Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 208976               October 13, 2014

THE HONORABLE OFFICE OF THE OMBUDSMAN, Petitioner, 

vs.
LEOVIGILDO DELOS REYES, JR. Respondent.

RESOLUTION

LEONEN, J.:

This resolves the petition for review on certiorari under Rule 45 of the Rules of Court,
assailing the Court of Appeals' decision  dated March 1, 2013, which set aside the Office of
1

the Ombudsman's decision and order in OMB-C-A-04-0309-G finding respondent Leovigildo

Delos Reyes, Jr. guilty of grave misconduct and gross neglect of duty,  and order dated
2

August 29, 2013, which denied petitioner Office of the Ombudsman's motion for
reconsideration.

The facts as summarized by the Court of Appeals are as follows:

To generate more funds in linewith its mandate, the Philippine Charity Sweepstakes Office
(PCSO) maintains On-line Lottery Terminals in its main office and in provincial district offices.
The Marketing and On-line Division of PCSO’s Central Operations Department (COD)
manages the terminals in the main office under Agency Number 14-5005-1.  Respondent
3

Leovigildo Delos Reyes, Jr. (Delos Reyes) served as the COD Division Chief. 4

On June 13, 2001, PCSO auditorssubmitted a consolidated report based on a surprise audit
conducted on June 5, 2001.  The auditors found that the cash and cash items under Delos
5

Reyes’ control were in order.  However, the auditors recommended thatthe lotto proceeds be
6

deposited in a bank the next working day instead of Delos Reyes keeping the lotto sales and
proceeds in a safe inside his office. 7

On June 5, 2002, COD Manager Josefina Lao instructed OIC Division Chief of the Liaison
and Accounts Management Division Teresa Nucup (Nucup) to conduct an account validation
and verification to reconcile accounts due to substantial outstanding balances as of May 31,
2002.  On August 16, 2002, Nucup reported that Agency No. 14-5005-1 had unremitted
8

collections in the amount of ₱428,349.00 from May 21, 2001 to June 3, 2001.  The amount
9

was subsequently reduced to ₱387,879.00 excluding penalties. 10

Nucup also found that "there was a deliberate delay in the submission of the periodic sales
report; that the partial remittance of total sales were made to cover previous collections; and
that the unremitted collections were attributed to Cesar Lara, Cynthia Roldan, Catalino
Alexandre Galang, Jr., who were all employed by [PCSO] as Lottery Operations Assistants
II, and Elizabeth Driz, the Assistant Division Chief." 11
After conducting its own investigation, the PCSO Legal Department recommended filing
formal charges against Delos Reyes and Elizabeth Driz (Driz) for dishonesty and gross
neglect of duty. The PCSO Legal Department found that the Lottery Operations Assistants
turned over the lotto proceeds and lotto ticket sales reports to Delos Reyes as the Division
Chief. In case of his absence, the proceeds and reports were turned over to Driz.  Driz would
12

then deposit the proceeds in the bank. If both Delos Reyes and Driz were absent, the
proceeds would be placed in the vault under Delos Reyes’ control and deposited the next
banking day. 13

On May 14, 2003, formal charges were filed against Delos Reyes and Driz, with the cases
docketed as Administrative Case Nos. 03-01 and 03-02, respectively.  Delos Reyes and Driz
14

were preventively suspended for 90 days. 15

On June 8, 2004, PCSO filed an affidavit-complaint with the Office of the

Ombudsman.  Delos Reyes and Driz were criminally charged with malversation of public
16

funds or property under Article 217 of the Revised Penal Code, and administratively charged
with dishonesty and gross neglect of duty under Section 46(b)(1) and (3) of Book V of
Executive Order No. 292. 17

After the submission of the parties’ pleadings, the Office of the Ombudsman rendered the
decision dated June 10, 2006 in OMB-C-A-04-0309-G finding Delos Reyes and Driz guilty of
grave misconduct and gross neglect of duty, and ordering their dismissal from service. The
dispositive portion of the decision reads:

WHEREFORE, premises considered, respondents, Leovigildo T. Delos Reyes, Jr. and

Elizabeth G. Driz, are found guilty for Grave Misconduct and Gross Neglect of Duty, and are
thus imposed the penalty of DISMISSAL from the service, including all the accessory
penalties of, cancellation of eligibility, forfeitureof leave credits and retirement benefits, and
disqualification for reemployment in the government service.

The complaint for Dishonesty filed against the respondent is however Dismissed for
insufficiency of evidence.

The Honorable Rosario Uriarte, Chairman and General Manager of the Philippine Charity
Sweepstakes Office, is hereby directed to implement immediately thisdecision pursuant to
Memorandum Circular No. 01, Series of 2006.

SO ORDERED. 18

Delos Reyes’ partial motion for reconsideration was denied on November 15, 2007.  He then 19

filed before the Court of Appeals a petition for certiorari docketed as CA-G.R. SP No. 117683
under Rule 65 of the Rules of Court.

On March 1, 2013, the Court of Appeals granted the petition and reversed and set aside the
Office of the Ombudsman’s decision and resolution, thus:

WHEREFORE, the petition is GRANTED and the assailed June 10, 2006 Decision and
November 15, 2007 Order, finding petitioner Leovigildo T. Delos Reyes, Jr. guilty of grave
misconduct and gross neglect of duty, are REVERSED and SET ASIDE. The Philippine
Charity Sweepstakes Office (PCSO) is ordered to REINSTATE petitioner as Chief of the
Marketing and On-Line Division, Central Operations Department (COD) of the PCSO, with
full backwages, retirement benefits and emoluments, and without diminution as to his
seniority rights from the time of his dismissal from office until his reinstatement.

SO ORDERED. 20

According to the Court of Appeals, the Office of the Ombudsman disregarded the PCSO’s
findings asto Delos Reyes’ liability for grave misconduct and gross neglect of duty.  The
21

Office of the Ombudsman failed to prove Delos Reyes’ guilt with substantial evidence, and
the ruling must be overturned. The Court of Appeals found that it was Driz who had the
specific duty to prepare and consolidate the sales reports and to remit the proceeds to the
bank.22

The Court of Appeals relied on PCSO’s position paper before the Office of the Ombudsman,
which stated that Driz’s manipulation of the lotto sales reports exonerates Delos Reyes from
liability.  The Court of Appeals also gave weight to PCSO’s assertion that he had no means
23

of verifying the reports submitted to him by Driz, absent the final accounting report of another
division, the Liaison and Accounts Management Division. 24

The Court of Appeals further held that:

Generally, the Court will not interfere with the investigatory and prosecutorial powers of the
Ombudsman, so long as the rulings are supported by substantial evidence. For the Court to
overturn the Ombudsman’s finding, it is imperative to clearly prove that the Ombudsman
acted with grave abuse of discretion. Grave abuse of discretion refers not merely to palpable
errors of jurisdiction, or to violations of the Constitution, the law and jurisprudence, it refers
also to cases in which, for various reasons, there has been a gross misapprehension of
facts.  (Citations and original emphasis omitted)
25

The Office of the Ombudsman and PCSO filed their respective motions for
reconsideration.  These were denied by the Court of Appeals in its resolution dated August
26

29, 2013. 27

On October 29, 2013, the Office of the Ombudsman, through the Office of the Solicitor
General, filed the present petition for review on certiorari. In the resolution dated January 22,
2014, we required Delos Reyes to comment on the petition. 28

On April 21, 2014, we noted Delos Reyes’ comment dated March 10, 2014 and required the
Office of the Ombudsman to submit its reply.  However, it submitted a manifestation and
29

motion instead.

The manifestation and motion dated June 16, 2014, filed by the Office of the Solicitor
General, prayed thatthis court adopt the Office of the Ombudsman’s petition for review on
certiorari as its reply to Delos Reyes’ comment. This was because the comment did not raise
any new matter which must be controverted. 30

The manifestation and motion was noted and granted in this court’s resolution dated July 9,
2014. 31

The issues to be resolved in thiscase are: (1) whether the Court of Appeals erred in taking
cognizance of the petition for certiorari under Rule 65 of the Rules of Court despite
availability of the remedy under Rule 43 of the Rules of Court; and (2) whether the Court of
Appeals erred in holding that the Office of the Ombudsman committed gross
misapprehension of facts in finding that substantial evidence exists for the administrative
charge of grave misconduct and gross neglect of duty.

Petitioner argued that the petition for certiorari under Rule 65 of the Rules of Court was the
wrong remedy to assail the Office of the Ombudsman’s decision before the Court of
Appeals.  The proper remedy is a petition for review under Rule 43 of the Rules of Court. In
32

any case, the petition was already filed out of time.  A petition for certiorari is not a substitute
33

for a lost appeal. 34

The Court of Appeals also erred in ruling that the Office of the Ombudsman committed gross
misapprehension of facts despite lack of proof of grave abuse of discretion on the part of the
Office of the Ombudsman.  There was substantial evidence to justify the finding of gross
35

misconduct and gross neglect of duty.  Misappreciation of facts or evidence is not equivalent
36

to a finding of grave abuse of discretion. 37

Moreover, citing Section 27 of Republic Act No. 6770, petitioner argued that "findings of fact
of the Ombudsman are conclusive when supported by substantial evidence." 38

In his comment  dated March 10, 2014, respondent relied on the PCSO’s acknowledgement
39

that it was Driz who was solely liable for the missing lotto proceeds. He argued that "Driz
was manipulating the bank deposit slips as against her daily sales report to cover her lapping
activities without the knowledge or participation of [respondent]." 40

Respondent assailed the Office ofthe Ombudsman’s argument that respondent had the
obligation to ensure Driz’s deposit of the daily lotto sales proceeds to the bank.  As 41

established from the proceedings before the PCSO up to the Court of Appeals, the task of
depositing the proceeds falls squarely on Driz based on her job description. 42

Respondent summarized facts that belie the Office of the Ombudsman’s finding of guilt for
grave misconduct, hence:

(1) Driz made the lapping of funds in a clandestine manner and respondent Delos Reyes had
no means to make the necessary precautionary measures or restorative measures to avoid
the misappropriation of funds, (2) there were no clear-cut guidelines by which Delos Reyes’
actions can be measured against to determine whether his acts were of such nature to
render it a grave misconduct or gross neglect of duty, and (3) it was impossible to pinpoint
the lapping of funds based on Delos Reyes’ functions, the latter cannot be held guilty of
simple misconduct, more so, of grave misconduct[.] 43

Likewise, respondent cannot be held liable for gross neglect of duty. Respondent faithfully
discharged his duties as certified in the Commission on Audit auditor’s report finding the
cash and cash items under respondent’s control to be in order.  There was never a flagrant
44

culpable refusal to perform a duty on respondent’s part. 45

Respondent added that "[c]onsidering . . . PCSO, the very institution that initiated this case,
sought to exculpate the respondent from the administrative charges filed against him
indicates that there are compelling reasons for this Honorable Court to review the flawed
decisions of the Honorable Office of the Ombudsman." 46
Furthermore, respondent averred thathe has served the PCSO with a clean record for 27
years, with him starting as a young clerk to support himself in college.  The wrongful actions
47

of a "scheming subordinate"  resulted in his termination from service and tarnished his and
48

his family’s reputation.  He asked that justice be given and his innocence proven.
49 50

We grant the petition.

At the outset, we note that the Court of Appeals initially dismissed the petition for certiorari
under Rule 65 filed by respondent to assail the Office of the Ombudsman’s decision dated
June 10, 2006 in OMB-C-A-04-0309-G.  The Court of Appeals, however, reinstated the case
51

"in the interest of substantial justice and in order to afford the parties the amplest opportunity
for the proper and just disposition of their cause." 52

It is settled that appeals from decisions of the Office of the Ombudsman in administrative
disciplinary cases should be appealed to the Court of Appeals under Rule43 of the Rules of
Court.  Indeed, certiorari lies to assail the Office of the Ombudsman’s decision when there is
53

allegation of grave abuse of discretion.  Grave abuse of discretion involves a "capricious and
54

whimsical exercise of judgment tantamount to lack of jurisdiction."  It must be shown that the
55

Office of the Ombudsman exercised its power "in an arbitrary or despotic manner — which
must be so patent and gross as to amount to an evasion of a positive duty or a virtual refusal
to perform the duty enjoined or to act at all in contemplation of law — in order to
exceptionally warrant judicial intervention." 56

The prevailing view is that the remedy of certiorari from an unfavorable decision or resolution
of the Office of the Ombudsman is available only in the following situations: a) in
administrative cases that have become final and unappealable where respondent is
exonerated or where respondent is convicted and the penalty imposed is public censure or
reprimand, suspension of not more than one month, or a fine equivalent to a one-month
salary; and b) in criminalcases involving the Office of the Ombudsman’s determination of
probable cause during preliminary investigation. 57

Furthermore, the writ of certiorari is an extraordinary remedy and is only granted when "there
is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law. . . ." 58

In Balbastro v. Junio,  this court held that certiorari is not a substitute for a lost appeal.
59

Verily, a petition for review under Rule 43 of the Rules of Court was already proscribed for
being filed beyond the reglementary period, thus:

Appeals from decisions in administrative disciplinary cases of the Office of the Ombudsman
should be taken to the CA by way of petition for review under Rule 43 of the 1997 Rules of
Civil Procedure, as amended. Rule 43 which prescribes the manner of appeal from quasi
judicial agencies, such as the Ombudsman, was formulated precisely to provide for a uniform
rule of appellate procedure for quasi-judicial agencies. Thus, certiorari under Rule 65 will not
lie, as appeal under Rule 43 is an adequate remedy in the ordinary course of law.

Petitioner failed to file an appeal with the CA within fifteen days from notice of the assailed
decision. As noted by the CA, she filed her petition for certiorari only after 52 days from
receiving the denial of her motion for reconsideration by the Ombudsman. Such remedy
cannot prosper as certiorari under Rule 65 cannot be resorted to as a substitute for the lost
remedy of appeal. The remedies of appeal and certiorariare mutually exclusive and not
alternative or successive.  (Citations omitted)
60
In this case, the remedy of an appealvia Rule 43 of the Rules of Court was available to
respondent; however, he still opted to file a petition for certiorari in complete disregard of the
rules. The rules and jurisprudence necessitated the dismissal of the petition before the Court
of Appeals. In addition, the petition for certiorari was filed 60 days from the receipt of the
copy of the denial of respondent’s motion for reconsideration, which was beyond the 15-day
period to file an appeal provided in the rules. Liberal application of the rules cannot be
invoked to justify a flagrant disregard of the rules of procedure. 61

The Court of Appeals, thus, erred in granting respondent’s petition for certiorari.

On the issue of the Office of the Ombudsman’s gross misapprehension of facts in finding that
substantial evidence exists for the administrative charge of grave misconduct and gross
neglect of duty, we hold that the Court of Appeals committed reversible error in reversing and
setting aside the Office of the Ombudsman’s findings and decision.

It is settled that "[f]indings of fact by the Office of the Ombudsman when supported by
substantial evidence are conclusive."  Substantial evidence is defined as "such relevant
62

evidence which a reasonable mind may accept as adequate to support a conclusion."  We 63

reiterate that only arbitrariness will warrant judicial intervention of the Office of the
Ombudsman’s findings. 64

The records reveal that petitioner did not commit grave abuse of discretion in rendering its
assailed decision in OMB-C-A-04-0309-G.

Misconduct has been defined as a "transgression of some established and definite rule of
action, more particularly, unlawful behavior or gross negligence by a public officer. The
misconduct is grave if it involves any of the additional elements of corruption, willful intent to
violate the law or disregard of established rules, which must be proved by substantial
evidence." 65

Meanwhile, gross neglect of duty is:

"[N]egligence characterized by the want of even slight care, or by acting or omitting to act in
a situation where there is a duty to act, not inadvertently but wilfully and intentionally, with a
conscious indifference to the consequences, insofar as other persons may be affected. It is
the omission of that care that even inattentive and thoughtless men never fail to giveto their
own property." It denotes a flagrant and culpable refusal or unwillingness of a person to
perform a duty. In cases involving public officials, gross negligence occurs when a breach
ofduty is flagrant and palpable.  (Citations omitted)
66

To establish respondent’s liability for grave misconduct and gross neglect of duty, the Office
of the Ombudsman found that:

. . . both the respondents [have] the authority to receive daily remittances from the
tellers.  But all must be handed to respondent Delos Reyes, Jr. for the reconciliation of the
1âwphi1

dailyreports and the proceeds remitted. . . . [Driz] cannot [deposit the proceeds] without the
authority and/or approval of her chief and supervisor, respondent Delos Reyes, Jr.

. . . . As far as Delos Reyes, Jr. is [concerned], he not only has the obligation of monitoring,
checking and reconciling lotto sales proceeds with the reports of the tellers, but is likewise
responsible for seeing to the prompt deposits of these proceeds, he being the chief of the
Marketing and On-Line Division and the supervisor of the remitting tellers of the Main
Office. . . . The procedure is quite simple. To safeguard the proceeds of the daily lotto sales,
prompt deposit to the agency’s bank must be made. Yet, they failed to fulfill the same . . .
and despite COA’s recommendation to deposit it immediately to a bank, the respondents
failed to heed the same, in apparent and wanton disregard of their lawful duty.  (Emphasis
67

supplied)

Furthermore, as argued by petitioner,respondent’s liability is shown in the following:

First, the Ombudsman investigation revealed that the Commission on Audit, in a

Memorandum dated June 13, 2011, submitted a consolidated report recommending that the
proceeds of the lotto sales for June 1 to 4, 2001 . . . be deposited promptly in a bank to avoid
any untoward incident.It was respondent’s failure to heed COA’s advice to promptly deposit
the amount found in the vault that caused the loss of the subject amount of ₱387,879.00.

Second, the said vault in which the lost money was kept is subject to the control and custody
of the respondent Leovigildo Delos Reyes, Jr.

Third, based on his Performance and Evaluation System, it is the duty of respondent Delos
Reyes to monitor, check, and reconcile reports and daily remittances of lotto sales submitted
by the tellers assigned at the Main Office (wherethe subject unremitted collections
originated) and San Marcelino Outlets. Clearly, he is accountable for the proceeds of the
lotto sales in said outlets.

Fourth, while it is the duty of Elizabeth Driz to deposit the said amount, it is her defense that
said deposit must be made with the authority of respondent Delos Reyes, and any
remittances or deposits made without his approval is considered unauthorized. It would thus
be improbable for Driz to have misappropriated the amount without the connivance of
respondent Delos Reyes.  (Emphasis supplied)
68

In administrative cases, it is sufficient that "there is reasonable ground to believe that the
petitioner is guilty of the act or omission complained of, even if the evidence might not be
overwhelming." 69

In this case, we find respondent guilty of both grave misconduct and gross neglect of
duty.  There is substantial evidence supporting the Office of the Ombudsman’s finding that
1âwphi1

respondent intentionally failed to act on his duty with a conscious indifference to the
consequences. The alleged lack of specific internal control procedures does not sway this
court.

It is undisputed that as Chief of the Marketing and On-Line Division of the COD, respondent
was accountable for the vault and the lotto proceeds placed inside it. As the Division
Chief,respondent had the duty to monitor, check, and reconcile the reports of the daily lotto
proceeds. It is true that it was not his job to personally deposit the lotto proceeds with the
bank, as this fell under Driz’s responsibility. However, it was incumbent upon respondent to
ensure that the lotto proceeds deposited in the bank correspond to the reports submitted to
him and that the proceeds are deposited promptly.

Despite such duty, respondent willfully ignored the auditor’s recommendations for prompt
deposit ofthe lotto sales proceeds. He disregarded his duty of overseeing the deposit of the
proceeds and wholly relied on Driz’s representations. Respondent’s act constitutes gross
neglect of duty. Similarly, records show that petitioner adduced substantial evidence to show
how respondent flagrantly disregarded the rules and acted with a willful intent to violate the
law, thus, amounting to grave misconduct. The Office of the Ombudsman’s investigation
revealed that all of the daily lotto remittances went through the hands of respondent. It also
found that respondent’s authorization and/or approval was required before Driz could deposit
the daily lotto proceeds. Driz’s alleged manipulation of the bank deposit slips and lapping of
funds could not have been missed by respondent had he performed his duties. Respondent
could have easily discovered the lapping of funds if he had checked the deposit records with
Driz vis-à-vis the reports and lotto sales proceeds he had allegedly reconciled upon turn-over
of the tellers to him.

This court’s ruling in Arias v. Sandiganbayan,  that heads of offices may rely to a certain
70

extent on their subordinates, will not exonerate respondent in this case. As held in Cesa v.
Office of the Ombudsman,  when there are facts that point to an irregularity and the officer
71

failed to take steps to rectify it, even tolerating it, the Arias doctrine is inapplicable.
72

Grave misconduct is punished by dismissal from the service, even for the first
offense.  Likewise, gross neglect of duty merits dismissal from the service.
73 74

In sum, the Court of Appeals erred when it failed to show how the Office of the Ombudsman
committed grave abuse of discretion in rendering the contested decision and order despite
the presence of substantial evidence.

WHEREFORE, the petition is GRANTED. The Court of Appeals' decision dated March 1,
2013 and resolution dated August 29, 2013 are REVERSED and SET ASIDE. The Office of
the Ombudsman's decision dated June 10, 2006 and order dated November 15, 2007 are
REINSTATED. Respondent Leovigildo Delos Reyes, Jr. is DISMISSED from service, which
includes the accessory penalties of cancellation of eligibility, forfeiture of leave credits · and
retirement benefits, and disqualification for re-employment in the government service.

SO ORDERED.

MARVIC M.V.F. LEONEN

Associate Justice
 SECOND DIVISION
G.R. No. 187061, October 08, 2014
CELERINA J. SANTOS, Petitioner, v. RICARDO T.
SANTOS, Respondent.
DECISION
LEONEN, J.:
The proper remedy for a judicial declaration of presumptive
death obtained by extrinsic fraud is an action to annul the
judgment. An affidavit of reappearance is not the proper
remedy when the person declared presumptively dead has
never been absent.

This is a petition for review on certiorari filed by Celerina J.

Santos, assailing the Court of Appeals' resolutions dated
November 28, 2008 and March 5, 2009. The Court of
Appeals dismissed the petition for the annulment of the trial
court's judgment declaring her presumptively dead.

On July 27, 2007, the Regional Trial Court of Tarlac City

declared petitioner Celerina J. Santos (Celerina)
presumptively dead after her husband, respondent Ricardo
T. Santos (Ricardo), had filed a petition for declaration of
absence or presumptive death for the purpose of remarriage
on  June 15, 2007.1 Ricardo remarried on September 17,
2008.2chanrobleslaw

In his petition for declaration of absence or presumptive

death, Ricardo alleged that he and Celerina rented an
apartment somewhere in San Juan, Metro Manila; after they
had gotten married on June 18, 1980.3 After a year, they
moved to Tarlac City. They were engaged in the buy and sell
business.4 chanrobleslaw
Ricardo claimed that their business did not prosper. 5 As a
result, Celerina convinced him to allow her to work as a
domestic helper in Hong Kong.6 Ricardo initially refused but
because of Celerina's insistence, he allowed her to work
abroad.7 She allegedly applied in an employment agency in
Ermita, Manila, in February 1995. She left Tarlac two months
after and was never heard from again.8 chanrobleslaw

Ricardo further alleged that he exerted efforts to locate

Celerina.9 He went to Celerina's parents in Cubao, Quezon
City, but they, too, did not know their daughter's
whereabouts.10 He also inquired about her from other
relatives and friends, but no one gave him any
information.11chanrobleslaw

Ricardo claimed that it was almost 12 years from the date of

his Regional Trial Court petition since Celerina left.  He
believed that she had passed away.12 chanrobleslaw

Celerina claimed that she learned about Ricardo's petition

only sometime in October 2008 when she could no longer
avail the remedies of new trial, appeal, petition for relief, or
other appropriate remedies.13 chanrobleslaw

On November 17, 2008, Celerina filed a petition for

annulment of judgment14 before the Court of Appeals on the
grounds of extrinsic fraud and lack of jurisdiction. She
argued that she was deprived her day in court when Ricardo,
despite his knowledge of her true residence, misrepresented
to the court that she was a resident of Tarlac City.15
According to Celerina, her true residence was in Neptune
Extension, Congressional Avenue, Quezon City. 16 This
residence had been her and Ricardo's conjugal dwelling since
1989 until Ricardo left in May 2008.17 As a result of Ricardo's
misrepresentation, she was deprived of any notice of and
opportunity to oppose the petition declaring her
presumptively dead.18 chanrobleslaw

Celerina claimed that she never resided in Tarlac.  She also

never left and worked as a domestic helper abroad.20 Neither
did she go to an employment agency in February 1995.21
She also claimed that it was not true that she had been
absent for 12 years. Ricardo was aware that she never left
their conjugal dwelling in Quezon City.22 It was he who left
the conjugal dwelling in May 2008 to cohabit with another
woman.23 Celerina referred to a joint affidavit executed by
their children to support her contention that Ricardo made
false allegations in his petition.24 chanrobleslaw

Celerina also argued that the court did not acquire

jurisdiction over Ricardo's petition because it had never been
published in a newspaper.25 She added that the Office of the
Solicitor General and the Provincial Prosecutor's Office were
not furnished copies of Ricardo's petition. 26 chanrobleslaw

The Court of Appeals issued the resolution dated November

28, 2008, dismissing Celerina's petition for annulment of
judgment for being a wrong mode of remedy.27 According to
the Court of Appeals, the proper remedy was to file a sworn
statement before the civil registry, declaring her
reappearance in accordance with Article 42 of the Family
Code.28chanrobleslaw

Celerina filed a motion for reconsideration of the Court of

Appeals' resolution dated November 28, 2008.29 The Court of
Appeals denied the motion for reconsideration in the
resolution dated March 5, 2009.30 chanrobleslaw

Hence, this petition was filed.

The issue for resolution is whether the Court of Appeals

erred in dismissing Celerina's petition for annulment of
judgment for being a wrong remedy for a fraudulently
obtained judgment declaring presumptive death.

Celerina argued that filing an affidavit of reappearance

under Article 42 of the Family Code is appropriate only when
the spouse is actually absent and the spouse seeking the
declaration of presumptive death actually has a well-founded
belief of the spouse's death.31 She added that it would be
inappropriate to file an affidavit of reappearance if she did
not disappear in the first place.32 She insisted that an action
for annulment of judgment is proper when the declaration of
presumptive death is obtained fraudulently.33 chanrobleslaw

Celerina further argued that filing an affidavit of

reappearance under Article 42 of the Family Code would not
be a sufficient remedy because it would not nullify the legal
effects of the judgment declaring her presumptive death.34 chanrobleslaw

In Ricardo's comment,35 he argued that a petition for

annulment of judgment is not the proper remedy because it
cannot be availed when there are other remedies available.
Celerina could always file an affidavit of reappearance to
terminate the subsequent marriage. Ricardo iterated the
Court of Appeals' ruling that the remedy afforded to Celerina
under Article 42 of the Family Code is the appropriate
remedy.

The petition is meritorious.

Annulment of judgment is the remedy when the Regional

Trial Court's judgment, order, or resolution has become
final, and the "remedies of new trial, appeal, petition for
relief (or other appropriate remedies) are no longer available
through no fault of the petitioner."36chanrobleslaw

The grounds for annulment of judgment are extrinsic fraud

and lack of jurisdiction.37 This court defined extrinsic fraud in
Stilianopulos v. City of Legaspi:38 chanrobleslaw

For fraud to become a basis for annulment of judgment, it

has to be extrinsic or actual. It is intrinsic when the
fraudulent acts pertain to an issue involved in the original
action or where the acts constituting the fraud were or could
have been litigated, It is extrinsic or collateral when a
litigant commits acts outside of the trial which prevents a
parly from having a real contest, or from presenting all of
his case, such that there is no fair submission of the
controversy.39 (Emphasis supplied)

Celerina alleged in her petition for annulment of judgment

that there was fraud when Ricardo deliberately made false
allegations in the court with respect to her residence. 40
Ricardo also falsely claimed that she was absent for 12
years. There was also no publication of the notice of hearing
of Ricardo's petition in a newspaper of general circulation. 41
Celerina claimed that because of these, she was deprived of
notice and opportunity to oppose Ricardo's petition to
declare her presumptively dead.42 chanrobleslaw

Celerina alleged that all the facts supporting Ricardo's

petition for declaration of presumptive death were false. 43
Celerina further claimed that the court did not acquire
jurisdiction because the Office of the Solicitor General and
the Provincial Prosecutor's Office were not given copies of
Ricardo's petition.44
chanrobleslaw

These are allegations of extrinsic fraud and lack of

jurisdiction. Celerina alleged in her petition with the Court of
Appeals sufficient ground/s for annulment of judgment.

Celerina filed her petition for annulment of judgment45 on

November 17, 2008. This was less than two years from the
July 27, 2007 decision declaring her presumptively dead and
about a month from her discovery of the decision in October
2008. The petition was, therefore, filed within the four-year
period allowed by law in case of extrinsic fraud, and before
the action is barred by laches, which is the period allowed in
case of lack of jurisdiction.46
chanrobleslaw

There was also no other sufficient remedy available to

Celerina at the time of her discovery of the fraud
perpetrated on her.

The choice of remedy is important because remedies carry

with them certain admissions, presumptions, and conditions.

The Family Code provides that it is the proof of absence of a

spouse for four consecutive years, coupled with a well-
founded belief by the present spouse that the absent spouse
is already dead, that constitutes a justification for a second
marriage during the subsistence of another marriage. 47 chanrobleslaw

The Family Code also provides that the second marriage is in

danger of being terminated by the presumptively dead
spouse when he or she reappears. Thus: chanRoblesvirtualLawlibrary

Article 42. The subsequent marriage referred to in the

preceding Article shall be automatically terminated by the
recording of the affidavit of reappearance of the absent
spouse, unless there is a judgment annulling the previous
marriage or declaring it void ab initio.

A sworn statement of the fact and circumstances of

reappearance shall be recorded in the civil registry of the
residence of the parties to the subsequent marriage at the
instance of any interested person, with due notice to the
spouses of the subsequent marriage and without prejudice
to the fact of reappearance being judicially determined in
case such fact is disputed. (Emphasis supplied)

In other words, the Family Code provides the presumptively

dead spouse with the remedy of terminating the subsequent
marriage by mere reappearance.
The filing of an affidavit of reappearance is an admission on
the part of the first spouse that his or her marriage to the
present spouse was terminated when he or she was declared
absent or presumptively dead.

Moreover, a close reading of the entire Article 42 reveals

that the termination of the subsequent marriage by
reappearance is subject to several conditions: (1) the non-
existence of a judgment annulling the previous marriage or
declaring it void ab initio; (2) recording in the civil registry
of the residence of the parties to the subsequent marriage of
the sworn statement of fact and circumstances of
reappearance; (3) due notice to the spouses of the
subsequent marriage of the fact of reappearance; and (4)
the fact of reappearance must either be undisputed or
judicially determined.

The existence of these conditions means that reappearance

does not always immediately cause the subsequent
marriage's termination.  Reappearance of the absent or
presumptively dead spouse will cause the termination of the
subsequent marriage only when all the conditions
enumerated in the Family Code are present.

Hence, the subsequent marriage may still subsist despite the

absent or presumptively dead spouse's reappearance (1) if
the first marriage has already been annulled or has been
declared a nullity; (2) if the sworn statement of the
reappearance is not recorded in the civil registry of the
subsequent spouses' residence; (3) if there is no notice to
the subsequent spouses; or (4) if the fact of reappearance is
disputed in the proper courts of law, and no judgment is yet
rendered confirming, such fact of reappearance.

