Caltex v Palomar

FACTS:

In the year 1960, Caltex Philippines conceived and laid the ground work for a
promotional scheme calculated to drum up patronage for its oil products. The contest
was entitled “Caltex Hooded Pump Contest”, which calls for participants to estimate
the actual number of liters as hooded gas pump at each Caltex station will dispense
during a specific period.

Foreseeing the extensive use of the mails not only as amongst the media for
publicizing the contest but also for the transmission of communications, representations
were made by Caltex with the postal authorities for the contest to be cleared in advance
for mailing. This was formalized in a letter sent by Caltex to the Post master General,
dated October 31, 1960, in which Caltex, thru its counsel, enclosed a copy of the contest
rules and endeavored to justify its position that the contest does not violate the “The
Anti-Lottery Provisions of the Postal Law”.

Unfortunately, the Palomar, the acting Postmaster General denied Caltex’s

request stating that the contest scheme falls within the purview of the Anti-lottery
Provision and ultimately, declined Clatex’s request for clearance.

Caltex sought reconsideration, stressing that there being no consideration

involved in part of the contestant, the contest was not commendable as a lottery.
However, the Postmaster General maintained his view that the contest involves
consideration, or even it does not involve any consideration it still falls as “Gift
Enterprise”, which was equally banned by the Postal Law.

ISSUE:

1. Whether the petition states a sufficient cause of action for declaratory relief?
2. Whether or not the scheme proposed by Caltex the appellee is within the
coverage of the prohibitive provisions of the Postal Law?

HELD:

I.

By express mandate of Section 1 of Rule 66 of the old Rules of Court which deals with
the applicability to invoke declaratory relief which states: “Declaratory relief is available to
person whose rights are affected by a statute, to determine any question of construction
or validity arising under the statute and for a declaration of rights thereunder.

In amplification, conformably established jurisprudence on the matter, laid down certain

conditions:

1. There must be a justiciable controversy.

2. The controversy must be between persons whose interests are adverse.
3. The party seeking declaratory relief must have a legal interest in the controversy.
4. The issue involved must be ripe for judicial determination.
With the appellee’s bent to hold the contest and the appellant’s threat to issue a fraud
order if carried out, the contenders are confronted by an ominous shadow of imminent
and inevitable litigation unless their differences are settled and stabilized by a
declaration. And, contrary to the insinuation of the appellant, the time is long past when it
can rightly be said that merely the appellee’s “desires are thwarted by its own doubts, or
by the fears of others” — which admittedly does not confer a cause of action. Doubt, if
any there was, has ripened into a justiciable controversy when, as in the case at bar, it
was translated into a positive claim of right which is actually contested.

Construction

– Is the art or process of discovering and expounding the meaning and intention of
the authors of the law with respect to its application to a given case, where that intention
is rendered doubtful, amongst others, by reason of the fact that the given case is not
explicitly provided for in the law.

It is not amiss to point out at this juncture that the conclusion we have herein just reached
is not without precedent. In Liberty Calendar Co. vs. Cohen, 19 N.J., 399, 117 A. 2d.,
487, where a corporation engaged in promotional advertising was advised by the county
prosecutor that its proposed sales promotion plan had the characteristics of a lottery, and
that if such sales promotion were conducted, the corporation would be subject to criminal
prosecution, it was held that the corporation was entitled to maintain a declaratory relief
action against the county prosecutor to determine the legality of its sales promotion plan.

II.

Is the Contest Scheme a Lottery?

Lottery

– Extends to all schemes for the distribution of prizes by chance

e.g. policy playing, gift exhibitions, prize concerts, raffles and fairs as well as various
forms of gambling.

Three Essential Elements:

1. Consideration
2. Prize
3. 3. Chance

No, according to the Supreme Court, the contest scheme is not a lottery but it
appears to be more of a gratuitous distribution since nowhere in the rules is any
requirements that any fee be paid, any merchandise be bought, any services be
rendered, or any value whatsoever be given for the privilege to participate. Since, a
prospective contestant has to do is go to a Caltex Station, request for the entry form
which is available on demand and accomplish and submit the same for the drawing of the
winner. Because of this, the contest fails to exhibit any discernible consideration which
would brand it as a lottery.

Moreover, the law does not condemn the gratuitous distribution of property by chance, if
no consideration is derived directly or indirectly from the party receiving the chance, but it
does condemn as criminal scheme in which a valuable consideration of some kind is paid
directly or indirectly for the chance to draw a prize.

Is the scheme, as sales promotion which would benefit the sponsor in the way of
increased patronage be considered as a consideration and thus violates the Postal
Law?

No, the required element of consideration does not consist of the benefit derived
by the sponsors of the contest. The true test lies on whether or not the participant pays a
valuable consideration for the chance of winning and not whether or not those conducting
the enterprise receiver something of value for the distribution of the prize.

Is the Contest Scheme a Gift Enterprise?

Even if the term Gift Enterprise is not yet defined explicitly, there appears to be a
consensus among lexicographers and standard authorities that the term is common
applied to a sporting artifice of under which goods are sold for their market value but by
way of inducement to purchase the product, the purchaser is given a chance to win a
prize.

And thus, the term of gift enterprise cannot be established in the case at bar since
there is not sale of anything to which the chance offered is attached as an inducement to
the purchaser. The contest is open to all qualified contestant irrespective of whether or
not they buy the appellee’s products.

The lesson that we derive from this state of the pertinent jurisprudence is that every
case must be resolved upon the particular phraseology of the applicable statutory
provision. It is only logical that the term under a construction should be accorded no
other meaning than that which is consistent with the nature of the word associated
therewith.

In the end, the Supreme Court ruled out that under the prohibitive provision of the Postal
Law, gift enterprise and similar schemes therein contemplated are condemnable only if,
like lotteries, they involve the element of consideration. Finding non in the contest, it was
ruled out that the appellee may not be denied the use of the mails for the purpose
thereof.

Daoang v Municipal Judge

G.R. No. L-34568

28 March 1988

Facts:

Petitioners are grandchildren of private respondents Agonoy. Private respondents filed a petition
before the MTC of San Nicolas seeking adoption of two minors. Petitioners filed an opposition to the
adoption invoking the provisions of the Civil Code. That the respondents have a legitimate child, the
mother of the petitioners, now deceased, as such they are not qualified to adopt as per Article 335 of
the aforesaid Code. The petition for adoption was granted. Hence, this petition.
Issue:

Whether or not private respondents are disqualified to adopt under paragraph 1 of Art. 335.

Held:

No. The provision invoked by the petitioners is clear and unambiguous. Therefore, no
construction or interpretation should be made. To add “grandchildren” in this article where no such
word is included would be in violation to the legal maxim that what is expressly included would
naturally exclude what is not included.

Montelibano v Ferrer

Facts:

In 1940, the Subdivision Inc, of which Montelibano is the president and general manager, leased a
lot to Benares for five years, with an option in favor of Benares of another five crop years. On
1951, the Subdivision instituted against Benares an unlawful detainer case which rendered a
decision ordering him to eject from the said lot. However, Benares continued planting on
the said lot, instead of delivering it to Subdivision. Acting upon Montelibano, his co-petitioners
cleared the land of sugarcane planted by Benares. Hence, a criminal case was filed by Benares
against petitiioners. A warrant of arrest was then filed to the petitioners. Monteibano and his
companions filed a motion to quash the complaint and warrant of arrest A civil case against
Municipal Judge and Benares was filed alleging that the said judge had o jurisdiction to take
cognizance of the criminal case.

Issue:

Whether or not the municipal court may entertain the criminal case relying upon CA 326, section
22 (Charter of the City of Bacolod) which provides that the City Attorney shall charge of the
prosecution of all crimes, misdemeanors, and violations of city ordinances, in the Court of First
Instance and the Municipal Court of Bacolod.

Held:

No, the Judge of Municipal Court has no jurisdiction over the case.

In the interpretation of reenacted statutes the court will follow the construction which they received
when previously in force. The legislature will be presumed to know the effect which such status
originally had, and by reenactment to intend that they should again have the same effect.

Two statutes with a parallel scope, purpose and terminology should, each in its own field, have a
like interpretation, unless in particular instances there is something peculiar in the question under
consideration, or dissimilar in the terms of the act relating thereto, requiring a different conclusion.

In the case at bar, the same provisions were contested in Sayo v. Chief of Police wherein it was
held that in the City of Manila, criminal complaints may be filed only with the City Fiscal who is
given the exclusive authority to institute criminal cases in the different courts of said city, under the
provisions of its Charter found in Sec 39 of Act # 183. The provisions of the Charter of City of
Bacolod which are substantially identical to that of Manila should then be interpreted the same.

Therefore, the decision appealed is reversed and the warrant of arrest issued by the judge shall be
annulled.

161 Phil. 246

ESGUERRA, J.:

Petition for certiorari to review the decision of the Court of Appeals (Second Division) in CA-G.R.
No. 38363-R, entitled "Leoncio Barrameda, plaintiff-appellant, vs. Development Bank of the
Philippines (Naga Branch, Naga City), Rodolfo General and Carmen Gontang, defendants-
appellees," which reversed the decision of the Court of First Instance of Camarines Sur in its Civil
Case No. 5697, "dismissing the complaint with costs against plaintiff".

Appellate Court's decision has the following dispositive portion:

"We therefore find that the appealed judgment should be reversed and set aside and another one
entered declaring (1) null and void the sale executed on September 3, 1963, by defendant
Development Bank of the Philippines in favor of its co-defendants Rodolfo General and Carmen
Gontang, (2) T.C.T. No. 5003 cancelled and (3) the mortgaged property redeemed; and ordering the
Clerk of the lower court to deliver the amount of P7,271.22 deposited to defendants Rodolfo
General and Carmen Gontang and the Register of Deeds to issue a new Transfer Certificate of Title
in the name of plaintiff in lieu of T.C.T. No. 5003 upon payment by him of corresponding fees; with
costs against the defendants in both instances."

Undisputed facts are:

"Plaintiff seeks to redeem the land formerly embraced in Transfer Certificate of Title No. 1418,
containing an area of 59.4687 hectares, situated in barrio Taban, Minalabac, Camarines Sur; to
annul any and all contracts affecting said property between the Development Bank of the
Philippines (DBP) and Rodolfo General and Carmen Gontang; and to recover damages, attorney's
fees and costs.

"The land in dispute was mortgaged by plaintiff to the DBP to secure a loan of P22,000.00. For
failure of the mortgagor to pay in full the installments as they fall due, the mortgagee foreclosed
extrajudicially pursuant to the provisions of Act 3135. On April 23, 1962, the provincial sheriff
conducted an auction sale in which the mortgagee, as the highest bidder, bought the mortgaged
property for P7,271.22. On May 13, 1963, the sheriff executed a final deed of sale in favor of the
DBP (Exhibit 2) and the DBP executed an affidavit of consolidation of ownership (Exhibit 3). Upon
registration of the sale and affidavit on September 2, 1963 (Exhibit 1), TCT No. 1418 in the name of
plaintiff was cancelled and TCT No. 5003 issued to the DBP (Exhibit 5) in its stead. On September 3,
1963, defendants Rodolfo General and Carmen Gontang purchased the land from their co-
defendant. The sale in their favor was annotated on TCT No. 5003 on November 26, 1963 only.

"Prior to the date last mentioned, or on November 20, 1963, plaintiff offered to redeem the land. In
view of the refusal of the DBP to allow the redemption, plaintiff commenced this suit. The original
complaint was filed in court on November 23, 1963. On August 12, 1964, plaintiff deposited with
the clerk of court the sum of P7,271.22, representing the repurchase price of the land.

"The trial court held that the one-year period of redemption began to run on April 23, 1962, when
the sale at public auction was held, and ended on April 24, 1963; that the plaintiffs offer to redeem
on November 20, 1963 and the deposit of the redemption price on August 12, 1964 were made
beyond the redemption period; and that defendants Rodolfo General and Carmen Gontang 'are
legitimate purchasers for value.' "

Two principal issues raised are:

(1) In the interpretation and application of Section 31, Commonwealth Act 459 (Law that created
the Agricultural and Industrial Bank, now Development Bank of the Philippines) which provides:

"The mortgagor or debtor to the Agricultural and Industrial Bank whose real property was sold at
public auction, judicially or extra-judicially, for the full or partial payment of an obligation to said
bank shall, within one year from the date of the auction sale, have the right to redeem the real
property ***." (Italicized for emphasis),

shall the period of redemption start from the date of auction sale or the date of the registration of
the sale in the register of deeds as the respondent Appellate Court held?

(2) Were petitioners under obligation to look beyond what appeared in the certificate of title of
their vendor the Development Bank of the Philippines and investigate the validity of its title before
they could be classified as purchasers in good faith?

Petitioners' principal contentions are: that Section 31 of Commonwealth Act No. 459 which created
the Agricultural and Industrial Bank, predecessor of the Rehabilitation Finance Corporation and the
Development Bank of the Philippines, clearly provides that the right to redeem the real property
sold at public auction judicially or extra-judicially may only be exercised "within one year from the
date of the auction sale"; that there is no provision in Commonwealth Act No. 459 expressly stating
that the redemption period of one year shall start from the registration of the certificate of sale in
the register of deeds; that Sec. 31 of C.A. 459 is a specific provision of law which governs
redemption of real property foreclosed by the Agricultural and Industrial Bank (now the
Development Bank of the Philippines), and prescribes the redemption period for both judicial and
extra-judicial foreclosures of mortgage; that insofar as foreclosures of mortgage by banking and
financial institutions are concerned, the period of redemption applicable must be the one
prescribed in their respective charters as, in the case at bar, Section 31, C.A. No. 459; that the ruling
in the case of Agbulos vs. Alberto, G.R. No. L-17483, July 31, 1962, cited by respondent Appellate
Court as a basis for its decision, is not applicable to the case at bar because this Court based its
Agbulos ruling on Section 26 (now Sec. 30) of Rule 39 of the Rules of Court, wherein it is not clear
when the period of redemption should start (date when execution sale was conducted, or when the
certificate of sale was executed by sheriff, or when the certificate of sale was registered in the
registry of deeds), and this Court ruled that as the land involved in that case is registered under the
Torrens system, the date of redemption should begin to run from the date of registration, unlike in
the case at bar where Section 31 of Commonwealth Act 459 specifically and clearly provides that
the running of the redemption period shall start from the date of the auction sale; and that the
ruling of this Court in Gonzales vs. P.N.B., 48 Phil. 824, also invoked by respondent Appellate Court
as a basis for its decision, is likewise not applicable to the case at bar because the provisions on the
matter of the P.N.B. Charter, Act No. 2938, are different from that of Commonwealth Act 459.
Section 32 of Act 2938, which is now Section 20 of R.A. No. 1300 (PNB Charter) provides that the
mortgagor shall have the right to redeem within one year after the sale of the real estate. This is
identical to the provision appearing in Sec. 26, now Sec. 30, Rule 39, Rules of Court, while under
Sec. 31 of Commonwealth Act 459, the period of redemption shall start from the date of the
auction sale, and the latter provision is applicable specifically and expressly to the case at bar.

It is also petitioners' principal argument that the ruling in Metropolitan Insurance Company,
substituted by spouses Loreto Z. Marcaida and Miguel de Marcaida vs. Pigtain, 101 Phil. 1111, 1115-
1116, wherein this Court, in construing Sec. 6 of Act No. 3135, categorically stated that the one year
redemption period shall start from the date of sale and not from the report of the sale or the
registration of the sale certificate in the office of the Register of Deeds, is more applicable to the
present case. The pertinent portion of the decision in the Marcaida case follows:

"But again the appellants claim that in this particular case, the statutory redemption period of one
year should begin from December 17, 1954, when the auction sale was actually recorded in the
office of the Register of Deeds of Manila and not from December 15, 1953, when the sale at public
auction of the properties in question took place. We find this contention to be also untenable in
view of the clear provision of the aforesaid Section 6 of Act No. 3135 to the effect that the right of
redemption should be exercised within one year from the date of the sale. It should not be
overlooked that the extrajudicial sale in question was for foreclosure of a mortgage and not by
virtue of an ordinary writ of execution in a civil case. * * * And since the appellants had failed to
redeem the land in question within the time allowed by Section 6 of Act 3135, the appellee has
perfect right to require the cancellation of the attachment lien in question" (Italicized for emphasis)

Notwithstanding the impressive arguments presented by petitioners, the crucial issue to determine
is the choice of what rule to apply in determining the start of the one year redemption period,
whether from the date of the auction sale or from that of the registration of the sale with the
registry of deeds. In other words it is whether a literal interpretation of the provision of Section 31
of Commonwealth Act 459 that the period of redemption shall start from the date of the auction
sale shall govern, or whether the words, "auction sale", shall be considered in their ordinary
meaning or in the same sense that "sale" is used in the texts of Section 26, now 30, of Rule 39 of the
Rules of Court, and Section 26 of Act 2938, now Section 20, R.A. 1300 (Charter of PNB). Stated
differently, should the word "sale" used in the above indicated provisions of the Rules of Court and
the PNB Charter, under which We ruled that the redemption period shall start from the registration
of the sale in the registry of deeds be applied to foreclosure sales for the DBP and give to the words
"auction sale" in its charter the same meaning of "sale" as used in connection with registered land?

We are of the view that a correct solution to the foregoing issue must entail not merely trying to
determine the meaning of the words "auction sale" and "sale" in different legislative enactments,
but, more importantly, a determination of the legislative intent which is quite a task to achieve as it
depends more on a determination of the purpose and objective of the law in giving mortgagors a
period of redemption of their foreclosed properties. Mortgagors whose properties are foreclosed
and are purchased by the mortgagee as highest bidder at the auction sale are decidedly at a great
disadvantage because almost invariably mortgagors forfeit their properties at a great loss as they
are purchased at nominal costs by the mortgagee himself who ordinarily bids in no more than his
credit or the balance thereof at the auction sale. That is the reason why the law gives them a
chance to redeem their properties within a fixed period. It cannot be denied that in all foreclosures
of mortgages and sale of property pursuant to execution, whether judicial or extrajudicial in nature,
under different legislative enactments, a public auction sale is an indispensable pre-requisite to the
valid disposal of properties used as collateral for the obligation. So that whether the legislators pi
different laws used the term "sale" or "auction sale" is of no moment, since the presumption is that
when they used those words "sale" and "auction sale" interchangeably in different laws they really
referred to only one act the sale at public auction indispensably necessary in the disposition of
mortgaged properties and those levied upon to pay the civil obligations of their owners.

