Rolex Suplico vs. NEDA / Amsterdam Holdings vs. DOTC / Galeleo P. 66.
66. Aside from the fact that the Notes of the Meeting Between
Angeles vs. DOTC
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 178830               July 14, 2008
ROLEX SUPLICO, Petitioner,  President Gloria Macapagal-Arroyo and Chinese President Hu
vs.
NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY,
represented by NEDA SECRETARY ROMULO L. NERI, and the
NEDA-INVESTMENT COORDINATION COMMITTEE,
DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS (DOTC), represented by DOTC
SECRETARY LEANDRO MENDOZA, including the
COMMISSION ON INFORMATION AND COMMUNICATIONS
TECHNOLOGY, headed by its Chairman, RAMON P. SALES,
THE TELECOMMUNICATIONS OFFICE, BIDS AND AWARDS
FOR INFORMATION AND COMMUNICATIONS TECHNOLOGY
(ICT), headed by DOTC ASSISTANT SECRETARY ELMER A.
SONEJA as Chairman, and the TECHNICAL WORKING GROUP
FOR ICT, AND DOTC ASSISTANT SECRETARY LORENZO
FORMOSO, AND ALL OTHER OPERATING UNITS OF THE
DOTC FOR INFORMATION AND COMMUNICATIONS
TECHNOLOGY, and ZTE CORPORATION, AMSTERDAM
HOLDINGS, INC., AND ALL PERSONS ACTING IN THEIR
BEHALF, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 179317
AMSTERDAM HOLDINGS, INC., and NATHANIEL
SAUZ, Petitioners, 
vs.
DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS, SECRETARY LEANDRO MENDOZA,
COMMISSION ON INFORMATION AND COMMUNICATIONS
TECHNOLOGY, and ASSISTANT SECRETARY LORENZO
FORMOSO III, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 179613
GALELEO P. ANGELES, VICENTE C. ANGELES, JOB
FLORANTE L. CASTILLO, TRINI ANNE G. NIEVA, ROY ALLAN
T. ARELLANO, CARLO MAGNO M. REONAL, ETHEL B.
REGADIO, RAENAN B. MALIG, AND VINALYN M. POTOT,
TOGETHER WITH LAWYERS AND ADVOCATES FOR
ACCOUNTABILITY, TRANSPARENCY, INTEGRITY AND GOOD
GOVERNANCE (LATIGO), Petitioners, 
vs.
DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS (DOTC), represented by DOTC
SECRETARY LEANDRO MENDOZA, and ZHONG XING
EQUIPMENT (ZTE) COMPANY, LTD., AND ANY AND ALL
PERSONS ACTING ON THEIR BEHALF, Respondents.
RESOLUTION
REYES, R.T., J.:
Under consideration is the Manifestation and Motion 1 dated October 26,
2007 of the Office of the Solicitor General (OSG) which states:
The Office of the Solicitor General (OSG) respectfully avers that in an
Indorsement dated October 24, 2007, the Legal Service of the
Department of Transportation and Communications (DOTC) has
informed it of the Philippine Government’s decision not to continue with
the ZTE National Broadband Network Project (see attachment 2). That
said, there is no more justiciable controversy for this Honorable Court to
resolve. WHEREFORE, public respondents respectfully pray that the
present petitions be DISMISSED.
On November 13, 2007, the Court noted the OSG’s manifestation and
motion and required petitioners in G.R. Nos. 178830, 179317, and 179613
to comment.
On December 6, 2007, Rolex Suplico, petitioner in G.R. No. 178830, filed
his Consolidated Reply and Opposition, 3 opposing the aforequoted OSG
Manifestation and Motion, arguing that:
President Gloria Macapagal-Arroyo and Chinese President Hu
Jintao held 2 October 2007 were not attached to the 26 October
2007 Manifestation and Motion - thus depriving petitioners of
the opportunity to comment thereon - a mere verbally
requested 1st Indorsement is not sufficient basis for the
conclusion that the ZTE-DOTC NBN deal has been permanently
scrapped.
67. Suffice to state, said 1st Indorsement is glaringly self-
serving, especially without the Notes of the Meeting Between
Jintao to support its allegations or other proof of the supposed
decision to cancel the ZTE-DOTC NBN deal. Public respondents
can certainly do better than that.4
Petitioner Suplico further argues that:
79. Assuming arguendo that some aspects of the present
Petition have been rendered moot (which is vehemently
denied), this Honorable Court, consistent with well-entrenched
jurisprudence, may still take cognizance thereof. 5
Petitioner Suplico cites this Court’s rulings in Gonzales v. Chavez, 6Rufino
v. Endriga,7 and Alunan III v. Mirasol8 that despite their mootness, the
Court nevertheless took cognizance of these cases and ruled on the merits
due to the Court’s symbolic function of educating the bench and the bar
by formulating guiding and controlling principles, precepts, doctrines,
and rules.
On January 31, 2008, Amsterdam Holdings, Inc. (AHI) and Nathaniel
Sauz, petitioners in G.R. No. 179317, also filed their comment expressing
their sentiments, thus:
3. First of all, the present administration has never been known
for candor. The present administration has a very nasty habit of
not keeping its word. It says one thing, but does another.
4. This being the case, herein petitioners are unable to bring
themselves to feel even a bit reassured that the government, in
the event that the above-captioned cases are dismissed, will not
backtrack, re-transact, or even resurrect the now infamous
NBN-ZTE transaction. This is especially relevant since what was
attached to the OSG’s Manifestation and Motion was a mere
one (1) page written communication sent by the Department of
Transportation and Communications (DOTC) to the OSG,
allegedly relaying that the Philippine Government has decided
not to continue with the NBN project "x x x due to several
reasons and constraints."
Petitioners AHI and Sauz further contend that because of the
transcendental importance of the issues raised in the petition, which
among others, included the President’s use of the power to borrow, i.e., to
enter into foreign loan agreements, this Court should take cognizance of
this case despite its apparent mootness.
On January 15, 2008, the Court required the OSG to file respondents’
reply to petitioners’ comments on its manifestation and motion.
On April 18, 2008, the OSG filed respondents’ reply, reiterating their
position that for a court to exercise its power of adjudication, there must
be an actual case or controversy - one which involves a conflict of legal
rights, an assertion of opposite legal claims susceptible of judicial
resolution; the case must not be moot or academic or based on extra-legal
or other similar considerations not cognizable by a court of justice. 9
Respondents also insist that there is no perfected contract in this case
that would prejudice the government or public interest. Explaining the
nature of the NBN Project as an executive agreement, respondents stress
that it remained in the negotiation stage. The conditions precedent 10 for
the agreement to become effective have not yet been complied with.
Respondents further oppose petitioners’ claim of the right to information,
which they contend is not an absolute right. They contend that the
matters raised concern executive policy, a political question which the
judicial branch of government would generally hesitate to pass upon.
On July 2, 2008, the OSG filed a Supplemental Manifestation and
Motion. Appended to it is the Highlights from the Notes of Meeting
between President Gloria Macapagal-Arroyo and Chinese President Hu
Jintao, held in XI Jiao Guesthouse, Shanghai, China, on October 2, 2007.
In the Notes of Meeting, the Philippine Government conveyed its decision
not to continue with the ZTE National Broadband Network Project due to
several constraints. The same Notes likewise contained President Hu
Jintao’s expression of understanding of the Philippine Government
decision.
We resolve to grant the motion.
Firstly, the Court notes the triple petitions to be for certiorari, prohibition
and mandamus, with application for the issuance of a Temporary
Restraining Order (TRO) and/or Preliminary Injunction. The individual
prayers in each of the three (3) consolidated petitions are:
G.R. No. 178830
WHEREFORE, it is respectfully prayed of this Honorable Court:
1. Upon the filing of this Petition, pursuant to the second
paragraph of Rule 58, Section 5 of the Rules of Court, issue
forthwith an ex parte temporary restraining order enjoining
respondents, their subordinates, agents, representatives and
any and all persons acting on their behalf from pursuing,
entering into indebtedness, disbursing funds, and
implementing the ZTE-DOTC Broadband Deal;
2. Compel respondents, upon Writ of Mandamus, to forthwith
produce and furnish petitioner or his undersigned counsel a
certified true copy of the contract or agreement covering the
NBN project as agreed upon with ZTE Corporation;
3. Schedule Oral Arguments in the present case pursuant to
Rule 49 in relation to Section 2, Rule 56 of the revised Rules of
Court; and,
4. Annul and set aside the award of the ZTE-DOTC Broadband
Deal, and compel public respondents to forthwith comply with
pertinent provisions of law regarding procurement of
government ICT contracts and public bidding for the NBN
contract.11 (Emphasis supplied)
G.R. No. 179317
WHEREFORE, petitioners Amsterdam Holdings, Inc., and Nathaniel
Sauz respectfully pray as follows:
A. upon the filing of this Petition for Mandamus and
conditioned upon the posting of a bond in such amount as the
Honorable Court may fix, a temporary restraining order and/or
writ of preliminary injunction be issued directing the
Department of Transportation and Communication, the
Commission on Information and Communications Technology,
all other government agencies and instrumentalities, their
officers, employees, and/or other persons acting for and on
their behalf to desist during the pendency of the instant Petition
for Mandamus from entering into any other agreements and
from commencing with any kind, sort, or specie of activity in
connection with the National Broadband Network Project;
B. the instant Petition for Mandamus be given due course; and,
C. after due consideration of all relevant issues, judgment be
rendered directing respondents to allow herein petitioners
access to all agreements entered into with the Government of
China, the ZTE Corporation, and/or other entities, government
instrumentalities, and/or individuals with regard to the
National Broadband Network Project.12 (Emphasis supplied)
G.R. No. 179613
WHEREFORE, it is respectfully prayed of this Honorable Court to:
1. Compel respondents, upon Writ of Mandamus, to forthwith
produce and furnish petitioner or his undersigned counsel a
certified true copy of the contract or agreement covering the
NBN project as agreed upon with ZTE Corporation;
2. Schedule Oral Arguments in the present case pursuant to
Rule 49 in relation to Section 2, Rule 56 of the Revised Rules of
Court;
3. Annul and set aside the award of the contract for the national
broadband network to respondent ZTE Corporation, upon the
ground that said contract, as well as the procedures resorted to
preparatory to the execution thereof, is contrary to the
Constitution, to law and to public policy;
4. Compel public respondent to forthwith comply with pertinent
provisions of law regarding procurement of government
infrastructure projects, including public bidding for said
contract to undertake the construction of the national
broadband network.13(Emphasis supplied)
On September 11, 2007, the Court issued a TRO 14 in G.R. No. 178830,
enjoining the parties from "pursuing, entering into indebtedness,
disbursing funds, and implementing the ZTE-DOTC Broadband Deal and
Project" as prayed for. Pertinent parts of the said Order read:
WHEREAS, the Supreme Court, on 11 September 2007, adopted a
resolution in the above-entitled case, to wit:
"G.R. No. 178830 (Rolex Suplico vs. National Economic and
Development Authority, represented by NEDA Secretary Romulo L. Neri,
and the NEDA Investment Coordination Committee, Department of
Transportation and Communications (DOTC), represented by DOTC
Secretary Leandro Mendoza, including the Commission on Information
and Communications Technology, headed by its Chairman, Ramon P.
