REMEDIAL LAW CASES ON GENERAL PRINCIPLES.

I. GENERAL PRINCIPLES

A. Concept of Remedial or Procedural Law

 Priscilla Alma Jose v. Ramon C. Javellana, et al., G.R. No. 158239, January 25, 2012

BERSAMIN, J p:

The denial of a motion for reconsideration of an order granting the defending party's motion to dismiss is
not an interlocutory but a final order because it puts an end to the particular matter involved, or settles
definitely the matter therein disposed of, as to leave nothing for the trial court to do other than to execute
the order. 1 Accordingly, the claiming party has a fresh period of 15 days from notice of the denial within
which to appeal the denial. 2

Antecedents

On September 8, 1979, Margarita Marquez Alma Jose (Margarita) sold for consideration of P160,000.00
to respondent Ramon Javellana by deed of conditional sale two parcels of land with areas of 3,675 and
20,936 square meters located in Barangay Mallis, Guiguinto, Bulacan. They agreed that Javellana would
pay P80,000.00 upon the execution of the deed and the balance of P80,000.00 upon the registration of
the parcels of land under the Torrens System (the registration being undertaken by Margarita within a
reasonable period of time); and that should Margarita become incapacitated, her son and attorney-in-fact,
Juvenal M. Alma Jose (Juvenal), and her daughter, petitioner Priscilla M. Alma Jose, would receive the
payment of the balance and proceed with the application for registration. 3

After Margarita died and with Juvenal having predeceased Margarita without issue, the vendor's
undertaking fell on the shoulders of Priscilla, being Margarita's sole surviving heir. However, Priscilla did
not comply with the undertaking to cause the registration of the properties under the Torrens System,
and, instead, began to improve the properties by dumping filling materials therein with the intention of
converting the parcels of land into a residential or industrial subdivision. 4 Faced with Priscilla's refusal to
comply, Javellana commenced on February 10, 1997 an action for specific performance, injunction, and
damages against her in the Regional Trial Court in Malolos, Bulacan (RTC), docketed as Civil Case No.
79-M-97 entitled Ramon C. Javellana, represented by Atty. Guillermo G. Blanco v. Priscilla Alma Jose.
cASTED

In Civil Case No. 79-M-97, Javellana averred that upon the execution of the deed of conditional sale, he
had paid the initial amount of P80,000.00 and had taken possession of the parcels of land; that he had
paid the balance of the purchase price to Juvenal on different dates upon Juvenal's representation that
Margarita had needed funds for the expenses of registration and payment of real estate tax; and that in
1996, Priscilla had called to inquire about the mortgage constituted on the parcels of land; and that he
had told her then that the parcels of land had not been mortgaged but had been sold to him. 5

Javellana prayed for the issuance of a temporary restraining order or writ of preliminary injunction to
restrain Priscilla from dumping filling materials in the parcels of land; and that Priscilla be ordered to
institute registration proceedings and then to execute a final deed of sale in his favor. 6

Priscilla filed a motion to dismiss, stating that the complaint was already barred by prescription; and that
the complaint did not state a cause of action. 7

The RTC initially denied Priscilla's motion to dismiss on February 4, 1998. 8 However, upon her motion
for reconsideration, the RTC reversed itself on June 24, 1999 and granted the motion to dismiss, opining
that Javellana had no cause of action against her due to her not being bound to comply with the terms of
the deed of conditional sale for not being a party thereto; that there was no evidence showing the
payment of the balance; that he had never demanded the registration of the land from Margarita or
Juvenal, or brought a suit for specific performance against Margarita or Juvenal; and that his claim of
paying the balance was not credible. 9

Javellana moved for reconsideration, contending that the presentation of evidence of full payment was not
necessary at that stage of the proceedings; and that in resolving a motion to dismiss on the ground of
failure to state a cause of action, the facts alleged in the complaint were hypothetically admitted and only
the allegations in the complaint should be considered in resolving the motion. 10 Nonetheless, he
attached to the motion for reconsideration the receipts showing the payments made to Juvenal. 11
Moreover, he maintained that Priscilla could no longer succeed to any rights respecting the parcels of
land because he had meanwhile acquired absolute ownership of them; and that the only thing that she, as
sole heir, had inherited from Margarita was the obligation to register them under the Torrens System. 12

On June 21, 2000, the RTC denied the motion for reconsideration for lack of any reason to disturb the
order of June 24, 1999. 13

Accordingly, Javellana filed a notice of appeal from the June 21, 2000 order, 14 which the RTC gave due
course to, and the records were elevated to the Court of Appeals (CA). SEAHcT

In his appeal (C.A.-G.R. CV No. 68259), Javellana submitted the following as errors of the RTC, 15 to wit:

THE TRIAL COURT GRIEVOUSLY ERRED IN NOT CONSIDERING THE FACT THAT PLAINTIFF-
APELLANT HAD LONG COMPLIED WITH THE FULL PAYMENT OF THE CONSIDERATION OF THE
SALE OF THE SUBJECT PROPERTY AND HAD IMMEDIATELY TAKEN ACTUAL AND PHYSICAL
POSSESSION OF SAID PROPERTY UPON THE SIGNING OF THE CONDITIONAL DEED OF SALE;

II

THE TRIAL COURT OBVIOUSLY ERRED IN MAKING TWO CONFLICTING INTERPRETATIONS OF

THE PROVISION OF THE CIVIL [CODE], PARTICULARLY ARTICLE 1911, IN THE LIGHT OF THE
TERMS OF THE CONDITIONAL DEED OF SALE;

III

THE TRIAL COURT ERRED IN HOLDING THAT DEFENDANT-APPELLEE BEING NOT A PARTY TO
THE CONDITIONAL DEED OF SALE EXECUTED BY HER MOTHER IN FAVOR OF PLAINTIFF-
APPELLANT IS NOT BOUND THEREBY AND CAN NOT BE COMPELLED TO DO THE ACT
REQUIRED IN THE SAID DEED OF CONDITIONAL SALE;

IV

THE TRIAL COURT ERRED IN DISMISSING THE AMENDED COMPLAINT WITHOUT HEARING THE
CASE ON THE MERITS.

Priscilla countered that the June 21, 2000 order was not appealable; that the appeal was not perfected on
time; and that Javellana was guilty of forum shopping. 16

It appears that pending the appeal, Javellana also filed a petition for certiorari in the CA to assail the June
24, 1999 and June 21, 2000 orders dismissing his complaint (C.A.-G.R. SP No. 60455). On August 6,
2001, however, the CA dismissed the petition for certiorari, 17 finding that the RTC did not commit grave
abuse of discretion in issuing the orders, and holding that it only committed, at most, an error of judgment
correctible by appeal in issuing the challenged orders. cAEDTa
On November 20, 2002, the CA promulgated its decision in C.A.-G.R. CV No. 68259, 18 reversing and
setting aside the dismissal of Civil Case No. 79-M-97, and remanding the records to the RTC "for further
proceedings in accordance with law." 19 The CA explained that the complaint sufficiently stated a cause
of action; that Priscilla, as sole heir, succeeded to the rights and obligations of Margarita with respect to
the parcels of land; that Margarita's undertaking under the contract was not a purely personal obligation
but was transmissible to Priscilla, who was consequently bound to comply with the obligation; that the
action had not yet prescribed due to its being actually one for quieting of title that was imprescriptible
brought by Javellana who had actual possession of the properties; and that based on the complaint,
Javellana had been in actual possession since 1979, and the cloud on his title had come about only when
Priscilla had started dumping filling materials on the premises. 20

On May 9, 2003, the CA denied the motion for reconsideration, 21 stating that it decided to give due
course to the appeal even if filed out of time because Javellana had no intention to delay the proceedings,
as in fact he did not even seek an extension of time to file his appellant's brief; that current jurisprudence
afforded litigants the amplest opportunity to present their cases free from the constraints of technicalities,
such that even if an appeal was filed out of time, the appellate court was given the discretion to
nonetheless allow the appeal for justifiable reasons.

Issues

Priscilla then brought this appeal, averring that the CA thereby erred in not outrightly dismissing
Javellana's appeal because: (a) the June 21, 2000 RTC order was not appealable; (b) the notice of
appeal had been filed belatedly by three days; and (c) Javellana was guilty of forum shopping for filing in
the CA a petition for certiorari to assail the orders of the RTC that were the subject matter of his appeal
pending in the CA. She posited that, even if the CA's decision to entertain the appeal was affirmed, the
RTC's dismissal of the complaint should nonetheless be upheld because the complaint stated no cause of
action, and the action had already prescribed.

On his part, Javellana countered that the errors being assigned by Priscilla involved questions of fact not
proper for the Court to review through petition for review on certiorari; that the June 21, 2000 RTC order,
being a final order, was appealable; that his appeal was perfected on time; and that he was not guilty of
forum shopping because at the time he filed the petition for certiorari the CA had not yet rendered a
decision in C.A.-G.R. CV No. 68259, and because the issue of ownership raised in C.A.-G.R. CV No.
68259 was different from the issue of grave abuse of discretion raised in C.A.-G.R. SP No. 60455.

Ruling

The petition for review has no merit. AEIHCS

I
Denial of the motion for reconsideration of the
order of dismissal was a final order and appealable

Priscilla submits that the order of June 21, 2000 was not the proper subject of an appeal considering that
Section 1 of Rule 41 of the Rules of Court provides that no appeal may be taken from an order denying a
motion for reconsideration.

Priscilla's submission is erroneous and cannot be sustained.

First of all, the denial of Javellana's motion for reconsideration left nothing more to be done by the RTC
because it confirmed the dismissal of Civil Case No. 79-M-97. It was clearly a final order, not an
interlocutory one. The Court has distinguished between final and interlocutory orders in Pahila-Garrido v.
Tortogo, 22 thuswise:

The distinction between a final order and an interlocutory order is well known. The first disposes of the
subject matter in its entirety or terminates a particular proceeding or action, leaving nothing more to be
done except to enforce by execution what the court has determined, but the latter does not completely
dispose of the case but leaves something else to be decided upon. An interlocutory order deals with
preliminary matters and the trial on the merits is yet to be held and the judgment rendered. The test to
ascertain whether or not an order or a judgment is interlocutory or final is: does the order or judgment
leave something to be done in the trial court with respect to the merits of the case? If it does, the order or
judgment is interlocutory; otherwise, it is final.

And, secondly, whether an order is final or interlocutory determines whether appeal is the correct remedy
or not. A final order is appealable, to accord with the final judgment rule enunciated in Section 1, Rule 41
of the Rules of Court to the effect that "appeal may be taken from a judgment or final order that
completely disposes of the case, or of a particular matter therein when declared by these Rules to be
appealable;" 23 but the remedy from an interlocutory one is not an appeal but a special civil action for
certiorari. The explanation for the differentiation of remedies given in Pahila-Garrido v. Tortogo is apt:

. . . The reason for disallowing an appeal from an interlocutory order is to avoid multiplicity of appeals in a
single action, which necessarily suspends the hearing and decision on the merits of the action during the
pendency of the appeals. Permitting multiple appeals will necessarily delay the trial on the merits of the
case for a considerable length of time, and will compel the adverse party to incur unnecessary expenses,
for one of the parties may interpose as many appeals as there are incidental questions raised by him and
as there are interlocutory orders rendered or issued by the lower court. An interlocutory order may be the
subject of an appeal, but only after a judgment has been rendered, with the ground for appealing the
order being included in the appeal of the judgment itself.

The remedy against an interlocutory order not subject of an appeal is an appropriate special civil action
under Rule 65, provided that the interlocutory order is rendered without or in excess of jurisdiction or with
grave abuse of discretion. Then is certiorari under Rule 65 allowed to be resorted to. TCDHIc

Indeed, the Court has held that an appeal from an order denying a motion for reconsideration of a final
order or judgment is effectively an appeal from the final order or judgment itself; and has expressly
clarified that the prohibition against appealing an order denying a motion for reconsideration referred only
to a denial of a motion for reconsideration of an interlocutory order. 24

II
Appeal was made on time pursuant to Neypes v. CA

Priscilla insists that Javellana filed his notice of appeal out of time. She points out that he received a copy
of the June 24, 1999 order on July 9, 1999, and filed his motion for reconsideration on July 21, 1999 (or
after the lapse of 12 days); that the RTC denied his motion for reconsideration through the order of June
21, 2000, a copy of which he received on July 13, 2000; that he had only three days from July 13, 2000,
or until July 16, 2000, within which to perfect an appeal; and that having filed his notice of appeal on July
19, 2000, his appeal should have been dismissed for being tardy by three days beyond the expiration of
the reglementary period.

Section 3 of Rule 41 of the Rules of Court provides:

Section 3. Period of ordinary appeal. — The appeal shall be taken within fifteen (15) days from notice of
the judgment or final order appealed from. Where a record on appeal is required, the appellant shall file a
notice of appeal and a record on appeal within thirty (30) days from notice of the judgment or final order.

The period of appeal shall be interrupted by a timely motion for new trial or reconsideration. No motion for
extension of time to file a motion for new trial or reconsideration shall be allowed. (n)

Under the rule, Javellana had only the balance of three days from July 13, 2000, or until July 16, 2000,
within which to perfect an appeal due to the timely filing of his motion for reconsideration interrupting the
running of the period of appeal. As such, his filing of the notice of appeal only on July 19, 2000 did not
perfect his appeal on time, as Priscilla insists.
The seemingly correct insistence of Priscilla cannot be upheld, however, considering that the Court
meanwhile adopted the fresh period rule in Neypes v. Court of Appeals, 25 by which an aggrieved party
desirous of appealing an adverse judgment or final order is allowed a fresh period of 15 days within which
to file the notice of appeal in the RTC reckoned from receipt of the order denying a motion for a new trial
or motion for reconsideration, to wit: DTISaH

The Supreme Court may promulgate procedural rules in all courts. It has the sole prerogative to amend,
repeal or even establish new rules for a more simplified and inexpensive process, and the speedy
disposition of cases. In the rules governing appeals to it and to the Court of Appeals, particularly Rules
42, 43 and 45, the Court allows extensions of time, based on justifiable and compelling reasons, for
parties to file their appeals. These extensions may consist of 15 days or more.

To standardize the appeal periods provided in the Rules and to afford litigants fair opportunity to appeal
their cases, the Court deems it practical to allow a fresh period of 15 days within which to file the notice of
appeal in the Regional Trial Court, counted from receipt of the order dismissing a motion for a new trial or
motion for reconsideration.

Henceforth, this "fresh period rule" shall also apply to Rule 40 governing appeals from the Municipal Trial
Courts to the Regional Trial Courts; Rule 42 on petitions for review from the Regional Trial Courts to the
Court of Appeals; Rule 43 on appeals from quasi-judicial agencies to the Court of Appeals and Rule 45
governing appeals by certiorari to the Supreme Court. The new rule aims to regiment or make the appeal
period uniform, to be counted from receipt of the order denying the motion for new trial, motion for
reconsideration (whether full or partial) or any final order or resolution. 26

The fresh period rule may be applied to this case, for the Court has already retroactively extended the
fresh period rule to "actions pending and undetermined at the time of their passage and this will not
violate any right of a person who may feel that he is adversely affected, inasmuch as there are no vested
rights in rules of procedure." 27 According to De los Santos v. Vda. de Mangubat: 28

Procedural law refers to the adjective law which prescribes rules and forms of procedure in order that
courts may be able to administer justice. Procedural laws do not come within the legal conception of a
retroactive law, or the general rule against the retroactive operation of statues — they may be given
retroactive effect on actions pending and undetermined at the time of their passage and this will not
violate any right of a person who may feel that he is adversely affected, insomuch as there are no vested
rights in rules of procedure.

The "fresh period rule" is a procedural law as it prescribes a fresh period of 15 days within which an
appeal may be made in the event that the motion for reconsideration is denied by the lower court.
Following the rule on retroactivity of procedural laws, the "fresh period rule" should be applied to pending
actions, such as the present case. DICcTa

Also, to deny herein petitioners the benefit of the "fresh period rule" will amount to injustice, if not
absurdity, since the subject notice of judgment and final order were issued two years later or in the year
2000, as compared to the notice of judgment and final order in Neypes which were issued in 1998. It will
be incongruous and illogical that parties receiving notices of judgment and final orders issued in the year
1998 will enjoy the benefit of the "fresh period rule" while those later rulings of the lower courts such as in
the instant case, will not. 29

Consequently, we rule that Javellana's notice of appeal was timely filed pursuant to the fresh period rule.

III
No forum shopping was committed
Priscilla claims that Javellana engaged in forum shopping by filing a notice of appeal and a petition for
certiorari against the same orders. As earlier noted, he denies that his doing so violated the policy against
forum shopping.

The Court expounded on the nature and purpose of forum shopping in In Re: Reconstitution of Transfer
Certificates of Title Nos. 303168 and 303169 and Issuance of Owner's Duplicate Certificates of Title In
Lieu of Those Lost, Rolando Edward G. Lim, Petitioner: 30

Forum shopping is the act of a party litigant against whom an adverse judgment has been rendered in
one forum seeking and possibly getting a favorable opinion in another forum, other than by appeal or the
special civil action of certiorari, or the institution of two or more actions or proceedings grounded on the
same cause or supposition that one or the other court would make a favorable disposition. Forum
shopping happens when, in the two or more pending cases, there is identity of parties, identity of rights or
causes of action, and identity of reliefs sought. Where the elements of litis pendentia are present, and
where a final judgment in one case will amount to res judicata in the other, there is forum shopping. For
litis pendentia to be a ground for the dismissal of an action, there must be: (a) identity of the parties or at
least such as to represent the same interest in both actions; (b) identity of rights asserted and relief
prayed for, the relief being founded on the same acts; and (c) the identity in the two cases should be such
that the judgment which may be rendered in one would, regardless of which party is successful, amount
to res judicata in the other. AcHSEa

For forum shopping to exist, both actions must involve the same transaction, same essential facts and
circumstances and must raise identical causes of action, subject matter and issues. Clearly, it does not
exist where different orders were questioned, two distinct causes of action and issues were raised, and
two objectives were sought.

Should Javellana's present appeal now be held barred by his filing of the petition for certiorari in the CA
when his appeal in that court was yet pending?

We are aware that in Young v. Sy, 31 in which the petitioner filed a notice of appeal to elevate the orders
concerning the dismissal of her case due to non-suit to the CA and a petition for certiorari in the CA
assailing the same orders four months later, the Court ruled that the successive filings of the notice of
appeal and the petition for certiorari to attain the same objective of nullifying the trial court's dismissal
orders constituted forum shopping that warranted the dismissal of both cases. The Court said:

Ineluctably, the petitioner, by filing an ordinary appeal and a petition for certiorari with the CA, engaged in
forum shopping. When the petitioner commenced the appeal, only four months had elapsed prior to her
filing with the CA the Petition for Certiorari under Rule 65 and which eventually came up to this Court by
way of the instant Petition (re: Non-Suit). The elements of litis pendentia are present between the two
suits. As the CA, through its Thirteenth Division, correctly noted, both suits are founded on exactly the
same facts and refer to the same subject matter — the RTC Orders which dismissed Civil Case No. SP-
5703 (2000) for failure to prosecute. In both cases, the petitioner is seeking the reversal of the RTC
orders. The parties, the rights asserted, the issues professed, and the reliefs prayed for, are all the same.
It is evident that the judgment of one forum may amount to res judicata in the other.

xxx xxx xxx

The remedies of appeal and certiorari under Rule 65 are mutually exclusive and not alternative or
cumulative. This is a firm judicial policy. The petitioner cannot hedge her case by wagering two or more
appeals, and, in the event that the ordinary appeal lags significantly behind the others, she cannot post
facto validate this circumstance as a demonstration that the ordinary appeal had not been speedy or
adequate enough, in order to justify the recourse to Rule 65. This practice, if adopted, would sanction the
filing of multiple suits in multiple fora, where each one, as the petitioner couches it, becomes a
"precautionary measure" for the rest, thereby increasing the chances of a favorable decision. This is the
very evil that the proscription on forum shopping seeks to put right. In Guaranteed Hotels, Inc. v. Baltao,
the Court stated that the grave evil sought to be avoided by the rule against forum shopping is the
rendition by two competent tribunals of two separate and contradictory decisions. Unscrupulous party
litigants, taking advantage of a variety of competent tribunals, may repeatedly try their luck in several
different fora until a favorable result is reached. To avoid the resultant confusion, the Court adheres
strictly to the rules against forum shopping, and any violation of these rules results in the dismissal of the
case. 32

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

Yet, the outcome in Young v. Sy and Zosa v. Estrella is unjust here even if the orders of the RTC being
challenged through appeal and the petition for certiorari were the same. The unjustness exists because
the appeal and the petition for certiorari actually sought different objectives. In his appeal in C.A.-G.R. CV
No. 68259, Javellana aimed to undo the RTC's erroneous dismissal of Civil Case No. 79-M-97 to clear
the way for his judicial demand for specific performance to be tried and determined in due course by the
RTC; but his petition for certiorari had the ostensible objective "to prevent (Priscilla) from developing the
subject property and from proceeding with the ejectment case until his appeal is finally resolved," as the
CA explicitly determined in its decision in C.A.-G.R. SP No. 60455. 34

Nor were the dangers that the adoption of the judicial policy against forum shopping designed to prevent
or to eliminate attendant. The first danger, i.e., the multiplicity of suits upon one and the same cause of
action, would not materialize considering that the appeal was a continuity of Civil Case No. 79-M-97,
whereas C.A.-G.R. SP No. 60455 dealt with an independent ground of alleged grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of the RTC. The second danger, i.e., the unethical
malpractice of shopping for a friendly court or judge to ensure a favorable ruling or judgment after not
getting it in the appeal, would not arise because the CA had not yet decided C.A.-G.R. CV No. 68259 as
of the filing of the petition for certiorari.

Instead, we see the situation of resorting to two inconsistent remedial approaches to be the result of the
tactical misjudgment by Javellana's counsel on the efficacy of the appeal to stave off his caretaker's
eviction from the parcels of land and to prevent the development of them into a residential or commercial
subdivision pending the appeal. In the petition for certiorari, Javellana explicitly averred that his appeal
was "inadequate and not speedy to prevent private respondent Alma Jose and her transferee/assignee . .
. from developing and disposing of the subject property to other parties to the total deprivation of
petitioner's rights of possession and ownership over the subject property," and that the dismissal by the
RTC had "emboldened private respondents to fully develop the property and for respondent Alma Jose to
file an ejectment case against petitioner's overseer . . . ." 35 Thereby, it became far-fetched that Javellana
brought the petition for certiorari in violation of the policy against forum shopping.

WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the decision
promulgated on November 20, 2002; and ORDERS the petitioner to pay the costs of suit.

SO ORDERED.

B. Nature of remedial law

 Ateneo v. De La Rosa, G. R. No. L-286, March 28, 1946

[G.R. No. L-286. March 29, 1946.]

FREDESVINDO S. ALVERO, petitioner, vs. M. L. DE LA ROSA Judge of First Instance of Manila, JOSE
R. VICTORIANO and MARGARITA VILLARICA., respondents.

Revilla & Palma for petitioner.

Francisco Claravall for respondents.

SYLLABUS

1. APPEAL; FAILURE TO PERFECT APPEAL, EXTENSION BY COURT OF TIME FOR APPEAL. —

Failure to perfect the appeal, within the time prescribed by the Rules of Court, will cause the judgment to
become final, and the certification of the record on appeal thereafter, cannot restore the jurisdiction which
has been lost. The period within which the record on appeal and appeal bond should be perfected and
filed may, however, be extended by order of the court, upon application made, prior to the expiration of
the original period.

2. COURTS; FORCE AND EFFECT OF RULES OF COURT. — Rules of court, promulgated by authority
of law, have the force and effect of law; and rules of court prescribing the time within which certain acts
must be done, or certain proceedings taken, are considered absolutely indispensable to the prevention, of
needless delays and to the orderly and speedy discharge of judicial business.

3. ID., ID.; STRICT COMPLIANCE WITH RULES OF COURT, MANDATORY. — Strict compliance with
the rules of court has been held mandatory and imperative, so that failure to pay the docket fee in the
Supreme Court, within the period fixed for that purpose, will cause the dismissal of the appeal. In the
same manner, on failure of the appellant in a civil case to serve his brief, within the time prescribed by
said rules, on motion of the appellee and notice to the appellant, or on its own motion the court may
dismiss the appeal.