In the case of Ernesto Salazar, et al. vs. Flor De Lis Meneses, et al., G.R. No. L-15378, promulgated
July 31, 1963, this Court stated:

"The issue decisive of this appeal is the one raised by appellants in their third assignment of error,
which is to this effect: that the lower court erred in not holding that the period of redemption in
this case, as far as appellants are concerned, started only on May 26, 1956, the date when the
certificate of sale issued by the sheriff was registered. Should We rule to this effect, it is clear that
when appellants attempted to exercise their right to redeem, as judgment creditors of the
deceased mortgagor by judgment subsequent to the extrajudicial foreclosure sale, and when they
initiated the present action on October 1, 1956, the period of redemption had not yet expired.
"We find appellants' contention to be meritorious. In the case of Agbulos vs. Alberto, G.R. No. L-
17483, promulgated on July 31, 1962, We held:

'The property involved in the present case is registered land. It is the law in this jurisdiction that
when property brought under the operation of the Land Registration Act is sold, the operative act is
the registration of the deed of conveyance. The deed of sale does not take effect as a conveyance
or bind the land until it is registered. (Section 50, Act 496; Tuason vs. Raymundo, 28 Phil. 635;
Sikatuna vs. Guevara, 43 Phil. 371; Worcester vs. Ocampo, 34 Phil. 646)' " (Italicized for emphasis)

We find no compelling reason to deviate from the aforequoted ruling and not apply the same to the
present case. To Us petitioners' main contention that there is a great deal of difference in legislative
intent in the use of the words "auction sale" in Sec. 31 of Commonwealth Act 459 and the word
"sale" in Sec. 32 of Act 2938, and Sec. 30 of Rule 39 of the Rules of Court, pales into insignificance in
the light of Our stand that those words used interchangeably refer to one thing, and that is the
public auction sale required by law in the disposition of properties foreclosed or levied upon. Our
stand in the Salazar case and in those mentioned therein (Garcia vs. Ocampo, G.R. No. L-13029,
June 30, 1959; Gonzales, et al. vs. Philippine National Bank, et al., 48 Phil. 824) is firmly planted on
the premise that registration of the deed of conveyance for properties brought under the Torrens
System is the operative act to transfer title to the property and registration is also the notice to the
whole world that a transaction involving the same had taken place.

To affirm the previous stand this Court has taken on the question of when the one year period of
redemption should start (from the time of registration of the sale) would better serve the ends of
justice and equity especially in this case, since to rule otherwise would result in preventing the
respondent-mortgagor from redeeming his 59.4687 hectares of land which was acquired by the
Development Bank of the Philippines as the highest bidder at the auction sale for the low price of
only P7,271.22 which was simply the unpaid balance of the mortgage debt of P22,000.00 after the
respondent-mortgagor had paid the sum of P14,728.78. As it is, affirmance of the Appellate Court's
decision would not result in any loss to petitioners since the amount of P7,271.22 they paid to the
Bank will be returned to them. What: further strengthens Our stand is the fact found by the
respondent Appellate Court that respondent Barrameda has always been in possession of the
disputed land.

In the light of the foregoing, We find it no longer necessary to determine whether the petitioners
are purchasers in good faith of the land involved, since the respondent Barrameda redeemed the
mortgaged property within the legal period of redemption and, consequently the sale of the
property executed on September 3, 1963, by the Development Bank of the Philippines in favor of
the petitioners is null and void.

Wherefore, the decision of the respondent Appellate Court is affirmed, with costs against
petitioners. So ordered.

Molina v Rafferty (1918)

Molina v Rafferty

April 4, 1918

Jacinto Molina- Plaintiff-Appellee

Rafferty, Collector of Internal Revenue- Defendant- Appellant

Appeal from a judgment of the CFI of Manila

J. Abreu

I. Definition, Concept, and purpose of Statutory Construction

1. Judge Cooley- The underlying principle of all construction is that the intent of the
legislature should be sought in the words employed to express it, and that when found, it
should be made to govern…. If the words of the law seem to be doubtful import, it may
then perhaps become necessary to look beyond them in order to ascertain what was in
the legislative mind at the time the law was enacted; what evil, is any, was meant to be
redressed;…

2. And where the law was contemporaneously been put upon it, this construction,
especially if followed for some considerable period, is entitled to great respect, as being
very probably a true expression of the legislative purpose, & is not lightly to be overruled,
although it isn’t conclusive.

II. Facts:

1. The present case was a rehearing granted to the appellee for a trail court decision on
Feb 1, 1918. The petition was granted and oral argument of the motion was permitted.

2. Jacinto Molina was the owner of various fish ponds in Bulacan. He was required to
pay the merchant’s tax required by the Bureau of Internal Revenue.

3. Molina protested that he was an agriculturist and not a merchant and therefore exempt
from the taxes imposed by the Internal Revenue Law upon the gross sales of merchants.

4. Point of contention- Plaintiff contends that the fish produced by him are to be regarded
as an “agricultural product” within the meaning of the term used in paragraph (c) of
Section 41 of Act No. 2339 (Now section 1460 of the Administrative Code of 1917),
enforced when the disputed tax was levied and that he is exempt from the percentage tax
on merchants’ sales established by section 40 of Act No. 2339.

5. Paragraph (c) of Act No. 2339 sec. 41 reads:

In computing the tax above imposed transactions in the following commodities shall be
excluded:

(c) Agricultural products when sold by the producer or owner of the land where grown,
whether in their original state or not

6. In the Trial Court, the Honorable Jose Abreu in a carefully prepared decision ordered
defendant to refund the P71.81 paid by plaintiff as internal-revenue taxes and penalties
under protest, with legal interest thereon from November 26, 1915, the date of such
payment under protest.

III. Issue:

1. WON fish produced as were those upon which the tax in question was levied are an
agricultural product
IV Decision:

Decision set aside. Judgment of lower court affirmed.

IV. Ruling:

1. Purpose of legislative in establishing the exemption – exempting agricultural products

from the tax the farming industry would be favored and the development of the resources
of the country encouraged.

2. As a consequence, it is fairly to be inferred from the statute that the object and
purpose of the Legislature was to levy the tax in question (merchant’s tax) upon all
persons engaged in making a profit upon goods produced by others but to exempt from
the tax all persons directly producing goods from the land. Products were grouped under
“agricultural products”.

3. It is also the public interest to encourage the artificial propagation of food. However, if
the artificial production of fish is held not to be included within the exemption of the
statute this conclusion must be based upon the inadequacy of the language used by the
Legislature to express its purpose, rather than the assumption that it was actually
intended to exclude producers of artificially grown fish from the benefits conferred upon
producers of other substances brought into the store of national wealth by the arts of
husbandry and animal industry.

4. Court held that the ponds where the fish were grown is agricultural land within the
definitions set by the Acts of Congress, the Philippine Commission, and the Mapa vs.
Insular Gov’t case.

5. With regard to the question that that the fish artificially grown and fed in a confined
area are agricultural products and therefore exempt, the Court looked deeper. It said that
a man might cultivate the surface of a tract of land patented to him under the mining law,
but the products of such soil would not for that reason be any the less "agricultural
products." Conversely, the admission that the land upon which these fishponds are
constructed is not to be classified as mineral or forest land, does not lead of necessity to
the conclusion that everything produced upon them is for that reason alone to be deemed
an "agricultural product" within the meaning of the statute under consideration.

3. Courts and lexicographers are in accord in holding that the term agricultural products
is not limited in its meaning to vegetable growth but includes everything which serves to
satisfy human needs which is grown upon the land, whether it pertains to the vegetable
kingdom or to the animal kingdom.

4. Purpose of agriculture – obtain from the land the products to which it is best adapted
and through it will yield the greatest return upon the expenditure of a given amount of
labor and capital. This is similar to the process of enclosing an area for fish production
and one of the diets of the products are marine plants rooted at the bottom of the pond.
5. Another distinction was made between fishermen and the people artificially growing
fish in ponds so as to delineate the scope of the occupation tax. Fishermen were made
liable to the occupation tax. The ones growing fish in ponds were not included.

5. As the present case related to US vs Laxa, the court held that Laxa wasn’t controlling
due to evidence that the fish subsisted solely upon free floating algae in Laxa while in
Molina, the fish subsisted through plants which grow from roots which attach themselves
to the bottom of the pond, thereby making Molina’s fish in the real sense a product of the
land!

Dissent:

J. Malcolm:

1. illustrates how on the same facts, same law, and the same authorities, judges can
arrive at diametrically opposed conclusions

2. Take the Facts where distinction of marine plants rooted to soil of ponds and floating
algae make a small difference, or

3. Take the Laws the small difference in the meaning of “agricultural products” needs to
be ascertained. Primary duty of the court is to ascertain legislative intention. The decision
of the majority on reconsideration in a laudable endeavor would make this the purpose of
the law and would follow this idea consistently to the end.

On the other hand, the original decision would start with the same presumption but
finding that to so construe the law would result in judicial amendment must then
necessarily reach a different result; if the Legislature had intended to exempt all classes
of domestic products which would include fish, it would undoubtedly have done so in
plain language.

4. When it came to the Authorities with regard to the limits of the term “agricultural
products”, another court could very well instead of prolonging the examples ad infinitum
merely judicially repeal the word agricultural and include everything which would fall
under the word products.

Suffice it to say that the argument on motion for reconsideration and the decision of the
majority have failed to convince me that fish — or to accede to the critical suggestion of
the majority — that fish produced as were those upon which the tax in question was
levied, are an agricultural product. The administrative ruling of the Attorney-General, the
decision of this court in United States vs. Laxa and the original decision in the instant
case should not be overturned by granting this motion.

Disposition: Judgment of the lower court affirmed

Definitions:

Agriculture – science and art of the production of plants and animal useful to man

Product – anything that is produced whether as the result of generation, growth , labor or
thought. Grow – raise, cultivate
Agricultural products – included animals which derived their sustenance from vegetable
growths and are therefore indirectly the product of the land

Statutory Construction – Who May Interpret Laws

Saturnino David, the then Collector of Internal Revenue, ordered the taxing of Justice
Pastor Endencia’s and Justice Fernando Jugo’s (and other judges’) salary pursuant
to Sec. 13 of Republic Act No. 590 which provides that

No salary wherever received by any public officer of the Republic of the Philippines
shall be considered as exempt from the income tax, payment of which is hereby
declared not to be a diminution of his compensation fixed by the Constitution or by
law.

The judges however argued that under the case of Perfecto vs Meer, judges are
exempt from taxation – this is also in observance of the doctrine of separation of
powers, i.e., the executive, to which the Internal Revenue reports, is separate from
the judiciary; that under the Constitution, the judiciary is independent and the salaries
of judges may not be diminished by the other branches of government; that taxing
their salaries is already a diminution of their benefits/salaries (see Section 9, Art. VIII,
Constitution).

The Solicitor General, arguing in behalf of the CIR, states that the decision in
Perfecto vs Meer was rendered ineffective when Congress enacted Republic Act No.
590.

ISSUE: Whether or not Sec 13 of RA 590 is constitutional.

HELD: No. The said provision is a violation of the separation of powers. Only courts
have the power to interpret laws. Congress makes laws but courts interpret them. In
Sec. 13, R.A. 590, Congress is already encroaching upon the functions of the courts
when it inserted the phrase: “payment of which [tax] is hereby declared not to be a
diminution of his compensation fixed by the Constitution or by law.”

Here, Congress is already saying that imposing taxes upon judges is not a diminution
of their salary. This is a clear example of interpretation or ascertainment of the
meaning of the phrase “which shall not be diminished during their continuance in
office,” found in Section 9, Article VIII of the Constitution, referring to the salaries of
judicial officers. This act of interpreting the Constitution or any part thereof by the
Legislature is an invasion of the well-defined and established province and
jurisdiction of the Judiciary.

“The rule is recognized elsewhere that the legislature cannot pass any declaratory
act, or act declaratory of what the law was before its passage, so as to give it any
binding weight with the courts. A legislative definition of a word as used in a statute is
not conclusive of its meaning as used elsewhere; otherwise, the legislature would be
usurping a judicial function in defining a term.

The interpretation and application of the Constitution and of statutes is within the
exclusive province and jurisdiction of the judicial department, and that in enacting a
law, the Legislature may not legally provide therein that it be interpreted in such a
way that it may not violate a Constitutional prohibition, thereby tying the hands of the
courts in their task of later interpreting said statute, especially when the interpretation
sought and provided in said statute runs counter to a previous interpretation already
given in a case by the highest court of the land.

Jose Angara vs The Electoral Commission, Pedro Ynsua, Miguel Castillo, and
Dionisio Mayor

ADVERTISEMENTS

63 Phil. 139 – Political Law – Judicial Review – Electoral Commission

In the elections of Sept 17, 1935, Angara, and the respondents, Pedro Ynsua et al.
were candidates voted for the position of member of the National Assembly for the
first district of the Province of Tayabas. On Oct 7, 1935, Angara was proclaimed as
member-elect of the NA for the said district. On November 15, 1935, he took his oath
of office. On Dec 3, 1935, the NA in session assembled, passed Resolution No. 8
confirming the election of the members of the National Assembly against whom no
protest had thus far been filed. On Dec 8, 1935, Ynsua, filed before the Electoral
Commission a “Motion of Protest” against the election of Angara. On Dec 9, 1935,
the EC adopted a resolution, par. 6 of which fixed said date as the last day for the
filing of protests against the election, returns and qualifications of members of the
NA, notwithstanding the previous confirmation made by the NA. Angara filed a
Motion to Dismiss arguing that by virtue of the NA proclamation, Ynsua can no longer
protest. Ynsua argued back by claiming that EC proclamation governs and that the
EC can take cognizance of the election protest and that the EC cannot be subject to
a writ of prohibition from the SC.

ISSUES: Whether or not the SC has jurisdiction over such matter.

Whether or not EC acted without or in excess of jurisdiction in taking cognizance of

the election protest.

HELD: The SC ruled in favor of Angara. The SC emphasized that in cases of conflict
between the several departments and among the agencies thereof, the judiciary, with
the SC as the final arbiter, is the only constitutional mechanism devised finally to
resolve the conflict and allocate constitutional boundaries.

That judicial supremacy is but the power of judicial review in actual and appropriate
cases and controversies, and is the power and duty to see that no one branch or
agency of the government transcends the Constitution, which is the source of all
authority.

That the Electoral Commission is an independent constitutional creation with specific

powers and functions to execute and perform, closer for purposes of classification to
the legislative than to any of the other two departments of the government.

That the Electoral Commission is the sole judge of all contests relating to the
election, returns and qualifications of members of the National Assembly.

G.R. No. L-51570 August 15, 1988

THE PHILIPPINE VETERANS AFFAIRS OFFICE, petitioner,
vs.
BRIGIDA V. SEGUNDO, respondent.

Rodolfo U. Jimenez for petitioner.

SARMIENTO, J.:

The Court of Appeals 1 certified this case to this Court on the ground that it involves pure questions of law.

The facts are not controverted. We quote:

Petitioner Brigida V. Segundo is the widow of the late Feliciano Segundo, a veteran of
the Second World War. She has remained unremarried. Soon after the death of her
husband, she applied for pension benefits with the respondent, then known as the
Philippine Veterans Board. Her application was approved effective April, 1947 and she
became entitled to a monthly pension for life on condition that she remains unremarried
and that no other similar benefits from the U.S. Government have been granted to her.

In November of 1951, the respondent cancelled and terminated petitioner's monthly

pension benefits because she is the recipient of a similar benefit from the U.S. Veterans
Administration, which is a violation of its standing policy.

It appears that on June 27, 1973, the Supreme Court, in the case of Del Mar. vs.
Philippine Veterans Administration, 51 SCRA 340, declared this policy of the respondent
null and void. Notwithstanding the decision of the Supreme Court, the respondent still
refused to restore the monthly pension of the petitioner.

On September 29, 1975, the trial court issued an order, the dispositive portion of which
reads —

WHEREFORE, the Order dated March 26, 1975 is reconsidered and set aside, and
judgment is hereby rendered in favor of the petitioner, directing the respondent to pay
petitioner her monthly life pension effective November, 1951, pursuant to the provisions
of Republic Act No. 65, and subsequent amendatory acts, subject to the availability of
funds appropriated and/or released for the purpose, without pronouncement as to costs. 2

In its appeal, the petitioner submits the following errors:

The lower court erred in holding that petitioner-appellee's action to compel the restoration
of her monthly pension effective from date of Cancellation thereof in November, 1951,
had not prescribed.

II

The lower court erred in holding that the cases of Del Mar. vs. Philippine Veterans
Administration L-27299, June 27, 1973, 51 SCRA 340 is applicable in the instant case.
III

The lower court erred in not dismissing the petition for mandamus for lack of cause of
action not only because (a) no demand whatsoever was made by the petitioner for the
restoration of her monthly pension nor was there a refusal by the respondent to comply
therewith but likewise (b) in view of the ruling laid down by the Supreme Court in "the
Board of Administration, Philippine Veterans Administration vs. Hon. Mariano V. Agcaoili,
et al "G.R. No. L-38128 promulgated July 23, 1974. 3

These challenges are nothing new. In Espanol, v. Chairman, Philippine Veterans

Administration, we were confronted with the same questions. We reiterate here our
4

holding therein.

That the respondent's claim has prescribed lacks merit.

In her petition below (for mandamus), she questions the continued enforcement by the
petitioner of section 6 of its Regulation No. 2, cancelling disability benefits if the
beneficiary is receiving a similar compensation from the United States Veterans
Administration, in spite of our pronouncement in Del Mar. v. The Philippine Veterans
Administration wherein we invalidated the said provision. In Espanol, supra, we said that
5

the prescriptive period cannot be counted from the actual act of cancellation and that at
such a time, the right of action of such a patty does not as yet accrue.

