CIVIL LAW

EFREN S. QUESADA, PETER CHUA, ARTURO B. PEREJAS, ERLINDA ESCOT A,

CRISANTO H. LIM, VASQUEZ BUILDING SYSTEMS CORPORATION, LION
GRANITE CONSTRUCTION SUPPLY CORPORATION, NELLIE M. MARIVELES,
ALEJANDRO V. VARDELEON III, ANGELITA P. ROQUE, DAVID LU, J.A.O.
BUILDERS & DEVELOPMENT CORPORATION, Petitioners 
vs.
BONANZA RESTAURANTS, INC., Respondent
G.R. No. 207500 November 14, 2016
FACTS:
Bonanza Restaurant, Inc. (Bonanza) is the registered owner of a 9,404-square meter
property situated at 1077-1079 EDSA, Balintawak, Quezon City. Efren was Bonanza's General
Property Manager while his brother, Miguel Quesada, was the Company President. Bonanza,
represented by Miguel, allegedly leased the subject lot to Efren. The lease was
supposedly "effective July 1, 2003 until such time that it is replaced or amended by another
resolution agreement " and "effective until such time that the parcel of land is sold." Using the
contract of lease, Efren entered into various subleases with third parties (the sublessees).

Thereafter, Bonanza rescinded the lease contract and formally demanded the return of the subject
lot. They then filed a complaint for unlawful detainer against Efren and his sublessees. It was alleged
that Efren was forestalling the sale of the property and that he had already constructed concrete
structure on the same property in bad faith and without its knowledge or consent to prolong his
enjoyment of the lot.

ISSUE:
1. Did Bonanza have basis to unilaterally terminate the lease?
2. Did the lease period already expire?
3. Was there a ground for summary judgment?
RULING:
Our Ruling
The petition is meritorious.
This case is rooted in Bonanza's complaint for unlawful detainer. The complaint theorizes that by
constructing concrete structures on the property without Bonanza's permission, Efren effectively
forestalled the sale of the property, constructively fulfilling the resolutory condition of the lease.
46

The complaint also points out that Bonanza's Board of Directors passed a resolution on January 28,
2008, canceling, rescinding, and/or terminating the lease. Therefore, the lease contract, which
was "effective July 1, 2003 and until such time that it is replaced or amended by another
resolution" had already expired.47

The lessor's demand to vacate

had no legal basis.
At the outset, we observe that Bonanza's complaint for ejectment was prematurely filed. According
to Rule 70, Section 2 of the Rules of Court, the lessor can only proceed with a summary action for
ejectment upon making a sufficient demand from the lessee:
SEC. 2. Lessor to proceed against lessee only after demand.- Unless otherwise stipulated, such
action by the lessor shall be commenced only after demand to pay or comply with the conditions of
the lease and to vacate is made upon the lessee, or by serving written notice of such demand upon
the person found on the premises, or by posting such notice on the premises if no person be found
thereon, and the lessee fails to comply therewith after fifteen (15) days in the case of land or five (5)
days in the case of buildings.
The Rules requires the concurrence of two conditions. First, the lessor must first make a written
demand for the lessee: (1) to pay or comply with the conditions of the lease; and (2) to vacate the
premises. Second, the lessee fails to comply with the demand within the given period.
A careful examination shows that Bonanza did not sufficiently comply with Rule 70, Section 2. Its
demand letter reads:
Please be advised that we have cancelled, rescinded and/or terminated the "Contract of
Lease"dated July 1, 2003, over that real property situated at 1077-79 EDSA, Balintawak, Quezon
City, covered by Transfer Certificate of Title No. 65703. In view thereof, formal demand is hereby
made upon you (and all persons claiming rights under you) to vacate and surrender the
property to uswithin fifteen (15) days from receipt of this letter.
For a peaceful and proper turnover of the premises, please coordinate with our new legal counsel
YULO ALILING PASCUA & ZUÑIGA with offices at the 4th Floor C-J Yulo Building, Pasong Tamo
corner Don Bosco Road, Makati City, and telephone number 816-6687. The contact person is Mr.
Jose P. O. Aliling IV.
Messrs. Yulo Aliling Pascua & Zuñiga believe that the contract is not really a lease but a usufruct
and that because you are a builder in bad faith, you lost what was built without right to indemnity.
The demand did not indicate that Efren breached the lease contract. There was no demand for him
to pay rent or comply with any of his obligations under the lease. Instead, it merely informs him
that Bonanza had unilaterally terminated the lease and demands the surrender of the property.
However, a contracting party cannot unilaterally terminate a contract unless otherwise stipulated
beforehand. A contract binds both contracting parties; its validity cannot be left to the will of one of
them.  To hold otherwise would offend the mutuality of contracts.
48

Bonanza's complaint theorized that by constructing concrete structures on the property without
Bonanza's permission, Efren effectively forestalled the sale of the property, constructively fulfilling
the resolutory condition of the lease.  However, this argument is without basis.
49

There is no logical connection between the construction of concrete structures on the property and
Bonanza's inability to sell it. The argument is a non sequitur. Moreover, the lease contract itself
specifically recognized the lessee's right to construct on the property:
5. Improvements - All construction improvements introduced by LESSEE shall be to his own
account. It is also understood that all materials used in the improvements shall be turned over to
LESSEE upon the sale of the property based on a submitted control listing of all approved
improvements and their respective costs at the end of the construction period. 50

Bonanza's approval is only relevant with respect to Efren's right to the turnover of materials used
upon the sale of the property.  Other than that, the contract does not oblige Efren to secure
1âwphi1

Bonanza's consent prior to constructing improvements.

Furthermore, Article 1657 of the Civil Code enumerates Efren's statutory obligations as a lessee:
Article 1657. The lessee is obliged:
(1) To pay the price of the lease according to the terms stipulated;
(2) To use the thing leased as a diligent father of a family, devoting it to the use stipulated; and in
the absence of stipulation, to that which may be inferred from the nature of the thing leased,
according to the custom of the place;
(3) To pay expenses for the deed of lease.  51
Bonanza failed to show how any of Efren's constructions go against the permissible use of the
property based on its nature. Accordingly, Bonanza had no basis to unilaterally terminate the lease
without offending the mutuality of contracts.
The period of the lease had
not yet expired.
There is also no merit in Bonanza's contention that the contract which was "effective July 1, 2003
and until such time that it is replaced or amended by another resolution " had expired because the
Board of Directors had already issued a board resolution terminating the lease. Bonanza interprets
the term "resolution" to mean a board resolution from Bonanza. This erroneous interpretation is
offensive to the mutuality and obligatory force of contracts.
The contract actually states:
8. Effectivity - This agreement shall be effective July 1, 2003 and until such time that it is replaced
or amended by another resolution agreement. 52

We point out that Bonanza has conveniently omitted the word "agreement" whenever it cited the
effectivity of the contract.  This omission is misleading and unethical.
1âwphi1

A lease contract is onerous in character containing reciprocal obligations; any ambiguities in its
terms are interpreted in favor of the greatest reciprocity of interests.  Accordingly, "resolution" or
53

"resolution agreement" should be interpreted to mean a subsequent agreement between the lessor
and the lessee instead of a unilateral resolution from the lessor's board of directors.
There was no ground for
summary ejectment.
A summary proceeding for unlawful detainer contemplates a situation where the defendant's
possession, while initially lawful, had legally expired. Under the Civil Code, a lessor may judicially
eject the lessee for any of the following causes:
Article 1673. The lessor may judicially eject the lessee for any of the following causes:
(1) When the period agreed upon, or that which is fixed for the duration of leases under articles
1682 and 1687, has expired;
(2) Lack of payment of the price stipulated;
(3) Violation of any of the conditions agreed upon in the contract;
(4) When the lessee devotes the thing leased to any use or service not stipulated which causes
the deterioration thereof; or if he does not observe the requirement in No. 2 of article 1657, as
regards the use thereof.
The ejectment of tenants of agricultural lands is governed by special law. 54

The presence of any of these circumstances authorizes the lessor to directly resort to the
MTC/MeTC for summary ejectment. The lessor is no longer required to file a separate complaint for
rescission before the RTC.  However, none of these circumstances is present in this case.
55

First, the contract did not specifically fix the period of the obligation. Therefore, we cannot conclude
that the lease had already expired.  While the nature and the circumstances of the contract make it
1âwphi1

apparent that a period was intended, this does not authorize the lessor to unilaterally conclude that
the period had lapsed or to summarily eject the lessee. The Civil Code only grants the lessor the
right to ask the courts to fix the period. 56

Second, the complaint did not allege that Efren had been remiss in the payment of the stipulated
rent.
Third, Bonanza failed to establish that Efren committed a substantial breach - as opposed to a
casual breach - of his legal obligations (both under the contract and under Article 1657 of the Civil
Code) that would defeat the very object of the parties in making the agreement and warrant the
rescission of the contract.
Lastly, Bonanza failed to show that Efren had dedicated the property to a use that is contrary to its
commercial nature and that caused its deterioration. On the contrary, Efren had maintained the
property and made improvements on it.
The RTC and the CA exceeded
the scope of their appellate review.
The CA and the RTC's findings challenging the validity of the lease contract went beyond the scope
of their appellate review. We stress that an ejectment proceeding is a summary action of limited
scope: the validity of the defendant's possession.
Consequently, the appellate courts erred when they passed upon the validity of the contract and
Miguel's authority (or lack thereof) - matters outside the scope of the original ejectment suit.
Moreover, Bonanza's complaint for unlawful detainer was implicit recognition of the validity of the
lease contract.
Admittedly, Rule 40, Section 8 authorizes the RTC to decide an appealed case on the merits – as if
it were originally filed before it - if it finds that it has original jurisdiction over the case. However, this
is not the case here because the RTC affirmed the MTC's jurisdiction over the original complaint.
Thus, this Court finds it improper for the RTC and for the CA to have passed upon: (1) the validity (or
invalidity) of the lease contract and (2) Miguel's authority (or alleged lack thereof) to enter into the
lease. While the RTC has the power to determine the validity or invalidity of contracts, this power is
exercised pursuant to its exclusive original jurisdiction over cases where the subject is incapable
of pecuniary estimation.  Due process demands that, in such cases, the litigants are thoroughly
57

heard in a fullblown trial and not just in a summary proceeding.

 G.R. No. 205951, July 04, 2016
UNION BANK OF THE PHILIPPINES, Petitioner, v. PHILIPPINE RABBIT BUS LINES,
INC., Respondent.
An ejectment case is not limited to lease agreements or deprivations of possession by force, intimidation,
threat, strategy, or stealth, It is as well an available remedy against one who withholds possession after the
expiration or termination of his right of possession under an express or implied contract, such as a contract
to sell

FACTS
Petitioner Union Bank of the Philippines is the owner of two parcels of land totaling 1,181 square meters,
with improvements. Respondent Philippine Rabbit Bus Lines, Inc. was the former owner of the lots but it lost
the same by foreclosure to Union Bank; nonetheless, PRBLI continued to occupy the same.

Petitioner and respondent executed a Contract to Sell covering the subject property for P12,208,633.57. The
contract to sell stipulated, among others, that "[a]ll payments required under this Contract to Sell shall be
made by the [buyer] without need of notice, demand, or any other act or deed, at the principal office
address of the [seller];" and that should respondent fail to fully comply with the agreement or in case the
contract is canceled or rescinded, all its installment payments "shall also be forfeited by way of penalty and
liquidated damages" and "applied as rentals for [its] use and possession of the property without need for any
judicial action or notice to or demand upon the [buyer] and without prejudice to such other rights as may be
available to and at the option of the [seller] such as, but not limited to bringing an action in court to enforce
payment of the Purchase Price or the balance thereof and/or for damages, or for any causes of action
allowed by law.”

Respondent failed to fully pay the stipulated price in the contract to sell. Petitioner thus sent a notarized
demand letter entitled "Demand to Pay with Rescission of Three (3) Contracts to Sell. Petitioner sent
another letter-demand to vacate dated May 24, 2004.

However, respondent was unable to pay and petitioner rescinded the contract to sell on February 28,2004.
Despite the fact that the contract to sell has been rescinded, respondent proposed to continue with the same
and issued and tendered to the petitioner three postdated checks in the amount of PI.5 million as payment.
However, only one check in the amount of P500,000.00 cleared and the same was applied as rental
payment.

Petitioner filed an ejectment case against respondent before the MTC.

Respondent prayed for dismissal, claiming that petitioner had no cause of action for ejectment and the
MTCC had no jurisdiction over the case because it involved breach of contract and rescission of the contract
to sell, which are cognizable by the Regional Trial Courts (RTC); that since the case is one for rescission,
there should be mutual restitution, but the amounts involved - payments, interests and penalties - should
be properly computed; that the demand to vacate was not unequivocal and was improperly served.

MTCC held that petitioner's case is one for rescission and enforcement of the stipulations in the contract to
sell; that the demand to vacate and fixing of rentals prayed for are consequences of petitioner's unilateral
cancellation of the contract and are thus inextricably connected with rescission; and that there is "no definite
expiration or termination of the [respondent's] right to possess" the subject property, and such right
depended "upon its fulfillment of the stipulations in the contract."

RTC:
The letter of demand did not demand for the payment of the defendant-appellee's obligation. It was merely
a demand to vacate without the demand to pay. Hence, the Court is of the considered opinion that such
demand is not sufficient compliance with Sec. 2 of Rule 70 of the Rules of Court. Furthermore, a Notice of
Demand giving the lessee the alternative whether to pay the rental or vacate the premises does not comply
with the above rule.

CA held that petitioner had a cause of action for ejectment based on non-payment of rentals and refusal to
vacate since respondent's right to occupy the subject property terminated when it failed to honor the
contract to sell by not paying the agreed amortizations, and thereafter their agreement was converted into a
lease, but respondent failed to pay rent and did not vacate the premises; however, it failed to comply with
the jurisdictional requirement of demand to pay and vacate under Section 2, Rule 70 of the 1997 Rules of
Civil Procedure. It found, as the RTC did, that while there was a demand to vacate upon respondent, there
was no prior demand to pay made on the latter; that since both requisites - demand to pay and vacate -
must concur, the absence of one strips the lower court of jurisdiction over petitioner's Complaint for
ejectment.

Issues

SINCE THE CONTRACT TO SELL BETWEEN PETITIONER UBP AND RESPONDENT PRBL WAS ALREADY
CANCELED DUE TO PRBL'S FAILURE TO PAY THE PURCHASE PRICE, IS UPB STILL REQUIRED TO ISSUE A
DEMAND TO PAY PRIOR TO THE FILING OF THE EJECTMENT CASE? No

RULING:

Petitioner essentially argues that since the contract to sell was already rescinded, it was no longer required
to make a demand for payment prior to filing an ejectment suit.

An ejectment case is not limited to lease agreements or deprivations of possession by force,

intimidation, threat, strategy, or stealth. It is as well available against one who withholds
possession after the expiration or termination of his right of possession under an express or
implied contract, such as a contract to sell.

Under Section 1, Rule 70 of the 1997 Rules, "a x x x vendor, vendee, or other person against whom the
possession of any land or building is unlawfully withheld after the expiration or termination of the right to
hold possession, by virtue of any contract, express or implied, or the legal representatives or assigns of any
such lessor, vendor, vendee, or other person, may, at any time within one (1) year after such unlawful
deprivation or withholding of possession, bring an action in the proper Municipal Trial Court against the
person or persons unlawfully withholding or depriving of possession, or any person or persons claiming
under them, for the restitution of such possession, together with damages and costs." In such cases, it is
sufficient to allege in the plaintiffs complaint that -

1. The defendant originally had lawful possession of the property, either by virtue of a contract or by
tolerance of the plaintiff;

2. Eventually, the defendant's possession of the property became illegal or unlawful upon notice by the
plaintiff to defendant of the expiration or the termination of the defendant's right of possession;

3. Thereafter, the defendant remained in possession of the property and deprived the plaintiff the
enjoyment thereof; and

4. Within one year from the unlawful deprivation or withholding of possession, the plaintiff instituted the
complaint for ejectment.32

UPB complied with the above requirements. It alleged that respondent acquired the right to occupy the
subject property by virtue of the November 8, 2001 Contract to Sell; that respondent failed to pay the
required amortizations and thus was in violation of the stipulations of the agreement; that petitioner made a
written "Demand to Pay with Rescission of Three (3) Contracts to Sell dated November 8, 2001," but
respondent was unable to heed the demand; that respondent lost its right to retain possession of the
subject property, and it was illegally occupying the premises; that petitioner made another demand, this
time a written demand to vacate on May 24, 2004, which respondent received on May 26, 2004; that
respondent refused to vacate the premises; that on May 26, 2005, or within the one-year period required by
the Rules, the ejectment case was filed; and that there is a need to determine the rents and damages owing
to petitioner.

It was erroneous for the lower courts to require a demand to pay prior to filing of the ejectment
case. This is not one of the requisites in an ejectment case based on petitioner's contract to sell with
respondent. The full payment of the purchase price in a contract to sell is a positive suspensive condition
whose non-fulfillment is not a breach of contract, but merely an event that prevents the seller from
conveying title to the purchaser; in other words, the non-payment of the purchase price renders the
contract to sell ineffective and without force and effect. Respondent's failure and refusal to pay the monthly
amortizations as agreed rendered the contract to sell without force and effect; it therefore lost its right to
continue occupying the subject property, and should vacate the same.

January 20, 2016

G.R. No. 180559
ANECITA GREGORIO, Petitioner, 
vs.
MARIA CRISOLOGO VDA. DE CULIG, THRU HER ATTORNEY-IN-FACT ALFREDO CULIG,
JR., Respondent.
Respondent Maria Crisologo V da. De Culig is the widow of Alfredo Culig, Sr. During his lifetime,
Alfredo was granted a homestead patent under the Public Land Act (C.A. 141) over a 54,730-square
meter parcel of land in Nuangan, Kidapawan, North Cotabato. Upon his death, an executed an
extra-judicial settlement of estate with simultaneous sale of the property in favor of petitioner
spouses Andres Seguritan and Anecita Gregorio. The property was sold for P25,0000.00, and title to
the property was issued in the name of the spouses.
Respondent filed a complaint demanding the repurchase of the property under the provisions of the
Public Land Act. She alleged that she first approached the spouses personally and offered to pay
back the purchase price of ₱25,000.00 but the latter refused. Subsequently, respondent and her
son, Alfredo Culig, Jr. (petitioner’s attorney-in-fact) wrote letters reiterating their desire to repurchase
the property but the spouses did not answer.
Spouses Seguritan countered that the respondent had no right to repurchase the property since the
latter only wanted to redeem the property to sell it for a greater profit.
Regional Trial Court dismissed the complaint. The trial court ruled that a formal offer alone, or the
filing of a case alone, within the prescribed period of five (5) years is not sufficient to effect a valid
offer to redeem—either must or should be coupled with consignation of the repurchase price if bona
fide tender of payment has been refused.
CA granted the appeal. According to the CA, consignation should not be considered a requisite
element for the repurchase of homestead or free patent lots. Consignation is not necessary in a sale
with right of repurchase because it involves "an exercise of a right or privilege … rather than the
discharge of an obligation, hence tender of payment would be sufficient to preserve [a] right or [a]
privilege."
Petitioner filed her motion for reconsideration on March 19, 2007, way beyond the fifteen (15) day
reglementary period. She alleged that she and the other heirs learned of the July 11, 2006 decision
only on March 5, 2007 when they personally verified with the records of the CA. She also assailed
the decision of the CA for being contrary to law, jurisprudence and facts of the case.
On September 27, 2007, the CA denied the motion, holding that "notice to counsel is notice to
client".
Did the respondent validly exercise the right of redemption? Yes.
Petitioner insists that there was no valid redemption since there was no valid tender of payment nor
consignation of the amount of repurchase made by the respondent. Petitioner maintains that tender
of payment of the repurchase price is necessary to exercise the right of redemption. Thus, when
respondent filed to tender payment of the repurchase price, and admitted her failure to consign the
amount in court, she lost her right to repurchase the property. 
Section 119 of the Public Land Act provides:
Sec.119. Every conveyance of land acquired under the free patent or homestead provisions, when
proper, shall be subject to repurchase by the applicant, his widow, or legal heirs, within a period of
five years from the date of the conveyance.
It is undisputed that the complaint for repurchase was filed within the reglementary period of five
years. The parties also agreed that there was no consignment of the repurchase price. However,
petitioner argues that consignment is necessary to validly exercise the right of redemption.
Consignment is not necessary to vaildly exercise the right of redemption.
In Hulganza v. Court of Appeals, we held that the bona fide tender of the redemption price or its
equivalent—consignation of said price in court is not essential or necessary where the filing of the
action itself is equivalent to a formal offer to redeem. As explained in the said case,
"The formal offer to redeem, accompanied by a bona fide tender of the redemption price, within the
period of redemption prescribed by law, is only essential to preserve the right of redemption for
future enforcement beyond such period of redemption and within the period prescribed for the action
by the statute of limitations. Where, as in the instant case, the right to redeem is exercised thru the
filing of judicial action within the period of redemption prescribed by the law, the formal offer to
redeem, accompanied by a bona fide tender of the redemption price, might be proper, but is not
essential. The filing of the action itself, within the period of redemption, is equivalent to a formal offer
to redeem. xxx" Thus, it is immaterial that the repurchase price was not deposited with the Clerk of
Court.
Article 1616 of the Civil Code does not apply in this case. The provision only speaks of the
amount to be tendered when exercising the right to repurchase, but it does not state the procedure
to be followed in exercising the right. In fact, in Peralta v. Alipio, we rejected the argument that the
provisions on conventional redemption apply as supplementary law to the Public Land Act, and
clarified that:
xxx. The Public Land Law does not fix the form and manner in which reconveyance may be
enforced, nor prescribe the method and manner in which demand therefor should be made; any act
which should amount to a demand for reconveyance should, therefore, be sufficient. (Underscoring
supplied.)
Is respondent not entitled to the right of repurchase because respondent intends to resell the
property for profit? No.
Indeed, the main purpose in the grant of a free patent or homestead is to preserve and keep in the
family of the homesteader that portion of public land which the State has given to him so he may
have a place to live with his family and become a happy citizen and a useful member of the society.
We have ruled in several instances, that the right to repurchase of a patentee should fail if the
purpose was only speculative and for profit, or "to dispose of it again for greater profit" or "to recover
the land only to dispose of it again to amass a hefty profit to themselves." In all these instances, we
found basis for ruling that there was intent to sell the property for a higher profit. We find no such
purpose in this case.
The lower courts did not make any definitive finding that the intent to repurchase was for profit. In its
decision, the RTC merely glossed over the issue of intent, anchoring its dismissal on the
respondent’s failure to consign the purchase price. Even the CA observed that the RTC found that
the claim of speculative repurchase is insufficient to warrant the denial of the redemption, as the
latter’s denial of the redemption was based on the lack of a formal offer of redemption and
consignation.
The burden of proof of such speculative intent is on the petitioner. Petitioner’s bare allegations as to
respondent’s "manifestation of the affluence," "bulging coffers," their being "professionals" and "most
of them are residing in Canada" are not enough to show that petitioner intended to resell the
property for profit.
Is the dismissal of the motion for reconsideration proper? Yes.
Petitioner claims that her previous counsel failed to file the motion for reconsideration due to gross
neglect of duties. Her counsel, Atty. Jeorge D. Zerrudo did not inform her of the appeal filed by the
respondent and the subsequent proceedings which took place after the RTC decision issued in
1998, all the while thinking that the RTC decision became final and binding. In 2007, she was
informed by Atty. Zerrudo that they have lost the case and should just enter into a compromise with
the respondent, as "nothing can be done.” It was only upon personal verification with the CA that
petitioner learned of the CA decision against her. Thus, petitioner maintains that she should not be
made responsible for the gross negligence of her counsel.
Petitioner is still bound by her counsel’s acts. A client is bound by the negligence of his counsel. A
counsel, once retained, holds the implied authority to do all acts necessary or, at least, incidental to
the prosecution and management of the suit in behalf of his client, such that any act or omission by
counsel within the scope of the authority is regarded, in the eyes of the law, as the act or omission of
the client himself. A recognized exception to the rule is when the reckless or gross negligence of the
counsel deprives the client of due process of law. For the exception to apply, however, the gross
negligence should not be accompanied by the client's own negligence or malice, considering that the
client has the duty to be vigilant in respect of his interests by keeping himself up-to-elate on the
status of the case. Failing in this duty, the client should suffer whatever adverse judgment is
rendered against him. 51

In Pasiona, Jr. v. Court qf Appeals, we declared that the failure to file a motion for reconsideration is
only simple negligence, since it did not necessarily deny due process to his client party who had the
opportunity to be heard at some point of the proceedings.
Moreover, petitioner is also guilty of negligence. By her own admission, she had no knowledge about
the subsequent proceedings after the trial court rendered its decision in 1998, and she just assumed
that the decision was final and binding. A litigant bears the responsibility to monitor the status of his
case, for no prudent party leaves the fate of his case entirely in the hands of his lawyer. Petitioner
should have maintained contact with her counsel from time to time, and informed herself of the
progress of their case, thereby exercising that standard of care "which an ordinarily prudent man
bestows upon his business." It took nine years before petitioner showed interest in her own case.
Had she vigilantly monitored the case, she would have sooner discovered the adverse decision and
avoided her plight.

September 6, 2017
G.R. No. 208625
PEOPLE OF THE PHILIPPINES, Plaintiff-appellee, 
vs.
RAMON FRANCIA y NAVALTA, Accused-appellant
No amount, especially not the ₱50.00 paid by the accused for sexually abusing his 11 -year-old
victim, will ever compensate for her trauma. The depravity of a grown man in taking advantage of a
child's trust and innocence and her family's poverty to repeatedly rape her rightfully deserves
condemnation and the most severe punishment that can be meted out under the law.
This Court is asked to review the February 22, 2013 Decision  of the Court of Appeals in CA-G.R.
1

CR-HC No. 03929. This Decision affirmed the conviction of accused-appellant Ramon Francica
(Francica) for three (3) counts of statutory rape under Article 266-A(1)(d) of the Revised Penal Code,
as amended by Republic Act No. 8353, in relation to Republic Act No. 7610, and imposed the
penalty of reclusion perpetua for each count of rape. 2

This Court restates the facts as found by the lower courts.

On February 3, 2005, in Criminal Case No. 05-1287-FC-H, an Information  was filed against
3

Francica before Branch 209, Regional Trial Court, Mandaluyong City. This Information read:
That on or about the 2nd day of February 2005, in the city of Mandaluyong, Philippines, a place
within the jurisdiction of [this Honorable Court,] the above-named accused, being the neighbor of the
victim, did, then and there willfully, unlawfully and feloniously have carnal knowledge with [AAA], a
girl eleven (11) years of age, by then and there inserting his private part into [the] latter's vagina, all
against the latter's will, which acts [sic] debases, degrades or demeans the intrinsic worth and dignity
of the victim (a child) as a human being.
CONTRARY TO LAW. 4

When arraigned,  Francica pleaded not guilty to the crime charged against him.
5

On September 20, 2005, in Criminal Case Nos. MCOS-1483-FC-H and MCOS-1484-FC-H, two (2)
additional Informations were also filed against Francica before Branch 209, Regional Trial Court,
Mandaluyong City. The second Information read:
That on or about the 19th day of January 2005, in the city of Mandaluyong, Philippines, a place
within the jurisdiction of [this Honorable Court,] the above-named accused, motivated by carnal lust
and by means of force, threat and intimidation, did, then and there willfully, unlawfully and feloniously
have carnal knowledge with [AAA], a girl eleven (11) years of age, a child within the meaning of R.A.
7610, by then and there inserting his private part into the latter's vagina, all against the latter's will,
which acts [sic] debases, degrades or demeans the intrinsic worth and dignity of the victim (a child)
as a human being.
CONTRARY TO LAW. 6

The third Infonnation read:

That sometime in the month of March 2004, in the City of Mandaluyong, Philippines, a place within
the jurisdiction [of this Honorable Court,] the above-named accused, motivated by carnal lust and by
means of force, threat and intimidation, did, then and there willfully, unlawfully and feloniously have
carnal knowledge with [AAA], a girl eleven (11) years of age, a child within the meaning of R.A.
7610, by then and there inserting his private part into the latter's vagina, all against the lattev's will,
which acts [sic] debases, degrades or demeans the intrinsic worth and dignity of the victim (a child)
as a human being.
CONTRARY TO LAW. 7

On October 26, 2005, the trial court ordered the consolidation of the three (3) charges of rape. 8

Francica also pleaded not guilty to the two (2) other charges of rape agamst him. 9

Trial on the merits ensued.

The prosecution presented the child victim, AAA, who was then 11 years old and a Grade 6 student
at a public school in Nueve de Pebrero in Mandaluyong City. 10
AAA testified that she lived with her parents and five (5) siblings in Mandaluyong City near Cardinal
Sin. AAA claimed that she knew Francica because he was their neighbor. 11

AAA testified that Francica was a good person because he would sometimes give her money
whenever he touched her.  When asked how Francica touched her, AAA answered that he licked
12

her breasts and inserted his penis into her vagina.13

She claimed that Francica started touching her sometime in March 2004 and that this went on many
times. He would sometimes even give her ₱50.00 after touching her. 14

The next prosecution witness was BBB, AAA's grandmother. BBB testified that AAA lived on the
ground floor of her house in Nueve de Pebrero while she lived on the second floor. BBB claimed to
know Francica because he had been her neighbor for many years. 15

BBB testified that she had two (2) bathrooms at the back of her house.  In the afternoon of February
16

2, 2005, she was using one (1) of them when she heard a voice say, "May tao. Si Mamang yata yun"
from inside the other lavatory.  When she went out, she saw someone run out of the other
17

bathroom. She quickly looked inside the washroom and saw AAA. She ran after the other person
and when he looked backed, she recognized him as Francica. 18

She was unable to catch Francica and when she returned to her house, she saw her other
grandchild, CCC, talking with AAA. CCC was outside the bathrooms when the commotion happened
and CCC told BBB that she saw AAA pulling up her underwear inside the lavatory after Francica ran
out.
19

BBB claimed that she had heard rumors that Francica and AAA regularly had sexual intercourse and
that she had confronted AAA about this before, but AAA never confirmed these rumors. 20

After she saw AAA and Francica inside the bathroom, BBB told Josephine, AAA's aunt, about what
happened. AAA and Josephine then went to the barangay hall to report the incident. 21

BBB testified that she was summoned to the barangay hall later that afternoon to confront Francica.
She claimed that Francica admitted the accusation against him, for which he was mauled inside the
barangay hall.  After the barangay investigation, BBB and AAA went to the police station to execute
22

their respective affidavits. 23

BBB testified that AAA's family was very poor and that AAA's mother could not look after her children
because she had a gambling problem. BBB admitted that she would prefer that AAA be placed
under the custody of the Department of Social Welfare and Development because she was already
overtaxed with looking after and providing for several other grandchildren and could no longer take
care of AAA. 24

The third prosecution witness was Carlos C. Gojo (Gojo), a member of Task Force Anti-Vice. He
testified that after BBB reported AAA's rape, Task Force Anti-Vice teamed up with Bantay Bayan of
Addition Hills that same day to arrest Francica. The two (2) groups went to Francica's house where
they found and arrested him. Gojo attested that Francica was informed of his constitutional rights to
be silent and be represented by a lawyer during his arrest.25

Gojo admitted that they had no warrant of arrest when they arrested Francica since they relied on
the complaint lodged against Francica. 26

Both parties agreed to stipulate  on the testimony of POI Jocelyn Samson, who investigated the
27

case and endorsed the complaint against Francica to the Office of the City Prosecutor.
The trial court then ruled that the prosecution waived its right to present as its witness medico-legal
PSI Pierre Paul Carpio, M.D. (PSI Carpio), who examined AAA, because of his repeated failure to
attend the hearings. 28

The last prosecution witness was Court Social Worker Leonor Laureles (Laureles), who conducted
the Social Case Study Report  on AAA upon the trial court's directive.  Laureles testified that she
29 30

interviewed AAA, who opened up about the abuse she underwent because of Francica.  Laureles 31

also averred that she had recommended that AAA be referred to an institution as she was neglected
by her parents. 32
Francica was the only witness for the defense and he denied that he ever had sexual intercourse
with AAA. He claimed that he was only set up by AAA's family after he found out from Nora, AAA's
other aunt, that AAA had a relationship with her uncle. Francica stated that he told AAA's parents
about her relationship with her uncle, but they ignored him. Francica further claimed that he was
made a scapegoat after he revealed AAA's relationship with her uncle. 33

Francica did not deny being inside the bathroom with AAA, but he claimed that it was a common
facility and that he was urinating when AAA went inside to wait for her tum to use the toilet. It was at
this point when AAA's cousin and BBB saw them inside the lavatory. 34

On March 3, 2009, the trial court rendered judgment  finding Francica guilty of three (3) counts of
35

statutory rape and meting out the penalty of reclusion perpetua for each count. 36

The trial court ruled that all the elements of statutory rape were established with AAA's credible and
candid testimony, corroborated by BBB's testimony. 37

The trial court also held that it was immaterial that the prosecution failed to present the testimony of
medico-legal PSI Carpio, since "a medical examination is not indispensable to the prosecution of
rape as long as the evidence on hand convinces the court that conviction for rape is proper." 38

The dispositive portion of the trial court's decision read:

WHEREFORE, premises considered, this Court finds the accused RAMON FRANCICA y NAVALTA
GUILTY beyond reasonable doubt of three (3) counts of Statutory Rape and he is hereby sentenced
to suffer the penalty of three (3) reclusion perpetua to be served successively. The accused is
further ordered to pay the victim, for each count of rape, the amount of ₱50,000.00 as civil
indemnity, ₱25,000.00 as exemplary damages, and ₱50,000.00 as moral damages.
COSTS against the accused.
SO ORDERED. 39

Francica filed a Notice of Appeal.  In his appeal,  he claimed that the prosecution's failure to present
40 41

medico-legal PSI Carpio was fatal to the prosecution's case because there were matters that should
be clarified by the examining physician. 42

On February 22, 2013, the Court of Appeals rendered a decision  affirming Francica's conviction.
43

The Court of Appeals held that AAA's Sinumpaang Salaysay and her testimony in court were
consistent in showing that she repeatedly had sexual intercourse with Francica, sometimes in
exchange for ₱50.00. 44

In upholding the trial court's assessment on the credibility of the witnesses, the Court of Appeals
stated that "the trial judge enjoys the peculiar advantage of observing firsthand the deportment of
witnesses while
testifying, and is, therefore, in a better position to form accurate impressions and conclusions." 45

The Court of Appeals emphasized that a conviction for rape based on the sole testimony of the
victim is possible, as long as the victim's testimony is competent and credible. 46

Finally, the Court of Appeals asserted that a medical examination of a rape victim is not
indispensable to the prosecution of a rape case, as it is merely corroborative in nature. 47

The fallo of the Court of Appeals Decision read:

WHEREFORE, premises considered, the instant Appeal is hereby DENIED. The Decision of the
court a quo dated 3 March 2009 is hereby AFFIRMED in toto.
SO ORDERED.  (Emphasis in the original)
48

On March 21, 2013, Francica filed a Notice of Appeal  with the Court of Appeals, which was given
49

due course in the Resolution  dated April 23, 2013. Hence, this appeal was instituted.
50

In the Resolution  dated October 23, 2013, this Court notified the parties that they may file their
51

respective supplemental briefs, if they so desired. However, both parties manifested  that they were
52

dispensing with the filing of their supplemental briefs.

In his appellant's brief:  Francica denies the accusations of rape against him and insists that he was
53

merely made a fall guy to cover up AAA's sexual relationship with her uncle. 54
Francica also claims that the lower courts erred in declaring that the prosecution's failure to present
the medico-legal officer was not fatal to the case since it affects the reliability of AAA's allegations. 55

Francica points out that the alleged rape on February 2, 2005 happened at 1:30 p.m. and AAA was
examined that same day at 5:53 p.m.  However, the initial medico-legal report submitted by PSI
56

Carpio showed shallow healed lacerations at 3:00 and 9:00 positions.  Francica maintains that if
57

AAA was indeed raped that afternoon, the lacerations should either be fresh bleeding laceration or
"fresh healing with fibrin formation and with edema of the surrounding tissue"  and not healed
58

lacerations as stated in the medico-legal report.

Francica likewise asserts that not all lacerations in the vagina are caused by sexual acts because
normal activities like jumping and running can also lead to lacerations or injury. He opines that the
initial medico-legal report failed to describe the degree and location of the laceration, thereby
creating doubt that the laceration was indeed caused by a sexual act. 59

On the other hand, the prosecution emphasizes that given the nature of rape cases, conviction
usually rests on the sole testimony of the victim.  The prosecution contends that AAA's credibility as
60

a witness survived strict scrutiny since she was credible and straightforward during her testimony.
She positively identified Francica and testified with specificity what transpires between them. 61

The prosecution underscores that jurisprudence is consistent that when a child victim says that she
has been raped, her testimony should be given full weight and credence. 62

Finally, the prosecution contends that the filing of a healed laceration instead of a fresh bleeding or
fresh healing laceration is irrelevant, as this Court ruled in People v. Espino  that full penile
63

penetration of the vagma is not an element of rape. 64

The only issue to be resolved by this Court is whether the prosecution was able to prove beyond
reasonable doubt that accused-appellant was guilty of statutory rape as defined under Article 266-A(l
)(d) of the Revised Penal Code, as amended by Republic Act No. 8353,  in relation to Republic Act
65

No. 7610. 66

This Court affirms Francica's conviction.

I
This Court notes that in the Information  dated February 3, 2005, Francica was charged with rape
67

under Article 266-A(2) of the Revised Penal Code, as amended by Republic Act No. 8353, in relation
to Republic Act No. 7610, while he was charged with rape under Article 266-A(l) under the two (2)
other Informations.68

Rape is defined in Article 266-A of the Revised Penal Code as:

Article 266-A. Rape; When and How Committed. - Rape is committed:
1. By a man who shall have carnal knowledge of a woman under any ofthe following circumstances:
a. Through force, threat, or intimidation;
b. When the offended party is deprived of reason or otherwise unconscious;
c. By means of fraudulent machination or grave abuse of authority; and
d. When the offended party is under twelve (12) years of age or is demented, even though none of
the circumstances mentioned above be present.
2. By any person who, under any of the circumstances mentioned in paragraph 1 hereof, shall
commit an act of sexual assault by inserting his penis into another person's mouth or anal orifice, or
any instrument or object, into the genital or anal orifice of another person.
For a charge of rape under Article 266-A(l) to prosper, it must be proven that "(1) the offender had
carnal knowledge of a woman, and (2) he accomplished such act through force or intimidation, or
when she was deprived of reason or otherwise unconscious, or when she was under 12 years of age
or was demented." 69

On the other hand, rape under Article 266-A(2) is described in Ricalde v. People  as "'instrument or
70

object rape,' 'gender-free rape,' or 'homosexual rape.' The gravamen of rape through sexual assault
is 'the insertion of the penis into another person's mouth or anal orifice, or any instrument or object,
into another person's genital or anal orifice."'
71

Francica was charged with rape under Article 266-A(2) in the Information dated February 3, 2005,
yet even a cursory reading of this Information shows that the allegations and the acts or omissions
complained of pertain to rape under Article 266-A(l)(d) or carnal knowledge of a girl below 12 years
of age:
That on or about the 2nd day of February 2005, in the city of Mandaluyong, Philippines, a place
within the jurisdiction of [this Honorable Court,] the above-named accused, being the neighbor of the
victim, did, then and there willfully, unlawfully and feloniously have carnal knowledge with [AAA], a
girl eleven (11) years of age, by then and there inserting his private part into [the] latter s vagina, all
against the latter's will, which acts [sic] debases, degrades or demeans the intrinsic worth and dignity
of the victim (a child) as a human being.  (Emphasis supplied)
72

It is well-established that the nature of a criminal charge is determined "by the recital of the ultimate
facts and circumstances in the complaint or information"  and not by the caption of the information or
73

the provision of the law claimed to have been violated.  Thus, the lower courts did not err in treating
74

and trying all charges against Francica as rape through carnal knowledge under Article 266-A(1)(d).
II
Rape under Article 266-A(l)(d) is also called statutory rape as "it departs from the usual modes of
committing rape."  The child victim's consent in statutory rape is immaterial because the law
75

presumes that her young age makes her incapable of discerning good from evil.  People v.
76

Gutierez  explained the elements of statutory rape:

77

Statutory rape is committed when (1) the offended party is under 12 years of age and (2) the
accused has carnal knowledge of her, regardless of whether there was force, threat or intimidation;
whether the victim was deprived of reason or consciousness; or whether it was done through fraud
or grave abuse of authority. It is enough that the age of the victim is proven and that there was
sexual intercourse. 78

The defense did not dispute the fact that AAA was 11 years old at the time of the incidents. Her birth
certificate was presented into evidence before the trial court and was not questioned by the defense.
79

What only needs to be proven, therefore, is whether AAA and Francica had sexual intercourse.
AAA testified as follows:
Q [FISCAL TRONCO]: Kilala mo ba iyong akusado sa kasong ito si
Ramon Fran[c]ica?
A: Opo.
Q: Bakit mo siya kilala?
A: Kapit-bahay po namin.
....
Q: Mabait ba siya sa 'yo?
A: (Witness nodded in the positive).
....
Q: Bakit sinabi mo mabait siya sa 'yo?
A: Kasi po binibigyan niya ako ng pera.
Q: Palagi ka ba niyang binibigyan ng pera?
A: Minsan lang po.
Q: Ito bang perang binibigay niya sa 'yo may kapalit?
A: Opo.
Q: Ano ang kapalit noon?
A: No answer.
Q: Naiintindihan mo ba iyong tanong o gusto mong ibahin? Bakit ka niya binibigyan ng pera?
A: Ginagalaw niya po ako.
Q: Binibigyan ka ba niya ng pera dahil ginagalaw ka niya?
A: Opo.
Q: Magkano ang binibigay niya sa 'yo?
A: ₱50.00 po.
Q: Sa natatandaan mo, ilang beses ka na niyang ginagalaw at binibigyan ng pera.
A: Marami na po.
Q: Alam mo ba kung kailan nagsimula iyon? Alam mo ba na kailangan mo dito na magsabi ng
katotohanan lamang at bawal magsinungaling?
A: Opo.
Q: So, yung sinasabi mo ngayon totoo yan lahat?
A: Opo.
Q: Kailan nga nagsimula yung paggalaw niya sa 'yo?
A: Mga March 2004 po.
Q: 'Pag sinabi mong "ginalaw ka niya'' ano ang ginalaw niya sa 'yo?
A: Dede ko po at ari kop o [sic].
Q: Paano niya ginagalaw yung dede mo?
A: Dinidilaan po niya.
Q: Eh yung ari mo paano naman niya ginagalaw?
A: Pinapasok po niya yung ari niya
88

AAA's testimony is consistent with her Sinumpaang Salaysay: 81

T: Bakit ka na ririto [sic] sa amin[g] opisina?