4. APPEAL; MOTION FOR RECONSIDERATION AND NEW TRIAL; WHEN DOES IT SUSPEND TIME
FOR APPEAL. — In his motion for reconsideration and new trial, dated December 27, 1945, counsel for
petitioner did not point out specifically the findings or conclusions in the judgment, which are not
supported by the evidence or which are contrary to law, making express reference to the pertinent
evidence or legal provisions, as expressly required by Rule 37, section 2, paragraph (c) of the Rules of
Court. Motions of that kind have been considered as motions pro forma intended merely to delay the
proceeding, and, as such, they cannot and will not interrupt or suspend the period of time for the
perfection of the appeal.

DECISION

DE JOYA, J p:

This is all original petition for certiorari filed in this court.

The record shows that, on June 26, 1945, respondent Jose R. Victoriano had filed a complaint, in the
Court of First Instance of the City of Manila, against petitioner Fredesvindo S. Alvero and one Margarita
Villarica, alleging two causes of action, to wit, (1) to declare in force the contract of sale, made on October
1, 1940, between said Jose R. Victoriano and Margarita Villarica, of two (2) parcels of land in the Manotoc
subdivision, Balintawak, in the barrio of Calaanan, municipality of Caloocan, Province of Rizal, with a
combined area of 480 square meters, which land was subsequently sold by said Margarita Villarica, in
favor of petitioner Fredesvindo S. Alvero, on December 31, 1944, for the sum of P100,000 in Japanese
military notes; and (2) to declare said subsequent sale null and void.

On July 7, 1945, Margarita Villarica filed an answer to said complaint, expressly admitting having sold
said land to Fredesvindo S. Alvero, for P100,000, in December, 1944, due to the imperative necessity of
raising funds with which to provide for herself and family, and that she did not remember the previous
sale; at the same time, offering to repurchase said land from Fredesvindo S. Alvero in the sum of P5,000,
but that the latter refused to accept the offer.
On July 13, 1945, Fredesvindo S. Alvero, in answering said complaint, denied the allegations made
therein, and claimed exclusive ownership of the land in question, and at the same time set up a
counterclaim and cross-claim in his answer, demanding from Jose R. Victoriano a P200 monthly rent on
said property, beginning from February, 1945, plus P2,000 as damages.

On July 21, 1945, Jose R. Victoriano filed an answer to said counterclaim, denying Fredesvindo S.
Alvero's alleged ownership over said land, and the other allegations contained in Alvero's answer.

After the trial of the case before the Hon. Mariano L. de la Rosa, Judge of the Court of First Instance of
the City of Manila, one of the respondents in this case, on November 16, 1945, said respondent judge
rendered his decision, in which it was declared that the two (2) parcels of land in question, with a
combined area of 480 square meter had been sold by Margarita Villarica to Jose R. Victoriano, since
October 1, 1940, for the sum of P6,000, on the condition that the purchaser should make a down payment
of P1,700, and a monthly payment of P76.86 in 120 equal monthly installments; that Jose R. Victoriano
continued making said monthly payments until December, 1941t, but that owing to the war-time
conditions then existing, Margarita Villarica agreed verbally to suspend such payments until the
restoration of peace; that immediately after said sale of said land to him, Jose R. Victoriano took
possession thereof and made improvements thereon to the amount of P800, and continued occupying
said property until December, 1944, when he abandoned the same to go to evacuation places, but
returned thereto in February, 1945; that Margarita Villarica, having forgotten the sale of said land to Jose
R. Victoriano, sold the same for P100,000 in Japanese military notes, on December 31, 1944, to
Fredesvindo S. Alvero, but afterwards offered to repurchase said property from him, for the sum of
P8,000 in genuine Philippine currency, after liberation; that Fredesvindo S. Alvero presented the deed of
sale, executed in his favor, to the Register of Deeds of the City of Manila, on January 3, 1945, and took
possession of said property in December, 1944, but afterwards found Jose R. Victoriano in the premises
in February, 1945; that in the contract of sale executed by Margarita Villarica, in favor of Jose R:
Victoriano, it was agreed that, upon failure of the purchaser to make payments of three (3) successive
monthly installments, the vendor would be free to sell the property again, forfeiting the payments made,
except in case of force majeure; that there was really a verbal agreement between Margarita Villarica and
Jose R. Victoriano, made in February, 1942, for the suspension of the payment of the monthly
installments until the restoration of peace; and that although Jose R. Victoriano had presented the deed of
sale, executed in his favor, to the Register of Deeds, in Pasig, Rizal, like Fredesvindo S. Alvero, he had
also failed to secure the transfer of title to his name. And considering that Jose R. Victoriano's document
was older than that of Fredesvindo S. Alvero, and that he had taken possession of said property, since
October 1, 1940, the respondent judge rendered his decision in favor of Jose R. Victoriano, adjudging to
him the title over the property in question, including all the improvements existing thereon, and dismissed
the counterclaim.

On November 28, 1945, Fredesvindo S. Alvero was notified of said decision; and on December 27, 1945,
he filed a petition for reconsideration and new trial, which was denied on January 3, 1946; and of said
order he was notified on January 7, 1946.

On January 8, 1946, Fredesvindo S. Alvero filed his notice of appeal and record on' appeal
simultaneously in the lower court, without filing the P60 appeal bond.

On January 14, 1946, Jose R. Victoriano filed a petition to dismiss the appeal, and at the same time,
asked for the execution of the judgment.

On January 15, 1946, Fredesvindo S. Alvero filed an opposition to said motion to dismiss, alleging that on
the very same day, January 15, 1946, said appeal bond for P60 had been actually filed, and alleged as an
excuse, for not filing the said appeal bond, in due time, the illness of his lawyer's wife, who died on
January 10, 1946, and buried the following day.

On January 17, 1946, the respondent judge, Hon. Mariano L. de la Rosa, ordered the dismissal of the
appeal, declaring that, although the notice of appeal and record on appeal had been filed in due time, the
P60-appeal bond was filed too late.
On January 23, 1946, Fredesvindo S. Alvero filed a petition for the reconsideration of the said order dated
January 17, 1946, dismissing his appeal; and said petition for reconsideration was denied on January 29,
1946. Hence, this petition for certiorari.

On February 11, 1946, the respondents filed their answer to the petition for certiorari, alleging (1) that said
petition is defective in form as well as in substance; (2) that there has been no excusable negligence, on
the part of the petitioner, or grave abuse of discretion on the part of the respondent judge, in the instant
case.

As already stated, the decision rendered by the respondent judge, Hon. Mariano L. de la Rosa, was dated
November 16, 1945, of which counsel for Fredesvindo S. Alvero was notified on November 28, 1945; that
his motion for reconsideration and new trial was filed on December 27, 1945, and denied on January 3,
1946, and that said counsel for Alvero was notified of said order on January 7, 1946; and that he filed his
notice of appeal and record on appeal the following day, to wit, January 8, 1946, and that the P60-appeal
bond was filed only on January 15, 1946.

According to the computation erroneously made by the trial court, the last day for filing and perfecting the
appeal, in this case, was January 8, 1946, on which date, Fredesvindo S. Alvero should have filed his (1)
notice of appeal, (2) record on appeal, and (3) appeal bond. But the P60-appeal bond was filed only on
January 15, 1946.

Failure to perfect the appeal, within the time prescribed by the rules of court, will cause the judgment to
become final, and the certification of the record on appeal thereafter, cannot restore the jurisdiction which
has been lost. (Roman Catholic Bishop of Tuguegarao vs. Director of Lands, 34 Phil., 623; Estate of
Cordoba and Zarate vs. Alabado, 34 Phil., 920; and Bermudez vs. Director of Lands, 36 Phil., 774.)

The period within which the record on appeal and appeal bond should be perfected and filed may,
however, be extended by order of the court, upon application made, prior to the expiration of the original
period. (Layda vs. Legaspi, 39 Phil., 83.)

Rules of courts, promulgated by authority of law, have the force and effect of law; and rules of court
prescribing the time within which certain acts must be done, or certain proceedings taken, are considered
absolutely indispensable to the prevention of needless delays and to the orderly and speedy discharge of
judicial business. (Shioji vs. Harvey, 43 Phil., 333.)

Strict compliance with the rules of court has been held mandatory and imperative, so that failure to pay
the docket fee in the Supreme Court, within the period fixed for that purpose, will cause the dismissal of
the appeal. (Salaveria vs. Albindo, 39 Phil., 922.) In the same manner, on failure of the appellant in a civil
case to serve his brief, within the time prescribed by said rules, on motion of the appellee and notice to
the appellant, or on its own motion, the court may dismiss the appeal. (Shioji vs. Harvey, 43 Phil., 333.)

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

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

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

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

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

It is futile to speak of hospitals, doctors and nurses to minister alone to the needs of the sick and the
dying, who are dearest to us, for our reasoning powers are of little avail when sorrow or despair rages
within.

But human laws are inflexible and no personal consideration should stand in the way of performing a legal
duty.

The attorney for petitioner Fredesvindo S. Alvero could have asked for an extension of time, within which
to file and perfect his appeal, in the court below; but he had failed to do so, and he must bear the
consequences of his act. A strict observance of the rules of court, which have been considered
indispensable to the prevention of needless delays and to the orderly and speedy dispatch of judicial
business, is an imperative necessity.

It may not be amiss to state in this connection that no irreparable damage has been caused to the
petitioner Fredesvindo S. Alvero, as Margarita Villarica, the vendor to the two, of the land in question, has
shown readiness to repair the damage done.

No showing having been made that there had been merely an excusable negligence, on the part of the
attorney for petitioner Fredesvindo S. Alvero, and that there had been grave abuse of sound judicial
discretion, on the part of the respondent judge, the petition for certiorari filed in this case, is, therefore,
hereby dismissed, without costs. So ordered.

Moran, C.J., Ozaeta, Paras, Jaranilla, Feria, Pablo, Perfecto, Hilado, Bengzon and Briones JJ., concur.

C. Substantive law vis-à-vis remedial law

 Bustos v. Lucero, G.R. No. L-2086, March 8, 1949

EN BANC

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

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

Acting Provincial Fiscal Albino L. Figueroa and Assistant Provincial Fiscal Marcelo L. Mallari for
respondent.

SYLLABUS

1. CRIMINAL PROCEDURE; PRELIMINARY INVESTIGATION; RIGHT OF CONFRONTATION NOT

APPLICABLE TO PRELIMINARY INVESTIGATION. — The constitutional right of an accused to be
confronted by the witnesses against him does not apply to preliminary hearings; nor will the absence of a
preliminary examination be an infringement of his right to confront witnesses. As a matter of fact,
preliminary investigation may be done away with entirely without infringing the constitutional right of an
accused under the due process clause to a fair trial. (Dequito and Saling Buhay vs. Arellano, L-1336, May
28, 1948.)

2. CRIMINAL PROCEDURE, RULES OF; SECTION 11 OF RULES 108 AS AN ADJECTIVE LAW. —

Section 11 of Rule 108, like its predecessors, is an adjective law and not a substantive law or substantive
right.

3. ID.; SUBSTANTIVE LAW AND ADJECTIVE LAW, DEFINED AND DISTINGUISHED. — Substantive
law creates substantive rights and the two terms in this respect may be said to be synonymous.
Substantive rights is a term which includes those rights which one enjoys under the legal system prior to
the disturbance of normal relations. (60 C. J., 980.) Substantive law is that part of the law which creates,
defines and regulates rights, or which regulates the rights and duties which give rise to a cause of action;
that part of the law which courts are established to administer; as opposed to adjective or remedial law,
which prescribes the method of enforcing rights or obtains redress for their invasion.

4. ID.; ID.; — As applied to criminal law, substantive law is that which declares what acts are crimes and
prescribes the punishment for committing them, as distinguished from the procedural law which provides
or regulates the steps by which one who commits a crime is to be punished.

5. ID.; PRELIMINARY INVESTIGATION AS REMEDIAL IN NATURE. — Preliminary investigation is

eminently and essentially remedial; it is the first step taken in a criminal prosecution.

6. ID.; SECTION 11 OF RULE 108 AS PROCEDURAL. — As a rule of evidence, section 11 of Rule 108
is also procedural. Evidence — which is "the mode and manner of proving the competent facts and
circumstances on which a party relies to establish the fact in dispute in judicial proceedings" — is
identified with and forms part of the method by which, in private law, rights are enforced and redress
obtained, and, in criminal law, a law transgressor is punished. Criminal procedure refers to pleading,
evidence and practice. (State vs. Capaci, 154 So., 419; 179 La., 462.) The entire rules of evidence have
been incorporated into the Rules of Court. We can not tear down section 11 of Rule 108 on constitutional
grounds without throwing out the whole code of evidence embodied in these Rules.

7. ID.; PRELIMINARY INVESTIGATION; CURTAILMENT OF ACCUSED'S RIGHT TO CROSS-EXAMINE

WITNESSES, EFFECT OF. — The curtailment of the right of an accused in a preliminary investigation to
cross-examine the witnesses who had given evidence for his arrest is not of such importance as to offend
against the constitutional inhibition. Preliminary investigation is not an essential part of due process of
law. It may be suppressed entirely, and if this may be done, mere restriction of the privilege formerly
enjoyed thereunder can not be held to fall within the constitutional prohibition.

8. ID.; ID.; DENIAL OF ACCUSED TO CROSS-EXAMINE WITNESSES, DUE PROCESS OF LAW IS

NOT INFRINGED BY. — While section 11 of Rule 108 denies to the defendant the right to cross-examine
witnesses in a preliminary investigation, his right to present his witnesses remains unaffected, and his
constitutional right to be informed of the charges against him both at such investigation and at the trial is
unchanged. In the latter stage of the proceedings, the only stage where the guaranty of due process
comes into play, he still enjoys to the full extent the right to be confronted by and to cross-examine the
witnesses against him. The degree of importance of a preliminary investigation to an accused may be
gauged by the fact that this formality is frequently waived.

9. WORDS AND PHRASES; "REMEDY" AND "SUBSTANTIVE RIGHT" EXPLAINED AND

DISTINGUISHED. — The distinction between "remedy" and "substantive right" is incapable of exact
definition. The difference is somewhat a question of degree. It is difficult to draw a line in any particular
case beyond which legislative power over remedy and procedure can pass without touching upon the
substantive rights of parties affected, as it is impossible to fix that boundary by general condition.

10. CONSTITUTIONAL LAW; SUPREME COURT; EXTENT AND SCOPE OF THE POWER TO
PROMULGATE RULES OF PLEADING AND PRACTICE. — That the Supreme Court in making rules
should step on substantive rights, and the Constitution must be presumed to tolerate if not to expect such
incursion as does not affect the accused in a harsh and arbitrary manner or deprive him of a defense, but
operates only in a limited and unsubstantial manner to his disadvantage. For the court's power is not
merely to compile, revise or codify the rules of procedure existing at the time of the Constitution's
approval. This power is "to promulgate rules concerning pleading, practice, and procedure in all courts,"
which is a power to adopt a general, complete and comprehensive system of procedure, adding new and
different rules without regard to their source and discarding old ones.

DECISION

TUASON, J p:

The petitioner herein, an accused in a criminal case, filed a motion with the Court of First Instance of
Pampanga after he had been bound over to that court for trial, praying that the record of the case be
remanded to the justice of the peace court of Masantol, the court of origin, in order that the petitioner
might cross-examine the complainant and her witnesses in connection with their testimony, on the
strength of which warrant was issued for the arrest of the accused. The motion was denied and that
denial is the subject matter of this proceeding.

According to the memorandum submitted by the petitioner's attorney to the Court or First Instance in
support of his motion, the accused, assisted by counsel, appeared at the preliminary investigation. In that
investigation, the justice of the peace informed him of the charges and asked him if he pleaded guilty or
not guilty, upon which he entered the plea of not guilty. "Then his counsel moved that the complainant
present her evidence so that she and her witnesses could be examined and cross-examined in the
manner and form provided by law." The fiscal and the private prosecutor objected, invoking section 11 of
Rule 108, and the objection was sustained. "In view thereof, the accused's counsel announced his
intention to renounce his right to present evidence," and the justice of the peace forwarded the case to
the court of first instance.

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

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

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

Upon the foregoing considerations, the present petition is dismissed with costs against the petitioner.

Moran, C.J., Paras, Pablo, Bengzon and Briones, JJ., concur.

Separate Opinions

FERIA, J., dissenting:

I am sorry to dissent from the decision.

The petitioner in the present case appeared at the preliminary investigation before the Justice of the
Peace of Masantol, Pampanga, and after being informed of the criminal charges against him and asked if
he pleaded guilty or not guilty, pleaded not guilty. "Then the counsel for the petitioner moved that the
complainant present her evidence so that her witnesses could be examined and cross-examined in the
manner and form provided by law." The fiscal and the private prosecutor objected to petitioner's motion
invoking section 11, Rule 108, and the objection was sustained. In view thereof, the accused refused to
present his evidence, and the case was forwarded to the Court of First Instance of Pampanga.

The counsel for the accused petitioner filed a motion with the Court of First Instance praying that the
record of the case be remanded to the justice of the peace of Masantol, in order that the petitioner might
cross-examine the complainant and her witnesses in connection with their testimony. The motion was
denied, and for that reason the present special civil action of mandamus was instituted.

It is evident that the refusal or waiver of the petitioner to present his evidence during the investigation in
the justice of the peace, was not a waiver of his alleged right to be confronted with and cross-examine the
witnesses for the prosecution, that is, of the preliminary investigation provided for in General Order No. 58
and Act No. 194, to which he claims to be entitled, as shown by the fact that, as soon as the case was
forwarded to the Court of First Instance, counsel for the petitioner filed a motion with said court to remand
the case to the Justice of the Peace of Masantol ordering the latter to make said preliminary investigation.
His motion having been denied, the petitioner has filed the present action in which he squarely attacks the
validity of the provision of section 11, Rule 108, on the ground that it deprives him of the right to be
confronted with and cross-examine the witnesses for the prosecution, contrary to the provision of section
13, Article VIII, of the Constitution.

In the case of Dequito and Saling Buhay vs. Arellano, No. L-1336, we did not discuss and decide the
question of validity or constitutionality of said section 11 in connection with section 1 of Rule 108, because
that question was not raised therein, and we merely construed the provisions on preliminary investigation
of Rule 108. In said case the writer of this dissenting-opinion said:

"It may not be amiss to state that, modesty aside, the writer of this dissenting opinion, then a practising
attorney, was the one who prepared the draft of the Rules of Court relating to criminal procedure, and the
provisions on preliminary investigation in the draft were the same as those of the old law, which gave the
defendant the right to be confronted with and to cross-examine the witnesses for the prosecution. But the
Supreme Court approved and adopted in toto the draft, except the part referring to preliminary
investigation which it modified, by suppressing said right and enacting, in its stead, the provisions of
section 11 of Rule 108 in its present form. I prefer the old to the new procedure. But I can not subscribe to
the majority decision, which is a judicial legislation and makes the exercise of the right of a defendant to
be confronted with and cross-examine the witnesses against him, to depend entirely upon the whim or
caprice of a judge or officer conducting the preliminary investigation."

But now the question of the validity of said section 11, Rule 108, is squarely presented to this Court for
decision, we have perforce to pass upon it.

Section 13, Article VIII, of the Constitution prescribes that "the Supreme Court shall have power to
promulgate rules concerning pleading, practice and procedure in all courts, but said rules shall not
diminish, increase or modify substantive rights." The Constitution added the last part of the above-quoted
constitutional precept in order to emphasize that the Supreme Court is not empowered, and therefore can
not enact or promulgate substantive laws or rules, for it is obvious that rules which diminish, increase or
modify substantive rights, are substantive and not adjective laws or rules concerning pleading, practice
and procedure.

It does not require an elaborate argument to show that the right granted by law upon a defendant to be
confronted with and cross- examine the witnesses for the prosecution in preliminary investigation as well
as in the trial of the case is a substantive right. It is based on human experience, according to which a
person is not prone to tell a lie against another in his presence, knowing fully well that the latter may
easily contradict him, and that the credibility of a person or veracity of his testimony may be efficaciously
tested by a cross-examination. It is a substantive right because by exercising it, an accused person may
show, even if he has no evidence in his favor, that the testimonies of the witnesses for the prosecution
are not sufficient to indicate that there is a probability that a crime has been committed and he is guilty
thereof, and therefore the accused is entitled to be released and not committed to prison, and thus avoid
an open and public accusation of crime, the trouble, expense, and anxiety of a public trial, and the
corresponding anxiety or moral suffering which a criminal prosecution always entails.

This right is not a constitutional but a statutory right granted by law to an accused outside of the City of
Manila because of the usual delay in the final disposition of criminal cases in provinces. The law does not
grant such right to a person charged with offenses triable by the Court of First Instance in the City of
Manila, because of the promptness, actual or presumptive, with which criminal cases are tried and
disposed of in the Court of First Instance of said city. But this right, though not a constitutional one, can
not be modified, abridged, or diminished by the Supreme Court, by virtue of the rule making power
conferred upon this Court by the Constitution.

Since the provisions of section 11 of Rule 108 as construed by this Court in several cases, (in which the
question of constitutionality or validity of said section had not been squarely raised) do away with the
defendant's right under discussion, it follows that said section 11 diminishes the substantive right of the
defendant in criminal case, and this Court has no power or authority to promulgate it and therefore is null
and void.

The fact that the majority of this Court has ruled in the above cited case of Dequito and Saling Buhay vs.
Arellano, that the inferior or justice of the peace courts have discretion to grant a defendant's request to
have the witnesses for the prosecution recalled to testify again in the presence of the defendant and be
cross-examined by the latter, does not validate said provision; because to make the exercise of an
absolute right discretionary or dependent upon the will or discretion of the court or officer making the
preliminary investigation, is evidently to diminish or modify it.

Petition is therefore granted.

D. Procedural laws applicable to actions pending at the time of the promulgation

 Panay Railways Inc. v. Heva Management and Development Corporation, et al., G.R. No.
154061, January 25, 2012
[G.R. No. 154061. January 25, 2012.]

PANAY RAILWAYS, INC., petitioner, vs. HEVA MANAGEMENT and DEVELOPMENT CORPORATION,
PAMPLONA AGRO-INDUSTRIAL CORPORATION, and SPOUSES CANDELARIA DAYOT and
EDMUNDO DAYOT, respondents.

DECISION

SERENO, J p:

The present Petition stems from the dismissal by the Regional Trial Court (RTC) of Iloilo City of a Notice
of Appeal for petitioner's failure to pay the corresponding docket fees.

The facts are as follows:

On 20 April 1982, petitioner Panay Railways, Inc., a government-owned and controlled corporation,
executed a Real Estate Mortgage Contract covering several parcels of lands, including Lot No. 6153, in
favor of Traders Royal Bank (TRB) to secure P20 million worth of loan and credit accommodations.
Petitioner excluded certain portions of Lot No. 6153: that already sold to Shell Co., Inc. referred to as
6153-B, a road referred to as 6153-C, and a squatter area known as 6153-D. 1

Petitioner failed to pay its obligations to TRB, prompting the bank to extra-judicially foreclose the
mortgaged properties including Lot No. 6153. On 20 January 1986, a Certificate of Sale was issued in
favor of the bank as the highest bidder and purchaser. Consequently, the sale of Lot No. 6153 was
registered with the Register of Deeds on 28 January 1986 and annotated at the back of the transfer
certificates of title (TCT) covering the mortgaged properties.

Thereafter, TRB caused the consolidation of the title in its name on the basis of a Deed of Sale and an
Affidavit of Consolidation after petitioner failed to exercise the right to redeem the properties. The
corresponding TCTs were subsequently issued in the name of the bank. STaAcC

On 12 February 1990, TRB filed a Petition for Writ of Possession against petitioner. During the
proceedings, petitioner, through its duly authorized manager and officer-in-charge and with the assistance
of counsel, filed a Manifestation and Motion to Withdraw Motion for Suspension of the Petition for the
issuance of a writ of possession. 2 The pertinent portions of the Manifestation and Motion state:

3. That after going over the records of this case and the case of Traders Royal Bank vs. Panay Railway,
Inc., Civil Case No. 18280, PRI is irrevocably withdrawing its Motion for Suspension referred to in
paragraph 1 above, and its Motion for Reconsideration referred in paragraph 2 above and will accept and
abide by the September 21, 1990 Order denying the Motion for Suspension;

4. That PRI recognizes and acknowledges petitioner (TRB) to be the registered owner of Lot 1-A; Lot
3834; Lot 6153; Lot 6158; Lot 6159, and Lot 5 covered by TCT No. T-84233; T-84234; T-84235; T-84236;
T-84237, T-84238 and T-45724 respectively, free of liens and encumbrances, except that portion sold to
Shell Co. found in Lot 5. That Petitioner (TRB) as registered owner is entitled to peaceful ownership and
immediate physical possession of said real properties.