For the statute of limitations begins to run from the moment the right of action
6

accrues There is a right of action when there exists a cause of action. A cause of action,
7

in turn, arises; (1) when there exists a right in favor of the plaintiff under the law or
contract; (2) there is a corresponding duty, by law or contract, on the part of the
defendant to honor that right; and (3) there has been an act or omission by the defendant
in violation of that right for which the law provides relief.
8

In Espanol, supra, we held that the cancellation of pension benefits in November, 1951
continued to enjoy a presumptive validity and hence, cannot be considered a violation of
the right of the pensioner. The ten-year period, so we held, must then be reckoned from
9

the promulgation of Del Mar on June 27, 1973, when we struck down section 6 of
Regulation 2 abovesaid, and not from actual cancellation of benefits in 1951. It is only
then, so we held, that the party's right of action can be said to acquire life. In other
10

words, prescription began to run only from June 27, 1973.

The respondent filed her petition on February 28, 1974, and accordingly, within the ten-
year period.

Neither is there merit in the second assigned error that Del Mar is not applicable since
prescription was never raised therein. It is to be noted that Del Mar did not consider
prescription because the challenge to the validity of the petitioner's rules is an act that
does not admit of prescription. (Prescription, however, commenced to run again from
11

the date invalidity was declared.)

At any rate, it cannot be seriously denied that to sustain the veteran's office is to allow it
to perpetuate a policy the Court had already and precisely declared null and void. And it
is plain that Del Mar notwithstanding, the veteran's office had not exerted efforts to
restore cancelled pension benefits insofar as non-parties (to Del Mar) are concerned. Let
it be admonished that decisions of the Supreme Court "applying or interpreting the laws
or the Constitution ... form part of the legal system of the Philippines," and, as it were,
12

"laws" by their own right because they interpret what the laws say or mean. Unlike 13

rulings of the lower courts, which bind the parties to specific cases alone, our judgments
are universal in their scope and application, and equally mandatory in character. Let it be
warned that to defy our decisions is to court contempt.

In any case, we hold Del Mar to be the ruling case law on the matter, and applies
whether to parties or non-parties.

The last assigned error, that mandamus does not lie in the absence of a prior demand
and in view of our alleged ruling in Board of administration, PVA v. Agcaoili, is not
14

impressive. In Espanol, supra, we held that "when a case involves solely legal questions,
the litigant need not exhaust all administrative remedies before judicial relief is
sought." We reiterate that ruling herein.
15

We likewise reiterate our holding therein rejecting the application of Agcaoili, where it
was held that claims for public funds must be covered by an appropriation for the
purpose. As we said therein (in Espanol), Agcaoili involved an action to compel payment
of additional benefits under Republic Act No. 5753. In the case at bar, however, the
respondent is asking the resumption of cancelled monthly pension payments, the funding
for which has been appropriated.

Republic Act No. 65, as amended, The Veterans' Bill Of Rights, is a social legislation,
and as such, must be construed most strongly in favor of its beneficiaries. "The State,"
16

declares the Constitution (1973), "shall establish, maintain, and ensure adequate social
services in the field of education, health, housing, employment, welfare, and social
security to guarantee the enjoyment by the people of a decent standard of
living." Under the present Constitution, the State's concern for war veterans finds an
17

even more emphatic expression:

SEC. 9. The State shall promote a just and dynamic social order that will ensure the
prosperity and independence of the nation and free the people from poverty through
policies that provide adequate social services, promote full employment, a rising standard
of living, and an improved quality of life for all.
18

SEC. 7. The State shall provide immediate and adequate care, benefits, and other forms
of assistance to war veterans of military campaigns, their surviving spouses and orphans.
Funds shall be provided therefor and due consideration shall be given them in the
disposition of agricultural lands of the public domain, and in appropriate cases, in the
utilization of natural resources.
19

The PVAO's omissions are, in more ways than one, an act of betrayal of the veterans
and the heroes of the last two wars of liberation. The Veteran's Bill of Rights is a measure
designed not to compensate alone the war veterans or their bereaved for their injuries
sustained in the line of duty, but more so, as a lasting memorial to their courage and
selflessness in laying their lives for the country so that this generation shall be free.
There should then be no repetition of the unfulfilled promises of the Government of the
United States articulated by its then President, Franklin Delano Roosevelt, at the height
of the U.S. — Japanese war of the Pacific, of compensation to our fighting men equal to
that given to the American G.I.'s. Let them reap, finally, the honor long denied them.

WHEREFORE, the petition is DISMISSED. The petitioner is ORDERED to RESTORE

monthly pension benefits in favor of the respondent in addition to such other and further
increments as may be provided by law, effective November 1, 1951. Costs against the
petitioner.

SO ORDERED.

Valenzuela Hardwood vs. CA Case Digest

Valenzuela Hardwood vs. Court of Appeals

(30 June 1997,274 SCRA 643)

Facts: On January 16, 1984, plaintiff entered into an agreement with Seven Brothers Shipping
corporation whereby the latter undertook to load on board its vessel M/V Seven Ambassadors 940
Lauan round logs for shipment from Isabela to Manila. On January 20, plaintiff insured the cargo
with South Sea Surety and Insurance for two million pesos. However on January 25, 1984, the
M/V Seven Ambassador sank, resulting in the loss of petitioners’ logs. Pursuant to the loss,
petitioner filed a claim with South Sea Surety and Insurance for the insured amount of the logs, but
the latter refused, denying liability under the policy. Petitioner likewise filed a formal claim against
Seven Brothers Shipping Corporation for the value of the lost logs, but the latter likewise denied
their claim.

The trial court found for the plaintiff, holding South Sea and Seven Brothers liable for the loss. On
appeal, the Court of Appeals affirmed in part the decision of the trial court. The Court of Appeals
affirmed the liability of South Sea Surety and Assurance but exonerated Seven Brothers, stating
that the latter is a private carrier therefore the provisions on common carriers is not applicable to
their contract. Hence the present appeal.

Issue: Whether or not respondent Court of Appeals committed a reversible error in upholding the
validity of the stipulation in the charter party executed between petitioner and Seven Brothers
exempting the latter from liability of loss arising from the negligence of its captain.

Held: The decision of the Court of appeals is correct. The contract between petitioner and Seven
Brothers is one of Private Carriage hence the provisions on common carriage do not apply. In a
contract of private carriage parties are free to stipulate that the responsibility for the cargo rests
solely in the charterer, such stipulations are valid because they are freely entered into by the
parties and the same is not contrary to law, morals, good custom, public order or public policy.

MARIA LOURDES C. DE JESUS, Petitioner, v. HON. RAUL T. AQUINO,PRESIDING

COMMISSIONER, NATIONAL LABOR RELATIONS COMMISSION, SECOND DIVISION, QUEZON
CITY,AND SUPERSONIC SERVICES, INC., Respondents.

[G.R. NO. 165787]

SUPERSONIC SERVICES, INC., Petitioner, v. MARIA LOURDES C. DE JESUS, Respondents.

DECISION

BERSAMIN, J.:

The dismissal of an employee for a just or authorized cause is valid despite the employer’s non-
observance of the due process of law the Labor Code has guaranteed to the employee. The dismissal
is effective against the employee subject to the payment by the employer of an indemnity.

Under review on certiorari is the July 23, 2004 Decision promulgated in C.A.-G.R. SP No. 81798
entitled Maria Lourdes C. De Jesus v. Hon. Raul T. Aquino, Presiding Commissioner, NLRC, Second
Division, Quezon City, and Supersonic Services, Inc.,1whereby the Court of Appeals (CA) affirmed the
validity of the dismissal from her employment of Maria Lourdes C. De Jesus(petitioner in G.R. No.
164622), but directed her employer, Supersonic Services, Inc. (Supersonic), to pay her full
backwages from the time her employment was terminated until the finality of the decision because of
the failure of Supersonic to comply with the two-written notice rule, citing the ruling in Serrano v.
National Labor Relations Commission.2

Antecedents

The antecedent facts, as summarized by the CA, follow:

On February 20, 2002, petitioner Ma. Lourdes De Jesus (De

Jesus for brevity) filed with the Labor Arbiter a
complaint for illegal dismissal against private
respondents Supersonic Services Inc., (Supersonic for
brevity), Pakistan Airlines, Gil Puyat, Jr. and Divina
Abad Santos praying for the payment of separation pay,
full backwages, moral and exemplary damages, etc.

De Jesus alleged that: she was employed by Supersonic

since February 1976 until her illegal dismissal of March
15, 2001; from 1976 to 1992, she held the position of
reservation staff, and from 1992 until her illegal
dismissal on March 15, 2001, she held the position of
Sales Promotion Officer where she solicited clients for
Supersonic and sold plane tickets to various travel
agencies on credit; on March 12, 2001, she had an
emergency hysterectomy operation preceded by continuous
bleeding; she stayed at the Makati Medical Center for
three (3) days and applied for a sixty-(60) day leave in
the meantime; on June 1, 2001, she went to Supersonic
and found the drawers of her desk opened and her personal
belongings packed, without her knowledge and consent;
while there, Divina Abad Santos (Santos for brevity), the
company’s general manager, asked her to sign
a promissory note and directed her secretary, Cora
Malubay (Malubay for brevity) not to allow her to leave
unless she execute a promissory note; she was later
forced to execute a promissory note which she merely
copied from the draft prepared by Santos and Malubay; she
was also forced to indorse to Supersonic her SSS check in
the amount of P25,000.00 which represents her benefits
from the hysterectomy operation; there was no notice and
hearing nor any opportunity given her to explain her side
prior to the termination of her employment; Supersonic
even filed a case for Estafa against her for her alleged
failure to remit collections despite the fact that she
had completely remitted all her collections; and the
termination was done in bad faith and in violation of due
process.

Supersonic countered that: as Sales Promotion Officer, De

Jesus was fully authorized to solicit clients and receive
payments for and in its behalf, and as such, she occupied
a highly confidential and financially sensitive position
in the company; De Jesus was able to solicit several
ticket purchases for Pakistan International Airlines
(PIA) routed from Manila to various destinations abroad
and received all payments for the PIA tickets in its
behalf; for the period starting May 30, 2000 until
September 28, 2000, De Jesus issued PIA tickets to
Monaliza Placement Agency, a client under her special
solicitation and account, in the amount of
U.S.$15,085.00; on January 24, 2001, the company’s
general manager sent a memorandum to De Jesus informing
her of the official endorsement of collectibles from
clients under her account; in March 2001, another
memorandum was issued to De Jesus reminding her to
collect payments of accounts guaranteed by her and which
had been past due since the year 2000; based on the
company records, an outstanding balance of U.S.$36,168.39
accumulated under the account of De Jesus; after
verifications with its clients, it discovered that the
amount of U.S.$36, 168.39 were already paid to De Jesus
but this was not turned over and duly accounted for by
her; hence, another memorandum was issued to De Jesus
directing her to explain in writing why she should not be
dismissed for cause for failure to account for the total
amount of U.S.$36, 168.39; De Jesus was informed that her
failure to explain in writing shall be construed that she
misappropriated said amount for her own use and benefit
to the damage of the company; De Jesus was likewise
verbally notified of the company’s intention to dismiss
her for cause; after due investigation and confrontation,
De Jesus admitted that she received the U.S.$36,168.39
from their clients and even executed a promissory note in
 her own handwriting acknowledging her obligation; she was
fully aware of her dismissal and even obligated herself
to offset her obligation with any amount she would
receive from her retirement; when De Jesus failed to
comply with her promise to settle her obligation, a
demand letter was sent to her; because of her persistent
failure to settle the unremitted collections, it was
constrained to suspend her as a precautionary measure and
to protect its interests; despite demands, De Jesus
failed to fulfill her promise, hence, a criminal case for
estafa was filed against her; and in retaliation to the
criminal case filed against her, she filed this illegal
dismissal case.3

After due proceedings, on October 30, 2002, the Labor Arbiter ruled against De Jesus, 4declaring her
dismissal to be for just cause and finding that she had been accorded due process of law.

Aggrieved, De Jesus appealed to the National Labor Relations Commission (NLRC), insisting that she
had not been afforded the opportunity to explain her side.

On July 31, 2003, however, the NLRC rendered its Resolution,5 affirming the Labor Arbiter’s Decision
and dismissing De Jesus’ appeal for its lack of merit, stating:

Records show that pursuant to a Memorandum dated May 12,

2001, complainant was required to explain in writing why
she should not be dismissed from employment for her
failure to account for the cash collections in her
custody (Records, p. 37). In a letter dated June 1, 2001,
complainant acknowledged her failure to effect a turn-
over of the amount of US$36,168.39 to the respondent
(Records, p. 40). More than this, she offered no
explanation for her failure to immediately account for
her collections. Further, her allegation of duress may
not be accorded credence, there being no evidence as to
the circumstances under which her consent was allegedly
vitiated. Having been given the opportunity to explain
her side, complainant may not successfully claim that she
was denied due process. Further, her admission and other
related evidence, particularly the finding of a prima
facie case for estafa against her, and corroborative
statements from respondent’s client, sufficiently
controvert complainant’s assertion that no just cause
existed for the dismissal.
 WHEREFORE, premises considered, the decision under review
is AFFIRMED, and complainant’s appeal, DISMISSED, for
lack of merit.

SO ORDERED.

The NLRC denied the Motion for Reconsideration filed by De Jesus on October 30, 2003. 6

De Jesus brought a petition for certiorari to the CA, charging the NLRC with committing grave abuse
of discretion amounting to lack or excess of jurisdiction in finding that she had not been denied due
process; and in finding that her dismissal had been for just cause.

On July 23, 2004, the CA promulgated its assailed decision,7relevantly stating as follows:

The petition is partly meritorious.

In termination of employment based on just cause , it is

not enough that the employee is guilty of misfeasance
towards his employer, or that his continuance in service
is patently inimical to the employer’s interest. The
law requires the employer to furnish the employee
concerned with two written notices – one, specifying the
ground or grounds for termination and giving said
employee reasonable opportunity within which to
explain his side, and another, indicating that upon due
consideration of all the circumstances, grounds have been
established to justify his termination. In addition to
this, a hearing or conference is also required, whereby
the employee may present evidence to rebut the
accusations against him.

There appears to be no dispute upon the fact that De

Jesus failed to remit and account for some of her
collections. This she admitted and explained in her
letters dated April 5, 2001 and May 15, 2001 to Santos,
the company’s general manager. Without totally
disregarding her allegations of duress in executing the
promissory note, the facts disclose therein also coincide
with the fact that De Jesus was somehow remiss in her
duties. Considering that she occupied a confidential and
sensitive position in the company, the circumstances
presented fairly justified her termination from
employment based on just cause. De Jesus’ failure to
fully account her collections is sufficient justification
for the company to lose its trust and confidence in her.
Loss of trust and confidence as a ground for dismissing
an employee does not require proof beyond reasonable
doubt. It is sufficient if there is “some basis” for
such loss of confidence, or if the employer has
reasonable grounds to believe that the employee concerned
is responsible for the misconduct, as to be unworthy of
the trust and confidence demanded by his position.

Nonetheless, while this Court is inclined to rule that De

Jesus’ dismissal was for just cause, the manner by which
the same was effected does not comply with the procedure
outlined under the Labor Code and as enunciated in the
landmark case of Serrano v. NLRC.

The evidence on record is bereft of any indicia that the

two written notices were furnished to De Jesus prior to
her dismissal. The various memoranda given her were not
the same notices required by law, as they were mere
internal correspondence intended to remind De Jesus of
her outstanding accountabilities to the company. Assuming
for the sake of argument that the memoranda furnished to
De Jesus may have satisfied the minimum requirements of
due process, still, the same did not satisfy the notice
requirement under the Labor Code because the intention to
sever the employee’s services must be made clear in the
notice. Such was not apparent from the memoranda. As the
Supreme Court held in Serrano, the violation of the
notice requirement is not strictly a denial of due
process. This is because such notice is precisely
intended to enable the employee not only to prepare
himself for the legal battle to protect his tenure of
employment, but also to find other means of employment
and ease the impact of the loss of his job and,
necessarily, his income.

Conformably with the doctrine laid down in Serrano v.

NLRC, the dismissal of De Jesus should therefore be
struck as ineffectual.

WHEREFORE, premises considered, the Resolutions dated

 July 31, 2003 and October 30, 2003 of the NLRC, Second
Division in NLRC NCR 30-02-01058-02 (CA NO. 033714-02)
are hereby MODIFIED, in that while the dismissal is
hereby held to be valid, the same must declared
ineffectual. As a consequence thereof, Supersonic is
hereby required to pay petitioner Maria Lourdes De Jesus
full backwages from the time her employment was
terminated up to the finality of this decision.

SO ORDERED.

De Jesus appealed by petition for review on certiorari to the Court (G.R. No. 164662), while
Supersonic first sought the reconsideration of the

Decision in the CA.Upon the denial of its motion for reconsideration on October 21, 2004, Supersonic
likewise appealed to the Court by petition for review on certiorari (G.R. No. 165787). The appeals
were consolidated on October 5, 2005.8

In G.R. No. 164662, De Jesus avers that:

1. The Honorable Court of Appeals erred in finding

that respondent Supersonic is liable only on the
backwages and not for the damages prayed for.

2. The Honorable Court of Appeals erred in finding

that the dismissal was valid and at the same time,
declaring it ineffectual.9

In G.R. No. 165787,Supersonic ascribes the following errors to the CA, to wit:

1. Respondent Court of Appeals committed serious

errors which are not in accordance with law and
applicable decisions of the Honorable Supreme Court
when it concluded that the two-notice requirement
has not been complied with when respondent De Jesus
was terminated from service.

2. Respondent Court of Appeals committed serious

errors by concluding that the Serrano Doctrine
applies squarely to the facts and legal issues of
the present case which are contrary to the law and
jurisprudence.

3. Serrano Doctrine has already been abandoned in the

case of Agabon v. NLRC,which is prevailing and
 landmark doctrine applicable in the resolution of
the present case.

4. Respondent Court of Appeals committed serious

errors by disregarding the law and jurisprudence
when it awarded damages to private respondent which
is excessive and unduly penalized petitioner SSI.10

Based on the foregoing, the decisive issues to be passed upon are: (1) Whether or not Supersonic
was justified in terminating De Jesus’ employment; (2) Whether or not Supersonic complied with the
two-written notice rule; and (3) Whether or not De Jesus was entitled to full backwages and damages.

Ruling

We partially grant the petition for review of Supersonic in G.R. No. 165787.

Anent the first issue, Supersonic substantially proved that De Jesus had failed to remit and had
misappropriated the amounts she had collected in behalf of Supersonic. In that regard, the factual
findings of the Labor Arbiter and NLRC on the presence of the just cause for terminating her
employment, being already affirmed by the CA, are binding if not conclusive upon this Court. There
being no cogent reason to disturb such findings, the dismissal of De Jesus was valid.

