THIRD DIVISION

[G.R. No. 135384. April 4, 2001]

MARIANO DE GUIA and APOLONIA DE GUIA, petitioners, vs. CIRIACO, LEON, VICTORINA, TOMASA and
PABLO, all surnamed DE GUIA, respondents.
DECISION
PANGANIBAN, J.:
Under the pre-1997 Rules of Civil Procedure, a notice of pretrial must be served separately on the counsel and the
client. If served only on the counsel, the notice must expressly direct the counsel to inform the client of the date, the time
and the place of the pretrial conference. The absence of such notice renders the proceedings void, and the judgment
rendered therein cannot acquire finality and may be attacked directly or collaterally.
The Case

Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the February 17, 1998 Decision[1] of
the Court of Appeals (CA) in CA-GR CV No. 42971. The dispositive portion of the CA Decision reads as follows:
WHEREFORE, without anymore touching on the merit of the judgment, we hereby SET ASIDE the default Order of June
18, 1992 which the lower court had improvidently issued as well as the ensuing judgment which suffers from the same
fatal infirmity. Let the case be remanded to the lower court, which is directed to promptly set the case for pre-trial
conference in accordance with the present Rules, and for further proceedings.[2]
Also assailed is the September 11, 1998 CA Resolution[3] which denied petitioners Motion for Reconsideration.
The Facts

The appellate court summarized the antecedents of the case as follows:

The record shows that on October 11, 1990, plaintiffs Mariano De Guia, Apolonia De Guia, Tomasa De Guia and Irene
Manuel filed with the court below a complaint for partition against defendants Ciriaco, Leon, Victorina and Pablo De
Guia. They alleged x x x that the real properties therein described were inherited by plaintiffs and defendants from their
predecessors-in-interest, and that the latter unjustly refused to have the properties subdivided among them. Shortly after
defendants filed their traverse, an amended complaint was admitted by the lower court, in which plaintiff Tomasa De Guia
was impleaded as one of the defendants for the reason that she had become an unwilling co-plaintiff.
It is further shown in the record that on June 11, 1992, the Branch Clerk of Court issued a Notice setting the case for pre-
trial conference on June 18, 1992 at 8:30 a.m. Copies of said notices were sent by registered mail to parties and their
counsel. It turned out that both defendants and counsel failed to attend the pre-trial conference. Hence, upon plaintiffs
motion, defendants were declared as in default and plaintiffs were allowed to present their evidence ex-parte.
It appears that on July 6, 1992, defendants filed their Motion for Reconsideration of the June 16, 1992 Order which
declared them as in default. They explained therein that they received the Notice of pre-trial only in the afternoon of June
18, 1992, giving them no chance to appear for such proceeding in the morning of that day. The Motion was opposed by
plaintiffs who pointed out that per Postal Delivery Receipt, defendants counsel actually received his copy of the Notice on
June 17, 1992 or one day before the date of pre-trial. Citing Section 2, Rule 13 of the Rules of Court, plaintiffs further
urged that counsels receipt of the said notice on June 17, 1992 was sufficient to bind defendants who received said notice
on the next day. Finally, they faulted defendants for failing to support their Motion for Reconsideration with an affidavit
of merit showing among others that they had a meritorious defense.
In an Order dated August 19, 1992, plaintiffs motion for reconsideration was denied and on June 11, 1993, judgment was
rendered ordering the partition of the controverted parcels of land.[4]
The CA Ruling

The CA sustained respondents claim that the trial court had improperly declared them in default. It held that the
Notice of pretrial received by their counsel a day before the hearing did not bind the clients, because the Rules of Court in
effect at the time mandated separate service of such Notice upon the parties and their counsel. Said the appellate court:
In fine, we hold that the lower court committed a reversible error in declaring appellants as in default for their failure to
attend the pre-trial conference [of] which they were not properly served x x x notice and in subsequently rendering the
herein appealed judgment. And while we commend the lower court for its apparent interest in disposing of the case with
dispatch, the imperatives of procedural due process constrain us to set aside the default order and the appealed judgment,
both of which were entered in violation of appellants right to notice of pre-trial as required by the Rules.[5]
Hence, this Petition.[6]
Issues

Petitioners impute the following alleged errors to the CA:

I
The Respondent Court of Appeals, with grave abuse of discretion, erred in not finding private respondents as in default
despite the existence of fraud, for being contrary to law, and for being contrary to the findings of the trial court.
II
The Respondent Court, with grave abuse of discretion, erred in reversing the trial courts Decision notwithstanding private
respondents violations of Rule 15, Sections 4 and 5 and Administrative Circular No. 04-94 and Revised Circular No. 28-
91.
III
The Respondent Court of Appeals, with grave abuse of discretion, erred in not affirming the compromise agreement
which has the effect and authority of res judicata even if not judicially approved.
IV
The Respondent Court gravely erred in not applying Rule 135, Section 8 as warranted by the facts, admission and the
evidence of the parties.[7]
In the main, petitioners raise the following core issues: (1) the propriety of the trial courts order declaring
respondents in default; and (2) petitioners allegation of procedural prejudice.
The Courts Ruling

The Petition has no merit.

First Issue: The Propriety of the Default Order

When the present dispute arose in 1992, the applicable rule was Section 1, Rule 20 of the pre-1997 Rules of Civil
Procedure, which provided as follows:
SECTION 1. Pre-trial mandatory. -- In any action after the last pleading has been filed, the court shall direct the parties
and their attorneys to appear before it for a conference to consider:
x x x x x x x x x.
This provision mandated separate service of the notice of pretrial upon the parties and their lawyers.[8] In Taroma v.
Sayo,[9] the Court explained:
For the guidance of the bench and bar, therefore, the Court in reaffirming the ruling that notice of pre-trial must be served
separately upon the party and his counsel of record, restates that while service of such notice to party may be made
directly to the party, it is best that the trial courts uniformly serve such notice to party through or care of his counsel at
counsels address with the express imposition upon counsel of the obligation of notifying the party of the date, time and
place of the pre-trial conference and assuring that the party either appear thereat or deliver counsel a written authority to
represent the party with power to compromise the case, with the warning that a party who fails to do so may be non-suited
or declared in default. (emphasis supplied)
Hence, before being declared non-suited or considered in default, parties and their counsel must be shown to have
been served with notice of the pretrial conference.[10] Moreover, if served only on the counsel, the notice must expressly
direct him or her to inform the client of the date, the time and the place of the pretrial conference. The absence of such
notice renders the proceedings void, and the judgment rendered therein cannot acquire finality and may be attacked
directly or collaterally.[11]
In this case, respondents received the notice on the afternoon of June 18, 1992, or after the pretrial scheduled on
the morning of that day. Moreover, although the Notice was also sent to their counsel, it did not contain any imposition or
directive that he inform his clients of the pretrial conference. The Notice merely stated: You are hereby notified that the
above-entitled case will be heard before this court on the 18th day of June, 1992, at 8:30 a.m. for pre-trial.[12]
Such belated receipt of the notice, which was not attributable to respondents, amounted to a lack of notice. Thus, the
lower court erred in declaring them in default and in denying them the opportunity to fully ventilate and defend their
claim in court.
Of course, this situation would not have arisen under Section 3,[13] Rule 18 of the 1997 Rules of Civil Procedure. It
specifically provides that notice of pretrial shall be served on counsel, who is charged with the duty of notifying the
client. Considering the milieu of the present case, however, such amended proviso is not applicable.
Second Issue: Allegation of Procedural Bias

Petitioners allege that, to their detriment, the appellate court disregarded established procedural precepts in resolving
the case, and that it did so for three reasons. First, respondents Manifestation and Motion to Lift the Order of Default, filed
with the trial court, was merely pro forma because the former lacked the requisite notice of hearing. Second, it also lacked
an affidavit of merit. Third, respondents Appeal Brief did not contain a certificate of non-forum shopping.
Granting that respondents Manifestation and Motion to Lift the Order of Default was pro forma, this issue has
become moot, not only because the trial court had denied such Motion, but also because what was appealed was the
judgment rendered by the lower court. For the same reason, we must also reject petitioners insistence that an affidavit of
merit was absent. In any case, there was no need to attach an affidavit of merit to the Motion, as the defenses of
respondents had been set out in their Answer.
With regard to the absence of a certification of non-forum shopping, substantial justice behooves us to agree with the
disquisition of the appellate court. We do not condone the shortcomings of respondents counsel, but we simply cannot
ignore the merits of their claim. Indeed, it has been held that [i]t is within the inherent power of the Court to suspend its
own rules in a particular case in order to do justice.[14]
One last point. Petitioners fault the CA for remanding the case to the trial court, arguing that the appellate court
should have resolved the case on its merit.
We understand petitioners apprehension at the prospect of re-hearing the case; after all, it has been nine years since
the filing of the Complaint. However, their claim and the evidence supporting it -- and respondents as well -- can be best
threshed out and justly resolved in the lower court. In this regard, we cannot pass upon the validity of the Agreement of
Partition between Mariano de Guia and Ciriaco de Guia, for such action would amount to a prejudgment of the case.
WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution AFFIRMED. No pronouncement
as to costs.
SO ORDERED.
Melo, (Chairman), Vitug, Gonzaga-Reyes, and Sandoval-Gutierrez, JJ., concur.

[G.R. No. 140486. February 6, 2001]

PUBLIC ESTATES AUTHORITY, petitioner, vs. JESUS S. YUJUICO and AUGUSTO Y. CARPIO, respondents.

DECISION
VITUG, J.:

The instant petition for review, with a prayer for the issuance of a temporary restraining order and/or writ of
preliminary injunction, seeks the reversal of the 13th September 1999 decision and 19th October 1999 resolution of the
Court of Appeals, both issued in CA-G.R. SP No. 50855, entitled Public Estates Authority vs. Hon. Raul E. De Leon, in
his capacity as Presiding Judge, Regional Trial Court, National Capital Judicial Region, Branch 258, Paraaque City and
Jesus S. Yujuico and Augusto Carpio.
The relevant antecedents:
On 24 July 1996, private respondents filed with the Regional Trial Court of Paraaque City, a complaint, docketed
Civil Case No. 96-0317, for the Removal of Cloud and Annulment of Title with Damages against petitioner. Respondent
Yujuico averred being the registered owner of Lot 1 of the subject area along Roxas Boulevard, Paraaque City, with an
area of 10,000 square meters, covered by Transfer Certificate of Title (TCT) No. 446386, dated 07 June 1974, of the
Registry of Deeds for the Province of Rizal. Respondent Carpio, in his case, himself maintained to be the registered owner
of Lot 2 with an area of 7,343 square meters, covered by TCT No. 44265, dated 16 June 1976, of the same registry. The
two lots were originally consolidated in one title registered in the name of one Fermina Castro under Original Certificate
of Title (OCT) No. 10215, dated 31 May 1974, of the Registry of Deeds for the province.
Sometime in 1989, petitioner Public Estates Authority (PEA) obtained ownership of various parcels of land along
Manila Bay for the purpose of constructing the Manila-Cavite Coastal Road. It was issued OCT No. Sp 02 on 13 January
1989. Petitioner likewise acquired ownership of some other parcels of land along the Manila Bay Coast covered by TCT
No. 7310 and TCT No. 19346 portions of which were subsequently sold by it to the Manila Bay Development
Corporation (MBDC). The MBDC, in turn, leased portions of the aforesaid lots to Uniwide Holdings, Inc. Petitioner
proceeded to carve out the path of the Coastal Road. Private respondents claimed that a subsequent verification survey
commissioned by them showed that the coastal road directly overlapped their property and that a portion of the area sold
by petitioner to the MBDC was also owned by them (private respondents). Private respondents contended that the titles
issued in the name of petitioner and the MBDC, being then invalid, ineffective, or voidable, should be nullified and set
aside.
In its answer, petitioner denied that the Coastal Road had overlapped the property of private respondents, stating that
the area covered by the infrastructure was granted to it by the government through a Special Patent and that the title to the
subject area was issued in its name on 13 January 1989 (for OCT No. SP 02) and on 04 April 1988 (for TCT No.
7310). Petitioner assailed the title of private respondents predecessor-in-interest, Fermina Castro, claiming that the latter
acquired her title to the subject land in 1974 when the same was yet under water and therefore still then part of the public
domain.
After the issues were joined, and during the pendency of the proceedings, petitioner, through its former General
Manager, Atty. Arsenio B. Yulo, Jr., asked the Office of the Government Corporate Counsel (OGCC) to make an in-depth
study on the validity of the titles of private respondents, the possible reversion of the property to the government, and the
question of the correct position of Tie-Point T-12-A of the PEA property sold to MBDC shown in the PEA Survey
Plan. In an opinion, dated 13 October 1997, the OGCC upheld the validity of the titles of private respondents and
expressed that there was no legal ground for filing reversion proceedings. There was, according to the OGCC, a
mispositioning of the PEA survey reference point by about 88 meters westward based on the documentary evidence
submitted to the court, resulting in the overlap of the PEA and the Yujuico property. The OGCC recommended that
petitioner should instead negotiate an amicable settlement with private respondents. Upon request of Atty. Yulo, the
Office of the Solicitor General (OSG) also gave an opinion, dated 22 December 1997, to the effect that, premised on the
matters on record, there was no sufficient basis for the government to institute an action to annul OCT No. 10215 in the
name of Fermina Castro and the derivative titles of private respondents.
Petitioner created a special committee of three PEA board directors composed of Atty. Nestor Kalaw, as Chairman,
and Gregorio Fider and Edgardo de Leon, as members, to study the matter of a possible settlement of the case and to
submit its recommendation. In due time, the committee recommended an amicable settlement of Civil Case No. 96-0317
and submitted a proposed compromise agreement which the PEA Board approved on 17 April 1998.
Following a series of negotiations, a compromise agreement was concluded on 15 May 1998 by then PEA General
Manager Atty. Arsenio B. Yulo, Jr., assisted by the OGCC, and by Benedicto Yujuico, attorney-in-fact of private
respondents, assisted by counsel Atty. Angel Cruz. The compromise agreement contained, among other things, two major
provisions, i.e., -

(a) that because PEA is not in a position to settle by cash payment, it was agreed that private respondents property with a
combined area of 1.7343 hectares covered by TCT No. 446386 and TCT No. 44265 shall be exchanged with PEA
property to be taken from PEAs property described as CBP-1A, shown on the Sketch Plan attached as Annex A of the
Compromise Agreement, and that all taxes and registration expenses for the property to be conveyed under the exchange
shall be for the account of the conveying party; and
(b) that private respondents were given an Option to purchase an additional 7.6 hectares from said PEA property CBP-1A
within a period of three years from the date of the approval by the Court of the Compromise Agreement at the price based
on the market value as determined by PEA on the date of the exercise of the Option.

The compromise was approved by the trial court in its resolution of 18 May 1998.
On 17 June 1998, pursuant to the compromise, the parties executed a Deed of Exchange of Real Property with a
sketch plan showing where the PEA property with an area of 1.4007 hectares to be conveyed to private respondents (in 3
Lots) would be taken in exchange for private respondents property with a combined area of 1.7343 hectares.
On 31 July 1998, the incumbent PEA General Manager, Carlos P. Doble, informed the Office of the Solicitor
General that the new PEA board and management had reviewed the compromise agreement and decided to defer and hold
in abeyance its implementation in view of the letter, dated 27 July 1998, of the former PEA General Manager, Atty.
Arsenio Yulo, Jr., to the effect that the compromise agreement which he signed did not reflect a condition required by the
previous PEA Board, i.e., the approval by the Office of the President.
On 14 September 1998, the new management of PEA filed a petition for relief from the resolution, dated 18 May
1998, of the trial court which approved the compromise agreement on the ground of mistake and excusable negligence
consisting of inadvertence on the part of former General Manager Yulo in the signing of the compromise agreement
without the requisite approval of the Office of the President. Private respondents opposed the petition and prayed for its
dismissal in that (a) it was filed beyond the reglementary period provided under Section 3, Rule 38, of the 1997 Rules of
Civil Procedure, and (b) the allegation of mistake and excusable negligence was a sham because it was through and upon
the recommendation of a special committee of three PEA directors and assisted by the OGCC, as well as guided by the
legal opinions of both the OGCC and the OSG, that PEA entered into and approved the compromise agreement.
The petition for relief was dismissed by the trial court on 06 November 1998 on the ground that it was filed out of
time and that the allegation of mistake and excusable negligence had no valid basis.Petitioner filed a motion for
reconsideration of the 06th November 1998 order of the trial court but its motion was denied on 07 January 1999.
Petitioner elevated the case to the Court of Appeals via a petition for certiorari but the petition was dismissed by the
appellate court on 13 September 1999 for petitioners failure to pay the required docket fees and for lack of merit. The
appellate court agreed with the findings of the trial court that the alleged inadvertence on the part of former PEA General
Manager in signing the compromise agreement on the belief that everything was in order could hardly be considered the
mistake or excusable negligence contemplated by the rules of civil procedure sufficient to support a petition for relief
from judgment. It further ruled that the petition for relief filed on 14 September 1998 came much too late considering that
the resolution approving the compromise agreement was issued by the trial court on 18 May 1998 and Civil Case No. 96-
0317 was dismissed on 03 July 1998. Petitioners motion for reconsideration was denied by the Court of Appeals on 19
October 1999.
Hence, the instant petition.
Petitioner raises the following grounds for allowance of the petition:
I.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW AND ACTED WITH GRAVE ABUSE
OF DISCRETION IN HOLDING THAT PETITIONER IS NOT EXEMPT FROM THE PAYMENT OF DOCKET
AND OTHER LEGAL FEES IN THE INSTANT CASE DESPITE THE FACT THAT IT WAS SUED BY
RESPONDENTS NOT FOR ANY PECUNIARY ACTIVITY BUT IN RELATION TO CERTAIN RECLAIMED
PARCELS OF LAND REGISTERED AND OWNED BY PETITIONER UNDENIABLY FOR AND ON BEHALF
OF THE NATIONAL GOVERNMENT.

II.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW AND ACTED WITH GRAVE ABUSE
OF DISCRETION IN BARRING PETITIONER, THROUGH PROCEDURAL TECHNICALITIES, FROM
SEEKING EQUITABLE AND JUDICIAL RELIEFS WHEN IT HELD THAT THE PETITION FOR RELIEF
FILED A QUO, DESPITE THE PECULIAR CIRCUMSTANCES OF THE INSTANT CASE, WAS FILED OUT
OF TIME.

III.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW AND ACTED WITH GRAVE ABUSE
OF DISCRETION IN AVOIDING AND EVADING, BASED ON A TECHNICAL AND/OR PROCEDURAL
GROUND, THE ISSUE OF FRAUD.

Petitioner admits that it has been paying docket fees in filing court petitions but asserts that since it is being sued not
in relation to any pecuniary activity but as a government entity holding reclaimed parcels of land for and on behalf of the
National Government pursuant to the purpose and objective of its creation, it should be exempt from such fees
conformably with Section 19, Rule 141, of the Revised Rules of Court. Petitioner claims that fraud has attended the
execution of the compromise agreement, adding that the unexplained deletion of the condition of prior approval by the
Office of the President constitutes extrinsic fraud which has prevented it from having a trial or from presenting its case in
court.
In refutation of the above assignment of errors private respondents contend that petitioner as an incorporated agency
of the government is liable and not exempt from the payment of docket fees.Respondents argue that the distinction made
by petitioner with respect to its being sued not in relation to any pecuniary activity but as a government entity owning
reclaimed parcels of land for and on behalf of the National Government is frivolous as not being based on any provision
of the PEA Charter. Respondents aver that petitioner, in fact, appears to concede that its petition for relief has been filed
out of time. In any case, respondents submit, there is absolutely no extrinsic fraud perpetrated upon the petitioner and that
the appellate court has properly disregarded this allegation as having been raised for the first time on appeal.
Petitioner has raised a valid point in its first assignment of error.
In both original and appealed cases, the court can be tasked to take cognizance over such cases only upon the
payment of the prescribed docket fees.[1] In this regard, Section 1 and Section 19, Rule 141, of the Revised Rules of Court
provide:

Sec. 1. Payment of Fees. - Upon the filing of the pleading or other application which initiates an action or proceeding, the
fees prescribed therefor shall be paid in full.
Sec. 19. Government Exempt. The Republic of the Philippines, its agencies and instrumentalities, are exempt from paying
the legal fees provided in this Rule. Local governments and government-owned or controlled corporations with or without
independent charters are not exempt from paying such fees."

Section 2, paragraph 10, of the Administrative Code of 1987 defines instrumentality as an agency of the National
Government, not integrated within the department framework, vested with special functions or jurisdiction by law,
endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually
through a charter. The term, under the Code, includes regulatory agencies, chartered institutions and government-owned
or controlled corporations.
Petitioner is a creation of Presidential Decree No. 1084, dated 04 February 1977, as a government corporation wholly
owned by the Government. It has been empowered to exercise the right of eminent domain in the name of the Republic of
the Philippines. In the acquisition of real estate by condemnation proceedings, the title to such real estate is to be taken in
the name of the Republic of the Philippines; thereupon, such real estate shall be entrusted to the Authority as the agent of
the Republic of the Philippines.[2] Although vested with personality separate and distinct from the government, petitioner
is not thereby divorced from its being an agent or instrumentality of the government within the purview of Section 19,
Rule 141, of the Revised Rules of Court. Petitioner, in having been charged with the construction of the Manila-Cavite
Coastal Road, exercises a governmental function, as so distinguished from a mere proprietary interest, and it is in relation
thereto that it has here been sued. In Iron Steel Authority vs. Court of Appeals,[3] the Court has observed that certain
agencies or instrumentalities of the National Government are cast in corporate form, that is to say, incorporated agencies
or instrumentalities, at times with and at other times without capital stock, and correspondingly vested with a juridical
personality distinct from the personality of the Republic.
At all events, while a court may refused to entertain a suit for non-payment of docket fees, such failure does not
preclude it, however, from taking cognizance of the case as circumstances may so warrant or when the ends of justice
would be best served if the case were to be given due course. Verily, the payment of fees is by no means a mere
technicality of law or procedure.[4] It is also an indispensable step in the perfection of an appeal.[5] While it is mandatory
on the litigant, the court, however, is not necessarily left without any alternative but to dismiss the appeal for non-payment
of docket fees. Thus, the failure to pay the appeal docketing fee confers a discretionary authority, not mandatory charge,
on the part of the court to dismiss an appeal. This discretion must, of course, be exercised soundly, wisely and prudently,
and with great deal of circumspection[6] in accordance with the tenets of fair play, never capriciously, and always with a
view to substance.[7]
Similarly, the Court has had occasions to suspend its own rules, or to except a particular case from its operation,
whenever the purposes of justice require it.[8] Strong compelling reasons, such as serving the ends of justice and
preventing a miscarriage thereof, can warrant a suspension of the rules.[9] While there is a crying need to unclog court
dockets, on the one hand, there is, on the other hand, an incomparable demand for resolving disputes fairly and
equitably.[10]
The Court, in fine, holds that petitioner, as and when it sues or is sued in the exercise of a governmental function,
could come within the category of an exempt agency of government under the Rules.
The Court now addresses the issue of whether or not the petition for relief has been filed with the trial court within
the reglementary period prescribed therefor.
Section 3, Rule 38, of the 1997 Rules of Civil Procedure provides that a verified petition for relief must be filed
within sixty (60) days after the petitioner learns of the judgment, final order, or other proceeding to be set aside and not
more than six (6) months after such judgment or final order has been entered or such proceeding has been taken. It must
be accompanied with affidavits showing the fraud, accident, mistake, or excusable negligence relied upon, and the facts
constituting petitioners good and substantial cause of action or defense.
In the instant case, the trial court issued the order approving the compromise agreement on 18 May
1998. Consequentially, two hearings were held in both of which instances petitioner was represented by counsel. The first
was on 01 June 1998 when petitioners co-defendant, Manila Bay Development Corporation (MBDC), through Atty.
William Chua, openly manifested that it was no longer pursuing its counterclaim against private respondents and its cross-
claim against petitioner because of the approval of the compromise agreement. On 17 June 1998, the parties executed a
Deed of Exchange of Real Properties pursuant to the compromise. The second hearing took place on 02 July 1998, where
the counsel for private respondents similarly manifested that they were withdrawing all claims against Uniwide and
MBDC. Thus, the trial court, in its order dated 03 July 1998, dismissed with prejudice all the claims by the plaintiffs and
defendants against each other. This narration was neither denied nor refuted by petitioner.
Surprisingly, petitioner, while reiterating in its own Memorandum the same sequence of events, would now argue,
however, that its incumbent management was not aware that prior to 15 July 1998, its previous counsel was already
aware of the existence of the 18th May 1998 resolution of the trial court, indicating parenthetically, that indeed the
petition for relief was filed beyond the sixty-day period allowed therefor. It would not be right to allow a mere change of
management of PEA to defeat the operation of the Rules on reglementary period.
Having thus concluded, the Court may not freely take on the third issued raised by petitioner.
Significantly, one other substantive matter brought up during the oral argument of the case is that the property subject
matter of the case was still under water[11] when titled, in the name of Fermina Castro and when it was thereafter conveyed
to private respondents; however, this issue, yet unventilated and a subject beyond the limited coverage of PEAs charter, is
not appropriate for consideration and determination, nor can it be peremptorily adjudged, by the Court in this instance. In
resolving this petition, the Court does not thus foreclose the right of the Republic of the Philippines itself from pursuing
any proper recourse in such separate proceedings as it may deem warranted.
WHEREFORE, the instant petition is DENIED, and the temporary restraining order previously issued is
accordingly lifted. No costs.
SO ORDERED.

[G. R. No. 145415. February 2, 2001]

UNITY FISHING DEVELOPMENT CORP. and/or ANTONIO DEE, petitioners, vs. COURT OF APPEALS,
NATIONAL LABOR RELATIONS COMMISSION and DOMINADOR LAGUIN, respondents.

