RULE 31

PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari[1] are the Decision[2] dated
June 9, 2014 and the Resolution[3] dated September 23, 2014 of the Court of
Appeals (CA) in CA-G.R. SP No. 132615, which annulled and set aside the
Decision[4] dated February 14, 2013 and the Resolution[5] dated August 30,
2013 of the National Labor Relations Commission (NLRC) in NLRC NCR
CN. 10-15949-11/NLRC LAC No. 07-001991-12 and instead, reinstated the
Decision[6] dated May 4, 2012 of the Labor Arbiter (LA) finding that
respondent Toyota Shaw/Pasig, Inc. (Toyota) validly dismissed petitioner
Armando N. Puncia (Puncia) for just cause.

The Facts

Puncia alleged that since 2004, he worked as a messenger/collector for

Toyota and was later on appointed on March 2, 2011 as a Marketing
Professional[7] tasked to sell seven (7) vehicles as monthly quota.
[8]
 However, Puncia failed to comply and sold only one (1) vehicle for the
month of July and none for August,[9] prompting Toyota to send him a
Notice to Explain.[10] In reply,[11] Puncia stated that as a trainee, he was only
required to sell three (3) vehicles per month; that the month of May has
always been a lean month; and that he was able to sell four (4) vehicles in
the month of September.[12] Thereafter, a hearing was conducted but Puncia
failed to appear despite notice.[13]

On October 18, 2011, Toyota sent Puncia a Notice of Termination,

[14]
 dismissing him on the ground of insubordination for his failure to attend
the scheduled hearing and justify his absence.[15] This prompted Puncia to
file a complaint[16] for illegal dismissal with prayer for reinstatement and
payment of backwages, unfair labor practice, damages, and attorney's fees
against Toyota and its officers, claiming, inter alia, that Toyota dismissed
him after discovering that he was a director of the Toyota-Shaw Pasig
Workers Union-Automotive Industry Worker's Alliance; and that he was
terminated on the ground of insubordination and not due to his failure to
meet his quota as contained in the Notice to Explain.[17]
In its defense, Toyota denied the harassment charges and claimed that
there was a valid cause to dismiss Puncia, considering his failure to comply
with the company's strict requirements on sales quota. It likewise stated
that Puncia has consistently violated the company rules on attendance and
timekeeping as several disciplinary actions were already issued against him.
[18]

The LA Ruling

In a Decision[19] dated May 4, 2012, the LA dismissed Puncia's complaint for

lack of merit, but nevertheless, ordered Toyota to pay Puncia his money
claims consisting of his earned commissions, 13th month pay for 2011, sick
leave, and vacation leave benefits.[20]

The LA found that Puncia was dismissed not because of his involvement in
the labor union, but was terminated for a just cause due to his inefficiency
brought about by his numerous violations of the company rules on
attendance from 2006 to 2010 and his failure to meet the required monthly
quota.[21] This notwithstanding, the LA found Puncia entitled to his money
claims, considering that Toyota failed to deny or rebut his entitlement
thereto.[22]

Aggrieved, Puncia appealed[23] to the NLRC.

The NLRC Ruling

In a Decision[24] dated February 14, 2013, the NLRC reversed the LA ruling

and, accordingly, declared Puncia to have been illegally dismissed by
Toyota, thus, entitling him to reinstatement and backwages.[25] The NLRC
found that Toyota illegally dismissed Puncia from employment as there
were no valid grounds to justify his termination. Moreover, the NLRC
observed that Toyota failed to comply with the due process requirements
as: first, the written notice served on the employee did not categorically
indicate the specific ground for dismissal sufficient to have given Puncia a
reasonable opportunity to explain his side, since the Intra-Company
Communication[26] providing the company rules failed to explain in detail
that Puncia's deficiency merited the penalty of dismissal; [27] and second,
Puncia's dismissal was not based on the same grounds cited in the Notice to
Explain, since the ground indicated was Puncia's failure to meet the sales
quota, which is different from the ground stated in the Notice of
Termination, which is his unjustified absence during the scheduled hearing.
[28]

Both parties filed their separate motions for reconsideration, [29] which were
denied in a Resolution[30] dated August 30, 2013.

Aggrieved, Toyota filed a Petition for Certiorari[31] before the CA, which was

docketed as CA-G.R. SP No. 132615 and was raffled to the First Division
(CA-First Division). In the same vein, Puncia filed his Petition
for Certiorari[32] before the CA, which was docketed as CA-G.R. SP No.
132674 and was raffled to the Eleventh Division (CA-Eleventh Division).[33]

The CA Proceedings

In a Resolution[34] dated November 29, 2013, the CA-Eleventh Division

dismissed outright CA-G.R. SP No. 132674 on procedural grounds.
Consequently, Puncia filed an Omnibus Motion (For Consolidation and
Reconsideration of Order of November 29, 2013)[35] and a Supplement to
the Omnibus Motion,[36] seeking the consolidation of CA-G.R. SP No.
132674 with CA-G.R. SP No. 132615.

In a Resolution[37] dated January 24, 2014, the CA-First Division denied the

motion for consolidation on the ground that CA-G.R. SP No. 132674 was
already dismissed by the CA-Eleventh Division. Thereafter, and while CA-
G.R. SP No. 132674 remained dismissed, the CA-First Division
promulgated the assailed Decision[38] dated June 9, 2014 (June 9, 2014
Decision) in CA-G.R. SP No. 132615 annulling and setting aside the NLRC
ruling and reinstating that of the LA. It held that Toyota was able to present
substantial evidence in support of its contention that there was just cause in
Puncia's dismissal from employment and that it was done in compliance
with due process, considering that: (a) Puncia's repeated failure to meet his
sales quota constitutes gross inefficiency and gross neglect of duties; and
(b) Puncia was afforded due process as he was able to submit a written
explanation within the period given to him by Toyota.[39]

Dissatisfied, Puncia filed a motion for reconsideration, [40] which the CA-

First Division denied in the assailed Resolution [41] dated September 23,
2014 (September 23, 2014 Resolution).

Meanwhile, in a Resolution[42] dated July 22, 2014, the CA-Eleventh

Division reconsidered its dismissal of CA-G.R. SP No. 132674, and
accordingly, reinstated the same and ordered Toyota to file its comment
thereto.

In view of the foregoing, Puncia filed the instant petition [43] mainly

contending that the rulings in CA-G.R. SP No. 132615, i.e., the assailed
June 9, 2014 Decision and September 23, 2014 Resolution, should be set
aside and the case be remanded back to the CA for consolidation with CA-
G.R. SP No. 132674 so that both cases will be jointly decided on the merits.
[44]

For its part,[45] Toyota maintained that the CA-First Division correctly

promulgated its June 9, 2014 Decision in CA-G.R. SP No. 132615,
considering that at the time of promulgation, there was no other pending
case before the CA involving the same issues and parties as CA-G.R. SP No.
132674 was dismissed by the CA-Eleventh Division on November 29, 2013,
and was only reinstated on July 22, 2014.[46]

The Issues Before the Court

The issues for the Court's resolution are (a) whether or not the CA-First
Division correctly promulgated its June 9, 2014 Decision in CA-G.R. SP No.
132615 without consolidating the same with CA-G.R. SP No. 132674; and
(b) whether or not Puncia was dismissed from employment for just cause.

The Court's Ruling

The petition is denied.

At the outset, the Court notes that consolidation of cases is a procedure

sanctioned by the Rules of Court for actions which involve a common
question of law or fact before the court.[47] It is a procedural device granted
to the court as an aid in deciding how cases in its docket are to be tried so
that the business of the court may be dispatched expeditiously and with
economy while providing justice to the parties.[48]
The rationale for consolidation is to have all cases, which are intimately
related, acted upon by one branch of the court to avoid the possibility of
conflicting decisions being rendered[49] and in effect, prevent confusion,
unnecessary costs,[50] and delay.[51] It is an action sought to avoid
multiplicity of suits; guard against oppression and abuse; clear congested
dockets; and to simplify the work of the trial court in order to attain justice
with the least expense and vexation to the parties-litigants.[52]

In order to determine whether consolidation is proper, the test is to check

whether the cases involve the resolution of common questions of law,
related facts,[53] or the same parties.[54] Consolidation is proper whenever
the subject matter involved and the relief demanded in the different suits
make it expedient for the court to determine all of the issues involved and
adjudicate the rights of the parties by hearing the suits together.
[55]
 However, it must be stressed that an essential requisite of
consolidation is that the several actions which should be pending
before the court, arise from the same act, event or transaction,
involve the same or like issues, and depend largely or
substantially on the same evidence.[56] As succinctly stated in the
rules, consolidation is allowed when there are similar actions which are
pending before the court[57] - for there is nothing to consolidate when a
matter has already been resolved and the very purpose of consolidation, to
avoid conflicting decisions and multiplicity of suits, rendered futile. The
Court's pronouncement in Honoridez v. Mahinay,[58] is instructive on this
matter, to wit:

Petitioners attempt to revive the issues in Civil Case No. CEB-16335 by

moving for the consolidation of the same with Civil Case No. CEB-
23653. Under Section 1, Rule 31 of the Rules of Court, only
pending actions involving a common question of law or fact may
be consolidated. Obviously, petitioners cannot make out a case for
consolidation in this case since Civil Case No. CEB-16335, the case which
petitioners seek to consolidate with the case a quo, has long become final
and executory; as such, it cannot be re-litigated in the instant proceedings
without virtually impeaching the correctness of the decision in the other
case. Public policy abhors such eventuality.[59] (Emphasis and underscoring
supplied)
In the instant case, while there were indeed two (2) separate petitions filed
before the CA assailing the Decision dated February 14, 2013 and the
Resolution dated August 30, 2013 of the NLRC in NLRC NCR CN. 10-
15949-11/NLRC LAC No. 07-001991-12, i.e., CA-G.R. SP No. 132615 and
CA-G.R. SP No. 132674, it must nevertheless be stressed that CA-G.R. SP
No. 132674 was dismissed by the CA-Eleventh Division as early as
November 29, 2013 due to procedural grounds. This fact was even pointed
out by the CA-First Division in its Resolution[60] dated January 24, 2014
when it held that CA-G.R. SP No. 132674 could no longer be consolidated
with CA-G.R. SP No. 132615 since the former case had already been
dismissed. From that point until the CA-First Division's promulgation of
the assailed June 9, 2014 Decision in CA-G.R. SP No. 132615, no
consolidation between CA-G.R. SP No. 132615 and CA-G.R. SP No. 132674
could take place mainly because the latter case remained dismissed during
that time. In other words, when the CA-First Division promulgated its
ruling in CA-G.R. SP No. 132615, it was the one and only case pending
before the CA assailing the aforesaid NLRC rulings. Therefore, the CA-First
Division acted within the scope of its jurisdiction when it promulgated its
ruling in CA-G.R. SP No. 132615 without having the case consolidated with
CA-G.R. SP No. 132674, notwithstanding the latter case's
reinstatement after said promulgation.

It should be emphasized that the consolidation of cases is aimed to simplify

the proceedings as it contributes to the swift dispensation of justice. [61] As
such, it is addressed to the sound discretion of the court and the latter's
action in consolidation will not be disturbed in the absence of manifest
abuse of discretion tantamount to an evasion of a positive duty or a refusal
to perform a duty enjoined by law,[62] which is absent in this case.

The foregoing notwithstanding, the Court deems it appropriate to look into

the issue of the validity of Puncia's dismissal so as to finally resolve the
main controversy at hand.

In his petition, Puncia insists that the CA gravely erred in upholding his
dismissal, considering that the administrative proceeding against him was
due to his failure to meet his monthly sales quota, but he was dismissed on
the ground of gross insubordination.[63] On the other hand, Toyota
maintains that the CA correctly declared Puncia's termination to be valid
and in compliance with due process.[64]

It is settled that "for a dismissal to be valid, the rule is that the employer
must comply with both substantive and procedural due process
requirements. Substantive due process requires that the dismissal must be
pursuant to either a just or an authorized cause under Articles 297, 298 or
299 (formerly Articles 282, 283, and 284)[65] of the Labor Code. Procedural
due process, on the other hand, mandates that the employer must observe
the twin requirements of notice and hearing before a dismissal can be
effected."[66] Thus, to determine the validity of Puncia's dismissal, there is a
need to discuss whether there was indeed just cause for his termination.

In the instant case, records reveal that as a Marketing Professional for

Toyota, Puncia had a monthly sales quota of seven (7) vehicles from March
2011 to June 2011. As he was having trouble complying with said quota,
Toyota even extended him a modicum of leniency by lowering his monthly
sales quota to just three (3) vehicles for the months of July and August
2011; but even then, he still failed to comply.[67] In that six (6)-month span,
Puncia miserably failed in satisfying his monthly sales quota, only selling a
measly five (5) vehicles out of the 34 he was required to sell over the course
of said period. Verily, Puncia's repeated failure to perform his duties - i.e.,
reaching his monthly sales quota - for such a period of time falls under the
concept of gross inefficiency. In this regard, case law instructs that "gross
inefficiency" is analogous to "gross neglect of duty," a just cause of
dismissal under Article 297 of the Labor Code, for both involve specific acts
of omission on the part of the employee resulting in damage to the
employer or to his business.[68] In Aliling v. Feliciano,[69] the Court held that
an employer is entitled to impose productivity standards for its employees,
and the latter's non-compliance therewith can lead to his termination from
work, viz.:

[T]he practice of a company in laying off workers because they failed to

make the work quota has been recognized in this jurisdiction, x x x. In the
case at bar, the petitioners' failure to meet the sales quota
assigned to each of them constitute a just cause of their
dismissal, regardless of the permanent or probationary status of their
employment. Failure to observe prescribed standards of work, or
to fulfill reasonable work assignments due to inefficiency may
constitute just cause for dismissal. Such inefficiency is
understood to mean failure to attain work goals or work quotas,
either by failing to complete the same within the allotted
reasonable period, or by producing unsatisfactory results.
[70]
 (Emphases and underscoring supplied)
Indisputably, Toyota complied with the substantive due process
requirement as there was indeed just cause for Puncia's termination.
Anent the issue of procedural due process, Section 2 (I), Rule XXIII, Book V
of the Omnibus Rules Implementing the Labor Code[71] provides for the
required standard of procedural due process accorded to employees who
stand to be terminated from work, to wit:

Section 2. Standards of due process; requirements of notice. - In all cases

of termination of employment, the following standards of due process shall
be substantially observed:

I. For termination of employment based on just causes as defined in Article

282 [now Article 297] of the Labor Code:

(a) A written notice served on the employee specifying the ground or

grounds for termination, and giving to said employee reasonable
opportunity within which to explain his side;

(b) A hearing or conference during which the employee concerned, with the
assistance of counsel if the employee so desires, is given opportunity to
respond to the charge, present his evidence, or rebut the evidence
presented against him; and

(c) A written notice of termination served on the employee indicating that

upon due consideration of all the circumstances, grounds have been
established to justify his termination.
The foregoing standards were then further refined in Unilever Philippines,
Inc. v. Rivera[72] as follows:

To clarify, the following should be considered in terminating the services of

employees:

(1) The first written notice to be served on the employees should

contain the specific causes or grounds for termination against
them, and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period. "Reasonable
opportunity" under the Omnibus Rules means every kind of assistance that
management must accord to the employees to enable them to prepare
adequately for their defense. This should be construed as a period of at least
five (5) calendar days from receipt of the notice to give the employees an
opportunity to study the accusation against them, consult a union official or
lawyer, gather data and evidence, and decide on the defenses they will raise
against the complaint. Moreover, in order to enable the employees
to intelligently prepare their explanation and defenses, the
notice should contain a detailed narration of the facts and
circumstances that will serve as basis for the charge against the
employees. A general description of the charge will not
suffice. Lastly, the notice should specifically mention which company
rules, if any, are violated and/or which among the grounds under Art. 282
is being charged against the employees.

(2) After serving the first notice, the employers should schedule and
conduct a hearing or conference wherein the employees will be given the
opportunity to: (1) explain and clarify their defenses to the charge against
them; (2) present evidence in support of their defenses; and (3) rebut the
evidence presented against them by the management. During the hearing
or conference, the employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of their choice.
Moreover, this conference or hearing could be used by the parties as an
opportunity to come to an amicable settlement.

(3) After determining that termination of employment is

justified, the employers shall serve the employees a written
notice of termination indicating that: (1) all circumstances
involving the charge against the employees have been
considered; and (2) grounds have been established to justify the
severance of their employment.[73] (Emphases and underscoring
supplied)
In this case, at first glance it seemed like Toyota afforded Puncia procedural
due process, considering that: (a) Puncia was given a Notice to Explain;
[74]
 (b) Toyota scheduled a hearing on October 17, 2011 regarding the charge
stated in the Notice to Explain;[75] (c) on the date of the hearing, Puncia was
able to submit a letter[76] addressed to Toyota's vehicle sales manager
explaining his side, albeit he failed to attend said hearing; and (d) Toyota
served a written Notice of Termination[77] informing Puncia of his dismissal
from work. However, a closer look at the records reveals that in the Notice
to Explain, Puncia was being made to explain why no disciplinary action
should be imposed upon him for repeatedly failing to reach his monthly
sales quota, which act, as already adverted to earlier, constitutes gross
inefficiency. On the other hand, a reading of the Notice of Termination
shows that Puncia was dismissed not for the ground stated in the Notice to
Explain, but for gross insubordination on account of his non-appearance in
the scheduled October 17, 2011 hearing without justifiable reason. In other
words, while Toyota afforded Puncia the opportunity to refute the charge of
gross inefficiency against him, the latter was completely deprived of the
same when he was dismissed for gross insubordination - a completely
different ground from what was stated in the Notice to Explain. As such,
Puncia's right to procedural due process was violated.

Hence, considering that Toyota had dismissed Puncia for a just cause,
albeit failed to comply with the proper procedural requirements, the former
should pay the latter nominal damages in the amount of P30,000.00 in
accordance with recent jurisprudence.[78]

WHEREFORE, the petition is DENIED. The Decision dated June 9, 2014

and the Resolution dated September 23, 2014 of the Court of Appeals in
CA-G.R. SP No. 132615 are hereby AFFIRMED with MODIFICATION in
that respondent Toyota Shaw/Pasig, Inc. is ORDERED to indemnify
petitioner Armando N. Puncia nominal damages in the amount of
P30,000.00 for dismissing the latter in violation of his right to procedural
due process, but for a just cause.

SO ORDERED.

NERI VS. SANDIGANBAYAN

Not Cited Recently
THIRD DIVISION G.R. No. 202243, August 07, 2013 ROMULO L. NERI, PETITIONER,
VS. SANDIGANBAYAN (FIFTH DIVISION) AND PEOPLE OF THE PHILIPPINES,
RESPONDENTS.
DECISION

VELASCO JR., J.:

The Case

Assailed and sought to be nullified in this Petition for Certiorari Prohibition and
Mandamus under Rule 65, With application tor preliminary Injunction and a
temporary restraining order, are the Resolution [1] dated February 3, 2012 of the Fifth
Division of the Sandiganbayan in SB-10-CRM-0099 entitled People of the Philippines
v. Romulo L. Neri, as well as its Resolution[2] of April 26, 2012 denying petitioner's
motion for reconsideration.

The Facts

Petitioner Romulo L. Neri (Neri) served as Director General of the National

Economic and Development Authority (NEDA) during the administration of former
President Gloria Macapagal-Arroyo.

In connection with what had been played up as the botched Philippine-

ZTE[3] National Broadband Network (NBN) Project, the Office of the Ombudsman
(OMB), on May 28, 2010, tiled with the Sandiganbayan two (2) criminal
Informations, the first against Benjamin Abalos, for violation of Section 3(h) of
Republic Act No. (RA) 3019, as amended, otherwise known as the Anti-Graft and
Corrupt Practices Act, docketed as SB-10-CRM-0098 (People v. Abalos), and eventually
raffled to the Fourth Division of that court. The second Information against Neri,
also for violation of Sec. 3(h), RA 3019, in relation to Sec. 13, Article VII of the 1987
Constitution, was docketed as SB-10-CRM-0099 (People v. Neri) and raffled to
the Fifth Division of the Sandiganbayan. Vis--vis the same project, the
Ombudsman would also later file an information against Macapagal-Arroyo and
another information against her and several others[4] docketed as SB-11-CRM-0467
and SB-11-CRM-0468 to 0469, respectively, all of which ended up, like SB-10-CRM-
0098, in the anti-graft court's 4th Division.

The accusatory portion of the Information against Neri reads as follows:

That during the period from September 2006 to April 2007, or thereabout in Metro
Manila x x x and within the jurisdiction of this Honorable Court, the above-named
accused x x x being the then Director General of the [NEDA], a Cabinet position and as
such, is prohibited by Sec. 13 of Article VII of the 1987 Constitution [from being
financially interested in any contract with, or in any franchise or special privilege
granted by the Government] but in spite of [said provision], petitioner, while acting as
such, x x x directly or indirectly have financial or pecuniary interest in the business
transaction between the Government of the Republic of the Philippines and the Zhing
Xing Telecommunications Equipment, Inc., a Chinese corporation x x x for the
implementation of the Philippine x x x (NBN) Project, which requires the review,
consideration and approval of the NEDA, x x x by then and there, meeting, having lunch
and playing golf with representatives and/or officials of the ZTE and meeting with the
COMELEC Chairman Benjamin Abalos and sending his emissary/representative in the
person of Engineer Rodolfo Noel Lozada to meet Chairman Abalos and Jose De Venecia
III, President/General Manager of Amsterdam Holdings, Inc. (AHI) another proponent to
implement the NBN Project and discuss matters with them. (Rollo, pp. 48-50.)
In the ensuing trial in the Neri case following the arraignment and pre- trial
proceedings, six (6) individuals took the witness stand on separate dates [5] to testify
for the prosecution. Thereafter, the prosecution twice moved for and secured
continuance for the initial stated reason that the prosecution is still verifying the
exact address of its next intended witness and then that such witness cannot be
located at his given address.[6]

In the meantime, a pre-trial conference was conducted in the Abalos case following

which the Fourth Division issued on September 17, 2010 a Pre-Trial
Order[7] containing, among other things, a list of witnesses and documents the
prosecution intended to present. On October 27, 2010, Neri, whose name appeared
high on the list, took the witness stand against Abalos in the Abalos case.[8]

On January 3, 2012, in SB-10-CRM-0099, the Office of the Special Prosecutor (OSP),

OMB, citing Sec. 22, Rule 119 of the Rules of Court in relation to Sec. 2 of the
Sandiganbayan Revised Internal Rules, moved for its consolidation with SB-10-CRM-
0098 (People v. Abalos), SB-11-CRM-0467 (People v. Arroyo, et al.) and SB-11-0468 to
469 (People v. Arroyo). The stated reason proffered: to promote a more expeditious
and less expensive resolution of the controversy of cases involving the same
business transaction. And in this regard, the prosecution would later manifest that
it would be presenting Yu Yong and Fan Yang, then president and finance officer,
respectively, of ZTE, as witnesses all in said cases which would entail a substantive
expense on the part of government if their testimonies are given separately. [9]

Neri opposed and argued against consolidation, and, as he would later reiterate,
contended, among other things that: (a) SB-10-CRM-0099, on one hand, and the
other cases, on the other, involve different issues and facts; (b) the desired
consolidation is oppressive and violates his rights as an accused; (c) consolidation
would unduly put him at risk as he does not actually belong to the Abalos group
which had been negotiating with the ZTE officials about the NBN Project; (d) he is
the principal witness and, in fact, already finished testifying, in the Abalos case; (e)
the trial in the Neri and Abalos cases are both in the advanced stages already; and
(f) the motion is but a ploy to further delay the prosecution of SB-10-CRM-0099,
considering the prosecution's failure to present any more witnesses during the last
two (2) scheduled hearings.

To the opposition, the prosecution interposed a reply basically advancing the same
practical and economic reasons why a consolidation order should issue.

By Resolution dated February 3, 2012, the Sandiganbayan Fifth Division, agreeing

with the position thus taken by the OSP, granted the consolidation of SB-10-CRM-
0099 with SB-10-CRM-0098, disposing as follows:

WHEREFORE, the prosecution's Motion to Consolidate is hereby GRANTED. The instant

case (SB-10-CRM-0099) is now ordered consolidated with SB-10-CRM-0098, the case with
the lower court docket number pending before the Fourth Division of this Court, subject
to the conformity of the said Division.[10] (Emphasis added.)
According to the Fifth Division, citing Domdom v. Sandiganbayan,[11] consolidation is
proper inasmuch as the subject matter of the charges in both
the Abalos and Neri cases revolved around the same ZTE-NBN Project. And
following the movant's line, the anti-graft court stated that consolidation would
allow the government to save unnecessary expenses, avoid multiplicity of suits,
prevent delay, clear congested dockets, and simplify the work of the trial court
without violating the parties' rights.

Neri sought a reconsideration, but the Fifth Division denied it in its equally assailed
April 26, 2012 Resolution.

The Issues

Petitioner Neri is now before the Court on the submission that the assailed
consolidation order is void for having been issued with grave abuse of discretion.
Specifically, petitioners allege that respondent court gravely erred:

[A]x x x in ordering a consolidation of the subject criminal cases when the Revised Rules of Criminal Procedure
 cases, only a consolidation of trials or joint trials in appropriate instances.
[B] x x x in ordering the consolidation because petitioner will now be tried for a crime not charged in the informa
violative of his constitutional right to be informed of the nature and cause of the accusation against him. Wor
in that criminal information.
[C] x x x in ordering the consolidation for it would surely prejudice the rights of petitioner as an accused in x x x
actually belong to the Abalos Group which had been negotiating with the ZTE Officials about the NBN Proje
[D]x x x in ordering the consolidation for it would just delay the trial of the case against the petitioner, as well as
already in the advanced stages of the trial. Worse, in the Abalos case, the prosecution has listed 50 witnesses
while in the case against the petitioner the prosecution (after presenting six witnesses) has no more witnesses
evidence in chief. Clearly, a consolidation of trial of these two (2) cases would unreasonably and unduly dela
violation of his right to a speedy trial.
[E] x x x in not finding that the proposed consolidation was just a ploy by the prosecution to further delay the pro
during the last two (2) hearings it has failed to present any more prosecution witnesses and there appears to b
the petitioner. x x x
[F] x x x in not finding that it would be incongruous or absurd to allow consolidation because petitioner was the p
testifying there) against Abalos in x x x SB-10- CRM-0098.[12]
The Court's Ruling

The petition is meritorious, owing for one on the occurrence of a supervening event
in the Sandiganbayan itself. As may be recalled, the assailed resolution of the
Sandiganbayan Fifth Division ordering the consolidation of SB-10-CRM-0099
(the Neri case) with SB-10-CRM-0098 (the Abalos case) pending with the Fourth
Division, was subject to the "conformity of the said (4th) Division." On October 19,
2012, the Fourth Division, on the premise that consolidation is addressed to the
sound discretion of both the transferring and receiving courts, but more
importantly the latter as the same transferred case would be an added workload,
issued a Resolution[13] refusing to accept the Neri case, thus:

WHEREFORE, the foregoing premises considered, the Fourth Division RESPECTFULLY

DECLINES to accept SB-10-CRM-0099 (Neri case) for consolidation with SB-10-CRM-00998
(Abalos case) pending before it.
The Sandiganbayan Fourth Division wrote to justify, in part, its action:

The Fourth Division already heard accused Neri testify against the accused in the Abalos
case, and in the course of the presentation of his testimony (on direct examination, on
cross-examination and based on his reply to the questions from the Court), the
individual members of the Fourth Division, based on accused Neri's answers as well as
his demeanor on the dock, had already formed their respective individual opinions on
the matter of his credibility. Fundamental is the rule x x x that an accused is entitled to
nothing less that the cold neutrality of an impartial judge. This Court would not want
accused Neri to entertain any doubt in his mind that such formed opinions might impact
on the proper disposition of the Neri case where he stands accused himself. [14]
While it could very well write finis to this case on the ground of mootness, the
actual justiciable controversy requirement for judicial review having ceased to exist
with the supervening action of the Fourth Division, the Court has nonetheless opted
to address the issue with its constitutional law component tendered in this
recourse.

The unyielding rule is that courts generally decline jurisdiction over cases on the
ground of mootness. But as exceptions to this general norm, courts will resolve an
issue, otherwise moot and academic, when, inter alia, a compelling legal or
constitutional issue raised requires the formulation of controlling principles to
guide the bench, the bar and the public[15] or when, as here, the case is capable of
repetition yet evading judicial review.[16] Demetria v. Alba added the following related
reason:

But there are also times when although the dispute has disappeared, as in this case, it
nevertheless cries out to be resolved. Justice demands that we act then, not only for the
vindication of the outraged right, though gone, but also for the guidance of and as a
restraint upon the future.[17]
The interrelated assignment of errors converged on the propriety, under the
premises, of the consolidation of SB-10-CRM-0099 with SB-10- CRM-0098.

Consolidation is a procedural device granted to the court as an aid in deciding how

cases in its docket are to be tried so that the business of the court may be
dispatched expeditiously while providing justice to the parties. [18] Toward this end,
consolidation and a single trial of several cases in the court's docket or
consolidation of issues within those cases are permitted by the rules.

As held in Republic v. Sandiganbayan (Fourth Division), citing American jurisprudence,

the term "consolidation" is used in three (3) different senses or concepts, thus:

(1)Where all except one of several actions are stayed until one is tried, in which case the judgment [in one] trial i
actually consolidation but is referred to as such. (quasi consolidation)
(2)Where several actions are combined into one, lose their separate identity, and become a single action in which
illustrated by a situation where several actions are pending between the same parties stating claims which mig
complaint. (actual consolidation)
(3)Where several actions are ordered to be tried together but each retains its separate character and requires the e
consolidation does not merge the suits into a single action, or cause the parties to one action to be parties to th
and emphasis omitted; italicization in the original.)
To be sure, consolidation, as taken in the above senses, is allowed, as Rule 31 of the
Rules of Court is entitled "Consolidation or Severance." And Sec. 1 of Rule 31
provides:

Section 1. Consolidation. When actions involving a common question of law or fact are
pending before the court, it may order a joint hearing or trial of any or all the matters in
issue in the actions; it may order all actions consolidated; and it may make such orders
concerning proceedings therein as may tend to avoid unnecessary costs or delay.
The counterpart, but narrowed, rule for criminal cases is found in Sec. 22, Rule 119
of the Rules of Court stating:

Sec. 22. Consolidation of trials of related offenses. - Charges for offenses founded on the
same facts or forming part of a series of offenses of similar character may be tried
jointly at the discretion of the court. (Emphasis added.)
as complemented by Rule XII, Sec. 2 of the Sandiganbayan Revised Internal Rules
which states:

Section 2. Consolidation of Cases. Cases arising from the same incident or series of
incidents, or involving common questions of fact and law, may be consolidated in the
Division to which the case bearing the lowest docket number is raffled.
Whether as a procedural tool to aid the court in dispatching its official business in
criminal or civil cases, the rule allowing consolidation in whatsoever sense it is
taken, be it as a merger of several causes of actions/cases, in the sense of actual
consolidation, or merely joint trialis designed, among other reasons, to avoid
multiplicity of suits, guard against oppression and abuse, attain justice with the
least expense and vexation to the litigants.[20]

While the assailed resolution is silent as to the resultant effect/s of the

consolidation it approved, there is nothing in the records to show that what the
prosecution vied for and what the Fifth Division approved went beyond
consolidation for trial or joint trial. This conclusion may be deduced from the
underscored portion of the following excerpts of the resolution in question, thus:

In its reply, the prosecution asserted that the rationale behind consolidation of cases is
to promote expeditious and less expensive resolution of a controversy than if they
were heard independently and separately. It is claimed that the [OMB] and [DOJ] have
already requested the participation in the hearing of these cases of the ZTE executives,
which will entail huge expenses if they will be presented separately for each case. x x x

We agree with the prosecution.[21] (Emphasis added.)

Not to be overlooked is the fact that the prosecution anchored its motion for
consolidation partly on the aforequoted Sec. 22 of Rule 119 which indubitably
speaks of a joint trial.

Given the above perspective, petitioner should now disabuse himself of the
unfounded notion that what the Fifth Division intended was a fusion into one
criminal proceedings of the Abalos and Neri cases, where one is unidentifiable from
the other, or worse, where he will be tried as co-accused in the Abalos case.

This thus brings us to the question of whether a consolidation of trial, under the
factual and legal milieu it was ordered, is proper.

Jurisprudence has laid down the requisites for consolidation of trial. As held
in Caños v. Peralta,[22] joint trial is permissible "where the [actions] arise from the
same act, event or transaction, involve the same or like issues, and depend largely
or substantially on the same evidence, provided that the court has jurisdiction over
the cases to be consolidated and that a joint trial will not give one party an undue
advantage or prejudice the substantial rights of any of the parties." More
elaborately, joint trial is proper

where the offenses charged are similar, related, or connected, or are of the same or
similar character or class, or involve or arose out of the same or related or connected
acts, occurrences, transactions, series of events, or chain of circumstances, or are based
on acts or transactions constituting parts of a common scheme or plan, or are of the
same pattern and committed in the same manner, or where there is a common element
of substantial importance in their commission, or where the same, or much the same,
evidence will be competent and admissible or required in their prosecution, and if not
joined for trial the repetition or reproduction of substantially the same testimony will be
required on each trial.[23]
In terms of its effects on the prompt disposition of cases, consolidation could cut
both ways. It may expedite trial or it could cause delays. Cognizant of this
dichotomy, the Court, in Dacanay v. People,[24] stated the dictum that "the resulting
inconvenience and expense on the part of the government cannot not be given
preference over the right to a speedy trial and the protection of a person's life,
liberty or property." Indeed, the right to a speedy resolution of cases can also be
affected by consolidation. As we intoned in People v. Sandiganbayan, a case
involving the denial by the anti-graft court of the prosecution's motion to
consolidate a criminal case for indirect bribery with another case for plunder,
consolidation should be refused if it will unduly expose a party, private respondent
in that instance, to totally unrelated testimonies, delay the resolution of the indirect
bribery case, muddle the issues, and expose him to the inconveniences of a lengthy
and complicated legal battle in the plunder case. Consolidation, the Court added,
has also been rendered inadvisable by supervening eventsin particular, if the
testimonies sought to be introduced in the joint trial had already been heard in the
earlier case.[25]

So it must be here.

