Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. Nos. 197592 & 20262 November 27, 2013

THE PROVINCE OF AKLAN, Petitioner,

vs.
JODY KING CONSTRUCTION AND DEVELOPMENT CORP., Respondent.

DECISION

VILLARAMA, JR., J.:

These consolidated petitions for review on certiorari seek to reverse and set aside the following: (1)
Decision1 dated October 18, 2010 and Resolution2 dated July 5, 2011 of the Court of Appeals (CA) in
CA-G.R. SP No. 111754; and (2) Decision3 dated August 31, 2011 and Resolution4 dated June 27,
2012 in CA-G.R. SP No. 114073.

The Facts

On January 12, 1998, the Province of Aklan (petitioner) and Jody King Construction and
Development Corp. (respondent) entered into a contract for the design and -construction of the
Caticlan Jetty Port and Terminal (Phase I) in Malay, Aklan. The total project cost is ₱38,900,000: P
18,700,000 for the design and construction of passenger terminal, and ₱20,200,000 for the design
and construction of the jetty port facility. 5 In the course of construction, petitioner issued
variation/change orders for additional works. The scope of work under these change orders were
agreed upon by petitioner and respondent. 6

On January 5, 2001, petitioner entered into a negotiated contract with respondent for the
construction of Passenger Terminal Building (Phase II) also at Caticlan Jetty Port in Malay, Aklan.
The contract price for Phase II is ₱2,475,345.54. 7

On October 22, 2001, respondent made a demand for the total amount of ₱22,419,112.96 covering
the following items which petitioner allegedly failed to settle:

1. Unpaid accomplishments on additional works

undertaken - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Php 12,396,143.09

2. Refund of taxes levied despite it not being

covered by original contract- - - - - - - - - - - - - - - - - - - - - - Php 884,098.59

3. Price escalation (Consistent with Section 7.5,

Original Contract- - - - - - - - - - - - - - - - - - - - - - - - - - - - Php 1,291,714.98

4. Additional Labor Cost resulting [from]

numerous change orders issued sporadically - - - - - - - - Php 3,303,486.60
 5. Additional Overhead Cost resulting [from]
numerous Orders issued sporadically - - - - - - - - - - - - - Php 1,101,162.60

6. Interest resulting [from] payment delays

consistent with Section 7.3.b of the Original
Contract - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Php 3,442,507.50.8

On July 13, 2006, respondent sued petitioner in the Regional Trial Court (RTC) of Marikina City (Civil
Case No. 06-1122-MK) to collect the aforesaid amounts.9 On August 17, 2006, the trial court issued
a writ of preliminary attachment.10

Petitioner denied any unpaid balance and interest due to respondent. It asserted that the sums being
claimed by respondent were not indicated in Change Order No. 3 as approved by the Office of
Provincial Governor. Also cited was respondent’s June 10, 2003 letter absolving petitioner from
liability for any cost in connection with the Caticlan Passenger Terminal Project. 11

After trial, the trial court rendered its Decision12 on August 14, 2009, the dispositive portion of which
reads:

WHEREFORE, foregoing premises considered, judgment is hereby rendered in favor of plaintiff Jody
King Construction And Development Corporation and against defendant Province of Aklan, as
follows:

1. ordering the defendant to pay to the plaintiff the amount of Php7,396,143.09 representing
the unpaid accomplishment on additional works undertaken by the plaintiff;

2. ordering the defendant to refund to the plaintiff the amount of Php884,098.59 representing
additional 2% tax levied upon against the plaintiff;

3. ordering the defendant to pay to the plaintiff price escalation in the amount of
Php1,291,714.98 pursuant to Section 7.5 of the original contract;

4. ordering the defendant to pay to the plaintiff the amount of Php3,303,486.60 representing
additional labor cost resulting from change orders issued by the defendant;

5. ordering the defendant to pay to the plaintiff the sum of Php1,101,162.00 overhead cost
resulting from change orders issued by the defendant;

6. ordering the defendant to pay the sum of Php3,442,507.50 representing interest resulting
from payment delays up to October 15, 2001 pursuant to Section 7.3.b of the original
contract;

7. ordering the defendant to pay interest of 3% per month from unpaid claims as of October
16, 2001 to date of actual payment pursuant to Section 7.3.b[;]

8. ordering the [defendant] to pay to the plaintiff the sum of Php500,000.00 as moral
damages;

9. ordering the defendant to pay to the plaintiff the sum of Php300,000.00 as exemplary
damages;
 10. ordering the defendant to pay the plaintiff the sum of Php200,000.00, as and for
attorney’s fees; and

11. ordering the defendant to pay the cost of suit.

SO ORDERED.13

Petitioner filed its motion for reconsideration14 on October 9, 2009 stating that it received a copy of
the decision on September 25, 2009. In its Order 15 dated October 27, 2009, the trial court denied the
motion for reconsideration upon verification from the records that as shown by the return card, copy
of the decision was actually received by both Assistant Provincial Prosecutor Ronaldo B. Ingente
and Atty. Lee T. Manares on September 23, 2009. Since petitioner only had until October 8, 2009
within which to file a motion for reconsideration, its motion filed on October 9, 2009 was filed one day
after the finality of the decision. The trial court further noted that there was a deliberate attempt on
both Atty. Manares and Prosecutor Ingente to mislead the court and make it appear that their motion
for reconsideration was filed on time. Petitioner filed a Manifestation16 reiterating the explanation set
forth in its Rejoinder to respondent’s comment/opposition and motion to dismiss that the wrong date
of receipt of the decision stated in the motion for reconsideration was due to pure inadvertence
attributable to the staff of petitioner’s counsel. It stressed that there was no intention to mislead the
trial court nor cause undue prejudice to the case, as in fact its counsel immediately corrected the
error upon discovery by explaining the attendant circumstances in the Rejoinder dated October 29,
2009.

On November 24, 2009, the trial court issued a writ of execution ordering Sheriff IV Antonio E.
Gamboa, Jr. to demand from petitioner the immediate payment of ₱67,027,378.34 and tender the
same to the respondent. Consequently, Sheriff Gamboa served notices of garnishment on Land
Bank of the Philippines, Philippine National Bank and Development Bank of the Philippines at their
branches in Kalibo, Aklan for the satisfaction of the judgment debt from the funds deposited under
the account of petitioner. Said banks, however, refused to give due course to the court order, citing
the relevant provisions of statutes, circulars and jurisprudence on the determination of government
monetary liabilities, their enforcement and satisfaction.17

Petitioner filed in the CA a petition for certiorari with application for temporary restraining order
(TRO) and preliminary injunction assailing the Writ of Execution dated November 24, 2009, docketed
as CA-G.R. SP No. 111754.

On December 7, 2009, the trial court denied petitioner’s notice of appeal filed on December 1, 2009.
Petitioner’s motion for reconsideration of the December 7, 2009 Order was likewise denied.18 On May
20, 2010, petitioner filed another petition for certiorari in the CA questioning the aforesaid orders
denying due course to its notice of appeal, docketed as CA-G.R. SP No. 114073.

By Decision dated October 18, 2010, the CA’s First Division dismissed the petition in CA-G.R. SP
No. 111754 as it found no grave abuse of discretion in the lower court’s issuance of the writ of
execution. Petitioner filed a motion for reconsideration which was likewise denied by the CA. The CA
stressed that even assuming as true the alleged errors committed by the trial court, these were
insufficient for a ruling that grave abuse of discretion had been committed. On the matter of
execution of the trial court’s decision, the appellate court said that it was rendered moot by
respondent’s filing of a petition before the Commission on Audit (COA).

On August 31, 2011, the CA’s Sixteenth Division rendered its Decision dismissing the petition in CA-
G.R. SP No. 114073. The CA said that petitioner failed to provide valid justification for its failure to
file a timely motion for reconsideration; counsel’s explanation that he believed in good faith that the
August 14, 2009 Decision of the trial court was received on September 25, 2009 because it was
handed to him by his personnel only on that day is not a justifiable excuse that would warrant the
relaxation of the rule on reglementary period of appeal. The CA also held that petitioner is estopped
from invoking the doctrine of primary jurisdiction as it only raised the issue of COA’s primary
jurisdiction after its notice of appeal was denied and a writ of execution was issued against it.

The Cases

In G.R. No. 197592, petitioner submits the following issues:

I.

WHETHER OR NOT THE DECISION DATED 14 AUGUST 2009 RENDERED BY THE

REGIONAL TRIAL COURT, BRANCH 273, MARIKINA CITY AND THE WRIT OF
EXECUTION DATED 24 NOVEMBER 2009 SHOULD BE RENDERED VOID FOR LACK OF
JURISDICTION OVER THE SUBJECT MATTER OF THE CASE.

II.

WHETHER OR NOT THE REGIONAL TRIAL COURT, BRANCH 273, MARIKINA CITY
GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OR IN EXCESS OF
JURISDICTION IN RENDERING THE DECISION DATED 14 AUGUST 2009 AND ISSUING
THE WRIT OF EXECUTION DATED 24 NOVEMBER 2009 EVEN IT FAILED TO DISPOSE
ALL THE ISSUES OF THE CASE BY NOT RESOLVING PETITIONER’S "URGENT
MOTION TO DISCHARGE EX-PARTE WRIT OF PRELIMINARY ATTACHMENT" DATED
31 AUGUST 2006.