RESOLUTION
GONZAGA-REYES, J.:

The present petition arose from the Resolution dated January 31, 2000 issued by the Court of Appeals dismissing the
petition for certiorari for being out of time. A Motion for Reconsideration thereto was likewise denied in the Resolution
of July 12, 2000. The Court of Appeals applied the earlier amendment which considered only the remaining period from
receipt of the order denying the motion for reconsideration in reckoning the reglementary period to file the petition.
It appears that a complaint for illegal dismissal, underpayment of wages, overtime pay, premium pay for holidays and
rest days, 13th month pay, service incentive leave pay, separation pay and for moral damages was filed by respondent
Dominador Laguin against petitioners Unity Fishing Development Corporation and/or Antonio Dee before the Labor
Arbiter. The Labor Arbiter rendered judgment on August 3, 1998 declaring the dismissal of respondent as illegal and
ordering herein petitioners to pay the former backwages, separation pay and salary differential. Respondents other claims
were dismissed, for lack of merit. On appeal, the National Labor Relations Commission (NLRC) affirmed the
judgment. Petitioners filed a motion for reconsideration therefrom. The NLRC-resolution denying petitioners motion for
reconsideration was received by petitioners on October 6, 1999. Thus, on December 6, 1999, petitioners filed, by
registered mail, a petition for certiorari with the Court of Appeals. In its Resolution dated January 31, 2000, the Court of
Appeals dismissed the petition for having been filed eleven (11) days past its due date. The Court of Appeals did not rule
on the merits of the case. The motion for reconsideration was likewise denied in the Resolution dated July 12, 2000,
which resolution was received by petitioners on August 1, 2000.[1]
Hence, the present petition for certiorari. Petitioners invoke the recent amendment to Section 4, Rule 65 where the
period of sixty (60) days is reckoned from receipt of the order denying the motion for reconsideration. Petitioners argue
that this amendment must be applied retroactively.
In the instant petition, petitioners invoke A.M. No. 00-2-03-SC, which took effect on September 1, 2000, particularly
amending Section 4, Rule 65 of the 1997 Rules of Civil Procedure wherein the sixty-day (60) period is reckoned from
receipt of the resolution denying the motion for reconsideration. Thus, applying said amendment, considering that
petitioners received on October 6, 1999 the resolution denying the motion for reconsideration, the filing of the petition
for certiorari with the Court of Appeals on December 6, 1999 would have been within the reglementary period.
Petitioners argue that the new rule gives a party whose motion for reconsideration has been denied a fresh 60-day
period to file a petition for certiorari. This rule, according to petitioners, must apply retroactively. Petitioners further
allege that the Court of Appeals Resolution dated July 12, 2000 denying their motion for reconsideration was received on
August 1, 2000 but the present petition was filed with this Court on October 2, 2000, because September 29, 2000,
although the 60th day, is a Saturday.
On November 20, 2000, this Court issued a Resolution requiring respondents to comment on the petition.
Respondent Dominador Laguin filed his Comment alleging that the amendment in Section 4, Rule 65 took effect on
September 1, 2000 and thus cannot be applied retroactively.
A.M. No. 00-2-03-SC amending Section 4, Rule 65 of the 1997 Rules of Civil Procedure (as amended by the
Resolution of July 21, 1998) took effect on September 1, 2000 and provides, to wit:
SEC. 4. When and where petition filed. --- The petition shall be filed not later than sixty (60) days from notice of the
judgment, order or resolution. In case a motion for reconsideration or new trial is timely filed, whether such motion
is required or not, the sixty (60) day period shall be counted from notice of the denial of said motion.
The petition shall be filed in the Supreme Court or, if it relates to the acts or omissions of a lower court or of a
corporation, board, officer or person, in the Regional Trial Court exercising jurisdiction over the territorial area as defined
by the Supreme Court. It may also be filed in the Court of Appeals whether or not the same is in aid of its appellate
jurisdiction, or in the Sandiganbayan if it is in aid of its appellate jurisdiction. If it involves the acts or omissions of a
quasi-judicial agency, unless otherwise provided by law or these rules, the petition shall be filed in and cognizable only by
the Court of Appeals.
No extension of time to file the petition shall be granted except for compelling reason and in no case exceeding fifteen
(15) days.

As we have ruled in the case of Systems Factors Corporation and Modesto Dean vs. NLRC, et al., G.R. No.
143789 (promulgated on November 27, 2000), the amendment under A.M. No. 00-2-03-SC wherein the sixty-day
period to file a petition for certiorari is reckoned from receipt of the resolution denying the motion for reconsideration
should be deemed applicable. We reiterate that remedial statutes or statutes relating to remedies or modes of procedure,
which do not create new or take away vested rights, but only operate in furtherance of the remedy or confirmation of
rights already existing, do not come within the legal conception of a retroactive law, or the general rule against retroactive
operation of statutes.[2] Statutes regulating the procedure of the courts will be construed as applicable to actions pending
and undetermined at the time of their passage. Procedural laws are retroactive in that sense and to that extent. The
retroactive application of procedural laws is not violative of any right of a person who may feel that he is adversely
affected.[3] The reason is that as a general rule, no vested right may attach to nor arise from procedural laws.[4]
The above conclusion is consonant with the provision in Section 6, Rule 1 of the 1997 Rules of Civil Procedure that
(T)hese Rules shall be liberally construed in order to promote their objective of securing a just, speedy and inexpensive
disposition of every action and proceeding.
As alleged in the petition, the NLRC-Resolution denying their motion for reconsideration was received by petitioners
on October 6, 1999 and the petition for certiorari was filed on December 6, 1999, a Monday.[5] Applying the amendment
to Section 4, Rule 65, the last day for filing the petition for certiorari should have been December 5, 1999. December 5
being a Sunday, the time shall not run until the next working day pursuant to Rule 22. [6] Hence, when petitioners filed
with the Court of Appeals the petition for certiorari on December 6, 1999, the same was still within the reglementary
period.
WHEREFORE, the assailed Resolutions dated January 31, 2000 and July 12, 2000 are hereby SET ASIDE and the
case is REMANDED to the Court of Appeals for further proceedings.

[ G . R . No . 110668 . February 6 , 1997 ] paragraph

SMITH , BELL & CO . , INC . , petitioner , vs . COURT OF APPEALS and JOSEPH BENGZON CHUA
, [1] respondents . paragraph

D E C I S I O N paragraph
PANGANIBAN , J . : paragraph

The main issue raised in this case is whether a local claim or settling agent is personally and / or solidarily liable
upon a marine insurance policy issued by its disclosed foreign principal . paragraph
This is a petition for review on certiorari of the Decision of respondent Court[2] promulgated on January 20 , 1993 in
CA - G . R . CV No . 31812 affirming the decision[3] of the trial court[4] which disposed as follows : [5] paragraph

Wherefore , the Court renders judgment condemning the defendants ( petitioner and First Insurance Co . Ltd . ) jointly
and severally to pay the plaintiff ( private respondent ) the amount of US$7 , 359 . 78 . plus 24% interest thereon
annually until the claim is fully paid , 10% as and for attorney s fees , and the cost . paragraph
 The Facts paragraph

The facts are undisputed by the parties , [6] and are narrated by respondent Court , quoting the trial court , as follows
[7]
: paragraph

The undisputed facts of the case have been succintly ( sic ) summarized by the lower court ( , ) as follows : paragraph

x x x in July 1982 , the plaintiffs , doing business under the style of Tic Hin Chiong , Importer , bought and imported
to the Philippines from the firm Chin Gact Co . , Ltd . of Taipei , Taiwan , 50 metric tons of Dicalcium Phospate
, Feed Grade F - 15% valued at US$13 , 000 . 00 CIF Manila . These were contained in 1 , 250 bags and shipped from
the Port of Kaohsiung , Taiwan on Board S . S . GOLDEN WEALTH for the Port on ( sic ) Manila . On July 27
, 1982 , this shipment was insured by the defendant First Insurance Co . for US$19 , 500 . 00 `against all risks at port of
departure under Marine Policy No . 1000M82070033219 , with the note `Claim , if any , payable in U . S . currency at
Manila ( Exh . `1 , `D for the plaintiff ) and with defendant Smith , Bell , and Co . stamped at the lower left side of
the policy as `Claim Agent . paragraph
The cargo arrived at the Port of Manila on September 1 , 1982 aboard the above - mentioned carrying vessel and landed
at port on September 2 , 1982 . Thereafter , the entire cargo was discharged to the local arrastre contractor , Metroport
Services Inc . with a number of the cargo in apparent bad order condition . On September 27 , 1982 , the plaintiff
secured the services of a cargo surveyor to conduct a survey of the damaged cargo which were ( sic ) delivered by
plaintiff s broker on said date to the plaintiff s premises at 12th Avenue , Grace Park , Caloocan City . The surveyor s
report ( Exh . `E ) showed that of the 1 , 250 bags of the imported material , 600 were damaged by tearing at the sides
of the container bags and the contents partly empty . Upon weighing , the contents of the damaged bags were found to
be 18 , 546 . 0 kg short . Accordingly , on October 16 following , the plaintiff filed with Smith , Bell , and Co . , Inc
. a formal statement of claim ( Exh . `G ) with proof of loss and a demand for settlement of the corresponding value of
the losses , in the sum of US$7 , 357 . 78 . 00 . ( sic ) After purportedly conveying the claim to its principal , Smith
, Bell , and Co . , Inc . informed the plaintiff by letter dated February 15 , 1983 ( Exh . `G - 2 ) that its principal
offered only 50% of the claim or US$3 , 616 . 17 as redress , on the alleged ground of discrepancy between the amounts
contained in the shipping agent s reply to the claimant of only US$90 . 48 with that of Metroport s . The offer not being
acceptable to the plaintiff , the latter wrote Smith , Bell , & Co . expressing his refusal to the `redress offer
, contending that the discrepancy was a result of loss from vessel to arrastre to consignees warehouse which losses were
still within the `all risk insurance cover . No settlement of the claim having been made , the plaintiff then caused the
instant case to be filed . ( p . 2 , RTC Decision ; p . 142 , Record ) . paragraph

Denying any liability , defendant - appellant averred in its answer that it is merely a settling or claim agent of defendant
insurance company and as such agent , it is not personally liable under the policy in which it has not even taken part of
. It then alleged that plaintiff - appellee has no cause of action against it . paragraph
Defendant The First Insurance Co . Ltd . did not file an Answer , hence it was declared in default . paragraph
After due trial and proceeding , the lower court rendered a decision favorable to plaintiff - appellee . It ruled that
plaintiff - appellee has fully established the liability of the insurance firm on the subject insurance contract as the former
presented concrete evidence of the amount of losses resulting from the risks insured against which were supported by
reliable report and assessment of professional cargo surveyor . As regards defendant - appellant , the lower court held
that since it is admittedly a claim agent of the foreign insurance firm doing business in the Philippines justice is better
served if said agent is made liable without prejudice to its right of action against its principal , the insurance firm . x x
x paragraph

The Issue paragraph

Whether or not a local settling or claim agent of a disclosed principal - - a foreign insurance company - - can be held
jointly and severally liable with said principal under the latter s marine cargo insurance policy , given that the agent is not
a party to the insurance contract [8] - - is the sole issue raised by petitioner . paragraph
Petitioner rejects liability under the said insurance contract , claiming that : ( 1 ) it is merely an agent and thus not
personally liable to the party with whom it contracts on behalf of its principal ; ( 2 ) it had no participation at all in the
contract of insurance ; and ( 3 ) the suit is not brought against the real party - in - interest . [9] paragraph
On the other hand , respondent Court in ruling against petitioner disposed of the main issue by citing a case it decided in
1987 , where petitioner was also a party - litigant . [10] In that case , respondent Court held that petitioner as resident
agent of First Insurance Co . Ltd . was authorized to settle claims against its principal . Its defense that its authority
excluded personal liability must be proven satisfactorily . There is a complete dearth of evidence supportive of appellant
s non - responsibility as resident agent . The ruling continued with the statement that the interest of justice is better
served by holding the settling or claim agent jointly and severally liable with its principal . [11] paragraph

Likewise , private respondent disputed the applicability of the cases of E . Macias & Co . vs . Warner , Barnes &
Co . [12] and Salonga vs . Warner , Barnes & Co . , Ltd . [13] invoked by petitioner in its appeal . According to private
respondent , these two cases impleaded only the insurance agent and did not include the principal . While both the
foreign principal - - which was declared in default by the trial court - - and petitioner , as claim agent , were found to
be solidarily liable in this case , petitioner still had recourse against its foreign principal . Also , being a contract of
adhesion , an insurance agreement must be strictly construed against the insurer . [14] paragraph

The Court s Ruling paragraph

There are three reasons why we find for petitioner . paragraph

First Reason : Existing Jurisprudence paragraph

Petitioner , undisputedly a settling agent acting within the scope of its authority , cannot be held personally and / or
solidarily liable for the obligations of its disclosed principal merely because there is allegedly a need for a speedy
settlement of the claim of private respondent . In the leading case of Salonga vs . Warner , Barnes & Co . , Ltd . this
Court ruled in this wise : [15] paragraph

We agree with counsel for the appellee that the defendant is a settlement and adjustment agent of the foreign insurance
company and that as such agent it has the authority to settle all the losses and claims that may arise under the policies that
may be issued by or in behalf of said company in accordance with the instructions it may receive from time to time from
its principal , but we disagree with counsel in his contention that as such adjustment and settlement agent , the defendant
has assumed personal liability under said policies , and , therefore , it can be sued in its own right . An adjustment and
settlement agent is no different from any other agent from the point of view of his responsibilty ( sic ) , for he also acts
in a representative capacity . Whenever he adjusts or settles a claim , he does it in behalf of his principal , and his action
is binding not upon himself but upon his principal . And here again , the ordinary rule of agency applies . The
following authorities bear this out : paragraph

An insurance adjuster is ordinarily a special agent for the person or company for whom he acts , and his authority
is prima facie coextensive with the business intrusted to him . * * * paragraph
An adjuster does not discharge functions of a quasi - judicial nature , but represents his employer , to whom he owes
faithful service , and for his acts , in the employer s interest , the employer is responsible so long as the acts are done
while the agent is acting within the scope of his employment . ( 45 C . J . S . , 1338 - 1340 . ) paragraph

It , therefore , clearly appears that the scope and extent of the functions of an adjustment and settlement agent do not
include personal liability . His functions are merely to settle and adjusts claims in behalf of his principal if those claims
are proven and undisputed , and if the claim is disputed or is disapproved by the principal , like in the instant case , the
agent does not assume any personal liability . The recourse of the insured is to press his claim against the principal . (
Underscoring supplied ) . paragraph
The foregoing doctrine may have been enunciated by this Court in 1951 , but the passage of time has not eroded its
value or merit . It still applies with equal force and vigor . paragraph
Private respondent s contention that Salonga does not apply simply because only the agent was sued therein while
here both agent and principal were impleaded and found solidarily liable is without merit . Such distinction is immaterial
. The agent can not be sued nor held liable whether singly or solidarily with its principal . paragraph
Every cause of action ex contractu must be founded upon a contract , oral or written , either express or implied
. [16] The only involvement of petitioner in the subject contract of insurance was having its name stamped at the bottom
left portion of the policy as Claim Agent . Without anything else to back it up , such stamp cannot even be deemed by
the remotest interpretation to mean that petitioner participated in the preparation of said contract . Hence , there is no
privity of contract , and correspondingly there can be no obligation or liability , and thus no cause of action against
petitioner attaches . Under Article 1311[17] of the Civil Code , contracts are binding only upon the parties ( and their
assigns and heirs ) who execute them . The subject cargo insurance was between the First Insurance Company , Ltd
. and the Chin Gact Co . , Ltd . , both of Taiwan , and was signed in Taipei , Taiwan by the president of the First
Insurance Company , Ltd . and the president of the Chin Gact Co . , Ltd . [18] There is absolutely nothing in the contract
which mentions the personal liability of petitioner . paragraph

Second Reason : Absence of Solidary Liability paragraph

May then petitioner , in its capacity as resident agent ( as found in the case cited by the respondent Court ) [19] be
held solidarily liable with the foreign insurer ? Article 1207 of the Civil Code clearly provides that ( t ) here is a
solidary liability only when the obligation expressly so states , or when the law or the nature of the obligation requires
solidarity . The well - entrenched rule is that solidary obligation cannot lightly be inferred . It must be positively and
clearly expressed . The contention that , in the end , it would really be First Insurance Company , Ltd . which would be
held liable is specious and cannot be accepted . Such a stance would inflict injustice upon petitioner which would be
made to advance the funds to settle the claim without any assurance that it can collect from the principal which
disapproved such claim , in the first place . More importantly , such position would have absolutely no legal basis
. paragraph
The Insurance Code is quite clear as to the purpose and role of a resident agent . Such agent , as a representative of
the foreign insurance company , is tasked only to receive legal processes on behalf of its principal and not to answer
personally for any insurance claims . We quote : paragraph

SEC . 190 . The Commissioner must require as a condition precedent to the transaction of insurance business in the
Philippines by any foreign insurance company , that such company file in his office a written power of attorney
designating some person who shall be a resident of the Philippines as its general agent , on whom any notice provided by
law or by any insurance policy , proof of loss , summons and other legal processes may be served in all actions or other
legal proceedings against such company , and consenting that service upon such general agent shall be admitted and held
as valid as if served upon the foreign company at its home office . Any such foreign company shall , as further condition
precedent to the transaction of insurance business in the Philippines , make and file with the Commissioner an agreement
or stipulation , executed by the proper authorities of said company in form and substance as follows : paragraph

The ( name of company ) does hereby stipulate and agree in consideration of the permission granted by the Insurance
Commissioner to transact business in the Philippines , that if at any time such company shall leave the Philippines , or
cease to transact business therein , or shall be without any agent in the Philippines on whom any notice , proof of loss
, summons , or legal process may be served , then in any action or proceeding arising out of any business or transaction
which occurred in the Philippines , service of any notice provided by law , or insurance policy , proof of loss , summons
, or other legal process may be made upon the Insurance Commissioner shall have the same force and effect as if made
upon the company . paragraph

Whenever such service of notice , proof of loss , summons , or other legal process shall be made upon the
Commissioner he must , within ten days thereafter , transmit by mail , postage paid , a copy of such notice , proof of
loss , summons , or other legal process to the company at its home or principal office . The sending of such copy of the
Commissioner shall be necessary part of the service of the notice , proof of loss , or other legal process . (
Underscoring supplied ) . paragraph
Further , we note that in the case cited by respondent Court , petitioner was found to be a resident agent of First
Insurance Co . Ltd . In the instant case however , the trial court had to order the service of summons upon First
Insurance Co . , Ltd . which would not have been necessary if petitioner was its resident agent . Indeed , from our
reading of the records of this case , we find no factual and legal bases for the finding of respondent Court that petitioner is
the resident agent of First Insurance Co . , Ltd . . paragraph

Third Reason : Not Real Party - In - Interest paragraph

 Lastly , being a mere agent and representative , petitioner is also not the real party - in - interest in this case . An
action is brought for a practical purpose , that is , to obtain actual and positive relief . If the party sued is not the proper
party , any decision that may be rendered against him would be futile , for the decision cannot be enforced or executed
. Section 2 , Rule 3 of the Rules of Court identifies who the real parties - in - interest are , thus : paragraph

Section 2 . Parties in interest . - Every action must be prosecuted and defended in the name of the real party in
interest . All persons having an interest in the subject of the action and in obtaining the relief demanded shall be joined as
plaintiffs . All persons who claim an interest in the controversy or the subject thereof adverse to the plaintiff , or who are
necessary to a complete determination or settlement of the questions involved therein shall be joined as defendants
. paragraph

The cause of action of private respondent is based on a contract of insurance which as already shown was not
participated in by petitioner . It is not a person who claim ( s ) an interest adverse to the plaintiff nor is said
respondent necessary to a complete determination or settlement of the questions involved in the controversy
. Petitioner is improperly impleaded for not being a real - party - interest . It will not benefit or suffer in case the action
prospers . [20] paragraph

Resort to Equity Misplaced paragraph

Finally , respondent Court also contends that the interest of justice is better served by holding the settling agent
jointly and severally liable with its principal . As no law backs up such pronouncement , the appellate Court is thus
resorting to equity . However , equity which has been aptly described as justice outside legality , is availed of only in
the absence of , and never against , statutory law or judicial pronouncements . [21] Upon the other hand , the liability of
agents is clearly provided for by our laws and existing jurisprudence . paragraph
WHEREFORE , in view of the foregoing considerations , the Petition is GRANTED and the Decision appealed
from is REVERSED and SET ASIDE . paragraph
No costs . paragraph
SO ORDERED . paragraph

[G.R. No. 132601. October 12, 1998]

LEO ECHEGARAY y PILO, petitioner, vs. THE SECRETARY OF JUSTICE and THE DIRECTOR OF THE
BUREAU OF CORRECTIONS, THE EXECUTIVE JUDGE OF THE REGIONAL TRIAL COURT OF
QUEZON CITY AND THE PRESIDING JUDGE OF REGIONAL TRIAL COURT OF QUEZON CITY,
BRANCH 104, respondents.

DECISION
PER CURIAM:

On June 25, 1996, this Court affirmed[1] the conviction of petitioner Leo Echegaray y Pilo for the crime of rape of the
10 year-old daughter of his common-law spouse and the imposition upon him of the death penalty for the said crime.
Petitioner duly filed a Motion for Reconsideration raising mainly factual issues, and on its heels, a Supplemental
Motion for Reconsideration raising for the first time the issue of the constitutionality of Republic Act No. 7659 [2] (the
death penalty law) and the imposition of the death penalty for the crime of rape.
On February 7, 1998, this Court denied[3] petitioner's Motion for Reconsideration and Supplemental Motion for
Reconsideration with a finding that Congress duly complied with the requirements for the reimposition of the death
penalty and therefore the death penalty law is not unconstitutional.
 In the meantime, Congress had seen it fit to change the mode of execution of the death penalty from electrocution to
lethal injection,[4] and passed Republic Act No. 8177, AN ACT DESIGNATING DEATH BY LETHAL INJECTION AS
THE METHOD OF CARRYING OUT CAPITAL PUNISHMENT, AMENDING FOR THE PURPOSE ARTICLE 81
OF THE REVISED PENAL CODE, AS AMENDED BY SECTION 24 OF REPUBLIC ACT NO. 7659.[5] Pursuant to the
provisions of said law, the Secretary of Justice promulgated the Rules and Regulations to Implement Republic Act No.
8177 ("implementing rules")[6] and directed the Director of the Bureau of Corrections to prepare the Lethal Injection
Manual.[7]
On March 2, 1998, petitioner filed a Petition[8] for Prohibition, Injunction and/or Temporary Restraining Order to
enjoin respondents Secretary of Justice and Director of the Bureau of Prisons from carrying out the execution by lethal
injection of petitioner under R.A. No. 8177 and its implementing rules as these are unconstitutional and void for being: (a)
cruel, degrading and inhuman punishment per seas well as by reason of its being (b) arbitrary, unreasonable and a
violation of due process, (c) a violation of the Philippines' obligations under international covenants, (d) an undue
delegation of legislative power by Congress, (e) an unlawful exercise by respondent Secretary of the power to legislate,
and (f) an unlawful delegation of delegated powers by the Secretary of Justice to respondent Director.
On March 3, 1998, petitioner, through counsel, filed a Motion for Leave of Court [9] to Amend and Supplement
Petition with the Amended and Supplemental Petition[10] attached thereto, invoking the additional ground of violation of
equal protection, and impleading the Executive Judge of the Regional Trial Court of Quezon City and the Presiding Judge
of the Regional Trial Court, Branch 104, in order to enjoin said public respondents from acting under the questioned rules
by setting a date for petitioner's execution.
On March 3, 1998, the Court resolved, without giving due course to the petition, to require the respondents to
COMMENT thereon within a non-extendible period of ten (10) days from notice, and directed the parties "to MAINTAIN
the status quo prevailing at the time of the filing of this petition."
On March 10, 1998, the Court granted the Motion for Leave of Court to Amend and Supplement Petition, and
required respondents to COMMENT thereon within ten (10) days from notice.
On March 16, 1998, petitioner filed a Very Urgent Motion (1) To clarify Status Quo Order, and (2) For the Issuance
of a Temporary Restraining Order expressly enjoining public respondents from taking any action to carry out petitioner's
execution until the petition is resolved.
On March 16, 1998, the Office of the Solicitor General[11] filed a Comment (On the Petition and the Amended
Supplemental Petition)[12] stating that (1) this Court has already upheld the constitutionality of the Death Penalty Law, and
has repeatedly declared that the death penalty is not cruel, unjust, excessive or unusual punishment; (2) execution by
lethal injection, as authorized under R.A. No. 8177 and the questioned rules, is constitutional, lethal injection being the
most modern, more humane, more economical, safer and easier to apply (than electrocution or the gas chamber); (3)
the International Covenant on Civil and Political Rights does not expressly or impliedly prohibit the imposition of the
death penalty; (4) R.A. No. 8177 properly delegated legislative power to respondent Director; and that (5) R.A. No. 8177
confers the power to promulgate the implementing rules to the Secretary of Justice, Secretary of Health and the Bureau of
Corrections.
On March 17, 1998, the Court required the petitioner to file a REPLY thereto within a non-extendible period of ten
days from notice.
On March 25, 1998, the Commission on Human Rights[13] filed a Motion for Leave of Court to Intervene and/or
Appear as Amicus Curiae[14] with the attached Petition to Intervene and/or Appear as Amicus Curiae[15] alleging that the
death penalty imposed under R.A. No. 7659 which is to be implemented by R.A. No. 8177 is cruel, degrading and outside
the limits of civil society standards, and further invoking (a) Article II, Section 11 of the Constitution which provides:
"The State values the dignity of every human person and guarantees full respect for human rights."; (b) Article III of
the Universal Declaration of Human Rights which states that "Everyone has the right to life, liberty and security of
person," and Article V thereof, which states that "No one shall be subjected to torture or to cruel, inhuman or degrading
treatment or punishment."; (c) The International Covenant on Civil and Political Rights, in particular, Article 6 thereof,
and the Second Optional Protocol to the International Covenant on Civil and Political Rights Aiming At The Abolition of
the Death Penalty; (d) Amnesty International statistics showing that as of October 1996, 58 countries have abolished the
death penalty for all crimes, 15 countries have abolished the death penalty for ordinary crimes, and 26 countries are
abolitionists de facto, which means that they have retained the death penalty for ordinary crimes but are considered
abolitionists in practice that they have not executed anyone during the past ten (10) years or more, or in that they have
made an international commitment not to carry out executions, for a total of 99 countries which are total abolitionists in
law or practice, and 95 countries as retentionists;[16] and (e) Pope John Paul II's encyclical, "Evangelium Vitae." In a
Resolution dated April 3, 1998, the Court duly noted the motion.
On March 27, 1998, petitioner filed a Reply[17] stating that (1) this Court is not barred from exercising judicial review
over the death penalty per se, the death penalty for rape and lethal injection as a mode of carrying out the death penalty;
(2) capital punishment is a cruel, degrading and inhuman punishment; (3) lethal injection is cruel, degrading and inhuman
punishment, and that being the "most modern" does not make it less cruel or more humane, and that the Solicitor
General's "aesthetic" criteria is short-sighted, and that the lethal injection is not risk free nor is it easier to implement; and
(4) the death penalty violates the International Covenant on Civil and Political Rights considering that the Philippines
participated in the deliberations of and voted for the Second Optional Protocol.
After deliberating on the pleadings, the Court gave due course to the petition, which it now resolves on the merits.
In the Amended and Supplemental Petition, petitioner assails the constitutionality of the mode of carrying out his
death sentence by lethal injection on the following grounds:[18]
I.

DEATH BY LETHAL INJECTION IS UNCONSTITUTIONAL FOR BEING A CRUEL, DEGRADING

AND INHUMAN PUNISHMENT.

II.

THE DEATH PENALTY VIOLATES THE INTERNATIONAL COVENANT ON CIVIL AND POLITICAL
RIGHTS, WHICH IS PART OF THE LAW OF THE LAND.

III.

LETHAL INJECTION, AS AUTHORIZED UNDER REPUBLIC ACT NO. 8177 AND THE QUESTIONED
RULES, IS UNCONSTITUTIONAL BECAUSE IT IS AN UNNECESSARY AND WANTON INFLICTION
OF PAIN ON A PERSON AND IS, THUS, A CRUEL, DEGRADING, AND INHUMAN PUNISHMENT.

IV.