S: Para po sabihin yung ginawa sa akin ni Amon (victim refer[r]ing to suspect identified as one
Ramon Francisca) [sic]
T: Ano ba ang ginawa sa iyo ni Amon?
S: Dinidilaan niya po yung dede ko po at yung ari po nya ay pinapasok niya sa pepe ko.
T: Kailan nangyari ang insidente?
S: Kanina lang po, mga 1 :30 po sa banyo po.
T: May sinabi ka sa akin kanina na matagal nya nang gin[a]gawa sa iyo ito. Naaalala mo pa ba kung
kailan nag sinmula [sic]?
S: Opo. Noon pong March 2004 po.
T: Sabihin mo nga sa akin kung paano nagsimula ang insedente?
S: Nandoon po ako sa Bulatao (Bulatao Compound) at naglalaro, lumapit siya (Ramon Francisca)
[sic] sa akin at sinabi niya na punta ka na <loon sa banyo. Nagpunta naman po ako[,] tapos po ay
pinapasok nya ako sa loob ng banyo at pumasok din sya. Tapos po ay dinilaan nya ako sa dede ko
tapos po yung ari nya ay ipinasok nya sa pepe ko. Umiyak po ako sa sobrang sakit. Nang matapos
po ay binigyan nya ako ng pera. Tapos po ay naging madalas na po.
T: Magkano naman ang ibinigay nyang pera sa iyo?
S: Fifty pesos (50.00Php) po.
T: Kailan naman yung mga sumunod na insedente.
S: Yung iba po ay hindi ko na matandaan pero noong January 19[,] 2005 ng gabi ay tinawag nya uli
ako at pinapunta nya sa bahay nya at ginawa nya uli yung ginagawa nya sa akin.
T: Hindi ka ba nag sumbong sa magulang mo?
S: [N]agsumbong po ako sa mama ko pero hindi po sya naniniwala sa Akin
T: Yung insedente kanina, maari mo bang sabihin sa akin?
S: Kanina naman po ay nasa Bulatao uli ako at naglalaro tinawag nya po ako pinapunta nya ako sa
banyo at dinilaan nya ang dede ko at pinasok ang ari nya sa pepe.   (Emphasis in the original)
82

As shown by her testimony, AAA was able to narrate in a straightforward and categorical manner
what transpired between her and Francica. In a long line of cases,   this Court has given full weight
83

and credence to the testimony of child victims, holding that their "[y ]outh and immaturity are
generally badges of truth and sincerity."  Compared to AAA's candid and categorical testimony,
84

Francica's defense of denial must fail. Imbo v. People  emphasized that the selfserving defense of
85

denial falters against the "positive identification by, and straightforward narration of the victim."  This
86

Court has likewise repeatedly held that the lone yet credible testimony of the offended party is
sufficient to establish the guilt of the accused. 87

Francica's defense that he was merely set up to become the fall guy so that AAA's family can hide
her sexual relationship with her uncle is not worthy of belief. Additionally, Francica's expose is
primarily hearsay in character since it was supposedly relayed to him by AAA's aunt Nora, who was
not presented as a witness before the trial court to corroborate his testimony. Thus, this Court
concurs with the trial court when it held that "[t]he 'secret' is too specious a motive for one to file not
only one but three serious charges of rape against the accused." 88

BBB also corroborated AAA's testimony on the sexual abuse committed on February 2, 2005:
Q: What did you see inside the bathroom which is being done to your granddaughter, Madam
Witness?
A: When I was inside the bathroom which is just beside the other room, I heard noise inside that
bathroom.  I don't know whose [sic] inside. My other grandchild who was about to throw or dispose
1âwphi1

something at that time [was] standing at that time, and when I went out [of] the bathroom that was
also the time that someone who was inside the other bathroom also went out, ma'am.
Q: What did you see when you got out of the bathroom?
A: When I went out of the bathroom that was the time that the person went out of the bathroom and
that person who went out of the bathroom ran but I saw my grandchild inside the bathroom and then
I ran after the person who ran and then when we were running looked back and then I saw the
person's face, and then I uttered, "Walang hiya ka ikaw pala!"
Q: What did you exactly see your grandchild doing at that particular time, Madam Witness?
A: She was standing but when I asked my other grandchild who was outside at that time what my
grandchild saw, she told me that she was pulling up her underwear, ma'am.
Q: Just for clarification, Madam Witness, the grandchild that you saw inside the bathroom, are you
referring to the victim in this case?
A: Yes, Ma'am. Her name is [AAA]. 89

The trial court found AAA's testimony to be worth believing, being both positive and credible, thus:
(AAA] is a credible witness. She has not obtained enough experience and maturity to concoct such a
story of rape. Her testimony, considering her very young age, was straightforward and candid. Thus,
it is sufficient to convict the accused. 90

The Court of Appeals likewise found that "AAA made sensible, straightforward and categorical
answers to the substantial, relevant and material questions." 91

The rule is settled that the trial court's factual findings and evaluation of witnesses' credibility and
testimony should be entitled to great respect unless it is shown that the trial court may have
"overlooked, misapprehended, or misapplied any fact or circumstance of weight and substance." 92

Francica's argument that the presence of healed hymenal lacerations belies AAA's accusation that
he sexually abused her on February 2, 2005 must fail in light of the fact that hymenal laceration is
not an element of rape. People v. Araojo  expounds on the evidentiary weight of a hymenal
93

laceration in a charge of rape:

The absence of external signs or physical injuries on the complainant's body does not necessarily
negate the commission of rape, hymenal laceration not being, to repeat, an element of the crime of
rape. A healed or fresh laceration would of course be a compelling proof of defloration. What is
more, the foremost consideration in the prosecution of rape is the victim's testimony and not the
findings of the medico-legal officer. In fact, a medical examination of the victim is not indispensable
in a prosecution for rape; the victim's testimony alone, if credible, is sufficient to convict.  (Citations
94

omitted)
Despite the absence of the medico-legal officer as a witness, the presence of healed lacerations
corroborates AAA's testimony as it "is the best physical evidence of forcible defloration." 95

It is well-established that "[p ]hysical evidence is evidence of the highest order. It speaks more
eloquently than a hundred witnesses."  The physical evidence of the healed lacerations in AAA's
96

vagina strongly corroborates her testimony that she was sexually abused by Francica.
Beyond reasonable doubt, Francica took advantage of AAA's youth and naivete to repeated1y
sexually abuse her.
Article 266-B  of the Revised Penal Code provides that the penalty of reclusion perpetua shall be
97

imposed in cases of rape stated in the first paragraph of Article 266-A where there are no
aggravating or qualifying circumstances present. This corresponds with Section 5(b) of Republic Act
No. 7610, which also provides for the penalty of reclusion perpetua if the rape victim is below 12
years old:
Section 5. Child Prostitution and Other Sexual Abuse. -
....
(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)
The lower courts correctly imposed the penalty of reclusion perpetua for each count of statutory
rape. However, this Court increases the amount of civil indemnity of ₱50,000.00 to ₱75,000.00,
moral damages of ₱50,000.00 to ₱75,000.00, and exemplary damages of ₱25,000.00 to ₱75,000.00
pursuant to prevailing jurisprudence. 98

In addition, interest at the legal rate of six percent (6%) per annum

shall be imposed on all damages awarded from the date of finality of this judgment until fully paid. 99

WHEREFORE, the Decision dated February 22, 2013 of the Court of Appeals in CA-G.R. CR-HC
No. 03929, finding accused-appellant Ramon Francica y Navalta guilty beyond reasonable doubt of
three (3) counts of statutory rape is AFFIRMED with MODIFICATION. The accusedappellant is
sentenced to suffer the penalty of three (3) reclusion perpetua to be served successively and is
ordered to pay AAA, for each count of rape, the amount of ₱75,000.00 as civil indemnity,
₱75,000.00 as moral damages, and ₱75,000.00 as exemplary damages.
All monetary awards for damages shall earn interest at the legal rate of six percent (6%) per
annum from the date of finality of this judgment until fully paid.
Costs against accused-appellant.
SO ORDERED.

GR. No. 196735, August 03, 2016

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. DANILO FELICIANO, JR., JULIUS VICTOR
MEDALLA, CHRISTOPHER SOLIVA, WARREN L. ZINGAPAN, AND ROBERT MICHAEL BELTRAN
PROMULGATED: ALVIR, ACCUSED-APPELLANTS., Respondent.
 RESOLUTION
LEONEN, J.:
Even as the judiciary strives to bring justice to victims of fraternity-related violence, the violence continues
to thrive in universities across the country. Mere weeks after our Decision dated May 5, 2014 was
promulgated, various news agencies reported the death of an 18-year-old student of De La Salle-College of
St. Benilde.1 The death was allegedly caused by hazing.

While this Court is powerless to end this madness, it can, at the very least, put an end to its impunity.

This resolves the separate Motions for Reconsideration of our Decision dated May 5, 2014, which were filed
by accused-appellants Christopher Soliva (Soliva),2 Warren L. Zingapan (Zingapan),3 and Robert Michael
Beltran Alvir (Alvir).4chanrobleslaw

To recall, we affirmed the Court of Appeals Decision5 dated November 26, 2010 finding accused-appellants
guilty beyond reasonable doubt for the murder of Dennis Venturina. However, we modified its finding that
accused-appellants were only guilty of slight physical injuries in relation to private complainants Leandro
Lachica, Cristobal Gaston, Jr., and Cesar Mangrobang, Jr. Instead, we upheld the trial court's
Decision6 dated February 28, 2002, which found accused-appellants guilty beyond reasonable doubt of the
attempted murder of private complainants Leandro Lachica (Lachica), Arnel Fortes (Fortes), Mervin Natalicio
(Natalicio), Cristobal Gaston, Jr. (Gaston), and Cesar Mangrobang, Jr. (Mangrobang, Jr.).

Alvir, Zingapan, and Soliva separately filed their Motions for Reconsideration on-July 1, 2014, July 2, 2014,
and July 9, 2014, respectively. The Office of the Solicitor General was directed to file a Consolidated
Comment on these Motions.7 chanrobleslaw

Atty. Estelito Mendoza, counsel for Zingapan, through a letter8 dated May 22, 2014, requested information
on the composition of the Division trying this case. At that time, our May 5, 2014 Decision was not yet
published in the Supreme Court website. Atty. Estelito Mendoza's request was denied9 under Rule 7, Section
3 of the Internal Rules of the Supreme Court,10 which mandates that results of a raffle, including the
composition of the Division, are confidential in eriminal cases where the trial court imposes capital
punishment.

Undaunted, Zingapan moved to elevate the case to this Court En Bane.11 The Motion was denied for lack of
merit.12
chanrobleslaw

On November 10, 2014, the Office of the Solicitor General filed its Consolidated Comment13 on the Motions
for Reconsideration.

Meanwhile, Alvir moved for modification of judgment,14 arguing on his innocence and praying for his
acquittal.

The only issue to be resolved is whether accused-appellants presented substantial arguments in their
Motions for Reconsideration as to warrant the reversal of this Court's May 5, 2014 Decision.

Soliva argues that his conviction was merely based on private complainant Natalicio's sole testimony, which
he alleges was doubtful and inconsistent.15 He points out that prosecution witness Ernesto Paolo Tan (Tan)
was able to witness the attack on Natalicio, but was unable to identify him as the attacker.16 chanrobleslaw

The Office of the Solicitor General, on the other hand, argues that Natalicio's testimony was sufficient to
identify Soliva.17 It argues that Tan's testimony did not contradict Natalicio's testimony since Tan was able to
state that he saw the assailants who were not masked, though he did not know their names.18 chanrobleslaw

The testimony of a single witness, as long as it is credible and positive, is enough to prove the guilt of an
accused beyond reasonable doubt.19 chanrobleslaw

Soliva argues that Natalicio was not able to identify his attackers since he was seen by Tan" lying face down
as he was being attacked. On the contrary, Natalicio's and Tan's testimonies were consistent as to
Natalicio's position during the attack. Natalicio testified: ChanRoblesVirtualawlibrary
Q With respect to the first group that attacked you, Mr. Natalicio, while
they were beating you up, what else if anything happened?
   
A I was able to recognize two (2) among those [sic] first group of
attackers.
   
COURT
  What group, first group?
   
....
   
A While I was parrying their blows, two (2) of these attackers had no
mask, they had no mask anymore.
   
....
   
Q So, Mr. Natalicio, who were these two (2) men that you recognized?
   
A They were Warren Zingapan and Christopher Soliva.20
   
Cross-examination
   
Q Imagine, Mr. Witness, there were ten (10) people ganging up on you,
you stood up, faced them, just like that?
   
A Yes.
   
Q You did not cover your head with your arms as they were pounding on
you?
   
A Not yet. When I was standing up, no. I was parrying their blows. I
 covered my head when I fell down already, because I was defenseless
already.
   
Q And there were people [who] attacked you from behind?
   
A When I was standing up, none.
   
Q All of them were in froRt of you?
   
A Front, yes.21
Natalicio explained that he was attacked twice. During the first attack, he tried to stand up and was able to
identify two (2) of his attackers. He fell to the ground when he was attacked the second time. This is
consistent with Tan's testimony, where he stated: ChanRoblesVirtualawlibrary

A During the second waive [sic], your honor, [Natalicio] tried to get up
but immediately after the first waive [sic] another group of persons
attacked, your honor.
 
COURT
Q When he tried to get up, he was still facing the ground?
 
  A He was a bit tilted, your honor. He was no longer lying face down or
"nakadapa, " your honor.22 (Emphasis supplied)
Soliva also misconstrues Tan's testimony that he could not identify Natalicio's attackers. Tan testified: ChanRoblesVirtualawlibrary

Q You stated that while you were inside the beach house canteen
observing the events outside thru the door and in that couple of
seconds, you could not establish the identity of persons, is it not?
   
A I could see them although I do not know their names. 23 (Emphasis
supplied)
Tan failed to identify the attackers only because he did not know their names. His testimony corroborates
Natalicio's testimony that some of the attackers were masked and some were not,24 although Tan could not
identify them because he was not familiar with their names.

Tan was a fourth year student of the University of the Philippines College of Business Administration at the
time of the incident. He was not part of the Sigma Rho Fraternity and was merely one of the students eating
at Beach House Canteen on December 8, 1994.25 cralawredchanrobleslaw

Another witness, Darwin Asuncion (Asuncion), was a third year student at the University of the Philippines
and was also at Beach House Canteen during the incident.26 He testified that some attackers were wearing
masks while some were not.27 On cross-examination, he stated: ChanRoblesVirtualawlibrary

Q And many of these people who were in beach house canteen who were
there to probably eat or probably lining up to eat were not wearing
mask? [sic]
 
A Yes sir.
 
Q And there is a great possibility that you could have mistaken the
unmasked people as part of the attacking group?
 
A No sir.
 
Q Why?
 
A Because they were carrying lead pipes and baseball bats
sir.28 (Emphasis supplied)
Asuncion's testimony corroborates that of defense witness Frisco Capilo, who testified that before the
incident, the attackers were wearing masks, but after the incident, he saw some wearing masks and some
who did not.29chanrobleslaw

Alvir argues that Lachica's identification of him was "uncorroborated and hazy."30 He argues that Lachica
admitted that while he was attacked, he covered his head with his forearms, which created doubt that he
was able to see his attackers. He argues that Lachica's statement that he was still able to raise his head
while parrying blows was impossible. Alvir also argues that when Lachica ran away and looked back at the
scene of the crime, Lachica was only able to identify Julius Victor Medalla (Medalla) and Zingapan.31 chanrobleslaw

It is in line with human experience that even while Lachica was parrying the blows, he would strive to
identify his attackers. As has been previously stated by this Court: ChanRoblesVirtualawlibrary

It is the most natural reaction for victims of criminal violence to strive to see the looks and faces of their
assailants and observe the manner in which the crime was committed. Most often the face of the assailant
and body movements thereof, create a lasting impression which cannot be easily erased from their
memory.32
Lachica clearly and categorically identified Alvir as one of his attackers: ChanRoblesVirtualawlibrary

Q And during these attacks of these five (5) men and according to you,
you were parrying their blows, what happened?
   
A At that time, one of the mask [sic] of those who attacked us fell off
and I was able to recognize one of them.
   
Q Who did you recognize whose mask fell?
   
A He was Mike Alvir.33
Alvir also misinterprets Lachica's testimony that Lachica was unable to see Alvir as he was running away.
Lachica testified: ChanRoblesVirtualawlibrary

Q What happened after as you said you parried the blows of the men
who attacked you and you recognized one of them to be Mike Alvir.
What happened next?
 
A As I said, I was able to elude these five armed men and run towards
the College of Education and prior to reaching the College of
Education, I tried to look back.
 
Q And what happened when you looked back?
 
A I was able to see also, identify two more of them. Two of the
attackers.
 
Q Who are these persons?
 
A Warren Zingapan and Victor Medalla.34 (Emphasis supplied)
Lachica testified that he was able to identify Alvir while he was being attacked. When Lachica ran away and
looked back at the scene of the crime, he was also able to identify two (2) more of the attackers, Zingapan
and Medalla. He did not deny seeing Alvir, but only added that he was able to identify two (2) more people.
U

Accused-appellants were positively identified by private complainants. Private complainants' testimonies

were clear and categorical. On this issue, we find no cogent reason to reverse our May 5, 2014 Decision.

II

Zingapan's main argument hinges on the sufficiency of the Information filed against him, which, he argues,
violated his constitutional right to be informed of the nature and cause of the accusation against him.35 His
arguments, however, have already been sufficiently addressed in our May 5, 2014 Decision.

For an information to be sufficient, Rule 110, Section 6 of the Rules of Criminal Procedure requires that it
state:ChanRoblesVirtualawlibrary

the name of the accused; the designation of the offense given by the statute; the acts or omissions
complained of as constituting the offense; the name of the offended party; the approximate date of the
commission of the offense; and the place where the offense was committed.
The purpose of alleging all the circumstances attending a crime, including any circumstance that may
aggravate the accused's liability, is for the accused to be able to adequately prepare for his or her
defense: ChanRoblesVirtualawlibrary

To discharge its burden of informing him of the charge, the State must specify in the information the details
of the crime and any circumstance that aggravates his liability for the crime. The requirement of sufficient
factual averments is meant to inform the accused of the nature and cause of the charge against him in
order to enable him to prepare his defense. It emanates from the presumption of innocence in his favor,
pursuant to which he is always presumed to have no independent knowledge of the details of the crime he is
being charged with. To have the facts stated in the body of the information determine the crime of which he
stands charged and for which he must be tried thoroughly accords with common sense and with the
requirements of plain justice[.]36 (Emphasis supplied)
Here, the aggravating circumstance of "masks and/or other forms of disguise"37 was alleged in the
Informations to enable the prosecution to establish that the attackers intended to conceal their identities.
Once this is established, the prosecution needed to prove how the witnesses were able to ft identify the
attackers despite the concealment of identity. In our May 5, X 2014 Decision: ChanRoblesVirtualawlibrary

In criminal cases, disguise is an aggravating circumstance because, like nighttime, it allows the accused to
remain anonymous and unidentifiable as he carries out his crimes.

The introduction of the prosecution of testimonial evidence that tends to prove that the accused were
masked but the masks fell off does not prevent them from including disguise as an aggravating
circumstance. What is important in alleging disguise as an aggravating circumstance is that there was
a concealment of identity by the accused. The inclusion of disguise in the information was, therefore,
enough to sufficiently apprise the accused that in the commission of the offense they were being charged
with, they tried to conceal their identity.38 (Emphasis in the original)
To recall, the Information for murder filed against accused-appellants reads: ChanRoblesVirtualawlibrary

That on or about the 8th day of December 1994, in Quezon City, Philippines, the above-named accused,
wearing masks and/or other forms of disguise, conspiring, confederating with other persons whose true
names, identities and whereabouts have not as yet been ascertained, and mutually helping one another,
with intent to kill, qualified with treachery, and with evident premeditation, taking advantage of superior
strength, armed with baseball bats, lead pipes, and cutters, did then and there willfully, unlawfully and
feloniously attack, assault and employ personal violence upon the person of DENNIS F. VENTURINA, by then
and there hitting him on the head and clubbing him on different parts of his body thereby inflicting upon him
serious and mortal injuries which were the direct and immediate cause of his death, to the damage and
prejudice of the heirs of said DENNIS F. VENTURINA.39
Zingapan was sufficiently informed that he was being charged with the death of Dennis Venturina,
committed through the circumstances provided.

Based on this Information, Zingapan's counsel was able to formulate his defense, which was that of alibi. He
was able to allege that he was not at Beach House Canteen at the time of the incident because he was
having lunch with his cousin's husband in Kamuning.40 His defense had nothing to do with whether he might
or might not have been wearing a mask during the December 8, 1994 incident since his main defense was
that he was not there at all.

Zingapan's right to be informed of the cause or nature of the accusation against him was not violated. The
inclusion of the aggravating circumstance of disguise in the Informations did not prevent him from
presenting his defense of alibi.

III

Accused-appellants argue that the testimony of University of the Philippines Police Officers Romeo Cabrera
(Cabrera) and Oscar Salvador (Salvador) and Dr. Carmen Mislang (Dr. Mislang) from the University of the
Philippines Infirmary should have been given credibility by this Court.41 They also insist that the victims'
delay in reporting the incident casts doubt in their credibility as witnesses.42Unfortunately, these arguments
fail to persuade.

Natalicio testified that he was unable to answer the queries of Cabrera and Salvador since he was more
concerned with his injuries and the injuries of his companions.43 He also denied that Dr. Mislang questioned
him on the identity of his attackers.44
chanrobleslaw

Even if it were true that Natalicio denied knowing his attackers when he was interviewed by Cabrera,
Salvador, and Dr. Mislang, it did not cast doubt on accused-appellants' guilt. The conditions prevailing within
the campus at the time of the incident must also be taken into account.

At the time of the incident, the University of the Philippines-Diliman had an existing policy that all students
involved in fraternity rumbles would be expelled.45 Cabrera, Salvador, and Dr. Mislang were employees of
the University.46 Reporting the incident as a fraternity rumble was risking expulsion.47 chanrobleslaw
The investigation conducted by the University of the Philippines Police was met with the same difficulty,
since the witnesses interviewed were reluctant to speak on fraternity matters: ChanRoblesVirtualawlibrary

As of this date, operatives of the UP Diliman Police have already interviewed sixty (60) persons, twenty five
(25) of them mostly students, refused to comment or to give their names. Most of those who refused to
comment said that they don't want to get involved in fraternity matters[.]48 (Emphasis supplied)
Under these circumstances, private complainants chose to report the matter to the National Bureau of
Investigation as an ordinary crime rather than to report it to school authorities. The University would have
treated the matter as a fraternity-related campus incident where all parties involved, including private
complainants who were also fraternity members, risk academic sanctions. At that time, private complainants
decided that reporting to the National Bureau of Investigation, rather than to university officials, was the
more prudent course of action.

The alleged delay in reporting the crime also does not cast doubt on private complainants' credibility. The
trial court stated: ChanRoblesVirtualawlibrary

[O]n the evening of December 8, 1994, the victims, upon the advice of their senior fraternity brothers, had
agreed that the NBI would handle the investigation. This was reached during the fellowship of the Sigma
Rho brothers in a racetrack in Makati which Lachica and Gaston attended. Lachica preferred the NBI because
he wanted a thorough investigation in view of the gravity of the offense.

So, on the very next day, December 9, 1994, the Vice Grand Archon, Redentor Guerrero, went to the NBI
and inquired about the procedure in filing a complaint. Thereafter, their then Grand Archon Jovy Bernabe,
with Redentor Guerrero, informed them that they would be going to the NBI together. They were advised to
rest and told that they would just be informed when they would go to the NBI. On the 11th, the two
informed them that they would go to the NBI the next day and they did.49
The incident happened on a Thursday. On the evening of the incident, private complainants agreed that they
would report the matter to the National Bureau of Investigation. On Friday, December 9, 1994, they were
advised by their senior fraternity brothers to recuperate first from their injuries while their Grand Archon
and Vice Grand Archon went to the National Bureau of Investigation to inquire on the procedure. They could
not report the incident on December 10 and 11, 1994 because this was a Saturday and a Sunday. They
were able to report to the National Bureau of Investigation on December 12, 1994, the Monday following the
incident.50
chanrobleslaw

The alleged delay in reporting was caused by the gravity of private complainants' injuries, their desire to
report to the proper authorities, and the weekend. These circumstances are not enough to disprove their
credibility as witnesses.

Soliva also takes exception to this Court's characterization that the University of the Philippines Police have
become desensitized to fraternity-related violence.51 chanrobleslaw

It is not disputed that the University of the Philippines has served as a common battleground for fraternity-
related violence. In 2007, GMA News compiled a list of casualties of fraternity-related violence at the
University of the Philippines.52 Six (6) students were reported to have died from fraternity-related violence
before the December 8, 1994 incident at Beach House Canteen.

Even after the promulgation of our May 5, 2014 Decision, fraternity-related violence remained prevalent
within the University. On July 4, 2014, the Office of the Chancellor issued a statement confirming another
fraternity-related incident involving students of the University.53 Another fraternity rumble was reported to
have occurred on university grounds.54 Although no casualties were reported in both incidents, these
incidents only amplify the reality that fraternity-related violence continues to be rampant within the
University.

The presence of the University of the Philippines Police or the severe sanctions imposed by university
officials have done little to deter these crimes. The frequency of these incidents has become the University's
cultural norm, where its students—and even university employees—simply regard it as part of university life.

IV

Alvir argues that this Court erred in finding conspiracy among all the accused since the trial court acquitted
those who were identified by Mangrobang, Jr.55 This argument, however, is non sequitur.

The trial court, in acquitting the other accused, stated: ChanRoblesVirtualawlibrary

The foregoing should not be misinterpreted to mean that the testimony of Mangrobang was an absolute
fabrication. The Court is not inclined to make such a declaration. The four accused were exonerated merely
because they were afforded the benefit of the doubt as their identification by Mangrobang, under tumultuous
and chaotic circumstances were not corroborated and their alibis, not refuted.56
In contrast, Lachica's identification of Alvir was given credibility by the trial court.57 Alvir's alibi was also
found to be weak.58 chanrobleslaw

Conspiracy does not require that all persons charged in the information be found guilty. It only requires that
those who were found guilty conspired in committing the crime. The acquittal of some of the accused does
not necessarily preclude the presence of conspiracy.

Of the 10 accused in the Informations, four59 (4) were acquitted. The trial court was convinced that they
were not present during the commission of the crime. Conspiracy cannot attach to those who were not
properly identified.

However, Alvir, Zingapan, Soliva, Medalla, and Danilo Feliciano, Jr. (Feliciano) were positively identified by
eyewitnesses before the trial court. The prosecution's evidence was enough to convince the trial court, the
Court of Appeals, and this Court that they were present during the December 8, 1994 incident and that they
committed the crime charged in the Informations. We have also exhaustively examined the evidence on
hand, as well as the assessments of the trial court and of the Court of Appeals, to determine that all five (5)
of them conspired to commit the crimes with which they were charged. The trial court's acquittal of some of
those charged in the Informations has no bearing on our finding that Alvir, Zingapan, Soliva, Feliciano, and
Medalla are guilty beyond reasonable doubt.

Soliva, however, argues that our May 5, 2014 Decision did not apply to those who did not appeal to this
Court, namely: Feliciano and Medalla.60 At this point, a re-examination of the rules of appeal in criminal
cases may be in order.

To recall the procedural incidents in this case, the trial court's Decision61 dated February 28, 2002 found
Alvir, Zingapan, Soliva, Feliciano, and Medalla guilty beyond reasonable doubt of the murder of Dennis
Venturina and the attempted murder of Lachica, Fortes, Natalicio,

Gaston, and Mangrobang, Jr.62 They were meted the death penalty, and the case was brought to this Court
on automatic review.63 chanrobleslaw

In view, however, of People v. Mateo64 and the Amended Rules to Govern Review of Death Penalty
Cases,65 this Court referred the case to the Court of Appeals for review. A notice of appeal in this instance
was unnecessary. Rule 122, Sections 3(d) and 10 of the Rules of Criminal Procedure, as amended, state:
chanRoblesvirtualLawlibrary

RULE 122 
APPEAL

SEC. 3. How appeal taken.—

....

(d) No notice of appeal is necessary in cases where the Regional Trial Court imposed the death penalty. The
Court of Appeals shall automatically review the judgment as provided in Section 10 of this Rule. (3a)

SEC. 10. Transmission of records in case of death penalty. —In all cases where the death penalty is imposed
by the trial court, the records shall be forwarded to the Court of Appeals for automatic review and
judgment within twenty days but not earlier than fifteen days from the promulgation of the judgment or
notice of denial of a motion for new trial or reconsideration. The transcript shall also be forwarded within ten
days after the filing thereof by the stenographic reporter. (Emphasis supplied)
The Court of Appeals was mandated to review the case with regard to all five (5) of the accused, now
referred to as accused-appellants, regardless of whether they filed a notice of appeal. The review is
considered automatic.

During the pendency of the appeal before the Court of Appeals, Congress enacted Republic Act No.
9346,66 which prohibited courts from imposing the death penalty. In its November 26, 2010 Decision,67the
Court of Appeals affirmed the trial court's finding that accused-appellants were guilty beyond reasonable
doubt of the murder of Dennis Venturina. In view of the proscription on death penalty, the Court of Appeals
modified the imposable penalty from death to reclusion perpetua.68 chanrobleslaw

However, the Court of Appeals disagreed with the trial court's finding that accused-appellants were likewise
guilty of attempted murder with regards Lachica, Mangrobang, Jr., and Gaston.69 It stated that the gravity of
their injuries was not indicative of accused-appellants' intent to kill.70 Instead, the Court of Appeals modified
the offense to slight physical injuries.71 In other words, it found accused-appellants guilty of the murder of
Dennis Venturina, the attempted murder of Fortes and Natalicio, and the slight physical injuries of Lachica,
Mangrobang, Jr., and Gaston.72 chanrobleslaw

Only three (3)—namely: Soliva, Alvir, and Zingapan—of the five (5) accused-appellants filed their respective
Notices of Appeal before this Court. The Court of Appeals forwarded the records of the case to this Court,
and the entire case was again opened for review under Rule 124, Section 13(b) and (c) of the Rules of
Criminal Procedure:
chanRoblesvirtualLawlibrary

RULE 124
SEC. 13. Certification or appeal of case to the Supreme Court.—

(b) Where the judgment also imposes a lesser penalty for offenses committed on the same occasion or
which arose out of the same occurrence that gave rise to the more severe offense for which the penalty of
death is imposed, and the accused appeals, the appeal shall be included in the case certified for review to,
the Supreme Court.

(c) In cases where the Court of Appeals imposes reclusion perpetua, life imprisonment or a lesser penalty, it
shall render and enter judgment imposing such penalty. The judgment may be appealed to the Supreme
Court by notice of appeal filed with the Court of Appeals.(Emphasis supplied)
In our May 5, 2014 Decision,73 we reversed the Court of Appeals' modification of the offense from attempted
murder to slight physical injuries.74 We explained that the liabilities of accused-appellants arose from a
single incident where the intent to kill was already evident from the first swing of the bat, and that intent
was shared by all when the presence of conspiracy was proven. In effect, we affirmed the trial court's ruling
that accused-appellants were guilty of the attempted murder of Lachica, Fortes, Natalicio, Gaston, and
Mangrobang, Jr.75 chanrobleslaw

According to Article 24876 in relation to Article 5177 of the Revised Penal Code, attempted murder is
punishable by prision mayor. Slight physical injuries, on the other hand, is punishable by arresto menor. The
Court of Appeals, in modifying the offenses with regard to victims Lachica, Gaston, and Mangrobang,
Jr., lowered some of the imposable penalties of accused-appellants. On appeal to this Court, however, we
reverted to the findings of the trial court and brought back the higher offense of attempted murder. In this
instance, the application of the higher penalty to accused-appellants becomes problematic when only three
(3) of them actually appealed to this Court.

The problem lies with the effect of the prohibition of death penalty on the current rules on appeal in the
Rules of Criminal Procedure. The amendments introduced in the Amended Rules to Govern Review of Death
Penalty Cases still stand even if, as this Court has previously mentioned, "death penalty cases are no longer
operational."78 chanrobleslaw

In People v. Rocha,79 this Court encountered a similar problem. The issue for resolution was whether the
accused's Motion to Withdraw Appeal before this Court could be granted if the Court of Appeals imposed a
penalty of reclusion perpetual80 The People were of the opinion that the appeal could not be withdrawn since
this Court was mandated by the Constitution to review all cases where the penalty imposed is reclusion
perpetua or higher.81 chanrobleslaw

However, this Court ruled that the appeal could still be withdrawn as cases where the penalty imposed
is reclusion perpetua or higher is not subject to this Court's mandatory review. Thus: ChanRoblesVirtualawlibrary

The confusion in the case at bar seems to stem from the effects of the Decision of this Court in People v.
Mateo. In Mateo, as quoted by plaintiff-appellee, it was stated that "[w]hile the Fundamental Law requires a
mandatory review by the Supreme Court of cases where the penalty imposed is reclusion perpetua, life
imprisonment, or death, nowhere, however, has it proscribed an intermediate review." A closer study
of Mateo, however, reveals that the inclusion in the foregoing statement of cases where the penalty imposed
is reclusion perpetua and life imprisonment was only for the purpose of including these cases within the
ambit of the intermediate review of the Court of Appeals: "[this] Court now deems it wise and compelling to
provide in these cases [cases where the penalty imposed is reclusion perpetua, life imprisonment or death]
review by the Court of Appeals before the case is elevated to the Supreme Court."

We had not intended to pronounce in Mateo that cases where the penalty imposed is reclusion perpetua or
life imprisonment are subject to the mandatory review of this Court. In Mateo, these cases were grouped
together with death penalty cases because, prior to Mateo, it was this Court which had jurisdiction to
directly review reclusion perpetua, life imprisonment and death penalty cases alike. The mode of review,
however, was different. Reclusion perpetua and life imprisonment cases were brought before this Court via
a notice of appeal, while death penalty cases were reviewed by this Court on automatic review. 

....

After the promulgation of Mateo on 7 June 2004, this Court promptly caused the amendment of the
foregoing provisions, but retained the distinction of requiring a notice of appeal for reclusion perpetua and
life imprisonment cases and automatically reviewing death penalty cases. .

Neither does the Constitution require a mandatory review by this Court of cases where the penalty imposed
is reclusion perpetua or life imprisonment. The constitutional provision quoted in Mateo merely gives this
Court jurisdiction over such cases[.] 

....

Since the case of accused-appellants is not subject to the mandatory review of this Court, the rule that
neither the accused nor the courts can waive a mandatory review is not applicable. Consequently, accused-
appellants' separate motions to withdraw appeal may be validly granted.82 (Emphasis supplied)
Here, the trial court's ruling mandated an automatic review and the case was forwarded to the Court of
Appeals per Mateo and the Amended Rules to Govern Review of Death Penalty Cases. As the death penalty
was abolished during the pendency of the appeal before the Court of Appeals, the highest penalty the Court
of Appeals could impose was reclusion perpetua. Any review of the Court of Appeals Decision by this Court
will never be mandatory or automatic.

In effect, while we can review the case in its entirety and examine its merits, we cannot disturb the
penalties imposed by the Court of Appeals on those who did not appeal, namely, Feliciano and Medalla. This
is consistent with Rule 122, Section 1 l(a) of the Rules of Criminal Procedure:
chanRoblesvirtualLawlibrary

RULE 122 
APPEAL
SEC. 11. Effect of appeal by any of several accused. —

(a) An appeal taken by one or more of several accused shall not affect those who did not appeal, except
insofar as the judgment of the appellate court is favorable and applicable to the latter[.]
As our May 5, 2014 Decision was unfavorable to accused-appellants, those who did not appeal must not be
affected by our judgment. The penalty of arresto menor imposed by the Court of Appeals on Feliciano and
Medalla in Criminal Case Nos. Q95-61134, Q95-61135, and Q95-61136 stands.

In view, however, of People v. Jugueta83 the damages previously awarded must also be increased. In
Jugueta, we stated that "civil indemnity is, technically, not a penalty or a fine; hence, it can be increased by
[this] Court when appropriate."84 We also explained that the Civil Code did not fix the amount of moral
damages, exemplary damages, and temperate damages that may be awarded; thus, the amount is within
this Court's discretion to determine.85
chanrobleslaw

In Criminal Case No. Q95-61133, the award of civil indemnity, moral damages, and exemplary damages are
increased to P100,000.00,86 respectively. The amount of temperate damages to be awarded is increased to
P50,000.00.87 In Criminal Cases Nos. Q95-61134, Q95-61135, Q95-61136, O95-61137, and Q95-61138, the
award of moral damages and exemplary damages are increased to P50,000.00,88respectively.

Soliva takes exception to this Court's statements on fraternity culture and argued that these have no basis
on facts or evidence.89 Unfortunately, our May 5, 2014 Decision was not the first time that this Court
expressed its sentiments on the issue of fraternity-related violence.

In Villareal v. People,90 this Court found five (5) promising young men guilty beyond reasonable doubt of
reckless impudence resulting in homicide for the death of Lenny Villa, an Ateneo law student and a neophyte
of Aquila Legis Fraternity. This Court could only lament on accused-appellants' fate and the senseless loss of
life in the name of a so-called "brotherhood," stating:
ChanRoblesVirtualawlibrary

It is truly astonishing how men would wittingly — or unwittingly — impose the misery of hazing and employ
appalling rituals in the name of brotherhood. There must be a better way to establish "kinship." A neophyte
admitted that he joined the fraternity to have more friends and to avail himself of the benefits it offered,
such as tips during bar examinations. Another initiate did not give up, because he feared being looked down
upon as a quitter, and because he felt he did not have a choice. Thus, for Lenny Villa and the other
neophytes, joining the Aquila Fraternity entailed a leap in the dark. By giving consent under the
circumstances, they left their fates in the hands of the fraternity members. Unfortunately, the hands to
which lives were entrusted were barbaric as they were reckless.91 (Emphasis supplied)
Indeed, the blind loyalty held by fraternity members to their "brothers" defies logic or reason.

In People v. Colana,92 an innocent college student, Librado De la Vega (De la Vega), became collateral
damage between two rival fraternities in Far Eastern University. When De la Vega passed Phi Lambda
Epsilon officer Leonardo Colana's (Colana) group on his way to school, the head of Colana's fraternity told
him that De la Vega was a member of Alpha Kappa Rho, their rival fraternity. The group approached De la
Vega as Colana, armed with an ice pick, stabbed De la Vega repeatedly. They left De la Vega on the street
to die.

On appeal, this Court affirmed the trial court's finding that Colana was guilty beyond reasonable doubt of
murder, stating that "[m]otive for the killing was revenge. On a prior occasion some members of the Epsilon
fraternity were beaten allegedly by members of the Alpha fraternity."93 chanrobleslaw

This Court likewise briefly mentioned the senselessness of De la Vega's death: ChanRoblesVirtualawlibrary

What is lamentable is that De la Vega was not an FEU student, much less a member of the Alpha fraternity.
He used to be an engineering student at the Feati University. At the time of his death, he was studying
typing.94
Death or injuries caused by fraternity rumbles are not treated as separate or distinct crimes, unlike deaths
or injuries as a result of hazing. They are punishable as ordinary crimes of murder, homicide, or physical
injuries under the Revised Penal Code.

The prosecution of fraternity-related violence, however, is harder than the prosecution of ordinary crimes.
Most of the time, the evidence is merely circumstantial. The reason is obvious: loyalty to the fraternity
dictates that brods do not turn on their brods. A crime can go unprosecuted for as long as the brotherhood
remains silent.

Perhaps the best person to explain fraternity culture is one of its own. Raymund Narag was among those
charged in this case but was eventually acquitted by the trial court. In 2009, he wrote a blog entry outlining
the culture and practices of a fraternity, referring to the fraternity system as "a big black hole that sucks
these young promising men to their graves."95 This, of course, is merely his personal opinion on the matter.
However, it is illuminating to see a glimpse of how a fraternity member views his disillusionment of an
organization with which he voluntarily associated. In particular, he writes that: ChanRoblesVirtualawlibrary

The fraternities anchor their strength on secrecy. Like the Sicilian code of omerta, fraternity members are
bound to keep the secrets from the non-members. They have codes and symbols the frat members alone
can understand. They know if there are problems in campus by mere signs posted in conspicuous places.
They have a different set [sic] of communicating, like inverting the spelling of words, so that ordinary
conversations cannot be decoded by non-members.

It takes a lot of acculturation in order for frat members to imbibe the code of silence. The members have to
be a mainstay of the tambayan to know the latest developments about new members and the activities of
other frats. Secrets are even denied to some members who are not really in to [sic] the system. They have
to earn a reputation to be part of the inner sanctum. It is a form of giving premium to become the "true blue
member".

The code of silence reinforces the feeling of elitism. The fraternities are worlds of their own. They are
sovereign in their existence. They have their own myths, conceptualization of themselves and worldviews.
Save perhaps to their alumni association, they do not recognize any authority aside from the head of the
fraternity.96
The secrecy that surrounds the traditions and practices of a fraternity becomes problematic on an
evidentiary level as there are no set standards from which a fraternity-related crime could be measured.
In People v. Gilbert Peralta,97 this Court could not consider a fraternity member's testimony biased without
any prior testimony on fraternity behavior:ChanRoblesVirtualawlibrary

Esguerra testified that as a fraternity brother he would do anything and everything for the victim. A witness
may be said to be biased when his relation to the cause or to the parties is such that he has an incentive to
exaggerate or give false color or pervert the truth, or to state what is false. To impeach a biased witness,
the counsel must lay the proper foundation of the bias by asking the witness the facts constituting the bias.
In the case at bar, there was no proper impeachment by bias of the three (3) prosecution
witnesses. Esguerra's testimony that he would do anything for his fellow brothers was too broad and general
so as to constitute a motive to lie before the trial court. Counsel for the defense failed to propound
questions regarding the tenets of the fraternity that espouse absolute fealty of the members to each other.
The question was phrased so as to ask only for Esguerra's personal conviction[.]98 (Emphasis supplied)
The inherent difficulty in the prosecution of fraternity-related violence forces the judiciary to be more
exacting in examining all the evidence on hand, with due regard to the peculiarities of the circumstances. In
this instance, we have thoroughly reviewed the arguments presented by accused-appellants in their Motions
for Reconsideration and have weighed them against the evidence on hand. Unfortunately, their Motions have
not given us cause to reconsider our May 5, 2014 Decision.

G.R. No. 208314, August 23, 2017

ANTONIO B. MANANSALA, Petitioner, v. MARLOW NAVIGATION PHILS., INC./MARLOW
NAVIGATION CO. LTD./CYPRUS, AND/OR EILEEN MORALES, Respondents.
DECISION
LEONEN, J.:
As laypersons, seafarers cannot be expected to make completely accurate accounts of their state of health.
Unaware of the nuances of medical conditions, they may, in good faith, make statements that tum out to be
false. These honest mistakes do not negate compensability for disability arising from pre-existing illnesses
shown to be aggravated by their working conditions. However, when a seafarer's proper knowledge of pre-
existing conditions and intent to deceive an employer are established, compensability is negated.

This resolves a Petition for Review on Certiorari1 under Rule 45 of the 1997 Rules of Civil Procedure praying
that the assailed April 10, 2013 Decision2 and July 18, 4013 Resolution3 of the Court of Appeals in CA-G.R.
SP No. 124546 be reversed and set aside.

