SECOND DIVISION

[G.R. No. L-29701. March 16, 1987.]

PHILIPPINE RABBIT BUS LINES, INC., petitioner, vs. HON. LUDIVICO D. ARCIAGA, as Judge
of the Court of First Instance of Ilocos Sur, Branch I Vigan, Ilocos Sur, TAURINO SINGSON
AND THE HONORABLE COURT OF APPEALS, respondents.
Eufrocino R. Tagayuma for respondent.
DECISION
PARAS, J p:
This is a petition for review on certiorari of the August 5, 1968 Resolution of the Court of Appeals in CA-G.R. No.
41582-R ** which dismissed petitioner's petition for certiorari and mandamus with preliminary injunction on the
ground that the allegations made therein are insufficient to justify further process. Cdpr
The undisputed facts of this case, as found by the Court of Appeals, are as follows:
"On August 24, 1960, Tauruno Singson, resident of Cabugao, Ilocos Sur, as paying passenger
on board bus No. 215 belonging to the Philippine Rabbit Bus Lines, Inc. sustained multiple
serious physical injuries when the said bus crashed against an acacia tree at Balaoan, La
Union, so he brought a complaint for contractual tort (Record 27-31). In its answer, defendant
interposed the defense that the collision was due to a fortuitous event (Rec. 42). The case
was set for trial on December 23, 1965 (45), but upon motion of both counsels, the same was
transferred to February 3 and 4, 1966 (55). On October 6, 1966, the Court noted that no pretrial has ever been conducted in the case and so both parties were ordered to confer with one
another for a compromise agreement at the office of the Philippine Rabbit at Tarlac, Tarlac,
and the trial was postponed to November 14, 1966 (57), and then transferred again upon
petition filed by counsel for Philippine Rabbit for January 20, 1967 (58) and then postponed
again to April 29, 1967. At the scheduled trial of April 29, 1967, at 8:40 a.m., only the
defendant Philippine Rabbit appeared and upon motion of its counsel, the Court dismissed the
case for non-appearance of plaintiff (59).
"It appears that the order of dismissal of April 29, 1967 alluded to was sent to Atty. Constante
Pimentel, counsel for plaintiff Taurino Singson, at Vigan, Ilocos Sur, by registered mail on May
3, 1967 and was received by Miss May altuna, addressee's agent, on May 6, 1967 (70). On
July 6, 1967 (61 days from receipt of dismissal), counsel for plaintiff Taurino Singson filed a
Petition for Relief accompanied by an affidavit of said plaintiff alleging that on April 29, 1967
(the date of the trial), he went to Vigan for the purpose of attending the trial of his case,
boarding a passenger jeepney at Cabugao, his hometown, but when the vehicle reached
Lapog, it had engine trouble, causing him to reach the court 15 minutes late and found
thereupon that the court had already dismissed the case (60-62). Opposition was filed to the
Petition for Relief by defendant Philippine Rabbit. On August 16, 1967, the lower court granted
plaintiff Taurino Singson's Petition for Relief (66). On September 14, 1967, counsel for
Philippine Rabbit filed a motion for reconsideration of the order granting the petition for Relief
(67-69). In an order dated November 28, 1967, the lower court denied the motion for
reconsideration of the Philippine Rabbit on the ground that 'considering the particular nature
and circumstances of the case at bar and also the fact that petition for relief under Rule 38 is
premised on equity and is allowed on exceptional circumstances, and that as far as possible
failure of justice should be avoided; and that, further, in the absence of a clear lack of intention
to delay, a case should not be allowed to go off on procedural points to the end that
technicalities should not override the merits of the case, this court believes that justice is best
served if in this particular case the plaintiff will be given his day in court' (79-72)." (pp. 22-25,
Rollo).
On July 9, 1968, herein petitioner Philippine Rabbit Bus Lines, Inc. filed a Petition for Certiorari and Mandamus
with Preliminary Injunction in the Court of Appeals, docketed therein as CA-G.R. No. 41582-R.

In a Resolution dated August 5, 1968, the Court of Appeals denied the petition on the ground that the allegations
made therein are insufficient to justify its giving it due course. Petitioner moved for a reconsideration, but in a
Resolution dated October 1, 1968, the Court of Appeals denied the same. Hence, the instant petition (Record,
pp. 4-20).
In a Resolution dated November 15, 1968 (Ibid., p. 47), this Court gave due course to the petition.
On January 23, 1969, petitioner filed its Brief (Ibid., p. 56), and on February 19, 1969, private respondent filed
his Brief (Ibid., p. 63). On March 29, 1969, petitioner filed its Reply Brief (Ibid., p. 67).
In its brief, petitioner raised the following assignment of errors:
I
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE 60-DAY PERIOD
PROVIDED IN SEC. 38 OF THE RULES OF COURT IS MANDATORY AND NONEXTENDIBLE.
II
THE COURT OF APPEALS ERRED IN APPLYING THE RULE OF EQUITY IN THE CASE AT
BAR.
III
THE COURT OF APPEALS ERRED IN HOLDING THAT CERTIORARI DOES NOT LIE IN
THE INSTANT CASE.
The petition is impressed with merit.
Sec. 3 of Rule 38 of the Rules of Court clearly states that "A petition provided for in either of the preceding
sections of this rule must be verified, filed within sixty (60) days after the petitioner learns of the judgment, order
or other proceeding to be set aside, and not more than six (6) months after such judgment or order was entered
or said proceeding was taken."
It is undisputed that the Petition for Relief in this case was filed 61 days from receipt of the notice of dismissal or
one day late. In fact, the records show that counsel for private respondent learned of the dismissal on the same
day, April 29, 1967, when he arrived late for the hearing so that the Petition for Relief was at least eight (8) days
late. The records further show that counsel for private respondent did not move for reconsideration of the Order
of dismissal, nor for new trial. Neither did he appeal, thereby allowing the decision to become final and
executory. As a last resort, he could have availed of the sixty day period provided for by Rule 38 to file a Petition
for Relief from judgment but again he allowed this opportunity to lapse. Indeed, to him is applicable, the well
known maxim that "equity aids the vigilant, not those who slumber on their rights." (Henson v. Director of Lands,
55 Phil. 586). cdrep
In the case of Turqueza v. Hernando (97 SCRA 488 [1980]) the Supreme Court in disallowing the reopening of
the case which has become final, ruled that there is no justification in law and in fact, for respondent judge's void
act of ordering the reopening of the case which has become final and executory.
Thus, the Court held:
"The Court has said time and again that the doctrine of finality of judgments is grounded or
fundamental considerations of public policy and sound practice that at the risk of occasional
error the judgments of courts must become final at some definite date fixed by law. The law
gives an exception or 'last chance' of a timely petition for relief from judgment within the
reglementary period (within 60 days from knowledge and 6 months from entry of judgment)
under Rule 38 supra, but such grace period must be taken as 'absolutely fixed, inextendible,
never interrupted and cannot be subject to any condition or contingency. Because the period
fixed is itself devised to meet a condition or contingency (fraud, accident, mistake or
excusable neglect), the equitable remedy is an act of grace, as it were, designed to give the
aggrieved party another and last chance' "and failure to avail of such last chance within the
grace period fixed by the statute or Rules of Court is fatal." (Turqueza v. Hernando, supra).

In expressly reiterating the above-quoted decision the Supreme Court in Arcilla v. Arcilla (138 SCRA 56, [1985]),
held that the Rule is that, for a petition for relief under Rule 38 to be entertained by the court, the petitioner must
satisfactorily show that he has faithfully and strictly complied with the provisions of said Rule. Consequently, it is
incumbent upon the petitioner to show that the said petition was filed within the reglementary period specified in
Sec. 3, of the same, otherwise on this ground alone, the petition should be dismissed. Cdpr
For the foregoing reasons, neither can private respondent invoke equity as a ground for the reopening of the
case "there being an express provision of law under which the remedy can be invoked." (Barrios v. Go Thong &
Co., 7 Phil. 542 [1963]). The rule is, "equity follows the law" and as discussed in Pomeroy's Equity
Jurisprudence Vol. 2 pp. 188-189 (as cited in Appellant's Brief p. 20), the meaning of the principle is stated as
follows:
"There are instances, indeed, in which a court of equity gives a remedy, where the law gives
none; but where a particular remedy is given by the law, and that remedy is bounded and
circumscribed by particular rules, it would be very improper for the court to take it up where
the law leaves it and to extend it further than the law allows."
In the same manner, the issue as to whether or not certiorari is proper in the instant case, has been laid to rest
in the case of Turqueza vs. Hernando, (supra) where a petition for certiorari directly filed with the Supreme Court
was granted and the Court set aside the questioned order issued by respondent judge to reopen the case below
for reception of respondent-defendant's evidence notwithstanding the lapse of the reglementary period within
which respondent could file a petition for relief from judgment.
PREMISES CONSIDERED, the resolution of the Court of Appeals in CA-G.R. No. 41582-R and the questioned
Order dated August 16, 1967 of Judge Ludivico D. Arciaga in Civil Case No. 2539 are hereby REVERSED and
SET ASIDE; and said Civil Case is declared TERMINATED. prcd
SO ORDERED.
Fernan (Chairman), Gutierrez, Jr., Padilla, Bidin and Cortes, JJ., concur.
Alampay, J., on leave.
||| (Philippine Rabbit Bus Lines, Inc. v. Arciaga, G.R. No. L-29701, [March 16, 1987], 232 PHIL 400-406)

FIRST DIVISION
[G.R. No. 134241. August 11, 2003.]
DAVID REYES (Substituted by Victoria R. Fabella), petitioner, vs. JOSE LIM, CHUY
CHENG KENG and HARRISON LUMBER, INC.,respondents.
Romulo Mabanta Buenaventura Sayoc & Delos Angeles for petitioner.
Limqueco & Macaraeg Law Office for respondents.
Beltran & Reyes-Beltran for Chuy Cheng Keng and Harrison Lumber, Inc.
SYNOPSIS
Petitioner Reyes filed a complaint for annulment of contract and damages against respondents alleging that
petitioner as seller and respondent Lim as buyer entered into a contract to sell a parcel of land. Lim paid ten
million pesos as down payment upon the signing of the contract. However, before the payment of the balance,
Lim learned that Reyes had already sold the property to another buyer. Lim sought the cancellation of the
contract to sell and requested in open court that Reyes be ordered to deposit the ten million down payment with
the trial court which was granted by the latter. Reyes filed a Motion to Set Aside the Order but the same was
denied. Reyes filed a Petition forCertiorari with the Court of Appeals (CA), but it was dismissed. Hence, this
petition for review.
In affirming the decision of the CA, the Supreme Court ruled that the trial court, in the exercise of its equity
jurisdiction, may validly order the deposit of the ten million down payment in court. The purpose of the exercise
of equity jurisdiction in this case is to prevent unjust enrichment and to ensure restitution. The application of
equity always involves the balancing of the equities in a particular case, a matter addressed to the sound
discretion of the court. Here, the Court found the equities weigh heavily in favor of Lim, who paid the ten million
down payment in good faith, only to discover that Reyes had subsequently sold the subject property to another
buyer.
The Court further held that rescission creates the obligation to return the things that are the subject of the
contract. Thus, since Reyes is demanding to rescind the contract to sell, he cannot refuse to deposit the ten
million down payment in court. Such deposit will ensure restitution of the ten million to its rightful owner. Lim, on
the other hand, has nothing to refund, as he has not received anything under the contract to sell. Moreover, in
this case, it was just, equitable and proper for the trial court to order the deposit of the ten million down payment
to prevent unjust enrichment by Reyes at the expense of Lim.
SYLLABUS
1. REMEDIAL LAW; COURTS; EQUITY JURISDICTION; AIMS TO DO COMPLETE JUSTICE IN CASES
WHERE A COURT OF LAW IS UNABLE TO ADAPT ITS JUDGMENTS TO THE SPECIAL CIRCUMSTANCES
OF A CASE BECAUSE OF THE INFLEXIBILITY OF ITS STATUTORY OR LEGAL JURISDICTION; CASE AT
BAR. The instant case ... is precisely one where there is ahiatus in the law and in the Rules of Court. If left
alone, the hiatus will result in unjust enrichment to Reyes at the expense of Lim. The hiatus may also imperil
restitution, which is a precondition to the rescission of the Contract to Sell that Reyes himself seeks. This is not a
case of. equity overruling a positive provision of law or judicial rule for there is none that governs this particular
case. This is a case of silence or insufficiency of the law and the Rules of Court. In this case, Article 9 of the Civil
Code expressly mandates the courts to make a ruling despite the "silence, obscurity or insufficiency of the laws."
This calls for the application of equity, which "fills the open spaces in the law." Thus, the trial court in the exercise
of its equity jurisdiction may validly order the deposit of the P10 million down payment in court. The purpose of
the exercise of equity jurisdiction in this case is to prevent unjust enrichment and to ensure restitution. Equity
jurisdiction aims to do complete justice in cases where a court of law is unable to adapt its judgments to the
special circumstances of a case because of the inflexibility of its statutory or legal jurisdiction. Equity is the
principle by which substantial justice may be attained in cases where the prescribed or customary forms of
ordinary law are inadequate. ... The application of equity always involves a balancing of the equities in a
particular case, a matter addressed to the sound discretion of the court. Here, we find the equities weigh heavily
in favor of Lim, who paid the P10 million down payment in good faith only to discover later that Reyes had
subsequently sold the Property to another buyer.

2. CIVIL LAW; OBLIGATIONS AND CONTRACTS; RESCISSIBLE CONTRACTS; RESCISSION CREATES THE
OBLIGATION TO RETURN THE THINGS THAT ARE THE OBJECT OF THE CONTRACT; CASE AT BAR.
Under Article 1385 of the Civil Code, rescission creates the obligation to return the things that are the object of
the contract. Rescission is possible only when the person demanding rescission can return whatever he may be
obliged to restore. A court of equity will not rescind a contract unless there is restitution, that is, the parties are
restored to the status quo ante. Thus, since Reyes is demanding to rescind the Contract to Sell, he cannot
refuse to deposit the P10 million down payment in court. Such deposit will ensure restitution of the P10 million to
its rightful owner. Lim, on the other hand, has nothing to refund, as he has not received anything under the
Contract to Sell. ... [A] court may not permit a seller to retain, pendente lite, money paid by a buyer if the seller
himself seeks rescission of the sale because he has subsequently sold the same property to another buyer. By
seeking rescission, a seller necessarily offers to return what he has received from the buyer. Such a seller may
not take back his offer if the court deems it equitable, to prevent unjust enrichment and ensure restitution, to put
the money in judicial deposit.
3. ID:; UNJUST ENRICHMENT; THE PRINCIPLE OF UNJUST ENRICHMENT MAY BE INVOKED BY AN
AGGRIEVED PARTY WHO HAS NO OTHER ACTION BASED ON CONTRACT, QUASI-CONTRACT, CRIME,
QUASI-DELICT OR ANY OTHER PROVISION OF LAW. The principle that no person may unjustly enrich
himself at the expense of another is embodied in Article 22 of the Civil Code. This principle applies not only to
substantive rights but also to procedural remedies. One condition for invoking this principle is that the aggrieved
party has no other action based on contract, quasi-contract, crime, quasi-delict or any other provision of law.
Courts can extend this condition to the hiatus in the Rules of Court where the aggrieved party, during the
pendency of the case, has no other recourse based on the provisional remedies of the Rules of Court.
4. ID.; ID.; WHEN PRESENT: CASE AT BAR. There is unjust enrichment when a person unjustly retains a
benefit to the loss of another, or when a person retains money or property of another against the fundamental
principles of justice, equity and good conscience. In this case, it was just, equitable and proper for the trial court
to order the deposit of the P10 million down payment to prevent unjust enrichment by Reyes at the expense of
Lim.
DECISION
CARPIO, J p:
The Case
This is a petition for review on certiorari of the Decision 1 dated 12 May 1998 of the Court of Appeals in CA-G.R.
SP No. 46224. The Court of Appeals dismissed the petition forcertiorari assailing the Orders dated 6 March
1997, 3 July 1997 and 3 October 1997 of the Regional Trial Court of Paraaque, Branch 260 2 ("trial court") in
Civil Case No. 95-032.
The Facts
On 23 March 1995, petitioner David Reyes ("Reyes") filed before the trial court a complaint for annulment of
contract and damages against respondents Jose Lim ("Lim"), Chuy Cheng Keng ("Keng") and Harrison Lumber,
Inc. ("Harrison Lumber").
The complaint 3 alleged that on 7 November 1994, Reyes as seller and Lim as buyer entered into a contract to
sell ("Contract to Sell") a parcel of land ("Property") located along F.B. Harrison Street, Pasay City. Harrison
Lumber occupied the Property as lessee with a monthly rental of P35,000. The Contract to Sell provided for the
following terms and conditions:
1. The total consideration for the purchase of the aforedescribed parcel of land together with
the perimeter walls found therein is TWENTY EIGHT MILLION (P28,000,000.00) PESOS
payable as follows:
(a) TEN MILLION (P10,000,000.00) PESOS upon signing of this Contract to Sell;
(b) The balance of EIGHTEEN MILLION (P18,000,000.00) PESOS shall be paid on or
before March 8, 1995 at 9:30 A.M. at a bank to be designated by the Buyer but upon
the complete vacation of all the tenants or occupants of the property and execution of
the Deed of Absolute Sale. However, if the tenants or occupants have vacated the

premises earlier than March 8, 1995, the VENDOR shall give the VENDEE at least
one week advance notice for the payment of the balance and execution of the Deed
of Absolute Sale.
2. That in the event, the tenants or occupants of the premises subject of this sale shall not
vacate the premises on March 8, 1995 as stated above, the VENDEE shall withhold the
payment of the balance of P18,000,000.00 and the VENDOR agrees to pay a penalty of Four
percent (4%) per month to the herein VENDEE based on the amount of the downpayment of
TEN MILLION (P10,000,000.00) PESOS until the complete vacation of the premises by the
tenants therein. 4
The complaint claimed that Reyes had informed Harrison Lumber to vacate the Property before the end of
January 1995. Reyes also informed Keng 5 and Harrison Lumber that if they failed to vacate by 8 March 1995,
he would hold them liable for the penalty of P400,000 a month as provided in the Contract to Sell. The complaint
further alleged that Lim connived with Harrison Lumber not to vacate the Property until the P400,000 monthly
penalty would have accumulated and equaled the unpaid purchase price of P18,000,000.
On 3 May 1995, Keng and Harrison Lumber filed their Answer 6 denying they connived with Lim to defraud
Reyes. Keng and Harrison Lumber alleged that Reyes approved their request for an extension of time to vacate
the Property due to their difficulty in finding a new location for their business. Harrison Lumber claimed that as of
March 1995, it had already started transferring some of its merchandise to its new business location in
Malabon. 7
On 31 May 1995, Lim filed his Answer 8 stating that he was ready and willing to pay the balance of the purchase
price on or before 8 March 1995. Lim requested a meeting with Reyes through the latter's daughter on the
signing of the Deed of Absolute Sale and the payment of the balance but Reyes kept postponing their meeting.
On 9 March 1995, Reyes offered to return the P10 million down payment to Lim because Reyes was having
problems in removing the lessee from the Property. Lim rejected Reyes' offer and proceeded to verify the status
of Reyes' title to the Property. Lim learned that Reyes had already sold the Property to Line One Foods
Corporation ("Line One") on 1 March 1995 for P16,782,840. After the registration of the Deed of Absolute Sale,
the Register of Deeds issued to Line One TCT No. 134767 covering the Property. Lim denied conniving with
Keng and Harrison Lumber to defraud Reyes. TAEcCS
On 2 November 1995, Reyes filed a Motion for Leave to File Amended Complaint due to supervening facts.
These included the filing by Lim of a complaint for estafa against Reyes as well as an action for specific
performance and nullification of sale and title plus damages before another trial court. 9 The trial court granted
the motion in an Order dated 23 November 1995.
In his Amended Answer dated 18 January 1996, 10 Lim prayed for the cancellation of the Contract to Sell and
for the issuance of a writ of preliminary attachment against Reyes. The trial court denied the prayer for a writ of
preliminary attachment in an Order dated 7 October 1996.
On 6 March 1997, Lim requested in open court that Reyes be ordered to deposit the P10 million down payment
with the cashier of the Regional Trial Court of Paraaque. The trial court granted this motion.
On 25 March 1997, Reyes filed a Motion to Set Aside the Order dated 6 March 1997 on the ground the Order
practically granted the reliefs Lim prayed for in his Amended Answer. 11 The trial court denied Reyes' motion in
an Order 12 dated 3 July 1997. Citing Article 1385 of the Civil Code, the trial court ruled that an action for
rescission could prosper only if the party demanding rescission can return whatever he may be obliged to
restore should the court grant the rescission.
The trial court denied Reyes' Motion for Reconsideration in its Order 13 dated 3 October 1997. In the same
order, the trial court directed Reyes to deposit the P10 million down payment with the Clerk of Court on or before
30 October 1997.
On 8 December 1997, Reyes 14 filed a Petition for Certiorari 15 with the Court of Appeals. Reyes prayed that
the Orders of the trial court dated 6 March 1997, 3 July 1997 and 3 October 1997 be set aside for having been

issued with grave abuse of discretion amounting to lack of jurisdiction. On 12 May 1998, the Court of Appeals
dismissed the petition for lack of merit.
Hence, this petition for review.
The Ruling of the Court of Appeals
The Court of Appeals ruled the trial court could validly issue the assailed orders in the exercise of its equity
jurisdiction. The court may grant equitable reliefs to breathe life and force to substantive law such as Article
1385 16 of the Civil Code since the provisional remedies under the Rules of Court do not apply to this case.
The Court of Appeals held the assailed orders merely directed Reyes to deposit the P10 million to the custody of
the trial court to protect the interest of Lim who paid the amount to Reyes as down payment. This did not mean
the money would be returned automatically to Lim.
The Issues
Reyes raises the following issues:
1. Whether the Court of Appeals erred in holding the trial court could issue the questioned
Orders dated March 6, 1997, July 3, 1997 and October 3, 1997, requiring petitioner
David Reyes to deposit the amount of Ten Million Pesos (P10,000,000.00) during the
pendency of the action, when deposit is not among the provisional remedies
enumerated in Rule 57 to 61 of the 1997 Rules on Civil Procedure.
2. Whether the Court of Appeals erred in finding the trial court could issue the questioned
Orders on grounds of equity when there is an applicable law on the matter, that is,
Rules 57 to 61 of the 1997 Rules on Civil Procedure. 17
The Court's Ruling
Reyes' contentions are without merit.
Reyes points out that deposit is not among the provisional remedies enumerated in the 1997 Rules of Civil
Procedure. Reyes stresses the enumeration in the Rules is exclusive. Not one of the provisional remedies in
Rules 57 to 61 18 applies to this case. Reyes argues that a court cannot apply equity and require deposit if the
law already prescribes the specific provisional remedies which do not include deposit. Reyes invokes the
principle that equity is "applied only in the absence of, and never against, statutory law or . . . judicial rules of
procedure." 19 Reyes adds the fact that the provisional remedies do not include deposit is a matter of dura lex
sed lex. 20
The instant case, however, is precisely one where there is a hiatus in the law and in the Rules of Court. If left
alone, the hiatus will result in unjust enrichment to Reyes at the expense of Lim. The hiatus may also imperil
restitution, which is a precondition to the rescission of the Contract to Sell that Reyes himself seeks. This is not a
case of equity overruling a positive provision of law or judicial rule for there is none that governs this particular
case. This is a case of silence or insufficiency of the law and the Rules of Court. In this case, Article 9 of the Civil
Code expressly mandates the courts to make a ruling despite the "silence, obscurity or insufficiency of the
laws." 21 This calls for the application of equity, 22 which "fills the open spaces in the law." 23
Thus, the trial court in the exercise of its equity jurisdiction may validly order the deposit of the P10 million down
payment in court. The purpose of the exercise of equity jurisdiction in this case is to prevent unjust enrichment
and to ensure restitution. Equity jurisdiction aims to do complete justice in cases where a court of law is unable
to adapt its judgments to the special circumstances of a case because of the inflexibility of its statutory or legal
jurisdiction. 24 Equity is the principle by which substantial justice may be attained in cases where the prescribed
or customary forms of ordinary law are inadequate. 25
Reyes is seeking rescission of the Contract to Sell. In his amended answer, Lim is also seeking cancellation of
the Contract to Sell. The trial court then ordered Reyes to deposit in court the P10 million down payment that
Lim made under the Contract to Sell. Reyes admits receipt of the P10 million down payment but opposes the
order to deposit the amount in court. Reyes contends that prior to a judgment annulling the Contract to Sell, he
has the "right to use, possess and enjoy" 26 the P10 million as its "owner" 27 unless the court orders its
preliminary attachment. 28

To subscribe to Reyes' contention will unjustly enrich Reyes at the expense of Lim. Reyes sold to Line One the
Property even before the balance of P18 million under the Contract to Sell with Lim became due on 8 March
1995. On 1 March 1995, Reyes signed a Deed of Absolute Sale 29 in favor of Line One. On 3 March 1995, the
Register of Deeds issued TCT No. 134767 30 in the name of Line One. 31 Reyes cannot claim ownership of the
P10 million down payment because Reyes had already sold to another buyer the Property for which Lim made
the down payment. In fact, in his Comment 32 dated 20 March 1996, Reyes reiterated his offer to return to Lim
the P10 million down payment. TCHEDA
On balance, it is unreasonable and unjust for Reyes to object to the deposit of the P10 million down payment.
The application of equity always involves a balancing of the equities in a particular case, a matter addressed to
the sound discretion of the court. Here, we find the equities weigh heavily in favor of Lim, who paid the P10
million down payment in good faith only to discover later that Reyes had subsequently sold the Property to
another buyer.
In Eternal Gardens Memorial Parks Corp. v. IAC, 33 this Court held the plaintiff could not continue to benefit
from the property or funds in litigation during the pendency of the suit at the expense of whomever the court
might ultimately adjudge as the lawful owner. The Court declared:
In the case at bar, a careful analysis of the records will show that petitioner admitted among
others in its complaint in Interpleader that it is still obligated to pay certain amounts to private
respondent; that it claims no interest in such amounts due and is willing to pay whoever is
declared entitled to said amounts. . . . .
Under the circumstances, there appears to be no plausible reason for petitioner's objections to
the deposit of the amounts in litigation after having asked for the assistance of the lower court
by filing a complaint for interpleader where the deposit of aforesaid amounts is not only
required by the nature of the action but is a contractual obligation of the petitioner under the
Land Development Program (Rollo, p. 252).
There is also no plausible or justifiable reason for Reyes to object to the deposit of the P10 million down
payment in court. The Contract to Sell can no longer be enforced because Reyes himself subsequently sold the
Property to Line One. Both Reyes and Lim are now seeking rescission of the Contract to Sell. Under Article 1385
of the Civil Code, rescission creates the obligation to return the things that are the object of the contract.
Rescission is possible only when the person demanding rescission can return whatever he may be obliged to
restore. A court of equity will not rescind a contract unless there is restitution, that is, the parties are restored to
the status quo ante. 34
Thus, since Reyes is demanding to rescind the Contract to Sell, he cannot refuse to deposit the P10 million
down payment in court. 35 Such deposit will ensure restitution of the P10 million to its rightful owner. Lim, on the
other hand, has nothing to refund, as he has not received anything under the Contract to Sell. 36
In Government of the Philippine Islands v. Wagner and Cleland Wagner, 37 the Court ruled the refund of
amounts received under a contract is a precondition to the rescission of the contract. The Court declared:
The Government, having asked for rescission, must restore to the defendants whatever it has
received under the contract. It will only be just if, as a condition to rescission, the Government
be required to refund to the defendants an amount equal to the purchase price, plus the sums
expended by them in improving the land. (Civil Code, Art. 1295.)
The principle that no person may unjustly enrich himself at the expense of another is embodied in Article
22 38 of the Civil Code. This principle applies not only to substantive rights but also to procedural remedies. One
condition for invoking this principle is that the aggrieved party has no other action based on contract, quasicontract, crime, quasi-delict or any other provision of law. 39 Courts can extend this condition to the hiatus in the
Rules of Court where the aggrieved party, during the pendency of the case, has no other recourse based on the
provisional remedies of the Rules of Court.
Thus, a court may not permit a seller to retain, pendente lite, money paid by a buyer if the seller himself seeks
rescission of the sale because he has subsequently sold the same property to another buyer. 40 By seeking

rescission, a seller necessarily offers to return what he has received from the buyer. Such a seller may not take
back his offer if the court deems it equitable, to prevent unjust enrichment and ensure restitution, to put the
money in judicial deposit.
There is unjust enrichment when a person unjustly retains a benefit to the loss of another, or when a person
retains money or property of another against the fundamental principles of justice, equity and good
conscience. 41 In this case, it was just, equitable and proper for the trial court to order the deposit of the P10
million down payment to prevent unjust enrichment by Reyes at the expense of Lim. 42
WHEREFORE, we AFFIRM the Decision of the Court of Appeals.
SO ORDERED.
Davide, Jr., C .J ., Vitug, Ynares-Santiago and Azcuna, JJ ., concur.
||| (Reyes v. Lim, G.R. No. 134241, [August 11, 2003], 456 PHIL 1-14)

THIRD DIVISION
[G.R. No. 166562. March 31, 2009.]
BENJAMIN G. TING, petitioner, vs. CARMEN M. VELEZ-TING, respondent.
DECISION
NACHURA, J p:
Before us is a petition for review on certiorari seeking to set aside the November 17, 2003 Amended
Decision 1 of the Court of Appeals (CA), and its December 13, 2004 Resolution 2 in CA-G.R. CV No. 59903.
The appellate court, in its assailed decision and resolution, affirmed the January 9, 1998 Decision 3 of the
Regional Trial Court (RTC), Branch 23, Cebu City, declaring the marriage between petitioner and respondent
null and void ab initio pursuant to Article 36 of the Family Code. 4 aTADCE
The facts follow.
Petitioner Benjamin Ting (Benjamin) and respondent Carmen Velez-Ting (Carmen) first met in 1972 while they
were classmates in medical school. 5 They fell in love, and they were wed on July 26, 1975 in Cebu City when
respondent was already pregnant with their first child.
At first, they resided at Benjamin's family home in Maguikay, Mandaue City. 6 When their second child was born,
the couple decided to move to Carmen's family home in Cebu City. 7 In September 1975, Benjamin passed the
medical board examinations 8 and thereafter proceeded to take a residency program to become a surgeon but
shifted to anesthesiology after two years. By 1979, Benjamin completed the preceptorship program for the said
field 9 and, in 1980, he began working for Velez Hospital, owned by Carmen's family, as member of its active
staff, 10 while Carmen worked as the hospital's Treasurer. 11
The couple begot six (6) children, namely Dennis, born on December 9, 1975; James Louis, born on August 25,
1977; Agnes Irene, born on April 5, 1981; Charles Laurence, born on July 21, 1986; Myles Vincent, born on July
19, 1988; and Marie Corinne, born on June 16, 1991. 12
On October 21, 1993, after being married for more than 18 years to petitioner and while their youngest child was
only two years old, Carmen filed a verified petition before the RTC of Cebu City praying for the declaration of
nullity of their marriage based on Article 36 of the Family Code. She claimed that Benjamin suffered from
psychological incapacity even at the time of the celebration of their marriage, which, however, only became
manifest thereafter. 13
In her complaint, Carmen stated that prior to their marriage, she was already aware that Benjamin used to drink
and gamble occasionally with his friends. 14 But after they were married, petitioner continued to drink regularly
and would go home at about midnight or sometimes in the wee hours of the morning drunk and violent. He
would confront and insult respondent, physically assault her and force her to have sex with him. There were also
instances when Benjamin used his gun and shot the gate of their house. 15 Because of his drinking habit,
Benjamin's job as anesthesiologist was affected to the point that he often had to refuse to answer the call of his
fellow doctors and to pass the task to other anesthesiologists. Some surgeons even stopped calling him for his
services because they perceived petitioner to be unreliable. Respondent tried to talk to her husband about the
latter's drinking problem, but Benjamin refused to acknowledge the same. 16 SEHTAC
Carmen also complained that petitioner deliberately refused to give financial support to their family and would
even get angry at her whenever she asked for money for their children. Instead of providing support, Benjamin
would spend his money on drinking and gambling and would even buy expensive equipment for his
hobby. 17 He rarely stayed home 18 and even neglected his obligation to his children. 19
Aside from this, Benjamin also engaged in compulsive gambling. 20 He would gamble two or three times a week
and would borrow from his friends, brothers, or from loan sharks whenever he had no money. Sometimes,
Benjamin would pawn his wife's own jewelry to finance his gambling. 21 There was also an instance when the
spouses had to sell their family car and even a portion of the lot Benjamin inherited from his father just to be able
to pay off his gambling debts. 22 Benjamin only stopped going to the casinos in 1986 after he was banned
therefrom for having caused trouble, an act which he said he purposely committed so that he would be banned
from the gambling establishments. 23

In sum, Carmen's allegations of Benjamin's psychological incapacity consisted of the following manifestations:
1. Benjamin's alcoholism, which adversely affected his family relationship and his profession;
2. Benjamin's violent nature brought about by his excessive and regular drinking;
3. His compulsive gambling habit, as a result of which Benjamin found it necessary to sell the
family car twice and the property he inherited from his father in order to pay off his
debts, because he no longer had money to pay the same; and
4. Benjamin's irresponsibility and immaturity as shown by his failure and refusal to give
regular financial support to his family. 24 aDTSHc
In his answer, Benjamin denied being psychologically incapacitated. He maintained that he is a respectable
person, as his peers would confirm. He said that he is an active member of social and athletic clubs and would
drink and gamble only for social reasons and for leisure. He also denied being a violent person, except when
provoked by circumstances. 25 As for his alleged failure to support his family financially, Benjamin claimed that it
was Carmen herself who would collect his professional fees from Velez Hospital when he was still serving there
as practicing anesthesiologist. 26 In his testimony, Benjamin also insisted that he gave his family financial
support within his means whenever he could and would only get angry at respondent for lavishly spending his
hard-earned money on unnecessary things. 27 He also pointed out that it was he who often comforted and took
care of their children, while Carmen played mahjong with her friends twice a week. 28
During the trial, Carmen's testimony regarding Benjamin's drinking and gambling habits and violent behavior
was corroborated by Susana Wasawas, who served as nanny to the spouses' children from 1987 to
1992. 29 Wasawas stated that she personally witnessed instances when Benjamin maltreated Carmen even in
front of their children. 30
Carmen also presented as witness Dr. Pureza Trinidad-Oate, a psychiatrist. 31 Instead of the usual personal
interview, however, Dr. Oate's evaluation of Benjamin was limited to the transcript of stenographic notes taken
during Benjamin's deposition because the latter had already gone to work as an anesthesiologist in a hospital in
South Africa. After reading the transcript of stenographic notes, Dr. Oate concluded that Benjamin's compulsive
drinking, compulsive gambling and physical abuse of respondent are clear indications that petitioner suffers from
a personality disorder. 32
To refute Dr. Oate's opinion, petitioner presented Dr. Renato D. Obra, a psychiatrist and a consultant at the
Department of Psychiatry in Don Vicente Sotto Memorial Medical Center, as his expert witness. 33 Dr. Obra
evaluated Benjamin's psychological behavior based on the transcript of stenographic notes, as well as the
psychiatric evaluation report prepared by Dr. A.J.L. Pentz, a psychiatrist from the University of Pretoria in South
Africa, and his (Dr. Obra's) interview with Benjamin's brothers. 34 Contrary to Dr. Oate's findings, Dr. Obra
observed that there is nothing wrong with petitioner's personality, considering the latter's good relationship with
his fellow doctors and his good track record as anesthesiologist. 35 SIcEHD
On January 9, 1998, the lower court rendered its Decision 36 declaring the marriage between petitioner and
respondent null and void. The RTC gave credence to Dr. Oate's findings and the admissions made by
Benjamin in the course of his deposition, and found him to be psychologically incapacitated to comply with the
essential obligations of marriage. Specifically, the trial court found Benjamin an excessive drinker, a compulsive
gambler, someone who prefers his extra-curricular activities to his family, and a person with violent tendencies,
which character traits find root in a personality defect existing even before his marriage to Carmen. The decretal
portion of the decision reads:
WHEREFORE, all the foregoing considered, judgment is hereby rendered declaring the
marriage between plaintiff and defendant null and void ab initio pursuant to Art. 36 of the
Family Code. . . .
xxx xxx xxx
SO ORDERED. 37
Aggrieved, petitioner appealed to the CA. On October 19, 2000, the CA rendered a Decision 38 reversing the
trial court's ruling. It faulted the trial court's finding, stating that no proof was adduced to support the conclusion

that Benjamin was psychologically incapacitated at the time he married Carmen since Dr. Oate's conclusion
was based only on theories and not on established fact, 39 contrary to the guidelines set forth in Santos v. Court
of Appeals 40 and in Rep. of the Phils. v. Court of Appeals and Molina. 41
Because of this, Carmen filed a motion for reconsideration, arguing that the Molina guidelines should not be
applied to this case since the Molina decision was promulgated only on February 13, 1997, or more than five
years after she had filed her petition with the RTC. 42 She claimed that the Molina ruling could not be made to
apply retroactively, as it would run counter to the principle of stare decisis. Initially, the CA denied the motion for
reconsideration for having been filed beyond the prescribed period. Respondent thereafter filed a manifestation
explaining compliance with the prescriptive period but the same was likewise denied for lack of merit.
Undaunted, respondent filed a petition forcertiorari 43 with this Court. In a Resolution 44 dated March 5, 2003,
this Court granted the petition and directed the CA to resolve Carmen's motion for reconsideration. 45 On
review, the CA decided to reconsider its previous ruling. Thus, on November 17, 2003, it issued an Amended
Decision 46 reversing its first ruling and sustaining the trial court's decision. 47 TcEAIH
A motion for reconsideration was filed, this time by Benjamin, but the same was denied by the CA in its
December 13, 2004 Resolution. 48
Hence, this petition.
For our resolution are the following issues:
I. Whether the CA violated the rule on stare decisis when it refused to follow the guidelines set
forth under the Santos and Molina cases;
II. Whether the CA correctly ruled that the requirement of proof of psychological incapacity for
the declaration of absolute nullity of marriage based on Article 36 of the Family Code
has been liberalized; and
III. Whether the CA's decision declaring the marriage between petitioner and respondent null
and void [is] in accordance with law and jurisprudence.
We find merit in the petition.
I. On the issue of stare decisis.
The principle of stare decisis enjoins adherence by lower courts to doctrinal rules established by this
Court in its final decisions. It is based on the principle that once a question of law has been examined and
decided, it should be deemed settled and closed to further argument. 49 Basically, it is a bar to any attempt
to relitigate the same issues, 50 necessary for two simple reasons: economy and stability. In our jurisdiction,
the principle is entrenched in Article 8 of the Civil Code. 51
This doctrine of adherence to precedents or stare decisis was applied by the English courts and was later
adopted by the United States. Associate Justice (now Chief Justice) Reynato S. Puno's discussion on the
historical development of this legal principle in his dissenting opinion in Lambino v. Commission on
Elections 52 is enlightening: DCTHaS
The latin phrase stare decisis et non quieta movere means "stand by the thing and do not
disturb the calm." The doctrine started with the English Courts. Blackstone observed that at
the beginning of the 18th century, "it is an established rule to abide by former precedents
where the same points come again in litigation." As the rule evolved, early limits to its
application were recognized: (1) it would not be followed if it were "plainly unreasonable"; (2)
where courts of equal authority developed conflicting decisions; and, (3) the binding force of
the decision was the "actual principle or principles necessary for the decision; not the words or
reasoning used to reach the decision."
The doctrine migrated to the United States. It was recognized by the framers of the U.S.
Constitution. According to Hamilton, "strict rules and precedents" are necessary to prevent
"arbitrary discretion in the courts." Madison agreed but stressed that ". . . once the precedent
ventures into the realm of altering or repealing the law, it should be rejected." Prof. Consovoy

well noted that Hamilton and Madison "disagree about the countervailing policy considerations
that would allow a judge to abandon a precedent." He added that their ideas "reveal a deep
internal conflict between the concreteness required by the rule of law and the flexibility
demanded in error correction. It is this internal conflict that the Supreme Court has attempted
to deal with for over two centuries."
Indeed, two centuries of American case law will confirm Prof. Consovoy's observation
although stare decisis developed its own life in the United States. Two strains of stare
decisis have been isolated by legal scholars. The first, known as vertical stare decisis deals
with the duty of lower courts to apply the decisions of the higher courts to cases involving the
same facts. The second, known as horizontal stare decisis requires that high courts must
follow its own precedents. Prof. Consovoy correctly observes that verticalstare decisis has
been viewed as an obligation, while horizontal stare decisis, has been viewed as a policy,
imposing choice but not a command. Indeed, stare decisis is not one of the precepts set in
stone in our Constitution.
It is also instructive to distinguish the two kinds of horizontal stare decisis constitutional
stare decisis and statutory stare decisis. Constitutional stare decisis involves judicial
interpretations of the Constitution while statutory stare decisis involves interpretations of
statutes. The distinction is important for courts enjoy more flexibility in refusing to apply stare
decisis in constitutional litigations. Justice Brandeis' view on the binding effect of the doctrine
in constitutional litigations still holds sway today. In soothing prose, Brandeis stated: "Stare
decisis is not . . . a universal and inexorable command. The rule of stare decisis is not
inflexible. Whether it shall be followed or departed from, is a question entirely within the
discretion of the court, which is again called upon to consider a question once decided." In the
same vein, the venerable Justice Frankfurter opined: "the ultimate touchstone of
constitutionality is the Constitution itself and not what we have said about it." In contrast, the
application of stare decisis on judicial interpretation of statutes is more inflexible. As Justice
Stevens explains: "after a statute has been construed, either by this Court or by a consistent
course of decision by other federal judges and agencies, it acquires a meaning that should be
as clear as if the judicial gloss had been drafted by the Congress itself." This stance reflects
both respect for Congress' role and the need to preserve the courts' limited
resources. aEIcHA
In general, courts follow the stare decisis rule for an ensemble of reasons, viz.: (1) it
legitimizes judicial institutions; (2) it promotes judicial economy; and, (3) it allows for
predictability. Contrariwise, courts refuse to be bound by the stare decisis rule where (1) its
application perpetuates illegitimate and unconstitutional holdings; (2) it cannot accommodate
changing social and political understandings; (3) it leaves the power to overturn bad
constitutional law solely in the hands of Congress; and, (4) activist judges can dictate the
policy for future courts while judges that respect stare decisis are stuck agreeing with them.
In its 200-year history, the U.S. Supreme Court has refused to follow the stare decisis rule and
reversed its decisions in 192 cases. The most famous of these reversals is Brown v. Board of
Education which junked Plessy v. Ferguson's "separate but equal doctrine". Plessy upheld as
constitutional a state law requirement that races be segregated on public transportation.
In Brown, the U.S. Supreme Court, unanimously held that "separate . . . is inherently
unequal". Thus, by freeing itself from the shackles of stare decisis, the U.S. Supreme Court
freed the colored Americans from the chains of inequality. In the Philippine setting, this Court
has likewise refused to be straitjacketed by the stare decisis rule in order to promote public
welfare. In La Bugal-B'laan Tribal Association, Inc. v. Ramos, we reversed our original ruling
that certain provisions of the Mining Law are unconstitutional. Similarly, in Secretary of Justice
v. Lantion, we overturned our first ruling and held, on motion for reconsideration, that a private
respondent is bereft of the right to notice and hearing during the evaluation stage of the
extradition process.

An examination of decisions on stare decisis in major countries will show that courts are
agreed on the factors that should be considered before overturning prior rulings. These are
workability, reliance, intervening developments in the law and changes in fact. In addition,
courts put in the balance the following determinants: closeness of the voting, age of the prior
decision and its merits. TIDcEH
The leading case in deciding whether a court should follow the stare decisis rule in
constitutional litigations is Planned Parenthood v. Casey. It established a 4-pronged test. The
court should (1) determine whether the rule has proved to be intolerable simply in defying
practical workability; (2) consider whether the rule is subject to a kind of reliance that would
lend a special hardship to the consequences of overruling and add inequity to the cost of
repudiation; (3) determine whether related principles of law have so far developed as to have
the old rule no more than a remnant of an abandoned doctrine; and, (4) find out whether facts
have so changed or come to be seen differently, as to have robbed the old rule of significant
application or justification. 53
To be forthright, respondent's argument that the doctrinal guidelines prescribed in Santos and Molina should not
be applied retroactively for being contrary to the principle ofstare decisis is no longer new. The same argument
was also raised but was struck down in Pesca v. Pesca, 54 and again in Antonio v. Reyes. 55 In these cases,
we explained that the interpretation or construction of a law by courts constitutes a part of the law as of the date
the statute is enacted. It is only when a prior ruling of this Court is overruled, and a different view is adopted, that
the new doctrine may have to be applied prospectively in favor of parties who have relied on the old doctrine and
have acted in good faith, in accordance therewith under the familiar rule of "lex prospicit, non respicit".
II. On liberalizing the required proof for the declaration of nullity of marriage under Article 36.
Now, petitioner wants to know if we have abandoned the Molina doctrine.
We have not.
In Edward Kenneth Ngo Te v. Rowena Ong Gutierrez Yu-Te, 56 we declared that, 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. We said that instead of serving as a guideline, Molina unintentionally became a
straightjacket, forcing all cases involving psychological incapacity to fit into and be bound by it, which is not only
contrary to the intention of the law but unrealistic as well because, with respect to psychological incapacity, no
case can be considered as on "all fours" with another. 57 IDSEAH
By the very nature of cases involving the application of Article 36, it is logical and understandable to give weight
to the expert opinions furnished by psychologists regarding the psychological temperament of parties in order to
determine the root cause, juridical antecedence, gravity and incurability of the psychological incapacity.
However, such opinions, while highly advisable, are not conditions sine qua non in granting petitions for
declaration of nullity of marriage. 58 At best, courts must treat such opinions as decisive but not indispensable
evidence in determining the merits of a given case. In fact, if the totality of evidence presented is enough to
sustain a finding of psychological incapacity, then actual medical or psychological examination of the person
concerned need not be resorted to. 59 The trial court, as in any other given case presented before it, must
always base its decision not solely on the expert opinions furnished by the parties but also on the totality of
evidence adduced in the course of the proceedings.
It was for this reason that we found it necessary to emphasize in Ngo Te that each case involving the application
of Article 36 must be treated distinctly and judged not on the basis of a priori assumptions, predilections or
generalizations but according to its own attendant facts. 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.
Far from abandoning Molina, we simply suggested the relaxation of the stringent requirements set forth therein,
cognizant of the explanation given by the Committee on the Revision of the Rules on the rationale of the Rule on

Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages (A.M. No. 02-11-10SC), viz.:
To require the petitioner to allege in the petition the particular root cause of the psychological
incapacity and to attach thereto the verified written report of an accredited psychologist or
psychiatrist have proved to be too expensive for the parties. They adversely affect access to
justice of poor litigants. It is also a fact that there are provinces where these experts are not
available. Thus, the Committee deemed it necessary to relax this stringent requirement
enunciated in the Molina Case. The need for the examination of a party or parties by a
psychiatrist or clinical psychologist and the presentation of psychiatric experts shall now be
determined by the court during the pre-trial conference. 60
But where, as in this case, the parties had the full opportunity to present professional and expert opinions of
psychiatrists tracing the root cause, gravity and incurability of a party's alleged psychological incapacity, then
such expert opinion should be presented and, accordingly, be weighed by the court in deciding whether to grant
a petition for nullity of marriage.
III. On petitioner's psychological incapacity.
Coming now to the main issue, we find the totality of evidence adduced by respondent insufficient to prove that
petitioner is psychologically unfit to discharge the duties expected of him as a husband, and more particularly,
that he suffered from such psychological incapacity as of the date of the marriage eighteen (18) years ago.
Accordingly, we reverse the trial court's and the appellate court's rulings declaring the marriage between
petitioner and respondent null and void ab initio. SDcITH
The intendment of the law has been to confine the application of Article 36 to the most serious cases of
personality disorders clearly demonstrative of an utter insensitivity or inability to give meaning and significance
to the marriage. 61 The psychological illness that must have afflicted a party at the inception of the marriage
should be a malady so grave and permanent as to deprive one of awareness of the duties and responsibilities of
the matrimonial bond he or she is about to assume. 62
In this case, respondent failed to prove that petitioner's "defects" were present at the time of the celebration of
their marriage. She merely cited that prior to their marriage, she already knew that petitioner would occasionally
drink and gamble with his friends; but such statement, by itself, is insufficient to prove any pre-existing
psychological defect on the part of her husband. Neither did the evidence adduced prove such "defects" to be
incurable.
The evaluation of the two psychiatrists should have been the decisive evidence in determining whether to
declare the marriage between the parties null and void. Sadly, however, we are not convinced that the opinions
provided by these experts strengthened respondent's allegation of psychological incapacity. The two experts
provided diametrically contradicting psychological evaluations: Dr. Oate testified that petitioner's behavior is a
positive indication of a personality disorder, 63 while Dr. Obra maintained that there is nothing wrong with
petitioner's personality. Moreover, there appears to be greater weight in Dr. Obra's opinion because, aside from
analyzing the transcript of Benjamin's deposition similar to what Dr. Oate did, Dr. Obra also took into
consideration the psychological evaluation report furnished by another psychiatrist in South Africa who
personally examined Benjamin, as well as his (Dr. Obra's) personal interview with Benjamin's
brothers. 64 Logically, therefore, the balance tilts in favor of Dr. Obra's findings.
Lest it be misunderstood, we are not condoning petitioner's drinking and gambling problems, or his violent
outbursts against his wife. There is no valid excuse to justify such a behavior. Petitioner must remember that he
owes love, respect, and fidelity to his spouse as much as the latter owes the same to him. Unfortunately, this
court finds respondent's testimony, as well as the totality of evidence presented by the respondent, to be too
inadequate to declare him psychologically unfit pursuant to Article 36. CASIEa
It should be remembered that the presumption is always in favor of the validity of marriage. Semper praesumitur
pro matrimonio. 65 In this case, the presumption has not been amply rebutted and must, perforce, prevail.

WHEREFORE, premises considered, the petition for review on certiorari is GRANTED. The November 17, 2003
Amended Decision and the December 13, 2004 Resolution of the Court of Appeals in CA-G.R. CV No. 59903
are accordingly REVERSED and SET ASIDE.
SO ORDERED.
Ynares-Santiago, Carpio-Morales, * Chico-Nazario and Peralta, JJ., concur.
||| (Ting v. Velez-Ting, G.R. No. 166562, [March 31, 2009], 601 PHIL 676-694)

EN BANC
[G.R. No. 127022. June 28, 2000.]
FIRESTONE CERAMICS, INC., BOOMTOWN DEVELOPMENT CORPORATION, Spouses
CYNTHIA D. CHING and CHING TIONG KENG, Spouses CARMEN SOCO and LORENZO
ONG ENG CHONG, Spouses SOLEDAD B. YU and YU SY CHIA and LETICIA NOCOM
CHAN, petitioners, vs. COURT OF APPEALS, LORENZO J. GANA, PATROCINIO E.
MARGOLLES, ALICE E. SOTTO, VIRGINIA E. VILLONGCO, EDGARDO C. ESPINOSA,
LUCIA E. LAPERAL, NORMA C. ESPINOSA, TERESITA E. CASAL, PELTAN
DEVELOPMENT, INC., REGIONAL TRIAL COURT (formerly CFI of Rizal) and the
REGISTER OF DEEDS OF LAS PIAS, METRO MANILA, [Link] B.
REY, petitioner-intervenor.
[G.R. No. 127245. June 28, 2000.]
REPUBLIC OF THE PHILIPPINES, represented by the DIRECTOR, LAND MANAGEMENT
BUREAU, petitioner, vs. HON. COURT OF APPEALS, LORENZO J. GANA, PATROCINIO
E. MARGOLLES, ALICE E. SOTTO, VIRGINIA E. VILLONGCO, EDGARDO C. ESPINOSA,
LUCIA A. LAPERAL, NORMA C. ESPINOSA, TERESITA E. CASAL, PELTAN
DEVELOPMENT INC., THE REGIONAL TRIAL COURT (formerly CFI) of RIZAL, and THE
REGISTER OF DEEDS OF LAS PIAS, respondents.
Arturo S. Santos for Firestone Ceramics, Inc.
The Solicitor General for public respondent.
Eddie Tomondong for Intervenor.
Padilla Law Office for Espinosas & Peltan.
SYNOPSIS
A motion was filed by petitioner Republic to refer to the Court en banc the motions for reconsideration of the
consolidated decision rendered by the Regional Trial Court affecting the validity of titles of 99 hectares of land
adjudicated to private individuals. It was alleged that the decision failed to state the classification of the subject
lands, claimed by the government, and that the court has no jurisdiction. The first motion was denied by the
division in a vote of 4-1, while the motion for reconsideration was unacted upon.
The Court en banc, in the legitimate and valid exercise of its residual power under paragraph 9 of Resolution of
November 18, 1993, may accept a case decided by a division on a finding that the issues raised by the cases
are of such importance, let alone the enormous value of the area claimed by the government.
SYLLABUS
REMEDIAL LAW; SUPREME COURT; SC CIRCULAR NO. 2-89; OTHER CASES DEEMED BY A MAJORITY
OF THE COURT EN BANC OF SUFFICIENT IMPORTANCE MAY BE CONSIDERED EN BANC CASES;
ADJUDICATION TO PRIVATE INDIVIDUALS OF 99 HECTARES OF LAND WHICH DOES NOT INDICATE
CLASSIFICATION, OF SUFFICIENT IMPORTANCE. The cases at bar involve a vast tract of land with an
area of around ninety-nine (99) hectares presumptively belonging to the Republic of the Philippines, which land
had been adjudicated to private individuals by a court alleged to be without jurisdiction. Since the validity of the
said decision and the original certificate of title as well as transfer certificates of title issued pursuant thereto
hinges on the classification of subject area at the time it was so adjudicated, determination of the validity of the
disposition thereof is in order. The assailed decision does not indicate the classification of the land in question,
when the herein private respondents obtained their decree of registration thereover. There was submitted to the
Court en consulta, petitioners' Motions to Refer to the Court En Banc these consolidated cases for the
consideration of the Court. On March 8, 2000, the Third Division voted 4-1 to deny petitioners' motion to transfer
these cases to the Banc. Thus, on March 14, 2000, the Court deliberated on the consulta and thereafter, voted
9-5 to accept the cases for the Banc to pass upon in view of the finding that the cases above entitled are of
sufficient importance to merit its attention. Evidently, the action of the Court under the premises is a legitimate

and valid exercise of its RESIDUAL POWER within the contemplation of paragraph 9 of the Resolution En
Banc of November 18, 1993, which reads: "All other cases as the court en banc by a majority of its actual
membership may deem of sufficient importance to merit its attention." Taking into account the importance of
these cases and the issues raised, let alone the enormous value of the area in litigation, which is claimed as
government property, there is merit in the prayer of petitioners that their pending motions for reconsideration
should be resolved by the Court En Banc.
PUNO, J., separate opinion:
REMEDIAL LAW; SUPREME COURT; SC CIRCULAR NO. 2-89; OTHER CASES DEEMED BY A MAJORITY
OF THE COURT EN BANC OF SUFFICIENT IMPORTANCE MAY BE CONSIDERED EN BANC CASES;
RESOLUTION OF MOTION FOR RECONSIDERATION PENDING WITH THE DIVISION, A VITAL FACTOR TO
CONSIDER BEFORE THE COURT EN BANC SHOULD FINALLY DECIDE TO ASSUME JURISDICTION OVER
CASE. In the session last March 21, 2000, information was given that a majority of the members of the Third
Division intends to hear the Motion for Reconsideration filed by the Republic and then report its result to the
Court en banc. Justice Puno sincerely believe that the result of the said oral arguments will be a vital factor to
consider before the court en banc should finally decide to assume jurisdiction over the case at bar. The issue for
resolution in the said Motion for Reconsideration concerns res judicata. This is an issue that does not strictly
involve a question of law for beyond doubt its resolution will rest on some amorphous questions of fact. Until and
unless these questions of fact are sharpened and given shape in the intended oral arguments, he is of the
opinion and so vote that the Court en banc should defer its action to assume jurisdiction over the case at bar.
PANGANIBAN, J., dissenting opinion:
1. REMEDIAL LAW; SUPREME COURT; SC CIRCULAR NO. 2-89; OTHER CASES DEEMED OF SUFFICIENT
IMPORTANCE MAY BE CONSIDERED EN BANC CASES; ABSENCE OF ANY COGENT OR COMPELLING
REASON NEGATES REFERRAL TO COURT EN BANC. On September 2, 1999, the Court through the Third
Division unanimously promulgated its Decision denying the Petitions in these cases. Thereafter, both the
government and private petitioners filed separate (1) Motions for Reconsideration and (2) Motions to Refer the
Cases to the Court En Banc. By vote of 4-1, the Third Division rejected the Motions to Refer the Cases to the full
Court because the movants had utterly failed to adduce any legal reason for such referral. With due respect, I
say that the majority has not given any cogent or compelling reason for this unprecedented action. The majority
simply used its sheer voting strength to bulldoze the earlier 4-1 action of the Third Division. If at all, the lame
excuse given that the "subject Decision [promulgated by the Third Division] does not clearly indicate the
classification of said land" is merely an argument why the pending Motions for Reconsideration should be
granted, not why the banc should take over this case. aHTEIA
2. ID.; ID.; ID.; ID.; COURT EN BANC SHOULD NOT ASSUME JURISDICTION OVER CASE WHERE MOTION
FOR REFERRAL WAS DENIED BY THE DIVISION BY A VOTE OF 4-1 AND MOTION FOR
RECONSIDERATION WAS NOT YET ACTED UPON BY THE DIVISION; CASE AT BAR SIMILAR TO SUMILAO
CASE. In the celebrated Sumilao farmers' case, a similar motion to refer to the full Court was turned down by
the Second Division by a vote of 3-1. Arguing that the Division's earlier vote of 2-2 on the Motion for
Reconsideration was not decisive, Justice Jose A.R. Melo (who was then a member of the Second Division)
subsequently asked the banc to take over the case. Justice Melo argued that under Article VIII, Section 4(3)
of the Constitution, "[c]ases or matters heard by a division shall be decided or resolved with the concurrence of a
majority of the members who actually took part in the deliberations on the issues in the case and voted thereon,
and in no case without the concurrence of at least three of such members." Since the Motion for
Reconsideration did not obtain the required three votes in the Division, he added that the banc should thus take
over and resolve the impasse. In other words, Justice Melo presented a genuine "question of sufficient
importance" which the Second Division was not in a position to resolve to justify a take-over by the banc.
Yet, the full Court turned down his proposal. I therefore cannot understand why the banc is now taking over this
case against the wishes of the Third Division. It turned down the poor farmers' plea and the Melo proposal. Why
then should the banc grant the not-so-poor private petitioners' prayer here? Why then should it approve the
groundless Purisima proposal? At the very least, if it should take over this case, then it should likewise assume
jurisdiction over the farmer's suit. After all, the vote in the Motion for Reconsideration in that case was two in

favor and two against, while in the present case, the Third Division has not even voted on the plea for
reconsideration. In other words, there was sufficient reason for the banc to take over the Sumilao problem
because of the 2-2 vote of the Division. Here, no cogent reason whatsoever other than the motherhood
peroration that the case was "of sufficient importance" is given by the majority. Parenthetically, I should add
that the Third Division is not averse to hearing the petitioners' Motion for Reconsideration. As a matter of fact, if
the banc did not take over this case, it would have scheduled the said Motions for oral argument. Simply stated,
the Third Division is not incapable of rendering objective and fair justice in this case and to rule on the issue of
"classification of said land." Having taken over this case, the banc in the name of equal justice should also
take over the Sumilao farmers' Petition. But having rejected their case, then it should also turn down this
one. Sauce for the poor goose should be the same sauce for the rich gander. That is simple, equal justice for all.
GONZAGA-REYES, J., dissenting opinion:
1. REMEDIAL LAW; SUPREME COURT; SC CIRCULAR NO. 2-89; OTHER CASES DEEMED BY A MAJORITY
OF THE COURT EN BANC OF SUFFICIENT IMPORTANCE MAY BE CONSIDERED EN BANC CASES; FACT
ALONE THAT PROPERTY COVERS 99 HECTARES DOES NOT PROVIDE COGENT REASON TO ELEVATE
CASE TO COURT EN BANC. The fact alone that the property involved covers an area of 99 hectares does
not provide a cogent reason to elevate the cases to the Court en banc. Nowhere in the extant guidelines for
referral to the Court en banc is the value of the property subject of the case relevant to determine whether the
division should refer a matter to the Court en banc. Moreover, the validity of OCT No. 4216, which petitioner
Republic raised as a principal issue in the instant petition, had already been long settled by final judgments of
this Court in three (3) cases.
2. ID.; ID.; ID.; ID.; RESOLUTION OF MOTION FOR RECONSIDERATION NECESSARY BEFORE REFERRAL
TO COURT EN BANC. The motion for reconsideration from the decision unanimously adopted by the 3rd
Division on September 2, 1999 is still pending. If there is any error to be rectified in the said decision, the matter
should be left to the sound judgment of the members of the division which promulgated the decision unless there
is a demonstrated incapacity or disqualification on the part of its members to render a fair and just resolution of
the motion for reconsideration.
3. ID.; ID.; COURT SITTING EN BANC, NOT AN APPELLATE COURT. The Supreme Court sitting en banc is
not an appellate court vis-a-vis its Divisions, and it exercises no appellate jurisdiction over the latter. Each
division of the Court is considered not a body inferior to the Court en banc, and sits veritably as the Court en
banc itself. The only constraint is that any doctrine or principle of law laid down by the Court, either rendered en
banc or in division, may be overturned or reversed only by the Court sitting en banc.
4. ID.; ID.; RESOLUTION DATED NOVEMBER 18, 1993 DOES NOT ABROGATE RULES FOR REFERRAL TO
COURT EN BANC OF CASES ASSIGNED TO DIVISION. Resolution dated November 18, 1993 is essentially
an amendment to Sections 15 and 16, Rule 136 of the Rules of Court which deals with the form ("unglazed
paper," margins, number of copies, etc.) of unprinted and printed papers to be filed with this Court. This
Resolution was clearly not intended to lay down new guidelines or rules for referral to the court en banc of cases
assigned to a Division. Thus, the principle that the court en banc is not an appellate court to which decisions or
resolutions of a Division may be appealed could not have been intended to be abrogated. Article VIII, Section 4
of the Constitution, earlier quoted, expressly provides that "when the required number (the concurrence of at
least three members of the division) is not obtained, the case shall be decided en banc." The obvious
contemplation is that when the required vote of at least three members is obtained, the banc's participation is
not called for.
5. ID.; ID.; SC CIRCULAR NO. 2-89; PREROGATIVE SHOULD BE USED ONLY FOR CLEARLY COMPELLING
REASONS. The prerogative to take out a case from the division without the concurrence of a majority of its
members, should, if at all, be used only for clearly compelling reasons; otherwise the decision of the Court en
banc to take cognizance of the matter itself would be suspect of irregularity and the precedent would be difficult
to justify before litigants who may be similarly situated.