III.

WHETHER OR NOT THE WRIT OF EXECUTION DATED 24 NOVEMBER 2009 WHICH

WAS HASTILY ISSUED IN VIOLATION OF SUPREME COURT ADMINISTRATIVE
CIRCULAR NO. 10-2000 SHOULD BE RENDERED VOID.19

The petition in G.R. No. 202623 sets forth the following arguments:

Petitioner is not estopped in questioning the jurisdiction of the Regional Trial Court, Branch 273,
Marikina City over the subject matter of the case. 20

The petition for certiorari filed before the CA due to the RTC’s denial of petitioner’s Notice of Appeal
was in accord with jurisprudence. 21

The Issues

The controversy boils down to the following issues: (1) the applicability of the doctrine of primary
jurisdiction to this case; and (2) the propriety of the issuance of the writ of execution.

Our Ruling

The petitions are meritorious.

COA has primary jurisdiction over private respondent’s money claims Petitioner is not estopped from
raising the issue of jurisdiction

The doctrine of primary jurisdiction holds that if a case is such that its determination requires the
expertise, specialized training and knowledge of the proper administrative bodies, relief must first be
obtained in an administrative proceeding before a remedy is supplied by the courts even if the matter
may well be within their proper jurisdiction.22 It applies where a claim is originally cognizable in the
courts, and comes into play whenever enforcement of the claim requires the resolution of issues
which, under a regulatory scheme, have been placed within the special competence of an
administrative agency. In such a case, the court in which the claim is sought to be enforced may
suspend the judicial process pending referral of such issues to the administrative body for its view
or, if the parties would not be unfairly disadvantaged, dismiss the case without prejudice. 23

The objective of the doctrine of primary jurisdiction is to guide the court in determining whether it
should refrain from exercising its jurisdiction until after an administrative agency has determined
some question or some aspect of some question arising in the proceeding before the court.24

As can be gleaned, respondent seeks to enforce a claim for sums of money allegedly owed by
petitioner, a local government unit.

Under Commonwealth Act No. 327,25 as amended by Section 26 of Presidential Decree No. 1445, 26 it
is the COA which has primary jurisdiction over money claims against government agencies and
instrumentalities.

Section 26. General jurisdiction. The authority and powers of the Commission shall extend to and
comprehend all matters relating to auditing procedures, systems and controls, the keeping of the
general accounts of the Government, the preservation of vouchers pertaining thereto for a period of
ten years, the examination and inspection of the books, records, and papers relating to those
accounts; and the audit and settlement of the accounts of all persons respecting funds or property
received or held by them in an accountable capacity, as well as the examination, audit, and
settlement of all debts and claims of any sort due from or owing to the Government or any of its
subdivisions, agencies and instrumentalities. The said jurisdiction extends to all government-owned
or controlled corporations, including their subsidiaries, and other self-governing boards,
commissions, or agencies of the Government, and as herein prescribed, including non-governmental
entities subsidized by the government, those funded by donations through the government, those
required to pay levies or government share, and those for which the government has put up a
counterpart fund or those partly funded by the government. (Emphasis supplied.)

Pursuant to its rule-making authority conferred by the 1987 Constitution27 and existing laws, the COA
promulgated the 2009 Revised Rules of Procedure of the Commission on Audit. Rule II, Section 1
specifically enumerated those matters falling under COA’s exclusive jurisdiction, which include
"money claims due from or owing to any government agency." Rule VIII, Section 1 further provides:

Section 1. Original Jurisdiction - The Commission Proper shall have original jurisdiction over:

a) money claim against the Government; b) request for concurrence in the hiring of legal retainers by
government agency; c) write off of unliquidated cash advances and dormant accounts receivable in
amounts exceeding one million pesos (₱1,000,000.00); d) request for relief from accountability for
loses due to acts of man, i.e. theft, robbery, arson, etc, in amounts in excess of Five Million pesos
(₱5,000,000.00).
In Euro-Med Laboratories Phil., Inc. v. Province of Batangas, 28 we ruled that it is the COA and not the
RTC which has primary jurisdiction to pass upon petitioner’s money claim against respondent local
government unit. Such jurisdiction may not be waived by the parties’ failure to argue the issue nor
active participation in the proceedings. Thus:

This case is one over which the doctrine of primary jurisdiction clearly held sway for although
petitioner’s collection suit for ₱487,662.80 was within the jurisdiction of the RTC, the circumstances
surrounding petitioner’s claim brought it clearly within the ambit of the COA’s jurisdiction.

First, petitioner was seeking the enforcement of a claim for a certain amount of money against a
local government unit. This brought the case within the COA’s domain to pass upon money claims
against the government or any subdivision thereof under Section 26 of the Government Auditing
Code of the Philippines:

The authority and powers of the Commission [on Audit] shall extend to and comprehend all matters
relating to x x x the examination, audit, and settlement of all debts and claims of any sort due from or
owing to the Government or any of its subdivisions, agencies, and instrumentalities. x x x.

The scope of the COA’s authority to take cognizance of claims is circumscribed, however, by an
unbroken line of cases holding statutes of similar import to mean only liquidated claims, or those
determined or readily determinable from vouchers, invoices, and such other papers within reach of
accounting officers. Petitioner’s claim was for a fixed amount and although respondent took issue
with the accuracy of petitioner’s summation of its accountabilities, the amount thereof was readily
determinable from the receipts, invoices and other documents. Thus, the claim was well within the
COA’s jurisdiction under the Government Auditing Code of the Philippines.

Second, petitioner’s money claim was founded on a series of purchases for the medical supplies of
respondent’s public hospitals. Both parties agreed that these transactions were governed by the
Local Government Code provisions on supply and property management and their implementing
rules and regulations promulgated by the COA pursuant to Section 383 of said Code. Petitioner’s
claim therefore involved compliance with applicable auditing laws and rules on procurement. Such
matters are not within the usual area of knowledge, experience and expertise of most judges but
within the special competence of COA auditors and accountants. Thus, it was but proper, out of
fidelity to the doctrine of primary jurisdiction, for the RTC to dismiss petitioner’s complaint.

Petitioner argues, however, that respondent could no longer question the RTC’s jurisdiction over the
matter after it had filed its answer and participated in the subsequent proceedings. To this, we need
only state that the court may raise the issue of primary jurisdiction sua sponte and its invocation
cannot be waived by the failure of the parties to argue it as the doctrine exists for the proper
distribution of power between judicial and administrative bodies and not for the convenience of the
parties.29 (Emphasis supplied.)

Respondent’s collection suit being directed against a local government unit, such money claim
should have been first brought to the COA. 30 Hence, the RTC should have suspended the
proceedings and refer the filing of the claim before the COA. Moreover, petitioner is not estopped
from raising the issue of jurisdiction even after the denial of its notice of appeal and before the CA.

There are established exceptions to the doctrine of primary jurisdiction, such as: (a) where there is
estoppel on the part of the party invoking the doctrine; (b) where the challenged administrative act is
patently illegal, amounting to lack of jurisdiction; (c) where there is unreasonable delay or official
inaction that will irretrievably prejudice the complainant; (d) where the amount involved is relatively
small so as to make the rule impractical and oppressive; (e) where the question involved is purely
legal and will ultimately have to be decided by the courts of justice; (f) where judicial intervention is
urgent; (g) when its application may cause great and irreparable damage; (h) where the controverted
acts violate due process; (i) when the issue of non-exhaustion of administrative remedies has been
rendered moot; (j) when there is no other plain, speedy and adequate remedy; (k) when strong
public interest is involved; and, (l) in quo warranto proceedings.31 However, none of the foregoing
circumstances is applicable in the present case.

The doctrine of primary jurisdiction does not warrant a court to arrogate unto itself authority to
resolve a controversy the jurisdiction over which is initially lodged with an administrative body of
special competence.32 All the proceedings of the court in violation of the doctrine and all orders and
decisions rendered thereby are null and void. 33

Writ of Execution issued in violation of COA’s primary jurisdiction is void

Since a judgment rendered by a body or tribunal that has no jurisdiction over the subject matter of
the case is no judgment at all, it cannot be the source of any right or the creator of any
obligation.34 All acts pursuant to it and all claims emanating from it have no legal effect and the void
judgment can never be final and any writ of execution based on it is likewise void.35

Clearly, the CA erred in ruling that the RTC committed no grave abuse of discretion when it ordered
the execution of its judgment against petitioner and garnishment of the latter’s funds.

In its Supplement to the Motion for Reconsideration, petitioner argued that it is the COA and not the
RTC which has original jurisdiction over money claim against government agencies and
subdivisions. The CA, in denying petitioner's motion for reconsideration, simply stated that the issue
1âwphi1

had become moot by respondent's filing of the proper petition with the COA. However, respondent's
belated compliance with the formal requirements of presenting its money claim before the COA did
not cure the serious errors committed by the RTC in implementing its void decision. The RTC's
orders implementing its judgment rendered without jurisdiction must be set aside because a void
judgment can never be validly executed.

