1d reimbursement for
extending the Contractor's All Risk
Insurance.[81] Conversely, the Court of
Appeals held CECON liable for delays
thereby entitling ACI to liquidated
damages corresponding to 10% of the
supposed contract sum
P1,540,000,000.00,
P15,400,000.00.[82]
Also on account of the supposed lump-
sum arrangement, the Court of
Appeals held that CECON was not
entitled to attendance fees on contract
amounts increased by change order
works.[83] It also stated that the rate
for attendance fees, overhead, and
profit for subcontractors' works
remained subject to the original
contract documents based on ACI's
original invitation to bidders and had
never been altered.[84]
Regarding attendance fees, the Court
of Appeals proffered that the work
attributed to subcontractors was merely
work done by CECON itself, thereby
negating the need for attendance fees.
[85]
Concerning take-out costs, the Court of
Appeals stated that CECON was in no
position to propose its own take-out
costs as the tender documents issued
along with ACI's invitation to bidders
stated that take-out costs must be
of
based exclusively on the rates
or provided in the Contract Cost
Breakdown. Nevertheless, as ACI had
previously undertaken to pay the
variance in takeout costs amounting to
P3,811,289.70, the Court of Appeals
concluded that an award for take-out
costs in that amount was proper.[86]
On the CIAC Arbitral Tribunal's award
for overhead costs and profits under
day work, the Court of Appeals held
that it was improper to grant this award
based on stipulations on day works
pertaining "only to 'materials' and not to
equipment."[87]
Finally, the Court of Appeals held that
CECON was not entitled to costs of
litigation considering that "no premium
is to be placed on the right to
litigate"[88] and since ACI could not be
faulted for delays.
The dispositive portion of the assailed
Court of Appeals April 28, 2008
Decision read:
WHEREFORE, based on all the
foregoing, the Decision of the Arbitral
Tribunal is modified as follows:
a. AWARD TO CECON
NO.
ISSUE
Pesos (PHP)
1
Cost Adjustment
10,266,628.00
2 d. Change Order No. 11 Bookmarking Granite Tiles
Take Out Cost of Equipment 5,205,004.02 6,980,000.00
[7]
3,811,289.70 [4] Permits, Licenses and Other Advances
3 Equipment Supplied by Owner
6,186,246.23
Change Orders
Total
1,127,486.50
31,566,246.20 (sic)
99,119,200.09 Total
In addition, CECON is directed to
submit all required. close-out
a. Approved Change Orders 114,324,605.00 (sic) documents within thirty (30) days from
receipt of this Decision.
1,132,946.17 b. AWARD TO ARANETA
NO.
The parties shall bear their own costs
ISSUE of arbitration and litigation.
b. [Schematic Drawings] to
[Construction Drawings]
Pesos (PHP) SO ORDERED.[89]
80,108,761.60
[5] Acting on CECON's Motion for
Liquidated Damages Reconsideration, the Court of Appeals
issued its Amended Decision on July 1,
15,400,000.00 2010.[90] This Amended Decision
c. Miscellaneous Change Orders increased the award for miscellaneous
[6]
change orders to P27,601,469.32;
12,672,488.30
Defective and Incomplete Works reinstated awards for undervalued
works in supplying and installing G.I.
3,000,000.00
sheets worth P1,209,782.50[91] and Increase in the costs of cement and
for the drilling of holes and application formworks falling under cost-bearing
TOTAL
of epoxy worth P4,543,456.00;[92] and change.
deleted the award for takeout costs. 130,062,581.94
5,205,004.02
[93]
b. AWARD TO ARANETA CENTER,
3
INC.
Representing undervaluation of
The dispositive portion of the assailed 1
respondent's works in the supply and
Court of Appeals July 1, 2010
installation of G.I. sheets. Liquidated Damage (sic)
Amended Decision read:
1,209,782.50 20,000,000.00
WHEREFORE, Our Decision dated 28
April 2008 is hereby modified as 4 2
follows:
Representing Miscellaneous Change Defective and Incomplete Works
Orders.
3,000,000.00
I - AWARD: 27,601,469.32
3
5
Bookmarking Granite Tiles
a. AWARD TO CE CONSTRUCTION, Drilling of Holes
INC. 6,980,000.00
4,543,450.00
NO. 4
6
ISSUE Permits, Licenses and other Advances
[Schematic Drawings] to [Construction
PESOS (PhP) Drawings] 6,186,246.23

1 80,108,761.60
Additional costs spent on rebars. [7] TOTAL
10,266,628.00 Installation of equipment supplied by 36,166,246.23
owner.
2 II - COMPUTATION:
1,127,486.50
AWARD TO CE CONSTRUCTION,
INC.
130,062,581.94
LESS
AWARD TO ARANETA CENTER, INC.
36,166,246.23
BALANCE PAYABLE BY ARANETA
TO CECON
93,896,335.71
SO ORDERED.[94]
Aggrieved at the Court of Appeals'
ruling, CECON tiled the present
Petition insisting on the propriety of the
CIAC Arbitral Tribunal's conclusions
and findings.[95] It prays that the
assailed Court of Appeals decisions be
reversed and that the CIAC Arbitral
Tribunal October 25, 2006 Decision, as
modified by its December 28, 2006
Order, be reinstated.[96]
ACI counters that the Court of Appeals
July 1, 2010 Amended Decision must
be upheld.[97]
considerations that run afoul of
contractual stipulations and on bases
ACI insists on the inviolability of its
such as industry practices and
supposed agreement with CECON, as
standards, which supposedly should
embodied in the contract documents
not have even been considered as the
delivered to contractors alongside the
parties have already adduced their
original offer to bid. It cites specific
respective evidence.[103] It insists
provisions of these documents such as
upon CECON's fault for delays and
valuation rules and required notices for
defects, making it liable for liquidated
extensions and changes, reckoning of
damages.[104]
losses and expenses, the ensuing
liquidated damages for defects, cost-
bearing changes and provisional sums,
Though nominally modifying the CIAC
[98] which define parameters for
Arbitral Tribunal October 25, 2006
permissible changes and for reckoning
Decision, the Court of Appeals actually
corresponding costs and liabilities.
reversed it on the pivotal matter of the
However, it did not attach any of these
characterization of the contract
documents to its Comment or
between CECON and ACI. Upon its
Memorandum. It also cites statutory
characterization of the contract as one
provisions-Articles 1715[99] and
for a lump-sum fixed price, the Court of
1724[100] of the Civil Code-on
Appeals deleted much of the CIAC
CECON's liabilities and the primacy of
Arbitral Tribunal's monetary awards to
stipulated contract prices.[101]
CECON and awarded liquidated
damages to ACI.
By the inviolability their agreement, ACI
insists on the supposed immutability of
On initial impression, what demands
the stipulated contract sum and on the
resolution is the issue of whether or not
impropriety of the CIAC Arbitral
the Court of Appeals erred in
Tribunal in writing its own terms for ACI
characterizing the contractual
and CECON to follow.[102] It faults the
arrangement between petitioner CE
CIAC Arbitral Tribunal for erroneously
Construction Corporation and
reckoning the sums due to CECON,
respondent Araneta Center, Inc. as
particularly in relying on factual
immutably one for a lump-sum fixed
price.
However, this is not merely a matter of
applying and deriving conclusions from
cut and dried contractual provisions.
More accurately, what is on issue is
whether or not the Court of Appeals
correctly held that the CIAC Arbitral
Tribunal acted beyond its jurisdiction in
holding that the price of
P1,540,000,000.00 did not bind the
parties as an immutable lump-sum.
Subsumed in this issue is the matter of
whether or not the Court of Appeals
correctly ruled that CECON was
rightfully entitled to time extensions
and that intervening circumstances had
made ACI liable for cost adjustments,
increases borne by change orders,
additional overhead costs, extended
contractor's all risk insurance
coverage, increased attendance fees
vis-a-vis subcontractors, and arbitration
costs which it awarded to CECON.
This Court limits itself to the legal
question of the CIAC Arbitral Tribunal's
competence. Unless any of the
exceptional circumstances that warrant
revisiting the factual matter of the
accuracy of the particulars of every
item awarded to the parties is availing,
this Court shall not embark on its own
audit of the amounts owing to each.
I
This Court begins by demarcating the
jurisdictional and technical competence
of the CIAC and of its arbitral tribunals.
I.A
The Construction Industry Arbitration
Commission was a creation of
Executive Order No. 1008, otherwise
known as the Construction Industry
Arbitration Law.[105] At inception, it
was under the administrative
supervision of the Philippine Domestic
Construction Board[106] which, in turn,
was an implementing agency of the
Construction Industry Authority of the
Philippines (CIAP).[107] The CIAP is
presently attached to the Department
of Trade and Industry.[108]
The CIAC was created with the specific
purpose of an "early and expeditious
settlement of disputes"[109] cognizant
of the exceptional role of construction
to "the furtherance of national
development goals."[110]
Section 4 of the Construction Industry
Arbitration Law spells out the
jurisdiction of the CIAC:
Section 4. Jurisdiction. - The CIAC
shall have original and exclusive
jurisdiction over disputes arising from,
or connected with, contracts entered
into by parties involved in construction
in the Philippines, whether the dispute
arises before or after the completion of
the contract, or after the abandonment
or breach thereof. These disputes may
involve government or private
contracts. For the Board to acquire
jurisdiction, the parties to a dispute
must agree to submit the same to
voluntary arbitration.
The jurisdiction of the CIAC may
include but is not limited to violation of
specifications for materials and
workmanship; violation of the terms of
agreement; interpretation and/or
application of contractual time and
delays; maintenance and defects;
payment, default of employer or
contractor and changes in contract
cost.
Excluded from the coverage of this law
are disputes arising from employer-
employee relationships which shall
continue to be covered by the Labor
Code of the Philippines.
Though created by the act of a Chief
Executive who then exercised
legislative powers concurrently with the
Batasang Pambansa, the creation,
continuing existence, and competence
of the CIAC have since been validated
by acts of Congress,
Republic Act No. 9184 or the
Government Procurement Reform Act,
enacted on January 10, 2003, explicitly
recognized and confirmed the
competence of the CIAC:
Section 59. Arbitration. - Any and all
disputes arising from the
implementation of a contract covered
by this Act shall be submitted to
arbitration in the Philippines according
to the provisions of Republic Act No.
876, otherwise known as the
"Arbitration Law": Provided, however,
That, disputes that are within the
competence of the Construction
Industry Arbitration Commission to
resolve shall be referred thereto. The
process of arbitration shall be
incorporated as a provision in the
contract that will be executed pursuant
to the provisions of this Act: Provided,
That by mutual agreement, the patties
may agree in writing to resort to
alternative modes of dispute resolution.
(Emphasis supplied)
Arbitration of construction disputes
through the CIAC was formally
incorporated into the general statutory
framework on alternative dispute
resolution through Republic Act No.
9285, the Alternative Dispute
Resolution Act of 2004 (ADR Law).
Chapter 6, Section 34 of ADR Law
made specific reference to the
Construction Industry Arbitration Law,
while Section 35 confirmed the CIAC's
jurisdiction:
CHAPTER 6
ARBITRATION OF CONSTRUCTION
DISPUTES
Section 34. Arbitration of Construction
Disputes: Governing Law. - The
arbitration of construction disputes
shall be governed by Executive Order
No. 1008, otherwise known as the
Construction Industry Arbitration Law.