RESOLUTION
PURISIMA, J p:
This resolves petitioners' Motions to Refer to the Court En Banc these consolidated cases, which the Third
Division decided on September 2, 1999. The motions for reconsideration seasonably filed by the petitioners,
Republic of the Philippines and Firestone Ceramics, Inc., et al., are pending.
Under Supreme Court Circular No. 2-89, dated February 7, 1989, as amended by the Resolution of November
18, 1993: prcd
. . ., the following are considered en banc cases:
1. Cases in which the constitutionality or validity of any treaty, international or
executive agreement, law, executive order, or presidential decree,
proclamation, order, instruction, ordinance, or regulation is in question;
2. Criminal cases in which the appealed decision imposes the death penalty;
3. Cases raising novel questions of law;
4. Cases affecting ambassadors, other public ministers and consuls;
5. Cases involving decisions, resolutions or orders of the Civil Service Commission,
Commission on Elections, and Commission on Audit;
6. Cases where the penalty to be imposed is the dismissal of a judge, officer or
employee of the judiciary, disbarment of a lawyer, or either the suspension of
any of them for a period of more than one (1) year or a fine exceeding
P10,000.00 or both;
7. Cases where a doctrine or principle laid down by the court en banc or in division
may be modified or reversed;
8. Cases assigned to a division which in the opinion of at least three (3) members
thereof merit the attention of the court en banc and are acceptable to a
majority of the actual membership of the court en banc; and
9. All other cases as the court en banc by a majority of its actual membership may
deem of sufficient importance to merit its attention.
The cases at bar involve a vast tract of land with an area of around ninety-nine (99) hectares presumptively
belonging to the Republic of the Philippines, which land had been adjudicated to private individuals by a court
alleged to be without jurisdiction. Since the validity of the said decision and the original certificate of title as well
as transfer certificates of title issued pursuant thereto hinges on the classification of subject area at the time it
was so adjudicated, determination of the validity of the disposition thereof is in order.
The assailed decision does not indicate the classification of the land in question, when the herein private
respondents obtained their decree of registration thereover.
In Limketkai Sons Milling, Inc. vs. Court of Appeals, the Court conceded that it is not infallible. Should any error
of judgment be perceived, it does not blindly adhere to such error, and the parties adversely affected thereby are
not precluded from seeking relief therefrom, by way of a motion for reconsideration. In this jurisdiction,
rectification of an error, more than anything else, is of paramount importance.
Here, there was submitted to the Court en consulta, petitioners Motions to Refer to the Court En Banc these
consolidated cases for the consideration of the Court. A pleading, entitled "FOR THE CONSIDERATION OF
THE COURT EN BANC, EN CONSULTA," was presented but when the same was first brought to its attention on
March 7, 2000, the Court opined that since the Third Division had not yet acted on subject motions to refer the
cases to the Banc, it was then premature for the Court to resolve the consulta. However, the Court succinctly
cautioned that the action of the Third Division on the matter would just be tentative.
On March 8, 2000, the Third Division voted 4-1 to deny petitioners motion to transfer these cases to the Banc.
Thus, on March 14, 2000, the Court deliberated on the consultaand thereafter, voted 9-5 to accept the cases for
the Banc to pass upon in view of the finding that the cases above entitled are of sufficient importance to merit its

attention. Evidently, the action of the Court under the premises is a legitimate and valid exercise of its
RESIDUAL POWER within the contemplation of paragraph 9 of the Resolution En Bancof November 18, 1993,
which reads: "All other cases as the court en banc by a majority of its actual membership may deem of sufficient
importance to merit its attention." (italics supplied)
Untenable is the contention of Justice Panganiban that the Chief Justice and the eight (8) Associate Justices
who voted to treat these consolidated cases as En Banc cases, have not given any cogent or compelling reason
for such action. Considering that paragraph 9 of the Resolution of this Court dated November 18, 1993, has
been cited to support the majority opinion, it is decisively clear that these consolidated cases have been found to
be of sufficient importance to merit the attention and disposition of the entire Court en banc and therefore, the
prayer of the Republic of the Philippines and the private petitioners for the Court en banc to hear and resolve
their pending motions for reconsideration, is meritorious. The aforesaid finding by the Court constitutes a reason
cogent and compelling enough to warrant the majority ruling that the Court En Banc has to act upon and decide
petitioners motions for reconsideration.
It bears stressing that where, as in the present cases, the Court En Banc entertains a case for its resolution and
disposition, it does so without implying that the Division of origin is incapable of rendering objective and fair
justice. The action of the Court simply means that the nature of the cases calls for en banc attention and
consideration. Neither can it be concluded that the Court has taken undue advantage of sheer voting strength. It
was merely guided by the well-studied finding and sustainable opinion of the majority of its actual membership
that, indeed, subject cases are of sufficient importance meriting the action and decision of the whole Court. It
is, of course, beyond cavil that all the members of this highest Court of the land are always imbued with the
noblest of intentions in interpreting and applying the germane provisions of law, jurisprudence, rules and
Resolutions of the Court to the end that public interest be duly safeguarded and rule of law be observed.
Reliance by Justice Panganiban on the ruling of the Court in the Sumilao case is misplaced. The said case is not
on all fours with these cases. In the Sumilao case, before it was brought to the Banc en consulta, the motion for
reconsideration of the decision therein rendered had been voted upon by the Second Division with a vote of 2-2.
The Court ruled that the stalemate resulting from the said voting constituted a denial of the motion for
reconsideration. LexLib
In the two consolidated cases under consideration, however, the Motions for Reconsideration of the petitioners,
Republic of the Philippines and Firestone Ceramics, Inc., et al., are pending and unresolved.
Taking into account the importance of these cases and the issues raised, let alone the enormous value of the
area in litigation, which is claimed as government property, there is merit in the prayer of petitioners that their
pending motions for reconsideration should be resolved by the Court En Banc.
WHEREFORE, these consolidated cases are considered and treated as en banc cases; and petitioners motions
for reconsideration are hereby set for oral argument on July 18, 2000, at 11:00 a.m. Let corresponding notices
issue. llcd
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Kapunan, Mendoza, Buena, Ynares-Santiago and De Leon, Jr. JJ., concur.
Melo, J., joined the dissents and in view of the close vote, urge that this action be not repeated and that it be
reviewed again.
Puno, J., see separate opinion.
Panganiban and Gonzaga Reyes, JJ., see dissenting opinion.
Vitug, J.,joined the dissenting justices.
Quisumbing and Pardo, JJ., joined J. Reyes' dissenting opinion.
||| (Firestone Ceramics, Inc. v. Court of Appeals, G.R. No. 127022, 127245 (Resolution), [June 28, 2000], 389
PHIL 810-828)

EN BANC
[G.R. No. 190529. April 29, 2010.]
PHILIPPINE GUARDIANS BROTHERHOOD, INC. (PGBI), represented by its SecretaryGeneral GEORGE "FGBF GEORGE" DULDULAO, petitioner, vs. COMMISSION ON
ELECTIONS, respondent.
RESOLUTION
BRION, J p:
The Philippine Guardians Brotherhood, Inc. (PGBI) seeks in this petition for certiorari 1 and in the motion for
reconsideration it subsequently filed to nullify Commission on Elections (COMELEC) Resolution No. 8679 dated
October 13, 2009 insofar as it relates to PGBI, and the Resolution dated December 9, 2009 denying PGBI's
motion for reconsideration in SPP No. 09-004 (MP). Via these resolutions, the COMELEC delisted PGBI from
the roster of registered national, regional or sectoral parties, organizations or coalitions under the party-list
system.
BACKGROUND
Section 6 (8) of Republic Act No. 7941 (RA 7941), otherwise known as the Party-List System Act, provides:
Section [Link] and/or Cancellation of Registration. The COMELEC may motu
proprio or upon verified complaint of any interested party, remove or cancel, after due notice
and hearing, the registration of any national, regional or sectoral party, organization or
coalition on any of the following grounds:
xxx xxx xxx
(8)It fails to participate in the last two (2) preceding elections or fails to obtain at least two per
centum (2%) of the votes cast under the party-list system in the two (2) preceding elections for
the constituency in which it has registered. [Emphasis supplied.] HCATEa
The COMELEC replicated this provision in COMELEC Resolution No. 2847 the Rules and Regulations
Governing the Election of the Party-List Representatives through the Party-List System which it
promulgated on June 25, 1996.
For the upcoming May 2010 elections, the COMELEC en banc issued on October 13, 2009 Resolution No. 8679
deleting several party-list groups or organizations from the list of registered national, regional or sectoral parties,
organizations or coalitions. Among the party-list organizations affected was PGBI; it was delisted because
it failed to get 2% of the votes cast in 2004 and it did not participate in the 2007 elections. Nevertheless,
the COMELEC stated in this Resolution that any national, regional sectoral party or organizations or coalitions
adversely affected can personally or through its authorized representative file a verified opposition on October
26, 2009.
PGBI filed its Opposition to Resolution No. 8679, but likewise sought, through its pleading, the admission ad
cautelam of its petition for accreditation as a party-list organization under the Party-List System Act. Among
other arguments, PGBI asserted that:
(1)The assailed resolution negates the right of movant and those similarly situated to invoke
Section 4 of R.A. No. 7941, which allows any party, organization and coalition already
registered with the Commission to no longer register anew; the party though is
required to file with the Commission, not later than ninety (90) days before the
election, a manifestation of its desire to participate in the party-list system; since PGBI
filed a Request/Manifestation seeking a deferment of its participation in the 2007
elections within the required period prior to the 2007 elections, it has the option to
choose whether or not to participate in the next succeeding election under the same
conditions as to rights conferred and responsibilities imposed;
(2)The Supreme Court's ruling in G.R. No. 177548 Philippine Mines Safety Environment
Association, also known as "MINERO" v. Commission on Elections cannot apply in

the instant controversy for two reasons: (a) the factual milieu of the cited case is
removed from PGBI's; (b) MINERO, prior to delisting, was afforded the opportunity to
be heard, while PGBI and the 25 others similarly affected by Resolution No. 8679
were not. Additionally, the requirement of Section 6(8) has been relaxed by the
Court's ruling in G.R. No. 179271 (Banat v. COMELEC) and the exclusion of PGBI
and the 25 other party-list is a denial of the equal protection of the laws;
(3)The implementation of the challenged resolution should be suspended and/or aborted to
prevent a miscarriage of justice in view of the failure to notify the parties in
accordance with the same Section 6(8) or R.A. No. 7941. 2
The COMELEC denied PGBI's motion/opposition for lack of merit.
First, the COMELEC observed that PGBI clearly misunderstood the import of Section 4 of R.A. 7941. 3 The
provision simply means that without the required manifestation or if a party or organization does not participate,
the exemption from registration does not arise and the party, organization or coalition must go through the
process again and apply for requalification; a request for deferment would not exempt PGBI from registering
anew. aCSDIc
Second, the MINERO ruling is squarely in point, as MINERO failed to get 2% of the votes in 2001 and did not
participate at all in the 2004 elections.
Third, PGBI was given an opportunity to be heard or to seek the reconsideration of the action or ruling
complained of the essence of due process; this is clear from Resolution No. 8679 which expressly gave the
adversely affected parties the opportunity to file their opposition.
As regards the alternative relief of application for accreditation, the COMELEC found the motion to have been
filed out of time, as August 17, 2009 was the deadline for accreditation provided in Resolution 8646. The motion
was obviously filed months after the deadline.
PGBI came to us in its petition for certiorari, arguing the same positions it raised with the COMELEC when it
moved to reconsider its delisting.
We initially dismissed the petition in light of our ruling in Philippine Mines Safety Environment Association, also
known as "MINERO" v. Commission on Elections (Minero); 4 we said that no grave abuse of discretion exists in
a ruling that correctly applies the prevailing law and jurisprudence. Applying Section 6 (8) of RA 7941, the Court
disqualifiedMINERO under the following reasoning:
Since petitioner by its own admission failed to get 2% of the votes in 2001 and did not
participate at all in the 2004 elections, it necessarily failed to get at least two per centum (2%)
of the votes cast in the two preceding elections. COMELEC, therefore, is riot duty bound to
certify it.
PGBI subsequently moved to reconsider the dismissal of its petition. Among other arguments, PGBI claimed that
the dismissal of the petition was contrary to law, the evidence and existing jurisprudence. Essentially, PGBI
asserts that Section 6 (8) of RA 7941 does not apply if one is to follow the tenor and import of the deliberations
inclusive of the interpellations in Senate Bill No. 1913 on October 19, 1994. It cited the following excerpts from
the Records of the Senate:
Senator Gonzales:
On the other hand, Mr. President, under ground no. (7), Section 5 there are actually two
grounds it states: "Failure to participate in the last two (2) preceding elections or its
failure to obtain at least ten percent (10%) of the votes case under the party-list
system in either of the last two (2) preceding elections for the constituency in which it
has registered"
In short, the first ground is that, it failed to participate in the last two (2) preceding elections.
The second is, failure to obtain at least 10 percent of the votes cast under the partylist system in either of the last two preceding elections, Mr. President,
Senator Tolentino:

Actually, these are two separate grounds.

Senator Gonzales:
There are actually two grounds, Mr. President.
Senator Tolentino:
Yes, Mr. President. 5 [Underscoring supplied.]
PGBI thus asserts that Section 6 (8) does not apply to its situation, as it is obvious that it failed to participate
in one (1) but not in the two (2) preceding elections. Implied in this is that it also failed to secure the
required percentage in one (1) but not in the two (2) preceding elections.
Considering PGBI's arguments, we granted the motion and reinstated the petition in the court's docket. ISaTCD
THE ISSUES
We are called upon to resolve: (a) whether there is legal basis for delisting PGBI; and (b) whether PGBI's right to
due process was violated.
OUR RULING
We find the petition partly impressed with merit.
[Link] Minero Ruling
Our Minero ruling is an erroneous application of Section 6 (8) of RA 7941; hence, it cannot sustain PGBI's
delisting from the roster of registered national, regional or sectoral parties, organizations or coalitions under the
party-list system.
First, the law is clear the COMELEC may motu proprio or upon verified complaint of any interested party,
remove or cancel, after due notice and hearing, the registration of any national, regional or sectoral party,
organization or coalition if it: (a) fails to participate in the last two (2) preceding elections; or (b) fails to obtain at
least two per centum (2%) of the votes cast under the party-list system in the two (2) preceding elections for the
constituency in which it has registered. 6 The word "or" is a disjunctive term signifying disassociation and
independence of one thing from the other things enumerated; it should, as a rule, be construed in the sense in
which it ordinarily implies, as a disjunctive word. 7 Thus, the plain, clear and unmistakable language of the law
provides for two (2) separate reasons for delisting.
Second, Minero is diametrically opposed to the legislative intent of Section 6 (8) of RA 7941, as PGBI's cited
congressional deliberations clearly show.
Minero therefore simply cannot stand. Its basic defect lies in its characterization of the non-participation of a
party-list organization in an election as similar to a failure to garner the 2% threshold party-list vote.
What Minero effectively holds is that a party list organization that does not participate in an election necessarily
gets, by default, less than 2% of the party-list votes. To be sure, this is a confused interpretation of the law, given
the law's clear and categorical language and the legislative intent to treat the two scenarios differently. A
delisting based on a mixture or fusion of these two different and separate grounds for delisting is therefore a
strained application of the law in jurisdictional terms, it is an interpretation not within the contemplation of the
framers of the law and hence is a gravely abusive interpretation of the law. 8
What we say here should of course take into account our ruling in Barangay Association for Advancement and
National Transparency v. COMELEC 9 (Banat) where we partlyinvalidated the 2% party-list vote requirement
provided in RA 7941 as follows:
We rule that, in computing the allocation of additional seats, the continued operation of the
two percent threshold for the distribution of the additional seats as found in the second clause
of Section 11(b) of R.A. No. 7941 is unconstitutional. This Court finds that the two percent
threshold makes it mathematically impossible to achieve the maximum number of available
party list seats when the number of available party list seats exceeds 50. The continued
operation of the two percent threshold in the distribution of the additional seats frustrates the
attainment of the permissive ceiling that 20% of the members of the House of Representatives
shall consist of party-list representatives. DSHcTC

The disqualification for failure to get 2% party-list votes in two (2) preceding elections should therefore be
understood in light of the Banat ruling that party-list groups or organizations garnering less than 2% of the
party-list votes may yet qualify for a seat in the allocation of additional seats.
We need not extensively discuss Banat's significance, except to state that a party-list group or organization
which qualified in the second round of seat allocation cannot now validly be delisted for the reason alone that it
garnered less than 2% in the last two elections. In other words, the application of this disqualification should
henceforth be contingent on the percentage of party-list votes garnered by the last party-list organization that
qualified for a seat in the House of Representatives, a percentage that is less than the 2% threshold invalidated
in Banat. The disqualification should now necessarily be read to apply to party-list groups or organizations that
did not qualify for a seat in the two preceding elections for the constituency in which it registered.
To reiterate, (a) Section 6 (8) of RA 7941 provides for two separate grounds for delisting; these grounds cannot
be mixed or combined to support delisting; and (b) the disqualification for failure to garner 2% party-list votes in
two preceding elections should now be understood, in light of the Banat ruling, to mean failure to qualify for a
party-list seat in two preceding elections for the constituency in which it has registered. This, we declare, is how
Section 6 (8) of RA 7941 should be understood and applied. We do so under our authority to state what the law
is, 10 and as an exception to the application of the principle of stare decisis.
The doctrine of stare decisis et non quieta movere (to adhere to precedents and not to unsettle things which are
established) is embodied in Article 8 of the Civil Code of the Philippines which provides, thus:
ART. [Link] decisions applying or interpreting the laws or the Constitution shall form a part
of the legal system of the Philippines.
The doctrine enjoins adherence to judicial precedents. It requires courts in a country to follow the rule
established in a decision of its Supreme Court. That decision becomes a judicial precedent to be
followed in subsequent cases by all courts in the land. The doctrine of stare decisis is based on the principle
that once a question of law has been examined and decided, it should be deemed settled and closed to
further argument. 11 The doctrine is grounded on the necessity for securing certainty and stability of judicial
decisions, thus:
Time and again, the court has held that it is a very desirable and necessary judicial
practice that when a court has laid down a principle of law as applicable to a certain state of
facts, it will adhere to that principle and apply it to all future cases in which the facts are
substantially the same. Stare decisis et non quieta movere. Stand by the decisions and
disturb not what is settled. Stare decisis simply means that for the sake of certainty, a
conclusion reached in one case should be applied to those that follow if the facts are
substantially the same, even though the parties may be different. It proceeds from the first
principle of justice that, absent any powerful countervailing considerations, like cases
ought to be decided alike. Thus, where the same questions relating to the same event have
been put forward by the parties similarly situated as in a previous case litigated and decided
by a competent court, the rule of stare decisis is a bar to any attempt to relitigate the
same issue. 12
The doctrine though is not cast in stone for upon a showing that circumstances attendant in a particular case
override the great benefits derived by our judicial system from the doctrine of stare decisis, the Court is justified
in setting it aside. 13
As our discussion above shows, the most compelling reason to abandon Minero exists; it was clearly an
erroneous application of the law an application that the principle of stability or predictability of decisions alone
cannot sustain. Minero did unnecessary violence to the language of the law, the intent of the legislature, and to
the rule of law in general. Clearly, we cannot allow PGBI to be prejudiced by the continuing validity of an
erroneous ruling. Thus, we now abandon Minero and strike it out from our ruling case law.
We are aware that PGBI's situation a party list group or organization that failed to garner 2% in a prior
election and immediately thereafter did not participate in the preceding election is something that is not
covered by Section 6 (8) of RA 7941. From this perspective, it may be an unintended gap in the law and as such

is a matter for Congress to address. We cannot and do not address matters over which full discretionary
authority is given by the Constitution to the legislature; to do so will offend the principle of separation of powers.
If a gap indeed exists, then the present case should bring this concern to the legislature's notice. ITDHSE
[Link] Issue of Due Process
On the due process issue, we agree with the COMELEC that PGBI's right to due process was not violated for
PGBI was given an opportunity to seek, as it did seek, a reconsideration of Resolution No. 8679. The essence of
due process, we have consistently held, is simply the opportunity to be heard; as applied to administrative
proceedings, due process is the opportunity to explain one's side or the opportunity to seek a reconsideration of
the action or ruling complained of. A formal or trial-type hearing is not at all times and in all instances
essential. The requirement is satisfied where the parties are afforded fair and reasonable opportunity to explain
their side of the controversy at hand. What is frowned upon is absolute lack of notice and hearing . . . . 14 We
find it obvious under the attendant circumstances that PGBI was not denied due process. In any case, given the
result of this Resolution, PGBI has no longer any cause for complaint on due process grounds.
WHEREFORE, premises considered, we GRANT the petition and accordingly ANNUL COMELEC Resolution
No. 8679 dated October 13, 2009 insofar as the petitioner PGBI is concerned, and the Resolution dated
December 9, 2009 which denied PGBI's motion for reconsideration in SPP No. 09-004 (MP). PGBI is qualified to
be voted upon as a party-list group or organization in the coming May 2010 elections.
SO ORDERED.
Carpio, Corona, Carpio Morales, Nachura, Leonardo-de Castro, Bersamin, Del Castillo, Perez and Mendoza,
JJ., concur.
Puno, C.J. and Velasco, Jr., J., join J. Abad's dissent.
Peralta and Villarama, Jr., JJ., concur in the result.
Abad, J., see dissenting opinion.
||| (Philippine Guardians Brotherhood, Inc. v. Commission on Elections, G.R. No. 190529, [April 29, 2010], 633
PHIL 590-608)

THIRD DIVISION
[G.R. No. 147097. June 5, 2009.]
CARMELO F. LAZATIN, MARINO A. MORALES, TEODORO L. DAVID and ANGELITO A.
PELAYO, petitioner, vs. HON. ANIANO A. DESIERTO as OMBUDSMAN, and
SANDIGANBAYAN, THIRD DIVISION, respondents.
DECISION
PERALTA, J p:
This resolves the petition for certiorari under Rule 65 of the Rules of Court, praying that the Ombudsman's
disapproval of the Office of the Special Prosecutor's (OSP) Resolution 1dated September 18, 2000,
recommending dismissal of the criminal cases filed against herein petitioners, be reversed and set aside.
The antecedent facts are as follows.
On July 22, 1998, the Fact-Finding and Intelligence Bureau of the Office of the Ombudsman filed a ComplaintAffidavit docketed as OMB-0-98-1500, charging herein petitioners with Illegal Use of Public Funds as defined
and penalized under Article 220 of the Revised Penal Code and violation of Section 3, paragraphs (a) and (e)
of Republic Act (R.A.) No. 3019, as amended.
The complaint alleged that there were irregularities in the use by then Congressman Carmello F. Lazatin of his
Countrywide Development Fund (CDF) for the calendar year 1996,i.e., he was both proponent and implementer
of the projects funded from his CDF; he signed vouchers and supporting papers pertinent to the disbursement
as Disbursing Officer; and he received, as claimant, eighteen (18) checks amounting to P4,868,277.08. Thus,
petitioner Lazatin, with the help of petitioners Marino A. Morales, Angelito A. Pelayo and Teodoro L. David, was
allegedly able to convert his CDF into cash.
A preliminary investigation was conducted and, thereafter, the Evaluation and Preliminary Investigation Bureau
(EPIB) issued a Resolution 2 dated May 29, 2000 recommending the filing against herein petitioners of fourteen
(14) counts each of Malversation of Public Funds and violation of Section 3 (e) of R.A. No. 3019. Said
Resolution was approved by the Ombudsman; hence, twenty-eight (28) Informations docketed as Criminal Case
Nos. 26087 to 26114 were filed against herein petitioners before the Sandiganbayan.
Petitioner Lazatin and his co-petitioners then filed their respective Motions for Reconsideration/Reinvestigation,
which motions were granted by the Sandiganbayan (Third Division). The Sandiganbayan also ordered the
prosecution to re-evaluate the cases against petitioners.
Subsequently, the OSP submitted to the Ombudsman its Resolution 3 dated September 18, 2000. It
recommended the dismissal of the cases against petitioners for lack or insufficiency of evidence. ADaSEH
The Ombudsman, however, ordered the Office of the Legal Affairs (OLA) to review the OSP Resolution. In a
Memorandum 4 dated October 24, 2000, the OLA recommended that the OSP Resolution be disapproved and
the OSP be directed to proceed with the trial of the cases against petitioners. On October 27, 2000, the
Ombudsman adopted the OLA Memorandum, thereby disapproving the OSP Resolution dated September 18,
2000 and ordering the aggressive prosecution of the subject cases. The cases were then returned to the
Sandiganbayan for continuation of criminal proceedings.
Thus, petitioners filed the instant petition.
Petitioners allege that:
I.
THE OMBUDSMAN ACTED WITH GRAVE ABUSE OF DISCRETION OR ACTED WITHOUT
OR IN EXCESS OF HIS JURISDICTION.
II.
THE QUESTIONED RESOLUTION WAS BASED ON MISAPPREHENSION OF FACTS,
SPECULATIONS, SURMISES AND CONJECTURES. 5

Amplifying their arguments, petitioners asseverate that the Ombudsman had no authority to overturn the OSP's
Resolution dismissing the cases against petitioners because, under Section 13, Article XI of the 1987
Constitution, the Ombudsman is clothed only with the power to watch, investigate and recommend the filing of
proper cases against erring officials, but it was not granted the power to prosecute. They point out that under the
Constitution, the power to prosecute belongs to the OSP (formerly the Tanodbayan), which was intended by the
framers to be a separate and distinct entity from the Office of the Ombudsman. Petitioners conclude that, as
provided by the Constitution, the OSP being a separate and distinct entity, the Ombudsman should have no
power and authority over the OSP. Thus, petitioners maintain that R.A. No. 6770 (The Ombudsman Act of 1989),
which made the OSP an organic component of the Office of the Ombudsman, should be struck down for being
unconstitutional.
Next, petitioners insist that they should be absolved from any liability because the checks were issued to
petitioner Lazatin allegedly as reimbursement for the advances he made from his personal funds for expenses
incurred to ensure the immediate implementation of projects that are badly needed by the Pinatubo victims.
The Court finds the petition unmeritorious.
Petitioners' attack against the constitutionality of R.A. No. 6770 is stale. It has long been settled that the
provisions of R.A. No. 6770 granting the Office of the Ombudsman prosecutorial powers and placing the OSP
under said office have no constitutional infirmity. The issue of whether said provisions of R.A. No.
6770 violated the Constitution had been fully dissected as far back as 1995 in Acop v. Office of the
Ombudsman. 6
Therein, the Court held that giving prosecutorial powers to the Ombudsman is in accordance with the
Constitution as paragraph 8, Section 13, Article XI provides that the Ombudsman shall "exercise such other
functions or duties as may be provided by law". Elucidating on this matter, the Court stated:
. . . While the intention to withhold prosecutorial powers from the Ombudsman was indeed
present, the Commission [referring to the Constitutional Commission of 1986] did not hesitate
to recommend that the Legislature could, through statute, prescribe such other powers,
functions, and duties to the Ombudsman. . . . As finally approved by the Commission after
several amendments, this is now embodied in paragraph 8, Section 13, Article XI
(Accountability of Public Officers) of the Constitution, which provides: aESTAI
Sec. 13. The Office of the Ombudsman shall have the following powers, functions,
and duties:
xxx xxx xxx
Promulgate its rules and procedure and exercise such other functions or duties as
may be provided by law.
Expounding on this power of Congress to prescribe other powers, functions, and duties to the
Ombudsman, we quote Commissioners Colayco and Monsod during interpellation by
Commissioner Rodrigo:
xxx xxx xxx
MR. RODRIGO:
Precisely, I am coming to that. The last of the enumerated functions of the Ombudsman is: "to
exercise such powers or perform such functions or duties as may be provided by law."
So, the legislature may vest him with powers taken away from the Tanodbayan, may it
not?
MR. COLAYCO:
Yes.
MR. MONSOD:
Yes.
MR. RODRIGO:

Madam President. Section 5 reads: "The Tanodbayan shall continue to function and exercise
its powers as provided by law".
MR. COLAYCO:
That is correct, because it is under P.D. No. 1630.
MR. RODRIGO:
So, if it is provided by law, it can be taken away by law, I suppose.
MR. COLAYCO:
That is correct.
MR. RODRIGO:
And precisely, Section 12(6) says that among the functions that can be performed by the
Ombudsman are "such functions or duties as may be provided by law". The sponsors
admitted that the legislature later on might remove some powers from the
Tanodbayan and transfer these to the Ombudsman.
MR. COLAYCO:
Madam President, that is correct.
xxx xxx xxx
MR. RODRIGO:
Madam President, what I am worried about is, if we create a constitutional body which has
neither punitive nor prosecutory powers but only persuasive powers, we might be
raising the hopes of our people too much and then disappoint them.
MR. MONSOD:
I agree with the Commissioner.
MR. RODRIGO:
Anyway, since we state that the powers of the Ombudsman can later on be implemented by
the legislature, why not leave this to the legislature? AECacS
xxx xxx xxx
MR. MONSOD:
(reacting to statements of Commissioner Blas Ople):
xxx xxx xxx
With respect to the argument that he is a toothless animal, we would like to say that we are
promoting the concept in its form at the present, but we are also saying that he can
exercise such powers and functions as may be provided by law in accordance with
the direction of the thinking of Commissioner Rodrigo. We do not think that at this time
we should prescribe this, but we leave it up to Congress at some future time if it feels
that it may need to designate what powers the Ombudsman need in order that he be
more effective. This is not foreclosed.
So, this is a reversible disability, unlike that of a eunuch; it is not an irreversible disability. 7
The constitutionality of Section 3 of R.A. No. 6770, which subsumed the OSP under the Office of the
Ombudsman, was likewise upheld by the Court in Acop. It was explained, thus:
. . . the petitioners conclude that the inclusion of the Office of the Special Prosecutor as
among the offices under the Office of the Ombudsman in Section 3 of R.A. No. 6770 ("An Act
Providing for the Functional and Structural Organization of the Office of the Ombudsman and
for Other Purposes") is unconstitutional and void.
The contention is not impressed with merit. . . .
xxx xxx xxx

. . . Section 7 of Article XI expressly provides that the then existing Tanodbayan, to be

henceforth known as the Office of the Special Prosecutor, "shall continue to function and
exercise its powers as now or hereafter may be provided by law, except those conferred on
the Office of the Ombudsman created under this Constitution". The underscored phrase
evidently refers to the Tanodbayan's powers under P.D. No. 1630 or subsequent amendatory
legislation. It follows then that Congress may remove any of the Tanodbayan's/Special
Prosecutor's powers under P.D. No. 1630 or grant it other powers, except those powers
conferred by the Constitution on the Office of the Ombudsman.
Pursuing the present line of reasoning, when one considers that by express mandate of
paragraph 8, Section 13, Article XI of the Constitution, the Ombudsman may "exercise such
other powers or perform functions or duties as may be provided by law", it is indubitable then
that Congress has the power to place the Office of the Special Prosecutor under the Office of
the Ombudsman. In the same vein, Congress may remove some of the powers granted to the
Tanodbayan by P.D. No. 1630 and transfer them to the Ombudsman; or grant the Office of the
Special Prosecutor such other powers and functions and duties as Congress may deem fit
and wise. This Congress did through the passage of R.A. No. 6770. 8 HICATc
The foregoing ruling of the Court has been reiterated in Camanag v. Guerrero. 9 More recently, in Office of the
Ombudsman v. Valera, 10 the Court, basing its ratio decidendi on its ruling in Acop and Camanag, declared that
the OSP is "merely a component of the Office of the Ombudsman and may only act under the supervision and
control, and upon authority of the Ombudsman" and ruled that under R.A. No. 6770, the power to preventively
suspend is lodged only with the Ombudsman and Deputy Ombudsman. 11 The Court's ruling in Acop that the
authority of the Ombudsman to prosecute based on R.A. No. 6770 was authorized by the Constitution was also
made the foundation for the decision in Perez v. Sandiganbayan, 12 where it was held that the power to
prosecute carries with it the power to authorize the filing of informations, which power had not been delegated to
the OSP. It is, therefore, beyond cavil that under the Constitution, Congress was not proscribed from legislating
the grant of additional powers to the Ombudsman or placing the OSP under the Office of the Ombudsman.
Petitioners now assert that the Court's ruling on the constitutionality of the provisions of R.A. No. 6770 should be
revisited and the principle of stare decisis set aside. Again, this contention deserves scant consideration.
The doctrine of stare decisis et non quieta movere (to adhere to precedents and not to unsettle things which are
established) is embodied in Article 8 of the Civil Code of the Philippines which provides, thus:
ART. 8. Judicial decisions applying or interpreting the laws or the Constitution shall form a part
of the legal system of the Philippines.
It was further explained in Fermin v. People 13 as follows:
The doctrine of stare decisis enjoins adherence to judicial precedents. It requires courts in a
country to follow the rule established in a decision of the Supreme Court thereof. That
decision becomes a judicial precedent to be followed in subsequent cases by all courts in the
land. The doctrine of stare decisis is based on the principle that once a question of law has
been examined and decided, it should be deemed settled and closed to further argument. 14
In Chinese Young Men's Christian Association of the Philippine Islands v. Remington Steel Corporation, 15 the
Court expounded on the importance of the foregoing doctrine, stating that:
The doctrine of stare decisis is one of policy grounded on the necessity for securing certainty
and stability of judicial decisions, thus:
Time and again, the court has held that it is a very desirable and necessary
judicial practice that when a court has laid down a principle of law as applicable to a
certain state of facts, it will adhere to that principle and apply it to all future cases in
which the facts are substantially the same. Stare decisis et non quieta movere. Stand
by the decisions and disturb not what is settled. Stare decisis simply means that for
the sake of certainty, a conclusion reached in one case should be applied to

those that follow if the facts are substantially the same, even though the parties
may be different. It proceeds from the first principle of justice that, absent any
powerful countervailing considerations, like cases ought to be decided
alike. Thus, where the same questions relating to the same event have been put
forward by the parties similarly situated as in a previous case litigated and decided by
a competent court, the rule of stare decisis is a bar to any attempt to relitigate the
same issue. 16
The doctrine has assumed such value in our judicial system that the Court has ruled that "[a]bandonment
thereof must be based only on strong and compelling reasons, otherwise, the becoming virtue of
predictability which is expected from this Court would be immeasurably affected and the public's confidence in
the stability of the solemn pronouncements diminished". 17 Verily, only upon showing that circumstances
attendant in a particular case override the great benefits derived by our judicial system from the doctrine of stare
decisis, can the courts be justified in setting aside the same.
In this case, petitioners have not shown any strong, compelling reason to convince the Court that the doctrine
of stare decisis should not be applied to this case. They have not successfully demonstrated how or why it would
be grave abuse of discretion for the Ombudsman, who has been validly conferred by law with the power of
control and supervision over the OSP, to disapprove or overturn any resolution issued by the latter.
The second issue advanced by petitioners is that the Ombudsman's disapproval of the OSP Resolution
recommending dismissal of the cases is based on misapprehension of facts, speculations, surmises and
conjectures. The question is really whether the Ombudsman correctly ruled that there was enough evidence to
support a finding of probable cause. That issue, however, pertains to a mere error of judgment. It must be
stressed that certiorari is a remedy meant to correct only errors of jurisdiction, not errors of judgment. This has
been emphasized in First Corporation v. Former Sixth Division of the Court of Appeals, 18 to wit:
It is a fundamental aphorism in law that a review of facts and evidence is not the province of
the extraordinary remedy of certiorari, which is extra ordinem beyond the ambit of
appeal. In certiorari proceedings, judicial review does not go as far as to examine and
assess the evidence of the parties and to weigh the probative value thereof. It does not
include an inquiry as to the correctness of the evaluation of evidence. Any error
committed in the evaluation of evidence is merely an error of judgment that cannot be
remedied by certiorari. An error of judgment is one which the court may commit in the
exercise of its jurisdiction. An error of jurisdiction is one where the act complained of was
issued by the court without or in excess of jurisdiction, or with grave abuse of discretion, which
is tantamount to lack or in excess of jurisdiction and which error is correctible only by the
extraordinary writ of certiorari. Certiorari will not be issued to cure errors of the trial court
in its appreciation of the evidence of the parties, or its conclusions anchored on the
said findings and its conclusions of law. It is not for this Court to re-examine
conflicting evidence, re-evaluate the credibility of the witnesses or substitute the
findings of fact of the court a quo. 19 SDECAI
Evidently, the issue of whether the evidence indeed supports a finding of probable cause would necessitate
an examination and re-evaluation of the evidence upon which the Ombudsman based its disapproval of the
OSP Resolution. Hence, the Petition for Certiorari should not be given due course.
Likewise noteworthy is the holding of the Court in Presidential Ad Hoc Fact-Finding Committee on Behest Loans
v. Desierto, 20 imparting the value of the Ombudsman's independence, stating thus:
Under Sections 12 and 13, Article XI of the 1987 Constitution and RA 6770 (The Ombudsman
Act of 1989), the Ombudsman has the power to investigate and prosecute any act or omission
of a public officer or employee when such act or omission appears to be illegal, unjust,
improper or inefficient. It has been the consistent ruling of the Court not to interfere with
the Ombudsman's exercise of his investigatory and prosecutory powers as long as his
rulings are supported by substantial evidence. Envisioned as the champion of the people
and preserver of the integrity of public service, he has wide latitude in exercising his

powers and is free from intervention from the three branches of government. This is to
ensure that his Office is insulated from any outside pressure and improper
influence. 21
Indeed, for the Court to overturn the Ombudsman's finding of probable cause, it is imperative for petitioners to
clearly prove that said public official acted with grave abuse of discretion. In Presidential Commission on Good
Government v. Desierto, 22 the Court elaborated on what constitutes such abuse, to wit:
Grave abuse of discretion implies a capricious and whimsical exercise of judgment
tantamount to lack of jurisdiction. The Ombudsman's exercise of power must have been done
in an arbitrary or despotic manner which must be so patent and gross as to amount to an
evasion of a positive duty or a virtual refusal to perform the duty enjoined or to act at all in
contemplation of law. . . . 23
In this case, petitioners failed to demonstrate that the Ombudsman acted in a manner described above.
Clearly, the Ombudsman was acting in accordance with R.A. No. 6770and properly exercised its power of
control and supervision over the OSP when it disapproved the Resolution dated September 18, 2000.
It should also be noted that the petition does not question any order or action of the Sandiganbayan Third
Division; hence, it should not have been included as a respondent in this petition.
IN VIEW OF THE FOREGOING, the petition is DISMISSED for lack of merit. No costs.
SO ORDERED.
Ynares-Santiago, Carpio * , Corona ** and Nachura, JJ., concur.
||| (Lazatin v. Desierto, G.R. No. 147097, [June 5, 2009], 606 PHIL 271-285)

THIRD DIVISION
[G.R. No. 192486. November 21, 2012.]
RUPERTA CANO VDA. DE VIRAY and JESUS CARLO GERARD VIRAY, petitioners, vs.
SPOUSES JOSE USI and AMELITA USI, respondents.
DECISION
VELASCO, JR., J p:
The Case
Petitioners have availed of Rule 45 to assail and nullify the Decision 1 dated July 24, 2009, as effectively
reiterated in a Resolution 2 of June 2, 2010, both rendered by the Court of Appeals (CA) in CA-G.R. CV No.
90344, setting aside the Decision 3 dated June 21, 2007 of the Regional Trial Court (RTC), Branch 55 in
Macabebe, Pampanga, in Civil Case No. 01-1118(M), an accion publiciana/reivindicatoria, which respondents
commenced with, but eventually dismissed by, that court. HSEIAT
The Facts
At the core of the present controversy are several parcels of land which form part of what was once Lot No. 733,
Cad-305-D, Masantol Cadastre (Lot 733 hereinafter), registered in the name of Ellen P. Mendoza (Mendoza),
married to Moses Mendoza, under Transfer Certificate of Title No. (TCT) 141-RP of the Registry of Deeds of
Pampanga. With an area of 9,137 square meters, more or less, Lot 733 is located in Brgy. Bebe Anac, Masantol,
Pampanga.
On April 28, 1986, Geodetic Engineer Abdon G. Fajardo prepared a subdivision plan 4 (Fajardo Plan, for short)
for Lot 733, in which Lot 733 was divided into six (6) smaller parcels of differing size dimensions, designated as:
Lot 733-A, Lot 733-B, Lot 733-C, Lot 733-D, Lot 733-E, and Lot 733-F consisting of 336, 465, 3,445, 683, 677
and 3,501 square meters, respectively.
The following day, April 29, 1986, Mendoza executed two separate deeds of absolute sale, the first, transferring
Lot 733-F to Jesus Carlo Gerard Viray (Jesus Viray), 5 and the second deed conveying Lot 733-A to spouses
Avelino Viray and Margarita Masangcay (Sps. Viray). 6 The names McDwight Mendoza, Mendoza's son, and
one Ernesto Bustos appear in both notarized deeds as instrumental witnesses. As of that time, the Fajardo Plan
has not been officially approved by the Land Management Bureau (LMB), formerly the Bureau of Lands. And at
no time in the course of the controversy did the spouses Viray and Jesus Viray, as purchasers of Lots 733-A and
733-F, respectively, cause the annotations of the conveying deeds of sale on TCT 141-RP.
Herein petitioner, Ruperta Cano Vda. de Viray (Vda. de Viray), is the surviving spouse of Jesus Viray, who died
in April 1992.
As of April 29, 1986, the dispositions made on and/or the ownership profile of the subdivided lots appearing
under the Fajardo Plan are as follows:
Lot No.

Area

Conveyances by Mendoza

Lot 733-A

366 square meters

Sold to Sps. Avelino and Margarita

Viray

Lot 733-B

465 square meters

Unsold

Lot 733-C

3,445 square meters

Unsold

Lot 733-D

683 square meters

Proposed Road

Lot 733-E

677 square meters

Unsold

Lot 733-F

3,501 square meters

Sold to Jesus Viray

The aforementioned conveyances notwithstanding, Mendoza, Emerenciana M. Vda. de Mallari (Vda. de Mallari)
and respondent spouses Jose Usi and Amelita T. Usi (Sps. Usi or the Usis), as purported co-owners of Lot 733,
executed on August 20, 1990 a Subdivision Agreement, 7 or the 1st subdivision agreement (1st SA). Pursuant to
this agreement which adopted, as base of reference, the LMB-approved subdivision plan prepared by Geodetic

Engineer Alfeo S. Galang (Galang Plan), Lot 733 was subdivided into three lots, i.e.,Lots A to C, with the
following area coverage: Lots 733-A, 465 square meters, 733-B, 494 square meters, and 733-C, 6,838 square
meters. In its pertinent parts, the 1st SA reads:
That the above-parties are the sole and exclusive owners of a certain parcel of land situated
in the Bo. of Bebe Anac, Masantol, Pampanga, which is known as Lot No. 733 under TCT No.
141 R.P. of the Registry of Deeds of Pampanga, under Psd-No. 03-10-025242;
That for the convenience of the parties hereto that the existing community of the said Lot be
terminated and their respective share be determined by proper adjudication;
That the parties hereto agreed to subdivided (sic) the above-mentioned property by Geodetic
Engineer Alfeo S. Galang, as per tracing cloth and blue print copy of plan Psd-03-025242 and
technical description duly approved by the Bureau of Lands, hereto Attached and made
internal part of this instrument in the followin[g] manner: acHCSD
Lot 733-A

To Emerencia M. Vda. Mallari;

Lot 733-B

To Sps. Jose B. Usi and Amelita B. Usi;

Lot 733-C

To Ellen P. Mendoza 8 (Emphasis added.)

TCT 141-RP would eventually be canceled and, in lieu thereof, three derivative titles were issued to the
following, as indicated: TCT 1584-RP for Lot 733-A to Mallari; TCT 1585-RP 9for Lot 733-B to Sps. Usi; and TCT
1586-RP for Lot 733-C to Mendoza.
On April 5, 1991, Mendoza, McDwight P. Mendoza, Bismark P. Mendoza, Beverly P. Mendoza, Georgenia P.
Mendoza, Sps. Alejandro Lacap and Juanita U. Lacap, Sps. Nestor Coronel and Herminia Balingit, Sps. Bacani
and Martha Balingit, Sps. Ruperto and Josefina Jordan, and Sps. Jose and Amelita Usi executed another
Subdivision Agreement 10 (2nd SA) covering and under which the 8,148-sq. m. Lot 733-C was further
subdivided into 13 smaller lots (Lot 733-C-1 to Lot 733-C-13 inclusive). The subdivision plan 11 for Lot 733-C, as
likewise prepared by Engr. Galang on October 13, 1990, was officially approved by the LMB on March 1, 1991
The 2nd SA partly reads:
1. That we are the sole and exclusive undivided co-owners of a parcel of land situated at
Barrio Putat and Arabia, Bebe Anac, Masantol, Pampanga, identified as Lot No. 733-C of PsdNo. 03-041669, containing an area of 8,148 sq. meters and covered by T.C.T. No. 1586 R.P.
of the Register of Deeds of Pampanga;
2. That it is for the benefit and best interest of the parties herein that the [sic] their coownership relation over the above-mentioned parcel of land be terminated and their
respective share over the co-ownership be allotted [sic] to them;
Wherefore, by virtue of the foregoing premises, we have agreed, as we hereby agree to
subdivide our said parcel of land . . . . 12 (Emphasis added.)
Consequent to the subdivision of Lot 733-C in line with the Galang Plan and its subsequent partition and
distribution to the respective allotees pursuant to the 2nd SA, the following individuals appeared as owners of
the subdivided units as indicated in the table below:
Lot [Link] areaPartitioned to:
Lot No.

Land area

Partitioned to:

Lot 733-C-1 200 square meters

Sps. Jose and Amelita Usi

Lot 733-C-2 1,000 square meters

Sps. Alejandro & Juanita Lacap

Lot 733-C-3 300 square meters

Sps. Nestor & Herminia Coronel

Lot 733-C-4 500 square meters

Sps. Nestor & Herminia Coronel and Sps. Bacani & Martha Balingit

Lot 733-C-5 400 square meters

Sps. Ruperto & Josefina Jordan

Lot 733-C-6 500 square meters

Ellen, McDwight, Bismark, Beverly and Georgenia Mendoza

Lot 733-C-7 220 square meters

Ellen, McDwight, Bismark, Beverly and Georgenia Mendoza

Lot 733-C-8 1,000 square meters

Ellen, McDwight, Bismark, Beverly and Georgenia Mendoza

Lot 733-C-9 500 square meters

Ellen, McDwight, Bismark, Beverly and Georgenia Mendoza

Lot 733-C-10 1,000 square meters

Sps. Jose and Amelita Usi

Lot 733-C-11 668 square meters

Ellen, McDwight, Bismark, Beverly and Georgenia Mendoza

Lot 733-C-12 550 square meters

Ellen, McDwight, Bismark, Beverly and Georgenia Mendoza

[Lot 733-C-13] [1,310 square meters] [Allotted for a proposed road]

In net effect, the two subdivision agreements paved the way for the issuance, under the Sps. Usi's name, of TCT
Nos. 1585-RP, 13 2092-RP, 14 and 2101-RP, 15 covering Lots 733-B, 733-C-1 and 733-C-10,
respectively. SHTcDE
On the other hand, the subdivision of Lot 733, per the Galang Plan, and the two subdivision agreements
concluded based on that plan, virtually resulted in the loss of the identity of what under the Fajardo Plan were
Lot 733-A and Lot 733-F. The Sps. Viray and the late Jesus Viray, to recall, purchased Lot 733-A and Lot 733-F,
respectively, from Mendoza.
Then came the ocular inspection and survey 16 conducted on Lot 733, as an undivided whole, by Geodetic
Engr. Angelito Nicdao of the LMB. Some highlights of his findings:
(a)Lot 733-A of the Fajardo Plan with an area of 336 square meters that Sps. Viray bought is within Lot 733-B
(Galang Plan) allotted under 1st SA to Sps. Jose and Amelita Usi; and
(b) Lot 733-F of the Fajardo Plan with an area of 3,501 square meters is almost identical to the combined area of
Lots 733-C-8 to 733-C-12 awarded to Ellen Mendoza and her children McDwight, Bismark, Beverly and
Georgenia, and a portion (1,000 square meters) of Lot 733-C-10 of the Galang Plan awarded to Sps. Jose and
Amelita Usi.
As to be expected, the foregoing overlapping transactions involving the same property or portions thereof
spawned several suits and counter-suits featuring, in particular, herein petitioners and respondents, viz.:
(a)A suit for Annulment of Deed of Absolute Sale filed before the RTC, Branch 55 in Macabebe, Pampanga,
docketed as Civil Case No. 88-0265-M, in which the Usis and Mendoza, as plaintiffs, assailed the validity and
sought the annulment of the deed of absolute sale executed by Mendoza on April 29, 1986 conveying Lot 733-A
(Fajardo Plan) to defendants Sps. Viray.
(b)A similar suit for Annulment of Deed of Absolute Sale commenced by Mendoza against Jesus Viray before
RTC-Br. 55 in Macabebe, Pampanga, docketed as Civil Case No. 88-0283-M, entitled Ellen P. Mendoza v.
Jesus Carlo Gerard Viray, also seeking to nullify the April 29, 1986 Deed of Absolute Sale conveying Lot 733-F
(Fajardo Plan) to Jesus Viray and to declare the plaintiff as entitled to its possession.
The adverted Civil Case Nos. 88-0265-M and 88-0283-M were jointly tried by RTC-Br. 55, which, on August 1,
1989, rendered a Joint Decision 17 finding for the Sps. Viray and Jesus Viray, as defendants, and accordingly
dismissing the separate complaints to annul the deeds of sale subject of the joint cases.
On appeal, the CA, in CA-G.R. CV Nos. 24981-82, and later this Court, in its Decision of December 11, 1995,
in G.R. No. 122287 in effect affirmed in toto the RTC dismissal decision.18 The Court, via its Resolution of April
17, 1998, would eventually deny with finality 19 Mendoza and the Usis' motion for reconsideration of the
aforesaid December 11, 1995 Decision.
(c)A forcible entry case filed on November 19, 1991 by the late Jesus Viray against the Sps. Usi before the
Municipal Circuit Trial Court (MCTC) in Macabebe, Pampanga, docketed as Civil Case No. 91 (13),
entitled Jesus Carlo Gerard Viray v. Spouses Jose Usi and Emelita Tolentino, to eject the Usis from Lot 733-F
(Fajardo Plan).
On July 29, 1998, the MCTC rendered a Decision 20 in favor of Jesus Viray, the dispositive portion of which
pertinently reads:

WHEREFORE, premises considered, judgment is hereby rendered for the plaintiff [the late
petitioner Jesus Viray], and accordingly, the defendants [Sps. Usi] and any other persons
claiming under them are hereby ordered to vacate the subject premises, Lot 733-F embraced
in T.C.T. No. 141-R.P., Register of Deeds Pampanga, and Lot 733-A, both situated at Bebe
Anac, Masantol, Pampanga and to remove at their own expense, all structures or
improvements they built and introduced thereon.
Defendants are likewise sentenced to pay plaintiff the amount of THREE HUNDRED
(P300.00) PESOS per month from November 19, 1991, until they vacate the premises, as
reasonable compensation for the use and occupation thereof . . . .
xxx xxx xxx
SO ORDERED. 21
The Decision eventually became final and executory, the Usis having opted not to appeal it. HIEASa
(d) A Petition for Annulment of the MCTC's [July 29, 1998] Decision filed by the Sps. Usi before the RTC,
docketed as Civil Case No. 99-0914M, entitled Sps. Jose & Amelita Usi v. Hon. Pres. Judge MCTC, Macabebe,
Pampanga, the Court Sheriff, MCTC, Macabebe, Pampanga and Ruperta Cano Vda. de Viray, which decision
placed Jesus Viray's widow, Ruperta, in possession of Lot 733-F of the Fajardo Plan
As may be noted, the spouses Usi, instead of appealing from the July 29, 1998 MCTC Decision in Civil Case
No. 91 (13), sought, after its finality, its annulment before the RTC. By Decision 22 dated June 29, 2000, the
RTC dismissed the petition to annul. The Usis' appeal to the CA, docketed as CA-G.R. CV No. 67945, merited
the same dismissal action. 23 And finally, in G.R. No. 154538 (Spouses Jose and Amelita Usi v. Ruperta Cano
Vda. de Viray), the Court denied, on February 12, 2003, Sps. Usi's petition for review of the CA's Decision. The
denial became final on April 8, 2003 and an Entry of Judgment 24 issued in due course.
(e)A Petition for Accion Publiciana/Reivindicatoria 25 instituted on December 12, 2001 by Sps. Usi against the
late Jesus Viray, as substituted by Vda. de Viray, et al., before the RTC in Macabebe, Pampanga, docketed as
Civil Case No. 01-1118(M), involving Lots 733-B, 733-C-1 and 733-C-10 (Galang Plan) covered by TCT Nos.
1585-RP, 2092-RP and 2101-RP.
The execution of the July 29, 1998 MCTC Decision in Civil Case No. 91 (13), as the Sps. Usi asserted in their
petition, would oust them from their own in fee simple lots even though the dispositive portion of said forcible
entry Decision mentioned Lots 733-A and 733-F (Fajardo Plan) and not Lots 733-B, 733-C-1 and 733-C-10
(Galang Plan) which are registered in their names per TCT Nos. 1585-RP, 2092-RP and 2101-RP.
In time, Vda. de Viray moved for the dismissal 26 of these publiciana/reivindicatoria actions on grounds, among
others, of litis pendentia and res judicata, on account of (1) the Sps. Usi's appeal, then pending before the CA,
from the dismissal by the RTC of Civil Case No. 99-0914M; 27 and (2) the August 1, 1989 RTC Decision in Civil
Case Nos. 88-0265-M and 88-0283-M, as effectively affirmed by the CA, and finally by the Court in G.R. No.
122287. This motion to dismiss would, however, be denied by the RTC through an Order 28of March 8, 2002,
compelling Vda. de Viray to file an answer, 29 again invoking in defense the doctrine of res judicata. Sps. Usi's
Reply to Answer 30 contained an averment that their titles over the subject lots are the best evidence of their
ownership.
(f) An action for Cancellation of Titles or Surrender of Original Titles with Damages 31 commenced by Vda. de
Viray, et al., against the Sps. Usi, Mendoza and eight others before the RTC, Branch 54 in Macabebe,
Pampanga, docketed as Civil Case No. (02)-1164(M), seeking the cancellation of TCT Nos. 3614-R.P., 2099R.P., 2101-R.P., 7502-R.P. and 2103-R.P. covering Lots 733-C-8 to 733-C-12 as subdivided under the 2nd SA of
April 5, 1991 which taken together is basically identical to Lot 733-F (Fajardo Plan) sold to Jesus Viray
To recap, the six (6) cases thus filed involving portions of Lot 733 and their status are:

Civil
Case No.

The Parties

Action/Suit for

Subject Lot(s)

Disposition

88-0265- Sps. Usi v. Sps. Annulment of Deed of

M
Viray
Absolute Sale

733-A (Fajardo
Plan)

Decision in favor of Sps. Viray.

Decision is now final.

88-0283- Mendoza v.
M
Jesus Viray

Annulment of Deed of
Absolute Sale

733-F (Fajardo
Plan)

Decision in favor of Sps. Viray.

Subject of CA-G.R. CV Nos. 2498182 denied. Subject of G.R. No.
122287 petition denied

91(13)

Jesus Viray v.
Sps. Usi

Forcible Entry

733-F (Fajardo
Plan)

Judgment in favor of Viray. No

appeal.

990914M

Sps. Usi v. Vda. Petition for Annulment of

de Viray
MCTC Decision in CC No.
91(13)

733-F (Fajardo
Plan)

RTC dismissed petition. CA-G.R. CV

No. 67945 appeal dismissed. G.R.
No. 154538 petition denied.

(02)Vda. de Viray v. Cancellation of Titles before Lots 733-C-8 to

1164(M) Mendoza, et al. RTC, Br. 55, Pampanga
733-C-12 (Lot
733-F (Fajardo
Plan)

Pending before the RTC.

01Sps. Usi v. Vda. Petition for Accion Publiciana 733-B, 733-C- 1 Petition dismissed. CA-G.R. CV No.
1118(M) de Viray
and Reivindicatoria before
and 733-C- 10
90344 reversed RTC Decision.
RTC, Br. 55, Pampanga
(Galang Plan)
Subject of instant case, G.R.
No. 192486
In sum, of the six (6) cases referred to above, the first four (4) have been terminated and the main issue/s
therein peremptorily resolved. To a precise point, the matter of the validity of the April 29, 1986 deeds of
absolute sale conveying Lots 733-A and 733-F under the Fajardo Plan to Sps. Viray and Vda. de Viray (vice
Jesus Viray), respectively, is no longer a contentious issue by force of the Court's Decision in G.R. No.
122287 effectively upholding the dismissal of the twin complaints to nullify the deeds aforementioned. Likewise,
the issue of who has the better possessory right independent of title over the disputed lots has been resolved in
favor of Vda. de Viray and the Sps. Viray and against the Usis and veritably put to rest by virtue of the Court's
final, affirmatory Decision in G.R. No. 154538. HAEIac
Only two cases of the original six revolving around Lot 733 remained unresolved. The first refers to the petition
for review of the decision of the CA in CA-G.R. CV No. 90344 which, in turn, is an appeal from the decision of
the RTC in Civil Case No. 01-1118(M), a Petition for Accion Publiciana/Reivindicatoria and Damages, and the
second is Civil Case No. (02)-1164(M) for Cancellation of Titles or Surrender of Original Titles with
Damages. The first case is subject of the present recourse, while the second is, per records, still pending before
the RTC, Branch 54 in Macabebe, Pampanga, its resolution doubtless on hold in light of the instant petition.
In the meantime, the Sps. Usi have remained in possession of what in the Galang Plan are designated as Lots
733-B, 733-C-1 and 733-C-10.
The Ruling of the RTC in Civil Case No. 01-1118(M)
As may be recalled, on June 21, 2007 in Civil Case No. 01-1118(M), the Macabebe, Pampanga RTC rendered
judgment dismissing the petition of the Sps. Usi 32 for Accion Publiciana/Reivindicatoria. In its dismissal action,
the RTC held that the Sps. Usi failed to establish by preponderance of evidence to support their claim of title,
possession and ownership over the lots subject of their petition.
Following the denial of their motion for reconsideration per the RTC's Order 33 of September 25, 2007, the Sps.
Usi interposed an appeal before the CA, docketed as CA-G.R. CV No. 90344.
The Ruling of the CA
On July 24, 2009, the CA rendered the assailed decision, reversing and setting aside the appealed June 21,
2007 RTC decision. The fallo of the CA decision reads:

WHEREFORE, the instant appeal is GRANTED and the assailed Decision of the Regional
Trial Court, REVERSED and SET ASIDE. Judgment is hereby rendered declaring as legal and
valid, the right of ownership of petitioner-appellant [respondents herein] spouses Jose Usi and
Amelita T. Usi over Lot Nos. 733-B, 733-C-1 and 733-C-10 covered by TCT Nos. 1585-R.P.,
2092-R.P, and 2101-R.P., respectively. Consequently, respondents-appellees [herein
petitioners] are hereby ordered to cease and desist from further committing acts of
dispossession or from disturbing possession and ownership of petitioners-appellants of the
said property as herein described and specified. Claims for damages, however, are hereby
denied . . . .
SO ORDERED.
The CA predicated its ruling on the interplay of the following premises and findings: (a) the validity of the two (2)
duly notarized subdivision agreements, or the 1st SA and 2nd SA, which the LMB later approved; (b) the
subdivisions of Lot 733 on the basis of the Galang Plan actually partook the nature of the partition of the shares
of its co-owners; (c) what Mendoza conveyed through the April 29, 1986 deeds of absolute sale is only her ideal,
abstract or pro-indiviso share of Lot 733 of which she had full ownership, the conveyance or sale subject to the
eventual delineation and partition of her share; (d) Vda. de Viray has not shown that fraud surrounded the
execution of the partition of Lot 733 through the subdivision agreements of August 20, 1990 and April 5, 1991;
(e) the certificates of title of the Sps. Usi constitute indefeasible proof of their ownership of Lots 733-B, 733-C-1
and 733-C-10; (f) said certificate entitled the Sps. Usi to take possession thereof, the right to possess being
merely an attribute of ownership; (g) Vda. de Viray can only go after the partitioned shares of Mendoza in Lot
733; and (h) the issue of possessory right has been mooted by the judgment of ownership in favor of the Sps.
Usi over Lots 733-B, 733-C-1 and 733-C-10
Vda. de Viray sought but was denied reconsideration per the assailed June 2, 2010 CA Resolution.
Hence, We have this petition.
The Issue
WHETHER OR NOT THE COURT A QUO GRAVELY AND SERIOUSLY ERRED IN
REVERSING AND SETTING ASIDE THE DECISION OF THE [RTC] DISMISSING
RESPONDENTS' PETITION.34
The Court's Ruling
In the main, the issue tendered in this proceeding boils down to the question of whether the two (2) subdivision
agreements dated August 20, 1990 and April 5, 1991, respectively, partake of a bona fide and legally binding
partition contracts or arrangements among co-owners that validly effectuated the transfer of the subject lots to
respondent spouses Usi. Intertwined with the main issue is the correlative question bearing on the validity of the
deeds of absolute sale upon which the petitioners hinged their claim of ownership and right of possession over
said lots.
The Court rules in favor of petitioners.
Petitioners contend first off that the CA erred in its holding that the partitions of Lot 733 and later of the divided
unit Lot 733-C following the Galang Plan were actually the partitions of the pro-indiviso shares of its co-owners
effectively conveying to them their respective specific shares in the property. CcTHaD
We agree with petitioners.
First, the CA's holding aforestated is neither supported by, nor deducible from, the evidentiary facts on record.
He who alleges must prove it. Respondents have the burden to substantiate the factum probandum of their
complaint or the ultimate fact which is their claimed ownership over the lots in question. They were, however,
unsuccessful in adducing the factum probans or the evidentiary facts by which the factum probandum or ultimate
fact can be established. As shall be discussed shortly, facts and circumstances obtain arguing against the
claimed co-ownership over Lot 733.
Second, the earlier sale of Lot 733-A and Lot 733-F (Fajardo Plan) on April 29, 1986 was valid and effective
conveyances of said portions of Lot 733. The subsequent transfers to the Sps. Usi of substantially the same

portions of Lot 733 accomplished through the subdivision agreements constitute in effect double sales of those
portions. This aberration was brought to light by the results of the adverted survey conducted sometime in June
22, 1999 of Engr. Nicdao of the LMB.
Third, even granting arguendo that the subject subdivision agreements were in fact but partitions of the proindiviso shares of co-owners, said agreements would still be infirm, for the Sps. Viray and Vda. de Viray (vice
Jesus Viray) were excluded from the transaction. Like Vda. de Mallari, Sps. Viray and Jesus Viray had validly
acquired and, hence, owned portions of Lot 733 and are themselves co-owners of Lot 733.
And last, over and above the foregoing considerations, the instant petition must be resolved in favor of
petitioners, the underlying reinvindicatory and possessory actions in Civil Case No. 01-1118 (M) being barred by
the application of the res judicata principle. What is more, the issue of superior possessory rights of petitioner
Vda. de Viray over Lot 733-F (Fajardo Plan) has been laid to rest with finality in Civil Case No. 91 (13). Besides,
Sps. Usi's action to assail the final and executory July 29, 1998 MCTC Decision in Civil Case No. 91 (13) has
been denied with finality in G.R. No. 154538.
The subdivision agreements not partition of co-owners
Partition, in general, is the separation, division, and assignment of a thing held in common by those to whom it
may belong. 35
Contrary to the finding of the CA, the subdivision agreements forged by Mendoza and her alleged coowners were not for the partition of pro-indiviso shares of co-owners of Lot 733 but were actually
conveyances, disguised as partitions, of portions of Lot 733 specifically Lots 733-A and 733-B, and
portions of the subsequent subdivision of Lot 733-C.
Notably, after a full-blown trial in Civil Case No. 01-1118 (M) wherein the spouses Usi merged an accion
publiciana with an accion reinvindicatoria in one petition, the RTC held that Sps. Usi failed to prove their case.
However, in CA G.R. CV No. 90344, an appeal from said RTC decision, the CA, while acknowledging the
existence of the April 29, 1986 deeds of absolute sale, nonetheless accorded validity to the August 20, 1990 and
April 5, 1991 subdivision agreements. This is incorrect. The CA held that the two (2) subdivision agreements, as
notarized, enjoy the presumption of regularity and effectuated the property transfers covered thereby, obviously
glossing over the mala fides attendant the execution of the two subdivision agreements. It cannot be
overemphasized enough that the two (2) deeds of absolute sale over portions of substantially the same parcel of
land antedated the subdivision agreements in question and their execution acknowledged too before a notary
public.
The appellate court found and so declared the subdivision agreements valid without so much as explaining, let
alone substantiating, its determination. The CA never elucidated how the Sps. Usi became, in the first place coowners, with Mendoza over Lot 733. On its face, TCT 141-RP covering Lot 733 was in the name of spouses
Ellen and Moses Mendoza only. Then too, the CA did not explain how under the 2nd SA the Sps. Usi, the Sps.
Lacap, the Sps. Balingit and the Sps. Jordan became co-owners with Mendoza over Lot 733-C, when Mendoza,
under the 1st SA, virtually represented herself as the sole owner of Lot 733-C. HIEAcC
A scrutiny of the records with a fine-tooth comb likewise fails to substantially show a partition of Lot 733 by its
co-owners. While the 1st and 2nd SAs purport to be deeds of partition by and among co-owners of the lot/s
covered thereby, partition as a fact is belied by the evidence extant on record. Consider:
It is undisputed that TCT 141 RP covering Lot 733 was originally in the name of Ellen P. Mendoza and husband,
Moses. 36 The joint decision of the RTC in Civil Case Nos. 88-0265 and 88-0283-M narrated how the couple
came to own Lot 733, thus: "Lot 733 was acquired by Spouses Moses Mendoza and Ellen Mendoza and
Spouses Pacifico Bustos and Maria Roman from Donato Lacap for P5,000.00 (Exh. "1") in 1977. After two
years, Spouses Pacifico Bustos and Maria Roman sold one-half pro-indiviso portion of Lot 733 to spouses
Moses Mendoza and Ellen Mendoza for P6,000.00 (Exh. "2") and the acquisition cost of the whole lot is only
P8,500.00 and . . . ." 37
Mendoza and the Sps. Usi, in their separate complaints for annulment of deeds of sale, docketed as Civil Case
Nos. 88-0265 and 88-0283-M of the Macabebe, Pampanga RTC, alleged that Moses Mendoza authorized Atty.
Venancio Viray to sell the subject lot for at least PhP200 per square meter, and that after his (Moses') death on

April 5, 1986, Lot 733 was included in the proceedings for the settlement of his estate docketed as Sp. Proc.
Case No. 86-0040-M of the RTC, Branch 55 in Macabebe, Pampanga, The events thus alleged by Mendoza and
the Usis can be gleaned from the final and executory joint decision in Civil Case Nos. 88-0265-M and 88-0283-M
which petitioner Vda. de Viray attached as Annex "5" in her Answer with Counterclaim 38 to the Usis' petition
for accion publicana/reivindicatoria. Said Joint Decision amply shows, in gist, the allegations 39 of both the Sps.
Usi and Mendoza in Civil Case Nos. 88-0265-M and 88-0283-M asserting said facts. And these assertions,
made in their complaints, are judicial admissions under Sec. 4, 40Rule 129 of the Rules of Court.
Unlike Vda. de Mallari who, per Vda. de Viray's own admission, purchased the 416-square meter portion of Lot
733 on February 14, 1984, thus constituting her (Vda. de Mallari) as co-owner of Mendoza to the extent of said
area purchased, 41 the Sps. Usi have not been shown to be co-owners with Mendoza. There is simply
nothing in the records to demonstrate how the Sps. Usi became co-owners of Lot 733 before or after the death
of Moses Mendoza. Elsewise put, no evidence had been adduced to show how the alleged interest of the Sps.
Usi, as co-owner, came about, except for the bare assertions in the 1st and 2nd SAs that they co-owned Lot 733
and Lot 733-C (Galang Plan).
It is fairly clear that Lot 733, even from the fact alone of its being registered under the name of the late Moses
Mendoza and Ellen Mendoza, formed part of the couple's conjugal property at the time Moses' demise on April
5, 1986. Equally clear, too, is that Vda. de Mallari became a co-owner of Lot 733 by virtue of the purchase of its
416-square meter portion on February 14, 1984, during the lifetime of Moses. Be that as it may and given that
the Sps. Usi have not been shown to be co-owners of Mendoza and Vda. de Mallari prior to the sale by
Mendoza on April 29, 1986 of Lots 733-A and 733-F (Fajardo Plan) to the Sps. Viray and Jesus Viray,
respectively, then the execution of the 1st SA on August 20, 1990 could not have been a partition by co-owners
of Lot 733. The same could be said of the 2nd SA of April 5, 1991 vis- -vis Lot 733-C, for the records are
similarly completely bereft of any evidence to show on how the purported participating co-owners, namely Sps.
Usi, the Sps. Lacap, the Sps. Balingit and the Sps. Jordan became co-owners with Mendoza and her
children, i.e., McDwight, Bismark, Beverly and Georgenia.
The
April
29,
of Lot 733-A and Lot 733-F are Valid

1986

Deeds

of

Absolute

Sale

It must be noted that the RTC, in its decision in Civil Case Nos. 88-0265-M and 88-0283-M, upheld the validity of
the separate April 29, 1986 deeds of absolute sale of Lots 733-A and 733-F (Fajardo Plan). The combined area
of Lot 733-A (366 sq. m.) and Lot 733-F (3,501) is less than one half of the total area coverage of Lot 733
(9,137). The sale of one-half portion of the conjugal property is valid as a sale. It cannot be gainsaid then that
the deeds, executed as they were by the property owner, were sufficient to transfer title and ownership over the
portions covered thereby. And the aforesaid RTC decision had become final and executory as far back as
December 11, 1995 when the Court, in G.R. No. 122287, in effect, affirmed the RTC decision. Likewise, the
MCTC's decision in Civil Case No. 91 (13) for forcible entry, declaring Vda. de Viray, as successor-in-interest of
Jesus Viray, as entitled to the physical possession, or possession de facto, of Lot 733-F (Fajardo Plan), and the
RTC's decision in Civil Case No. 99-0914M, disposing of the belated appeal of the MCTC decision in the forcible
entry case, have become final and executory on February 12, 2003 under G.R. No. 154538. HTCIcE
In light of the convergence of the foregoing disposed-of cases, there can be no question as to the ownership of
the Sps. Viray and Vda. de Viray (vice Jesus Viray) over the specified and delineated portions of Lot 733 which
they purchased for value from Mendoza. And Mendoza, as vendor, was bound to transfer the ownership of and
deliver, as well as warrant, the thing which is the object of the sale. 42
In the instant case, the April 29, 1986 deeds of absolute sale indeed included the technical description of that
part of Lot 733 subject of the transactions, thus clearly identifying the portions (Lots 733-A and 733-F under the
Fajardo Plan) sold by Mendoza to the Sps. Viray and Vda. de Viray (vice Jesus Viray). Hence, there can be no
mistaking as to the identity of said lots.
The deeds in question were, to reiterate, not only valid but constitute prior conveyances of the disputed portions
of Lot 733. Accordingly, the subsequent conveyances in 1990 and 1991 to the Sps. Usi through transfer
contracts, styled as subdivision agreements, resulted, in effect, in a double sale situation involving substantially
the same portions of Lot 733.

The survey report of LMB surveyor, Engr. Nicdao, would support a finding of double sale. His report, as earlier
indicated, contained the following key findings: (1) Lot 733-A (Fajardo Plan) with an area of 336 square meters
thus sold to the Sps. Viray is within Lot 733-B (Galang Plan), the part assigned to Sps. Usi under the division;
and (2) Lot 733-F (Fajardo Plan) with an area of 3,501 square meters is almost identical to the combined area of
Lots 733-C-8 to 733-C-12 awarded to Ellen Mendoza and her children, McDwight, Bismark, Beverly and
Georgenia, and a portion (1,000 square meters) of Lot 733-C-10 (Galang Plan) adjudicated to Sps. Usi.
A double sale situation, which would call, if necessary, the application of Art. 1544 of the Civil Code,arises when,
as jurisprudence teaches, the following requisites concur:
(a) The two (or more) sales transactions must constitute valid sales;
(b) The two (or more) sales transactions must pertain to exactly the same subject matter;
(c) The two (or more) buyers at odds over the rightful ownership of the subject matter must
each represent conflicting interests; and
(d) The two (or more) buyers at odds over the rightful ownership of the subject matter must
each have bought from the very same seller. 43
From the facts, there is no valid sale from Mendoza to respondents Usi. The parties did not execute a valid deed
of sale conveying and transferring the lots in question to respondents. What they rely on are two subdivision
agreements which do not explicitly chronicle the transfer of said lots to them. Under the 1st SA, all that can be
read is the declaration that respondents, together with others, are the "sole and exclusive owners" of the lots
subject of said agreement. Per the 2nd SA, it simply replicates the statement in the 1st SA that respondents are
"sole and exclusive undivided co-owners" with the other parties. While respondents may claim that the SAs of
1990 and 1991 are convenient conveying vehicles Mendoza resorted to in disposing portions of Lot 733 under
the Galang Plan, the Court finds that said SAs are not valid legal conveyances of the subject lots due to nonexistent prestations pursuant to Article 1305 which prescribes "a meeting of minds between two persons
whereby one binds himself, with respect to the other, to give something or to render some service." The third
element of cause of the obligation which is established under Art. 1318 of the Civil Code is likewise visibly
absent from the two SAs. The transfer of title to respondents based on said SAs is flawed, irregular, null and
void. Thus the two SAs are not "sales transactions" nor "valid sales" under Art. 1544 of the Civil Code and,
hence, the first essential element under said legal provision was not satisfied.
Given the above perspective, the Sps. Viray and Vda. de Viray (vice Jesus Viray) have, as against the Sps. Usi,
superior rights over Lot 733-A and Lot 733-F (Fajardo Plan) or portions thereof.
Res Judicata Applies
Notably, the Sps. Viray and Vda. de Viray, after peremptorily prevailing in their cases supportive of their claim of
ownership and possession of Lots 733-A and 733-F (Fajardo Plan), cannot now be deprived of their rights by the
expediency of the Sps. Usi maintaining, as here, an accion publiciana and/or accion reivindicatoria, two of the
three kinds of actions to recover possession of real property. The third, accion interdictal, comprises two distinct
causes of action, namely forcible entry and unlawful detainer, 44 the issue in both cases being limited to the right
to physical possession or possession de facto, independently of any claim of ownership that either party may set
forth in his or her pleadings, 45 albeit the court has the competence to delve into and resolve the issue of
ownership but only to address the issue of priority of possession. 46 Both actions must be brought within one
year from the date of actual entry on the land, in case of forcible entry, and from the date of last demand to
vacate following the expiration of the right to possess, in case of unlawful detainer. 47
When the dispossession or unlawful deprivation has lasted more than one year, one may avail himself of accion
publiciana to determine the better right of possession, or possession de jure, of realty independently of title. On
the other hand, accion reivindicatoria is an action to recover ownership which necessarily includes recovery of
possession.48
Now then, it is a hornbook rule that once a judgment becomes final and executory, it may no longer be modified
in any respect, even if the modification is meant to correct an erroneous conclusion of fact or law, and regardless
of whether the modification is attempted to be made by the court rendering it or by the highest court of the land,

as what remains to be done is the purely ministerial enforcement or execution of the judgment. 49 Any attempt
to reopen a close case would offend the principle of res judicata.
Res judicata embraces two concepts or principles, the first is designated as "bar by prior judgment" and the
other, "conclusiveness of judgment." Tiongson v. Court of Appeals 50describes the effects of res judicata, as a
bar by prior judgment, in the following manner:
There is no question that where as between the first case where the judgment is rendered and
the second where such judgment is invoked, there is identity of parties, subject matter and
cause of action, the judgment on the merits in the first case constitutes an absolute bar to the
subsequent action not only as to every matter which was offered and received to sustain or
defeat the claim or demand, but also as to any other admissible matter which might have
been offered for that purpose and to all matters that could have been adjudged in that case. . .
.
Res judicata operates as 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 second action, identity of parties, of subject matter and of causes of action. 51 All the requisites are present
in the instant case.
The better right to possess and the right of ownership of Vda. de Viray (vice Jose Viray) and the Sps. Viray over
the disputed parcels of land cannot, by force of the res judicatadoctrine, be re-litigated thru actions to recover
possession and vindicate ownership filed by the Sps. Usi. The Court, in G.R. No. 122287 (Ellen P. Mendoza and
Jose and Amelita Usi v. Spouses Avelino Viray and Margarita Masangcay and Jesus Carlo Gerard Viray), has in
effect determined that the conveyances and necessarily the transfers of ownership made to the Sps. Viray and
Vda. de Viray (vice Jose Viray) on April 29, 1986 were valid. This determination operates as a bar to the Usis
reivindicatory action to assail the April 29, 1986 conveyances and precludes the relitigation between the same
parties of the settled issue of ownership and possession arising from ownership. It may be that the spouses Usi
did not directly seek the recovery of title or possession of the property in question in their action for annulment of
the deed sale of sale. But it cannot be gainsaid that said action is closely intertwined with the issue of ownership,
and affects the title, of the lot covered by the deed. The prevalent doctrine, to borrow from Fortune Motors,
(Phils.), Inc. v. Court of Appeals, 52 "is that an action for the annulment or rescission of a sale of real property
does not operate to efface the fundamental and prime objective and nature of the case, which is to recover said
real property."
And lest it be overlooked, the Court, in G.R. No. 154538 (Spouses Jose and Amelita Usi v. Ruperta Cano Vda.
de Viray), again in effect ruled with finality that petitioner Vda. de Viray has a better possessory right over Lot
733-F (Fajardo Plan). Thus, the Court's decision in G.R. No. 122287 juxtaposed with that in G.R. No.
154538 would suffice to bar the Sps. Usi's accion publiciana, as the spouses had invoked all along their
ownership over the disputed Lot 733-F as basis to defeat any claim of the right of possession. While anaccion
reivindicatoria is not barred by a judgment in an ejectment case, such judgment constitutes a bar to the
institution of the accion publiciana, because the matter of possession between the same parties has become res
judicata and cannot be delved into in a new action. 53
The doctrine of res judicata is a basic postulate to the end that controversies and issues once decided on the
merits by a court of competent jurisdiction shall remain in repose. It is simply unfortunate that the RTC, in Civil
Case No. 01-1118(M), did not apply the doctrine of res judicata to the instant case, despite petitioners, as
respondents below, had raised that ground both in their motion to dismiss and answer to the underlying petition.
WHEREFORE, the instant petition is GRANTED. The assailed Decision dated July 24, 2009 and Resolution
dated June 2, 2010 of the Court of Appeals in CA-G.R. CV No. 90344 areREVERSED and SET ASIDE. The
Decision dated June 21, 2007 in Civil Case No. 01-1118(M) of the RTC, Branch 55 in Macabebe, Pampanga is
accordingly REINSTATED.
Costs against respondents.
SO ORDERED.