Article 282 of the Labor Code enumerates the causes by which the employer may validly terminate the
employment of the employee, viz:

Article 282.Termination by employer. - An employer may

terminate an employment for any of the following causes:

(a) Serious misconduct or willful disobedience by the

employee of the lawful orders of his employer or
representative in connection with his work;

(b) Gross and habitual neglect by the employee of his

duties;

(c) Fraud or willful breach by the employee of the trust

reposed in him by his employer or duly authorized
representative;

(d) Commission of a crime or offense by the employee

against the person of his employer or any immediate
member of his family or his duly authorized
representatives; and

(e) Other causes analogous to the foregoing.

The CA observed that De Jesus had not disputed her failure to remit and account for some of her
collections, for, in fact, she herself had expressly admitted her failure to do so through her letters
dated April 5, 2001 and May 15, 2001 sent to Supersonic’s general manager. Thereby, the CA
concluded, she defrauded her employer or willfully violated the trust reposed in her by Supersonic. In
that regard, the CA rightly observed that proof beyond reasonable doubt of her violation of the trust
was not required, for it was sufficient that the employer had “reasonable grounds to believe that the
employee concerned is responsible for the misconduct as to be unworthy of the trust and confidence
demanded by [her] position.”11

Concerning the second issue, the NLRC and the CA differed from each other, with the CA concluding,
unlike the NLRC, that Supersonic did not comply with the two-written notice rule. In the exercise of its
equity jurisdiction, then, this Court should now re-evaluate and re-examine the relevant findings.12

A careful consideration of the records persuades us to affirm the decision of the CA holding that
Supersonic had not complied with the two-written notice rule.

It ought to be without dispute that the betrayal of the trust the employer reposed in De Jesus was the
essence of the offense for which she was to be validly penalized with the supreme penalty of
dismissal.13Nevertheless, she was still entitled to due process in order to effectively safeguard her
security of tenure. The law affording to her due process as an employee imposed on Supersonic as the
employer the obligation to send to her two written notices before finally dismissing her. This
requirement of two written notices is enunciated in Article 277of the Labor Code, as amended, which
relevantly states:

Article 277. Miscellaneous provisions.–xxx

x x x x

(b) Subject to the constitutional right of workers to

security of tenure and their right to be protected
against dismissal except for a just and authorized cause
and without prejudice to the requirement of notice under
Article 283 of this Code, the employer shall furnish the
worker whose employment is sought to be terminated a
written notice containing a statement of the causes for
termination and shall afford the latter ample
opportunity to be heard and to defend himself with the
assistance of his representative if he so desires in
accordance with company rules and regulations
promulgated pursuant to guidelines set by the Department
of Labor and Employment. Any decision taken by the
employer shall be without prejudice to the right of the
worker to contest the validity or legality of his
dismissal by filing a complaint with the regional branch
of the National Labor Relations Commission. The burden of
proving that the termination was for a valid or
authorized cause shall rest on the employer. The
Secretary of the Department of Labor and Employment may
suspend the effects of the termination pending resolution
of the dispute in the event of a prima facie finding by
the appropriate official of the Department of Labor and
 Employment before whom such dispute is pending that the
termination may cause a serious labor dispute or is in
implementation of a mass lay-off.14

x x x x

and in Section 215 and Section 7,16 Rule I, Book VI of the Implementing Rules of the Labor Code. The
first written notice would inform her of the particular acts or omissions for which her dismissal was
being sought. The second written notice would notify her of the employer’s decision to dismiss
her. But the second written notice must not be made until after she was given a reasonable period
after receiving the first written notice within which to answer the charge, and after she was given the
ample opportunity to be heard and to defend herself with the assistance of her representative, if she
so desired.17 The requirement was mandatory.18

Did Supersonic observe due process before dismissing De Jesus?

Supersonic contends that it gave the two written notices to De Jesus in the form of the memoranda
dated March 26, 2001 and May 12, 2001, to wit:

Memorandum dated March 26, 2001

26 March 2001

MEMORANDUM

TO : MA LOURDES DE JESUS
SALES PROMOTION OFFICER
FROM : DIVINA S. ABAD SANTOS
SUBJECT: PAST DUE ACCOUNTS

We have repeatedly reminded you to collect payment of

accounts guaranteed by you and which have been past due
since last year. You have assured us that these will be
settled by the end of February 2001.

Our books show, that as of today, March 26, 2001, the

following accounts have outstanding balances:

Wafa $6,585
Monaliza/Ragab 4,326.39
Salah 1,950
Jerico 1,300
 Rafat 4,730
Mahmood/Alhirsh 3,205
Amina 2,000
MMML 1,653
RDRI 361
HMD 2,100
Amru 1,388
Iyad Ali 97
Ali 740
Maher 675
Sharikat 350
Imad 905
Rubies 2,678
Adel 1,125
$36,168.39

Please give us an updated report on your collection

efforts and the status of each of the above accounts to
enable us to take necessary actions. This would be
submitted on or before April 2, 2001

(SGD) DIVINA ABAD SANTOS

General Manager19

Memorandum dated May 12, 2001

12 May 2001

MEMORANDUM

TO : MA LOURDES DE JESUS
SALES PROMOTION OFFICER
FROM : DIVINA S. ABAD SANTOS
 GENERAL MANAGER
SUBJECT: PAST DUE ACCOUNTS

You are asked to refer to my memorandum dated 26 March

2001. We were informed that the following accounts have
been paid to you but not accounted/turned over to the
office:

NAME AMOUNTS
Wafa $6,585
Monaliza/Ragab 4,326.39
Salah 1,950
Jerico 1,300
Rafat 4,730
Mahmood/Alhirsh 3,205
Amina 2,000
MMML 1,653
RDRI 361
HMD 2,100
Amru 1,388
Iyad Ali 97
Ali 740
Maher 675
Sharikat 350
Imad 905
Rubies 2,678
Adel 1,125
$36,168.39
You are hereby directed to explain in writing within 72
hours from receipt of this memorandum, why you should not
be dismissed for cause for failure to account for above
 amounts.

By your failure to explain in writing the above

accountabilities, within the set deadline, we shall
assume that you have misappropriated the same for your
own use and benefit to the damage of the office.

(SGD.) DIVINA S. ABAD SANTOS

General Manager20

Contrary to Supersonic’s contention, however, the aforequoted memoranda did not satisfy the
requirement for the two written notices under the law. The March 26, 2001 memorandum did not
specify the grounds for which her dismissal would be sought, and for that reason was at best a mere
reminder to De Jesus to submit her report on the status of her accounts. The May 12, 2001
memorandum did not provide the notice of dismissal under the law because it only directed her to
explain why she should not be dismissed for cause. The latter memorandum was apparently only the
first written notice under the requirement.The insufficiency of the two memoranda as compliance with
the two-written notices requirement of due process was, indeed, indubitable enough to impel the CA
to hold:

The evidence on record is bereft of any indicia that the

two written notices were furnished to De Jesus prior to
her dismissal. The various memoranda given her were not
the same notices required by law, as they were mere
internal correspondences intended to remind De Jesus of
her outstanding accountabilities to the company. Assuming
for the sake of argument that the memoranda furnished to
De Jesus may have satisfied the minimum requirements of
due process, still, the same did not satisfy the notice
requirement under the Labor Code because the intention to
sever the employee’s services must be made clear in the
notice. Such was not apparent from the memoranda. As
the Supreme Court held in Serrano, the violation of the
notice requirement is not strictly a denial of due
process. This is because such notice is precisely
intended to enable the employee not only to prepare
himself for the legal battle to protect his tenure of
employment, but also to find other means of employment
and ease the impact of the loss of his job and,
necessarily, his income.

Conformably with the doctrine laid down in Serrano v.

NLRC, the dismissal of De Jesus should therefore be
struck (down) as ineffectual.21
On the third issue, Supersonic posits that the CA gravely erred in declaring the dismissal of De Jesus
ineffectual pursuant to the ruling in Serrano v. National Labor Relations Commission; and insists that
the CA should have instead applied the ruling in Agabon v. National Labor Relations
Commission,22which meanwhile abandoned Serrano.

In Serrano, the Court pronounced as follows:

x x x, with respect to dismissals for cause under Art.

282, if it is shown that the employee was dismissed for
any of the just causes mentioned in said Art. 282, then,
in accordance with that article, he should not be
reinstated. However, he must be paid backwages from the
time his employment was terminated until it is determined
that the termination of employment is for a just cause
because the failure to hear him before he is dismissed
renders the termination of his employment without legal
effect.

WHEREFORE, the petition is GRANTED and the resolution of

the National Labor Relations Commission is MODIFIED by
ordering private respondent Isetann Department Store,
Inc. to pay petitioner separation pay equivalent to one
(1) month pay for every year of service, his unpaid
salary, and his proportionate 13th month pay and, in
addition, full backwages from the time his employment was
terminated on October 11, 1991 up to the time the
decision herein becomes final. For this purpose, this
case is REMANDED to the Labor Arbiter for computation of
the separation pay, backwages, and other monetary awards
to petitioner.

SO ORDERED.23

The CA did not err. Relying on Serrano,the CA precisely ruled that the violation by Supersonic of the
two-written notice requirement rendered ineffectual the dismissal of De Jesus for just cause under
Article 282 of the Labor Code, and entitled her to be paid full backwages from the time of her
dismissal until the finality of its decision.The Court cannot ignore that the applicable case law when
the CA promulgated its decision on July 23, 2004, and when it denied Supersonic’s motion for
reconsideration on October 21, 2004 was still Serrano. Considering that the Court determines in this
appeal by petition for review on certiorari only whether or not the CA committed an error of law in
promulgating its assailed decision of July 23, 2004,the CA cannot be declared to have erred on the
basis of Serrano being meanwhile abandoned through Agabon if all that the CA did was to fully apply
the law and jurisprudence applicable at the time of its rendition of the judgment.As a rule, a judicial
interpretation becomes a part of the law as of the date that the law was originally passed, subject
only to the qualification that when a doctrine of the Court is overruled and the Court adopts a different
view, and more so when there is a reversal of the doctrine, the new doctrine should be applied
prospectively and should not apply to parties who relied on the old doctrine and acted in good
faith.24 To hold otherwise would be to deprive the law of its quality of fairness and justice, for, then,
there is no recognition of what had transpired prior to such adjudication.25
Although Agabon,being promulgated only on November 17, 2004, ought to be prospective, not
retroactive, in its operation because its language did not expressly state that it would also operate
retroactively,26 the Court has already deemed it to be the wise judicial course to let its abandonment
of Serrano be retroactive as its means of giving effect to its recognition of the unfairness of declaring
illegal or ineffectual dismissals for valid or authorized causes but not complying with statutory due
process.27Under Agabon, the new doctrine is that the failure of the employer to observe the
requirements of due process in favor of the dismissed employee (that is, the two-written notices rule)
should not invalidate or render ineffectual the dismissal for just or authorized cause.
The Agabon Court plainly saw the likelihood of Serrano producing unfair but far-reaching
consequences, such as, but not limited to, encouraging frivolous suits where even the most notorious
violators of company policies would be rewarded by invoking due process; to having the constitutional
policy of providing protection to labor be used as a sword to oppress the employers; and to compelling
the employers to continue employing persons who were admittedly guilty of misfeasance or
malfeasance and whose continued employment would be patently inimical to the interest of
employers.28

Even so, the Agabon Court still deplored the employer’s violation of the employee’s right to statutory
due process by directing the payment of indemnity in the form of nominal damages, the amount of
which would be addressed to the sound discretion of the labor tribunal upon taking into account the
relevant circumstances. Thus, the Agabon Court designed such form of damages as a deterrent to
employers from committing in the future violations of the statutory due process rights of employees,
and, at the same time,as at the very least a vindication or recognition of the fundamental right
granted to the employees under the Labor Code and its implementing rules.29Accordingly, consistent
with precedent,30 the amount of P50,000.00 as nominal damages is hereby fixed for the purpose of
indemnifying De Jesus for the violation of her right to due process.

WHEREFORE, the Court DENIES the petition for review on certiorari in G.R. No. 164662
entitled Maria Lourdes C. De Jesus v. Hon. Raul T. Aquino, Presiding Commissioner, NLRC, Second
Division, Quezon City, and Supersonic Services, Inc.; PARTIALLY GRANTS the petition for review
on certiorari in G.R. No. 165787 entitled Supersonic Services, Inc. v. Maria Lourdes C. De Jesus and,
accordingly, DECLARESthe dismissal of Maria Lourdes C. De Jesus for just or authorized cause as
valid and effectual; and ORDERS Supersonic Services, Inc. to pay to Maria Lourdes C. De
Jesus P50,000.00 as nominal damages to indemnify her for the violation of her right to due process.

No pronouncements on costs of suit.

SO ORDERED.

LOURDES BARRERA, Plaintiff, v. LEON BARRERA and FIDELA ANDRES BARRERA, Defendants,
RE CONTEMPT CHARGE AGAINST JUDGE ALFREDO CATOLICO, Respondent.

RESOLUTION

FERNANDO, J.:

This Court is faced with a question of the most unique kind. Respondent Judge Alfredo Catolico of the
Court of First Instance of Cavite was cited for contempt and asked why no disciplinary action should
be taken against him for hurling the accusation that this Court had delegated to its Clerk a power
which under the Rules of Court appertained to its Chief Justice, an accusation made in the context of
an explicit avowal that he was in no mood to accord recognition and respect to a binding decision of
this Court, which for him was obsolete and no longer authoritative. Such an attitude betrayed a
refusal to apply the law as interpreted by this tribunal. He could not bring himself to abide by a settled
doctrine. Given the opportunity to explain both in a memorandum and in an oral argument, he
remained adamant and obdurate. It was apparent he was not averse to disciplinary action being
visited on his conduct. He leaves us no choice. We find him in contempt.

It all started innocently enough in a letter dated September 8, 1969, received by us two days
thereafter. Counsel for the plaintiff in Barrera v. Barrera, a civil case pending in the Court of First
Instance of Cavite 1 requested "that the Court of First Instance of Cavite, Branch III. presided over by
the Hon. Judge Alfredo Catolico be authorized to continue with the hearing of the above-entitled case
pursuant to Section 3, Rule 22 of the Rules of Court." 2 Why such request was made was explained by
counsel in these words: "The said case is pending trial. The plaintiff has one more witness to present
and thereafter, she intends to rest her case. Unfortunately, on May 22, 1969, when this case was set
for hearing, the presiding Judge of the Court of First Instance of Cavite, the Hon. Judge Jose B.
Jimenez, was appointed as District Judge for the Court of First Instance of Manila, and on said date,
he did not hold court session. Because of this, the trial of this case was left pending, and it was only in
the month of July when it was reset for hearing on August 6, 1969. However, on this date, this case
was not again heard because the new Presiding Judge did not arrive due to bad weather." cralaw virtua1aw l ibra ry

Under our resolution of September 12, 1969, the afore said letter was referred to the Department of
Justice. The then Undersecretary of Justice, now the Solicitor General, Felix Q. Antonio, referred the
matter to respondent Judge whose comments were received by the Department of Justice in an
indorsement of October 22, 1969. After pointing out that the first day of trial on the merits of the case
in Barrera v. Barrera having been held on August 21, 1968, there had elapsed by then the period of
fourteen months, far beyond the three-month limit as set forth in the Rules of Court, he continued:
"When the undersigned Presiding Judge assumed his duties as such, he found no written authority by
the Honorable Chief Justice of the Supreme Court extended to this branch for it to be able to continue
trying the case by receiving evidence yet to be presented, seasonably adjourning and transferring
continuation of the trial, and finally thereafter, adjudging the case. Considering the express provision
of Rule 22 of the Rules of Court on the subject of adjournments and postponements, same need not
be interpreted or construed for indeed, the Court can only apply its clear and express provisions; and
that upon the lapse of three months from the first day of trial on the merits, the trial judge lost
control of the same, and may not continue trying the same for the only thing possible to be done is to
dismiss the case.’ 3

That policy he adopted, notwithstanding his awareness of our ruling in Barrueco v. Abeto, 4 as is
evident from his comments. Thus: "This is the only conceivable way of complying with the express
provision of Rule 22 of the Rules of Court. Indeed, this same provision was incorporated in the original
rules of court of 1940. In an identical case submitted for ruling by the Hon. Supreme Court, Barrueco
v. Abeto, 71 Phil. 7, Justice Laurel who penned the decision interpreted the same to be of directory
character rather than mandatory." 5 Clearly then, he was not disposed to yield obedience. What the
Court had said, he would blithely ignore. So his comments would indicate: "Way back in 1941 where
throughout the Philippines there were few thousands of cases undecided beyond 90 days, the said
decision of the Supreme Court could be well-sustained according to the facts then existing; but, could
that ruling be sustained now where throughout the Philippines there are pending cases with a
dormancy of between four months to seventeen years reaching the lawful number of almost 100,000
cases be justified in its observance as directory when according to the present circumstances and the
policy adopted by the same Supreme Court in incorporating this provision in its Rules of Court the
idea is to make judges decide cases as fast as possible within 90 days rather than allowing cases with
a dormancy reaching up to 17 years? 6

In the meanwhile, he would follow his own interpretation contrary to what was decided by this Court:
"It is submitted that under the said rule, not even the Chief Justice of the Supreme Court could
validly, legally and morally extend power to the trial Judge to reacquire control of the case
tantamount to reacquiring jurisdiction of the subject matter when the said written authority is
extended far beyond the three months limit in the said Rule 22 of the Rules of Court, for indeed, it is
elementary, and it has been reiterated time and again by the Hon. Tribunal that when it comes to
time or period in order that it could be extended, the petition for extension should be filed before its
expiration or there is nothing that could be extended." 7

Not content with such an attitude that breathes of defiance, he would impute a delegation of such
authority by the Chief Justice of this Court to its Clerk with this unfounded assertion: "Further, the
clerk of court of the Supreme Court had been extending this power to the undersigned trial judge
upon petition of counsel for the plaintiff to continue trying the case where the same has already been
dismissed ‘without prejudice’ and where there is no more case to continue, for indeed, the counsel for
the plaintiff has not as yet secured the reconsideration of the said order of dismissal previous to the
granting of power to continue trying and handling the case by the undersigned trial judge. Another
question that cropped up as a consequence of the above observation is as to whether the phrase ‘by
authority of the Chief Justice" has given enough legal power and authority to the said employee of the
Supreme Court to in turn give power and authority to the undersigned trial judge to continue trying
the case even if it has already been dismissed." 8