REPUBLIC ACT NO. 8177 UNDULY DELEGATES LEGISLATIVE POWER TO RESPONDENT

DIRECTOR.

V.

RESPONDENT SECRETARY UNLAWFULLY DELEGATED THE LEGISLATIVE POWERS

DELEGATED TO HIM UNDER REPUBLIC ACT NO. 8177 TO RESPONDENT DIRECTOR.

VI.

RESPONDENT SECRETARY EXCEEDED THE AUTHORITY DELEGATED TO HIM UNDER

REPUBLIC ACT NO. 8177 AND UNLAWFULLY USURPED THE POWER TO LEGISLATE IN
PROMULGATING THE QUESTIONED RULES.

VII.

SECTION 17 OF THE QUESTIONED RULES IS UNCONSTITUTIONAL FOR BEING

DISCRIMINATORY AS WELL AS FOR BEING AN INVALID EXERCISE BY RESPONDENT
SECRETARY OF THE POWER TO LEGISLATE.

VIII.

INJUCTION MUST ISSUE TO PREVENT IRREPARABLE DAMAGE AND INJURY TO PETITIONER'S

RIGHTS BY REASON OF THE EXISTENCE, OPERATION AND IMPLEMENTATION OF AN
UNCONSTITUTIONAL STATUTE AND EQUALLY INVALID AND IMPLEMENTING RULES.
 Concisely put, petitioner argues that R.A. No. 8177 and its implementing rules do not pass constitutional muster for:
(a) violation of the constitutional proscription against cruel, degrading or inhuman punishment, (b) violation of our
international treaty obligations, (c) being an undue delegation of legislative power, and (d) being discriminatory.
The Court shall now proceed to discuss these issues in seriatim.
I. LETHAL INJECTION, NOT CRUEL, DEGRADING OR INHUMAN PUNISHMENT UNDER SECTION 19,
ARTICLE III OF THE 1987 CONSTITUTION.
The main challenge to R.A. 8177 and its implementing rules is anchored on Article III, Section 19 (1) of the 1987
Constitution which proscribes the imposition of "cruel, degrading or inhuman" punishment. "The prohibition in the
Philippine Bill against cruel and unusual punishments is an Anglo-Saxon safeguard against governmental oppression of
the subject, which made its first appearance in the reign of William and Mary of England in 'An Act declaring the rights
and liberties of the subject, and settling the succession of the crown,' passed in the year 1689. It has been incorporated into
the Constitution of the United States (of America) and into most constitutions of the various States in substantially the
same language as that used in the original statute. The exact language of the Constitution of the United States is used in
the Philippine Bill."[19] "The counterpart of Section 19 (1) in the 1935 Constitution reads: 'Excessive fines shall not be
imposed, nor cruel and inhuman punishment inflicted.' xxx In the 1973 Constitution the phrase became 'cruel or unusual
punishment.' The Bill of Rights Committee of the 1986 Constitutional Commission read the 1973 modification as
prohibiting 'unusual' punishment even if not 'cruel.' It was thus seen as an obstacle to experimentation in
penology. Consequently, the Committee reported out the present text which prohibits 'cruel, degrading or inhuman
punishment' as more consonant with the meaning desired and with jurisprudence on the subject." [20]
Petitioner contends that death by lethal injection constitutes cruel, degrading and inhuman punishment considering
that (1) R.A. No. 8177 fails to provide for the drugs to be used in carrying out lethal injection, the dosage for each drug to
be administered, and the procedure in administering said drug/s into the accused; (2) R.A. No. 8177 and its implementing
rules are uncertain as to the date of the execution, time of notification, the court which will fix the date of execution,
which uncertainties cause the greatest pain and suffering for the convict; and (3) the possibility of "botched executions" or
mistakes in administering the drugs renders lethal injection inherently cruel.
Before the Court proceeds any further, a brief explanation of the process of administering lethal injection is in order.
In lethal injection, the condemned inmate is strapped on a hospital gurney and wheeled into the execution room. A
trained technician inserts a needle into a vein in the inmate's arm and begins an intravenous flow of saline solution. At the
warden's signal, a lethal combination of drugs is injected into the intravenous line. The deadly concoction typically
includes three drugs: (1) a nonlethal dose of sodium thiopenthotal, a sleep inducing barbiturate; (2) lethal doses of
pancuronium bromide, a drug that paralyzes the muscles; and (3) potassium chloride, which stops the heart within
seconds. The first two drugs are commonly used during surgery to put the patient to sleep and relax muscles; the third is
used in heart bypass surgery.[21]
Now it is well-settled in jurisprudence that the death penalty per se is not a cruel, degrading or inhuman
punishment.[22] In the oft-cited case of Harden v. Director of Prisons,[23] this Court held that "[p]unishments are cruel
when they involve torture or a lingering death; but the punishment of death is not cruel, within the meaning of that word
as used in the constitution. It implies there something inhuman and barbarous, something more than the mere
extinguishment of life." Would the lack in particularity then as to the details involved in the execution by lethal injection
render said law "cruel, degrading or inhuman"? The Court believes not. For reasons hereafter discussed, the implementing
details of R.A. No. 8177 are matters which are properly left to the competence and expertise of administrative officials.[24]
Petitioner contends that Sec. 16[25] of R.A. No. 8177 is uncertain as to which "court" will fix the time and date of
execution, and the date of execution and time of notification of the death convict. As petitioner already knows, the "court"
which designates the date of execution is the trial court which convicted the accused, that is, after this Court has reviewed
the entire records of the case[26] and has affirmed the judgment of the lower court. Thereupon, the procedure is that the
"judgment is entered fifteen (15) days after its promulgation, and 10 days thereafter, the records are remanded to the court
below including a certified copy of the judgment for execution.[27] Neither is there any uncertainty as to the date of
execution nor the time of notification. As to the date of execution, Section 15 of the implementing rules must be read in
conjunction with the last sentence of Section 1 of R.A. No. 8177 which provides that the death sentence shall be carried
out "not earlier than one (1) year nor later then eighteen (18) months from the time the judgment imposing the death
penalty became final and executory, without prejudice to the exercise by the President of his executive clemency powers
at all times." Hence, the death convict is in effect assured of eighteen (18) months from the time the judgment imposing
the death penalty became final and executory[28] wherein he can seek executive clemency[29] and attend to all his temporal
and spiritual affairs.[30]
Petitioner further contends that the infliction of "wanton pain" in case of possible complications in the intravenous
injection, considering and as petitioner claims, that respondent Director is an untrained and untested person insofar as the
choice and administration of lethal injection is concerned, renders lethal injection a cruel, degrading and inhuman
punishment. Such supposition is highly speculative and unsubstantiated.
First. Petitioner has neither alleged nor presented evidence that lethal injection required the expertise only of
phlebotomists and not trained personnel and that the drugs to be administered are unsafe or ineffective.[31] Petitioner
simply cites situations in the United States wherein execution by lethal injection allegedly resulted in prolonged and
agonizing death for the convict,[32] without any other evidence whatsoever.
Second. Petitioner overlooked Section 1, third paragraph of R.A. No. 8177 which requires that all personnel involved
in the execution proceedings should be trained prior to the performance of such task.We must presume that the public
officials entrusted with the implementation of the death penalty (by lethal injection) will carefully avoid inflicting cruel
punishment.[33]
Third. Any infliction of pain in lethal injection is merely incidental in carrying out the execution of death penalty and
does not fall within the constitutional proscription against cruel, degrading and inhuman punishment. "In a limited sense,
anything is cruel which is calculated to give pain or distress, and since punishment imports pain or suffering to the
convict, it may be said that all punishments are cruel. But of course the Constitution does not mean that crime, for this
reason, is to go unpunished."[34] The cruelty against which the Constitution protects a convicted man is cruelty inherent in
the method of punishment, not the necessary suffering involved in any method employed to extinguish life
humanely.[35] Numerous federal and state courts of the United States have been asked to review whether lethal injections
constitute cruel and unusual punishment. No court has found lethal injections to implicate prisoner's Eighth Amendment
rights. In fact, most courts that have addressed the issue state in one or two sentences that lethal injection clearly is a
constitutional form of execution.[36] A few jurisdictions, however, have addressed the merits of the Eighth Amendment
claims. Without exception, these courts have found that lethal injection does not constitute cruel and unusual
punishment. After reviewing the medical evidence that indicates that improper doses or improper administration of the
drugs causes severe pain and that prison officials tend to have little training in the administration of the drugs, the courts
have found that the few minutes of pain does not rise to a constitutional violation.[37]
What is cruel and unusual "is not fastened to the obsolete but may acquire meaning as public opinion becomes
enlightened by a humane justice" and "must draw its meaning from the evolving standards of decency that mark the
progress of a maturing society."[38] Indeed, "[o]ther (U.S.) courts have focused on 'standards of decency' finding that the
widespread use of lethal injections indicates that it comports with contemporary norms." [39] the primary indicator of
society's standard of decency with regard to capital punishment is the response of the country's legislatures to the
sanction.[40] Hence, for as long as the death penalty remains in our statute books and meets the most stringent requirements
provided by the Constitution, we must confine our inquiry to the legality of R.A. No. 8177, whose constitutionality we
duly sustain in the face of petitioner's challenge. We find that the legislature's substitution of the mode of carrying out the
death penalty from electrocution to lethal injection infringes no constitutional rights of petitioner herein.
II. REIMPOSITION OF THE DEATH PENALTY LAW DOES NOT VIOLATE INTERNATIONAL TREATY
OBLIGATIONS
Petitioner assiduously argues that the reimposition of the death penalty law violates our international obligations, in
particular, the International Covenant on Civil And Political Rights, which was adopted by the General Assembly of the
United Nations on December 16, 1996, signed and ratified by the Philippines on December 19, 1966 and October 23,
1986,[41] respectively.
Article 6 of the International Covenant on Civil and Political Rights provides:

"1. Every human being has the inherent right to life. This right shall be protected by law. No one shall be arbitrarily
deprived of his life.
2. In countries which have not abolished the death penalty, sentence of death may be imposed only for the most serious
crimes in accordance with the law in force at the time of the commission of the crime and not contrary to the provisions of
the present Covenant and to the Convention on the Prevention and Punishment of the Crime of Genocide. This penalty
can only be carried out pursuant to a final judgment rendered by a competent court." (emphasis supplied)
3. When deprivation of life constitutes the crime of genocide, it is understood that nothing in this article shall authorize
any State Party to the present Covenant to derogate in any way from any obligation assumed under the provisions of the
Convention on the Prevention and Punishment of the Crime of Genocide.
4. Anyone sentenced to death shall have the right to seek pardon or commutation of the sentence. Amnesty, pardon or
commutation of the sentence of death may be granted in all-cases.
5. Sentence of death shall not be imposed for crimes committed by persons below eighteen years of age and shall not be
carried out on pregnant women.
6. Nothing in this article shall be invoked to delay or to prevent the abolition of capital punishment by any State. Party to
the present Covenant."

Indisputably, Article 6 of the Covenant enshrines the individual's right to life. Nevertheless, Article 6 (2) of
the Covenant explicitly recognizes that capital punishment is an allowable limitation on the right to life, subject to the
limitation that it be imposed for the "most serious crimes". Pursuant to Article 28 of the Covenant, a Human Rights
Committee was established and under Article 40 of the Covenant, State parties to the Covenant are required to submit an
initial report to the Committee on the measures they have adopted which give effect to the rights recognized within
the Covenant and on the progress made on the enjoyment of those rights one year of its entry into force for the State Party
concerned and thereafter, after five years. On July 27, 1982, the Human Rights Committee issued General Comment No.
6 interpreting Article 6 of the Covenant stating that "(while) it follows from Article 6 (2) to (6) that State parties are not
obliged to abolish the death penalty totally, they are obliged to limit its use and, in particular, to abolish it for other than
the 'most serious crimes.' Accordingly, they ought to consider reviewing their criminal laws in this light and, in any event,
are obliged to restrict the application of the death penalty to the most serious crimes.' The article strongly suggests (pars. 2
(2) and (6) that abolition is desirable. xxx The Committee is of the opinion that the expression 'most serious crimes' must
be read restrictively to mean that the death penalty should be a quite exceptional measure." Further, the Safeguards
Guaranteeing Protection of Those Facing the Death Penalty[42] adopted by the Economic and Social Council of the
United Nations declare that the ambit of the term 'most serious crimes' should not go beyond intentional crimes, with
lethal or other extremely grave consequences.
The Optional Protocol to the International Covenant on Civil and Political Rights was adopted by the General
Assembly of the United Nations on December 16, 1966, and signed and ratified by the Philippines on December 19, 1966
and August 22, 1989,[43] respectively. The Optional Protocol provides that the Human Rights Committee shall receive and
consider communications from individuals claiming to be victims of violations of any of the rights set forth in the
Covenant.
On the other hand, the Second Optional Protocol to the International Covenant on Civil and Political Rights, Aiming
at the Abolition of the Death Penalty was adopted by the General Assembly on December 15, 1989. The Philippines
neither signed nor ratified said document.[44] Evidently, petitioner's assertion of our obligation under the Second
Optional Protocol is misplaced.
III. THERE IS NO UNDUE DELEGATION OF LEGISLATIVE POWER IN R.A. NO. 8177 TO THE
SECRETARY OF JUSTICE AND THE DIRECTOR OF BUREAU OF CORRECTIONS, BUT SECTION 19
OF THE RULES AND REGULATIONS TO IMPLEMENT R.A. NO. 8177 IS INVALID.
The separation of powers is a fundamental principle in our system of government. It obtains not through express
provision but by actual division in the framing of our Constitution. Each department of the government has exclusive
cognizance of matters placed within its jurisdiction, and is supreme within its own sphere. [45] Corollary to the doctrine of
separation of powers is the principle of non-delegation of powers. "The rule is that what has been delegated, cannot be
delegated or as expressed in a Latin maxim: potestas delegata non delegari potest."[46] The recognized exceptions to the
rule are as follows:
(1) Delegation of tariff powers to the President under Section 28 (2) of Article VI of the Constitution;
(2) Delegation of emergency powers to the President under Section 23 (2) of Article VI of the Constitution;
(3) Delegation to the people at large;
(4) Delegation to local governments; and
(5) Delegation to administrative bodies.[47]
Empowering the Secretary of Justice in conjunction with the Secretary of Health and the Director of the Bureau of
Corrections, to promulgate rules and regulations on the subject of lethal injection is a form of delegation of legislative
authority to administrative bodies.
The reason for delegation of authority to administrative agencies is the increasing complexity of the task of
government requiring expertise as well as the growing inability of the legislature to cope directly with the myriad
problems demanding its attention. The growth of society has ramified its activities and created peculiar and sophisticated
problems that the legislature cannot be expected to attend to by itself. Specialization even in legislation has become
necessary. On many problems involving day-to-day undertakings, the legislature may not have the needed competence to
provide the required direct and efficacious, not to say, specific solutions. These solutions may, however, be expected from
its delegates, who are supposed to be experts in the particular fields assigned to them.[48]
Although Congress may delegate to another branch of the Government the power to fill in the details in the
execution, enforcement or administration of a law, it is essential, to forestall a violation of the principle of separation of
powers, that said law: (a) be complete in itself - it must set forth therein the policy to be executed, carried out or
implemented by the delegate[49] - and (b) fix a standard - the limits of which are sufficiently determinate or determinable -
to which the delegate must conform in the performance of his functions.[50]
Considering the scope and the definiteness of R.A. No. 8177, which changed the mode of carrying out the death
penalty, the Court finds that the law sufficiently describes what job must be done, who is to do it, and what is the scope of
his authority.[51]
R.A. No. 8177 likewise provides the standards which define the legislative policy, mark its limits, map out its
boundaries, and specify the public agencies which will apply it. it indicates the circumstances under which the legislative
purpose may be carried out.[52] R.A. No. 8177 specifically requires that "[t]he death sentence shall be executed under the
authority of the Director of the Bureau of Corrections, endeavoring so far as possible to mitigate the sufferings of the
person under the sentence during the lethal injection as well as during the proceedings prior to the
execution."[53] Further, "[t]he Director of the Bureau of Corrections shall take steps to ensure that the lethal injection to
be administered is sufficient to cause the instantaneous death of the convict."[54] The legislature also mandated that
"all personnel involved in the administration of lethal injection shall be trained prior to the performance of such
task."[55] The Court cannot see that any useful purpose would be served by requiring greater detail.[56] The question raised
is not the definition of what constitutes a criminal offense,[57] but the mode of carrying out the penalty already imposed by
the Courts. In this sense, R.A. No. 8177 is sufficiently definite and the exercise of discretion by the administrative
officials concerned is, to use the words of Justice Benjamin Cardozo, canalized within banks that keep it from
overflowing.
Thus, the Court finds that the existence of an area for exercise of discretion by the Secretary of Justice and the
Director of the Bureau of Corrections under delegated legislative power is proper where standards are formulated for the
guidance and the exercise of limited discretion, which though general, are capable of reasonable application. [58]
It is also noteworthy that Article 81 of the Revised Penal Code which originally provided for the death penalty by
electrocution was not subjected to attack on the ground that it failed to provide for details such as the kind of chair to be
used, the amount of voltage, volume of amperage or place of attachment of electrodes on the death convict. Hence,
petitioner's analogous argument with respect to lethal injection must fail.
A careful reading of R.A. No. 8177 would show that there is no undue delegation of legislative power from the
Secretary of Justice to the Director of the Bureau of Corrections for the simple reason that under the Administrative Code
of 1987, the Bureau of Corrections is a mere constituent unit of the Department of Justice.[59] Further, the Department of
Justice is tasked, among others, to take charge of the "administration of the correctional system."[60] Hence, the import of
the phraseology of the law is that the Secretary of Justice should supervise the Director of the Bureau of Corrections in
promulgating the Lethal Injection Manual, in consultation with the Department of Health.[61]
However, the Rules and Regulations to Implement Republic Act No. 8177 suffer serious flaws that could not be
overlooked. To begin with, something basic appears missing in Section 19 of the implementing rules which provides:

"SEC. 19. EXECUTION PROCEDURE. - Details of the procedure prior to, during and after administering the
lethal injection shall be set forth in a manual to be prepared by the Director. The manual shall contain details of,
among others, the sequence of events before and after execution; procedures in setting up the intravenous line; the
administration of the lethal drugs; the pronouncement of death; and the removal of the intravenous system.
Said manual shall be confidential and its distribution shall be limited to authorized prison personnel."

Thus, the Courts finds in the first paragraph of Section 19 of the implementing rules a veritable vacuum. The
Secretary of Justice has practically abdicated the power to promulgate the manual on the execution procedure to the
Director of the Bureau of Corrections, by not providing for a mode of review and approval thereof. Being a mere
constituent unit of the Department of Justice, the Bureau of Corrections could not promulgate a manual that would not
bear the imprimatur of the administrative superior, the Secretary of Justice as the rule-making authority under R.A. No.
8177. Such apparent abdication of departmental responsibility renders the said paragraph invalid.
As to the second paragraph of section 19, the Court finds the requirement of confidentiality of the contents of the
manual even with respect to the convict unduly suppressive. It sees no legal impediment for the convict, should he so
desire, to obtain a copy of the manual. The contents of the manual are matters of public concern "which the public may
want to know, either because these directly affect their lives, or simply because such matters naturally arouse the interest
of an ordinary citizen."[62] Section 7 of Article III of the 1987 Constitution provides:

"SEC. 7. The right of the people to information on matters of public concern shall be recognized. Access to
official records, and to documents and papers pertaining to official acts, transaction, or decisions, as well as to
 government research data used as a basis for policy development, shall be afforded the citizen, subject to such
limitation as may be provided by law."

The incorporation in the Constitution of a guarantee of access to information of public concern is a recognition of the
essentiality of the free flow of ideas and information in a democracy. [63] In the same way that free discussion enables
members of society to cope with the exigencies of their time,[64] access to information of general interest aids the people in
democratic decision-making[65] by giving them a better perspective of the vital issues confronting the nation.[66]
D. SECTION 17 OF THE RULES AND REGULATIONS TO IMPLEMENT R.A. NO. 8177 IS INVALID FOR
BEING DISCRIMINATORY AND CONTRARY TO LAW.
Even more seriously flawed than Section 19 is Section of the implementing rules which provides:

"SEC. 17. SUSPENSION OF THE EXECUTION OF THE DEATH SENTENCE. Execution by lethal injection
shall not be inflicted upon a woman within the three years next following the date of the sentence or while she is
pregnant, nor upon any person over seventy (70) years of age. In this latter case, the death penalty shall be commuted
to the penalty of reclusion perpetua with the accessory penalties provided in Article 40 of the Revised Penal Code."

Petitioner contends that Section 17 is unconstitutional for being discriminatory as well as for being an invalid
exercise of the power to legislate by respondent Secretary. Petitioner insists that Section 17 amends the instances when
lethal injection may be suspended, without an express amendment of Article 83 of the Revised Penal Code, as amended
by section 25 of R.A. No. 7659.
Article 83 f the Revised Penal Code, as amended by section 25 of R.A. No. 7659 now reads as follows:

"ART. 83, Suspension of the execution of the death sentence.- The death sentence shall not be inflicted upon a
woman while she is pregnant or within one (1) year after delivery, nor upon any person over seventy years of age. In
this last case, the death sentence shall be commuted to the penalty of reclusion perpetua with the accessory penalty
provided in Article 40. x x x".

On this point, the Courts finds petitioner's contention impressed with merit. While Article 83 of the Revised Penal
Code, as amended by Section 25 of Republic Act No. 7659, suspends the implementation of the death penalty while a
woman is pregnant or within one (1) year after delivery, Section 17 of the implementing rules omits the one (1) year
period following delivery as an instance when the death sentence is suspended, and adds a ground for suspension of
sentence no longer found under Article 83 of the Revised Penal Code as amended, which is the three-year reprieve after
a woman is sentenced. This addition is, in petitioner's view, tantamount to a gender-based discrimination sans statutory
basis, while the omission is an impermissible contravention of the applicable law.
Being merely an implementing rule, Section 17 aforecited must not override, but instead remain consistent and in
harmony with the law it seeks to apply and implement. Administrative rules and regulations are intended to carry out,
neither to supplant nor to modify, the law."[67] An administrative agency cannot amend an act of Congress.[68] In case of
discrepancy between a provision of statute and a rule or regulation issued to implement said statute, the statutory
provision prevails. Since the cited clause in Section 17 which suspends the execution of a woman within the three (3)
years next following the date of sentence finds no supports in Article 83 of the Revised Penal Code as amended, perforce
Section 17 must be declared invalid.
One member of the Court voted to declare Republic Act. No. 8177 as unconstitutional insofar as it delegates the
power to make rules over the same subject matter to two persons (the Secretary of Justice and the Director of the Bureau
of Corrections) and constitutes a violation of the international norm towards the abolition of the death penalty. One
member of the Court, consistent with his view in People v. Echegaray, 267 SCRA 682, 734-758 (1997) that the death
penalty law (Republic Act. No. 7659) is itself unconstitutional, believes that Republic Act No. 8177 which provides for
the means of carrying out the death sentence, is likewise unconstitutional. Two other members of the court concurred in
the aforesaid Separate Opinions in that the death penalty law (Republic Act No. 7659) together with the assailed statute
(Republic Act No. 8177) are unconstitutional. In sum, four members of the Court voted to declare Republic Act. No. 8177
as unconstitutional. These Separate Opinions are hereto annexed, infra.
WHEREFORE, the petition is DENIED insofar as petitioner seeks to declare the assailed statute (Republic Act No.
8177) as unconstitutional; but GRANTED insofar as Sections 17 and 19 of the Rules and Regulations to Implement
Republic Act No. 8177 are concerned, which are hereby declared INVALID because (a) Section 17 contravenes Article
83 of the Revised Penal Code, as amended by Section 25 of the Republic Act No. 7659; and (b) Section 19 fails to provide
for review and approval of the Lethal Injection Manual by the Secretary of Justice, and unjustifiably makes the manual
confidential, hence unavailable to interested parties including the accused/convict and counsel. Respondents are hereby
enjoined from enforcing and implementing Republic Act No. 8177 until the aforesaid Sections 17 and 19 of the Rules and
Regulations to Implement Republic Act No. 8177 are appropriately amended, revised and/or corrected in accordance with
this Decision.

GENERAL PRINCIPLES

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

FREDESVINDO S. ALVERO, petitioner,

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

Revilla and Palma for petitioner.

Francisco Claravall for respondents.

DE JOYA, J.:

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

The record shows that, on June 25, 1945, respondent Jose R. Victoriano had filed a complaint, in the Court of First Instance of
the City of Manila, against petitioner Fredesvindo S. Alvero and one Margarita Villarica, alleging two causes of action, to wit,
(1) to declare in force the contract of sale, made on October 1, 1940, between said Jose R. Victoriano and Margarita Villarica,
of two (2) parcels of land in the Manotoc subdivision, Balintawak, in the barrio of Calaanan, municipality of Caloocan,
Province of Rizal, with a combined area of 480 square meters, which land was subsequently sold by said Villarica, in favor of
petitioner Fredesvindo S. Alvero, on December 31, 1944, for the sum of P100,000 in Japanese military notes; and (2) to declare
said subsequent sale null and void.

On July 7, 1945, Margarita Villarica filed an answer to said complaint, expressly admitting having sold said land to
Fresdesvindo S. Alvero, for P100,000, in December, 1944, due to the imperative necessity of raising funds with which to
provide for herself and family, and that she did not remember the previous sale; at the same time, offering to repurchase said
land from Fredesvindo S. Alvero in the sum of P5,000, but that the latter refused to accept the offer.

On July 13, 1945, Fredesvindo S. Alvero, in answering said complaint, denied the allegations made therein, and claimed
exclusive ownership of the land in question, and at the same time set up a counterclaim and crossclaim in his answer,
demanding from Jose R. Victoriano a P200-monthly rent on said property, beginning from February, 1945, plus P2,000 as
damages.

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

After the trial of the case before the Hon. Mariano L. de la Rosa, Judge of the Court of First Instance of the City of Manila, one
of the respondents in this case, on November 16, 1945, said respondent judge rendered his decision, in which it was declared
that the two (2) parcels of land in question, with a combined area of 480 square meters had been sold by Margarita Villarica to
Jose R. Victoriano, since October 1, 1940, for the sum of P6,000, on the condition that the purchaser should make a down
payment of P1,700, and a monthly payment of P76.86 in 120 equal monthly installments; that Jose R. Victoriano continued
making said monthly payments until December, 1941, but that owing to the war-time conditions then existing, Margarita
Villarica agreed verbally to suspend such payments until the restoration of peace; that immediately after said sale of said land to
him, Jose R. Victoriano took possession thereof and made improvements thereon to the amount of P800, and continued
occupying said property until December, 1944, when he abandoned the same to go to evacuation places, but returned thereto in
February, 1945; that Margarita Villarica, having forgotten the sale of said land to Jose R. Victoriano, sold the same for
P100,000 in Japanese military notes, on December 31, 1944, to Fredesvindo S. Alvero, but afterwards offered to repurchase
said property from him, for the sum of P8,000 in genuine Philippine currency, after liberation; that Fredesvindo S. Alvero
presented the deed of sale, executed in his favor, to the Register of Deeds of the City of Manila, on January 3, 1945, and took
possession of said property in December, 1944, but afterwards found Jose R. Victoriano in the premises in February, 1945; that
in the contract of sale executed by Margarita Villarica, in favor of Jose R. Victoriano, it was agreed that, upon failure of the
purchaser to make payments of three (3) successive mothly installments, the vendor would be free to sell the property again,
forfeiting the payments made, except in the case of force majeure; that there was really a verbal agreement between Margarita
Villarica and Jose Victoriano, made in February, 1942, for the suspension of the payment of the monthly installments until the
restoration of peace; and that although Jose R. Victoriano had presented the deed of sale, executed in his favor, to the Register
of Deeds, in Pasig, Rizal, like Fredesvindo S. Alvero, he had also failed to secure the transfer of title to his name. And
considering that Jose R. Victoriano's document was older than that of Fredesvindo S. Alvero, and that he had taken possession
of said property, since October 1, 1940, the respondent judge rendered his decision in favor of Jose R. Victoriano, adjudging to
him the title over the property in question, including all the improvements existing thereon, and dismissed the counterclaim.

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

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

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

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

On January 17, 1946, the respondent judge, Hon. Mariano L. de la Rosa, ordered the dismissal of the appeal, declaring that,
although the notice of appeal and record on appeal had been filed in due time, the P60-appeal bond was filed too late.

On January 23, 1946, Fredesvindo S. Alvero filed a petition for the reconsideration of the said order dated January 17, 1946,
dismissing his appeal; and said petition for reconsideration was denied on January 29, 1946. Hence, this petition for certiorari.

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

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

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

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

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

Rules of courts, promulgated by authority of law, have the force and effect of law; and rules of court prescribing the time within
which certain acts must be done, or certain proceedings taken, are considered absolutely indispensable to the prevention of
needless delays and to the orderly and speedy discharge of judicial business. (Shioji vs. Harvey, 43 Phil., 333.)
Strict compliance with the rules of court has been held mandatory and imperative, so that failure to pay the docket fee in the
Supreme Court, within the period fixed for that purpose, will cause the dismissal of the appeal. (Salaveria vs. Albindo, 39Phil.,
922.) In the same manner, on failure of the appellant in a civil case to serve his brief, within the time prescribed by said rules,
on motion of the appellee and notice to the appellant, or on its own motion, the court may dismiss the appeal.
(Shioji vs. Harvey, 43 Phil., 333.)

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

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

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

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

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

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

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

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

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

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

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

DOMINADOR B. BUSTOS, Petitioner, vs. ANTONIO G. LUCERO, Judge of First Instance

of Pampanga, Respondent.
E. M. Banzali for petitioner.
Acting Provincial Fiscal Albino L. Figueroa and Assistant Provincial Fiscal Marcelo L. Mallari
for respondent

TUASON, J.: chanrobles virtual law library

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

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

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

But we made it clear that the "defendant can not, as a matter of right, compel the complaint and his
witnesses to repeat in his presence what they had said at the preliminary examination before the
issuance of the order of arrest." We called attention to the fact that "the constitutional right of an
accused to be confronted by the witnesses against him does not apply to preliminary hearings' nor
will the absence of a preliminary examination be an infringement of his right to confront
witnesses." As a matter of fact, preliminary investigation may be done away with entirely without
infringing the constitutional right of an accused under the due process clause to a fair trial. chanroblesvirtualawlibrary chanrobles virtual law library
The foregoing decision was rendered by a divided court. The minority went farther than the
majority and denied even any discretion on the part of the justice of the peace or judge holding the
preliminary investigation to compel the complainant and his witnesses to testify anew. chanroblesvirtualawlibrary chanrobles virtual law library

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

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

Separate Opinions

FERIA, J., dissenting: chanrobles virtual law library

I am sorry to dissent from the decision. chanroblesvirtualawlibrary chanrobles virtual law library

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

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

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

In the case of Dequito and Saling Buhay vs. Arellano, No. L-1336, we did not discuss and decide
the question of validity or constitutionality of said section 11 in connection with section 1 of Rule
108, because that question was not raised therein, and we merely construed the provisions on
preliminary investigation or Rule 108. In said case the writer of this dissenting opinion said:
It may not be amiss to state that, modesty aside, the writer of this dissenting opinion, then a
practising attorney, was the one who prepared the draft of the Rules of Court relating to criminal
procedure, and the provisions on preliminary investigation in the draft were the same as those of
the old law, which gave the defendant the right to be confronted with and to cross-examine the
witnesses for the prosecution. But the Supreme Court approved and adopted in toto the draft,
except the part referring to preliminary investigation which it modified, by suppressing said right
and enacting, in its stead, the provisions of section 11 of Rule 108 in its present form. I prefer the
old to the new procedure. But I can not subscribe to the majority decision, which is a judicial
legislation and makes the exercise of the right of a defendant to be confronted, with and cross-
examine the witnesses against him, to depend entirely upon the whim or caprice of a judge or
officer conducting the preliminary investigation.

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

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

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

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

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

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

Petition is therefore granted.

PERFECTO, J., dissenting: chanrobles virtual law library

In our concurring and dissenting opinion in the case of Dequito and Saling Buhay vs. Arellano, No.
L-1336, we said:

In our opinion, section 11 of Rule 108 must be read, interpreted, and applied in a way that will not
contravene the constitutional provision guaranteeing to all accused the right "to meet the witnesses
face to face." (Section 1 [17], Article III.) chanrobles virtual law library

Consequently, at the preliminary hearing contemplated by said reglementary section, the defendant
is entitled as a matter of fundamental right to her the testimony of the witnesses for the prosecution
and to cross-examine them. chanroblesvirtualawlibrary chanrobles virtual law library

Although in such preliminary hearing the accused cannot finally be convicted, he is liable to endure
the ordeal eloquently depicted in the decision, and the constitutional guarantee protects defendants,
not only from the jeopardy of being finally convicted and punished, but also from the physical,
mental and moral sufferings that may unjustly be visited upon him in any one of the stages of the
criminal process instituted against him. He must be afforded the opportunities to have the charges
against him quashed, not only at the final hearing, but also at the preliminary investigation, if by
confronting the witnesses for the prosecution he can convince the court that the charges are
groundless. There is no justice in compelling him to undergo the troubles of a final hearing if at the
preliminary hearing the case can be terminated in his favor. Otherwise, the preliminary
investigation or hearing will be an empty gesture that should not have a place within the framework
of dignified and solemn judicial proceedings.

On the strength of the above quoted opinion the opinion should be granted and so we vote. chanroblesvirtualawlibrary chanrobles virtual law library

Petition dismissed.

RESOLUTION

March 8, 1949
TUASON, J.: chanrobles virtual law library

This cause is now before us on a motion for reconsideration. chanroblesvirtualawlibrary chanrobles virtual law library

In the decision sought to be reconsidered, we said, citing Dequito and Saling Buhay vs. Arellano,
G.R. No. L-1336: "The constitutional right of an accused to be confronted by the witnesses against
him does not apply to preliminary hearings; nor will the absence of a preliminary examination be
an infringement of his right to confront witness. As a matter of fact, preliminary investigation may
be done away with entirely without infringing the constitutional right of an accused under the due
process clause to a fair trial." We took this ruling to be ample enough to dispose the constitutional
question pleaded in the application for certiorari. Heeding the wishes of the petitioner, we shall
enlarge upon the subject. chanroblesvirtualawlibrary chanrobles virtual law library

It is contended that section 11 of Rule 108 of the Rules of Court 1infringes section 13, Article VIII,
of the Constitution. 2 It is said that the rule in question deals with substantive matters and impairs
substantive rights. chanroblesvirtualawlibrary chanrobles virtual law lib rary

We can not agree with this view. We are of the opinion that section 11 of Rule 108, like its
predecessors, is an adjective law and not a substantive law or substantive right. Substantive law
creates substantive rights and the two terms in this respect may be said to be synonymous.
Substantive rights is a term which includes those rights which one enjoys under the legal system
prior to the disturbance of normal relations. (60 C.J., 980.) Substantive law is that part of the law
which creates, defines and regulates rights, or which regulates the rights and duties which give rise
to a cause of action; that part of the law which courts are established to administer; as opposed to
adjective or remedial law, which prescribes the method of enforcing rights or obtains redress for
their invasion. (36 C. J., 27; 52 C. J. S., 1026.) chanrobles virtual law library

As applied to criminal law, substantive law is that which declares what acts are crimes and
prescribes the punishment for committing them, as distinguished from the procedural law which
provides or regulates the steps by which one who commits a crime is to be punished. (22 C. J. S.,
49.) Preliminary investigation is eminently and essentially remedial; it is the first step taken in a
criminal prosecution. chanroblesvirtualawlibrary chanrobles virtual law library

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

In Beazell vs. Ohio, 269 U. S., 167, 70 Law. ed., 216, the United States Supreme Court said:

Expressions are to be found in earlier judicial opinions to the effect that the constitutional limitation
may be transgressed by alterations in the rules of evidence or procedure. See Calder vs. Bull, 3
Dall. 386, 390, 1 L. ed., 648, 650; Cummings vs. Missouri, 4 Wall. 277, 326, 18 L. ed., 356, 364;
Kring vs. Missouri, 107 U. S. 221, 228, 232, 27 L. ed., 507, 508, 510, 2 Ct. Rep., 443. And there
may be procedural changes which operate to deny to the accused a defense available under the laws
in force at the time of the commission of his offense, or which otherwise affect him in such a harsh
and arbitrary manner as to fall within the constitutional prohibition. Kring vs. Missouri, 107 U. S.,
221, 27 L. ed., 507, 2 Sup. Ct. Rep., 443; Thompson vs. Utah, 170 U. S., 343, 42 L. ed., 1061, 18
Sup. Ct. Rep., 620. But it is not well settled that statutory changes in the mode of trial or the rules
of evidence, which do not deprive the accused of a defense and which operate only in a limited and
unsubstantial manner to his disadvantage, are not prohibited. A statute which, after indictment,
enlarges the class of persons who may be witnesses at the trial, by removing the disqualification of
persons convicted of felony, is not an ex post facto law. Hopt vs. Utah, 110 U. S., 575, 28 L. ed.,
263, 4 Sup. Ct. Rep., 202, 4 Am. Crim. Rep. 417. Nor is a statute which changes the rules of
evidence after the indictment so as to render admissible against the accused evidence previously
held inadmissible, Thompson vs. Missouri, 171 U. S., 380, 43 L. ed., 204, 18 Sup. Ct. Rep., 922; or
which changes the place of trial, Gut. vs. Minnesota, 9 Wall. 35, 19 L. ed., 573; or which abolishes
a court for hearing criminal appeals, creating a new one in its stead. See Duncan vs. Missouri, 152
U. S., 377, 382, 38 L. ed., 485, 487, 14 sup. Ct. Rep., 570.

Tested by this standard, we do not believe that the curtailment of the right of an accused in a
preliminary investigation to cross-examine the witnesses who had given evidence for his arrest is of
such importance as to offend against the constitutional inhibition. As we have said in the beginning,
preliminary investigation is not an essential part of due process of law. It may be suppressed
entirely, and if this may be done, mere restriction of the privilege formerly enjoyed thereunder can
not be held to fall within the constitutional prohibition. chanroblesvirtualawlibrary chanrobles virtual law library

While section 11 of Rule 108 denies to the defendant the right to cross-examine witnesses in a
preliminary investigation, his right to present his witnesses remains unaffected, and his
constitutional right to be informed of the charges against him both at such investigation and at the
trial is unchanged. In the latter stage of the proceedings, the only stage where the guaranty of due
process comes into play, he still enjoys to the full extent the right to be confronted by and to cross-
examine the witnesses against him. The degree of importance of a preliminary investigation to an
accused may be gauged by the fact that this formality is frequently waived. chanroblesvirtualawlibrary chanrobles virtual law library

The distinction between "remedy" and "substantive right" is incapable of exact definition. The
difference is somewhat a question of degree. (Dexter vs. Edmands, 89 F., 467; Beazell vs.
Ohio, supra.) It is difficult to draw a line in any particular case beyond which legislative power
over remedy and procedure can pass without touching upon the substantive rights of parties
affected, as it is impossible to fix that boundary by general condition. (State vs. Pavelick, 279 P.,
1102.) This being so, it is inevitable that the Supreme Court in making rules should step on
substantive rights, and the Constitution must be presumed to tolerate if not to expect such incursion
as does not affect the accused in a harsh and arbitrary manner or deprive him of a defense, but
operates only in a limited and unsubstantial manner to his disadvantage. For the Court's power is
not merely to compile, revise or codify the rules of procedure existing at the time of the
Constitution's approval. This power is "to promulgate rules concerning pleading, practice, and
procedure in all courts," which is a power to adopt a general, complete and comprehensive system
of procedure, adding new and different rules without regard to their source and discarding old
ones.chanroblesvirtualawlibrary chanrobles virtual law library
The motion is denied.

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

FERIA, J., dissenting: chanrobles virtual law library

I dissent. chanroblesvirtualawlibrary chanrobles virtual law library

The motion for reconsideration must be granted. chanroblesvirtualawlibrary chanrobles virtual law library

According to the resolution, the right of a defendant to be confronted with and cross-examine the
witnesses for the prosecution in a preliminary investigation granted by law or provided for in
General Orders, No. 58, as amended, in force prior to the promulgation of the Rules of Court, is not
a substantive right but a mere matter of procedure, and therefore this Court can suppress it in
section 11, Rule 108, of the Rules of Court, for the following reasons: chanrobles virtual law library

First. Because "preliminary investigation is eminently and essentially remedial; it is the first step
taken in a criminal prosecution." . . . "As a rule of evidence, section 11 of Rule 108 is also
procedural." . . . "The entire rules of evidence have been incorporated into the Rules of Court." And
therefore "we can not tear down section 11 of Rule 108 on constitutional grounds without throwing
out the whole Code of evidence embodied in these rules." chanrobles virtual law library

Secondly. Because, "preliminary investigation is not an essential part of due process of law. It may
be suppressed entirely, and if this may be done, mere restriction of the privilege formerly enjoyed
thereunder can not be held to fall within the constitutional prohibition." chanrobles virtual law library

Lastly. Because, "the distinction between remedy and 'substantive right' is incapable of exact
definition. The difference is somewhat a question of degree" . . . It is difficult to draw a line in any
particular case beyond which legislative power over remedy and procedure can pass without
touching upon the substantive rights of parties affected, as it is impossible to fix that boundary by
general condition. . . . "This being so, it is inevitable that the Supreme Court in making rules should
step on substantive rights, and the Constitution must be presumed to tolerate if not to expect such
incursion as does not affect the accused in a harsh and arbitrary manner or deprive him of a
defense, but operates only in a limited and unsubstantial manner to his disadvantage." chanrobles virtual law library

Before proceeding it is necessary to distinguish substantive law from procedure, for the distinction
is not always well understood. Substantive law is that part of the law which creates, defines, and
regulates rights as opposed to objective or procedural law which prescribes the method of enforcing
rights. What constitutes practice and procedure in the law is the mode or proceeding by which a
legal right is enforced, "that which regulates the formal steps in an action or judicial proceedings;
the course of procedure in courts; the form, manner and order in which proceedings have been, and
are accustomed to be had; the form, manner and order of carrying on and conducting suits or
prosecutions in the courts through their various sages according to the principles of law and the
rules laid down by the respective courts." 31 Cyc. Law and Procedure, p. 1153; id., 32, section 405;
Rapalje & Lawrence's Law Dictionary; Anderson Law Dictionary; Bouvier's Law Dictionary. chanroblesvirtualawlibrary chanrobles virtual law library
Substantive rights may be created or granted either in the Constitution or in any branch of the law,
civil, criminal, administrative or procedural law. In our old Code of Civil Procedure, Act No. 190,
as amended, there are provisions which create, define and regulate substantive rights, and many of
those provisions such as those relating to guardianship, adoption, evidence and many others are
incorporated in the Rules of Court for the sake of convenience and not because this Court is
empowered to promulgate them as rules of court. And our old law of Criminal Procedure General
Orders No. 58 grants the offended party the right to commence a criminal action or file a complaint
against the offender and to intervene in the criminal prosecution against him, and grants the
defendant in the Court of First Instance (except in the City of Manila) the right to bail, and to a
preliminary investigation including his rights during said investigation, and the rights at the trial,
which are now reproduced or incorporated in Rules 106, 108, 110, and 111 of the Rules of Court,
except the rights now in question. And all these, and others not necessary for us to mention, are
obviously substantive rights. chanroblesvirtualawlibrary chanrobles virtual law library

(1) As to the first argument, the premise "the preliminary investigation is eminently and essentially
remedial is not correct. Undoubtedly the majority means to say procedural, in line with the
conclusion in the resolution, because remedial law is one thing, and procedural law is another.
Obviously they are different branches of the law. "Remedial statute" is "a statute providing a
remedy for an injury as distinguished from a penal statute. A statute giving a party a mode of
remedy for a wrong where he had none or a different one before. . . . Remedial statutes are those
which are made to supply such defects, and abridge such superfluities in the common law, as arise
either from the general imperfections of all human law, from change of time and circumstances,
from the mistakes and unadvised determination of unlearned (or even learned) judges, or from any
other cause whatsoever." (Black's Law Dictionary, third edition, pp. 1525, 1526.) chanrobles virtual law library

It is also not correct to affirm that section 11 of Rule 108 relating to right of defendant after arrest
"is a rule of evidence and therefore is also procedural." In the first place, the provisions of said
section to the effect that "the defendant, after the arrest and his delivery to the court has the right to
be informed of the complaint or information filed against him, and also to be informed of the
testimony and evidence presented against him, and may be allowed to testify and present witnesses
or evidence for him if he so desires," are not rules of evidence; and in the second place, it is evident
that most of the rules of evidence, if not all, are substantive laws that define, create or regulate
rights, and not procedural. "Rules of evidence are substantive rights found in common law chiefly
and growing out of reasoning, experience and common sense of lawyers and courts." (State vs.
Pavelich, et al., 279 P., 1102.) "It is true that weighing of evidence and the rules of practice with
respect thereto form part of the law of procedure, but the classification of proofs is sometime
determined by the substantive law." (U. S. vs. Genato, 15 Phil., 170, 176.) How can the law on
judicial notice, conclusive as well as juris tantum presumption, hearsay and best evidence rule,
parol evidence rule, interpretation of documents, competency of a person to testify as a witness be
considered procedural? chanrobles virtual law library

Therefore, the argumentative conclusion that "we can not tear down section 11 of Rule 108 on
constitutional grounds without throwing out the whole code of evidence embodied in these Rules,"
is evidently wrong, not only for the reason just stated, but because our contention that the defendant
can not be deprived of his right to be confronted with and cross-examine the witness of the
prosecution is a preliminary investigation under consideration would not, if upheld, necessarily tear
down said section. Our theory, is that said section 11 should be so construed as to be valid and
effective, that is, that if the defendant asks the court to recall the witness or witnesses for the
prosecution to testify again in his presence, and to allow the former to cross-examine the latter, the
court or officer making the preliminary investigation is under obligation to grant the request. But if
the defendant does not so ask the court, he should be considered as waiving his right to be
confronted with and cross-examine the witness against him. chanroblesvirtualawlibrary chanrobles virtual law library

(2) With respect to the second argument or reason, it is true that the preliminary investigation as
provided for in the General Orders, No. 58, as amended, is not an essential part of due process of
law, because "due process of law" is not iron clad in its meaning; its does not necessarily mean a
particular procedure. Due process of law simply requires a procedure that fully protects the life,
liberty and property. For that reason the investigation to be made by the City Fiscal of the City of
Manila under Act No. 612, now section 2465 of the Administrative Code, before filing an
information, was considered by this Court as sufficient to satisfy the due process of law
constitutional requirement (U. S. vs. Ocampo, 18 Phil., 1; U. S. vs. Grant and Kennedy, 18 Phil.,
122). But it is also true that we have already and correctly held that: "The law having explicitly
recognized and established that no person charged with the commission of a crime shall be
deprived of his liberty or subjected to trial without prior preliminary investigation (provided for in
General orders, No. 58, as amended) that shall show that there are reasonable grounds to believe
him guilty, there can be no doubt that the accused who is deprived of his liberty, tried and
sentenced without the proper preliminary investigation having been made in his regard, is convicted
without the process of law," (United States vs. Banzuela, 31 Phil., 564). chanroblesvirtualawlibrary chanrobles virtual law library

The ruling in Beazell vs. Ohio, 269 U. S. 167, 70 Law. ed., 216, quoted in the resolution, has no
application to the present case, for the question involved therein was the power of Congress to alter
the rules of evidence and procedure without violating the constitutional precept that prohibits the
passing of ex post facto law, while the question herein involved is the power of the Supreme Court
to promulgate rules of pleading, practice and procedure, which diminish the substantive right of a
defendant, expressly prohibited by the same provision of the Constitution that confers upon this
Court the power to promulgate said rules. chanroblesvirtualawlibrary chanrobles virtual law library

(3) The last reason or argument premised on the conclusion that "the distinction between remedy
and 'substantive right' is incapable of exact definition;" indeed "the difference is somewhat a
question of degree," (Dexter vs. Edmonds, 89 F 487), is immaterial, because, as we have already
said in refuting the majority's first reason, remedy and procedure are two completely different
things.
chanroblesvirtualawlibrary chanrobles virtual law library

As above defined, substantive law is clearly differentiated from procedural law and practice. But
even assuming arguendo that it is difficult to draw the line in any particular case beyond which the
power of the court over procedure can not pass without touching upon the substantial right of the
parties, what this Court should do in that case would be to abstain from promulgating such rule of
procedure which many increase, diminish or modify substantive right in order to avoid violating the
constitutional prohibition above referred to. Because as this Supreme Court is not empowered by
the Constitution to legislate on or abrogate substantive rights, but only to promulgate rules of
pleading, practice and procedure which "shall not diminish, increase or modify substantive rights,"
this Court can not step on them in making the rules, and the Constitution must be presumed not to
tolerate nor expect such incursion as would affect the substantive rights of the accused in any
manner. chanroblesvirtualawlibrary chanrobles virtual law library

Besides, depriving an accused of his right to be confronted and cross-examine the witness against
him in a preliminary investigation would affect the accused not in a limited and unsubstantial but in
a harsh and arbitrary manner. The testimony of a witness given in the absence of the defendant and
without an opportunity on the part of the latter to cross-examine him is a hearsay evidence, and it
should not be admitted against the defendant in a preliminary investigation that is granted to the
latter as a protection against hasty, malicious and oppressive prosecutions (U. S. vs. Grant and
Kennedy, supra). Otherwise, an accused who is innocent and should not be arrested, or if arrested
should be released immediately a short time after his arrest after the preliminary investigation,
would have to be held for trial and wait for a considerable period of time until the case is tried and
acquitted after trial by the Courts of First Instance in provinces on account of the admission of such
evidence in the preliminary investigation, evidence not admissible at the trial. chanroblesvirtualawlibrary chanrobles virtual law library

Therefore, the motion for reconsideration is granted, and after the necessary proceedings the
decision of the majority reversed or modified in accordance with my dissenting opinion.

PERFECTO, J.: chanrobles virtual law library

We dissent. Our opinion in the Dequito case still stands. The motion for reconsideration should be
granted.

Endnotes:

TUASON, J.:
1
Rights of defendant after arrest. - After the arrest of the defendant and his delivery to the
court, he shall be informed of the complaint or information filed against him. He shall also be
informed of the substance of the testimony and evidence presented against him, and, if he desires to
testify or to present witnesses or evidence in his favor, he may be allowed to do so. The testimony
of the witnesses need not be reduced to writing but that of the defendant shall be taken in writing
and subscribed by him. chanroblesvirtualawlibrary chanrobles virtual law library

2
The Supreme Court shall have the power to promulgate rules concerning pleading, practice,
and procedure in all courts, and the admission to the practice of law. Said rules shall be uniform for
all courts of the same grade and shall not diminish, increase, or modify substantive rights. The
existing laws on pleading, practice, and procedure are hereby repealed as statutes, and are declared
Rules of Courts, subject to the power of the Supreme Court to alter and modify the same. The
National Assembly shall have the power to repeal, alter, or supplement the rules concerning
pleading, practice, and procedure, and the admission to the practice of law in the Philippines.

FIRST DIVISION

PRISCILLA ALMA JOSE, G.R. No. 158239

Petitioner,
 Present:

CORONA, C.J., Chairperson,

LEONARDO-DE CASTRO,
- versus - BERSAMIN,
*
ABAD, and
VILLARAMA, JR., JJ.
Promulgated:

RAMON C. JAVELLANA, January 25, 2012

ET AL.,
Respondents.
x-----------------------------------------------------------------------------------------x

DECISION

BERSAMIN, J.:

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

Antecedents

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

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

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

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

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

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

Javellana moved for reconsideration, contending that the presentation of evidence of full
payment was not necessary at that stage of the proceedings; and that in resolving a motion to
dismiss on the ground of failure to state a cause of action, the facts alleged in the complaint
were hypothetically admitted and only the allegations in the complaint should be considered in
resolving the motion.[10] Nonetheless, he attached to the motion for reconsideration the receipts
showing the payments made to Juvenal.[11] Moreover, he maintained that Priscilla could no
longer succeed to any rights respecting the parcels of land because he had meanwhile acquired
absolute ownership of them; and that the only thing that she, as sole heir, had inherited from
Margarita was the obligation to register them under the Torrens System.[12]
 On June 21, 2000, the RTC denied the motion for reconsideration for lack of any reason
to disturb the order of June 24, 1999.[13]

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

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

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

II
THE TRIAL COURT OBVIOUSLY ERRED IN MAKING TWO CONFLICTING
INTERPRETATIONS OF THE PROVISION OF THE CIVIL [CODE],
PARTICULARLY ARTICLE 1911, IN THE LIGHT OF THE TERMS OF THE
CONDITIONAL DEED OF SALE;

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

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

Priscilla countered that the June 21, 2000 order was not appealable; that the appeal was
not perfected on time; and that Javellana was guilty of forum shopping.[16]
It appears that pending the appeal, Javellana also filed a petition for certiorari in the CA
to assail the June 24, 1999 and June 21, 2000 orders dismissing his complaint (C.A.-G.R. SP
No. 60455). On August 6, 2001, however, the CA dismissed the petition
for certiorari,[17] finding that the RTC did not commit grave abuse of discretion in issuing the
orders, and holding that it only committed, at most, an error of judgment correctible by appeal
in issuing the challenged orders.
 On November 20, 2002, the CA promulgated its decision in C.A.-G.R. CV No.
68259,[18] reversing and setting aside the dismissal of Civil Case No. 79-M-97, and remanding
the records to the RTC for further proceedings in accordance with law.[19] The CA explained
that the complaint sufficiently stated a cause of action; that Priscilla, as sole heir, succeeded to
the rights and obligations of Margarita with respect to the parcels of land; that Margaritas
undertaking under the contract was not a purely personal obligation but was transmissible to
Priscilla, who was consequently bound to comply with the obligation; that the action had not yet
prescribed due to its being actually one for quieting of title that was imprescriptible brought by
Javellana who had actual possession of the properties; and that based on the
complaint, Javellana had been in actual possession since 1979, and the cloud on his title had
come about only when Priscilla had started dumping filling materials on the premises. [20]

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

Issues

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

On his part, Javellana countered that the errors being assigned by Priscilla involved
questions of fact not proper for the Court to review through petition for review on certiorari;
that the June 21, 2000 RTC order, being a final order, was appealable; that his appeal was
perfected on time; and that he was not guilty of forum shopping because at the time he filed the

petition for certiorari the CA had not yet rendered a decision in C.A.-G.R.
CV No. 68259, and because the issue of ownership raised in C.A.-G.R. CV No. 68259 was
different from the issue of grave abuse of discretion raised in C.A.-G.R. SP No. 60455.
 Ruling

The petition for review has no merit.

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

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

Priscillas submission is erroneous and cannot be sustained.

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

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

interlocutory or final is: does the order or judgment leave something to be done in the
trial court with respect to the merits of the case? If it does, the order or judgment is
interlocutory; otherwise, it is final.

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

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

The remedy against an interlocutory order not subject of an appeal is an

appropriate special civil action under Rule 65, provided that the interlocutory order is
rendered without or in excess of jurisdiction or with grave abuse of discretion. Then
is certiorari under Rule 65 allowed to be resorted to.

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

reconsideration referred only to a denial of a motion for reconsideration of an interlocutory

order.[24]
II
Appeal was made on time pursuant to Neypes v. CA

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

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

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

The period of appeal shall be interrupted by a timely motion for new trial or
reconsideration. No motion for extension of time to file a motion for new trial or
reconsideration shall be allowed. (n)
 Under the rule, Javellana had only the balance of three days from July 13, 2000, or until
July 16, 2000, within which to perfect an appeal due to the timely filing of his motion for
reconsideration interrupting the running of the period of appeal. As such, his filing of the notice
of appeal only on July 19, 2000 did not perfect his appeal on time, as Priscilla insists.
The seemingly correct insistence of Priscilla cannot be upheld, however, considering that
the Court meanwhile adopted the fresh period rule in Neypes v. Court of Appeals,[25] by which
an aggrieved party desirous of appealing an adverse judgment or final order is allowed a fresh
period of 15 days within which to file the notice of appeal in the RTC reckoned from receipt of
the order denying a motion for a new trial or motion for reconsideration, to wit:

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

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

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

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

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

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

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

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

III
No forum shopping was committed

Priscilla claims that Javellana engaged in forum shopping by filing a notice of appeal and
a petition for certiorari against the same orders. As earlier noted, he denies that his doing so
violated the policy against forum shopping.

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

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

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

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

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

Ineluctably, the petitioner, by filing an ordinary appeal and a petition

for certiorari with the CA, engaged in forum shopping. When the petitioner
commenced the appeal, only four months had elapsed prior to her filing with the CA
the Petition for Certiorari under Rule 65 and which eventually came up to this Court
by way of the instant Petition (re: Non-Suit). The elements of litis pendentia are
present between the two suits. As the CA, through its Thirteenth Division, correctly
noted, both suits are founded on exactly the same facts and refer to the same subject
matterthe 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.
xxxx
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 forauntil a favorable result
is reached. To avoid the resultant confusion, the Court adheres strictly to the rules
against forum shopping, and any violation of these rules results in the dismissal of the
case.[32]

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

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

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

Instead, we see the situation of resorting to two inconsistent remedial approaches to be

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

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

SO ORDERED.

PANAY RAILWAYS INC., G. R. No. 154061

Petitioner,
Present:

- versus - CARPIO, J., Chairperson,

PEREZ,
HEVA MANAGEMENT and SERENO,
DEVELOPMENT CORPORATION, REYES, and
PAMPLONA AGRO-INDUSTRIAL PERLAS-BERNABE, JJ.*
CORPORATION, and SPOUSES
CANDELARIA DAYOT and
EDMUNDO DAYOT, Promulgated:
Respondents.
January 25, 2012
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

SERENO, J.:

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

The facts are as follows:

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

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

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

On 12 February 1990, TRB filed a Petition for Writ of Possession against petitioner.
During the proceedings, petitioner, through its duly authorized manager and officer-in-charge
and with the assistance of counsel, filed a Manifestation and Motion to Withdraw Motion for
Suspension of the Petition for the issuance of a writ of possession. [2] The pertinent portions of
the Manifestation and Motion state:
3. That after going over the records of this case and the case of Traders Royal
Bank vs. Panay Railway, Inc., Civil Case No. 18280, PRI is irrevocably withdrawing
its Motion for Suspension referred to in paragraph 1 above, and its Motion for
Reconsideration referred in paragraph 2 above and will accept and abide by the
September 21, 1990 Order denying the Motion For Suspension;

4. That PRI recognizes and acknowledges petitioner (TRB) to be the

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

5. That PRI further acknowledges that the Provincial Sheriff validly

foreclosed the Real Estate Mortgage erected by PRI due to failure to pay the loan
of ₱20,000,000.00. That TRB was the purchaser of these lots mentioned in paragraph
4 above at Sheriffs Auction Sale as evidenced by the Certificate of Sale dated January
20, 1986 and the Certificates of Titles issued to Petitioner;
 6. That PRI further manifests that it has no past, present or future
opposition to the grant of the Writ of Possession to TRB over the parcels of land
mentioned in paragraph 4 above and subject of this Petition and even assuming
arguendo that it has, PRI irrevocably waives the same. That PRI will even assist
TRB in securing possession of said properties as witness against squatters, illegal
occupants, and all other possible claimants;

7. That upon execution hereof, PRI voluntarily surrenders physical

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

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

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

It then filed an Amended Complaint[4] on 1 January 1995 and again filed a Second
Amended Complaint[5] on 8 December 1995.

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

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

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

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

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

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

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

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

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

Thereafter, respondents filed their respective Motions for Reconsideration.

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

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

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

On 30 May 2002, the CA issued the assailed Resolution[15] denying petitioners Motion for
Reconsideration.

Hence, this Petition.

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

The Petition has no merit.

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

The argument that the CA had the exclusive jurisdiction to dismiss the appeal has no
merit. When this Court accordingly amended Sec. 13 of Rule 41 through A.M. No. 00-2-10-SC,
the RTCs dismissal of the action may be considered to have had the imprimatur of the Court.
Thus, the CA committed no reversible error when it sustained the dismissal of the appeal,
taking note of its directive on the matter prior to the promulgation of its Decision.

As early as 1932, in Lazaro v. Endencia,[17] we have held that the payment of the full
amount of the docket fees is an indispensable step for the perfection of an appeal. The Court
acquires jurisdiction over any case only upon the payment of the prescribed docket fees.[18]

Moreover, the right to appeal is not a natural right and is not part of due process. It is
merely a statutory privilege, which may be exercised only in accordance with the law.[19]
 We have repeatedly stated that the term substantial justice is not a magic wand that would
automatically compel this Court to suspend procedural rules. Procedural rules are not to be
belittled or dismissed simply because their non-observance may result in prejudice to a partys
substantive rights. Like all other rules, they are required to be followed, except only for the
most persuasive of reasons when they may be relaxed to relieve litigants of an injustice not
commensurate with the degree of their thoughtlessness in not complying with the procedure
prescribed.[20]

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

G.R. No. 198357 December 10, 2012

BUILDING CARE CORPORATION / LEOPARD SECURITY & INVESTIGATION AGENCY and/or RUPERTO
PROTACIO, Petitioners,
vs.
MYRNA MACARAEG, Respondent.

DECISION

PERALTA, J.:

This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that the Decision1 of the Court
of Appeals (CA) promulgated on March 24, 2011, and its Resolution2 dated August 19, 2011, denying petitioner's Motion for
Reconsideration be reversed and set aside.

Petitioners are in the business of providing security services to their clients. They hired respondent as a security guard
beginning August 25, 1996, assigning her at Genato Building in Caloocan City. However, on March 9, 2008, respondent was
relieved of her post. She was re-assigned to Bayview Park Hotel from March 9-13, 2008, but after said period, she was
allegedly no longer given any assignment. Thus, on September 9, 2008, respondent filed a complaint against petitioners for
illegal dismissal, underpayment of salaries, non-payment of separation pay and refund of cash bond. Conciliation and mediation
proceedings failed, so the parties were ordered to submit their respective position papers.3

Respondent claimed that petitioners failed to give her an assignment for more than nine months, amounting to constructive
dismissal, and this compelled her to file the complaint for illegal dismissal.4

On the other hand, petitioners alleged in their position paper that respondent was relieved from her post as requested by the
client because of her habitual tardiness, persistent borrowing of money from employees and tenants of the client, and sleeping
on the job. Petitioners allegedly directed respondent to explain why she committed such infractions, but respondent failed to
heed such order. Respondent was nevertheless temporarily assigned to Bayview Park Hotel from March 9-13, 2008, but she also
failed to meet said client's standards and her posting thereat was not extended.5

Respondent then filed an administrative complaint for illegal dismissal with the PNP-Security Agencies and Guard Supervision
Division on June 18, 2008, but she did not attend the conference hearings for said case. Petitioners brought to the conference
hearings a new assignment order detailing respondent at the Ateneo de Manila University but, due to her absence, petitioners
failed to personally serve respondent said assignment order. Petitioners then sent respondent a letter ordering her to report to
headquarters for work assignment, but respondent did not comply with said order. Instead, respondent filed a complaint for
illegal dismissal with the Labor Arbiter.6

On May 13, 2009, the Labor Arbiter rendered a Decision, the dispositive portion of which reads as follows:

WHEREFORE, judgment is hereby made dismissing the charge of illegal dismissal as wanting in merit but, as explained above,
ordering the Respondents Leopard Security and Investigation Agency and Rupert Protacio to pay complainant a financial
assistance in the amount of P5,000.00.

Other claims are DISMISSED for lack of merit.

SO ORDERED.7

Respondent then filed a Notice of Appeal with the National Labor Relations Commission (NLRC), but in a Decision dated
October 23, 2009, the NLRC dismissed the appeal for having been filed out of time, thereby declaring that the Labor Arbiter's
Decision had become final and executory on June 16, 2009.8

Respondent elevated the case to the CA via a petition for certiorari, and on March 24, 2011, the CA promulgated its Decision,
the dispositive portion of which reads as follows:

WHEREFORE, the petition for certiorari is GRANTED. The Decision dated October 23, 2009 and Resolution dated March 2,
2010 rendered by public respondent in NLRC LAC No. 07-001892-09 (NLRC Case No. NCR-09-12628-08) are REVERSED
and SET ASIDE, and in lieu thereof, a new judgment is ENTERED declaring petitioner to have been illegally dismissed and
DIRECTING private respondents to reinstate petitioner without loss of seniority rights, benefits and privileges; and to pay her
backwages and other monetary benefits during the period of her illegal dismissal up to actual reinstatement.

Public respondent NLRC is DIRECTED to conduct further proceedings, for the sole purpose of determining the amount of
private respondent's monetary liabilities in accordance with this decision.

SO ORDERED.9

Petitioners' motion for reconsideration of the aforequoted Decision was denied per Resolution dated August 19, 2011. Hence,
the present petition, where the main issue for resolution is whether the CA erred in liberally applying the rules of procedure and
ruling that respondent's appeal should be allowed and resolved on the merits despite having been filed out of time.

The Court cannot sustain the CA's Decision.

It should be emphasized that the resort to a liberal application, or suspension of the application of procedural rules, must remain
as the exception to the well-settled principle that rules must be complied with for the orderly administration of justice. In
Marohomsalic v. Cole,10 the Court stated:

While procedural rules may be relaxed in the interest of justice, it is well-settled that these are tools designed to facilitate the
adjudication of cases. The relaxation of procedural rules in the interest of justice was never intended to be a license for erring
litigants to violate the rules with impunity. Liberality in the interpretation and application of the rules can be invoked only in
proper cases and under justifiable causes and circumstances. While litigation is not a game of technicalities, every case must be
prosecuted in accordance with the prescribed procedure to ensure an orderly and speedy administration of justice.11

The later case of Daikoku Electronics Phils., Inc. v. Raza,12 further explained that:

To be sure, the relaxation of procedural rules cannot be made without any valid reasons proffered for or underpinning it. To
merit liberality, petitioner must show reasonable cause justifying its non-compliance with the rules and must convince the Court
that the outright dismissal of the petition would defeat the administration of substantial justice. x x x The desired leniency
cannot be accorded absent valid and compelling reasons for such a procedural lapse. x x x

We must stress that the bare invocation of "the interest of substantial justice" line is not some magic want that will
automatically compel this Court to suspend procedural rules. Procedural rules are not to be belittled, let alone dismissed simply
because their non-observance may have resulted in prejudice to a party's substantial rights. Utter disregard of the rules cannot be
justly rationalized by harping on the policy of liberal construction.13

In this case, the justifications given by the CA for its liberality by choosing to overlook the belated filing of the appeal are, the
importance of the issue raised, i.e., whether respondent was illegally dismissed; and the belief that respondent should be
"afforded the amplest opportunity for the proper and just determination of his cause, free from the constraints of
technicalities,"14 considering that the belated filing of respondent's appeal before the NLRC was the fault of respondent's former
counsel. Note, however, that neither respondent nor her former counsel gave any explanation or reason citing extraordinary
circumstances for her lawyer's failure to abide by the rules for filing an appeal. Respondent merely insisted that she had not
been remiss in following up her case with said lawyer.

It is, however, an oft-repeated ruling that the negligence and mistakes of counsel bind the client. A departure from this rule
would bring about never-ending suits, so long as lawyers could allege their own fault or negligence to support the client’s case
and obtain remedies and reliefs already lost by the operation of law.15 The only exception would be, where the lawyer's gross
negligence would result in the grave injustice of depriving his client of the due process of law.16 In this case, there was no such
deprivation of due process. Respondent was able to fully present and argue her case before the Labor Arbiter. She was accorded
the opportunity to be heard. Her failure to appeal the Labor Arbiter's Decision cannot, therefore, be deemed as a deprivation of
her right to due process. In Heirs of Teofilo Gaudiano v. Benemerito,17 the Court ruled, thus:

The perfection of an appeal within the period and in the manner prescribed by law is jurisdictional and non-compliance with
such legal requirements is fatal and has the effect of rendering the judgment final and executory. The limitation on the period of
appeal is not without reason. They must be strictly followed as they are considered indispensable to forestall or avoid
unreasonable delays in the administration of justice, to ensure an orderly discharge of judicial business, and to put an end to
controversies. x x x

xxxx

The right to appeal is not a natural right or part of due process; it is merely a statutory privilege and may be exercised only in
the manner and in accordance with the provisions of law. Thus, one who seeks to avail of the right to appeal must strictly
comply with the requirements of the rules, and failure to do so leads to the loss of the right to appeal."18

In Ocampo v. Court of Appeals (Former Second Division),19 the Court declared that:

x x x we cannot condone the practice of parties who, either by their own or their counsel's inadvertence, have allowed a
judgment to become final and executory and, after the same has become immutable, seek iniquitous ways to assail it. The
finality of a decision is a jurisdictional event which cannot be made to depend on the convenience of the parties.20

Clearly, allowing an appeal, even if belatedly filed, should never be taken lightly. The judgment attains finality by the lapse of
1â wph i1

the period for taking an appeal without such appeal or motion for reconsideration being filed.21 In Ocampo v. Court of Appeals
(Former Second Division),22 the Court reiterated the basic rule that "when a party to an original action fails to question an
adverse judgment or decision by not filing the proper remedy within the period prescribed by law, he loses the right to do so,
and the judgment or decision, as to him, becomes final and binding."23 The Decision of the Labor Arbiter, therefore, became
final and executory as to respondent when she failed to file a timely appeal therefrom. The importance of the concept of finality
of judgment cannot be gainsaid. As elucidated in Pasiona, Jr. v. Court of Appeals,24 to wit:

The Court re-emphasizes the doctrine of finality of judgment. In Alcantara v. Ponce, the Court, citing its much earlier ruling in
Arnedo v. Llorente, stressed the importance of said doctrine, to wit:

x x x controlling and irresistible reasons of public policy and of sound practice in the courts demand that at the risk of
occasional error, judgments of courts determining controversies submitted to them should become final at some definite time
fixed by law, or by a rule of practice recognized by law, so as to be thereafter beyond the control even of the court which
rendered them for the purpose of correcting errors of fact or of law, into which, in the opinion of the court it may have fallen.
The very purpose for which the courts are organized is to put an end to controversy, to decide the questions submitted to the
litigants, and to determine the respective rights of the parties. With the full knowledge that courts are not infallible, the litigants
submit their respective claims for judgment, and they have a right at some time or other to have final judgment on which they
can rely as a final disposition of the issue submitted, and to know that there is an end to the litigation.
 xxxx

It should also be borne in mind that the right of the winning party to enjoy the finality of the resolution of the case is also an
essential part of public policy and the orderly administration of justice. Hence, such right is just as weighty or equally important
as the right of the losing party to appeal or seek reconsideration within the prescribed period.25

When the Labor Arbiter's Decision became final, petitioners attained a vested right to said judgment. They had the right to fully
rely on the immutability of said Decision. In Sofio v. Valenzuela,26 it was amply stressed that:

The Court will not override the finality and immutability of a judgment based only on the negligence of a party’s counsel in
timely taking all the proper recourses from the judgment. To justify an override, the counsel’s negligence must not only be
gross but must also be shown to have deprived the party the right to due process.

In sum, the Court cannot countenance relaxation of the rules absent the showing of extraordinary circumstances to justify the
same. In this case, no compelling reasons can be found to convince this Court that the CA acted correctly by according
respondent such liberality.

IN VIEW OF THE FOREGOING, the Petition is GRANTED. The Decision of the Court of Appeals dated March 24, 2011, and
its Resolution dated August 19, 2011 in CA-G.R. SP No. 114822 are hereby SET ASIDE, and the Decision of the National
Labor Relations Commission in NLRC-LAC No. 07-001892-09 (NLRC Case No. NCR-09-12628-08), ruling that the Decision
of the Labor Arbiter has become final and executory, is REINSTATED.

G.R. No. 173586 March 14, 2012

MCA-MBF COUNTDOWN CARDS PHILIPPINES INC., AMABLE R. AGUILUZ V, AMABLE C. AGUILUZ IX,
CIELO C. AGUILUZ, ALBERTO L. BUENVIAJE, VICENTE ACSAY and MCA HOLDINGS AND MANAGEMENT
CORPORATION, Petitioners,
vs.
MBf CARD INTERNATIONAL LIMITED and MBf DISCOUNT CARD LIMITED, Respondents.

RESOLUTION

LEONARDO-DE CASTRO, J.:

This is a Petition for Review on Certiorari assailing the Resolutions of the Court of Appeals in CA-G.R. CV No. 84370 dated
March 20, 20061 and July 6, 2006.2

Herein respondents MBf Card International Limited (MBf Card) and MBf Discount Card Limited (MBf Discount Card), both
foreign corporations not doing business in the Philippines, filed a complaint for Recovery of Money, Unfair Competition and
Damages, with Application for Preliminary Injunction against herein petitioners MCA-MBF Countdown Cards Phils., Inc.
(MCA-MBF), Amable R. Aguiluz V (Aguiluz V), Amable C. Aguiluz IX, Cielo C. Aguiluz, Alberto L. Buenviaje, Vicente
Acsay and MCA Holdings and Management Corporation (MCA Holdings). The complaint alleged that sometime in the second
half of 1993, respondent MBf Card and petitioner MCA Holdings, the latter principally acting through petitioner Aguiluz V,
entered into negotiations for the execution of a Joint Venture Agreement wherein: (1) they would establish a Joint Venture
Company (JVC) in the Philippines with MBf Card owning about 40% and MCA Holdings owning 60% of the capital stock
thereof, and (2) said JVC would execute a "Countdown Country License Agreement" with respondent MBf Discount Card,
under which the JVC would conduct the business of discount cards in the Philippines under the "Countdown" mark, and use the
distinctive business format and method for the operation of the "Countdown Discount Card."3

The Complaint further alleged that even before respondent MBf Card and petitioner MCA Holdings could agree on drafts of the
Joint Venture and Licensing Agreement, and pending negotiations thereon, petitioner Aguiluz V, on January 3, 1994, wrote
respondent MBf Card that he had already incorporated on October 18, 1993, a company which would later be converted into the
proposed JVC upon the execution and approval of the pertinent Agreements. The company incorporated by Aguiluz V with the
Securities and Exchange Commission (SEC) was stated in the letter as "MBF-MCA Discount Card Corp. Philippines," but is
actually named "MCA-MBF Countdown Cards Philippines, Inc.," i.e., petitioner MCA-MBF. Acceding to a request in the same
letter, respondent MBf Card remitted on January 21, 1994 the amount of US$74,074.04 to Account No. 838-06 (Metrobank,
Quezon Avenue Branch), which, as it turned out, belongs to petitioner MCA-MBF. The understanding was that such amount
was to be applied as MBf Card’s payment of its 40% shareholding in the JVC upon the execution and approval of the Joint
Venture and Licensing Agreements.4 However, without the prior authority of the respondents, and while the parties were still
discussing and negotiating on the terms and conditions of the Joint Venture and Licensing Agreements, petitioners, through the
intended JVC (petitioner MCA-MBF), began to promote, market and sell the Countdown Discount Cards to the public, using
the "Countdown" name, logo and trademark.5

The Complaint then alleged the facts that led up to respondents’ decision to end its negotiations with petitioners:

8. Accordingly, [respondent] MBf card advised [petitioners] not to promote, market and sell Countdown Discount
Cards to the public until the Joint Venture Agreement and the License Agreement (for the use of the tradename
"Countdown" and the format and method for the operation of the Countdown Discount Card) had been signed and,
thereafter, approved by the appropriate government agency.

9. In particular, on March 8 and 17, 1994, [respondent] MBf Card wrote [petitioner] MCA-MBF’s Ruby Pearl M. Shan
to "freeze" all selling activities on the Countdown Discount Card until after the pertinent Agreements had been signed
and approved. x x x.

10. In reply to [respondent] MBf Card’s freeze advice, [petitioner] Amable R. Aguiluz V promised that they would
comply therewith. This was confirmed by Ruby Pearl M. Shan, who wrote [respondent] MBf Card on March 19, 1994
"to confirm that selling activities of Discount Card have been ordered [frozen] temporarily, effective 10th March
1994." x x x.

11. On March 30 and April 3, 1994, before any of the Joint Venture and License Agreements had been signed and
approved, and with malice, bad faith and in breach of [petitioner’s] promise to [respondent] MBf Card, the [petitioners]
illegally caused the publication of two advertisements in the Manila Bulletin, promoting, marketing and selling the
Countdown Discount Card. x x x.

11.1 In the said ads, [petitioners] fraudulently misrepresented to the public that they have already been
authorized by [respondents] to promote, market and sell the Countdown Discount Card and that the discount
cards they offer are valid and enforceable, and as such would be honored in various establishments in the
Philippines and elsewhere.

11.2 Moreover, in the said advertisements, [petitioners] offered to the public, aside from the regular features of
the Countdown Discount Card, a purchase protection plan and even personal accident insurance. This caused
great concern for [respondents] as, to their knowledge, these have not been firmed up with any insurance
company.

12. What is worse, in his column appearing in the April 15, 1994 issue of the Philippine Star[,] [petitioner] Amable R.
Aguiluz V misrepresented to the public that he, "representing the MCA Holdings had actually signed a joint venture
agreement with Mr. Gordon Yuen, Chairman, of the Malaysia Borneo Finance." No such joint venture agreement has to
date been signed and Mr. Gordon Yuen is president and chief executive officer of [respondent] MBf Card and not the
chairman of Malaysia Borneo Finance.

13. On April 20, 1994, [respondent] MBf Card wrote [petitioners], advising them that it had decided not to proceed
with the joint venture project on the Countdown Discount Card, and demanding that [petitioners] immediately:

(a) refund to [respondent] MBf Card the US$74,074.04 it had remitted;

(b) cease and desist from using the MBf and Countdown names, logos and trademarks; and

(c) delete "MBf" and "Countdown" from MCA-MBF’s corporate name as registered with the Securities and
Exchange Commission.

xxxx
 14. To date, to the damage and prejudice of [respondents], the [petitioners] continue to promote, market and sell the
Countdown Discount Card, thereby misrepresenting to the public that they have been authorized to do so, and that the
Countdown Discount Card they offer are valid and binding against [respondents]. These acts of [petitioners], including
their continued use of "Countdown" and "MBf" in the corporate name and business of MCA-MBF, are in violation of
[respondent’s] lawful and exclusive proprietary rights to such names. Furthermore, they are in fraud of the public and
constitute unfair competition which should be enjoined and for which [petitioners] are liable to [respondents] in
damages.6

Respondents prayed before the trial court that petitioners be enjoined from promoting, marketing and selling Countdown
Discount Cards and from using the "MBf" and "Countdown" names, logos and trademarks. They also prayed that petitioners be
ordered to refund to respondent MBf Card the sum of US$74,074.04, and to pay ₱2,000,000.00 as moral damages, and
₱500,000.00 as attorney’s fees and expenses of litigation.

On April 22, 1994, the trial court issued a temporary restraining order enjoining petitioners, particularly MCA-MBF, to refrain
and desist from promoting, marketing and selling Countdown Discount Cards and from using the "MBf" and "Countdown"
names, logos and trademarks.

After hearings on April 28 and 29, and March 4, 1994, the trial court, in an Order dated May 6, 1994, granted respondents’
prayer for a preliminary injunction.

On August 8, 1994, petitioner MCA-MBF filed its Answer with Counterclaim, claiming that the contract between the parties
had already been perfected. The parties allegedly agreed that (1) they jointly undertook the task of marketing the MBf Discount
Card in the Philippines; (2) MBf Card was solely responsible for securing the necessary selling paraphernalia from the main
Licensor, Countdown of London, England; and (3) Gordon Yuen and T.K. Wong were elected as members of the Board of
Directors of the Joint Venture Corporation. Petitioner MCA-MBF asserted that MBf Card did not suffer any damage from the
introduction and marketing of the MBf Countdown Discount Card in the Philippines since all acts pertaining to the business
were jointly undertaken by the parties. In its Counterclaim, petitioner MCA-MBF prayed for damages in the amount of
₱22,500,000.00, and an order directing respondents to execute, sign and submit the form of the Joint Venture Agreement as
allegedly approved and accepted by petitioners on March 16, 1994.

On August 10, 1994, the trial court issued the Writ of Preliminary Injunction on account of the posting by the respondents of the
required bond.

On October 18, 1996, petitioners Vicente R. Acsay, Amable R. Aguiluz V, Amable C. Aguiluz IX, Cielo C. Aguiluz, Alberto
Buenviaje and MCA Holdings filed their Answer, alleging practically the same defenses as those raised by petitioner MCA-
MBF.

On June 8, 1998, the law firm of Castillo Laman Tan Pantaleon & San Jose (CLTPSJ) filed a Motion to Record Attorney’s
Lien. However, while CLTPSJ did not withdraw its appearance in the case, the law firm of Poblador Bautista & Reyes (PBR)
entered its appearance in October 1994 and has since then been the firm representing respondents. On August 27, 1998, the trial
court noted the prayer to record attorney’s lien and held that the same shall be considered in the adjudication of the case.