Bersamin, * Abad, Perez ** and Mendoza, JJ., concur.

||| (Vda. de Viray v. Spouses Usi, G.R. No. 192486, [November 21, 2012], 699 PHIL 205-235)

SECOND DIVISION
[G.R. No. 173590. December 9, 2013.]
PHILIPPINE POSTAL CORPORATION, petitioner, vs.
CRISANTO G. DE GUZMAN, respondents.

COURT

OF

APPEALS

and

DECISION
PERLAS-BERNABE, J p:
Assailed in this petition for review on certiorari 1 are the Decision 2 dated April 4, 2006 and Resolution 3 dated
July 19, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 88891 which reversed and set aside the
Resolutions dated November 23, 2004 4 and January 6, 2005 5 of petitioner Philippine Postal Corporation
(PPC), through its then Postmaster General and Chief Executive Officer (CEO) Dario C. Rama (PG Rama),
finding that the latter gravely abused its discretion when it revived the administrative charges against respondent
Crisanto G. De Guzman (De Guzman) despite their previous dismissal.
The Facts
Sometime in 1988, De Guzman, then a Postal Inspector at the Postal Services Office, 6 was investigated by
Regional Postal Inspector Atty. Raul Q. Buensalida (Atty. Buensalida) in view of an anonymous complaint
charging him of dishonesty and conduct grossly prejudicial to the best interest of the service. 7 As a result
thereof, Atty. Buensalida recommended 8 that De Guzman be formally charged with twelve (12) counts of the
same offenses and eventually be relieved from his post to protect the employees and witnesses from
harassment.
Since the Postal Services Office was then a line-agency of the Department of Transportation and
Communication (DOTC), Atty. Buensalida's investigation report was forwarded to the said department's
Investigation Security and Law Enforcement Staff (ISLES) for further evaluation and approval. Contrary to the
findings of Atty. Buensalida, however, the ISLES, through a Memorandum 9 dated February 26, 1990 prepared
by Director Antonio V. Reyes (Dir. Reyes), recommended that De Guzman be exonerated from the charges
against him due to lack of merit. The said recommendation was later approved by DOTC Assistant Secretary
Tagumpay R. Jardiniano (Asec. Jardiniano) in a Memorandum 10dated May 15, 1990.
On February 6, 1992, Republic Act No. (RA) 7354, 11 otherwise known as the "Postal Service Act of 1992," was
passed. Pursuant to this law, the Postal Services Office under the DOTC was abolished, and all its powers,
duties, and rights were transferred to the PPC. 12 Likewise, officials and employees of the Postal Services
Office were absorbed by the PPC. 13 TaCDIc
Subsequently, or on July 16, 1993, De Guzman, who had by then become Chief Postal Service Officer, was
formally charged 14 by the PPC, through Postmaster General Eduardo P. Pilapil (PG Pilapil), for the same acts
of "dishonesty, gross violation of regulations, and conduct grossly prejudicial to the best interest of the service,
and the Anti-graft law, committed as follows":
Investigation disclosed that while you were designated as Acting District Postal Inspector with
assignment at South Cotabato District, Postal Region XI, Davao City, you personally made
unauthorized deductions and/or cuttings from the ten (10%) percent salary differential for the
months of January-March, 1988, when you paid each of the employees of the post office at
Surallah, South Cotabato, on the last week of April 1988, and you intentionally failed to give to
Postmaster Juanito D. Dimaup, of the said post office his differential amounting to P453.91,
Philippine currency; that you demanded and required Letter Carrier Benjamin Salero, of the
aforestated post office to give fifty (P50.00) pesos out of the aforesaid differential; that you
personally demanded, take away and encashed the salary differential check No. 008695317
in the total amount of P1,585.67, Philippine currency, of Postmaster Benjamin C. Charlon, of
the post office at Lake Cebu, South Cotabato, for your own personal gain and benefit to the
damage and prejudice of the said postmaster; that you personally demanded, required and
received from Postmaster Peniculita B. Ledesma, of the post office of Sto. Nio, South
Cotabato, the amount of P300.00, P200.00 and P100.00 for hazard pay, COLA differential and
contribution to the affair "Araw ng Kartero and Christmas Party," respectively; that you

personally demanded and required Letter Carrier Feliciano Bayubay, of the post office at
General Santos City to give money in the amount of P1,000.00, Philippine Currency, as a
condition precedent for his employment in this Corporation, and you again demanded and
personally received from the said letter carrier the amount of P300.00 Philippine currency, as
gift to the employees of the Civil Service Commission, Davao City to facilitate the release of
Bayubay's appointment; that you demanded and forced Postmaster Felipe Collamar, Jr., of
the post office at Maitum, South Cotabato to contribute and/or produce one (1) whole Bariles
fish for shesami (sic), and you also required and received from the aforesaid postmaster the
amount of P500.00 Philippine currency; that you demanded and required Postmaster
Diosdado B. Delfin to give imported wine and/or P700.00, Philippine currency, for gift to the
outgoing Regional Director Escalada; and that you failed to liquidate and return the substantial
amount of excess contributions on April, 1987, June, 1987 and December, 1987, for Postal
Convention at MSU, arrival of Postmaster General Banayo and Araw ng Kartero and
Christmas Party, respectively, for your own personal gain and benefit to the damage and
prejudice of all the employees assigned at the aforementioned district.
In a Decision 15 dated August 15, 1994, De Guzman was found guilty as charged and was dismissed from the
service. Pertinently, its dispositive reads that "[i]n the interest of the service, it is directed that this decision be
implemented immediately." 16
It appears, however, that the afore-stated decision was not implemented until five (5) years later when Regional
Director Mama S. Lalanto (Dir. Lalanto) issued a Memorandum 17dated August 17, 1999 for this purpose. De
Guzman lost no time in filing a motion for reconsideration, 18 claiming that: (a) the decision sought to be
implemented was recalled on August 29, 1994 by PG Pilapil himself; and (b) since the decision had been
dormant for more than five (5) years, it may not be revived without filing another formal charge.
The motion was, however, denied in a Resolution 19 dated May 14, 2003, pointing out that De Guzman failed to
produce a copy of the alleged recall order even if he had been directed to do so.
Undaunted, De Guzman filed a second motion for reconsideration, which was resolved 20 on June 2, 2003 in his
favor in that: (a) the Resolution dated May 14, 2003 denying De Guzman's first motion for Reconsideration was
recalled; and (b) a formal hearing of the case was ordered to be conducted as soon as possible. CTaIHE
After due hearing, the PPC, through PG Rama, issued a Resolution 21 dated November 23, 2004, finding De
Guzman guilty of the charges against him and consequently dismissing him from the service. It was emphasized
therein that when De Guzman was formally charged on July 16, 1993, the complainant was the PPC, which had
its own charter and was no longer under the DOTC. Thus, the ISLES Memorandum dated February 26, 1990
prepared by Dir. Reyes which endorsed the exoneration of De Guzman and the dismissal of the complaints
against him was merely recommendatory. As such, the filing of the formal charge on July 16, 1993 was an
obvious rejection of said recommendation. 22
De Guzman's motion for reconsideration was denied initially in a Resolution 23 dated January 6, 2005, but the
motion was, at the same time, considered as an appeal to the PPC Board of Directors (Board). 24 The Board,
however, required PG Rama to rule on the motion. Thus, in a Resolution 25 dated May 10, 2005, PG Rama
pointed out that, being the third motion for reconsideration filed by De Guzman, the same was in gross violation
of the rules of procedure recognized by the PPC, as well as of the Civil Service Commission (CSC), which both
allowed only one (1) such motion to be entertained. 26 It was further held that res judicata was unavailing as the
decision exonerating De Guzman was "only a ruling after a fact-finding investigation." Hence, the same could
not be considered as a dismissal on the merits but rather, a dismissal made by an investigative body which was
not clothed with judicial or quasi-judicial power. 27
Meanwhile, before the issuance of the Resolution dated May 10, 2005, De Guzman elevated his case on March
12, 2005 28 to the CA via a special civil action for certiorari andmandamus, 29 docketed as CA-G.R. SP No.
88891, imputing grave abuse of discretion amounting to lack or excess of jurisdiction in that: (a) the case against
him was a mere rehash of the previous complaint already dismissed by the DOTC, and therefore, a clear
violation of the rule on res judicata; (b) the assailed PPC Resolutions did not consider the evidences submitted
by De Guzman; (c) the uncorroborated, unsubstantiated and contradictory statements contained in the affidavits

presented became the bases of the assailed Resolutions; (d) the Resolution dated November 23, 2004 affirmed
a non-existent decision; (e) Atty. Buensalida was not a credible witness and his testimony bore no probative
value; and (f) the motion for reconsideration filed by De Guzman of the Resolution dated November 23, 2004 is
not the third motion for reconsideration filed by him.
On June 10, 2005, De Guzman appealed 30 the Resolution dated May 10, 2005 before the PPC Board, which
resolution was allegedly received by De Guzman on May 26, 2005. Almost a year later, the Board issued a
Resolution 31 dated May 25, 2006, denying the appeal and affirming with finality the Decision dated August 15,
1994 and the Resolution dated May 14, 2003. The motion for reconsideration subsequently filed by De Guzman
was likewise denied in a Resolution 32 dated June 29, 2006.
On April 4, 2006, the CA rendered a Decision 33 in CA-G.R. SP No. 88891, reversing the PPC Resolutions
dated November 23, 2004 and January 6, 2005, respectively. It held that the revival of the case against De
Guzman constituted grave abuse of discretion considering the clear and unequivocal content of the
Memorandum dated May 15, 1990 duly signed by Asec. Jardiniano that the complaint against De Guzman was
already dismissed.
Aggrieved, PPC moved for reconsideration which was, however, denied in a Resolution 34 dated July 19, 2006,
hence, the instant petition.
Meanwhile, on July 26, 2006, De Guzman filed an appeal of the PPC Board's Resolutions dated May 25,
2006 and June 29, 2006 with the CSC 35 which was, however, dismissed in Resolution No. 080815 36 dated
May 6, 2008. The CSC equally denied De Guzman's motion for reconsideration therefrom in Resolution No.
090077 37 dated January 14, 2009.
The Issues Before the Court
The essential issues for the Court's resolution are whether: (a) De Guzman unjustifiably failed to exhaust the
administrative remedies available to him; (b) De Guzman engaged in forum-shopping; and (c) the investigation
conducted by the DOTC, through the ISLES, bars the filing of the subsequent charges by PPC.
The Court's Ruling
The petition is meritorious.
A. Exhaustion
remedies.

of

administrative

The thrust of the rule on exhaustion of administrative remedies is that the courts must allow the administrative
agencies to carry out their functions and discharge their responsibilities within the specialized areas of their
respective competence. It is presumed that an administrative agency, if afforded an opportunity to pass upon a
matter, will decide the same correctly, or correct any previous error committed in its forum. Furthermore, reasons
of law, comity and convenience prevent the courts from entertaining cases proper for determination by
administrative agencies. Hence, premature resort to the courts necessarily becomes fatal to the cause of action
of the petitioner. 38
PPC claims that De Guzman failed to subscribe to the rule on exhaustion of administrative remedies since he
opted to file a premature certiorari case before the CA instead of filing an appeal with the PPC Board, or of an
appeal to the CSC, which are adequate remedies under the law. 39
The Court agrees with PPC's submission. TAECaD
Under Section 21 (d) of R.A. 7354, the removal by the Postmaster General of PPC officials and employees
below the rank of Assistant Postmaster General may be appealed to the Board of the PPC, viz.:
Sec. 21. Powers and Functions of the Postmaster General. as the Chief Executive
Officer, the Postmaster General shall have the following powers and functions:
xxx xxx xxx
(d) to appoint, promote, assign, reassign, transfer and remove personnel below the ranks of
Assistant Postmaster General: Provided, That in the case of removal of officials and
employees, the same may be appealed to the Board;
xxx xxx xxx

This remedy of appeal to the Board is reiterated in Section 2 (a), Rule II of the Disciplinary Rules and
Procedures of the PPC, which provides further that the decision of the Board is, in turn, appealable to the
CSC, viz.:
Section 2. DISCIPLINARY JURISDICTION. (a) The Board of Directors shall decide upon
appeal the decision of the Postmaster General removing officials and employees from the
service. (R.A. 7354, Sec. 21 (d)). The decision of the Board of Directors is appealable to the
Civil Service Commission.
It is well-established that the CSC has jurisdiction over all employees of government branches, subdivisions,
instrumentalities, and agencies, including government-owned or controlled corporations with original charters,
and, as such, is the sole arbiter of controversies relating to the civil service. 40 The PPC, created under RA
7354, is a government-owned and controlled corporation with an original charter. Thus, being an employee of
the PPC, De Guzman should have, after availing of the remedy of appeal before the PPC Board, sought
further recourse before the CSC.
Records, however, disclose that while De Guzman filed on June 10, 2005 a notice of appeal 41 to the PPC
Board and subsequently appealed the latter's ruling to the CSC on July 26, 2006, these were all after he
challenged the PPC Resolution dated November 23, 2004 (wherein he was adjudged guilty of the charges
against him and consequently dismissed from the service) in a petition for certiorari and mandamus before the
CA (docketed as CA-G.R. SP No. 88891). That the subject of De Guzman's appeal to the Board was not the
Resolution dated November 23, 2004 but the Resolution dated May 10, 2005 denying the motion for
reconsideration of the first-mentioned resolution is of no moment. In Alma Jose v. Javellana, 42 the Court ruled
that an appeal from an order denying a motion for reconsideration of a final order or judgment is effectively an
appeal from the final order or judgment itself. 43 Thus, finding no cogent explanation on De Guzman's end or
any justifiable reason for his premature resort to a petition for certiorari andmandamus before the CA, the Court
holds that he failed to adhere to the rule on exhaustion of administrative remedies which should have warranted
the dismissal of said petition.
B. Forum-shopping.
PPC further submits that De Guzman violated the rule on forum-shopping since he still appealed the order of his
dismissal before the PPC Board, notwithstanding the pendency of his petition for certiorari before the CA
identically contesting the same. 44
The Court also concurs with PPC on this point.
Aside from violating the rule on exhaustion of administrative remedies, De Guzman was also guilty of forumshopping by pursuing two (2) separate remedies petition forcertiorari and appeal that have long been held
to be mutually exclusive, and not alternative or cumulative remedies. 45 Evidently, the ultimate relief sought
by said remedies which De Guzman filed only within a few months from each other 46 is one and the
same the setting aside of the resolution dismissing him from the service. As illumined in the case
of Sps. Zosa v. Judge Estrella, 47 wherein several precedents have been cited on the subject
matter: 48 cDTHIE
The petitions are denied. The present controversy is on all fours with Young v. Sy, in which we
ruled that the successive filing of a notice of appeal and a petition for certiorariboth to assail
the trial court's dismissal order for non-suit constitutes forum shopping. Thus,
Forum shopping consists of filing multiple suits involving the same parties for
the same cause of action, either simultaneously or successively, for the
purpose of obtaining a favorable judgment.
There is forum shopping where there exist: (a) identity of parties, or at least
such parties as represent the same interests in both actions; (b) identity of
rights asserted and relief prayed for, the relief being founded on the same facts;
and (c) the identity of the two preceding particulars is such that any judgment
rendered in the pending case, regardless of which party is successful would
amount to res judicata.

Ineluctably, the petitioner, by filing an ordinary appeal and a petition for certiorari with
the CA, engaged in forum shopping. When the petitioner commenced the appeal, only
four months had elapsed prior to her filing with the CA the Petition for Certiorari under
Rule 65 and which eventually came up to this Court by way of the instant Petition (re:
Non-Suit). The elements of litis pendentia are present between the two suits. As the
CA, through its Thirteenth Division, correctly noted, both suits are founded on exactly
the same facts and refer to the same subject matter the RTC Orders which
dismissed Civil Case No. SP-5703 (2000) for failure to prosecute. In both cases, the
petitioner is seeking the reversal of the RTC orders. The parties, the rights asserted,
the issues professed, and the reliefs prayed for, are all the same. It is evident that the
judgment of one forum may amount to res judicata in the other.
xxx xxx xxx
The remedies of appeal and certiorari under Rule 65 are mutually exclusive and
not alternative or cumulative. This is a firm judicial policy. The petitioner cannot
hedge her case by wagering two or more appeals, and, in the event that the ordinary
appeal lags significantly behind the others, she cannot post facto validate this
circumstance as a demonstration that the ordinary appeal had not been speedy or
adequate enough, in order to justify the recourse to Rule 65. This practice, if adopted,
would sanction the filing of multiple suits in multiple fora, where each one, as the
petitioner couches it, becomes a "precautionary measure" for the rest, thereby
increasing the chances of a favorable decision. This is the very evil that the
proscription on forum shopping seeks to put right. In Guaranteed Hotels, Inc. v.
Baltao, the Court stated that the grave evil sought to be avoided by the rule
against forum shopping is the rendition by two competent tribunals of two
separate and contradictory decisions. Unscrupulous party litigants, taking
advantage of a variety of competent tribunals, may repeatedly try their luck in several
different fora until a favorable result is reached. To avoid the resultant confusion, the
Court adheres strictly to the rules against forum shopping, and any violation of these
rules results in the dismissal of the case.
Thus, the CA correctly dismissed the petition for certiorari and the petition for review
(G.R. No. 157745) filed with this Court must be denied for lack of merit.
We also made the same ruling in Candido v. Camacho, when the respondent therein assailed
identical court orders through both an appeal and a petition for an extraordinary writ.
Here, petitioners questioned the June 26, 2000 Order, the August 21, 2000 Clarificatory Order,
and the November 23, 2000 Omnibus Order of the RTC via ordinary appeal (CA-G.R. CV No.
69892) and through a petition for certiorari (CA-G.R. SP No. 62915) in different divisions of
the same court. The actions were filed with a month's interval from each one. Certainly,
petitioners were seeking to obtain the same relief in two different divisions with the end
in view of endorsing whichever proceeding would yield favorable consequences. Thus,
following settled jurisprudence, both the appeal and the certiorari petitions should be
dismissed. (Emphases supplied; citations omitted)
Similar thereto, the very evil that the prohibition on forum-shopping was seeking to prevent conflicting
decisions rendered by two (2) different tribunals resulted from De Guzman's abuse of the processes. Since
De Guzman's appeal before the PPC Board was denied in its Resolutions 49 dated May 25, 2006 and June 29,
2006, De Guzman sought the review of said resolutions before the CSC where he raised yet again the defense
of res judicata. Nonetheless, the CSC, in its Resolution No. 080815 50 dated May 6, 2008, affirmed De
Guzman's dismissal, affirming "the Resolutions of the PPC Board of Directors dismissing De Guzman from the
service for Dishonesty, Gross Violation of Regulations, and Conduct Grossly Prejudicial to the Best Interest of
the Service." 51

De Guzman's motion for reconsideration of the aforesaid Resolution was similarly denied by the CSC in its
Resolution No. 090077 52 dated January 14, 2009. On the other hand, the petition for certiorari, which contained
De Guzman's prayer for the reversal of Resolutions dated November 23, 2004 and January 6, 2005 dismissing
him from the service, was granted by the CA much earlier on April 4, 2006. HcSETI
It should be pointed out that De Guzman was bound by his certification 53 with the CA that if he "should
thereafter learn that a similar action or proceeding has been filed or is pending before the Supreme Court, the
Court of Appeals, or any other tribunal or agency," he "undertake[s] to report that fact within five (5) days
therefrom to [the] Honorable Court." 54 Nothing, however, appears on record that De Guzman had informed the
CA of his subsequent filing of a notice of appeal before the PPC from the Resolution dated May 10, 2005. By
failing to do so, De Guzman committed a violation of his certification against forum-shopping with the CA, which
has been held to be a ground for dismissal of an action distinct from forum-shopping itself. 55
Moreover, De Guzman's contention 56 that the filing of the notice of appeal from the said Resolution was only
"taken as a matter of precaution" 57 cannot extricate him from the effects of forum-shopping. He was fully aware
when he filed CA-G.R. SP No. 88891 that PG Rama had forwarded the records of the case to the PPC Board for
purposes of appeal.58 Yet, he decided to bypass the administrative machinery. And this was not the first time he
did so. In his Comment to the instant petition, De Guzman claimed 59 that in response to the
Memorandum 60 dated August 17, 1999 issued by Dir. Lalanto implementing his dismissal from service, he not
only filed a motion for reconsideration but he likewise challenged the actions of the PPC before the Regional
Trial Court of Manila through a petition for mandamus docketed as Case No. 99-95442.
Even when CA-G.R. SP No. 88891 was decided in De Guzman's favor on April 4, 2006, and PPC's motion for
reconsideration was denied on July 19, 2006, De Guzman nonetheless filed on July 26, 2006 an appeal before
the CSC from the denial by the PPC Board of his Notice of Appeal dated June 7, 2005 as pointed out in CSC
Resolution No. 090077. 61 While De Guzman did inform the CSC that he previously filed a petition
for certiorari with the CA, he failed to disclose the fact that the CA had already rendered a decision thereon
resolving the issue of res judicata, 62 which was the very same issue before the CSC.
Verily, unscrupulous party litigants who, taking advantage of a variety of competent tribunals, repeatedly try their
luck in several different fora until a favorable result is reached63 cannot be allowed to profit from their
wrongdoing. The Court emphasizes strict adherence to the rules against forum-shopping, and this case is no
exception. Based on the foregoing, the CA should have then dismissed the petition for certiorari filed by De
Guzman not only for being violative of the rule on exhaustion of administrative remedies but also due to forumshopping.
In addition, it may not be amiss to state that De Guzman's petition for certiorari was equally dismissible since
one of the requirements for the availment thereof is precisely that there should be no appeal. It is wellsettled that the remedy to obtain reversal or modification of the judgment on the merits is to appeal. This is true
even if the error, or one of the errors, ascribed to the tribunal rendering the judgment is its lack of jurisdiction
over the subject matter, or the exercise of power in excess thereof, or grave abuse of discretion in the findings of
fact or of law set out in the decision. 64 In fact, under Section 30, Rule III (C) of the Disciplinary Rules and
Procedures of the PPC, among the grounds for appeal to the PPC Board from an order or decision of dismissal
are: (a) grave abuse of discretion on the part of the Postmaster General; and (b) errors in the finding of facts or
conclusions of law which, if not corrected, would cause grave and irreparable damage or injury to the appellant.
Clearly, therefore, with the remedy of appeal to the PPC Board and thereafter to the CSC available to De
Guzman, certiorari to the CA should not have been permitted.
In this relation, it bears noting that PPC has sufficiently addressed De Guzman's argument that an appeal would
not be a speedy and adequate remedy considering that the resolution dismissing him from service was to be
"implemented immediately." 65
To elucidate, on February 24, 2005, before De Guzman filed the petition for certiorari dated March 12, 2005, the
PPC Board had passed Board Resolution 66 No. 2005-14 adopting a "Corporate Policy that henceforth the
decision of the Postmaster General in administrative cases when the penalty is removal or dismissal, the
same shall not be final and executory pending appeal to the Office of the Board of Directors." Shortly

thereafter, or on March 8, 2005, PG Rama issued Philpost Administrative Order 67 No. 05-05 pursuant to the
aforementioned Board Resolution, the pertinent portions of which are quoted hereunder:
1. Decisions of the Postmaster General in administrative cases where the penalty imposed
is removal/dismissal from the service shall not be final and executory pending appeal to the
Office of the PPC Board of Directors. . . .
2. Decisions of the Postmaster General in administrative cases where the penalty imposed
is removal/dismissal from the service shall be executory pending appeal to the Civil Service
Commission;
3. Respondents who have pending appealed administrative cases to the PPC Board of
Directors are entitled to report back to office and receive their respective salary and benefits
beginning at the time they reported back to work. No back wages shall be allowed by virtue
of the PPC Board Resolution No. 2005-14;
4. Following the Civil Service Rules and Regulations, back wages can only be recovered in
case the respondent is exonerated of the administrative charges on appeal; and
5. PPC Board Resolution No. 2005-14 took effect on 24 February 2005. . . .
PPC further claimed that instead of reporting for work while his motion for reconsideration and, subsequently, his
appeal were pending, "[De Guzman] voluntarily elected to absent himself." Much later, however, De Guzman
"finally reported back [to] work and thereby received his salary and benefits in full for the covered period." 68 De
Guzman failed to sufficiently rebut these claims, except to say that he was never given any copy of the
aforementioned board resolution and administrative order. 69 Therefore, considering that his dismissal was not
to be executed by PPC immediately (if he had appealed the same), De Guzman's contention that an appeal
would not be a speedy and adequate remedy similarly deserves no merit.
C. Res judicata.
De Guzman likewise failed to convince the Court of the applicability of the doctrine of res judicata for having
been charged of the same set of acts for which he had been exculpated by the ISLES of the DOTC whose
recommendation for the dismissal of the complaint against De Guzman was subsequently approved by then
DOTC Asec. Jardiniano.
The Court agrees with PPC's argument that there was no formal charge filed by the DOTC against De Guzman
and, as such, the dismissal of the complaint against him by Asec. Jardiniano, upon the recommendation of the
ISLES, did not amount to a dismissal on the merits that would bar the filing of another case.
While the CA correctly pointed out that it was the DOTC, through its Department Head, that had disciplinary
jurisdiction over employees of the then Bureau of Posts, including De Guzman, it however proceeded upon the
presumption that De Guzman had been formally charged. But he was not.
Pertinent is Section 16 of the Uniform Rules on Administrative Cases in the Civil Service which reads as follows:
Section 16. Formal Charge. After a finding of a prima facie case, the disciplining
authority shall formally charge the person complained of. The formal charge shall contain
a specification of charge(s), a brief statement of material or relevant facts, accompanied by
certified true copies of the documentary evidence, if any, sworn statements covering the
testimony of witnesses, a directive to answer the charge(s) in writing under oath in not less
than seventy-two (72) hours from receipt thereof, an advice for the respondent to indicate in
his answer whether or not he elects a formal investigation of the charge(s), and a notice that
he is entitled to be assisted by a counsel of his choice. (Emphasis supplied)
The requisite finding of a prima facie case before the disciplining authority shall formally charge the person
complained of is reiterated in Section 9, Rule III (B) of the Disciplinary Rules and Procedures of the PPC, to wit:
Section 9. FORMAL CHARGE. When the Postmaster General finds the existence of
a prima facie case, the respondent shall be formally charged. He shall be furnished
copies of the complaint, sworn statements and other documents submitted by the
complainant, unless he had already received the same during the preliminary investigation.

The respondent shall be given at least seventy-two (72) hours from receipt of said formal
charge to submit his answer under oath, together with the affidavits of his witnesses and other
evidences, and a statement indicating whether or not he elects a formal investigation. He shall
also be informed of his right to the assistance of a counsel of his choice. If the respondent
already submitted his comment and counter-affidavits during the preliminary investigation, he
shall be given the opportunity to submit additional evidence. (Emphasis supplied) TAHIED
The investigation conducted by the ISLES, which "provides, performs, and coordinates security,
intelligence, fact-finding, and investigatory functions for the Secretary, the Department, and Departmentwide official undertakings," 70 was intended precisely for the purpose of determining whether or not a prima
facie case against De Guzman existed. Due to insufficiency of evidence, however, no formal charge was filed
against De Guzman and the complaint against him was dismissed by Asst. Secretary Jardiniano.
In order that res judicata may bar the institution of a subsequent action, the following requisites must
concur: (a) the former judgment must be final; (b) it must have been rendered by a court having jurisdiction over
the subject matter and the parties; (c) it must be a judgment on the merits; and (d) there must be between the
first and the second actions (i) identity of parties, (ii) identity of subject matter, and (iii) identity of cause of
action. 71
A judgment may be considered as one rendered on the merits when it determines the rights and liabilities of the
parties based on the disclosed facts, irrespective of formal, technical or dilatory objections; or when the
judgment is rendered after a determination of which party is right, as distinguished from a judgment rendered
upon some preliminary or formal or merely technical point. 72
In this case, there was no "judgment on the merits" in contemplation of the above-stated definition. The
dismissal of the complaint against De Guzman in the Memorandum 73 dated May 15, 1990 of Asec. Jardiniano
was a result of a fact-finding investigation only for purposes of determining whether a prima facie case
exists and a formal charge for administrative offenses should be filed. This being the case, no rights and
liabilities of the parties were determined therein with finality. In fact, the CA, conceding that the ISLES was "a
mere fact-finding body," pointed out that the Memorandum 74 dated February 26, 1990 issued by Dir. Reyes
recommending the dismissal of the complaint against De Guzman "did not make any adjudication regarding the
rights of the parties." 75 TEAcCD
Hence, for the reasons above-discussed, the Court holds that PPC did not gravely abuse its discretion when it
revived the case against De Guzman despite the previous dismissal thereof by Asec. Jardiniano. Since said
dismissal was not a judgment on the merits, the doctrine of res judicata does not apply.
In fine, due to the errors of the CA as herein detailed, the Court hereby grants the present petition and
accordingly reverses and sets aside the former's dispositions. The Resolutions dated November 23, 2004 and
January 6, 2005 of the PPC ordering De Guzman's dismissal from the service are thus reinstated.
WHEREFORE, the petition is GRANTED. The Decision dated April 4, 2006 and the Resolution dated July 19,
2006 of the Court of Appeals in CA-G.R. SP No. 88891 are REVERSEDand SET ASIDE, and the Resolutions
dated November 23, 2004 and January 6, 2005 of petitioner Philippine Postal Corporation are
hereby REINSTATED.
SO ORDERED.
Carpio, Brion, Del Castillo and Leonen, * JJ., concur.
||| (Phil. Postal Corp. v. Court of Appeals, G.R. No. 173590, [December 9, 2013])

THIRD DIVISION
[G.R. No. 150470. August 6, 2008.]
SPOUSES FELIPE and VICTORIA LAYOS, petitioners, vs. FIL-ESTATE GOLF AND
DEVELOPMENT, INC., LA PAZ HOUSING AND DEVELOPMENT CORPORATION,
REPUBLIC OF THE PHILIPPINES, AND THE SPOUSES MARINA AND GENEROSO
OTIC, respondents.
DECISION
CHICO-NAZARIO, J p:
Before this Court is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of Court filed by petitionerspouses Felipe and Victoria Layos (Spouses Layos) seeking the reversal and setting aside of the
Decision 2 dated 26 April 2001 of the Court of Appeals in CA-G.R. CV No. 61759, which affirmed the
Order 3 dated 19 January 1998 of the Regional Trial Court (RTC), Branch 93 of San Pedro, Laguna, summarily
dismissing the spouses Layos' Petition for Reconstitution of Original Certificate of Title (OCT) No. 239 in LRC
Case No. B-1784. Likewise being assailed in the Petition at bar is the Resolution 4 dated 18 October 2001 of the
appellate court denying the Spouses Layos' Motion for Reconsideration of its earlier Decision.
The factual and procedural antecedents of the case presently before this Court, by themselves, appear
deceptively simple. However, they are so intimately linked with other cases the factual backgrounds and judicial
resolutions of which the Court must also necessarily present herein.
I
FACTUAL BACKGROUND
G.R. No. 120958:
The Injunction Cases
The Court begins with Fil-Estate Golf and Development, Inc. v. Court of Appeals, 5 a case which it decided more
than a decade ago. The said case arose from the following facts:
Petitioner Fil-Estate Golf & Development, Inc. (FEGDI) is the developer of the Manila
Southwoods golf course and residential subdivision project which partly covers lands located
in Bian, Laguna. Its partner in the joint venture, La Paz Housing and Development
Corporation (La Paz), provided the aforementioned properties which are registered in its
name. The project involves the "construction and development of, among others, a highway
interchange linking nearby communities to the South Expressway and world class tourismgenerating cultural theme and water parks." THESAD
On 29 December 1992, a certain Felipe Layos filed a complaint for Injunction and Damages
with Application for Preliminary Injunction against Fil-Estate Realty Corporation, (FERC) et al.
with the Regional Trial Court of Bian, Laguna and docketed as Civil Case No. B-3973.
It was alleged in the said complaint that Felipe Layos is the legal owner and possessor of two
(2) parcels of land having a total area of 837,695 square meters located at Barrio Tubigan,
Bian, Laguna, known as Lots 1 & 2 of Plan Psu-201 of the Bureau of Lands having acquired
the same from his father, Mauricio Layos, who in turn inherited said properties from his own
father, Natalio Layos, allegedly the original owner thereof. Layos claimed that the Southwoods
project encroached upon the aforecited lands and thus contended that his rights of ownership
and possession were violated when FERC brought in men and equipment to begin
development of the said properties.
On 2 February 1993, FERC filed an Opposition to Application for Writ of Preliminary Injunction
and explicitly stated therein that the developer of the Southwoods project is its sister
company, FEGDI. THADEI
On 5 March 1993, FEGDI filed an Answer to the abovementioned complaint and reiterated
that it is the developer of the Southwoods project and not FERC and that the land covered by

the project is covered by Transfer Certificates of Title in the name of La Paz, copies of which
were attached to said answer as annexes.
On 29 March 1993, Presiding Judge Justo M. Sultan of the Regional Trial Court of Bian,
Laguna issued an order denying the prayer for preliminary injunction in Civil Case No. B-3973
in view of the inability of Layos to substantiate his right. Neither he nor his counsel appeared
on the scheduled hearings. . . .
xxx xxx xxx
On 25 June 1993, Felipe Layos along with his wife and other individuals filed another case for
Injunction and Damages with Prayer for Preliminary Injunction with the Regional Trial Court of
San Pedro, Laguna docketed as Civil Case No. B-4133, this time against the correct party,
FEGDI.
The complaint in the San Pedro case (Civil Case No. B-4133) is basically identical to that filed
in the Bian case (Civil Case No. B3973), except for changes in the number of party-plaintiffs
and party-defendants and in the area size of the claimed landholdings. Further, in the San
Pedro case there is reference to a title (OCT No. 239), a specific date of intrusion and an
increase in the damages prayed for. cSTHaE
On 1 July 1993, FEGDI moved to dismiss the San Pedro case on grounds of litis
pendentia, forum-shopping, lack of cause of action and lack of jurisdiction. FEGDI argued that
a similar complaint was previously filed with the Regional Trial Court of Bian, Laguna and is
currently pending therein. It, likewise, accused the private respondents of forum-shopping,
stating that the latter instituted the San Pedro case after their application for preliminary
injunction was denied by the Bian court. Anent the third and fourth grounds, FEGDI averred
that the documents relied upon by the private respondents are of doubtful veracity and that
they failed to pay the correct filing fees considering that the San Pedro case is a real action as
allegedly revealed in the body of the complaint. The Layoses filed their opposition on 5 July
1993 arguing in the main that there is no litis pendentiabecause there is no identity of parties.
Felipe Layos claimed that he never authorized the filing of the Bian case and that the
defendant therein is the Fil-Estate Realty Corporation not the Fil-Estate Golf & Development,
Inc. Consequently, the two cases being dissimilar, there can be no forum-shopping. Private
respondents contended, likewise, that they have satisfied all the requirements of a valid cause
of action and insisted that the suit is not for recovery of possession but is a personal action for
injunction and damages. On 12 July 1993, Judge Stella Cabuco-Andres of the San Pedro
Regional Trial Court issued an order denying FEGDI's motion to dismiss. The Motion for
Reconsideration filed by FEGDI on 13 July 1993 was similarly denied by the aforesaid court in
an order dated 14 July 1993.
On 15 July 1993, FEGDI filed a Petition for Certiorari and Prohibition with Application for
Preliminary Injunction with the Court of Appeals (docketed as CA-G.R. SP No. 31507)
assailing the denial of its motion to dismiss the San Pedro case. The arguments and issues
raised by petitioner to support its motion to dismiss were the same issues raised in the
aforestated petition.
On 20 July 1993, the Court of Appeals issued a temporary restraining order enjoining Judge
Andres from proceeding with the San Pedro case. DTIaCS
Meanwhile, the Regional Trial Court of Bian, Laguna, in an order dated 25 January 1994,
dismissed the Bian case without prejudice on grounds of forum-shopping. FEGDI moved for
a partial reconsideration of the said order praying that the dismissal be with prejudice. Hence,
on 25 April 1994, the aforestated court dismissed the Bian case with prejudice to forestall the
plaintiffs therein from forum-shopping. . . .
xxx xxx xxx
On 10 March 1995, the Court of Appeals, dismissed FEGDI's petition for lack of merit. . . . .

FEGDI's motion for reconsideration was subsequently denied in the Court of Appeals'
resolution dated 13 July 1995. Hence, this petition for review. 6
FEGDI came to this Court via a Petition for Review on Certiorari under Rule 45 of the Rules of Court, docketed
as G.R. No. 120958. The Court granted the Petition and ruled in favor of FEGDI. EScaIT
The Court found that therein private respondents, which included the Spouses Layos, did commit forum
shopping by instituting similar proceedings for injunction before the RTCs of Bian and San Pedro, Laguna:
Private respondents have indeed resorted to forum-shopping in order to obtain a favorable
decision. The familiar pattern (of one party's practice of deliberately seeking out a
"sympathetic" court) is undisputedly revealed by the fact that after Felipe Layos instituted in
1992 a case for injunction and damages with application for preliminary injunction in the
Regional Trial Court of Bian, Laguna and after his prayer for a preliminary injunction was
denied in March 1993, he and his wife, together with four (4) alleged buyers of portions of the
land claimed by him, filed an identical complaint for injunction and damages with preliminary
injunction a few months later, or in June 1993, this time with the Regional Trial Court of San
Pedro, Laguna.
Having been denied their temporary restraining order in one court, private respondents
immediately instituted the same action in another tribunal a deliberate tactic to seek out a
different court which may grant their application for preliminary injunction, or at least give them
another chance to obtain one.
Private respondents parry petitioner's allegation of forum shopping by adamantly contending
that Felipe Layos did not, in any manner, authorize the filing of the Bian case. Moreover, they
insist that Felipe Layos' signature in the Bian complaint is a forgery and that he neither
appeared nor participated in the proceedings before the Bian court. cETCID
We find no merit in private respondents' assertions. The almost word-for-word similarity of the
complaints in both the Bian and San Pedro cases totally refutes such a theory, as can readily
be observed from a comparative view of the two aforementioned complaints . . . .
xxx xxx xxx
Even the affidavits attached to the two complaints are virtually identical . . .
xxx xxx xxx
Examining the two complaints one can easily discern that the San Pedro complaint is simply
an "improved" version of the Bian complaint and the similarity does not end there. The
residence certificates (of Felipe Layos) used in the verification of both complaints are
practically identical same number, date of issue and place of issue.
If indeed there is a "ghost Mr. Layos", as claimed by the private respondents, the genuine
Felipe Layos and the rest of the private respondents should have, on their own volition,
denounced the allegedly bogus case filed with the Bian court or at the very least, informed
the San Pedro court about it. It cannot be denied that private respondents were aware of the
Bian case considering that Annex C (Affidavit of Self-Adjudication with Sale) of the San
Pedro complaint was a mere photocopy of Annex B of the Bian complaint.
Private respondents likewise aver that there is no identity of party-defendants in view of the
fact that the defendant in the Bian case is the Fil-Estate Realty Corporation (FERC) and in
the San Pedro case the Fil-Estate Golf and Development, Inc. (FEGDI), two completely
separate and distinct entities. aEACcS
Private respondents' contention is unmeritorious. In the Bian case, FEGDI voluntarily
submitted to the court's jurisdiction by filing its answer and expressly stating therein that it is
the developer of Southwoods, and not its sister company, FERC. Moreover, the Bian court in
its orders dated 25 January 1994 and 20 October 1994 expressly recognized FEGDI as the

defendant in the said case. There can be no question then that in both cases FEGDI is the
true party-defendant.
As clearly demonstrated above, the willful attempt by private respondents to obtain a
preliminary injunction in another court after it failed to acquire the same from the original court
constitutes grave abuse of the judicial process. Such disrespect is penalized by the summary
dismissal of both actions as mandated by paragraph 17 of the Interim Rules and Guidelines
issued by this Court on 11 January 1983 and Supreme Court Circular No. 28-91. . . .
xxx xxx xxx
The rule against forum-shopping is further strengthened by the issuance of Supreme Court
Administrative Circular No. 04-94. Said circular formally established the rule that the
deliberate filing of multiple complaints to obtain favorable action constitutes forum-shopping
and shall be a ground for summary dismissal thereof . . . . 7 TaCDAH
The Court further pronounced that the Complaint in the San Pedro case did not state a cause of action. Taking
into consideration the Complaint itself and its attached annexes, as well as the other pleadings submitted by the
parties, the Court found that:
In the San Pedro complaint, private respondents anchored their claim of ownership on an
OCT No. 239 and on a survey plan Psu-201 in the name of Natalio Layos, copies of which
were attached to the complaint. His son and sole heir Mauricio Layos inherited the properties
covered by the said plan. In turn, Felipe Layos became the owner thereof through an Affidavit
of Self-Adjudication with Sale executed by Mauricio Layos, his father. This is where the
inconsistency materializes. In the said Affidavit of Self-Adjudication with Sale which was also
attached to the San Pedro complaint as Annex "C", Mauricio Layos categorically stated that
the subject properties (Lots No. 1 and 2 of Plan PSU-201) were not registered under
the Spanish Mortgage Law or under the Property Registration Decree. If the properties in
question were not registered, where did the OCT No. 239 come from? Mauricio Layos'
express admission not only contradicts but indubitably strikes down the purported OCT No.
239 and exposes private respondents' claim as a sham. This inconsistency is patent in the
documents attached to the complaint which form part and parcel of the complaint. The
Affidavit of Self-Adjudication with Sale attached to the complaint is the crucial and
indispensable basis for private respondents' claim of ownership and interest in the subject
properties, without which they have no right of action or personality in the case. Necessarily,
the Affidavit of Self-Adjudication is a vital part of the complaint that should be considered in
the determination of whether or not a cause of action exists. EHcaAI
Private respondents' inconsistency is further manifested by the 1992 application for original
registration filed by Mauricio Layos with the Regional Trial Court of Bian, Laguna (docketed
as Civil Case No. B-542) for the lots under Plan Psu-201. Why would Mauricio Layos file an
application for the registration of the land claimed by him if it is already covered by OCT No.
239? The conclusion is inescapable that the document is fake or a forgery.
Finally, private respondents' cause of action against petitioner is defeated by the findings of
Mr. Privadi Dalire, Chief of the Geodetic Surveys Division of the Bureau of Lands, contained in
his letters to the Regional Technical Director of the Department of Environment and Natural
Resources (DENR), Region IV dated 12 November 1992 and 15 December 1992,
respectively:
12 November 1992
The Regional Technical Director of Lands
DENR, Region IV, 1515 L & S Building
Roxas Boulevard. Manila
ATTN.: Engr.
ROBERT
OIC, Surveys Division

C.

PANGYARIHAN

Sir:
In connection with your request to validate the white print copy of an alleged plan Psu-201
which you had issued and certified that it is a copy of the tracing cloth of Psu-201 which is on
file in that Office, please forward to us the tracing cloth plan to be examined instead of the
white print copy that you have issued in accordance with the procedure stated in DENR
Administrative Order regarding validation of plans other than the original copies being sent to
the region office.
It may be worthwhile to state for your information that the plan Psu-201 is not among those
officially enrolled into the file of this Bureau. What is more confusing is that the inventory book
of all plans that were recovered after the war shows that Psu-201 is a survey for J. Reed
covering a piece of land in Malate, Manila but the plan that was salvaged was heavily
damaged and therefore it was not also microfilmed. This would require therefore a more
exhaustive research regarding the authenticity of the tracing cloth that is in your file. (Italics
ours.) ICTcDA
Very truly yours,
For the Director of Lands:
(SGD.) PRIVADI J.G. DALIRE
Chief, Geodetic Surveys Division
xxx xxx xxx
MEMORANDUM:
15 December 1992
FOR: The Regional Technical Director of Lands
The Chief, Regional Surveys Division
DENR, Region IV
L & S Building, Roxas Boulevard
Manila
FROM: L M B
SUBJECT: Psu-201
Records show that the region furnished us a white print copy certified by Engr. Robert
Pangyarihan to have been "prepared from a tracing cloth plan on file in the NCR" for
validation. We returned the white print plan prepared by Engr. Pangyarihan because we
should examine the "tracing cloth plan" and it is the tracing cloth plan, white prints and
photographic copies sent by the Central Records Division to be returned to LMB for validation
by this Division.
In the letter dated 27 November 1992, Engr. Pangyarihan explained that he prepared the copy
which he certified from a white print plan on file in the region as the applicant claims to have
lost the tracing cloth. While the explanation may be considered, yet the preparation of the plan
is not yet in accordance with Section 1.3 and 4.3 of DENRAdministrative Order No. 49, s-1991
which requires that the white prints or photographic print of the plan other than the original
plan which have been decentralized must first be authenticated by this Bureau before a
certified true copy is issued by the region. It is evident therefore that the issuance of a certified
true copy of Psu-201 from a white print is premature, and considered void ab initio.
Consider also that if the record of the Bureau is different from the print copy is subjected to
field ocular inspection of the land and on the basis of the findings, the region may reconstruct
the plan to be approved as usual. Certified copies may now be issued based on the
reconstructed and approved plan. The white print of Psu-201 should therefore be subjected to
ocular inspection. cADEHI

Our records of inventory of approved plans show Psu-201 as a survey of J. Reed covering a
piece of land in Malate, Manila. That plan was heavily damaged and its reconstruction was
not finalized. This should be included in the investigation. (Italics ours.)
For the Director of Lands:
(SGD.) PRIVADI J.G. DALIRE
Chief, Geodetic Surveys Division.
Consequently, Mr. Sidicious F. Panoy, the Regional Technical Director of DENR, Region IV,
issued an order dated 5 May 1994 cancelling all copies of plans pertaining to Psu-201. The
order states that:
IN RE: CANCELLATION ORDER:
Plan Si-14769
True copy of Plan Claimant-Sofronio Olano
Si-14779 and Psu-201 Brgy Bukal ng Tala & Hasaan
Municipality of Ternate, Cavite
Area: 13,321,977 sq. m.
Plan Psu-201
Claimant Natalio Layos
Brgy. Tubigan, Bian, Laguna
Area: 837,695 sq. m.
ORDER
By way of reaction to a number of inquiries as to the status of plans Si-14769 and Psu-201,
verification was made at the Technical Reference Section of the Land Management Bureau,
Escolta, Manila as to the authenticity thereof on the basis of still recoverable records and the
following facts were established, to wit: CcAESI
1. That Psu-201 is an original survey for J Reed located in Malate, Manila; and
2. That Si-14769 is a survey number for the plan of a land parcel situated in Bo.
Bessang, Municipality of Allacapang, Province of Cagayan in the name of
Gregorio Blanco.
The purported blue print plan of Psu-201 indicating the land covered thereby to be situated in
Bo. Tubigan, Bian, Laguna and claimed by Natalio Layos and comprising 837,695 sq. meters
is, therefore, a spurious plan and, probably the result of a manipulative act by scheming
individuals who surreptitiously got it inserted in the records. The same can be said as to the
blue print of Si-14769 which is a plan purportedly covering a parcel of land situated in Bo.
Bukal ng Tala and Hasaan, Ternate, Cavite comprising 13,321,977 sq. meters. (Italics ours.)
WHEREFORE, in view of the foregoing, all plans pertaining to the above and indicated as true
copies and bearing the signature of Engr. Robert C. Pangyarihan are as hereby IT IS
CANCELLED including any document attached thereto and, as such, declared null and void
and of no force and effect. CAIHaE
SO ORDERED.
5 May 1994.
(SGD.) SIDICIOUS F. PANOY
Regional Technical Director
It is quite evident from the foregoing findings on record that private respondents' claim of
ownership is totally baseless. Plan Psu-201 pertains to land located in Malate, Manila and
said survey plan was made for a certain J. Reed.

In the case at bar, the technical rules of procedure regarding motions to dismiss must be
applied liberally lest these very same rules be used not to achieve but to thwart justice. 8
Consequently, on the grounds of forum shopping and lack of cause of action, the Court decreed in G.R. No.
120958 as follows:
WHEREFORE, premises considered, the petition for review on certiorari is hereby
GRANTED. Private respondents' complaint docketed as Civil Case No. B-4133 is hereby
DISMISSED. 9
In a Resolution dated 19 February 1997, the Court refused to reconsider its afore-quoted Decision and
dismissed with finality G.R. No. 120958.
CA-G.R. CV No. 50962:
The Quieting of Title Case
On 12 August 1993, only months after instituting the injunction cases before the RTCs of Bian and San Pedro,
Laguna, and during the pendency of said cases, the Spouses Layos filed with the Bian RTC a Complaint 10 for
Quieting of Title and/or Declaration of Nullity/Annulment of Title with Damages, against La Paz and the Register
of Deeds of the Province of Laguna, docketed as Civil Case No. B-4194. TAacIE
According to the Complaint, Felipe Layos' grandfather, Natalio Layos, was the original owner and lawful
possessor of two parcels of land (subject property) with a total land area of 1,068,725 square meters, more or
less, situated in Barrio Tubigan, Bian, Laguna, known as Lots 1 and 2 of Plan Psu-201 of the Bureau of Lands.
The subject property is covered by OCT No. 239 in the name of Natalio Layos. Upon the death of Natalio Layos,
his son, Mauricio Layos, inherited the subject property. On 15 April 1992, Mauricio Layos executed an Affidavit of
Self-Adjudication with Sale by which he sold the subject property to his son, Felipe Layos, and the latter's wife,
Victoria Layos. The Spouses Layos and their predecessors-in-interest had exercised their right of ownership by
being in open, continuous, adverse, and peaceful possession of the subject property for more than 80 years,
even before Plan Psu-201 was approved by the Bureau of Lands. The subject property had also been declared
for taxation purposes with an assessed value of P555,737.00.
The Complaint further alleged that in 1992 and 1993, La Paz, in conspiracy with other persons, entered the
subject property and started developing the same without the consent of the Spouses Layos. The Spouses
Layos then discovered that La Paz had in its name 19 Transfer Certificates of Title (TCTs) which encroached
upon portions of the subject property. The TCTs of La Paz were derived from OCT No. 242, which was issued on
9 August 1913, or 14 days after OCT No. 239 was issued on 30 July 1913 in the name of Natalio Layos. Since
OCT No. 239 was older or issued earlier than OCT No. 242, the Spouses Layos asserted that their title under
OCT No. 239 was indefeasible against any other title issued subsequent to it, such as OCT No. 242 and the
TCTs of La Paz derived and issued from the latter.
Contending that the TCTs of La Paz, although void ab initio, put a cloud over their title to and ownership and
possession of the subject property, the Spouses Layos primarily prayed that the said TCTs be declared null and
void and be accordingly cancelled in order to quiet their title. ECTIcS
In their Answer, La Paz and the Register of Deeds denied the allegations in the Spouses Layos' Complaint, and
countered:
21. That [Spouses Layos] have never owned nor possessed the land in question.
22. That the Original Certificates of Title No. 239 purportedly issued by the Register of Deeds
on November 18, 1913, in the name of Natalio Layos, does not exist in the files of the Registry
of Deeds of Laguna.
23. That Decree No. 7663 dated July 12, 1912, GLRO Record No. 7733 from whence OCT
No. 239 appears to have emanated from likewise does not exist in the records of the Land
Registration Authority. DHAcET
24. That records of Plan PSU-201 are still extant in the Bureau of Lands but it is not in the
name of Natalio Layos, but in the name of another person nor, is the land covered thereby
situated in Laguna.

25. That the certified technical data of Lot Nos. 1 and 2, PSU-201, marked as Annex 'D'
attached to the Complaint was issued on the basis of records that do not exist in the files of
the Lands Office.
26. That in the Affidavit of Self-Adjudication with Sale dated April 15, 1992, marked as Annex
'C' attached to the Complaint, there is an admission in the third paragraph by Mauricio Layos
to the following effect:
'Which parcels of land are not registered under the Spanish Mortgage Law nor the Property
Registration Decree.[']
27. That the [Spouses Layos'] alleged predecessor, Mauricio Layos, filed an application for
registration of the same land on October 5, 1992, with this Honorable Court docketed as LRC
No. RTC-B-542, which act amounts to an admission that the [Spouses Layos] and their
predecessors-in-interest have no title to the land. TCcDaE
28. That OCT No. 239 surfaced only when the [Spouses Layos] themselves filed a petition for
reconstitution of their alleged OCT No. 239 with this Honorable Court on August 11,
1993 (sic), which has been docketed as LRC Case No. B-1784.
29. That it is [La Paz's] Certificates of Titles [sic] that are real, genuine and subsisting, and the
originals thereof are extant in the files of the Registry of Deeds of Laguna.
30. That [La Paz] acquired ownership of these lands from various registered owners from
1982 to 1988 for valuable consideration.
31. That the lands form part of what used to be called the Bian Friar Land estate which the
government purchased from Spanish Religious Orders, and later subdivided and resold at
cost to qualified applicants pursuant to Act No. 1120, otherwise known as the Friar Land Act,
and which have fallen finally into the hands of [La Paz] after a succession of transfers.
32. That under Act No. 496, otherwise known as the Land Registration Act, [La Paz's] titles to
the land in question are indefeasible, binding, conclusive and enforceable against the whole
world. 11
Following other developments in the case, 12 La Paz filed on 22 February 1995 an Omnibus Amended Motion
(for Summary Judgment and Cancellation of Lis Pendens). Acting on the said Motion, the Bian RTC issued on
14 July 1995 an Omnibus Order in Civil Case No. B-4194, the decretal portion of which reads:
WHEREFORE, in view of the foregoing, the instant Omnibus Amended Motion for Summary
Judgment filed by counsel for [La Paz] is hereby GRANTED in accordance with Rule 34 of the
Revised Rules of Court. The Original Certificate of Title No. 242 issued to the Government of
the Philippine Islands and the [La Paz's] nineteen (19) Transfer Certificates of Title which were
respectively derives [sic] therefrom are hereby declared indefeasible for all legal intents and
purposes against any other title thereby making it binding to the whole world. HEaCcD
Necessarily, the Motion for Leave to Intervene and the Motion for Issuance of a Writ of
Preliminary Injunction, both pending before this Court, are hereby declared MOOTED.
On the other hand, the Motion for Cancellation of Lis Pendens included in the [La Paz's]
Omnibus Motion for Summary Judgment is likewise GRANTED for the reasons above-stated.
Consequently, the Office of the Register of Deeds of Calamba, Laguna is hereby directed to
immediately cancel the Notice of Lis Pendens annotated at the back of each of the [La Paz's]
nineteen (19) Transfer Certificates of Title which were all disputed by the [Spouses Layos].
Meanwhile, let the hearing of the instant case for the reception of evidence as to the
counterclaim of [La Paz] for damages be set for hearing on August 31, 1995 at 8:30 o'clock in
the morning. 13
When their motion for reconsideration was denied by the Bian RTC, the Spouses Layos appealed their case to
the Court of Appeals, where it was docketed as CA-G.R. CV No. 50962. In a Decision 14 dated 20 February
2001, the appellate court ruled:

Under par. 13 of the [Spouses Layos'] complaint, it was alleged that La Paz['s] title was issued
only on August 9, 1913, which was 14 days after the issuance of the Layos' title. From the
findings of the lower court, August 13, 1913 was the date when La Paz['s] title was transcribed
at the Register of Deeds while that of the Layos as can be seen in their attached xerox copy
of title, the transcription was made later which was on November, 1913. CaAcSE
The date issued referred to by [Spouses Layos] is the date of the decree of judgment issued
by the Court. But this is not the reckoning period within which title should become indefeasible
in the ambit of the law. The operative act is the decree of registration which is the transcription
at the Register of Deeds. One year after its transcription in the Register of Deeds, the title
becomes indefeasible. It means therefore, that it is the transcription in the Register of Deeds
and not the date decreed by the Court is the operative act. And this should be the reckoning
date when a title becomes indefeasible.
In the case at bar, we have the scenario that OCT 239 was earlier decreed by the Land
Management Court than OCT 242, but for unknown reasons, OCT 242 was transcribed earlier
at the Register of [D]eeds on August 19, 1913 while OCT 239 was transcribed at the Register
of Deeds only on November 18, 1913. While the PSU-201 is of minor importance as even
claimed by [Spouses Layos], this court deem to pass over the same.
[Spouses Layos] contended that the representatives of the Land Management Bureau,
identified and confirmed that the Original PSU-201 in the name of Natalio Layos and the
technical descriptions as appearing in LMB Form No. 28-37R issued to [Spouses Layos], are
true and genuine. But this was denied by the Chief, Records of [sic] Division of the Bureau of
Lands, Mr. Armando Bangayan, the superior of the Land Management Bureau, alleging in his
affidavit that was [sic] not his signature appearing in the Certification. And to corroborate the
denial of Mr. Bangayan, a certain Engineer Private (sic) J.J. Dalire, Chief of Surveys Division,
Land Management Bureau, PSU-201 which is purportedly covered by OCT No. 239 is a
survey plan in the name of J. Reed and it covers a piece of land situated in Malate,
Manila. Further, the Regional Technical Director for Lands, Region IV, Roxas Boulevard,
Manila has issued an Order declaring PSU-201 of Natalio Layos as null and void, because it
is a spurious document.
Considering the aforementioned, this Court believes that [Spouses Layos] has [sic] no proof to
establish their claim in the present case.
With the foregoing, this court is more inclined to believe the three affidavits executed by three
(3) different individuals coming from different offices that PSU-201 claimed by Layos is
obviously doubtful, contrary to the affidavits of persons who are subordinates of Bangayan. If
this is so, OCT 239 is therefore, patently a spurious title. 15 (Underscoring supplied.) STcAIa
Based on the foregoing ratiocination, the fallo of the Court of Appeals Decision dated 20 February 2001 in CAG.R. CV No. 50962 reads, thus:
WHEREFORE, finding no reversible error committed on the part of the lower court, the
appealed Omnibus Order dated July 14, 1995 is hereby AFFIRMED. 16
Records do not show whether the Spouses Layos filed a motion for reconsideration of the afore-mentioned
Decision of the appellate court; what they do establish is that the Spouses Layos filed a Petition for Review
on Certiorari with this Court, docketed as G.R. No. 155612, but said Petition was denied by this Court in a
Resolution dated 13 January 2003 because of the Spouses Layos' failure to:
a) take the appeal within the reglementary period of fifteen (15) days in accordance with
Section 2, Rule 45 in relation to Section 5(a), Rule 56, in view of the denial of the motion for
extension of time to file said petition in the resolution of 20 November 2002;
b) properly verify the petition in accordance with Section 4, Rule 7 in relation to Section 1,
Rule 45, and submit a valid certification on non-forum shopping duly executed by all

petitioners in accordance with Section 5, Rule 7, Section 4(e), Rule 45 in relation to Section 2,
Rule 42 and Sections 4 and 5(d), Rule 56, there being no proof that petitioner Felipe Layos
was duly authorized to sign said verification and certification on non-forum shopping in behalf
of his co-petitioner; and
c) serve a copy of the petition on the Court of Appeals in accordance with Section 4, Rule 13,
in relation to Section 3, Rule 45 of the 1997 Rules of Civil Procedure, as amended, and par. 2
of Revised Circular No. 1-88 of this Court. 17
The Resolution dated 13 January 2003 of this Court denying the Petition in G.R. No. 155612 became final and
executory, and entry of judgment was made therein on 14 March 2003. 18
G.R. No. 150470:
The Reconstitution Case
The Court now comes to the Petition at bar.
The instant Petition originated from a Petition for Reconstitution 19 of OCT No. 239 filed by the Spouses Layos
on 12 August 1993 with the San Pedro RTC, docketed as LRC Case No. B-1784. It is noted that the Spouses
Layos instituted this reconstitution case on the same day as their quieting of title case before the Bian
RTC. TCaAHI
The Petition in LRC Case No. B-1784 essentially contained the same allegations made by the Spouses Layos in
their Complaints in the injunction cases and quieting of title case. However, in support of their prayer for the
reconstitution of the original copy of OCT No. 239 from their Owner's Duplicate Certificate, the Spouses Layos
additionally alleged that:
6. The Owner's Duplicate Certificate of the said Original Certificate of Title is in due form
without any alteration or erasure, and is not subject to litigation or investigation, administrative
or judicial, regarding its genuineness or due execution or issuance.
xxx xxx xxx
9. The Original Copy of the said title which used to be in the Office of the Register of Deeds
for the Province of Laguna appears to have been lost and/or destroyed. In fact, the said Office
does not anymore have any record regarding the subject title.
10. The above parcels of land are free from any lien or encumbrance, and no deed or
instrument affecting the same has been presented for registration or is any such deed or
instrument pending registration with the Office of the Register of Deeds for the Province of
Laguna. ScAHTI
11. The above parcels of land are in lawful possession of [Spouses Layos].
12. The transfer of the subject properties from Natalio Layos to Mauricio Layos (by
inheritance) and the subsequent transfer of the same properties from Mauricio Layos to
petitioner Felipe Layos (through the Affidavit of Self-Adjudication with Sale executed by
Mauricio Layos in favor of Felipe Layos) cannot be registered and new title/s cannot be issued
in the name of [Spouses Layos] because the original copy of said Original Certificate of Title
No. 239 was lost and/or destroyed. 20
Several parties filed their intervention and/or opposition to the Petition for Reconstitution of the Spouses Layos
in LRC Case No. B-1784, particularly:
PARTY PLEADING INTEREST/BASIS
Shappel Homes, Inc. Complaint-in-Intervention 21 In a Joint Venture with the
Spouses Layos to develop the
subject property
La Paz Opposition 22 Existing TCTs over the subject
property
FEGDI Opposition 23 In a Joint Venture with La Paz
to develop the subject property

as part of the Manila

Southwoods Project
Mauricio Layos Opposition 24 Sole child and heir of Natalio
Layos denies alienating or
disposing the subject property in
favor of the Spouses Layos
Spouses Antonio and Purchased portions of the
Norma Saavedra Complaint-in-Intervention 25 subject property from Mauricio
Layos and Felipe Layos
Veneracion L. Arboleda, Purchased portions of the
Antonio L. Arboleda, Jr., Complaint-in-Intervention 26 subject property from Mauricio
Lydia Arboleda-David, Layos and/or Felipe Layos
and Antonio M.
Arboleda
Spouses Ponciano and Purchased a portion of the
Annie Miranda Petition-in-Intervention 27 subject property from the
Spouses Layos
Bonifacio Javier, The true heirs of Natalio Layos
representing the Heirs Opposition 28 deny that the Spouses Layos are
of Natalio Layos in any way related to them
Spouses Marina and Purchased an undivided portion
Generoso Otic Motion for Intervention 29 of the subject property from
Mauricio Layos and are, thus,
co-owners of the subject
property with Mauricio Layos
FEGDI and La Paz filed separate Motions to Dismiss, which the Office of the Solicitor General supported in its
Comment on the Petition. On 19 January 1998, the San Pedro RTC issued an Order, 30 the dispositive portion
of which states:
Acting therefore on the motion (sic) to dismiss filed by La Paz Housing and FEGDI, and it
appearing that indeed the title sought to be reconstituted, specifically OCT No. 239 is a
forgery as held no [sic] less than the Supreme Court in G.R. No. 120958, Fil-Estate Golf and
Development, Inc., (FEGDI) vs. Court of Appeals, December 16, 1996, the Court has no other
option but to dismiss the case. DICcTa
Resolution on all other pending incidents had been rendered moot and academic with the
dismissal of this case. 31
The San Pedro RTC denied the Spouses Layos' Motion for Reconsideration in an Order 32 issued on 1 October
1998.
Aggrieved, the Spouses Layos filed an appeal with the Court of Appeals, docketed as CA-G.R. CV No. 61759.
The appellate court, however, found no reversible error in the ruling of the lower court dismissing the Spouses
Layos' Petition for Reconstitution. According to the Court of Appeals, the validity of OCT No. 239 of the spouses
Layos was already determined by the Supreme Court in its Decision dated 16 December 1996 in G.R. No.
120958, in which the Supreme Court categorically declared that the said certificate of title was a forgery. The
appellate court contradicted the Spouses Layos' assertion that such declaration of the Supreme Court in G.R.
No. 120958 was merely an obiter dictum, for the same was a resolution of one of the controverted issues and
was part of the principal disquisition of the lower court. Hence, in its assailed Decision 33 dated 26 April 2001,
the Court of Appeals decreed:
WHEREFORE, premises considered, the instant appeal is hereby DISMISSED, and the
orders of the lower court dated January 19, 1998 and October 1, 1998 are hereby
AFFIRMED.34