Criminal prosecutions primarily revolve around proving beyond reasonable doubt

the existence of the elements of the crime charged. As such, they mainly involve
questions of fact. There is a question of fact when the doubt or difference arises
from the truth or the falsity of the allegations of facts. Put a bit differently, it exists
when the doubt or difference arises as to the truth or falsehood of facts or when
the inquiry invites calibration of the whole gamut of evidence considering mainly
the credibility of the witnesses, the existence and relevancy of specific surrounding
circumstances as well as their relation to each other and to the whole, and the
probability of the situation.[26]

Since conviction or acquittal in a criminal case hinges heavily on proof that the
overt acts constituting, or the elements, of the crime were indeed committed or are
present, allegations in the information are crucial to the success or failure of a
criminal prosecution. It is for this reason that the information is considered the
battle ground in criminal prosecutions. As stressed in Matrido v. People:

From a legal point of view, and in a very real sense, it is of no concern to the accused
what is the technical name of the crime of which he stands charged. It in no way aids
him in a defense on the merits. That to which his attention should be directed, and in
which he, above all things else, should be most interested, are the facts alleged. The real
question is not did he commit the crime given in the law in some technical and specific
name, but did he perform the acts alleged in the body of the information in the
manner therein set forth.[27] (Emphasis supplied.)
The overt acts ascribed to the two accused which formed the basis of their
indictments under the separate criminal charge sheets can be summarized as
follows:

People v. Neri (For Violation of Section 3[h] RA 3019)[28]

1. Directly or indirectly having financial or pecuniary interest in the business

transaction between the Government of the Republic of the Philippines (GRP)
and ZTE for the implementation of the NBN Project, which requires the
 review, consideration and approval by the accused, as then NEDA Director
General;

2. Meeting, having lunch and playing golf with representatives and/or officials
of the ZTE;

3. Meeting with then COMELEC Chairman Benjamin Abalos; and

4. Sending his emissary/representative, Engr. Rodolfo Noel Lozada, to meet

Abalos and Jose de Venecia III, President/General Manager of Amsterdam
Holdings Inc. (AHI), another proponent to implement the NBN Project and
discuss matters with them.

People v. Abalos (For Violation of Section 3[h], RA 3019)

1. Having financial or pecuniary interest in the business transaction between

the GRP and the ZTE for the implementation of the Philippines' NBN;

2. Attending conferences, lunch meetings and golf games with said ZTE officials
in China, all expenses paid by them and socializing with them in China and
whenever they were here in the Philippines;

3. Offering bribes to petitioner in the amount of PhP 200,000,000 and to Jose de

Venecia III President and General Manager of AHI in the amount of USD
10,000,000, being also another proponent to implement said NBN Project of
the Government; and

4. Arranging meetings with Secretary Leandro Mendoza of the Department of

Transportation and Communications (DOTC).[29]

As can be gleaned from the above summary of charges, the inculpatory acts
complained of, the particulars and specifications for each of the cases are
dissimilar, even though they were allegedly done in connection with the
negotiations for and the implementation of the NBN Project. Due to this variance,
the prosecution witnesses listed in the pre-trial order in the Neri case are also
different from the list of the people's witnesses lined up to testify in the Abalos case,
albeit some names appear in both the pre-trial orders. This can be easily seen by a
simple comparison of the list of witnesses to be presented in the cases
consolidated. The witnesses common to both cases are underscored. Thus:
In People v. Neri, the following are named as witnesses, [30] viz:

1. Benjamin Abalos

2. Jose de Venecia Jr.

3. Jose de Venecia III

4. Rodolfo Noel "Jun" Lozada

5. Dante Madriaga

6. Jarius Bondoc

7. Leo San Miguel

8. Sec. Margarito Teves

9. Representative of the Bureau of Immigration and Deportation;

10. Employees of the Wack Wack Golf and Country Club

11. Airline Representatives (2)

12. Raquel Desiderio DOTC, Asec. Administrative and Legal Affairs

13. Atty. Frederick Fern Belandres, DOTC

14. Atty. Geronimo Quintos

15. Nilo Colinares

16. Elmer Soneja

17. Lorenzo Formoso

18. Records Custodian, DOTC

19. Senate Secretary or any of her duly authorized representative

20. Director General of the Senate Blue Ribbon Committee or any of his duly authorized
representative

21. Representative of NEDA;

22. ZTE Officials

23. Ramon Sales

24. Hon. Gloria Macapagal-Arroyo

25. Atty. Jose Miguel Arroyo

26. Others.
In People v. Abalos, the following are the listed witnesses,[31] to wit:

1. Atty. Oliver Lozano

2. Mr. Jose De Venecia III

3. Engr. Rodolfo Noel Lozada

4. Engr. Dante Madriaga

5. Secretary Romulo L. Neri

6. Mr. Jarius Bondoc

7. Speaker Jose De Venecia, Jr.

8. Atty. Ernesto B. Francisco

9. Congresswoman Ana Theresa H. Baraquel

10. TESDA Chairman Emmanuel Joel J. Villanueva

11. Mr. Leo San Miguel

12. Secretary Margarito Teves

13. Atty. Raquel T. Desiderio

14. Atty. Frederick Fern M. Belandres

15. Atty. Geronimo V. Quintos

16. Mr. Nilo Colinares

17. Mr. Elmer A. Soneja

18. Asst. Secretary Lorenzo Formoso

19. Atty. Harry L. Roque

20. Vice-President Teofisto T. Guingona, Jr.

21. Dr. Ma. Dominga B. Padilla

22. Fr. Jose P. Dizon

23. Mr. Roel Garcia

24. Mr. Bebu Bulchand

25. Mr. Renato Constantino, Jr.

26. Mr. Ferdinand R. Gaite

27. Mr. Guillermo Cunanan

28. Mr. Amado Gat Inciong

29. Mr. Rafael V. Mariano

30. Ms. Consuelo J. Paz

31. Atty. Roberto Rafael J. Pulido

32. Antonia P. Barrios, Director III, Senate Legislative Records & Archives Services

33. The Personnel Officer, Human Resource Management Office, Commission on

Elections (COMELEC)

34. Representative/s from the Wack-Wack Golf and Country Club, Mandaluyong City

35. Representative/s from the Philippine Airlines (PAL)

36. Representative/s from Cathay Pacific Airways

37. Representative/s from the Cebu Pacific Airlines

38. Representative/s from the COMELEC

39. Representative/s from the National Economic & Development Authority (NEDA)

40. Representative/s from the Board of Investments

41. Representative/s from the Department of Trade and Industry (DTI)

42. Representative/s from the Department of Foreign Affairs (DFA)

43. Representative/s from the Bureau of Immigration

44. Representative/s from the National Bureau of Investigation (NBI)

45. Representative/s from the Securities and Exchange Commission (SEC)

46. Representative/s from the National Statistics Office (NSO)

47. Representative/s from the Embassy of the People's Republic of China to the
Philippines

48. Representative/s from the Central Records Division, Office of the Ombudsman

49. Representative/s from the Department of Transportation and Communications

(DOTC)
50. Representative/s from the Philippine Senate
The names thus listed in the pre-trial order in the Abalos case do not yet include, as
aptly observed by the Fourth Division in its adverted October 19, 2012 Resolution,
[32]
 additional names allowed under a subsequent resolution. In all, a total of at least
66 warm bodies were lined up to testify for the prosecution.