Pursuing the same line, he continued thus: "In one case, it was the same clerk of court who informed
the undersigned trial judge that by resolution of the Supreme Court he is empowered to continue
trying the case until finished. In this case, could the Supreme Court as a body validly and legally
authorize the undersigned trial judge to continue handling a case pending in this Court which was not
brought to the appellate jurisdiction of the Hon. Supreme Court either by appeal or by certiorari? Can
the Supreme Court take cognizance of a case pending before the Court of First Instance without the
benefit of appeal or certiorari? If this could be done, could the Supreme Court order the trial judge to
continue a case which was already dismissed and not existing anymore where the counsel for the
plaintiff has not filed a motion to set aside an order of dismissal or has not filed any petition
for certiorari to the Supreme Tribunal for the review of said order?" 9

The closing portion of his comments let no doubt as to his determination to adhere to the policy
adopted by him contrary to the ruling in the Abebo case: "The above considerations and questions are
hereby humbly submitted to the Hon. Department of Justice for its consideration in the sanguine belief
and expectation that something be done tending to remedy the nebulous situation wherein the
undersigned trial Judge is found, not only by the clear and express provisions of Sec. 3 of Rule 22 of
the Rules of Court but also by the ruling of the highest tribunal of the land in the Abeto case and in
the letters written by the Clerk of the Supreme Court extending authority to the undersigned trial
judge to continue handling all these cases even if dismissals have already been ordered and no
petition for the setting aside of the order, or no certiorari has been presented for the review thereof
and where factually, there is no case to continue." 10

In our resolution of November 12, 1969, his comments being sent to us by the then Undersecretary of
Justice on November 3 of that month, he was given the opportunity to explain in writing not later than
November 24, and to appear personally before the Court on November 26, to show cause why he
should not be dealt with for contempt. His explanation was filed on November 24. It was apparent
that further reflection did not occasion a change of heart. As set forth therein: "It may not be amiss to
state in this connection, that your herein respondent is at a loss for really he cannot ascertain who is
the offended party in this proceeding. Is it the Hon. Tribunal as a whole or the Chief Justice of the
Supreme Court, or the deputy clerk of court? Indeed, there is no written charge by anybody or
specific person seeking the institution of a contempt proceeding against your herein Respondent." 11

This is how he would answer his question: "If it is the Hon. Tribunal as a whole who might be the
offended party your herein respondent would be at a loss to understand how he could incur the
responsibilities attached to a contempt of court proceeding when he has not disobeyed any order of
the Supreme Court. If it is the Hon. Chief Justice of the Supreme Court who might be the offended
party in this case, it is respectfully submitted that the respondent judge might not be subjected to
contempt proceeding for expressing his honest opinion which happens to be different from the highly
respected one of the Hon. Chief Justice of the Supreme Court, and if there is any error in this case it
might be one where interpretation of law rather than a deliberate misstatement of facts as specified in
the communication of the deputy clerk of court. And if it is the deputy clerk of court who has been
writing all these letters to your herein respondent who might be considering himself as an offended
party and has initiated this contempt of court proceeding, your herein respondent, with all humility,
submits the fact that he cannot be made respondent in a contempt of court proceeding just because
of an erroneous communication written by the said deputy clerk of court and may your humble
respondent be allowed to say that he cannot be charged with contempt of court because of the
erroneous letters of a deputy clerk of court who might want to exert a personality higher than that of
your herein respondent, and finally, if these were the case, let your humble respondent say with
Dolores Ibarruri as follows: ‘[Better to die on one’s feet than to live on one’s knees.]." 12

Then two days later, on November 26, respondent Judge argued his case in a manner that erased any
lingering doubt as to his being obsessed with the conviction that nothing said or done by him could in
no wise be objectionable, a position maintained with all the obstinacy at his command. He could not
be reconciled to the thought that our Clerk when speaking for this Court was performing a duty to
which lower court judges would do well to pay heed. It was even more apparent that while making
much of his refusal to believe that the order received by him proceeded from a source not authorized
to do so, in itself an unfounded charge that this Court was recreant to its responsibility not to allow
any one to usurp its authority, he was acting in accordance with a fixed and resolute determination
not to be bound by the Barrueco doctrine. For him, it was no longer in force. It did not matter that
this Court had not so decreed: He could not bring himself to accord it deference. So his acts and
words did indicate. What other alternative is there then than to find him guilty of contempt?

It is to be made clear that the disciplinary action taken against him is not for the thoughts entertained
or opinions uttered by him. Judges are not expected to be wholly in agreement with every decision of
this Tribunal. Nor are they required to keep locked up within their breasts their own views on such
matters. Doubts and skepticism about the continuing validity of doctrines announced by us may under
appropriate circumstances be ventilated. As a matter of fact, they should not be discouraged, for the
progress of the law may very well depend on a more searching inquiry as to the continuing validity of
certain assumptions and presuppositions uncritically accepted. Nonetheless, as long as our rulings
constitute authoritative precedents, the duty of obedience is cast on inferior court judges.

Nor is respondent Judge to be held responsible for the manner in which he gave expression to his
thoughts. There is no offense against this Court arising from a rather truculent tone that fails to
exhibit the redeeming grace of urbanity. Nor could the mere fact that the impression left is one of
dogmatic finality, that apparently could not harbor the least suspicion that one could possibly be in the
slightest bit mistaken, call for a reproof. After all, the style reflects the man, and perhaps he cannot
help himself.

What calls for disciplinary action is the recklessness with which respondent Judge did hurl the baseless
allegation that the Clerk of this Court was permitted to exercise an authority which appertained to the
Chief Justice. He did speak with all the valor of ignorance. Nor did he retreat from such an
indefensible stand in the face of his being informed that what the Clerk did was solely in accordance
with what was previously decided by this Court, which certainly will not tolerate, anybody else, much
less a subordinate, to speak and act for itself. This gross disrespect shown to this Court has no
justification. The misdeed of respondent Judge is compounded by such an accusation apparently
arising from his adamantine conviction that a doctrine of this Court that fails to meet his approval
need not be applied. No inferior court judge, to repeat, can be permitted to arrogate unto himself such
a prerogative at war with everything that the rule of law stands for.

The delicate task of ascertaining the significance that attaches to a constitutional statutory provision,
an executive order, a procedural norm or a municipal ordinance is committed to the judiciary. It thus
discharges a role no less crucial than that appertaining to the other two departments in the
maintenance of the rule of law. To assure stability in legal relations and avoid confusion, it has to
speak with one voice. It does so with finality, logically and rightly, through the highest judicial organ,
this Court. What it says then should be definitive and authoritative, binding on those occupying the
lower ranks in the judicial hierarchy. They have to defer and to submit. What was so appropriately
said by Justice Laurel comes to mind: "A becoming modesty of inferior courts demands conscious
realization of the position that they occupy in the interrelation and operation of the integrated judicial
system of the nation." 13

Such a thought was reiterated in an opinion of Justice J.B.L. Reyes and further emphasized in these
words: "Judge Gaudencio Cloribel need not be reminded that the Supreme Court, by tradition and in
our system of judicial administration, has the last word on what the law is; it is the final arbiter of any
justifiable controversy. There is only one Supreme Court from whose decisions all other courts should
take their bearings." 14 To the same effect is the following excerpt from a 1958 decision: "Now if a
Judge of a lower Court feels, in the fulfillment of his mission of deciding cases, that the application of
a doctrine promulgated by this Superiority is against his way of reasoning, or against his conscience,
he may state his opinion on the matter, but rather than disposing of the case in accordance with his
personal views he must first think that it is his duty to apply the law as interpreted by the Highest
Court of the Land, and that any deviation from a principle laid down by the latter would unavoidably
cause, as a sequel, unnecessary inconveniences, delays and expenses to the litigants. And if despite
of what is here said a Judge, by delicate or acute qualms of conscience, still believes that he cannot
follow Our rulings, then he has no other alternative than to place himself in the position that he could
properly avoid the duty of having to render judgment on the case concerned (Art. 9, C. C.), and he
has only one legal way to do that." 15

WHEREFORE, respondent Judge Alfredo Catolico is reprimanded by this Court for the above offense.
Let a copy of this resolution be forwarded to the Honorable, The Secretary of Justice.

IMELDA S. ENRIQUEZ, COMPLAINANT, VS. JUDGE ANACLETO L.

CAMINADE, RESPONDENT

DECISION
PANGANIBAN, CJ:

Judges are expected to exhibit more than just cursory acquaintance with statutes and procedural
laws. In all good faith, they must know the laws and apply them properly. Judicial competence requires
no less. Where the legal principle involved is sufficiently basic and elementary, lack of conversance with
it constitutes gross ignorance of the law.
 The Case and the Facts

This administrative case stems from a verified Complaint[1] filed with the Office of the Court
Administrator (OCA) by Imelda S. Enriquez. In that case, Judge Anacleto Caminade was charged with
gross misconduct, knowingly rendering an unjust judgment, and gross ignorance of the law. The
material averments of the Complaint and respondent's Comment are summarized by the OCA as
follows:
"x x x [Complainant] Imelda S. Enriquez charges
[Respondent] Judge Anacleto Caminade with Gross
Misconduct, Knowingly Rendering an Unjust Judgment and
Gross Ignorance of the Law and Procedure relative [to]
Criminal Case No. CBU-066703, entitled 'People of the
Philippines versus Sherwin Que @ Bungol, Anthony John
Apura,' for Murder. As mother of the victim in the
criminal case, [complainant] alleges that respondent
issued an order dated 31 March 2004, the decretal portion
of which reads:
'WHEREFORE, the Court hereby denies the
motion for the issuance of the warrant of
arrest against the accused-movants; sets
aside the assailed Resolution of the City
Prosecutor on the basis of which the latest
amended information was filed; quashes the
latest amended information; and remands this
case to the City Prosecutor for completion of
the preliminary investigation.'
"Respondent so ruled because there was no preliminary
investigation completed on accused Alvin Taggart Pimentel
Alvez and Alvin John Apura [as] they were denied the
opportunity to file a motion for reconsideration or a
petition for review before the information was filed in
court.

"Complainant claims that respondent was grossly mistaken

when he ruled, in effect, that the investigating
prosecutor cannot file a criminal information before the
expiration of the 15-day period within which the accused
are allowed by the Revised Rules of Court to move for
reconsideration or petition for review of an adverse
'Resolution.' Respondent cited Sales versus
Sandiganbayan (G.R. [No.] 143802, 16 November 2001) that
'the filing of motion for reconsideration is an integral
part of the preliminary investigation proper' and that an
[i]nformation 'filed without first affording x x x
accused his right to file motion for reconsideration' is
tantamount to a denial of the right itself to a
preliminary investigation.

"Complainant contends that Sales is not applicable to the

criminal case because of significant factual and
procedural distinctions between the two cases: (1) the
Sales case proceeded under the Rules of Procedure of the
Ombudsman, while subject criminal case was conducted
under the Rules of Court; (2) there was no completed
preliminary investigation in the Sales case but there was
a completed full-blown panel preliminary investigation on
the accused in the subject criminal case; and (3) it is
only under the Rules of Procedure of the Ombudsman that
the preliminary investigation is deemed completed and
terminated upon the lapse of the period to file a motion
for reconsideration from the resolution of the Ombudsman
while there is nothing in the Rules of Court which states
that a person investigated has the right to file a motion
for reconsideration or reinvestigation before the
[i]nformation can be filed in court.

"In his COMMENT, respondent explains that the panel of

prosecutors conducting preliminary investigation filed in
court their amended information without furnishing
accused Apura and Alvez their copy of the resolution. He
stresses that his challenged order is in accordance with
law and jurisprudence, citing among others, the case of
Sales. He claims his order was an honest response to the
pending matters before him and [he] merely granted
reliefs consistent with those granted by the Supreme
Court in the Sales case.

"[Respondent judge asserts that] while the facts of Sales

and the criminal case are different, the legal principle
involved in the former case 'that a preliminary
investigation is part of due process and a motion for
reconsideration of the Resolution of the Prosecutor
finding probably cause for the filing of information is
part of a preliminary investigation and respondent who is
 not given the opportunity to file the same is in effect
deprived of his right without due process of law' cannot
be overlooked. Respondent points out that complainant,
who was represented by two attorneys, should have
resorted to judicial recourse such as an appeal of the
order in question via a petition for certiorari to the
Court of Appeals."[2]
Report and Recommendation of the OCA

In its Report,[3] the OCA finds respondent guilty of gross ignorance of the law. Thus, it recommends that
respondent be penalized with the maximum imposable fine of P40,000, considering that he was earlier
penalized with six months' suspension for another serious though unrelated offense.

According to the OCA, the issue raised by complainant does not pertain to an error of judgment or to
one pertaining to the exercise of sound judicial discretion by respondent. Rather, the issue is whether
respondent complied with procedural rules so elementary that to digress from them amounts to either
ignorance or negligence. Since the procedure for the institution of criminal actions is basic
and clearly expressed in the Rules of Court, respondent's Order is deemed to have been attended by
gross ignorance of the law.

The Court's Ruling

The Court agrees with the findings of the OCA but reduces the penalty.

Administrative Liability of Respondent

This Court has consistently held that lack of conversance with legal principles sufficiently basic and
elementary constitutes gross ignorance of the law.[4] As an advocate of justice and a visible
representation of the law, a judge is expected to be proficient in the interpretation of our laws. [5]

A perusal of the Order issued by respondent on March 31, 2004, shows that he remanded Criminal
Case No. CBU-066703 to the city prosecutor for the completion of the preliminary investigation based
on this Court's ruling in Sales v. Sandiganbayan.[6] Clearly, respondent failed to read the case in its
entirety, or he grossly misapprehended the doctrine it had laid down.

A careful study of Sales reveals that it applies specifically to preliminary investigations conducted before
the Ombudsman. That case was decided in accordance with the Rules of Procedure of the
Ombudsman, granting the accused fifteen days to move for a reconsideration or a reinvestigation of an
adverse resolution in a preliminary investigation.[7] Obviously, the criminal case filed before
respondent's court was not covered by the Rules of Procedure of the Ombudsman but by the Rules of
Court, which had no corresponding provision. Thus, Sales was not in point.

Diligence in keeping up-to-date with the decisions of this Court is a commendable virtue of judges and,
of course, members of the bar. Comprehending the Court's decisions is a different matter, however, for
it is in this area where one's competence may be tested and proven. [8]

As aptly pointed out by the OCA, the termination of a preliminary investigation upon the filing of an
information in court is a well-established procedural rule under the Rules of Criminal
Procedure. Respondent clearly strayed from the well-trodden path when he grossly misapplied the
ruling of the Court in Sales. Since a preliminary investigation in Criminal Case No. CBU-066703 was
held, that stage of the legal process was already completed.

The New Code of Judicial Conduct for the Philippine Judiciary requires judges to be embodiments of
judicial competence and diligence.[9] Those who accept this exalted position owe the public and this
Court the ability to be proficient in the law and the duty to maintain professional competence at all
times.[10] Indeed, competence is a mark of a good judge. This exalted position entails a lot of
responsibilities, foremost of which is proficiency in the law. One cannot seek refuge in a mere cursory
knowledge of statutes and procedural rules.[11]
Respondent judge fell short of these standards when he failed in his duties to follow elementary law and
to keep abreast with prevailing jurisprudence.[12] Service in the judiciary involves continuous study and
research from beginning to end.[13]

Exacting as these standards may be, judges are expected to be personifications of justice and the rule
of law and, as such, to have more than just a modicum acquaintance with statutes and procedural
rules.[14] Essential to every one of them is faithfulness to the laws and maintenance of professional
competence.

Judges are not common individuals whose gross errors "men forgive and time forgets." [15] For when
they display an utter lack of familiarity with the rules, they erode the confidence of the public in the
competence of our courts.[16] Such lack is gross ignorance of the law. Verily, failure to follow basic legal
commands and rules constitutes gross ignorance of the law, of which no one is excused, and surely not
a judge.[17]

Respondent contends that instead of filing the instant Administrative Complaint, complainant should
have resorted to judicial recourse, like an appeal of the Order in question. It should be reiterated that
the court's power of appellate review is distinct from an administrative matter, which involves the
exercise of the court's power to discipline judges. An administrative matter is undertaken and
prosecuted solely for the public welfare; that is, to maintain the faith and confidence of the people in the
government.[18]

In sum, we reiterate our ruling in Abbariao v. Beltran,[19] as follows:

"We emphasize that ignorance of the law is the mainspring
of injustice. For this reason, we always remind the
members of the bench of their duty to be faithful to the
law and to maintain professional competence. Judges are
called upon to exhibit more than just cursory
acquaintance with statutes and procedural rules. Basic
rules must be at the palms of their hands. Their
inexcusable failure to observe the basic laws and rules
will render them administratively liable. 'Where the law
involved — as in this case — is simple and elementary,
lack of conversance therewith constitutes gross ignorance
of the law.""[20]
As to the charges of grave misconduct and knowingly rendering an unjust judgment, we agree with the
findings of the OCA that there is no allegation or evidence on record to support these claims.

Regarding the penalty to be imposed on respondent, although gross ignorance of the law is classified as
a serious charge, it has been sanctioned with a wide range of penalties. [21] The Court has to balance
the recommended penalty. The OCA suggests the maximum fine of P40,000, because respondent was
penalized earlier with six months' suspension for another serious though unrelated offense. Without
minimizing the seriousness of the previous misconduct, the Court notes that the acts presently
complained of are completely unrelated to and dissimilar from those in the prior case. The acts under
consideration cannot be considered a repetition of the same or similar acts for which respondent was
previously suspended. Neither is there any showing that he acted with malice or bad faith in issuing his
Order in the present case. Under the present circumstances, this Court deems a fine of P20,000 to be
appropriate.