5. That PRI further acknowledges that the Provincial Sheriff validly foreclosed the Real Estate Mortgage
erected by PRI due to failure to pay the loan of P20,000,000.00. That TRB was the purchaser of these
lots mentioned in paragraph 4 above at Sheriff's Auction Sale as evidenced by the Certificate of Sale
dated January 20, 1986 and the Certificates of Titles issued to Petitioner;

6.That PRI further manifests that it has no past, present or future opposition to the grant of the Writ of
Possession to TRB over the parcels of land mentioned in paragraph 4 above and subject of this Petition
and even assuming "arguendo" that it has, PRI irrevocably waives the same. That PRI will even assist
TRB in securing possession of said properties as witness against squatters, illegal occupants, and all
other possible claimants;

7. That upon execution hereof, PRI voluntarily surrenders physical possession and control of the
premises of these lots to TRB, its successors or its assigns, together with all the buildings, warehouses,
offices, and all other permanent improvements constructed thereon and will attest to the title and
possession of petitioner over said real properties. (Emphasis supplied)

TCT No. T-84235 mentioned in the quoted portion above is Lot No. 6153, which is under dispute. TCDHIc

It was only in 1994 that petitioner realized that the extrajudicial foreclosure included some excluded
properties in the mortgage contract. Thus, on 19 August 1994, it filed a Complaint for Partial Annulment of
Contract to Sell and Deed of Absolute Sale with Addendum; Cancellation of Title No. T-89624; and
Declaration of Ownership of Real Property with Reconveyance plus Damages. 3

It then filed an Amended Complaint 4 on 4 January 1995 and again filed a Second Amended Complaint 5
on 8 December 1995.

Meanwhile, respondents filed their respective Motions to Dismiss on these grounds: (1) petitioner had no
legal capacity to sue; (2) there was a waiver, an abandonment and an extinguishment of petitioner's claim
or demand; (3) petitioner failed to state a cause of action; and (4) an indispensable party, namely TRB,
was not impleaded.

On 18 July 1997, the RTC issued an Order 6 granting the Motion to Dismiss of respondents. It held that
the Manifestation and Motion filed by petitioner was a judicial admission of TRB's ownership of the
disputed properties. The trial court pointed out that the Manifestation was executed by petitioner's duly
authorized representative with the assistance of counsel. This admission thus operated as a waiver
barring petitioner from claiming otherwise.

On 11 August 1997, petitioner filed a Notice of Appeal without paying the necessary docket fees.
Immediately thereafter, respondents filed a Motion to Dismiss Appeal on the ground of nonpayment of
docket fees.

In its Opposition, 7 petitioner alleged that its counsel was not yet familiar with the revisions of the Rules of
Court that became effective only on 1 July 1997. Its representative was likewise not informed by the court
personnel that docket fees needed to be paid upon the filing of the Notice of Appeal. Furthermore, it
contended that the requirement for the payment of docket fees was not mandatory. It therefore asked the
RTC for a liberal interpretation of the procedural rules on appeals.

On 29 September 1997, the RTC issued an Order 8 dismissing the appeal citing Sec. 4 of Rule 41 9 of
the Revised Rules of Court.

Petitioner thereafter moved for a reconsideration of the Order 10 alleging that the trial court lost
jurisdiction over the case after the former had filed the Notice of Appeal. Petitioner also alleged that the
court erred in failing to relax procedural rules for the sake of substantial justice. ScTIAH

On 25 November 1997, the RTC denied the Motion. 11

On 28 January 1998, petitioner filed with the Court of Appeals (CA) a Petition for Certiorari and
Mandamus under Rule 65 alleging that the RTC had no jurisdiction to dismiss the Notice of Appeal, and
that the trial court had acted with grave abuse of discretion when it strictly applied procedural rules.

On 29 November 2000, the CA rendered its Decision 12 on the Petition. It held that while the failure of
petitioner to pay the docket and other lawful fees within the reglementary period was a ground for the
dismissal of the appeal pursuant to Sec. 1 of Rule 50 of the Revised Rules of Court, the jurisdiction to do
so belonged to the CA and not the trial court. Thus, appellate court ruled that the RTC committed grave
abuse of discretion in dismissing the appeal and set aside the latter's assailed Order dated 29 September
1997.

Thereafter, respondents filed their respective Motions for Reconsideration.

It appears that prior to the promulgation of the CA's Decision, this Court issued Administrative Matter
(A.M.) No. 00-2-10-SC which took effect on 1 May 2000, amending Rule 4, Sec. 7 and Sec. 13 of Rule 41
of the 1997 Revised Rules of Court. The circular expressly provided that trial courts may, motu proprio or
upon motion, dismiss an appeal for being filed out of time or for nonpayment of docket and other lawful
fees within the reglementary period. Subsequently, Circular No. 48-2000 13 was issued on 29 August
2000 and was addressed to all lower courts.

By virtue of the amendment to Sec. 41, the CA upheld the questioned Orders of the trial court by issuing
the assailed Amended Decision 14 in the present Petition granting respondents' Motion for
Reconsideration.

The CA's action prompted petitioner to file a Motion for Reconsideration alleging that SC Circular No. 48-
2000 should not be given retroactive effect. It also alleged that the CA should consider the case as
exceptionally meritorious. Petitioner's counsel, Atty. Rexes V. Alejano, explained that he was yet to
familiarize himself with the Revised Rules of Court, which became effective a little over a month before he
filed the Notice of Appeal. He was thus not aware that the nonpayment of docket fees might lead to the
dismissal of the case.

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

Hence, this Petition.

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

The Petition has no merit.

Statutes and rules regulating the procedure of courts are considered applicable to actions pending and
unresolved at the time of their passage. Procedural laws and rules are retroactive in that sense and to
that extent. The effect of procedural statutes and rules on the rights of a litigant may not preclude their
retroactive application to pending actions. This retroactive application does not violate any right of a
person adversely affected. Neither is it constitutionally objectionable. The reason is that, as a general
rule, no vested right may attach to or arise from procedural laws and rules. It has been held that "a person
has no vested right in any particular remedy, and a litigant cannot insist on the application to the trial of
his case, whether civil or criminal, of any other than the existing rules of procedure." 16 More so when, as
in this case, petitioner admits that it was not able to pay the docket fees on time. Clearly, there were no
substantive rights to speak of when the RTC dismissed the Notice of Appeal.

The argument that the CA had the exclusive jurisdiction to dismiss the appeal has no merit. When this
Court accordingly amended Sec. 13 of Rule 41 through A.M. No. 00-2-10-SC, the RTC's dismissal of the
action may be considered to have had the imprimatur of the Court. Thus, the CA committed no reversible
error when it sustained the dismissal of the appeal, taking note of its directive on the matter prior to the
promulgation of its Decision. HEITAD
As early as 1932, in Lazaro v. Endencia, 17 we have held that the payment of the full amount of the
docket fees is an indispensable step for the perfection of an appeal. The Court acquires jurisdiction over
any case only upon the payment of the prescribed docket fees. 18

Moreover, the right to appeal is not a natural right and is not part of due process. It is merely a statutory
privilege, which may be exercised only in accordance with the law. 19

We have repeatedly stated that the term "substantial justice" is not a magic wand that would automatically
compel this Court to suspend procedural rules. Procedural rules are not to be belittled or dismissed
simply because their non-observance may result in prejudice to a party's substantive rights. Like all other
rules, they are required to be followed, except only for the most persuasive of reasons when they may be
relaxed to relieve litigants of an injustice not commensurate with the degree of their thoughtlessness in
not complying with the procedure prescribed. 20

We cannot consider counsel's failure to familiarize himself with the Revised Rules of Court as a
persuasive reason to relax the application of the Rules. It is well-settled that the negligence of counsel
binds the client. This principle is based on the rule that any act performed by lawyers within the scope of
their general or implied authority is regarded as an act of the client. Consequently, the mistake or
negligence of the counsel of petitioner may result in the rendition of an unfavorable judgment against it.
21

WHEREFORE, in view of the foregoing, the Petition is DENIED for lack of merit.

SO ORDERED.

E. Liberal construction of procedural rules

 Felix Martos, et al. v. New San Jose Builders, Inc., G.R. No. 192650, October 24, 2012

Questioned in this Petition for Review is the July 31, 2009 Decision 1 of the Court of Appeals (CA) and its
June 17, 2010 Resolution, 2 which reversed and set aside the July 30, 2008 Decision 3 and October 28,
2008, Resolution 4 of the National Labor Relations Commission (NLRC); and reinstated the May 23, 2003
Decision 5 of the Labor Arbiter (LA). The dispositive portion of the CA Decision reads:

WHEREFORE, decision is hereby rendered, as follows:

1. Declaring the complainant Felix Martos was illegally dismissed and ordering respondent New San Jose
Builders, Inc. to pay him his separation pay, backwages, salary differentials, 13th month pay, service
incentive leave pay, and attorney's fees in the total amount of TWO HUNDRED SIXTY THOUSAND SIX
HUNDRED SIXTY ONE PESOS and 50/1000 (P260,661.50).

The awards for separation pay, backwages and the corresponding attorney's fees are subject to further
computation until the decision in this case becomes final and executory; and

2. Dismissing the complaints/claim of the other complainants without prejudice.

SO ORDERED. 6

The Facts

The factual and procedural antecedents were succinctly summarized by the CA as follows:

New San Jose Builders, Inc. (hereafter petitioner) is a domestic corporation duly organized and existing
under the laws of the Philippines and is engaged in the construction of road, bridges, buildings, and low
cost houses primarily for the government. One of the projects of petitioner is the San Jose Plains Project
(hereafter SJPP), located in Montalban, Rizal. SJPP, which is also known as the "Erap City" calls for the
construction of low cost housing, which are being turned over to the National Housing Authority to be
awarded to deserving poor families.

Private respondents alleged that, on various dates, petitioner hired them on different positions, hereunder
specified:

Sometime in 2000, petitioner was constrained to slow down and suspend most of the works on the SJPP
project due to lack of funds of the National Housing Authority. Thus, the workers were informed that many
of them [would] be laid off and the rest would be reassigned to other projects. Juan Villaber, Terso Garay,
Rowell Batta, Pastor Pantig, Rafael Villa, and Melvin Garay were laid off. While on the other hand, Felix
Martos, Ariel Dominguez, Greg Bisonia, Allan Caballera, Orlando Limos, Mandy Mamalateo, Eric
Castrence, Anthony Molina, and Roy Silva were among those who were retained and were issued new
appointment papers to their respective assignments, indicating therein that they are project employees.
However, they refused to sign the appointment papers as project employees and subsequently refused to
continue to work.

On different dates, three (3) Complaints for Illegal Dismissal and for money claims were filed before the
NLRC against petitioner and Jose Acuzar, by private respondents who claimed to be the former
employees of petitioner, to wit:

1. Complaint dated March 11, 2002, entitled "Felix Martos, et al. vs. NSJBI", docketed as NLRC-NCR
Case No. 03-01639-2002;

2. Complaint dated July 9, 2002, entitled "Jimmy Campana, et al. vs. NSJBI," docketed as NLRC-NCR
Case No. 07-04969-2002;

3. Complaint dated July 4, 2002, entitled "Greg Bisonia, et al. vs. NSJBI", docketed as NLRC-NCR Case
No. 07-02888-2002.

Petitioner denies that private respondents were illegally dismissed, and alleged that they were project
employees, whose employments were automatically terminated upon completion of the project for which
they were hired. On the other hand, private respondents claim that petitioner hired them as regular
employees, continuously and without interruption, until their dismissal on February 28, 2002.

Subsequently, the three Complaints were consolidated and assigned to Labor Arbiter Facundo Leda. 7

Ruling of the Labor Arbiter

As earlier stated, on May 23, 2003, the LA handed down a decision declaring, among others, that
petitioner Felix Martos (Martos) was illegally dismissed and entitled to separation pay, backwages and
other monetary benefits; and dismissing, without prejudice, the complaints/claims of the other
complainants (petitioners).

Ruling of the NLRC

Both parties appealed the LA decision to the NLRC. Petitioners appealed that part which dismissed all the
complaints, without prejudice, except that of Martos. On the other hand, New San Jose Builders, Inc.
(respondent) appealed that part which held that Martos was its regular employee and that he was illegally
dismissed.

On July 30, 2008, the NLRC resolved the appeal by dismissing the one filed by respondent and partially
granting that of the other petitioners. The dispositive portion of the NLRC decision reads as follows:
WHEREFORE, premises considered, respondent's appeal is DISMISSED for lack of merit. The appeal of
the complainants is, however, PARTIALLY GRANTED by modifying the 23 May 2003 Decision of the
Labor Arbiter Facundo L. Leda, in that, respondents are ordered to reinstate all the complainants to their
former positions, without loss of seniority rights and with full backwages, counted from the time their
compensation was withheld from them until actual reinstatement.

Respondents are likewise ordered to pay complainants their salary differentials, service incentive leave
pay, and 13th month pay, using, as basis, the computation made on the claims of complainant Felix
Martos.

In all other aspects, the Decision is AFFIRMED.

SO ORDERED. 8

Ruling of the CA

After the denial of its motion for reconsideration, respondent filed before the CA a petition for certiorari
under Rule 65 of the 1997 Rules of Civil Procedure, as amended, raising the following issues:

I) The public respondent has committed grave abuse of discretion in holding that the private respondents
were regular employees and, thus, have been illegally dismissed.

II) The public respondent has committed grave abuse of discretion in reviving the complaints of the other
private respondents despite their failure to verify the same.

III) The public respondent has committed grave abuse of discretion when it upheld the findings of the
Labor Arbiter granting relief in favor of those supposed complainants who did not even render service to
the petitioner and, hence, are not on its payroll.

On July 31, 2009, the CA rendered a decision reversing and setting aside the July 30, 2008 Decision and
the October 28, 2008 Resolution of the NLRC and reinstating the May 23, 2003 Decision of the LA. The
dispositive portion of the CA decision reads:

WHEREFORE, premises considered, the present petition is hereby GRANTED. Accordingly, the assailed
Resolution dated October 28, 2008 of public respondent National Labor Relations Commission is
REVERSED and SET ASIDE, and the Decision dated May 23, 2003 of Labor Arbiter Facundo L. Leda, is
hereby ordered reinstated.

SO ORDERED. 9

The CA explained that the NLRC committed grave abuse of discretion in reviving the complaints of
petitioners despite their failure to verify the same. Out of the 102 complainants, only Martos verified the
position paper and his counsel never offered any explanation for his failure to secure the verification of
the others. The CA also held that the NLRC gravely abused its discretion when it took cognizance of
petitioners' appeal because Rule 41, Section 1 (h) of the 1997 Rules of Civil Procedure, as amended,
which is suppletory, provides that no appeal may be taken from an order dismissing an action without
prejudice.

Nevertheless, the CA stated that the factual circumstances of Martos' employment and his dismissal from
work could not equally apply to petitioners because they were not similarly situated. The NLRC did not
even bother to look at the evidence on record and inappropriately granted monetary awards to petitioners
who had either denied having filed a case or withdrawn the case against respondent. According to the
CA, the position papers should have covered only those claims and causes of action raised in the
complaint excluding those that might have been amicably settled.
With respect to Martos, the CA ruled that he was a regular employee of respondent and his termination
was illegal. It explained that Martos should have been considered a regular employee because there was
no indication that he was merely a project employee when he was hired. To show otherwise, respondent
should have presented his employment contract for the alleged specific project and the successive
employment contracts for the different projects or phases for which he was hired. In the absence of such
document, he could not be considered such an employee because his work was necessary and desirable
to the respondent's usual business and that he was not required to sign any employment contract fixing a
definite period or duration of his engagement. Thus, Martos already attained the status of a regular
employee. Moreover, the CA noted that respondent did not report the termination of Martos' supposed
project employment to the Department of Labor and Employment (DOLE), as required under Department
Order No. 19.

Being a regular employee, the CA concluded that he was constructively dismissed when he was asked to
sign a new appointment paper indicating therein that he was a project employee and that his appointment
would be co-terminus with the project.

Not in conformity with the CA decision, petitioners filed this petition anchored on the following:

ASSIGNMENT OF ERRORS

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS AND THE LABOR ARBITER BELOW
GRAVELY ERRED IN DISMISSING THE COMPLAINTS OF THE NINETY NINE (99) PETITIONERS
DUE TO FAILURE OF THE LATTER TO VERIFY THEIR POSITION PAPER WHEN, OBVIOUSLY,
SUCH TECHNICALITY SHOULD NOT HAVE BEEN RESORTED TO BY THEM AS IT WILL DEPRIVE
THESE PETITIONERS OF THEIR PROPERTY RIGHT TO WORK.

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS AND THE LABOR ARBITER BELOW
GRAVELY ERRED IN NOT ORDERING THE REINSTATEMENT OF PETITIONER MARTOS AND THE
OTHER 99 PETITIONERS WHEN, OBVIOUSLY, AND AS FOUND BY THEM, THE DISMISSAL OF
MARTOS IS ILLEGAL WHICH WOULD WARRANT HIS REINSTATEMENT AND THE GRANT TO HIM
OF FULL BACKWAGES AND OTHER EMPLOYEES' BENEFITS.

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT
ORDERING THE RESPONDENTS TO PAY THE PETITIONERS ACTUAL, MORAL AND EXEMPLARY
DAMAGES.

Position of Petitioners

Petitioners basically argue that the CA was wrong in affirming the dismissal of their complaints due to
their failure to verify their position paper. They insist that the lack of verification of a position paper is only
a formal and not a jurisdictional defect. Hence, it was not fatal to their cause of action considering that the
CA could have required them to submit the needed verification.

The CA overlooked the fact that all of them verified their complaints by declaring under oath relevant and
material facts such as their names, addresses, employment status, salary rates, facts, causes of action,
and reliefs common to all of them. The information supplied in their complaints is sufficient to prove their
status of employment and entitlement of their monetary claims. In the adjudication of labor cases, the
adherence to stringent technical rules may be relaxed in the interest of the working man. Moreover,
respondent failed to adduce evidence of payment of their money claims.

Finally, petitioners argue that they and Martos were similarly situated. The award of separation pay
instead of reinstatement to an illegally dismissed employee was improper because the strained relations
between the parties was not clearly established. Moreover, they are entitled to actual, moral and
exemplary damages for respondent's illegal act of violating labor standard laws, the minimum wage law
and the 13th month pay law.

Position of Respondents

On the other hand, respondent principally counters that the CA and the LA 1) did not err in dismissing the
complaints of the 88 petitioners who failed to verify their position paper, without prejudice; 2) correctly
ruled that Martos and the 88 petitioners concerned were not entitled to reinstatement; and 3) correctly
ruled that petitioners were not entitled to an award of actual, moral and exemplary damages.

Petitioners have the propensity to disregard the mandatory provisions of the 2005 Revised Rules of
Procedure of the NLRC (NLRC Rules) which require the parties to submit simultaneously their verified
position papers with supporting documents and affidavits. In the proceedings before the LA, the
complaints of the 99 workers were dismissed because they failed to verify or affix their signatures to the
position paper filed with the LA.

While it is true that the NLRC Rules must be liberally construed and that the NLRC is not bound by the
technicalities of law and procedure, it should not be the first to arbitrarily disregard specific provisions of
the rules which are precisely intended to assist the parties in obtaining just, expeditious and inexpensive
settlement of labor disputes. It was only Felix Martos who verified their position paper and their
memorandum of appeal. It was only he alone who was vigilant in looking after his interest and enforcing
his rights. Petitioners should be considered to have waived their rights and interests in the case for their
consistent neglect and passive attitude.

Moreover, Martos was never authorized by any of his fellow complainants through a special power of
attorney or other document in the proceedings to represent them before the LA and the NLRC. His acts
and verifications were made only in his own personal capacity and did not bind or benefit petitioners.
There is only one logical reason why a majority of them failed to verify their position paper, their appeal
and now their petition: they were not in any way employees of the respondent. They were total strangers
to the respondent. They even refused to identify themselves during the proceedings by their failure to
appear thereat. Hence, it is too late for the others to participate in the fruits, if any, of this litigation.

Finally, the reinstatement being sought by Martos and the others was no longer practicable because of
the strained relation between the parties. Petitioners can no longer question this fact. This issue was
never raised or taken up on appeal before the NLRC. It was only when the petitioners lost in the appeal in
the CA that they first raised the issue of strained relation. Moreover, no proof of actual damages was
presented by the petitioners. There is no clear and convincing evidence on record showing that the
termination of an employee's services had been carried out in an arbitrary, capricious or malicious
manner.

The Court's Ruling

The Court is basically asked to resolve two (2) issues: 1] whether or not the CA was correct in dismissing
the complaints filed by those petitioners who failed to verify their position papers; and 2] whether or not
Martos should be reinstated.

Regarding the first issue, the Court agrees with the respondent.

Sections 4 and 5 of Rule 7 of the 1997 Rules of Civil Procedure provide:

SEC. 4. Verification. — Except when otherwise specifically required by law or rule, pleadings need not be
under oath, verified or accompanied by affidavit.

A pleading is verified by an affidavit that the affiant has read the pleadings and that the allegations therein
are true and correct of his personal knowledge or based on authentic records.

A pleading required to be verified which contains a verification based on "information and belief" or upon
"knowledge, information and belief" or lacks a proper verification, shall be treated as an unsigned
pleading.

SEC. 5. Certification against forum shopping. — The plaintiff or principal party shall certify under oath in
the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed
thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed
any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his
knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or
claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the
same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days
therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere amendment of the
complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice,
unless otherwise provided, upon motion and after hearing. The submission of a false certification or non-
compliance with any of the undertakings therein shall constitute indirect contempt of court, without
prejudice to the corresponding administrative and criminal actions. If the acts of the party or his counsel
clearly constitute willful and deliberate forum shopping, the same shall be ground for summary dismissal
with prejudice and shall constitute direct contempt, as well as a cause for administrative sanctions. . . . .
[Emphases supplied]

The verification requirement is significant, as it is intended to secure an assurance that the allegations in
the pleading are true and correct and not the product of the imagination or a matter of speculation, and
that the pleading is filed in good faith. 10 Verification is deemed substantially complied with when, as in
this case, one who has ample knowledge to swear to the truth of the allegations in the complaint or
petition signs the verification, and when matters alleged in the petition have been made in good faith or
are true and correct. 11

The absence of a proper verification is cause to treat the pleading as unsigned and dismissible. 12

The lone signature of Martos would have been sufficient if he was authorized by his co-petitioners to sign
for them. Unfortunately, petitioners failed to adduce proof that he was so authorized. The complaints of
the other parties in the case of Nellie Vda. De Formoso v. PNB13 suffered a similar fate. Thus:

Admittedly, among the seven (7) petitioners mentioned, only Malcaba signed the verification and
certification of non-forum shopping in the subject petition. There was no proof that Malcaba was
authorized by his co-petitioners to sign for them. There was no special power of attorney shown by the
Formosos authorizing Malcaba as their attorney-in-fact in filing a petition for review on certiorari. Neither
could the petitioners give at least a reasonable explanation as to why only he signed the verification and
certification of non-forum shopping.

The liberal construction of the rules may be invoked in situations where there may be some excusable
formal deficiency or error in a pleading, provided that the same does not subvert the essence of the
proceeding and it at least connotes a reasonable attempt at compliance with the rules. Besides,
fundamental is the precept that rules of procedure are meant not to thwart but to facilitate the attainment
of justice; hence, their rigid application may, for deserving reasons, be subordinated by the need for an
apt dispensation of substantial justice in the normal course. They ought to be relaxed when there is
subsequent or even substantial compliance, consistent with the policy of liberality espoused by Rule 1,
Section 6. 14 Not being inflexible, the rule on verification allows for such liberality. 15

Considering that the dismissal of the other complaints by the LA was without prejudice, the other
complainants should have taken the necessary steps to rectify their procedural mistake after the decision
of the LA was rendered. They should have corrected this procedural flaw by immediately filing another
complaint with the correct verification this time. Surprisingly, they did not even attempt to correct this
technical blunder. Worse, they committed the same procedural error when they filed their appeal 16 with
the NLRC.

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

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

The Court can only do so much for them.

Most probably, as the list 17 submitted is not complete with the information as to when each started and
when each was dismissed there must be some truth in the claim of respondent that those complainants
who failed to affix their signatures in the verification were either not employees of respondent at all or they
simply refused to prosecute their complaints. In its position paper, 18 respondent alleged that, aside from
the four (4) complainants who withdrew their complaints, only 17 out of the more or less 104 complainants
appeared on its records as its former project employees or at least known by it to have worked in one of
its construction projects. From the sworn statements executed by Felix Yortas, 19 Marvin Batta, 20 Lito
Bantillo, 21 Gavino Felix Nicolas, 22 and Romeo Pangacian Martos, 23 they already withdrew their
complaints against respondent. Their status and cause of action not being clear and proven, it is just not
right that these complainants be considered as similarly situated as Martos and entitled to the same
benefits.

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

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

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

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

WHEREFORE, the petition is DENIED.

SO ORDERED.
  Maria Consolacion Rivera-Pascual v. Sps. Marilyn Lim, et al., G.R. No.191837, September
19, 2012
RESOLUTION

REYES, J p:

This is a petition for review on certiorari assailing the Resolutions dated October 15, 2009 1 and March
11, 2010 2 of the Court of Appeals (CA) in CA-G.R. SP No. 109265.

The facts leading to the filing of this petition are undisputed.

Subject of the present controversy is a parcel of land with an approximate area of 4.4 hectares and
located at Bignay, Valenzuela City. The property is covered by Transfer Certificate of Title (TCT) No. V-
73892, registered in the names of George and Marilyn Lim (Spouses Lim).

On September 8, 2004, Maria Consolacion Rivera-Pascual (Consolacion) filed before the Office of the
Regional Agrarian Reform Adjudicator (RARAD) for Region IV-A a petition to be recognized as a tenant of
a property located at Bignay, Valenzuela City against Danilo Deato (Deato). At that time, the property,
which has an approximate area of 4.4 hectares, was covered by TCT No. 24759 under Deato's name.
During the pendency of the petition, Deato sold the property to Spouses Lim. The sale was registered on
December 21, 2004 leading to the issuance of TCT No. V-73892 in favor of Spouses Lim. Considering
this development, Consolacion filed a motion on March 3, 2005 to implead Spouses Lim as respondents.
3

The petition, which was docketed as DARAB Case No. R-0400-0012-04, was granted by Regional
Adjudicator Conchita C. Miñas (RA Miñas) in a Decision 4 dated December 2, 2005, the dispositive
portion of which states:

WHEREFORE, premises considered, judgment is hereby rendered:

1) Declaring that petitioner is the tenant of the subject landholding by succession from her deceased
father;

2) Declaring respondents spouses George and Marilyn Lim to have subrogated to the rights and
substituted to the obligation of spouses Danilo and Divina Deato;

3) Ordering the respondents and all persons claiming rights under them to maintain petitioner in peaceful
possession and cultivation of the agricultural land subject hereof;

4) Declaring petitioner to have the right to exercise the right of redemption of the subject parcel of
agricultural land pursuant to Section 12 of RA 3844 as [a]mended; and

5) Dismissing the petition against Louie Cruz, Fire Force Agency and Danny Boy Rivera for having no
proximate tenurial relationship with the petitioner hence beyond the jurisdictional ambit of this Office.
aEACcS

SO ORDERED. 5

On July 7, 2006, the foregoing decision became final. 6

Upon Consolacion's motion for execution filed on January 7, 2008, RA Miñas issued a writ of execution
on January 8, 2008. 7
On January 21, 2008, Consolacion filed a petition against Spouses Lim and the Registrar of Deeds of
Valenzuela City praying for the issuance of an order directing Spouses Lim to accept the amount of
P10,000,000.00 which she undertook to tender during the initial hearing, declaring the property
redeemed, and cancelling TCT No. V-73892. 8 Consolacion consigned with the RARAD the amount of
P10,000,000.00 on March 3, 2008. 9

Consolacion's petition, which was docketed as DARAB Case No. R-0400-001-08, was given due course
by RA Miñas in a Decision 10 dated June 2, 2008, the dispositive portion of which states:

WHEREFORE, foregoing premises considered, judgment is hereby rendered:

1. As prayed for, declaring that the landholding subject of the petition as lawfully redeemed;

2. Ordering respondent spouses to accept and withdraw the amount of the redemption price consigned
with this Office which was deposited for safekeeping indicated in Manager's Check No. 0000004518
issued by Allied Bank in the name of Spouses Marilyn and George Lim and/or DAR Adjudication Board
Region IV-A in the amount of ten (10) million pesos;

3. Upon acceptance and the withdrawal of the redemption price as ordered in paragraph 2 hereof,
ordering respondent spouses to execute a Deed of Redemption in favor of petitioner;

4. In case of refusal and/or failure of respondent spouses to execute the Deed of Redemption as ordered
above, the Regional Clerk of the Board is hereby ordered to execute a Deed of Redemption in the name
of the petitioner; and

5. Directing the Register of Deeds for Valenzuela City to cause the cancellation of TCT No. V-73892
registered in the name of respondent spouses Marilyn and George Lim and a new one issued in the name
of petitioner upon presentment of the Deed of Redemption.

SO ORDERED. 11

On appeal, the Department of Agrarian Reform Adjudication Board (DARAB) issued a Decision 12 on
February 18, 2009 reversing RA Miñas Decision dated June 2, 2008. Specifically:

WHEREFORE, in view of the foregoing, the appealed Decision dated 02 June 2008 is hereby
REVERSED and SET ASIDE. A new judgment is hereby rendered:

1. DECLARING the landholding to be not lawfully redeemed;

2. DECLARING petitioner-appellee not a bona fide tenant of the subject landholding;

3. DECLARING that petitioner-appellee cannot redeem the subject parcel registered in the names of the
respondents-appellants;

4. ORDERING the respondents-appellants to be maintained in peaceful possession of the subject

landholding[; and]

5. DIRECTING the Clerk of the Board of the Regional Agrarian Reform Adjudicator of Region IV-A to
return the Manager's Check No. 0000004518 issued by Allied Bank in the name of Spouses Marilyn and
George Lim and/or DAR Adjudication Board Region IV-A in the amount of Ten Million pesos to herein
petitioner-appellee. IcHTAa

SO ORDERED. 13

On April 13, 2009, Consolacion moved for reconsideration, 14 which the DARAB denied in a Resolution
15 dated June 8, 2009 for being filed out of time.
SECTION 12 Rule X of the 2003 DARAB Rules provides that a Motion for Reconsideration shall be filed
within fifteen (15) days from receipt of notice of the order, resolution, or decision of the Board or
Adjudicator. Records show that both the petitioner-appellee and her counsel received a copy of the
Decision dated 18 February 2009 on 27 February 2009 and that Legal Officer Nancy Geocada[,] the
alleged new counsel of the herein petitioner[-]appellee[,] filed the Motion for Reconsideration only on 13
April 2009, clearly the Motion for Reconsideration was filed beyond the fifteen (15) days (sic)
reglementary period thus the herein Decision has already become final and executory. . . . 16

On June 25, 2009, Consolacion filed a petition for review under Rule 43 of the Rules of Court with the CA.
17

On July 1, 2009, the CA resolved to require Consolacion's counsel to submit within five (5) days from
notice his Mandatory Continuing Legal Education (MCLE) Certificate of Compliance or Exemption and an
amended Verification and Certification Against Non-Forum-Shopping. 18 Apparently, Consolacion's
counsel failed to indicate in the petition his MCLE Certificate of Compliance or Exemption Number as
required under Bar Matter No. 1922. Also, the jurat of Consolacion's verification and certification against
non-forum-shopping failed to indicate any competent evidence of Consolacion's identity apart from her
community tax certificate.

Considering the failure of Consolacion and her counsel to comply, the CA issued a Resolution 19 on
October 15, 2009 dismissing the petition.

On July 7, 2009, the counsel for the petitioner received the above-mentioned Resolution. However, the
counsel for the petitioner failed to comply with the said Resolution which was due on July 19, 2009.

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

SO ORDERED. 20

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

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

The Court finds no merit in the petition. The Court sees no reversible error committed by the CA in
dismissing Consolacion's petition before it on the ground of petitioner's unexplained failure to comply with
basic procedural requirements attendant to the filing of a petition for review under Rule 43 of the Rules of
Court. Notably, Consolacion and her counsel remained obstinate despite the opportunity afforded to them
by the CA to rectify their lapses. While there was compliance, this took place, however, after the CA had
ordered the dismissal of Consolacion's petition and without reasonable cause proffered to justify its
belatedness. Consolacion and her counsel claimed inadvertence and negligence but they did not explain
the circumstances thereof. Absent valid and compelling reasons, the requested leniency and liberality in
the observance of procedural rules appears to be an afterthought, hence, cannot be granted. The CA saw
no compelling need meriting the relaxation of the rules. Neither does this Court see any.
The Court is aware of the exceptional cases where technicalities were liberally construed. However, in
these cases, outright dismissal is rendered unjust by the presence of a satisfactory and persuasive
explanation. The parties therein who prayed for liberal interpretation were able to hurdle that heavy
burden of proving that they deserve an exceptional treatment. It was never the Court's intent "to forge a
bastion for erring litigants to violate the rules with impunity." 22

This Court will not condone a cavalier attitude towards procedural rules. It is the duty of every member of
the bar to comply with these rules. They are not at liberty to seek exceptions should they fail to observe
these rules and rationalize their omission by harking on liberal construction. While it is the negligence of
Consolacion's counsel that led to this unfortunate result, she is bound by such. cDTCIA

WHEREFORE, premises considered, the petition is DISMISSED. The Resolutions dated October 15,
2009 and March 11, 2010 of the Court of Appeals in CA-G.R. SP No. 109265 are AFFIRMED.

Costs against the petitioner.

SO ORDERED.

F. Rule-making power of the Supreme Court

 Commissioner of Internal Revenue v. Migrant Pagbilao Corporation, G.R. No. 159593,
October 12, 2006

[G.R. No. 159593. October 16, 2006.]

COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. MIRANT 1 PAGBILAO CORPORATION

(formerly SOUTHERN ENERGY QUEZON, INC.), respondent.

DECISION

CHICO-NAZARIO, J p:

Before this Court is a Petition for Review 2 under Rule 45 of the 1997 Rules of Civil Procedure assailing
the Decision, 3 dated 30 July 2003, of the Court of Appeals in CA-G.R. SP No. 60783, which affirmed in
toto the Decision, 4 dated 11 July 2000, of the Court of Tax Appeals (CTA) in CTA Case No. 5658. The
CTA partially granted the claim of herein respondent Mirant Pagbilao Corporation (MPC) for the refund of
the input Value Added Tax (VAT) on its purchase of capital goods and services for the period 1 April 1996
to 31 December 1996, and ordered herein petitioner Commissioner of the Bureau of Internal Revenue
(BIR) to issue a tax credit certificate in the amount of P28,744,626.95.

There is no dispute as to the following facts that gave rise to the claim for refund of MPC, as found by the
CTA 5 —

[MPC] is a domestic corporation duly organized and existing under and by virtue of the laws of the
Philippines with principal office address in Pagbilao Grande Island, Pagbilao, Quezon. It is licensed by the
Securities and Exchange Commission to principally engage in the business of power generation and
subsequent sale thereof (Exh. A). It is registered with the Bureau of Internal Revenue as a VAT registered
entity with Certificate of Registration bearing RDO Control No. 96-600-002498, dated January 26, 1996.

For the period April 1, 1996 to December 31, 1996, [MPC] seasonably filed its Quarterly VAT Returns
reflecting an (sic) accumulated input taxes in the amount of P39,330,500.85 (Exhs. B, C, and D). These
input taxes were allegedly paid by [MPC] to the suppliers of capital goods and services for the
construction and development of the power generating plant and other related facilities in Pagbilao,
Quezon (TSN, November 16, 1998, p. 11).
Pursuant to the procedures prescribed under Revenue Regulations No. 7-95, as amended, [MPC] filed on
June 30, 1998, an application for tax credit or refund of the aforementioned unutilized VAT paid on capital
goods (Exhibit "E").

Without waiting for an answer from the [BIR Commissioner], [MPC] filed the instant petition for review on
July 10, 1998, in order to toll the running of the two-year prescriptive period for claiming a refund under
the law.

In answer to the Petition, [the BIR Commissioner] advanced as special and affirmative defenses that
"[MPC]'s claim for refund is still pending investigation and consideration before the office of [the BIR
Commissioner] accordingly, the filing of the present petition is premature; well-settled is the doctrine that
provisions in tax refund and credit are construed strictly against the taxpayer as they are in the nature of a
tax exemption; in an action for refund or tax credit, the taxpayer has the burden to show that the taxes
paid were erroneously or illegally paid and failure to sustain the said burden is fatal to the action for
refund; it is incumbent upon [MPC] to show that the claim for tax credit has been filed within the
prescriptive period under the Tax Code; and the taxes allegedly paid by [MPC] are presumed to have
been collected and received in accordance with law and revenue regulations.["]

On July 14, 1998, while the case was pending trial, Revenue Officer, Rosemarie M. Vitto, was assigned
by Revenue District Officer, Ma. Nimfa Penalosa-Asensi, of Revenue District No. 60 to investigate
[MPC]'s application for tax credit or refund of input taxes (Exhs. 1 and 1-a). As a result, a memorandum
report, dated August 27, 1998, was submitted recommending a favorable action but in a reduced amount
of P49,616.40 representing unapplied input taxes on capital goods. (Exhs. 2, 2-a, 3, and 3-a).

[MPC], due to the voluminous nature of evidence to be presented, availed of the services of an
independent Certified Public Accountant pursuant to CTA Circular No. 1-95, as amended. As a
consequence, Mr. Ruben R. Rubio, Partner of SGV & Company, was commissioned to verify the
accuracy of [MPC]'s summary of input taxes (TSN, October 15, 1998, pp. 3-5). A report, dated March 8,
1999, was presented stating the audit procedures performed and the finding that out of the total claimed
input taxes of P39,330,500.85, only the sum of P28,745,502.40 was properly supported by valid invoices
and/or official receipts (Exh. G; see also TSN, March 3, 1999, p. 12). STIcaE

The CTA ruled in favor of MPC, and declared that MPC had overwhelmingly proved, through the VAT
invoices and official receipts it had presented, that its purchases of goods and services were necessary in
the construction of power plant facilities which it used in its business of power generation and sale. The
tax court, however, reduced the amount of refund to which MPC was entitled, in accordance with the
following computation —

Total amount of the claim for refund

P39,330,500.85
Less: Disallowances

a. Per independent auditor

P10,584,998.45

b. Per CTA's examination

875.45
10,585,873.90
––––––––––––
––––––––––––––

P28,744,626.95 6

=============
Thus, the dispositive portion of the CTA Decision, 7 dated 11 July 2000, reads —

WHEREFORE, in view of the foregoing, [MPC]'s claim for refund is hereby partially GRANTED. [The BIR
Commissioner] is ORDERED to ISSUE A TAX CREDIT CERTIFICATE in the amount of P28,744,626.95
representing input taxes paid on capital goods for the period April 1, 1996 to December 31, 1996.

The CTA subsequently denied the BIR Commissioner's Motion for Reconsideration in a Resolution, 8
dated 31 August 2001.

Aggrieved, the BIR Commissioner filed with the Court of Appeals a Petition for Review 9 of the foregoing
Decision, dated 11 July 2000, and Resolution, dated 31 August 2001, of the CTA. Notably, the BIR
Commissioner identified and discussed as grounds 10 for its Petition arguments that were totally new and
were never raised before the CTA, to wit —

1. RESPONDENT BEING AN ELECTRIC UTILITY, IT IS SUBJECT TO FRANCHISE TAX UNDER THEN

SECTION 117 (NOW SECTION 119) OF THE TAX CODE AND NOT TO VALUE ADDED TAX (VAT).

2. SINCE RESPONDENT IS EXEMPT FROM VAT, IT IS NOT ENTITLED TO THE REFUND OF INPUT
VAT PURSUANT TO SECTION 4.103-1 OF REVENUE REGULATIONS NO. 7-95.

The Court of Appeals found no merit in the BIR Commissioner's Petition, and in its Decision, dated 30
July 2003, it pronounced that: (1) The BIR Commissioner cannot validly change his theory of the case on
appeal; (2) The MPC is not a public utility within the contemplation of law; (3) The sale by MPC of its
generated power to the National Power Corporation (NAPOCOR) is subject to VAT at zero percent rate;
and (4) The MPC, as a VAT-registered taxpayer, may apply for tax credit. Accordingly, the decretal
portion of the said Decision 11 reads as follows —

WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit and the assailed 11 July
2000 Decision of respondent Court in CTA Case No. 5658 is hereby AFFIRMED in toto. No costs.

Refusing to give up his cause, the BIR Commissioner filed the present Petition before this Court on the
ground that the Court of Appeals committed reversible error in affirming the Decision of the CTA holding
respondent entitled to the refund of the amount of P28,744,626.95, allegedly representing input VAT on
capital goods and services for the period 1 April 1996 to 31 December 1996. He argues that (1) The
observance of procedural rules may be relaxed considering that technicalities are not ends in themselves
but exist to protect and promote the substantive rights of the parties; and (2) A tax refund is in the nature
of a tax exemption which must be construed strictly against the taxpayer. He reiterates his position before
the Court of Appeals that MPC, as a public utility, is exempt from VAT, subject instead to franchise tax
and, thus, not entitled to a refund of input VAT on its purchase of capital goods and services. DHEACI

This Court finds no merit in the Petition at bar.

The general rule is that a party

cannot change his theory of
the case on appeal.
To recall, the BIR Commissioner raised in its Answer 12 before the CTA the following special and
affirmative defenses —

3. [MPC]'s claim for refund is still pending investigation and consideration before the office of [the BIR
Commissioner]. Accordingly, the present petition is premature;

4. Well-settled is the doctrine that provisions in tax refund and credit are construed strictly against the
taxpayer as they are in the nature of a tax exemption;

5. In an action for refund or tax credit, the taxpayer has the burden to show that the taxes paid were
erroneously or illegally paid and failure to sustain the said burden is fatal to the action for refund;

6. It is incumbent upon [MPC] to show that the claim for tax credit has been filed within the prescriptive
period under the tax code;

7. The taxes allegedly paid by [MPC] are presumed to have been collected and received in accordance
with law and revenue regulations.

These appear to be general and standard arguments used by the BIR to oppose any claim by a taxpayer
for refund. The Answer did not posit any allegation or contention that would defeat the particular claim for
refund of MPC. Trial proper ensued before the CTA, during which the MPC presented evidence of its
entitlement to the refund and in negation of the afore-cited defenses of the BIR Commissioner. It was only
after the CTA promulgated its Decision on 11 July 2000, which was favorable to MPC and adverse to the
BIR Commissioner, that the latter filed his Petition for Review before the Court of Appeals on 4 October
2000, averring, for the very first time, that MPC was a public utility, subject to franchise tax and not VAT;
and since it was not paying VAT, it could not claim the refund of input VAT on its purchase of capital
goods and services.

There is a palpable shift in the BIR Commissioner's defense against the claim for refund of MPC and an
evident change of theory. Before the CTA, the BIR Commissioner admitted that the MPC is a VAT-
registered taxpayer, but charged it with the burden of proving its entitlement to refund. However, before
the Court of Appeals, the BIR Commissioner, in effect denied that the MPC is subject to VAT, making an
affirmative allegation that it is a public utility liable, instead, for franchise tax. Irrefragably, the BIR
Commissioner raised for the first time on appeal questions of both fact and law not taken up before the
tax court, an actuality which the BIR Commissioner himself does not deny, but he argues that he should
be allowed to do so as an exception to the technical rules of procedure and in the interest of substantial
justice.

It is already well-settled in this jurisdiction that a party may not change his theory of the case on appeal.
13 Such a rule has been expressly adopted in Rule 44, Section 15 of the 1997 Rules of Civil Procedure,
which provides —

SEC. 15. Questions that may be raised on appeal. — Whether or not the appellant has filed a motion for
new trial in the court below, he may include in his assignment of errors any question of law or fact that
has been raised in the court below and which is within the issues framed by the parties.

Thus, in Carantes v. Court of Appeals, 14 this Court emphasized that —

The settled rule is that defenses not pleaded in the answer may not be raised for the first time on appeal.
A party cannot, on appeal, change fundamentally the nature of the issue in the case. When a party
deliberately adopts a certain theory and the case is decided upon that theory in the court below, he will
not be permitted to change the same on appeal, because to permit him to do so would be unfair to the
adverse party.
In the more recent case of Mon v. Court of Appeals, 15 this Court again pronounced that, in this
jurisdiction, the settled rule is that a party cannot change his theory of the case or his cause of action on
appeal. It affirms that "courts of justice have no jurisdiction or power to decide a question not in issue."
Thus, a judgment that goes beyond the issues and purports to adjudicate something on which the court
did not hear the parties, is not only irregular but also extrajudicial and invalid. The rule rests on the
fundamental tenets of fair play.

The BIR Commissioner pleads with this Court not to apply the foregoing rule to the instant case, for a rule
on technicality should not defeat substantive justice. The BIR Commissioner apparently forgets that there
are specific reasons why technical or procedural rules are imposed upon the courts, and that compliance
with these rules, should still be the general course of action. Hence, this Court has expounded that —

Procedural rules, we must stress, should be treated with utmost respect and due regard since they are
designed to facilitate the adjudication of cases to remedy the worsening problem of delay in the resolution
of rival claims and in the administration of justice. The requirement is in pursuance to the bill of rights
inscribed in the Constitution which guarantees that "all persons shall have a right to the speedy
disposition of their cases before all judicial, quasi-judicial and administrative bodies." The adjudicatory
bodies and the parties to a case are thus enjoined to abide strictly by the rules. While it is true that a
litigation is not a game of technicalities, it is equally true that every case must be prosecuted in
accordance with the prescribed procedure to ensure an orderly and speedy administration of justice.
There have been some instances wherein this Court allowed a relaxation in the application of the rules,
but this flexibility was "never intended to forge a bastion for erring litigants to violate the rules with
impunity." A liberal interpretation and application of the rules of procedure can be resorted to only in
proper cases and under justifiable causes and circumstances. 16

The courts have the power to relax or suspend technical or procedural rules or to except a case from their
operation when compelling reasons so warrant or when the purpose of justice requires it. What
constitutes good and sufficient cause that would merit suspension of the rules is discretionary upon the
courts. 17

In his Petition and Memorandum before this Court, the BIR Commissioner made no attempt to provide
reasonable explanation for his failure to raise before the CTA the issue of MPC being a public utility
subject to franchise tax rather than VAT. The BIR Commissioner argues, in a singular paragraph in his
Petition, 18 subsequently reproduced in his Memorandum, 19 that the Court of Appeals should have
taken cognizance of the said issue, although it was raised for the first time on appeal, entirely on the basis
of this Court's ruling in Sy v. Court of Appeals. 20 He contends that —

The submission fails to take into account that although this Honorable Court has repeatedly ruled that
litigants cannot raise an issue for the first time on appeal, as this would contravene the basic rules of
justice and fair play, the observance of procedural rules may be relaxed, noting that technicalities are not
ends in themselves but exist to protect and promote the substantive rights of the litigants (Sy v. Court of
Appeals, 330 SCRA 570 [2000]). ADSIaT

This Court is unconvinced. There is no sufficient cause to warrant the relaxation of technical or procedural
rules in the instant case. The general rules of procedure still apply and the BIR Commissioner cannot be
allowed to raise an issue for the first time on appeal.

It should be emphasized that the BIR Commissioner is invoking a suspension of the general rules of
procedure or an exception thereto, thus, it is incumbent upon him to present sufficient cause or justifiable
circumstance that would qualify his case for such a suspension or exception. That this Court had
previously allowed in another case such suspension of or exception to technical or procedural rules does
not necessarily mean that the same shall also be allowed in the present case. The BIR Commissioner has
the burden of persuading this Court that the same causes or circumstances that justified the suspension
of or exception to the technical or procedural rules in the other case are also present in the case at bar.
The Sy case, on which the BIR Commissioner fully anchored his claim for suspension of or exception to
the technical or procedural rules, is not even on all fours with his case. It involves a petition for declaration
of nullity of marriage instituted by the therein petitioner Filipina Sy before the Regional Trial Court (RTC)
on the basis of the alleged psychological incapacity of her husband, Fernando Sy. Her petition was
denied by the RTC because it found that Fernando's acts did not constitute psychological incapacity, a
finding later affirmed by the Court of Appeals. In an appeal by certiorari before this Court, Filipina raised
the issue that her marriage to Fernando was void from the very beginning for lack of a marriage license at
the time of the ceremony. This Court took cognizance of the said issue, reversed the RTC and the Court
of Appeals, and ruled in favor of Filipina. Its ratiocination on the matter is reproduced in full below —

Petitioner, for the first time, raises the issue of the marriage being void for lack of a valid marriage license
at the time of its celebration. It appears that, according to her, the date of the actual celebration of their
marriage and the date of issuance of their marriage certificate and marriage license are different and
incongruous.

Although we have repeatedly ruled that litigants cannot raise an issue for the first time on appeal, as this
would contravene the basic rules of fair play and justice, in a number of instances, we have relaxed
observance of procedural rules, noting that technicalities are not ends in themselves but exist to protect
and promote substantive rights of litigants. We said that certain rules ought not to be applied with severity
and rigidity if by so doing, the very reason for their existence would be defeated. Hence, when substantial
justice plainly requires, exempting a particular case from the operation of technicalities should not be
subject to cavil. In our view, the case at bar requires that we address the issue of the validity of the
marriage between Filipina and Fernando which petitioner claims is void from the beginning for lack of a
marriage license, in order to arrive at a just resolution of a deeply seated and violent conflict between the
parties. Note, however, that here the pertinent facts are not disputed; and what is required now is a
declaration of their effects according to existing law. 21 [Emphasis supplied.]

In the instant case, the conflict between the MPC and the BIR Commissioner could be hardly described
as "deeply seated and violent," it remaining on a professional level.

Moreover, this Court pointed out in the Sy case that the pertinent facts, i.e., the dates of actual celebration
of the marriage, issuance of the marriage certificate, and issuance of the marriage license, were
undisputed. The same cannot be said in the case at bar. That MPC is a public utility is not an undisputed
fact; on the contrary, the determination thereof gives rise to a multitude of other questions of fact and law.
It is a mere deduction on the part of the BIR Commissioner that since the MPC is engaged in the
generation of power, it is a public utility. The MPC contests this arguing that it is not a public utility
because it sells its generated power to NAPOCOR exclusively, and not to the general public. It asserts
that it is subject to VAT and that its sale of generated electricity to NAPOCOR is subject to zero-rated
VAT.

Substantial justice, in such a case, requires not the allowance of issues raised for the first time on appeal,
but that the issue of whether MPC is a public utility, and the correlated issue of whether MPC is subject to
VAT or franchise tax, be raised and threshed out in the first opportunity before the CTA so that either
party would have fully presented its evience and legal arguments in support of its position and to
contravene or rebut those of the opposing party.

In Atlas Consolidated Mining & Development Corp. v. Commissioner of Internal Revenue, 22 this Court
held that it was too late for the BIR Commissioner to raise an issue of fact of payment for the first time in
his memorandum in the CTA and in his appeal to this Court. If raised earlier, the matter ought to have
been seriously delved into by the CTA. On this ground, this Court was of the opinion that under all the
attendant circumstances of the case, substantial justice would be served if the BIR Commissioner be held
as precluded from attempting to raise the issue at this stage. Failure to assert a question within a
reasonable time warrants a presumption that the party entitled to assert it either has abandoned or
declined to assert it.
Therefore, the Court of Appeals correctly refused to consider the issues raised by the BIR Commissioner
for the first time on appeal. Its discussion on whether the MPC is a public utility and whether it is subject
to VAT or franchise tax is nothing more than obiter dictum. It is best not at all to discuss these issues for
they do not simply involve questions of law, but also closely-related questions of fact 23 which neither the
Court of Appeals nor this Court could presume or garner from the evidence on record.

II

Input VAT on capital goods

and services may be the
subject of a claim for refund.

The MPC bases its claim for refund of its input VAT on Section 106(b) of the Tax Code of 1986, as
amended by Republic Act No. 7716, 24 which provides —

Sec. 106. Refunds or tax credits of creditable input tax. —

xxx xxx xxx

(b) Capital goods. — A VAT-registered person may apply for the issuance of a tax credit certificate or
refund of input taxes paid on capital goods imported or locally purchased, to the extent that such input
taxes have not been applied against output taxes. The application may be made only within two (2) years,
after the close of the taxable quarter when the importation or purchase was made.

Capital goods or properties, as defined in Revenue Regulations No. 7-95, the implementing rules on VAT,
are "goods and properties with estimated useful life greater than one year and which are treated as
depreciable assets under Section 29(f), used directly or indirectly in the production or sale of taxable
goods or services." 25

Contrary to the argument of the BIR Commissioner, input VAT on capital goods is among those expressly
recognized as creditable input tax by Section 104(a) of the Tax Code of 1986, as amended by Rep. Act
No. 7716, 26 to wit —

Sec. 104. Tax Credits. — (a) Creditable input tax. — Any input tax evidenced by a VAT invoice or official
receipt issued in accordance with Section 108 hereof on the following transactions shall be creditable
against the output tax:

(1) Purchase or importation of goods:

(A) For sale; or

(B) For conversion into or intended to form part of a finished product for sale including packing materials;
or

(C) For use as supplies in the course of business; or

(D) For use as materials supplied in the sale of service; or

(E) For use in trade or business for which deduction for depreciation or amortization is allowed under this
Code, except automobiles, aircraft and yachts. [Emphasis supplied.]

Thus, goods and properties used by the taxpayer in its VAT-taxable business, subject to depreciation or
amortization in accordance with the Tax Code, are considered capital goods. Input VAT on the purchase
of such capital goods is creditable against the taxpayer's output VAT. The taxpayer is further given the
option, under Section 106(b) of the Tax Code of 1986, as amended by Republic Act No. 7716, to claim
refund of the input VAT on its capital goods, but only to the extent that the said input VAT has not been
applied to its output VAT.

This Court, likewise, will not give credence to the BIR Commissioner's contention that the claim for refund
of input VAT on capital goods by the MPC should be denied for the latter's failure to comply with the
requirements for the refund of input VAT credits on zero-rated sales provided in Section 16 of Revenue
Regulations No. 5-87, as amended by Revenue Regulations No. 3-88. The BIR Commissioner is
apparently confused. MPC is claiming refund of the input VAT it has paid on the purchase of capital
goods, it is not claiming refund of its input VAT credits attributable to its zero-rated sales. These are two
different input VAT credits, arising from distinct transactions, although both may be the subject of claims
for refund by the taxpayer. 27 Indeed, the very same regulation invoked by the BIR Commissioner,
Revenue Regulations No. 5-87, as amended, distinguishes between these two refundable input VAT
credits and discusses them in two separate paragraphs: Section 16(a) on zero-rated sales of goods and
services, and Section 16(b) on capital goods. It is also worth noting that Revenue Regulations No. 7-95,
issued on 9 December 1995, which consolidated all VAT regulations, already superseded Revenue
Regulations No. 5-87. Still, Revenue Regulations No. 7-95 maintains the distinction between these two
input VAT credits, discussing the zero-rated sales of goods or properties or services in Section 4.106-
1(a), and capital goods in Section 4.106-1(b).

Hence, the present claim for refund of input VAT on capital goods filed by MPC need not comply with the
requirements for refund of input VAT attributable to zero-rated sales.

III

There is no reason for this

Court to disturb the findings of
fact of the CTA, as affirmed by
the Court of Appeals.

While it is true, as the BIR Commissioner alleges, that the MPC has the burden of proving that it is
entitled to the refund it is claiming for, both the CTA and Court of Appeals had ruled that the MPC
presented substantial evidence to support its claim for refund of its input VAT on capital goods and
services in the amount of P28,744,626.95. DAcSIC

The CTA found that MPC is registered as a VAT-taxpayer, as evidenced by its Certificate of Registration,
issued by the BIR Revenue District Office (RDO) No. 60, on 26 January 1996. The BIR Commissioner
does not contest this fact, and does not offer any explanation as to why the BIR RDO had approved the
registration of MPC as a VAT-taxpayer when, as the BIR Commissioner is now asserting, the MPC is not
subject to VAT but to franchise tax. The MPC had been filing its VAT Quarterly Returns, including those
for the period covered by its claim for refund, 1 April 1996 to 31 December 1996, reporting and reflecting
therein the input VAT it had paid on its purchase of capital goods and services. These capital goods and
services were necessary in the construction of the power plant facilities used by MPC in electric power
generation.

The VAT invoices and receipts submitted by MPC, in support of its claim for refund, had been examined
and evaluated by an independent auditor, as well as by the CTA itself. Thus, from the original amount of
P39,330,500.85 claimed by MPC for refund, the independent auditor, SGV & Co., found only the sum of
P28,745,502.40 sufficiently supported by valid invoices and/or official receipts. Following its own
examination and evaluation of the evidence submitted, the CTA further reduced the amount refundable to
P28,744,626.95 after disallowing the input VAT on the purchase of "xerox and office supplies which
cannot be capitalized and not necessary in the construction of power plant facilities." 28

It is worth noting that the foregoing findings by the CTA were affirmed in totality by the Court of Appeals.
Likewise, this Court finds no reason to disturb the foregoing findings of the tax court.
Another well-settled principle in this jurisdiction is that this Court is bound by the findings of fact of the
CTA. Only errors of law, and not rulings on the weight of evidence, are reviewable by this Court. Findings
of fact of the CTA are not to be disturbed unless clearly shown to be unsupported by substantial
evidence. 29 Quite the reverse, the claim of MPC for refund of input VAT on its purchase of capital goods
and services in the present case is found to be supported by substantial evidence, not just by the CTA,
but also by the Court of Appeals. The BIR Commissioner failed to convince this Court otherwise.

IV

The BIR should seriously

study and consider each and
every application for claim for
refund pending before it.

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

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

SO ORDERED.

 SM Land, Inc., et al. v. City of Manila, et al., G.R. No. 197151, October 22, 2012
THIRD DIVISION

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
reverse and set aside the Decision 1 and Resolution 2 of the Court of Tax Appeals (CTA) En Banc, dated
December 17, 2010 and May 27, 2011, respectively, in CTA EB No. 548. The assailed Decision affirmed
the July 3, 2009 Decision 3 and September 30, 2009 Resolution 4 of the CTA Second Division in CTA AC
No. 51, while the questioned Resolution denied herein petitioners' Motion for Reconsideration. TDcHCa

The factual and procedural antecedents of the case are as follows:

On the strength of the provisions of Tax Ordinance Nos. 7988 and 8011, which amended Ordinance No.
7794, also known as the Revenue Code of Manila, herein respondent City of Manila assessed herein
petitioners, together with their other sister companies, increased rates of business taxes for the year 2003
and the first to third quarters of 2004.

Petitioners and their sister companies paid the additional taxes under protest.
Subsequently, petitioners and their sister companies claimed with herein respondent City Treasurer of
Manila a credit or refund of the increased business taxes which they paid for the period abovementioned.
However, the City Treasurer denied their claim.

Aggrieved, petitioners and their sister companies filed with the Regional Trial Court (RTC) of Pasay City a
Complaint for Refund and/or Issuance of Tax Credit of Taxes Illegally Collected. 5

On July 10, 2007, the RTC rendered a summary judgment in favor of herein petitioners, disposing as
follows:

WHEREFORE, this Court renders judgment in plaintiffs' favor and directs the defendants to grant a
refund/tax credit:

(a) To Plaintiff SM Mart, Inc. —

i. The amount of P3,543,318.97 representing overpayment of increased local business taxes under
Sections 15, 16, 17, 18, and 19, under the rates imposed by Ordinance Nos. 7988 and 8011, and

ii. The amount of P17,519,133.16 representing payment of the Section 21 tax;

(b) To Plaintiff SM Prime Holdings, Inc. —

i. The amount of P667,377.21 representing overpayment of increased local business taxes under
Sections 15, 16, 17, 18, and 19, under the rates imposed by Ordinance Nos. 7988 and 8011, and
ESacHC

ii. The amount of P6,711,068.38 representing payment of the Section 21 tax;

(c) To Plaintiff Shoemart, Inc. —

i. The amount of P691,887.07 representing overpayment of increased local business taxes under Section
17, under the rates imposed by Ordinance Nos. 7988 and 8011, and

ii. The amount of P2,954,520.24 representing payment of the Section 21 tax;

(d) To Plaintiff Star Appliances Center —

i. The amount of P700,974.98 representing overpayment of increased local business taxes under Section
17, under the rates imposed by Ordinance Nos. 7988 and 8011, and

ii. The amount of P3,459,812.76 representing payment of the Section 21 tax;

(e) To Plaintiff Supervalue, Inc. —

i. The amount of P1,360,984.69 representing overpayment of increased local business taxes under
Sections 17 and 18, under the rates imposed by Ordinance Nos. 7988 and 8011, and

ii. The amount of P2,774,859.82 representing payment of the Section 21 tax;

(f) To Plaintiff Ace Hardware Philippines, Inc. —

i. The amount of P202,175.67 representing overpayment of increased local business taxes under Section
17, under the rates imposed by Ordinance Nos. 7988 and 8011, and
ii. The amount of P988,347.16 representing payment of the Section 21 tax; CTEDSI

(g) To Plaintiff Watsons Personal Care Stores Philippines, Inc. —

i. The amount of P214,667.73 representing overpayment of increased local business taxes under Section
17, under the rates imposed by Ordinance Nos. 7988 and 8011, and

ii. The amount of P636,857.15 representing payment of the Section 21 tax;

(h) To Plaintiff Jollimart Phils., Corp. —

i. The amount of P98,223.61 representing overpayment of increased local business taxes under Section
17, under the rates imposed by Ordinance Nos. 7988 and 8011, and

ii. The amount of P296,178.13 representing payment of the Section 21 tax;

(i) To Plaintiff Surplus Marketing Corporation —

i. The amount of P84,494.76 representing overpayment of increased local business taxes under Section
17, under the rates imposed by Ordinance Nos. 7988 and 8011, and

ii. The amount of P399,942.81 representing payment of the Section 21 tax;

(j) To Plaintiff Signature Lines —

i. The amount of P49,566.91 representing overpayment of increased local business taxes under Section
17, under the rates imposed by Ordinance Nos. 7988 and 8011, and

ii. The amount of P222,565.79 representing payment of the Section 21 tax.

No Costs. ScCIaA

SO ORDERED. 6

The RTC held that Tax Ordinance Nos. 7988 and 8011, which were the bases of the City of Manila in
imposing the assailed additional business taxes on petitioners and their co-plaintiffs, had already been
declared null and void by this Court in the case of Coca-Cola Bottlers Philippines, Inc. v. City of Manila. 7
On this ground, the RTC ruled that respondents cannot use the assailed Ordinances in imposing
additional taxes on petitioners and their co-plaintiffs.

Respondents moved for reconsideration, but the RTC denied it in its Order dated December 14, 2007.

After the CTA granted their request for extension of time, herein respondents filed a petition for review
with the tax court. 8 The case was raffled to the Second Division of the said court.

On July 3, 2009, the CTA Second Division rendered its Decision, the dispositive portion of which reads,
thus:

WHEREFORE, premises considered, the instant Petition for Review is hereby PARTIALLY GRANTED.
The appealed Order dated July 10, 2007 and Order dated December 14, 2007 of the Regional Trial Court
of Pasay City, Branch 115, in Civil Case No. 05-0051-CFM are hereby MODIFIED. Accordingly, with the
exception of Shoemart, Inc. and Watsons Personal Care Stores, Phils., petitioners are hereby ORDERED
to REFUND the rest of the respondents, their erroneously paid local business taxes for taxable year 2003
and for the first to third quarters of taxable year 2004 in the aggregate amount of THIRTY-NINE MILLION
SEVENTY-EIGHT THOUSAND NINE HUNDRED EIGHTY-EIGHT PESOS AND 81/100
(P39,078,988.81), detailed as follows: 9 cIADaC

The CTA Second Division sustained the ruling of the RTC that Ordinance Nos. 7988 and 8011 are null
and void. Applying the doctrine of stare decisis, the CTA Second Division held that the ruling in the Coca-
Cola case cited by the RTC is applicable in the present case as both cases involve substantially the same
facts and issues. The CTA Second Division, nonetheless, held that herein petitioners' claims for tax
refund should be denied because of their failure to comply with the provisions of the Rules of Court
requiring verification and submission of a certificate of non-forum shopping. The CTA Second Division
noted that petitioners failed to attach to the complaint filed with the RTC their respective Secretary's
Certificates authorizing their supposed representative, a certain Atty. Rex Enrico V. Cruz III (Atty. Cruz),
to file the said complaint in their behalf. The CTA also observed that in the Verification and Certification of
Non-Forum Shopping attached to the complaint, petitioner SM Land, Inc. was not included in the list of
corporations represented by the person who executed the said Verification and Certification.

Petitioners filed a Motion for Partial Reconsideration. 10 Attached to the said Motion was the Verification
and Certification executed by Atty. Cruz as the representative of petitioner SM Land, Inc. Also attached
were petitioners' Secretary's Certificates authorizing Atty. Cruz as their representative. The CTA Second
Division, however, denied the Motion for Partial Reconsideration in its Resolution 11 dated September
30, 2009.

Aggrieved, petitioners filed a petition for review with the CTA En Banc, contending that: (1) the CTA
Second Division erred in holding that the 30-day period provided by law within which to appeal decisions
of the RTC to the CTA may be extended; and (2) the CTA Second Division committed error in denying
herein petitioners' claim for tax refund on the ground that they violated the rules on verification and
certification of non-forum shopping.

On December 17, 2010, the CTA En Banc rendered its assailed Decision affirming in toto the judgment of
the CTA Second Division.

Petitioners' Motion for Reconsideration was subsequently denied by the CTA En Banc in its Resolution
dated May 27, 2011.

Hence, the present petition anchored on the following arguments:

A. SECTION 11, REPUBLIC ACT NO. 1125, AS AMENDED BY REPUBLIC ACT NO. 9282, CLEARLY
DID NOT INTEND FOR THE THIRTY (30)-DAY PERIOD TO APPEAL DECISIONS OF THE REGIONAL
TRIAL COURT TO THE CTA TO BE EXTENDIBLE; AND DcCHTa

B. ASSUMING HYPOTHETICALLY THAT THE CTA WAS CORRECT IN GRANTING RESPONDENTS

AN EXTENSION, THERE WERE STILL COMPELLING REASONS TO JUSTIFY THE RELAXATION OF
THE RULES REQUIRING VERIFICATION AND CERTIFICATION OF NON-FORUM SHOPPING. 12

The Court finds the petition meritorious. Nonetheless, the Court does not fully agree with petitioners'
contentions.

In the first argument raised, the Court is not persuaded by petitioners' insistence that the 30-day period to
appeal decisions of the RTC to the CTA is non-extendible.

Petitioners cited cases decided by this Court wherein it was held that the 30-day period within which to
file an appeal with the CTA is jurisdictional and non-extendible. However, these rulings had been
superseded by this Court's decision in the case of City of Manila v. Coca-Cola Bottlers, Philippines, Inc.,
13 as correctly cited by the CTA En Banc. Suffice it to say that this Court's ruling in the said case is
instructive, to wit:

xxx xxx xxx

The period to appeal the decision or ruling of the RTC to the CTA via a Petition for Review, is specifically
governed by Section 11 of Republic Act No. 9282, and Section 3 (a), Rule 8 of the Revised Rules of the
CTA.

Section 11 of Republic Act No. 9282 provides:

SEC. 11. Who May Appeal; Mode of Appeal; Effect of Appeal. — Any party adversely affected by a
decision, ruling or inaction of the Commissioner of Internal Revenue, the Commissioner of Customs, the
Secretary of Finance, the Secretary of Trade and Industry or the Secretary of Agriculture or the Central
Board of Assessment Appeals or the Regional Trial Courts may file an Appeal with the CTA within thirty
(30) days after the receipt of such decision or ruling or after the expiration of the period fixed by law for
action as referred to in Section 7(a)(2) herein.

Appeal shall be made by filing a petition for review under a procedure analogous to that provided for
under Rule 42 of the 1997 Rules of Civil Procedure with the CTA within thirty (30) days from the receipt of
the decision or ruling or in the case of inaction as herein provided, from the expiration of the period fixed
by law to act thereon. . . . . (Emphasis supplied.) SITCcE

Section 3(a), Rule 8 of the Revised Rules of the CTA states:

SEC. 3. Who may appeal; period to file petition. — (a) A party adversely affected by a decision, ruling or
the inaction of the Commissioner of Internal Revenue on disputed assessments or claims for refund of
internal revenue taxes, or by a decision or ruling of the Commissioner of Customs, the Secretary of
Finance, the Secretary of Trade and Industry, the Secretary of Agriculture, or a Regional Trial Court in the
exercise of its original jurisdiction may appeal to the Court by petition for review filed within thirty days
after receipt of a copy of such decision or ruling, or expiration of the period fixed by law for the
Commissioner of Internal Revenue to act on the disputed assessments. . . . . (Emphasis supplied.)

It is crystal clear from the afore-quoted provisions that to appeal an adverse decision or ruling of the RTC
to the CTA, the taxpayer must file a Petition for Review with the CTA within 30 days from receipt of said
adverse decision or ruling of the RTC.

It is also true that the same provisions are silent as to whether such 30-day period can be extended or
not. However, Section 11 of Republic Act No. 9282 does state that the Petition for Review shall be filed
with the CTA following the procedure analogous to Rule 42 of the Revised Rules of Civil Procedure.
Section 1, Rule 42 of the Revised Rules of Civil Procedure provides that the Petition for Review of an
adverse judgment or final order of the RTC must be filed with the Court of Appeals within: (1) the original
15-day period from receipt of the judgment or final order to be appealed; (2) an extended period of 15
days from the lapse of the original period; and (3) only for the most compelling reasons, another extended
period not to exceed 15 days from the lapse of the first extended period.

Following by analogy, Section 1, Rule 42 of the Revised Rules of Civil Procedure, the 30-day original
period for filing a Petition for Review with the CTA under Section 11 of Republic Act No. 9282, as
implemented by Section 3 (a), Rule 8 of the Revised Rules of the CTA, may be extended for a period of
15 days. No further extension shall be allowed thereafter, except only for the most compelling reasons, in
which case the extended period shall not exceed 15 days. EHaASD

xxx xxx xxx 14

Petitioners further contend that the Order of the CTA Second Division granting petitioners' motion for
extension to file their petition for review is invalid, because at the time that the said motion was granted
on March 4, 2008, this Court has not yet promulgated its decision in the above-cited Coca-Cola case. It
was only on August 4, 2009 that this Court issued its decision in the said case and, that petitioners
reason out that the same is inapplicable to the instant case as the ruling therein cannot be applied
retroactively. Petitioners argue that, aside from the Coca-Cola case, the CTA Second Division had no
clear statutory authority or jurisprudential basis in granting petitioners' motion for extension to file their
petition for review.

The Court does not agree.

At the time that the CTA Second Division granted petitioners' motion for extension to file their petition for
review, Republic Act 9282 15 (RA 9282), which amended certain provisions of RA 1125, 16 were already
in effect, 17 and it is clearly provided therein that appeals from the RTC to the CTA shall follow a
procedure analogous to that provided for under Rule 42 of the Rules of Court. Rule 42 of the said Rules,
in turn, provides that the court may grant an extension of fifteen (15) days within which to file the petition
for review. Thus, independent of the Coca-Cola case, the CTA Second Division had clear statutory
authority in granting petitioners' motion for extension. This Court's ruling in Coca-Cola is a mere
clarification and affirmation of what is provided for under the provisions of RA 1125, as amended by RA
9282.

Nonetheless, the Court agrees with petitioners' contention in its second argument that there are
compelling reasons in the present case which justify the relaxation of the rules on verification and
certification of non-forum shopping.

It must be kept in mind that while the requirement of the certification of non-forum shopping is mandatory,
nonetheless, the requirements must not be interpreted too literally and, thus, defeat the objective of
preventing the undesirable practice of forum shopping. 18 aCATSI

Time and again, this Court has held that rules of procedure are established to secure substantial justice.
19 Being instruments for the speedy and efficient administration of justice, they must be used to achieve
such end, not to derail it. 20 In particular, when a strict and literal application of the rules on non-forum
shopping and verification will result in a patent denial of substantial justice, these may be liberally
construed. 21

In the instant case, petitioner Watsons' procedural lapse was its belated submission of a Secretary's
Certificate authorizing Atty. Cruz as its representative. On the other hand, petitioner SM Land, Inc.'s
infraction was not only its late submission of its Secretary's Certificate but also its failure to timely submit
its verification and certification of non-forum shopping.

