GENERAL PRINCIPLES/RULE 1: CONCEPT OF REMEDIAL OR
8 However, upon
PROCEDURAL LAW
G.R. No. 158239 January 25, 2012
PRISCILLA ALMA JOSE, Petitioner,
vs.
RAMON C. JAVELLANA, ET AL., Respondents.
DECISION
BERSAMIN, J.:
The denial of a motion for reconsideration of an order granting the defending party’s motion
to dismiss is not an interlocutory but a final order because it puts an end to the particular
matter involved, or settles definitely the matter therein disposed of, as to leave nothing for
the trial court to do other than to execute the order.1 Accordingly, the claiming party has a
fresh period of 15 days from notice of the denial within which to appeal the denial.2
Antecedents
On September 8, 1979, Margarita Marquez Alma Jose (Margarita) sold for consideration of
₱160,000.00 to respondent Ramon Javellana by deed of conditional sale two parcels of land
with areas of 3,675 and 20,936 square meters located in Barangay Mallis, Guiguinto,
Bulacan. They agreed that Javellana would pay ₱80,000.00 upon the execution of the deed
and the balance of ₱80,000.00 upon the registration of the parcels of land under the Torrens
System (the registration being undertaken by Margarita within a reasonable period of time);
and that should Margarita become incapacitated, her son and attorney-in-fact, Juvenal M.
Alma Jose (Juvenal), and her daughter, petitioner Priscilla M. Alma Jose, would receive the
payment of the balance and proceed with the application for registration. 3
After Margarita died and with Juvenal having predeceased Margarita without issue, the
vendor’s undertaking fell on the shoulders of Priscilla, being Margarita’s sole surviving heir.
However, Priscilla did not comply with the undertaking to cause the registration of the
properties under the Torrens System, and, instead, began to improve the properties by
dumping filling materials therein with the intention of converting the parcels of land into a
residential or industrial subdivision.4 Faced with Priscilla’s refusal to comply, Javellana
commenced on February 10, 1997 an action for specific performance, injunction, and
damages against her in the Regional Trial Court in Malolos, Bulacan (RTC), docketed as
Civil Case No. 79-M-97 entitled Ramon C. Javellana, represented by Atty. Guillermo G.
Blanco v. Priscilla Alma Jose.
In Civil Case No. 79-M-97, Javellana averred that upon the execution of the deed of
conditional sale, he had paid the initial amount of ₱80,000.00 and had taken possession of
the parcels of land; that he had paid the balance of the purchase price to Juvenal on different
dates upon Juvenal’s representation that Margarita had needed funds for the expenses of
registration and payment of real estate tax; and that in 1996, Priscilla had called to inquire
about the mortgage constituted on the parcels of land; and that he had told her then that the
parcels of land had not been mortgaged but had been sold to him. 5
Javellana prayed for the issuance of a temporary restraining order or writ of preliminary
injunction to restrain Priscilla from dumping filling materials in the parcels of land; and that
Priscilla be ordered to institute registration proceedings and then to execute a final deed of
sale in his favor.6
Priscilla filed a motion to dismiss, stating that the complaint was already barred by
prescription; and that the complaint did not state a cause of action. 7
1
The RTC initially denied Priscilla’s motion to dismiss on February 4, 1998.
her motion for reconsideration, the RTC reversed itself on June 24, 1999 and granted the
motion to dismiss, opining that Javellana had no cause of action against her due to her not
being bound to comply with the terms of the deed of conditional sale for not being a party
thereto; that there was no evidence showing the payment of the balance; that he had never
demanded the registration of the land from Margarita or Juvenal, or brought a suit for specific
performance against Margarita or Juvenal; and that his claim of paying the balance was not
credible.9
Javellana moved for reconsideration, contending that the presentation of evidence of full
payment was not necessary at that stage of the proceedings; and that in resolving a motion to
dismiss on the ground of failure to state a cause of action, the facts alleged in the complaint
were hypothetically admitted and only the allegations in the complaint should be considered
in resolving the motion.10 Nonetheless, he attached to the motion for reconsideration the
receipts showing the payments made to Juvenal.11 Moreover, he maintained that Priscilla
could no longer succeed to any rights respecting the parcels of land because he had
meanwhile acquired absolute ownership of them; and that the only thing that she, as sole
heir, had inherited from Margarita was the obligation to register them under the Torrens
System.12
On June 21, 2000, the RTC denied the motion for reconsideration for lack of any reason to
disturb the order of June 24, 1999.13
Accordingly, Javellana filed a notice of appeal from the June 21, 2000 order, 14 which the
RTC gave due course to, and the records were elevated to the Court of Appeals (CA).
In his appeal (C.A.-G.R. CV No. 68259), Javellana submitted the following as errors of the
RTC,15 to wit:
I
THE TRIAL COURT GRIEVOUSLY ERRED IN NOT CONSIDERING THE FACT
THAT PLAINTIFF-APELLANT HAD LONG COMPLIED WITH THE FULL
PAYMENT OF THE CONSIDERATION OF THE SALE OF THE SUBJECT
PROPERTY AND HAD IMMEDIATELY TAKEN ACTUAL AND PHYSICAL
POSSESSION OF SAID PROPERTY UPON THE SIGNING OF THE CONDITIONAL
DEED OF SALE;
II
THE TRIAL COURT OBVIOUSLY ERRED IN MAKING TWO CONFLICTING
INTERPRETATIONS OF THE PROVISION OF THE CIVIL [CODE],
PARTICULARLY ARTICLE 1911, IN THE LIGHT OF THE TERMS OF THE
CONDITIONAL DEED OF SALE;
III
THE TRIAL COURT ERRED IN HOLDING THAT DEFENDANT-APPELLEE BEING
NOT A PARTY TO THE CONDITIONAL DEED OF SALE EXECUTED BY HER
MOTHER IN FAVOR OF PLAINTFF-APPELLANT IS NOT BOUND THEREBY AND
CAN NOT BE COMPELLED TO DO THE ACT REQUIRED IN THE SAID DEED OF
CONDITIONAL SALE;
IV
THE TRIAL COURT ERRED IN DISMISSING THE AMENDED COMPLAINT
WITHOUT HEARING THE CASE ON THE MERITS.
Priscilla countered that the June 21, 2000 order was not appealable; that the appeal was not
perfected on time; and that Javellana was guilty of forum shopping. 16
It appears that pending the appeal, Javellana also filed a petition for certiorari in the CA to
assail the June 24, 1999 and June 21, 2000 orders dismissing his complaint (C.A.-G.R. SP
No. 60455). On August 6, 2001, however, the CA dismissed the petition for certiorari,17
finding that the RTC did not commit grave abuse of discretion in issuing the orders, and
holding that it only committed, at most, an error of judgment correctible by appeal in issuing
the challenged orders.
On November 20, 2002, the CA promulgated its decision in C.A.-G.R. CV No. 68259,18
reversing and setting aside the dismissal of Civil Case No. 79-M-97, and remanding the
records to the RTC "for further proceedings in accordance with law."19 The CA explained
that the complaint sufficiently stated a cause of action; that Priscilla, as sole heir, succeeded
to the rights and obligations of Margarita with respect to the parcels of land; that Margarita’s
undertaking under the contract was not a purely personal obligation but was transmissible to
Priscilla, who was consequently bound to comply with the obligation; that the action had not
yet prescribed due to its being actually one for quieting of title that was imprescriptible
brought by Javellana who had actual possession of the properties; and that based on the
complaint, Javellana had been in actual possession since 1979, and the cloud on his title had
come about only when Priscilla had started dumping filling materials on the premises. 20
On May 9, 2003, the CA denied the motion for reconsideration, 21 stating that it decided to
give due course to the appeal even if filed out of time because Javellana had no intention to
delay the proceedings, as in fact he did not even seek an extension of time to file his
appellant’s brief; that current jurisprudence afforded litigants the amplest opportunity to
present their cases free from the constraints of technicalities, such that even if an appeal was
filed out of time, the appellate court was given the discretion to nonetheless allow the appeal
for justifiable reasons.
Issues
Priscilla then brought this appeal, averring that the CA thereby erred in not outrightly
dismissing Javellana’s appeal because: (a) the June 21, 2000 RTC order was not appealable;
(b) the notice of appeal had been filed belatedly by three days; and (c) Javellana was guilty
of forum shopping for filing in the CA a petition for certiorari to assail the orders of the RTC
that were the subject matter of his appeal pending in the CA. She posited that, even if the
CA’s decision to entertain the appeal was affirmed, the RTC’s dismissal of the complaint
should nonetheless be upheld because the complaint stated no cause of action, and the action
had already prescribed.
On his part, Javellana countered that the errors being assigned by Priscilla involved questions
of fact not proper for the Court to review through petition for review on certiorari; that the
June 21, 2000 RTC order, being a final order, was appealable; that his appeal was perfected
on time; and that he was not guilty of forum shopping because at the time he filed the
petition for certiorari the CA had not yet rendered a decision in C.A.-G.R.
CV No. 68259, and because the issue of ownership raised in C.A.-G.R. CV No. 68259 was
different from the issue of grave abuse of discretion raised in C.A.-G.R. SP No. 60455.
Ruling
The petition for review has no merit.
I
2
Denial of the motion for reconsideration of the
order of dismissal was a final order and appealable
Priscilla submits that the order of June 21, 2000 was not the proper subject of an appeal
considering that Section 1 of Rule 41 of the Rules of Court provides that no appeal may be
taken from an order denying a motion for reconsideration.
Priscilla’s submission is erroneous and cannot be sustained.
First of all, the denial of Javellana’s motion for reconsideration left nothing more to be done
by the RTC because it confirmed the dismissal of Civil Case No. 79-M-97. It was clearly a
final order, not an interlocutory one. The Court has distinguished between final and
interlocutory orders in Pahila-Garrido v. Tortogo,22 thuswise:
The distinction between a final order and an interlocutory order is well known. The first
disposes of the subject matter in its entirety or terminates a particular proceeding or action,
leaving nothing more to be done except to enforce by execution what the court has
determined, but the latter does not completely dispose of the case but leaves something else
to be decided upon. An interlocutory order deals with preliminary matters and the trial on the
merits is yet to be held and the judgment rendered. The test to ascertain whether or not an
order or a judgment is
interlocutory or final is: does the order or judgment leave something to be done in the trial
court with respect to the merits of the case? If it does, the order or judgment is interlocutory;
otherwise, it is final.
And, secondly, whether an order is final or interlocutory determines whether appeal is the
correct remedy or not. A final order is appealable, to accord with the final judgment rule
enunciated in Section 1, Rule 41 of the Rules of Court to the effect that "appeal may be taken
from a judgment or final order that completely disposes of the case, or of a particular matter
therein when declared by these Rules to be appealable;"23 but the remedy from an
interlocutory one is not an appeal but a special civil action for certiorari. The explanation for
the differentiation of remedies given in Pahila-Garrido v. Tortogo is apt:
xxx The reason for disallowing an appeal from an interlocutory order is to avoid multiplicity
of appeals in a single action, which necessarily suspends the hearing and decision on the
merits of the action during the pendency of the appeals. Permitting multiple appeals will
necessarily delay the trial on the merits of the case for a considerable length of time, and will
compel the adverse party to incur unnecessary expenses, for one of the parties may interpose
as many appeals as there are incidental questions raised by him and as there are interlocutory
orders rendered or issued by the lower court. An interlocutory order may be the subject of an
appeal, but only after a judgment has been rendered, with the ground for appealing the order
being included in the appeal of the judgment itself.
The remedy against an interlocutory order not subject of an appeal is an appropriate special
civil action under Rule 65, provided that the interlocutory order is rendered without or in
excess of jurisdiction or with grave abuse of discretion. Then is certiorari under Rule 65
allowed to be resorted to.
Indeed, the Court has held that an appeal from an order denying a motion for reconsideration
of a final order or judgment is effectively an appeal from the final order or judgment itself;
and has expressly clarified that the prohibition against appealing an order denying a motion
for
reconsideration referred only to a denial of a motion for reconsideration of an interlocutory
order.24
 II
Appeal was made on time pursuant to Neypes v. CA
Priscilla insists that Javellana filed his notice of appeal out of time. She points out that he
received a copy of the June 24, 1999 order on July 9, 1999, and filed his motion for
reconsideration on July 21, 1999 (or after the lapse of 12 days); that the RTC denied his
motion for reconsideration through the order of June 21, 2000, a copy of which he received
on July 13, 2000; that he had only three days from July 13, 2000, or until July 16, 2000,
within which to perfect an appeal; and that having filed his notice of appeal on July 19, 2000,
his appeal should have been dismissed for being tardy by three days beyond the expiration
of the reglementary period.
Section 3 of Rule 41 of the Rules of Court provides:
Section 3. Period of ordinary appeal. — The appeal shall be taken within fifteen (15) days
from notice of the judgment or final order appealed from. Where a record on appeal is
required, the appellant shall file a notice of appeal and a record on appeal within thirty (30)
days from notice of the judgment or final order.
The period of appeal shall be interrupted by a timely motion for new trial or reconsideration.
No motion for extension of time to file a motion for new trial or reconsideration shall be
allowed. (n)
Under the rule, Javellana had only the balance of three days from July 13, 2000, or until July
16, 2000, within which to perfect an appeal due to the timely filing of his motion for
reconsideration interrupting the running of the period of appeal. As such, his filing of the
notice of appeal only on July 19, 2000 did not perfect his appeal on time, as Priscilla insists.
The seemingly correct insistence of Priscilla cannot be upheld, however, considering that the
Court meanwhile adopted the fresh period rule in Neypes v. Court of Appeals,25 by which an
aggrieved party desirous of appealing an adverse judgment or final order is allowed a fresh
period of 15 days within which to file the notice of appeal in the RTC reckoned from receipt
of the order denying a motion for a new trial or motion for reconsideration, to wit:
The Supreme Court may promulgate procedural rules in all courts. It has the sole prerogative
to amend, repeal or even establish new rules for a more simplified and inexpensive process,
and the speedy disposition of cases. In the rules governing appeals to it and to the Court of
Appeals, particularly Rules 42, 43 and 45, the Court allows extensions of time, based on
justifiable and compelling reasons, for parties to file their appeals. These extensions may
consist of 15 days or more.
To standardize the appeal periods provided in the Rules and to afford litigants fair
opportunity to appeal their cases, the Court deems it practical to allow a fresh period of 15
days within which to file the notice of appeal in the Regional Trial Court, counted from
receipt of the order dismissing a motion for a new trial or motion for reconsideration.
Henceforth, this "fresh period rule" shall also apply to Rule 40 governing appeals from the
Municipal Trial Courts to the Regional Trial Courts; Rule 42 on petitions for review from
the Regional Trial Courts to the Court of Appeals; Rule 43 on appeals from quasi-judicial
agencies to the Court of Appeals and Rule 45 governing appeals by certiorari to the Supreme
Court. The new rule aims to regiment or make the appeal period uniform, to be counted from
receipt of the order denying the motion for new trial, motion for reconsideration (whether
full or partial) or any final order or resolution.26
The fresh period rule may be applied to this case, for the Court has already retroactively
extended the fresh period rule to "actions pending and undetermined at the time of their
3
passage and this will not violate any right of a person who may feel that he is adversely
affected, inasmuch as there are no vested rights in rules of procedure."27 According to De los
Santos v. Vda. de Mangubat:28
Procedural law refers to the adjective law which prescribes rules and forms of procedure in
order that courts may be able to administer justice. Procedural laws do not come within the
legal conception of a retroactive law, or the general rule against the retroactive operation of
statues ― they may be given retroactive effect on actions pending and undetermined at the
time of their passage and this will not violate any right of a person who may feel that he is
adversely affected, insomuch as there are no vested rights in rules of procedure.
The "fresh period rule" is a procedural law as it prescribes a fresh period of 15 days within
which an appeal may be made in the event that the motion for reconsideration is denied by
the lower court. Following the rule on retroactivity of procedural laws, the "fresh period rule"
should be applied to pending actions, such as the present case.
Also, to deny herein petitioners the benefit of the "fresh period rule" will amount to injustice,
if not absurdity, since the subject notice of judgment and final order were issued two years
later or in the year 2000, as compared to the notice of judgment and final order in Neypes
which were issued in 1998. It will be incongruous and illogical that parties receiving notices
of judgment and final orders issued in the year 1998 will enjoy the benefit of the "fresh period
rule" while those later rulings of the lower courts such as in the instant case, will not.29
Consequently, we rule that Javellana’s notice of appeal was timely filed pursuant to the fresh
period rule.
III
No forum shopping was committed
Priscilla claims that Javellana engaged in forum shopping by filing a notice of appeal and a
petition for certiorari against the same orders. As earlier noted, he denies that his doing so
violated the policy against forum shopping.
The Court expounded on the nature and purpose of forum shopping in In Re: Reconstitution
of Transfer Certificates of Title Nos. 303168 and 303169 and Issuance of Owner’s Duplicate
Certificates of Title In Lieu of Those Lost, Rolando Edward G. Lim, Petitioner:30
Forum shopping is the act of a party litigant against whom an adverse judgment has been
rendered in one forum seeking and possibly getting a favorable opinion in another forum,
other than by appeal or the special civil action of certiorari, or the institution of two or more
actions or proceedings grounded on the same cause or supposition that one or the other court
would make a favorable disposition. Forum shopping happens when, in the two or more
pending cases, there is identity of parties, identity of rights or causes of action, and identity
of reliefs sought. Where the elements of litis pendentia are present, and where a final
judgment in one case will amount to res judicata in the other, there is forum shopping. For
litis pendentia to be a ground for the dismissal of an action, there must be: (a) identity of the
parties or at least such as to represent the same interest in both actions; (b) identity of rights
asserted and relief prayed for, the relief being founded on the same acts; and (c) the identity
in the two cases should be such that the judgment which may be rendered in one would,
regardless of which party is successful, amount to res judicata in the other.
For forum shopping to exist, both actions must involve the same transaction, same essential
facts and circumstances and must raise identical causes of action, subject matter and issues.
Clearly, it does not exist where different orders were questioned, two distinct causes of action
and issues were raised, and two objectives were sought.
Should Javellana’s present appeal now be held barred by his filing of the petition for Nor were the dangers that the adoption of the judicial policy against forum shopping designed
certiorari in the CA when his appeal in that court was yet pending? to prevent or to eliminate attendant. The first danger, i.e., the multiplicity of suits upon one
and the same cause of action, would not materialize considering that the appeal was a
We are aware that in Young v. Sy,31 in which the petitioner filed a notice of appeal to elevate continuity of Civil Case No. 79-M-97, whereas C.A.-G.R. SP No. 60455 dealt with an
the orders concerning the dismissal of her case due to non-suit to the CA and a petition for independent ground of alleged grave abuse of discretion amounting to lack or excess of
certiorari in the CA assailing the same orders four months later, the Court ruled that the jurisdiction on the part of the RTC. The second danger, i.e., the unethical malpractice of
successive filings of the notice of appeal and the petition for certiorari to attain the same shopping for a friendly court or judge to ensure a favorable ruling or judgment after not
objective of nullifying the trial court’s dismissal orders constituted forum shopping that getting it in the appeal, would not arise because the CA had not yet decided C.A.-G.R. CV
warranted the dismissal of both cases. The Court said: No. 68259 as of the filing of the petition for certiorari.
Ineluctably, the petitioner, by filing an ordinary appeal and a petition for certiorari with the Instead, we see the situation of resorting to two inconsistent remedial approaches to be the
CA, engaged in forum shopping. When the petitioner commenced the appeal, only four result of the tactical misjudgment by Javellana’s counsel on the efficacy of the appeal to stave
months had elapsed prior to her filing with the CA the Petition for Certiorari under Rule 65 off his caretaker’s eviction from the parcels of land and to prevent the development of them
and which eventually came up to this Court by way of the instant Petition (re: Non-Suit). The into a residential or commercial subdivision pending the appeal. In the petition for certiorari,
elements of litis pendentia are present between the two suits. As the CA, through its Javellana explicitly averred that his appeal was "inadequate and not speedy to prevent private
Thirteenth Division, correctly noted, both suits are founded on exactly the same facts and respondent Alma Jose and her transferee/assignee xxx from developing and disposing of the
refer to the same subject matter—the RTC Orders which dismissed Civil Case No. SP-5703 subject property to other parties to the total deprivation of petitioner’s rights of possession
(2000) for and ownership over the subject property," and that the dismissal by the RTC had
"emboldened private respondents to fully develop the property and for respondent Alma Jose
failure to prosecute. In both cases, the petitioner is seeking the reversal of the RTC
to file an ejectment case against petitioner’s overseer xxx."35 Thereby, it became far-fetched
orders.1âwphi1 The parties, the rights asserted, the issues professed, and the reliefs prayed
that Javellana brought the petition for certiorari in violation of the policy against forum
for, are all the same. It is evident that the judgment of one forum may amount to res judicata
shopping.
in the other.
WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the
xxxx
decision promulgated on November 20, 2002; and ORDERS the petitioner to pay the costs
The remedies of appeal and certiorari under Rule 65 are mutually exclusive and not of suit.
alternative or cumulative. This is a firm judicial policy. The petitioner cannot hedge her case
SO ORDERED.
by wagering two or more appeals, and, in the event that the ordinary appeal lags significantly
behind the others, she cannot post facto validate this circumstance as a demonstration that
the ordinary appeal had not been speedy or adequate enough, in order to justify the recourse
to Rule 65. This practice, if adopted, would sanction the filing of multiple suits in multiple
fora, where each one, as the petitioner couches it, becomes a "precautionary measure" for the
rest, thereby increasing the chances of a favorable decision. This is the very evil that the
proscription on forum shopping seeks to put right. In Guaranteed Hotels, Inc. v. Baltao, the
Court stated that the grave evil sought to be avoided by the rule against forum shopping is
the rendition by two competent tribunals of two separate and contradictory decisions.
Unscrupulous party litigants, taking advantage of a variety of competent tribunals, may
repeatedly try their luck in several different fora until a favorable result is reached. To avoid
the resultant confusion, the Court adheres strictly to the rules against forum shopping, and
any violation of these rules results in the dismissal of the case.32

The same result was reached in Zosa v. Estrella,33 which likewise involved the successive
filing of a notice of appeal and a petition for certiorari to challenge the same orders, with the
Court upholding the CA’s dismissals of the appeal and the petition for certiorari through
separate decisions.

Yet, the outcome in Young v. Sy and Zosa v. Estrella is unjust here even if the orders of the
RTC being challenged through appeal and the petition for certiorari were the same. The
unjustness exists because the appeal and the petition for certiorari actually sought different
objectives. In his appeal in C.A.-G.R. CV No. 68259, Javellana aimed to undo the RTC’s
erroneous dismissal of Civil Case No. 79-M-97 to clear the way for his judicial demand for
specific performance to be tried and determined in due course by the RTC; but his petition
for certiorari had the ostensible objective "to prevent (Priscilla) from developing the subject
property and from proceeding with the ejectment case until his appeal is finally resolved," as
the CA explicitly determined in its decision in C.A.-G.R. SP No. 60455.34

4
GENERAL PRINCIPLES/RULE 1: NATURE OF REMEDIAL LAW
G.R. No. L-286 March 29, 1946
FREDESVINDO S. ALVERO, petitioner,
vs.
M.L. DE LA ROSA, Judge of First Instance of Manila, JOSE R. VICTORIANO, and
MARGARITA VILLARICA, respondents.
DE JOYA, J.:
This is an original petition for certiorari filed in this court.
The record shows that, on June 25, 1945, respondent Jose R. Victoriano had filed a complaint,
in the Court of First Instance of the City of Manila, against petitioner Fredesvindo S. Alvero
and one Margarita Villarica, alleging two causes of action, to wit, (1) to declare in force the
contract of sale, made on October 1, 1940, between said Jose R. Victoriano and Margarita
Villarica, of two (2) parcels of land in the Manotoc subdivision, Balintawak, in the barrio of
Calaanan, municipality of Caloocan, Province of Rizal, with a combined area of 480 square
meters, which land was subsequently sold by said Villarica, in favor of petitioner
Fredesvindo S. Alvero, on December 31, 1944, for the sum of P100,000 in Japanese military
notes; and (2) to declare said subsequent sale null and void.
On July 7, 1945, Margarita Villarica filed an answer to said complaint, expressly admitting
having sold said land to Fresdesvindo S. Alvero, for P100,000, in December, 1944, due to
the imperative necessity of raising funds with which to provide for herself and family, and
that she did not remember the previous sale; at the same time, offering to repurchase said
land from Fredesvindo S. Alvero in the sum of P5,000, but that the latter refused to accept
the offer.
On July 13, 1945, Fredesvindo S. Alvero, in answering said complaint, denied the allegations
made therein, and claimed exclusive ownership of the land in question, and at the same time
set up a counterclaim and crossclaim in his answer, demanding from Jose R. Victoriano a
P200-monthly rent on said property, beginning from February, 1945, plus P2,000 as
damages.
On July 21, 1945, Jose R. Victoriano filed an answer to said counterclaim, denying
Fredesvindo S. Alvero's alleged ownership over said land, and the other allegations contained
in Alvero's answer.
After the trial of the case before the Hon. Mariano L. de la Rosa, Judge of the Court of First
Instance of the City of Manila, one of the respondents in this case, on November 16, 1945,
said respondent judge rendered his decision, in which it was declared that the two (2) parcels
of land in question, with a combined area of 480 square meters had been sold by Margarita
Villarica to Jose R. Victoriano, since October 1, 1940, for the sum of P6,000, on the condition
that the purchaser should make a down payment of P1,700, and a monthly payment of P76.86
in 120 equal monthly installments; that Jose R. Victoriano continued making said monthly
payments until December, 1941, but that owing to the war-time conditions then existing,
Margarita Villarica agreed verbally to suspend such payments until the restoration of peace;
that immediately after said sale of said land to him, Jose R. Victoriano took possession
thereof and made improvements thereon to the amount of P800, and continued occupying
said property until December, 1944, when he abandoned the same to go to evacuation places,
but returned thereto in February, 1945; that Margarita Villarica, having forgotten the sale of
said land to Jose R. Victoriano, sold the same for P100,000 in Japanese military notes, on
December 31, 1944, to Fredesvindo S. Alvero, but afterwards offered to repurchase said
property from him, for the sum of P8,000 in genuine Philippine currency, after liberation;
that Fredesvindo S. Alvero presented the deed of sale, executed in his favor, to the Register
5
of Deeds of the City of Manila, on January 3, 1945, and took possession of said property in
December, 1944, but afterwards found Jose R. Victoriano in the premises in February, 1945;
that in the contract of sale executed by Margarita Villarica, in favor of Jose R. Victoriano, it
was agreed that, upon failure of the purchaser to make payments of three (3) successive
mothly installments, the vendor would be free to sell the property again, forfeiting the
payments made, except in the case of force majeure; that there was really a verbal agreement
between Margarita Villarica and Jose Victoriano, made in February, 1942, for the suspension
of the payment of the monthly installments until the restoration of peace; and that although
Jose R. Victoriano had presented the deed of sale, executed in his favor, to the Register of
Deeds, in Pasig, Rizal, like Fredesvindo S. Alvero, he had also failed to secure the transfer
of title to his name. And considering that Jose R. Victoriano's document was older than that
of Fredesvindo S. Alvero, and that he had taken possession of said property, since October
1, 1940, the respondent judge rendered his decision in favor of Jose R. Victoriano, adjudging
to him the title over the property in question, including all the improvements existing thereon,
and dismissed the counterclaim.
On November 28, 1945, Fredesvindo S. Alvero was notified of said decision; and on
December 27, 1945, he filed a petition for reconsideration and new trial, which was denied
on January 3, 1946; and of said order he was notified on January 7, 1946.
On January 8, 1946, Fredesvindo S. Alvero filed his notice of appeal and record on appeal
simultaneously in the lower court, without filing the P60-appeal bond.
On January 14, 1946, Jose R. Victoriano filed a petition to dismiss the appeal, and at the
same time, asked for the execution of the judgment.
On January 15, 1946, Fredesvindo S. Alvero filed an opposition to said motion to dismiss,
alleging that on the very same day, January 15, 1946, said appeal bond for P60 had been
actually filed, and allege as an excuse, for not filing the said appeal bond, in due time, the
illness of his lawyer's wife, who died on January 10, 1946, and buried the following day.
On January 17, 1946, the respondent judge, Hon. Mariano L. de la Rosa, ordered the
dismissal of the appeal, declaring that, although the notice of appeal and record on appeal
had been filed in due time, the P60-appeal bond was filed too late.
On January 23, 1946, Fredesvindo S. Alvero filed a petition for the reconsideration of the
said order dated January 17, 1946, dismissing his appeal; and said petition for reconsideration
was denied on January 29, 1946. Hence, this petition for certiorari.
On February 11, 1946, the respondents filed their answer to the petition for certiorari,
alleging (1) that said petition is defective in form as well as in substance; (2) that there has
been no excusable negligence, on the part of the petitioner, or grave abuse of discretion on
the part of the respondent judge, in the instant case.
As already stated, the decision rendered by the respondent judge, Hon. Mariano L. de la Rosa,
was dated November 16, 1945, of which counsel for Fredesvindo S. Alvero was notified on
November 28, 1945; that his motion for reconsideration and new trial was filed on December
27, 1945, and denied on January 3, 1946, and that said counsel for Alvero was notified of
said order on January 7, 1946; and that he filed his notice of appeal and record on appeal the
following day, to wit, January 8, 1946, and that the P60-appeal bond was filed only on
January 15, 1946.
According to the computation erroneously made by the court, the last day for filing and
perfecting the appeal, in this case, was January 8, 1946, or which date, Fredesvindo S. Alvero
should have filed his (1) notice of appeal, (2) record on appeal, and (3) appeal bond. But the
P60-appeal bond was filed only on January 15, 1946.
Failure to perfect the appeal, within the time prescribed by the rules of court, will cause the
judgment to become final, and the certification of the record on appeal thereafter, cannot
restore the jurisdiction which has been lost. (Roman Catholic Bishop of Tuguegarao vs.
Director of Lands, 34 Phil., 623; Estate of Cordoba and Zarate vs. Alabado, 34 Phil., 920;
and Bermudez vs. Director of Lands, 36 Phil., 774.)
The period within which the record on appeal and appeal bond should be perfected and filed
may, however, be extended by order of the court, upon application made, prior to the
expiration of the original period. (Layda vs. Legaspi, 39 Phil., 83.)
Rules of courts, promulgated by authority of law, have the force and effect of law; and rules
of court prescribing the time within which certain acts must be done, or certain proceedings
taken, are considered absolutely indispensable to the prevention of needless delays and to the
orderly and speedy discharge of judicial business. (Shioji vs. Harvey, 43 Phil., 333.)
Strict compliance with the rules of court has been held mandatory and imperative, so that
failure to pay the docket fee in the Supreme Court, within the period fixed for that purpose,
will cause the dismissal of the appeal. (Salaveria vs. Albindo, 39Phil., 922.) In the same
manner, on failure of the appellant in a civil case to serve his brief, within the time prescribed
by said rules, on motion of the appellee and notice to the appellant, or on its own motion, the
court may dismiss the appeal. (Shioji vs. Harvey, 43 Phil., 333.)
It is futile to speak of hospitals, doctors and nurses to minister alone to the needs of the sick
and the dying, who are dearest to us, for our reasoning powers are of little avail when sorrow
or despair rages within.
But human laws are inflexible and no personal consideration should stand in the way of
performing a legal duty.
The attorney for petitioner Fredesvindo S. Alvero could have asked for an extension of time,
within which to file and perfect his appeal, in the court below; but he had failed to do so, and
he must bear the consequences of his act. A strict observance of the rules of court, which
have been considered indispensable to the prevention of needless delays and to the orderly
and speedy dispatch of judicial business, is an imperative necessity.
It may not be amiss to state in this connection that no irreparable damage has been caused to
the petitioner Fredesvindo S. Alvero, as Margarita Villarica, the vendor to the two, of the
land in question, has shown readiness to repair the damage done.
No showing having been made that there had been merely excusable negligece, on the part
of the attorney for petitioner Fredesvindo S. Alvero, and that there had been gave abuse of
sound judicial discretion, on the part of the respondent judge, the petition for certiorari filed
in this case, is, therefore, hereby dismissed, without costs. So ordered.

Counsel for the petitioner Fredesvindo Alvero alleges as an excuse, for his failure to perfect
and file his appeal, in due time, the illness of his wife, which ended in her death on January
10, 1946, and by which he was greatly affected.

How little, indeed, does one realize that in life he lives in the midst of death; and that every
that passes in a step nearer towards eternity. Yet, notwithstanding the inexorable laws of
human destiny, every mortal fears death, and such fear is worse than death itself. That is
perhaps the reason why those feeling its approach, in their last moments, want to be
surrounded by the ones dearest to their heart, to hear from them words of tenderness and
eternal truth, and thus receive as balm their love and the cheering influence of the traditional
faith, and the consolation of religious hope.

The virtuous and loving wife is the peculiar gift of heaven, and Mother is the name for God
in the innocent lips and hearts of adoring children. "She looketh well to the ways of her
household, and eateth not the bread of idleness." "And her daughters arise up and call her
blessed." And when she dies in the bosom of God, her children find solace in the
contemplation of her eternal bliss, as mirrored in her tranquil beauty.

It is not, therefore, difficult to understand the state of mind of the attorney, and his intense
devotion and ardent affection towards his dying wife.

Unfortunately, counsel for petitioner has created a difficult situation. In his motion for
reconsideration and new trial, dated December 27, 1945, he did not point out specifically the
findings or conclusions in the judgment, are not supported by the evidence or which are
contrary to law, making express reference to the pertinent evidence or legal provisions, as
expressly required by Rule 37, section 2, paragraph (c) of the Rules of Court. Motions of that
kind have been considered as motions pro forma intended merely to delay the proceeding,
and, as such, they cannot and will not interrupt or suspend the period of time for the perfection
of the appeal. (Valdez vs. Jugo, 74 Phil., 49, and Reyes vs. Court of Appeals and Bautista,
74 Phil., 235.) Hence, the period for perfecting herein petitioner's appeal commenced from
November 28, 1945, when he was notified of the judgment rendered in the case, and expired
on December 28, 1945; and, therefore, his notice of appeal and record on appeal filed on
January 8, 1946, were filed out of time, and much more so his appeal bond, which was only
filed on January 15, 1946.

6
GENERAL PRINCIPLES/RULE 1: SUBSTANTIVE LAW VIS A VIS REMEDIAL Upon the foregoing considerations, the present petition is dismissed with costs against the
LAW petitioner.

G.R. No. L-2068 October 20, 1948

DOMINADOR B. BUSTOS, petitioner,
vs.
ANTONIO G. LUCERO, Judge of First Instance of Pampanga, respondent.

TUASON, J.:

The petitioner herein, an accused in a criminal case, filed a motion with the Court of First
Instance of Pampanga after he had been bound over to that court for trial, praying that the
record of the case be remanded to the justice of the peace court of Masantol, the court of
origin, in order that the petitioner might cross-examine the complainant and her witnesses in
connection with their testimony, on the strength of which warrant was issued for the arrest
of the accused. The motion was denied and that denial is the subject matter of this proceeding.
According to the memorandum submitted by the petitioner's attorney to the Court of First
Instance in support of his motion, the accused, assisted by counsel, appeared at the
preliminary investigation. In that investigation, the justice of the peace informed him of the
charges and asked him if he pleaded guilty or not guilty, upon which he entered the plea of
not guilty. "Then his counsel moved that the complainant present her evidence so that she
and her witnesses could be examined and cross-examined in the manner and form provided
by law." The fiscal and the private prosecutor objected, invoking section 11 of rule 108, and
the objection was sustained. "In view thereof, the accused's counsel announced his intention
to renounce his right to present evidence," and the justice of the peace forwarded the case to
the court of first instance.