Sales, The Telecommunications Office, Bids and Awards for Information
and Communications Technology Committee (ICT), headed by DOTC
Assistant Secretary Elmer A. Soneja as Chairman, and The Technical
Working Group for ICT, and DOTC Assistant Secretary Lorenzo Formoso,
and All Other Operating Units of the DOTC for Information and
Communications Technology, and ZTE Corporation, Amsterdam
Holdings, Inc., and ARESCOM, Inc.—Acting on the instant petition with
prayer for temporary restraining order and/or writ of preliminary
injunction, the Court Resolved, without giving due course to the petition,
to
xxxx
(d) Issue a TEMPORARY RESTRAINING ORDER, effective immediately
and continuing until further orders from this Court, enjoining the (i)
National Economic and Development Authority, (ii) NEDA-Investment
Coordination Committee, (iii) Department of Transportation and
Communications, Commission on Information and Communications
Technology, (iv) Telecommunications Office, Bids and Awards for
Information and Communications Technology Committee (ICT), (v)
Technical Working Group for ICT, and all other Operating Units of the
DOTC for Information and Communications Technology, (vi) ZTE
Corporation; (vii) Amsterdam Holdings, Inc., and (viii) ARESCOM, Inc.,
and any and all persons acting on their behalf from ‘pursuing, entering
into indebtedness, disbursing funds, and implementing the ZTE-DOTC
Broadband Deal and Project’ as prayed for."
NOW THEREFORE, effective immediately and continuing until further
orders from this Court, You, Respondents (i) National Economic and
Development Authority, (ii) NEDA-Investment Coordination Committee,
(iii) Department of Transportation and Communications, Commission on
Information and Communications Technology, (iv) Telecommunications
Office, Bids and Awards for Information and Communications
Technology Committee (ICT), (v) Technical Working Group for ICT, and
all other Operating Units of the DOTC for Information and
Communications Technology, (vi) ZTE Corporation; (vii) Amsterdam
Holdings, Inc., and (viii) ARESCOM, Inc., and any and all persons acting
on their behalf are hereby ENJOINED from "pursuing, entering into
indebtedness, disbursing funds, and implementing the ZTE-DOTC
Broadband Deal and Project" as prayed for. 15 (Emphasis supplied.)
Petitioners in G.R. Nos. 178830 and 179613 pray that they be furnished
certified true copies of the "contract or agreement covering the NBN
project as agreed upon with ZTE Corporation." It appears that during one
of the Senate hearings on the NBN project, copies of the supply
contract16 were readily made available to petitioners. 17 Evidently, the said
prayer has been complied with and is, thus, mooted.
When President Gloria Macapagal-Arroyo, acting in her official capacity
during the meeting held on October 2, 2007 in China, informed China’s
President Hu Jintao that the Philippine Government had decided not to
continue with the ZTE-National Broadband Network (ZTE-NBN) Project
due to several reasons and constraints, there is no doubt that all the other
principal prayers in the three petitions (to annul, set aside, and enjoin the
implementation of the ZTE-NBN Project) had also become moot.
Contrary to petitioners’ contentions that these declarations made by
officials belonging to the executive branch on the Philippine
Government’s decision not to continue with the ZTE-NBN Project are
self-serving, hence, inadmissible, the Court has no alternative but to take
judicial notice of this official act of the President of the Philippines.
Section 1, Rule 129 of the Rules of Court provides:
SECTION 1. Judicial Notice, when mandatory. - A court shall take judicial
notice, without introduction of evidence, of the existence and territorial
extent of states, their political history, forms of government and symbols
of nationality, the law of nations, the admiralty and maritime courts of
the world and their seals, the political constitution and history of the
Philippines, the official acts of the legislative, executive and judicial
departments of the Philippines, the laws of nature, the measure of time,
and the geographical divisions. (Emphasis supplied)
Under the rules, it is mandatory and the Court has no alternative but to
take judicial notice of the official acts of the President of the Philippines,
who heads the executive branch of our government. It is further provided
in the above-quoted rule that the court shall take judicial notice of the
foregoing facts without introduction of evidence. Since we consider the
act of cancellation by President Macapagal-Arroyo of the proposed ZTE-
NBN Project during the meeting of October 2, 2007 with the Chinese
President in China as an official act of the executive department, the
Court must take judicial notice of such official act without need of
evidence.
In David v. Macapagal-Arroyo, 18 We took judicial notice of the
announcement by the Office of the President banning all rallies and
canceling all permits for public assemblies following the issuance of
Presidential Proclamation No. 1017 and General Order No. 5.
In Estrada v. Desierto,19 the Court also resorted to judicial notice in
resolving the factual ingredient of the petition.
Moreover, under Section 2, paragraph (m) of Rule 131 of the Rules of
Court, the official duty of the executive officials 20 of informing this Court
of the government’s decision not to continue with the ZTE-NBN Project is
also presumed to have been regularly performed, absent proof to the
contrary. Other than petitioner AHI’s unsavory insinuation in its
comment, the Court finds no factual or legal basis to disregard this
disputable presumption in the present instance.
Concomitant to its fundamental task as the ultimate citadel of justice and
legitimacy is the judiciary’s role of strengthening political stability
indispensable to progress and national development. Pontificating on
issues which no longer legitimately constitute an actual case or
controversy will do more harm than good to the nation as a whole. Wise
exercise of judicial discretion militates against resolving the academic
issues, as petitioners want this Court to do. This is especially true where,
as will be further discussed, the legal issues raised cannot be resolved
without previously establishing the factual basis or antecedents.
Judicial power presupposes actual controversies, the very antithesis of
mootness. In the absence of actual justiciable controversies or disputes,
the Court generally opts to refrain from deciding moot issues. Where
there is no more live subject of controversy, the Court ceases to have a
reason to render any ruling or make any pronouncement.
Kapag wala nang buhay na kaso, wala nang dahilan para magdesisyon
ang Husgado.
In Republic Telecommunications Holdings, Inc. v. Santiago, 21 the lone
issue tackled by the Court of Appeals (CA) was whether the Securities
Investigation and Clearing Department (SICD) and Securities and
Exchange Commission (SEC) en banc committed reversible error in
issuing and upholding, respectively, the writ of preliminary injunction.
The writ enjoined the execution of the questioned agreements between
Qualcomm, Inc. and Republic Telecommunications Holdings, Inc.
(RETELCOM). The implementation of the agreements was restrained
through the assailed orders of the SICD and the SEC en banc which,
however, were nullified by the CA decision. Thus, RETELCOM elevated
the matter to this Court praying for the reinstatement of the writ of
preliminary injunction of the SICD and the SEC en banc. However, before
the matter was finally resolved, Qualcomm, Inc. withdrew from the
negotiating table. Its withdrawal had thwarted the execution and
enforcement of the contracts. Thus, the resolution of whether the
implementation of said agreements should be enjoined became no longer
necessary.
Equally applicable to the present case is the Court ruling in the above-
cited Republic Telecommunications. There We held, thus:
Indeed, the instant petition, insofar as it assails the Court of Appeals’
Decision nullifying the orders of the SEC en banc and the SICD, has been
rendered moot and academic. To rule, one way or the other, on the
correctness of the questioned orders of the SEC en banc and the SICD will
be indulging in a theoretical exercise that has no practical worth in view
of the supervening event.