The assailed Court of Appeals Decision affirmed the National Labor Relations Commission's December 13,
2011 Decision4 and February 28, 2012 Resolution,5 which, in turn, affirmed the Labor Arbiter's April 20,
2011 Decision.6 The Labor Arbiter dismissed Antonio B. Manansala's (Manansala) Complaint for payment of
total and permanent disability benefits. The assailed Court of Appeals Resolution denied Manansala's Motion
for Reconsideration.7

On April 8, 2010, Manansalals services were engaged by Marlow Navigation Phils., Inc., for and on behalf of
its principal, Marlow Navigation Co. Ltd./Cyprus, for him to serve as a "fitter" on board the vessel M/V
Seaboxer.8

Before boarding the vessel, Manansala underwent a Pre Employment Medical Examination (PEME) on March
23, 20109 at the EL ROI Medical Clinic and Diagnostic Center, Inc.10 In his examination, Manansala was
required to disclose information regarding all existing and prior medical conditions. The examination
specifically required information on 29 illnesses and/or conditions, among which were hypertension and
diabetes. Manansala's examination certificate indicates that he denied having hypertension and diabetes,
specifically answering "NO" when asked about hypertension and diabetes mellitus. Following his
examination, Manansala was declared fit for sea duty and was cieployed.11

On May 30, 2010, while on board the M/V Seaboxer, Manansala suffered a stroke,12 "experienc[ing]
moderate headache at the vertex associated with dizziness and blurring of vision and right[-]sided
weakness."13 He was, then, admitted to the ADK Hospital in the Maldives14 where a brain CT scan conducted
on him showed that he was suffering from an "[a]cute infarct at the left MCA territory."15Because of this,
Manansala was repatriated on June 8, 2010.16

Manansala was confined at the De Los Santos Medical Center from June 10, 2010 to June 23, 2010,17under
the primary care of company-designated physician, Dr. Teresita Barrairo (Dr. Barrairo).18 While under Dr.
Barrairo's care, he "repeatedly denied that he ha[d] any past history of diabetes and hypertension."19
On September 7, 2010,20 Dr. Barrairo issued to Manansala an interim Grade 10 disability rating.21 She issued
a final Grade 10 Disability assessment on September 30, 2010.22

On October 21, 2010, Manansala filed a Complaint against the respondents for total and permanent
disability benefits, as well as damages and attorney's fees.23 When the mandatory conferences failed, the
parties were ordered to file their respective position papers and responsive pleadings.24

Two (2) months after he filed his Complaint, on December 20, 2010, Manansala's own doctor, Dr. Amado
San Luis (Dr. San Luis), issued a medical opinion stating that Manansala must be considered permanently
disabled:
Medical Opinion

....

4. Patient should be permanently disabled (sic) because of the inherent risk of his work as a seaman that
will predispose him to repeated stroke or other cardiovascular attacks. Because of the presence of diabetes,
hypertension, hyperlipidemia and stroke, he is considered a high risk of (sic) developing another stroke.25
The same opinion indicated that Manansala admitted to having had a long history of hypertension and
diabetes, He even admitted to taking Enalapril and Metformin as maintenance medications.26

On Apri1 20, 2011, the Labor Arbiter rendered a Decision finding that Manansala was suffering from pre-
existing, rather than work-related, ailments. Therefore, he was not entitled to disability benefits.27

On December 13, 2011, the National Labor Relations Commission rendered a Decision affirming that of the
Labor Arbiter.28 In a Resolution dated February 28, 2012, the National Labor Relations Commission denied
Manansala's Motion for Reconsideration.29

Manansala filed a Petition for Certiorari before the Court of Appeals. In its assailed April 10, 2013 Decision,
the Court of Appeals sustained the decision of the National Labor Relations Commission.30 In its assailed July
18, 2013 Resolution,31 the Court of Appeals denied Manansala's Motion for Reconsideration.

Hence, Manansala filed the present Petition. He now asserts that he properly disclosed his pre-existing
illnesses during his medical examination and that his stroke was work-related.32

For resolution is the sole issue of whether or not petitioner Antonio B. Manansala is entitled to total and
permanent disability benefits occasioned by work-related illnesses.

He is not.

Filipinos hired as seafarers are contractual employees whose employment is governed by their respective
contracts with their employers: "[t]heir employment is governed by the contracts they sign every time they
are rehired and their employment is terminated when the contract expires."33

Seafarers must be registered with the Philippine Overseas Employment Administration (POEA).34 The POEA
Standard Employment Contract (POEA-SEC) must be executed by seafarers and their employers "as a
condition sine qua non prior to the deployment for overseas work"35 and is "deemed incorporated in
[seafarer] employment contract[s]."36

The POEA-SEC37 requires the employer to compensate a seafarer for work-related illnesses.38 It defines
"work-related illness" as follows:
Definition of Terms:

....
12. Work-Related Illness - any sickness resulting to disability or death as a result of an
occupational disease listed under Section 32-A of this Contract with the conditions set
therein satisfied.39
The benefits that the employer must pay "when the seafarer suffers work-related injury or illness during the
term of his contract"40 are outlined in Section 20(B) of the POEA-SEC.41
The compensation to be given to a seafarer depends on the severity of the disability suffered. Section 32 of
the POEA-SEC provides a schedule of disabilities and their corresponding impediment grades.42 The grades
range from 1 to 14, with 1 being the most severe and entailing the highest amount of compensation.43

II

Section 32-A of the POEA-SEC provides a non-exhaustive list44 of diseases considered as occupational. The
mere occurrence of a listed illness does not automatically engender compensability. The first paragraph of
Section 32-A requires the satisfaction of all of its listed general conditions "[f]or an occupational disease and
the resulting disability or death to be compensable":
Section 32-A OCCUPATIONAL DISEASES

For an occupational disease and the resulting disability or death to be compensable, all of the following
conditions must be satisfied:

(1) The seafarer's work must involve the risks described herein;
(2) The disease was contracted as a result of the seafarer's exposure to
the described risks;
(3) The disease was contracted within a period of exposure and under
such other factors necessary to contract it;
(4) There was no notorious negligence on the part of the seafarer.
To enable compensation, an occupational disease and ensuing death or disability must, thus, be "work-
related";45 that is to say that there must be a "reasonable linkage between the disease suffered by the
employee and his work."46

Common sense dictates that an illness could not possibly have been "contracted as a result of the seafarer's
exposure to the described risks"47 if it has been existing before the seafarer's services are engaged. Still,
pre existing illnesses may be aggravated by the seafarer's working conditions. To the extent that any such
aggravation is brought about by the work of the seafarer, compensability ensues:
Settled is the rule that for illness to be compensable, it is not necessary that the nature of the employment
be the sole and only reason for the illness suffered by the seafarer. It is sufficient that there is a reasonable
linkage between the disease suffered by the employee and his work to lead a rational mind to conclude that
his work may have contributed to the establishment or, at the very least, aggravation of any pre-existing
condition he might have had.48 (Emphasis supplied).
Consistent with the basic standard in labor cases and other administrative proceedings, the linkage between
the disease or its aggravation and the working conditions of a seafarer must be proven by substantial
evidence. In Jebsens Maritime v. Undag:49
In labor cases as in other administrative proceedings, substantial evidence or such relevant evidence as a
reasonable mind might accept as sufficient to support a conclusion is required. The oft-repeated rule is that
whoever claims entitlement to the benefits provided by law should establish his or her right thereto by
substantial evidence. Substantial evidence is more than a mere scintilla. The evidence must be real and
substantial, and not merely apparent; for the duty to prove work-causation or work-aggravation imposed by
law is real and not merely apparent.50 (Emphasis supplied, citations omitted)
Compensability is not limited to Section 32-A's listed occupational diseases. For as long as seafarers are able
to show by substantial evidence that they suffered disabilities occasioned by a disease contracted on
account of or aggravated by working conditions, compensation is availing:
Of course, the law recognizes that under certain circumstances, certain diseases not otherwise considered as
an occupational disease under the POEA-SEC may nevertheless have been caused or aggravated by the
seafarer's working conditions. In these situations, the law recognizes the inherent paucity of the list and the
difficulty, if not the outright improbability, of accounting for all the known and unknown diseases that may
be associated with, caused or aggravated by such working conditions.

Hence, the POEA-SEC provides for a disputable presumption of work-relatedness for non-POEA-SEC-listed
occupational disease and the resulting illness or injury which he may have suffered during the term of his
employment contract.

This disputable presumption is made in the law to signify that the non inclusion in the list of compensable
diseases/illnesses does not translate to an absolute exclusion from disability benefits. In other words, the
disputable presumption does not signify an automatic grant of compensation and/or benefits claim; the
seafarer must still prove his entitlement to disability benefits by substantial evidence of his illness' work-
relatedness.51
III

The POEA-SEC bars the compensability of disability arising from a pre-existing illness when attended by an
employee's fraudulent misrepresentation. Section 20(E) of the POEA-SEC states:

E. A seafarer who knowingly conceals and does not disclose past medical
condition, disability and history in the pre-employment medical
examination constitutes fraudulent misrepresentation and shall
disqualify him from any compensation and benefits. This may also be a
valid ground for termination of employment and imposition of the
appropriate administrative and legal sanctions.
The POEA-SEC's terminology is carefully calibrated: it does not merely speak of incorrectness or falsity, or of
incompleteness or inexactness. Rather, to negate compensability, it requires fraudulent misrepresentation.

To speak of fraudulent misrepresentation is not only to say that a person failed to disclose the truth but that
he or she deliberately concealed it for a malicious purpose. To amount to fraudulent misrepresentation,
falsity must be coupled with intent to deceive and to profit from that deception.

Consequently, reasonable leeway may be extended for inability to make complete and fastidiously accurate
accounts when this inability arises from venial human limitation and frailty. This is a normal tendency for
laypersons-such as seafarers-rendering accounts of their own medical conditions.         

IV

Prospective seafarers undergo a pre-employment medical examination (PEME) to determine if they are fit to
work. Republic Act No. 8042, as amended, otherwise known as the Migrant Workers and Overseas Filipinos
Act of 1995, tasks the Department of Health to regulate the operations of clinics conducting PEMEs for
migrant workers.52

Department of Health Administrative Order No. 2007-0025, which was in effect when petitioner took his
PEME, articulated guidelines on PEMEs for seafarers.53 It identified minimum test requirements, summarized
as follows:54

PEME "B"  PEME "C"

PEME "A"  Serving Serving
TEST New Seafarers Seafarers
Candidates (below 40 (40 years old
years old) and above)
Audiometry - - -
Blood Uric Acid X X -
Chest X-ray - - -
Color Perception  -
  Test - -
Complete Blood - - -
    Count and Blood 
  Typing
Complete Physical  -
   Examination and  - -
  Medical History
Dental Examination - - -
ECG - X -
Fasting Blood Sugar X X -
Hepatitis B
- - -
Screening
HIV OPTIONAL
Psychometric -
- -
examinations
Routine Stool - - -
Routine Urinalysis - - -
RPR - - -
Total Cholesterol X X -
Triglyceride X X -
Visual Acuity - - -
As to their source, there are two categories of information obtained in PEMEs. First is information obtained
from and colored by the prospective seafarer's opinion, i.e., information on medical history gained from
probing questions asked to prospective seafarers and answered by them to the best of their knowledge.
Second is information generated by procedures conducted by health professionals. From these, a
determination is made on whether a prospective seafarer is fit, unfit, or temporarily unfit for sea duty:55
C. On the Assessment of PEME Results

1. PEME recommendations shall be given as follows:

a.) Fit for Sea Duty - The seafarer is assessed as able to perform safely
the duties of his position aboard a ship in the absence of medical care,
without danger to his health or to the safety of the vessel, crew and
passengers.
b.) Unfit for Sea Duty - The seafarer is assessed to be not fit for sea
duty.
c.) Temporarily Unfit for Sea Duty - The seafarer is assessed to be
temporarily unfit for sea duty when, at the time of PEME, the result
shows an abnormal finding, a suspected medical or surgical condition,
or a disclosed significant past medical history which needs further
 investigation and reevaluation. The examinee shall be given thirty
(30) days to undergo further assessment in accordance with the
established referral system of the accredited medical clinic. Within the
said period, the seafarer may either be medically upgraded to fitness
or downgraded to unfitness indefinitely based on the results of the
follow-up evaluation.56(Emphasis in the original)
Between the prospective seafarer and an examining physician, the latter is in a better position to assess
fitness for the rigors of sea duty. Apart from one's literal body, a prospective seafarer's only other
contribution to a medical examination is a set of responses to questions. A seafarer's personal health
assessment is home by his or her amateur opinion, or otherwise unrefined understanding of nuanced
medical conditions. In contrast, the procedures attendant to a PEME are conducted and supervised by
professionals with sGientific and technical capabilities. Their examinations generate verifiable empirical data,
which are then evaluated by a physician.

A PEME is not expected to be an in-depth examination of a seafarer's health.57 Still, it must fulfill its purpose
of ascertaining a prospective seafarer's capacity for safely performing tasks at sea. Thus, if it concludes that
a seafarer, even one with an existing medical condition, is "fit for sea duty," it must, on its face, be taken to
mean that the seafarer is well in a position to engage in employment aboard a sea vessel "without danger to
his health."58

A recommendation stating that a seafarer is "fit for sea duty" when standardized procedures would readily
reveal that he or she is not can only mean that medical examiners failed to diligently screen a seafarer. The
persons responsible for the examination are then bound by their negligence. Ultimately, it is more
appropriate that the examining physician, a trained professional, and not the seafarer, who is a layperson,
be faulted for discounting the presence of diseases even after subjecting the seafarer to a series of
procedures.

For its part, a recruiting employer is expected to know the physical demands of a seafarer's engagement. It
is then equally expected to peruse the results of PEMEs to ensure that, healthwise, its recruits are up to par.
An employer who admits a physician's "fit to work" detennination binds itself to that conclusion and its
necessary consequences. This includes compensating the seafarer for the aggravation of negligently or
deliberately overlooked conditions.

Essential hypertension is among the occupational diseases enumerated in Section 32-A of the POEA-SEC.
Section 32-A, paragraph 2(20) of the POEA-SEC reads:
20. Essential Hypertension

Hypertension classified as primary or essential is considered compensable if it causes impairment of function

of body organs like kidneys, heart, eyes and brain, resulting in permanent disability; Provided, that the
following documents substantiate it: (a) chest x-ray report, (b) ECG report, (c) blood chemistry report, (d)
funduscopy report, and (e) C-T scan. (Emphasis supplied)
Primary or essential hypertension is the most common form of hypertension.59 It is a "conse uence of an
interaction between environmental and genetic factors."60 Hypertension doubles the risk of cardio-vascular
diseases,61 the most common cause of death in hypertensive patients.62 Hypertensive patients are also
susceptible to having a stroke.63

The following degrees of severity have been associated with identifying hypertension:64

Severity SBP, mmHg DBP, mmHg

Normal <120 and <80
Prehypertension 120-139 or 80-89
Stage 1 hypertension 140-159 or 90-99
 Stage 2 hypertension >160 or >100
Literature on hypertension concedes a degree of ambiguity and acknowledges variance in its effects and
incidents:
High blood pressure is a trait as opposed to a specific disease and represents a quantitative rather than a
qualitative deviation from the norm. Any definition of hypertension is therefore, arbitrary.

....

The cardiovascular risks associated with a given blood pressure are dependent upon the combination of risk
factors in the specific individual. These include age, gender, weight, physical inactivity, smoking, family
history, serum cholesterol, diabetes mellitus and pre existing vascular disease. Effective management of
hypertension therefore requires a holistic approach that is based on the identification of those at highest
cardiovascular risk and the adoption of multifactorial interventions, targeting not only blood pressure but all
modifiable cardiovascular risk factors.

In light of these observations[,] a practical definition of hypertension is 'the level of blood pressure at which
the benefits of treatment outweigh the costs and hazards'.65
Consistent with this, "most [hypertensive] patients remain asymptomatic";66 and frequently, patients only
discover that they are hypertensive because of a routine examination or because complications have
arisen.67

The POEA-SEC's treatment of essential hypertension recognizes its gradations. To enable compensation, the
mere occurrence of hypertension, even as it is work-related and concurs with the four basic requisites of the
first paragraph of Section 32-A, does not suffice. The POEA-SEC requires an element of gravity. It speaks of
essential hypertension only as an overture to the "impairment of function of body organs like kidneys, heart,
eyes and brain." This impairment must then be of such severity as to be "resulting in permanent
disability."68 Section 32-A, paragraph 2(20), thus, requires three successive occurrences: first, the
contracting of essential hypertension; second, organ impairment arising from essential hypertension; and
third, permanent disability arising from that impairment.

In keeping with the requisite gravity occasioning essential hypertension, the mere averment of essential
hypertension and its incidents do not suffice. In addition to the substantive requirements of essential
hypertension's being the cause of organ impairment leading to permanent disability, the POEA-SEC identifies
documentary requirements for considering a claim under Section 32-A, paragraph 2(20). As is evident from
the use of the conjunctive word "and," this enumeration is inclusive and cumulative, rather than alternative.
Accordingly, all documentary requirements must be submitted and satisfied; otherwise, a claim for benefits
should not be entertained. These prerequisites are: first, a chest x-ray report; second, an electrocardiogram
(ECG) report; third, a blood chemistry report; fourth, a funduscopy report; and fifth, a C-T Scan.

The POEA-SEC also includes cardio-vascular diseases in its list of occupational diseases. They are
compensable if, in addition to the requirements of the first paragraph of Section 32-A, any of the conditions
listed in Section 32-A, paragraph 2(11) are attendant:
11. Cardio-Vascular Diseases. Any of the following conditions must be met:
a. If the heart disease was known to have been present during employment, there must be
proof thut an acute exacerbation was clearly precipitated by the unusual strain by reasons
of the nature ofhis work.

b. The strain of work that brings about an acute attack must be sufficient severity and must
be followed within 24 hours by the clinical signs of a cardiac insult to constitute causal
relationship.

c. If a person who was apparently asymptomatic before being subjected to strain at work
showed signs and symptoms of cardiac injury during the performance of his work and such
symptoms and signs persisted, it is reasonable to claim a causal relationship.
Diabetes is not among Section 32-A's listed occupational diseases. As with hypertension, it is a complex
medical condition typified by gradations. Blood sugar levels classify as normal, pre-diabetes, or diabetes
depending on the glucose level of a patient.69

Normal Pre-diabetes Diabetes Mellitus

 FPG <5.6 mmol/L 5.6-6.9 mmol/L >7.0 mmol/L
2-h PG <7.8 mmol/L 7.8-11.0 mmol/L >11.1 mmol/L
HbA1C <5.6% 5.7-6.4% >6.5%
Diabetes "is a clinical syndrome characterised by hyperclycaemia due to absolute or relative deficiency of
insulin."70 It can cause several symptoms depending on its type, Type 1 or Type 2.71 Patients with Type 1
diabetes show more prominent symptoms, while patients with Type 2 diabetes are mostly
asymptomatic.72 However, the symptoms between these two types may overlap. Other symptoms may even
be inexplicit such as fatigue.73 Diabetes can lead to several complications, among which is suffering a
stroke.74

Hypertension and diabetes are hardly elementary conditions that afflicted laypersons could handily grasp.
Even the POEA-SEC's appreciation of essential hypertension proceeds from an understanding that
hypertension per se does not equate to disability warranting cessation of work and entailing compensation.
Rather, it concedes that hypertension is identified by degrees of severity.

Hypertension and diabetes can be difficult to recognize because of gradations whose demarcations are not
readily perceptible and because they can be asymptomatic. This is especially true in their mild stages. Even
in relatively advanced stages, their symptoms may be generic that they are as ea sly mistaken to be
indicating other conditions.75

The greater possibility, then, is that a seafarer's self-assessment of personal medical conditions will fail to
capture nuances that can make the difference between fitness and unfitness for work As laypersons, they do
not have the requisite medical knowledge to properly characterize their illnesses. Even if they are aware of
their own medical conditions, they may, in their non professional opinion but still in good faith, be convinced
that their conditions are not so sey re and that they can manage to perform work aboard a vessel. Seafarers
cannot be held to account under an inordinate standard. The POEA-SEC takes exception to fraudulent
misrepresentation, not to honest mistakes.

VI

This Court finds petitioner to have knowingly and fraudulently misrepresented himself as not afflicted with
hypertension or diabetes. He did not merely make inaccuracies in good faith but engaged in serial
dishonesty. Thus, this Court affirms the Decision of the Court of Appeals.

During his PEME, petitioner was recorded to have "categorically answered 'No' when asked whether he has
ever suffered from or has been told to have hypertension and diabetes."76 After repatriation and while being
treated by Dr. Barrairo, the company-designated physician, he again "denied that he ha[d] any past history
of diabetes and hypertension."77

However, in the medical opinion and evaluation prepared by his own physician, Dr. San Luis, petitioner was
indicated to not only have admitted that "he ha[d] a past history of hypertension and diabetes,"78but even
that he was "regularly taking Enalapril and Metformin respectively to treat the said illnesses."79

Forced into a corner by his own conflicting declarations, petitioner attempted to extricate himself by
disavowing the declarations he made in his PEME and claiming that it was the examining physician who
failed to accurately reflect his responses on his examination certificate.80

Petitioner's assertion is an admission that he fully knew of his conditions at the moment he was examined,
rendering it pointless for this Court to consider whether he was merely confused at the time of his
examination. Additionally, his assertion burdens him with the task of proving his claims. As he was duty-
bound to truthfully answer questions during his examination, petitioner must show that despite his
knowledge, he did not willfully or deceptively withhold information. Likewise, his imputation of the
examining physician's liability despite the examination certificate's indication that his responses were duly
recorded is an affirmative defense or an alternative version of events that becomes his burden to prove.

Petitioner failed to discharge his burden. On the contrary, the confluence of circumstances belies his claims.

Petitioner adequately understood the significance of the declarations attributed to him in his examination
certificate. Petitioner's engagement aboard the MIV Seaboxer was not his first stint as a seafarer. He had
been a seafarer since 1994,81 although he worked for respondents, on and off, only since 2007.82 His
prolonged seafaring experience must have familiarized him with the conduct of PEMEs and the need for him
to give truthful answers. He explicitly declared, too, that he was "aware of the contents of Section 20.E [on
misrepresentation] in the POEA [Standard Employment Contract]."83 Certainly, his awareness of Section
20(E) must have impressed upon him not only the potentil complications of what he claims to be a false
declaration foisted on him by the examining physician but also the urgency of rectifying that error. Instead,
he remained silent and did nothing. Petitioner's concession by omission militates against him.

This Court has nothing to rely on but petitioner's bare recollection. This does not satisfy, He should have
actively endeavored to demonstrate that the false declarations in his examination certificate were
anomalous, stray errors. As a seafarer since 1994, he must have completed several other medical
examinations. His good faith could have ben substantiated by prior acts in analogous situations. He could
have presented copies of the certificates for his previous medical examinations, but he did not These would
have shown that while the responses he otiered about his conditions in prior instances had been properly
recorded, the examining physician during his March 23, 2010 examination failed to render an accurate
account.

It is, of course, possible that prior to his most recent medical examination on March 23, 2010, petitioner had
not been diagnosed with hypertension or diabetes. This would make it impossible for him to present
evidence of countervailing prior declarations. However, even conceding this, petitioners good faith is belied
by other circumstances attending this case.

Petitioner's good faith could have been demonstrated by his subsequent acts. Knowing full well that a false
declaration was made on his examination certificate, petitioner should, at the very least, not have
compounded it. Instead of this, however, he maintained before Dr. Barrairo upon repatriation that he had no
history of either hypertension or diabetes. It was only before his personally chosen physician did petitioner
admit to not only a history of diabetes and hypertension but even to the maintenance medications he had
been taking to address those illnesses.

A measure of good faith can be appreciated on the part of a seafarer who is unable to grasp the nuances of
his or her medical condition. This Court is unable to appreciate this good faith here. Petitioner knew that his
illnesses were of such severity that he needed to take maintenance medicine. Despite this, he consistently
maintained that he had no history of hypertension or diabetes. Finally confronted with his own discrepant
statements he denied accountability by shifting the blame to a person who was beyond the reach of the
proceedings he had initiated.

We are not a trier of facts and only questions of law may be brought before this Court in Rule 45 petitions.
Faced with nothing more than petitioner's self-serving, unsubstantiated backtracking on his own
inconsistencies, we see no need to deviate from the uniform findings of the Labor Arbiter, the National Labor
Relations Commission and the Court of Appeals. Petitioner's disavowals were not statements made in good
faith but were part of a serial utterance of lies.

VII

It works no less in petitioner's favor that he failed to observe the procedure outlined by the POEA-SEC
concerning disputed disability assessments by company-designated physicians. Section 20(B)(3) of the
POEA-SEC requires referral to a third physician in the event of diverging findings by a company-designated
physician and a seafarer's personally chosen physician:
SECTION 20. COMPENSATION AND BENEFITS

....

B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS 

The liabilities of the employer when the seafarer suffers work related injury or illness during the term of his
contract arc as follows:

....
3. Upon sign off from the vessel for medical treatment, the seafarer is entitled to sickness
allowance equivalent to his basic wage until he is declared fit to work or the degree of
permanent disability has been assessed by the company-designated physician but in no
case shall this period exceed one hundred twenty (120) days.
 For this purpose, the seafarer shall submit himself to a post employment medical
examination by a company-designated physician within three working days upon his return
except when he is physically incapacitated to do so, in which case, a written notice to the
agency within the same period is deemed as compliance. Failure of the seafarer to comply
with the mandatory reporting requirement shall result in his forfeiture of the right to claim
the above benefits.

If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be
agreed jointly benveen the Employer and the seafarer. The third doctor's decision shall be
final and binding on both parties.
(Emphasis supplied)
INC Shipmanagement, Inc. v. Rosales84 explained the significance of this referral and emphasized that it is
"mandatory":
This referral to a third doctor has been held by this Court to be a mandatory proc dure as a consequence of
the provision that it is the company-designated doctor whose sessment should prevail. In other words, the
company can insist on its disability rating even against a contrary opinion by another doctor, unless the
seafarer expresses his disagreement by king for the referral to a third doctor who shall make his or her
determination and whose decision is final and binding on the parties. We have followed this rule in a string
of cases, among them, Philippine Hammonia, Ayungo v. Beamko Shipmanagement Corp., Santiago v.
Pacbasin Shipmanagement, Inc., Andrada v. Agemar Manning Agency, and Masangkay v. Trans-Global
Maritime Agency, Inc. Thus, at this point, the matter of referral pursuant to the provision of the POEASEC is
a settled ruling.85 (Citations omitted)
Petitioner made no effort to comply with the required referral. He did not even consult a personally chosen
physician before filing his Complaint.  Upon repatriation, the company-designated physician, Dr. Barrairo,
assessed petitioner and twice rendered Grade 10 disability assessments in September 2010.86Disagreeing
with these assessments, petitioner would proceed to file his Complaint on October 21, 2010.87 In need of
support for his Complaint, only two months after would petitioner pick a personal physician, Dr. San Luis, to
seek another opinion. Only on December 70, 2010 would Dr. San Luis declare that petitioner "should be
permanently disabled (sic)."88 Beyond this, there is no indication that petitioner did more to ascertain his
proper disability grade.

Petitioner's non-compliance constrains us to not lend credibility to his personal physicians assessment. In
any event, the record demonstrates why this assessment deserves no credence as against that of the
company-designated physician. He was under the care and supervision of Dr. Barrairo throughout the more
than four months that intervened between his repatriation and the filing of his Complaint.89 For a period, he
was kept under Dr. Barrairo's close observation as he was confined at the De Los Santos Medical Center
from June 10, 2010 to June 23, 2010.90 Dr. Barrairo's prolonged care and observation of him yielded two
disability assessments: first, an interim assessment on September 7, 2010; and another, a verified
assessment on September 30, 2010.91 In contrast, petitioner's personal physician examined him on only one
occasion and only under such circumstances that petitioner needed backing for his Complaint.92

Jurisprudence holds that, in analogous cases, company-designated physicians' assessments are to be

upheld.93 This could have entitled petitioner to Grade 10 disability benefits. However, his failure to observe
Section 20(B)(3)'s requirements is not all that there is to this case. We cite his non-referral to a third
physician, not as a mitigating circumstance, but to emphasize how multi-layered exigencies militate against
him. We have explained at length how petitioner engaged in fraudulent misrepresentation, deceptively
concealing his pre-existing hypertension and diabetes. This, in itself, is fatal to his cause. In keeping with
Section 20(E) of the POEA-SEC, petitioner is, thus, disqualified from receiving any compensation.

WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed April 10, 2013 Decision and
July 18, 2013 Resolution of the Court of Appeals in CA-G.R. SP No. 124546 are AFFIRMED.

SO ORDERED.
 A.C. No. 11774 (Formerly CBD Case No. 14-4186), March 21, 2018
READY FORM INCORPORATED, Complainant, v. ATTY. EGMEDIO J. CASTILLON, JR., Respondent.
FACTS

Ready Form was one of the companies who participated in a public bidding conducted by the NPO on
October 17, 2008. Thereafter, the NPO Bids and Awards Committee (NPO-BAC) required all bidders to re-
submit their eligibility documents, which includes the bidders' past ITRs and financial documents stamp
received by the Bureau of Internal Revenue (BIR).3 After reviewing these submissions, the NPO-BAC
imposed a suspension of one (1) year against Ready Form effective from December 22, 2008 to December
21, 20094 due to the supposed misrepresentation and misdeclaration it committed when it submitted alleged
false ITRs and financial statements for the calendar year 2007.

Subsequently, on September 18, 2009, Eastland Printink Corporation (Eastland) filed a Petition for
Blacklisting with the NPO against Ready Form, wherein Eastland alleged that Ready Form had committed
other violations, such as (1) misrepresentation, when it also filed with the NPO false ITRs for the year 2006,
(2) unlawfully soliciting printing jobs and services from various local government offices or agencies, and (3)
undermining the authority and jurisdiction of the NPO by disseminating letters which suggested that the NPO
no longer has exclusive jurisdiction over printing services.5 As Eastland's counsel, Atty. Castillon signed the
Petition on behalf of his client.

The NPO then asked both parties to file position papers in relation to the Petition for Blacklisting. Eastland
filed a position paper6 which stated that:
The figures declared by respondent in its financial statement submitted to the Securities and Exchange
Commission indicate that (sic) a total net sale of P78,639,134.73, but respondent net sales with NPO alone
yielded P80,063.932, (sic) or a discrepancy of P1,424,797.27. The figures speak for themselves where false
statements and/or information were clearly resorted to by the respondent. These documents are material for
eligibility requirements which bespeak of respondent's deliberate act of misrepresentation.

The respondent has intentionally and consciously falsified its Financial Statement and Income Tax Return for
2006 by stating and declaring the reduced and wrong amount of annual net sales to gainfully reduce
payment of taxes due the government.

It has been a pattern of respondent in reporting the reduced and incorrect net sales for two (2) years in a
row. It did in 2006 and 2007. In fact, it was duly reflected in its 2006 and 2007 falsified Financial
Statements submitted before the Securities and Exchange Commission.7
On December 1, 2009, the NPO issued a Resolution8 suspending and blacklisting Ready Form for a period of
five (5) years after finding, among others, that:
Respondent (sic) 2006 Financial Statement contains false information; hence, it is a falsified document. As
part of its eligibility requirements, respondent submitted to NPO its 2006 Financial Statement (earlier
submitted to the Securities and Exchange Commission in compliance with its reportorial requirements) which
contains false information. Evidently, the same is (sic) fictitious, false and falsified document.

Respondent intentionally reported the reduced amount of its net sales for 2006 in its Financial Statement by
declaring only Seventy Eight Million Six Hundred Thirty Nine Thousand One Hundred Thirty Four
and Seventy Three Centavos (P78,639,134.73). However, its net sales alone in NPO reached Eighty
Million Sixty Three Thousand Nine Hundred Thirty Two and Twenty Nine Centavos
(P80,063,932.29). The under declaration was not only conscious and deliberate but also it was purposely
done by respondent two (2) years in a row solely intended to evade payment of correct taxes due to
government.

Its (sic) worth recalling that in 2007, respondent also under declared its nets (sic) sales by stating in its
2007 Financial Statement the amount of Seventy Four Million Three Hundred Seventy Seven
Thousand Five Hundred Ninety Three Pesos and Twenty Three Centavos (P74,377,593.23). But in
truth and in fact, its net sales for NPO alone hit One Hundred Seven Million Three Hundred One
Thousand Twelve Pesos and Ninety Four Centavos (P107,301,012.94). In fact, the respondent was
suspended for one (1) year from 22 December 2008 up to 22 December 2009 for that reason. An appeal
was filed by respondent to the Office of the Press Secretary. However, the appeal was dismissed and the
imposition of administrative sanction of one (1) year was affirmed. The same has already become final and
executory since respondent neither filed a motion for reconsideration nor a Petition for Review to the Court
of Appeals timely filed.9 (Emphasis and underscoring in the original)
On April 4, 2014, Ready Form filed a Complaint-Affidavit (Complaint) before the CBD-IBP praying that Atty.
Castillon be disbarred due to allegedly violating Rules 1.01, 1.02, and 1.03 of Canon 1 of the Code of
Professional Responsibility, alleging as a ground therefor Atty. Castillon's supposed unlawful use of Ready
Form's ITRs. Complainant alleges that this is in violation of Sections 4 and 278 of Republic Act No.
8424,10 otherwise known as the National Internal Revenue Code (NIRC), which state that:
SEC. 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases. - The power to
interpret the provisions of this Code and other tax laws shall be under the exclusive and original jurisdiction
of the Commissioner, subject to review by the Secretary of Finance.

The power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges,
penalties imposed in relation thereto, or other matters arising under this Code or other laws or portions
thereof administered by the Bureau of Internal Revenue is vested in the Commissioner, subject to the
exclusive appellate jurisdiction of the Court of Tax Appeals.
xxxx

SEC. 278. Procuring Unlawful Divulgence of Trade Secrets.  Any person who causes or procures an
officer or employee of the Bureau of Internal Revenue to divulge any confidential information regarding the
business, income or inheritance of any taxpayer, knowledge of which was acquired by him in the discharge
of his official duties, and which it is unlawful for him to reveal, and any person who publishes or prints in any
manner whatever, not provided by law, any income, profit, loss or expenditure appearing in any income tax
return, shall be punished by a fine of not more than Two thousand pesos (P2,000), or suffer imprisonment
of not less than six (6) months nor more than five (5) years, or both. (Emphasis and italics in the original)
Complainant further alleges that Atty. Castillon's supposed act was in violation of Section 30.1 of the
Implementing Rules and Regulations of Republic Act No. 918411 or the Government Procurement Reform Act
which mandates that the Bids and Awards Committee concerned shall use a non discretionary "pass/fail"
criterion in determining the eligibility of bidding documents submitted to it. The said section states that:

30.1. The BAC shall open the first bid envelopes in public to determine
each bidder's compliance with the documents required to be
submitted for eligibility and for the technical requirements, as
prescribed in this IRR. For this purpose, the BAC shall check the
submitted documents of each bidder against a checklist of required
documents to ascertain if they are all present, using a non
discretionary "pass/fail" criterion, as stated in the Instructions to
Bidders. If a bidder submits the required document, it shall be rated
"passed" for that particular requirement. In this regard, bids that
fail to include any requirement or are incomplete or patently
insufficient shall be considered as "failed." Otherwise, the BAC shall
rate the said first bid envelope as "passed."
During the mandatory conference of the case before the CBD-IBP, the parties agreed to limit the issue on
whether or not Atty. Castillon's act of attaching Ready Form's audited financial statements in the Petition for
Blacklisting he filed with the NPO constitutes a violation of Sections 4 and 238 of the NIRC.12Consequently,
the answer to the said question also determines whether Atty. Castillon violated Rules 1.01, 1.02, and 1.03
of Canon 1 of the Code of Professional Responsibility.

Atty. Castillon, in his position paper submitted to the CBD-IBP, stressed that what was submitted in support
of the Petition for Blacklisting with the NPO was Ready Form's audited financial statements which were
acquired from the Securities and Exchange Commission (SEC). Atty. Castillon categorically denied that he
acquired, much less attached, an ITR of complainant Ready Form.13

After due proceedings, Commissioner Maria Editha A. Go-Biñas (Commissioner Go-Biñas) rendered a Report
and Recommendation14 on July 21, 2016, absolving Atty. Castillon from the charges filed by Ready Form.
Commissioner Go-Biñas found that Ready Form's claims were unfounded, as there is no proof that Atty.
Castillon procured Ready Form's ITR, or that he used it in the Petition for Blacklisting.

On September 23, 2016, the IBP Board of Governors passed a Resolution adopting the findings of fact and
recommendation of Commissioner Go-Biñas and resolved to dismiss the complaint.

The Court's Ruling

After a judicious examination of the records and submission of the parties, the Court finds no compelling
reason to diverge from the factual findings of Commissioner Go-Biñas as adopted by IBP Board of
Governors.

Ready Form's central issue against Atty. Castillon is that he allegedly violated the law, particularly the NIRC,
when he supposedly attached a copy of its ITR for 2006 when he filed the Petition for Blacklisting. A perusal
of the records will reveal, however, that what Atty. Castillon attached in the Petition for Blacklisting is Ready
Form's audited financial statement for the year 2006 and not the latter's ITR. Ready Form harps on the fact
that the following paragraphs, which mentions Ready Form's ITR, were in the Petition for Blacklisting signed
by Atty. Castillon:17
4. The aforecited suspension was brought about by the misrepresentation and misdeclaration committed by
herein respondent on its Income Tax Return and Financial Statement and other documents submitted before
this Office covering the period 2007;

5. Previous to the said violation, respondent had committed acts of similar nature in their Income Tax
Returns and Financial Statements and other documents submitted before this office covering the year 2006,
among other things, which underscores a deliberate scheme of submitting false declarations. A photocopy of
the 2006 Financial Statement is hereto attached and marked as Annexes "B" and made integral part
hereof.18
Ready Form repeatedly made an issue out of the fact that its ITR was mentioned in the Petition for
Blacklisting, and later on in the Position Paper filed by Eastland, both signed by Atty. Castillon. They did not,
however, offer proof to substantiate its claims that its ITR was attached to the Petition for Blacklisting
despite the clear and express statement therein that only its audited financial statement, which is available
to the public through the SEC, was attached thereto. During the mandatory conference, it was clear that
only an audited financial statement was attached by Atty. Castillon. Ready Form only wants the IBP, and
consequently this Court, to hold that Atty. Castillon used confidential information by doing such act:
Clearly, therefore, the complainant wants this Court to penalize the respondent for using a publicly-available
document to support allegations in a pleading signed by him. This, the Court refuses to do.

The Court takes judicial notice20 of the fact that audited financial statements submitted by corporations, as
required by Section 141 of the Corporation Code, are made available to the public by the SEC. Hence, the
Court fails to see how Atty. Castillon violated any law when he attached a copy of Ready Form's audited
financial statements in the Petition for Blacklisting he filed with the NPO.

Thus, the Court agrees with Commissioner Go-Biñas when she correctly said:
He who alleges should prove his case in a very clear and convincing manner.

An individual should not be allowed to claim relief just because a lawyer is aiding or was hired by an
opponent. To do so would create more injustice and lead to an even more erroneous practice.