Unrelated or not, both cases reflect poorly on respondent as a public officer. The Constitution expects
judges to be embodiments of competence, integrity, probity and independence. [22] Indeed, magistrates
should personify four Ins; namely, integrity, independence, industry and intelligence. [23]

WHEREFORE, Judge Anacleto L. Caminade is found guilty of gross ignorance of the law, for which he
is FINED in the amount of twenty thousand pesos (P20,000). He is STERNLY WARNED that a
repetition of the same or similar acts shall be dealt with more severely in the future.

SO ORDERED.

AYALA CORPORATION, Petitioner, v. ROSA-DIANA REALTY AND DEVELOPMENT

CORPORATION, Respondent.

DECISION

DE LEON, JR., J.:

Before us is a petition for review on certiorari seeking the reversal of a decision rendered by the Court
of Appeals in C.A. G.R. C.V. No. 4598 entitled, "Ayala Corporation v. Rosa-Diana Realty and
Development Corporation," dismissing Ayala Corporation’s petition for lack of merit.

The facts of the case are not in dispute: chanrobles v irt ual law l ibra ry

Petitioner Ayala Corporation (hereinafter referred to as Ayala) was the registered owner of a parcel of
land located in Alfaro Street, Salcedo Village, Makati City with an area of 840 square meters, more or
less and covered by Transfer Certificate of Title (TCT) No. 233435 of the Register of Deeds of Rizal.

On April 20, 1976, Ayala sold the lot to Manuel Sy married to Vilma Po and Sy Ka Kieng married to
Rosa Chan. The Deed of Sale executed between Ayala and the buyers contained Special Conditions of
Sale and Deed Restrictions. Among the Special Conditions of Sale were: chanrob 1es vi rtua l 1aw lib rary

a) the vendees shall build on the lot and submit the building plans to the vendor before September
30, 1976 for the latter’s approval

b) the construction of the building shall start on or before March 30, 1977 and completed before 1979.
Before such completion, neither the deed of sale shall be registered nor the title released even if the
purchase price shall have been fully paid

c) there shall be no resale of the property

The Deed Restrictions, on the other hand, contained the stipulation that the gross floor area of the
building to be constructed shall not be more than five (5) times the lot area and the total height shall
not exceed forty two (42) meters. The restrictions were to expire in the year 2025.

Manuel Sy and Sy Ka Kieng failed to construct the building in violation of the Special Conditions of
Sale. Notwithstanding the violation, Manuel Sy and Sy Ka Kieng, in April 1989, were able to sell the
lot to respondent Rosa-Diana Realty and Development Corporation (hereinafter referred to as Rosa-
Diana) with Ayala’s approval. As a consideration for Ayala to release the Certificate of Title of the
subject property, Rosa-Diana, on July 27, 1989 executed an Undertaking promising to abide by said
special conditions of sale executed between Ayala and the original vendees. Upon the submission of
the Undertaking, together with the building plans for a condominium project, known as "The Peak",
Ayala released title to the lot, thereby enabling Rosa-Diana to register the deed of sale in its favor and
obtain Certificate of Title No. 165720 in its name. The title carried as encumbrances the special
conditions of sale and the deed restrictions. Rosa-Diana’s building plans as approved by Ayala were
"subject to strict compliance of cautionary notices appearing on the building plans and to the
restrictions encumbering the Lot regarding the use and occupancy of the same." cralaw virtua1aw l ibra ry

Thereafter, Rosa-Diana submitted to the building official of Makati another set of building plans for
"The Peak" which were substantially different from those that it earlier submitted to Ayala for
approval. While the building plans which Rosa-Diana submitted to Ayala for approval envisioned a 24-
meter high, seven (7) storey condominium project with a gross floor area of 3,968.56 square meters,
the building plans which Rosa-Diana submitted to the building official of Makati, contemplated a 91.65
meter high, 38 storey condominium building with a gross floor area of 23,305.09 square meters. 1
Needless to say, while the first set of building plans complied with the deed restrictions, the latter set
exceeded the same.

During the construction of Rosa-Diana’s condominium project, Ayala filed an action with the Regional
Trial Court (RTC) of Makati, Branch 139 for specific performance, with application for a writ of
preliminary injunction/temporary restraining order against Rosa-Diana Realty seeking to compel the
latter to comply with the contractual obligations under the deed of restrictions annotated on its title as
well as with the building plans it submitted to the latter. In the alternative, Ayala prayed for rescission
of the sale of the subject lot to Rosa-Diana Realty.

The lower court denied Ayala’s prayer for injunctive relief, thus enabling Rosa-Diana to complete the
construction of the building. Undeterred, Ayala tried to cause the annotation of a notice of lis pendens
on Rosa-Diana’s title. The Register of Deeds of Makati, however, refused registration of the notice of
lis pendens on the ground that the case pending before the trial court, being an action for specific
performance and/or rescission, is an action in personam which does not involve the title, use or
possession of the property. 2 The Land Registration Authority (LRA) reversed the ruling of the
Register of Deeds saying that an action for specific performance or rescission may be classified as a
proceeding of any kind in court directly affecting title to the land or the use or occupation thereof for
which a notice of lis pendens may be held proper. 3 The decision of the LRA, however, was overturned
by the Court of Appeals in C.A. G.R. S.P. No. 29157. In G.R. No. 112774, We affirmed the ruling of
the CA on February 16, 1994 saying

We agree with respondent court that the notice of lis pendens is not proper in this instance. The case
before the trial court is a personal action since the cause of action thereof arises primarily from the
alleged violation of the Deed of Restrictions.

In the meantime, Ayala completed its presentation of evidence before the trial court. Rosa-Diana filed
a Demurrer to Evidence averring that Ayala failed to establish its right to the relief sought inasmuch
as (a) Ayala admittedly does not enforce the deed restrictions uniformly and strictly (b) Ayala has lost
its right/power to enforce the restrictions due to its own acts and omissions; and (c) the deed
restrictions are no longer valid and effective against lot buyers in Ayala’s controlled subdivision.
chanrob 1es vi rtua 1 1aw 1ib rary

The trial court sustained Rosa-Diana’s Demurrer to Evidence saying that Ayala was guilty of
abandonment and/or estoppel due to its failure to enforce the terms of deed of restrictions and special
conditions of sale against Manuel Sy and Sy Ka Kieng. The trial court noted that notwithstanding the
violation of the special conditions of sale, Manuel Sy and Sy Ka Kieng were able to transfer the title to
Rosa-Diana with the approval of Ayala. The trial court added that Ayala’s failure to enforce the
restrictions with respect to Trafalgar, Shellhouse, Eurovilla, LPL Plaza, Parc Regent, LPL Mansion and
Leronville which are located within Salcedo Village, shows that Ayala discriminated against those
which it wants to have the obligation enforced. The trial court then concluded that for Ayala to
discriminately choose which obligor would be made to follow certain conditions and which should not,
did not seem fair and legal.

The Court of Appeals affirmed the ruling of the trial court saying that the "appeal is sealed by the
doctrine of the law of the case in C.A. G.R. S.P. No. 29157" where it was stated that

. . . Ayala is barred from enforcing the Deed of Restrictions in question pursuant to the doctrine of
waiver and estoppel. Under the terms of the deed of sale, the vendee Sy Ka Kieng assumed faithful
compliance with the special conditions of sale and with the Salcedo Village Deed of Restrictions. One
of the conditions was that a building would be constructed within one year. However, Sy Ka Kieng
failed to construct the building as required under the Deed of Sale. Ayala did nothing to enforce the
terms of the contract. In fact, it even agreed to the sale of the lot by Sy Ka Kieng in favor of petitioner
Realty in 1989 or thirteen (13) years later. We, therefore, see no justifiable reason for Ayala to
attempt to enforce the terms of the conditions of sale against the petitioner.

x x x

The Court of Appeals also cited C.A. G.R. C.V. No. 46488 entitled, "Ayala Corporation v. Ray Burton
Development Corporation" which relied on C.A. G.R. S.P. No. 29157 in ruling that Ayala is barred from
enforcing the deed restrictions in dispute. Upon a motion for reconsideration filed by herein petitioner,
the Court of Appeals clarified that "the citation of the decision in Ayala Corporation v. Ray Burton
Development Corporation, C.A. G.R. C.V. No. 46488, February 27, 1996, was made not because said
decision is res judicata to the case at bar but rather because it is precedential under the doctrine of
stare decisis."
cralaw virtua1aw li bra ry

Upon denial of said motion for reconsideration, Ayala filed the present appeal.

Ayala contends that the pronouncement of the Court of Appeals in C.A. G.R. S.P. No. 29157 that it is
estopped from enforcing the deed restrictions is merely obiter dicta inasmuch as the only issue raised
in the aforesaid case was the propriety of a lis pendens annotation on Rosa-Diana’s certificate of title.

Ayala avers that Rosa-Diana presented no evidence whatsoever on Ayala’s supposed waiver or
estoppel in C.A. G.R. S.P. No. 29157. Ayala likewise pointed out that at the time C.A. G.R. S.P. No.
29157 was on appeal, the issues of the validity and continued viability of the deed of restrictions and
their enforceability by Ayala were joined and then being tried before the trial court.

Petitioner’s assignment of errors in the present appeal may essentially be summarized as follows: chanrob1es vi rt ual 1aw li bra ry

I. The Court of Appeals acted in a manner not in accord with law and the applicable decisions of the
Supreme Court in holding that the doctrine of the law of the case, or stare decisis, operated to dismiss
Ayala’s appeal.

II. The Court of Appeals erred as a matter of law and departed from the accepted and usual course of
judicial proceedings when it failed to expressly pass upon the specific errors assigned in Ayala’s
appeal.

A discussion on the distinctions between law of the case, stare decisis and obiter dicta is in order.

The doctrine of the law of the case has certain affinities with, but is clearly distinguishable from, the
doctrines of res judicata and stare decisis, principally on the ground that the rule of the law of the
case operates only in the particular case and only as a rule of policy and not as one of law. 4 At
variance with the doctrine of stare decisis, the ruling adhered to in the particular case under the
doctrine of the law of the case need not be followed as a precedent in subsequent litigation between
other parties, neither by the appellate court which made the decision followed on a subsequent appeal
in the same case, nor by any other court. The ruling covered by the doctrine of the law of the case is
adhered to in the single case where it arises, but is not carried into other cases as a precedent. 5 On
the other hand, under the doctrine of stare decisis, once a point of law has been established by the
court, that point of law will, generally, be followed by the same court and by all courts of lower rank in
subsequent cases where the same legal issue is raised. 6 Stare decisis proceeds from the first
principle of justice that, absent powerful countervailing considerations, like cases ought to be decided
alike. 7

The Court of Appeals, in ruling against petitioner Ayala Corporation stated that the appeal is "sealed"
by the doctrine of the law of the case, referring to G.R. No. 112774 entitled "Ayala Corporation,
petitioner v. Court of Appeals, Et Al., respondents" The Court of Appeals likewise made reference to
C.A. G.R. C.V. No. 46488 entitled, "Ayala Corporation v. Ray Burton Development Corporation, Inc."
in ruling against petitioner saying that it is jurisprudential under the doctrine of stare decisis.
chanrob1es vi rt ua1 1aw 1i bra ry

It must be pointed out that the only issue that was raised before the Court of Appeals in C.A. G.R.
S.P. No. 29157 was whether or not the annotation of lis pendens is proper. The Court of Appeals, in
its decision, in fact stated "the principal issue to be resolved is: whether or not an action for specific
performance, or in the alternative, rescission of deed of sale to enforce the deed of restrictions
governing the use of property, is a real or personal action, or one that affects title thereto and its use
or occupation thereof." 8

In the aforesaid decision, the Court of Appeals even justified the cancellation of the notice of lis
pendens on the ground that Ayala had ample protection should it succeed in proving its allegations
regarding the violation of the deed of restrictions, without unduly curtailing the right of the petitioner
to fully enjoy its property in the meantime that there is as yet no decision by the trial court. 9

From the foregoing, it is clear that the Court of Appeals was aware that the issue as to whether
petitioner is estopped from enforcing the deed of restrictions has yet to be resolved by the trial court.
Though it did make a pronouncement that the petitioner is estopped from enforcing the deed of
restrictions, it also mentioned at the same time that this particular issue has yet to be resolved by the
trial court. Notably, upon appeal to this Court, We have affirmed the ruling of the Court of Appeals
only as regards the particular issue of the propriety of the cancellation of the notice of lis pendens.

We see no reason then, how the law of the case or stare decisis can be held to be applicable in the
case at bench. If at all, the pronouncement made by the Court of Appeals that petitioner Ayala is
barred from enforcing the deed of restrictions can only be considered as obiter dicta. As earlier
mentioned, the only issue before the Court of Appeals at the time was the propriety of the annotation
of the lis pendens. The additional pronouncement of the Court of Appeals that Ayala is estopped from
enforcing the deed of restrictions even as it recognized that this said issue is being tried before the
trial court was not necessary to dispose of the issue as to the propriety of the annotation of the lis
pendens. A dictum is an opinion of a judge which does not embody the resolution or determination of
the court, and made without argument, or full consideration of the point, not the proffered deliberate
opinion of the judge himself. 10 It is not necessarily limited to issues essential to the decision but may
also include expressions of opinion which are not necessary to support the decision reached by the
court. Mere dicta are not binding under the doctrine of stare decisis. 11

While the Court of Appeals did not err in ruling that the present petition is not barred by C.A. G.R.
C.V. No. 46488 entitled "Ayala Corporation v. Ray Burton Development Inc." under the doctrine of res
judicata, neither, however, can the latter case be cited as precedential under the doctrine of stare
decisis. It must be pointed out that at the time the assailed decision was rendered, C.A. G.R. C.V. No.
46488 was on appeal with this Court. Significantly, in the decision We have rendered in Ayala
Corporation v. Ray Burton Development Corporation 12 which became final and executory on July 5,
1999 we have clearly stated that "An examination of the decision in the said Rosa-Diana case reveals
that the sole issue raised before the appellate court was the propriety of the lis pendens annotation.
However, the appellate court went beyond the sole issue and made factual findings bereft of any basis
in the record to inappropriately rule that AYALA is in estoppel and has waived its right to enforce the
subject restrictions. Such ruling was immaterial to the resolution of the issue of the propriety of the
annotation of the lis pendens. The finding of estoppel was thus improper and made in excess of
jurisdiction."
cralaw virt ua1aw lib rary

Coming now to the merits of the case, petitioner avers that the Court of Appeals departed from the
usual course of judicial proceedings when it failed to expressly pass upon the specific errors assigned
in its appeal. Petitioner reiterates its contention that the trial court’s findings that Ayala has waived its
right to enforce the deed of restrictions is not supported by law and evidence.

We find merit in the petition.

It is basic that findings of fact of the trial court and the Court of Appeals are conclusive upon the
Supreme Court when supported by substantial evidence. 13 We are constrained, however, to review
the trial court’s findings of fact, which the Court of Appeals chose not to pass upon, inasmuch as there
is ample evidence on record to show that certain facts were overlooked which would affect the
disposition of the case.

In its assailed decision of February 4, 1994, the trial court, ruled in favor of respondent Rosa-Diana
Realty on the ground that Ayala had not acted fairly when it did not institute an action against the
original vendees despite the latter’s violation of the Special Conditions of Sale but chose instead to file
an action against herein respondent Rosa-Diana. The trial court added that although the 38 storey
building of Rosa-Diana is beyond the total height restriction, it was not violative of the National
Building Code. According to the trial court the construction of the 38 storey building known as "The
Peak" has not been shown to have been prohibited by law and neither is it against public policy. chanrob1es vi rt ua1 1aw 1i bra ry

It bears emphasis that as complainant, Ayala had the prerogative to initiate an action against violators
of the deed restrictions. That Rosa-Diana had acted in bad faith is manifested by the fact that it
submitted two sets of building plans, one which was in conformity with the deed restrictions submitted
to Ayala and MACEA, and the other, which exceeded the height requirement in the deed restrictions to
the Makati building official for the purpose of procuring a building permit from the latter. Moreover,
the violation of the deed restrictions committed by respondent can hardly be denominated as a minor
violation. It should be pointed out that the original building plan which was submitted to and approved
by petitioner Ayala Corporation, envisioned a twenty four (24) meter high, seven (7) storey
condominium whereas the respondent’s building plan which was submitted to and approved by the
building official of Makati is that of a thirty eight (38) storey, 91.65 meters high, building. At present,
the Peak building of respondent which actually stands at 133.65 meters with a total gross floor area of
23,305.09 square meters, seriously violates the dimensions indicated in the building plans submitted
by Rosa-Diana to petitioner Ayala for approval inasmuch as the Peak building exceeds the approved
height limit by about 109 meters and the allowable gross floor area under the applicable deed
restrictions by about 19,105 square meters. Clearly, there was a gross violation of the deed
restrictions and evident bad faith by the Respondent.

It may not be amiss to mention that the deed restrictions were revised in a general membership
meeting of the association of lot owners in Makati Central Business District — the Makati Commercial
Estate Association, Inc. (MACEA) — whereby direct height restrictions were abolished in lieu of floor
area limits. Respondent, however, did not vote for the approval of this revision during the General
Membership meeting which was held on July 11, 1990 at the Manila Polo Club Pavilion, Makati, Metro
Manila and again on July 12, 1990 at the Hotel Mandarin Oriental, Makati, Metro Manila. Hence,
respondent continues to be bound by the original deed restrictions applicable to Lot 7, Block 1 and
annotated on its title to said lot. In any event, assuming arguendo that respondent voted for the
approval of direct height restrictions in lieu of floor area limits, the total floor area of its Peak building
would still be violative of the floor area limits to the extent of about 9,865 square meters of allowable
floor area under the MACEA revised restrictions.

Respondent Rosa-Diana avers that there is nothing illegal or unlawful in the building plans which it
used in the construction of the Peak condominium "inasmuch as it bears the imprimatur of the
building official of Makati, who is tasked to determine whether building and construction plans are in
accordance with the law, notably, the National Building Code." cralaw virtua1aw li bra ry

Respondent Rosa-Diana, however, misses the point inasmuch as it has freely consented to be bound
by the deed restrictions when it entered into a contract of sale with spouses Manuel Sy and Sy Ka
Kieng. While respondent claims that it was under the impression that the deed restrictions were no
longer being enforced by Ayala, the Undertaking 14 it executed belies this same claim. In said
Undertaking, respondent agreed to "construct and complete the construction of the house on said lot
as required under the special condition of sale." Respondent likewise bound itself to abide and comply
with . . . the condition of the rescission of the sale by Ayala Land, Inc. on the grounds therein
stated . . .