On March 8, 2000, the trial court rendered its Decision in favor of respondents. The dispositive portion of the Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered permanently enjoining the [petitioners] from promoting,
marketing and selling Countdown Discount Cards, and from using "MBf" and "Countdown" names, logos and trademarks;
ordering [petitioners] to jointly and severally refund to [respondent] MBf Card the sum of US$74,074.04 or its equivalent in
Philippine currency, with legal interest thereon from date of demand until full payment; and ordering [petitioners] to jointly and
severally pay [respondents] the amount of TWO HUNDRED THOUSAND (₱200,000.00) PESOS as attorney’s fees and
expenses of litigation.

As regards CLTPSJ’s claim, [respondents] are ordered to pay the amount of FIFTY THOUSAND (₱50,000.00) PESOS, as
attorney’s fees.7

On August 15, 2003, petitioners filed a Notice of Appeal. On September 28, 2005, petitioners received an Order from the Court
of Appeals requiring them to file their Appellant’s Brief within 45 days from receipt of said notice.
Petitioners failed to file the Brief within the period allotted by the Court of Appeals. Thus, on March 20, 2006, the Court of
Appeals issued the first assailed Resolution dismissing petitioners’ appeal on the ground of abandonment of the same:

For failure of defendants-appellants to file the required brief within the prescribed period as per report of the Judicial Records
Division dated March 1, 2006, their appeal is considered ABANDONED and consequently, ordered DISMISSED pursuant to
Section 1(e), Rule 50 of the 1997 Rules of Civil Procedure.8

Petitioners filed a Motion for Reconsideration with Motion to Admit Appellant’s Brief, wherein they claimed that the lawyer
who was handling the case suddenly resigned from the law firm in October 2005, shortly after they received the notice to file
the Brief. The other counsels allegedly had been handling voluminous cases and attending to numerous court appearances and
out of town hearings.

On July 6, 2006, the Court of Appeals issued the second assailed Resolution denying petitioners’ Motion for Reconsideration.
According to the Court of Appeals, the reason given by the counsels is not substantial or meritorious to merit the relaxation of
the rules. The Court of Appeals also noted that there was no action on the part of the petitioners from the time they received the
notice to file their Brief on September 28, 2005 until the Resolution of the appellate court on March 20, 2006.9

Hence, the present Petition for Review, wherein petitioners rely on the following grounds:

A.

The Court of Appeals grievously committed a reversible error in dismissing the case based on procedural technicalities
without considering at all whether or not petitioners’ appeal deserved full consideration on the merits.

B.

In the interest of substantial justice, petitioners’ appeal should be reinstated considering that the errors of the trial court
in rendering its appealed decision are evident on the face of the said decision and more so after an examination of the
evidence on record.

1. The Trial Court erred in perfunctorily disregarding corporate fiction and adjudging individual petitioners
personally liable in its Decision.

2. The Trial Court erred when it disregarded basic principles of contract law when it ruled that there was no
joint venture agreement yet between respondent MBf Card and petitioner MCA because they have not yet
executed the documents formalizing said contract.

3. The Trial Court erred in finding that petitioners have not proven Tan Sri’s authority to represent and bind
the respondents to the joint venture agreement.

4. The Trial Court’s award of attorney’s fees is devoid of legal basis.10

Petitioners pray before this Court that their appeal before the Court of Appeals, CA-G.R. CV No. 84370, be reinstated.11

We resolve to deny the present petition.

Confronted with the necessity to justify their failure to file their Appellants’ Brief before the Court of Appeals, all that the
petitioners could offer was that the lawyer who was handling the case resigned from the law firm shortly after they received the
notice to file the Brief, while other counsels have been handling voluminous cases, numerous court appearances, and out of
town hearings. Petitioners did not allege that the other lawyers of the firm were not informed of the appellate court’s notice to
file the Brief. Petitioners did not even ask the court for an extension. Instead, petitioners claim that the rules concerning the
filing of the Appellant’s Brief are mere "insignificant and harmless technicalities"12 and argue that because of the alleged merits
of their case, they do not have to prove that their failure to file the said brief was excusable:

In light of the merits of petitioners’ appeal as will be further discussed below, and in accordance with the jurisprudence
discouraging dismissal of appeals grounded on pure technicalities, whether or not the inadvertence resulting in the late filing of
the appellant’s brief is excusable is already beside the point. The focus should have been on whether or not the appeal deserved
full consideration on the merits, and this can only be determined if a preliminary consideration of the merits is
made.13 (Emphasis added.)

This contention, which in effect advances that the appellate court does not even deserve a valid explanation for the appellant’s
failure to its Brief, cannot be countenanced. Liberality is given to litigants who are worthy of the same, and not to ones who
flout the rules, give explanations to the effect that the counsels are busy with other things, and expect the court to disregard the
procedural lapses on the mere self-serving claim that their case is meritorious.

In Rural Bankers Association of the Philippines v. Tanghal-Salvaña,14 this Court held:

Obedience to the requirements of procedural rules is needed if the parties are to expect fair results therefrom, and utter disregard
of the rules cannot justly be rationalized by harking on the policy of liberal construction. Procedural rules are tools designed to
facilitate the adjudication of cases. Courts and litigants alike are thus enjoined to abide strictly by the rules. And while the
Court, in some instances, allows a relaxation in the application of the rules, this was never intended to forge a bastion for erring
litigants to violate the rules with impunity. The liberality in the interpretation and application of the rules applies only in proper
cases and under justifiable causes and circumstances. While it is true that litigation is not a game of technicalities, it is equally
true that every case must be prosecuted in accordance with the prescribed procedure to insure an orderly and speedy
administration of justice.15

Furthermore, petitioners’ characterization of the rules concerning the filing of the Appellant’s Brief as "insignificant and
harmless technicalities" is downright improper as it is contrary to established jurisprudence. In Casim v. Flordeliza,16 this Court
particularly held that:

It would be incorrect to perceive the procedural requirements of the rules on appeal as being merely "harmless and trivial
technicalities" that can just be discarded. As this Court so explained in Del Rosario vs. Court of Appeals –

"Petitioners' plea for liberality in applying these rules in preparing Appellants' Brief does not deserve any sympathy. Long
1âwphi1

ingrained in our jurisprudence is the rule that the right to appeal is a statutory right and a party who seeks to avail of the right
must faithfully comply with the rules. In People vs. Marong, we held that deviations from the rules cannot be tolerated. The
rationale for this strict attitude is not difficult to appreciate. These rules are designed to facilitate the orderly disposition of
appealed cases. In an age where courts are bedeviled by clogged dockets, these rules need to be followed by appellants with
greater fidelity. Their observance cannot be left to the whims and caprices of appellants."17

Petitioners’ claim that the trial court Decision was erroneous on its face and that even a cursory reading of the same would show
prima facie merit in the appeal is in itself a grave exaggeration. In alleging the prima facie merit of its appeal, petitioners rely on
two main grounds: (1) the RTC allegedly disregarded the basic principles of contract law when it ruled that the joint venture
agreement had not yet been perfected; and (2) the RTC allegedly disregarded corporate fiction in adjudging individual
petitioners personally liable to respondents.

The basic principles of contract law referred to by petitioners are those enshrined in Article 131518 of the Civil Code, which
provides that contracts are perfected by mere consent, and in Article 1356,19 which states that contracts shall be obligatory in
whatever form they may have been entered into, provided all the essential requisites for their validity is present.

It is clear from a reading of the RTC Decision that the above principles were not disregarded. On the contrary, the RTC went
beyond the fact that the Joint Venture and Licensing Agreement has yet to be signed, and carefully weighed the evidence in
order to determine whether or not there was a perfected oral joint venture agreement:

1. The trial court had to look into whether Tan Sri had the authority to bind respondents in the alleged oral agreement.
In this regard, the trial court found no evidence proving the same. The RTC instead considered the admission of
Aguiluz V that he neither knew nor inquired whether Tan Sri was an officer or director of the plaintiff corporations.20

2. Despite the absence of a written contract, the RTC discussed whether or not the remittance of US$74,074.04 and
conveyance of trade secrets and advice should be considered partial execution of the Joint Venture
Agreement.21 However, the trial court apparently found the testimony of the respondents’ witness to be credible and
believed that the respondents were assured that the money will only be applied to its proposed 40% shareholding upon
the execution and approval of the Joint Venture Licensing Agreements.22 Furthermore, it appeared to the RTC that the
 advice and suggestions from respondents for the sale, promotion and marketing of the discount cards are merely
preparatory acts and does not necessarily indicate the existence of a perfected contract.23

3. It was shown that the RTC sought to determine the existence of a Joint Venture and Licensing Agreement despite the
absence of a written contract evidencing the same when it considered therefor the letter of witness Luis Pangulayan in
behalf of petitioner Aguiluz V. The RTC quoted Pangulayan’s April 14, 1994 letter wherein it was admitted that (a) the
signing of the Joint Venture Agreement is required to finalize the formation of the JVC since the provisions of the
contract shall be incorporated in the JVC’s By-Laws; and (2) even the formation of the JVC does not necessarily
complete the process since a Licensing Agreement still needs to be executed between the JVC and respondents.24

In addition to the above, while we agree with petitioners that the absence of a written Joint Venture and Licensing Agreement
does not necessarily negate the perfection of a contract, we nevertheless find that this very lack of a written contract constitutes
convincing circumstantial proof that said parties were indeed in the process of negotiating the contract’s terms. When there is as
of yet no meeting of the minds as to the subject matter or the cause or consideration of the contract being negotiated, the same
cannot be considered to have been perfected.

In ruling in favor of respondents, the RTC made a factual finding that the Joint Venture and Licensing Agreement being
negotiated between petitioners and respondents was never perfected. Respondents are neither incorporators nor stockholders of
MCA-MBF, the company that was supposedly intended to be converted into the Joint Venture Company. It must be stressed
that MCA-MBF has not yet been converted into the Joint Venture Company as no shares of stock have been delivered to
respondents. As alleged by respondents and found by the RTC, the respondents were assured that the money remitted by them
will only be applied to its proposed 40% shareholding in the JVC upon the execution and approval of the Joint Venture and
Licensing Agreements. Therefore, while the US$74,074.04 was remitted to the account of MCA-MBF as requested by Aguiluz
V, said money was, insofar as respondents are concerned, with the persons they are negotiating with for the creation of the JVC.
Consequently, respondents cannot be said to be suing the natural persons among the petitioners as officers of the yet-to-be-
created JVC. They were instead held liable for the US$74,074.04 in their individual capacities as the persons negotiating with
respondents for the creation of the JVC and, thus, there was no need to pierce the corporate fiction of MCA-MBF.

IN VIEW OF THE FOREGOING, the instant Petition for Review on Certiorari is hereby DISMISSED.

DOUGLAS F. ANAMA, G.R. No. 187021

Petitioner,

Present:

- versus -
VELASCO, JR., J., Chairperson,

PERALTA,

COURT OF APPEALS, ABAD,

PHILIPPINE SAVINGS BANK,
SPOUSES SATURNINA BARIA MENDOZA, and
&TOMAS CO and THE REGISTER
PERLAS-BERNABE, JJ.
OF DEEDS, METRO MANILA,
DISTRICT II,
Respondents.
 Promulgated:

January 25, 2012

X ----------------------------------------------------------------------------------------------------- X

DECISION

MENDOZA, J.:

This is a petition for review under Rule 45 assailing the March 31, 2008 Decision[1] of the
Court of Appeals (CA) and its February 27, 2009 Resolution,[2] in CA G.R. No. SP-94771,
which affirmed the November 25, 2005 Order of the Regional Trial Court, Branch 167, Pasig
City (RTC), granting the motion for issuance of a writ of execution of respondents.

The Facts

The factual and procedural backgrounds of this case were succinctly recited by the CA in
its decision as follows:

Sometime in 1973, the Petitioner, Douglas F. Anama (Anama), and the Respondent,
Philippine Savings Bank (PSB), entered into a Contract to Buy, on installment basis, the real
property owned and covered by Transfer Certificate of Title (TCT) No. 301276 in the latters
name. However, Anama defaulted in paying his obligations thereunder, thus, PSB rescinded the
said contract and title to the property remained with the latter. Subsequently, the property was
sold by PSB to the Spouses Saturnina Baria and Tomas Co (Co Spouses) who, after paying the
purchase price in full, caused the registration of the same in their names and were, thus, issued
TCT No. 14239.

Resultantly, Anama filed before the Respondent Court a complaint for declaration of
nullity of the deed of sale, cancellation of transfer certificate of title, and specific performance
with damages against PSB, the Co Spouses, and the Register of Deeds of Metro Manila, District
II.
 On August 21, 1991 and after trial on the merits, the Respondent Court dismissed
Anamas complaint and upheld the validity of the sale between PSB and the Co Spouses.
Undaunted, Anama appealed, at first, to this Court, and after failing to obtain a favorable
decision, to the Supreme Court.

On January 29, 2004, the Supreme Court rendered judgment denying Anamas petition
and sustaining the validity of the sale between PSB and the Co Spouses. Its decision became
final and executory on July 12, 2004. Pursuant thereto, the Co Spouses moved for execution,
which was granted by the Respondent Court per its Order, dated November 25, 2005.

Aggrieved, Anama twice moved for the reconsideration of the Respondent Courts
November 25, 2005 Order arguing that the Co Spouses motion for execution is fatally defective.
He averred that the Spouses motion was pro forma because it lacked the required affidavit of
service and has a defective notice of hearing, hence, a mere scrap of paper. The Respondent
Court, however, denied Anamas motion(s) for reconsideration.

Dissatisfied, the petitioner questioned the RTC Order before the CA for taking judicial
cognizance of the motion for execution filed by spouses Tomas Co and Saturnina
Baria (Spouses Co) which was (1) not in accord with Section 4 and Section 15 of the Rules of
Court because it was without a notice of hearing addressed to the parties; and (2) not in accord
with Section 6, Rule 15 in conjunction with Section 13, Rule 13 of the Rules of Court because it
lacks the mandatory affidavit of service.

On March 31, 2008, the CA rendered a decision dismissing the petition. It reasoned out,
among others, that the issue on the validity of the deed of sale between respondents, Philippine
Savings Bank (PSB) and the Spouses Co, had long been laid to rest considering that the January
29, 2004 Decision of this Court became final and executory on July 12, 2004. Hence, execution
was already a matter of right on the part of the respondents and the RTC had the ministerial
duty to issue a writ of execution enforcing a final and executory decision.

The CA also stated that although a notice of hearing and affidavit of service in a motion
are mandatory requirements, the Spouses Cos motion for execution of a final and executory
judgment could be acted upon by the RTC ex parte, and therefore, excused from the mandatory
requirements of Sections 4, 5 and 6 of Rule 15 of the Rules of Court.

The CA was of the view that petitioner was not denied due process because he was
properly notified of the motion for execution of the Spouses Co. It stated that the act of the
Spouses Co in resorting to personal delivery in serving their motion for execution did not render
the motion pro forma. It refused to apply a rigid application of the rules because it would result
in a manifest failure of justice considering that petitioners position was nothing but an obvious
dilatory tactic designed to prevent the final disposition of Civil Case No. 44940.

Not satisfied with the CAs unfavorable disposition, petitioner filed this petition praying
for the reversal thereof presenting the following

ARGUMENTS:

THE RESPONDENT APPELLATE COURT DID NOT TAKE INTO

CONSIDERATION THE CLEAR TEACHING OF THE HONORABLE COURT WITH
REGARD TO THE REQUISITE NOTICE OF HEARING IT SHOULD BE ADDRESSED
TO THE PARTIES NOT TO THE CLERK OF COURT, THE LATEST (THEN) BEING
GARCIA V. SANDIGANBAYAN, G.R. NO. 167103, AUGUST 31, 2006, 500 SCRA 361;
DE JESUS V. JUDGE DILAG, A.M. NO. RTJ-05-1921, SEPTEMBER 30, 2005, 471 SCRA
176; LAND BANK OF THE PHILIPPINES V. NATIVIDAD, G.R. NO. 127198, MAY 16,
2005, 458 SCRA 441; ATTY. JULIUS NERI V. JUDGE JESUS S. DE LA PEA, A.M
NO. RTJ-05-1896, APRIL 29, 2005, 457 SCRA 538; AND ALVAREZ V. DIAZ, A.M. NO.
MTJ-00-1283, MARCH 3, 2004, 424 SCRA 213;

THE RESPONDENT APPELLATE COURT DID NOT TAKE INTO

CONSIDERATION THE CLEAR TEACHING OF THE HONORABLE COURT WITH
REGARD TO THE REQUISITE AFFIDAVIT OF SERVICE IT SHOULD BE IN THE
PROPER FORM AS PRESCRIBED IN THE RULES AND IT SHOULD BE ATTACHED
TO THE MOTION, THE LATEST (THEN) BEING ELLO V. COURT OF APPEALS,
G.R. NO. 141255, JUNE 21, 2005, 460 SCRA 406; LOPEZ DELA ROSA DEVELOPMENT
CORPORATION V. COURT OF APPEALS, G.R. NO. 148470, APRIL 29, 2005, 457
SCRA 614; ALVAREZ V. DIAZ, A.M. NO. MTJ-00-1283, MARCH 3, 2004, 424 SCRA
213; EL REYNO HOMES, INC. V. ERNESTO ONG, 397 SCRA 563; CRUZ V. COURT
OF APPEALS, 388 SCRA 72, 80-81; AND MERIS V. OFILADA, 293 SCRA 606;

THE RESPONDENT APPELLATE COURT DID NOT TAKE APPROPRIATE

ACTION ON THE FRAUD PERPETRATED UPON THE COURT BY RESPONDENT-
SPOUSES AND THEIR LEAD COUNSEL.

SINCE THE RESPONDENT APPELLATE COURT REFUSED TO TAKE

INTO CONSIDERATION THE RESPONDENT BANKS ACTION THAT
OF:
 ENGAGING IN A DAGDAG-BAWAS (LEGALLY INTERCALATION)
OPERATION OF A PORTION OF THE TRANSCRIPT OF
STENOGRAPHIC NOTES (TSN), OCTOBER 12, 1984, OF THE
REGIONAL TRIAL COURT, BRANCH 167, PASIG CITY, IN CIVIL CASE
NO. 44940, PAGES 54-55, AND

PRESENTING IT IN ITS APPELLEES BRIEF (IN THE OWNERSHIP

CASE, CA-G.R. NO. CV-42663, LIKEWISE, BEFORE THE RESPONDENT
APPELLATE COURT) BY CITING IT ON PAGE 14 OF SAID BRIEF, AS
IMPLIEDLY COMING FROM THE TSN OF THE TRIAL COURT.

THINKING THAT THEIR FALSIFIED APPELLEES BRIEF WAS

MATERIAL IN SAID CA-G.R. NO. CV-42663.

IT COULD NOT RULE THAT THE SAME HAS BROUGHT ABOUT A

CRUCIAL MATERIAL CHANGE IN THE SITUATION OF THE PARTIES WHICH
MAKES EXECUTION INEQUITABLE (PUNCIA V. GERONA, 252 SCRA 424, 430-431),
OR, IN THE WORDS OF DEVELOPMENT BANK OF RIZAL V. CA, G.R. NO.
75964, DECEMBER 1, 1987, 156 SCRA 84, 90, THERE EXISTS A COMPELLING
REASON FOR STAYING THE EXECUTION OF JUDGMENT.

Basically, petitioner argues that the respondents failed to substantially comply with the
rule on notice and hearing when they filed their motion for the issuance of a writ of execution
with the RTC. He claims that the notice of hearing in the motion for execution filed by the
Spouses Co was a mere scrap of paper because it was addressed to the Clerk of Court and not to
the parties. Thus, the motion for execution did not contain the required proof of service to the
adverse party. He adds that the Spouses Co and their counsel deliberately misserved the copy of
their motion for execution, thus, committing fraud upon the trial court.

Additionally, he claims that PSB falsified its appellees brief by engaging in a dagdag-
bawas (intercalation) operation in pages 54 to 55 of the TSN, dated October 12, 1984.

Position of the Spouses Co

The Spouses Co counter that the petition should be dismissed outright for raising both
questions of facts and law in violation of Section 1, Rule 45 of the Rules of Court. The Spouses
Co aver that petitioner attempts to resurrect the issue that PSB cheated him in their transaction
and that the RTC committed a dagdag-bawas. According to the Spouses Co, these issues had
long been threshed out by this Court.

At any rate, they assert that they have substantially complied with the requirements of
notice and hearing provided under Sections 4 and 5 of Rule 15 and Section 13, Rule 13 of the
Rules of Court. Contrary to petitioners allegations, a copy of the motion for the issuance of a
writ of execution was given to petitioner through his principal counsel, the Quasha Law Offices.
At that time, the said law office had not formally withdrawn its appearance as counsel for
petitioner. Spouses Co argue that what they sought to be executed was the final judgment of the
RTC duly affirmed by the CA and this Court, thus, putting the issues on the merits to rest. The
issuance of a writ of execution then becomes a matter of right and the courts duty to issue the
writ becomes ministerial.

Position of respondent PSB

PSB argues that the decision rendered by the RTC in Civil Case No. 44940
entitled Douglas F. Anama v. Philippine Savings Bank, et. al.[3] had long become final and
executory as shown by the Entry of Judgment made by the Court on July 12, 2004. The finality
of the said decision entitles the respondents, by law, to the issuance of a writ of execution. PSB
laments that petitioner relies more on technicalities to frustrate the ends of justice and to delay
the enforcement of a final and executory decision.

As to the principal issue, PSB points out that the notice of hearing appended to the
motion for execution filed by the Spouses Co substantially complied with the requirements of
the Rules since petitioners then counsel of record was duly notified and furnished a copy of the
questioned motion for execution. Also, the motion for execution filed by the Spouses Co was
served upon and personally received by said counsel.

The Courts Ruling

The Court agrees with the Spouses Co that petitioners allegations on the dagdag-bawas
operation of the Transcript of Stenographic Notes, the fraud perpetuated upon the Court by said
spouses and their lead counsel, the ownership, and falsification had long been laid to rest in the
case of Douglas F. Anama v. Philippine Savings Bank, et. al.[4] For said reason, the Court
cannot review those final pronouncements. To do so would violate the rules as it would open a
final judgment to another reconsideration which is a prohibited procedure.

On the subject procedural question, the Court finds no compelling reason to stay the execution
of the judgment because the Spouses Co complied with the notice and hearing requirements
under Sections 4, 5 and 6 of Rule 15. Said sections, as amended, provide:

SECTION 4. Hearing of motion. Except for motions which the court may act
upon without prejudicing the rights of the adverse party, every written motion shall be
set for hearing by the applicant.

Every written motion required to be heard and the notice of the hearing thereof
shall be served in such a manner as to ensure its receipt by the other party at least
three (3) days before the date of hearing, unless the court for good cause sets the
hearing on shorter notice.

SECTION 5. Notice of hearing. The notice of hearing shall be addressed to all

parties concerned, and shall specify the time and date of the hearing which must not
be later than ten (10) days after the filing of the motion.

SECTION 6. Proof of service necessary. No written motion set for hearing

shall be acted upon by the court without proof of service thereof.

Pertinently, Section 13 of Rule 13 of the 1997 Rules of Civil Procedure, as amended,

provides:

SEC. 13. Proof of service. Proof of personal service shall consist of a written
admission of the party served, or the official return of the server, or the affidavit of
the party serving, containing a full statement of the date, place, and manner of
service. If the service is by ordinary mail, proof thereof shall consist of an affidavit of
the person mailing of facts showing compliance with section 7 of this Rule. If service
is made by registered mail, proof shall be made by such affidavit and the registry
receipt issued by the mailing office. The registry return card shall be filed
immediately upon its receipt by the sender, or in lieu thereof the unclaimed letter
together with the certified or sworn copy of the notice given by the postmaster to the
addressee.

Elementary is the rule that every motion must contain the mandatory requirements of
notice and hearing and that there must be proof of service thereof. The Court has consistently
held that a motion that fails to comply with the above requirements is considered a worthless
piece of paper which should not be acted upon. The rule, however, is not absolute. There are
motions that can be acted upon by the court ex parte if these would not cause prejudice to the
other party. They are not strictly covered by the rigid requirement of the rules on notice and
hearing of motions.

The motion for execution of the Spouses Co is such kind of motion. It cannot be denied
that the judgment sought to be executed in this case had already become final and executory. As
such, the Spouses Co have every right to the issuance of a writ of execution and the RTC has
the ministerial duty to enforce the same. This right on the part of the Spouses Co and duty on
the part of the RTC are based on Section 1 and Section 2 of Rule 39 of the 1997 Revised Rules
of Civil Procedure provides, as follows:

Section 1. Execution upon judgments or final orders. Execution shall issue as a matter of
right, on motion, upon a judgment or order that disposes of the action or proceeding upon the
expiration of the period to appeal therefrom if no appeal has been duly perfected.
If the appeal has been duly perfected and finally resolved, the execution may forthwith be
applied for in the court of origin, on motion of the judgment obligee, submitting therewith
certified true copies of the judgment or judgments or final order or orders sought to be enforced
and of the entry thereof, with notice to the adverse party.

The appellate court may, on motion in the same case, when the interest of justice so
requires, direct the court of origin to issue the writ of execution.
SEC. 2. Discretionary execution.
(a) Execution of a judgment or final order pending appeal. On motion of the
prevailing party with notice to the adverse party filed in the trial court while it has
jurisdiction over the case and is in possession of either the original record or the
record on appeal, as the case may be, at the time of the filing of such motion, said
court may, in its discretion, order execution of a judgment or final order even before
the expiration of the period to appeal.
After the trial court has lost jurisdiction, the motion for execution pending
appeal may be filed in the appellate court.
Discretionary execution may only issue upon good reasons to be stated in a
special order after due hearing.
(b) Execution of several, separate or partial judgments.A several, separate or partial
judgment may be executed under the same terms and conditions as execution of a judgment or
final order pending appeal. (2a) [Emphases and underscoring supplied]

As can be gleaned therefrom, under Paragraph 1 of Section 1 of Rule 39 of the 1997

Revised Rules of Civil Procedure, the Spouses Co can have their motion for execution executed
as a matter of right without the needed notice and hearing requirement to petitioner. This is in
contrast to the provision of Paragraph 2 of Section 1 and Section 2 where there must be notice
to the adverse party. In the case of Far Eastern Surety and Insurance Company, Inc. v. Virginia
D. Vda. De Hernandez,[5] it was written:
 It is evident that Section 1 of Rule 39 of the Revised Rules of Court does
not prescribe that a copy of the motion for the execution of a final and executory
judgment be served on the defeated party, like litigated motions such as a motion
to dismiss (Section 3, Rule 16), or motion for new trial (Section 2, Rule 37), or a
motion for execution of judgment pending appeal (Section 2, Rule 39), in all of which
instances a written notice thereof is required to be served by the movant on the
adverse party in order to afford the latter an opportunity to resist the application.