Finally, the RTC should have exercised utmost caution, prudence and judiciousness in issuing the
writ of execution and notices of garnishment against petitioner. The RTC had no authority to direct
the immediate withdrawal of any portion of the garnished funds from petitioner's depositary
banks.36 Such act violated the express directives of this Court under Administrative Circular No. 10-
2000,37 which was issued "precisely in order to prevent the circumvention of Presidential Decree No.
1445, as well as of the rules and procedures of the COA."38 WHEREFORE, both petitions in G.R.
Nos. 197592 and 202623 are GRANTED. The Decision dated October 18, 2010 and Resolution
dated July 5 2011 of the Court of Appeals in CA-G.R. SP No. 111754, and Decision dated August
31, 2011 and Resolution dated June 27, 2012 in CA- G.R. SP No. 114073 are hereby REVERSED
and SET ASIDE. The Decision dated August 14 2009, Writ of Execution and subsequent issuances
implementing the said decision of the Regional Trial Court of Marikina City in Civil Case No. 06-
1122-MK are all SET ASIDE. No pronouncement as to costs.

SO ORDERED.

MARTIN S. VILLARAMA, JR.

Associate Justice

WE CONCUR:
 TERESITA J. LEONARDO-DE CASTRO
Associate Justice
Acting Chairperson

DIOSDADO M. PERALTA* LUCAS P. BERSAMIN

Associate Justice Associate Justice

BIENVENIDO L. REYES
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court’s Division.

TERESITA J. LEONARDO-DE CASTRO

Associate Justice
Acting Chairperson, First Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the 1987 Constitution and the Division Acting Chairperson s
Attestation, I certify that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court’s Division.

MARIA LOURDES P. A. SERENO

Chief Justice

Footnotes

* Designated additional member per Raffle dated November 13, 2013 vice Chief Justice Ma.
Lourdes P. A. Sereno who recused herself from the cases in view of her inhibition in a
related case.

1
Rollo (G.R. No. 197592), pp. 289-298. Penned by Presiding Justice Andres B. Reyes, Jr.
with Associate Justices Japar B. Dimaampao and Jane Aurora C. Lantion concurring.

2
Id. at 343-348.

3
Rollo (G.R. No. 202623), pp. 183-200. Penned by Associate Justice Angelita A. Gacutan
with Associate Justices Vicente S.E. Veloso and Francisco P. Acosta concurring.

4
Id. at 217-219.

5
CA rollo, pp. 136-147.

6
Rollo (G.R. No. 197592), p. 58.
7
CA rollo, pp. 126-131.

8
Id. at 361-362.

9
Id. at 217-229.

10
Rollo (G.R. No. 197592), p. 56.

11
Id. at 59-60.

12
Id. at 56-74. Penned by Judge Manuel S. Quimbo.

13
Id. at 73-74.

14
Id. at 75-103.

15
Id. at 114-115.

16
CA rollo, pp. 100-103.

17
Id. at 120-121, 285-292.

18
Rollo (G.R. No. 197592), pp. 137-183, 197-199.

19
Id. at 484-485.

20
Rollo (G.R. No. 202623), p. 16.

21
Id. at 21.

22
Industrial Enterprises, Inc. v. Court of Appeals, 263 Phil. 352, 358 (1990).

23
Id.; Euro-Med Laboratories Phil., Inc. v. Province of Batangas, 527 Phil. 623, 626-627
(2006).

24
Fabia v. Court of Appeals, 437 Phil. 389, 403 (2002).

AN ACT FIXING THE TIME WITHIN WHICH THE AUDITOR GENERAL SHALL RENDER
25

HIS DECISIONS AND PRESCRIBING THE MANNER OF APPEAL THEREFROM.

ORDAINING AND INSTITUTING A GOVERNMENT AUDITING CODE OF THE

26

PHILIPPINES.

27
Sec. 6, Art. IX-A.

28
Supra note 23.

29
Id. at 627-629.
 See Department of Agriculture v. NLRC, G.R. No. 104269, November 11, 1993, 227 SCRA
30

693, 700-701.

Rep. of the Phils. v. Lacap, 546 Phil. 87, 97-98 (2007), citing Rocamora v. RTC-Cebu (Br.
31

VIII), 249 Phil. 571, 579 (1988); Hon. Carale v. Hon. Abarintos, 336 Phil. 126, 137 (1997);
and Castro v. Sec. Gloria, 415 Phil. 645, 651-652 (2001).

Heirs of Tantoco, Sr. v. Court of Appeals, 523 Phil. 257, 284 (2006), citing First Lepanto
32

Ceramics, Inc. v. Court of Appeals, G.R. No. 117680, February 9, 1996, 253 SCRA 552, 558;
Machete v. Court of Appeals, 320 Phil. 227, 235 (1995); and Vidad v. RTC of Negros
Oriental, Br. 42, G.R. Nos. 98084, 98922 & 100300-03, October 18, 1993, 227 SCRA 271,
276.

See Agra v. Commission on Audit, G.R. No. 167807, December 6, 2011, 661 SCRA 563,
33

582.

34
Ga, Jr. v. Tubungan, G.R. No. 182185, September 18, 2009, 600 SCRA 739, 746.

35
Id.

See University of the Philippines v. Han Agustin Dizon G.R. No. 171182, August 23, 2012,
36

679 SCRA 54, 80.

37
EXERCISE OF UTMOST CAUTION, PRUDENCE AND JUDICIOUSNESS IN THE
ISSUANCE OF WRITS OF EXECUTION TO SATISFY MONEY JUDGMENTS AGAINST
GOVERNMENT AGENCIES AND LOCAL GOVERNMENT UNITS.

38
University of the Philippines v. Han Agustin Dizon supra note 36, at 81.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 1491 March 5, 1904

THE UNITED STATES, complainant-appellee,

vs.
LORENZO ARCEO ET AL., defendants-appellants.

Crispin Oben for appellants.

Office of the Solicitor-General Araneta for appellee.

JOHNSON, J.:

The defendants were charged with entering the house of one Alejo Tiongson on the night of
February 20, 1903, armed with deadly weapons, against the will of the said Alejo Tiongson.

The evidence shows that Alejo Tiongson lived in his house in company with his wife, Alejandra San
Andres, and his wife's sister, Marcela San Andres. On the night of the 20th of February, 1903,
between 8 and 9 o'clock at night, the accused, one of whom was armed with a gun and the other two
each with bolo, entered the house of the said Alejo Tiongson without first obtaining the permission of
any person. It appears from the proof that there was a light burning in the house at the time the
accused entered, which was immediately put out by one of the accused; that Alejo and his wife had
retired for the night; that Marcela was still sitting up sewing; that as soon as Marcela had discovered
the accused in the house she awoke Alejo and his wife; that immediately after the accused were in
the house, one of them wounded, by means of a bolo, Alejo Tiongson, the owner the house; that the
accused to their own use a certain quantity of money; that the accused took and carried away out of
the said house toward the fields the said Marcela San Andres and illtreated her.

The evidence on the part of the defense tended to prove an alibi. The court below found that this
testimony was not to be believed. We find no occasion, from the proof, to change this finding of fact.

The court below found that the defendants were each guilty of the crime of entering the house of
another, with violence and intimidation, which crime is punishable under subsection 2 of article 491
of the Penal Code, and sentenced each of them to be imprisoned for the term of three years six
months and twenty-one days of prision correccional, and also imposed upon each a fine of 271
pesos and costs. In reaching this conclusion the court took into consideration the aggravating
circumstance of nighttime and the extenuating circumstance provided for in article 11 of the Penal
Code.

Article 491 of the Penal Code provides that —

He who shall enter the residence (dwelling house) of another against the will of the tenant
thereof shall be punished with the penalty of arresto mayor and a fine of from 325 to 3,259
pesetas.

Subsection 2 provides that —

If the act shall be executed with violence or intimidation the penalty shall be prision
correccional in the medium and maximum grade, and a fine of from 325 to 3,250 pesetas.

Under the facts presented in this case, was the trial court justified in finding that the accused were
guilty of the crime of entering the residence of another against his will and with violence or
intimidation? We think that it was. We are not of the opinion that the statute relates simply to the
method by which one may pass the threshold of the residence of another without his consent. We
think it relates also to the conduct, immediately after entrance, of him who enters the house of
another without his consent. He who being armed with deadly weapons enters the residence of
another in the nighttime, without consent, and immediately commits acts of violence and intimidation,
is guilty of entering the house of another with violence and intimidation and is punishable under
subsection 2 of article 491 of the Penal Code. (See Viada, vol. 3, p. 303; Gazette of Spain of the
28th of March, 1883; Viada, vol. 6, p. 363; Gazette of Spain of the 19th of May, 1892, p. 165.)

The inviolability of the home is one of the most fundamental of all the individual rights declared and
recognized in the political codes of civilized nations. No one can enter into the house of another
without the consent of its owners or occupants.