In a number of cases, this Court has excused the belated filing of the required verification and certification
of non-forum shopping, citing that special circumstances or compelling reasons make the strict
application of the rule clearly unjustified. 22 This Court ruled that substantial justice and the apparent
merits of the substantive aspect of the case are deemed special circumstances or compelling reasons to
relax the said rule.

In fact, this Court has held that even if there was complete non-compliance with the rule on certification
against forum shopping, the Court may still proceed to decide the case on the merits, pursuant to its
inherent power to suspend its own rules on grounds, as stated above, of substantial justice and apparent
merit of the case. 23

Thus, in Vda. de Formoso v. Philippine National Bank, 24 this Court reiterated, in capsule form, the rule
on non-compliance with the requirements on, or submission of defective verification and certification of
non-forum shopping, to wit:

1) A distinction must be made between non-compliance with the requirement on or submission of

defective verification, and non-compliance with the requirement on or submission of defective certification
against forum shopping.

2) As to verification, non-compliance therewith or a defect therein does not necessarily render the
pleading fatally defective. The Court may order its submission or correction or act on the pleading if the
attending circumstances are such that strict compliance with the Rule may be dispensed with in order that
the ends of justice may be served thereby. cISAHT

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

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

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

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

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

In the present case, there is no dispute that Tax Ordinance Nos. 7988 and 8011 have already been
declared null and void by this Court as early as 2006 in the case of Coca-Cola Bottlers Philippines, Inc. v.
City of Manila. 26 The nullity of the said Tax Ordinances is affirmed in the more recent case of City of
Manila v. Coca-Cola Bottlers Philippines, Inc., 27 as cited above. Thus, to the mind of this Court, the
unquestioned nullity of the above assailed Tax Ordinances upon which petitioners were previously taxed,
makes petitioners' claim for tax refund clearly meritorious. In fact, petitioners' sister companies, which
were their co-plaintiffs in their Complaint filed with the RTC, were granted tax refund in accordance with
the judgments of the trial court, the CTA Second Division and the CTA En Banc. On this basis,
petitioners' meritorious claims are compelling reasons to relax the rule on verification and certification of
non-forum shopping. ACIESH

In any case, it would bear to point out that petitioners and their co-plaintiffs in the trial court filed their
claim for tax refund as a collective group, because they share a common interest and invoke a common
cause of action. Hence, the signature of the representative of the other co-plaintiffs may be considered as
substantial compliance with the rule on verification and certification of non-forum shopping, consistent
with this Court's pronouncement that when all the petitioners share a common interest and invoke a
common cause of action or defense, the signature of only one of them in the certification against forum
shopping substantially complies with the rules. 28

WHEREFORE, the instant petition is GRANTED. The Decision and Resolution of the Court of Tax
Appeals En Banc, dated December 17, 2010 and May 27, 2011, respectively, in CTA EB No. 548, as well
as the July 3, 2009 Decision and September 30, 2009 Resolution of the Court of Tax Appeals Second
Division in CTA AC No. 51, are REVERSED AND SET ASIDE and the Orders of the Regional Trial Court
of Pasay City, Branch 115, dated July 10, 2007 and December 14, 2007, are REINSTATED.

SO ORDERED.

 Pinga v. Heirs of Santiago, G.R. No. 170354, June 30, 2006

The constitutional faculty of the Court to promulgate rules of practice and procedure 1 necessarily carries
the power to overturn judicial precedents on points of remedial law through the amendment of the Rules
of Court. One of the notable changes introduced in the 1997 Rules of Civil Procedure is the explicit
proviso that if a complaint is dismissed due to fault of the plaintiff, such dismissal is "without prejudice to
the right of the defendant to prosecute his counterclaim in the same or in a separate action." 2 The
innovation was instituted in spite of previous jurisprudence holding that the fact of the dismissal of the
complaint was sufficient to justify the dismissal as well of the compulsory counterclaim. 3

In granting this petition, the Court recognizes that the former jurisprudential rule can no longer stand in
light of Section 3, Rule 17 of the 1997 Rules of Civil Procedure.

The relevant facts are simple enough. Petitioner Eduardo Pinga was named as one of two defendants in
a complaint for injunction 4 filed with Branch 29 of the Regional Trial Court (RTC) 5 of San Miguel,
Zamboanga del Sur, by respondent Heirs of German Santiago, represented by Fernando Santiago. The
Complaint 6 dated 28 May 1998 alleged in essence that petitioner and co-defendant Vicente Saavedra
had been unlawfully entering the coco lands of the respondent, cutting wood and bamboos and
harvesting the fruits of the coconut trees therein. Respondents prayed that petitioner and Saavedra be
enjoined from committing "acts of depredation" on their properties, and ordered to pay damages.

In their Amended Answer with Counterclaim, 7 petitioner and his co-defendant disputed respondents'
ownership of the properties in question, asserting that petitioner's father, Edmundo Pinga, from whom
defendants derived their interest in the properties, had been in possession thereof since the 1930s. 8
They alleged that as far back as 1968, respondents had already been ordered ejected from the properties
after a complaint for forcible entry was filed by the heirs of Edmundo Pinga. It was further claimed that
respondents' application for free patent over the properties was rejected by the Office of the President in
1971. Defendants in turn prayed that owing to respondents' forcible re-entry in the properties and the
irresponsible and reckless filing of the case, they be awarded various types of damages instead in
amounts totaling P2,100,000 plus costs of suit. 9

By July of 2005, the trial of the case had not yet been completed. Moreover, respondents, as plaintiffs,
had failed to present their evidence. It appears that on 25 October 2004, the RTC already ordered the
dismissal of the complaint after respondents' counsel had sought the postponement of the hearing
scheduled then. 10 However, the order of dismissal was subsequently reconsidered by the RTC in an
Order dated 9 June 2005, which took into account the assurance of respondents' counsel that he would
give priority to that case. 11

At the hearing of 27 July 2005, plaintiffs' counsel on record failed to appear, sending in his stead a
representative who sought the postponement of the hearing. Counsel for defendants (who include herein
petitioner) opposed the move for postponement and moved instead for the dismissal of the case. The
RTC noted that it was obvious that respondents had failed to prosecute the case for an unreasonable
length of time, in fact not having presented their evidence yet. On that ground, the complaint was
dismissed. At the same time, the RTC allowed defendants "to present their evidence ex-parte." 12

Respondents filed a Motion for Reconsideration 13 of the order issued in open court on 27 July 2005,
opting however not to seek that their complaint be reinstated, but praying instead that the entire action be
dismissed and petitioner be disallowed from presenting evidence ex-parte. Respondents claimed that the
order of the RTC allowing petitioner to present evidence ex-parte was not in accord with established
jurisprudence. They cited cases, particularly City of Manila v. Ruymann 14 and Domingo v. Santos, 15
which noted those instances in which a counterclaim could not remain pending for independent
adjudication. CaDEAT

On 9 August 2005, the RTC promulgated an order granting respondents' Motion for Reconsideration and
dismissing the counterclaim, citing as the only ground therefor that "there is no opposition to the Motion
for Reconsideration of the [respondents]." 16 Petitioner filed a Motion for Reconsideration, but the same
was denied by the RTC in an Order dated 10 October 2005. 17 Notably, respondents filed an Opposition
to Defendants' Urgent Motion for Reconsideration, wherein they argued that the prevailing jurisprudential
rule 18 is that "compulsory counterclaims cannot be adjudicated independently of plaintiff's cause of
action," and "a conversu, the dismissal of the complaint carries with it the dismissal of the compulsory
counterclaims." 19
The matter was elevated to this Court directly by way of a Petition for Review under Rule 45 on a pure
question of law, the most relevant being whether the dismissal of the complaint necessarily carries the
dismissal of the compulsory counterclaim.

We hold that under Section 3, Rule 17 of the 1997 Rules of Civil Procedure, the dismissal of the
complaint due to the fault of plaintiff does not necessarily carry with it the dismissal of the counterclaim,
compulsory or otherwise. In fact, the dismissal of the complaint is without prejudice to the right of
defendants to prosecute the counterclaim.

On a prefatory note, the RTC, in dismissing the counterclaim, did not expressly adopt respondents'
argument that the dismissal of their complaint extended as well to the counterclaim. Instead, the RTC
justified the dismissal of the counterclaim on the ground that "there is no opposition to [plaintiff's] Motion
for Reconsideration [seeking the dismissal of the counterclaim]." 20 This explanation is hollow,
considering that there is no mandatory rule requiring that an opposition be filed to a motion for
reconsideration without need for a court order to that effect; and, as posited by petitioner, the "failure to
file an opposition to the Plaintiff's Motion for Reconsideration is definitely not one among the established
grounds for dismissal [of the counterclaim]." 21 Still, the dismissal of the counterclaim by the RTC betrays
at very least a tacit recognition of respondents' argument that the counterclaim did not survive the
dismissal of the complaint. At most, the dismissal of the counterclaim over the objection of the defendant
(herein petitioner) on grounds other than the merits of the counterclaim, despite the provisions under Rule
17 of the 1997 Rules of Civil Procedure, constitutes a debatable question of law, presently meriting
justiciability through the instant action. Indeed, in reviewing the assailed orders of the RTC, it is inevitable
that the Court consider whether the dismissal of the complaint, upon motion of the defendant, on the
ground of the failure to prosecute on plaintiff's part precipitates or carries with it the dismissal of the
pending counterclaims.

Our core discussion begins with Section 3, Rule 17 of the 1997 Rules of Civil Procedure, which states:

SEC. 3. Dismissal due to fault of plaintiff. — If, for no justifiable cause, the plaintiff fails to appear on the
date of the presentation of his evidence in chief on the complaint, or to prosecute his action for an
unreasonable length of time, or to comply with these Rules or any order of the court, the complaint may
be dismissed upon motion of defendant or upon the court's own motion, without prejudice to the right of
the defendant to prosecute his counterclaim in the same or in a separate action. This dismissal shall have
the effect of an adjudication upon the merits, unless otherwise declared by the court.

The express qualification in the provision that the dismissal of the complaint due to the plaintiff's fault, as
in the case for failure to prosecute, is without prejudice to the right of the defendant to prosecute his
counterclaim in the same or separate action. This stands in marked contrast to the provisions under Rule
17 of the 1964 Rules of Court which were superseded by the 1997 amendments. In the 1964 Rules,
dismissals due to failure to prosecute were governed by Section 3, Rule 17, to wit:

SEC. 3. Failure to prosecute. — If plaintiff fails to appear at the time of the trial, or to prosecute his action
for an unreasonable length of time, or to comply with these rules or any order of the court, the action may
be dismissed upon motion of the defendant or upon the court's own motion. This dismissal shall have the
effect of an adjudication upon the merits, unless otherwise provided by court.

Evidently, the old rule was silent on the effect of such dismissal due to failure to prosecute on the pending
counterclaims. As a result, there arose what one authority on remedial law characterized as "the nagging
question of whether or not the dismissal of the complaint carries with it the dismissal of the counterclaim."
22 Jurisprudence construing the previous Rules was hardly silent on the matter.

In their arguments before the RTC on the dismissal of the counterclaim, respondents cited in support City
of Manila v. Ruymann, 23 Domingo v. Santos, 24 Belleza v. Huntington, 25 and Froilan v. Pan Oriental
Shipping Co., 26 all of which were decided more than five decades ago. Notably though, none of the
complaints in these four cases were dismissed either due to the fault of the plaintiff or upon the instance
of the defendant. 27

The distinction is relevant, for under the previous and current incarnations of the Rules of Civil Procedure,
it is Section 3, Rule 17 that governs the dismissals due to the failure of the plaintiff to prosecute the
complaint, as had happened in the case at bar. Otherwise, it is Section 2, Rule 17, which then, and still is
now, covered dismissals ordered by the trial court upon the instance of the plaintiff. 28 Yet, as will be
seen in the foregoing discussion, a discussion of Section 2 cannot be avoided as the postulate behind
that provision was eventually extended as well in cases that should have properly been governed by
Section 3. TSIEAD

Even though the cases cited by respondents involved different factual antecedents, there exists more
appropriate precedents which they could have cited in support of their claim that the counterclaim should
have been dismissed even if the dismissal of the complaint was upon the defendants' motion and was
predicated on the plaintiff's fault. BA Finance Corp. v. Co 29 particularly stands out in that regard,
although that ruling is itself grounded on other precedents as well. Elucidation of these cases is in order.

On the general effect of the dismissal of a complaint, regardless of cause, on the pending counterclaims,
previous jurisprudence laid emphasis on whether the counterclaim was compulsory or permissive in
character. The necessity of such distinction was provided in the 1964 Rules itself, particularly Section 2,
Rule 17, which stated that in instances wherein the plaintiff seeks the dismissal of the complaint, "if a
counterclaim has been pleaded by a defendant prior to the service upon him of the plaintiff's motion to
dismiss, the action shall not be dismissed against the defendant's objection unless the counterclaim can
remain pending for independent adjudication by the court." 30 The vaunted commentaries of Chief
Justice Moran, remarking on Section 2, Rule 17, noted that "[t]here are instances in which a counterclaim
cannot remain pending for independent adjudication, as, where it arises out of, or is necessarily
connected with, the transaction or occurrence which is the subject matter of the opposing party's claim."
31

This view expressed in Moran's Commentaries was adopted by the Court in cases where the application
of Section 2, Rule 17 of the 1964 Rules of Court was called for, such as in Lim Tanhu v. Ramolete, 32
and Dalman v. City Court of Dipolog City. 33 The latter case warrants brief elaboration. Therein, the
plaintiff in a civil case for damages moved for the withdrawal of her own case on the ground that the
dispute had not been referred to the barangay council as required by law. Over the objection of the
defendant, who feared that her own counterclaim would be prejudiced by the dismissal, plaintiff's motion
was granted, the complaint and the counterclaim accordingly dismissed by the trial court. The Court
refused to reinstate the counterclaim, opining without elaboration, "[i]f the civil case is dismissed, so also
is the counterclaim filed therein." 34 The broad nature of that statement gave rise to the notion that the
mandatory dismissal of the counterclaim upon dismissal of the complaint applied regardless of the cause
of the complaint's dismissal. 35

Notably, the qualification concerning compulsory counterclaims was provided in Section 2, Rule 17 of the
1964 Rules, the provision governing dismissals by order of the court, and not Section 3, Rule 17. As
stated earlier, Section 3, which covered dismissals for failure to prosecute upon motion of the defendant
or upon motu proprio action of the trial court, was silent on the effect on the counterclaim of dismissals of
such nature.

Spouses Sta. Maria, Jr. v. Court of Appeals, 36 decided in 1972, ostensibly supplied the gap on the effect
on the counterclaim of complaints dismissed under Section 3. The defendants therein successfully moved
before the trial court for the dismissal of the complaint without prejudice and their declaration in default on
the counterclaim after plaintiffs therein failed to attend the pre-trial. After favorable judgment was
rendered on the counterclaim, plaintiffs interposed an appeal, citing among other grounds, that the
counterclaim could no longer have been heard after the dismissal of the complaint. While the Court noted
that the adjudication of the counterclaim in question "does not depend upon the adjudication of the claims
made in the complaint since they were virtually abandoned by the non-appearance of the plaintiffs
themselves," it was also added that "[t]he doctrine invoked is not available to plaintiffs like the petitioners,
who prevent or delay the hearing of their own claims and allegations." 37 The Court, through Justice JBL
Reyes, noted:

The doctrine that the complaint may not be dismissed if the counterclaim cannot be independently
adjudicated is not available to, and was not intended for the benefit of, a plaintiff who prevents or delays
the prosecution of his own complaint. Otherwise, the trial of counterclaims would be made to depend
upon the maneuvers of the plaintiff, and the rule would offer a premium to vexing or delaying tactics to the
prejudice of the counterclaimants. It is in the same spirit that we have ruled that a complaint may not be
withdrawn over the opposition of the defendant where the counterclaim is one that arises from, or is
necessarily connected with, the plaintiff's action and cannot remain pending for independent adjudication.
38

There is no doubt that under the 1964 Rules, the dismissal of a complaint due to the failure of the plaintiff
to appear during pre-trial, as what had happened in Sta. Maria, fell within the coverage of Section 3, Rule
17. On the other hand, Section 2 was clearly limited in scope to those dismissals sustained at the
instance of the plaintiff. 39 Nonetheless, by the early 1990s, jurisprudence was settling on a rule that
compulsory counterclaims were necessarily terminated upon the dismissal of the complaint not only if
such dismissal was upon motion of the plaintiff, but at the instance of the defendant as well. Two
decisions from that period stand out in this regard, Metals Engineering Resources Corp. v. Court of
Appeals 40 and International Container Terminal Services v. Court of Appeals. 41

In Metals, the complaint was expunged from the record after the defendant had filed a motion for
reconsideration of a trial court order allowing the filing of an amended complaint that corrected a
jurisdictional error in the original complaint pertaining to the specification of the amount of damages
sought. When the defendant was nonetheless allowed to present evidence on the counterclaim, the
plaintiff assailed such allowance on the ground that the counterclaim was compulsory and could no
longer remain pending for independent adjudication. The Court, in finding for the plaintiff, noted that the
counterclaim was indeed compulsory in nature, and as such, was auxiliary to the proceeding in the
original suit and derived its jurisdictional support therefrom. 42 It was further explained that the doctrine
was in consonance with the primary objective of a counterclaim, which was to avoid and prevent circuitry
of action by allowing the entire controversy between the parties to be litigated and finally determined in
one action, and to discourage multiplicity of suits. 43 Also, the Court noted that since the complaint was
dismissed for lack of jurisdiction, it was as if no claim was filed against the defendant, and there was thus
no more leg for the complaint to stand on. 44

In International Container, the defendant filed a motion to dismiss which was granted by the trial court.
The defendant's counterclaim was dismissed as well. The Court summarized the key question as "what is
the effect of the dismissal of a complaint ordered at the instance of the defendant upon a compulsory
counterclaim duly raised in its answer." 45 Then it ruled that the counterclaim did not survive such
dismissal. After classifying the counterclaim therein as compulsory, the Court noted that "[i]t is obvious
from the very nature of the counterclaim that it could not remain pending for independent adjudication,
that is, without adjudication by the court of the complaint itself on which the counterclaim was based." 46

Then in 1993, a divided Court ruled in BA Finance that the dismissal of the complaint for nonappearance
of plaintiff at the pre-trial, upon motion of the defendants, carried with it the dismissal of their compulsory
counterclaim. 47 The Court reiterated the rule that "a compulsory counterclaim cannot remain pending for
independent adjudication by the court . . . as it is auxiliary to the proceeding in the original suit and merely
derives its jurisdictional support therefrom." 48 Express reliance was made on Metals, International
Container, and even Dalman in support of the majority's thesis. BA Finance likewise advised that the
proper remedy for defendants desirous that their counterclaims not be dismissed along with the main
complaint was for them to move to declare the plaintiffs to be "non-suited" on their complaint and "as in
default" on their compulsory counterclaim, instead of moving for the dismissal of the complaint. 49
Justice Regalado, joined by Chief Justice Narvasa, registered a strong objection to the theory of the
majority. They agreed that the trial court could no longer hear the counterclaim, but only on the ground
that defendant's motion to be allowed to present evidence on the counterclaim was filed after the order
dismissing the complaint had already become final. They disagreed however that the compulsory
counterclaim was necessarily dismissed along with the main complaint, pointing out that a situation
wherein the dismissal of the complaint was occasioned by plaintiff's failure to appear during pre-trial was
governed under Section 3, Rule 17, and not Section 2 of the same rule. Justice Regalado, who ironically
penned the decision in Metals cited by the majority, explained:

Turning back to Rule 17, it is readily apparent that Sections 2 and 3 thereof envisage different factual and
adjective situations. The dismissal of the complaint under Section 2 is at the instance of plaintiff, for
whatever reason he is minded to move for such dismissal, and, as a matter of procedure, is without
prejudice unless otherwise stated in the order of the court or, for that matter, in plaintiff's motion to
dismiss his own complaint. By reason thereof, to curb any dubious or frivolous strategy of plaintiff for his
benefit or to obviate possible prejudice to defendant, the former may not dismiss his complaint over the
defendant's objection if the latter has a compulsory counterclaim since said counterclaim would
necessarily be divested of juridical basis and defendant would be deprived of possible recovery thereon
in that same judicial proceeding.

Section 3, on the other hand, contemplates a dismissal not procured by plaintiff, albeit justified by causes
imputable to him and which, in the present case, was petitioner's failure to appear at the pre-trial. This
situation is also covered by Section 3, as extended by judicial interpretation, and is ordered upon motion
of defendant or motu proprio by the court. Here, the issue of whether defendant has a pending
counterclaim, permissive or compulsory, is not of determinative significance. The dismissal of plaintiff's
complaint is evidently a confirmation of the failure of evidence to prove his cause of action outlined
therein, hence the dismissal is considered, as a matter of evidence, an adjudication on the merits. This
does not, however, mean that there is likewise such absence of evidence to prove defendant's
counterclaim although the same arises out of the subject matter of the complaint which was merely
terminated for lack of proof. To hold otherwise would not only work injustice to defendant but would be
reading a further provision into Section 3 and wresting a meaning therefrom although neither exists even
by mere implication. Thus understood, the complaint can accordingly be dismissed, but relief can
nevertheless be granted as a matter of course to defendant on his counterclaim as alleged and proved,
with or without any reservation therefor on his part, unless from his conduct, express or implied, he has
virtually consented to the concomitant dismissal of his counterclaim. 50

Justice Regalado also adverted to Sta. Maria and noted that the objections raised and rejected by the
Court therein were the same as those now relied upon by the plaintiff. He pointed out that Dalman and
International Container, both relied upon by the majority, involved the application of Section 2, Rule 17
and not Section 3, which he insisted as the applicable provision in the case at bar. 51

The partial dissent of Justice Regalado in BA Finance proved opportune, as he happened then to be a
member of the Rules of Court Revision Committee tasked with the revision of the 1964 Rules of Court.
Just a few months after BA Finance was decided, Justice Regalado proposed before the Committee an
amendment to Section 3, Rule 17 that would explicitly provide that the dismissal of the complaint due to
the fault of the plaintiff shall be "without prejudice to the right of the defendant to prosecute his
counterclaim in the same or in a separate action." The amendment, which was approved by the
Committee, is reflected in the minutes of the meeting of the Committee held on 12 October 1993:

[Justice Regalado] then proposed that after the words "upon the court's own motion" in the 6th line of the
draft in Sec. 3 of Rule 17, the following provision be inserted: "without prejudice to the right of the
defendant to prosecute his counterclaim in the same or in a separate action." The Committee agreed with
the proposed amendment of Justice Regalado.
Justice Herrera observed that under Secs. 1 to 3 of Rule 17, it is not the action that is dismissed but the
complaint. He asked whether there is any distinction between "complaint" and "action." Justice Regalado
opined that the action of the plaintiff is initiated by his complaint.

Justice Feria then suggested that the dismissal be limited to the complaint[.] Thus, in the 1st line of Sec.
1, the words "An action" will be changed to "a complaint"; in the 2nd line of Sec. 2, the words "an action"
will be changed to "a complaint" and in Sec. 3, the word "action" on the 5th line of the draft will be
changed to "complaint." The Committee agreed with Justice Feria's suggested amendments.

CA Paño believed that there is a need to clarify the counterclaim that the defendant will prosecute,
whether it is permissive or compulsory or all kinds of counterclaims.

Justice Regalado opined that there is no need of making a clarification because it is already understood
that it covers both counterclaims. 52

It is apparent from these minutes that the survival of the counterclaim despite the dismissal of the
complaint under Section 3 stood irrespective of whether the counterclaim was permissive or compulsory.
Moreover, when the Court itself approved the revisions now contained in the 1997 Rules of Civil
Procedure, not only did Justice Regalado's amendment to Section 3, Rule 17 remain intact, but the final
version likewise eliminated the qualification formerly offered under Section 2 on "counterclaims that can
remain pending for independent adjudication by the court." 53 At present, even Section 2, concerning
dismissals on motion of the plaintiff, now recognizes the right of the defendant to prosecute the
counterclaim either in the same or separate action notwithstanding the dismissal of the complaint, and
without regard as to the permissive or compulsory nature of the counterclaim.