Section 35. Coverage of the Law. -
Construction disputes which fall within
the original and exclusive jurisdiction of
the Construction Industry Arbitration
Commission (the "Commission") shall
include those between or among
parties to, or who are otherwise bound
by, an arbitration agreement, directly or
by reference whether such parties are
project owner, contractor,
subcontractor, fabricator, project
manager, design professional,
consultant, quantity surveyor,
bondsman or issuer of an insurance
policy in a construction project.
The Commission shall continue to
exercise original and exclusive
jurisdiction over construction disputes
although the arbitration is "commercial"
pursuant to Section 21 of this Act.
I.B
The CIAC does not only serve the
interest of speedy dispute resolution, it
also facilitates authoritative dispute
resolution. Its authority proceeds not
only from juridical legitimacy but
equally from technical expertise. The
creation of a special adjudicatory body
for construction disputes presupposes
distinctive and nuanced competence
on matters that are conceded to be
outside the innate expertise of regular
courts and adjudicatory bodies
concerned with other specialized fields.
The CIAC has the state's confidence
concerning the entire technical
expanse of construction, defined in
jurisprudence as "referring to all on-site
works on buildings or altering
structures, from land clearance through
completion including excavation,
erection and assembly and installation
of components and equipment."[111]
Jurisprudence has characterized the
CIAC as a quasi-judicial, administrative
agency equipped with technical
proficiency that enables it to efficiently
and promptly resolve conflicts;
[The CIAC] is a quasi-judicial agency.
A quasi-judicial agency or body has
been defined as an organ of
government other than a court and
other than a legislature, which affects
the rights of private parties through
either adjudication or rule-making. The
very definition of an administrative
agency includes its being vested with
quasi-judicial powers. The ever
increasing variety of powers and
functions given to administrative
agencies recognizes the need for the
active intervention of administrative
agencies in matters calling for technical
knowledge and speed in countless
controversies which cannot possibly be
handled by regular courts. The CIAC's
primary function is that of a quasi-
judicial agency, which is to adjudicate
claims and/or determine rights in
accordance with procedures set forth in
E.O. No. 1008.[112]
The most recent jurisprudence
maintains that the CIAC is a quasi-
judicial body. This Court's November
23, 2016 Decision in Fruehauf
Electronics v. Technology Electronics
Assembly and Management
Pacific[113] distinguished construction
arbitration, as well as voluntary
arbitration pursuant to Article 219(14)
of the Labor Code,[114] from
commercial arbitration. It ruled that
commercial arbitral tribunals are not
quasi-judicial agencies, as they are
purely ad hoc bodies operating through
contractual consent and as they intend
to serve private, proprietary interests.
[115] In contrast, voluntary arbitration
under the Labor Code and construction
arbitration operate through the
statutorily vested jurisdiction of
government instrumentalities that exist
independently of the will of contracting
parties and to which these parties
submit. They proceed from the public
interest imbuing their respective
spheres:
Voluntary Arbitrators resolve labor
disputes and grievances arising from
the interpretation of Collective
Bargaining Agreements. These
disputes were specifically excluded
from the coverage of both the
Arbitration Law and the ADR Law.
Unlike purely commercial relationships,
the relationship between capital and
labor are heavily impressed with public
interest. Because of this. Voluntary
Arbitrators authorized to resolve labor
disputes have been clothed with quasi-
judicial authority.
On the other hand, commercial
relationships covered by our
commercial arbitratjon laws are purely
private and contractual in nature.
Unlike labor relationships, they do not
possess the same compelling state
interest that would justify state
interference into the autonomy of
contracts. Hence, commercial
arbitration is a purely private system of
adjudication facilitated by private
citizens instead of government
instrumentalities wielding quasi-judicial
powers.
Moreover, judicial or quasi-judicial
jurisdiction cannot be conferred upon a
tribunal by the parties alone. The Labor
Code itself confers subject-matter
jurisdiction to Voluntary Arbitrators.
Notably, the other arbitration body
listed in Rule 43 the Construction
Industry Arbitration Commission
(CIAC) - is also a government agency
attached to the Department of Trade
and Industry. Its jurisdiction is likewise
conferred by statute. By contrast, the
subject matter urisdiction of
commercial arbitrators is stipulated by
the parties.[116] (Emphasis supplied,
citations omitted)
Consistent with the primacy of
technical mastery, Section 14 of the
Construction Industry Arbitration Law
on the qualification of arbitrators
provides:
Section 14. Arbitrators. - A sole
arbitrator or three arbitrators may settle
a dispute.
....
Arbitrators shall be men of distinction in
whom the business sector and the
government can have confidence.
They shall not be permanently
employed with the CIAC. Instead, thy
shall render services only when called
to arbitrate. For each dispute they
settle, they shall be given fees.
Section 8.1 of the Revised Rules of
Procedure Governing Construction
Arbitration establishes that the
foremost qualification of arbitrators
shall be technical proficiency. It
explicitly enables not only lawyers but
also "engineers, architects,
construction managers, engineering
consultants, and businessmen familiar
with the construction industry" to serve
as arbitrators:
Section 8.1 General Qualification of
Arbitrators. - The Arbitrators shall be
men of distinction in whom the
business sector and the government
can have confidence. They shall be
technically qualified to resolve any
construction dispute expeditiously and
equitably. The Arbitrators shall come
from different professions. They may
include engineers, architects,
construction managers, engineering
consultants, and businessmen familiar
with the construction industry and
lawyers who are experienced in
construction disputes. (Emphasis
supplied)
Of the 87 CIAC accredited arbitrators
as of January 2017, only 33 are
lawyers. The majority are experts from
construction-related professions or
engaged in related fields.[117]
Apart from arbitrators, technical
experts aid the CIAC in dispute
resolution. Section 15 of the
Construction Industry Arbitration Law
provides:
Section 15. Appointment of Experts. -
The services of technical or legal
experts may be utilized in the
settlement of disputes if requested by
any of the parties or by the Arbitral
Tribunal. If the request for an expert is
done by either or by both of the parties,
it is necessary that the appointment of
the expert be confirmed by the Arbitral
Tribunal.

Whenever the parties request for the
services of an expert, they shall equally
shoulder the expert's fees and
expenses, half of which shall be
deposited with the Secretariat before
the expert renders service. When only
one party makes the request, it shall
deposit the whole amount required.
II
Consistent with CIAC's technical
expertise is the primacy and deference
accorded to its decisions. There is only
a very narrow room for assailing its
rulings.
Section 19 of the Construction Industry
Arbitration Law establishes that CIAC
arbitral awards may not be assailed,
except on pure questions of law:
Section 19. Finality of Awards. - The
arbitral award shall be binding upon the
parties. It shall be final and
inappealable except on questions of
law which shall be appealable to the
Supreme Court.
Rule 43 of the 1997 Rules of Civil
Procedure standardizes appeals from
quasi-judicial agencies.[118] Rule 43,
Section 1 explicitly lists CIAC as
among the quasi judicial agencies
covered by Rule 43.[119] Section 3
indicates that appeals through Petitions
for Review under Rule 43 are to "be
taken to the Court of Appeals ...
whether the affoeal involves questions
of fact, of law, or mixed questions of
fact and law."[120]
This is not to say that factual findings
of CIAC arbitral tribunals may now be
assailed before the Court of Appeals.
Section 3's statement "whether the
appeal involves questions of fact, of
law, or mixed questions of fact and
law" merely recognizes variances in
the disparate modes of appeal that
Rule 43 standardizes: there were those
that enabled questions of fact; there
were those that enabled questions of
law, and there were those that enabled
mixed questions fact and law. Rule 43
emphasizes that though there may
have been variances, all appeals under
its scope are to be brought before the
Court of Appeals. However, in keeping
with the Construction Industry
Arbitration Law, any appeal from CIAC
arbitral tribunals must remain limited to
questions of law.
Hi-Precision Steel Center, Inc. v. Lim
Kim Steel Builders, Inc.[121] explained
the wisdom underlying the limitation of
appeals to pure questions of law:
Section 19 makes it crystal clear that
questions of fact cannot be raised in
proceedings before the Supreme Court
- which is not a trier of facts - in respect
of an arbitral award rendered under the
aegis of the CIAC. Consideration of the
animating purpose of voluntary
arbitration in generaland arbitration
under the aegis of the CIAC in
particular, requires us to apply
rigorously the above principle
embodied in Section 19 that the
Arbitral Tribunal's findings of fact shall
be final and unappealable.
Voluntary arbitration involves the
reference of a dispute to an impartial
body, the members of which are
chosen by the parties themselves,
which parties freely consent in advance
to abide by the arbitral award issued
after proceedings where both parties
had the opportunity to be heard. The
basic objective is to provide a speedy
and inexpensive method of settling
disputes by allowing the parties to
avoid the formalities, delay, expense
and aggravation which commonly
accompany ordinary litigation,
especially litigation which goes through
the entire hierarchy of courts. [The
Construction Industry Arbitration Law]
created an arbitration facility to which
the construction industry in the
Philippines can have recourse. The
[Construction Industry Arbitration Law]
was enacted to encourage the early
and expeditious settlement of disputes
in the construction industry, a public
policy the implementation of which is
necessa and important for the
realization of national development
goals.[122]
Consistent with this restrictive
approach, this Court is duty-bound to
be extremely watchful and to ensure
that an appeal does not become an
ingenious means for und rmining the
integrity of arbitration or for
conveniently setting aside the
conclusions arbitral processes make.
An appeal is not an artifice for the
parties to undermine the process they
voluntarily elected to engage in. To
prevent this Court from being a party to
such perversion, this Court's primordial
inclination must be to uphold the
factual finqings of arbitral tribunals:
Aware of the objective of voluntary
arbitration in the labor field, in the
construction industry, and in any other
area for that matter, the Court will not
assist one or the other or even both
parties in any effort to subvert or defeat
that objective tbr their private
purposes. The Court will not review the
factual findings of an arbitral tribunal
upon the artful allegation that such
body had "misapprehended the facts"
and will not pass upon issues which
are, at bottom, issues of fact, no matter
how cleverly disguised they might be
as "legal questions." The parties here
had recourse to arbitration and chose
the arbitrators themselves; they must
have had confidence in such
arbitrators. The Court will not,
therefore, permit the parties to relitigate
before it the issues of facts previously
presented and argued before the
Arbitral Tribunal, save only where a
very clear showing is made that, in
reaching its factual conclusions, the
Arbitral Tribunal committed an error so
egregious and hurtful to one party as to
constitute a grave abuse of discretion
resulting in lack or loss of jurisdiction.
Prototypical examples would be factual
conclusions of the Tribunal which
resulted in deprivation of one or the
other party of a fair opportunity to
present its position before the Arbitral
Tribunal, and an award obtained
through fraud or the corruption of
arbitrators. Any other, more relaxed,
rule would result in setting at naught
the basic objective of a voluntary
arbitration and would reduce arbitration
to a largely inutile institution.[123]
(Emphasis supplied, citations omitted)
Thus, even as exceptions to the highly
restrictive nature of appeals may be
contemplated, these exceptions are
only on the nanowest of grounds.