When subsequent marriages are contracted after a judicial

declaration of presumptive death, a presumption arises that
the first spouse is already dead and that the second
marriage is legal. This presumption should prevail over the
continuance of the marital relations with the first spouse.48
The second marriage, as with all marriages, is presumed
valid.49 The burden of proof to show that the first marriage
was not properly dissolved rests on the person assailing the
validity of the second marriage.50 chanrobleslaw

This court recognized the conditional nature of reappearance

as a cause for terminating the subsequent marriage in Social
Security System v. Vda. de Bailon.51 This court noted52 that
mere reappearance will not terminate the subsequent
marriage even if the parties to the subsequent marriage
were notified if there was "no step . . . taken to terminate
the subsequent marriage, either by [filing an] affidavit [of
reappearance] or by court action[.]"53 "Since the second
marriage has been contracted because of a presumption that
the former spouse is dead, such presumption continues
inspite of the spouse's physical reappearance, and by fiction
of law, he or she must still be regarded as legally an
absentee until the subsequent marriage is terminated as
provided by law."54chanrobleslaw

The choice of the proper remedy is also important for

purposes of determining the status of the second marriage
and the liabilities of the spouse who, in bad faith, claimed
that the other spouse was absent.

A second marriage is bigamous while the first subsists. 

However, a bigamous subsequent marriage may be
considered valid when the following are present: chanRoblesvirtualLawlibrary

1 The prior spouse had been absent for four consecutive

) years;
2 The spouse present has a well-founded belief that the
) absent spouse was already dead;
3 There must be a summary proceeding for the declaration
) of presumptive death of the absent spouse; and
4 There is a court declaration of presumptive death of the
) absent spouse.55

A subsequent marriage contracted in bad faith, even if it was

contracted after a court declaration of presumptive death,
lacks the requirement of a well-founded belief56 that the
spouse is already dead. The first marriage will not be
considered as. validly terminated. Marriages contracted prior
to the valid termination of a subsisting marriage are
generally considered bigamous and void.57 Only a
subsequent marriage contracted in good faith is protected by
law.

Therefore, the party who contracted the subsequent

marriage in bad faith is also not immune from an action to
declare his subsequent marriage void for being bigamous.
The prohibition against marriage during the subsistence of
another marriage still applies.58
chanrobleslaw

If, as Celerina contends, Ricardo was in bad faith when he

filed his petition to declare her presumptively dead and
when he contracted the subsequent marriage, such marriage
would be considered void for being bigamous under Article
35(4) of the Family Code. This is because the circumstances
lack the element of "well-founded belief under Article 41 of
the Family Code, which is essential for the exception to the
rule against bigamous marriages to apply.59 chanrobleslaw

The provision on reappearance in the Family Code as a

remedy to effect the termination of the subsequent marriage
does not preclude the spouse who was declared
presumptively dead from availing other remedies existing in
law. This court had, in fact, recognized that a subsequent
marriage may also be terminated by filing "an action in court
to prove the reappearance of the absentee and obtain a
declaration of dissolution or termination of the subsequent
marriage."60chanrobleslaw

Celerina does not admit to have been absent. She also seeks
not merely the termination of the subsequent marriage but
also the nullification of its effects. She contends that
reappearance is not a sufficient remedy because it will only
terminate the subsequent marriage but not nullify the
effects of the declaration of her presumptive death and the
subsequent marriage.

Celerina is correct. Since an undisturbed subsequent

marriage under Article 42 of the Family Code is valid until
terminated, the "children of such marriage shall be
considered legitimate, and the property relations of the
spouse[s] in such marriage will be the same as in valid
marriages."61 If it is terminated by mere reappearance, the
children of the subsequent marriage conceived before the
termination shall still be considered legitimate. 62 Moreover, a
judgment declaring presumptive death is a defense against
prosecution for bigamy.63 chanrobleslaw

It is true that in most cases, an action to declare the nullity

of the subsequent marriage may nullify the effects of the
subsequent marriage, specifically, in relation to the status of
children and the prospect of prosecuting a respondent for
bigamy.

However, "a Petition for Declaration of Absolute Nullity of

Void Marriages may be filed solely by the husband or
wife."64  This means that even if Celerina is a real party in
interest who stands to be benefited or injured by the
outcome of an action to nullify the second marriage, 65 this
remedy is not available to her.

Therefore, for the purpose of not only terminating the

subsequent marriage but also of nullifying the effects of the
declaration of presumptive death and the subsequent
marriage, mere filing of an affidavit of reappearance would
not suffice. Celerina's choice to file an action for annulment
of judgment will, therefore, lie.
WHEREFORE, the case is REMANDED to the Court of
Appeals for determination of the existence of extrinsic fraud,
grounds for nullity/annulment of the first marriage, and the
merits of the petition.

SO ORDERED. cralawlawlibrary

Carpio, (Chairperson), Del Castillo,  Mendoza, and Perlas-

Bernabe,* JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 175507               October 8, 2014

RAMON CHING AND POWING PROPERTIES, INC., Petitioners, 

vs.
JOSEPH CHENG, JAIME CHENG, MERCEDES IGNE  AND LUCINA 1

SANTOS, Respondents.

DECISION

LEONEN, J.:

Rule 17 of the Rules of Civil Procedure governs dismissals of actions at the instance of the
plaintiff. Hence, the "two-dismissal rule" under Rule 17, Section 1 of the Rules of Civil
Procedure will not apply if the prior dismissal was done at the instance of the defendant.

This is a petition for review on certiorari assailing the decision  and resolution  of the Court of
2 3

Appeals in CA-G.R. SP. No. 86818, which upheld the (1) order  dated November 22, 2002
4

dismissing Civil Case No. 02-103319 without prejudice, and (2) the omnibus order  dated 5

July 30, 2004, which denied petitioners’ motion for reconsideration. Both orders were issued
by the Regional Trial Court of Manila, Branch 6. 6

The issues before this court are procedural. However, the factual antecedents in this case,
which stemmed from a complicated family feud, must be stated to give context to its
procedural development.

It is alleged that Antonio Ching owned several businesses and properties, among which was
Po Wing Properties, Incorporated (Po Wing Properties).  His total assets are alleged to have
7

been worth more than 380 million.  It is also alleged that whilehe was unmarried, he had
8

children from two women. 9

Ramon Ching alleged that he was the only child of Antonio Ching with his common-law wife,
Lucina Santos.  She, however, disputed this. She maintains that even ifRamon Ching’s birth
10

certificate indicates that he was Antonio Ching’s illegitimate child, she and Antonio Ching
merely adopted him and treated him like their own. 11

Joseph Cheng and Jaime Cheng, on the other hand, claim to be Antonio Ching’s illegitimate
children with his housemaid, Mercedes Igne.  While Ramon Ching disputed this,  both
12 13

Mercedes and Lucina have not. 14

Lucina Santos alleged that when Antonio Ching fell ill sometime in 1996, he entrusted her
with the distribution of his estate to his heirs if something were to happen to him. She alleged
that she handed all the property titles and business documents to Ramon Ching for
safekeeping.  Fortunately, Antonio Ching recovered from illness and allegedly demanded
15

that Ramon Ching return all the titles to the properties and business documents. 16

On July 18, 1996, Antonio Ching was murdered.  Ramon Ching allegedly induced Mercedes
17

Igne and her children, Joseph Cheng and Jaime Cheng, to sign an agreement and waiver  to 18

Antonio Ching’s estate in consideration of ₱22.5 million. Mercedes Igne’s children alleged
that Ramon Ching never paid them.  On October 29, 1996, Ramon Ching allegedly executed
19

an affidavit of settlement of estate,  naming himself as the sole heir and adjudicating upon
20

himself the entirety of Antonio Ching’s estate. 21

Ramon Ching denied these allegationsand insisted that when Antonio Ching died, the Ching
family association, headed by Vicente Cheng, unduly influenced him to give Mercedes Igne
and her children financial aid considering that they served Antonio Ching for years. It was for
this reason that an agreement and waiver in consideration of 22.5 million was made. He also
alleged that hewas summoned by the family association to execute an affidavit of settlement
of estate declaring him to be Antonio Ching’s sole heir. 22

After a year of investigating Antonio Ching’s death, the police found Ramon Ching to be its
primary suspect. Information  was filed against him, and a warrant of arrest  was issued.
23 24 25

On October 7, 1998, Joseph Cheng, Jaime Cheng, and Mercedes Igne (the Chengs) filed a
complaint for declaration of nullity of titles against Ramon Ching before the Regional Trial
Court of Manila. This case was docketed as Civil Case No. 98-91046 (the first case). 26

On March 22, 1999, the complaint was amended, with leave of court, to implead additional
defendants, including Po Wing Properties, of which Ramon Ching was a primary
stockholder.The amended complaint was for "Annulment of Agreement, Waiver, Extra-
Judicial Settlement of Estate and the Certificates of Title Issued by Virtue of Said Documents
with Prayer for Temporary Restraining Order and Writ of Preliminary Injunction."  Sometime27

after, Lucina Santos filed a motion for intervention and was allowed to intervene. 28

After the responsive pleadings had been filed, Po Wing Properties filed a motion to dismiss
on the ground of lack of jurisdiction of the subject matter. 29

On November 13, 2001, the Regional Trial Court of Manila, Branch 6, granted the motion to
dismiss on the ground of lack of jurisdiction over the subject matter.  Upon motion of the
30

Chengs’ counsel, however, the Chengs and Lucina Santos were given fifteen (15) days to
file the appropriate pleading. They did not do so. 31

On April 19, 2002, the Chengs and Lucina Santos filed a complaint for "Annulment of
Agreement, Waiver, Extra-Judicial Settlement of Estate and the Certificates of Title Issued by
Virtue of Said Documents with Prayer for Temporary Restraining Order and Writ of
Preliminary Injunction" against Ramon Ching and Po Wing Properties. This case was
32

docketed as Civil Case No. 02-103319 (the second case) and raffled to Branch 20 of the
Regional Trial Court of Manila.  When Branch 20 was made aware of the first case, it issued
33

an order transferring the case to Branch 6, considering that the case before it involved
substantially the same parties and causes of action. 34

On November 11, 2002, the Chengs and Lucina Santos filed a motion to dismiss their
complaint in the second case, praying that it be dismissed without prejudice. 35
On November 22, 2002, Branch 6 issued an order granting the motion to dismiss on the
basis that the summons had not yet been served on Ramon Ching and Po Wing Properties,
and they had not yet filed any responsive pleading. The dismissal of the second case was
made without prejudice. 36

On December 9, 2002, Ramon Ching and Po Wing Properties filed a motion for
reconsideration of the order dated November 22, 2002. They argue that the dismissal should
have been with prejudice under the "two dismissal rule" of Rule 17, Section 1 of the 1997
Rules of Civil Procedure, in view of the previous dismissal of the first case. 37

During the pendency of the motion for reconsideration, the Chengs and Lucina Santos filed a
complaint for "Disinheritance and Declaration of Nullity of Agreement and Waiver, Affidavit of
Extra judicial Agreement, Deed of Absolute Sale, and Transfer Certificates of Title with
Prayer for TRO and Writ of Preliminary Injunction" against Ramon Ching and Po Wing
Properties. This case was docketed as Civil Case No. 02-105251(the third case) and was
eventually raffled to Branch 6. 38

On December 10, 2002, Ramon Ching and Po Wing Properties filed their
comment/opposition to the application for temporary restraining order in the third case. They
also filed a motion to dismiss on the ground of res judicata, litis pendencia, forum-shopping,
and failure of the complaint to state a cause of action. A series of responsive pleadings were
filed by both parties.
39

On July 30, 2004, Branch 6 issued an omnibus order  resolving both the motion for
40

reconsideration in the second case and the motion to dismiss in the third case. The trial court
denied the motion for reconsideration and the motion to dismiss, holding that the dismissal of
the second case was without prejudice and, hence, would not bar the filing of the third
case.  On October 8, 2004, while their motion for reconsideration in the third case was
41

pending, Ramon Ching and Po Wing Properties filed a petition for certiorari (the first
certiorari case) with the Court of Appeals, assailing the order dated November 22,2002 and
the portion of the omnibus order dated July 30, 2004, which upheldthe dismissal of the
second case. 42

On December 28, 2004, the trial court issued an order denying the motion for
reconsideration in the third case. The denial prompted Ramon Ching and Po Wing
Properties to file a petition for certiorari and prohibition with application for a writ of
preliminary injunction or the issuance of a temporary restraining order (the second certiorari
case) with the Court of Appeals. 43

On March 23, 2006, the Court of Appeals rendered the decision  in the first certiorari case
44

dismissing the petition. The appellate court ruled that Ramon Ching and Po Wing Properties’
reliance on the "two-dismissal rule" was misplaced since the rule involves two motions for
dismissals filed by the plaintiff only. In this case, it found that the dismissal of the first case
was upon the motion of the defendants, while the dismissal of the second case was at the
instance of the plaintiffs.45

Upon the denial of their motion for reconsideration,  Ramon Ching and Po Wing Properties
46

filed this present petition for review  under Rule 45 of the Rules of Civil Procedure.
47

Ramon Ching and Po Wing Properties argue that the dismissal of the second case was with
prejudice since the non-filing of an amended complaint in the first case operated as a
dismissal on the merits.  They also argue that the second case should be dismissed on the
48
ground of res judicata since there was a previous final judgment of the first case involving the
same parties, subject matter, and cause of action. 49

Lucina Santos was able to file a comment  on the petition within the period required.  The
50 51

Chengs, however, did not comply.  Upon the issuance by this court of a show cause order
52

on September 24, 2007,  they eventually filed a comment with substantially the same
53

allegations and arguments as that of Lucina Santos’. 54

In their comment, respondents allege that when the trial court granted the motion to dismiss,
Ramon Ching’s counsel was notified in open court that the dismissal was without prejudice.
They argue that the trial court’s order became final and executory whenhe failed to file his
motion for reconsideration within the reglementary period. 55

Respondents argue that the petition for review should be dismissed on the ground of forum
shopping and litis pendencia since Ramon Ching and Po Wing Properties are seeking relief
simultaneously in two forums by filing the two petitions for certiorari, which involved the same
omnibus order by the trial court.  They also argue that the "two-dismissal rule" and res
56

judicata did not apply since (1) the failure to amend a complaint is not a dismissal, and (2)
they only moved for dismissal once in the second case. 57

In their reply,  petitioners argue that they did not commit forum shopping since the actions
58

they commenced against respondents stemmed from the complaints filed against them in the
trial courts.  They reiterate that their petition for review is only about the second case; it just
59

so happened that the assailed omnibus order resolved both the second and third cases. 60

Upon the filing of the parties’ respective memoranda,  the case was submitted for decision.
61 62

For this court’s resolution are the following issues:

I. Whether the trial court’s dismissal of the second case operated as a bar to the filing
of a third case, asper the "two-dismissal rule"; and

II. Whether respondents committed forum shopping when they filed the third case
while the motion for reconsideration of the second case was still pending.

The petition is denied.

The "two-dismissal rule" vis-à-vis

the Rules of Civil Procedure

Dismissals of actions are governed by Rule 17 of the 1997 Rules of Civil Procedure. The
pertinent provisions state:

RULE 17
DISMISSAL OF ACTIONS

SEC. 1. Dismissal upon notice by plaintiff. — A complaint may be dismissed by the plaintiff
by filing a notice of dismissal at any time before service of the answer or of a motion for
summary judgment. Upon such notice being filed, the court shall issue an order confirming
the dismissal. Unless otherwise stated in the notice, the dismissal is without prejudice,
except that a notice operates as an adjudication upon the merits when filed by a plaintiff who
has once dismissed in a competent court an action based on or including the same claim.

SEC. 2. Dismissal upon motion of plaintiff. — Except as provided in the preceding section, a
complaint shall not be dismissed at the plaintiff's instance save upon approval of the court
and upon such terms and conditions as the court deems proper. If a counterclaim has been
pleaded by a defendant prior to the service upon him of the plaintiff’s motion for dismissal,
the dismissal shall be limited to the complaint. The dismissal shall be without prejudice to the
right of the defendant to prosecute his counterclaim in a separate action unless within fifteen
(15) days from notice of the motion he manifests his preference to have his counterclaim
resolved in the same action. Unless otherwise specified in the order, a dismissal under this
paragraph shall be without prejudice. A class suit shall not be dismissed or compromised
without the approval of the court.

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

The first section of the rule contemplates a situation where a plaintiff requests the dismissal
of the case beforeany responsive pleadings have been filed by the defendant. It is
donethrough notice by the plaintiff and confirmation by the court. The dismissal is without
prejudice unless otherwise declared by the court.

The second section of the rule contemplates a situation where a counterclaim has been
pleaded by the defendant before the service on him or her of the plaintiff’s motion to dismiss.
It requires leave of court, and the dismissal is generally without prejudice unless otherwise
declared by the court.

The third section contemplates dismissals due to the fault of the plaintiff such as the failure to
prosecute. The case is dismissed either upon motion of the defendant or by the court motu
propio. Generally, the dismissal is with prejudice unless otherwise declared by the court.

In all instances, Rule 17 governs dismissals at the instance of the plaintiff, not of the
defendant. Dismissals upon the instance of the defendant are generally governed by Rule
16, which covers motions to dismiss. 63

In Insular Veneer, Inc. v. Hon. Plan,  Consolidated Logging and Lumber Mills filed a
64

complaint against Insular Veneer to recover some logs the former had delivered to the latter.
It also filed ex partea motion for issuance of a restraining order. The complaint and motion
were filed in a trial court in Isabela.
65

The trial court granted the motion and treated the restraining order as a writ of preliminary
injunction. When Consolidated Logging recovered the logs, it filed a notice of dismissal
under Rule 17, Section 1 of the 1964 Rules of Civil Procedure. 66

While the action on its notice for dismissal was pending, Consolidated Logging filed the
same complaint against Insular Veneer, this time in a trial court in Manila. It did not mention
any previous action pending in the Isabela court. 67
The Manila court eventually dismissed the complaint due to the nonappearance of
Consolidated Logging’s counsel during pre-trial. Consolidated Logging subsequently
returned to the Isabela court to revive the same complaint. The Isabela court apparently
treated the filing of the amended complaint as a withdrawal of its notice of dismissal. 68

Insular Veneer also filed in the Isabela court a motion to dismiss, arguing that the dismissal
by the Manila court constituted res judicataover the case. The Isabela court, presided over
by Judge Plan, denied the motion to dismiss. The dismissal was the subject of the petition for
certiorari and mandamus with this court. 69

This court stated that:

In resolving that issue, we are confronted with the unarguable fact that Consolidated Logging
on its volition dismissed its action for damages and injunction in the Isabela court and refiled
substantially the same action in the Manila court. Then, when the Manila court dismissed its
action for failure to prosecute, it went hack [sic] to the Isabela court and revived its old action
by means of an amended complaint.

Consolidated Logging would liketo forget the Manila case, consign it to oblivion as if it were a
bad dream, and prosecute its amended complaint in the Isabela court as if nothing had
transpired in the Manila court. We hold that it cannot elude the effects of its conduct in
junking the Isabela case and in giving that case a reincarnation in the Manila court.

Consolidated Logging’ [sic] filed a new case in Manila at its own risk. Its lawyer at his peril
failed toappear at the pre-trial.
70

This court ruled that the filing of the amended complaint in the Isabela court was barred by
the prior dismissal of the Manila court, stating that:

The provision in section 1(e), Rule 16 of the Rules of Court that an action may be dismissed
because "there is another action pending between the same parties for the same cause"
presupposes that two similar actions are simultaneously pending in two different Courts of
First Instance. Lis pendensas a ground for a motion to dismiss has the same requisites as
the plea of res judicata.

On the other hand, when a pleading is amended, the original pleading is deemed
abandoned. The original ceases to perform any further function as a pleading. The case
stands for trial on the amended pleading only. So, when Consolidated Logging filed its
amended complaint dated March 16, 1970 in Civil Case No. 2158, the prior dismissal order
dated January 5, 1970 in the Manila case could he [sic] interposed in the Isabela court to
support the defense of res judicata. 71

As a general rule, dismissals under Section 1 of Rule 17 are without prejudice except when it
is the second time that the plaintiff caused its dismissal. Accordingly, for a dismissal to
operate as an adjudication upon the merits, i.e, with prejudice to the re-filing of the same
claim, the following requisites must be present:

(1) There was a previous case that was dismissed by a competent court;

(2) Both cases were based on or include the same claim;

 (3) Both notices for dismissal werefiled by the plaintiff; and

(4) When the motion to dismiss filed by the plaintiff was consented to by the
defendant on the ground that the latter paid and satisfied all the claims of the
former.72

The purpose of the "two-dismissal rule" is "to avoid vexatious litigation."  When a complaint
73

is dismissed a second time, the plaintiff is now barred from seeking relief on the same claim.

The dismissal of the second case was without prejudice in view of the "two-dismissal rule"

Here, the first case was filed as an ordinary civil action. It was later amended to include not
only new defendants but new causes of action that should have been adjudicated in a
special proceeding. A motion to dismiss was inevitably filed by the defendants onthe ground
of lack of jurisdiction.

The trial court granted that motion to dismiss, stating that:

A careful perusal of the allegations of the Amended Complaint dated February 10, 1999, filed
by Plaintiff Joseph Cheng, show that additional causes of action were incorporated i.e. extra-
judicial settlement of the intestate estate of Antonio Ching and receivership, subject matters,
which should be threshed out in a special proceedings case. This is a clear departure from
the main cause of action in the original complaint which is for declaration of nullity of
certificate of titles with damages. And the rules of procedure which govern special
proceedings case are different and distinct from the rules of procedure applicable in an
ordinary civil action.

In view of the afore-going, the court finds the Motion to Dismiss filed by Atty. Maria Lina
Nieva S. Casals to be meritorious and the Court is left with no alternative but to dismiss as it
hereby dismisses the Amended Complaint.

However, on motion of Atty. Mirardo Arroyo Obias, counsel for the plaintiffs, he is given a
period of fifteen (15) days from today, within which to file an appropriate pleading, copy
furnished to all the parties concerned.

....

SO ORDERED. 74

Petitioners are of the view that when Atty. Mirardo Arroyo Obias failed to file the appropriate
pleading within fifteen (15) days, he violated the order of the court. This, they argue, made
the original dismissal an adjudication upon the merits, in accordance with Rule 17, Section 3,
i.e., a dismissal through the default of the plaintiff. Hence, they argue that when respondents
filed the second case and then caused its dismissal, the dismissal should have been with
prejudice according to Rule 17, Section 1, i.e., two dismissals caused by the plaintiff on the
same claim. Unfortunately, petitioners’ theory is erroneous.

The trial court dismissed the first case by granting the motion to dismiss filed by the
defendants. When it allowed Atty. Mirardo Arroyo Obias a period of fifteen (15) days tofile an
appropriate pleading, it was merely acquiescing to a request made bythe plaintiff’s counsel
that had no bearing on the dismissal of the case.
Under Rule 17, Section 3, a defendant may move to dismiss the case if the plaintiff defaults;
it does not contemplate a situation where the dismissal was due to lack of jurisdiction. Since
there was already a dismissal prior to plaintiff’s default, the trial court’s instruction to file the
appropriate pleading will not reverse the dismissal. If the plaintiff fails to file the appropriate
pleading, the trial court does not dismiss the case anew; the order dismissing the case still
stands.

The dismissal of the first case was done at the instance of the defendant under Rule 16,
Section 1(b) of the Rules of Civil Procedure, which states:

SECTION 1. Grounds.— Within the time for but before filing the answer to the complaint or
pleading asserting a claim, a motion to dismiss may be made on any of the following
grounds:

....

(b) That the court has no jurisdiction over the subject matter of the claim;

....

Under Section 5 of the same rule,  a party may re-file the same action or claim subject to
75

certain exceptions.

Thus, when respondents filed the second case, they were merely refiling the same claim that
had been previously dismissed on the basis of lack of jurisdiction. When they moved to
dismiss the second case, the motion to dismiss can be considered as the first dismissal at
the plaintiff’s instance.

Petitioners do not deny that the second dismissal was requested by respondents before the
service of any responsive pleadings. Accordingly, the dismissal at this instance is a matter of
right that is not subject to the trial court’s discretion. In O.B. Jovenir Construction and
Development Corporation v. Macamir Realty and Development Corporation: 76

[T]he trial court has no discretion or option to deny the motion, since dismissal by the plaintiff
under Section 1, Rule 17 is guaranteed as a matter of right to the plaintiffs. Even if the
motion cites the most ridiculous of grounds for dismissal, the trial court has no choice but to
consider the complaint as dismissed, since the plaintiff may opt for such dismissal as a
matter of right, regardless of ground.  (Emphasis supplied)
77

For this reason, the trial court issued its order dated November 22, 2002 dismissing the
case, without prejudice. The order states:

When this Motion was called for hearing, all the plaintiffs namely, Joseph Cheng, Jaime
Cheng, Mercedes Igne and Lucina Santos appeared without their counsels. That they
verbally affirmed the execution of the Motion to Dismiss, as shown by their signatures over
their respective names reflected thereat. Similarly, none of the defendants appeared, except
the counsel for defendant, Ramon Chang [sic], who manifested that they have not yet filed
their Answer as there was a defect in the address of Ramon Cheng [sic] and the latter has
not yet been served with summons.
Under the circumstances, and further considering that the defendants herein have not yet
filed their Answers nor any pleading, the plaintiffs has [sic] the right to out rightly [sic] cause
the dismissal of the Complaint pursuant to Section 2, Rule 17 of the 1997 Rules of Civil
Procedure without prejudice. Thereby, and as prayed for, this case is hereby ordered
DISMISSED without prejudice.

SO ORDERED.  (Emphasis supplied)

78

When respondents filed the third case on substantially the same claim, there was already
one prior dismissal at the instance of the plaintiffs and one prior dismissal at the instance of
the defendants. While it is true that there were two previous dismissals on the same claim, it
does not necessarily follow that the re-filing of the claim was barred by Rule 17, Section 1 of
the Rules of Civil Procedure. The circumstances surrounding each dismissal must first be
examined to determine before the rule may apply, as in this case.

Even assuming for the sake of argument that the failure of Atty. Mirardo Arroyo Obias to file
the appropriate pleading in the first case came under the purview of Rule 17, Section 3 of the
Rules of Civil Procedure, the dismissal in the second case is still considered as one without
prejudice. In Gomez v. Alcantara: 79

The dismissal of a case for failure to prosecute has the effect of adjudication on the merits,
and is necessarily understood to be with prejudice to the filing of another action, unless
otherwise provided in the order of dismissal. Stated differently, the general rule is that
dismissal of a case for failure to prosecute is to be regarded as an adjudication on the merits
and with prejudice to the filing of another action, and the only exception is when the order of
dismissal expressly contains a qualification that the dismissal is without
prejudice.  (Emphasis supplied)
80

In granting the dismissal of the second case, the trial court specifically orders the dismissal
to be without prejudice. It is only when the trial court’s order either is silent on the matter, or
states otherwise, that the dismissal will be considered an adjudication on the merits.

However, while the dismissal of the second case was without prejudice, respondents’ act of
filing the third case while petitioners’ motion for reconsideration was still pending constituted
forum shopping.

The rule against forum shopping and the "twin-dismissal rule"

In Yap v. Chua: 81

Forum shopping is the institution of two or more actions or proceedings involving the same
parties for the same cause of action, either simultaneously or successively, on the
supposition that one or the other court would make a favorable disposition. Forum shopping
may be resorted to by any party against whom an adverse judgment or order has been
issued in one forum, in an attempt to seek a favorable opinion in another, other than by
appeal or a special civil action for certiorari. Forum shopping trifles with the courts, abuses
their processes, degrades the administration of justice and congest court dockets. What
iscritical is the vexation brought upon the courts and the litigants by a party who asks
different courts to rule on the same or related causes and grant the same or substantially the
same reliefs and in the process creates the possibility of conflicting decisions being
renderedby the different fora upon the same issues. Willful and deliberate violation of the
rule against forum shopping is a ground for summary dismissal of the case; it may also
constitute direct contempt.

To determine whether a party violated the rule against forum shopping, the most important
factor toask is whether the elements of litis pendentiaare present, or whether a final
judgment in one case will amount to res judicatain another; otherwise stated, the test for
determining forum shopping is whether in the two (or more) cases pending, there is identity
of parties, rights or causes of action, and reliefs sought.  (Emphasis supplied)
82

When respondents filed the third case, petitioners’ motion for reconsideration of the
dismissal of the second case was still pending. Clearly, the order of dismissal was not yet
final since it could still be overturned upon reconsideration, or even on appeal to a higher
court.

Moreover, petitioners were not prohibited from filing the motion for reconsideration. This
court has already stated in Narciso v. Garcia  that a defendant has the right to file a motion
83

for reconsideration of a trial court’s order denying the motion to dismiss since "[n]o rule
prohibits the filing of such a motion for reconsideration."  The second case, therefore, was
84

still pending when the third case was filed.

The prudent thing that respondents could have done was to wait until the final disposition of
the second case before filing the third case. As it stands, the dismissal of the second case
was without prejudice to the re-filing of the same claim, in accordance with the Rules of Civil
Procedure. In their haste to file the third case, however, they unfortunately transgressed
certain procedural safeguards, among which are the rules on litis pendentiaand res judicata.

In Yap:

Litis pendentiaas a ground for the dismissal of a civil action refers to that situation wherein
another action is pending between the same parties for the same cause of action, such that
the second action becomes unnecessary and vexatious. The underlying principle of litis
pendentia is the theory that a party is not allowed to vex another more than once regarding
the same subject matter and for the same cause of action. This theory is founded on the
public policy that the same subject matter should not be the subject of controversy incourts
more than once, in order that possible conflicting judgments may be avoided for the sake of
the stability of the rights and status of persons.

The requisites of litis pendentiaare: (a) the identity of parties, or at least such as representing
the same interests in both actions; (b) the identity of rights asserted and relief prayed for, the
relief being founded on the same facts; and (c) the identity of the two cases such that
judgment in one, regardless ofwhich party is successful, would amount to res judicatain the
other.  (Emphasis supplied)
85

There is no question that there was an identity of parties, rights, and reliefs in the second
and third cases. While it may be true that the trial court already dismissed the second case
when the third case was filed, it failed to take into account that a motion for reconsideration
was filed in the second case and, thus, was still pending. Considering that the dismissal of
the second case was the subject of the first certiorari case and this present petition for
review, it can be reasonably concluded that the second case, to this day, remains pending.
Hence, when respondents filed the third case, they engaged in forum shopping. Any
judgment by this court on the propriety of the dismissal of the second case will inevitably
affect the disposition of the third case.

This, in fact, is the reason why there were two different petitions for certiorari before the
appellate court. The omnibus order dated July 30, 2004 denied two pending motions by
petitioners: (1) the motion for reconsideration in the second case and (2) the motion to
dismiss in the third case. Since petitioners are barred from filing a second motion for
reconsideration of the second case, the first certiorari case was filed before the appellate
court and is now the subject of this review. The denial of petitioners’ motion for
reconsideration in the third case, however, could still be the subject of a separate petition for
certiorari. That petition would be based now on the third case, and not on the second case.

This multiplicity of suits is the veryevil sought to be avoided by the rule on forum shopping. In
Dy v. Mandy Commodities Co., Inc.,  the rule is that:
86

Once there is a finding of forum shopping, the penalty is summary dismissal not only of the
petition pending before this Court, but also of the other case that is pending in a lower court.
This is so because twin dismissal is a punitive measure to those who trifle with the orderly
administration of justice.  (Emphasis supplied)
87

The rule originated from the 1986 case of Buan v. Lopez, Jr.  In Buan, petitioners filed a
88

petition for prohibition with this court while another petition for prohibition with preliminary
injunction was pending before the Regional Trial Court of Manila involving the same parties
and based on the same set of facts. This court, in dismissing both actions, stated:

Indeed, the petitioners in both actions . . . have incurred not only the sanction of dismissal
oftheir case before this Court in accordance with Rule 16 of the Rules of Court, but also the
punitive measure of dismissal of both their actions, that in this Court and that in the Regional
Trial Court as well. Quite recently, upon substantially identical factual premises, the Court en
banchad occasion to condemn and penalize the act of litigants of filing the same suit in
different courts, aptly described as "forum shopping[.]" 89

The rule essentially penalizes the forum shopper by dismissing all pending actions on the
same claim filed in any court. Accordingly, the grant of this petition would inevitably result in
the summary dismissal of the third case. Any action, therefore, which originates from the
third case pending with any court would be barred by res judicata.