In his commentaries on the 1997 Rules of Civil Procedure, Justice Regalado expounds on the effects of
the amendments to Section 2 and 3 of Rule 17:

2. Under this revised section [2], where the plaintiff moves for the dismissal of his complaint to which a
counterclaim has been interposed, the dismissal shall be limited to the complaint. Such dismissal shall be
without prejudice to the right of the defendant to either prosecute his counterclaim in a separate action or
to have the same resolved in the same action. Should he opt for the first alternative, the court should
render the corresponding order granting and reserving his right to prosecute his claim in a separate
complaint. Should he choose to have his counterclaim disposed of in the same action wherein the
complaint had been dismissed, he must manifest such preference to the trial court within 15 days from
notice to him of plaintiff's motion to dismiss. These alternative remedies of the defendant are available to
him regardless of whether his counterclaim is compulsory or permissive. A similar alternative procedure,
with the same underlying reason therefor, is adopted in Sec. 6, Rule 16 and Sec. 3 of this Rule, wherein
the complaint is dismissed on the motion of the defendant or, in the latter instance, also by the court motu
proprio.

xxx xxx xxx

2. The second substantial amendment to [Section 3] is with respect to the disposition of the defendant's
counterclaim in the event the plaintiff's complaint is dismissed. As already observed, he is here granted
the choice to prosecute that counterclaim in either the same or a separate action. . . . CEaDAc

3. With the aforestated amendments in Secs. 2 and 3 laying down specific rules on the disposition of
counterclaims involved in the dismissal actions, the controversial doctrine in BA Finance Corporation vs.
Co, et al., (G.R. No. 105751, June 30, 1993) has been abandoned, together with the apparent confusion
on the proper application of said Secs. 2 and 3. Said sections were distinguished and discussed in the
author's separate opinion in that case, even before they were clarified by the present amendments . . . .
54

Similarly, Justice Feria notes that "the present rule reaffirms the right of the defendant to move for the
dismissal of the complaint and to prosecute his counterclaim, as stated in the separate opinion [of Justice
Regalado in BA Finance.]" 55 Retired Court of Appeals Justice Herrera pronounces that the amendment
to Section 3, Rule 17 settles that "nagging question" whether the dismissal of the complaint carries with it
the dismissal of the counterclaim, and opines that by reason of the amendments, the rulings in Metals
Engineering, International Container, and BA Finance "may be deemed abandoned." 56 On the effect of
amendment to Section 3, Rule 17, the commentators are in general agreement, 57 although there is less
unanimity of views insofar as Section 2, Rule 17 is concerned. 58

To be certain, when the Court promulgated the 1997 Rules of Civil Procedure, including the amended
Rule 17, those previous jural doctrines that were inconsistent with the new rules incorporated in the 1997
Rules of Civil Procedure were implicitly abandoned insofar as incidents arising after the effectivity of the
new procedural rules on 1 July 1997. BA Finance, or even the doctrine that a counterclaim may be
necessarily dismissed along with the complaint, clearly conflicts with the 1997 Rules of Civil Procedure.
The abandonment of BA Finance as doctrine extends as far back as 1997, when the Court adopted the
new Rules of Civil Procedure. If, since then, such abandonment has not been affirmed in jurisprudence, it
is only because no proper case has arisen that would warrant express confirmation of the new rule. That
opportunity is here and now, and we thus rule that the dismissal of a complaint due to fault of the plaintiff
is without prejudice to the right of the defendant to prosecute any pending counterclaims of whatever
nature in the same or separate action. We confirm that BA Finance and all previous rulings of the Court
that are inconsistent with this present holding are now abandoned.

Accordingly, the RTC clearly erred when it ordered the dismissal of the counterclaim, since Section 3,
Rule 17 mandates that the dismissal of the complaint is without prejudice to the right of the defendant to
prosecute the counterclaim in the same or separate action. If the RTC were to dismiss the counterclaim, it
should be on the merits of such counterclaim. Reversal of the RTC is in order, and a remand is necessary
for trial on the merits of the counterclaim. cSEaTH

It would be perfectly satisfactory for the Court to leave this matter at that. Still, an explanation of the
reason behind the new rule is called for, considering that the rationale behind the previous rule was
frequently elaborated upon.

Under Act No. 190, or the Code of Procedure in Civil Actions promulgated in 1901, it was recognized in
Section 127(1) that the plaintiff had the right to seek the dismissal of the complaint at any time before
trial, "provided a counterclaim has not been made, or affirmative relief sought by the cross-complaint or
answer of the defendant." 59 Note that no qualification was made then as to the nature of the
counterclaim, whether it be compulsory or permissive. The protection of the defendant's right to prosecute
the counterclaim was indeed unqualified. In City of Manila, decided in 1918, the Court explained:

By paragraph 1 [of Section 127], it will be seen that, where the defendant has interposed a counterclaim,
or is seeking affirmative relief by a cross-complaint, that then, and in that case, the plaintiff cannot
dismiss the action so as to affect the right of the defendant in his counterclaim or prayer for affirmative
relief. The reason for that exception is clear. When the answer sets up an independent action against the
plaintiff, it then becomes an action by the defendant against the plaintiff, and, of course, the plaintiff has
no right to ask for a dismissal of the defendant's action. 60

Nonetheless, a new rule was introduced when Act No. 190 was replaced by the 1940 Rules of Court.
Section 2, Rule 30 of the 1940 Rules specified that if a counterclaim is pleaded by a defendant prior to
the service of the plaintiff's motion to dismiss, the action shall not be dismissed against the defendant's
objection unless the counterclaim can remain pending for independent adjudication by the court. This
qualification remained intact when the 1964 Rules of Court was introduced. 61 The rule referred only to
compulsory counterclaims, or counterclaims which arise out of or are necessarily connected with the
transaction or occurrence that is the subject matter of the plaintiff's claim, since the rights of the parties
arising out of the same transaction should be settled at the same time. 62 As was evident in Metals,
International Container and BA Finance, the rule was eventually extended to instances wherein it was the
defendant with the pending counterclaim, and not the plaintiff, that moved for the dismissal of the
complaint.

We should not ignore the theoretical bases of the rule distinguishing compulsory counterclaims from
permissive counterclaims insofar as the dismissal of the action is concerned. There is a particular school
of thought that informs the broad proposition in Dalman that "if the civil case is dismissed, so also is the
counterclaim filed therein," 63 or the more nuanced discussions offered in Metals, International Container,
and BA Finance. The most potent statement of the theory may be found in Metals, 64 which proceeds
from the following fundamental premises — a compulsory counterclaim must be set up in the same
proceeding or would otherwise be abated or barred in a separate or subsequent litigation on the ground
of auter action pendant, litis pendentia or res judicata; a compulsory counterclaim is auxiliary to the main
suit and derives its jurisdictional support therefrom as it arises out of or is necessarily connected with the
transaction or occurrence that is the subject matter of the complaint; 65 and that if the court dismisses the
complaint on the ground of lack of jurisdiction, the compulsory counterclaim must also be dismissed as it
is merely ancillary to the main action and no jurisdiction remained for any grant of relief under the
counterclaim.

The first point is derived from Section 4, Rule 9, of the 1964 Rules of Court, while the two latter points are
sourced from American jurisprudence. There is no disputing the theoretical viability of these three points.
In fact, the requirement that the compulsory counterclaim must be set up in the same proceeding remains
extant under the 1997 Rules of Civil Procedure. 66 At the same time, other considerations rooted in
actual practice provide a counterbalance to the above-cited rationales.

Whatever the nature of the counterclaim, it bears the same integral characteristics as a complaint;
namely a cause (or causes) of action constituting an act or omission by which a party violates the right of
another. The main difference lies in that the cause of action in the counterclaim is maintained by the
defendant against the plaintiff, while the converse holds true with the complaint. Yet, as with a complaint,
a counterclaim without a cause of action cannot survive.

It would then seemingly follow that if the dismissal of the complaint somehow eliminates the cause(s) of
the counterclaim, then the counterclaim cannot survive. Yet that hardly is the case, especially as a
general rule. More often than not, the allegations that form the counterclaim are rooted in an act or
omission of the plaintiff other than the plaintiff's very act of filing the complaint. Moreover, such acts or
omissions imputed to the plaintiff are often claimed to have occurred prior to the filing of the complaint
itself. The only apparent exception to this circumstance is if it is alleged in the counterclaim that the very
act of the plaintiff in filing the complaint precisely causes the violation of the defendant's rights. Yet even
in such an instance, it remains debatable whether the dismissal or withdrawal of the complaint is
sufficient to obviate the pending cause of action maintained by the defendant against the plaintiff. 67

These considerations persist whether the counterclaim in question is permissive or compulsory. A

compulsory counterclaim arises out of or is connected with the transaction or occurrence constituting the
subject matter of the opposing party's claim, does not require for its adjudication the presence of third
parties, and stands within the jurisdiction of the court both as to the amount involved and the nature of the
claim. 68 The fact that the culpable acts on which the counterclaim is based are founded within the same
transaction or occurrence as the complaint, is insufficient causation to negate the counterclaim together
with the complaint. The dismissal or withdrawal of the complaint does not traverse the boundaries of time
to undo the act or omission of the plaintiff against the defendant, or vice versa. While such dismissal or
withdrawal precludes the pursuit of litigation by the plaintiff, either through his/her own initiative or fault, it
would be iniquitous to similarly encumber the defendant who maintained no such initiative or fault. If the
defendant similarly moves for the dismissal of the counterclaim or neglects to timely pursue such action,
let the dismissal of the counterclaim be premised on those grounds imputable to the defendant, and not
on the actuations of the plaintiff.

The other considerations supplied in Metals are anchored on the premise that the jurisdictional foundation
of the counterclaim is the complaint itself. The theory is correct, but there are other facets to this subject
that should be taken into account as well. On the established premise that a counterclaim involves
separate causes of action than the complaint even if derived from the same transaction or series of
transactions, the counterclaim could have very well been lodged as a complaint had the defendant filed
the action ahead of the complainant. 69 The terms "ancillary" or "auxiliary" may mislead in signifying that
a complaint innately possesses more credence than a counterclaim, yet there are many instances
wherein the complaint is trivial but the counterclaim is meritorious. In truth, the notion that a counterclaim
is, or better still, appears to be merely "ancillary" or "auxiliary" is chiefly the offshoot of an accident of
chronology, more than anything else.

The formalistic distinction between a complaint and a counterclaim does not detract from the fact that
both of them embody causes of action that have in their end the vindication of rights. While the distinction
is necessary as a means to facilitate order and clarity in the rules of procedure, it should be remembered
that the primordial purpose of procedural rules is to provide the means for the vindication of rights. A
party with a valid cause of action against another party cannot be denied the right to relief simply because
the opposing side had the good fortune of filing the case first. Yet this in effect was what had happened
under the previous procedural rule and correspondent doctrine, which under their final permutation,
prescribed the automatic dismissal of the compulsory counterclaim upon the dismissal of the complaint,
whether upon the initiative of the plaintiff or of the defendant.

Thus, the present rule embodied in Sections 2 and 3 of Rule 17 ordains a more equitable disposition of
the counterclaims by ensuring that any judgment thereon is based on the merit of the counterclaim itself
and not on the survival of the main complaint. Certainly, if the counterclaim is palpably without merit or
suffers jurisdictional flaws which stand independent of the complaint, the trial court is not precluded from
dismissing it under the amended rules, provided that the judgment or order dismissing the counterclaim is
premised on those defects. At the same time, if the counterclaim is justified, the amended rules now
unequivocally protect such counterclaim from peremptory dismissal by reason of the dismissal of the
complaint.

WHEREFORE, the petition is GRANTED. The Orders dated 9 August 2005 and 10 October 2005 of
Branch 29, Regional Trial Court of San Miguel, Zamboanga del Sur in Civil Case No. 98-012 are SET
ASIDE. Petitioner's counterclaim as defendant in Civil Case. No. 98-012 is REINSTATED. The Regional
Trial Court is ORDERED to hear and decide the counterclaim with deliberate dispatch. aHIDAE

SO ORDERED.

 In the Matter of the Petition for the Issuance of a Writ of Amparo in Favor of Lilibeth
Ladaga v. Major General Reynaldo Mapagu, et al., G.R. No. 189689 & G.R. No. 189691,
November 13, 2012

IN THE MATTER OF THE PETITION FOR THE ISSUANCE OF A WRIT OF AMPARO IN FAVOR OF
LILIBETH O. LADAGA:

LILIBETH O. LADAGA, petitioner, vs. MAJ. GEN. REYNALDO MAPAGU, COMMANDING GENERAL OF
THE PHILIPPINE ARMY'S 10TH INFANTRY DIVISION (ID); COL. LYSANDER SUERTE, CHIEF OF
STAFF, 10TH ID, LT. COL. KURT A. DECAPIA, CHIEF, 10TH ID, PUBLIC AFFAIRS OFFICE; COL.
OSCAR LACTAO, HEAD-TASK FORCE-DAVAO; SR. SUPT. RAMON APOLINARIO, DAVAO CITY
POLICE OFFICE DIRECTOR; AND SEVERAL OTHER JOHN DOES, respondents.

[G.R. No. 189690. November 13, 2012.]

IN THE MATTER OF THE PETITION FOR THE ISSUANCE OF A WRIT OF AMPARO IN FAVOR OF
ANGELA A. LIBRADO-TRINIDAD:
ANGELA A. LIBRADO-TRINIDAD, petitioner, vs. MAJ. GEN. REYNALDO MAPAGU, COMMANDING
GENERAL OF THE PHILIPPINE ARMY'S 10TH ID; COL. LYSANDER SUERTE, CHIEF OF STAFF,
10TH ID, LT. COL. KURT A. DECAPIA, CHIEF, 10TH ID, PUBLIC AFFAIRS OFFICE; COL. OSCAR
LACTAO, HEAD-TASK FORCE-DAVAO; SR. SUPT. RAMON APOLINARIO, DAVAO CITY POLICE
OFFICE DIRECTOR; AND SEVERAL OTHER JOHN DOES, respondents.

[G.R. No. 189691. November 13, 2012.]

IN THE MATTER OF THE PETITION FOR THE ISSUANCE OF A WRIT OF AMPARO IN FAVOR OF
CARLOS ISAGANI T. ZARATE:

CARLOS ISAGANI T. ZARATE, petitioner, vs. MAJ. GEN. REYNALDO MAPAGU, COMMANDING
GENERAL OF THE PHILIPPINE ARMY'S 10TH ID; COL. LYSANDER SUERTE, CHIEF OF STAFF,
10TH ID, LT. COL. KURT A. DECAPIA, CHIEF, 10TH ID, PUBLIC AFFAIRS OFFICE; COL. OSCAR
LACTAO, HEAD-TASK FORCE-DAVAO; SR. SUPT. RAMON APOLINARIO, DAVAO CITY POLICE
OFFICE DIRECTOR; AND SEVERAL OTHER JOHN DOES, respondents.

DECISION

PERLAS-BERNABE, J p:

The Cases

In each of these three (3) consolidated petitions for review, the Court is tasked to evaluate the
substantially similar but separately issued Orders of the Regional Trial Court (RTC) of Davao City, Branch
10, dated August 14, 2009 1 in the three (3) writ of amparo cases, as well as, the Order dated September
22, 2009 2 denying the joint motion for reconsideration thereof.

The Facts

Petitioners share the common circumstance of having their names included in what is alleged to be a
JCICC "AGILA" 3rd Quarter 2007 Order of Battle Validation Result of the Philippine Army's 10th Infantry
Division (10th ID), 3 which is a list containing the names of organizations and personalities in Southern
Mindanao, particularly Davao City, supposedly connected to the Communist Party of the Philippines
(CPP) and its military arm, the New People's Army (NPA). They perceive that by the inclusion of their
names in the said Order of Battle (OB List), they become easy targets of unexplained disappearances or
extralegal killings — a real threat to their life, liberty and security.

The petitioner in G.R. No. 189689, ATTY. LILIBETH O. LADAGA (Atty. Ladaga), first came to know of the
existence of the OB List from an undisclosed source on May 21, 2009. This was after the PowerPoint
presentation made public by Bayan Muna Party-List Representative Satur Ocampo (Representative
Ocampo) on May 18, 2009 during the conclusion of the International Solidarity Mission (ISM) conducted
by various organizations. The following entries bearing specific reference to her person were reflected
therein: EaCDAT

7. ON 12 NOV 07, MEETING AT SHIMRIC BEACH RESORT, TALOMO, DC PRESIDED BY ATTY.

LILIBETH LADAGA — SEC GEN, UNION OF PEOPLE'S LAWYER MOVEMENT (UPLM) AND KELLY
DELGADO-SEC GEN, KARAPATAN:

— PRESENTED THE NATL GOAL/THEME WHICH STATES THAT "THE STAGE IS SET, TIME TO
UNITE AGAINST ARROYO, STEP UP PROTESTS AND ARMED OFFENSIVE."

— DISCUSSED THE FOLLOWING ISSUES WHICH WILL BE CAPITALIZED ON THEIR PLANNED

ACTIVITIES ON 30 NOV 07:
ISSUES:

1. OUTREACH PROGRAMS/MEDICAL MISSION IN RURAL AREAS;

2. OUT OF SCHOOL YOUTH RECRUITMENT;

3. P125 DAILY WAGE HIKE OR P3,000 ACROSS THE BOARD HIKE;

4. SCRAP ANTI-TERRORISM BILL;

5. OIL DE-REGULATION LAW;

6. ANTI-LARGE SCALE MINING;

7. CORRUPTION AND ANTI-POVERTY/ZTE ISSUES AND BRIBERY;

8. ANTI-POLITICAL AND EXTRA JUDICIAL KILLINGS;

9. CARP ISSUES AND LAND DISPUTES; AND

10. LATEST GLORIETA BOMBING

COMPOSITION: CIVIC, RELIGIOUS, TRANSPORT, LABOR AND PEASANT, YOUTH SECTOR,

PROGRESSIVE GROUPS, BUSINESS SECTOR, ANTI-PGMA, BLACK AND WHITE MOVEMENT AND
ANTI-POVERTY MOVEMENT.

ULTIMATE GOAL: TRY TO OUST PGMA ON 30 NOV 07 4

In her Affidavit, 5 Atty. Ladaga substantiated the threats against her life, liberty and security by narrating
that since 2007, suspicious-looking persons have been visiting her Davao City law office during her
absence, posing either as members of the military or falsely claiming to be clients inquiring on the status
of their cases. These incidents were attested to by her law office partner, Atty. Michael P. Pito, through an
Affidavit 6 dated June 16, 2009.

On the other hand, the petitioner in G.R. No. 189690, Davao City Councilor ATTY. ANGELA LIBRADO-
TRINIDAD (Atty. Librado-Trinidad), delivered a Privilege Speech 7 before the members of the
Sangguniang Panglungsod of Davao City on May 19, 2009 to demand the removal of her name from said
OB List. Subsequently, the Davao City Council ordered a formal investigation into the existence of the
alleged OB List. The Commission on Human Rights (CHR), for its part, announced the conduct of its own
investigation into the matter, having been presented a copy of the PowerPoint presentation during its
public hearing in Davao City on May 22, 2009.

According to her, in the course of the performance of her duties and functions as a lawyer, as a member
of the Sangguniang Panglungsod of Davao, as well as, of Bayan Muna, she has not committed any act
against national security that would justify the inclusion of her name in the said OB List. In her Affidavit, 8
she recounted that sometime in May 2008, two suspicious-looking men on a motorcycle tailed her vehicle
as she went about her day going to different places. She also recalled that on June 23, 2008, while she
was away from home, three unidentified men tried to barge into their house and later left on board a plate-
less, stainless "owner type-vehicle." Both incidents were duly reported to the police. 9 AHCcET

Meanwhile, the petitioner in G.R. No. 189691, current Secretary General of the Union of Peoples'
Lawyers in Mindanao (UPLM) and Davao City Coordinator of the Free Legal Assistance Group (FLAG),
ATTY. CARLOS ISAGANI T. ZARATE (Atty. Zarate), was informed sometime in May 2009 that his name
was also among those included in the OB List made public by Representative Ocampo at a forum
concerning human rights violations in Southern Mindanao. In Atty. Zarate's petition, 10 he alleged that:
5. On May 19, 2009, during a press conference marking the conclusion of an International Solidarity
Mission (ISM) — attended by both local and international delegates and organized to investigate alleged
human rights violations in Southern Mindanao by state's forces — Bayan Muna Party-list Representative
Satur Ocampo revealed the existence of a "watch list," officially known in military parlance as "Order of
Battle" prepared by the intelligence arm of Philippine Army's 10th ID, headed by respondent Maj. Gen.
Reynaldo Mapagu. . . .;

6. The said "Order of Battle" was contained in a [PowerPoint] presentation marked "SECRET" and
captioned "3rd Quarter 2007 OB Validation Result"; it was supposedly prepared by the "JCICC 'Agila'"
under the [O]ffice of the Assistant Chief of Staff for Intelligence of the 10th Infantry Division of the
Philippine Army. It also mentioned a certain "JTICC 'LAWIN'" with the following as members: Task Force
Davao — Chairman; Team Leader, SPOT11-3, MIG11, ISAFP, NISU-Davao, NISG-EM, PN, 305th AISS,
PAF, TL, ISU 11, PA, S2, RCDG, PA; M2, DCPO; NICA XI; S2, 104th DRC, PA, and, WACOM-
Researcher/Analyst MIG11, ISAFP[;]

7. The said [PowerPoint] presentation (which Representative Ocampo said was "leaked" by a
"conscientious soldier"), revealed the names of organizations and personalities in Southern Mindanao,
particularly Davao City, supposedly "connected" to the Communist Party of the Philippines (CPP) and its
military arm, the New People's Army (NPA);

8. The name of the herein petitioner was listed in the categories of"human rights" and "Broad
Alliance" . . .; 11 (Emphasis in the original)

Asserting that the inclusion of his name in the OB List was due to his advocacies as a public interest or
human rights lawyer, Atty. Zarate vehemently and categorically denied that he was fronting for, or
connected with, the CPP-NPA. 12

In fine, petitioners were one in asserting that the OB List is really a military hit-list as allegedly shown by
the fact that there have already been three victims of extrajudicial killing whose violent deaths can be
linked directly to the OB List, to wit: Celso B. Pojas, who was assassinated in May 2008 13 purportedly
because he was Secretary General of the Farmers Association of Davao City 14 and Spokesperson of
the Kilusang Magbubukid sa Pilipinas (KMP), 15 which organizations were identified as communist fronts
in the subject OB List; Lodenio S. Monzon, who was a victim of a shooting incident in April 2009 16 due to
his supposed connection to the known activist party-list group Bayan Muna 17 as Coordinator in the
Municipality of Boston, Davao Oriental; and Dr. Rogelio Peñera, who was shot to death in June 2009
allegedly because he was a member of RX Against Erap (RAGE), 18 a sectoral group also identified in
the OB List.

Petitioners further alleged that respondents' inconsistent statements and obvious prevarication sufficiently
prove their authorship of the subject OB List. Supposedly sourced from their own Press Releases, 19
respondents have been quoted in several newspapers as saying: 1) that the "10th ID has its Order of
Battle, and, it is not for public consumption"; 2) that the Order of Battle "requires thorough confirmation
and validation from different law enforcement agencies, and from various sectors and stakeholders who
are the ones providing the information about the people and organizations that may in one way or the
other, wittingly or unwittingly, become involved in the CPP's grand design"; 3) that an "order of battle does
not target individuals; it is mainly an assessment of the general threat to national security"; 4) that
Representative Ocampo "utilized the material to disrupt the ongoing government efforts in the area by
raising issues and propaganda against the military"; 5) that "[t]he public viewing of the "falsified"
document of the OB was a deliberate act of Representative Ocampo . . . to mar the image of the military
forces, gain media mileage and regain the support of the masses and local executives"; 6) that
Representative Ocampo "'twisted' the data and insinuated names as targets of the AFP/10ID when in fact
these are targets (for infiltration) by the CPP/NPA"; and 7) that this "attempt of the CPP to attribute human
rights violations to the Philippine government is a cover to mask their record of killing people." According
to petitioners, there is no question that these Press Releases came from the 10th ID. Its source email
address, dpao10id@yahoo.com, has been identified by regular correspondent of the Philippine Daily
Inquirer Jeffrey Tupas as the same one used by respondent Lt. Col. Decapia in sending to him previous
official press statements of the 10th ID, including the Press Release entitled, "CPP/NPA demoralized,
ISM on the rescue." 20

On June 16, 2009, petitioners separately filed before the RTC a Petition for the Issuance of a Writ of
Amparo with Application for a Production Order, 21 docketed as Special Proceeding Nos. 004-09, 22 005-
09 23 and 006-09. 24 On June 22, 2009, the RTC issued separate Writs of Amparo 25 in each of the
three (3) cases, directing respondents to file a verified written return within seventy-two (72) hours and
setting the case for summary hearing on June 29, 2009.