The rule is well-settled that for a court to exercise its power of
adjudication, there must be an actual case or controversy - one which
involves a conflict of legal rights, an assertion of opposite legal claims
susceptible of judicial resolution; the case must not be moot or academic
or based on extra-legal or other similar considerations not cognizable by
a court of justice. Where the issue has become moot and academic, there
is no justiciable controversy, and an adjudication thereon would be of no
practical use or value as courts do not sit to adjudicate mere academic
questions to satisfy scholarly interest, however intellectually challenging.
In the ultimate analysis, petitioners are seeking the reinstatement of the
writ of injunction to prevent the concerned parties from pushing through
with transactions with Qualcomm, Inc. Given that Qualcomm, Inc. is no
longer interested in pursuing the contracts, there is no actual substantial
relief to which petitioners would be entitled and which would be negated
by the dismissal of the petition.
The Court likewise finds it unnecessary to rule whether the assailed Court
of Appeals’ Decision had the effect of overruling the Court’s Resolution
dated 29 January 1999, which set aside the TRO issued by the appellate
court.
A ruling on the matter practically partakes of a mere advisory opinion,
which falls beyond the realm of judicial review. The exercise of the power
of judicial review is limited to actual cases and controversies. Courts have
no authority to pass upon issues through advisory opinions or to resolve
hypothetical or feigned problems.
While there were occasions when the Court passed upon issues although
supervening events had rendered those petitions moot and academic, the
instant case does not fall under the exceptional cases. In those cases, the
Court was persuaded to resolve moot and academic issues to formulate
guiding and controlling constitutional principles, precepts, doctrines or
rules for future guidance of both bench and bar.
In the case at bar, the resolution of whether a writ of preliminary
injunction may be issued to prevent the implementation of the assailed
contracts calls for an appraisal of factual considerations which are
peculiar only to the transactions and parties involved in this controversy.
Except for the determination of whether petitioners are entitled to a writ
of preliminary injunction which is now moot, the issues raised in this
petition do not call for a clarification of any constitutional principle or the
interpretation of any statutory provision. 22
Secondly, even assuming that the Court will choose to disregard the
foregoing considerations and brush aside mootness, the Court cannot
completely rule on the merits of the case because the resolution of the
three petitions involves settling factual issues which definitely requires
reception of evidence. There is not an iota of doubt that this may not be
done by this Court in the first instance because, as has been stated often
enough, this Court is not a trier of facts.
Ang pagpapasiya sa tatlong petisyon ay nangangailangan ng paglilitis na
hindi gawain ng Hukumang ito.
Respondent ZTE, in its Comment in G.R. No. 178830, 23 correctly pointed
out that since petitioner Suplico filed his petition directly with this Court,
without prior factual findings made by any lower court, a determination
of pertinent and relevant facts is needed. ZTE enumerated some of these
factual issues, to wit:
(1) Whether an executive agreement has been reached between
the Philippine and Chinese governments over the NBN Project;
(2) Whether the ZTE Supply Contract was entered into by the
Republic of the Philippines, through the DOTC, and ZTE
International pursuant to, and as an integral part of, the
executive agreement;
(3) Whether a loan agreement for the NBN Project has actually
been executed;
(4) Whether the Philippine government required that the NBN
Project be completed under a Build-Operate-and-Transfer
Scheme;
(5) Whether the AHI proposal complied with the requirements
for an unsolicited proposal under the BOT Law;
(6) Whether the Philippine government has actually earmarked
public finds for disbursement under the ZTE Supply Contract;
and
(7) Whether the coverage of the NBN Project to be supplied
under the ZTE Supply Contract is more extensive than that
under the AHI proposal or such other proposal submitted
therefor.24
Definitely, some very specific reliefs prayed for in both G.R. Nos. 178830
and 179613 require prior determination of facts before pertinent legal
issues could be resolved and specific reliefs granted.
In G.R. No. 178830, petitioner seeks to annul and set aside the award of
the ZTE-DOTC Broadband Deal and compel public respondents to
forthwith comply with pertinent provisions of law regarding procurement
of government ICT contracts and public bidding for the NBN contract.
In G.R. No. 179613, petitioners also pray that the Court annul and set
aside the award of the contract for the national broadband network to
respondent ZTE Corporation, upon the ground that said contract, as well
as the procedures resorted to preparatory to the execution thereof, is
contrary to the Constitution, to law and to public policy. They also ask the
Court to compel public respondent to forthwith comply with pertinent
provisions of law regarding procurement of government infrastructure
projects, including public bidding for said contract to undertake the
construction of the national broadband network.
It is simply impossible for this Court "to annul and set aside the award of
the ZTE-DOTC Broadband Deal" without any evidence to support a prior
factual finding pointing to any violation of law that could lead to such
annulment order. For sure, the Supreme Court is not the proper venue
for this factual matter to be threshed out.
Thirdly, petitioner Suplico in G.R. No. 178830 prayed that this Court
order "public respondents to forthwith comply with pertinent provisions
of law regarding procurement of government ICT contracts and public
bidding for the NBN contract." 25 It would be too presumptuous on the
part of the Court to summarily compel public respondents to comply with
pertinent provisions of law regarding procurement of government
infrastructure projects without any factual basis or prior determination of
very particular violations committed by specific government officials of
the executive branch. For the Court to do so would amount to a breach of
the norms of comity among co-equal branches of government. A
perceived error cannot be corrected by committing another error.
Without proper evidence, the Court cannot just presume that the
executive did not comply with procurement laws. Should the Court allow
itself to fall into this trap, it would plainly commit grave error itself.
Magiging kapangahasan sa Hukumang ito na pilitin ang mga pinipetisyon
na tumalima sa batas sa pangongontrata ng pamahalaan kung wala pang
pagtitiyak o angkop na ebidensiya ng nagawang paglabag dito.
Let it be clarified that the Senate investigation in aid of legislation cannot
be the basis of Our decision which requires a judicial finding of facts.
Justice Antonio T. Carpio takes the view that the National Broadband
Network Project should be declared null and void. The foregoing
threefold reasons would suffice to address the concern of Our esteemed
colleague.
The Court is, therefore, constrained to dismiss the petitions and deny
them due course because of mootness and because their resolution
requires reception of evidence which cannot be done in an original
petition brought before the Supreme Court.
WHEREFORE, the petitions are DISMISSED. The Temporary
Restraining Order issued on September 11, 2007 is DISSOLVED.
SO ORDERED.
Bernando B. Jose, Jr. vs. Michael Phils., Inc. et al.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 169606               November 27, 2009
BERNARDO B. JOSE, JR., Petitioner, 
vs.
MICHAELMAR PHILS., INC. and MICHAELMAR SHIPPING
SERVICES, INC., Respondents.
DECISION
CARPIO, J.:
The Case
This is a petition1 for review on certiorari under Rule 45 of the
Rules of Court. The petition challenges the 11 May 2005
Decision2 and 5 August 2005 Resolution3 of the Court of
Appeals in CA-G.R. SP No. 83272. The Court of Appeals set
aside the 19 January4 and 22 March5 2004 Resolutions of the
National Labor Relations Commission (NLRC) in NLRC NCR
CA No. 036666-03 and reinstated the 18 June 2003 Decision 6of
the Labor Arbiter in NLRC NCR OFW Case No. (M)02-12-3137-
00.
The Facts
Michaelmar Philippines, Inc. (MPI) is the Philippine agent of Michaelmar
Shipping Services, Inc. (MSSI). In an undertaking 7 dated 2 July 2002 and
an employment contract8 dated 4 July 2002, MSSI through MPI engaged
the services of Bernardo B. Jose, Jr. (Jose, Jr.) as oiler of M/T Limar. The
employment contract stated:
That the employee shall be employed on board under the following terms
and conditions:
1.1 Duration of Contract EIGHT (8) MONTHS
Position OILER
Basic Monthly Salary US$ 450.00 & US$ 39.00 TANKER ALLOWANCE
Hours of Work 48 HOURS/WEEK
Overtime US$ 386.00 FIXED OT. 105 HRS/ MOS.
Vacation Leave with Pay US$ 190.00 & US$ 150 OWNERS BONUS
Point of Hire MANILA, PHILIPPINES9
In connection with the employment contract, Jose, Jr. signed a
declaration10 dated 10 June 2002 stating that:
In order to implement the Drug and Alcohol Policy on board the
managed vessels the following with [sic] apply:
All alcoholic beverages, banned substances and unprescribed drugs
including but not limited to the following: Marijuana Cocaine
Phencyclidine Amphetamines Heroin Opiates are banned from Stelmar
Tankers (Management) Ltd. managed vessels.
Disciplinary action up to and including dismissal will be taken against
any employee found to be in possession of or impaired by the use of any
of the above mentioned substances.
A system of random testing for any of the above banned substances will
be used to enforce this policy. Any refusal to submit to such tests shall be
deemed as a serious breach of the employment contract and shall result
to the seaman’s dismissal due to his own offense.
Therefore any seaman will be instantly dismissed if:
xxx
They are found to have positive trace of alcohol or any of the banned
substances in any random testing sample.
Jose, Jr. began performing his duties on board the M/T Limar on 21
August 2002. On 8 October 2002, a random drug test was conducted on
all officers and crew members of M/T Limar at the port of Curacao. Jose,
Jr. was found positive for marijuana. Jose, Jr. was informed about the
result of his drug test and was asked if he was taking any medication.
Jose, Jr. said that he was taking Centrum vitamins.