Leaving aside the question whether the accused, after renouncing his right to present
evidence, and by reason of that waiver he was committed to the corresponding court for trial,
is estopped, we are of the opinion that the respondent judge did not act in excess of his
jurisdiction or in abuse of discretion in refusing to grant the accused's motion to return the
record for the purpose set out therein. In Dequito and Saling Buhay vs. Arellano, G.R. No.
L-1336, recently promulgated, in which case the respondent justice of the peace had allowed
the accused, over the complaint's objection, to recall the complainant and her witnesses at
the preliminary investigation so that they might be cross-examined, we sustained the justice
of the peace's order. We said that section 11 of Rule 108 does not curtail the sound discretion
of the justice of the peace on the matter. We said that "while section 11 of Rule 108 defines
the bounds of the defendant's right in the preliminary investigation, there is nothing in it or
any other law restricting the authority, inherent in a court of justice, to pursue a course of
action reasonably calculated to bring out the truth."

But we made it clear that the "defendant can not, as a matter of right, compel the complaint
and his witnesses to repeat in his presence what they had said at the preliminary examination
before the issuance of the order of arrest." We called attention to the fact that "the
constitutional right of an accused to be confronted by the witnesses against him does not
apply to preliminary hearings' nor will the absence of a preliminary examination be an
infringement of his right to confront witnesses." As a matter of fact, preliminary investigation
may be done away with entirely without infringing the constitutional right of an accused
under the due process clause to a fair trial.

The foregoing decision was rendered by a divided court. The minority went farther than the
majority and denied even any discretion on the part of the justice of the peace or judge
holding the preliminary investigation to compel the complainant and his witnesses to testify
anew.

7
GENERAL PRINCIPLES/RULE 1: PROCEDURAL LAWS APPL. TO PENDING
ACTIONS AT TIME OF PROMULGATION
G. R. No. 154061 January 25, 2012
PANAY RAILWAYS INC., Petitioner,
vs.
HEVA MANAGEMENT and DEVELOPMENT CORPORATION, PAMPLONA
AGRO-INDUSTRIAL CORPORATION, and SPOUSES CANDELARIA DAYOT
and EDMUNDO DAYOT, Respondents.
DECISION
SERENO, J.:
The present Petition stems from the dismissal by the Regional Trial Court (RTC) of Iloilo
City of a Notice of Appeal for petitioner’s failure to pay the corresponding docket fees.
The facts are as follows:
On 20 April 1982, petitioner Panay Railways Inc., a government-owned and controlled
corporation, executed a Real Estate Mortgage Contract covering several parcels of lands,
including Lot No. 6153, in favor of Traders Royal Bank (TRB) to secure ₱ 20 million worth
of loan and credit accommodations. Petitioner excluded certain portions of Lot No. 6153:
that already sold to Shell Co., Inc. referred to as 6153-B, a road referred to as 6153-C, and a
squatter area known as 6153-D.1
Petitioner failed to pay its obligations to TRB, prompting the bank to extra-judicially
foreclose the mortgaged properties including Lot No. 6153. On 20 January 1986, a Certificate
of Sale was issued in favor of the bank as the highest bidder and purchaser. Consequently,
the sale of Lot No. 6153 was registered with the Register of Deeds on 28 January 1986 and
annotated at the back of the transfer certificates of title (TCT) covering the mortgaged
properties.
Thereafter, TRB caused the consolidation of the title in its name on the basis of a Deed of
Sale and an Affidavit of Consolidation after petitioner failed to exercise the right to redeem
the properties. The corresponding TCTs were subsequently issued in the name of the bank.
On 12 February 1990, TRB filed a Petition for Writ of Possession against petitioner. During
the proceedings, petitioner, through its duly authorized manager and officer-in-charge and
with the assistance of counsel, filed a Manifestation and Motion to Withdraw Motion for
Suspension of the Petition for the issuance of a writ of possession.2 The pertinent portions of
the Manifestation and Motion state:
3. That after going over the records of this case and the case of Traders Royal Bank vs.
Panay Railway, Inc., Civil Case No. 18280, PRI is irrevocably withdrawing its Motion
for Suspension referred to in paragraph 1 above, and its Motion for Reconsideration
referred in paragraph 2 above and will accept and abide by the September 21, 1990
Order denying the Motion For Suspension;
4. That PRI recognizes and acknowledges petitioner (TRB) to be the registered
owner of Lot 1-A; Lot 3834; Lot 6153; Lot 6158; Lot 6159, and Lot 5 covered by
TCT No. T-84233; T-84234; T-84235; T-84236; T-84237, T-84238 and T-45724
respectively, free of liens and encumbrances, except that portion sold to Shell Co.
found in Lot 5. That Petitioner (TRB) as registered owner is entitled to peaceful
ownership and immediate physical possession of said real properties.
8
5. That PRI further acknowledges that the Provincial Sheriff validly foreclosed the
Real Estate Mortgage erected by PRI due to failure to pay the loan of ₱
20,000,000.00. That TRB was the purchaser of these lots mentioned in paragraph 4
above at Sheriff’s Auction Sale as evidenced by the Certificate of Sale dated January
20, 1986 and the Certificates of Titles issued to Petitioner;
6. That PRI further manifests that it has no past, present or future opposition to
the grant of the Writ of Possession to TRB over the parcels of land mentioned in
paragraph 4 above and subject of this Petition and even assuming "arguendo" that
it has, PRI irrevocably waives the same. That PRI will even assist TRB in securing
possession of said properties as witness against squatters, illegal occupants, and all
other possible claimants;
7. That upon execution hereof, PRI voluntarily surrenders physical possession and
control of the premises of these lots to TRB, its successors or its assigns, together
with all the buildings, warehouses, offices, and all other permanent improvements
constructed thereon and will attest to the title and possession of petitioner over said
real properties. (Emphasis supplied)
TCT No. T-84235 mentioned in the quoted portion above is Lot No. 6153, which is under
dispute.
It was only in 1994 that petitioner realized that the extrajudicial foreclosure included some
excluded properties in the mortgage contract. Thus, on 19 August 1994, it filed a Complaint
for Partial Annulment of Contract to Sell and Deed of Absolute Sale with Addendum;
Cancellation of Title No. T-89624; and Declaration of Ownership of Real Property with
Reconveyance plus Damages.3
It then filed an Amended Complaint4 on 1 January 1995 and again filed a Second Amended
Complaint5 on 8 December 1995.
Meanwhile, respondents filed their respective Motions to Dismiss on these grounds: (1)
petitioner had no legal capacity to sue; (2) there was a waiver, an abandonment and an
extinguishment of petitioner’s claim or demand; (3) petitioner failed to state a cause of action;
and (4) an indispensable party, namely TRB, was not impleaded.
On 18 July 1997, the RTC issued an Order6 granting the Motion to Dismiss of respondents.
It held that the Manifestation and Motion filed by petitioner was a judicial admission of
TRB’s ownership of the disputed properties. The trial court pointed out that the Manifestation
was executed by petitioner’s duly authorized representative with the assistance of counsel.
This admission thus operated as a waiver barring petitioner from claiming otherwise.
On 11 August 1997, petitioner filed a Notice of Appeal without paying the necessary docket
fees. Immediately thereafter, respondents filed a Motion to Dismiss Appeal on the ground of
nonpayment of docket fees.
In its Opposition,7 petitioner alleged that its counsel was not yet familiar with the revisions
of the Rules of Court that became effective only on 1 July 1997. Its representative was
likewise not informed by the court personnel that docket fees needed to be paid upon the
filing of the Notice of Appeal. Furthermore, it contended that the requirement for the payment
of docket fees was not mandatory. It therefore asked the RTC for a liberal interpretation of
the procedural rules on appeals.
On 29 September 1997, the RTC issued an Order8 dismissing the appeal citing Sec. 4 of Rule
419 of the Revised Rules of Court.
Petitioner thereafter moved for a reconsideration of the Order10 alleging that the trial court
lost jurisdiction over the case after the former had filed the Notice of Appeal. Petitioner also
alleged that the court erred in failing to relax procedural rules for the sake of substantial
justice.
On 25 November 1997, the RTC denied the Motion.11
On 28 January 1998, petitioner filed with the Court of Appeals (CA) a Petition for Certiorari
and Mandamus under Rule 65 alleging that the RTC had no jurisdiction to dismiss the Notice
of Appeal, and that the trial court had acted with grave abuse of discretion when it strictly
applied procedural rules.
On 29 November 2000, the CA rendered its Decision 12 on the Petition. It held that while the
failure of petitioner to pay the docket and other lawful fees within the reglementary period
was a ground for the dismissal of the appeal pursuant to Sec. 1 of Rule 50 of the Revised
Rules of Court, the jurisdiction to do so belonged to the CA and not the trial court. Thus,
appellate court ruled that the RTC committed grave abuse of discretion in dismissing the
appeal and set aside the latter’s assailed Order dated 29 September 1997.
Thereafter, respondents filed their respective Motions for Reconsideration.
It appears that prior to the promulgation of the CA’s Decision, this Court issued
Administrative Matter (A.M.) No. 00-2-10-SC which took effect on 1 May 2000, amending
Rule 4, Sec. 7 and Sec. 13 of Rule 41 of the 1997 Revised Rules of Court. The circular
expressly provided that trial courts may, motu proprio or upon motion, dismiss an appeal for
being filed out of time or for nonpayment of docket and other lawful fees within the
reglementary period. Subsequently, Circular No. 48-200013 was issued on 29 August 2000
and was addressed to all lower courts.
By virtue of the amendment to Sec. 41, the CA upheld the questioned Orders of the trial court
by issuing the assailed Amended Decision14 in the present Petition granting respondents’
Motion for Reconsideration.
The CA’s action prompted petitioner to file a Motion for Reconsideration alleging that SC
Circular No. 48-2000 should not be given retroactive effect. It also alleged that the CA should
consider the case as exceptionally meritorious. Petitioner’s counsel, Atty. Rexes V. Alejano,
explained that he was yet to familiarize himself with the Revised Rules of Court, which
became effective a little over a month before he filed the Notice of Appeal. He was thus not
aware that the nonpayment of docket fees might lead to the dismissal of the case.
application does not violate any right of a person adversely affected. Neither is it
constitutionally objectionable. The reason is that, as a general rule, no vested right may attach
to or arise from procedural laws and rules. It has been held that "a person has no vested right
in any particular remedy, and a litigant cannot insist on the application to the trial of his case,
whether civil or criminal, of any other than the existing rules of procedure."16 More so when,
as in this case, petitioner admits that it was not able to pay the docket fees on time. Clearly,
there were no substantive rights to speak of when the RTC dismissed the Notice of Appeal.
The argument that the CA had the exclusive jurisdiction to dismiss the appeal has no
merit.1âwphi1 When this Court accordingly amended Sec. 13 of Rule 41 through A.M. No.
00-2-10-SC, the RTC’s dismissal of the action may be considered to have had the imprimatur
of the Court. Thus, the CA committed no reversible error when it sustained the dismissal of
the appeal, taking note of its directive on the matter prior to the promulgation of its Decision.
As early as 1932, in Lazaro v. Endencia,17 we have held that the payment of the full amount
of the docket fees is an indispensable step for the perfection of an appeal. The Court acquires
jurisdiction over any case only upon the payment of the prescribed docket fees. 18
Moreover, the right to appeal is not a natural right and is not part of due process. It is merely
a statutory privilege, which may be exercised only in accordance with the law. 19
We have repeatedly stated that the term "substantial justice" is not a magic wand that would
automatically compel this Court to suspend procedural rules. Procedural rules are not to be
belittled or dismissed simply because their non-observance may result in prejudice to a
party’s substantive rights. Like all other rules, they are required to be followed, except only
for the most persuasive of reasons when they may be relaxed to relieve litigants of an injustice
not commensurate with the degree of their thoughtlessness in not complying with the
procedure prescribed.20
We cannot consider counsel’s failure to familiarize himself with the Revised Rules of Court
as a persuasive reason to relax the application of the Rules. It is well-settled that the
negligence of counsel binds the client. This principle is based on the rule that any act
performed by lawyers within the scope of their general or implied authority is regarded as an
act of the client. Consequently, the mistake or negligence of the counsel of petitioner may
result in the rendition of an unfavorable judgment against it. 21
WHEREFORE, in view of the foregoing, the Petition is DENIED for lack of merit.
SO ORDERED.

On 30 May 2002, the CA issued the assailed Resolution 15 denying petitioner’s Motion for
Reconsideration.

Hence, this Petition.

Petitioner alleges that the CA erred in sustaining the RTC’s dismissal of the Notice of Appeal.
Petitioner contends that the CA had exclusive jurisdiction to dismiss the Notice of Appeal at
the time of filing. Alternatively, petitioner argues that while the appeal was dismissible for
failure to pay docket fees, substantial justice demands that procedural rules be relaxed in this
case.

The Petition has no merit.

Statutes and rules regulating the procedure of courts are considered applicable to actions
pending and unresolved at the time of their passage. Procedural laws and rules are retroactive
in that sense and to that extent. The effect of procedural statutes and rules on the rights of a
litigant may not preclude their retroactive application to pending actions. This retroactive

9
GENERAL PRINCIPLES/RULE 1: RETROACTIVE APPLICATION
PROCEDURAL LAW: FRESH PERIOD RULE
G.R. No. 141524 September 14, 2005
DOMINGO NEYPES, LUZ FAUSTINO, ROGELIO FAUSTINO, LOLITO
VICTORIANO, JACOB OBANIA AND DOMINGO CABACUNGAN, Petitioners,
vs.
HON. COURT OF APPEALS, HEIRS OF BERNARDO DEL MUNDO, namely: FE,
CORAZON, JOSEFA, SALVADOR and CARMEN, all surnamed DEL MUNDO,
LAND BANK OF THE PHILIPPINES AND HON. ANTONIO N. ROSALES,
Presiding Judge, Branch 43, Regional Trial Court, Roxas, Oriental Mindoro,
Respondent.
DECISION
CORONA, J.:
Petitioners Domingo Neypes, Luz Faustino, Rogelio Faustino, Lolito Victoriano, Jacob
Obania and Domingo Cabacungan filed an action for annulment of judgment and titles of
land and/or reconveyance and/or reversion with preliminary injunction before the Regional
Trial Court, Branch 43, of Roxas, Oriental Mindoro, against the Bureau of Forest
Development, Bureau of Lands, Land Bank of the Philippines and the heirs of Bernardo del
Mundo, namely, Fe, Corazon, Josefa, Salvador and Carmen.
In the course of the proceedings, the parties (both petitioners and respondents) filed various
motions with the trial court. Among these were: (1) the motion filed by petitioners to declare
the respondent heirs, the Bureau of Lands and the Bureau of Forest Development in default
and (2) the motions to dismiss filed by the respondent heirs and the Land Bank of the
Philippines, respectively.
In an order dated May 16, 1997, the trial court, presided by public respondent Judge Antonio
N. Rosales, resolved the foregoing motions as follows: (1) the petitioners’ motion to declare
respondents Bureau of Lands and Bureau of Forest Development in default was granted for
their failure to file an answer, but denied as against the respondent heirs of del Mundo
because the substituted service of summons on them was improper; (2) the Land Bank’s
motion to dismiss for lack of cause of action was denied because there were hypothetical
admissions and matters that could be determined only after trial, and (3) the motion to dismiss
filed by respondent heirs of del Mundo, based on prescription, was also denied because there
were factual matters that could be determined only after trial.1
The respondent heirs filed a motion for reconsideration of the order denying their motion to
dismiss on the ground that the trial court could very well resolve the issue of prescription
from the bare allegations of the complaint itself without waiting for the trial proper.
In an order2 dated February 12, 1998, the trial court dismissed petitioners’ complaint on the
ground that the action had already prescribed. Petitioners allegedly received a copy of the
order of dismissal on March 3, 1998 and, on the 15th day thereafter or on March 18, 1998,
filed a motion for reconsideration. On July 1, 1998, the trial court issued another order
dismissing the motion for reconsideration3 which petitioners received on July 22, 1998. Five
days later, on July 27, 1998, petitioners filed a notice of appeal 4 and paid the appeal fees on
August 3, 1998.
On August 4, 1998, the court a quo denied the notice of appeal, holding that it was filed eight
days late.5 This was received by petitioners on July 31, 1998. Petitioners filed a motion for
reconsideration but this too was denied in an order dated September 3, 1998. 6
10
Via a petition for certiorari and mandamus under Rule 65 of the 1997 Rules of Civil
Procedure, petitioners assailed the dismissal of the notice of appeal before the Court of
Appeals.
In the appellate court, petitioners claimed that they had seasonably filed their notice of
appeal. They argued that the 15-day reglementary period to appeal started to run only on July
22, 1998 since this was the day they received the final order of the trial court denying their
motion for reconsideration. When they filed their notice of appeal on July 27, 1998, only five
days had elapsed and they were well within the reglementary period for appeal.7
On September 16, 1999, the Court of Appeals (CA) dismissed the petition. It ruled that the
15-day period to appeal should have been reckoned from March 3, 1998 or the day they
received the February 12, 1998 order dismissing their complaint. According to the appellate
court, the order was the "final order" appealable under the Rules. It held further:
Perforce the petitioners’ tardy appeal was correctly dismissed for the (P)erfection of an
appeal within the reglementary period and in the manner prescribed by law is jurisdictional
and non-compliance with such legal requirement is fatal and effectively renders the judgment
final and executory.8
Petitioners filed a motion for reconsideration of the aforementioned decision. This was
denied by the Court of Appeals on January 6, 2000.
In this present petition for review under Rule 45 of the Rules, petitioners ascribe the
following errors allegedly committed by the appellate court:
I
THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE
PETITIONERS’ PETITION FOR CERTIORARI AND MANDAMUS AND IN
AFFIRMING THE ORDER OF THE HON. JUDGE ANTONIO N. ROSALES WHICH
DISMISSED THE PETITIONERS’ APPEAL IN CIVIL CASE NO. C-36 OF THE
REGIONAL TRIAL COURT, BRANCH 43, ROXAS, ORIENTAL MINDORO, EVEN
AFTER THE PETITIONERS HAD PAID THE APPEAL DOCKET FEES.
II
THE HONORABLE COURT OF APPEALS LIKEWISE ERRED IN RULING AND
AFFIRMING THE DECISION OR ORDER OF THE RESPONDENT HON. ANTONIO M.
ROSALES THAT PETITIONERS’ APPEAL WAS FILED OUT OF TIME WHEN
PETITIONERS RECEIVED THE LAST OR FINAL ORDER OF THE COURT ON JULY
22, 1998 AND FILED THEIR NOTICE OF APPEAL ON JULY 27, 1998 AND PAID THE
APPEAL DOCKET FEE ON AUGUST 3, 1998.
III
THE HONORABLE COURT OF APPEALS FURTHER ERRED IN RULING THAT THE
WORDS "FINAL ORDER" IN SECTION 3, RULE 41, OF THE 1997 RULES OF CIVIL
PROCEDURE WILL REFER TO THE [FIRST] ORDER OF RESPONDENT JUDGE
HON. ANTONIO M. MORALES DATED FEBRUARY 12, 1998 INSTEAD OF THE
LAST AND FINAL ORDER DATED JULY 1, 1998 COPY OF WHICH WAS RECEIVED
BY PETITIONERS THROUGH COUNSEL ON JULY 22, 1998.
IV.
THE HONORABLE COURT OF APPEALS FINALLY ERRED IN FINDING THAT THE
DECISION IN THE CASE OF DENSO, INC. V. IAC, 148 SCRA 280, IS APPLICABLE
IN THE INSTANT CASE THEREBY IGNORING THE PECULIAR FACTS AND
CIRCUMSTANCES OF THIS CASE AND THE FACT THAT THE SAID DECISION
WAS RENDERED PRIOR TO THE ENACTMENT OF THE 1997 RULES OF CIVIL
PROCEDURE.9
The foregoing issues essentially revolve around the period within which petitioners should
have filed their notice of appeal.
First and foremost, the right to appeal is neither a natural right nor a part of due process. It is
merely a statutory privilege and may be exercised only in the manner and in accordance with
the provisions of law. Thus, one who seeks to avail of the right to appeal must comply with
the requirements of the Rules. Failure to do so often leads to the loss of the right to appeal. 10
The period to appeal is fixed by both statute and procedural rules. BP 129, 11 as amended,
provides:
Sec. 39. Appeals. – The period for appeal from final orders, resolutions, awards, judgments,
or decisions of any court in all these cases shall be fifteen (15) days counted from the notice
of the final order, resolution, award, judgment, or decision appealed from. Provided,
however, that in habeas corpus cases, the period for appeal shall be (48) forty-eight hours
from the notice of judgment appealed from. x x x
Rule 41, Section 3 of the 1997 Rules of Civil Procedure states:
SEC. 3. Period of ordinary appeal. ― The appeal shall be taken within fifteen (15) days
from the notice of the judgment or final order appealed from. Where a record on appeal
is required, the appellant shall file a notice of appeal and a record on appeal within thirty (30)
days from the notice of judgment or final order.
The period to appeal shall be interrupted by a timely motion for new trial or reconsideration.
No motion for extension of time to file a motion for new trial or reconsideration shall be
allowed. (emphasis supplied)
Based on the foregoing, an appeal should be taken within 15 days from the notice of judgment
or final order appealed from. A final judgment or order is one that finally disposes of a case,
leaving nothing more for the court to do with respect to it. It is an adjudication on the merits
which, considering the evidence presented at the trial, declares categorically what the rights
and obligations of the parties are; or it may be an order or judgment that dismisses an action. 12
As already mentioned, petitioners argue that the order of July 1, 1998 denying their motion
for reconsideration should be construed as the "final order," not the February 12, 1998 order
which dismissed their complaint. Since they received their copy of the denial of their motion
for reconsideration only on July 22, 1998, the 15-day reglementary period to appeal had not
yet lapsed when they filed their notice of appeal on July 27, 1998.
What therefore should be deemed as the "final order," receipt of which triggers the start of
the 15-day reglementary period to appeal ¾ the February 12, 1998 order dismissing the
complaint or the July 1, 1998 order dismissing the MR?
In the recent case of Quelnan v. VHF Philippines, Inc.,13 the trial court declared petitioner
Quelnan non-suited and accordingly dismissed his complaint. Upon receipt of the order of
dismissal, he filed an omnibus motion to set it aside. When the omnibus motion was filed,
12 days of the 15-day period to appeal the order had lapsed. He later on received another
order, this time dismissing his omnibus motion. He then filed his notice of appeal. But this
was likewise dismissed ― for having been filed out of time.
The court a quo ruled that petitioner should have appealed within 15 days after the dismissal
of his complaint since this was the final order that was appealable under the Rules. We
11
reversed the trial court and declared that it was the denial of the motion for reconsideration
of an order of dismissal of a complaint which constituted the final order as it was what ended
the issues raised there.
This pronouncement was reiterated in the more recent case of Apuyan v. Haldeman et al.14
where we again considered the order denying petitioner Apuyan’s motion for reconsideration
as the final order which finally disposed of the issues involved in the case.
Based on the aforementioned cases, we sustain petitioners’ view that the order dated July 1,
1998 denying their motion for reconsideration was the final order contemplated in the Rules.
We now come to the next question: if July 1, 1998 was the start of the 15-day reglementary
period to appeal, did petitioners in fact file their notice of appeal on time?
Under Rule 41, Section 3, petitioners had 15 days from notice of judgment or final order to
appeal the decision of the trial court. On the 15th day of the original appeal period (March
18, 1998), petitioners did not file a notice of appeal but instead opted to file a motion for
reconsideration. According to the trial court, the MR only interrupted the running of the 15-
day appeal period.15 It ruled that petitioners, having filed their MR on the last day of the 15-
day reglementary period to appeal, had only one (1) day left to file the notice of appeal upon
receipt of the notice of denial of their MR. Petitioners, however, argue that they were entitled
under the Rules to a fresh period of 15 days from receipt of the "final order" or the order
dismissing their motion for reconsideration.
In Quelnan and Apuyan, both petitioners filed a motion for reconsideration of the decision
of the trial court. We ruled there that they only had the remaining time of the 15-day appeal
period to file the notice of appeal. We consistently applied this rule in similar cases, 16
premised on the long-settled doctrine that the perfection of an appeal in the manner and
within the period permitted by law is not only mandatory but also jurisdictional. 17 The rule
is also founded on deep-seated considerations of public policy and sound practice that, at risk
of occasional error, the judgments and awards of courts must become final at some definite
time fixed by law.18
Prior to the passage of BP 129, Rule 41, Section 3 of the 1964 Revised Rules of Court read:
Sec. 3. How appeal is taken. — Appeal maybe taken by serving upon the adverse party
and filing with the trial court within thirty (30) days from notice of order or judgment,
a notice of appeal, an appeal bond, and a record on appeal. The time during which a
motion to set aside the judgment or order or for new trial has been pending shall be deducted,
unless such motion fails to satisfy the requirements of Rule 37.
But where such motion has been filed during office hours of the last day of the period herein
provided, the appeal must be perfected within the day following that in which the party
appealing received notice of the denial of said motion.19 (emphasis supplied)
According to the foregoing provision, the appeal period previously consisted of 30 days. BP
129, however, reduced this appeal period to 15 days. In the deliberations of the Committee
on Judicial Reorganization20 that drafted BP 129, the raison d’ etre behind the amendment
was to shorten the period of appeal21 and enhance the efficiency and dispensation of justice.
We have since required strict observance of this reglementary period of appeal. Seldom have
we condoned late filing of notices of appeal,22 and only in very exceptional instances to better
serve the ends of justice.
In National Waterworks and Sewerage Authority and Authority v. Municipality of
Libmanan,23 however, we declared that appeal is an essential part of our judicial system and
the rules of procedure should not be applied rigidly. This Court has on occasion advised the
lower courts to be cautious about not depriving a party of the right to appeal and that every
party litigant should be afforded the amplest opportunity for the proper and just disposition with dispatch and to have judgments of courts become final at some definite time, we
of his cause, free from the constraint of technicalities. likewise aspire to deliver justice fairly.

In de la Rosa v. Court of Appeals,24 we stated that, as a rule, periods which require litigants
to do certain acts must be followed unless, under exceptional circumstances, a delay in the
filing of an appeal may be excused on grounds of substantial justice. There, we condoned the
delay incurred by the appealing party due to strong considerations of fairness and justice.
In setting aside technical infirmities and thereby giving due course to tardy appeals, we have
not been oblivious to or unmindful of the extraordinary situations that merit liberal
application of the Rules. In those situations where technicalities were dispensed with, our
decisions were not meant to undermine the force and effectivity of the periods set by law.
But we hasten to add that in those rare cases where procedural rules were not stringently
applied, there always existed a clear need to prevent the commission of a grave injustice. Our
judicial system and the courts have always tried to maintain a healthy balance between the
strict enforcement of procedural laws and the guarantee that every litigant be given the full
opportunity for the just and proper disposition of his cause.25
In this case, the new period of 15 days eradicates the confusion as to when the 15-day appeal
period should be counted – from receipt of notice of judgment (March 3, 1998) or from
receipt of notice of "final order" appealed from (July 22, 1998).
To recapitulate, a party litigant may either file his notice of appeal within 15 days from receipt
of the Regional Trial Court’s decision or file it within 15 days from receipt of the order (the
"final order") denying his motion for new trial or motion for reconsideration. Obviously, the
new 15-day period may be availed of only if either motion is filed; otherwise, the decision
becomes final and executory after the lapse of the original appeal period provided in Rule
41, Section 3.
Petitioners here filed their notice of appeal on July 27, 1998 or five days from receipt of the
order denying their motion for reconsideration on July 22, 1998. Hence, the notice of appeal
was well within the fresh appeal period of 15 days, as already discussed. 34

The Supreme Court may promulgate procedural rules in all courts.26 It has the sole We deem it unnecessary to discuss the applicability of Denso (Philippines), Inc. v. IAC35
prerogative to amend, repeal or even establish new rules for a more simplified and since the Court of Appeals never even referred to it in its assailed decision.
inexpensive process, and the speedy disposition of cases. In the rules governing appeals to it
WHEREFORE, the petition is hereby GRANTED and the assailed decision of the Court
and to the Court of Appeals, particularly Rules 42,27 4328 and 45,29 the Court allows
of Appeals REVERSED and SET ASIDE. Accordingly, let the records of this case be
extensions of time, based on justifiable and compelling reasons, for parties to file their
remanded to the Court of Appeals for further proceedings.
appeals. These extensions may consist of 15 days or more.
No costs.
To standardize the appeal periods provided in the Rules and to afford litigants fair
opportunity to appeal their cases, the Court deems it practical to allow a fresh period of 15 SO ORDERED.
days within which to file the notice of appeal in the Regional Trial Court, counted from
receipt of the order dismissing a motion for a new trial or motion for reconsideration. 30

Henceforth, this "fresh period rule" shall also apply to Rule 40 governing appeals from the
Municipal Trial Courts to the Regional Trial Courts; Rule 42 on petitions for review from
the Regional Trial Courts to the Court of Appeals; Rule 43 on appeals from quasi-judicial
agencies31 to the Court of Appeals and Rule 45 governing appeals by certiorari to the
Supreme Court.32 The new rule aims to regiment or make the appeal period uniform, to be
counted from receipt of the order denying the motion for new trial, motion for reconsideration
(whether full or partial) or any final order or resolution.

We thus hold that petitioners seasonably filed their notice of appeal within the fresh period
of 15 days, counted from July 22, 1998 (the date of receipt of notice denying their motion
for reconsideration). This pronouncement is not inconsistent with Rule 41, Section 3 of the
Rules which states that the appeal shall be taken within 15 days from notice of judgment or
final order appealed from. The use of the disjunctive word "or" signifies disassociation and
independence of one thing from another. It should, as a rule, be construed in the sense in
which it ordinarily implies.33 Hence, the use of "or" in the above provision supposes that the
notice of appeal may be filed within 15 days from the notice of judgment or within 15 days
from notice of the "final order," which we already determined to refer to the July 1, 1998
order denying the motion for a new trial or reconsideration.

Neither does this new rule run counter to the spirit of Section 39 of BP 129 which shortened
the appeal period from 30 days to 15 days to hasten the disposition of cases. The original
period of appeal (in this case March 3-18, 1998) remains and the requirement for strict
compliance still applies. The fresh period of 15 days becomes significant only when a party
opts to file a motion for new trial or motion for reconsideration. In this manner, the trial court
which rendered the assailed decision is given another opportunity to review the case and, in
the process, minimize and/or rectify any error of judgment. While we aim to resolve cases

12
GENERAL PRINCIPLES/RULE 1: RETROACTIVE APPLICATION
PROCEDURAL LAW: FRESH PERIOD RULE
G.R. No. 194702, April 20, 2015
SAN LORENZO RUIZ BUILDERS AND DEVELOPERS GROUP, INC. AND
OSCAR VIOLAGO, Petitioners, v. MA. CRISTINA F. BAYANG, Respondent.
DECISION
BRION, J.:
This is a petition for review on certiorari assailing the July 23, 2010 decision1 and the
December 2, 2010 resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 100332. The
CA affirmed the resolutions dated November 17, 2006 and July 26, 2007 of the Office of
President in O.P. Case No. 06-D-160, which dismissed the appeal of petitioners San Lorenzo
Ruiz Builders and Developers Group, Inc. (SLR Builders) and Oscar Violago for having been
filed out of time.
Facts
On April 15, 2000, petitioner SLR Builders (then known as Violago Builders, Inc), as seller,
and respondent Ma. Cristina F. Bayang (Cristina), as buyer, entered into a "contract to sell"
of a sixty (60)-square meter lot in Violago Homes Parkwoods Subdivision, located in
Barangay Payatas, Quezon City.
Upon full payment of the monthly amortizations on the purchased lot, Cristina demanded
from SLR Builders the execution of the deed of absolute sale and the lot's certificate of title
but the latter failed to deliver, prompting Cristina to file a complaint for specific
performance and damages against SLR Builders and its President, Oscar Violago
(petitioners) before the Housing and Land Use Regulatory Board (HLURB).
In a decision3 dated February 16, 2004, Housing and Land Use Arbiter Atty. Joselito F.
Melchor ruled in Cristina's favor, to wit:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. Ordering the respondents (referring to the petitioners) to execute the Deed of
Absolute Sale of the subject property in the name of the complainant (referring to
the respondent) and deliver the title thereof free from all liens and encumbrances;
2. In the alternative, in case of legal and physical impossibility of the respondents to
perform the aforementioned acts in the preceding paragraph, respondent San
Lorenzo Ruiz Builders and Developers Group, Incorporated is hereby ordered to
reimburse to the complainant the amount of THREE HUNDRED TWENTY
FOUR THOUSAND EIGHT HUNDRED SIXTY FIVE PESOS & 16/100
(P324,865.16) with legal interest of twelve percent (12%) per annum to be
computed from the filing of the complaint on November 04, 2002 until fully paid;
and
3. Ordering respondent San Lorenzo Ruiz Builders and Developers Group,
Incorporated to pay the following sums:
a. FIVE THOUSAND PESOS (P5,000.00) as moral damages;
b. FIVE THOUSAND PESOS (P5,000.00) as exemplary damages;
c. FIVE THOUSAND PESOS (P5,000.00) as attorney's fees;
d. An administrative fine of TEN THOUSAND PESOS (P10,000.00) payable to
this Office fifteen (15) days upon receipt of this decision, for violation of
Section 18 in relation to Section 38 of PD 957.
SO ORDERED.4
13
The petitioners appealed Arbiter Melchor's decision to the HLURB Board of Commissioners.
The Board dismissed5 and denied,6 respectively, the petitioners' appeal and subsequent
motion for reconsideration. The petitioners then brought their case to the Office of the
President (OP), which was docketed as O.P. Case No. 06-D-160.
In a resolution7 dated November 17, 2006, the OP dismissed the petitioners' appeal for having
been filed out of time. The OP's resolution stated:
A review of the records shows that the HLURB Decision affirming the Arbiter's
decision was received by the respondents/appellants (referring to the petitioners) on July
27, 2005. On that date, the 15-day prescriptive period within which to file an appeal
began to run. Instead of preparing an appeal, respondents-appellants opted to file a
Motion for Reconsideration on August 10, 2005. Their filing of the said motion
interrupted the period of appeal by that time, however, fourteen (14) days had already
elapsed.
On April 17, 2006, respondents-appellants received the Resolution denying their Motion
for Reconsideration. Following the above rules, respondents-appellants have only one
(1) day left, or until April 18, 2006, within which to file their notice of appeal to this
Office. Unfortunately, they were able to do so only on April 27, 2006, or nine (9) days
late8 (Emphasis supplied.)
The petitioners moved to reconsider and argued that the "fresh period rule" enunciated in the
case of Domingo Neypes, et at. v. Court of Appeals, et al.9 should be applied to their case.
The OP, in a resolution10 dated July 26, 2007, denied the petitioners' motion with finality,
stating that the "fresh period rule" applies only to judicial appeals and not to administrative
appeals, such as in petitioners' case. The petitioners then appealed to the CA via petition for
review under Rule 43 of the Rules of Court.
In its assailed decision, the CA denied the petitioners' petition for review. The CA, likewise,
denied the petitioners' motion for reconsideration; hence, the filing of the present petition for
review on certiorari with this Court.
Issue
Whether the "fresh period rule" in Neypes applies to administrative appeals, such as an appeal
filed from a decision of the HLURB Board of Commissioners to the Office to the President.
Our Ruling
We DENY the petition. It is settled that the "fresh period rule" in Neypes applies only to
judicial appeals and not to administrative appeals.
In Panolino v. Tajala,11 the Court was confronted with a similar issue of whether the "fresh
period rule" applies to an appeal filed from the decision or order of the DENR regional office
to the DENR Secretary, an appeal which is administrative in nature. We held in Panolino
that the "fresh period rule" only covers judicial proceedings under the 1997 Rules of Civil
Procedure:
The "fresh period rule" in Neypes declares:
To standardize the appeal periods provided in the Rules and to afford litigants fair
opportunity to appeal their cases, the Court deems it practical to allow a fresh period of 15
days within which to file the notice of appeal in the Regional Trial Court, counted from
receipt of the order dismissing a motion for a new trial or motion for reconsideration.
Henceforth, this "fresh period rule" shall also apply to Rule 40 governing appeals from the
Municipal Trial Courts to the Regional Trial Courts; Rule 42 on petitions for review from
the Regional Trial Courts to the Court of Appeals; Rule 43 on appeals from quasi-judicial
agencies to the Court of Appeals; and Rule 45 governing appeals by certiorari to the Supreme
Court. The new rule aims to regiment or make the appeal period uniform, to be counted from
receipt of the order denying the motion for new trial, motion for reconsideration (whether
full or partial) or any final order or resolution.
adverse decision of any agency/office, the said party has the only remaining balance of
the prescriptive period within which to appeal, reckoned from receipt of notice of the
decision denying his/her motion for reconsideration.12 (Emphasis supplied.)
Thus, in applying the above-mentioned rules to the present case, we find that the CA correctly
affirmed the OP in dismissing the petitioners' appeal for having been filed out of time.
WHEREFORE, we DENY the present petition for review on certiorari and AFFIRM the
decision dated July 23, 2010 and resolution dated December 2, 2010 of the Court of Appeals
in CA-G.R. SP No. 100332.
SO ORDERED.

xxxx

As reflected in the above-quoted portion of the decision in Neypes, the "fresh period rule"
shall apply to Rule 40_(appeals from the Municipal Trial Courts to the Regional Trial
Courts); Rule 41 (appeals from the Regional Trial Courts to the Court of Appeals or Supreme
Court); Rule 42 (appeals from the Regional Trial Courts to the Court of Appeals); Rule 43
(appeals from quasi-judicial agencies to the Court of Appeals); and Rule 45 (appeals by
certiorari to the Supreme Court). Obviously, these Rules cover judicial proceedings under
the 1997 Rules of Civil Procedure.