In their Returns, 26 respondents denied authorship of the document being adverted to and distributed by
Representative Ocampo to the media. They claimed that petitioners miserably failed to show, by
substantial evidence, that they were responsible for the alleged threats perceived by petitioners. Instead,
they asserted that petitioners' allegations are based solely on hearsay, speculation, beliefs, impression
and feelings, which are insufficient to warrant the issuance of the writ and, ultimately, the grant of the
privilege of the writ of amparo.

In her Reply, 27 Atty. Librado-Trinidad averred that the present petition substantially conformed with the
requirements of the Amparo Rule, as it alleged ultimate facts on the participation of respondents in the
preparation of the OB List, which naturally requires utmost secrecy. The petition likewise alleged how the
inclusion of their names in the said OB List substantiates the threat of becoming easy targets of
unexplained disappearances and extrajudicial killings. On the other hand, Attys. Zarate and Ladaga
commonly asserted 28 that the totality of the events, which consists of respondents' virtual admission to
the media of the existence of the OB List, as well as, the fact that known victims of past extrajudicial
killings have been likewise labeled as communist fronts in similar orders of battle, more than satisfies the
standard required to prove that petitioners' life, liberty and security are at risk. HESCcA

During the scheduled summary hearing on June 22, 2009, Representative Ocampo's oral testimony on
the circumstances surrounding his obtention of the alleged military document was dispensed with and,
instead, the Affidavit 29 he executed on June 30, 2009 was presented in the hearing held on July 1, 2009
to form part of the documentary exhibits of petitioners. 30

After submission of the parties' respective Position Papers, 31 the RTC issued on August 14, 2009 the
three separate but similarly-worded Orders finding no substantial evidence to show that the perceived
threat to petitioners' life, liberty and security was attributable to the unlawful act or omission of the
respondents, thus disposing of each of the three cases in this wise:

Prescinding therefrom, and in . . . light of all the pieces of evidence presented, this Court is of the
considered views [sic] that petitioner failed to prove, by substantial evidence, that indeed, (her/his)
perceived threat to (her/his) life, liberty and security is attributable to the unlawful act or omission of the
respondents. Accordingly, this Court has no other recourse but to deny the instant petition.

WHEREFORE, the privilege of the Writ is hereby denied.

SO ORDERED. 32

The RTC rejected the sworn statement of Representative Ocampo for being hearsay, holding that with no
direct or personal knowledge of the authenticity of the subject OB List, even an oral testimony from him
on the circumstances surrounding its obtention through a "conscientious soldier" would still be of no
probative weight. It likewise found that the violent deaths of Celso Pojas, Lodenio Monzon and Dr.
Rogelio Peñera, and other incidents of threat have no direct relation at all to the existence of the present
OB List.

In their Joint Motion for Reconsideration, 33 petitioners argued that the existence and veracity of the OB
List had already been confirmed by respondents themselves through their statements to the media,
hence, respondents' personal authorship thereof need not be proven by substantial evidence, as it is,
after all, "not the crux of the issue." Petitioners explicated that since respondents were being impleaded
as the responsible officers of the 10th ID — the military unit that supposedly prepared the OB List
PowerPoint presentation, their general denials on the existence of the OB List without taking serious
steps to find the persons actually responsible for the threat could not discharge respondents from the
standard of diligence required of them under the Amparo Rule.

The RTC, however, rejected petitioners' arguments in the September 22, 2009 Order, hence, these
petitions for review on certiorari raising the following issues:

I. THE TRIAL COURT ERRED IN RULING THAT PETITIONER FAILED TO ADDUCE SUBSTANTIAL
EVIDENCE TO WARRANT THE GRANT OF THE PRIVILEGE OF THE WRIT, I.E., PROTECTION;

II. THE TRIAL COURT ERRED IN FAILING TO CONSIDER THAT THE RESPONDENTS LIKEWISE
FAILED TO DISCHARGE THE DILIGENCE REQUIRED BY THE AMPARO RULES BY THEIR
SWEEPING AND GENERAL DENIALS; AND

III. THE TRIAL COURT ERRED IN APPRECIATING THE NATURE AND CONCEPT OF THE
PRIVILEGE OF THE WRIT. 34

Commenting on the petitions, respondents argue 35 that the purported OB List could not have come from
the military because it does not have the "distinctive marks and security classifications" of military
documents. They quickly defend the correctness of the RTC's denial of the privilege of the writ and the
interim relief of a protection order as petitioners have not presented any adequate and competent
evidence, much less substantial evidence, to establish that public respondents are threatening to violate
their rights to life, liberty and security or that, at the very least, were involved in the preparation of the OB
List.

We deny the petitions.

The writ of amparo was promulgated by the Court pursuant to its rule-making powers in response to the
alarming rise in the number of cases of enforced disappearances and extrajudicial killings. 36 It plays the
preventive role of breaking the expectation of impunity in the commission of extralegal killings and
enforced disappearances, as well as the curative role of facilitating the subsequent punishment of the
perpetrators. 37 In Tapuz v. Del Rosario, 38 the Court has previously held that the writ of amparo is an
extraordinary remedy intended to address violations of, or threats to, the rights to life, liberty or security
and that, being a remedy of extraordinary character, it is not one to issue on amorphous or uncertain
grounds but only upon reasonable certainty. Hence, every petition for the issuance of the writ is required
to be supported by justifying allegations of fact on the following matters:

(a) The personal circumstances of the petitioner;

(b)The name and personal circumstances of the respondent responsible for the threat, act or omission,
or, if the name is unknown or uncertain, the respondent may be described by an assumed appellation;

(c) The right to life, liberty and security of the aggrieved party violated or threatened with violation by an
unlawful act or omission of the respondent, and how such threat or violation is committed with the
attendant circumstances detailed in supporting affidavits;

(d) The investigation conducted, if any, specifying the names, personal circumstances, and addresses of
the investigating authority or individuals, as well as the manner and conduct of the investigation, together
with any report;

(e) The actions and recourses taken by the petitioner to determine the fate or whereabouts of the
aggrieved party and the identity of the person responsible for the threat, act or omission; and
(f) The relief prayed for. The petition may include a general prayer for other just and equitable reliefs. 39
(Underscoring supplied)

The sole and common issue presented in these petitions is whether the totality of evidence satisfies the
degree of proof required under the Amparo Rule. Sections 17 and 18 of the Rule on the Writ of Amparo
provide as follows:

SEC. 17. Burden of Proof and Standard of Diligence Required. — The parties shall establish their claims
by substantial evidence.

xxx xxx xxx

SEC. 18. Judgment. — The court shall render judgment within ten (10) days from the time the petition is
submitted for decision. If the allegations in the petition are proven by substantial evidence, the court shall
grant the privilege of the writ and such reliefs as may be proper and appropriate; otherwise, the privilege
shall be denied. (Emphasis supplied)

Substantial evidence is that amount of relevant evidence which a reasonable mind might accept as
adequate to support a conclusion. It is more than a mere imputation of wrongdoing or violation that would
warrant a finding of liability against the person charged. 40 The summary nature of amparo proceedings,
as well as, the use of substantial evidence as standard of proof shows the intent of the framers of the rule
to address situations of enforced disappearance and extrajudicial killings, or threats thereof, with what is
akin to administrative proceedings. 41

Suitable to, and consistent with this incipiently unique and informal treatment of amparo cases, the Court
eventually recognized the evidentiary difficulties that beset amparo petitioners, arising as they normally
would from the fact that the State itself, through its own agents, is involved in the enforced disappearance
or extrajudicial killing that it is supposedly tasked by law to investigate. Thus, in Razon, Jr. v. Tagitis, the
Court laid down a new standard of relaxed admissibility of evidence to enable amparo petitioners to meet
the required amount of proof showing the State's direct or indirect involvement in the purported violations
and found it a fair and proper rule in amparo cases "to consider all the pieces of evidence adduced in
their totality" and "to consider any evidence otherwise inadmissible under our usual rules to be admissible
if it is consistent with the admissible evidence adduced." 42 Put simply, evidence is not to be rejected
outright because it is inadmissible under the rules for as long as it satisfies "the most basic test of reason
— i.e., relevance of the evidence to the issue at hand and its consistency with all other pieces of adduced
evidence." 43

This measure of flexibility in the admissibility of evidence, however, does not do away with the
requirement of substantial evidence in showing the State's involvement in the enforced disappearance,
extrajudicial killing or threats thereof. It merely permits, in the absence of hard-to-produce direct evidence,
a closer look at the relevance and significance of every available evidence, 44 including those that are,
strictly speaking, hearsay where the circumstances of the case so require, and allows the consideration of
the evidence adduced in terms of their consistency with the totality of the evidence. 45

As emphasized by Justice Arturo D. Brion (Justice Brion) during the deliberations on this case, in cases of
enforced disappearance, the evidence that would directly establish a violation of the right to life, liberty
and security is indubitably in the State's possession. The same is not equally true in cases where the
amparo petitioner alleges (as in this case) a threatened violation of his/her rights since the facts,
circumstances and the link between these that create an actual threat to his/her life are measurably within
the ability of the amparo petitioner to prove. These include, among others, the alleged documented
human rights violations by the military in Mindanao; documentary and/or testimonial evidence on the
military's counter-insurgency operations; corroborative evidence to support the allegations on the
presence of suspicious men; and presumptive evidence linking the deaths of Celso Pojas, Ludenio
Monzon and Dr. Rogelio Peñera to their political affiliation and the similarity of their situation to those of
petitioners. A mere inclusion of one's name in the OB List, without more, does not suffice to discharge the
burden to establish actual threat to one's right to life, liberty and security by substantial evidence.
The statement of Representative Ocampo that the respondents are the real source of the OB List is
unquestionably hearsay evidence because, except for the fact that he himself received the OB List from
an unnamed source merely described as "a conscientious soldier," he had no personal knowledge
concerning its preparation. But even if the Court were to apply the appropriate measure of flexibility in the
instant cases by admitting the hearsay testimony of Representative Ocampo, a consideration of this piece
of evidence to the totality of those adduced, namely, the Press Releases issued by the 10th ID admitting
the existence of a military-prepared Order of Battle, the affidavits of petitioners attesting to the threatening
visits and tailing of their vehicles by menacing strangers, as well as the violent deaths of alleged militant
personalities, leads to the conclusion that the threat to petitioners' security has not be adequately proven.

Petitioners sought to prove that the inclusion of their names in the OB List presented a real threat to their
security by attributing the violent deaths of known activists Celso Pojas, Lodenio Monzon and Dr. Rogelio
Peñera to the inclusion of the latter's names or the names of their militant organizations in the subject OB
List. Petitioner Atty. Librado-Trinidad even attributed the alleged tailing of her vehicle by motorcycle-riding
men and the attempted entry by suspicious men into her home to the inclusion of her name in the OB List.
The RTC, however, correctly dismissed both arguments, holding that the existence of the OB List could
not be directly associated with the menacing behavior of suspicious men or the violent deaths of certain
personalities, thus:

"Anent petitioner's revelation that sometime in 2008, a number of unidentified men attempted to forcibly
enter the premises of her dwelling and that at one occasion, the vehicle she was riding was tailed by
motorcycle-riding men, the same could not led [sic] to the conclusion that indeed, those incidents were
related to the existence of the "OB List." There appears not even an iota of evidence upon which the
same assumption can be anchored on. 46

This Court likewise sees no direct relation between the violent deaths of Celso Pojas, Ludenio Monzon
and Dr. Rogelio Peñera and the subject "OB List." There is no evidence pointing to the claim that they
were killed because their names or the organizations they were involved in were mentioned in the same
"OB List." More importantly, there is no official finding by the proper authorities that their deaths were
precipitated by their involvement in organizations sympathetic to, or connected with, the Communist Party
of the Philippines, or its military arm, the New People's Army. Lastly, and more telling, the existence of the
subject "OB List" has not been adequately proven, as discussed heretofore, hence, reference to the same
finds no basis." 47

The Court holds that the imputed pattern of targeting militants for execution by way of systematically
identifying and listing them in an Order of Battle cannot be inferred simply from the Press Releases
admitting the existence of a military document known as an Order of Battle and the fact that activists
Celso Pojas, Lodenio Monzon and Dr. Rogelio Peñera have become supposed victims of extralegal
killings. The adduced evidence tends to bear strongly against the proposition because, except for Celso
Pojas, the names of the supposed victims of extrajudicial killings are manifestly absent in the subject OB
List and the supposed connection of the victims to the militant groups explicitly identified in the OB List is
nothing short of nebulous.

Moreover, while respondents may have admitted through various statements to the media that the military
has its own Order of Battle, such an admission is not equivalent to proof that the subject OB List, which
was publicly disclosed by Representative Ocampo by way of a PowerPoint presentation, is one and the
same with the Order of Battle that the military has in its keeping. And, assuming that the Press Releases
do amount to an admission not only of the existence but also the authenticity of the subject OB List, the
inclusion of petitioners' names therein does not, by itself, constitute an actual threat to their rights to life,
liberty and security as to warrant the issuance of a writ of amparo.

In the case of Secretary of National Defense v. Manalo, 48 the Court ruled that a person's right to security
is, in one sense, "freedom from fear" and that any threat to the rights to life, liberty or security is an
actionable wrong. The term "any threat," however, cannot be taken to mean every conceivable threat in
the mind that may cause one to fear for his life, liberty or security. The Court explicated therein that "[f]ear
is a state of mind, a reaction; threat is a stimulus, a cause of action. Fear caused by the same stimulus
can range from being baseless to well-founded as people react differently. The degree of fear can vary
from one person to another with the variation of the prolificacy of their imagination, strength of character
or past experience with the stimulus." Certainly, given the uniqueness of individual psychological
mindsets, perceptions of what is fearful will necessarily vary from one person to another.

The alleged threat to herein petitioners' rights to life, liberty and security must be actual, and not merely
one of supposition or with the likelihood of happening. And, when the evidence adduced establishes the
threat to be existent, as opposed to a potential one, then, it goes without saying that the threshold
requirement of substantial evidence in amparo proceedings has also been met. Thus, in the words of
Justice Brion, in the context of the Amparo rule, only actual threats, as may be established from all the
facts and circumstances of the case, can qualify as a violation that may be addressed under the Rule on
the Writ of Amparo.

Petitioners cannot assert that the inclusion of their names in the OB List is as real a threat as that which
brought ultimate harm to victims Celso Pojas, Lodenio Monzon and Dr. Rogelio Peñera without
corroborative evidence from which it can be presumed that the suspicious deaths of these three people
were, in fact, on account of their militant affiliations or that their violent fates had been actually planned
out by the military through its Order of Battle.

The Court may be more yielding to the use of circumstantial or indirect evidence and logical inferences,
but substantial evidence is still the rule to warrant a finding that the State has violated, is violating, or is
threatening to violate, amparo petitioners' right to life, liberty or security. No substantial evidence of an
actual threat to petitioners' life, liberty and security has been shown to exist in this case. For, even if the
existence of the OB List or, indeed, the inclusion of petitioners' names therein, can be properly inferred
from the totality of the evidence presented, still, no link has been sufficiently established to relate the
subject OB List either to the threatening visits received by petitioners from unknown men or to the violent
deaths of the three (3) mentioned personalities and other known activists, which could strongly suggest
that, by some identifiable pattern of military involvement, the inclusion of one's name in an Order of Battle
would eventually result to enforced disappearance and murder of those persons tagged therein as
militants. caCSDT

Emphasizing the extraordinary character of the amparo remedy, the Court ruled in the cases of Roxas
and Razon, Jr. that an amparo petitioner's failure to establish by substantial evidence the involvement of
government forces in the alleged violation of rights is never a hindrance for the Court to order the conduct
of further investigation where it appears that the government did not observe extraordinary diligence in
the performance of its duty to investigate the complained abduction and torture or enforced
disappearance. The Court directed further investigation in the case of Roxas because the modest efforts
of police investigators were effectively putting petitioner's right to security in danger with the delay in
identifying and apprehending her abductors. In Razon, Jr., the Court found it necessary to explicitly order
the military and police officials to pursue with extraordinary diligence the investigation into the abduction
and disappearance of a known activist because not only did the police investigators conduct an
incomplete and one-sided investigation but they blamed their ineffectiveness to the reluctance and
unwillingness of the relatives to cooperate with the authorities. In both of these cases, the incidents of
abduction and torture were undisputed and they provided the evidentiary support for the finding that the
right to security was violated and the necessity for further investigation into such violation. Unlike Roxas
and Razon, Jr., however, the present petitions do not involve actual cases of abduction or disappearance
that can be the basis of an investigation. Petitioners would insist that respondents be investigated and
directed to produce the Order of Battle that they have admitted to be in their safekeeping and Justify the
inclusion of petitioners' names therein. However, without substantial evidence of an actual threat to
petitioners' rights to life, liberty and security that consists more than just the inclusion of their names in an
OB List, an order for further investigation into, or production of, the military's Order of Battle, would have
no concrete basis.
WHEREFORE, premises considered, the petitions are hereby DENIED. The assailed Orders dated
August 14, 2009 and September 22, 2009 of the Regional Trial Court of Davao City, Branch 10, are
AFFIRMED.

SO ORDERED.

||| (Ladaga v. Mapagu, G.R. Nos. 189689, 189690 & 189691, [November 13, 2012], 698 PHIL 525-548)

G. Nature of Philippine Courts

1. Classification of Philippine Courts
2. Principle of judicial Hierarchy

 Audi AG v. Mejia, G.R. No. 167533, July 27, 2007

Before us for resolution is the instant Petition for Certiorari under Rule 65 of the 1997 Rules of Civil
Procedure, as amended, alleging that respondent Executive Judge Jules A. Mejia of the Regional Trial
Court (RTC), Alaminos City (Pangasinan) acted with grave abuse of discretion in issuing the Orders dated
March 29 and July 6, 2005 in Civil Case No. A-3010, entitled "Auto Prominence Corporation and Proton
Pilipinas Corporation, Plaintiffs, versus Audi AG, Defendant."

The petition alleges that Audi AG, petitioner, is a non-resident foreign company engaged in the
manufacture of "Audi" brand cars. It is organized and existing under the laws of the Federal Republic of
Germany, with principal office at I/VO-3, 85045 Ingolstadt, Germany. It is not licensed to do business in
the Philippines but is suing on an isolated transaction. 1

Auto Prominence Corporation and Proton Pilipinas Corporation (Proton), respondents, are corporations
duly organized and existing under Philippine laws engaged in the business of assembling, buying, selling,
distributing, importing, marketing, and servicing of motor vehicles. They have a common principal office at
Barangay Alos, Alaminos City. aACEID

On March 21, 2005, respondents filed with the RTC, Alaminos City a complaint for specific performance
and injunction (with application for a temporary restraining order [TRO] and preliminary injunction) against
petitioner Audi AG, docketed as Civil Case No. A-3010. The complaint alleges inter alia that on August 1,
1996, petitioner appointed respondent Proton as its sole assembler and distributor of Audi cars in the
Philippines under an Assembly Agreement and a Distributorship Agreement; that respondent Proton was
induced to open, promote, develop and sell Audi brand cars in the Philippines upon petitioner's
representations that it (respondent Proton) will be the exclusive assembler and distributor of Audi cars
and local parts manufacturer for export purposes, for a period of 12 months and, thereafter, for an
indefinite period upon the establishment of the assembly and distributorship network; that respondent
Proton, relying upon petitioner's representations, was enticed to: (a) borrow money to establish the
assembly plant and building for petitioner; (b) buy tools and equipment for its assembly plant and
distributorship; (c) spend for its showrooms and offices; and (d) pay its license fees, technical brochure
and other expenses; that it turned out that petitioner did not include the Philippines in its ASEAN
Assembly Strategy program, but only Malaysia, thus frustrating respondent Proton's assembly
preparations; that with evident bad faith, petitioner has been negotiating for the transfer of the
distributorship of the Audi cars to a third party; and that both respondents were surprised when they
received from petitioner a letter dated September 27, 2004 terminating the assembly and the
distributorship agreements for reasons which to them are unjustified. Thus, the complaint prays that
petitioner be ordered to comply with the exclusive assembly and distributorship agreements; and that,
pending the determination of the merits of the case, a TRO and a writ of preliminary injunction be issued
ordering petitioner, its representative, or any person claiming rights under it, to maintain the status quo
ante, and restrain them from doing any act contrary to the parties' existing agreements.

After the complaint was filed, respondent Executive Judge Jules A. Mejia issued an Order (a) directing
that summons and a copy of the complaint be served upon petitioner through extra-territorial service; and
(b) setting on March 29, 2005 the hearing of the application for TRO.
On March 29, 2005, after conducting a hearing wherein respondents presented two witnesses,
respondent Executive Judge issued the Order in question directing the issuance of a TRO effective for
twenty (20) days, enjoining petitioner from terminating the contracts executed by the parties, and directing
it or any person claiming rights under it, to maintain the status quo ante. The raffle of the case was set on
April 8, 2005 at two o'clock in the afternoon.

Hence, the instant petition.

Petitioner contends that respondent Executive Judge's March 29, 2005 Order granting a TRO for twenty
(20) days was "issued in a capricious, arbitrary, and whimsical manner constituting grave abuse of
discretion, amounting to lack or excess of jurisdiction" because (a) the Order violates the second
paragraph of Section 5, Rule 58 of the 1997 Rules of Civil Procedure, as amended; and (b) it was issued
even before Civil Case No. A-3010 was raffled to a ponente. aHIEcS

Meanwhile, petitioner filed with the trial court an Urgent Motion for Voluntary Inhibition of respondent
Executive Judge. But the motion was denied in an Order dated July 6, 2005, prompting petitioner to file a
supplemental petition 2 praying for the nullification of this Order.

In their Opposition 3 and Comment, 4 respondents pray that the petition be dismissed for lack of merit.
Specifically, they alleged that the petition suffers from the following defects: (1) it was filed in the absence
of a motion for reconsideration of the assailed Order; (2) petitioner failed to observe the doctrine of
hierarchy of courts; (3) the certification against forum shopping is defective as it was executed by counsel
for petitioner, not by the latter's officers; and (4) the issue raised against the challenged Order of March
29, 2005 had become moot and academic.

The respondents are correct.

Indeed, we cannot ignore the fatal defects in the petition.

First, petitioner failed to file with the trial court the requisite motion for reconsideration of the challenged
Order before resorting to the instant recourse. The well-established rule is that a motion for
reconsideration is an indispensable condition before an aggrieved party can resort to the special civil
action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as amended. 5 Thus, petitioner
should have first filed with the trial court a motion for reconsideration, as such special civil action may be
resorted to only when "there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary
course of law." 6 Such indispensable requirement may, in well recognized instances, be glossed over to
prevent a miscarriage of justice, or when the need for relief is extremely urgent and certiorari is the only
adequate and speedy remedy available. 7 Petitioner failed to show sufficient justification for its failure to
comply with the requirement.

We cannot accept petitioner's submission that a motion for reconsideration "is unnecessary" as its petition
raises a question of law and that the assailed Order is a patent nullity. Petitioner may not arrogate unto
itself the determination of whether a motion for reconsideration is necessary or not. 8 Its submission runs
counter to the purpose of the rule that a motion for reconsideration would afford the erring court or agency
an opportunity to rectify the error/s it may have committed without the intervention of a higher court. 9
Such motion is not only an expeditious remedy of an aggrieved party but also obviates an improvident
and unnecessary recourse to appellate proceedings. 10

Second, petitioner, by filing directly with this Court its petition, has ignored the established rule on
hierarchy of courts. It must be stressed that the Court of Appeals and the Supreme Court have original
concurrent jurisdiction over petitions for certiorari. The rule on hierarchy of courts determines the venue of
appeals. 11 Such rule is necessary to prevent inordinate demands upon the Court's precious time and
attention which are better devoted to matters within its exclusive jurisdiction, and to prevent further
overcrowding of the Court's docket. 12 Thus, petitioner should have filed with the Court of Appeals its
petition, not directly with this Court. While such rule may be relaxed for special and important reasons
clearly and specifically set out in the petition, however, in the instant case, petitioner failed to discharge
that burden. DaAETS

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

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

SO ORDERED.