Jose, Jr. was allowed to continue performing his duties on board the M/T
Limar from 8 October to 29 November 2002. In the Sea Going Staff
Appraisal Report11 on Jose Jr.’s work performance for the period of 1
August to 28 November 2002, Jose, Jr. received a 96% total rating and
was described as very hardworking, trustworthy, and reliable.
On 29 December 2002, M/T Limar reached the next port after the
random drug test and Jose, Jr. was repatriated to the Philippines. When
Jose, Jr. arrived in the Philippines, he asked MPI that a drug test be
conducted on him. MPI ignored his request. On his own, Jose, Jr.
procured drug tests from Manila Doctors Hospital, 12 S.M. Lazo Medical
Clinic, Inc.,13 and Maritime Clinic for International Services, Inc. 14 He was
found negative for marijuana.
Jose, Jr. filed with the NLRC a complaint against MPI and MSSI for
illegal dismissal with claim for his salaries for the unexpired portion of
the employment contract.
The Labor Arbiter’s Ruling
In her 18 June 2003 Decision, the Labor Arbiter dismissed the complaint
for lack of merit. The Labor Arbiter held that:
Based from the facts and evidence, this office inclined [sic] to
rule in favor of the respondents: we find that complainant’s
termination from employment was valid and lawful. It is
established that complainant, after an unannounced drug test
conducted by the respondent principal on the officers and crew
on board the vessel, was found positive of marijuana, a
prohibited drug. It is a universally known fact the menace that
drugs bring on the user as well as to others who may have got
on his way. It is noted too that complainant worked on board a
tanker vessel which carries toxic materials such as fuels,
gasoline and other combustible materials which require
delicate and careful handling and being an oiler, complainant
is expected to be in a proper disposition. Thus, we agree with
respondents that immediate repatriation of complainant is
warranted for the safety of the vessel as well as to
complainant’s co-workers on board. It is therefore a risk that
should be avoided at all cost. Moreover, under the POEA
Standard Employment Contract as cited by the respondents
(supra), violation of the drug and alcohol policy of the
company carries with it the penalty of dismissal to be effected
by the master of the vessel. It is also noted that complainant
was made aware of the results of the drug test as per Drug Test
Certificate dated October 29, 2002. He was not dismissed right
there and then but it was only on December 29, 2002 that he
was repatriated for cause.
As to the complainant’s contention that the ship doctor’s report can not
be relied upon in the absence of other evidence supporting the doctor’s
findings for the simple reason that the ship doctor is under the control of
the principal employer, the same is untenable. On the contrary, the
findings of the doctor on board should be given credence as he would not
make a false clarification. Dr. A.R.A Heath could not be said to have
outrageously contrived the results of the complainant’s drug test. We are
therefore more inclined to believe the original results of the unannounced
drug test as it was officially conducted on board the vessel rather than the
subsequent testing procured by complainant on his own initiative. The
result of the original drug test is evidence in itself and does not require
additional supporting evidence except if it was shown that the drug test
was conducted not in accordance with the drug testing procedure which
is not obtaining in this particular case. [H]ence, the first test prevails.
We can not also say that respondents were motivated by ill will against
the complainant considering that he was appraised to be a good worker.
For this reason that respondents would not terminate [sic] the services of
complainant were it not for the fact that he violated the drug and alcohol
policy of the company. [T]hus, we find that just cause exist [sic] to justify
the termination of complainant. 15
Jose, Jr. appealed the Labor Arbiter’s 18 June 2003 Decision to the
NLRC. Jose, Jr. claimed that the Labor Arbiter committed grave abuse of
discretion in ruling that he was dismissed for just cause.
The NLRC’s Ruling
In its 19 January 2004 Resolution, the NLRC set aside the
Labor Arbiter’s 18 June 2003 Decision. The NLRC held that
Jose, Jr.’s dismissal was illegal and ordered MPI and MSSI to
pay Jose, Jr. his salaries for the unexpired portion of the
employment contract. The NLRC held that:
Here, a copy of the purported drug test result for Complainant
indicates, among others, the following typewritten words
"Hoofd: Drs. R.R.L. Petronia Apotheker" and "THC-COOH
POS."; the handwritten word "Marihuana"; and the stamped
words "Dr. A.R.A. Heath, MD", "SHIP’S DOCTOR" and "29
OKT. 2002." However, said test result does not contain any
signature, much less the signature of any of the doctors whose
names were printed therein (Page 45, Records). Verily, the
veracity of this purported drug test result is questionable,
hence, it cannot be deemed as substantial proof that
Complainant violated his employer’s "no alcohol, no drug"
policy. In fact, in his November 14, 2002 message to Stelmar
Tanker Group, the Master of the vessel where Complainant
worked, suggested that another drug test for complainant
should be taken when the vessel arrived [sic] in Curacao next
call for final findings (Page 33, Records), which is an indication
that the Master, himself, was in doubt with the purported drug
test result. Indeed there is reason for the Master of the vessel
to doubt that Complainant was taking in the prohibited drug
"marihuana." The Sea Going Staff Appraisal Report signed by
Appraiser David A. Amaro, Jr. and reviewed by the Master of
the vessel himself on complainant’s work performance as
Wiper from August 1, 2002 to November 28, 2002 which
included a two-month period after the purported drug test,
indicates that out of a total score of 100% on Safety
Consciousness (30%), Ability (30%), Reliability (20%) and
Behavior & Attitude (20%), Complainant was assessed a score
of 96% (Pages 30-31, Records). Truly, a worker who had been
taking in prohibited drug could not have given such an
excellent job performance. Significantly, under the category
"Behavior & Attitude (20%)," referring to his personal
relationship and his interactions with the rest of the ship’s staff
and his attitude towards his job and how the rest of the crew
regard him, Complainant was assessed the full score of 20%
(Page 31, Records), which belies Respondents’ insinuation that
his alleged offense directly affected the safety of the vessel, its
officers and crew members. Indeed, if Complainant had been a
threat to the safety of the vessel, officers and crew members,
he would not be been [sic] allowed to continue working almost
three (3) months after his alleged offense until his repatriation
on December 29, 2002. Clearly, Respondents failed to present
substantial proof that Complainant’s dismissal was with just or
authorized cause.
Moreover, Respondents failed to accord Complainant due process prior
to his dismissal. There is no showing that Complainant’s employer
furnished him with a written notice apprising him of the particular act or
omission for which his dismissal was sought and a subsequent written
notice informing him of the decision to dismiss him, much less any proof
that Complainant was given an opportunity to answer and rebut the
charges against him prior to his dismissal. Worse, Respondents’ invoke
the provision in the employment contract which allows summary
dismissal for cases provided therein. Consequently, Respondents argue
that there was no need for him to be notified of his dismissal. Such
blatant violation of basic labor law principles cannot be permitted by this
Office. Although a contract is law between the parties, the provisions of
positive law which regulate such contracts are deemed included and shall
limit and govern the relations between the parties (Asia World
Recruitment, Inc. vs. NLRC, G.R. No. 113363, August 24, 1999).
Relative thereto, it is worth noting Section 10 of Republic Act No. 8042,
which provides that "In cases of termination of overseas employment
without just, valid or authorized cause as defined by law or contract, the
worker shall be entitled to the full reimbursement of his placement fee
with interest of twelve percent (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for three (3) months for
every year of the unexpired term, whichever is less." 16
MPI and MSSI filed a motion for reconsideration. In its 22
March 2004 Resolution, the NLRC denied the motion for lack
of merit. MPI and MSSI filed with the Court of Appeals a
petition17 for certiorari under Rule 65 of the Rules of Court.
MPI and MSSI claimed that the NLRC gravely abused its
discretion when it (1) reversed the Labor Arbiter’s factual
finding that Jose, Jr. was legally dismissed; (2) awarded Jose,
Jr. his salaries for the unexpired portion of the employment
contract; (3) awarded Jose, Jr. $386 overtime pay; and (4)
ruled that Jose, Jr. perfected his appeal within the
reglementary period.
The Court of Appeals’ Ruling
In its 11 May 2005 Decision, the Court of Appeals set aside the 19 January
and 22 March 2004 Resolutions of the NLRC and reinstated the 18 June
2003 Decision of the Labor Arbiter. The Court of Appeals held that:
The POEA standard employment contract adverted to in the labor
arbiter’s decision to which all seamen’s contracts must adhere explicitly
provides that the failure of a seaman to obey the policy warrants a penalty
of dismissal which may be carried out by the master even without a notice
of dismissal if there is a clear and existing danger to the safety of the
vessel or the crew. That the petitioners were implementing a no-alcohol,
no drug policy that was communicated to the respondent when he
embarked is not in question. He had signed a document entitled Drug
and Alcohol Declaration in which he acknowledged that alcohol
beverages and unprescribed drugs such as marijuana were banned on the
vessel and that any employee found possessing or using these substances
would be subject to instant dismissal. He undertook to comply with the
policy and abide by all the relevant rules and guidelines, including the
system of random testing that would be employed to enforce it.
We can hardly belabor the reasons and justification for this policy. The
safety of the vessel on the high seas is a matter of supreme and
unavoidable concern to all — the owners, the crew and the riding public.