Factual findings of CIAC arbitral
tribunals may be revisited not merely
because arbitral tribunals may have
erred, not even on the already
exceptional grounds traditionally
available in Rule 45 Petitions.[124]
Rather, factual findings may be
reviewed only in cases where the CIAC
arbitral tribunals conducted their affairs
in a haphazard, immodest manner that
the most basic integrity of the arbitral
process was imperiled. In Spouses
David v. Construction Industry and
Arbitration Commission:[125]
We reiterate the rule that factual
findings of construction arbitrators are
final and conclusive and not reviewable
by this Court on appeal, except when
the petitioner proves affirmatively that:
(1) the award was procured by
corruption, fraud or other undue
means; (2) there was evident partiality
or corruption of the arbitrators or of any
of them; (3) the arbitrators were guilty
of misconduct in refusing to postpone
the hearing upon sufficient cause
shown, or in refusing to hear evidence
pertinent and material to the
controversy; (4) one or more of the
arbitrators were disqualified to act as
such under section nine of Republic
Act No. 876 and willfully refrained from
disclosing such disqualifications or of
any other misbehavior by which the
rights of any party have been materially
prejudiced; or (5) the arbitrators
exceeded their powers, or so
imperfectly executed them, that a
mutual, final and definite award upon
the subject matter submitted to them
was not made.[126] (Citation omitted)
Guided by the primacy of CIAC's
technical competence, in exercising
this Court's limited power of judicial
review, this Court proceeds to rule on
whether or not the Court of Appeals
erred in its assailed decisions.
III
Properly discerning the issues in this
case reveals that what is involved is
not a mere matter of contractual
interpretation but a question of the
CIAC Arbitral Tribunal's exercise of its
powers.
III.A
F.F. Cruz v. HR Construction[127]
distinguished questions of law, properly
cognizable in appeals from CIAC
arbitral awards, from questions of fact:
A question of law arises when there is
doubt as to what the law is on a certain
state of facts, while there is a question
of fact when the doubt arises as to the
truth or falsity of the alleged facts. For
a question to be one of law, the same
must not involve an examination of the
probative value of the evidence
presented by the litigants or any of
them. The resolution of tbe 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.[128]
It further explained that an inquiry into
the true intention of the contracting
parties is a legal, rather than a factual,
issue:
On the surface, the instant petition
appears to merely raise factual
questions as it mainly puts in issue the
appropriate amount that is due to
HRCC. However, a more thorough
analysis of the issues raised by FFCCl
would show that it actually asserts
questions of law.
FFCCI primarily seeks from this Court
a determination of whether [the]
amount claimed by HRCC in its
progress billing may be enforced
against it in the absence of a joint
measurement of the former's
completed works. Otherwise stated,
the main question advanced by FFCCI
is this: in the absence of the joint
measurement agreed upon in the
Subcontract Agreement, how will the
completed works of HRCC be verified
and the amolfnt due thereon be
computed?
The determination of the foregoing
question entails an interpretation of the
terms of the Subcontract Agreement
vis-a-vis the respective rights of the
parties herein. On this point, it should
be stressed that where an
interpretation of the true agreement
between the parties is involved in an
appeal, the appeal is in effect an
inquiry of the law between the parties,
its interpretation necessarily involves a
question of law.
Moreover, we are not called upon to
examine the probative value of the
evidence presented before the CIAC.
Rather, what is actually sought from
this Court is an interpretation of the
terms of the Subcontract Agreement as
it relates to the dispute between the
parties.[129] (Emphasis supplied)
Though similarly concerned with "an
interpretation of the true agreement
between the parties,"[130] this case is
not entirely congruent with F.F. Cruz.
In F.F. Cruz, the parties' agreement
had been clearly set out in writing.
There was a definitive instrument
which needed only to be consulted to
ascertain the parties' intent:
In resolving the dispute as to the
proper valuation of the works
accomplished by HRCC, the primordial
consideration should be the terms of
the Subcontract Agreement. It is basic
that if the tem1s of a contract are clear
and leave no doubt upon the intention
of the contracting parties, the literal
meaning of its stipulations shall control.
[131]
Thus, this Court concluded:
Pursuant to the terms of payment
agreed upon by the parties, FFCCI
obliged itself to pay the monthly
progress billings of HRCC within 30
days from receipt of the same.
Additionally, the monthly progress
billings of HRCC should indicate the
extent of the works completed by it, the
same beinff essential to the valuation
of the amount that FFCCI would pay to
HRCC.[132]
III.B
In this case, there is no established
contract that simply required
interpretation and application.
The assailed Court of Appeals April 28,
2008 Decision implies that all that had
to be done to resolve the present
controversy was to apply the
supposedly clear and unmistakable
terms of the contract between ACI and
CECON. It even echoes the words of
F.F. Cruz:
It is a legal principle of long standing
that when the language of the contract
is explicit, leaving no doubt as to the
intention of the parties, the courts may
not read into it any other intention that
would contradict its plain import. The
clear terms of the contract should
never be the subject matter of
interpretation. Neither abstract justice
nor the rule of liberal interpretation
justifies the creation of a contract for
the parties which they did not make
themselves or the imposition upon one
party to a contract or obligation not
assumed simply or merely to avoid
seeming hardships. Their true meaning
must be enforced, as it is to be
presumed that the contracting parties
know their scope and effects.
....
The Contract Documents expressly
characterize the construction contract
between [ACI] and CECON as "lump-
sum" and "fixed price" in nature. As a
consequence, the Contract Documents
expressly prohibit any adjustment of
the contract sum due to any changes
or fluctuations in the cost of labor,
materials or other matters.[133]
(Citations omitted)
Upon its characterization of the
contract as one for the lump-sum, fixed
price of P1,540,000,000.00, the Court
of Appeals faulted the CIAC Arbitral
Tribunal for acting in excess of
jurisdiction as it supposedly
countermanded the parties' agreement,
or worse, conjured its own tenns for the
parties' compliance.[134]
It was the Court of Appeals, not the
CIAC Arbitral Tribunal, that committed
serious error.
To rule that the CIAC Arbitral Tribunal
modified the parties' agreement
because it was indisputably one for a
lump-sum, fixed price of
P1,540,000,000.00 is begging the
question. The Court of Appeals used a
conclusion as a premise to support
itself. It erroneously jumped to a
conclusion only to plead this
conclusion in support of points that
should have made up its anterior
framework, points that would have
been the ones to lead to a conclusion.
It then used this abortive conclusion to
injudiciously dispose of the case.
The Court of Appeals took the parties'
contractual relation as a revealed and
preordained starting point. Then, it
dismissed every prior or subsequent
detail that contradicted this
assumption. It thereby conveniently
terminated the discussion before it
even began.
III.C
There was never a meeting of minds
on the price of P1,540,000,000.00.
Thus, that stipulation could not have
been the basis of any obligation.
The only thing that ACI has in its favor
is its initial delivery of tender
documents to prospective bidders.
Everything that transpired after this
delivery militates against ACI's
position.
Before proceeding to a consideration of
the circumstances that negate a
meeting of minds, this Court
emphasizes that ACI would have this
Court sustain claims premised on
supposed inviolable documents. Yet, it
did not annex copies of these
documents either to its Comment or to
its Memorandwn.
ACI leaves this Court compelled to rely
purely on their packaged presentation
and in a bind, unable to verify even the
accuracy of the syntax of its citations.
This Court cannot approve of this
predicament. To cursorily acquiesce to
ACI's overtures without due diligence
and substantiation is being overly
solicitous, even manifestly partisan.
ACI and its counsel must have fully
known the importance of equipping this
Court with a reliable means of
confirmation, especially in a case so
steeped in the sway of circumstances.
ACI's omission can only work against
its cause.
By delivering tender documents to
bidders, ACI made an offer. By these
documents, it specitled its terms and
defined the parameters within which
bidders could operate. These tender
documents, therefore, guided the
bidders in formulating their own offers
to ACI, or, even more fundamentally,
helped them make up their minds if
they were even willing to consider
undertaking the proposed project. In
responding and submitting their bids,
contractors, including CECON, did not
peremptorily become subservient to
ACI's terms. Rather, they made their
own representations as to their own
willingness and ability. They adduced
their own counter offers, although
these were already tailored to work
within ACI's parameters.
These exchanges were in keeping with
Article 1326 of the Civil Code:
Article 1326. Advertisements for
bidders are simply invitations to make
proposals, and the advertiser is not
bound to accept the highest or lowest
bidder, unless the contrary appears.
The mere occurrence of these
exchanges of offers fails to satisfy the
Civil Code's requirement of absolute
and unqualified acceptance:
Article 1319. Consent is manifested by
the meeting of the offer and the
acceptance upon the thing and the
cause which are to constitute the
contract. The offer must be certain and
the acceptance absolute. A qualified
acceptance constitutes a counter-offer.
Acceptance made by letter or telegram
does not bind the offerer except from
the time it came to his knowledge. The
contract, in such a case, is presumed
to have been entered into in the place
where the offer was made. (Emphasis
supplied)
Subsequent events do not only show
that there was no meeting of minds on
CECON's initial offered contract sum of
P1,449,089,174.00 as stated in its
August 30, 2002 bid. They also show
that there was never any meeting of
minds on the contract sum at all.
In accordance with Article 1321 of the
Civil Code,[135] an offeror may fix the
time of acceptance. Thus, CECON's
August 30, 2002 offer of
P1,449,089,174.00 "specifically stated
that its bid was valid for only ninety
(90) days, or only until 29 November
2002."[136] November 29, 2002 lapsed
and ACI failed to manifest its
acceptance of CECON's offered
contract sum.
It was only sometime after November
29, 2002 that ACI verbally informed
CECON that the contract was being
awarded to it. Through a telephone call
on December 7, 2002, ACI informed
CECON that it may commence
excavation works. However, there is no
indication that an agreement was
reached on the contract sum in any of
these conversations. ACI, CECON, the
CIAC Arbitral Tribunal, and the Court of
Appeals all concede that negotiations
persisted.
Still without settling on a contract sum,
even the object of the contract was
subjected to multiple modifications.
Absent a concurrence of consent and
object, no contract was perfected.[137]
An office tower atop Part A was
included in CECON's scope of works
and the contract sum increased to
P1,582,810,525.00. Price fluctuations
were conceded after this and the
project cost was again adjusted to
P1,613,615,244.00. Thereafter,
CECON agreed to extend a discount
and reduced its offered project cost to
P1,540,000,000.00.[138]
After all these, ACI demurred on the
tenns of its own tender documents and
changed the project from one
encompassing both design and
construction to one that was limited to
construction.
Though not pertaining to the object of
the contract itself but only to one (1) of
its many facets, ACI also removed from
CECON's scope of works the
acquisition of elevators, escalators,
chillers, generator sets, indoor
substations, cooling towers, pumps,
and tanks. However, much later, ACI
reneged on its own and opted to still
obtain pumps, tanks, and cooling
towers through CECON.
It is ACI's contention that the offered
project cost of P1,540,000,000.00 is
what binds the parties because its
June 2, 2003 letter indicated
acceptance of this offered amount.
This is plain error.
CECON was never remiss in
impressing upon ACI that the
P1,540,000,000.00 offer was not
perpetually availing. WithoutACI's
timely acceptance, on December 27,
2002, CECON wrote to ACI
emphasizing that the quoted sum of
P1,540,000,000.00 was "based [only]
upon the prices prevailing at December
26, 2002" levels.[139] On January 8,
2003, CECON notified ACI of further
increases in costs and specifically
stated that "[f]urther delay in the
acceptance of the revised offer and
release of the down payment may
affect the revised lump sum
amount."[140] Finally, on January 21,
2003, CECON wrote again to ACI,[141]
stating that the contract sum had to be
increased to P1,594,631,418.00.