It is not disputed that the judgment sought to be executed in the case at bar had
already become final and executory. It is fundamental that the prevailing party in a
litigation may, at any time within five (5) years after the entry thereof, have a writ of
execution issued for its enforcement and the court not only has the power and
authority to order its execution but it is its ministerial duty to do so. It has also been
held that the court cannot refuse to issue a writ of execution upon a final and
executory judgment, or quash it, or order its stay, for, as a general rule, the parties will
not be allowed, after final judgment, to object to the execution by raising new issues
of fact or of law, except when there had been a change in the situation of the parties
which makes such execution inequitable or when it appears that the controversy has
ever been submitted to the judgment of the court; or when it appears that the writ of
execution has been improvidently issued, or that it is defective in substance, or is
issued against the wrong party, or that judgment debt has been paid or otherwise
satisfied; or when the writ has been issued without authority. Defendant-appellant has
not shown that she falls in any of the situations afore-mentioned. Ordinarily, an order
of execution of a final judgment is not appealable. Otherwise, as was said by this
Court in Molina v. de la Riva, a case could never end. Once a court renders a final
judgment, all the issues between or among the parties before it are deemed resolved
and its judicial function as regards any matter related to the controversy litigated
comes to an end. The execution of its judgment is purely a ministerial phase of
adjudication. The nature of its duty to see to it that the claim of the prevailing party is
fully satisfied from the properties of the loser is generally ministerial.

In Pamintuan v. Muoz, We ruled that once a judgment becomes final and

executory, the prevailing party can have it executed as a matter of right, and
the judgment debtor need not be given advance notice of the application for
execution.

Also of the same stature is the rule that once a judgment becomes final and
executory, the prevailing party can have it executed as a matter of right and the
granting of execution becomes a ministerial duty of the court. Otherwise stated, once
sought by the prevailing party, execution of a final judgment will just follow as a
matter of course. Hence, the judgment debtor need not be given advance notice of
the application for execution nor he afforded prior hearing.

Absence of such advance notice to the judgment debtor does not constitute an
infringement of the constitutional guarantee of due process.
 However, the established rules of our system of jurisprudence do not require
that a defendant who has been granted an opportunity to be heard and has had his day
in court should, after a judgment has been rendered against him, have a further notice
and hearing before supplemental proceedings are taken to reach his property in
satisfaction of the judgment. Thus, in the absence of a statutory requirement, it is not
essential that he be given notice before the issuance of an execution against his
tangible property; after the rendition of the judgment he must take "notice of what
will follow," no further notice being "necessary to advance justice." [Emphases and
underscoring supplied]

Likewise, in the case of Leonardo Lim De Mesa v. Hon. Court of Appeals,[6] it was stated:

In the present case, the decision ordering partition and the rendition of
accounting had already become final and executory. The execution thereof thus
became a matter of right on the part of the plaintiffs, herein private respondents, and is
a mandatory and ministerial duty on the part of the court. Once a judgment becomes
final and executory, the prevailing party can have it executed as a matter of
right, and the judgment debtor need not be given advance notice of the
application for execution nor be afforded prior hearings thereon.

On the bases of the foregoing considerations, therefore, the Court of Appeals

acted correctly in holding that the failure to serve a copy of the motion for execution
on petitioner is not a fatal defect. In fact, there was no necessity for such service.
[Emphases and underscoring supplied]

At any rate, it is not true that the petitioner was not notified of the motion for execution
of the Spouses Co. The records clearly show that the motion for execution was duly served
upon, and received by, petitioners counsel-of-record, the Quasha Ancheta Pena Nolasco Law
Offices, as evidenced by a signed stamped received mark appearing on said pleading. [7] The
records are bereft of proof showing any written denial from petitioners counsel of its valid
receipt on behalf of its client. Neither is there proof that the Quasha Ancheta Pena Nolasco Law
Offices has formally withdrawn its appearance as petitioners counsel-of-record. Considering
that there is enough proof shown on record of personal delivery in serving the subject motion
for execution, there was a valid compliance with the Rules, thus, no persuasive reason to stay
the execution of the subject final and executory judgment.

Moreover, this Court takes note that petitioner was particularly silent on the ruling of the
CA that he was notified, through his counsel, of the motion for execution of the Spouses Co
when he filed a motion for reconsideration of the RTCs order dated June 28, 2005, holding in
abeyance said motion pending the resolution of petitioners pleading filed before this Court. He
did not dispute the ruling of the CA either that the alleged defect in the Spouses Cos motion was
cured when his new counsel was served a copy of said motion for reconsideration of the RTCs
June 28, 2005 Order.[8]

The three-day notice rule is not absolute. A liberal construction of the

procedural rules is proper where the lapse in the literal observance of a rule of
procedure has not prejudiced the adverse party and has not deprived the court of its
authority. Indeed, Section 6, Rule 1 of the Rules of Court provides that the Rules
should be liberally construed in order to promote their objective of securing a just,
speedy and inexpensive disposition of every action and proceeding. Rules of
procedure are tools designed to facilitate the attainment of justice, and courts must
avoid their strict and rigid application which would result in technicalities that tend to
frustrate rather than promote substantial justice.

In Somera Vda. De Navarro v. Navarro, the Court held that there was
substantial compliance of the rule on notice of motions even if the first notice was
irregular because no prejudice was caused the adverse party since the motion was not
considered and resolved until after several postponements of which the parties were
duly notified.

Likewise, in Jehan Shipping Corporation v. National Food Authority, the Court

held that despite the lack of notice of hearing in a Motion for Reconsideration, there
was substantial compliance with the requirements of due process where the adverse
party actually had the opportunity to be heard and had filed pleadings in opposition to
the motion. The Court held:

This Court has indeed held time and again, that under Sections 4 and 5 of Rule
15 of the Rules of Court, mandatory is the requirement in a motion, which is rendered
defective by failure to comply with the requirement. As a rule, a motion without a
notice of hearing is considered pro forma and does not affect the reglementary period
for the appeal or the filing of the requisite pleading.

As an integral component of the procedural due process, the three-day notice

required by the Rules is not intended for the benefit of the movant. Rather, the
requirement is for the purpose of avoiding surprises that may be sprung upon the
adverse party, who must be given time to study and meet the arguments in the motion
before a resolution of the court. Principles of natural justice demand that the right of a
party should not be affected without giving it an opportunity to be heard.
 The test is the presence of opportunity to be heard, as well as to have time
to study the motion and meaningfully oppose or controvert the grounds upon
which it is based.[9][Emphases and underscoring supplied]

Likewise, in the case of KKK Foundation, Inc. v. Hon. Adelina Calderon-Bargas,[10] this
Court stated:

Anent the second issue, we have consistently held that a motion which does not
meet the requirements of Sections 4 and 5 of Rule 15 of the Rules of Court is
considered a worthless piece of paper, which the Clerk of Court has no right to receive
and the trial court has no authority to act upon. Service of a copy of a motion containing
a notice of the time and the place of hearing of that motion is a mandatory requirement,
and the failure of movants to comply with these requirements renders their motions
fatally defective. However, there are exceptions to the strict application of this
rule. These exceptions are: (1) where a rigid application will result in a manifest failure
or miscarriage of justice especially if a party successfully shows that the alleged defect
in the questioned final and executory judgment is not apparent on its face or from the
recitals contained therein; (2) where the interest of substantial justice will be served; (3)
where the resolution of the motion is addressed solely to the sound and judicious
discretion of the court; and (4) where the injustice to the adverse party is not
commensurate with the degree of his thoughtlessness in not complying with the
procedure prescribed.

A notice of hearing is an integral component of procedural due process to afford

the adverse parties a chance to be heard before a motion is resolved by the court.
Through such notice, the adverse party is given time to study and answer the arguments
in the motion. Records show that while Angeless Motion for Issuance of Writ of
Execution contained a notice of hearing, it did not particularly state the date and time of
the hearing. However, we still find that petitioner was not denied procedural due
process. Upon receiving the Motion for Issuance of Writ of Execution, the trial court
issued an Order dated September 9, 2002 giving petitioner ten (10) days to file its
comment. The trial court ruled on the motion only after the reglementary period to file
comment lapsed. Clearly, petitioner was given time to study and comment on the
motion for which reason, the very purpose of a notice of hearing had been
achieved.

The notice requirement is not a ritual to be followed blindly. Procedural due

process is not based solely on a mechanical and literal application that renders any
deviation inexorably fatal. Instead, procedural rules are liberally construed to promote
their objective and to assist in obtaining a just, speedy and inexpensive determination of
any action and proceeding. [Emphases supplied]

At any rate, it is undisputed that the August 21, 1991 RTC Decision[11] in Civil Case No.
44940 is already final and executory. Once a judgment becomes final and executory, all the
issues between the parties are deemed resolved and laid to rest. All that remains is the execution
of the decision which is a matter of right. The prevailing party is entitled to a writ of execution,
the issuance of which is the trial courts ministerial duty.[12]

The Court agrees with the respondents that petitioner mainly relies on mere technicalities to
frustrate the ends of justice and further delay the execution process and enforcement of the RTC
Decision that has been affirmed by the CA and this Court. The record shows that the case has
been dragging on for almost 30 years since petitioner filed an action for annulment of sale in
1982. From the time the Spouses Co bought the house from PSB in 1978, they have yet to set
foot on the subject house and lot.

To remand the case back to the lower court would further prolong the agony of the Spouses Co.
The Court should not allow this to happen. The Spouses Co should not be prevented from
enjoying the fruits of the final judgment in their favor. In another protracted case, the Court
wrote:

As a final note, it bears to point out that this case has been dragging for more
than 15 years and the execution of this Courts judgment in PEA v. CA has been
delayed for almost ten years now simply because De Leon filed a frivolous appeal
against the RTCs order of execution based on arguments that cannot hold water. As a
consequence, PEA is prevented from enjoying the fruits of the final judgment in its
favor. The Court agrees with the Office of the Solicitor General in its contention that
every litigation must come to an end once a judgment becomes final, executory and
unappealable. Just as a losing party has the right to file an appeal within the prescribed
period, the winning party also has the correlative right to enjoy the finality of the
resolution of his case by the execution and satisfaction of the judgment, which is the
"life of the law." To frustrate it by dilatory schemes on the part of the losing party is
to frustrate all the efforts, time and expenditure of the courts. It is in the interest of
justice that this Court should write finis to this litigation.[13]
WHEREFORE, the petition is DENIED.

G.R. No. 192650 October 24, 2012

FELIX MARTOS, JIMMY ECLANA, RODEL PILONES, RONALDO NOVAL, JONATHAN PAILAGO, ERNESTO
MONTANO, DOYONG JOSE, DEO MAMALATEO, ROSELO MAGNO, BONNIE SANTILLAN, ARSENIO
GONZALES, ALEX EDRADAN, MICHAEL ERASCA, MARLON MONTANO, VICENTE OLIVEROS, REYNALDO
LAMBOSON, DOMINGO ROTA, EDDIE ROTA, ZALDY OLIVEROS, ANTONIO NATIL, HERMIE BUISON,
ROGER BUISON, MARIANO LAZATE, JUAN VILLABER, LIMUEL LLANETA, LITO BANTILO, TERSO
GARAY, ROWEL BESTOLO, JERRY YORTAS, PASTOR PANTIG, GAVINO NICOLAS, RAFAEL VILLA, FELIX
YORTAS, MELVIN GARAY, NEIL DOMINGUEZ REYNALDO EVANGELISTA, JR., JOSE RAMOS, ELVIN
ROSALES, JUN GRANEHO, DANNY ASPARES, SALVEDOR TONLOC, ROLANDO EVANGELISTA, RICKY M.
FRANCISCO, EDUARDO ALEGRIA, SALVADOR SANTOS, GREG BISONIA, RUFO CARBILLO, MARVIN
MONTERO, DANILO BESSIRE, ALLAN CABALLERO, ORLANDO LIMOS, EDGARDO BICLAR, MANDY
MAMALATEO, ALFRED GAJO, ERIC CASTRENCE, ANTHONY MOLINA, JAIME SALIM, ROY SILVA,
DANILO BEGORIE, PEPING CALISANA, ERIC RONDA, RUFO CARBANILLO, ROWEL BATA, RICARDO
TOLENTINO, ARNEL ARDINEZ, FERDINAND R. ARANDIA, ROMEO R. GARBO, ANTONIO ROTA,
REYNIELANDRE QUINTANILLA, JOSELITO HILARIO, JIMMY CAMPANA, DANILO LIDO-AN, EMERSON
PENAFLOR, CESAR PABALINAS, JONATHAN MELCHOR, ALEX DAVID, EUTIQUIO ALCALA, MICHAEL
CARANDANG, EDUARDO MANUEL, RAMON EVANGELISTA, RUBEN MENDOZA, ERNESTO MENDOZA,
RICKY RAMOS, ROBERTO NOVELLA, RUBEN CONDE, DANILO POLISTICO, DOMINGO MENDOZA,
FERNANDO SAN GABRIEL, AND DOMINGO ROTO,Petitioners,
vs.
NEW SAN JOSE BUILDERS, INC., Respondent.

DECISION

MENDOZA, J.:

Questioned in this Petition for Review is the July 31, 2009 Decision1 of the Court of Appeals (CA) and its June 17, 2010
Resolution,2 which reversed and set aside the July 30, 2008 Decision3 and October 28, 2008, Resolution4 of the National Labor
Relations Commission (NLRC); and reinstated the May 23, 2003 Decision5 of the Labor Arbiter (LA). The dispositive portion of
the CA Decision reads:

WHEREFORE, decision is hereby rendered, as follows:

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

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

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

SO ORDERED.6

The Facts

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

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

Private respondents alleged that, on various dates, petitioner hired them on different positions, hereunder specified:
1âwph i1

Names Date Employed Date Dismissed

1. Felix Martos October 5, 1998 February 25, 2002

2. Jimmy Eclana 1999 July 2001

3. Rodel Pilones February 1999 July 2001

4. Ronaldo Noval
5. Jonathan Pailago

6. Ernesto Montaño 1998 2000

7. Doyong Jose 1996 July 2001
8. Deo Mamalateo 1999 July 2001

9. Roselo Magno 1994 November 2000

10. Bonnie Santillan 1998 July 2001
11. Arsenio Gonzales 1998 July 2001

12. Alex Edradan 1998 November 2001

13. Michael Erasca 1999 July 2001

14. Marlon Montaño 1998 July 2001

15. Vicente Oliveros April 5, 1998 July 2001

16. Reynaldo Lamboson 1999 July 2001

17. Domingo Rota 1998

18. Eddie Rota 1998

19. Zaldy Oliveros 1999 July 2001

20. Antonio Natel 1998 July 2001

21. Hermie Buison 1998 July 2001

22. Roger Buison 1998 2000

23. Mariano Lazate February 19, 1995

24. Juan Villaber January 10, 1997

25. Limuel Llaneta March 5, 1994

26. Lito Bantilo May 1987

27. Terso Garay October 3, 1986

28. Rowel Bestolo February 6, 1999

29. Jerry Yortas May 1994

30. Pastor Pantig April 11,1998
31. Gavino Nicolas June 20, 1997

32. Rafael Villa March 9, 1998

33. Felix Yortas 1992

34. Melvin Garay February 2, 1994

35. Neil Dominguez February 16, 1998

36. Reynaldo Evangelista, Jr. October 10, 1998

37. Jose Ramos October 10, 1998

38. Elvis Rosales June 14, 1998
39. Jun Graneho January 15, 1998

40. Danny Espares April 1999

41. Salvador Tonloc January 8, 1998
42. Rolando Evangelista March 15, 1998

43. Ricky M. Francisco September 28, 1991

44. Eduardo Alegria May 2001
45. Salvador Santos September 22, 2000

46. Greg Bisonia March 28, 1993

47. Rufo Carbillo March 28, 1993

48. Marvin Montero 1997 January 2001

49. Danilo Bessiri 1997 2002

50. Allan Caballero 1997 2002

51. Orlando Limos 1997 July 2001

52. Edgardo Biclar 1997 July 2001

53. Mandy Mamalatco 1989 2002

54. Alfred Gajo 1998 July 2001

55. Eric Castrence 1988 2002

56. Anthony Molina 1997 2002

57. Jaime Salin

58. Roy Silva 1997 2002

59. Danilo V. Begorie 1994 January 2001

60. Peping Celisana 1999 July 2001

61. Eric Ronda 1998 July 2001

62. Rufo Carbanillo 1998 July 2001

63. Rowel Batta 1999 July 2001

64. Ricardo Tolentino 1997 July 2001
65. Arnel Ardinez 1998 July 2001

66. Ferdinand P. Arandia 1998 1999

67. Romeo R. Garbo 1998 2000

68. Antonio Rota 1998 July 2001

69. Reynielande Quintanilla February 28, 1998 2002

70. Joselito Hilario 1998 2002

71. Jimmy Campana August 15, 1998 August 2001

72. Danilo Lido-An September 8, 1998
73. Emerson Peñaflor August 8,1998

74. Cesar Pabalinas

 75. Jonathan Melchor November 1998
76. Alex David 1998

77. Eutiquio Alcala December 1999

78. Michael Carandang June 2000
79. Eduardo Nanuel October 1999

80. Ramon Evangelista February 15, 1998

81. Ruben Mendoza 1999 July 2001

82. Ernesto A. Mendoza 1998 July 2001

83. Ricky Ramos 1999 July 2001

84. Roberto Novella 1998 July 2001

85. Ruben Conde 1998 July 2001

86. Ramon Evangelista 1997 July 2001

87. Danilo Polistico 1999 July 2001

88. Domingo Mendoza 1999 July 2001

89. Fernando San Gabriel 1999 July 2001

90. Domingo Roto 1994 July 2001

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

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

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

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

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

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

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

Ruling of the Labor Arbiter

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

Ruling of The NLRC

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

On July 30, 2008, the NLRC resolved the appeal by dismissing the one filed by respondent and partially granting that of the
other petitioners. The dispositive portion of the NLRC decision reads as follows:

WHEREFORE, premises considered, respondent’s appeal is DISMISSED for lack of merit. The appeal of the complainants is,
however, PARTIALLY GRANTED by modifying the 23 May 2003 Decision of the Labor Arbiter Facundo L. Leda, in that,
respondents are ordered to reinstate all the complainants to their former positions, without loss of seniority rights and with full
backwages, counted from the time their compensation was withheld from them until actual reinstatement.

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

In all other aspects, the Decision is AFFIRMED.

SO ORDERED.8

Ruling Of The CA

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

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

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

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

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

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

SO ORDERED.9

The CA explained that the NLRC committed grave abuse of discretion in reviving the complaints of petitioners despite their
failure to verify the same. Out of the 102 complainants, only Martos verified the position paper and his counsel never offered
any explanation for his failure to secure the verification of the others. The CA also held that the NLRC gravely abused its
discretion when it took cognizance of petitioners’ appeal because Rule 41, Section 1(h) of the 1997 Rules of Civil Procedure, as
amended, which is suppletory, provides that no appeal may be taken from an order dismissing an action without prejudice.
Nevertheless, the CA stated that the factual circumstances of Martos’ employment and his dismissal from work could not
equally apply to petitioners because they were not similarly situated. The NLRC did not even bother to look at the evidence on
record and inappropriately granted monetary awards to petitioners who had either denied having filed a case or withdrawn the
case against respondent. According to the CA, the position papers should have covered only those claims and causes of action
raised in the complaint excluding those that might have been amicably settled.

With respect to Martos, the CA ruled that he was a regular employee of respondent and his termination was illegal. It explained
that Martos should have been considered a regular employee because there was no indication that he was merely a project
employee when he was hired. To show otherwise, respondent should have presented his employment contract for the alleged
specific project and the successive employment contracts for the different projects or phases for which he was hired. In the
absence of such document, he could not be considered such an employee because his work was necessary and desirable to the
respondent’s usual business and that he was not required to sign any employment contract fixing a definite period or duration of
his engagement. Thus, Martos already attained the status of a regular employee. Moreover, the CA noted that respondent did not
report the termination of Martos’ supposed project employment to the Department of Labor and Employment (DOLE), as
required under Department Order No. 19.

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

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

ASSIGNMENT OF ERRORS

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

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

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

Position of Petitioners

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

The CA overlooked the fact that all of them verified their complaints by declaring under oath relevant and material facts such as
their names, addresses, employment status, salary rates, facts, causes of action, and reliefs common to all of them. The
information supplied in their complaints is sufficient to prove their status of employment and entitlement of their monetary
claims. In the adjudication of labor cases, the adherence to stringent technical rules may be relaxed in the interest of the working
man. Moreover, respondent failed to adduce evidence of payment of their money claims.
Finally, petitioners argue that they and Martos were similarly situated. The award of separation pay instead of reinstatement to
an illegally dismissed employee was improper because the strained relations between the parties was not clearly established.
Moreover, they are entitled to actual, moral and exemplary damages for respondent’s illegal act of violating labor standard laws,
the minimum wage law and the 13th month pay law.

Position of Respondents

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

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

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

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

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

The Court’s Ruling

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

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

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

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

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

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

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

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

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

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

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

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

The liberal construction of the rules may be invoked in situations where there may be some excusable formal deficiency or error
in a pleading, provided that the same does not subvert the essence of the proceeding and it at least connotes a reasonable attempt
at compliance with the rules. Besides, fundamental is the precept that rules of procedure are meant not to thwart but to facilitate
the attainment of justice; hence, their rigid application may, for deserving reasons, be subordinated by the need for an apt
dispensation of substantial justice in the normal course. They ought to be relaxed when there is subsequent or even substantial
compliance, consistent with the policy of liberality espoused by Rule 1, Section 6.14 Not being inflexible, the rule on verification
allows for such liberality.15

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

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

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

The Court can only do so much for them.

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

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

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

Thus, the Court deems it fair to award separation pay in lieu of reinstatement. In addition to his separation pay. Martos is also
1âwphi1

entitled to payment of full backwages, 13th month pay, service incentive leave pay, and attorney’s fees.

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

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

WHEREFORE, the petition is DENIED.

Resolution G.R. No. 191837

The facts leading to the filing of this petition are undisputed. Subject of the present controversy is a parcel of land with an
approximate area of 4.4 hectares and located at Bignay, Valenzuela City. The property is covered by Transfer Certificate
of Title (TCT) No. V-73892, registered in the names of George and Marilyn Lim (Spouses Lim). On September 8, 2004,
Maria Consolacion Rivera-Pascual (Consolacion) filed before the Office of the Regional Agrarian Reform Adjudicator
(RARAD) for Region IV-A a petition to be recognized as a tenant of a property located at Bignay, Valenzuela City
against Danilo Deato (Deato). At that time, the property, which has an approximate area of 4.4 hectares, was covered by
TCT No. 24759 under Deato’s name. During the pendency of the petition, Deato sold the property to Spouses Lim. The
sale was registered on December 21, 2004 leading to the issuance of TCT No. V73892 in favor of Spouses Lim.
Considering this development, Consolacion filed a motion on March 3, 2005 to implead Spouses Lim as respondents.3
The petition, which was docketed as DARAB Case No. R-0400-0012- 04, was granted by Regional Adjudicator Conchita
C. Miñas (RA Miñas) in a Decision4 dated December 2, 2005, the dispositive portion of which states: WHEREFORE,
premises considered, judgment is hereby rendered: 1) Declaring that petitioner is the tenant of the subject landholding by
succession from her deceased father; 2) Declaring respondents spouses George and Marilyn Lim to have subrogated to the
rights and substituted to the obligation of spouses Danilo and Divina Deato; 3) Ordering the respondents and all persons
claiming rights under them to maintain petitioner in peaceful possession and cultivation of the agricultural land subject
hereof; 3 Id. at 59. 4 Id. at 55-67. Resolution G.R. No. 191837 3 4) Declaring petitioner to have the right to exercise the
right of redemption of the subject parcel of agricultural land pursuant to Section 12 of RA 3844 as [a]mended; and 5)
Dismissing the petition against Louie Cruz, Fire Force Agency and Danny Boy Rivera for having no proximate tenurial
relationship with the petitioner hence beyond the jurisdictional ambit of this Office. SO ORDERED.5 On July 7, 2006, the
foregoing decision became final.6 Upon Consolacion’s motion for execution filed on January 7, 2008, RA Miñas issued a
writ of execution on January 8, 2008.7 On January 21, 2008, Consolacion filed a petition against Spouses Lim and the
Registrar of Deeds of Valenzuela City praying for the issuance of an order directing Spouses Lim to accept the amount of
P10,000,000.00 which she undertook to tender during the initial hearing, declaring the property redeemed, and cancelling
TCT No. V-73892.8 Consolacion consigned with the RARAD the amount of P10,000,000.00 on March 3, 2008.9
Consolacion’s petition, which was docketed as DARAB Case No. R0400-001-08, was given due course by RA Miñas in a
Decision10 dated June 2, 2008, the dispositive portion of which states: WHEREFORE, foregoing premises considered,
judgment is hereby rendered: 1. As prayed for, declaring that the landholding subject of the petition as lawfully redeemed;
5 Id. at 66. 6 Id. at 68-69. 7 Id. at 70-71. 8 Id. at 73-75. 9 Id. at 106. 10 Id. at 97-108. Resolution G.R. No. 191837 4 2.
Ordering respondent spouses to accept and withdraw the amount of the redemption price consigned with this Office which
was deposited for safekeeping indicated in Manager’s Check No. 0000004518 issued by Allied Bank in the name of
Spouses Marilyn and George Lim and/or DAR Adjudication Board Region IV-A in the amount of ten (10) million pesos;
3. Upon acceptance and the withdrawal of the redemption price as ordered in paragraph 2 hereof, ordering respondent
spouses to execute a Deed of Redemption in favor of petitioner; 4. In case of refusal and/or failure of respondent spouses
to execute the Deed of Redemption as ordered above, the Regional Clerk of the Board is hereby ordered to execute a Deed
of Redemption in the name of the petitioner; and 5. Directing the Register of Deeds for Valenzuela City to cause the
cancellation of TCT No. V-73892 registered in the name of respondent spouses Marilyn and George Lim and a new one
issued in the name of petitioner upon presentment of the Deed of Redemption. SO ORDERED. 11 On appeal, the
Department of Agrarian Reform Adjudication Board (DARAB) issued a Decision12 on February 18, 2009 reversing RA
Miñas Decision dated June 2, 2008. Specifically: WHEREFORE, in view of the foregoing, the appealed Decision dated
02 June 2008 is hereby REVERSED and SET ASIDE. A n Resolution G.R. No. 191837 5 5. DIRECTING the Clerk of
the Board of the Regional Agrarian Reform Adjudicator of Region IV-A to return the Manager’s Check No. 0000004518
issued by Allied Bank in the name of Spouses Marilyn and George Lim and/or DAR Adjudication Board Region IV-A in
the amount of Ten Million pesos to herein petitioner-appellee. SO ORDERED. 13 On April 13, 2009, Consolacion moved
for reconsideration, 14 which the DARAB denied in a Resolution15 dated June 8, 2009 for being filed out of time.
SECTION 12 Rule X of the 2003 DARAB Rules provides that a Motion for Reconsideration shall be filed within fifteen
(15) days from receipt of notice of the order, resolution, or decision of the Board or Adjudicator. Records show that both
the petitioner-appellee and her counsel received a copy of the Decision dated 18 February 2009 on 27 February 2009 and
that Legal Officer Nancy Geocada[,] the alleged new counsel of the herein petitioner[-]appellee[,] filed the Motion for
Reconsideration only on 13 April 2009, clearly the Motion for Reconsideration was filed beyond the fifteen (15) days
(sic) reglementary period thus the herein Decision has already become final and executory. x x x. 16 On June 25, 2009,
Consolacion filed a petition for review under Rule 43 of the Rules of Court with the CA.17 On July 1, 2009, the CA
resolved to require Consolacion’s counsel to submit within five (5) days from notice his Mandatory Continuing Legal
Education (MCLE) Certificate of Compliance or Exemption and an amended Verification and Certification Against Non-
Forum-Shopping.18 Apparently, Consolacion’s counsel failed to indicate in the petition his MCLE Certificate of
Compliance or Exemption Number as required under Bar Matter No. 1922. Also, the jurat of Consolacion’s verification
and certification against 13 Id. at 153-154. 14 Id. at 157-163. 15 Id. at 164-167. 16 Id. at 165-166. 17 Id. at 26. 18 Id. at
26-27. Resolution G.R. No. 191837 6 non-forum-shopping failed to indicate any competent evidence of Consolacion’s
identity apart from her community tax certificate. Considering the failure of Consolacion and her counsel to comply, the
CA issued a Resolution19 on October 15, 2009 dismissing the petition. On July 7, 2009, the counsel for the petitioner
received the abovementioned Resolution. However, the counsel for the petitioner failed to comply with the said
Resolution which was due on July 19, 2009. For failure of the counsel for the petitioner to comply with the Resolution
dated July 1, 2009, despite receipt of the notice thereof, the petition is hereby DISMISSED. SO ORDERED. 20
Consolacion moved for reconsideration but this was denied by the CA in a Resolution21 dated March 11, 2010.
Consolacion is, before this Court, claiming that the CA’s summary dismissal of her petition on technical grounds is
unwarranted. Consolacion invoked substantial justice against the CA’s strict application of the rule requiring her counsel
to note his MCLE Compliance or Exemption Certificate Number and the rule rendering the jurat of her verification and
certification on non-forum-shopping defective in the absence of the details of any one of her current identification
document issued by an official agency bearing her photograph and signature. That there was merit in her petition and that
she complied, albeit belatedly as her counsel’s MCLE Compliance Certificate Number was indicated and a verification
and certificate on non-forum-shopping with a proper jurat was attached to her motion for reconsideration, should have
sufficed for the CA to reverse the dismissal of her petition and decide the same on its merits. Consolacion alleged that
procedural rules or technicalities are designed to facilitate the 19 Id. at 41-42. 20 Id. at 41. 21 Id. at 44-45. Resolution
G.R. No. 191837 7 attainment of justice and their rigid application should be avoided if this would frustrate rather than
promote substantial justice. The Court finds no merit in the petition. The Court sees no reversible error committed by the
CA in dismissing Consolacion’s petition before it on the ground of petitioner’s unexplained failure to comply with basic
procedural requirements attendant to the filing of a petition for review under Rule 43 of the Rules of Court. Notably,
Consolacion and her counsel remained obstinate despite the opportunity afforded to them by the CA to rectify their lapses.
While there was compliance, this took place, however, after the CA had ordered the dismissal of Consolacion’s petition
and without reasonable cause proffered to justify its belatedness. Consolacion and her counsel claimed inadvertence and
negligence but they did not explain the circumstances thereof. Absent valid and compelling reasons, the requested
leniency and liberality in the observance of procedural rules appears to be an afterthought, hence, cannot be granted. The
CA saw no compelling need meriting the relaxation of the rules. Neither does this Court see any. The Court is aware of
the exceptional cases where technicalities were liberally construed. However, in these cases, outright dismissal is rendered
unjust by the presence of a satisfactory and persuasive explanation. The parties therein who prayed for liberal
interpretation were able to hurdle that heavy burden of proving that they deserve an exceptional treatment. It was never
the Court’s intent “to forge a bastion for erring litigants to violate the rules with impunity.”22 This Court will not condone
a cavalier attitude towards procedural rules. It is the duty of every member of the bar to comply with these rules. They are
not at liberty to seek exceptions should they fail to observe these rules and rationalize their omission by harking on liberal
construction. 22 Pates v. Commission on Elections, G.R. No. 184915, June 30, 2009, 591 SCRA 481, 487, citing Hon.
Fortich v. Hon. Corona, 359 Phil. 210, 220 (1998). Resolution 8 G.R. No. 191837 While it is the negligence of
Consolacion's counsel that led to this unfortunate result, she is bound by such.