Petitioner's present case is administrative in nature involving an appeal from the decision or
order of the DENR regional office to the DENR Secretary. Such appeal is indeed governed
by Section 1 of Administrative Order No. 87, Series of 1990. As earlier quoted, Section 1
clearly provides that if the motion for reconsideration is denied, the movant shall perfect his
appeal "during the remainder of the period of appeal, reckoned from receipt of the resolution
of denial;" whereas if the decision is reversed, the adverse party has a fresh 15-day period to
perfect his appeal. (Emphasis supplied.)

In this case, the subject appeal, i.e., appeal from a decision of the HLURB Board of
Commissioners to the OP, is not judicial but administrative in nature; thus, the "fresh period
rule" in Neypes does not apply.

As aptly pointed out by the OP, the rules and regulations governing appeals from decisions
of the HLURB Board of Commissioners to the OP are Section 2, Rule XXI of HLURB
Resolution No. 765, series of 2004, in relation to Paragraph 2, Section 1 of Administrative
Order No. 18, series of 1987:

Section 2, Rule XXI of the HLURB Resolution No. 765, series of 2004, prescribing the rules
and regulations governing appeals from decisions of the Board of Commissioners to the
Office of the President, pertinently reads:

Section 2. Appeal. - Any party may, upon notice to the Board and the other party, appeal a
decision rendered by the Board of Commissioners to the Office of the President within fifteen
(15) days from receipt thereof, in accordance with P.D. No. 1344 and A.O. No. 18 Series of
1987.

The pendency of the motion for reconsideration shall suspend the running of the period of
appeal to the Office of the President.

Corollary thereto, paragraph 2, Section 1 of Administrative Order No. 18, series of 1987,
provides that in case the aggrieved party files a motion for reconsideration from an

14
GENERAL PRINCIPLES/RULE 1: LIBERAL CONSTRUCTION OF
PROCEDURAL RULES
G.R. No. 192650 October 24, 2012
FELIX MARTOS, JIMMY ECLANA, RODEL PILONES, RONALDO NOVAL,
Petitioners,
vs.
NEW SAN JOSE BUILDERS, INC., Respondent.
DECISION
MENDOZA, J.:
Questioned in this Petition for Review is the July 31, 2009 Decision1 of the Court of Appeals
(CA) and its June 17, 2010 Resolution,2 which reversed and set aside the July 30, 2008
Decision3 and October 28, 2008, Resolution4 of the National Labor Relations Commission
(NLRC); and reinstated the May 23, 2003 Decision5 of the Labor Arbiter (LA). The
dispositive portion of the CA Decision reads:
WHEREFORE, decision is hereby rendered, as follows:
1. Declaring the complainant Felix Martos was illegally dismissed and ordering
respondent New San Jose Builders, Inc. to pay him his separation pay, backwages,
salary differentials, 13th month pay, service incentive leave pay, and attorney’s fees in
the total amount of TWO HUNDRED SIXTY THOUSAND SIX HUNDRED SIXTY
ONE PESOS and 50/1000 (P260, 661.50).
The awards for separation pay, backwages and the corresponding attorney’s fees are
subject to further computation until the decision in this case becomes final and
executory; and
2. Dismissing the complaints/claim of the other complainants without prejudice.
SO ORDERED.6
The Facts
The factual and procedural antecedents were succinctly summarized by the CA as follows:
New San Jose Builders, Inc. (hereafter petitioner) is a domestic corporation duly organized
and existing under the laws of the Philippines and is engaged in the construction of road,
bridges, buildings, and low cost houses primarily for the government. One of the projects of
petitioner is the San Jose Plains Project (hereafter SJPP), located in Montalban, Rizal. SJPP,
which is also known as the "Erap City" calls for the construction of low cost housing, which
are being turned over to the National Housing Authority to be awarded to deserving poor
families. Private respondents alleged that, on various dates, petitioner hired them on different
positions.
Sometime in 2000, petitioner was constrained to slow down and suspend most of the works
on the SJPP project due to lack of funds of the National Housing Authority. Thus, the workers
were informed that many of them [would] be laid off and the rest would be reassigned to
other projects. Juan Villaber, Terso Garay, Rowell Batta, Pastor Pantig, Rafael Villa, and
15
Melvin Garay were laid off. While on the other hand, Felix Martos, Ariel Dominguez, Greg
Bisonia, Allan Caballera, Orlando Limos, Mandy Mamalateo, Eric Castrence, Anthony
Molina, and Roy Silva were among those who were retained and were issued new
appointment papers to their respective assignments, indicating therein that they are project
employees. However, they refused to sign the appointment papers as project employees and
subsequently refused to continue to work.
On different dates, three (3) Complaints for Illegal Dismissal and for money claims were
filed before the NLRC against petitioner and Jose Acuzar, by private respondents who
claimed to be the former employees of petitioner, to wit:
1. Complaint dated March 11, 2002, entitled "Felix Martos, et al. vs. NSJBI",
docketed as NLRC-NCR Case No. 03-01639-2002;
2. Complaint dated July 9, 2002, entitled "Jimmy Campana, et al. vs. NSJBI,"
docketed as NLRC-NCR Case No. 07-04969-2002;
3. Complaint dated July 4, 2002, entitled "Greg Bisonia, et al. vs. NSJBI", docketed as
NLRC-NCR Case No. 07-02888-2002.
Petitioner denies that private respondents were illegally dismissed, and alleged that they were
project employees, whose employments were automatically terminated upon completion of
the project for which they were hired. On the other hand, private respondents claim that
petitioner hired them as regular employees, continuously and without interruption, until their
dismissal on February 28, 2002.
Subsequently, the three Complaints were consolidated and assigned to Labor Arbiter
Facundo Leda.7
Ruling of the Labor Arbiter
As earlier stated, on May 23, 2003, the LA handed down a decision declaring, among others,
that petitioner Felix Martos (Martos) was illegally dismissed and entitled to separation pay,
backwages and other monetary benefits; and dismissing, without prejudice, the
complaints/claims of the other complainants (petitioners).
Ruling of The NLRC
Both parties appealed the LA decision to the NLRC. Petitioners appealed that part which
dismissed all the complaints, without prejudice, except that of Martos. On the other hand,
New San Jose Builders, Inc. (respondent) appealed that part which held that Martos was its
regular employee and that he was illegally dismissed.
On July 30, 2008, the NLRC resolved the appeal by dismissing the one filed by respondent
and partially granting that of the other petitioners. The dispositive portion of the NLRC
decision reads as follows:
WHEREFORE, premises considered, respondent’s appeal is DISMISSED for lack of merit.
The appeal of the complainants is, however, PARTIALLY GRANTED by modifying the 23
May 2003 Decision of the Labor Arbiter Facundo L. Leda, in that, respondents are ordered
to reinstate all the complainants to their former positions, without loss of seniority rights and
with full backwages, counted from the time their compensation was withheld from them until
actual reinstatement.
Respondents are likewise ordered to pay complainants their salary differentials, service
incentive leave pay, and 13th month pay, using, as basis, the computation made on the claims
of complainant Felix Martos.
In all other aspects, the Decision is AFFIRMED.
SO ORDERED.8
Ruling Of The CA
After the denial of its motion for reconsideration, respondent filed before the CA a petition
for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as amended, raising the
following issues:
I) The public respondent has committed grave abuse of discretion in holding that the
private respondents were regular employees and, thus, have been illegally dismissed.
II) The public respondent has committed grave abuse of discretion in reviving the
complaints of the other private respondents despite their failure to verify the same.
III) The public respondent has committed grave abuse of discretion when it upheld the
findings of the Labor Arbiter granting relief in favor of those supposed complainants
who did not even render service to the petitioner and, hence, are not on its payroll.
On July 31, 2009, the CA rendered a decision reversing and setting aside the July 30, 2008
Decision and the October 28, 2008 Resolution of the NLRC and reinstating the May 23, 2003
Decision of the LA. The dispositive portion of the CA decision reads:
WHEREFORE, premises considered, the present petition is hereby GRANTED.
Accordingly, the assailed Resolution dated October 28, 2008 of public respondent National
Labor Relations Commission is REVERSED and SET ASIDE, and the Decision dated May
23, 2003 of Labor Arbiter Facundo L. Leda, is hereby ordered reinstated.
SO ORDERED.9
The CA explained that the NLRC committed grave abuse of discretion in reviving the
complaints of petitioners despite their failure to verify the same. Out of the 102 complainants,
only Martos verified the position paper and his counsel never offered any explanation for his
failure to secure the verification of the others. The CA also held that the NLRC gravely
abused its discretion when it took cognizance of petitioners’ appeal because Rule 41, Section
1(h) of the 1997 Rules of Civil Procedure, as amended, which is suppletory, provides that no
appeal may be taken from an order dismissing an action without prejudice.
Nevertheless, the CA stated that the factual circumstances of Martos’ employment and his
dismissal from work could not equally apply to petitioners because they were not similarly
situated. The NLRC did not even bother to look at the evidence on record and inappropriately
granted monetary awards to petitioners who had either denied having filed a case or
withdrawn the case against respondent. According to the CA, the position papers should have
covered only those claims and causes of action raised in the complaint excluding those that
might have been amicably settled.
With respect to Martos, the CA ruled that he was a regular employee of respondent and his
termination was illegal. It explained that Martos should have been considered a regular
employee because there was no indication that he was merely a project employee when he
was hired. To show otherwise, respondent should have presented his employment contract
for the alleged specific project and the successive employment contracts for the different
projects or phases for which he was hired. In the absence of such document, he could not be
considered such an employee because his work was necessary and desirable to the
respondent’s usual business and that he was not required to sign any employment contract
fixing a definite period or duration of his engagement. Thus, Martos already attained the
status of a regular employee. Moreover, the CA noted that respondent did not report the
16
termination of Martos’ supposed project employment to the Department of Labor and
Employment (DOLE), as required under Department Order No. 19.
Being a regular employee, the CA concluded that he was constructively dismissed when he
was asked to sign a new appointment paper indicating therein that he was a project employee
and that his appointment would be co-terminus with the project.
Not in conformity with the CA decision, petitioners filed this petition anchored on the
following
A
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS AND THE
LABOR ARBITER BELOW GRAVELY ERRED IN DISMISSING THE
COMPLAINTS OF THE NINETY NINE (99) PETITIONERS DUE TO FAILURE OF
THE LATTER TO VERIFY THEIR POSITION PAPER WHEN, OBVIOUSLY,
SUCH TECHNICALITY SHOULD NOT HAVE BEEN RESORTED TO BY THEM
AS IT WILL DEPRIVE THESE PETITIONERS OF THEIR PROPERTY RIGHT TO
WORK.
B
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS AND THE
LABOR ARBITER BELOW GRAVELY ERRED IN NOT ORDERING THE
REINSTATEMENT OF PETITIONER MARTOS AND THE OTHER 99
PETITIONERS WHEN, OBVIOUSLY, AND AS FOUND BY THEM, THE
DISMISSAL OF MARTOS IS ILLEGAL WHICH WOULD WARRANT HIS
REINSTATEMENT AND THE GRANT TO HIM OF FULL BACKWAGES AND
OTHER EMPLOYEES’ BENEFITS.
C
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN NOT ORDERING THE RESPONDENTS TO PAY THE PETITIONERS
ACTUAL, MORAL AND EXEMPLARY DAMAGES.
Position of Petitioners
Petitioners basically argue that the CA was wrong in affirming the dismissal of their
complaints due to their failure to verify their position paper. They insist that the lack of
verification of a position paper is only a formal and not a jurisdictional defect. Hence, it was
not fatal to their cause of action considering that the CA could have required them to submit
the needed verification.
The CA overlooked the fact that all of them verified their complaints by declaring under oath
relevant and material facts such as their names, addresses, employment status, salary rates,
facts, causes of action, and reliefs common to all of them. The information supplied in their
complaints is sufficient to prove their status of employment and entitlement of their monetary
claims. In the adjudication of labor cases, the adherence to stringent technical rules may be
relaxed in the interest of the working man. Moreover, respondent failed to adduce evidence
of payment of their money claims.
Finally, petitioners argue that they and Martos were similarly situated. The award of
separation pay instead of reinstatement to an illegally dismissed employee was improper
because the strained relations between the parties was not clearly established. Moreover, they
are entitled to actual, moral and exemplary damages for respondent’s illegal act of violating
labor standard laws, the minimum wage law and the 13th month pay law.
Position of Respondents
On the other hand, respondent principally counters that the CA and the LA 1) did not err in
dismissing the complaints of the 88 petitioners who failed to verify their position paper,
without prejudice; 2) correctly ruled that Martos and the 88 petitioners concerned were not
entitled to reinstatement; and 3) correctly ruled that petitioners were not entitled to an award
of actual, moral and exemplary damages.
Petitioners have the propensity to disregard the mandatory provisions of the 2005 Revised
Rules of Procedure of the NLRC (NLRC Rules) which require the parties to submit
simultaneously their verified position papers with supporting documents and affidavits. In
the proceedings before the LA, the complaints of the 99 workers were dismissed because
they failed to verify or affix their signatures to the position paper filed with the LA.
While it is true that the NLRC Rules must be liberally construed and that the NLRC is not
bound by the technicalities of law and procedure, it should not be the first to arbitrarily
disregard specific provisions of the rules which are precisely intended to assist the parties in
obtaining just, expeditious and inexpensive settlement of labor disputes. It was only Felix
Martos who verified their position paper and their memorandum of appeal. It was only he
alone who was vigilant in looking after his interest and enforcing his rights. Petitioners
should be considered to have waived their rights and interests in the case for their consistent
neglect and passive attitude.
Moreover, Martos was never authorized by any of his fellow complainants through a special
power of attorney or other document in the proceedings to represent them before the LA and
the NLRC. His acts and verifications were made only in his own personal capacity and did
not bind or benefit petitioners. There is only one logical reason why a majority of them failed
to verify their position paper, their appeal and now their petition: they were not in any way
employees of the respondent. They were total strangers to the respondent. They even refused
to identify themselves during the proceedings by their failure to appear thereat. Hence, it is
too late for the others to participate in the fruits, if any, of this litigation.
Finally, the reinstatement being sought by Martos and the others was no longer practicable
because of the strained relation between the parties. Petitioners can no longer question this
fact. This issue was never raised or taken up on appeal before the NLRC. It was only when
the petitioners lost in the appeal in the CA that they first raised the issue of strained relation.
Moreover, no proof of actual damages was presented by the petitioners. There is no clear and
convincing evidence on record showing that the termination of an employee’s services had
been carried out in an arbitrary, capricious or malicious manner.
The Court’s Ruling
The Court is basically asked to resolve two (2) issues: 1 whether or not the CA was correct
in dismissing the complaints filed by those petitioners who failed to verify their position
papers; and 2 whether or not Martos should be reinstated.
Regarding the first issue, the Court agrees with the respondent.
Sections 4 and 5 of Rule 7 of the 1997 Rules of Civil Procedure provide:
SEC. 4. Verification. – Except when otherwise specifically required by law or rule, pleadings
need not be under oath, verified or accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read the pleadings and that the
allegations therein are true and correct of his personal knowledge or based on authentic
records.
17
A pleading required to be verified which contains a verification based on "information and
belief" or upon "knowledge, information and belief" or lacks a proper verification, shall be
treated as an unsigned pleading.
SEC. 5. Certification against forum shopping. – The plaintiff or principal party shall certify
under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a
sworn certification annexed thereto and simultaneously filed therewith:
(a) that he has not theretofore commenced any action or filed any claim involving the same
issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no
such other action or claim is pending therein; (b) if there is such other pending action or
claim, a complete statement of the present status thereof; and (c) if he should thereafter learn
that the same or similar action or claim has been filed or is pending, he shall report that fact
within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory
pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by mere amendment
of the complaint or other initiatory pleading but shall be cause for the dismissal of the case
without prejudice, unless otherwise provided, upon motion and after hearing. The submission
of a false certification or non-compliance with any of the undertakings therein shall constitute
indirect contempt of court, without prejudice to the corresponding administrative and
criminal actions. If the acts of the party or his counsel clearly constitute willful and deliberate
forum shopping, the same shall be ground for summary dismissal with prejudice and shall
constitute direct contempt, as well as a cause for administrative sanctions. x x x. [Emphases
supplied]
The verification requirement is significant, as it is intended to secure an assurance that the
allegations in the pleading are true and correct and not the product of the imagination or a
matter of speculation, and that the pleading is filed in good faith. 10 Verification is deemed
substantially complied with when, as in this case, one who has ample knowledge to swear to
the truth of the allegations in the complaint or petition signs the verification, and when
matters alleged in the petition have been made in good faith or are true and correct. 11
The absence of a proper verification is cause to treat the pleading as unsigned and
dismissible.12
The lone signature of Martos would have been sufficient if he was authorized by his co-
petitioners to sign for them. Unfortunately, petitioners failed to adduce proof that he was so
authorized. The complaints of the other parties in the case of Nellie Vda. De Formoso v. v.
PNB13 suffered a similar fate. Thus:
Admittedly, among the seven (7) petitioners mentioned, only Malcaba signed the verification
and certification of non-forum shopping in the subject petition. There was no proof that
Malcaba was authorized by his co-petitioners to sign for them. There was no special power
of attorney shown by the Formosos authorizing Malcaba as their attorney-in-fact in filing a
petition for review on certiorari. Neither could the petitioners give at least a reasonable
explanation as to why only he signed the verification and certification of non-forum
shopping.
The liberal construction of the rules may be invoked in situations where there may be some
excusable formal deficiency or error in a pleading, provided that the same does not subvert
the essence of the proceeding and it at least connotes a reasonable attempt at compliance with
the rules. Besides, fundamental is the precept that rules of procedure are meant not to thwart
but to facilitate the attainment of justice; hence, their rigid application may, for deserving
reasons, be subordinated by the need for an apt dispensation of substantial justice in the
normal course. They ought to be relaxed when there is subsequent or even substantial
compliance, consistent with the policy of liberality espoused by Rule 1, Section 6. 14 Not SO ORDERED.
being inflexible, the rule on verification allows for such liberality.15

Considering that the dismissal of the other complaints by the LA was without prejudice, the
other complainants should have taken the necessary steps to rectify their procedural mistake
after the decision of the LA was rendered. They should have corrected this procedural flaw
by immediately filing another complaint with the correct verification this time. Surprisingly,
they did not even attempt to correct this technical blunder. Worse, they committed the same
procedural error when they filed their appeal16 with the NLRC.

Under the circumstances, the Court agrees with the CA that the dismissal of the other
complaints were brought about by the own negligence and passive attitude of the
complainants themselves. In Formoso, the Court further wrote:

The petitioners were given a chance by the CA to comply with the Rules when they filed
their motion for reconsideration, but they refused to do so. Despite the opportunity given to
them to make all of them sign the verification and certification of non-forum shopping, they
still failed to comply. Thus, the CA was constrained to deny their motion and affirm the
earlier resolution.

The Court can only do so much for them.

Most probably, as the list17 submitted is not complete with the information as to when each
started and when each was dismissed there must be some truth in the claim of respondent
that those complainants who failed to affix their signatures in the verification were either not
employees of respondent at all or they simply refused to prosecute their complaints. In its
position paper,18 respondent alleged that, aside from the four (4) complainants who withdrew
their complaints, only 17 out of the more or less 104 complainants appeared on its records as
its former project employees or at least known by it to have worked in one of its construction
projects. From the sworn statements executed by Felix Yortas,19 Marvin Batta,20

Lito Bantillo,21 Gavino Felix Nicolas,22 and Romeo Pangacian Martos,23 they already
withdrew their complaints against respondent. Their status and cause of action not being clear
and proven, it is just not right that these complaints be considered as similarly situated as
Martos and entitled to the same benefits.

As to Martos, the Court agrees that the reinstatement being sought by him was no longer
practicable because of strained relation between the parties. Indeed, he can no longer question
this fact. This issue was never raised or taken up on appeal before the MLRC. It was only
after he lost the appeal in the CA that he raised it.

Thus, the Court deems it fair to award separation pay in lieu of reinstatement.1âwphi1 In
addition to his separation pay. Martos is also entitled to payment of full backwages, 13th
month pay, service incentive leave pay, and attorney’s fees.

The accepted doctrine is that separation pay may avail in lieu of reinstatement if
reinstatement is no longer practical or in the best interest of the parties. Separation pay in lieu
of reinstatement may likewise be awarded if the employee decides not to be reinstated.

Under the doctrine of stained relations, the payment of separation pay is considered an
acceptable alternative to reinstatement when the latter opinion is no longer desirable or
viable. On one hand, such payment liberates the employee from what could be highly
oppressive work environment. On the other hand, it release the employer from the grossly
unpalatable obligation of maintaining in its employ a worker it could no longer trust. 24

WHEREFORE, the petition is DENIED.

18
GENERAL PRINCIPLES/RULE 1: LIBERAL CONSTRUCTION OF
PROCEDURAL RULES
G.R. No. 191837 September 19, 2012
MARIA CONSOLACION RIVERA-PASCUAL, Petitioner,
vs.
SPOUSES MARILYN LIM and GEORGE LIM and the REGISTRY OF DEEDS OF
VALENZUELA CITY, Respondents.
REYES, J.:
This is a petition for review on certiorari assailing the Resolutions dated October 15, 20091
and March 11, 20102 of the Court of Appeals (CA) in CA-G.R. SP No. 109265.
The facts leading to the filing of this petition are undisputed.
Subject of the present controversy is a parcel of land with an approximate area of 4.4 hectares
and located at Bignay, Valenzuela City. The property is covered by Transfer Certificate of
Title (TCT) No. V-73892, registered in the names of George and Marilyn Lim (Spouses
Lim).
On September 8, 2004, Maria Consolacion Rivera-Pascual (Consolacion) filed before the
Office of the Regional Agrarian Reform Adjudicator (RARAD) for Region IV-A a petition
to be recognized as a tenant of a property located at Bignay, Valenzuela City against Danilo
Deato (Deato). At that time, the property, which has an approximate area of 4.4 hectares, was
covered by TCT No. 24759 under Deato’s name. During the pendency of the petition, Deato
sold the property to Spouses Lim. The sale was registered on December 21, 2004 leading to
the issuance of TCT No. V-73892 in favor of Spouses Lim. Considering this development,
Consolacion filed a motion on March 3, 2005 to implead Spouses Lim as respondents. 3
The petition, which was docketed as DARAB Case No. R-0400-0012-04, was granted
byRegional Adjudicator Conchita C. Miñas (RA Miñas) in a Decision 4 dated December 2,
2005, the dispositive portion of which states:
WHEREFORE, premises considered, judgment is hereby rendered:
1) Declaring that petitioner is the tenant of the subject landholding by succession from
her deceased father;
2) Declaring respondents spouses George and Marilyn Lim to have subrogated to the
rights and substituted to the obligation of spouses Danilo and Divina Deato;
3) Ordering the respondents and all persons claiming rights under them to maintain
petitioner in peaceful possession and cultivation of the agricultural land subject hereof;
4) Declaring petitioner to have the right to exercise the right of redemption of the subject
parcel of agricultural land pursuant to Section 12 of RA 3844 as amended; and
5) Dismissing the petition against Louie Cruz, Fire Force Agency and Danny Boy
Rivera for having no proximate tenurial relationship with the petitioner hence beyond
the jurisdictional ambit of this Office.
SO ORDERED.5
On July 7, 2006, the foregoing decision became final. 6 Upon Consolacion’s motion for
execution filed on January 7, 2008, RA Miñas issued a writ of execution on January 8, 2008. 7
On January 21, 2008, Consolacion filed a petition against Spouses Lim and the Registrar of
Deeds of Valenzuela City praying for the issuance of an order directing Spouses Lim to
accept the amount of ₱ 10,000,000.00 which she undertook to tender during the initial
19
hearing, declaring the property redeemed, and cancelling TCT No. V-73892.8 Consolacion
consigned with the RARAD the amount of ₱ 10,000,000.00 on March 3, 2008. 9
Consolacion’s petition, which was docketed as DARAB Case No. R-0400-001-08, was given
due course by RA Miñas in a Decision10 dated June 2, 2008, the dispositive portion of which
states:
WHEREFORE, foregoing premises considered, judgment is hereby rendered:
1. As prayed for, declaring that the landholding subject of the petition as lawfully
redeemed;
2. Ordering respondent spouses to accept and withdraw the amount of the redemption price
consigned with this Office which was deposited for safekeeping indicated in Manager’s
Check No. 0000004518 issued by Allied Bank in the name of Spouses Marilyn and George
Lim and/or DAR Adjudication Board Region IV-A in the amount of ten (10) million pesos;
3. Upon acceptance and the withdrawal of the redemption price as ordered in paragraph 2
hereof, ordering respondent spouses to execute a Deed of Redemption in favor of
petitioner;
4. In case of refusal and/or failure of respondent spouses to execute the Deed of
Redemption as ordered above, the Regional Clerk of the Board is hereby ordered to
execute a Deed of Redemption in the name of the petitioner; and
5. Directing the Register of Deeds for Valenzuela City to cause the cancellation of TCT
No. V-73892 registered in the name of respondent spouses Marilyn and George Lim and
a new one issued in the name of petitioner upon presentment of the Deed of Redemption.
SO ORDERED.11
On appeal, the Department of Agrarian Reform Adjudication Board (DARAB) issued a
Decision12 on February 18, 2009 reversing RA Miñas Decision dated June 2, 2008.
Specifically:
WHEREFORE, in view of the foregoing, the appealed Decision dated 02 June 2008 is
hereby REVERSED and SET ASIDE. A new judgment is hereby rendered:
1. DECLARING the landholding to be not lawfully redeemed;
2. DECLARING petitioner-appellee not a bona fide tenant of the subject landholding;
3. DECLARING that petitioner-appellee cannot redeem the subject parcel registered in
the names of the respondents-appellants;
4. ORDERING the respondents-appellants to be maintained in peaceful possession of the
subject landholding; and
5. DIRECTING the Clerk of the Board of the Regional Agrarian Reform Adjudicator of
Region IV-A to return the Manager’s Check No. 0000004518 issued by Allied Bank in the
name of Spouses Marilyn and George Lim and/or DAR Adjudication Board Region IV-A
in the amount of Ten Million pesos to herein petitioner-appellee.
SO ORDERED.
On April 13, 2009, Consolacion moved for reconsideration,14 which the DARAB denied in a
Resolution15 dated June 8, 2009 for being filed out of time.
SECTION 12 Rule X of the 2003 DARAB Rules provides that a Motion for Reconsideration
shall be filed within fifteen (15) days from receipt of notice of the order, resolution, or
decision of the Board or Adjudicator. Records show that both the petitioner-appellee and her
counsel received a copy of the Decision dated 18 February 2009 on 27 February 2009 and
that Legal Officer Nancy Geocada, the alleged new counsel of the herein petitioner-appellee,
filed the Motion for Reconsideration only on 13 April 2009, clearly the Motion for
Reconsideration was filed beyond the fifteen (15) days (sic) reglementary period thus the
herein Decision has already become final and executory. x x x. 16
On June 25, 2009, Consolacion filed a petition for review under Rule 43 of the Rules of Court
with the CA.17 On July 1, 2009, the CA resolved to require Consolacion’s counsel to submit
within five (5) days from notice his Mandatory Continuing Legal Education (MCLE)
Certificate of Compliance or Exemption and an amended Verification and Certification
Against Non-Forum-Shopping.18 Apparently, Consolacion’s counsel failed to indicate in the
petition his MCLE Certificate of Compliance or Exemption Number as required under Bar
Matter No. 1922. Also, the jurat of Consolacion’s verification and certification against non-
forum-shopping failed to indicate any competent evidence of Consolacion’s identity apart
from her community tax certificate.
satisfactory and persuasive explanation. The parties therein who prayed for liberal
interpretation were able to hurdle that heavy burden of proving that they deserve an
exceptional treatment. It was never the Court’s intent "to forge a bastion for erring litigants
to violate the rules with impunity."22
This Court will not condone a cavalier attitude towards procedural rules. It is the duty of
every member of the bar to comply with these rules. They are not at liberty to seek exceptions
should they fail to observe these rules and rationalize their omission by harking on liberal
construction.

Considering the failure of Consolacion and her counsel to comply, the CA issued a While it IS the negligence of Consolacion's counsel that led to this unfortunate result, she is
Resolution19 on October 15, 2009 dismissing the petition. bound by such.

On July 7, 2009, the counsel for the petitioner received the above-mentioned Resolution. WHEREFORE, premises considered, the petition is DISMISSED. The Resolutions dated
However, the counsel for the petitioner failed to comply with the said Resolution which was October 15, 2009 and March 11, 2010 of the Court of Appeals in CA-G.R. SP No. 109265
due on July 19, 2009. are AFFIRMED. Costs against the petitioner.

For failure of the counsel for the petitioner to comply with the Resolution dated July 1, 2009, SO ORDERED.
despite receipt of the notice thereof, the petition is hereby DISMISSED.

SO ORDERED.20

Consolacion moved for reconsideration but this was denied by the CA in a Resolution 21 dated
March 11, 2010.

Consolacion is, before this Court, claiming that the CA’s summary dismissal of her petition
on technical grounds is unwarranted.1âwphi1 Consolacion invoked substantial justice
against the CA’s strict application of the rule requiring her counsel to note his MCLE
Compliance or Exemption Certificate Number and the rule rendering the jurat of her
verification and certification on non-forum-shopping defective in the absence of the details
of any one of her current identification document issued by an official agency bearing her
photograph and signature. That there was merit in her petition and that she complied, albeit
belatedly as her counsel’s MCLE Compliance Certificate Number was indicated and a
verification and certificate on non-forum-shopping with a proper jurat was attached to her
motion for reconsideration, should have sufficed for the CA to reverse the dismissal of her
petition and decide the same on its merits. Consolacion alleged that procedural rules or
technicalities are designed to facilitate the attainment of justice and their rigid application
should be avoided if this would frustrate rather than promote substantial justice.

The Court finds no merit in the petition. The Court sees no reversible error committed by the
CA in dismissing Consolacion’s petition before it on the ground of petitioner’s unexplained
failure to comply with basic procedural requirements attendant to the filing of a petition for
review under Rule 43 of the Rules of Court. Notably, Consolacion and her counsel remained
obstinate despite the opportunity afforded to them by the CA to rectify their lapses. While
there was compliance, this took place, however, after the CA had ordered the dismissal of
Consolacion’s petition and without reasonable cause proffered to justify its belatedness.
Consolacion and her counsel claimed inadvertence and negligence but they did not explain
the circumstances thereof. Absent valid and compelling reasons, the requested leniency and
liberality in the observance of procedural rules appears to be an afterthought, hence, cannot
be granted. The CA saw no compelling need meriting the relaxation of the rules. Neither does
this Court see any.