Because of the severity of the penalty of the rule, an examination must first be made on the
purpose of the rule. Parties resort to forum shopping when they file several actions of the
1âwphi1

same claim in different forums in the hope of obtaining a favorable result. It is prohibited by
the courts as it "trifle[s] with the orderly administration of justice."
90

In this case, however, the dismissal of the first case became final and executory upon the
failure of respondents’counsel to file the appropriate pleading. They filed the correct pleading
the second time around but eventually sought its dismissal as they"[suspected] that their
counsel is not amply protecting their interests as the case is not moving for almost three (3)
years."  The filing of the third case, therefore, was not precisely for the purpose of obtaining
91

a favorable result butonly to get the case moving, in an attempt to protect their rights.

It appears that the resolution on the merits of the original controversy between the parties
has long beenmired in numerous procedural entanglements. While it might be more judicially
expedient to apply the "twin-dismissal rule" and disallow the proceedings in the third case to
continue, it would not serve the ends of substantial justice. Courts of justice must always
endeavor to resolve cases on their merits, rather than summarily dismiss these on
technicalities: [C]ases should be determined on the merits, after all parties have been given
full opportunity to ventilate their causes and defenses, rather than on technicalities or
procedural imperfections. In that way, the ends of justice would be served better. Rules of
procedure are mere tools designed to expedite the decision or resolution of cases and other
matters pending in court. A strict and rigid application of rules, resulting in technicalities that
tend to frustrate rather than promote substantial justice, must be avoided.In fact, Section 6 of
Rule 1 states that the Rules [on Civil Procedure] shall be liberally construed in order to
promote their objective of ensuring the just, speedy and inexpensive disposition of every
action and proceeding.  (Emphasis supplied)
92

The rule on forum shopping will not strictly apply when it can be shown that (1) the original
case has been dismissed upon request of the plaintiff for valid procedural reasons; (2) the
only pending matter is a motion for reconsideration; and (3) there are valid procedural
reasons that serve the goal of substantial justice for the fresh new· case to proceed.

The motion for reconsideration filed in the second case has since been dismissed and is now
the subject of a petition for certiorari. The third case filed apparently contains the better
cause of action for the plaintiffs and is now being prosecuted by a counsel they are more
comfortable with. Substantial justice will be better served if respondents do not fall victim to
the labyrinth in the procedures that their travails led them. It is for this reason that we deny
the petition. WHEREFORE, the petition is DENIED. The Regional Trial Court of Manila,
Branch 6 is ordered to proceed with Civil Case No. 02-105251 with due and deliberate
dispatch.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 174938               October 1, 2014

GERARDO LANUZA, JR. AND ANTONIO O. OLBES, Petitioners, 

vs.
BF CORPORATION, SHANGRI-LA PROPERTIES, INC., ALFREDO C. RAMOS, RUFO B.
COLAYCO, MAXIMO G. LICAUCO III, AND BENJAMIN C. RAMOS, Respondents.

DECISION

LEONEN, J.:

Corporate representatives may be compelled to submit to arbitration proceedings pursuant

to a contract entered into by the corporation they represent if there are allegations of bad
faith or malice in their acts representing the corporation.

This is a Rule 45 petition, assailing the Court of Appeals' May 11, 2006 decision and October
5, 2006 resolution. The Court of Appeals affirmed the trial court's decision holding that
petitioners, as director, should submit themselves as parties tothe arbitration proceedings
between BF Corporation and Shangri-La Properties, Inc. (Shangri-La).

In 1993, BF Corporation filed a collection complaint with the Regional Trial Court against
Shangri-Laand the members of its board of directors: Alfredo C. Ramos, Rufo B.Colayco,
Antonio O. Olbes, Gerardo Lanuza, Jr., Maximo G. Licauco III, and Benjamin C. Ramos. 1

BF Corporation alleged in its complaint that on December 11, 1989 and May 30, 1991, it
entered into agreements with Shangri-La wherein it undertook to construct for Shangri-La a
mall and a multilevel parking structure along EDSA. 2

Shangri-La had been consistent in paying BF Corporation in accordance with its progress
billing statements. However, by October 1991, Shangri-La started defaulting in payment.
3 4

BF Corporation alleged that Shangri-La induced BF Corporation to continue with the

construction of the buildings using its own funds and credit despite Shangri-La’s
default.  According to BF Corporation, ShangriLa misrepresented that it had funds to pay for
5

its obligations with BF Corporation, and the delay in payment was simply a matter of delayed
processing of BF Corporation’s progress billing statements. 6
BF Corporation eventually completed the construction of the buildings.  Shangri-La allegedly
7

took possession of the buildings while still owing BF Corporation an outstanding balance. 8

BF Corporation alleged that despite repeated demands, Shangri-La refused to pay the
balance owed to it.  It also alleged that the Shangri-La’s directors were in bad faith in
9

directing Shangri-La’s affairs. Therefore, they should be held jointly and severally liable with
Shangri-La for its obligations as well as for the damages that BF Corporation incurred as a
result of Shangri-La’s default. 10

On August 3, 1993, Shangri-La, Alfredo C. Ramos, Rufo B. Colayco, Maximo G. Licauco III,
and Benjamin C. Ramos filed a motion to suspend the proceedings in view of BF
Corporation’s failure to submit its dispute to arbitration, in accordance with the arbitration
clauseprovided in its contract, quoted in the motion as follows: 11

35. Arbitration

(1) Provided always that in case any dispute or difference shall arise between the Owner or
the Project Manager on his behalf and the Contractor, either during the progress or after the
completion or abandonment of the Works as to the construction of this Contract or as to any
matter or thing of whatsoever nature arising there under or inconnection therewith (including
any matter or thing left by this Contract to the discretion of the Project Manager or the
withholding by the Project Manager of any certificate to which the Contractor may claim to be
entitled or the measurement and valuation mentioned in clause 30(5)(a) of these Conditions
or the rights and liabilities of the parties under clauses 25, 26, 32 or 33 of these Conditions),
the owner and the Contractor hereby agree to exert all efforts to settle their differences or
dispute amicably. Failing these efforts then such dispute or difference shall be referred to
arbitration in accordance with the rules and procedures of the Philippine Arbitration Law.

x x x           x x x          x x x

(6) The award of such Arbitrators shall be final and binding on the parties. The decision of
the Arbitrators shall be a condition precedent to any right of legal action that either party may
have against the other. . . .  (Underscoring in the original)
12

On August 19, 1993, BF Corporation opposed the motion to suspend proceedings. 13

In the November 18, 1993 order, the Regional Trial Court denied the motion to suspend
proceedings. 14

On December 8, 1993, petitioners filed an answer to BF Corporation’s complaint, with

compulsory counter claim against BF Corporation and crossclaim against Shangri-La.  They 15

alleged that they had resigned as members of Shangri-La’s board of directors as of July 15,
1991. 16

After the Regional Trial Court denied on February 11, 1994 the motion for reconsideration of
its November 18, 1993 order, Shangri-La, Alfredo C. Ramos, Rufo B. Colayco,Maximo G.
Licauco III, and Benjamin Ramos filed a petition for certiorari with the Court of Appeals. 17

On April 28, 1995, the Court of Appeals granted the petition for certiorari and ordered the
submission of the dispute to arbitration. 18
Aggrieved by the Court of Appeals’ decision, BF Corporation filed a petition for review on
certiorari with this court. On March 27, 1998, this court affirmed the Court of Appeals’
19

decision, directing that the dispute be submitted for arbitration. 20

Another issue arose after BF Corporation had initiated arbitration proceedings. BF

Corporation and Shangri-La failed to agree as to the law that should govern the arbitration
proceedings.  On October 27, 1998, the trial court issued the order directing the parties to
21

conduct the proceedings in accordance with Republic Act No. 876. 22

Shangri-La filed an omnibus motion and BF Corporation an urgent motion for clarification,
both seeking to clarify the term, "parties," and whether Shangri-La’s directors should be
included in the arbitration proceedings and served with separate demands for arbitration. 23

Petitioners filed their comment on Shangri-La’s and BF Corporation’s motions, praying that
they be excluded from the arbitration proceedings for being non-parties to Shangri-La’s and
BF Corporation’s agreement. 24

On July 28, 2003, the trial court issued the order directing service of demands for arbitration
upon all defendants in BF Corporation’s complaint.  According to the trial court, Shangri-La’s
25

directors were interested parties who "must also be served with a demand for arbitration to
give them the opportunity to ventilate their side of the controversy, safeguard their interest
and fend off their respective positions."  Petitioners’ motion for reconsideration ofthis order
26

was denied by the trial court on January 19, 2005. 27

Petitioners filed a petition for certiorari with the Court of Appeals, alleging grave abuse of
discretion in the issuance of orders compelling them to submit to arbitration proceedings
despite being third parties to the contract between Shangri-La and BF Corporation. 28

In its May 11, 2006 decision,  the Court of Appeals dismissed petitioners’ petition for
29

certiorari. The Court of Appeals ruled that ShangriLa’s directors were necessary parties in
the arbitration proceedings.  According to the Court of Appeals:
30

[They were] deemed not third-parties tothe contract as they [were] sued for their acts in
representation of the party to the contract pursuant to Art. 31 of the Corporation Code, and
that as directors of the defendant corporation, [they], in accordance with Art. 1217 of the Civil
Code, stand to be benefited or injured by the result of the arbitration proceedings, hence,
being necessary parties, they must be joined in order to have complete adjudication of the
controversy. Consequently, if [they were] excluded as parties in the arbitration proceedings
and an arbitral award is rendered, holding [Shangri-La] and its board of directors jointly and
solidarily liable to private respondent BF Corporation, a problem will arise, i.e., whether
petitioners will be bound bysuch arbitral award, and this will prevent complete determination
of the issues and resolution of the controversy. 31

The Court of Appeals further ruled that "excluding petitioners in the arbitration proceedings . .
. would be contrary to the policy against multiplicity of suits."
32

The dispositive portion of the Court of Appeals’ decision reads:

WHEREFORE, the petition is DISMISSED. The assailed orders dated July 28, 2003 and
January 19, 2005 of public respondent RTC, Branch 157, Pasig City, in Civil Case No.
63400, are AFFIRMED. 33
The Court of Appeals denied petitioners’ motion for reconsideration in the October 5, 2006
resolution. 34

On November 24, 2006, petitioners filed a petition for review of the May 11, 2006 Court of
Appeals decision and the October 5, 2006 Court of Appeals resolution. 35

The issue in this case is whether petitioners should be made parties to the arbitration
proceedings, pursuant to the arbitration clause provided in the contract between BF
Corporation and Shangri-La.

Petitioners argue that they cannot be held personally liable for corporate acts or
obligations.  The corporation is a separate being, and nothing justifies BF Corporation’s
36

allegation that they are solidarily liable with Shangri-La. Neither did they bind themselves
37

personally nor did they undertake to shoulder Shangri-La’s obligations should it fail in its
obligations.  BF Corporation also failed to establish fraud or bad faith on their part.
38 39

Petitioners also argue that they are third parties to the contract between BF Corporation and
Shangri-La. Provisions including arbitration stipulations should bind only the parties.  Based
40 41

on our arbitration laws, parties who are strangers to an agreement cannot be compelled to
arbitrate.
42

Petitioners point out thatour arbitration laws were enacted to promote the autonomy of
parties in resolving their disputes.  Compelling them to submit to arbitration is against this
43

purpose and may be tantamount to stipulating for the parties. 44

Separate comments on the petition werefiled by BF Corporation, and Maximo G. Licauco III,
Alfredo C.Ramos and Benjamin C. Ramos. 45

Maximo G. Licauco III Alfredo C. Ramos, and Benjamin C. Ramos agreed with petitioners
that Shangri-La’sdirectors, being non-parties to the contract, should not be made personally
liable for Shangri-La’s acts.  Since the contract was executed only by BF Corporation and
46

Shangri-La, only they should be affected by the contract’s stipulation.  BF Corporation also
47

failed to specifically allege the unlawful acts of the directors that should make them solidarily
liable with Shangri-La for its obligations. 48

Meanwhile, in its comment, BF Corporation argued that the courts’ ruling that the parties
should undergo arbitration "clearly contemplated the inclusion of the directors of the
corporation[.]"  BF Corporation also argued that while petitioners were not parties to the
49

agreement, they were still impleaded under Section 31 of the Corporation Code. Section 31 50

makes directors solidarily liable for fraud, gross negligence, and bad faith.  Petitioners are51

not really third parties to the agreement because they are being sued as Shangri-La’s
representatives, under Section 31 of the Corporation Code. 52

BF Corporation further argued that because petitioners were impleaded for their solidary
liability, they are necessary parties to the arbitration proceedings.  The full resolution of all
53

disputes in the arbitration proceedings should also be done in the interest of justice. 54

In the manifestation dated September 6, 2007, petitioners informed the court that the Arbitral
Tribunal had already promulgated its decision on July 31, 2007.  The Arbitral Tribunal denied
55

BF Corporation’s claims against them. Petitioners stated that "[they] were included by the
56

Arbitral Tribunal in the proceedings conducted . . . notwithstanding [their] continuing

objection thereto. . . ."  They also stated that "[their] unwilling participation in the arbitration
57

case was done ex abundante ad cautela, as manifested therein on several

occasions."  Petitioners informed the court that they already manifested with the trial court
58

that "any action taken on [the Arbitral Tribunal’s decision] should be without prejudice to the
resolution of [this] case." 59

Upon the court’s order, petitioners and Shangri-La filed their respective memoranda.
Petitioners and Maximo G. Licauco III, Alfredo C. Ramos, and Benjamin C. Ramos reiterated
their arguments that they should not be held liable for Shangri-La’s default and made parties
to the arbitration proceedings because only BF Corporation and Shangri-La were parties to
the contract.

In its memorandum, Shangri-La argued that petitioners were impleaded for their solidary
liability under Section 31 of the Corporation Code. Shangri-La added that their exclusion
from the arbitration proceedings will result in multiplicity of suits, which "is not favored in this
jurisdiction."  It pointed out that the case had already been mooted by the termination of the
60

arbitration proceedings, which petitioners actively participated in.  Moreover, BF Corporation

61

assailed only the correctness of the Arbitral Tribunal’s award and not the part absolving
Shangri-La’s directors from liability. 62

BF Corporation filed a counter-manifestation with motion to dismiss  in lieu of the required
63

memorandum.

In its counter-manifestation, BF Corporation pointed out that since "petitioners’ counterclaims

were already dismissed with finality, and the claims against them were likewise dismissed
with finality, they no longer have any interest orpersonality in the arbitration case. Thus, there
is no longer any need to resolve the present Petition, which mainly questions the inclusion of
petitioners in the arbitration proceedings."  The court’s decision in this case will no longer
64

have any effect on the issue of petitioners’ inclusion in the arbitration proceedings. 65

The petition must fail.

The Arbitral Tribunal’s decision, absolving petitioners from liability, and its binding effect on
BF Corporation, have rendered this case moot and academic.

The mootness of the case, however, had not precluded us from resolving issues so that
principles may be established for the guidance of the bench, bar, and the public. In De la
Camara v. Hon. Enage,  this court disregarded the fact that petitioner in that case already
66

escaped from prison and ruled on the issue of excessive bails:

While under the circumstances a ruling on the merits of the petition for certiorari is
notwarranted, still, as set forth at the opening of this opinion, the fact that this case is moot
and academic should not preclude this Tribunal from setting forth in language clear and
unmistakable, the obligation of fidelity on the part of lower court judges to the unequivocal
command of the Constitution that excessive bail shall not be required. 67

This principle was repeated in subsequent cases when this court deemed it proper to clarify
important matters for guidance. 68
Thus, we rule that petitioners may be compelled to submit to the arbitration proceedings in
accordance with Shangri-Laand BF Corporation’s agreement, in order to determine if the
distinction between Shangri-La’s personality and their personalities should be disregarded.

This jurisdiction adopts a policy in favor of arbitration. Arbitration allows the parties to avoid
litigation and settle disputes amicably and more expeditiously by themselves and through
their choice of arbitrators.

The policy in favor of arbitration has been affirmed in our Civil Code,  which was approved
69

as early as 1949. It was later institutionalized by the approval of Republic Act No.
876,  which expressly authorized, made valid, enforceable, and irrevocable parties’ decision
70

to submit their controversies, including incidental issues, to arbitration. This court recognized
this policy in Eastboard Navigation, Ltd. v. Ysmael and Company, Inc.: 71

As a corollary to the question regarding the existence of an arbitration agreement, defendant

raises the issue that, even if it be granted that it agreed to submit its dispute with plaintiff to
arbitration, said agreement is void and without effect for it amounts to removing said dispute
from the jurisdiction of the courts in which the parties are domiciled or where the dispute
occurred. It is true that there are authorities which hold that "a clause in a contract providing
that all matters in dispute between the parties shall be referred to arbitrators and to them
alone, is contrary to public policy and cannot oust the courts of jurisdiction" (Manila Electric
Co. vs. Pasay Transportation Co., 57 Phil., 600, 603), however, there are authorities which
favor "the more intelligent view that arbitration, as an inexpensive, speedy and amicable
method of settling disputes, and as a means of avoiding litigation, should receive every
encouragement from the courts which may be extended without contravening sound public
policy or settled law" (3 Am. Jur., p. 835). Congress has officially adopted the modern view
when it reproduced in the new Civil Code the provisions of the old Code on Arbitration. And
only recently it approved Republic Act No. 876 expressly authorizing arbitration of future
disputes.  (Emphasis supplied)
72

In view of our policy to adopt arbitration as a manner of settling disputes, arbitration clauses
are liberally construed to favor arbitration. Thus, in LM Power Engineering Corporation v.
Capitol Industrial Construction Groups, Inc.,  this court said:
73

Being an inexpensive, speedy and amicable method of settling disputes, arbitration — along
with mediation, conciliation and negotiation — is encouraged by the Supreme Court. Aside
from unclogging judicial dockets, arbitration also hastens the resolution of disputes,
especially of the commercial kind. It is thus regarded as the "wave of the future" in
international civil and commercial disputes. Brushing aside a contractual agreement calling
for arbitration between the parties would be a step backward.

Consistent with the above-mentioned policy of encouraging alternative dispute resolution

methods, courts should liberally construe arbitration clauses. Provided such clause is
susceptible of an interpretation that covers the asserted dispute, an order to arbitrate should
be granted. Any doubt should be resolved in favor of arbitration. (Emphasis supplied)
74

A more clear-cut statement of the state policy to encourage arbitration and to favor
interpretations that would render effective an arbitration clause was later expressed in
Republic Act No. 9285: 75

SEC. 2. Declaration of Policy.- It is hereby declared the policy of the State to actively
promote party autonomy in the resolution of disputes or the freedom of the party to make
their own arrangements to resolve their disputes. Towards this end, the State shall
encourage and actively promote the use of Alternative Dispute Resolution (ADR) as an
important means to achieve speedy and impartial justice and declog court dockets. As such,
the State shall provide means for the use of ADR as an efficient tool and an alternative
procedure for the resolution of appropriate cases. Likewise, the State shall enlist active
private sector participation in the settlement of disputes through ADR. This Act shall be
without prejudice to the adoption by the Supreme Court of any ADR system, such as
mediation, conciliation, arbitration, or any combination thereof as a means of achieving
speedy and efficient means of resolving cases pending before all courts in the Philippines
which shall be governed by such rules as the Supreme Court may approve from time to time.

....

SEC. 25. Interpretation of the Act.- In interpreting the Act, the court shall have due regard to
the policy of the law in favor of arbitration.Where action is commenced by or against multiple
parties, one or more of whomare parties who are bound by the arbitration agreement
although the civil action may continue as to those who are not bound by such arbitration
agreement. (Emphasis supplied)

Thus, if there is an interpretation that would render effective an arbitration clause for
purposes ofavoiding litigation and expediting resolution of the dispute, that interpretation
shall be adopted. Petitioners’ main argument arises from the separate personality given to
juridical persons vis-à-vis their directors, officers, stockholders, and agents. Since they did
not sign the arbitration agreement in any capacity, they cannot be forced to submit to the
jurisdiction of the Arbitration Tribunal in accordance with the arbitration agreement.
Moreover, they had already resigned as directors of Shangri-Laat the time of the alleged
default.

Indeed, as petitioners point out, their personalities as directors of Shangri-La are separate
and distinct from Shangri-La.

A corporation is an artificial entity created by fiction of law.  This means that while it is not a
76

person, naturally, the law gives it a distinct personality and treats it as such. A corporation, in
the legal sense, is an individual with a personality that is distinct and separate from other
persons including its stockholders, officers, directors, representatives,  and other juridical
77

entities. The law vests in corporations rights,powers, and attributes as if they were natural
persons with physical existence and capabilities to act on their own.  For instance, they have
78

the power to sue and enter into transactions or contracts. Section 36 of the Corporation
Code enumerates some of a corporation’s powers, thus:

Section 36. Corporate powers and capacity.– Every corporation incorporated under this
Code has the power and capacity:

1. To sue and be sued in its corporate name;

2. Of succession by its corporate name for the period of time stated in the articles of
incorporation and the certificate ofincorporation;

3. To adopt and use a corporate seal;

 4. To amend its articles of incorporation in accordance with the provisions of this
Code;

5. To adopt by-laws, not contrary to law, morals, or public policy, and to amend or
repeal the same in accordance with this Code;

6. In case of stock corporations, to issue or sell stocks to subscribers and to sell

treasury stocks in accordance with the provisions of this Code; and to admit
members to the corporation if it be a non-stock corporation;

7. To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage
and otherwise deal with such real and personal property, including securities and
bonds of other corporations, as the transaction of the lawful business of the
corporation may reasonably and necessarily require, subject to the limitations
prescribed by law and the Constitution;

8. To enter into merger or consolidation with other corporations as provided in this

Code;

9. To make reasonable donations, including those for the public welfare or for
hospital, charitable, cultural, scientific, civic, or similar purposes: Provided, That no
corporation, domestic or foreign, shall give donations in aid of any political party or
candidate or for purposes of partisan political activity;

10. To establish pension, retirement, and other plans for the benefit of its directors,
trustees, officers and employees; and

11. To exercise such other powers asmay be essential or necessary to carry out its
purpose or purposes as stated in its articles of incorporation. (13a)

Because a corporation’s existence is only by fiction of law, it can only exercise its rights and
powers through itsdirectors, officers, or agents, who are all natural persons. A corporation
cannot sue or enter into contracts without them.

A consequence of a corporation’s separate personality is that consent by a corporation

through its representatives is not consent of the representative, personally. Its obligations,
incurred through official acts of its representatives, are its own. A stockholder, director, or
representative does not become a party to a contract just because a corporation executed a
contract through that stockholder, director or representative.

Hence, a corporation’s representatives are generally not bound by the terms of the contract
executed by the corporation. They are not personally liable for obligations and liabilities
incurred on or in behalf of the corporation.

Petitioners are also correct that arbitration promotes the parties’ autonomy in resolving their
disputes. This court recognized in Heirs of Augusto Salas, Jr. v. Laperal Realty
Corporation  that an arbitration clause shall not apply to persons who were neither parties to
79

the contract nor assignees of previous parties, thus:

A submission to arbitration is a contract. As such, the Agreement, containing the stipulation
on arbitration, binds the parties thereto, as well as their assigns and heirs. But only
they.  (Citations omitted)
80

Similarly, in Del Monte Corporation-USA v. Court of Appeals,  this court ruled:

81

The provision to submit to arbitration any dispute arising therefrom and the relationship of
the parties is part of that contract and is itself a contract. As a rule, contracts are respected
as the law between the contracting parties and produce effect as between them, their
assigns and heirs. Clearly, only parties to the Agreement . . . are bound by the Agreement
and its arbitration clause as they are the only signatories thereto.  (Citation omitted)
82

This court incorporated these rulings in Agan, Jr. v. Philippine International Air Terminals
Co., Inc.  and Stanfilco Employees v. DOLE Philippines, Inc., et al.
83 84

As a general rule, therefore, a corporation’s representative who did not personally bind
himself or herself to an arbitration agreement cannot be forced to participate in arbitration
proceedings made pursuant to an agreement entered into by the corporation. He or she is
generally not considered a party to that agreement.

However, there are instances when the distinction between personalities of directors,
officers,and representatives, and of the corporation, are disregarded. We call this piercing
the veil of corporate fiction.

Piercing the corporate veil is warranted when "[the separate personality of a corporation] is
used as a means to perpetrate fraud or an illegal act, or as a vehicle for the evasion of an
existing obligation, the circumvention of statutes, or to confuse legitimate issues."  It is also
85

warranted in alter ego cases "where a corporation is merely a farce since it is a mere alter
ego or business conduit of a person, or where the corporation is so organized and controlled
and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or
adjunct of another corporation." 86

When corporate veil is pierced, the corporation and persons who are normally treated as
distinct from the corporation are treated as one person, such that when the corporation is
adjudged liable, these persons, too, become liable as if they were the corporation.

Among the persons who may be treatedas the corporation itself under certain circumstances
are its directors and officers. Section 31 of the Corporation Code provides the instances
when directors, trustees, or officers may become liable for corporate acts:

Sec. 31. Liability of directors, trustees or officers. - Directors or trustees who willfully and
knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of
gross negligence or bad faith in directing the affairs of the corporation or acquire any
personal or pecuniary interest in conflict with their duty as such directors or trustees shall be
liable jointly and severally for all damages resulting therefrom suffered by the corporation, its
stockholders or members and other persons.

When a director, trustee or officer attempts to acquire or acquires, in violation of his duty, any
interest adverse to the corporation in respect of any matter which has been reposed inhim in
confidence, as to which equity imposes a disability upon him to deal in his own behalf, he
shall be liable as a trustee for the corporation and must account for the profits which
otherwise would have accrued to the corporation. (n)

Based on the above provision, a director, trustee, or officer of a corporation may be made
solidarily liable with it for all damages suffered by the corporation, its stockholders or
members, and other persons in any of the following cases:

a) The director or trustee willfully and knowingly voted for or assented to a patently
unlawful corporate act;

b) The director or trustee was guilty of gross negligence or bad faith in directing
corporate affairs; and

c) The director or trustee acquired personal or pecuniary interest in conflict with his
or her duties as director or trustee.

Solidary liability with the corporation will also attach in the following instances:

a) "When a director or officer has consented to the issuance of watered stocks or

who, having knowledge thereof, did not forthwith file with the corporate secretary his
written objection thereto";87

b) "When a director, trustee or officer has contractually agreed or stipulated to hold

himself personally and solidarily liable with the corporation";  and
88

c) "When a director, trustee or officer is made, by specific provision of law, personally

liable for his corporate action."89

When there are allegations of bad faith or malice against corporate directors or
representatives, it becomes the duty of courts or tribunals to determine if these persons and
the corporation should be treated as one. Without a trial, courts and tribunals have no basis
for determining whether the veil of corporate fiction should be pierced. Courts or tribunals do
not have such prior knowledge. Thus, the courts or tribunals must first determine whether
circumstances exist towarrant the courts or tribunals to disregard the distinction between the
corporation and the persons representing it. The determination of these circumstances must
be made by one tribunal or court in a proceeding participated in by all parties involved,
including current representatives of the corporation, and those persons whose personalities
are impliedly the sameas the corporation. This is because when the court or tribunal finds
that circumstances exist warranting the piercing of the corporate veil, the corporate
representatives are treated as the corporation itself and should be held liable for corporate
acts. The corporation’s distinct personality is disregarded, and the corporation is seen as a
mere aggregation of persons undertaking a business under the collective name of the
corporation.

Hence, when the directors, as in this case, are impleaded in a case against a corporation,
alleging malice orbad faith on their part in directing the affairs of the corporation,
complainants are effectively alleging that the directors and the corporation are not acting as
separate entities. They are alleging that the acts or omissions by the corporation that
violated their rights are also the directors’ acts or omissions.  They are alleging that
90

contracts executed by the corporation are contracts executed by the directors. Complainants
effectively pray that the corporate veilbe pierced because the cause of action between the
corporation and the directors is the same.

In that case, complainants have no choice but to institute only one proceeding against the
parties.  Under the Rules of Court, filing of multiple suits for a single cause of action is
1âwphi1

prohibited. Institution of more than one suit for the same cause of action constitutes splitting
the cause of action, which is a ground for the dismissal ofthe others. Thus, in Rule 2:

Section 3. One suit for a single cause of action. — A party may not institute more than one
suit for a single cause of action. (3a)

Section 4. Splitting a single cause of action;effect of. — If two or more suits are instituted on
the basis of the same cause of action, the filing of one or a judgment upon the merits in any
one is available as a ground for the dismissal of the others. (4a)

It is because the personalities of petitioners and the corporation may later be found to be
indistinct that we rule that petitioners may be compelled to submit to arbitration.

However, in ruling that petitioners may be compelled to submit to the arbitration proceedings,
we are not overturning Heirs of Augusto Salas wherein this court affirmed the basic
arbitration principle that only parties to an arbitration agreement may be compelled to submit
to arbitration. In that case, this court recognizedthat persons other than the main party may
be compelled to submit to arbitration, e.g., assignees and heirs. Assignees and heirs may be
considered parties to an arbitration agreement entered into by their assignor because the
assignor’s rights and obligations are transferred to them upon assignment. In other words,
the assignor’s rights and obligations become their own rights and obligations. In the same
way, the corporation’s obligations are treated as the representative’s obligations when the
corporate veil is pierced. Moreover, in Heirs of Augusto Salas, this court affirmed its policy
against multiplicity of suits and unnecessary delay. This court said that "to split the
proceeding into arbitration for some parties and trial for other parties would "result in
multiplicity of suits, duplicitous procedure and unnecessary delay."  This court also intimated
91

that the interest of justice would be best observed if it adjudicated rights in a single
proceeding.  While the facts of that case prompted this court to direct the trial court to
92

proceed to determine the issues of thatcase, it did not prohibit courts from allowing the case
to proceed to arbitration, when circumstances warrant.

Hence, the issue of whether the corporation’s acts in violation of complainant’s rights, and
the incidental issue of whether piercing of the corporate veil is warranted, should be
determined in a single proceeding. Such finding would determine if the corporation is merely
an aggregation of persons whose liabilities must be treated as one with the corporation.

However, when the courts disregard the corporation’s distinct and separate personality from
its directors or officers, the courts do not say that the corporation, in all instances and for all
purposes, is the same as its directors, stockholders, officers, and agents. It does not result in
an absolute confusion of personalities of the corporation and the persons composing or
representing it. Courts merely discount the distinction and treat them as one, in relation to a
specific act, in order to extend the terms of the contract and the liabilities for all damages to
erring corporate officials who participated in the corporation’s illegal acts. This is done so that
the legal fiction cannot be used to perpetrate illegalities and injustices.

Thus, in cases alleging solidary liability with the corporation or praying for the piercing of the
corporate veil, parties who are normally treated as distinct individuals should be made to
participate in the arbitration proceedings in order to determine ifsuch distinction should
indeed be disregarded and, if so, to determine the extent of their liabilities.

In this case, the Arbitral Tribunal rendered a decision, finding that BF Corporation failed to
prove the existence of circumstances that render petitioners and the other directors solidarily
liable. It ruled that petitioners and Shangri-La’s other directors were not liable for the
contractual obligations of Shangri-La to BF Corporation. The Arbitral Tribunal’s decision was
made with the participation of petitioners, albeit with their continuing objection. In view of our
discussion above, we rule that petitioners are bound by such decision.

WHEREFORE, the petition is DENIED. The Court of Appeals' decision of May 11, 2006 and
resolution of October 5, 2006 are AFFIRMED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 172505               October 1, 2014

ANTONIO M. GARCIA, Petitioner, 
vs.
FERRO CHEMICALS, INC., Respondent.

DECISION

LEONEN, J.:

Before this court is a petition for review on certiorari  assailing the decision  of the Court of
1 2

Appeals dated August 11, 2005 and its· resolution  dated April 27, 2006, denying petitioner
3

Antonio Garcia's motion for reconsideration.