"While courts will not hesitate to mete out proper disciplinary punishment upon lawyers who fail to live up to
their sworn duties, they will on the other hand, protect them from the unjust accusations of dissatisfied
litigants. The success of a lawyer in his profession depends most entirely on his reputation. Anything which
will harm his good name is to be deplored. Private persons and particularly disgruntled opponents,
may not, therefore, be permitted to use the courts as vehicles through which to vent their rancor
on members of the Bar" (Santos vs. Dichoso, Adm. Case No. 1825, August 22, 1978).21 (Emphasis in the
original)
All told, the Court finds that the evidence adduced is wholly insufficient to support the allegations against
Atty. Castillon. As such, the Court fails to see how Atty. Castillon had violated Rules 1.01, 1.02, and 1.03 of
Canon 1 of the Code of Professional Responsibility. Hence, the Court affirms the IBP's recommendation to
dismiss the Complaint.
 September 5, 2017
A.C. No. 11478
SPOUSES ANDRE CHAMBON AND MARIA FATIMA CHAMBON, Complainants 
vs.
ATTY. CHRISTOPHER S. RUIZ, Respondent
DECISION
TIJAM, J.:
This administrative case arose from a verified Complaint  for gross violation of Section 2 (b ),
1

paragraph 2 of Rule IV and Section 2, paragraphs (a), (d), and (e) of Rule VI of the 2004 Rules on
Notarial Practice filed by complainant Spouses Andre and Maria Fatima Chambon (Spouses
Chambon) against Atty. Christopher S. Ruiz (respondent) before the Integrated Bar of the
Philippines(IBP).
The Facts
Spouses Chambon alleged that they were creditors of a certain Suzette Camasura Auman, also
known as Mrs. Suzette Camasura Remoreras (Remoreras). To secure her obligation, Remoreras
executed a real estate mortgage (REM) over a parcel of land with improvements covered by
2

Transfer Certificate of Title (TCT) No. 29490,  which was registered in her maiden name. Said REM
3

was annotated in the Registry of Deeds of Mandaue City in 2006. TCT No. 29490 was handed over
to Spouses Chambon. 4

As Remoreras failed to pay her loan obligation, Spouses Chambon were prompted to institute an
extra-judicial foreclosure proceedings on the subject property before the Ex-Officio Sheriff of
Mandaue City. The public auction was set on April 27, 2010. 5
In February 2010, counsel for Spouses Chambon learned that the Regional Trial Court (RTC) of
Mandaue City, Branch 56, issued an Order  dated March 24, 2008, which directed the issuance of a
6

new Owner's Duplicate Copy of TCT No. 29490. Apparently, a Petition for Issuance of a new
Owner's Duplicate Copy of TCT No. 29490, which was grounded on an alleged Notice of
Loss/Affidavit of Loss of the subject title, was filed by Remoreras.
Before the scheduled public auction, Remoreras filed a complaint to enjoin the holding of the same
on the basis of an alleged execution and delivery of a Release of Mortgage document on the subject
property purportedly executed by Spouses Chambon. 7

Spouses Chambon discovered that the Notice of Loss/ Affidavit of Loss  and the Release of
8

Mortgage  were notarized by the respondent in Cebu City and that certain defects were found in said
9

notarized documents and in the Notarial Register. In the jurat of said Notice, there was no competent
evidence of identity of the executor. Also, in said Release, Spouses Chambon denied having
executed the same. 10

These incidents prompted Spouses Chambon to file a complaint for gross violation of Section 2 (b),
paragraph 2 of Rule IV and Section 2, paragraphs (a), (d), and (e) of Rule VI of the 2004 Rules on
Notarial Practice before the IBP.
In his Answer, the respondent denied the existence and notarization of the Release of Mortgage. As
to the Notice of Loss/Affidavit of Loss, he admitted its existence and its entry in the Notarial Register.
However, he imputed negligence on the part of his secretary as regards certain lapses in his Notarial
Register.11

After investigation, the Investigating Commissioner of the IBP-Committee on Bar Discipline (CBD)
rendered a Report and Recommendation  dated June 19, 2013, to wit:
12

Viewed from the foregoing, we recommend that the Respondent's present commission as notary
public, if any, be revoked and that he be barrt!d from being commissioned as a notary public for a
period of four (4) years.
RESPECTFULLY SUBMITTED. 13

In a Resolution   dated October 11, 2014, the Board of Governors of the IBP adopted the findings of
14

the IBP-CBD, but modified the penalty, viz:

RESOLVED TO ADOPT and APPROVE, as it is hereby ADOPTED and APPROVED with
modification, the Report and Recommendation of the Investigating Commissioner in the above-
entitled case, herein made part of this Resolution as Annex "A'', and for violation of Rule IV, Section
2 (b), Rule VI, Section (a). par. 4, 5, and 6 and Rule VI, Section (2), par. (e) of the 2004 Rules of [sic]
Notarial Practice, Atty. Christopher S. Ruiz's notarial commission if presently commissioned is
immediately REVOKED. Further, he is DISQUALIFIED from reappointment as notary public for three
(3) years and SUSPENDED from the practice of law for three (3) years.   (Emphasis supplied)
15

The Issue
Should respondent be administratively disciplined based on the allegations in the complaint and
evidence on record?
Our Ruling
By law, a notary public is empowered to perform the following acts: acknowledgments, oaths and
affirmations, jurats, signature witnessing, copy certifications, among others.   The duties of a notary
16

public is dictated by public policy and impressed with public interest. It is not a meaningless
ministerial act of acknowledging documents executed by parties who are willing to pay the fees for
notarization.   For notarization by a notary public converts a private document into a public
17

document, making the same admissible in evidence without further proof of authenticity; thus, a
notarial
document is, by law, entitled to full faith and credit upon its face.
18

In this case, We find that the respondent failed to live up with the duties of a notary public as dictated
by the 2004 Rules on Notarial Practice. The subject Notice of Loss/Affidavit of Loss, allegedly
executed by Remoreras, was undisputedly notarized by the respondent and entered in his Notarial
Register. However, a careful examination of said Notice reveals that violation of the 2004 Rules was
committed.
For one, the jurat was incomplete in that the competent proof of identity of the executor, Remoreras,
was left in blank. Also, reference to the Notarial Register indicates that the entries pertaining to said
Notice were also left in blank. The title/description of instrument, name and addresses of parties,
competent evidence of identity, date and time of notarization, and type of notarial act were not filled
up.
We emphasize that Section 5 of Rule IV of the 2004 Rules provides:
Sec. 5. False or Incomplete Certificate. - A notary public shall not:
(a) execute a certificate containing information known or believed by the notary to be false.
(b) affix an official signature or seal on a notarial certificate that is incomplete.
Relevantly, Section 8 defines a notarial certificate as part of, or attachment to, a notarized instrument
or document that is completed by the notary public, bears the notary's signature and seal, and states
the facts attested to by the notary public in a particular notarization as provided for by these Rules.
In this case, the respondent affixed his signature and seal on the notarial certificate without verifying
the identity of the executor. Such was inferred from the fact that the competent proof of such
executor's identity was left in blank. Hence, his act of signing the notarial certificate, notwithstanding
the fact that it was incomplete, is a clear violation of the said Rules. No allegation as well that
Remoreras is personally known to the respondent to dispense with the presentation of a competent
evidence of identity. 
19

Moreover, entries in the respondent's Notarial Register, which refer to said Notice of Loss/Affidavit
ofLoss were also not properly accomplished.
RULE VI - NOTARIAL REGISTER
SEC. 1. Form of Notarial Register. - (a) A notary public shall keep, maintain, protect and provide for
lawful inspection as provided in these Rules, a chronological official notarial register of notarial acts
consisting of a permanently bound book with numbered page.
xxxx
SEC. 2. Entries in the Notarial Register. - (a) For every notarial act, the notary shall record in the
notarial register at the time of notarization the following:
(1) the entry number and page number;
(2) the date and time of day of the notarial act;
(3) the type of notarial act;
(4) the title or description of the instrument, document or proceeding;
(5) the name and address of each principal;
(6) the competent evidence of identity as defined by these Rules if the signatory is not personally
known to the notary;
(7) the name and address of each credible witness swearing to or affirming the person's identity;
(8) the fee charged for the notarial act;
(9) the address where the notarization was performed if not in the notary's regular place of work or
business; and
(10) any other circumstance the notary public may deem of significance or relevance.
(b) A notary public shall record in the notarial register the reasons and circumstances for not
completing a notarial act.
Here, it is undisputed that the respondent's Notarial Register did not bear the details pertaining to
said Notice of Loss/Affidavit of Loss. To exculpate himself from liability, he attributed negligence and
omission on the part of his secretary who prepared the same.
On this note, We reiterate that a notary public is personally accountable for all entries in his notarial
register. He cannot relieve himself of this responsibility by passing the buck to his secretary.  The
20
act of recording such entries in the Notarial Register is part and parcel of the duties of a notary
public. Keeping in mind the nature of a notary public's responsibility, the respondent should not have
shifted such responsibility to his office secretary and allowed her to make such pertinent entries.
As to the second subject document, i.e., Release of Mortgage, the respondent denied having
notarized the same. He averred that reference to the book number, document number, and page
number of the such alleged Release points to a Special Power of Attorney (SPA) in his Notarial
Register. The respondent admitted that while an SP A is indicated therein, it was actually a Deed of
Absolute Sale, which he actually notarized. Such inadvertence was also blamed to his office
secretary.
Said Release of Mortgage bears similarities as to the signature and seal of the respondent as
provided in the Notice of Loss/ Affidavit of Loss. Nevertheless, his admission that inadvertence on
the part of his secretary was committed with regard to the entries in his Notarial Register also
constitutes a violation under the Rules as aforementioned.
We stress that a notary public carries with him a duty imbued with public interest. At all times, a
notary public must be wary of the duties pertaining to his office. Thus, those who are not qualified to
live up with the mandate of such office must, in absolute terms, be stripped off such authority.
As to penalty, We deem it proper to modify the same in accordance with jurisprudence. For failure to
make proper entries in the notarial register, We imposed the penalty of revocation of the notarial
commission and suspension from the practice of law for different durations. In the cases of Agadan,
et al. v. Atty. Kilaan  and Father Aquino v. Atty. Pascuai,  the duration for the suspension is for three
21 22

months, while in the case of Bernardo v. Atty. Ramos,  the duration is for six months. On the other
23

hand, for affixing signature and seal on an incomplete notarial certificate, the penalty of revocation of
notarial commission, prohibition from being a notary public for two years, and suspension from the
practice of law for one year was viewed as wise in the case of Gaddi v. Atty. Velasco, Jr, while in the
24

case of Flodeliza E. Coquia v. Atty. Emmanuel E. Laforteza,   the penalty of revocation of notarial
25

commission and disqualification from being a notary public for one year was considered proper.
Lastly, in the case of Bartolome v. Basilio,  wherein the notary public was found to have failed to
26

make proper entries in his notarial register and affixed his signature in an incomplete notarial
certificate, the penalty imposed was revocation of the notarial commissio, suspension from the
practice of law for one year, and prohibition from being a notary public for two years.
Guided by the foregoing precedents, the imposition of the penalty of revocation of notarial
commission and suspension from the practice of law for a period of one year is considered as just
and proper. Also, We deem it proper to impose the penalty of perpetual disqualification from being a
notary public. It is beyond question that respondent was doubly negligent in the performance of his
duties as a notary public. Not only did he notarize an incomplete notarial document, but he also
admittedly delegated to his secretary his duty of entering details in his Notarial Register. To recall,
such admission was apparent from respondent's act of shifting the blame to his secretary when
attention was called out as to the non-accomplishment of pertinent entries in his Notarial Register.
To Our mind, such acts constitute dishonesty to this Court, warranting perpetual disqualification from
being a notary public.
WHEREFORE, the instant complaint is GRANTED. Respondent Atty. Christopher S. Ruiz is
found GUILTY of violating the 2004 Rules on Notarial Practice. Accordingly, We hereby REVOKE
his notarial commission and PERPETUALLY DISQUALIFY him from being a notary public. Atty.
Ruiz is also SUSPENDED from the practice of law for a period of one (1) year, effective immediately.
He is STERNLY WARNED that repetition of the same will be dealt with more severely.
Let copies of this Decision be furnish all courts, the Office of the Bar Confidant, and the Integrated
Bar of the Philippines for their information and guidance.  The Office of the Bar Confidant is directed
1âwphi1

to append a copy of this Decision to respondent's record as member of the Bar.

SO ORDERED.
 A.C. No. 11238, September 21, 2016
ATTY. MYLENE S. YUMUL-ESPINA, Complainant, v. ATTY. BENEDICTO D. TABAQUERO, Respondent.
DECISION
JARDELEZA, J.:
Before us is a complaint for disbarment1 filed by Arty. Mylene S. Yumul-Espina (complainant) against Atty.
Benedicto D. Tabaquero (respondent) before the Integrated Bar of the Philippines (IBP). Complainant
charged respondent with violating Canon 12 of the Code of Professional Responsibility (CPR), specifically
Rules 1.01,3 1.024 and 1.03.5chanrobleslaw

Facts

Shirley Atkinson (Shirley) is married to Derek Atkinson (Derek), a British Citizen. She purchased two
properties (covered by Transfer Certificate of Title [TCT] No. 142730 and TCT No. 151683), both of which
she intended to mortgage. In order to facilitate the mortgage on TCT No. 142730, Derek allegedly executed
an Affidavit of Waiver of Rights which he subscribed before complainant (as a notary public) on October 25,
1999. Thus, Shirley was able to mortgage TCT No. 142730 without the signature of marital consent of Derek
Atkinson.6chanrobleslaw

Derek, however, claims that he could not have executed the Affidavit of Waiver of Rights because he was
out of the country on October 25, 1999, and therefore, could not have personally appeared before
complainant on that date.7 Thus, he filed falsification cases against complainant and Shirley, respectively.8chanrobleslaw

During the pendency of these criminal cases, complainant filed a complaint-affidavit before the IBP
Commission on Bar Discipline against respondent.9 She alleges that in representing Derek in the criminal
cases against her for "Falsification of Document by a Notary Public," and against Shirley for "Falsification of
Public Document," respondent violated the CPR.10 She claims that respondent prosecuted the criminal
complaints against her and Shirley in order to assert his client's non-existent rights and interest as owner of
the property, blatantly disregarding the constitutional prohibition on foreigners from acquiring private lands
in the Philippines.11 chanrobleslaw

In his Answer,12 respondent argues that he was engaged as counsel for Derek long after the acquisition of
the disputed properties. He never had any participation with respect to the purchase of the two
properties.13 Upon Derek's instruction, direction and decision, respondent filed the cases (against Shirley and
complainant) after Derek learned about the mortgages and the execution of the Affidavits of Waiver of
Rights he allegedly subscribed before complainant.14 chanrobleslaw

According to respondent, the issue being raised by complainant in the disbarment proceeding is the same
issue raised by Maria Luisa Tanghal, one of the defendants in the petition for annulment of the extra-judicial
foreclosure filed by Derek.15 In that case, Tanghal filed a Motion to Dismiss on the ground that Derek cannot
own lands in the Philippines. The Regional Trial Court of Parañaque City denied Tanghal's motion, and ruled
that Derek's claim is not actually a claim of ownership over the said property but a claim on his
funds.16 Respondent also denied committing any violation of the canons of the CPR. He countered that the
complainant is bitter and vengeful on account of Derek's filing of the criminal complaint against her.17 chanrobleslaw

Investigation ensued and the IBP issued a Notice of Mandatory Conference/Hearing18 on June 19, 2014.
Respondent submitted his Mandatory Conference Brief19 on July 10, 2014. In his brief, he alleged (as a
counter-complaint) that complainant violated her duties under the Notarial Law.20 Complainant submitted
her Mandatory Conference Brief21 on July 15, 2014 reiterating the salient points in her complaint.

In respondent's Rejoinder to Reply,22 he submitted that the constitutional prohibition is not germane,
material or relevant to the criminal complaints his client filed against complainant and Shirley. The basis of
these criminal complaints is the falsified signature in the affidavit allegedly executed by Derek.23 As in his
counter-complaint, respondent, citing Social Security Commission v. Corral,24 reiterated complainant's
breach of the notarial law:25 cralawredcralawred

x x x A notary public is duty bound to require the person executing a document to be personally present, to
swear before him that he is that person and ask the latter if he has voluntarily and freely executed the same
x x x.26
chanroblesvirtuallawlibrary

Meanwhile, pending resolution of the case by the Investigating Commissioner, complainant executed and
filed an Affidavit of Desistance27 which recited, thus: ChanRoblesVirtualawlibrary

3. Moreover, consistent with charity, goodwill and the Christmas spirit, I hereby desist and withdraw the
averments I alleged in my Complaint-Affidavit which I filed in connection with above-captioned case. I
further request this Honorable Commission to consider my Complaint-Affidavit as withdrawn from the
records of above-captioned case, with full knowledge of the legal and other consequences thereof;

4. This Affidavit of Desistance may be pleaded as a bar to any existing and/or future criminal, civil and/or
administrative cases filed or will be filed against Respondent for the same acts subject of the present
Complaint; and  cralawlawlibrary

5. I am hereby executing this Affidavit for the purpose of attesting to the truth of the foregoing averments,
for the purpose of dismissing above-captioned case and for other legal intents and purposes.
Respondent also filed and executed his Affidavit of Desistance/Withdrawal28 which stated, thus: ChanRoblesVirtualawlibrary

2. I hereby desist and/or withdraw my [unsworn] Counter-Complaint mentioned in my Mandatory

Conference Brief dated [July 9,] 2014 and my [unsworn] averments/allegations in my Rejoinder to Reply
dated [September 10,] 2014 regarding the alleged violation of duties and/or non-compliance of the Notarial
Law by Complainant and request this Honorable Office to consider the same as withdrawn from the records
of [the] above-captioned case, with full knowledge of the legal and other consequences thereof;

3. I expressly declare that the incident was the result of a misapprehension of facts and a simple
misunderstanding between Complainant and me;

4. This Affidavit of Desistance and/or Withdrawal may be pleaded as a bar to any existing and/or future
criminal, civil and/or administrative cases filed or will be filed against Complainant for the same acts subject
of above-captioned case[.]
Thus, Investigating Commissioner Eduardo R. Robles, in his Report and Recommendation,29recommended
that the complaint and counter-complaint be dismissed upon the "prodding of the parties." He reasoned that
the Commission cannot possibly resolve the controversies after the revelations made by the parties in their
Affidavit of Desistance and Affidavit of Desistance/Withdrawal.30 chanrobleslaw
On April 18, 2015, the IBP Board of Governors (IBP Board) issued Resolution No. XXI-2015-283,31adopting
and approving the recommendation to dismiss the complaint and counter-complaint against the parties.

Our Ruling

We do not agree with the ruling of the IBP Board. The cases should not have been dismissed on the basis of
the affidavits of desistance.

Disbarment proceedings are sui generis.32 Their main purpose is mainly to determine the fitness of a lawyer
to continue acting as an officer of the court and as participant in the dispensation of justice.33Hence, the
underlying motives of the complainant are unimportant and of little relevance.34 chanrobleslaw

We have consistently looked with disfavor upon affidavits of desistance filed in disbarment
proceedings.35Administrative proceedings are imbued with public interest.36 Hence, these proceedings should
not be made to depend on the whims and caprices of complainants who are, in a real sense, only
witnesses.37In Garrido v. Garrido,38 we held: ChanRoblesVirtualawlibrary

Laws dealing with double jeopardy or with procedure—such as the verification of pleadings and prejudicial
questions, or in this case, prescription of offenses or the filing of affidavits of desistance by the complainant
—do not apply in the determination of a lawyer's qualifications and fitness for membership in the Bar.39 chanroblesvirtuallawlibrary

We emphasize that a case for disbarment or suspension is not meant to grant relief to a complainant as in a
civil case, but is intended to cleanse the ranks of the legal profession of its undesirable members in order to
protect the public and the courts.40chanrobleslaw

Although there are times when we dismissed the case after the complainant withdrew his complaint,41the
dismissal was not due to our acquiescence to the complainant's wish but because of the absence of any
competent and credible evidence by reason of the desistance.42 chanrobleslaw

In Gaviola v. Salcedo,43 we clarified that the filing of an affidavit of desistance by the complainant for lack of
interest does not ipso facto result in the termination of an administrative case for suspension or disbarment
of an erring lawyer.44 However, we were constrained to dismiss the case against respondent Salcedo
because the charges cannot be proved without the evidence of the complainant and her witnesses.45 chanrobleslaw

In Firman v. Crisanto,46 the complainant alleged that respondent lawyer had carnal relations with her when
she was below 18 years of age although he was a married man.47 Since the only evidence available is the
complainant's testimony and the complaint was withdrawn before any investigation was made, the charge
can no longer hold water. In the absence of any evidence, it is of course inevitable that the case should be
dismissed.48chanrobleslaw

The foregoing decisions reflect the principle that in disbarment cases, the burden of proof rests upon the
complainant,49 and the legal presumption that a lawyer is innocent of the charges proferred against him until
the contrary is proved; and that he regularly performed his duty as an officer of the Court in accordance
with his oath.50 It follows therefore that if the complaint was withdrawn (in this case through desistance)
immediately after it was filed, it would be difficult to investigate, or prove the charge.

However, the facts of these cited cases differ from the case before this court. Unlike in the cited cases, the
affidavits of desistance in this case were submitted after the investigation was completed: Thus, the issues
in the complaint and in the counter-complaint (with their corresponding evidentiary Support) have been duly
ventilated in the pleadings submitted by the parties,51 and during the conferences and hearings52 held before
the Investigating Commissioner. In fact, the only matter lacking in the proceeding is the Investigating
Commissioner's report and recommendation. We also note one peculiarity in this case, in contrast to the
cited cases. In this case, there is already a finding of probable cause against complainant for falsification of
public document.53 Therefore, unlike the aforementioned cases, it cannot be said that the complaint and
counter-complaint should be dismissed for lack of evidence to investigate or prove the charge.

Further, Section 5, Rule 139-B of the Rules of Court provides: ChanRoblesVirtualawlibrary

Sec. 5. Service or dismissal. - x x x

No investigation shall be interrupted or terminated by reason of the desistance, settlement, compromise,

restitution, withdrawal of the charges or failure of the complainant to prosecute the same, unless the
Supreme Court motu propio or upon recommendation of the IBP Board of Governors, determines that there
is no compelling reason to continue with the disbarment or suspension proceedings against the respondent.
(Emphasis supplied.)
The report and recommendation did not find that there is no compelling reason to continue the proceedings
against petitioner and respondent. It merely stated that "[b]esides, this Commission cannot possibly resolve
the controversies after the revelations made by the parties in their Affidavit of Desistance and Affidavit of
Desistance/Withdrawal. Accordingly, it is hereby recommended that, upon the prodding of the parties
themselves, the complaint and the counter-complaint be dismissed."54 chanrobleslaw

The IBP Board should not have dismissed the cases on the basis of the affidavits of desistance filed by the
parties.

We now come to the merits of the complaint and the counter-complaint.

We find respondent not guilty of violations of Canon 1 of the Code of Professional Responsibility.
Complainant cannot argue that the intention behind the falsification cases filed by respondent (as counsel of
Derek) against her and Shirley, respectively, was to circumvent the constitutional prohibition on foreign
ownership of lands in the Philippines. In these cases, Derek did not seek that the ownership of the lands be
conveyed to him.55 The basis of these criminal complaints is complainant's act of malking it appear that
Derek was present, or participated in the execution of the affidavits. The constitutional prohibition is
therefore irrelevant in these criminal complaints.

However, the counter-complaint against complainant, for violation of the Notarial Law, is meritorious. The
evidence on record sufficiently showed that Derek could not have appeared before complainant on October
25, 1999, the day the Affidavit of Waiver was notarized. Derek's passport entries56 and the
certification57 from the Bureau of Immigration show that after Derek departed from the Philippines for United
Kingdom on September 27, 1999, his next arrival in the Philippines was on December 17, 1999.

Records show that complainant failed to address this issue in any of the pleadings she filed in the
proceedings before the IBP. The failure is despite the opportunities where complainant could have refuted
the allegation.58 We note that the only instance where it appeared that complainant may have addressed
this issue was when respondent referred59 to complainant's claim in his Comment/Opposition to the Petition
for Review before the Department of Justice (DOJ).60 We further note that the Comment/Opposition was an
attachment to complainant's complaint-affidavit to prove merely that respondent continued to represent
Derek in the proceedings before the DOJ.61 The relevant portion provides: ChanRoblesVirtualawlibrary

x x x [A]bout the claim of [complainant] that all what she could remember is that there was a man who
appeared a foreigner (sic) and claimed to be [Derek]. Noticeably and conformably to the Notarial Law, there
is need for personal appearance, positive proofs of identity for the notarization of the document.

What was presented as identification and the claim that a foreigner appeared before her is largely on the
basis of a Community Tax Certificate. The Community Tax Certificate that appeared on the Affidavit of
Waiver of Rights, and surprisingly obtained by a foreigner who is not qualified to have a Community Tax
Certificate, not being a Filipino citizen but a visitor, is entered as having been paid for and issued on
September 28, 1999.

This is preposterous in that as the Community Tax Certificate was procured, issued and released on
September 28, 1999, [Derek] was not also in the Philippines. x x x62 chanroblesvirtuallawlibrary

Thus, complainant's act of notarizing the document without the presence of the affiant is prohibited by the
2004 Rules on Notarial Practice63 which provides:ChanRoblesVirtualawlibrary

Rule IV. Powers and Limitations of Notaries Public

x x x 

Sec. 2. Prohibitions. x x x 

(b) A person shall not perform a notarial act if the person involved as
signatory to the instrument or document -
(1) is not in the notary's presence personally at the time of the
notarization; and
 (2) is not personally known to the notary public or otherwise
identified by the notary public or otherwise identified by the
notary public throug competent evidence of identity as defined by
these Rules.
This is the most common violation committed by lawyers. To deter further violations, and in line with
existing jurisprudence, we impose the penalties of suspension from the practice of law for six (6) months,
revocation of incumbent commission as a notary public, and disqualification from being commissioned as a
notary public for a period of two (2) years.

Further, we note that the result of this case cannot affect the pending criminal cases involving the parties.
Administrative cases against lawyers belong to a class of their own. They are distinct from and they may
proceed independently of civil and criminal cases.64 chanrobleslaw

Finally, we remind complainants, especially members of the bar, to be more circumspect in filing disbarment
complaints. A complaint filed solely as a retaliatory measure65 or by reason of mistake, lack of
communication66 or a misapprehension of facts as in this case, achieves nothing except to waste the time of
the IBP and this Court.

WHEREFORE, we SET ASIDE Resolution No. XXI-2015-283 of the IBP Board of Governors insofar as it
dismissed the cases against complainant and respondent because of the affidavits of desistance. Based on
the merits of the cases filed against the parties, we hold that:
chanRoblesvirtualLawlibrary

(1) The complaint agamst respondent Atty. Benedicto D.

Tabaquero is DISMISSED for lack of merit.
(2) Complainant Atty. Mylene S. Yumul-Espina is GUILTY of violating
the 2004 Rules on Notarial Practice. Accordingly, the Court
hereby SUSPENDS her from the practice of law for six (6)
months; REVOKES her incumbent commission as a notary public;
and PROHIBITS her from being commissioned as a notary public for
two (2) years, effective immediately. She is WARNED that a
repetition of the same offense or similar acts in the future shall be
dealt with more severely.67

SO ORDERED.
 G.R. No. 207526, October 03, 2018
THE INSULAR ASSURANCE CO., LTD., Petitioner, v. THE HEIRS OF JOSE H. ALVAREZ, Respondents.

G.R. No. 210156, October 3, 2018

UNION BANK OF THE PHILIPPINES, Petitioner, v. HEIRS OF JOSE H. ALVAREZ, Respondents.

DECISION
LEONEN, J.:
The Insurance Code dispenses with proof of fraudulent intent in cases of rescission due to concealment, but
not so in cases of rescission due to false representations. When an abundance of available documentary
evidence can be referenced to demonstrate a design to defraud, presenting a singular document with an
erroneous entry does not qualify as clear and convincing proof of fraudulent intent. Neither does belatedly
invoking just one other document, which was not even authored by the alleged miscreant.
This resolves the consolidated Petitions for Review on Certiorari, under Rule 45 of the 1997 Rules of Civil
Procedure. The first, docketed as G.R. No. 207526,1 was brought by The Insular Life Assurance Co., Ltd.
(Insular Life). The second, docketed as G.R. No. 210156,2 was brought by Union Bank of the Philippines
(UnionBank). These consolidated petitions seek the reversal of the assailed Court of Appeals May 21, 2013
Decision3 and November 6, 2013 Resolution4 in CA-G.R. CV No. 91820.
The assailed Court of Appeals May 21, 2013 Decision denied Insular Life's and UnionBank's separate appeals
and affirmed the January 29, 2007 Decision5 of Branch 148, Regional Trial Court, Makati City. The Regional
Trial Court ruled in favor of Jose H. Alvarez's (Alvarez) heirs6 (the Heirs of Alvarez) in their action for specific
performance against Insular Life and UnionBank. It ordered compliance with the insurance undertaking on
the Group Mortgage Redemption Insurance covering a loan obtained by Alvarez from UnionBank by applying
its proceeds as payment for that loan. It also nullified the extrajudicial foreclosure ensuing from the non-
payment of Alvarez's loan, and required UnionBank to reconvey title and ownership over the foreclosed
property to Alvarez's estate. Lastly, it ordered Insular Life's and UnionBank's payment of attorney's fees and
costs of suit.7
The assailed Court of Appeals November 6, 2013 Resolution denied UnionBank's Motion for Reconsideration.8
Alvarez and his wife, Adelina, owned a residential lot with improvements covered by Transfer Certificate of
Title (TCT) No. C-315023 and registered in the Caloocan City Registry of Deeds.9
On June 18, 1997, Alvarez applied for and was granted a housing loan by UnionBank in the amount of
P648,000.00. This loan was secured by a promissory note,10 a real estate mortgage over the lot,11 and a
mortgage redemption insurance taken on the life of Alvarez with UnionBank as beneficiary. Alvarez was
among the mortgagors included in the list of qualified debtors covered by the Group Mortgage Redemption
Insurance that UnionBank had with Insular Life.12
Alvarez passed away on April 17, 1998.13 In May 1998, UnionBank filed with Insular Life a death claim under
Alvarez's name pursuant to the Group Mortgage Redemption Insurance. In line with Insular Life's standard
procedures, UnionBank was required to submit documents to support the claim. These included: (1)
Alvarez's birth, marriage, and death certificates; (2) the attending physician's statement; (3) the claimant's
statement; and (4) Alvarez's statement of account.14
Insular Life denied the claim after determining that Alvarez was not eligible for coverage as he was
supposedly more than 60 years old at the time of his loan's approval.15
With the claim's denial, the monthly amortizations of the loan stood unpaid. UnionBank sent the Heirs of
Alvarez a demand letter,16 giving them 10 days to vacate the lot. Subsequently, on October 4, 1999, the lot
was foreclosed and sold at a public auction with UnionBank as the highest bidder.17
On February 14, 2001, the Heirs of Alvarez filed a Complaint18 for Declaration of Nullity of Contract and
Damages against UnionBank, a certain Alfonso P. Miranda (Miranda), who supposedly benefitted from the
loan, and the insurer which was identified only as John Doe.19 The Heirs of Alvarez denied knowledge of any
loan obtained by Alvarez.20
The Heirs of Alvarez claimed that after Alvarez's death, they came upon a document captioned "Letter of
Undertaking," which appeared to have been sent by UnionBank to Miranda. In this document, UnionBank
bound itself to deliver to Miranda P466,000.00 of the approved P648,000.00 housing loan, provided that
Miranda would deliver to it TCT No. C-315023, "free from any liens and/or encumbrances."21
The Complaint was later amended and converted into one for specific performance22 to include a demand
against Insular Life to fulfill its obligation as an insurer under the Group Mortgage Redemption Insurance.23
In its defense, UnionBank asserted that the Heirs of Alvarez could not feign ignorance over the existence of
the loan and mortgage considering the Special Power of Attorney24 executed by Adelina in favor of her late
husband, which authorized him to apply for a housing loan with UnionBank.25
For its part, Insular Life maintained that based on the documents submitted by UnionBank, Alvarez was no
longer eligible under the Group Mortgage Redemption Insurance since he was more than 60 years old when
his loan was approved.26
In its January 29, 2007 Decision,27 the Regional Trial Court ruled in favor of the Heirs of Alvarez. It found no
indication that Alvarez had any fraudulent intent when he gave UnionBank information about his age and
date of birth. It explained that UnionBank initiated and negotiated the Group Mortgage Redemption
Insurance with Insular Life, and that "ordinary customers will not know about [insurance policies such as
this] unless it is brought to their knowledge by the bank."28 It noted that if UnionBank's personnel were
mindful of their duties and if Alvarez appeared to be disqualified for the insurance, they should have
immediately informed him of his disqualification. It emphasized that in evaluating Alvarez's worthiness for
the loan, UnionBank had been in possession of materials sufficient to inform itself of Alvarez's personal
circumstances. It added that if Insular Life had any doubt on the information that UnionBank had provided,
it should have inquired further instead of relying solely on the information readily available to it and
immediately refusing to pay.29
The dispositive portion of the Regional Trial Court's January 29, 2007 Decision read:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and against
defendants order (sic):
1. Defendants to comply with the insurance undertaking under Mortgage Redemption Insurance Policy No.
G-098496 by paying its proceeds to be applied as payment of the outstanding loan obligation of deceased
Jose H. Alvarez with defendant Union Bank;
2. The extrajudicial foreclosure of the real estate mortgage over Jose H. Alvarez's TCT No. C-315023 a
nullity and without legal force and effect and to release the mortgage encumbrance thereon;
3. Defendant Union Bank to reconvey the title and ownership over TCT No. C-315023 to the Estate of the
deceased Jose H. Alvarez for the benefit of his heirs and successors-in-interest;
4. Defendants jointly and severally to pay the plaintiffs the sum of P50,000.00 as and for attorney's fees;
5. Defendants jointly and severally to pay the costs of the suit.
SO ORDERED.30
UnionBank31 and Insular Life32 filed separate appeals before the Court of Appeals.
In its assailed May 21, 2013 Decision,33 the Court of Appeals affirmed the Regional Trial Court's ruling. It
noted that the errors assigned by Insular Life and UnionBank to the Regional Trial Court boiled down to the
issue of whether or not Alvarez was guilty of fraudulent misrepresentation as to warrant the rescission of the
Group Mortgage Redemption Insurance obtained by UnionBank on Alvarez's life. It explained that fraud is
never presumed and fraudulent misrepresentation as a defense of the insurer to avoid liability must be
established by convincing evidence. Insular Life, in this case, failed to establish this defense. It only relied
on Alvarez's Health Statement Form where he wrote "1942" as his birth year. However, this form alone was
insufficient to prove that he fraudulently intended to misrepresent his age. It noted that aside from the
Health Statement Form, Alvarez had to fill out an application for insurance. This application would have
supported the conclusion that he consistently wrote "1942" in all the documents that he had submitted to
UnionBank. However, the records made no reference to this document.34
The Court of Appeals added that assuming that fraudulent misrepresentation entitled Insular Life to rescind
the contract, it should have first complied with certain conditions before it could exercise its right to rescind.
The conditions were:
(1) prior notice of cancellation to [the] insured; (2) notice must be based on the occurrence after effective
date of the policy of one or more grounds mentioned; (3) must be in writing, mailed or delivered to the
insured at the address shown in the policy; and (4) must state the grounds relied upon provided in Section
64 of the Insurance Code and upon [the] request of [the] insured, to furnish facts on which cancellation is
based.35
None of these conditions were fulfilled. Finally, the letter of denial dated April 8, 1999 was furnished only to
UnionBank.36
Insular Life opted to directly appeal before this Court. Its appeal was docketed as G.R. No.
207526.37UnionBank, on the other hand, filed its Motion for Reconsideration (of the Decision dated May 21,
2013),38 which the Court of Appeals denied in its November 6, 2013 Resolution.39 UnionBank then filed
before this Court its Petition, docketed as G.R. No. 210156.40
In its March 12, 2014 Resolution, this Court consolidated Insular Life's and UnionBank's Petitions.41
In response to the Court of Appeals' reasoning that intent to defraud must be established, Insular Life
pinpoints concealment, rather than fraudulent misrepresentation, as the key to the validity of its rescission.
It asserts that Alvarez's concealment of his age, whether intentional or unintentional, entitles it to rescind
the insurance contract.42 It claims that proof of fraudulent intent is not necessary for the insurer to rescind
the contract on account of concealment.43 It adds that it did not rely solely on Alvarez's Health Statement
Form but also on his representations during the background check conducted by UnionBank where he said
that he was only 55 years old at the time of application. As an insurance contract is a contract uberrima
fides, it claims that it has every right to rely on Alvarez's good faith in its dealing with him.44
UnionBank claims that the real estate mortgage is not affected by the status of the Group Mortgage
Redemption Insurance as they are two (2) different contracts. Thus, any concealment made by Alvarez
should not result in the invalidation of the foreclosure.45
For this Court's resolution are the following issues:
First, whether or not petitioner The Insular Life Assurance Co., Ltd. is obliged to pay Union Bank of the
Philippines the balance of Jose H. Alvarez's loan given the claim that he lied about his age at the time of the
approval of his loan; and
Second, whether or not petitioner Union Bank of the Philippines was correct in proceeding with the
foreclosure following Insular Life Assurance Co., Ltd.'s refusal to pay.
I.A
Fraud is not to be presumed, for "otherwise, courts would be indulging in speculations and
surmises."46Moreover, it is not to be established lightly. Rather, "[i]t must be established by clear and
convincing evidence . . . [; a] mere preponderance of evidence is not even adequate to prove
fraud."47 These precepts hold true when allegations of fraud are raised as grounds justifying the invalidation
of contracts, as the fraud committed by a party tends to vitiate the other party's consent.48
Citing Section 27 of the Insurance Code, however, Insular Life asserts that in cases of rescission due to
concealment, i.e., when a party "neglect[s] to communicate that which [he or she] knows and ought to
communicate,"49 proof of fraudulent intent is not necessary.50
Section 27 reads:
Section 27. A concealment whether intentional or unintentional entitles the injured party to rescind a
contract of insurance. (Emphasis supplied)
The statutory text is unequivocal. Insular Life correctly notes that proof of fraudulent intent is unnecessary
for the rescission of an insurance contract on account of concealment.
This is neither because intent to defraud is intrinsically irrelevant in concealment, nor because concealment
has nothing to do with fraud. To the contrary, it is because in insurance contracts, concealing material
facts51 is inherently fraudulent: "if a material fact is actually known to the [insured], its concealment must of
itself necessarily be a fraud."52 When one knows a material fact and conceals it, "it is difficult to see how the
inference of a fraudulent intent or intentional concealment can be avoided."53 Thus, a concealment,
regardless of actual intent to defraud, "is equivalent to a false representation."54
This Court has long settled this equivalence. Argente v. West Coast Life Insurance,55 quoting heavily from
Joyce's The Law of Insurance, explained how concealment of material facts in insurance contracts is
tantamount to causal fraud,56 deceptively inducing an insurer into "accepting the risk, or accepting it at the
rate of premium agreed upon."57Argente explained:
One ground for the rescission of a contract of insurance under the Insurance Act is "a concealment," which
in section 25 is defined as "A neglect to communicate that which a party knows and ought to communicate."
Appellant argues that the alleged concealment was immaterial and insufficient to avoid the policy. We
cannot agree. . . . If the policy was procured by fraudulent representations, the contract of insurance
apparently set forth therein was never legally existent. It can fairly be assumed that had the true facts been
disclosed by the assured, the insurance would never have been granted.
In Joyce, The Law of Insurance, second edition, volume 3, Chapter LV, is found the following:
Concealment exists where the assured has knowledge of a fact material to the risk, and honesty, good faith,
and fair dealing requires that he should communicate it to the assured, but he designedly and intentionally
withholds the same.
Another rule is that if the assured undertakes to state all the circumstances affecting the risk, a full and fair
statement of all is required.
It is also held that the concealment must, in the absence of inquiries, be not only material, but fraudulent,
or the fact must have been intentionally withheld; so it is held under English law that if no inquiries are
made and no fraud or design to conceal enters into the concealment the contract is not avoided. And it is
determined that even though silence may constitute misrepresentation or concealment it is not of itself
necessarily so as it is a question of fact. Nor is there a concealment justifying a forfeiture where the fact of
insanity is not disclosed no questions being asked concerning the same. . . .
But it would seem that if a material fact is actually known to the assured, its concealment must of itself
necessarily be a fraud, and if the fact is one which the assured ought to know, or is presumed to know, the
presumption of knowledge ought to place the assured in the same position as in the former case with
relation to material facts; and if the jury in such cases find the fact material, and one tending to increase the
risk, it is difficult to see how the inference of a fraudulent intent or intentional concealment can be avoided.
And it is declared that if a material fact is concealed by assured it is equivalent to a false representation that
it does not exist and that the essentials are the truth of the representations whether they were intended to
mislead and did insurer accept them as true and act upon them to his prejudice. So it is decided that under
a stipulation voiding the policy for concealment or misrepresentation of any material fact or if his interest is
not truly stated or is other than the sole and unconditional ownership the facts are unimportant that insured
did not intend to deceive or withhold information as to encumbrances even though no questions were asked.
And if insured while being examined for life insurance and knowing that she had heart disease, falsely stated
that she was in good health, and though she could not read the application, it was explained to her and the
questions asked through an interpreter, and the application like the policy contained a provision that no
liability should be incurred unless the policy was delivered while the insured was in good health, the court
properly directed a verdict for the insurer, though a witness who was present at the examination testified
that the insured was not asked whether she had heart disease.
....
The basis of the rule vitiating the contract in cases of concealment is that it misleads or deceives the insurer
into accepting the risk, or accepting it at the rate of premium agreed upon; The insurer, relying upon the
belief that the assured will disclose every material fact within his actual or presumed knowledge, is misled
into a belief that the circumstance withheld does not exist, and he is thereby induced to estimate the risk
upon a false basis that it does not exist. The principal question, therefore, must be, Was the assurer misled
or deceived into entering a contract obligation or in fixing the premium of insurance by a withholding of
material information or facts within the assured's knowledge or presumed knowledge?
It therefore follows that the assurer in assuming a risk is entitled to know every material fact of which the
assured has exclusive or peculiar knowledge, as well as all material facts which directly tend to increase the
hazard or risk which are known by the assured, or which ought to be or are presumed to be known by him.
And a concealment of such facts vitiates the policy. "It does not seem to be necessary . . . that the . . .
suppression of the truth should have been willful." If it were but an inadvertent omission, yet if it were
material to the risk and such as the plaintiff should have known to be so, it would render the policy void. But
it is held that if untrue or false answers are given in response to inquiries and they relate to material facts
the policy is avoided without regard to the knowledge or fraud of assured, although under the statute
statements are representations which must be fraudulent to avoid the policy. So under certain codes the
important inquiries are whether the concealment was willful and related to a matter material to the
risk.58 (Emphasis supplied)
Echoing Argente, Saturnino v. Philippine American Life Insurance Co.59 stated:
In this jurisdiction, a concealment, whether intentional or unintentional, entitles the insurer to rescind the
contract of insurance, concealment being defined as "negligence to communicate that which a party knows
and ought to communicate" (Sections 25 & 26, Act No. 2427). In the case of Argente vs. West Coast Life
Insurance Co., 51 Phil. 725, 732, this Court said, quoting from Joyce, The Law of Insurance, 2nd ed. Vol. 3:
The basis of the rule vitiating the contract in cases of concealment is that it misleads or deceives the insurer
into accepting the risk, or accepting it at the rate of premium agreed upon. The insurer, relying upon the
belief that the assured will disclose every material fact within his actual or presumed knowledge, is misled
into a belief that the circumstance withheld does not exist, and he is thereby induced to estimate the risk
upon a false basis that it does not exist.60
In Vda. de Canilang v. Court of Appeals,61 this Court considered an alternative version of Section 27, i.e.,
prior to the Insurance Code's amendment by Batas Pambansa Blg. 874, which omitted the qualifier "whether
intentional or unintentional." Vda. de Canilang clarified that even without this qualifier, Section 27 still
covers '"any concealment' without regard to whether such concealment is intentional or
unintentional,"62 thus:
The Insurance Commissioner had also ruled that the failure of Great Pacific to convey certain information to
the insurer was not "intentional" in nature, for the reason that Jaime Canilang believed that he was suffering
from minor ailment like a common cold. Section 27 of the Insurance Code of 1978 as it existed from 1974
up to 1985, that is, throughout the time range material for present purposes, provided that:
Sec. 27. A concealment entitles the injured party to rescind a contract of insurance.
The preceding statute, Act No. 2427, as it stood from 1914 up to 1974, had provided:
Sec. 26. A concealment, whether intentional or unintentional, entitles the injured party to rescind a contract
of insurance.
Upon the other hand, in 1985, the Insurance Code of 1978 was amended by B.P. Blg. 874. This subsequent
statute modified Section 27 of the Insurance Code of 1978 so as to read as follows:
Sec. 27. A concealment whether intentional or unintentional entitles the injured party to rescind a contract
of insurance.
The unspoken theory of the Insurance Commissioner appears to have been that by deleting the phrase
"intentional or unintentional," the Insurance Code of 1978 (prior to its amendment by B.P. Blg. 874)
intended to limit the kinds of concealment which generate a right to rescind on the part of the injured party
to "intentional concealments." This argument is not persuasive. As a simple matter of grammar, it may be
noted that "intentional" and "unintentional" cancel each other out. The net result therefore of the phrase
"whether intentional or unintentional" is precisely to leave unqualified the term "concealment."
Thus, Section 27 of the Insurance Code of 1978 is properly read as referring to "any concealment" without
regard to whether such concealment is intentional or unintentional. The phrase "whether intentional or
unintentional" was in fact superfluous. The deletion of the phrase "whether intentional or unintentional"
could not have had the effect of imposing an affirmative requirement that a concealment must be
intentional if it is to entitle the injured party to rescind a contract of insurance. The restoration in 1985 by
B.P. Blg. 874 of the phrase "whether intentional or unintentional" merely underscored the fact that all
throughout (from 1914 to 1985), the statute did not require proof that concealment must be "intentional" in
order to authorize rescission by the injured party.63(Emphasis supplied)
Following Vda. de Canilang, this Court was categorical in Sunlife Assurance Co. of Canada v. Court of
Appeals:64 '"good faith' is no defense in concealment."65
I.B
It does not escape this Court's attention that there have been decisions that maintained that in cases of
concealment, "fraudulent intent on the part of the insured must be established to entitle the insurer to
rescind the contract."66 However, these decisions proceed from an inordinately segregated reading
of Argente and have not been heedful of plain statutory text. While focusing on the equivalence between
concealment and false representation, they fail to account for the manifest textual peculiarity whereby the
negation of distinctions between intentional and unintentional acts is found only in Section 27, the provision
concerning rescission due to concealment, but not in the counterpart provision concerning false
representations.67
Ng Gan Zee v. Asian Crusader Life,68 decided in 1983, stated:
Section 27 of the Insurance Law [Act 2427] provides:
Sec. 27. Such party to a contract of insurance must communicate to the other, in good faith, all facts within
his knowledge which are material to the contract, and which the other has not the means of ascertaining,
and as to which he makes no warranty.
Thus, "concealment exists where the assured had knowledge of a fact material to the risk, and honesty,
good faith, and fair dealing requires that he should communicate it to the assurer, but he designedly and
intentionally withholds the same."
It has also been held "that the concealment must, in the absence of inquiries, be not only material, but
fraudulent, or the fact must have been intentionally withheld."
Assuming that the aforesaid answer given by the insured is false, as claimed by the appellant. Sec. 27 of the
Insurance Law, above-quoted, nevertheless requires that fraudulent intent on the part of the insured be
established to entitle the insurer to rescind the contract. And as correctly observed by the lower court,
"misrepresentation as a defense of the insurer to avoid liability is an 'affirmative' defense. The duty to
establish such a defense by satisfactory and convincing evidence rests upon the defendant. The evidence
before the Court does not clearly and satisfactorily establish that defense."69(Emphasis supplied)
Ng Gan Zee makes a fundamental error in interpretation.
Ng Gan Zee's fourth footnote purports that the phrase quoted in the italicized paragraph was
from Argente.70 While the phrase indeed appears in Argente, it is not Argente itself which stated the quoted
phrase; rather, it was Joyce's The Law of Insurance.
In any case, Ng Gan Zee limited itself to a brief quote from Joyce. It discarded much of the discussion
that Argente lifted from Joyce. Most notably, it discarded the portion where Joyce explained that
concealment is necessarily fraudulent when the matter that was concealed is "a material fact . . . actually
known to the [insured]."71 Thus, Ng Gan Zee omitted the discussion explaining and accounting for why proof
of actual fraudulent intent may be dispensed with in cases of concealment, i.e., that concealment of material
facts is fraudulent in and of itself. Contrast this with Saturnino which, though also quoting only briefly
from Argente and Joyce, did not cursorily focus on the equivalence between concealment and false
representations, but rather on the underlying reason for this equivalence. Ng Gan Zee focused on the result,
i.e., equivalence, without accounting for the cause.
In like manner as Ng Gan Zee, Great Pacific Life v. Court of Appeals72 stated:
The second assigned error refers to an alleged concealment that the petitioner interposed as its defense to
annul the insurance contract. Petitioner contends that Dr. Leuterio failed to disclose that he had
hypertension, which might have caused his death. Concealment exists where the assured had knowledge of
a fact material to the risk, and honesty, good faith, and fair dealing requires that he should communicate it
to the assured, but he designedly and intentionally withholds the same.
....
The fraudulent intent on the part of the insured must be established to entitle the insurer to rescind the
contract. Misrepresentation as a defense of the insurer to avoid liability is an affirmative defense and the
duty to establish such defense by satisfactory and convincing evidence rests upon the insurer. In the case at
bar, the petitioner failed to clearly and satisfactorily establish its defense, and is therefore liable to pay the
proceeds of the insurance.73 (Emphasis supplied)
So too, Philamcare Health Systems, Inc. v. Court of Appeals74 stated:
The fraudulent intent on the part of the insured must be established to warrant rescission of the insurance
contract. Concealment as a defense for the health care provider or insurer to avoid liability is an affirmative
defense and the duty to establish such defense by satisfactory and convincing evidence rests upon the
provider or insurer.75 (Emphasis supplied)
Great Pacific Life and Philamcare perpetuate Ng Gan Zee's unfortunate error.
Of the two (2) paragraphs this Court quoted from Great Pacific Life, the first cites Argente.76 Much like Ng
Gan Zee, it quotes an isolated portion of Joyce but fails to account for that part of Joyce's discussion that
explains how fraud inheres in concealment. The last sentence in this first quoted paragraph merely
reproduces the first paragraph that Argente lifted from Joyce. The second quoted paragraph cites Ng Gan
Zee77 and confounds concealment with misrepresentation.
The first sentence of the quoted paragraph from Philamcare cites Great Pacific Life and Ng Gan Zee.78 At this
juncture, a contagion of Ng Gan Zee's error can be observed.
More than misreading Argente and Joyce, Ng Gan Zee, Great Pacific Life, and Philamcare contradict Section
27's plain text. The statute's clear and unmistakable text must prevail. For purposes of rescission, Section
27 of the Insurance Code unequivocally negates any distinction between intentional and unintentional
concealments. Pronouncements in jurisprudence cannot undermine this explicit legislative intent.
I.C
While Insular Life correctly reads Section 27 as making no distinction between intentional and unintentional
concealment, it erroneously pleads Section 27 as the proper statutory anchor of this case.
The Insurance Code distinguishes representations from concealments. Chapter 1, Title 4 is on concealments.
It spans Sections 26 to 35 of the Insurance Code;79 it is where Section 27 is found. Chapter 1, Title 5 is on
representations. It spans Sections 36 to 48 of the Insurance Code.80
Section 26 defines concealment as "[a] neglect to communicate that which a party knows and ought to
communicate." However, Alvarez did not withhold information on or neglect to state his age. He made an
actual declaration and assertion about it.
What this case involves, instead, is an allegedly false representation. Section 44 of the Insurance Code
states, "A representation is to be deemed false when the facts fail to correspond with its assertions or
stipulations." If indeed Alvarez misdeclared his age such that his assertion fails to correspond with his
factual age, he made a false representation, not a concealment.
At no point does Chapter 1, Title 5 of the Insurance Code replicate Section 27's language negating the
distinction between intentional and unintentional concealment. Section 45 is Chapter 1, Title 5's counterpart
provision to Section 27, and concerns rescission due to false representations. It reads:
Section 45. If a representation is false in a material point, whether affirmative or promissory, the injured
party is entitled to rescind the contract from the time when the representation becomes false.
Not being similarly qualified as rescission under Section 27, rescission under Section 45 remains subject to
the basic precept of fraud having to be proven by clear and convincing evidence. In this respect, Ng Gan
Zee's and similar cases' pronouncements on the need for proof of fraudulent intent in cases of
misrepresentation are logically sound, albeit the specific reference to Argente as ultimate authority is
misplaced. Thus, while Great Pacific Life confounded concealment with misrepresentation by its citation
of Ng Gan Zee, it nevertheless acceptably stated that:
The fraudulent intent on the part of the insured must be established to entitle the insurer to rescind the
contract. Misrepresentation as a defense of the insurer to avoid liability is an affirmative defense and the
duty to establish such defense by satisfactory and convincing evidence rests upon the insurer.81
Conformably, subsequent fraud cases citing Great Pacific Life which do not exclusively concern concealment
rightly maintain that "[f]raudulent intent on the part of the insured must be established to entitle the insurer
to rescind the contract."82 To illustrate, Manila Bankers Life Insurance Corp. v. Aban83was correct in
explaining:
With the above crucial finding of fact — that it was Sotero who obtained the insurance for herself —
petitioner's case is severely weakened, if not totally disproved. Allegations of fraud, which are predicated on
respondent's alleged posing as Sotero and forgery of her signature in the insurance application, are at once
belied by the trial and appellate courts' finding that Sotero herself took out the insurance for herself.
"Fraudulent intent on the part of the insured must be established to entitle the insurer to rescind the
contract." In the absence of proof of such fraudulent intent, no right to rescind arises.84
Concealment applies only with respect to material facts. That is, those facts which by their nature would
clearly, unequivocally, and logically be known by the insured as necessary for the insurer to calculate the
proper risks.
The absence of the requirement of intention definitely increases the onus on the insured. Between the
insured and the insurer, it is true that the latter may have more resources to evaluate risks. Insurance
companies are imbued with public trust in the sense that they have the obligation to ensure that they will be
able to provide succor to those that enter into contracts with them by being both frugal and, at the same
time, diligent in their assessment of the risk which they take with every insurance contract. However, even
with their tremendous resources, a material fact concealed by the insured cannot simply be considered by
the insurance company. The insurance company may have huge resources, but the law does not require it to
be omniscient.
On the other hand, when the insured makes a representation, it is incumbent on them to assure themselves
that a representation on a material fact is not false; and if it is false, that it is not a fraudulent
misrepresentation of a material fact. This returns the burden to insurance companies, which, in general,
have more resources than the insured to check the veracity of the insured's beliefs as to a statement of fact.
Consciousness in defraudation is imperative and it is for the insurer to show this.
There may be a mistaken impression, on the part of the insured, on the extent to which precision on one's
age may alter the calculation of risks with definitiveness. Deliberation attendant to an apparently inaccurate
declaration is vital to ascertaining fraud.
I.D
Spouses Manalo v. Roldan-Confesor85 explained what qualifies as clear and convincing proof:
Clear and convincing proof is ". . . more than mere preponderance, but not to extent of such certainty as is
required beyond reasonable doubt as in criminal cases . . ."while substantial evidence ". . . consists of more
than a mere scintilla of evidence but may be somewhat less than a preponderance . . ." Consequently, in the
hierarchy of evidentiary values, We find proof beyond reasonable doubt at the highest level, followed by
clear and convincing evidence, preponderance of evidence, and substantial evidence, in that order.86
The assailed Court of Appeals May 21, 2013 Decision discussed the evidentiary deficiency in Insular Life's
cause, i.e., how it relied on nothing but a single piece of evidence to prove fraudulent intent:
At bar, Insular Life basically relied on the Health Statement form personally accomplished by Jose Alvarez
wherein he wrote that his birth year was 1942. However, such form alone is not sufficient absent any other
indications that he purposely wrote 1942 as his birth year. It should be pointed out that, apart from a health
statement form, an application for insurance is required first and foremost to be answered and filled-up.
However, the records are deficient of this application which would eventually depict to Us Jose Alvarez's
fraudulent intent to misrepresent his age. For, if he continually written (sic) 1942 in all the documents he
submitted with UBP and Insular Life then there is really a clear precursor of his fraudulent intent. Otherwise,
a mere Health Statement form bearing a wrong birth year should not be relied at.
As aptly pointed out by the court a quo:
....
If the defendant Insular Life had any doubt about the information, particularly the data which are material to
the risk, such as the age of the insured, which defendant Union Bank provided, it is not justified for the
insurer to rely solely therefrom, but it is obligated under the circumstances to make further inquiry. . . .87
The Court of Appeals' observations are well-taken. Consistent with the requirement of clear and convincing
evidence, it was Insular Life's burden to establish the merits of its own case. Relative strength as against
respondents' evidence does not suffice.
A single piece of evidence hardly qualifies as clear and convincing. Its contents could just as easily have
been an isolated mistake.
Alvarez must have accomplished and submitted many other documents when he applied for the housing
loan and executed supporting instruments like the promissory note, real estate mortgage, and Group
Mortgage Redemption Insurance. A design to defraud would have demanded his consistency. He needed to
maintain appearances across all documents. Otherwise, he would doom his own ruse.
He needed to have been consistent, not only before Insular Life, but even before UnionBank. Even as it was
only Insular Life's approval that was at stake with the Group Mortgage Redemption Insurance, Alvarez must
have realized that as it was an accessory agreement to his housing loan with UnionBank. Insular Life was
well in a position to verify information, whether through simple cross referencing or through concerted
queries with UnionBank.
Despite these circumstances, the best that Insular Life could come up with before the Regional Trial Court
and the Court of Appeals was a single document. The Court of Appeals was straightforward, i.e., the most
basic document that Alvarez accomplished in relation to Insular Life must have been an insurance
application form. Strangely, Insular Life failed to adduce even this document—a piece of evidence that was
not only commonsensical, but also one which has always been in its possession and disposal.
Even now, before this Court, Insular Life has been unable to address the importuning for it to account for
Alvarez's insurance application form. Given the basic presumption under our rules on evidence "[t]hat
evidence willfully suppressed would be adverse if produced,"88 this raises doubts, perhaps not entirely on
Insular Life's good faith, but, at the very least, on the certainty and confidence it has in its own evidence.
Rather than demonstrate Alvarez's consistent fraudulent design, Insular Life comes before this Court
pleading nothing but just one other instance when Alvarez supposedly declared himself to have been 55
years old. It claims that it did not rely solely on Alvarez's Health Statement Form but also on his Background
Checking Report.89
Reliance on this report is problematic. It was not prepared by Alvarez himself. Rather, it was accomplished
by a UnionBank employee following the conduct of credit investigation. Insular Life notes a statement by
UnionBank's Josefina Barte that all information in the Background Checking Report was supplied by
Alvarez.90 But this is a self-serving statement, wholly reliant on the assumption of that employee's flawless
performance of her duty to record findings. Precisely, it is a claim that needed to be vetted. It had to be
tested under the crucible of a court trial, that is, through the rigors of presentation and authentication of
evidence, cross-examination, and personal perusal by a judge. Yet, Insular Life would now have this Court
sustain its appreciation, solely on the strength of its own representations.
An erroneous statement's dual occurrence in the Health Statement Form and the Background Checking
Report concededly reduces the likelihood of honest mistakes or overlooked inaccuracies. However, in the
context of so many other documents being available to ascertain the error, a mere dual occurrence does not
definitively establish a fraudulent scheme. This is especially so when the errors could not be directly and
exclusively attributed to a single author.
Pleading just one (1) additional document still fails to establish the consistent fraudulent design that was
Insular Life's burden to prove by clear and convincing evidence. Insular Life had all the opportunity to
demonstrate Alvarez's pattern of consistently indicating erroneous entries for his age. All it needed to do
was to inventory the documents submitted by Alvarez and note the statements he made concerning his age.
This was not a cumbersome task, yet it failed at it. Its failure to discharge its burden of proving must thwart
its plea for relief from this Court.
II
Having settled Insular Life's continuing liability under the Group Mortgage Redemption Insurance, this Court
proceeds to the matter of the propriety of UnionBank's foreclosure.
UnionBank insists that the real estate mortgage is a contract separate and distinct from the Group Mortgage
Redemption Insurance; thus, it should not be affected by the validity or invalidity of Insular Life's
rescission.91 It also cites Great Pacific Life, which it claims involves a similar set of facts as this case, and
underscores how this Court in that case did not nullify the foreclosure despite a finding that the rescission
was improper, but instead considered the foreclosure as a supervening event.92
Great Pacific Life similarly involved an insurer's rescission of a mortgage redemption insurance on account of
a supposed concealment. This Court sustained the lower courts' conclusions holding the rescission invalid
and maintaining the insurer's liability to pay the mortgage. However, this Court considered the foreclosure,
which in the interim had been completed, as a supervening event. Ruling on the basis of equity, this Court
concluded that the insurance proceeds, which should have been paid to the mortgagee, were now due to the
heirs of the insured:
However, we noted that the Court of Appeals' decision was promulgated on May 17, 1993. In private
respondent's memorandum, she states that DBP foreclosed in 1995 their residential lot, in satisfaction of
mortgagor's outstanding loan. Considering this supervening event, the insurance proceeds shall inure to the
benefit of the heirs of the deceased person or his beneficiaries. Equity dictates that DBP should not unjustly
enrich itself at the expense of another (Nemo cum alterius detrimenio protest). Hence, it cannot collect the
insurance proceeds, after it already foreclosed on the mortgage. The proceeds now rightly belong to Dr.
Leuterio's heirs represented by his widow, herein private respondent Medarda Leuterio.93
Maglaque v. Planters Development Bank94 sustained a mortgagor's right to foreclose in the event of a
mortgagee's death:
[T]he rule is that a secured creditor holding a real estate mortgage has three (3) options in case of death of
the debtor. These are:

(1) to waive the mortgage and claim the entire debt from the estate of
the mortgagor as an ordinary claim;
(2) to foreclose the mortgage judicially and prove any deficiency as an
ordinary claim; and
(3) to rely on the mortgage exclusively, foreclosing the same at anytime
before it is barred by prescription, without right to file a claim for any
deficiency.95
This is in keeping with Rule 86, Section 7 of the Rules of Court, which states:
Section 7. Mortgage debt due from estate. — A creditor holding a claim against the deceased secured by
mortgage or other collateral security, may abandon the security and prosecute his claim in the manner
provided in this rule, and share in the general distribution of the assets of the estate; or he may foreclose
his mortgage or realize upon his security, by action in court, making the executor or administrator a party
defendant, and if there is a judgment for a deficiency, after the sale of the mortgaged premises, or the
property pledged, in the foreclosure or other proceeding to realize upon the security, he may claim his
deficiency judgment in the manner provided in the preceding section; or he may rely upon his mortgage or
other security alone, and foreclose the same at any time within the period of the statute of limitations, and
in that event he shall not be admitted as a creditor, and shall receive no share in the distribution of the
other assets of the estate; but nothing herein contained shall prohibit the executor or administrator from
redeeming the property mortgaged or pledged, by paying the debt for which it is held as security, under the
direction of the court, if the court shall adjudge it to be for the best interest of the estate that such
redemption shall be made.
While the mortgagee's right to proceed with foreclosure is settled, this Court finds the debacle at the heart
of this case to have been borne in large, if not equal measure, by UnionBank's oversight. UnionBank
contributed to setting in motion a course of events that culminated in the unjust foreclosure of Alvarez's
mortgaged lot. As such a contributor, its profiting from the wrongful foreclosure cannot be condoned.
The Regional Trial Court explained how UnionBank was remiss:
If at the time of the application, Jose H. Alvarez appears disqualified, and the personnel of the bank is
mindful of his duties, then the personnel of the bank will immediately tell the late Jose H. Alvarez [that] he
is not qualified. As it would appear in this case, there is nothing to show nor indicate that the late Jose H.
Alvarez exhibited any fraudulent intent when the bank was given certain data such as his age and date of
birth. The bank is already in its possession sufficient materials to inform itself regarding the true and actual
age, civil status and other personal circumstances of Jose Alvarez to merit approval of the loan applied for.
It was the same informative materials from which the defendant Union Bank lifted the data it provided the
defendant Insular Life for the consummation of the insurance contract, without which, the bank would not
have favorably approved the loan.96
These observations are well-taken.
Great Pacific Life, in considering the insurable interest involved in a mortgage redemption insurance,
discussed:
To resolve the issue, we must consider the insurable interest in mortgaged properties and the parties to this
type of contract. The rationale of a group insurance policy of mortgagors, otherwise known as the "mortgage
redemption insurance," is a device for the protection of both the mortgagee and the mortgagor. On the part
of the mortgagee, it has to enter into such form of contract so that in the event of the unexpected demise of
the mortgagor during the subsistence of the mortgage contract, the proceeds from such insurance will be
applied to the payment of the mortgage debt, thereby relieving the heirs of the mortgagor from paying the
obligation. In a similar vein, ample protection is given to the mortgagor under such a concept so that in the
event of death; the mortgage obligation will be extinguished by the application of the insurance proceeds to
the mortgage indebtedness.97 (Emphasis supplied)
The Regional Trial Court was correct in emphasizing that Alvarez entered into the Group Mortgage
Redemption Insurance entirely upon UnionBank's prodding. Bank clients are generally unaware of insurance
policies such as a mortgage redemption insurance unless brought to their knowledge by a bank. The
processing of a mortgage redemption insurance was within UnionBank's regular course of business. It knew
the import of truthfully and carefully accomplished applications. To facilitate the principal contract of the
loan and its accessory obligations such as the real estate mortgage and the mortgage redemption insurance,
UnionBank completed credit appraisals and background checks. Thus, the Regional Trial Court was correct in
noting that UnionBank had been in possession of materials sufficient to inform itself of Alvarez's personal
circumstances.98
UnionBank was the indispensable nexus between Alvarez and Insular Life. Not only was it well in a position
to address any erroneous information transmitted to Insular Life, it was also in its best interest to do so.
After all, payments by the insurer relieve it of the otherwise burdensome ordeal of foreclosing a mortgage.
This is not to say that UnionBank was the consummate guardian of the veracity and accuracy of Alvarez's
representations. It is merely to say that given the circumstances, considering Insular Life's protestation over
supposedly false declarations, UnionBank was in a position to facilitate the inquiry on whether or not a
fraudulent design had been effected. However, rather than actively engaging in an effort to verify, it appears
that UnionBank stood idly by, hardly bothering to ascertain if other pieces of evidence in its custody would
attest to or belie a fraudulent scheme.
UnionBank approved Alvarez's loan and real estate mortgage, and endorsed the mortgage redemption
insurance to Insular Life. Fully aware of considerations that could have disqualified Alvarez, it nevertheless
acted as though nothing was irregular. It itself acted as if, and therefore represented that, Alvarez was
qualified. Yet, when confronted with Insular Life's challenge, it readily abandoned the stance that it had
earlier maintained and capitulated to Insular Life's assertion of fraud.
UnionBank's headlong succumbing casts doubt on its own confidence in the information in its possession.
This, in turn, raises questions on the soundness of the credit investigation and background checks it had
conducted prior to approving Alvarez' loan.
In Poole-Blunden v. Union Bank of the Philippines,99 this Court emphasized that the high degree of diligence
required of banks "equally holds true in their dealing with mortgaged real properties, and subsequently
acquired through foreclosure."100 It specifically drew attention to this requisite high degree of diligence in
relation to "[c]redit investigations [which] are standard practice for banks before approving loans."101
The foreclosure here may well be a completed intervening occurrence, but Great Pacific Life's leaning to an
irremediable supervening event cannot avail. What is involved here is not the mortgagor's medical history,
as in Great Pacific Life, which the mortgagee bank was otherwise incapable of perfectly ascertaining. Rather,
it is merely the mortgagor's age. This information was easily available from and verifiable on several
documents. UnionBank's passivity and indifference, even when it was in a prime position to enable a more
conscientious consideration, were not just a cause of Insular Life's rescission bereft of clear and convincing
proof of a design to defraud, but also, ultimately, of the unjust seizure of Alvarez's property. By this
complicity, UnionBank cannot be allowed to profit. Its foreclosure must be annulled.
WHEREFORE, the Petitions are DENIED. The assailed Court of Appeals May 21, 2013 Decision and
November 6, 2013 Resolution in CA G.R. CV No. 91820 are AFFIRMED.
Petitioners Union Bank of the Philippines and The Insular Life Assurance Co., Ltd. are ordered to comply with
the insurance undertaking under Mortgage Redemption Insurance Policy No. G-098496 by applying its
proceeds as payment of the outstanding loan obligation of deceased Jose H. Alvarez with respondent Union
Bank of the Philippines;
The extrajudicial foreclosure of the real estate mortgage over Jose H. Alvarez's TCT No. C-315023 is
declared null and without legal force and effect;
Petitioner Union Bank of the Philippines is ordered to reconvey the title and ownership over the lot covered
by TCT No. C-315023 to the Estate of the deceased Jose H. Alvarez for the benefit of his heirs and
successors-in-interest; and
Petitioners Union Bank of the Philippines and The Insular Life Assurance Co., Ltd. are ordered to jointly and
severally pay respondents the Heirs of Jose H. Alvarez attorney's fees and the costs of suit.
SO ORDERED.
 September 1, 2015
G.R. No. 216572
FELICIANO P. LEGASPI, Petitioner, 
vs.
COMMISSION ON ELECTIONS, ALFREDO GERMAR, and ROGELIO P. SANTOS,
JR., Respondents.
DECISION
PEREZ, J.:
This is a Petition for Certiorari  assailing the Order  dated 28 January 2015 of respondent
1 2

Commission on Elections (COMELEC) en bane in SPA No. 13-323 (DC).

The Parties
Respondents Alfredo Germar (Germar) and Rogelio P. Santos, Jr. (Santos), along with one Roberto
C. Esquivel (Esquivel), were among the candidates fielded by the Liberal Party (LP) to vie for local
elective posts in Norzagaray, Bulacan, during the 13 May 2013 elections. Germar ran for the position
of mayor, Santos ran for the position of councilor, and Esquivel ran for the position of vice-mayor.
Petitioner Feliciano P. Legaspi, on the other hand, was the National Unity Party’s (NUP’s) bet for
mayor of Norzagaray during the 2013 polls.
The Election Results and the Petition for Disqualification
After the votes cast by the Norzagaray electorate were tallied, Germar emerged as the highest vote
getter in the mayoralty race. Santos, for his part, also appeared to have secured enough votes to be
the second councilor of the municipality. Esquivel, though, failed in his bid to become vice-mayor of
Norzagaray.
Upon learning about the results of the tally, petitioner immediately filed before the Municipal Board of
Canvassers (MBC) of Norzagaray a motion to suspend the proclamation of Germar and Santos as
winning candidates. Such motion, however, proved to be futile.
At exactly 7:45 a.m. on 14 May 2013, despite the petitioner’s motion, the MBC proclaimed Germar
and Santos as duly elected mayor and councilor of the municipality of Norzagaray, respectively.
A few hours  after the said proclamation, petitioner filed before the COMELEC a Petition for
3

Disqualification against Germar, Santos, and Esquivel. In it, petitioner accused Germar, Santos, and
Esquivel of having engaged in rampant vote buying during the days leading to the elections.
The Petition for Disqualification was docketed as SPA No. 13-323 (DC) and was assigned to the
COMELEC First Division, then composed of Commissioners Lucenito N. Tagle (Commissioner
Tagle), Christian Robert S. Lim (Commissioner Christian Lim) and Al A. Parreño (Commissioner
Parreño).
COMELEC First Division and Special First Division
In due course, the COMELEC First Division took a vote on SPA No. 13-323 (DC). The vote of the
division was an even 1-1 split, with Commissioner Tagle voting in favor of granting the petition for
disqualification, but with Commissioner Christian Lim voting against it. The third member of the
division, i.e., Commissioner Parreño, was not able to provide the potential tie-breaking vote as he
was then absent and attending to some other official business.
Due to the impasse created by the absence of one of its members, the COMELEC First Division
called for the constitution of a Special First Division through which COMELEC Chairman Sixto S.
Brillantes, Jr. sat in the First Division as acting member vice the absent Commissioner Parreño for
purposes of SPA No. 13-323 (DC). 4

On 3 October 2013, the COMELEC Special First Division, by a 2 to 1 vote, rendered a resolution: (1)
disqualifying Germar and Santos for the positions of mayor and councilor, respectively, of
Norzagaray; and (2) referring the criminal aspect of SPA No. 13-323 (DC) to the COMELEC Law
Department for preliminary investigation.5

Germar, Santos, and Esquivel filed a motion for reconsideration with the COMELEC en banc.
The COMELEC En Banc and the Dismissal of the Electoral Aspect of SPA No. 13-323 (DC)
On 10 July 2004, the COMELEC en banc took a vote on the motion for reconsideration. At that time,
the COMELEC en banc had six (6) incumbent members.  Of the six (6), however, only five (5)
6

members actually participated in the deliberations and casted votes. Commissioner Parreño opted to
take no part and did not vote.
The following were the results of the voting:
1. As to the electoral aspect of SPA No. 13-323 (DC), the vote was 3-2, i.e., 3 members
voted in favor of the disqualification of Germar and Santos, and 2 dissented.  Hence, a
7

majority of at least four (4) votes was not reached with respect to the electoral aspect of the
case.
2. As to the criminal aspect of SPA No. 13-323 (DC), the vote was 4-1, i.e., 4 members voted
in favor of the referral of the criminal aspect of the disqualification case to the COMELEC
Law Department and 1 dissented. Hence, a majority was reached with respect to the criminal
8

aspect of the case.

In view of the foregoing, the COMELEC en banc issued a resolution  denying the motion for
9

reconsideration with respect to the criminal aspect of SPA No. 13-323 (DC), but ordering the conduct
of a rehearing insofar as the electoral aspect of the case was concerned.
After the rehearing, the COMELEC en banc took another vote but it still failed to muster a majority
consensus on the electoral aspect of SPA No. 13-323 (DC).  The final vote of the COMELEC en
10

banc on the matter remained at the exact 3-2 split that it was before the rehearing.  Commissioner
11

Parreño maintained his "no part" stance, while newly appointed Commissioner Arthur D. Lim also
opted to take no part and did not vote.
Thus, on 28 January 2015, the COMELEC en banc issued an Order  directing the dismissal of the
12

electoral aspect of SPA No. 13-323 (DC) pursuant to Section 6, Rule 18 of the 1993 COMELEC
Rules of Procedure  (COMELEC Rules), to wit:
13

Sec. 6. Procedure if Opinion is Equally Divided. – When the Commission en banc is equally divided
in opinion, or the necessary majority cannot be had, the case shall be reheard, and if on rehearing
no decision is reached, the action or proceeding shall be dismissed if originally commenced in the
Commission; in appealed cases gment or order appealed from shall stand affirmed; and in all
incidental matters, the petition or motion shall be denied. (Emphasis ours.)
Unconvinced, petitioner filed the present petition  before this Court.
14

The Present Petition

Petitioner claims that COMELEC en banc gravely abused its discretion when it dismissed the
electoral aspect of SPA No. 13-323 (DC). He protests that the dismissal was occasioned by a
"misapplication" by the COMELEC en banc of Section 6, Rule 18 of the COMELEC Rules. 15

OUR RULING
We dismiss the present petition.
I
Let us start with the basics.
Section 7 of Article IX-A of the Constitution obliges the COMELEC, like the other constitutional
commissions, to decide all cases or matters before it by a "majority vote of all its [m]embers."  When
16

such majority vote cannot be mustered by the COMELEC en banc, Section 6, Rule 18 of the
COMELEC Rules provides the mechanism to avert a non-decision. Thus:
Sec. 6. Procedure if Opinion is Equally Divided. – When the Commission en banc is equally divided
in opinion, or the necessary majority cannot be had, the case shall be reheard, and if on rehearing
no decision is reached, the action or proceeding shall be dismissed if originally commenced in the
Commission; in appealed cases, the jud pealed from shall stand affirmed; and in all incidental
matters, the petition or motion shall be denied.
Verily, under the cited provision, the COMELEC en banc is first required to rehear the case or matter
that it cannot decide or resolve by the necessary majority. When a majority still cannot be had after
the rehearing, however, there results a failure to decide on the part of the COMELEC en banc. The
provision then specifies the effects of the COMELEC en banc’s failure to decide:
1. If the action or proceeding is originally commenced in the COMELEC, such action or
proceeding shall be dismissed;
2. In appealed cases, the judgment or order appealed from shall stand affirmed; or
3. In incidental matters, the petition or motion shall be denied.
As can be gleaned above, the effects of the COMELEC en banc’s failure to decide vary depending
on the type of case or matter that is before the commission. Thus, under the provision, the first effect
(i.e., the dismissal of the action or proceeding) only applies when the type of case before the
COMELEC is an action or proceeding "originally commenced in the commission"; the second effect
(i.e., the affirmance of a judgment or order) only applies when the type of case before the
COMELEC is an "appealed case"; and the third effect (i.e., the denial of the petition or motion) only
applies when the case or matter before the COMELEC is an "incidental matter."
Mendoza v. Commission on Elections, et al.  gives us a key illustration of an application of the first
17

effect under Section 6, Rule 18 of the COMELEC Rules.

Mendoza involved an electoral protest that was originally filed before the COMELEC and which was
raffled to one of its divisions. The COMELEC division to which the electoral protest was assigned
granted that protest, prompting the protestee to file a motion for reconsideration with the COMELEC
en banc. When the COMELEC en banc took a vote on the motion for reconsideration, however, it
failed to obtain the necessary majority vote. Consequently, the COMELEC en banc reheard the
matter and then took another vote. However, the second vote also lacked the necessary majority.
The final vote of the COMELEC en banc was 3-1 (i.e., 3 in support of granting the protest and 1
dissent), with 3 members taking no part.  On the basis of the foregoing, the COMELEC en banc
18

issued a resolution denying the motion for reconsideration (in effect sustaining the division’s
decision). The protestee challenged the foregoing resolution on the strength of the argument that the
failure of the COMELEC en banc to obtain the necessary majority should have resulted in the
dismissal of the election protest case itself pursuant to the first effect under Section 6, Rule 18 of the
COMELEC Rules.
When that dispute reached this Court in Mendoza, we sustained the protestee. We held that the first
effect applied because the case before the COMELEC en banc was an electoral protest that was
"originally commenced" in the commission. We noted that while the electoral protest only reached
the COMELEC en banc through the motion for reconsideration of the decision of a division, the
same did not change the nature of the case before it; the motion for reconsideration not being an
appeal.  Thus, we held that the failure of the COMELEC en banc to decide the motion for
19

reconsideration would result—not in the denial of the said motion or the affirmance of the division’s
decision—but in the dismissal of the electoral protest itself, pursuant to the first effect under Section
6, Rule 18 of the COMELEC Rules. 20

Guided by the foregoing precepts, we shall now address the issues at hand.
II
The main thrust of petitioner’s challenge is the supposed error of the COMELEC en banc in applying
the first effect under Section 6, Rule 18 of the COMELEC Rules (by dismissing the electoral aspect
of SPA No. 13-323 [DC]) when it was unable to reach a majority vote after the rehearing.  According
21

to petitioner, the COMELEC en banc erred in treating SPA No. 13-323 (DC) as an action that was
"originally commenced in the commission" under the said provision.  As petitioner argues, an action
22

can only be considered as having been "originally commenced in the commission" under Section 6,
Rule 18 of the COMELEC Rules when that action was originally filed before the COMELEC en banc
itself and, as such, is the very matter pending before it.
23

Petitioner then points out that, in this case, what was before the COMELEC en banc was not the
main petition itself but only a motion for reconsideration of the decision of the division in SPA No. 13-
323 (DC). Hence, petitioner submits, the failure of the COMELEC en banc to reach a majority vote in
this case should result, not in the dismissal of the electoral aspect of SPA No. 13-323 (DC), but
merely in the denial of the motion for reconsideration and the affirmance of the division’s decision. 24

We do not agree.
The COMELEC en banc did not err when it dismissed the electoral aspect of SPA No. 13-323 (DC)
when it was unable to reach a majority vote after the rehearing. Contrary to what petitioner asserts,
SPA No. 13-323 (DC) is most definitely an action that was filed originally before the COMELEC
within the contemplation of the said provision. While SPA No. 13-323 (DC) reached the COMELEC
en banc only through a motion for reconsideration of the decision of the Special First Division, its
character as an original case filed before the commission remains the same. Hence, the failure of
COMELEC en banc to decide in this case properly results in the application of the first effect of
Section 6, Rule 18 of the COMELEC Rules.
SPA No. 13-323 (DC) is an Action
"Originally Commenced in the
Commission" Under Section 6, Rule
18 of the COMELEC Rules
Petitioner, to begin with, misconstrues Section 6, Rule 18 of the COMELEC Rules.
The phrase "originally commenced in the commission" in Section 6, Rule 18 of the COMELEC Rules
is worded in plain language and, therefore, must be construed in its ordinary and natural sense.  It
25

simply means what it says. The phrase is meant to cover any action or proceeding that is filed, at the
first instance, before the COMELEC—whether sitting in division or en banc—as contradistinguished
from cases that are merely appealed to it. Petitioner’s view that restricts such phrase to include only
those actions or proceedings that are originally filed with the COMELEC en banc itself (e.g., petition
to declare failure of elections) has no basis and only obscures the otherwise clear import of the
phrase’s language.
In this case, the fact that SPA No. 13-323 (DC) is an action originally commenced in the COMELEC
cannot at all be doubted.  The records are crystal clear that the petition was first filed with the
1âwphi1

COMELEC and was raffled to the First Division for decision. It is a fresh petition—as it passed upon
no other tribunal, body or entity prior to its filing with the COMELEC. Hence, for all intents and
purposes, SPA No. 13-323 (DC) must be considered as an action "originally commenced in the
commission" under Section 6, Rule 18 of the COMELEC Rules.
Single Process of COMELEC in
Deciding Election Cases; COMELEC
En Banc Correctly Dismissed
Electoral Aspect of SPA No. 13-323
(DC)
Petitioner’s insistence that the first effect under Section 6, Rule 18 of the COMELEC Rules ought not
to be applied since what was before the COMELEC en banc was merely a motion for
reconsideration and not the petition for disqualification itself, likewise has no merit. It is premised on
the assumption that the proceedings in election cases before the COMELEC division are separate
from those before the en banc—an assumption that has already been discredited by Mendoza.
In Mendoza, we held that the COMELEC acts on election cases under a single and integrated
process, to wit:
[H]owever the jurisdiction of the COMELEC is involved, xxx, the COMELEC will act on the case in
one whole and single process: to repeat, in division, and if impelled by a motion for reconsideration,
en banc. 26

In his concurring opinion in Mendoza, Justice Presbitero J. Velasco (Justice Velasco) described the
act of filing a motion for reconsideration with the COMELEC en banc from a decision of a division in
an election case as but "part" of such single and integrated process and is "not an appeal" from the
latter to the former:
At best, the filing of a motion for reconsideration with the COMELEC en banc of a decision or
resolution of the division of the COMELEC should be viewed as part of one integrated process. Such
motion for reconsideration before the COMELEC en banc is a constitutionally guaranteed remedial
mechanism for parties aggrieved by a division decision or resolution. However, at the risk of
repetition, it is not an appeal from the COMELEC division to the en banc. 27

Verily, when an election case originally filed with the COMELEC is first decided by a division, the
subsequent filing of a motion for reconsideration from that decision before the en banc does not
signify the initiation of a new action or case, but rather a mere continuation of an existing process.
The motion for reconsideration—not being an appeal from the decision of the division to the en banc
—only thus serves as a means of having the election case decided by the COMELEC en banc.
Under this view, therefore, the nature of the election case as it was before the division remains the
same even after it is forwarded to the en banc through a motion for reconsideration. Hence, the
failure of the COMELEC en banc to decide a motion for reconsideration from the decision of a
division in an original election case would unquestionably bring to the fore the application of the first
effect under Section 6, Rule 18 of the COMELEC Rules.
This is exactly what happened in this case. In this case, SPA No. 13- 323 (DC) was filed, at the first
instance, with the COMELEC. Being a petition for disqualification filed under Section 68 of the
Omnibus Election Code,  SPA No. 13-323 (DC) was initially raffled to and decided by a division of
28

the commission. From that point, however, SPA No. 13-323 (DC) found its way to the COMELEC en
banc after a motion for reconsideration from the decision of the division was filed. Hence, when the
COMELEC en banc twice failed to reach the necessary majority to decide the electoral aspect of
SPA No. 13-323 (DC), it applied the first effect under Section 6, Rule 18 of the COMELEC Rules.
We find absolutely nothing wrong with such application. It is, in fact, reinforced by the very provisions
of the COMELEC Rules and by Mendoza.
III
We next address the contra argument raised by Justice Velasco in his Dissenting Opinion.
Justice Velasco, in his dissent, shared petitioner’s position that the failure of the COMELEC en banc
to reach a necessary majority in this case should have resulted merely in the denial of the motion for
reconsideration and not in the dismissal of SPA No. 13-323 (DC) itself. The learned justice, however,
justified the said position with an argument different from that advanced by petitioner: Justice
Velasco, in essence, concedes that the first effect under Section 6, Rule 18 of the COMELEC Rules
applies in this case, but contends that the COMELEC en banc erred in how it applied the said
provision.
Justice Velasco points out that the first effect under Section 6, Rule 18 of the COMELEC Rules
speaks of the dismissal of either an "action" or a "proceeding" – which, the good justice submits,
supposedly pertains to different cases or matters that may be brought before the COMELEC en
banc. After identifying what those matters are, Justice Velasco concluded that the word "action" as
used under the subject provision has reference to the "cases originally filed before the COMELEC
division or en banc" whilst the word "proceeding" under the same rule has reference to "motions for
reconsideration challenging the rulings [of a division in election cases]."
29

Thus, Justice Velasco opines, the failure of the COMELEC en banc to reach a majority vote on a
mere motion for reconsideration of a division decision in an original election case would – under the
first effect of Section 6, Rule 18 of the COMELEC Rules – only lead to a dismissal of the
"proceeding" or of the motion for reconsideration; not the dismissal of the "action" or of the election
case itself.
Cognizant that the foregoing view is a betrayal of the principles laid down by the Court in Mendoza,
Justice Velasco now clamors for a "modification" or an abandonment of our ruling in the said case
insofar as how it applied the first effect under Section 6, Rule 18 of the COMELEC Rules.  Justice
30

Velasco cautions the Court that pursuing Mendoza’s interpretation of Section 6, Rule 18 of the
COMELEC Rules is bound to lead to absurd and illogical results – such as one wherein a decision of
a COMELEC division in an election case can simply be overturned by the COMELEC en banc even
though the latter is not able to reach a majority vote.
31

The Court is not convinced.