CECON also specifically stated,
consistent with Article 1321 of the Civil
Code, that its tender of this adjusted
price was valid only until January 31,
2003, as further price changes may be
forthcoming. CECON also impressed
upon ACI that the 400 days allotted for
the completion of the project had to be
adjusted.[142]
When ACI indicated acceptance,
CECON's P1,540,000,000.00 offer had
been superseded. Even CECON's
subsequent offer of P1,594,631,418.00
had, by then, lapsed by more than four
(4) months. Apparently totally
misinformed, ACI's acceptance letter
did not even realize or remotely
reference CECON's most recent
P1,594,631,418.00 stipulation but
insisted on the passe offer of
P1,540,000,000.00 from the past year.
ACI's supposed acceptance was not an
effective, unqualified acceptance, as
contemplated by Article 1319 of the
Civil Code. At most, it was a counter-
offer to revert to P1,540,000,000.00.
ACI's June 2, 2003 letter stated an
undertaking: "This notwithstanding,
formal contract documents embodying
these positions will shortly be prepared
and forwarded to you for
execution."[143] Through this letter,
ACI not only undertook to deliver
documents, it also admitted that the
final, definitive terms between the
parties had yet to be articulated in
writing.
ACI's delivery CECON's review, and
both parties' final act of formalizing
their respective consent and affixing
their respective signatures would have
established a clear point in which the
contract between ACI and CECON has
been perfected. These points, i.e. ACI's
delivery, CECON's review, and parties'
formalization, too, would have
validated the Court of Appeals'
assertion that all that remained to be
done was to apply unequivocal
contractual provisions.
ACI would fail on its own undertaking.
III.D
Without properly executed contract
documents, what would have been a
straightforward exercise, akin to the
experience in F.F. Cruz, became a
drawn-out fact-finding affair. The
situation that ACI engendered made it
necessary for the CIAC Arbitral
Tribunal to unravel the terms binding
ACI to CECON from sources other
than definitive documents.
It is these actions of the CIAC Arbitral
Tribunal that raise an issue, purely as a
matter of law, now the subject of this
Court's review; that is, faced with the
lacunae confronting it, whether or not
the CIAC Arbitral Tribunal acted within
its jurisdiction.
IV
The CIAC Arbitral Tribunal did not act
in excess of its jurisdiction. Contrary to
the Court of Appeals' and ACI's
assertions, it did not draw up its own
tenns and force these terms upon ACI
and CECON.
IV.A
The CIAC Arbitral Tribunal was not
confronted with a barefaced
controversy for which a fom1ulaic
resolution sufficed. More pressingly, it
was confronted with a state of affairs
where CECON rendered services to
ACI, with neither definitive governing
instrwnents nor a confirmed, fixed
remuneration for its services. Thus, did
the CIAC Arbitral Tribunal go about the
task of asce1taining the sum properly
due to CECON.
This task was well within its jurisdiction.
This determination entailed the full
range of subjects expressly stipulated
by Section 4 of the Construction
Industry Arbitration Law to be within
the CIAC's subject matter jurisdiction.
Section 4. Jurisdiction. - ....
The jurisdiction of the CIAC may
include but is not limited to violation of
specifications for materials and
workmanship; violation of the terms of
agreement; interpretation and/or
application of contractual time and
delays; maintenance and defects;
payment, default of employer or
contractor and changes in contract
cost.
CECON raised the principal issue of
the payment due to it on account, not
only of fluctuating project costs but
more so because of ACI's inability to
timely act on many contingencies,
despite proper notice and
communication from and by CECON.
Theretbre, at the heart of the
controversy was the "interpretation
and/or application of contractual time
and delays." ACI's counter-arguments,
too, directly appealed to CIAC's subject
matter jurisdiction. ACI countered by
asserting that sanctioning CECON's
claims was tantamount to violating the
tem1s of their agreement. It further
claimed liability on CECON's part for
"maintenance and defects," and for
"violation of specifications for materials
and workmanship."
ACI and CECON voluntarily submitted
themselves to the CIAC Arbitral
Tribunal's jurisdiction. The contending
parties' own volition is at the inception
of every construction arbitration
proceeding.[144] Common sense
dictates that by the parties' voluntary
submission, they acknowledge that an
arbitral tribunal constituted under the
CIAC has full competence to rule on
the dispute presented to it. They
concede this not only with respect to
the literal issues recited in their terms
of reference, as ACI suggests,[145] but
also with respect to their necessary
incidents. Accordingly, in delineating
the authority of arbitrators, the CIAC
Rules of Procedure speak not only of
the literally recited issues but also of
"related matters":
SECTION 21.3 Extent of power of
arbitrator - The Arbitral Tribunal shall
decide only such issues and related
matters as are submitted to them for
adjudication. They have no power to
add, to subtract from, modify, or amend
any of the terms of the contract or any
supplementary agreement thereto, or
any rule, regulation or policy
promulgated by the CIAC.
To otherwise be puritanical about
cognizable issues would be to cripple
CIAC arbitral tribunals. It would
potentially be to condone the parties'
efforts at tying the hands of tribunals
through circuitous, trivial recitals that
fail to address the complete extent of
their claims and which are ultimately
ineffectual in dispensing an exhaustive
and dependable resolution.
Construction arbitration is not a game
of guile which may be left to ingenious
textual or technical acrobatics, but an
endeavor to ascertain the tluth and to
dispense justice "by every and all
reasonable means without regard to
technicalities of law or
proc.edure."[146]
IV.B
Two (2) guiding principles steered the
CIAC Arbitral Tribunal in going about
its task. First was the basic matter of
fairness. Second was effective dispute
resolution or the overarching principle
of arbitration as a mechanism relieved
of the encumbrances of litigation. In
Section 1.1 of the CIAC Rules of
Procedure:
SECTION 1.1 Statement of policy and
objectives - It is the policy and
objective of these Rules to provide a
fair and expeditious resolution of
construction disputes as an altemative
to judicial proceedings, which may
restore the disrupted harmonious and
friendly relationships between or
among the parties. (Emphasis
supplied)
CECON's predicament demanded
compensation. The precise extent may
yet to have been settled; yet, as the
exigencies that prompted CECON to
request for arbitration unraveled, it
became clear that it was not for the
CIAC Arbitral Tribunal to turn a blind
eye to CECON's just entitlement to
compensation.
Jurisprudence has settled that even in
cases where parties enter into
contracts which do not strictly confmm
to standard formalities or to the
typifying provisions of nominate
contracts, when one renders services
to another, the latter must compensate
the fonner for the reasonable value of
the services rendered. This amount
shall be fixed by a court. This is a
matter so basic, this Court has once
characterized it as one that "springs
from the fountain of good conscience":
As early as 1903, in Perez v. Pomar,
this Court mled that where one has
rendered services to another, and
these services are accepted by the
latter, in the absence of proof that the
service was rendered gratuitously, it is
but just that he should pay a
reasonable remuneration therefore
because "it is a well known principle of
law, that no one should be permitted to
enrich himself to the damage of
another." Similary in 1914, this Court
declared that in this jurisdiction, even in
the absence of statute, ". . . under the
general principle that one person may
not enrich himself at the expense of
another, a judgment creditor would not
be permitted to retain the purchase
price of land sold as the property of the
judgment debtor after it has been made
to appear that the judgment debtor had
no title to the land and that the
purchaser had failed to secure title
thereto . . ." The foregoing equitable
principle which springs from the
fountain of good conscience are
applicable to the case at bar.[147]
Consistent with the Construction contractual interpretation, even those
Industry Arbitration Law's declared where the need for interpretation arises
policy,[148] the CIAC Arbitral Tribunal outside of court proceedings:
was specifically charged with
Article 1379. The principles of
"ascertain[ing] the facts in each case
interpretation stated in Rule 123 of the
by every and all reasonable
Rules of Court shall likewise be
means."[149] In discharging its task, it
observed in the construction of
was permitted to even transcend
contracts.
technical rules on admissibility of
evidence.[150] As with Article 1371, therefore, the
following principles from the Revised
Rules on Evidence equally governed
IV.C the CIAC Arbitral Tribunal's affairs:
4. Interpretation of Documents
The reality of a vacuum where there
were no definite contractual terms,
Section 12. Interpretation according to
coupled with the demands of a "fair
intention; general and particular
and expeditious resolution" of a dispute
provisions. - In the construction of an
centered on contractual interpretation,
instrument, the intention of the parties
called into operation Article 1371 of the
is to be pursued; and when a general
Civil Code:
and a particular provision are
Article 1371. In order to judge the inconsistent, the latter is paramount to
intention of the contracting parties, the former. So a particular intent will
their contemporaneous and control a general one that is
subsequent acts shall be principally inconsistent with it.
considered. (Emphasis supplled)
Article 1379 of the Civil Code invokes
Section 13. Interpretation according to
principles from the Revised Rules on
circumstances. - For the proper
Evidence. By invoking these principles,
construction of an instrument, the
Article 1379 makes them properly
circumstances under which it was
applicable in every instance of
made, including the situation of the
subject thereof and of the parties to it,
may be shown, so that the judge may
be placed in the position of those
whose language he is to interpret.
Within its competence and in keeping
with basic principles on contractual
interpretation, the CIAC Arbitral
Tribunal ascertained the trqe and just
terms governing ACI and CECON.
Thus, the CIAC Arbitral Tribunal did not
conjure its own contractual creature out
of nothing. In keeping with this, the
CIAC Arbitral Tribtmal found it proper
to sustain CECON's position. There
having been no meeting of minds on
the contract sum, the amount due to
CECON became susceptible to
reasonable adjustment, subject to
proof of legitimate costs that CECON
can adduce.
V made in its bid. Second, CECON could
Unravelling the CIAC Arbitral Tribunal's
competence and establishing how it
acted consistent with law resolves the
principal legal issue before us. From
this threshold, the inquiry transitions to
the matter of whether or not the
conclusions made by the CIAC Arbitral
Tribunal were warranted.
They were. Far from being capricious,
the CIAC Arbitral Tribunal's
conclusions find solid basis in law and
evidence.
V.A
The tender documents may have
characterized the contract sum as fixed
and lump-sum, but the premises for
this arrangement have undoubtedly
been repudiated by intervening
circumstances.
When CECON made its offer of
P1,540,000,000.00, it proceeded from
several premises. First, ACI would
timely respond to the representations
act on the basis of prices prevailing
then. Third, the subject matter of the
contract was the entire expanse of
design and construction covering all
elements disclosed in the tender
documents, nothing more and nothing
less. Fourth, the basic specifications
for designing and building the Gateway
Mall, as stated in the tender
documents, would remain consistent.
Lastly, ACI would timely deliver on its
concomitant obligations.
Contrary to CECON's reasonable
expectations, ACI failed to timely act
either on CECON's bid or on those of
its competitors. Negotiations persisted
for the better part of two (2) calendar
years, during which the quoted contract
sum had to be revised at least five (5)
times. The object of the contract and
CECON's scope of work widely varied.
There were radical changes like the
addition of an entire office tower to the
project and the change in the project's
structural framing. There was also the
undoing of CECON's freedom to
design, thereby rendering it entirely
dependent on configurations that ACI
was to unilaterally resolve, It turned out
that ACI took its time in delivering
construction drawings to CECON, with
almost 38% of construction drawings
being delivered after the intended
completion date. There were many
other less expansive changes to the
project, such as ACI's fickleness on
which equipment it would acquire by
itself. ACI even failed to immediately
deliver the project site to CECON so
that CECON may commence
excavation, the most basic task in
setting up a structure's foundation. ACI
also failed to produce definite
instruments articulating its agreement
with CECON, the final contract
documents.
With the withering of the premises
upon which a lump-sum, fixed price
arrangement would have been
founded, such an arrangement must
have certainly been negated:
[T]he contract is fixed and lump sum
when it was tendered and contracted
as a design and constmct package.
The contract scope and character
significantly changed when the design
was taken over by the Respondent. At
the time of the negotiation and
agreement of the amount of Php1.54
billion, there were no final plans for the
change to structural steel, and all the
[mechanical, electrical and plumbing]
drawings were all schematics.
[I]t is apparent to the Tribunal that the
quantity and materials at the time of
the P1.54B agreement are significantly
different from the original plans to the
finally implemented plans. The price
increases in the steel products and
cement were established to have
already increased by 11.52% and by
P5.00 per bag respectively by January
21, 2003. The Tribunal finds
agreement with the Claimant that it is
fairer to award the price increase.
....
It should also be mentioned that
Respondent had changed the scope
and character of the agreement. First,
there were major changes in the plans
and specifications. Originally, the
contract was for design and construct.
The design was deleted from the scope
of the Claimant. It was changed to a
straight construction contract. As a
straight construction contract, there
were no final plans to speak of at the
time of the instructions to change.
Then there was a verbal change to
structural steel frame. No plans were
available upon this instruction to
change. Next, the [mechanical,
electrical and plumbing] plans were all
schematics. It is therefore expected
that changes of plans are forthcoming,
and that changes in costs would
follow ...
....
It has been established that the original
tender, request for proposal and award
is for a design and construct contract.
The contract documents are therefore
associated for said system of
construction. When Respondent
decided to change and take over the
design, such as the change from
concrete to structural steel framing,
"take-out" equipment from the contract
and modify the [mechanical, electrical
and plumbing w]orks, the original
scope of work had been drastically
changed. To tie down the Claimant to
the tmit prices for the proposal for a
different scope of work would be
grossly unfair. This Tribunal will hold
that unit price adjustment could be
allowed but only for change orders that
were not in the original scope of work,
such as the change order from
concrete to structural framing, the
[mechanical, electrical and plumbing
w]orks, [schematic drawings to
construction drawings] and the
Miscellaneous Change Order Works.
[151]
V.B
Contrary to ACI's oft-repeated
argument,[152] the CIAC Arbitral
Tribunal correctly found that ACI had
gained no solace in statutory
provisions on the immutability of prices
stipulated between a contractor and a
landowner. Article 1724 of the Civil
Code reads:
Article 1724. The contractor who
undertakes to build a structure or any
other work for a stipulated price, in
conformity with plans and
specifications agreed upon with the
land-owner, can neither withdraw from
the contract nor demand an increase in
the price on account of the higher cost
of labor or materials, save when there
has been a change in the plans and
specifications, provided:
(1) Such change has been authorized
by the proprietor in writing; and
(2) The additional price to be paid to
the contractor has been determined in
writing by both parties.
Article 1724 demands two (2)
requisites in order that a price may
become immutable: first, there must be
an actual, stipulated price; and second,
plans and specifications must have
definitely been agreed upon.
Neither requisite avails in this case. Yet
again, ACI is begging the question. It is
precisely the crux of the controversy
that no price has been set. Article 1724
does not work to entrench a disputed
price and make it sacrosanct.
Moreover, it was ACI which thn1st itself
upon a situation where no plans and
specifications were immediately agreed
upon and from which no deviation
could be made. It was ACI, not
CECON, which made, revised, and
deviated from designs and
specifications.
V.C
The CIAC Arbitral Tribunal also merely
held ACI to account for its voluntarily
admitted adjustments. The CIAC Rules
of Procedure pennit deviations from
technical rules on evidence, including
those on admissions. Still, common
sense dictates that the principle that
"[t]he act, declaration or omission of a
party as to a relevant fact may be given
in evidence against him"[153] must
equally hold true in administrative or
quasi-judicial proceedings as they do in
court actions. Certainly, each must be
held to account for his or her own
voluntary declarations. It would have
been plainly absurd to disregard ACI's
reneging on its own admissions:
Respondent has agreed to the price
increase in structural steel and after
some negotiation paid the agreed
amount. Respondent also agreed to
the price increase in the reinforcing
bars and instructed the Claimant to bill
it accordingly. To the Tribunal, such
action is an acknowledgment of the
price increase. Respondent can make
the case that said agreement is
conditional, i.e., the Complaint must be
withdrawn. To the Tribunal, the
conditionality falls both ways. The
Claimant has as much interest to agree
to a negotiated price increase so that it
can collect payments for the claims.
The conditionalities do not change the
basis for the quantity and the amotmt.
The process of the negotiation has
arrived at the price difference and
quantities. The Tribunal finds the
process in arriving at the Joint
Manifestation, a fair determination of
the unit price increase. This holding will
render the discussions on Exhibit JJJJ,
and the demand of the burden of proof
of the Respondent superfluous.[154]
This absurdity is so patent that the
Court of Appeals was still compelled to
uphold awards premised on ACI's
admissions, even as it reversed the
CIAC Arbitral Tribunal decision on the
primordial issue of the characterization
of the contractual arrangement
between CECON and ACI:
As stated, the contract between [ACI]
and CECON has not been amended or
revised. The Arbitral Tribunal had no
power to amend the contract to provide
that there be allowed price and/or cost
adjustment removing the express
stipulation that the Project is for a lump
sum or fixed price consideration.
Accordingly, this Court removes the
award for additional costs spent by
CECON on cement and formworks due
to price increases or removing the
award for these items in the total
amount of PhP5,598,338.20. Since
CECON is not entitled to its claim for
price increase, it is likewise not entitled
to the award of the interest rate of 6%
per annum.
With regard however to the additional
costs for the rebars due to price
increases. this Court finds that CECON
is entitled to the amount of
PhP10,266,628.00 representing the
additional costs spent by CECON for
rebars due to price increases,
notwithstanding the Arbitral Tribunal's
excess of jurisdiction in amending the
The Arbitral Tribunal's award must be
contract between the parties because
reinstated.
[ACI] and CECON had in fact agreed
that CECON was entitled to such an
amount and that [ACI] would pay the
same. This agreement was made in VI.A
the parties' Joint Manifestation of
Compliance dated March 30, 2004
With the undoing of the foundation for
which they filed with th Arbitral Tribunal
the Court of Appeal's fallacious,
("Joint Manifestation").[155]
circular reasoning, its monetary awards
No extraordinary technical or legal must also necessarily give way to the
proficiency is required to see that it reinstatement of the CIAC Arbitral
would be the height of absurdity and Tribunal's awards.
injustice to insist on the payment of an
amount the consideration of which has
been reduced to a distant memory.
The inevitable changes borne by ACI's
ACI's invocation of Article 1724 is
own trifling actions justify, as a
useless as the premises for its
consequence, compensation for cost
application are absent. ACI's position is
adjustments and the ensuing change
an invitation for this Court to lend its
orders, additional overhead costs for
imprimatur to unjust enrichment
the period of extension, extended
enabled by the gradual wilting of what
coverage for contractor's all-risk
should have been a reliable contractual
insurance, and attendance fees for
relation. Basic decency impels this
auxiliary services to subcontractors
Court to not give in to ACI's advances
whose functions were also necessarily
and instead sustain the CIAC Arbitral
prolonged. ACI's frivolity on the
Tribunal's conclusion that the amount
acquisition of elevators, escalators,
due to CECON has become
chillers, generator sets, indoor
susceptible to reasonable adjustment.
substations, cooling towers, pumps,
and tanlcs also vindicates
compensation for the works that
VI remained under CECON's account.
ACI's authorship of the causes of delay
supports time extensions favoring
CECON and, conversely, discredits
liquidated damages benefitting ACI.
This Court upholds the Arbitral
Tribunal's awards on each of the items
due to CECON, as well as on its
findings relating to CECON's
countervailing liabilities.
In fulfilling its task, the CIAC Arbitral
Tribunal was equipped with its
technical competence, adhered to the
rigors demanded by the CIAC Rules of
Procedure, and was endowed with the
experience of exclusively presiding
over 19 months of arbitral proceedings,
examining object and documentary
evidence, and probing witnesses.
VI.B
Within the CIAC Arbitral Tribunal's
technical competence was its
reference to prevailing industry
practices, a much-bewailed point by
ACI.[156] This reference was made not
only desirable but even necessary by
the absence of definitive governing stipulations which are ordinarily
instruments. Moreover, this reference established.
was made feasible by the CIAC Arbitral
From the Revised Rules on Evidence,
Tribunars inherent expertise in the
the following have been made
construction industry.
applicable even outside regular
litigation by Article 1379 of the Civil
Code:
This reference was not only borne by
practical contingencies and buttressed Section 14. Peculiar signification of
by recognized proficiency, it was also terms. - The terms of a writing are
sanctioned by the statutory framework presumed to have been used in their
of contractual interpretation within primary and general acceptation, but
which the CIAC Arbitral Tribunal evidence is admissible to show that
operated. Thus, the following principles they have a local, technical, or
governed the interpretation of the otherwise peculiar signification, and
change orders, requests, and other were so used and understood in the
communications, which had effectively particular instance, in which case the
been surrogates of a single definite agreement must be construed
instrument executed by the parties. accordingly.
From the Civil Code: ....
Article 1375. Words which may have
different significations shall be
Section 19. Interpretation according to
understood in that which is most in
usage. - An instrument may be
keeping with the nature and object of
construed according to usage, in order
the contract.
to determine its true character.[157]
(Emphasis supplied)
Article 1376. The usage or custom of Equally availing is the following
the place shall be borne in mind in the principle. This is especially tlue of the
interpretation of the ambiguities of a remuneration due to CECON,
contract, and shall fill the omission of considering that stipulations for
remuneration are devised for the
benefit of the person rendering the
service:
Section 17. Of two constn.1ctions,
which preferred. - When the terms of
an agreement have been intended in a
different sense by the different parties
to it, that sense is to prevail against
either party in which he supposed the
other understood it, and when different
constructions of a provision are
otherwise equally proper, that is to be
taken which is the most favorable to
the party in whose favor the provision
was made.[158]
VI.C
In appraising the CIAC Arbitral
Tribunal's awards, it is not the province
of the present Rule 45 Petition to
supplant this Court's wisdom for the
inherent technical competence of and
the insights drawn by the CIAC Arbitral
Tribunal throughout the protracted
proceedings before it. The CIAC
Arbitral Tribunal perused each of the
parties' voluminous pieces of evidence.
[159] Its members personally heard,
observed, tested, and propounded
questions to each of the witnesses.
Having been constituted solely and
precisely for the purpose of resolving
the dispute between ACI and CECON
for 19 months, the CIAC Arbitral
Tribunal devoted itself to no other task
than resolving that controversy. This
Court has the benefit neither of the
CIAC Arbitral Tribunal's technical
competence nor of its irreplaceable
experience of hearing the case,
scrutinizing every piece of evidence,
and probing the witnesses.
True, the inhibition that impels this
Court admits of exceptions enabling it
to embark on its own factual inquiry.
Yet, none of these exceptions, which
are all anchored on considerations of
the CIAC Arbitral Tribunal's integrity
and not merely on mistake, doubt, or
conflict, is availing.
This Court finds no basis for casting
aspersions on the integrity of the CIAC
Arbitral TribunaL There does not
appear to have been an undisclosed
disqualification for any of its three (3)
members or proof of any prejudicial
misdemeanor. There is nothing to
sustain an allegation that the parties'
voluntarily selected arbitrators were
conupt, fraudulent, manifestly partial,
or otherwise abusive. From all
indications, it appears that the CIAC
Arbitral Tribunal extended every
possible opportunity for each of the
parties to not only plead their case but
also to arrive at a mutually beneficial
settlement. This Court has ruled,
precisely, that the arbitrators acted in
keeping with their lawful competencies.
This enabled them to come up with an
otherwise definite and reliable award
on the controversy before it.
Inventive, hair-splitting recitals of the
supposed imperfections in the CIAC
Arbitral Tribunal's execution of its tasks
will not compel this Court to supplant
itself as a fact-finding, technical expert.
ACI's refutations on each of the
specific items claimed by CECON and
its counterclaims of sums call for the
point by point appraisal of work,
progress, defects and rectifications,
and delays and their causes. They are,
in truth, invitations for this Court to
engage in its own audit of works and
corresponding financial consequences.
In the alternative, its refutations insist
on the application of rates, schedules,
and other stipulations in the same
tender documents, copies of which ACI
never adduced and the efficacy of
which this Court has previously
discussed to be, at best, doubtful.
This Court now rectifies the error made
by the Court of Appeals. By this
rectification, this Court does not open
the doors to an inordinate and
overzealous display of this Court's
authority as a final arbiter.
Without a showing of any of the
exceptional circumstances justifying
factual review, it is neither this Court's
business nor in this Court's
competence to pontificate on technical
matters. These include things such as
fluctuations in prices of materials from
2002 to 2004, the architectural and
engineering consequences - with their
ensuing financial effects - of shifting
from reinforced concrete to structural
steel, the feasibility of rectification
works for defective installations and
fixtures, the viability of a given
schedule of rates as against another,
the audit of changes for every
schematic drawing as revised by
construction drawings, the proper
mechanism for examining discolored
and mismatched tiles, the minutiae of
installing G.I. sheets and sealing
cracks with epoxy sealants, or even
unpaid sums for garbage collection.
The CIAC Arbitral Tribunal acted in
keeping with the law, its competence,
and the adduced evidence; thus, this
Court upholds and reinstates the CIAC
Arbitral Tribunal's monetary awards.
VII
It does not escape this Court's
attention that this controversy has
dragged on for more than 13 years
since CECON initially sought to avail of
arbitration.
The CIAC Arbitral Tribunal noted that
ACI consumed a total of 840 days filing
several motions and manifestations,
including at least eight (8) posturings at
pursuing settlement.[160] It added,
however, that ACI repeatedly failed to
respond to CECON's claims during
meetings thereby constraining CECON
to file motions to proceed after
repeatedly being dangled hope of an
early resolution.[161] It appeared that
ACI was more interested in buying time
than in effecting a consummate
voluntary settlement.
The CIAC Arbitral Tribunal October 25,
2006 Decision should have long
brought this matter to an end. This
Court does not fault ACI for availing of
remedies. Yet, this Court also notes
that even in proceedings outside of the
CIAC Arbitral Tribunal, ACI seems to
not have been sufficiently
conscientious of time.
In this Court alone, ACI sought
extensions to file its Comment no less
than five (5) times.[162] It sought
several other extensions in the filing of
its Memorandum.[163]
It also does not escape this Court's
attention that while ACI's arguments
have perennially pleaded the supposed
primacy and itnmutability of stipulations
originally articulated in the tender
documents, it never bothered to annex
any of these documents either to its
Comment or to its Memorandum.
Without these and other supporting
materials, this Court is left in the
uneasy predicament of merely relying
on ACI's self-stated assertions and
without means of verifying even the
syntax of its citations.
While presumptions of good faith may
be indulged, the repercussions of ACI's
vacillation cannot be denied.
Even if this Court were to ignore the
delays borne by ACI's procedural
posturing, this Court is compelled to
hearken to ACI's original faults. These
are, after all, what begot these
proceedings. These are the same
original faults which so exasperated
CECON; it was left with no recourse
but to seek the intervention of CIAC.
These faults began as soon as bidders
responded to ACI's invitation. In
CECON's case, its communicated time
for the validity of its offer lapsed
without confinnation from ACI. ACI only
verbally responded and only after
CECON's communicated timeframe. It
told CECON to commence excavation
works but failed to completely deliver
the project site until five (5) months
later. It engaged in protracted
negotiations, never confirming
acceptance until the tenth month, after
bidders had submitted their offers. By
then, ACI's supposed acceptance
could not even identify CECON's most
recent quoted price. It undertook to
process and deliver formal documents,
yet this controversy already reached
this Court and not a single page of
those documents has seen the light of
day. It has repeatedly added and taken
from CECONs scope of works but
vigorously opposed adjustments that
should have at least been given
reasonable consideration, only to admit
and partially stipulate on thern. In
taking upon itself the task of designing,
it took its time in delivering as many as
1,675 construction drawings to
CECON, more than 600 of which were
not delivered until well after the
project's intended completion date.
This Court commenced its discussion
by underscoring that arbitration
primarily serves the need of
expeditious dispute resolution. This
interest takes on an even greater
urgency in the context of construction
projects and the national interest so
intimately tied with them. ACI's actions
have so bogged down its contractor.
Nearing 13 years after the Gateway
Mall's completion, its contractor has yet
to be fully and properly compensated.
Not only have ACI's actions begotten
this dispute, they have hyper-extended
arbitration proceedings and dragged
courts into the controversy. The delays
have virtually bastardized the hopes at
expeditious and effective dispute
resolution which are supposedly the
hallmarks of arbitration proceedings.
For these, in addition to sustaining
each of the awards due to CECON
arising from the facets of the project,
this Court also sustains the CIAC
Arbitral Tribunal's award to CECON of
arbitration costs. Further, this Court
imposes upon respondent Araneta
Corporation, Inc. the burden of bearing
the costs of what have mutated into a
full-fledged litigation before this Court
and the Court of Appeals.
WHEREFORE, the Petition is
GRANTED. The assailed April 28,
2008 Decision and July 1, 2010
Amended Decision of the Court of
Appeals in CA-G.R. SP No. 96834 are
REVERSED and SET ASIDE. The
Construction Industry Arbitration
Commission Arbitral Tribunal October
25, 2006 Decision in CIAC Case No.
01-2004 is REINSTATED.

Legal interest at the rate of six percent
(6%) per annum is imposed on the
award from the finality of this Decision
until its full satisfaction.
Costs against respondent.
SO ORDERED.
G.R. No. 214300, July 26, 2017
PEOPLE OF THE
PHILIPPINES, Petitioner, v. MAN
UEL ESCOBAR, Respondent.
DECISION
LEONEN, J.:
This Rule 45 Petition assails the
Court of Appeals Decision to grant
the accused's second petition for
bail. Res judicata applies only in a
final judgment in a civil case,1 not
in an interlocutory order in a
criminal case.2 An order disposing a
petition for bail is
interlocutory.3 This order does not
attain finality when a new matter
warrants a second look on the
application for bail.
Respondent Manuel Escobar
(Escobar) filed a petition for bail
(First Bail Petition), which was
denied by the Regional Trial Court
in the Order4 dated October 6, 2008
and by the Court of Appeals in the
Decision5 dated March 8, 2011. A
subsequent development in the
accused's case6 compelled him to
file a second petition for bail
(Second Bail Petition). On April 26,
2012, the Regional Trial Court
denied7 this on the ground of res
judicata. In the Decision8 dated
March 24, 2014, the Court of
Appeals overturned the Regional
Trial Court Order and granted the
Second Bail Petition.
Escobar was suspected of
conspiring in the kidnap for ransom
of Mary Grace Cheng-Rosagas
(Mary Grace), daughter of Filipino-
Chinese businessman Robert G.
Cheng (Robert), and two (2) other
victims.9 Robert was the owner of
Uratex Foam, Philippines,10 a
manufacturing company of foams
and mattresses.11
On June 18, 2001 at 7:40 a.m.,
Mary Grace, her bodyguard Valentin
B. Torres (Torres), and her driver
Dionisio F. Burca (Burca) were
passing by the front of Malcolm
Hall, University of the Philippines,
Diliman, Quezon City when a
vehicle blocked their way.12 Another
group of suspects helped as
lookouts.13
Clad in police uniform, four (4)
armed men forced Mary Grace,
Burca, and Torres inside the
vehicle.14 The incident happened in
broad daylight.
Alleged group leader Rolando
Villaver (Villaver) and some of the
suspects then travelled and
detained Mary Grace, Burca, and
Torres in an undisclosed location in
Batangas.15 Afterwards, the group
headed to Club Solvento, a
resort16 in Calamba, Laguna owned
by Escobar,17 who personally served
them food.18
Some of the accused19 stayed in
Club Solvento to rest or sleep while
the others, namely, Villaver, Cesar
Olimpiada, a certain Cholo, and
Biboy Lugnasin, left to negotiate
the price for the victims'
release.20 Cheng paid the ransom of
P15,000,000.00.21
At 7:00 p.m. on the same day,
Villaver's group returned to Club
Solvento,22 followed by co-accused Escobar as a co-conspirator33 in the Cheng, owner of Uratex Foam,
brothers Rolando and Harold kidnapping for ransom.34 The Philippines, and have the same
Fajardo (the Fajardo brothers), who charging portion stated: delivered at E. Rodriguez
were alleged advisers of Compound, Calamba, Laguna
Villaver.23 The group then locked That on or about June 18, 2001 at thereby resulting to the release of
themselves in a room where around 7:40 in the morning, at the kidnap victims somewhere in
Villaver partitioned the ransom Quezon City, Philippines, and within Alaminos, Laguna at about 10:30
money.24 Cancio Cubillas (Cubillas), the jurisdiction of this Honorable p.m. of the same day all to the
the group's driver,25 confessed to Court, the above-named accused, damage and prejudice of the three
have received a total of conspiring, confederating and (3) victims and their families in
P1,250,000.00 for the kidnapping mutually helping one another and such amount as may be awarded to
operation.26 grouping themselves together, with them and their families under the
others not present during the actual provisions of the Civil Code.
At 10:30 p.m. on the same day, kidnapping but performing some
Mary Grace, Burca, and Torres were other peculiarly contributory roles, CONTRARY TO LAW.35
finally released.27 They were freed did, then and there, by force and Escobar was arrested on February
somewhere in Alaminos, Laguna, intimidation, with the use of long 14, 2008.36
more than 12 hours since they were firearms and clad in police uniform,
abducted.28 willfully, unlawfully and feloniously On June 3, 2008, Escobar filed the
take, carry away and thereafter First Bail Petition before the
Cubillas became a state detain at some undisclosed place, Regional Trial Court.37 During the
witness.29 On June 3, 2002, he after having blocked their car in hearing on Escobar's bail
executed an extrajudicial confession front of Malcolm Hall, Osmena application, Cubillas testified that
and implicated respondent Escobar Avenue, UP Campus, Diliman, Escobar and the Fajardo brothers
as an adviser for Villaver.30 Cubillas Quezon City, MARY GRACE CHENG- were Villaver's advisers.38
believed that Escobar was involved ROSAGAS, her driver DIONISIO F.
after he saw Escobar talk to Villaver BURCA and her bodyguard In the Order dated October 6,
while they were in Club VALENTIN B. TORRES, against their 2008, the Regional Trial Court
Solvento.31 In his extrajudicial will and consent thereby depriving denied39 Escobar's First Bail
confession, Cubillas also claimed them of their liberty for more than Petition. The dispositive portion
that Escobar received a portion of twelve (12) hours for the purpose read:
the ransom money from Villaver.32 of extorting ransom for their
chanRoblesvirtualLawlibrary

The Petition for Bail filed by accused

release in the amount of FIFTEEN Manny Escobar is denied for lack of
On February 17, 2004, an Amended MILLION PESOS (P15,000,000.00), merit considering that state witness
Information was filed before the and which amount was in fact paid Cancio Cubillas positively identified
Regional Trial Court charging by Mary Grace's father, Mr. Robert said accused as the owner of Club
Solvento located in Calamba,
Laguna; that he was the one who
served food to the group of Rolando
Villaver, Jun Jun Villaver, Ning Ning
Villaver, Danny Velasquez, Cholo,
Cesar Olimpiada, Mike, Alan
Celebre, Biboy Lugnasin and
witness himself, Cancio Cubillas;
that it was also in said Club
Solvento where Cancio Cubillas, Jun
Jun Villaver, Ning Ning Villaver,
Danny Velasquez, Mike and Alan
Celebre rested and slept after
Rolando Villaver, Cholo, Biboy
Lugnasin and Cesar Olimpiada left
to negotiate for the ransom of
kidnap victim Mary Grace Cheng
Rosagas, and that on the night of
June 18, 2001, Cubillas saw
accused Rolando Villaver gave part
of the ransom money to him.
SO ORDERED.40
Escobar appealed before the Court
of Appeals.41 On March 8, 2011, the
Court of Appeals affirmed42 the
denial of the First Bail Petition. It
recognized that Cubillas'
extrajudicial confession was
generally incompetent evidence
against his co-accused and was
admissible against himself only43 for
this rule and held that the Regional abduction of Rosagas, Burca and
Trial Court "did not rely solely on Torres or that during the actual
the extrajudicial confession of abduction, accused Rolando Fajardo
Cubillas"; rather, the trial court also gave advice or instruction to the
relied on Cubillas' testimony during other accused herein. The evidence
the bail hearing.45 for the prosecution likewise does
not establish that accused Rolando
Escobar moved to reconsider the Fajardo acted as adviser to accused
Court of Appeals March 8, 2011 Rolando Villaver and his group in
Decision.46 connection with the kidnapping of
the victims herein. There is no
testimony as to what advice or
Pending the proceedings on instructions were made by accused
Escobar's case, the police arrested Rolando Fajardo in connection with
one (1) of the co-accused Fajardo the kidnapping of the victims
brothers, Rolando Fajardo herein. There is thus a paucity of
(Rolando),47 who applied for bail evidence establishing the
before the Regional Trial Court.48 As participation of accused Rolando
in Escobar's bail hearing, the Fajardo in the kidnapping of
prosecution relied solely on Cubillas' Rosagas, Burca and
statements to establish the strength Torres.52 (Emphasis supplied)
of Fajardo's guilt.49 In an Order The reversal came about after the
dated September 13, 2011, the trial court considered that,
Regional Trial Court denied according to Cubillas, "[Rolando]
Rolando's petition for bail.50 was not present before, during and
after the kidnapping."53 There was
However, in an Order dated October paucity of evidence on Rolando's
14, 2011, the Regional Trial Court alleged participation.54
reversed its previous order and
granted Rolando's bail Meanwhile, on October 27, 2011,
application.51 The Regional Trial the Court of Appeals denied
Court stated: chanRoblesvirtualLawlibrary

Escobar's motion for

being hearsay and for violating To summarize, the evidence for the reconsideration.55 He no longer
the res inter alios prosecution does not establish that appealed before this Court.56
acta rule.44 Nevertheless, the Court accused Rolando Fajardo
of Appeals invoked an exception to participated during the actual By January 2012, only Escobar was
left in detention pending the final
judgment on the merits of the case
as all the other accused who had
active participation in the
kidnapping had been granted
bail.57 Escobar saw Rolando's
release on bail as a new
"development which warrant[ed] a
different view" on his own bail
application.58
Thus, on January 27, 2012, Escobar
filed another petition for bail
(Second Bail Petition) before the
Regional Trial Court.59 He noted
that Cubillas could not explain how
either Rolando or Escobar advised
Villaver and that both Rolando and
Escobar were absent before, during,
and after the kidnapping.60 Hence, if
Rolando's petition for bail was
granted based on the unreliability of
Cubillas' testimony, Escobar
reasoned that the trial court should
likewise grant him provisional
release.61
On April 26, 2012, the Regional
Trial Court denied62 Escobar's
Second Bail Petition on the ground
of res judicata,63 reasoning thus:
"[i]n deference to the Decision of
the Court of Appeals which has
already attained finality, accused's
Petition for Bail which is actually a
second petition for bail[,] must be
necessarily denied."64 judgment and not an interlocutory
order.70 An order denying a petition
Escobar moved for reconsideration for bail is interlocutory in nature.71
but this was denied by the Regional
Trial Court.65 On January 14, 2013, On April 4, 2014, the Regional Trial
he appealed before the Court of Court fixed72 Escobar's bail at
Appeals via Rule 65, arguing that P300,000.00. The dispositive
the trial court committed grave portion read: chanRoblesvirtualLawlibrary
abuse of discretion in denying his In view of the Decision rendered by
Second Bail Petition.66 the Court of Appeals on 24 March
2014, the bail for the provisional
In the Decision dated March 24, liberty of accused Manuel Escobar is
2014, the Court of Appeals hereby fixed at Three Hundred
67
granted  the petition for certiorari Thousand Pesos (Php300,000.00).
and ordered the Regional Trial
Court to determine the appropriate SO ORDERED.73
bail for Escobar's provisional liberty. In the Resolution dated September
The dispositive portion read: chanRoblesvirtualLawlibrary
11, 2014, the Court of Appeals
WHEREFORE, the petition denied74 the prosecution's Motion
is GRANTED. The April 26, 2012, for Reconsideration.
September 14, 2012, September
17, 2012 and November 6, 2012 On November 6, 2014, the
Orders, are SET ASIDE. The trial prosecution, through the Office of
court is directed to determine the the Solicitor General, filed a Petition
appropriate bail for the provisional for Review75 via Rule 45 before this
liberty of the petitioner, Manuel Court. In its Petition, the
Escobar, with dispatch. prosecution does not pray for the
issuance of a temporary restraining
SO ORDERED.68 order of the Court of Appeals
The Court of Appeals denied the Decision;76 rather, in assailing the
prosecution's Motion for grant of Escobar's Second Bail
Reconsideration.69 According to the Petition, the prosecution avers that
Court of Appeals, Escobar's Second the doctrine of res judicata must be
Bail Petition was not barred by res respected.77
judicata, which applies only if the
former judgment is a final order or On October 19, 2015, Escobar filed
his Comment,78 arguing that res
judicata did not apply here,79 that
there was no strong evidence of his
guilt,80 and that the Court of
Appeals could rectify errors of
judgment in the greater interest of
justice.81 According to Escobar:chanRoblesvirtualLawlibrary
13. Due to this sudden
development of the grant of bail to
his co-accused, [Rolando], and
considering that both [Rolando] and
[Escobar]'s alleged participation in
the crime are based on the same
court-declared unreliable
"speculations" of the state witness
Cubillas, who even admitted he was
lying when questioned during
[Escobar]'s own bail hearings, it
was in the interest of justice and
fairness to re-open the matter of
bail with respect to [Escobar] and
thereby grant the same. And the
Honorable Court of Appeals
agreed.82
This Court's program to decongest
holding jails led City Jail Warden
Randel H. Latoza (City Jail Warden
Latoza) to review Escobar's
83
case.  In his manifestation dated
August 18, 2016, City Jail Warden
Latoza informed this Court that
there was no temporary restraining
order against the Regional Trial
Court April 4, 2014 Order, which
fixed Escobar's provisional liberty at
P300,000.00. He also acknowledged
the Court of Appeals March 24, I
2014 Decision granting Escobar the
right to bail.84 He mentioned that Bail is the security given for the
Escobar had posted the temporary release of a person who
P300,000.00 bail, as ordered by the has been arrested and detained but
trial court.85 Thus, he moved to "whose guilt has not yet been
allow Escobar's provisional release proven" in court beyond reasonable
on bail.86 doubt.91 The right to bail is cognate
to the fundamental right to be
City Jail Warden Latoza alleged that presumed innocent. In People v.
Escobar had paid the necessary Fitzgerald:92
surety bond87 and attached a copy The right to bail emanates from the
of Traveller's Insurance Surety [accused's constitutional] right to
Corporation's surety bond be presumed innocent. It is
undertaking to his accorded to a person in the custody
manifestation.88 However, the of the law who may, by reason of
attached surety bond undertaking the presumption of innocence he
was neither notarized nor approved [or she] enjoys, be allowed
by the Regional Trial Court judge.89 provisional liberty upon filing of a
security to guarantee his [or her]
In a Letter dated May 15, 2017, the appearance before any court, as
Commission on Human Rights wrote required under specified
to Associate Justice Antonio T. conditions.93 (Citations omitted)
Carpio to ask for the speedy Bail may be a matter of right or
resolution of the case as Escobar judicial discretion. The accused has
was already 78 years old.90 the right to bail if the offense
charged is "not punishable by
For resolution are the following death, reclusion perpetua or life
issues: imprisonment" before conviction by
the Regional Trial Court.94 However,
First, whether Manuel Escobar's if the accused is charged with an
second petition for bail is barred offense the penalty of which is
by res judicata; and death, reclusion perpetua, or life
imprisonment—"regardless of the
Finally, whether respondent should stage of the criminal prosecution"—
be granted bail. and when evidence of one's guilt is
not strong, then the accused's
prayer for bail is subject to the
discretion of the trial court.95
In this case, the imposable penalty
for kidnapping for ransom is
death,96 reduced to reclusion
perpetua.97 Escobar's bail is, thus, a
matter of judicial discretion,
provided that the evidence of his
guilt is not strong.98
Rule 114 of the Revised Rules on
Criminal Procedure states: chanRoblesvirtualLawlibrary
Section 4. Bail, a matter of right;
exception. - All persons in custody
shall be admitted to bail as a
matter of right, with sufficient
sureties, or released on
recognizance as prescribed by law
or this Rule (a) before or after
conviction by the Metropolitan Trial
Court, Municipal Trial Court,
Municipal Trial Court in Cities, or
Municipal Circuit Trial Court, and
(b) before conviction by the
Regional Trial Court of an offense
not punishable by death, reclusion
perpetua, or life imprisonment.
....
Section 7. Capital offense or an
offense punishable by reclusion
perpetua or life imprisonment, not
bailable. - No person charged with a
capital offense, or an offense
punishable by reclusion perpetua or
life imprisonment, shall be admitted
to bail when evidence of guilt is
strong, regardless of the stage of
the criminal prosecution.
The Regional Trial Court
denied99 Escobar's Second Bail
Petition on the ground of res
judicata. The Court of Appeals
overturned100 this and correctly
ruled that his Second Bail Petition
was not barred by res judicata.
In its literal meaning, res
judicata refers to "a matter
adjudged."101 This doctrine bars the
re-litigation of the same claim
between the parties, also known as
claim preclusion or bar by former
judgment.102 It likewise bars the re-
litigation of the same issue on a
different claim between the same
parties, also known as issue
preclusion or conclusiveness of
judgement.103 It "exists as an
obvious rule of reason, justice,
fairness, expediency, practical
necessity, and public tranquillity."104
Degayo v. Magbanua-
Dinglasan105 held that "[t]he
doctrine of res judicata is set forth
in Section 47 of Rule 39"106 of the
Revised Rules of Civil Procedure,
thus:chanRoblesvirtualLawlibrary
Sec. 47. Effect of Judgments or
Final Orders. — The effect of a
judgment or final order rendered by
a court of the Philippines, having
jurisdiction to pronounce the
judgment or final order, may be as
follows:
....
(b) [T]he judgment or final order is,
with respect to the matter directly
adjudged or as to any other matter
that could have been raised in
relation thereto, conclusive between
the parties and their successors in
interest by title subsequent to the
commencement of the action or
special proceeding, litigating for the
same thing and under the same
title and in the same capacity; and
(c) In any other litigation between
the same parties or their successors
in interest, that only is deemed to
have been adjudged in a former
judgment or final order which
appears upon its face to have been
so adjudged, or which was actually
and necessarily included therein or
necessary thereto.
Escobar's Second Bail Petition is not
barred by res judicata as this
doctrine is not recognized in
criminal proceedings.107
Expressly applicable in civil him, and that the Agan cases without his express
cases, res judicata settles with cannot be a supervening event or consent.115 Here, while there was an
finality the dispute between the evidence per se to warrant a initial ruling on Escobar's First Bail
parties or their successors-in- reinvestigation on the same set of Petition, Escobar has not been
interest.108Trinidad v. facts and circumstances — do not convicted, acquitted, or has had his
Marcelo109 declares that res lie. case dismissed or terminated.
judicata, as found in Rule 39 of the
Rules of Civil Procedure, is a Res judicata is a doctrine of Even assuming that this case allows
principle in civil law and "has no civil law and thus has no for res judicata as applied in civil
bearing on criminal bearing on criminal cases, Escobar's Second Bail
proceedings."110 Rule 124, Section proceedings. Petition cannot be barred as there
18 of the Rules of Criminal is no final judgment on the merits.
Procedure states: chanRoblesvirtualLawlibrary But even if petitioner's arguments]
Section 18. Application of certain were to be expanded to Res judicata requires the
rules in civil procedure to criminal contemplate "res judicata in prison concurrence of the following
cases. - The provisions of Rules 42, grey" or the criminal law concept of elements: chanRoblesvirtualLawlibrary

44 to 46 and 48 to 56 relating to double jeopardy, this Court still

procedure in the Court of Appeals finds it inapplicable to bar the 1. The judgment sought
and in the Supreme Court in reinvestigation conducted by the to bar the new action
original and appealed civil cases Office of the must be final;
shall be applied to criminal cases Ombudsman.113 (Emphasis supplied,
insofar as they are applicable and citations omitted). 2. The decision must
not inconsistent with the provisions An interlocutory order denying an have been rendered
of this Rule. application for bail, in this case by a court having
Indeed, while certain provisions of being criminal in nature, does not jurisdiction over the
the Rules of Civil Procedure may be give rise to res judicata. As parties and the
applied in criminal cases,111 Rule 39 in Trinidad, even if we are to subject matter;
of the Rules of Civil Procedure is expand the argument of the
3. The disposition of the
excluded from the enumeration prosecution in this case to
under Rule 124 of the Rules of contemplate "res judicata in prison case must be
a judgment on the
Criminal Procedure. In Trinidad:112 grey" or double jeopardy, the same
Petitioner's arguments — that res will still not apply.114 Double merits; and
judicata applies since the Office of jeopardy requires that the accused
4. There must be
the Ombudsman twice found no has been convicted or acquitted or
between the first and
sufficient basis to indict him in that the case against him or her has
second actions,
similar cases earlier filed against been dismissed or terminated
 identity of parties, of
subject matter, and of
causes of action.116
In deciding on a matter before it, a
court issues either a final judgment
or an interlocutory order. A final
judgment "leaves nothing else to be
done" because the period to appeal
has expired or the highest tribunal
has already ruled on the case.117 In
contrast, an order is considered
interlocutory if, between the
beginning and the termination of a
case, the court decides on a point
or matter that is not yet a final
judgment on the entire
controversy. 118
An interlocutory order "settles only
some incidental, subsidiary or
collateral matter arising in an
action";119 in other words,
something else still needs to be
done in the primary case—the
rendition of the final
judgment.120Res judicata applies
only when there is a final judgment
on the merits of a case; it cannot
be availed of in an interlocutory
order even if this order is not
appealed.121 In Macahilig v. Heirs of
Magalit:122
Citing Section 49 of Rule 39, Rules
of Court, petitioner insists that the
September 17, 1997 [interlocutory]
Order of the trial court in Civil Case
No. 3517 bars it from rehearing
questions on the ownership of Lot
4417. She insists that said Order
has become final and
executory, because Dr. Magalit did
not appeal it.
We disagree. Final, in the
phrase judgments or final
orders found in Section 49 of Rule
39, has two accepted
interpretations. In the first sense, it
is an order that one can no longer
appeal because the period to do so
has expired, or because the order
has been affirmed by the highest
possible tribunal involved. The
second sense connotes that it is an
order that leaves nothing else to be
done, as distinguished from one
that is interlocutory. The phrase
refers to a. final determination as
opposed to a judgment or an order
that settles only some incidental,
subsidiary or collateral matter
arising in an action; for example,
an order postponing a trial, denying
a motion to dismiss or allowing
intervention. Orders that give rise
to  res judicata  and conclusiveness
of judgment apply only to those
falling under the second category.
....
For example, an Order overruling a
motion to dismiss does not give rise
to res adjudicata [sic] that will bar
a subsequent action, because such
order is merely interlocutory and is
subject to amendments until the
rendition of the final
judgment.123 (Emphasis supplied,
citations omitted)
A decision denying a petition for
bail settles only a collateral
matter124—whether accused is
entitled to provisional liberty—and
is not a final judgment on accused's
guilt or innocence. Unlike in a full-
blown trial, a hearing for bail is
summary in nature: it deliberately
"avoid[s] unnecessary
thoroughness" and does not try the
merits of the case.125 Thus:
chanRoblesvirtualLawlibrary
Summary hearing means such
brief and speedy method of
receiving and considering the
evidence of guilt as is practicable
and consistent with the purpose of
the hearing which is merely to
determine the weight of the
evidence for purposes of bail. The
course of the inquiry may be left to
the discretion of the court which
may confine itself to receiving such
evidence as has reference to
substantial matters avoiding
unnecessary thoroughness in the
examination and cross-examination
of witnesses and reducing to a
reasonable minimum the amount of
corroboration particularly on details
that are not essential to the
purpose of the
hearing.126 (Emphasis in the
original)
Here, the prosecution itself has
acknowledged that "the first order
denying bail is an interlocutory
order."127 The merits of the case for
kidnapping must still be threshed
out in a full-blown proceeding.
Being an interlocutory order, the
March 8, 2011 Court of Appeals
Decision denying Escobar's First Bail
Petition did not have the effect
of res judicata. The kidnapping case
itself has not attained finality.
Since res judicata has not attached
to the March 8, 2011 Court of
Appeals Decision, the Regional Trial
Court should have taken cognizance
of Escobar's Second Bail Petition
and weighed the strength of the
evidence of guilt against him.
In any case, the Court of Appeals
may still reverse its Decision,
notwithstanding its denial of the
First Bail Petition on March 8, 2011.
Rules of procedure should not be
interpreted as to disadvantage a
party and deprive him or her of
fundamental rights and liberties. A
judgment or order may be modified
where executing it in its present
form is impossible or unjust in view
of intervening facts or
circumstances:128
[W]here facts and circumstances
transpire which render [the]
execution [of a judgment]
impossible or unjust and it
therefore becomes necessary, "in
the interest of justice, to direct its
modification in order to harmonize
the disposition with the prevailing
circumstances."129 (Emphasis
supplied, citation omitted)
Appellate courts may correct "errors
of judgment if blind and stubborn
adherence to the doctrine of
immutability of final judgments
would involve the sacrifice of justice
for technicality."130 Thus, an
accused may file a second petition
for bail, particularly if there are
sudden developments or a "new
matter or fact which warrants
a different view."131
Rolando's release on bail is a new
development in Escobar's
case.132 The Court of Appeals has
pointed out that the other alleged
co-conspirators are already out on
bail: Rolando, in particular, was
granted bail because Cubillas'
testimony against him was
weak.133 "[Escobar] and [Rolando]
participated in the same way, but
[Escobar]'s bail was
134
denied."  Escobar's fundamental
rights and liberty are being
deprived in the meantime.
Article III, Section 13 of the 1987
Constitution states: chanRoblesvirtualLawlibrary
Section 13. All persons, except
those charged with offenses
punishable by reclusion
perpetua when evidence of guilt
is strong, shall, before conviction,
be bailable . . . (Emphasis supplied)
The same evidence used by the trial
court to grant bail to Rolando was
not used similarly in Escobar's
favor. As the Court of Appeals
found:135
We cannot ignore the allegation of
conspiracy and that the other
accused were all granted bail
except him. Specifically, [Rolando]
was granted bail due to the
weakness of Cubillas' testimony
against him.136
In light of the circumstances after
the denial of Escobar's First Bail
Petition, his Second Bail Petition
should have been given due course.
It should not be denied on the
technical ground of res judicata.
II
 WHEREFORE, the Petition
The Court of Appeals already is DENIED. The Court of Appeals
approved Escobar's bail petition. Decision dated March 24, 2014 in
Meanwhile, City Jail Warden Latoza CA-G.R. SP No. 128189
has informed this Court of the is AFFIRMED.
absence of any temporary
restraining order against the Court Escobar may be provisionally
of Appeals Decision granting the released if he indeed has paid the
Second Bail Petition, as well as the surety bond that must be contained
Regional Trial Court Order fixing his in a public document and approved
bail at P300,000.00.137 Thus, the by the Regional Trial Court judge.
Court of Appeals March 24, 2014 Otherwise, he is directed to post
Decision granting Escobar's bail.
provisional liberty can be executed
upon the approval of his bail bond, SO ORDERED.
if he has indeed paid the surety
bond.

In closing, no part of this Decision

should prejudice the submission of
additional evidence for the
prosecution to prove Escobar's guilt
in the main case. "[A] grant of bail
does not prevent the trier of
facts . . . from making a final
assessment of the evidence after
full trial on the merits."138 As the
Court of Appeals correctly ruled:chanRoblesvirtualLawlibrary

[T]his determination is only for the

purpose of bail[;] it is without
prejudice for the prosecution to
submit additional evidence to prove
[Escobar]'s guilt in the course of
the proceedings in the primary
case.139