Antonio Garcia, as seller, and Ferro Chemicals, Inc., through Ramon Garcia, as buyer,
entered into a deed of absolute· sale and purchase of shares of stock on July 15, 1988. The
deed was for the sale and purchase of shares of stock from various corporations, including
one class "A" share in Alabang Country Club, Inc. and one proprietary membership in the
Manila Polo Club, Inc.  These shares of stock were in the name of Antonio Garcia.  The
4 5

contract was allegedly entered into to prevent these shares of stock from being sold at public
auction to pay the outstanding obligations of Antonio Garcia. 6

On March 3, 1989, a deed of right of repurchase over the same shares of stock subject of
the deed of absolute sale and purchase of shares of stock was entered into between Antonio
Garcia and Ferro Chemicals, Inc. Under the deed of right of repurchase, Antonio Garcia can
redeem the properties sold within 180 days from the signing of the agreement. 7
Before the end of the 180-day period, Antonio Garcia exercised his right to repurchase the
properties.  However, Ferro Chemicals, Inc. did not agree to the repurchase ofthe shares of
8

stock.  Thus, Antonio Garcia filed an action for specific performance and annulment of
9

transfer of shares. 10

On September 6, 1989, the class "A" share in Alabang Country Club, Inc. and proprietary
membership in the Manila Polo Club, Inc., which were included in the contracts entered
intobetween Antonio Garcia and Ferro Chemicals, Inc., were sold at public auction to
Philippine Investment System Organization. 11

On September 3, 1990, the information based on the complaint of Ferro Chemicals, Inc. was
filed against Antonio Garcia before the Regional Trial Court.  He was charged with
12

estafaunder Article 318 (Other Deceits) of the Revised Penal Code for allegedly
misrepresenting to Ferro Chemicals, Inc. that the shares subject of the contracts entered into
were free from all liens and encumbrances. The information reads:

The undersigned Assistant Prosecutor accuses Antonio M. Garcia of the felony of Estafa as
defined and penalized under Art. 318 of the Revised Penal Code as amended, committed as
follows:

THAT on or about 15 July 1988, in Makati, Metro Manila, Philippines, a place within the
jurisdiction of this Honorable Court, the above-named accused, with evident bad faith and
deceit, did, then and there, willfully, unlawfully and feloniously, misrepresent to FERRO
CHEMICALS, INC. (FCI) represented by Ramon M. Garcia, that his share of
stock/proprietary share with Ayala Alabang Country Club, Inc. and Manila Polo Club, Inc.
collectively valued at about ₱10.00 Million Pesos, being part of other shares of stock subject
matter of a Deed of Absolute Sale and Purchase of Shares of Stock between the accused
and FCI, were free from all liens, encumbrances and claims by third persons, when in truth
and in fact, accused well knew that aforesaid share of stock/proprietary share had already
been garnished in July 1985 and subsequently sold at public auction in September 1989,
and which misrepresentation and assurance FCI relied upon and paid the consideration in
accordance with the stipulated condition/manner of payment, all to the damage and
prejudice of FCI in the aforestated amount of ₱10.00 Million Pesos.

Contrary to law. 13

In the decision dated December 12, 1996 of the Regional Trial Court, Antonio Garcia was
acquitted for insufficiency of evidence.  The Regional Trial Court held:
14

From the foregoing, it is very clear that private complainant was aware of the status of the
subject CLUB SHARES. Thus, the element of false pretense, fraudulent act or fraudulent
means which constitute the very cause or the only motive which induced the private
complainant to enter into the questioned deed of sale (Exh. "A") is wanting in the case at
bar.  (Underscoring in the original)
15

Ferro Chemicals, Inc. filed a motion for reconsideration, which was denied by the Regional
Trial Court in the order dated July 29, 1997.
16

On August 25, 1997, Ferro Chemicals, Inc. appealed to the Court of Appeals the July 29,
1997 order of the Regional Trial Court as to the civil aspect of the case.  The notice of
17

appeal  filed was entitled "Notice of Appeal Ex Gratia Abudantia Ad Cautelam (Of The Civil
18

Aspect of the Case)." It alleged:

4. Herein private complainant hereby gives notice, out of extreme caution, that it is appealing
the Decision dated 12 December 1996 and the Order dated 29 July 1997 on the civil aspect
of the case to the Court of Appeals on the ground that it is notin accordance with the law and
the facts of the case.

5. This notice of appeal is without prejudice to the filing of an appropriate petition for
certiorari under Rule 65 of the Rules of Court on the criminal aspect, upon the giving of due
course thereto, private complainant shall endeavor to seek the consolidation of this appeal
with the said petition.
19

On October 15, 1997, the Makati City Prosecutor’s Office and Ferro Chemicals, Inc. also
filed a petition for certiorari  with this court, assailing the Regional Trial Court’s December
20

12, 1996 decision and July 29, 1997 order acquitting Antonio Garcia. 21

The petition for certiorari  filed before this court sought to annul the decision of the trial court
22

acquitting Antonio Garcia. People of the Philippines and Ferro Chemicals, Inc. argued that
the trial court "acted in grave abuse of discretion amounting to lack or excess of jurisdiction
when it rendered the judgment of acquittal based on affidavits not at all introduced in
evidence by either of the parties thereby depriving the people of their substantive right to due
process of law."  The verification/certification against forum shopping, signed by Ramon
23

Garcia as president of Ferro Chemicals, Inc., disclosed that the notice of appeal was filed
"with respect to the civil aspect of the case." 24

In the resolution  dated November 16, 1998, this court dismissed the petition for certiorari
25

filed, and entry of judgment was made on December 24, 1998. 26

On the other hand, the Court of Appeals,  in its decision  dated August 11, 2005, granted the
27 28

appeal and awarded Ferro Chemicals, Inc. the amount of ₱1,000,000.00 as actual loss with
legal interest and attorney’s fees in the amount of ₱20,000.00.  The appellate court found
29

that Antonio Garcia failed to disclose the Philippine Investment and Savings Organization’s
lien over the club shares.  Thus:
30

The issue in this case is whether or not Antonio Garcia disclosed to Ferro-Chemicals, during
the negotiation stage of the impending sale of the imputed club shares, the third attachment
lien in favor of Philippine Investment and Savings Organization (PISO) which, ultimately,
became the basis of the auction sale of said club shares. We have scrutinized the records of
the case but found no evidence that Antonio Garcia intimated to his brother the third
attachment lien of PISO over the said club shares. While it is true that Antonio Garcia
divulged the two liens of Security Bank and Insular Bank of Asia and America, the lien of
PISO was clearly not discussed. The affidavits executed by the two lawyers to the effect that
the lien of PISO was considered but deliberately left out in the deed cannot be given much
weight as they were never placed on the witness stand and cross-examined by Ferro-
Chemicals. If their affidavits, although not offered, were considered inthe criminal aspect and
placed a cloud on the prosecution’s thrust, theycannot be given the same probative value in
this civil aspect as only a preponderance of evidence is necessary to carry the day for the
plaintiff, Ferro Chemicals.

While Antonio Garcia insists that no consideration was ever made over the club shares as
the same were merely given for safekeeping, the document denominated as Deed of
Absolute Sale states otherwise. It is a basic rule of evidence that between documentary
evidence and oral evidence, the former carries more weight.
Also, We have observed that in Antonio Garcia’s letter of redemption addressed to Ferro
Chemicals, he mentioned his interest in redeeming the company shares only. That he did not
include the club shares only meant that said club shares no longer had any much
redeemable value as there was a lienover them. To redeem them would be pointless.

If they had no redeemable value to Antonio Garcia, to Ferro Chemical they were certainly
marketable assets. The non-disclosure of the third lien in favor of PISO materially affected
Ferro Chemicals since it was not able to act on time to protect its interest when the auction
sale over the club shares actually took place. As a result, Ferro Chemicals suffered losses
due to the unfortunate public auction sale. It is but just and fair that Antonio Garcia be made
to compensate the loss pursuant to Articles 21 and 2199 of the Civil Code.

The actual loss suffered by Ferro Chemicals amounted to ₱1,000,000.00 which

correspondents to the bid value of the club shares at the time of the auction as evidenced by
the Sheriff’s Certificate of Sale.  (Citations omitted)
31

Antonio Garcia filed a motion for reconsideration and Ferro Chemicals, Inc. filed a partial
motion for reconsideration of the decision of the Court of Appeals.  These motions were
32

denied in the resolution  dated April 27, 2006. Thus, Antonio Garcia filed this petition for
33

review on certiorari,  assailing the decision and resolution of the Court of Appeals.
34

Antonio Garcia argues that the factual findings of the Court of Appeals were erroneous  and 35

insists that "[Ferro Chemicals, Inc.] was fully aware that the shares covered by the Deed of
Absolute Sale, including the Subject Club Shares, were not free from liens and
encumbrances and that the Deed [of] Sale was executed [to] warehouse [Antonio Garcia’s]
assets based on, among other evidence, the affidavits executed by Jaime Gonzales . . . and
Rolando Navarro. . . ." 36

Antonio Garcia faults the Court of Appeals in disregarding the affidavits executed by Jaime
Gonzales and Rolando Navarro. Antonio Garcia argues that even thiscourt in G.R. No.
130880 entitled People of the Philippines and Ferro Chemicals, Inc. v. Hon. Dennis Villa
Ignacio and Antonio Garcia where the admissibility of the affidavits was put in issue held that
the trial court did not commit any grave abuse of discretion in the challenged decision.  He
37

then reasoned that "pursuant to the law of the case, [the affidavits of Gonzalez and Navarro]
are admissible and should be given weight." 38

Finally, Antonio Garcia claims thatboth he and and Ferro Chemicals, Inc. acted in bad faith
when they entered into the deed of absolute sale as a scheme to defraud Antonio Garcia’s
creditors. Thus, they are in pari delicto and Ferro Chemicals, Inc. should not be allowed to
recover from Antonio Garcia. 39

In its comment,  Ferro Chemicals, Inc. points out that Antonio Garcia raised factual issues
40

not proper ina Rule 45 petition and reiterates the findings of the Court of Appeals. 41

There are pertinent and important issues that the parties failed to raise before the trial court,
Court of Appeals, and this court. Nonetheless, we resolve to rule on these issues.

As a general rule, this court through its appellate jurisdiction can only decide on matters or
issues raised by the parties.  However, the rule admits of exceptions.  When the unassigned
42 43

error affects jurisdiction over the subject matter  or when the consideration of the error is
44

necessary for a complete resolution of the case,  this court can still decide on these issues.
45
We cannot turn a blind eye on glaring misapplications of the law or patently erroneous
decisions or resolutions simply because the parties failed to raise these errors before the
court. Otherwise, we will be allowing injustice by reason of the mistakes of the parties’
counsel and condoning reckless and negligent acts of lawyers to the prejudice of the
litigants. Failure to rule on these issues amounts to an abdication of our duty to dispense
justice to all parties.

The issues are:

I. Whether the Regional Trial Court had jurisdiction over the case

II. Whether the act of FerroChemicals, Inc. in filing the notice of appeal before the
Court of Appeals and the petition for certiorari assailing the same trial court decision
amounted to forum shopping

III. Whether Ferro Chemicals, Inc. was entitled to the awards given as civil liability ex
delicto

The Regional Trial Court did not have jurisdiction

Jurisdiction of a court over the subject matter is vested by law.  In criminal cases, the
46

imposable penalty of the crime charged in the information determines the court that has
jurisdiction over the case.
47

The information charged Antonio Garcia with violation of Article 318 of the Revised Penal
Code, which is punishable by arresto mayor, or imprisonment for a period of one (1) month
and one (1) day to six (6) months. Article 318 states:

ART. 318: Other deceits. – The penalty of arresto mayor and a fine of not less than the
amount of the damage caused and not more than twice such amount shall be imposed upon
any person who shall defraud or damage another by any other deceit not mentioned in the
preceding articles of this chapter.

Any person who, for profit or gain, shall interpret dreams, make forecasts, tell fortunes, or
take advantage of the credulity of the public in any other similar manner, shall suffer the
penalty of arresto mayoror a fine not exceeding 200 pesos.

When the information was filed on September 3, 1990, the law in force was Batas Pambansa
Blg. 129 before it was amended by Republic Act No. 7691. Under Section 32 of Batas
Pambansa Blg. 129, the Metropolitan Trial Court had jurisdiction over the case:

SEC. 32. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal
Circuit Trial Courts in criminal cases.–

....

2. Exclusive original jurisdiction over all offenses punishable with imprisonment of not
exceeding four years and two months, or a fine of not more than four thousand pesos, or
both such fine and imprisonment, regardless of other imposable accessory or other
penalties, including the civil liability arising from such offenses or predicated thereon,
irrespective of kind, nature, value, or amount thereof: Provided, however, That in offenses
involving damage to property through criminal negligence they shall have exclusive original
jurisdiction where the imposable fine does not exceed twenty thousand pesos. (Emphasis
supplied)

The Regional Trial Court did not have jurisdiction to hear and decide the case. This lack of
jurisdiction resulted in voiding all of the trial court’s proceedings and the judgment
rendered.  Although the trial court’s lack of jurisdiction was never raised as an issue in any
48

part of the proceedings and even until it reached this court, we proceed with resolving the
matter.

In Pangilinan v. Court of Appeals,  this court held:

49

Thus, we apply the general rule thatjurisdiction is vested by law and cannot be conferred or
waived by the parties. Even on appeal and even if the reviewing parties did not raise the
issue of jurisdiction, the reviewing court is not precluded fromruling that the lower court had
no jurisdiction over the case[.]

....

Having arrived at the conclusion that the Regional Trial Court did not have jurisdiction to try
the case against the appellant, it is no longer necessary to consider the other issues raised
as the decision of the Regional Trial Court is null and void. 50

The trial court’s lack of jurisdiction cannot be cured by the parties’ silence on the
matter.  The failure of the parties to raise the matter of jurisdiction also cannot be construed
51

as a waiver of the parties. Jurisdiction is conferred by law and cannot be waived by the
parties.

The assailed decision is void, considering that it originates from a void decision of the
Regional Trial Court for lack of jurisdiction over the subject matter.

Ferro Chemicals, Inc. committed forum shopping

Forum shopping is defined as "theact of a litigant who ‘repetitively availed of several judicial
remedies in different courts, simultaneously or successively, all substantially founded on the
same transactions and the same essential facts and circumstances, and all raising
substantially the same issues either pending in, or already resolved adversely by some other
court . . . to increase his chances of obtaining a favorable decision if not in one court, then in
another’."  Once clearly established that forum shopping was committed willfully and
52

deliberately by a party or his or her counsel, the case may be summarily dismissed with
prejudice, and the act shall constitute direct contempt and a cause for administrative
sanctions. 53

Forum shopping is prohibited, and sanctions are imposed on those who commit forum
shopping as "it trifles with the courts, abuses their processes, degrades the administration of
justice and adds to the already congested court dockets."  This court has said:
54

What is critical is the vexation brought upon the courts and the litigants by a party who asks
different courts to rule on the same or related causes and grant the same or substantially the
same reliefs and in the process creates the possibility of conflicting decisions being rendered
by the different fora upon the same issues, regardless of whether the court in which one of
the suits was brought has no jurisdiction over the action.  (Citation omitted)
55

The test and requisites that must concur to establish when a litigant commits forum shopping
are the following:

The test for determining the existence of forum shopping is whether the elements of litis
pendentiaare present, or whether a final judgment in one case amounts to res judicatain
another. Thus, there is forum shopping when the following elements are present: (a) identity
of parties, or at least such parties asrepresent the same interests in both actions; (b) identity
of rights asserted and relief prayed for, the relief being founded on the same facts; and (c)
the identity of the two preceding particulars, such that any judgment rendered in the other
action will, regardless of which party is successful, amount to res judicatain the action under
consideration; said requisites are also constitutive of the requisites for auter action pendant
or lis pendens.  (Citation omitted)
56

There is no question that Ferro Chemicals, Inc. committed forum shopping when it filed an
appeal before the Court of Appeals and a petition for certiorari before this court assailing the
same trial court decision. This is true even if Ferro Chemicals, Inc.’s notice of appeal to the
Court of Appeals was entitled "Notice of Appeal Ex Gratia Abudantia Ad Cautelam (Of The
Civil Aspect of the Case)."  The "civil aspect of the case" referred to by Ferro Chemicals, Inc.
57

is for the recovery of civil liability ex delicto. However, it failed to make a reservation before
the trial court to institute the civil action for the recovery of civil liability ex delictoor institute a
separate civil action prior to the filing of the criminal case.

There is identity of parties. Petitioner, Antonio Garcia, and respondent, Ferro Chemicals,
Inc., are both parties in the appeal filed before the Court of Appeals and the petition for
certiorari before this court.

There is identity of the rights asserted and reliefs prayed for in both actions. At a glance, it
may appear that Ferro Chemicals, Inc. asserted different rights: The appeal before the Court
of Appeals is purely on the civil aspect of the trial court’s decision while the petition for
certiorari before this court is allegedly only onthe criminal aspect of the case. However, the
civil liability asserted by Ferro Chemicals, Inc. before the Court of Appeals arose from the
criminal act. It is in the nature of civil liability ex delicto. Ferro Chemicals, Inc. did not reserve
the right to institute the civil action for the recovery of civil liability ex delictoor institute a
separate civil action prior to the filing of the criminal case.  Thus, it is an adjunct of the
58

criminalaspect of the case.  As held in Lim v. Kou Co Ping:

1âwphi1
59

The civil liability arising from the offense or ex delictois based on the acts or omissions that
constitute the criminal offense; hence, its trial is inherently intertwined with the criminal
action.For this reason, the civil liability ex delictois impliedly instituted with the criminal
offense. If the action for the civil liability ex delictois instituted prior to or subsequent to the
filing of the criminal action, its proceedings are suspended until the final outcome of the
criminal action. The civil liability based on delict is extinguished when the court hearing the
criminal action declares that ‘the act or omission from which the civil liability may arise did
not exist’."  (Emphasis supplied, citations omitted).
60

When the trial court’s decision was appealed as to its criminal aspect in the petition for
certiorari before thiscourt, the civil aspect thereof is deemed included in the appeal. Thus,
the relief prayed for by Ferro Chemicals, Inc., that is, recovery of civil liability ex delicto, is
asserted in both actions before this court and the Court of Appeals.
Even the allegations in the notice of appeal readily show that Ferro Chemicals, Inc.
committedforum shopping, to wit:

5. This notice of appeal is without prejudice to the filing of an appropriate petition for
certiorari under Rule 65 of the Rules of Court on the criminal aspect, upon the giving of due
course thereto, private complainant shall endeavor to seek the consolidation of this appeal
with the said petition.
61

As to the third requisite, on the assumption that the trial court had jurisdiction over the case,
this court’s decision in G.R. No. 130880 affirming the trial court’s decision acquitting the
accused for lack of an essential element of the crime charged amounts to res judicatato
assert the recovery of civil liability arising from the offense. This court’s resolution dismissing
the petition for certiorari filed by Ferro Chemicals, Inc. states:

In any event, petitioners failed to sufficiently show that any grave abuse of discretion was
committed by the Regional Trial Court in rendering the challenged decision and order which,
on the contrary, appear to be in accord with the facts and the applicable law and
jurisprudence. 62

Litigants cannot avail themselves of two separate remedies for the same relief in the hope
that in one forum, the relief prayed for will be granted. This is the evil sought tobe averted by
the doctrine of non-forum shopping, and this is the problem that has happened in this case.
This court denied the petition for certiorari filed byFerro Chemicals, Inc. resulting in finality of
the trial court’s decision.  The decision found Antonio Garcia not guilty of the offense
1awp++i1

charged, and no civil liability was awarded to Ferro Chemicals, Inc. However, at
present,there is a conflicting decision from the Court of Appeals awarding Ferro Chemicals,
Inc. civil indemnity arising from the offense charged.

When the civil action for the recovery of civil liability ex delicto is instituted with the criminal
action, whether by choice of private complainant (i.e., no reservation is made or no prior filing
of a separate civil action) or as required by the law or rules, the case will be prosecuted
under the direction and control of the public prosecutor.  The civil action cannot proceed
63

independently of the criminal case. This includes subsequent proceedings on the criminal
action such as an appeal. In any case, Ferro Chemicals, Inc. joined the public prosecutor in
filing the petition for certiorari before this court. Ramon Garcia, President of Ferro Chemicals,
Inc., signed the verification and certification of non-forum shopping of the petition for
certiorari.
64

We must clarify, however, that private complainants in criminal cases are not precluded from
filing a motion for reconsideration and subsequently an appeal on the civil aspect of a
decision acquitting the accused. An exception to the rule that only the Solicitor General can
bring actions in criminal proceedings before the Court of Appeals or this court is "when the
private offended party questions the civil aspect of a decision of a lower court."  As
65

discussed in Mobilia Products, Inc. v. Hajime Umezawa: 66

In a criminal case in which the offended party is the State, the interest of the private
complainant or the offended party is limited to the civil liability arising there from. Hence, if a
criminal case is dismissed by the trial court or if there is an acquittal, a reconsideration of the
order of dismissal or acquittal may be undertaken, whenever legally feasible, insofar as the
criminal aspect there of is concerned and may be made only by the public prosecutor; or in
the case of an appeal, by the State only, through the OSG. The private complainant or
offended party may not undertake such motion for reconsideration or appeal on the criminal
aspect of the case.However, the offended party or private complainant may file a motion for
reconsideration of such dismissal or acquittal or appeal therefrom but only insofar as the civil
aspect thereof is concerned. In so doing, the private complainant or offended party need not
secure the conformity of the public prosecutor. If the court denies his motion for
reconsideration, the private complainant or offended party may appeal or file a petition for
certiorarior mandamus,if grave abuse amounting to excess or lack of jurisdiction is shown
and the aggrieved party has no right of appeal or given an adequate remedy in the ordinary
course of law.  (Citations omitted)
67

This is in consonance with the doctrine that:

[T]he extinction of the penal action does not necessarily carry with it the extinction ofthe civil
action, whether the latter is instituted with or separately from the criminal action. The
offended party may still claim civil liability ex delictoif there is a finding in the final judgment in
the criminal action that the act or omission from which the liability may arise exists.
Jurisprudence has enumerated three instances when, notwithstanding the accused’s
acquittal, the offended party may still claim civil liability ex delicto: (a) if the acquittal is based
on reasonable doubt as only preponderance of evidence is required; (b) if the court declared
that the liability of the accused is only civil;and (c) if the civil liability of the accused does not
arise from or is not based upon the crime of which the accused is acquitted. 68

However, if the state pursues an appeal on the criminal aspect of a decision of the trial court
acquitting the accused and private complainant/s failed to reserve the right to institute a
separate civil action,the civil liability ex delictothat is inherently attached to the offense is
likewise appealed. The appeal of the civil liability ex delictois impliedly instituted with the
petition for certiorari assailing the acquittal of the accused. Private complainant cannot
anymore pursue a separate appeal from that of the state without violating the doctrine of
non-forum shopping.

On the other hand, the conclusion isdifferent if private complainant reserved the right to
institute the civil action for the recovery of civil liability ex delicto before the Regional Trial
Court orinstitute a separate civil action prior to the filing of the criminal case in accordance
with Rule 111 of the Rules of Court. In these situations, the filing of an appealas to the civil
aspect of the case cannot be considered as forum shopping.  This is not the situation here.
1âwphi1

We see no more reason to discuss the issues presented by the parties in light of the
foregoing discussion.

Entry of judgment having been made on the resolution of the court in G.R. No. 130880
involving the same parties and issues and by virtue of the doctrine of finality of judgment, we
reiterate the resolution of this court.

WHEREFORE, the resolution in G.R. No. 130880 is reiterated. We grant the petition insofar
as it prays for the setting aside of the Court of Appeals' decision d~ted August 11, 2005 and
resolution dated April 27, 2006 as a final decision over the assailed Regional Trial Court
decision that was rendered on November 16, 1998 in G.R. No. 130880.

SO ORDERED.

MARVIC M.V.F. LEONEN

Associate Justice
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 172843               September 24, 2014

ALFREDO L. VILLAMOR, JR., Petitioner, 

vs.
JOHN S. UMALE, in substitution of HERNANDO F. BALMORES, Respondent.

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

G.R. No. 172881

ODIVAL E. REYES, HANS M. PALMA and DOROTEO M. PANGILINAN, Petitioners, 

vs.
HERNANDO F. BALMORES, Respondent.

DECISION

LEONEN, J.:

Before us is a petition for review on certiorari  under Rule 45 of the Rules of Court, assailing
1

the decision  of the Court of Appeals dated March 2, 2006 and its resolution  dated May 29,
2 3

2006, denying petitioners’ motions for reconsideration. The Court of Appeals placed Pasig
Printing Corporation (PPC) under receivership and appointed an interim management
committee for the corporation. 4

MC Home Depot occupied a prime property (Rockland area) in Pasig. The property was part
of the area owned by Mid-Pasig Development Corporation (Mid-Pasig). 5

On March 1, 2004, PPC obtained an option to lease portions of MidPasig’s property,

including the Rockland area. 6

On November 11, 2004, PPC’s board of directors issued a resolution  waiving all its rights,
7

interests, and participation in the option to lease contract in favor of the law firm of Atty.
Alfredo Villamor, Jr. (Villamor), petitioner in G.R. No. 172843. PPC received no consideration
for this waiver in favor of Villamor’s law firm. 8

On November 22, 2004, PPC, represented by Villamor, entered into a memorandum of

agreement (MOA) with MC Home Depot.  Under the MOA, MC Home Depot would continue
9

to occupy the area as PPC’s sublessee for four (4) years, renewable for another four (4)
years, at a monthly rental of ₱4,500,000.00 plus goodwill of ₱18,000,000.00. 10

In compliance with the terms of the MOA, MC Home Depot issued 20 post-dated checks
representing rentalpayments for one year and the goodwill money. The checks were given to
Villamor who did not turn these or the equivalent amount over to PPC, upon encashment. 11

Hernando Balmores, respondent inG.R. No. 172843 and G.R. No. 172881 and a stockholder
and director of PPC, wrote a letter addressed to PPC’s directors, petitioners inG.R. No.
12

172881, on April 4, 2005.  He informed them that Villamor should bemade to deliver to PPC
13

and account for MC Home Depot’s checks or their equivalent value. 14

Due to the alleged inaction of the directors, respondent Balmores filed with the Regional Trial
Court an intra-corporate controversy complaint under Rule 1, Section 1(a)(1) of the Interim
Rules for Intra-Corporate Controversies  (Interim Rules) against petitioners for their alleged
15

devices or schemes amounting to fraud or misrepresentation "detrimental to the interest of

the corporation and its stockholders." 16

Respondent Balmores alleged in his complaint that because of petitioners’ actions, PPC’s
assets were ". . . not only in imminent danger, but have actually been dissipated,lost, wasted
and destroyed." 17

Respondent Balmores prayed that a receiver be appointed from his list of nominees.  He 18

also prayed for petitioners’ prohibition from "selling, encumbering, transferring or disposing in
any manner any of [PPC’s] properties, including the MC Home [Depot] checks and/or their
proceeds."  He prayed for the accounting and remittance to PPC of the MC Home Depot
19

checks or their proceeds and for the annulment of the board’s resolution waiving PPC’s
rights in favor of Villamor’s law firm. 20

Ruling of the Regional Trial Court

In its resolution  dated June 15, 2005, the Regional Trial Court denied respondent Balmores’
21

prayer for the appointment of a receiver or the creation of a management committee.The

dispositive portion reads:

WHEREFORE, premises considered the appointment of a Receiver and the creation of a

Management Committee applied for by plaintiff Hernando F. Balmores are, as they are
hereby, DENIED.  (Emphasis in the original)
22

According to the trial court, PPC’s entitlement to the checks was doubtful. The resolution
issued by PPC’s board of directors, waiving its rights to the option to lease contract infavor of
Villamor’s law firm, must be accorded prima facie validity. 23

The trial court also noted that there was a pending case filed by one Leonardo Umale
against Villamor, involving the same checks. Umale was also claiming ownership of the
checks.  This, according to the trial court, weakened respondent Balmores’ claim that the
24

checks were properties of PPC. 25

The trial court also found that there was "no clear and positive showing of dissipation, loss,
wastage, or destruction of [PPC’s] assets . . . [that was] prejudicial to the interestof the
minority stockholders, partieslitigants or the general public."  The board’s failure to recover
26

the disputed amounts was not an indication of mismanagement resulting in the dissipation of
assets.27

The trial court noted that PPC was earning substantial rental income from its other sub-
lessees. 28

The trial court added that the failure to implead PPCwas fatal. PPC should have been
impleaded as an indispensable party, without which, there would be no final determination of
the action. 29

Ruling of the Court of Appeals

Respondent Balmores filed with the Court of Appeals a petition for certiorari under Rule 65 of
the Rules of Court. He assailed the decision of the trial court, which denied his "application
30

for the appointment of a [r]eceiver and the creation ofa [m]anagement [c]ommittee." 31

In the decision promulgated on March 2, 2006, the Court of Appeals gave due course to
respondent Balmores’ petition. It reversed the trial court’s decision, and issued a new order
placing PPC under receivership and creating an interim management committee.  The 32

dispositive portion reads:

WHEREFORE, premises considered, the instant petition is hereby GRANTED and GIVEN
DUE COURSE and the June 15, 2005 Order/Resolution of the commercial court, the
Regional Trial Court of Pasig City, Branch 167, in S.E.C. Case No. 05-62, is hereby
REVERSED and SET ASIDE and a NEW ORDER is ISSUED that, during the pendency of
the derivative suit, untiljudgment on the merits is rendered by the commercial court, in order
toprevent dissipation, loss, wastage or destruction of the assets, in order to prevent
paralization of business operations which may be prejudicial to the interest of stockholders,
parties-litigants or the general public, and in order to prevent violations of the corporation
laws: (1) Pasig Printing Corporation (PPC) is hereby placed under receivership pursuant to
the Rules Governing Intra-Corporate Controversies under R.A. No. 8799;(2) an Interim
Management Committee is hereby created for Pasig Printing Corporation (PPC) composed
of Andres Narvasa, Jr., Atty. Francis Gustilo and Ms Rosemarie Salvio-Leonida; (3) the
interim management committee is hereby directed to forthwith, during the pendency of the
derivative suit until judgment on the merits is rendered by the commercial court, to: (a) take
over the business of Pasig Printing Corporation (PPC), (b) take custody and control of all
assets and properties owned and possessed by Pasig Printing Corporation (PPC), (c) take
the place of the management and the board of directors of Pasig Printing Corporation (PPC),
(d) preserve Pasig Printing Corporation’s assets and properties, (e) stop and prevent any
disposal, in any manner, of any of the properties of Pasig Printing Corporation (PPC)
including the MC Home Depot checks and/or their proceeds; and (3) [sic] restore the status
quo ante prevailing by directing respondents their associates and agents to account and
return to the Interim Management Committee for Pasig Printing Corporation (PPC) all the
money proceeds of the 20 MC Home Depot checks taken by them and to account and
surrender to the Interim Management Committee all subsequent MC Home Depot checks or
proceeds. (Citation omitted)
33
The Court of Appeals characterizedthe assailed order/resolution of the trial court as an
interlocutory order that is not appealable.  In reversing the trial court order/resolution, the
34

Court of Appeals considered the danger of dissipation, wastage, and loss of PPC’s assets if
the review of the trial court’s judgment would be delayed. 35

The Court of Appeals ruled that the case filed by respondent Balmores with the trial court
"[was] a derivative suit because there were allegations of fraud or ultra vires acts . . . by
[PPC’s directors]." 36

According to the Court of Appeals,the trial court abandoned its duty to the stockholders in a
derivative suit when it refused to appoint a receiver or create a management committee, all
during the pendency of the proceedings. The assailed order ofthe trial court removed from
the stockholders their right, in an intra-corporate controversy, to be allowed the remedy of
appointment of a receiverduring the pendency of a derivative suit, leaving the corporation
under the control of an outsider and its assets prone to dissipation.  The Court of Appeals
37

also ruled that this amounts to "despotic, capricious, or whimsicalexercise of judicial

power"  on the part of the trial court.
38

In justifying its decision to place PPCunder receivership and to create a management

committee, the Court of Appeals stated that the board’s waiver of PPC’s rights in favor
ofVillamor’s law firm without any consideration and its inaction on Villamor’s failure to turn
over the proceeds of rental payments to PPC warrant the creation of a management
committee.  The circumstances resulted in the imminent danger of loss, waste, or dissipation
39

of PPC’s assets. 40

Petitioners filed separatemotions for reconsideration. Both motions were denied by the Court
of Appeals on May 29, 2006. The dispositive portion of the Court of Appeals’ resolution
reads:

WHEREFORE, for lack of merit, respondents’ March 10, 2006 and March 20, 2006 Motions
for Reconsideration are hereby DENIED. 41

Petitioners filed separatepetitions for review under Rule 45, raising the following threshold
issues:

I. Whether the Court of Appeals correctly characterized respondent Balmores’ action

as a derivative suit

II. Whether the Court of Appeals properly placed PPC under receivership and
created a receiver or management committee

PPC’s directors argued that the Court of Appeals erred in characterizing respondent
Balmores’ suit as a derivative suit because of his failure to implead PPC as party in the case.
Hence, the appellate court did not acquire jurisdiction over the corporation, and the
appointment of a receiver or management committee is not valid. 42

The directors further argued that the requirements for the appointment of a receiver or
management committee under Rule 9  of the Interim Rules were not satisfied. The directors
43

pointed out that respondent Balmores failed to prove that the assets of the corporation were
in imminent danger of being dissipated. 44
According to the directors, assuming that a receiver or management committee may be
appointed in the case, it is the Regional Trial Court only and not the Court of Appeals that
must appoint them. 45

Meanwhile, Villamor argued that PPC’s entitlement to the checks or their proceeds was still
in dispute. In a separate civil case against Villamor, a certain Leonardo Umale was claiming
ownership of the checks. 46

Villamor also argued that the Court of Appeals’ order to place PPC under receivership and to
appoint a management committee does not endanger PPC’s assets because the MC Home
Depot checks were not the only assets of PPC.  Therefore, it would not affect the operation
47

of PPC or result in its paralysation. 48

In his comment, respondent Balmores argued that Villamor’s and the directors’ petitions
raise questions of facts, which cannot be allowed in a petition for review under Rule 45. 49

On the appointment of a receiver or management committee, respondent Balmores stated

that the ". . . very practice of waiving assets and income for no consideration can in factlead,
not only to the paralyzation of business, but to the complete loss or cessation of business of
PPC[.] It is

precisely because of this fraudulent practice that a receiver/management committee must be

appointed to protect the assets of PPC from further fraudulent acts, devices and schemes." 50

The petitions have merit.