The privacy of the home — the place of abode, the place where a man with his family may dwell in
peace and enjoy the companionship of his wife and children unmolested by anyone, even the king,
except in rare cases — has always been regarded by civilized nations as one of the most sacred
personal rights to which men are entitled. Both the common and the civil law guaranteed to man the
right of absolute protection to the privacy of his home. The king was powerful; he was clothed with
majesty; his will was the law, but, with few exceptions, the humblest citizen or subject might shut the
door of his humble cottage in the face of the monarch and defend his intrusion into that privacy
which was regarded as sacred as any of the kingly prerogatives. The poorest and most humble
citizen or subject may, in his cottage, no matter how frail or humble it is, bid defiance to all the
powers of the state; the wind, the storm and the sunshine alike may enter through its weather-
beaten parts, but the king may not enter against its owner's will; none of his forces dare to cross the
threshold of even the humblest tenement without its owner's consent.

"A man's house is his castle," has become a maxim among the civilized peoples of the earth. His
protection therein has become a matter of constitutional protection in England, America, and Spain,
as well as in other countries.

However, under the police power of the state the authorities may compel entrance to dwelling
houses against the will of the owners for sanitary purposes. The government has this right upon
grounds of public policy. It has a right to protect the health and lives of all of its people. A man can
not insist upon the privacy of his home when a question of the health and life of himself, his family,
and that of the community is involved. This private right must be subject to the public welfare.

It may be argued that one who enters the dwelling house of another is not liable unless he has been
forbidden — i.e., the phrase "against the will of the owner" means that there must have been an
express prohibition to enter. In other words, if one enters the dwelling house of another without the
knowledge of the owner he has not entered against his will. This construction is certainly not tenable,
because entrance is forbidden generally under the spirit of the law unless permission to enter is
expressly given. To allow this construction would destroy the very spirit of the law. Under the law no
one has the right to enter the home of another without the other's express consent. Therefore, to say
that one's home is open for the entrance of all who are not expressly forbidden. This is not the rule.
The statute must not be given that construction. No one can enter the dwelling house of another, in
there Islands, without rendering himself liable under the law, unless he has the express consent of
the owner and unless the one seeking entrance comes within some of the exceptions dictated by the
law or by a sound public policy.

So jealously did the people of England regard this right to enjoy, unmolested, the privacy of their
houses, that they might even take the life of the unlawful intruder, if it be nighttime. This was also the
sentiment of the Romans expressed by Tully: "Quid enim sanctius quid omni religione munitius,
quam domus uniuscu jusque civium."

It may be argued that the offense punishable under article 491 of the Penal Code corresponds to the
crime of burglary at the common law. It is true that the offense of entering the house of another
without the latter's consent and the common-law crime of burglary are both offenses against the
habitation of individuals. But these crimes are distinctively different. The punishment for burglary is
"to prevent the breaking and entering of a dwelling house of another in the nighttime for the purpose
of committing a felony therein," while the object of article 491 is to prevent entrance into the dwelling
house of another at any time, either by day or by night, for any purpose, against the will of its owner.

In burglary there must have existed an intent to enter for the purpose of committing a felony, while
under article 491 of the Penal Code entrance against the will, simply, of the owner is punishable.
Under the provisions of the Penal Code entrance in the nighttime can only be regarded as an
aggravation of the offense of entering.

We are of the opinion, under all the facts in the case, that the extenuating circumstance provided for
in article 11 of the Penal Code should not be considered in favor of these defendants.
We find that the defendants are guilty of the crime of entering the house of another with violence and
intimidation, without the consent of the owner, with the aggravating circumstance of nocturnity, and
hereby impose the maximum degree of prision correccional, and the fine provided for in subsection
of 2 article 491 of the Penal Code should be imposed.

The sentence of the court below is therefore modified, and each of the said defendants is hereby
sentenced to be imprisoned for the term of six years of prision correccional, and each to pay a fine of
271 pesos and the costs of this suit or in default thereof to suffer subsidiary imprisonment.

Arellano, C. J., Torres, Willard and Mapa, JJ., concur.

Cooper and McDonough, JJ., dissent.

The Lawphil Project - Arellano Law Foundation

FIRST DIVISION

July 8, 2019

G.R. No. 233781

DEPARTMENT OF LABOR and EMPLOYMENT (DOLE), Petitioner

vs.
KENTEX MANUFACTURING CORPORATION and ONG KING GUAN, Respondents

DECISION

DEL CASTILLO, J.:

Petitioner Department of Labor and Employment (DOLE) filed this Rule 45 Petition1 assailing the
March 27, 2017 Decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 141606 discharging
respondent Ong King Guan (Ong), a corporate officer of Kentex Manufacturing Corporation
(Kentex), from being personally and solidarily liable with Kentex for the monetary awards specified in
the June 26, 2015 Order3 rendered by the DOLE-National Capital Region (DOLE-NCR) in NCROO-
TSSD-1505-OSHI-001.4

The Facts

Records show that, on May 13, 2015, a fire broke out in the factory located in Valenzuela City owned
by Kentex. The fire claimed 72 lives and injured a number of workers. As part of its standard
procedures, personnel of the DOLE Caloocan, Malabon, Navotas and Valenzuela (DOLE
CAMANAVA) Field Office went to Kentex's premises.5 For its part, the DOLE-NCR also
assessed6 Kentex's compliance with the occupational health and safety standards.
In the course of the investigation, it was discovered that Kentex had contracted with CJC Manpower
Services (CJC) for the deployment of workers. The DOLE-NCR directed Kentex and CJC to attend
the mandatory conference set on May 18 and 20, 2015 at the DOLE-NCR Office in Malate, Manila.
Notably, Kentex, its Chairman and Chief Executive Officer Beato Ang, and the corporation's Chief
Finance Officer Ong, were made parties to this case before the DOLE-NCR.

In the meantime, on May 15, 2015, the DOLE Regional Office No. III (DOLE-RO III) conducted its
own Joint Assessment7 of CJC. The DOLE-RO III discovered that CJC, which deployed workers to
Kentex, was an unregistered private recruitment and placement agency. Moreover, it noted that CJC
was non-compliant with the occupational health and safety standards as well as with labor
standards, such as underpayment of wages and nonpayment of statutory benefits. 8 As a result of
these findings, the DOLE RO III issued a June 8, 2015 Compliance Order 9 which effectively declared
CJC as a labor-only contractor with Kentex as its principal. 10

Meanwhile, during the mandatory conference set by the DOLE-NCR, CJC's representatives admitted
that there was no service contract between CJC and Kentex; that CJC had deployed 99 workers at
the Kentex factory on the day of the unfortunate incident; that there were no employment contracts
between CJC and the workers; that a CJC representative was sent once a week to Kentex only to
check on the workers' daily time records; that Kentex remitted to CJC the wage of Php230.00/day for
each of the deployed workers from which amount CJC deducted administrative costs and other
statutory contributions, leaving each worker a mere wage of Php202.50 a day.

Kentex and its corporate officers, through counsel, refuted CJC's claims. They alleged that CJC's
workers were originally engaged by Panday Management and Labor Consultancy which CJC later
absorbed; and that the workers' wages ranged from Php250.00 to Php350.00/day on top of CJC's
wage of, more or less, Php202/day. They contended that while the corporate/business and
employment records had all been gutted by fire, Kentex nevertheless complied with the labor
standards particularly on the minimum wage requirement and with the occupational health and
safety standards, as evidenced by a Certificate of Compliance (COC) signed by the DOLE-NCR
Regional Director Alex Avila (Avila).

The DOLE-NCR's Orders

In a June 26, 2015 Order,11 the DOLE-NCR rejected the aforementioned arguments of Kentex. It
declared that Kentex could not invoke the COC because this only attested to the findings of the
compliance officer at the time of the assessment/inspection, even as Kentex was duty-bound to
observe continuing compliance with the labor standards as well as the occupational health and
safety standards. Like the June 8, 2015 Compliance Order of the DOLE-RO III, the DOLE-NCR also
found that CJC was a mere labor-only contractor considering that it was unregistered with the DOLE
Regional Office where it operated.12 The DOLE-NCR likewise found that the workers were
underpaid,13 and computed the monetary claims due them. It concluded, thus —

WHEREFORE, premises considered, Kentex Manufacturing Corporation and/or Beato C. Ang and/or
Ong King Guan is/are hereby ordered to pay within ten (10) days from receipt hereof, Louie Andaya
and 56 other similarly situated employees an aggregate amount of One Million Four Hundred Forty
Thousand Six Hundred Forty-One Pesos and Thirty-Nine Centavos (₱1,440,641.39). Failure to pay
said workers within ten (10) days from receipt hereof shall cause the imposition of the penalty of
double indemnity pursuant to Republic Act No. 8188 otherwise known as 'An Act Increasing the
Penalty and Imposing Double Indemnity for Violation of the Prescribed Increase or Adjustment in the
Wage Rates.'

SO ORDERED.14
On July 3, 2015, only Ong moved for reconsideration of the foregoing order.15 However, in a letter
dated July 7, 2015,16 DOLE-NCR Regional Director Avila explained that Ong's motion for
reconsideration was not the proper remedy. Instead, an appeal to the DOLE Secretary should have
been made within 10 days from receipt of the Order pursuant to Section 1, Rule 11 of Department
Order No. 131, Series of 2013. Moreover, since Ong received the June 26, 2015 Order on the same
day, he had only until July 6, 2015 within which to appeal to the DOLE Secretary. However, Ong
never did; thus, the Compliance Order had attained finality.