In the ultimate analysis, a vessel is only as seaworthy as the men who sail
it, so that it is necessary to maintain at every moment the efficiency and
competence of the crew. Without an effective no alcohol, no drug policy
on board the ship, the vessel’s safety will be seriously compromised. The
policy is, therefore, a reasonable and lawful order or regulation that, once
made known to the employee, must be observed by him, and the failure
or refusal of a seaman to comply with it should constitute serious
misconduct or willful disobedience that is a just cause for the termination
of employment under the Labor Code (Aparente vs. National Labor
Relations Commission, 331 SCRA 82). As the labor arbiter has discerned,
the seriousness and earnestness in the enforcement of the ban is
highlighted by the provision of the POEA Standard Employment Contract
allowing the ship master to forego the notice of dismissal requirement in
effecting the repatriation of the seaman violating it.
xxxx
Under legal rules of evidence, not all unsigned documents or papers fail
the test of admissibility. There are kinds of evidence known as exceptions
to the hearsay rule which need not be invariably signed by the author if it
is clear that it issues from him because of necessity and under
circumstances that safeguard the trustworthiness of the paper. A number
of evidence of this sort are called entries in the course of business, which
are transactions made by persons in the regular course of their duty or
business. We agree with the labor arbiter that the drug test result
constitutes entries made in the ordinary or regular course of duty of a
responsible officer of the vessel. The tests administered to the crew were
routine measures of the vessel conducted to enforce its stated policy, and
it was a matter of course for medical reports to be issued and released by
the medical officer. The ship’s physician at Curacao under whom the tests
were conducted was admittedly Dr. Heath. It was under his name and
with his handwritten comments that the report on the respondent came
out, and there is no basis to suspect that these results were issued other
than in the ordinary course of his duty. As the labor arbiter points out,
the drug test report is evidence in itself and does not require additional
supporting evidence except if it appears that the drug test was conducted
not in accordance with drug testing procedures. Nothing of the sort, he
says, has even been suggested in this particular case.
The regularity of the procedure observed in the administration and
reporting of the tests is the very assurance of the report’s admissibility
and credibility under the laws of the evidence. We see no reason why it
cannot be considered substantial evidence, which, parenthetically, is the
lowest rung in the ladder of evidence. It is from the fact that a report or
entry is a part of the regular routine work of a business or profession that
it derives its value as legal evidence.
Then the respondent was notified of the results and allowed to explain
himself. He could not show any history of medication that could account
for the traces of drugs in his system. Despite his lack of plausible excuses,
the ship captain came out in support of him and asked his superiors to
give him another chance. These developments prove that the respondent
was afforded due process consistent with the exigencies of his service at
sea. For the NLRC to annul the process because he was somehow not
furnished with written notice is already being pedantic. What is the
importance to the respondent of the difference between a written and
verbal notice when he was actually given the opportunity to be heard? x x
x cause for Jose, Jr.’s dismissal. The Court of Appeals gave credence to the
The working environment in a seagoing vessel is sui generis which amply
justifies the difference in treatment of seamen found guilty of serious
infractions at sea. The POEA Standard Employment Contract allows the
ship master to implement a repatriation for just cause without a notice of
dismissal if this is necessary to avoid a clear and existing danger to the
vessel. The petitioners have explained that that [sic] it is usually at the
next port of call where the offending crewman is made to disembark. In
this case, a month had passed by after the date of the medical report
before they reached the next port. We may not second-guess the
judgment of the master in allowing him to remain at his post in the
meantime. It is still reasonable to believe that the proper safeguards were
taken and proper limitations observed during the period when the
respondent remained on board.
Finally, the fact that the respondent obtained negative results in
subsequent drug tests in the Philippines does not negate the findings
made of his condition on board the vessel. A drug test can be negative if
the user undergoes a sufficient period of abstinence before taking the
test. Unlike the tests made at his instance, the drug test on the vessel was
unannounced. The credibility of the first test is, therefore, greater than
the subsequent ones.18
Jose, Jr. filed a motion19 for reconsideration. In its 5 August 2005
Resolution, the Court of Appeals denied the motion for lack of merit.
Hence, the present petition.
In a motion20 dated 1 August 2007, MPI and MSSI prayed that they be
substituted by OSG Ship Management Manila, Inc. as respondent in the
present case. In a Resolution 21 dated 14 November 2007, the Court noted
the motion.
The Issues
In his petition dated 13 September 2005, Jose, Jr. claims that he was
illegally dismissed from employment for two reasons: (1) there is no just
cause for his dismissal because the drug test result is unsigned by the
doctor, and (2) he was not afforded due process. He stated that:
2. The purported drug test result conducted to petitioner indicates,
among others, the following: [sic] typwritten words ‘Hool: Drs. R.R.L..
[sic] Petronia Apotheker" [sic] and :THC-COOH POS." [sic]; the
handwritten word "Marihuana"; and the stamped words "Dr. A.R.A
Heath, MD", "SHIP’S DOCTOR" and "29 OKT. 2002." However, said test
result does not contain any signature, much less the signature of any of
the doctors whose name [sic] were printed therein. This omission is fatal
as it goes to the veracity of the said purported drug test result.
Consequently, the purported drug test result cannot be deemed as
substantial proof that petitioner violated his employer’s "no alcohol, no
drug policy’ [sic].
xxxx
Even assuming arguendo that there was just cause,
respondents miserably failed to show that the presence of the
petitioner in the vessel constitutes a clear and existing danger
to the safety of the crew or the vessel. x x x
xxxx
It is a basic principle in Labor Law that in termination disputes, the
burden is on the employer to show that the dismissal was for a just and
valid cause. x x x
xxxx
x x x [T]he Honorable Labor Arbiter as well as the Honorable Court of
Appeals clearly erred in ruling that there was just cause for the
termination of petitioner’s employment. Petitioner’s employment was
terminated on the basis only of a mere allegation that is unsubstantiated,
unfounded and on the basis of the drug test report that was not even
signed by the doctor who purportedly conducted such test.
5. Moreover, respondents failed to observe due process in terminating
petitioner’s employment. There is no evidence on record that petitioner
was furnished by his employer with a written notice apprising him of the
particular act or omission which is the basis for his dismissal.
Furthermore, there is also no evidence on record that the second notice,
informing petitioner of the decision to dismiss, was served to the
petitioner. There is also no proof on record that petitioner was given an
opportunity to answer and rebut the charges against him prior to the
dismissal.22
The Court’s Ruling
In its 11 May 2005 Decision, the Court of Appeals held that there was just
drug test result showing that Jose, Jr. was positive for marijuana. The
Court of Appeals considered the drug test result as part of entries in the
course of business. The Court of Appeals held that:
Under legal rules of evidence, not all unsigned documents or papers fail
the test of admissibility. There are kinds of evidence known as exceptions
to the hearsay rule which need not be invariably signed by the author if it
is clear that it issues from him because of necessity and under
circumstances that safeguard the trustworthiness of the paper. A number
of evidence of this sort are called entries in the course of business, which
are transactions made by persons in the regular course of their duty or
business. We agree with the labor arbiter that the drug test result
constitutes entries made in the ordinary or regular course of duty of a
responsible officer of the vessel. The tests administered to the crew were
routine measures of the vessel conducted to enforce its stated policy, and
it was a matter of course for medical reports to be issued and released by
the medical officer. The ship’s physician at Curacao under whom the tests
were conducted was admittedly Dr. Heath. It was under his name and
with his handwritten comments that the report on the respondent came
out, and there is no basis to suspect that these results were issued other
than in the ordinary course of his duty. As the labor arbiter points out,
the drug test report is evidence in itself and does not require additional
supporting evidence except if it appears that the drug test was conducted
not in accordance with drug testing procedures. Nothing of the sort, he
says, has even been suggested in this particular case. 23(Emphasis
supplied)
Jose, Jr. claims that the Court of Appeals erred when it ruled that there
was just cause for his dismissal. The Court is not impressed. In a petition
for review on certiorari under Rule 45 of the Rules of Court, a mere
statement that the Court of Appeals erred is insufficient. The petition
must state the law or jurisprudence and the particular ruling of the
appellate court violative of such law or jurisprudence. In Encarnacion v.
Court of Appeals,24 the Court held that:
Petitioner asserts that there is a question of law involved in this appeal.
We do not think so. The appeal involves an appreciation of facts, i.e.,
whether the questioned decision is supported by the evidence and the
records of the case. In other words, did the Court of Appeals commit a
reversible error in considering the trouble record of the subject
telephone? Or is this within the province of the appellate court to
consider? Absent grave abuse of discretion, this Court will not reverse the
appellate court’s findings of fact.
In a petition for review under Rule 45, Rules of Court, invoking the usual
reason, i.e., that the Court of Appeals has decided a question of substance
not in accord with law or with applicable decisions of the Supreme Court,
a mere statement of the ceremonial phrase is not sufficient to confer
merit on the petition. The petition must specify the law or prevailing
jurisprudence on the matter and the particular ruling of the appellate
court violative of such law or previous doctrine laid down by the Supreme
Court. (Emphasis supplied)
In the present case, Jose, Jr. did not show that the Court of Appeals’
ruling is violative of any law or jurisprudence. Section 43, Rule 130, of the
Rules of Court states:
SEC. 43. Entries in the course of business. — Entries made at, or near the
time of the transactions to which they refer, by a person deceased, or
unable to testify, who was in a position to know the facts therein stated,
may be received as prima facie evidence, if such person made the entries
in his professional capacity or in the performance of duty and in the
ordinary or regular course of business or duty.