The Court is aware of the exceptional cases where technicalities were liberally construed.
However, in these cases, outright dismissal is rendered unjust by the presence of a

20
GENERAL PRINCIPLES/RULE 1: RULE-MAKING POWER OF SC
G.R. No. 159593 October 12, 2006
COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs.
MIRANT1 PAGBILAO CORPORATION (formerly SOUTHERN ENERGY
QUEZON, INC.), respondent.
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review2 under Rule 45 of the 1997 Rules of Civil Procedure
assailing the Decision,3 dated 30 July 2003, of the Court of Appeals in CA-G.R. SP No.
60783, which affirmed in toto the Decision,4 dated 11 July 2000, of the Court of Tax Appeals
(CTA) in CTA Case No. 5658. The CTA partially granted the claim of herein respondent
Mirant Pagbilao Corporation (MPC) for the refund of the input Value Added Tax (VAT) on
its purchase of capital goods and services for the period 1 April 1996 to 31 December 1996,
and ordered herein petitioner Commissioner of the Bureau of Internal Revenue (BIR) to issue
a tax credit certificate in the amount of P28,744,626.95.
There is no dispute as to the following facts that gave rise to the claim for refund of MPC, as
found by the CTA5 –
[MPC] is a domestic corporation duly organized and existing under and by virtue of the
laws of the Philippines with principal office address in Pagbilao Grande Island, Pagbilao,
Quezon. It is licensed by the Securities and Exchange Commission to principally engage
in the business of power generation and subsequent sale thereof (Exh. A). It is registered
with the Bureau of Internal Revenue as a VAT registered entity with Certificate of
Registration bearing RDO Control No. 96-600-002498, dated January 26, 1996.
For the period April 1, 1996 to December 31, 1996, [MPC] seasonably filed its Quarterly
VAT Returns reflecting an (sic) accumulated input taxes in the amount of P39,330,500.85
(Exhs. B, C, and D). These input taxes were allegedly paid by [MPC] to the suppliers of
capital goods and services for the construction and development of the power generating
plant and other related facilities in Pagbilao, Quezon (TSN, November 16, 1998, p. 11).
Pursuant to the procedures prescribed under Revenue Regulations No. 7-95, as amended,
[MPC] filed on June 30, 1998, an application for tax credit or refund of the aforementioned
unutilized VAT paid on capital goods (Exhibit "E").
Without waiting for an answer from the [BIR Commissioner], [MPC] filed the instant
petition for review on July 10, 1998, in order to toll the running of the two-year prescriptive
period for claiming a refund under the law.
In answer to the Petition, [the BIR Commissioner] advanced as special and affirmative
defenses that "[MPC]'s claim for refund is still pending investigation and consideration
before the office of [the BIR Commissioner] accordingly, the filing of the present petition
is premature; well-settled is the doctrine that provisions in tax refund and credit are
construed strictly against the taxpayer as they are in the nature of a tax exemption; in an
action for refund or tax credit, the taxpayer has the burden to show that the taxes paid were
erroneously or illegally paid and failure to sustain the said burden is fatal to the action for
21
refund; it is incumbent upon [MPC] to show that the claim for tax credit has been filed
within the prescriptive period under the Tax Code; and the taxes allegedly paid by [MPC]
are presumed to have been collected and received in accordance with law and revenue
regulations.["]
On July 14, 1998, while the case was pending trial, Revenue Officer, Rosemarie M. Vitto,
was assigned by Revenue District Officer, Ma. Nimfa Penalosa-Asensi, of Revenue
District No. 60 to investigate [MPC]'s application for tax credit or refund of input taxes
(Exhs. 1 and 1-a). As a result, a memorandum report, dated August 27, 1998, was
submitted recommending a favorable action but in a reduced amount of P49,616.40
representing unapplied input taxes on capital goods. (Exhs. 2, 2-a, 3, and 3-a).
[MPC], due to the voluminous nature of evidence to be presented, availed of the services
of an independent Certified Public Accountant pursuant to CTA Circular No. 1-95, as
amended. As a consequence, Mr. Ruben R. Rubio, Partner of SGV & Company, was
commissioned to verify the accuracy of [MPC]'s summary of input taxes (TSN, October
15, 1998, pp. 3-5). A report, dated March 8, 1999, was presented stating the audit
procedures performed and the finding that out of the total claimed input taxes of
P39,330,500.85, only the sum of P28,745,502.40 was properly supported by valid invoices
and/or official receipts (Exh. G; see also TSN, March 3, 1999, p. 12).
The CTA ruled in favor of MPC, and declared that MPC had overwhelmingly proved,
through the VAT invoices and official receipts it had presented, that its purchases of goods
and services were necessary in the construction of power plant facilities which it used in its
business of power generation and sale. The tax court, however, reduced the amount of refund
to which MPC was entitled.
Thus, the dispositive portion of the CTA Decision,7 dated 11 July 2000, reads -
WHEREFORE, in view of the foregoing, [MPC]'s claim for refund is hereby partially
GRANTED. [The BIR Commissioner] is ORDERED to ISSUE A TAX CREDIT
CERTIFICATE in the amount of P28,744,626.95 representing input taxes paid on
capital goods for the period April 1, 1996 to December 31, 1996.
The CTA subsequently denied the BIR Commissioner's Motion for Reconsideration in a
Resolution,8 dated 31 August 2001.
Aggrieved, the BIR Commissioner filed with the Court of Appeals a Petition for Review9 of
the foregoing Decision, dated 11 July 2000, and Resolution, dated 31 August 2001, of the
CTA. Notably, the BIR Commissioner identified and discussed as grounds10 for its Petition
arguments that were totally new and were never raised before the CTA, to wit –
1. RESPONDENT BEING AN ELECTRIC UTILITY, IT IS SUBJECT TO
FRANCHISE TAX UNDER THEN SECTION 117 (NOW SECTION 119) OF THE
TAX CODE AND NOT TO VALUE ADDED TAX (VAT).
2. SINCE RESPONDENT IS EXEMPT FROM VAT, IT IS NOT ENTITLED TO
THE REFUND OF INPUT VAT PURSUANT TO SECTION 4.103-1 OF REVENUE
REGULATIONS NO. 7-95.
The Court of Appeals found no merit in the BIR Commissioner's Petition, and in its Decision,
dated 30 July 2003, it pronounced that: (1) The BIR Commissioner cannot validly change
his theory of the case on appeal; (2) The MPC is not a public utility within the contemplation
of law; (3) The sale by MPC of its generated power to the National Power Corporation
(NAPOCOR) is subject to VAT at zero percent rate; and (4) The MPC, as a VAT-registered
taxpayer, may apply for tax credit. Accordingly, the decretal portion of the said Decision 11
reads as follows –
WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit
and the assailed 11 July 2000 Decision of respondent Court in CTA Case No. 5658 is
hereby AFFIRMED in toto. No costs.
Refusing to give up his cause, the BIR Commissioner filed the present Petition before this
Court on the ground that the Court of Appeals committed reversible error in affirming the
Decision of the CTA holding respondent entitled to the refund of the amount of
P28,744,626.95, allegedly representing input VAT on capital goods and services for the
period 1 April 1996 to 31 December 1996. He argues that (1) The observance of procedural
rules may be relaxed considering that technicalities are not ends in themselves but exist to
protect and promote the substantive rights of the parties; and (2) A tax refund is in the nature
of a tax exemption which must be construed strictly against the taxpayer. He reiterates his
position before the Court of Appeals that MPC, as a public utility, is exempt from VAT,
subject instead to franchise tax and, thus, not entitled to a refund of input VAT on its purchase
of capital goods and services.
This Court finds no merit in the Petition at bar.
I SEC. 15. Questions that may be raised on appeal. – Whether or not the appellant has filed
The general rule is that a party cannot change his theory of the case on appeal.
To recall, the BIR Commissioner raised in its Answer12 before the CTA the following special
and affirmative defenses –
3. [MPC]'s claim for refund is still pending investigation and consideration before the
office of [the BIR Commissioner]. Accordingly, the present petition is premature;
4. Well-settled is the doctrine that provisions in tax refund and credit are construed strictly
against the taxpayer as they are in the nature of a tax exemption;
5. In an action for refund or tax credit, the taxpayer has the burden to show that the taxes
paid were erroneously or illegally paid and failure to sustain the said burden is fatal to the
action for refund;
6. It is incumbent upon [MPC] to show that the claim for tax credit has been filed within
the prescriptive period under the tax code;
7. The taxes allegedly paid by [MPC] are presumed to have been collected and received
in accordance with law and revenue regulations.
22
These appear to be general and standard arguments used by the BIR to oppose any claim by
a taxpayer for refund. The Answer did not posit any allegation or contention that would defeat
the particular claim for refund of MPC. Trial proper ensued before the CTA, during which
the MPC presented evidence of its entitlement to the refund and in negation of the afore-cited
defenses of the BIR Commissioner. It was only after the CTA promulgated its Decision on
11 July 2000, which was favorable to MPC and adverse to the BIR Commissioner, that the
latter filed his Petition for Review before the Court of Appeals on 4 October 2000, averring,
for the very first time, that MPC was a public utility, subject to franchise tax and not VAT;
and since it was not paying VAT, it could not claim the refund of input VAT on its purchase
of capital goods and services.
There is a palpable shift in the BIR Commissioner's defense against the claim for refund of
MPC and an evident change of theory. Before the CTA, the BIR Commissioner admitted that
the MPC is a VAT-registered taxpayer, but charged it with the burden of proving its
entitlement to refund. However, before the Court of Appeals, the BIR Commissioner, in
effect denied that the MPC is subject to VAT, making an affirmative allegation that it is a
public utility liable, instead, for franchise tax. Irrefragably, the BIR Commissioner raised for
the first time on appeal questions of both fact and law not taken up before the tax court, an
actuality which the BIR Commissioner himself does not deny, but he argues that he should
be allowed to do so as an exception to the technical rules of procedure and in the interest of
substantial justice.
It is already well-settled in this jurisdiction that a party may not change his theory of the case
on appeal.13 Such a rule has been expressly adopted in Rule 44, Section 15 of the 1997 Rules
of Civil Procedure, which provides –
a motion for new trial in the court below, he may include in his assignment of errors any
question of law or fact that has been raised in the court below and which is within the
issues framed by the parties.
Thus, in Carantes v. Court of Appeals,14 this Court emphasized that –
The settled rule is that defenses not pleaded in the answer may not be raised for the first
time on appeal. A party cannot, on appeal, change fundamentally the nature of the issue in
the case. When a party deliberately adopts a certain theory and the case is decided upon
that theory in the court below, he will not be permitted to change the same on appeal,
because to permit him to do so would be unfair to the adverse party.
In the more recent case of Mon v. Court of Appeals,15 this Court again pronounced that, in
this jurisdiction, the settled rule is that a party cannot change his theory of the case or his
cause of action on appeal. It affirms that "courts of justice have no jurisdiction or power to
decide a question not in issue." Thus, a judgment that goes beyond the issues and purports to
adjudicate something on which the court did not hear the parties, is not only irregular but
also extrajudicial and invalid. The rule rests on the fundamental tenets of fair play.
The BIR Commissioner pleads with this Court not to apply the foregoing rule to the instant
case, for a rule on technicality should not defeat substantive justice. The BIR Commissioner
apparently forgets that there are specific reasons why technical or procedural rules are
imposed upon the courts, and that compliance with these rules, should still be the general
course of action. Hence, this Court has expounded that –
 Procedural rules, we must stress, should be treated with utmost respect and due regard
since they are designed to facilitate the adjudication of cases to remedy the worsening
problem of delay in the resolution of rival claims and in the administration of justice. The
requirement is in pursuance to the bill of rights inscribed in the Constitution which
guarantees that "all persons shall have a right to the speedy disposition of their cases before
all judicial, quasi-judicial and administrative bodies." The adjudicatory bodies and the
parties to a case are thus enjoined to abide strictly by the rules. While it is true that a
litigation is not a game of technicalities, it is equally true that every case must be
prosecuted in accordance with the prescribed procedure to ensure an orderly and speedy
administration of justice. There have been some instances wherein this Court allowed a
relaxation in the application of the rules, but this flexibility was "never intended to forge
a bastion for erring litigants to violate the rules with impunity." A liberal interpretation
and application of the rules of procedure can be resorted to only in proper cases and under
justifiable causes and circumstances.16
The courts have the power to relax or suspend technical or procedural rules or to except a
case from their operation when compelling reasons so warrant or when the purpose of justice
requires it. What constitutes good and sufficient cause that would merit suspension of the
rules is discretionary upon the courts.17
In his Petition and Memorandum before this Court, the BIR Commissioner made no attempt
to provide reasonable explanation for his failure to raise before the CTA the issue of MPC
being a public utility subject to franchise tax rather than VAT. The BIR Commissioner
argues, in a singular paragraph in his Petition,18 subsequently reproduced in his
Memorandum,19 that the Court of Appeals should have taken cognizance of the said issue,
although it was raised for the first time on appeal, entirely on the basis of this Court's ruling
in Sy v. Court of Appeals.20 He contends that –
The submission fails to take into account that although this Honorable Court has
repeatedly ruled that litigants cannot raise an issue for the first time on appeal, as this
would contravene the basic rules of justice and fair play, the observance of procedural
rules may be relaxed, noting that technicalities are not ends in themselves but exist to
protect and promote the substantive rights of the litigants (Sy v. Court of Appeals,
330 SCRA 570 [2000]).
This Court is unconvinced. There is no sufficient cause to warrant the relaxation of technical
or procedural rules in the instant case. The general rules of procedure still apply and the BIR
Commissioner cannot be allowed to raise an issue for the first time on appeal.
It should be emphasized that the BIR Commissioner is invoking a suspension of the general
rules of procedure or an exception thereto, thus, it is incumbent upon him to present sufficient
cause or justifiable circumstance that would qualify his case for such a suspension or
exception. That this Court had previously allowed in another case such suspension of or
exception to technical or procedural rules does not necessarily mean that the same shall also
be allowed in the present case. The BIR Commissioner has the burden of persuading this
Court that the same causes or circumstances that justified the suspension of or exception to
the technical or procedural rules in the other case are also present in the case at bar.
The Sy case, on which the BIR Commissioner fully anchored his claim for suspension of or
exception to the technical or procedural rules, is not even on all fours with his case. It involves
a petition for declaration of nullity of marriage instituted by the therein petitioner Filipina Sy
before the Regional Trial Court (RTC) on the basis of the alleged psychological incapacity
23
of her husband, Fernando Sy. Her petition was denied by the RTC because it found that
Fernando's acts did not constitute psychological incapacity, a finding later affirmed by the
Court of Appeals. In an appeal by certiorari before this Court, Filipina raised the issue that
her marriage to Fernando was void from the very beginning for lack of a marriage license at
the time of the ceremony. This Court took cognizance of the said issue, reversed the RTC
and the Court of Appeals, and ruled in favor of Filipina. Its ratiocination on the matter is
reproduced in full below –
Petitioner, for the first time, raises the issue of the marriage being void for lack of a valid
marriage license at the time of its celebration. It appears that, according to her, the date of
the actual celebration of their marriage and the date of issuance of their marriage certificate
and marriage license are different and incongruous.
Although we have repeatedly ruled that litigants cannot raise an issue for the first time on
appeal, as this would contravene the basic rules of fair play and justice, in a number of
instances, we have relaxed observance of procedural rules, noting that technicalities are
not ends in themselves but exist to protect and promote substantive rights of litigants. We
said that certain rules ought not to be applied with severity and rigidity if by so doing, the
very reason for their existence would be defeated. Hence, when substantial justice plainly
requires, exempting a particular case from the operation of technicalities should not be
subject to cavil. In our view, the case at bar requires that we address the issue of the validity
of the marriage between Filipina and Fernando which petitioner claims is void from the
beginning for lack of a marriage license, in order to arrive at a just resolution of a deeply
seated and violent conflict between the parties. Note, however, that here the pertinent
facts are not disputed; and what is required now is a declaration of their effects
according to existing law.21 [Emphasis supplied.]
In the instant case, the conflict between the MPC and the BIR Commissioner could be hardly
described as "deeply seated and violent," it remaining on a professional level.
Moreover, this Court pointed out in the Sy case that the pertinent facts, i.e., the dates of actual
celebration of the marriage, issuance of the marriage certificate, and issuance of the marriage
license, were undisputed. The same cannot be said in the case at bar. That MPC is a public
utility is not an undisputed fact; on the contrary, the determination thereof gives rise to a
multitude of other questions of fact and law. It is a mere deduction on the part of the BIR
Commissioner that since the MPC is engaged in the generation of power, it is a public utility.
The MPC contests this arguing that it is not a public utility because it sells its generated
power to NAPOCOR exclusively, and not to the general public. It asserts that it is subject to
VAT and that its sale of generated electricity to NAPOCOR is subject to zero-rated VAT.
Substantial justice, in such a case, requires not the allowance of issues raised for the first time
on appeal, but that the issue of whether MPC is a public utility, and the correlated issue of
whether MPC is subject to VAT or franchise tax, be raised and threshed out in the first
opportunity before the CTA so that either party would have fully presented its evidence and
legal arguments in support of its position and to contravene or rebut those of the opposing
party.
In Atlas Consolidated Mining & Development Corp. v. Commissioner of Internal Revenue,22
this Court held that it was too late for the BIR Commissioner to raise an issue of fact of
payment for the first time in his memorandum in the CTA and in his appeal to this Court. If
raised earlier, the matter ought to have been seriously delved into by the CTA. On this
ground, this Court was of the opinion that under all the attendant circumstances of the case,
substantial justice would be served if the BIR Commissioner be held as precluded from
attempting to raise the issue at this stage. Failure to assert a question within a reasonable time
warrants a presumption that the party entitled to assert it either has abandoned or declined to
assert it.
Therefore, the Court of Appeals correctly refused to consider the issues raised by the BIR
Commissioner for the first time on appeal. Its discussion on whether the MPC is a public
utility and whether it is subject to VAT or franchise tax is nothing more than obiter dictum.
It is best not at all to discuss these issues for they do not simply involve questions of law, but
also closely-related questions of fact23 which neither the Court of Appeals nor this Court
could presume or garner from the evidence on record.
II
Input VAT on capital goods and services may be the subject of a claim for refund.
The MPC bases its claim for refund of its input VAT on Section 106(b) of the Tax Code of
1986, as amended by Republic Act No. 7716,24 which provides –
Sec. 106. Refunds or tax credits of creditable input tax. –
xxxx
(b) Capital goods. - A VAT-registered person may apply for the issuance of a tax credit
certificate or refund of input taxes paid on capital goods imported or locally purchased, to
the extent that such input taxes have not been applied against output taxes. The application
may be made only within two (2) years, after the close of the taxable quarter when the
importation or purchase was made.
Capital goods or properties, as defined in Revenue Regulations No. 7-95, the implementing
rules on VAT, are "goods and properties with estimated useful life greater than one year and
which are treated as depreciable assets under Section 29(f), used directly or indirectly in the
production or sale of taxable goods or services."25
Contrary to the argument of the BIR Commissioner, input VAT on capital goods is among
those expressly recognized as creditable input tax by Section 104(a) of the Tax Code of 1986,
as amended by Rep. Act No. 7716,26 to wit –
Sec. 104. Tax Credits. - (a) Creditable input tax. - Any input tax evidenced by a VAT
invoice or official receipt issued in accordance with Section 108 hereof on the following
transactions shall be creditable against the output tax:
(1) Purchase or importation of goods:
(A) For sale; or
(B) For conversion into or intended to form part of a finished product for sale including
packing materials; or
(C) For use as supplies in the course of business; or
(D) For use as materials supplied in the sale of service; or
24
(E) For use in trade or business for which deduction for depreciation or amortization is
allowed under this Code, except automobiles, aircraft and yachts. [Emphasis supplied.]
Thus, goods and properties used by the taxpayer in its VAT-taxable business, subject to
depreciation or amortization in accordance with the Tax Code, are considered capital goods.
Input VAT on the purchase of such capital goods is creditable against the taxpayer's output
VAT. The taxpayer is further given the option, under Section 106(b) of the Tax Code of
1986, as amended by Republic Act No. 7716, to claim refund of the input VAT on its capital
goods, but only to the extent that the said input VAT has not been applied to its output VAT.
This Court, likewise, will not give credence to the BIR Commissioner's contention that the
claim for refund of input VAT on capital goods by the MPC should be denied for the latter's
failure to comply with the requirements for the refund of input VAT credits on zero-rated
sales provided in Section 16 of Revenue Regulations No. 5-87, as amended by Revenue
Regulations No. 3-88. The BIR Commissioner is apparently confused. MPC is claiming
refund of the input VAT it has paid on the purchase of capital goods, it is not claiming refund
of its input VAT credits attributable to its zero-rated sales. These are two different input
VAT credits, arising from distinct transactions, although both may be the subject of claims
for refund by the taxpayer.27 Indeed, the very same regulation invoked by the BIR
Commissioner, Revenue Regulations No. 5-87, as amended, distinguishes between these two
refundable input VAT credits and discusses them in two separate paragraphs: Section 16(a)
on zero-rated sales of goods and services, and Section 16(b) on capital goods. It is also worth
noting that Revenue Regulations No. 7-95, issued on 9 December 1995, which consolidated
all VAT regulations, already superseded Revenue Regulations No. 5-87. Still, Revenue
Regulations No. 7-95 maintains the distinction between these two input VAT credits,
discussing the zero-rated sales of goods or properties or services in Section 4.106-1(a), and
capital goods in Section 4.106-1(b).
Hence, the present claim for refund of input VAT on capital goods filed by MPC need not
comply with the requirements for refund of input VAT attributable to zero-rated sales.
III
There is no reason for this Court to disturb the findings of fact of the CTA, as affirmed by
the Court of Appeals.
While it is true, as the BIR Commissioner alleges, that the MPC has the burden of proving
that it is entitled to the refund it is claiming for, both the CTA and Court of Appeals had ruled
that the MPC presented substantial evidence to support its claim for refund of its input VAT
on capital goods and services in the amount of P28,744,626.95.
The CTA found that MPC is registered as a VAT-taxpayer, as evidenced by its Certificate of
Registration, issued by the BIR Revenue District Office (RDO) No. 60, on 26 January 1996.
The BIR Commissioner does not contest this fact, and does not offer any explanation as to
why the BIR RDO had approved the registration of MPC as a VAT-taxpayer when, as the
BIR Commissioner is now asserting, the MPC is not subject to VAT but to franchise tax. The
MPC had been filing its VAT Quarterly Returns, including those for the period covered by
its claim for refund, 1 April 1996 to 31 December 1996, reporting and reflecting therein the
input VAT it had paid on its purchase of capital goods and services. These capital goods and
services were necessary in the construction of the power plant facilities used by MPC in
electric power generation.
The VAT invoices and receipts submitted by MPC, in support of its claim for refund, had
been examined and evaluated by an independent auditor, as well as by the CTA itself. Thus,
from the original amount of P39,330,500.85 claimed by MPC for refund, the independent
auditor, SGV & Co., found only the sum of P28,745,502.40 sufficiently supported by valid
invoices and/or official receipts. Following its own examination and evaluation of the
evidence submitted, the CTA further reduced the amount refundable to P28,744,626.95 after
disallowing the input VAT on the purchase of "xerox and office supplies which cannot be
capitalized and not necessary in the construction of power plant facilities."28

It is worth noting that the foregoing findings by the CTA were affirmed in totality by the
Court of Appeals. Likewise, this Court finds no reason to disturb the foregoing findings of
the tax court.

Another well-settled principle in this jurisdiction is that this Court is bound by the findings
of fact of the CTA. Only errors of law, and not rulings on the weight of evidence, are
reviewable by this Court. Findings of fact of the CTA are not to be disturbed unless clearly
shown to be unsupported by substantial evidence.29 Quite the reverse, the claim of MPC for
refund of input VAT on its purchase of capital goods and services in the present case is found
to be supported by substantial evidence, not just by the CTA, but also by the Court of
Appeals. The BIR Commissioner failed to convince this Court otherwise.

IV

The BIR should seriously study and consider each and every application for claim for
refund pending before it.

As a final point, this Court would like to call the attention of the BIR Commissioner, as well
as the responsible BIR officers, to seriously study and consider each and every application
for claim for refund filed before their office. It is very obvious to this Court that the Answer
filed by the BIR Commissioner before the Court of Appeals, which it essentially reproduced
as its Memorandum before the same court, presented general and pro forma arguments. The
BIR Commissioner only raised belatedly before the Court of Appeals the issues of whether
MPC is a public utility and whether it is subject to franchise tax and not VAT. Even then, his
Petition for Review before the appellate court, numbering only six pages, with only one page
devoted to a discussion of the merits of his Petition, left much to be desired and would hardly
persuade any court. Since he represents the interest of the government in tax cases, the BIR
Commissioner should exert more effort and exercise more diligence in preparing his
pleadings before any court; he should not wait to do so only upon appeal of his case to the
higher court. This Court may not always be inclined to allow him to remedy his past laxity.

IN VIEW OF THE FOREGOING, the instant Petition is hereby DENIED. The Decision,
dated 30 July 2003, of the Court of Appeals in CA-G.R. SP No. 60783, which affirmed in
toto the Decision, dated 11 July 2000, of the CTA in CTA Case No. 5658, is hereby
AFFIRMED. The BIR Commissioner is hereby ORDERED to issue in favor of MPC a tax
credit certificate in the amount of P28,744,626.95 representing input VAT paid on capital
goods and services for the period of 1 April 1996 to 31 December 1996. No pronouncement
as to costs.

SO ORDERED.

25
GENERAL PRINCIPLES/RULE 1: RULE-MAKING POWER OF SC
G.R. No. 197151 October 22, 2012
SM LAND, INC. (Formerly Shoemart, Inc.) and WATSONS PERSONAL CARE
STORES, PHILS., INC., Petitioners,
vs.
CITY OF MANILA, LIBERTY TOLEDO, in her official capacity as the City
Treasurer of Manila and JOSEPH SANTIAGO, in his official capacity as the Chief of
License Division of the City of Manila, Respondents.
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court
seeking to reverse and set aside the Decision1 and Resolution2 of the Court of Tax Appeals
(CTA) En Banc, dated December 17, 2010 and May 27, 2011, respectively, in CTA EB No.
548. The assailed Decision affirmed the July 3, 2009 Decision3 and September 30, 2009
Resolution4 of the CTA Second Division in CTA AC No. 51, while the questioned Resolution
denied herein petitioners' Motion for Reconsideration.
The factual and procedural antecedents of the case are as follows:
On the strength of the provisions of Tax Ordinance Nos. 7988 and 8011, which amended
Ordinance No. 7794, also known as the Revenue Code of Manila, herein respondent City of
Manila assessed herein petitioners, together with their other sister companies, increased rates
of business taxes for the year 2003 and the first to third quarters of 2004.
Petitioners and their sister companies paid the additional taxes under protest. Subsequently,
petitioners and their sister companies claimed with herein respondent City Treasurer of
Manila a credit or refund of the increased business taxes which they paid for the period
abovementioned. However, the City Treasurer denied their claim. Aggrieved, petitioners and
their sister companies filed with the Regional Trial Court (RTC) of Pasay City a Complaint
for Refund and/or Issuance of Tax Credit of Taxes Illegally Collected.5
On July 10, 2007, the RTC rendered a summary judgment in favor of herein petitioners,
disposing as follows:
WHEREFORE, this Court renders judgment in plaintiffs’ favor and directs the defendants to
grant a refund/tax credit. No Costs.
SO ORDERED.6
The RTC held that Tax Ordinance Nos. 7988 and 8011, which were the bases of the City of
Manila in imposing the assailed additional business taxes on petitioners and their co-
plaintiffs, had already been declared null and void by this Court in the case of Coca-Cola
Bottlers Philippines, Inc. v. City of Manila.7 On this ground, the RTC ruled that respondents
cannot use the assailed Ordinances in imposing additional taxes on petitioners and their co-
plaintiffs.
Respondents moved for reconsideration, but the RTC denied it in its Order dated December
14, 2007.
After the CTA granted their request for extension of time, herein respondents filed a petition
for review with the tax court.8 The case was raffled to the Second Division of the said court.
26
On July 3, 2009, the CTA Second Division rendered its Decision, the dispositive portion of
which reads, thus:
WHEREFORE, premises considered, the instant Petition for Review is hereby PARTIALLY
GRANTED.1âwphi1 The appealed Order dated July 10, 2007 and Order dated December 14,
2007 of the Regional Trial Court of Pasay City, Branch 115, in Civil Case No. 05-0051-CFM
are hereby MODIFIED. Accordingly, with the exception of Shoemart, Inc. and Watsons
Personal Care Stores, Phils., petitioners are hereby ORDERED to REFUND the rest of the
respondents, their erroneously paid local business taxes for taxable year 2003 and for the first
to third quarters of taxable year 2004 in the aggregate amount of THIRTY-NINE MILLION
SEVENTY-EIGHT THOUSAND NINE HUNDRED EIGHTY-EIGHT PESOS AND
81/100 (P39,078,988.81), detailed as follows:9
The CTA Second Division sustained the ruling of the RTC that Ordinance Nos. 7988 and
8011 are null and void. Applying the doctrine of stare decisis, the CTA Second Division held
that the ruling in the Coca-Cola case cited by the RTC is applicable in the present case as
both cases involve substantially the same facts and issues. The CTA Second Division,
nonetheless, held that herein petitioners' claims for tax refund should be denied because of
their failure to comply with the provisions of the Rules of Court requiring verification and
submission of a certificate of non-forum shopping. The CTA Second Division noted that
petitioners failed to attach to the complaint filed with the RTC their respective Secretary's
Certificates authorizing their supposed representative, a certain Atty. Rex Enrico V. Cruz III
(Atty. Cruz), to file the said complaint in their behalf. The CTA also observed that in the
Verification and Certification of Non-Forum Shopping attached to the complaint, petitioner
SM Land, Inc. was not included in the list of corporations represented by the person who
executed the said Verification and Certification.
Petitioners filed a Motion for Partial Reconsideration.10 Attached to the said Motion was the
Verification and Certification executed by Atty. Cruz as the representative of petitioner SM
Land, Inc. Also attached were petitioners' Secretary's Certificates authorizing Atty. Cruz as
their representative. The CTA Second Division, however, denied the Motion for Partial
Reconsideration in its Resolution11 dated September 30, 2009.
Aggrieved, petitioners filed a petition for review with the CTA En Banc, contending that: (1)
the CTA Second Division erred in holding that the 30-day period provided by law within
which to appeal decisions of the RTC to the CTA may be extended; and (2) the CTA Second
Division committed error in denying herein petitioners' claim for tax refund on the ground
that they violated the rules on verification and certification of non-forum shopping.
On December 17, 2010, the CTA En Banc rendered its assailed Decision affirming in toto
the judgment of the CTA Second Division.
Petitioners' Motion for Reconsideration was subsequently denied by the CTA En Banc in its
Resolution dated May 27, 2011.
Hence, the present petition anchored on the following arguments:
A. SECTION 11, REPUBLIC ACT NO. 1125, AS AMENDED BY REPUBLIC ACT
NO. 9282, CLEARLY DID NOT INTEND FOR THE THIRTY (30)-DAY PERIOD
TO APPEAL DECISIONS OF THE REGIONAL TRIAL COURT TO THE CTA TO
BE EXTENDIBLE; AND
B. ASSUMING HYPOTHETICALLY THAT THE CTA WAS CORRECT IN
GRANTING RESPONDENTS AN EXTENSION, THERE WERE STILL
 COMPELLING REASONS TO JUSTIFY THE RELAXATION OF THE RULES
REQUIRING VERIFICATION AND CERTIFICATION OF NON-FORUM
SHOPPING.12
The Court finds the petition meritorious. Nonetheless, the Court does not fully agree with
petitioners' contentions.
In the first argument raised, the Court is not persuaded by petitioners’ insistence that the 30-
day period to appeal decisions of the RTC to the CTA is non-extendible.
Petitioners cited cases decided by this Court wherein it was held that the 30-day period within
which to file an appeal with the CTA is jurisdictional and non-extendible. However, these
rulings had been superseded by this Court's decision in the case of City of Manila v. Coca-
Cola Bottlers, Philippines, Inc.,13 as correctly cited by the CTA En Banc. Suffice it to say
that this Court's ruling in the said case is instructive, to wit:
xxxx
The period to appeal the decision or ruling of the RTC to the CTA via a Petition for Review
is specifically governed by Section 11 of Republic Act No. 9282, and Section 3 (a), Rule 8
of the Revised Rules of the CTA.
Section 11 of Republic Act No. 9282 provides:
SEC. 11. Who May Appeal; Mode of Appeal; Effect of Appeal. – Any party adversely
affected by a decision, ruling or inaction of the Commissioner of Internal Revenue, the
Commissioner of Customs, the Secretary of Finance, the Secretary of Trade and Industry or
the Secretary of Agriculture or the Central Board of Assessment Appeals or the Regional
Trial Courts may file an Appeal with the CTA within thirty (30) days after the receipt of such
decision or ruling or after the expiration of the period fixed by law for action as referred to
in Section 7(a)(2) herein.
Appeal shall be made by filing a petition for review under a procedure analogous to that
provided for under Rule 42 of the 1997 Rules of Civil Procedure with the CTA within thirty
(30) days from the receipt of the decision or ruling or in the case of inaction as herein
provided, from the expiration of the period fixed by law to act thereon. x x x. (Emphasis
supplied.)
Section 3(a), Rule 8 of the Revised Rules of the CTA states:
SEC 3. Who may appeal; period to file petition. – (a) A party adversely affected by a decision,
ruling or the inaction of the Commissioner of Internal Revenue on disputed assessments or
claims for refund of internal revenue taxes, or by a decision or ruling of the Commissioner
of Customs, the Secretary of Finance, the Secretary of Trade and Industry, the Secretary of
Agriculture, or a Regional Trial Court in the exercise of its original jurisdiction may appeal
to the Court by petition for review filed within thirty days after receipt of a copy of such
decision or ruling, or expiration of the period fixed by law for the Commissioner of Internal
Revenue to act on the disputed assessments. x x x. (Emphasis supplied.)
It is crystal clear from the afore-quoted provisions that to appeal an adverse decision or ruling
of the RTC to the CTA, the taxpayer must file a Petition for Review with the CTA within 30
days from receipt of said adverse decision or ruling of the RTC.
27
It is also true that the same provisions are silent as to whether such 30-day period can be
extended or not. However, Section 11 of Republic Act No. 9282 does state that the Petition
for Review shall be filed with the CTA following the procedure analogous to Rule 42 of the
Revised Rules of Civil Procedure. Section 1, Rule 42 of the Revised Rules of Civil Procedure
provides that the Petition for Review of an adverse judgment or final order of the RTC must
be filed with the Court of Appeals within: (1) the original 15-day period from receipt of the
judgment or final order to be appealed; (2) an extended period of 15 days from the lapse of
the original period; and (3) only for the most compelling reasons, another extended period
not to exceed 15 days from the lapse of the first extended period.
Following by analogy, Section 1, Rule 42 of the Revised Rules of Civil Procedure, the 30-
day original period for filing a Petition for Review with the CTA under Section 11 of
Republic Act No. 9282, as implemented by Section 3 (a), Rule 8 of the Revised Rules of the
CTA, may be extended for a period of 15 days. No further extension shall be allowed
thereafter, except only for the most compelling reasons, in which case the extended period
shall not exceed 15 days.
x x x x14
Petitioners further contend that the Order of the CTA Second Division granting petitioners'
motion for extension to file their petition for review is invalid, because at the time that the
said motion was granted on March 4, 2008, this Court has not yet promulgated its decision
in the above-cited Coca-Cola case. It was only on August 4, 2009 that this Court issued its
decision in the said case and, that petitioners reason out that the same is inapplicable to the
instant case as the ruling therein cannot be applied retroactively. Petitioners argue that, aside
from the Coca-Cola case, the CTA Second Division had no clear statutory authority or
jurisprudential basis in granting petitioners' motion for extension to file their petition for
review.
The Court does not agree.
At the time that the CTA Second Division granted petitioners' motion for extension to file
their petition for review, Republic Act 928215 (RA 9282), which amended certain provisions
of RA 1125,16 were already in effect,17 and it is clearly provided therein that appeals from the
RTC to the CTA shall follow a procedure analogous to that provided for under Rule 42 of
the Rules of Court. Rule 42 of the said Rules, in turn, provides that the court may grant an
extension of fifteen (15) days within which to file the petition for review. Thus, independent
of the Coca-Cola case, the CTA Second Division had clear statutory authority in granting
petitioners' motion for extension. This Court’s ruling in Coca-Cola is a mere clarification and
affirmation of what is provided for under the provisions of RA 1125, as amended by RA
9282.
Nonetheless, the Court agrees with petitioners' contention in its second argument that there
are compelling reasons in the present case which justify the relaxation of the rules on
verification and certification of non-forum shopping.
It must be kept in mind that while the requirement of the certification of non-forum shopping
is mandatory, nonetheless, the requirements must not be interpreted too literally and, thus,
defeat the objective of preventing the undesirable practice of forum shopping. 18
Time and again, this Court has held that rules of procedure are established to secure
substantial justice.19 Being instruments for the speedy and efficient administration of justice,
they must be used to achieve such end, not to derail it.20 In particular, when a strict and literal
application of the rules on non-forum shopping and verification will result in a patent denial
of substantial justice, these may be liberally construed. 21
In the instant case, petitioner Watsons' procedural lapse was its belated submission of a
Secretary's Certificate authorizing Atty. Cruz as its representative. On the other hand,
petitioner SM Land, Inc.'s infraction was not only its late submission of its Secretary's
Certificate but also its failure to timely submit its verification and certification of non-forum
shopping.
In a number of cases, this Court has excused the belated filing of the required verification
and certification of non-forum shopping, citing that special circumstances or compelling
reasons make the strict application of the rule clearly unjustified.22 This Court ruled that
substantial justice and the apparent merits of the substantive aspect of the case are deemed
special circumstances or compelling reasons to relax the said rule.
In fact, this Court has held that even if there was complete non-compliance with the rule on
certification against forum shopping, the Court may still proceed to decide the case on the
merits, pursuant to its inherent power to suspend its own rules on grounds, as stated above,
of substantial justice and apparent merit of the case.23
Thus, in Vda. de Formoso v. Philippine National Bank,24 this Court reiterated, in capsule
form, the rule on non-compliance with the requirements on, or submission of defective
verification and certification of non-forum shopping, to wit:
1) A distinction must be made between non-compliance with the requirement on or
submission of defective verification, and non-compliance with the requirement on or
submission of defective certification against forum shopping.
2) As to verification, non-compliance therewith or a defect therein does not necessarily
render the pleading fatally defective. The Court may order its submission or correction
or act on the pleading if the attending circumstances are such that strict compliance with
the Rule may be dispensed with in order that the ends of justice may be served thereby.
In the present case, there is no dispute that Tax Ordinance Nos. 7988 and 8011 have already
been declared null and void by this Court as early as 2006 in the case of Coca-Cola Bottlers
Philippines, Inc. v. City of Manila.26 The nullity of the said Tax Ordinances is affirmed in the
more recent case of City of Manila v. Coca-Cola Bottlers, Philippines, Inc.,27 as cited above.
Thus, to the mind of this Court, the unquestioned nullity of the above assailed Tax
Ordinances upon which petitioners were previously taxed, makes petitioners' claim for tax
refund clearly meritorious. In fact, petitioners' sister companies, which were their co-
plaintiffs in their Complaint filed with the RTC, were granted tax refund in accordance with
the judgments of the trial court, the CTA Second Division and the CTA En Banc. On this
basis, petitioners’ meritorious claims are compelling reasons to relax the rule on verification
and certification of non-forum shopping.
In any case, it would bear to point out that petitioners and their co-plaintiffs in the trial court
filed their claim for tax refund as a collective group, because they share a common interest
and invoke a common cause of action. Hence, the signature of the representative of the other
co-plaintiffs may be considered as substantial compliance with the rule on verification and
certification of non-forum shopping, consistent with this Court's pronouncement that when
all the petitioners share a common interest and invoke a common cause of action or defense,
the signature of only one of them in the certification against forum shopping substantially
complies with the rules.28
WHEREFORE, the instant petition is GRANTED. The Decision and Resolution of the Court
of Tax Appeals En Banc, dated December 17, 2010 and May 27, 2011, respectively, in CTA
EB No. 548, as well as the July 3, 2009 Decision and September 30, 2009 Resolution of the
Court of Tax Appeals Second Division in CTA AC No. 51, are REVERSED AND SET
ASIDE and the Orders of the Regional Trial Court of Pasay City, Branch 115, dated July 10,
2007 and December 14, 2007, are REINSTATED.
SO ORDERED.

3) Verification is deemed substantially complied with when one who has ample
knowledge to swear to the truth of the allegations in the complaint or petition signs the
verification, and when matters alleged in the petition have been made in good faith or
are true and correct.

4) As to certification against forum shopping, non-compliance therewith or a defect

therein, unlike in verification, is generally not curable by its subsequent submission or
correction thereof, unless there is a need to relax the Rule on the ground of "substantial
compliance" or presence of "special circumstances or compelling reasons."

5) The certification against forum shopping must be signed by all the plaintiffs or
petitioners in a case; otherwise, those who did not sign will be dropped as parties to the
case. Under reasonable or justifiable circumstances, however, as when all the plaintiffs
or petitioners share a common interest and invoke a common cause of action or defense,
the signature of only one of them in the certification against forum shopping
substantially complies with the Rule.

6) Finally, the certification against forum shopping must be executed by the party-
pleader, not by his counsel. If, however, for reasonable or justifiable reasons, the party-
pleader is unable to sign, he must execute a Special Power of Attorney designating his
counsel of record to sign on his behalf.25 (Emphasis supplied)

28
GENERAL PRINCIPLES/RULE 1: RULE-MAKING POWER OF SC
G.R. No. 170354 June 30, 2006
EDGARDO PINGA, Petitioner,
vs.
THE HEIRS OF GERMAN, SANTIAGO represented by FERNANDO SANTIAGO,
Respondents.
TINGA, J.:
The constitutional faculty of the Court to promulgate rules of practice and procedure1
necessarily carries the power to overturn judicial precedents on points of remedial law
through the amendment of the Rules of Court. One of the notable changes introduced in the
1997 Rules of Civil Procedure is the explicit proviso that if a complaint is dismissed due to
fault of the plaintiff, such dismissal is "without prejudice to the right of the defendant to
prosecute his counterclaim in the same or in a separate action."2 The innovation was instituted
in spite of previous jurisprudence holding that the fact of the dismissal of the complaint was
sufficient to justify the dismissal as well of the compulsory counterclaim. 3
In granting this petition, the Court recognizes that the former jurisprudential rule can no
longer stand in light of Section 3, Rule 17 of the 1997 Rules of Civil Procedure.
The relevant facts are simple enough. Petitioner Eduardo Pinga was named as one of two
defendants in a complaint for injunction4 filed with Branch 29 of the Regional Trial Court
(RTC)5 of San Miguel, Zamboanga del Sur, by respondent Heirs of German Santiago,
represented by Fernando Santiago. The Complaint6 dated 28 May 1998 alleged in essence
that petitioner and co-defendant Vicente Saavedra had been unlawfully entering the coco
lands of the respondent, cutting wood and bamboos and harvesting the fruits of the coconut
trees therein. Respondents prayed that petitioner and Saavedra be enjoined from committing
"acts of depredation" on their properties, and ordered to pay damages.
In their Amended Answer with Counterclaim,7 petitioner and his co-defendant disputed
respondents’ ownership of the properties in question, asserting that petitioner’s father,
Edmundo Pinga, from whom defendants derived their interest in the properties, had been in
possession thereof since the 1930s.8 They alleged that as far back as 1968, respondents had
already been ordered ejected from the properties after a complaint for forcible entry was filed
by the heirs of Edmundo Pinga. It was further claimed that respondents’ application for free
patent over the properties was rejected by the Office of the President in 1971. Defendants in
turn prayed that owing to respondents’ forcible re-entry in the properties and the irresponsible
and reckless filing of the case, they be awarded various types of damages instead in amounts
totaling P2,100,000 plus costs of suit.9
By July of 2005, the trial of the case had not yet been completed. Moreover, respondents, as
plaintiffs, had failed to present their evidence. It appears that on 25 October 2004, the RTC
already ordered the dismissal of the complaint after respondents’ counsel had sought the
postponement of the hearing scheduled then.10 However, the order of dismissal was
subsequently reconsidered by the RTC in an Order dated 9 June 2005, which took into
account the assurance of respondents’ counsel that he would give priority to that case.11
At the hearing of 27 July 2005, plaintiffs’ counsel on record failed to appear, sending in his
stead a representative who sought the postponement of the hearing. Counsel for defendants
(who include herein petitioner) opposed the move for postponement and moved instead for
the dismissal of the case. The RTC noted that it was obvious that respondents had failed to
prosecute the case for an unreasonable length of time, in fact not having presented their
29
evidence yet. On that ground, the complaint was dismissed. At the same time, the RTC
allowed defendants "to present their evidence ex-parte."12
Respondents filed a Motion for Reconsideration13 of the order issued in open court on 27
July 2005, opting however not to seek that their complaint be reinstated, but praying instead
that the entire action be dismissed and petitioner be disallowed from presenting evidence ex-
parte. Respondents claimed that the order of the RTC allowing petitioner to present evidence
ex-parte was not in accord with established jurisprudence. They cited cases, particularly City
of Manila v. Ruymann14 and Domingo v. Santos,15 which noted those instances in which a
counterclaim could not remain pending for independent adjudication.
On 9 August 2005, the RTC promulgated an order granting respondents’ Motion for
Reconsideration and dismissing the counterclaim, citing as the only ground therefor that
"there is no opposition to the Motion for Reconsideration of the [respondents]."16 Petitioner
filed a Motion for Reconsideration, but the same was denied by the RTC in an Order dated
10 October 2005.17 Notably, respondents filed an Opposition to Defendants’ Urgent Motion
for Reconsideration, wherein they argued that the prevailing jurisprudential rule18 is that
"compulsory counterclaims cannot be adjudicated independently of plaintiff’s cause of
action," and "a conversu, the dismissal of the complaint carries with it the dismissal of the
compulsory counterclaims."19
The matter was elevated to this Court directly by way of a Petition for Review under Rule
45 on a pure question of law, the most relevant being whether the dismissal of the complaint
necessarily carries the dismissal of the compulsory counterclaim.
We hold that under Section 3, Rule 17 of the 1997 Rules of Civil Procedure, the dismissal of
the complaint due to the fault of plaintiff does not necessarily carry with it the dismissal of
the counterclaim, compulsory or otherwise. In fact, the dismissal of the complaint is without
prejudice to the right of defendants to prosecute the counterclaim.
On a prefatory note, the RTC, in dismissing the counterclaim, did not expressly adopt
respondents’ argument that the dismissal of their complaint extended as well to the
counterclaim. Instead, the RTC justified the dismissal of the counterclaim on the ground that
"there is no opposition to [plaintiff’s] Motion for Reconsideration [seeking the dismissal of
the counterclaim]."20 This explanation is hollow, considering that there is no mandatory rule
requiring that an opposition be filed to a motion for reconsideration without need for a court
order to that effect; and, as posited by petitioner, the "failure to file an opposition to the
Plaintiff’s Motion for Reconsideration is definitely not one among the established grounds
for dismissal [of the counterclaim]."21 Still, the dismissal of the counterclaim by the RTC
betrays at very least a tacit recognition of respondents’ argument that the counterclaim did
not survive the dismissal of the complaint. At most, the dismissal of the counterclaim over
the objection of the defendant (herein petitioner) on grounds other than the merits of the
counterclaim, despite the provisions under Rule 17 of the 1997 Rules of Civil Procedure,
constitutes a debatable question of law, presently meriting justiciability through the instant
action. Indeed, in reviewing the assailed orders of the RTC, it is inevitable that the Court
consider whether the dismissal of the complaint, upon motion of the defendant, on the ground
of the failure to prosecute on plaintiff’s part precipitates or carries with it the dismissal of the
pending counterclaims.
Our core discussion begins with Section 3, Rule 17 of the 1997 Rules of Civil Procedure,
which states:
SEC. 3. Dismissal due to fault of plaintiff.—If, for no justifiable cause, the plaintiff fails to
appear on the date of the presentation of his evidence in chief on the complaint, or to
prosecute his action for an unreasonable length of time, or to comply with these Rules or any
order of the court, the complaint may be dismissed upon motion of defendant or upon the
court's own motion, without prejudice to the right of the defendant to prosecute his
counterclaim in the same or in a separate action. This dismissal shall have the effect of an
adjudication upon the merits, unless otherwise declared by the court.
The express qualification in the provision that the dismissal of the complaint due to the
plaintiff’s fault, as in the case for failure to prosecute, is without prejudice to the right of the
defendant to prosecute his counterclaim in the same or separate action. This stands in marked
contrast to the provisions under Rule 17 of the 1964 Rules of Court which were superseded
by the 1997 amendments. In the 1964 Rules, dismissals due to failure to prosecute were
governed by Section 3, Rule 17, to wit:
SEC. 3. Failure to prosecute. — If plaintiff fails to appear at the time of the trial, or to
prosecute his action for an unreasonable length of time, or to comply with these rules or any
order of the court, the action may be dismissed upon motion of the defendant or upon the
court’s own motion. This dismissal shall have the effect of an adjudication upon the merits,
unless otherwise provided by court.
Evidently, the old rule was silent on the effect of such dismissal due to failure to prosecute
on the pending counterclaims. As a result, there arose what one authority on remedial law
characterized as "the nagging question of whether or not the dismissal of the complaint
carries with it the dismissal of the counterclaim."22 Jurisprudence construing the previous
Rules was hardly silent on the matter.
In their arguments before the RTC on the dismissal of the counterclaim, respondents cited in
support City of Manila v.
Ruymann,23 Domingo v. Santos,24 Belleza v. Huntington,25 and Froilan v. Pan Oriental
Shipping Co.,26 all of which were decided more than five decades ago. Notably though, none
of the complaints in these four cases were dismissed either due to the fault of the plaintiff or
upon the instance of the defendant.27
The distinction is relevant, for under the previous and current incarnations of the Rules of
Civil Procedure, it is Section 3, Rule 17 that governs the dismissals due to the failure of the
plaintiff to prosecute the complaint, as had happened in the case at bar. Otherwise, it is
Section 2, Rule 17, which then, and still is now, covered dismissals ordered by the trial court
upon the instance of the plaintiff.28 Yet, as will be seen in the foregoing discussion, a
discussion of Section 2 cannot be avoided as the postulate behind that provision was
eventually extended as well in cases that should have properly been governed by Section 3.
Even though the cases cited by respondents involved different factual antecedents, there
exists more appropriate precedents which they could have cited in support of their claim that
the counterclaim should have been dismissed even if the dismissal of the complaint was upon
the defendants’ motion and was predicated on the plaintiff’s fault. BA Finance Corp. v. Co29
particularly stands out in that regard, although that ruling is itself grounded on other
precedents as well. Elucidation of these cases is in order.
On the general effect of the dismissal of a complaint, regardless of cause, on the pending
counterclaims, previous jurisprudence laid emphasis on whether the counterclaim was
compulsory or permissive in character. The necessity of such distinction was provided in the
1964 Rules itself, particularly Section 2, Rule 17, which stated that in instances wherein the
plaintiff seeks the dismissal of the complaint, "if a counterclaim has been pleaded by a
defendant prior to the service upon him of the plaintiff’s motion to dismiss, the action shall
not be dismissed against the defendant’s objection unless the counterclaim can remain
pending for independent adjudication by the court."30 The
vaunted commentaries of Chief Justice Moran, remarking on Section 2, Rule 17, noted that
"[t]here are instances in which a counterclaim cannot remain pending for independent
30
adjudication, as, where it arises out of, or is necessarily connected with, the transaction or
occurrence which is the subject matter of the opposing party’s claim."31
This view expressed in Moran’s Commentaries was adopted by the Court in cases where the
application of Section 2, Rule 17 of the 1964 Rules of Court was called for, such as in Lim
Tanhu v. Ramolete,32 and Dalman v. City Court of Dipolog City.33 The latter case warrants
brief elaboration. Therein, the plaintiff in a civil case for damages moved for the withdrawal
of her own case on the ground that the dispute had not been referred to the barangay council
as required by law. Over the objection of the defendant, who feared that her own counterclaim
would be prejudiced by the dismissal, plaintiff’s motion was granted, the complaint and the
counterclaim accordingly dismissed by the trial court. The Court refused to reinstate the
counterclaim, opining without elaboration, "[i]f the civil case is dismissed, so also is the
counterclaim filed therein."34 The broad nature of that statement gave rise to the notion that
the mandatory
dismissal of the counterclaim upon dismissal of the complaint applied regardless of the cause
of the complaint’s dismissal.35
Notably, the qualification concerning compulsory counterclaims was provided in Section 2,
Rule 17 of the 1964 Rules, the provision governing dismissals by order of the court, and not
Section 3, Rule 17. As stated earlier, Section 3, which covered dismissals for failure to
prosecute upon motion of the defendant or upon motu proprio action of the trial court, was
silent on the effect on the counterclaim of dismissals of such nature.
Spouses Sta. Maria, Jr. v. Court of Appeals,36 decided in 1972, ostensibly supplied the gap
on the effect on the counterclaim of complaints dismissed under Section 3. The defendants
therein successfully moved before the trial court for the dismissal of the complaint without
prejudice and their declaration in default on the counterclaim after plaintiffs therein failed to
attend the pre-trial. After favorable judgment was rendered on the counterclaim, plaintiffs
interposed an appeal, citing among other grounds, that the counterclaim could no longer have
been heard after the dismissal of the complaint. While the Court noted that the adjudication
of the counterclaim in question "does not depend upon the adjudication of the claims made
in the complaint since they were virtually abandoned by the non-appearance of the plaintiffs
themselves," it was also added that "[t]he doctrine invoked is not available to plaintiffs like
the petitioners, who prevent or delay the hearing of their own claims and allegations."37 The
Court, through Justice JBL Reyes, noted:
The doctrine that the complaint may not be dismissed if the counterclaim cannot be
independently adjudicated is not available to, and was not intended for the benefit of, a
plaintiff who prevents or delays the prosecution of his own complaint. Otherwise, the
trial of counterclaims would be made to depend upon the maneuvers of the plaintiff, and the
rule would offer a premium to vexing or delaying tactics to the prejudice of the
counterclaimants. It is in the same spirit that we have ruled that a complaint may not be
withdrawn over the opposition of the defendant where the counterclaim is one that arises
from, or is necessarily connected with, the plaintiff’s action and cannot remain pending for
independent adjudication.38
There is no doubt that under the 1964 Rules, the dismissal of a complaint due to the failure
of the plaintiff to appear during pre-trial, as what had happened in Sta. Maria, fell within the
coverage of Section 3, Rule 17. On the other hand, Section 2 was clearly limited in scope to
those dismissals sustained at the instance of the plaintiff.39 Nonetheless, by the early 1990s,
jurisprudence was settling on a rule that compulsory counterclaims were necessarily
terminated upon the dismissal of the complaint not only if such dismissal was upon motion
of the plaintiff, but at the instance of the defendant as well. Two decisions from that period
stand out in this regard, Metals Engineering Resources Corp. v. Court of Appeals40 and
International Container Terminal Services v. Court of Appeals.41
In Metals, the complaint was expunged from the record after the defendant had filed a motion
for reconsideration of a trial court order allowing the filing of an amended complaint that
corrected a jurisdictional error in the original complaint pertaining to the specification of the
amount of damages sought. When the defendant was nonetheless allowed to present evidence
on the counterclaim, the plaintiff assailed such allowance on the ground that the counterclaim
was compulsory and could no longer remain pending for independent adjudication. The
Court, in finding for the plaintiff, noted that the counterclaim was indeed compulsory in
nature, and as such, was auxiliary to the proceeding in the original suit and derived its
jurisdictional support therefrom.42 It was further explained that the doctrine was in
consonance with the primary objective of a counterclaim, which was to avoid and prevent
circuitry of action by allowing the entire controversy between the parties to be litigated and
finally determined in one action, and to discourage multiplicity of suits. 43 Also, the Court
noted that since the complaint was dismissed for lack of jurisdiction, it was as if no claim
was filed against the defendant, and there was thus no more leg for the complaint to stand
on.44
In International Container, the defendant filed a motion to dismiss which was granted by the
trial court. The defendant’s counterclaim was dismissed as well. The Court summarized the
key question as "what is the effect of the dismissal of a complaint ordered at the instance of
the defendant upon a compulsory counterclaim duly raised in its answer."45 Then it ruled that
the counterclaim did not survive such dismissal. After classifying the counterclaim therein
as compulsory, the Court noted that "[i]t is obvious from the very nature of the counterclaim
that it could not remain pending for independent adjudication, that is, without adjudication
by the court of the complaint itself on which the counterclaim was based."46
Then in 1993, a divided Court ruled in BA Finance that the dismissal of the complaint for
nonappearance of plaintiff at the pre-trial, upon motion of the defendants, carried with it the
dismissal of their compulsory counterclaim.47 The Court reiterated the rule that "a
compulsory counterclaim cannot remain pending for independent adjudication by the court…
as it is auxiliary to the proceeding in the original suit and merely derives its jurisdictional
support therefrom."48 Express reliance was made on Metals, International Container, and
even Dalman in support of the majority’s thesis. BA Finance likewise advised that the proper
remedy for defendants desirous that their counterclaims not be dismissed along with the main
complaint was for them to move to declare the plaintiffs to be "non-suited" on their complaint
and "as in default" on their compulsory counterclaim, instead of moving for the dismissal of
the complaint.49
Justice Regalado, joined by Chief Justice Narvasa, registered a strong objection to the theory
of the majority. They agreed that the trial court could no longer hear the counterclaim, but
only on the ground that defendant’s motion to be allowed to present evidence on the
counterclaim was filed after the order dismissing the complaint had already become final.
They disagreed however that the compulsory counterclaim was necessarily dismissed along
with the main complaint, pointing out that a situation wherein the dismissal of the complaint
was occasioned by plaintiff’s failure to appear during pre-trial was governed under Section
3, Rule 17, and not Section 2 of the same rule. Justice Regalado, who ironically penned the
decision in Metals cited by the majority, explained:
Turning back to Rule 17, it is readily apparent that Sections 2 and 3 thereof envisage different
factual and adjective situations. The dismissal of the complaint under Section 2 is at the
instance of plaintiff, for whatever reason he is minded to move for such dismissal, and, as a
matter of procedure, is without prejudice unless otherwise stated in the order of the court or,
for that matter, in plaintiff's motion to dismiss his own complaint. By reason thereof, to curb
any dubious or frivolous strategy of plaintiff for his benefit or to obviate possible prejudice
to defendant, the former may not dismiss his complaint over the defendant's objection if the
latter has a compulsory counterclaim since said counterclaim would necessarily be divested
31
of juridical basis and defendant would be deprived of possible recovery thereon in that same
judicial proceeding.
Section 3, on the other hand, contemplates a dismissal not procured by plaintiff, albeit
justified by causes imputable to him and which, in the present case, was petitioner's failure
to appear at the pre-trial. This situation is also covered by Section 3, as extended by judicial
interpretation, and is ordered upon motion of defendant or motu proprio by the court. Here,
the issue of whether defendant has a pending counterclaim, permissive or compulsory, is not
of determinative significance. The dismissal of plaintiff's complaint is evidently a
confirmation of the failure of evidence to prove his cause of action outlined therein, hence
the dismissal is considered, as a matter of evidence, an adjudication on the merits. This does
not, however, mean that there is likewise such absence of evidence to prove defendant's
counterclaim although the same arises out of the subject matter of the complaint which was
merely terminated for lack of proof. To hold otherwise would not only work injustice to
defendant but would be reading a further provision into Section 3 and wresting a meaning
therefrom although neither exists even by mere implication. Thus understood, the complaint
can accordingly be dismissed, but relief can nevertheless be granted as a matter of course to
defendant on his counterclaim as alleged and proved, with or without any reservation therefor
on his part, unless from his conduct, express or implied, he has virtually consented to the
concomitant dismissal of his counterclaim.50
Justice Regalado also adverted to Sta. Maria and noted that the objections raised and rejected
by the Court therein were the same as those now relied upon by the plaintiff. He pointed out
that Dalman and International Container, both relied upon by the majority, involved the
application of Section 2, Rule 17 and not Section 3, which he insisted as the applicable
provision in the case at bar.51
The partial dissent of Justice Regalado in BA Finance proved opportune, as he happened then
to be a member of the Rules of Court Revision Committee tasked with the revision of the
1964 Rules of Court. Just a few months after BA Finance was decided, Justice Regalado
proposed before the Committee an amendment to Section 3, Rule 17 that would explicitly
provide that the dismissal of the complaint due to the fault of the plaintiff shall be "without
prejudice to the right of the defendant to prosecute his counterclaim in the same or in a
separate action." The amendment, which was approved by the Committee, is reflected in the
minutes of the meeting of the Committee held on 12 October 1993:
[Justice Regalado] then proposed that after the words "upon the court’s own motion" in the
6th line of the draft in Sec. 3 of Rule 17, the following provision be inserted: "without
prejudice to the right of the defendant to prosecute his counterclaim in the same or in
a separate action." The Committee agreed with the proposed amendment of Justice
Regalado.
Justice Herrera observed that under Secs. 1 to 3 of Rule 17, it is not the action that is
dismissed but the complaint. He asked whether there is any distinction between "complaint"
and "action." Justice Regalado opined that the action of the plaintiff is initiated by his
complaint.
Justice Feria then suggested that the dismissal be limited to the complaint[.] Thus, in
the 1st line of Sec. 1, the words "An action" will be changed to "a complaint"; in the
2nd line of Sec. 2, the words "an action" will be changed to "a complaint" and in Sec.
3, the word "action" on the 5th line of the draft will be changed to "complaint." The
Committee agreed with Justice Feria’s suggested amendments.
CA Paño believed that there is a need to clarify the counterclaim that the defendant will
prosecute, whether it is permissive or compulsory or all kinds of counterclaims.
Justice Regalado opined that there is no need of making a clarification because it is
already understood that it covers both counterclaims.52
It is apparent from these minutes that the survival of the counterclaim despite the dismissal
of the complaint under Section 3 stood irrespective of whether the counterclaim was
permissive or compulsory. Moreover, when the Court itself approved the revisions now
contained in the 1997 Rules of Civil Procedure, not only did Justice Regalado’s amendment
to Section 3, Rule 17 remain intact, but the final version likewise eliminated the qualification
formerly offered under Section 2 on "counterclaims that can remain pending for independent
adjudication by the court."53 At present, even Section 2, concerning dismissals on motion of
the plaintiff, now recognizes the right of the defendant to prosecute the counterclaim either
in the same or separate action notwithstanding the dismissal of the complaint, and without
regard as to the permissive or compulsory nature of the counterclaim.
In his commentaries on the 1997 Rules of Civil Procedure, Justice Regalado expounds on the
effects of the amendments to Section 2 and 3 of Rule 17:
2. Under this revised section [2], where the plaintiff moves for the dismissal of his complaint
to which a counterclaim has been interposed, the dismissal shall be limited to the complaint.
Such dismissal shall be without prejudice to the right of the defendant to either prosecute his
counterclaim in a separate action or to have the same resolved in the same action. Should he
opt for the first alternative, the court should render the corresponding order granting and
reserving his right to prosecute his claim in a separate complaint. Should he choose to have
his counterclaim disposed of in the same action wherein the complaint had been dismissed,
he must manifest such preference to the trial court within 15 days from notice to him of
plaintiff’s motion to dismiss. These alternative remedies of the defendant are available
to him regardless of whether his counterclaim is compulsory or permissive. A similar
alternative procedure, with the same underlying reason therefor, is adopted in Sec. 6, Rule
16 and Sec. 3 of this Rule, wherein the complaint is dismissed on the motion of the defendant
or, in the latter instance, also by the court motu proprio.
xxxx
2. The second substantial amendment to [Section 3] is with respect to the disposition of the
defendant’s counterclaim in the event the plaintiff’s complaint is dismissed. As already
observed, he is here granted the choice to prosecute that counterclaim in either the same or a
separate action. x x x x
3. With the aforestated amendments in Secs. 2 and 3 laying down specific rules on the
disposition of counterclaims involved in the dismissal actions, the controversial doctrine
in BA Finance Corporation vs. Co, et al., (G.R. No. 105751, June 30, 1993) has been
abandoned, together with the apparent confusion on the proper application of said Secs.
2 and 3. Said sections were distinguished and discussed in the author’s separate opinion in
that case, even before they were clarified by the present amendments x x x.54
Similarly, Justice Feria notes that "the present rule reaffirms the right of the defendant to
move for the dismissal of the complaint and to prosecute his counterclaim, as stated in the
separate opinion [of Justice Regalado in BA Finance.]"55 Retired Court of Appeals Justice
Herrera pronounces that the amendment to Section 3, Rule 17 settles that "nagging question"
whether the dismissal of the complaint carries with it the dismissal of the counterclaim, and
opines that by reason of the amendments, the rulings in Metals Engineering, International
Container, and BA Finance "may be deemed abandoned."56 On the effect of amendment to
Section 3, Rule 17, the commentators are in general agreement,57 although there is less
unanimity of views insofar as Section 2, Rule 17 is concerned. 58
32
To be certain, when the Court promulgated the 1997 Rules of Civil Procedure, including the
amended Rule 17, those previous jural doctrines that were inconsistent with the new rules
incorporated in the 1997 Rules of Civil Procedure were implicitly abandoned insofar as
incidents arising after the effectivity of the new procedural rules on 1 July 1997. BA Finance,
or even the doctrine that a counterclaim may be necessarily dismissed along with the
complaint, clearly conflicts with the 1997 Rules of Civil Procedure. The abandonment of BA
Finance as doctrine extends as far back as 1997, when the Court adopted the new Rules of
Civil Procedure. If, since then, such abandonment has not been affirmed in jurisprudence, it
is only because no proper case has arisen that would warrant express confirmation of the new
rule. That opportunity is here and now, and we thus rule that the dismissal of a complaint due
to fault of the plaintiff is without prejudice to the right of the defendant to prosecute any
pending counterclaims of whatever nature in the same or separate action. We confirm that
BA Finance and all previous rulings of the Court that are inconsistent with this present
holding are now abandoned.
Accordingly, the RTC clearly erred when it ordered the dismissal of the counterclaim, since
Section 3, Rule 17 mandates that the dismissal of the complaint is without prejudice to the
right of the defendant to prosecute the counterclaim in the same or separate action. If the
RTC were to dismiss the counterclaim, it should be on the merits of such counterclaim.
Reversal of the RTC is in order, and a remand is necessary for trial on the merits of the
counterclaim.
It would be perfectly satisfactory for the Court to leave this matter at that. Still, an explanation
of the reason behind the new rule is called for, considering that the rationale behind the
previous rule was frequently elaborated upon.
Under Act No. 190, or the Code of Procedure in Civil Actions promulgated in 1901, it was
recognized in Section 127(1) that the plaintiff had the right to seek the dismissal of the
complaint at any time before trial, "provided a counterclaim has not been made, or affirmative
relief sought by the cross-complaint or answer of the defendant."59 Note that no qualification
was made then as to the nature of the counterclaim, whether it be compulsory or permissive.
The protection of the defendant’s right to prosecute the counterclaim was indeed unqualified.
In City of Manila, decided in 1918, the Court explained:
By paragraph 1 [of Section 127], it will be seen that, where the defendant has interposed a
counterclaim, or is seeking affirmative relief by a cross-complaint, that then, and in that case,
the plaintiff cannot dismiss the action so as to affect the right of the defendant in his
counterclaim or prayer for affirmative relief. The reason for that exception is clear. When
the answer sets up an independent action against the plaintiff, it then becomes an action
by the defendant against the plaintiff, and, of course, the plaintiff has no right to ask
for a dismissal of the defendant’s action.60
Nonetheless, a new rule was introduced when Act No. 190 was replaced by the 1940 Rules
of Court. Section 2, Rule 30 of the 1940 Rules specified that if a counterclaim is pleaded by
a defendant prior to the service of the plaintiff’s motion to dismiss, the action shall not be
dismissed against the defendant’s objection unless the counterclaim can remain pending for
independent adjudication by the court. This qualification remained intact when the 1964
Rules of Court was introduced.61 The rule referred only to compulsory counterclaims, or
counterclaims which arise out of or are necessarily connected with the transaction or
occurrence that is the subject matter of the plaintiff’s claim, since the rights of the parties
arising out of the same transaction should be settled at the same time.62 As was evident in
Metals, International Container and BA Finance, the rule was eventually extended to
instances wherein it was the defendant with the pending counterclaim, and not the plaintiff,
that moved for the dismissal of the complaint.
We should not ignore the theoretical bases of the rule distinguishing compulsory
counterclaims from permissive counterclaims insofar as the dismissal of the action is
concerned. There is a particular school of thought that informs the broad proposition in
Dalman that "if the civil case is dismissed, so also is the counterclaim filed therein,"63 or the
more nuanced discussions offered in Metals, International Container, and BA Finance. The
most potent statement of the theory may be found in Metals,64 which proceeds from the
following fundamental premises—a compulsory counterclaim must be set up in the same
proceeding or would otherwise be abated or barred in a separate or subsequent litigation on
the ground of auter action pendant, litis pendentia or res judicata; a compulsory
counterclaim is auxiliary to the main suit and derives its jurisdictional support therefrom as
it arises out of or is necessarily connected with the transaction or occurrence that is the subject
matter of the complaint;65 and that if the court dismisses the complaint on the ground of lack
of jurisdiction, the compulsory counterclaim must also be dismissed as it is merely ancilliary
to the main action and no jurisdiction remained for any grant of relief under the counterclaim.
The first point is derived from Section 4, Rule 9, of the 1964 Rules of Court, while the two
latter points are sourced from American jurisprudence. There is no disputing the theoretical
viability of these three points. In fact, the requirement that the compulsory counterclaim must
be set up in the same proceeding remains extant under the 1997 Rules of Civil Procedure. 66
At the same time, other considerations rooted in actual practice provide a counterbalance to
the above-cited rationales.
Whatever the nature of the counterclaim, it bears the same integral characteristics as a
complaint; namely a cause (or causes) of action constituting an act or omission by which a
party violates the right of another. The main difference lies in that the cause of action in the
counterclaim is maintained by the defendant against the plaintiff, while the converse holds
true with the complaint. Yet, as with a complaint, a counterclaim without a cause of action
cannot survive.
It would then seemingly follow that if the dismissal of the complaint somehow eliminates
the cause(s) of the counterclaim, then the counterclaim cannot survive. Yet that hardly is the
case, especially as a general rule. More often than not, the allegations that form the
counterclaim are rooted in an act or omission of the plaintiff other than the plaintiff’s
very act of filing the complaint. Moreover, such acts or omissions imputed to the
plaintiff are often claimed to have occurred prior to the filing of the complaint itself.
The only apparent exception to this circumstance is if it is alleged in the counterclaim
that the very act of the plaintiff in filing the complaint precisely causes the violation of
the defendant’s rights. Yet even in such an instance, it remains debatable whether the
dismissal or withdrawal of the complaint is sufficient to obviate the pending cause of
action maintained by the defendant against the plaintiff.67
These considerations persist whether the counterclaim in question is permissive or
compulsory. A compulsory counterclaim arises out of or is connected with the transaction or
occurrence constituting the subject matter of the opposing party’s claim, does not require for
its adjudication the presence of third parties, and stands within the jurisdiction of the court
both as to the amount involved and the nature of the claim. 68 The fact that the culpable acts
on which the counterclaim is based are founded within the same transaction or occurrence as
the complaint, is insufficient causation to negate the counterclaim together with the
complaint. The dismissal or withdrawal of the complaint does not traverse the boundaries of
time to undo the act or omission of the plaintiff against the defendant, or vice versa. While
such dismissal or withdrawal precludes the pursuit of litigation
by the plaintiff, either through his/her own initiative or fault, it would be iniquitous to
similarly encumber the defendant who maintained no such initiative or fault. If the defendant
similarly moves for the dismissal of the counterclaim or neglects to timely pursue such
33
action, let the dismissal of the counterclaim be premised on those grounds imputable to the
defendant, and not on the actuations of the plaintiff.
The other considerations supplied in Metals are anchored on the premise that the
jurisdictional foundation of the counterclaim is the complaint itself. The theory is correct,
but there are other facets to this subject that should be taken into account as well. On the
established premise that a counterclaim involves separate causes of action than the complaint
even if derived from the same transaction or series of transactions, the counterclaim could
have very well been lodged as a complaint had the defendant filed the action ahead of the
complainant.69 The terms "ancillary" or "auxiliary" may mislead in signifying that a
complaint innately possesses more credence than a counterclaim, yet there are many
instances wherein the complaint is trivial but the counterclaim is meritorious. In truth, the
notion that a counterclaim is, or better still, appears to be merely "ancillary" or "auxiliary" is
chiefly the offshoot of an accident of chronology, more than anything else.
The formalistic distinction between a complaint and a counterclaim does not detract from the
fact that both of them embody causes of action that have in their end the vindication of rights.
While the distinction is necessary as a means to facilitate order and clarity in the rules of
procedure, it should be remembered that the primordial purpose of procedural rules is to
provide the means for the vindication of rights. A party with a valid cause of action against
another party cannot be denied the right to relief simply because the opposing side had the
good fortune of filing the case first. Yet this in effect was what had happened under the
previous procedural rule and correspondent doctrine, which under their final permutation,
prescribed the automatic dismissal of the compulsory counterclaim upon the dismissal of the
complaint, whether upon the initiative of the plaintiff or of the defendant.
Thus, the present rule embodied in Sections 2 and 3 of Rule 17 ordains a more equitable
disposition of the counterclaims by ensuring that any judgment thereon is based on the merit
of the counterclaim itself and not on the survival of the main complaint. Certainly, if the
counterclaim is palpably without merit or suffers jurisdictional flaws which stand
independent of the complaint, the trial court is not precluded from dismissing it under the
amended rules, provided that the judgment or order dismissing the counterclaim is premised
on those defects. At the same time, if the counterclaim is justified, the amended rules now
unequivocally protect such counterclaim from peremptory dismissal by reason of the
dismissal of the complaint.
WHEREFORE, the petition is GRANTED. The Orders dated 9 August 2005 and 10 October
2005 of Branch 29, Regional Trial Court of San Miguel, Zamboanga del Sur in Civil Case
No. 98-012 are SET ASIDE. Petitioner’s counterclaim as defendant in Civil Case. No. 98-
012 is REINSTATED. The Regional Trial Court is ORDERED to hear and decide the
counterclaim with deliberate dispatch.
SO ORDERED.
GENERAL PRINCIPLES/RULE 1: RULE-MAKING POWER OF SC
[GR No. 189689, Nov 13, 2012]
IN MATTER OF PETITION FOR ISSUANCE OF A WRIT OF AMPARO IN
FAVOR OF LILIBETH O. LADAGA: LILIBETH O. LADAGA v. MAJ. GEN.
REYNALDO MAPAGU +
PERLAS-BERNABE, J.:
Cases
In each of these three (3) consolidated petitions for review, the Court is tasked to evaluate
the substantially similar but separately issued Orders of the Regional Trial Court (RTC) of
Davao City, Branch 10, dated August 14, 2009 [1] in the three (3) writ of amparo cases, as
well as, the Order dated September 22, 2009[2] denying the joint motion for reconsideration
thereof.
Facts
Petitioners share the common circumstance of having their names included in what is alleged
to be a JCICC "AGILA" 3rd Quarter 2007 Order of Battle Validation Result of the Philippine
Army's 10th Infantry Division (10th ID),[3] which is a list containing the names of
organizations and personalities in Southern Mindanao, particularly Davao City, supposedly
connected to the Communist Party of the Philippines (CPP) and its military arm, the New
People's Army (NPA). They perceive that by the inclusion of their names in the said Order
of Battle (OB List), they become easy targets of unexplained disappearances or extralegal
killings a real threat to their life, liberty and security.
The petitioner in G.R. No. 189689, ATTY. LILIBETH O. LADAGA (Atty. Ladaga), first
came to know of the existence of the OB List from an undisclosed source on May 21,
2009. This was after the PowerPoint presentation made public by Bayan Muna Party-List
Representative Satur Ocampo (Representative Ocampo) on May 18, 2009 during the
conclusion of the International Solidarity Mission (ISM) conducted by various
organizations. The following entries bearing specific reference to her person were reflected
therein:
7. ON 12 NOV 07, MEETING AT SHIMRIC BEACH RESORT, TALOMO, DC
PRESIDED BY ATTY LILIBETH LADAGA SEC GEN, UNION OF PEOPLE'S
LAWYER MOVEMENT (UPLM) AND KELLY DELGADO SEC GEN,
KARAPATAN:
- PRESENTED THE NATL GOAL/THEME WHICH STATES THAT "THE
STAGE IS SET, TIME TO UNITE AGAINST ARROYO, STEP UP PROTESTS
AND ARMED OFFENSIVE.
- DISCUSSED THE FOLLOWING ISSUES WHICH WILL BE CAPITALIZED
ON THEIR PLANNED ACTIVITIES ON 30 NOV 07:
ISSUES:
1. OUTREACH PROGRAMS/ MEDICAL MISSION IN RURAL
AREAS;
2. OUT OF SCHOOL YOUTH RECRUITMENT;
3. P125 DAILY WAGE HIKE OR P3,000 ACROSS THE BOARD HIKE;
4. SCRAP ANTI-TERRORISM BILL;
34
5. OIL DE-REGULATION LAW;
6. ANTI-LARGE SCALE MINING;
7. CORRUPTION AND ANTI-POVERTY/ZTE ISSUES AND
BRIBERY;
8. ANTI-POLITICAL AND EXTRA JUDICIAL KILLINGS;
9. CARP ISSUES AND LAND DISPUTES; AND
10. LATEST GLORIETA BOMBING
COMPOSITION: CIVIC, RELIGIOUS, TRANSPORT, LABOR AND
PEASANT, YOUTH SECTOR, PROGRESSIVE GROUPS, BUSINESS
SECTOR, ANTI-PGMA, BLACK AND WHITE MOVEMENT AND ANTI-
POVERTY MOVEMENT.
ULTIMATE GOAL: TRY TO OUST PGMA ON 30 NOV 07[4]
In her Affidavit,[5] Atty. Ladaga substantiated the threats against her life, liberty and security
by narrating that since 2007, suspicious-looking persons have been visiting her Davao City
law office during her absence, posing either as members of the military or falsely claiming
to be clients inquiring on the status of their cases. These incidents were attested to by her
law office partner, Atty. Michael P. Pito, through an Affidavit [6] dated June 16, 2009.
On the other hand, the petitioner in G.R. No. 189690, Davao City Councilor ATTY.
ANGELA LIBRADO-TRINIDAD (Atty. Librado-Trinidad), delivered a Privilege
Speech[7] before the members of the Sangguniang Panglungsod of Davao City on May 19,
2009 to demand the removal of her name from said OB List. Subsequently, the Davao City
Council ordered a formal investigation into the existence of the alleged OB List. The
Commission on Human Rights (CHR), for its part, announced the conduct of its own
investigation into the matter, having been presented a copy of the PowerPoint presentation
during its public hearing in Davao City on May 22, 2009.
According to her, in the course of the performance of her duties and functions as a lawyer,
as a member of the Sangguniang Panglungsod of Davao, as well as, of Bayan Muna, she has
not committed any act against national security that would justify the inclusion of her name
in the said OB List. In her Affidavit,[8] she recounted that sometime in May 2008, two
suspicious-looking men on a motorcycle tailed her vehicle as she went about her day going
to different places. She also recalled that on June 23, 2008, while she was away from home,
three unidentified men tried to barge into their house and later left on board a plate-less,
stainless "owner type-vehicle." Both incidents were duly reported to the police.[9]
Meanwhile, the petitioner in G.R. No. 189691, current Secretary General of the Union of
Peoples' Lawyers in Mindanao (UPLM) and Davao City Coordinator of the Free Legal
Assistance Group (FLAG), ATTY. CARLOS ISAGANI T. ZARATE (Atty. Zarate), was
informed sometime in May 2009 that his name was also among those included in the OB List
made public by Representative Ocampo at a forum concerning human rights violations in
Southern Mindanao. In Atty. Zarate's petition,[10] he alleged that:
5. On May 19, 2009, during a press conference marking the conclusion of an International
Solidarity Mission (ISM) attended by both local and international delegates and organized to
investigate alleged human rights violations in Southern Mindanao by state's forces Bayan
Muna Party-list Representative Satur Ocampo revealed the existence of a "watch list,"
officially known in military parlance as "Order of Battle" prepared by the intelligence arm
of Philippine Army's 10th ID, headed by respondent Maj. Gen. Reynaldo Mapagu. x x x;
6. The said "Order of Battle" was contained in a [PowerPoint] presentation marked
"SECRET" and captioned "3rd Quarter 2007 OB Validation Result"; it was supposedly
prepared by the "JCICC 'Agila'" under the [O]ffice of the Assistant Chief of Staff for
Intelligence of the 10th Infantry Division of the Philippine Army. It also mentioned a certain
"JTICC 'LAWIN'" with the following as members: Task Force Davao Chairman; Team
Leader, SPOT11-3, MIG11, ISAFP, NISU-Davao, NISG-EM, PN, 305th AISS, PAF,
TL, ISU 11, PA, S2, RCDG, PA; M2, DCPO; NICA XI; S2, 104th DRC, PA, and,
WACOM-Researcher/Analyst MIG11, ISAFP[;]
7. The said [PowerPoint] presentation (which Representative Ocampo said was "leaked" by
a "conscientious soldier"), revealed the names of organizations and personalities in Southern
Mindanao, particularly Davao City, supposedly "connected" to the Communist Party of the
Philippines (CPP) and its military arm, the New People's Army (NPA);
8. The name of the herein petitioner was listed in the categories of "human rights" and
"Broad Alliance" x x x;[11] (Emphasis in the original)
Asserting that the inclusion of his name in the OB List was due to his advocacies as a public
interest or human rights lawyer, Atty. Zarate vehemently and categorically denied that he
was fronting for, or connected with, the CPP-NPA.[12]
In fine, petitioners were one in asserting that the OB List is really a military hit-list as
allegedly shown by the fact that there have already been three victims of extrajudicial killing
whose violent deaths can be linked directly to the OB List, to wit: Celso B. Pojas, who was
assassinated in May 2008[13] purportedly because he was Secretary General of the Farmers
Association of Davao City[14] and Spokesperson of the Kilusang Magbubukid sa Pilipinas
(KMP),[15] which organizations were identified as communist fronts in the subject OB List;
Lodenio S. Monzon, who was a victim of a shooting incident in April 2009[16] due to his
supposed connection to the known activist party-list group Bayan Muna[17] as Coordinator in
the Municipality of Boston, Davao Oriental; and Dr. Rogelio Peñera, who was shot to death
in June 2009 allegedly because he was a member of RX Against Erap (RAGE),[18] a sectoral
group also identified in the OB List.
Petitioners further alleged that respondents' inconsistent statements and obvious
prevarication sufficiently prove their authorship of the subject OB List. Supposedly sourced
from their own Press Releases,[19]respondents have been quoted in several newspapers as
saying: 1) that the "10th ID has its Order of Battle, and, it is not for public consumption"; 2)
that the Order of Battle "requires thorough confirmation and validation from different law
enforcement agencies, and from various sectors and stakeholders who are the ones providing
the information about the people and organizations that may in one way or the other, wittingly
or unwittingly, become involved in the CPP's grand design"; 3) that an "order of battle does
not target individuals; it is mainly an assessment of the general threat to national security";
4) that Representative Ocampo "utilized the material to disrupt the ongoing government
efforts in the area by raising issues and propaganda against the military"; 5) that "[t]he public
viewing of the "falsified" document of the OB was a deliberate act of Representative Ocampo
x x x to mar the image of the military forces, gain media mileage and regain the support of
the masses and local executives"; 6) that Reperesentative Ocampo "'twisted' the data and
insinuated names as targets of the AFP/10ID when in fact these are targets (for infiltration)
by the CPP/NPA"; and 7) that this "attempt of the CPP to attribute human rights violations
to the Philippine government is a cover to mask their record of killing people." According
to petitioners, there is no question that these Press Releases came from the 10th ID. Its source
email address, dpao10id@yahoo.com, has been identified by regular correspondent of
the Philippine Daily Inquirer Jeffrey Tupas as the same one used by respondent Lt. Col.
Decapia in sending to him previous official press statements of the 10th ID, including the
Press Release entitled, "CPP/NPA demoralized, ISM on the rescue."[20]
35
On June 16, 2009, petitioners separately filed before the RTC a Petition for the Issuance of
a Writ of Amparowith Application for a Production Order,[21] docketed as Special Proceeding
Nos. 004-09,[22] 005-09[23] and 006-09.[24] On June 22, 2009, the RTC issued separate Writs
of Amparo[25] in each of the three (3) cases, directing respondents to file a verified written
return within seventy-two (72) hours and setting the case for summary hearing on June 29,
2009.
In their Returns,[26] respondents denied authorship of the document being adverted to and
distributed by Representative Ocampo to the media. They claimed that petitioners miserably
failed to show, by substantial evidence, that they were responsible for the alleged threats
perceived by petitioners. Instead, they asserted that petitioners' allegations are based solely
on hearsay, speculation, beliefs, impression and feelings, which are insufficient to warrant
the issuance of the writ and, ultimately, the grant of the privilege of the writ of amparo.
In her Reply,[27] Atty. Librado-Trinidad averred that the present petition substantially
conformed with the requirements of the Amparo Rule, as it alleged ultimate facts on the
participation of respondents in the preparation of the OB List, which naturally requires
utmost secrecy. The petition likewise alleged how the inclusion of their names in the said
OB List substantiates the threat of becoming easy targets of unexplained disappearances and
extrajudicial killings. On the other hand, Attys. Zarate and Ladaga commonly asserted[28]that
the totality of the events, which consists of respondents' virtual admission to the media of the
existence of the OB List, as well as, the fact that known victims of past extrajudicial killings
have been likewise labeled as communist fronts in similar orders of battle, more than satisfies
the standard required to prove that petitioners' life, liberty and security are at risk.
During the scheduled summary hearing on June 22, 2009, Representative Ocampo's oral
testimony on the circumstances surrounding his obtention of the alleged military document
was dispensed with and, instead, the Affidavit[29] he executed on June 30, 2009 was presented
in the hearing held on July 1, 2009 to form part of the documentary exhibits of petitioners.[30]
After submission of the parties' respective Position Papers,[31] the RTC issued on August 14,
2009 the three separate but similarly-worded Orders finding no substantial evidence to show
that the perceived threat to petitioners' life, liberty and security was attributable to the
unlawful act or omission of the respondents, thus disposing of each of the three cases in this
wise:
Prescinding therefrom, and in x x x light of all the pieces of evidence presented, this Court
is of the considered views [sic] that petitioner failed to prove, by substantial evidence, that
indeed, (her/his) perceived threat to (her/his) life, liberty and security is attributable to the
unlawful act or omission of the respondents. Accordingly, this Court has no other recourse
but to deny the instant petition.
WHEREFORE, the privilege of the Writ is hereby denied.
SO ORDERED.[32]
The RTC rejected the sworn statement of Representative Ocampo for being hearsay, holding
that with no direct or personal knowledge of the authenticity of the subject OB List, even an
oral testimony from him on the circumstances surrounding its obtention through a
"conscientious soldier" would still be of no probative weight. It likewise found that the
violent deaths of Celso Pojas, Lodenio Monzon and Dr. Rogelio Peñera, and other incidents
of threat have no direct relation at all to the existence of the present OB List.
In their Joint Motion for Reconsideration,[33] petitioners argued that the existence and
veracity of the OB List had already been confirmed by respondents themselves through their
statements to the media, hence, respondents' personal authorship thereof need not be proven
by substantial evidence, as it is, after all, "not the crux of the issue." Petitioners explicated
that since respondents were being impleaded as the responsible officers of the 10th ID the
military unit that supposedly prepared the OB List PowerPoint presentation, their general
denials on the existence of the OB List without taking serious steps to find the persons
actually responsible for the threat could not discharge respondents from the standard of
diligence required of them under the Amparo Rule.
The RTC, however, rejected petitioners' arguments in the September 22, 2009 Order, hence,
these petitions for review on certiorari raising the following issues:
I. The trial court erred in ruling that Petitioner failed to adduce substantial evidence
to warrant the grant of the privilege of the writ, i.e., protection;
II. The trial court erred in failing to consider that the Respondents likewise failed to
discharge the diligence required by the Amparo Rules by their sweeping and
general denials; AND
III. The trial court erred in appreciating the nature and concept of the privilege of the
writ.[34]
Commenting on the petitions, respondents argue[35] that the purported OB List could not have
come from the military because it does not have the "distinctive marks and security
classifications" of military documents. They quickly defend the correctness of the RTC's
denial of the privilege of the writ and the interim relief of a protection order as petitioners
have not presented any adequate and competent evidence, much less substantial evidence, to
establish that public respondents are threatening to violate their rights to life, liberty and
security or that, at the very least, were involved in the preparation of the OB List.
We deny the petitions.
The writ of amparo was promulgated by the Court pursuant to its rule-making powers in
response to the alarming rise in the number of cases of enforced disappearances and
extrajudicial killings.[36] It plays the preventive role of breaking the expectation of impunity
in the commission of extralegal killings and enforced disappearances, as well as the curative
role of facilitating the subsequent punishment of the perpetrators. [37] In Tapuz v. Del
Rosario,[38] the Court has previously held that the writ of amparo is an extraordinary remedy
intended to address violations of, or threats to, the rights to life, liberty or security and that,
being a remedy of extraordinary character, it is not one to issue on amorphous or uncertain
grounds but only upon reasonable certainty. Hence, every petition for the issuance of the
writ is required to be supported by justifying allegations of fact on the following matters:
(a) The personal circumstances of the petitioner;
(b) The name and personal circumstances of the respondent responsible for the threat, act or
omission, or, if the name is unknown or uncertain, the respondent may be described by an
assumed appellation;
(c) The right to life, liberty and security of the aggrieved party violated or threatened with
violation by an unlawful act or omission of the respondent, and how such threat or violation
is committed with the attendant circumstances detailed in supporting affidavits;
(d) The investigation conducted, if any, specifying the names, personal circumstances, and
addresses of the investigating authority or individuals, as well as the manner and conduct of
the investigation, together with any report;
36
(e) The actions and recourses taken by the petitioner to determine the fate or whereabouts of
the aggrieved party and the identity of the person responsible for the threat, act or omission;
and
(f) The relief prayed for. The petition may include a general prayer for other just and equitable
reliefs.[39] (Underscoring supplied)
The sole and common issue presented in these petitions is whether the totality of evidence
satisfies the degree of proof required under the Amparo Rule. Sections 17 and 18 of the Rule
on the Writ of Amparo provide as follows:
SEC. 17. Burden of Proof and Standard of Diligence Required. The parties shall establish
their claims by substantial evidence.
x x x x
SEC. 18. Judgment. The court shall render judgment within ten (10) days from the time the
petition is submitted for decision. If the allegations in the petition are proven by substantial
evidence, the court shall grant the privilege of the writ and such reliefs as may be proper and
appropriate; otherwise, the privilege shall be denied. (Emphasis supplied)
Substantial evidence is that amount of relevant evidence which a reasonable mind might
accept as adequate to support a conclusion. It is more than a mere imputation of wrongdoing
or violation that would warrant a finding of liability against the person charged. [40] The
summary nature of amparo proceedings, as well as, the use of substantial evidence as
standard of proof shows the intent of the framers of the rule to address situations of enforced
disappearance and extrajudicial killings, or threats thereof, with what is akin to administrative
proceedings.[41]
Suitable to, and consistent with this incipiently unique and informal treatment
of amparo cases, the Court eventually recognized the evidentiary difficulties that
beset amparo petitioners, arising as they normally would from the fact that the State itself,
through its own agents, is involved in the enforced disappearance or extrajudicial killing that
it is supposedly tasked by law to investigate. Thus, in Razon, Jr. v. Tagitis, the Court laid
down a new standard of relaxed admissibility of evidence to enable amparo petitioners to
meet the required amount of proof showing the State's direct or indirect involvement in the
purported violations and found it a fair and proper rule in amparo cases "to consider all the
pieces of evidence adduced in their totality" and "to consider any evidence otherwise
inadmissible under our usual rules to be admissible if it is consistent with the admissible
evidence adduced."[42] Put simply, evidence is not to be rejected outright because it is
inadmissible under the rules for as long as it satisfies "the most basic test of reason i.e.,
relevance of the evidence to the issue at hand and its consistency with all other pieces of
adduced evidence."[43]
This measure of flexibility in the admissibility of evidence, however, does not do away with
the requirement of substantial evidence in showing the State's involvement in the enforced
disappearance, extrajudicial killing or threats thereof. It merely permits, in the absence of
hard-to-produce direct evidence, a closer look at the relevance and significance of every
available evidence,[44] including those that are, strictly speaking, hearsay where the
circumstances of the case so require, and allows the consideration of the evidence adduced
in terms of their consistency with the totality of the evidence.[45]
As emphasized by Justice Arturo D. Brion (Justice Brion) during the deliberations on this
case, in cases of enforced disappearance, the evidence that would directly establish a
violation of the right to life, liberty and security is indubitably in the State's possession. The
same is not equally true in cases where the amparopetitioner alleges (as in this case) a
threatened violation of his/her rights since the facts, circumstances and the link between these
that create an actual threat to his/her life are measurably within the ability of
the amparopetitioner to prove. These include, among others, the alleged documented human
rights violations by the military in Mindanao; documentary and/or testimonial evidence on
the military's counter-insurgency operations; corroborative evidence to support the
allegations on the presence of suspicious men; and presumptive evidence linking the deaths
of Celso Pojas, Ludenio Monzon and Dr. Rogelio Peñera to their political affiliation and the
similarity of their situation to those of petitioners. A mere inclusion of one's name in the OB
List, without more, does not suffice to discharge the burden to establish actual threat to one's
right to life, liberty and security by substantial evidence.
The statement of Representative Ocampo that the respondents are the real source of the OB
List is unquestionably hearsay evidence because, except for the fact that he himself received
the OB List from an unnamed source merely described as "a conscientious soldier," he had
no personal knowledge concerning its preparation. But even if the Court were to apply the
appropriate measure of flexibility in the instant cases by admitting the hearsay testimony of
Representative Ocampo, a consideration of this piece of evidence to the totality of those
adduced, namely, the Press Releases issued by the 10th ID admitting the existence of a
military-prepared Order of Battle, the affidavits of petitioners attesting to the threatening
visits and tailing of their vehicles by menacing strangers, as well as the violent deaths of
alleged militant personalities, leads to the conclusion that the threat to petitioners' security
has not be adequately proven.
Petitioners sought to prove that the inclusion of their names in the OB List presented a real
threat to their security by attributing the violent deaths of known activists Celso Pojas,
Lodenio Monzon and Dr. Rogelio Peñera to the inclusion of the latter's names or the names
of their militant organizations in the subject OB List. Petitioner Atty. Librado-Trinidad even
attributed the alleged tailing of her vehicle by motorcycle-riding men and the attempted entry
by suspicious men into her home to the inclusion of her name in the OB List. The RTC,
however, correctly dismissed both arguments, holding that the existence of the OB List could
not be directly associated with the menacing behavior of suspicious men or the violent deaths
of certain personalities, thus:
"Anent petitioner's revelation that sometime in 2008, a number of unidentified men attempted
to forcibly enter the premises of her dwelling and that at one occasion, the vehicle she was
riding was tailed by motorcycle-riding men, the same could not led [sic] to the conclusion
that indeed, those incidents were related to the existence of the "OB List." There appears not
even an iota of evidence upon which the same assumption can be anchored on.[46]
This Court likewise sees no direct relation between the violent deaths of Celso Pojas, Ludenio
Monzon and Dr. Rogelio Peñera and the subject "OB List." There is no evidence pointing to
the claim that they were killed because their names or the organizations they were involved
in were mentioned in the same "OB List." More importantly, there is no official finding by
the proper authorities that their deaths were precipitated by their involvement in
organizations sympathetic to, or connected with, the Communist Party of the Philippines, or
its military arm, the New People's Army. Lastly, and more telling, the existence of the
subject "OB List" has not been adequately proven, as discussed heretofore, hence, reference
to the same finds no basis."[47]
The Court holds that the imputed pattern of targeting militants for execution by way of
systematically identifying and listing them in an Order of Battle cannot be inferred simply
from the Press Releases admitting the existence of a military document known as an Order
of Battle and the fact that activists Celso Pojas, Lodenio Monzon and Dr. Rogelio Peñera
have become supposed victims of extralegal killings. The adduced evidence tends to bear
37
strongly against the proposition because, except for Celso Pojas, the names of the supposed
victims of extrajudicial killings are manifestly absent in the subject OB List and the supposed
connection of the victims to the militant groups explicitly identified in the OB List is nothing
short of nebulous.
Moreover, while respondents may have admitted through various statements to the media
that the military has its own Order of Battle, such an admission is not equivalent to proof that
the subject OB List, which was publicly disclosed by Representative Ocampo by way of a
PowerPoint presentation, is one and the same with the Order of Battle that the military has
in its keeping. And, assuming that the Press Releases do amount to an admission not only of
the existence but also the authenticity of the subject OB List, the inclusion of petitioners'
names therein does not, by itself, constitute an actual threat to their rights to life, liberty and
security as to warrant the issuance of a writ of amparo.
In the case of Secretary of National Defense v. Manalo,[48] the Court ruled that a person's
right to security is, in one sense, "freedom from fear" and that any threat to the rights to life,
liberty or security is an actionable wrong. The term "any threat," however, cannot be taken
to mean every conceivable threat in the mind that may cause one to fear for his life, liberty
or security. The Court explicated therein that "[f]ear is a state of mind, a reaction; threat is a
stimulus, a cause of action. Fear caused by the same stimulus can range from being baseless
to well-founded as people react differently. The degree of fear can vary from one person to
another with the variation of the prolificacy of their imagination, strength of character or past
experience with the stimulus." Certainly, given the uniqueness of individual psychological
mindsets, perceptions of what is fearful will necessarily vary from one person to another.
The alleged threat to herein petitioners' rights to life, liberty and security must be actual, and
not merely one of supposition or with the likelihood of happening. And, when the evidence
adduced establishes the threat to be existent, as opposed to a potential one, then, it goes
without saying that the threshold requirement of substantial evidence in amparo proceedings
has also been met. Thus, in the words of Justice Brion, in the context of the Amparo rule,
only actual threats, as may be established from all the facts and circumstances of the case,
can qualify as a violation that may be addressed under the Rule on the Writ of Amparo.
Petitioners cannot assert that the inclusion of their names in the OB List is as real a threat as
that which brought ultimate harm to victims Celso Pojas, Lodenio Monzon and Dr. Rogelio
Peñera without corroborative evidence from which it can be presumed that the suspicious
deaths of these three people were, in fact, on account of their militant affiliations or that their
violent fates had been actually planned out by the military through its Order of Battle.
The Court may be more yielding to the use of circumstantial or indirect evidence and logical
inferences, but substantial evidence is still the rule to warrant a finding that the State has
violated, is violating, or is threatening to violate, amparo petitioners' right to life, liberty or
security. No substantial evidence of an actual threat to petitioners' life, liberty and security
has been shown to exist in this case. For, even if the existence of the OB List or, indeed, the
inclusion of petitioners' names therein, can be properly inferred from the totality of the
evidence presented, still, no link has been sufficiently established to relate the subject OB
List either to the threatening visits received by petitioners from unknown men or to the
violent deaths of the three (3) mentioned personalities and other known activists, which could
strongly suggest that, by some identifiable pattern of military involvement, the inclusion of
one's name in an Order of Battle would eventually result to enforced disappearance and
murder of those persons tagged therein as militants.
Emphasizing the extraordinary character of the amparo remedy, the Court ruled in the cases
of Roxas and Razon, Jr. that an amparo petitioner's failure to establish by substantial
evidence the involvement of government forces in the alleged violation of rights is never a
hindrance for the Court to order the conduct of further investigation where it appears that the
government did not observe extraordinary diligence in the performance of its duty to
investigate the complained abduction and torture or enforced disappearance. The Court
directed further investigation in the case of Roxas because the modest efforts of police
investigators were effectively putting petitioner's right to security in danger with the delay in
identifying and apprehending her abductors. In Razon, Jr., the Court found it necessary to
explicitly order the military and police officials to pursue with extraordinary diligence the
investigation into the abduction and disappearance of a known activist because not only did
the police investigators conduct an incomplete and one-sided investigation but they blamed
their ineffectiveness to the reluctance and unwillingness of the relatives to cooperate with the
authorities. In both of these cases, the incidents of abduction and torture were undisputed
and they provided the evidentiary support for the finding that the right to security was
violated and the necessity for further investigation into such
violation. Unlike Roxas and Razon, Jr., however, the present petitions do not involve actual
cases of abduction or disappearance that can be the basis of an investigation. Petitioners
would insist that respondents be investigated and directed to produce the Order of Battle that
they have admitted to be in their safekeeping and justify the inclusion of petitioners' names
therein. However, without substantial evidence of an actual threat to petitioners' rights to
life, liberty and security that consists more than just the inclusion of their names in an OB
List, an order for further investigation into, or production of, the military's Order of Battle,
would have no concrete basis.