It can thus be easily seen that veritably the very situation, the same mischief sought
to be avoided in People v. Sandiganbayan[33] which justified the non-consolidation of
the cases involved therein, would virtually be present should the assailed
consolidation be upheld. Applying the lessons of People v. Sandiganbayan to the
instant case, a consolidation of the Neri case to that of Abalos would expose
petitioner Neri to testimonies which have no relation whatsoever in the case
against him and the lengthening of the legal dispute thereby delaying the
resolution of his case. And as in People v. Sandiganbayan, consolidation here would
force petitioner to await the conclusion of testimonies against Abalos, however
irrelevant or immaterial as to him (Neri) before the case against the latter may be
resolveda needless, hence, oppressive delay in the resolution of the criminal case
against him.

What is more, there is a significant difference in the number of witnesses to be

presented in the two cases. In fact, the number of prosecution witnesses in
the Neri case is just half of that in Abalos. Awaiting the completion in due course of
the presentation of the witnesses in Abalos would doubtless stall the disposition of
the case against petitioner as there are more or less thirty-five (35) prosecution
witnesses listed in People v. Abalos who are not so listed in People v. Neri. In the
concrete, this means, in the minimum, awaiting the completion of the testimonies
of thirty-five (35) additional witnesses, whose testimonies are unrelated to the
charges against him, before the case against petitioner may finally be disposed of,
one way or another. Also, petitioner will be exposed to an extra thirty-five (35)
irrelevant testimonies which even exceed those relating to his case, since the
prosecution only has roughly about twenty-six (26) witnesses for his case. Further
still, any delay in the presentation of any of the witnesses in People v. Abalos would
certainly affect the speedy disposition of the case against petitioner. At the end of
the day, the assailed consolidation, instead of contributing to the swift dispensation
of justice and affording the parties a just, speedy and inexpensive determination of
their cases, would achieve the exact opposite.

Before the Sandigabayan and this Court, petitioner has harped and rued on the
possible infringement of his right to speedy trial should consolidation push
through, noting in this regard that the Neri case is on its advanced stage but with
the prosecution unable to continue further with its case after presenting six
witnesses.

Petitioner's point is well-taken. In Dacanay, a case involving a request for separate

trial instead of a joint trial, the Court upheld an accused's right to a speedy trial,
guaranteed by Sec. 14 (2), Art. III of the Constitution, over the claim of the
prosecution that a joint trial would make the resolution of the case less expensive.
[34]
 In Dacanay, Dacanay moved for immediate and separate trial, which the People
opposed on the ground that a separate trial, if approved, would entail a repetitive
presentation of the same evidence instead of having to present evidence against
Dacanay and his coaccused only once at the joint trial. According to the respondent
therein, th will result in inconvenience and expense on the part of the Government,
[35]
 the very same reasons given by the prosecution in the case at hand. There as
later in People v. Sandiganbayan,[36] We held that the rights of an accused take
precedence over minimizing the cost incidental to the resolution of the
controversies in question.

Clearly then, consolidation, assuming it to be proper owing to the existence of the

element of commonality of the lineage of the otTenses charged contemplated in
Sec. 22 of Rule 119, should be ordered to achieve all the objects and purposes
underlying the rule on consolidation, foremost of which, to stress, is the swift
dispensation of justice with the least expense and vexation to the parties. It should,
however. be denied if it subverts any of the aims of consolidation.
And Dacanay and People v. Sandiganbayan are one in saying, albeit implicitly, that
ordering consolidation-likely to delay the resolution of one of the cases, expose a
patty to the rigors of a lengthy litigation and in the process undermine the
accused's right to speedy disposition of cases--constitutes grave abuse of
discretion. Not lost on the Court of course and certainly not on the
Sandiganbayan's Fourth Division is the resulting absurdity arising from the
consolidation of trial where the accused (Neri) in one case would be the
prosecution's main witness in the other case.

WHEREFORE, premises considered, the assailed Resolution of the Sandiganbayan

Fifth Division dated February 3, 2012 in Criminal Case No. SB-1 0-CRM-0099 and its
Resolution dated April 26, 2012 are hereby REVERSED and SET ASIDE. Let Criminal
Case No. SB-1 0-CRM-0098 and Criminal Case No. SB-1 0-CRM-0099 proceed
independently and be resolved with dispatch by the Divisions of the Sandiganbayan
to which each was originally raffled.

No pronouncement as to costs.

SO ORDERED.

SECOND DIVISION

G.R. No. 213286, August 26, 2015

MAMERTA LOPEZ CLAUDIO, EDUARDO L. CLAUDIO, ASUNCION CLAUDIO-

CONTEGINO, ANA CLAUDIO-ISULAT, DOLORES CLAUDIO-MABINI, AND FERMIN
L. CLAUDIO, Petitioners, v. SPOUSES FEDERICO AND NORMA
SARAZA, Respondent.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari seeking to reverse and set aside the October
24, 2013 Decision1 and the July 1, 2014 Resolution2 of the Court of Appeals (CA) in CA-
G.R. CV No. 96051, which affirmed in toto the January 21, 2011 Order of the Regional
Trial Court of Pasay City, Branch 108 (RTC), in Civil Case No. 04-0661-CFM, a case of
annulment of sale, power of attorney and mortgage.

The Facts

The case traces its roots to Civil Case No. 04-0661-CFM, for annulment of sale, power
of attorney and mortgage with prayer for damages filed before the RTC on September
28, 2004 by petitioners Mamerta Lopez Claudio (Mamerta), Eduardo L. Claudio,
Asuncion Claudio-Contegino (Asuncion), Ana Claudio-Isulat, Dolores Claudio-Mabini,
and Fermin L. Claudio (Fermin) against respondents Florentino Claudio (Florentino) and
Spouses Federico and Norma Saraza (Spouses Saraza).

The complaint alleged that Porfirio Claudio (Porfirio) and his wife, Mamerta, during their
marriage, acquired ten (10) parcels of land in Pasay City including the property covered
by Transfer Certificate of Title (TCT) No. 142989; that on June 18, 2004, Florentino
made it appear that his parents, Porfirio and Mamerta Claudio, sold to him the lot
covered by TCT No. 142989 for P500,000.00 thru a deed of absolute sale sometime in
October 2003; that the said deed of sale was void because the signatures of the
vendors were forged and there was no consideration for the sale; that the signatures of
petitioners Fermin and Asuncion appearing in the same deed of sale, expressing their
conformity to the conveyance, were likewise forged; and that subsequently, Florentino
sought the registration of the said property in his name before the Register of Deeds of
Pasay City.

It was further averred in the complaint that on June 22, 2004, Florentino executed a
deed of real estate mortgage over the subject lot with special power to sell the
mortgaged property without judicial proceedings, in favor of Spouses Saraza to secure
the payment of a loan in the aggregate amount of P1,000,000.00; that Spouses Saraza
were mortgagees in bad faith because they knew fully well that Florentino could not
have acquired the subject property from his parents because Porfirio had long been
deceased on May 31, 1997 while Mamerta was in the United States of America at the
time of the alleged sale; that Spouses Saraza did not conduct a credit investigation on
Florentino to ascertain the validity of his title and his authority to mortgage the subject
lot; that the real estate mortgage was void because it emanated from a falsified deed of
absolute sale and void title; that the registration of the real estate mortgage, together
with the special power of attorney and deed of conveyances, before the Register of
Deeds was procured through fraud; that it was only on June 28, 2004 that TCT No.
142989 was cancelled and, in lieu thereof, TCT No. 145979 was issued in the name of
Florentino; and that for failure of mortgagor Florentino to redeem the subject property,
it was consolidated in the name of Spouses Saraza.

Spouses Saraza moved for the dismissal of the complaint contending that the issue as
to whether or not the petitioners had the legal right to proceed against them could be
resolved even without a trial. On May 18, 2005, the RTC issued an order denying the
motion to dismiss for lack of merit.

In their answer, Spouses Saraza interposed the defense that the lot now covered by
TCT No. 145979, which was used as collateral in the real estate mortgage contract, was
valid and that the mortgage was enforceable.

After the presentation of the petitioners' evidence in chief, Spouses Saraza moved for
leave of court to file a demurrer to evidence. On December 15, 2009, they filed
their Demurrer to Evidence praying for the dismissal of the civil case anchored on the
ground of insufficiency of evidence.
On January 21, 2010, the RTC issued the assailed order, the dispositive portion of
which as quoted by the CA, reads: cralawlawlibrary

WHEREFORE, the Demurrer to Evidence with Leave filed by defendants Sarazas is

hereby GRANTED and the Complaint against them is hereby Dismissed without
prejudice.

SO ORDERED.3
The petitioners filed a motion for reconsideration of the January 21, 2010 Order, but it
was denied by the RTC in its June 4, 2010 Order.4 cralawrednad

Not in conformity, the petitioners appealed the order of dismissal of Civil Case No. 04-
0661-CFM before the CA.

In its assailed decision, dated October 24, 2013, the CA found no cogent reason to
disturb the findings and conclusions of the RTC. It held that Spouses Saraza had the
right to rely in good faith on TCT No. 145979, which covered the lot given as security
by Florentino, considering that there was no showing of any sign to excite suspicion.
Thus, they were under no obligation to look beyond what appeared on the face of the
certificate of title and investigate it. The appellate court deemed Spouses Saraza as
innocent mortgagees for value and as such, the petitioners had shown no right to relief
against them. Thus, Spouses Saraza and their mortgage lien were entitled to
protection. The fallo of its decision states: cralawlawlibrary

WHEREFORE, the 21 January 2011 Order of the Regional Trial Court of Pasay City,
Branch 108 in Civil Case No. 04-0661-CFM is hereby AFFIRMED in toto.

Cost against appellants.

SO ORDERED.5
Unfazed, the petitioners filed the subject petition and presented for the Court's review
the following

ISSUES

WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE

RESPONDENTS ARE MORTGAGEES IN GOOD FAITH BECAUSE WHEN THE
MORTGAGE WAS ALLEGEDLY EXECUTED ON AUGUST 11, 2004 THE TITLE HAS
BEEN TRANSFERRED TO FLORENTINO CLAUDIO ON JUNE 28, 2004.

II

WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT EVEN IF

THE REAL ESTATE MORTGAGE WAS ENTERED INTO BETWEEN THE MORTGAGOR
AND THE MORTGAGEE ON JUNE 22, 2004, THERE WAS A DEED OF ABSOLUTE
SALE WHICH DESCRIBED THE PROPERTY INVOLVED AND WAS EXECUTED ON
JUNE 10, 2004 BETWEEN VENDOR PORFIRIO CLAUDIO AND VENDEE
FLORENTINO CLAUDIO.

III

WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE

RESPONDENTS ARE NO LONGER DUTY BOUND TO LOOK BEYOND THE
TRANSFER CERTIFICATE OF TITLE AS THE LAND WAS REGISTERED IN THE
NAME OF FLORENTINO CLAUDIO.

IV

WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT THE

RESPONDENTS ARE MORTGAGEES IN GOOD FAITH BECAUSE THE AGREEMENT
WAS REGISTERED IN THE TITLE A FEW DAYS AFTER THE AGREEMENT WAS
EXECUTED.6

It is the position of the petitioners that Florentino had no title to the mortgaged
property, that he was not its registered owner at the time he entered into a real estate
mortgage agreement with Spouses Saraza on June 22, 2004; and that it was only on
June 28, 2004 or six (6) days after the execution of the mortgage contract that TCT No.
145979 was issued to Florentino. The petitioners argue that the principle that a
mortgagee for value need not look beyond the face of the certificate of title finds no
application where the mortgagor is not the registered owner and has no certificate of
title at the time of the execution of the mortgage agreement. They contend that the
failure of Spouses Saraza to ascertain if there was any flaw in the mortgagor's
ownership over the subject property, to examine its status and to determine the
mortgagor's right to mortgage the property as collateral of the loan would hardly make
them mortgagees in good faith.

Spouses Saraza, on the other hand, criticize the present petition as a mere reiteration
or rehash of the arguments set forth by the petitioners in their pleadings filed before
the RTC and the CA. Other than these issues already judiciously considered and
squarely passed upon, the petitioners failed to advance any compelling reason for the
modification, much less reversal, of the assailed October 24, 2013 Decision of the CA.7 cralawr

The petitioners, in reply, theorize that Spouses Saraza did not offer any counter-
argument in their comment because they failed to grasp the gravity and substance of
the issues raised in the subject petition, notably the issue that the CA overlooked and
misappreciated material facts which, if properly taken into account would alter the
outcome of the case.8
 The Court's Ruling

The issue before this Court now is whether the RTC erred in granting Spouses Saraza's
demurrer to evidence. Corollary to this is the issue of whether or not they were
mortgagees in good faith.

The petition is meritorious. The Court finds that Spouses Saraza are not mortgagees in
good faith.

In Cavite Development Bank v. Lim,11 the Court explained the doctrine of mortgagee in

good faith, thus:cr

There is, however, a situation where, despite the fact that the mortgagor is not the
owner of the mortgaged property, his title being fraudulent, the mortgage contract and
any foreclosure sale arising therefrom are given effect by reason of public policy. This is
the doctrine of "the mortgagee in good faith" based on the rule that all persons dealing
with property covered by a Torrens Certificate of Title, as buyers or mortgagees, are
not required to go beyond what appears on the face of the title. The public interest in
upholding the indefeasibility of a certificate of title, as evidence of the lawful ownership
of the land or of any encumbrance thereon, protects a buyer or mortgagee who, in
good faith, relied upon what appears on the face of the certificate of title.

Verily, a mortgagee has a right to rely in good faith on the certificate of title of the
mortgagor and, in the absence of any sign that might arouse suspicion, has no
obligation to undertake further investigation. Accordingly, even if the mortgagor is not
the rightful owner of, or does not have a valid title to, the mortgaged property, the
mortgagee in good faith is entitled to protection.13 This doctrine presupposes, however,
that the mortgagor, who is not the rightful owner of the property, has already
succeeded in obtaining a Torrens title over the property in his name and that, after
obtaining the said title, he succeeds in mortgaging the property to another who
relies on what app ears on the said title.14
cralawrednad