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

COMMISSIONER OF INTERNAL G.R. No. 159593

REVENUE,
Petitioner,
Present:

PANGANIBAN, C.J.
Chairperson,
YNARES-SANTIAGO,
- versus-
AUSTRIA-MARTINEZ,

CALLEJO, SR., and

CHICO-NAZARIO, JJ.

MIRANT[1] PAGBILAO
CORPORATION (formerly
SOUTHERN ENERGY QUEZON, Promulgated:
INC.),

Respondent. October 12, 2006

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

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

There is no dispute as to the following facts that gave rise to the claim for refund of MPC, as
found by the CTA[5]
[MPC] is a domestic corporation duly organized and existing under and by
virtue of the laws of the Philippines with principal office address in Pagbilao Grande
Island, Pagbilao, Quezon. It is licensed by the Securities and Exchange Commission to
principally engage in the business of power generation and subsequent sale thereof
(Exh. A). It is registered with the Bureau of Internal Revenue as a VAT registered
entity with Certificate of Registration bearing RDO Control No. 96-600-002498, dated
January 26, 1996.

For the period April 1, 1996 to December 31, 1996, [MPC] seasonably filed its
Quarterly VAT Returns reflecting an (sic) accumulated input taxes in the amount
of P39,330,500.85 (Exhs. B, C, and D). These input taxes were allegedly paid by [MPC]
to the suppliers of capital goods and services for the construction and development
of the power generating plant and other related facilities in Pagbilao, Quezon (TSN,
November 16, 1998, p. 11).

Pursuant to the procedures prescribed under Revenue Regulations No. 7-95,

as amended, [MPC] filed on June 30, 1998, an application for tax credit or refund of
the aforementioned unutilized VAT paid on capital goods (Exhibit E).
 Without waiting for an answer from the [BIR Commissioner], [MPC] filed the
instant petition for review on July 10, 1998, in order to toll the running of the two-
year prescriptive period for claiming a refund under the law.

In answer to the Petition, [the BIR Commissioner] advanced as special and

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

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

[MPC], due to the voluminous nature of evidence to be presented, availed of

the services of an independent Certified Public Accountant pursuant to CTA Circular
No. 1-95, as amended.As a consequence, Mr. Ruben R. Rubio, Partner of SGV &
Company, was commissioned to verify the accuracy of [MPC]s summary of input
taxes (TSN, October 15, 1998, pp. 3-5). A report, dated March 8, 1999, was presented
stating the audit procedures performed and the finding that out of the total claimed
input taxes of P39,330,500.85, only the sum of P28,745,502.40 was properly
supported by valid invoices and/or official receipts (Exh. G; see also TSN, March 3,
1999, p. 12).
The CTA ruled in favor of MPC, and declared that MPC had overwhelmingly proved, through
the VAT invoices and official receipts it had presented, that its purchases of goods and services
were necessary in the construction of power plant facilities which it used in its business of
power generation and sale. The tax court, however, reduced the amount of refund to which
MPC was entitled, in accordance with the following computation

Total amount of the claim for refund P39,330,500.85

Less: Disallowances

a. Per independent auditor P10,584,998.45

b. Per CTAs examination 875.45 10,585,873.90

P28,744,626.95[6]

Thus, the dispositive portion of the CTA Decision,[7] dated 11 July 2000, reads -

WHEREFORE, in view of the foregoing, [MPC]s claim for refund is hereby

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

The CTA subsequently denied the BIR Commissioners Motion for Reconsideration in a
Resolution,[8] dated 31 August 2001.

Aggrieved, the BIR Commissioner filed with the Court of Appeals a Petition for Review [9] of the
foregoing Decision, dated 11 July 2000, and Resolution, dated 31 August 2001, of the
CTA. Notably, the BIR Commissioner identified and discussed as grounds[10] for its Petition
arguments that were totally new and were never raised before the CTA, to wit
 1. RESPONDENT BEING AN ELECTRIC UTILITY, IT IS SUBJECT TO FRANCHISE TAX
UNDER THEN SECTION 117 (NOW SECTION 119) OF THE TAX CODE AND NOT TO
VALUE ADDED TAX (VAT).

2. SINCE RESPONDENT IS EXEMPT FROM VAT, IT IS NOT ENTITLED TO THE

REFUND OF INPUT VAT PURSUANT TO SECTION 4.103-1 OF REVENUE REGULATIONS
NO. 7-95.

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

WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit

and the assailed 11 July 2000 Decision of respondent Court in CTA Case No. 5658 is
hereby AFFIRMED in toto. No costs.

Refusing to give up his cause, the BIR Commissioner filed the present Petition before this Court
on the ground that the Court of Appeals committed reversible error in affirming the Decision
of the CTA holding respondent entitled to the refund of the amount of P28,744,626.95,
allegedly representing input VAT on capital goods and services for the period 1 April 1996 to
31 December 1996. He argues that (1) The observance of procedural rules may be relaxed
considering that technicalities are not ends in themselves but exist to protect and promote the
substantive rights of the parties; and (2) A tax refund is in the nature of a tax exemption which
must be construed strictly against the taxpayer. He reiterates his position before the Court of
Appeals that MPC, as a public utility, is exempt from VAT, subject instead to franchise tax and,
thus, not entitled to a refund of input VAT on its purchase of capital goods and services.
This Court finds no merit in the Petition at bar.

The general rule is that a party cannot change his

theory of the case on appeal.

To recall, the BIR Commissioner raised in its Answer[12] before the CTA the following special
and affirmative defenses

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

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

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

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

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

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

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

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

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

The settled rule is that defenses not pleaded in the answer may not be raised
for the first time on appeal. A party cannot, on appeal, change fundamentally the
nature of the issue in the case. When a party deliberately adopts a certain theory
and the case is decided upon that theory in the court below, he will not be permitted
 to change the same on appeal, because to permit him to do so would be unfair to
the adverse party.

In the more recent case of Mon v. Court of Appeals,[15] this Court again pronounced that,
in this jurisdiction, the settled rule is that a party cannot change his theory of the case or his
cause of action on appeal. It affirms that courts of justice have no jurisdiction or power to
decide a question not in issue. Thus, a judgment that goes beyond the issues and purports to
adjudicate something on which the court did not hear the parties, is not only irregular but also
extrajudicial and invalid. The rule rests on the fundamental tenets of fair play.

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

Procedural rules, we must stress, should be treated with utmost respect and
due regard since they are designed to facilitate the adjudication of cases to remedy
the worsening problem of delay in the resolution of rival claims and in the
administration of justice. The requirement is in pursuance to the bill of rights
inscribed in the Constitution which guarantees that all persons shall have a right to
the speedy disposition of their cases before all judicial, quasi-judicial
and administrative bodies. The adjudicatory bodies and the parties to a case are thus
enjoined to abide strictly by the rules. While it is true that a litigation is not a game of
technicalities, it is equally true that every case must be prosecuted in accordance
with the prescribed procedure to ensure an orderly and speedy administration of
justice. There have been some instances wherein this Court allowed a relaxation in
the application of the rules, but this flexibility was never intended to forge a bastion
for erring litigants to violate the rules with impunity. A liberal interpretation and
application of the rules of procedure can be resorted to only in proper cases and
under justifiable causes and circumstances.[16]
The courts have the power to relax or suspend technical or procedural rules or to except a
case from their operation when compelling reasons so warrant or when the purpose of justice
requires it. What constitutes good and sufficient cause that would merit suspension of the
rules is discretionary upon the courts.[17]

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

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

This Court is unconvinced. There is no sufficient cause to warrant the relaxation of

technical or procedural rules in the instant case. The general rules of procedure still apply and
the BIR Commissioner cannot be allowed to raise an issue for the first time on appeal.

It should be emphasized that the BIR Commissioner is invoking a suspension of the

general rules of procedure or an exception thereto, thus, it is incumbent upon him to present
sufficient cause or justifiable circumstance that would qualify his case for such a suspension or
exception. That this Court had previously allowed in another case such suspension of or
exception to technical or procedural rules does not necessarily mean that the same shall also
be allowed in the present case. The BIR Commissioner has the burden of persuading this Court
that the same causes or circumstances that justified the suspension of or exception to the
technical or procedural rules in the other case are also present in the case at bar.

The Sy case, on which the BIR Commissioner fully anchored his claim for suspension of
or exception to the technical or procedural rules, is not even on all fours with his case. It
involves a petition for declaration of nullity of marriage instituted by the therein petitioner
Filipina Sy before the Regional Trial Court (RTC) on the basis of the alleged psychological
incapacity of her husband, Fernando Sy. Her petition was denied by the RTC because it found
that Fernandos acts did not constitute psychological incapacity, a finding later affirmed by the
Court of Appeals. In an appeal by certiorari before this Court, Filipina raised the issue that her
marriage to Fernando was void from the very beginning for lack of a marriage license at the
time of the ceremony. This Court took cognizance of the said issue, reversed the RTC and the
Court of Appeals, and ruled in favor of Filipina. Its ratiocination on the matter is reproduced in
full below

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

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

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

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

In Atlas Consolidated Mining & Development Corp. v. Commissioner of Internal

Revenue,[22] this Court held that it was too late for the BIR Commissioner to raise an issue of
fact of payment for the first time in his memorandum in the CTA and in his appeal to this
Court. If raised earlier, the matter ought to have been seriously delved into by the CTA. On this
ground, this Court was of the opinion that under all the attendant circumstances of the case,
substantial justice would be served if the BIR Commissioner be held as precluded from
attempting to raise the issue at this stage. Failure to assert a question within a reasonable
time warrants a presumption that the party entitled to assert it either has abandoned or
declined to assert it.

Therefore, the Court of Appeals correctly refused to consider the issues raised by the
BIR Commissioner for the first time on appeal. Its discussion on whether the MPC is a public
utility and whether it is subject to VAT or franchise tax is nothing more than obiter dictum. It is
best not at all to discuss these issues for they do not simply involve questions of law, but also
closely-related questions of fact[23] which neither the Court of Appeals nor this Court could
presume or garner from the evidence on record.

II

Input VAT on capital goods and services may be

the subject of a claim for refund.

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

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

xxxx

(b) Capital goods. - A VAT-registered person may apply for the issuance of a tax credit certificate or refund of input taxes paid on
capital goods imported or locally purchased, to the extent that such input taxes have not been applied against output taxes. The application
may be made only within two (2) years, after the close of the taxable quarter when the importation or purchase was made.
Capital goods or properties, as defined in Revenue Regulations No. 7-95, the implementing
rules on VAT, are goods and properties with estimated useful life greater than one year and
which are treated as depreciable assets under Section 29(f), used directly or indirectly in the
production or sale of taxable goods or services.[25]

Contrary to the argument of the BIR Commissioner, input VAT on capital goods is among
those expressly recognized as creditable input tax by Section 104(a) of the Tax Code of 1986,
as amended by Rep. Act No. 7716,[26] to wit
Sec. 104. Tax Credits. - (a) Creditable input tax. - Any input tax evidenced by a VAT invoice or official receipt issued in accordance
with Section 108 hereof on the following transactions shall be creditable against the output tax:

(1) Purchase or importation of goods:

(A) For sale; or

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

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

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

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

Thus, goods and properties used by the taxpayer in its VAT-taxable business, subject to
depreciation or amortization in accordance with the Tax Code, are considered capital
goods. Input VAT on the purchase of such capital goods is creditable against the taxpayers
output VAT. The taxpayer is further given the option, under Section 106(b) of the Tax Code of
1986, as amended by Republic Act No. 7716, to claim refund of the input VAT on its capital
goods, but only to the extent that the said input VAT has not been applied to its output VAT.
This Court, likewise, will not give credence to the BIR Commissioners contention that the claim
for refund of input VAT on capital goods by the MPC should be denied for the latters failure to
comply with the requirements for the refund of input VAT credits on zero-rated sales provided
in Section 16 of Revenue Regulations No. 5-87, as amended by Revenue Regulations No. 3-
88. The BIR Commissioner is apparently confused. MPC is claiming refund of the input VAT it
has paid on the purchase of capital goods, it is not claiming refund of its input VAT credits
attributable to its zero-rated sales. These are two different input VAT credits, arising from
distinct transactions, although both may be the subject of claims for refund by the
taxpayer.[27] Indeed, the very same regulation invoked by the BIR Commissioner, Revenue
Regulations No. 5-87, as amended, distinguishes between these two refundable input VAT
credits and discusses them in two separate paragraphs: Section 16(a) on zero-rated sales of
goods and services, and Section 16(b) on capital goods. It is also worth noting that Revenue
Regulations No. 7-95, issued on 9 December 1995, which consolidated all VAT regulations,
already superseded Revenue Regulations No. 5-87. Still, Revenue Regulations No. 7-95
maintains the distinction between these two input VAT credits, discussing the zero-rated sales
of goods or properties or services in Section 4.106-1(a), and capital goods in Section 4.106-
1(b).

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

There is no reason for this Court to disturb the

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

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

The CTA found that MPC is registered as a VAT-taxpayer, as evidenced by its Certificate
of Registration, issued by the BIR Revenue District Office (RDO) No. 60, on 26 January
1996. The BIR Commissioner does not contest this fact, and does not offer any explanation as
to why the BIR RDO had approved the registration of MPC as a VAT-taxpayer when, as the BIR
Commissioner is now asserting, the MPC is not subject to VAT but to franchise tax. The MPC
had been filing its VAT Quarterly Returns, including those for the period covered by its claim
for refund, 1 April 1996 to 31 December 1996, reporting and reflecting therein the input VAT it
had paid on its purchase of capital goods and services. These capital goods and services were
necessary in the construction of the power plant facilities used by MPC in electric power
generation.
 The VAT invoices and receipts submitted by MPC, in support of its claim for refund, had
been examined and evaluated by an independent auditor, as well as by the CTA itself. Thus,
from the original amount of P39,330,500.85 claimed by MPC for refund, the independent
auditor, SGV & Co., found only the sum of P28,745,502.40 sufficiently supported by valid
invoices and/or official receipts. Following its own examination and evaluation of the evidence
submitted, the CTA further reduced the amount refundable to P28,744,626.95 after
disallowing the input VAT on the purchase of xerox and office supplies which cannot be
capitalized and not necessary in the construction of power plant facilities.[28]
It is worth noting that the foregoing findings by the CTA were affirmed in totality by the Court
of Appeals. Likewise, this Court finds no reason to disturb the foregoing findings of the tax
court.
Another well-settled principle in this jurisdiction is that this Court is bound by the findings of
fact of the CTA. Only errors of law, and not rulings on the weight of evidence,
are reviewable by this Court. Findings of fact of the CTA are not to be disturbed unless clearly
shown to be unsupported by substantial evidence.[29] Quite the reverse, the claim of MPC for
refund of input VAT on its purchase of capital goods and services in the present case is found
to be supported by substantial evidence, not just by the CTA, but also by the Court of
Appeals. The BIR Commissioner failed to convince this Court otherwise.

IV

The BIR should seriously study and consider each

and every application for claim for refund
pending before it.

As a final point, this Court would like to call the attention of the BIR Commissioner, as well as
the responsible BIR officers, to seriously study and consider each and every application for
claim for refund filed before their office. It is very obvious to this Court that the Answer filed
by the BIR Commissioner before the Court of Appeals, which it essentially reproduced as its
Memorandum before the same court, presented general and pro forma arguments. The BIR
Commissioner only raised belatedly before the Court of Appeals the issues of whether MPC is
a public utility and whether it is subject to franchise tax and not VAT. Even then, his Petition
for Review before the appellate court, numbering only six pages, with only one page devoted
to a discussion of the merits of his Petition, left much to be desired and would hardly persuade
any court. Since he represents the interest of the government in tax cases, the BIR
Commissioner should exert more effort and exercise more diligence in preparing his pleadings
before any court; he should not wait to do so only upon appeal of his case to the higher
court. This Court may not always be inclined to allow him to remedy his past laxity.
IN VIEW OF THE FOREGOING, the instant Petition is hereby DENIED. The Decision, dated 30
July 2003, of the Court of Appeals in CA-G.R. SP No. 60783, which affirmed in toto the
Decision, dated 11 July 2000, of the CTA in CTA Case No. 5658, is hereby AFFIRMED. The BIR
Commissioner is hereby ORDERED to issue in favor of MPC a tax credit certificate in the
amount of P28,744,626.95 representing input VAT paid on

G.R. No. 197151 October 22, 2012

SM LAND, INC. (Formerly Shoemart, Inc.) and WATSONS PERSONAL CARE STORES, PHILS.,
INC.,Petitioners,
vs.
CITY OF MANILA, LIBERTY TOLEDO, in her official capacity as the City Treasurer of Manila and JOSEPH
SANTIAGO, in his official capacity as the Chief of License Division of the City of Manila, Respondents.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and set
aside the Decision1 and Resolution2 of the Court of Tax Appeals (CTA) En Banc, dated December 17, 2010 and May
27, 2011, respectively, in CTA EB No. 548. The assailed Decision affirmed the July 3, 2009 Decision3 and
September 30, 2009 Resolution4 of the CTA Second Division in CTA AC No. 51, while the questioned Resolution
denied herein petitioners' Motion for Reconsideration.

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

On the strength of the provisions of Tax Ordinance Nos. 7988 and

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

Petitioners and their sister companies paid the additional taxes under protest.

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

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

On July 10, 2007, the RTC rendered a summary judgment in favor of herein petitioners, disposing as follows:
WHEREFORE, this Court renders judgment in plaintiffs’ favor and directs the defendants to grant a refund/tax credit:

(a) To Plaintff SM Mart, Inc. –

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

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

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

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

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

(c) To Plaintiff Shoemart, Inc. –

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

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

(d) To Plaintiff Star Appliances Center –

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

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

(e) To Plaintiff Supervalue, Inc. –

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

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

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

i. The amount of P202,175.67 representing overpayment of increased local business taxes under Section
17, under the rates imposed by Ordinance Nos. 7988 and 8011, and

ii. The amount of P988,347.16 representing payment of the Section 21 tax;

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

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

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

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

i. The amount of P98,223.61 representing overpayment of increased local business taxes under Section 17,
under the rates imposed by Ordinance Nos. 7988 and 8011, and
 ii. The amount of P296,178.13 representing payment of the Section 21 tax;

(i) To Plaintiff Surplus Marketing Corporation –

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

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

(j) To Plaintiff Signature Lines –

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

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

No Costs.

SO ORDERED.6

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

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

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

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

WHEREFORE, premises considered, the instant Petition for Review is hereby PARTIALLY GRANTED. The 1âwphi 1

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

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

Petitioners filed a Motion for Partial Reconsideration.10 Attached to the said Motion was the Verification and
Certification executed by Atty. Cruz as the representative of petitioner SM Land, Inc. Also attached were petitioners'
Secretary's Certificates authorizing Atty. Cruz as their representative. The CTA Second Division, however, denied
the Motion for Partial Reconsideration in its Resolution11 dated September 30, 2009.
Aggrieved, petitioners filed a petition for review with the CTA En Banc, contending that: (1) the CTA Second Division
erred in holding that the 30-day period provided by law within which to appeal decisions of the RTC to the CTA may
be extended; and (2) the CTA Second Division committed error in denying herein petitioners' claim for tax refund on
the ground that they violated the rules on verification and certification of non-forum shopping.

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

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

Hence, the present petition anchored on the following arguments:

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

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

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

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

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

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

xxxx

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

Section 11 of Republic Act No. 9282 provides:

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

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

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

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

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

It is also true that the same provisions are silent as to whether such 30-day period can be extended or not.
However, Section 11 of Republic Act No. 9282 does state that the Petition for Review shall be filed with the CTA
following the procedure analogous to Rule 42 of the Revised

Rules of Civil Procedure. Section 1, Rule 42 of the Revised Rules of Civil Procedure provides that the Petition for
Review of an adverse judgment or final order of the RTC must be filed with the Court of Appeals within: (1) the
original 15-day period from receipt of the judgment or final order to be appealed; (2) an extended period of 15 days
from the lapse of the original period; and (3) only for the most compelling reasons, another extended period not to
exceed 15 days from the lapse of the first extended period.

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

x x x x14

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

The Court does not agree.

At the time that the CTA Second Division granted petitioners' motion for extension to file their petition for review,
Republic Act 928215 (RA 9282), which amended certain provisions of RA 1125,16 were already in effect,17 and it is
clearly provided therein that appeals from the RTC to the CTA shall follow a procedure analogous to that provided
for under Rule 42 of the Rules of Court. Rule 42 of the said Rules, in turn, provides that the court may grant an
extension of fifteen (15) days within which to file the petition for review. Thus, independent of the Coca-Cola case,
the CTA Second Division had clear statutory authority in granting petitioners' motion for extension. This Court’s
ruling in Coca-Cola is a mere clarification and affirmation of what is provided for under the provisions of RA 1125, as
amended by RA 9282.

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

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

Time and again, this Court has held that rules of procedure are established to secure substantial justice.19 Being
instruments for the speedy and efficient administration of justice, they must be used to achieve such end, not to
derail it.20 In particular, when a strict and literal application of the rules on non-forum shopping and verification will
result in a patent denial of substantial justice, these may be liberally construed.21
In the instant case, petitioner Watsons' procedural lapse was its belated submission of a Secretary's Certificate
authorizing Atty. Cruz as its representative. On the other hand, petitioner SM Land, Inc.'s infraction was not only its
late submission of its Secretary's Certificate but also its failure to timely submit its verification and certification of
non-forum shopping.

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

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

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

1) A distinction must be made between non-compliance with the requirement on or submission of defective
verification, and non-compliance with the requirement on or submission of defective certification against
forum shopping.

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

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

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

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

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

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

In the present case, there is no dispute that Tax Ordinance Nos. 7988 and 8011 have already been declared null
and void by this Court as early as 2006 in the case of Coca-Cola Bottlers Philippines, Inc. v. City of Manila.26 The
nullity of the said Tax Ordinances is affirmed in the more recent case of City of Manila v. Coca-Cola Bottlers,
Philippines, Inc.,27 as cited above. Thus, to the mind of this Court, the unquestioned nullity of the above assailed Tax
Ordinances upon which petitioners were previously taxed, makes petitioners' claim for tax refund clearly meritorious.
In fact, petitioners' sister companies, which were their co-plaintiffs in their Complaint filed with the RTC, were
granted tax refund in accordance with the judgments of the trial court, the CTA Second Division and the CTA En
Banc. On this basis, petitioners’ meritorious claims are compelling reasons to relax the rule on verification and
certification of non-forum shopping.
In any case, it would bear to point out that petitioners and their co-plaintiffs in the trial court filedtheir claim for tax
refund as a collective group, because they share a common interest and invoke a common cause of action. Hence,
the signature of the representative of the other co-plaintiffs may be considered as substantial compliance with the
rule on verification and certification of non-forum shopping, consistent with this Court's pronouncement that when all
the petitioners share a common interest and invoke a common cause of action or defense, the signature of only one
of them in the certification against forum shopping substantially complies with the rules.28

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