In Canque v. Court of Appeals,25 the Court laid down the requisites for
admission in evidence of entries in the course of business: (1) the person
who made the entry is dead, outside the country, or unable to testify; (2)
the entries were made at or near the time of the transactions to which
they refer; (3) the person who made the entry was in a position to know
the facts stated in the entries; (4) the entries were made in a professional
capacity or in the performance of a duty; and (5) the entries were made in
the ordinary or regular course of business or duty.
Here, all the requisites are present: (1) Dr. Heath is outside the country;
(2) the entries were made near the time the random drug test was
conducted; (3) Dr. Heath was in a position to know the facts made in the
entries; (4) Dr. Heath made the entries in his professional capacity and in
the performance of his duty; and (5) the entries were made in the
ordinary or regular course of business or duty.
The fact that the drug test result is unsigned does not necessarily lead to
the conclusion that Jose, Jr. was not found positive for marijuana. In
KAR ASIA, Inc. v. Corona,26 the Court admitted in evidence unsigned
payrolls. In that case, the Court held that:
Entries in the payroll, being entries in the course of business, enjoy the
presumption of regularity under Rule 130, Section 43 of the Rules of
Court. It is therefore incumbent upon the respondents to adduce clear
and convincing evidence in support of their claim. Unfortunately,
respondents’ naked assertions without proof in corroboration will not
suffice to overcome the disputable presumption.
In disputing the probative value of the payrolls for December 1994, the
appellate court observed that the same contain only the signatures of
Ermina Daray and Celestino Barreto, the paymaster and the president,
respectively. It further opined that the payrolls presented were only
copies of the approved payment, and not copies disclosing actual
payment.
The December 1994 payrolls contain a computation of the amounts
payable to the employees for the given period, including a breakdown of
the allowances and deductions on the amount due, but the signatures of
the respondents are conspicuously missing. Ideally, the signatures of the
respondents should appear in the payroll as evidence of actual payment.
However, the absence of such signatures does not necessarily lead to the
conclusion that the December 1994 COLA was not received. (Emphasis
supplied)
In the present case, the following facts are established (1) random drug
tests are regularly conducted on all officers and crew members of M/T
Limar; (2) a random drug test was conducted at the port of Curacao on 8
October 2002; (3) Dr. Heath was the authorized physician of M/T Limar;
(4) the drug test result of Jose, Jr. showed that he was positive for
marijuana; (5) the drug test result was issued under Dr. Heath’s name
and contained his handwritten comments. The Court of Appeals found
that:
The tests administered to the crew were routine measures of the vessel
conducted to enforce its stated policy, and it was a matter of course for
medical reports to be issued and released by the medical officer. The
ship’s physician at Curacao under whom the tests were conducted was
admittedly Dr. Heath. It was under his name and with his handwritten
comments that the report on the respondent came out, and there is no
basis to suspect that these results were issued other than in the ordinary
course of his duty. As the labor arbiter points out, the drug test report is
evidence in itself and does not require additional supporting evidence
except if it appears that the drug test was conducted not in accordance
with drug testing procedures. Nothing of the sort, he says, has even been
suggested in this particular case.27
Factual findings of the Court of Appeals are binding on the Court. Absent
grave abuse of discretion, the Court will not disturb the Court of Appeals’
factual findings.28 In Encarnacion,29 the Court held that, "unless there is a
clearly grave or whimsical abuse on its part, findings of fact of the
appellate court will not be disturbed. The Supreme Court will only
exercise its power of review in known exceptions such as gross
misappreciation of evidence or a total void of evidence." Jose, Jr. failed to
show that the Court of Appeals gravely abused its discretion.
Article 282(a) of the Labor Code states that the employer may terminate
an employment for serious misconduct. Drug use in the premises of the
employer constitutes serious misconduct. In Bughaw, Jr. v. Treasure
Island Industrial Corporation, 30 the Court held that:
The charge of drug use inside the company’s premises and during
working hours against petitioner constitutes serious misconduct, which is
one of the just causes for termination. Misconduct is improper or wrong
conduct. It is the transgression of some established and definite rule of
action, a forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not merely an error in judgment. The
misconduct to be serious within the meaning of the Act must be of such a
grave and aggravated character and not merely trivial or unimportant.
Such misconduct, however serious, must nevertheless, in connection with
the work of the employee, constitute just cause for his separation. This
Court took judicial notice of scientific findings that drug abuse can
damage the mental faculties of the user. It is beyond question therefore
that any employee under the influence of drugs cannot possibly continue
doing his duties without posing a serious threat to the lives and property
of his co-workers and even his employer. (Emphasis supplied)
Jose, Jr. claims that he was not afforded due process. The Court agrees.
There are two requisites for a valid dismissal: (1) there must be just
cause, and (2) the employee must be afforded due process. 31 To meet the
requirements of due process, the employer must furnish the employee
with two written notices — a notice apprising the employee of the
particular act or omission for which the dismissal is sought and another
notice informing the employee of the employer’s decision to dismiss.
In Talidano v. Falcon Maritime & Allied Services, Inc.,32 the Court held
that:
[R]espondent failed to comply with the procedural due process required
for terminating the employment of the employee. Such requirement is
not a mere formality that may be dispensed with at will. Its disregard is a
matter of serious concern since it constitutes a safeguard of the highest
order in response to man’s innate sense of justice. The Labor Code does
not, of course, require a formal or trial type proceeding before an erring
employee may be dismissed. This is especially true in the case of a vessel
on the ocean or in a foreign port. The minimum requirement of due
process termination proceedings, which must be complied with even with
respect to seamen on board a vessel, consists of notice to the employees
intended to be dismissed and the grant to them of an opportunity to
present their own side of the alleged offense or misconduct, which led to
the management’s decision to terminate. To meet the requirements of
due process, the employer must furnish the worker sought to be
dismissed with two written notices before termination of employment
can be legally effected, i.e., (1) a notice which apprises the employee of
the particular acts or omissions for which his dismissal is sought; and (2)
the subsequent notice after due hearing which informs the employee of
the employer’s decision to dismiss him. (Emphasis supplied)
In the present case, Jose, Jr. was not given any written notice about his
dismissal. However, the propriety of Jose, Jr.’s dismissal is not affected
by the lack of written notices. When the dismissal is for just cause, the
lack of due process does not render the dismissal ineffectual but merely
gives rise to the payment of P30,000 in nominal damages.33
WHEREFORE, the petition is DENIED. The 11 May 2005 Decision and 5
August 2005 Resolution of the Court of Appeals in CA-G.R. SP No. 83272
are AFFIRMED with the MODIFICATION that OSG Ship Management
Manila, Inc. is ordered to pay Bernardo B. Jose, Jr. P30,000 in nominal
damages.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Baguio City
SECOND DIVISION
G.R. Nos. 173148               April 6, 2015
ELSA DEGAYO, Petitioner,  and that the area in dispute was an accretion to Lot No. 861 On May 7,
vs.
CECILIA MAGBANUA-DINGLASAN, JOHNNY DINGLASAN,
ASUNCION MAGBANUA-PORRAS, MARIANO P ASCUALITO
and AMADO JR., all surnamed MAGBANUA, Respondents.
DECISION
BRION, J.:
Before us is the Petition for Review on Certiorari filed by the petitioner
Elsa Degayo (Degayo) under Rule 45 of the Rules of Court, assailing the
Decision1 dated November 7, 2005 and the Resolution2 dated May 19,
2006 of the Court of Appeals (CA) in CA-G.R. CV No. 62070.
The Factual Antecedents
The present case involves a property dispute, which gave rise to two civil
cases for ownership and damages between conflicting claimants over a
parcel of land located on the northeastern bank of Jalaud River. The
respondents Cecilia Magbanua-Dinglasan, Johnny Dinglasan, Pascualito
Magbanua, Mariano Magbanua, Asuncion Magbanua-Porras, Amado
Magbanua Jr. (respondents) initiated the first civil case against Nicolas
Jarencio, Cesar Jarencio, Myrna Olmo, Fredercio Sumvilla, Herminio
Sumvilla, Perpetuo Larano and Angelo Larano, the tenants (tenants) of
Lot No. 861. Degayo, on the other hand, initiated the second civil case,
which eventually reached this Court via the present petition.
Records show that Lot No. 861 isa 36,864 sqm. parcel in the Cadastral
Survey of Dingle, Iloilo, covered by Transfer Certificate of Title (TCT) No.
T-2804, registered in the name of Degayo’s deceased parents, spouses
Marcelo Olmo and Rosalia Labana. Lot No. 861 used to be bounded on
the southwest by the Jalaud River that serves to separate Dingle from
Pototan Iloilo.
On the other side of Jalaud River, opposite Lot No. 861, lies a 153,028
square meter parcel of land, designated as Lot No. 7328 of the Cadastre
of Pototan, Iloilo, collectively owned by the respondents, covered under
TCT No. T-84829. The Jalaud River, which separates these parcels of
land, thus flows along the northeast side of Lot 861 and the southwest
side of Lot No. 7328. Sometime in the 1970’s the Jalauad River steadily
changed its course and moved southwards towards the banks of Pototan,
where Lot No. 7328 lies, leaving its old riverbed dry. Eventually, the
course of the Jalaud River encroached on Lot No. 7328. As a result, Lot
No. 7328 progressively decreased in size while the banks adjacent to Lot
No. 861 gradually increased in land area.
Degayo and the tenants believed that the area was an accretion to Lot No.
861. As a result, her tenants, commenced cultivating and tilling that
disputed area with corn and tobacco. The area allegedly added to Lot No.