WHEREFORE, premises considered, the petitions are hereby DENIED. The assailed
Orders dated August 14, 2009 and September 22, 2009 of the Regional Trial Court of Davao
City, Branch 10, are AFFIRMED.

SO ORDERED.

38
GENERAL PRINCIPLES/RULE 1: NATURE OF THE PHILIPPINE COURT
G.R. No. 167533 July 27, 2007
AUDI AG, Petitioner,
vs.
HON. JULES A. MEJIA, in his capacity as Executive Judge of the Regional Trial
Court, Alaminos City; AUTO PROMINENCE CORPORATION; and PROTON
PILIPINAS CORPORATION, Respondents.
SANDOVAL-GUTIERREZ, J.:
Before us for resolution is the instant Petition for Certiorari under Rule 65 of the 1997 Rules
of Civil Procedure, as amended, alleging that respondent Executive Judge Jules A. Mejia of
the Regional Trial Court (RTC), Alaminos City (Pangasinan) acted with grave abuse of
discretion in issuing the Orders dated March 29 and July 6, 2005 in Civil Case No. A-3010,
entitled "Auto Prominence Corporation and Proton Pilipinas Corporation, Plaintiffs, versus
Audi AG, Defendant."
The petition alleges that Audi AG, petitioner, is a non-resident foreign company engaged in
the manufacture of "Audi" brand cars. It is organized and existing under the laws of the
Federal Republic of Germany, with principal office at I/VO-3, 85045 Ingolstadt, Germany.
It is not licensed to do business in the Philippines but is suing on an isolated transaction.1
Auto Prominence Corporation and Proton Pilipinas Corporation (Proton), respondents, are
corporations duly organized and existing under Philippine laws engaged in the business of
assembling, buying, selling, distributing, importing, marketing, and servicing of motor
vehicles. They have a common principal office at Barangay Alos, Alaminos City.
On March 21, 2005, respondents filed with the RTC, Alaminos City a complaint for specific
performance and injunction (with application for a temporary restraining order [TRO] and
preliminary injunction) against petitioner Audi AG, docketed as Civil Case No. A-3010. The
complaint alleges inter alia that on August 1, 1996, petitioner appointed respondent Proton
as its sole assembler and distributor of Audi cars in the Philippines under an Assembly
Agreement and a Distributorship Agreement; that respondent Proton was induced to open,
promote, develop and sell Audi brand cars in the Philippines upon petitioner’s
representations that it (respondent Proton) will be the exclusive assembler and distributor of
Audi cars and local parts manufacturer for export purposes, for a period of 12 months and,
thereafter, for an indefinite period upon the establishment of the assembly and distributorship
network; that respondent Proton, relying upon petitioner’s representations, was enticed to:
(a) borrow money to establish the assembly plant and building for petitioner; (b) buy tools
and equipment for its assembly plant and distributorship; (c) spend for its showrooms and
offices; and (d) pay its license fees, technical brochure and other expenses; that it turned out
that petitioner did not include the Philippines in its ASEAN Assembly Strategy program, but
only Malaysia, thus frustrating respondent Proton’s assembly preparations; that with evident
bad faith, petitioner has been negotiating for the transfer of the distributorship of the Audi
cars to a third party; and that both respondents were surprised when they received from
petitioner a letter dated September 27, 2004 terminating the assembly and the distributorship
agreements for reasons which to them are unjustified. Thus, the complaint prays that
petitioner be ordered to comply with the exclusive assembly and distributorship agreements;
and that, pending the determination of the merits of the case, a TRO and a writ of preliminary
injunction be issued ordering petitioner, its representative, or any person claiming rights
under it, to maintain the status quo ante, and restrain them from doing any act contrary to the
parties’ existing agreements.
39
After the complaint was filed, respondent Executive Judge Jules A. Mejia issued an Order
(a) directing that summons and a copy of the complaint be served upon petitioner through
extra-territorial service; and (b) setting on March 29, 2005 the hearing of the application for
TRO.
On March 29, 2005, after conducting a hearing wherein respondents presented two witnesses,
respondent Executive Judge issued the Order in question directing the issuance of a TRO
effective for twenty (20) days, enjoining petitioner from terminating the contracts executed
by the parties, and directing it or any person claiming rights under it, to maintain the status
quo ante. The raffle of the case was set on April 8, 2005 at two o’clock in the afternoon.
Hence, the instant petition.
Petitioner contends that respondent Executive Judge’s March 29, 2005 Order granting a TRO
for twenty (20) days was "issued in a capricious, arbitrary, and whimsical manner
constituting grave abuse of discretion, amounting to lack or excess of jurisdiction" because
(a) the Order violates the second paragraph of Section 5, Rule 58 of the 1997 Rules of Civil
Procedure, as amended; and (b) it was issued even before Civil Case No. A-3010 was raffled
to a ponente.
Meanwhile, petitioner filed with the trial court an Urgent Motion for Voluntary Inhibition of
respondent Executive Judge. But the motion was denied in an Order dated July 6, 2005,
prompting petitioner to file a supplemental petition2 praying for the nullification of this
Order.
In their Opposition3 and Comment,4 respondents pray that the petition be dismissed for lack
of merit. Specifically, they alleged that the petition suffers from the following defects: (1) it
was filed in the absence of a motion for reconsideration of the assailed Order; (2) petitioner
failed to observe the doctrine of hierarchy of courts; (3) the certification against forum
shopping is defective as it was executed by counsel for petitioner, not by the latter’s officers;
and (4) the issue raised against the challenged Order of March 29, 2005 had become moot
and academic.
The respondents are correct.
Indeed, we cannot ignore the fatal defects in the petition.
First, petitioner failed to file with the trial court the requisite motion for reconsideration of
the challenged Order before resorting to the instant recourse. The well-established rule is that
a motion for reconsideration is an indispensable condition before an aggrieved party can
resort to the special civil action for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure, as amended.5 Thus, petitioner should have first filed with the trial court a motion
for reconsideration, as such special civil action may be resorted to only when "there is no
appeal, nor any plain, speedy, and adequate remedy
in the ordinary course of law."6 Such indispensable requirement may, in well recognized
instances, be glossed over to prevent a miscarriage of justice, or when the need for relief is
extremely urgent and certiorari is the only adequate and speedy remedy available.7 Petitioner
failed to show sufficient justification for its failure to comply with the requirement.
We cannot accept petitioner’s submission that a motion for reconsideration "is unnecessary"
as its petition raises a question of law and that the assailed Order is a patent nullity. Petitioner
may not arrogate unto itself the determination of whether a motion for reconsideration is
necessary or not.8 Its submission runs counter to the purpose of the rule that a motion for
reconsideration would afford the erring court or agency an opportunity to rectify the error/s
it may have committed without the intervention of a higher court.9 Such motion is not only
an expeditious remedy of an aggrieved party but also obviates an improvident and
unnecessary recourse to appellate proceedings.10
Second, petitioner, by filing directly with this Court its petition, has ignored the established
rule on hierarchy of courts. It must be stressed that the Court of Appeals and the Supreme
Court have original concurrent jurisdiction over petitions for certiorari. The rule on hierarchy
of courts determines the venue of appeals.11 Such rule is necessary to prevent inordinate
demands upon the Court’s precious time and attention which are better devoted to matters
within its exclusive jurisdiction, and to prevent further overcrowding of the Court’s docket. 12
Thus, petitioner should have filed with the Court of Appeals its petition, not directly with
this Court.1avvphi1 While such rule may be relaxed for special and important reasons clearly
and specifically set out in the petition, however, in the instant case, petitioner failed to
discharge that burden.1avvphil

Once again, we stress that the rules of procedure exist for a noble purpose, and to disregard
such rules in the guise of liberal construction would be to defeat such purpose. Procedural
rules are not to be disdained as mere technicalities. They may not be ignored to suit the
convenience of a party. Adjective law ensures the effective enforcement of substantive rights
through the orderly and speedy administration of justice. Rules are not intended to hamper
litigants or complicate litigation. But they help provide for a vital system of justice where
suitors may be heard following judicial procedure and in the correct forum. Public order and
our system of justice are well served by a conscientious observance by the parties of the
procedural rules.13

WHEREFORE, the instant petition is DISMISSED. Costs against petitioner.

SO ORDERED.

40
GENERAL PRINCIPLES/RULE 1: NATURE OF THE PHILIPPINE COURT
G.R. No. 138297 January 27, 2006
DESIDERIO DE LOS REYES and MYRNA VILLANUEVA, Petitioners,
vs.
PEOPLE OF THE PHILIPPINES and HON. ANTONIO M. EUGENIO, JR.,
Presiding Judge, Regional Trial Court, Calamba, Laguna, Branch 34, Respondents.
SANDOVAL-GUTIERREZ, J.:
For our resolution is the instant Petition for Certiorari assailing the Order 1 dated February
16, 1998 of the Regional Trial Court (RTC), Branch 34, at Calamba, Laguna, in Civil Case
No. 2494-97-C and its Order dated March 31, 1998.
The instant case stemmed from a complaint filed with the Municipal Trial Court (MTC) of
Calauan, Laguna by the Philippine Coconut Authority against Desiderio De los Reyes and
Myrna Villanueva, petitioners, and several others for violation of Republic Act No. 8048,
otherwise known as The Coconut Preservation Act of 1995, docketed as Criminal Case No.
6768. The complaint reads:
That on August, September and October 1996 in Brgy. Imok, Calauan, Laguna, the above
named respondents did then and there willfully, unlawfully and feloniously cut down and
processed more or less FOUR HUNDRED and FORTY (440) coconut trees without the
required permit to cut from the Philippine Coconut Authority in gross violation of the
provisions of R.A. 8048 or the Coconut Preservation Act of 1995.
On January 31, 1997, the MTC ordered the accused, including petitioners, to file their
counter-affidavits within ten (10) days from notice.
On March 4, 1997, petitioners, instead of submitting their counter-affidavits, filed a Motion
for Preliminary Investigation.
On May 13, 1997, the MTC denied the motion on the ground that in cases cognizable by the
MTCs, an accused is not entitled to a preliminary investigation.
On June 4, 1997, petitioners filed a Motion To Quash the complaint on the ground that the
allegations therein do not constitute an offense.
On October 15, 1997, the MTC issued an Order denying the motion and requiring anew all
the accused to file their counter-affidavits within five (5) days from notice.
Petitioners then filed a petition for certiorari, prohibition, and mandamus with the RTC,
docketed as Civil Case No. 2494-97-C. They alleged that the MTC committed grave abuse
of discretion amounting to lack or excess of jurisdiction when it denied their Motion To
Quash.
In an Order dated February 16, 1998, the RTC dismissed the petition and ruled that the MTC
did not gravely abuse its discretion considering that the allegations in the complaint, if
hypothetically admitted, are sufficient to constitute the elements of the offense.
Petitioners seasonably filed a motion for reconsideration, but this was denied by the RTC in
its Order of March 31, 1998.
Petitioners then interposed an appeal to the Court of Appeals.
41
On November 20, 1998, the Appellate Court rendered its Decision affirming the RTC Orders
dated February 16 and March 31, 1998, holding that since petitioners are raising a question
of law, they should have filed a petition for review on certiorari with the Supreme Court.
Petitioners filed a motion for reconsideration but it was denied by the Court of Appeals in its
Resolution of March 19, 1999.
Thus, petitioners filed with this Court the instant petition for certiorari assailing the Orders
of the RTC in Civil Case No. 2494-97-C dismissing their petition for certiorari on the ground
that the MTC did not gravely abuse its discretion.
There was no procedural lapse when petitioners initially appealed the RTC Orders to the
Court of Appeals. But what they should have done after the Appellate Court rendered its
Decision affirming the RTC Orders was to seasonably file with this Court an appeal via a
petition for review on certiorari pursuant to Rule 45 of the 1997 Rules of Civil Procedure, as
amended. Instead, as earlier mentioned, what they filed with this Court is this petition for
certiorari under Rule 65 of the same Rules. Time and again, we have ruled that certiorari is
not a substitute for a lost appeal.2
Even assuming that the instant petition for certiorari is in order, still we have to dismiss the
same. Petitioners failed to observe the principle of hierarchy of courts. They should have
filed their petition for certiorari with the Court of Appeals. Pursuant to Section 9 of Batas
Pambansa Blg. 129, as amended, the Court of Appeals has original jurisdiction to issue,
among others, a writ of certiorari.
Moreover, records indicate that they filed with this Court the instant petition for certiorari on
May 6, 1999. They received a copy of the RTC Order denying their motion to dismiss on
March 2, 1998. On April 21, 1998, they received a copy of the Order denying their motion
for reconsideration. Under Section 4, Rule 65 of the same Rules, they had sixty (60) days
from April 21, 1998 to file this petition for certiorari. However, they filed it only on May 6,
1999, or after one (1) year.
Even on the merits of the case, this petition is vulnerable to dismissal. It is a dictum that when
a motion to quash in a criminal case is denied, the remedy is not certiorari, but for petitioners
to go to trial without prejudice to reiterating the special defenses invoked in their motion to
quash.3 In the event that an adverse decision is rendered after trial on the merits, an appeal
therefrom is the next legal step.
WHEREFORE, we DISMISS the instant petition. Costs against petitioners.
SO ORDERED.
GENERAL PRINCIPLES/RULE 1: NATURE OF THE PHILIPPINE COURT
[G.R. No. 151992. September 18, 2002.]
COMMISSION ON ELECTIONS, COMELEC CHAIRMAN ALFREDO L.
BENIPAYO, COMELEC COMMISSIONERS RESURRECCION Z. BORRA and
FLORENTINO A. TUASON, JR., Petitioners, v. JUDGE MA. LUISA QUIJANO-
PADILLA, REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH 215 and
PHOTOKINA MARKETING CORP., Respondents.
SANDOVAL-GUTIERREZ, J.:
The contracting prerogative of public officers is circumscribed with a heavy burden of
responsibility. They must exercise utmost caution and observe the law in order to protect the
public from unjust and inequitable government contracts.
The case at bar provides us with another occasion to stress that with respect to government
contracts, statutes take precedence over the public officers’ freedom to contract. Here, the
primordial question to be resolved is — may a successful bidder compel a government
agency to formalize a contract with it notwithstanding that its bid exceeds the amount
appropriated by Congress for the project?
Before us is a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as
amended, alleging that respondent Judge Ma. Luisa Quijano-Padilla of the Regional Trial
Court, Branch 215, Quezon City, committed grave abuse of discretion in issuing the (a)
Resolution 1 dated December 19, 2001 granting private respondent’s application for a writ
of preliminary prohibitory injunction in Special Civil Action No. Q-01-454052; and (b)
Resolution 3 dated February 7, 2002 denying petitioners’ Omnibus Motion to dismiss the
petition and their motion for reconsideration of the same Resolution and granting private
respondent’s application for a writ of preliminary mandatory injunction.
The facts are undisputed.
In 1996, the Philippine Congress passed Republic Act No. 8189, otherwise known as the
"Voter’s Registration Act of 1996," providing for the modernization and computerization of
the voters’ registration list and the appropriation of funds therefor "in order to establish a
clean, complete, permanent and updated list of voters."
Pursuant thereto, the Commission on Elections (COMELEC) promulgated Resolution No.
00-0315 5 approving in principle the Voters’ Registration and Identification System Project
(VRIS Project for brevity). The VRIS Project envisions a computerized database system for
the May 2004 Elections. The idea is to have a national registration of voters whereby each
registrant’s fingerprints will be digitally entered into the system and upon completion of
registration, compared and matched with other entries to eliminate double entries. A tamper-
proof and counterfeit-resistant voter’s identification card will then be issued to each registrant
as a visual record of the registration.
On September 9, 1999, the COMELEC issued invitations to pre-qualify and bid for the
supply and installation of information technology equipment and ancillary services for its
VRIS Project.
Private respondent Photokina Marketing Corporation (PHOTOKINA) pre-qualified and was
allowed to participate as one of the bidders. After the public bidding was conducted,
42
PHOTOKINA’s bid in the amount of P6.588 Billion Pesos garnered the highest total
weighted score and was declared the winning bidder. Thus, on September 28, 2000, the
COMELEC issued Resolution No. 3252 7 approving the Notice of Award to PHOTOKINA,
which, in turn, immediately accepted the same. The parties then proceeded to formalize the
contract, with Commissioner Mehol K. Sadain and Atty. Rodrigo D. Sta. Ana, acting as
negotiators for the COMELEC and PHOTOKINA, respectively.
However, under Republic Act No. 8760 8 the budget appropriated by Congress for the
COMELEC’s modernization project was only One (1) Billion Pesos and that the actual
available funds under the Certificate of Availability of Funds (CAF) issued by the Chief
Accountant of the COMELEC was only P1.2 Billion Pesos.
In December 2000, then COMELEC Chairman Harriet O. Demetriou issued a memorandum
to the COMELEC en banc expressing her objections to the contract. Commissioner Sadain,
for his part, submitted a draft of the contract 9 providing a price that would not exceed the
certified available appropriation but covering only Phase I of the VRIS Project, i.e., issuance
of registration cards for 1,000,000 voters in certain areas only. 10 Under the draft, the
"subsequent completion of the whole project shall be agreed upon in accordance with the Bid
Documents and the annual funds available for it."
On February 2, 2001, the term of former Chairman Demetriou and those of Commissioners
Julio F. Desamito and Teresita Dy-Liacco Flores expired. Appointed as their successors were
Alfredo L. Benipayo as Chairman and Resurreccion Z. Borra and Florentino A. Tuason, Jr.
as Commissioners.
Meanwhile, PHOTOKINA, as the winning bidder, wrote several letters to the COMELEC
requesting the formal execution of the contract, but to no avail.
Then Chairman Benipayo, through various press releases and public statements, announced
that the VRIS Project has been "scrapped, dropped, junked, or set aside." He further
announced his plan to "re-engineer" the entire modernization program of the COMELEC,
emphasizing his intention to replace the VRIS Project with his own version, the "Triple E
Vision."
On October 2, 2001, Senator Edgardo J. Angara directed the creation of a technical working
group to "assist the COMELEC in evaluating all programs for the modernization of the
COMELEC which will also consider the PHOTOKINA contract as an alternative program
and various competing programs for the purpose."
Unsatisfied with the adverse turn of events, PHOTOKINA filed with the Regional Trial
Court, Branch 215, Quezon City a petition for mandamus, prohibition and damages (with
prayer for temporary restraining order, preliminary prohibitory injunction and preliminary
mandatory injunction) against the COMELEC and all its Commissioners, 14 docketed as
Special Civil Action No. Q-01-45405. PHOTOKINA alleged three causes of action: first, the
deliberate refusal of the COMELEC and its Commissioners to formalize the contract
rendered nugatory the perfected contract between them; second, in announcing that the VRIS
Project has been junked and that he has plans to re-engineer the COMELEC’s entire
modernization program, Chairman Benipayo committed grave abuse of discretion; and third,
the COMELEC’s failure to perform its duty under the contract has caused PHOTOKINA to
incur damages since it has spent substantial time and resources in the preparation of the bid
and the draft contract.
In support of its application for writs of preliminary prohibitory and mandatory injunction,
PHOTOKINA adopted the evidence it adduced during the hearing of its application for the
issuance of a temporary restraining order.
On December 19, 2001, respondent Judge Ma. Luisa Quijano-Padilla issued the first assailed
Resolution granting PHOTOKINA’s application for a writ of preliminary prohibitory
injunction, thus:
"WHEREFORE, premises considered, the Court resolves to: (1) grant the application for the
issuance of a writ of preliminary prohibitory injunction; and (2) deny the application for the
issuance of a writ of preliminary mandatory injunction.
Accordingly, let a writ of preliminary prohibitory injunction issue enjoining respondents,
their agents, successors and assigns from replacing the VRIS Project upon petitioner’s
posting of a bond in the amount of P20,000,000.00, which bond shall answer for whatever
damages which may be sustained by reason of the issuance of the said writ, if it turns out that
the plaintiffs are not entitled thereto.
SO ORDERED."
Both parties filed their respective motions for reconsideration. PHOTOKINA reiterated its
plea for a writ of preliminary mandatory injunction. 16 For their part, the COMELEC and its
Commissioners, through the Solicitor General, prayed that the writ of preliminary prohibitory
injunction be set aside and that the petition for mandamus, prohibition and damages be
dismissed.
On February 8, 2002, respondent judge issued the second assailed Resolution denying the
COMELEC’s Omnibus Motion and, this time, granting PHOTOKINA’s application for a
writ of preliminary mandatory injunction, thus:
"WHEREFORE, premises considered, this Court resolves to: (1) deny Respondents’
Omnibus Motion for the dismissal of this case and for the reconsideration of this Court’s
Resolution granting the writ of preliminary prohibitory injunction; (2) grant Petitioner’s
Motion dated January 2, 2002 insofar as it prays for the issuance of a writ of preliminary
mandatory injunction; (3) Grant the prayer for the reduction of the preliminary prohibitory
injunction bond from P20,000,000.00 to P10,000,000.00; (4) Clarify its Resolution dated
December 19, 2001 to the extent that the writ of preliminary prohibitory injunction will also
enjoin Respondents, their agents, successors and assigns from disregarding the contract for
the VRIS Project between Petitioner and Respondent COMELEC; (5) deny Petitioner’s
motion to declare Respondents in default.
"Accordingly, let a writ of preliminary mandatory injunction issue directing all respondent
Commissioners to immediately resume negotiations to formalize the execution of the
contract with Petitioner for the VRIS Project upon petitioner’s posting of a bond, separate
from the above bond for the writ of preliminary prohibitory injunction, in the amount of
P20,000,000.00, which bond shall answer for whatever damages that may be sustained by
reason of the issuance of the said writ, if it turns out that Petitioner is not entitled thereto.
"SO ORDERED."
Hence, the instant petition for certiorari filed by the Office of the Solicitor General (OSG)
in behalf of then COMELEC Chairman Alfredo L. Benipayo and Commissioners
Resurreccion Z. Borra and Florentino A. Tuason, Jr..
43
Petitioners contend that: (1) a petition for mandamus and prohibition does not lie to enforce
contractual obligations, hence, PHOTOKINA’s proper recourse before the Regional Trial
Court should have been an action for specific performance; (2) respondent judge, by issuing
the injunctive writs, already assumed that the VRIS Project was lawfully awarded by the
COMELEC to PHOTOKINA, and that there is a valid perfected contract between them, thus,
manifesting her prejudgment; and (3) injunctive writs should not be issued when an action
for damages can adequately compensate for the injuries. Petitioners pray that the two assailed
Resolutions be nullified and Special Civil Action No. Q-01-45405 be dismissed outright. 19
On February 21, 2002, the majority of the COMELEC Commissioners — Luzviminda G.
Tancangco, Rufino S.B. Javier, Ralph C. Lantion and Mehol K. Sadain — filed with this
Court a Manifestation 20 that "the Chairman and the two Commissioners who filed the
instant Petition acted without authority from the COMELEC en banc to take such action."
PHOTOKINA filed a Comment with Motion to Dismiss, 21 the present petition, on two
procedural grounds. First, the petition violates the doctrine of hierarchy of courts. And
second, the OSG has no authority and/or standing to file the petition considering that the
petitioners have not been authorized by the COMELEC en banc to take such action. Without
the concurrence of at least a majority of the members of the COMELEC, neither petitioners
nor the OSG could file the petition in behalf of the COMELEC.
In refutation of petitioners’ arguments, PHOTOKINA contends that mandamus is an
appropriate remedy since what is involved in Special Civil Action No. Q-01-45405 is the
performance of a ministerial duty. Citing Isada v. Bocar, 22 PHOTOKINA maintains that
mandamus may be availed of by private parties to compel public officers to act on a contract
entered into pursuant to law. In its Supplemental Comment, 23 PHOTOKINA invites the
Court’s attention to Metropolitan Manila Development Authority v. Jancom Environmental
Corporation 24 whereby the winning bidder was afforded every right to seek enforcement of
its perfected contract with the government.
The petition is impressed with merit.
Initially, we must resolve the procedural roadblocks.
PHOTOKINA alleges that the OSG has no standing to file the present petition since its legal
position is contrary to that espoused by the majority of the COMELEC Commissioners. This
is a leap to a non-sequitur conclusion. The OSG is an independent office. Its hands are not
shackled to the cause of its client agency. In the discharge of its task, the primordial concern
of the OSG is to see to it that the best interest of the government is upheld. 25 This is
regardless of the fact that what it perceived as the "best interest of the government" runs
counter to its client agency’s position. 26 Endowed with a broad perspective that spans the
legal interest of virtually the entire government officialdom, the OSG may transcend the
parochial concerns of a particular client agency and instead, promote and protect the public
weal. 27 Our ruling in Orbos v. Civil Service Commission, 28 is relevant, thus:
". . . It is incumbent upon him (Solicitor General) to present to the court what he considers
would legally uphold the best interest of the government although it may run counter to a
client’s position. . . ..
"In the present case, it appears that after the Solicitor General studied the issues he found
merit in the cause of the petitioner based on the applicable law and jurisprudence. Thus, it is
his duty to represent the petitioner as he did by filing this petition. He cannot be disqualified
from appearing for the petitioner even if in so doing his representation runs against the
interests of the CSC.
"This is not the first time that the Office of the Solicitor General has taken a position adverse
to his clients like the CSC, the National Labor Relations Commission, among others, and
even the People of the Philippines. . . ." (Emphasis supplied)
Hence, while petitioners’ stand is contrary to that of the majority of the Commissioners, still,
the OSG may represent the COMELEC as long as in its assessment, such would be for the
best interest of the government. For, indeed, in the final analysis, the client of the OSG is not
the agency but no less than the Republic of the Philippines in whom the plenum of
sovereignty resides. 29
Moreover, it must be emphasized that petitioners are also public officials entitled to be
represented by the OSG. Under Executive Order No. 292 30 and Presidential Decree No.
478, 31 the OSG is the lawyer of the government, its agencies and instrumentalities, and its
officials or agents. Surely, this mandate includes the three petitioners 32 who have been
impleaded as public respondents in Special Civil Action No. Q-01-45405.
Anent the alleged breach of the doctrine of hierarchy of courts, suffice it to say that it is not
an iron-clad dictum. On several instances where this Court was confronted with cases of
national interest and of serious implications, it never hesitated to set aside the rule and
proceed with the judicial determination of the case. 33 The case at bar is of similar import. It
is in the interest of the State that questions relating to government contracts be settled without
delay. This is more so when the contract, as in this case, involves the disbursement of public
funds and the modernization of our country’s election process, a project that has long been
overdue.
We now resolve the following substantive issues:
1) Is a petition for mandamus the appropriate remedy to enforce contractual obligations? and
2) May a successful bidder compel a government agency to formalize a contract with it
notwithstanding that its bid exceeds the amount appropriated by Congress for the
project?chanrob1es virtua1 1aw 1ibrary
I the pleadings filed in Special Civil Action No. Q-01-45405 and we are convinced that what
No rule of law is better settled than that mandamus does not lie to enforce the performance
of contractual obligations. 34 As early as 1924, Justice Street, in Quiogue v. Romualdez, 35
already set forth the justification of this rule, thus:
"Upon the facts above stated we are of the opinion that the writ of mandamus is not the
appropriate, or even an admissible remedy. It is manifest that whatever rights the petitioner
may have, upon the facts stated, are derived from her contract with the city; and no rule of
law is better settled than that mandamus never lies to enforce the performance of private
contracts. . . . The petitioner’s remedy, if any she has, is by an original action in the Court of
First Instance to compel the city to pay the agreed price or to pay damages for the breach of
contract.
". . . As said in Lowe v. Phelps (14 Bush, 642):
44
‘It must, therefore, appear upon every application for a mandamus that it is the legal duty of
the respondent to do that which it is sought to compel him to do, and that he has upon proper
application refused to perform that duty.’ (Citing numerous authorities).
"It was not intended to aid a plaintiff in the enforcement of a mere contract right, or to take
the place of the other remedies provided by law for the adjudication of disputed claims.
Looking at the case from the standpoint of appellant, it involves nothing more than an
ordinary breach of contract. If, as contended, the appellant had a valid contract with the
school board, it also had an adequate remedy at law to recover damages for its breach; and
to permit the writ of mandamus to be used for the purpose of enforcing a mere contract right
would be a wide departure from the settled practice in respect to the character of cases in
which relief by mandamus may be obtained.
"In Parrott v. City of Bridgeport (44 Conn., 180), the writ was refused where the petitioner
sought to compel a city to construct a public street in a certain manner agreeably to the terms
of a special agreement between the petitioner and the city. In the course of the opinion the
court said:
" * * * The duty, therefore, if any, which rests upon the city in this regard, is one which it
owes to the petitioner as an individual, not to the public, and the special contract is the
foundation upon which it rests. But the writ of mandamus has never been considered as an
appropriate remedy for the enforcement of contract rights of a private and personal nature
and obligations which rest wholly upon contract and which involve no questions of public
trusts or official duty. Indeed, strictly speaking, it never lies where the party aggrieved has
adequate remedy at law, and its aid is only to be invoked to prevent an absolute failure of
justice in cases where ordinary legal processes furnish no relief." (Emphasis supplied)
The passage of time has not eroded the wisdom of the foregoing rule. Its invocation by this
Court in Province of Pangasinan v. Reparation Commission, 36 Aprueba v. Ganzon, 37 City
of Manila v. Posadas, 38 Jacinto v. Director of Lands, 39 National Marketing Corporation v.
Cloribel, 40 Astudillo v. The Board of Directors of People’s Homesite and Housing
Corporation, 41 and Sharp International Marketing v. Court of Appeals, 42 virtually
reinforces the rule.
The present case is our latest addition to the above catena of jurisprudence. We carefully read
PHOTOKINA sought to enforce therein are its rights under the accepted bid proposal. Its
petition alleged that notwithstanding the COMELEC’s issuance of a Notice of Award and its
(PHOTOKINA’s) subsequent acceptance thereof, the COMELEC still refused to formalize
the contract. As a relief, PHOTOKINA prayed that after trial, petitioners be directed "to
review and finalize the formal contract" and to "implement the VRIS Project." 43 Petitioners,
on their part, specifically denied the existence of a perfected contract and asserted that even
if there was one, the same is null and void for lack of proper appropriation. Petitioners labeled
the contract as illegal and against public policy.
Akin to our rulings cited above, we hold that mandamus is not the proper recourse to enforce
the COMELEC’s alleged contractual obligations with PHOTOKINA. It has other adequate
remedy in law. Moreover, worth stressing is the judicial caution that mandamus applies as a
remedy only where petitioner’s right is founded clearly in law and not when it is doubtful.
44 In varying language, the principle echoed and reechoed is that legal rights may be enforced
by mandamus only if those rights are well-defined, clear and certain. 45 Here, the alleged
contract, relied upon by PHOTOKINA as source of its rights which it seeks to be protected,
is being disputed, not only on the ground that it was not perfected but also because it is illegal
and against public policy.
Of course, there are cases in which the writ of mandamus has been used to compel public
officers to perform certain acts, but it will be generally observed that in such cases, the
contracts have been completely performed by the petitioner, and nothing remained to be done
except for the government to make compensation. These exceptional cases are cited in Isada
v. Bocar 46 where the act of the respondent public officer has the effect of setting aside
contracts already in the process of consummation. In contrast with Isada, the alleged contract
here has not yet been fully performed by PHOTOKINA; and though it avers readiness to
perform, petitioners raised serious questions as to its validity. Their posture is tenable.
II
To spare PHOTOKINA the drudgery of a fruitless pursuit, we deem it appropriate to lay
down the principles governing government contracts and to apply them to the instant case.
Meanwhile, as PHOTOKINA will later on deduce from the discussion, the contract subject
of this controversy is one that can be slain in sight for being patently void and unenforceable.
Enshrined in the 1987 Philippine Constitution is the mandate that "no money shall be paid
out of the Treasury except in pursuance of an appropriation made by law." 47 Thus, in the
execution of government contracts, the precise import of this constitutional restriction is to
require the various agencies to limit their expenditures within the appropriations made by
law for each fiscal year.
Complementary to the foregoing constitutional injunction are pertinent provisions of law and
administrative issuances that are designed to effectuate the above mandate in a detailed
manner. 48 Sections 46 and 47, Chapter 8, Subtitle B, Title 1, Book V of Executive Order
No. 292, otherwise known as "Administrative Code of 1987," provide:
"SEC. 46. Appropriation Before Entering into Contract. — (1) No contract involving the
expenditure of public funds shall be entered into unless there is an appropriation therefor, the
unexpended balance of which, free of other obligations, is sufficient to cover the proposed
expenditure; and . . .
"SEC. 47. Certificate Showing Appropriation to Meet Contract. — Except in the case of a
contract for personal service, for supplies for current consumption or to be carried in stock
not exceeding the estimated consumption for three (3) months, or banking transactions of
government-owned or controlled banks, no contract involving the expenditure of public
funds by any government agency shall be entered into or authorized unless the proper
accounting official of the agency concerned shall have certified to the officer entering into
the obligation that funds have been duly appropriated for the purpose and that the amount
necessary to cover the proposed contract for the current calendar year is available for
expenditure on account thereof, subject to verification by the auditor concerned. The
certificate signed by the proper accounting official and the auditor who verified it, shall be
attached to and become an integral part of the proposed contract, and the sum so certified
shall not thereafter be available for expenditure for any other purpose until the obligation of
the government agency concerned under the contract is fully extinguished.
It is quite evident from the tenor of the language of the law that the existence of
appropriations and the availability of funds are indispensable pre-requisites to or conditions
sine qua non for the execution of government contracts. The obvious intent is to impose such
conditions as a priori requisites to the validity of the proposed contract. 49 Using this as our
premise, we cannot accede to PHOTOKINA’s contention that there is already a perfected
contract. While we held in Metropolitan Manila Development Authority v. Jancom
Environmental Corporation 50 that "the effect of an unqualified acceptance of the offer or
proposal of the bidder is to perfect a contract, upon notice of the award to the bidder,"
45
however, such statement would be inconsequential in a government where the acceptance
referred to is yet to meet certain conditions. To hold otherwise is to allow a public officer to
execute a binding contract that would obligate the government in an amount in excess of the
appropriations for the purpose for which the contract was attempted to be made. 51 This is a
dangerous precedent.
In the case at bar, there seems to be an oversight of the legal requirements as early as the
bidding stage. The first step of a Bids and Awards Committee (BAC) is to determine whether
the bids comply with the requirements. The BAC shall rate a bid "passed" only if it complies
with all the requirements and the submitted price does not exceed the approved budget for
the contract."
Extant on the record is the fact that the VRIS Project was awarded to PHOTOKINA on
account of its bid in the amount of P6.588 Billion Pesos. However, under Republic Act No.
8760, 53 the only fund appropriated for the project was P1 Billion Pesos and under the
Certification of Available Funds 54 (CAF) only P1.2 Billion Pesos was available. Clearly,
the amount appropriated is insufficient to cover the cost of the entire VRIS Project. There is
no way that the COMELEC could enter into a contract with PHOTOKINA whose accepted
bid was way beyond the amount appropriated by law for the project. This being the case, the
BAC should have rejected the bid for being excessive 55 or should have withdrawn the
Notice of Award on the ground that in the eyes of the law, the same is null and void. 56
The objections of then Chairman Demetriou to the implementation of the VRIS Project,
ardently carried on by her successor Chairman Benipayo, are therefore in order.
Even the draft contract submitted by Commissioner Sadain, that provides for a contract price
in the amount of P1.2 Billion Pesos is unacceptable. Indeed, we share the observation of
former Chairman Demetriou that it circumvents the statutory requirements on government
contracts. While the contract price under the draft contract 57 is only P1.2 Billion and, thus,
within the certified available funds, the same covers only Phase I of the VRIS Project, i.e.,
the issuance of identification cards for only 1,000,000 voters in specified areas. 58 In effect,
the implementation of the VRIS Project will be "segmented" or "chopped" into several
phases. Not only is such arrangement disallowed by our budgetary laws and practices, it is
also disadvantageous to the COMELEC because of the uncertainty that will loom over its
modernization project for an indefinite period of time. Should Congress fail to appropriate
the amount necessary for the completion of the entire project, what good will the
accomplished Phase I serve? As expected, the project failed "to sell" with the Department of
Budget and Management. Thus, Secretary Benjamin Diokno, per his letter of December 1,
2000, declined the COMELEC’s request for the issuance of the Notice of Cash Availability
(NCA) and a multi-year obligational authority to assume payment of the total VRIS Project
for lack of legal basis. 59 Corollarily, under Section 33 of R.A. No. 8760, no agency shall
enter into a multi-year contract without a multi-year obligational authority, thus:
"SECTION 33. Contracting Multi-Year Projects. — In the implementation of multi-year
projects, no agency shall enter into a multi-year contract without a multi-year Obligational
Authority issued by the Department of Budget and Management for the purpose.
Notwithstanding the issuance of the multi-year Obligational Authority, the obligation to be
incurred in any given calendar year, shall in no case exceed the amount programmed for
implementation during said calendar year."
Petitioners are justified in refusing to formalize the contract with PHOTOKINA. Prudence
dictated them not to enter into a contract not backed up by sufficient appropriation and
available funds. Definitely, to act otherwise would be a futile exercise for the contract would
inevitably suffer the vice of nullity. In Osmeña v. Commission on Audit, 60 this Court held:
"The Auditing Code of the Philippines (P.D. 1445) further provides that no contract involving
the expenditure of public funds shall be entered into unless there is an appropriation therefor
and the proper accounting official of the agency concerned shall have certified to the officer
entering into the obligation that funds have been duly appropriated for the purpose and the
amount necessary to cover the proposed contract for the current fiscal year is available for
expenditure on account thereof. Any contract entered into contrary to the foregoing
requirements shall be VOID.
"Clearly then, the contract entered into by the former Mayor Duterte was void from the very
beginning since the agreed cost for the project (P8,368,920.00) was way beyond the
appropriated amount (P5,419,180.00) as certified by the City Treasurer. Hence, the contract
was properly declared void and unenforceable in COA’s 2nd Indorsement, dated September
4, 1986. The COA declared and we agree, that:
of mandatory and prohibitory injunction and in not dismissing Special Civil Action No. Q-
01-45405, respondent judge acted with grave abuse of discretion. Petitioners cannot be
compelled by a writ of mandamus to discharge a duty that involves the exercise of judgment
and discretion, especially where disbursement of public funds is concerned.
WHEREFORE, the petition is GRANTED. The Resolutions dated December 19, 2001 and
February 7, 2002 issued by respondent Judge Padilla are SET ASIDE. Special Civil Action
No. Q-01-45405 is hereby ordered DISMISSED.
SO ORDERED.

‘The prohibition contained in Sec. 85 of PD 1445 (Government Auditing Code) is explicit

and mandatory. Fund availability is, as it has always been, an indispensable prerequisite to
the execution of any government contract involving the expenditure of public funds by all
government agencies at all levels. Such contracts are not to be considered as final or binding
unless such a certification as to funds availability is issued (Letter of Instruction No. 767, s.
1978). Antecedent of advance appropriation is thus essential to government liability on
contracts (Zobel v. City of Manila, 47 Phil. 169). This contract being violative of the legal
requirements aforequoted, the same contravenes Sec. 85 of PD 1445 and is null and void by
virtue of Sec. 87." ‘

Verily, the contract, as expressly declared by law, is inexistent and void ab initio. 61 This is
to say that the proposed contract is without force and effect from the very beginning or from
its incipiency, as if it had never been entered into, and hence, cannot be validated either by
lapse of time or ratification.

Of course, we are not saying that the party who contracts with the government has no other
recourse in law. The law itself affords him the remedy. Section 48 of E.O. No. 292 explicitly
provides that any contract entered into contrary to the above-mentioned requirements shall
be void, and "the officers entering into the contract shall be liable to the Government or other
contracting party for any consequent damage to the same as if the transaction had been wholly
between private parties." So when the contracting officer transcends his lawful and legitimate
powers by acting in excess of or beyond the limits of his contracting authority, the
Government is not bound under the contract. It would be as if the contract in such case were
a private one, whereupon, he binds only himself, and thus, assumes personal liability
thereunder. 63 Otherwise stated, the proposed contract is unenforceable as to the
Government.

While this is not the proceeding to determine where the culpability lies, however, the
constitutional mandate cited above constrains us to remind all public officers that public
office is a public trust and all public officers must at all times be accountable to the people.
The authority of public officers to enter into government contracts is circumscribed with a
heavy burden of responsibility. In the exercise of their contracting prerogative, they should
be the first judges of the legality, propriety and wisdom of the contract they entered into.
They must exercise a high degree of caution so that the Government may not be the victim
of ill-advised or improvident action.