Contractual obligations between parties have the force of law between them and absent any allegation
that the same are contrary to law, morals, good customs, public order or public policy, they must be
complied with in good faith. Hence, Article 1159 of the New Civil Code provides

"Obligations arising from contracts have the force of law between the contracting parties and should
be complied with in good faith."cralaw vi rtua1aw l ib rary

Respondent Rosa-Diana insists that the trial court had already ruled that the Undertaking executed by
its Chairman and President cannot validly bind Rosa-Diana and hence, it should not be held bound by
the deed restrictions.

We agree with petitioner Ayala’s observation that respondent Rosa-Diana’s special and affirmative
defenses before the trial court never mentioned any allegation that its president and chairman were
not authorized to execute the Undertaking. It was inappropriate therefore for the trial court to rule
that in the absence of any authority or confirmation from the Board of Directors of respondent Rosa-
Diana, its Chairman and the President cannot validly enter into an undertaking relative to the
construction of the building on the lot within one year from July 27, 1989 and in accordance with the
deed restrictions. Curiously, while the trial court stated that it cannot be presumed that the Chairman
and the President can validly bind respondent Rosa-Diana to enter into the aforesaid Undertaking in
the absence of any authority or confirmation from the Board of Directors, the trial court held that the
ordinary presumption of regularity of business transactions is applicable as regards the Deed of Sale
which was executed by Manuel Sy and Sy Ka Kieng and respondent Rosa-Diana. In the light of the
fact that respondent Rosa-Diana never alleged in its Answer that its president and chairman were not
authorized to execute the Undertaking, the aforesaid ruling of the trial court is without factual and
legal basis and surprising to say the least.

The fact alone that respondent Rosa-Diana conveniently prepared two sets of building plans — with
one set which fully conformed to the Deed Restrictions and another in gross violation of the same —
should have cautioned the trial court to conclude that respondent Rosa-Diana was under the
erroneous impression that the Deed Restrictions were no longer enforceable and that it never
intended to be bound by the Undertaking signed by its President and Chairman. We reiterate that
contractual obligations have the force of law between parties and unless the same are contrary to
public policy morals and good customs, they must be complied by the parties in good faith.

Petitioner, in its Petition, prays that judgment be rendered: chanrob1es vi rtua1 1aw 1ib rary

a) ordering Rosa-Diana Realty and Development Corporation to comply with its contractual obligations
in the construction of the Peak by removing, or closing down and prohibiting Rosa-Diana from using,
selling, leasing or otherwise disposing of, the portions of areas thereof constructed beyond or in
excess of the approved height, as shown by the building plans submitted to, and approved by, Ayala,
including any other portion of the building constructed not in accordance with the said building plans,
during the effectivity of the Deed Restrictions;

b) Alternatively, in the event specific performance has become impossible: chanrob 1es vi rtua l 1aw lib rary

(1) ordering the cancellation and rescission of the April 20, 1976 Deed of Sale by Ayala in favor of the
original vendees thereof as well as the subsequent Deed of Sale executed by such original vendees in
favor of Rosa-Diana, and ordering Rosa-Diana to return to Ayala Lot 7, Block 1 of Salcedo Village;
(2) ordering the cancellation of Transfer Certificate of Title No. 165720 (in the name of Rosa-Diana)
and directing the office of the Register of Deeds of Makati to issue a new title over the lot in the name
of Ayala; and

(3) ordering Rosa-Diana to pay Ayala attorney’s fees in the amount of P500,000.00, exemplary
damages in the amount of P500,000.00 and the costs of suit.

It must be noted that during the trial respondent Rosa-Diana was able to complete the construction of
The Peak as a building with a height of thirty eight (38) floors or 133.65 meters and with a total gross
floor area of 23,305.09 square meters. Having been completed for a number of years already, it
would be reasonable to assume that it is now fully tenanted. Consequently, the remedy of specific
performance by respondent is no longer feasible. However, neither can we grant petitioner’s prayer
for the cancellation and rescission of the April 20, 1976 Deed of Sale by petitioner Ayala in favor of
the original vendees thereof as well as the subsequent Deed of Sale executed by the original vendees
in favor of respondent Rosa-Diana inasmuch as the original vendees were not even made parties in
the case at bar. Moreover, petitioner Ayala, having agreed to the resale of the property by the original
vendees, spouses Manuel Sy and Sy Ka Kieng, to respondent Rosa-Diana despite the failure of Manuel
Sy and Sy Ka Kieng to comply with their obligation to construct a building within one year from April
20, 1976, has effectively waived its right to rescind the sale of the subject lot to the original vendees.

Faced with the same question as to the proper remedy available to petitioner in the case of "Ayala
Corporation v. Ray Burton Development Inc.," a case which is on all fours with the case at bench, we
ruled therein that the party guilty of violating the deed restrictions may only be held alternatively
liable for substitute performance of its obligation, that is, for the payment of damages. In the
aforesaid case it was observed that the Consolidated and Revised Deed Restrictions (CRDR) imposed
development charges on constructions which exceed the estimated Gross Limits permitted under the
original Deed Restrictions but which are within the limits of the CRDR’s.

The pertinent portion of the Deed of Restrictions reads: chanrob1e s virtual 1aw lib rary

3. DEVELOPMENT CHARGE

For any building construction within the Gross Floor Area limits defined under Paragraphs C-2.1 to C-
2.4 above, but which will result in a Gross Floor Area exceeding certain standards defined in
Paragraphs C-3.1-C below, the OWNER shall pay MACEA, prior to the construction of any new
building, a DEVELOPMENT CHARGE as a contribution to a trust fund to be administered by MACEA.
This trust fund shall be used to improve facilities and utilities in Makati Central District.

3.1. The amount of the development charge that shall be due from the OWNER shall be computed as
follows: chanrob 1es vi rtual 1aw lib rary

DEVELOPMENT CHARGE = A x (B-C-D)

where: chanrob1es vi rtua 1 1aw 1i bra ry

A — is equal to the Area Assessment which shall be set at Five Hundred Pesos (P500.00) until
December 31, 1990. Each January 1st thereafter, such amount shall increase by ten percent (10%)
over the Area Assessment charged in the immediately preceding year; provided that beginning 1995
and at the end of every successive five-year period thereafter, the increase in the Area Assessment
shall be reviewed and adjusted by the VENDOR to correspond to the accumulated increase in the
construction cost index during the immediately preceding five years as based on the weighted average
of wholesale price and wage indices of the National Census and Statistics Office and the Bureau of
Labor Statistics.

B — is equal to the Gross Floor Area of the completed or expanded building in square meters.

C — is equal to the estimated Gross Floor Area permitted under the original deed restrictions, derived
by multiplying the lot area by the effective original FAR shown below for each location.

We then ruled in the aforesaid case that the development charges are a fair measure of compensatory
damages which therein respondent Ray Burton Development Inc. is liable to Ayala Corporation. The
dispositive portion of the decision in the said case which is squarely applicable to the case at bar,
reads as follows: chanrob 1es vi rtua l 1aw lib rary

WHEREFORE, premises considered, the assailed Decision of the Court of Appeals dated February 27,
1996, in CA-G.R. C.V. No. 46488, and its Resolution dated October 7, 1996 are hereby REVERSED and
SET ASIDE, and in lieu thereof, judgment is hereby rendered finding that: chanro b1es vi rt ual 1aw li bra ry

(1) The Deed Restrictions are valid and petitioner AYALA is not estopped from enforcing them against
lot owners who have not yet adopted the Consolidated and Revised Deed Restrictions.

(2) Having admitted that the Consolidated and Revised Deed Restrictions are the applicable Deed
Restrictions to Ray Burton Development Corporation, RBDC should be, and is bound by the same.

(3) Considering that Ray Burton Development Corporation’s Trafalgar plaza exceeds the floor area
limits of the Deed Restrictions, RBDC is hereby ordered to pay development charges as computed
under the provisions of the consolidated and Revised Deed Restrictions currently in force.

(4) Ray Burton Development corporation is further ordered to pay AYALA exemplary damages in the
amount of P2,500,000.00 attorney’s fees in the amount of P250,000.00.

SO ORDERED.

There is no reason why the same rule should not be followed in the case at bar, the remedies of
specific performance and/or rescission prayed for by petitioner no longer being feasible. In accordance
with the peculiar circumstances of the case at bar, the development charges would certainly be a fair
measure of compensatory damages to petitioner Ayala.

Exemplary damages in the sum of P2,500,000.00 as prayed for by petitioner are also in order
inasmuch as respondent Rosa-Diana was in evident bad faith when it submitted a set of building plans
in conformity with the deed restrictions to petitioner Ayala for the sole purpose of obtaining title to the
property, but only to prepare and later on submit another set of building plans which are in gross
violation of the Deed Restrictions. Petitioner Ayala is likewise entitled to an award of attorney’s fees in
the sum of P250,000.00.

WHEREFORE, the assailed Decision of the Court of Appeals dated December 4, 1997 and its Resolution
dated June 19, 1998, C.A. G.R. C.V. No. 4598, are REVERSED and SET ASIDE. In lieu thereof,
judgment is rendered

a) ordering respondent Rosa-Diana Realty and Development Corporation to pay development charges
as computed under the provisions of the consolidated and Revised Deed Restrictions currently in
force; and

b) ordering respondent Rosa-Diana Realty and Development Corporation to pay petitioner Ayala
Corporation exemplary damages in the sum of P2,500,000.00, attorney’s fees in the sum of
P250,000.00 and the costs of the suit. chan rob1e s virtua1 1aw 1ib rary

SO ORDERED.

Tung Chin Hui v. Rodriguez

ISSUE: whether Sec.18 Rule 41 of the pre-1007 Rules of Court, which provided the
appeal in habeas corpus cases to be taken within 48 hours from notice of judgment,
has been replaced by the 1997 Rules of Civil Procedure, which provides in Sec. 3
Rule 41 thereof, that appeal from judgment or final order shall be taken within 15
days from receipt thereof, in view of the fact that the Sec. 18 was repealed, in
accordance with the well-settled rule of statutory construction that provisions of
an old law that were not reproduced in the revision thereof covering the same
subject are deemed repealed and discarded
HELD: SC in this case to abrogate those provisions of the old laws that are not
reproduced in the revised statute or Code.

Villena
 vs

Spouses Chavez

G.R. No. 148126. November 10, 2003

Facts:
This is a petitioned case that was already decided by the Court of Appeals (CA), this case was said to
be stare decisis which mean”…that a judgment reached in one case should be applied to successive
ones in which the facts are substantially identical, even though the parties may be different. Like cases
ought to be decided alike.”

According to the facts of the CA the respondents owned four parcels of land subdivided into several
blocks. By mere permission of the respondents the petitioners have occupied and erected their homes,
the respondent allowed it but they should, in consideration pay in certain amount as equity

The petitioners failed to pay the equity from the respondent so the respondent in return wrote them a
letter that they need to vacate the premises in a span of 30 days, but in regards to that the petioners
refused to vacate and remove their houses.

The petitioners said that the respondent does not have power to institute such orders from the conflicted
properties because the equities that they must pay is in accordance of National Home Mortgage
Finance Corp.(NHMFC) They also claim that they paid already the said equity however they were not
given any receipts and copy of their contract

The petitioners also claim that they are qualified beneficiaries under the RA no. 7279 known as the
Urban Development and Housing Act and adding that they were builder of good faith

CA ruled that the petitioners entered with an agreement of equity with the respondent , so in return they
must pay amortization or they will face eviction.

Issue:

Whether or not, the decision of the CA needed to be redefine by the SC.

Rulling:

It is ruled that in the findings they the petitioners were in binding contract with the respondent in
regarding with paying their equity and by not paying it they has lost their right to occupy.

The CA rulling in this case is informative and straight to the point. The petition to review was granted,
the decision of the CA was overturned and the decision of the RTC and MTC was reinstated

Negros Navigation Co., Inc. v. Court of Appeals

G.R. No. 110398, 7 November 1997, 281 SCRA 534

FACTS:

In April of 1980, private respondent Ramon Miranda purchased from the Negros
Navigation Co., Inc. four special cabin ticketsfor his wife, daughter, son and niece who
were going to Bacolod City to attend a family reunion. The tickets were for Voyage of the
M/V Don Juan, leaving Manila at 1:00 p.m. on April 22, 1980.

The ship sailed from the port of Manila on schedule.

At about 10:30 in the evening of April 22, 1980, the Don Juan collided off the Tablas
Strait in Mindoro, with the M/T Tacloban City, an oil tanker owned by the Philippine
National Oil Company (PNOC) and the PNOC Shipping and Transport Corporation
(PNOC/STC). As a result, the M/V Don Juan sank. Several of her passengers perished in
the sea tragedy. The bodies of some of the victims were found and brought to shore, but
the four members of private respondents’ families were never found.

Private respondents filed a complaint on July 16, 1980 in the Regional Trial Court of
Manila, Branch 34, against the Negros Navigation, the Philippine National Oil Company
(PNOC), and the PNOC Shipping and Transport Corporation (PNOC/STC), seeking
damages for the death of the four family members that were never found. Petitioner,
however, denied that the four relatives of private respondents actually boarded the vessel
as shown by the fact that their bodies were never recovered. Petitioner further averred
that the Don Juan was seaworthy and manned by a full and competent crew, and that the
collision was entirely due to the fault of the crew of the M/T Tacloban City. The RTC ruled
in favor of the complainants and ordered petitioner to pay for the damages. The CA
affirmed the said decision.

ISSUE:

Whether petitioner is liable for damages to the full extent

RULING:

Prior to this case, a previous case was brought for the death of other passengers. Said
case is entitledMecenas v. Intermediate Appellate Court .In that case it was found that
although the proximate cause ofthe mishap was the negligence of the crew of the
M/TTacloban City, the crew of theDon Juanwas equallynegligent as it found that the
latter’s master, Capt. Rogelio Santisteban, was playing mahjong at the timeof collision,
and the officer on watch, Senior Third Mate Rogelio De Vera, admitted that he failed to
call theattention of Santisteban to the imminent danger facing them. This Court found that
Capt. Santisteban andthe crew of the M/VDon Juan failed to take steps to preventthe
collision or at least delay the sinking of theship and supervise the abandoning of the ship.
Petitioner Negros Navigation was found equally negligent in tolerating the playing of
mahjong by the shipcaptain and other crew members while on board the ship and failing
to keep the M/VDon Juanseaworthyso much so that the ship sank within 10 to 15
minutes of its impact with the M/TTacloban City .

In addition, the Court found that the Don Juan was overloaded
On the Doctrine of stare decisis: Adherence to the Mecenas case is dictated by this
Courts policy of maintaining stability in jurisprudence in accordance with the legal maxim
stare decisis et non quieta movere (Follow past precedents and do not disturb what has
been settled.) Where, as in this case, the same questions relating to the same event
have been put forward by parties similarly situated as in a previous case litigated and
decided by a competent court, the rule of stare decisis is a bar to any attempt to re
litigate the same issue.

Lazatin vs. Desierto

FACTS:
The Fact-Finding and Intelligence Bureau of the Office of the Ombudsman filed a
Complaint-Affidavit charging petitioners (Lazatin) with Illegal Use of Public Funds.

A preliminary investigation was conducted and it was recommened that 14 counts each of
Malversation of Public Funds and violation of Section 3 (e) of R.A. No. 3019 should be
filed against the petitioners. Resolution was approved by the Ombudsman; hence, 28
Informations were filed before the Sandiganbayan.

Petitioner Lazatin and his co-petitioners then filed their respective Motions for
Reconsideration/Reinvestigation, which motions were granted by the Sandiganbayan. The
Sandiganbayan also ordered the prosecution to re-evaluate the cases against petitioners.

The Office of the Special Prosecutor(OSP) submitted to the Ombudsman its Resolution
which recommended the dismissal of the cases against petitioners for lack or
insufficiency of evidence.

The Ombudsman ordered the Office of the Legal Affairs (OLA) to review the OSP
Resolution. In a Memorandum, the OLA recommended that the OSP Resolution be
disapproved and the OSP be directed to proceed with the trial of the cases against
petitioners. The Ombudsman adopted the OLA Memorandum, thereby disapproving
the OSP Resolution and ordering the prosecution of the subject cases. The cases were
then returned to the Sandiganbayan for continuation of criminal proceedings.

Petitioners filed the instant petition.

Petitioners argue that the Ombudsman had no authority to overturn the OSP's
Resolution dismissing the cases against petitioners because, under Section 13,
Article XI of the 1987 Constitution, the Ombudsman is clothed only with the power to
watch, investigate and recommend the filing of proper cases against erring officials,
but it was not granted the power to prosecute. They point out that under the
Constitution, the power to prosecute belongs to the OSP, which was intended by the
framers to be a separate and distinct entity from the Office of the
Ombudsman. Petitioners conclude that, as provided by the Constitution, the OSP being a
separate and distinct entity, the Ombudsman should have no power and authority over the
OSP. Thus, petitioners maintain that R.A. No. 6770 (The Ombudsman Act of 1989), which
made the OSP an organic component of the Office of the Ombudsman, should be struck
down for being unconstitutional.

The Court finds the petition unmeritorious.

Petitioners' attack against the constitutionality of R.A. No. 6770 is stale. It has long
been settled that the provisions of R.A. No. 6770 granting the Office of the Ombudsman
prosecutorial powers and placing the OSP under said office have no constitutional
infirmity. The issue of whether said provisions of R.A. No. 6770 violated the
Constitution had been fully dissected as far back as 1995 in Acop v. Office of the
Ombudsman : The Court held that giving prosecutorial powers to the Ombudsman is in
accordance with the Constitution as paragraph 8, Section 13, Article XI provides that the
Ombudsman shall “exercise such other functions or duties as may be provided by law.”

The constitutionality of Section 3 of R.A. No. 6770, which subsumed the OSP under
the Office of the Ombudsman, was likewise upheld by the Court in Acop. It was
explained, thus:

x x x Section 7 of Article XI expressly provides that the then

existing Tanodbayan, to be henceforth known as the Office of the
 Special Prosecutor, “shall continue to function and exercise its powers
as now or hereafter may be provided by law, except those conferred on
the Office of the Ombudsman created under this Constitution.” The
underscored phrase evidently refers to the Tanodbayan's powers
under P.D. No. 1630 or subsequent amendatory legislation. It follows
then that Congress may remove any of the Tanodbayan's/Special
Prosecutor's powers under P.D. No. 1630 or grant it other powers,
except those powers conferred by the Constitution on the Office
of the Ombudsman.

Pursuing the present line of reasoning, when one considers

that by express mandate of paragraph 8, Section 13, Article XI of the
Constitution, the Ombudsman may “exercise such other powers or
perform functions or duties as may be provided by law,” it is indubitable
then that Congress has the power to place the Office of the Special
Prosecutor under the Office of the Ombudsman. In the same vein,
Congress may remove some of the powers granted to the Tanodbayan
by P.D. No. 1630 and transfer them to the Ombudsman; or grant the
Office of the Special Prosecutor such other powers and functions and
duties as Congress may deem fit and wise. This Congress did through
the passage of R.A. No. 6770.

The foregoing ruling of the Court has been reiterated in Camanag v.

Guerrero. More recently, in Office of the Ombudsman v. Valera, the Court, basing its ratio
decidendi on its ruling in Acop and Camanag, declared that the OSP is “merely a
component of the Office of the Ombudsman and may only act under the supervision
and control, and upon authority of the Ombudsman” and ruled that under R.A. No.
6770, the power to preventively suspend is lodged only with the Ombudsman and Deputy
Ombudsman. The Court's ruling in Acop that the authority of the Ombudsman to
prosecute based on R.A. No. 6770 was authorized by the Constitution was also made the
foundation for the decision in Perez v. Sandiganbayan, where it was held that the power
to prosecute carries with it the power to authorize the filing of informations, which power
had not been delegated to the OSP. It is, therefore, beyond cavil that under the
Constitution, Congress was not proscribed from legislating the grant of additional powers
to the Ombudsman or placing the OSP under the Office of the Ombudsman.

ISSUE:

W/n the Court's ruling on the constitutionality of the provisions of R.A. No.
6770 should be revisited and the principle of stare decisis be set aside.

RULING:

The doctrine of stare decisis et non quieta movere (to adhere to precedents and not
to unsettle things which are established) is embodied in Article 8 of the Civil Code
of the Philippines which provides, thus:

ART. 8. Judicial decisions applying or interpreting the laws

or the Constitution shall form a part of the legal system of the
Philippines.

It was further explained in Fermin v. People as follows:

The doctrine of stare decisis enjoins adherence to judicial precedents. It

requires courts in a country to follow the rule established in a decision of the
 Supreme Court thereof. That decision becomes a judicial precedent to be
followed in subsequent cases by all courts in the land. The doctrine of stare
decisis is based on the principle that once a question of law has been examined
and decided, it should be deemed settled and closed to further argument.

In Chinese Young Men's Christian Association of the Philippine Islands v. Remington Steel
Corporation, the Court expounded on the importance of the foregoing doctrine, stating that:

The doctrine of stare decisis is one of policy grounded on the

necessity for securing certainty and stability of judicial decisions, thus:

Time and again, the court has held that it is a

very desirable and necessary judicial practice that when a
court has laid down a principle of law as applicable to a certain
state of facts, it will adhere to that principle and apply it to all
future cases in which the facts are substantially the
same. Stare decisis et non quieta movere. Stand by the
decisions and disturb not what is settled. Stare decisis simply
means that for the sake of certainty, a conclusion reached
in one case should be applied to those that follow if the
facts are substantially the same, even though the parties
may be different. It proceeds from the first principle of justice
that, absent any powerful countervailing considerations,
like cases ought to be decided alike. Thus, where the same
questions relating to the same event have been put forward by
the parties similarly situated as in a previous case litigated and
decided by a competent court, the rule of stare decisis is a
bar to any attempt to relitigate the same issue.

The doctrine has assumed such value in our judicial system that the Court has
ruled that “[a]bandonment thereof must be based only on strong and compelling
reasons, otherwise, the becoming virtue of predictability which is expected from this Court
would be immeasurably affected and the public's confidence in the stability of the solemn
pronouncements diminished.” Verily, only upon showing that circumstances attendant in a
particular case override the great benefits derived by our judicial system from the doctrine of
stare decisis, can the courts be justified in setting aside the same.

In this case, petitioners have not shown any strong, compelling reason to
convince the Court that the doctrine of stare decisis should not be applied to this
case. They have not successfully demonstrated how or why it would be grave abuse
of discretion for the Ombudsman, who has been validly conferred by law with the
power of control and supervision over the OSP, to disapprove or overturn any
resolution issued by the latter.

The petition is DISMISSED for lack of merit.

GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS) and WINSTON F. GARCIA

his capacity as President and General Manager of the GSIS, Petitioner,
vs.
MARICAR B. BUENVIAJE-CARREON, Respondent.

SERENO *

PERLAS-BERNABE *
 RESOLUTION

PEREZ, J.:

This petition for review on certiorari seeks the reversal of the Decision dated 20 February
1

2009 of the Court of Appeals in CA-G.R. SP No. 103539, which affirmed Resolution No.
07-1350 of the Civil Service Commission (CSC) finding respondent Maricar B. Buenviaje-
Carreon not guilty of Grave Misconduct and/or Conduct Prejudicial to the Best Interest of
the Service, but only of Violation of Reasonable Office Rules and Regulations.

Respondent was holding the position of Social Insurance Specialist of the Claims
Department of Government Service Insurance System (GSIS) when she was
administratively charged with Grave Misconduct and/or Conduct Prejudicial to the Best
Interest of the Service for the following acts:

1. Wearing red shirt and marching to or appearing at the office of the Investigation Unit in
protest and to support Atty. Mario Molina (Atty. Molina) and Atty. Albert Velasco (Atty.
Velasco);

2. Conspiring with other employees and temporarily leaving her workplace, and
abandoning her post and duties;

3. Badmouthing the security guards and the GSIS management and defiantly raising
clenched fists; and

4. Causing alarm, frightening some employees, and disrupting the work at the
Investigation Unit during office hours.
2

The GSIS Investigation Unit issued a Memorandum dated 31 May 2005 concerning the
alleged unauthorized concerted activity and requiring respondent to explain in writing why
she should not be administratively dealt with.3

In the Formal Charge dated 4 June 2005 signed by the GSIS President and General
Manager Winston F. Garcia (Garcia), respondent was directed to submit her written
answer and was placed under preventive suspension for ninety (90) days. 4

Instead of answering the Formal Charge, respondent, together with eight (8) other
charged employees, chose to respond to the 31 May 2005 Memorandum. Respondent
5

essentially admitted that her presence outside the office of the Investigation Unit was to
show support for Atty. Velasco, the Union President and to witness the case hearing of
Atty. Velasco and Atty. Molina.6

In a Decision dated 29 June 2005 for Administrative Case No. 05-004, respondent was
found guilty of the charges against her and penalized as follow:

WHEREFORE, PREMISES CONSIDERED, finding herein respondent

guilty of the charges against her, she is hereby penalized with ONE (1)
YEAR SUSPENSION with all the accessory penalties appurtenant thereto
pursuant to Section 5 and 6 Rule V of the Amended Policy and
Procedural Guidelines No. 178-04 otherwise known as Rules of
Procedure in Administrative Investigations (RPAI) of GSIS Employees
and Officials in relation to Sections 56(d) and 58(d) of the Uniform Rules
 on Administrative Cases in the Civil Service (URACCS). The period
however of her preventive suspension shall be deducted therefrom. 7

The GSIS noted that respondent has not filed any Answer nor submitted any responsive
pleading to the Formal Charge. Respondent was found to have participated in a
concerted mass action prohibited by law and staged on 27 May 2005 at the Investigation
Unit Office to show support for Atty. Molina who had a scheduled hearing during that
time.8

On appeal, the respondent asserted that her right to due process was violated when
GSIS proceeded to render judgment on the case after she failed to submit her answer to
the Formal Charge. Moreover, she averred that Garcia acted as the complainant,
prosecutor and judge at the same time in the GSIS resolution. She insisted that no
substantial evidence exist to hold her guilty of Grave Misconduct and/or Conduct
Prejudicial to the Best Interest of the Service.

On 18 July 2007, the CSC rendered judgment partially granting the appeal, to wit:

WHEREFORE, the appeal of Maricar Buenviaje-Carreon, Social

Insurance Specialist, Claims Department, Government Service Insurance
System (GSIS) is PARTIALLY GRANTED. Accordingly, the Decision
dated June 29, 2005 of Winston F. Garcia, President and General
Manager, GSIS, finding her guilty of Grave Misconduct and/or Conduct
Prejudicial to the Best Interest of the Service and imposing upon her the
penalty of suspension from the service for one (1) year, is MODIFIED.
Carreon is found guilty only of the lesser offense of Violation of
Reasonable Office Rules and Regulations and is imposed the penalty of
reprimand.9

GSIS filed a motion for reconsideration of the CSC Resolution but it was denied by the
CSC on 31 March 2008.

GSIS elevated the case to the Court of Appeals via Petition for Certiorari. On 20
February 2009, the Court of Appeals denied the petition and adopted the ruling of the
Court of Appeals Seventh Division dated 31 August 2007 in the case entitled GSIS v.
Dinna Villariza, which according to the appellate court, has substantially the same facts
and issues raised with the instant case.

Undaunted, GSIS filed the instant petition raising the following grounds for its appeal:

I.

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN

RULING THAT THE GSIS CANNOT APPLY SUPPLETORILY THE
PROVISIONS OF THE RULES OF COURT ON THE EFFECT OF
FAILURE TO DENY THE ALLEGATIONS IN THE COMPLAINT AND
FAILURE TO FILE AN ANSWER, WHERE THE RESPONDENT IN AN
ADMINISTRATIVE CASE DID NOT FILE AN ANSWER TO THE
FORMAL CHARGE OR ANY RESPONSIVE PLEADING.

II.
 THE HONORABLE COURT OF APPEALS’ FINDING THAT THE CIVIL
SERVICE COMMISSION CAN VALIDLY CONSIDER AND GIVE FULL
PROBATIVE VALUE TO AN UNNOTARIZED LETTER THAT DID NOT
FORM PART OF THE CASE RECORD, SUPPOSEDLY IN LINE WITH
THE RULE THAT ADMINISTRATIVE DUE PROCESS CANNOT BE
EQUATED WITH DUE PROCESS IN JUDICIAL SENSE, IS CONTRARY
TO THE SETTLED JURISPRUDENCE ON ADMINISTRATIVE DUE
PROCESS.

III.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS

ERROR IN SUSTAINING A DECISION THAT, ON ONE HAND, MAKES
CONCLUSIONS OF FACTS BASED ON EVIDENCE ON RECORD AND,
ON THE OTHER HAND, MAKES A CONCLUSION OF LAW BASED ON
A DOCUMENT THAT DID NOT FORM PART OF THE CASE RECORD.

IV.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS

ERROR IN HOLDING THAT PROOF OF SUBSTANTIAL REDUCTION
OF THE OPERATIONAL CAPACITY OF AN AGENCY, DUE TO
UNRULY MASS GATHERING OF GOVERNMENT EMPLOYEES INSIDE
OFFICE PREMISES AND WITHIN OFFICE HOURS, IS REQUIRED TO
JUSTIFY A FINDING THAT SAID EMPLOYEES ARE LIABLE FOR
CONDUCT PREJUDICIAL TO THE BEST INTEREST OF THE SERVICE
PURSUANT TO CSC RESOLUTION NO. 021316.

V.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS

ERROR IN HOLDING THAT AN UNRULY MASS GATHERING OF
TWENTY EMPLOYEES, LASTING FOR MORE THAN AN HOUR,
INSIDE OFFICE PREMISES, TO PROTEST A VALID PROHIBITION ON
THEIR LEADER’S APPEARANCE AS COUNSEL IS A VALID EXERCISE
OF THE RIGHTS TO FREEDOM OF EXPRESSION AND PEACEFUL
ASSEMBLY.

VI.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS

ERROR IN SUSTAINING THE CIVIL SERVICE COMMISSION’S
FINDING THAT THE CONCERTED ABANDONMENT OF EMPLOYEES
OF THEIR POSTS FOR MORE THAN AN HOUR TO HOLD AN UNRULY
PROTEST INSIDE OFFICE PREMISES IS ONLY A VIOLATION OF
REASONABLE OFFICE RULES AND REGULATIONS. 10

The very case cited by the Court of Appeals to support its findings and conclusions was
elevated to the Court via a petition for review and We decided it last 27 July 2010. That
petition was entitled GSIS v. Villaviza, docketed as G.R. No. 180291. The issues raised
11

by GSIS herein have been settled by our ruling in Villaviza. The respondents therein, like
herein respondent, were all charged under one Formal Charge for Grave Misconduct
and/or Conduct Prejudicial to the Best Interest of the Service. Villaviza and the instant
case have the same factual antecedents and both went through the same procedure
before reaching this Court. The issues raised in both cases are substantially the same. 12

The rule of stare decisis is applicable.

The principle of stare decisis enjoins adherence to judicial precedents. It requires courts
in a country to follow the rule established in a decision of its Supreme Court. That
decision becomes a judicial precedent to be followed in subsequent cases by all courts in
the land. The doctrine is based on the principle that once a question of law has been
examined and decided, it should be deemed settled and closed to further argument. 13

Thus, where the same question relating to the same event is brought by parties similarly
situated as in a previous case already litigated and decided by a competent court, the
rule of stare decisis is a bar to any attempt to relitigate the same issue.
14

Considering that the facts, issues, causes of action, evidence and the applicable laws are
exactly the same as those in the decided case of Villaviza, we shall adopt the latter’s
ruling. More pertinently, we reiterate the ratio decidendi in that case ─ respondents’
actuations did not amount to a prohibited concerted activity or mass action as defined in
CSC’s Resolution No. 02-1316. 15

Following the principle of stare decisis, the present petition must be denied.

WHEREFORE, the petition is DENIED and the 20 February 2009 Decision of the Court of
Appeal is AFFIRMED.

SO ORDERED.

Ebralinag vs. Division Superintendent of School of Cebu

GR 95770, 29 December 1995; En Banc Resolution, Kapunan [J]

FACTS:

Two special civil actions for certiorari, Mandamus and Prohibition were filed and
consolidated raising the same issue whether school children who are members or a
religious sect known as Jehovah’s Witnesses may be expelled from school (both public
and private), for refusing, on account of their religious beliefs, to take part in the flag
ceremony which includes playing (by a band) or singing the Philippine national anthem,
saluting the Philippine flag and reciting the patriotic pledge.

All of the petitioners in both (consolidated) cases were expelled from their classes by the
public school authorities in Cebu for refusing to salute the flag, sing the national anthem
and recite the patriotic pledge as required by Republic Act No. 1265 (An Act making
flagceremony compulsory in all educational institutions) of July 11, 1955 , and by
Department Order No. 8 (Rules and Regulations for Conducting the Flag Ceremony in All
Educational Institutions)dated July 21, 1955 of the Department of Education, Culture and
Sports (DECS) making the flag ceremony compulsory in all educational institutions.

Petitioners are Jehovah’s Witnesses believing that by doing these is religious

worship/devotion akin to idolatry against their teachings. They contend that to compel
transcends constitutional limits and invades protection against official control and
religious freedom. The respondents relied on the precedence of Gerona et al v. Secretary
of Education where the Court upheld the explulsions. Gerona doctrine provides that we
are a system of separation of the church and state and the flag is devoid of religious
significance and it doesn’t involve any religious ceremony. The children of Jehovah’s
Witnesses cannot be exempted from participation in the flag ceremony. They have no
valid right to such exemption. Moreover, exemption to the requirement will disrupt school
discipline and demoralize the rest of the school population which by far constitutes the
great majority. The freedom of religious belief guaranteed by the Constitution does not
and cannot mean exemption from or non-compliance with reasonable and non-
discriminatory laws, rules and regulations promulgated by competent authority.

ISSUE: Whether or not the expulsion of petitioners violated their freedom of religion?

HELD:

YES. The Court held that the expulsion of the petitioners from the school was not
justified.

Religious freedom is a fundamental right of highest priority and the amplest

protection among human rights, for it involves the relationship of man to his
Creator. The right to religious profession and worship has a two-fold aspect, vis.,
freedom to believe and freedom to act on one’s belief. The first is absolute as long
as the belief is confined within the realm of thought. The second is subject to
regulation where the belief is translated into external acts that affect the public
welfare. The only limitation to religious freedom is the existence of grave and
present danger to public safety, morals, health and interests where State has right
to prevent.

Petitioners stress that while they do not take part in the compulsory flag ceremony, they
do not engage in “external acts” or behavior that would offend their countrymen who
believe in expressing their love of country through the observance of the flag ceremony.
They quietly stand at attention during the flag ceremony to show their respect for the right
of those who choose to participate in the solemn proceedings. Since they do not engage
in disruptive behavior, there is no warrant for their expulsion.

OLAGUER V. MILITARY COMMISSION

[GR L-54558, 22 May 1987]

IN RE: Sec. 18, Art. VII, 1987 Constitution

FACTS:

On 24 December 1979, herein Petitioners – all, of which, are civilians – were

arrested by the military and were subsequently detained at Camp Crame and
were then transferred to Camp Bagong Diwa. Sometime in 1980, the then
Chief of Staff of the Armed Forces created the Respondent Military
Commission No. 34 for the purposes of trying the said Petitioners of their
alleged crimes. Hastily, the said Respondent Commission sentenced the
Petitioners to death. Petitioners now come to the Supreme Court to challenge
the said Military Commission.
ISSUE:

Whether or not the actions of the military are Constitutional?

HELD:

It must be noted that in 1981, President Marcos issued Proclamation No. 2045,
thereby officially lifting Martial Law. Furthermore, between 1981 and 1986,
the Petitioners were given provisional liberty thereby rendering their
Petitions for Habeas Corpus moot and academic.

It has been held in a long line of cases that Military Commissions/Tribunals

have no jurisdiction to try civilians for alleged offenses when Civil Courts are
open and functioning. Such being the case here, the respondent Military
Commission’s actions of trying the Petitioners and rendering sentence is null
and void.

And assuming that the same does have jurisdiction, the fact that the trial(s)
were conducted hastily – i.e., the Petitioners were never actually given a
chance to defend themselves or even present their own evidences – due
process was actually denied to the Petitioners; hence, their sentence should be
treated as unconstitutional.