Petition for review on

certiorari under Rule 45 was proper

First, we rule on the issue of whether petitioners properly filed a petition for review on
certiorari under Rule 45.

Respondent Balmores argued that the petition raises questions of fact.

Under Rule 45, only questionsof law may be raised.  There is a question of law "when there
51

is doubt or controversy as to what the law is on a certain [set] of facts."  The test is "whether
52

the appellate court can determine the issue raised without reviewing or evaluating the
evidence."  Meanwhile, there is a question of fact when there is "doubt . . . as to the truth or
53

falsehood of facts."  The question must involve the examination of probative value of the
54

evidence presented.

In this case, petitioners raise issues on the correctness of the Court of Appeals’ conclusions.
Specifically, petitioners ask (1) whether respondent Balmores’ failure to implead PPC in his
action with the trial court was fatal; (2) whether the Court of Appeals correctly characterized
respondent Balmores’ action as a derivative suit; (3) whether the Court of Appeals’
appointment of a management committee was proper; and (4) whether the Court of Appeals
may exercise the power to appoint a management committee.
These are questions of law that may be determined without looking into the evidence
presented. The question of whether the conclusion drawn by the Court of Appeals from a set
of facts is correct is a question of law, cognizable by this court. 55

Petitioners, therefore, properly filed a petition for review under Rule 45.

II

Respondent Balmores’ action

in the trial court is not a derivative suit

A derivative suit is an action filed by stockholders to enforce a corporate action.  It is an

56

exception to the general rule that the corporation’s power to sue  is exercised only by the
57

board of directors or trustees. 58

Individual stockholders may be allowed to sue on behalf of the corporation whenever the
directors or officers of the corporation refuse to sue to vindicate the rights of the corporation
or are the ones to be sued and are in control of the corporation.  It is allowed when the
59

"directors [or officers] are guilty of breach of . . . trust, [and] not of mere error of judgment."
60

In derivative suits, the real party in interest is the corporation, and the suing stockholder is a
mere nominal party. 61

Thus, this court noted:

The Court has recognized that a stockholder’s right to institute a derivative suit is not based
on any express provision of the Corporation Code, or even the Securities Regulation Code,
but is impliedly recognized when the said laws make corporate directors or officers liable for
damages suffered by the corporation and its stockholders for violation of their fiduciary
duties. In effect, the suit isan action for specific performance of an obligation, owed by the
corporation to the stockholders, to assist its rights of action when the corporation has been
put in default by the wrongful refusal of the directors or management to adopt suitable
measures for its protection. 62

Rule 8, Section 1 of the Interim Rules of Procedure for Intra Corporate Controversies (Interim
Rules) provides the five (5) requisites  for filing derivative suits:
63

SECTION 1. Derivative action. – A stockholder or member may bring an action in the name
of a corporation or association, as the case may be, provided, that:

(1) He was a stockholder or member at the time the acts or transactions subject of
the action occurred and at the time the action was filed;

(2) He exerted all reasonable efforts, and alleges the same with particularity in the
complaint, toexhaust all remedies available under the articles of incorporation, by-
laws, laws or rules governing the corporation or partnership to obtain the relief he
desires;

(3) No appraisal rights are available for the act or acts complained of; and

(4) The suit is not a nuisance or harassment suit.

In case of nuisance or harassment suit, the court shall forthwith dismiss the case.

The fifth requisite for filing derivative suits, while not included in the enumeration, is implied
in the first paragraph of Rule 8, Section 1 of the Interim Rules: The action brought by the
stockholder or member must be "in the name of [the] corporation or association. . . ." This
requirement has already been settled in jurisprudence.

Thus, in Western Institute of Technology, Inc., et al. v. Salas, et al.,  this court said that
64

"[a]mong the basic requirements for a derivative suit to prosper is that the minority
shareholder who is suing for and on behalf of the corporation must allege in his complaint
before the proper forum that he is suing on a derivative cause of action on behalf of the
corporation and all other shareholders similarly situated who wish to join [him]."  This
65

principle on derivative suits has been repeated in, among other cases, Tam Wing Tak v.
Hon. Makasiar and De Guia  and in Chua v. Court of Appeals,  which was cited in Hi-Yield
66 67

Realty, Incorporated v. Court of

Appeals. 68

Moreover, it is important that the corporation be made a party to the case. 69

This court explained in Asset Privatization Trust v. Court of Appeals  why it is a condition
70

sine qua nonthat the corporation be impleaded as party in derivative suits. Thus:

Not only is the corporation an indispensible party, but it is also the present rule that it must
be served with process. The reason given is that the judgment must be made binding upon
the corporation inorder that the corporation may get the benefit of the suit and may not bring
a subsequent suit against the same defendants for the same cause of action. In other words
the corporation must be joined as party because it is its cause of action that is being litigated
and because judgment must be a res judicata against it. 71

In the same case, this court enumerated the reasons for disallowing a direct individual suit.

The reasons given for not allowing direct individual suit are:

(1) . . . "the universally recognized doctrine that a stockholder in a corporation has no

title legal or equitable to the corporate property; that both of these are in the
corporation itself for the benefit of the stockholders." Inother words, to allow
shareholders to sue separately would conflict with the separate corporate entity
principle;

(2) . . . that the prior rights of the creditors may be prejudiced. Thus, our Supreme
Court held in the case of Evangelista v. Santos, that ‘the stockholders may not
directly claim those damages for themselves for that would result in the appropriation
by, and the distribution among them of part of the corporate assets before the
dissolution of the corporation and the liquidation of its debts and liabilities, something
which cannot be legally donein view of Section 16 of the Corporation Law. . .";

(3) the filing of such suits would conflict with the duty of the management to sue for
the protection of all concerned;

(4) it would produce wasteful multiplicity of suits; and

 (5) it would involve confusion in ascertaining the effect of partial recovery by an
individual on the damages recoverable by the corporation for the same act. 72

While it is true that the basis for allowing stockholders to file derivative suits on behalf of
corporations is based on equity, the above legal requisites for its filing must necessarily be
complied with for its institution.
73

Respondent Balmores’ action in the trial court failed to satisfy all the requisites of a derivative
suit.

Respondent Balmores failed to exhaust all available remedies to obtain the reliefs he prayed
for. Though he tried to communicate with PPC’s directors about the checks in Villamor’s
possession before he filed an action with the trial court, respondent Balmores was not able
to show that this comprised all the remedies available under the articles of incorporation,
bylaws, laws, or rules governing PPC.

An allegation that appraisal rights were not available for the acts complained of is another
requisite for filing derivative suits under Rule 8, Section 1(3) of the Interim Rules.

Section 81 of the Corporation Code provides the instances of appraisal right:

SEC. 81. Instances of appraisal right.— Any stockholder of a corporation shall have the right
to dissent and demand payment of the fair value of his shares in the following instances:

1. In case any amendment to the articles of incorporation has the effect of changing
or restricting the rights of any stockholders or class of shares, or of authorizing
preferences in any respect superior to those of outstanding shares of any class, or of
extending or shortening the term of corporate existence;

2. In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of

all or substantially all of the corporate property and assets as provided in this Code;
and

3. In case of merger or consolidation.

Section 82 of the Corporation Codeprovides that the stockholder may exercise the right if he
or she voted against the proposed corporate action and if he made a written demand for
payment on the corporation within thirty (30) days after the date of voting.

Respondent Balmores complained aboutthe alleged inaction of PPC’s directors in his letter
informing themthat Villamor should be made to deliver to PPC and accountfor MC Home
Depot’s checks or their equivalent value. He alleged that these are devices or schemes
amounting to fraud or misrepresentation detrimental to the corporation’s and the
stockholders’ interests. He also alleged that the directors’ inaction placed PPC’s assets in
imminent and/or actual dissipation, loss, wastage, and destruction.

Granting that (a) respondent Balmores’ attempt to communicate with the other PPC directors
already comprised all the available remedies that he could have exhausted and (b) the
corporation was under full control of petitioners that exhaustion of remedies became
impossible or futile,  respondent Balmores failed toallege that appraisal rights were not
74

available for the acts complained of here.

Neither did respondent Balmores implead PPC as party in the case nor did he allege that he
was filing on behalf of the corporation.

The non-derivative character of respondent Balmores’ action may also be gleaned from his
allegations in the trial court complaint. In the complaint, he described the nature ofhis action
as an action under Rule 1, Section 1(a)(1) of the Interim Rules, and not an action under Rule
1, Section 1(a)(4) of the Interim Rules, which refers to derivative suits. Thus, respondent
Balmores said:

1.1 This is an action under Section 1 (a) (1), Rule 1 of the Interim Rules of Procedure for
Intra-corporate Controversies, involving devices or schemes employed by, or acts of, the
defendants as board of directors, business associates and officers of Pasig Printing
Corporation (PPC), amounting to fraud or misrepresentation, which are detrimental to the
interest of the plaintiff as stockholder of PPC.  (Emphasis supplied)
75

Rule 1, Section 1(a)(1) of the Interim Rules refers to acts of the board, associates, and
officers, amounting to fraud or misrepresentation, which may be detrimental to the interest of
the stockholders. This is different from a derivative suit.

While devices and schemes of the board of directors, business associates, or officers
amounting to fraud under Rule 1, Section 1(a)(1) of the Interim Rules are causes of a
derivative suit, it is not always the case that derivative suits are limited to such causes or that
they are necessarily derivative suits. Hence, they are separately enumerated in Rule 1,
Section 1(a) of the Interim Rules:

SECTION 1. (a) Cases covered. – These Rules shall govern the procedure to be observed in
civil cases involving the following:

(1) Devices or schemes employed by, or any act of, the board of directors, business
associates, officers or partners, amounting to fraud or misrepresentation which may
be detrimental to the interest of the public and/or of the stockholders, partners, or
members of any corporation, partnership, or association;

(2) Controversies arising out of intra-corporate, partnership, or association relations,

between and among stockholders, members, or associates; and between, any or all
of them and the corporation, partnership, or association of which they are
stockholders, members, or associates, respectively;

(3) Controversies in the election orappointment of directors, trustees, officers, or

managers ofcorporations, partnerships, or associations;

(4) Derivative suits;and

(5) Inspection of corporate books. (Emphasis supplied)

Stockholder/s’ suits based on fraudulent or wrongful acts of directors, associates, or officers

may also beindividual suits or class suits.

Individual suits are filed when the cause of action belongs to the individual stockholder
personally, and notto the stockholders as a group or to the corporation, e.g., denial of right to
inspection and denial of dividends to a stockholder.  If the cause of action belongs to a group
76
of stockholders, such as when the rights violated belong to preferred stockholders, a class or
representative suit may be filed to protect the stockholders in the group. 77

In this case, respondent Balmores filed an individual suit. His intent was very clear from his
manner of describing the nature of his action:

1.1 This is an action under Section 1 (a) (1), Rule 1 of the Interim Rules of Procedure for
Intra-corporate Controversies, involving devices or schemes employed by, or acts of, the
defendants as board of directors, business associates and officers of Pasig Printing
Corporation (PPC),amounting to fraud or misrepresentation, which are detrimental to the
interest of the plaintiff as stockholder of PPC.78

(Emphasis supplied)

His intent was also explicit from his prayer:

WHEREFORE, plaintiff respectfully prays that the Honorable Court –

....

2. After notice and due proceedings –

Declare that the acts of defendant Directorsin allowing defendant VILLAMOR to retain
custody of the MC Home checks and encash them upon maturity, as well as their refusal or
failure to take any action against defendant VILLAMOR to make him account and deliver the
MC Home checks and/or their proceeds to Pasig Printing Corporation are devices, schemes
or acts amounting to fraud that are detrimental to plaintiff’s interest as a stockholder of
PPC;  (Emphasis supplied)
79

Respondent Balmores did not bring the action for the benefit of the corporation. Instead,
hewas alleging that the acts of PPC’s directors, specifically the waiver of rights in favor of
Villamor’s law firm and their failure to take back the MC Home Depot checks from Villamor,
were detrimental to his individual interest as a stockholder. In filing an action, therefore, his
intention was to vindicate his individual interest and not PPC’s or a group of stockholders’.

The essence of a derivative suit is thatit must be filed on behalf of the corporation. This is
because the cause of action belongs, primarily, to the corporation. The stockholder who sues
on behalf of a corporation is merely a nominal party.

Respondent Balmores’ intent to file an individual suit removes it from the coverage of
derivative suits.

III

Respondent Balmores has no cause of action that would

entitle him to the reliefs sought

Corporations have a personality that is separate and distinct from their stockholders and
directors. A wrong tothe corporation does not necessarily create an individual cause of
action. "A cause of action is the act or omission by which a party violates the right of
another."  A cause of action must pertain to complainant if he or she is to be entitled to the
80

reliefs sought. Thus, in Cua v. Tan,  this court emphasized:

81

. . . where the acts complainedof constitute a wrong to the corporation itself, the cause of
action belongs to the corporation and not to the individual stockholder or member. Although
in most every case of wrong to the corporation, each stockholder is necessarily affected
because the value of his interest therein would beimpaired, this fact of itself is not sufficient
to give him an individual cause of action since the corporation is a person distinct and
separate from him, and can and should itself sue the wrongdoer. Otherwise, not only would
the theory of separate entity be violated, but there would be multiplicity of suits as well as a
violation of the priority rights of creditors. Furthermore, there is the difficulty of determining
the amount of damages that should be paid to each individual stockholder. 82

In this case, respondent Balmores did not allege any cause of action that is personal to him.
His allegations are limited to the facts that PPC’s directors waived their rights to rental
income in favor of Villamor’s law firm without consideration and that they failed to take action
when Villamor refused to turn over the amounts to PPC. These are wrongsthat pertain to
PPC. Therefore, the cause of action belongs to PPC — not to respondent Balmores or any
stockholders as individuals.

For this reason, respondent Balmoresis not entitled to the reliefs sought in the complaint.
Only the corporation, or arguably the stockholders as a group, is entitled to these reliefs,
which should have been sought in a proper derivative suit filed on behalf of the corporation.

PPC will not be bound by a decision granting the application for the appointment of a
receiver or management committee. Since it was not impleaded in the complaint, the
courtsdid not acquire jurisdiction over it. On this matter, it is an indispensable party, without
which, no final determination can be had.

Hence, it is not only respondent Balmores’ failure to implead PPC that is fatal to his action,
as petitioners point out. It is the fact that he alleged no cause of action that pertains
personally to him that disqualifies him from the reliefs he sought in his complaint.

On this basis alone, the Court of Appeals erred in giving due course to respondent Balmores’
petition for certiorari, reversing the trial court’s decision, and issuing a new order placing
PPC under receivership and creating an interim management committee.

IV

Appointment of a management committee was not proper

Assuming that respondent Balmores has an individual cause of action, the Court of Appeals
still erred in placing PPC under receivership and in creating and appointing a management
committee.

A corporation may be placed under receivership, or management committees may be

created to preserveproperties involved in a suit and to protect the rights of the parties under
the control and supervision of the court. Management committees and receivers are
83

appointed when the corporation is in imminent danger of "(1) [d]issipation, loss, wastage or
destruction of assets or other properties; and (2) [p]aralysation of its business operations that
may be prejudicial to the interest of the minority stockholders, parties-litigants, or the general
public."
84

Applicants for the appointment of a receiver or management committee need to establish the
confluence of these two requisites.  This is because appointed receivers and management
1âwphi1

committees will immediately take over the management of the corporation and will have the
management powers specified in law.  This may have a negative effect on the operations
85

and affairs of the corporation with third parties,  as persons who are more familiar with its
86

operations are necessarily dislodged from their positions in favor of appointees who are
strangers to the corporation’s operations and affairs.

Thus, in Sy Chim v. Sy Siy Ho & Sons, Inc.,  this court said:

87

. . . the creation and appointment of a management committee and a receiver is an extra

ordinary and drastic remedy to be exercised with care and caution; and only when the
requirements under the Interim Rules are shown. It is a drastic course for the benefit of the
minority stockholders, the parties-litigants or the general public are allowed only under
pressing circumstances and, when there is inadequacy, ineffectual or exhaustion of legal or
other remedies . . . The powerof the court to continue a business of a corporation . . . must
be exercised with the greatest care and caution. There should be a full consideration ofall
the attendant facts, including the interest of all the parties concerned. 88

PPC waived its rights, without any consideration in favor of Villamor. The checks were
already in Villamor’s possession. Some of the checks may have already been encashed.
This court takes judicial notice that the goodwill money of ₱18,000,000.00 and the rental
payments of ₱4,500,000.00 every month are not meager amounts only to be waived without
any consideration. It is, therefore, enough to constitute loss or dissipation of assets under the
Interim Rules.

Respondent Balmores, however, failed to show that there was an imminent danger of
paralysis of PPC’s business operations. Apparently, PPC was earning substantial amounts
from its other sub-lessees. Respondent Balmores did not prove otherwise. He, therefore,
failed to show at least one of the requisites for appointment of a receiver or management
committee.

The Court of Appeals had no

jurisdiction to appoint the receiver or management

committee

The Court of Appeals has no power to appoint a receiver or management committee. The
Regional Trial Court has original and exclusive jurisdiction  to hear and decide intra-
89

corporate controversies,  including incidents of such controversies.  These incidents include

90 91

applications for the appointment of receivers or management committees.

"The receiver and members of the management committee . . . are considered officers of the
court and shall be under its control and supervision."  They are required to report tothe court
92

on the status of the corporation within sixty (60) days from their appointment and every three
(3) months after.93
When respondent Balmores filed his petition for certiorari with the Court of Appeals, there
was still a pending action in the trial court. No less than the Court of Appeals stated that it
allowed respondent Balmores’ petition under Rule 65 because the order or resolution in
question was an interlocutory one. This means that jurisdiction over the main case was still
lodged with the trial court.

The court making the appointment controls and supervises the appointed receiver or
management committee. Thus, the Court of Appeals’ appointment of a management
1âwphi1

committee would result in an absurd scenario wherein while the main case is still pending
before the trial court, the receiver or management committee reports to the Court of Appeals.

WHEREFORE, the petitions are GRANTED. The decision of the Court of Appeals dated
March 2, 2006 and its resolution dated May 29, 2006 are SET ASIDE.

SO ORDERED.

MARVIC M.V. F. LEONEN

Associate Justice
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 207950               September 22, 2014

PEOPLE OF THE PHILIPPINES, Plaintiff-appellee, 

vs.
MARK JASON CHAVEZ y BITANCOR alias "NOY", Accused-appellant.

DECISION

LEONEN, J.:

Every conviction for any crime must be accompanied by the required moral certainty that the
accused has committed the offense charged beyond reasonable doubt. The prosecution
must prove "the offender's intent to take personal property before the killing, regardless of
the time when the homicide [was] actually carried out"  !n order to convict for the crime of
1

robbery with homicide. The accused may nevertheless be convi·cted of the separate crime of
homicide once the prosecution establishes beyond reasonable doubt the accused's
culpability for the victim's death.

In the information dated November 8, 2006, Mark Jason Chavez y Bitancor (Chavez) was
charged with the crime of robbery with homicide:

That on or about October 28, 2006, in the City of Manila, Philippines, the said accused, did
then and there wilfully, unlawfully and feloniously, with intent of gain and means of force,
violence and intimidation upon the person of ELMER DUQUE y OROS, by then and there,
with intent to kill, stabbing the latter repeatedly with a kitchen knife, thereby inflicting upon
him mortal stab wounds which were the direct and immediate cause of his death thereafter,
and on the saidoccasion or by reason thereof, accused took, robbed and carried away the
following:

One (1) Unit Nokia Cellphone

One (1) Unit Motorola Cellphone

Six (6) pcs. Ladies Ring

 Two (2) pcs. Necklace

One (1) pc. Bracelet All of undetermined value and undetermined amount of money, all
belonging to said ELMER DUQUE y OROS @ BARBIE to the damage and prejudice of the
said owner/or his heirs, in the said undetermined amount in Philippines currency.

Contrary to law. 2

Chavez pleaded not guilty during his arraignment on December 4, 2006. The court
proceeded to trial. The prosecution presented Angelo Peñamante (Peñamante), P/Chief
Inspector Sonia Cayrel (PCI Cayrel), SPO3 Steve Casimiro (SPO3 Casimiro), Dr. Romeo T.
Salen (Dr. Salen), and Raymund Senofa as witnesses. On the other hand, the defense
presented Chavez as its sole witness. 3

The facts as found by the lower court are as follows.

On October 28, 2006, Peñamante arrived home at around 2:45 a.m., coming from work as a
janitor in Eastwood City.  When he was about to go inside his house at 1326 Tuazon Street,
4

Sampaloc, Manila, he saw a person wearing a black, long-sleeved shirt and black pants and
holding something while leaving the house/parlor of Elmer Duque (Barbie) at 1325 Tuazon
Street, Sampaloc, Manila, just six meters across Peñamante’s house. 5

There was a light at the left side of the house/parlor of Barbie, his favorite haircutter, so
Peñamante stated that he was able to see the face of Chavez and the clothes he was
wearing. 6

Chavez could not close the door of Barbie’s house/parlor so he simply walked away.
However, he dropped something that he was holding and fell down when he stepped on
it.  He walked away after, and Peñamante was not able to determine what Chavez was
7

holding.  Peñamante then entered his house and went to bed.

8 9

Sometime after 10:00 a.m., the Scene of the Crime Office (SOCO) team arrived, led by PCI
Cayrel. She was joined by PO3 Rex Maglansi (photographer), PO1 Joel Pelayo (sketcher),
and a fingerprint technician.  They conducted an initial survey of the crime scene after
10

coordinating with SPO3 Casimiro of the Manila Police District Homicide Section. 11

The team noted that the lobby and the parlor were in disarray, and they found Barbie’s dead
body inside.  They took photographs and collected fingerprints and other pieces of evidence
12

such as the 155 pieces of hair strands found clutched in Barbie’s left hand.  They
13

documented the evidence then turned them over to the Western Police District Chemistry
Division. Dr. Salen was called to conduct an autopsy on the body. 14

At around 11:00 a.m., Peñamante’s landlady woke him up and told him that Barbie was
found dead at 9:00 a.m. He then informed his landlady that he saw Chavez leaving Barbie’s
house at 2:45 a.m. 15

At around 1:00 p.m., Dr. Salen conducted an autopsy on the body and found that the time of
death was approximately 12 hours prior to examination.  There were 22 injuries on Barbie’s
16

body — 21 were stab wounds in various parts of the body caused by a sharp bladed
instrument, and one incised wound was caused by a sharp object.  Four (4) of the stab
17

wounds were considered fatal. 18

The next day, the police invited Peñamante to the Manila Police Station to give a statement.
Peñamante described to SPO3 Casimiro the physical appearance of the person he saw
leaving Barbie’s parlor. 19

Accompanied by his mother, Chavez voluntarily surrendered on November 5, 2006 to SPO3

Casimiro at the police station.  Chavez was then 22 years old.  His mother told the police
20 21

that she wanted to help her son who might be involved in Barbie’s death. 22

SPO3 Casimiro informed them ofthe consequences in executing a written statement without
the assistance of a lawyer. However, Chavez’s mother still gave her statement, subscribed
by Administrative Officer Alex Francisco. She also surrendered two cellular phones owned
23

by Barbie and a baseball cap owned by Chavez. 24

The next day, Peñamante was again summoned by SPO3 Casimiro to identify from a line-up
the person he saw leaving Barbie’s house/parlor that early morning of October 28,
2006.  Peñamante immediately pointed to and identified Chavez and thereafter executed his
25

written statement.  There were no issues raised in relation to the line-up.

26

On the other hand, Chavez explained that he was athome on October 27, 2006, exchanging
text messages withBarbie on whether they could talk regarding their
misunderstanding.  According to Chavez, Barbie suspected that he was having a
27

relationship with Barbie’s boyfriend, Maki.  When Barbie did not reply to his text message,
28

Chavez decided to go to Barbie’s house at around 1:00 a.m. of October 28, 2006.  Barbie 29

allowed him to enter the house, and he went home after. 30

On August 19, 2011, the trial court  found Chavez guilty beyond reasonable doubt of the
31

crime of robbery with homicide:

WHEREFORE, in view of the foregoing, this Court finds accused MARK JASON CHAVEZ y
BITANCOR @ NOY GUILTY beyond reasonable doubt of the crime of Robbery with
Homicideand hereby sentences him to suffer the penaltyof reclusion perpetua without
eligibility for parole.

Further, he is ordered to pay tothe heirs of the victim, Elmer Duque y Oros the sum of
75,000.00 as death indemnity and another ₱75,000 for moral damages.

SO ORDERED. 32

On February 27, 2013, the Court of Appeals  affirmed the trial court’s decision.  Chavez then
33 34

filed a notice of appeal pursuant to Rule 124, Section 13(c) of the Revised Rules of Criminal
Procedure, as amended, elevating the case with this court. 35

This court notified the parties tosimultaneously submit supplemental briefs if they so desire.
Both parties filed manifestationsthat they would merely adopt their briefs before the Court of
Appeals. 36

In his brief, Chavez raised presumption of innocence, considering that the trial court
"overlooked and misapplied some facts of substance that could have altered its verdict."  He 37

argued that since the prosecution relied on purely circumstantial evidence, conviction must
rest on a moral certainty of guilt on the part of Chavez.  In this case, even if Peñamante saw
38
him leaving Barbie’s house, Peñamante did not specify whether Chavez was acting
suspiciously at that time.39

As regards his mother’s statement,Chavez argued its inadmissibility as evidence since his
mother was not presented before the court to give the defense an opportunity for cross-
examination.  He added that affidavits are generally rejected as hearsay unless the affiant
40

appears before the court and testifies on it. 41

Chavez argued that based on Dr. Salen’s findings, Barbie’s wounds were caused by two
sharp bladed instruments, thus, it was possible that there were two assailants.  It was also
42

possible that the assailants committed the crime after Chavez had left Barbie’s
house.  Given that many possible explanations fit the facts,that which is consistent with the
43

innocence of Chavez should be favored. 44

On the other hand, plaintiff-appellee argued that direct evidence is not indispensable when
the prosecution isestablishing guilt beyond reasonable doubt of Chavez.  The circumstantial
45

evidence presented before the trial court laid down an unbroken chain of events leading to
no other conclusion than Chavez’s acts of killing and robbing Barbie. 46

On the argument made by Chavez that his mother’s statement was inadmissible as hearsay,
plaintiff-appellee explained that the trial court did not rely on, and did not even refer to, any of
the statements made by Chavez’s mother. 47

Finally, insofar as Chavez’s submission that Dr. Salen testified on the possibility that there
weretwo assailants, Dr. Salen equally testified on the possibility that there was only
one.  The sole issue now before us iswhether Chavez is guilty beyond reasonable doubt of
48

the crime of robbery with homicide.

We reverse the decisions of the lower courts, but find Chavez guilty of the crime of homicide.

Chavez was found guilty of the specialcomplex crime of robbery with homicide under the
Revised Penal Code:

Art. 294. Robbery with violence against or intimidation of persons – Penalties. – Any person
guilty of robberywith the use of violence against or intimidation of any person shall suffer:

1) The penalty of reclusion perpetua to death, when by reason or on occasion of the robbery,
the crime of homicide shall have been committed. . . . 49

Chavez invokes his constitutional right to be presumed innocent, especially since the
prosecution’s evidence is purely circumstantial and a conviction must stand on a moral
certainty of guilt.50

The Rules of Court expressly provides that circumstantial evidence may be sufficient to
establish guilt beyond reasonable doubt for the conviction of an accused:

SEC. 4. Circumstantial evidence, when sufficient. – Circumstantial evidence is sufficient for

conviction if:
 (a) There is more than one circumstance;

(b) The facts from which the inferences are derived are proven; and

(c) The combination of all the circumstances is such as to produce a conviction

beyond reasonable doubt. 51

The lower courts found that the circumstantial evidence laid down by the prosecution led to
no other conclusion than the commission by Chavez of the crime charged:

In the instant case, while there is no direct evidence showing that the accused robbed and
fatally stabbed the victim to death, nonetheless, the Court believes that the following
circumstances form a solid and unbroken chain of events that leads to the conclusion,
beyond reasonable doubt, that accused Mark Jason Chavez y Bitancor @ Noy committed
the crime charged, vi[z]: first, it has been duly established, as the accused himself admits,
that he went to the parlor of the victim at around 1:00 o’clock in the morning of 28 October
2006 and the accused was allowed by the victim to get inside his parlor as it serves as his
residence too; second, the victim’s two (2) units of cellular phones (one red Nokia with model
3310 and the other one is a black Motorola) without sim cards and batteries, which were
declared as partof the missing personal belongings of the victim, were handled to SPO3
Steve Casimiro by the mother of the accused, Anjanette C. Tobias on 05 November 2006
when the accused voluntarily surrendered, accompanied by his mother, at the police station:
third, on 28 October 2006 at about 2:45 o’clock in the morning, witness Angelo Peñamante,
who arrived from his work, saw a person holding and/or carrying something and about toget
out of the door of the house of the victim located at 1325 G. Tuazon Street, Sampaloc,
Manila, and trying to close the door but the said person was not able to successfully do so.
He later positively identified the said person at the police station as MARK JASON CHAVEZ
y BITANCOR @ NOY, the accused herein; and finally, the time when the accused decided
on 27 October 2006 to patch up things with the victim and the circumstances (Dr. Salen’s
testimony that the body of the victim was dead for more or less twelve (12) hours) when the
latter was discovered fatally killed on 28 October 2006 is not a co-incidence.

The prosecution has equally established, based on the same circumstantial evidence, that
the accused had indeed killed the victim.52

Factual findings by the trial court on its appreciation of evidence presented by the parties,
and even its conclusions derived from the findings, are generally given great respect and
conclusive effect by this court, more so when these factual findings are affirmed by the Court
of Appeals. 53

Nevertheless, this court has held that "[w]hat is imperative and essential for a conviction for
the crime of robbery with homicide is for the prosecution to establish the offender’s intent to
take personal property before the killing, regardless of the time when the homicide is actually
carried out."  In cases when the prosecution failed to conclusively prove that homicide was
54

committed for the purpose of robbing the victim, no accused can be convicted of robbery with
homicide.55

The circumstantial evidence relied on by the lower courts, as quoted previously, do not
satisfactorily establish an original criminal design by Chavez to commit robbery.

At most, the intent to take personal property was mentioned by Chavez’s mother in her
statement as follows:
Na si Noy na aking anak ay nagtapat sa akin tungkol sa kanyang kinalaman sa pagkamatay
ni Barbie at kasabay ang pagbigay sa akin ng dalawang (2) piraso ng cellular phones na
pag/aari [sic] ni Barbie na kanyang kinuha pagka/tapos [sic] ng insidente.

Na ipinagtapat din sa akin ni Noy na ang ginamit na panaksak na isang kutsilyo na gamit
namin sabahay ay inihulog niya sa manhole sa tapat ng aming bahay matapos ang
insidente.

At ang isang piraso ng kwintas na kinuha rin nya mula kay Barbie ay naisanla niya sa isang
sanglaan sa Quezon City.

Na ang suot niyang tsinelas ay nag/iwan [sic] ng bakas sa pinangyarihan ng insidente. At

sya rin ang nakasugat sa kanyang sariling kamay ng [sic] maganap ang insidente.

Na sinabi niya sa akin na wala siyang intensyon na patayin [sic] si Barbie kundi ay
pagnakawan lamang. (Emphasis supplied)
56

However, this statement is considered as hearsay, with no evidentiary value, since Chavez’s
mother was never presented as a witness during trial to testify on her statement. 57

An original criminal design to take personal property is also inconsistent with the infliction of
no less than 21 stab wounds in various parts of Barbie’s body. 58

The number of stab wounds inflicted on a victim has been used by this court in its
determination of the nature and circumstances of the crime committed.

This may show an intention to ensure the death of the victim. In a case where the victim
sustained a total of 36 stab wounds in his front and back, this court noted that "this number
of stab wounds inflicted on the victim is a strong indication that appellants made sure of the
success of their effort to kill the victim without risk to themselves."
59

This court has also looked into the number and gravity of the wounds sustained by the victim
as indicative ofthe accused’s intention to kill the victim and not merely to defend himself or
others.60

In the special complex crime of robbery with homicide, homicide is committed in order "(a) to
facilitate the robbery or the escape of the culprit; (b) to preserve the possession by the culprit
of the loot; (c) to prevent discovery of the commission of the robbery; or (d) to eliminate
witnesses to the commission of the crime."  21 stab wounds would be overkill for these
61

purposes. The sheer number of stab wounds inflicted on Barbie makes it difficult to conclude
an original criminal intent of merely taking Barbie’s personal property.

In People v. Sanchez,  this court found accused-appellant liable for the separate crimes of
62

homicide and theft for failure of the prosecution to conclusively prove that homicide was
committed for the purpose of robbing the victim:

But from the record of this case, we find that the prosecution palpably failed to substantiate
its allegations of the presence of criminal design to commit robbery, independent ofthe intent
to commit homicide. There is no evidence showing that the death of the victim occurred by
reason or on the occasion of the robbery. The prosecution was silent on accused-appellant’s
primary criminal intent. Did he intend to kill the victim in order to steal the cash and the
necklace? Or did he intend only to kill the victim, the taking of the latter’s personal property
being merely an afterthought? Where the homicide is notconclusively shown to have been
committed for the purpose of robbing the victim, or where the robbery was not proven at all,
there can be no conviction for robo con homicidio. 63

II

This court finds that the prosecution proved beyond reasonable doubt the guilt of Chavez for
the separate crime of homicide.

First, the alibi of Chavez still placeshim at the scene of the crime that early morning of
October 28, 2006.

The victim, Elmer Duque, went by the nickname, Barbie, and he had a boyfriend named
Maki. Nevertheless, Chavez described his friendship with Barbie to be "[w]e’re like
brothers."  He testified during cross-examination that he was a frequent visitor at Barbie’s
64

parlor that he cannot recall how many times he had been there.  This speaks of a close
65

relationship between Chavez and Barbie.

Chavez testified that he went to Barbie’s house at 1:00 in the morning of October 28, 2006 to
settle his misunderstanding with Barbie who suspected him of having a relationship with
Barbie’s boyfriend:

MARK JASON CHAVEZ was a friend to the victim, Barbie, for almost three (3) years and the
two (2) treated each other like brothers. The latter, however, suspected Mark Jason of
having a relationship with Maki Añover, Barbie’s boyfriend for six (6) months, which resulted
in a misunderstanding between them. Mark Jason tried to patch things up with Barbie so thru
a text message he sent on the evening of 27 October 2006, he asked if they could talk.
When Barbie did not reply, he decided to visit him at his parlor at around 1:00 o’clock in the
morning. Barbie let him in and they tried to talk about the situation between them. Their rift,
however, was not fixed so he decided to gohome. Later on, he learned that Barbie was
already dead. 66

This court has considered motive as one of the factors in determining the presence of an
intent to kill,  and a confrontation with the victim immediately prior to the victim’sdeath has
67

been considered as circumstantial evidence for homicide. 68

Second, the number of stab wounds inflicted on Barbie strengthens an intention to kill and
ensures his death.The prosecution proved that there was a total of 22 stab wounds found
indifferent parts of Barbie’s body and that a kitchen knife was found in a manhole near
Chavez’s house at No. 536, 5th Street, San Beda, San Miguel, Manila. 69

The Court of Appeals’ recitation of facts quoted the statement of Chavez’s mother. This
provides, among others, her son’s confession for stabbing Barbie and throwing the knife
used in a manhole near their house:

Na si Noy na aking anak ay nagtapat sa akin tungkol sa kanyang kinalaman sa pagkamatay

ni Barbie at kasabay ang pagbigay sa akin ng dalawang (2) piraso ng cellular phones na
pag/aari [sic] ni Barbie na kanyang kinuha pagka/tapos [sic] ng insidente.
Na ipinagtapat din sa akin ni Noy na ang ginamit na panaksak na isang kutsilyo na gamit
namin sa bahay ay inihulog niya sa manhole sa tapat ng aming bahay matapos ang
insidente.

At ang isang piraso ng kwintas nakinuha rin nya mula kay Barbie ay naisanla niya sa isang
sanglaan sa Quezon City.

Na ang suot niyang tsinelas ay nag/iwan [sic] ng bakas sa pinangyarihan ng insidente. At

sya rin ang nakasugat sa kanyang sariling kamay ng [sic] maganap ang insidente.

Na sinabi niya sa akin na wala siyang intensyon na patayin [sic] si Barbie kundi ay
pagnakawan lamang. (Emphasis supplied)
70

Even if this statement was not taken into account for being hearsay, further investigation
conducted still led tothe unearthing of the kitchen knife with a hair strand from a manhole
near Chavez’s house. 71

Third, no reason exists to disturb the lower court’s factual findings giving credence to 1)
Peñamante’s positive identification of Chavez as the person leaving Barbie’s house that
early morning of October 28, 2006  and 2) the medico-legal’s testimony establishing Barbie’s
72

time of death as 12 hours prior to autopsy at 1:00 p.m., thus, narrowing the time of death to
approximately 1:00 a.m. of the same day, October 28, 2006. 73

All these circumstances taken together establish Chavez’s guilt beyond reasonable doubt for
the crime of homicide.

III

There is a disputable presumption that "a person found in possession of a thing taken in the
doing of a recent wrongful act is the taker and the doer of the whole act; otherwise, thatthing
which a person possesses, or exercises acts of ownership over, are owned by him."  Thus,
74

when a person has possession of a stolen property, hecan be disputably presumed as the
author of the theft.
75

Barbie’s missing cellular phones were turned over to the police by Chavez’s mother, and this
was never denied by the defense.  Chavez failed to explain his possession of these cellular
76

phones.  The Court of Appeals discussed that "a cellular phone has become a necessary
77

accessory, no person would part with the same for a long period of time, especially in this
case as it involves an expensive cellular phone unit, as testified by Barbie’s kababayan,
witness Raymond Seno[f]a." 78

However, with Chavez and Barbie’s close relationship having been established, there is still
a possibilitythat these cellphones were lent to Chavez by Barbie.

The integrity of these cellphones was also compromised when SPO3 Casimiro testified
during cross-examination that the police made no markings on the cellphones, and their SIM
cards were removed.

Q: But you did not place any marking on the cellphone, Mr. witness?

A: No, sir.
Atty. Villanueva: No further questions, Your Honor.

Court: When you received the items,there were no markings also?

Witness: No, Your Honor.

Court: The cellular phones, were they complete with the sim cards and the batteries?

A: There’s no sim card, Your Honor.

Q; No sim card and batteries?

A; Yes, Your Honor.

Q: No markings when you receivedand you did not place markings when these were turned
over to the Public Prosecutor, no markings?

A: No markings, Your Honor. 79

The other missing items were no longer found, and no evidence was presented to conclude
that these weretaken by Chavez. The statement of Chavez’s mother mentioned that her son
pawned one of Barbie’s necklaces ["At ang isang piraso ng kwintas na kinuha rin nya mula
kay Barbie ay naisanla niya sa isang sanglaan sa Quezon City"  ], but, as earlier discussed,
80

this statement is mere hearsay.

In any case, the penalty for the crime of theft is based on the value of the stolen items.  The
81

lower court made no factual findings on the value of the missing items enumerated in the
information — one Nokia cellphone unit, one Motorola cellphone unit, six pieces ladies ring,
two pieces necklace, and one bracelet.

At most, prosecution witness Raymund Senofa, a town mate of Barbie, testified that he could
not remember the model of the Motorola fliptype cellphone he saw used by Barbie but that
he knew it was worth 19,000.00 more or less.  This amounts to hearsay as he has no
82

personal knowledge on how Barbie acquired the cellphone or for how much.

These circumstances create reasonable doubt on the allegation that Chavez stole the
missing personal properties of Barbie.

It is contrary to human nature for a mother to voluntarily surrender her own son and confess
that her son committed a heinous crime.

Chavez was 22 years old, no longer a minor, when he voluntarily went to the police station
on November 5, 2006 for investigation,  and his mother accompanied him. SPO3 Casimiro
83

testified that the reason she surrendered Chavez was because "she wanted to help her
son"  and "perhaps the accused felt that [the investigating police] are getting nearer to
84

him."  Nevertheless, during cross-examination, SPO3 Casimiro testified:

85

Q: Regarding the mother, Mr. witness, did I get you right that when the mother brought her
son, according to you she tried to help her son, is that correct?

A: That is the word I remember, sir.

Q: Of course, said help you do notknow exactly what she meant by that?

A: Yes, sir.

Q: It could mean that she is trying to help her son to be cleared from this alleged crime, Mr.
witness?

A: Maybe, sir. 86

Chavez’s mother "turned-over (2) units of Cellular-phones and averred that her son Mark
Jason told her that said cellphones belong[ed] to victim Barbie. . . [that] NOY was wounded
in the incident and that the fatal weapon was put in a manhole infront[sic] of their
residence."  The records are silent on whether Chavez objected to his mother’s statements.
87

The records also do not show why the police proceeded to get his mother’s testimony as
opposed to getting Chavez’s testimony on his voluntary surrender.

At most, the lower court found thatChavez’s mother was informed by the investigating officer
at the police station of the consequences in executing a written statement withoutthe
assistance of a lawyer.  She proceeded to give her statement dated November 7, 2006 on
88

her son’s confession of the crime despite the warning.  SPO3 Casimiro testified during his
89

cross-examination:

Q: Do you remember if anybody assisted this Anjanette Tobias when she executed this
Affidavit you mentioned?

A: She was with some neighbors.

Atty. Villanueva

Q: How about a lawyer, Mr. Witness?

A: None, sir.

Q: So, in other words, no lawyer informed her of the consequence of her act of executing an
Affidavit?

A: We somehow informed her of what will be the consequences of that statement, sir.

Q: So, you and your police officer colleague at the time?

A: Yes, sir. 90

The booking sheet and arrest report states that "when [the accused was] appraised [sic] of
his constitutional rights and nature of charges imputed against him, accused opted to remain
silent."  This booking sheet and arrest report is also dated November 7, 2006, or two days
91

after Chavez, accompanied by his mother, had voluntarily gone to the police station.

The right to counsel upon being questioned for the commission of a crime is part of the
Miranda rights, which require that:
. . . (a) any person under custodial investigation has the right to remain silent; (b) anything he
says can and will be used against him in a court of law; (c) he has the right totalk to an
attorney before being questioned and to have his counsel present when being questioned;
and (d) if he cannot afford an attorney, one will be provided before any questioning if he so
desires.92

The Miranda rightswere incorporated in our Constitution but were modified to include the
statement thatany waiver of the right to counsel must be made "in writing and in the
presence of counsel." 93

The invocation of these rights applies during custodial investigation, which begins "when the
police investigation is no longer a general inquiry into an unsolved crime but has begun
tofocus on a particular suspect taken into custody by the police who starts the interrogation
and propounds questions to the person to elicit incriminating statements." 94

It may appear that the Miranda rightsonly apply when one is "taken into custody by the
police," such as during an arrest. These rights are intended to protect ordinary citizens from
the pressures of a custodial setting:

The purposes of the safeguards prescribed by Miranda are to ensure that the police do not
coerce or trick captive suspects into confessing, to relieve the "inherently compelling
pressures" "generated by the custodial setting itself," "which work to undermine the
individual’s will to resist," and as much as possible to free courts from the task of scrutinizing
individual cases to try to determine, after the fact, whether particular confessions were
voluntary. Those purposes are implicated as much by in-custody questioning of persons
suspected of misdemeanours as they are by questioning of persons suspected of
felonies.  (Emphasis supplied)
95

Republic Act No. 7438  expanded the definition of custodial investigation to "include the
96

practice ofissuing an ‘invitation’ to a person who is investigated in connection with an offense

he is suspected to have committed, without prejudice to the liability of the ‘inviting’ officer for
any violation of law."
97

This means that even those who voluntarily surrendered before a police officer must be
apprised of their Miranda rights. For one, the same pressures of a custodial setting exist in
this scenario. Chavez is also being questioned by an investigating officer ina police station.
As an additional pressure, he may have been compelled to surrender by his mother who
accompanied him to the police station.

This court, thus, finds that the circumstantial evidence sufficiently proves beyond reasonable
doubt that Chavez is guilty of the crime of homicide, and not the special complex crime of
robbery with homicide.

On the service of Chavez’s sentence, the trial court issued the order dated November 14,
2006 in that "as prayed for, the said police officer is hereby ordered to immediately commit
accused, Mark Jason Chavez y Bitancor @ Noy to the Manila City Jail and shall be detained
thereat pending trial of this case and/or untilfurther orders from this court."  The order of
98

commitment dated September 28, 2011 was issued after his trial court conviction in the
decision dated August 19, 2011.
Chavez has been under preventive detention since November 14, 2006, during the
pendency of the trial.  This period may be credited in the service of his sentence pursuant to
1âwphi1

Article 29 of the Revised Penal Code, as amended:

ART. 29. Period of preventive imprisonment deducted from term of imprisonment.–

Offenders or accused who have undergone preventive imprisonment shall be credited in the
service of their sentence consisting of deprivation of liberty, with the full time during which
they have undergone preventive imprisonment if the detention prisoner agrees voluntarily in
writing after being informed of the effects thereof and with the assistance of counsel to abide
by the same disciplinary rules imposed upon convicted prisoners, except in the following
cases:

1. When they are recidivists, or have been convicted previously twice or more times
of any crime; and

2. When upon being summoned for the execution of their sentence they have failed
to surrender voluntarily.

If the detention prisoner does notagree to abide by the same disciplinary rules imposed upon
convicted prisoners, he shall do so in writing with the assistance of a counsel and shall be
credited in the service of his sentence with four-fifths of the time during which he has
undergone preventive imprisonment.

Credit for preventive imprisonment for the penalty of reclusion perpetua shall be deducted
from thirty (30) years.

Whenever an accused has undergone preventive imprisonment for a period equal to the
possible maximum imprisonment of the offense charged to which he may be sentenced and
his case is not yet terminated, he shall be released immediately without prejudice to the
continuation of the trial thereof or the proceeding on appeal, if the same is under review.
Computation of preventive imprisonment for purposes of immediate release under this
paragraph shall be the actual period of detention with good conduct time allowance:
Provided, however, That if the accused is absent without justifiable cause at any stage of the
trial, the court may motu proprio order the rearrest of the accused: Provided, finally, That
recidivists, habitual delinquents, escapees and persons charged with heinous crimes are
excluded from the coverage of this Act. In case the maximum penalty to which the accused
may be sentenced is destierro, he shall be released after thirty (30) days of preventive
imprisonment. 99

Finally, this court laments thatobject evidence retrieved from the scene of the crime were not
properly handled, and no results coming from the forensic examinations were presented to
the court. There was no examination of the fingerprints found on the kitchen knife retrieved
from the manhole near the house of Chavez.  There were no results of the DNA
100

examination done on the hair strands found with the knife and those in the clutches of the
victim. Neither was there a comparison made between these strands of hair and Chavez’s.
There was no report regarding any finding of traces of blood on the kitchen knife recovered,
and no matching with the blood of the victim or Chavez’s. The results of this case would
have been rendered with more confidence at the trial court level had all these been done. In
many cases, eyewitness testimony may not be as reliable — or would have been belied —
had object evidence been properly handled and presented.
We deal with the life of a personhere. Everyone’s life — whether it be the victim’s or the
accused’s — is valuable. The Constitution and our laws hold these lives in high esteem.
Therefore, investigations such as these should have been attended with
greaterprofessionalism and more dedicated attention to detail by our law enforcers. The
quality of every conviction depends on the evidence gathered, analyzed, and presented
before the courts. The public’s confidence on our criminal justice system depends on the
quality of the convictions we promulgate against the accused. All those who participate in our
criminal justice system should realize this and take this to heart.

WHEREFORE, the judgment of the trial court is MODIFIED. Accused-appellant Mark Jason
Chavez y Bitancor alias "Noy" is hereby declared GUILTYbeyond reasonable doubt of the
separate and distinct crime of HOMICIDE. Inasmuch as the commission of the crime was not
attended by any aggravating or mitigating circumstances, accused-appellant Chavez is
hereby SENTENCEDto suffer an indeterminate penalty ranging from eight (8) years and one
(1) day of prision mayor, as minimum, to seventeen (17) years and four (4) months of
reclusion temporal, as maximum.

Accused-appellant Chavez's period of detention shall be deducted if consistent with Article

29 of the Revised Penal Code.

SO ORDERED.

MARVIC M.V.F. LEONEN

Associate Justice
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 207992               August 11, 2014

PEOPLE OF THE PHILIPPINES, Plaintiff-appellee, 

vs.
ROBERTO HOLGADO Y DELA CRUZ AND ANTONIO MISAREZ Y ZARAGA, Accused-
appellants.

DECISION

LEONEN, J.:

Law enforcers should not trifle with the legal requirement to ensure integrity in the chain of
custody of seized dangerous drugs and drug paraphernalia. This is especially true when only
a miniscule amount of dangerous drugs is alleged to have been taken from the accused.

This resolves an appeal from a conviction for illegal sale of dangerous drugs or for violation
of Section 5 of Republic Act No. 9165, otherwise known as the Comprehensive Dangerous
Drugs Act of 2002.

Accused-appellants Roberto Holgado y Dela Cruz (Holgado) and Antonio Misarez y Zaraga
(Misarez) were charged in an information dated January 19, 2007, as follows:

On or about January 17, 2007, in Pasig City and within the jurisdiction of this Honorable
Court, the accused conspiring and confederating together and both of them mutually helping
and aiding with (sic) one another, and not being lawfully authorized to sell any dangerous
drug, did then and there wilfully, unlawfully and feloniously sell, deliver and give away to PO1
Philip Aure, one (1) piece of heat-sealed transparent plastic sachet containing five (5)
centigrams (0.05 gram) of white crystalline substance, which was found to (sic) positive to
the test for methylamphetamine hyrdrocloride (shabu), a dangerous drug, in violation of the
said law.

Contrary to law. 1

Holgado and Misarez were also charged with possession of dangerous drugs, and
possession of drug paraphernalia, but subsequently acquitted.

As alleged by the prosecution, inDecember 2006, the Pasig City Police received reports of
illegal drug activities of Holgado along C. Raymundo Street, Pasig City.  After surveillance
2
operations, a search warrant was issued against Holgado. Acting on the search warrant, the
Pasig City Chief of Police instructed his officers to, if possible, first conduct a buy-bust
operation before actuallyenforcing the search warrant. 3

In the evening of January 17, 2007, police operatives went to No. 17, C. Raymundo Street
for the buy-bust operation. PO1 Philip Aure, acting as poseur-buyer and accompanied by the
police informant, approached Holgado who was then part of a drinking session with two (2)
companions. Holgado asked the informant if he was buying drugs while at the same time
offering him a drink. The informant accepted the drink and introduced PO1 Aure as a drug
user. PO1 Aure thenhanded Holgado two (2) marked one hundred peso bills. Holgado asked
PO1 Aure and the informant to wait as the drugs were with his "kumpare" who was then in
the restroom.4

Holgado called Misarez. After some time, co-accused Antonio Misarez stepped out of the
restroomand asked who was buying drugs. PO1 Aure and the informant answered, "Kami."
Misarez then handed a plastic sachet containing a white crystalline substance to PO1 Aure.
PO1 Aure examined the sachet’s contents and took out his cellphone. This was the pre-
arranged signal to the other police operatives that the sale of drugs had been consummated. 5

The police operatives then approached PO1 Aure. When PO1 Aure saw his companions
approaching, he seized Misarez’s hand, but the latter was able to escape and lock himself
inside the house. Holgado, too, was able to flee into the house and join Misarez. The police
operatives managed to break open the wooden door with a crowbar. By then, however,
Holgado and Misarez had managed to leave the house through a passageway in the ceiling
leading to an adjoining house. PO3 Rolando Abuyme and PO2 Arnulfo Dancel managed to
get inside the adjoining house where they apprehended Holgado and Misarez. 6

The search warrant was then enforced "in coordination with a barangay official and in the
presence of some media people."  The search allegedly yielded several drugs and drug
7

paraphernalia.  These items (i.e., other than the plastic sachet containing a white crystalline
8

substance supposedly sold to PO1 Aure) were the subject of three (3) other cases. These
other cases have since been dismissed. 9

As noted in the Regional Trial Court’s August 17, 2009 decision, PO3 Abuyme prepared an
inventory of the seized items.  Specifically with respect to the plastic sachet which was the
10

basis of the charge of illegal sale of dangerous drugs, PO1 Aure supposedly marked the
plastic sachet handed to him by Misarez with "RH-PA"  at the site of the buy-bust operation.
11

Following their arrest, Holgado and Misarez were charged with violating Sections 5 (sale of
dangerous drugs),  11 (possession of dangerous drugs),  and 12 (possession of drug
12 13

paraphernalia)  of Republic Act No. 9165. The case for violating Section 5 was docketed as
14

Criminal Case No. 15338-D. The cases for violating Section 11 were docketed as Criminal
Case Nos. 15339-D and 15341-D. The case for violating Section 12 was docketed as
Criminal Case No. 15340-D. The charge for violating Section 5 was in view of the plastic
sachet containing a white crystalline substance supposedly sold by Holgado to PO1 Aure.
The charges for violations of Sections 11 and 12 were in view of the items supposedly seized
in enforcing the search warrant.

During trial, the prosecution presented as witnesses PO1 Aure and the apprehending
officers PO2 Roberto Castulo and PO3 Abuyme. The defense presented as its witnesses
accused-appellants Holgado and Misarez, as well as their neighbor, Carlos Marquing, and
Holgado’s wife, Maribel Villareal. 15
In their testimonies, accused-appellants claimed that no buy-bust operation was conducted.
Instead, the police operatives allegedly barged into Holgado’s house and arrested accused-
appellants who were then merely having a few drinks. While Holgado and Misarez were
handcuffed, the police operatives conducted a supposed search of Holgado’s house. They
were then taken to the police station. Defense witnesses Marquing and Villareal
corroborated accused-appellants’ claims. 16

After trial, the Pasig City Regional Trial Court, Branch 154 found Holgado and Misarez guilty
of illegal saleof dangerous drugs (i.e., violating Section 5 of Republic Act No. 9165). They
were acquitted of the charges pertaining to Section 11 of Republic Act No. 9165 as the drugs
supposedly seized were not introduced in evidence. Holgado, the sole accused in Criminal
Case No. 15340-D, was also acquitted of the charges relating to Section 12 of Republic Act
No. 9165 asthe paraphernalia to which PO2 Castulo testified to in court were different from
those indicated in the inventory supposedly made when the search warrant was enforced. 17

Holgado and Misarez were sentencedto suffer the penalty of life imprisonment and to pay a
penalty of ₱1million. The dispositive portion of the Regional Trial Court’s decision reads:

WHEREFORE, premises considered, judgment is hereby rendered –

In Crim. Case No. 15338-D finding both the accused Roberto Holgado and Antonio Misarez
GUILTY beyond reasonable doubt of the crime of violation of Section 5 of R.A. 9165 (sale of
dangerous drug), and each of them is hereby sentenced to suffer the penalty of life
imprisonment. Each of them is also ordered to pay a fine of One Million Pesos
(₱1,000,000.00). In Crim. Cases Nos. 15339-D and 15341-D for violation of Section 11 of
R.A. 9165 (possession of dangerous drug) against accused Roberto Holgado and Antonio
Misarez, they are hereby found NOT GUILTY of the said offense for lack of evidence.

In Crim. Case No. 15340-D for violation of Section 12 of R.A. 9165 (possession of drug
paraphernalia) against Roberto Holgado, judgment is hereby rendered finding the said
accused NOT GUILTY of the said offense charged against him on the ground of reasonable
doubt.

The dangerous drugs and drug paraphernalia allegedly obtained from the persons of the
accused and subject of the Informations are hereby ordered delivered forthwith to the
Philippine Drug Enforcement Agency (PDEA) for proper disposition.

Considering the penalty imposed by the Court on the accused ROBERTO HOLGADO and
ANTONIO MISAREZ for violation of Section 5 of R.A. 9165 (sale of dangerous drug), their
immediate commitment to the National Bilibid Prisons is hereby ordered.

SO ORDERED.  (Underscoring in the original)

18

In the decision dated February 18, 2013,  the Court of Appeals affirmed the Regional Trial
19

Court’s decision convicting Holgado and Misarez.

On March 4, 2013, Holgado and Misarez filed their notice of appeal. 20

In the resolution dated September 11, 2013, this court noted the records forwarded by the
Court of Appeals and informed the parties that they may file their supplemental briefs.
21
On November 6, 2013, the Office of the Solicitor General filed a manifestation and motion,
on behalf ofthe People of the Philippines, noting that it would no longer file a supplemental
brief.
22

On December 27, 2013, Holgado and Misarez filed their joint supplemental brief  where they
23

assailed the supposed lack of compliance with the requirements set by the chain of custody
of seized drugs and drug paraphernalia as provided by Section 21 of Republic Act No. 9165.

For resolution is the issue of whether Holgado’s and Misarez’s guilt beyond reasonable
doubt for violating Section 5 of Republic Act No. 9165 was established. Subsumed in the
resolution of this issue is the question of whether the prosecution was able to establish
compliance with the requisites of Section 21 of Republic Act No. 9165.

The elements that must be established to sustain convictions for illegal sale of dangerous
drugs are settled. In People v. Morales,  this court stated:
24

In actions involving the illegal sale of dangerous drugs, the following elements must first be
established: (1) proof that the transaction or sale took place and (2) the presentation in court
of the corpus delicti or the illicit drug as evidence.
25

On corpus delicti, Section 21 of Republic Act No. 9165, as amended by Republic Act No.
10640, provides for the custody and disposition of confiscated, seized, and/or surrendered
drugs and/or drug paraphernalia. Specifically with respect to custody before the filing of a
criminal case, Section 21, as amended, provides: SEC. 21. Custody and Disposition
ofConfiscated, Seized, and/or Surrendered Dangerous Drugs, Plant Sources of Dangerous
Drugs, Controlled Precursors and Essential Chemicals, Instruments/Paraphernalia
and/orLaboratory Equipment. – The PDEA shall take charge and havecustody of all
dangerous drugs, plant sources of dangerous drugs, controlled precursors and essential
chemicals, as well as instruments/paraphernalia and/or laboratory equipment so confiscated,
seized and/or surrendered, for proper disposition in the following manner:

(1) The apprehending teamhaving initial custody and control of the dangerous drugs,
controlled precursors and essential chemicals, instruments/paraphernalia and/or
laboratory equipment shall, immediately after seizure and confiscation, conduct a
physical inventory of the seized items and photograph the same in the presence of
the accused or the person/s from whom such items were confiscated and/or seized,
or his/her representative or counsel, with an elected public official and a
representative of the National Prosecution Service or the media who shall be
required to sign the copies of the inventory and be given a copy thereof:Provided,
That the physical inventory and photograph shall be conducted at the place where
the search warrant is served; or at the nearest police station or at the nearest office
of the apprehending officer/team, whichever is practicable, in case of warrantless
seizures: Provided, finally, That noncompliance of these requirements under
justifiable grounds, as long as the integrity and the evidentiary value of the seized
items are properly preserved by the apprehending officer/team, shall not render void
and invalid such seizures and custody over said items.

(2) Within twenty-four (24) hours upon confiscation/seizure of dangerous drugs, plant
sources ofdangerous drugs, controlled precursors and essential chemicals, as well
as instruments/paraphernalia and/or laboratory equipment, the same shall be
submitted to the PDEA Forensic Laboratory for a qualitative and quantitative
examination;
 (3) A certification of the forensic laboratory examination results, which shall be done
by the forensic laboratory examiner, shall be issued immediately upon the receipt of
the subject item/s: Provided, That when the volume of dangerous drugs, plant
sources of dangerous drugs, and controlled precursors and essential chemicals does
not allow the completion of testing within the time frame, a partial laboratory
examination report shall be provisionally issued stating therein the quantities of
dangerous drugs still to be examined by the forensic laboratory: Provided, however,
That a final certification shall be issued immediately uponcompletion of the said
examination and certification[.] (Emphasis supplied)

As this court declared in People v. Morales, "failure to comply with Paragraph 1, Section 21,
Article II of RA 9165 implie[s] a concomitant failure on the part of the prosecution toestablish
the identity of the corpus delicti."  It "produce[s] doubts as tothe origins ofthe [seized
26

paraphernalia]."27

The significance of ensuring the integrity of drugs and drug paraphernalia in prosecutions
under Republic Act No. 9165 is discussed in People v. Belocura: 28

Worse, the Prosecution failed to establish the identity of the prohibited drug that constituted
the corpus delicti itself. The omission naturally raises grave doubt about any search being
actually conducted and warrants the suspicion that the prohibited drugs were planted
evidence.

