JANUARY 2015

FIRST DIVISION
[ G.R. No. 182864, January 12, 2015 ]
EASTERN SHIPPING LINES, INC., PETITIONER, VS. BPI/MS INSURANCE
CORP., & MITSUI SUMITOMO INSURANCE CO., LTD., RESPONDENTS.
DECISION
PEREZ, J.:
Before this Court is a Petition for Review on Certiorari[1] of the Decision[2] of the Second
Division of the Court of Appeals in CA-G.R. CV No. 88744 dated 31 January 2008, modifying
the Decision of the Regional Trial Court (RTC) by upholding the liability of Eastern Shipping
Lines, Inc. (ESLI) but absolving Asian Terminals, Inc. (ATI) from liability and deleting the
award
of
attorneys
fees.
The

facts

gathered

from

the

records

follow:

On 29 December 2004, BPI/MS Insurance Corporation (BPI/MS) and Mitsui Sumitomo

Insurance Company Limited (Mitsui) filed a Complaint [3] before the RTC of Makati City against
ESLI and ATI to recover actual damages amounting to US$17,560.48 with legal interest,
attorneys
fees
and
costs
of
suit.
In their complaint, BPI/MS and Mitsui alleged that on 2 February 2004 at Yokohama, Japan,
Sumitomo Corporation shipped on board ESLIs vessel M/V Eastern Venus 22 22 coils of
various Steel Sheet weighing 159,534 kilograms in good order and condition for transportation to
and delivery at the port of Manila, Philippines in favor of consignee Calamba Steel Center, Inc.
(Calamba Steel) located in Saimsim, Calamba, Laguna as evidenced by a Bill of Lading with
Nos. ESLIYMA001. The declared value of the shipment was US$83,857.59 as shown by an
Invoice with Nos. KJGE-03-1228-NT/KE3. The shipment was insured with the respondents
BPI/MS and Mitsui against all risks under Marine Policy No. 103-GG03448834.
On 11 February 2004, the complaint alleged that the shipment arrived at the port of Manila in an
unknown condition and was turned over to ATI for safekeeping. Upon withdrawal of the
shipment by the Calamba Steels representative, it was found out that part of the shipment was
damaged and was in bad order condition such that there was a Request for Bad Order Survey. It
was found out that the damage amounted to US$4,598.85 prompting Calamba Steel to reject the
damaged
shipment
for
being
unfit
for
the
intended
purpose.
On 12 May 2004 at Kashima, Japan, Sumitomo Corporation again shipped on board ESLIs
vessel M/V Eastern Venus 25 50 coils in various Steel Sheet weighing 383,532 kilograms in

good order and condition for transportation to and delivery at the port of Manila, Philippines in
favor of the same consignee Calamba Steel as evidenced by a Bill of Lading with Nos.
ESLIKSMA002. The declared value of the shipment was US$221,455.58 as evidenced by
Invoice Nos. KJGE-04-1327-NT/KE2. The shipment was insured with the respondents BPI/MS
and Mitsui against all risks under Marine Policy No. 104-GG04457785.
On 21 May 2004, ESLIs vessel with the second shipment arrived at the port of Manila partly
damaged and in bad order. The coils sustained further damage during the discharge from vessel
to
shore
until
its
turnover
to
ATIs
custody
for
safekeeping.
Upon withdrawal from ATI and delivery to Calamba Steel, it was found out that the damage
amounted to US$12,961.63. As it did before, Calamba Steel rejected the damaged shipment for
being
unfit
for
the
intended
purpose.
Calamba Steel attributed the damages on both shipments to ESLI as the carrier and ATI as the
arrastre operator in charge of the handling and discharge of the coils and filed a claim against
them. When ESLI and ATI refused to pay, Calamba Steel filed an insurance claim for the total
amount of the cargo against BPI/MS and Mitsui as cargo insurers. As a result, BPI/MS and
Mitsui became subrogated in place of and with all the rights and defenses accorded by law in
favor
of
Calamba
Steel.
Opposing the complaint, ATI, in its Answer, denied the allegations and insisted that the coils in
two shipments were already damaged upon receipt from ESLIs vessels. It likewise insisted that
it exercised due diligence in the handling of the shipments and invoked that in case of adverse
decision, its liability should not exceed P5,000.00 pursuant to Section 7.01, Article VII[4] of the
Contract for Cargo Handling Services between Philippine Ports Authority (PPA) and ATI. [5] A
cross-claim
was
also
filed
against
ESLI.
On its part, ESLI denied the allegations of the complainants and averred that the damage to both
shipments was incurred while the same were in the possession and custody of ATI and/or of the
consignee or its representatives. It also filed a cross-claim against ATI for indemnification in case
of
liability.[6]
To expedite settlement, the case was referred to mediation but it was returned to the trial court
for further proceedings due to the parties failure to resolve the legal issues as noted in the
Mediators
Report
dated
28
June
2005.[7]
On 10 January 2006, the court issued a Pre-Trial Order wherein the following stipulations were
agreed upon by the parties:
1. Parties admitted the capacity of the parties to sue and be sued;
2. Parties likewise admitted the existence and due execution of the Bill of Lading covering
various steel sheets in coil attached to the Complaint as Annex A;
3. Parties admitted the existence of the Invoice issued by Sumitomo Corporation, a true and
faithful copy of which was attached to the Complaint as Annex B;

4. Parties likewise admitted the existence of the Marine Cargo Policy issued by the Mitsui
Sumitomo Insurance Company, Limited, copy of which was attached to the Complaint as
Annex C;
5. [ATI] admitted the existence and due execution of the Request for Bad Order Survey
dated February 13, 2004, attached to the Complaint as Annex D;
6. Insofar as the second cause of action, [ESLI] admitted the existence and due execution of
the document [Bill of Lading Nos. ESLIKSMA002, Invoice with Nos. KJGE-04-1327NT/KE2 and Marine Cargo Policy against all risks on the second shipment] attached to
the Complaint as Annexes E, F and G;
7. [ATI] admitted the existence of the Bill of Lading together with the Invoices and Marine

Cargo Policy. [It] likewise admitted by [ATI] are the Turn Over Survey of Bad Order
Cargoes attached to the Complaint as Annexes H, H-1 and J.[8]
The parties agreed that the procedural issue was whether there was a valid subrogation in favor
of BPI/MS and Mitsui; and that the substantive issues were, whether the shipments suffered
damages, the cause of damage, and the entity liable for reparation of the damages caused. [9]
Due to the limited factual matters of the case, the parties were required to present their evidence
through affidavits and documents. Upon submission of these evidence, the case was submitted
for
resolution.[10]
BPI/MS and Mitsui, to substantiate their claims, submitted the Affidavits of (1) Mario A. Manuel
(Manuel),[11] the Cargo Surveyor of Philippine Japan Marine Surveyors and Sworn Measurers
Corporation who personally examined and conducted the surveys on the two shipments; (2)
Richatto P. Almeda,[12] the General Manager of Calamba Steel who oversaw and examined the
condition, quantity, and quality of the shipped steel coils, and who thereafter filed formal notices
and claims against ESLI and ATI; and (3) Virgilio G. Tiangco, Jr.,[13] the Marine Claims
Supervisor of BPI/MS who processed the insurance claims of Calamba Steel. Along with the
Affidavits were the Bills of Lading[14] covering the two shipments, Invoices,[15] Notices of Loss of
Calamba Steel,[16] Subrogation Form,[17] Insurance Claims,[18] Survey Reports,[19] Turn Over
Survey of Bad Order Cargoes [20] and Request for Bad Order Survey.[21]
ESLI, in turn, submitted the Affidavits of Captain Hermelo M. Eduarte, [22] Manager of the
Operations Department of ESLI, who monitored in coordination with ATI the discharge of the
two shipments, and Rodrigo Victoria (Rodrigo), [23] the Cargo Surveyor of R & R Industrial and
Marine Services, Inc., who personally surveyed the subject cargoes on board the vessel as well as
the manner the ATI employees discharged the coils. The documents presented were the Bills of
Lading, Secretarys Certificate[24] of PPA, granting ATI the duty and privilege to provide arrastre
and stevedoring services at South Harbor, Port of Manila, Contract for Cargo Handling Services,
[25]
Damage Report[26] and Turn Over Report made by Rodrigo. [27] ESLI also adopted the Survey
Reports
submitted
by
BPI/MS
and
Mitsui.[28]
Lastly, ATI submitted the Affidavits of its Bad Order Inspector Ramon Garcia (Garcia) [29] and

Claims Officer Ramiro De Vera.[30] The documents attached to the submissions were the Turn
Over Surveys of Bad Cargo Order,[31] Requests for Bad Order Survey,[32] Cargo Gatepasses issued
by ATI,[33] Notices of Loss/Claims of Calamba Steel [34] and Contract for Cargo Handling
Services.[35]
On 17 September 2006, RTC Makati City rendered a decision finding both the ESLI and ATI
liable for the damages sustained by the two shipments. The dispositive portion reads:
WHEREFORE, judgment is hereby rendered in favor of [BPI/MS and Mitsui] and against
[ESLI Inc.] and [ATI], jointly and severally ordering the latter to pay [BPI/MS and Mitsui] the
following:
1. Actual damages amounting to US$17,560.48 plus 6% legal interest per annum
commencing from the filing of this complaint, until the same is fully paid;
2. Attorneys fees in a sum equivalent to 20% of the amount claimed;
3. Costs of suit.[36]

Aggrieved, ESLI and ATI filed their respective appeals before the Court of Appeals on both
questions
of
fact
and
law.[37]
Before the appellate court, ESLI argued that the trial court erred when it found BPI/MS has the
capacity to sue and when it assumed jurisdiction over the case. It also questioned the ruling on its
liability since the Survey Reports indicated that the cause of loss and damage was due to the
rough handling of ATIs stevedores during discharge from vessel to shore and during loading
operation onto the trucks. It invoked the limitation of liability of US$500.00 per package as
provided in Commonwealth Act No. 65 or the Carriage of Goods by Sea Act (COGSA). [38]
On the other hand, ATI questioned the capacity to sue of BPI/MS and Mitsui and the award of
attorneys fees despite its lack of justification in the body of the decision. ATI also imputed error
on the part of the trial court when it ruled that ATIs employees were negligent in the ruling of
the shipments. It also insisted on the applicability of the provision of COGSA on limitation of
liability.[39]
In its Decision,[40] the Court of Appeals absolved ATI from liability thereby modifying the
decision of the trial court. The dispositive portions reads:
WHEREFORE, the appeal of ESLI is DENIED, while that of ATI is GRANTED. The assailed
Judgment dated September 17, 2006 of Branch 138, RTC of Makati City in Civil Case No. 05108 is hereby MODIFIED absolving ATI from liability and deleting the award of attorneys fees.
The rest of the decision is affirmed.[41]
Before

this

Court,

ESLI

seeks

the

reversal

of

the

ruling

on

its

liability.

At the outset, and notably, ESLI included among its arguments the attribution of liability to ATI

but it failed to implead the latter as a party to the present petition. This non-inclusion was raised
by BPI/MS and Mitsui as an issue[42] in its Comment/Opposition[43] and Memorandum:[44]
For reasons known only to [ESLI], it did not implead ATI as a party respondent in this case when
it could have easily done so. Considering the nature of the arguments raised by petitioner
pointing to ATI as solely responsible for the damages sustained by the subject shipments, it is
respectfully submitted that ATI is an indispensable party in this case. Without ATI being
impleaded, the issue of whether ATI is solely responsible for the damages could not be
determined with finality by this Honorable Court. ATI certainly deserves to be heard on the issue
but it could not defend itself because it was not impleaded before this Court. Perhaps, this is the
reason why [ESLI] left out ATI in this case so that it could not rebut while petitioner puts it at
fault.[45]
ESLI in its Reply[46] put the blame for the non-exclusion of ATI to BPI/MS and Mitsui:
[BPI/MS and Mitsui] claim that herein [ESLI] did not implead [ATI] as a party respondent in the
Petition for Review on Certiorari it had filed. Herein Petitioner submits that it is not the
obligation of [ESLI] to implead ATI as the same is already the look out of [BPI/MS and Mitsui].
If [BPI/MS and Mitsui] believe that ATI should be made liable, they should have filed a Motion
for Reconsideration with the Honorable Court of Appeals. The fact that [BPI/MS and Mitsui] did
not even lift a finger to question the decision of the Honorable Court of Appeals goes to show
that [BPI/MS and Mitsui] are not interested as to whether or not ATI is indeed liable.[47]
It is clear from the exchange that both [ESLI] and [BPI/MS and Mitsui] are aware of the noninclusion of ATI, the arrastre operator, as a party to this review of the Decision of the Court of
Appeals. By blaming each other for the exclusion of ATI, [ESLI] and [BPI/MS and Mitsui]
impliedly agree that the absolution of ATI from liability is final and beyond review. Clearly,
[ESLI] is the consequential loser. It alone must bear the proven liability for the loss of the
shipment. It cannot shift the blame to ATI, the arrastre operator, which has been cleared by the
Court of Appeals. Neither can it argue that the consignee should bear the loss.
Thus
First

confined,

we
Issue:

go

to

the

merits
Liability

of

the

arguments
of

of

ESLI.
ESLI

ESLI bases of its non-liability on the survey reports prepared by BPI/MS and Mitsuis witness
Manuel which found that the cause of damage was the rough handling on the shipment by the
stevedores of ATI during the discharging operations. [48] However, Manuel does not absolve ESLI
of liability. The witness in fact includes ESLI in the findings of negligence. Paragraphs 3 and 11
of the affidavit of witness Manuel attribute fault to both ESLI and ATI.
3. The vessel M.V. EASTERN VENUS V 22-S carrying the said shipment of 22 coils of
various steel sheets arrived at the port of Manila and discharged the said shipment on or about 11
February 2004 to the arrastre operator [ATI]. I personally noticed that the 22 coils were roughly
handled during their discharging from the vessel to the pier of [ATI] and even during the loading
operations of these coils from the pier to the trucks that will transport the coils to the
consigneess warehouse. During the aforesaid operations, the employees and forklift

operators of [ESLI] and [ATI] were very negligent in the handling of the subject cargoes.
x

11. The vessel M.V. EASTERN VENUS V 25-S carrying the said shipment of 50 coils of
various steel sheets arrived at the port of Manila and discharged the said shipment on or about 21
May 2004 to the arrastre operator [ATI]. I personally noticed that the 50 coils were roughly
handled during their discharging from the vessel to the pier of [ATI] and even during the loading
operations of these coils from the pier to the trucks that will transport the coils to the
consigneess warehouse. During the aforesaid operations, the employees and forklift
operators of [ESLI] and [ATI] were very negligent in the handling of the subject cargoes.[49]
(Emphasis supplied).
ESLI cannot rely only on parts it chooses. The entire body of evidence should determine the
liability of the parties. From the statements of Manuel, [ESLI] was negligent, whether solely or
together
with
ATI.
To further press its cause, ESLI cites the affidavit of its witness Rodrigo who stated that the
cause of the damage was the rough mishandling by ATIs stevedores.
The affidavit of Rodrigo states that his functions as a cargo surveyor are, (1) getting hold of a
copy of the bill of lading and cargo manifest; (2) inspection and monitoring of the cargo onboard, during discharging and after unloading from the vessel; and (3) making a necessary report
of his findings. Thus, upon arrival at the South Harbor of Manila of the two vessels of ESLI on
11 February 2004 and on 21 May 2004, Rodrigo immediately boarded the vessels to inspect and
monitor the unloading of the cargoes. In both instances, it was his finding that there was
mishandling on the part of ATIs stevedores which he reported as the cause of the damage. [50]
Easily seen, however, is the absence of a crucial point in determining liability of either or both
ESLI and ATI lack of determination whether the cargo was in a good order condition as
described in the bills of lading at the time of his boarding. As Rodrigo admits, it was also his
duty to inspect and monitor the cargo on-board upon arrival of the vessel. ESLI cannot invoke its
non-liability solely on the manner the cargo was discharged and unloaded. The actual condition
of the cargoes upon arrival prior to discharge is equally important and cannot be disregarded.
Proof is needed that the cargo arrived at the port of Manila in good order condition and remained
as
such
prior
to
its
handling
by
ATI.
Common carriers, from the nature of their business and on public policy considerations, are
bound to observe extraordinary diligence in the vigilance over the goods transported by them.
Subject to certain exceptions enumerated under Article 1734 [51] of the Civil Code, common
carriers are responsible for the loss, destruction, or deterioration of the goods. The
extraordinary responsibility of the common carrier lasts from the time the goods are
unconditionally placed in the possession of, and received by the carrier for transportation
until the same are delivered, actually or constructively, by the carrier to the consignee, or to
the
person
who
has
a
right
to
receive
them.[52]

In maritime transportation, a bill of lading is issued by a common carrier as a contract, receipt

and symbol of the goods covered by it. If it has no notation of any defect or damage in the goods,
it is considered as a clean bill of lading. A clean bill of lading constitutes prima facie evidence
of the receipt by the carrier of the goods as therein described. [53]
Based on the bills of lading issued, it is undisputed that ESLI received the two shipments of coils
from shipper Sumitomo Corporation in good condition at the ports of Yokohama and Kashima,
Japan. However, upon arrival at the port of Manila, some coils from the two shipments were
partly dented and crumpled as evidenced by the Turn Over Survey of Bad Order Cargoes No.
67982 dated 13 February 2004[54] and Turn Over Survey of Bad Order Cargoes Nos. 68363 [55] and
68365[56] both dated 24 May 2004 signed by ESLIs representatives, a certain Tabanao and
Rodrigo together with ATIs representative Garcia. According to Turn Over Survey of Bad Order
Cargoes No. 67982, four coils and one skid were partly dented and crumpled prior to turnover by
ESLI to ATIs possession while a total of eleven coils were partly dented and crumpled prior to
turnover based on Turn Over Survey Bad Order Cargoes Nos. 68363 and 68365.
Calamba Steel requested for a re-examination of the damages sustained by the two shipments.
Based on the Requests for Bad Order Survey Nos. 58267 [57] and 58254[58] covering the first
shipment dated 13 and 17 February 2004, four coils were damaged prior to turnover. The second
Request for Bad Order Survey No. 58658[59] dated 25 May 2004 also affirmed the earlier findings
that eleven coils on the second shipment were damaged prior to turnover.
In Asian Terminals, Inc., v. Philam Insurance Co., Inc.,[60] the Court based its ruling on liability
on the Bad Order Cargo and Turn Over of Bad Order. The Receipt bore a notation B.O. not yet
t/over to ATI, while the Survey stated that the said steel case was not opened at the time of
survey and was accepted by the arrastre in good order. Based on these documents, packages in
the Asian Terminals, Inc. case were found damaged while in the custody of the carrier Westwind
Shipping
Corporation.
Mere proof of delivery of the goods in good order to a common carrier and of their arrival in bad
order at their destination constitutes a prima facie case of fault or negligence against the carrier.
If no adequate explanation is given as to how the deterioration, loss, or destruction of the goods
happened, the transporter shall be held responsible. [61] From the foregoing, the fault is
attributable to ESLI. While no longer an issue, it may be nonetheless state that ATI was correctly
absolved
of
liability
for
the
damage.
Second

Issue:

Limitation

of

Liability

ESLI assigns as error the appellate courts finding and reasoning that the package limitation
under the COGSA[62] is inapplicable even if the bills of lading covering the shipments only made
reference to the corresponding invoices. Noticeably, the invoices specified among others the
weight, quantity, description and value of the cargoes, and bore the notation Freight Prepaid
and As Arranged.[63] ESLI argues that the value of the cargoes was not incorporated in the bills
of lading[64] and that there was no evidence that the shipper had presented to the carrier in writing
prior to the loading of the actual value of the cargo, and, that there was a no payment of
corresponding freight.[65] Finally, despite the fact that ESLI admits the existence of the invoices,

it denies any knowledge either of the value declared or of any information contained therein. [66]
According to the New Civil Code, the law of the country to which the goods are to be transported
shall govern the liability of the common carrier for their loss, destruction or deterioration. [67]
The Code takes precedence as the primary law over the rights and obligations of common
carriers with the Code of Commerce and COGSA applying suppletorily.[68]
The New Civil Code provides that a stipulation limiting a common carriers liability to the value
of the goods appearing in the bill of lading is binding, unless the shipper or owner declares a
greater value.[69] In addition, a contract fixing the sum that may be recovered by the owner or
shipper for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just
under the circumstances, and has been fairly and freely agreed upon.[70]
COGSA, on the other hand, provides under Section 4, Subsection 5 that an amount recoverable
in case of loss or damage shall not exceed US$500.00 per package or per customary freight
unless the nature and value of such goods have been declared by the shipper before
shipment
and
inserted
in
the
bill
of
lading.
In line with these maritime law provisions, paragraph 13 of bills of lading issued by ESLI to the
shipper specifically provides a similar restriction:
The value of the goods, in calculating and adjusting any claims for which the Carrier may be
liable shall, to avoid uncertainties and difficulties in fixing value, be deemed to the invoice value
of the goods plus ocean freight and insurance, if paid, Irrespective of whether any other value is
greater or less, and any partial loss or damage shall be adjusted pro rata on the basis of such
value; provided, however, that neither the Carrier nor the ship shall in any event be or become
liable for any loss, non-delivery or misdelivery of or damage or delay to, or in connection with
the custody or transportation of the goods in an amount exceeding $500.00 per package lawful
money of the United States, or in case of goods not shipped in packages, per customary freight
unit, unless the nature of the goods and a valuation higher than $500.00 is declared in writing by
the shipper on delivery to the Carrier and inserted in the bill of lading and extra freight is paid
therein as required by applicable tariffs to obtain the benefit of such higher valuation. In which
case even if the actual value of the goods per package or unit exceeds such declared value, the
value shall nevertheless be deemed to be the declared value and any Carriers liability shall not
exceed such declared value and any partial loss or damage shall be adjusted pro-rata on the basis
thereof. The Carrier shall not be liable for any loss or profit or any consequential or special
damage and shall have the option of replacing any lost goods and replacing o reconditioning any
damage goods. No oral declaration or agreement shall be evidence of a value different from that
provided
therein.[71]
xxxx
Accordingly, the issue whether or not ESLI has limited liability as a carrier is determined by
either absence or presence of proof that the nature and value of the goods have been declared by
Sumitomo
Corporation
and
inserted
in
the
bills
of
lading.
ESLI contends that the invoices specifying the weight, quantity, description and value of the

cargo in reference to the bills of lading do not prove the fact that the shipper complied with the
requirements mandated by the COGSA. It contends that there must be an insertion of this
declaration in the bill of lading itself to fall outside the statutory limitation of liability.
ESLI asserts that the appellate court erred when it ruled that there was compliance with the
declaration requirement even if the value of the shipment and fact of payment were indicated on
the
invoice
and
not
on
the
bill
of
lading
itself.
There is no question about the declaration of the nature, weight and description of the goods on
the
first
bill
of
lading.
The bills of lading represent the formal expression of the parties rights, duties and obligations.
It is the best evidence of the intention of the parties which is to be deciphered from the language
used in the contract, not from the unilateral post facto assertions of one of the parties, or of third
parties who are strangers to the contract. [72] Thus, when the terms of an agreement have been
reduced to writing, it is deemed to contain all the terms agreed upon and there can be, between
the parties and their successors in interest, no evidence of such terms other than the contents of
the
written
agreement.[73]
As to the non-declaration of the value of the goods on the second bill of lading, we see no error
on the part of the appellate court when it ruled that there was a compliance of the requirement
provided by COGSA. The declaration requirement does not require that all the details must be
written down on the very bill of lading itself. It must be emphasized that all the needed details
are in the invoice, which contains the itemized list of goods shipped to a buyer, stating
quantities, prices, shipping charges, and other details which may contain numerous sheets. [74]
Compliance can be attained by incorporating the invoice, by way of reference, to the bill of
lading provided that the former containing the description of the nature, value and/or payment of
freight
charges
is
as
in
this
case
duly
admitted
as
evidence.
In Unsworth Transport International (Phils.), Inc. v. Court of Appeals,[75] the Court held that
the insertion of an invoice number does not in itself sufficiently and convincingly show that
petitioner had knowledge of the value of the cargo. However, the same interpretation does not
squarely apply if the carrier had been advised of the value of the goods as evidenced by the
invoice and payment of corresponding freight charges. It would be unfair for ESLI to invoke the
limitation under COGSA when the shipper in fact paid the freight charges based on the value of
the goods. In Adams Express Company v. Croninger,[76] it was said: Neither is it conformable
to plain principles of justice that a shipper may understate the value of his property for the
purpose of reducing the rate, and then recover a larger value in case of loss. Nor does a
limitation based upon an agreed value for the purpose of adjusting the rate conflict with any
sound principle of public policy. Conversely, but for the same reason, it is unjust for ESLI to
invoke the limitation when it is informed that the shipper paid the freight charges corresponding
to
the
value
of
the
goods.
Also, ESLI admitted the existence and due execution of the Bills of Lading and the Invoice
containing the nature and value of the goods on the second shipment. As written in the Pre-Trial
Order,[77] the parties, including ESLI, admitted the existence and due execution of the two Bills

of Lading[78] together with the Invoice on the second shipment with Nos. KJGE-04-1327NT/KE2[79] dated 12 May 2004. On the first shipment, ESLI admitted the existence of the
Invoice
with
Nos.
KJGE-031228-NT/KE3[80]
dated
2
February
2004.
The effect of admission of the genuineness and due execution of a document means that the party
whose signature it bears admits that he voluntarily signed the document or it was signed by
another
for
him
and
with
his
authority.[81]
A review of the bill of ladings and invoice on the second shipment indicates that the shipper
declared the nature and value of the goods with the corresponding payment of the freight on the
bills of lading. Further, under the caption description of packages and goods, it states that the
description of the goods to be transported as various steel sheet in coil with a gross weight of
383,532 kilograms (89.510 M3). On the other hand, the amount of the goods is referred in the
invoice, the due execution and genuineness of which has already been admitted by ESLI, is
US$186,906.35 as freight on board with payment of ocean freight of US$32,736.06 and
insurance premium of US$1,813.17. From the foregoing, we rule that the non- limitation of
liability
applies
in
the
present
case.
We likewise accord the same binding effect on the contents of the invoice on the first shipment.
ESLI contends that what was admitted and written on the pre-trial order was only the existence
of the first shipment invoice but not its contents and due execution. It invokes admission of
existence but renounces any knowledge of the contents written on it. [82]
Judicial admissions are legally binding on the party making the admissions. Pre-trial admission
in civil cases is one of the instances of judicial admissions explicitly provided for under Section
7, Rule 18 of the Rules of Court, which mandates that the contents of the pre-trial order shall
control the subsequent course of the action, thereby, defining and limiting the issues to be tried.
In Bayas v. Sandiganbayan,[83] this Court emphasized that:
Once the stipulations are reduced into writing and signed by the parties and their counsels, they
become binding on the parties who made them. They become judicial admissions of the fact or
facts stipulated. Even if placed at a disadvantageous position, a party may not be allowed to
rescind them unilaterally, it must assume the consequences of the disadvantage.[84]
Moreover, in Alfelor v. Halasan,[85] this Court declared that:
A party who judicially admits a fact cannot later challenge that fact as judicial admissions are a
waiver of proof; production of evidence is dispensed with. A judicial admission also removes an
admitted fact from the field of controversy. Consequently, an admission made in the pleadings
cannot be controverted by the party making such admission and are conclusive as to such party,
and all proofs to the contrary or inconsistent therewith should be ignored, whether objection is
interposed by the party or not. The allegations, statements or admissions contained in a pleading
are conclusive as against the pleader. A party cannot subsequently take a position contrary of or
inconsistent with what was pleaded.[86] (Citations omitted)
The admission having been made in a stipulation of facts at pre-trial by the parties, it must be
treated as a judicial admission. Under Section 4, of Rule 129 of the Rules of Court, a judicial

admission

requires

no

proof.[87]

It is inconceivable that a shipping company with maritime experience and resource like the ESLI
will admit the existence of a maritime document like an invoice even if it has no knowledge of
its
contents
or
without
having
any
copy
thereof.
ESLI also asserts that the notation Freight Prepaid and As Arranged, does not prove that
there was an actual declaration made in writing of the payment of freight as required by COGSA.
ESLI did not as it could not deny payment of freight in the amount indicated in the documents.
Indeed, the earlier discussions on ESLIs admission of the existence and due execution of the
invoices, cover and disprove the argument regarding actual declaration of payment. The bills of
lading bore a notation on the manner of payment which was Freight Prepaid and As
Arranged while the invoices indicated the amount exactly paid by the shipper to ESLI.
WHEREFORE, we DENY the Petition for Review on Certiorari. The Decision dated 31
January 2008 and Resolution dated 5 May 2008 of the Second Division of the Court of Appeals
in
CA-G.R.
CV.
No.
88744
are
hereby
AFFIRMED.
SO

ORDERED.

Sereno, C.J., (Chairman), Leonardo-De Castro, Peralta,* and Reyes,** JJ., concur.

Per Raffle dated 21 April 2014.

**

Per Raffle dated 1 December 2014.

[1]

Rule on Civil Procedure, Rule 45.

[2]

Penned by Associate Justice Estela M. Perlas-Bernabe (now a member of this Court) with
Associate Justices Portia Alio-Homachuelos and Lucas P. Bersamin (also a member of this
Court) concurring. Rollo, pp. 43-50.
[3]

Complaint. Records, pp. 1-5.

[4]

Rollo, pp. 170-171.

[5]

Answer of ATI. Records, pp. 23-27.

[6]

Answer of ESLI. Id. at 38-47.

[7]

Mediators Report. Id. at 91.

[8]

As embodied in the Pre-Trial Order. Id. at 98-99.

[9]

Id. at 99.

[10]

Id.

[11]

Id. at 145-147.

[12]

Id. at 102-104.

[13]

Id. at 129-131.

[14]

Id. at 105 and 116.

[15]

Id. at 106-110 and 117-123.

[16]

Id. at 124-127.

[17]

Id. at 128.

[18]

Id. at 133-136 and 140-143.

[19]

Id. at 149-154.

[20]

Id. at 157-159.

[21]

Id. at 148.

[22]

Compliance/Manifestation. Id. at 169-171.

[23]

Id. at 173-176.

[24]

Id. at 178-179.

[25]

Id. at 180-205.

[26]

Id. at 207 and 210-210-A.

[27]

Id. at 208 and 210-212.

[28]

Id. at 149-154.

[29]

Id. at 215-217.

[30]

Id. at 224-227.

[31]

Id. at 218 and 221.

[32]

Id. at 219-220 and 223.

[33]

Id. at 228-232.

[34]

Id. at 233 and 273.

[35]

Id. at 235-261.

[36]

Rollo, pp. 131-137.

[37]

Records, pp. 284-285 and 287.

[38]

Appellants Brief of ESLI. Rollo, pp. 71-106.

[39]

Appellants Brief of ATI. Id. at 107-130.

[40]

Id. at 43-50.

[41]

Id. at 49-50.

[42]

Id. at 302.

[43]

Id. at 300-307.

[44]

Id. at 401-414.

[45]

Id. at 302.

[46]

Id. at 308-326.

[47]

Id. at 312.

[48]

Petition for Review on Certiorari. Id. at 15.

[49]

Records, pp. 145-146.

[50]

Id. at 173-176.

[51]

Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the
goods, unless the same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers; and
(5) Order or act of competent public authority.
[52]
Asian Terminals, Inc. v. Philam Insurance Co., Inc. (Now Chartis Philippines Insurance,
Inc.), G.R. No. 181163, 181262 and 181319, 24 July 2013 citing Philippines First Insurance

Co., Inc. v. Wallem Phils. Shipping, Inc., G.R. No. 165647, 26 March 2009, 582 SCRA 457, 466467.
[53]

Lorenzo Shipping Corp. v. Chubb and Sons, Inc., G.R. No. 147724, 8 June 2004, 431 SCRA
266, 279-280 citing Aguedo F. Agbayani, Commentaries and Jurisprudence on the Commercial
Laws of the Philippines, Vol. IV, 1987 ed., p. 119 citing further Government of the Philippine
Island v. Ynchausti & Co., 40 Phil. 219, 213 (1919); 28 Am Jur 2d 264 and Westway Coffee
Corp. v. M/V Netuno, 675 F.2d 30, 32 (1982).
[54]

Records, pp. 218.

[55]

Id. at 221.

[56]

Id. at 222.

[57]

Id. at 219.

[58]

Id. at 220.

[59]

Id. at 223.

[60]

Supra note 52.

[61]

Belgian Overseas Chartering and Shipping N.V. v. Philippine First Insurance Co., Inc., 432
Phil. 567, 579 (2002); Tabacalera Insurance Co. v. North Front Shipping Services, Inc., 338 Phil.
1024, 1029-1030 (1997).
[62]

On 16 April 1936, the Philippine Government adopted the U.S. COGSA by virtue of
Commonwealth Act No. 65 and was made applicable to all contracts for the carriage of goods by
sea to and from Philippine ports in foreign trade provided that it would but be construed as a
repealing law of the Code of Commerce.
[63]

Petition for Review on Certiorari. Rollo, pp. 30-31.

[64]

Id. at 31.

[65]

Id. at 33.

[66]

Id. at 34.

[67]

New Civil Code, Article 1753.

[68]

Art. 1766. In all matters not regulated by this Code, the rights and obligations of common
carriers shall be governed by the Code of Commerce and by special laws.
[69]

New Civil Code, Article 1749.

[70]

New Civil Code, Art. 1750.

[71]

Bill of Lading. Records, p. 105.

[72]

Chua Gaw v. Chua, 574 Phil. 640, 657 (2008) citing Arwood Induestries, Inc. v. D.M.
Consunji, Inc., 442 Phil. 203, 212 (2002); Herbon v. Palad, 528 Phil. 130, 142 (2006).
[73]

Rules of Court, Rule 130, Sec. 9.

[74]

Glossary of Shipping Terms, United States of America, Department of Transportation,

Maritime Administration, [Link] (visited 3
April 2014)
[75]

G.R. No. 166250, 26 July 2010, 625 SCRA 357, 368.

[76]

226 U.S. 491, 33 [Link]. 148, 57 [Link]. 314 (1913); as reiterated in H. E. Heacock Company v.
Macondray & Co. Inc., 42 Phil. 205, 210 (1921) which ruled that, A limitation of liability based
upon an agreed value to obtain a lower rate does not conflict with any sound principle of public
policy; and it is not conformable to plain principles of justice that a shipper may understate value
in order to reduce the rate and then recover a larger value in case of loss. [Adams Express Co. v.
Croninger 226 U.S. 491, 492; Reid v. Fargo (130 C.C.A., 285); Jennings v. Smith (45 C.C.A.,
249); George N. Pierce Co. v. Wells, Fargo and Co. (236 U.S., 278); Wells, Fargo & Co. v.
Neiman-Marcus Co. 227 U.S., 469]
[77]

Records, pp. 98-99.

[78]

Id. at 9 and 13.

[79]

Id. at 14.

[80]

Id. at 10.

[81]

Permanent Savings and Loan Bank v. Velarde, 482 Phil. 193, 202 (2004).

[82]

Rollo, p. 34.

[83]

440 Phil. 54 (2002).

[84]

Id. at 69.

[85]

520 Phil. 982 (2006).

[86]

Id. at 991; Constantino v. Heirs of Constantino, Jr., G.R. No. 181508, 2 October 2013.

[87]

SCC Chemicals Corporation v. Court of Appeals, 405 Phil. 514, 522-523 (2001).

FIRST DIVISION

[ G.R. No. 156995, January 12, 2015 ]

RUBEN MANALANG, CARLOS MANALANG, CONCEPCION GONZALES
AND LUIS MANALANG, PETITIONERS, VS. BIENVENIDO AND
MERCEDES BACANI, RESPONDENTS.
DECISION
BERSAMIN, J.:
In the exercise of its appellate jurisdiction, the Regional Trial Court (RTC) shall decide
the appeal of the judgment of the Municipal Trial Court (MTC) in unlawful detainer or
forcible entry cases on the basis of the entire record of the proceedings had in the
court of origin and such memoranda and/or briefs as may be required by the RTC.
There is no trial de novo of the case.
The Case
The petitioners assail the decision promulgated on October 18, 2002 in CA-G.R. SP
No. 68419,[1] whereby the Court of Appeals (CA) reversed and set aside the decision
of the RTC, Branch 49, in Guagua, Pampanga, and reinstated the judgment rendered
on August 31, 2000 by the MTC of Guagua, Pampanga dismissing their complaint for
unlawful detainer and the respondents counterclaim. They also hereby assail the
resolution promulgated on January 24, 2003 denying their motion for
reconsideration.[2]
Antecedents
Petitioners Ruben Manalang, Amado Manalang, Carlos Manalang, Concepcion M.
Gonzales, Ladislao Manalang and Luis Manalang were the co-owners of Lot No 4236
with an area of 914 square meters of the Guagua Cadastre, and declared for
taxation purposes in the name of Tomasa B. Garcia. The land was covered by
approved survey plan Ap-03-004154. Adjacent to Lot 4236 was the respondents Lot
No. 4235 covered by Original Certificate of Title (OCT) No. N-216701. In 1997, the
petitioners caused the relocation and verification survey of Lot 4236 and the
adjoining lots, and the result showed that the respondents had encroached on Lot
No. 4236 to the extent of 405 square meters. A preliminary relocation survey
conducted by the Lands Management Section of the Department of Environment
and Natural Resources (DENR) confirmed the result on the encroachment. When the
respondents refused to vacate the encroached portion and to surrender peaceful
possession thereof despite demands, the petitioners commenced this action for
unlawful detainer on April 21, 1997 in the MTC of Guagua (Civil Case No. 3309), and
the
case
was
assigned
to
Branch
2
of
that
court. [3]

On September 17, 1998, the MTC (Branch 2) dismissed Civil Case No. 3309 for lack
of jurisdiction based on its finding that the action involved an essentially boundary
dispute that should be properly resolved in an accion reivindicatoria.[4] It stated
that the complaint did not aver any contract, whether express or implied, between
the petitioners and the respondents that qualified the case as one for unlawful
detainer; and that there was also no showing that the respondents were in
possession of the disputed area by the mere tolerance of the petitioners due to the
latter having become aware of the encroachment only after the relocation survey
held
in
1997.
On appeal, however, the RTC reversed the MTC (Branch 2), and remanded the case
for further proceedings,[5] holding that because there was an apparent withholding
of possession of the property and the action was brought within one year from such
withholding of possession the proper action was ejectment which was within the
jurisdiction of the MTC; and that the case was not a boundary dispute that could be
resolved in an accion reinvidicatoria, considering that it involved a sizeable area of
property
and
not
a
mere
transferring
of
boundary. [6]
Upon remand, the MTC, Branch 1,[7] ultimately dismissed the complaint and
counterclaim for lack of merit through the decision rendered on August 31, 2000, [8]
ruling that the petitioners failed to adduce clear and convincing evidence showing
that the respondents had encroached on their property and had been occupying
and possessing property outside the metes and bounds described in Bienvenido
Bacanis OCT No. N-216701; that the preponderance of evidence was in favor of the
respondents right of possession; and that the respondents counterclaim for
damages should also be dismissed, there being no showing that the complaint had
been
filed
in
gross
and
evident
bad
faith. [9]
Once

more,

the

petitioners

appealed

to

the

RTC.

At that point, the RTC ordered the petitioners to conduct a relocation survey to
determine their allegation of encroachment, and also heard the testimony of the
surveyor, Engr. Emmanuel Limpin, then Acting Chief of the Survey Section of the
CENRDENR.
On September 19, 2001,[10] the RTC rendered its judgment whereby it reversed and
set aside the MTCs decision of August 31, 2000, observing that the respondents
had encroached on the petitioners property based on the court-ordered relocation
survey, the reports by Engr. Limpin, and his testimony; [11] that the respondents
could not rely on their OCT No. N-216701, considering that although their title
covered only 481 square meters, the relocation survey revealed that they had
occupied also 560 square meters of the petitioners Lot No. 4236; [12] that the
petitioners did not substantiate their claims for reasonable compensation,
attorneys fees and litigation expenses; and that, nevertheless, after it had been

established that the respondents had encroached upon and used a portion of the
petitioners property, the latter were entitled to P1,000.00/month as reasonable
compensation from the filing of the complaint up to time that the respondents
actually vacated the encroached property, plus P20,000.00 attorneys fees. [13]
The respondents moved for reconsideration, but the RTC denied their motion for its
lack
of
merit.[14]
The

respondents

appealed.

On October 18, 2002, the CA promulgated its assailed decision, [15] viz:
WHEREFORE, the appealed RTC decision is hereby REVERSED and SET ASIDE, and
the decisions of the MTC of Guagua, Pampanga, Branches 1 and 2, are REINSTATED.
No pronouncement as to costs.
SO ORDERED.
The CA concluded that the RTC, by ordering the relocation and verification survey
in aid of its appellate jurisdiction upon motion of the petitioners and over the
objection of the respondents, and making a determination of whether there was an
encroachment based on such survey and testimony of the surveyor, had acted as a
trial court in complete disregard of the second paragraph of Section 18, Rule
70 of the Rules of Court. It declared such action by the RTC as unwarranted
because it amounted to the reopening of the trial, which was not allowed under
Section 13(3) Rule 70 of the Rules of Court. It observed that the relocation and
verification survey was inconclusive inasmuch as the surveyor had himself admitted
that he could not determine which of the three survey plans he had used was
correct
without
a
full-blown
trial.
The CA held that considering that the petitioners complaint for unlawful detainer
did not set forth when and how the respondents had entered the land in question
and constructed their houses thereon, jurisdiction did not vest in the MTC to try and
decide the case; that the complaint, if at all, made out a case for either accion
reivindicatoria or accion publiciana, either of which fell within the original
jurisdiction of the RTC; and that the RTCs reliance on Benitez v. Court of Appeals[16]
and Calubayan v. Ferrer[17] was misplaced, because the controlling ruling was that in
Sarmiento v. Court of Appeals,[18] in which the complaint was markedly similar to
that
filed
in
the
case.
The petitioners sought reconsideration, but the CA denied their motion for its lack of
merit in the resolution of January 24, 2003.[19]

Issues
Hence,

this

appeal.

The petitioners contend that the RTC had authority to receive additional evidence on
appeal in an ejectment case because it was not absolutely confined to the records
of the trial in resolving the appeal; that the respondents were estopped from
assailing the relocation and verification survey ordered by the RTC because they
had actively participated in the survey and had even cross-examined Engr. Limpin,
the surveyor tasked to conduct the survey; [20] that Engr. Limpins testimony must be
given credence, honoring the well-entrenched principle of regularity in the
performance of official functions;[21] that the RTC did not conduct a trial de novo by
ordering the relocation and verification survey and hearing the testimony of the
surveyor; that the desirability of the relocation and verification survey had always
been part of the proceedings even before the case was appealed to the RTC; [22] that,
in any case, the peculiar events that transpired justified the RTCs order to conduct
a relocation and verification survey;[23] that the case, because it involved
encroachment into anothers property, qualified as an ejectment case that was
within the jurisdiction of the MTC; and that the respondents were barred by laches
for never questioning the RTCs February 11, 1999 ruling on the issue of jurisdiction.
[24]

In contrast, the respondents assail the relocation and verification survey ordered by
the RTC as immaterial, because (a) it could not vest a right of possession or
ownership; (b) the petitioners were mere claimants, not the owners of the property;
(c) the petitioner had never been in possession of the area in question; and (d)
cadastral surveys were not reliable. Hence, they maintain that whether or not the
relocation and verification survey was considered would not alter the outcome of
the case.[25]
Ruling of the Court
The appeal has no merit.
To start with, the RTC, in an appeal of the judgment in an ejectment case, shall not
conduct a rehearing or trial de novo.[26] In this connection, Section 18, Rule 70 of the
Rules of Court clearly provides:
Sec. 18. Judgment conclusive only on possession; not conclusive in actions involving
title or ownership. x x x.
xxxx
The judgment or final order shall be appealable to the appropriate

Regional Trial Court which shall decide the same on the basis of the entire
record of the proceedings had in the court of origin and such memoranda
and/or briefs as may be submitted by the parties or required by the
Regional Trial Court. (7a)
Hence, the RTC violated the foregoing rule by ordering the conduct of the relocation
and verification survey in aid of its appellate jurisdiction and by hearing the
testimony of the surveyor, for its doing so was tantamount to its holding of a trial de
novo. The violation was accented by the fact that the RTC ultimately decided the
appeal based on the survey and the surveyors testimony instead of the record of
the proceedings had in the court of origin.
Secondly, on whether or not Civil Case No. 3309 was an ejectment case within the
original and exclusive jurisdiction of the MTC, decisive are the allegations of the
complaint. Accordingly, the pertinent allegations of the petitioners complaint follow:
2. Plaintiffs are co-owners of land known as Lot no. 4236 of the Guagua cadastre.
Plaintiffs inherited the said parcel of residential land from Tomasa B. GarciaManalang who is the absolute owner of the said property and the same is declared
for taxation purposes in her name under Tax Declaration No. 07014906, a copy of
which is hereto attached as Annex A;
3. Lot No. 4236 is covered by an approved plan, Plan Ap-03-004154 (a copy made
Annex B) and it consists of 914 square meters;
4. Adjacent to plaintiffs [p]roperty is Lot No. 4235 of the Guagua Cadastre and
covered by approved plan As-03-00533 (copy made Annex C) which is being
claimed by defendants and is the subject matter of Cadastral Case No. N-229 of the
Regional Trial Court of Guagua, Branch 53 where a decision (copy made Annex D)
was rendered by said court on August 28, 1996 confirming the title over said lot in
favor of defendant Bienvenido Bacani. The said decision is now final and executory

5. On February 23, 1997, plaintiffs caused the relocation and verification survey of
cadastral Not No. 4236 of the Guagua Cadastre belonging to plaintiff and the
adjoining lots, particularly Lot No. 4235 being claimed by defendants;
6. The relocation and verification survey conducted by Engr. Rufo R. Rivera, a duly
licensed Geodetic Engineer per plan (copy made Annex F) revealed that
defendants had encroached an area of 405 square meters of the parcel of land
belonging to plaintiffs. In fact, the whole or part of the houses of the said
defendants have been erected in said encroached portion;
7. Sometime in June of 1997, plaintiffs through plaintiff Concepcion Gonzales lodged

a complaint before the Barangay Council of San Juan, Guagua, Pampanga against
defendants regarding the encroached portion. A preliminary relocation survey was
conducted by the Lands Management Sector of the DENR and it was found that
indeed, defendants encroached into the parcel of land belonging to plaintiffs. This
finding was confirmed by the approved plan Ap-03-004154;
8. Since defendants refused to vacate the premises and surrender the peaceful
possession thereof to plaintiff, the Barangay Captain of San Juan, Guagua,
Pampanga issued a certification to file action (copy made Annex G) dated March 4,
1997 to enable the plaintiff to file the appropriate action in court;
9. On March 10, 1997, plaintiffs sent a formal demand letter (copy made Annex H)
to defendants to vacate the premises and to pay reasonable compensation for the
use of the said encroached portion;
10. Despite receipt of said demand letter per registry return cards attached to the
letter, defendants failed and refused to vacate the encroached portion and
surrender the peaceful possession thereof to plaintiffs;
11. Plaintiffs are entitled to a reasonable compensation in the amount of P 3,000.00
from defendants for the illegal use and occupation of their property by defendants;
12. By reason of the unjust refusal of defendants to vacate the premises and pay
reasonable compensation to plaintiffs, the latter were constrained to engage the
services of counsel for P30,00.00 plus P1,000.00 per appearance and incur litigation
expenses in the amount of P10,000.00. [27]
Given the foregoing allegations, the case should be dismissed without prejudice to
the filing of a non-summary action like accion reivindicatoria. In our view, the CA
correctly held that a boundary dispute must be resolved in the context of accion
reivindicatoria, not an ejectment case. The boundary dispute is not about
possession, but encroachment, that is, whether the property claimed by the
defendant formed part of the plaintiffs property. A boundary dispute cannot be
settled summarily under Rule 70 of the Rules of Court, the proceedings under which
are limited to unlawful detainer and forcible entry. In unlawful detainer, the
defendant unlawfully withholds the possession of the premises upon the expiration
or termination of his right to hold such possession under any contract, express or
implied. The defendants possession was lawful at the beginning, becoming unlawful
only because of the expiration or termination of his right of possession. In forcible
entry, the possession of the defendant is illegal from the very beginning, and the
issue centers on which between the plaintiff and the defendant had the prior
possession de facto.
Thirdly, the MTC dismissed the action because it did not have jurisdiction over the

case. The dismissal was correct. It is fundamental that the allegations of the
complaint and the character of the relief sought by the complaint determine the
nature of the action and the court that has jurisdiction over the action. [28] To be
clear, unlawful detainer is an action filed by a lessor, vendor, vendee, or other
person against whom the possession of any land or building is unlawfully withheld
after the expiration or termination of the right to hold possession by virtue of any
contract, express or implied.[29] To vest in the MTC the jurisdiction to effect the
ejectment from the land of the respondents as the occupants in unlawful detainer,
therefore, the complaint should embody such a statement of facts clearly showing
the attributes of unlawful detainer. [30] However, the allegations of the petitioners
complaint did not show that they had permitted or tolerated the occupation of the
portion of their property by the respondents; or how the respondents entry had
been effected, or how and when the dispossession by the respondents had started.
All that the petitioners alleged was the respondents illegal use and occupation of
the property. As such, the action was not unlawful detainer.
Lastly, the conclusion by the MTC that the petitioners failed to show by clear and
convincing evidence that the respondents had encroached on the petitioners
property was also warranted. In contrast, the only basis for the RTCs decision was
the result of the relocation and verification survey as attested to by the surveyor,
but that basis should be disallowed for the reasons earlier mentioned. Under the
circumstances, the reinstatement of the ruling of the MTC by the CA was in accord
with the evidence.
WHEREFORE, the Court AFFIRMS the decision promulgated on October 18, 2002;
and ORDERS the petitioners to pay the costs of suit.
SO ORDERED.
Sereno, C.J., Leonardo-De Castro, Perez, and Perlas-Bernabe, JJ., concur.

[1]

Rollo, pp. 39-52; penned by Associate Justice Salvador J. Valdez, Jr.

(retired/deceased), with the concurrence of Associate Justice Mercedes Gozo-Dadole
(retired) and Associate Justice Sergio L. Pestao (retired/deceased).
[2]

Id. at 61-67.

[3]

Id. at 79-83.

[4]

Id. at 91.

[5]

Id. at 96-98.

[6]

Id. at 98.

[7]

The Presiding Judge of Branch 2 later voluntary inhibited herself from the case,
which was then re-assigned to Branch 1.
[8]

Rollo pp. 99-105.

[9]

Id. at 104.

[10]

Id. at 106-111.

[11]

Id. at 109.

[12]

Id. at 110.

[13]

Id. at 111.

[14]

Id. at 112.

[15]

Supra note 1.

[16]

G.R. No. 104828, January 16, 1997, 266 SCRA 242.

[17]

No. L-22645, September 18, 1967, 21 SCRA 146.

[18]

G.R. No. 116192, November 16, 1995, 250 SCRA 108.

[19]

Rollo, pp. 61-65.

[20]

Id. at 23.

[21]

Id. at 24.

[22]

Id. at 25.

[23]

Id. at 26.

[24]

Id. at 33.

[25]

Id. at 118-121.

[26]

Abellera v. Court of Appeals, G.R. No. 127480, February 28, 2000, 326 SCRA 485,
491.

[27]

CA rollo, pp. 31-33.

[28]

Ten Forty Realty and Development Corp. v. Cruz, G.R. No. 151212, September 10,
2003, 410 SCRA 484, 493.
[29]

Estate of Soledad Manantan v. Somera, G.R. No. 145867, April 7, 2009, 584 SCRA
81, 88-89.
[30]

Sarmiento v. Court of Appeals, G.R. No. 116192, November 16, 1995, 250 SCRA
108, 116.

FIRST DIVISION
[ G.R. No. 176508, January 12, 2015 ]
SAINT MARY CRUSADE TO ALLEVIATE POVERTY OF BRETHREN
FOUNDATION, INC., PETITIONER, VS. HON. TEODORO T. RIEL,
ACTING PRESIDING JUDGE, REGIONAL TRIAL COURT,
NATIONAL CAPITAL JUDICIAL REGION, BRANCH 85, QUEZON
CITY, RESPONDENT.
UNIVERSITY OF THE PHILIPPINES, INTERVENOR.
DECISION

BERSAMIN, J.:
A petition for the judicial reconstitution of a Torrens title must strictly comply with
the requirements prescribed in Republic Act No. 26; [1] otherwise, the petition should
be
dismissed.
This case is a direct resort to the Court by petition for certiorari and mandamus. The
petitioner applied for the judicial reconstitution of Original Certificate of Title (OCT)
No. 1609 of the Register of Deeds of Quezon City, and for the issuance of a new OCT
in place thereof, docketed as L.R.C. Case No. Q-18987 (04), but respondent Acting
Presiding Judge of Branch 85 of the Regional Trial Court (RTC) in Quezon City
dismissed the petition for reconstitution through the assailed order dated
September 12, 2006. The petitioner alleges that the respondent Judge thereby
committed grave abuse of discretion and unlawful neglect of performance of an act
specifically enjoined upon him. Equally assailed is the ensuing denial of its motion
for
reconsideration
through
the
order
dated
February
5,
2007.
The

antecedents

follow.

On October 28, 2004, the petitioner claimed in its petition for reconstitution that the
original copy of OCT No. 1609 had been burnt and lost in the fire that gutted the
Quezon City Register of Deeds in the late 80s. Initially, respondent Judge gave due
course to the petition, but after the preliminary hearing, he dismissed the petition
for reconstitution through the first assailed order of September 12, 2006, [2] to wit:
With the receipt of Report dated July 14, 2006 from Land Registration Authority
(LRA) recommending that the petition be dismissed, and considering the Opposition
filed by the Republic of the Philippines and University of the Philippines, the aboveentitled petition is hereby ordered DISMISSED.
On October 11, 2006, the petitioner moved for reconsideration of the dismissal, [3]
attaching the following documents to support its petition for reconstitution, namely:
(1) the copy of the original application for registration dated January 27, 1955; (2)
the notice of initial hearing dated June 23, 1955; (3) the letter of transmittal to the
Court of First Instance in Quezon City; (4) the copy of the Spanish Testimonial Title
No. 3261054 dated March 25, 1977 in the name of Eladio Tiburcio; (5) the copy of
Tax Assessment No. 14238; and (6) the approved Plan SWD-37457.
On February 5, 2007, the RTC denied the motion for reconsideration for lack of any
cogent
or
justifiable
ground
to
reconsider. [4]
Hence, on February 22, 2007, the petitioner came directly to the Court alleging that
respondent Judge had unfairly abused his discretion and unlawfully neglected the
performance of an act which is specifically enjoined upon him as a duly [sic] under

Rule 7, Section 8, of the Revised Rules of Court; [5] that in finally dismissing the
herein subject Petition for Reconsideration, respondent Honorable Acting Presiding
Judge has acted without and in excess of his authority and with grave abuse of
discretion to the further damage and prejudice of the herein petitioner; [6] and that
it had no other remedy in the course of law except through the present petition for
certiorari and mandamus.
Issues
The Court directed respondent Judge and the Office of the Solicitor General (OSG) to
comment on the petition for certiorari and mandamus. Respondent Judge submitted
his comment on May 23, 2007,[7] and the OSG its comment on July 19, 2007. [8] On
November 13, 2007, the University of the Philippines (UP) sought leave to intervene,
attaching to its motion the intended comment/opposition-in-intervention. [9] The
motion for the UPs intervention was granted on November 28, 2007. [10] In turn, the
petitioner presented its consolidated reply on February 8, 2008. [11] The parties,
except respondent Judge, then filed their memoranda in compliance with the Courts
directive.
Respondent Judge justified the dismissal of the petition for reconstitution by citing
the opposition by the OSG and the UP, as well as the recommendation of the Land
Registration Authority (LRA). He pointed out that the petitioner did not present its
purported Torrens title to be reconstituted; that the petitioners claim was doubtful
given the magnitude of 4,304,623 square meters as the land area involved; [12] and
that the UPs ownership of the portion of land covered by petitioners claim had long
been
settled
by
the
Court
in
a
long
line
of
cases. [13]
The OSG and the UP argued that by directly coming to the Court by petition for
certiorari and mandamus, the petitioner had availed itself of the wrong remedies to
substitute for its lost appeal; that the correct recourse for the petitioner was an
appeal considering that the two assailed orders already finally disposed of the case;
that the petitioner intended its petition for certiorari and mandamus to reverse the
final orders;[14] that the petitioner further failed to observe the doctrine of hierarchy
of courts, despite the Court of Appeals (CA) having concurrent jurisdiction with the
Court over special civil actions under Rule 65; [15] that the RTC would have gravely
erred had it proceeded on the petition for reconstitution despite the petitioner not
having notified the adjoining owners of the land or other parties with interest over
the land;[16] that the petitioner had no factual and legal bases for reconstitution due
to its failure to prove the existence and validity of the certificate of title sought to be
reconstituted, in addition to the ownership of the land covered by the petition for
reconstitution being already settled in a long line of cases; that the petitioners
claim over the land was derived from the Deed of Assignment executed by one
Marcelino Tiburcio the same person whose claim had long been settled and
disposed of in Tiburcio v. Peoples Homesite and Housing Corporation and University

of the Philippines (106 Phil. 477), which vested title in the UP, and in Caero v.
University of the Philippines (437 SCRA 630); and that the Deed of Transfer and
Conveyance dated November 26, 1925 executed by Tiburcio in favor of St. Mary
Village Association, Inc. was not a basis for the judicial reconstitution of title
accepted
under
Section
2
of
Republic
Act
No.
26.
In its memorandum, the petitioner indicates that the RTC gravely abused its
discretion amounting to lack or excess of its jurisdiction in dismissing its petition for
reconstitution on the basis of the recommendation of the LRA and the opposition of
the Republic and the UP despite having initially given due course to the petition for
reconstitution. It urges that the dismissal should be overturned because it was not
given a chance to comment on the recommendation of the LRA, or to controvert the
oppositions filed.[17] It contends that the LRA report did not substantiate the
allegation of dismissal of the application for registration of Marcelino Tiburcio on
October 17, 1955, in addition to the veracity of the report being questionable by
virtue of its not having been under oath. [18]
Ruling
The petition for certiorari and mandamus, being devoid of procedural and
substantive
merit,
is
dismissed.
Firstly, certiorari, being an extraordinary remedy, is granted only under the
conditions defined by the Rules of Court. The conditions are that: (1) the
respondent tribunal, board or officer exercising judicial or quasi-judicial functions
has acted without or in excess of its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction; and (2) there is no appeal, or
any plain, speedy, and adequate remedy in the ordinary course of law. [19] Without
jurisdiction means that the court acted with absolute lack of authority;
there is excess of jurisdiction when the court transcends its power or acts
without any statutory authority; grave abuse of discretion implies such
capricious and whimsical exercise of judgment as to be equivalent to lack
or excess of jurisdiction; in other words, power is exercised in an arbitrary or
despotic manner by reason of passion, prejudice, or personal hostility; and such
exercise is so patent or so gross as to amount to an evasion of a positive duty or to
a virtual refusal either to perform the duty enjoined or to act at all in contemplation
of
law.[20]
The petition for certiorari and mandamus did not show how respondent Judge could
have been guilty of lacking or exceeding his jurisdiction, or could have gravely
abused his discretion amounting to lack or excess of jurisdiction. Under Section
12[21] of Republic Act No. 26, the law on the judicial reconstitution of a Torrens title,
the Regional Trial Court (as the successor of the Court of First Instance) had the
original and exclusive jurisdiction to act on the petition for judicial reconstitution of

title. Hence, the RTC neither lacked nor exceeded its authority in acting on and
dismissing the petition. Nor did respondent Judge gravely abuse his discretion
amounting to lack or excess of jurisdiction considering that the petition for
reconstitution involved land already registered in the name of the UP, as confirmed
by the LRA. Instead, it would have been contrary to law had respondent Judge dealt
with and granted the petition for judicial reconstitution of title of the petitioner.
Secondly, the petitioner did not present the duplicate or certified copy of OCT No.
1609. Thereby, it disobeyed Section 2 and Section 3 of Republic Act No. 26, the
provisions that expressly listed the acceptable bases for judicial reconstitution of an
existing Torrens title, to wit:
Sec. 2. Original certificates of title shall be reconstituted from such of the
sources hereunder enumerated as may be available, in the following
order:
(a) The owner's duplicate of the certificate of title;
(b) The co-owner's, mortgagee's, or lessee's duplicate of the certificate of
title;
(c) A certified copy of the certificate of title, previously issued by the
register of deeds or by a legal custodian thereof;
(d) An authenticated copy of the decree of registration or patent, as the
case may be, pursuant to which the original certificate of title was issued;
(e) A document, on file in the registry of deeds, by which the property,
the description of which is given in said document, is mortgaged, leased
or encumbered, or an authenticated copy of said document showing that
its original had been registered; and
(f) Any other document which, in the judgment of the court, is sufficient
and proper basis for reconstituting the lost or destroyed certificate of
title.
Sec. 3. Transfer certificates of title shall be reconstituted from such of the
sources hereunder enumerated as may be available, in the following
order:
(a) The owner's duplicate of the certificate of title;
(b) The co-owner's, mortgagee's, or lessee's duplicate of the certificate of
title;

(c) A certified copy of the certificate of title, previously issued by the

register of deeds or by a legal custodian thereof;
(d) The deed of transfer or other document, on file in the registry of
deeds, containing the description of the property, or an authenticated
copy thereof, showing that its original had been registered, and pursuant
to which the lost or destroyed transfer certificate of title was issued;
(e) A document, on file in the registry of deeds, by which the property, the
description of which is given in said document, is mortgaged, leased or
encumbered, or an authenticated copy of said document showing that its
original had been registered; and
(f) Any other document which, in the judgment of the court, is sufficient
and proper basis for reconstituting the lost or destroyed certificate of
title.
Thirdly, with the questioned orders of the RTC having finally disposed of the
application for judicial reconstitution, nothing more was left for the RTC to do in the
case. As of then, therefore, the correct recourse for the petitioner was to appeal to
the Court of Appeals by notice of appeal within 15 days from notice of the denial of
its motion for reconsideration. By allowing the period of appeal to elapse without
taking action, it squandered its right to appeal. Its present resort to certiorari is
impermissible, for an extraordinary remedy like certiorari cannot be a substitute for
a lost appeal. That the extraordinary remedy of certiorari is not an alternative to an
available remedy in the ordinary course of law is clear from Section 1 of Rule 65,
which requires that there must be no appeal, or any plain, speedy, and adequate
remedy in the ordinary course of law. Indeed, no error of judgment by a court will be
corrected by certiorari, which corrects only jurisdictional errors. [22]
Fourthly, the filing of the instant special civil action directly in this Court is in
disregard of the doctrine of hierarchy of courts. Although the Court has concurrent
jurisdiction with the Court of Appeals in issuing the writ of certiorari, direct resort is
allowed only when there are special, extra-ordinary or compelling reasons that
justify the same. The Court enforces the observance of the hierarchy of courts in
order to free itself from unnecessary, frivolous and impertinent cases and thus
afford time for it to deal with the more fundamental and more essential tasks that
the Constitution has assigned to it.[23] There being no special, important or
compelling reason, the petitioner thereby violated the observance of the hierarchy
of courts, warranting the dismissal of the petition for certiorari.
Finally, the land covered by the petition for judicial reconstitution related to the
same area that formed the UP campus. The UPs registered ownership of the land

comprising its campus has long been settled under the law. Accordingly, the
dismissal of the petition for judicial reconstitution by respondent Judge only
safeguarded the UPs registered ownership. In so doing, respondent Judge actually
heeded the clear warnings to the lower courts and the Law Profession in general
against mounting or abetting any attack against such ownership. One such warning
was that in Caero v. University of the Philippines,[24] as follows:
We strongly admonish courts and unscrupulous lawyers to stop entertaining
spurious cases seeking further to assail respondent UPs title. These cases open the
dissolute avenues of graft to unscrupulous land-grabbers who prey like vultures
upon the campus of respondent UP. By such actions, they wittingly or unwittingly
aid the hucksters who want to earn a quick buck by misleading the gullible to buy
the Philippine counterpart of the proverbial London Bridge. It is well past time for
courts and lawyers to cease wasting their time and resources on these worthless
causes and take judicial notice of the fact that respondent UPs title had already
been validated countless times by this Court. Any ruling deviating from such
doctrine is to be viewed as a deliberate intent to sabotage the rule of law and will
no longer be countenanced.[25]
WHEREFORE, the Court DISMISSES the petition for certiorari and mandamus for
lack of merit; and ORDERS the petitioner to pay the costs of suit.
SO ORDERED.
Sereno, C.J., Leonardo-De Castro, Perez, and Perlas-Bernabe, JJ., concur.

[1]

An Act Providing A Special Procedure for the Reconstitution of Torrens Certificates

of Title Lost or Destroyed.
[2]

Rollo, p. 24.

[3]

Id. at 25-29.

[4]

Id. at 32-33.

[5]

Id. at 5.

[6]

Id.

[7]

Id. at 40-45.

[8]

Id. at 107-133.

[9]

Id. at 136-151.

[10]

Id. at 153.

[11]

Id. at 155-158.

[12]

Id. at 41.

[13]

Listing the cases as Tiburcio v. P.H.H.C., 106 Phil 477 (1959); Galvez v. Tuason,
No. L-15644, February 29, 1964, 10 SCRA 344; Peoples Homesite and Housing
Corporation v. Mencias, No. L-24114, August 16, 1967, 20 SCRA 1031; Varsity Hills,
Inc. v. Mariano, No. L-30546, June 30, 1998, 163 SCRA 132; Heirs of Antonio Pael v.
Court of Appeals, G.R. No. 133547, November 11, 2003, 415 SCRA 451; Caero v.
University of the Philippines, G.R. No. 156380, September 8, 2004, 437 SCRA 630.
[14]

Rollo, pp. 275-276 (Memorandum of Republic); pp. 190-191 (Memorandum of

UP).
[15]

Id. at 277-290; 191-192.

[16]

Id. at 281-284; 189-190.

[17]

Id. at 309-311.

[18]

Id. at 310-311.

[19]

Section 1, Rule 65 of the Rules of Court.

[20]

De los Santos v. Court of Appeals, G.R. No. 169498, December 11, 2008, 573
SCRA 691, 700.
[21]

Sec. 12. Petitions for reconstitution from sources enumerated in

sections 2(c), 2(d), 2(e), 2(f), 3(c), 3(d), 3(e) and/or 3(f) of this Act, shall
be filed with the proper Court of First Instance, by the registered owner,
his assigns, or any person having an interest in the property. The petition
shall state or contain, among other things, the following: (a) that the
owner's duplicate of the certificate of title had been lost or destroyed; (b)
that no co-owner's mortgagee's or lessee's duplicate had been issued, or,
if any had been issued, the same had been lost or destroyed; (c) the
location, area and boundaries of the property; (d) the nature and
description of the buildings or improvements, if any, which do not belong
to the owner of the land, and the names and addresses of the owners of
such buildings or improvements; (e) the names and addresses of the

occupants or persons in possession of the property, of the owners of the

adjoining properties and all persons who may have any interest in the
property; (f) a detailed description of the encumbrances, if any, affecting
the property; and (g) a statement that no deeds or other instruments
affecting the property have been presented for registration, or, if there be
any, the registration thereof has not been accomplished, as yet. All the
documents, or authenticated copies thereof, to be introduced in evidence
in support of the petition for reconstitution shall be attached thereto and
filed with the same: Provided, That in case the reconstitution is to be
made exclusively from sources enumerated in section 2(f) of 3(f) of this
Act, the petition shall be further be accompanied with a plan and technical
description of the property duly approved by the Chief of the General Land
Registration Office, or with a certified copy of the description taken from a
prior certificate of title covering the same property.
[22]

Rigor v. Tenth Division of the Court of Appeals, G.R. No. 167400, June 30, 2006,
494 SCRA 375, 378-379.
[23]

Baez, Jr. v. Concepcion, G.R. No. 159508, August 29, 2012, 679 SCR 237, 250.

[24]

G.R. No. 156380, September 8, 2004, 437 SCRA 630.

[25]

Id. at 646-647.

THIRD DIVISION
[ G.R. No. 178169, January 12, 2015 ]
NFF INDUSTRIAL CORPORATION, PETITIONER, VS. G & L ASSOCIATED
BROKERAGE AND/OR GERARDO TRINIDAD, RESPONDENTS.
DECISION
PERALTA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse
and set aside the Decision[1] dated November 22, 2006 and the Order[2] dated May 22, 2007,
respectively, of the Court of Appeals (CA), in the civil case entitled NFF Industrial Corporation
v. G & L Associated Brokerage, Inc. and/or Gerardo Trinidad, docketed as CA-G.R. CV No.
85060.
The

facts

follow.

Petitioner NFF Industrial Corporation is engaged in the business of manufacturing bulk bags,
while respondent G & L Associated Brokerage, Inc. (respondent company) is among its

customers.[3] Respondent Gerardo Trinidad is the general manager of respondent company. [4]
According to petitioner, on July 20, 1999, respondent company ordered one thousand (1,000)
pieces of bulk bags from petitioner, at Three Hundred Eighty Pesos (P380.00) per piece, or a
total purchase price of Three Hundred Eighty Thousand Pesos (P380,000.00), payable within
thirty (30) days from delivery, covered by Purchase Order No. 97-002 dated July 29, 1999. [5] In
the said Purchase Order, an instruction was made that the bulk bags were for immediate delivery
to G & L Associated Brokerage, Inc., c/o Hi-Cement Corporation, Norzagaray, Bulacan.[6]
Shortly thereafter, respondent company ordered an additional one thousand (1,000) pieces of
bulk bags, thus for a total of two thousand (2,000) pieces, at the same price per bag and with the
same terms of payment as well as the same instructions for delivery. [7]
Accordingly, petitioner made deliveries of the bulk bags to Hi-Cement on the following dates
and evidenced by the following documents, to wit:
Units Delivered

Date of Delivery

Amount

400

July 30, 1999

P152,000.00

1,000

August 4, 1999

P380,000.00

600

August 6, 1999

P228,000.00

2,000

Delivery Receipts Sales Invoices

No. 0226 dated
No. 4113 dated
July 30, 1999
July 30, 1999
No. 0229 dated
No. 4120 dated
August 4, 1999
August 4, 1999
No. 0231 dated
No. 4122 dated
August 6, 1999
August 6, 1999[8]

P760,000.00

Petitioner alleged that the aforementioned deliveries were duly acknowledged by representatives
of respondent company.[9] Petitioner also averred that all the delivery receipts were rubber
stamped, dated and signed by the security guard-on-duty, as well as other representatives of
respondent company.[10] All deliveries made were likewise covered by sales invoices. [11] Based on
the said invoices, the total sales price is Seven Hundred Sixty Thousand Pesos (P760,000.00). [12]
All the sales invoices were duly served upon, and received by respondent companys
representative,
one
Marian
Gabay.[13]
On the other hand, respondents alleged that on July 20, 1999, it ordered from petitioner, by way
of Purchase Order No. 97-002, one thousand (1,000) pieces of bulk bags from petitioner at a unit
price of (P380.00) per piece for a total purchase price of Three Hundred Eighty Thousand Pesos
(P380,000.00).[14] The said bulk bags were to be used by respondent company for the purpose of
hauling cement from Hi-Cement Corporation at Norzagaray, Bulacan, to a dam project in
Casecnan, Nueva Ecija, the respondent company having been designated as one of the many
haulers at the Hi-Cement Corporation.[15] On July 26, 1999, respondent company formalized its
offer through a letter containing the same terms as the Purchase Order and providing for other
details
regarding
the
purchase.[16]
According to respondents, the Purchase Order specifically provides that the bulk bags were to be
delivered at Hi-Cement Corporation to Mr. Raul Ambrosio, respondent companys checker and
authorized representative assigned thereat. [17] Subsequently, however, the ordered bulk bags were

not delivered to respondent company, the same not having been received by the authorized
representative
in
conformity
with
the
terms
of
the
Purchase
Order.[18]
Meanwhile, thirty (30) days elapsed from the time the last alleged delivery was made but no
payment was effected by respondent company.[19] This prompted petitioner to send a demand
letter dated October 27, 1999 to respondent company.[20] As respondent company failed to
respond to the demand letter, petitioner followed up its claim from the former through a series of
telephone calls.[21] Again, since no concrete answer was provided by respondent company,
petitioner sent another demand letter dated November 23, 1999; and finally, a third demand letter
dated October 2, 2001.[22] As the demands remained unheeded, petitioner filed a complaint for
sum
of
money
against
respondents
on
December
19,
2001.[23]
As no settlement was reached during the pre-trial stage, trial proceeded. On January 25, 2005,
the Regional Trial Court (RTC) rendered its decision in favor of petitioner. The fallo of the
Decision provides:
PRESCINDING FROM THE FOREGOING CONSIDERATIONS, judgment is hereby rendered
in favor of the plaintiff NFF INDUSTRIAL CORPORATION and against the defendant
Corporation G & L Associated Brokerage, Inc., and the latter is hereby ordered to pay the
plaintiff the following:
1. The sum of Php760,000.00 representing overdue accounts plus interest from the first
demand on October 27, 1999 until fully paid.
2. The sum of Php152,000.00 as attorneys fees.
3. Cost of suit.
SO ORDERED.[24]
Aggrieved, respondents appealed before the CA. As a result, the decision of the RTC was
reversed in the CAs Decision[25] dated November 22, 2006, in the following wise:
WHEREFORE, the appealed decision is, hereby, REVERSED AND SET ASIDE. The
Complaint against the appellant is perforce DISMISSED.
SO ORDERED.[26]
Undaunted, petitioner filed a Motion for Reconsideration. The same was, however, denied in the
assailed Order dated May 22, 2007.
Hence, this petition stating the following grounds:
I
PREPONDERANCE OF EVIDENCE SHOWS THAT THE RESPONDENT COMPANY
ACCEPTED DELIVERY OF THE BULK BAGS.
II
RESPONDENTS CONDUCT PREPONDERANTLY SHOWS THAT DELIVERY OF THE
BULK BAGS HAS BEEN ACCEPTED.

III
FINDINGS OF FACT OF THE TRIAL COURT ARE ENTITLED TO GREAT WEIGHT.
IV.
TO SUSTAIN THE DECISION OF THE COURT OF APPEALS WILL CAUSE UNJUST
ENRICHMENT ON THE PART OF RESPONDENTS AT THE EXPENSE OF THE
PETITIONER.[27]
Simply, the issue before us is whether or not there was valid delivery on the part of petitioner in
accordance with law, which would give rise to an obligation to pay on the part of respondent for
the
value
of
the
bulk
bags.
The question is basically factual since it involves an evaluation of the conflicting evidence
presented by the opposing parties, including the existence and relevance of specific surrounding
circumstances,
to
determine
the
truth
or
falsity
of
alleged
facts. [28]
While it is well settled that factual issues are not within the province of this Court, as it is not a
trier of facts and is not required to examine or contrast the oral and documentary evidence de
novo, nevertheless, the Court has the authority to review and, in proper cases, reverse the factual
findings of lower courts in these instances: (a) when the findings of fact of the trial court are in
conflict with those of the appellate court; (b) when the judgment of the appellate court is based
on misapprehension of facts; and (c) when the appellate court manifestly overlooked certain
relevant facts which, if properly considered, would justify a different conclusion. [29] Considering
that in the instant case, the findings of the CA are contrary to those of the RTC, a minute
scrutiny by this Court is in order, and resort to duly proven evidence becomes necessary. [30]
Petitioner avers that it has delivered the bulk bags to respondent company, which effectively
placed the latter in control and possession thereof, as in fact, respondent company had made use
of the said bulk bags in the ordinary course of its business activities. [31] Conversely, respondents
contend that the evidence on record miserably failed to establish that the alleged deliveries were
received by the authorized representative of the respondents. Thus, there was no delivery at all in
contemplation
of
law.[32]
We

find

respondents'

contention

devoid

of

persuasive

force.

The resolution of the issue at bar necessitates a scrutiny of the concept of delivery in the
context of the Law on Sales.[33] Under the Civil Code, the vendor is bound to transfer the
ownership of and deliver, as well as warrant the thing which is the object of the sale. [34] The
ownership of thing sold is considered acquired by the vendee once it is delivered to him in the
following wise:
Art. 1496. The ownership of the thing sold is acquired by the vendee from the moment it is
delivered to him in any of the ways specified in Articles 1497 to 1501, or in any other manner
signifying an agreement that the possession is transferred from the vendor to the vendee.
Art. 1497. The thing sold shall be understood as delivered, when it is placed in the control and
possession of the vendee.

Thus, ownership does not pass by mere stipulation but only by delivery. [35] Manresa explains,
the delivery of the thing x x x signifies that title has passed from the seller to the buyer." [36]
Moreover, according to Tolentino, the purpose of delivery is not only for the enjoyment of the
thing but also a mode of acquiring dominion and determines the transmission of ownership, the
birth of the real right.[37] The delivery under any of the forms provided by Articles 1497 to 1505
of the Civil Code signifies that the transmission of ownership from vendor to vendee has taken
place.[38] Here, emphasis is placed on Article 1497 of the Civil Code, which contemplates what is
known as real or actual delivery, when the thing sold is placed in the control and possession of
the
vendee.[39]
In Equatorial Realty Development, Inc. v. Mayfair Theater, Inc.,[40] the concept of delivery
was elucidated, to wit:
Delivery has been described as a composite act, a thing in which both parties must join and the
minds of both parties concur. It is an act by which one party parts with the title to and the
possession of the property, and the other acquires the right to and the possession of the same. In
its natural sense, delivery means something in addition to the delivery of property or title; it
means transfer of possession. In the Law on Sales, delivery may be either actual or constructive,
but both forms of delivery contemplate "the absolute giving up of the control and custody of
the property on the part of the vendor, and the assumption of the same by the vendee."[41]
Applying the foregoing criteria to the case at bar, We find that there were various occasions of
delivery by petitioner to respondents, and the same was duly acknowledged by respondent
Trinidad. This is supported by the testimony of petitioners Sales Manager, Richard Agustin
Vergamos, an excerpt thereof states:
DIRECT EXAMINATION
ATTY. CORALDE
Q: So, after getting the order of two thousand pieces (2,000 pcs.) and after following the
delivery instructions of Mr. Trinidad, after you agreed to the price of three hundred eighty
pesos per piece (P380.00/pc) what happened next, if any, Mr. Witness?
A: WE processed the order and as committed to him, we delivered the items few days after the
order.
COURT
Q: How many days?
Let me refer, your honor, to the document of the D.R.
xxxx
A: On July 30, 1999, we delivered four hundred pieces (400 pcs.) to Union Cement
Manufacturing Plant under the company name G & L Associated Brokerage, your honor.
ATTY. CORALDE:

Q: So after your company delivered on July 30, 1999, what did you do next, if any, Mr.
Witness?
A: After I was advised by our deliveryman, I immediately called Mr. Trinidad that we were
able to deliver only four hundred pieces (400 pcs.) of bulk bags.
Q: And what was his reaction to your report, Mr. Witness?
A: At first, I apologized because I was not able to make the five hundred pieces required. So, in
reply
xxxx
ATTY. CORALDE
Q: So what was his reaction to your report that you delivered only four hundred pieces (400
pcs) of bulk bags instead of five hundred pieces (500 pcs), Mr. Witness?
A: He acknowledged our delivery and thanked me for delivering the item.
xxxx

Q: So, after the conversation with Mr. Trinidad, what happened next, in so far as the second
delivery, Mr. Witness?
A: And in that call, he followed-up to me the balance of delivery.
Q: So what did you tell him?
A: I told him that the two thousand pieces (2,000 pcs.) we agreed was already in process in our
production and the one thousand pieces (1,000 pcs.) is scheduled to deliver a few days later.
xxxx
Q: No, my question is, who advised you that there was already delivery made on August 4,
1999?
A: Our deliveryman advised me that they have already delivered the one thousand pieces
(1,000 pcs.) bulk bags to the Cement Manufacturing Plant.
Q: What did you do after receiving that information from your deliveryman?
A: After that advise[d], I called again Mr. Trinidad to inform him that we already delivered
one thousand pieces (1,000 pcs.) of bulk bags and he acknowledged our delivery and
thank me that I was able to deliver one thousand pieces (1,000 pcs.), sir.
xxxx
Q: Now, who advised you that there was a delivery of six hundred pieces (600 pcs.)?
A: Our deliveryman, sir.

Q: So, having been informed that, what did you do next, if any, Mr. Witness?
A: And after advised I called again MR. Gerry Trinidad to inform of the delivered six
hundred pieces (600 pcs.) bags.
Q: And then what was his reaction, Mr. Witness?
A: He confirmed our delivery, sir.
Q: So after that, did you have any occasion to talk again personally to Mr. Gerry Trinidad, Mr.
Witness?
A: Yes, sir.
Q: When was this?
A: It was when the time I have to submit the invoices, sir.
Q: What for these invoices are (sic), Mr. Witness?
A: These invoices have to be submitted to the customer for recognizing the delivery, as well as
for collection purposes and payment of the orders, sir.[42]
Based on the foregoing, it is clear that petitioner has actually delivered the bulk bags to
respondent company, albeit the same was not delivered to the person named in the Purchase
Order. In addition, by allowing petitioners employee to pass through the guard-on-duty, who
allowed the entry of delivery into the premises of Hi-Cement, which is the designated delivery
site, respondents had effectively abandoned whatever infirmities may have attended the delivery
of the bulk bags. As a matter of fact, if respondents were wary about the manner of delivery, such
issue should have been brought up immediately after the first delivery was made. Instead, Mr.
Trinidad acknowledged receipt of the first batch of the bulk bags and even followed up the
remaining
balance
of
the
orders
for
delivery.
Thus, the RTC correctly held that:
The evidence adduced by the parties clearly proved that Gerardo Trinidad himself, initially
ordered 1,000 pieces of NFF bulk bags at Php380.00 per piece from the plaintiff on or about July
29, 1999. After testing and checking sample bags, Mr. Trinidad had approved it and even
instructed the Sales Manager of NFF in the person of Richard Bergamo to place and print the
bags with G & L logo as well as control number on all our sides of bags and thereafter agreed to
the quantity of Two Thousand [2,000] pieces as what had been agreed upon during the meeting
with the Union Cement Marketing personnel at the Cement manufacturing [TSN March 10,
2003, pp. 25]. Initial delivery of 400 pieces of bulk bags were made on July 31, 1999 and then
followed by another delivery of additional bulk bags on August 5, 1999 while the remaining
600 pieces of bags were delivered on August 6, 1999 to complete the 2,000 pieces ordered by
the defendant. All these deliveries were made to defendants designated address at G & L
Associated Brokerage, Inc., C/O HI CEMENT CORPORATION, NORZAGARAY
BULACAN. These deliveries were made in compliance with Hi-Cements standard/regular
operating procedure. It passed thru guard on duty, who allowed the entry of delivery into the
premises of Hi-Cement, which is the designated delivery site and then a representative of the
defendant thereat received the delivered items in behalf of the defendant.[43]

Respondents mere allegations of non-delivery and misdelivery deserve scant consideration. On

the matter of non-delivery, We find it bizarre that respondents failed in demanding the delivery of
the bulk bags despite its urgent need to procure the same, as admitted by respondents witnesses.
Customarily, failure to deliver the goods could have prompted respondents to follow up on the
orders and ensure that the same is delivered at the earliest opportunity. In fact, if they had not
actually received any quantity of bulk bags, despite their alleged repeated demands, they could
have demanded in writing or resorted to legal action for the enforcement thereof. But there was
dearth of evidence showing the same. On the matter of misdelivery, when the instruction to
deliver the partial five hundred (500) pieces of bulk bags was made by Mr. Trinidad, the latter
did not even mention the name Ramil Ambrosio. The significance of such condition, therefore,
falls flat to the actual delivery made by petitioner at the agreed delivery site. As testified by Mr.
Vergamos, to wit:
DIRECT TESTIMONY
ATTY. CORALDE
Q: Now, Mr. Witness, where was the delivery of the bulk bags required for you by Mr.
Trinidad?
A: I was instructed by Mr. Gerry Trinidad to deliver the partial five hundred pieces (500 pcs.)
bags to Union Cement Manufacturing Plant in Norzagaray, Bulacan, under the name G & L
Associated Brokerage, sir.
Q: Did he advise you of specific person to whom this delivery should be made, Mr. Witness?
A: He did not advise me of any person, sir.[44]
Interestingly, respondents presented the payroll of its employees wherein the name Ramil
Ambrosio appeared only in the payroll for the periods of July 16 to 31, 1999, August 16 to 31,
1999 and September 16 to 30, 1999. However, for the period from July 30 to August 6, 1999,
during which the deliveries were made, the name Ramil Ambrosio does not appear in the payroll
of respondent company.[45] Thus, it is clear that during the time the deliveries were made on the
agreed dates and for which petitioner in fact delivered the bags to respondent company, there was
no Ramil Ambrosio to actually receive the same as he obviously did not report for work. [46]
More importantly, in his testimony, respondent Trinidad categorically admitted receiving the
delivery receipts, which evince the actual delivery of the bulk bags, to wit:
DIRECT EXAMINATION
ATTY. RODRIGUEZ
Q: The plaintiff also presented other Delivery Receipts, Mr. Witness, one (1) dated on August
4, 1999, No. 0229, previously marked as Exhibit C for the plaintiff and another Receipt
No. 0231 dated August 6, 1999, kindly go over these Delivery Receipts, Mr. Witness, and
inform us if you have seen this Delivery Receipts before?

COURT
Q: The one with No. 0229 dated August 4, 1999, you saw it?
A: Yes, your honor, I have seen this.
Q: Where did you see it?
A: I have seen this before. This was attached to the billing they have sent us, your honor.
Q: How about the other receipt, Mr. Witness, No. 0231?
INTERPRETER
Witness perusing over the document hand by the counsel.
A: Yes sir, I have already seen this sir.
Q: And on what occasion did you see this Delivery Receipt, Mr. Witness?
A: Thru the billing that they have sent to us, sir.
Q: In other words, you have copies of these delivery receipts?
xxxx
ATTY. RODRIGUEZ
xxxx
Q: Mr. Witness, you mentioned that you have seen these Delivery Receipts before thru the
invoices or billings sent to you by the plaintiff in this case, if these receipts are shown to
you, will you be able to identify them?
A: Yes, sir.[47]
Similarly, the corresponding sales invoices were duly served upon, and received by respondent
companys representatives, as shown by the signatures of one Marian Gabay, respondent
Trinidads helper at his residence, who received the sales invoices in behalf of respondent
company.[48] It is worthy to stress that from the time the copies of the sales invoices were served
on respondents and thereafter, respondents were never heard to complain relative thereto. [49]
On this score, We agree with petitioner that it is rather confounding that respondents, despite
receipt, on various occasions, of the billing statements and delivery receipts, failed to even call
the attention of petitioner regarding the matter.[50] In the same vein, despite the subsequent receipt
of demand letters, receipt of which were duly acknowledged and admitted by respondents, the
latter opted not to question or contest the same, which is quite unusual and extremely
inconsistent with its claim of non-delivery of the bulk bags in question. [51]
At any rate, We find merit in petitioners argument that despite its failure to strictly comply with

the instruction to deliver the bulk bags to the specified person, acceptance of delivery may be
inferred from the conduct of the respondents. [52] Accordingly, respondents may be held liable to
pay for the price of the bulk bags pursuant to Article 1585 of the Civil Code, which provides
that:
ARTICLE 1585. The buyer is deemed to have accepted the goods when he intimates to the seller
that he has accepted them, or when the goods have been delivered to him, and he does any act in
relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of
a reasonable time, he retains the goods without intimating to the seller that he has rejected them.
As early as Sy v. Mina,[53] it has been pronounced that the vendees acceptance of the equipment
and supplies and accessories, and the use it made of them is an implied conformity to the terms
of the invoices and he is bound thereby.[54] The Court in that case also held that the buyers
failure to interpose any objection to the invoices issued to it, to evidence delivery of the
materials ordered as per their agreement, should be deemed as an implied acceptance by the
buyer
of
the
said
conditions.[55]
Indeed, the use by respondent of the bulk bags is an act of dominion, which is inconsistent with
the ownership of petitioner. As correctly observed by the RTC, the use of the bulk bags by
respondents can be readily verified from the records of the case, to wit:
The plaintiffs witness affirmatively testified that the personnel of G & L Associated Brokerage
used the bulk bags by loading cement inside the bulk bags and it was lifted by a forklift and
lifted the same towards the truck belonging to G & L Associated Brokerage [TSN May 12, 2003
pp. 13]. Case records even disclosed that the Exhibits L and its submarkings which was
identified by the plaintiffs witness Richard Agustin Bergamo who took the pictures himself
evidently showing that the defendant being the haulers of the Union Cement, withdrew tonner
bags from Union Cement Bulacan Plan and used these tonner bags supplied by the plaintiff in
hauling Union Cement intended for CP Casecnan. The self-serving claim of Gerardo Trinidad
that he was constrained to make an order to some other suppliers due to alleged non-delivery of
the tonner bags likewise, deserved scant consideration. Defendant Gerardo Trinidad admitted
having used more than four thousand bags for the Casecnan Project but when asked to produce
copies of sales invoices and proof of purchase with respect to these alleged suppliers in
connection with Casecnan Project, said defendant miserably failed to produce even a single proof
and instead identified some delivery receipts covering the period year 2000 contrary to his very
claim that the bulk bags were urgently needed sometime in July 1999 for the Casecnan Project.[56]
Also, the fact that respondent company was the sole user of the tonner bags at the Bulacan Plant
of Union Cement during the period pertinent to this case was duly proven by the Certification
issued by Union Cement Corporation, dated July 26, 2002, that respondent was the only sole user
of tonner bags at Union Cement Bulacan Plant intended for the CP Casecnan Project(Project)
from August 1999 to June 2001. To bolster this, the pictures taken at the premises of respondent
company situated near the Project clearly depict respondent companys act of using tonner bags
supplied by petitioner, in hauling Union Cement intended for the Project. [57]
At this juncture, the overriding consideration is the evidence adduced that the bulk bags
delivered by petitioner at the Union Cement Plant were actually used by respondents, and this

Court cannot allow respondents to enrich themselves at the expense of another.

Having received the aforesaid billings, the corresponding delivery receipts and demand letters
rendered by petitioner, respondents should have forthwith called the attention of petitioner, if
indeed, its insinuation that the bulk bags themselves have not been delivered or misdelivered
were true.[58] In the ordinary course of business, in case of unwarranted claims of payment of a
sum of money, one would immediately protest the same. [59] But no such action was taken by
respondents despite notice thereof.[60] Only when respondents were required by the RTC to
submit an answer to the complaint were they constrained to contest the claims of petitioner. If
respondent were to be defeated only by its failure to effect delivery to the designated
representative of respondent, the latter would inevitably be unjustly enriched at the expense of
the
former.[61]
If at all, respondents failure to pay the purchase price may have been due to lack of funds rather
than non-delivery or misdelivery of the bulk bags. On cross-examination, Aurelio L. Gomez,
petitioners general manager, testified that respondents admitted after the third delivery that they
were postponing the payment because they have no money to pay. Thus:
CROSS-EXAMINATION
ATTY. RODRIGUEZ:
Q: How about the other officers of the corporation, did you inquire from them?
A: Not me personally sir, but my credit collector.
Q: Did you inquire from them what was the result of the inquiry?
A: This was after the third delivery was made when they said that they have no money to pay
that is why they were postponing the payment sir.[62]
Sifting through the testimony of the witnesses and the evidence submitted, the evidence of
petitioner preponderantly established that there was valid delivery of bulk bags, which gives rise
to respondent companys corresponding obligation to pay therefor. By preponderance of
evidence is meant that the evidence adduced by one side is, as a whole, superior to that of the
other side.[63] Essentially, preponderance of evidence refers to the comparative weight of the
evidence presented by the opposing parties.[64] As such, it has been defined as the weight, credit,
and value of the aggregate evidence on either side, and is usually considered to be synonymous
with the term greater weight of the evidence or greater weight of the credible evidence. [65] It is
proof that is more convincing to the court as worthy of belief than that which is offered in
opposition thereto.[66] Contrary to respondents view, We find that petitioner has successfully
established its case. Accordingly, We give greater weight, credit and value to its evidence.
Finally, with regard to the liability of respondent Trinidad, we adopt with approval the findings
of the RTC that he was merely being sued in his capacity as General Manager of respondent
company.[67] Since there was no showing of any of circumstances warranting the piercing the veil
of corporate fiction, he cannot be held jointly and severally liable for the outstanding obligation
of respondent company.[68] As held in Kukan International Corporation v. Reyes,[69] citing an

earlier case, those who seek to pierce the veil must clearly establish that the separate and distinct
personalities of the corporations are set up to justify a wrong, protect fraud, or perpetrate a
deception, to wit:
The same principle was the subject and discussed in Rivera v. United Laboratories, Inc.:
While a corporation may exist for any lawful purpose, the law will regard it as an association of
persons or, in case of two corporations, merge them into one, when its corporate legal entity is
used as a cloak for fraud or illegality. This is the doctrine of piercing the veil of corporate
fiction. The doctrine applies only when such corporate fiction is used to defeat public
convenience, justify wrong, protect fraud, or defend crime, or when it is made as a shield to
confuse the legitimate issues, or where a corporation is the mere alter ego or business conduit
of a person, or where the corporation is so organized and controlled and its affairs are so
conducted as to make it merely an instrumentality, agency, conduit or adjunct of another
corporation.
To disregard the separate juridical personality of a corporation, the wrongdoing must be
established clearly and convincingly. It cannot be presumed. (Emphasis supplied.)[70]
All told, We find reason to overturn the findings of the CA and affirm the decision of the trial
court. Accordingly, respondent is hereby ordered to pay petitioner the sum of Seven Hundred
Sixty Thousand Pesos (P760,000.00), representing overdue accounts plus interest from the first
demand on October 27, 1999 until fully paid in accordance with the doctrine laid down in
Eastern Shipping Lines v. Court of Appeals,[71] then later on in Nacar v. Gallery Frames,[72] as
well
as
attorneys
fees.[73]
At this juncture, it is well to note that under Nacar, in the absence of stipulation by the parties,
the judgment obligor shall be liable to pay six percent (6%) interest per annum to be computed
from default, i.e., judicial or extrajudicial demand pursuant to the provisions of Article 1169 of
the Civil Code.[74] Furthermore, when the judgment of the court awarding the sum of money
becomes final and executory, the rate of legal interest shall be six percent (6%) per annum from
such finality until its satisfaction, [75] taking the form of a judicial debt.
WHEREFORE, the petition is GRANTED. The Decision dated November 22, 2006 and the
Order dated May 22, 2007, respectively, of the Court of Appeals are hereby REVERSED and
SET ASIDE. The Decision of the Regional Trial Court, dated January 25, 2005, is hereby
AFFIRMED with MODIFICATION to the effect that legal interest shall be awarded to
petitioner at the following rates:
a)
b)
c)

For the period of October 27, 1999[76] to June 30, 2013,[77] the interest rate of twelve percent
(12%) per annum shall be imposed, compounded annually;
For the period of July 1, 2013[78] up to the day prior to the date of promulgation of this
Decision, the interest rate of six percent (6%) per annum shall be imposed, compounded
annually; and
From the date of promulgation of this Decision up to full payment, a straight six percent
(6%) interest per annum shall be imposed on the sum of money plus the interest computed
under paragraph (a) and (b) above.[79]

SO ORDERED.
Velasco, Jr., (Chairperson), Villarama, Jr., Reyes, and Jardeleza, JJ., concur.
[1]

Penned by Associate Justice Jose L. Sabio, Jr., with Associate Justices Rosalinda AsuncionVicente and Ramon M. Bato, Jr., concurring; Annex A to Petition, rollo, pp. 35-49.
[2]

Annex B to Petition, id. at 50.

[3]

Rollo, p. 13.

[4]

Id. at 12.

[5]

Id. at 13.

[6]

Id.

[7]

Id.

[8]

Id. at 14.

[9]

Id.

[10]

Id.

[11]

Id.

[12]

Id.

[13]

Id.

[14]

Comment to Petition, rollo, p. 88.

[15]

Id. at 88-89.

[16]

Id. at 89.

[17]

Rollo, p. 15.

[18]

Id.

[19]

Id.

[20]

Id. at 14-15.

[21]

Id. at 15.

[22]

Id.

[23]

Id.

[24]

Annex O to Petition, rollo, pp. 80-81.

[25]

Supra note 1.

[26]

Id. at 48. (Emphasis in the original)

[27]

Rollo, p. 17.

[28]

Lagon v. Hooven Comalco Industries, Inc., 402 Phil. 404, 412-413 (2001).

[29]

Id. at 413.

[30]

Legaspi v. Court of Appeals, 161 Phil. 471, 478 (1976), citing Tolentino v. De Jesus, 155 Phil.
144 (1974).
[31]

Rollo, p. 21.

[32]

Supra note 1, at 93.

[33]

Cebu Winland Development Corporation v. Ong Siao Hua, 606 Phil. 103, 113 (2009).

[34]

Civil Code, Art. 1495.

[35]

Cebu Winland Development Corporation v. Ong Siao Hua, supra note 33, at 114.

[36]

Id.

[37]

Id.

[38]

Id.

[39]

Id.

[40]

421 Phil. 709 (2001).

[41]

Id. at 731. (Emphasis ours)

[42]

TSN (Direct Examination of Richard Agustin Vergamos for the Plaintiff), March 10, 2003, pp.
27-42. (Emphasis supplied)

[43]

Supra note 24, at 78.

[44]

TSN (Direct Examination of Richard Agustin Vergamos for the Plaintiff), dated March 10,
2003, pp. 26-27. (Emphasis supplied)
[45]

Records, p. 63.

[46]

Id.

[47]

TSN (Direct Examination of Gerardo Trinidad for the Defense), October 13, 2003, pp. 26-28.

[48]

Records, p. 61.

[49]

Id.

[50]

Rollo, p. 24.

[51]

Id. at 22.

[52]

Id. at 25-26.

[53]

G.R. No. L-32217, August 15, 1988, 164 SCRA 312, citing Pan Pacific Company (Phils.) v.
Advertising Corporation, G.R. No. L-22050, June 13, 1968, 23 SCRA 977, 991.
[54]

Sy v. Mina, supra, at 315.

[55]

Id., citing Naga Development v. Court of Appeals, G.R. No. L-28173, September 30, 1971. 41
SCRA 106.
[56]

Supra note 24, at 78-79.

[57]

Records, p. 62.

[58]

Rollo, p. 26.

[59]

Id.

[60]

Id.

[61]

Records, p. 115.

[62]

TSN (Cross Examination of Aurelio L. Gomez), March 3, 2003, pp. 26-28. (Emphasis
supplied)
[63]

Republic v. Reyes-Bakunawa, G.R. No. 180418, August 28, 2013, 704 SCRA 163, 177-178.

[64]

Id. at 178.

[65]

Id.

[66]

Id.

[67]

Supra note 24, at 80.

[68]

Id.

[69]

G.R. No. 182729, September 29, 2010, 631 SCRA 596.

[70]

Kukan International Corporation v. Reyes, supra, at 617-618.

[71]

G.R. No. 97412, July 12, 1994, 234 SCRA 78.

[72]

G.R. No. 189871, August 13, 2013, 703 SCRA 439.

[73]

Eastern Shipping Lines v. Court of Appeals, supra note 71, at 80-81.

[74]

Nacar v. Gallery Frames, supra, note 72, at 457-458.

[75]

Id. at 458.

[76]

This is the date of petitioners first demand letter to respondent company.

[77]

According to Nacar v. Gallery Frames, in the absence of an express stipulation as to the

rate of interest that would govern the parties, the rate of legal interest for loans or forbearance
of any money, goods or credits and the rate allowed in judgments shall no longer be twelve
percent (12%) per annum - as reflected in the case of Eastern Shipping Lines and Subsection
X305.1 of the Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of
the Manual of Regulations for Non-Bank Financial Institutions, before its amendment by BSPMB Circular No. 799 - but will now be six percent (6%) per annum effective July 1, 2013. It
should be noted, nonetheless, that the new rate could only be applied prospectively and not
retroactively. Consequently, the twelve percent (12%) per annum legal interest shall apply only
until June 30, 2013. Come July 1, 2013 the new rate of six percent (6%) per annum shall be
the prevailing rate of interest when applicable. (Emphasis supplied)
[78]

[79]

Id.

Such interest is imposed by reason of the Courts decision and takes the nature of a judicial
debt.

SECOND DIVISION
[ G.R. No. 209605, January 12, 2015 ]
NEIL B. AGUILAR AND RUBEN CALIMBAS, PETITIONERS, VS.
LIGHTBRINGERS CREDIT COOPERATIVE, RESPONDENT.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari filed by petitioners Neil B. Aguilar (Aguilar) and
Ruben Calimbas (Calimbas), seeking to reverse and set aside the April 5, 2013 [1] and October 9,
2013[2] Resolutions of the Court of Appeals (CA) in CA-G.R. SP No. 128914, which denied the
petition for review outright, assailing the January 2, 2013 Decision [3] of the Regional Trial Court,
Branch 5, Dinalupihan, Bataan (RTC) and the May 9, 2012 Decision [4] of the First Municipal
Circuit
Trial
Court,
Dinalupihan,
Bataan
(MCTC).
In the lower courts, one of the issues involved was the proper application of the rules when a
party does not appear in the scheduled pre-trial conference despite due notice. In this petition, the
dismissal by the CA of the petition filed under Rule 42 for failure to attach the entire records has
also been put to question, aside from the veracity of indebtedness issue.
The Facts
This case stemmed from the three (3) complaints for sum of money separately filed by
respondent Lightbringers Credit Cooperative (respondent) on July 14, 2008 against petitioners
Aguilar and Calimbas, and one Perlita Tantiangco (Tantiangco) which were consolidated before
the First Municipal Circuit Trial Court, Dinalupihan, Bataan (MCTC). The complaints alleged

that Tantiangco, Aguilar and Calimbas were members of the cooperative who borrowed the
following funds:
1. In Civil Case No. 1428, Tantiangco allegedly borrowed P206,315.71 as evidenced by

Cash Disbursement Voucher No. 4010 but the net loan was only P45,862.00 as supported
by PNB Check No. 0000005133.[5]
2. In Civil Case No. 1429, petitioner Calimbas allegedly borrowed P202,800.18 as

evidenced by Cash Disbursement Voucher No. 3962 but the net loan was only P60,024.00
as supported by PNB Check No. 0000005088;[6]
3. In Civil Case No. 1430, petitioner Aguilar allegedly borrowed P126,849.00 as evidenced

by Cash Disbursement Voucher No. 3902 but the net loan was only P76,152.00 as
supported by PNB Check No. 0000005026;[7]
Tantiangco, Aguilar and Calimbas filed their respective answers. They uniformly claimed that
the discrepancy between the principal amount of the loan evidenced by the cash disbursement
voucher and the net amount of loan reflected in the PNB checks showed that they never
borrowed the amounts being collected. They also asserted that no interest could be claimed
because there was no written agreement as to its imposition.
On the scheduled pre-trial conference, only respondent and its counsel appeared. The MCTC
then issued the Order,[8] dated August 25, 2009, allowing respondent to present evidence ex
parte. Respondent later presented Fernando Manalili (Manalili), its incumbent General Manager,
as its sole witness. In his testimony, Manalili explained that the discrepancy between the amounts
of the loan reflected in the checks and those in the cash disbursement vouchers were due to the
accumulated interests from previous outstanding obligations, withheld share capital, as well as
the service and miscellaneous fees. He stated, however, that it was their bookkeeper who could
best explain the details.
Aguilar and Calimbas insisted that they should have the right to cross-examine the witness of
respondent, notwithstanding the fact that these cases were being heard ex parte. In the interest of
justice, the MCTC directed the counsels of the parties to submit their respective position papers
on the issue of whether or not a party who had been declared as in default might still
participate in the trial of the case. Only respondent, however, complied with the directive. In its
Order,[9] dated April 27, 2011, the MCTC held that since the proceedings were being heard ex
parte, the petitioners who had been declared as in default had no right to participate therein
and to cross-examine the witnesses. Thereafter, respondent filed its formal offer of evidence.[10]
MCTC Ruling
On May 9, 2012, the MCTC resolved the consolidated cases in three separate decisions. In Civil
Case No. 1428,[11] the MCTC dismissed the complaint against Tantiangco because there was no
showing that she received the amount being claimed. Moreover, the PNB check was made
payable to cash and was encashed by a certain Violeta Aguilar. There was, however, no
evidence that she gave the proceeds to Tantiangco. Further, the dates indicated in the cash

disbursement voucher and the PNB check varied from each other and suggested that the voucher
could refer to a different loan.
The decisions in Civil Case No. 1429[12] and 1430,[13] however, found both Calimbas and Aguilar
liable to respondent for their respective debts. The PNB checks issued to the petitioners proved
the existence of the loan transactions. Their receipts of the loan were proven by their signatures
appearing on the dorsal portions of the checks as well as on the cash disbursement vouchers. As a
matter of practice, banks would allow the encashment of checks only by the named payee and
subject to the presentation of proper identification. Nonetheless, the MCTC ruled that only the
amount shown in the PNB check must be awarded because respondent failed to present its
bookkeeper to justify the higher amounts being claimed. The court also awarded attorneys fees
in favor of respondent. The dispositive portion of the decision in Civil Case No. 1429 reads:
WHEREFORE, premises considered, judgment is hereby rendered in plaintiffs favor and against
the defendant, ordering the latter to pay plaintiff the amount of P60,024.00 with interest at the
rate of 12% per annum from April 4, 2007 until fully paid, plus P15,000.00 as attorneys fees.
Costs against the defendant.
SO ORDERED.[14]
And in Civil Case No. 1430, the dispositive portion states:
WHEREFORE, premises considered, judgment is hereby rendered in plaintiffs favor and against
the defendant, ordering the latter to pay the plaintiff the amount of ?76,152.00 with interest at the
rate of 12% per annum from February 28, 2007 until fully paid.
Defendant is further directed to pay attorneys fees equivalent to 25% of the adjudged amount.
Costs against the defendant.
SO ORDERED.[15]
On July 12, 2012, a notice of appeal[16] was filed by the petitioners, and on August 15, 2012, they
filed their joint memorandum for appeal[17] before the Regional Trial Court, Branch 5, Bataan
(RTC). Aguilar and Calimbas argued out that had they been allowed to present evidence, they
would have established that the loan documents were bogus. Respondent produced documents to
appear that it had new borrowers but did not lend any amount to them. Attached to the joint
memorandum were photocopies of the dorsal portions of the PNB checks which showed that
these checks were to be deposited back to respondents bank account.
RTC Ruling
On January 2, 2013, the RTC rendered separate decisions in Civil Case No. DH-1300-12[18] and
Civil Case No. DH-1299-12[19] which affirmed the MCTC decisions. It held that the PNB checks
were concrete evidence of the indebtedness of the petitioners to respondent. The RTC relied on
the findings of the MCTC that the checks bore no endorsement to another person or entity. The

checks were issued in the name of the petitioners and, thus, they had the right to encash the same
and appropriate the proceeds. The decretal portions of the RTC decision in both cases similarly
read:
WHEREFORE, premises considered, the appeal is hereby DENIED. The Decision dated May 9,
2012 of the First Municipal Circuit Trial Court (1st MCTC), Dinalupihan-Hermosa, Bataan is
hereby affirmed in toto.
SO ORDERED.
On January 18, 2013, the petitioners filed their joint motion for reconsideration/new trial[20]
before the RTC. Aguilar and Calimbas reiterated their position that they did not receive the
proceeds of the checks. As an alternative prayer, petitioners moved that the RTC remand the case
to the MCTC for a new trial on account of the Sinumpaang Salaysay of Arcenit Dela Torre, the
bookkeeper of respondent.
On February 11, 2013, the RTC issued separate orders[21] denying the motion of the petitioners. It
explained that all the issues were already passed upon and the supposed newly discovered
evidence was already available during appeal, but the petitioners failed to present the same in
time.
CA Ruling
Aggrieved, Aguilar and Calimbas filed a petition for review[22] before the CA on March 11, 2013.
It was dismissed, however, in the questioned resolution,[23] dated April 5, 2013, stating that the
petition was formally defective because the verification and disclaimer of forum shopping and
the affidavit of service had a defective jurat for failure of the notary public to indicate his
notarial commission number and office address. Moreover, the entire records of the case,
inclusive of the oral and documents evidence, were not attached to the petition in contravention
of Section 2, Rule 42 of the Rules of Court.
A motion for reconsideration[24] was filed by the petitioners which sought the leniency of the CA.
They attached a corrected verification and disclaimer of forum shopping and affidavit of service.
They asked the CA to simply order the RTC to elevate the records of the case pursuant to Section
7, Rule 42 of the Rules of Court. Moreover, the petitioners could not attach the records of the
case because the flooding caused by Habagat in August 2012 soaked the said records in water.
In the other questioned resolution, dated October 9, 2013, the CA denied the motion because the
petitioners still failed to attach the entire records of the case which was a mandatory requirement
under Section 2, Rule 42.
Hence, this petition.
SOLE ASSIGNMENT OF ERROR
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION WHEN IT DISMISSED

THE PETITION FOR REVIEW FILED BEFORE IT BY THE PETITIONERS UNDER

RULE 42 OF THE RULES OF COURT CITING THAT THE SAID PETITION IS
FORMALLY DEFECTIVE FOR FAILURE OF THE PETITIONERS TO SUBMIT WITH
THE SAID PETITION THE ENTIRE RECORDS OF THE APPEALED CIVIL CASE
NOS. DH-1300-12 AND DH-1299-12.[25]
The petitioners argue that contrary to the findings of the CA, they substantially complied with
the required form and contents of a petition for review under Section 2, Rule 42 of the Rules of
Court. There is nothing in the provision which requires that the entire records of the appealed
case should be endorsed to the CA. Such requirement would definitely be cumbersome to poor
litigants like them.
They assert that they submitted the following pleadings and material portions of the court records
in their petition for review: (1) certified copies of the decisions, orders or resolutions of the RTC
and the MCTC; (2) complaints against the petitioners attached with documents used by
respondent in its formal offer of evidence; (3) answer of the petitioners; (4) order of the MCTC
declaring the petitioners in default; (5) respondents formal offer of evidence; (6) notice of
appeal; (7) joint memorandum of appeal; and (8) joint motion for reconsideration/new trial.
According to the petitioners, these pleadings and records were sufficient to support their petition
for review.
Assuming that there was a reason to dismiss the petition on account of technicalities, the
petitioners argue that the CA should not have strictly applied the rules of procedure and provided
leniency to the petitioners. They also ask the Court to give a glance on the merits of their case
brought before the CA.
On February 7, 2014, respondent filed its comment[26] contending that the petitioners had no
excuse in their non-compliance with Section 2, Rule 42. They claim that the court records were
not attached because these were soaked in flood water in August 2012, but the RTC rendered its
decision in January 2013. The petitioners failed to secure a certification from the RTC that these
records were indeed unavailable.
On May 21, 2014, the petitioners filed their reply before this Court,[27] adding that the elevation
of the entire records of the case was not a mandatory requirement, and the CA could exercise its
discretion that it furnished with the entire records of the case by invoking Section 7, Rule 42 of
the Rules of Court.
The Courts Ruling
First Procedural Issue
On the sole assignment of error, the Court agrees with the petitioners that Section 2, Rule 42
does not require that the entire records of the case be attached to the petition for review. The
provision states:

Sec. 2. Form and contents. - The petition shall be filed in seven (7) legible copies, with the
original copy intended for the court being indicated as such by the petitioner, and shall (a) state
the full names of the parties to the case, without impleading the lower courts or judges thereof
either as petitioners or respondents; (b) indicate the specific material dates showing that it was
filed on time; (c) set forth concisely a statement of the matters involved, the issues raised, the
specification of errors of fact or law, or both, allegedly committed by the Regional Trial Court,
and the reasons or arguments relied upon for the allowance of the appeal; (d) be accompanied
by clearly legible duplicate originals or true copies of the judgments or final orders of both
lower courts, certified correct by the clerk of court of the Regional Trial Court, the requisite
number of plain copies thereof and of the pleadings and other material portions of the
record as would support the allegations of the petition. [Emphasis and underscoring supplied]
The abovequoted provision enumerates the required documents that must be attached to a
petition for review, to wit: (1) clearly legible duplicate originals or true copies of the judgments
or final orders of both lower courts, certified correct by the clerk of court of the Regional Trial
Court; (2) the requisite number of plain copies thereof; and (3) of the pleadings and other
material portions of the record as would support the allegations of the petition. Clearly, the
Rules do not require that the entire records of the case be attached to the petition for review.
Only when these specified documents are not attached in the petition will it suffer infirmities
under Section 3, Rule 42, which states:
Sec. 3. Effect of failure to comply with requirements. - The failure of the petitioner to comply
with any of the foregoing requirements regarding the payment of the docket and other lawful
fees, the deposit for costs, proof of service of the petition, and the contents of and the documents
which should accompany the petition shall be sufficient ground for the dismissal thereof.
In Canton v. City of Cebu,[28] the Court discussed the importance of attaching the pleadings or
material portions of the records to the petition for review. [P]etitioners discretion in choosing
the documents to be attached to the petition is however not unbridled. The CA has the duty to
check the exercise of this discretion, to see to it that the submission of supporting documents is
not merely perfunctory. The practical aspect of this duty is to enable the CA to determine at the
earliest possible time the existence of prima facie merit in the petition.[29] In that case, the
petition was denied because the petitioner failed to attach the complaint, answer and appeal
memorandum to support their allegation.
In Cusi-Hernandez v. Diaz,[30] a case where the petitioner did not attach to her petition for review
a copy of the contract to sell that was at the center of controversy, the Court nonetheless found
that there was a substantial compliance with the rule, considering that the petitioner had
appended to the petition for review a certified copy of the decision of the MTC that contained a
verbatim reproduction of the omitted contract.
Recently, in Galvez, v. CA,[31] it was held that attaching the other records of the MTC and the
RTC were not necessary based on the circumstances of the case. The petitioner therein was not
assailing the propriety of the findings of fact by the MTC and the RTC, but only the conclusions
reached by the said lower courts after their appreciation of the facts. In dealing with the
questions of law, the CA could simply refer to the attached decisions of the MTC and the RTC.

Thus, the question in the case at bench is whether or not the petitioners attached the sufficient
pleadings and material portions of the records in their petition for review. The Court rules that
the petition was in substantial compliance with the requirements.
The assignment of error[32] in the petition for review clearly raises questions of fact as the
petitioners assail the appreciation of evidence by the MCTC and the RTC. Thus, aside from the
decisions and orders of the MCTC and the RTC, the petitioners should attach pertinent portions
of the records such as the testimony of the sole witness of respondent, the copies of the cash
disbursement vouchers and the PNB checks presented by respondent in the MCTC. In the
petition for review, the petitioners attached respondents complaints before the MCTC which
contained the photocopies of the cash disbursement vouchers and PNB checks. These should be
considered as ample compliance with Section 2, Rule 42 of the Rules of Court.

Second Procedural Issue

Nevertheless, instead of remanding the case to the CA, this Court deems it fit to rule on the
merits of the case to once and for all settle the dispute of the parties.
The rule is that a court can only consider the evidence presented by respondent in the MCTC
because the petitioners failed to attend the pre-trial conference on August 25, 2009 pursuant to
Section 5, Rule 18 of the Rules of Court.[33] The Court, however, clarifies that failure to attend
the pre-trial does not result in the default of the defendant. Instead, the failure of the defendant
to attend shall be cause to allow the plaintiff to present his evidence ex parte and the court to
render judgment on the basis thereof.
The case of Philippine American Life & General Insurance Company v. Joseph Enario[34]
discussed the difference between non-appearance of a defendant in a pre-trial conference and the
declaration of a defendant in default in the present Rules of Civil Procedure. The decision states:
Prior to the 1997 Revised Rules of Civil Procedure, the phrase "as in default" was initially
included in Rule 20 of the old rules, and which read as follows:
Sec. 2. A party who fails to appear at a pre-trial conference may be non-suited or considered as
in default.
It was however amended in the 1997 Revised Rules of Civil Procedure. Justice Regalado, in his
book REMEDIAL LAW COMPENDIUM, explained the rationale for the deletion of the phrase
"as in default" in the amended provision, to wit:
1. This is a substantial reproduction of Section 2 of the former Rule 20 with the change that,
instead of defendant being declared "as in default" by reason of his non-appearance, this section
now spells out that the procedure will be to allow the ex parte presentation of plaintiffs evidence
and the rendition of judgment on the basis thereof. While actually the procedure remains the
same, the purpose is one of semantical propriety or terminological accuracy as there were
criticisms on the use of the word "default" in the former provision since that term is identified
with the failure to file a required answer, not appearance in court.
If the absent party is the plaintiff, then his case shall be dismissed. If it is the defendant who fails

to appear, then the plaintiff is allowed to present his evidence ex parte and the court shall render
judgment on the basis thereof. Thus, the plaintiff is given the privilege to present his evidence
without objection from the defendant, the likelihood being that the court will decide in favor of
the plaintiff, the defendant having forfeited the opportunity to rebut or present his own evidence.
[35]

The pre-trial cannot be taken for granted. It is not a mere technicality in court proceedings for it
serves a vital objective: the simplification, abbreviation and expedition of the trial, if not indeed
its dispensation.[36] More significantly, the pre-trial has been institutionalized as the answer to
the clarion call for the speedy disposition of cases. Hailed as the most important procedural
innovation in Anglo-Saxon justice in the nineteenth century, it paved the way for a less cluttered
trial and resolution of the case. It is, thus, mandatory for the trial court to conduct pre-trial in
civil cases in order to realize the paramount objective of simplifying, abbreviating and
expediting trial.[37]
In the case at bench, the petitioners failed to attend the pre-trial conference set on August 25,
2009. They did not even give any excuse for their non-appearance, manifestly ignoring the
importance of the pre-trial stage. Thus, the MCTC properly issued the August 25, 2009 Order,[38]
allowing respondent to present evidence ex parte.
The MCTC even showed leniency when it directed the counsels of the parties to submit their
respective position papers on whether or not Aguilar and Calimbas could still participate in the
trial of the case despite their absence in the pre-trial conference. This gave Aguilar and Calimbas
a second chance to explain their non-attendance and, yet, only respondent complied with the
directive to file a position paper. The MCTC, in its Order,[39] dated April 27, 2011, properly held
that since the proceedings were being heard ex parte, Aguilar and Calimbas had no right to
participate therein and to cross-examine the witness.
Thus, as it stands, the Court can only consider the evidence on record offered by respondent. The
petitioners lost their right to present their evidence during the trial and, a fortiori, on appeal due
to their disregard of the mandatory attendance in the pre-trial conference.
Substantive Issue
And on the merits of the case, the Court holds that there was indeed a contract of loan between
the petitioners and respondent. The Court agrees with the findings of fact of the MCTC and the
RTC that a check was a sufficient evidence of a loan transaction. The findings of fact of the trial
court, its calibration of the testimonies of the witnesses and its assessment of the probative
weight thereof, as well as its conclusions anchored on the findings are accorded high respect, if
not conclusive effect.[40]
The case of Pua v. Spouses Lo Bun Tiong[41] discussed the weight of a check as an evidence of a
loan:
In Pacheco v. Court of Appeals, this Court has expressly recognized that a check constitutes an
evidence of indebtedness and is a veritable proof of an obligation. Hence, it can be used in lieu of
and for the same purpose as a promissory note. In fact, in the seminal case of Lozano v.

Martinez, We pointed out that a check functions more than a promissory note since it not only
contains an undertaking to pay an amount of money but is an "order addressed to a bank and
partakes of a representation that the drawer has funds on deposit against which the check is
drawn, sufficient to ensure payment upon its presentation to the bank." This Court reiterated this
rule in the relatively recent Lim v. Mindanao Wines and Liquour Galleria stating that a check,
the entries of which are in writing, could prove a loan transaction.[42]
There is no dispute that the signatures of the petitioners were present on both the PNB checks
and the cash disbursement vouchers. The checks were also made payable to the order of the
petitioners. Hence, respondent can properly demand that they pay the amounts borrowed. If the
petitioners believe that there is some other bogus scheme afoot, then they must institute a
separate action against the responsible personalities. Otherwise, the Court can only rule on the
evidence on record in the case at bench, applying the appropriate laws and jurisprudence.
As to the award of attorneys fees, the Court is of the view that the same must be removed.
Attorney's fees are in the concept of actual or compensatory damages allowed under the
circumstances provided for in Article 2208 of the Civil Code, and absent any evidence
supporting its grant, the same must be deleted for lack of factual basis.[43] In this case, the MCTC
merely stated that respondent was constrained to file the present suit on account of the
petitioners obstinate failure to settle their obligation. Without any other basis on record to
support the award, such cannot be upheld in favor of respondent. The settled rule is that no
premium should be placed on the right to litigate and that not every winning party is entitled to
an automatic grant of attorneys fees.[44]
WHEREFORE, the petition is PARTIALLY GRANTED.
In accord with the discourse on the substantive issue, the January 2, 2013 decision of the
Regional Trial Court, Branch 5, Dinalupihan, Bataan, is AFFIRMED. The award of attorney's
fees is, however, DELETED.
SO ORDERED.
Carpio, (Chairperson), Velasco, Jr.,* Del Castillo, and Leonen, JJ., concur.

Designated Acting member in lieu of Associate Justice Arturo D. Brion, per Special Order No.
1910, dated January 12, 2015.
[1]

Penned by Associate Justice Mario V. Lopez with Associate Justice Amy C. Lazaro-Javier and
Associate Justice Socorro B. Inting, concurring; rollo, pp. 135-136.
[2]

Id. at 137-138.

[3]

Penned by Executive Judge Jose Ener S. Fernando; id. at 51-55 and 57-61.

[4]

Penned by Presiding Judge Franco Paulo R. Arago; id. at 62-66 and 67-71.

[5]

Id. at 107.

[6]

Id. at 82.

[7]

Id. at 73.

[8]

Id. at 96-97.

[9]

Id. at 102-103.

[10]

Id. at 104-106.

[11]

Id. at 107-111.

[12]

Id. at 62-66.

[13]

Id. at 67-71.

[14]

Id. at 66.

[15]

Id. at 71.

[16]

Id. at 112.

[17]

Id. at 114-132.

[18]

Id. at 51-55.

[19]

Id. at 57-61.

[20]

Id. at 124-132.

[21]

Id. at 50 and 56.

[22]

Id. at 27-49.

[23]

Id. at 135-136.

[24]

Id. at 139-145.

[25]

Id. at 14.

[26]

Id. at 160-171.

[27]

Id. at 178-188.

[28]

544 Phil. 369 (2007).

[29]

Id. at 377.

[30]

390 Phil. 1245, 1252 (2000).

[31]

G.R. No. 157445, April 3, 2013, 695 SCRA 10, 24.

[32]

Rollo, pp. 36-37.

[33]

Sec. 5. Effect of failure to appear. - The failure of the plaintiff to appear when so required
pursuant to the next preceding section shall be cause for dismissal of the action. The dismissal
shall be with prejudice, unless otherwise ordered by the court. A similar failure on the part of the
defendant shall be cause to allow the plaintiff to present his evidence ex parte and the court to
render judgment on the basis thereof.
[34]

645 Phil. 166, 174-175 (2010).

[35]

Tolentino v. Laurel, G.R. No. 181368, February 22, 2012, 666 SCRA 561, 569-570.

[36]

United Coconut Planters Bank v. Magpayo, 473 Phil. 739, 746 (2004).

[37]

Paraaque Kings Enterprise, Inc. v. Santos, G.R. No. 194638, July 2, 2014.

[38]

Id. at 96-97.

[39]

Id. at 102-103.

[40]

People v. Warriner, G.R. No. 208678, June 16, 2014.

[41]

G.R. No. 198660, October 23, 2013, 708 SCRA 571.

[42]

Id. at 584.

[43]

People v. Likiran, G.R. No. 201858, June 4, 2014.

[44]

First Lepanto-Taisho Insurance Corporation v. Chevron Philippines, Inc., G.R. No. 177839,
January 18, 2012, 663 SCRA 309, 325.

FIRST DIVISION
[ G.R. No. 148748, January 14, 2015 ]
IMELDA, LEONARDO, FIDELINO, AZUCENA, JOSEFINA, ANITA AND
SISA, ALL SURNAMED SYJUCO, PETITIONERS,
REPUBLIC OF THE PHILIPPINES, PETITIONER-INTERVENOR, VS.
FELISA D. BONIFACIO AND VSD REALTY & DEVELOPMENT
CORPORATION, RESPONDENTS.
DECISION
LEONARDO-DE CASTRO, J.:
For review on certiorari under Rule 45 of the Rules of Court is the Decision [1] dated
February 23, 2001 and Resolution[2] dated June 26, 2001 of the Court Appeals in CAG.R. CV. No. 57777, which affirmed in toto the Decision[3] dated January 9, 1998 of
the Regional Trial Court (RTC), Branch 126 of Caloocan City in Civil Case No. C-366.
The present controversy involves a parcel of land, measuring around 2,835 square
meters, which originally formed part of a wider tract of land, dubbed as the Maysilo
Estate (subject land).
The factual antecedents, as culled from the records, are as follows:
Petitioners Imelda, Leonardo, Fidelino, Azucena, Anita, and Sisa, all surnamed
Syjuco (collectively referred to as petitioners) are the registered co-owners of the
subject land, located in the then Barrio of Balintawak, Municipality of Caloocan,

Province of Rizal, under Transfer Certificate of Title (TCT) No. T-108530 [4] issued by
the Register of Deeds of Caloocan City on March 26, 1984. The subject land is
particularly described under petitioners certificate of title as follows:
It is hereby certified that certain land situated in the Caloocan, Metro Manila,
Philippines, bound and described as follows:
Un terreno (Lote No. 3-B del plano de subdivision Psd-706, parte del Lote No. 23-A,
plano original Psu-2345 de la Hacienda de Maysilo), situado en el Barrio de
Balintawak, Municipio de Caloocan, Provincia de Rizal. Linda por el NE. con el Lote
No. 3-D del plano de subdivision; por el SE., con el Lote No. 3-C del plano de
subdivision; por el SO. con el Lote No. 7; y por el No. con el Lote No. 3-A del plano
de subdivision. x x x midiendo una extension superficial de DOS MIL OCHOCIENTOS
TREINTA Y CINCO METROS CUADRADOS CON TREINTA DECIMETROS CUADRADOS (2,
835), mas o menos. x x x la fecha de la medicion original 8 al 27 de Septiembre, 4
al 21 de Octubre y 17-18 de Noviembre de 1911 y la de la subdivision, 29 de
Diciembre de 1924. (Consta la descripcion decinica en el Certificado de
Transferencia de Titulo No. 10301)
xxxx
is registered in accordance with the provisions of the Land Registration Act in the
name of
IMELDA G. SYJUCO; LEONARDO G. SYJUCO; FIDELINO G. SYJUCO; AZUCENA G.
SYJUCO; JOSEFINA G. SYJUCO; ANITA G. SYJUCO; SISA G. SYJUCO, all of legal age,
single, Filipinos, - as owner thereof in fee simple, subject to such of the encumbrances mentioned in
Section 39 of said Act as may be subsisting, and to the provisions of Sec. 4, Rule 74
of the Rules of Court with respect to the inheritance left by the deceased Monica
Galauran and Mariano Mesina. (From T.C.T. No. 12370)
Petitioners have been in open, continuous, and uninterrupted possession of the
subject land, by themselves or through their predecessors-in-interest, since 1926.
Petitioners traced back their title over the subject land to TCT No. 10301 issued on
February 26, 1926 to Monica Jacinto Galauran. Thereafter, TCT No. 10301 was
replaced by TCT No. 8685 under the names of Avelina Baello, Felisa Baello, Dolores
Baello, Eduardo Mesina, and Fausto Galauran (Avelina Baello, et al.). TCT No. 8685
was then replaced by TCT No. 12370 under the names of the brothers Martin V.
Syjuco (Martin) and Manuel V. Syjuco (Manuel) pursuant to a Deed of Sale of Real
Estate[5] dated February 7, 1949 executed by Avelina Baello, et al. in favor of the
siblings Martin and Manuel. TCT No. 12370 was, in turn, replaced by TCT No. 4856 [6]
issued on July 1, 1964 in Martins name alone in accordance with a Partition
Agreement[7] executed by the brothers on June 16, 1964. Upon Martins death,

petitioners inherited the subject land, and following the extrajudicial partition they
executed on June 27, 1976, they registered said land in their names, as co-owners,
under TCT No. T-108530 issued on March 26, 1984. Petitioners and their
predecessors-in-interest have been paying the real property taxes over the subject
land since 1949.[8]
Among the annotations on TCT No. T-108530 are two encumbrances constituted by
petitioners and/or their predecessors-in-interest on the subject land, particularly:
(1) a lease agreement dated September 24, 1963, in favor of Manufacturers Bank
and Trust Company (Manufacturers Bank), over a portion of the subject land, with
the condition that the buildings which the lessee had constructed thereon shall
become the property of the lessor/s after the expiration of the lease agreement; and
(2) another lease agreement dated December 20, 1971, in favor of a certain Chan
Heng, over the remaining portion of the subject land. [9]
Sometime in 1994, however, petitioners learned that a broker named Exequiel
Fajardo, through a Letter[10] dated March 9, 1994, offered for sale the subject land
along with the improvements thereon to a certain Luis Ong, giving the following
description of the property and terms of the offer:
AREA:

2,835.30 square meters

Lot No. 23-A-4-B-2A-3B, PSD 706, TCT265778, Register of Deeds,
Kalookan City

Location:

Kalookan City (beside LRT Station)

Owner:

Felisa D. Bonifacio

The terms of this offer are as follows:

Price:

P35,000.00 per square meter

Payment
Terms:

50% downpayment;

Petitioners found out that the purported owner of the subject land, respondent
Felisa D. Bonifacio (Bonifacio), was the sub-lessee of Kalayaan Development
Corporation, which, in turn, was the sub-lessee of Manufacturers Bank, which was
the direct lessee of petitioners. Petitioners also learned that respondent Bonifacio
was able to register the subject land in her name under TCT No. 265778, which was
issued on March 29, 1993 by the Register of Deeds of Caloocan City. Respondent
Bonifacios certificate of title described the subject land as follows:

It is hereby certified that certain land situated in the Caloocan City, Philippines,
bounded and described as follows:
A parcel of land (Lot 23-A-4-B-2-A-3-B of the subd. plan, Psd-706, L.R.C. Rec. No. ),
situated in Balintawak, Caloocan Rizal, Bounded of the E., along line 1-2 by Lot 23-A4-B-2-A-3-D, on the SE., along line 2-3 by lot 23-A-4-B-2-A-3-C; both of the subd. plan
on the SW., along line 3-4 by lot 23-A-4-B-2-A-6; and on the NW., along line 4-1 by
Lot 23-A-4-B-2-A-3-A of the subd. plan. Beginning at a point marked 1 on plan,
being N. 71 deg. 17E., 1,285.85 m. from BLLN No. 1, Caloocan thence; S. 01 deg.
46W., 27.70 m. to point 2; S 64 deg. 30W., 105.15 m. to point 3; N 23 deg. 12 W.,
26.39 m. to point 4; N. 65 deg. 22E., 116.78 m. to pt. of beginning, containing an
area of TWO THOUSAND EIGHT HUNDRED THIRTY FIVE SQ. METERS AND THIRTY SQ.
DECIMETERS (2,835.30). All pts. referred to are indicated on the plan and are
marked on the ground by old pts. Bearings true; date of original survey, Date of
subd. survey, Dec. 29, 1922,
is registered in accordance with the provisions of the Property Registration Decree
in the name of
FELISA D. BONIFACIO, of legal age, Filipino, widow, as owner thereof in fee simple, subject to such of the encumbrances mentioned in
Section 44 of said Decree as may be subsisting[.] x x x. [11]
Respondent Bonifacios TCT No. 265778 was issued pursuant to an Order [12] dated
October 8, 1992 of the RTC of Caloocan City, Branch 125, in L.R.C. Case No. C-3288,
entitled In the Matter of Petition for Authority to Segregate an Area of 5,680.1
Square Meters from Lot 23-A-4-B-2-A-3-B, PSD-706 (PSU-2345) of Maysilo Estate
and Issuance of Separate Certificate of Title in the Name of Felisa D. Bonifacio. RTCBranch 125 granted respondent Bonifacios petition for segregation because:
From the evidence presented, the Court finds that in Case No. 4557 for
Petition for Substitution of Names, in the then Court of First Instance of
Rizal, Branch 1, the then Presiding Judge Cecilia Muoz Palma, issued an
Order dated May 25, 1962 (EXHIBIT N) substituting Maria de la
Concepcion Vidal as one of the registered owners of several parcels of
land forming the Maysilo Estate and covered by, among others, Original
Certificate of Title No. 994 of the Register of Deeds of Rizal with among
others Eleuteria Rivera Bonifacio to the extent of 1/6 of 1-189/1000 per
cent of the entire Maysilo Estate. On January 29, 1991, Eleuteria Rivera
Bonifacio executed in favor of Felisa D. Bonifacio, herein petitioner, a Deed
of Assignment (EXHIBIT M) assigning all her rights and interests over
Lot 23-A-4-B-2-A-3-A, Psd-706 and Lot 23-A-4-B-2-A-3-B, Psd-706, both lots
being covered by O.C.T. 994 of the Register of Deeds of Rizal. That even
prior to the execution of the Deed of Assignment but while negotiations with

Eleuteria Rivera Bonifacio were going on, petitioner already requested the Lands
Management Sector, Department of Environment and Natural Resources, National
Capital Region, to prepare and issue the Technical Descriptions of the two lots
subject of this petition. As requested by petitioner, Elpidio T. de Lara, Chief,
Technical Services Section, Lands Management Sector, DENR-NCR, issued on June
20, 1990, two technical descriptions (EXHIBITS J and K) covering the two lots.
After the issuance of the technical descriptions, the petitioner requested Geodetic
Engineer Jose R. Rodriguez to prepare a sketch plan of the two lots subject of this
petition. As requested, Engr. Rodriguez prepared a sketch plan (EXHIBIT L) based
from Exhibits J and K which was submitted to the Lands Management Services,
formerly Bureau of Lands, for verification and checking. That Mr. Benjamin V.
Roque, Chief, Topographic and Special Map Section, Land Management Services,
formerly Bureau of Lands, certified on July 31, 1992 that the sketch plan (EXHIBIT
L) is a true and correct plan of Lots 23-A-4-B-2-A-3-A and 23-A-4-B-2-A-3-B, both on
Psd-[706]. (Emphasis supplied.)
Hence, RTC-Branch 125 decreed in the same Order:
WHEREFORE, in view of all the foregoing, the Court hereby GRANTS the petition and
orders the segregation of Lots 23-A-4-B-2-A-3-A and 23-A-4-B-2-A-3-B both on Psd[706] from Original Certificate of Title No. 994 of the Register of Deeds of Rizal in
favor of the herein petitioner.
Upon the finality of this order and the payment of the prescribed fees if any and
presentation of the clearances of said lots, the Register of Deeds of Caloocan
City is ordered to issue a new transfer certificate of title in the name of
herein petitioner Felisa D. Bonifacio over Lots 23-A-4-B-2-A-3-A and 23-A4-B-2-A-3-B both on Psd-[706] of O.C.T. 994 of the Register of Deeds of Rizal. [13]
For unexplained reasons, the Register of Deeds of Caloocan City issued TCT No.
265778 to respondent Bonifacio on March 29, 1993 even before RTC-Branch 125
declared its Order dated October 8, 1992, granting respondent Bonifacios petition
for segregation, final and executory on April 6, 1993. [14]
Civil Case No. C-366 before
RTC-Branch 126
To protect their rights and interest over the subject land, petitioners lodged a
Petition[15] on July 28, 1994, docketed as Civil Case No. C-366 before RTC-Branch
126, Kalookan City, praying for the declaration of nullity and cancellation of
respondent Bonifacios TCT No. 265778 over the subject land in view of petitioners
subsisting TCT No. T-108530 over the very same property. In an Order[16] dated July
28, 1994, RTC-Branch 126 deemed Civil Case No. C-366 as a special civil action for
quieting of title and not an ordinary civil action for recovery of ownership of land.

Subsequently, petitioners discovered that respondent Bonifacio sold the subject

land in favor of respondent VSD Realty & Development Corporation (VSD Realty),
and that TCT No. 265778 in the name of respondent Bonifacio had already been
cancelled and replaced by TCT No. 285313 [17] in the name of respondent VSD Realty
on September 12, 1994. As a result, petitioners filed on April 25, 1995 an Amended
Petition,[18] impleading respondent VSD Realty in Civil Case No. C-366.
Petitioners contended before RTC-Branch 126 that although TCT No. T-108530 of
petitioners, on one hand, and TCT No. 265778 of respondent Bonifacio and TCT No.
285313 of respondent VSD Realty, on the other hand, contained different technical
descriptions, said certificates of title actually pertained to one and the same
property. According to petitioners, respondents certificates of title over the subject
land could have only been obtained fraudulently given that:
a)

No subsequent survey of the Lot could have been obtained, approved by the
Director of Lands, and presented by the respondent as there exists an original
isolated survey thereto for which Transfer Certificate of Title No. 10301 covering
the said land was issued as early as 26 February 1926 in the name of Monica
Jacinto Galauran, married to Mariano Mesina.

b)

TCT No. 265778 was issued in the name of the respondent Felisa Bonifacio on
[29]
March 1993 before the issuance on 6 April 1993 by the Branch Clerk of Court
(RTC Branch 125 in L.R.C. No. C-3288) of a Certificate of Finality of the aforesaid
Order dated 8 October 1992.

c)

TCT No. 265778 was issued to Felisa Bonifacio on 29 March 1993 without the
Register of Deeds of Kalookan City requiring the presentation of the owners
duplicate copy of O.C.T. No. 994.[19]

Respondent Bonifacio filed her Answer with Compulsory Counterclaim [20] on October
11, 1994. She denied knowledge of petitioners TCT No. T-108530 and maintained
that the technical description of the land covered by petitioners TCT No. T-108530
is different from that in her TCT No. 265778. Respondent Bonifacio also averred
that the technical description of the land covered by her TCT No. 265778 had been
verified and approved by the Land Management Services of the Department of
Environment and Natural Resources (DENR); that she acquired a valid title, TCT No.
265778, over the subject land pursuant to a court order in a land registration case;
and that Civil Case No. C-366 was a collateral attack on the validity of her TCT No.
265778. Respondent VSD Realty, in its Manifestation [21] filed on June 31, 1995,
adopted respondent Bonifacios aforementioned Answer.
In the Pre-Trial Order[22] dated February 23, 1995 of RTC-Branch 126, the parties
agreed on the following stipulation of facts and issues:

STIPULATION OF FACTS:
1. That the petitioners are in possession of the lot in question; and
2. That the respondent is never in possession of the lot in question.
ISSUES:
1. Whether or not the Technical Description is one and the same as appearing on
both titles; and
2. Whether or not the TCT No. 265778 of the respondent is a valid title.
Thereafter, trial ensued.
Petitioners presented several documentary exhibits [23] and the testimonies of
Leonardo de Guzman Syjuco, one of the petitioners; [24] Renato T. Malindog, Land
Registration Examiner of the Caloocan City Registry of Deeds; [25] and Engineer
(Engr.) Elpidio T. de Lara (De Lara), Chief of Technical Services Section, Land
Management Sector (LMS), DENR.[26] In its Order[27] dated November 29, 1995, RTCBranch 126 admitted all the evidence presented by petitioners.
RTC-Branch 126 summarized petitioners evidence as follows:
Leonardo Syjuco testified that he, together with the other petitioners in this case,
inherited the subject property from their late father, Martin Syjuco, as shown in
Entry No. 15033/T-No. 108530 annotated in TCT No. T-108530 (Exhibit A). His
father and his uncle, Manuel Syjuco, in turn acquired the same from the Baello
Family through a Deed of Real Estate (Exhibit H). Thereafter, Martin and Manuel
executed a deed of partition (Exhibit I) and their father was issued TCT No. 4856
(Exhibit G) over the subject property. He has been paying the tax declaration on
said property as evidenced by tax receipts (Exhibits J to J-14). They then leased
the property to Manufacturers Bank who was the one who built the improvements
on the same with stipulation that they will become the owners of these
improvements after the expiration of the lease. They also subleased the property to
Kalayaan Development Corporation (KDC, for short) and respondent Bonifacio is a
lessee of KDC. One of their tenants informed him that their property was being
offered for sale and so he instituted measures to protect their interest. He also
discovered the existence of TCT No. T-265778 (Exhibit C) in the name of
respondent Bonifacio which he claims to be void as there can be no segregation of a
property that was previously segregated. Witness admits having executed a lease
in favor of a certain John Hay. He likewise admitted that the technical description
appearing on the property lease to John Hay is not the same as the technical
description appearing on Exh. A. He claims that when they inherited the property,
the technical description was already recorded thereon and it was the Registry of
Deeds who placed the same on the property.

Renato T. Malindog, an examiner of the Register of Deeds of Kalookan City,

testified that prior to the issuance of TCT No. 265778, derivative documents were
filed before their office such as the Court Order dated October 8, 1992 in L.R.C.
Case No. C-3288; the Certificate of Finality to said Order dated April 6, 1993; the
subdivision plan to Lot 23-A-4-B-2-A-3-A and Lot 23-A-4-B-2-A-3-B also PSD-706 with
Plan No. SK-007501-00024-D and annexed to said documents were the technical
description for Lot 23-A-4-B-2-A-3-A, PSD-706 and the technical description for Lot
23-A-4-B-2-A-3-B also of PSD-706. Based on their record, documents were
[received] regarding the order of finality but there was no showing that the tax
clearance [was] registered in their office. Likewise, based on the document
presented to them, the office who issued the technical description was from the
Department of Environment and Natural Resources, Land Management Sector, and
one Teodoro E. Mundo, Jr. is the Chief Survey Division of said office.
Elpidio T. de Lara, Chief of the Technical Services Section of the Department of
Agrarian and Natural Resources, affirms to having certified to the technical
description [o]n July 9, 1990, referred to as Lot 23-A-4-B-2-A-3-B of subdivision plan
PSD 706, based on a request by Felisa Bonifacio. He made the Note: Subject for
field survey on Exhibit M so that the corresponding technical description be
identified in the plan. Before issuing the technical description for the subject lot, he
complied with the processes of having the technical description researched from
their records. From their record, he had not issued a technical description for the
subject lot and they have no record in their office of such. The corresponding B-37
technical description attached to the letter request came from the Land
Management Bureau, which is the survey of the technical description. At the time
the request was made until the time the certification was issued, he did not meet
Felisa Bonifacio and said request was filed in their office and sent to the technical
services department.[28]
Respondents, in turn, presented documentary exhibits [29] and called to the witness
stand Geodetic Engr. Evelyn G. Celzo (Celzo) of the Land Management Services,
DENR;[30] Fernando D. Macaro (Macaro), Land Registration Examiner of the Caloocan
City Register of Deeds;[31] and Attorney (Atty.) Kaulayao V. Faylona, Director and
Corporate Secretary of respondent VSD Realty.[32]
RTC-Branch 126 summed-up respondents evidence as follows:
Evelyn G. Celzo, a geodetic engineer from the Land Management Services,
testified that she was ordered to conduct a verification survey of Lot 23-A-4-B-2-A-3B of PSD 706 by their Regional Technical Director, Roquesa de Castro. The survey
was conducted on August 23, 1994 and its result [was] contained in a report dated
April 17, 1995 (Exhibit 4) which she prepared and submitted. She and her team
personally went to the place and found out that two (2) stores, namely, Fairy Mart

and Zenco Footstep were the present occupants of the lot. They likewise informed
the adjoining lots that they were going to execute a verification survey. BPM 119 in
Kalookan Cadastre was the reference point to determine whether the lot was really
in that place. BPM 153, Kalookan Cadastre were used as common points to identify
the technical description in Felisas lot. However, insofar as Exhibit A is
concerned, the technical description of said property did not contain these common
points. The DENR, NCR, has record of all technical descriptions approved and
verified in said office. She points out that only one (1) technical description is
allowed for a particular lot. In conducting the survey verification, the certified TCT
was furnished to them by Felisa Bonifacio, together with the relocation survey filed
at the Technical Reference Section. As to the adjoining lots, they secured the map
of the Maysilo Estate Plan, under the relocation survey, they found out that the lot
belonged to Felisa Bonifacio and the technical description is the same as the
technical description submitted to her. Her verification survey was approved as
reflected in the original plan from the Bureau of Land Verification Survey (Exhibit
7). She also stated that before the survey, she conducted a research as to the
origin of the technical description from her office and from the Bureau of Lands in
Binondo but there were no available record. Neither was there any record about the
original owner. When the certified copy of TCT No. 265778 was given to her, there
were no annotations of adverse claims and so she did not anymore inquire from the
Registry of Deeds whether there were new annotations made thereon.
Atty. Kaulayao V. Faylona, a director and Corporate Secretary of VSD Realty
Corporation, testified that a real estate broker offered for sale to VSD two (2) lots
along Avenida and occupied by Fairmart and Uniwide Sales, Inc. Among the
documents shown to him by the seller were the Order of Judge Geronimo S. Mangay,
of the Regional Trial Court of Kalookan City, Branch 125 (Exhibit 2), as well as the
Transcript of Case No. C-3288 (Exh. 3). While he found the issuance of said Order
by the Court regular, he also requested for a verification survey from the sellers
group in order to make sure that the lot appearing in the technical description is
also the lot actually being occupied by the buildings already mentioned thereon.
The actual verification survey was conducted by the DENR through Engr. E. Celzo as
evidenced by a report (Exh. 4) submitted for the purpose. Moreover, a
verification plan (Exh. 7) approved by the DENR was likewise prepared in
connection with the verification survey. He even personally went to the sala of
Judge Mangay and verified from the then Deputy Branch Clerk of Court, the
authenticity of the transcript that was given to him which the said Branch Clerk of
Court confirmed as having been issued by said court. He did not however go over
the petition filed by Felisa Bonifacio since what was important was that the title was
issued in the land registration proceedings. He knew that Felisa was not in
possession of the said property as it was being occupied by business establishments
who were all not owners of the lot. As to payments of realty taxes due on the
property, he claims that the title would not have been issued in the first place [and]
the taxes [would] not [have] been previously paid. Insofar as VSD is concerned, the

corporation was up-to-date in its payment of realty taxes over their property. He
stresses that there is no other owner of the lot in question except Felisa Bonifacio
because there was only one (1) lot with that technical description. The said
approved technical description appearing on Felisas lot was issued by the DENR
which is actually the custodian of the technical descriptions of lands under the Land
Registration System, which was confirmed by Mr. Elpidio T. de Lara, complainants
witness.[33]
Macaros testimony was not included in the foregoing prcis of respondents
evidence by RTC-Branch 126. Macaro affirmed before RTC-Branch 126 the existence
of respondent Bonifacios TCT No. 265778. Macaro further testified that the
standard operating procedure at the Caloocan City Registry of Deeds was to require
the presentation of the certification stating that the court order directing issuance of
the certificate of title had already become final and executory, before actually
issuing said certificate of title; but he was unable to explain how in this case
respondent Bonifacios TCT No. 265778 was issued on March 29, 1993, before the
Certificate of Finality of the Order dated October 8, 1992 in Civil Case No. C-3288
was issued by RTC-Branch 125 on April 6, 1993.
On January 9, 1998, RTC-Branch 126 rendered its Decision in Civil Case No. C-366,
the dispositive portion of which reads:
WHEREFORE, in the light of the foregoing considerations, judgment is hereby
rendered as follows:
1)

Dismissing the petition of the petitioners;

2)

Declaring that the technical description described in TCT No. 108530 by the
petitioners is not the same as the technical description on [respondent]
Bonifacios title (TCT No. 265778, now TCT No. 285313);

3)

Declaring that TCT No. 265778 is a valid title and considering that respondent
VSDs title, T-285313, replaced the former title, VSD is hereby declared the
owner of the land in question, that is, Lot 23-A-4-B-2-A-3-B of PSD 706;

4)

For petitioners to pay attorneys fees and the costs of this suit. [34]

Comparing the technical descriptions in petitioners TCT No. T-108530 and

respondents TCT Nos. 265778 and 285313, RTC-Branch 126 noted the bare
differences in the land areas and lot numbers contained therein, and concluded that
said technical descriptions were not one and the same and that petitioners TCT No.
T-108530 did not pertain to the same parcel of land described in respondent
Bonifacios TCT No. 265778. RTC-Branch 126 also pointed out that petitioners own
witness, Engr. De Lara, testified that his office, Technical Services Section of the
DENR, had not previously issued the technical description appearing on respondent

Bonifacios TCT No. 265778. Engr. De Laras certification of the technical

description of respondent Bonifacios property was issued for the first time on July 9,
1990 only after complying with all the legal processes necessary for the purpose,
such as, among other things, conducting a research from their office records which
showed that no such technical description on the subject property was previously
issued and further stating that the B-37 technical description came from the Land
Management Bureau which was the survey of the technical description. [35] RTCBranch 126 further cited the testimony of Engr. Celzo of Land Management Services
who conducted the verification survey during which it was revealed that while
common points were used in identifying the technical description in TCT No.
265778, no such common points existed in the technical description appearing on
petitioners[] title. RTC-Branch 126 saw no reason to doubt the testimonies of
Engrs. De Lara and Celzo consistent with the rule that government officials are
presumed to perform their functions with regularity and strong evidence is
necessary to rebut this presumption.
RTC-Branch 126 also categorically upheld the validity of respondent Bonifacios TCT
No. 265778 as it was issued pursuant to the Order dated October 8, 1992 of the
Caloocan City RTC-Branch 125. RTC-Branch 126 said that it could not question the
order of a co-equal court and brushed aside petitioners claim of continuous
possession of the subject property because such fact alone could not defeat
respondents title over said property registered under the Torrens system. Absent
any showing by clear and convincing proof that TCT No. 265778 of respondent
Bonifacio, now TCT No. 285313 of respondent VSD Realty, was irregularly issued,
RTC-Branch 126 accorded said titles the conclusive presumption of validity.
CA-G.R. CV. No. 57777 before the
Court of Appeals
Petitioners filed an appeal[36] before the Court of Appeals, docketed as CA-G.R. CV.
No. 57777, with the following sole assignment of error:
THE LOWER COURT ERRED IN NOT ANNUL[L]ING [RESPONDENTS] TITLES WHICH
OVERLAP THE EXISTING TITLE IN THE NAMES OF THE PETITIONERS. [37]
Petitioners asserted that the technical description of the land in their TCT No. T108530 and that in respondents TCT Nos. 265778 and 285313 pertain to one and
the same land. Petitioners argue that RTC-Branch 126 failed to appreciate the
probative value of Engr. De Laras testimony on this particular issue. According to
petitioners, Engr. De Laras certification dated July 9, 1990 on the correctness of the
technical description of Lot 23-A-4-B-2-A-3-B, PSD 706, was based merely on the B37 survey attached to respondent Bonifacios letter-request, hence, Engr. De Laras
certification included a notation [s]ubject for field survey since he did not know
the location of the land referred to by the technical description. The B-37 survey

or the subdivision plan of PSD 706 was neither presented before RTC-Branch 126 in
this case nor before RTC-Branch 125 in Civil Case No. C-3288 (respondent
Bonifacios Petition for Segregation[38]); thus, petitioners contended that there was
no evidence as to when the survey was made, under whose name the survey was
made, and as to whether or not the said survey had the requisite government
approval.[39] Petitioners added that it was incorrect for RTC-Branch 126 to conclude
that Engr. De Laras office had never issued any technical description pertaining to
the subject land prior to July 9, 1990, and what Engr. De Lara actually said was that
there was no record in his office of the technical description of the subject land as
appearing in petitioners TCT No. T-108530. Petitioners also maintained that the
Survey Order dated August 22, 1994 and the Verification Plan of Lot 23-A-4-B-2-A-3B, PSD 706, dated April 28, 1995 had no probative value as (1) said Survey Order
was not authenticated; (2) said Survey Order was incomplete and uncertain as it did
not specify the lot to be surveyed, its location, and its technical description; and (3)
the verification survey was conducted only on August 23, 1994, after respondent
Bonifacios TCT No. 265778 was issued on March 29, 1993, consequently, said
survey could not validate the irregular issuance of TCT No. 265778.
Additionally, petitioners alleged the following irregularities in the issuance of
respondent Bonifacios TCT No. 265778:
(1)

Civil Case No. C-3288, respondent Bonifacios Petition for Segregation, is

rooted in a Deed of Assignment of the subject land purportedly executed on
January 29, 1991 by Eleuteria Rivera Bonifacio in favor of respondent
Bonifacio, but said Deed merely copied the technical description of the land
issued and certified on June 19, 1990 upon the request of respondent
Bonifacio herself.

(2)

Respondent Bonifacio merely attached to her Petition for Segregation in

Civil Case No. C-3288 a sketch plan of the subject land, not an approved
survey or subdivision plan.

(3)

Respondent Bonifacio stated in her Petition for Segregation in Civil Case No.
C-3288 that her and her transferors possession of the subject land was
open, public, and notorious without any known claimants[,] [40] but she
later admitted that she had never been in possession of the said property.

(4)

Respondent Bonifacio attached to her Petition for Segregation a real

property tax computation sheet for the subject property which was in the
name of Martin V. Syjuco, who was petitioners predecessor-in-interest. [41]

(5)

Respondent Bonifacio obtained TCT No. 265778 over the subject property
on March 29, 1993 whereas the order authorizing the issuance of said
certificate of title became final and executory only on April 6, 1993.

(6)

The Register of Deeds issued TCT No. 265778 to respondent Bonifacio

without requiring the presentation of Original Certificate of Title (OCT) No.

994, which covered the vast land from whence respondent Bonifacios
property was purportedly segregated, and the requisite tax clearance in
respondent Bonifacios name.

Respondents asseverated that the technical descriptions contained in their TCT Nos.
265778 and 285313, on one hand, and in petitioners TCT No. T-108530, on the
other, do not pertain to the same land; that respondent Bonifacios TCT No. 265778
was issued pursuant to a valid court order by RTC-Branch 125 in Civil Case No. C3288; and that petitioners Civil Case No. C-366 before RTC-Branch 126 was a
collateral attack on the validity of respondents titles.
In its Decision dated February 23, 2001, the Court of Appeals dismissed petitioners
appeal and affirmed in toto the Decision dated January 9, 1998 of RTC-Branch 126 in
Civil Case No. C-366.
Aside from essentially adopting the ratiocination in the appealed judgment of RTCBranch 126, the Court of Appeals also espoused respondents argument that Civil
Case No. C-366, instituted by petitioners before RTC-Branch 126, was a collateral
attack on the validity of respondent Bonifacios TCT No. 265778, in violation of
Section 48 of Presidential Decree No. 1529, otherwise known as the Property
Registration Decree. The appellate court, comparing the parties respective
certificates of title, further ruled that:
[A] careful scrutiny of TCT Nos. 108530 and 265778 revealed relevant similarities.
Both TCTs originate from OCT No. 994 pursuant to Decree No. 36455, Record No.
4429. TCT No. 108530 was first originally registered on May 03, 1917, in contrast to
Bonifacios title (TCT No. 265778) which was [registered] in 1912.
In view of this, we quote the ruling enunciated by the court in Metropolitan
Waterworks Sewerage System v. Court of Appeals and reiterated in the cases of
Heirs of Luis J. Gonzaga v. Court of Appeals and Mascarias v. Court of Appeals.
Where two certificates (of title) purport to include the same land, the earlier in date
prevails. x x x. In successive registrations, where more than one certificate is
issued in respect of a particular estate or interest in land, the person claiming under
the prior certificate is entitled to the estate or interest; and the person is deemed to
hold under the prior certificate who is the holder of, or whose claim is derived
directly or indirectly from the person who was the holder of the earliest certificate
issued in respect thereof.
Hence, in point of priority in issuance, the title of Bonifacio prevails over that of the
[petitioners]. Since, the land in question has already been registered under OCT

994, in the year 1912, the subsequent registration of the same land on May 03,
1917 is null and void.[42] (Citations omitted.)
The Court of Appeals lastly pointed out that petitioners possession of the subject
land cannot defeat respondent Bonifacios title thereto:
While we recognize the fact that the [petitioners] have been in 44 years of
continuous possession, still, we should not lose sight of the fact that [respondent]
Bonifacio is an owner of an earlier issued title. The imprescriptibility of Bonifacios
title cannot be defeated by the [petitioners] continuous possession of the
questioned lot. To hold otherwise, the efficacy of the conclusiveness of the
certificate of title, which the Torrens System seeks to insure, would be futile and
nugatory.[43] (Citations omitted.)
The Court of Appeals concluded that since respondent Bonifacio is the owner of the
subject land, validly registered in her name, she is within her rights in selling said
property to respondent VSD Realty, making the latters TCT No. 285313 also valid.
Hence, the present petition for review.
Petitioners reiterate their position that their TCT No. T-108530 and respondents TCT
Nos. 265778 and 285313 pertain to one and the same land, and that the latter titles
have been fraudulently obtained. Petitioners also aver that their undisturbed
possession of the subject property gives them a continuing right to seek the aid of a
court to ascertain and determine the nature and effect of respondents adverse
claim on the subject land.
In addition, petitioners pray for this Court to take judicial notice of supervening
events relative to the indiscriminate issuance or proliferation of fake titles derived
from OCT No. 994 covering the Maysilo Estate. They point out that the Department
of Justice (DOJ) and the Senate Committees on Justice and Human Rights, Urban
Planning, and Housing and Resettlement, already conducted separate investigations
of this serious land title anomaly and had submitted their respective reports on the
matter. The DOJ Committee Report dated August 28, 1997 and Senate Committee
Report No. 1031 dated May 25, 1998 validated OCT No. 994 registered on May 3,
1917; declared OCT No. 994 registered on April 19, 1917 as non-existent; and
recommended the cancellation of all titles derived from OCT No. 994 registered on
April 19, 1917. Petitioners, thus, argue that respondent Bonifacios title, which
originated from OCT No. 994 registered in 1912, is null and void as the only
authentic OCT No. 994 is the one issued pursuant to Decree No. 36455 originally
registered on May 3, 1917.
In their Comment, respondents stand by the propriety of the Decision dated

February 23, 2001 of the Court of Appeals in CA-G.R. CV. No. 57777 and the
Decision dated January 9, 1998 of RTC-Branch 126 in Civil Case No. C-366.
Respondents also exhort this Court not to take judicial notice of the DOJ and Senate
committee reports because those are irrelevant to the present case as the true date
of registration of OCT No. 994 has never been an issue herein. At any rate,
respondents insinuate that there was a mistake in the indication in the title of
respondent Bonifacio that it originated from OCT No. 994 registered in 1912,
claiming that the same must have been [caused by either] a clerical error or a
mental lapse.
RULING
The petition is meritorious.
On the propriety of petitioners
action to quiet title over the subject
land.
The Court, at the outset, finds untenable the contention that the action instituted by
petitioners is a prohibited collateral attack on the certificate of title of respondents
over the subject land.
Section 48 of Presidential Decree No. 1529[44] states:
Sec. 48. Certificate not subject to collateral attack. - A certificate of title shall not
be subject to collateral attack. It cannot be altered, modified, or canceled except in
a direct proceeding in accordance with law.
To determine whether an attack on a certificate of title is direct or indirect, the
relevance of the object of the action instituted and the relief sought therein must be
examined. The rule was explained in Catores v. Afidchao[45] as follows:
When is an action an attack on a title? It is when the object of the action or
proceeding is to nullify the title, and thus challenge the judgment pursuant to which
the title was decreed. The attack is direct when the object of an action or
proceeding is to annul or set aside such judgment, or enjoin its
enforcement. On the other hand, the attack is indirect or collateral when,
in an action to obtain a different relief, an attack on the judgment is
nevertheless made as an incident thereof. (Emphasis supplied, citation
omitted.)
The instituted action in this case is clearly a direct attack on a certificate of title to
real property.

In their complaint for quieting of title, petitioners specifically pray for the
declaration of nullity and/or cancellation of respondents TCT Nos. 265778 and
285313 over the subject land. The relief sought by petitioners is certainly feasible
since the objective of an action to quiet title, as provided under Article 476 of the
Civil Code of the Philippines, is precisely to quiet, remove, invalidate, annul, and/or
nullify a cloud on title to real property or any interest therein by reason of any
instrument, record, claim, encumbrance or proceeding which is apparently valid or
effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable,
and may be prejudicial to said title.
The Court also finds bereft of merit the contentions that petitioners action to quiet
title had already prescribed and/or that the titles of respondents over the subject
land have already become incontrovertible and indefeasible based on Section 32 of
Presidential Decree No. 1529.
Section 32 of Presidential Decree No. 1529 states:
Section 32. Review of decree of registration; Innocent purchaser for value. - The
decree of registration shall not be reopened or revised by reason of absence,
minority, or other disability of any person adversely affected thereby, nor by any
proceeding in any court for reversing judgments, subject, however, to the right of
any person, including the government and the branches thereof, deprived of land or
of any estate or interest therein by such adjudication or confirmation of title
obtained by actual fraud, to file in the proper Court of First Instance a petition for
reopening and review of the decree of registration not later than one year from
and after the date of the entry of such decree of registration, but in no case
shall such petition be entertained by the court where an innocent purchaser for
value has acquired the land or an interest therein, whose rights may be prejudiced.
Whenever the phrase innocent purchaser for value or an equivalent phrase occurs
in this Decree, it shall be deemed to include an innocent lessee, mortgagee, or
other encumbrancer for value.
Upon the expiration of said period of one year, the decree of registration
and the certificate of title issued shall become incontrovertible. Any person
aggrieved by such decree of registration in any case may pursue his remedy by
action for damages against the applicant or any other persons responsible for the
fraud. (Emphases added.)
The above-quoted rule has well-settled exceptions.
It is an established doctrine in land ownership disputes that the filing of an action to
quiet title is imprescriptible if the disputed real property is in the possession of the
plaintiff. One who is in actual possession of a piece of land claiming to be owner
thereof may wait until his possession is disturbed or his title is attacked before

taking steps to vindicate his right, the reason for the rule being that his undisturbed
possession gives him a continuing right to seek the aid of a court of equity to
ascertain and determine the nature of the adverse claim of a third party and its
effect on his own title, which right can be claimed only by one who is in possession.
[46]

In this case, petitioners have duly established during the trial that they and/or their
predecessors-in-interest have been in uninterrupted possession of the subject land
since 1926 and that it was only in 1994 when they found out that respondent
Bonifacio was able to register the said property in her name in another title. It was
also only in 1995 when petitioners learned that respondent Bonifacio was able to
sell and transfer her title over the subject land in favor of respondent VSD Realty.
Moreover, the rule on the incontrovertibility or indefeasibility of title has no
application in this case given the fact that the contending parties claim ownership
over the subject land based on their respective certificates of title thereon which
originated from different sources. Certainly, there cannot be two or even several
certificates of title on the same parcel of real property because a land registration
court has no jurisdiction to order the registration of land already decreed in the
name of another in an earlier land registration case and a second decree for the
same land would be null and void, since the principle behind original registration is
to register a parcel of land only once.[47] The indefeasibility of a title under the
Torrens system could be claimed only if a previous valid title to the same parcel of
land does not exist. Where the issuance of the title was attended by fraud, the
same cannot vest in the titled owner any valid legal title to the land covered by it;
and the person in whose name the title was issued cannot transmit the same, for he
has no true title thereto. This ruling is a mere affirmation of the recognized
principle that a certificate is not conclusive evidence of title if it is shown that the
same land had already been registered and that an earlier certificate for the same
land is in existence.[48]
Accordingly, petitioners filing of an action to quiet title over the subject land is in
order.
On the propriety of remanding this
case for further proceedings before the
Court of Appeals.
In VSD Realty & Development Corporation v. Uniwide Sales, Inc., [49] this Court
remanded the case before the Court of Appeals, citing Manotok Realty, Inc. v. CLT
Realty Development Corporation,[50] and held:
In the main, respondent Baello contends that the Court erred in not
declaring petitioner VSDs TCT No. T-285312 as null and void, considering

that it is derived from Felisa Bonifacios TCT No. 265777/T-1325, which, in

turn, is derived from the false and fictitious OCT No. 994 dated April 19,
1917. The records of this case, however, show that Felisa Bonifacios TCT
No. 265777/T-1325 and VSDs TCT No. T-285312 are derived from the
legitimate OCT No. 994 registered on May 3, 1917, which date has been
held as the correct date of registration of the said OCT in Manotok Realty,
Inc. v. CLT Realty Development Corporation. In her Motion for Leave and
Time to File Judicial Affidavit of Mr. Felino Cortez and Supplemental Motion
for Reconsideration, which the Court granted, respondent Baello contends
that she has additional evidence showing that the copy of Felisa
Bonifacios TCT No. 265777/T-1325 that was presented to the Register of
Deeds of Caloocan, for the purpose of the issuance of petitioner VSDs TCT
No. T-285312, was tampered with to fraudulently reflect that it was
derived from the legitimate and authentic OCT No. 994 dated May 3, 1917.
It is alleged that the original microfilm copy retained by the LRA shows that Felisa
Bonifacios TCT No. 265777/T-1325 did not originate from the legitimate and
authentic OCT No. 994 dated May 3, 1917, but was instead derived from OCT No.
994 dated April 19, 1912. Baello cited Manotok Realty, Inc. v. CLT Realty
Development Corporation, which allowed the presentation of evidence
before a Special Division of the Court of Appeals to ascertain which of the
conflicting claims of title should prevail, even though the case had already
been decided; and the additional evidence was presented in connection
with a motion for reconsideration of this Courts decision.
The Court notes that in Manotok Realty, Inc. v. CLT Realty Development
Corporation, the Court pronounced that there is only one OCT No. 994,
which is correctly registered on May 3, 1917, and that any title that traces
its source to OCT No. 994 dated April 17, 1917 is void, for such mother
title is inexistent.
The Court recognizes the importance of protecting the countrys Torrens
system from fake land titles and deeds. Considering that there is an issue
on the validity of the title of petitioner VSD, which title is alleged to be
traceable to OCT No. 994 registered on April 19, 1917, which mother title
was held to be inexistent in Manotok Realty, Inc. v. CLT Realty
Development Corporation, in the interest of justice, and to safeguard the
correct titling of properties, a remand is proper to determine which of the
parties derived valid title from the legitimate OCT No. 994 registered on
May 3, 1917. Since this Court is not a trier of facts and not capacitated to
appreciate evidence of the first instance, the Court may remand this case
to the Court of Appeals for further proceedings, as it has been similarly
tasked in Manotok Realty, Inc. v. CLT Realty Development Corporation on these
bases:

Under Section 6 of Rule 46, which is applicable to original cases for certiorari, the
Court may, whenever necessary to resolve factual issues, delegate the reception of
the evidence on such issues to any of its members or to an appropriate court,
agency or office. The delegate need not be the body that rendered the assailed
decision.
The Court of Appeals generally has the authority to review findings of fact. Its
conclusions as to findings of fact are generally accorded great respect by this
Court. It is a body that is fully capacitated and has a surfeit of experience in
appreciating factual matters, including documentary evidence.
In fact, the Court had actually resorted to referring a factual matter pending before
it to the Court of Appeals. In Republic v. Court of Appeals, this Court commissioned
the former Thirteenth Division of the Court of Appeals to hear and receive evidence
on the controversy, more particularly to determine the actual area reclaimed by
the Republic Real Estate Corporation, and the areas of the Cultural Center Complex
which are open spaces and/or areas reserved for certain purposes, determining in
the process the validity of such postulates and the respective measurements of the
areas referred to. The Court of Appeals therein received the evidence of the
parties and rendered a Commissioners Report shortly thereafter. Thus, resort to
the Court of Appeals is not a deviant procedure.
The provisions of Rule 32 should also be considered as governing the grant of
authority to the Court of Appeals to receive evidence in the present case. Under
Section 2, Rule 32 of the Rules of Court, a court may, motu proprio, direct a
reference to a commissioner when a question of fact, other than upon the
pleadings, arises upon motion or otherwise, in any stage of a case, or for carrying a
judgment or order into effect. The order of reference can be limited exclusively to
receive and report evidence only, and the commissioner may likewise rule upon the
admissibility of evidence. The commissioner is likewise mandated to submit a
report in writing to the court upon the matters submitted to him by the order of
reference. In Republic, the commissioners report formed the basis of the final
adjudication by the Court on the matter. The same result can obtain herein.[51]
(Emphases added.)
The Court notes, however, that several matters have already transpired during the
pendency of this case that bear considerable relation in the resolution of the main
question of which of the respective titles of the parties over the subject land is valid.
Firstly, the Court observes that the certification as indicated in petitioners title,
which the latter submitted during the trial, shows that it originated from OCT No.
994 registered on May 3, 1917, thus:

It is further certified that said land was originally registered on the 3rd day of May,
in the year nineteen hundred and seventeen, in the Registration Book of the
Office of the Register of Deeds of Rizal, Volume A-9, page 226, as Original
Certificate of Title No. 994, pursuant to Decree No. 36455, issued in L.R.C. ___
Record No. 4429.
This certificate is a transfer from Transfer Certificate of Title No. 4856/T-25, which is
cancelled by virtue hereof in so far as the above-described land is concerned. [52]
(Emphasis added.)
On the other hand, the title of respondent Bonifacio, the one presented during the
trial, shows that it likewise originated from OCT No. 994, but such mother title
states only the day and the year of its original registration as follows:
It is further certified that said land was originally registered on the 19th day of ___,
in the year nineteen hundred and twelve, in the Registration Book of the Office
of the Register of Deeds of Manila, Volume ___, Page ___, as Original Certificate of
Title No. 994, pursuant to Decree No. 36455 issued in L.R.C. ___, Record No. 4423, in
the name of ___.
This certificate is a transfer from Original Certificate of Title No. 994, which is
cancelled by virtue hereof in so far as the above-described land is concerned. [53]
(Emphasis added.)
Curiously, the title of respondent VSD Realty is supposed to be a direct transfer from
the title of respondent Bonifacio, yet, the certification as to the original registration
of its mother title OCT No. 994 provides the registration date of May 3, 1917,
thus:
IT IS FURTHER CERTIFIED that said land was originally registered on the 3rd day of
May, in the year nineteen hundred and seventeen in the Registration Book of
the Office of the Register of Deeds of Rizal, Volume A-9-A, Page 226, as Original
Certificate of Title No. 994, pursuant to Decree No. 36455 issued in L.R.C. ___ Record
No. 4429 in the name of ___.
This certificate is a transfer from Transfer Certificate of Title No. 265778/T1325 which is cancelled by virtue hereof in so far as the above-described
land is concerned.
Entered at the City of Kalookan,
Philippines, on the 12th day of September
in the year nineteen hundred and ninetyfour at 1:23 p.m.[54] (Emphases added.)

Furthermore, a certified true copy of respondent Bonifacios title, which petitioners

have obtained just prior to the filing of the Petition at bar and attached to their
Reply dated December 12, 2001, now shows that the date of the original
registration of respondent Bonifacios mother title - OCT No. 994 - has changed from
the 19th day of an unspecified month[55] in 1912 to May 3, 1917, and the place of
registration from Manila to Rizal. Aside from these changes, the portions that were
left blank in the earlier copy of respondent Bonifacios title have already been filledup in the latest copy of the same, thus:
IT IS FURTHER CERTIFIED that said land was originally registered on the 3rd day of
May, in the year nineteen hundred and seventeen in the Registration Book of
the Office of the Register of Deeds of Rizal, Volume A-9-A, Page 226, as Original
Certificate of Title No. 994, pursuant to Decree No. 36455 issued in L.R.C. ___
Record No. 4429 in the name of ___.
This certificate is a transfer from Original Certificate of Title No. 994 which
is cancelled by virtue hereof in so far as the above-described land is
concerned.
Entered at Caloocan City, Philippines, on
the 29th day of March in the year
nineteen hundred and ninety-three at
3:20 a.m.[56] (Emphases added.)
Secondly, the Court notes that the Republic, represented by the Office of the
Solicitor General (OSG), filed herein a Motion for Intervention with attached Petitionin-Intervention, pursuant to the recommendation in the Report dated May 25, 1998
of the Senate Committees on Justice, Human Rights, Housing, and Urban Planning
and Resettlement, that the OSG be mandated to intervene in land disputes before
the court, on cases whether pertaining to government or private lands as the OSG
may determine, involving fake titles, duplication of titles or similar anomalies, to
guide the court on the position of the government and to involve the concerned
government entities particularly the Land Registration Authority in a concerted
effort to protect the integrity of the Torrens system of land title registration. [57] The
motion was granted and the Petition of the Republic was admitted in the Courts
Resolution[58] dated December 8, 2004.
The OSG manifests, among others, that petitioners TCT No. T-108530, in reliance to
the conclusions of the DOJ and Senate committees, is the valid certificate of title
covering the subject land as it could be traced back to the authentic OCT No. 994
registered on May 3, 1917; conversely, respondents TCT Nos. 265778 and 285313
are null and void as these originated from the spurious OCT No. 994 registered in
1912.

Respondents filed their Comment [to the Republics intervention] [59] on June 1,
2005. Interestingly, respondents now contend that their TCT Nos. 265778 and
285313 are derivatives of OCT No. 994 registered on April 19, 1917, hence,
they capitalize on the rulings of this Court in Metropolitan Waterworks and
Sewerage Systems (MWSS) v. Court of Appeals [60] and Heirs of Luis J. Gonzaga v.
Court of Appeals[61] that those titles derived from OCT No. 994 registered on April
19, 1917 prevail over those titles derived from OCT No. 994 registered on May 3,
1917 considering the priority of the date of registration.
Thirdly, the Court reiterates that the validity of OCT No. 994 registered on May 3,
1917, and the non-existence of a purported OCT No. 994 registered on April 19,
1917, have already been exhaustively passed upon and settled with finality in the
Resolution[s] dated December 14, 2007 and March 31, 2009 in Manotok Realty, Inc.
v. CLT Realty Development Corporation.[62]
In Angeles v. The Secretary of Justice,[63] this Court reiterated its pronouncements in
Manotok Realty, Inc. v. CLT Realty Development Corporation [64] that the true and
valid OCT No. 994 was registered on May 3, 1917, not on April 19, 1917, and that
any title that traces its source to the latter date is deemed void and inexistent. The
Court was also explicit that the cases of MWSS v. Court of Appeals and
Gonzaga v. Court of Appeals had already been rendered functus officio,
thus, these cases can no longer be cited as precedents. The Court
expounded as follows:
It is important to emphasize at this point that in the recent case resolved by this
Court En Banc in 2007, entitled Manotok Realty, Inc. v. CLT Realty Development
Corporation (the 2007 Manotok case), as well as the succeeding resolution in the
same case dated March 31, 2009 (the 2009 Manotok case), the controversy
surrounding the Maysilo Estate and the question of the existence of another OCT
No. 994 have been finally laid to rest. All other cases involving said estate and OCT
No. 994, such as the case at bar, are bound by the findings and conclusions set
forth in said resolutions.
As stated earlier, petitioner anchors her claim on previous cases decided by this
Court which have held that there are two existing OCT No. 994, dated differently,
and the one from which she and her co-plaintiffs (in Civil Case No. C-424) derived
their rights was dated earlier, hence, was the superior title. Regrettably,
petitioners claim no longer has a leg to stand on. As we held in the 2007 Manotok
case:
The determinative test to resolve whether the prior decision of this Court should be
affirmed or set aside is whether or not the titles invoked by the respondents are
valid. If these titles are sourced from the so-called OCT No. 994 dated 17 April
1917, then such titles are void or otherwise should not be recognized by this Court.
Since the true basic factual predicate concerning OCT No. 994 which is that there is

only one such OCT differs from that expressed in the MWSS and Gonzaga decisions,
said rulings have become virtually functus officio except on the basis of the law of
the case doctrine, and can no longer be relied upon as precedents.
Specifically, petitioner cannot anymore insist that OCT No. 994 allegedly issued on
April 19, 1917 validly and actually exists, given the following conclusions made by
this Court in the 2007 Manotok case:
First, there is only one OCT No. 994. As it appears on the record, that
mother title was received for transcription by the Register of Deeds on 3
May 1917, and that should be the date which should be reckoned as the
date of registration of the title. It may also be acknowledged, as appears
on the title, that OCT No. 994 resulted from the issuance of the decree of
registration on [19] April 1917, although such date cannot be considered
as the date of the title or the date when the title took effect.
Second. Any title that traces its source to OCT No. 994 dated [19] April
1917 is void, for such mother title is inexistent. The fact that the Dimson
and CLT titles made specific reference to an OCT No. 994 dated [19] April
1917 casts doubt on the validity of such titles since they refer to an
inexistent OCT. x x x.
Third. The decisions of this Court in MWSS v. Court of Appeals and
Gonzaga v. Court of Appeals cannot apply to the cases at bar, especially in
regard to their recognition of an OCT No. 994 dated 19 April 1917, a title
which we now acknowledge as inexistent. Neither could the conclusions in
MWSS or Gonzaga with respect to an OCT No. 994 dated 19 April 1917 bind
any other case operating under the factual setting the same as or similar
to that at bar.
To be sure, this Court did not merely rely on the DOJ and Senate reports regarding
OCT No. 994. In the 2007 Manotok case, this Court constituted a Special Division of
the Court of Appeals to hear the cases on remand, declaring as follows:
Since this Court is not a trier of fact[s], we are not prepared to adopt the findings
made by the DOJ and the Senate, or even consider whether these are admissible as
evidence, though such questions may be considered by the Court of Appeals upon
the initiative of the parties. x x x. The reports cannot conclusively supersede or
overturn judicial decisions, but if admissible they may be taken into account as
evidence on the same level as the other pieces of evidence submitted by the
parties. The fact that they were rendered by the DOJ and the Senate should not, in
itself, persuade the courts to accept them without inquiry. The facts and arguments
presented in the reports must still undergo judicial scrutiny and analysis, and
certainly the courts will have the discretion to accept or reject them.

There are many factual questions looming over the properties that could only be
threshed out in the remand to the Court of Appeals. x x x.
xxxx
The Special Division is tasked to hear and receive evidence, conclude the
proceedings and submit to this Court a report on its findings and recommended
conclusions within three (3) months from finality of this Resolution.
Thus, in the 2009 Manotok case, this Court evaluated the evidence engaged in by
said Special Division, and adopted the latters conclusions as to the status of the
original title and its subsequent conveyances. This case affirmed the earlier
finding that there is only one OCT No. 994, the registration date of which
had already been decisively settled as 3 May 1917 and not 19 April 1917
and categorically concluded that OCT No. 994 which reflects the date of
19 April 1917 as its registration date is null and void.[65] (Emphases added.)
In Phil-Ville Development and Housing Corporation v. Bonifacio,[66] this Court upheld
the validity of the titles to a portion of land which originally formed part of the
Maysilo Estate which were sourced from OCT No. 994 registered on May 3, 1917,
and declared as null and void a title purportedly overlapping the said land which
traced its roots from OCT No. 994 registered on April 19, 1917. The Court found
that it was physically impossible for Eleuteria Rivera, the person whom respondent
Bonifacio claims to be her predecessor-in-interest, to be an heir of Maria de la
Concepcion Vidal because it would turn out that Eleuteria Rivera was older than her
alleged grandmother Maria de la Concepcion Vidal, to wit:
Eventually, on March 31, 2009, the Supreme Court issued a Resolution reversing its
Decision of November 29, 2005 and declaring certain titles in the names of Araneta
and Manotok valid. In the course of discussing the flaws of Jose Dimsons title
based on his alleged 25% share in the hereditary rights of Bartolome Rivera,
Eleuteria Riveras co-petitioner in LRC No. 4557, the Court noted:
. . . However, the records of these cases would somehow negate the rights of Rivera
to claim from Vidal. The Verification Report of the Land Registration Commission
dated 3 August 1981 showed that Rivera was 65 years old on 17 May 1963 (as
gathered from the records of Civil Case Nos. 4429 and 4496). It can thus be
deduced that, if Rivera was already 65 years old in 1963, then he must have been
born around 1898. On the other hand, Vidal was only nine (9) years in 1912;
hence, she could have been born only on [1903]. This alone creates an
unexplained anomalous, if not ridiculous, situation wherein Vidal, Riveras alleged
Grandmother, was seven (7) years younger than her alleged grandson. Serious

doubts existed as to whether Rivera was in fact an heir of Vidal, for him to claim a
share in the disputed portions of the Maysilo Estate.
The same is true in this case. The Death Certificate of Eleuteria Rivera
reveals that she was 96 years old when she died on February 22, 1997.
That means that she must have been born in 1901. That makes Rivera two
years older than her alleged grandmother Maria de la Concepcion Vidal
who was born in 1903. Hence, it was physically impossible for Eleuteria
Rivera to be an heir of Maria de la Concepcion Vidal. (Emphases supplied,
citations omitted.)
Considering all of the above matters, especially the fact that respondents claim that
their respective titles, TCT Nos. 265778 and 285313, are derivatives of OCT No. 994
registered on April 19, 1917, which this Court had already repeatedly declared to
be a non-existent and invalid title, the Court rules in favor of petitioners. As held
in Manotok, [a]ny title that traces its source to OCT No. 994 dated [19]
April 1917 is void, for such mother title is inexistent.[67]
WHEREFORE, in view of all the foregoing, the petition is hereby GRANTED. The
Decision dated February 23, 2001, as well as the Resolution dated June 26, 2001 of
the Court of Appeals in CA-G.R. CV. No. 57777 which affirmed in toto the Decision
dated January 9, 1998 of Branch 126 of the RTC of the City of Caloocan in Civil Case
No. C-366, are REVERSED and SET ASIDE. TCT No. 265778 in the name of Felisa
D. Bonifacio and TCT No. 285313 in the name of VSD Realty & Development
Corporation are declared NULL and VOID. The Registry of Deeds of Caloocan City is
DIRECTED to CANCEL the said certificates of title.
SO ORDERED.
Sereno, CJ., (Chairperson), Bersamin, Perez, and Perlas-Bernabe, JJ., concur.

[1]

Rollo, pp. 27-34; penned by Associate Justice Perlita J. Tria Tirona with Associate
Justices Eugenio S. Labitoria and Elloy R. Bello, Jr., concurring.
[2]

Id. at 36.

[3]

Records, pp. 435-442.

[4]

Id. at 200-201; Exhibit A.

[5]

Id. at 207-210; Exhibit H (with submarkings).

[6]

Id. at 205-206; Exhibit G (with submarkings).

[7]

Id. at 211-213; Exhibit I (with submarkings).

[8]

Id. at 202-204, 214-223; Exhibits D, E, F, and J (with submarkings).

[9]

Id. at 200-201; Exhibit A.

[10]

Id. at 224; Exhibit K.

[11]

Id. at 21; Exhibits C and 1.

[12]

Id. at 19-20; Exhibits B and 2.

[13]

Id. at 20.

[14]

Id. at 229; Exhibit O, Certificate of Finality.

[15]

Id. at 1-5.

[16]

Id. at 8-9.

[17]

Id. at 92-93; Exhibits Q and 5.

[18]

Id. at 80-86.

[19]

Id. at 84.

[20]

Id. at 30-37.

[21]

Id. at 99.

[22]

Id. at 73-75.

[23]

Petitioners documentary exhibits consisted of the following:

1) Certified True Copy of TCT No. T-108530 in petitioners names (Records, p. 200;
Exhibit A);
2) Order dated October 8, 1992 issued by RTC-Branch 125 in L.R.C. Case No. C-3288
(Id. at 19-20; Exhibits B and 2);
3) Photocopy of TCT No. 265778 in respondent Bonifacios name (Id. at 21; Exhibits
C and 1);
4) Certified True Copy of TCT No. 4856 in Martins name (Id. at 205-206; Exhibit G);

5) Deed of [Sale of] Real Estate dated February 7, 1949 executed by Avelina Baello,
et al. in favor of the siblings Martin and Manuel over a parcel of land covered by TCT
No. 8685 (Id. at 207-210; Exhibit H);
6) Partition Agreement dated June 16, 1964 executed by the siblings Martin and
Manuel over several properties, including the parcel of land covered by TCT No.
12370 (Id. at 211-213; Exhibit I);
7) Tax Declaration of Real Property Value (for land covered by TCT No. 4856) issued
in Martins name; Tax Declaration of Real Property Value (for building and other
improvements) issued in the name of Manufacturers Bank; and Tax Declaration of
Real Property Value (for building and other improvements) issued in petitioner
Imelda Syjucos name (Id. at 202-204; Exhibits D, E, and F);
8) Various Real Property Tax Receipts dated from 1949 to 1995 (Id. at 214-223;
Exhibit J);
9) Letter dated March 9, 1994 addressed to Luis Ong from Exequiel Fajardo (Id. at
224; Exhibit K);
10) Letter dated June 5, 1994 addressed to petitioners from their counsel (Id. at
225-226; Exhibit L);
11) Certified True Copy of the Technical Description of Lot 23-A-4-B-2-A-3-B, Psd-706,
dated June 19, 1990, issued by LMS-DENR with the notation [s]ubject for field
survey (Id. at 227; Exhibit M);
12) Certified True Copy of the Sketch Plan of Lot 23-A-4-B-2-A-3-A, Psd-706, and Lot
23-A-4-B-2-A-3-B, Psd-706, prepared for respondent Bonifacio (Id. at 228; Exhibit N);
13) Certificate of Finality dated April 6, 1993 declaring final and executory the Order
dated October 8, 1992 of RTC-Branch 125 in L.R.C. Case No. C-3288 (Id. at 229;
Exhibit O);
14) Certified True Copy of the Transcript of Stenographic Notes (TSN) of the hearing
held on August 11, 1992 before RTC-Branch 125 in L.R.C. Case No. C-3288 (Id. at
230-253; Exhibit P); and
15) Photocopy of TCT No. 285313 in the name of VSD Realty (Id. at 92-93; Exhibits Q
and 5);
[24]

TSN, July 13, 1995.

[25]

TSN, September 8, 1995.

[26]

TSN, September 29, 1995.

[27]

Records, p. 260.

[28]

Id. at 437-438.

[29]

Respondents documentary exhibits consisted of the following:

1) The Survey Order dated August 22, 1994 issued by Acting Regional Technical

Director Roquesa E. de Castro of the DENR, pursuant to respondent Bonifacios

request (Records, p. 429; Exhibit 6);
2) Engr. Celzos report dated April 17, 1995 on the verification/relocation survey
conducted on August 23, 1994 (Id. at 424; Exhibit 4); and
3) The Verification Plan of Lot 23-A-4-B-2-A-3-B, PSD 706, dated April 28, 1995, as
surveyed for respondent Bonifacio, which established that a verification survey of
respondent Bonifacios property (subsequently covered by TCT No. 265778) was
officially conducted and approved (Id. at 429-A; Exhibit 7).
[30]

TSN, December 1, 1995, February 2, 1996, and February 15, 1996.

[31]

TSN, September 9, 1997.

[32]

TSN, November 3, 1997.

[33]

Records, pp. 438-439.

[34]

Id. at 442.

[35]

During his testimony on September 29, 1995 (TSN, p. 5), Engr. De Lara confirmed
that he certified the technical description of respondent Bonifacios Lot 23-A-4-B-2A-3-B, PSD 706, on July 9, 1990. However, a close look at the Technical Description
itself (Records, p. 227; Exhibit M) shows that it was certified as correct by one
Engineer T. Calvelo for the Regional Technical Director on June 19, 1990 and by
Engr. De Lara, Chief of the Technical Services Section, on June 21, 1990.
[36]

CA rollo, pp. 54-69.

[37]

Id. at 61.

[38]

Id. at 78-82.

[39]

Id. at 64.

[40]

Id. at 80.

[41]

Id. at 82-A.

[42]

Rollo, pp. 32-33.

[43]

Id. at 33.

[44]

The Property Registration Decree.

[45]

601 Phil. 638, 652 (2009).

[46]

Faja v. Court of Appeals, 166 Phil. 429, 438 (1977).

[47]

Laburada v. Land Registration Authority, 350 Phil. 779, 790-791 (1998).

[48]

Register of Deeds of Cotabato v. Philippine National Bank, 121 Phil. 49, 51-52
(1965), citing C. N. Hodges v. Dy Buncio & Co., Inc., 116 Phil. 595, 601 (1962).
[49]

G.R. No. 170677, July 31, 2013, 702 SCRA 597.

[50]

565 Phil. 59 (2007) and 601 Phil. 571 (2009).

[51]

VSD Realty & Development Corporation v. Uniwide Sales, Inc., supra note 49 at
610-613.
[52]

Records, p. 200.

[53]

Id. at 21.

[54]

Id. at 92.

[55]

The space for the month was left blank.

[56]

Rollo, p. 156.

[57]

Id. at 354-403.

[58]

Id. at 404.

[59]

Id. at 360-378.

[60]

G.R. No. 103558, November 17, 1992, 215 SCRA 783.

[61]

330 Phil. 8 (1996).

[62]

Supra note 50.

[63]

628 Phil. 381 (2010).

[64]

Supra note 50.

[65]

Angeles v. The Secretary of Justice, supra note 63 at 398-401.

[66]

G.R. No. 167391, June 8, 2011, 651 SCRA 327, 345-346.

[67]

Manotok Realty, Inc. v. CLT Realty Development Corporation, supra note 50 at

349.

SPECIAL FIRST DIVISION

[ G.R. No. 166357, January 14, 2015 ]
VALERIO E. KALAW, PETITIONER, VS. MA. ELENA FERNANDEZ,
RESPONDENT.
RESOLUTION
BERSAMIN, J.:
In our decision promulgated on September 19, 2011, [1] the Court dismissed the
complaint for declaration of nullity of the marriage of the parties upon the following
ratiocination, to wit:
The petition has no merit. The CA committed no reversible error in setting aside the
trial
courts
Decision
for
lack
of
legal
and
factual
basis.
x

In the case at bar, petitioner failed to prove that his wife (respondent) suffers from
psychological incapacity. He presented the testimonies of two supposed expert
witnesses who concluded that respondent is psychologically incapacitated, but the
conclusions of these witnesses were premised on the alleged acts or behavior of
respondent which had not been sufficiently proven. Petitioners experts heavily
relied on petitioners allegations of respondents constant mahjong sessions, visits

to the beauty parlor, going out with friends, adultery, and neglect of their children.
Petitioners experts opined that respondents alleged habits, when performed
constantly to the detriment of quality and quantity of time devoted to her duties as
mother and wife, constitute a psychological incapacity in the form of NPD.
But petitioners allegations, which served as the bases or underlying premises of the
conclusions of his experts, were not actually proven. In fact, respondent presented
contrary
evidence
refuting
these
allegations
of
the
petitioner.
For instance, petitioner alleged that respondent constantly played mahjong and
neglected their children as a result. Respondent admittedly played mahjong, but it
was not proven that she engaged in mahjong so frequently that she neglected her
duties as a mother and a wife. Respondent refuted petitioners allegations that she
played four to five times a week. She maintained it was only two to three times a
week and always with the permission of her husband and without abandoning her
children at home. The children corroborated this, saying that they were with their
mother when she played mahjong in their relatives home. Petitioner did not present
any proof, other than his own testimony, that the mahjong sessions were so
frequent that respondent neglected her family. While he intimated that two of his
sons repeated the second grade, he was not able to link this episode to
respondents mahjong-playing. The least that could have been done was to prove
the frequency of respondents mahjong-playing during the years when these two
children were in second grade. This was not done. Thus, while there is no dispute
that respondent played mahjong, its alleged debilitating frequency and adverse
effect
on
the
children
were
not
proven.
Also unproven was petitioners claim about respondents alleged constant visits to
the beauty parlor, going out with friends, and obsessive need for attention from
other men. No proof whatsoever was presented to prove her visits to beauty salons
or her frequent partying with friends. Petitioner presented Mario (an alleged
companion of respondent during these nights-out) in order to prove that respondent
had affairs with other men, but Mario only testified that respondent appeared to be
dating other men. Even assuming arguendo that petitioner was able to prove that
respondent had an extramarital affair with another man, that one instance of sexual
infidelity cannot, by itself, be equated with obsessive need for attention from other
men. Sexual infidelity per se is a ground for legal separation, but it does not
necessarily
constitute
psychological
incapacity.
Given the insufficiency of evidence that respondent actually engaged in the
behaviors described as constitutive of NPD, there is no basis for concluding that she
was indeed psychologically incapacitated. Indeed, the totality of the evidence points
to the opposite conclusion. A fair assessment of the facts would show that
respondent was not totally remiss and incapable of appreciating and performing her
marital and parental duties. Not once did the children state that they were

neglected by their mother. On the contrary, they narrated that she took care of
them, was around when they were sick, and cooked the food they like. It appears
that respondent made real efforts to see and take care of her children despite her
estrangement from their father. There was no testimony whatsoever that shows
abandonment and neglect of familial duties. While petitioner cites the fact that his
two sons, Rio and Miggy, both failed the second elementary level despite having
tutors, there is nothing to link their academic shortcomings to Malyns actions.
After poring over the records of the case, the Court finds no factual basis for the
conclusion of psychological incapacity. There is no error in the CAs reversal of the
trial courts ruling that there was psychological incapacity. The trial courts Decision
merely summarized the allegations, testimonies, and evidence of the respective
parties, but it did not actually assess the veracity of these allegations, the credibility
of the witnesses, and the weight of the evidence. The trial court did not make
factual findings which can serve as bases for its legal conclusion of psychological
incapacity.
What transpired between the parties is acrimony and, perhaps, infidelity, which may
have constrained them from dedicating the best of themselves to each other and to
their children. There may be grounds for legal separation, but certainly not
psychological
incapacity
that
voids
a
marriage.
WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals
May 27, 2004 Decision and its December 15, 2004 Resolution in CA-G.R. CV No.
64240
are
AFFIRMED.
SO ORDERED.[2]
In his Motion for Reconsideration,[3] the petitioner implores the Court to take a
thorough second look into what constitutes psychological incapacity; to uphold the
findings of the trial court as supported by the testimonies of three expert witnesses;
and consequently to find that the respondent, if not both parties, were
psychologically incapacitated to perform their respective essential marital
obligation.
Upon an assiduous review of the records, we resolve to grant the petitioners Motion
for Reconsideration.
I
Psychological incapacity as a ground for the nullity of marriage under Article 36 of
the Family Code refers to a serious psychological illness afflicting a party even prior
to the celebration of the marriage that is permanent as to deprive the party of the
awareness of the duties and responsibilities of the matrimonial bond he or she was

about to assume. Although the Family Code has not defined the term psychological
incapacity, the Court has usually looked up its meaning by reviewing the
deliberations of the sessions of the Family Code Revision Committee that had
drafted the Family Code in order to gain an insight on the provision. It appeared that
the members of the Family Code Revision Committee were not unanimous on the
meaning, and in the end they decided to adopt the provision with less specificity
than expected in order to have the law allow some resiliency in its application. [4]
Illustrative of the less specificity than expected has been the omission by the
Family Code Revision Committee to give any examples of psychological incapacity
that would have limited the applicability of the provision conformably with the
principle of ejusdem generis, because the Committee desired that the courts
should interpret the provision on a case-to-case basis, guided by experience, the
findings of experts and researchers in psychological disciplines, and the decisions of
church tribunals that had persuasive effect by virtue of the provision itself having
been taken from the Canon Law. [5]
On the other hand, as the Court has observed in Santos v. Court of Appeals,[6]
the deliberations of the Family Code Revision Committee and the relevant materials
on psychological incapacity as a ground for the nullity of marriage have rendered it
obvious that the term psychological incapacity as used in Article 36 of the Family
Code has not been meant to comprehend all such possible cases of psychoses as,
likewise mentioned by some ecclesiastical authorities, extremely low intelligence,
immaturity, and like circumstances, and could not be taken and construed
independently of but must stand in conjunction with, existing precepts in our law
on marriage. Thus correlated:x x x psychological incapacity should refer to no less than a mental (not physical)
incapacity that causes a party to be truly incognitive of the basic marital covenants
that concomitantly must be assumed and discharged by the parties to the marriage
which, as so expressed by Article 68 of the Family Code, include their mutual
obligations to live together, observe love, respect and fidelity and render help and
support. There is hardly any doubt that the intendment of the law has been to
confine the meaning of psychological incapacity to the most serious cases of
personality disorders clearly demonstrative of an utter insensitivity or inability to
give meaning and significance to the marriage. This psychologic condition must
exist at the time the marriage is celebrated. The law does not evidently envision,
upon the other hand, an inability of the spouse to have sexual relations with the
other. This conclusion is implicit under Article 54 of the Family Code which considers
children conceived prior to the judicial declaration of nullity of the void marriage to
be legitimate.[7]
In time, in Republic v. Court of Appeals,[8] the Court set some guidelines for the
interpretation and application of Article 36 of the Family Code, as follows:

(1) The burden of proof to show the nullity of the marriage belongs to the plaintiff.
Any doubt should be resolved in favor of the existence and continuation of the
marriage and against its dissolution and nullity. This is rooted in the fact that both
our Constitution and our laws cherish the validity of marriage and unity of the
family. Thus, our Constitution devotes an entire Article on the Family, recognizing it
as the foundation of the nation. It decrees marriage as legally inviolable,
thereby protecting it from dissolution at the whim of the parties. Both the family
and marriage are to be protected by the state.
The Family Code echoes this constitutional edict on marriage and the family and
emphasizes their permanence, inviolability and solidarity.
(2) The root cause of the psychological incapacity must be (a) medically or clinically
identified, (b) alleged in the complaint, (c) sufficiently proven by experts and (d)
clearly explained in the decision. Article 36 of the Family Code requires that the
incapacity must be psychological not physical, although its manifestations and/or
symptoms may be physical. The evidence must convince the court that the parties,
or one of them, was mentally or psychically ill to such an extent that the person
could not have known the obligations he was assuming, or knowing them, could not
have given valid assumption thereof. Although no example of such incapacity need
be given here so as not to limit the application of the provision under the principle
of ejusdem generis, nevertheless such root cause must be identified as a
psychological illness and its incapacitating nature fully explained. Expert evidence
may be given by qualified psychiatrists and clinical psychologists.
(3) The incapacity must be proven to be existing at the time of the celebration of
the marriage. The evidence must show that the illness was existing when the
parties exchanged their I dos. The manifestation of the illness need not be
perceivable at such time, but the illness itself must have attached at such moment,
or prior thereto.
(4) Such incapacity must also be shown to be medically or clinically permanent or
incurable. Such incurability may be absolute or even relative only in regard to the
other spouse, not necessarily absolutely against everyone of the same sex.
Furthermore, such incapacity must be relevant to the assumption of marriage
obligations, not necessarily to those not related to marriage, like the exercise of a
profession or employment in a job. Hence, a pediatrician may be effective in
diagnosing illnesses of children and prescribing medicine to cure them but may not
be psychologically capacitated to procreate, bear and raise his/her own children as
an essential obligation of marriage.
(5) Such illness must be grave enough to bring about the disability of the party to
assume the essential obligations of marriage. Thus, mild characteriological
peculiarities, mood changes, occasional emotional outbursts cannot be accepted

as root causes. The illness must be shown as downright incapacity or inability, not a
refusal, neglect or difficulty, much less ill will. In other words, there is a natal or
supervening disabling factor in the person, an adverse integral element in the
personality structure that effectively incapacitates the person from really accepting
and thereby complying with the obligations essential to marriage.
(6) The essential marital obligations must be those embraced by Articles 68 up to
71 of the Family Code as regards the husband and wife as well as Articles 220, 221
and 225 of the same Code in regard to parents and their children. Such noncomplied marital obligation(s) must also be stated in the petition, proven by
evidence and included in the text of the decision.
(7) Interpretations given by the National Appellate Matrimonial Tribunal of the
Catholic Church in the Philippines, while not controlling or decisive, should be given
great respect by our courts. It is clear that Article 36 was taken by the Family Code
Revision Committee from Canon 1095 of the New Code of Canon Law, which
became effective in 1983 and which provides:
The following are incapable of contracting marriage: Those who are unable to
assume the essential obligations of marriage due to causes of psychological
nature.
Since the purpose of including such provision in our Family Code is to harmonize our
civil laws with the religious faith of our people, it stands to reason that to achieve
such harmonization, great persuasive weight should be given to decisions of such
appellate tribunal. Ideally subject to our law on evidence what is decreed as
canonically invalid should also be decreed civilly void.
This is one instance where, in view of the evident source and purpose of the Family
Code provision, contemporaneous religious interpretation is to be given persuasive
effect. Here, the State and the Church while remaining independent, separate
and apart from each other shall walk together in synodal cadence towards the
same goal of protecting and cherishing marriage and the family as the inviolable
base of the nation.
(8) The trial court must order the prosecuting attorney or fiscal and the Solicitor
General to appear as counsel for the state. No decision shall be handed down unless
the Solicitor General issues a certification, which will be quoted in the decision,
briefly stating therein his reasons for his agreement or opposition, as the case may
be, to the petition. The Solicitor General, along with the prosecuting attorney, shall
submit to the court such certification within fifteen (15) days from the date the case
is deemed submitted for resolution of the court. The Solicitor General shall
discharge the equivalent function of the defensor vinculi contemplated under Canon
1095.[9]

The foregoing guidelines have turned out to be rigid, such that their application to
every instance practically condemned the petitions for declaration of nullity to the
fate of certain rejection. But Article 36 of the Family Code must not be so strictly
and too literally read and applied given the clear intendment of the drafters to
adopt its enacted version of less specificity obviously to enable some resiliency
in its application. Instead, every court should approach the issue of nullity not on
the basis of a priori assumptions, predilections or generalizations, but according to
its own facts in recognition of the verity that no case would be on all fours with
the next one in the field of psychological incapacity as a ground for the nullity of
marriage; hence, every trial judge must take pains in examining the factual milieu
and the appellate court must, as much as possible, avoid substituting its own
judgment for that of the trial court. [10]
In the task of ascertaining the presence of psychological incapacity as a ground for
the nullity of marriage, the courts, which are concededly not endowed with
expertise in the field of psychology, must of necessity rely on the opinions of
experts in order to inform themselves on the matter, and thus enable themselves to
arrive at an intelligent and judicious judgment. Indeed, the conditions for the
malady of being grave, antecedent and incurable demand the in-depth diagnosis by
experts.[11]
II
The findings of the Regional Trial Court (RTC) on the existence or non-existence of a
partys psychological incapacity should be final and binding for as long as such
findings and evaluation of the testimonies of witnesses and other evidence are not
shown to be clearly and manifestly erroneous. [12] In every situation where the
findings of the trial court are sufficiently supported by the facts and evidence
presented during trial, the appellate court should restrain itself from substituting its
own judgment.[13] It is not enough reason to ignore the findings and evaluation by
the trial court and substitute our own as an appellate tribunal only because the
Constitution and the Family Code regard marriage as an inviolable social institution.
We have to stress that the fulfilment of the constitutional mandate for the State to
protect marriage as an inviolable social institution [14] only relates to a valid
marriage. No protection can be accorded to a marriage that is null and void ab
initio, because such a marriage has no legal existence. [15]
In declaring a marriage null and void ab initio, therefore, the Courts really
assiduously defend and promote the sanctity of marriage as an inviolable social
institution. The foundation of our society is thereby made all the more strong and
solid.
Here, the findings and evaluation by the RTC as the trial court deserved credence

because it was in the better position to view and examine the demeanor of the
witnesses while they were testifying.[16] The position and role of the trial judge in the
appreciation of the evidence showing the psychological incapacity were not to be
downplayed but should be accorded due importance and respect.
Yet, in the September 19, 2011 decision, the Court brushed aside the opinions
tendered by Dr. Cristina Gates, a psychologist, and Fr. Gerard Healy on the ground
that their conclusions were solely based on the petitioners version of the events.
After a long and hard second look, we consider it improper and unwarranted to give
to such expert opinions a merely generalized consideration and treatment, least of
all to dismiss their value as inadequate basis for the declaration of the nullity of the
marriage. Instead, we hold that said experts sufficiently and competently described
the psychological incapacity of the respondent within the standards of Article 36 of
the Family Code. We uphold the conclusions reached by the two expert witnesses
because they were largely drawn from the case records and affidavits, and should
not anymore be disputed after the RTC itself had accepted the veracity of the
petitioners factual premises.[17]
Admittedly, Dr. Gates based her findings on the transcript of the petitioners
testimony, as well as on her interviews of the petitioner, his sister Trinidad, and his
son Miguel. Although her findings would seem to be unilateral under such
circumstances, it was not right to disregard the findings on that basis alone. After
all, her expert opinion took into consideration other factors extant in the records,
including the own opinions of another expert who had analyzed the issue from the
side of the respondent herself. Moreover, it is already settled that the courts must
accord weight to expert testimony on the psychological and mental state of the
parties in cases for the declaration of the nullity of marriages, for by the very nature
of Article 36 of the Family Code the courts, despite having the primary task and
burden of decision-making, must not discount but, instead, must consider as
decisive evidence the expert opinion on the psychological and mental
temperaments of the parties.[18]
The expert opinion of Dr. Gates was ultimately necessary herein to enable the trial
court to properly determine the issue of psychological incapacity of the respondent
(if not also of the petitioner). Consequently, the lack of personal examination and
interview of the person diagnosed with personality disorder, like the respondent, did
not per se invalidate the findings of the experts. The Court has stressed in Marcos
v. Marcos[19] that there is no requirement for one to be declared psychologically
incapacitated to be personally examined by a physician, because what is important
is the presence of evidence that adequately establishes the partys psychological
incapacity. Hence, if the totality of evidence presented is enough to sustain a
finding of psychological incapacity, then actual medical examination of the person
concerned need not be resorted to.[20]

Verily, the totality of the evidence must show a link, medical or the like, between
the acts that manifest psychological incapacity and the psychological disorder itself.
If other evidence showing that a certain condition could possibly result from an
assumed state of facts existed in the record, the expert opinion should be
admissible and be weighed as an aid for the court in interpreting such other
evidence on the causation.[21] Indeed, an expert opinion on psychological incapacity
should be considered as conjectural or speculative and without any probative value
only in the absence of other evidence to establish causation. The experts findings
under such circumstances would not constitute hearsay that would justify their
exclusion as evidence.[22] This is so, considering that any ruling that brands the
scientific and technical procedure adopted by Dr. Gates as weakened by bias should
be eschewed if it was clear that her psychiatric evaluation had been based on the
parties upbringing and psychodynamics. [23]
In that context, Dr. Gates expert opinion should be considered not in isolation but
along with the other evidence presented here.
Moreover, in its determination of the issue of psychological incapacity, the trial
court was expected to compare the expert findings and opinion of Dr. Natividad
Dayan, the respondents own witness, and those of Dr. Gates.
In her Psychological Evaluation Report, [24] Dr. Dayan impressed that the respondent
had compulsive and dependent tendencies to the extent of being relationship
dependent. Based from the respondents psychological data, Dr. Dayan indicated
that:
In her relationship with people, Malyne is likely to be reserved and seemingly
detached in her ways. Although she likes to be around people, she may keep her
emotional distance. She, too, values her relationship but she may not be that
demonstrative of her affections. Intimacy may be quite difficult for her since she
tries to maintain a certain distance to minimize opportunities for rejection. To
others, Malyne may appear, critical and demanding in her ways. She can be
assertive when opinions contrary to those of her own are expressed. And yet, she is
apt to be a dependent person. At a less conscious level, Malyne fears that others
will abandon her. Malyne, who always felt a bit lonely, placed an enormous value on
having significant others would depend on most times.
xxxx
But the minute she started to care, she became a different personclingy and
immature, doubting his love, constantly demanding reassurance that she was the
most important person in his life. She became relationship-dependent. [25]

Dr. Dayan was able to clearly interpret the results of the Millon Clinical Multiaxial
Inventory test[26] conducted on the respondent, observing that the respondent
obtained high scores on dependency, narcissism and compulsiveness, to wit:
Atty. Bretania
Q:

How about this Millon Clinical Multiaxial Inventory?

A:

Sir, the cut of the score which is supposed to be normal is 73 percental

round and there are several scores wherein Mrs. Kalaw obtained very high
score and these are on the score of dependency, narcissism and
compulsion.

Q:

Would you please tell us again, Madam Witness, what is the acceptable
score?

A:

When your score is 73 and above, that means that it is very significant. So,
if 72 and below, it will be considered as acceptable.

Q:

In what area did Mrs. Kalaw obtain high score?

A:

Under dependency, her score is 78; under narcissism, is 79; under

compulsiveness, it is 84.[27]

It is notable that Dr. Dayans findings did not contradict but corroborated the
findings of Dr. Gates to the effect that the respondent had been afflicted with
Narcissistic Personality Disorder as well as with Anti-Social Disorder. Dr. Gates
relevantly testified:
ATTY. GONONG
Q:

Could you please repeat for clarity. I myself is [sic] not quite familiar with
psychology terms. So, more or less, could you please tell me in more
laymans terms how you arrived at your findings that the respondent is selfcentered or narcissistic?

A:

I moved into this particular conclusion. Basically, if you ask about her
childhood background, her father died in a vehicular accident when she was
in her teens and thereafter she was prompted to look for a job to partly
assume the breadwinners role in her family. I gathered that paternal
grandmother partly took care of her and her siblings against the fact that
her own mother was unable to carry out her respective duties and
responsibilities towards Elena Fernandez and her siblings considering that
the husband died prematurely. And there was an indication that Elena
Fernandez on several occasions ever told petitioner that he cannot blame
her for being negligent as a mother because she herself never experienced

the care and affection of her own mother herself. So, there is a precedent in
her background, in her childhood, and indeed this seems to indicate a
particular script, we call it in psychology a script, the tendency to repeat
some kind of experience or the lack of care, lets say some kind of
deprivation, there is a tendency to sustain it even on to your own life when
you have your own family. I did interview the son because I was not
satisfied with what I gathered from both Trinidad and Valerio and even
though as a young son at the age of fourteen already expressed the he
could not see, according to the child, the sincerity of maternal care on the
part of Elena and that he preferred to live with the father actually.
Q:

Taking these all out, you came to the conclusion that respondent is selfcentered and narcissistic?

A:

Actually respondent has some needs which tempts [sic] from a deprived
childhood and she is still in search of this. In her several boyfriends, it
seems that she would jump from one boyfriend to another. There is this
need for attention, this need for love on other people.

Q:

And that led you to conclude?

A:

And therefore I concluded that she is self-centered to the point of

neglecting her duty as a wife and as a mother. [28]

The probative force of the testimony of an expert does not lie in a mere statement
of her theory or opinion, but rather in the assistance that she can render to the
courts in showing the facts that serve as a basis for her criterion and the reasons
upon which the logic of her conclusion is founded. [29] Hence, we should weigh and
consider the probative value of the findings of the expert witnesses vis--vis the
other evidence available.
The other expert of the petitioner was Fr. Healy, a canon law expert, an advocate
before the Manila Archdiocese and Matrimonial Tribunal, and a consultant of the
Family Code Revision Committee. Regarding Father Healys expert testimony, we
have once declared that judicial understanding of psychological incapacity could be
informed by evolving standards, taking into account the particulars of each case, by
current trends in psychological and even by canonical thought, and by experience.
[30]
It is prudent for us to do so because the concept of psychological incapacity
adopted under Article 36 of the Family Code was derived from Canon Law.
Father Healy tendered his opinion on whether or not the respondents level of
immaturity and irresponsibility with regard to her own children and to her husband
constituted psychological incapacity, testifying thusly:
ATTY. MADRID

Q:

Now, respondent Ma. Elena Fernandez claims that she is not psychologically
incapacitated. On the facts as you read it based on the records of this case
before this Honorable Court, what can you say to that claim of respondent?

A:

I would say it is a clear case of psychological incapacity because of her

immaturity and traumatic irresponsibility with regards to her own children.

Q:

So what you are saying is that, the claim of respondent that she is not
psychologically incapacitated is not true?

A:

Yes. It should be rejected.

Q:

Why do you say so?

A:

Because of what she has manifested in her whole lifestyle, inconsistent

pattern has been manifested running through their life made a doubt that
this is immaturity and irresponsibility because her family was dysfunctional
and then her being a model in her early life and being the breadwinner of
the family put her in an unusual position of prominence and then begun to
inflate her own ego and she begun to concentrate her own beauty and that
became an obsession and that led to her few responsibility of subordinating
to her children to this lifestyle that she had embraced.

Q:

You only mentioned her relationship with the children, the impact. How
about the impact on the relationship of the respondent with her husband?

A:

Also the same thing. It just did not fit in to her lifestyle to fulfill her
obligation to her husband and to her children. She had her own priorities,
her beauty and her going out and her mahjong and associating with friends.
They were the priorities of her life.

Q:

And what you are saying is that, her family was merely secondary?

A:

Secondary.

Q:

And how does that relate to psychological incapacity?

A:

That she could not appreciate or absorb or fulfill the obligations of marriage
which everybody takes for granted. The concentration on the husband and
the children before everything else would be subordinated to the marriage
with her. Its the other way around. Her beauty, her going out, her beauty
parlor and her mahjong, they were their priorities in her life.

Q:

And in medical or clinical parlance, what specifically do you call this?

A:

That is narcissism where the person falls in love with himself is from a
myt[h]ical case in Roman history.

Q:

Could you please define to us what narcissism is?

A:

Its a self-love, falling in love with oneself to make up for the loss of a dear
friend as in the case of Narcissus, the myth, and then that became known
in clinical terminology as narcissism. When a person is so concern[ed] with
her own beauty and prolonging and protecting it, then it becomes the top
priority in her life.
xxxx

Q:

And you stated that circumstances that prove this narcissism. How do you
consider this narcissism afflicting respondent, it is grave, slight or .?

A:

I would say its grave from the actual cases of neglect of her family and
that causes serious obligations which she has ignored and not properly
esteemed because she is so concern[ed] with herself in her own lifestyle.
Very serious.

Q:

And do you have an opinion whether or not this narcissism afflicting

respondent was already existing at the time or marriage or even thereafter?

A:

xxxx
When you get married you dont develop narcissism or psychological
incapacity. You bring with you into the marriage and then it becomes
manifested because in marriage you accept these responsibilities. And now
you show that you dont accept them and you are not capable of fulfilling
them and you dont care about them.

Q:

Is this narcissism, Fr. Healy, acquired by accident or congenital or what?

A:

No. The lifestyle generates it. Once you become a model and still the family
was depended [sic] upon her and she was a model at Hyatt and then
Rustans, it began to inflate her ego so much that this became the top
priority in her life. Its her lifestyle.

Q:

What you are saying is that, the narcissism of respondent even expanded
after the marriage?

A:

That could have expanded because it became very obvious after the
marriage because she was neglecting such fundamental obligations.

Q:

And how about the matter of curability, is this medically or clinically

curable, this narcissism that you mentioned?

A:

Lets say, it was manifested for so many years in her life. It was found in
her family background situation. Say, almost for sure would be incurable
now.

Q:

What specific background are you referring to?

A:

Well, the fact when the father died and she was the breadwinner and her
beauty was so important to give in her job and money and influence and so
on. But this is a very unusual situation for a young girl and her position in
the family was exalted in a very very unusual manner and therefore she
had that pressure on her and in her accepting the pressure, in going along
with it and putting it in top priority.[31]

Given his credentials and conceded expertise in Canon Law, Father Healys opinions
and findings commanded respect. The contribution that his opinions and findings
could add to the judicial determination of the parties psychological incapacity was
substantive and instructive. He could thereby inform the trial court on the degrees
of the malady that would warrant the nullity of marriage, and he could as well
thereby provide to the trial court an analytical insight upon a subject as esoteric to
the courts as psychological incapacity has been. We could not justly disregard his
opinions and findings. Appreciating them together with those of Dr. Gates and Dr.
Dayan would advance more the cause of justice. The Court observed in Ngo Te v.
Yu-Te:[32]
By the very nature of Article 36, courts, despite having the primary task and burden
of decision-making, must not discount but, instead, must consider as
decisive evidence the expert opinion on the psychological and mental
temperaments of the parties.
Justice Romero explained this in Molina, as follows:
Furthermore, and equally significant, the professional opinion of a psychological
expert became increasingly important in such cases. Data about the person's entire
life, both before and after the ceremony, were presented to these experts and they
were asked to give professional opinions about a party's mental capacity at the
time of the wedding. These opinions were rarely challenged and tended to be
accepted as decisive evidence of lack of valid consent.
The Church took pains to point out that its new openness in this area did not
amount to the addition of new grounds for annulment, but rather was an
accommodation by the Church to the advances made in psychology during the past
decades. There was now the expertise to provide the all-important connecting link
between a marriage breakdown and premarital causes.
During the 1970s, the Church broadened its whole idea of marriage from that of a
legal contract to that of a covenant. The result of this was that it could no longer be
assumed in annulment cases that a person who could intellectually understand the
concept of marriage could necessarily give valid consent to marry. The ability to
both grasp and assume the real obligations of a mature, lifelong commitment are

now considered a necessary prerequisite to valid matrimonial consent.

Rotal decisions continued applying the concept of incipient psychological incapacity,
"not only to sexual anomalies but to all kinds of personality disorders that
incapacitate a spouse or both spouses from assuming or carrying out the essential
obligations of marriage. For marriage . . . is not merely cohabitation or the right of
the spouses to each other's body for heterosexual acts, but is, in its totality the
right to the community of the whole of life; i.e., the right to a developing lifelong
relationship. Rotal decisions since 1973 have refined the meaning of psychological
or psychic capacity for marriage as presupposing the development of an adult
personality; as meaning the capacity of the spouses to give themselves to each
other and to accept the other as a distinct person; that the spouses must be `other
oriented' since the obligations of marriage are rooted in a self-giving love; and that
the spouses must have the capacity for interpersonal relationship because marriage
is more than just a physical reality but involves a true intertwining of personalities.
The fulfillment of the obligations of marriage depends, according to Church
decisions, on the strength of this interpersonal relationship. A serious incapacity for
interpersonal sharing and support is held to impair the relationship and
consequently, the ability to fulfill the essential marital obligations. The marital
capacity of one spouse is not considered in isolation but in reference to the
fundamental relationship to the other spouse.
Fr. Green, in an article in Catholic Mind, lists six elements necessary to the
mature marital relationship:
"The courts consider the following elements crucial to the marital commitment: (1)
a permanent and faithful commitment to the marriage partner; (2) openness to
children and partner; (3) stability; (4) emotional maturity; (5) financial
responsibility; (6) an ability to cope with the ordinary stresses and strains of
marriage, etc."
Fr. Green goes on to speak about some of the psychological conditions
that might lead to the failure of a marriage:
"At stake is a type of constitutional impairment precluding conjugal communion
even with the best intentions of the parties. Among the psychic factors possibly
giving rise to his or her inability to fulfill marital obligations are the following: (1)
antisocial personality with its fundamental lack of loyalty to persons or sense of
moral values; (2) hyperesthesia, where the individual has no real freedom of sexual
choice; (3) the inadequate personality where personal responses consistently fall
short of reasonable expectations.
xxxx
The psychological grounds are the best approach for anyone who doubts whether

he or she has a case for an annulment on any other terms. A situation that does not
fit into any of the more traditional categories often fits very easily into the
psychological category.
As new as the psychological grounds are, experts are already detecting a shift in
their use. Whereas originally the emphasis was on the parties' inability to exercise
proper judgment at the time of the marriage (lack of due discretion), recent cases
seem to be concentrating on the parties' incapacity to assume or carry out their
responsibilities and obligations as promised (lack of due competence). An
advantage to using the ground of lack of due competence is that at the time the
marriage was entered into civil divorce and breakup of the family almost always is
proof of someone's failure to carry out marital responsibilities as promised at the
time the marriage was entered into."
Hernandez v. Court of Appeals emphasizes the importance of presenting expert
testimony to establish the precise cause of a party's psychological incapacity, and
to show that it existed at the inception of the marriage. And as Marcos v. Marcos
asserts, there is no requirement that the person to be declared psychologically
incapacitated be personally examined by a physician, if the totality of evidence
presented is enough to sustain a finding of psychological incapacity. Verily, the
evidence must show a link, medical or the like, between the acts that manifest
psychological incapacity and the psychological disorder itself.
This is not to mention, but we mention nevertheless for emphasis, that the
presentation of expert proof presupposes a thorough and in-depth assessment of
the parties by the psychologist or expert, for a conclusive diagnosis of a grave,
severe and incurable presence of psychological incapacity. [33]
Ngo Te also emphasized that in light of the unintended consequences of strictly
applying the standards set in Molina,[34] the courts should consider the totality of
evidence in adjudicating petitions for declaration of nullity of marriage under Article
36 of the Family Code, viz:
The resiliency with which the concept should be applied and the case-to-case basis
by which the provision should be interpreted, as so intended by its framers, had,
somehow, been rendered ineffectual by the imposition of a set of strict standards in
Molina, thus:
xxxx
Noteworthy is that in Molina, while the majority of the Courts membership
concurred in the ponencia of then Associate Justice (later Chief Justice) Artemio V.
Panganiban, three justices concurred in the result and another three--including, as
aforesaid, Justice Romero--took pains to compose their individual separate opinions.

Then Justice Teodoro R. Padilla even emphasized that each case must be judged,
not on the basis of a priori assumptions, predilections or generalizations, but
according to its own facts. In the field of psychological incapacity as a ground for
annulment of marriage, it is trite to say that no case is on all fours with another
case. The trial judge must take pains in examining the factual milieu and the
appellate court must, as much as possible, avoid substituting its own judgment for
that of the trial court.
Predictably, however, in resolving subsequent cases, the Court has applied the
aforesaid standards, without too much regard for the law's clear intention that each
case is to be treated differently, as courts should interpret the provision on a
case-to-case basis; guided by experience, the findings of experts and researchers in
psychological disciplines, and by decisions of church tribunals.
In hindsight, it may have been inappropriate for the Court to impose a rigid set of
rules, as the one in Molina, in resolving all cases of psychological incapacity.
Understandably, the Court was then alarmed by the deluge of petitions for the
dissolution of marital bonds, and was sensitive to the OSG's exaggeration of Article
36 as the "most liberal divorce procedure in the world." The unintended
consequences of Molina, however, has taken its toll on people who have to live with
deviant behavior, moral insanity and sociopathic personality anomaly, which, like
termites, consume little by little the very foundation of their families, our basic
social institutions. Far from what was intended by the Court, Molina has become a
strait-jacket, forcing all sizes to fit into and be bound by it. Wittingly or unwittingly,
the Court, in conveniently applying Molina, has allowed diagnosed sociopaths,
schizophrenics, nymphomaniacs, narcissists and the like, to continuously debase
and pervert the sanctity of marriage. Ironically, the Roman Rota has annulled
marriages on account of the personality disorders of the said individuals.
The Court need not worry about the possible abuse of the remedy provided by
Article 36, for there are ample safeguards against this contingency, among which is
the intervention by the State, through the public prosecutor, to guard against
collusion between the parties and/or fabrication of evidence. The Court should
rather be alarmed by the rising number of cases involving marital abuse, child
abuse, domestic violence and incestuous rape.
In dissolving marital bonds on account of either party's psychological incapacity, the
Court is not demolishing the foundation of families, but it is actually protecting the
sanctity of marriage, because it refuses to allow a person afflicted with a
psychological disorder, who cannot comply with or assume the essential marital
obligations, from remaining in that sacred bond. It may be stressed that the
infliction of physical violence, constitutional indolence or laziness, drug dependence
or addiction, and psychosexual anomaly are manifestations of a sociopathic
personality anomaly. Let it be noted that in Article 36, there is no marriage to speak

of in the first place, as the same is void from the very beginning. To indulge in
imagery, the declaration of nullity under Article 36 will simply provide a decent
burial to a stillborn marriage.
xxxx
Lest it be misunderstood, we are not suggesting the abandonment of Molina in this
case. We simply declare that, as aptly stated by Justice Dante O. Tinga in Antonio
v. Reyes, there is need to emphasize other perspectives as well which should
govern the disposition of petitions for declaration of nullity under Article 36. At the
risk of being redundant, we reiterate once more the principle that each case must
be judged, not on the basis of a priori assumptions, predilections or generalizations
but according to its own facts. And, to repeat for emphasis, courts should interpret
the provision on a case-to-case basis; guided by experience, the findings of experts
and researchers in psychological disciplines, and by decisions of church tribunals. [35]

III
In the decision of September 19, 2011, the Court declared as follows:
Respondent admittedly played mahjong, but it was not proven that she
engaged in mahjong so frequently that she neglected her duties as a mother and a
wife. Respondent refuted petitioners allegations that she played four to five times a
week. She maintained it was only two to three times a week and always
with the permission of her husband and without abandoning her children
at home. The children corroborated this, saying that they were with their
mother when she played mahjong in their relatives home. Petitioner did not
present any proof, other than his own testimony, that the mahjong sessions were so
frequent that respondent neglected her family. While he intimated that two of his
sons repeated the second grade, he was not able to link this episode to
respondents mahjong-playing. The least that could have been done was to prove
the frequency of respondents mahjong-playing during the years when these two
children were in second grade. This was not done. Thus, while there is no dispute
that respondent played mahjong, its alleged debilitating frequency and adverse
effect on the children were not proven. [36] (Emphasis supplied)
The frequency of the respondents mahjong playing should not have delimited our
determination of the presence or absence of psychological incapacity. Instead, the
determinant should be her obvious failure to fully appreciate the duties and
responsibilities of parenthood at the time she made her marital vows. Had she fully
appreciated such duties and responsibilities, she would have known that bringing
along her children of very tender ages to her mahjong sessions would expose them
to a culture of gambling and other vices that would erode their moral fiber.

Nonetheless, the long-term effects of the respondents obsessive mahjong playing

surely impacted on her family life, particularly on her very young children. We do
find to be revealing the disclosures made by Valerio Teodoro Kalaw [37] the parties
eldest son in his deposition, whereby the son confirmed the claim of his father that
his mother had been hooked on playing mahjong, viz:
ATTY. PISON: From the timebefore your parents separation, do you remember any
habit or activity or practice which your mother engaged in, before the
separation?
WITNESS:

Yeah, habit? She was a heavy smoker and she likes to play mahjong a
lot, and I cant remember.
xxxx

ATTY. PISON: You said that your mother played mahjong frequently. How frequent, do
you remember?
WITNESS :

Not really, but it was a lot. Not actually, I cant, I cant

ATTY. PISON: How long would she stay playing mahjong say one session?
WITNESS :

Really long cuz we would go to my aunts house in White Plains and I

think we would get there by lunch then leave, we fall asleep. I think it
was like one in the morning.

ATTY. PISON: You, you went there? She brought you?

WITNESS :

Yeah, to play with my cousins, yeah and my brothers & sisters.

ATTY. PISON: Were you brought all the time?

WITNESS:

Yeah, almost all the time but sometimes, I guess shed go out by
herself.[38]

The fact that the respondent brought her children with her to her mahjong sessions
did not only point to her neglect of parental duties, but also manifested her
tendency to expose them to a culture of gambling. Her willfully exposing her
children to the culture of gambling on every occasion of her mahjong sessions was a
very grave and serious act of subordinating their needs for parenting to the
gratification of her own personal and escapist desires. This was the observation of
Father Healy himself. In that regard, Dr. Gates and Dr. Dayan both explained that
the current psychological state of the respondent had been rooted on her own
childhood experience.
The respondent revealed her wanton disregard for her childrens moral and mental
development. This disregard violated her duty as a parent to safeguard and protect

her children, as expressly defined under Article 209 and Article 220 of the Family
Code, to wit:
Article 209. Pursuant to the natural right and duty of parents over the person and
property of their unemancipated children, parental authority and responsibility
shall include the caring for and rearing of such children for civic consciousness
and efficiency and the development of their moral, mental and physical
character and well-being.
Article 220. The parents and those exercising parental authority shall have with
respect to their unemancipated children or wards the following rights and duties:
(1) To keep them in their company, to support, educate and instruct them
by right precept and good example, and to provide for their upbringing in
keeping with their means;
(2) x x x x
(3) To provide them with moral and spiritual guidance , inculcate in them
honesty, integrity, self-discipline, self-reliance, industry and thrift, stimulate their
interest in civic affairs, and inspire in them compliance with the duties of
citizenship;
(4) To enhance, protect, preserve and maintain their physical and mental
health at all times;
(5) To furnish them with good and wholesome educational materials, supervise their
activities, recreation and association with others, protect them from bad
company, and prevent them from acquiring habits detrimental to their
health, studies and morals;
(6) x x x x
(7) x x x x
(8) x x x x
(9) x x x x (emphasis supplied)
The September 19, 2011 decision did not properly take into consideration the
findings of the RTC to the effect that both the petitioner and the respondent had
been psychologically incapacitated, and thus could not assume the essential
obligations of marriage. The RTC would not have found so without the allegation to
that effect by the respondent in her answer, [39] whereby she averred that it was not

she but the petitioner who had suffered from psychological incapacity.
The allegation of the petitioners psychological incapacity was substantiated by Dr.
Dayan, as follows:
ATTY. BRETAA:
Q:

You stated earlier that both parties were behaviorally immature?

A:

Yes, sir.

Q:

And that the marriage was a mistake?

A:

Yes, sir.

Q:

What is your basis for your statement that respondent was behaviorally
immature?

A:

Sir, for the reason that even before the marriage Malyn had noticed already
some of those short temper of the petitioner but she was very much in love
and so she lived-in with him and even the time that they were together,
that they were living in, she also had noticed some of his psychological
deficits if we may say so. But as I said, because she is also dependent and
she was one who determined to make the relationship work, she was
denying even those kinds of problems that she had seen.

Q:

To make it clear, Madam witness, Im talking here of the petitioner, Mr.

Kalaw. What led you to conclude that Mr. Kalaw was behaviorally immature?

A:

I think he also mentioned that his concept of marriage was not duly stable
then. He was not really thinking of marriage except that his wife got
pregnant and so he thought that he had to marry her. And even that time
he was not also a monogamous person.

Q:

Are you saying, Madam Witness, that ultimately the decision to marry lied
on the petitioner?

A:

I think so, Sir.

Q:

Now, in your report, Madam Witness, you mentioned here that the
petitioner admitted to you that in his younger years he was often out
seeking other women. Im referring specifically to page 18. He also
admitted to you that the thought of commitment scared him, the petitioner.
Now, given these admissions by petitioner to you, my questions is, is it
possible for such a person to enter into marriage despite this fear of
commitment and given his admission that he was a womanizer? Is it
possible for this person to stop his womanizing ways during the marriage?

A:

Sir, its difficult.

Q:

It would be difficult for that person?

A:

Yes, Sir.

Q:

What is the probability of this person giving up his womanizing after

marriage?

A:

Sir, I would say the probability of his giving up is almost only 20%.

Q:

So, it is entirely possible that the respondent womanized during his

marriage with the respondent?

A:

Yes, Sir.

Q:

What is the bearing of this fear of commitment on the part of the petitioner
insofar as his psychological capacity to perform his duties as a husband is
concerned?

A:

Sir, it would impair his ability to have sexual integrity and also to be fully
committed to the role of husband to Malyn.

Q:

Madam Witness, you never directly answered my question on whether the

petitioner was psychologically incapacitated to perform his duty as a
husband. You only said that the petitioner was behaviorally immature and
that the marriage was a mistake. Now, may I asked [sic] you that question
again and request you to answer that directly?

A:

Sir, he is psychologically incapacitated. [40]

Although the petitioner, as the plaintiff, carried the burden to prove the nullity of the
marriage, the respondent, as the defendant spouse, could establish the
psychological incapacity of her husband because she raised the matter in her
answer. The courts are justified in declaring a marriage null and void under Article
36 of the Family Code regardless of whether it is the petitioner or the respondent
who imputes the psychological incapacity to the other as long as the imputation is
fully substantiated with proof. Indeed, psychological incapacity may exist in one
party alone or in both of them, and if psychological incapacity of either or both is
established, the marriage has to be deemed null and void.
More than twenty (20) years had passed since the parties parted ways. By now,
they must have already accepted and come to terms with the awful truth that their
marriage, assuming it existed in the eyes of the law, was already beyond repair.
Both parties had inflicted so much damage not only to themselves, but also to the
lives and psyche of their own children. It would be a greater injustice should we
insist on still recognizing their void marriage, and then force them and their children
to endure some more damage. This was the very same injustice that Justice Romero
decried in her erudite dissenting opinion in Santos v. Court of Appeals:[41]

It would be great injustice, I believe, to petitioner for this Court to give a much too
restrictive interpretation of the law and compel the petitioner to continue to be
married to a wife who for purposes of fulfilling her marital duties has, for all
practical purposes, ceased to exist.
Besides, there are public policy considerations involved in the ruling the Court
makes today. It is not, in effect, directly or indirectly, facilitating the transformation
of petitioner into a habitual tryster or one forced to maintain illicit relations with
another woman or women with emerging problems of illegitimate children, simply
because he is denied by private respondent, his wife, the companionship and
conjugal love which he has sought from her and to which he is legally entitled?
I do not go as far as to suggest that Art. 36 of the Family Code is a sanction for
absolute divorce but I submit that we should not constrict it to non-recognition of its
evident purpose and thus deny to one like petitioner, an opportunity to turn a new
leaf in his life by declaring his marriage a nullity by reason of his wifes
psychological incapacity to perform an essential marital obligation.
In this case, the marriage never existed from the beginning because the respondent
was afflicted with psychological incapacity at and prior to the time of the marriage.
Hence, the Court should not hesitate to declare the nullity of the marriage between
the parties.
To stress, our mandate to protect the inviolability of marriage as the basic
foundation of our society does not preclude striking down a marital union that is illequipped to promote family life, thus:
Now is also the opportune time to comment on another common legal guide utilized
in the adjudication of petitions for declaration of nullity in the adjudication of
petitions for declaration of nullity under Article 36. All too frequently, this Court and
lower courts, in denying petitions of the kind, have favorably cited Sections 1 and 2,
Article XV of the Constitution, which respectively state that [t]he State recognizes
the Filipino family as the foundation of the nation. Accordingly, it shall strengthen
its solidarity and actively promote its total development[t], and that [m]arriage, as
an inviolable social institution, is the foundation of the family and shall be protected
by the State. These provisions highlight the importance of the family and the
constitutional protection accorded to the institution of marriage.
But the Constitution itself does not establish the parameters of state protection to
marriage as a social institution and the foundation of the family. It remains the
province of the legislature to define all legal aspects of marriage and prescribe the
strategy and the modalities to protect it, based on whatever socio-political
influences it deems proper, and subject of course to the qualification that such
legislative enactment itself adheres to the Constitution and the Bill of Rights. This

being the case, it also falls on the legislature to put into operation the constitutional
provisions that protect marriage and the family. This has been accomplished at
present through the enactment of the Family Code, which defines marriage and the
family, spells out the corresponding legal effects, imposes the limitations that affect
married and family life, as well as prescribes the grounds for declaration of nullity
and those for legal separation. While it may appear that the judicial denial of a
petition for declaration of nullity is reflective of the constitutional mandate to
protect marriage, such action in fact merely enforces a statutory definition of
marriage, not a constitutionally ordained decree of what marriage is. Indeed, if
circumstances warrant, Sections 1 and 2 of Article XV need not be the only
constitutional considerations to be taken into account in resolving a petition for
declaration of nullity.
Indeed, Article 36 of the Family Code, in classifying marriages contracted by a
psychologically incapacitated person as a nullity, should be deemed as an
implement of this constitutional protection of marriage. Given the avowed State
interest in promoting marriage as the foundation of the family, which in
turn serves as the foundation of the nation, there is a corresponding
interest for the State to defend against marriages ill-equipped to promote
family life. Void ab initio marriages under Article 36 do not further the
initiatives of the State concerning marriage and family, as they promote
wedlock among persons who, for reasons independent of their will, are not
capacitated to understand or comply with the essential obligations of
marriage.[42] (Emphasis supplied)
WHEREFORE, the Court GRANTS the Motion for Reconsideration; REVERSES and
SETS ASIDE the decision promulgated on September 19, 2011; and REINSTATES
the decision rendered by the Regional Trial Court declaring the marriage between
the petitioner and the respondent on November 4, 1976 as NULL AND VOID AB
INITIO due to the psychological incapacity of the parties pursuant to Article 36 of
the Family Code.
No pronouncement on costs of suit.
SO ORDERED.
Leonardo-De Castro, (Chairperson), *Perez, and **Leonen, JJ., concur.
Del Castillo, J., see dissenting opinion.

**

Per Special Order No. 1080 dated September 13, 2011.

Pursuant to the third paragraph of Section 7, Rule 2, Internal Rules.

[1]

657 SCRA 822.

[2]

Id. at 836-839.

[3]

Rollo, pp. 689-704.

[4]

See Santos v. Court of Appeals, G.R. No. 112019, January 4, 1995, 240 SCRA 20,
31.
[5]

See Salita v. Magtolis, G.R No. 106429, June 13, 1994, 233 SCRA 100, 107-108.

[6]

Supra note 4.

[7]

Id. at 34.

[8]

G.R. No. 108763, February 13, 1997, 268 SCRA 198.

[9]

Id. at 209-213.

[10]

Separate Statement of Justice Teodoro Padilla in Republic v. Court of Appeals,

supra, note 8, at 214.
[11]

Hernandez v. Court of Appeals, G.R. No. 126010, December 8, 1999, 320 SCRA
76; Republic v. Quintero-Hamano, G.R. No. 149498, May 20, 2004, 428 SCRA 735.
[12]

Tuason v. Court of Appeals, G.R. No. 116607, April 10, 1996, 256 SCRA 158, 170.

[13]

Separate Statement of Justice Teodoro R. Padilla in Republic v. Court of Appeals,

supra note 10.
[14]

Article XV of the 1987 Constitution provides:

Section 2. Marriage, as an inviolable social institution, is the foundation of the family

and shall be protected by the State.
[15]

Camacho-Reyes v. Reyes, G.R. No. 185286, August 18, 2010, 628 SCRA
461 ([B]lind adherence by the courts to the exhortation in the Constitution and in
our statutes that marriage is an inviolable social institution, and validating a
marriage that is null and void despite convincing proof of psychological incapacity,
trenches on the very reason why a marriage is doomed from its inception should
not be forcibly inflicted upon its hapless partners for life.).
[16]

Collado v. Intermediate Appellate Court, G.R. No. 72780, February 13, 1992, 206

SCRA 206, 212; People v. Basmayor, G.R. No. 182791, February 10, 2009, 578 SCRA
369, 382-383.
[17]

Antonio v. Reyes, G.R. No. 155800, March 10, 2006, 484 SCRA 353, 379.

[18]

Ngo Te v. Yu-Te, G.R. No. 161793, February 13, 2009, 579 SCRA 193, 228.

[19]

G.R. No. 136490, October 19, 2000, 343 SCRA 755, 757.

[20]

Id. at 764.

[21]

Herrera, Remedial Law, Volume V (1999), pp. 804-805.

[22]

Camacho-Reyes v. Reyes, supra, note 15, at 487.

[23]

Carcereny, et al., Annulment in the Philippines: Clinical and Legal Issues (2010),
p. 16.
[24]

Records Volume II, pp. 87-105.

[25]

Id. at 100, 103.

[26]

A psychological test used to find personality disorders based on the respondents

answers to 175 true/false questions (Ng, et al., Legal and Clinical Bases of
Psychological Incapacity [2006], p. 109).
[27]

TSN dated January 30, 1996, p. 13.

[28]

TSN dated February 15, 1995, pp. 8-10.

[29]

Lim v. Sta. Cruz-Lim, G.R. No. 176464, February 4, 2010, 611 SCRA 569, 585.

[30]

Antonio v. Reyes, supra note 17, at 370.

[31]

TSN dated June 17, 1998, pp. 24-28.

[32]

Supra note 18.

[33]

Id. at 229-232.

[34]

Republic v. Court of Appeals, supra, note 8.

[35]

Supra note 18, at 220-228.

[36]

Decision, pp. 837-838.

[37]

Records, pp. 354-391.

[38]

Id. at 363.

[39]

Paragraph 3 (Records, Vol. I, p. 20) of which runs:

3. She specifically denies the allegations contained in paragraphs 5, 6 and 7 of the

Petition alleging that the respondent was psychologically incapacitated to comply
with the essential obligations to the marriage and that such incapacity manifested
itself only after the marriage, the truth of the matter being that it is the petitioner
who is psychologically incapacitated.
[40]

TSN dated March 14, 1996, pp. 10-12.

[41]

Supra note 4, at 38.

[42]

Antonio v. Reyes, supra note 17, at 371-373.

DISSENTING OPINION

DEL CASTILLO, J.:

On September 19, 2011, this Court issued its Decision [1] denying petitioner Valerio E.
Kalaws petition and affirming the appellate courts determination that there is
insufficient evidence of psychological incapacity that would render the parties
marriage null and void. The Court, in making its Decision, relied on the experts own
proffered guideline for making their conclusions. They said that actions, such as
those allegedly performed by respondent, when performed constantly to the
detriment of quality and quantity of time devoted to her duties as mother and
wife, constitute a psychological incapacity in the form of [Narcissistic Personality
Disorder].[2] The Court, using the experts own guideline, reviewed the evidence to
determine if there is indeed proof, before the Court, that respondent engaged in the
alleged acts, that she performed them constantly, and to the detriment of the
quality and quantity of time devoted to her duties as mother and wife. Considering
the opposing views of the trial and appellate courts on the matter, the Court
thoroughly reviewed the records of the case, including the psychiatrists reports.
Despite the Courts considerable effort to respect and accept the psychologists

findings, we simply found no adequate evidence of the factual premises of their

diagnosis of Narcissistic Personality Disorder. Thus, we agreed with the Court of
Appeals (CA) that the evidence is insufficient for a declaration of nullity of marriage
on the ground of psychological incapacity.
The petitioner filed a Motion for Reconsideration (MR), [3] arguing that the Court erred
in finding the psychological experts conclusions (that respondent is psychologically
incapacitated to understand the demands of a marriage) unsupported by the
available evidence.
The respondent, in lieu of a Comment, [4] reiterated her earlier Manifestation that she
is now conceding that petitioner, not herself, may actually be psychologically
incapacitated to perform his essential marital obligations. [5]
The Majority Opinion opines that the Court would be unjust to keep the parties in a
marriage despite their shared opinion that their marriage is beyond repair.
However, under the law, the parties own desire to dissolve their marriage is not a
determining factor in assessing the existence of a ground for annulment or
declaration of nullity. Indeed, Article 48 of the Family Code mandates the court to
guard against the possibility of collusion between the parties:
ARTICLE 48. In all cases of annulment or declaration of absolute nullity of marriage,
the Court shall order the prosecuting attorney or fiscal assigned to it to appear on
behalf of the State to take steps to prevent collusion between the parties and to
take care that evidence is not fabricated or suppressed.
xxxx
The Courts Decision should rely solely on the available evidence and the law.
The Majority Opinion claims that our Decision failed to appreciate the evidence, as
found by the trial court and by the expert psychologists and that the trial courts
ruling on the psychological incapacity of the parties should be final and binding on
the appellate courts when such ruling is based on the facts and on opinion of the
qualified experts.
I agree that the ruling of a lower court should be given due respect and finality
when it is adequately explained, rests on established facts, and considers the
opinion of qualified experts. Unfortunately, such kind of trial court ruling is not
before us; hence, our September 19, 2011 Decision did not see fit to adopt the
findings of the trial court.
The trial court summarized the parties respective evidence, including the

testimonies of their psychologists, in the first six pages of its decision. [6] It then
proceeded to quote Article 36 of the Family Code and the definitions of
psychological incapacity in Santos v. Court of Appeals[7] and in the Republic v. Court
of Appeals.[8] Without any indication of which pieces of evidence it found convincing,
reliable, and overwhelming, much less a discussion of how these evidence tend to
prove the existence or non-existence of psychological incapacity ergo, without
factual findings whatsoever the trial court ruled in a terse and unsatisfying
paragraph that:
From the evidence, it appears that parties are both suffering from psychological
incapacity to perform their essential marital obligations under Article 36 of the
Family Code. The parties entered into a marriage without as much as understanding
what it entails. They failed to commit themselves to its essential obligations: the
conjugal act, the community of life and love, the rendering of mutual help, the
procreation and education of their children to become responsible individuals.
Parties psychological incapacity is grave, and serious such that both are incapable
of carrying out the ordinary duties required in marriage. The incapacity has been
clinically established and was found to be pervasive, grave and incurable. [9]
(Emphases supplied)
The inadequacy of the trial courts ruling and its understanding of the concept of
psychological incapacity is apparent. Psychological incapacity, as a ground for the
declaration of nullity, is not a lack of understanding of what marriage entails, nor is
it a failure to commit ones self to the essential marital and familial obligations. [10]
It is a downright inability to understand, perform, or comply with, the said duties
and obligations.[11] How can any appellate court rely on the trial courts assessment
of whether the evidence constituted psychological incapacity when there is none
and its understanding of the concept of psychological incapacity is doctrinally
flawed?
The trial court then characterized the parties psychological incapacity as grave and
serious, without even going over the evidence upon which it relied in making such
conclusion. It appears to the Court that the last sentence of the trial courts decision
that the incapacity has been clinically established -- encapsulates the process
by which the trial court arrived at its judgment. It relied merely and solely on the
conclusions of the psychological experts, without doing its duty to make an
independent assessment of the evidence.
To reiterate, while I agree that the trial courts ruling on the psychological incapacity
of the parties should be final and binding on the appellate courts when such ruling
is based on the facts and on the opinion of the experts, I believe that the trial
courts decision in this case was not based on facts, but solely on the opinion of the
experts. Such blind reliance by the trial court was an abdication of its duty to go
over the evidence for itself.

While the courts may consider the assistance of the experts, the courts are dutybound to assess not only the correctness of the experts conclusions, but also the
factual premises upon which such conclusions are based. The experts conclusions,
like any other opinion, are based on certain assumptions or premises. It is the
courts job to assess whether those assumptions or premises are in fact true or
correct, and supported by evidence on record. The soundness of experts
conclusions lie in the quantity and quality of the input they received in making
their conclusions. This is precisely where the courts take the reins from these
experts. The root cause of psychological incapacity must not only be clinically
identified by experts, it must also be sufficiently proven and clearly explained in the
decision.[12]
The expertise of courts lies in determining which facts are admissible, which are
relevant, which carry weight, which have been proven, which have been debunked.
In resolving legal disputes, the courts have the expertise in evaluating the quantity,
quality, and relevance of the facts to the legal issue involved. Courts have to
conduct its independent assessment of the quality of the facts that the
psychologists relied upon in support of their conclusion. It is only if, and when, the
court is convinced that the psychologists conclusions are strongly anchored on
verifiable, admissible, and relevant evidence that it can adopt the psychologists
findings. Even petitioners expert witness, Fr. Healy, acknowledged in his testimony
that it is the courts job, not that of the expert, to verify the truthfulness of the
factual allegations regarding respondents alleged habits. Fr. Healy cautioned that
his opinion rests only on his assumption that the factual allegations are true.[13]
It remains my opinion that the factual premises for the experts conclusions in this
case were not established in court. While the experts testified that the alleged
dysfunction in respondents family and her subsequent actions within her marriage
are indicative of a Narcissistic Personality Disorder, the court records themselves
reveal no credible and preponderant evidence of the supposed family dysfunction in
respondents childhood and of her supposed narcissistic habits later in life. There
was no independent witness presented, who is knowledgeable of respondents
upbringing and of her actions before and after the celebration of marriage. This is
detrimental in proving that the cause of her psychological incapacity occurred
before, or at the time of the celebration of, the marriage, [14] and renders the
experts opinion on the root cause of her psychological incapacity conjectural or
speculative. Also there was no evidence of respondents supposed obsessive desire
for attention and selfishness, which obsession, according to the experts, indicates a
narcissistic personality. The most that was proven was a single incident wherein she
was found in a hotel room with another man (after they have separated in fact), a
penchant for visiting salons and for meeting friends over a mahjong game. This can
hardly be considered as a pattern, defined as a reliable sample of traits, acts or
other observable features characterizing an individual, [15] much less an obsession.

Much is said about respondents undesirability as a mother for supposedly exposing

her children to the culture of gambling; [16] this, from the evidence that she brought
her children with her to their aunts house where she frequently played mahjong. I
find this judgment unsupported by the evidence and irrelevant. While it has been
proven that respondent played mahjong, there is no evidence whatsoever that it
involved gambling, which is the act of playing a game and consciously risking
money or other stakes on its outcome. [17] Without the element of gambling, a
mothers act of bringing her kids with her when she meets with friends (which is the
most that can be said of this matter) can hardly be described as undesirable. Even
Fr. Healy acknowledged that playing mahjong and spending time with friends are
not disorders by themselves. They would only constitute psychological incapacity if
inordinate amounts of time are spent on these activities to the detriment of ones
familial duties.[18] The Court, in our Decision, applied Fr. Healys standards. We
concluded that respondent was not psychologically incapacitated because there
was no proof that she spent inordinate amounts of time in these alleged activities or
that her kids were adversely affected.[19] On the contrary, the records revealed her
efforts to maintain supervision of her kids, even when she was among her friends.
Further, the kids recalled that, after respondent left the conjugal home, she would
surreptitiously visit them in their schools; and, once granted visitation rights, spent
weekends with them and took care of them at any time they got sick. [20] These are
hardly the actions of a woman with an inability to understand her filial duties and
obligations.
It must be emphasized that the Court does not disrespect the experts findings
when it disagrees with them; nor does it assert that it is wiser in analyzing human
behavior. It is simply performing its duty to go over the evidence independently,
consider the experts opinions, and apply the law and jurisprudence to the facts of
the case. The Court cannot simply adhere to the experts opinion when there is an
obvious dearth of factual evidence. The Court is not a passive receptacle of expert
opinions; otherwise, there would be no need for psychological incapacity cases to
be tried before the courts. Courts would be reduced to a mere rubber stamp for the
experts conclusions. That is not what the framers of Article 36 envisioned.
In the end, this is simply the sad story of two people who married and started a
family, but realized early on that they have made a mistake. They both contributed
to the demise of their marriage, as hurt people often do. Despite their brokenness,
they tried to make the most of the situation, caring for their children while they try
to move on with their now separate lives. Now, in their advanced years, they want a
magical solution that would erase any trace of their follies of youth; unfortunately,
the provision for psychological incapacity is not such a miraculous fix for dissolving
the marriage bond. The policy of our 1987 Constitution continues to be to protect
and strengthen the family as the basic autonomous social institution and marriage
as the foundation of the family. (Art. 11, Sec. 12, Art. XV, Secs. 1-2) The existence of

any doubt should still be resolved in favor of the validity of the marriage.
I, therefore, submit that petitioners Motion for Reconsideration be denied with
finality.

[1]

Rollo, pp. 672-688.

[2]

Id. at 685.

[3]

Id. at 689-705.

[4]

Id. at 707-709.

[5]

Id. at 650-654.

[6]

Id. at 74-79.

[7]

310 Phil. 21 (1995).

[8]

Rollo, pp. 79-80.

[9]

Id. at 80.

[10]

Republic v. Galang, G.R. No. 168335, June 6, 2011, 650 SCRA 524, 539-540;
Agraviador v. Amparo-Agraviador, G.R. No. 170729, December 8, 2010, 637 SCRA
519, 533-534.
[11]

Antonio v. Reyes, 519 Phil. 337, 351 (2006).

[12]

Republic v. Dagdag, 404 Phil. 249, 260 (2001); Republic v. Court of Appeals, 335
Phil. 664, 677 (1997).
[13]

Rollo, p. 676.

[14]

Republic v. Galang, supra note 10 at 540-541; Agraviador v. Amparo-Agraviador,

supra note 10 at 535-536.
[15]

BLACKS LAW DICTIONARY (abridged 5th ed.)

[16]

Majority Opinion, pp. 18-19.

[17]

Websters Third New International Dictionary (unabridged version).

[18]

Rollo, p. 676.

[19]

Id. at 685.

[20]

Id. at 679.

FIRST DIVISION
[ G.R. Nos. 209672-74, January 14, 2015 ]
EDMUND SIA, PETITIONER, VS. WILFREDO ARCENAS, FERNANDO
LOPEZ, AND PABLO RAFANAN, RESPONDENTS.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari[1] are the Decision[2] dated January 31, 2013 and
the Resolution[3] dated August 29, 2013 of the Court of Appeals (CA) in CA-G.R. SP Nos. 04598,
04607, and 04608 which set aside the Writ of Possession[4] dated June 19, 2009 and the Writ of
Demolition[5] dated August 28, 2009 of the Regional Trial Court (RTC) of Roxas City, Capiz,
Branch 15 (RTC Br. 15) in Special Civil Action No. V-7075 (SCA No. V-7075), involving Lot
145-A and Lot No. 1839-pt, with areas of 7,652 and 8,381 square meters, respectively, both
located in Barangay IX, Roxas City, Capiz (subject lots), issued in favor of petitioner Edmund
Sia (petitioner).
The Facts
Due to the real property tax delinquencies of Panay Railways, Incorporated (PRI) over the
subject lots covering the years 1992 to 1996, the City Treasurer of Roxas City (City Treasurer)

auctioned the subject lots, with petitioner as the highest bidder.[6] Consequently, on December 20,
1996, a Certificate of Sale was issued in petitioners favor.[7] This notwithstanding, petitioner was
not able to take possession thereof in view of the refusal of the City Treasurer to issue a Final
Bill of Sale despite the lapse of the one-year redemption period. Worse, then-Mayor Juliano Alba
(Mayor Alba) of Roxas City issued Executive Order No. (EO) 08-97, nullifying the auction sale.
[8]
Hence, petitioner was constrained to file a Petition[9] for the annulment of EO 08-97,
mandamus, and damages on February 4, 1998 against the City Treasurer, Mayor Alba, the
members of the City Council of Roxas City, the Roxas City Government, and the PRI before the
RTC of Roxas City, Branch 17 (RTC Br. 17), docketed as SCA No. V-7075, ultimately seeking
that a Final Bill of Sale over the subject lots be issued to him.[10]
In a Decision[11] dated March 21, 2001, the RTC Br. 17 ruled in petitioners favor, and
accordingly ordered the City Treasurer to issue the Final Bill of Sale as prayed for.[12] PRI
appealed to the CA, which affirmed the RTC Br. 17s ruling in toto.[13] Dissatisfied, PRI appealed
to the Court,[14] which was denied outright for having been filed beyond the 15-day reglementary
period and for failure to pay the docket and other fees on time. On October 23, 2007, the Courts
ruling became final and executory.[15]
Petitioner moved for execution[16] before the RTC Br. 15 and was granted the corresponding writ
on February 28, 2008.[17]This notwithstanding, the City Treasurer refused to issue the Final Bill
of Sale, positing that petitioner still had to settle the delinquent real property taxes over the
subject lots in the amount of P2,394,526.44 which accrued during the pendency of the case.[18]
Instead of paying said delinquent taxes, petitioner filed a Motion for Order Divesting Panay
Railway, [Inc. of] Title and Vesting Title to Plaintiff Edmund Sia[19] dated March 31, 2008.
Finding the motion to be meritorious, the RTC Br. 15 issued an Order[20] dated June 10, 2008
granting petitioners motion, and likewise holding that petitioner cannot be held liable for any
real property tax prior to the issuance of a Final Bill of Sale.[21]
Thereafter, petitioner moved for the delivery of the possession[22] of the subject lots as they were
already being occupied by third parties, including herein respondents Wilfredo Arcenas,
Fernando Lopez, and Pablo Rafanan (respondents). Thus, a Writ of Possession[23] dated June 19,
2009, and eventually, a Writ of Demolition[24] dated August 28, 2009 were issued in petitioners
favor.
Respondents, who, at that time, were occupying the subject lots as lessees of PRI, moved for the
quashal of the abovementioned writs,[25] essentially contending that the March 21, 2001 Decision
in SCA No. V-7075 sought to be executed arose from a mandamus petition where a writ of
possession is proscribed. They posited that the execution of a final judgment in a mandamus case
is similar to the execution of special judgments as provided in Section 11, Rule 39 in relation to
Section 9, Rule 65 of the Rules of Court.[26]
In his Opposition,[27] petitioner argued that the ruling in SCA No. V-7075, as well as the orders
directing the issuance of the Final Bill of Sale and the divesting of PRIs title over the subject
lots entitles him to their possession.[28]
The RTC Br. 15 Ruling

In an Order[29] dated September 18, 2009, the RTC Br. 15 denied respondents motion to quash. It
held that the proceedings for tax delinquency sale at a public auction takes the nature of, or is
akin to, an extrajudicial foreclosure, thus necessitating the issuance of the corresponding writs of
possession and demolition. In this relation, it agreed with petitioners posture that his entitlement
to the aforesaid writs arose from the ruling in SCA No. V-7075, as well as the orders directing
the issuance of the Final Bill of Sale, thereby vesting unto petitioner title over the subject lots.[30]
Respondents moved for reconsideration,[31] which was, however, denied in an Order[32] dated
October 15, 2009. Aggrieved, respondents elevated the matter to the CA through three (3)
separate petitions for certiorari.[33]
The CA Ruling
In a Decision[34] dated January 31, 2013, the CA set aside RTC Br. 15s June 19, 2009 Writ of
Possession[35] and August 28, 2009 Writ of Demolition,[36] and directed the said court to enforce
with dispatch the Writ of Execution dated February 28, 2008 in accordance with Section 11, Rule
39 in relation to Section 9, Rule 65 of the Rules of Court.[37]
It held that the writs of possession and demolition issued by the RTC Br. 15 are null and void as
they were issued beyond the ambit of the March 21, 2001 Decision in SCA No. V-7075.[38] In this
regard, the CA ruled that since SCA No. V-7075 is one for mandamus, the RTC Br. 15s power in
executing the judgment therein is limited to directing compliance with the judgment (i.e.,
ordering the City Treasurer to issue a Final Bill of Sale in petitioners favor) and, in case of
refusal, punish with contempt the person required by law to obey the same.[39]
Dissatisfied, petitioner filed a Motion for Reconsideration[40] dated March 1, 2013, which was,
eventually, denied in a Resolution[41] dated August 29, 2013, hence, this petition.
The Issue Before the Court
The primordial issue for the Courts resolution is whether or not the CA correctly declared the
writs of possession and demolition null and void, and accordingly directed the RTC Br. 15 to
enforce the Writ of Execution dated February 28, 2008 in accordance with Section 11, Rule 39 in
relation to Section 9, Rule 65 of the Rules of Court.
The Courts Ruling
The petition is without merit.
At the outset, it is essential to note that the petition in SCA No. V-7075 before the RTC Br. 17 is
primarily that of mandamus, seeking that the court, through the issuance of a writ of mandamus,
compel the City Treasurer to issue a Final Bill of Sale covering the subject lots in petitioners
favor pursuant to its mandate under Section 262[42] of Republic Act No. 7160,[43] otherwise
known as the Local Government Code of 1991 (LGC).[44] In fact, the RTC Br. 17 granted such
petition when it declared valid the auction sale where petitioner purchased the subject lots in

supersession of EO 08-97, and accordingly ordered the City Treasurer to issue the sought for
Final Bill of Sale, viz.:
Judgment is hereby rendered as follows:
1. Declaring Panay Railways Inc. and/or the subject [lots] as not exempt from real property
Taxes and declaring the auction sale of December 20, 1996 as valid and binding;
2. Ordering the City Treasurer of Roxas City to issue in favor of the petitioner the Final Bill of
Sale over [the subject lots] described in the petition.
SO ORDERED. [45]
As case law defines, a writ of mandamus is a command issuing from a court of law of
competent jurisdiction, in the name of the state or sovereign, directed to an inferior court,
tribunal, or board, or to some corporation or person, requiring the performance of a particular
duty therein specified, which duty results from the official station of the party to whom the writ
is directed, or from operation of law. It is employed to compel the performance, when refused, of
a ministerial duty, which, as opposed to a discretionary one, is that which an officer or tribunal
performs in a given state of facts, in a prescribed manner, in obedience to the mandate of legal
authority, without regard to or the exercise of his or its own judgment upon the propriety or
impropriety of the act done.[46]
In this case, the judgment in SCA No. V-7075 primarily compels the City Treasurer to issue the
Final Bill of Sale covering the subject lots in favor of petitioner pursuant to Section 262 of the
LGC, a ministerial duty, which said officer unduly refused to perform. Thus, it may be properly
deemed as a judgment ordering the issuance of a writ of mandamus against the City Treasurer.
Given that the judgment in SCA No. V-7075 ordered the issuance of a writ of mandamus
compelling the performance of a ministerial duty, and not the payment of money or the sale or
delivery of real or personal property, the same is in the nature of a special judgment[47] that is
which a judgment directs the performance of a specific act requiring the party or person to
personally do because of his personal qualifications and circumstances.[48] As such, execution of
the said judgment should be governed by Section 11, Rule 39 of the Rules of Court, which
provides:
SEC. 11. Execution of special judgments. When a judgment requires the performance of any
act other than those mentioned in [Sections 9 and 10, Rule 39 of the Rules of Court], a certified
copy of the judgment shall be attached to the writ of execution and shall be served by the officer
upon the party against whom the same is rendered, or upon any other person required thereby, or
by law, to obey the same, and such party or person may be punished for contempt if he disobeys
such judgment.
This is in consonance with the rule on service and enforcement of orders or judgments
concerning, among others, the special civil action of mandamus under Section 9, Rule 65 of the
Rules of Court, which states:

SEC. 9. Service and enforcement of order or judgment. A certified copy of the judgment
rendered in accordance with the last preceding section shall be served upon the court, quasijudicial agency, tribunal, corporation, board, officer or person concerned in such manner as the
court may direct, and disobedience thereto shall be punished as contempt. An execution may
issue for any damages or costs awarded in accordance with Section 1 of Rule 39.
The rule therefore is that the service and execution of a special judgment, such as a favorable
judgment in mandamus as in this case should be deemed to be limited to directing
compliance with the judgment, and in case of disobedience, to have the disobedient person
required by law to obey such judgment punished with contempt.
In this case, it is undisputed that the City Treasurer obstinately refused to issue the Final Bill of
Sale in petitioners favor, despite the finality of the judgment in SCA No. V-7075, as well as the
issuance and service of the Writ of Execution dated February 28, 2008 commanding him to do
so. In view of such refusal, the RTC Br. 15 should have cited the City Treasurer in contempt in
order to enforce obedience to the said judgment.[49] However, instead of simply doing so, it
granted petitioners numerous motions, resulting in, among others, the issuance of a writ of
possession.
A writ of possession is defined as a writ of execution employed to enforce a judgment to
recover the possession of land. It commands the sheriff to enter the land and give its possession
to the person entitled under the judgment.[50] It may be issued under the following instances: (a)
land registration proceedings under Section 17[51] of Act No. 496,[52] otherwise known as The
Land Registration Act; (b) judicial foreclosure, provided the debtor is in possession of the
mortgaged realty and no third person, not a party to the foreclosure suit, had intervened; (c)
extrajudicial foreclosure of a real estate mortgage under Section 7[53] of Act No. 3135,[54] as
amended by Act No. 4118;[55] and (d) in execution sales.[56] Proceeding therefrom, the issuance of
a writ of possession is only proper in order to execute judgments ordering the delivery of specific
properties to a litigant, in accordance with Section 10, Rule 39,[57] of the Rules of Court.
As already discussed, the judgment in SCA No. V-7075 sought to be enforced in the case at bar
only declared valid the auction sale where petitioner bought the subject lots, and accordingly
ordered the City Treasurer to issue a Final Bill of Sale to petitioner. Since the said judgment did
not order that the possession of the subject lots be vested unto petitioner, the RTC Br. 15
substantially varied the terms of the aforesaid judgment and thus, exceeded its authority in
enforcing the same when it issued the corresponding writs of possession and demolition to vest
unto petitioner the possession of the subject lots. It is well-settled that orders pertaining to
execution of judgments must substantially conform to the dispositive portion of the decision
sought to be executed. As such, it may not vary, or go beyond, the terms of the judgment it seeks
to enforce.[58] Where the execution is not in harmony with the judgment which gives it life and
exceeds it, it has no validity.[59] Had the petitioner pursued an action for ejectment or
reconveyance, the issuance of writs of possession and demolition would have been proper; but
not in a special civil action for mandamus, as in this case.
Perforce, the CA correctly ruled that the Writ of Possession dated June 19, 2009 and the Writ of
Demolition dated August 28, 2009 issued in this case are null and void for having been rendered

beyond the authority of RTC Br. 15 in enforcing the judgment in SCA No. V-7075.
WHEREFORE, the petition is DENIED. Accordingly, the Decision dated January 31, 2013 and
the Resolution dated August 29, 2013 of the Court of Appeals in CA-G.R. SP Nos. 04598,
04607, and 04608 are hereby AFFIRMED.
SO ORDERED.
Sereno, C.J., (Chairperson), Leonardo-De Castro, Bersamin, and Perez, JJ., concur.

[1]

Rollo, pp. 4-15.

[2]

Id. at 17-35. Penned by Associate Justice Pedro B. Corales with Associate Justices Edgardo L.
Delos Santos and Gabriel T. Ingles, concurring.
[3]

Id. at 44-49. Penned by Associate Justice Edgardo L. Delos Santos with Associate Justices
Gabriel T. Ingles and Pamela Ann Abella Maxino, concurring.
[4]

Id. at 36-37. Issued by Acting/OIC Branch Clerk of Court Patricia A. Abaldonado.

[5]

Id. at 38. Issued by Judge Juliana C. Azarraga.

[6]

Id. at 22 and 79.

[7]

Id. at 95-96.

[8]

Id. at 22.

[9]

Dated January 30, 1998. (Id. at 92-105.)

[10]

See id. at 103-104.

[11]

Id. at 79-91. Penned by Judge Julius L. Abela.

[12]

Id. at 91. See also id. at 22.

[13]

See CA Decision dated November 16, 2006 in CA-G.R. CV. No. 72776 penned by Associate
Justice Priscilla Baltazar-Padilla with Associate Justices Isaias P. Dicdican and Romeo F. Barza;
CA rollo (CA G.R. SP No. 04598), pp. 57-73.
[14]

[15]

Entitled Panay Railways Incorporated v. Edmund Sia docketed as G.R. No. 175698.

See Entry of Judgment dated October 23, 2007; CA rollo (CA-G.R. SP No. 04598), p. 74. See
also rollo, pp. 22-23.

[16]

See Motion for Execution dated December 21, 2007, CA rollo (CA-G.R. SP No. 04598),
pp.75-78.
[17]

See Writ of Execution issued by Clerk of Court VI Blas C. Nolasco, Jr.; id. at 80-81.

[18]

See Letter dated March 19, 2008 of City Treasurer Joselito R. Almodiente addressed to
petitioner; id. at 84. See also rollo, p. 23.
[19]

CA rollo, pp. 85-86.

[20]

Id. at 87-91. Penned by Judge Juliana C. Azarraga.

[21]

Rollo, pp. 23-24.

[22]

See Motion for Writ of Possession filed on November 4, 2008; CA rollo (CA-G.R. SP. No.
04598), pp. 92-94.
[23]

Id. at 96-97.

[24]

Id. at 108.

[25]

See Urgent Motion to Quash the Writs of Possession and/or Demolition dated September 1,
2009 (id. at 109-114), which were adopted by Fernando Lopez through a Manifestation dated
September 3, 2009 (CA rollo [CA-G.R. SP No. 04607]), pp. 40-42) and Pablo Rafanan through
an Urgent Motion dated September 14, 2009 (CA rollo [CA-G.R. SP No. 04608], pp. 117-121).
[26]

Rollo, p. 25.

[27]

See Opposition to Urgent Motion to Quash the Writs of Possession and/or Demolition dated
September 1, 2009; CA rollo (CA-G.R. SP. No. 04598), pp. 127-129.
[28]

See Rollo, pp. 25-26.

[29]

Id. at 50-55.

[30]

Id. at 53.

[31]

See Motion for Reconsideration filed on September 29, 2009; CA rollo (CA-G.R. SP. No.
04598), pp. 153-157.
[32]

[33]

Rollo, p. 56.

See Petition of: (a) Wilfredo Arcenas filed on October 23, 2009; CA rollo (CA-G.R. SP No.
04598), pp. 4-21; (b) Fernando Lopez filed on October 26, 2009; CA rollo (CA-G.R. SP No.
04607), pp. 4-27; and (c) Pablo Rafanan filed on October 26, 2009; CA rollo (CA-G.R. SP No.
04608), pp. 4-19. All these cases were consolidated in a Resolution dated August 17, 2010 (CA

rollo [CA-G.R. SP No. 04607], pp. 219-220).

[34]

Rollo, pp. 17-35.

[35]

Id. at 36-37.

[36]

Id. at 38.

[37]

Id. at 35.

[38]

Id. at 34.

[39]

See id. at 31-34.

[40]

Id. at 39-43.

[41]

Id. at 44-49.

[42]

SEC. 262. Final Deed to Purchaser. In case the owner or person having legal interest
therein fails to redeem the delinquent property as provided herein, the local treasurer shall
execute a deed conveying to the purchaser said property, free from lien of the delinquent tax,
interest due thereon and expenses of sale. The deed shall briefly state the proceedings upon
which the validity of the sale rests.
[43]

Entitled AN ACT PROVIDING FOR A LOCAL GOVERNMENT CODE OF 1991

(January 1, 1992).
[44]

Rollo, pp. 99-103.

[45]

Id. at 91.

[46]

National Home Mortgage Finance Corporation v. Abayari, 617 Phil. 446, 458 (2009);
citations omitted.
[47]

Id.

[48]

Sandico, Sr. v. Piguing, 149 Phil. 422, 431 (1971).

[49]

Under Section 9 [now Section 11, Rule 39 of the Rules of Court], the court may resort to
proceedings for contempt in order to enforce obedience to a judgment which requires the
personal performance of a specific act other than the payment of money, or the sale or delivery of
real or personal property. (Sandico, Sr. v. Piguing, supra.)
[50]

Metropolitan Bank & Trust Company v. Abad Santos, G.R. No. 157867, December 15, 2009,
608 SCRA 222, 232, citing Blacks Law Dictionary, 5th Ed., 1979, p. 1444.

[51]

SEC. 17. The Court of Land Registration, in all matters over which it has jurisdiction, may
enforce its orders, judgments, or derives in the same manner as orders, judgments, and decrees
are enforced in the Courts of First Instance, and, upon the request of the judge of the Court of
Land Registration, the governor or sheriff of any province or of the city of Manila, as the case
may be shall assign a deputy to attend the sittings of the court in that province or city.
[52]

Entitled AN ACT TO PROVIDE FOR THE ADJUDICATION AND REGISTRATION OF

TITLES TO LANDS IN THE PHILIPPINE ISLANDS (November 6, 1902).
[53]

SEC. 7. In any sale made under the provisions of this Act, the purchaser may petition the
Court of First Instance of the province or place where the property or any part thereof is situated,
to give him possession thereof during the redemption period, furnishing bond in an amount
equivalent to the use of the property for a period of twelve months, to indemnify the debtor in
case it be shown that the sale was made without violating the mortgage or without complying
with the requirements of this Act. Such petition shall be made under oath and filed in form of an
ex parte motion in the registration or cadastral proceedings if the property is registered, or in
special proceedings in the case of property registered under the Mortgage Law or under section
one hundred and ninety-four of the Administrative Code, or of any other real property
encumbered with a mortgage duly registered in the office of any register of deeds in accordance
with any existing law, and in each case the clerk of the court shall, upon the filing of such
petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act
Numbered Four hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred
and sixty-six and the court shall, upon approval of the bond, order that a writ of possession issue,
addressed to the sheriff of the province in which the property is situated, who shall execute said
order immediately.
[54]

Entitled AN ACT TO REGULATE THE SALE OF PROPERTY UNDER SPECIAL

POWERS INSERTED IN OR ANNEXED TO REAL-ESTATE MORTGAGES (March 6,
1924).
[55]

Entitled AN ACT TO AMEND ACT NUMBERED THIRTY-ONE HUNDRED AND

THIRTY-FIVE, ENTITLED AN ACT TO REGULATE THE SALE OF PROPERTY UNDER
SPECIAL POWERS INSERTED IN OR ANNEXED TO REAL-ESTATE MORTGAGES
(December 7, 1933).
[56]

Factor v. Martel, Jr., 567 Phil. 521, 526-527 (2008).

[57]

Section 10, Rule 39 of the Rules of Court reads:

SEC. 10. Execution of judgments for specific act.
(a) Conveyance, delivery of deeds, or other specific acts; vesting title. If a judgment directs a
party to execute a conveyance of land or personal property, or to deliver deeds or other
documents, or to perform any other specific act in connection therewith, and the party fails to
comply within the time specified, the court may direct the act to be done at the cost of the
disobedient party by some other person appointed by the court and the act when so done shall
have like effect as if done by the party. If real or personal property is situated within the

Philippines, the court in lieu of directing a conveyance thereof may by an order divest the title of
any party and vest it in others, which shall have the force and effect of a conveyance executed in
due form of law.
xxxx
(c) Delivery or restitution of real property. The officer shall demand of the person against
whom the judgment for the delivery or restitution of real property is rendered and all persons
claiming rights under him to peaceably vacate the property within three (3) working days, and
restore possession thereof to the judgment obligee; otherwise, the officer shall oust all such
persons therefrom with the assistance, if necessary, of appropriate peace officers, and employing
such means as may be reasonably necessary to retake possession, and place the judgment obligee
in possession of such property. Any costs, damages, rents or profits awarded by the judgment
shall be satisfied in the same manner as a judgment for money.
xxxx
[58]
See Lao v. King, 532 Phil. 305, 312 (2006), citing Devt. Bank of the Phils. v. Union Bank of
the Phils., 464 Phil. 161, 168 (2004).
[59]

Greater Metropolitan Manila Solid Waste Management Committee v. Jancom Environmental

Corporation, 526 Phil. 761, 779 (2006), citing Equatorial Realty Devt., Inc. v. Mayfair Theater,
Inc., 387 Phil. 885, 895 (2000).

FIRST DIVISION
[ G.R. No. 184458, January 14, 2015 ]
RODRIGO RIVERA, PETITIONER, VS. SPOUSES SALVADOR CHUA AND
S. VIOLETA CHUA, RESPONDENTS.
[G.R. NO. 184472]
SPS. SALVADOR CHUA AND VIOLETA S. CHUA, PETITIONERS, VS.
RODRIGO RIVERA, RESPONDENT.
DECISION
PEREZ, J.:

Before us are consolidated Petitions for Review on Certiorari under Rule 45 of the
Rules of Court assailing the Decision[1] of the Court of Appeals in CA-G.R. SP No.

90609 which affirmed with modification the separate rulings of the Manila City trial
courts, the Regional Trial Court, Branch 17 in Civil Case No. 02-105256 [2] and the
Metropolitan Trial Court (MeTC), Branch 30, in Civil Case No. 163661, [3] a case for
collection of a sum of money due a promissory note. While all three (3) lower courts
upheld the validity and authenticity of the promissory note as duly signed by the
obligor, Rodrigo Rivera (Rivera), petitioner in G.R. No. 184458, the appellate court
modified the trial courts consistent awards: (1) the stipulated interest rate of sixty
percent (60%) reduced to twelve percent (12%) per annum computed from the date
of judicial or extrajudicial demand, and (2) reinstatement of the award of attorneys
fees also in a reduced amount of P50,000.00.
In G.R. No. 184458, Rivera persists in his contention that there was no valid
promissory note and questions the entire ruling of the lower courts. On the other
hand, petitioners in G.R. No. 184472, Spouses Salvador and Violeta Chua (Spouses
Chua), take exception to the appellate courts reduction of the stipulated interest
rate of sixty percent (60%) to twelve percent (12%) per annum.
We proceed to the facts.
The parties were friends of long standing having known each other since 1973:
Rivera and Salvador are kumpadres, the former is the godfather of the Spouses
Chuas son.
On 24 February 1995, Rivera obtained a loan from the Spouses Chua:
PROMISSORY NOTE
120,000.00
FOR VALUE RECEIVED, I, RODRIGO RIVERA promise to pay spouses SALVADOR C.
CHUA and VIOLETA SY CHUA, the sum of One Hundred Twenty Thousand Philippine
Currency (P120,000.00) on December 31, 1995.
It is agreed and understood that failure on my part to pay the amount of
(P120,000.00) One Hundred Twenty Thousand Pesos on December 31, 1995. (sic) I
agree to pay the sum equivalent to FIVE PERCENT (5%) interest monthly from the
date of default until the entire obligation is fully paid for.
Should this note be referred to a lawyer for collection, I agree to pay the further sum
equivalent to twenty percent (20%) of the total amount due and payable as and for
attorneys fees which in no case shall be less than P5,000.00 and to pay in addition
the cost of suit and other incidental litigation expense.
Any action which may arise in connection with this note shall be brought in the

proper Court of the City of Manila.

Manila, February 24, 1995[.]
(SGD.) RODRIGO RIVERA[4]
In October 1998, almost three years from the date of payment stipulated in the
promissory note, Rivera, as partial payment for the loan, issued and delivered to the
Spouses Chua, as payee, a check numbered 012467, dated 30 December 1998,
drawn against Riveras current account with the Philippine Commercial International
Bank (PCIB) in the amount of P25,000.00.
On 21 December 1998, the Spouses Chua received another check presumably
issued by Rivera, likewise drawn against Riveras PCIB current account, numbered
013224, duly signed and dated, but blank as to payee and amount. Ostensibly, as
per understanding by the parties, PCIB Check No. 013224 was issued in the amount
of P133,454.00 with cash as payee. Purportedly, both checks were simply partial
payment for Riveras loan in the principal amount of P120,000.00.
Upon presentment for payment, the two checks were dishonored for the reason
account closed.
As of 31 May 1999, the amount due the Spouses Chua was pegged at P366,000.00
covering the principal of P120,000.00 plus five percent (5%) interest per month
from 1 January 1996 to 31 May 1999.
The Spouses Chua alleged that they have repeatedly demanded payment from
Rivera to no avail. Because of Riveras unjustified refusal to pay, the Spouses Chua
were constrained to file a suit on 11 June 1999. The case was raffled before the
MeTC, Branch 30, Manila and docketed as Civil Case No. 163661.
In his Answer with Compulsory Counterclaim, Rivera countered that: (1) he never
executed the subject Promissory Note; (2) in all instances when he obtained a loan
from the Spouses Chua, the loans were always covered by a security; (3) at the time
of the filing of the complaint, he still had an existing indebtedness to the Spouses
Chua, secured by a real estate mortgage, but not yet in default; (4) PCIB Check No.
132224 signed by him which he delivered to the Spouses Chua on 21 December
1998, should have been issued in the amount of only P1,300.00, representing the
amount he received from the Spouses Chuas saleslady; (5) contrary to the
supposed agreement, the Spouses Chua presented the check for payment in the
amount of P133,454.00; and (6) there was no demand for payment of the amount of
P120,000.00 prior to the encashment of PCIB Check No. 0132224. [5]
In the main, Rivera claimed forgery of the subject Promissory Note and denied his

indebtedness thereunder.
The MeTC summarized the testimonies of both parties respective witnesses:
[The spouses Chuas] evidence include[s] documentary evidence and oral evidence
(consisting of the testimonies of [the spouses] Chua and NBI Senior Documents
Examiner Antonio Magbojos). x x x
xxxx
Witness Magbojos enumerated his credentials as follows: joined the NBI (1987); NBI
document examiner (1989); NBI Senior Document Examiner (1994 to the date he
testified); registered criminologist; graduate of 18th Basic Training Course [i]n
Questioned Document Examination conducted by the NBI; twice attended a seminar
on US Dollar Counterfeit Detection conducted by the US Embassy in Manila;
attended a seminar on Effective Methodology in Teaching and Instructional design
conducted by the NBI Academy; seminar lecturer on Questioned Documents,
Signature Verification and/or Detection; had examined more than a hundred
thousand questioned documents at the time he testified.
Upon [order of the MeTC], Mr. Magbojos examined the purported signature of
[Rivera] appearing in the Promissory Note and compared the signature thereon with
the specimen signatures of [Rivera] appearing on several documents. After a
thorough study, examination, and comparison of the signature on the questioned
document (Promissory Note) and the specimen signatures on the documents
submitted to him, he concluded that the questioned signature appearing in the
Promissory Note and the specimen signatures of [Rivera] appearing on the other
documents submitted were written by one and the same person. In connection with
his findings, Magbojos prepared Questioned Documents Report No. 712-1000 dated
8 January 2001, with the following conclusion: The questioned and the standard
specimen signatures RODGRIGO RIVERA were written by one and the same person.
[Rivera] testified as follows: he and [respondent] Salvador are kumpadres; in May
1998, he obtained a loan from [respondent] Salvador and executed a real estate
mortgage over a parcel of land in favor of [respondent Salvador] as collateral; aside
from this loan, in October, 1998 he borrowed P25,000.00 from Salvador and issued
PCIB Check No. 126407 dated 30 December 1998; he expressly denied execution of
the Promissory Note dated 24 February 1995 and alleged that the signature
appearing thereon was not his signature; [respondent Salvadors] claim that PCIB
Check No. 0132224 was partial payment for the Promissory Note was not true, the
truth being that he delivered the check to [respondent Salvador] with the space for
amount left blank as he and [respondent] Salvador had agreed that the latter was to
fill it in with the amount of ?1,300.00 which amount he owed [the spouses Chua];
however, on 29 December 1998 [respondent] Salvador called him and told him that

he had written P133,454.00 instead of P1,300.00; x x x. To rebut the testimony of

NBI Senior Document Examiner Magbojos, [Rivera] reiterated his averment that the
signature appearing on the Promissory Note was not his signature and that he did
not execute the Promissory Note.[6]
After trial, the MeTC ruled in favor of the Spouses Chua:
WHEREFORE, [Rivera] is required to pay [the spouses Chua]: P120,000.00 plus
stipulated interest at the rate of 5% per month from 1 January 1996, and legal
interest at the rate of 12% percent per annum from 11 June 1999, as actual and
compensatory damages; 20% of the whole amount due as attorneys fees. [7]
On appeal, the Regional Trial Court, Branch 17, Manila affirmed the Decision of the
MeTC, but deleted the award of attorneys fees to the Spouses Chua:
WHEREFORE, except as to the amount of attorneys fees which is hereby deleted,
the rest of the Decision dated October 21, 2002 is hereby AFFIRMED.[8]
Both trial courts found the Promissory Note as authentic and validly bore the
signature of Rivera.
Undaunted, Rivera appealed to the Court of Appeals which affirmed Riveras liability
under the Promissory Note, reduced the imposition of interest on the loan from 60%
to 12% per annum, and reinstated the award of attorneys fees in favor of the
Spouses Chua:
WHEREFORE, the judgment appealed from is hereby AFFIRMED, subject to the
MODIFICATION that the interest rate of 60% per annum is hereby reduced to 12%
per annum and the award of attorneys fees is reinstated at the reduced amount of
P50,000.00 Costs against [Rivera].[9]
Hence, these consolidated petitions for review on certiorari of Rivera in G.R. No.
184458 and the Spouses Chua in G.R. No. 184472, respectively raising the following
issues:
A. In G.R. No. 184458
1. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING
THE RULING OF THE RTC AND M[e]TC THAT THERE WAS A VALID PROMISSORY NOTE
EXECUTED BY [RIVERA].
2. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING
THAT DEMAND IS NO LONGER NECESSARY AND IN APPLYING THE PROVISIONS OF
THE NEGOTIABLE INSTRUMENTS LAW.

3. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN AWARDING

ATTORNEYS FEES DESPITE THE FACT THAT THE SAME HAS NO BASIS IN FACT AND IN
LAW AND DESPITE THE FACT THAT [THE SPOUSES CHUA] DID NOT APPEAL FROM
THE DECISION OF THE RTC DELETING THE AWARD OF ATTORNEYS FEES. [10]
B. In G.R. No. 184472
[WHETHER OR NOT] THE HONORABLE COURT OF APPEALS COMMITTED GROSS
LEGAL ERROR WHEN IT MODIFIED THE APPEALED JUDGMENT BY REDUCING THE
INTEREST RATE FROM 60% PER ANNUM TO 12% PER ANNUM IN SPITE OF THE FACT
THAT RIVERA NEVER RAISED IN HIS ANSWER THE DEFENSE THAT THE SAID
STIPULATED RATE OF INTEREST IS EXORBITANT, UNCONSCIONABLE,
UNREASONABLE, INEQUITABLE, ILLEGAL, IMMORAL OR VOID.[11]
As early as 15 December 2008, we already disposed of G.R. No. 184472 and denied
the petition, via a Minute Resolution, for failure to sufficiently show any reversible
error in the ruling of the appellate court specifically concerning the correct rate of
interest on Riveras indebtedness under the Promissory Note. [12]
On 26 February 2009, Entry of Judgment was made in G.R. No. 184472.
Thus, what remains for our disposition is G.R. No. 184458, the appeal of Rivera
questioning the entire ruling of the Court of Appeals in CA-G.R. SP No. 90609.
Rivera continues to deny that he executed the Promissory Note; he claims that
given his friendship with the Spouses Chua who were money lenders, he has been
able to maintain a loan account with them. However, each of these loan
transactions was respectively secured by checks or sufficient collateral.
Rivera points out that the Spouses Chua never demanded payment for the loan nor
interest thereof (sic) from [Rivera] for almost four (4) years from the time of the
alleged default in payment [i.e., after December 31, 1995].[13]
On the issue of the supposed forgery of the promissory note, we are not inclined to
depart from the lower courts uniform rulings that Rivera indeed signed it.
Rivera offers no evidence for his asseveration that his signature on the promissory
note was forged, only that the signature is not his and varies from his usual
signature. He likewise makes a confusing defense of having previously obtained
loans from the Spouses Chua who were money lenders and who had allowed him a
period of almost four (4) years before demanding payment of the loan under the
Promissory Note.

First, we cannot give credence to such a naked claim of forgery over the testimony
of the National Bureau of Investigation (NBI) handwriting expert on the integrity of
the promissory note.
On that score, the appellate court aptly disabled Riveras contention:
[Rivera] failed to adduce clear and convincing evidence that the signature on the
promissory note is a forgery. The fact of forgery cannot be presumed but must be
proved by clear, positive and convincing evidence. Mere variance of signatures
cannot be considered as conclusive proof that the same was forged. Save for the
denial of Rivera that the signature on the note was not his, there is nothing in the
records to support his claim of forgery. And while it is true that resort to experts is
not mandatory or indispensable to the examination of alleged forged documents,
the opinions of handwriting experts are nevertheless helpful in the courts
determination of a documents authenticity.
To be sure, a bare denial will not suffice to overcome the positive value of the
promissory note and the testimony of the NBI witness. In fact, even a perfunctory
comparison of the signatures offered in evidence would lead to the conclusion that
the signatures were made by one and the same person.
It is a basic rule in civil cases that the party having the burden of proof must
establish his case by preponderance of evidence, which simply means evidence
which is of greater weight, or more convincing than that which is offered in
opposition to it.
Evaluating the evidence on record, we are convinced that [the Spouses Chua] have
established a prima facie case in their favor, hence, the burden of evidence has
shifted to [Rivera] to prove his allegation of forgery. Unfortunately for [Rivera], he
failed to substantiate his defense.[14]
Well-entrenched in jurisprudence is the rule that factual findings of the trial court,
especially when affirmed by the appellate court, are accorded the highest degree of
respect and are considered conclusive between the parties. [15] A review of such
findings by this Court is not warranted except upon a showing of highly meritorious
circumstances, such as: (1) when the findings of a trial court are grounded entirely
on speculation, surmises or conjectures; (2) when a lower court's inference from its
factual findings is manifestly mistaken, absurd or impossible; (3) when there is
grave abuse of discretion in the appreciation of facts; (4) when the findings of the
appellate court go beyond the issues of the case, or fail to notice certain relevant
facts which, if properly considered, will justify a different conclusion; (5) when there
is a misappreciation of facts; (6) when the findings of fact are conclusions without
mention of the specific evidence on which they are based, are premised on the
absence of evidence, or are contradicted by evidence on record. [16] None of these

exceptions obtains in this instance. There is no reason to depart from the separate
factual findings of the three (3) lower courts on the validity of Riveras signature
reflected in the Promissory Note.
Indeed, Rivera had the burden of proving the material allegations which he sets up
in his Answer to the plaintiffs claim or cause of action, upon which issue is joined,
whether they relate to the whole case or only to certain issues in the case. [17]
In this case, Riveras bare assertion is unsubstantiated and directly disputed by the
testimony of a handwriting expert from the NBI. While it is true that resort to
experts is not mandatory or indispensable to the examination or the comparison of
handwriting, the trial courts in this case, on its own, using the handwriting expert
testimony only as an aid, found the disputed document valid. [18]
Hence, the MeTC ruled that:
[Rivera] executed the Promissory Note after consideration of the following:
categorical statement of [respondent] Salvador that [Rivera] signed the Promissory
Note before him, in his ([Riveras]) house; the conclusion of NBI Senior Documents
Examiner that the questioned signature (appearing on the Promissory Note) and
standard specimen signatures Rodrigo Rivera were written by one and the same
person; actual view at the hearing of the enlarged photographs of the questioned
signature and the standard specimen signatures. [19]
Specifically, Rivera insists that: [i]f that promissory note indeed exists, it is beyond
logic for a money lender to extend another loan on May 4, 1998 secured by a real
estate mortgage, when he was already in default and has not been paying any
interest for a loan incurred in February 1995. [20]
We disagree.
It is likewise likely that precisely because of the long standing friendship of the
parties as kumpadres, Rivera was allowed another loan, albeit this time secured
by a real estate mortgage, which will cover Riveras loan should Rivera fail to pay.
There is nothing inconsistent with the Spouses Chuas two (2) and successive loan
accommodations to Rivera: one, secured by a real estate mortgage and the other,
secured by only a Promissory Note.
Also completely plausible is that given the relationship between the parties, Rivera
was allowed a substantial amount of time before the Spouses Chua demanded
payment of the obligation due under the Promissory Note.
In all, Riveras evidence or lack thereof consisted only of a barefaced claim of
forgery and a discordant defense to assail the authenticity and validity of the

Promissory Note. Although the burden of proof rested on the Spouses Chua having
instituted the civil case and after they established a prima facie case against Rivera,
the burden of evidence shifted to the latter to establish his defense. [21]
Consequently, Rivera failed to discharge the burden of evidence, refute the
existence of the Promissory Note duly signed by him and subsequently, that he did
not fail to pay his obligation thereunder. On the whole, there was no question left on
where the respective evidence of the parties preponderatedin favor of plaintiffs,
the Spouses Chua.
Rivera next argues that even assuming the validity of the Promissory Note, demand
was still necessary in order to charge him liable thereunder. Rivera argues that it
was grave error on the part of the appellate court to apply Section 70 of the
Negotiable Instruments Law (NIL).[22]
We agree that the subject promissory note is not a negotiable instrument and the
provisions of the NIL do not apply to this case. Section 1 of the NIL requires the
concurrence of the following elements to be a negotiable instrument:
(a) It must be in writing and signed by the maker or drawer;
(b) Must contain an unconditional promise or order to pay a sum certain in money;
(c) Must be payable on demand, or at a fixed or determinable future time;
(d) Must be payable to order or to bearer; and
(e) Where the instrument is addressed to a drawee, he must be named or otherwise
indicated therein with reasonable certainty.
On the other hand, Section 184 of the NIL defines what negotiable promissory note
is:
SECTION 184. Promissory Note, Defined. A negotiable promissory note within the
meaning of this Act is an unconditional promise in writing made by one person to
another, signed by the maker, engaging to pay on demand, or at a fixed or
determinable future time, a sum certain in money to order or to bearer. Where a
note is drawn to the makers own order, it is not complete until indorsed by him.
The Promissory Note in this case is made out to specific persons, herein
respondents, the Spouses Chua, and not to order or to bearer, or to the order of the
Spouses Chua as payees.
However, even if Riveras Promissory Note is not a negotiable instrument and
therefore outside the coverage of Section 70 of the NIL which provides that
presentment for payment is not necessary to charge the person liable on the
instrument, Rivera is still liable under the terms of the Promissory Note that he
issued.

The Promissory Note is unequivocal about the date when the obligation falls due
and becomes demandable31 December 1995. As of 1 January 1996, Rivera had
already incurred in delay when he failed to pay the amount of P120,000.00 due to
the Spouses Chua on 31 December 1995 under the Promissory Note.
Article 1169 of the Civil Code explicitly provides:
Art. 1169. Those obliged to deliver or to do something incur in delay from the time
the obligee judicially or extrajudicially demands from them the fulfillment of their
obligation.
However, the demand by the creditor shall not be necessary in order that
delay may exist:
(1) When the obligation or the law expressly so declare; or
(2) When from the nature and the circumstances of the obligation it appears that
the designation of the time when the thing is to be delivered or the service is to be
rendered was a controlling motive for the establishment of the contract; or
(3) When demand would be useless, as when the obligor has rendered it beyond his
power to perform.
In reciprocal obligations, neither party incurs in delay if the other does not comply
or is not ready to comply in a proper manner with what is incumbent upon him.
From the moment one of the parties fulfills his obligation, delay by the other begins.
(Emphasis supplied)
There are four instances when demand is not necessary to constitute the debtor in
default: (1) when there is an express stipulation to that effect; (2) where the law so
provides; (3) when the period is the controlling motive or the principal inducement
for the creation of the obligation; and (4) where demand would be useless. In the
first two paragraphs, it is not sufficient that the law or obligation fixes a date for
performance; it must further state expressly that after the period lapses, default will
commence.
We refer to the clause in the Promissory Note containing the stipulation of interest:
It is agreed and understood that failure on my part to pay the amount of
(P120,000.00) One Hundred Twenty Thousand Pesos on December 31, 1995. (sic) I
agree to pay the sum equivalent to FIVE PERCENT (5%) interest monthly from the
date of default until the entire obligation is fully paid for. [23]
which expressly requires the debtor (Rivera) to pay a 5% monthly interest from the
date of default until the entire obligation is fully paid for. The parties evidently
agreed that the maturity of the obligation at a date certain, 31 December 1995, will
give rise to the obligation to pay interest. The Promissory Note expressly provided

that after 31 December 1995, default commences and the stipulation on payment
of interest starts.
The date of default under the Promissory Note is 1 January 1996, the day following
31 December 1995, the due date of the obligation. On that date, Rivera became
liable for the stipulated interest which the Promissory Note says is equivalent to 5%
a month. In sum, until 31 December 1995, demand was not necessary before Rivera
could be held liable for the principal amount of P120,000.00. Thereafter, on 1
January 1996, upon default, Rivera became liable to pay the Spouses Chua
damages, in the form of stipulated interest.
The liability for damages of those who default, including those who are guilty of
delay, in the performance of their obligations is laid down on Article 1170 [24] of the
Civil Code.
Corollary thereto, Article 2209 solidifies the consequence of payment of interest as
an indemnity for damages when the obligor incurs in delay:
Art. 2209. If the obligation consists in the payment of a sum of money, and
the debtor incurs in delay, the indemnity for damages, there being no
stipulation to the contrary, shall be the payment of the interest agreed upon, and in
the absence of stipulation, the legal interest, which is six percent per annum.
(Emphasis supplied)
Article 2209 is specifically applicable in this instance where: (1) the obligation is for
a sum of money; (2) the debtor, Rivera, incurred in delay when he failed to pay on
or before 31 December 1995; and (3) the Promissory Note provides for an indemnity
for damages upon default of Rivera which is the payment of a 5% monthly interest
from the date of default.
We do not consider the stipulation on payment of interest in this case as a penal
clause although Rivera, as obligor, assumed to pay additional 5% monthly interest
on the principal amount of P120,000.00 upon default.
Article 1226 of the Civil Code provides:
Art. 1226. In obligations with a penal clause, the penalty shall substitute the
indemnity for damages and the payment of interests in case of
noncompliance, if there is no stipulation to the contrary. Nevertheless,
damages shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in
the fulfillment of the obligation.
The penalty may be enforced only when it is demandable in accordance with the
provisions of this Code.

The penal clause is generally undertaken to insure performance and works as

either, or both, punishment and reparation. It is an exception to the general rules on
recovery of losses and damages. As an exception to the general rule, a penal clause
must be specifically set forth in the obligation. [25]
In high relief, the stipulation in the Promissory Note is designated as payment of
interest, not as a penal clause, and is simply an indemnity for damages incurred by
the Spouses Chua because Rivera defaulted in the payment of the amount of
P120,000.00. The measure of damages for the Riveras delay is limited to the
interest stipulated in the Promissory Note. In apt instances, in default of stipulation,
the interest is that provided by law. [26]
In this instance, the parties stipulated that in case of default, Rivera will pay interest
at the rate of 5% a month or 60% per annum. On this score, the appellate court
ruled:
It bears emphasizing that the undertaking based on the note clearly states the date
of payment to be 31 December 1995. Given this circumstance, demand by the
creditor is no longer necessary in order that delay may exist since the contract itself
already expressly so declares. The mere failure of [Spouses Chua] to immediately
demand or collect payment of the value of the note does not exonerate [Rivera]
from his liability therefrom. Verily, the trial court committed no reversible error
when it imposed interest from 1 January 1996 on the ratiocination that [Spouses
Chua] were relieved from making demand under Article 1169 of the Civil Code.
xxxx
As observed by [Rivera], the stipulated interest of 5% per month or 60% per annum
in addition to legal interests and attorneys fees is, indeed, highly iniquitous and
unreasonable. Stipulated interest rates are illegal if they are unconscionable and the
Court is allowed to temper interest rates when necessary. Since the interest rate
agreed upon is void, the parties are considered to have no stipulation regarding the
interest rate, thus, the rate of interest should be 12% per annum computed from
the date of judicial or extrajudicial demand. [27]
The appellate court found the 5% a month or 60% per annum interest rate, on top
of the legal interest and attorneys fees, steep, tantamount to it being illegal,
iniquitous and unconscionable.
Significantly, the issue on payment of interest has been squarely disposed of in G.R.
No. 184472 denying the petition of the Spouses Chua for failure to sufficiently show
any reversible error in the ruling of the appellate court, specifically the reduction of
the interest rate imposed on Riveras indebtedness under the Promissory Note.

Ultimately, the denial of the petition in G.R. No. 184472 is res judicata in its concept
of bar by prior judgment on whether the Court of Appeals correctly reduced the
interest rate stipulated in the Promissory Note.
Res judicata applies in the concept of bar by prior judgment if the following
requisites concur: (1) the former judgment or order must be final; (2) the judgment
or order must be on the merits; (3) the decision must have been rendered by a
court having jurisdiction over the subject matter and the parties; and (4) there must
be, between the first and the second action, identity of parties, of subject matter
and of causes of action.[28]
In this case, the petitions in G.R. Nos. 184458 and 184472 involve an identity of
parties and subject matter raising specifically errors in the Decision of the Court of
Appeals. Where the Court of Appeals disposition on the propriety of the reduction of
the interest rate was raised by the Spouses Chua in G.R. No. 184472, our ruling
thereon affirming the Court of Appeals is a bar by prior judgment.
At the time interest accrued from 1 January 1996, the date of default under the
Promissory Note, the then prevailing rate of legal interest was 12% per annum
under Central Bank (CB) Circular No. 416 in cases involving the loan or forbearance
of money.[29] Thus, the legal interest accruing from the Promissory Note is 12% per
annum from the date of default on 1 January 1996.
However, the 12% per annum rate of legal interest is only applicable until 30 June
2013, before the advent and effectivity of Bangko Sentral ng Pilipinas (BSP) Circular
No. 799, Series of 2013 reducing the rate of legal interest to 6% per annum.
Pursuant to our ruling in Nacar v. Gallery Frames,[30] BSP Circular No. 799 is
prospectively applied from 1 July 2013. In short, the applicable rate of legal interest
from 1 January 1996, the date when Rivera defaulted, to date when this Decision
becomes final and executor is divided into two periods reflecting two rates of legal
interest: (1) 12% per annum from 1 January 1996 to 30 June 2013; and (2) 6% per
annum FROM 1 July 2013 to date when this Decision becomes final and executory.
As for the legal interest accruing from 11 June 1999, when judicial demand was
made, to the date when this Decision becomes final and executory, such is likewise
divided into two periods: (1) 12% per annum from 11 June 1999, the date of judicial
demand to 30 June 2013; and (2) 6% per annum from 1 July 2013 to date when this
Decision becomes final and executor. [31] We base this imposition of interest on
interest due earning legal interest on Article 2212 of the Civil Code which
provides that interest due shall earn legal interest from the time it is judicially
demanded, although the obligation may be silent on this point.
From the time of judicial demand, 11 June 1999, the actual amount owed by Rivera
to the Spouses Chua could already be determined with reasonable certainty given

the wording of the Promissory Note.[32]

We cite our recent ruling in Nacar v. Gallery Frames:[33]
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts,
delicts or quasi-delicts is breached, the contravenor can be held liable for damages.
The provisions under Title XVIII on Damages of the Civil Code govern in
determining the measure of recoverable damages.
II. With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is
imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a
sum of money, i.e., a loan or forbearance of money, the interest due
should be that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal interest from the
time it is judicially demanded. In the absence of stipulation, the rate
of interest shall be 6% per annum to be computed from default, i.e.,
from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is
breached, an interest on the amount of damages awarded may be imposed at
the discretion of the court at the rate of 6% per annum. No interest, however,
shall be adjudged on unliquidated claims or damages, except when or until
the demand can be established with reasonable certainty. Accordingly, where
the demand is established with reasonable certainty, the interest shall begin
to run from the time the claim is made judicially or extrajudicially (Art. 1169,
Civil Code), but when such certainty cannot be so reasonably established at
the time the demand is made, the interest shall begin to run only from the
date the judgment of the court is made (at which time the quantification of
damages may be deemed to have been reasonably ascertained). The actual
base for the computation of legal interest shall, in any case, be on the
amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph 1
or paragraph 2, above, shall be 6% per annum from such finality until its
satisfaction, this interim period being deemed to be by then an equivalent to
a forbearance of credit.
And, in addition to the above, judgments that have become final and
executory prior to July 1, 2013, shall not be disturbed and shall continue to be
implemented applying the rate of interest fixed therein. (Emphasis supplied)

On the reinstatement of the award of attorneys fees based on the stipulation in the

Promissory Note, we agree with the reduction thereof but not the ratiocination of
the appellate court that the attorneys fees are in the nature of liquidated damages
or penalty. The interest imposed in the Promissory Note already answers as
liquidated damages for Riveras default in paying his obligation. We award
attorneys fees, albeit in a reduced amount, in recognition that the Spouses Chua
were compelled to litigate and incurred expenses to protect their interests. [34] Thus,
the award of P50,000.00 as attorneys fees is proper.
For clarity and to obviate confusion, we chart the breakdown of the total amount
owed by Rivera to the Spouses Chua:
Face value of
the
Promissory
Note

Stipulated Interest A
&B

Interest due earning

legal interest A & B

Attorneys
fees

February 24, A. January 1, 1996 to

1995 to
June 30, 2013
December
31, 1995
B. July 1 2013 to date
when this Decision
becomes final and
executory

A. June 11, 1999

Wholesale
(date of judicial
amount
demand) to June 30,
2013
B. July 1, 2013 to
date when this
Decision becomes
final and executory

P120,000.00 A. 12 % per annum on

the principal amount
of P120,000.00
B. 6% per annum on
the principal amount
of P120,000.00

A. 12% per annum on P50,000.00

the total amount of
column 2
B. 6% per annum on
the total amount of
column 2[35]

Total
Amount

Total
amount of
Columns 14

The total amount owing to the Spouses Chua set forth in this Decision shall further
earn legal interest at the rate of 6% per annum computed from its finality until full
payment thereof, the interim period being deemed to be a forbearance of credit.
WHEREFORE, the petition in G.R. No. 184458 is DENIED. The Decision of the Court
of Appeals in CA-G.R. SP No. 90609 is MODIFIED. Petitioner Rodrigo Rivera is
ordered to pay respondents Spouse Salvador and Violeta Chua the following:
(1) the principal amount of P120,000.00;
(2) legal interest of 12% per annum of the principal amount of P120,000.00

reckoned from 1 January 1996 until 30 June 2013;

(3) legal interest of 6% per annum of the principal amount of P120,000.00 form 1
July 2013 to date when this Decision becomes final and executory;
(4) 12% per annum applied to the total of paragraphs 2 and 3 from 11 June 1999,
date of judicial demand, to 30 June 2013, as interest due earning legal interest;
(5) 6% per annum applied to the total amount of paragraphs 2 and 3 from 1 July
2013 to date when this Decision becomes final and executor, as interest due
earning legal interest;
(6) Attorneys fees in the amount of P50,000.00; and
(7) 6% per annum interest on the total of the monetary awards from the finality of
this Decision until full payment thereof.
Costs against petitioner Rodrigo Rivera.
SO ORDERED.
Sereno, C.J., (Chairperson), Leonardo-De Castro, Bersamin, and Perlas-Bernabe, JJ.,
concur.

[1]

Rollo in G.R. No. 184458, pp. 52-62; Penned by Associate Justice Ricardo R.
Rosario with Associate Justices Mariano C. Del Castillo (now a member of this Court)
and Arcangelita Romilla-Lontok concurring.
[2]

Id. at 152-156; Penned by Presiding Judge Eduardo B. Peralta, Jr.

[3]

Rollo in G.R. No. 184472, pp. 52-56; Penned by Presiding Judge Nina G. AntonioValenzuela.
[4]

Rollo in G.R. No. 184458, p. 76.

[5]

Id. at 53-54.

[6]

Rollo in G.R. No. 184472, pp. 53-54.

[7]

Id. at 56.

[8]

Id. at 61.

[9]

Rollo in G.R. No. 184458, p. 62.

[10]

Id. at 29.

[11]

Rollo in G.R. No. 184472, p. 13

[12]

Id. at p. 103.

[13]

Rollo in G.R. No. 184458, p. 32.

[14]

Id. at 58-59.

[15]

Siain Enterprises v. Cupertino Realty Corp., G.R. No. 170782, 22 June 2009, 590
SCRA 435, 445.
[16]

Durban Apartments Corporation v. Pioneer Insurance and Surety Corporation,

G.R. No. 179419, 12 January 2011, 639 SCRA 441, 449.
[17]

Francisco, Evidence, (3rd Ed. 1996), p. 385.

[18]

Lorzano v. Tabayag, Jr., G.R. No. 189647, 6 February 2012, 665 SCRA 38, 47.

[19]

Rollo in G.R. No. 184458, p. 113.

[20]

Id. at 33.

[21]

De Leon v. Bank of the Philippine Islands, G.R. No. 184565, 20 November 2013.

[22]

Sec. 70. Effect of want of demand on principal debtor. - Presentment for payment
is not necessary in order to charge the person primarily liable on the instrument;
but if the instrument is, by its terms, payable at a special place, and he is able and
willing to pay it there at maturity, such ability and willingness are equivalent to a
tender of payment upon his part. But except as herein otherwise provided,
presentment for payment is necessary in order to charge the drawer and indorsers.
[23]

Rollo in G.R. No. 184472, p. 76.

[24]

Art. 1170. Those who in the performance of their obligations are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor thereof,
are liable for damages.
[25]

4 Tolentino, Civil Code of the Philippines, p. 260.

[26]

5 Tolentino, Civil Code of the Philippines, pp. 649-650.

[27]

Rollo in G.R. No. 184458, pp. 59-61.

[28]

Agustin v. Sps. Delos Santos, 596 Phil. 630, 642-643 (2009).

[29]

See Eastern Shipping Lines v. Court of Appeals, G.R. No. 97412, 12 July 1994, 234
SCRA 78.
[30]

G.R. No. 189871, 13 August 2013.

[31]

BSP Circular No. 799, Series of 2013 amending BSP Circular No. 905, Series of
1982.
Section 1. The rate of interest for the loan or forbearance of any money, goods or
credits and the rate allowed in judgments, in the absence of contracts as to such
rate or interest, shall be six percent (6%) per annum. visited 11 May 2014.
[32]

Article 2213 of the Civil Code: Interest cannot be recovered upon unliquidated
claims or damages except when the demand can be established with reasonable
certainty.
[33]

Supra note 30.

[34]

Article 2208 of the CIVIL CODE: In the absence of stipulation, attorneys fees, and
expenses of litigation, other than judicial costs, cannot be recovered, except:
xxxx
(2) when the defendants act or omission has compelled the plaintiff to litigate with
third persons or to incur expenses to protect his interest;
xxxx
[35]

Based on Article 2212 of the Civil Code: Interest due shall earn legal interest
from the time it is judicially demanded, although the obligation may be silent upon
this point.

FIRST DIVISION
[ G.R. No. 195272, January 14, 2015 ]
BANK OF THE PHILIPPINE ISLANDS (FORMERLY PRUDENTIAL BANK)
PETITIONER, VS. SPOUSES DAVID M. CASTRO AND CONSUELO B.
CASTRO, RESPONDENTS.
DECISION
PEREZ, J.:
For resolution is the petition for review on certiorari assailing the Decision[1] dated 26 November
2009 of the Court of Appeals, Special Sixth Division in CA-G.R. CV No. 88870 and the
Resolution[2] dated 14 January 2011 of the Court of Appeals, Second Division denying the
motion for reconsideration, which reversed and set aside the judgment[3] rendered by the
Regional Trial Court of Quezon City, Branch 97 (RTC) dismissing the complaint for Declaration
of Nullity of Sheriffs Certificate of Sale and Damages against Prudential Bank.
The Complaint has its origins from the two loans contracted by respondent Spouses David M.
Castro (David)[4] and Consuelo B. Castro (Consuelo) from Prudential Bank in the amounts of
P100,000.00 and P55,000.00 in July and August 1987. The first loans maturity date was on 18
January 1988 while the second loan had a maturity date of 23 February 1988. The P100,000.00
loan was secured by a Real Estate Mortgage (REM) over petitioners' property located in Quezon
City and covered by Transfer Certificate of Title (TCT) No. 364277 while the P55,000.00 loan
was secured by another REM over two parcels of land located in Alaminos, Laguna covered by
TCT Nos. T-2225 and T-2226, registered in the name of Davids mother, Guellerma Malabanan.
The loans remained unpaid as of 30 April 1996 and the balances ballooned to P290,205.05 on the
P100,000.00 loan and P96,870.20 on the P55,000.00 loan. Prudential Bank, through counsel,
filed two separate petitions for foreclosure of the mortgage. In their first petition, Prudential
Bank admitted that through inadvertence, the photocopies of the first two pages of the REM
covering the properties in Laguna were mixed and attached to the photocopies of the last two
pages of the REM covering the Quezon City property.[5] Thus, in the Notice of Sheriffs Sale, the
name Guellerma Malabanan rep. by her AIF David M. Castro appeared as mortgagor while the
amount of mortgaged indebtedness is P96,870.20. The real property described therein however
is the Quezon City property.
On 26 August 1996, the Quezon City property was sold at a public auction in favor of Prudential
Bank whose winning bid was P396,000.00.
In their Complaint, Spouses Castro alleged that the extrajudicial foreclosure and sale of the
Quezon City property is null and void for lack of notice and publication of the extrajudicial
foreclosure sale. Spouses Castro proffered that the property foreclosed is not one of the
properties covered by the REM executed by Guellerma Malabanan which was the basis of the

Notice of Sheriffs Sale which was posted and published. Spouses Castro prayed for the
declaration of the Sheriffs Certificate of Sale as null and void and for award of damages.[6]
In their Answer, Prudential Bank asserted that Spouses Castro were fully aware that the Quezon
City property was to be foreclosed considering that the obligation secured by it remained unpaid
as of the date of the foreclosure sale. Prudential Bank cited a clerical and harmless inadvertence
in the preparation of the petition for extrajudicial foreclosure but nonetheless, it claimed that
Spouses Castro, having been notified of the scheduled foreclosure of the mortgage of the Quezon
City property, should have noticed the inadvertence and alerted the sheriff. Their failure to do
so, Prudential Bank added, clearly amounted to laches.[7]
The issue before the RTC was whether Prudential Bank legally complied with the jurisdictional
requirement of due notice prior to the extrajudicial sale of the property in question. The trial
court ruled in favor of Prudential Bank and dismissed the complaint. It found that:
x x x there was no substantial defect on the published and posted notice of Sheriffs sale. The
public had been sufficiently informed of the identity of the property to be sold, identity of the
mortgagor-borrower whose unpaid loan is secured by the mortgage and the identity of the
mortgagee. The notice did not render plaintiffs themselves uninformed of the nature of the
property to be sold.[8]
The trial court further held that the objective of notice was attained since there was sufficient
publicity of the sale through newspaper publication and that there was no showing that the
property was sold for a price far below its value, an intimation of collusion between the sheriff
who conducted the sale and the bank.[9]
On appeal, the Court of Appeals reversed the ruling of the trial court. The appellate court
stressed the importance of notice in a foreclosure sale and ruled that failure to advertise a
mortgage foreclosure sale in compliance with statutory requirements constitutes a jurisdictional
defect invalidating the sale.[10]
Prudential Bank filed a motion for reconsideration. In a Resolution dated 14 January 2011, the
Court of Appeals, Second Division, expounded on the previous Decision. The appellate court
clarified that the erroneous designation of Guellerma Malabanan as mortgagor, instead of David,
did not affect the validity of the notice. With respect to the amount of the mortgaged
indebtedness however, the appellate court noted that the discrepancy vis-a-vis the actual amount
owed by Spouses Castro is so huge that it can hardly be considered immaterial. The appellate
court opined that declaring a small amount of indebtedness in the petition for extrajudicial
foreclosure and in the notice of sheriffs sale would effectively depreciate the value of the
property. The appellate court then concluded that statutory provisions governing publication of
notice of mortgage foreclosure sales must be strictly complied with and that even slight
deviations will invalidate the notice.[11]
Petitioner Bank of the Philippine Islands (BPI), being the successor-in-interest of Prudential
Bank, by virtue of the merger of the two banking institutions with BPI as the surviving entity,
filed the instant petition for review defending the ruling of the trial court and reiterating that the
published Notice of Sheriffs Sale would show that the subject of the sale, the Quezon City

property, was sufficiently and properly described and identified. Petitioner refuted the appellate
courts finding that by indicating a lower amount of indebtedness, the notice depreciated the
value of the property subject of sale. Petitioner cited Olizon v. Court of Appeals,[12] wherein the
court declared that immaterial errors and mistakes cannot affect the sufficiency of the notice.
Petitioner reiterated Prudential Banks right to foreclose the mortgage constituted over the
Quezon City property because the loan secured by the mortgage had not been paid when it fell
due and remained so when the mortgage was scheduled for foreclosure.[13]
In her Comment, Consuelo points out as glaringly erroneous the Notice of Sheriffs Sale which
named the mortgagor as Guellerma Malabanan and the mortgage indebtedness as P96,870.20.
Consuelo avers that the properties, the foreclosure of which Prudential Bank appears to seek in
its petition, were situated in Laguna, thus, the Sheriff of Quezon City had no jurisdiction to issue
a Notice for Sale of said property. Consuelo insists that even if the property was sold for more
than the mortgage indebtedness, such would not render the sale valid because public policy is
involved in the need for strict compliance with the requirements of notice in extrajudicial
foreclosures of mortgage. It was posited that a lesser amount of indebtedness as stated in the
notice would mislead a potential bidder in public auction and subject the value of the property to
risk of unwarranted diminution. Finally, Consuelo counters that petitioners reliance on Olizon is
misplaced because the alleged failure of notice in said case lay in the fact that the notice was
published in a newspaper in lieu of being posted. Consuelo argues that in this case the property
itself was misidentified in the petition for foreclosure.[14]
The submissions of the parties indicate the basic issue to be whether the errors in the Notice of
Sheriffs Sale invalidate the notice and render the sale and the certificate of such sale void.
We find merit in the petition.
At the outset, it bears emphasis that foreclosure proceedings have in their favor the presumption
of regularity and the party who seeks to challenge the proceedings has the burden of evidence to
rebut the same.[15] In this case, respondent failed to prove that Prudential Bank has not complied
with the notice requirement of the law.
Sections 2, 3, and 4 of Act No. 3135 laid down the procedure regarding foreclosure sale:
Sec. 2. Said sale cannot be made legally outside of the province in which the property sold is
situated; and in case the place within said province in which the sale is to be made is subject to
stipulation, such sale shall be made in said place or in the municipal building of the municipality
in which the property or part thereof is situated.
Sec. 3. Notice shall be given by posting notices of the sale for not less than twenty days in at
least three public places of the municipality or city where the property is situated, and if such
property is worth more than four hundred pesos, such notice shall also be published once a week
for at least three consecutive weeks in a newspaper of general circulation in the municipality or
city.
Sec. 4. The sale shall be made at public auction, between the hours of nine in the morning and
four in the afternoon; and shall be under the direction of the sheriff of the province, the justice or

auxiliary justice of the peace of the municipality in which such sale has to be made, or a notary
public of said municipality, who shall be entitled to collect a fee of five pesos each day of actual
work performed, in addition to his expenses.
In Philippine National Bank v. Maraya, Jr.,[16] we elucidated that one of the most important
requirements of Act No. 3135 is that the notice of the time and place of sale shall be given. If the
sheriff acts without notice, or at a time and place other than that designated in the notice, the
sheriff acts without warrant of law.[17] In this case, the property sold in the public auction is
located in Quezon City and the foreclosure sale proceeded as scheduled at 10:00 oclock in the
morning on 26 August 1996 at the Hall of Justice in Quezon City with Prudential Bank as the
winning bidder, registering the highest bid of P396,000.00.
In Century Savings Bank v. Samonte[18] citing Olizon v. Court of Appeals,[19] the Court reiterated
the purpose of the rule on notice, to wit:
The object of a notice of sale is to inform the public of the nature and condition of the property to
be sold, and of the time, place and terms of the sale. Notices are given for the purpose of
securing bidders and to prevent a sacrifice of the property. If these objects are attained,
immaterial errors and mistakes will not affect the sufficiency of the notice; but if mistakes or
omissions occur in the notices of sale, which are calculated to deter or mislead bidders, to
depreciate the value of the property, or to prevent it from bringing a fair price, such mistakes or
omissions will be fatal to the validity of the notice, and also to the sale made pursuant thereto.[20]
The mistakes and omissions referred to in the above-cited ruling which would invalidate notice
pertain to those which: 1) are calculated to deter or mislead bidders, 2) to depreciate the value of
the property, or 3) to prevent it from bringing a fair price.
In this case, the Notice of Sheriffs Sale[21] states:
NOTICE OF SHERIFFS SALE
Upon extra-judicial petition for sale under Act 3135, as amended by Act 4118, filed Prudential
Bank, mortgage[e]/s, against Guellerma Malabanan rep. by her AIF David M. Castro
mortgagor/s, with residence and postal address at Sta. Rosa, Alaminos, Laguna to satisfy the
mortgaged indebtedness, which as of July 1996 amounts to NINETY SIX THOUSAND EIGHT
HUNDRED SEVENTY PESOS & 20/100 (P96,870.20) excluding penalties[,] charges,
attorneys fees and all the legal fees and expenses for the foreclosure and sale, the Ex-Officio
Sheriff of Quezon City or her duly authorized Deputy, will sell at PUBLIC AUCTION to the
highest bidder FOR CASH and in Philippine Currency, on the 26th day of AUGUST, 1996, at
10:00 oclock in the morning, or soon thereafter, infront of the main entrance of the Hall of
Justice (beside the Quezon City Hall) Elliptical Road, Diliman, Quezon City, the following
described real estate property, together with all the improvements existing thereon to wit:
TRANSFER CERTIFICATE OF TITLE
NO. 364277
Registry of Deeds Quezon City

A parcel of land (Lot 5-B of the subd. Plan (LRC) Psd-339863, approved as a nonsubdn. project,
being a portion of Lot 5, Blk. 1, (LRC) Psd-45612, LRC Rec. No. 5975), situated in the Dist. of
Tandang Sora, Quezon City. Bounded on the NE., points 4 to 1 by Road Lot 1 (LRC) Psd45612; on the SE., points 1 to 2 by Lot 5-C; on the SW., points 2-3 by Lot 5-A, both of the
subdn. plan; and on the NW., points 3-4 by Lot 371- New Psd- 36060. x x x x containing an area
of ONE HUDNRED (100) SQUARE METERS, more or less.
Prospective bidders or buyers are hereby enjoined to investigate for themselves the title of the
said real estate property and the encumbrances thereon, if any there be.
With jurisprudence as the measure, the errors pointed out by respondents appear to be harmless.
The evils that can result from an erroneous notice did not arise. There was no intention to
mislead, as the errors in fact did not mislead the bidders as shown by the fact that the winning
registered bid of P396,000.00 is over and above the real amount of indebtedness of P209,205.05.
As correctly observed by the trial court, the amount mentioned in the notice did not indicate a
collusion between the sheriff who conducted the sale and the respondent bank. Notably, the
mentioned amount of P96,870.20 refers to the mortgage indebtedness not the value of the
property. Equally notable is the announcement in the notice that the amount excludes penalties,
charges, attorneys fees and all legal fees and expenses for the foreclosure and sale.
As regards the designation of Guellerma Malabanan as the mortgagor, we agree with the
reference made by the Court of Appeals to the case of Langkaan Realty Devt Inc. v. UCPB
which ruled that the erroneous designation of an entity as the mortgagor does not invalidate the
notice of sale.[22]
The notice rule was complied with when the Notice of Sheriffs Sale was published in Philippine
Recorder, a national newspaper of general circulation once a week for three consecutive weeks
or on 29 July, 5 and 12 August 1996. As a matter of fact, the foreclosure procedure undertaken
by Prudential Bank was supported by the following documents: Affidavit of Publication, [23]
Notice of Sheriffs Sale,[24] Sheriffs Certificate of Sale,[25] Affidavit of Posting,[26] and Minutes of
the Auction Sale.[27] Indubitably, these documents evidenced the regular and lawful conduct of
the foreclosure proceedings.
There is much significance in the fact that David admitted on the witness stand that he knew that
there was an application for foreclosure on their Quezon City property but the REM used as basis
of the foreclosure covered the Laguna properties. Upon learning this information, he should
have registered his objection or sought clarification from the sheriffs office. Instead, he let the
public auction run its course and belatedly objected to the sale.
For failure to overcome the burden of showing that the foreclosure proceedings is tainted with
irregularity, the Certificate of Sale should be upheld.
WHEREFORE, the petition is GRANTED. The 26 November 2009 Decision and 14 January
2011 Resolution of the Court of Appeals in CA-G.R. CV No. 88870 is REVERSED and SET
ASIDE. The 24 January 2007 Decision of the Regional Trial Court of Quezon City, Branch 97
in Civil Case No. Q-97-32018 is REINSTATED.

SO ORDERED.
Sereno, C.J., (Chairperson), Leonardo-De Castro, Bersamin, and Perlas-Bernabe, JJ., concur.

[1]

Penned by Associate Justice Arcangelita M. Romilla-Lontok with Associate Justices Arturo G.

Tayag and Sixto C. Marella, Jr., concurring. Rollo, pp. 32-38.
[2]

Penned by Associate Justice Remedios A. Salazar-Fernando with Associate Justices Celia C.

Librea-Leagogo and Michael P. Elbinias, concurring. Id. at 40-43.
[3]

Penned by Judge Bernelito R. Fernandez. CA rollo, pp. 14-21.

[4]

David Castro died in 3 November 2009. Rollo, p. 76.

[5]

Petition for Review on Certiorari. Id. at 15.

[6]

Complaint. Records, pp. 2-4.

[7]

Answer. Id. at 35-39.

[8]

CA rollo, p. 21.

[9]

Records, p. 311.

[10]

Rollo, p. 37.

[11]

Id. at 42.

[12]

G.R. No. 107075, 1 September 1994, 236 SCRA 148.

[13]

Petition for Review on Certiorari. Rollo, pp. 20-24.

[14]

Comment. Id. at 113-115.

[15]

Bank of the Philippine Island v. Puzon, G.R. No. 160046, 27 November 2009, 606 SCRA 51,
62 citing Consuelo Metal Corporation v. Planters Development Bank, 578 Phil. 431, 440 (2008).
[16]

G.R. No. 164104, 11 September 2009, 599 SCRA 394, 399-400 citing Campomanes v.
Bartolome, 38 Phil. 808 (1918).
[17]

Tambunting v. Court of Appeals, G.R. No. L-48278, 8 November 1988, 167 SCRA 16, 23-24.

[18]

G.R. No. 176212, 20 October 2010, 634 SCRA 261, 276.

[19]

Supra note 12.

[20]

Id. at 156.

[21]

Folder of Exhibits, p. 35.

[22]

400 Phil. 1349, 1360 (2000) citing Olizon v. Court of Appeals, supra note 12 at 154-155.

[23]

Folder of Exhibits, p. 23.

[24]

Id. at 24.

[25]

Id. at 26.

[26]

Id. at 31.

[27]

Id. at 32.

SECOND DIVISION
[ G.R. No. 204702, January 14, 2015 ]
RICARDO C. HONRADO, PETITIONER, VS. GMA NETWORK FILMS,
INC., RESPONDENT.
DECISION
CARPIO, J.:
The Case
We review[1] the Decision[2] of the Court of Appeals (CA) ordering petitioner Ricardo C. Honrado
(petitioner) to pay a sum of money to respondent GMA Network Films, Inc. for breach of
contract and breach of trust.
The Facts
On 11 December 1998, respondent GMA Network Films, Inc. (GMA Films) entered into a TV
Rights Agreement (Agreement) with petitioner under which petitioner, as licensor of 36 films,
granted to GMA Films, for a fee of P60.75 million, the exclusive right to telecast the 36 films for
a period of three years. Under Paragraph 3 of the Agreement, the parties agreed that all betacam
copies of the [films] should pass through broadcast quality test conducted by GMA-7, the TV
station operated by GMA Network, Inc. (GMA Network), an affiliate of GMA Films. The parties
also agreed to submit the films for review by the Movie and Television Review and
Classification Board (MTRCB) and stipulated on the remedies in the event that MTRCB bans the
telecasting of any of the films (Paragraph 4):
The PROGRAMME TITLES listed above shall be subject to approval by the Movie and
Television Review and Classification Board (MTRCB) and, in the event of disapproval,
LICENSOR [Petitioner] will either replace the censored PROGRAMME TITLES with another
title which is mutually acceptable to both parties or, failure to do such, a proportionate reduction
from the total price shall either be deducted or refunded whichever is the case by the
LICENSOR OR LICENSEE [GMA Films].[3] (Emphasis supplied)
Two of the films covered by the Agreement were Evangeline Katorse and Bubot for which GMA
Films paid P1.5 million each.
In 2003, GMA Films sued petitioner in the Regional Trial Court of Quezon City (trial court) to
collect P1.6 million representing the fee it paid for Evangeline Katorse (P1.5 million) and a
portion of the fee it paid for Bubot (P350,000[4]). GMA Films alleged that it rejected Evangeline
Katorse because its running time was too short for telecast[5] and petitioner only remitted
P900,000 to the owner of Bubot (Juanita Alano [Alano]), keeping for himself the balance of
P350,000. GMA Films prayed for the return of such amount on the theory that an implied trust
arose between the parties as petitioner fraudulently kept it for himself.[6]

Petitioner denied liability, counter-alleging that after GMA Films rejected Evangeline Katorse,
he replaced it with another film, Winasak na Pangarap, which GMA Films accepted. As proof of
such acceptance, petitioner invoked a certification of GMA Network, dated 30 March 1999,
attesting that such film is of good broadcast quality [7] (Film Certification). Regarding the fee
GMA Films paid for Bubot, petitioner alleged that he had settled his obligation to Alano.
Alternatively, petitioner alleged that GMA Films, being a stranger to the contracts he entered into
with the owners of the films in question, has no personality to question his compliance with the
terms of such contracts. Petitioner counterclaimed for attorneys fees.
The Ruling of the Trial Court
The trial court dismissed GMA Films complaint and, finding merit in petitioners counterclaim,
ordered GMA Films to pay attorneys fees (P100,000). The trial court gave credence to
petitioners defense that he replaced Evangeline Katorse with Winasak na Pangarap. On the
disposal of the fee GMA Films paid for Bubot, the trial court rejected GMA Films theory of
implied trust, finding insufficient GMA Films proof that petitioner pocketed any portion of the
fee in question.
GMA Films appealed to the CA.
The Ruling of the Court of Appeals
The CA granted GMA Films appeal, set aside the trial courts ruling, and ordered respondent to
pay GMA Films P2 million[8] as principal obligation with 12% annual interest, exemplary
damages (P100,000), attorneys fees (P200,000), litigation expenses (P100,000) and the costs.
Brushing aside the trial courts appreciation of the evidence, the CA found that (1) GMA Films
was authorized under Paragraph 4 of the Agreement to reject Evangeline Katorse, and (2) GMA
Films never accepted Winasak na Pangarap as replacement because it was a bold film.[9]
On petitioners liability for the fee GMA Films paid for Bubot, the CA sustained GMA Films
contention that petitioner was under obligation to turn over to the film owners the full amount
GMA Films paid for the films as nowhere in the TV Rights Agreement does it provide that the
licensor is entitled to any commission x x x [hence] x x x [petitioner] Honrado cannot claim any
portion of the purchase price paid for by x x x GMA Films.[10] The CA concluded that
petitioners retention of a portion of the fee for Bubot gave rise to an implied trust between him
and GMA Films, obligating petitioner, as trustee, to return to GMA Films, as beneficiary, the
amount claimed by the latter.
Hence, this petition. Petitioner prays for the reinstatement of the trial courts ruling while GMA
Films attacks the petition for lack of merit.
The Issue
The question is whether the CA erred in finding petitioner liable for breach of the Agreement and
breach of trust.
The Ruling of the Court

We grant the petition. We find GMA Films complaint without merit and accordingly reinstate
the trial courts ruling dismissing it with the modification that the award of attorneys fees is
deleted.
Petitioner Committed No Breach of Contract or Trust
MTRCB Disapproval the Stipulated Basis for Film Replacement
The parties do not quarrel on the meaning of Paragraph 4 of the Agreement which states:
The PROGRAMME TITLES listed [in the Agreement] x x x shall be subject to approval by the
Movie and Television Review and Classification Board (MTRCB) and, in the event of
disapproval, LICENSOR [Petitioner] will either replace the censored PROGRAMME TITLES
with another title which is mutually acceptable to both parties or, failure to do such, a
proportionate reduction from the total price shall either be deducted or refunded whichever is
the case by the LICENSOR OR LICENSEE [GMA Films].[11] (Emphasis supplied)
Under this stipulation, what triggers the rejection and replacement of any film listed in the
Agreement is the disapproval of its telecasting by MTRCB.
Nor is there any dispute that GMA Films rejected Evangeline Katorse not because it was
disapproved by MTRCB but because the films total running time was too short for telecast
(undertime). Instead of rejecting GMA Films demand for falling outside of the terms of
Paragraph 4, petitioner voluntarily acceded to it and replaced such film with Winasak na
Pangarap. What is disputed is whether GMA Films accepted the replacement film offered by
petitioner.
Petitioner maintains that the Film Certification issued by GMA Network attesting to the good
broadcast quality of Winasak na Pangarap amounted to GMA Films acceptance of such film.
On the other hand, GMA Films insists that such clearance pertained only to the technical quality
of the film but not to its content which it rejected because it found the film as bomba (bold).[12]
The CA, working under the assumption that the ground GMA Films invoked to reject Winasak
na Pangarap was sanctioned under the Agreement, found merit in the latters claim. We hold that
regardless of the import of the Film Certification, GMA Films rejection of Winasak na
Pangarap finds no basis in the Agreement.
In terms devoid of any ambiguity, Paragraph 4 of the Agreement requires the intervention of
MTRCB, the state censor, before GMA Films can reject a film and require its replacement.
Specifically, Paragraph 4 requires that MTRCB, after reviewing a film listed in the Agreement,
disapprove or X-rate it for telecasting. GMA Films does not allege, and we find no proof on
record indicating, that MTRCB reviewed Winasak na Pangarap and X-rated it. Indeed, GMA
Films own witness, Jose Marie Abacan (Abacan), then Vice-President for Program Management
of GMA Network, testified during trial that it was GMA Network which rejected Winasak na
Pangarap because the latter considered the film bomba.[13] In doing so, GMA Network went
beyond its assigned role under the Agreement of screening films to test their broadcast quality
and assumed the function of MTRCB to evaluate the films for the propriety of their content. This
runs counter to the clear terms of Paragraphs 3 and 4 of the Agreement.

Disposal of the Fees Paid to Petitioner Outside of the Terms of the Agreement
GMA Films also seeks refund for the balance of the fees it paid to petitioner for Bubot which
petitioner allegedly failed to turn-over to the films owner, Alano.[14] Implicit in GMA Films
claim is the theory that the Agreement obliges petitioner to give to the film owners the entire
amount he received from GMA Films and that his failure to do so gave rise to an implied trust,
obliging petitioner to hold whatever amount he kept in trust for GMA Films. The CA sustained
GMA Films interpretation, noting that the Agreement does not provide that the licensor is
entitled to any commission.[15]
This is error.
The Agreement, as its full title denotes (TV Rights Agreement), is a licensing contract, the
essence of which is the transfer by the licensor (petitioner) to the licensee (GMA Films), for a
fee, of the exclusive right to telecast the films listed in the Agreement. Stipulations for payment
of commission to the licensor is incongruous to the nature of such contracts unless the licensor
merely acted as agent of the film owners. Nowhere in the Agreement, however, did the parties
stipulate that petitioner signed the contract in such capacity. On the contrary, the Agreement
repeatedly refers to petitioner as licensor and GMA Films as licensee. Nor did the parties
stipulate that the fees paid by GMA Films for the films listed in the Agreement will be turned
over by petitioner to the film owners. Instead, the Agreement merely provided that the total fees
will be paid in three installments (Paragraph 3).[16]
We entertain no doubt that petitioner forged separate contractual arrangements with the owners
of the films listed in the Agreement, spelling out the terms of payment to the latter. Whether or
not petitioner complied with these terms, however, is a matter to which GMA Films holds
absolutely no interest. Being a stranger to such arrangements, GMA Films is no more entitled to
complain of any breach by petitioner of his contracts with the film owners than the film owners
are for any breach by GMA Films of its Agreement with petitioner.
We find it unnecessary to pass upon the question whether an implied trust arose between the
parties, as held by the CA. Such conclusion was grounded on the erroneous assumption that
GMA Films holds an interest in the disposition of the licensing fees it paid to petitioner.
Award of Attorneys Fees to Petitioner Improper
The trial court awarded attorneys fees to petitioner as it deemed it just and reasonable[17] to do
so, using the amount provided by petitioner on the witness stand (P100,000). Undoubtedly,
attorneys fees may be awarded if the trial court deems it just and equitable.[18] Such ground,
however, must be fully elaborated in the body of the ruling.[19] Its mere invocation, without more,
negates the nature of attorneys fees as a form of actual damages.
WHEREFORE, we GRANT the petition. The Decision, dated 30 April 2012 and Resolution,
dated 19 November 2012, of the Court of Appeals are SET ASIDE. The Decision, dated 5
December 2008, of the Regional Trial Court of Quezon City (Branch 223) is REINSTATED
with the MODIFICATION that the award of attorneys fees is DELETED.

SO ORDERED.
Velasco, Jr.,* Del Castillo, Mendoza, and Leonen, JJ., concur.
*

Designated Acting Member per Special Order No. 1910 dated 12 January 2015.

[1]

Under Rule 45 of the 1997 Rules of Civil Procedure.

[2]

Dated 30 April 2012 and penned by Associate Justice Stephen C. Cruz, with Associate Justices
Vicente S.E. Veloso and Angelita A. Gacutan concurring. The Resolution of 19 November 2012
denied reconsideration.
[3]

Records, p. 11.

[4]

In its Memorandum, GMA Films increased this amount to P750,000.

[5]

Records, p. 5.

[6]

Invoking Article 1456 of the Civil Code (If property is acquired through mistake or fraud, the
person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of
the person from whom the property comes.).
[7]

Records, p. 82.

[8]

The CA sustained the increased amount (P750,000) demanded by GMA Films for Bubot (see
note 3), which, together with the demand for the refund for Evangeline Katorse (P1.25 million),
totals P2 million.
[9]

Rollo, p. 29

[10]

Id. at 31-32.

[11]

Supra note 3.

[12]

TSN (Jose Marie Abacan), 20 February 2008, p. 15.

[13]

Abacan testified (id. at 14-15):

Q [Atty.
Now, can you please tell us Mr. Abacan what was the reason why the said film of
Estoesta]:
Winasak na Pangarap was not accepted by GMA Network?
A:
Sir, bomba eh.
Q:
A:

When you say bomba, Mr. Abacan, what do you mean?

It is something that you cannot really the material presented is not something
that you can really air on television because of the censorship problem x x x.
(Italicization in the original; boldfacing supplied)

[14]

The amount demanded increased from P350,000 as stated in GMA Films complaint to
P750,000 as alleged in its memorandum before the trial court.
[15]

Rollo, p. 31.

[16]

This provides:
TERMS OF PAYMENT
60,750,000 payable as follows:
30% (18,225,000) Dec. 23, 1998 (downpayment)
30% (18,225,000) March 23, 1999 (w/post-dated check)
40% (24,000,000) June 23, 1999 (w/post-dated check)
30% downpayment will only be released on December 23, 1998 upon submission of: a) all
betacam copies of the above-listed titles which should pass through broadcast quality test
conducted by GMA-7, and b) all relevant authorities to sell from producers. (Records, p. 11)
[17]
Id. at 328.
[18]

[19]

Article 2208(11), Civil Code.

Scott Consultants & Resources Devt. Corp., Inc. v. Court of Appeals, 312 Phil. 466, 481
(1995).

FIRST DIVISION
[ G.R. No. 179491, January 14, 2015 ]
ALEJANDRO C. ALMENDRAS, JR., PETITIONER, VS. ALEXIS C.
ALMENDRAS, RESPONDENT.
DECISION
SERENO, C.J.:
We resolve the Petition for Review filed by petitioner Alejandro C. Almendras, Jr., from the 27
January 2006 Decision and 28 August 2007 Resolution of the Court of Appeals (CA) in CA-G.R.
CV No. 73088.[1] The CA affirmed the Decision and Order of the Regional Trial Court (RTC) in
Civil Case No. 3343[2] finding petitioner liable for damages.
THE FACTS
As culled from the CA, petitioner sent letters with similar contents on 7 February 1996 to House
Speaker Jose de Venecia, Jr., and on 26 February 1996 to Dr. Nemesio Prudente, President of Oil
Carriers, Inc. The controversial portion of the first and second letters reads as follows:
This is to notify your good self and your staff that one ALEXIS DODONG C. ALMENDRAS,
a brother, is not vested with any authority to liaison or transact any business with any
department, office, or bureau, public or otherwise, that has bearing or relation with my office,
mandates or functions. x x x.
Noteworthy to mention, perhaps, is the fact that Mr. Alexis Dodong C. Almendras, a reknown
blackmailer, is a bitter rival in the just concluded election of 1995 who ran against the wishes of
my father, the late Congressman Alejandro D. Almendras, Sr. He has caused pain to the family
when he filed cases against us: his brothers and sisters, and worst against his own mother.
I deemed that his act of transacting business that affects my person and official functions is
malicious in purpose, done with ill motive and part of a larger plan of harassment activities to
perforce realise his egoistic and evil objectives.
May I therefore request the assistance of your office in circulating the above information to
concerned officials and secretariat employees of the House of Representatives.[3]
xxxx
These letters were allegedly printed, distributed, circulated and published by petitioner, assisted
by Atty. Roberto Layug, in Digos, Davao del Sur and Quezon City, with evident bad faith and

manifest malice to destroy respondent Alexis C. Almendras good name. Hence, the latter filed
an action for damages arising from libel and defamation against petitioner in the Regional Trial
Court (RTC), Branch 19, Digos City.
THE RTC RULING
In the course of trial at the lower court, petitioner failed to present any evidence, except his
Answer, despite several rescheduling of hearings at his instance.[4] The trial court thus submitted
the case for decision, and eventually ruled that respondent was libeled and defamed. For the
sufferings, social ridicule, defamation and dishonor caused by petitioners letters, respondent was
awarded damages, as follows: P5,000,000.00 as moral damages; P100,000.00 as exemplary
damages; P10,000.00 for litigation expenses; and attorneys fees in the amount of 25% of
whatever amounts actually received by plaintiff for this judgment.[5]
Petitioner moved for reconsideration and/or new trial,[6] but the same was denied by the trial
court.[7]
THE CA RULING
On intermediate appellate review, the CA ruled that petitioner was not denied due process. It
noted that petitioner was given full opportunity to present his evidence, but he vehemently
disregarded the proceedings by merely absenting himself from trials without valid excuses. [8]
The appellate court also ruled that the letters were not privileged communications, since
petitioner was not acting as a member of the Congress when he sent them. In fact, his letter
stated that he extends his apology for bringing this personal matter in the open. He was, as
maintained by the respondent, sending open libelous and unsealed letters, duly published and
circulated in Digos, Davao del Sur, and Quezon City.[9] Consequently, the CA upheld the
damages awarded by the trial court, the amounts being consistent with the social and financial
standing of the parties involved.[10]
We now rule on the final review of the case.
THE ISSUES
From the foregoing, we reduce the issues to the following:
(1) Whether or not petitioner was deprived due process;
(2) Whether or not the letters are libelous in nature;
(3) Whether or not the letters fall within the purview of privileged communication; and
(4) Whether or not respondent is entitled to moral and exemplary damages, attorneys fees and
litigation expenses.
OUR RULING

We deny the petition.

Petitioner anchors his appeal on the ground that his letters are covered by privileged
communications. He insists that he has the legal, moral, or social duty to make the
communication, or at least, had an interest to protect, being then a Congressman duty-bound to
insulate his office and his constituents from the dubious and mistrustful pursuits of his elder
brother.[11] Moreover, the letters were also not meant to be circulated or published. They were
sent merely to warn the individuals of respondents nefarious activities, and made in good faith
and without any actual malice. Respondents testimony that he learned the existence of the letter
from others cannot be countenanced, as no witness corroborated this. At best, it is only hearsay.
[12]

On the denial of his motion for reconsideration and/or new trial, he maintains that his own
counsel Atty. Leonardo D. Suario categorically admitted that he did not know of petitioners
ailment and thus did not make the proper manifestations in Court. His failure to attend the
hearing was not of his own volition, but because of his doctors strict advice since he earlier
underwent a quadruple coronary artery bypass at the St. Lukes Medical Center-Heart Institute in
Quezon City on 16 July 2001, just a day before the Motion for Reconsideration and/or New Trial
was filed. While his counsel represents him, the latters mistakes should not deprive him of his
day in court to present his side.[13]
As to the damages, petitioner avers that since respondent never testified on any suffering he
sustained or why he is entitled to them, the same must not be awarded.
On the other hand, respondent asserts that petitioners letters do not fall within the purview of
privileged communication because it was published and read by the secretariat of the House of
the Representatives, and not exclusively communicated to persons who have some interest or
duty in the matter and who have the power to furnish the protection sought by the author of the
statement. Moreover, he was not acting as a member of congress when he sent the letters. The
writing of a personal matter (which petitioner admitted in the letters), not relating to the
functions of a member of Congress cannot, by any stretch of imagination, be deemed to be
privileged and insulated from suit arising therefrom.[14]
Malice has also been sufficiently proven because the language of the letters in fact shows that the
writer had some ill-feeling towards the respondent by using the words such as reknown
blackmailer and bitter rival. There is sufficient showing that petitioner bore a grudge against
the respondent and that there was rivalry or ill-feeling between them.[15]
Anent the damages, respondent believes that they were rightly awarded, taking into consideration
his testimony in the lower court,[16] and the financial and social standing of the parties herein.[17]
First, we rule that petitioner was not deprived of his right to due process.
Settled is the rule that a client is bound by the mistakes of his counsel. The only exception is
when the negligence of the counsel is so gross, reckless and inexcusable that the client is

deprived of his day in court. In such instance, the remedy is to reopen the case and allow the
party who was denied his day in court to adduce evidence. However, perusing the case at bar, we
find no reason to depart from the general rule.[18]
Petitioner was given several opportunities to present his evidence or to clarify his medical
constraints in court, but he did not do so, despite knowing full well that he had a pending case in
court. For petitioner to feign and repeatedly insist upon a lack of awareness of the progress of an
important litigation is to unmask a penchant for the ludicrous. Although he rightfully expected
counsel to amply protect his interest, he cannot just sit back, relax and await the outcome of the
case. In keeping with the normal course of events, he should have taken the initiative of making
the proper inquiries from his counsel and the trial court as to the status of his case. For his
failure to do so, he has only himself to blame.[19] The Court cannot allow petitioner the exception
to the general rule just because his counsel admitted having no knowledge of his medical
condition. To do so will set a dangerous precedent of never-ending suits, so long as lawyers
could allege their own fault or negligence to support the clients case and obtain remedies and
reliefs already lost by the operation of law.[20]
Second, we find that petitioners letters are libelous in nature and do not fall within the
purview of privileged communication.
For an imputation to be libelous under Article 353 of the Revised Penal Code, the following
requisites must be present: (a) it must be defamatory; (b) it must be malicious; (c) it must be
given publicity; and (d) the victim must be identifiable.[21]
Consequently, under Article 354, every defamatory imputation is presumed to be malicious, even
if true, if no good intention and justifiable motive is shown. As an exception to the rule, the
presumption of malice is done away with when the defamatory imputation qualifies as privileged
communication.[22] In order to qualify as privileged communication under Article 354, Number 1,
[23]
the following requisites must concur: (1) the person who made the communication had a
legal, moral, or social duty to make the communication, or at least, had an interest to protect,
which interest may either be his own or of the one to whom it is made; (2) the communication is
addressed to an officer or a board, or superior, having some interest or duty in the matter, and
who has the power to furnish the protection sought; and (3) the statements in the communication
are made in good faith and without malice.[24]
Were petitioners letters defamatory in nature? We believe so.
In determining whether a statement is defamatory, the words used are to be construed in their
entirety and should be taken in their plain, natural, and ordinary meaning as they would naturally
be understood by the persons reading them, unless it appears that they were used and understood
in another sense.[25] In the instant case, the letters tag respondent as a reknown black mailer, a
vengeful family member who filed cases against his mother and siblings, and with nefarious
designs. Even an impartial mind reading these descriptions would be led to entertain doubts on
the persons character, thereby affecting that persons reputation.
Malice can also be presumed inasmuch as the letters are not privileged in nature. Petitioners

contention that he has the legal, moral or social duty to make the communication cannot be
countenanced because he failed to communicate the statements only to the person or persons
who have some interest or duty in the matter alleged, and who have the power to furnish the
protection sought by the author of the statement. A written letter containing libelous matter
cannot be classified as privileged when it is published and circulated among the public.[26]
Examination of the letters would reveal that petitioner himself intended for the letters to be
circulated (and they were so) when he said that:
May I therefore request the assistance of your office in circulating the above information to
concerned officials and secretariat employees of the House of Representatives.[27]
This lack of selectivity on his part is indicative of malice and is anathema to his claim of
privileged communication because such publication created upon the minds of the readers a
circumstance which brought discredit and shame to respondents reputation.[28]
Lastly, having duly proved that all the elements of libel are present in this case, we rule that the
damages awarded by the trial court and affirmed by the appellate court must be modified
and equitably reduced.
In awarding damages in libel cases, the court is given ample discretion to determine the amount,
depending upon the facts of the particular case.[29] Article 2219 of the Civil Code expressly
authorizes the recovery of moral damages in cases of libel, slander or any other form of
defamation. However, while no proof of pecuniary loss is necessary in order that moral
damages may be awarded, x x x it is nevertheless essential that the claimant should satisfactorily
show the existence of the factual basis of damages and its causal connection to defendants
acts.[30] Considering that respondent sufficiently justified his claim for damages (i.e. he testified
that he was embarrassed by the said letters [and] ashamed to show his face in [sic] government
offices[31]), we find him entitled to moral and exemplary damages.
However, we equitably reduce the amounts[32] awarded because even though the letters were
libellous, respondent has not suffered such grave or substantial damage to his reputation to
warrant receiving P5,000,000 as moral damages and P100,000.00 as exemplary damages. In fact,
he was able to successfully secure an elected position in recent years. Accordingly, we reduce the
award of moral damages from P5,000,000 to P100,000 and exemplary damages from P100,000
to P20,000.
The award of attorneys fees is not proper because respondent failed to justify satisfactorily his
claim, and both the trial and appellate courts failed to explicitly state in their respective decisions
the rationale for the award.[33] It is an accepted doctrine that the award thereof as an item of
damages is the exception rather than the rule, and counsels fees are not to be awarded every time
a party wins a suit. The power of the court to award attorneys fees under Article 2208 of the
Civil Code demands factual, legal and equitable justification, without which the award is a
conclusion without a premise, its basis being improperly left to speculation and conjecture. In all
events, the court must explicitly state in the text of the decision, and not only in the decretal
portion thereof, the legal reason for the award of attorneys fees.[34] The same is true for the
award of litigation expenses because respondent failed to satisfactorily justify his claim.

WHEREFORE, we DENY the instant petition. The 27 January 2006 Decision and 28 August
2007 Resolution of the Court of Appeals in CA-G.R. CV No. 73088 are hereby MODIFIED, in
that: (1) the award of moral damages is reduced from P5,000,000 to P100,000; (2) the award of
exemplary damages is reduced from P100,000 to P20,000; and (3) litigation expenses and
attorneys fees are deleted.
SO ORDERED.
Leonardo-De Castro, Bersamin, Perez, and Perlas-Bernabe, JJ., concur.

[1]

Rollo, pp. 48-57 and 58-59; penned by Associate Justice Edgardo A. Camello, and concurred
by Associate Justices Normandie B. Pizarro and Ramon R. Garcia.
[2]

Id. at 104-108, 122-123; the RTC Decision dated 19 June 2001 and Order dated 5 October
2001 were penned by Judge Hilario I. Mapayo of RTC Branch 19, Digos City.
[3]

Id. at 97-98.

[4]

Id. at 106-107; Atty. Roberto Layug failed to file his Answer, and on motion of respondents
counsel, was declared in default by the trial court.
[5]

Id. at 107-108

[6]

Id. at 113-118.

[7]

Id. at 122-123.

[8]

Id. at 51-53.

[9]

Id. at 53-55.

[10]

Id. at 55-56.

[11]

Id. at 16.

[12]

Id. at 19-20.

[13]

Id. at 21-22.

[14]

Id. at 65.

[15]

Id. at 167.

[16]

Id. at 106.

[17]

Id. at 168.

[18]

Barza v. Sps. Dinglasan, 484 Phil. 242 (2004), citing Villa Rhecar Bus vs. Dela Cruz, 241
Phil. 14 (1988); Producers Bank of the Philippines vs. Court of Appeals, 430 Phil. 812 (2002).
[19]

Air Philippines Corporation v. International Business Aviation Services Phils., Inc., 481 Phil.
366 (2004), citing Gold Line Transit, Inc. v. Ramos, 415 Phil. 492, 504 (2001).
[20]

Building Care Corporation v. Macaraeg, G.R. No. 198357, 10 December 2012, 687 SCRA
643, citing Lagua v. Court of Appeals, G.R. No. 173390, 27 June 2012, 675 SCRA 176; Panay
Railways, Inc. v. Heva Management and Development Corp., G.R. No. 154061, 25 January 2012,
664 SCRA 1, 9.
[21]

Diaz v. People, 551 Phil. 192 (2007), citing Novicio v. Aggabao, 463 Phil. 510 (2003).

[22]

Brillante v. Court of Appeals, 483 Phil. 568 (2004), citing REVISED PENAL CODE, Art.
354, par. 1; Art. 354, par. 2
[23]

REVISED PENAL CODE, Art. 354, Number 1 A private communication made by any
person to another in the performance of any legal, moral or social duty.
[24]

Supra note 21, citing U.S. v. Bustos, 13 Phil 690, 701 (1909).

[25]

Supra note 20.

[26]

Buatis, Jr. v. People, 520 Phil. 149 (2006), citing Brillante v. Court of Appeals, 483 Phil. 568
(2004); Daez v. Court of Appeals, G.R. No. 47971, 31 October 1990, 191 SCRA 61, 69.
[27]

Supra note 3.

[28]

Supra note 25, citing Brillante v. Court of Appeals, 483 Phil. 568 (2004).

[29]

Philippine Journalists, Inc., v. Thoenen, 513 Phil. 607 (2005), citing Guevarra v. Almario 56
Phil. 476 (1932).
[30]

Mahinay v. Velasquez, Jr., 464 Phil. 146 (2004), citing Kierulf v. Court of Appeals, 336 Phil.
414 (1997).
[31]

Rollo, p. 106.

[32]

Id. at 107; The Decision states ?5,000,000 as moral damages and P100,000 as exemplary
damages.
[33]

Id. at 108, citing Koa v. CA, G.R. No. 84847, 5 March 1993, 219 SCRA 541.

[34]

Inter-Asia Investment Industries, Inc. v. Court of Appeals, 451 Phil. 554 (2003). See also PNB
v. CA, 326 Phil. 504 (1996); ABS-CBN Broadcasting Corp. v. CA, 361 Phil. 499 (1999).

SECOND DIVISION

[ G.R. No. 203384, January 14, 2015 ]

REPUBLIC OF THE PHILIPPINES, PETITIONER, VS. SPS. JOSE
CASTUERA AND PERLA CASTUERA, RESPONDENTS.
DECISION
CARPIO, J.:
The Case
This is a petition[1] for review on certiorari under Rule 45 of the Rules of Court. The petition
challenges the 26 March 2012 Decision[2] and 14 August 2012 Resolution[3] of the Court of
Appeals in CA-G.R. CV No. 85015, affirming the 31 January 2005 Decision[4] of the Regional
Trial Court (RTC), Branch 70, Iba, Zambales, in Land Registration Case No. RTC-N-92-I and
denying the motion for reconsideration, respectively.
The Facts
Andres Valiente owned a 3,135-square meter land in Barangay Siminublan, San Narciso,
Zambales. In 1978, he sold the property to respondents Jose and Perla Castuera (Spouses
Castuera). On 21 May 2003, the Spouses Castuera filed with the RTC an application[5] for
original registration of title over the property.
The Spouses Castuera presented three witnesses to support their application. The three witnesses
were (1) former barangay captain and councilman Alfredo Dadural, (2) Senior Police Officer 2
Teodorico Cudal, and (3) Perla Castuera. All witnesses testified that the Spouses Castuera owned
the property.
The Spouses Castuera also presented documentary evidence to support their application. The
documents included tax receipts and an advance plan[6] with a notation, Checked and verified
against the cadastral records on file in this office and is for registration purposes. This survey is
within the Alienable and Disposable land proj. No. 3-H certified by Director of Forestry on June
20, 1927 per LC Map No. 669 Sheet 1.
Petitioner Republic of the Philippines (petitioner), through the Office of the Solicitor General,
filed an opposition to the application for original registration.
The RTCs Ruling
In its 31 January 2005 Decision, the RTC granted the application for original registration of title
over the property. The RTC held:
From the evidence submitted by the applicants, they have shown preponderantly that they are the
lawful owners in fee simple and the actual possessors of Lot 6553 of the San Narciso Cadastre.
They are entitled therefore to a judicial confirmation of their imperfect title to the said land
pursuant to the provisions of the new Property Registration Decree (PD 1529).[7]

Petitioner appealed the RTC Decision to the Court of Appeals. The Spouses Castuera attached to
their appellees brief a certification[8] from the Community Environment and Natural Resources
Office (CENRO), stating:
THIS IS TO CERTIFY that the tract of land situated at Brgy. Siminublan, San Narciso, Zambales
containing an area of ONE THOUSAND EIGHT HUNDRED FORTY SEVEN (1847.00)
SQUARE METERS as shown and described in this sketch as verified by Cart. Nestor L.
Delgado for Sps. Jose Castuera and Perla Castuera was found to be within the Alienable or
Disposable, Project No. 3-H, certified by then Director of Forestry, manila [sic] on June 20, 1927
per LC Map No. 669, sheet No. 1.[9]
The Court of Appeals Ruling
In its 26 March 2012 Decision, the Court of Appeals affirmed the RTC Decision. The Court of
Appeals held that:
Presidential Decree No. 1529, otherwise known as the Property Registration Decree, provides for
the instances when a person may file for an application for registration of title over a parcel of
land:
Section 14. Who May Apply. The following persons may file in the proper Court of first
Instance an application for registration of title to land, whether personally or through their duly
authorized representatives:
Those who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation of alienable and disposable lands
of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier.
Accordingly, pursuant to the aforequoted provision of law, applicants for registration of title must
prove the following: (1) that the subject land forms part of the disposable and alienable lands of
the public domain; and (2) that they have been in open, continuous, exclusive and notorious
possession and occupation of the land under a bona fide claim of ownership since 12 June 1945
or earlier. Section 14(1) of the law requires that the property sought to be registered is already
alienable and disposable at the time the application for registration is filed.
Applying the foregoing in the present case, We find and so rule that the trial court is correct in
granting appellees application for original registration of the subject land. A scrutiny of the
records shows that there is substantial compliance with the requirement that the subject land is
alienable and disposable land. It bears to emphasize that the Advance Plan has the following
notations:
Checked and verified against the cadastral records on file in this office and is for registration
purposes.[]
This survey is within the alienable and disposable land proj. no. 3-H certified by Director of
Forestry on June 20, 1927 per LC Map No. 669, Sheet 1.
In Republic v. Serrano, the Supreme Court affirmed the findings of the trial court and this Court
that the parcel of land subject of registration was alienable and disposable. It held that a DENR
Regional Technical Directors certification, which is annotated on the subdivision plan submitted
in evidence, constitutes substantial compliance with the legal requirement:

While Cayetano failed to submit any certification which would formally attest to the alienable
and disposable character of the land applied for,
the Certification by DENR Regional Technical Director Celso V. Loriega, Jr., as annotated on the
subdivision plan submitted in evidence by Paulita, constitutes substantial compliance with the
legal requirement. It clearly indicates that Lot 249 had been verified as belonging to the alienable
and disposable area as early as July 18, 1925.[]
The DENR certification enjoys the presumption of regularity absent any evidence to the
contrary. It bears noting that no opposition was filed or registered by the Land Registration
Authority or the DENR to contest respondents applications on the ground that their respective
shares of the lot are inalienable. There being no substantive rights which stand to be prejudiced,
the benefit of the Certification may thus be equitably extended in favor of respondents.
While in the case of Republic v. T.A.N. Properties, Inc., the Supreme Court overturned the grant
by the lower courts of an original application for registration over a parcel of land in Batangas
and ruled that a CENRO certification is not enough to certify that a land is alienable and
disposable:
[]Further, it is not enough for the PENRO or CENRO to certify that a land is alienable and
disposable. The applicant for land registration must prove that the DENR Secretary had approved
the land classification and released the land of the public domain as alienable and disposable, and
that the land subject of the application for registration falls within the approved area per
verification through survey by the PENRO or CENRO. In addition, the applicant for land
registration must present a copy of the original classification approved by the DENR Secretary
and certified as a true copy by the legal custodian of the official records. These facts must be
established to prove that the land is alienable and disposable. Respondent failed to do so because
the certifications presented by respondent do not, by themselves, prove that the land is alienable
and disposable.
However, in the recent case of Republic vs. Carlos R. Vega, et al., as an exception to the strict
application of the stringent rule imposed in the above pronouncement that the absence of these
twin certifications justifies a denial of an application for registration, the Supreme Court, in its
sound discretion, and based solely on the evidence on record, may approve the application, pro
hac vice, on the ground of substantial compliance showing that there has been a positive act of
government to show the nature and character of the land and an absence of effective opposition
from the government. This exception shall only apply to applications for registration currently
pending before the trial court prior to this Decision and shall be inapplicable to all future
applications.
It must be noted that the present case was decided by the trial court only on January 31, 2005,
prior to the above pronouncement[.] We believe that the same rule shall apply to the present case
allowing the registration of the subject property as there is substantial compliance with the
requirement that the land subject of registration is an alienable and disposable land. Besides,
appellees had attached to their appellees brief a Certification from the DENR-CENR Office
issued on December 2, 1999, which states the following:
THIS IS TO CERTIFY that the tract of land situated at Brgy. Siminublan, San Narciso,
Zambales containing an area of ONE THOUSAND EIGHT HUNDRED FORTY SEVEN
(1,847) SQUARE METERS as shown and described in this sketch as verified by Cart. Nestor L.
Delgado for Sps. Jose Castuera and Perla Castuera was found to be within the Alienable or

Disposable, Project No. 3-H, certified by then Director of Forestry, Manila on June 20, 1927 per
LC Map No 669, Sheet No. 1.[10]
Petitioner filed a motion for reconsideration. In its 14 August 2012 Resolution, the Court of
Appeals denied the motion. Hence, the present petition.
The Issue
Petitioner raises as issue that the advance plan and the CENRO certification are insufficient
proofs of the alienable and disposable character of the property.
The Courts Ruling
The petition is meritorious.
The advance plan and the CENRO certification are insufficient proofs of the alienable and
disposable character of the property. The Spouses Castuera, as applicants for registration of title,
must present a certified true copy of the Department of Environment and Natural Resources
Secretarys declaration or classification of the land as alienable and disposable. In Republic of
the Philippines v. Heirs of Juan Fabio,[11] citing Republic v. T.A.N. Properties, Inc.,[12] the Court
held that:
In Republic v. T.A.N. Properties, Inc., we ruled that it is not enough for the Provincial
Environment and Natural Resources Office (PENRO) or CENRO to certify that a land is
alienable and disposable. The applicant for land registration must prove that the DENR Secretary
had approved the land classification and released the land of the public domain as alienable and
disposable, and that the land subject of the application for registration falls within the approved
area per verification through survey by the PENRO or CENRO. In addition, the applicant must
present a copy of the original classification of the land into alienable and disposable, as declared
by the DENR Secretary, or as proclaimed by the President. Such copy of the DENR Secretarys
declaration or the Presidents proclamation must be certified as a true copy by the legal custodian
of such official record. These facts must be established to prove that the land is alienable and
disposable.[13]
WHEREFORE, the Court GRANTS the petition and SETS ASIDE the 26 March 2012
Decision and 14 August 2012 Resolution of the Court of Appeals in CA-G.R. CV No. 85015.
Respondents Jose and Perla Castueras application for registration is DISMISSED.
SO ORDERED.
Velasco, Jr.,* Del Castillo, Mendoza, and Leonen, JJ., concur.
*

Designated Acting Member per Special Order No. 1910 dated 12 January 2015.

[1]

[2]

Rollo, pp. 7-26.

Id. at 27-34. Penned by Associate Justice Stephen C. Cruz, with Associate Justices Vicente S.
E. Veloso and Myra V. Garcia-Fernandez concurring.

[3]

Id. at 35-36.

[4]

CA rollo, pp. 35-38. Penned by Judge Clodualdo M. Monta.

[5]

Records, pp. 2-5.

[6]

Id. at 6.

[7]

CA rollo, pp. 37-38.

[8]

Id. at 57.

[9]

Id.

[10]

Rollo, pp. 30-33.

[11]

595 Phil. 664 (2008).

[12]

578 Phil. 441 (2008).

[13]

Supra note 11, at 687.

THIRD DIVISION
[ G.R. No. 187892, January 14, 2015 ]

UNGAY MALOBAGO MINES, INC. PETITIONER, VS. REPUBLIC OF THE

PHILIPPINES, RESPONDENT.
DECISION
PERALTA, J.:
Assailed in this petition for review on certiorari is the Decision[1] dated January 21, 2009 and the
Resolution[2] dated May 7, 2009 of the Court of Appeals (CA) in CA-G.R. CV No. 88210.
The antecedent facts are as follows:
On April 16, 2004, petitioner Ungay Malobago Mines, Inc. filed with the Regional Trial Court
(RTC) of Legaspi City, a verified petition[3] seeking the reconstitution of Original Certificate of
Title (OCT) No. 4784 of the Cadastral Survey of Albay, pursuant to the provisions of Republic
Act (RA) 26[4] and Presidential Decree (PD) No. 1529.[5] The case was docketed as LRA Case
No. RT-2720 and raffled off to Branch 4. In its petition, petitioner alleged: that it is the registered
owner of a mining patent covered by OCT No. 4784 which was issued by then President
Diosdado Macapagal on July 20, 1962 and entered in the Registry of Deeds of the Province of
Albay on September 4, 1962; that sometime in April 2004, it requested for a certified true copy
of OCT No. VH-4784 from the Register of Deeds of Albay, but despite a diligent search, the said
copy could not be located by the said office leading one to believe that the same was
permanently lost or destroyed; that the property was free from all liens and encumbrances of any
kind whatsoever and there existed no deeds or instruments affecting the same which had been
presented for or pending registration with the Register of Deeds of Albay; and that the owner's
duplicate of OCT No. VH-4784 which would serve as a basis for the reconstitution, was attached
thereto.
During the initial hearing, petitioner, through counsel, showed compliance with the jurisdictional
requirements. Trial thereafter ensued. The Republic opposed the petition.
On July 17, 2006, the RTC rendered its decision[6] dismissing the petition.
The RTC found that there was no factual and legal basis to warrant the reconstitution of
petitioner's alleged lost certificate of title. It found that while petitioner submitted a purported
owner's duplicate of OCT No. VH-4784, the same was not signed by then Register of Deeds,
Ramon Balana, both on the face and the dorsal side thereof; that the owner's duplicate certificate
being an original duplicate, should contain the original signature of the Register of Deeds just
like the original certificate which should have been on file with the Register of Deeds; that even
if the said duplicate had the documentary seal of the office, it was considered a scrap of paper
without any probative value since the Register of Deeds as an ex-officio mining recorder has no
signature authenticating said duplicate; and to rule otherwise would make the signature of the
Register of Deeds a useless dispensable ceremony in a Torrens title which would open the
floodgates to fraud which would destroy the registration system. The RTC further ruled that since
petitioner is not the owner of the surface land which had already been titled to Rapu Rapu
Minerals, Inc. and petitioner is claiming only the minerals underneath, it is not entitled to the

certificate of title over its mining patent.

Petitioner filed its appeal with the CA. After the parties had filed their respective pleadings, the
case was then submitted for decision.
On January 21, 2009, the CA issued its assailed decision, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, the 17 July 2006 decision of the Regional Trial Court
of Legaspi City (Branch 4) in LRA Case No. RT-2720 dismissing the petition of Ungay
Malobago Mines, Inc. for the reconstitution of OCT No. VH-4784 is AFFIRMED.[7]
In so ruling, the CA found that since petitioner is not the registered owner of the land covered by
OCT No. VH-4784 and citing our earlier ruling in Ungay Malobago Mines, Inc v. Intermediate
Appellate Court (IAC)[8] where we declared that as a grantee of a mining patent, petitioner did
not become the owner of the land where the minerals are located, hence, it has no personality to
file for the reconstitution of lost or destroyed certificate of title. The CA ruled that petitioner's
mining patent did not qualify as an interest in property as contemplated by RA No. 26 so as to
give petitioner the authority under the law to initiate a petition for the reconstitution of said OCT.
The CA affirmed the RTC's findings that the owner's duplicate of OCT No. VH-4784 presented
by petitioner was insufficient to serve as a basis for the reconstitution of the original of said OCT
because of the absence of the signature of the Register of Deeds.
Petitioner filed a motion for reconsideration, which the CA denied in its Resolution dated May 7,
2009.
Petitioner is now before us raising the following issues:
WHETHER OR NOT THE COURT OF APPEALS, IN AFFIRMING THE DISMISSAL OF
RECONSTITUTION, ERRED IN ITS APPRECIATION OF THE SUBJECT OF
RECONSTITUTION WHICH IS PETITIONER'S MINING PATENT OR RIGHT TO
EXPLORE AND EXTRACT MINERALS WITHIN THE LAND DESCRIBED IN THE TITLE
THE TITLE ITSELF (OCT) SERVING MERELY AS AN INSTRUMENT OF
REGISTRATION AS THIS WAS THE PROCEDURE FOR REGISTRATION OF MINING
PATENTS AT THE TIME.
WHETHER OR NOT THE ABSENCE OF THE SIGNATURE OF THE REGISTER OF DEEDS
IN THE ORIGINAL CERTIFICATE OF TITLE REGISTERING THE MINING PATENT
EVEN IF DUE ONLY TO OBVIOUS INADVERTENCE AND ABSENT ANY FRAUD HAS
THE EFFECT OF RENDERING THE ENTIRE INSTRUMENT VOID, INCLUDING THE
GRANT OF MINING PATENT ITSELF CONTAINED THEREIN, AS TO PREVENT
RECONSTITUTION OF THE SAME.[9]
Anent the first issue, petitioner claims that the CA erred in categorizing the reconstitution in this
case as reconstitution of ownership of the property itself (surface ownership), when in law and in
fact, it is really a reconstitution of evidence of the grant by the state in favor of petitioner of the
right to explore and extract mineral deposits within the area described in the original certificate
of title; that the concept and nature of the right to explore and mine a piece of land (referred to as
mining patent) is separate and distinct from right and title of ownership over the property itself
and are not inconsistent to and exclusive of each other.

The Torrens title is conclusive evidence with respect to the ownership of the land described
therein, and other matters which can be litigated and decided in land registration proceedings.[10]
When the Torrens Certificate of Title has been lost or destroyed, RA No. 26 provides for a
special procedure for the reconstitution of such title. Sections 5 and 10 of RA No. 26 state:
Section 5. Petitions for reconstitution from sources enumerated in sections 2(a), 2(b), 3(a), 3(b),
and/or 4(a) of this Act may be filed with the register of deeds concerned by the registered owner,
his assigns, or other person having an interest in the property. The petition shall be accompanied
with the necessary sources for reconstitution and with an affidavit of the registered owner stating,
among other things, that no deed or other instrument affecting the property had been presented
for registration, or, if there be any, the nature thereof, the date of its presentation, as well as the
names of the parties, and whatever the registration of such deed or instrument is still pending
accomplishment. If the reconstitution is to be made from any of the sources enumerated in
section 2(b) or 3(b), the affidavit should further state that the owner's duplicate has been lost or
destroyed and the circumstances under which it was lost or destroyed. Thereupon, the register of
deeds shall, no valid reason to the contrary existing, reconstitute the certificate of title as
provided in this Act.
Section 10. Nothing hereinbefore provided shall prevent any registered owner or person in
interest from filing the petition mentioned in section five of this Act directly with the proper
Court of First Instance, based on sources enumerated in sections 2(a), 2(b), 3(a), 3(b), and/or 4(a)
of this Act: Provided, however, That the court shall cause a notice of the petition, before hearing
and granting the same, to be published in the manner stated in section nine hereof: And provided,
further, That certificates of title reconstituted pursuant to this section shall not be subject to the
encumbrance referred to in section seven of this Act.
Thus, the persons who can file the petition for reconstitution of a lost certificate are the
registered owner, his assigns or persons in interest in the property. In this case, petitioner
admitted that it was not the owner of the land on which the mining patent was issued as the same
was owned and registered in the name of Rapu Rapu Minerals Inc. Thus said petitioner's witness,
Atty. Cela Magdalen A. Agpaoa, to wit:
Q. Can you tell the [H]on. Court where is this mining patent situated or located, if you know?
A. This mining patent covers several parcels of land situated in the various barangays in Rapu
Rapu, more concentrated in [B]arangay Pagcolbon, Rapu Rapu, Albay.
Q. You want to tell the [H]on. Court that this mining patent cannot be seen on the surface? Is that
what you want to tell the [H]on. Court, Madam Witness?
A. That is right, because this mining patent is a right over minerals found beneath the surface.
Q. I see. I'm showing to you again the Report made by the Land Registration Authority which
forms part of the records which is now marked as Exhs J and J-1 consisting of two (2) pages.
A copy of which was sent to Atty. Cela Magdalen A. Agpaoa, collaborating counsel.
My question to you is this, are you this Atty. Cela Magdalen Agpaoa, the collaborating counsel?
A. Yes, I am.
Q. Did you receive a copy of this report?
A. Yes, I do (sic).

Q. Did you read the contents of this report?

A. Yes, I do (sic).
Q. I am inviting your attention to this Exh. J, par. (2) of the technical description of the parcel
of land described on Plan LP- 714-A inscribed on the certified xerox copy of the Original
Certificate of Title No. VH-4784 appears to overlap Lot Nos. 984, 985, 986 1007, 1008, 1009,
1014, Pls-858-B, of the Rapu Rapu Public Land Subdivision.
My question to you is this, are you aware of these lots mentioned in this report?
A. Yes, I am sir.
Q. Why? Can you tell the [H]on. court why you are aware of all these lots, which this mining
patent appears to overlap all these lots, which I mentioned?
A. The various parcels of land mentioned in VH No. 4784 are actually surface lands, actual
parcels of land which have already been acquired by the petitioner's activated (sic) corporation
for purposes of consolidating the surface rights and the mining rights, referred to in VH No.
4784.
Q. Now, another question, you said that these lots mentioned here are the surface lots, am I
correct?
A. Yes, sir.
Q. Tell the [H]on. Court since these are surface lots, do you know who owns now all these lots
you mentioned in this report, madam witness?
A. Yes sir, I do.
Q. Tell the [H]on. Court who is now the owner of these lots?
A. It is now owned by the petitioner's affiliated company, the Rapu Rapu Minerals, Incorporated.
Q. Do you know also this Rapu Rapu Minerals, Incorporated?
A. Yes, I do.
Q. Why do you know this corporation, Madam Witness?
A. I am also their legal counsel, sir.
Q. Have you seen these surface lots which are mentioned in this report?
A. Yes, I did sir.
Q. Why, for how many times have you seen these lots mentioned in this report, madam witness?
A. I started actually going to these particular parcels of land when I personally negotiated the
sale between the original owners and the company which I represented, the Rapu Rapu Minerals,
Incorporated, as far as in 2002, sir.
Q. You want to tell the [H]on. court that you have seen these lots mentioned in this report
personally?
A. Yes, sir. I go to the island in Rapu Rapu and during the negotiation time we met with the
original owners, and I personally inspect and take a look at that particular parcels of land covered

by the mining patent.

xxxx
Q. Can you tell the court who is the President of this Rapu Rapu Minerals, Incorporated, Madam
Witness?
A. The current duly-elected President of Rapu Rapu Minerals, Incorporated is Mr. Roderick R.C.
Salazar III.
Q. Do you know also the president of Ungay Malobago Mines, Incorporated?
A. Yes, I do sir.
Q. Who is the president, if you know?
A. It is also Mr. Roderick R.C. Salazar III, sir.
Q. As far as you know, what is now the status of these several lots you mentioned in this report?
A. They are now registered under the name of Rapu Rapu Minerals, Inc. and presently being
used for mining purpose.
Q. What do you mean that it is now registered in the name of Rapu Rapu Minerals, Inc.?
A. These surface lands are now owned by this corporation called Rapu Rapu Minerals, Inc., an
affiliated company of Ungay Malobago Mines, Inc.
Q. Do you know if these lots mentioned in this report are already titled properties?
A. Yes, these are titled properties.[11]
In Ungay Malobago Mines, Inc. v. IAC,[12] herein petitioner filed a complaint for annulment and
cancellation of free patents against private respondents therein. Petitioner was claiming
ownership over the surface land subject matter of its mining patents which also included Lode
Patent No. V-46 covered by OCT No. VH-4784, the title sought to be reconstituted in this case.
Petitioner did so as the Director of Lands had issued free patents on portions of the lots covered
by petitioner's mining patent. We ruled in favor of private respondents. We found that the
issuance of the lode patents on mineral claims by the President of the Philippines in 1962 in
favor of the petitioner granted to it only the right to extract or utilize the minerals which may be
found on or under the surface of the land. On the other hand, the issuance of the free patents by
the respondent Director of Lands in 1979 in favor of the private respondents granted to them the
ownership and the right to use the land for agricultural purposes but excluding the ownership of,
and the right to extract or utilize, the minerals which may be found on or under the surface.
The above-cited case, as well as petitioner's admission in this case, established that the surface
land covered by its mining patent under OCT No. VH-4784, which title is sought to be
reconstituted, is not owned by petitioner. Thus, not having an interest on the land amounting to a
title to the same, petitioner is not possessed of a legal personality to institute a petition for
judicial reconstitution of the alleged lost OCT No. VH-4785.
Petitioner contends that Section 11 of RA No. 26 includes persons who are not the registered

owners but who have registered interest in the property covered by the Torrens title which was
lost or destroyed who can file a petition for reconstitution of title, to wit:
Section 11. Petitions for reconstitution of registered interests, liens and other encumbrances,
based on sources enumerated in sections 4(b) and/or 4(c) of this Act, shall be filed, by the
interested party, with the proper Court of First Instance. The petition shall be accompanied with
the necessary documents and shall state, among other things, the number of the certificate of title
and the nature as well as a description of the interest, lien or encumbrance which is to be
reconstituted, and the court, after publication, in the manner stated in section nine of this Act, and
hearing shall determine the merits of the petition and render such judgment as justice and equity
may require.
A petition for judicial reconstitution of a registered interest, lien or encumbrance, may be filed
only when the certificate of title affected has not been totally destroyed, that is, when said
certificate of title is composed of more than one sheet and only the portion of the additional
sheet, on which such interest, lien or encumbrance was noted is missing.[13] The reconstitution in
this case does not only refer to a registered interest which was noted on an additional sheet of a
certificate of title but the reconstitution of a lost certificate. Therefore, petitioner's reliance on
Section 11 to support its claim that it can file for the reconstitution of OCT No. VH-4784 is
misplaced.
Petitioner argues that what it actually sought is the reconstitution of evidence of the grant by the
State in favor of petitioner of the right to explore and extract mineral deposits within the area
described in the original certificate of title. Petitioner's filing of the reconstitution for that
purpose is not within the purview of RA No. 26 which deals with lost or destroyed certificates
attesting title to a piece of land.
Based on our above discussion, we find no need to discuss petitioner's second assignment of
error.
WHEREFORE, the petition for review is DENIED. The Decision dated January 21, 2009 and
the Resolution dated May 7, 2009 of the Court of Appeals are hereby AFFIRMED.
SO ORDERED.
Velasco, Jr., (Chairperson), Villarama, Jr., Reyes, and Jardeleza, JJ., concur.
[1]

Penned by Associate Justice Marlene Gonzales-Sison, with Associate Justices Josefina

Guevara-Salonga and Isaias P. Dicdican, concurring; rollo, pp. 35-44.
[2]

Id. at 46-47.

[3]

Records, pp. 1-4.

[4]

An Act Providing a Special Procedure for the Reconstitution of Torrens Certificates of Title
Lost or Destroyed.
[5]

Property Registration Decree.

[6]

Rollo, pp. 67-75; Per Judge Edgar L. Armes.

[7]

Id. at 48. (Emphasis in the original)

[8]

238 Phil. 505 (1987).

[9]

Rollo, pp. 16-17.

[10]

See Sampaco v. Lantud, G.R. No. 163551, July 18, 2011, 654 SCRA 36, 47.

[11]

TSN, April 7, 2005, pp. 6-10.

[12]

See note 7.

[13]

Section 27, General Land Registration Office (GLRO) Circular No. 17 dated February 19,
1947, Sec 7.

THIRD DIVISION
[ G.R. No. 200013, Janua