After this, Kentex and Ong filed with the CA a Rule 43 Petition17 assailing the (1) June 8, 2015
Compliance Order; (2) the June 26, 2015 Order; and (3) the July 7, 2015 letter of the DOLE-NCR
Regional Director. Among the errors Kentex and Ong assigned was the DOLE-NCR's finding that
Ong was solidarily liable with Kentex for the monetary awards due the workers.

Ruling of the Court of Appeals

Although the CA ruled on the merits of the case and upheld the assailed Orders and letter of the
DOLE-NCR Regional Director,18 it observed at the outset that Kentex and Ong resorted to the wrong
remedy in filing a Rule 43 Petition, when the proper remedy should have been a Rule
65 certiorari petition from the decisions/resolutions of the DOLE Secretary. In fact, nothing from the
assailed documents indicative of acts of grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the DOLE Secretary was set forth or amply demonstrated. And given the
fact that time had irretrievably lapsed without any appeal being availed of by Kentex and Ong as
prescribed by the procedural rules on labor laws, 19 the CA ruled that the assailed orders had become
final and executory.

Anent the particular issue involving Ong, the CA took the view that, as a company officer, he could
not be personally held liable for the debts of Kentex without a showing of bad faith or wrongdoing on
his part for the corporation's unlawful act.20 The CA opined that nothing from the DOLE-NCR's June
26, 2015 Order discussed any act of Ong that showed his involvement in the wrongdoing of Kentex.
Thus, the dispositive portion of the CA judgment stated:

FOR THESE REASONS, the Order, dated June 26, 2015, of the DOLE-National Capital Region in
Case No. NCR00-TSSD-1505-OSHI-001, is AFFIRMED with the MODIFICATION that petitioner Ong
King Guan is held not liable for the monetary awards specified in the Order. The Order, dated June
8, 2015 of the DOLE-Regional Office No. III, San Fernando City, Pampanga, in Case No. R003-JA-
2015-05-002-6 and the Order/Letter, dated July 7, 2015, of DOLE-NCR Regional Director Alex V.
Avila, are AFFIRMED.

SO ORDERED.21

Petitioner filed a Motion for Partial Reconsideration22 to set aside the release or discharge of Ong
from liability to pay the monetary awards. But the CA denied the motion in its August 22, 2017
Resolution.23 Hence, this Petition.

The Arguments

Petitioner contends that the CA erred in releasing or discharging Ong from liability. It argues that,
since the June 26, 2015 DOLE-NCR Order had already become final and executory, there being no
appeal made or perfected from said order to the DOLE Secretary, the CA could no longer alter the
subject Order.
Respondents Kentex and Ong counter that the CA Decision correctly released or discharged Ong
from monetary liability because a corporate officer has a juridical personality entirely separate and
distinct from the corporation. They moreover claim that the DOLE-NCR Order was a void judgment
because they were deprived of due process; they assert that they could not expect a fair decision if
they appealed because the then DOLE Secretary24 had previously announced that cases would be
filed against Kentex, an announcement that was clearly designed for media consumption and to gain
publicity mileage.

Our Ruling

We agree with petitioner.

Both the DOLE-NCR and the CA correctly ruled that the June 26, 2015 Order had already become
final and executory in view of the failure of respondents Kentex and Ong to appeal therefrom to the
Secretary of Labor. Notice ought to be taken of the fact that, at the time the DOLE-NCR rendered its
ruling, Department Order No. 131-13 Series of 201325 was the applicable rule of procedure. The
pertinent provision states:

Rule 11, Section 1. Appeal. – The Compliance Order may be appealed to the Office of the
Secretary of Labor and Employment by filing a Memorandum of Appeal, furnishing the other party
with a copy of the same, within ten (10) days from receipt thereof. No further motion for extension of
time shall be entertained.

A mere notice of appeal shall not stop the running of the period within which to file an appeal.

Here, instead of filing an appeal with the DOLE Secretary, Ong moved for a reconsideration of the
subject Order; needless to say, this did not halt or stop the running of the period to elevate the
matter to the DOLE Secretary. Indeed, the DOLE-NCR took no action at all on Ong's motion for
reconsideration; in fact, it categorically informed Ong that his resort to the filing of a motion for
reconsideration was procedurally infirm. The June 26, 2015 Order having become final, it could no
longer be altered or modified by discharging or releasing Ong from his accountability.

Anent respondents' allegation regarding the DOLE Secretary's partiality, this Court agrees with the
CA, that —

[Kentex and Ong King Guan's] contention that the Secretary has already prejudged their liability in
her pronouncements before the media, such that an appeal to her would be an exercise in futility, is
untenable. We have the rules. And, as heretofore stated, failure to conform to the rules regarding
appeal will render the judgment final and executory. True, litigation is not a game of technicalities. It
is equally true, however, that every case must be presented in accordance with the prescribed
procedure to ensure an orderly and speedy administration of justice. The failure, therefore, of
petitioners to comply with the settled procedural rules justifies the dismissal of the present petition. 26

Neither was there merit in respondents' claim that they had been denied or deprived of due process.
The facts clearly disclose that they had substantially participated in the proceedings before the
DOLE-NCR from the mandatory conference up to the filing of a position paper where their side was
sufficiently heard. It is axiomatic that "[t]he observance of fairness in the conduct of any investigation
is at the very heart of procedural due process. The essence of due process is to be heard, and, as
applied to administrative proceedings, this means a fair and reasonable opportunity to explain one's
side, or an opportunity to seek a reconsideration of the action or ruling complained of." 27
Thus, it is self-evident that the CA committed serious error when it ordered the discharge or release
of Ong from the obligations of Kentex. The reason is elemental in its simplicity: contrary to settled,
unrelenting jurisprudence, it unconsciously and egregiously sought to alter and modify, as indeed it
altered and modified, an already final and executory verdict. We have already declared in Mocorro,
Jr. v. Ramirez28 that:

x x x A definitive final judgment, however erroneous, is no longer subject to change or revision.

A decision that has acquired finality becomes immutable and unalterable. This quality of immutability
precludes the modification of a final judgment, even if the modification is meant to correct erroneous
conclusions of fact and law. And this postulate holds true whether the modification is made by the
court that rendered it or by the highest court in the land. The orderly administration of justice requires
that, at the risk of occasional errors, the judgments/resolutions of a court must reach a point of
finality set by the law. The noble purpose is to write finis to dispute once and for all. This is a
fundamental principle in our justice system, without which there would be no end to litigations.
Utmost respect and adherence to this principle must always be maintained by those who exercise
the power of adjudication. Any act, which violates such principle, must immediately be struck down.
Indeed, the principle of conclusiveness of prior adjudications is not confined in its operation to the
judgments of what are ordinarily known as courts, but extends to all bodies upon which judicial
powers had been conferred.

The only exceptions to the rule on the immutability of final judgments are (1) the correction of clerical
errors, (2) the so-called nunc pro tunc entries which cause no prejudice to any party, and (3) void
judgments. x x x29

In the absence of any showing that the CA's modification or alteration of the subject Order falls
within the exceptions to the rule on the immutability of final judgments, the DOLE-NCR's June 26,
2015 Order must be upheld and respected.

WHEREFORE, the Petition is hereby GRANTED. The Court of Appeals' Decision dated March 27,
2017 insofar as it holds respondent Ong King Guan not liable for the monetary awards specified in
the June 26, 2015 Order is hereby REVERSED and SET ASIDE. The June 26, 2015 Order of the
Department of Labor and Employment, National Capital Region, finding respondent Ong King Guan
solidarily liable to pay the employees named in the Order the amount ofPhp1,440,641.39 is
hereby REINSTATED.

Costs against respondents.

SO ORDERED.

Bersamin, C.J., Jardeleza, Gesmundo, and Carandang, JJ., concur.

Footnotes

1
Rollo, pp. 10-27.

2
Id. at 30-50: penned by Associate Justice Elihu A. Ybañez and concurred in by Associate
Justices Magdangal M. De Leon and Carmelita Salandanan Manahan.
3
Id. at 62-102; penned by Regional Director Alex V. Avila.

4
In the Matter of the General Labor Standards and Occupational Safety and Health
Investigation at Kentex Manufacturing Corporation located at No. 6159 Tatalon Street, Brgy.
Ugong, Mapulang Lupa, Valenzuela City.

5
While they were not able to interview Kentex representatives and workers, the team noted
the following:

1) two plant ingresses were available; 2) the foul smell of burnt rubber materials was
still present in the surrounding area, which was still cordoned by the police; 3) the
whole plant structure appeared as a warehouse outside, where vents are only visible
on the walls at the upper section of the structure, which was considered to be the
second floor of the whole facility; 4) grilled windows were at the second floor; and 5)
the ground floor where the administrative office was once located was also
destroyed. Rollo, pp. 31-32.

6
No. NCR00-TSSD-1505-OSHI-001.

7
Case No. R003-JA-2015-05-002-6; id. at 32.

8
The following deficiencies are as follows: On general labor standards: 1) Underpayment of
minimum wage under Wage Order No. NCR-18 and Wage Order No. NCR-19 from date of
employment to present; 2) Non-payment of COLA under Wage Order No. NCR-18 and Wage
Order No. NCR-19; 3) Non payment of 13th month pay for the year 2014; 4) Non-payment of
holiday pay and special holiday premium; 5) Illegal deduction of cash bond (Php100.00 per
week); 6) Non-membership of workers and therefore non-remittance of premiums to SSS,
PhilHealth, and PAGIBIG Fund despite deductions on pay; 7) CJC Manpower Services is not
registered as contractor/subcontractor under Department Order (D.O.) No. 18-A in Region III;
8) There is no written service agreement between KMC and CJC Manpower Services; and 9)
There is no employment contract between CJC Manpower Services and workers deployed at
Kentex. On occupational safety and health standards: 1) Non-registration under Rule 1020;
2) Non-submission of annual work accident/illness exposure data report; 3) Non-submission
of annual medical report; 4) No company policy and program on anti-sexual harassment,
drug-free workplace, tuberculosis, hepatitis 8, and HIV-AIDS; id at 32-33.

9
Rollo, pp. 54-56.

Both Kentex and CJC were ordered to pay jointly and severally the total monetary
10

deficiencies of Php8,389,655.70 to 99 workers; id. at 56.

11
Rollo, pp. 62-102.

12
In violation of Section 14 of Department Order No. 18-A Series of 2011:

Section 14. Mandatory Registration and Registry of Legitimate

Contractors. Consistent with the authority of the Secretary of Labor and
Employment to restrict or prohibit the contracting out of labor to protect the rights of
workers, it shall be mandatory for all persons or entities, including cooperatives,
acting as contractors to register with the Regional Office of the Department of Labor
and Employment (DOLE) where it principally operates.
 Failure to register shall give rise to the presumption that the contractor is engaged in
labor only contracting.

Accordingly, the registration system governing contracting arrangements and

implemented by the Regional Offices of the DOLE is hereby established, with the
Bureau of Working Conditions (BWC) as the central registry.

The computations were for the underpayment of basic wages, premium pay on rest days,
13

COLA, wages on holidays, overtime pay, night shift differential, 13th month, and the
unauthorized deduction of the cash bond.

14
Rollo, p. 102.

15
Id. at 103-113.

16
Id. at 114-115.

17
Id. at 116-136.

18
Id. at 30-50.

N.B. The CA cited Rule XV, Section 1 of D.O. No. 131-B, Series of 2016, i.e., the "Revised
19

Rules on Labor Laws Compliance System," which echoes the same provision cited by the
DOLE Regional Director in his July 7, 2015 letter that cited Rule II, Section 1 of D.O. 131-13,
Series of 2013.

20
Citing Section 31 of the Corporation Code Liability of Directors, Trustees or Officers. -
Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts
of the corporation or who are guilty of gross negligence or bad faith in directing the affairs of
the corporation x x x shall be liable jointly and severally for all damages resulting therefrom
suffered by the corporation, its stockholders or members and other persons.

21
Rollo, pp. 49-50.

22
Id. at 137-141.

23
Id. at 52-53.

24
The then DOLE Secretary was Rosalinda Baldoz.

25
Entitled "Rules on Labor Laws Compliance System".

26
Rollo, p. 44.

27
Vivo v. Philippine Amusement and Gaming Corporation, 721 Phil. 34, 39 (2013).

28
582 Phil. 357 (2008).

29
Id. at 366-367.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-18624 March 31, 1922

GREGORIO MARQUEZ and MARIA JURADO, petitioners,

vs.
The Honorable BARTOLOME REVILLA, Judge of first Instance of Tayabas, DANIEL
MARQUEZ, and RICARDA JARBINA, respondents.

Godofredo Reyes for petitioners.

Recto, Casal and Ozaeta for respondents.

OSTRAND, J.:

This is a petition for a writ of certiorari. It appears from the record that in an action pending in the
Court of First Instance for the dissolution of a partnership the court, after hearing, appointed a
receiver to take charge of the partnership property. The appointment was based upon the following
allegations in the complaint in said case:

That due to the sad and unfortunate disagreement and lack of harmony now existing
between the parties with regard to the management and administration of the enormous
estates herein involved — a situation which plaintiffs exceedingly regret but cannot avoid —
and in view of the fact that the defendant Gregorio Marquez insists upon imposing his will
upon the plaintiff Daniel Marquez with regard to such management and administration, to the
prejudice of the plaintiffs, the latter will suffer incalculable loss and damage unless the
coownership or community of property existing between the parties is at once terminated and
their common property partitioned and divided, and unless in the meantime, pending the final
determination of this cause, a receiver is appointed by this court to take the possession,
control, management, and administration of the estates and property herein involved; that
plaintiffs are ready and willing to relinquish their control of said common property in favor of
such receiver, for the common benefit of the parties.

The petitioners contend that the allegations quoted do not show sufficient cause for the appointment
of a receiver; that it does not appear that the property has been mismanaged by the petitioners or
that it is in danger of being lost; that the petition for the appointment of a receiver was not properly
verified inasmuch as the verification is only made upon information and belief; and that the
petitioners will suffer irreparable damage if the receivership is maintained. The petitioners therefore
ask that the respondent judge be ordered to certify the record of the case in which the receiver was
appointed to this court and that, thereupon, the appointment be declared illegal and the property
under the receivership restored to the petitioners.

We do not think that the writ of certiorari will lie in the present case. This court has on numerous
occasions consistently held that under our statutes a writ of certiorari brings up for review only the
question whether the inferior tribunal, board, or officer, exercising judicial functions, has exceeded
its, or his, jurisdiction and cannot be used as a writ of error for the correction of mistakes either in
law or fact, committed by the inferior tribunal within the limits of its jurisdiction. (In re Prautch, 1 Phil.,
132; De los Reyes vs. Roxas, 1 Phil., 625; Araneta vs. Heirs of Gustilo, 2 Phil., 60;
Springer vs. Odlin, 3 Phil., 344; Somes vs. Crossfield, 8 Phil., 284; Artacho vs. Tan Chu Chay, 11
Phil., 47; Lagahit vs. Nengasca and Wislizenus, 12 Phil., 423; Bañes vs. Cordero, 13 Phil., 466;
Arzadon vs. Chanco and Baldueza, 14 Phil., 710; Herrera vs. Barretto and Joaquin, 25 Phil., 245;
Gala vs. Cui and Rodriguez, 25 Phil., 522, and eight other election cases; De Fiesta vs. Llorente and
Manila Railroad Co., 25 Phil., 554; Labiano vs. McMahon, 28 Phil., 168; Napa vs. Weissenhagen, 29
Phil., 180; Government of the Philippine Islands vs. Judge of First Instance of Iloilo and Bantillo, 34
Phil., 157; Perlas vs. Concepcion, 34 Phil., 559; Macasieb Sison vs. Court of First Instance of
Pangasinan, 34 Phil., 404; Mercader vs. Wislizenus, 34 Phil., 847; Oria vs. Campbell and Gutierrez
Hermanos, 34 Phil., 850; Alvendia vs. Moir and Dinio, 35 Phil., 356; Campos vs. Wislizenus and
Aldanese, 35 Phil., 373; Bustos vs. Moir and Fajardo, 35 Phil., 415; De la Cruz vs. Moir, 36 Phil.,
213; Javier vs. Nadres, 36 Phil., 226; Venturanza vs. Court of First Instance of Batangas and
Cabrera, 36 Phil., 545, and Leung Ben vs. O'Brien, 38 Phil., 182).

The decision in the two cases of De Castro and Morales vs. Justice of the Peace of Bocaue (33 Phil.
595), and Valdez vs. Querubin (37 Phil., 774), where the writ was granted on the ground of abuse of
discretion on the part of justice of the peace in requiring excessive bonds may, at first sight, seem
out of harmony with the rule above stated, but on close analysis it will be found that in these cases
the abuse of discretion was such as to be equivalent to a failure of jurisdiction.

The irregularities alleged by the petitioners do not, as far as we can see, go to the jurisdiction of the
court below. The allegations quoted from the complaint, and on the strength of which the receiver
was appointed, may well have been sufficient, under subsection 4 of section 174 of the Code of the
Civil Procedure which authorizes the appointment "whatever . . . it shall be made to appear to the
court that the appointment of a receiver is the most convenient and feasible means of preserving
and administering the property which is the subject of litigation during the pendency of the action,"
and a showing as to past management of the property by the adverse party is not essential. Neither
does the fact that the complaint was verified merely on information and belief affect the jurisdiction of
the court; this might have been of some importance if the receiver had been appointed ex parte, but
in the present case the appointment was made upon notice and hearing where the necessity for
positive verification is less imperative.

The writ is denied and the proceeding dismissed, with the costs against the petitioners. So ordered.

Araullo, C.J., Malcolm, Avanceña, Villamor, Johns and Romualdez, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 17254 March 29, 1922

CRISPULO VILLARUEL, plaintiff -appellee,

vs.
TAN KING, defendant-appellant.

Lacson and Lacson for appellant.

Apolonio Suntay for appellee.

ROMUALDEZ, J.:
On April 14, 1918, the plaintiff and the defendant entered into the following contract:

Know all men by these presents:

That we, Dn. Crispulo Villaruel, married, as party of the first part, and the Chinaman Tan
King, married , with certificate of residence No. 10090, Manila Insular Collector's No. 27857,
and with cedula No. F-1905383, issued at Pagsanhan, Laguna, on January 14, 1918, as
party of the second part, both of legal age, the former residing in Manila and the latter in
Pagsanhan, Laguna, Islands, do hereby agree and covenant.

1. That in consideration of the sum of two thousand seven hundred pesos (P2,700) which the
said Chinaman Tan King binds himself to pay unto the said Dn. Crispulo Villaruel, the later
hereby agree to sell, assign and transfer absolutely and perpetually to the said Chinaman,
his heirs and successors in interest, his right, ownership and interest in sublots 11-C and 11-
F, which are contiguous, for block 32 of the estate known as the "San Lazaro Estate,"
together with the two structures of mixed materials thereon, situated on Calle Bambang Nos.
216-220, Manila, free from all lien and circumstances.

2. That I, Tan King, do hereby declare that I accept this sale made in my favor by the said Dn
Crispulo Villaruel, and I hereby agree to pay and deliver unto the same, at the time of
executing this document, the sum of one thousand pesos (P1,000) which I promise and bind
myself to pay unto the said Crispulo Villaruel within one year, from this date, which time may
be extended another year at the option of the parties.

3. That for the security of the payment of the said sum of one thousand pesos (P1,000) the
property sold and described above is hereby transferred, in special and voluntary mortgage,
unto the said Crispulo Villaruel which shall subsist until the said amount of P1,000 is fully
paid; the debtor, the Chinaman Tan King, hereby binds himself not to sell or mortgage, or in
any way encumber the aforesaid property, without the express consent of the creditor Dn.
Crispulo Villaruel, and for this purpose they agree that these presents shall be recorded in,
and registered with, the Bureau of Lands.

4. In consideration of the fact that the Chinaman debtor, Tan King, will not pay any interest
on the amount of his debt, it is hereby agreed that the said Dn. Crispulo Villaruel shall use
and occupy the house No. 216 of Calle Bambang, Manila, without paying any rental therefor
until the debt of P1,000 is fully paid by the debtor. The Chinaman Tan King, however, shall
have the right to collect, from this date, the amount of four pesos (P4), which is the monthly
rent of the annex situated behind the said house.

If, for the purpose of enforcing the payment of the said sum of one thousand pesos, Dn.
Crispulo Villaruel should be compelled to institute judicial proceedings against the said
Chinaman Tan King, the latter shall pay a penalty of two hundred pesos (P200) as attorney's
fees and other judicial expenses.

In witness whereof we sign these presents in Manila this 14th day of April, 1918, after this
document has been interpreted into the Tagalog dialect by the notary to the Chinaman Tan
King.

(Sgd.) C. VILLARUEL. (Sgd.) TAN KING.

Signed in the presence of:

 (Sgd.) B. G. LAURELA. (Sgd.) P.A. REMIGIO.

UNITED STATES OF AMERICA

PHILIPPINE ISLANDS

In the city of Manila this 14th day of April, 1918, before me personally appeared dn. Crispulo
Villaruel with cedula No. F-50291, issued at Manila on January 31, 1918, and the Chinaman
Tan King with cedula No. F-1905383, issued at Pagsanhan, Laguna, on January 14, 1918,
whom I know to be the persons who executed the foregoing instrument and before me
acknowledged same to be their free and voluntary act.

Before the Chinaman Tan King signed this document I made known to him the contents of
this document by translating it into Tagalog which he understands and speaks.

Before me,
(Sgd.) P.A. REMIGIO,
Notary Public
Until the 31st of December, 1918.

Inst. No. 1004, Not. Reg., p. 65, Book IX.

(Bill of Exceptions, pp. 4-7.)

Because the defendant failed to pay the balance of the purchase price, that is, the sum of one
thousand pesos (1,000), in accordance with the terms of the contract, the plaintiff filed this action
praying that the sale be resolved after returning to the defendant the amount of one thousand seven
hundred pesos (P1,700) which he paid as a part of the purchase price, and that the latter be
sentenced to pay him the sum of one hundred pesos (P100) as damages, plus the costs and that he
be granted any other just and equitable remedy.

The defendant in his answer denied generally and specifically the allegations contained in the
complaint and set up a special defense and a counterclaim. Defendant's special defense is to the
effect that he is the owner in fee simple of the property which was sold and that since the plaintiff
refused to accept the one thousand pesos (P1,000), being the balance of the purchase price
according to the contract, the defendant deposited that amount in the Court of First Instance of
Manila at the disposal of the plaintiff. The counterclaim is based upon the fact that the plaintiff, under
the terms of the contract, being in possession of the property in question, was notified to leave the
premises within ten days after May 21, 1920; that he refused to leave the premises and still
continues in possession thereof, thus causing damages to the defendant in the amount of thirty
pesos (P30) per month. The amended answer further alleges that the plaintiff has taken
merchandise from the defendant to the amount of forty-seven pesos and seventy-seven centavos
(P47.77). Defendant, therefore, prays that he be absolved from the complaint, that the plaintiff be
ordered to vacate the house in question and sentenced to pay him the sum of thirty pesos (P30) a
month until the property is vacated, plus forty-seven pesos and seventy-seven centavos (P47.77),
the value of the merchandise taken by plaintiff, together with the costs of the action, and that he be
granted any other just and equitable remedy.

The court, after due hearing, rendered its decision containing the final order as follows:

The balance of the purchase price not having been paid within the time agreed upon in the
contract, it is the order of the court that the sale executed by the plaintiff in favor of the
defendant of sublots 11-C and 11-F of block 32 of the San Lazaro Estate with the
 improvements of mixed materials existing thereon at Nos. 316-320 of Calle Bambang,
District of Santa Cruz of this city, is hereby resolved, the plaintiff being ordered to return to
the defendant the amount of P1,700 paid by the latter. There is no ground for sentencing the
defendant to pay the plaintiff the sum of P100 as damages because they have not been
proven. With costs against the defendant.

This is the judgment which is the subject of this appeal. The defendant-appellant assigns the
following errors: (a) "the decreeing of the resolution of a sale that was entirely consummated,
considering it as a conditional sale;" and (b) "the failure to sentence the plaintiff to vacate the house
of the defendant on Calle Bambang No. 216, Manila, and to pay to defendant monthly rentals at the
rate of thirty pesos (P30) per month from the time of the deposit of the amount due from defendant,
until the premises are vacated."

The fundamental point here presented is whether the purchase and sale in question is subject to the
condition known as pacto comisorio.

At the outset it must be said that since the subject-matter of the sale in question is real property, it
does not come strictly within the provisions of article 1124 of the Civil Code, but is rather subjected
to the stipulations agreed upon by the contracting parties and to the provisions of article 1504 of the
Civil Code.

The "pacto comisorio" or "ley comisoria" is nothing more than a condition subsequent of the
contract of purchase and sale. Considered carefully, it is the very condition subsequent that
is always attached to all bilateral obligations according to article 1124; except that when
applied to real property it is not within the scope of said article 1124, and it is subordinate to
the stipulations made by the contracting parties and to the provisions of the article on which
we are now commenting (article 1504). (Manresa, Civil Code, volume 10, page 286, second
edition.)

Now, in the contract of purchase and sale before us, the parties stipulated that the payment of the
balance of one thousand pesos (P1,000) was guaranteed by the mortgage of the house that was
sold. This agreement has the two-fold effect of acknowledging indisputably that the sale had been
consummated, so much so that the vendee was disposing of it by mortgaging it to the vendor, and of
waiving the pacto comisorio, that is, the resolution of the sale in the event of failure to pay the one
thousand pesos (P1,000) such waiver being proved by the execution of the mortgage to guarantee
the payment, and in accord therewith the vendor's adequate remedy, in case of nonpayment, is the
foreclosure of such mortgage.

However, even supposing that the mortgage does not imply a waiver of the pacto comisorio, the fact
is that in the instant case the plaintiff, before commencing this action in view of defendant's failure to
pay, did not serve judicial or notarial notice upon the defendant that he (the vendor) was willing to
resolve the contract. Indeed, it does not appear that any such step had been taken by him. On the
other hand, it appears that the defendant, before the complaint in the above-entitled case was filed,
deposited with the court the sum of one thousand pesos P1,000 (less the amount of a certain
account), which the plaintiff refused to accept. In view of these facts the resolution of the sale is
improper, even if the pacto comisorio had been expressly stipulated in the contract.

In the sale of real property, even though it may have been stipulated that in default of the
payment of the price within the time agreed upon, the resolution of the contract shall take
place ipso facto, the vendee may pay even after the expiration of the period, at any time
before demand for payment has been made either by suit or by notarial act. After such
 demand has been made the judge cannot grant him further time. (Emphasis ours.) (Art.
1504, Civil Code.)

The illustsrious writer Mr. Manresa, commenting upon this article, explains fully what must be
understood as a demand, and says:

The Code in this article refers to a demand: we have already considered it. But it is pertinent
to ask: demand of what and for what? Does it refer to a demand for payment? A reading of
article 1504 will leave that impression; but it is scarcely impressed upon the reader's mind
when there appears the consideration of the anomalous and paradoxical result of requiring
payment from a person for the very purpose of preventing him to pay, and to make this
demand the basis for a stubborn refusal to accept payment of the purchase price.

This simple consideration is more than enough to make it clear to us that article 1504 does
not refer to a demand for payment or of a payment, but rather to an authentic notice that the
vendor takes the option of resolving the contract, or, if it pleases you, in order to harmonize
the spirit with the letter of the code, it refers to a demand that the vendor makes upon the
vendee for the latter to agree to the resolution of the obligation and to create no obstacles to
this contractual mode of extinguishing obligations. (Manresa, Civil Code, volume 10, page
288, second edition.)

There is, therefore, no cause for the resolution of the sale as prayed for by the plaintiff. His action, at
all events, should have been one for the foreclosure of the mortgage, which is not the action brought
in this case.

Article 1124 of the Civil code, as we have seen, is not applicable to this case. Neither is the doctrine
enunciated in the case of Ocejo, Perez and Co. vs. International Banking Corporation (37 Phil., 631),
which plaintiff alleges to be applicable, because that principle has reference to the sale of personal
property.

The conclusion of the court a quo that the defendant did not offer payment of the balance of the
purchase price either before or on the day of the expiration of the time agreed upon is supported by
the evidence of record. But, a we have said, the default in this case did not give, nor will it give, the
plaintiff the right to ask for the resolution of the contract.

The plaintiff was occupying the property in question, under and by virtue of the contract and in
consideration of the interest on the one thousand pesos (P1,000) then due him and had the right to
occupy the property until said amount was paid. But said amount having been deposited in court on
May 21, 1920, after deducting the sum of one hundred eight pesos and three centavos (P108.03) for
merchandise taken by the plaintiff from the defendant, the right of the plaintiff to occupy the said
premises ceased from that date.

It appears, however, that plaintiff's indebtedness to the defendant for merchandise amounts only to
forty-seven pesos and seventy-seven centavos (P47.77) and the defendant, in his counterclaim
(page 12, bill of exceptions), prays that the same be deducted from the one thousand pesos
(P1,000) that he still owes the plaintiff.

It also appears that the defendant on May 21, 1920, requested the plaintiff to vacate the house in
question, which the latter refused to do; and that the amount of thirty pesos (P30) that the plaintiff
asks as the monthly rent of the said property is reasonable and adequate.
In view of the foregoing, the judgment appealed from is reversed, and the defendant is absolved
from the complaint, and it is ordered:

First. That the plaintiff accept the amount of eight hundred ninety-one pesos and twenty-seven
centavos (P891.27) which he must take from the Court of First Instance where they have been
deposited by the defendant, the plaintiff to pay the expenses incurred by such deposit.

Second. That the defendant pay unto the plaintiff the sum of one hundred eight pesos and three
centavos (P108.03), thus completing the one thousand pesos (P1,000), the purchase price of the
property, with legal interest thereon from April 15, 1919, until paid.

Third. That the plaintiff vacate the premises in question and pay to the defendant rent for his
occupation of the same from May 21, 1920, until he actually vacates the property at the rate of thirty
pesos (P30) per month, this payment to be considered as the rent of said property.

And fourth. That the plaintiff pay to the defendant the sum of forty-seven pesos and seventy-seven
centavos (P47.77), the value of the merchandise and cash taken by him.

So ordered without special pronouncement as to costs.

Araullo, C.J., Malcolm, Avanceña, Villamor, Ostrand and Johns, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 16530 March 31, 1922

MAMERTO LAUDICO and FRED M. HARDEN, plaintiffs-appellants,

vs.
MANUEL ARIAS RODRIGUEZ, ET AL., defendants-appellants.

Crossfield and O'Brien for plaintiff-appellants.

Fisher and DeWitt for defendants-appellants.

AVANCEÑA, J.:

On February 5, 1919, the defendant, Vicente Arias, who, with his codefendants, owned the building
Nos. 205 to 221 on Carriedo Street, on his behalf and that of his coowners, wrote a letter to the
plaintiff, Mamerto Laudico, giving him an option to lease the building to a third person, and
transmitting to him for that purpose a tentative contract in writing containing the conditions upon
which the proposed lease should be made. Later Mr. Laudico presented his coplaintiff, Mr. Fred. M.
Harden, as the party desiring to lease the building. On one hand, other conditions were added to
those originally contained in the tentative contract, and, on the other, counter-propositions were
made and explanations requested on certain points in order to make them clear. These negotiations
were carried on by correspondence and verbally at interviews held with Mr. Vicente Arias, no definite
agreement having been arrived at until the plaintiff, Mr. Laudico, finally wrote a letter to Mr. Arias on
March 6, 1919, advising him that all his propositions, as amended and supplemented, were
accepted. It is admitted that this letter was received by Mr. Arias by special delivery at 2.53 p.m. of
that day. On that same day, at 11.25 in the morning, Mr. Arias had, in turn, written a letter to the
plaintiff, Mr. Laudico, withdrawing the offer to lease the building.

The chief prayer of the plaintiff in this action is that the defendants be compelled to execute the
contract of lease of the building in question. It thus results that when Arias sent his letter of
withdrawal to Laudico, he had not yet received the letter of acceptance, and when it reached him, he
had already sent his letter of withdrawal. Under these facts we believe that no contract was
perfected between the plaintiffs and the defendants.

The parties agree that the circumstances under which that offer was made were such that the offer
could be withdrawn at any time before acceptance.

Under article 1262, paragraph 2, of the Civil Code, an acceptance by letter does not have any effect
until it comes to the knowledge of the offerer. Therefore, before he learns of the acceptance, the
latter is not yet bound by it and can still withdraw the offer. Consequently, when Mr. Arias wrote Mr.
Laudico, withdrawing the offer, he had the right to do so, inasmuch as he had not yet receive notice
of the acceptance. And when the notice of the acceptance was received by Mr. Arias, it no longer
had any effect, as the offer was not then in existence, the same having already been withdrawn.
There was no meeting of the minds, through offer and acceptance, which is the essence of the
contract. While there was an offer, there was no acceptance, and when the latter was made and
could have a binding effect, the offer was then lacking. Though both the offer and the acceptance
existed, they did not meet to give birth to a contract.

Our attention has been called to a doctrine laid down in some decisions to the effect that ordinarily
notice of the revocation of an offer must be given to avoid an acceptance which may convert in into a
binding contract, and that no such notice can be deemed to have been given to the person to whom
the offer was made unless the revocation was in fact brought home to his knowledge.

This, however, has no application in the instant case, because when Arias received the letter of
acceptance, his letter of revocation had already been received. The latter was sent through a
messenger at 11.25 in the morning directly to the office of Laudico and should have been received
immediately on that same morning, or at least, before Arias received the letter of acceptance. On
this point we do not give any credence to the testimony of Laudico that he received this letter of
revocation at 3.30 in the afternoon of that day. Laudico is interested in destroying the effect of this
revocation so that the acceptance may be valid, which is the principal ground of his complaint.

But even supposing Laudico's testimony to be true, still the doctrine invoked has no application here.
With regard to contracts between absent persons there are two principal theories, to wit, one holding
that an acceptance by letter of an offer has no effect until it comes to the knowledge of the offerer,
and the other maintaining that it is effective from the time the letter is sent.

The Civil Code, in paragraph 2 of article 1262, has adopted the first theory and, according to its most
eminent commentators, it means that, before the acceptance is known, the offer can be revoked, it
not being necessary, in order for the revocation to have the effect of impeding the perfection of the
contract, that it be known by the acceptant. Q. Mucius Scaevola says apropros: "To our mind, the
power to revoke is implied in the criterion that no contract exists until the acceptance is known. As
the tie or bond springs from the meeting or concurrence of the minds, since up to that moment there
exists only a unilateral act, it is evident that he who makes it must have the power to revoke it by
withdrawing his proposition, although with the obligation to pay such damages as may have been
sustained by the person or persons to whom the offer was made and by whom it was accepted, if he
in turn failed to give them notice of the withdrawal of the offer. This view is confirmed by the
provision of article 1257, paragraph 2, concerning the case where a stipulation is made in favor of a
third person, which provision authorizes the contracting parties to revoke the stipulation before the
notice of its acceptance. That case is quite similar to that under comment, as said stipulation in favor
of a third person (who, for the very reason of being a third person, is not a contracting party) is
tantamount to an offer made by the makers of the contract which may or may not be accepted by
him, and which does not have any effect until the obligor is notified, and may, before it is accepted,
be revoked by those who have made it; therefore, the case being similar, the same rule applies."

Under the second theory, the doctrine invoked by the plaintiffs is sound, because if the sending of
the letter of acceptance in itself really perfects the contract, the revocation of the offer, in order to
prevent it, must be known to the acceptor. But this consideration has no place in the first theory
under which the forwarding of the letter of acceptance, in itself, does not have any effect until the
acceptance is known by the person who has made the offer.

The judgment appealed from is reversed and the defendants are absolved from the complaint,
without special finding as to costs. So ordered.

Araullo, C.J., Malcolm, Villamor, Johns and Romualdez, JJ., concur.