In every criminal prosecution for possession of illegal drugs, the Prosecution must account
for the custody of the incriminating evidence from the moment of seizure and confiscation
until the moment it is offered in evidence. That account goes to the weight of evidence. It is
not enough that the evidence offered has probative value on the issues, for the evidence
must also be sufficiently connectedto and tied with the facts in issue. The evidence is not
relevant merely because it is available but that it has an actual connection with the
transaction involved and with the parties thereto. This is the reason why authentication and
laying a foundation for the introduction of evidence are important.  (Emphasis supplied)
29

In Malilin v. People,  this court explained that the exactitude required by Section 21 goes into
30

the very nature of narcotics as the subject of prosecutions under Republic Act No. 9165:

Indeed, the likelihood of tampering, loss or mistake withrespect to an exhibit is greatest when
the exhibit issmall and is one that has physical characteristics fungible in nature and similar
in form to substances familiar to people in their daily lives. Graham vs. Statepositively
acknowledged this danger. In that case where a substance later analyzed as heroin—was
handled by two police officers prior to examination who however did not testify in court on the
condition and whereabouts of the exhibit at the time it was in their possession—was
excluded from the prosecution evidence, the court pointing out that the white powder seized
could have been indeed heroin or it could havebeen sugar or baking powder. It ruled that
unless the state can show by records or testimony, the continuous whereabouts of the
exhibit at least between the time it came into the possession of police officers until it was
tested in the laboratory to determine its composition, testimony of the state as to the
laboratory’s findings is inadmissible. A unique characteristic of narcotic substances is that
they are not readily identifiable as in fact they are subject to scientific analysis to determine
their composition and nature.The Court cannot reluctantly close its eyes to the likelihood, or
at least the possibility, that at any of the links in the chain of custody over the same there
could have been tampering, alteration or substitution of substances from other cases—by
accident or otherwise—in which similar evidence was seized or in which similar evidence
was submitted for laboratory testing. Hence, in authenticating the same, a standard more
stringent than that applied to cases involving objects which are readily identifiable must be
applied,a more exacting standard that entails a chain of custody of the item with sufficient
completeness if only to render it improbable that the original item has either been exchanged
with another or been contaminated or tampered with. (Emphasis supplied)
31

Compliance with the chain of custody requirement provided by Section 21, therefore,
ensures the integrity of confiscated, seized, and/or surrendered drugs and/or
drugparaphernalia in four (4) respects: first, the nature of the substances or items seized;
second, the quantity (e.g., weight) of the substances or items seized; third, the relation of the
substances or items seized to the incident allegedly causing their seizure; and fourth, the
relation of the substances or items seized to the person/s alleged to have been in
possession of or peddling them. Compliance with this requirement forecloses opportunities
for planting, contaminating, or tampering of evidence in any manner.

By failing to establish identity of corpus delicti, non-compliance with Section 21 indicates a

failure to establish an element of the offense of illegal sale of dangerous drugs. It follows that
this non-compliance suffices as a ground for acquittal. As this court stated in People v.
Lorenzo: 32

In both illegal sale and illegal possession of prohibited drugs, conviction cannot be sustained
if there is a persistent doubt on the identity of the drug.The identity of the prohibited drug
must be established with moral certainty. Apart from showing that the elements of
possession or sale are present, the fact that the substance illegally possessed and sold in
the first place is the same substance offered in court as exhibit must likewise be established
with the same degree of certitude as that needed to sustain a guilty verdict.  (Emphasis
33

supplied)

The prosecution’s sweeping guarantees as to the identity and integrity of seized drugs and
drug paraphernaliawill not secure a conviction. Not even the presumption of regularity in the
performance of official duties will suffice. In fact, whatever presumption there is as to the
regularity of the manner by which officers took and maintained custody of the seized items is
"negated."  Republic Act No. 9165 requires compliance with Section 21.
34

Even the doing of acts which ostensibly approximate compliance but do not actuallycomply
with the requirements of Section 21 does not suffice. In People v. Magat,  for instance, this
35

court had occasion to emphasize the inadequacy of merely marking the items supposedly
seized: "Marking of the seized drugs alone by the law enforcers is not enough to comply with
the clear and unequivocal procedures prescribed in Section 21 of R.A. No. 9165." 36

The exactitude which the state requires in handling seized narcotics and drug paraphernalia
is bolstered by the amendments made to Section 21 by Republic Act No. 10640. Section
21(1), as amended, now includes the following proviso, thereby making it even more
stringent than as originally worded:

Provided, That the physical inventory and photograph shall be conducted at the place where
the search warrant is served; or at the nearest police station or at the nearest office of the
apprehending officer/team, whichever is practicable, in case of warrantless seizures:

In People v. Nandi,  this court explained that four (4) links "should be established in the
37

chain of custody of the confiscated item: first, the seizure and marking, if practicable, of the
illegal drug recovered from the accused by the apprehending officer; second, the turnover of
the illegal drug seized by the apprehending officerto the investigating officer; third, the
turnover by the investigating officer ofthe illegal drug to the forensic chemist for laboratory
examination; and fourth, the turnover and submission of the marked illegal drug seized from
the forensic chemist to the court."38

In Nandi, where the prosecution failed to show how the seized items were handled following
the actual seizure and, thereafter, turned over for examination, this court held thatthe
accused must be acquitted:

After a closer look, the Court finds that the linkages in the chain of custody of the subject
item were not clearly established.  As can be gleaned from his forequoted testimony, PO1
1âwphi1

Collado failed to provide informative details on how the subject shabu was handled
immediately after the seizure. He just claimed that the item was handed to him by the
accused in the course of the transaction and, thereafter, hehanded it to the investigator.

There is no evidence either on how the item was stored, preserved, labeled, and recorded.
PO1 Collado could not even providethe court with the name of the investigator. He admitted
that he was not present when it was delivered to the crime laboratory. It was Forensic
Chemist Bernardino M. Banac, Jr. who identified the person who delivered the specimen to
the crime laboratory. Hedisclosed that he received the specimen from one PO1 Cuadra, who
was not even a member of the buybust team. Per their record, PO1 Cuadra delivered the
letter-request with the attached seized item to the CPD Crime Laboratory Office where a
certain PO2 Semacio recorded it and turned it over to the Chemistry Section.

In view of the foregoing, the Court is of the considered view that chain of custody of the illicit
drug seized was compromised. Hence, the presumption of regularity in the performance of
duties cannot be applied in this case.

Given the flagrant procedural lapses the police committed in handling the seized shabu and
the obvious evidentiary gaps in the chain of its custody, a presumption of regularity in the
performance of duties cannot be made in this case. A presumption of regularity in the
performance of official duty is made in the context of an existing rule of law or statute
authorizing the performance of an act or duty or prescribing a procedure in the performance
thereof. The presumption applies when nothing in the record suggests that the law enforcers
deviated from the standard conduct of official duty required by law; where the official act is
irregular on its face, the presumption cannot arise. In light of the flagrant lapses we noted,
the lower courts were obviously wrong when they relied on the presumption of regularity in
the performance of official duty.

With the chain of custody in serious question, the Court cannot gloss over the argument of
the accused regarding the weight of the seized drug. The standard procedure is that after the
confiscation of the dangerous substance, it is brought to the crime laboratory for a series of
tests. The result thereof becomes oneof the bases of the charge to be filed.  (Citations
39

omitted)

In this case, the defense points out that all that the prosecution claimed, with respect to the
handling of the sachetsupposedly handed by Misarez to PO1 Aure, was that PO1 Aure
supposedly marked it "RH-PA" at the scene of the buy-bust operation. 40

While the buy-bust operation team allegedly conducted an inventory of the seized items, it is
unclear if this inventory was limited to those seized pursuant to the enforcement of the
search warrant (i.e., after the conduct of the buy-bust operation) or was inclusive of whatever
items seized during the buy-bust operation. In any case, this inventory was discredited as
Holgado was acquitted by the Regional Trial Court of the charge of illegal possession of drug
paraphernalia because the inventory was found to be unreliable visa-vis the testimony of
PO2 Castulo. The paraphernaliato which PO2 Castulo testified to in court were different from
those indicated in the inventory supposedly made when the search warrant was enforced.

There have been claims to the effect that the search warrant was enforced "in coordination
with a barangay official and in the presence of some media people."  However, this
41

"barangay official" and these "media people" have neither been identified nor presented as
witnesses. In any case, even if it were to be granted that these individuals took part in the
events that transpired in the evening of January 17, 2007, their participation was alleged to
have been only with respect to the enforcement of the search warrant. It did not extend to
the physical inventory and taking of photographs of the seized items arising from the buy-
bust operation, as required by Section 21. For that matter, it was not even shown that
photographs of the sachet marked as "RH-PA" were taken. Per his own testimony, PO1 Aure
himself doubtedif any photograph was taken. 42

The defense also points out that "PO1 Aure . . . failed to disclose who, in particular, held the
sachet of shabu from the crime scene (after it was marked) up to the police station, and
finally to the crime laboratory for the requisite chemical examination."  It added that "nothing
43

on (sic) the records showed who, in particular, submitted/brought the specimen to the crime
laboratory for examination." 44

In People v. Gatlabayan  and People v. Sitco,  this court considered as fatal to the
45 46

prosecution’s case the lack of evidence on the identity of the person who submitted the
specimen for examination to the PNP Crime Laboratory and/or the forensic chemist. In Sitco,
this court characterized the lack of evidence on this matter as "glaring gaps or missing links
in the chain of custody of evidence, raising doubt asto the identity of the seized items and
necessarily their evidentiary value."  This court also underscored that "[t]his broken chain of
47

custody is especially significant given that what are involved are fungible items that may
beeasily altered or tampered with." 48

In sum, the integrity of three (3) ofthe four (4) links enumerated in People v. Nandi  (i.e.,
49

seizure and marking, turnover by the apprehending officer to the investigating officer, and
turnover by the investigating officer to the forensic chemist) has been cast in doubt. As in
Nandi, this doubt must be resolved in favor of accused-appellants.

It is true that Section 21(1), as amended, now includes a proviso to the effect that
"noncompliance of (sic) these requirements under justifiable grounds, as long as the integrity
and the evidentiary value of the seized items are properly preserved by the apprehending
officer/team, shall not render void and invalid such seizures and custody over said items."
However, the prosecution has not shown that when the buy-bust operation was allegedly
conducted on January 17, 2007 and the sachet was supposedly seized and marked, there
were "justifiable grounds" for dispensing with compliance with Section 21. Rather, it merely
insisted on its self-serving assertion that the integrity of the seized sachet has nevertheless
been, supposedly, preserved. The omission became more glaring considering that the
prosecution asserted that the events of January 17, 2007 entailed a carefully planned
operation, engendered by reports of drug-related activities along C. Raymundo Street. This
planning even led to the application for and issuance of a search warrant.

Apart from the officers’ glaring non-compliance with Section 21, two (2) circumstances are
worth underscoringin this case. First, the shabu supposedly seized amounted to five (5)
centigrams (0.05 gram). This quantity is so miniscule it amounts to only about 2.5% of the
weight of a five-centavo coin (1.9 grams) or a one-centavo coin (2.0 grams). Second,
Holgado and Misarez were acquitted by the Regional Trial Court of all other charges (i.e., for
possession of dangerous drugs and for possession of drug paraphernalia).

While the miniscule amount of narcotics seized is by itself not a ground for acquittal, this
circumstance underscores the need for more exacting compliance with Section 21. In Malilin
v. People,  this court said that "the likelihood of tampering, loss ormistake with respect to an
50

exhibit is greatest when the exhibit is small and is one that has physical characteristics
fungible innature and similar in form to substances familiar to people in their daily lives."
51

Moreover, the Regional Trial Court’s observations which led to accused-appellants’ acquittal
for violations of Sections 11 and 12 of Republic Act No. 9165 should have warned the
Regional Trial Court and the Court of Appeals that something was amiss.

The events of January 17, 2007 should be taken and appreciated as a whole even as they
gave rise to four (4) distinct criminal cases which were separately docketed. The reasons for
acquitting accused-appellants for the charges of violating Sections 11 and 12 (i.e., the
prosecution’s complete failure to introduce in evidence the drugs seized and the testifying
police operative’s own failure to properly account for the paraphernalia he himself took part
in seizing)  seriously cast doubt, not only on accused-appellants’ own guilt, but more so on
52

the soundness and reliability of the measures taken and procedures followed by the police
operatives. These circumstances cast a heavy shadow on the integrity of the operation and
the police operatives themselves.

Trial courts should meticulously consider the factual intricacies of cases involving violations
of Republic Act No. 9165.  All details that factor into an ostensibly uncomplicatedand
1âwphi1

barefaced narrative must be scrupulously considered. Courts must employ heightened

scrutiny, consistent with the requirement ofproof beyond reasonable doubt, in evaluating
cases involving miniscule amounts of drugs. These can be readily planted and tampered.
Also, doubt normally follows in cases where an accused has been discharged from other
simultaneous offenses due to mishandling of evidence. Had the Regional Trial Court and the
Court of Appeals been so judicious in this case, a speedier resolution would have been
handed to Holgado and Misarez whose guilt beyond reasonable doubt was not established.

It is lamentable that while our dockets are clogged with prosecutions under Republic Act No.
9165 involving small-time drug users and retailers, we are seriously short of prosecutions
involving the proverbial "big fish." We are swamped with cases involving small fry who have
been arrested for miniscule amounts. While they are certainly a bane to our society, small
retailers are but low-lying fruits in an exceedingly vast network of drug cartels. Both law
enforcers and prosecutors should realize that the more effective and efficient strategy is to
focus resources more on the source and true leadership of these nefarious organizations.
Otherwise, all these executive and judicial resources expended to attempt to convict an
accused for 0.05 gram of shabu under doubtful custodial arrangements will hardly make a
dent in the overall picture. Itmight in fact be distracting our law enforcers from their more
challenging task: to uproot the causes of this drug menace. We stand ready to assess cases
involving greater amounts of drugs and the leadership of these cartels.

WHEREFORE, premises considered, the decision dated February 18, 2013 of the Court of
Appeals inCA-G.R. CR-HC No. 04635 is REVERSED and SET ASIDE. Accused-appellants
Roberto Holgado y Dela Cruz and Antonio Misarez y Zaraga are hereby ACQUITTEDfor
failure of the prosecution to prove their guilt beyond reasonable doubt. They are ordered
immediately RELEASED from detention, unless they are confined for any other lawful cause.

Let a copy of this decision be furnished to the Director of the Bureau of Corrections,
Muntinlupa City, for immediate implementation. The Director of the Bureau of Corrections is
directed to report to this court within five (5) days from receipt of this decision the action he
has taken. Copies shall also be furnished to the Director General of Philippine National
Police and the Director General of Philippine Drugs Enforcement Agency for their
information.

The Regional Trial Court is directed to tum over the seized sachet of methamphetamine
hydrochloride to the Dangerous Drugs Board for destruction in accordance with law.

SO ORDERED.

MARVIC MARIO VICTOR F. LEONEN

Associate Justice
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 200334               July 30, 2014

THE PEOPLE OF THE PHILIPPINES, Respondent-Appellee, 

vs.
VICTOR COGAED y ROMANA, Accused-Appellant.

DECISION

LEONEN, J.:

The mantle of protection upon one's person and one's effects through Article III, Section 2 of
the Constitution is essential to allow citizens to evolve their autonomy and, hence, to avail
themselves of their right to privacy. The alleged compromise with the battle against
dangerous drugs is more apparent than real. Often, the compromise is there because law
enforcers neglect to perform what could have been done to uphold the Constitution as they
pursue those who traffic this scourge of society.

Squarely raised in· this appeal  is the admissibility of the evidence seized as a result of a
1

warrantless arrest. The police officers identified the alleged perpetrator through facts that
were not based on their personal knowledge. The information as to the accused’s
whereabouts was sent through a text message. The accusedwho never acted suspicious
was identified by a driver. The bag that allegedly contained the contraband was required to
be opened under intimidating circumstances and without the accused having been fully
apprised of his rights. This was not a reasonable search within the meaning of the
Constitution. There was no reasonable suspicion that would allow a legitimate "stop and
frisk" action. The alleged waiver of rights by the accused was not done intelligently,
knowingly, and without improper pressure or coercion.

The evidence, therefore, used against the accused should be excluded consistent with
Article III, Section 3 (2) of the Constitution. There being no possible admissible evidence, the
accused should be acquitted.

According to the prosecution, at about 6:00 a.m. of November 25, 2005, Police Senior
Inspector Sofronio Bayan (PSI Bayan) of the San Gabriel Police Station in San Gabriel,La
Union, "received a text message from an unidentified civilian informer"  that one Marvin Buya
2

(also known as Marvin Bugat) "[would]be transporting marijuana"  from Barangay LunOy,
3

San Gabriel, La Union to the Poblacion of San Gabriel, La Union. 4

PSI Bayan organized checkpoints in order "to intercept the suspect."  PSI Bayan ordered 5

SPO1 Jaime Taracatac, Jr. (SPO1 Taracatac), a member of the San Gabriel Police, to set up
a checkpoint in the waiting area of passengers from San Gabriel bound for San Fernando
City.  A passenger jeepney from Barangay Lun-Oy arrived at SPO1 Taracatac’s
6

checkpoint.  The jeepney driver disembarked and signalled to SPO1 Taracatac indicating the
7

two male passengers who were carrying marijuana.  SPO1 Taracatac approached the two
8

male passengers who were later identified as Victor RomanaCogaed and Santiago Sacpa
Dayao.  Cogaed was carrying a blue bag and a sack while Dayao was holding a yellow bag.
9 10

SPO1 Taracatac asked Cogaed and Dayao about the contents of their bags.  Cogaed and 11

Dayao told SPO1 Taracatac that they did not know since they were transporting the bags as
a favor for their barriomatenamed Marvin.  After this exchange, Cogaed opened the blue
12

bag, revealing three bricks of what looked like marijuana. Cogaed then muttered, "nagloko
13

daytoy nga Marvinen, kastoymet gayam ti nagyanna,"which translates to "Marvin is a fool,

this is what [is] contained in the bag."  "SPO1 Taracatac arrested [Cogaed] and . . . Dayao
14

and brought them to the police station."  Cogaed and Dayao "were still carrying their
15

respective bags"  inside the station.

16 17

While at the police station, the Chief of Police and Investigator PO3 Stanley Campit (PO3
Campit) requested Cogaed and Dayao to empty their bags.  Inside Cogaed’s sack was "four
18

(4) rolled pieces of suspected marijuana fruiting tops,"  and inside Dayao’s yellow bag was a
19

brick of suspected marijuana. 20

PO3 Campit prepared the suspected marijuana for laboratory testing.  PSI Bayan personally 21

delivered the suspected marijuana to the PNP Crime Laboratory.  Forensic Chemical Officer 22

Police Inspector Valeriano Panem Laya II performed the tests and found that the objects
obtained were indeed marijuana.  The marijuana collected from Cogaed’s blue bag had a
23

total weight of 8,091.5 grams.  The marijuana from Cogaed’s sack weighed 4,246.1
24

grams.  The marijuana collected from Dayao’s bag weighed 5,092 grams.  A total of
25 26

17,429.6 grams werecollected from Cogaed’s and Dayao’s bags. 27

According to Cogaed’s testimony during trial, he was at Balbalayan, La Union, "waiting for a
jeepney to take him" to the Poblacion of San Gabriel so he could buy pesticide.  He boarded
28 29

a jeepney and recognized Dayao, his younger brother’s friend.  Upon arrival at the Poblacion 30

of San Gabriel, Dayao and Cogaed alighted from the jeepney.  Dayao allegedly "asked for 31

[Cogaed’s] help in carrying his things, which included a travelling bag and a sack."  Cogaed 32

agreed because they were both going to the market.  This was when SPO1 Taracatac
33

approached them, and when SPO1 Taracatac asked Cogaed what was inside the bags,
Cogaed replied that he did not know. SPO1 Taracatac then talked to Dayao, however,
34

Cogaed was not privy to their conversation.  Thereafter, SPO1 Taracatac arrested Dayao
35

and Cogaed and brought them to the police station.  These facts were corroborated by an
36

eyewitness,Teodoro Nalpu-ot, who was standing across the parking lot where Cogaed was
apprehended. 37

At the police station, Cogaed said that "SPO1 Taracatac hit [him] on the head."  The bags 38

were also opened, but Cogaed never knew what was inside. 39

It was only later when Cogaed learned that it was marijuana when he and Dayao were
charged with illegal possession of dangerous drugs under Republic Act No. 9165.  The 40

information against them states:

That on or about the 25th day of November, 2005, in the Municipality of San Gabriel,
Province of La Union, and within the jurisdiction of this Honorable Court, the above-named
accused VICTOR COGAED Y ROMANA and SANTIAGO DAYAO Y SACPA (who acted with
discernment) and JOHN DOE,conspiring, confederating and mutually helping one another,
did then there wilfully, unlawfully, feloniously and knowingly, without being authorized by law,
have in their control, custody and possession dried marijuana, a dangerous drug, with a total
weight of seventeen thousand,four hundred twenty-nine and sixtenths (17, 429.6) grams.

CONTRARY TO Section 11 (Possession of Dangerous Drugs), Article II, of Republic Act No.
9165 (otherwise known as the "Comprehensive Dangerous Drugs Act of 2002"). 41

The case was raffled to Regional Trial Court, Branch 28 of San Fernando City, La
Union.  Cogaed and Dayao pleaded not guilty.  The case was dismissed against Dayao
42 43

because he was only 14 years old at that time and was exempt from criminal liability under
the Juvenile Justice and Welfare Act of 2006 or Republic Act No. 9344.  Trial against
44

Cogaed ensued. In a decision  dated May 21, 2008, the Regional Trial Court found Cogaed
45

guilty. The dispositive portion of the decision states:

WHEREFORE, the Court finds accused Victor Cogaed y Romana GUILTY beyond
reasonable doubt for Violation of Section 11, Article II of Republic Act No. 9165 (otherwise
known as the "Comprehensive Dangerous Drugs Act of 2002") and sentences him to suffer
life imprisonment, and to pay a fine of one million pesos (Php 1,000,000.00). 46

The trial court judge initiallyfound Cogaed’s arrest illegal considering that "Cogaed at that
time was not, at the moment of his arrest, committing a crime nor was shown that hewas
about to do so or that had just done so. He just alighted from the passenger jeepney and
there was no outward indication that called for his arrest."  Since the arrest was illegal, the
47

warrantless search should also be considered illegal.  However, the trial court stated that
48

notwithstanding the illegality of the arrest, Cogaed "waived his right to object to such
irregularity"  when "he did not protest when SPO1 Taracatac, after identifying himself, asked
49

him to open his bag." 50

Cogaed appealed  the trial court’s decision.However, the Court of Appeals denied his appeal
51

and affirmed the trial court’s decision.  The Court of Appeals found that Cogaed waived his
52

right against warrantless searches when "[w]ithout any prompting from SPO1 Taracatac, [he]
voluntarily opened his bag."  Hence, this appeal was filed.
53

The following errors were assigned by Cogaed in his appellant’s brief:

THE TRIAL COURT GRAVELY ERRED IN ADMITTING THE SEIZED DANGEROUS

DRUGS AS EVIDENCE AGAINST THE ACCUSED-APPELLANT DESPITE BEING THE
RESULT OF AN UNLAWFUL WARRANTLESS SEARCH AND SEIZURE.

II

THE TRIAL COURT GRAVELY ERRED IN CONVICTING THE ACCUSED-APPELLANT

DESPITE THE ARRESTING OFFICER’S NON-COMPLIANCE WITH THE REQUIREMENTS
FOR THE PROPER CUSTODY OF SEIZED DANGEROUS DRUGS UNDER REPUBLIC
ACT NO. 9165.
 III

THE TRIAL COURT GRAVELY ERRED IN CONVICTING THE ACCUSED-APPELLANT

DESPITE THE ARRESTING OFFICER’S FAILURE TO PRESERVE THE INTEGRITY AND
EVIDENTIARY VALUE OF THE SEIZED DANGEROUS DRUGS. 54

For our consideration are the following issues: (1) whether there was a valid search and
seizure of marijuana as against the appellant; (2) whether the evidence obtained through the
search should be admitted; and (3) whether there was enough evidence to sustain the
conviction of the accused.

In view of the disposition of this case, we deem that a discussion with respect to the
requirements on the chain of custody of dangerous drugs unnecessary. 55

We find for the accused.

II

The right to privacy is a fundamental right enshrined by implication in our Constitution. It has
many dimensions. One of its dimensions is its protection through the prohibition of
unreasonable searches and seizures in Article III, Section 2 of the Constitution:

The right of the people to be secure in their persons, houses, papers, and effects against
unreasonable searches and seizures of whatever nature and for any purpose shall be
inviolable, and no search warrant or warrant of arrest shall issue except upon probable
cause to be determinedpersonally by the judge after examination under oath or affirmation of
the complainant and the witnesses he may produce, and particularly describing the place to
be searched and the persons or things to be seized.

This provision requires that the court examine with care and diligence whether searches and
seizures are "reasonable." As a general rule, searches conducted with a warrant that meets
all the requirements of this provision are reasonable. This warrant requires the existence of
probable cause that can only be determined by a judge. The existence of probable cause
56

must be established by the judge after asking searching questions and answers. Probable
57

cause at this stage can only exist if there is an offense alleged to be committed. Also, the
warrant frames the searches done by the law enforcers. There must be a particular
description of the place and the things to be searched. 58

However, there are instances when searches are reasonable even when warrantless.  In the 59

Rules of Court, searchesincidental to lawful arrests are allowed even without a separate
warrant.  This court has taken into account the "uniqueness of circumstances involved
60

including the purpose of the search or seizure, the presence or absence of probable cause,
the manner in which the search and seizure was made, the place or thing searched, and the
character of the articles procured."  The known jurisprudential instances of reasonable
61

warrantless searches and seizures are:

1. Warrantless search incidental to a lawful arrest. . . ;

2. Seizure of evidence in "plain view," . . . ;

 3. Search of a moving vehicle. Highly regulated by the government, the vehicle’s
inherent mobility reduces expectation of privacy especially when its transit in public
thoroughfares furnishes a highly reasonable suspicion amounting to probable cause
that the occupant committed a criminal activity;

4. Consentedwarrantless search;

5. Customs search;

6. Stop and frisk; and

7. Exigent and emergency circumstances.  (Citations omitted)

62

III

One of these jurisprudential exceptionsto search warrants is "stop and frisk". "Stop and frisk"
searches are often confused with searches incidental to lawful arrests under the Rules of
Court.  Searches incidental to a lawful arrest require that a crime be committed in flagrante
63

delicto, and the search conducted within the vicinity and withinreach by the person arrested
is done to ensure that there are no weapons, as well as to preserve the evidence. 64

On the other hand, "stop and frisk"searches are conducted to prevent the occurrence of a
crime. For instance, the search in Posadas v. Court of Appeals  was similar "to a ‘stop and
65

frisk’ situation whose object is either to determine the identity of a suspicious individual or to
maintain the status quomomentarily while the police officer seeks to obtain more
information."  This court stated that the "stop and frisk" search should be used "[w]hen
66

dealing with a rapidly unfolding and potentially criminal situation in the city streets where
unarguably there is no time to secure . . . a search warrant." 67

The search involved in this case was initially a "stop and frisk" search, but it did not comply
with all the requirements of reasonability required by the Constitution.

"Stop and frisk" searches (sometimes referred to as Terrysearches ) are necessary for law
68

enforcement. That is, law enforcers should be given the legal arsenal to prevent the
commission of offenses. However, this should be balanced with the need to protect the
privacy of citizens in accordance with Article III, Section 2 of the Constitution.

The balance lies in the concept of"suspiciousness" present in the situation where the police
officer finds himself or herself in. This may be undoubtedly based on the experience ofthe
police officer. Experienced police officers have personal experience dealing with criminals
and criminal behavior. Hence, they should have the ability to discern — based on facts that
they themselves observe — whether an individual is acting in a suspicious manner. Clearly,
a basic criterion would be that the police officer, with his or her personal knowledge, must
observe the facts leading to the suspicion of an illicit act.

In Manalili v. Court of Appeals,  the police officers were initially informed about a place
69

frequented by people abusing drugs.  When they arrived, one of the police officers saw a
70

man with "reddish eyes and [who was] walking in a swaying manner."  The suspicion 71

increased when the man avoided the police officers.  These observations led the police
72

officers to conclude that the man was high on drugs.  These were sufficient facts observed
73

by the police officers "to stop[the] petitioner [and] investigate." 74

In People v. Solayao,  police officers noticed a man who appeared drunk.  This man was
75 76

also "wearing a camouflage uniform or a jungle suit."  Upon seeing the police, the man
77

fled.  His flight added to the suspicion. After stopping him, the police officers found an
78 79

unlicensed "homemade firearm"  in his possession.  This court ruled that "[u]nder the
80 81

circumstances, the government agents could not possibly have procured a search warrant
first."  This was also a valid search.
82

In these cases, the police officers using their senses observed facts that led to the suspicion.
Seeing a man with reddish eyes and walking in a swaying manner, based on their
experience, is indicative of a person who uses dangerous and illicit drugs. A drunk civilian in
guerrilla wear is probably hiding something as well.

The case of Cogaed was different. He was simply a passenger carrying a bag and traveling
aboarda jeepney. There was nothing suspicious, moreover, criminal, about riding a jeepney
or carrying a bag. The assessment of suspicion was not made by the police officer but by the
jeepney driver. It was the driver who signalled to the police that Cogaed was "suspicious."

This is supported by the testimony of SPO1 Taracatac himself:

COURT:

Q So you don’t know what was the content while it was still being carried by him in the
passenger jeep?

WITNESS:

A Not yet, Your Honor. 83

SPO1 Taracatac likewise stated:

COURT:

Q If the driver did not make a gesture pointing to the accused, did you have reason to
believe that the accused were carrying marijuana?

WITNESS:

A No, Your Honor. 84

The jeepney driver had to point toCogaed. He would not have been identified by the police
officers otherwise.

It is the police officer who should observe facts that would lead to a reasonable degree of
suspicion of a person. The police officer should not adopt the suspicion initiated by another
person. This is necessary to justify that the person suspected be stopped and reasonably
searched.  Anything less than this would be an infringementupon one’s basic right to security
85

of one’s person and effects.

IV
Normally, "stop and frisk" searches do not give the law enforcer an opportunity to confer with
a judge to determine probable cause. In Posadas v. Court of Appeals,  one of the earliest
86

cases adopting the "stop and frisk" doctrine in Philippine jurisprudence, this court
approximatedthe suspicious circumstances as probable cause:

The probable causeis that when the petitioner acted suspiciously and attempted to flee with
the buri bag there was a probable cause that he was concealing something illegal in the bag
and it was the right and duty of the police officers to inspect the same.  (Emphasis supplied)
87

For warrantless searches, probable cause was defined as "a reasonable ground of
suspicionsupported by circumstances sufficiently strong in themselves to warrant a cautious
man to believe that the person accused is guilty of the offense with which he is charged." 88

Malacat v. Court of Appeals  clarifies the requirement further. It does not have to be
89

probable cause,but it cannot be mere suspicion.  It has to be a "genuine reason"  to serve
90 91

the purposes of the "stop and frisk" exception: 92

Other notable points of Terryare that while probable cause is not required to conduct a "stop
and frisk," it nevertheless holds that mere suspicion or a hunch will not validate a "stop and
frisk." A genuine reason must exist, in light of the police officer’s experience and surrounding
conditions, to warrant the belief that the person detained has weapons concealed about
him.  (Emphasis supplied, footnotes omitted)
93

In his dissent for Esquillo v. People,  Justice Bersamin reminds us that police officers must
94

not rely on a single suspicious circumstance.  There should be "presence of more than
95

oneseemingly innocent activity, which, taken together, warranted a reasonable inference of

criminal activity."  The Constitution prohibits "unreasonable searches and
96

seizures."  Certainly, reliance on only one suspicious circumstance or none at all will not
97

result in a reasonable search. 98

There was not a single suspicious circumstance in this case, and there was no
approximation for the probable cause requirement for warrantless arrest. The person
searched was noteven the person mentioned by the informant. The informant gave the name
of Marvin Buya, and the person searched was Victor Cogaed. Even if it was true that Cogaed
responded by saying that he was transporting the bag to Marvin Buya, this still remained only
as one circumstance. This should not have been enough reason to search Cogaed and his
belongings without a valid search warrant.