Meaning of the Words "Action" and
"Proceeding" Determinable From Other
Provisions of the COMELEC Rules;
Justice Velasco’s Interpretation of the
Word "Proceeding" Contradicted By
COMELEC Rules, Taken As A Whole
The pin that holds Justice Velasco’s argument is his interpretation of the terms "action" and
"proceeding" under Section 6, Rule 18 of the COMELEC Rules. While an isolated view of the
contested terms does lend some degree of reason to the respected justice’s interpretation, a more
careful consideration of such terms in the context of the other parts of the COMELEC Rules,
however, will quickly reveal the interpretation’s fault.
Verily, we are unable to accept it.
The words "action" and "proceeding" and even the entire phrase "action or proceeding" are not
exclusive to Section 6, Rule 18 of the COMELEC Rules. Such words and phrase, in fact, appear in
other parts of the COMELEC Rules, most notably in Part V thereof. To our minds, an examination of
how the words "action" and "proceeding" and the phrase "actions or proceedings" were used in Part
V of the COMELEC Rules is telling of how the COMELEC Rules actually intended such terms and
phrase to be understood, which is, in the context of its other provisions.
32

Part V of the COMELEC Rules, which is aptly titled "Particular Actions or Proceedings," is one of the
nine major parts of the COMELEC Rules. It is composed of Rules 20 to 34 of the COMELEC Rules,
wherein each rule covers a specific "action or proceeding" that the COMELEC can take cognizance
of, thus:
COMELEC RULES OF PROCEDURE – PART V
PARTICULAR ACTIONS OR PROCEEDINGS
A. ORDINARY ACTIONS
 Rule 20 – Election Protests
 Rule 21 – Quo Warranto
 Rule 22 – Appeals from Decisions of Courts in Election Protest
  Cases
B. SPECIAL ACTIONS
 Rule 23 – Petition to Deny Due Course To or Cancel Certificates of
 Candidacy
 Rule 24 – Proceedings Against Nuisance Candidates
 Rule 25 – Disqualification of Candidates
 Rule 26 – Postponement of Suspension of Elections
C. SPECIAL CASES
 Rule 27 – Pre-proclamation Controversies
D. SPECIAL RELIEFS
 Rule 28 – Certiorari, Prohibition and Mandamus
 Rule 29 – Contempt
E. PROVISIONAL REMEDIES
 Rule 30 – Injunction
F. SPECIAL PROCEEDINGS
 Rule 31 – Annulment of Permanent List of Voters
 Rule 32 – Registration of Political Parties or Organization
 Rule 33 – Accreditation of Citizens’ Arms of the Commission
G. ELECTION OFFENSES
 Rule 34 – Prosecution of Election Offenses
Evidently, what Part V actually discloses are the particular cases or matters that may be considered
as "actions or proceedings" for purposes of the COMELEC Rules. Notably, all the actions or
proceedings identified thereunder, save for the provisional remedy of injunction, are all main cases
cognizable by the COMELEC. Notable too is that a motion for reconsideration from a decision of a
division – which is but a part of a main case – is not among those included in Part V.33

Accordingly, we find Justice Velasco’s formulation linking the term "proceeding" under Section 6,
Rule 18 of the COMELEC Rules with "motions for reconsideration challenging the rulings [of a
division in election cases]"  to be inconsistent with how such term was actually intended to be
34

understood by the COMELEC Rules. Such a formulation, rooted as it was in an isolated analysis of
the contested term, is out of touch with the rest of the provisions of the COMELEC Rules.
Pursuing Mendoza Ruling Will Not
Lead to Absurdity
We likewise rebut Justice Velasco's submission that continuing with Mendoza's interpretation of the
first effect under Section 6, Rule 18 of the COMELEC Rules is bound to lead to absurd results.
To our minds, there is no "absurdity" in the fact that the decision of a division in an election case
ceases to be a COMELEC decision as a consequence of the failure of the COMELEC en bane to
reach a majority vote on reconsideration. That fact, far from being absurd, is nothing but the natural
and logical consequence of the application of the first effect under Section 6, Rule 18 of the
COMELEC Rules which, in tum, only complements our Constitution.
IV
All told, we found no indications that the COMELEC en bane had acted with grave abuse of
discretion in dismissing the electoral aspect of SPA No. 13-323 (DC). On the contrary, what we
found is that such dismissal was perfectly in accord with the provisions of its own rules of procedure
and is consistent with established jurisprudence on the matter. Mendoza, to our minds, remains
good law. Certainly, the extraordinary writ of certiorari does not lie here.
IN VIEW WHEREOF, the instant petition is DISMISSED.
SO ORDERED.
 July 26, 2017
G.R. No. 197032
SECURITIES AND EXCHANGE COMMISSION, Petitioner 
vs.
PRICE RICHARDSON CORPORATION, CONSUELO VELARDE-ALBERT, and GORDON
RESNICK, Respondents
DECISION
LEONEN, J.:
The determination of probable cause for purposes of filing an information is lodged with the public
prosecutor. It is not reviewable by courts unless it is attended by grave abuse of discretion.
This is a Petition for Review on Certiorari  under Rule 45 of the Rules of Court, praying that the Court
1

of Appeals Decision  dated May 26, 2011 and the Department of Justice Resolutions dated April 12,
2

2005  and July 5, 2006  be reversed and set aside.  The Court of Appeals affirmed the assailed
3 4 5

Resolutions of the Department of Justice, which denied the Petition for Review filed by the Securities
and Exchange Commission (petitioner).  Petitioner prays for the filing of an Information against Price
6

Richardson Corporation, Consuelo Velarde-Albert, and Gordon Resnick (respondents) for violating
Sections 26.3 and 28 of the Securities Regulation Code. 7
Respondent Price Richardson Corporation (Price Richardson) is a Philippine corporation duly
incorporated under Philippine laws on December 7, 2000.  Its primary purpose is "[t]o provide
8

administrative services which includes but is not limited to furnishing all necessary and incidental
clerica], bookkeeping, mailing and billing services." 9

On October 17, 2001, its former employee, Michelle S. Avelino, (Avelino) executed a sworn affidavit
at the National Bureau of Investigation's Interpol Division,  alleging that Price Richardson was
10

"engaged in boiler room operations, wherein the company sells non[-] existent stocks to investors
using high pressure sales tactics."  Whenever this activity was discovered, the company would close
11

and emerge under a new company name.  Pertinent portions of her sworn statement read:
12

Q03: State your reason why you are here at the NBI Interpol?
A: I am here to give a statement about the "boiler room" operation of PRICE RICHARDSON
CORPORATION.
Q04: What do you mean by "boiler room"?
A: A boiler room is a company which sells non-existent stocks to investors by using high pressure
sales tactics. They had no intention of paying the duped investors and when their operation ha[s]
been discovered this company would close and would spring up under a new name. I know this for a
fact because I used to work before with New Millennium Market Research, Inc. which was shut down
after the duped victims reported to authorities [its] illegal activities. New Millennium Market
Research, Inc. eventually became Price Richardson. Boiler Room operation is an illegal activity
considering that the company has no license from the Securities and Exchange Commission to deal
on securities or stocks.
Q05: Why do you know that Price Richardson is a "boiler room"?
A: I used to work there as a telemarketer from September 3, 2001 to October 15, 2001.
Q06: As telemarketer at Price Richardson what do you do?
A: Our supervisor would give "leads" for me to call. "Leads" are names of prospective investors.
Upon contracting a prospective investor, I would read a prepared "script" or presentation of the
company's profile and the services it offers. If the prospect is interested, I will write all the information
about this person and would forward the same to our supervisor JOVY AGUDO. All our leads or
prospects are foreigners.
Q07: As a telemarketer, how many calls do you make in a day and how many investors do you
qualify?
[A:] I average 100 calls a day and I can qualify an average of six (6) would[-]be investors daily.
....
Ql0: After you qualify a prospective investor, what happens next?
A: The company will send him a newsletter and then the salesman would contact him and [use] high-
pressure sales tactics to make a sale of non-existent stocks. The salesmen would use the data and
information gathered by the telemarketers and would make reference to the calls or initial contact
made by telemarketers. If the investor agreed, the salesman would give him instructions on how to
send the money to the company. Usually, the payment is made through telegraphic transfers. After
the payment has been received, a confirmation receipt would then be sen[t] by the courier to the
investor indicating therein the name of the company where the alleged investment was made, the
number of shares, the amount per share, the tax and commissions paid. However, no hard copy of
the stocks or certificates will be issued for in truth and in fact there was no actual sale or transfer of
stocks or certificates for they are non-existent. In the event that the investor would then sell his
certificates or stocks, the salesman would try to convince the investor not to sell in order not to
release the money. Eventually, the company would disappear and would spring up under a new
name.
Qll: Who are these salesmen?
A: The salesmen are all foreigners of various nationalities. They used also a prepared script to
induce the prospective client to invest.
....
Q13: Do you know if these salesmen are licensed stockbrokers duly authorized by the Securities
and Exchange Commission?
A: They are not licensed by the Securities and Exchange Commission. They are tourists here in the
country and they used aliases to hide their identities. 13

Janet C. Rillo corroborated Avelino's claims.  She was a former employee of Capital International
14

Consultants, Inc. (Capital International), acorporation that allegedly merged with Price
Richardson.  She claimed that their calls to prospective investors should be in Price Richardson's
15

name.  Pertinent portions of her sworn statement read:

16

07. Q: You said that CAPITAL INTERNATIONAL CONSULTANTS CORP. has just merged with
Price Richardson Inc., can you elaborate on this?
A: Yes, just this September, we have been informed of the [merge]. In fact we have been instructed
to use the name of Price Richardson in our calls starting September 2001.
....
09. Q: Can you describe the process in, as you said - "qualify clients as possible investors"?
A: I make overseas calls to individuals listed in our Client Leads. The "Client Leads" contains a list of
the names of the top-level personnel of international companies, it includes their address and
telephone numbers. From these leads, we select clients to call and offer them a free subscription of
our "Financial News Letter".
....
11. Q: What does these "Financial News Letter" contain?
A: It contains the current status of the worldwide stock market.
12: Q: So what happens when a client agrees to subscribe in your news letter?
A: We then check from our list if the information we have regarding their address and telephone
numbers [is] correct. This is to check their mail preference - where they would like us to send the
news letter.
13. Q: What happens after that?
A: Those who agree to receive the subscription are considered as qualified clients. We then fill out a
"SALES LEAD" card, which reflects the information of the client. We then forward these cards to the
marketing department, consisting of the encoders and other telemarketers. These people are the
ones who send the newsletters and transaction receipts to clients. Their office is located at the Price
Richardson Office, 31st Floor Citibank Tower, Paseo De Roxas, Makati. It is from these cards that
our foreigner salesmen could get possible investors. These possible investors would then be sold
with non-existent stocks.
....
15. Q: So are you saying that CAPITAL INTERNATIONAL CONSULTANTS CORP and/or PRICE
RICHARDSON, Inc. is engaged in the illegal trading of stocks to clients?
A: Yes. When I applied for the job, I was briefed by ANNE BENWICK, the Operations Manager,
about the nature of their [b]usiness. She said that the company is engaged in trading stocks, and my
job as a Telemarketer would be to "qualify clients" who might become possible investors. I am also
aware of the nature of their business since I have been employed in a similar company. 17

Upon application of the National Bureau of Investigation Interpol Division  and the Securities and
18

Exchange Commission  on November 15, 2001, Branch 143, Regional Trial Court, Makati City
19

issued three (3) search warrants against Capital International and Price Richardson for violation of
Section 28  of the Securities Regulation Code.  The Regional Trial Court ordered the seizure of
20 21

Price Richardson's and Capital International's office equipment, documents, and other items that
were connected with the alleged violation. 22

On November 16, 2001, the search warrants were served and Price Richardson's office equipment
and documents were seized. 23
On December 4, 2001, the Securities and Exchange Commission filed before the Department of
Justice its complaint against Price Richardson, Clara Arlene Baybay (Baybay), Armina A. La Torre
(La Torre), Manuel Luis Limpin (Limpin), Editha C. Rupido (Rupido ), Jose C. Taopo (Taopo ),
Consuelo Velarde-Albert (Velarde-Albert), and Gordon Resnick (Resnick) for violation of Article
315(1)(b)  of the Revised Penal Code and Sections 26.3  and 28 of the Securities Regulation
24 25

Code.  Baybay, La Torre, Limpin, Rupido, and Taopo (the incorporators and directors) were Price
26

Richardson's incorporators and directors.  Velarde-Albert was its Director for Operations and
27

Resnick was its Associated Person. 28

The Securities and Exchange Commission alleged that Price Richardson was neither licensed nor
registered "to engage in the business of buying and selling securities within the Philippines or act as
salesman, or an associated person of any broker or dealer."  As shown by the seized documents
29

and equipment, Price Richardson engaged in seeking clients for the buying and selling of securities,
thereby violating Sections 26.3 and 28 of the Securities Regulation Code. 30

The Securities and Exchange Commission claimed that Velarde-Albert and Resnick should be liable
for acting as brokers or salesmen despite not being registered.  Meanwhile, the incorporators and
31

directors' liability was based on being responsible "for the corporate management with the obligation
to ensure that [Price Richardson] operate[d] within the bounds of law." 32

Price Richardson, Velarde-Albert, Resnick, and the incorporators and directors were also charged
with Estafa under Article 315(1)(b) of the Revised Penal Code. The Securities and Exchange
Commission averred that they obtained their investors' confidence by comporting themselves as
legitimate stock brokers.  Thus, when they failed to return the investments they received, their act
33

"constitute[d] misappropriation with abuse of confidence." 34

In defense, the incorporators and directors denied knowing or agreeing to the offenses charged.
They countered that they already transferred their respective shares to various individuals in
December 2000, as shown by their registered Deeds of Absolute Sale of Shares of Stock.  Velarde-
35

Albert denied the Securities and Exchange Commission's allegations against her while Resnick did
not submit any evidence refuting the charges. 36

On March 13, 2002, State Prosecutor Aristotle M. Reyes (State Prosecutor Reyes) issued a
Resolution,  dismissing the Securities and Exchange Commission's complaint "for lack of probable
37

cause."  He found that:

38

[C]omplainant SEC failed to adduce evidence showing respondent Price's alleged unauthorized
trading. While it is true that based on the certification issued by the SEC, respondent-corporation has
no license to buy or sell securities, it does not, however, follow, that said corporation had indeed
engaged in such business. It is imperative for complainant to prove the respondent-corporation's
affirmative act of buying and selling securities to constitute the offense charged. It cannot be
established on the expedient reason that a corporation is not license[d] or authorize[d] to trade
securities. He who alleges a positive statement has the burden of proving the same.
The various "confirmation of trade" receipts ... taken singly, does not prove violation of Sections 26.3
and 28 of the Securities Regulation Code. Far from proving the offense charged, those confirmation
of trade could very well mean that indeed respondent Price was merely "providing administrative
services of furnishing all necessary and incidental clerical, bookkeeping, mailing and billing services"
pursuant to its primary purpose as embodied in its articles of incorporation. There is no evidence that
indeed anyone transacted business much less purchased or sold securities with any of the
respondents acting as broker or dealer in securities. In other words, the burden of proving that
respondents made various offers to sell unregistered securities; that the offers were accepted; and,
that agreements of sale were reached and consummated, has not been dislodged by the
complainant. Independent proof of the various stages of a sale transaction is necessary to show
violation of Sections 26.3 and 28 of the Securities Regulation Code. 39

State Prosecutor Reyes absolved the incorporators and directors from any liability considering that
they already relinquished their positions as directors of Price Richardson when they transferred their
shares to third parties.  He also found Velarde-Albert and Resnick not liable for lack of sufficient
40

proof that they engaged in the trading of securities. 41

On the allegation of conspiracy, State Prosecutor Reyes held that because the facts failed "to
establish the alleged unauthorized trading, or the fraudulent investments that constitute the crime
charged, there can be no basis in determining collective criminal responsibility."  Finally, State 42

Prosecutor Reyes ruled that there was no sufficient evidence to show that Price Richardson,
Velarde-Albert, Resnick, and the incorporators and directors deceived investors that would constitute
the crime of estafa withabuse of confidence.  43

In the meantime, individuals claiming to have agreed to purchase

securities from Price Richardson and have been defrauded surfaced and executed sworn
statements against it. They claimed that Price Richardson engaged in illegal trade of
44

securities.  They filed complaints against Price Richardson before the Department of Justice for
45

violation of Article 315(1)(b) of the Revised Penal Code and Sections 26.3 and 28 of the Securities
Regulation Code. 46

The Securities and Exchange Commission moved for reconsideration  of the March 13, 2002 47

Resolution, which was denied by State Prosecutor Reyes in a Resolution  dated May 31, 2002. 48

The Securities and Exchange Commission filed before the Department of Justice a Petition for
Review  of State Prosecutor Reyes' March 13, 2002 and May 31, 2002 Resolutions. This was
49

denied in the April 12, 2005 Resolution  of Department of Justice Secretary Raul M. Gonzalez
50

(Secretary Gonzalez). The Securities and Exchange Commission filed a Motion for
Reconsideration  of the April 12, 2005 Resolution but this was denied by Secretary Gonzalez in his
51

July 5, 2006 Resolution. 52

The Securities and Exchange Commission filed a Petition for Certiorari  against Secretary Gonzalez,53

Price Richardson, Velarde-Albert, and Resnick before the Court of Appeals for the annulment of
Secretary Gonzalez's April 12, 2005 and July 5, 2006 Resolutions. 54

On May 26, 2011, the Court of Appeals promulgated a Decision  affirming the assailed
55

Resolutions.  The Court of Appeals held that there was no grave abuse of discretion on the part of
56

Secretary Gonzalez when he affirmed State Prosecutor Reyes' Resolutions, which found no
probable cause to file an information. 57

The Court of Appeals found that the affidavits executed by Price Richardson's employees were
merely surmises. They did not have personal knowledge of the security trading since their jobs were
58

limited to persuading people to get newsletter subscriptions.  Indeed, the documents seized from
59

Price Richardson's office showed a transaction between it and an investor.  However, "no clear and 60

specific acts of buying or selling of securities were alleged and substantiated by the SEC[.]" 61

The alleged investors' affidavits were not sufficient to find probable cause because the alleged
transactions transpired over the phone and while these investors were not in the
Philippines.  Moreover, since the traded stocks were not of domestic corporations or from
62

corporations doing business in the Philippines, Philippine penal laws could not be applied. 63

Lastly, there was no basis for the complaints against Velarde-Albert and Resnick because they were
neither board members nor stockholders of the corporation. The complaint did not allege any
particular act that can be interpreted as their direct participation in the purported illegal stock
trading.
64

Hence, on July 26, 2011, the Securities and Exchange Commission filed a Petition for
Review  before this Court against Price Richardson, Velarde-Albert, and Resnick. It assailed the
65

May 26, 2011 Decision of the Court of Appeals and the April 12, 2005 and July 5, 2006 Resolutions
of Secretary Gonzalez and prayed for the filing of an information against respondents for violation of
Sections 26.3 and 28 of the Securities Regulation Code. 66

Petitioner claims that Secretary Gonzalez committed grave abuse of discretion in not finding
probable cause to indict respondents.  The complainants who claimed to have been defrauded by
67

respondents and the documents and equipment seized show that respondent Price Richardson was
engaged in buying and selling securities without license or authority.  On the liability of respondents
68
Velarde-Albert and Resnick, petitioner asserts that the seized documents sufficiently show that they
acted as salesmen or associated persons under Section 28 of the Securities Regulation Code. 69

On December 7, 2011, respondent Price Richardson filed its Comment,  arguing that the
70

determination of probable cause is an executive function and is reviewable by courts only upon
showing of grave abuse of discretion.  The Department of Justice did not gravely abuse its
71

discretion when it found that there was no probable cause to indict respondents for violation of the
Securities Regulation Code.  Respondent Price Richardson's former employees' sworn statements
72

contained factual claims that were outside their personal knowledge or conclusions of law that were
beyond their capacity to make. 73

Respondent Price Richardson insists that Section 28 of the Securities Regulation Code prohibits
anyone from engaging in the business of buying and selling securities without registration from the
Securities and Exchange Commission if those transactions are offered "to the public within the
Philippines[.]"  This provision does not apply in this case because the alleged buyers of securities
74

were not citizens of or resided in the Philippines. Additionally, the allegedly sold or offered securities
were registered outside the Philippines, where the alleged sales also transpired. Hence, these sales
are not under the Philippine jurisdiction. 75

Respondent Resnick filed his Comment  on January 11, 2012 while respondent Velarde-Albert filed
76

her Comment on April 23, 2013. Both respondents argue that the complaints did not allege any act
77

attributable to them or related to the alleged transactions involved.  Respondent Velarde Albert also
78

contends that there was no question of law raised in the Petition, which is required in a Rule 45
petition. 79

On November 4, 2013, petitioner filed its Consolidated Reply.  Petitioner posits that direct invocation
80

of this Court's original jurisdiction is allowed as its petition is an exception to the rule that only
questions of law may be raised in a Rule 45 petition.  Petitioner alleges that the Court of Appeals'
81

grave abuse of discretion and its Decision, which was based on a misapprehension of facts and was
contradicted by evidence on record,  make its Petition an exception to the rule.
82 83

On December 2, 2013, this Court issued a Resolution,  giving due course to the Petition and
84

required the parties to file their respective memoranda.

Petitioner filed its Memorandum  on March 21, 2014. Respondents Velarde-Albert, Resnick, and
85

Price Richardson submitted their Memoranda on February 24, 2014,  April 3, 2014,  and May 8,
86 87

2014,  respectively.
88

This Court resolves the following issues:

First, whether courts may pass upon the prosecutor's determination of probable cause; and
Finally, whether there is probable cause to indict respondents for violation of Sections 26.3 and 28 of
the Securities Regulation Code and Article 315(1)(b) of the Revised Penal Code
I
Courts may pass upon the prosecutor's determination of probable cause only upon a showing of
grave abuse of discretion.
Probable cause, in relation to the filing of an information, was explained by this Court in Villanueva v.
Secretary of Justice: 89

Probable cause, for purposes of filing a criminal information, has been defined as such facts as are
sufficient to engender a well-founded belief that a crime has been committed and that the private
respondent is probably guilty thereof. It is such a state of facts in the mind of the prosecutor as
would lead a person of ordinary caution and prudence to believe or entertain an honest or strong
suspicion that a thing is so. The term does not mean "actual or positive cause;" nor does it import
absolute certainty. It is merely based on opinion and reasonable belief. Thus, a finding of probable
cause does not require an inquiry into whether there is sufficient evidence to procure a conviction. It
is enough that it is believed that the act or omission complained of constitutes the offense charged. 90

The definition of probable cause was lifted from Rule 112, Section 1, paragraph 1 of the Revised
Rules of Criminal Procedure, which states:
RULE 112
Preliminary Investigation
Section 1. Preliminary Investigation Defined; When Required. - Preliminary investigation is an inquiry
or proceeding to determine whether there is sufficient ground to engender a well-founded belief that
a crime has been committed and the respondent is probably guilty thereof, and should be held for
trial.
Under Rule 112, preliminary investigation must be conducted to determine the existence of probable
cause.  In Andres v. Justice Secretary Cuevas, this Court stressed that:
91 92

[Preliminary investigation] is not the occasion for the full and exhaustive display of their evidence.
The presence or absence of the elements of the crime is evidentiary in nature and is a matter of
defense that may be passed upon after a full-blown trial on the merits.
In fine, the validity and merits of a party's defense or accusation, as well as admissibility of
testimonies and evidence, are better ventilated during trial proper than at the preliminary
investigation level. (Citations omitted)
93

It has long been established that the determination of probable cause to charge a person of a crime
is an executive function,  which pertains to and lies within the discretion of the public prosecutor and
94

the justice secretary. 95

If the public prosecutor finds probable cause to charge a person with a crime, he or she causes the
filing of an information before the court.  The court may not pass upon or interfere with the
96

prosecutor's determination of the existence of probable cause to file an information regardless of its
correctness.  It does not review the determination of probable cause made by the prosecutor. It
97

does not function as the prosecutor's appellate court. Thus, it is also the public prosecutor who
98

decides "what constitutes sufficient evidence to establish probable cause." 99

However, if the public prosecutor erred in its determination of probable cause, an appeal can be
made before the Department of Justice Secretary. Simultaneously, the accused may move for the
suspension of proceedings until resolution of the appeal. 100

Upon filing of the information before the court, judicial determination of probable cause is initiated.
The court shall make a personal evaluation of the prosecutor's resolution and its supporting
evidence.  Unlike the executive determination of probable cause, the purpose of judicial
101

determination of probable cause is "to ascertain whether a warrant of arrest should be issued
against the accused."  This determination is independent of the prosecutor's determination of
102

probable cause and is a function of courts for purposes of issuance of a warrant of arrest.
Judicial determination of probable cause is in consonance with Article III, Section 2 of the
Constitution:
ARTICLE III
Bill of Rights
....
Section 2. The right of the people to be secure in their persons, houses, papers, and effects against
unreasonable searches and seizures of whatever nature and for any purpose shall be inviolable,
and no search warrant or warrant of arrest shall issue except upon probable cause to be determined
personally by the judge after examination under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the place to be searched and the persons or
things to be seized. (Emphasis supplied)
Accordingly, a judge may immediately dismiss the case if he or she finds that there is no probable
cause to issue a warrant of arrest based on the records.  To protect the accused's right to
103

liberty,  the trial court may dismiss an information based on "its own independent finding of lack of
104

probable cause"  when an information has already been filed and the court is already set to
105

determine probable cause to issue a warrant of arrest.

Thus, the general rule is that the determination of probable cause is an executive function which
courts cannot pass upon. As an exception, courts may interfere with the prosecutor's determination
of probable cause only when there is grave abuse of discretion.  Grave abuse of discretion
106

constitutes "a refusal to act in contemplation of law or a gross disregard of the Constitution, law, or
existing jurisprudence, [accompanied by] a whimsical and capricious exercise of judgment
amounting to lack of jurisdiction."
107

A prosecutor gravely abuses his or her discretion in not finding probable cause by disregarding or
overlooking evidence that "are sufficient to form a reasonable ground to believe that the crime ... was
committed and that the respondent was its author."  Further, "what is material to a finding of
108

probable cause is the commission of acts constituting [the offense], the presence of all its elements
and the reasonable belief, based on evidence, that the respondent had committed it." 109

In this case, grave abuse of discretion exists, which warrants this Court's interference in the conduct
of the executive determination of probable cause.
II
Petitioner provided sufficient bases to form a belief that a crime was possibly committed by
respondent Price Richardson.
The complaint alleged that respondents committed violations of the following:
SECURITIES REGULATION CODE
Section 26. Fraudulent Transactions. - It shall be unlawful for any person, directly or indirectly, in
connection with the purchase or sale of any securities to:
....
26.3. Engage in any act, transaction, practice or course of business which operates or would operate
as a fraud or deceit upon any person.
....
Section 28. Registration of Brokers, Dealers, Salesmen and Associated Persons. - 28.1. No person
shall engage in the business of buying or selling securities in the Philippines as a broker or dealer, or
act as a salesman, or an associated person of any broker or dealer unless registered as such with
the Commission.
REVISED PENAL CODE
ARTICLE 315. Swindling (Estafa). - Any person who shall defraud another by any of the means
mentioned hereinbelow shall be punished by:
....
4th. By arresto mayor in its medium and maximum periods, if such amount does not exceed 200
pesos, provided that in the four cases mentioned, the fraud be committed by any of the following
means:
1. With unfaithfulness or abuse of confidence, namely:
....
(b) By misappropriating or converting, to the prejudice of another, money, goods, or any other
personal property received by the offender in trust or on commission, or for administration, or under
any other obligation involving the duty to make delivery of or to return the same, even though such
obligation be totally or partially guaranteed by a bond; or by denying having received such money,
goods, or other property.
An examination of the records reveals that probable cause exists to file an information against
respondent Price Richardson for violating the laws.
Based on the Certification  dated October 11, 2001 issued by the Market Regulation Department of
110

the Securities and Exchange Commission, respondent Price Richardson "has never been issued any
secondary license to act as broker/dealer in securities, investment house and dealer in government
securities."  Petitioner also certified that respondent Price Richardson "is not, under any
111

circumstances, authorized or licensed to engage and/or solicit investments from clients." 112

However, the documents seized from respondent Price Richardson's office show possible sales of
securities. These documents include:
a) A company brochure consisting of 8 pages which declares that it is a financial consultant geared
towards portfolio investment advice and other financial services to investors ...
b) Detailed Quotes of OWTNF Otis-Winston Ltd. shares downloaded from the Bloomberg.com
website which indicates its price, return, fundamentals and other matters ...
c) Confirmation of Trade issued by the respondent to its client MR. PETER VAN DER HAEGEN
which indicates that he bought on Oc[to]ber 16, 2001 750 Otis-[W]inston Ltd at $4.15 price per share
for $3,112.50 ...
d) Confirmation of Trade issued by the respondent to MR. RENNY NAIR who bought 500 shares of
Hugo International (HGOI) at $5.75 per share for which he paid $2,932.50 ... and Telegraphic
Transfer from Oman U.A.E. Exchange Centre & Co. LLC made by Mr. Nair to PRICE RICHARDSON
to the latter's bank account No. 103-719221-0 in China Banking Corporation in the amount of
$2932.50 ...
e) Confirmation of Trade issued by the respondent to MR. JOHANNES DE KORTE who bought 500
shares of Otis-Winston Ltd (OWTNF) at $5.05 per share for which he paid $2,575.50 ...
f) Confirmation of Trade issued by the respondent to MR. JUERGEN GEIGER who bought 2500
shares of Hugo International at $4.65 per share for which he paid $11,857.50 ...
g) Confirmation of Trade issued by the respondent to MR. ZULKEPLI HAMID who bought 2000
shares of OWTNF at $5.05 per share for which he paid $10,302 ...
h) Telegraphic Transfers issued by China Banking Corporation to Union Bank of California
International NY with Price Richardson as the Order Party and M.L. Vitale as the beneficiary in the
amount of $2000 and Citibank Belgium as the Beneficiary Bank ...
i) Confirmation of Trade issued by the respondent to MR. Junzo Watanabe who bought 2500 shares
of OWTNF at $3.90 per share and sold 1500 Geoalert (GEOA) shares for which he paid $3,525 ...
j) First Hawaiian Bank check issued by Junzo Watanabe payable to the Order of Price
Richardson[.] 113

Petitioner further supports its charges by submitting the complaint-affidavits and letters of individuals
who transacted with Price Richardson:
The SEC has submitted the complaint of Mr. Don Sextus Nilantha, a citizen of Sri Lanka who clearly
named Price Richardson as selling him 1000 shares of Hugo Intl. Telecom, Inc. sometime in April
2001. At such time, and until today, Price Richardson was not authorized to act as traders or brokers
o[f] securities in the Philippines.
Furthermore, there are other complainants against Price Richardson who deserve to have their
complaints aired and tried before the proper court.  Mr. Johannes Jacob Van Prooyen filed a
1âwphi1

complaint against Price Richardson with the National Bureau of Investigation ... In the said
complaint, Mr. Van Prooyen clearly pointed to Price Richardson as the ones who contacted him on
June 12, 2001 to buy 2000 shares of Hugo Intl. Telecom, Inc. and on July 10, 2001 to buy 2000
shares of GeoAlert. At no time at such relevant dates was Price Richardson licensed to act as
traders or brokers of securities in the Philippines.
Mr. Bjorn L. Nymann of Oslo, Norway wrote about Price Richardson to this very same Department of
Justice, which letter was received on July 9, 2002. In his letter Mr. Nymann admitted dealing with
Price Richardson. He admitted to having bought 3000 shares of Hugo Intl. Telecom, Inc .... Although
Mr. Nymann is not a complaining witness against Price Richardson, his letter is relevant as at no
time at such relevant date was Price Richardson licensed to act as traders or brokers of securities in
the Philippines. 114

In addition, respondent Price Richardson stated in its Memorandum:

If this Honorable Court were to consider the set-up of Price Richardson, it was as if it engaged in
outsourced operations wherein persons located in the Philippines called up persons located in
foreign locations to inform them of certain securities available in certain locations, and to determine if
they wanted to buy these securities which are offered in a different country. 115
The evidence gathered by petitioner and the statement of respondent Price Richardson are facts
sufficient enough to support a reasonable belief that respondent is probably guilty of the offense
charged.
III
However, respondents Velarde-Albert and Resnick cannot be indicted for violations of the Securities
Regulation Code and the Revised Penal Code.
Petitioner failed to allege the specific acts of respondents Velarde-Albert and Resnick that could be
interpreted as participation in the alleged violations.  There was also no showing, based on the
1âwphi1

complaints, that they were deemed responsible for Price Richardson's violations. As found byState
Prosecutor Reyes in his March 13, 2002 Resolution:
[T]here is no sufficient evidence to substantiate SEC's allegation that individual respondents, Connie
Albert and Gordon Resnick, acted as broker, salesman or associated person without prior
registration with the Commission. The evidence at hand merely proves that the above-named
respondents were not licensed to act as broker, salesman or associated person. No further proof,
however, was presented showing that said respondents have indeed acted as such in trading
securities. Although complainant SEC presented several confirmation of trade receipts and
documents intended to establish respondents Albert and Resnick illegal activities, the said
documents, standing alone as heretofore stated, could not warrant the indictment of the two
respondents for the offense charged. 116

A corporation's personality is separate and distinct from its officers, directors, and shareholders. To
be held criminally liable for the acts of a corporation, there must be a showing that its officers,
directors, and shareholders actively participated in or had the power to prevent the wrongful act.117

WHEREFORE, premises considered, the Petition is PARTIALLY GRANTED. The Court of Appeals

Decision dated May 26, 2011 and Department of Justice Secretary Raul M. Gonzalez's Resolutions
dated April 12, 2005 and July 5, 2006 are AFFIRMED in so far as they find no grave abuse of
discretion in the dismissal of the complaints for lack of probable cause against Consuelo Velarde-
Albert and Gordon Resnick for: a) committing Estafa under Article 315(1)(b) of the Revised Penal
Code and b) violating Sections 26.3 and 28 of the Securities Regulation Code.
This Court, however, finds that the dismissal of the complaint for lack of probable cause against
Price Richardson Corporation for violation of Sections 26.3 and 28 of the Securities Regulation Code
was rendered with grave abuse of discretion amounting to lack or excess of jurisdiction and is,
thus, ANNULLED and SET ASIDE.
SO ORDERED.
 November 23, 2016
G.R. No. 203770
MANUELA AZUCENA MAYOR, Petitioner 
vs.
EDWIN TIU and DAMIANA CHARITO MARTY, Respondents
DECISION
MENDOZA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the October
5, 2011  and September 24, 2012  Resolutions of the Court of Appeals (CA) in CA-G.R. SP No.
1 2

06256, which dismissed the petition filed by Remedios Tiu (Remedios) and Manuela Azucena
Mayor (Manuela) for procedural infirmities. The said CA petition challenged the January 20,
2011  and June 10, 2011  Orders of the Regional Trial Court, Branch 6, Tacloban City (RTC-Br.
3 4

6), in Sp. Proc. No. 2008-05-30, a case for Probate of Last Will and Testament and Issuance of
Letters of Testamentary.
The Antecedents:
On May 25, 2008, Rosario Guy-Juco Villasin Casilan (Rosario), the widow of the late Primo
Villasin (Primo), passed away and left a holographic Last Will and Testament,  wherein she named
5

her sister, Remedios Tiu (Remedios), and her niece, Manuela Azucena Mayor (Manuela), as

executors. Immediately thereafter, Remedios and Manuela filed a petition for the probate of
Rosario's holographic will  with prayer for the issuance of letters testamentary (probate
6

proceedings). The petition was raffled to the Regional Trial Court, Branch 9, Tacloban City (RTC-Br.
9) and docketed as Sp. Proc. No. 2008-05-30. They averred that Rosario left properties valued at
approximately ₱2.5 million.
On May 29, 2008, respondent Damiana Charito Marty (Marty) claiming to be the adopted daughter
of Rosario, filed a petition for letters of administration before the RTC, Branch 34, Tacloban
City (RTC- Br. 34), docketed as Sp. Proc. No. 2008-05-32, but it was not given due course because
of the probate proceedings. Per records, this dismissal is subject of a separate proceeding filed by
Marty with the CA Cebu City, docketed as CA-G.R. SP No. 04003. 7

On June 12, 2008, in its Order,  the RTC-Br. 9 found the petition for probate of will filed by Remedios
8

and Manuela as sufficient in form and substance and set the case for hearing.
Consequently, Marty filed her Verified Urgent Manifestation and Motion,  dated June 23, 2008,
9

stating that Remedios kept the decedent Rosario a virtual hostage for the past ten (10) years and
her family was financially dependent on her which led to the wastage and disposal of the properties
owned by her and her husband, Primo. Marty averred that until the alleged will of the decedent could
be probated and admitted, Remedios and her ten (10) children had no standing to either possess or
control the properties comprising the estate of the Villasins. She prayed for the probate court to: 1)
order an immediate inventory of all the properties subject of the proceedings; 2) direct the tenants of
the estate, namely, Mercury Drug and Chowking, located at Primrose Hotel, to deposit their rentals
with the court; 3) direct Metro bank, P. Burgos Branch, to freeze the accounts in the name of
Rosario, Primrose Development Corporation (Primrose) or Remedios; and 4) lock up the Primrose
Hotel in order to preserve the property until final disposition by the court.
On July 8, 2008, Remedios and Manuela filed their Comment/Opposition  to the urgent
10

manifestation averring that Marty was not an adopted child of the Villasins based on a certification
issued by the Office of the Clerk of Court of Tacloban City, attesting that no record of any adoption
proceedings involving Marty existed in their records. They also argued that the probate court had no
jurisdiction over the properties mistakenly claimed by Marty as part of Rosario's estate because
these properties were actually owned by, and titled in the name of, Primrose. Anent the prayer to
direct the tenants to deposit the rentals to the probate court, Remedios and Manuela countered that
the probate court had no jurisdiction over properties owned by third persons, particularly by
Primrose, the latter having a separate and distinct personality from the decedent's estate.
In her Reply,  dated July 15, 2008, Marty cited an order of the Court of First Instance of Leyte (CF!
11

Leyte) in SP No. 1239,  claiming that as early as March 3, 1981, the veil of corporate entity of
12

Primrose was pierced on the ground that it was a closed family corporation controlled by Rosario
after Primo's death. Thus, Marty alleged that "piercing" was proper in the case of Rosario's estate
because the incorporation of Primrose was founded on a fraudulent consideration, having been done
in contemplation of Primo's death.
Further, on July 22, 2008, in her Opposition to the Petition for the Approval of the Will of the Late
Rosario Guy-Juco Villasin Casilan,  Marty impugned the authenticity of her holographic will.
13

Meanwhile, Edwin Tiu (Edwin), a son of Remedios, also filed his Opposition,  dated June 13, 2008.
14

After a protracted exchange of pleadings, the parties submitted their respective memoranda.
The January 14, 2009 Order
In its January 14, 2009 Order,  the RTC-Br. 9 granted the motion of Marty and appointed the OIC
15

Clerk of Court as special administrator of the Estate. The Probate Court also ordered Mercury Drug
and Chowking to deposit the rental income to the court and Metrobank to freeze the bank accounts
mentioned in the motion of Marty. The doctrine of piercing the corporate veil was applied in the case
considering that Rosario had no other properties that comprised her estate other than Primrose.
According to the probate court, for the best interest of whoever would be adjudged as the legal heirs
of the Estate, it was best to preserve the properties from dissipation.
On January 22, 2009, Remedios and Manuela filed their Motion for Inhibition  on the ground of their
16

loss of trust and confidence in RTC-Br. 9 Presiding Judge Rogelio C. Sescon (Judge Sescon) to
dispense justice. Later, they also filed their Motion for Reconsideration Ad Cautelam,  dated
17

February 3, 2009, arguing that Rosario's estate consisted only of shares of stock in Primrose and not
the corporation itself. Thus, the probate court could not order the lessees of the corporation to remit
the rentals to the Estate's administrator. With regard to the appointment of a special administrator,
Remedios and Manuela insisted that it be recalled. They claimed that if ever there was a need to
appoint one, it should be the two of them because it was the desire of the decedent in the will
subject of the probation proceedings.
In its Order,  dated March 27, 2009, the RTC-Br. 9 denied the motion for reconsideration for lack of
18

merit and affirmed its January 14, 2009 Order. The presiding judge, Judge Sescon, also granted the
motion for inhibition and ordered that the records of the case be referred to the RTC Executive
Judge for reraffling. The case was later re-raffled to RTC-Br.6, Judge Alphinor C. Serrano, presiding
judge.
Aggrieved by the denial of their motion for reconsideration, Remedios and Manuela filed a petition
for certiorari with the CA in Cebu City, docketed as CA-G.R. S.P. No. 04254, assailing the January
14, 2009 and March 27, 2009 Orders of the RTC-Br. 9. 19

Ruling of the CA
In its October 16, 2009 Decision,  the CA reversed the assailed orders of the RTC Br. 9, except as
20

to the appointment of a special administrator insofar as this relates to properties specifically

belonging to the "Estate." It held that Primrose had a personality separate and distinct from the
estate of the decedent and that the probate court had no jurisdiction to apply the doctrine of
piercing the corporate veil.
According to the CA, nowhere in the assailed orders of the probate court was it stated that its
determination of the title of the questioned properties was only for the purpose of determining
whether such properties ought to be included in the inventory. When the probate court applied the
doctrine of "piercing," in effect, it adjudicated with finality the ownership of the properties in favor of
the Estate. The CA stated that RTC-Br. 9 had no jurisdiction to adjudicate ownership of a property
claimed by another based on adverse title; and that questions like this must be submitted to a court
of general jurisdiction and not to a probate court.
The CA added that assuming that the probate court's determination on the issue of ownership was
merely intended to be provisional, Marty's contentions still had no merit. The properties, which she
claimed to be part of the estate of Rosario and over which she claimed co-ownership, comprised of
real properties registered under the Torrens system. As such, Primrose was considered the owner
until the titles to those properties were nullified in an appropriate ordinary action. The CA further
stated that the RTC erroneously relied on the order issued by the CFI Leyte in 1981, in the probate
proceedings involving the estate of Primo. Whatever determination the CFI made at the time
regarding the title of the properties was merely provisional, hence, not conclusive as to the
ownership.
By reason of the favorable decision by the CA, Remedios and Manuela filed their Motion to Partially
Revoke the Writ of Execution Enforcing the January 14, 2009 Order of the Honorable Court and
Manifestation in Compliance with the October 21, 2009 Order (Ad Cautelam),  dated October 27,
21

2009.
In its Order,  dated November 17, 2009, the RTC-Br. 6 partially granted the motion as it revoked the
22

power of the special administrator to oversee the day-to-day operations of Primrose. It also revoked
the order with respect to Mercury Drug and Chowking, reasoning out that the said establishments
dealt with Primrose, which had a personality distinct and separate from the estate of the decedent. In
the said order, Atty. Blanche A. Salino nominated by oppositors Marty and Edwin, was appointed
special administrator to oversee the day-to-day operations of the estate. The same order also upheld
the January 14, 2009 Order, as to the conduct and inventory of all the properties comprising the
estate.
This order was not questioned or appealed by the parties.
Omnibus Motion
On September 24, 2010, or almost ten (10) months after the November 17, 2009 Order of the
probate court was issued, Marty, together with her new counsel, filed her Omnibus Motion,  praying
23

for the probate court to: 1) order Remedios and Manuela to render an accounting of all the
properties and assets comprising the estate of the decedent; 2) deposit or consign all rental
payments or other passive income derived from the properties comprising the estate; and 3) prohibit
the disbursement of funds comprising the estate of the decedent without formal motion and approval
by the probate court.
Ruling of the RTC-Br. 6
In its January 20, 2011 Order, the RTC-Br. 6 granted Marty's Omnibus Motion. Although it agreed
with the October 16, 2009 CA Decision reversing the January 14, 2009 Order of the RTC-Br. 9,
nonetheless, it acknowledged the urgency and necessity of appointing a special administrator.
According to the probate court, considering that there was clear evidence of a significant decrease of
Rosario's shares in the outstanding capital stock of Primrose, prudence dictated that an inquiry into
24

the validity of the transfers should be made. A final determination of this matter would be outside the
limited jurisdiction of the probate court, but it was likewise settled that the power to institute an action
for the recovery of a property claimed to be part of the estate was normally lodged with the executor
or administrator. Thus, the probate court disposed:
WHEREFORE, for the reasons aforestated, and so as not to render moot any action that the special
administrator, or the regular administrator upon the latter's qualification and appointment, may deem
appropriate to take on the matter (i.e. Whether or not to institute in the name of the estate the
appropriate action for the recovery of the shares of stock), this Court hereby GRANTS Oppositor
Marty's Omnibus Motion, dated September 24, 2010, and thus hereby:
1. DIRECTS petitioners, either individually or jointly, to: (a) RENDER AN ACCOUNTING of all the
properties and assets comprising the estate of the decedent that may have come into their
possession; and, (b) DEPOSIT OR CONSIGN all the rentals payments or such other passive
incomes from the properties and assets registered in the name of Primrose Development
Corporation, including all income derived from the Primrose Hotel and the lease contracts with
Mercury Drug and Chowking Restaurant, both within fifteen (15) days from receipt of this Order;
2. DIRECTS the Special Administrator to take possession and charge of the properties comprising
the decedent's estate, specially those pertaining to the sharesholding of the decedent in Primrose
Development Corporation, to determine whether or not action for the recovery of the shares of stock
supposedly transferred from the decedent to petitioners Remedios Tiu, Manuela Azucena Mayor
should be instituted in the name of the estate against the said transferees and to submit a Report on
the foregoing matters to this Court, within fifteen (15) days from receipt of this Order; and,
3. ORDERS that no funds comprising the estate of the decedent shall be disbursed without formal
Motion therefor, with the conformity of the Special Administrator, duly approved by this Court.
SO ORDERED.  [Underscoring supplied]
25

The partial motion for reconsideration of the above order filed by Remedios and Manuela was
denied in the other assailed order of the RTC-Br. 6, dated June 10, 2011. 26

Dissatisfied, Remedios and Manuela availed of the special civil action of certiorari under Rule 65,
and filed a petition before the CA.
Action by the CA
The CA, however, in its October 5, 2011 Resolution,  dismissed the same based on the following
27

infirmities: 1) there was no proper proof of service of a copy of the petition on the respondents which
was sent by registered mail; 2) petitioners failed to indicate on the petition the material date when
the motion for reconsideration was filed; 3) the copy of the assailed order was not certified true and
correct by the officer having custody of the original copy; and 4) the serial number of the commission
of the notary public, the province-city where he was commissioned, the office address of the notary
public and the roll of attorney's number were not properly indicated on the verification and
certification of non-forum shopping.
Remedios and Manuela moved for reconsideration of the assailed CA resolution, but to no avail, as
the appellate court denied the motion in its September 24, 2012 Resolution.
Hence, this petition before the Court, filed only by Manuela as Remedios had also passed away, and
anchored on the following
GROUNDS
I.
THE HONORABLE COURT OF APPEALS COMMITTED GROSS AND REVERSIBLE ERROR IN
THE APPLICATION OF LAW AND THE RULES WARRANTING REVIEW WHEN IT MISAPPLIED
SECTION 13, RULE 13 OF THE RULES OF COURT AND DECLARED THAT THERE WAS NO
PROPER PROOF OF SERVICE BY REGISTERED MAIL.
II.
THE HONORABLE COURT OF APPEALS COMMITTED GROSS AND REVERSIBLE ERROR IN
THE APPLICATION OF LAW AND THE RULES WARRANTING REVIEW WHEN IT MISAPPLIED
JURISPRUDENCE AND RULE 65 AND IT HELD THAT PETITIONER MAYOR DID NOT COMPLY
WITH THE MATERIAL DATE RULE.
III.
THE HONORABLE COURT OF APPEALS COMMITTED GROSS AND REVERSIBLE ERROR IN
THE APPLICATION OF LAW AND THE RULES WARRANTING REVIEW WHEN IT DECLARED
THAT PETITIONER MAYOR FAILED TO COMPLY WITH THE REQUIREMENT OF SECTION 1,
RULE 65 FOR FAILING TO ATTACH CERTIFIED TRUE COPY OF THE ORDER OF THE TRIAL
COURT.
IV.
THE HONORABLE COURT OF APPEALS COMMITTED GROSS AND REVERSIBLE ERROR IN
THE APPLICATION OF LAW AND THE RULES WARRANTING REVIEW WHEN IT DECLARED
THAT PETITIONER MAYOR DID NOT COMPLY WITH THE REQUIREMENT OF VERIFICATION
AND CERTIFICATION AGAINST FORUM SHOPPING.
V.
THE HONORABLE COURT OF APPEALS COMMITTED GROSS AND REVERSIBLE ERROR IN
THE APPLICATION OF LAW AND THE RULES WARRANTING REVIEW WHEN IT ALLOWED
TECHNICALITIES TO BE USED TO DEFEAT SUBSTANTIAL RIGHT OF THE PARTIES.
VI.
PETITIONERS HA VE GOOD CAUSE AND A MERITORIOUS CASE AGAINST HEREIN
RESPONDENTS AS PARAGRAPH l(B) OF THE DISPOSITIVE PORTION OF THE FIRST
ASSAILED ORDER SHOULD HA VE BEEN REVERSED BECAUSE IT OVERTURNS THE
DECISION OF THE COURT OF APPEALS DATED 16 OCTOBER 2009 WHICH HAS LONG
BECOME FINAL AND EXECUTORY. 28

Petitioner Manuela argued that:

1) There was actual compliance with Section 13, Rule 13 of the Rules of Court. The
CA petition was accompanied by a notarized affidavit of service and filing of
registered mail. At the time the petition was filed, this was the best evidence of the
service. The other registry receipts for the other parties were also attached to the
petition. Further, the available registry return card was furnished the CA in the motion
for reconsideration. 29

2) The failure of the petition to comply with the rule on a statement of material dates
could be excused because the dates were evident from the records. 30

3) The petitioner went to the RTC of Tacloban to secure certified true copies of the
assailed orders. Only the stamped name of the Clerk of Court, however, appeared
thereon, because the particular branch had no stamp pad which had the phrase for
certification. The branch did not even have a typewriter in order to affix the phrase on
the copies. These inadequacies could not be attributed to the petitioners. 31

4) The lack of information pertaining to the notary public in the verification and
certification against forum-shopping should not invalidate the same because, again, it
was not attributable to the parties. 32

5) Technicalities should never be used to defeat the substantive rights of a party.33

In its January 23, 2013 Resolution  the Court ordered the respondents to file their respective
34

comments. Marty, in her Comment, insisted that the petitioner failed to comply with the procedural
requirements as stated by the CA. 35

In her Reply to Comment,  petitioner Manuela clarified that the affidavit of service was executed on
36

August 31, 2011, which was after the petition was signed by the lawyers and after it was verified by
the petitioner herself. After contesting Marty's arguments on the alleged procedural infirmities of the
petitions with the CA and this Court, Manuela asserted that the final and executory October 16, 2009
Decision of the CA already held that Primrose had a personality separate and distinct from the
estate of decedent Rosario.
Meanwhile, in his Manifestation,  dated May 29, 2013, Edwin affirmed that he and Manuela decided
37

to patch up their differences and agreed to settle amicably. Accordingly, he manifested that he was
withdrawing from the case pursuant to their agreement.
On June 18, 2014, Manuela filed her Motion for Issuance of Temporary Restraining Order and Writ
of Preliminary Injunction  on the ground that a flurry of orders had been issued by the RTC-Br. 6 in
38

the implementation of the assailed January 20, 2011 Order, such as the Order,  dated May 27,
39

2013, wherein the probate court vaguely ordered "the inventory of the exact extent of the 'decedent's
estate."' Then another order was issued appointing an auditing firm to conduct an inventory/audit of
the Estate including the rentals and earnings derived from the lease of Mercury Drug and Chowking
Restaurant, as tenants of Primrose.  According to petitioner Manuela, although an inventory of the
40

assets of the decedent was proper, the probate court ordered an inventory of the assets of Primrose,
a separate and distinct entity. Manuela asserts that it was clearly in error.
In her Supplement to the Motion for Issuance of Temporary Restraining Order and Writ of
Preliminary Injunction, dated June 17, 2013, Manuela informed the Court that the inventory and
41

accounting of Primrose would already commence on June 19, 2013.

Marty filed her Opposition,  dated July 3, 2013, stating that the petition of Manuela had been
42

rendered moot and academic as the probate court had declared her as the sole heir of Rosario and
appointed her administrator of the estate. She argued that an injunctive relief would work injustice to
the estate because of the total assimilation by petitioner of the shareholdings of the decedent in
Primrose and her share in the corporation's income corresponding to her shareholdings.
Finding that the requisites for preliminary injunctive relief were present,  the Court issued the
43

TRO  in favor of Manuela on October 14, 2013. At the outset, the Court was convinced that the
44

rights of Primrose sought to be protected by the grant of injunctive relief were material and
substantial and the TRO was issued in order to prevent any irreparable damage to a corporate entity
that could arise from the conduct of an accounting by the court-appointed inventory.
The Court's Ruling
The Court now resolves the subject case by the issuance of a permanent injunction, as prayed for by
petitioner Manuela. This position is supported by law and jurisprudence, as follows:
First. Artificial persons include (1) a collection or succession of natural persons forming a
corporation; and (2) a collection of property to which the law attributes the capacity of having rights
and duties. This class of artificial persons is recognized only to a limited extent in our law. Example
is the estate of a bankrupt or deceased person. From this pronouncement, it can be gleaned that the
45

estate of the deceased person is a juridical person separate and distinct from the person of the
decedent and any other corporation. This status of an estate comes about by operation of law. This
is in consonance with the basic tenet under corporation law that a corporation has a separate
personality distinct from its stockholders and from other corporations to which it may be connected. 46

Second. The doctrine of piercing the corporate veil has no relevant application in this case. Under
this doctrine, the court looks at the corporation as a mere collection of individuals or an aggregation
of persons undertaking business as a group, disregarding the separate juridical personality of the
corporation unifying the group. Another formulation of this doctrine is that when two business
enterprises are owned, conducted and controlled by the same parties, both law and equity will, when
necessary to protect the rights of third parties, disregard the legal fiction that two corporations are
distinct entities and treat them as identical or as one and the same.  The purpose behind piercing a
47

corporation's identity is to remove the barrier between the corporation and the persons comprising it
to thwart the fraudulent and illegal schemes of those who use the corporate personality as a shield
for undertaking certain proscribed activities.48

Here, instead of holding the decedent's interest in the corporation separately as a stockholder, the
situation was reversed. Instead, the probate court ordered the lessees of the corporation to remit
rentals to the estate's administrator without taking note of the fact that the decedent was not the
absolute owner of Primrose but only an owner of shares thereof. Mere ownership by a single
stockholder or by another corporation of all or nearly all of the capital stocks of a corporation is not of
itself a sufficient reason for disregarding the fiction of separate corporate personalities.  Moreover, to
49

disregard the separate juridical personality of a corporation, the wrongdoing cannot be presumed,
but must be clearly and convincingly established. 50

Third. A probate court is not without limits in the determination of the scope of property covered in
probate proceedings. In a litany of cases, the Court had defined the parameters by which a probate
court may extend its probing arms in the determination of the question of title in probate
proceedings. In Pastor, Jr. vs. Court of Appeals,  the Court explained that, as a rule, the question of
51

ownership was an extraneous matter which the probate court could not resolve with finality. Thus, for
the purpose of determining whether a certain property should, or should not, be included in the
inventory of estate properties, the probate court may pass upon the title thereto, but such
determination is provisional, not conclusive, and is subject to the final decision in a separate action
to resolve title. It is a well-settled rule that a probate court or one in charge of proceedings, whether
testate or intestate, cannot adjudicate or determine title to properties claimed to be part of the estate
but which are equally claimed to belong to outside parties. It can only determine whether they
should, or should not, be included in the inventory or list of properties to be overseen by the
administrator. If there is no dispute, well and good; but if there is, then the parties, the administrator
and the opposing parties have to resort to an ordinary action for a final determination of the
conflicting claims of title because the probate court cannot do so. 52

In this case, respondent Marty argues that the subject properties and the parcel of land on which
these were erected should be included in the inventory of Rosario's estate. More so, the arrears from
the rental of these properties were later on ordered to be remitted to the administrator of the estate
grounded on the allegation that Rosario had no other properties other than her interests in Primrose.
To the Court's mind, this holding of the probate court was in utter disregard of the undisputed fact
the subject land is registered under the Torrens system in the name of Primrose, a third person who
may be prejudiced by the orders of the probate court. In Valera vs. Inserto:  the Court stated:
53

xxx, settled is the rule that a Court of First Instance (now Regional Trial Court), acting as a probate
court, exercises but limited jurisdiction, and thus has no power to take cognizance of and determine
the issue of title to property claimed by a third person adversely to the decedent, unless the claimant
and all the other parties having legal interest in the property consent, expressly or impliedly, to the
submission of the question to the probate court for adjudgment, or the interests of third persons are
not thereby prejudiced, the reason for the exception being that the question of whether or not a
particular matter should be resolved by the Court in the exercise of its general jurisdiction or of its
limited jurisdiction as a special court (e.g. probate, land registration, etc.), is in reality not a
jurisdictional but in essence of procedural one, involving a mode of practice which may be waived.
xxxx
xxx These considerations assume greater cogency where, as here, the Torrens title to the
property is not in the decedent's names but in others, a situation on which this Court has
already had occasion to rule.  [Emphasis and underscoring supplied]
54

Thus, the probate court should have recognized the incontestability accorded to the Torrens title of
Primrose over Marty's arguments of possible dissipation of properties. In fact, in the given setting,
even evidence purporting to support a claim of ownership has to yield to the incontestability of a
Torrens title, until after the same has been set aside in the manner indicated in the law itself. In other
words, the existence of a Torrens title may not be discounted as a mere incident in special
proceedings for the settlement of the estate of deceased persons. Put clearly, if a property covered
by Torrens title is involved, "the presumptive conclusiveness of such title should be given due
weight, and in the absence of strong compelling evidence to the contrary, the holder thereof should
be considered as the owner of the property in controversy until his title is nullified or modified in an
appropriate ordinary action, particularly, when as in the case at bar, possession of the property itself
is in the persons named in the title."
55

Additionally, Presidential Decree (P.D.) No. 1529  proscribes a collateral attack on a Torrens title:

56

Sec. 48. Certificate not subject to collateral attack. - A certificate of title shall not be subject to
collateral attack.  It cannot be altered, modified or cancelled except in a direct proceeding in
1âwphi1

accordance with law.

In Cuizon vs. Ramolete,  the property subject of the controversy was duly registered under the
57

Torrens system. To this, Court categorically stated:

Having been apprised of the fact that the property in question was in the possession of third parties
and more important, covered by a transfer certificate of title issued in the name of such third
parties, the respondent court should have denied the motion of the respondent administrator
and excluded the property in question from the inventory of the property of the estate. It had
no authority to deprive such third persons of their possession and ownership of the
property.   xxx [Emphasis and underscoring supplied]
58

A perusal of the records of this case would show that that no compelling evidence was ever
presented to substantiate the position of Marty that Rosario and Primrose were one and the same,
justifying the inclusion of the latter's properties in the inventory of the decedent's properties. This has
remained a vacant assertion. At most, what Rosario owned were shares of stock in Primrose. In
turn, this boldly underscores the fact that Primrose is a separate and distinct personality from the
estate of the decedent. Inasmuch as the real properties included in the inventory of the estate of
Rosario are in the possession of, and are registered in the name of, Primrose, Marty's claims are
bereft of any logical reason and conclusion to pierce the veil of corporate fiction.
Fourth. The probate court in this case has not acquired jurisdiction over Primrose and its properties.
Piercing the veil of corporate entity applies to determination of liability not of jurisdiction; it is
basically applied only to determine established liability. It is not available to confer on the court a
jurisdiction it has not acquired, in the first place, over a party not impleaded in a case.  This is so
59

because the doctrine of piercing the veil of corporate fiction comes to play only during the trial of the
case after the court has already acquired jurisdiction over the corporation. Hence, before this
doctrine can be even applied, based on the evidence presented, it is imperative that the court must
first have jurisdiction over the corporation.
60

Hence, a corporation not impleaded in a suit cannot be subject to the court's process of piercing the
veil of its corporate fiction. Resultantly, any proceedings taken against the corporation and its
properties would infringe on its right to due process.
In the case at bench, the probate court applied the doctrine of piercing the corporate veil
ratiocinating that Rosario had no other properties that comprise her estate other than her shares in
Primrose. Although the probate court's intention to protect the decedent's shares of stock in
Primrose from dissipation is laudable, it is still an error to order the corporation's tenants to remit
their rental payments to the estate of Rosario.
Considering the above disquisition, the Court holds that a permanent and final injunction is in order
in accordance with Section 9, Rule 58 of the Rules of Court which provides that "[i]f after the trial of
the action it appears that the applicant is entitled to have the act or acts complained of permanently
enjoined, the court shall grant a final injunction perpetually restraining the party or person enjoined
from the commission or continuance of the act or acts or confirming the preliminary mandatory
injunction." Undoubtedly, Primrose stands to suffer an irreparable injury from the subject order of the
probate court.
 April 20, 2016
G.R. No. 205002
COMMISSIONER OF CUSTOMS, COLLECTOR OF CUSTOMS OF THE PORT OF BATANGAS,
and THE BUREAU OF CUSTOMS, Petitioners, 
vs.
PILIPINAS SHELL PETROLEUM CORPORATION (PSPC), WILLIE J. SARMIENTO, PSPC Vice-
President for Finance and Treasurer and ATTY. CIPRIANO U. ASILO, Respondents.
"Forum shopping exists if the [suits] raise identical causes of action, subject matter, and issues[;
thus, t]he mere filing of several cases based on the same incident does not necessarily constitute
forum shopping." 1

Factual Antecedents
Respondent Pilipinas Shell Petroleum Corporation (PSPC) is a domestic corporation engaged in the
business of manufacturing and selling petroleum products for distribution in the Philippines.
5

On January 30, 2009, petitioner District Collector Juan N. Tan, the Collector of Customs of the Port
of Batangas, issued a demand letter asking respondent PSPC to pay the excise tax and value-added
tax (VAT), plus penalty on its importation of catalytic cracked gasoline (CCG) and light catalytic
cracked gasoline (LCCG) for the years 2006 to 2008 in the total amount of P21,419,603,310.00.
Respondent PSPC, however, refused to heed the demand.
On February 18, 2009, petitioner District Collector issued another letter  reiterating the demand for
8

the payment of the said unpaid taxes.

On March 5, 2009, respondent PSPC appealed the matter to petitioner Commissioner of Customs
(COC) Napoleon Morales.
On November 11, 2009, petitioner COC denied the appeal and ordered respondent PSPC to pay the
unpaid taxes to avoid the application of Section 1508  of the Tariff and Customs Code of the
11

Philippines (TCCP). 12

Unfazed, respondent PSPC moved for reconsideration  but petitioner COC denied the same in his
13

letter  dated November 26, 2009.

14

On December 3, 2009, respondent PSPC filed with the CTA a Petition for Review  docketed as CTA
15

Case No. 8004 assailing the Letter-Decisions dated November 11 and 26, 2009 of petitioner COC.
Respondent PSPC likewise filed a Verified Motion for the issuance of a Suspension Order against
the collection of taxes with a prayer for immediate issuance of a Temporary Restraining Order
(TRO). 16

On December 9, 2009, the CTA First Division issued a Resolution granting respondent PSPC’s
application for a TRO for a period of 60 days or until February 7, 2010. 17

On February 9, 2010, after due hearing on the Verified Motion, the CTA First Division issued a
Resolution  denying respondent PSPC’s request for a suspension order.
18

In light of the denial of the Verified Motion, petitioner District Collector issued a Memorandum dated
February 9, 2010 ordering the personnel of petitioner Bureau of Customs (BOC) in the Port of
Batangas to hold the delivery of all import shipments of respondent PSPC to satisfy its excise tax
liabilities. 19

On February 10, 2010, respondent PSPC filed with the Regional Trial Court (RTC), Fourth Judicial
Region, Batangas City, Branch 3, a Complaint for Injunction with prayer for the ex-parte issuance of
a 72-hour TRO, docketed as Civil Case No. 8780, to enjoin the implementation of the Memorandum
20

dated February 9, 2010. In the Verification and Certification  attached to the Complaint for
21

Injunction, respondent Vice President for Finance and Treasurer Willie J. Sarmiento (Sarmiento)
declared that there is a pending case before the CTA, however, it involves different issues and/or
reliefs.
On the same day, the RTC issued a 72-hour TRO, which it later extended to 17 more days. 22

On March 19, 2010, petitioners filed with the CTA a Motion to Cite respondents PSPC, Sarmiento,
and Atty. Cipriano U. Asilo for Direct Contempt of Court.  As per the Resolution dated July 7, 2010,
23

the said Motion, docketed as CTA Case No. 8121, was consolidated with the main case, CTA Case
No. 8004. 24

Meanwhile, petitioner District Collector filed a Complaint-Affidavit  for Perjury under Article 183 of the
25

Revised Penal Code (RPC) against respondent Sarmiento in relation to the Verification and
Certification he filed before the RTC of Batangas City, where he declared that the Petition for Review
PSPC filed with the CTA does not involve the same issues and/or reliefs.
On April 8, 2010, an Information  for Perjury against respondent Sarmiento, docketed as Criminal
26

Case No. 52763, was filed before Branch 1 of the Municipal Trial Court in Cities (MTCC), Batangas
City.
1âwphi1

On August 9, 2010, the MTCC rendered a Resolution  dismissing the case for Perjury for lack of
27

probable cause, which later became final and executory. 28

Ruling of the Court of Tax Appeals Division

On October 18, 2010, the CTA Third Division rendered a Resolution  denying the Motion to Cite
29

respondents in Direct Contempt of Court. Although the parties in the CTA case and the Batangas
injunction case are the same, the CTA found that the rights asserted and the reliefs prayed for are
different.  It pointed out that the CTA case assails the Letter-Decisions dated November 11 and 26,
30

2009, while the Batangas injunction case opposes the Memorandum dated February 9, 2010.  The 31

CTA also opined that a decision in one case would not result in res judicata in the other case.  Thus, 32

it ruled that the filing of the Batangas injunction case does not constitute forum shopping.  And since
33

no forum shopping exists, the CTA found no reason to cite respondents in direct contempt of court.
Feeling aggrieved, petitioners moved for reconsideration  but the CTA Third Division denied the
34

same in its Resolution  dated March 9, 2011.

35

Ruling of the Court of Tax Appeals En Banc

Unfazed, petitioners elevated the matter to the CTA En Banc via a Petition for Review. 36

On June 11, 2012, the CTA En Banc rendered a Decision affirming the Resolutions dated October
18, 2010 and March 9, 2011 of the CTA Third Division.
Petitioners sought reconsideration of the Decision.
On August 28, 2012, the CTA En Banc rendered a Resolution denying petitioners’ motion for
reconsideration.
 Issue
Hence, petitioners filed the instant Petition for Review on Certiorari raising the sole issue of whether
the CTA committed a reversible error when it ruled that respondents did not commit willful and
deliberate forum shopping. 37

Petitioners’ Arguments
Petitioners contend that the CTA seriously erred in finding respondents not guilty of willful and
deliberate forum shopping considering that the Verified Motion filed before the CTA and the
Complaint for Injunction filed before the RTC of Batangas involve exactly the same parties, the same
rights, and the same reliefs.  Petitioners claim that the material allegations in both pleadings are
38

based on the same set of facts;  that both cases substantially raise the same issues;  and that both
39 40

seek to enjoin the enforcement of Section 1508 of the TCCP.  Petitioners further claim that the
41

phrase "to refrain or stop from exercising any action described in, under or pursuant to, Section 1508
of the TCCP" in the prayer of the Verified Motion is all-encompassing as it includes whatever relief
respondent PSPC sought in the Complaint for Injunction filed before the RTC.  Moreover, petitioners
42

allege that the filing of the Complaint for Injunction was done in utter disrespect of the CTA exclusive
jurisdiction;  that it was a calculated maneuver of respondents to undermine the CTA’s denial of their
43

prayer for the issuance of a suspension order; and that it should not be allowed, as it constitutes
44

forum shopping.  Finally, petitioners assert that the dismissal of the perjury case against respondent
45

Sarmiento does not estop them from claiming that respondents are guilty of forum shopping, as the
elements of perjury are not the same as that of contempt via willful forum shopping. 46

Respondents’ Arguments
Respondents, on the other hand, argue that the issue of forum shopping may no longer be re-
opened or re-litigated, as this has long been resolved with finality in the criminal case for perjury filed
against respondent Sarmiento. They
insist that the dismissal of the criminal complaint for perjury against respondent Sarmiento on the
ground that there is no forum shopping for which reason the third element of perjury is wanting, is
binding on the CTA.  Thus, petitioners are barred by prior judgment  and by the principle of
47 48

conclusiveness of judgment.  In addition, respondents maintain that the Batangas injunction case is
49

different from the case pending before the CTA as the former pertains to importations already
released and transferred to the possession of respondent PSPC while the
latter pertains to "future importations" of respondent PSPC. 50

Our Ruling
The Petition must fail.
In a nutshell, petitioners contend that respondents should be cited for direct contempt of court
pursuant to Section 5,  Rule 7 of the 1997 Rules of Civil Procedure, as amended, which states that
51

the submission of a false certification on non-forum shopping constitutes indirect or direct contempt
of court, and that the willful and deliberate commission of forum shopping constitutes direct contempt
of court.
We do not agree.
Under prevailing jurisprudence, forum shopping can be committed in three ways, to wit:
(1) filing multiple cases based on the same cause of action and with the same prayer, the
previous case not having been resolved yet (litis pendentia);
(2) filing multiple cases based on the same cause of action and [with] the same prayer, the
previous case having been finally resolved (res judicata); or
(3) filing multiple cases based on the same cause of action but with different prayers
(splitting of causes of action, where the ground for dismissal is also either litis
pendentia or res judicata). 52

Corollarily, there is forum shopping when a party seeks a favorable opinion in another forum, other
than by an appeal or by certiorari, as a result of an adverse opinion in one forum, or when he
institutes two or more actions or proceedings grounded on the same cause, hoping that one or the
other court would make a favorable disposition on his case.  In other words, "[f]orum shopping exists
53

when a party repeatedly avails himself of several judicial remedies in different courts, [either]
simultaneously or successively, all [of which are] substantially founded on the same transactions and
the same essential facts and circumstances, and all raising substantially the same issues either
pending in or already resolved adversely by some other court." 54

Hence, to constitute forum shopping the following elements must be present:

(1) identity of the parties or, at least, of the parties who represent the same interest in both
actions;
(2) identity of the rights asserted and relief prayed for, as the latter is founded on the same
set of facts; and
(3) identity of the two preceding particulars, such that any judgment rendered in the other
action will amount to res judicata in the action under consideration or will constitute litis
pendentia.55

In this case, a careful reading of the Verified Motion in the CTA case vis-àvis the Complaint for
Injunction filed with the RTC of Batangas reveals that although both cases have the same parties,
originated from the same factual antecedents, and involve Section 1508 of the TCCP, the subject
matter, the cause of action, the issues involved, and the reliefs prayed for are not the same.
The subject matter and the causes of
action are not the same.
The subject matter in the CTA case is the alleged unpaid taxes of respondent PSPC on its
importation of CCG and LCCG for the years 2006 to 2008 in the total amount of
P21,419,603,310.00, which is sought to be collected by petitioners. On the other hand, the subject
matter of the Batangas injunction case is the 13 importations/shipments of respondent PSPC for the
period January to February 2010, which respondent PSPC claims are threatened to be seized by
petitioners pursuant to the Memorandum dated February 9, 2010 issued by petitioner District
Collector.
Also, the cause of action in the CTA case is based on the Letter-Decisions of petitioner COC, finding
respondent PSPC liable for excise taxes and VAT; while the cause of action in the Batangas
injunction case is the Memorandum
dated February 9, 2010, ordering the personnel of petitioner BOC in the Port of Batangas to hold the
delivery of all import shipments of respondent PSPC.
The issues raised are not the same.
Furthermore, the issues raised are not the same. Respondent PSPC filed the CTA case to assail the
Letter-Decisions of petitioner COC, finding it liable to pay excise taxes and VAT on its importation of
CCG and LCCG. Thus, in the Petition for Review, the main issue involved is the validity of the Letter-
Decisions; while in the Verified Motion, the issue raised is respondent PSPC’s entitlement to a
suspension order pending the resolution of the validity of the Letter-Decisions.
On the other hand, respondent PSPC filed the Batangas injunction case to question the validity of
the Memorandum dated February 9, 2010 and to oppose the seizure of the 13
importations/shipments on the ground that petitioners no
longer have jurisdiction over the subject importations/shipments as these have been discharged and
placed in its Batangas refinery since 90% of the import duties due on the said shipments have been
paid. To support its case, respondent PSPC interposed that Section 1508 of the TCCP is available
only if petitioner BOC has actual physical custody of the goods sought to be held, a situation not
present in the case of the said importations/shipments; that petitioners have no reason to seize the
13 importations/shipments, as only two were CCG and only one was LCCG;
and that the Memorandum dated February 9, 2010 deprives respondent PSPC of its property without
due process of law. From the arguments interposed by respondent PSPC in the Batangas injunction
case, it is clear that the issue to be resolved by the RTC is limited to the validity of the Memorandum
dated February 9, 2010.
The reliefs prayed for are not the same.
Likewise, a comparison of prayers in the CTA case and Batangas injunction case shows that the
reliefs prayed for are not the same.
PETITION FOR REVIEW
(CTA)
WHEREFORE, it is
respectfully prayed that the
Honorable Court:
a. Give due course to the
instant Petition for Review;
and
b. Upon due consideration,
reverse and nullify the
Letter-Decision dated 11
November 2009 and Letter-
Decision dated 26
November 2009 issued
by[petitioner] COC and
render a
Decision finding [respondent]
PSPC not liable for any of the
excise taxes and the VAT
thereon demanded by
[petitioner] COC,
and permanently enjoining
[petitioners], their officers,
subordinates, personnel
and agents, or any other
person acting on their
behalf or authority, from
demanding and/or
collecting by any manner
from [respondent] PSPC
any and all duties and
excise taxes, including any
VAT thereon, on the subject
CCG and LCCG
importations, as well as
from collecting excise taxes
and VAT on future
importations of
CCGs/LCCGs by
[respondent] PSPC. 56
VERIFIED MOTION
(CTA)
WHEREFORE, it is
respectfully prayed that the
Honorable Court:
a. Immediately upon the filing
of the instant Petition and
Verified Motion, ISSUE, a
[TRO] effective for such
number of days as sufficient
for the Honorable Court to
hear, consider and issue a
Suspension Order, ordering,
commanding and directing
[petitioners], their officers,
subordinates, personnel and
agents, and/or any other
person acting on their behalf
or authority, to refrain or stop
from exercising any action
described in, under, or
pursuant to, Section 1508 of
the TCCP, including holding
delivery or release of imported
articles, and/or from
performing any act of
collecting the disputed
amounts by distraint, levy,
seizure, impounding, or sale
of the importations of
[respondent] PSPC, and/or
from collecting excise taxes
and VAT on future
importations of CCGs and
LCCGs by [respondent]
PSPC; and
b. Thereafter, after due
proceedings, ISSUE a
SUSPENSION ORDER
ordering, commanding, and
directing [petitioners], their
officers, subordinates,
personnel and agents,
and/or any other person
acting on their behalf or
authority, to refrain or stop
from exercising any action
described in, under, or
COMPLAINT FOR
INJUNCTION (RTC)
WHEREFORE, it is
respectfully prayed that the
Honorable Court:
1) Upon filing of the instant
complaint, a 72-hour [TRO] be
issued ex
parte RESTRAINING
[petitioners], their assigns,
agents, employees,
representatives or any
person under their direction
and/or control from entering
the Refinery or property of
[respondent] PSPC and/or
seize, confiscate, or forcibly
take possession of the
imported shipments of
[respondent] PSPC that are
already in the latter’s
physical custody and/or
possession;
2) After due notice and
hearing, that a [TRO] and/or
writ of preliminary injunction
be ISSUED on such bond as
the Honorable Court may
require; and
3) After hearing on the merits,
render judgment making the
writ of injunction
PERMANENT. 58
 
 pursuant to, Section 1508 of
the TCCP, including holding
delivery or release of
imported articles, and/or
from performing any act of
collecting the disputed
amounts by distraint, levy,
seizure, impounding, or sale
of importations of
[respondent] PSPC, and/or
from collecting excise taxes
and VAT on future
importations of CCGs and
LCCGs by [respondent]
PSPC, during the pendency
of the instant case. 57

In the CTA case, respondent PSPC seeks the reversal of the Letter- Decisions of petitioner COC in
order to prevent petitioners from imposing payment of excise tax and VAT for importations of CCG
and LCCG for the years 2004 to 2009. Pending the resolution of the said case, respondent PSPC
filed a Verified Motion praying for the issuance of a suspension order to prevent petitioners from
exercising any action pursuant to Section 1508 of the TCCP based on the Letter-Decisions of
petitioner COC. While in the Batangas injunction case, respondent PSPC seeks to prevent
petitioners from entering its refinery and from seizing its importations pursuant to Section 1508 of the
TCCP by virtue of the Memorandum dated February 9, 2010.
Since the subject matter, the cause of action, the issues raised, and the reliefs prayed for are not the
same, respondents are not guilty of forum shopping. Accordingly, the CTA did not err in denying the
Motion to Cite respondents in Direct Contempt of Court.
WHEREFORE, the Petition is hereby DENIED. The assailed Decision dated June 11, 2012 and the
Resolution dated August 28, 2012 of the Court of Tax Appeals in C.T.A. EB Case No. 744 are
hereby AFFIRMED.
SO ORDERED.

November 9, 2016
G.R. No. 196596
COMMISSIONER OF INTERNAL REVENUE, Petitioner 
vs.
DE LA SALLE UNIVERSITY, INC., Respondent
x-----------------------x
G.R. No. 198841
DE LA SALLE UNIVERSITY INC., Petitioner, 
vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
x-----------------------x
G.R. No. 198941
COMMISSIONER OF INTERNAL REVENUE, Petitioner, 
vs.
DE LA SALLE UNIVERSITY, INC., Respondent.
DECISION
BRION, J.:
Before the Court are consolidated petitions for review on certiorari:1

1. G.R. No. 196596 filed by the Commissioner of Internal Revenue (Commissioner) to assail the

December 10, 2010 decision and March 29, 2011 resolution of the Court of Tax Appeals
(CTA) in En Banc Case No. 622; 2

2. G.R. No. 198841 filed by De La Salle University, Inc. (DLSU) to assail the June 8, 2011 decision
and October 4, 2011 resolution in CTA En Banc Case No. 671;  and 3

3. G.R. No. 198941 filed by the Commissioner to assail the June 8, 2011 decision and October 4,
2011 resolution in CTA En Banc Case No. 671. 4

G.R. Nos. 196596, 198841 and 198941 all originated from CTA Special First Division (CTA
Division) Case No. 7303. G.R. No. 196596 stemmed from CTA En Banc Case No. 622 filed by the
Commissioner to challenge CTA Case No. 7303. G.R. No. 198841 and 198941 both stemmed
from CTA En Banc Case No. 671 filed by DLSU to also challenge CTA Case No. 7303.
The Factual Antecedents
Sometime in 2004, the Bureau of Internal Revenue (BIR) issued to DLSU Letter of Authority (LOA)
No. 2794 authorizing its revenue officers to examine the latter's books of accounts and other
accounting records for all internal revenue taxes for the period Fiscal Year Ending 2003 and
Unverified Prior Years.5

On May 19, 2004, BIR issued a Preliminary Assessment Notice to DLSU. 6

Subsequently on August 18, 2004, the BIR through a Formal Letter of Demand assessed DLSU the
following deficiency taxes: (1) income tax on rental earnings from restaurants/canteens and
bookstores operating within the campus; (2) value-added tax (VAI) on business income; and
(3) documentary stamp tax (DSI) on loans and lease contracts. The BIR demanded the payment
of ₱17,303,001.12, inclusive of surcharge, interest and penalty for taxable years 2001, 2002 and
2003.7

DLSU protested the assessment. The Commissioner failed to act on the protest; thus, DLSU filed on
August 3, 2005 a petition for review with the CTA Division. 8

DLSU, a non-stock, non-profit educational institution, principally anchored its petition on Article XIV,
Section 4 (3)of the Constitution, which reads:
(3) All revenues and assets of non-stock, non-profit educational institutions used actually, directly,
and exclusively for educational purposes shall be exempt from taxes and duties. xxx.
On January 5, 2010, the CTA Division partially granted DLSU's petition for review. The dispositive
portion of the decision reads:
WHEREFORE, the Petition for Review is PARTIALLY GRANTED. The DST assessment on the loan
transactions of [DLSU] in the amount of ₱1,1681,774.00 is hereby CANCELLED. However, [DLSU]
is ORDERED TO PAY deficiency income tax, VAT and DST on its lease contracts, plus 25%
surcharge for the fiscal years 2001, 2002 and 2003 in the total amount of ₱18,421,363.53 ... xxx.
In addition, [DLSU] is hereby held liable to pay 20% delinquency interest on the total amount due
computed from September 30, 2004 until full payment thereof pursuant to Section 249(C)(3) of the
[National Internal Revenue Code]. Further, the compromise penalties imposed by [the
Commissioner] were excluded, there being no compromise agreement between the parties.
SO ORDERED. 9

Both the Commissioner and DLSU moved for the reconsideration of the January 5, 2010
decision.  On April 6, 2010, the CTA Division denied the Commissioner's motion for reconsideration
10

while it held in abeyance the resolution on DLSU's motion for reconsideration. 11

On May 13, 2010, the Commissioner appealed to the CTA En Banc (CTA En Banc Case No. 622)
arguing that DLSU's use of its revenues and assets for non-educational or commercial purposes
removed these items from the exemption coverage under the Constitution. 12

On May 18, 2010, DLSU formally offered to the CTA Division supplemental pieces of documentary
evidence to prove that its rental income was used actually, directly and exclusively for educational
purposes.  The Commissioner did not promptly object to the formal offer of supplemental evidence
13

despite notice. 14

On July 29, 2010, the CTA Division, in view of the supplemental evidence submitted, reduced the
amount of DLSU's tax deficiencies. The dispositive portion of the amended decision reads:
WHEREFORE, [DLSU]'s Motion for Partial Reconsideration is hereby PARTIALLY GRANTED.
[DLSU] is hereby ORDERED TO PAY for deficiency income tax, VAT and DST plus 25% surcharge
for the fiscal years 2001, 2002 and 2003 in the total adjusted amount of ₱5,506,456.71 ... xxx.
In addition, [DLSU] is hereby held liable to pay 20% per annum deficiency interest on the ... basic
deficiency taxes ... until full payment thereof pursuant to Section 249(B) of the [National Internal
Revenue Code] ... xxx.
Further, [DLSU] is hereby held liable to pay 20% per annum delinquency interest on the deficiency
taxes, surcharge and deficiency interest which have accrued ... from September 30, 2004 until fully
paid.15

Consequently, the Commissioner supplemented its petition with the CTA En Banc and argued that
the CTA Division erred in admitting DLSU's additional evidence. 16

Dissatisfied with the partial reduction of its tax liabilities, DLSU filed a separate petition for review
with the CTA En Banc (CTA En Banc Case No. 671) on the following grounds: (1) the entire
assessment should have been cancelled because it was based on an invalid LOA; (2) assuming the
LOA was valid, the CTA Division should still have cancelled the entire assessment because DLSU
submitted evidence similar to those submitted by Ateneo De Manila University (Ateneo) in
a separate case where the CTA cancelled Ateneo's tax assessment;  and (3) the CTA Division erred
17

in finding that a portion of DLSU's rental income was not proved to have been used actually, directly
and exclusively for educational purposes. 18

The CTA En Banc Rulings

CTA En Banc Case No. 622
The CTA En Banc dismissed the Commissioner's petition for review and sustained the findings of
the CTA Division. 19

Tax on rental income

Relying on the findings of the court-commissioned Independent Certified Public Accountant
(Independent CPA), the CTA En Banc found that DLSU was able to prove that a portion of the
assessed rental income was used actually, directly and exclusively for educational purposes; hence,
exempt from tax.  The CTA En Banc was satisfied with DLSU's supporting evidence confirming that
20
part of its rental income had indeed been used to pay the loan it obtained to build the university's
Physical Education – Sports Complex. 21

Parenthetically, DLSU's unsubstantiated claim for exemption, i.e., the part of its income that was not
shown by supporting documents to have been actually, directly and exclusively used for educational
purposes, must be subjected to income tax and VAT. 22

DST on loan and mortgage transactions

Contrary to the Commissioner's contention, DLSU froved its remittance of the DST due on its loan
and mortgage documents.  The CTA En Banc found that DLSU's DST payments had been remitted
23

to the BIR, evidenced by the stamp on the documents made by a DST imprinting machine, which is
allowed under Section 200 (D) of the National Internal Revenue Code (Tax Code)  and Section 2 of
24

Revenue Regulations (RR) No. 15-2001. 25

Admissibility of DLSU's supplemental evidence

The CTA En Banc held that the supplemental pieces of documentary evidence were admissible
even if DLSU formally offered them only when it moved for reconsideration of the CTA Division's
original decision. Notably, the law creating the CTA provides that proceedings before it shall not be
governed strictly by the technical rules of evidence. 26

The Commissioner moved but failed to obtain a reconsideration of the CTA En Banc's December 10,
2010 decision.  Thus, she came to this court for relief through a petition for review on certiorari (G.R.
27

No. 196596).
CTA En Banc Case No. 671
The CTA En Banc partially granted DLSU's petition for review and further reduced its tax liabilities
to ₱2,554,825.47inclusive of surcharge. 28

On the validity of the Letter of Authority

The issue of the LOA' s validity was raised during trial;  hence, the issue was deemed properly
29

submitted for decision and reviewable on appeal.

Citing jurisprudence, the CTA En Banc held that a LOA should cover only one taxable period and
that the practice of issuing a LOA covering audit of unverified prior years is prohibited.  The
30

prohibition is consistent with Revenue Memorandum Order (RMO) No. 43-90, which provides that if
the audit includes more than one taxable period, the other periods or years shall be specifically
indicated in the LOA.31

In the present case, the LOA issued to DLSU is for Fiscal Year Ending 2003 and Unverified Prior
Years. Hence, the assessments for deficiency income tax, VAT and DST for taxable years 2001 and
2002 are void, but the assessment for taxable year 2003 is valid. 32

On the applicability of the Ateneo case

The CTA En Banc held that the Ateneo case is not a valid precedent because it involved different
parties, factual settings, bases of assessments, sets of evidence, and defenses. 33

On the CTA Division's appreciation of the evidence

The CTA En Banc affirmed the CTA Division's appreciation of DLSU' s evidence. It held that while
DLSU successfully proved that a portion of its rental income was transmitted and used to pay the
loan obtained to fund the construction of the Sports Complex, the rental income from other sources
were not shown to have been actually, directly and exclusively used for educational purposes. 34

Not pleased with the CTA En Banc's ruling, both DLSU (G.R. No. 198841) and the Commissioner
(G.R. No. 198941) came to this Court for relief.
The Consolidated Petitions
G.R. No. 196596
The Commissioner submits the following arguments:
First, DLSU's rental income is taxable regardless of how such income is derived, used or disposed
of.  DLSU's operations of canteens and bookstores within its campus even though exclusively
35

serving the university community do not negate income tax liability. 36

The Commissioner contends that Article XIV, Section 4 (3) of the Constitution must be harmonized
with Section 30 (H) of the Tax Code, which states among others, that the income of whatever kind
and character of [a non-stock and non-profit educational institution] from any of [its] properties, real
or personal, or from any of [its] activities conducted for profit regardless of the disposition made of
such income, shall be subject to tax imposed by this Code. 37

The Commissioner argues that the CTA En Banc misread and misapplied the case
of Commissioner of Internal Revenue v. YMCA  to support its conclusion that revenues however
38

generated are covered by the constitutional exemption, provided that, the revenues will be used for
educational purposes or will be held in reserve for such purposes. 39

On the contrary, the Commissioner posits that a tax-exempt organization like DLSU is exempt only
from property tax but not from income tax on the rentals earned from property.  Thus, DLSU's
40

income from the leases of its real properties is not exempt from taxation even if the income would be
used for educational purposes. 41

Second, the Commissioner insists that DLSU did not prove the fact of DST payment  and that it is
42

not qualified to use the On-Line Electronic DST Imprinting Machine, which is available only to certain
classes of taxpayers under RR No. 9-2000. 43

Finally, the Commissioner objects to the admission of DLSU's supplemental offer of evidence. The
belated submission of supplemental evidence reopened the case for trial, and worse, DLSU offered
the supplemental evidence only after it received the unfavorable CTA Division's original decision.  In 44

any case, DLSU's submission of supplemental documentary evidence was unnecessary since its
rental income was taxable regardless of its disposition. 45

G.R. No. 198841

DLSU argues as that:
First, RMO No. 43-90 prohibits the practice of issuing a LOA with any indication of unverified prior
years. A LOA issued contrary to RMO No. 43-90 is void, thus, an assessment issued based on such
defective LOA must also be void. 46

DLSU points out that the LOA issued to it covered the Fiscal Year Ending 2003 and Unverified Prior
Years. On the basis of this defective LOA, the Commissioner assessed DLSU for deficiency income
tax, VAT and DST for taxable years 2001, 2002 and 2003.  DLSU objects to the CTA En
47

Banc's conclusion that the LOA is valid for taxable year 2003. According to DLSU, when RMO No.
43-90 provides that:
The practice of issuing [LOAs] covering audit of 'unverified prior years' is hereby prohibited.
it refers to the LOA which has the format "Base Year + Unverified Prior Years." Since the LOA
issued to DLSU follows this format, then any assessment arising from it must be entirely voided. 48

Second, DLSU invokes the principle of uniformity in taxation, which mandates that for similarly
situated parties, the same set of evidence should be appreciated and weighed in the same
manner.  The CTA En Banc erred when it did not similarly appreciate DLSU' s evidence as it did to
49

the pieces of evidence submitted by Ateneo, also a non-stock, non-profit educational institution. 50

G.R. No. 198941

The issues and arguments raised by the Commissioner in G.R. No. 198941 petition are exactly the
same as those she raised in her: (1) petition docketed as G.R. No. 196596 and (2) comment on
DLSU's petition docketed as G.R. No. 198841. 51

Counter-arguments
DLSU's Comment on G.R. No. 196596
First, DLSU questions the defective verification attached to the petition. 52

Second, DLSU stresses that Article XIV, Section 4 (3) of the Constitution is clear that all assets and
revenues of non-stock, non-profit educational institutions used actually, directly and exclusively for
educational purposes are exempt from taxes and duties. 53
On this point, DLSU explains that: (1) the tax exemption of non-stock, non-profit educational
institutions is novel to the 1987 Constitution and that Section 30 (H) of the 1997 Tax Code cannot
amend the 1987 Constitution;  (2) Section 30 of the 1997 Tax Code is almost an exact replica of
54

Section 26 of the 1977 Tax Code -with the addition of non-stock, non-profit educational institutions
to the list of tax-exempt entities; and (3) that the 1977 Tax Code was promulgated when the 1973
Constitution was still in place.
DLSU elaborates that the tax exemption granted to a private educational institution under the 1973
Constitution was only for real property tax. Back then, the special tax treatment on income of private
educational institutions only emanates from statute, i.e., the 1977 Tax Code. Only under the 1987
Constitution that exemption from tax of all the assets and revenues of non-stock, non-profit
educational institutions used actually, directly and exclusively for educational purposes, was
expressly and categorically enshrined. 55

DLSU thus invokes the doctrine of constitutional supremacy, which renders any subsequent law that
is contrary to the Constitution void and without any force and effect.  Section 30 (H) of the 1997 Tax
56

Code insofar as it subjects to tax the income of whatever kind and character of a non-stock and non-
profit educational institution from any of its properties, real or personal, or from any of its activities
conducted for profit regardless of the disposition made of such income, should be declared without
force and effect in view of the constitutionally granted tax exemption on "all revenues and assets of
non-stock, non-profit educational institutions used actually, directly, and exclusively for educational
purposes." 57

DLSU further submits that it complies with the requirements enunciated in the YMCA case, that for
an exemption to be granted under Article XIV, Section 4 (3) of the Constitution, the taxpayer must
prove that: (1) it falls under the classification non-stock, non-profit educational institution; and (2) the
income it seeks to be exempted from taxation is used actually, directly and exclusively for
educational purposes.  Unlike YMCA, which is not an educational institution, DLSU is undisputedly a
58

non-stock, non-profit educational institution. It had also submitted evidence to prove that it actually,
directly and exclusively used its income for educational purposes. 59

DLSU also cites the deliberations of the 1986 Constitutional Commission where they recognized that
the tax exemption was granted "to incentivize private educational institutions to share with the State
the responsibility of educating the youth." 60

Third, DLSU highlights that both the CTA En Banc and Division found that the bank that handled
DLSU' s loan and mortgage transactions had remitted to the BIR the DST through an imprinting
machine, a method allowed under RR No. 15-2001.  In any case, DLSU argues that it cannot be
61

held liable for DST owing to the exemption granted under the Constitution. 62

Finally, DLSU underscores that the Commissioner, despite notice, did not oppose the formal offer of
supplemental evidence. Because of the Commissioner's failure to timely object, she became bound
by the results of the submission of such supplemental evidence. 63

The CIR's Comment on G.R. No. 198841

The Commissioner submits that DLSU is estopped from questioning the LOA's validity because it
failed to raise this issue in both the administrative and judicial proceedings.  That it was asked on
64

cross-examination during the trial does not make it an issue that the CTA could resolve.  The65

Commissioner also maintains that DLSU's rental income is not tax-exempt because an educational
institution is only exempt from property tax but not from tax on the income earned from the property. 66

DLSU's Comment on G.R. No. 198941

DLSU puts forward the same counter-arguments discussed above.  In addition, DLSU prays that the
67

Court award attorney's fees in its favor because it was constrained to unnecessarily retain the
services of counsel in this separate petition. 68

Issues
Although the parties raised a number of issues, the Court shall decide only the pivotal issues, which
we summarize as follows:
 I. Whether DLSU' s income and revenues proved to have been used actually, directly and
exclusively for educational purposes are exempt from duties and taxes;
II. Whether the entire assessment should be voided because of the defective LOA;
III. Whether the CTA correctly admitted DLSU's supplemental pieces of evidence; and
IV. Whether the CTA's appreciation of the sufficiency of DLSU's evidence may be disturbed
by the Court.
Our Ruling
As we explain in full below, we rule that:
I. The income, revenues and assets of non-stock, non-profit educational institutions proved
to have been used actually, directly and exclusively for educational purposes are exempt
from duties and taxes.
II. The LOA issued to DLSU is not entirely void. The assessment for taxable year 2003 is
valid.
III. The CTA correctly admitted DLSU's formal offer of supplemental evidence; and
IV. The CTA's appreciation of evidence is conclusive unless the CTA is shown to have
manifestly overlooked certain relevant facts not disputed by the parties and which, if properly
considered, would justify a different conclusion.
The parties failed to convince the Court that the CTA overlooked or failed to consider relevant facts.
We thus sustain the CTA En Banc's findings that:
a. DLSU proved that a portion of its rental income was used actually, directly and exclusively
for educational purposes; and
b. DLSU proved the payment of the DST through its bank's on-line imprinting machine.
I. The revenues and assets of non-stock,
non-profit educational institutions
proved to have been used actually,
directly, and exclusively for educational
purposes are exempt from duties and
taxes.
DLSU rests it case on Article XIV, Section 4 (3) of the 1987 Constitution, which reads:
(3) All revenues and assets of non-stock, non-profit educational institutions used actually,
directly, and exclusively for educational purposes shall
be exempt from taxes and duties. Upon the dissolution or cessation of the corporate existence of
such institutions, their assets shall be disposed of in the manner provided by law.
Proprietary educational institutions, including those cooperatively owned, may likewise be
entitled to such exemptions subject to the limitations provided by law including restrictions on
dividends and provisions for reinvestment. [underscoring and emphasis supplied]
Before fully discussing the merits of the case, we observe that:
First, the constitutional provision refers to two kinds of educational institutions: (1) non-stock, non-
profit educational institutions and (2) proprietary educational institutions.
69

Second, DLSU falls under the first category. Even the Commissioner admits the status of DLSU as a
non-stock, non-profit educational institution.
70

Third, while DLSU's claim for tax exemption arises from and is based on the Constitution, the
Constitution, in the same provision, also imposes certain conditions to avail of the exemption. We
discuss below the import of the constitutional text vis-a-vis the Commissioner's counter-arguments.
Fourth, there is a marked distinction between the treatment of non-stock, non-profit educational
institutions and proprietary educational institutions. The tax exemption granted to non-stock, non-
profit educational institutions is conditioned only on the actual, direct and exclusive use of their
revenues and assets for educational purposes. While tax exemptions may also be granted to
proprietary educational institutions, these exemptions may be subject to limitations imposed by
Congress.
As we explain below, the marked distinction between a non-stock, non-profit and a proprietary
educational institution is crucial in determining the nature and extent of the tax exemption granted to
non-stock, non-profit educational institutions.
The Commissioner opposes DLSU's claim for tax exemption on the basis of Section 30 (H) of the
Tax Code. The relevant text reads:
The following organizations shall not be taxed under this Title [Tax on
Income] in respect to income received by them as such:
xxxx
(H) A non-stock and non-profit educational institution
xxxx
Notwithstanding the provisions in the preceding paragraphs, the income of whatever kind and
character of the foregoing organizations from any of their properties, real or personal, or from
any of their activities conducted for
profit regardless of the disposition made of such income shall be subject to tax imposed
under this Code. [underscoring and emphasis supplied]
The Commissioner posits that the 1997 Tax Code qualified the tax exemption granted to non-stock,
non-profit educational institutions such that the revenues and income they derived from their assets,
or from any of their activities conducted for profit, are taxable even if these revenues and income are
used for educational purposes.
Did the 1997 Tax Code qualify the tax exemption constitutionally-granted to non-stock, non-profit
educational institutions?
We answer in the negative.
While the present petition appears to be a case of first impression,  the Court in the YMCA case had
71

in fact already analyzed and explained the meaning of Article XIV, Section 4 (3) of the Constitution.
The Court in that case made doctrinal pronouncements that are relevant to the present case.
The issue in YMCA was whether the income derived from rentals of real property owned by the
YMCA, established as a "welfare, educational and charitable non-profit corporation," was subject to
income tax under the Tax Code and the Constitution. 72

The Court denied YMCA's claim for exemption on the ground that as a charitable institution falling
under Article VI, Section 28 (3) of the Constitution,  the YMCA is not tax-exempt per se; " what is
73

exempted is not the institution itself... those exempted from real estate taxes are lands, buildings
and improvements actually, directly and exclusively used for religious, charitable or educational
purposes." 74

The Court held that the exemption claimed by the YMCA is expressly disallowed by the last
paragraph of then Section 27 (now Section 30) of the Tax Code, which mandates that the income of
exempt organizations from any of their properties, real or personal, are subject to the same tax
imposed by the Tax Code, regardless of how that income is used. The Court ruled that the last
paragraph of Section 27 unequivocally subjects to tax the rent income of the YMCA from its
property.75

In short, the YMCA is exempt only from property tax but not from income tax.
As a last ditch effort to avoid paying the taxes on its rental income, the YMCA invoked the tax
privilege granted under Article XIV, Section 4 (3) of the Constitution.
The Court denied YMCA's claim that it falls under Article XIV, Section 4 (3) of the Constitution
holding that the term educational institution, when used in laws granting tax exemptions, refers to
the school system (synonymous with formal education); it includes a college or an educational
establishment; it refers to the hierarchically structured and chronologically graded learnings
organized and provided by the formal school system. 76
The Court then significantly laid down the requisites for availing the tax exemption under Article XIV,
Section 4 (3), namely: (1) the taxpayer falls under the classification non-stock, non-profit
educational institution; and (2) the income it seeks to be exempted from taxation is used
actually, directly and exclusively for educational purposes. 77

We now adopt YMCA as precedent and hold that:

1. The last paragraph of Section 30 of the Tax Code is without force and effect with respect to non-
stock, non-profit educational institutions, provided, that the non-stock, non-profit educational
institutions prove that its assets and revenues are used actually, directly and exclusively for
educational purposes.
2. The tax-exemption constitutionally-granted to non-stock, non-profit educational institutions, is not
subject to limitations imposed by law.
The tax exemption granted by the
Constitution to non-stock, non-profit
educational institutions is conditioned only
on the actual, direct and exclusive use of
their assets, revenues and income  for 78

educational purposes.
We find that unlike Article VI, Section 28 (3) of the Constitution (pertaining to charitable institutions,
churches, parsonages or convents, mosques, and non-profit cemeteries), which exempts from
tax only the assets, i.e., "all lands, buildings, and improvements, actually, directly, and
exclusively used for religious, charitable, or educational purposes ... ," Article XIV, Section 4
(3) categorically states that "[a]ll revenues and assets ... used actually, directly, and exclusively for
educational purposes shall be exempt from taxes and duties."
The addition and express use of the word revenues in Article XIV, Section 4 (3) of the Constitution is
not without significance.
We find that the text demonstrates the policy of the 1987 Constitution, discernible from the records
of the 1986 Constitutional Commission  to provide broader tax privilege to non-stock, non-profit
79

educational institutions as recognition of their role in assisting the State provide a public good. The
tax exemption was seen as beneficial to students who may otherwise be charged unreasonable
tuition fees if not for the tax exemption extended to all revenues and assets of non-stock, non-profit
educational institutions.80

Further, a plain reading of the Constitution would show that Article XIV, Section 4 (3) does not
require that the revenues and income must have also been sourced from educational activities or
activities related to the purposes of an educational institution. The phrase all revenues is unqualified
by any reference to the source of revenues. Thus, so long as the revenues and income are used
actually, directly and exclusively for educational purposes, then said revenues and income shall be
exempt from taxes and duties. 81

We find it helpful to discuss at this point the taxation of revenues versus the taxation of assets.
Revenues consist of the amounts earned by a person or entity from the conduct of business
operations.  It may refer to the sale of goods, rendition of services, or the return of an investment.
82

Revenue is a component of the tax base in income tax,  VAT,  and local business tax (LBT).
83 84 85

Assets, on the other hand, are the tangible and intangible properties owned by a person or entity.  It86

may refer to real estate, cash deposit in a bank, investment in the stocks of a corporation, inventory
of goods, or any property from which the person or entity may derive income or use to generate the
same. In Philippine taxation, the fair market value of real property is a component of the tax base in
real property tax (RPT).  Also, the landed cost of imported goods is a component of the tax base in
87

VAT on importation  and tariff duties.

88 89

Thus, when a non-stock, non-profit educational institution proves that it uses its revenues actually,
directly, and exclusively for educational purposes, it shall be exempted from income tax, VAT, and
LBT. On the other hand, when it also shows that it uses its assets in the form of real property for
educational purposes, it shall be exempted from RPT.
To be clear, proving the actual use of the taxable item will result in an exemption, but the specific tax
from which the entity shall be exempted from shall depend on whether the item is an item of revenue
or asset.
To illustrate, if a university leases a portion of its school building to a bookstore or cafeteria, the
leased portion is not actually, directly and exclusively used for educational purposes, even if the
bookstore or canteen caters only to university students, faculty and staff.
The leased portion of the building may be subject to real property tax, as held in Abra Valley
College, Inc. v. Aquino.  We ruled in that case that the test of exemption from taxation is the use of
90

the property for purposes mentioned in the Constitution. We also held that the exemption extends to
facilities which are incidental to and reasonably necessary for the accomplishment of the main
purposes.
In concrete terms, the lease of a portion of a school building for commercial purposes, removes
such asset from the property tax exemption granted under the Constitution.  There is no exemption
91

because the asset is not used actually, directly and exclusively for educational purposes. The
commercial use of the property is also not incidental to and reasonably necessary for the
accomplishment of the main purpose of a university, which is to educate its students.
However, if the university actually, directly and exclusively uses for educational
purposes the revenues earned from the lease of its school building, such revenues shall be exempt
from taxes and duties. The tax exemption no longer hinges on the use of the asset from which the
revenues were earned, but on the actual, direct and exclusive use of the revenues for educational
purposes.
Parenthetically, income and revenues of non-stock, non-profit educational institution not used
actually, directly and exclusively for educational purposes are not exempt from duties and taxes. To
avail of the exemption, the taxpayer must factually prove that it used actually, directly and
exclusively for educational purposes the revenues or income sought to be exempted.
The crucial point of inquiry then is on the use of the assets or on the use of the revenues. These
are two things that must be viewed and treated separately. But so long as the assets or revenues
are used actually, directly and exclusively for educational purposes, they are exempt from duties
and taxes.
The tax exemption granted by the
Constitution to non-stock, non-profit
educational institutions, unlike the exemption
that may be availed of by proprietary
educational institutions, is not subject to
limitations imposed by law.
That the Constitution treats non-stock, non-profit educational institutions differently from proprietary
educational institutions cannot be doubted. As discussed, the privilege granted to the former is
conditioned only on the actual, direct and exclusive use of their revenues and assets for educational
purposes. In clear contrast, the tax privilege granted to the latter may be subject to limitations
imposed by law.
We spell out below the difference in treatment if only to highlight the privileged status of non-stock,
non-profit educational institutions compared with their proprietary counterparts.
While a non-stock, non-profit educational institution is classified as a tax-exempt entity under Section
30 (Exemptions from Tax on Corporations) of the Tax Code, a proprietary educational institution is
covered by Section 27 (Rates of Income Tax on Domestic Corporations).
To be specific, Section 30 provides that exempt organizations like non-stock, non-profit educational
institutions shall not be taxed on income received by them as such.
Section 27 (B), on the other hand, states that "[p]roprietary educational institutions ... which are
nonprofit shall pay a tax of ten percent (10%) on their taxable income .. . Provided, that if the gross
income from unrelated trade, business or other activity exceeds fifty percent (50%) of the total gross
income derived by such educational institutions ... [the regular corporate income tax of 30%] shall be
imposed on the entire taxable income ... " 92

By the Tax Code's clear terms, a proprietary educational institution is entitled only to the reduced
rate of 10% corporate income tax. The reduced rate is applicable only if: (1) the proprietary
educational institution is nonprofit and (2) its gross income from unrelated trade, business or activity
does not exceed 50% of its total gross income.
Consistent with Article XIV, Section 4 (3) of the Constitution, these limitations do not apply to non-
stock, non-profit educational institutions.
Thus, we declare the last paragraph of Section 30 of the Tax Code without force and effect for being
contrary to the Constitution insofar as it subjects to tax the income and revenues of non-stock, non-
profit educational institutions used actually, directly and exclusively for educational purpose. We
make this declaration in the exercise of and consistent with our duty  to uphold the primacy of the
93

Constitution.94

Finally, we stress that our holding here pertains only to non-stock, non-profit educational institutions
and does not cover the other exempt organizations under Section 30 of the Tax Code.
For all these reasons, we hold that the income and revenues of DLSU proven to have been used
actually, directly and exclusively for educational purposes are exempt from duties and taxes.
II. The LOA issued to DLSU is
not entirely void. The
assessment for taxable year
2003 is valid.
DLSU objects to the CTA En Banc 's conclusion that the LOA is valid for taxable year 2003 and
insists that the entire LOA should be voided for being contrary to RMO No. 43-90, which provides
that if tax audit includes more than one taxable period, the other periods or years shall be specifically
indicated in the LOA.
A LOA is the authority given to the appropriate revenue officer to examine the books of account and
other accounting records of the taxpayer in order to determine the taxpayer's correct internal
revenue liabilities  and for the purpose of collecting the correct amount of tax,  in accordance with
95 96

Section 5 of the Tax Code, which gives the CIR the power to obtain information, to
summon/examine, and take testimony of persons. The LOA commences the audit process  and 97

informs the taxpayer that it is under audit for possible deficiency tax assessment.
Given the purposes of a LOA, is there basis to completely nullify the LOA issued to DLSU, and
consequently, disregard the BIR and the CTA's findings of tax deficiency for taxable year 2003?
We answer in the negative.
The relevant provision is Section C of RMO No. 43-90, the pertinent portion of which reads:
3. A Letter of Authority [LOA] should cover a taxable period not exceeding one taxable year. The
practice of issuing [LO As] covering audit of unverified prior years is hereby prohibited. If the audit of
a taxpayer shall include more than one taxable period, the other periods or years shall be specifically
indicated in the [LOA].98

What this provision clearly prohibits is the practice of issuing LOAs covering audit of unverified prior
years. RMO 43-90 does not say that a LOA which contains unverified prior years is void. It merely
prescribes that if the audit includes more than one taxable period, the other periods or years must be
specified. The provision read as a whole requires that if a taxpayer is audited for more than one
taxable year, the BIR must specify each taxable year or taxable period on separate LOAs.
Read in this light, the requirement to specify the taxable period covered by the LOA is simply to
inform the taxpayer of the extent of the audit and the scope of the revenue officer's authority. Without
this rule, a revenue officer can unduly burden the taxpayer by demanding random accounting
records from random unverified years, which may include documents from as far back as ten years
in cases of fraud audit.99
In the present case, the LOA issued to DLSU is for Fiscal Year Ending 2003 and Unverified Prior
Years. The LOA does not strictly comply with RMO 43-90 because it includes unverified prior years.
This does not mean, however, that the entire LOA is void.
As the CTA correctly held, the assessment for taxable year 2003 is valid because this taxable period
is specified in the LOA. DLSU was fully apprised that it was being audited for taxable year 2003.
Corollarily, the assessments for taxable years 2001 and 2002 are void for having
been unspecified on separate LOAs as required under RMO No. 43-90.
Lastly, the Commissioner's claim that DLSU failed to raise the issue of the LOA' s validity at the CTA
Division, and thus, should not have been entertained on appeal, is not accurate.
On the contrary, the CTA En Banc found that the issue of the LOA's validity came up during the
trial.  DLSU then raised the issue in its memorandum and motion for partial reconsideration with the
100

CTA Division. DLSU raised it again on appeal to the CTA En Banc. Thus, the CTA En Banc could,
as it did, pass upon the validity of the LOA. Besides, the Commissioner had the opportunity to argue
101

for the validity of the LOA at the CTA En Banc but she chose not to file her comment and
memorandum despite notice. 102

III.The CTA correctly admitted

the supplemental evidence
formally offered by DLSU.
The Commissioner objects to the CTA Division's admission of DLSU's supplemental pieces of
documentary evidence.
To recall, DLSU formally offered its supplemental evidence upon filing its motion for reconsideration
with the CTA Division.  The CTA Division admitted the supplemental evidence, which proved that a
103

portion of DLSU's rental income was used actually, directly and exclusively for educational purposes.
Consequently, the CTA Division reduced DLSU's tax liabilities.
We uphold the CTA Division's admission of the supplemental evidence on distinct but mutually
reinforcing grounds, to wit: (1) the Commissioner failed to timely object to the formal offer of
supplemental evidence; and (2) the CTA is not governed strictly by the technical rules of evidence.
First, the failure to object to the offered evidence renders it admissible, and the court cannot, on its
own, disregard such evidence. 104

The Court has held that if a party desires the court to reject the evidence offered, it must so state in
the form of a timely objection and it cannot raise the objection to the evidence for the first time on
appeal.  Because of a party's failure to timely object, the evidence offered becomes part of the
105

evidence in the case. As a consequence, all the parties are considered bound by any outcome
arising from the offer of evidence properly presented. 106

As disclosed by DLSU, the Commissioner did not oppose the supplemental formal offer of evidence
despite notice.  The Commissioner objected to the admission of the supplemental evidence only
107

when the case was on appeal to the CTA En Banc. By the time the Commissioner raised her
objection, it was too late; the formal offer, admission and evaluation of the supplemental
evidence were all fait accompli.
We clarify that while the Commissioner's failure to promptly object had no bearing on the materiality
or sufficiency of the supplemental evidence admitted, she was bound by the outcome of the CTA
Division's assessment of the evidence. 108

Second, the CTA is not governed strictly by the technical rules of evidence. The CTA Division's
admission of the formal offer of supplemental evidence, without prompt objection from the
Commissioner, was thus justified.
Notably, this Court had in the past admitted and considered evidence attached to the taxpayers'
motion for reconsideration. 1âwphi1

In the case of BPI-Family Savings Bank v. Court of Appeals,  the tax refund claimant attached to its
109

motion for reconsideration with the CT A its Final Adjustment Return. The Commissioner, as in the
present case, did not oppose the taxpayer's motion for reconsideration and the admission of
the Final Adjustment Return.  We thus admitted and gave weight to the Final Adjustment
110

Return although it was only submitted upon motion for reconsideration.

We held that while it is true that strict procedural rules generally frown upon the submission of
documents after the trial, the law creating the CTA specifically provides that proceedings before it
shall not be governed strictly by the technical rules of evidence  and that the paramount
111

consideration remains the ascertainment of truth. We ruled that procedural rules should not bar
courts from considering undisputed facts to arrive at a just determination of a controversy.
112

We applied the same reasoning in the subsequent cases of Filinvest Development Corporation v.
Commissioner of Internal Revenue  and Commissioner of Internal Revenue v. PERF Realty
113

Corporation,  where the taxpayers also submitted the supplemental supporting document only upon
114

filing their motions for reconsideration.

Although the cited cases involved claims for tax refunds, we also dispense with the strict application
of the technical rules of evidence in the present tax assessment case. If anything, the liberal
application of the rules assumes greater force and significance in the case of a taxpayer who claims
a constitutionally granted tax exemption. While the taxpayers in the cited cases claimed refund of
excess tax payments based on the Tax Code,  DLSU is claiming tax exemption based on the
115

Constitution. If liberality is afforded to taxpayers who paid more than they should have under a
statute, then with more reason that we should allow a taxpayer to prove its exemption from tax
based on the Constitution.
Hence, we sustain the CTA's admission of DLSU's supplemental offer of evidence not only because
the Commissioner failed to promptly object, but more so because the strict application of the
technical rules of evidence may defeat the intent of the Constitution.
IV. The CTA's appreciation of
evidence is generally binding on
the Court unless compelling
reasons justify otherwise.
It is doctrinal that the Court will not lightly set aside the conclusions reached by the CTA which, by
the very nature of its function of being dedicated exclusively to the resolution of tax problems, has
developed an expertise on the subject, unless there has been an abuse or improvident exercise of
authority.  We thus accord the findings of fact by the CTA with the highest respect. These findings
116

of facts can only be disturbed on appeal if they are not supported by substantial evidence or there is
a showing of gross error or abuse on the part of the CTA. In the absence of any clear and convincing
proof to the contrary, this Court must presume that the CTA rendered a decision which is valid in
every respect. 117

We sustain the factual findings of the CTA.

The parties failed to raise credible basis for us to disturb the CTA's findings that DLSU had used
actually, directly and exclusively for educational purposes a portion of its assessed income and that
it had remitted the DST payments though an online imprinting machine.
a. DLSU used actually, directly, and exclusively for educational purposes a portion of its assessed
income.
To see how the CTA arrived at its factual findings, we review the process undertaken, from which it
deduced that DLSU successfully proved that it used actually, directly and exclusively for educational
purposes a portion of its rental income.
The CTA reduced DLSU' s deficiency income tax and VAT liabilities in view of the submission of the
supplemental evidence, which consisted of statement of receipts, statement of disbursement and
fund balance and statement of fund changes. 118

These documents showed that DLSU borrowed ₱93.86 Million,  which was used to build the
119

university's Sports Complex. Based on these pieces of evidence, the CTA found that DLSU' s rental
income from its concessionaires were indeed transmitted and used for the payment of this loan. The
CTA held that the degree of preponderance of evidence was sufficiently met to prove actual, direct
and exclusive use for educational purposes.
The CTA also found that DLSU's rental income from other concessionaires, which were allegedly
deposited to a fund (CF-CPA Account),  intended for the university's capital projects, was not
120

proved to have been used actually, directly and exclusively for educational purposes. The
CTA observed that "[DLSU] ... failed to fully account for and substantiate all the disbursements from
the [fund]." Thus, the CTA "cannot ascertain whether rental income from the [other] concessionaires
was indeed used for educational purposes." 121

To stress, the CTA's factual findings were based on and supported by the report of the Independent
CPA who reviewed, audited and examined the voluminous documents submitted by DLSU.
Under the CTA Revised Rules, an Independent CPA's functions include: (a) examination and
verification of receipts, invoices, vouchers and other long accounts; (b) reproduction of, and
comparison of such reproduction with, and certification that the same are faithful copies of original
documents, and pre-marking of documentary exhibits consisting of voluminous documents; (c)
preparation of schedules or summaries containing a chronological listing of the numbers, dates and
amounts covered by receipts or invoices or other relevant documents and the amount(s) of taxes
paid; (d) making findings as to compliance with substantiation requirements under pertinent
tax laws, regulations and jurisprudence; (e) submission of a formal report with certification of
authenticity and veracity of findings and conclusions in the performance of the audit; (f) testifying on
such formal report; and (g) performing such other functions as the CTA may direct. 122

Based on the Independent CPA's report and on its own appreciation of the evidence, the CTA held
that only the portion of the rental income pertaining to the substantiated disbursements (i.e., proved
by receipts, vouchers, etc.) from the CF-CPA Account was considered as used actually, directly and
exclusively for educational purposes. Consequently, the unaccounted and unsubstantiated
disbursements must be subjected to income tax and VAT. 123

The CTA then further reduced DLSU's tax liabilities by cancelling the assessments for taxable years
2001 and 2002 due to the defective LOA. 124

The Court finds that the above fact-finding process undertaken by the CTA shows that it based its
ruling on the evidence on record, which we reiterate, were examined and verified by the Independent
CPA. Thus, we see no persuasive reason to deviate from these factual findings.
However, while we generally respect the factual findings of the CTA, it does not mean that we are
bound by its conclusions. In the present case, we do not agree with the method used by the CTA to
arrive at DLSU' s unsubstantiated rental income (i.e., income not proved to have been actually,
directly and exclusively used for educational purposes).
To recall, the CTA found that DLSU earned a rental income of ₱l0,610,379.00 in taxable year
2003.  DLSU earned this income from leasing a portion of its premises to: 1) MTG-Sports Complex,
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2) La Casita, 3) Alarey, Inc., 4) Zaide Food Corp., 5) Capri International, and 6) MTO Bookstore. 126

To prove that its rental income was used for educational purposes, DLSU identified the transactions
where the rental income was expended, viz.: 1) ₱4,007,724.00  used to pay the loan obtained by
127

DLSU to build the Sports Complex; and 2) ₱6,602,655.00 transferred to the CF-CPA Account. 128

DLSU also submitted documents to the Independent CPA to prove that the ₱6,602,655.00
transferred to the CF-CPA Account was used actually, directly and exclusively for educational
purposes. According to the Independent CPA' findings, DLSU was able to substantiate
disbursements from the CF-CPA Account amounting to ₱6,259,078.30.
Contradicting the findings of the Independent CPA, the CTA concluded that out of
the ₱l0,610,379.00 rental income, ₱4,841,066.65 was unsubstantiated, and thus, subject to income
tax and VAT. 129

The CTA then concluded that the ratio of substantiated disbursements to the total disbursements
from the CF-CPA Account for taxable year 2003 is only 26.68%.  The CTA held as follows:
130

However, as regards petitioner's rental income from Alarey, Inc., Zaide Food Corp., Capri
International and MTO Bookstore, which were transmitted to the CF-CPA Account, petitioner again
failed to fully account for and substantiate all the disbursements from the CF-CPA Account; thus
failing to prove that the rental income derived therein were actually, directly and exclusively used for
educational purposes. Likewise, the findings of the Court-Commissioned Independent CPA show
that the disbursements from the CF-CPA Account for fiscal year 2003 amounts to ₱6,259,078.30
only. Hence, this portion of the rental income, being the substantiated disbursements of the CF-CPA
Account, was considered by the Special First Division as used actually, directly and exclusively for
educational purposes. Since for fiscal year 2003, the total disbursements per voucher is
₱6,259,078.3 (Exhibit "LL-25-C"), and the total disbursements per subsidiary ledger amounts to
₱23,463,543.02 (Exhibit "LL-29-C"), the ratio of substantiated disbursements for fiscal year 2003 is
26.68% (₱6,259,078.30/₱23,463,543.02). Thus, the substantiated portion of CF-CPA Disbursements
for fiscal year 2003, arrived at by multiplying the ratio of 26.68% with the total rent income added to
and used in the CF-CPA Account in the amount of ₱6,602,655.00 is ₱1,761,588.35.  (emphasis
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supplied)
For better understanding, we summarize the CTA's computation as follows:
1. The CTA subtracted the rent income used in the construction of the Sports Complex
(₱4,007,724.00) from the rental income (₱10,610,379.00) earned from the abovementioned
concessionaries. The difference (₱6,602,655.00) was the portion claimed to have been deposited to
the CF-CPA Account.
2. The CTA then subtracted the supposed substantiated portion of CF-CPA disbursements
(₱1,761,308.37) from the ₱6,602,655.00 to arrive at the supposed unsubstantiated portion of the
rental income (₱4,841,066.65). 132

3. The substantiated portion of CF-CPA disbursements (₱l,761,308.37)  was derived by multiplying

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the rental income claimed to have been added to the CF-CPA Account (₱6,602,655.00) by 26.68%
or the ratio of substantiated disbursements to total disbursements (₱23,463,543.02).
4. The 26.68% ratio  was the result of dividing the substantiated disbursements from the CF-CPA
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Account as found by the Independent CPA (₱6,259,078.30) by the total disbursements

(₱23,463,543.02) from the same account.
We find that this system of calculation is incorrect and does not truly give effect to the constitutional
grant of tax exemption to non-stock, non-profit educational institutions. The CTA's reasoning is
flawed because it required DLSU to substantiate an amount that is greater than the rental income
deposited in the CF-CPA Account in 2003.
To reiterate, to be exempt from tax, DLSU has the burden of proving that the proceeds of its rental
income (which amounted to a total of ₱10.61 million)  were used for educational purposes. This
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amount was divided into two parts: (a) the ₱4.0l million, which was used to pay the loan obtained for
the construction of the Sports Complex; and (b) the ₱6.60 million,  which was transferred to the CF-
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CPA account.
For year 2003, the total disbursement from the CF-CPA account amounted to ₱23 .46
million.  These figures, read in light of the constitutional exemption, raises the question: does DLSU
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claim that the whole total CF-CPA disbursement of ₱23.46 million is tax-exempt so that it is
required to prove that all these disbursements had been made for educational purposes?
We answer in the negative.
The records show that DLSU never claimed that the total CF-CPA disbursements of ₱23.46 million
had been for educational purposes and should thus be tax-exempt; DLSU only claimed ₱10.61
million for tax-exemption and should thus be required to prove that this amount had been used as
claimed.
Of this amount, ₱4.01 had been proven to have been used for educational purposes, as confirmed
by the Independent CPA. The amount in issue is therefore the balance of ₱6.60 million which was
transferred to the CF-CPA which in turn made disbursements of ₱23.46 million for various general
purposes, among them the ₱6.60 million transferred by DLSU.
Significantly, the Independent CPA confirmed that the CF-CPA made disbursements for educational
purposes in year 2003 in the amount ₱6.26 million. Based on these given figures, the CT A
concluded that the expenses for educational purposes that had been coursed through the CF-CPA
should be prorated so that only the portion that ₱6.26 million bears to the total CF-CPA
disbursements should be credited to DLSU for tax exemption.
This approach, in our view, is flawed given the constitutional requirement that revenues actually and
directly used for educational purposes should be tax-exempt. As already mentioned above, DLSU is
not claiming that the whole ₱23.46 million CF-CPA disbursement had been used for educational
purposes; it only claims that ₱6.60 million transferred to CF-CPA had been used for educational
purposes. This was what DLSU needed to prove to have actually and directly used for educational
purposes.
That this fund had been first deposited into a separate fund (the CF -CPA established to fund capital
projects) lends peculiarity to the facts of this case, but does not detract from the fact that the
deposited funds were DLSU revenue funds that had been confirmed and proven to have been
actually and directly used for educational purposes via the CF-CPA. That the CF-CPA might have
had other sources of funding is irrelevant because the assessment in the present case pertains only
to the rental income which DLSU indisputably earned as revenue in 2003. That the proven CF-CPA
funds used for educational purposes should not be prorated as part of its total CF-CPA
disbursements for purposes of crediting to DLSU is also logical because no claim whatsoever had
been made that the totality of the CF-CPA disbursements had been for educational purposes. No
prorating is necessary; to state the obvious, exemption is based on actual and direct use and this
DLSU has indisputably proven.
Based on these considerations, DLSU should therefore be liable only for the difference between
what it claimed and what it has proven. In more concrete terms, DLSU only had to prove that its
rental income for taxable year 2003 (₱10,610,379.00) was used for educational purposes. Hence,
while the total disbursements from the CF-CPA Account amounted to ₱23,463,543.02, DLSU only
had to substantiate its Pl0.6 million rental income, part of which was the ₱6,602,655.00 transferred
to the CF-CPA account. Of this latter amount, ₱6.259 million was substantiated to have been used
for educational purposes.
To summarize, we thus revise the tax base for deficiency income tax and VAT for taxable year 2003
as follows:
  CTA
Decision 138
Revised
Rental income 10,610,379.00 10,610,379.00

Less: Rent income used in construction of the Sports 4,007,724.00 4,007,724.00

Complex

     
Rental income deposited to the CF-CPA Account 6,602,655.00 6,602,655.00
     

Less: Substantiated portion of CF-CPA 1,761,588.35 6,259,078.30

disbursements

     
Tax base for deficiency income tax and VAT 4,841,066.65 343.576.70
On DLSU' s argument that the CTA should have appreciated its evidence in the same way as it did
with the evidence submitted by Ateneo in another separate case, the CTA explained that the issue in
the Ateneo case was not the same as the issue in the present case.
The issue in the Ateneo case was whether or not Ateneo could be held liable to pay income taxes
and VAT under certain BIR and Department of Finance issuances  that required the educational
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institution to own and operate the canteens, or other commercial enterprises within its campus, as
condition for tax exemption. The CTA held that the Constitution does not require the educational
institution to own or operate these commercial establishments to avail of the exemption.
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Given the lack of complete identity of the issues involved, the CTA held that it had to evaluate the
separate sets of evidence differently. The CTA likewise stressed that DLSU and Ateneo gave distinct
defenses and that its wisdom "cannot be equated on its decision on two different cases with two
different issues."
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DLSU disagrees with the CTA and argues that the entire assessment must be cancelled because it
submitted similar, if not stronger sets of evidence, as Ateneo. We reject DLSU's argument for
being non sequitur. Its reliance on the concept of uniformity of taxation is also incorrect.
First, even granting that Ateneo and DLSU submitted similar evidence, the sufficiency and
materiality of the evidence supporting their respective claims for tax exemption would necessarily
differ because their attendant issues and facts differ.
To state the obvious, the amount of income received by DLSU and by Ateneo during the taxable
years they were assessed varied. The amount of tax assessment also varied. The amount of
income proven to have been used for educational purposes
also varied because the amount substantiated varied.  Thus, the amount of tax assessment
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cancelled by the CTA varied.

On the one hand, the BIR assessed DLSU a total tax deficiency of ₱17,303,001.12 for taxable years
2001, 2002 and 2003. On the other hand, the BIR assessed Ateneo a total deficiency tax
of ₱8,864,042.35 for the same period. Notably, DLSU was assessed deficiency DST, while Ateneo
was not.143

Thus, although both Ateneo and DLSU claimed that they used their rental income actually, directly
and exclusively for educational purposes by submitting similar evidence, e.g., the testimony of their
employees on the use of university revenues, the report of the Independent CPA, their income
summaries, financial statements, vouchers, etc., the fact remains that DLSU failed to prove that a
portion of its income and revenues had indeed been used for educational purposes.
The CTA significantly found that some documents that could have fully supported DLSU's claim
were not produced in court. Indeed, the Independent CPA testified that some disbursements had not
been proven to have been used actually, directly and exclusively for educational purposes. 144

The final nail on the question of evidence is DLSU's own admission that the original of these
documents had not in fact been produced before the CTA although it claimed that there was no bad
faith on its part.  To our mind, this admission is a good indicator of how the Ateneo and the DLSU
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cases varied, resulting in DLSU's failure to substantiate a portion of its claimed exemption.
Further, DLSU's invocation of Section 5, Rule 130 of the Revised
Rules on Evidence, that the contents of the missing supporting documents were proven by its recital
in some other authentic documents on record,  can no longer be entertained at this late stage of the
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proceeding. The CTA did not rule on this particular claim. The CTA also made no finding on DLSU' s
assertion of lack of bad faith. Besides, it is not our duty to go over these documents to test the
truthfulness of their contents, this Court not being a trier of facts.
Second, DLSU misunderstands the concept of uniformity of taxation.
Equality and uniformity of taxation means that all taxable articles or kinds of property of the same
class shall be taxed at the same rate.  A tax is uniform when it operates with the same force and
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effect in every place where the subject of it is found.  The concept requires that all subjects of
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taxation similarly situated should be treated alike and placed in equal footing.
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In our view, the CTA placed Ateneo and DLSU in equal footing. The CTA treated them alike because
their income proved to have been used actually, directly and exclusively for educational purposes
were exempted from taxes. The CTA equally applied the requirements in the YMCA case to test if
they indeed used their revenues for educational purposes.
DLSU can only assert that the CTA violated the rule on uniformity if it can show that,
despite proving that it used actually, directly and exclusively for educational purposes its income and
revenues, the CTA still affirmed the imposition of taxes. That the DLSU secured a different result
happened because it failed to fully prove that it used actually, directly and exclusively for educational
purposes its revenues and income.
On this point, we remind DLSU that the rule on uniformity of taxation does not mean that subjects of
taxation similarly situated are treated in literally the same way in all and every occasion. The fact
that the Ateneo and DLSU are both non-stock, non-profit educational institutions, does not mean that
the CTA or this Court would similarly decide every case for (or against) both universities. Success in
tax litigation, like in any other litigation, depends to a large extent on the sufficiency of evidence.
DLSU's evidence was wanting, thus, the CTA was correct in not fully cancelling its tax liabilities.
b. DLSU proved its payment of the DST
The CTA affirmed DLSU's claim that the DST due on its mortgage and loan transactions were paid
and remitted through its bank's On-Line Electronic DST Imprinting Machine. The Commissioner
argues that DLSU is not allowed to use this method of payment because an educational institution is
excluded from the class of taxpayers who can use the On-Line Electronic DST Imprinting Machine.
We sustain the findings of the CTA. The Commissioner's argument lacks basis in both the Tax Code
and the relevant revenue regulations.
DST on documents, loan agreements, and papers shall be levied, collected and paid for by the
person making, signing, issuing, accepting, or transferring the same.  The Tax Code provides that
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whenever one party to the document enjoys exemption from DST, the other party not exempt from
DST shall be directly liable for the tax. Thus, it is clear that DST shall be payable by any party to the
document, such that the payment and compliance by one shall mean the full settlement of the DST
due on the document.
In the present case, DLSU entered into mortgage and loan agreements with banks. These
agreements are subject to DST.  For the purpose of showing that the DST on the loan agreement
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has been paid, DLSU presented its agreements bearing the imprint showing that DST on the
document has been paid by the bank, its counterparty. The imprint should be sufficient proof that
DST has been paid. Thus, DLSU cannot be further assessed for deficiency DST on the said
documents.
Finally, it is true that educational institutions are not included in the class of taxpayers who can pay
and remit DST through the On-Line Electronic DST Imprinting Machine under RR No. 9-2000. As
correctly held by the CTA, this is irrelevant because it was not DLSU who used the On-Line
Electronic DST Imprinting Machine but the bank that handled its mortgage and loan transactions.
RR No. 9-2000 expressly includes banks in the class of taxpayers that can use the On-Line
Electronic DST Imprinting Machine.
Thus, the Court sustains the finding of the CTA that DLSU proved the
payment of the assessed DST deficiency, except for the unpaid balance of
₱13,265.48. 152