The Spouses Layos moved for the reconsideration of the foregoing Decision, but they failed to convince the
Court of Appeals to detract from its earlier ruling. Resultantly, the appellate court denied what it called the "proforma motion for reconsideration" of the Spouses Layos in a Resolution 35 dated 18 October 2001.
The Spouses Layos, thus, filed before this Court the instant Petition for Review on Certiorari under Rule 45 of
the Rules of Court, docketed as G.R. No. 150470, stating the following assignment of errors:
A. The Court of Appeals erred in applying the principle of res judicata in the instant case,
when it declared that the ruling of this Honorable Supreme Court in G.R. No. 120958
is conclusive upon the issue of validity of the [Spouses Layos'] O.C.T. No.
239; CAScIH
B. The Court of Appeals erred in holding that the observation of this Honorable Supreme
Court in G.R. No. 120958 to the effect that OCT No. 239 is a forgery was not merely
an obiter dictum, but a resolution of one of the controverted issues, and is part of the
principal disquisition of the Supreme Court;
C. The Court of Appeals erred in upholding the summary dismissal of the instant case by the
court a quo by holding that since the title sought to be reconstituted has finally been
determined as a forgery and fake, there is no longer a need for trial and in effect
deprived [Spouses Layos] of property without due process of law; [and]
D. The Court of Appeals erred in upholding the decision of the lower court and in effect
violated the cardinal rule against a collateral attack against the validity of the land
title; 36
and seeking the following reliefs from this Court:
WHEREFORE, it is respectfully prayed that judgment be rendered by this Honorable Court,
setting aside the assailed Decision dated April 26, 2001 and Resolution dated October 18,
2001 respectively of the Court of Appeals which affirmed the Decision of the Court a quo for
being contrary to law and jurisprudence and directing the Regional Trial Court of San Pedro,
Laguna to forthwith receive evidence of all parties concerned to determine the merits of their
respective claims. HECTaA
Other reliefs just and equitable are likewise prayed for.
II
THE COURT'S RULING
Res Judicata
Based on the arguments raised by the parties in their pleadings herein, the foremost issue for resolution of this
Court is whether the Decision dated 16 December 1996 of this Court in G.R. No. 120958 bars by res
judicata LRC Case No. B-1784, the Petition for Reconstitution of OCT No. 239 filed by the Spouses Layos
before the San Pedro RTC, thus, justifying the dismissal of the latter case.
The Spouses Layos maintain that the Decision dated 16 December 1996 of this Court in G.R. No. 120958 does
not bar by res judicata their Petition for Reconstitution of the same certificate of title in LRC Case No. B-1784,
there being no identity of parties, causes of action, and subject matters between the two cases. They insist that
the Court in G.R. No. 120958 had no jurisdiction to determine the issue of ownership as the same was never
raised or contained in the pleadings and, therefore, any pronouncement of the Court in its Decision of 16
December 1996 on the validity of OCT No. 239 or on the question of ownership is mere obiter dictum. They
highlight the fact that the fallo of the Court's 16 December 1996 Decision in G.R. No. 120958 simply dismissed
the injunction case before the San Pedro RTC but did not annul or cancel OCT No. 239. AacSTE
The position of the Spouses Layos is untenable.
Res judicata literally means "a matter adjudged; a thing judicially acted upon or decided; a thing or matter settled
by judgment." Res judicata lays the rule that an existing final judgment or decree rendered on the merits, and
without fraud or collusion, by a court of competent jurisdiction, upon any matter within its jurisdiction, is

conclusive of the rights of the parties or their privies, in all other actions or suits in the same or any other judicial
tribunal of concurrent jurisdiction on the points and matters in issue in the first suit. 37
It is espoused in the Rules of Court, under paragraphs (b) and (c) of Section 47, Rule 39, which provide:
SEC. 47. Effect of judgments or final orders. The effect of a judgment or final order
rendered by a court of the Philippines, having jurisdiction to pronounce the judgment or final
order, may be as follows:
xxx xxx xxx
(b) In other cases, the judgment or final order is, with respect to the matter directly adjudged
or as to any other matter that could have been raised in relation thereto, conclusive between
the parties and their successors in interest by title subsequent to the commencement of the
action or special proceeding, litigating the same thing and under the same title and in the
same capacity; and
(c) In any other litigation between the same parties or their successors in interest, that only is
deemed to have been adjudged in a former judgment or final order which appears upon its
face to have been so adjudged, or which was actually and necessarily included therein or
necessary thereto.
The doctrine of res judicata lays down two main rules which may be stated as follows: (1) The judgment or
decree of a court of competent jurisdiction on the merits concludes the litigation between the parties and their
privies and constitutes a bar to a new action or suit involving the same cause of action either before the same or
any other tribunal; and (2) any right, fact, or matter in issue directly adjudicated or necessarily involved in the
determination of an action before a competent court in which a judgment or decree is rendered on the merits is
conclusively settled by the judgment therein and cannot again be litigated between the parties and their privies
whether or not the claims or demands, purposes, or subject matters of the two suits are the same. These two
main rules mark the distinction between the principles governing the two typical cases in which a judgment may
operate as evidence. 38 In speaking of these cases, the first general rule above stated, and which corresponds
to the afore-quoted paragraph (b) of Section 47, Rule 39 of the Rules of Court, is referred to as "bar by former
judgment"; while the second general rule, which is embodied in paragraph (c) of the same section and rule, is
known as "conclusiveness of judgment". IEcaHS
The Resolution of this Court in Calalang v. Register of Deeds of Quezon City, 39 provides the following
enlightening discourse on conclusiveness of judgment:
The doctrine res judicata actually embraces two different concepts: (1) bar by former
judgment and (b) conclusiveness of judgment.
The second concept conclusiveness of judgment states that a fact or question which
was in issue in a former suit and was there judicially passed upon and determined by a court
of competent jurisdiction, is conclusively settled by the judgment therein as far as the parties
to that action and persons in privity with them are concerned and cannot be again litigated in
any future action between such parties or their privies, in the same court or any other court of
concurrent jurisdiction on either the same or different cause of action, while the judgment
remains unreversed by proper authority. It has been held that in order that a judgment in one
action can be conclusive as to a particular matter in another action between the same parties
or their privies, it is essential that the issue be identical. If a particular point or question is in
issue in the second action, and the judgment will depend on the determination of that
particular point or question, a former judgment between the same parties or their privies will
be final and conclusive in the second if that same point or question was in issue and
adjudicated in the first suit (Nabus vs. Court of Appeals, 193 SCRA 732 [1991]). Identity of
cause of action is not required but merely identity of issue. EaHIDC
Justice Feliciano, in Smith Bell & Company (Phils.), Inc. vs. Court of Appeals (197 SCRA 201,
210 [1991]), reiterated Lopez vs. Reyes (76 SCRA 179 [1977]) in regard to the distinction
between bar by former judgment which bars the prosecution of a second action upon the

same claim, demand, or cause of action, and conclusiveness of judgment which bars the
relitigation of particular facts or issues in another litigation between the same parties on a
different claim or cause of action.
The general rule precluding the relitigation of material facts or questions which were
in issue and adjudicated in former action are commonly applied to all matters
essentially connected with the subject matter of the litigation. Thus, it extends to
questions necessarily implied in the final judgment, although no specific finding may
have been made in reference thereto and although such matters were directly
referred to in the pleadings and were not actually or formally presented. Under this
rule, if the record of the former trial shows that the judgment could not have been
rendered without deciding the particular matter, it will be considered as having settled
that matter as to all future actions between the parties and if a judgment necessarily
presupposes certain premises, they are as conclusive as the judgment itself.
Another case, Oropeza Marketing Corporation v. Allied Banking Corporation, 40 further differentiated
between the two rules of res judicata, as follows:
There is "bar by prior judgment" when, as between the first case where the judgment was
rendered and the second case that is sought to be barred, there is identity of parties,
subject matter, and causes of action. In this instance, the judgment in the first case
constitutes an absolute bar to the second action. Otherwise put, the judgment or decree of the
court of competent jurisdiction on the merits concludes the litigation between the parties, as
well as their privies, and constitutes a bar to a new action or suit involving the same cause of
action before the same or other tribunal. cHCSDa
But where there is identity of parties in the first and second cases, but no identity of
causes of action, the first judgment is conclusive only as to those matters actually and
directly controverted and determined and not as to matters merely involved therein. This is the
concept of res judicata known as "conclusiveness of judgment". Stated differently, any
right, fact, or matter in issue directly adjudicated or necessarily involved in the determination
of an action before a competent court in which judgment is rendered on the merits is
conclusively settled by the judgment therein and cannot again be litigated between the parties
and their privies whether or not the claim, demand, purpose, or subject matter of the two
actions is the same. (Emphasis ours.)
In sum, conclusiveness of judgment bars the re-litigation in a second case of a fact or question already settled in
a previous case. The second case, however, may still proceed provided that it will no longer touch on the same
fact or question adjudged in the first case. Conclusiveness of judgment requires only the identity of issues and
parties, but not of causes of action.
It is on the ground of res judicata, in its second concept conclusiveness of judgment that the Petition for
Reconstitution of the Spouses Layos must be dismissed. As explained by the Court of Appeals in its assailed
Decision:
In the case at bar, the ruling of the Supreme Court in G.R. No. 120958 is conclusive upon the
issue of validity of the [Spouses Layos'] OCT No. 239, inasmuch as the said issue has already
been mutually controverted by the parties and ruled upon with finality by the Supreme Court
no less, in favor of the invalidity of the [Spouses Layos'] title. 41
Conclusiveness of Judgment in G.R. No. 120958
Contrary to the position of the Spouses Layos, there is identity of parties and issues between G.R. No. 120958
(the injunction cases) and LRC Case No. B-1784 (the reconstitution case). ICacDE
The principal parties in both cases are the Spouses Layos, on one hand, and La Paz and FEGDI, on the other.
The Spouses Layos and La Paz both claim title to the subject property, while FEGDI is the partner of La Paz in a
joint venture to develop the said property. There may be other parties named in both cases, but these parties

only derive their rights from the principal parties. The Court has previously held that for purposes of res
judicata, only substantial identity of parties is required and not absolute identity. There is substantial identity of
parties when there is community of interest between a party in the first case and a party in the second case even
if the latter was not impleaded in the first case. In other words, privity or a shared identity of interest is sufficient
to invoke application of the principle of res judicata. 42 It is fundamental that the application of res judicatamay
not be evaded by simply including additional parties in a subsequent litigation. 43
For conclusiveness of judgment, identity of causes of action and subject matter is not required; it is the identity
of issues that is material. The issue of the validity of the Spouses Layos' title to the subject property is integral to
both G.R. No. 120958 and LRC Case No. B-1784.
In G.R. No. 120958, the Spouses Layos themselves invoked OCT No. 239 to establish their title over the subject
property. It was on the basis of their title to the subject property that they sought to enjoin FEGDI and La Paz
from entering into and developing the same. In seeking the dismissal of the injunction case before the San
Pedro RTC, La Paz presented its own title to the subject property by virtue of which it claimed the right to
possess and develop the said property. It then became incumbent upon the Court to determine which of the
titles to the property is valid. For the Spouses Layos to be entitled to the issuance of a writ of injunction, it must
have valid title to the subject property. Without a valid title to the said property, the Spouses Layos had no cause
of action for injunction against FEGDI and La Paz. It was in this context that the Court was compelled to look
into the validity of the Spouses Layos' title to the subject property. SIcEHD
After consideration of the Complaint for injunction of the Spouses Layos and its annexed documents, the Court
observed that: (a) the annexed Affidavit of Self-Adjudication with Sale, supposedly executed by Mauricio Layos
in favor of his son Felipe Layos stated that the subject property had not been registered; (b) Mauricio Layos filed
an application for registration of the subject property with the Bian RTC in 1992; (c) Mr. Privadi Dalire, Chief of
the Geodetic Surveys Division of the Bureau of Lands, stated his findings in his letters dated 12 November 1992
and 15 December 1992, that Plan PSU-201, on which OCT No. 239 was supposed to be based, was actually a
survey for J. Reed covering a piece of land in Malate, Manila, that was heavily damaged and had not yet been
fully reconstructed and microfilmed; and (d) Mr. Sidicious F. Panoy, the Regional Director of the Department of
Environment and Natural Resources (DENR), Region IV, issued an Order dated 5 May 1994, cancelling all plans
pertaining to PSU-201, since it was "a spurious plan and, probably the result of a manipulative act by scheming
individuals who surreptitiously got it inserted in the records," 44 which led the Court to the "inescapable"
conclusion in its Decision dated 16 December 1996 that OCT No. 239 is fake or a forgery.
Consequently, the Court of Appeals correctly ruled that the pronouncement of the Supreme Court in G.R. No.
120958 on the invalidity of OCT No. 239 was not merely obiter dictum, 45 but was a resolution of one of the
controverted issues in said case. In fact, it was on the basis of the said pronouncement that this Court ordered
the dismissal of the injunction case filed before the San Pedro RTC for lack of cause of action.
In LRC Case No. B-1784, the Spouses Layos once again invoked ownership of the subject property pursuant to
OCT No. 239. They sought the reconstitution of the original copy of OCT No. 239 which allegedly used to be in
the possession of the Register of Deeds of Laguna, but was now lost and/or destroyed, and, in support thereof,
they presented their owner's duplicate of OCT No. 239. However, both La Paz and FEGDI, as well as the Office
of the Solicitor General, opposed the Petition for Reconstitution of the Spouses Layos on the ground that OCT
No. 239 and Plan Psu-201, on which said certificate of title was based, were spurious. The opposition to LRC
Case No. B-1784, thus, raised the question of whether a valid OCT No. 239 existed in the first place, and could
be reconstituted. CAaSED
Reconstitution or reconstruction of a certificate of title literally and within the meaning of Republic Act No.
26 denotes restoration of the instrument which is supposed to have been lost or destroyed in its original form
and condition. 46 For an order of reconstitution to issue, the following elements must be present: 1) the
certificate of title has been lost or destroyed; 2) the petitioner is the registered owner or has an interest therein;
and 3) the certificate of title is in force at the time it was lost or destroyed. 47
While G.R. No. 120958 does not bar the institution of LRC Case No. B-1758, the pronouncement of invalidity of
OCT No. 239 by this Court in G.R. No. 120958 is conclusive upon the San Pedro RTC in LRC Case No. B-1758,
precluding it from re-litigating the same issue and ending up with a contrary ruling. Since the Court already

settled in G.R. No. 120958 that OCT No. 239 is fake and a forgery, it would have been a senseless and futile
endeavor for the San Pedro RTC to continue with the reconstitution proceedings in LRC Case No. B-1758, for
there is actually no valid certificate to reconstitute. The court cannot, and should not, reconstitute a spurious
certificate of title and allow the continuous illegal proliferation and perpetuation thereof. Republic Act No.
26 48 provides for a special procedure for the reconstitution of Torrens certificates of title that are missing
but not fictitious titles or titles, which are existing. 49
Resultantly, the San Pedro RTC is left with no other option but to order the dismissal of LRC Case No. B-1758.
Conclusiveness of Judgment in G.R. No. 155612
During the pendency of the Petition at bar, a significant development took place in the quieting of title case. The
Court had already denied in a Resolution dated 13 January 2003 the appeal of the Spouses Layos in G.R. No.
155612 and, in effect, affirmed the Decision dated 20 February 2001 of the Court of Appeals in CA-G.R. CV No.
50962. It should be recalled that in said Decision, the appellate court upheld the validity of OCT No. 242 from
which La Paz derived its TCTs and, at the same time, explicitly found OCT No. 239 of the Spouses Layos
spurious.
This ruling of the Court of Appeals on the spuriousness of OCT No. 239, once again, constitutes res judicata by
conclusiveness of judgment on the Petition for Reconstitution of the Spouses Layos.
The Spouses Layos and La Paz, asserting their respective titles to and ownership of the subject property, are
parties to the quieting of title case, as well as the reconstitution case. In their Complaint before the Bian RTC,
the Spouses Layos prayed for the quieting of their title to the subject property under OCT No. 239 by the
annulment or cancellation of the TCTs of La Paz covering the same property. In answer, La Paz claimed that it
was its title to the subject property under the 19 TCTs, derived from OCT No. 242, which was valid, and pointed
out that it was actually OCT No. 239 and its supporting documents which were inexistent in the records of the
concerned government agencies. Given the contradicting assertions of the parties, the Bian RTC and the Court
of Appeals, in their original and appellate jurisdiction, respectively, over the quieting of title case, had to delve
into the issue of validity of OCT No. 239 vis--vis OCT No. 242. Necessarily, only one of the said certificates of
title over the same property can be valid, and the 20 February 2001 Decision of the Court of Appeals in CA-G.R.
CV No. 50962 settled with finality that it is OCT No. 242. The categorical finding of the Court of Appeals in CAG.R. CV No. 50962 (the quieting of title case) that OCT No. 239 is spurious is now conclusive and binding
upon this Court in its consideration on appeal of the Spouses Layos' Petition for Reconstitution of OCT No. 239,
in much the same way and for the same reasons previously discussed herein for the conclusiveness of this
Court's judgment in G.R. No. 120958 (the injunction cases) that OCT No. 239 is fake and a forgery. cCTaSH
Finality of Judgment
A statement in the Spouses Layos' Petition for Review before this Court reveals their ultimate intent:
The test of a man's honor is his ability to admit his mistake. In the instant case, it would [be] in
keeping with the rule of law and justice for this Most Venerable and Honorable Court to allow
the parties to fully ventilate their claims in the court below instead of depriving the [Spouses
Layos] of their valued property based on a sweeping obiter dictum by this Court in the
FEDGI [sic] case where the [Spouses Layos'] title was not directly attacked. 50
It may be nicely and even deceptively phrased but, simply, what the Spouses Layos pray to this Court is for the
re-litigation of an issue settled conclusively in this Court's Decision dated 16 December 1996 in G.R. No.
120958, and also in the Court of Appeals' Decision dated 20 February 2001 in CA-G.R. CV No. 50962. Both
Decisions have already become final, and no part thereof may be disturbed by any court, even if to correct a
purported error therein.
Nothing is more settled in law than that when a final judgment is executory; it thereby becomes immutable and
unalterable. The judgment may no longer be modified in any respect, even if the modification is meant to correct
what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is
attempted to be made by the court rendering it or by the highest Court of the land. The doctrine is founded on

considerations of public policy and sound practice that, at the risk of occasional errors, judgments must become
final at some definite point in time. 51
What cannot be directly done by motion for reconsideration or appeal, given the finality of the Decisions in G.R.
No. 120985 and CA-G.R. CV No. 50962, likewise, cannot be indirectly done through a separate
proceeding. aCTHDA
Under the doctrine of conclusiveness of judgment which is also known as "preclusion of issues" or "collateral
estoppel", issues actually and directly resolved in a former suit cannot again be raised in any future case
between the same parties involving a different cause of action. Once a judgment attains finality it becomes
immutable and unalterable. It may no longer be modified in any respect, even if the modification is meant to
correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the
modification is attempted to be made by the court rendering it or by the highest court of the land. 52
Due Process
The Spouses Layos contend that the Order dated 19 January 1998 of the San Pedro RTC dismissing their
Petition for Reconstitution without a full blown trial deprived them of their property without due process. The said
Order had no evidentiary foundation, being based entirely on the unjust and sweeping conclusion of this Court in
its 16 December 1996 Decision in G.R. No. 120958 that OCT No. 239 is fake or a forgery.
There is no truth in the averments of the Spouses Layos.
Holding a trial in the reconstitution case would be an exercise in futility, because given the conclusiveness of the
judgment of this Court in G.R. No. 120958 and the Court of Appeals in CA-G.R. CV No. 50962 that OCT No. 239
is fake, forged, and spurious, then the San Pedro RTC in LRC Case No. B-1758 is, thus, barred from re-litigating
the issue and accepting evidence thereon. DTAESI
Furthermore, due process does not require that a trial be held in all circumstances. This Court, in a Resolution
dated 18 November 2003 in Republic v. Sandiganbayan, elucidated that:
The words "hearing" and "trial" have different meanings and connotations. Trial may refer to
the reception of evidence and other processes. It embraces the period for the introduction of
evidence by both parties. Hearing, as known in law, is not confined to trial but embraces the
several stages of litigation, including the pre-trial stage. A hearing does not necessarily mean
presentation of evidence. It does not necessarily imply the presentation of oral or
documentary evidence in open court but that the parties are afforded the opportunity to be
heard.
A careful analysis of Section 5 of RA 1379 readily discloses that the word "hearing" does not
always require the formal introduction of evidence in a trial, only that the parties are given the
occasion to participate and explain how they acquired the property in question. If they are
unable to show to the satisfaction of the court that they lawfully acquired the property in
question, then the court shall declare such property forfeited in favor of the State. There is no
provision in the law that a full blown trial ought to be conducted before the court declares the
forfeiture of the subject property. Thus, even if the forfeiture proceedings do not reach trial, the
court is not precluded from determining the nature of the acquisition of the property in
question even in a summary proceeding. DHaECI
Due process, a constitutional precept, does not therefore always and in all situations require a
trial-type proceeding. The essence of due process is found in the reasonable opportunity to be
heard and submit one's evidence in support of his defense. What the law prohibits is not
merely the absence of previous notice but the absence thereof and the lack of opportunity to
be heard. This opportunity was made completely available to respondents who participated in
all stages of the litigation. 53
The Spouses Layos cannot claim deprivation of property without due process when they were never denied the
opportunity to be heard by the courts. The Spouses Layos repeatedly and persistently sought recourse from the
courts, at the risk of forum shopping (of which it was actually found guilty at one point in G.R. No. 120958). They
instituted no less than four cases before the RTCs of Bian and San Pedro, Laguna; although based on different

causes of action, all invoked their title to the subject property under OCT No. 239. They were able to file
pleadings bearing their allegations and arguments, reply to their opponents' pleadings, and present as
attachments their documentary evidence. When their cases were dismissed by the RTCs, they were able to file
their motions for reconsideration and, upon denial thereof, raised their case on appeal to the appellate court.
Unfortunately for the Spouses Layos, however, the Court of Appeals and this Court agreed in the dismissal of
their cases.
That the cases of the Spouses Layos were dismissed by the RTCs even before they reach trial stage is not
denial of due process. The dismissals were due to the lack of merit of their complaints and/or petitions, already
apparent in the pleadings and evidence on record, and pointed out in their opponents' Motions for Dismissal (in
the injunction cases) and Motion for Summary Judgment (in the quieting of title case).
In a letter dated 8 September 2005 to then Chief Justice Hilario G. Davide, 54 made part of the records of this
case, Felipe Layos averred that the conflicting allegations and documents which led this Court and the Court of
Appeals in G.R. No. 120958 and CA-G.R. CV No. 50962, respectively, to declare OCT No. 239 spurious, were
fraudulently prepared and submitted to the courts in a concerted scheme (which sadly seemed to involve their
former counsel, Atty. Vitaliano Aguirre II) to deprive them of the subject property. Now represented by a new
counsel, he requested that he be given a chance to prove that the subject property is covered by OCT No. 239
and not OCT No. 242. CTDAaE
Even if it is conceded that the allegations of the aforementioned letter are true, no stretch of interpretation or
liberal application of the rules of procedure can grant the San Pedro RTC jurisdiction in LRC Case No. B-1758, a
case for reconstitution, to set aside or reverse the final judgment made in both G.R. No. 120958 and CA-G.R.
CV No. 50962 on the invalidity of OCT No. 239.
The RTC, acting on a petition for reconstitution, is of limited jurisdiction. Lands already covered by valid titles in
the name of registered owners other than the petitioners cannot be a proper subject of reconstitution
proceedings, thus:
The Court stresses once more that lands already covered by duly issued existing Torrens
Titles (which become incontrovertible upon the expiration of one year from their issuance
under Section 38 of the Land Registration Act) cannot be the subject of petitions for
reconstitution of allegedly lost or destroyed titles filed by third parties without first securing by
final judgment the cancellation of such existing titles. (And as the Court reiterated in the recent
case of Silvestre vs. Court of Appeals, "in cases of annulment and/or reconveyance of title, a
party seeking it should establish not merely by a preponderance of evidence but by clear and
convincing evidence that the land sought to be reconveyed is his"). The courts simply have
no jurisdiction over petitions by such third parties for reconstitution of allegedly lost or
destroyed titles over lands that are already covered by duly issued subsisting titles in
the names of their duly registered owners. The very concept of stability and
indefeasibility of titles covered under the Torrens System of registration rules out as
anathema the issuance of two certificates of title over the same land to two different
holders thereof. 55 (Emphasis ours.)
It should be pointed out that the validity of the title to the subject property herein had already been squarely put
in issue in Civil Case No. B-4194, the quieting of title case, instituted by the Spouses Layos before the Bian
RTC, and resolved definitively and with finality when appealed to the Court of Appeals in CA-G.R. CV No.
50962, in favor of La Paz. It is a ruling irrefragably beyond the jurisdiction of the San Pedro RTC to overturn or
contradict in LRC Case No. B-1784, the reconstitution case.
The prayer of the Spouses Layos to have LRC Case No. B-1784 remanded to the San Pedro RTC for trial, if
granted, would only be farcical. Should the San Pedro RTC subsequently grant the reconstitution of OCT No.
239 after the trial, it would only be an empty victory for the Spouses Layos, for a reconstituted certificate of title,
like the original certificate, by itself does not vest ownership of the land or estate covered thereby. 56 The valid
title to the subject property would still be that of La Paz, as determined by the Court of Appeals in CA-G.R. CV
No. 50962, over which the reconstituted certificate of title of the Spouses Layos cannot prevail. The
reconstituted OCT No. 239 would be a mere piece of paper with actually no title to evidence ownership. IAEcCT

As earlier mentioned, a reconstitution of title is the re-issuance of a new certificate of title lost
or destroyed in its original form and condition. It does not pass upon the ownership of the land
covered by the lost or destroyed title. Any change in the ownership of the property must be the
subject of a separate suit. Thus, although petitioners are in possession of the land, a separate
proceeding is necessary to thresh out the issue of ownership of the land. 57
The reconstitution of a title is simply the reissuance of a new duplicate certificate of title
allegedly lost or destroyed in its original form and condition. It does not pass upon the
ownership of the land covered by the lost or destroyed title. Possession of a lost certificate is
not necessarily equivalent to ownership of the land covered by it. The certificate of title, by
itself, does not vest ownership; it is merely an evidence of title over a particular property. 58
Evidently, the Spouses Layos seek more than just reconstitution of OCT No. 239 in LRC Case No. B-1758. They
want to hold a trial so as to prove before the San Pedro RTC the fraudulent scheme perpetrated by several
people, including their former counsel, to sabotage their cases before the courts; the errors in the Decisions of
the courts that have long attained finality; and, ultimately, the validity of their title to the subject property. Again,
these are matters beyond the jurisdiction of the San Pedro RTC to determine in a case for reconstitution. If truly
the Spouses Layos have been misled and defrauded in a concerted effort to ruin their chances before the
courts, then their recourse is not to persist with this petition for reconstitution of title, but to institute other actions
to hold those responsible administratively, civilly, and even criminally liable.
Collateral Attack
Finally, the Spouses Layos argue that the Motions to Dismiss of La Paz and FEGDI and the Comment of the
Office of the Solicitor General supporting the dismissal of the Spouses Layos' Petition for Reconstitution
constitute a collateral attack upon the validity of OCT No. 239, in violation of the proscription laid down by law
and jurisprudence against any collateral attack of a duly registered certificate of title.
The Spouses Layos are clearly mistaken. No collateral attack on OCT No. 239 was made in LRC Case No. B1784 (the reconstitution case). The San Pedro RTC dismissed it precisely because the invalidity of said
certificate of title was already determined conclusively and with finality by the Supreme Court in G.R. No.
120958 (the injunction cases). A similar ruling of invalidity of OCT No. 239 was rendered yet again in the final
judgment of the Court of Appeals in CA-G.R. CV No. 50962 (the quieting of title case). Therefore, no collateral
attack has been made on OCT No. 239 in the present Petition; the San Pedro RTC, Court of Appeals, and this
Court only abided by the conclusive and final judgment made on the invalidity of OCT No. 239 in G.R. No.
120958 and CA-G.R. CV No. 50962. DacTEH
In sum, the Decision dated 16 December 1996 of this Court in G.R. No. 120958 and the Decision dated 20
February 2001 of the Court of Appeals in CA-G.R. CV No. 50962 declaring OCT No. 239 fake, forged, and
spurious, already bar the reconstitution of OCT No. 239 under the doctrine of res judicata, in the concept of
conclusiveness of judgment. There is, therefore, no need to remand the case to the San Pedro RTC for trial.
WHEREFORE, premises considered, the instant Petition for Review is hereby DENIED. The Decision dated 26
April 2001 and Resolution dated 18 October 2001 of the Court of Appeals in CA-G.R. CV No. 61759, affirming
the Order dated 19 January 1998 of the Regional Trial Court, Branch 93 of San Pedro, Laguna, in LRC Case
No. B-1784, which dismissed the Petition for Reconstitution of OCT No. 239 filed by the petitioner-spouses
Felipe and Victoria Layos, are hereby AFFIRMED. Costs against the petitioner-spouses.
SO ORDERED.
Ynares-Santiago, Austria-Martinez, Nachura and Reyes, JJ., concur.
||| (Spouses Layos v. Fil-Estate Golf and Development, Inc., G.R. No. 150470, [August 6, 2008], 583 PHIL 72117)

FIRST DIVISION
[G.R. No. L-60800. August 31, 1982.]
JAIME PELEJO and BELEN C. ZABALLERO, petitioners, vs. THE HONORABLE COURT
OF APPEALS, PATERNO C. ZABALLERO and AURORA GONZALES,respondents.
Domingo M. Ballon and Ernesto V. Plantilla for petitioners.
Reynaldo B. Aralar for private respondents.
SYNOPSIS
Petitioners filed a complaint for Annulment of Deed of Sale, Title, Reconveyance and Damages (Civil Case No.
124771), alleging that the Deed of Sale petitioners executed in favor of respondents, is merely simulated to
accommodate the latter in obtaining a loan from the hank. The complaint was dismissed on the motion of private
respondents pointing out that the complaint states no cause of action. No appeal was taken by petitioners and
instead another complaint but with the same cause of action was filed (Civil Case No, 140996), On the ground
of res judicata, the said complaint was dismissed and such dismissal was appealed to the Court of Appeals.
Meanwhile, respondents filed Civil Case No. 14435, captioned "Accion Reinvendicatoria or Publiciana," the
dismissal of which was appealed to the Supreme Court, Thereafter, upon private respondents' motion for the
issuance of a writ of possession in Civil Case No. 124771, the Court of First Instance granted the motion. The
Court of Appeals sustained the lower court, hence, the present petition.
The Supreme Court upheld the position of petitioners. It held that only that portion of a decision ordained or
decreed in the dispositive part may be executed. It pointed out that the complaint in Civil Case No. 124771 was
not decided on the merits and the dismissal as shown by its dispositive portion is predicated on the private
respondents' motion to dismiss.
SYLLABUS
REMEDIAL LAW; JUDGMENT; EXECUTION; ONLY DISPOSITIVE PORTION MAY BE EXECUTED.
Execution is the remedy provided by law for the enforcement of a judgment and the only portion of a decision
that becomes the subject of execution is that ordained or decreed in the dispositive part. Whatever may be
found in the body of the decision can only be considered as part of the reasons or conclusions of the court andwhile they may serve as guide or enlightenment to determine the ratio decidendi; what is controlling is what
appears in the dispositive part of the decision (Rubles vs. Timarin, et al., 107 Phil. 809).
DECISION
RELOVA, J p:
In this petition for certiorari, spouses Jaime Pelejo and Belen C. Zaballero pray that the Writ of Possession,
dated March 30, 1982, issued by the lower court be declared null and void for having been issued without or in
excess of jurisdiction and with a grave abuse of discretion amounting to lack of jurisdiction, and that the private
respondents and the Sheriff of Manila be enjoined from enforcing the said Writ of Possession.
On July 3, 1979, herein petitioners filed Civil Case No. 124771 for Annulment of Deed, Title, Reconveyance and
Damages. According to petitioners, respondents Paterno C. Zaballero and his wife Aurora Gonzales Zaballero
approached them sometime in 1974 for assistance. They borrowed the title TCT No. T-49125, covering the
property so that they could have a collateral for a loan from the Monte de Piedad Bank, the proceeds of which
would finance respondents' rice mill business in San Juan, Batangas. To accommodate herein private
respondents, who are the brother and sister-in-law, respectively of petitioner Belen C. Zaballero, a simulated
Deed of Absolute Sale with Assumption of Mortgage was executed in favor of Mr. and Mrs. Paterno C. Zaballero.
The Zaballeros took the Deed of Sale to mean what it stated and had the title transferred to their names. As a
consequence, TCT No. T-49125 was cancelled and TCT No. 130117 was issued in the names of the Zaballeros.
In their answer to the complaint, respondents denied the allegations of simulated sale and claimed that the Deed
of Absolute Sale was properly executed in good faith before a notary public of the Philippine National Bank; that
the P400,000.00 stated in the deed was paid to herein petitioners while the P200,000.00 PNB Mortgage was
eventually paid to the bank; that the P600,000.00 was a fair price for the properties in 1974 when the
conveyance was executed; that petitioner Belen Zaballero, an older sister of respondent Paterno Zaballero, now

regrets having sold the property for only P600,000.00 because a relative volunteered to help her negotiate a
one-million peso loan on the property as collateral.
On August 22, 1980, the trial court issued an order dismissing the complaint but allowing the petitioners to file an
amended complaint within ten (10) days. The original complaint was dismissed upon motion of the private
respondents on the ground that it did not state a cause of action, and assuming there was a cause of action, it
was already barred by statute. The petitioners filed their amended complaint after September 18, 1980 which
was beyond the ten-day period.
On October 14, 1980, the trial judge denied the admission of the amended complaint in an order which reads:
"Acting on the Motion to Admit Amended Complaint as well as the opposition thereto, and it
appearing that said amendment is studiedly not in accordance with what the parties have
agreed upon in open Court, which is inimitably for collection of a Sum of Money, the same
should be, as it is hereby, DENIED."
This order dismissing the complaint in Civil Case No. 124771 was not appealed or otherwise elevated to an
appellate court. Instead, petitioners filed a new complaint for "Annulment of Deed, Title, Reconveyance and
Damages" which was docketed as Civil Case No. 140996 and assigned to another branch of the Manila Court of
First Instance.
On September 9, 1981, Judge Fidel P. Purisima of Branch XX dismissed the new case (Civil Case No. 140996)
on the ground that the dismissal of Civil Case No. 124771 and the subsequent denial of the Motion to Admit
Complaint amounted to res judicata barring the new complaint.
The dismissal of the second case (Civil Case No. 140996) was appealed to the Court of Appeals where it is still
pending resolution.
In the meantime, respondents Paterno Zaballero and Aurora Gonzales Zaballero filed Civil Case No. 144435,
captioned "Accion Reinvendicatoria or Publiciana, with Collection and Damages," but the same was dismissed
by Court of First Instance Judge Maximo A. Maceren on February 4, 1982 on the ground that it was actually an
action for illegal detainer which is not within the jurisdiction of this court.
The dismissal of said Civil Case No. 144435 was appealed by private respondents to this Court where it is still
pending action.
Thereafter, herein private respondents filed a motion for the issuance of a Writ of Possession in Civil Case No,
124771. On March 30, 1982, Judge Abelardo Dayrit of the Court of First Instance granted the motion and issued
a Writ of Possession "ordering the Sheriff of the City of Manila to place in possession the herein defendants
Paterno C. Zaballero and Aurora Gonzales Zaballero, in the premises at 541 M. V. delos Santos Street,
Sampaloc, Manila, and eject therefrom the herein plaintiffs Jaime Pelejo and Belen Zaballero Pelejo, and all
persons claiming under said plaintiffs."
It is the position of herein petitioner that the lower court acted in excess of its jurisdiction and with grave abuse of
discretion when it issued the writ of possession because Civil Case No. 124771 was not decided on the merits
and the rights and obligations of the parties were not defined. They alleged that there was no decision on who
the owners were in the order dismissing the complaint.
The Court of Appeals, sustaining the lower court when it issued the writ of possession, said:
"The order in Civil Case No. 124771 was to dismiss the complaint. The respondent Judge
obviously believed that to issue a writ of execution to implement an order dismissing a
complaint was a superfluity. The effect of a writ of execution would have been the same.
"The very arguments of the petitioners support the action taken by the respondent Judge.
According to the petitioners, Judge Dayrit could not issue a writ of execution because Civil
Case No. 124771 was dismissed without determining the rights of the parties and hence no
judgment was rendered. They argue that no writ of execution may issue because a writ of
execution must conform to that ordained in the dispositive part of the decision. If this
argument is right and no writ of execution may issue, the action taken by the respondent
Judge could not be error, much less grave abuse of discretion. How else could an order of

dismissal, long final and executory, be given meaning and effect? What the petitioners really
seek to achieve through this petition for a writ of certiorari is to delay execution of a final and
executory order while they file case after case in attempts to reopen the issue of simulated
deed of sale. A petition for certiorari cannot take the place of a long lost appeal. It cannot be
used to delay or prevent the logical consequences of an order that has become final and of
issues that have become res judicata because of a failure to appeal.
"The ex-parte motion filed on April 19, 1981 urging Us to order restoration of possession is
untenable in the light of Our above findings."
There is merit in the petition of the Pelejos.
Execution is the remedy provided by law for the enforcement of a judgment and the only portion of a decision
that becomes the subject of execution is that ordained or decreed in the dispositive part. Whatever may be
found in the body of the decision can only be considered as part of the reasons, or conclusions of the court and
while they may serve as guide or enlightenment to determine the ratio decidendi what is controlling is what
appears in the dispositive part of the decision (Robles vs. Timario, et. al., 107 Phil. 809).
In the case at bar, the trial judge issued the writ of possession in Civil Case No. 124771 which was dismissed in
an Order, dated August 22, 1980. In other words, the complaint for "Annulment of Deed of Sale, Title,
Reconveyance and Damages" was not decided on the merits because the order states:
"Acting on defendants" Motion to Dismiss for the grounds therein alleged which the Court
finds to be well taken the Complaint is hereby DISMISSED, without pronouncement as to
costs. However, considering that defendant have no objection to plaintiffs amending their
complaint, plaintiffs may do so, provided they file in Court an amended complaint within ten
(10) days from today.
"SO ORDERED."
WHEREFORE, finding the petition for certiorari justifiable, the Writ of Possession, dated March 30, 1982, having
been issued by the lower court with grave abuse of discretion, is hereby NULLIFIED; and, the private
respondents and the City Sheriff of Manila are enjoined from enforcing the said Writ of Possession.
SO ORDERED.
Melencio-Herrera, Plana and Vasquez, JJ., concur.
Teehankee (Chairman), J., in the result.
Makasiar, J., on leave.
Gutierrez, Jr., J., took no part.
||| (Pelejo v. Court of Appeals, G.R. No. L-60800, [August 31, 1982], 201 PHIL 873-878)

EN BANC
[G.R. No. 198423. October 23, 2012.]
LEO A. GONZALES, petitioner, vs. SOLID CEMENT CORPORATION and ALLEN
QUERUBIN, respondents.
RESOLUTION
BRION, J p:
Before us is the Second Motion for Reconsideration 1 filed by petitioner Leo Gonzales (petitioner) in the case in
caption (the current petition). Previously, the Court granted the petitioner's Motion for Leave to File and Admit
the Attached Motion to Refer the Case to the Court En Banc. The motion for reconsideration addresses our
Minute Resolutions of November 16, 2011 and February 27, 2012, both denying petitioner's petition for review
on certiorari.
The Antecedent Facts
The current petition arose from the execution of the final and executory judgment in the parties' illegal dismissal
dispute (referred to as "original case," docketed in this Court as G.R. No. 165330 and entitled Solid Cement
Corporation, et al. v. Leo Gonzales). The Labor Arbiter (LA) resolved the case at his level on December 12,
2000. Since the LA found that an illegal dismissal took place, the company reinstated petitioner Gonzales in
the payroll on January 22, 2001. 2
In the meanwhile, the parties continued to pursue the original case on the merits. The case was appealed to the
National Labor Relations Commission (NLRC) and from there to the Court of Appeals (CA) on a petition
for certiorari under Rule 65 of the Rules of Court. The LA's ruling of illegal dismissal was largely left undisturbed
in these subsequent recourses. The original case eventually came to this Court. In our Resolutions of March 9,
2005 3 and June 8, 2005, 4 we denied the petition of respondent Solid Cement Corporation (Solid Cement) for
lack of merit. Our ruling became final and entry of judgment took place on July 12, 2005. cIHSTC
Soon after its finality, the original case was remanded to the LA for execution. The LA decision dated December
12, 2000 declared the respondents guilty of illegal dismissal and ordered the reinstatement of Gonzales to his
former position "with full backwages and without loss of seniority rights and other benefits[.]" 5 Under this ruling,
as modified by the NLRC ruling on appeal, Gonzales was awarded the following:
(1) Backwages in the amount of P636,633.33;
(2) Food and Transportation Allowance in the amount of P18,080.00;
(3) Moral damages in the amount of P100,000.00;
(4) Exemplary damages in the amount of P50,000.00; and
(5) Ten percent (10%) of all sums owing to the petitioner as attorney's fees.
Actual reinstatement and return to work for Gonzales (who had been on payroll reinstatement since
January 22, 2001) came on July 15, 2008. 6
When Gonzales moved for the issuance of an alias writ of execution on August 4, 2008, he included several
items as components in computing the amount of his backwages. Acting on the motion, the LA added
P57,900.00 as rice allowance and P14,675.00 as medical reimbursement (with the company's apparent
conformity), and excluded the rest of the items prayed for in the motion, either because these items have been
paid or that, based on the records of the case, Gonzales was not entitled thereto. Under the LA's execution
order dated August 18, 2009, Gonzales was entitled to a total of P965,014.15. 7
The NLRC, in its decision 8 dated February 19, 2010 and resolution dated May 18, 2010, modified the LA's
execution order by including the following amounts as part of the judgment award: CADacT
Additional backwages from Dec. 13, 2000 to Jan. 21, 2001
Salary differentials from year 2000 until August 2008

P50,800.00 9
617,517.48

13th month pay differential

51,459.79

13th month pay for years 2000 and 2001

80,000.00

12% interest from July 12, 2005

878,183.42

This ruling increased Gonzales' entitlement to P2,805,698.04.

On a petition for certiorari under Rule 65 of the Rules of Court, the CA set aside the NLRC's decision and
reinstated the LA's order, prompting Gonzales to come to the Court via a petition for review
on certiorari (docketed as G.R. No. 198423) under Rule 45 of the Rules of Court. In our Minute Resolutions, we
denied Gonzales' Rule 45 petition. At this point came the two motions now under consideration.
For easier tracking and understanding, the developments in the original case and in the current petition are
chronologically arranged in the table below:
October 5, 1999

Solid Cement terminated Gonzales' employment;

December 12, 2000

The LA declared that Gonzales was illegally dismissed and ordered

his reinstatement;

January 5, 2001

Gonzales filed a Motion for Execution of reinstatement aspect;

January 22, 2001

Solid Cement reinstated Gonzales in the payroll;

March 26, 2002

The NLRC modified the LA decision by reducing amount of damages

awarded by the LA but otherwise affirmed the judgment;

June 28, 2004

The CA dismissed Solid Cement's certiorari petition;

March 9, 2005

The Court ultimately denied Solid Cement's petition for review;

July 12, 2005

The judgment became final and an entry of judgment was recorded;

July 15, 2008

Gonzales was actually reinstated;

August 4, 2008

Gonzales filed with the LA a motion for the issuance of an alias writ
of execution (with computation of monetary benefits as of August 28,
2008 the day before his termination anew, allegedly due to
redundancy, shall take effect);

August 18, 2009

The LA issued an Order directing the issuance of a writ of execution;

February 19, 2010

The NLRC rendered a decision affirming with modification the LA's

Order by including certain monetary benefits in favor of Gonzales;

May 31, 2011

The CA reversed the NLRC and reinstated the LA's Order;

November 16, 2011

The Court denied Gonzales' petition for review, questioning the

reinstatement of the LA's Order;

February 27, 2012

The Court denied Gonzales' 1st motion for reconsideration;

April 12, 2012

Gonzales again moved for reconsideration and asked that his case
be referred to the En Banc.
Our Ruling

As a rule, a second motion for reconsideration is a prohibited pleading under the Rules of Court, 10 and this
reason alone is sufficient basis for us to dismiss the present second motion for reconsideration. The ruling in the
original case, as affirmed by the Court, has been expressly declared final. A definitive final judgment, however
erroneous, is no longer subject to change or revision. HIEAcC
A decision that has acquired finality becomes immutable and unalterable. This quality of
immutability precludes the modification of a final judgment, even if the modification is meant to
correct erroneous conclusions of fact and law. And this postulate holds true whether the
modification is made by the court that rendered it or by the highest court in the land.
The orderly administration of justice requires that, at the risk of occasional errors, the
judgments/resolutions of a court must reach a point of finality set by the law. The noble
purpose is to write finis to dispute once and for all. This is a fundamental principle in our
justice system, without which there would be no end to litigations. Utmost respect and
adherence to this principle must always be maintained by those who exercise the power of
adjudication. Any act, which violates such principle, must immediately be struck down. Indeed,
the principle of conclusiveness of prior adjudications is not confined in its operation to the
judgments of what are ordinarily known as courts, but extends to all bodies upon which
judicial powers had been conferred. 11 (emphases ours, citations omitted)
After due consideration and further analysis of the case, however, we believe and so hold that the CA did not
only legally err but even acted outside its jurisdiction when it issued its May 31, 2011 decision. Specifically,
by deleting the awards properly granted by the NLRC and by reverting back to the LA's execution order, the CA
effectively varied the final executory judgement in the original case, as modified on appeal and
ultimately affirmed by the Court, and thereby acted outside its jurisdiction. The CA likewise, in the course
of its rulings and as discussed below, acted with grave abuse of discretion amounting to lack or excess of
jurisdiction by using wrong considerations, thereby acting outside the contemplation of law.
The CA's actions outside its jurisdiction cannot produce legal effects and cannot likewise be perpetuated by a
simple reference to the principle of immutability of final judgment; a void decision can never become final. "The
only exceptions to the rule on the immutability of final judgments are (1) the correction of clerical errors, (2) the
so-called nunc pro tunc entries which cause no prejudice to any party, and (3) void judgments." 12 For these
reasons, the Court sees it legally appropriate to vacate the assailed Minute Resolutions of November 16,
2011 and February 27, 2012, and to reconsider its ruling on the current petition. TSCIEa
The fallo or the dispositive portion
The resolution of the court in a given issue embodied in the fallo or dispositive part of a decision or order is
the controlling factor in resolving the issues in a case. The falloembodies the court's decisive action on the
issue/s posed, and is thus the part of the decision that must be enforced during execution. The other parts of the
decision only contain, and are aptly called, the ratio decidendi (or reason for the decision) and, in this sense,
assume a lesser role in carrying into effect the tribunal's disposition of the case.
When a conflict exists between the dispositive portion and the opinion of the court in the text or body of the
decision, the former must prevail over the latter under the rule that the dispositive portion is the definitive order,
while the opinion is merely an explanatory statement without the effect of a directive. Hence, the execution must
conform with what the fallo or dispositive portion of the decision ordains or decrees.

Significantly, no claim or issue has arisen regarding the fallo of the labor tribunals and the CA's ruling on the
merits of the original case. We quote below the fallo of these rulings, which this Court ultimately sustained.
LA ruling:
WHEREFORE, premises considered, respondents are hereby declared guilty of ILLEGAL
DISMISSAL and ordered to reinstate complainant to his former position with full backwages
and without loss of seniority rights and other benefits which to date amounts (sic)to Six
Hundred Thirty Six Thousand and Six Hundred Thirty Three Pesos and Thirty Three Centavos
(P636,633.33).
Further, respondents are jointly and severally liable to pay the following: SEHaTC
1. P18,080 as reimbursement for food and transportation allowance;
2. Five Hundred Thousand (P500,000.00) Pesos as moral damages;
3. Two Hundred Fifty Thousand (P250,000.00) Pesos as exemplary damages; and
4. 10% of all sums owing to complainant as attorney's fees. 13 (emphasis and
underscoring ours)
NLRC Ruling:
WHEREFORE, premises considered, the decision under review is hereby, MODIFIED by
REDUCING the amount of moral and exemplary damages due the complainant to the sum of
P100,000.00 and P50,000.00, respectively.
Further, joint and several liability for the payment of backwages, food and transportation
allowance and attorney's fees as adjudged in the appealed decision is hereby imposed only
upon respondents Allen Querubin and Solid Cement Corporation, the latter having a
personality which is distinct and separate from its officers.
The relief of reinstatement is likewise, AFFIRMED. 14
CA Ruling:
IN VIEW OF ALL THE FOREGOING, the instant petition is hereby dismissed for lack of merit.
Accordingly, the decision of the Second Division of the NLRC dated 26 March 2002 in NLRC
CA No. 027452-01 is hereby AFFIRMED. 15
We affirmed the CA ruling on the original case in the final recourse to us; thus, on the merits, the judgment in
Gonzales' favor is already final. From that point, only the implementation or execution of the fallo of the final
ruling remained to be done. EDISaA
Re-computation of awards during
execution of an illegal dismissal
decision
On the execution aspect of an illegal dismissal decision, the case of Session Delights Ice Cream and Fast
Foods v. Court of Appeals (Sixth Division), 16 despite its lack of a complete factual congruence with the present
case, serves as a good guide on how to approach the execution of an illegal dismissal decision that contains a
monetary award.
In Session Delights, the LA found that the employee had been illegally dismissed and consequently ordered the
payment of separation pay (in lieu of reinstatement), backwages, 13th month pay, and indemnity, all of which the
LA itemized and computed as of the time of his decision. The NLRC and the CA affirmed the LA's decision on
appellate review, except that the CA deleted the award for 13th month pay and indemnity. In due course, the CA
decision became final.
During the execution stage of the decision, the LA arrived at an updated computation of the final awards that
included additional backwages, separation pay (computed from the date of the LA decision to the finality of the
ruling on the case) and 13th month pay. This updated computation was affirmed by the NLRC and by the CA,
except for the latter's deletion of the 13th month pay award.

Session Delights went to this Court raising the issue of whether the original fallo of the LA's decision on the
merits at that point already final could still be re-computed. After stating that only the monetary awards of
backwages, separation pay, and attorney's fees required active enforcement and re-computation, the Court
stated:
A source of misunderstanding in implementing the final decision in this case proceeds from
the way the original labor arbiter framed his decision. The decision consists essentially of two
parts. EDCcaS
The first is . . . the finding of the illegality of the dismissal and the awards of separation pay in
lieu of reinstatement, backwages, attorney's fees, and legal interests.
The second part is the computation of the awards made. On its face, the computation the
labor arbiter made shows that it was time-bound as can be seen from the figures used in the
computation. This part, being merely a computation of what the first part of the decision
established and declared, can, by its nature, be re-computed. . . . .
xxx xxx xxx
However, the petitioner disagreed with the labor arbiter's findings on all counts i.e., on the
finding of illegality as well as on all the consequent awards made. Hence, the petitioner
appealed the case to the NLRC which, in turn, affirmed the labor arbiter's decision. . . . .
The petitioner appropriately sought to nullify the NLRC decision on jurisdictional grounds
through a timely filed Rule 65 petition for certiorari. The CA decision, finding that NLRC
exceeded its authority in affirming the payment of 13th month pay and indemnity, lapsed to
finality and was subsequently returned to the labor arbiter of origin for execution.
It was at this point that the present case arose. Focusing on the core illegal dismissal portion
of the original labor arbiter's decision, the implementing labor arbiter ordered the award recomputed; he apparently read the figures originally ordered to be paid to be the computation
due had the case been terminated and implemented at the labor arbiter's level. Thus, the
labor arbiter re-computed the award to include the separation pay and the backwages due up
to the finality of the CA decision that fully terminated the case on the merits. Unfortunately, the
labor arbiter's approved computation went beyond the finality of the CA decision (July 29,
2003) and included as well the payment for awards the final CA decision had deleted
specifically, the proportionate 13th month pay and the indemnity awards. Hence, the CA
issued the decision now questioned in the present petition. HITEaS
We see no error in the CA decision confirming that a re-computation is necessary as it
essentially considered the labor arbiter's original decision in accordance with its basic
component parts as we discussed above. To reiterate, the first part contains the finding of
illegality and its monetary consequences; the second part is the computation of the awards or
monetary consequences of the illegal dismissal, computed as of the time of the labor arbiter's
original decision.
xxx xxx xxx
. . . . What the petitioner simply disputes is the re-computation of the award when the final CA
decision did not order any re-computation while the NLRC decision that the CA affirmed and
the labor arbiter decision the NLRC in turn affirmed, already made a computation that on
the basis of immutability of judgment and the rule on execution of the dispositive portion of the
decision should not now be disturbed.
Consistent with what we discussed above, we hold that under the terms of the decision
under execution, no essential change is made by a re-computation as this step is a
necessary consequence that flows from the nature of the illegality of dismissal
declared in that decision. A re-computation (or an original computation, if no previous
computation has been made) is a part of the law specifically, Article 279 of the Labor Code
and the established jurisprudence on this provision that is read into the decision. By the

nature of an illegal dismissal case, the reliefs continue to add on until full satisfaction,
as expressed under Article 279 of the Labor Code. The re-computation of the
consequences of illegal dismissal upon execution of the decision does not constitute
an alteration or amendment of the final decision being implemented. The illegal
dismissal ruling stands; only the computation of monetary consequences of this
dismissal is affected and this is not a violation of the principle of immutability of final
judgments. TEcHCA
. . . [T]he core issue in this case is not the payment of separation pay and backwages but their
re-computation in light of an original labor arbiter ruling that already contained a dated
computation of the monetary consequences of illegal dismissal.
That the amount the petitioner shall now pay has greatly increased is a consequence that it
cannot avoid as it is the risk that it ran when it continued to seek recourses against the labor
arbiter's decision. Article 279 provides for the consequences of illegal dismissal in no
uncertain terms, qualified only by jurisprudence in its interpretation of when separation pay in
lieu of reinstatement is allowed. When that happens, the finality of the illegal dismissal
decision becomes the reckoning point instead of the reinstatement that the law decrees. In
allowing separation pay, the final decision effectively declares that the employment
relationship ended so that separation pay and backwages are to be computed up to that point.
The decision also becomes a judgment for money from which another consequence flows
the payment of interest in case of delay. This was what the CA correctly decreed when it
provided for the payment of the legal interest of 12% from the finality of the judgment, in
accordance with our ruling in Eastern Shipping Lines, Inc. v. Court of Appeals. 17 (emphases
ours, italics supplied)
The re-computation of the amounts still due took off from the LA's decision that contained the itemized and
computed dispositive portion as of the time the LA rendered his judgment. It was necessary because time
transpired between the LA's decision and the final termination of the case on appeal, during which time the
illegally dismissed employee should have been paid his salary and benefit entitlements.
The present case, of course, is not totally the same as Session Delights. At the most obvious level, separation
pay is not an issue here as reinstatement, not separation from service, is the final directive; Gonzales was
almost immediately reinstated pending appeal, although only by way of a payroll reinstatement as allowed by
law. Upon the finality of the decision on the appeal, Gonzales was actually reinstated. DaAIHC
Although backwages was an issue in both cases, the thrusts of this issue in the two cases were different.
In Session Delights, the issue was more on whether the award would be confined to what the LA originally
awarded or would continue to run during the period of appeal. This is not an issue in the present case, since
Gonzales received his salary and benefit entitlements during his payroll reinstatement; the general concern in
the present case is more on the items that should be included in the award, part of which are the backwages.
In other words, the current petition only generally involves a determination of the scope of the awards that
include the backwages. The following were the demanded items:
1. Additional backwages from the LA's decision (on the merits) until Gonzales was payroll
reinstated;
2. Seniority rights
a. longevity pay/loyalty/service award
b. general annual bonus
c. annual birthday gift
d. bereavement assistance;
3. Other benefits
a. vacation and sick leave
b. holiday pay; THaAEC

4. Other allowances
a. monetary equivalent of rice allowance (from October 1999 to July 2005) which
should be included in computing backwages
b. monetary equivalent of yearly medical allowance from 2000 to July 2005 which
should be included in computing backwages
c. meal allowance
d. uniform and clothing allowance
e. transportation, gasoline and representation allowance;
5. 13th month pay for the years 2000 and 2001;
6. Salary differentials;
7. Damages;
8. Interest on the computed judgment award; and
9. Attorney's fees. 18
The LA and the NLRC uniformly excluded some of these items from the awards they made and we could have
dismissed the current petition outright on the issue of entitlement to these benefits, since entitlement mainly
involves questions of fact which a Rule 45 petition generally does not allow. A deeper consideration of the
current petition, however, shows that there is more beyond the factual issues of entitlement that are evident on
the surface.
To recall, the NLRC differed from the LA on the actual details of implementation and modified the latter's ruling
by including
Additional backwages from Dec. 13, 2000 to Jan. 21, 2001P50,800.00 19
Salary differentials from year 2000 until August 2008617,517.48
13th month pay differential51,459.79
13th month pay for years 2000 and 200180,000.00
12% interest from July 12, 2005878,183.42
The CA, in its own Rule 65 review of the NLRC ruling, effectively found that the NLRC acted outside its
jurisdiction when it modified the LA's execution order and, on this basis, ruled for the implementation of what
the LA ordered. IDTSaC
Under this situation and in the context of the Rule 45 petition before us, the reviewable issue before us
is whether the CA was legally correct in finding that the NLRC acted outside its jurisdiction when it
modified the LA's execution order. This is the issue on which our assailed Resolutions would rise or fall. For,
indeed, a Rule 45 petition which seeks a review of the CA decision on a Rule 65 petition should be reviewed
"from the prism of whether [the CA] correctly determined the presence or absence of grave abuse of discretion
in the NLRC decision." 20 In short, we do not rule whether the CA committed grave abuse of discretion;
rather, we rule on whether the CA correctly determined the absence or presence of grave abuse of
discretion by the NLRC.
The components of the backwages
a. Salary and 13th month differential due after dismissal
In the case of BPI Employees Union Metro Manila and Zenaida Uy v. Bank of the Philippine Islands and Bank
of the Philippine Islands v. BPI Employees Union Metro Manila and Zenaida Uy, 21 the Court ruled that in
computing backwages, salary increases from the time of dismissal until actual reinstatement, and benefits not
yet granted at the time of dismissal are excluded. Hence, we cannot fault the CA for finding that the NLRC
committed grave abuse of discretion in awarding the salary differential amounting to P617,517.48 and the
13th month pay differentials amounting to P51,459.48 that accrued subsequent to Gonzales' dismissal.
b. Legal interest of 12% on total judgment

However, based on the same BPI case, Gonzales is entitled to 12% interest on the total unpaid judgment
amount, from the time the Court's decision (on the merits in the original case) became final. When the CA
reversed the NLRC and reinstated the LA's ruling (which did not order payment of interest), the CA overstepped
the due bounds of its jurisdiction under a certiorari petition as it acted on the basis of wrong considerations and
outside the contemplation of the law on the legal interests that final orders and rulings on forbearance of money
should bear.
In a certiorari petition, the scope of review is limited to the determination of whether a judicial or quasi-judicial
tribunal acted without or in excess of its jurisdiction or grave abuse of discretion amounting to lack of jurisdiction;
such grave abuse of discretion can exist when the ruling entity used the wrong considerations and thereby acted
outside the contemplation of law. In justifying the return to and adoption of the LA's execution order, the CA
solely relied on the doctrine of immutability of judgment which it considered to the exclusion of other attendant
and relevant factors. This is a fatal error that amounted to grave abuse of discretion, particularly on the award
of 12% interest. The seminal case of Eastern Shipping Lines, Inc. v. Court of Appeals 22 cannot be clearer on
the rate of interest that applies:
3. When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest . . . shall be 12% per annum from such finality until
its satisfaction, this interim period being deemed to be by then an equivalent to a
forbearance of credit. 23 (emphasis ours)
In BPI, we even said that "[t]his natural consequence of a final judgment is not defeated notwithstanding the
fact that the parties were at variance in the computation of what is due" 24 under the judgment. In the
present case, the LA's failure to include this award in its order was properly corrected by the NLRC on
appeal, only to be unreasonably deleted by the CA. Such deletion, based solely on the immutability of the
judgment in the original case, is a wrong consideration that fatally afflicts and renders the CA's ruling
void. cSTHaE
c. Additional backwages and 13th month pay
We reach the same conclusion on the other deletions the CA made, particularly on the deletion of the 13th
month pay for 2000-2001, amounting to P80,000.00, and the additional backwages for the period of
December 13, 2000 to January 21, 2001, amounting to P50,800.00. We note in this regard that the execution
proceedings were conducted before the LA issued an Order requiring the payment of P965,014.15 in Gonzales'
favor. An appeal of this computation to the NLRC to question the LA's determination of the amount due throws
the LA's determination wide open for the NLRC's review. In granting these monetary reliefs, the NLRC reasoned
that
Since there is no showing that complainant was paid his salaries from the time when he
should have been immediately reinstated until his payroll reinstatement, he is entitled
thereto. 25 (emphasis ours)
To be sure, if the NLRC's findings had been arrived at arbitrarily or in disregard of the evidence on record, the
CA would have been right and could have granted the petition forcertiorari on the finding that the NLRC made a
factual finding not supported by substantial evidence. 26 The CA, in fact, did not appear to have looked into
these matters and did not at all ask whether the NLRC's findings on the awarded monetary benefits were
supported by substantial evidence. This omission, however, did not render the NLRC's ruling defective
as Jimenez v. NLRC, et al. 27 teaches us that
On the first issue, we find no reason to disturb the findings of respondent NLRC that the entire
amount of commissions was not paid, this by reason of the evident failure of herein petitioners
to present evidence that full payment thereof has been made. It is a basic rule in evidence
that each party must prove his affirmative allegations. Since the burden of evidence
lies with the party who asserts an affirmative allegation, the plaintiff or complainant has to
prove his affirmative allegation, in the complaint and the defendant or respondent has to prove
the affirmative allegations in his affirmative defenses and counterclaim. Considering that
petitioners herein assert that the disputed commissions have been paid, they have the
bounden duty to prove that fact. HAICTD

As a general rule, one who pleads payment has the burden of proving it. Even where the
plaintiff must allege non-payment, the general rule is that the burden rests on the
defendant to prove payment, rather than on the plaintiff to prove non-payment. The
debtor has the burden of showing with legal certainty that the obligation has been discharged
by payment.
When the existence of a debt is fully established by the evidence contained in the record, the
burden of proving that it has been extinguished by payment devolves upon the debtor who
offers such a defense to the claim of the creditor. Where the debtor introduces some evidence
of payment, the burden of going forward with the evidence as distinct from the general
burden of proof shifts to the creditor, who is then under a duty of producing some evidence
to show non-payment. 28 (emphases ours, citations omitted)
Thus, even without proof of nonpayment, the NLRC was right in requiring the payment of the 13th month
pay and the salaries due after the LA's decision until the illegally dismissed petitioner was reinstated in the
payroll, i.e., from December 13, 2000 to January 21, 2001. It follows that the CA was wrong when it
concluded that the NLRC acted outside its jurisdiction by including these monetary awards as items for
execution.
These amounts are not excluded from the concept of backwages as the salaries fell due after Gonzales should
have been reinstated, while the 13th month pay fell due for the same period by legal mandate. These are
entitlements that cannot now be glossed over if the final decision on the merits in this case were to be
respected.
The Legal Obstacle: the prohibition
on 2nd motion for reconsideration
The above discussions unavoidably lead to the conclusion that the Court's Minute Resolutions denying
Gonzales' petition were not properly issued and are tainted by the nullity of the CA decision these Resolutions
effectively approved. We do not aim to defend these actions, however, by mechanically and blindly applying the
principle of immutability of judgment, nor by tolerating the CA's inappropriate application of this principle. The
immutability principle, rather than being absolute, is subject to well-settled exceptions, among which is its
inapplicability when a decision claimed to be final is not only erroneous, but null and void. CcSTHI
We cannot also be oblivious to the legal reality that the matter before us is no longer the validity of Gonzales'
dismissal and the legal consequences that follow matters long laid to rest and which we do not and cannot
now disturb. Nor is the matter before us the additional monetary benefits that Gonzales claims in his petition,
since these essentially involve factual matters that are beyond a Rule 45 petition to rule upon and correct.
The matter before us in the Rule 45 petition questioning the CA's Rule 65 determination is the scope of
the benefits awarded by the LA, as modified on appeal and ultimately affirmed by this Court, which ruling
has become final and which now must be implemented as a matter of law.
Given these considerations, to reopen this case on second motion for reconsideration would not actually embroil
the Court with changes in the decision on the merits of the case, but would confine itself solely to the issue of
the CA's actions in the course of determining lack or excess of jurisdiction or the presence of grave abuse of
discretion in reviewing the NLRC's ruling on the execution aspect of the case.
Additionally, while continued consideration of a case on second motion for reconsideration very strongly remains
an exception, our action in doing so in this case is not without sound legal justification. 29 An order of execution
that varies the tenor of a final and executory judgment is null and void. 30 This was what the CA effectively did
it varied the final and executory judgment of the LA, as modified on appeal and ultimately affirmed by the
Court. We would simply be enforcing our own Decision on the merits of the original case by nullifying what the
CA did.
Viewed in these lights, the recognition of, and our corrective action on, the nullity of the CA's ruling on the
current petition is a duty this Court is under obligation to undertake pursuant to Section 1, Article VIII of the
Constitution. We undertake this corrective action by restoring what the CA should have properly recognized to
be covered by the Decision on the merits of the original case. cASIED

WHEREFORE, premises considered, in lieu of our Minute Resolutions of November 16, 2011 and February 27,
2012 which we hereby vacate, we hereby PARTIALLY GRANT the petition and DIRECT the payment of the
following deficiencies in the payments due petitioner Leo Gonzales under the Labor Arbiter's Order of August 18,
2009:
1. 13th month pay for the years 2000 and 2001;
2. Additional backwages from December 13, 2000 until January 21, 2001; and
3. 12% interest on the total judgment award from the time of the judgment's finality on July 12,
2005 until the total award is fully paid. IEHScT
The Labor Arbiter is hereby DIRECTED to issue the appropriate writ of execution incorporating these additional
awards to those reflected in his Order of August 18, 2009.
Costs against respondents Solid Cement Corporation and Allen Querubin.
SO ORDERED.
Sereno, C.J., Velasco, Jr., Leonardo-de Castro, Peralta, Bersamin, Abad, Villarama, Jr., Mendoza,
Reyes and Perlas-Bernabe, JJ., concur.
Carpio, Del Castillo and Perez, JJ., are on leave.
||| (Gonzales v. Solid Cement Corp., G.R. No. 198423 (Resolution), [October 23, 2012], 697 PHIL 619-643)

THIRD DIVISION
[G.R. No. 121075. July 24, 1997.]
DELTA MOTORS CORPORATION, petitioner, vs. COURT OF APPEALS, HON. ROBERTO
M. LAGMAN and STATE INVESTMENT HOUSE, INC.,respondents.
Marcelo P. Villanueva for petitioner
Roco, Bunag, Kapunan & Migallos for private respondent.
SYNOPSIS
In an action for a sum of money against Delta Motors (Civil Case No. 84-23019) filed by private respondent
State Investment House, Inc. (SIHI), Delta was ordered to pay SIHI P20,061,898.97. The decision could not be
served on Delta because it was dissolved earlier. In the meantime, Delta had been taken over by the Philippine
National Bank. SIHI moved for service of the decision by way of publication. On March 11, 1987, a writ of
execution was issued and pursuant thereto certain properties of Delta were levied upon and sold.
Delta filed a special civil action for certiorari with the Court of Appeals, CA-G.R. SP No. 23068, insisting that the
trial court's decision was void since there was no proper service of summons, and that being void, the decision
never became final and executory. The Court of Appeals ruled that the trial court's decision did not become final
and executory because no copy of the assailed judgment had been properly served on PNB which assumed
Delta's operation. In a motion for reconsideration, Delta insisted that there was no valid service of summons and
the decision of the trial court was not in accordance with the Rules, hence, void.
Delta filed a Notice of Appeal with the RTC in Civil Case No. 84-23019 and prayed that the records of the case
be elevated to the Court of Appeals. The trial court dismissed the Notice of Appeal, and denied Delta's motion for
reconsideration of the dismissal.
Delta filed with the Court of Appeals a petition for certiorari, docketed as CA-G.R. SP No. 29147, where it prayed
for the annulment of the trial court's order dismissing the Notice of Appeal, and for the elevation of the original
records of Civil Case No. 84-23019 to the Court of Appeals.
The Court of Appeals issued in CA-G.R. SP No. 29147 a restraining order enjoining respondents from enforcing
the decision, subject of the petition, and ordered the elevation of the records of the case to it on appeal. Delta
filed in the Court of Appeals an Omnibus Motion praying that the March 11, 1987 writ of execution be nullified
and set aside. In its resolution of January 5, 1995, the Court of Appeals denied Delta's Omnibus Motion, holding
that the matters prayed for in the Omnibus Motion are matters which were not raised as issued by petitioner and
therefore not within the jurisdiction of the Court of Appeals to decide.
Delta then filed the instant petition, insisting that the matters raised in the Omnibus Motion were included in the
appellate Jurisdiction of the Court of Appeals; hence, it had jurisdiction to rule on the Omnibus Motion.
The Court of Appeals committed no reversible error in denying Delta's Omnibus Motion. The decision of the
Court of Appeals in CA-GR SP No. 29147 had long become final insofar as DELTA was concerned. As a matter
of fact, at the time Delta filed the petition in CA-GR SP NO. 29147, the orders sought to be declared null and
void in the Omnibus Motion had already been issued they having been so issued at the commencement of CAG.R. SP No. 23068. Moreover, the Court of Appeals correctly denied petitioner's Omnibus Motion in keeping with
jurisprudence concerning Section 7 of Rule 51 of the Rules of Court on the Procedure in the Court of Appeals.
Clearly then, the Court of Appeals could only consider errors raised by petitioner in CA-G.R. SP No. 29147,
which were limited to the trial court's orders of 3 June 1992 and 14 September 1992. These were the only errors
Delta argued extensively in its brief. To allow Delta's Omnibus Motion which it filed more than eight months from
promulgation of the decision in CA-G.R. SP No. 29147, long after finality of said case, would result in
abandonment of sound Judicial process.
Petition is dismissed.
SYLLABUS
1. REMEDIAL LAW; ACTIONS; JUDGMENT; FINAL DECISIONS, NOT SUBJECT TO REVIEW. The decision
of the Court of Appeals of 17 June 1993 in CA-G.R. SP No. 29147 had long become final insofar as DELTA was
concerned, and it very well knew that the only issues raised therein concerned the trial court's orders of 3 June

1992 and 14 September 1992. As a matter of fact, at the time Delta filed the petition in CA-G.R. SP No. 29147,
the orders sought to be declared null and void in the Omnibus Motion had already been issued, they having
been so issued at the commencement of CA-G.R. SP No. 23068. In short, if DELTA intended such orders to be
challenged in CA-G.R. SP No. 29147, it could have explicitly alleged them as sources of additional causes of
action and prayed for the corresponding affirmative relief therefrom, and if this course of action initially proved
unavailing then DELTA could and should have moved for reconsideration on that aspect. After the finality of the
decision in said case, any attempt to introduce or revive the issue had become procedurally impermissible.
Plainly, the issues raised in the Omnibus Motion could have been allowed during the pendency of said case by
way of amendments to the petition.
2. ID.; COURT OF APPEALS; ISSUES SOUGHT TO BE REVIEWED MUST BE STATED IN THE ASSIGNMENT
OF ERROR; ERRORS NOT ASSIGNED, NOT SUBJECT TO REVIEW. The Court of Appeals correctly denied
petitioner's Omnibus Motion in keeping with jurisprudence concerning Section 7 of Rule 51 of the Rules of Court
on the Procedure in the Court of Appeals, which mandates that: Sec. 7. Questions that may be decided. No
error which does not affect the jurisdiction over the subject matter will be considered unless stated in the
assignment of errors and properly argued in the brief, save as the court, at its option, may notice plain errors not
specified, and also clerical errors. Clearly then, the Court of Appeals could only consider errors raised by
petitioner in CA-G.R. SP No. 29147, which were limited to the trial court's orders of 3 June 1992 and 14
September 1992. These were the only errors Delta argued extensively in its brief. To allow DELTA's Omnibus
Motion which it filed more than eight months from promulgation of the decision in CA-G.R. SP No. 29147, or
long after finality of said case, would result in abandonment of sound judicial process.
3. ID.; ACTIONS; JUDGMENT; OBITER DICTUM, DEFINED. An obiter dictum has been defined as an
opinion expressed by a court upon some question of law which is not necessary to the decision of the case
before it. It is a remark made, or opinion expressed, by a judge, in his decision upon a cause, "by the way," that
is, incidentally or collaterally, and not directly Upon the question before him, or upon a point not necessarily
involved in the determination of the caused, or introduced by way of illustration, or analogy or argument. Such
are not binding as precedent.
4. ID.; ID.; ID.; OBITER DICTUM; MAY BE DELETED FROM THE DECISION. The Court of Appeals likewise
did not commit reversible error in deleting the phrase SIHI protested as obiter dictum. The assailed phrase was
indeed obiter dictum as it touched upon a matter not raised by petitioner expressly in its petition assailing the
dismissal of its notice of appeal. It was not a prerequisite in disposing of the aforementioned issue. The body of
the resolution did not contain any discussion on such matter nor mention any principle of law to support such
statement.
DECISION
DAVIDE, JR., J p:
This is a Petition for Certiorari 1 under Rule 65 of the Revised Rules of Court seeking the reversal of the
Resolutions of the Court of Appeals in CA-G.R. SP No. 29147 dated 5 January 1995 2 and 14 July 1995. 3 The
former denied the Omnibus Motion filed by petitioner Delta Motors Corporation (hereinafter DELTA), while the
latter amended the earlier Resolution.
The pleadings and annexes in the record of CA-G.R. SP No. 29147 disclose the following materials operative
facts:
Private respondent State Investment House, Inc. (hereinafter, SIHI) brought an action for a sum of money
against DELTA in the Regional Trial Court (RTC) of Manila, Branch VI. The case was docketed as Civil Case No.
84-23019. DELTA was declared in default, and on 5 December 1984, the RTC, per Judge Ernesto Tengco,
rendered a decision 4 the dispositive portion of which reads as follows:
WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered ordering
the defendant to pay unto plaintiff the amount of P20,061,898.97 as its total outstanding
obligation and to pay 25% of the total obligation as and for attorney's fees, plus cost of suit.
The decision could not be served on DELTA, either personally or by registered mail, due to its earlier dissolution.
However, Delta had been taken over by the Philippine National Bank (PNB) in the meantime. This

notwithstanding, SIHI moved, on 4 November 1986, for service of the decision by way of publication, which the
trial court allowed in its order of 6 December 1986. The decision was published in the Thunderer, a weekly
newspaper published in Manila. After publication, SIHI moved for execution of the judgment, which the trial court
granted in its order of 11 March 1987 on the ground that no appeal had been taken by DELTA despite publication
of the decision. The writ of execution was issued and pursuant thereto certain properties of DELTA in Iloilo and
Bacolod City were levied upon and sold. The sheriff likewise levied on some other properties of DELTA.
DELTA then commenced a special civil action for certiorari with the Court of Appeals, which was docketed as
CA-G.R. SP No. 23068, wherein DELTA insisted that: (a) the trial court did not acquire jurisdiction over the
person of the defendant (DELTA) since there was no valid/proper service of summons, thus rendering the
decision null and void; and (b) the void decision never became final and executory.
In its decision of 22 January 1991 5 the Court of Appeals ruled against DELTA on the first ground, but found that
the record before it "is bereft of any showing that a copy of the assailed judgment had been properly served on
P.N.B. which assumed DELTA's operation upon the latter's dissolution." Accordingly the Court of Appeals ruled
that:
[T]he [decision] did not become executory (Vda. de Espiritu v. CFI, L-30486, Oct. 31, 1972;
Tuazon v. Molina, L-55697, Feb. 26, 1981).
It further opined that service by publication did not cure the fatal defect and thus decreed as
follows:
WHEREFORE, while the assailed decision was validly rendered by respondent court,
nonetheless it has not attained finality pending service of copy thereof on petitioner DELTA,
which may appeal therefore within the reglementary period. 6
In a motion for reconsideration, DELTA insisted that there was no valid service of summons and the decision of
the RTC was not in accordance with the Rules, hence, void. 7 SIHI also filed a motion for reconsideration
claiming that DELTA was not dissolved, and even if it were, its corporate personality to receive service of
processes subsisted; moreover, its right to appeal had been lost. 8 These motions were denied by the Court of
Appeals in its resolution of 27 May 1991. 9 Unsatisfied, DELTA filed with this Court a petition for review
on certiorari (G.R. No. 100366) which was denied in the resolution of 16 September 1991 for non-compliance
with Circular No. 1-88. A motion for reconsideration was denied in the resolution of 9 October 1991, a copy of
which was received by DELTA on 31 October 1991. 10
On 12 November 1991, DELTA filed a Notice of Appeal 11 with the RTC in Civil Case No. 84-23019, indicating
therein that it was appealing from the 5 December 1984 decision, and prayed as follows:
WHEREFORE, it is most respectfully prayed of this Honorable Court that this Notice of Appeal
be noted and the records of this case be elevated to the Court of Appeals.
SIHI filed on 2 December 1991 a motion to dismiss DELTA's appeal 12 on the ground that it was filed out of
time, since DELTA obtained a certified true copy of the decision from the RTC on 21 September 1990, hence it
had only fifteen days therefrom within which to appeal from the decision. Despite DELTA's opposition, 13 the trial
court dismissed the Notice of Appeal. 14 DELTA moved to reconsider, 15 which SIHI opposed. 16 In its
order 17 of 14 September 1992 the trial court denied Delta's motion.
DELTA then filed with the Court of Appeals a petition for certiorari under Rule 65 of the Rules of Court. The case
was docketed as CA-G.R. SP No. 29147. 18 In its petition, Delta prayed for the: (a) annulment of the order of
the trial court dated 3 June 1992 dismissing the Notice of Appeal dated 6 November 1991; (b) annulment of the
order of the trial court dated 14 September 1992 denying the motion for reconsideration of the former; and (c)
elevation of the original records of Civil Case No. 84-23019 to the Court of [Link]
On 30 October 1992 the Court of Appeals issued in CA-G.R. SP No. 29147 a restraining order enjoining
respondents and any and all other persons acting on their behalf "from enforcing or directing the enforcement of
the Decision, subject of the petition." 19 Thereafter, in its resolution promulgated on 22 December 1992, 20 the
Court of Appeals gave due course to the petition in said case, considered the comments of private respondents
therein as its answer and required the parties to submit their respective memoranda.

On 17 June 1993 the Court of Appeals promulgated its decision 21 in CA-G.R. SP No. 29147, the dispositive
portion providing:
WHEREFORE, the questioned order of the respondent court dated June 3, 1992, dismissing
the notice of appeal dated November 6, 1991; and the order dated September 14, 1992 of the
same court denying the motion for reconsideration filed by the petitioner, through counsel, are
hereby SET ASIDE; and respondent court hereby ordered to ELEVATE the records of the
case to the Court of Appeals, on appeal.
On 18 January 1993, the RTC elevated the record of Civil Case No. 84-23019 to the Court of Appeals.
SIHI appealed to this Court from the decision by way of a petition for review. 22 It contended that DELTA had
lost the right to appeal in view of the lapse of more than 15 days from DELTA's receipt of a certified true
copy of the RTC decision in Civil Case No. 84-23019. This petition for review was docketed as G.R. No.
110677. 23
While SIHI's petition in G.R. No. 110677 was pending before this Court, DELTA filed on 14 February 1994, in CA
G.R. SP No. 29147 of the Court of Appeals, an Omnibus Motion 24to:
1) DECLARE AS NULL AND VOID AB INITIO AND WITHOUT ANY FORCE AND EFFECT
THE ORDER OF RESPONDENT COURT DATED MARCH 11, 1987 ORDERING
THE ISSUANCE OF THE WRIT OF EXECUTION;
2) DECLARE AS NULL AND VOID AB INITIO AND WITHOUT ANY FORCE AND EFFECT
THE WRIT OF EXECUTION ISSUED PURSUANT TO THE ORDER DATED MARCH
11, 1987;
3) ALL OTHER PROCEEDINGS HELD, CONDUCTED AND EXECUTED BY RESPONDENT
SHERIFF IMPLEMENTING THE AFORESAID WRIT OF EXECUTION.
SIHI opposed the motion 25 on grounds that: a) there was a pending appeal by certiorari with this Court, thus
the Court of Appeals was without jurisdiction to entertain the Omnibus Motion; b) the Omnibus Motion was
barred by res judicata; and c) the filing of the Omnibus Motion was a clear act of forum-shopping and should
then be denied outright.
In its resolution of 7 June 1994, the Court of Appeals merely noted the Omnibus Motion and stated:
It appearing that there is a pending petition for review with the Supreme Court of this Court's
Decision dated June 17, 1993, it would be improper for this Court to act on the Omnibus
Motion filed by petitioner Delta Motor Corporation . . . 26
On 18 July 1994 this Court's Second Division issued a resolution 27 in G.R. No. 110677 denying the petition
therein for failure to sufficiently show that the Court of Appeals committed reversible error in the questioned
judgment. SIHI's motion for reconsideration was denied in the resolution of this Court of 21 September 1994. 28
On 26 October 1994 DELTA filed a manifestation and motion 29 to resolve its Omnibus Motion of February 10,
1994.
In its resolution of 5 January 1995, 30 the Court of Appeals denied DELTA's Omnibus Motion, holding:
[T]he matters prayed for in the Omnibus Motion of petitioner Delta Motor Corporation dated
February 10, 1994 and abovequoted are matters which were not raised as issues by petitioner
in the instant petition and, therefore, not within the jurisdiction and power of this Court in the
instant petition to decide. 31
On 27 January 1995 DELTA filed a motion for reconsideration and/or clarification 32 wherein it alleged that: (a)
while it was true that the matters prayed for in the Omnibus Motion of petitioner were not raised in the instant
petition, they were, nevertheless, included in the general prayer in the petition "for such other reliefs and
remedies just and equitable in the premises;" (b) it could not file the Omnibus Motion with the RTC since the
records of Civil Case No. 84-23019 had already been elevated to the Court of Appeals and upon the perfection
of the appeal, the trial court lost jurisdiction over the case; and (c) the matters raised in the Omnibus Motion
were incidental to and included in the appellate jurisdiction of the Court of Appeals.

On the other hand, on 2 February 1995, SIHI filed a motion for clarification 33 wherein it asked for the deletion,
for being mere obiter dictum, the following paragraph in the Resolution of 5 January 1995, to wit:
While it is true that as a necessary consequence the decision of the Court of Appeals dated
January 22, 1991 ruling that the decision in Civil Case No. 84-23019 "has not attained finality
pending service of a copy thereof on petitioner Delta, which may appeal therefrom within the
reglementary period", all proceedings and/or orders arising from the trial court's decision in
Civil Case No. 84-23019 are null and void . . .
SIHI argued that this paragraph was "not necessary to the decision of the case before it" 34 and "cannot be
considered binding for the purpose of establishing precedent;" 35likewise, the Resolution itself did not decide
the incident on its merits or consider and dispose of the issues, nor determine the respective rights of the parties
concerned.
In its resolution of 14 July 1995, 36 the Court of Appeals granted SIHI's motion for clarification and denied
DELTA's motion for reconsideration. As to the latter, it ruled that:
[P]etitioner DELTA is not without remedy, especially considering the ruling of the Court of
Appeals in the first petition for certiorari (CA-G.R. SP No. 23068) which ruled thus:
"WHEREFORE, while the assailed decision was validly rendered by the respondent court,
nonetheless it has not attained finality pending service of a copy thereof on petitioner DELTA,
which may appeal therefrom within the reglementary period."
Clearly, the only issue in this petition (CA-G.R. SP No. 29147) is as to the validity of the
questioned orders of respondent court dated June 3, 1992 (dismissing the notice of appeal
dated November 6, 1991) and the Order dated September 14, 1992 of the same court
(denying the motion for reconsideration filed by the petitioner through counsel). 37
It then decreed to amend its Resolution of 5 January 1995 by deleting the assailed paragraph.
DELTA then filed the instant petition, insisting that the matters raised in the Omnibus Motion were incidental to
and included in the appellate jurisdiction of the Court of Appeals; hence, it had jurisdiction to rule on said motion.
As regards the grant of SIHI's motion to strike out a paragraph in the resolution of 5 January 1995 for
being obiter dictum, DELTA submitted that the latter contained a finding or affirmation of fact, thus could not have
constituted obiter dictum.
After SIHI filed its comment, we gave due course to the petition and required the parties to submit their
respective memoranda. DELTA and SIHI did so on 16 April 1996 and on 13 May 1996, respectively.
After a painstaking review of the record in CA-G.R. SP No. 29147, we are more than convinced that respondent
Court of Appeals committed no reversible error in denying DELTA's Omnibus Motion. The decision of the Court
of Appeals of 17 June 1993 in CA-G.R. SP No. 29147 had long become final insofar as DELTA was concerned,
and it very well knew that the only issues raised therein concerned the trial court's orders of 3 June 1992 and 14
September 1992. As a matter of fact, at the time Delta filed the petition in CA-G.R. SP No. 29147, the orders
sought to be declared null and void in the Omnibus Motion had already been issued, they having been to issued
at the commencement of CA-G.R. SP No. 23068. In short, if DELTA intended such orders to be challenged in
CA-G.R. SP No. 29147, it could have explicitly alleged them as sources of additional causes of action and
prayed for the corresponding affirmative relief therefrom, and if this course of action initially proved unavailing
then DELTA could and should have moved for reconsideration on that aspect. After the finality of the decision in
said case, any attempt to introduce or revive the issue had become procedurally impermissible. Plainly, the
issues raised in the Omnibus Motion could have been allowed during the pendency of said case by way of
amendments to the petition.
Moreover, the Court of Appeals correctly denied petitioner's Omnibus Motion in keeping with
jurisprudence 38 concerning Section 7 of Rule 51 of the Rules of Court on the Procedure in the Court of
Appeals, which mandates that:

Sec. 7. Questions that may be decided. No error which does not affect the jurisdiction over
the subject matter will be considered unless stated in the assignment of errors and properly
argued in the brief, save as the court, at its option, may notice plain errors not specified, and
also clerical errors.
Clearly then, the Court of Appeals could only consider errors raised by petitioner in CA-G.R. SP No. 29147,
which were limited to the trial court's orders of 3 June 1992 and 14 September 1992. These were the only errors
Delta argued extensively in its brief. To allow DELTA's Omnibus Motion which it filed more than eight months
from promulgation of the decision in CA-G.R. SP No. 29147, or long after finality of said case, would result in
abandonment of sound judicial process.
In light of the dispositive portions of the Court of Appeals' decisions of 22 January 1991 in CA-G.R. SP No.
23068, and of 17 June 1993 in CA-G.R. SP No. 29147, we cannot agree with SIHI that DELTA is barred by res
judicata. This conclusion is further fortified by the unequivocal statements of the Court of Appeals in its
challenged resolution of 14 July 1995 that:
[P]etitioner DELTA is not without remedy, especially considering the ruling of the Court of
Appeals in the first petition for certiorari (CA-G.R. SP No. 23068) . . .
xxx xxx xxx
Clearly, the only issue in this petition (CA-G.R. SP No. 29147) is as to the validity of the
questioned orders of respondent court dated June 3, 1992 (dismissing the notice of appeal
dated November 6, 1991) and the Order dated September 14, 1992 of the same court
(denying the motion for reconsideration filed by the petitioner through counsel).
The Court of Appeals likewise did not commit reversible error in deleting the phrase SIHI protested as obiter
dictum.
An obiter dictum has been defined as an opinion expressed by a court upon some question of law which is not
necessary to the decision of the case before it. 39 It is a remark made, or opinion expressed, by a judge, in his
decision upon a cause, "by the way," that is, incidentally or collaterally, and not directly upon the question before
him, or upon a point not necessarily involved in the determination of the cause, or introduced by way of
illustration, or analogy or argument. Such are not binding as precedent. 40
The assailed phrase was indeed obiter dictum as it touched upon a matter not raised by petitioner expressly in
its petition assailing the dismissal of its notice of appeal. It was not a prerequisite in disposing of the
aforementioned issue. The body of the resolution did not contain any discussion on such matter nor mention any
principle of law to support such statement.
WHEREFORE, the instant petition is DISMISSED and the challenged resolutions of 5 January 1995 and 14 July
1995 in CA-G.R. SP No. 29147 are AFFIRMED.
Costs against petitioner.
SO ORDERED.
Narvasa, C .J ., Francisco and Panganiban, JJ ., concur.
Melo, J ., took no part; a member of the CA in CA-G.R. 23068. See footnote no. 5.
||| (Delta Motors Corp. v. Court of Appeals, G.R. No. 121075, [July 24, 1997], 342 PHIL 173-186)

FIRST DIVISION
[G.R. No. 188376. December 14, 2011.]
LAND BANK OF THE PHILIPPINES, petitioner, vs. FEDERICO SUNTAY, as represented
by his Assignee, JOSEFINA LUBRICA, respondent.
DECISION
BERSAMIN, J p:
In Land Bank v. Suntay, 1 the Court has declared that the original and exclusive jurisdiction to
determine just compensation under Republic Act No. 6657(Comprehensive Agrarian Reform Law, or CARL)
pertains to the Regional Trial Court (RTC) as a Special Agrarian Court; that any effort to transfer such
jurisdiction to the adjudicators of the Department of Agrarian Reform Adjudication Board (DARAB) and to
convert the original jurisdiction of the RTC into appellate jurisdiction is void for being contrary to the CARL;
and that what DARAB adjudicators are empowered to do is only to determine in a preliminary manner the
reasonable compensation to be paid to the landowners, leaving to the courts the ultimate power to decide
this question.
Bearing this pronouncement in mind, we grant the petition for review on certiorari and reverse the
decision promulgated on June 5, 2009 by the Court of Appeals (CA) in CA-G.R. SP No. 106104
entitled Land Bank of the Philippines v. Hon. Conchita C. Mias, Regional Agrarian Adjudicator of Region IV,
and Federico Suntay, as represented by his Assignee, Josefina Lubrica, dismissing the petition
for certiorari of Land Bank of the Philippines (Land Bank) on the ground of its being moot and academic.
ANTECEDENTS
Respondent Federico Suntay (Suntay) owned land situated in Sta. Lucia, Sablayan, Occidental
Mindoro with a total area of 3,682.0285 hectares. In 1972, the Department of Agrarian Reform (DAR)
expropriated 948.1911 hectares of Suntay's land pursuant to Presidential Decree No. 27. 2 Petitioner Land
Bank and DAR fixed the value of the expropriated portion at P4,497.50/hectare, for a total valuation of
P4,251,141.68. 3 Rejecting the valuation, however, Suntay filed a petition for determination of just
compensation in the Office of the Regional Agrarian Reform Adjudicator (RARAD) of Region IV, DARAB,
docketed as DARAB Case No. V-0405-0001-00; his petition was assigned to RARAD Conchita Mias
(RARAD Mias). 4 DcHaET
On January 24, 2001, after summary administrative proceeding in DARAB Case No. V-0405-000100, RARAD Mias rendered a decision fixing the total just compensation for the expropriated portion at
P157,541,951.30. Land Bank moved for a reconsideration, but RARAD Mias denied its motion on March
14, 2001. It received the denial on March 26, 2001. 5
On April 20, 2001, Land Bank brought a petition for the judicial determination of just compensation in
the RTC (Branch 46) in San Jose, Occidental Mindoro as a Special Agrarian Court, impleading Suntay and
RARAD Mias. The petition, docketed as Agrarian Case No. R-1241, essentially prayed that the total just
compensation for the expropriated portion be fixed at only P4,251,141.67. 6
G.R. No. 159145
DARAB v. Lubrica
On May 22, 2001, despite the pendency of Agrarian Case No. R-1241 in the RTC, RARAD Mias
issued an order in DARAB Case No. V-0405-0001-00, declaring that her decision of January 24, 2001 had
become final and executory. Land Bank contested the order through a motion for reconsideration, but
RARAD Mias denied the motion for reconsideration on July 10, 2001.
On July 18, 2001, RARAD Mias issued a writ of execution directing the Regional Sheriff of DARAB
Region IV to implement the decision of January 24, 2001. 7 jur2005
On September 12, 2001, Land Bank filed in DARAB a petition for certiorari (with prayer for the
issuance of temporary restraining order (TRO)/preliminary injunction), docketed as DSCA No. 0252, seeking
to nullify the following issuances of RARAD Mias, to wit:

(a) The decision of January 24, 2001 directing Land Bank to pay Suntay just compensation of
P147,541,951.30;
(b) The order dated May 22, 2001 declaring the decision of January 24, 2001 as final and
executory;
(c) The order dated July 10, 2001 denying Land Bank's motion for reconsideration; and
(d) The writ of execution dated July 18, 2001 directing the sheriff to enforce the decision of
January 24, 2001.
On September 12, 2001, DARAB enjoined RARAD Mias from proceeding with the implementation
of the decision of January 24, 2001, and directed the parties to attend the hearing to determine the propriety
of issuing a preliminary or permanent injunction. 8 ESCcaT
On September 20, 2001, Josefina Lubrica (Lubrica), the assignee of Suntay, filed a petition for
prohibition in the CA (CA-G.R. SP No. 66710) to prevent DARAB from proceeding in DSCA No. 0252 by
mainly contending that the CARL did not grant to DARAB jurisdiction over special civil actions for certiorari.
On the same day, the CA granted the prayer for TRO.
On October 3, 2001, DARAB issued a writ of preliminary injunction enjoining RARAD Mias from
implementing the January 24, 2001 decision and the orders incidental to said decision. 9
DARAB submitted its own comment to the CA, arguing that it had issued the writ of injunction under
its power of supervision over its subordinates, like the PARADs and the RARADs.
Land Bank also submitted its own comment, citing the prematurity of the petition for prohibition. 10
On August 22, 2002, the CA promulgated its decision in CA-G.R. SP No. 66710, holding that
DARAB, being a mere formal party, had no personality to file a comment vis- -vis the petition for
prohibition; and that DARAB had no jurisdiction to take cognizance of DSCA No. 1252, considering that its
exercise of jurisdiction over a special civil action for certiorari had no constitutional or statutory basis.
Accordingly, the CA granted the petition for prohibition and perpetually enjoined DARAB from proceeding in
DSCA No. 1252, which the CA ordered dismissed. 11 IaSCTE
Thence, DARAB appealed the adverse CA decision to this Court via petition for review on certiorari,
docketed as G.R. No. 159145 entitled Department of Agrarian Reform Adjudication Board of the Department
of Agrarian Reform, Represented by DAR Secretary Roberto M. Pagdanganan v. Josefina S. Lubrica, in her
capacity as Assignee of the rights and interest of Federico Suntay (DARAB v. Lubrica), insisting that the CA
erred in declaring that DARAB had no personality to file a comment; in holding that DARAB had no
jurisdiction over DSCA No. 0252; and in nullifying the writ of preliminary injunction issued by DARAB in
DSCA No. 0252 for having been issued in violation of the CA's TRO.
On April 29, 2005, the Court promulgated its decision in DARAB v. Lubrica (G.R. No.
159145), 12 denying the petition for review. The Court opined that DARAB's limited jurisdiction as a quasijudicial body did not include the authority to take cognizance of petitions for certiorari, in the absence of an
express grant in R.A. No. 6657, Executive Order (E.O.) No. 229, and E.O. No. 129-A.
G.R. No. 157903
Land Bank v. Suntay
In the meanwhile, in Agrarian Case No. R-1241, Suntay filed a motion to dismiss, claiming that Land
Bank's petition for judicial determination of just compensation had been filed beyond the 15-day
reglementary period prescribed in Section 11, Rule XIII of the New Rules of Procedure of DARAB; and that,
by virtue of such tardiness, RARAD Mias' decision had become final and executory. 13
The RTC granted Suntay's motion to dismiss on August 6, 2001 on that ground.
Land Bank sought reconsideration, maintaining that its petition for judicial determination of just
compensation was a separate action that did not emanate from the case in the RARAD.
Nonetheless, the RTC denied Land Bank's motion for reconsideration on August 31, 2001. 14

On September 10, 2001, Land Bank filed a notice of appeal in Agrarian Case No. R-1241, but the
RTC denied due course to the notice of appeal on January 18, 2002, pointing out that the proper mode of
appeal was by petition for review pursuant to Section 60 of the CARL.
The RTC denied Land Bank's motion for reconsideration on March 8, 2002. 15 HCSEcI
Thereupon, Land Bank assailed in the CA the RTC's orders dated January 18, 2002 and March 8,
2002 via a special civil action certiorari (CA-G.R. SP No. 70015), alleging that the RTC thereby committed
grave abuse of discretion amounting to lack or excess of jurisdiction in denying due course to its notice of
appeal; and contending that decisions or final orders of the RTCs, acting as Special Agrarian Courts, were
not appealable to the CA through a petition for review but through a notice of appeal.
On July 19, 2002, the CA promulgated its decision in CA-G.R. SP No. 70015, granting Land Bank's
petition for certiorari; nullifying the RTC's orders dated January 18, 2002 and March 8, 2002; allowing due
course to Land Bank's notice of appeal; and permanently enjoining the RTC from enforcing the nullified
orders, and the RARAD from enforcing the writ of execution issued in DARAB Case No. V-0405-0001-00. 16
Thereafter, upon Suntay's motion for reconsideration, the CA reversed itself through the amended
decision dated February 5, 2003, 17 and dismissed Land Bank's petition for certiorari, thuswise:
WHEREFORE, premises considered, the present Motion for Reconsideration is hereby
GRANTED. Consequently, the present petition is hereby DISMISSED.
The injunction issued by this Court enjoining (a) respondent Executive Judge from enforcing
his Orders dated January 18, 2002 and March 8, 2002 in Agrarian Case No. R-1241; and (b)
respondent Regional Agrarian Reform Adjudicator Conchita S. Mias from enforcing the Writ
of Execution dated July 18, 2001 issued in DARAB Case No. V-0405-0001-00, are hereby
REVOKED and SET ASIDE.
SO ORDERED.
On April 10, 2003, the CA denied the Land Bank's motion for reconsideration. 18
On May 6, 2003, Land Bank appealed to the Court, docketed as G.R. No. 157903, entitled Land
Bank of the Philippines v. Federico Suntay, Represented by his Assignee, Josefina Lubrica (Land Bank v.
Suntay). 19
On October 12, 2005, the Court issued a TRO upon Land Bank's urgent motion to stop the
implementation of RARAD Mias' decision dated January 24, 2001 pending the final resolution of G.R. No.
157903. 20
On October 11, 2007, this Court promulgated its decision in Land Bank v. Suntay (G.R. No.
157903), 21 viz.:
The crucial issue for our resolution is whether the RTC erred in dismissing the Land Bank's
petition for the determination of just compensation.
It is clear that the RTC treated the petition for the determination of just compensation as
an appeal from the RARAD Decision in DARAB Case No. V-0405-0001-00. In dismissing the
petition for being filed out of time, the RTC relied on Section 11, Rule XIII of the DARAB New
Rules of Procedure which provides:
Section 11. Land Valuation and Preliminary Determination and Payment of Just
Compensation. The decision of the Adjudicator on land valuation and preliminary
determination and payment of just compensation shall not be appealable to the Board
[Department of Agrarian Reform Adjudication Board (DARAB)] but shall be brought
directly to the Regional Trial Courts designated as Special Agrarian Courts within
fifteen (15) days from receipt of the notice thereof. Any party shall be entitled to only
one motion for reconsideration.
The RTC erred in dismissing the Land Bank's petition. It bears stressing that the petition
is not an appeal from the RARAD final Decision but an original action for the determination
of the just compensation for respondent's expropriated property, over which the RTC

has original and exclusive jurisdiction. This is clear from Section 57 of R.A. No. 6657 which
provides: IcTEAD
Section 57. Special Jurisdiction. The Special Agrarian Courts [the designated
Regional Trial Courts] shall have original and exclusive jurisdiction over all
petitions for the determination of just compensation to landowners, and the
prosecution of all criminal offenses under this Act. The Rules of Court shall apply to all
proceedings before the Special Agrarian Courts, unless modified by this Act.
The Special Agrarian Courts shall decide all appropriate cases under their special
jurisdiction within thirty (30) days from submission of the case for decision. (Emphasis
supplied)
Parenthetically, the above provision is not in conflict with Section 50 of the same R.A. No.
6657 which states:
Section 50. Quasi-judicial Powers of the DAR. The DAR is hereby vested with
primary jurisdiction to determine and adjudicate agrarian reform matters and shall
have exclusive original jurisdiction over all matters involving the implementation of
agrarian reform, except those falling under the exclusive jurisdiction of the
Department of Agriculture (DA) and the Department of Environment and Natural
Resources (DENR) . . . .
In Republic of the Philippines v. Court of Appeals, we held that Section 50 must be construed
in harmony with Section 57 by considering cases involving the determination of just
compensation and criminal cases for violations of R.A. No. 6657 as excepted from the
plenitude of power conferred upon the DAR. Indeed, there is a reason for this distinction. The
DAR is an administrative agency which cannot be granted jurisdiction over cases of eminent
domain (such as taking of land under R.A. No. 6657) and over criminal cases. Thus, in Land
Bank of the Philippines v. Celada, Export Processing Zone Authority v. Dulay and Sumulong v.
Guerrero, we held that the valuation of property in eminent domain is essentially a judicial
function which cannot be vested in administrative agencies. Also, in Scoty's Department
Store, et al. v. Micaller, we struck down a law granting the then Court of Industrial Relations
jurisdiction to try criminal cases for violations of the Industrial Peace Act.
The procedure for the determination of just compensation cases under R.A. No. 6657, as
summarized in Landbank of the Philippines v. Banal, is that initially, the Land Bank is
charged with the responsibility of determining the value of lands placed under land reform and
the compensation to be paid for their taking under the voluntary offer to sell or compulsory
acquisition arrangement. The DAR, relying on the Land Bank's determination of the land
valuation and compensation, then makes an offer through a notice sent to the landowner. If
the landowner accepts the offer, the Land Bank shall pay him the purchase price of the land
after he executes and delivers a deed of transfer and surrenders the certificate of title in favor
of the government. In case the landowner rejects the offer or fails to reply thereto, the DAR
adjudicator conducts summary administrative proceedings to determine the compensation for
the land by requiring the landowner, the Land Bank and other interested parties to submit
evidence as to the just compensation for the land. A party who disagrees with the Decision of
the DAR adjudicator may bring the matter to the RTC designated as a Special Agrarian Court
for the determination of just compensation. In determining just compensation, the RTC is
required to consider several factors enumerated in Section 17 of R.A. No. 6657. These factors
have been translated into a basic formula in DAR Administrative Order (A.O.) No. 6, Series of
1992, as amended by DAR A.O. No. 11, Series of 1994, issued pursuant to the DAR's rulemaking power to carry out the object and purposes of R.A. No. 6657.
xxx xxx xxx
Obviously, these factors involve factual matters which can be established only during
a hearing wherein the contending parties present their respective evidence. In fact, to

underscore the intricate nature of determining the valuation of the land, Section 58 of
the same law even authorizes the Special Agrarian Courts to appoint commissioners
for such purpose. ISHCcT
In the instant case, the Land Bank properly instituted its petition for the determination of just
compensation before the RTC in accordance with R.A. No. 6657. The RTC erred in dismissing
the petition. To repeat, Section 57 of R.A. No. 6657 is explicit in vesting the RTC, acting as a
Special Agrarian Court, "original and exclusive jurisdiction over all petitions for the
determination of just compensation to landowners." As we held in Republic of the Philippines
v. Court of Appeals:
. . . . It would subvert this "original and exclusive" jurisdiction of the RTC for the DAR
to vest original jurisdiction in compensation cases in administrative officials and make
the RTC an appellate court for the review of administrative decisions.
Consequently, although the new rules [Section 11, Rule XIII of the DARAB New Rules
of Procedure] speak of directly appealing the decision of adjudicators to the RTCs
sitting as Special Agrarian Courts, it is clear from Section 57 that
the original and exclusive jurisdiction to determine such cases is in the RTCs. Any
effort to transfer such jurisdiction to the adjudicators and to convert the
original jurisdiction of the RTCs into appellate jurisdiction would be contrary to
Section 57 and therefore would be void. What adjudicators are empowered to do is
only to determine in a preliminary manner the reasonable compensation to be paid to
landowners, leaving to the courts the ultimate power to decide this question.
(Emphasis supplied)
WHEREFORE, we GRANT the instant Petition for Review on Certiorari. The assailed
Amended Decision dated February 5, 2003 and Resolution dated April 10, 2003 of the Court
of Appeals in CA-G.R. SP No. 70015 are REVERSED. The Orders dated January 18, 2002
and March 8, 2002 issued by the RTC in Agrarian Case No. R-1241 are NULLIFIED. The
RTC isORDERED to conduct further proceedings to determine the just compensation of
respondent's expropriated property in accordance with the guidelines set by this Court
inLandbank of the Philippines v. Banal.
No pronouncement as to costs. cCSTHA
SO ORDERED. 22
Suntay sought reconsideration, invoking the pronouncement in DARAB v. Lubrica (G.R. No.
159145) to the effect that "the RARAD Decision had already attained finality in accordance with the abovequoted rule, notwithstanding Land Bank's recourse to the special agrarian court." 23
On
January
30,
2008,
however,
the
Court
denied
Suntay's
motion
reconsideration. 24 Accordingly, the decision in Land Bank v. Suntay became final and executory.

for

Second Execution in
DARAB Case No. V-0405-0001-00
On September 14, 2005, notwithstanding the pendency of Land Bank v. Suntay (G.R. No. 157903)
in this Court, RARAD Mias granted Suntay's ex parte motion for the issuance of an alias writ of execution
by citing the pronouncement in DARAB v. Lubrica (G.R. No. 159145) to the effect that her decision dated
January 24, 2001 had attained finality in accordance with DARAB's rules of procedure. 25
Acting pursuant to the alias writ of execution, the DARAB sheriffs issued and served the following
notices on the dates indicated herein, to wit: AHCETa
(a) A notice of demand to Land Bank on September 15, 2005; 26
(b) A notice of levy to Land Bank on September 21, 2005; 27
(c) A notice of levy to Bank of the Philippine Islands 28 and to Hongkong Shanghai Bank
Corporation both on September 28, 2005; 29 and

(d) An order to deliver "so much of the funds" in its custody "sufficient to satisfy the final
judgment" to Land Bank on October 5, 2005. 30
The moves of the sheriffs compelled Land Bank to file an urgent verified motion for the issuance of a
TRO or writ of preliminary injunction in Land Bank v. Suntay (G.R. No. 157903).
On October 12, 2005, acting on Land Bank's urgent motion, the Court resolved in Land Bank v.
Suntay (G.R. No. 157903), viz.:
(a) to issue a TEMPORARY RESTRAINING ORDER prayed for, effective immediately,
enjoining and restraining Hon. Conchita C. Mias or the Regional Agrarian Reform
Adjudicator (RARAD) concerned, from issuing an alias writ of execution implementing
the RARAD decision dated January 24, 2000, until further orders from this court;
andIcaHTA
(b) to require the petitioner to POST a CASH BOND or a SURETY BOND from a reputable
bonding company of indubitable solvency in the amount of FIVE HUNDRED
THOUSAND PESOS (P500,000.00), within five (5) days from notice, otherwise, the
temporary restraining order herein issued shall AUTOMATICALLY be lifted. Unless
and until the Court directs otherwise, the bond shall be effective from its approval by
the Court until this case is finally decided, resolved or terminated. 31
On October 24, 2005, the Court directed the parties in Land Bank v. Suntay (G.R. No. 157903) to
maintain the status quo ante, 32 thus:
G.R. No. 157903 . . . Acting on the petitioner's very urgent manifestation and omnibus
motion dated October 21, 2005, the Court Resolves to DIRECT the parties to maintain
theSTATUS QUO prior to the issuance of the Alias Writ of Execution dated September 14,
2005. All actions done in compliance or in connection with the said Writ issued by Hon.
Conchita C. Mias, Regional Agrarian Reform Adjudicator (RARAD), are hereby DEEMED
QUASHED, and therefore, of no force and effect.
On the same day of October 24, 2005, however, the sheriffs held a public auction of Land Bank's
levied shares of stock in the Philippine Long Distance Telephone Company (PLDT) and Manila Electric
Company (MERALCO) at the Office of the DARAB Regional Clerk in Mandaluyong City. In that public
auction, Lubrica, the lone bidder, was declared the highest bidder. 33
On October 25, 2005, the same sheriffs resumed the public auction of Land Bank's remaining PLDT
shares of stock and First Gen Corporation bonds. Lubrica was again declared the highest bidder. 34 The
sheriffs then issued two certificates of sale in favor of Lubrica.
On October 25, 2005, RARAD Mias reversed herself and quashed all acts done pursuant to the
writ of execution, 35 viz.:
This refers to the Resolution of the Third Division of the Supreme Court dated October 24,
2005 in G.R. No. 157903 (Land Bank of the Philippines vs. Federico Suntay, Represented by
His Assignee, Josefina Lubrica) directing the parties to maintain the STATUS QUO prior to the
issuance of the Alias Writ of Execution dated September 14, 2005; and that all actions done in
compliance or in connection with said Writ issued by Hon. Conchita C. Mias, Regional
Agrarian Reform Adjudicator (RARAD) are hereby DEEMED QUASHED, and therefore, of no
force and effect.
The Sheriffs and all parties in this case are ordered to strictly comply with this Order
immediately. SIcCTD
SO ORDERED.
As earlier stated, on October 11, 2007, the Court resolved Land Bank v. Suntay (G.R. No. 157903)
in favor of Land Bank. 36
This Case (G.R. No. 188376)

On October 29, 2008, Suntay presented to RARAD Mias in DARAB Case No. V-0405-0001-00 his
urgent ex parte manifestation and motion to resume interrupted execution, 37 citing Land Bank v.
Martinez (G.R. No. 169008, July 31, 2008, 560 SCRA 776).
Immediately, on October 30, 2008, RARAD Mias granted Suntay's urgent ex parte manifestation
and motion, and ordered the DARAB sheriffs to resume their implementation of the alias writ of execution
issued in DARAB Case No. V-0405-0001-00, stating:
The basis of the motion, the case of Land Bank vs. Raymunda Martinez (supra) indubitably
clarified that "the adjudicator's decision on land valuation attained finality after the lapse of the
15-day period citing the case of Department of Agrarian Reform Adjudication Board vs.
Lubrica in G.R. No. 159145 promulgated on April 29, 2005. Movant in this case therefore is
correct that the Decision in the Land Bank case of the Philippines vs. Raymunda
Martinez resolved the conflict by rendering a Decision upholding the rulings of the Second
Division of the Supreme Court in G.R. No. 159145 entitled Department of Agrarian Reform
Adjudication Board (DARAB) of the Department of Agrarian Reform (DAR) represented by
DAR Secretary, Roberto M. Pagdanganan vs. Josefina Lubrica in her capacity as Assignee of
rights and interest of Federico Suntay and striking down as erroneous the rulings of the Third
Division in G.R. No. 157903 entitled Land Bank of the Philippines vs. Federico Suntay, et al.
The ruling in the case of Land Bank of the Philippines vs. Raymunda Martinez which upheld
the Decision in Lubrica having attained finality, the Status Quo Order issued by the Third
Division in G.R. No. 157903 is now rendered ineffective.
WHEREFORE, premises considered, the instant motion is hereby GRANTED.
Sheriffs Maximo Elejerio and Juanita Baylon are hereby ordered to resume the interrupted
execution of the Alias Writ issued in this case on September 14, 2005. cTECIA
SO ORDERED. 38
The DARAB sheriffs forthwith served a demand to comply dated October 30, 2008 on the Philippine
Depository and Trust Corporation (PDTC) and Securities Transfer Services, Inc. (STSI). 39
By letter dated October 31, 2008, PDTC notified Land Bank about its being served with the demand
to comply and about its action thereon, including an implied request for Land Bank to "uplift" the
securities. 40
Also on October 31, 2008, PDTC filed a manifestation and compliance in the office of the RARAD,
Region IV, stating that it had already "issued a written notice" to Land Bank "to uplift the assets involved"
and that "it ha(d) caused the subject assets to be outside the disposition" of Land Bank. 41
In response, Land Bank wrote back on November 3, 2008 to request PDTC to disregard the DARAB
sheriffs' demand to comply. 42
PDTC responded to Land Bank that it was not in the position to determine the legality of the demand
to comply, and that it was taking the necessary legal action. 43
On November 10, 2008, PDTC sent a supplemental letter to Land Bank reiterating its previous
letter. 44
Given the foregoing, Land Bank commenced on November 12, 2008 a special civil action
for certiorari in the CA (CA-G.R. SP No. 106104), alleging that RARAD Mias had "committed grave abuse
of discretion amounting to lack or in excess of jurisdiction in rendering ex parte the assailed Order dated
October 30, 2008 as it varies, modifies or alters the Supreme Court Decision dated October 11, 2007, which
had become final and executory;" and that the DARAB sheriffs had "committed grave abuse of discretion
amounting to lack or excess of jurisdiction in issuing to, and serving on, the Philippine Depository and Trust
Corporation, a copy of the Demand to Comply dated October 30, 2008 notwithstanding the unquestioned
finality of the Supreme Court's decision dated October 11, 2007." 45 TCADEc
Suntay submitted a comment and opposed the issuance of a TRO. 46

On November 28, 2008, before the CA could act on Land Bank's application for TRO, MERALCO
cancelled Land Bank's 42,002,750 shares of stock and issued new stock certificates in the name of Lubrica.
MERALCO recorded the transfer of ownership of the affected stocks in its stock and transfer book. All such
acts of MERALCO were done in compliance with the demand to comply by the DARAB sheriffs pursuant to
the certificate of sheriff's sale dated October 24, 2005 and the certificate authorizing registration dated
November 20, 2008 (respecting Land Bank's MERALCO shares) issued in favor of Lubrica. 47
Without yet being aware of the transfers, the CA issued a TRO on December 4, 2008 to prevent the
implementation of RARAD Mias' order dated October 30, 2008. 48Land Bank then sought the approval of
its bond for that purpose. 49
On December 4, 2008, MERALCO communicated to the CA its cancellation of Land Bank's
certificates of MERALCO stocks on November 28, 2008 and its issuance of new stock certificates in the
name of Lubrica. 50
Learning of the cancellation of its stock certificates and the transfer of its MERALCO shares in the
name of Lubrica, Land Bank filed on December 12, 2008 its very urgent manifestation and omnibus motion,
praying that the CA's TRO issued on December 4, 2008 be made to cover any and all acts done pursuant to
the assailed order dated October 30, 2008 and the demand to comply dated October 30, 2008. Land Bank
further prayed that the cancellation of its certificates of MERALCO shares be invalidated and the transfer of
the shares in favor of Lubrica be quashed, and that the parties be directed to maintain the status quo
ante. 51 HESIcT
On December 17, 2008, Land Bank presented a very urgent motion to resolve and supplemental
motion, seeking to expand the scope of the TRO earlier issued; to restrain the Philippine Stock Exchange
(PSE) from allowing the trading of its (Land Bank) entire MERALCO shares, and the Corporate Secretary of
MERALCO from recording or registering the transfer of ownership of Land Bank's MERALCO shares to
other parties in MERALCO's stock and transfer book; to invalidate the cancellation of the certificates of
MERALCO shares and to quash the transfer in favor of Lubrica and all subsequent transfers to other parties;
to direct the parties and all concerned persons and entities to maintain the status quo; and to declare all acts
done pursuant to the assailed order and the demand to comply null and void and of no force and effect. 52
On December 24, 2008, the CA denied Land Bank's very urgent motion to resolve and supplemental
motion. 53
In the meantime, DAR administratively charged and preventively suspended RARAD Mias for
issuing the October 30, 2008 order, and replaced her with RARAD Marivic Casabar (RARAD Casabar) in
RARAD Region IV. 54
On December 15, 2008, RARAD Casabar recalled RARAD Mias order dated October 30, 2008. 55
On December 17, 2008, RARAD Casabar directed: CDcHSa
(a) MERALCO to cancel the stock certificates issued to Lubrica and to any of her transferees or
assignees, and to restore the ownership of the shares to Land Bank and to record the restoration in
MERALCO's stock and transfer book; and
(b) PSE, PDTC, STSI, the Philippine Dealing System Holdings Corporation and Subsidiaries (PDS
Group), and any stockbroker, dealer, or agent of MERALCO shares to stop trading or dealing on the
shares. 56
On June 5, 2009, the CA promulgated a resolution in CA-G.R. SP No. 106104, dismissing Land
Bank's petition for certiorari for being moot and academic, 57 citing the recall by RARAD Casabar of RARAD
Mias's order of October 30, 2008.
On June 23, 2009, Land Bank, through the Office of the Government Corporate Attorney, filed in this
Court a motion for extension of time to file petition for review oncertiorari, seeking additional time of 30 days
within which to file its petition for review on certiorari. 58
On July 24, 2009, before the Court could take any action on its motion for extension of time to file
petition for review, Land Bank moved to withdraw the motion, allegedly because the CA still retained

jurisdiction over CA-G.R. SP No. 106104 due to Lubrica's having meanwhile filed the following motions and
papers in CA-G.R. SP No. 106104, namely:
(a) Motion for reconsideration or for clarificatory ruling dated June 23, 2009, a copy of which
Land Bank received on July 2, 2009;
(b) Additional arguments in support of the motion for reconsideration and for clarificatory ruling
dated July 1, 2009, a copy of which Land Bank received on July 8, 2009;
(c) Motion for leave of court to file the attached manifestation dated July 8, 2009, a copy of
which Land Bank received on July 13, 2009;
(d) Manifestation dated July 8, 2009, a copy of which Land Bank received on July 13, 2009;
and
(e) Motion to direct RARAD Casabar to explain why she had issued her orders of December
15, 2008 and December 17, 2008, a copy of which Land Bank received on July 20,
2009. 59
On July 31, 2009, Land Bank filed a very urgent ex parte motion for execution dated July 30, 2009 in
DARAB, seeking the execution of RARAD Casabar's orders of December 15, 2008 and December 17,
2008. 60
On August 7, 2009, Land Bank filed in this Court: (a) a motion to withdraw its motion to withdraw
motion for extension of time to file petition for review on certiorari;and (b) a motion for leave to file and to
admit 61 the attached petition for review on certiorari. 62 ICTHDE
On September 9, 2009, the Court denied Land Bank's motion to withdraw its motion to withdraw
motion for extension of time to file petition for review on certiorari, but granted Land Bank's motion for leave
to file and to admit the attached petition for review on certiorari. The Court required Lubrica to comment on
the petition for review, and Land Bank to comply with A.M. No. 07-6-5-SC dated July 10, 2007. 63
On September 30, 2009, the CA denied Lubrica's motion to direct RARAD Casabar to explain why
she had issued her orders of December 15, 2008 and December 17, 2008, among others. 64
On October 14, 2009, Lubrica filed a motion for leave to file motion to dismiss, 65 stating that Land
Bank's petition for certiorari had been filed out of time and that the assailed order of RARAD Mias had
been affirmed by the final judgment in DARAB v. Lubrica (G.R. No. 159145), and had been supported by the
ruling in Land Bank v. Martinez, G.R. No. 169008, July 31, 2008, 560 SCRA 776.
On May 5, 2010, Land Bank filed an urgent verified motion for the issuance of a TRO or writ of
preliminary injunction, seeking thereby to enjoin MERALCO, its Corporate Secretary, and its Assistant
Corporate Secretary, pending the proceedings and until the resolution of the case, from releasing on May
11, 2010 and thereafter the cash dividends pertaining to the disputed shares in favor of Lubrica or any
person acting on her behalf. 66 DaEcTC
Lubrica opposed Land Bank's motion. 67
Todate, the Court has taken no action on Land Bank's urgent verified motion.
ISSUES
Land Bank contends that:
The Court of Appeals acted not in accord with law and with the applicable jurisprudence when
it dismissed the petition a quo on purely technical grounds.
A.
Contrary to the findings of the Court of Appeals, DARAB v. Lubrica is not the law of
the case insofar as the issue on the proper procedure to follow in the determination of
the just compensation is concerned.
B.

The issue before the Court of Appeals, whether the order dated 30 October 2008 was
issued with grave abuse of discretion, has not been rendered moot and academic
with the subsequent issuance of the order dated December 15, 2008.
C.
The Court of Appeals erred when in gave its implicit imprimatur to the irregular
procedure for execution, which the RARAD and the DARAB sheriffs adopted, in gross
violation of Republic Act No. 6657 and the DARAB Rules of Procedure. 68
On the other hand, Lubrica proposes as issue:
Is the January 24, 2001 Decision of RARAD Conchita Mias final and executory? 69
As we see it, then, the Court has to resolve the following, to wit:
1. Whether or not RARAD Casabar's orders dated December 15, 2008 and December 18,
2008 rendered Land Bank's petition for certiorari moot and academic;
2. Whether or not RARAD Mias' order dated October 30, 2008 was valid; and
3. Whether or not the manner of execution of RARAD Mias' order dated October 30, 2008
was lawful.
RULING
The appeal has merit.
I.
Whether or not RARAD Casabar's orders
dated December 15, 2008 and December 18, 2008
rendered Land Bank's petition for certiorari moot and academic
The CA rationalized its dismissal of Land Bank's petition for certiorari in the following manner:
It must be stressed that this Court is dismissing the instant petition not because it has
lost jurisdiction over the case but because the case has already become moot and
academic. In other words, this Court is dismissing the case out of practicality because
proceeding with the merit of the case would only be an exercise in futility. This is
because whichever way this Court would later decide the case would only be rendered
immaterial and ineffectual by the foregoing new Orders of the RARAD. To elaborate, a
denial of the instant petition would mean that We are sustaining the Mias' Order dated
October 30, 2008 which, as matters stand right now, had been superseded by the two new
orders of the RARAD. Will sustaining RARAD Mias' Order have the effect of nullifying the
two new orders of RARAD Casabar? The answer is still in the negative. On the other hand,
the ultimate result of granting this petition would be that the two new Orders would still govern,
which is already the prevailing situation at this point. Indeed, the dismissal of the case on this
ground is in itself an exercise by the Court of its jurisdiction over the case. 70 ISCHET
We cannot uphold the CA.
To the extent that it nullified and recalled RARAD Mias' October 30, 2008 order, RARAD Casabar's
December 15, 2008 order seemingly mooted Land Bank's petition forcertiorari (whereby Land Bank
contended that RARAD Mias, through her order dated October 30, 2008, could not disregard or invalidate
the decision promulgated on October 11, 2007 in G.R. No. 157903, and that the monies, funds, shares of
stocks, and accounts of Land Bank, which did not form part of the Agrarian Reform Fund (ARF), could not
be levied upon, garnished, or transferred to Lubrica in satisfaction of RARAD Mias' January 24, 2000
decision). 71
At first glance, indeed, RARAD Casabar's December 15, 2008 order seemingly rendered the reliefs
prayed for by the petition for certiorari unnecessary and moot. An issue is said to become moot and
academic when it ceases to present a justiciable controversy, so that a declaration on the issue would be of
no practical use or value. 72

However, the application of the moot-and-academic principle is subject to several exceptions

already recognized in this jurisdiction. In David v. Macapagal-Arroyo, 73 the Court has declared that the
moot-and-academic principle is not a magical formula that automatically dissuades courts from resolving
cases, because they will decide cases, otherwise moot and academic, if they find that:
(a) There is a grave violation of the Constitution;
(b) The situation is of exceptional character, and paramount public interest is involved;
(a) The constitutional issue raised requires formulation of controlling principles to guide the
Bench, the Bar, and the public; or
(b) A case is capable of repetition yet evading review.
In addition, in Province of North Cotabato v. Government of the Republic of the Philippines Peace
Panel on Ancestral Domain (GRP), 74 the Court has come to consider a voluntary cessation by the
defendant or the doer of the activity complained of as another exception to the moot-and-academic principle,
the explanation for the exception being that:
. . . once a suit is filed and the doer voluntarily ceases the challenged conduct, it does not
automatically deprive the tribunal of power to hear and determine the case and does not
render the case moot especially when the plaintiff seeks damages or prays for injunctive relief
against the possible recurrence of the violation.
The exception of voluntary cessation of the activity without assuring the non-recurrence of the
violation squarely covers this case. Hence, the CA's dismissal of CA-G.R. SP No. 106104 on the ground of
mootness must be undone. TcDAHS
Yet another reason why the Court should still resolve derives from the fact that the supervening
RARAD Casabar's recall order did not at all resolve and terminate the controversy between the parties. The
CA itself conceded that Lubrica could still assail the validity of RARAD Casabar's recall order. 75 That
possibility underscores the need to definitely resolve the controversy between the parties to avoid further
delay. As herein shown, this appeal is the third time that the intervention of the Court has been invoked
regarding the controversy, the earlier ones being DARAB v. Lubrica (G.R. No. 159145) and Land Bank v.
Suntay (G.R. No. 157903). The need to put an end to the controversy thus becomes all the more pressing
and practical.
We further discern that the parties have heretofore acted to advance their respective interests and
claims against each other by relying on seemingly conflicting pronouncements made in DARAB v.
Lubrica (G.R. No. 159145) and Land Bank v. Suntay (G.R. No. 157903). Their reliance has unavoidably
spawned and will continue to spawn confusion about their rights and can occasion more delays in the
settlement of their claims. acHITE
The Court does not surely desire confusion and delay to intervene in any litigation, because the
Court only aims to ensure to litigants a just, speedy, and inexpensive administration of justice. Thus, the
Court feels bound to undo the CA's deeming Land Bank's petition for certiorari mooted by RARAD
Casabar's recall order. Verily, RARAD Mias' assailed order, until and unless its legality is declared and
settled by final judgment, may yet be revived, and the judicial dispute between the parties herein may then
still resurrect itself.
II.
Whether or not RARAD Mias' order
dated October 30, 2008 was valid
The controversy is traceable to the October 30, 2005 Order of RARAD Mias directing the DARAB
sheriffs to resume the implementation of the alias writ of execution she had issued in DARAB Case No. V0405-0001-00. She predicated her order on the following pronouncement made in Land Bank v.
Martinez, 76 viz.:
To resolve the conflict in the rulings of the Court, we now declare herein, for the guidance of
the bench and the bar, that the better rule is that stated in Philippine Veterans Bank,reiterated

in Lubrica and in the August 14, 2007 Decision in this case. Thus, while a petition for the
fixing of just compensation with the SAC is not an appeal from the agrarian reform
adjudicator's decision but an original action, the same has to be filed within the 15-day period
stated in the DARAB Rules; otherwise, the adjudicator's decision will attain finality. This rule is
not only in accord with law and settled jurisprudence but also with the principles of justice and
equity. Verily, a belated petition before the SAC, e.g., one filed a month, or a year, or even a
decade after the land valuation of the DAR adjudicator, must not leave the dispossessed
landowner in a state of uncertainty as to the true value of his property. 77
Land Bank contends, however, that Land Bank v. Martinez did not vary, alter, or disregard the
judgment in Land Bank v. Suntay(G.R. No. 157903).
Lubrica counters that instead of Land Bank v. Suntay (G.R. No. 157903) being applicable, it
was DARAB v. Lubrica (G.R. No. 159145) that had become immutable and unalterable.
Lubrica is grossly mistaken.
Through the resolution promulgated on January 30, 2008 in Land Bank v. Suntay (G.R. No.
157903), the Court denied with finality Suntay's motion for reconsideration filed against the October 11, 2007
decision. The decrees in Land Bank v. Suntay (G.R. No. 157903) were to nullify the order dated January 18,
2002 (denying due course to Land Bank's notice of appeal of the dismissal of its petition for determination of
just compensation upon Suntay's motion to dismiss) and the order dated March 8, 2002 (denying Land
Bank's motion for reconsideration), both issued by the RTC in Agrarian Case No. R-1241; and to order the
RTC to "conduct further proceedings to determine the just compensation of (Suntay)'s expropriated property
in accordance with the guidelines set by this Court in Landbank of the Philippines v. Banal."
In effect, Land Bank v. Suntay (G.R. No. 157903) set aside the decision of RARAD Mias dated
January 24, 2000 fixing the just compensation. The finality of the judgment in Land Bank v. Suntay (G.R. No.
157903) meant that the decrees thereof could no longer be altered, modified, or reversed even by the
Court en banc. Nothing is more settled in law than that a judgment, once it attains finality, becomes
immutable and unalterable, and can no longer be modified in any respect, even if the modification is meant
to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the
modification is attempted to be made by the court rendering it or by the highest court of the land. 78 This
rule rests on the principle that all litigation must come to an end, however unjust the result of error may
appear; otherwise, litigation will become even more intolerable than the wrong or injustice it is designed to
correct. 79 aSTAHD
Resultantly, Lubrica cannot invoke the pronouncement in Land Bank v. Martinez in order to bar the
conclusive effects of the judicial result reached in Land Bank v. Suntay (G.R. No. 157903).
II. a.
Land Bank v. Suntay (G.R. No. 157903)
is now the law of the case
We underscore that Land Bank v. Suntay (G.R. No. 157903) was the appropriate case for the
determination of the issue of the finality of the assailed RARAD Decision by virtue of its originating from
Land Bank's filing on April 20, 2001 of its petition for judicial determination of just compensation against
Suntay and RARAD Mias in the RTC sitting as a Special Agrarian Court. Therein, Suntay filed a motion to
dismiss mainly on the ground that the petition had been filed beyond the 15-day reglementary period as
required by Section 11, Rule XIII of the Rules of Procedure of DARAB. After the RTC granted the motion to
dismiss, Land Bank appealed to the CA, which sustained the dismissal. As a result, Land Bank came to the
Court (G.R. No. 157903), and the Court then defined the decisive issue to be: "whether the RTC erred in
dismissing the Land Bank's petition for the determination of just compensation." 80
The Court ruled in favor of Land Bank. For both Land Bank and Suntay (including his assignee
Lubrica), the holding in Land Bank v. Suntay (G.R. No. 157903) became the law of the case that now
controlled the course of subsequent proceedings in the RTC as a Special Agrarian Court. In Cucueco v.
Court of Appeals, 81 the Court defined law of the case as "the opinion delivered on a former appeal." Law of

the case is a term applied to an established rule that when an appellate court passes on a question and
remands the case to the lower court for further proceedings, the question there settled becomes the law of
the case upon subsequent appeal. It means that whatever is once irrevocably established as the controlling
legal rule or decision between the same parties in the same case continues to be the law of the case,
whether correct on general principles or not, so long as the facts on which such decision was predicated
continue to be the facts of the case before the court. 82 With the pronouncement in G.R. No. 157903 having
undeniably become the law of the case between the parties, we cannot pass upon and rule again on the
same legal issue between the same parties.
II. b.
Land Bank v. Martinez is neither
applicable nor binding on the parties herein
Suntay's reliance on Land Bank v. Martinez (G.R. No. 169008, July 31, 2008, 560 SCRA 776) is
unavailing for the simple reason that the pronouncement was absolutely unrelated to the present
controversy. ECSHAD
Land Bank v. Martinez concerned a different set of facts, a different set of parties, and a different
subject matter; it was extraneous to the present matter, or to DARAB v. Lubrica (G.R. No. 159145) and Land
Bank v. Suntay (G.R. No. 157903). Land Bank and Suntay (and his assignee Josefina Lubrica) were not
parties in Land Bank v. Martinez, rendering the pronouncement inapplicable to them now.
At best, Land Bank v. Martinez may only guide the resolution of similar controversies, but only
prospectively. We note that Land Bank v. Suntay (G.R. No. 157903) was promulgated in October 11, 2007,
while Land Bank v. Martinez was promulgated on July 31, 2008. The rule followed in this jurisdiction is that a
judicial interpretation that varies from or reverses another is applied prospectively and should not apply to
parties who relied on the old doctrine and acted in good faith. To hold otherwise is to deprive the law of its
quality of fairness and justice, for, then, there is no recognition of what had transpired prior to such
adjudication. 83
Accordingly, if posterior changes in doctrines of the Court cannot retroactively be applied to nullify a
prior final ruling in the same proceeding where the prior adjudication was had, 84 we have stronger reasons
to hold that such changes could not apply to a different proceeding with a different set of parties and facts.
Suntay is also incorrect to insinuate that a modification or reversal of a final and executory decision
rendered by a division of the Court would be valid only if done by the Court en banc. 85 Such insinuation
runs afoul of the well settled doctrine of immutability of judgments. Moreover, although Article VIII, Section 4
(1) of the Constitutiongives the Court the discretion to sit either en banc or in divisions of three, five, or
seven Members, 86 the divisions are not considered separate and distinct courts. Nor is a hierarchy of
courts thereby established within the Supreme Court, which remains a unit notwithstanding that it also works
in divisions. The actions taken and the decisions rendered by any of the divisions are those of the Court
itself, considering that the divisions are not considered separate and distinct courts but as divisions of one
and the same court. 87 Lastly, the only thing that the Constitution allows the banc to do in this regard is to
reverse a doctrine or principle of law laid down by the Court en banc or in division. 88
II. c.
Pronouncement in DARAB v. Lubrica
(G.R. No. 159145) was a mere obiter dictum
In Department of Agrarian Reform Adjudication Board (DARAB) v. Lubrica (G.R. No. 159145), the
DARAB assigned as erroneous in its petition the following rulings of the CA: ( a) that DARAB, being a formal
party, should not have filed a comment to the petition, for, instead, the comment should have been filed by
co-respondent Land Bank as the financial intermediary of CARP; (b) that DARAB had no jurisdiction over
DSCA 0252, a special civil action for certiorari; and (c) that the writ of preliminary injunction DARAB had
issued in DSCA 0252 was null and void for having been in violation of the TRO of the CA. 89 SHEIDC
It is evident that the only issues considered and resolved in DARAB v. Lubrica (G.R. No. 159145)
were: (a) the personality of DARAB to participate and file comment; (b) the jurisdiction of DARAB over

petitions for certiorari; and (c) the validity of the preliminary injunction it issued. It is equally evident that at no
time in DARAB v. Lubrica (G.R. No. 159145) did the finality of RARAD Mias' decision become the issue,
precisely because the finality of RARAD Mias' decision had been put in issue instead in Land Bank v.
Suntay (G.R. No. 157903), a suit filed ahead of DARAB v. Lubrica (G.R. No. 159145). In short, the question
about the finality of RARAD Mias' decision was itself the lis mota inLand Bank v. Suntay (G.R. No.
157903).
In view of the foregoing, Suntay's invocation of the pronouncement in DARAB v. Lubrica (G.R. No.
159145), to the effect that RARAD Mias' decision had attained finality upon the failure of Land Bank to
appeal within the 15-day reglementary period, was unfounded and ineffectual because the pronouncement
was a mere obiter dictum.
An obiter dictum has been defined as an opinion expressed by a court upon some question of law
that is not necessary in the determination of the case before the court. It is a remark made, or opinion
expressed, by a judge, in his decision upon a cause by the way, that is, incidentally or collaterally, and not
directly upon the question before him, or upon a point not necessarily involved in the determination of the
cause, or introduced by way of illustration, or analogy or argument. 90 It does not embody the resolution or
determination of the court, and is made without argument, or full consideration of the point. 91 It lacks the
force of an adjudication, being a mere expression of an opinion with no binding force for purposes of res
judicata. 92
II. d.
Suntay was estopped from denying
being aware of existence of the judgment
in Land Bank v. Suntay (G.R. No. 157903)
Suntay cannot deny or evade the adverse effect and conclusiveness of the adverse decision
in Land Bank v. Suntay (G.R. No. 157903). He was aware of it due to his having actively participated therein.
In the RTC, he had filed the motion to dismiss against Land Bank's petition for determination of just
compensation. In the CA, he filed a motion for reconsideration against the adverse decision of the CA, which
ultimately favored him by reconsidering the adverse decision. In this Court, he actively defended the CA's
self-reversal, including filing an omnibus motion for partial reconsideration/clarification after the Court
rendered its decision dated October 11, 2007. In view of his active participation in various stages, he cannot
now turn his back on the judgment in Land Bank v. Suntay (G.R. No. 157903) simply because it was
adverse to him in order to invoke instead the "favorable" ruling in DARAB v. Lubrica (G.R. No.
159145). aTEACS
III.
Whether or not the manner of execution of
RARAD Mias' order dated October 30, 2008 was lawful
The writs of execution issued by RARAD Mias and the manner of their enforcement by the DARAB
sheriffs did not accord with the applicable law and the rules of DARAB; hence, they were invalid and
ineffectual.
III. a.
Order of October 30, 2008 to resume execution
was invalid because there was nothing to resume
In Land Bank v. Suntay (G.R. No. 157903), the Court directed the parties on October 24, 2005 to
maintain the status quo prior to the issuance of the alias writ of execution, holding that all actions done in
compliance or in connection with the alias writ of execution were "DEEMED QUASHED, and therefore, of no
force and effect." 93
On October 25, 2005, RARAD Mias herself quashed the acts done pursuant to her writ of
execution, declaring that "all actions done in compliance or in connection with the . . . Writ" issued by her
"are DEEMED QUASHED, and therefore, of no force and effect." 94

As a result, the following acts done in compliance with or pursuant to the writ of execution issued ex
parte by RARAD Mias on September 14, 2005 were expressly quashed and rendered of no force and
effect, to wit:
1. The DARAB sheriffs' issuance on September 15, 2005 of (a) the notice of demand against
Land Bank; (b) the notice of levy on September 21, 2005 to Land Bank; (c) the notice
of levy on September 28, 2005 to Bank of the Philippine Islands and to Hongkong
Shanghai Bank Corporation; and (d) an order to deliver on October 5, 2005,
addressed to Land Bank, "so much of the funds" in its custody "sufficient to satisfy the
final judgment;"
2. The holding by the DARAB sheriffs of the public auction sale on October 24, 2005 involving
the levied PLDT and MERALCO shares of stock of Land Bank at the Office of the
Regional Clerk of DARAB in Mandaluyong City, wherein Lubrica was the highest
bidder; aEACcS
3. The resumption on October 25, 2005 by the DARAB sheriffs of the public auction sale of
some of Land Bank's remaining PLDT shares and First Gen Corp. bonds, wherein
Lubrica was also declared the highest bidder; and
4. The issuance on October 25, 2005 by the DARAB sheriffs of two certificates of sale in favor
of Lubrica as the highest bidder.
In view of the foregoing, the order issued on October 30, 2008 by RARAD Mias directing the
DARAB sheriffs to "resume the interrupted executions of the Alias Writ issued . . . on September 14,
2005" 95 was not legally effective and valid because there was no longer any existing valid prior acts or
proceedings to resume enforcement or execution of.
Consequently, the following acts done by virtue of RARAD Mias' October 30, 2008 order to resume
the implementation of the September 15, 2005 writ of execution were bereft of factual and legal bases, to
wit:
1. The DARAB sheriffs' service on PDTC and STSI of a demand to comply dated October 30,
2008;
2. Letter of PDTC dated October 31, 2008 informing Land Bank of the demand to comply and
the action it had taken, and requesting Land Bank to "uplift" the securities;
3. PDTC's manifestation and compliance dated October 31, 2008 filed in the office of the
RARAD, Region IV, stating, among others, that PDTC had already "issued a written
notice" to Land Bank "to uplift the assets involved" and that PDTC "has caused the
subject assets to be outside the disposition" of Land Bank; and
4. MERALCO's cancellation on November 28, 2008 of Land Bank's 42,002,750 shares, its
issuance of new stock certificates in the name of Lubrica, and its subsequent
recording of the transfer of ownership of the stocks in the company's stock and
transfer book.
III. b.
Levy of Land Bank's MERALCO
shares was void and ineffectual
A further cause that invalidated the execution effected against Land Bank's MERALCO shares
derived from the statutory and reglementary provisions governing the payment of any award for just
compensation. At the outset, we hold that Land Bank's liability under the CARP was to be satisfied only from
the ARF.
The ARF was first envisioned in Proclamation No. 131 issued on July 22, 1987 by President Aquino
to institute the Government's centerpiece Comprehensive Agrarian Reform Program, to wit:
Section 2. Agrarian Reform Fund. There is hereby created a special fund, to be known as
the Agrarian Reform fund, an initial amount of FIFTY BILLION PESOS (P50,000,000,000.00)

to cover the estimated cost of the Comprehensive Agrarian Reform Program from 1987 to
1992 which shall be sourced from the receipts of the sale of the assets of the Asset
Privatization Trust receipts of ill-gotten wealth received through the Presidential Commission
on Good Government and such other sources as government may deem appropriate. The
amounts collected and accruing to this special fund shall be considered automatically
appropriated for the purpose authorized in this proclamation.
Executive Order No. 229 implemented the creation of the ARF, viz.:
Section 20. Agrarian Reform Fund. As provided in Proclamation No. 131 dated July 22,
1987, a special fund is created, known as The Agrarian Reform Fund, an initial amount of
FIFTY BILLION PESOS (P50 billion) to cover the estimated cost of the CARP from 1987 to
1992 which shall be sourced from the receipts of the sale of the assets of the Asset
Privatization Trust (APT) and receipts of the sale of ill-gotten wealth recovered through the
Presidential Commission on Good Government and such other sources as government may
deem appropriate. The amount collected and accruing to this special fund shall be considered
automatically appropriated for the purpose authorized in this Order.
In enacting the CARL, Congress adopted and expanded the ARF, providing in its Section 63, as
follows:
Section 63. Funding Source. The initial amount needed to implement this Act for the period
of ten (10) years upon approval hereof shall be funded from the Agrarian Reform Fund
created under Sections 20 and 21 of Executive Order No. 229. Additional amounts are hereby
authorized to be appropriated as and when needed to augment the Agrarian Reform Fund in
order to fully implement the provisions of this Act.
Sources of funding or appropriations shall include the following:
(a) Proceeds of the sales of the Assets Privatization Trust;
(b) All receipts from assets recovered and from sale of ill-gotten wealth
recovered through the Presidential Commission on Good Government;
(c) Proceeds of the disposition of the properties of the Government in foreign
countries;
(d) Portion of amounts accruing to the Philippines from all sources or official
foreign aid grants and concessional financing from all countries, to be used for
the specific purposes of financing production credits, infrastructures, and other
support services required by this Act;
(e) Other government funds not otherwise appropriated.
All funds appropriated to implement the provisions of this Act shall be considered continuing
appropriations during the period of its implementation. (emphases supplied)
Subsequently, Republic Act No. 9700 amended the CARL in order to strengthen and extend
the CARP. It is notable that Section 21 of Republic Act No. 9700 expressly provided that "all just
compensation payments to landowners, including execution of judgments therefore, shall only be sourced
from the Agrarian Reform Fund;" and that "just compensation payments that cannot be covered within the
approved annual budget of the program shall be chargeable against the debt service program of the national
government, or any unprogrammed item in the General Appropriations Act."
The enactments of the Legislature decreed that the money to be paid to the landowner as just
compensation for the taking of his land is to be taken only from the ARF. As such, the liability is not the
personal liability of Land Bank, but its liability only as the administrator of the ARF. In fact, Section 10, Rule
19 of the 2003 DARAB Rules of Procedure, reiterates that the satisfaction of a judgment for just
compensation by writ of execution should be from the ARF in the custody of Land Bank, to wit:
Section 10. Execution of judgments for Just Compensation which have become Final and
Executory. The Sheriff shall enforce a writ of execution of a final judgment for

compensation by demanding for the payment of the amount stated in the writ of execution in
cash and bonds against the Agrarian Reform Fund in the custody of LBP [Land Bank of
the Philippines] in accordance with RA 6657 . . . . (Emphases supplied) CTHDcS
Consequently, the immediate and indiscriminate levy by the DARAB sheriffs of Land Bank's
MERALCO shares, without first determining whether or not such assets formed part of the ARF, disregarded
Land Bank's proprietary rights in its own funds and properties.
The prior determination of whether the asset of Land Bank sought to be levied to respond to a
judgment liability under the CARP in favor of the landowner was demanded by its being a banking institution
created by law, 96 possessed with universal or expanded commercial banking powers 97 by virtue
of Presidential Decree No. 251.98 As a regular bank, Land Bank is under the supervision and regulation of
the Bangko Sentral ng Pilipinas. 99 Being the official depository of Government funds, Land Bank is also
invested with duties and responsibilities related to the implementation of the CARP, mainly as the
administrator of the ARF. 100 Given its discrete functions and capacities under the laws, Land Bank's assets
and properties must necessarily come under segregation, namely: (a) those arising from its proprietary
functions as a regular banking or financial institution; and (b) those arising from its being the administrator of
the ARF. Indeed, Executive Order No. 267 has required Land Bank to segregate accounts, 101 to wit: (a)
corporate funds, which are derived from its banking operations and are essentially moneys held in trust for
its depositors as a financial banking institution; and (b) ARF, which comprise funds and assets expressly
earmarked for or appropriated under the CARL to pay final awards of just compensation under
the CARP. 102
Suntay argues that the MERALCO shares of Land Bank were part of the ARF, submitting
photocopied documents showing Land Bank to be one of the top stockholders of MERALCO under Land
Bank's account number 1100052533. 103
Land Bank disputes Suntay's argument, positing that its levied MERALCO shares, particularly those
covered by Stock Certificate No. 87265, Stock Certificate No. 664638, Stock Certificate No. 0707447 and
Stock Certificate No. 0707448 that were cancelled and transferred in favor of Lubrica, did not form part of
the ARF. It explains that there are three different accounts relative to its MERALCO shares, to wit: (a) Trust
Account No. 03-141, which was the subject of a Custodianship Agreement it had with the Asset Privatization
Trust (APT); (b) Account titled "FAO PCGG ITF MFI", which was the subject of a Custodial Safekeeping
Agreement between Land Bank and the Three-Man Board for the MERALCO Privatization (c/o PCGG); and
(c) LBP Proprietary Account with PCD Nominee Corporation involving Stock Certificate No. 87265, Stock
Certificate No. 664638, Stock Certificate No. 0707447 and Stock Certificate No. 0707448. It insists that the
LBP Proprietary Account was not part of the ARF, and that its shares covered by Stock Certificate No.
87265, Stock Certificate No. 664638, Stock Certificate No. 0707447, and Stock Certificate No. 0707448 had
been acquired or obtained in the exercise of its proprietary function as a universal bank. 104
Land Bank presented copies of the Custodianship Agreement with the APT, the Custodial
Safekeeping Agreement with the Three-Man Board for the MERALCO Privatization (c/o PCGG), and the
joint affidavit of Land Bank's officers.
In light of the clarifications by Land Bank, the Court concludes that the procedure of execution
adopted by the DARAB sheriffs thoroughly disregarded the existence of Land Bank's proprietary account
separate and distinct from the ARF. The procedure thereby contravened the various pertinent laws and rules
earlier adverted to and which the DARAB sheriffs were presumed to be much aware of, denying to the
DARAB sheriffs any presumption in the regularity of their performance of their duties.
Also significant is that Section 20 of Executive Order No. 229 has mandated that the ARF "shall be
sourced from the receipts of the sale of the assets of the APT and receipts of the sale of ill-gotten wealth
recovered through the PCGG and such other sources as government may deem appropriate;" and that
Section 63 of the CARL has authorized that additional amounts be appropriated as and when needed to
augment the ARF.
It should not be difficult to see the marked distinction between proceeds or receipts, on one hand,
and asset or wealth derived from such proceeds or receipts, on the other hand. The term proceeds refers to

"the amount proceeding or accruing from some possession or transaction," 105 and is synonymous to
product, income, yield, receipts, or returns. 106 Clearly, therefore, the ARF was sourced from the money or
cash realized either from the sale of or as income from the assets or properties held by the APT or the
PCGG. The levied MERALCO shares were neither proceeds nor receipts. Thus, the DARAB sheriffs had no
authority to indiscriminately levy such shares because they were clearly not part of the ARF.
Moreover, the DARAB sheriffs did not strictly comply with the rule in force at the time of their
execution of the writ of execution and the alias writ of execution, which was Section 10, Rule 19 of the 2003
DARAB Rules of Procedure, viz.: TDCaSE
Section 10. Execution of judgments for Just Compensation Which Have
Become Final and Executory. The Sheriff shall enforce a writ of execution of a
final judgment for compensation by demanding for the payment of the amount stated
in the writ of execution in cash and bonds against the Agrarian Reform Fund in the
custody of LBP [Land Bank of the Philippines] in accordance with RA 6657, and the
LBP shall pay the same in accordance with the final judgment and the writ of
execution within five (5) days from the time the landowner accordingly executes
and submits to the LBP the corresponding deed/s of transfer in favor of the
government and surrenders the muniments of title to the property in accordance
with Section 15 (c) of RA 6657. (Emphasis supplied)
As the rule reveals, a condition was imposed before Land Bank could be made to pay the landowner
by the sheriff. The condition was for Suntay as the landowner to first submit to Land Bank the corresponding
deed of transfer in favor of the Government and to surrender the muniments of the title to his affected
property. Yet, by immediately and directly levying on the shares of stocks of Land Bank and forthwith selling
them at a public auction to satisfy the amounts stated in the assailed writs without first requiring Suntay to
comply with the condition, the DARAB sheriffs unmitigatedly violated the 2003 DARAB Rules of Procedure.
Relevantly, Section 18 of the CARL, which Section 10 of the 2003 DARAB Rules of
Procedure implements, has expressly listed the modes by which the landowner may choose to be paid his
just compensation, thus:
Section 18. Valuation and Mode of Compensation. The LBP shall compensate the
landowner in such amount as may be agreed upon by the landowner and the DAR and LBP or
as may be finally determined by the court as just compensation for the land.
The compensation shall be paid in one of the following modes at the option of the
landowner:
(1) Cash payment, under the following terms and conditions:
(a) For lands above fifty (50) hectares, insofar as the excess hectarage is
concerned Twenty-five percent (25%) cash, the balance to be paid in government
financial instruments negotiable at any time. EcTCAD
(b) For lands above twenty-four hectares and up to fifty (50) hectares Thirty
percent (30%) cash, the balance to be paid in government financial instruments
negotiable at any time.
(c) For lands twenty-four (24) hectares and below Thirty-five percent (35%) cash,
the balance to be paid in government financial instruments negotiable at any time.
(2) Shares of stock in government-owned or controlled corporations, LBP preferred shares,
physical assets or other qualified investments in accordance with guidelines set by the PARC;
(3) Tax credits which can be used against any tax liability;
(4) LBP bonds, which shall have the following features: DHEcCT
(a) Market interest rates aligned with 91-day treasury bill rates. Ten percent (10%) of
the face value of the bonds shall mature every year from the date of issuance until the

tenth (10th) year: Provided, That should the landowner choose to forego the cash
portion, whether in full or in part, he shall be paid correspondingly in LBP bonds;
(b) Transferability and negotiability. Such LBP bonds may be used by the landowner,
his successors-in-interest or his assigns, up to the amount of their face value for any
of the following:
(i) Acquisition of land or other real properties of the government, including
assets under the Assets Privatization Program and other assets foreclosed by
government financial institution in the same province or region where the
lands for which the bonds were paid are situated;
(ii) Acquisition of shares of stock of government-owned or controlled
corporations or shares or stock owned by the government in private
corporations; SIcCEA
(iii) Substitution for surety or bail bonds for the provisional release of accused
persons, or for performance bonds;
(iv) Security for loans with any government financial institution, provided the
proceeds of the loans shall be invested in an economic enterprise, preferably
in a small and medium-scale industry, in the same province or region as the
land for which the bonds are paid;
(v) Payment for various taxes and fees to the government: Provided, That the
use of these bonds for these purposes will be limited to a certain percentage
of the outstanding balance of the financial instrument: Provided, further, That
the PARC shall determine the percentages mentioned above;
(vi) Payment for tuition fees of the immediate family of the original bondholder
in government universities, colleges, trade schools and other institutions;
(vii) Payment for fees of the immediate family of the original bondholder in
government hospitals; and
(viii) Such other uses as the PARC may from time to time allow.
In case of extraordinary inflation, the PARC shall take appropriate measures to protect the
economy. (Emphases supplied)
We note that the DARAB sheriffs' method of execution did not adhere to any of the legallyauthorized modes, to the extreme detriment of Land Bank.
Still, Suntay proposes that the resort to levying on the MERALCO shares of Land Bank was
necessary, considering that it was Land Bank alone that had the control of the ARF.
The proposition is not only incorrect but also dangerous.
To start with, Land Bank could not simply shirk from or evade discharging its obligations under
the CARP because the law mandated Land Bank with a positive duty. 107The performance of its ministerial
duty to fully pay a landowner the just compensation could subject its officials responsible for the nonperformance to punishment for contempt of court.
And, secondly, tolerating the irregular execution carried out by the DARAB sheriffs would be
dangerous to the viability of Land Bank as a regular banking institution as well as the administrator of the
ARF. The total claim of Suntay under the assailed RARAD decision was only P157.5 million, but the worth of
Land Bank's 53,557,257 MERALCO shares, 912,230 PLDT shares and First Gen Corporation bonds
auctioned off by the DARAB sheriffs at P1.00/share for the total of only P53,557,257.00 was probably about
P841 million. If that probable worth was true, the levy and execution were patently unconscionable and
definitely worked against the interest of the Government represented by Land Bank.
Further, Suntay complains of the delay in the payment of just compensation due to him. HESIcT
The Court finds that Suntay has only himself to blame. As early as in 2005 Land Bank v.
Suntay (G.R. No. 157903) already opened the way for the RTC to determine the just compensation in

Agrarian Case No. R-1241. Had he ensured the speedy disposition of Agrarian Case No. R-1241 in the
RTC, he would not now be complaining.
IV.
Land Bank is entitled to all
dividends pertaining to the
invalidly levied shares of MERALCO
As earlier mentioned, Land Bank filed on May 5, 2010 an urgent verified motion for the issuance of a
TRO or writ of preliminary injunction to enjoin MERALCO, its Corporate Secretary, and its Assistant
Corporate Secretary, pending the proceedings and until the resolution of the case, from releasing the cash
dividends pertaining to the disputed shares in favor of Lubrica or any person acting on her behalf.
Although the Court did not resolve the motion, it is time to look into the matter in light of the
foregoing conclusions.
The Court has to declare as a necessary consequence of the foregoing conclusions that Land Bank
remained fully entitled to all the cash and other dividends accruing to the MERALCO shares levied and sold
by the DARAB sheriffs pursuant to the orders issued on September 14, 2005 and October 30, 2008 by
RARAD Mias, as if no levy and sale of them were made. In this connection, the Court affirms and reiterates
the order issued on October 25, 2005 by RARAD Mias (deeming to be quashed and of no force and effect
"all actions done in compliance or in connection with" the writ of execution issued by her), 108 and the order
issued on December 17, 2008 by RARAD Casabar directing:
(c) MERALCO to cancel the stock certificates issued to Lubrica and to any of her transferees or
assignees, and to restore the ownership of the shares to Land Bank and to record the
restoration in MERALCO's stock and transfer book; and
(d) PSE, PDTC, STSI, the Philippine Dealing System Holdings Corporation and Subsidiaries
(PDS Group), and any stockbroker, dealer, or agent of MERALCO shares to stop
trading or dealing on the shares. 109
WHEREFORE, we GRANT the petition for review on certiorari, and REVERSE the Decision
promulgated June 5, 2009 in CA-G.R. SP No. 106104.
ACCORDINGLY, the Court:
(a) DIRECTS the Regional Trial Court, Branch 46, in San Jose, Occidental Mindoro to continue the
proceedings for the determination of the just compensation of Federico Suntay's expropriated property in
Agrarian Case No. R-1241; CDTHSI
(b) QUASHES and NULLIFIES the orders issued in DARAB Case No. V-0405-0001-00 on
September 14, 2005 (granting Suntay's ex parte motion for the issuance of analias writ of execution) and
October 30, 2008 by RARAD Conchita C. Mias (directing the DARAB sheriffs "to resume the interrupted
execution of the Alias Writ in this case on September 14, 2005"), and all acts performed pursuant thereto;
(c) AFFIRMS and REITERATES the order issued on October 25, 2005 by RARAD Mias (deeming
to be quashed and of no force and effect "all actions done in compliance or in connection with" the writ of
execution issued by her), and the order issued on December 17, 2008 by RARAD Marivic Casabar
(directing MERALCO to cancel the stock certificates issued to Josefina Lubrica and to any of her transferees
or assignees, and to restore the ownership of the shares to Land Bank and to record the restoration in
MERALCO's stock and transfer book; and the Philippine Stock Exchange, Philippine Depository and Trust
Corporation, Securities Transfer Services, Inc., and the Philippine Dealing System Holdings Corporation and
Subsidiaries (PDS Group), and any stockbroker, dealer, or agent of MERALCO shares to stop trading or
dealing on the shares);
(d) DECLARES Land Bank fully entitled to all the dividends accruing to its levied MERALCO shares
of stocks as if no levy on execution and auction were made involving such shares of stocks;

(e) COMMANDS the Integrated Bar of the Philippines to investigate the actuations of Atty. Conchita
C. Mias in DARAB Case No. V-0405-0001-00, and to determine if she was administratively liable as a
member of the Philippine Bar; and
(f) ORDERS the Department of Agrarian Reform Adjudication Board to conduct a thorough
investigation of the sheriffs who participated in the irregularities noted in this Decision, and to proceed
against them if warranted.
Costs against the respondent. IDCScA
SO ORDERED.
Corona, C.J., Leonardo-de Castro, Del Castillo and Villarama, Jr., JJ., concur.
||| (Land Bank of the Phils. v. Suntay, G.R. No. 188376, [December 14, 2011], 678 PHIL 879-929)

EN BANC
[G.R. No. 148208. December 15, 2004.]
CENTRAL BANK (now Bangko Sentral ng Pilipinas) EMPLOYEES ASSOCIATION,
INC., petitioner, vs. BANGKO SENTRAL NG PILIPINAS and the EXECUTIVE
SECRETARY, respondents.
DECISION
PUNO, J p:
Can a provision of law, initially valid, become subsequently unconstitutional, on the ground that its continued
operation would violate the equal protection of the law? We hold that with the passage of the subsequent laws
amending the charter of seven (7) other governmental financial institutions (GFIs), the continued operation of the
last proviso of Section 15(c), Article II of Republic Act (R.A.) No. 7653, constitutes invidious discrimination on
the 2,994 rank-and-file employees of the Bangko Sentral ng Pilipinas (BSP).
I.
The Case
First the facts.
On July 3, 1993, R.A. No. 7653 (the New Central Bank Act) took effect. It abolished the old Central Bank of the
Philippines, and created a new BSP.
On June 8, 2001, almost eight years after the effectivity of R.A. No. 7653, petitioner Central Bank (now BSP)
Employees Association, Inc., filed a petition for prohibition against BSP and the Executive Secretary of the Office
of the President, to restrain respondents from further implementing the last proviso in Section 15(c), Article II
of R.A. No. 7653, on the ground that it is unconstitutional.
Article II, Section 15(c) of R.A. No. 7653 provides:
Section [Link] of Authority. In the exercise of its authority, the Monetary Board shall:
xxx xxx xxx
(c)establish a human resource management system which shall govern the selection, hiring,
appointment, transfer, promotion, or dismissal of all personnel. Such system shall aim to
establish professionalism and excellence at all levels of the Bangko Sentral in accordance
with sound principles of management.
A compensation structure, based on job evaluation studies and wage surveys and subject to
the Board's approval, shall be instituted as an integral component of the Bangko
Sentral's human resource development program: Provided, That the Monetary Board shall
make its own system conform as closely as possible with the principles provided for
under Republic Act No. 6758 [Salary Standardization Act]. Provided, however, That
compensation and wage structure of employees whose positions fall under salary grade 19
and below shall be in accordance with the rates prescribed under Republic Act No. 6758.
[emphasis supplied]
The thrust of petitioner's challenge is that the above proviso makes an unconstitutional cut between two classes
of employees in the BSP, viz: (1) the BSP officers or those exempted from the coverage of the Salary
Standardization Law (SSL)(exempt class); and (2) the rank-and-file (Salary Grade [SG] 19 and below), or those
not exempted from the coverage of the SSL (non-exempt class). It is contended that this classification is "a
classic case of class legislation," allegedly not based on substantial distinctions which make real differences, but
solely on the SG of the BSP personnel's position. Petitioner also claims that it is not germane to the purposes of
Section 15(c), Article II of R.A. No. 7653, the most important of which is to establish professionalism and
excellence at all levels in the BSP. 1 Petitioner offers the following sub-set of arguments:
[Link] legislative history of R.A. No. 7653 shows that the questioned proviso does not appear
in the original and amended versions of House Bill No. 7037, nor in the original
version of Senate Bill No. 1235; 2

[Link] the compensation of the BSP rank-and-file employees to the rate prescribed by
the SSL actually defeats the purpose of the law 3 of establishing professionalism and
excellence at all levels in the BSP; 4 (emphasis supplied)
[Link] assailed proviso was the product of amendments introduced during the deliberation of
Senate Bill No. 1235, without showing its relevance to the objectives of the law, and
even admitted by one senator as discriminatory against low-salaried employees of the
BSP; 5
[Link], LBP, DBP and SSS personnel are all exempted from the coverage of the SSL; thus
within the class of rank-and-file personnel of government financial institutions (GFIs),
the BSP rank-and-file are also discriminated upon; 6 and
[Link] assailed proviso has caused the demoralization among the BSP rank-and-file and
resulted in the gross disparity between their compensation and that of the BSP
officers'. 7
In sum, petitioner posits that the classification is not reasonable but arbitrary and capricious, and violates the
equal protection clause of the Constitution. 8 Petitioner also stresses: (a) that R.A. No. 7653 has a separability
clause, which will allow the declaration of the unconstitutionality of the proviso in question without affecting the
other provisions; and (b) the urgency and propriety of the petition, as some 2,994 BSP rank-and-file
employees have been prejudiced since 1994 when the proviso was implemented. Petitioner concludes that: (1)
since the inequitable proviso has no force and effect of law, respondents' implementation of such amounts to
lack of jurisdiction; and (2) it has no appeal nor any other plain, speedy and adequate remedy in the ordinary
course except through this petition for prohibition, which this Court should take cognizance of, considering the
transcendental importance of the legal issue involved. 9
Respondent BSP, in its comment, 10 contends that the provision does not violate the equal protection clause
and can stand the constitutional test, provided it is construed in harmony with other provisions of the same law,
such as "fiscal and administrative autonomy of BSP," and the mandate of the Monetary Board to "establish
professionalism and excellence at all levels in accordance with sound principles of management."
The Solicitor General, on behalf of respondent Executive Secretary, also defends the validity of the provision.
Quite simplistically, he argues that the classification is based on actual and real differentiation, even as it
adheres to the enunciated policy of R.A. No. 7653 to establish professionalism and excellence within the BSP
subject to prevailing laws and policies of the national government. 11
II.
Issue
Thus, the sole albeit significant issue to be resolved in this case is whether the last paragraph of Section
15(c), Article II of R.A. No. 7653, runs afoul of the constitutional mandate that "No person shall be . . . denied the
equal protection of the laws." 12
III.
Ruling
[Link] THE PRESENT STANDARDS OF EQUAL PROTECTION, SECTION 15(c), ARTICLE II OF R.A.
NO. 7653 IS VALID.
Jurisprudential standards for equal protection challenges indubitably show that the classification created by the
questioned proviso, on its face and in its operation, bears no constitutional infirmities.
It is settled in constitutional law that the "equal protection" clause does not prevent the Legislature from
establishing classes of individuals or objects upon which different rules shall operate so long as the
classification is not unreasonable. As held in Victoriano v. Elizalde Rope Workers' Union, 13 and reiterated in a
long line of cases: 14
The guaranty of equal protection of the laws is not a guaranty of equality in the application of
the laws upon all citizens of the state. It is not, therefore, a requirement, in order to avoid the
constitutional prohibition against inequality, that every man, woman and child should be

affected alike by a statute. Equality of operation of statutes does not mean indiscriminate
operation on persons merely as such, but on persons according to the circumstances
surrounding them.. It guarantees equality, not identity of rights. The Constitution does not
require that things which are different in fact be treated in law as though they were the same.
The equal protection clause does not forbid discrimination as to things that are different. It
does not prohibit legislation which is limited either in the object to which it is directed or by the
territory within which it is to operate.
The equal protection of the laws clause of the Constitution allows classification. Classification
in law, as in the other departments of knowledge or practice, is the grouping of things in
speculation or practice because they agree with one another in certain particulars. A law is not
invalid because of simple inequality. The very idea of classification is that of inequality, so that
it goes without saying that the mere fact of inequality in no manner determines the matter of
constitutionality. All that is required of a valid classification is that it be reasonable, which
means that the classification should be based on substantial distinctions which make for real
differences, that it must be germane to the purpose of the law; that it must not be limited to
existing conditions only; and that it must apply equally to each member of the class. This
Court has held that the standard is satisfied if the classification or distinction is based on a
reasonable foundation or rational basis and is not palpably arbitrary.
In the exercise of its power to make classifications for the purpose of enacting laws over
matters within its jurisdiction, the state is recognized as enjoying a wide range of discretion. It
is not necessary that the classification be based on scientific or marked differences of things
or in their relation. Neither is it necessary that the classification be made with mathematical
nicety. Hence, legislative classification may in many cases properly rest on narrow
distinctions, for the equal protection guaranty does not preclude the legislature from
recognizing degrees of evil or harm, and legislation is addressed to evils as they may appear.
(citations omitted) IaEASH
Congress is allowed a wide leeway in providing for a valid classification. 15 The equal protection clause is not
infringed by legislation which applies only to those persons falling within a specified class. 16 If the groupings
are characterized by substantial distinctions that make real differences, one class may be treated and regulated
differently from another. 17 The classification must also be germane to the purpose of the law and must apply to
all those belonging to the same class. 18
In the case at bar, it is clear in the legislative deliberations that the exemption of officers (SG 20 and above) from
the SSL was intended to address the BSP's lack of competitiveness in terms of attracting competent officers and
executives. It was not intended to discriminate against the rank-and-file. If the end-result did in fact lead to a
disparity of treatment between the officers and the rank-and-file in terms of salaries and benefits, the
discrimination or distinction has a rational basis and is not palpably, purely, and entirely arbitrary in the legislative
sense. 19
That the provision was a product of amendments introduced during the deliberation of the Senate Bill does not
detract from its validity. As early as 1947 and reiterated in subsequent cases, 20 this Court has subscribed to the
conclusiveness of an enrolled bill to refuse invalidating a provision of law, on the ground that the bill from which it
originated contained no such provision and was merely inserted by the bicameral conference committee of both
Houses.
Moreover, it is a fundamental and familiar teaching that all reasonable doubts should be resolved in favor of the
constitutionality of a statute. 21 An act of the legislature, approved by the executive, is presumed to be within
constitutional limitations. 22 To justify the nullification of a law, there must be a clear and unequivocal breach
of the Constitution, not a doubtful and equivocal breach. 23
[Link] ENACTMENT, HOWEVER, OF SUBSEQUENT LAWS EXEMPTING ALL OTHER RANK-ANDFILE EMPLOYEES OF GFIs FROM THE SSL RENDERS THE CONTINUED APPLICATION OF
THE CHALLENGED PROVISION A VIOLATION OF THE EQUAL PROTECTION CLAUSE.

While R.A. No. 7653 started as a valid measure well within the legislature's power, we hold that the enactment
of subsequent laws exempting all rank-and-file employees of other GFIs leeched all validity out of the
challenged proviso.
[Link] concept of relative constitutionality.
The constitutionality of a statute cannot, in every instance, be determined by a mere comparison of its provisions
with applicable provisions of the Constitution, since the statute may be constitutionally valid as applied to one set
of facts and invalid in its application to another. 24
A statute valid at one time may become void at another time because of altered circumstances. 25 Thus, if a
statute in its practical operation becomes arbitrary or confiscatory, its validity, even though affirmed by a former
adjudication, is open to inquiry and investigation in the light of changed conditions. 26
Demonstrative of this doctrine is Vernon Park Realty v. City of Mount Vernon, 27 where the Court of Appeals of
New York declared as unreasonable and arbitrary a zoning ordinance which placed the plaintiff's property in a
residential district, although it was located in the center of a business area. Later amendments to the ordinance
then prohibited the use of the property except for parking and storage of automobiles, and service station within
a parking area. The Court found the ordinance to constitute an invasion of property rights which was contrary to
constitutional due process. It ruled:
While the common council has the unquestioned right to enact zoning laws respecting the use
of property in accordance with a well-considered and comprehensive plan designed to
promote public health, safety and general welfare, such power is subject to the constitutional
limitation that it may not be exerted arbitrarily or unreasonably and this is so whenever the
zoning ordinance precludes the use of the property for any purpose for which it is reasonably
adapted. By the same token, an ordinance valid when adopted will nevertheless be stricken
down as invalid when, at a later time, its operation under changed conditions proves
confiscatory such, for instance, as when the greater part of its value is destroyed, for which
the courts will afford relief in an appropriate case. 28 (citations omitted, emphasis supplied)
In the Philippine setting, this Court declared the continued enforcement of a valid law as unconstitutional as a
consequence of significant changes in circumstances. Rutter [Link] 29 upheld the constitutionality of the
moratorium law its enactment and operation being a valid exercise by the State of its police power 30 but
also ruled that thecontinued enforcement of the otherwise valid law would be unreasonable and oppressive. It
noted the subsequent changes in the country's business, industry and agriculture. Thus, the law was set aside
because its continued operation would be grossly discriminatory and lead to the oppression of the creditors. The
landmark ruling states: 31
The question now to be determined. is, is the period of eight (8) years which Republic Act No.
342 grants to debtors of a monetary obligation contracted before the last global war and who
is a war sufferer with a claim duly approved by the Philippine War Damage Commission
reasonable under the present circumstances?
It should be noted that Republic Act No. 342 only extends relief to debtors of prewar
obligations who suffered from the ravages of the last war and who filed a claim for their losses
with the Philippine War Damage Commission. It is therein provided that said obligation shall
not be due and demandable for a period of eight (8) years from and after settlement of the
claim filed by the debtor with said Commission. The purpose of the law is to afford to prewar
debtors an opportunity to rehabilitate themselves by giving them a reasonable time within
which to pay their prewar debts so as to prevent them from being victimized by their creditors.
While it is admitted in said law that since liberation conditions have gradually returned to
normal, this is not so with regard to those who have suffered the ravages of war and so it was
therein declared as a policy that as to them the debt moratorium should be continued in force
(Section 1).
But we should not lose sight of the fact that these obligations had been pending since 1945 as
a result of the issuance of Executive Orders Nos. 25 and 32 and at present their enforcement

is still inhibited because of the enactment of Republic Act No. 342 and would continue to be
unenforceable during the eight-year period granted to prewar debtors to afford. them an
opportunity to rehabilitate themselves, which in plain language means that the creditors would
have to observe a vigil of at least twelve (12) years before they could effect a liquidation of
their investment dating as far back as 1941. This period seems to us unreasonable, if not
oppressive. While the purpose of Congress is plausible, and should be commended, the relief
accorded works injustice to creditors who are practically left at the mercy of the debtors. Their
hope to effect collection becomes extremely remote, more so if the credits are unsecured. And
the injustice is more patent when, under the law, the debtor is not even required to pay
interest during the operation of the relief, unlike similar statutes in the United States.
xxx xxx xxx
In the face of the foregoing observations, and consistent with what we believe to be as the
only course dictated by justice, fairness and righteousness, we feel that the only way open to
us under the present circumstances is to declare that the continued operation and
enforcement of Republic Act No. 342 at the present time is unreasonable and oppressive, and
should not be prolonged a minute longer, and, therefore, the same should be declared null
and void and without effect. (emphasis supplied, citations omitted)
[Link] of the equal protection clause.
In the realm of equal protection, the U.S. case of Atlantic Coast Line R. Co. v. Ivey 32 is illuminating. The
Supreme Court of Florida ruled against the continued application of statutes authorizing the recovery of double
damages plus attorney's fees against railroad companies, for animals killed on unfenced railroad right of way
without proof of negligence. Competitive motor carriers, though creating greater hazards, were not subjected to
similar liability because they were not yet in existence when the statutes were enacted. The Court ruled that the
statutes became invalid as denying "equal protection of the law," in view of changed conditions since their
enactment.
In another U.S. case, Louisville & N.R. Co. v. Faulkner, 33 the Court of Appeals of Kentucky declared
unconstitutional a provision of a statute which imposed a duty upon a railroad company of proving that it was
free from negligence in the killing or injury of cattle by its engine or cars. This, notwithstanding that the
constitutionality of the statute, enacted in 1893, had been previously sustained. Ruled the Court:
The constitutionality of such legislation was sustained because it applied to all similar
corporations and had for its object the safety of persons on a train and the protection of
property. . . . Of course, there were no automobiles in those days.
The subsequent inauguration and development of transportation by motor vehicles on the
public highways by common carriers of freight and passengers created even greater risks to
the safety of occupants of the vehicles and of danger of injury and death of domestic animals.
Yet, under the law the operators of that mode of competitive transportation are not subject to
the same extraordinary legal responsibility for killing such animals on the public roads as are
railroad companies for killing them on their private rights of way.
The Supreme Court, speaking through Justice Brandeis in Nashville, C. &
St. L. Ry. Co. v. Walters, 294 U.S. 405, 55 [Link]. 486, 488, 79 [Link]. 949, stated, "A statute
valid when enacted may become invalid by change in the conditions to which it is applied. The
police power is subject to the constitutional limitation that it may not be exerted arbitrarily or
unreasonably." A number of prior opinions of that court are cited in support of the statement.
The State of Florida for many years had a statute, F.S.A. 356.01 et seq. imposing
extraordinary and special duties upon railroad companies, among which was that a railroad
company was liable for double damages and an attorney's fee for killing livestock by a train
without the owner having to prove any act of negligence on the part of the carrier in the
operation of its train. In Atlantic Coast Line Railroad Co. v. Ivey, it was held that the changed
conditions brought about by motor vehicle transportation rendered the statute unconstitutional
since if a common carrier by motor vehicle had killed the same animal, the owner would have

been required to prove negligence in the operation of its equipment. Said the court, "This
certainly is not equal protection of the law." 34 (emphasis supplied)
Echoes of these rulings resonate in our case law, viz:
[C]ourts are not confined to the language of the statute under challenge in determining
whether that statute has any discriminatory effect. A statute nondiscriminatory on its face may
be grossly discriminatory in its operation. Though the law itself be fair on its face and impartial
in appearance, yet, if it is applied and administered by public authority with an evil eye and
unequal hand, so as practically to make unjust and illegal discriminations between persons in
similar circumstances, material to their rights, the denial of equal justice is still within the
prohibition of the Constitution 35 (emphasis supplied, citations omitted)
[W]e see no difference between a law which denies equal protection and a law which permits
of such denial. A law may appear to be fair on its face and impartial in appearance, yet, if it
permits of unjust and illegal discrimination, it is within the constitutional prohibition. . . . In
other words, statutes may be adjudged unconstitutional because of their effect in operation. . .
. If a law has the effect of denying the equal protection of the law it is
unconstitutional. . . . 36 (emphasis supplied, citations omitted)
[Link] of R.A. Nos. 7907 + 8282 + 8289 + 8291 + 8523 + 8763 + 9302 = consequential
unconstitutionality of challenged proviso.
According to petitioner, the last proviso of Section 15(c), Article II of R.A. No. 7653 is also violative of the equal
protection clause because after it was enacted, the charters of the GSIS, LBP, DBP and SSS were also
amended, but the personnel of the latter GFIs were all exempted from the coverage of the SSL. 37 Thus, within
the class of rank-and-file personnel of GFIs, the BSP rank-and-file are also discriminated upon.
Indeed, we take judicial notice that after the new BSP charter was enacted in 1993, Congress also undertook
the amendment of the charters of the GSIS, LBP, DBP and SSS, and three other GFIs, from 1995 to 2004, viz:
1.R.A. No. 7907 (1995) for Land Bank of the Philippines (LBP);
2.R.A. No. 8282 (1997) for Social Security System (SSS);
3.R.A. No. 8289 (1997) for Small Business Guarantee and Finance Corporation, (SBGFC);
4.R.A. No. 8291 (1997) for Government Service Insurance System (GSIS);
5.R.A. No. 8523 (1998) for Development Bank of the Philippines (DBP);
6.R.A. No. 8763 (2000) for Home Guaranty Corporation (HGC); 38 and
7.R.A. No. 9302 (2004) for Philippine Deposit Insurance Corporation (PDIC).
It is noteworthy, as petitioner points out, that the subsequent charters of the seven other GFIs share this
common proviso: a blanket exemption of all their employees from the coverage of the SSL, expressly or
impliedly, as illustrated below:
[Link] (R.A. No. 7907)
Section [Link] 90 of [R.A. No. 3844] is hereby amended to read as follows:
Section [Link].
xxx xxx xxx
All positions in the Bank shall be governed by a compensation, position classification
system and qualification standards approved by the Bank's Board of Directors based
on a comprehensive job analysis and audit of actual duties and responsibilities. The
compensation plan shall be comparable with the prevailing compensation plans in the
private sector and shall be subject to periodic review by the Board no more than once
every two (2) years without prejudice to yearly merit reviews or increases based on
productivity and profitability. The Bank shall therefore be exempt from existing laws,
rules and regulations on compensation, position classification and qualification

standards. It shall however endeavor to make its system conform as closely as

possible with the principles under Republic Act No. 6758. (emphasis supplied)
xxx xxx xxx
[Link] (R.A. No. 8282)
Section 1.[Amending R.A. No. 1161, Section 3(c)]:
xxx xxx xxx
(c)The Commission, upon the recommendation of the SSS President, shall appoint an
actuary and such other personnel as may [be] deemed necessary; fix their reasonable
compensation, allowances and other benefits; prescribe their duties and establish
such methods and procedures as may be necessary to insure the efficient, honest
and economical administration of the provisions and purposes of this Act: Provided,
however, That the personnel of the SSS below the rank of Vice President shall be
appointed by the SSS President: Provided, further, That the personnel appointed by
the SSS President, except those below the rank of assistant manager, shall be
subject to the confirmation by the Commission; Provided further, That the personnel
of the SSS shall be selected only from civil service eligibles and be subject to civil
service rules and regulations: Provided, finally, That the SSS shall be exempt from
the provisions of Republic Act No. 6758 and Republic Act No. 7430. (emphasis
supplied)
[Link] (R.A. No. 8289)
Section 8.[Amending R.A. No. 6977, Section 11]:
xxx xxx xxx
The Small Business Guarantee and Finance Corporation shall:
xxx xxx xxx
(e)notwithstanding the provisions of Republic Act No. 6758, and Compensation
Circular No. 10, series of 1989 issued by the Department of Budget and
Management, the Board of Directors of SBGFC shall have the authority to extend to
the employees and personnel thereof the allowance and fringe benefits similar to
those extended to and currently enjoyed by the employees and personnel of other
government financial institutions. (emphases supplied)
[Link] (R.A. No. 8291)
Section 1.[Amending Section 43(d)].
xxx xxx xxx
Sec. [Link] and Functions of the Board of Trustees. The Board of Trustees
shall have the following powers and functions:
xxx xxx xxx
(d)upon the recommendation of the President and General Manager, to approve the
GSIS' organizational and administrative structures and staffing pattern, and to
establish, fix, review, revise and adjust the appropriate compensation package for the
officers and employees of the GSIS with reasonable allowances, incentives, bonuses,
privileges and other benefits as may be necessary or proper for the effective
management, operation and administration of the GSIS, which shall be exempt from
Republic Act No. 6758, otherwise known as the Salary Standardization Law and
Republic Act No. 7430, otherwise known as the Attrition Law. (emphasis supplied)
xxx xxx xxx
[Link] (R.A. No. 8523)
Section 6.[Amending E.O. No. 81, Section 13]:

Section [Link] Officers and Employees. The Board of Directors shall provide for
an organization and staff of officers and employees of the Bank and upon
recommendation of the President of the Bank, fix their remunerations and other
emoluments. All positions in the Bank shall be governed by the compensation,
position classification system and qualification standards approved by the Board of
Directors based on a comprehensive job analysis of actual duties and responsibilities.
The compensation plan shall be comparable with the prevailing compensation plans
in the private sector and shall be subject to periodic review by the Board of Directors
once every two (2) years, without prejudice to yearly merit or increases based on the
Bank's productivity and profitability. The Bank shall, therefore, be exempt from
existing laws, rules, and regulations on compensation, position classification and
qualification standards. The Bank shall however, endeavor to make its system
conform as closely as possible with the principles under Compensation and Position
Classification Act of 1989 (Republic Act No. 6758, as amended). (emphasis
supplied) AaHTIE
[Link] (R.A. No. 8763)
Section [Link], Functions and Duties of the Board of Directors. The Board shall have
the following powers, functions and duties:
xxx xxx xxx
(e)To create offices or positions necessary for the efficient management, operation
and administration of the Corporation: Provided, That all positions in the Home
Guaranty Corporation (HGC) shall be governed by a compensation and position
classification system and qualifications standards approved by the Corporation's
Board of Directors based on a comprehensive job analysis and audit of actual duties
and responsibilities: Provided, further, That the compensation plan shall be
comparable with the prevailing compensation plans in the private sector and which
shall be exempt from Republic Act No. 6758, otherwise known as the Salary
Standardization Law, and from other laws, rules and regulations on salaries and
compensations; and to establish a Provident Fund and determine the Corporation's
and the employee's contributions to the Fund; (emphasis supplied)
xxx xxx xxx
[Link] (R.A. No. 9302)
Section [Link] 2 of [Republic Act No. 3591, as amended] is hereby further amended to
read:
xxx xxx xxx
3.
xxx xxx xxx
A compensation structure, based on job evaluation studies and wage surveys and
subject to the Board's approval, shall be instituted as an integral component of the
Corporation's human resource development program: Provided, That all positions in
the Corporation shall be governed by a compensation, position classification system
and qualification standards approved by the Board based on a comprehensive job
analysis and audit of actual duties and responsibilities. The compensation plan shall
be comparable with the prevailing compensation plans of other government financial
institutions and shall be subject to review by the Board no more than once every two
(2) years without prejudice to yearly merit reviews or increases based on productivity
and profitability. The Corporation shall therefore be exempt from existing laws, rules
and regulations on compensation, position classification and qualification standards. It

shall however endeavor to make its system conform as closely as possible with the
principles under Republic Act No. 6758, as amended. (emphases supplied)
Thus, eleven years after the amendment of the BSP charter, the rank-and-file of seven other GFIs were granted
the exemption that was specifically denied to the rank-and-file of the BSP. And as if to add insult to petitioner's
injury, even the Securities and Exchange Commission (SEC) was granted the same blanket exemption from the
SSL in 2000! 39
The prior view on. the constitutionality of R.A. No. 7653 was confined to an evaluation of its classification
between the rank-and-file and the officers of the BSP, found reasonable because there were substantial
distinctions that made real differences between the two classes.
The above-mentioned subsequent enactments, however, constitute significant changes in circumstance that
considerably alter the reasonability of the continued operation of the last proviso of Section 15(c), Article II of
Republic Act No. 7653, thereby exposing the proviso to more serious scrutiny. This time, the scrutiny relates to
the constitutionality of the classification albeit made indirectly as a consequence of the passage of eight other
laws between the rank-and-file of the BSP and the seven other GFIs. The classification must not only be
reasonable, but must also apply equally to all members of the class. The proviso may be fair on its face and
impartial in appearance but it cannot be grossly discriminatory in its operation, so as practically to make unjust
distinctions between persons who are without differences. 40
Stated differently, the second level of inquiry deals with the following questions: Given that Congress chose to
exempt other GFIs (aside the BSP) from the coverage of the SSL, can the exclusion of the rank-and-file
employees of the BSP stand constitutional scrutiny in the light of the fact that Congress did not exclude the rankand-file employees of the other GFIs? Is Congress' power to classify so unbridled as to sanction unequal and
discriminatory treatment, simply because the inequity manifested itself, not instantly through a single overt act,
but gradually and progressively, through seven separate acts of Congress? Is the right to equal protection of the
law bounded in time and space that: (a) the right can only be invoked against a classification made directly and
deliberately, as opposed to a discrimination that arises indirectly, or as a consequence of several other acts; and
(b) is the legal analysis confined to determining the validity within the parameters of the statute or ordinance
(where the inclusion or exclusion is articulated), thereby proscribing any evaluation vis- -vis the grouping, or
the lack thereof, among several similar enactments made over a period of time?
In this second level of scrutiny, the inequality of treatment cannot be justified on the mere assertion that each
exemption (granted to the seven other GFIs) rests "on a policy determination by the legislature." All legislative
enactments necessarily rest on a policy determination even those that have been declared to contravene the
Constitution. Verily, if this could serve as a magic wand to sustain the validity of a statute, then no due process
and equal protection challenges would ever prosper. There is nothing inherently sacrosanct in a policy
determination made by Congress or by the Executive; it cannot run riot and overrun the ramparts of protection
of the Constitution.
In fine, the "policy determination" argument may support the inequality of treatment between the rank-and-file
and the officers of the BSP, but it cannot justify the inequality of treatment between BSP rank-and-file and other
GFIs' who are similarly situated. It fails to appreciate that what is at issue in the second level of scrutiny is not
the declared policy of each law per se, but the oppressive results of Congress' inconsistent and unequal
policy towards the BSP rank-and-file and those of the seven other GFIs. At bottom, the second challenge to the
constitutionality of Section 15(c), Article II of Republic Act No. 7653 is premised precisely on the irrational
discriminatory policy adopted by Congress in its treatment of persons similarly situated. In the field of equal
protection, the guarantee that "no person shall be . . . denied the equal protection of the laws" includes the
prohibition against enacting laws that allow invidious discrimination, directly or indirectly. If a law has the effect of
denying the equal protection of the law, or permits such denial, it is unconstitutional. 41
It is against this standard that the disparate treatment of the BSP rank-and-file from the other GFIs cannot stand
judicial scrutiny. For as regards the exemption from the coverage of the SSL, there exist no substantial
distinctions so as to differentiate, the BSP rank-and-file from the other rank-and-file of the seven GFIs. On the

contrary, our legal history shows that GFIs have long been recognized as comprising one distinct class,
separate from other governmental entities.
Before the SSL, Presidential Decree (P.D.) No. 985 (1976) declared it as a State policy (1) to provide equal pay
for substantially equal work, and (2) to base differences in pay upon substantive differences in duties and
responsibilities, and qualification requirements of the positions. P.D. No. 985 was passed to address disparities
in pay among similar or comparable positions which had given rise to dissension among government
employees. But even then, GFIs and government-owned and/or controlled corporations (GOCCs) were already
identified as a distinct class among government employees. Thus, Section 2 also provided, "[t]hat
notwithstanding a standardized salary system established for all employees, additional financial incentives may
be established by government corporation and financial institutions for their employees to be supported fully
from their corporate funds and for such technical positions as may be approved by the President in critical
government agencies." 42
The same favored treatment is made for the GFIs and the GOCCs under the SSL. Section 3(b) provides that
one of the principles governing the Compensation and Position Classification System of the Government is that:
"[b]asic compensation for all personnel in the government and government-owned or controlled corporations and
financial institutions shall generally be comparable with those in the private sector doing comparable work, and
must be in accordance with prevailing laws on minimum wages."
Thus, the BSP and all other GFIs and GOCCs were under the unified Compensation and Position Classification
System of the SSL, 43 but rates of pay under the SSL were determined on the basis of, among others,
prevailing rates in the private sector for comparable work. Notably, the Compensation and Position Classification
System was to be governed by the following principles: (a) just and equitable wages, with the ratio of
compensation between pay distinctions maintained at equitable levels; 44 and (b) basic compensation generally
comparable with the private sector, in accordance with prevailing laws on minimum wages. 45 Also, the
Department of Budget and Management was directed to use, as guide for preparing the Index of Occupational
Services, the Benchmark Position Schedule, and the following factors: 46
(1)the education and experience required to perform the duties and responsibilities of the
positions;
(2)the nature and complexity of the work to be performed;
(3)the kind of supervision received;
(4)mental and/or physical strain required in the completion of the work;
(5)nature and extent of internal and external relationships;
(6)kind of supervision exercised;
(7)decision-making responsibility;
(8)responsibility for accuracy of records and reports;
(9)accountability for funds, properties and equipment; and
(10)hardship, hazard and personal risk involved in the job.
The Benchmark Position Schedule enumerates the position titles that fall within Salary Grades 1 to 20.
Clearly, under R.A. No. 6758, the rank-and-file of all GFIs were similarly situated in all aspects pertaining to
compensation and position classification, in consonance with Section 5, Article IX-B of the 1997 Constitution. 47
Then came the enactment of the amended charter of the BSP, implicitly exempting the Monetary Board from the
SSL by giving it express authority to determine and institute its own compensation and wage structure. However,
employees whose positions fall under SG 19 and below were specifically limited to the rates prescribed under
the SSL.
Subsequent amendments to the charters of other GFIs followed. Significantly, each government financial
institution (GFI) was not only expressly authorized to determine and institute its own compensation and wage
structure, but also explicitly exempted without distinction as to salary grade or position all employees of
the GFI from the SSL.

It has been proffered that legislative deliberations justify the grant or withdrawal of exemption from the SSL,
based on the perceived need "to fulfill the mandate of the institution concerned considering, among others,
that: (1) the GOCC or GFI is essentially proprietary in character; (2) the GOCC or GFI is in direct competition
with their [sic] counterparts in the private sector, not only in terms of the provisions of goods or services, but also
in terms of hiring and retaining competent personnel; and (3) the GOCC or GFI are or were [sic] experiencing
difficulties filling up plantilla positions with competent personnel and/or retaining these personnel. The need for
the scope of exemption necessarily varies with the particular circumstances of each institution, and the
corresponding variance in the benefits received by the employees is merely incidental."
The fragility of this argument is manifest. First, the BSP is the central monetary authority, 48 and the banker of
the government and all its political subdivisions. 49 It has the sole power and authority to issue
currency; 50 provide policy directions in the areas of money, banking, and credit; and supervise banks and
regulate finance companies and non-bank financial institutions performing quasi-banking functions, including the
exempted GFIs. 51 Hence, the argument that the rank-and-file employees of the seven GFIs were exempted
because of the importance of their institution's mandate cannot stand any more than an empty sack can stand.
Second, it is certainly misleading to say that "the need for the scope of exemption necessarily varies with the
particular circumstances of each institution." Nowhere in the deliberations is there a cogent basis for the
exclusion of the BSP rank-and-file from the exemption which was granted to the rank-and-file of the other GFIs
and the SEC. As point in fact, the BSP and the seven GFIs are similarly situated in so far as Congress deemed it
necessary for these institutions to be exempted from the SSL. True, the SSL-exemption of the BSP and the
seven GFIs was granted in the amended charters of each GFI, enacted separately and over a period of time.
But it bears emphasis that, while each GFI has a mandate different and distinct from that of another, the
deliberations show that the raison d'etre of the SSL-exemption was inextricably linked to and for the most part
based on factors common to the eight GFIs, i.e., (1) the pivotal role they play in the economy; (2) the necessity
of hiring and retaining qualified and effective personnel to carry out the GFI's mandate; and (3) the recognition
that the compensation package of these GFIs is not competitive, and fall substantially below industry standards.
Considering further that (a) the BSP was the first GFI granted SSL exemption; and (b) the subsequent
exemptions of other GFIs did not distinguish between the officers and the rank-and-file; it is patent that the
classification made between the BSP rank-and-file and those of the other seven GFIs was inadvertent, and NOT
intended, i.e., it was not based on any substantial distinction vis- -vis the particular circumstances of each GFI.
Moreover, the exemption granted to two GFIs makes express reference to allowance and fringe benefits similar
to those extended to and currently enjoyed by the employees and personnel of other GFIs, 52 underscoring that
GFIs are a particular class within the realm of government entities.
It is precisely this unpremeditated discrepancy in treatment of the rank-and-file of the BSP made manifest and
glaring with each and every consequential grant of blanket exemption from the SSL to the other GFIs that
cannot be rationalized or justified. Even more so, when the SEC which is not a GFI was given leave to
have a compensation plan that "shall be comparable with the prevailing compensation plan in the [BSP] and
other [GFIs]," 53 then granted a blanket exemption from the SSL, and its rank-and-file endowed a more
preferred treatment than the rank-and-file of the BSP.
The violation to the equal protection clause becomes even more pronounced when we are faced with this
undeniable truth: that if Congress had enacted a law for the sole purpose of exempting the eight GFIs from the
coverage of the SSL, the exclusion of the BSP rank-and-file employees would have been devoid of any
substantial or material basis. It bears no moment, therefore, that the unlawful discrimination was not a direct
result arising from one law. "Nemo potest facere per alium quod non potest facere per directum." No one is
allowed to do indirectly what he is prohibited to do directly.
It has also been proffered that "similarities alone are not sufficient to support the conclusion that rank-and-file
employees of the BSP may be lumped together with similar employees of the other GOCCs for purposes of
compensation, position classification and qualification standards. The fact that certain persons have some
attributes in common does not automatically make them members of the same class with respect to a legislative
classification." Cited is the ruling in Johnson v. Robinson: 54 "this finding of similarity ignores that a common

characteristic shared by beneficiaries and nonbeneficiaries alike, is not sufficient to invalidate a statute when
other characteristics peculiar to only one group rationally explain the statute's different treatment of the two
groups."
The reference to Johnson is inapropos. In Johnson, the US Court sustained the validity of the classification as
there were quantitative and qualitative distinctions, expressly recognized by Congress, which formed a rational
basis for the classification limiting educational benefits to military service veterans as a means of helping them
readjust to civilian life. The Court listed the peculiar characteristics as follows:
First, the disruption caused by military service is quantitatively greater than that caused by
alternative civilian service. A conscientious objector performing alternative service is obligated
to work for two years. Service in the Armed Forces, on the other hand, involves a six-year
commitment. . . .
xxx xxx xxx
Second, the disruptions suffered by military veterans and alternative service performers are
qualitatively different. Military veterans suffer a far greater loss of personal freedom during
their service careers. Uprooted from civilian life, the military veteran becomes part of the
military establishment, subject to its discipline and potentially hazardous duty. Congress was
acutely aware of the peculiar disabilities caused by military service, in consequence of which
military servicemen have a special need for readjustment benefits. . . .55 (citations omitted)
In the case at bar, it is precisely the fact that as regards the exemption from the SSL, there are no
characteristics peculiar only to the seven GFIs or their rank-and-file so as to justify the exemption which BSP
rank-and-file employees were denied (not to mention the anomaly of the SEC getting one). The distinction made
by the law is not only superficial, 56 but also arbitrary. It is not based on substantial distinctions that make real
differences between the BSP rank-and-file and the seven other GFIs.
Moreover, the issue in this case is not as the dissenting opinion of Mme. Justice Carpio-Morales would put it
whether "being an employee of a GOCC or GFI is reasonable and sufficient basis for exemption" from R.A.
No. 6758. It is Congress itself that distinguished the GFIs from other government agencies, not once but eight
times, through the enactment of R.A. Nos. 7653, 7907, 8282, 8289, 8291, 8523,8763, and 9302. These laws
may have created a "preferred sub-class within government employees," but the present challenge is not
directed at the wisdom of these laws. Rather, it is a legal conundrum involving the exercise of legislative power,
the validity of which must be measured not only by looking at the specific exercise in and by itself (R.A. No.
7653), but also as to the legal effects brought about by seven separate exercises albeit indirectly and without
[Link]
Thus, even if petitioner had not alleged "a comparable change in the factual milieu as regards the
compensation, position classification and qualification standards of the employees of the BSP (whether of the
executive level or of the rank-and-file) since the enactment of the new Central Bank Act" is of no moment.
In GSIS v. Montesclaros, 57 this Court resolved the issue of constitutionality notwithstanding that claimant had
manifested that she was no longer interested in pursuing the case, and even when the constitutionality of the
said provision was not squarely raised as an issue, because the issue involved not only the claimant but also
others similarly situated and whose claims GSIS would also deny based on the challenged proviso. The Court
held that social justice and public interest demanded the resolution of the constitutionality of the proviso. And so
it is with the challenged proviso in the case at bar.
It bears stressing that the exemption from the SSL is a "privilege" fully within the legislative prerogative to give or
deny. However, its subsequent grant to the rank-and-file of the seven other GFIs and continued denial to the
BSP rank-and-file employees breached the latter's right to equal protection. In other words, while the granting of
a privilege per seis a matter of policy exclusively within the domain and prerogative of Congress, the validity or
legality of the exercise of this prerogative is subject to judicial review. 58 So when the distinction made is
superficial, and not based on substantial distinctions that make real differences between those included and
excluded, it becomes a matter of arbitrariness that this Court has the duty and the power to correct. 59 As held
in the United Kingdom case of Hooper v. Secretary of State for Work and Pensions, 60 once the State has
chosen to confer benefits, "discrimination" contrary to law may occur where favorable treatment already afforded

to one group is refused to another, even though the State is under no obligation to provide that favorable
treatment. 61
The disparity of treatment between BSP rank-and-file and the rank-and-file of the other seven GFIs definitely
bears the unmistakable badge of invidious discrimination no one can, with candor and fairness, deny the
discriminatory character of the subsequent blanket and total exemption of the seven other GFIs from the SSL
when such was withheld from the BSP. Alikes are being treated as unalikes without any rational basis.
Again, it must be emphasized that the equal protection clause does not demand absolute equality but it requires
that all persons shall be treated alike, under like circumstances and conditions both as to privileges conferred
and liabilities enforced. Favoritism and undue preference cannot be allowed. For the principle is that equal
protection and security shall be given to every person under circumstances which, if not identical, are
analogous. If law be looked upon in terms of burden or charges, those that fall within a class should be treated in
the same fashion; whatever restrictions cast on some in the group is equally binding on the rest. 62
In light of the lack of real and substantial distinctions that would justify the unequal treatment between the rankand-file of BSP from the seven other GFIs, it is clear that the enactment of the seven subsequent charters has
rendered the continued application of the challenged proviso anathema to the equal protection of the law, and
the same should be declared as an outlaw.
IV.
Equal Protection Under
International Lens
In our jurisdiction, the standard and analysis of equal protection challenges in the main have followed the
"rational basis" test, coupled with a deferential attitude to legislative classifications 63 and a reluctance to
invalidate a law unless there is a showing of a clear and unequivocal breach of the Constitution. 64
[Link]

Protection
in the United States

In contrast, jurisprudence in the U.S. has gone beyond the static "rational basis" test. Professor Gunther
highlights the development in equal protection jurisprudential analysis, to wit: 65
Traditionally, equal protection supported only minimal judicial intervention in most contexts.
Ordinarily, the command of equal protection was only that government must not impose
differences in treatment "except upon some reasonable differentiation fairly related to the
object of regulation." The old variety of equal protection scrutiny focused solely on
the means used by the legislature: it insisted merely that the classification in the
statute reasonably relates to the legislative purpose. Unlike substantive due process, equal
protection scrutiny was not typically concerned with identifying "fundamental values" and
restraining legislative ends. And usually the rational classification requirement was readily
satisfied: the courts did not demand a tight fit between classification and purpose; perfect
congruence between means and ends was not required.
xxx xxx xxx
[From marginal intervention to major cutting edge: The Warren Court's "new equal protection"
and the two-tier approach.]
From its traditional modest role, equal protection burgeoned into a major intervention tool
during the Warren era, especially in the 1960s. The Warren Court did not abandon the
deferential ingredients of the old equal protection: in most areas of economic and social
legislation, the demands imposed by equal protection remained as minimal as ever . . . But
the Court launched an equal protection revolution by finding large new areas for strict rather
than deferential scrutiny. A sharply differentiated two-tier approach evolved by the late 1960s:
in addition to the deferential "old" equal protection, a "new" equal protection, connoting strict
scrutiny, arose. . . . The intensive review associated with the new equal protection imposed

two demands a demand not only as to means but also one as to ends. Legislation
qualifying for strict scrutiny required a far closer fit between classification and statutory
purpose than the rough and ready flexibility traditionally tolerated by the old equal
protection: means had to be shown "necessary" to achieve statutory ends, not merely
"reasonably related" ones. Moreover, equal protection became a source of ends scrutiny as
well: legislation in the areas of the new equal protection had to be justified by "compelling"
state interests, not merely the wide spectrum of "legitimate" state ends.
The Warren Court identified the areas appropriate for strict scrutiny by searching for two
characteristics: the presence of a "suspect" classification; or an impact on "fundamental"
rights or interests. In the category of "suspect classifications," the Warren Court's major
contribution was to intensify the strict scrutiny in the traditionally interventionist area of racial
classifications. But other cases also suggested that there might be more other suspect
categories as well: illegitimacy and wealth for example. But it was the 'fundamental interests'
ingredient of the new equal protection that proved particularly dynamic, open-ended, and
amorphous . . . [Other fundamental interests included voting, criminal appeals, and the right of
interstate travel . . .]
xxx xxx xxx
The Burger Court and Equal Protection.
The Burger Court was reluctant to expand the scope of the new equal protection, although its
best established ingredient retains vitality. There was also mounting discontent with the rigid
two-tier formulations of the Warren Court's equal protection doctrine. It was prepared to use
the clause as an interventionist tool without resorting to the strict language of the new equal
protection. . . . [Among the fundamental. interests identified during this time were voting and
access to the ballot, while "suspect" classifications included sex, alienage and illegitimacy.]
xxx xxx xxx
Even while the two-tier scheme has often been adhered to in form, there has also been an
increasingly noticeable resistance to the sharp difference between deferential "old" and
interventionist "new" equal protection. A number of justices sought formulations that would
blur the sharp distinctions of the two-tiered approach or that would narrow the gap between
strict scrutiny and deferential review. The most elaborate attack came from Justice Marshall,
whose frequently stated position was developed most elaborately in his dissent in
the Rodriguez case: 66
The Court apparently seeks to establish [that] equal protection cases fall into one of
two neat categories which dictate the appropriate standard of review strict scrutiny
or mere rationality. But this (sic) Court's [decisions] defy such easy categorization. A
principled reading of what this Court has done reveals that it has applied a spectrum
of standards in reviewing discrimination allegedly violative of the equal protection
clause. This spectrum clearly comprehends variations in the degree of care with
which Court will scrutinize particular classification, depending, I believe, on the
constitutional and societal importance of the interests adversely affected and the
recognized invidiousness of the basis upon which the particular classification is
drawn.
Justice Marshall's "sliding scale" approach describes many of the modem decisions, although
it is a formulation that the majority refused to embrace. But the Burger Court's results indicate
at least two significant changes in equal protection law: First, invocation of the "old" equal
protection formula no longer signals, as it did with the Warren Court, an extreme deference to
legislative classifications and a virtually automatic validation of challenged statutes. Instead,
several cases, even while voicing the minimal "rationality" "hands-off" standards of the old
equal protection, proceed to find the statute unconstitutional. Second, in some areas
the modern Court has put forth standards for equal protection review that, while clearly more

intensive than the deference of the "old" equal protection, are less demanding than the
strictness of the "new" equal protection. Sex discrimination is the best established example of
an "intermediate" level of review. Thus, in one case, the Court said that "classifications by
gender must serve importantgovernmental objectives and must be substantially related to
achievement of those objectives." That standard is "intermediate" with respect to both ends
and means: where ends must be "compelling" to survive strict scrutiny and merely "legitimate"
under the "old" mode, "important" objectives are required here; and where means must be
"necessary" under the "new" equal protection, and merely "rationally related" under the "old"
equal protection, they must be "substantially related" to survive the "intermediate" level of
review. (emphasis supplied, citations omitted)
[Link]

Protection
in Europe

The United Kingdom and other members of the European Community have also gone forward in discriminatory
legislation and jurisprudence. Within the United Kingdom domestic law, the most extensive list of protected
grounds can be found in Article 14 of the European Convention on Human Rights (ECHR). It prohibits
discrimination on grounds such as "sex, race, colour, language, religion, political or other opinion, national or
social origin, association with a national minority, property, birth or other status." This list is illustrative and not
exhaustive. Discrimination on the basis of race, sex and religion is regarded as grounds that require strict
scrutiny. A further indication that certain forms of discrimination are regarded as particularly suspect under the
Covenant can be gleaned from Article 4, which, while allowing states to derogate from certain Covenant articles
in times of national emergency, prohibits derogation by measures that discriminate solely on the grounds of
"race, colour, language, religion or social origin." 67
Moreover, the European Court of Human Rights has developed a test of justification which varies with the
ground of discrimination. In the Belgian Linguistics case 68 the European Court set the standard of justification
at a low level: discrimination would contravene the Convention only if it had no legitimate aim, or there was no
reasonable relationship of proportionality between the means employed and the aim sought to be
realised. 69 But over the years, the European Court has developed a hierarchy of grounds covered by Article 14
of the ECHR, a much higher level of justification being required in respect of those regarded as "suspect" (sex,
race, nationality, illegitimacy, or sexual orientation) than of others. Thus, in Abdulaziz, 70 the European Court
declared that:
. . . [t]he advancement of the equality of the sexes is today a major goal in the member States
of the Council of Europe. This means that very weighty reasons would have to be advanced
before a difference of treatment on the ground of sex could be regarded as compatible with
the Convention.
And in Gaygusuz v. Austria, 71 the European Court held that "very weighty reasons would have to be put
forward before the Court could regard a difference of treatment based exclusively on the ground of nationality as
compatible with the Convention." 72 The European Court will then permit States a very much narrower margin
of appreciation in relation to discrimination on grounds of sex, race, etc., in the application of the Convention
rights than it will in relation to distinctions drawn by states between, for example, large and small landowners. 73
[Link]
International Law

under

The principle of equality has long been recognized under international law. Article 1 of the Universal Declaration
of Human Rights proclaims that all human beings are born free and equal in dignity and rights. Nondiscrimination, together with equality before the law and equal protection of the law without any discrimination,
constitutes basic principles in the protection of human rights. 74
Most, if not all, international human rights instruments include some prohibition on discrimination and/or
provisions about equality. 75 The general international provisions pertinent to discrimination and/or equality are

the International Covenant on Civil and Political Rights (ICCPR); 76 the International Covenant on Economic,
Social and Cultural Rights (ICESCR); the International Convention on the Elimination of all Forms of Racial
Discrimination (CERD); 77 the Convention on the Elimination of all Forms of Discrimination against Women
(CEDAW); and the Convention on the Rights of the Child (CRC).
In the broader international context, equality is also enshrined in regional instruments such as the American
Convention on Human Rights; 78 the African Charter on Human and People's Rights; 79 the European
Convention on Human Rights; 80 the European Social Charter of 1961 and revised Social Charter of 1996; and
the European Union Charter of Rights (of particular importance to European states). Even the Council of the
League of Arab States has adopted the Arab Charter on Human Rights in 1994, although it has yet to be ratified
by the Member States of the League. 81
The equality provisions in these instruments do not merely function as traditional "first generation" rights,
commonly viewed as concerned only with constraining rather than requiring State action. Article 26 of the ICCPR
requires "guarantee[s]" of "equal and effective protection against discrimination" while Articles 1 and 14 of the
American and European Conventions oblige States Parties "to ensure . . . the full and free exercise of [the rights
guaranteed] . . . without any discrimination" and to "secure without discrimination" the enjoyment of the rights
guaranteed. 82 These provisions impose a measure of positive obligation on States Parties to take steps to
eradicate discrimination.
In the employment field, basic detailed minimum standards ensuring equality and prevention of discrimination,
are laid down in the ICESCR 83 and in a very large number of Conventions administered by the International
Labour Organisation, a United Nations body. 84 Additionally, many of the other international and regional human
rights instruments have specific provisions relating to employment. 85
The United Nations Human Rights Committee has also gone beyond the earlier tendency to view the prohibition
against discrimination (Article 26) as confined to the ICCPR rights. 86 In Broeks 87 and Zwaan-de-Vries, 88 the
issue before the Committee was whether discriminatory provisions in the Dutch Unemployment Benefits Act
(WWV) fell within the scope of Article 26. The Dutch government submitted that discrimination in social security
benefit provision was not within the scope of Article 26, as the right was contained in the ICESCR and not the
ICCPR. They accepted that Article 26 could go beyond the rights contained in the Covenant to other civil and
political rights, such as discrimination in the field of taxation, but contended that Article 26 did not extend to the
social, economic, and cultural rights contained in ICESCR. The Committee rejected this argument. In its view,
Article 26 applied to rights beyond the Covenant including the rights in other international treaties such as the
right to social security found in ICESCR:
Although Article 26 requires that legislation should prohibit discrimination, it does not of itself
contain any obligation with respect to the matters that may be provided for by legislation. Thus
it does not, for example, require any state to enact legislation to provide for social security.
However, when such legislation is adopted in the exercise of a State's sovereign power, then
such legislation must comply with Article 26 of the Covenant. 89
Breaches of the right to equal protection occur directly or indirectly. A classification may be struck down if it has
the purpose or effect of violating the right to equal protection. International law recognizes that discrimination
may occur indirectly, as the Human Rights Committee 90 took into account the definitions of discrimination
adopted by CERD and CEDAW in declaring that:
. . . "discrimination" as used in the [ICCPR] should be understood to imply any distinction,
exclusion, restriction or preference which is based on any ground such as race, colour, sex,
language, religion, political or other opinion, national or social origin, property, birth or other
status, and which has the purpose or effect of nullifying or impairing the recognition,
enjoyment or exercise by all persons, on an equal footing, of all rights and
freedoms. 91 (emphasis supplied)
Thus, the two-tier analysis made in the case at bar of the challenged provision, and its conclusion of
unconstitutionality by subsequent operation, are in cadence and in consonance with the progressive trend of
other jurisdictions and in international law. There should be no hesitation in using the equal protection clause as
a major cutting edge to eliminate every conceivable irrational discrimination in our society. Indeed, the social

justice imperatives in the Constitution, coupled with the special status and protection afforded to labor, compel
this approach. 92
Apropos the special protection afforded to labor under our Constitution and international law, we held
in International School Alliance of Educators v. Quisumbing: 93
That public policy abhors inequality and discrimination is beyond contention. Our Constitution
and laws reflect the policy against these evils. The Constitution in the Article on Social Justice
and Human Rights exhorts Congress to "give highest priority to the enactment of measures
that protect and enhance the right of all people to human dignity, reduce social, economic,
and political inequalities." The very broad Article 19 of the Civil Code requires every person,
"in the exercise of his rights and in the performance of his duties, [to] act with justice, give
everyone his due, and observe honesty and good faith."
International law, which springs from general principles of law, likewise proscribes
discrimination. General principles of law include principles of equity, i.e., the general principles
of fairness and justice, based on the test of what is reasonable. The Universal Declaration of
Human Rights, the International Covenant on Economic, Social, and Cultural Rights, the
International Convention on the Elimination of All Forms of Racial Discrimination, the
Convention against Discrimination in Education, the Convention (No. 111) Concerning
Discrimination in Respect of Employment and Occupation all embody the general principle
against discrimination, the very antithesis of fairness and justice. The Philippines, through
its Constitution,has incorporated this principle as part of its national laws.
In the workplace, where the relations between capital and labor are often skewed in favor of
capital, inequality and discrimination by the employer are all the more reprehensible.
The Constitution specifically provides that labor is entitled to "humane conditions of work."
These conditions are not restricted to the physical workplace the factory, the office or the
field but include as well the manner by which employers treat their employees.
The Constitution also directs the State to promote "equality of employment opportunities for
all." Similarly, the Labor Code provides that the State shall "ensure equal work opportunities
regardless of sex, race or creed." It would be an affront to both the spirit and letter of these
provisions if the State, in spite of its primordial obligation to promote and ensure equal
employment opportunities, closes its eyes to unequal and discriminatory terms and conditions
of employment.
xxx xxx xxx
Notably, the International Covenant on Economic, Social, and Cultural Rights, in Article 7
thereof, provides:
The States Parties to the present Covenant recognize the right of everyone to the
enjoyment of just and [favorable] conditions of work, which ensure, in particular:
[Link] which provides all workers, as a minimum, with:
[Link] wages and equal remuneration for work of equal value without
distinction of any kind, in particular women being guaranteed
conditions of work not inferior to those enjoyed by men, with equal
pay for equal work;
xxx xxx xxx
The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal
truism of "equal pay for equal work." Persons who work with substantially equal qualifications,
skill, effort and responsibility, under similar conditions, should be paid similar salaries.
(citations omitted)
Congress retains its wide discretion in providing for a valid classification, and its policies should be accorded
recognition and respect by the courts of justice except when they run afoul of the Constitution. 94 The deference

stops where the classification violates a fundamental right, or prejudices persons accorded special protection
by the Constitution. When these violations arise, this Court must discharge its primary role as the vanguard of
constitutional guaranties, and require a stricter and more exacting adherence to constitutional limitations.
Rational basis should not suffice.
Admittedly, the view that prejudice to persons accorded special protection by the Constitution requires a stricter
judicial scrutiny finds no support in American or English jurisprudence. Nevertheless, these foreign decisions
and authorities are not per se controlling in this jurisdiction. At best, they are persuasive and have been used to
support many of our decisions. 95 We should not place undue and fawning reliance upon them and regard them
as indispensable mental crutches without which we cannot come to our own decisions through the employment
of our own endowments. We live in a different ambience and must decide our own problems in the light of our
own interests and needs, and of our qualities and even idiosyncrasies as a people, and always with our own
concept of law and justice. 96 Our laws must be construed in accordance with the intention of our own
lawmakers and such intent may be deduced from the language of each law and the context of other local
legislation related thereto. More importantly, they must be construed to serve our own public interest which is the
be-all and the end-all of all our laws. And it need not be stressed that our public interest is distinct and different
from others. 97
In the 2003 case of Francisco v. House of Representatives, this Court has stated that: "[A]merican jurisprudence
and authorities, much less the American Constitution,are of dubious application for these are no longer
controlling within our jurisdiction and have only limited persuasive merit insofar as Philippine constitutional law is
concerned. . . . [I]n resolving constitutional disputes, [this Court] should not be beguiled by foreign jurisprudence
some of which are hardly applicable because they have been dictated by different constitutional settings and
needs." 98 Indeed, although the Philippine Constitution can trace its origins to that of the United States, their
paths of development have long since diverged. 99
Further, the quest for a better and more "equal" world calls for the use of equal protection as a tool of effective
judicial intervention.
Equality is one ideal which cries out for bold attention and action in the Constitution. The
Preamble proclaims "equality" as an ideal precisely in protest against crushing inequities in
Philippine society. The command to promote social justice in Article II, Section 10, in "all
phases of national development," further explicitated in Article XIII, are clear commands to the
State to take affirmative action in the direction of greater equality. . . . [T]here is thus in
the Philippine Constitution no lack of doctrinal support for a more vigorous state effort towards
achieving a reasonable measure of equality. 100
Our present Constitution has gone further in guaranteeing vital social and economic rights to marginalized
groups of society, including labor. 101 Under the policy of social justice, the law bends over backward to
accommodate the interests of the working class on the humane justification that those with less privilege in life
should have more in law. 102 And the obligation to afford protection to labor is incumbent not only on the
legislative and executive branches but also on the judiciary to translate this pledge into a living reality. 103Social
justice calls for the humanization of laws and the equalization of social and economic forces by the State so that
justice in its rational and objectively secular conception may at least be approximated. 104
V.
A Final Word
Finally, concerns have been raised as to the propriety of a ruling voiding the challenged provision. It has been
proffered that the remedy of petitioner is not with this Court, but with Congress, which alone has the power to
erase any inequity perpetrated by R.A. No. 7653. Indeed, a bill proposing the exemption of the BSP rank-and-file
from the SSL has supposedly been filed.
Under most circumstances, the Court will exercise judicial restraint in deciding questions of constitutionality,
recognizing the broad discretion given to Congress in exercising its legislative power. Judicial scrutiny would be
based on the "rational basis" test, and the legislative discretion would be given deferential treatment. 105

But if the challenge to the statute is premised on the denial of a fundamental right, or the perpetuation of
prejudice against persons favored by the Constitution with special protection, judicial scrutiny ought to be more
strict. A weak and watered down view would call for the abdication of this Court's solemn duty to strike down any
law repugnant tothe Constitution and the rights it enshrines. This is true whether the actor committing the
unconstitutional act is a private person or the government itself or one of its instrumentalities. Oppressive acts
will be struck down regardless of the character or nature of the actor. 106
Accordingly, when the grant of power is qualified, conditional or subject to limitations, the
issue on whether or not the prescribed qualifications or conditions have been met, or the
limitations respected, is justiciable or non-political, the crux of the problem being one of
legality or validity of the contested act, not its wisdom. Otherwise, said qualifications,
conditions or limitations particularly those prescribed or imposed by the Constitution
would be set at naught. What is more, the judicial inquiry into such issue and the settlement
thereof are the main functions of courts of justice under the Presidential form of government
adopted in our 1935 Constitution, and the system of checks and balances, one of its basic
predicates. As a consequence, We have neither the authority nor the discretion to decline
passing upon said issue, but are under the ineluctable obligation made particularly more
exacting and peremptory by our oath, as members of the highest Court of the land, to support
and defend the Constitution to settle it. This explains why, in Miller v. Johnson, it was held
that courts have a "duty, rather than a power", to determine whether another branch of the
government has "kept within constitutional limits." Not satisfied with this postulate, the court
went farther and stressed that, if the Constitution provides how it may be amended as it is
in our 1935 Constitution "then, unless the manner is followed, the judiciary as the
interpreter of that constitution,will declare the amendment invalid." In fact, this very Court
speaking through Justice Laurel, an outstanding authority on Philippine Constitutional Law, as
well as one of the highly respected and foremost leaders of the Convention that drafted
the1935 Constitution declared, as early as July 15, 1936, that "(i)n times of social
disquietude or political excitement, the great landmarks of the Constitution are apt to be
forgotten or marred, if not entirely obliterated. In cases of conflict, the judicial department is
the only constitutional organ which can be called upon to determine the proper allocation of
powers between the several departments" of the government. 107 (citations
omitted; emphasis supplied) DHcESI
In the case at bar, the challenged proviso operates on the basis of the salary grade or officer-employee status. It
is akin to a distinction based on economic class and status, with the higher grades as recipients of a benefit
specifically withheld from the lower grades. Officers of the BSP now receive higher compensation packages that
are competitive with the industry, while the poorer, low-salaried employees are limited to the rates prescribed by
the SSL. The implications are quite disturbing: BSP rank-and-file employees are paid the strictly regimented
rates of the SSL while employees higher in rank possessing higher and better education and opportunities for
career advancement are given higher compensation packages to entice them to stay. Considering that
majority, if not all, the rank-and-file employees consist of people whose status and rank in life are less and
limited, especially in terms of job marketability, it is they and not the officers who have the real economic
and financial need for the adjustment. This is in accord with the policy of the Constitution "to free the people from
poverty, provide adequate social services, extend to them a decent standard of living, and improve the quality of
life for all." 108Any act of Congress that runs counter to this constitutional desideratum deserves strict scrutiny
by this Court before it can pass muster.
To be sure, the BSP rank-and-file employees merit greater concern from this Court. They represent the more
impotent rank-and-file government employees who, unlike employees in the private sector, have no specific right
to organize as a collective bargaining unit and negotiate for better terms and conditions of employment, nor the
power to hold a strike to protest unfair labor practices. Not only are they impotent as a labor unit, but their
efficacy to lobby in Congress is almost nil as R.A. No. 7653 effectively isolated them from the other GFI rankand-file in compensation. These BSP rank-and-file employees represent the politically powerless and they
should not be compelled to seek a political solution to their unequal and iniquitous treatment. Indeed, they have

waited for many years for the legislature to act. They cannot be asked to wait some more for discrimination
cannot be given any waiting time. Unless the equal protection clause of the Constitution is a mere platitude, it is
the Court's duty to save them from reasonless discrimination.
IN VIEW WHEREOF, we hold that the continued operation and implementation of the last proviso of Section
15(c), Article II of Republic Act No. 7653 is unconstitutional.
Davide, Jr., C .J ., Quisumbing,
Tinga and Chico-Nazario JJ ., concur.

Ynares-Santiago,

Sandoval-Gutierrez,

Austria-Martinez,

Azcuna,

Panganiban, J ., see dissenting opinion.

Carpio, J ., see dissenting opinion.
Corona and Callejo, Sr., JJ ., are on leave.
Carpio Morales, J ., please see my dissenting opinion.
Garcia, J ., concur with dissenting opinion of J. Carpio.
||| (Central Bank Employees Association, Inc. v. Bangko Sentral ng Pilipinas, G.R. No. 148208, [December 15,
2004], 487 PHIL 531-793)
THIRD DIVISION
[G.R. No. 141314. April 9, 2003.]
REPUBLIC OF THE PHILIPPINES REPRESENTED BY ENERGY REGULATORY
BOARD, petitioner, vs. MANILA ELECTRIC COMPANY, respondent.
[G.R. No. 141369. April 9, 2003.]
LAWYERS AGAINST MONOPOLY AND POVERTY (LAMP) consisting of CEFERINO
PADUA,
Chairman,
G.
FULTON
ACOSTA,
GALILEO
BRION,
ANATALIA
BUENAVENTURA, PEDRO CASTILLO, NAPOLEON CORONADO, ROMEO ECHAUZ,
FERNANDO GAITE, ALFREDO DE GUZMAN, ROGELIO KARAGDAG, JR., MA. LUZ
ARZAGA-MENDOZA, ANSBERTO PAREDES, AQUILINO PIMENTEL III, MARIO REYES,
EMMANUEL SANTOS, RUDEGELIO TACORDA, members, and ROLANDO ARZAGA,
Secretary-General, JUSTICE ABRAHAM SARMIENTO, SENATOR AQUILINO PIMENTEL,
JR. and COMMISSIONER BARTOLOME FERNANDEZ, JR., Board of Consultants, and
Lawyer
GENARO
LUALHATI, petitioners, vs.
MANILA
ELECTRIC
COMPANY
(MERALCO), respondent.
The Solicitor General for petitioners.
Ceferino Padua Law Office for Lawyers Against Monopoly and Poverty (LAMP).
Quiason Makalintal Barot Torres & Ibarra for MERALCO Puno & Puno for Intervenor.
SYNOPSIS
For resolution herein is the motion for reconsideration filed by respondent Manila Electric Company (Meralco)
from the decision of the Supreme Court reducing Meralco's rate adjustment in the amount of P0.017 per kwh for
its billing cycles beginning 1994 and further directing Meralco to credit the excess average amount of P0.167 per
kwh to its customers starting with Meralco billing cycles beginning February, 1994. In this motion for
reconsideration, Meralco contended that (1) the deduction of income tax from revenues allowed from rate
determination of public utilities is a part of its constitutional right to property; (2) it correctly used the "average
investment method" or the "simple average" in computing the value of its properties entitled to a return instead of
the "net average investment method" or the "number of months use method"; and (3) the decision of the ERB
(Energy Regulatory Board) ordering the refund of P0.167 per kwh to its customers should not be given
retroactive effect.
The Supreme Court denied with finality Meralco's motion for reconsideration. According to the Court, rate
regulation calls for a careful consideration of the totality of facts and circumstances material to each application
for an upward rate revision. In this case, even if income tax is to be included as an operating expense and,

hence, recoverable from the consuming public, Meralco would still enjoy a rate of return that is above the
authorized rate of 12%. Public utilities cannot be allowed to overcharge at the expense of the public, and worse,
they cannot complain that they are not overcharging enough. The Court also found no reversible error on the
part of COA and the ERB in adopting the "net average investment method" or the "number of months use
method" for property valuation purposes. Such matters are primarily entrusted to the said administrative or
regulating authorities, which the courts are ill equipped to enter. The Court ruled that the audit procedures
conducted in a rate application proceeding is to determine whether the rate applied for will generate a
reasonable return for public utility, which, in accordance with settled laws and jurisprudence, is 12% on rate base
or the present value of the assets used in the operations of a public utility. Hence, the ERB decision ordering a
refund to Meralco customers should be given retroactive effect.
SYLLABUS
1. STATUTORY CONSTRUCTION; STATUTES; MUST BE CONSTRUED IN ACCORDANCE WITH THE
INTENTION OF OUR OWN LAWMAKERS; APPLICATION IN CASE AT BAR. American decisions and
authorities are not per se controlling in this jurisdiction. At best, they are persuasive for no court holds a patent
on correct decisions. Our laws must be construed in accordance with the intention of our own lawmakers and
such intent may be deduced from the language of each law and the context of other local legislation related
thereto. More importantly, they must be construed to serve our own public interest which is the be-all and the
end-all of all our laws. And it need not be stressed that our public interest is distinct and different from others.
Rate regulation calls for a careful consideration of the totality of facts and circumstances material to each
application for an upward rate revision. Rate regulators should strain to strike a balance between the clashing
interests of the public utility and the consuming public and the balance must assure a reasonable rate of return
to public utilities without being unreasonable to the consuming public. What is reasonable or unreasonable
depends on a calculus of changing circumstances that ebb and flow with time. Yesterday cannot govern today,
no more than today can determine tomorrow.
2. POLITICAL LAW; ADMINISTRATIVE LAW; ENERGY REGULATORY COMMISSION (ERC); MANDATED TO
REGULATE AND FACILITATE THE UNBUNDLING OF RATES PRESCRIBED BY SECTION 36 OF
THE ELECTRIC POWER INDUSTRY REFORM ACT OF 2001 (EPIRA); CASE AT BAR. Under Section 36 of
the EPIRA, (Electric Power Industry Reform Act of 2001) the NPC and every distribution facility covered by the
law is mandated to unbundle, segregate or itemize its rates according to the various sectors of the electric power
industry identified in the law, namely: generation, transmission, distribution and supply. The law further directs
the ERC to regulate and facilitate the unbundling of rates prescribed by Section 36. Thus, on October 30, 2001,
the ERC issued guidelines prescribing the uniform rate filing requirements to be followed by distribution facilities
for the purposes of unbundling rates. A proper appreciation of the UFR shows that it simply specifies a uniform
accounting system to be complied with by a distribution facility when filing an application for revised rates under
the EPIRA. As the EPIRA requires the unbundling or segregation of rates according to the different sectors of
the electric power industry, the UFR seeks to facilitate this process by properly identifying the accounts or
information required for proper evaluation by the ERB. Thus, the introductory statements of the UFR provide:
These uniform rate filing requirements are intended to promote consistency and completeness in the rate filings
required by Republic Act No. 9136 (RA 9136), Section 36. To that end, the filing requirements only specify
minimum form and content. A rate application in all its aspects continues to be subject to subsequent
Commission review and deliberation. At the onset, it is clear that the UFR does not seek to determine which
accounting method will be used by the ERC for determination of rate base or the items of expenses that may be
recovered by a public utility from its customers. The UFR only seeks to prescribe a uniform system or format to
standardize or facilitate the process of unbundling of rates mandated by the EPIRA. At best, the UFR prescribes
the set of raw data or figures to be disclosed by a distribution facility that the ERC will need to determine the
authorized rates that a distribution facility may charge. The UFR does not, in any way, determine the manner by
which the set of data or figures indicated in the rate application will be evaluated by the ERC for rate
determination purposes. ACHEaI
3. ID.; ID.; ID.; FINDINGS OF ADMINISTRATIVE OR REGULATORY AGENCIES ON MATTERS WHICH ARE
WITHIN THEIR TECHNICAL AREA OF EXPERTISE, GENERALLY ACCORDED NOT ONLY RESPECT BUT AT
TIMES EVEN FINALITY; PRESENT IN CASE AT BAR. The rule then as it is now, is that rate regulating

authorities are not hidebound to use any single formula or combination of formulas for property valuation
purposes because the rate-making process involves the balancing of investor and consumer interests which
takes into account various factors that may be unique or peculiar to a particular rate revision application. We
again stress the long established doctrine that findings of administrative or regulatory agencies on matters which
are within their technical area of expertise are generally accorded not only respect but at times even finality if
such findings and conclusions are supported by substantial evidence. Rate fixing calls for a technical
examination and a specialized review of specific details which the courts are ill-equipped to enter, hence, such
matters are primarily entrusted to the administrative or regulating authority.
4. ID.; COMMISSION ON AUDIT; ESSENCE OF THE USE OF A "TEST YEAR" FOR AUDITING PURPOSES;
CONSTRUED IN CASE AT BAR. The purpose of the audit procedures conducted in a rate application
proceeding is to determine whether the rate applied for will generate a reasonable return for the public utility,
which, in accordance with settled laws and jurisprudence, is 12% on rate base or the present value of the assets
used in the operations of a public utility. For audit purposes, however, there is a need to obtain a sample set of
data usually derived from figures within a designated period of time to determine the amount of returns
obtained by a public utility during such period. In the cases at bar, the COA conducted an audit for the test year
beginning February 1, 1994 and ending January 31, 1995 or a 12-month period immediately after the order of
the ERB granting a provisional increase in the amount of P0.184 per kwh was issued. Thus, the ultimate issue
resolved by the COA when it conducted its audit was whether the provisional increase granted by the ERB
generated an amount of return well within the rates authorized by law. As stated earlier, based on the findings of
the ERB, with the increase of P0.184 per kwh, MERALCO obtained a rate of return which was 8.15% more than
the authorized rate of return of 12%. Thus, a refund in the amount of P0.167 was determined and ordered by
ERB. The essence of the use of a "test year" for auditing purposes is to obtain a sample or representative set of
figures to enable the examining authority to arrive at a conclusion or finding based on the gathered data. The
use of a "test year" does not mean that the information and conclusions so derived would only be correct for that
year and would be incorrect on the succeeding years. The use of a "test year" assumes that within a reasonable
period after such test year, figures used to determine the amount of return would only vary slightly from the
figures culled during the test year such that the impact on the utility's rate of return would not be very significant.
Thus, in the event that there is a substantial change in circumstances significantly affecting the variable amounts
that would determine the reasonableness of a return, an event which would normally occur after a certain period
of time has elapsed, the public utility may subsequently apply for a rate revision.
Panganiban, J., separate opinion:
REMEDIAL LAW; APPEAL TO THE SUPREME COURT; WHEN ORAL ARGUMENTS DEEMED PROPER;
RATIONALE. There are still lingering questions that need to be answered or clarified before the Motion for
Reconsideration of Meralco should be resolved. These questions were not fully taken up by the pleadings of the
parties. Thus, it would be pretentious for me to render an opinion on them. On the other hand, I believe that a
decision that does not take up these questions would be incomplete. Hearing the parties on Oral Argument
before the entire Court, or even by just the Third Division, prior to resolving with finality the motion for
reconsideration on a very important matter such as the present case is not unusual. In fact, with due respect, I
believe that this is the proper thing to do. After all, very recently in PLDT v. City of Davao (GR No. 143863,
March 27, 1993), the Court en banc conducted an Oral Argument on the Motion for Reconsideration challenging
the unanimous Decision of the Second Division. That case involved the legality of whether a local government
unit (LGU) like the City of Davao may impose local taxes on the Philippine Long Distance Telephone Company.
The amount involved there was only about P4 million. On the other hand, the present case involves the refund of
about P2.5 billion per year starting 1994, or about P20 billion up to the year 2003. Apart from the monetary
consideration, I believe the issues raised including the foregoing questions are important enough to merit a
hearing also. May I stress that this case will affect not only Meralco and its customers but all electric utilities
and all their customers all over the Philippines, which means this case will affect all the people of this country.
RESOLUTION
PUNO, J p:

The business and operations of a public utility are imbued with public interest. In a very real sense, a public
utility is engaged in public service providing basic commodities and services indispensable to the interest of
the general public. For this reason, a public utility submits to the regulation of government authorities and
surrenders certain business prerogatives, including the amount of rates that may be charged by it. It is the
imperative duty of the State to interpose its protective power whenever too much profits become the priority of
public utilities.
For resolution is the Motion for Reconsideration filed by respondent Manila Electric Company (MERALCO) on
December 5, 2002 from the decision of this Court dated November 15, 2002 reducing MERALCO's rate
adjustment in the amount of P0.017 per kilowatthour (kwh) for its billing cycles beginning 1994 and further
directing MERALCO to credit the excess amount of P0.167 per kwh to its customers starting with MERALCO's
billing cycles beginning February 1994. 1
First, we leapfrog through the facts. On December 23, 1993, MERALCO filed with the Energy Regulatory Board
(ERB) an application for revised rates, with an average increase of P0.21 per kwh in its distribution charge. On
January 28, 1994 the ERB granted a provisional increase of P0.184 per kwh subject to the condition that in the
event the ERB determines that MERALCO is entitled to a lesser increase in rates, all excess amounts collected
by MERALCO shall be refunded to its customers or credited in their favor. The Commission on Audit (COA)
conducted an examination of the books of accounts and records of MERALCO and thereafter recommended,
among others, that: (1) income taxes paid by MERALCO should not be included as part of MERALCO's
operating expenses and (2) the "net average investment method" or the "number of months use method" should
be applied in determining the proportionate value of the properties used by MERALCO during the test year.
In its decision dated February 16, 1998, the ERB adopted the recommendations of the COA and authorized
MERALCO to adopt a rate adjustment of P0.017 per kilowatthour (kwh)for its billing cycles beginning 1994. The
ERB further directed MERALCO to credit the excess average amount of P0.167 per kwh to its
customers starting with MERALCO's billing cycles beginning February 1994. The said ruling of the ERB was
affirmed by this Court in its decision dated November 15, 2002.
In its Motion for Reconsideration, respondent MERALCO contends that: (1) the deduction of income tax from
revenues allowed for rate determination of public utilities is part of its constitutional right to property; (2) it
correctly used the "average investment method" or the "simple average" in computing the value of its properties
entitled to a return instead of the "net average investment method" or the "number of months use method"; and
(3) the decision of the ERB ordering the refund of P0.167 per kwh to its customers should not be given
retroactive effect. 2
The Republic of the Philippines through the ERB, now Energy Regulatory Commission (ERC), represented by
the Office of the Solicitor General, filed its Comment on March 7, 2003. Surprisingly, in its Comment, the ERC
proffered a divergent view from the Office of the Solicitor General. The ERC submits that income taxes are not
operating expenses but are reasonable costs that may be recoverable from the consuming public. While the
ERC admits that "there is still no categorical determination on whether income tax should indeed be deducted
from revenues of a public utility," it agrees with MERALCO that to disallow public utilities from recovering its
income tax payments will effectively lower the return on rate base enjoyed by a public utility to 8%. The ERC,
however, agrees with this Court's ruling that the use of the "net average investment method" or the "number of
months use method" is not unreasonable. 3
The Office of the Solicitor General, under its solemn duty to protect the interests of the people, defended the
thesis that income tax payments by a public utility should not be recovered as costs from consuming public. It
contended that: (1) the foreign jurisprudence cited by MERALCO in support of its position is not applicable in this
jurisdiction; (2) MERALCO was given a fair rate of return; (3) the COA and the ERB followed the National
Accounting and Auditing Manual which expressly disallows the treatment of income tax as operating expense;
(4) Executive Order No. 72 does not grant electric utilities the privilege of treating income tax as operating
expense; (5) the COA and the ERB have been consistent in not allowing income tax as part of operating
expenses; (6) ERB decisions allowing the application of a tax recovery clause are inapropos; (7) allowing
MERALCO to treat income tax as an operating expense would set a dangerous precedent; (8) assuming that the
disallowance of income tax as operating expense would discourage foreign investors and lenders, the

government is not precluded from enacting laws and instituting measures to lure them back; and (9) the findings
and conclusions of the ERB carry great weight and should be binding on the courts in the absence of grave
abuse of discretion. The Solicitor General agrees with the ERC that the "net average investment method" is a
reasonable method for property valuation. Finally, the Solicitor General argues that the ERB decision may be
applied retroactively and the use of a test period to determine the rate base and allowable rates to be collected
by a public utility is an accepted practice. 4
We shall discuss the main issues in seriatim.
I
MERALCO argues that deduction of all kinds of taxes, including income tax from the gross revenues of a public
utility is firmly entrenched in American jurisprudence. It contends that the Public Service Act (Commonwealth Act
No. 146) was patterned after Act 2306 of the Philippine Commission, which, in turn, was borrowed from
American state public utility laws such as the New Jersey Public Utility Act. Hence, it maintains that American
jurisprudence on the inclusion of income taxes as a lawful charge to operating expenses should be controlling. It
cites the rule on statutory construction that a statute adopted from a foreign country will be presumed to be
adopted with the construction placed upon it by the courts of that country before its adoption. 5
We are not persuaded. American decisions and authorities are not per se controlling in this jurisdiction. At best,
they are persuasive for no court hold a patent on correct decisions. Our laws must be construed in accordance
with the intention of our own lawmakers and such intent may be deduced from the language of each law and the
context of other local legislation related thereto. More importantly, they must be construed to serve our own
public interest which is the be-all and the end-all of all our laws. And it need not be stressed that our public
interest is distinct and different from others.
Rate regulation calls for a careful consideration of the totality of facts and circumstances material to each
application for an upward rate revision. Rate regulators should strain to strike a balance between the clashing
interests of the public utility and the consuming public and the balance must assure a reasonable rate of return
to public utilities without being unreasonable to the consuming public. What is reasonable or unreasonable
depends on a calculus of changing circumstances that ebb and flow with time. Yesterday cannot govern today,
no more than today can determine tomorrow.
Prescinding from these premises, we reject MERALCO's insistence that the non-inclusion of income tax
payments as a legitimate operating expense will deny public utilities a fair return of their investment. This
stubborn stance is belied by the report submitted by the COA on the audit conducted on MERALCO's books of
accounts and the findings of the ERB. 6
Upon the instructions of the ERB, the COA conducted an audit of the operations of MERALCO covering the
period from February 1, 1994 to January 31, 1995, or the period immediately after the implementation of the
provisional rate increase. 7 Hence, amounts culled by the COA from its examination of the books of MERALCO
already included the provisional rate increase of P0.184 granted by the ERB. SAHIaD
From the figures submitted by the COA, the ERB was able to determine that MERALCO derived excess
revenue during the test year in the amount of P2,448,378,000. 8 This means that during the test year, and after
the rates were increased by P0.184, MERALCO earned P2,448,378,000 or 8.15% more than the amount it
should have earned at a 12% rate of return on rate base. Accordingly, based on this amount of excess revenue,
the ERB determined that the provisional rate granted by it to MERALCO was P0.167 per kwh more than the
amount MERALCO ought to charge its customers to obtain the prescribed 12% rate of return on rate
base. Thus, the ERB correspondingly lowered the provisional increase byP0.167 per kwh and ordered
MERALCO to increase its rates at a reduced amount of P0.017 per kwh, computed as follows: 9
At appraised value
Total Invested Capital Entitled P30,059,614,000 10
to Return
12% return thereon P 3,607,154,000

Add: Total Operating expenses P38,260,420,000 11

for Rate Determination
Purposes
Computed Revenue P41,867,573,000
Actual Revenue P44,315,951,000
Excess Revenue P 2,448,378,000
Percent of Excess Revenue to 8.15%
Invested Capital
Authorized Rate of Return 12.00%
Actual Rate of Return 20.15%
Total kwh sold 14,640,094,000
Ratio of Excess Revenue to P 0.167
Total kwh Sold
In fact, even if MERALCO's income tax liability would be included as an operating expense, MERALCO would
still enjoy excess revenue of P312,738,000.00 or 1.04% above the authorized rate of return of 12%. Based on its
audit, the COA determined that the provision for income tax liability of MERALCO amounted to
P2,135,639,000.00. 12 Thus, even if such amount of income tax liability would be included as operating
expense, the amount of excess revenue earned by MERALCO during the test year would be more than
sufficient to cover the additional income tax expense. Thus:
At appraised value
Total Invested Capital Entitled P30,059,614,000
to Return
12% return thereon P 3,607,154,000
Add: Total Operating expenses P40,396,059,000 13
for Rate Determination
Purposes
Computed Revenue P44,033,213,000
Actual Revenue P44,315,951,000
Excess Revenue P 312,738,000
Percent of Excess Revenue to 1.04%
Invested Capital
Authorized Rate of Return 12.00%
Actual Rate of Return 13.04%
It is crystal clear, therefore, that even if income tax is to be included as an operating expense and hence,
recoverable from the consuming public, MERALCO would still enjoy a rate of return that is above the authorized
rate of 12%. Public utilities cannot be allowed to overcharge at the expense of the public and worse, they cannot
complain that they are not overcharging enough.
Be that as it may, MERALCO contends that considering income tax payments of public utilities constitute onethird of their net income, public utilities will effectively get, not the 12% rate of return on rate base allowed them,
but only about 8%. 14 Again, we are not persuaded.
The foregoing argument assumes that the 12% return allowed to public utilities is equivalent to its taxable
income which will be subject to income tax. The 12% rate of return is computed only for the purpose of fixing the
allowable rates to be charged by a public utility and is in no way determinative of the income subject to income
tax of the public utility. The computation of a corporation's income tax liability is an altogether different matter,

with the corporation's taxable income derived by taking into account the corporation's gross revenue less
allowable deductions. 15
At any rate, even on the assumption that in the test year involved (February 1, 1994 to January 31, 1995),
MERALCO's computed revenue of P41,867,573,000 or the amount that it is allowed to earn based on a 12%
rate of return is its taxable income after payment of its income tax liability of P2,135,639,000.00, MERALCO
would still obtain an 11.38% rate of return or a return that is well within the 12% rate allowed to public utilities. 16
MERALCO also contends that even the successor of the ERB or the ERC created under the Electric Power
Industry Reform Act of 2001 (EPIRA)17 "adheres to the principle that income tax is part of operating
expenses." 18 To bolster its argument, MERALCO cites Article 36 of the EPIRA which charges the ERC with the
responsibility of unbundling the rates of the National Power Corporation (NPC) and each distribution utility
coming within the coverage of the law. 19 MERALCO alleges that pursuant to said provision, the ERC issued a
set of Uniform Rate Filing Requirements (UFR) containing guidelines to be followed with respect to rate
unbundling applications to be filed. MERALCO asserts that under the UFR, the enumeration of the expenses
which are to be recovered through the rates, and which are to be separated or allocated for the purpose of
unbundling of these rates include income tax expenses.
Under Section 36 of the EPIRA, the NPC and every distribution facility covered by the law is mandated to
unbundle, segregate or itemize its rates according to the various sectors of the electric power industry identified
in the law, namely: generation, transmission, distribution and supply. 20 The law further directs the ERC to
regulate and facilitate the unbundling of rates prescribed by Section 36. Thus, on October 30, 2001, the ERC
issued guidelines prescribing the uniform rate filing requirements to be followed by distribution facilities for the
purposes of unbundling rates. 21
A proper appreciation of the UFR shows that it simply specifies a uniform accounting system to be complied with
by a distribution facility when filing an application for revised rates under the EPIRA. As the EPIRA requires the
unbundling or segregation of rates according to the different sectors of the electric power industry, the UFR
seeks to facilitate this process by properly identifying the accounts or information required for the proper
evaluation by the ERB. Thus, the introductory statements of the UFR provide:
These uniform rate filing requirements are intended to promote consistency and completeness
in the rate filings required by Republic Act No. 9136 (RA 9136), Section 36. To that end, the
filing requirements only specify minimum form and content. A rate application in all its aspects
continues to be subject to subsequent Commission review and deliberation. 22
At the onset, it is clear that UFR does not seek to determine which accounting method will be used by the ERC
for determination of rate base or the items of expenses that may be recovered by a public utility from its
customers. The UFR only seeks to prescribe a uniform system or format to standardize or facilitate the process
of unbundling of rates mandated by the EPIRA. At best, the UFR prescribes the set of raw data or figures to be
disclosed by a distribution facility that the ERC will need to determine the authorized rates that a distribution
facility may charge. The UFR does not, in any way, determine the manner by which the set of data or figures
indicated in the rate application will be evaluated by the ERC for rate determination purposes.
II
MERALCO also challenges the use of the "net average investment method" or the number of months use
method" on the ground that MERALCO and the Public Service Commission (PSC) have been consistently
applying the "average investment method" or "simple average," which it alleged was also affirmed by this Court
in the case ofMERALCO v. PSC 23 and Republic v. Medina. 24
It is true that in MERALCO v. PSC, 25 the issue of the proper valuation method to be used in determining the
value of MERALCO's utility plants for rate fixing purposes was brought to fore. In the said case, MERALCO
applied the "average investment method" or "simple average" by obtaining the average value of the utility plants,
using its values at the beginning and at the end of the test year. In contrast, the General Auditing Office used the
"appraisal method" which fixes the value of the utility plants by ascertaining the cost of production per kilowatt
and multiplying the same by the total capacity of said plants, less the corresponding depreciation. 26 In
upholding the "average investment method" used by MERALCO, this Court adopted the findings of the PSC for

being "by and large, supported by the records of the case." 27 This Court did not make an independent
assessment of the validity or applicability of the average investment method but simply did not disturb the
findings of the PSC for being supported by substantial evidence. To conclude that the said decision "affirmed"
the use of the "average investment method" thereby implying that the said method is the only method to be
applied in all instances, is a strained reading of the decision.
In fact, in the case of Republic v. Medina, 28 also cited by MERALCO to have affirmed the use of the "average
investment method," this Court ruled:
The decided weight of authority, however, is to the effect that property valuation is not to be
solved by formula but depends upon the particular circumstances and relevant facts affecting
each utility as to what constitutes a just rate base and what would be a fair return, just to both
the utility and the public. 29
Further, Mr. Justice Castro in his concurring opinion in the same case elucidated:
A regulatory commission's field of inquiry, however, is not confined to the computation of the
cost of service or capital nor to a mere prognostication of the future behavior of the money
and capital markets. It must also balance investor and consumer expectations in such a way
that broad requirements of public interest may be meaningfully realized. It would hence
appear in keeping with its public duty if a regulatory body is allowed wide discretion in the
choice of methods rationally related to the achievement of this end. 30
Thus, the rule then as it is now, is that rate regulating authorities are not hidebound to use any single formula or
combination of formulas for property valuation purposes because the rate-making process involves the
balancing of investor and consumer interests which takes into account various factors that may be unique or
peculiar to a particular rate revision application.
We again stress the long established doctrine that findings of administrative or regulatory agencies on matters
which are within their technical area of expertise are generally accorded not only respect but at times even
finality if such findings and conclusions are supported by substantial evidence. 31 Rate fixing calls for a technical
examination and a specialized review of specific details which the courts are ill-equipped to enter, hence, such
matters are primarily entrusted to the administrative or regulating authority. 32
Thus, this Court finds no reversible error on the part of the COA and the ERB in adopting the "net average
investment method" or the "number of months use method" for property valuation purposes in the cases at bar.
III
MERALCO also rants against the retroactive application of the rate adjustment ordered by the ERB and affirmed
by this Court. In its decision, the ERB, after authorizing MERALCO to adopt a rate adjustment in the amount of
P0.017 per kwh, directed MERALCO to refund or credit to its customers' future consumption the excess average
amount of P0.167 per kwh from its billing cycles beginning February 1994 33 until its billing cycles beginning
February 1998. 34 In the decision appealed from, this Court likewise ordered that the refund in the average
amount of P0.167 per kwh be made to retroact from MERALCO's billing cycles beginning February 1994.
MERALCO contends that the refund cannot be given retroactive effect as the figures determined by the ERB
only apply to the test year or the period subject of the COA Audit, i.e., February 1, 1994 to January 31, 1995. It
reasoned that the amounts used to determine the proper rates to be charged by MERALCO would vary from
year to year and thus the computation of the excess average charge of P0.167 would hold true only for the test
year. Thus, MERALCO argues that if a refund of P0.167 would be uniformly applied to its billing cycles beginning
1994, with respect to periods after January 31, 1995, there will be instances wherein its operating revenues
would fall below the 12% authorized rate of return. MERALCO therefore suggests that the dispositive portion be
modified and order that "the refund applicable to the periods after January 31, 1995 is to be computed on the
basis of the excess collection in proportion to the excess over the 12% return." 35
The purpose of the audit procedures conducted in a rate application proceedings is to determine whether the
rate applied for will generate a reasonable return for the public utility, which, in accordance with settled laws and
jurisprudence, is 12% on rate base or the present value of the assets used in the operations of a public utility.

For audit purposes, however, there is a need to obtain a sample set of data usually derived from figures
within a designated period of time to determine the amount of returns obtained by a public utility during such
period. In the cases at bar, the COA conducted an audit for the test year beginning February 1, 1994 and ending
January 31, 1995 or a 12-month period immediately after the order of the ERB granting a provisional increase in
the amount of P0.184 per kwh was issued. Thus, the ultimate issue resolved by the COA when it conducted its
audit was whether the provisional increase granted by the ERB generated an amount of return well within the
rates authorized by law. As stated earlier, based on the findings of the ERB, with the increase of P0.184 per kwh,
MERALCO obtained a rate of return which has 8.15% more than the authorized rate of return of 12%. 36Thus, a
refund in the amount of P0.167 was determined and ordered by ERB.
The essence of the use of a "test year" for auditing purposes is to obtain a sample or representative set of
figures to enable the examining authority to arrive at a conclusion or finding based on the gathered data. The
use of a "test year" does not mean that the information and conclusions so derived would only be correct for that
year and would be incorrect on the succeeding years. The use of a "test year" assumes that within a reasonable
period after such test year, figures used to determine the amount of return would only vary slightly from the
figures culled during the test year such that the impact on the utility's rate of return would not be very significant.
Thus, in the event that there is a substantial change in circumstances significantly affecting the variable amounts
that would determine the reasonableness of a return, an event which would normally occur after a certain period
of time has elapsed, the public utility may subsequently apply for a rate revision.
We agree with the Solicitor General that following MERALCO's reasoning that the figures culled from a test year
would only be relevant during such year there would be a need for public utilities to apply for a rate
adjustment every year and perform an audit examination on a public utility's books of accounts every year as the
amount of a utility's revenue may fall above or below the authorized rates at any given year. Needless to say, the
trajectory of MERALCO's arguments will lead to an absurdity.
From the time the order granting a provisional increase was issued by the ERB, nowhere in the records does it
appear that the subsequent refund of P0.167 per kwh ordered by the ERB was ever implemented or executed
by MERALCO. 37 Accordingly, from January 28, 1994 MERALCO imposed on its customers charge that is
P0.167 in excess of the proper amount. In fact, any application for rate adjustment that may have been applied
or and/or granted to MERALCO during the intervening period would have to be reckoned from rates increased
by P0.184 per kwh as these were the rates prevailing at the time any application for rate adjustment was made
by MERALCO.
While we agree that the amounts used to determine the utility's rate of return would vary from year to year, we
are unable to subscribe to the view that the refund applicable to the periods after January 31, 1995 should be
computed on the basis of the excess collection in proportion to the excess over the 12% return. MERALCO's
contention that the refund for periods after January 31, 1995 should be computed on the basis of revenue of
each year in excess of the 12% authorized rate of return calls for a year-by-year computation of MERALCO's
revenues and assets which would be contrary to the essence of an audit examination of a public utility based on
a test year. To grant MERALCO's prayer would, in effect, allow MERALCO the benefit of a year-by-year
adjustment of rates not normally enjoyed by any other public utility required to adopt a subsequent rate
modification. Indeed, had the ERB ordered an increase in the provisional rates it previously granted, said
increase in rates would apply retroactively and would not have varied from year to year, depending on the
variable amounts used to determine the authorized rates that may be charged by MERALCO. We find no
significant circumstance prevailing in the cases at bar that would justify the application of a yearly adjustment as
requested by MERALCO.
WHEREFORE, in view of the foregoing, the petitioner's Motion for Reconsideration is DENIED WITH
FINALITY. IHDCcT
SO ORDERED.
Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.
Panganiban, J., see separate opinion.
||| (Republic v. Manila Electric Co., G.R. No. 141314, 141369, [April 9, 2003], 449 PHIL 118-142)

EN BANC
[G.R. No. 212398. November 25, 2014.]
EMILIO RAMON "E.R." P. EJERCITO, petitioner, vs. HON. COMMISSION ON ELECTIONS
and EDGAR "EGAY" S. SAN LUIS, respondents.
DECISION
PERALTA, J p:
Contested in this petition for certiorari under Rule 64, in relation to Rule 65 of the Rules of Court (Rules), is the
May 21, 2014 Resolution 1 of the Commission on Elections(COMELEC) En Banc in SPA No. 13-306 (DC),
which affirmed the September 26, 2013 Resolution 2 of the COMELEC First Division granting the petition for
disqualification filed by private respondent Edgar "Egay" S. San Luis (San Luis) against petitioner Emilio Ramon
"E.R." P. Ejercito (Ejercito).
Three days prior to the May 13, 2013 National and Local Elections, a petition for disqualification was filed by San
Luis before the Office of the COMELEC Clerk in Manila against Ejercito, who was a fellow gubernatorial
candidate and, at the time, the incumbent Governor of the Province of Laguna. 3 Alleged in his Petition are as
follows:
FIRST CAUSE OF ACTION
5. [Ejercito], during the campaign period for 2013 local election, distributed to the electorates
of the province of Laguna the so-called "Orange Card" with an intent to influence, induce or
corrupt the voters in voting for his favor. Copy thereof is hereto attached and marked as
Annex "C" and made as an integral part hereof;
6. In furtherance of his candidacy for the position of Provincial Governor of Laguna, [Ejercito]
and his cohorts claimed that the said "Orange Card" could be used in any public hospital
within the Province of Laguna for their medical needs as declared by the statements of
witnesses which are hereto attached and marked as Annex "D" as integral part hereof;
7. The so-called "Orange Card" is considered a material consideration in convincing the
voters to cast their votes for [Ejercito's] favor in clear violation of the provision of the Omnibus
Election Code which provides and I quote:
"Sec. 68. Disqualifications. Any candidate who, in an action or protest in which he
is a party is declared by final decision by a competent court guilty of, or found by the
Commission of having (a) given money or other material consideration to influence,
induce or corrupt the voters or public officials performing electoral functions; (b)
committed acts of terrorism to enhance his candidacy; (c) spent in his election
campaign an amount in excess of that allowed by this Code; (d) solicited, received or
made any contribution prohibited under Sections 89, 95, 96, 97 and 104; or (e)
violated any of Sections 80, 83, 85, 86, and 261, paragraphs d, e, k, v, and cc,
subparagraph 6, shall be disqualified from continuing as a candidate, or if he has
been elected, from holding the office. Any person who is a permanent resident of or
an immigrant to a foreign country shall not be qualified to run for any elective office
under this Code, unless said person has waived his status as permanent resident or
immigrant of a foreign country in accordance with the residence requirement provided
for in the election laws." (emphasis ours)
8. Thus, pursuant to the mandate of the aforesaid law, [Ejercito] should be disqualified;
SECOND CAUSE OF ACTION
9. Based on the records of the Provincial COMELEC, the Province of Laguna has a total of
1,525,522 registered electorate. A certification issued by the Provincial Election Supervisor is
hereto attached and marked as Annex "E" as an integral part hereof;

10. In this regard, par. (a), Section 5 of COMELEC Resolution No. 9615, otherwise known as
the Rules and Regulations Implementing FAIR ELECTION ACT provides and I quote:
"Authorized Expenses of Candidates and Parties. The aggregate amount that a
candidate or party may spent for election campaign shall be as follows:
a. For candidates Three pesos (P3.00) for every voter currently registered in the
constituency where the candidate filed his certificate of candidacy.
b. For other candidates without any political party and without any support from any
political party Five pesos (P5.00) for every voter currently registered in the
constituency where the candidate filed his certificate of candidacy.
c. For Political Parties and party-list groups Five pesos (P5.00) for every voter
currently registered in the constituency or constituencies where it has official
candidates. (underscoring mine for emphasis)
11. Accordingly, a candidate for the position of Provincial Governor of Laguna is only
authorized to incur an election expense amounting to FOUR MILLION FIVE
HUNDRED SEVENTY-SIX THOUSAND FIVE HUNDRED SIXTY-SIX (P4,576,566.00)
PESOS.
12. However, in total disregard and violation of the afore-quoted provision of law,
[Ejercito] exceeded his expenditures in relation to his campaign for the 2013 election.
For television campaign commercials alone, [Ejercito] already spent the sum of
PhP23,730.784 based on our party's official monitoring on the following dates[:] April
28, May 4 & May 5, 2013.
Network
ABS-CBN

Date

Program

April 28, 2013 TV Patrol

Time
5:58 p.m.

Duration
4 minutes

Amount*
P3,297,496

(approximately)
ABS-CBN

April 28, 2013 Sundays Best 10:40 p.m.

(local specials)

GMA

April 28, 2013 Sunday Night

April 28, 2013 Sunday Night

10:46 p.m.

April 28, 2013 Sunday Night

11:06 p.m.

April 28, 2013 Sunday Night

11:18 p.m.

May 4, 2013

TODA MAX

4 minutes

P2,635,200

4 minutes

P2,635,200

(approximately)
11:47 p.m.

Box Office
ABS-CBN

P2,635,200

(approximately)

Box Office
GMA

3 minutes
(approximately)

Box Office
GMA

P3,297,496

(approximately)

Box Office
GMA

4 minutes

4 minutes

P2,635,200

(approximately)
11:26 p.m.

4 minutes

P3,297,496

(approximately)
ABS-CBN

May 5, 2013

Rated K

8:06 p.m.

4 minutes

P3,297,496

(approximately)

Total

P23,730.784
==========

* Total cost based on published rate card;

13. Even assuming that [Ejercito] was given 30% discount as prescribed under
the Fair Election Act, he still exceeded in the total allowable expenditures for which he
paid the sum of P16,611,549;
14. In view of the foregoing disquisitions, it is evident that [Ejercito] committed an
election offense as provided for under Section 35 of COMELEC Resolution No. 9615,
which provides and I quote:
"Election Offense. Any violation of R.A. No. 9006 and
these Rules shall constitute an election offense punishable under
the first and second paragraph of Section 264 of the Omnibus
Election Code in addition to administrative liability, whenever
applicable. . . ."
15. Moreover, it is crystal clear that [Ejercito] violated Sec. 68 of the Omnibus Election
Code which provides and I quote:
"Sec. 68. Disqualifications. Any candidate who, in an
action or protest in which he is a party is declared by final decision
by a competent court guilty of, or found by the Commission of
having (a) given money or other material consideration to influence,
induce or corrupt the voters or public officials performing electoral
functions; (b) committed acts of terrorism to enhance his
candidacy; (c) spent in his election campaign an amount in excess
of that allowed by this Code; (d) solicited, received or made any
contribution prohibited under Sections 89, 95, 96, 97 and 104; or
(e) violated any of Sections 80, 83, 85, 86, and 261, paragraphs d,
e, k, v, and cc, subparagraph 6, shall be disqualified from
continuing as a candidate, or if he has been elected, from holding
the office. Any person who is a permanent resident of or an
immigrant to a foreign country shall not be qualified to run for any
elective office under this Code, unless said person has waived his
status as permanent resident or immigrant of a foreign country in
accordance with the residence requirement provided for in the
election laws." (emphasis ours)
16. On the other hand, the effect of disqualification is provided under Sec. 6
of Republic Act No. 6646, which states and I quote:
"Effect of Disqualification Case. Any candidate who has
been declared by final judgment to be disqualified shall not be
voted for, and the votes cast for him shall not be counted. If for any
reason a candidate is not declared by final judgment before an
election to be disqualified and he is voted for and receives the
winning number of votes in such election, the Court or Commission
shall continue with the trial and hearing of the action, inquiry or
protest and, upon motion of the complainant or any intervenor, may
during the pendency thereof order the suspension of the
proclamation of such candidate whenever the evidence of [his] guilt
is strong." (emphasis mine)
PRAYER
WHEREFORE, premises considered, it is respectfully prayed that:
1. Upon filing of this petition, a declaration by the Honorable Commission of the existence of
probable cause be made against [Ejercito] for violating the afore-quoted provisions of laws;

2. In the event that [Ejercito] will be able to get a majority vote of the electorate of the Province
of Laguna on May 13, 2013, his proclamation be suspended until further order of the
Honorable Commission pursuant to Sec. 6 of Republic Act No. 6646;
3. Lastly, a criminal case for VIOLATION OF ELECTION LAWS be filed against [Ejercito]
before the proper court[;] [and]
4. Other relief, just and equitable under the premises, are also prayed for. 4
Subsequently, on May 16, 2013, San Luis filed a Very Urgent Ex-Parte Motion to Issue Suspension
of Possible Proclamation of Respondent and Supplemental to the Very Urgent Ex-Parte Motion to Issue
Suspension of Possible Proclamation of Respondent. 5 However, these were not acted upon by the
COMELEC. The next day, Ejercito and Ramil L. Hernandez were proclaimed by the Provincial Board of
Canvassers as the duly-elected Governor and Vice-Governor, respectively, of Laguna. 6 Based on the
Provincial/District Certificate of Canvass, Ejercito obtained 549,310 votes compared with San Luis' 471,209
votes. 7
The COMELEC First Division issued a Summons with Notice of Conference on June 4, 2013. 8 Ejercito then
filed his Verified Answer on June 13, 2013 that prayed for the dismissal of the petition due to procedural and
substantive irregularities and taking into account his proclamation as Provincial Governor. 9 He countered that
the petition was improperly filed because, based on the averments and relief prayed for, it is in reality a
complaint for election offenses; thus, the case should have been filed before the COMELEC Law Department, or
the election registrar, provincial election supervisor or regional election director, or the state, provincial or city
prosecutor in accordance with Laurel v. Presiding Judge, RTC, Manila, Br. 10. 10 Assuming that the petition
could be given due course, Ejercito argued that San Luis failed to show, conformably with Codilla, Sr. v. Hon. De
Venecia,11 that he (Ejercito) was previously convicted or declared by final judgment of a competent court for
being guilty of, or found by the COMELEC of having committed, the punishable acts under Section 68 of Batas
Pambansa (B.P.) Bilang 881, or the Omnibus Election Code of the Philippines, as amended (OEC). 12
As to the acts he allegedly committed, Ejercito claimed that the same are baseless, unfounded, and totally
speculative. He stated that the Health Access Program or the E.R. "Orange Card" was a priority project of his
administration as incumbent Governor of Laguna and was never intended to influence the electorate during the
May 2013 elections. He added that the "Orange Card," which addressed the increasing need for and the high
cost of quality health services, provides the Laguneos not only access to medical services but also the privilege
to avail free livelihood seminars to help them find alternative sources of income. With respect to the charge of
having exceeded the total allowable election expenditures, Ejercito submitted that the accusation deserves no
consideration for being speculative, self-serving, and uncorroborated by any other substantial evidence.
Citing Sinaca v. Mula, 13 Ejercito asserted that the petition questioning his qualification was rendered moot and
academic by his proclamation as the duly-elected Provincial Governor of Laguna for the term 2013-2016. He
perceived that his successful electoral bid substantiates the fact that he was an eligible candidate and that his
victory is a testament that he is more than qualified and competent to hold public office.
Lastly, Ejercito considered San Luis' petition for disqualification as purely frivolous and with no plain and clear
purpose but to harass and cause undue hardship. According to him, the fact that it was filed only a few days
before the May 13, 2013 elections evidently shows that it was lodged as a last-ditch effort to baselessly derail
and obstruct his assumption of office and function as the duly-elected Laguna Governor.
The scheduled case conference between the parties on June 13, 2013 was reset to June 27, 2013. 14 In the
latter date, all the documentary exhibits were marked in evidence and the parties agreed to file their respective
memorandum within ten (10) days. 15
San Luis substantially reiterated the content of the Petition in his Memorandum. 16 Additionally, he alleged that:
15. After the election, [San Luis] was able to secure documents from the Information and
Education Department of the Commission on Elections showing that [Ejercito] have incurred
advertising expenses with ABS-CBN in the amount of [P20,197,170.25] not to mention his
advertisement with GMA 7. Copies of the summary report, media purchase order, advertising

contract[,] and official receipt are marked as EXHS. "B-1", "B-2", "B-3", and "B-4" (Annexes
"A", "B", "C", and "D", supplemental to the very urgent ex-partemotion)[.] 17
It was stressed that the case is a "Special Action for Disqualification" seeking to disqualify Ejercito as
gubernatorial candidate for violation of Section 68 (a) (c) of the OEC. He prayed that "[t]he Petition BE
GRANTED [and] . . . [Ejercito] BE DISQUALIFIED, and PREVENTED from further holding office as Governor of
Laguna." 18 In refutation of Ejercito's defenses, San Luis argued that it is precisely because of the commission
of the election offenses under Section 68 of the OEC that he (Ejercito) should be disqualified. Also, citing
Section 6 of Republic Act (R.A.) No. 6646, 19 San Luis contended that Ejercito's proclamation and assumption
of office do not affect the COMELEC's jurisdiction to continue with the trial and hearing of the action until it is
finally resolved.
For his part, Ejercito filed a Manifestation (In Lieu of Memorandum) 20 restating all the arguments set forth in
his Verified Answer.
On September 26, 2013, the COMELEC First Division promulgated a Resolution, the dispositive portion of which
reads:
WHEREFORE, premises considered, the Commission (First Division) RESOLVED, as it
hereby RESOLVES, to:
(1) GRANT the Petition for Disqualification filed against respondent Emilio Ramon
"E.R." P. Ejercito;
(2) DISQUALIFY respondent Ejercito from holding the Office of the Provincial
Governor of Laguna, pursuant to Section 68 of the Omnibus Election Code;
(3) ORDER respondent Ejercito to CEASE and DESIST from performing the functions
of the Office of the Provincial Governor of Laguna;
(4) DECLARE a permanent VACANCY in the Office of the Provincial Governor of
Laguna;
(5) DIRECT the duly elected Vice Governor of Laguna to assume the Office of the
Provincial Governor by virtue of succession as provided in Section 44 of
the Local Government Code; and
(6) DIRECT the Campaign Finance Unit to coordinate with the Law Department of this
Commission for the conduct of a preliminary investigation into the alleged
violations of campaign finance laws, rules and regulations committed by
respondent Ejercito.
SO ORDERED. 21
On procedural matters, the COMELEC First Division held that the title of San Luis' petition and its reliance on
Section 68 (a) (c) of the OEC as grounds for his causes of action clearly show that the case was brought under
Rule 25 of the COMELEC Rules of Procedure, 22 as amended by COMELEC Resolution No. 9523, 23 which
allows petitions for disqualification to be filed "any day after the last day for filing of certificates of candidacy, but
not later than the date of proclamation." No credence was given to Ejercito's contention that the petition was
mooted by his proclamation as Governor of Laguna. The COMELEC First Division opined that the case
of Sinaca is inapplicable, because it was not about Sinaca's eligibility or whether he committed any of the acts
enumerated in Section 68 of the OEC. Consistent with Maquiling v. Commission on Elections, 24 it was declared
that Ejercito's garnering of more votes than San Luis in the May 2013 elections is not tantamount to condonation
of any act or acts that he committed which may be found to be a ground for disqualification or election offense.
The COMELEC First Division settled the substantive issues put forth in the petition for disqualification in this
wise:
Anent [San Luis'] first cause of action, [San Luis] presented the Sworn Statement dated [May
7, 2013] of a certain Mrs. Daisy A. Cornelio, together with the "Orange Card" issued to Mrs.
Cornelio, marked respectively as Exhibits "A-4" and "A-3" as per [San Luis'] Summary of
Exhibits to prove that [Ejercito] committed the act described in Section 68(a) of the OEC.

After reviewing Mrs. Cornelio's Sworn Statement, we do not find any averment to the effect
that the Orange Card was given to the affiant to influence or induce her to vote for [Ejercito].
Affiant only stated that she was given the Orange Card "last April of this year" and that she
was "not able to use it during those times when [she] or one of [her] family members got sick
and needed hospital assistance." Aside from Mrs. Cornelio's Sworn Statement, there is no
other evidence to support [San Luis'] claim, leading us to reject [San Luis'] first cause of
action.
With respect to the second cause of action, [San Luis] presented Exhibits "B-1" to "B-4", which
are submissions made by the ABS-CBN Corporation as mandated by Section 6 ofRepublic
Act No. 9006 ("RA 9006" or the "Fair Election Act"), implemented through Section 9(a)
of Resolution No. 9615. Exhibit "B-3" is an Advertising Contract between ABS-CBN
Corporation and Scenema Concept International, Inc. ("SCI"). The details of the Contract are
as follows:
Payor/Advertiser

Scenema Concept International, Inc.

Beneficiary

Jeorge "ER" Ejercito Estregan

Broadcast Schedule

April 27, 28, May 3, 4, 10 & 11, 2013

Number of Spots

6 spots of 3.5 minutes each

Unit Cost per Spot

PhP3,366,195.04

Total Cost of Contract

PhP20,197,170.25 plus VAT

=====================

The Contract contains the signature of [Ejercito] signifying his acceptance of the donation by
SCI, the latter represented by its Executive Vice President, Ms. Maylyn Enriquez. In addition
to the advertising contract, Exhibit "B-4" was submitted, which is a photocopy of an Official
Receipt issued by ABS-CBN for the contract, with the following details:
Date of the Receipt

[April 26, 2013]

Received From

Scenema Concept International, Inc.

Amount Received

PhP6,409,235.28

Official Receipt No.

278499

Upon verification of the submitted Exhibits "B-1" to "B-4" with this Commission's Education
and Information Department (EID), the latter having custody of all advertising contracts
submitted by broadcast stations and entities in relation to the [May 13, 2013] National and
Local Elections, we find the said Exhibits to be faithful reproductions of our file copy of the
same. A comparison of [Ejercito's] signature on the Advertising Contract and that on
his Certificate of Candidacy show them to be identical to each other, leading us to the
conclusion that [Ejercito] had indeed accepted the PhP20,197,170.25 donation in the form of
television advertisements to be aired on ABS-CBN's Channel 2. Even if we were to assume
that only PhP6,409,235.28 was actually paid out of PhP20,197,170.25 advertising contract,
this amount is still more than PhP4,576,566.00, which is [Ejercito's] total authorized aggregate
amount allowed for his election campaign, computed as follows:
Number of registered
voters for the whole
Province of Laguna

Authorized expense
x

per voter registered

in the constituency

Total amount of
=

spending allowed
for election campaign

1,525,522 registered

PhP3.00 per voter

PhP4,576,566.00

voters in Laguna
While not presented as evidence in this case, we cannot deny the existence of
another Advertising Contract dated [May 8, 2013] for one (1) spot of a 3.5-minute
advertisement scheduled for broadcast on [May 9, 2013], amounting to PhP3,366,195.05.
This Contract also contains the signature of [Ejercito] accepting the donation from SCI and is
accompanied by an ABS-CBN-issued Official Receipt No. 279513 dated [May 7, 2013] in
SCI's name for PhP6,409,235.28. If we add the amounts from both contracts, we arrive at a
total cost of PhP23,563,365.29, which, coincidentally, is the product of:
Number of spots

Unit cost per spot

Total contract cost

Seven (7) spots

PhP3,366,195.04

PhP23,563,365.28

This matches the data gathered by the Commission's EID from the reports and logs submitted
by broadcast stations as required by the Fair Election Act. According to the 99-pageDaily
Operations Log for Channel 2 submitted by ABS-CBN covering the period of [April 27, 2013]
to [May 11, 2013], [Ejercito's] 3.5-minute or 210-second advertisement was aired seven (7)
times. The specific details on the dates of airing, program or time slot when the
advertisements were aired, and the time when the advertisements as culled from the 99page Daily Operations Log are summarized as thus:
Date aired

Program/Time Slot

Airtime

28 Apr 2013

TV Patrol Linggo/5:20-5:30 pm

[Link] PM

28 Apr 2013

Harapan Senatorial Debate/[Link] pm

[Link] PM

04 May 2013

TODA MAX/10:30-11:15 pm

[Link] PM

05 May 2013

Rated K-Handa Na Ba
Kayo/7:15-8:15 pm

[Link] PM

09 May 2013

TV Patrol/6:30-7:45 pm

[Link] PM

10 May 2013

TV Patrol/6:30-7:45 pm

[Link] PM

11 May 2013

TV Patrol Sabado/5:30-6:00 pm

[Link] PM

Source:

Pages 6, 8, 43, 47, 75, 84, and 93 of ABS-CBN

Channel 2 Daily
Operations Log for [April 27,
2013] to [May 11, 2013].

Assuming arguendo, that the actual cost of both contracts only amounted to
PhP12,818,470.56 as substantiated by the two (2) Official Receipts issued by the ABS-CBN
on [April 26] and [May 7, 2013], or even if we were only to consider Exhibit ["B-4"] or the
Php6,409,235.28 payment to ABS-CBN on [April 26, 2013], it nevertheless supports our
finding that [Ejercito] exceeded his authorized expenditure limit of PhP4,576,566.00 which is a
ground for disqualification under Section 68(c) and concurrently an election offense pursuant
to Section 100 in relation to Section 262 of the Omnibus Election Code. 25

Only Ejercito filed a Verified Motion for Reconsideration before the COMELEC En Banc. 26 After the parties'
exchange of pleadings, 27 the Resolution of the COMELEC First Division was unanimously affirmed on May 21,
2014.
The COMELEC En Banc agreed with the findings of its First Division that San Luis' petition is an action to
disqualify Ejercito, reasoning that:
. . . First, the title of the petition indicating that it is a petition for disqualification clearly
expresses the objective of the action. Second, it is manifest from the language of the petition
that the causes of action have relied primarily on Section 68(a) and (c) of the OEC[,] which
are grounds for disqualification . . . . Third, notwithstanding that the relief portion of the petition
sounded vague in its prayer for the disqualification of Ejercito, the allegations and arguments
set forth therein are obviously geared towards seeking his disqualification for having
committed acts listed as grounds for disqualification in Section 68 of OEC. Lastly, as correctly
observed by the COMELEC First Division, San Luis'Memorandum addresses and clarifies the
intention of the petition when it prayed for Ejercito to "be disqualified and prevented from
holding office as Governor of Laguna." While there is a prayer seeking that Ejercito be held
accountable for having committed election offenses, there can be no doubt that the petition
was primarily for his disqualification.
Section 68 of the OEC expressly grants COMELEC the power to take cognizance of an action
or protest seeking the disqualification of a candidate who has committed any of the acts listed
therein from continuing as one, or if he or she has been elected, from holding office. One
ground for disqualification listed in Section 68 is spending in an election campaign an amount
in excess of that allowed by law. It is exactly on said ground that San Luis is seeking the
disqualification of Ejercito. The jurisdiction of COMELEC over the petition, therefore, is
clear. 28
The alleged violation of Ejercito's constitutional right to due process was also not sustained:
Ejercito insists that he was deprived of his right to notice and hearing and was not informed of
the true nature of the case filed against him when San Luis was allegedly allowed in his
memorandum to make as substantial amendment in the reliefs prayed for in his petition. San
Luis was allegedly allowed to seek for Ejercito's disqualification instead of the filing of an
election offense against him.
As discussed above, the allegations in the petition, particularly the causes of action, clearly
show that it is not merely a complaint for an election offense but a disqualification case
against Ejercito as well. San Luis' memorandum merely amplified and clarified the allegations
and arguments in his petition. There was no change in the cause or causes of action.
Ejercito[,] therefore, cannot claim that he was not aware of the true nature of the petition filed
against him.
Likewise, Ejercito cannot complain that he was deprived of his right to notice and hearing. He
cannot feign ignorance that the COMELEC First Division, throughout the trial, was hearing the
petition as a disqualification case and not as an election offense case. He was served
with Summons with Notice of Conference on [June 4, 2013] and was given a copy of the
petition. He likewise submitted to the jurisdiction of the Commission when he filed his Verified
Answer. He also participated in the Preliminary Conference on [June 27, 2013] wherein he
examined evidence on record and presented his own documentary exhibits. Lastly, he filed
a Manifestation (in lieu of Memorandum) incorporating all his allegations and defenses.
Ejercito contends that amending the reliefs prayed for is prohibited under Section 2, Rule 9 of
the 1993 COMELEC Rules of Procedure. He asserts that the relief prayed for in the
memorandum is not the same as that in the petition. However, a scrutiny of said amendment
shows that no new issues were introduced. Moreover, there was no departure from the
causes of action and no material alterations on the grounds of relief. The amendment[,]

therefore[,] is not substantial as it merely rectifies or corrects the true nature of reliefs being
prayed for as set forth in the petition.
The records of the case will show that Ejercito has been afforded the opportunity to contest
and rebut all the allegations against him. He was never deprived of his right to have access to
the evidence against him. He was adequately aware of the nature and implication of the
disqualification case against him. Thus, Ejercito cannot say that he was denied of his
constitutional right to due process.
It is important to note at this point that Ejercito, in his motion for reconsideration, deliberately
did not tackle the merit and substance of the charges against him. He limited himself to raising
procedural issues. This is despite all the opportunity that he was given to confront the
evidence lodged against him. Therefore, there is no reason for the COMELEC En Banc to
disturb the findings of the COMELEC First Division on whether Ejercito indeed over-spent in
his campaign for governorship of Laguna in the [May 13, 2013] National and Local
Elections. 29
Anchoring on the case of Lanot v. Commission on Elections, 30 the COMELEC En Banc likewise debunked
Ejercito's assertion that the petition was prematurely and improperly filed on the ground that the filing of an
election offense and the factual determination on the existence of probable cause are required before a
disqualification case based on Section 68 of the OEC may proceed. It held:
As discussed in the case of Lanot vs. Comelec, each of the acts listed as ground for
disqualification under Section 68 of the OEC has two aspects electoral and criminal which
may proceed independently from each other, to wit:
. . . The electoral aspect of a disqualification case determines whether the offender
should be disqualified from being a candidate or from holding office. Proceedings are
summary in character and require only clear preponderance of evidence. An erring
candidate may be disqualified even without prior determination of probable
cause in a preliminary investigation. The electoral aspect may proceed
independently of the criminal aspect, and vice-versa.
The criminal aspect of a disqualification case determines whether there is probable
cause to charge a candidate for an election offense. The prosecutor is the
COMELEC, through its Law Department, which determines whether probable cause
exists. If there is probable cause, the COMELEC, through its Law Department, files
the criminal information before the proper court. Proceedings before the proper court
demand a full-blown hearing and require proof beyond reasonable doubt to convict. A
criminal conviction shall result in the disqualification of the offender, which may even
include disqualification from holding a future public office." (Emphasis supplied) 31
The petition for disqualification against Ejercito for campaign over-spending before the
Commission is heard and resolved pursuant to the electoral aspect of Section 68 of theOEC.
It is an administrative proceeding separate and distinct from the criminal proceeding through
which Ejercito may be made to undergo in order to determine whether he can be held
criminally liable for the same act of over-spending. It is through this administrative proceeding
that this Commission, initially through its divisions, makes a factual determination on the
veracity of the parties' respective allegations in a disqualification case. There is no need for a
preliminary investigation finding on the criminal aspect of the offenses in Section 68 before the
Commission can act on the administrative or electoral aspect of the offense. All that is needed
is a complaint or a petition. As enunciated inLanot, "(a)n erring candidate may be disqualified
even without prior determination of probable cause in a preliminary investigation. The
electoral aspect may proceed independently of the criminal aspect, and vice-versa."
Moreover, Ejercito's reliance on Codilla is misplaced. The COMELEC En Banc opined that the portion of
the Codilla decision that referred to the necessity of the conduct of preliminary investigation pertains to cases
where the offenders are charged with acts not covered by Section 68 of the OEC, and are, therefore, beyond the

ambit of the COMELEC's jurisdiction. It said that the decision refers to this type of cases as criminal (not
administrative) in nature, and, thus, should be handled through the criminal process.
Further rejected was Ejercito's argument that the COMELEC lost its jurisdiction over the petition for
disqualification the moment he was proclaimed as the duly-elected Governor of Laguna. For the COMELEC En
Banc, its First Division thoroughly and sufficiently addressed the matter when it relied on Maquiling instead
of Sinaca. It maintained that Section 5 of COMELEC Resolution No. 9523, not COMELEC Resolution No.
2050, 32 is relevant to the instant case as it states that the COMELEC shall continue the trial and hearing of a
pending disqualification case despite the proclamation of a winner. It was noted that the proper application of
COMELEC Resolution No. 2050 was already clarified in Sunga v. COMELEC. 33
Finally, the COMELEC En Banc ruled on one of San Luis' contentions in his Comment/Opposition to Ejercito's
motion for reconsideration. He argued that he becomes the winner in the gubernatorial election upon the
disqualification of Ejercito. Relying on Maquiling, San Luis declared that he was not the second placer as he
obtained the highest number of valid votes cast from among the qualified candidates. In denying
that Maquiling is on all fours with this case, the COMELEC En Banc said:
In the instant case, Ejercito cannot be considered as a non-candidate by reason of his
disqualification under Section 68 of the OEC. He was a candidate who filed a valid certificate
of candidacy which was never cancelled.
Ejercito was a bona fide candidate who was disqualified, not because of any ineligibility
existing at the time of the filing of the certificate of candidacy, but because he violated the
rules of candidacy. His disqualifying circumstance, that is, his having over-spent in his
campaign, did not exist at the time of the filing of his certificate of candidacy. It did not affect
the validity of the votes cast in his favor. Notwithstanding his disqualification, he remains the
candidate who garnered the highest number of votes.
Ejercito cannot be on the same footing with Arnado in the Maquiling case. Arnado was
disqualified from running for Mayor of Kauswagan, Lanao Del Sur because he was a dual
citizen not qualified to run for election. His disqualification existed at the time of the filing of the
certificate of candidacy. The effect, pursuant to the Maquiling case, is that the votes he
garnered are void, which in turn resulted in having considered the "second placer"
Maquiling as the candidate who obtained the highest number of valid votes cast.
San Luis is in a different circumstance. The votes for the disqualified winning candidate
remained valid. Ergo, San Luis, being the second placer in the vote count, remains the
second placer. He cannot[,] thus[,] be named the winner.
Section 6, Rule 25 of the COMELEC Resolution No. 9523, which governs Section 68 petitions
for disqualification, enunciates the rule succinctly, to wit:
Section 6. Effect of Granting of Petition. In the event a Petition to disqualify a
candidate is granted by final judgment as defined under Section 8 of Rule 23 and the
disqualified candidate obtains the highest number of votes, the candidate with the
second highest number of votes cannot be proclaimed and the rule of succession, if
allowed by law, shall be observed. In the event the rule of succession is not allowed, a
vacancy shall exist for such position. 34
On May 23, 2014, Ejercito filed before this Court a Petition for certiorari with application for the issuance of
a status quo ante order or temporary restraining order (TRO)/writ of preliminary injunction (WPI). 35 Without
issuing a TRO/WPI, the Honorable Chief Justice, Maria Lourdes P. A. Sereno, issued on May 28, 2014 an order
to respondents to comment on the petition within a non-extendible period of ten (10) days from notice. 36 Such
order was confirmed nunc pro tunc by the Court En Banc on June 3, 2014. 37
Meantime, on May 26, 2014, Ejercito filed before the COMELEC En Banc an Omnibus Motion to suspend
proceedings and to defer the implementation of the May 21, 2014 Resolution. 38 On the same day, San Luis
also filed an Extremely Urgent Motion to Declare COMELEC En Banc Resolution of May 21, 2014 and First
Division Resolution of September 26, 2013 Final and Executory and to Issue Forthwith Writ of Execution or

Implementing Order 39 invoking Paragraph 2, Section 8 of COMELEC Resolution No. 9523, in relation to
Section 13 (b), Rule 18 of the COMELEC Rules of Procedure. 40 On May 27, 2014, the COMELEC En
Banc issued an Order denying Ejercito's omnibus motion, granted San Luis' extremely urgent motion, and
directed the Clerk of the Commission to issue the corresponding writ of execution. 41 On even date, ViceGovernor Hernandez was sworn in as the Governor of Laguna at the COMELEC Main Office in Manila. The
service of the writ was deemed completed and validly served upon Ejercito on May 28, 2014. 42
In his petition before Us, Ejercito raised the following issues for resolution:
THE COMMISSION COMMITTED GRAVE ABUSE OF DISCRETION IN THAT:
(I) IT VIOLATED THE RIGHT OF PETITIONER TO DUE PROCESS WHEN IT RULED FOR
THE DISQUALIFICATION OF PETITIONER EVEN IF IT WAS NEVER PRAYED FOR IN THE
PETITION. WORSE, THERE IS YET NO FINDING OF GUILT BY A COMPETENT COURT
OR A FINDING OF FACT STATING THAT PETITIONER ACTUALLY COMMITTED THE
ALLEGED ELECTION OFFENSE OF OVERSPENDING;
(II) IT RELIED ON A DOCUMENTARY EXHIBIT (ADVERTISING CONTRACT) WHICH WAS
NOT EVEN FORMALLY OFFERED AS EVIDENCE; [AND]
(III) IT DISQUALIFIED PETITIONER FOR AN ACT DONE BY A THIRD PARTY WHO SIMPLY
EXERCISED ITS RIGHT TO FREE EXPRESSION WITHOUT THE KNOWLEDGE AND
CONSENT OF PETITIONER[.] 43
The petition is unmeritorious.
A special civil action for certiorari under Rule 64, in relation to Rule 65, is an independent action that is available
only if there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law. 44 It is
a legal remedy that is limited to the resolution of jurisdictional issues and is not meant to correct simple errors of
judgment. 45 More importantly, it will only prosper if grave abuse of discretion is alleged and is actually proved to
exist. 46
Grave abuse of discretion arises when a lower court or tribunal violates the Constitution, the
law or existing jurisprudence. It means such capricious and whimsical exercise of judgment as
would amount to lack of jurisdiction; it contemplates a situation where the power is exercised
in an arbitrary or despotic manner by reason of passion or personal hostility, so patent and
gross as to amount to an evasion of positive duty or a virtual refusal to perform the duty
enjoined by law. . . . . 47
Ejercito failed to prove that the COMELEC rendered its assailed Resolution with grave abuse of discretion.
We now explain.
The petition filed by San Luis
against Ejercito is for the
latter's disqualification and
prosecution for election
offense
Ejercito insists that his alleged acts of giving material consideration in the form of "Orange Cards" and election
overspending are considered as election offenses under Section 35 of COMELEC Resolution No. 9615, 48 in
relation to Section 13 49 of R.A. No. 9006, and punishable under Section 264 50 of the OEC. Considering that
San Luis' petition partakes of the nature of a complaint for election offenses, the COMELEC First Division has no
jurisdiction over the same based on COMELEC Resolution No. 9386 51 and Section 265 52 of the OEC.
Still, Ejercito contends that the COMELEC erroneously sanctioned a change in San Luis' cause of action by the
mere expedient of changing the prayer in the latter'sMemorandum. According to him, San Luis' additional prayer
for disqualification in the Memorandum is a substantial amendment to the Petition as it constitutes a material
deviation from the original cause of action from a complaint for election offenses to a petition for
disqualification. Since such substantial amendment was effected after the case was set for hearing, Ejercito

maintains that the same should have been allowed only with prior leave of the COMELEC First Division pursuant
to Section 2, Rule 9 53 of the COMELEC Rules of Procedure, which San Luis never did.
The arguments are untenable.
The purpose of a disqualification proceeding is to prevent the candidate from running or, if elected, from serving,
or to prosecute him for violation of the election laws. 54 A petition to disqualify a candidate may be filed pursuant
to Section 68 of the OEC, which states:
SEC. 68. Disqualifications. Any candidate who, in an action or protest in which he is a
party is declared by final decision of a competent court guilty of, or found by the Commission
of having: (a) given money or other material consideration to influence, induce or corrupt the
voters or public officials performing electoral functions; (b) committed acts of terrorism to
enhance his candidacy; (c) spent in his election campaign an amount in excess of that
allowed by this Code; (d) solicited, received or made any contribution prohibited under
Sections 89, 95, 96, 97 and 104; or (e) violated any of Sections 80, 83, 85, 86 and 261,
paragraphs d, e, k, v, and cc, sub-paragraph 6, shall be disqualified from continuing as a
candidate, or if he has been elected, from holding the office. Any person who is a permanent
resident of or an immigrant to a foreign country shall not be qualified to run for any elective
office under this Code, unless said person has waived his status as permanent resident or
immigrant of a foreign country in accordance with the residence requirement provided for in
the election laws.
The prohibited acts covered by Section 68 (e) refer to election campaign or partisan political activity outside the
campaign period (Section 80); removal, destruction or defacement of lawful election propaganda (Section 83);
certain forms of election propaganda (Section 85); violation of rules and regulations on election propaganda
through mass media; coercion of subordinates (Section 261 [d]); threats, intimidation, terrorism, use of
fraudulent device or other forms of coercion (Section 261 [e]); unlawful electioneering (Section 261 [k]); release,
disbursement or expenditure of public funds (Section 261 [v]); solicitation of votes or undertaking any
propaganda on the day of the election within the restricted areas (Section 261 [cc], sub-par. 6). All the offenses
mentioned in Section 68 refer to election offenses under the OEC, not to violations of other penal laws. In other
words, offenses that are punished in laws other than in the OEC cannot be a ground for a Section 68 petition.
Thus, We have held:
. . . [T]he jurisdiction of the COMELEC to disqualify candidates is limited to those enumerated
in Section 68 of the [OEC]. All other election offenses are beyond the ambit of COMELEC
jurisdiction. They are criminal and not administrative in nature. Pursuant to Sections 265 and
268 of the [OEC], the power of the COMELEC is confined to the conduct of preliminary
investigation on the alleged election offenses for the purpose of prosecuting the alleged
offenders before the regular courts of justice, viz.:
"Section 265. Prosecution. The Commission shall, through its duly authorized legal
officers, have the exclusive power to conduct preliminary investigation of all election
offenses punishable under this Code, and to prosecute the same. The Commission
may avail of the assistance of other prosecuting arms of the government:Provided,
however, That in the event that the Commission fails to act on any complaint within
four months from its filing, the complainant may file the complaint with the office of the
fiscal or with the Ministry of Justice for proper investigation and prosecution, if
warranted.
xxx xxx xxx
Section 268. Jurisdiction. The regional trial court shall have the exclusive original
jurisdiction to try and decide any criminal action or proceeding for violation of this
Code, except those relating to the offense of failure to register or failure to vote which
shall be under the jurisdictions of metropolitan or municipal trial courts. From the
decision of the courts, appeal will lie as in other criminal cases." 55

In the case at bar, the COMELEC First Division and COMELEC En Banc correctly ruled that the petition filed by
San Luis against Ejercito is not just for prosecution of election offense but for disqualification as well. Indeed, the
following are clear indications:
1. The title of San Luis' petition shows that the case was brought under Rule 25 of the
COMELEC Rules of Procedure, as amended by COMELEC Resolution No.
9523. 56 This expresses the objective of the action since Rule 25 is the specific rule
governing the disqualification of candidates.
2. The averments of San Luis' petition rely on Section 68 (a) and (c) of the OEC as grounds
for its causes of action. Section 68 of the OEC precisely enumerates the grounds for
the disqualification of a candidate for elective position and provides, as penalty, that
the candidate shall be disqualified from continuing as such, or if he or she has been
elected, from holding the office.
3. Paragraph 2 of San Luis' prayer in the petition states that "[in the event that [Ejercito] will be
able to get a majority vote of the electorate of the Province of Laguna on May 13,
2013, his proclamation be suspended until further order of the Honorable
Commission." San Luis reiterated this plea when he later filed aVery Urgent Ex-Parte
Motion to Issue Suspension of Possible Proclamation of Respondent and
Supplemental to the Very Urgent Ex-Parte Motion to Issue Suspension of Possible
Proclamation of Respondent. The relief sought is actually pursuant to Section
6 57 of R.A. No. 6646 and Section 5 Rule 25 58 of COMELEC Resolution No. 9523,
both of which pertain to the effect of a disqualification case when the petition is
unresolved by final judgment come election day.
4. San Luis' Memorandum emphasized that the case is a "Special Action for Disqualification,"
praying that "[t]he Petition BE GRANTED [and] . . . [Ejercito] BE DISQUALIFIED, and
PREVENTED from further holding office as Governor of Laguna."
With the foregoing, Ejercito cannot feign ignorance of the true nature and intent of San Luis' petition. This
considering, it is unnecessary for Us to discuss the applicability of Section 2, Rule 9 of the COMELEC Rules of
Procedure, there being no substantial amendment to San Luis' petition that constitutes a material deviation from
his original causes of action. Likewise, COMELEC Resolution No. 9386 and Section 265 of the OEC do not
apply since both refer solely to the prosecution of election offenses. Specifically, COMELEC Resolution No.
9386 is an amendment to Rule 34 of the COMELEC Rules of Procedure on the prosecution of election offenses,
while Section 265 of the OEC is found under Article XXII of said law pertaining also to election offenses.
The conduct of preliminary
investigation is not required in
the resolution of the electoral
aspect of a disqualification
case
Assuming, arguendo, that San Luis' petition was properly instituted as an action for disqualification, Ejercito
asserts that the conduct of preliminary investigation to determine whether the acts enumerated under Section 68
of the OEC were indeed committed is a requirement prior to actual disqualification. He posits that Section 5,
Rule 25 of COMELEC Resolution No. 9523 is silent on the matter of preliminary investigation; hence, the clear
import of this is that the necessity of preliminary investigation provided for in COMELEC Resolution No. 2050
remains undisturbed and continues to be in full force and effect.
We are not persuaded.
Section 5, Rule 25 of COMELEC Resolution No. 9523 states:
Section 5. Effect of Petition if Unresolved Before Completion of Canvass. If a Petition
for Disqualification is unresolved by final judgment on the day of elections, the petitioner may
file a motion with the Division or Commission En Banc where the case is pending, to suspend
the proclamation of the candidate concerned, provided that the evidence for the grounds to

disqualify is strong. For this purpose, at least three (3) days prior to any election, the Clerk of
the Commission shall prepare a list of pending cases and furnish all Commissioners copies of
said the list.
In the event that a candidate with an existing and pending Petition to disqualify is proclaimed
winner, the Commission shall continue to resolve the said Petition.
It is expected that COMELEC Resolution No. 9523 is silent on the conduct of preliminary investigation because
it merely amended, among others, Rule 25 of the COMELEC Rules of Procedure, which deals with
disqualification of candidates. In disqualification cases, the COMELEC may designate any of its officials, who
are members of the Philippine Bar, to hear the case and to receive evidence only in cases
involving barangay officials. 59 As aforementioned, the present rules of procedure in the investigation and
prosecution of election offenses in the COMELEC, which requires preliminary investigation, is governed by
COMELEC Resolution No. 9386. Under said Resolution, all lawyers in the COMELEC who are Election Officers
in the National Capital Region ("NCR"), Provincial Election Supervisors, Regional Election Attorneys, Assistant
Regional Election Directors, Regional Election Directors and lawyers of the Law Department are authorized to
conduct preliminary investigation of complaints involving election offenses under the election laws which may be
filed directly with them, or which may be indorsed to them by the COMELEC. 60
Similarly, Ejercito's reliance on COMELEC Resolution No. 2050 is misplaced. COMELEC Resolution No. 2050,
which was adopted on November 3, 1988, reads:
WHEREAS, there remain pending before the Commission, a number of cases of
disqualification filed by virtue of the provisions of Section 68 of the Omnibus Election Code in
relation to Section 6 of R.A. 6646, otherwise known as the Electoral Reforms Law of 1987;
WHEREAS, opinions of the members of the Commission on matters of procedure in dealing
with cases of this nature and the manner of disposing of the same have not been uniform;
WHEREAS, in order to avoid conflicts of opinion in the disposition [of] disqualification cases
contemplated under Section 68 of the Omnibus Election Code in relation to Section 6 of Rep.
Act 6646, there is a strongly felt need to lay down a definite policy in the disposition of this
specific class of disqualification cases;
NOW, THEREFORE, on motion duly seconded, the Commission en banc:
RESOLVED, as it hereby resolves, to formulate the following rules governing the disposition
of cases of disqualification filed by virtue of Section 68 of the Omnibus Election Codein
relation to Section 6 of R.A. No. 6646, otherwise known as the Electoral Reforms Law of
1987:
1. Any complaint for the disqualification of a duly registered candidate based upon any of the
grounds specifically enumerated under Section 68 of the Omnibus Election Code, filed directly
with the Commission before an election in which the respondent is a candidate, shall be
inquired into by the Commission for the purpose of determining whether the acts complained
of have in fact been committed. Where the inquiry by the Commission results in a finding
before election, that the respondent candidate did in fact commit the acts complained, the
Commission shall order the disqualification of the respondent candidate from continuing as
such candidate.
In case such complaint was not resolved before the election, the Commission may motu
proprio, or [on] motion of any of the parties, refer the complaint to the [Law] Department of the
Commission as the instrument of the latter in the exercise of its exclusive power to conduct a
preliminary investigation of all cases involving criminal infractions of the election laws. Such
recourse may be availed of irrespective of whether the respondent has been elected or has
lost in the election.
2. Any complaint for disqualification based on Section 68 of the Omnibus Election Code in
relation to Section 6 of Rep. Act No. 6646 filed after the election against a candidate who has
already been proclaimed as winner shall be dismissed as a disqualification case. However,

the complaint shall be referred for preliminary investigation to the Law Department of the
Commission.
Where a similar complaint is filed after election but before proclamation of the respondent
candidate, the complaint shall, nevertheless, be dismissed as a disqualification case.
However, the complaint shall be referred for preliminary investigation to the Law Department.
If, before proclamation, the Law Department makes a prima facie finding of guilt and the
corresponding information has been filed with the appropriate trial court, the complainant may
file a petition for suspension of the proclamation of the respondent with the court before which
the criminal case is pending and the said court may order the suspension of the proclamation
if the evidence of guilt is strong.
3. The Law Department shall terminate the preliminary investigation within thirty (30) days
from receipt of the referral and shall submit its study, report and recommendation to the
Commission en banc within five (5) days from the conclusion of the preliminary investigation.
If it makes a prima facie finding of guilt, it shall submit with such study the Information for filing
with the appropriate court. 61
In Bagatsing v. COMELEC, 62 the Court stated that the above-quoted resolution covers two (2) different
scenarios:
First, as contemplated in paragraph 1, a complaint for disqualification filed before the
election which must be inquired into by the COMELEC for the purpose of determining whether
the acts complained of have in fact been committed. Where the inquiry results in a finding
before the election, the COMELEC shall order the candidate's disqualification. In case the
complaint was not resolved before the election, the COMELEC may motu propio or on motion
of any of the parties, refer the said complaint to the Law Department of the COMELEC for
preliminary investigation.
Second, as laid down in paragraph 2, a complaint for disqualification filed after the
election against a candidate (a) who has not yet been proclaimed as winner, or (b) who has
already been proclaimed as winner. In both cases, the complaint shall be dismissed as a
disqualification case but shall be referred to the Law Department of the COMELEC for
preliminary investigation. However, if before proclamation, the Law Department makes
a prima facie finding of guilt and the corresponding information has been filed with the
appropriate trial court, the complainant may file a petition for suspension of the proclamation
of the respondent with the court before which the criminal case is pending and the said court
may order the suspension of the proclamation if the evidence of guilt is strong. 63
However, with respect to Paragraph 1 of COMELEC Resolution No. 2050, which is the situation in this case, We
held in Sunga:
. . . Resolution No. 2050 as interpreted in Silvestre v. Duavit infringes on Sec. 6 of RA No.
6646, which provides:
SEC. 6. Effects of Disqualification Case. Any candidate who has been declared by final
judgment to be disqualified shall not be voted for, and the votes cast for him shall not be
counted. If for any reason a candidate is not declared by final judgment before an election to
be disqualified and he is voted for and receives the winning number of votes in such election,
the Court or Commission shall continue with the trial and hearing of the action, inquiry or
protest and, upon motion of the complainant or any intervenor, may during the pendency
thereof order the suspension of the proclamation of such candidate whenever the evidence of
his guilt is strong (italics supplied).
Clearly, the legislative intent is that the COMELEC should continue the trial and hearing of the
disqualification case to its conclusion, i.e., until judgment is rendered thereon. The word
"shall" signifies that this requirement of the law is mandatory, operating to impose a positive
duty which must be enforced. The implication is that the COMELEC is left with no discretion

but to proceed with the disqualification case even after the election. Thus, in providing for the
outright dismissal of the disqualification case which remains unresolved after the
election, Silvestre v. Duavit in effect disallows what RA No. 6646 imperatively requires. This
amounts to a quasi-judicial legislation by the COMELEC which cannot be countenanced and
is invalid for having been issued beyond the scope of its authority. Interpretative rulings of
quasi-judicial bodies or administrative agencies must always be in perfect harmony with
statutes and should be for the sole purpose of carrying their general provisions into effect. By
such interpretative or administrative rulings, of course, the scope of the law itself cannot be
limited. Indeed, a quasi-judicial body or an administrative agency for that matter cannot
amend an act of Congress. Hence, in case of a discrepancy between the basic law and an
interpretative or administrative ruling, the basic law prevails.
Besides, the deleterious effect of the Silvestre ruling is not difficult to foresee. A candidate
guilty of election offenses would be undeservedly rewarded, instead of punished, by the
dismissal of the disqualification case against him simply because the investigating body was
unable, for any reason caused upon it, to determine before the election if the offenses were
indeed committed by the candidate sought to be disqualified. All that the erring aspirant would
need to do is to employ delaying tactics so that the disqualification case based on the
commission of election offenses would not be decided before the election. This scenario is
productive of more fraud which certainly is not the main intent and purpose of the law. 64
The "exclusive power [of the COMELEC] to conduct a preliminary investigation of all cases involving criminal
infractions of the election laws" stated in Par. 1 of COMELEC Resolution No. 2050 pertains to
the criminal aspect of a disqualification case. It has been repeatedly underscored that an election offense has
its criminal and electoral aspects. While its criminal aspect to determine the guilt or innocence of the accused
cannot be the subject of summary hearing, its electoral aspect to ascertain whether the offender should be
disqualified from office can be determined in an administrative proceeding that is summary in character. This
Court said in Sunga:
It is worth to note that an election offense has criminal as well as electoral aspects. Its criminal
aspect involves the ascertainment of the guilt or innocence of the accused candidate. Like in
any other criminal case, it usually entails a full-blown hearing and the quantum of proof
required to secure a conviction is beyond reasonable doubt. Its electoral aspect, on the other
hand, is a determination of whether the offender should be disqualified from office. This is
done through an administrative proceeding which is summary in character and requires only a
clear preponderance of evidence. Thus, under Sec. 4 of the COMELEC Rules of Procedure,
petitions for disqualification "shall be heard summarily after due notice." It is the electoral
aspect that we are more concerned with, under which an erring candidate may be disqualified
even without prior criminal conviction. 65
and equally in Lanot:
. . . The electoral aspect of a disqualification case determines whether the offender should be
disqualified from being a candidate or from holding office. Proceedings are summary in
character and require only clear preponderance of evidence. An erring candidate may be
disqualified even without prior determination of probable cause in a preliminary investigation.
The electoral aspect may proceed independently of the criminal aspect, and vice-versa.
The criminal aspect of a disqualification case determines whether there is probable cause to
charge a candidate for an election offense. The prosecutor is the COMELEC, through its Law
Department, which determines whether probable cause exists. If there is probable cause, the
COMELEC, through its Law Department, files the criminal information before the proper court.
Proceedings before the proper court demand a full-blown hearing and require proof beyond
reasonable doubt to convict. A criminal conviction shall result in the disqualification of the
offender, which may even include disqualification from holding a future public office.

The two aspects account for the variance of the rules on disposition and resolution of
disqualification cases filed before or after an election. When the disqualification case is filed
before the elections, the question of disqualification is raised before the voting public. If the
candidate is disqualified after the election, those who voted for him assume the risk that their
votes may be declared stray or invalid. There is no such risk if the petition is filed after the
elections. . . . . 66
We cannot accept Ejercito's argument that Lanot did not categorically pronounce that the conduct of a
preliminary investigation exclusively pertains to the criminal aspect of an action for disqualification or that a
factual finding by the authorized legal officers of the COMELEC may be dispensed with in the proceedings for
the administrative aspect of a disqualification case. According to him, a close reading of said case would reveal
that upon filing of the petition for disqualification with the COMELEC Division, the latter referred the matter to the
Regional Election Director for the purpose of preliminary investigation; therefore, Lanot contemplates two
referrals for the conduct of investigation first, to the Regional Election Director, prior to the issuance of the
COMELEC First Division's resolution, and second, to the Law Department, following the reversal by the
COMELEC En Banc.
For easy reference, the factual antecedents of Lanot are as follows:
On March 19, 2004, a little less than two months before the May 10, 2004 elections, Henry P. Lanot, et al. filed a
Petition for Disqualification under Sections 68 and 80 of the OECagainst then incumbent Pasig City Mayor
Vicente P. Eusebio. National Capital Region Director Esmeralda Amora-Ladra conducted hearings on the
petition. On May 4, 2004, she recommended Eusebio's disqualification and the referral of the case to the
COMELEC Law Department for the conduct of a preliminary investigation on the possible violation of Section
261 (a) of the OEC. When the COMELEC First Division issued a resolution adopting Director Ladra's
recommendations on May 5, 2004, then COMELEC Chairman Benjamin S. Abalos informed the pertinent
election officers through an Advisory dated May 8, 2004. Eusebio filed a Motion for Reconsideration on May 9,
2004. On election day, Chairman Abalos issued a memorandum to Director Ladra enjoining her from
implementing the May 5, 2004 COMELEC First Division resolution. The petition for disqualification was not yet
finally resolved at the time of the elections. Eusebio's votes were counted and canvassed. After which, Eusebio
was proclaimed as the winning candidate for city mayor. On August 20, 2004, the COMELEC En Banc annulled
the COMELEC First Division's order to disqualify Eusebio and referred the case to the COMELEC Law
Department for preliminary investigation.
When the issue was elevated to Us, the Court agreed with Lanot that the COMELEC En Banc committed grave
abuse of discretion when it ordered the dismissal of the disqualification case pending preliminary investigation of
the COMELEC Law Department. Error was made when it ignored the electoral aspect of the disqualification
case by setting aside the COMELEC First Division's resolution and referring the entire case to the COMELEC
Law Department for the criminal aspect. We noted that COMELEC Resolution No. 2050, upon which the
COMELEC En Banc based its ruling, is procedurally inconsistent with COMELEC Resolution No. 6452, which
was the governing rule at the time. The latter resolution delegated to the COMELEC Field Officials the hearing
and reception of evidence of the administrative aspect of disqualification cases in the May 10, 2004 National and
Local Elections. In marked contrast, in the May 2013 elections, it was only in cases involving barangay officials
that the COMELEC may designate any of its officials, who are members of the Philippine Bar, to hear the case
and to receive evidence. 67
The COMELEC En Banc
properly considered as
evidence the Advertising
Contract dated May 8, 2013
Ejercito likewise asserts that the Advertising Contract dated May 8, 2013 should not have been relied upon by
the COMELEC. First, it was not formally offered in evidence pursuant to Section 34, Rule 132 68 of the Rules
and he was not even furnished with a copy thereof, depriving him of the opportunity to examine its authenticity
and due execution and object to its admissibility. Second, even if Section 34, Rule 132 does not apply,
administrative bodies exercising quasi-judicial functions are nonetheless proscribed from rendering judgment

based on evidence that was never presented and could not be controverted. There is a need to balance the
relaxation of the rules of procedure with the demands of administrative due process, the tenets of which are laid
down in the seminal case of Ang Tibay v. Court of Industrial Relations. 69 And third, the presentation of the
advertising contracts, which are highly disputable and on which no hearing was held for the purpose of taking
judicial notice in accordance with Section 3, Rule 129 70 of the Rules, cannot be dispensed with by COMELEC's
claim that it could take judicial notice.
Contrary to Ejercito's claim, Section 34, Rule 132 of the Rules is inapplicable. Section 4, Rule 1 71 of the Rules
of Court is clear enough in stating that it shall not apply to election cases except by analogy or in a suppletory
character and whenever practicable and convenient. In fact, nowhere from COMELEC Resolution No. 9523
requires that documentary evidence should be formally offered in evidence. 72 We remind again that the
electoral aspect of a disqualification case is done through an administrative proceeding which is summary in
character.
Granting, for argument's sake, that Section 4, Rule 1 of the Rules of Court applies, there have been instances
when We suspended the strict application of the rule in the interest of substantial justice, fairness, and
equity. 73 Since rules of procedure are mere tools designed to facilitate the attainment of justice, it is well
recognized that the Court is empowered to suspend its rules or to exempt a particular case from the application
of a general rule, when the rigid application thereof tends to frustrate rather than promote the ends of
justice. 74 The fact is, even Sections 3 and 4, Rule 1 of the COMELEC Rules of Procedure fittingly declare that
"[the] rules shall be liberally construed in order to promote the effective and efficient implementation of the
objectives of ensuring the holding of free, orderly, honest, peaceful and credible elections and to achieve just,
expeditious and inexpensive determination and disposition of every action and proceeding brought before the
Commission" and that "[in] the interest of justice and in order to obtain speedy disposition of all matters pending
before the Commission, these rules or any portion thereof may be suspended by the Commission." This Court
said in Hayudini v. Commission on Elections: 75
Settled is the rule that the COMELEC Rules of Procedure are subject to liberal construction.
The COMELEC has the power to liberally interpret or even suspend its rules of procedure in
the interest of justice, including obtaining a speedy disposition of all matters pending before it.
This liberality is for the purpose of promoting the effective and efficient implementation of its
objectives ensuring the holding of free, orderly, honest, peaceful, and credible elections, as
well as achieving just, expeditious, and inexpensive determination and disposition of every
action and proceeding brought before the COMELEC. Unlike an ordinary civil action, an
election contest is imbued with public interest. It involves not only the adjudication of private
and pecuniary interests of rival candidates, but also the paramount need of dispelling the
uncertainty which beclouds the real choice of the electorate. And the tribunal has the
corresponding duty to ascertain, by all means within its command, whom the people truly
chose as their rightful leader. 76
Further, Ejercito's dependence on Ang Tibay is weak. The essence of due process is simply an opportunity to be
heard, or, as applied to administrative proceedings, an opportunity to explain one's side or an opportunity to
seek for a reconsideration of the action or ruling complained of. 77 Any seeming defect in its observance is
cured by the filing of a motion for reconsideration and denial of due process cannot be successfully invoked by a
party who had the opportunity to be heard thereon. 78 In this case, it is undisputed that Ejercito filed a motion for
reconsideration before the COMELEC En Banc. Despite this, he did not rebut the authenticity and due execution
of the advertising contracts when he decided not to discuss the factual findings of the COMELEC First Division
on the alleged ground that it may be construed as a waiver of the jurisdictional issues that he raised. 79
We agree with San Luis and the Office of the Solicitor General that, pursuant to Section 2, Rule 129, 80 the
COMELEC has the discretion to properly take judicial notice of the Advertising Contract dated May 8, 2013. In
accordance with R.A. No. 9006, the COMELEC, through its Campaign Finance Unit, is empowered to:
a. Monitor fund raising and spending activities;
b. Receive and keep reports and statements of candidates, parties, contributors and election
contractors, and advertising contracts of mass media entities;

c. Compile and analyze the reports and statements as soon as they are received and make
an initial determination of compliance;
d. Develop and manage a recording system for all reports, statements, and contracts received
by it and to digitize information contained therein;
e. Publish the digitized information gathered from the reports, statements and contracts and
make them available to the public;
f. Develop a reportorial and monitoring system;
g. Audit all reports, statements and contracts and determine compliance by the candidates,
parties, contributors, and election contractors, including the inspection of Books and
records of candidates, parties and mass media entities and issue subpoenas in
relation thereto and submit its findings to the Commission En Banc;
h. Coordinate with and/or assist other departments/offices of the Commission receiving
related reports on Campaign Finance including prosecution of violators and collection
of fines and/or imposition of perpetual disqualification; and
i. Perform other functions as ordered by the Commission. 81
The COMELEC may properly take and act on the advertising contracts without further proof from the parties
herein. Aside from being considered as an admission 82 and presumed to be proper submissions from them, the
COMELEC already has knowledge of the contracts for being ascertainable from its very own records. Said
contracts ought to be known by the COMELEC because of its statutory function as the legal custodian of all
advertising contracts promoting or opposing any candidate during the campaign period. As what transpired in
this case, the COMELEC has the authority and discretion to compare the submitted advertising contracts with
the certified true copies of the broadcast logs, certificates of performance or other analogous records which a
broadcast station or entity is required to submit for the review and verification of the frequency, date, time and
duration of advertisements aired.
To be precise, R.A. No. 9006 provides:
Sec. 4. Requirements for Published or Printed and Broadcast Election Propaganda.
xxx xxx xxx
4.3 Print, broadcast or outdoor advertisements donated to the candidate or political
party shall not be printed, published, broadcast or exhibited without the written
acceptance by the said candidate or political party. Such written acceptance shall be
attached to the advertising contract and shall be submitted to the COMELEC as
provided in Subsection 6.3 hereof.
Sec. 6. Equal Access to Media Time and Space. All registered parties and bona
fide candidates shall have equal access to media time and space. The following guidelines
may be amplified on by the COMELEC:
xxx xxx xxx
6.2
xxx xxx xxx
(b.) Each bona fide candidate or registered political party for a locally elective office
shall be entitled to not more than sixty (60) minutes of television advertisement and
ninety (90) minutes of radio advertisement whether by purchase or donation.
For this purpose, the COMELEC shall require any broadcast station or entity to
submit to the COMELEC a copy of its broadcast logs and certificates of performance
for the review and verification of the frequency, date, time and duration of
advertisements broadcast for any candidate or political party.

6.3 All mass media entities shall furnish the COMELEC with a copy of all contracts for
advertising, promoting or opposing any political party or the candidacy of any person
for public office within five (5) days after its signing. . . . .
The implementing guidelines of the above-quoted provisions are found in Rule 5 of COMELEC Resolution No.
9476
Section 2. Submission of Copies of Advertising Contracts. All media entities shall
submit a copy of its advertising and or broadcast contracts, media purchase orders, booking
orders, or other similar documents to the Commission through its Campaign Finance Unit,
accompanied by a summary report in the prescribed form (Annex "E") together with official
receipts issued for advertising, promoting or opposing a party, or the candidacy of any person
for public office, within five (5) days after its signing, through:
a. For Media Entities in the NCR
The Education and Information Department (EID), which shall furnish copies thereof
to the Campaign Finance Unit of the Commission.
b. For Media Entities outside of the NCR
The City/Municipal Election Officer (EO) concerned who shall furnish copies thereof to
the Education and Information Department of the Commission within five (5) days
after the campaign periods. The EID shall furnish copies thereof to the Campaign
Finance Unit of the Commission.
xxx xxx xxx
It shall be the duty of the EID to formally inform media entities that the latter's failure
to comply with the mandatory provisions of this Section shall be considered an
election offense punishable pursuant to Section 13 of Republic Act No. 9006. [RA
9006, Secs. 6.3 and 13]
and in COMELEC Resolution No. 9615
SECTION 9. Requirements and/or Limitations on the Use of Election Propaganda
through Mass Media. All parties and bona fide candidates shall have equal access to
media time and space for their election propaganda during the campaign period subject to the
following requirements and/or limitations:
a. Broadcast Election Propaganda
xxx xxx xxx
Provided, further, that a copy of the broadcast advertisement contract be furnished to
the Commission, thru the Education and Information Department, within five (5) days
from contract signing.
xxx xxx xxx
d. Common requirements/limitations:
xxx xxx xxx
(3) For the above purpose, each broadcast entity and website owner or administrator
shall submit to the Commission a certified true copy of its broadcast logs, certificates
of performance, or other analogous record, including certificates of acceptance as
required in Section 7(b) of these Guidelines, for the review and verification of the
frequency, date, time and duration of advertisements aired for any candidate or party
through:
For Broadcast Entities in the NCR
The Education and Information Department (EID) which in turn shall furnish copies
thereof to the Campaign Finance Unit (CFU) of the Commission within five days from
receipt thereof.

For Broadcast Entities outside of the NCR

The City/Municipal Election Officer (EO) concerned, who in turn, shall furnish copies
thereof to the Education and Information Department (EID) of the Commission which
in turn shall furnish copies thereof to the Campaign Finance Unit (CFU) of the
Commission within five (5) days from the receipt thereof.
For website owners or administrators
The City/Municipal Election Officer (EO) concerned, who in turn, shall furnish copies
thereof to the Education and Information Department (EID) of the Commission which
in turn shall furnish copies thereof to the Campaign Finance Unit (CFU) of the
Commission within five (5) days from the receipt thereof.
All broadcast entities shall preserve their broadcast logs for a period of five (5) years
from the date of broadcast for submission to the Commission whenever required.
Certified true copies of broadcast logs, certificates of performance, and certificates of
acceptance, or other analogous record shall be submitted, as follows:

Candidates for NationaI Positions

Candidates for Local Positions

1st Report

3 weeks after start of campaign period

March 4-11

2nd Report

3 weeks after 1st filing week

April 3-10

3rd Report

1 week before election day

May 2-9

Last Report

Election week

May 14-17

1st Report

1 week after start of campaign period

April 15-22

2nd Report

1 week after 1st filing week

April 30-May 8

3rd Report

Election week

May 9-15

Last Report

1 week after election day

May 16-22

For subsequent elections, the schedule for the submission of reports shall be prescribed by
the Commission.
Ejercito should be disqualified
for spending in his election
campaign an amount in excess
of what is allowed by the OEC
Ejercito claims that the advertising contracts between ABS-CBN Corporation and Scenema Concept
International, Inc. were executed by an identified supporter without his knowledge and consent as, in fact, his
signature thereon was obviously forged. Even assuming that such contract benefited him, Ejercito alleges that
he should not be penalized for the conduct of third parties who acted on their own without his consent.
Citing Citizens United v. Federal Election Commission 83 decided by the US Supreme Court, he argues that
every voter has the right to support a particular candidate in accordance with the free exercise of his or her
rights of speech and of expression, which is guaranteed in Section 4, Article III of the 1987 Constitution. 84 He
believes that an advertising contract paid for by a third party without the candidate's knowledge and consent
must be considered a form of political speech that must prevail against the laws suppressing it, whether by
design or inadvertence. Further, Ejercito advances the view that COMELEC Resolution No.
9476 85 distinguishes between "contribution" and "expenditure" and makes no proscription on the medium or
amount of contribution. 86 He also stresses that it is clear from COMELEC Resolution No. 9615 that the limit set
by law applies only to election expenditures of candidates and not to contributions made by third parties. For
Ejercito, the fact that the legislature imposes no legal limitation on campaign donations is presumably because
discussion of public issues and debate on the qualifications of candidates are integral to the operation of the
government.

We refuse to believe that the advertising contracts between ABS-CBN Corporation and Scenema Concept
International, Inc. were executed without Ejercito's knowledge and consent. As found by the COMELEC First
Division, the advertising contracts submitted in evidence by San Luis as well as those in legal custody of the
COMELEC belie his hollow assertion. His express conformity to the advertising contracts is actually a must
because non-compliance is considered as an election offense. 87
Notably, R.A. No. 9006 explicitly directs that broadcast advertisements donated to the candidate shall not be
broadcasted without the written acceptance of the candidate, which shall be attached to the advertising contract
and shall be submitted to the COMELEC, and that, in every case, advertising contracts shall be signed by the
donor, the candidate concerned or by the duly-authorized representative of the political party. 88 Conformably
with the mandate of the law, COMELEC Resolution No. 9476 requires that election propaganda materials
donated to a candidate shall not be broadcasted unless it is accompanied by the written acceptance of said
candidate, which shall be in the form of an official receipt in the name of the candidate and must specify the
description of the items donated, their quantity and value, and that, in every case, the advertising contracts,
media purchase orders or booking orders shall be signed by the candidate concerned or by the duly authorized
representative of the party and, in case of a donation, should be accompanied by a written acceptance of the
candidate, party or their authorized representatives. 89 COMELEC Resolution No. 9615 also unambiguously
states that it shall be unlawful to broadcast any election propaganda donated or given free of charge by any
person or broadcast entity to a candidate without the written acceptance of the said candidate and unless they
bear and be identified by the words "airtime for this broadcast was provided free of charge by" followed by the
true and correct name and address of the donor. 90
This Court cannot give weight to Ejercito's representation that his signature on the advertising contracts was a
forgery. The issue is a belated claim, raised only for the first time in this petition for certiorari. It is a rudimentary
principle of law that matters neither alleged in the pleadings nor raised during the proceedings below cannot be
ventilated for the first time on appeal before the Supreme Court. 91 It would be offensive to the basic rules of fair
play and justice to allow Ejercito to raise an issue that was not brought up before the COMELEC. 92 While it is
true that litigation is not a game of technicalities, it is equally true that elementary considerations of due process
require that a party be duly apprised of a claim against him before judgment may be rendered. 93
Likewise, whether the advertising contracts were executed without Ejercito's knowledge and consent, and
whether his signatures thereto were fraudulent, are issues of fact. Any factual challenge has no place in a Rule
65 petition. This Court is not a trier of facts and is not equipped to receive evidence and determine the truth of
factual allegations. 94Instead, the findings of fact made by the COMELEC, or by any other administrative
agency exercising expertise in its particular field of competence, are binding on the Court. As enunciated in Juan
v. Commission on Election: 95
Findings of facts of administrative bodies charged with their specific field of expertise, are
afforded great weight by the courts, and in the absence of substantial showing that such
findings are made from an erroneous estimation of the evidence presented, they are
conclusive, and in the interest of stability of the governmental structure, should not be
disturbed. The COMELEC, as an administrative agency and a specialized constitutional body
charged with the enforcement and administration of all laws and regulations relative to the
conduct of an election, plebiscite, initiative, referendum, and recall, has more than enough
expertise in its field that its findings or conclusions are generally respected and even given
finality. . . . . 96
Having determined that the subject TV advertisements were done and broadcasted with Ejercito's consent, it
follows that Citizens United does not apply. In said US case, a non-profit corporation sued the Federal Election
Commission, assailing, among others, the constitutionality of a ban on corporate independent expenditures for
electioneering communications under 2 U.S.C.S. 441b. The corporation released a documentary film
unfavorable of then-Senator Hillary Clinton, who was a candidate for the Democratic Party's Presidential
nomination. It wanted to make the film available through video-on-demand within thirty (30) days of the primary
elections, and it produced advertisements to promote the film. However, federal law prohibits all corporations
including non-profit advocacy corporations from using their general treasury funds to

make independentexpenditures for speech that is an "electioneering communication" 97 or for speech that
expressly advocates the election or defeat of a candidate within thirty (30) days of a primary election and sixty
(60) days of a general election. The US Supreme Court held that the ban imposed under 441b on
corporate independent expenditures violated the First Amendment 98 because the Government could not
suppress political speech on the basis of the speaker's identity as a non-profit or for-profit corporation. It was
opined:
Section 441b's prohibition on corporate independent expenditures is thus a ban on speech. As
a "restriction on the amount of money a person or group can spend on political communication
during a campaign," that statute "necessarily reduces the quantity of expression by restricting
the number of issues discussed, the depth of their exploration, and the size of the audience
reached." Buckley v. Valeo, 424 U.S. 1, 19, 96 S. Ct. 612, 46 L. Ed. 2d 659 (1976) (per
curiam). Were the Court to uphold these restrictions, the Government could repress speech
by silencing certain voices at any of the various points in the speech process. See McConnell,
supra, at 251, 124 S. Ct. 619, 517 L. Ed. 2d 491 (opinion of Scalia, J.) (Government could
repress speech by "attacking all levels of the production and dissemination of ideas," for
"effective public communication requires the speaker to make use of the services of others").
If 441b applied to individuals, no one would believe that it is merely a time, place, or manner
restriction on speech. Its purpose and effect are to silence entities whose voices the
Government deems to be suspect.
Speech is an essential mechanism of democracy, for it is the means to hold officials
accountable to the people. See Buckley, supra, at 14-15, 96 S. Ct. 612, 46 L. Ed. 2d 659 ("In
a republic where the people are sovereign, the ability of the citizenry to make informed
choices among candidates for office is essential"). The right of citizens to inquire, to hear, to
speak, and to use information to reach consensus is a precondition to enlightened selfgovernment and a necessary means to protect it. The First Amendment "'has its fullest and
most urgent application' to speech uttered during a campaign for political office." Eu v. San
Francisco County Democratic Central Comm., 489 U.S. 214, 223, 109 S. Ct. 1013, 103 L. Ed.
2d 271 (1989) (quoting Monitor Patriot Co. v. Roy, 401 U.S. 265, 272, 91 S. Ct. 621, 28 L. Ed.
2d 35 (1971)); see Buckley, supra, at 14, 96 S. Ct. 612, 46 L. Ed. 2d 659("Discussion of public
issues and debate on the qualifications of candidates are integral to the operation of the
system of government established by our Constitution").
For these reasons, political speech must prevail against laws that would suppress it, whether
by design or inadvertence. Laws that burden political speech are "subject to strict scrutiny,"
which requires the Government to prove that the restriction "furthers a compelling interest and
is narrowly tailored to achieve that interest." WRTL, 551 U.S., at 464, 127 S. Ct. 2652, 168 L.
Ed. 2d 329 (opinion of Roberts, C. J.). While it might be maintained that political speech
simply cannot be banned or restricted as a categorical matter, seeSimon & Schuster, 502
U.S., at 124, 112 S. Ct. 501, 116 L. Ed. 2d 476 (Kennedy, J., concurring in judgment), the
quoted language from WRTL provides a sufficient framework for protecting the relevant First
Amendment interests in this case. We shall employ it here.
Premised on mistrust of governmental power, the First Amendment stands against attempts to
disfavor certain subjects or viewpoints. See, e.g., United States v. Playboy Entertainment
Group, Inc., 529 U.S. 803, 813, 120 S. Ct. 1878, 146 L. Ed. 2d 865 (2000) (striking down
content-based restriction). Prohibited, too, are restrictions distinguishing among different
speakers, allowing speech by some but not others. See First Nat. Bank of Boston v. Bellotti,
435 U.S. 765, 784, 98 S. Ct. 1407, 55 L. Ed. 2d 707 (1978). As instruments to censor, these
categories are interrelated: Speech restrictions based on the identity of the speaker are all too
often simply a means to control content.
Quite apart from the purpose or effect of regulating content, moreover, the Government may
commit a constitutional wrong when by law it identifies certain preferred speakers. By taking

the right to speak from some and giving it to others, the Government deprives the
disadvantaged person or class of the right to use speech to strive to establish worth, standing,
and respect for the speaker's voice. The Government may not by these means deprive the
public of the right and privilege to determine for itself what speech and speakers are worthy of
consideration. The First Amendment protects speech and speaker, and the ideas that flow
from each.
The Court has upheld a narrow class of speech restrictions that operate to the disadvantage
of certain persons, but these rulings were based on an interest in allowing governmental
entities to perform their functions. See, e.g., Bethel School Dist. No. 403 v. Fraser, 478 U.S.
675, 683, 106 S. Ct. 3159, 92 L. Ed. 2d 549 (1986) (protecting the "function of public school
education"); Jones v. North Carolina Prisoners' Labor Union, Inc., 433 U.S. 119, 129, 97 S. Ct.
2532, 53 L. Ed. 2d 629 (1977) (furthering "the legitimate penological objectives of the
corrections system" (internal quotation marks omitted)); Parker v. Levy, 417 U.S. 733, 759, 94
S. Ct. 2547, 41 L. Ed. 2d 439 (1974) (ensuring "the capacity of the Government to discharge
its [military] responsibilities" (internal quotation marks omitted)); Civil Service Comm'n v. Letter
Carriers, 413 U.S. 548, 557, 93 S. Ct. 2880, 37 L. Ed. 2d 796 (1973) ("[F]ederal service
should depend upon meritorious performance rather than political service"). The corporate
independent expenditures at issue in this case, however, would not interfere with
governmental functions, so these cases are inapposite. These precedents stand only for the
proposition that there are certain governmental functions that cannot operate without some
restrictions on particular kinds of speech. By contrast, it is inherent in the nature of the political
process that voters must be free to obtain information from diverse sources in order to
determine how to cast their votes. At least before Austin, the Court had not allowed the
exclusion of a class of speakers from the general public dialogue.
We find no basis for the proposition that, in the context of political speech, the Government
may impose restrictions on certain disfavored speakers. Both history and logic lead us to this
conclusion.
The previous decisions of the US Supreme Court in Austin v. Michigan Chamber of Commerce 99 (which ruled
that political speech may be banned based on the speaker's corporate identity) and the relevant portion
of McConnell v. Federal Election Commission 100 (which upheld the limits on electioneering communications in
a facial challenge) were, in effect, overruled by Citizens United.
Like Citizens United is the 1976 case of Buckley v. Valeo. 101 In this much earlier case, the US Supreme Court
ruled, among other issues elevated to it for resolution, on a provision of the Federal Election Campaign Act of
1971, as amended, (FECA) 102 which limits independent political expenditures by an individual or group
advocating the election or defeat of a clearly identified candidate for federal office to $1,000 per year. Majority of
the US Supreme Court expressed the view that the challenged provision is unconstitutional as it impermissibly
burdens the right of free expression under the First Amendment, and could not be sustained on the basis of
governmental interests in preventing the actuality or appearance of corruption or in equalizing the resources of
candidates. 103
Even so, the rulings in Citizens United and Buckley find bearing only on matters related to
"independent expenditures," an election law concept which has no application in this jurisdiction. In the US
context, independent expenditures for or against a particular candidate enjoy constitutional protection. They
refer to those expenses made by an individual, a group or a legal entity which are not authorized or
requested by the candidate, an authorized committee of the candidate, or an agent of the candidate; they are
expenditures that are not placed in cooperation with or with the consent of a candidate, his agents, or an
authorized committee of the candidate. 104 In contrast, there is no similar provision here in the Philippines. In
fact, R.A. No. 9006 105 and its implementing rules and regulations 106 specifically make it unlawful to print,
publish, broadcast or exhibit any print, broadcast or outdoor advertisements donated to the candidate without
the written acceptance of said candidate.

If at all, another portion of the Buckley decision is significant to this case. One of the issues resolved therein is
the validity of a provision of the FECA which imposes $1,000 limitation on political contributions by individuals
and groups to candidates and authorized campaign committees. 107 Five justices of the nine-member US
Supreme Court sustained the challenged provision on the grounds that it does not violate First Amendment
speech and association rights or invidiously discriminate against non-incumbent candidates and minority party
candidates but is supported by substantial governmental interests in limiting corruption and the appearance of
corruption. It was held:
As the general discussion in Part I-A, supra, indicated, the primary First Amendment problem
raised by the Act's contribution limitations is their restriction of one aspect of the contributor's
freedom of political association. The Court's decisions involving associational freedoms
establish that the right of association is a "basic constitutional freedom,"Kusper v. Pontikes,
414 U.S. at 57, that is "closely allied to freedom of speech and a right which, like free speech,
lies at the foundation of a free society." Shelton v. Tucker, 364 U.S. 479, 486 (1960).
See, e.g., Bates v. Little Rock, 361 U.S. 516, 522-523 (1960); NAACP v. Alabama, supra at
460-461; NAACP v. Button, supra, at 452 (Harlan, J., dissenting). In view of the fundamental
nature of the right to associate, governmental "action which may have the effect of curtailing
the freedom to associate is subject to the closest scrutiny."NAACP v. Alabama, supra, at 460461. Yet, it is clear that "[n]either the right to associate nor the right to participate in political
activities is absolute." CSC v. Letter Carriers, 413 U.S. 548, 567 (1973). Even a "significant
interference' with protected rights of political association" may be sustained if the State
demonstrates a sufficiently important interest and employs means closely drawn to avoid
unnecessary abridgment of associational freedoms. Cousins v. Wigoda, supra, at 488;
NAACP v. Button, supra, at 438; Shelton v. Tucker, supra, at 488.
Appellees argue that the Act's restrictions on large campaign contributions are justified by
three governmental interests. According to the parties and amici, the primary interest
served by the limitations and, indeed, by the Act as a whole, is the prevention of
corruption and the appearance of corruption spawned by the real or imagined coercive
influence of large financial contributions on candidates' positions and on their actions
if elected to office. Two "ancillary" interests underlying the Act are also allegedly
furthered by the $1,000 limits on contributions. First, the limits serve to mute the voices
of affluent persons and groups in the election process and thereby to equalize the
relative ability of all citizens to affect the outcome of elections. Second, it is argued, the
ceilings may to some extent act as a brake on the skyrocketing cost of political
campaigns and thereby serve to open the political system more widely to candidates
without access to sources of large amounts of money.
It is unnecessary to look beyond the Act's primary purpose to limit the actuality and
appearance of corruption resulting from large individual financial contributions in order to
find a constitutionally sufficient justification for the $1,000 contribution limitation. Under a
system of private financing of elections, a candidate lacking immense personal or family
wealth must depend on financial contributions from others to provide the resources necessary
to conduct a successful campaign. The increasing importance of the communications media
and sophisticated mass-mailing and polling operations to effective campaigning make the
raising of large sums of money an ever more essential ingredient of an effective candidacy. To
the extent that large contributions are given to secure political quid pro quo's from
current and potential office holders, the integrity of our system of representative
democracy is undermined. Although the scope of such pernicious practices can never be
reliably ascertained, the deeply disturbing examples surfacing after the 1972 election
demonstrate that the problem is not an illusory one.
Of almost equal concern as the danger of actual quid pro quo arrangements is the impact of
the appearance of corruption stemming from public awareness of the opportunities for abuse
inherent in a regime of large individual financial contributions. In CSC v. Letter Carriers,

supra, the Court found that the danger to "fair and effective government" posed by partisan
political conduct on the part of federal employees charged with administering the law was a
sufficiently important concern to justify broad restrictions on the employees' right of partisan
political association. Here, as there, Congress could legitimately conclude that the avoidance
of the appearance of improper influence "is also critical. . . if confidence in the system of
representative Government is not to be eroded to a disastrous extent." 413 U.S. at 565.
Appellants contend that the contribution limitations must be invalidated because bribery laws
and narrowly drawn disclosure requirements constitute a less restrictive means of dealing with
"proven and suspected quid pro quo arrangements." But laws making criminal the giving and
taking of bribes deal with only the most blatant and specific attempts of those with money to
influence governmental action. And while disclosure requirements serve the many salutary
purposes discussed elsewhere in this opinion, Congress was surely entitled to conclude that
disclosure was only a partial measure, and that contribution ceilings were a necessary
legislative concomitant to deal with the reality or appearance of corruption inherent in a
system permitting unlimited financial contributions, even when the identities of the contributors
and the amounts of their contributions are fully disclosed.
The Act's $1,000 contribution limitation focuses precisely on the problem of large campaign
contributions the narrow aspect of political association where the actuality and potential for
corruption have been identified while leaving persons free to engage in independent
political expression, to associate actively through volunteering their services, and to assist to a
limited but nonetheless substantial extent in supporting candidates and committees with
financial resources. Significantly, the Act's contribution limitations in themselves do not
undermine to any material degree the potential for robust and effective discussion of
candidates and campaign issues by individual citizens, associations, the institutional press,
candidates, and political parties.
We find that, under the rigorous standard of review established by our prior decisions, the
weighty interests served by restricting the size of financial contributions to political candidates
are sufficient to justify the limited effect upon First Amendment freedoms caused by the
$1,000 contribution ceiling. (Emphasis supplied)
Until now, the US Supreme Court has not overturned the ruling that, with respect to limiting political contributions
by individuals and groups, the Government's interest in preventing quid pro quo corruption or its appearance
was "sufficiently important" or "compelling" so that the interest would satisfy even strict scrutiny. 108
In any event, this Court should accentuate that resort to foreign jurisprudence would be proper only if no law or
jurisprudence is available locally to settle a controversy and that even in the absence of local statute and case
law, foreign jurisprudence are merely persuasive authority at best since they furnish an uncertain guide. 109 We
prompted inRepublic of the Philippines v. Manila Electric Company: 110
. . . American decisions and authorities are not per se controlling in this jurisdiction. At best,
they are persuasive for no court holds a patent on correct decisions. Our laws must be
construed in accordance with the intention of our own lawmakers and such intent may be
deduced from the language of each law and the context of other local legislation related
thereto. More importantly, they must be construed to serve our own public interest which is
the be-all and the end-all of all our laws. And it need not be stressed that our public interest is
distinct and different from others. 111
and once more in Central Bank Employees Assoc., Inc. v. Bangko Sentral ng Pilipinas: 112
. . . [A]merican jurisprudence and authorities, much less the American Constitution,are of
dubious application for these are no longer controlling within our jurisdiction and have only
limited persuasive merit insofar as Philippine constitutional law is concerned. . . . [I]n resolving
constitutional disputes, [this Court] should not be beguiled by foreign jurisprudence some of
which are hardly applicable because they have been dictated by different constitutional

settings and needs." Indeed, although the Philippine Constitutioncan trace its origins to that of
the United States, their paths of development have long since diverged. 113
Indeed, in Osmea v. COMELEC, 114 this Court, in reaffirming its ruling in National Press Club v. Commission
on Elections 115 that Section 11 (b) of R.A. No. 6646 116 does not invade and violate the constitutional
guarantees comprising freedom of expression, remarked in response to the dissent of Justice Flerida Ruth P.
Romero:
On the other hand, the dissent of Justice Romero in the present case, in batting for an
"uninhibited market place of ideas," quotes the following from Buckley v. Valeo:
[T]he concept that the government may restrict the speech of some elements in our society in
order to enhance the relative voice of the others is wholly foreign to the First Amendment
which was designed to "secure the widest possible dissemination of information from diverse
and antagonistic sources" and "to assure unfettered interchange of ideas for the bringing
about of political and social changes desired by the people."
But do we really believe in that? That statement was made to justify striking down a limit on
campaign expenditure on the theory that money is speech. Do those who endorse the view
that government may not restrict the speech of some in order to enhance the relative voice of
others also think that the campaign expenditure limitation found in our election laws is
unconstitutional? How about the principle of one person, one vote, is this not based on the
political equality of voters? Voting after all is speech. We speak of it as the voice of the people
even of God. The notion that the government may restrict the speech of some in order to
enhance the relative voice of others may be foreign to the American Constitution. It is not to
the Philippine Constitution, being in fact an animating principle of that document.
Indeed, Art. IX-C, 4 is not the only provision in the Constitution mandating political equality.
Art. XIII, 1 requires Congress to give the "highest priority" to the enactment of measures
designed to reduce political inequalities, while Art. II, 26 declares as a fundamental principle
of our government "equal access to opportunities for public service." Access to public office
will be denied to poor candidates if they cannot even have access to mass media in order to
reach the electorate. What fortress principle trumps or overrides these provisions for political
equality?
Unless the idealism and hopes which fired the imagination of those who framed the
Constitution now appear dim to us, how can the electoral reforms adopted by them to
implement the Constitution, of which 11(b) of R.A. No. 6646, in relation to 90 and 92 are
part, be considered infringements on freedom of speech? That the framers contemplated
regulation of political propaganda similar to 11(b) is clear from the following portion of the
sponsorship speech of Commissioner Vicente B. Foz:
MR. FOZ . . . . Regarding the regulation by the Commission of the enjoyment or utilization of
franchises or permits for the operation of transportation and other public utilities, media of
communication or information, all grants, special privileges or concessions granted by the
Government, there is a provision that during the election period, the Commission may
regulate, among other things, the rates, reasonable free space, and time allotments for public
information campaigns and forums among candidates for the purpose of ensuring free,
orderly, honest and peaceful elections. This has to do with the media of communication or
information. 117
Proceeding from the above, the Court shall now rule on Ejercito's proposition that the legislature imposes no
legal limitation on campaign donations. He vigorously asserts that COMELEC Resolution No. 9476 distinguishes
between "contribution" and "expenditure" and makes no proscription on the medium or amount of contribution
made by third parties in favor of the candidates, while the limit set by law, as appearing in COMELEC Resolution
No. 9615, applies only to election expenditures of candidates.
We deny.

Section 13 of R.A. No. 7166 118 sets the current allowable limit on expenses of candidates and political parties
for election campaign, thus:
SEC. 13. Authorized Expenses of Candidates and Political Parties. The aggregate amount
that a candidate or registered political party may spend for election campaign shall be as
follows:
(a) For candidates Ten pesos (P10.00) for President and Vice President; and for
other candidates, Three pesos (P3.00) for every voter currently registered in
the constituency where he filed his certificate of candidacy: Provided, That, a
candidate without any political party and without support from any political
party may be allowed to spend Five pesos (P5.00) for every such voter; and
(b) For political parties Five pesos (P5.00) for every voter currently registered in
the constituency or constituencies where it has official candidates.
Any provision of law to the contrary notwithstanding, any contribution in cash or in kind to any
candidate or political party or coalition of parties for campaign purposes, duly reported to the
Commission, shall not be subject to the payment of any gift tax. 119
Sections 100, 101, and 103 of the OEC are not repealed by R.A. No. 7166. 120 These provisions, which are
merely amended insofar as the allowable amount is concerned, read:
SECTION 100. Limitations upon expenses of candidates. No candidate shall spend for his
election campaign an aggregate amount exceeding one peso and fifty centavos for every
voter
currently
registered
in
the
constituency
where
he
filed
his
candidacy: Provided, That the expenses herein referred to shall include those incurred
or caused to be incurred by the candidate, whether in cash or in kind, including the use,
rental or hire of land, water or aircraft, equipment, facilities, apparatus and paraphernalia used
in the campaign: Provided, further, That where the land, water or aircraft, equipment, facilities,
apparatus and paraphernalia used is owned by the candidate, his contributor or supporter, the
Commission is hereby empowered to assess the amount commensurate with the expenses
for the use thereof, based on the prevailing rates in the locality and shall be included in the
total expenses incurred by the candidate.
SECTION 101. Limitations upon expenses of political parties. A duly accredited political
party may spend for the election of its candidates in the constituency or constituencies where
it has official candidates an aggregate amount not exceeding the equivalent of one peso and
fifty centavos for every voter currently registered therein. Expenses incurred by branches,
chapters, or committees of such political party shall be included in the computation of the total
expenditures of the political party.
Expenses incurred by other political parties shall be considered as expenses of their
respective individual candidates and subject to limitation under Section 100 of this Code.
SECTION 103. Persons authorized to incur election expenditures. No person, except the
candidate, the treasurer of a political party or any person authorized by such candidate
or treasurer, shall make any expenditure in support of or in opposition to any candidate or
political party. Expenditures duly authorized by the candidate or the treasurer of the party shall
be considered as expenditures of such candidate or political party.
The authority to incur expenditures shall be in writing, copy of which shall be furnished the
Commission signed by the candidate or the treasurer of the party and showing the
expenditures so authorized, and shall state the full name and exact address of the person so
designated. (Emphasis supplied) 121
The focal query is: How shall We interpret "the expenses herein referred to shall include those
incurred or caused to be incurred by the candidate " and "except the candidate, the treasurer of a political
party or any person authorized by such candidate or treasurer" found in Sections 100 and 103, respectively,

of the OEC? Do these provisions exclude from the allowable election expenditures the contributions of third
parties made with the consent of the candidate? The Court holds not.
When the intent of the law is not apparent as worded, or when the application of the law would lead to absurdity,
impossibility or injustice, extrinsic aids of statutory construction may be resorted to such as the legislative history
of the law for the purpose of solving doubt, and that courts may take judicial notice of the origin and history of
the law, the deliberations during the enactment, as well as prior laws on the same subject matter in order to
ascertain the true intent or spirit of the law. 122
Looking back, it could be found that Sections 100, 101, and 103 of the OEC are substantially lifted from P.D. No.
1296, 123 as amended. Sections 51, 52 and 54 of which specifically provide:
Section 51. Limitations upon expenses of candidates. No candidate shall spend for his
election campaign an amount more than the salary or the equivalent of the total emoluments
for one year attached to the office for which he is a candidate: Provided, That the expenses
herein referred to shall include those incurred by the candidate, his contributors and
supporters, whether in cash or in kind, including the use, rental or hire of land, water or air
craft, equipment, facilities, apparatus and paraphernalia used in the campaign: Provided,
further, That, where the land, water or air craft, equipment, facilities, apparatus and
paraphernalia used is owned by the candidate, his contributor or supporter, the Commission is
hereby empowered to assess the amount commensurate with the expenses for the use
thereof, based on the prevailing rates in the locality and shall be included in the total
expenses incurred by the candidate.
In the case of candidates for the interim Batasang Pambansa, they shall not spend more than
sixty thousand pesos for their election campaign.
Section 52. Limitation upon expenses of political parties, groups or aggrupations. A
political party, group or aggrupation may not spend for the election of its candidates in the
constituency or constituencies where it has official candidates an aggregate amount more
than the equivalent of fifty centavos for every voter currently registered therein: Provided, That
expenses incurred by such political party, group or aggrupation not duly registered with the
Commission and/or not presenting or supporting a complete list of candidates shall be
considered as expenses of its candidates and subject to the limitation under Section 51 of this
Code. Expenses incurred by branches, chapters or committees of a political party, group or
aggrupation shall be included in the computation of the total expenditures of the political party,
group or aggrupation. (Emphasis supplied)
Section 54. Persons authorized to incur election expenditures. No person, except the
candidate or any person authorized by him or the treasurer of a political party, group or
aggrupation, shall make any expenditure in support of, or in opposition to any candidate or
political party, group or aggrupation. Expenditures duly authorized by the candidate of the
treasurer of the party, group or aggrupation shall be considered as expenditure of such
candidate or political party, group or aggrupation.
The authority to incur expenditures shall be in writing, copy of which shall be furnished the
Commission, signed by the candidate or the treasurer of the party, group or aggrupation and
showing the expenditure so authorized, and shall state the full name and exact address of the
person so designated. (Emphasis supplied)
Prior to P.D. No. 1296, R.A. No. 6388 (otherwise known as the "Election Code of 1971") was
enacted. 124 Sections 41 and 42 of which are relevant, to quote:
Section 41. Limitation Upon Expenses of Candidates. No candidate shall spend for his
election campaign more than the total amount of salary for the full term attached to the office
for which he is a candidate.
Section 42. Limitation Upon Expenses of Political Parties and Other Non-political
Organizations. No political party as defined in this Code shall spend for the election of its

candidates an aggregate amount more than the equivalent of one peso for every voter
currently registered throughout the country in case of a regular election, or in the constituency
in which the election shall be held in case of a special election which is not held in conjunction
with a regular election. Any other organization not connected with any political party,
campaigning for or against a candidate, or for or against a political party shall not
spend more than a total amount of five thousand pesos. (Emphasis supplied)
Much earlier, Section 12 (G) of R.A. No. 6132, 125 which implemented the resolution of both Houses of
Congress calling for a constitutional convention, explicitly stated:
Section 12. Regulations of Election Spending and Propaganda. The following provisions
shall govern election spending and propaganda in the election provided for in this Act:
xxx xxx xxx
(G) All candidates and all other persons making or receiving expenditures,
contributions or donations which in their totality exceed fifty pesos, in order to further or
oppose the candidacy of any candidate, shall file a statement of all such expenditures and
contributions made or received on such dates and with such details as the Commission on
Elections shall prescribe by rules. The total expenditures made by a candidate, or by any
other person with the knowledge and consent of the candidate, shall not exceed thirtytwo thousand pesos. (Emphasis supplied)
In tracing the legislative history of Sections 100, 101, and 103 of the OEC, it can be said, therefore, that the
intent of our lawmakers has been consistent through the years: to regulate not just the election expenses of the
candidate but also of his or her contributor/supporter/donor as well as by including in the aggregate limit of the
former's election expenses those incurred by the latter. The phrase "those incurred or caused to be incurred by
the candidate" is sufficiently adequate to cover those expenses which are contributed or donated in the
candidate's behalf. By virtue of the legal requirement that a contribution or donation should bear the written
conformity of the candidate, a contributor/supporter/donor certainly qualifies as "any person authorized by such
candidate or treasurer." Ubi lex non distinguit, nec nos distinguere debemus. 126 (Where the law does not
distinguish, neither should We.) There should be no distinction in the application of a law where none is
indicated.
The inclusion of the amount contributed by a donor to the candidate's allowable limit of election expenses does
not trample upon the free exercise of the voters' rights of speech and of expression under Section 4, Article III
of the Constitution. As a content-neutral regulation, 127 the law's concern is not to curtail the message or
content of the advertisement promoting a particular candidate but to ensure equality between and among
aspirants with "deep pockets" and those with less financial resources. Any restriction on speech or expression is
only incidental and is no more than necessary to achieve the substantial governmental interest of promoting
equality of opportunity in political advertising. It bears a clear and reasonable connection with the constitutional
objectives set out in Section 26, Article II, Section 4, Article IX-C, and Section 1, Art. XIII of the
Constitution. 128 Indeed, to rule otherwise would practically result in an unlimited expenditure for political
advertising, which skews the political process and subverts the essence of a truly democratic form of
government.
WHEREFORE, the Petition is DENIED. The May 21, 2014 Resolution of the COMELEC En Banc in SPA No. 13306 (DC), which upheld the September 26, 2013 Resolution of the COMELEC First Division, granting the
petition for disqualification filed by private respondent Edgar "Egay" S. San Luis against petitioner Emilio Ramon
"E.R." P. Ejercito, is herebyAFFIRMED.
SO ORDERED.
Sereno, C.J., Carpio, Velasco, Jr., Leonardo-de Castro, Bersamin, Del Castillo, Villarama, Jr., Perez, Mendoza,
Reyes and Leonen, JJ., concur.
Brion * and Jardeleza, * JJ., took no part.
Perlas-Bernabe, ** J., is on official leave.
||| (Ejercito v. Commission on Elections, G.R. No. 212398, [November 25, 2014])