In fine, we rule that PHOTOKINA, though the winning bidder, cannot compel the
COMELEC to formalize the contract. Since PHOTOKINA’s bid is beyond the amount
appropriated by Congress for the VRIS Project, the proposed contract is not binding upon
the COMELEC and is considered void; and that in issuing the questioned preliminary writs
46
GENERAL PRINCIPLES/RULE 1: NATURE OF THE PHILIPPINE COURT
G.R. No. 187107 January 31, 2012
UNITED CLAIMANTS ASSOCIATION OF NEA (UNICAN), represented by its
representative BIENVENIDO R. LEAL, in his official capacity as its President and in
his own individual capacity, Petitioners,
vs.
NATIONAL ELECTRIFICATION ADMINISTRATION (NEA), Respondents.
VELASCO, JR., J.:
The Case
This is an original action for Injunction to restrain and/or prevent the implementation of
Resolution Nos. 46 and 59, dated July 10, 2003 and September 3, 2003, respectively,
otherwise known as the National Electrification Administration (NEA) Termination Pay
Plan, issued by respondent NEA Board of Administrators (NEA Board).
The Facts
Petitioners are former employees of NEA who were terminated from their employment with
the implementation of the assailed resolutions.
Respondent NEA is a government-owned and/or controlled corporation created in
accordance with Presidential Decree No. (PD) 269 issued on August 6, 1973. Under PD 269,
Section 5(a)(5), the NEA Board is empowered to organize or reorganize NEA’s staffing
structure, as follows:
Section 5. National Electrification Administration; Board of Administrators; Administrator.
(a) For the purpose of administering the provisions of this Decree, there is hereby established
a public corporation to be known as the National Electrification Administration. All of the
powers of the corporation shall be vested in and exercised by a Board of Administrators,
which shall be composed of a Chairman and four (4) members, one of whom shall be the
Administrator as ex-officio member. The Chairman and the three other members shall be
appointed by the President of the Philippines to serve for a term of six years. x x x
xxxx
The Board shall, without limiting the generality of the foregoing, have the following specific
powers and duties.
1. To implement the provisions and purposes of this Decree;
xxxx
5. To establish policies and guidelines for employment on the basis of merit, technical
competence and moral character, and, upon the recommendation of the Administrator to
organize or reorganize NEA’s staffing structure, to fix the salaries of personnel and to define
their powers and duties. (Emphasis supplied.)
Thereafter, in order to enhance and accelerate the electrification of the whole country,
including the privatization of the National Power Corporation, Republic Act No. (RA) 9136,
otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA Law), was
enacted, taking effect on June 26, 2001. The law imposed upon NEA additional mandates in
relation to the promotion of the role of rural electric cooperatives to achieve national
electrification. Correlatively, Sec. 3 of the law provides:
47
Section 3. Scope. - This Act shall provide a framework for the restructuring of the electric
power industry, including the privatization of the assets of NPC, the transition to the desired
competitive structure, and the definition of the responsibilities of the various government
agencies and private entities. (Emphasis supplied.)
Sec. 77 of RA 9136 also provides:
Section 77. Implementing Rules and Regulations. - The DOE shall, in consultation with the
electric power industry participants and end-users, promulgate the Implementing Rules and
Regulations (IRR) of this Act within six (6) months from the effectivity of this Act, subject
to the approval by the Power Commission.
Thus, the Rules and Regulations to implement RA 9136 were issued on February 27, 2002.
Under Sec. 3(b)(ii), Rule 33 of the Rules and Regulations, all the NEA employees and
officers are considered terminated and the 965 plantilla positions of NEA vacant, to wit:
Section 3. Separation and Other Benefits.
(a) x x x
(b) The following shall govern the application of Section 3(a) of this Rule:
xxxx
(ii) With respect to NEA officials and employees, they shall be considered legally terminated
and shall be entitled to the benefits or separation pay provided in Section 3(a) herein when a
restructuring of NEA is implemented pursuant to a law enacted by Congress or pursuant to
Section 5(a)(5) of Presidential Decree No. 269. (Emphasis supplied.)
Meanwhile, on August 28, 2002, former President Gloria Macapagal- Arroyo issued
Executive Order No. 119 directing the NEA Board to submit a reorganization plan. Thus, the
NEA Board issued the assailed resolutions.
On September 17, 2003, the Department of Budget and Management approved the NEA
Termination Pay Plan.
Thereafter, the NEA implemented an early retirement program denominated as the "Early
Leavers Program," giving incentives to those who availed of it and left NEA before the
effectivity of the reorganization plan. The other employees of NEA were terminated effective
December 31, 2003.
Hence, We have this petition.
The Issues
Petitioners raise the following issues:
1. The NEA Board has no power to terminate all the NEA employees;
2. Executive Order No. 119 did not grant the NEA Board the power to terminate
all NEA employees; and
3. Resolution Nos. 46 and 59 were carried out in bad faith.
On the other hand, respondents argue in their Comment dated August 20, 2009 that:
1. The Court has no jurisdiction over the petition;
2. Injunction is improper in this case given that the assailed resolutions of the
NEA Board have long been implemented; and
3. The assailed NEA Board resolutions were issued in good faith.
 The Court’s Ruling
This petition must be dismissed.
The procedural issues raised by respondents shall first be discussed.
This Court Has Jurisdiction over the Case
Respondents essentially argue that petitioners violated the principle of hierarchy of courts,
pursuant to which the instant petition should have been filed with the Regional Trial Court
first rather than with this Court directly.
We explained the principle of hierarchy of courts in Mendoza v. Villas, 1 stating:
In Chamber of Real Estate and Builders Associations, Inc. (CREBA) v. Secretary of Agrarian
Reform, a petition for certiorari filed under Rule 65 was dismissed for having been filed
directly with the Court, violating the principle of hierarchy of courts, to wit:
Primarily, although this Court, the Court of Appeals and the Regional Trial Courts have
concurrent jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto,
habeas corpus and injunction, such concurrence does not give the petitioner unrestricted
freedom of choice of court forum. In Heirs of Bertuldo Hinog v. Melicor, citing People v.
Cuaresma, this Court made the following pronouncements:
This Court’s original jurisdiction to issue writs of certiorari is not exclusive. It is shared by
this Court with Regional Trial Courts and with the Court of Appeals. This concurrence of
jurisdiction is not, however, to be taken as according to parties seeking any of the writs an
absolute, unrestrained freedom of choice of the court to which application therefor will be
directed. There is after all a hierarchy of courts. That hierarchy is determinative of the venue
of appeals, and also serves as a general determinant of the appropriate forum for petitions for
the extraordinary writs. A becoming regard for that judicial hierarchy most certainly indicates
that petitions for the issuance of extraordinary writs against first level ("inferior") courts
should be filed with the Regional Trial Court, and those against the latter, with the Court of
Appeals. A direct invocation of the Supreme Court’s original jurisdiction to issue these writs
should be allowed only when there are special and important reasons therefor, clearly and
specifically set out in the petition. This is [an] established policy. It is a policy necessary to
prevent inordinate demands upon the Court’s time and attention which are better devoted to
those matters within its exclusive jurisdiction, and to prevent further over-crowding of the
Court’s docket. (Emphasis supplied.)
Evidently, the instant petition should have been filed with the RTC. However, as an exception
to this general rule, the principle of hierarchy of courts may be set aside for special and
important reasons. Such reason exists in the instant case involving as it does the employment
of the entire plantilla of NEA, more than 700 employees all told, who were effectively
dismissed from employment in one swift stroke. This to the mind of the Court entails its
attention.
Moreover, the Court has made a similar ruling in National Power Corporation Drivers and
Mechanics Association (NPC-DAMA) v. National Power Corporation (NPC).2 In that case,
the NPC-DAMA also filed a petition for injunction directly with this Court assailing NPC
Board Resolution Nos. 2002-124 and 2002-125, both dated November 18, 2002, directing
the termination of all employees of the NPC on January 31, 2003. Despite such apparent
disregard of the principle of hierarchy of courts, the petition was given due course. We
perceive no compelling reason to treat the instant case differently.
The Remedy of Injunction Is still Available
48
Respondents allege that the remedy of injunction is no longer available to petitioners
inasmuch as the assailed NEA Board resolutions have long been implemented.
Taking respondents’ above posture as an argument on the untenability of the petition on the
ground of mootness, petitioners contend that the principle of mootness is subject to
exceptions, such as when the case is of transcendental importance.
In Funa v. Executive Secretary,3 the Court passed upon the seeming moot issue of the
appointment of Maria Elena H. Bautista (Bautista) as Officer-in-Charge (OIC) of the
Maritime Industry Authority (MARINA) while concurrently serving as Undersecretary of
the Department of Transportation and Communications. There, even though Bautista later on
was appointed as Administrator of MARINA, the Court ruled that the case was an exception
to the principle of mootness and that the remedy of injunction was still available, explaining
thus:
A moot and academic case is one that ceases to present a justiciable controversy by virtue of
supervening events, so that a declaration thereon would be of no practical use or value.
Generally, courts decline jurisdiction over such case or dismiss it on ground of mootness.
However, as we held in Public Interest Center, Inc. v. Elma, supervening events, whether
intended or accidental, cannot prevent the Court from rendering a decision if there is a grave
violation of the Constitution. Even in cases where supervening events had made the cases
moot, this Court did not hesitate to resolve the legal or constitutional issues raised to
formulate controlling principles to guide the bench, bar, and public.
As a rule, the writ of prohibition will not lie to enjoin acts already done. However, as an
exception to the rule on mootness, courts will decide a question otherwise moot if it is capable
of repetition yet evading review. (Emphasis supplied.)
Similarly, in the instant case, while the assailed resolutions of the NEA Board may have long
been implemented, such acts of the NEA Board may well be repeated by other government
agencies in the reorganization of their offices. Petitioners have not lost their remedy of
injunction.
The Power to Reorganize Includes the Power to Terminate
The meat of the controversy in the instant case is the issue of whether the NEA Board had
the power to pass Resolution Nos. 46 and 59 terminating all of its employees.
This must be answered in the affirmative.
Under Rule 33, Section 3(b)(ii) of the Implementing Rules and Regulations of the EPIRA
Law, all NEA employees shall be considered legally terminated with the implementation of
a reorganization program pursuant to a law enacted by Congress or pursuant to Sec. 5(a)(5)
of PD 269 through which the reorganization was carried out, viz:
Section 5. National Electrification Administration; Board of Administrators; Administrator.
(a) For the purpose of administering the provisions of this Decree, there is hereby established
a public corporation to be known as the National Electrification Administration. x x x
xxxx
The Board shall, without limiting the generality of the foregoing, have the following specific
powers and duties.
xxxx
5. To establish policies and guidelines for employment on the basis of merit, technical
competence and moral character, and, upon the recommendation of the Administrator to
organize or reorganize NEA’s staffing structure, to fix the salaries of personnel and to define
their powers and duties. (Emphasis supplied.)
Thus, petitioners argue that the power granted unto the NEA Board to organize or reorganize
does not include the power to terminate employees but only to reduce NEA’s manpower
complement.
Such contention is erroneous.
In Betoy v. The Board of Directors, National Power Corporation, 4 the Court upheld the
dismissal of all the employees of the NPC pursuant to the EPIRA Law. In ruling that the
power of reorganization includes the power of removal, the Court explained:
[R]eorganization involves the reduction of personnel, consolidation of offices, or abolition
thereof by reason of economy or redundancy of functions. It could result in the loss of one’s
position through removal or abolition of an office. However, for a reorganization for the
purpose of economy or to make the bureaucracy more efficient to be valid, it must pass the
test of good faith; otherwise, it is void ab initio. (Emphasis supplied.)
Evidently, the termination of all the employees of NEA was within the NEA Board’s powers
and may not successfully be impugned absent proof of bad faith.
Petitioners Failed to Prove that the NEA Board Acted in Bad Faith
Next, petitioners challenge the reorganization claiming bad faith on the part of the NEA
Board.
Congress itself laid down the indicators of bad faith in the reorganization of government
offices in Sec. 2 of RA 6656, an Act to Protect the Security of Tenure of Civil Service
Officers and Employees in the Implementation of Government Reorganization, to wit:
Section 2. No officer or employee in the career service shall be removed except for a valid
cause and after due notice and hearing. A valid cause for removal exists when, pursuant to a
bona fide reorganization, a position has been abolished or rendered redundant or there is a
need to merge, divide, or consolidate positions in order to meet the exigencies of the service,
or other lawful causes allowed by the Civil Service Law. The existence of any or some of the
following circumstances may be considered as evidence of bad faith in the removals made
as a result of reorganization, giving rise to a claim for reinstatement or reappointment by an
aggrieved party:
(a) Where there is a significant increase in the number of positions in the new staffing
pattern of the department or agency concerned;
(b) Where an office is abolished and other performing substantially the same functions is
created;
(c) Where incumbents are replaced by those less qualified in terms of status of
appointment, performance and merit;
(d) Where there is a reclassification of offices in the department or agency concerned and
the reclassified offices perform substantially the same function as the original offices;
(e) Where the removal violates the order of separation provided in Section 3 hereof.
(Emphasis supplied.)
It must be noted that the burden of proving bad faith rests on the one alleging it. As the Court
ruled in Culili v. Eastern Telecommunications, Inc.,5 "According to jurisprudence, ‘basic is
the principle that good faith is presumed and he who alleges bad faith has the duty to prove
the same.’ " Moreover, in Spouses Palada v. Solidbank Corporation, 6 the Court stated,
"Allegations of bad faith and fraud must be proved by clear and convincing evidence."
49
Here, petitioners have failed to discharge such burden of proof.
In alleging bad faith, petitioners cite RA 6656, particularly its Sec. 2, subparagraphs (b) and
(c).1âwphi1 Petitioners have the burden to show that: (1) the abolished offices were replaced
by substantially the same units performing the same functions; and (2) incumbents are
replaced by less qualified personnel.
Petitioners failed to prove such facts. Mere allegations without hard evidence cannot be
considered as clear and convincing proof.
Next, petitioners state that the NEA Board should not have abolished all the offices of NEA
and instead made a selective termination of its employees while retaining the other
employees.
Petitioners argue that for the reorganization to be valid, it is necessary to only abolish the
offices or terminate the employees that would not be retained and the retention of the
employees that were tasked to carry out the continuing mandate of NEA. Petitioners argue
in their Memorandum dated July 27, 2010:
A valid reorganization, pursued in good faith, would have resulted to: (1) the abolition of old
positions in the NEA’s table of organization that pertain to the granting of franchises and rate
fixing functions as these were all abolished by Congress (2) the creation of new positions
that pertain to the additional mandates of the EPIRA Law and (3) maintaining the old
positions that were not affected by the EPIRA Law.
The Court already had the occasion to pass upon the validity of the similar reorganization in
the NPC. In the aforecited case of Betoy,7 the Court upheld the policy of the Executive to
terminate all the employees of the office before rehiring those necessary for its operation.
We ruled in Betoy that such policy is not tainted with bad faith:
It is undisputed that NPC was in financial distress and the solution found by Congress was
to pursue a policy towards its privatization. The privatization of NPC necessarily demanded
the restructuring of its operations. To carry out the purpose, there was a need to terminate
employees and re-hire some depending on the manpower requirements of the privatized
companies. The privatization and restructuring of the NPC was, therefore, done in good faith
as its primary purpose was for economy and to make the bureaucracy more efficient.
(Emphasis supplied.)
Evidently, the fact that the NEA Board resorted to terminating all the incumbent employees
of NPC and, later on, rehiring some of them, cannot, on that ground alone, vitiate the bona
fides of the reorganization.
WHEREFORE, the instant petition is hereby DISMISSED. Resolution Nos. 46 and 59, dated
July 10, 2003 and September 3, 2003, respectively, issued by the NEA Board of Directors
are hereby UPHELD.
No costs.
SO ORDERED.
GENERAL PRINCIPLES/RULE 1: NATURE OF THE PHILIPPINE COURT
G.R. No. 194994 April 16, 2013
EMMANUEL A. DE CASTRO, Petitioner,
vs.
EMERSON S. CARLOS, Respondent.
SERENO, CJ.:
Before us is a Petition for the issuance of a writ of quo warranto under Rule 66 filed by
Emmanuel A. de Castro (petitioner) seeking to oust respondent Emerson S. Carlos
(respondent) from the position of assistant general manager for operations (AGMO) of the
Metropolitan Manila Development Authority (MMDA).
On 29 July 2009, then President Gloria Macapagal Arroyo appointed petitioner as AGM0. 1
His appointment was concurred in by the members of the Metro Manila Council in MMDA
Resolution No. 09-10, Series of 2009.2 He took his oath on 17 August 2009 before then
Chairperson Bayani F. Fernando.3
Meanwhile, on 29 July 2010, Executive Secretary Paquito Ochoa issued Office of the
President (OP) Memorandum Circular No. 2, Series of 2010, amending OP Memorandum
Circular No. 1, Series of 2010.
OP Memorandum Circular No. 2 states:
2. All non-Career Executive Service Officials (non-CESO) occupying Career Executive
Service (CES) positions in all agencies of the executive branch shall remain in office and
continue to perform their duties and discharge their responsibility until October 31, 2010 or
until their resignations have been accepted and/or until their respective replacements have
been appointed or designated, whichever comes first, unless they are reappointed in the
meantime.4
On 30 July 2010, Atty. Francis N. Tolentino, chairperson of the MMDA, issued Office Order
No. 106,5 designating Corazon B. Cruz as officer-in-charge (OIC) of the Office of the
AGMO. Petitioner was then reassigned to the Legal and Legislative Affairs Office, Office of
the General Manager. The service vehicle and the office space previously assigned to him
were withdrawn and assigned to other employees.
Subsequently, on 2 November 2010, Chairperson Tolentino designated respondent as OIC
of the Office of the AGMO by virtue of Memorandum Order No. 24,6 which in turn cited OP
Memorandum Circular No. 2 as basis. Thereafter, the name of petitioner was stricken off the
MMDA payroll, and he was no longer paid his salary beginning November 2010.
Petitioner sought a clarification7 from the Career Executive Service Board (CESB) as to the
proper classification of the position of AGMO. In her reply,8 Executive Director Maria
Anthonette Allones (Executive Director Allones), CESO I, stated that the position of AGMO
had not yet been classified and could not be considered as belonging to the Career Executive
Service (CES). She further stated that a perusal of the appointment papers of petitioner
showed that he was not holding a coterminous position. In sum, she said, he was not covered
by OP Memorandum Circular Nos. 1 and 2.
Petitioner was later offered the position of Director IV of MMDA Public Health and Safety
Services and/or MMDA consultant. He turned down the offer, claiming that it was a
demotion in rank.
50
Demanding payment of his salary and reinstatement in the monthly payroll, 9 petitioner sent
a letter on 5 December 2010 to Edenison Faisan, assistant general manager (AGM) for
Finance and Administration; and Lydia Domingo, Director III, Administrative Services. For
his failure to obtain an action or a response from MMDA, he then made a formal demand for
his reinstatement as AGMO through a letter addressed to the Office of the President on 17
December 2010.10
However, on 4 January 2011, President Benigno S. Aquino III (President Aquino) appointed
respondent as the new AGMO of the MMDA.11 On 10 January 2011, the latter took his oath
of office.
Hence, the instant Petition.
The Office of the Solicitor General (OSG), representing respondent, filed its Comment on
19 August 2011.12 However, upon motion of petitioner, it was disqualified from representing
respondent. Thus, a private law firm13 entered an appearance as counsel for respondent and
adopted the Comment filed by the OSG.14
Petitioner filed his Reply on 17 November 2011.
ISSUES
Petitioner raises the following issues15 for the consideration of this Court:
(1) Whether respondent Emerson S. Carlos was validly appointed by President Aquino to the
position of AGMO of the MMDA;
(2) Whether petitioner Emmanuel A. de Castro is entitled to the position of AGMO; and
(3) Whether or not respondent should pay petitioner the salaries and financial benefits he
received during his illegal tenure as AGMO of the MMDA.
THE COURT’S RULING
Petitioner contends that Section 2(3), Article IX(B) of the 1987 Constitution guarantees the
security of tenure of employees in the civil service. He further argues that his appointment
as AGMO is not covered by OP Memorandum Circular No. 2, since it is not a CES position
as determined by the CESB.
On the other hand, respondent posits that the AGMO position belongs to the CES; thus, in
order to have security of tenure, petitioner, must be a Career Executive Service official
(CESO). Respondent maintains that the function of an AGM is executive and managerial in
nature. Thus, considering that petitioner is a non-CESO occupying a CES position, he is
covered by OP Memorandum Circular Nos. 1 and 2. Respondent likewise raises the issue of
procedural infirmity in the direct recourse to the Supreme Court by petitioner, who thereby
failed to adhere to the doctrine of hierarchy of courts.
Hierarchy of Courts
As to the procedural issue, petitioner submits that a direct recourse to this Court is warranted
by the urgent demands of public interest, particularly the veritable need for stability in the
civil service and the protection of the rights of civil servants. Moreover, considering that no
other than the President of the Philippines is the appointing authority, petitioner doubts if a
trial court judge or an appellate court justice, with a prospect of promotion in the judiciary
would be willing to go against a presidential appointment.
Although Section 5(1) of Article VIII of the 1987 Constitution explicitly provides that the
Supreme Court has original jurisdiction over petitions for certiorari, prohibition, mandamus,
quo warranto, and habeas corpus, the jurisdiction of this Court is not exclusive but is
concurrent with that of the Court of Appeals and regional trial court and does not give
petitioner unrestricted freedom of choice of court forum. 16 The hierarchy of courts must be
strictly observed.
Settled is the rule that "the Supreme Court is a court of last resort and must so remain if it is
to satisfactorily perform the functions assigned to it by the fundamental charter and
immemorial tradition."17 A disregard of the doctrine of hierarchy of courts warrants, as a
rule, the outright dismissal of a petition.18
A direct invocation of this Court’s jurisdiction is allowed only when there are special and
important reasons that are clearly and specifically set forth in a petition. 19 The rationale
behind this policy arises from the necessity of preventing (1) inordinate demands upon the
time and attention of the Court, which is better devoted to those matters within its exclusive
jurisdiction; and (2) further overcrowding of the Court’s docket. 20
In this case, petitioner justified his act of directly filing with this Court only when he filed
his Reply and after respondent had already raised the procedural infirmity that may cause the
outright dismissal of the present Petition. Petitioner likewise cites stability in the civil service
and protection of the rights of civil servants as rationale for disregarding the hierarchy of
courts.
Petitioner’s excuses are not special and important circumstances that would allow a direct
recourse to this Court. More so, mere speculation and doubt to the exercise of judicial
discretion of the lower courts are not and cannot be valid justifications to hurdle the hierarchy
of courts. Thus, the Petition must be dismissed.
Nature of the AGMO Position
Even assuming that petitioner’s direct resort to this Court is permissible, the Petition must
still be dismissed for lack of merit.
"A petition for quo warranto is a proceeding to determine the right of a person to use or
exercise a franchise or an office and to oust the holder from the enjoyment, thereof, if the
claim is not well-founded, or if his right to enjoy the privilege has been forfeited."21 Where
the action is filed by a private person, in his own name, he must prove that he is entitled to
the controverted position, otherwise, respondent has a right to the undisturbed possession of
the office.22
The controversy arose from the issuance of OP Memorandum Circular Nos. 1 and 2, which
applies to all non-CESO’s occupying CES positions in all agencies of the executive branch.
Petitioner, being a non-CESO, avers that he is not covered by these OP memoranda
considering that the AGMO of the MMDA is a non-CES position.
In order to settle the controversy, there is a need to determine the nature of the contentious
position of AGMO of the MMDA.
Career vs. non-career
Section 4 of Republic Act No. (R.A.) 7924,23 otherwise known as the MMDA Charter,
specifically created the position of AGMO. It reads as follows:
Sec. 4 Metro Manila Council. x x x.
xxxx
The Council shall be headed by a Chairman, who shall be appointed by the President and
who shall continue to hold office at the discretion of the appointing authority. He shall be
51
vested with the rank, rights, privileges, disqualifications, and prohibitions of a Cabinet
member.
The Chairman shall be assisted by a General Manager, an Assistant General Manager for
Finance and Administration, an Assistant General Manager for Planning and an Assistant
General Manager for Operations, all of whom shall be appointed by the President with the
consent and concurrence of the majority of the Council, subject to civil service laws and
regulations. They shall enjoy security of tenure and may be removed for cause in accordance
with law. (Emphasis supplied)
Executive Order No. (E.O.) 292, otherwise known as The Revised Administrative Code of
1987, provides for two classifications of positions in the civil service: career and non-
career.24
Career service is characterized by the existence of security of tenure,25 as contradistinguished
from non-career service whose tenure is coterminous with that of the appointing authority;
or subject to the latter’s pleasure; or limited to a period specified by law or to the duration of
a particular project for which purpose the appointment was made.26
Applying the foregoing distinction to the instant case, this Court finds that an AGMO holds
a career position, considering that the MMDA Charter specifically provides that AGMs enjoy
security of tenure – the core characteristic of a career service, as distinguished from a non-
career service position.
CES vs. non-CES
Career service includes the following:
(1) Open Career positions for appointment to which prior qualification in an appropriate
examination is required;
(2) Closed Career positions which are scientific, or highly technical in nature; these include
the faculty and academic staff of state colleges and universities, and scientific and technical
positions in scientific or research institutions which shall establish and maintain their own
merit systems;
(3) Positions in the Career Executive Service; namely, Undersecretary, Assistant Secretary,
Bureau Director, Assistant Bureau Director, Regional Director, Assistant Regional Director,
Chief of Department Service and other officers of equivalent rank as may be identified by
the Career Executive Service Board, all of whom are appointed by the President;
(4) Career officers, other than those in the Career Executive Service, who are appointed by
the President, such as the Foreign Service Officers in the Department of Foreign Affairs;
(5) Commissioned officers and enlisted men of the Armed Forces which shall maintain a
separate merit system;
(6) Personnel of government-owned or controlled corporations, whether performing
governmental or proprietary functions, who do not fall under the non-career service; and
(7) Permanent laborers, whether skilled, semi-skilled, or unskilled.27 (Emphasis supplied)
In Civil Service Commission v. Court of Appeals and PCSO, 28 the Court clarified the
positions covered by the CES:
Thus, from the long line of cases cited above, in order for a position to be covered by the
CES, two elements must concur. First, the position must either be (1) a position enumerated
under Book V, Title I, Subsection A, Chapter 2, Section 7(3) of the Administrative Code of
1987, i.e., Undersecretary, Assistant Secretary, Bureau Director, Assistant Bureau Director,
Regional Director, Assistant Regional Director, Chief of Department Service, or (2) a
position of equal rank as those enumerated, and identified by the Career Executive Service
Board to be such position of equal rank. Second, the holder of the position must be a
presidential appointee. Failing in any of these requirements, a position cannot be considered
as one covered by the third-level or CES. (Emphasis supplied)
In sum, there are two elements required for a position to be considered as CES:
1) The position is among those enumerated under Book V, Title I, Subtitle A, Chapter 2,
Section 7(3) of the Administrative Code of 1987 OR a position of equal rank as those
enumerated and identified by the CESB to be such position of equal rank; AND
2) The holder of the position is a presidential appointee. Records show that in reply29 to
Chairperson Tolentino’s query on whether the positions of general manager and AGM of the
MMDA are covered by the CES,30 the CESB – thru Executive Director Allones –
categorically stated that these positions are not among those covered by the CES.
Upon petitioner’s separate inquiry on the matter,31 the CESB similarly responded that the
AGMO’s position could not be considered as belonging to the CES. 32 Additionally,
Executive Director Allones said that petitioner was not covered by OP Memorandum
Circular Nos. 1 and 2, to wit:
A cursory perusal of your appointment papers would show that it does not bear any indication
that you are holding a coterminous appointment. Neither your position as AGMO can be
considered as created in excess of the authorized staffing pattern since RA 7924, the law that
created the MMDA clearly provided for such position. As further stated above, your position
will not fall under paragraph No. 2 of OP MC 1 because it is not yet considered as belonging
to the CES. Hence, we posit that you are not covered by OP MC 1 and 2. 33
However, contrary to Executive Director Allones’ statement, the CESB, through Resolution
No. 799 already declared certain positions meeting the criteria set therein as embraced within
the CES.
It is worthy of note that CESB Resolution No. 799 was issued on 19 May 2009, even prior
to petitioner’s appointment on 29 July 2009. Moreover, as early as 31 May 1994, the above
classification was already embodied in CSC Resolution No. 34-2925, circularized in CSC
Memorandum Circular 21, Series of 1994.
Resolution No. 799 classified the following positions as falling within the coverage of the
CES:
a. The Career Executive Service includes the positions of Undersecretary, Assistant
Secretary, Bureau director, Assistant Bureau Director, regional Director (department-wide
and bureau-wide), Assistant Regional Director (department-wide and bureau-wide), and
Chief of Department Service;
b. Unless provided otherwise, all other managerial or executive positions in the government,
including government-owned or controlled corporations with original charters are embraced
within the CES provided that they meet the following criteria:
i.) The position is a career position;
ii.) The position is above division chief level; and,
iii.) The duties and responsibilities of the position require performance of executive and
managerial functions.
52
Without a doubt, the AGMO position is not one of those enumerated in the above-cited
paragraph(a) but it clearly falls under paragraph(b) considering that it belongs to a
government-owned and controlled corporation with an original charter. The nature of AGMO
is clear from the provisions of the MMDA Charter.
First, we have already determined that an AGMO is a career position that enjoys security of
tenure by virtue of the MMDA Charter.
Second, it is undisputed that the position of AGMO is above the division chief level, which
is equivalent to the rank of assistant secretary with Salary Grade 29. 34
Third, a perusal of the MMDA Charter readily reveals that the duties and responsibilities of
the position require the performance of executive and managerial functions.
Section 12.4, Rule IV of the Rules and Regulations Implementing R.A. 7924 provides the
powers, functions, duties and responsibilities of an AGMO, as follows:
12.4 Assistant General Manager for Operations
The Assistant General Manager for Operations shall perform the following functions:
a. Establish a mechanism for coordinating and operationalizing the delivery of metro-wide
basic services;
b. Maintain a monitoring system for the effective evaluation of the implementation of
approved policies, plans and programs for the development of Metropolitan Manila;
c. Mobilize the participation of local government units, executive departments or agencies of
the national government, and the private sector in the delivery of metro-wide services; and
d. Operate a central radio communication system.
He shall perform such other duties as are incidental or related to the above functions or as
may be assigned from time to time.
An AGMO performs functions that are managerial in character; exercises management over
people, resource, and/or policy; and assumes functions like planning, organizing, directing,
coordinating, controlling, and overseeing the activities of MMDA. The position requires the
application of managerial or supervisory skills necessary to carry out duties and
responsibilities involving functional guidance, leadership, and supervision.
For the foregoing reasons, the position of AGMO is within the coverage of the CES.
In relation thereto, positions in the career service, for which appointments require
examinations, are grouped into three major levels:35
Sec. 8. Classes of positions in the Career Service. — (1) Classes of positions in the career
service appointment to which requires examinations shall be grouped into three major levels
as follows:
(a) The first level shall include clerical, trades, crafts and custodial service positions which
involve non-professional or sub-professional work in a non-supervisory or supervisory
capacity requiring less than four years of collegiate studies;
(b) The second level shall include professional, technical, and scientific positions which
involve professional, technical or scientific work in a non-supervisory or supervisory
capacity requiring at least four years of college work up to Division Chief levels; and
(c) The third level shall cover positions in the Career Executive Service. (Emphasis supplied)
Entrance to different levels requires corresponding civil service eligibilities.36 Those at the
third level (CES positions) require career service executive eligibility (CSEE) as a
requirement for permanent appointment.37
Evidently, an AGMO should possess all the qualifications required by third-level career
service within the CES. In this case, petitioner does not have the required eligibility.
Therefore, we find that his appointment to the position of AGMO was merely temporary.
Amores v. Civil Service Commission38 is instructive as to the nature of temporary
appointments in the CES. The Court held therein that an appointee cannot hold a position in
a permanent capacity without the required CES eligibility:
We begin with the precept, firmly established by law and jurisprudence that a permanent
appointment in the civil service is issued to a person who has met the requirements of the
position to which the appointment is made in accordance with law and the rules issued
pursuant thereto. An appointment is permanent where the appointee meets all the
requirements for the position to which he is being appointed, including the appropriate
eligibility prescribed, and it is temporary where the appointee meets all the requirements for
the position except only the appropriate civil service eligibility.
xxxx
With particular reference to positions in the career executive service (CES), the requisite civil
service eligibility is acquired upon passing the CES examinations administered by the CES
Board and the subsequent conferment of such eligibility upon passing the examinations.
Once a person acquires eligibility, he either earns the status of a permanent appointee to the
CES position to which he has previously been appointed, or he becomes qualified for a
permanent appointment to that position provided only that he also possesses all the other
qualifications for the position. Verily, it is clear that the possession of the required CES
eligibility is that which will make an appointment in the career executive service a permanent
one. Petitioner does not possess such eligibility, however, it cannot be said that his
appointment to the position was permanent.
Indeed, the law permits, on many occasions, the appointment of non-CES eligibles to CES
positions in the government in the absence of appropriate eligibles and when there is
necessity in the interest of public service to fill vacancies in the government. But in all such
cases, the appointment is at best merely temporary as it is said to be conditioned on the
subsequent obtention of the required CES eligibility. This rule, according to De Leon v. Court
of Appeals, Dimayuga v. Benedicto, Caringal v. Philippine Charity Sweepstakes Office, and
Achacoso v. Macaraig, is invariable even though the given appointment may have been
designated as permanent by the appointing authority.
xxxx
Security of tenure in the career executive service, which presupposes a permanent
appointment, takes place upon passing the CES examinations administered by the CES Board
x x x.
Petitioner undisputedly lacked CES eligibility. Thus, he did not hold the position of AGMO
in a permanent capacity or acquire security of tenure in that position. Otherwise stated, his
appointment was temporary and "co-terminus with the appointing authority."39 In Carillo v.
CA,40 this Court ruled that "one who holds a temporary appointment has no fixed tenure of
office; his employment can be terminated at the pleasure of the appointing power, there being
no need to show that the termination is for cause." Therefore, we find no violation of security
of tenure when petitioner was replaced by respondent upon the latter’s appointment to the
position of AGMO by President Aquino.
53
Even granting for the sake of argument that the position of AGMO is yet to be classified by
the CESB, petitioner’s appointment is still deemed coterminous pursuant to CESB
Resolution No. 945 issued on 14 June 2011, which reads:
WHEREAS, on November 23, 2010, the Supreme Court in the case of PCSO v. CSC, G.R.
NO. 185766 and G.R. No. 185767 limited the coverage of positions belonging to the CES to
positions requiring Presidential appointments.
WHEREAS, in the same vein, CES positions have now become synonymous to third level
positions by virtue of the said ruling.
WHEREFORE, foregoing premises considered, the Board RESOLVES, as it is hereby
RESOLVED, to issue the following guidelines to clarify the policy on the coverage of CES
and its classification:
1. For career service positions requiring Presidential appointments expressly enumerated
under Section 7(3), Chapter 2, Subtitle A, Title 1, Book V of the Administrative Code of
1987 namely:
Undersecretary, Assistant Secretary, Bureau Director, Assistant Bureau Director, Regional
Director, Assistant Regional Director, and Chief of Department Service, no classification of
position is necessary to place them under the coverage of the CES, except if they belong to
Project Offices, in which case a position classification is required, in consultation with the
Department of Budget and Management (DBM).
2. For positions requiring Presidential appointments other than those enumerated above, a
classification of positions is necessary which shall be conducted by the Board, upon request
of the head of office of the government department/agency concerned, to place them under
the coverage of the CES provided they comply with the following criteria:
i.) The position is a career position;
ii.) The position is above division chief level; and,
iii.)The duties and responsibilities of the position require the performance of executive and
managerial functions.
All appointments to positions which have not been previously classified as part of the CES
would be deemed co-terminus with the appointing authority. (Emphasis supplied)
Therefore, considering that petitioner is an appointee of then President Arroyo whose term
ended on 30 June 2010, petitioner’s term of office was also deemed terminated upon the
assumption of President Aquino.
Likewise, it is inconsequential that petitioner was allegedly replaced by another non-CESO
eligible. In a quo warranto proceeding, the person suing must show that he has a clear right
to the office allegedly held unlawfully by another. Absent a showing of that right, the lack of
qualification or eligibility of the supposed usurper is immaterial. 41
All the foregoing considered, the petition merits an outright dismissal for disregarding the
hierarchy of courts and petitioner’s lack of cause of action against respondent for failure to
sufficiently show that he has undisturbed rights to the position of AGMO of the MMDA.
WHEREFORE, premises considered, the Petition is DENIED.
SO ORDERED.