Police officers cannot justify unbridled searches and be shielded by this exception, unless
there is compliance with the "genuine reason" requirement and that the search serves the
purpose of protecting the public. As stated in Malacat:

[A] "stop-and-frisk" serves a two-fold interest: (1) the general interest of effective crime
prevention and detection, which underlies the recognition that a police officer may, under
appropriate circumstances and in an appropriate manner, approach a person for purposes of
investigating possible criminal behavior even without probable cause; and (2) the more
pressing interest of safety and self-preservationwhich permit the police officer to take steps
to assure himself that the person with whom he deals is not armed with a deadly weapon
that could unexpectedly and fatally be used against the police officer.  (Emphasis supplied)
99
The "stop and frisk" searchwas originally limited to outer clothing and for the purpose of
detecting dangerous weapons.  As in Manalili,  jurisprudence also allows "stop and frisk"
100 101

for cases involving dangerous drugs.

The circumstances of thiscase are analogous to People v. Aruta.  In that case, an informant
102

told the police that a certain "Aling Rosa" would be bringing in drugs from Baguio City by
bus.  At the bus terminal, the police officers prepared themselves.  The informant pointed
103 104

at a woman crossing the street  and identified her as "Aling Rosa."  The police
105 106

apprehended "Aling Rosa," and they alleged that she allowed them to look inside her
bag. The bag contained marijuana leaves.
107 108

In Aruta, this court found that the search and seizure conducted was illegal.  There were no 109

suspicious circumstances that preceded Aruta’s arrest and the subsequent search and
seizure.  It was only the informant that prompted the police to apprehend her.  The
110 111

evidence obtained was not admissible because of the illegal search. Consequently, Aruta 112

was acquitted. 113

Arutais almost identical to this case, except that it was the jeepney driver, not the police’s
informant, who informed the police that Cogaed was "suspicious."

The facts in Arutaare also similar to the facts in People v. Aminnudin.  Here, the National 114

Bureau ofInvestigation (NBI) acted upon a tip, naming Aminnudin as somebody possessing
drugs.  The NBI waited for the vessel to arrive and accosted Aminnudin while he was
115

disembarking from a boat.  Like in the case at bar, the NBI inspected Aminnudin’s bag and
116

found bundles of what turnedout to be marijuana leaves.  The court declared that the
117

searchand seizure was illegal.  Aminnudin was acquitted.

118 119

People v. Chua  also presents almost the same circumstances. In this case, the police had
120

been receiving information that the accused was distributing drugs in "different karaoke bars
in Angeles City."  One night, the police received information that thisdrug dealer would be
121

dealing drugs at the Thunder Inn Hotel so they conducted a stakeout.  A car "arrived and 122

parked"  at the hotel. The informant told the police that the man parked at the hotel was
123 124

dealing drugs.  The man alighted from his car.  He was carrying a juice box.  The police
125 126 127

immediately apprehended him and discovered live ammunition and drugs in his person and
in the juice box he was holding. 128

Like in Aruta, this court did not find anything unusual or suspicious about Chua’s situation
when the police apprehended him and ruled that "[t]here was no valid‘stop-and-frisk’." 129

VI

None of the other exceptions to warrantless searches exist to allow the evidence to be
admissible.The facts of this case do not qualify as a search incidental to a lawful arrest.

Rule 126, Section 13 of the Rules of Court allows for searches incidental to a lawful arrest.
For there to be a lawful arrest, there should be either a warrant of arrest or a lawful
warrantless arrest as enumerated in Rule 113, Section 5 of the Rules of Court:

Section 5. Arrest without warrant; when lawful. – A peace officer or a private person may,
withouta warrant, arrest a person:
 (a) When, in his presence, the person to be arrested has committed, is actually
committing, or is attempting to commit an offense;

(b) When an offense has just been committed and he has probable cause to believe
based on personal knowledge of facts or circumstances that the person to be
arrested has committed it; and

(c) When the person to be arrested is a prisoner who has escaped from a penal
establishment or place where he is serving final judgment or temporarily confined
while his case is pending, or has escaped while being transferred from one
confinement to another.

The apprehension of Cogaed was not effected with a warrant of arrest. None of the
instances enumerated in Rule 113, Section 5 of the Rules of Court were present whenthe
arrest was made. At the time of his apprehension, Cogaed has not committed, was not
committing, or was about to commit a crime. As in People v. Chua, for a warrantless arrest of
in flagrante delictoto be affected, "two elements must concur: (1) the person to bearrested
must execute anovert act indicating that he has just committed, is actually committing, or is
attempting to commit a crime; and (2) such overt act is done inthe presence or within the
view of the arresting officer."  Both elements were missing when Cogaed was
130

arrested.  There were no overt acts within plain view of the police officers that suggested
131

that Cogaed was in possession of drugs at that time.

Also, Cogaed was not an escapee prisoner that time; hence, he could not have qualified for
the last allowable warrantless arrest.

VII

There can be no valid waiver of Cogaed’s constitutional rights even if we assume that he did
not object when the police asked him to open his bags. As this court previously stated:

Appellant’s silence should not be lightly taken as consent to such search. The implied
acquiescence to the search, if there was any, could not have been more than mere passive
conformity given under intimidating or coercive circumstances and is thus considered no
consent at all within the purview of the constitutional guarantee. (Citations omitted)
132

Cogaed’s silence or lack of aggressive objection was a natural reaction to a coercive

environment brought about by the police officer’s excessive intrusion into his private space.
The prosecution and the police carry the burden of showing that the waiver of a
constitutional right is one which is knowing, intelligent, and free from any coercion. In all
cases, such waivers are not to be presumed.

The coercive atmosphere created by the presence of the police officer can be discerned
again from the testimony of SPO1 Taracatac during cross-examination:

ATTY. BINWAG:

Q Now, Mr. witness, you claimed that you only asked them what are the contents of their
bags, is it not?

WITNESS:
A Yes, ma’am.

Q And then without hesitation and voluntarily they just opened their bags, is it not?

A Yes, ma’am.

Q So that there was not any order from you for them to open the bags?

A None, ma’am.

Q Now, Mr. witness when you went near them and asked them what were the contents ofthe
bag, you have not seen any signs of hesitation or fright from them, is it not?

A It seems they were frightened, ma’am.

Q But you actually [claimed] that there was not any hesitation from them in opening the bags,
is it not?

A Yes, ma’am but when I went near them it seems that they were surprised.  (Emphasis 133

supplied)

The state of mind of Cogaed was further clarified with SPO1 Taracatac’s responses to Judge
Florendo’s questions:

COURT:

....

Q Did you have eye contact with Cogaed?

A When I [sic] was alighting from the jeepney, Your Honor I observed that he was somewhat
frightened.  He was a little apprehensive and when he was already stepping down and he
1âwphi1

put down the bag I asked him, "what’s that," and he answered, "I don’t know because Marvin
only asked me to carry." 134

For a valid waiver by the accused of his or her constitutional right, it is not sufficient that the
police officerintroduce himself or herself, or be known as a police officer.  The police officer
1âwphi1

must also inform the person to be searched that any inaction on his orher part will amount to
a waiver of any of his or her objections that the circumstances do not amount to a
reasonable search. The police officer must communicate this clearly and in a language
known to the person who is about to waive his or her constitutional rights. There must be
anassurance given to the police officer that the accused fully understands his or her rights.
The fundamental nature of a person’s constitutional right to privacy requires no less.

VIII
The Constitution provides:

Any evidence obtained in violation of [the right against unreasonable searches and seizures]
shall be inadmissible for any purpose in any proceeding. 135
Otherwise known as the exclusionary rule or the fruit of the poisonous tree doctrine, this
constitutional provision originated from Stonehill v. Diokno.  This rule prohibits the issuance
136

of general warrants that encourage law enforcers to go on fishing expeditions. Evidence

obtained through unlawful seizures should be excluded as evidence because it is "the only
practical means of enforcing the constitutional injunction against unreasonable searches and
seizures."  It ensures that the fundamental rights to one’s person, houses, papers, and
137

effects are not lightly infringed upon and are upheld.

Considering that the prosecution and conviction of Cogaed were founded on the search of
his bags, a pronouncement of the illegality of that search means that there is no evidence left
to convict Cogaed.

Drugs and its illegal traffic are a scourgeto our society. In the fight to eradicate this menace,
law enforcers should be equipped with the resources to be able to perform their duties
better. However, we cannot, in any way, compromise our society’s fundamental values
enshrined in our Constitution. Otherwise, we will be seen as slowlydismantling the very
foundations of the society that we seek to protect.

WHEREFORE, the decisions of the Regional Trial Court, Branch 28, San Fernando City, La
Union and of the Court of Appeals in CA-G.R. CR-HC No. 03394 are hereby REVERSEDand
SET ASIDE. For lack of evidence to establish his guilt beyond reasonable doubt, accused-
appellant VICTOR COGAED Y ROMANA is hereby ACQUITTED and ordered RELEASED
from confinement unless he is being heldfor some other legal grounds. No costs.

SO ORDERED.

MARVIC MARIO VICTOR F. LEONEN

Associate Justice
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 181843               July 14, 2014

MIGUEL CIRERA y USTELO, Petitioner, 

vs.
PEOPLE OF THE PHILIPPINES, Respondent.

DECISION

LEONEN, J.:

Treachery as a qualifying circumstance must be deliberately sought to ensure the safety of

the accused from the defensive acts of the victim. Unexpectedness of the attack does not
always equate to treachery.

We are asked to decide on a petition for review on certiorari  of the Court of Appeals'
1

decision  dated November 20, 2007 and the Court of Appeals’ resolution  dated February 18,
2 3

2008. The Court of Appeals affirmed the Regional Trial Court’s decision  dated July 2, 2004
4

that found petitioner guilty of two (2) counts of frustrated murder and sentenced him to suffer
the indeterminate penalty of imprisonment of six (6) years and one (1) day of prision
mayoras minimum to 17 years and four (4) months of reclusion temporalas maximum for
each count. 5

This case arose out of two (2) informations for frustrated murder filed against petitioner:

Criminal Case No. Q-00-91821

That on or about the 20th day of April 2000, in Quezon City, Philippines, the said accused,
with intent to kill, with evident premeditation and by means of treachery, did, then and there,
wilfully, unlawfully and feloniously attackand assault and employ personal violence upon the
person of one GERARDO NAVAL by then and there stabbing the latter with a sharp bladed
weapon hitting him at the left back portion of his body, thereby inflicting upon said offended
party physical injuries which are necessarily fatal and mortal, thus performing all the acts of
execution which would have produced the crime of Murder as a consequence but which
nevertheless did not produce it by reason of causes independent of the will of the
perpetrator, that is, by the timely and able medical attendance rendered to said GERARDO
NAVAL which save his life, to the damage and prejudice of the said offended party. 6

Criminal Case No. Q-00-91842

That on or about the 20 th day of April 2000, in Quezon City, Philippines, the said accused,
with intent to kill, with evident premeditation and by means of treachery, did, then and there,
wilfully, unlawfully and feloniously attackand assault and employ personal violence upon the
person of one ROMEO AUSTRIA by then and there stabbing the latter with a sharp bladed
weapon hitting him at the left back portion of his body, thereby inflicting upon said offended
party physical injuries which are necessarily fatal and mortal, thus performing all the acts of
execution which would have produced the crime of Murder as a consequence but which
nevertheless did not produce it by reason of causes independent of the will of the
perpetrator, that is, by the timely and able medical attendance rendered to said ROMEO
AUSTRIA which save his life, to the damage and prejudice of the said offended party. 7

Upon arraignment, petitioner pleadednot guilty to the offenses charged against him. 8

The prosecution presented private complainants Gerardo Naval and Romeo Austria as
witnesses.  It also presented Dr. Raisa D. Francisco, Carlos Angeles, and Arnold Angeles as
9

witnesses.  Petitioner testified for the defense.

10 11

Facts according to the prosecution

Romeo Austria testified that at around 8:30 a.m. on April 20, 2000, he was playing a lucky
nine game ata wake on Araneta Avenue, Quezon City.  Miguel arrived, asking money from 12

Austria so he could buy liquor.  In response, Austria asked Miguel "to keep quiet."  Gerardo
13 14

Naval "arrived and asked [Austria] to go home."  There was an exchange of words between
15

Naval and Miguel.  Austria "stood up [and] felt that he was stabbed."  As he ran home, he
16 17

noticedMiguel "armed with a knife,"  this time chasing Naval.  Austria was "hospitalized . . .
18 19

and was . . . confined for more than a month."  He spent around ₱110,000.00 for his
20

hospitalization.  On cross-examination, Austria testified that he saw Miguel attempt to stab
21

him again. 22

Gerardo Naval testified that Miguel was irked when he asked Austria to go home.  After he 23

and Miguel had an exchange of words, he "felt a hard blow on his back."  Naval 24

retaliated.  However, he ran away when he saw Miguel holding a knife.  Miguel chased
25 26

Naval who fell on the ground.  When Naval saw that Miguel was "about to stab him again, he
27

hit [Miguel] with a bench"  and left him lying on the ground, unable to stand.  According to
28 29

Naval, "he did not see the [knife] land on his back."  Naval was also confined at the hospital
30

but only for six (6) days. 31

Dr. Carlos Angeles testified that "he treated [Austria] for [the] stab wound at [his] back."  He 32

declared that Austria could have died without an emergency operation.  According to him, "a 33

long and sharp instrument, probably a knife,"  could have been used to stab the victim.  Dr.
34 35

Arnold Angeles, Naval’s doctor, testified that "continuous blood loss"  could have caused 36

Naval’s death. 37

Facts according to the defense

Miguel testified that he saw private complainants at a wake.  Naval tapped his back and 38

asked, "Anong problema mo?" to which he answered, "Wala naman."  Thereafter, Naval 39

punched Miguel.  As he was about to stand up, he was hit by a hard objecton his head,
40

causing him to lose consciousness.  He was brought to UERM Memorial Hospital where
41

Naval identified him.  He was then brought to Station 11 in Galas, Quezon City.  Miguel also
42 43

testified that only Naval identified him at the hospital. 44

The parties stipulated that Dr. Renan Acosta, supposedly the second defense witness,
conducted Miguel’s examination.  He issued a temporary medical certificate and a separate
45

permanent medical certificate. 46

Regional Trial Court

In its decision, the Regional Trial Court found petitioner guilty beyond reasonable doubt of
two (2) counts of frustrated murder.  He was sentenced to suffer the indeterminate penalty of
47

imprisonment of six (6) years and one (1) day of prision mayoras minimum, to 17 years and
four (4) months of reclusion temporalas maximum for each count.  Petitioner was ordered to
48

indemnify Austria ₱25,000.00 as moral damages and ₱100,000.00 as actual damages; and
Naval ₱25,000.00 asmoral damages and ₱10,000.00 as temperate or moderate damages. 49

Petitioner was also ordered to pay the costs of suit.  The dispositive portion of the Regional
50

Trial Court decision reads:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. Re: Criminal Case No. 00-91841-finding accused MIGUEL CIRERA y USTELO

guilty beyond reasonable doubt of the crime of Frustrated Murder hereby sentencing
him to suffer the indeterminate penalty of imprisonment of Six (6) years and one (1)
day of Prision Mayor as MINIMUM to Seventeen (17)Years and Four (4) months of
Reclusion Temporal as MAXIMUM and to indemnify private complainant Gerardo
Naval in the amount of Twenty Five Thousand (₱25,000.00) Pesos as and by way of
morals [sic] damages and in the absence of evidence, the amount of Ten Thousand
(₱10,000.00) Pesos as and by way [of] Temperate or moderate damages;

2. Re: Criminal Case NO. 00-91841-finding accused MIGUEL CIRERA y USTELO

guilty beyond reasonable doubt of the crime of Frustrated Murder, hereby sentencing
him to suffer the indeterminate penalty [of] Six (6) years and one (1) day of Prision
Mayor as MINIMUM to Seventeen (17)years and four (4) months of Reclusion
Temporal as MAXIMUM and to indemnify private complainant Romeo Austria in the
amount of Twenty Five Thousand (₱25,000.00) Pesos as and by way of moral
damages and the amount of One Hundred Thousand (₱100,000.00) Pesos as actual
damages.

3. To pay the cost of suit.  (Emphasis in the original)

51

The Regional Trial Court found thatpetitioner caused the stab wounds of private
complainants.  Naval and Austria were able to positively identify him and describe how they
52

obtained their injuries. 53

Petitioner’s acts were not attended by evident premeditation as ruled by the trial
court.  However, there was treachery on petitioner’s end, considering the length of time it
54

took private complainants to realize that they were stabbed.  This, according to the Regional
55

Trial Court, was a method or form that tended to insure the execution of an act without risk
from the offended party’s defense. 56

Petitioner appealed  the Regional Trial Court’s July 2, 2004 decision to the Court of Appeals,
57

raising as issue the credibility of the prosecution’s witnesses and, hence, the correctness of
his conviction. 58

Court of Appeals

In a decision  promulgated on November 20, 2007, the Court of Appeals affirmed the
59

decision of the trial court.

The Court of Appeals was not persuaded by petitioner’s arguments pointing to alleged
inconsistencies inthe prosecution witnesses’ narratives. It found that the inconsistency
between Naval’s testimony and his sworn affidavit on the number of times petitioner was hit
might be attributed to the fact that "the statement was taken . . . while he was [still at] the
hospital [unable] to fully understand its contents".  The Court of Appeals was not persuaded
60

either by petitioner’s argument that Austria and Naval failed to testify that they saw him stab
them.  The Court of Appeals held that "no other person could have committed the crime"  as
61 62

"all the circumstances point to [petitioner] as the author of the crime."63

The Court of Appeals affirmed the finding of the trial court that there was treachery in this
case because"the attack was so sudden and unexpected"  that "self-defense was not
64

possible." 65

Petitioner’s motion for reconsideration was denied in the Court of Appeals’

resolution  promulgated on February 18, 2008.
66

Petitioner, in this case, raises the following issue:

WHETHER THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE

APPEAL WHICH IN EFFECT, AFFIRMS THE JUDGMENT OF CONVICTION RENDERED
BY THE TRIAL COURT, DESPITE THE PATENT LACK OF EVIDENCE AGAINST THE
PETITIONER AND FOR THE FAILURE OF THE PROSECUTION TO PROVE THE
PETITIONER’S GUILT BEYOND REASONABLE DOUBT. 67

Petitioner argues that the Court of Appeals failed to consider the inconsistencies in Austria’s
and Naval’s statements.  Austria’s statement that only Naval and petitioner were standing
68

behind him was inconsistent with Austria’s other statement that "petitioner was on his left
side, while [Naval] was on his right side." 69

Petitioner also stresses that Austria’s claim that Naval and petitioner "were still having an
altercation when he suddenly felt a stab blow at his back"  was inconsistent with Naval’s
70

alleged failure to mention "that he had an altercation with the petitioner before the stabbing
incident."  Petitioner claims that it was not possible for him to have stabbed Austria without
71

Naval noticing since he was having a heatedexchange of words with Naval. 72

Petitioner insists that the claim that "petitioner was armed with a knife"  was not proven since
73

"the knife was not recovered."  Petitioner was left immobile, yet "nobody bothered to retrieve
74

the knife"  he supposedly used in committing the crimes charged against him.  Petitioner
75 76

also points out that other players in the lucky nine game might have gotten mad at private
complainants when Naval allegedly asked Austria to go home for a drinking spree. 77

Petitioner also argues that there was no treachery.  Even assuming that an assault was
78

sudden and unexpected, there must be "evidence that [the] mode of assault was consciously
and deliberately adopted to [e]nsure the execution of the crime without risk to the
[petitioner.]"  Given "private complainants’ superiority in number"  and considering that
79 80

petitioner "was left behind unconscious,"  private complainants were not left without
81

"opportunity to retaliate."
82

Respondent counters that the "trial court’s observations and conclusions deserve great
respect and are often accorded finality, unless there appears in the recordsome fact or
circumstance of weight which the lower court may have overlooked, misunderstood or
misappreciated and which . . . would alter the result of the case." 83
Private complainants point out that the circumstances of the case show treachery since they
were attacked from behind.  Further, they claim that there was no warning that they were in
84

danger when they were stabbed. 85

The petition should be partly granted. Treachery did not exist and, hence, petitioner may only
be convicted of two counts of frustrated homicide.

Nonetheless, we affirm the findingthat the prosecution’s witnesses were credible.

Petitioner points to alleged inconsistencies that pertain only to collateral and inconsequential
matters. He directs this court’s attention to inconsistent statements regarding the positions of
private complainants at the time of the incident.  He also points to the alleged impossibility of
86

him committing the offense without being noticed by Naval and to the alleged failure to
87

recover the knife used in stabbing private complainants. 88

These alleged inconsistencies do not affect the credibility of the testimonies of the
prosecution witnesses, specially with respect to the "principal occurrence and positive
identification"  of petitioner. Slight inconsistencies in the testimony even strengthen
89

credibility as they show that the "testimony [was] not rehearsed."  What is important is that
90

there is consistency as to the occurrence and identity of the perpetrator. 91

Further, the alleged failure to retrieve the knife supposed to have been used in perpetrating
the offense does not destroy the credibility of the testimonies.  The crime is proved not by
92

presenting the object but by establishing the existence of the elements of the crime as
written in law.
93

II

Petitioner was charged and convicted by the trial court and the Court of Appeals with two
counts of frustrated murder.

Article 248 of the Revised Penal Code provides that murder is committed by a person who
kills, under certain circumstances, another person that is not his or her father, mother, child,
ascendant, descendant, or spouse. It provides:

ARTICLE 248. Murder. — Any person who, not falling within the provisions of Article 246
shall kill another, shall be guilty of murder and shall be punished by reclusión temporalin its
maximum period to death, if committed with any of the following attendant circumstances:

1. With treachery, taking advantage ofsuperior strength, with the aid of armed men,
or employing means to weaken the defense or of means or persons to insure or
afford impunity.

2. In consideration of a price, reward or promise.

3. By means of inundation, fire, poison, explosion, shipwreck, stranding of a vessel,

derailment or assault upon a street car or locomotive, fall of an airship, by means of
motor vehicles, or with the use of any other means involving great waste and ruin.
 4. On occasion of any of the calamities enumerated in the preceding paragraph, or of
an earthquake, eruption of a volcano, destructive cyclone, epidemic, or any other
public calamity. 5. With evident premeditation.

6. With cruelty, by deliberately and inhumanly augmenting the suffering of the victim,
or outraging or scoffing at his person or corpse.

If these qualifying circumstances are not present or cannot be proven beyond reasonable
doubt, the accused may only be convicted with homicide, defined in Article 249 of the
Revised Penal Code:

Art. 249. Homicide. – Any person who, not falling within the provisions of Article 246, shall kill
another withoutthe attendance of any of the circumstances enumerated in the next preceding
article, shall be deemed guilty of homicide and be punished by reclusión temporal.

In murder or homicide, the offender must have the intent to kill. If there is no intent to kill on
the part ofthe offender, he or she is liable only for physical injuries.94

"[I]ntent to kill . . . must beproved by clear and convincing evidence."  "[It] should not be
95

drawn inthe absence of circumstances sufficient to prove such intent beyond reasonable
doubt."96

In Escamilla v. People,  we said that "[t]he evidence to prove intent to kill may consist of,
97

inter alia, the means used; the nature, location and number of wounds sustained by the
victim; and the conduct of the malefactors before, at the time of, orimmediately after the
killing of the victim."
98

The act of killing becomes frustrated when an offender "perform[s] all the acts of execution
which [c]ould produce the [crime]"  but did not produce it for reasons independent of his or
99

her will.

In convicting petitioner offrustrated murder, the trial court and the Court of Appeals found
that petitioner intentionally tried to kill private complainants. He was the author ofthe stab
wounds obtained by private complainants. However, for reasons independent of his will, he
was unable to fully execute the crime.

This court held that "findings of facts and assessment of credibility of witnesses are matters
best left to the trial court,"  which is in the best position to observe the witnesses’ demeanor
100

while being examined in court.  This court gives more weight tosuch findings if affirmed by
101

the Court of Appeals.  The exception to the ruleis when the trial court misconstrued facts
102

which if properly appreciated could alter the outcome of the case. 103

We find that there is nothing in the circumstances of this case that warrants the application of
the exception, with respect to the findings that: 1) there was intent to kill; 2) petitioner was
the willful author of the stab wounds, which almost killed private complainants; and that 3)
petitioner’s failure to kill private complainants was a result of circumstances independent of
his will. Circumstantial evidence was used to identify the perpetrator in this case. 104

Rule 133, Section 4 of the Rules ofCourt provides that a person may be convicted based on
circumstantial evidence if the requisites are present. It provides:
Section 4. Circumstantial evidence, when sufficient.— Circumstantial evidence is sufficient
for conviction if:

(a) There is more than one circumstance;

(b) The facts from which the inferences are derived are proven; and

(c) The combination of all the circumstances is such as to produce a conviction

beyond reasonable doubt.

This court iterated this rule in Trinidad v. People: 105

The settled rule is that a judgment of conviction based purely on circumstantial evidence can
be upheld only if the following requisites concur: (1) there is more than one circumstance; (2)
the facts from which the inferences are derived are proven; and (3) the combination of all the

circumstance es is such as to produce conviction beyond reasonable doubt. 106

In this case, the following facts were considered:

1) Petitioner was identified by private complainants to be at the scene of the crime; 107

2) Private complainants were able todescribe how they obtained their injuries; 108

3) Petitioner was seen holding the knife at the scene of the crime; 109

4) Only three persons were involved in the incident — private complainants and
petitioner;
110

5) Petitioner "was standing very close to the private complainants"; 111

6) Petitioner was the only one who had an altercation with private
complainants,  and petitioner was seen chasing and about to stab at least one of the
112

private complainants; 113

7) Private complainants sustained stab wounds; 114

8) The stab wounds sustained by private complainants would have been fatal had it
not been given appropriate medical attention. 115

The combination of these circumstances "constitute[s] an unbroken chain which leads to one
fair and reasonable conclusion pointing to the [petitioner], to the exclusion of all others, as
the guilty person." 116

The version offered by petitioner that it was he who was punched and hit with a hard
object  is not inconsistent with the facts as stated by private complainants. It may even be
117

true. However, it does not remove such reasonable conclusion that he was the author of the
acts complained about in this case.
Petitioner’s intent to kill is evident from his attempt to stab private complainants more than
once.  Petitioner chased private complainants after they had tried to flee from him.  The
118 119

wounds inflicted by petitioner were also shown to have been fatal if no medical attention had
been given to private complainants immediately after the incident. 120

Petitioner’s acts did not result in private complainants’ deaths despite petitioner having
already performed all acts of execution of the crime. However, this was not due to his
desistance but due to the timely medical attention given to private complainants. 121

Meanwhile, Dr. Carlos Angeles’ and Dr. Arnold Angeles’ testimonies that private
complainants would have died had no immediate medical attention been given to
them,  showed that petitioner’s failure to kill private complainants was due toacts
122

independent of his will.

Based on the foregoing, we do not find reason to disturb the trial court’s and the Court of
Appeals’ findings.

III

However, treachery, as a qualifying circumstance to sustain a conviction of frustrated murder

rather than frustrated homicide, was not proven by the prosecution.

Article 14(16) of the Revised Penal Code defines treachery:

ARTICLE 14. Aggravating Circumstances. — The following are aggravating circumstances:

....

16. That the act be committed with treachery (alevosia).

There is treachery when the offender commits any of the crimes against the person,
employing means, methods, or forms in the execution thereof, which tend directly and
specially to insure its execution, without risk to himself arising from the defense which the
offended party might make. 123

The requisites of treachery are:

(1) [T]he employment of means,method, or manner of execution which will ensure

the safety of the malefactor from defensive or retaliating acts on the part of the
victim, no opportunity being given to the latter to defend himself or to retaliate;  and 124

(2) [D]eliberate or conscious adoption of such means, method, or manner of

execution.125

A finding of the existence of treachery should be based on "clear and convincing

evidence."  Such evidence must be as conclusive as the fact of killing itself.  Its existence
126 127

"cannot be presumed."  As with the finding of guilt of the accused, "[a]ny doubt as to [its]
128

existence . . . [should] be resolved in favor of the accused." 129

The unexpectedness of an attack cannotbe the sole basis of a finding of treachery  even if 130

the attack was intended to kill another as long as the victim’s position was merely
accidental.  The means adopted must have been a result of a determination to ensure
131

success in committing the crime.

In this case, no evidence was presented to show that petitioner consciously adopted or
reflected on the means, method, or form of attack to secure his unfair advantage.

The attack might "have been done on impulse [or] as a reaction to an actual or imagined
provocation offered by the victim."  In this case, petitioner was not only dismissed by Austria
132

when he approached him for money. There was also an altercation between him and Naval.
The provocation might have been enough to entice petitioner to action and attack private
complainants.

Therefore, the manner of attack might not have been motivated by a determination to ensure
success in committing the crime.  What was more likely the case, based on private
1âwphi1

complainants’ testimonies, was that petitioner’s action was an impulsive reaction to being
dismissed by Austria, his altercation with Naval, and Naval’s attempt to summon Austria
home.

Generally, this type of provocation negates the existence of treachery.  This is the type of
133

provocation that does not lend itself to premeditation. The provocation in thiscase is of the
kind which triggers impulsive reactions left unchecked by the accused and caused him to
commit the crime. There was no evidence of a modicum ofpremeditation indicating the
possibility of choice and planning fundamental to achieve the elements of treachery.

The ability of the offended parties toretaliate and protect themselves may not by itself negate
the existence of treachery. The efforts of the accused to employ means and method to
ensure his safety and freedom from retaliation may not have succeeded. However, in this
case, the ability of the offended parties to have avoided greater harm by running away or by
being able to subdue the accused is a strongindicator that no treachery exists.

It is, therefore, an error for both the trial and appellate courts not to have considered the
evidence that the offended parties were able to flee and retaliate. Upon proof of evasion and
retaliation, courts must evaluate the evidence further to ensure whether there can be
reasonable doubt for this qualifying circumstance to exist. This is only in keeping with the
presumption of innocence of the accused.

Thus, in the absence of clear proof of the existence of treachery, the crime proven beyond
reasonable doubt isonly frustrated homicide and, correspondingly, the penalty should be
reduced. 134

IV

Article 250 of the Revised Penal Code provides that a penalty lower by one degree than that
which should be imposed for homicide may be imposed upon a person guilty of frustrated
homicide.

The imposable penalty for homicide is reclusion temporal. Article 50 of the Revised Penal
Code provides that the penalty to be imposed upon principals of a frustrated crime shall be
the penalty next lower in degree than that prescribed by law for the consummated crimes.
The penalty next lower in degree is prision mayor.
Applying the Indeterminate Sentence Law, the penalty to be imposed must have a maximum
term which canbe properly imposed under the rules considering the attending
circumstances.  Since there is no attending circumstance in this case, the penalty of prision
135

mayor in its medium term or eight (8) years and one (1) day asmaximum should beimposed.
The minimum sentence should be within the range of the penalty next lower to that
prescribed by the Revised Penal Code.  A penalty of one (1) year and one (1) day as
136

minimum, prision correccional should, therefore, be proper.

Furthermore, petitioner’s civil liabilitymust be modified. The award of actual damages to

Romeo Austria should be 88,028.77 since this is the only amount supported by receipts on
record. This is in line with Article 2199  of the Civil Code, which limits the entitlement for
137

pecuniary loss to such amount duly proved.

We see no reason to modify the trial court’s award of moral damages, being in line with
Article 2219  and jurisprudence.  The trial court’s award of temperate damages to Naval
138 139

isalso justified in recognition of the injuries he sustained, which from their very nature imply
damages and do not need to be proved inaccordance with Article 2216  of the Civil Code.
140

WHEREFORE, the Court of Appeals’ decision is SET ASIDE. Petitioner is found guilty of two
(2) counts of frustrated homicide. He is sentenced to a prison term of one (1) year and one
(1) day of prision correccional as minimum, to eight (8) years and one (1) day of prision
mayor medium as maximum, for every count. Furthermore, he is ordered to indemnify a)
Romeo Austria ₱25,000.00 as moral damages and ₱88,028.77 as actual damages and b)
Gerardo Naval ₱25,000.00 as moral damages and ₱10,000.00 as temperate ormoderate
damages.

Petitioner is also ordered to pay the c.osts of suit.

SO ORDERED.

MARVIC MARIO VICTOR F. LEONEN

Associate Justice