861 contains 52,528 sqm, broken down as follows:
1. 26,106 sqm. Original abandoned river bed;
2. 26,419 sqm. resurfaced area of Lot No. 7328
The respondents, on the other hand, argued that the disputed property
was an abandoned riverbed, which should rightfully belong to them to
compensate for the erstwhile portion of Lot No. 7328, over which the
Jalaud River presently runs.
On October 2, 1984, the respondents filed a complaint for ownership and
damages against the tenants, with the Regional Trial Court (RTC) of
Iloilo, Branch 27, entitled Cecilia Magbanua Dinglasan, et al. v. Nicolas
Jarencio, et al., docketed as Civil Case No. 16047. Degayo sought to
intervene in Civil Case No. 16047 but her motion was denied. Notably,
Degayo never bothered to question the interlocutory order denying her
motion for intervention by filing a petition for certiorari. Instead, Degayo
initiated the present suit against the respondents for declaration of
ownership with damages, also with the RTC of Iloilo, Branch 22,
docketed as Civil Case No. 18328, involving the disputed parcel of land.
In her complaint, Degayo alleged to have acquired Lot No. 861 by
inheritance by virtue of a Quitclaim Deed and that she had been in
possession of that land since 1954. She likewise stressed that the area in
dispute was an accretion to Lot No. 861.
Meanwhile, notwithstanding the previous denial of her motion to
intervene in Civil Case No. 16047, Degayo was able to participate in the
proceedings therein as a witness for the defense. In particular, during her
direct examination, Degayo testified on the same matters and raised the
same arguments she alleged in her complaint in Civil Case No. 18328,
those are: that she acquired Lot No. 861 by inheritance by virtue of a
Quitclaim Deed; that she had been in possession of that land since 1954;
1996, the RTC of Iloilo, Branch 27, rendered its decision in Civil Case No.
16047, in favor of the respondents. The tenants promptly filed an appeal
but they failed to file an appeal brief, resulting to a dismissal of their
appeal per resolution dated June 20, 1999.3 The decision in Civil Case No.
16047 became final and executory on August 6, 1999.4
Meanwhile, in Civil Case No. 18328, the court, a quo, found in favor of
Degayo and declared the property in question as an accretion to Lot No.
861. The respondents filed a motion for reconsideration but their motion
was denied. Hence, the respondents filed an appeal with the CA.
The CA Ruling
On November 7, 2005, the CA granted the respondents’ appeal and
reversed and set aside the decision of the RTC Branch 22 in Civil Case
No. 18328. In granting the appeal the CA noted that the disputed
properties are abandoned riverbeds. Being abandoned riverbeds, the
property in question rightfully belongs to the respondents as the owners
of the land now occupied by the Jalaud River. 5 The CA likewise noted that
the previous RTC Branch decision in Civil Case No. 16047 is conclusive to
the title of the thing, being an aspect of the rule on conclusiveness of
judgment.6
Degayo sought a reconsideration of the CA Decision but the CA denied
her motion in its May 19, 2006 Resolution. 7Aggrieved, Degayo filed the
preset petition for review on certiorari under Rule 45 with this Court.
The Petition and Comment
Degayo’s petition is based on the following grounds/arguments: 8
1. That the CA erred in declaring the disputed property as an
abandoned riverbed and not an accretion to Lot 861;
2. The CA erred in taking judicial notice of the RTC decision in
Civil Case No. 16047, which was not even presented during the
hearing of the present case;
3. The CA erred in declaring the RTC Branch 27 decision in Civil
Case No. 16047 conclusive upon Degayo when she was not even
a party in the said Civil Case.
In his Comment,9 the respondents assert that the petition raised
questions of fact which are not proper issues to be raised in a petition for
review on certiorari.10 They also claim that the essential requisites of
accretion are not present.11 Finally, the respondents claim that the
decision in Civil Case No. 16047 constitutes res judicata. 12
THE COURT'S RULING
We deny the petition for lack of merit.
The Decision in Civil Case No. 16047 constitutes res judicata.
Res judicataliterally means "a matter adjudged; a thing judicially acted
upon or decided; a thing or matter settled by judgment." It also refers to
the "rule that a final judgment or decree on the merits by a court of
competent jurisdiction is conclusive of the rights of the parties or their
privies in all later suits on points and matters determined in the former
suit.13 It rests on the principle that parties should not to be permitted to
litigate the same issue more than once; that, when a right or fact has been
judicially tried and determined by a court of competent jurisdiction, or an
opportunity for such trial has been given, the judgment of the court, so
long as it remains unreversed, should be conclusive upon the parties and
those in privity with them in law or estate. 14
This judicially created doctrine exists as an obvious rule of reason,
justice, fairness, expediency, practical necessity, and public
tranquillity.15 Moreover, public policy, judicial orderliness, economy of
judicial time, and the interest of litigants, as well as the peace and order
of society, all require that stability should be accorded judgments, that
controversies once decided on their merits shall remain in repose, that
inconsistent judicial decision shall not be made on the same set of facts,
and that there be an end to litigation which, without the doctrine of res
judicata, would be endless.16
This principle cannot be overemphasized in light of our clogged dockets.
As this Court has aptly observed in Salud v. Court of Appeals: 17
"The interest of the judicial system in preventing relitigation of the same
dispute recognizes that judicialresources are finite and the number of
cases that can be heard by the court is limited. Every dispute that is
reheard means that another will be delayed. In modern times when court
dockets are filled to overflowing, this concern is of critical importance.
Res judicata thus conserves scarce judicial resources and promotes
efficiency in the interest of the public at large. Once a final judgment has
been rendered, the prevailing party also has an interest in the stability of
that judgment. Parties come to the courts in order to resolve
controversies; a judgment would be of little use in resolving disputes if
the parties were free to ignore it and to litigate the same claims again and
again. Although judicial determinations are not infallible, judicial error
should be corrected through appeals procedures, not through repeated
suits on the same claim. Further, to allow relitigation creates the risk of
inconsistent results and presents the embarrassing problem of
determining which of two conflicting decisions is to be preferred. Since
there is no reason to suppose that the second or third determination of a
claim necessarily is more accurate than the first, the first should be left
undisturbed.
In some cases the public at large also has an interest in seeing that rights
and liabilities once established remain fixed. If a court quiets title to land,
for example, everyone should be able to rely on the finality of that
determination. Otherwise, many business transactions would be clouded
by uncertainty. Thus, the most important purpose of res judicata is to
provide repose for both the party litigants and the public. As the Supreme
Court has observed, "res judicata thus encourages reliance on judicial
decision, bars vexatious litigation, and frees the courts to resolve other
disputes."
The doctrine of res judicata is set forth in Section 47 of Rule 39 of the
Rules of Court, which in its relevant part reads:
Sec. 47. Effect of judgments or final orders. — The effect of a judgment or
final order rendered by a court of the Philippines, having jurisdiction to
pronounce the judgment or final order, may be as follows:
xxxx
(b) In other cases, the judgment or final order is, with respect to
the matter directly adjudged or as to any other matter that
could have been raised in relation thereto, conclusive between
the parties and their successors in interest by title subsequent
to the commencement of the action or special proceeding,
litigating for the same thing and under the same title and in the
same capacity; and
(c) In any other litigation between the same parties or their
successors in interest, that only is deemed to have been
adjudged in a former judgment or final order which appears
upon its face to have been so adjudged, or which was actually
and necessarily included therein or necessary thereto.
This provision comprehends two distinct concepts of res judicata: (1) bar
by former judgment and (2) conclusiveness of judgment.
The first aspect is the effect of a judgment as a bar to the prosecution of a
second action upon the same claim, demand or cause of action. 18 In
traditional terminology, this aspect is known as merger or bar; in modern
terminology, it is called claim preclusion. 19
The second aspect precludes the relitigation of a particular fact of issue in
another action between the same parties on a different claim or cause of
action. This is traditionally known as collateral estoppel; in modern
terminology, it is called issue preclusion. 20
Conclusiveness of judgment finds application when a fact or question has
been squarely put in issue, judicially passed upon, and adjudged in a
former suit by a court of competent jurisdiction. The fact or question
settled by final judgment or order binds the parties to that action (and
persons in privity with them or their successors-in-interest), and
continues to bind them while the judgment or order remains standing
and unreversed by proper authority on a timely motion or petition; the
conclusively settled fact or question furthermore cannot again be litigated
in any future or other action between the same parties or their privies and
successors-in-interest, in the same or in any other court of concurrent
jurisdiction, either for the same or for a different cause of action. 21 Thus,
only the identities of parties and issues are required for the operation of
the principle of conclusiveness of judgment. 22
While conclusiveness of judgment does not have the same barring effect
as that of a bar by former judgment that proscribes subsequent actions,
the former nonetheless estops the parties from raising in a later case the
issues or points that were raised and controverted, and were
determinative of the ruling in the earlier case. 23 In other words, the
dictum laid down in the earlier final judgment or order becomes
conclusive and continues to be binding between the same parties, their
privies and successors-in-interest, as long as the facts on which that
judgment was predicated continue to be the facts of the case or incident
before the court in a later case; the binding effect and enforceability of
that earlier dictum can no longer be re-litigated in a later case since the
issue has already been resolved and finally laid to rest in the earlier
case.24
In the present case, it is beyond dispute that the judgment in Civil Case
No. 16047 has attained finality in view of the tenant’s abandonment of
their appeal to the CA. Moreover, records show that that decision was
adjudicated on the merits, i.e., it was rendered after a consideration of
the evidence or stipulations submitted by the parties at the trial of the
case25 by a court which had jurisdiction over the subject matter and the
parties.
We likewise find that there is an identity of parties in Civil Case No.
16047 and the present case. There is identity of parties where the parties
in both actions are the same, or there is privity between them, or they are
"successors-in-interest by title subsequent to the commencement of the
action, litigating for the same thing and under the same title and in the
same capacity.26 Absolute identity of parties is not required, shared
identity of interest is sufficient to invoke the coverage of this
principle.27 Thus, it is enough that there is a community of interest
between a party in the first case and a party in the second case even if the
latter was not impleaded in the first case. 28
It is not disputed that respondents were the plaintiffs in Civil Case No.
16047. Degayo, however insists that she is not bound by the decision in
Civil Case No. 16047 as she was not made a party in that case. We,
however, refuse to subscribe to this technical interpretation of the Rules.
In Torres v. Caluag,29 we held that a real litigant may be held bound as a
party even if not formally impleaded because he had his day in court and
because her substantial rights were not prejudiced. In that case, J. M.
Tuazon & Co., Inc. (Tuason) commenced Civil Case No Q-3674 in the
Court of First Instance of Quezon City against Isidro Conisido to recover
from him the possession of a parcel of land. Conisido answered the
complaint alleging, that he was occupying the land in question as a mere
tenant of Dominga Torres (Torres), who owned both the land and the
house thereon. Torres was not impleaded in the said case but she
nonetheless appeared as witness for Conisido and asserted her ownership
over the disputed property because she had purchased it from Eustaquio
Alquiroz on October 20, 1951 and constructed a house thereon worth
₱500.00, which she had leased to Conisido for a rental of ₱20.00 a
month. The CFI eventually decided in favor of Tuason and that decision
became final and executory. Subsequently, Torres filed a petition for
certiorari with the Court to set aside the decision of the CFI. Indismissing
the petition, we ruled:
"x x x, it appears that DomingaTorres who, according to the defendant
Conisido was the true owner ofthe land in question, testified as his
witness and asserted on the witness stand that she was really the owner
thereof because she had purchased it from Eustaquio Alquiroz on
October 20, 1951 and constructed a house thereon worth ₱500.00 which
she had leased to Conisido for a rental of ₱20.00 a month. In other
words, petitioner herein had really had her day in court and had laid
squarely before the latter the issue of ownership as between her, on one
hand, and respondent Tuason, on the other.
xxx
In the present case, assisted heretofore, petitioner had the fullest
opportunity to lay before the court her claim but the same was overruled.
The fact that she was not formally made a party defendant in the case
would appear therefore to be a mere technicality that would not serve the
interest of the administration of justice. As we have repeatedly held,
technicalities should be ignored when they do not serve the purpose of
the law.
 x x x"
In the present case, Degayo had the fullest opportunity to ventilate her
accretion claim Civil Case No. 16047. In her testimony, she asserted that
she inherited Lot No. 861 from her parents and that she has been in
possession of that parcel of land since 1954. 30 She further stressed that
the disputed parcel of land has been occupied and tilled by her tenants
and that it was the result of the gradual and continuous deposit of the
river.31 Notably, these are the same allegations that Degayo asserted in
the present case, which have been previously considered and evaluated by
the RTC Branch 27 in Civil Case No. 16047.
Likewise, there exists a community of interest between Degayo and her
tenants, who were respondents in Civil Case No. 16047. One test to
determine substantial identity of interest would be to see whether the
success or failure of one party materially affects the other. 32 In the
present case, Degayo is suing for the ownership of the disputed land.
Degayo’s rights over the disputed land is predicated on the same defenses
that his alleged tenants interposed in Civil Case No. 16047, that is, their
perceived rights which emanated from the disputed accretion to Lot No.
861. The interests of Degayo and the tenants in relation to the two cases
are inextricably intertwined in that both their claims emanate from a
singular fundamental allegation of accretion. Moreover, Degayo and the
respondents are litigating the same properties subject of the antecedent
cases inasmuch as they claim better right of ownership. Degayo even
admitted this in her petition wherein she stated that "the land subject of
Civil Case No. 16047 is the same property subject of the case at bench. 33 "
Notably, the ownership of the disputed parcel of land has been
unequivocally settled in Civil Case No. 16047.In ruling that the subject
parcels of land belong to the respondents, the RTC Branch 27 in Civil
Case No. 16047 opined that the claim of accretion has no valid
basis.34 What really happened was that the Jalaud River naturally
changed its course and moved southward. As a result, it abandoned its
previous bed and encroached upon a portion of Lot No. 7328. It further
held that the claim of accretion could not be sustained because the 26,419
sqm. portion is ostensibly within the metes and bounds of Lot No. 7328,
owned and registered in the name of the respondents. 35 On the other
hand, the 26,106 sqm. portion refers to an abandoned river bed, and is
thus governed by Article 461 of the Civil Code, which states that River
beds which are abandoned through the natural change in the course of
the waters ipso facto belong to the owners whose lands are occupied by
the new course in proportion to the area lost.
The fact that the present cause of action is based on an accretion claim
does not prevent the application of res judicata. For, res judicata, under
the concept of conclusiveness of judgment, operates even if no absolute
identity of causes of action exists. Res judicata, in its conclusiveness of
judgment concept, merely requires identity of issues. We thus agree with
the uniform view of the CA – on the application of conclusiveness of
judgment to the present case. The CA may take judicial notice of
"The said Civil Case No. 16047 was for recovery of ownership and
possession with damages over the property subject of the instant case
filed by the herein defendants-appellants against [the tenants]"
She also referred to the decision in Civil Case No. 16047 in her appellee’s
brief. She mentioned: "In Civil Case No. 16047, the Court had ordered the
deposit of 50% of the net produce of the disputed portion that pertains to
the owner, thus depriving the plaintiff of her share of not less than Php
4,000.00 a year starting 1986, to the damage of plaintiff."
There was thus no denial of the existence and the decision in Civil Case
No. 16047.1âwphi1 In fact, Degayo stated on record her full knowledge of
Civil Case No. 16047 and clearly and frequently referred to it in her
pleadings, and sufficiently designated it by name, parties, cause of action
and docket number from the court a quo, to the CA and even before this
Court. Under the circumstances, the CA could certainly take judicial
notice of the finality of a judgment in Civil Case No. 16047. There was no
sense in relitigating issues that have already been passed upon in a
previous civil case. That was all that was done by the CA in decreeing the
dismissal. Certainly such an order is not contrary to law. As we aptly
stated in Republic v. CA,42 citing Justice Edgardo L. Paras:
"A court will take judicial notice of its own acts and records in the same
case, of facts established in prior proceedings in the same case, of the
authenticity of its own records of another case between the same parties,
of the files of related cases in the same court, and of public records on file
in the same court. In addition judicial notice will be taken of the record,
pleadings or judgment of a case in another court between the same
parties or involving one of the same parties, as well as of the record of
another case between different parties in the same court. " Lastly, there is
another equally compelling consideration. Degayo undoubtedly had
recourse to a remedy which under the law then in force could be availed
of, which is to file a petition for certiorari with the CA. It would have
served the cause of justice better, not to mention the avoidance of
needless expense on her part and the vexation to which the respondents
were subjected if she did reflect a little more on the matter.
With the conclusion that Civil Case No. 16047 constitutes resjudicata on
the present case, we see no reason to engage in a discussion on the factual
issues raised by the petitioner for they have been passed upon and
considered in Civil Case No. 16047.
WHEREFORE, premises considered, we DENY the petition for lack of
merit. Costs against the petitioner.
SO ORDERED.

Civil Case No. 16047.

The taking of judicial notice is a matter of expediency and convenience

for it fulfills the purpose that the evidence is intended to achieve, and in
this sense, it is equivalent to proof.36 Generally, courts are not authorized
to "take judicial notice of the contents of the records of other cases even
when said cases have been tried or are pending in the same court or
before the same judge.37 " While the principle invoked is considered to be
the general rule, this rule is not absolute. There are exceptions to this
rule. In the case of Tiburcio v PHHC,38 this Court, citing Justice Moran,
stated:

"In some instance, courts have taken judicial notice of proceedings in

other causes, because of their close connection with the matter in the
controversy. Thus, in a separate civil action against the administrator of
an estate arising from an appeal against the report of the committee on
claims appointed in the administration proceedings of the said estate, to
determine whether or not the appeal was taken on time, the court took
judicial notice of the record of the administration proceedings. Courts
have also taken judicial notice of previous cases to determine whether or
not the case pending is a moot one or whether or not a previous ruling is
applicable in the case under consideration."

Moreover, Degayo’s objection to the action of CA on this matter is merely

technical because Degayo herself repeatedly referred to the Civil Case No.
16047 in her pleadings in Civil Case No. 18328and even in her appellee’s
brief before the CA and her petition for review before this Court. In
particular, in her complaint, she stated that her motion to intervene in
Civil Case No. 16047, which was denied by the Court. 39 The existence of
that case was likewise jointly stipulated by that parties in Civil Case No.
1832840 and mentioned by the court a quoin its decision. 41In her
appellee’s brief as well, Degayo expressly referred to Civil Case No. 16047.
In particular, she stated: